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/raid1/www/Hosts/bankrupt/TCR_Public/060421.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, April 21, 2006, Vol. 10, No. 94 Headlines ADELPHIA COMMS: ADcom Sues Media Services Unit for Contract Breach AIRCAST HOLDING: Moody's Withdraws Ratings as DJ Deal Closes ALLIED HOLDINGS: Gets Access to $5 Million Overadvance Facility AMERICAN AIRLINES: Posts $92 Million Net Loss in First Quarter APX HOLDINGS: Gets Interim DIP Financing & Cash Collateral Access ARLINGTON HOSPITALITY: Has Sole Right to File Plan Until April 28 ARLINGTON HOSPITALITY: Asks Court to Disallow Secured Claims ARTIFICIAL LIFE: Incurs $1.6 Million Net Loss for Fiscal Year 2005 ATA AIRLINES: Court OKs C8 Airlines' Amended Disclosure Statement BALLY TOTAL: Sells Common Shares to Ramius Entities for $2.8 Mil. BALLY TOTAL: Gets $2.8M Equity Placement from Wattles Entities BIOGEN IDEC: Earns $161 Million of Net Income in Full-Year 2005 BROOKLYN HOSPITAL: U.S. Trustee Balks at Proposed KERP CABCO TRUST: S&P Upgrades Certificate Rating to BBB- from BB+ CALPINE CORP: Completes Sale of 45% Interest in Mexico Power Plant CATHOLIC CHURCH: Portland Says Tort Panel's Plan is Insufficient CATHOLIC CHURCH: Claimants Balk at Portland's Disclosure Statement CHEMTURA CORP: Moody's Places Ba1 Rating on $400 Million Notes CHEMTURA CORP: S&P Assigns BB+ Debt Rating to $400 Million Notes CHOCTAW RESORT: S&P Affirms BB Rating & Revises Outlook to Pos. CINRAM INT'L: S&P May Downgrade Corporate Credit Rating to BB- CMP KC: S&P Rates Planned $98.4 Million Credit Facilities at CCC+ CMP SUSQUEHANNA: S&P Rates Proposed $275 Million Sub. Notes at CCC COLLINS & AIKMAN: Taps Lathrop & Gage as Special Counsel COLLINS & AIKMAN: SEC Has Until May 15 to File Claims COLLINS & AIKMAN: Amends New Headquarters Leases CROWN HOLDINGS: Balance Sheet Upside-Down by $213MM at March 31 CURATIVE HEALTH: Ernst & Young Raises Going Concern Doubt DANA CORP: Amends DIP Financing Pact, Extends Payment Deadline DANA CORP: Gets Final Court Approval to Hire Jones Day as Counsel DANA CORP: Gets Final Okay to Hire Pachulski as Conflicts Counsel DELTA AIR: Amends Credit Facilities with General Electric Capital DELTA AIR: Allegheny Airport Authority Concedes to Lease Rejection DENBURY RESOURCES: Plans to Sell $125 Million of Common Stock DIVERSIFAX INC: Pender Newkirk Raises Going-Concern Doubt DYNEGY INC: Completes New $670 Million Revolving and Term Facility FEDERAL-MOGUL: March 31 Balance Sheet Upside-Down by $2 Billion FORD MOTOR: Proposed Plant Closures to Cost $2.4 Billion FUNCTIONAL RESTORATION: Taps Xroads as Financial Advisor GENERAL MOTORS: First Quarter Sales Rise 4.4% GT BRANDS: Files Disclosure Statement & Liquidation Plan HARRY FERRYMAN: Case Summary & 5 Largest Unsecured Creditors HEXION SPECIALTY: Raising $86M in Stock Offering to Pay Off Debts IDI GLOBAL: Files for Chapter 11 Reorganization IFCO SYSTEMS: 1/3 of Workforce Apprehended & 7 Managers Indicted INTEGRATED HEALTH: IRS Wants More Time to File Amended Claim INTELSAT LTD: Incurs $325.3 Million Net Loss in 2005 KAISER ALUMINUM: Dist. Court Sets Confirmation Hearing for May 11 LEAR CORP: S&P Affirms Proposed $1 Billion Term Loan's B+ Rating LEVITZ HOME: Rejects Eight Store Leases LEVITZ HOME: Birchfield Responds to Landlord's Lease Objection LEVITZ HOME: Can Terminate and Reject Jennifer Sublease LINN ENERGY: Delayed 10-K Filing Prompts Nasdaq Delisting Notice LONDON FOG: Court Okays Avalon Group as Financial Advisor LONGVIEW FIBRE: Board Says Obsidian Undervalues Timber Assets LONGVIEW FIBRE: S&P Holds BB Corp. Credit Rating on Negative Watch LORBER INDUSTRIES: Wants to Hire Fineman West as Accountants MAGSTAR TECH: Equity Deficit Prompts Auditor's Going Concern Doubt MARSH SUPERMARKETS: S&P Holds CCC Sub. Debt Rating on CreditWatch MASTEC INC: Settles $10 Million Claims in Securities Litigation MESABA AVIATION: MAIR Won't Renew DIP Financing Commitment MESABA AVIATION: Court OKs Mercer's Retention as Consultant NANOBAC PHARMACEUTICALS: Aidman Piser Raises Going Concern Doubt NOMURA ASSET: Moody's Places Low-B Ratings on Two Cert. Classes NORCRAFT HOLDINGS: S&P Rates $60 Million Credit Facility at BB O'SULLIVAN INDUSTRIES: Appoints Russ Steinhorst as CFO ONEIDA LTD: Court Okays Shearman & Sterling as Bankruptcy Counsel ONEIDA LTD: Court Okays Kurtzman's Retention as Claims Agent OWENS CORNING: Wants to Expand Scope of Ernst & Young's Employment PACIFIC BIOMETRICS: Private Placement Proceeds Total $4.3 Million PARMALAT GROUP: Citibank Can Sue Parmalat Paraguay S.A. PILLOWTEX CORP: Wants to Settle Dispute Over Duke's $1.5MM Claims PLIANT: Creditors Panel Wants Bonus Plan Documents & Buck Report PLIANT CORP: Wants Until August 1 to Remove State Court Actions PREMIER ENT: S&P Puts CCC Corp. Credit Rating on Watch QUEEN'S SEAPORT: Howard Ehrenberg Appointed as Chapter 11 Trustee REFCO INC: Chap. 7 Trustee Wants Stay Modified to Liquidate Claims REFCO INC: Refco LLC Trustee Wants Expenses Paid Before Conversion RHODES INC: Files Third Amended Joint Liquidation Plan in Georgia ROTECH HEALTHCARE: Annual Stockholders' Meeting Slated for June 30 RUSSELL CORP: S&P Puts B+ Corp. Credit Rating on Positive Watch SAXON CAPITAL: S&P Assigns B Rating to Senior Unsecured Debt SEALY CORP: Raising $294.2MM in IPO; 28MM Common Shares For Sale SND ELECTRONICS: Wants to Sell Assets to AstonTec for $710,000 SOUTHERN UNION: Asks Shareholders to OK Restructuring & Asset Sale SYSTEMS MANAGEMENT: Malone & Bailey Expresses Going Concern Doubt TECO AFFILIATES: Court Closes Chapter 11 Cases TENET HEALTHCARE: To Sell $16MM Gulf Coast Medical Center to HMA TEXAS PETROCHEMICALS: Moody's Rates $280 Million Term Loan at Ba3 TITANIUM METALS: Company's Request Prompts S&P to Withdraw Ratings UAL CORP: Battles with Argenbright Over Prepetition Obligations US AIRWAYS: Adopts Incentive Compensation Plan Targets for 2006 VARIG S.A.: Reaches $400 Mil. Purchase Pact with Varig Logistica VILLAGES AT SARATOGA: Court Approves Amended Disclosure Statement VIOQUEST PHARMACEUTICALS: Auditor Expresses Going Concern Doubt VIRGIN MOBILE: Moody's May Downgrade Ratings After Loan Default WESTPOINT STEVENS: Court Delays Case Dismissal Hearing to April 25 WESTPOINT STEVENS: 2nd Cir. Nixes Aretex Parties' Mandamus Request WINDOW ROCK: Court Approves Winthrop Couchot as Insolvency Counsel WINDOW ROCK: Taps MacPherson Kwok as Intellectual Property Counsel WORLDCOM INC: Hansen Corporation Moves for Summary Judgment WORLDCOM INC: Inks Pact Settling U.S. Telepacific's Claims XM SATELLITE: S&P Rates Planned $600 Mil. Sr. Unsec. Notes at CCC * BOOK REVIEW: The Logic and Limits of Bankruptcy Law ********* ADELPHIA COMMS: ADcom Sues Media Services Unit for Contract Breach ------------------------------------------------------------------ ADcom Information Services, Inc., and ACC Operations, Inc., doing business as Adelphia Media Services, were parties to a Service and License Agreement dated August 6, 2001. ADcom was required to install, maintain and analyze household meters in and around Cleveland, Ohio, to provide Adelphia Media with Viewership Information, including but not limited to local cable ratings. ADcom's Viewership Information enabled Adelphia Media to present prospective advertisers with cable statistics specific to the cable advertising it sought to sell, Heather Windt, Esq., at Friedman Kaplan Seiler & Adelman LLP, in New York, relates. Adelphia intended to use Adcom's Viewership Information in connection with its advertising sales not only on behalf of its own systems, but on behalf of other Cleveland cable systems as well. Those cable systems included AT&T, Cox Media, Erie/Buckeye, Wooster and Massillon. Adelphia also represented that it was in negotiations to acquire the right to sell advertising on behalf of Time Warner cable system in Akron, Ohio. Ms. Windt notes that this group of cable systems, which was referred to as the "Interconnect," enable advertisers to negotiate with and purchase regional cable advertising from a single source -- Adelphia. Shortly after the Parties executed the Agreement, Adelphia Media filed for bankruptcy. In connection with its bankruptcy proceedings, Adelphia Media persuaded ADcom to modify their Initial Agreement under which ADcom was entitled to a flat license fee. Ms. Windt relates that under the new agreement, ADcom's compensation would be contingent on Adelphia Media's sale of advertising. This means that ADcom would only be entitled to certain payments if Adelphia Media achieved specified advertising revenue benchmarks. ADcom agreed to the agreement with confidence. Subsequently, Adelphia Media announced that it had surrendered its right to sell advertising on behalf of other cable systems in the Cleveland advertising market. Adelphia Media also announced that it would turn over many of its own sales rights to Time Warner Cable, Inc. Thus, Time Warner became responsible in large part for selling advertising on behalf of Adelphia Media and the other Cleveland cable systems. Adelphia Media admitted that its inability to sell advertising would make the achievement of the advertising revenue benchmarks impossible. Ms. Windt tells the Court that Adelphia Media refused to pay ADcom's invoice in full. ADcom has not been compensated for the system it dutifully installed for Adelphia Media at a cost of over $10,000,000. ADCom asserts four causes of action against Adelphia Media: 1. Breach of contract Adelphia's failure to sell advertising on behalf of the Interconnect is a material breach of Adelphia's obligations under the terms of the Amended Agreement, including Adelphia's obligation of good faith and fair dealing. 2. Promissory estoppel Ms. Windt asserts that Adelphia made unambiguous representations and promises to ADcom that it intended to sell advertising on behalf of the Interconnect. 3. Breach of fiduciary duty Adelphia and ADcom were joint-venturers. Adelphia was an equity participant in ADcom and its representatives were entitled to attend ADcom board meeting and review board materials. Thus, Adelphia owed fiduciary obligations of care and loyalty to ADcom, Ms. Windt relates. Adelphia breached its fiduciary obligations by acting intentionally, recklessly or with gross negligence in representing to ADcom that it intended to sell advertising on behalf of the Interconnect and later awarding sales rights Adelphia had for other cable systems in Cleveland and many of its own sales rights to Time Warner, Ms. Windt tells the Court. 4. Unjust enrichment/constructive trust Through Adelphia's sale of its right to sell advertising on behalf of the Interconnect, (a) Adelphia has been unjustly enriched, and ADcom has suffered a detriment, and (b) Adelphia holds illegal profits as a constructive trustee for the benefit of ADcom. AdCom is entitled to imposition of a constructive trust upon Adelphia's assets wherever those illegal profits may be traced. Accordingly, ADcom asks the Court to: a. on the first to third causes of action, award it actual damages plus interest; b. on the first cause of action, award it consequential damages; c. on the third cause of action, award damages together with punitive damages; d. declare that Adelphia Media hold in trust, as constructive trustees for the benefit of ADcom, illegal profits obtained from the sale of its right to sell advertising; e. declare that any amounts acclaimed in the adversary proceeding are entitled to allowance and payment as an administrative expense pursuant to Section 503(b)(1)(A) of the Bankruptcy Code; and f. award its reasonable attorney's fees, costs and disbursements of its action. Adelphia Media Responds According to Adelphia Media, at the time the Service and License Agreement was signed, it informed ADcom that it was in negotiations to form an interconnect with a number of other cable and that the interconnect, not Adelphia Media, would sell advertising on behalf of Interconnect members. Michael S. Doluisio, Esq., at Dechert LLP, in Philadelphia, Pennsylvania, asserts that: a. ADcom's claims are barred because Adelphia Media did not breach any obligation under the Service and License Agreement or the Amendment; b. ADcom's claims are barred by the terms of the Service and License Agreement and the Amendment; c. ADcom cannot recover some or all of the damages alleged in the Complaint pursuant to the Service and License Agreement and incorporated into the Amendment; d. ADcom's claims are barred because ADcom materially breached the Service and License Agreement and the Amendment; e. ADcom's claims are barred because any damages suffered by ADcom were not proximately caused by Adelphia Media's conduct; f. ADcom's claims are barred because Adelphia Media has made payment consistent with the Service and License Agreement and the Amendment; g. ADcom's claims are barred by the statute of frauds; h. ADcom's unjust enrichment claim is barred because there is a written, express contract which governs the parties' relationship; i. ADcom's unjust enrichment claim is barred because there was no sale of the Interconnect, and if there was a sale, any enrichment was not unjust; j. ADcom's unjust enrichment claim is barred because any alleged enrichment by Adelphia Media was not at the expense of ADcom. Accordingly, Adelphia Media asks the Court to enter a judgment against ADcom and in its favor, and award it reasonable attorneys' fees and costs. About Adelphia Communications Based in Coudersport, Pa., Adelphia Communications Corporation -- http://www.adelphia.com/-- 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. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. (Adelphia Bankruptcy News, Issue No. 125; Bankruptcy Creditors' Service, Inc., 215/945-7000) AIRCAST HOLDING: Moody's Withdraws Ratings as DJ Deal Closes ------------------------------------------------------------ Moody's Investors Service withdrew all ratings for Aircast Holding Company LLC for business reasons. On April 7, 2006, dj Orthopedics announced that it closed its acquisition of Aircast, which had been first announced on Feb. 27, 2006. dj Orthopedics acquired Aircast from its shareholders, including majority owner Tailwind Capital, for approximately $290 million in cash. Pursuant to the transaction, a portion of the purchase price was used to repay all of Aircast's senior secured bank debt. Outlook Actions: Issuer: Aircast Holding Company LLC * Outlook, Changed To Rating Withdrawn From Stable Withdrawals: Issuer: Aircast Holding Company LLC * Corporate Family Rating, Withdrawn, previously rated B2 * Speculative Grade Liquidity Rating, Withdrawn, previously rated SGL-3 * Senior Secured Bank Credit Facility, Withdrawn, previously rated B3 Based in Summit, New Jersey, Aircast is a manufacturer and distributor of ankle braces, walkers, compression products and vascular systems. ALLIED HOLDINGS: Gets Access to $5 Million Overadvance Facility --------------------------------------------------------------- Allied Holdings, Inc. (Pink Sheets: AHIZQ.PK) entered into an amendment to its debtor-in-possession credit facility with GE Commercial Finance, Morgan Stanley Senior Funding, Inc., GE Capital Markets Group, Inc., and the other lenders. Terms of the Amendment The amendment, which was made effective as of April 18, 2006, provides for the creation of an overadvance facility under the Term B Loan under the DIP Facility pursuant to which up to an additional $5 million may be advanced to the Company at the discretion of Morgan Stanley Senior Funding, Inc., as the Term B agent. The maturity date for the overadvance facility is May 18, 2006, provided, however, that the maturity date may be extended for a period of up to an additional thirty days in the sole discretion of the Term B Agent if certain conditions are met by the Company, including filing with and approval by the U.S. Bankruptcy Court for the Northern District of Georgia of an emergency motion for a 10% reduction in the wages and benefits payable to the Company's employees covered by its collective bargaining agreement with the International Brotherhood of Teamsters. The Company filed the emergency motion on April 13, 2006 and it is currently pending before the court with a hearing on the motion set for April 26. The overadvance facility bears interest at a rate equal to one- month LIBOR plus 9.5%, however, as a result of the Company's previously reported financial covenant defaults under the DIP Facility, the Company has agreed to pay a default rate of interest on all loans under the DIP Facility, including the new overadvance facility. The default rate of interest is 2% over the otherwise applicable rates. The amendment provides that if the Company is successful in receiving commitments for additional funds to be provided to the Company by June 15, 2006, in an amount not less than $20 million, the default interest rates will no longer be paid as long as there are no additional events of default under the DIP Facility. The amendment also provides for a prepayment penalty in the event that the Company prepays any or all of the term loans under the DIP Facility, including the overadvance facility, unless such prepayment results from a refinancing provided by the Term B Agent. The prepayment penalty is equal to 1% of the principal amount of the loans being prepaid. In addition, the amendment to the DIP Facility revises, for the applicable periods ending March 31, 2006, April 30, 2006 and May 31, 2006, only, certain financial covenants relating to: * maximum capital expenditures, * the minimum fixed charge coverage ratio, * minimum EBITDA and maximum leverage ratio; however, the changes to these covenants do not affect the Company's prior covenant defaults that are subject to the Forbearance Agreement with the lenders dated March 9, 2006, and extended on April 3, 2006. The amendment to the DIP Facility further extends the applicable forbearance period from April 18, 2006, to the maturity date of the overadvance. About Allied Holdings Headquartered in Decatur, Georgia, Allied Holdings, Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provides the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provides financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. AMERICAN AIRLINES: Posts $92 Million Net Loss in First Quarter -------------------------------------------------------------- AMR Corporation (NYSE: AMR - News), the parent company of American Airlines, Inc., reported a net loss of $92 million in the first quarter of 2006, as compared to a net loss of $162 million in the first quarter of 2005. First quarter 2005 results included a benefit of $69 million related to certain excise tax refunds. "A loss of any size is never satisfactory," said AMR Chairman and CEO Gerard Arpey, "but it is somewhat gratifying to have improved our first quarter results by $139 million year over year excluding last year's excise tax refunds, despite the Company paying $349 million more for fuel because of higher fuel prices during the first quarter of 2006 versus the same period last year." Arpey also pointed out that the Company achieved a first quarter operating profit of $115 million, and had positive operating cash flow for the period. For the quarter, American's passenger revenue per available seat mile was up 10.8% year over year. American's load factor - or percentage of seats filled -- for the first quarter was 77.2%, up 1.8 points over the first quarter of 2005, while yield, representing average fares, was up 8.2%. Overall, AMR's revenue from all sources -- passenger, cargo and other categories - grew in the first quarter by $594 million, or 12.5%, year over year. "Thanks to the hard work of our people and the changes we have made, we are creating new streams of revenue and are bringing additional customers into the network. These efforts are driving unit revenues to near 2000 levels," Arpey said. "Unfortunately, the price of fuel has increased by more than 143% since then, adding $3.6 billion to our annual cost structure. Even with strong demand for air travel, we have been able to pass only a very small portion of that increase on to our customers." On a year over year basis, American's mainline cost per available seat mile was up by 10.3%. Excluding fuel, mainline unit costs increased 2.9% versus the first quarter of last year. Under the tenets of its Turnaround Plan and working collaboratively with its employees and unions, American continues to focus sharply on numerous cost savings initiatives as it works to achieve sustained profitability. One such step is a flattening of the summer peak schedule that allows the airline to reduce the extra resources that it carries year-round to support the summer peak. As a result, American is placing 27 of its MD80 aircraft into temporary storage in phases by July 1, 2006, to improve the overall efficiency of its operations. In an initiative to reduce distribution costs, American at the end of March successfully renegotiated its agreement with Worldspan, a global distribution system that enables an airline to display its products over an extensive network of travel agencies. The new arrangement provides American with substantially lower costs and greater flexibility in continuing to adopt new cost-effective technologies as they become available. American is in discussions with some of the other GDSs as well. Despite the continuing challenges of a very difficult industry, Arpey said he is pleased with the airline's progress to date, and expects a very robust summer. "It looks like another very busy summer for our industry," he said. "Our planes should be full, which among other things means we have a golden opportunity - if we stay focused on running a good airline, controlling costs, and giving our customers what they truly value -- to build on the momentum reflected in the financial results we are reporting today." Arpey pointed out that as of April 14, AMR had contributed $120 million to its various defined benefit plans this year. AMR ended the quarter with $4.8 billion in cash and short-term investments, including a restricted balance of $510 million. About American Airlines American Airlines is the world's largest airline. American, American Eagle and the AmericanConnection regional airlines serve more than 250 cities in over 40 countries with more than 3,800 daily flights. The combined network fleet numbers more than 1,000 aircraft. American's Web site -- http://www.AA.com/-- provides users with easy access to check and book fares, plus personalized news, information and travel offers. American Airlines is a founding member of the oneworld Alliance, which brings together some of the best and biggest names in the airline business, enabling them to offer their customers more services and benefits than any airline can provide on its own. Together, its members serve more than 600 destinations in over 135 countries and territories. American Airlines, Inc. and American Eagle are subsidiaries of AMR Corporation (NYSE: AMR). * * * As reported in the Troubled Company Reporter on Feb. 24, 2006, Moody's Investors Service affirmed all debt ratings of AMR Corp., and its primary subsidiary American Airlines, Inc. - corporate family rating at B3 -- as well as all tranches of the Enhanced Equipment Trust Certificates supported by payments from American and the SGL-2 Speculative Grade Liquidity Rating. The outlook was changed to stable from negative. The stable outlook reflects Moody's expectation of steadily improving operating and financial performance during 2006 resulting primarily from yield-driven revenue growth while maintaining control of the growth of unit costs. The company should generate sufficient cash from operations to meet scheduled debt maturities as well as planned capital spending without adding additional debt. As reported in the Troubled Company Reporter on Nov. 2, 2005, Standard & Poor's Ratings Services assigned its 'B-' rating to $800 million of New York City Industrial Development Agency special facility revenue bonds, series 2005 - American Airlines Inc., John F. Kennedy International Airport Project, which mature at various dates. At the same time, the ratings on existing series 2002 bonds were raised to 'B-' from 'CCC', reflecting changes in the security arrangements that apply to those bonds. Both series of bonds will be serviced by payments made by AMR Corp. unit American Airlines Inc. under a lease between the airline and the agency. APX HOLDINGS: Gets Interim DIP Financing & Cash Collateral Access ----------------------------------------------------------------- APX Holdings, LLC, and its debtor-affiliates sought and obtained permission, on an interim basis, from the United States Bankruptcy Court for the Central District of California, to borrow funds from Fleet Capital Corp., through its assignee The Bank of America, N.A., to finance the liquidation of its business. The Court allowed BofA to provide revolving loans to the Debtors pursuant to their two-week budget with respect to: a) payroll, retention, health, legal, and employee expenses including accrued wages, taxes, sales commission and vacation expenses to the extent incurred irrespective of default or expiration; b) all other expense items, provided the amounts incurred have prior approval from the Lender or its consultant The Recovery Group, Inc.; and c) the Veterans Administration Expense Itemization not exceeding $8,000,000 irrespective of event of default or expiration date. A copy of the Debtors' two-week budget is available for free at: http://researcharchives.com/t/s?7f3 In case of duplication of the expense items, the Court ruled that the items will be deemed to appear solely in the VA Expense Itemization and will reduce BofA's obligation to fund the Liquidation Expense Itemization. BofA is further authorized to make additional loans to the Debtors, provided that the total variance above the Budget will not exceed 10% in the aggregate. As adequate protection, the Debtors grant BofA liens in all of their assets, subject to a carve-out to allow for payment of: a) the United States Trustee's statutory fees and any unpaid fees owing to the Clerk of Court; b) the fees and expenses of the Debtors' professionals not exceeding $100,000, exclusive of prepetition retainers incurred after an event of default; c) the professional fees and expenses of the Official Committee of Unsecured Creditors not exceeding $25,000; and d) in the event of a chapter 7 conversion, up to $25,000 of fees and expenses incurred by the Chapter 7 trustee and its professionals. Headquartered in Santa Fe Springs, California, APX Holdings LLC -- http://www.shipapx.com/-- provides small parcel and freight delivery services to high volume commercial customers. The Debtor and eight of its affiliates filed for chapter 11 protection on Mar. 16, 2006 (Bankr. C.D. Calif. Case No. 06-10875). Martin R. Barash, Esq., at Klee, Tuchin, Bogdanoff & Stern LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. ARLINGTON HOSPITALITY: Has Sole Right to File Plan Until April 28 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Illinois extended, until April 28, 2006, Arlington Hospitality, Inc., and its debtor-affiliates' exclusive period to file a chapter 11 plan. The Bankruptcy Court also gave the Debtors until June 29, 2006, to solicit acceptances of their reorganization plan. As reported in the Troubled Company Reporter on March 14, 2006, the Debtors asked the Bankruptcy Court to extend their exclusive plan filing and solicitation periods to gain more time to resolve claims issues and streamline the plan formulation process. The Debtors also informed the Bankruptcy Court that: -- they are in discussions with various constituents in their chapter 11 cases, including the Official Committee of Unsecured Creditors, about formulating a plan of liquidation that would benefit the estates' creditors. -- they are exploring issues on valuation and allocation to determine whether and to what extent substantive consolidation among various related debtor entities is warranted. Headquartered in Arlington Heights, Illinois, Arlington Hospitality, Inc., and its affiliates develop and construct limited service hotels and own, operate, manage and sell those hotels. The Debtors operate 15 AmeriHost Inn Hotels under leases from PMC Commercial Trust. Arlington Hospitality, Inc., serves as a guarantor under these leases. Arlington Inns Inc., an affiliate, filed for bankruptcy protection on June 22, 2005 (Bankr. N.D. Ill. Case No. 05-24749), the Honorable A. Benjamin Goldgar presiding. Arlington Hospitality and additional debtor- affiliates filed for chapter 11 protection on Aug. 31, 2005 (Bankr. N.D. Ill. Lead Case No. 05-34885). Catherine L. Steege, Esq., at Jenner & Block LLP, provides the Debtors with legal advice and Chanin Capital LLC serves as the company's investment banker. David W. Wirt, Esq., at Winston & Strawn, represents the Official Committee of Unsecured Creditors. As of March 31, 2005, Arlington Hospitality reported $99 million in total assets and $94 million in total debts. ARLINGTON HOSPITALITY: Asks Court to Disallow Secured Claims ------------------------------------------------------------ Arlington Hospitality, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Illinois, Eastern Division, to disallow several claims filed by various secured lenders. Catherine Steege, Esq., at Jenner & Block LLP, tells the Bankruptcy Court that Sunburst Hotel Holdings, Inc., assumed the mortgage debt they owed to First Security Bank, The Citizens Bank of Logan and certain other secured creditors after Sunburst purchased substantially all of the Debtors' assets. The Debtors want the Bankruptcy Court to disallow these claims because Sunburst has assumed them: -- Citizens Bank's $1.19 million claim; -- First Security's $1.31 million claim; -- PMC Capital, LP 1999-1's $1.5 million claim; -- PMC Joint Venture, LP's $1.4 million claim; -- DCR Mortgage III Sub 1's $1 million claim; and -- LNR Partners, Inc./Wachovia Securities' $2.2 million claim The Debtors also ask the Bankruptcy Court for permission to pay First Security $2,170, and Citizens Bank $8,280 for attorneys fees and expenses associated with their mortgages. The Debtors further ask the Court to disallow PMC Commercial Trust's aggregate $3.2 million claim since its claims have been satisfied in full by the Debtors delivery of a deed for the properties securing the claims. In addition, the Debtors want the Bankruptcy Court to reduce General Electric Commercial Finance Business Property Corp.'s $3.7 million secured claim to approximately $1.6 million since Sunburst has paid GECC $2 million. The Hon. A. Benjamin Goldgar will convene a hearing at 9:00 a.m. on May 1, 2006, to consider the Debtors' request. Headquartered in Arlington Heights, Illinois, Arlington Hospitality, Inc., and its affiliates develop and construct limited service hotels and own, operate, manage and sell those hotels. The Debtors operate 15 AmeriHost Inn Hotels under leases from PMC Commercial Trust. Arlington Hospitality, Inc., serves as a guarantor under these leases. Arlington Inns Inc., an affiliate, filed for bankruptcy protection on June 22, 2005 (Bankr. N.D. Ill. Case No. 05-24749), the Honorable A. Benjamin Goldgar presiding. Arlington Hospitality and additional debtor- affiliates filed for chapter 11 protection on Aug. 31, 2005 (Bankr. N.D. Ill. Lead Case No. 05-34885). Catherine L. Steege, Esq., at Jenner & Block LLP, provides the Debtors with legal advice and Chanin Capital LLC serves as the company's investment banker. David W. Wirt, Esq., at Winston & Strawn, represents the Official Committee of Unsecured Creditors. As of March 31, 2005, Arlington Hospitality reported $99 million in total assets and $94 million in total debts. ARTIFICIAL LIFE: Incurs $1.6 Million Net Loss for Fiscal Year 2005 ------------------------------------------------------------------ Artificial Life, Inc., filed its financial results on Form 10-KSB for the fiscal quarter ended Dec. 31, 2006, with the Securities and Exchange Commission on March 31, 2006. For the year ended Dec. 31, 2005, the company reported a net loss of $1,684,449 on $266,757 of net revenues compared to a $945,000 net loss on $262,026 of net revenues for the same period in 2004. The Company has experienced difficulty and uncertainty in meeting its liquidity needs in the past. Management continues to pursue short-term borrowings and direct share placement opportunities to meet potential future liquidity shortfalls. At Dec. 31, 2005, short-term loans amounted to $88,000 and funds raised from issuance of shares in 2005 amounted to $1,328,640. In February 2006, the Company sold 3,090,681 shares of common stock in connection with 5 private placements. The total proceeds to the company were $1,999,900. In March 2006, the Company issued 166,000 shares of common stock for $69,720 upon exercise of an option and a warrant issued in November 2001. The Company's CEO has agreed to postpone his claim for a total sum of $529,481 owed to him by the Company at Dec. 31, 2005. A full-text copy of Artificial Life's Annual Report ended Dec. 31, 2006, is available for free at http://researcharchives.com/t/s?811 Artificial Life, Inc. -- http://www.artificial-life.com/-- is a public US corporation headquartered in Hong Kong and a leading global provider of award winning mobile technology, content, games and applications. As of Dec. 31, 2005, the company's balance sheet showed total assets of $523,489 and total debts of $3,185,105 resulting to a stockholders' deficit of $2,661,616. At Dec. 31, 2005, the company had a working capital deficit of $2,740,923. ATA AIRLINES: Court OKs C8 Airlines' Amended Disclosure Statement ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Indiana approved the disclosure statement explaining the First Amended Plan of Liquidation of C8 Airlines, Inc., in all respects, on April 18, 2006. Judge Lorch rules that C8's First Amended Disclosure Statement contains "adequate information" as defined in Section 1125 of the Bankruptcy Code to enable holders of claims or interests of the relevant class to make an informed judgment about the Plan. As reported in the Troubled Company Reporter on Apr. 10, 2006, C8 Airlines, Inc., formerly known as Chicago Express Airlines, Inc., delivered its First Amended Plan of Liquidation and accompanying Disclosure Statement to the U.S. Bankruptcy Court for the Southern District of Indiana. Terry E. Hall, Esq., at Baker & Daniels, in Indianapolis, Indiana, relates that under C8's Amended Plan, a Creditors' Liquidation Committee will be formed for the limited purposes of: -- assisting C8 with the appropriate procedures for the settlement of General Unsecured Claims; -- overseeing the distributions to the holders of General Unsecured Claims under the Plan and the collection of Avoidance Claims; and -- appearing before, and being heard by, the Bankruptcy Court and other courts of competent jurisdiction in connection with its duties, and other matters as may be agreed upon. 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. Daniel H. Golden, Esq., Lisa G. Beckerman, Esq., and John S. Strickland, Esq., at Akin Gump Strauss Hauer & Feld, LLP, represents the Official Committee of Unsecured Creditors. 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. 52; Bankruptcy Creditors' Service, Inc., 215/945-7000) BALLY TOTAL: Sells Common Shares to Ramius Entities for $2.8 Mil. ----------------------------------------------------------------- Bally Total Fitness Holding Corporation sold 400,000 shares of its common stock to these Ramius Entities for $2.8 million at $7 per share: Ramius Capital Group, L.L.C. 666 Third Avenue, 26th Floor New York, NY 10017 Starboard Value and Opportunity Master Fund Ltd. c/o Ramius Capital Group, L.L.C. Citizenship: Cayman Islands RCG Ambrose Master Fund, Ltd. c/o Ramius Capital Group, L.L.C. Citizenship: Cayman Islands RCG Halifax Fund, Ltd. Citizenship: Cayman Islands Ramius Master Fund, Ltd. Citizenship: Cayman Islands Ramius Securities, L.L.C. Citizenship: Delaware Admiral Advisors, LLC Citizenship: Delaware Ramius Advisors, LLC c/o Ramius Capital Group, L.L.C. Citizenship: Delaware C4S & Co., L.L.C. Citizenship: Delaware Peter A. Cohen Citizenship: United States Morgan B. Stark Citizenship: United States Thomas W. Strauss Citizenship: United States Jeffrey M. Solomon Citizenship: United States The company issued the common shares in reliance upon Section 4(2) of the Securities Act. Proceeds from the stock sale will be used to finance: -- the cash portion of the consent solicitation consideration to be paid to holders of: * 10-1/2% Senior Notes due 2011; and * 9-7/8% Senior Subordinated Notes due 2007; and related expenses; -- fees and expenses relating to similar waivers obtained from the lenders under the company's senior secured credit facility; and -- additional working capital. On April 10, 2006, the Company instructed its transfer agent to issue 1,951,417 common shares to holders of the Notes that gave their consent to the financial reporting waivers in the consent solicitations and elected to receive their consent payment in common shares. The equity holdings of the Ramius Entities on the Company are: Ramius Entities Common Shares Equity Stake --------------- ------------- ------------ Starboard Value and 1,186,753 3.10% Opportunity Master Fund Ramius Master Fund 463,011 1.21% Ramius Securities 370,981 0.97% RCG Ambrose Master Fund 95,708 0.25% RCG Halifax Fund 93,392 0.24% These Ramius Entities have beneficial ownership of these common shares: Ramius Entities Common Shares --------------- ------------- Admiral Advisors 1,186,753 shares owned by Starboard Ramius Advisors 463,011 shares owned by Ramius Master Fund These Ramius Entities have beneficial ownership of all shares held by Starboard, RCG Ambrose, RCG Halifax, Ramius Master Fund and Ramius Securities, an aggregate number of 2,209,845 common shares. * Ramius Capital; * C4S & Co.; * Peter A. Cohen; * Morgan B. Stark; * Thomas W. Strauss; and * Jeffrey M. Solomon Ramius Capital is the investment manager of Ambrose and Halifax and has the power to direct some of the affairs of Ambrose and Halifax, including decisions to dispose proceeds from the sale of shares. Admiral Advisors is the investment manager of Starboard and has the power to direct some of the affairs of Starboard, including decisions to dispose proceeds from the sale of shares. Ramius Capital is the sole member of Admiral Advisors. Ramius Advisors is the investment manager of Ramius Master Fund and has the power to direct some of the affairs of Ramius Master Fund, including decisions respecting the disposition of the proceeds from the sale of shares of the Common Stock. Ramius Capital is the managing member of Ramius Advisors. Ramius Securities is a broker dealer affiliated with Ramius Capital. Ramius Capital is the managing member of Ramius Securities. C4S is the managing member of Ramius Capital and in that capacity directs its operations. Mr. Cohen, Mr. Stark, Mr. Strauss and Mr. Solomon are the managing members of C4S and in that capacity direct its operations. About Bally Total Bally Total Fitness Holding Corporation -- http://www.ballyfitness.com/-- is the largest and only U.S. commercial operator of fitness centers, with approximately four million members and 440 facilities located in 29 states, Mexico, Canada, Korea, China and the Caribbean under the Bally Total Fitness(R), Crunch Fitness(SM), Gorilla Sports(SM), Pinnacle Fitness(R), Bally Sports Clubs(R) and Sports Clubs of Canada(R) brands. With an estimated 150 million annual visits to its clubs, Bally offers a unique platform for distribution of a wide range of products and services targeted to active, fitness-conscious adult consumers. * * * As reported in the Troubled Company Reporter on March 17, 2006, Standard & Poor's Ratings Services held its ratings on Bally Total Fitness Holding Corp., including the 'CCC' corporate credit rating, on CreditWatch with developing implications, where they were placed on Dec. 2, 2005. BALLY TOTAL: Gets $2.8M Equity Placement from Wattles Entities -------------------------------------------------------------- Bally Total Fitness Holding Corporation sold 400,000 shares of its common stock to Mark J. Wattles and Wattles Capital Management, LLC, for $2.8 million at $7 per share. The common shares were sold pursuant to an April 11, 2006, Stock Purchase Agreement. Mr. Wattles and Wattles Capital now hold 3,825,100 common shares, comprising 9.3% of the Company's equity. The Company's issued and outstanding common shares now total 41,281,381 shares. Mr. Wattles and Wattles Capital certified that they are accredited investors, pursuant to Rule 501 of Regulation D promulgated under the Securities Act. The company issued the common shares in reliance upon Section 4(2) of the Securities Act. Proceeds from the stock sale will be used to finance: -- the cash portion of the consent solicitation consideration to be paid to holders of: * 10-1/2% Senior Notes due 2011; and * 9-7/8% Senior Subordinated Notes due 2007; and related expenses; -- fees and expenses relating to similar waivers obtained from the lenders under the company's senior secured credit facility; and -- additional working capital. Mr. Wattles agreed, subject to certain exceptions, to vote the shares purchased pursuant to the Stock Purchase Agreement in favor of a transaction that may result from the company's strategic process and approved by the company's board of directors. On April 10, 2006, the Company instructed its transfer agent to issue 1,951,417 common shares to holders of the Notes that gave their consent to the financial reporting waivers in the consent solicitations and elected to receive their consent payment in common shares. A full-text copy of the Stock Purchase Agreement is available for free at http://ResearchArchives.com/t/s?7f5 About Bally Total Bally Total Fitness -- http://www.ballyfitness.com/-- is the largest and only U.S. commercial operator of fitness centers, with approximately four million members and 440 facilities located in 29 states, Mexico, Canada, Korea, China and the Caribbean under the Bally Total Fitness(R), Crunch Fitness(SM), Gorilla Sports(SM), Pinnacle Fitness(R), Bally Sports Clubs(R) and Sports Clubs of Canada(R) brands. With an estimated 150 million annual visits to its clubs, Bally offers a unique platform for distribution of a wide range of products and services targeted to active, fitness-conscious adult consumers. * * * As reported in the Troubled Company Reporter on March 17, 2006, Standard & Poor's Ratings Services held its ratings on Bally Total Fitness Holding Corp., including the 'CCC' corporate credit rating, on CreditWatch with developing implications, where they were placed on Dec. 2, 2005. BIOGEN IDEC: Earns $161 Million of Net Income in Full-Year 2005 ---------------------------------------------------------------- Biogen Idec Inc. (NASDAQ: BIIB), a global biotechnology leader with leading products and capabilities in oncology, neurology and immunology, reported its full year 2005 and fourth quarter results. Full Year & Fourth Quarter Highlights * Total revenues in 2005 exceeded $2.42 billion vs. prior year $2.21 billion, an increase of 10%, driven primarily by RITUXAN(R) (rituximab) revenues from the unconsolidated joint business arrangement up 15% to $709 million and AVONEX(R) (Interferon beta-1a) sales up 9% to $1.54 billion. * On a reported basis, calculated in accordance with U.S. generally accepted accounting principles (GAAP), full year 2005 earnings per share (EPS) were $0.47 vs. $0.07 in 2004. * Fourth quarter revenues increased 8% to $633 million vs. prior year, driven primarily by AVONEX sales up 12% to $413 million and RITUXAN revenues from the unconsolidated joint business arrangement up 6% to $182 million. * Fourth quarter 2005 GAAP EPS were $0.16 vs. $0.08 in the fourth quarter of 2004. James Mullen, Biogen Idec's Chief Executive Officer, commented, "Our discipline and successful execution in 2005 led to very robust performance of the core business resulting in strong revenue and bottom line growth, despite a challenging year. We anticipate major approvals for RITUXAN in rheumatoid arthritis and TYSABRI in multiple sclerosis in 2006." On a reported basis, calculated in accordance with GAAP, Biogen Idec reported net income of $56 million (or EPS of $0.16) in the fourth quarter of 2005 and net income of $161 million (or EPS of $0.47) for the full year 2005. Revenues from AVONEX, Biogen Idec's therapy for patients with relapsing forms of multiple sclerosis (MS), increased 12% in the fourth quarter to $413 million. Full year AVONEX sales increased 9% to $1.54 billion. In 2005, U.S. sales were $939 million and international sales increased 22% to $604 million. Revenues for the fourth quarter of 2005 and full year 2005 included $182 million and $709 million, respectively, from Biogen Idec's joint business arrangement with Genentech, Inc. related to RITUXAN, a treatment for certain B-cell non-Hodgkin's lymphomas that Biogen Idec co-promotes in the U.S. with Genentech. All U.S. sales of RITUXAN are recognized by Genentech, and Biogen Idec records its share of the pretax co-promotion profits on a quarterly basis. U.S. net sales of RITUXAN were $484 million in the fourth quarter (Q4 2004: $429 million) and $1.83 billion for the full year (2004: $1.57 billion), as reported by Genentech. Royalties were $22 million in the fourth quarter and $93 million for the full year. Recent Highlights * On Feb. 10, 2006, Biogen Idec and Genentech, Inc., announced that the U.S. Food and Drug Administration has approved RITUXAN for use in the first-line treatment of patients with diffuse large B-cell, CD20-positive, non-Hodgkin's lymphoma, in combination with CHOP (cyclophosphamide, doxorubicin, vincristine and prednisone) or other anthracycline-based chemotherapy regimens. On Oct. 25, 2005, the companies announced that the FDA had granted Priority Review to this sBLA. RITUXAN was previously approved as a single agent for use in relapsed or refractory, low-grade or follicular, CD20-positive, B-cell non-Hodgkin's lymphoma. * On Jan. 23, 2006, Biogen Idec and Elan Corporation, plc. announced that they have received notification from the FDA that the Peripheral and Central Nervous System Drugs Advisory Committee will review TYSABRIr (natalizumab) for the treatment of MS on March 7, 2006. The supplemental Biologics License Application (sBLA) for TYSABRIr for the treatment of MS has been accepted and designated for Priority Review by the FDA. Based on the FDA's designation of Priority Review for TYSABRI in MS, the companies anticipate action by the Agency approximately six months from the submission date, or by late March 2006. * On Jan. 9, 2006, Biogen Idec and Fumapharm AG announced that a Phase II study designed to evaluate the efficacy and safety of BG-12, an oral fumarate, in patients with relapsing-remitting MS met its primary endpoint. Treatment with BG-12 led to a statistically significant reduction in the total number of gadolinium-enhancing brain lesions as measured by MRI with six months of treatment versus placebo. This Phase II multi-center, double-blind, placebo-controlled study enrolled approximately 250 patients at sites in 10 countries in Europe. * On Dec. 15, 2005, Biogen Idec announced that new data, presented at the 47th Annual Meeting of the American Society of Hematology in Atlanta, demonstrate that patients may benefit from earlier and consolidated use of ZEVALINf (Ibritumomab Tiuxetan) radioimmunotherapy in refractory and hard-to-treat cancers, including diffuse large B-cell lymphoma, mantle cell lymphoma, and follicular non-Hodgkin's lymphoma. * On Nov. 16, 2005, Biogen Idec and Roche announced positive results of a Phase III clinical study of RITUXAN in rheumatoid arthritis, showing that a significantly greater proportion of patients who received a single course of two infusions of RITUXAN with a stable dose of methotrexate (MTX) achieved American College of Rheumatology (ACR) 20, 50 and 70 response rates compared to patients who received placebo and MTX. These findings were presented during a plenary session at the ACR Annual Scientific Meeting in San Diego. * On Oct. 31, 2005, Biogen Idec and Genentech, Inc., announced that the sBLA submitted by the companies for RITUXAN for patients with active RA who inadequately respond to anti-TNF therapy has been granted Priority Review designation by the FDA. The FDA has until late February 2006 to take action on the sBLA. A full-text copy of Biogen Idec's financial statement for the year ended Dec. 31, 2005, is available for free at http://tinyurl.com/fc8o7 About Biogen Idec Biogen Idec -- http://www.biogenidec.com/-- develops, manufactures, and commercializes novel therapies, focusing on oncology and immunology. The Company's lead products include RITUXAN, AVONEX, ZEVALIN, and AMEVIVE. Biogen has offices in the United States, Canada, Australia, Japan, and Europe. BROOKLYN HOSPITAL: U.S. Trustee Balks at Proposed KERP ------------------------------------------------------ Diana G. Adams, the acting United States Trustee for Region 2, opposes The Brooklyn Hospital Center and its debtor-affiliates' request to implement a Key Employee Retention Program. Ms. Adams tells the U.S. Bankruptcy Court for the Eastern District of New York that the Debtors failed to justify the need for the KERP in view of the Debtors' financial difficulties and the likely recoveries of their unsecured creditors. Proposed KERP Last month, the Debtors asked the Bankruptcy Court to approve a KERP designed to minimize management turnover, and motivate key employees to remain with the Company. The KERP also offers certain protections to key employees in the event that their employment is terminated without cause. The Debtors expect the KERP to cost approximately $1.1 million. Developed in consultation with the Debtors' financial advisor, J.H. Cohn LLP, and approved by the Official Committee of Unsecured Creditors, the KERP classifies the Debtors into two groups: -- Tier 1 employees composed of three of the Debtors' senior executives; and -- Tier 2 employees consisting of certain of the Debtors' senior personnel. Individuals in Tier 1 will receive an amount equal to 50% of their annual salary if they opt to remain continuously employed by the Debtors through the confirmation of their reorganization plan. The Debtors' Chief Executive Officer has the sole authority to determine the amounts due to Tier 2 employees in connection with their continued employment with the Debtors. However, payments due to Tier 2 participants will not exceed $500,000. Each Tier 2 participant will receive 50% of his or her designated amount if he or she remains continuously employed by the Debtors on the first anniversary of the petition date. Tier 2 employees will get the remaining 50% due to them on the effective date of the Debtor's plan. Tier I participants terminated without cause are entitled to severance payments equal to their annual salary during the year their employment was terminated. The severance payments are payable at the usual times the employees payroll become due. However, the severance payment will be reduced dollar-for-dollar by the amount of compensation that a Tier 1 participant receives from another employer in the one-year period following the termination of his or her employment. If the Debtors terminate the employment of a Tier 2 participant, he or she will not be entitled to any severance payment or benefit under the KERP. U.S. Trustee Objections Ms. Adams points out that the Debtors failed to show that the employees covered by the KERP have received competing offers for employment from other employers. She added that, based on financial difficulties experienced by other hospitals, it is unlikely that the key employees would receive employment offers. In addition, Ms. Adams said that it is unseemly to award large incentives under the KERP considering that there are numerous unsecured non-priority creditors who themselves could also be suffering severe financial difficulties. Headquartered in Brooklyn, New York, The Brooklyn Hospital Center -- http://www.tbh.org/-- provides a variety of inpatient and outpatient services and education programs to improve the well being of its community. The Debtor, together with Caledonian Health Center, Inc., filed for chapter 11 protection on Sept. 30, 2005 (Bankr. E.D.N.Y. Case No. 05-26990). Lawrence M. Handelsman, Esq., and Eric M. Kay, Esq., at Stroock & Stroock & Lavan LLP represent the Debtors in their restructuring efforts. Glenn B. Rice, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., represents the Official Committee of Unsecured Creditors. Mark Dominick Alvarez at Alvarez & Marsal, LLC, serves as the Committee's financial advisor. When the Debtors filed for protection from their creditors, they listed $233,000,000 in assets and $337,000,000 in debts. CABCO TRUST: S&P Upgrades Certificate Rating to BBB- from BB+ ------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on CABCO Trust For J.C. Penney Debentures and CorTS Trust For J.C. Penney Debentures and removed them from CreditWatch, where they were placed with positive implications on March 3, 2006. The two certificate issues are swap-independent synthetic transactions that are weak-linked to the underlying securities issued by J.C. Penney Co. Inc. The upgrades reflect the raising of the ratings on the underlying assets of J.C. Penney Co. Inc. and their subsequent removal from CreditWatch positive on April 6, 2006. Ratings raised and removed from creditwatch positive: CABCO Trust For J.C. Penney Debentures $52.65 million trust securities certificates Rating Class To From ----- -- ---- Certs BBB- BB+/Watch Pos CorTS Trust For J.C. Penney Debentures $100 million corporate-backed trust securities (CorTs) certificates Rating Class To From ----- -- ---- Certs BBB- BB+/Watch Pos CALPINE CORP: Completes Sale of 45% Interest in Mexico Power Plant ------------------------------------------------------------------ Calpine Corporation (OTC Pink Sheets: CPNLQ) reported that one of its foreign non-debtor affiliates has completed the sale of its 45% equity interest in the 525-megawatt Valladolid III Power Plant, located on the Yucatan Peninsula, Mexico, to the two remaining partners in the project, Mitsui & Co., Ltd. and Chubu Electric Power Co., Inc. With this sale, Calpine advances its program to streamline the company, reduce costs, and strengthen Calpine's overall organization as part of its Chapter 11 restructuring. Calpine received a cash payment of approximately $43 million, less a 10% holdback that the Buyers will return after one year. With completion of the sale, Calpine has eliminated its 45% share of the non-recourse unconsolidated project debt. In addition, $9.1 million of Calpine funds held in escrow for credit support for the project were released to Calpine. The company expects to record a non-cash impairment charge of approximately $41 million on its investment in the project for the period ending Dec. 31, 2005, which is a component of the impairment charges on April 17, 2006. "Selling our interest in Valladolid is another step forward in our restructuring to emerge from Chapter 11 as a profitable, more competitive power company," said Robert P. May, Calpine's Chief Executive Officer. "We're focused on completing our restructuring as efficiently and quickly as possible and are pleased to have closed this transaction in such short order." Valladolid III is a natural gas-fired, combined-cycle power plant that will provide up to 525 megawatts of energy through a 25-year power purchase agreement with the Comision Federal de Electricidad. Calpine had supplied two General Electric F-class combustion gas turbines in exchange for its 45% interest in the project. Calpine also provided engineering, construction and commissioning services for the construction subcontractor. Construction of the project is scheduled for completion in June 2006. 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. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed $26,628,755,663 in total assets and $22,535,577,121 in total liabilities. CATHOLIC CHURCH: Portland Says Tort Panel's Plan is Insufficient ---------------------------------------------------------------- Four parties-in-interest oppose the Disclosure Statement explaining the Tort Claimants Committee's Plan of Reorganization for the Archdiocese of Portland in Oregon: (a) Portland Archdiocese Thomas W. Stilley, Esq., at Sussman Shank LLP, in Portland, Oregon, contends that the Tort Committee's Plan is not feasible because it does not address critical funding issues. The Tort Committee's Plan purports to provide a claims payment trust with a $66,000,000 initial deposit and trust deeds covering over $400,000,000 in real property. The Tort Committee's Plan states that $20,000,000 will come from insurance recoveries and $4,000,000 from the reorganized Archdiocese's repurchase of future Oregon Catholic Press charitable contributions. But it does not explain where most of the $66,000,000 will come from, Mr. Stilley notes. If the Tort Committee envisions funding its Plan from the liquidation of the $36,000,000 Perpetual Endowment Fund, the Tort Committee cannot ensure that these will be available, Mr. Stilley points out. The availability of the Funds remains in dispute and will not be determined until the property of the estate and insurance litigation is finally concluded. In addition, until the litigation regarding the parish and school real property is finally concluded, the Tort Committee will be unable to require that trust deed be placed on the property. Even assuming that the property became available, it would be impossible to determine if the Tort Committee's Plan is feasible because its treats all claims as unimpaired and payable upon compliance, Mr. Stilley says. Mr. Stilley asserts that the Tort Committee's Plan is not proposed in a good faith effort to allow the Archdiocese to reorganize and continue its religious mission. The Tort Committee's Disclosure Statement says, "no churches or schools will have to be sold." But the Tort Committee provides no support to its conclusion that the Archdiocese, the parishes and schools have sufficient resources at their disposal to avoid a grave interruption or a shutdown of their operations and a forced liquidation of the disputed property. Contrary to the principles of Chapter 11, the Tort Committee does not want to give the Archdiocese a "fresh start" by proposing not to discharge the Archdiocese after all property of the estate, or the corresponding value, has been paid to claimants. Moreover, Mr. Stilley further notes that the Tort Committee's Plan does not contain adequate explanation regarding: -- the status or amount of the claims; -- the property of the estate litigation or an estimate when that litigation will be concluded; -- the risk to claimants in continuing with the property of the estate litigation; and -- the Archdiocese's competing Plan, including its proposal for claims estimation and the benefit to claimants afforded by that Plan. In addition, the Archdiocese identified several statements in the Tort Committee's Disclosure Statement that are either false or misleading that need to be deleted or revised. (b) Oregon Catholic Press Contrary to the Tort Committee's assertions, the Oregon Catholic Press tells Judge Perris that it does not owe, or possess, any funds that belong to the Archdiocese. The OCP has been an Oregon religious nonprofit corporation since 1928. It is organized under O.R.S. Chapter 65 and had been granted Section 503(c)(3) status under the Internal Revenue Code. Jennifer Palmquist, Esq., at Northwest Law Firm, in Portland, Oregon, explains that the OCP has not made any distributions to the Archdiocese. Distributions under ORS 65.554(3) can only be made to members. OCP has no members pursuant to its Articles of Incorporation. Ms. Palmquist, however, notes that the OCP makes discretionary charitable contributions to the Archdiocese. "These contributions are allowed under ORS 65.077(13), which provides that a nonprofit corporation has power to make charitable donations." (c) Certain Insurers From the perspective of certain insurers, the Tort Committee's Disclosure Statement is devoid of information pertaining to the treatment of the Archdiocese's insurance policies and their rights under those Policies. The Objecting Insurers include: 1. ACE Property & Casualty Insurance Company, formerly known as CIGNA Property & Casualty Insurance Company, formerly known as Aetna Insurance Company 2. General Insurance Company of America 3. St. Paul Mercury Insurance Company 4. St. Paul Fire and Marine Insurance Company According to John Spencer Stewart, Esq., at Stewart Sokol & Gray, LLC, in Portland Oregon, who represents General Insurance, the Tort Committee's Disclosure Statement should not only disclose the proposed treatment of the Policies. The Disclosure Statement should also disclose that certain critical provisions of the Plan relating to the treatment of insurance might violate provisions of the Policies and the Oregon state law. As is typical of insurance contracts, Mr. Stewart notes, the Policies contain or may be found to obtain provisions requiring insurer consent to assignment of the Policies by the insured. The Tort Committee's Plan, however, provides that "[t]he Trust [will] succeed to all of the [Archdiocese's] Insurance Rights in the Insurance Policies notwithstanding any provision in any Insurance Policy purporting to limit or preclude assignment of the policies or rights . . . without regard to any state law limitations on the assignment of such policies, which limitations, if any, [will] be of no force and effect." Neither the Tort Committee's Disclosure Statement nor Plan contains any discussion of whether that provision is enforceable or of why a sweeping assignment is necessary in the context of its Plan. The Tort Committee's Plan should also disclose that it contemplates the transfer of "any privilege or work product attaching to any document or communications (whether written or oral) relating to the Coverage Litigation" to the Trust, Mr. Stewart asserts. The Plan does not clearly provide for the intended effect of the Transfer. In addition, the Tort Committee's Disclosure Statement should clarify which other provisions of the Policies will be affected by the Plan, Mr. Stewart says. Certain provisions in the Tort Committee's Plan appear to be in conflict with the Policies' provisions. Mr. Stewart relates that the Insurers provided the Tort Committee with suggested language to preserve their rights under the Plan. To the extent that the Tort Committee intends to preserve the Insurers' contractual and state law rights, the Insurers will work with the Committee and other interested parties to incorporate satisfactory preservation language in any amended Plan and related documents. Until the Tort Committee's intent with respect to the Policies is made clear, its Disclosure Statement will not be able to comply with Section 1125 of the Bankruptcy Code. Hence, the Insurers ask the Court to deny the approval of the Tort Committee's Disclosure Statement. (d) Cameo L. Garrett Cameo L. Garrett objects to the Tort Committee's Plan "based on evidence of corruption by [the Tort Committee] of [its] obligation to all tort claimants." Ms. Garrett complains that the Tort Committee, including its counsel, Albert N. Kennedy, Esq., at Tonkon Torp, LLP, in Portland, Oregon, are excluding "claimants who do not have child sex abuse claims" from being represented. "The exclusion of other tort claimants has been intentional and aggressive," Ms. Garrett contends. Ms. Garrett also seeks Judge Perris' permission to file a late proof of claim. She also seeks mediation for the purposes of estimating the damages and compensation due to her. Ms. Garrett also asks the Court not to further authorize fee payment to Mr. Kennedy until the Tort Committee's Plan is modified to provide for an "inclusive language." Ms. Garrett objects to any Plan that prohibits and infringes on the rights of any and all forms of clergy abuse, and present and future tort claimants. About Archdiocese of Portland 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. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, represents the Official Tort Claimants Committee in Portland, and scores of abuse victims are represented by other lawyers. David A. Foraker serves as the Future Claimants Representative appointed in the Archdiocese of Portland's Chapter 11 case. 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. 56; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Claimants Balk at Portland's Disclosure Statement ------------------------------------------------------------------ The Tort Claimants Committee and certain insurers tell Judge Perris that the Disclosure Statement accompanying the Archdiocese of Portland in Oregon's First Modified Plan of Reorganization does not contain adequate information as that term is defined in Section 1125(a)(1) of the Bankruptcy Code. (1) Tort Committee The Archdiocese's disclosure with respect to its insurance coverage is misleading and distorted, asserts Albert N. Kennedy, Esq., at Tonkon Torp LLP, in Portland, Oregon, on the Tort Committee's behalf. In its Disclosure Statement, the Archdiocese estimates that certain insurers owe it "in excess of $20 million," Mr. Kennedy relates. But in a March 28, 2006 hearing, Portland's counsel represented that the Insurers owe the Archdiocese approximately $30,000,000, on account of settled prepetition claims. The Archdiocese believes that the Insurers also owed it additional sums for defense costs and postpetition payments on claims. In the aggregate, the Insurers owe it approximately $70,000,000 to $80,000,000. Additionally, the Archdiocese also states that in the event that its Plan is not confirmed and the Bankruptcy Court's decision with respect to the parish property is reversed, only $21,500,000 will be available for unsecured creditors. That statement is untrue, Mr. Kennedy argues. The $21,500,000 is the Archdiocese's estimate of its unrestricted Archdiocesan Property, exclusive of insurance claims. If the Archdiocese's insurance claims are included, even if none of the Parish assets were available to pay the claims, "there would still be approximately $100,000,000 . . . available for unsecured creditors, resulting in payment in full to creditors," Mr. Kennedy asserts. Moreover, the description of the Archdiocese's Plan and its comparison to the Tort Committee's alternative plan are misleading and inaccurate, Mr. Kennedy points out. The Disclosure Statement does not disclose the conditions to confirmation and to the effective date. The Disclosure Statement should disclose that: -- confirmation is conditioned on the entry of an estimation order by the District Court; -- the Archdiocese has the absolute right to withdraw its Plan in the event that it is not satisfied with the estimation; and -- the Archdiocese's Plan will not become effective if any party-in-interest files an appeal to the Confirmation Order. Consequently, if any party-in-interest is unsatisfied with the claims estimation or the terms of the Plan and files an appeal from the Confirmation Order, then the Plan will not be effective until that appeal is dismissed in all respects. Mr. Kennedy also points out that the Archdiocese's Plan contains no assurance that claims will be paid promptly or in full in the event that it is confirmed and becomes effective. Claims will be paid only upon application to, and approval by the District Court. Unless and until the District Court is certain that sufficient funds are available to pay all claims in full, the District Court can, and should, order that payments to creditors be withheld in whole or in part until all claims are resolved, Mr. Kennedy says. Because the Plan provides that the Archdiocese may stay any verdict without posting a bond, it is possible that all appeals will need to be resolved before all claims are paid in full. Furthermore, the Disclosure Statement does not disclose the amount of funding that the Archdiocese is willing to obtain, Mr. Kennedy points out. "If there is a limitation on [the Archdiocese's] ability or willingness to fund its Plan, then that limitation should be disclosed," Mr. Kennedy explains. "If [the Archdiocese's] willingness to pursue confirmation of its Plan is conditioned in any way upon the amount of the estimation by the District Court, then that amount should be fully disclosed. If [the Archdiocese's] willingness or ability to fund its Plan is conditioned on consent or approval by any third person, then that person and the condition should be identified and explained." The Disclosure Statement should disclose any agreements with parishes, Mr. Kennedy adds. The Disclosure Statement should identify the parishes that have consented to the use of their property as collateral, the persons who have consented on behalf of the parishes, and the terms, conditions and limitations of that consent. Among other things, the Disclosure Statement should also: -- disclose the status of Portland's discussions with parishes that have not consented to the use of their assets as collateral; -- identify the person or persons whose consent is necessary to bind a parish and what form that consent must take; -- state whether the Archdiocese should explicitly state whether the Archdiocese's ability or willingness to fund its Plan is conditioned in any way on consent from donors, parishioners or beneficiaries. If the Archdiocese's ability or willingness to fund its Plan is conditioned on consent from donors, beneficiaries or parishioners, Mr. Kennedy maintains that the Disclosure Statement should: * identify those donors, parishioners and beneficiaries whose consent is necessary; * what form that consent must take; * the status of its discussions with any of the donors, beneficiaries or parishioners; and * whether there are any conditions, contingencies or limitations relating to those consents. For these reasons, the Tort Committee asks Judge Perris to deny the approval of the Archdiocese's Disclosure Statement. (2) Certain Insurers Although the Archdiocese's Disclosure Statement addresses the concerns of certain insurers, it still lacks adequate information with respect to several fundamental points, John Spencer Stewart, Esq., at Stewart Sokol & Gray, LLC, in Portland Oregon, contends. The Objecting Insurers include: (1) ACE Property & Casualty Insurance Company, formerly known as CIGNA Property & Casualty Insurance Company, formerly known as Aetna Insurance Company; (2) General Insurance Company of America; (3) St. Paul Mercury Insurance Company; and (4) St. Paul Fire and Marine Insurance Company. According to Mr. Stewart, the Modified Plan and the proposed Claims Resolution Facility Agreement remain vague or incomplete regarding their impact on the Insurers' contractual and state law rights under the certain insurance policies, including whether: (i) the Modified Plan will preserve the rights of the insurers to object to claims where appropriate; and (ii) the Modified Plan and CRFA will relieve the Archdiocese of its duties and obligations under the Insurance Policies including without limitation its duty of cooperation in the defense of claims and suits. Mr. Stewart says that further work remains to ensure that: -- the Modified Plan and the CRFA do not, in fact, violate the Insurers' rights; and -- nothing in the Modified Plan, CRFA, Confirmation Order or any other Plan-related document approved may be used against or have any effect whatsoever on the legal, equitable or contractual rights or obligations of the insurers. Under the CRFA, the Archdiocese's "rights that have accrued for covered losses" will be assigned to the Archdiocese of Portland Claims Resolution Facility, Inc. Although the Modified Plan purports to preserve the Insurers' rights despite the assignment, the Insurers are concerned about the impact that the Assignment will have on contractual rights and obligations under the Policies, Mr. Stewart explains. For the Insurers to properly defend claims tendered to them, the duty of cooperation and assistance -- which requires that the Archdiocese, as the insured, make witnesses available, provide documents and provide other cooperation -- must remain with the Archdiocese, as well as being honored by the APCRF. Moreover, Mr. Stewart suggests that the approval of the Modified Plan and the CRFA must not operate as an advance ruling or prejudge any right or defense of an Insurer in any subsequent proceeding with the APCRF or the Archdiocese, including without limitation the "Coverage Action." To this extent, Mr. Stewart tells Judge Perris that the Insurers will work with the Archdiocese to make the appropriate modifications. About Archdiocese of Portland 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. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, represents the Official Tort Claimants Committee in Portland, and scores of abuse victims are represented by other lawyers. David A. Foraker serves as the Future Claimants Representative appointed in the Archdiocese of Portland's Chapter 11 case. 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. 56; Bankruptcy Creditors' Service, Inc., 215/945-7000) CHEMTURA CORP: Moody's Places Ba1 Rating on $400 Million Notes -------------------------------------------------------------- Moody's Investors Service assigned a Ba1 rating to Chemtura Corporation's proposed new $400 million of senior notes due 2016 and affirmed the Ba1 ratings for its other debt and the corporate family rating. Proceeds from the new notes will be used to refinance the senior unsecured floating rate notes due 2010 and reduce outstandings under Chemtura's revolver. The rating outlook remains negative. The Ba1 ratings reflect Chemtura's high pro forma leverage, challenges at the Plastic Additives segment, and uncertainty surrounding the progress of integration and remaining legacy issues. Chemtura's pro forma leverage as of December 31, 2005, was 3.5x EBITDA. Moody's adjusted debt includes $1.4 billion of funded debt, $303 million in unfunded pension obligations, $85 million of account receivable securitizations, and $157 million in capitalized leases. While much progress has been made in raising prices to cover higher raw material costs, this strategy has been challenged in the large Plastic Additives portion of Chemtura's business. As a result, profitable volumes were lost and steps are being made to restore volume and improve the non-flame-retardants Plastic Additives business. In addition, Moody's believes the challenges of integrating two organizations that had been individually challenged by their own unique restructuring programs, combined with essentially a complete changeover in senior management, are key factors in both the Ba1 rating and the negative outlook. Further changes in senior management were recently instituted in February 2006 in order to place greater focus on specific businesses and functional areas. Rating Assigned: * Senior notes, $400 million due 2016 -- Ba1 Ratings affirmed: * Corporate Family Rating -- Ba1 * Senior Unsecured Notes due 2012, $159 million -- Ba1 * Senior Unsecured Floating Rate Notes due 2010, $165 million -- Ba1 * Senior Unsecured Notes, $150 million due 2026 -- Ba1 * Senior Unsecured Notes, $400 million due 2009 -- Ba1 Headquartered in Middlebury, Connecticut, Chemtura manufactures a variety of polymer and rubber additives, castable urethane pre- polymers, ethylene propylene diene monomer, crop protection chemicals, brominated flame-retardants, recreational water treatment chemicals, and brominated/fluorinated specialty chemicals. The combined company had pro forma 2005 revenues and EBITDA of $3.9 billion and approximately $570 million, respectively. CHEMTURA CORP: S&P Assigns BB+ Debt Rating to $400 Million Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB+' senior unsecured debt rating to Chemtura Corp.'s $400 million notes due 2016. Standard & Poor's said that its 'BB+' long-term corporate credit rating on the Middlebury, Connecticut-based company was affirmed. The outlook remains positive. Proceeds will be used to redeem all of the outstanding $165 million of senior floating-rate notes and to reduce borrowings under the revolving credit facility. "The ratings on Chemtura incorporate its vulnerability to competitive pricing pressures, raw-material costs, and cyclical markets; and its weak cash flow protection measures. The ratings also reflect its diversified portfolio of specialty and industrial chemical businesses," said Standard & Poor's credit analyst Wesley E. Chinn. Chemtura generates annual pro forma revenues of almost $4.0 billion after the July 2005 acquisition of Great Lakes Chemical Corp. for approximately $1.6 billion in common stock, plus the assumption of debt. The transaction resulted in an immediate strengthening of Chemtura's business mix and cash flow protection measures, because of the equity-financed acquisition of a much higher-rated company. Other credit quality strengths include: * improving earnings in the near term; * management's focus on strengthening the product mix; and * commitment to debt reduction. Great Lakes Chemical added complementary product lines to Chemtura's existing plastics additives portfolio as well as a recreational water chemicals business, which has a strong market share. Key chemical and plastic additives niches of the combined company serving diverse markets include: * plastic and specialty additives, * urethane prepolymers, * pool and spa chemicals, * crop protection chemicals, * brominated flame retardants, and * petroleum additives. On the other hand, a portion of the business portfolio is comprised of products where current profitability is subpar and long-term prospects appear less favorable, and where markets are commodity-like and highly competitive. Consequently, the company is rationalizing the number of customers and products and shedding underperforming or non-core businesses. CHOCTAW RESORT: S&P Affirms BB Rating & Revises Outlook to Pos. --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on the Choctaw Resort Development Enterprise (CRDE) to positive from stable. At the same time, Standard & Poor's affirmed its ratings on the Choctaw, Mississippi-based casino operator, including its 'BB' issuer credit rating. Total debt outstanding at Sept. 30, 2005, was expected to have approximated $285 million. The outlook revision reflects Standard & Poor's expectation that the CRDE's credit profile will improve during fiscal 2006, as a portion of cash generated from a temporary increase in visitation is applied to permanently reduce debt balances. While Standard & Poor's expects that the current strong operating performance is directly related to the removal of gaming capacity along the Gulf Coast stemming from Hurricane Katrina, and that the CRDE's operating performance will weaken in fiscal 2007 as Gulf Coast capacity returns, the amount of debt expected to be repaid during fiscal 2006 will result in credit measures being strong for the ratings. Standard & Poor's further expects that credit measures will remain strong for the ratings in fiscal 2007 even if EBITDA declines in the low- to mid-double digit range during that time. CINRAM INT'L: S&P May Downgrade Corporate Credit Rating to BB- -------------------------------------------------------------- Standard & Poor's Ratings Services plans to lower its corporate credit and bank loan ratings on Cinram International Inc. to 'BB-' from 'BB', if the company's conversion to an income trust is completed under the currently proposed terms. The ratings remain on CreditWatch with negative implications, where they were placed March 3, 2006. Upon completion of the transaction, the outlook will be stable. In addition, Standard & Poor's plans to assign its 'BB-' bank loan rating and '4' recovery rating to Toronto-based Cinram's proposed US$850 million secured bank facility (US$700 million term loan and US$150 million revolving credit facility) due 2011. The loan will be rated the same as the long-term corporate credit rating. The '4' recovery rating indicates a modest (25%-50%) recovery of principal in the event of a default or bankruptcy. The bank loan rating is based on preliminary terms and conditions and is subject to review once final documentation is received. Proceeds from the new bank facility will be used to repay the company's existing bank loan following conversion to an income trust. The CreditWatch update reflects Standard & Poor's review of Cinram's new capital structure following management's announced intention to convert the company into an income trust, subject to shareholder approval and other conditions. "Although the company's credit ratios are expected to remain solid post conversion, Cinram's financial profile will weaken nonetheless, principally because of its reduced financial flexibility due to the significant increase in cash distributions to unitholders," said Standard & Poor's credit analyst Lori Harris. "Given the challenging conditions of the media replication industry, including its commodity-like nature and vulnerability to shifts in technology, Standard & Poor's original ratings were based on management's continued focus on debt repayment from free cash flow to strengthen the company's financial profile. This financial strategy will change upon conversion to an income trust, as a substantial portion of free cash flow will be distributed to unitholders," Ms. Harris added. The ratings on Cinram reflect the company's weak business risk score, which is based on customer and product concentration, seasonality, and the commodity-like nature of the media replication industry that is vulnerable to shifts in technology and availability of hit new movie releases. Although new hits are a significant revenue growth driver, the availability of previously released titles and television series in DVD format is also an important component of the company's revenue base. The ratings will also reflect the company's reduced financial flexibility post conversion to an income trust. In addition, the industry will be undergoing change due to the introduction of high definition DVDs in mid-2006. Although Cinram has positioned itself to continue being a key player in this market, the new product could have a limited lifespan given the increasing availability of on-demand products. These factors are partially offset by: * Cinram's strong market position as the world's largest manufacturer of prerecorded multimedia products; * solid credit measures; * management's track record of adapting to changing technologies; and * reasonable industry growth prospects in the next couple of years. Credit measures (adjusted for operating leases and nonrecurring items) were solid in 2005, with EBITDA interest coverage of 6.6x and debt to EBITDA of 2.1x. Post conversion, debt to EBITDA is expected to remain in the 2x area in the medium term. Standard & Poor's does not expect meaningful debt amortization in the medium term because of the company's expected income fund ownership and resulting high cash payout ratio. CMP KC: S&P Rates Planned $98.4 Million Credit Facilities at CCC+ ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'CCC+' rating to CMP KC LLC ("Stick"). A 'CCC+' rating and a recovery rating of '3' were also assigned to Stick's proposed $98.4 million credit facilities, indicating expectations of a meaningful (50%-80%) recovery of principal in the event of a payment default. The outlook is negative. Atlanta, Georgia-based radio station owner Stick will have approximately $72 million in pro forma debt outstanding. "The rating on Stick reflects very high financial risk from its small radio station portfolio, currently negative broadcast cash flow, and marginal liquidity," said Standard & Poor's credit analyst Alyse Michaelson Kelly. "These factors are only partially offset by radio station asset values." A portion of the borrowings under Stick's proposed credit facility are expected to be used to help fund CMP Susquehanna Corp.'s acquisition of Susquehanna Radio for $1.2 billion. CMP SUSQUEHANNA: S&P Rates Proposed $275 Million Sub. Notes at CCC ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B-' corporate credit rating to CMP Susquehanna Corp. At the same time, Standard & Poor's assigned its 'B-' rating and a recovery rating of '3' to CMP's proposed $750 million secured credit facilities, indicating a meaningful (50%-80%) recovery of principal in the event of a payment default. A 'CCC' rating was also assigned to CMP's proposed $275 million subordinated notes. The outlook is stable. The Atlanta, Georgia-based radio broadcaster will have approximately $975 million in pro forma debt outstanding. "The rating on CMP reflects its very high leverage, unfavorable secular trends in radio advertising, advertising cyclicality, and the potential for additional acquisitions," said Standard & Poor's credit analyst Alyse Michaelson Kelly. "These factors are partially offset by CMP's portfolio of large-market radio stations, radio broadcasting's good margin and discretionary cash flow potential, and healthy station asset values." Proceeds from the proposed transaction, along with cash equity from Bain Capital Partners, The Blackstone Group, and Thomas H. Lee Partners L.P., will be used to fund the acquisition of Susquehanna Radio for $1.2 billion. Cumulus Media Inc. (B+/Stable/--) will manage CMP's radio assets and will contribute its two FM stations in both: * Houston, Texas, and * Kansas City, to Cumulus Media Partners LLC, the ultimate parent company of CMP, in exchange for a 25% equity interest in Cumulus Media Partners. COLLINS & AIKMAN: Taps Lathrop & Gage as Special Counsel -------------------------------------------------------- Collins & Aikman Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Michigan for authority to employ Lathrop & Gage L.C. as their special counsel with respect to an Environmental Insurance Litigation. The Debtors employed and retained Lathrop & Gage L.C. to represent their interest on the Environmental Insurance Litigation on Nov. 18, 2003. The Debtors have been seeking to recover certain environmental expenses from their insurance providers, including OneBeacon America Insurance Company and National Indemnity Company, regarding a claim for insurance coverage related to various environmental sites including sites in Beardstown, Illinois; Bowling Green, Ohio; Chase, Michigan; Mancelona, Michigan; and Stringfellow, California. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, relates that because L&G has represented the Debtors in connection with the Environmental Insurance Litigation since November 2003, L&G is intimately familiar with the complex legal issues in connection with the Environmental Insurance Litigation. The Debtors believe that the interruption and the duplicative cost involved in obtaining substitute counsel to replace L&G's role would not be favorable. L&G has agreed to continue to represent the Debtors in the Environmental Insurance Litigation in accordance with a contingent fee agreement, with fees payable only when L&G is successful in achieving a recovery in the Environmental Insurance Litigation. Pursuant to L&G's engagement letter, L&G is entitled to receive: (a) 17.5% of all amounts received before the close of discovery; (b) 25% of all amounts received after the close of discovery and more than two weeks before a scheduled trial date; or (c) 32.5% of all amounts received during the two-week period before a scheduled trial date, on a scheduled trial date, or thereafter. L&G intends to seek periodic reimbursement for the postpetition expenses that it incurs as a result of the Environmental Insurance Litigation. The Postpetition Costs will be due and owing in the month that they are incurred, regardless of the outcome of the Environmental Insurance Litigation. Brian T. Fenimore, a member of L&G, assures that Court that L&G does not hold nor represent any interest adverse to the Debtors or their estates in connection with the continued prosecution of the Environmental Insurance Litigation. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represents C&A in its restructuring. Lazard Freres & Co., LLC, provides the Debtor with investment banking services. Michael S. Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors Committee. When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 215/945-7000) COLLINS & AIKMAN: SEC Has Until May 15 to File Claims ----------------------------------------------------- Collins & Aikman Corporation, its debtor-affiliates and the Securities and Exchange Commission agree to further extend the SEC's deadline to file proofs of claim in the Debtors' Chapter 11 cases to May 15, 2006. As reported in the Troubled Company Reporter on March 21, 2006, the SEC is currently conducting an investigation of controls over financial reporting and review of certain accounting issues of the Debtors. The SEC sought documents and information relating to the company's financial statements for the fiscal years 2000-2005, as well as documents and information pertaining to accounts receivable, customer and/or supplier rebates and other matters. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represents C&A in its restructuring. Lazard Freres & Co., LLC, provides the Debtor with investment banking services. Michael S. Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors Committee. When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 215/945-7000) COLLINS & AIKMAN: Amends New Headquarters Leases ------------------------------------------------ As reported in the Troubled Company Reporter on March 21, 2006, The U.S. Bankruptcy court for the Eastern District of Michigan allowed Collins & Aikman Corporation to ink a new Headquarters Lease with TTERTT Associates, LLC. The Debtors had decided to reject their existing headquarters leases at 150, 250 and 350 Stephenson Highway, in Troy, Michigan to save in costs. Material terms of the New Headquarters Lease: (a) Lease Term is 10 years and six months. (b) Rent is $121,150 per month plus the Debtors' share of expenses and taxes, beginning January 1, 2007. (c) The Debtors will have the right to terminate the New Headquarters Lease effective November 30, 2007, with at least six months' advance written notice. In the event the Debtors terminate the lease, they will be liable for the costs of any lessor-made improvements to the headquarters -- estimated to be $3,300,000 -- and an additional $1,000,000. (d) The Debtors will have the right of first refusal to lease additional space at the new headquarters location during the first two years of the Lease Term. (e) TTERTT Associates will be responsible for the costs of repair, maintenance and replacement of all internal and external structural parts of the headquarters Lease Amendments Marc J. Carmel, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, tells Judge Rhodes that the Debtors have continued to assess their operational needs and have determined that they require 9,000 square feet of more space than originally anticipated. TTERTT Associates, LLC, has agreed to amend the Headquarters Lease to provide the Debtors with the necessary additional space for an $8,000 additional monthly rent cost. The Debtors ask the U.S. Bankruptcy Court for the Eastern District of Michigan for authority to enter into the Amendment. The Debtors further ask the Court to approve certain procedures to the extent they require further amendments to the Headquarters Lease. The Debtors will file with the Court and serve on major parties in interest in the case any proposed amendment. If no objections are filed with the Court and received by (a) the Debtors, (b) the agents for the Debtors' senior, secured lenders and (c) the Official Committee of Unsecured Creditors within 10 days after the proposed amendment is filed, a proposed order approving the amendment will be submitted to the Court. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represents C&A in its restructuring. Lazard Freres & Co., LLC, provides the Debtor with investment banking services. Michael S. Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors Committee. When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 215/945-7000) CROWN HOLDINGS: Balance Sheet Upside-Down by $213MM at March 31 --------------------------------------------------------------- Crown Holdings, Inc. (NYSE:CCK) disclosed its financial results for the first quarter ended March 31, 2006. Net sales in the first quarter rose to $1.579 billion, up 3.3% over the $1.529 billion in the first quarter of 2005. The European Division's net sales grew 4.5% to $832 million, the Americas Division's net sales were up 0.7% to $637 million, and the Asia Division's net sales increased 10.0% to $110 million. First quarter gross profit was up 1.1% to $184 million over the $182 million in the 2005 first quarter. As a percentage of net sales, gross profit declined to 11.7% in the first quarter compared to 11.9% in the first quarter last year. The decline was primarily driven by the impact of higher raw material cost and weaker foreign currencies. Segment income (defined by the Company as gross profit less selling and administrative expense) grew to $101 million in the first quarter, up 3.1% over the $98 million in the 2005 first quarter. Segment income as a percentage of net sales was 6.4% in both periods. Commenting on the quarter, John W. Conway, Chairman and Chief Executive Officer, stated, "Considering the substantial raw material price increases impacting our business in the first quarter, we are pleased with the result achieved. "We have announced selling price increases to pass through these higher input costs and we expect this to be reflected in increased revenues throughout the year. Unit volumes were firm in this seasonally smaller first quarter." "During the quarter, we announced plans to build on our 30 years of experience in Southeast Asia and construct a beverage can plant in the fast growing Cambodian market. "We also announced that we are increasing our capability to manufacture specialty beverage cans in North America to meet demand. These actions demonstrate our commitment to grow with our customers around the world, and at the same time, supply them with the innovative packaging they need to distinguish their products on the shelf and build brand equity with consumers. "As we move further in 2006, Crown remains well positioned to further leverage our worldwide manufacturing expertise and platform as well as our industry leading research and development capability," Mr. Conway added. Interest expense in the first quarter was $67 million compared to $94 million in the first quarter of 2005. The decrease reflects the impact of lower average debt outstanding and lower average interest rates. The Company's free cash flow improved by $85 million primarily due to lower interest payments and less working capital offset by higher capital spending. During the quarter, the Company recorded a net charge of $10 million primarily related to the restructuring of our Spanish food can operation and expensing stock options as required under FAS 123R. In last year's first quarter, the Company reported a net charge of $17 million related to a net loss on the remeasurement of foreign currency exposures in Europe partially offset by a net gain on the sale of assets. Net income from continuing operations in the first quarter was $7 million compared to a net loss from continuing operations of $18 million in the first quarter of 2005. Crown Holdings, Inc. -- http://www.crowncork.com/-- through its affiliated companies, supplies packaging products to consumer marketing companies around the world. World headquarters are located in Philadelphia, Pennsylvania. At March 31, 2006, the Company's balance sheet showed a $213 million equity deficit from a $228 million positive equity at March 31, 2005. CURATIVE HEALTH: Ernst & Young Raises Going Concern Doubt --------------------------------------------------------- Ernst & Young LLP expressed substantial doubt about Curative Health Services, Inc.'s ability to continue as a going-concern after it audited the Company's financial statements for the years ended Dec. 31, 2005 and 2004. The auditing firm pointed to the Company's default on its outstanding debt obligations in 2005 and its subsequent Chapter 11 bankruptcy filing in March 2006. In its annual report for the year ended Dec. 31, 2005 on Form 10-K, submitted to the Securities and Exchange Commission on April 11, 2006, Curative reported a $101,592,000 net loss on $261,059,000 of revenues, as compared to a $141,405,000 net loss on $224,980,000 of revenues in the prior year. The Company's balance sheet at Dec. 31, 2005, showed $169,288,000 in total assets and $263,621,000, in total liabilities, resulting in a stockholders' deficit of $94,333,000. The Company's debts include $185 million of Senior Notes and a $26.3 million revolving credit facility with General Electric Capital Corporation. Working capital deficit was $156.9 million at Dec. 31, 2005, compared to working capital of $50.8 million at Dec. 31, 2004. Curative Health formed a special committee and hired a financial advisor in August 2005 to assist in evaluating the financial alternatives available given its significant debt and continuing losses. On Nov. 1, 2005, the Company was required to make an interest payment in the amount of approximately $9.9 million to the Senior Noteholders. The Company failed to make the payment deadline on Nov. 30, 2005, triggering a default under its credit facility with GECC. On Dec. 2, 2005, the Company reached an agreement with the Ad Hoc Committee on the general terms of a financial restructuring and entered into a Plan Support Agreement. The financial restructuring, as contemplated by the Plan Support Agreement and the Plan, is designed to: a) de-leverage the Company's balance sheet; b) provide substantial liquidity to conduct business operations; c) ensure that business operations are unaffected by the Chapter 11 Cases and that the Company is able to retain existing management and employees; and d) provide the greatest return to creditors. Under the Plan Support Agreement, the Senior Noteholders party agreed to forbear from exercising remedies with respect to any defaults arising under the Senior Notes. The Plan Support Agreement will terminate on July 31, 2006. A full-text copy of the regulatory filing is available for free at http://researcharchives.com/t/s?818 Headquartered in Nashua, New Hampshire, Curative Health Services, Inc. -- http://www.curative.com/-- provides Specialty Infusion and Wound Care Management services. The company and 14 of its affiliates filed for chapter 11 protection on Mar. 27, 2006 (Bankr. S.D.N.Y. Case No. 06-10552). Brian E. Greer, Esq., and Martin N. Flics, Esq., at Linklaters, represent the Debtors in their restructuring efforts. The Debtors financial condition as of Sept. 30, 2005 showed $155,000,000 in total assets and $255,592,000 in total debts. DANA CORP: Amends DIP Financing Pact, Extends Payment Deadline -------------------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission on April 13, 2006, Dana Corporation disclosed that it entered into amendments to its Senior Secured Superpriority Debtor-in- Possession Credit Agreement with Citicorp North America, Inc., Bank of America, N.A. and JPMorgan Chase Bank, N.A. Amendment No. 1 to the Credit Agreement provides, among other things, that all of the loans and other obligations under the Credit Agreement will be due and payable on the earlier of: (i) 24 months -- instead of 18 months -- after the effective date of the Credit Agreement; or (ii) the consummation of a plan of reorganization under the Bankruptcy Code. Amendment No. 2 to the Credit Agreement provides, among other things, that interest on the term loan facility under the Credit Agreement will accrue, at Dana's option, either at the London interbank offered rate plus a 2.25% per annum margin, or the prime rate plus a 1.25% per annum margin. The Credit Agreement had provided that interest on the term loan facility would accrue, at Dana's option, either at LIBOR plus a 3.25% per annum margin, or the prime rate plus a 2.25% per annum margin. As reported in the Troubled Company Reporter on Mar. 30, 2006, the U.S. Bankruptcy Court for the Southern District of New York entered an order for final approval of the Credit Agreement. As a result, Dana may borrow up to $750,000,000 under the revolving credit facility, of which $400,000,000 will be available for the issuance of letters of credit, and $700,000,000 under the term loan facility. Availability under the revolving credit facility is subject to a borrowing base that includes advance rates relating to the value of Dana's inventory and accounts receivable. On March 30, 2006, Dana borrowed $700,000,000 under the term loan facility and used the proceeds to refinance its prepetition revolving credit facility and pay certain other prepetition obligations, as well as working capital and general corporate expenses. Headquartered in Toledo, Ohio, Dana Corporation -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. When the Debtors filed for protection from their creditors, they listed $7.9 billion in assets and $6.8 billion in liabilities as of Sept. 30, 2005. (Dana Corporation Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000) DANA CORP: Gets Final Court Approval to Hire Jones Day as Counsel ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave Dana Corporation and its debtor-affiliates final authority to employ Jones Day as their counsel, nunc pro tunc to the Debtors' bankruptcy petition date. Jones Day is one of the largest law firms in the world, with a natural and international practice, and has substantial experience in virtually all aspects of the law that may arise in the Debtors' Chapter 11 cases, including bankruptcy, corporate, employee benefits, environmental, finance, intellectual property, labor and employment, litigation, mergers and acquisitions, real estate, securities and tax expertise. Jones Day's Business Restructuring and Reorganization practice group consists of approximately 100 attorneys. The firm's restructuring lawyers have played significant roles in several billion-dollar Chapter 11 cases. As reported in the Troubled Company Reporter on Mar. 16, 2006, Jones Day has represented some of the Debtors on a wide variety of matters for the past 30 years. The firm assisted the Debtors with their restructuring efforts and their preparations to commence their Chapter 11 cases. Thus, Jones Day has developed a substantial knowledge regarding the Debtors. As counsel, Jones Day will: (a) advise the Debtors of their rights, powers and duties as debtors and debtors-in-possession continuing to operate and manage their businesses and properties under Chapter 11 of the Bankruptcy Code; (b) prepare on the Debtors' behalf all necessary and appropriate applications, motions, proposed orders, other pleadings, notices, schedules and other documents, and reviewing all financial and other reports to be filed in their Chapter 11 cases; (c) advise the Debtors concerning, and preparing responses to, applications, motions, other pleadings, notices and other papers that may be filed by other parties in their Chapter 11 cases; (d) advise the Debtors with respect to, and assisting in the negotiation and documentation of, financing arrangements and related transactions; (e) review the nature and validity of any liens asserted against the Debtors' property and advising the Debtors concerning the enforceability of those liens; (f) advise the Debtors regarding their ability to initiate actions to collect and recover property for the benefit of their estates; (g) advise and assist the Debtors in connection with any potential property dispositions; (h) advise the Debtors concerning executory contract and unexpired lease assumptions, assignments and rejections and lease restructurings and recharacterizations; (i) advise the Debtors in connection with the formulation, negotiation and promulgation of a plan or plans of reorganization, and related transactional documents; (j) assist the Debtors in reviewing, estimating and resolving claims asserted against the Debtors' estates; (k) commence and conduct litigation necessary and appropriate to assert rights held by the Debtors, protect assets of the Debtors' Chapter 11 estates or otherwise further the goal of completing the Debtors' successful reorganization; (l) provide non-bankruptcy services for the Debtors to the extent requested by the Debtors; and (m) perform all other necessary and appropriate legal services in connection with the Debtors' Chapter 11 cases. Jones Day will bill the Debtors based on its professionals' hourly rates. The professionals expected to spend significant time on the Debtors' Chapter 11 cases and their hourly rates are: Name Location Position Billing Rate ---- -------- -------- ------------ Corinne Ball New York Partner $825 Brett P. Barragate Cleveland Partner $400 Robert L. Cunningham New York Partner $725 Jeffrey B. Ellman Atlanta Partner $625 Richard H. Engman New York Partner $575 Heather Lennox Cleveland Partner $625 Erica M. Ryland New York Partner $650 Ross S. Barr New York Associate $330 Brett J. Berlin Atlanta Associate $355 Carl E. Black Cleveland Associate $405 Eric R. Goodman Cleveland Associate $210 Robbin Rahman Atlanta Associate $280 Veerle N. Roovers New York Associate $430 Ryan T. Routh Cleveland Associate $380 Thomas A. Wilson Cleveland Associate $230 Mary E. Hemann Cleveland Associate $145 On Feb. 17, 2006, the Debtors provided Jones Day with a $750,000 advance payment to establish a retainer to pay for legal services. The Debtors replenished and maintained the Initial Deposit through the provision of subsequent deposits: Date of Amount of Replenishing Replenishing Deposits Deposits ------------ ------------ February 23, 2006 $521,967 February 28, 2006 $779,016 March 2, 2006 $1,007,533 As of the Petition Date, $750,000 of the Retainer remained unapplied. The Debtors also made payments to Jones Day aggregating $661,455 during the period January 1, 2005, through the Petition Date. The firm said it will seek reimbursement of actual and necessary out-of-pocket expenses. It intends to maintain detailed, contemporaneous time records and apply to the Court for payment of compensation and reimbursement of expenses. Ms. Ball told the Court that Jones Day has performed and will continue to perform services for certain non-debtor Dana Companies. The firm intends to bill these entities separately. Ms. Ball assured the Court that Jones Day is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code and as required by Section 327(a) of the Bankruptcy Code. Ms. Ball disclosed that some creditors and other parties-in- interest currently employ or have formerly employed Jones Day in matters unrelated to the Debtors or their Chapter 11 cases. A copy of that Schedule is available for free at http://ResearchArchives.com/t/s?690 About Dana Corporation Headquartered in Toledo, Ohio, Dana Corporation -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. When the Debtors filed for protection from their creditors, they listed $7.9 billion in assets and $6.8 billion in liabilities as of Sept. 30, 2005. (Dana Corporation Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000) DANA CORP: Gets Final Okay to Hire Pachulski as Conflicts Counsel ----------------------------------------------------------------- On a final basis, the U.S. Bankruptcy Court for the Southern District of New York gave Dana Corporation and its debtor- affiliates authority to employ Pachulski Stang Ziehl Young Jones & Weintraub LLP as their conflicts counsel in their Chapter 11 cases. As reported in the Troubled Company Reporter on Mar. 21, 2006, the Debtors selected Pachulski because of: (i) its extensive experience and knowledge in the field of debtors' and creditors' rights and business reorganizations under Chapter 11; (ii) its expertise, experience and knowledge practicing before the Court; and (iii) its familiarity with the potential legal issues that may arise in the context of the Debtors' Chapter 11 cases. According to Michael L. DeBacker, Esq., vice president, general counsel and secretary of Dana Corp., told the Court that Pachulski will handle matters which are not appropriately handled by general bankruptcy counsel because of a potential conflict of interest or, alternatively, which can be more efficiently handled by the firm as the Debtors or general bankruptcy counsel may request. This will ensure that matters are properly handled by counsel and will reduce the overall expense of their Chapter 11 cases by avoiding unnecessary litigation, Mr. DeBacker avered. The Debtors will pay Pachulski on an hourly basis, subject to these rates: Professional Hourly Rate ------------ ----------- Partners $395 to $725 Associates $295 to $355 Paraprofessionals $135 to $185 The Debtors will also reimburse the firm for necessary out-of- pocket expenses. The principal attorneys and paralegals designated to represent the Debtors are: Employee Hourly Rate -------- ----------- Dean Ziehl $675 Robert Feinstein $675 Debra Grassgreen $525 Alan Kornfeld $525 Linda Cantor $475 Denise Harris $185 Mr. Ziehl, a partner at Pachulski, assured the Court that the firm does not hold or represent any interest adverse to the Debtors' estates, and is a "disinterested person" as that phrase is defined in Section 101(14) of the Bankruptcy Code. Mr. Ziehl disclosed that Pachulski currently represents three parties-in-interest in matters not related to the Debtors' cases: (A) Pachulski is co-counsel to Federal-Mogul Corporation and its affiliates in their Chapter 11 cases, pending before the United States Bankruptcy Court for the District of Delaware. Certain of the Federal-Mogul debtors were involved in a dispute with certain of the Debtors or their affiliates, which led to a settlement agreement that was approved by the Delaware Court. While Sidley & Austin or other outside counsel handled all substantive legal issues, Pachulski simply performed an administrative function in connection with the litigation and the settlement. (B) Pachulski is co-counsel to J.L. French Corporation and its affiliates in their Chapter 11 cases pending before the Delaware Bankruptcy Court. (C) Pachulski is counsel to Murray Inc., and its affiliates in their Chapter 11 cases, pending in the U.S. Bankruptcy Court for the Middle District of Tennessee. Dana Corp. or one of its affiliates is a defendant in an adversary proceeding brought by Murray, to recover a preferential transfer. Mr. Ziehl assures Judge Lifland that Pachulski will withdraw From the adversary proceeding and its co-counsel, Bass, Berry & Sims PLC, will handle the matter exclusively. About Dana Corporation Headquartered in Toledo, Ohio, Dana Corporation -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. When the Debtors filed for protection from their creditors, they listed $7.9 billion in assets and $6.8 billion in liabilities as of Sept. 30, 2005. (Dana Corporation Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELTA AIR: Amends Credit Facilities with General Electric Capital ----------------------------------------------------------------- Delta Air Lines, Inc., disclosed in a Form 8-K report filed with the U.S. Securities and Exchange Commission on March 31, 2006, that it entered into an amendment with General Electric Capital Corporation to three credit facilities - the Spare Engines Loan, Aircraft Loan, and Spare Parts Loan -- and a reimbursement agreement. GECC issued $403,000,000 irrevocable, direct-pay letters of credit to pay the principal and interest under the: (i) $295,000,000 tax-exempt special facility bonds issued by the Development Authority of Clayton County to refinance the construction cost of certain facilities leased to the Debtors at Hartsfield-Jackson Atlanta Int'l Airport; and (ii) $102,000,000 tax exempt special facility bonds issued by other municipalities to refinance the construction cost of certain facilities leased to the Debtors at Cincinnati/ Northern Kentucky International Airport, Salt Lake City International Airport, and Tampa International Airport. The Debtors agreed to reimburse GECC for drawings made on the L/Cs. Pursuant to the Reimbursement Agreement, if a drawing under an L/C is made to pay the purchase price of Bonds tendered for purchase and not remarketed, the resulting reimbursement obligation to GECC will bear interest at a base rate or three- month LIBOR plus a margin. The principal amount of any outstanding reimbursement obligation will be repaid quarterly through May 20, 2008, the expiry date of the L/Cs. The Debtors are also indebted to GECC on account of 8.95% Notes due in installments from 2006 to July 7, 2011, under the Three Credit Facilities: Credit Facility Amount --------------- ------ Spare Engines Loan $198,000,000 Aircraft Loan 134,000,000 Spare Parts Loan 293,000,000 ------------ Total $625,000,000 The Debtors' obligations under the Three Credit Facilities and the Reimbursement Agreement are secured by: (1) nine B767-400 and three B777-200 aircraft; (2) 93 spare Mainline aircraft engines; and (3) certain other assets, including substantially all of the Debtors' Mainline aircraft spare parts. The Reimbursement Agreement contains a minimum collateral value test, which the Debtors will not satisfy if: (i) their payable amounts under the Agreement on March 20, 2006, is more than 60% of the appraised value of the aircraft collateral; and (ii) on or before May 19, 2006, they have not either provided additional collateral to GECC in the form of cash or aircraft or caused a reduction in the Debtors' Aggregate Obligations. Pursuant to the Amendments, the expiration date of the L/Cs is extended from 2008 to 2011, and the Collateral Value Test is eliminated. In exchange, GECC is granted the right, exercisable until March 30, 2007, to lease up to an additional 15 CRJ-200 aircraft to the Debtors. GECC may exercise the put rights only after providing the Debtors with prior written notice, and no more than three of the Aircraft may be scheduled for delivery in the same month. The terms of the leases will range between 108 months and 172 months, as determined by GECC, and lease rates will be based on the date of manufacture of the Aircraft. The Debtors expect that the lease payments for the Aircraft will aggregate $215,000,000 over the maximum 172-month term and that the lease payments approximate current market rates. As of March 31, 2006, GECC has exercised put rights with respect to three of the Aircraft. The Debtors have rights to sublease the Aircraft. The Collateral Pool now secures: (1) the Three Credit Facilities; (2) 12 leases for CRJ-200 aircraft the Debtors previously entered into with GECC; and (3) leases of the 15 Aircraft GECC may lease to the Debtors; and (4) the Reimbursement Agreement. About Delta Air Lines Headquartered in Atlanta, Georgia, Delta Air Lines -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. (Delta Air Lines Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 215/945-7000). DELTA AIR: Allegheny Airport Authority Concedes to Lease Rejection ------------------------------------------------------------------ Pursuant to stipulation approved by the U.S. Bankruptcy Court for the Southern District of New York, the Allegheny County Airport Authority conceded to Delta Air Lines, Inc.'s request to reject their Airline-Operating Agreement, dated April 26, 1989. The Parties entered into a new signatory agreement, which became effective April 1, 2006. Airport Facility Lease As reported in the Troubled Company Reporter on Mar. 14, 2006, the Debtors asked the Court to allow them to reject their lease with the County of Allegheny governing their use and occupancy of various airport facilities at Pittsburgh International Airport, effective Apr. 1, 2006. The Debtors told the Court that they and the County of Allegheny were parties to an Airline-Operating Agreement and Terminal Building Lease, dated April 26, 1989. The Debtors say that as part of their ongoing restructuring efforts, they reviewed space and facilities requirements at airports and, where appropriate, took steps to reduce excess airport facilities. The Debtors have determined that certain leased facilities at the Pittsburgh Airport are not required for their current operations, including: -- Gate 76 and related hold room and ramp areas; -- certain lower level operations space; -- a baggage service office; -- certain ticket counter space; and -- unfinished club room space. Pursuant to Section 554(a) of the Bankruptcy Code, the Debtors also sought the Court's permission to abandon a millwork located in the vacated premises, including a gate podium at Gate 76 and certain other millwork in the vacated baggage service office and ticket counter space. The Expendable Property is of inconsequential value and of no benefit to the estates. About Delta Air Lines Headquartered in Atlanta, Georgia, Delta Air Lines -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. (Delta Air Lines Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 215/945-7000). DENBURY RESOURCES: Plans to Sell $125 Million of Common Stock ------------------------------------------------------------- Denbury Resources Inc. (NYSE:DNR) will sell $125 million of its common stock to underwriters in a block trade. Closing is expected to occur on or about April 25, 2006. Denbury will use the net proceeds to repay the current borrowings under the Company's bank credit facility, which are currently $120 million, the majority of which was incurred to partially fund its $248 million acquisition of three properties in January 2006. The underwriter will have the option to purchase up to an additional $18.75 million of common stock at the same price for 30 days. J.P. Morgan Securities Inc. will serve as underwriter for the offering. When available, copies of the prospectus supplement and accompanying prospectus may be obtained from: J.P. Morgan Securities Inc. Attn: Prospectus Department One Chase Manhattan Plaza, Floor 5B New York, NY 10081 Tel: (212) 552-5164 Denbury Resources, Inc. -- http://www.denbury.com/-- is a growing independent oil and gas company. The Company is the largest oil and natural gas operator in Mississippi, owns the largest reserves of CO2 used for tertiary oil recovery east of the Mississippi River, and holds key operating acreage in the onshore Louisiana and Texas Barnett Shale areas. The Company increases the value of acquired properties in its core areas through a combination of exploitation drilling and proven engineering extraction practices. * * * Denbury Resources, Inc.'s 7-1/2% Senior Subordinated Notes due 2013 carry Moody's Investors Service's and Standard & Poor's single-B rating. DIVERSIFAX INC: Pender Newkirk Raises Going-Concern Doubt --------------------------------------------------------- Pender Newkirk & Company LLP expressed substantial doubt about DiversiFax, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the fiscal years ended Nov. 30, 2005 and 2004. The auditing firm pointed to the Company's $14 million accumulated deficit and negative working capital at Nov. 30, 2005. The Company also has significant indebtedness to an officer and shareholder. DiversiFax incurred a $33,400 net loss on $1,023,476 of revenues for the fiscal year ended Nov. 30, 2005, compared to an $18,035 net income on $751,963 of revenues in the prior year. The Company's balance sheet at Nov. 30, 2005, showed $194,508 in total assets and $2,953,198 in total liabilities, resulting in a stockholders' deficit of $2,758,690. A full-text copy of the Company's fiscal 2005 annual report on Form 10-K ,submitted to the Securities and Exchange Commission, is available for free at http://researcharchives.com/t/s?815 Headquartered in Sarasota, Florida, DiversiFax, Inc. -- http://www.diversifax.com/-- owns and operates coin and debit card pay-per-copy photocopy machines, microfilm reader-printers, and accessory equipment. The company, through its subsidiary, IMSG Systems, Inc., provides self-service coin and card reader operated photocopy machines in colleges, universities, libraries, courthouses, government agencies, pharmacies, and other retail establishments throughout the eastern United States. Another wholly owned subsidiary, DiversiFax Information Services, Inc., provided the Smart Switch(TM), a computerized switching device used in the public facsimile business. DYNEGY INC: Completes New $670 Million Revolving and Term Facility ------------------------------------------------------------------ Dynegy Holdings Inc., a wholly owned subsidiary of Dynegy Inc. (NYSE:DYN) can now borrow up to $670 million amended senior secured credit facility. The new facility amends, restates and increases the $400 million revolving credit facility that was amended on March 6, 2006. The $470 million revolving credit portion of the facility matures in April 2009. The $200 million term portion of the facility matures in January 2012. Terms of the New Facility Under the new facility, revolving credit loans will bear interest at the relevant Eurodollar rate plus a current ratings based margin of 175 or the base rate plus a current ratings based margin of 75 basis points. These margins will decrease upon meeting specified improvements in credit ratings for the facility. Under the previous facility, loans incurred interest at the relevant Eurodollar rate plus a margin of 200 basis points or the base rate plus a margin of 100 basis points. The term portion of the facility will bear interest at the relevant Eurodollar rate plus a ratings based margin of 150 to 175 basis points (currently 175 basis points) or the base rate plus a ratings based margin of 50 or 75 basis points (currently 75 basis points). The revolving credit facility, which is currently undrawn, is available for general corporate purposes and letters of credit, subject to the letter of credit commitments of the issuing banks (currently $400 million). The term credit facility has been fully drawn and the proceeds placed in a collateral account to support the issuance of letters of credit. The lead arrangers for the new facility are Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. Based in Houston, Texas, Dynegy Inc. -- http://www.dynegy.com/-- produces and sells electric energy, capacity and ancillary services in key U.S. markets. The company's power generation portfolio consists of more than 12,800 megawatts of baseload, intermediate and peaking power plants fueled by a mix of coal, fuel oil and natural gas. * * * As reported in the Troubled Company Reporter on April 11, 2006, Moody's Investors Service assigned a Ba3 rating to Dynegy Holdings Inc.'s $600 million senior secured bank facility. Moody's says the rating outlook is stable. FEDERAL-MOGUL: March 31 Balance Sheet Upside-Down by $2 Billion --------------------------------------------------------------- Federal-Mogul Corporation (OTCBB:FDMLQ) reported its financial results for the three months ended March 31, 2006. Net sales of $1.6 billion for the quarter ended March 31, 2006, decreased by $33 million compared to the first quarter of 2005. Gross margin of $285 million for the quarter increased by $10 million over the first quarter of 2005 despite unfavorable foreign currency effects of $9 million. The Company reported a net loss for the three months ended March 31, 2006, of $68.4 million compared to $48.3 million for the same period of 2005. At March 31, 2006, the Company's balance sheet showed a stockholders' equity deficit of $2.494 billion, compared to a $2.433 billion equity deficit at March 31, 2005. "Federal-Mogul continues to progress toward emergence from U.K. Administration and Chapter 11 in the U.S. Despite challenging market conditions, for the quarter ended March 31, 2006, the Company increased net sales, excluding foreign exchange, improved EBITDA to $146 million and generated positive cash inflows of $31 million, $76 million better than the comparable period of 2005," Chairman, President and CEO Jose Maria Alapont, said. "We remain focused on the implementation of our global profitable growth strategy, providing world-class customer service and leading products and technology at competitive cost." Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some US$6 billion. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed US$10.15 billion in assets and US$8.86 billion in liabilities. At Dec. 31, 2004, Federal-Mogul's balance sheet showed a US$1.925 billion stockholders' deficit. At Nov. 30, 2005, Federal-Mogul's balance sheet showed a US$1,450.4 billion stockholders' deficit, compared to a US$1.926 billion deficit at Dec. 31, 2004. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. FORD MOTOR: Proposed Plant Closures to Cost $2.4 Billion -------------------------------------------------------- Ford Motor Company expects to record an estimated $2.4 billion in special charges in connection with the automaker's plans to idle and cease production at its Twin Cities Assembly Plant in St. Paul, Minnesota, and its Norfolk Assembly Plant in Norfolk, Virginia. The special charges will cover approximately $1.7 billion of costs related to the expected layoffs and attendant jobs bank benefits. Under the provisions of Ford's collective bargaining agreements, the Company is required to pay idled workers who meet certain conditions, substantially all of their wages and benefits for the term of the current agreements. The Company will offer voluntary termination packages to idled workers to avoid paying these benefits. In addition, associated with the employee-related costs is a non- cash pre-tax charge of approximately $425 million related to a pension curtailment. Associated with the idling of the plants is a pre-tax charge of approximately $280 million, primarily non- cash, of other facility related costs. As reported in the Troubled Company Reporter on April 18, 2006, The Norfolk plant, which opened in 1925, currently employs 2,275 hourly and 158 salaried workers. The Twin Cities plant, which also opened in 1925, employs 1,750 hourly and 135 salaried workers. These staff reductions are part of the 25,000 - 30,000 job workforce reduction announced as part of the "Way Forward" plan. Under the "Way Forward" plan, Ford expects to idle 14 manufacturing facilities by 2012, including seven vehicle assembly plants, in its North American automotive operations. The move is anticipated to reduce the Company's workforce by 25,000 to 30,000 people during the period 2006 through 2012. In addition to the Twin Cities Assembly Plant and the Norfolk Assembly Plant, the other facilities that the Company previously announced would be idled are: the St. Louis Assembly Plant; the Atlanta Assembly Plant; the Wixom Assembly Plant; the Windsor Casting Plant; and the Batavia Transmission Plant. Production at the Company's St. Thomas Assembly Plant will be reduced to one shift. The actions will reduce Ford's North American assembly capacity by 1.2 million units, or 26%, by the end of 2008. About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Company -- http://www.ford.com/-- is the world's third largest automobile manufacturer. The Company manufactures and distributes automobiles in 200 markets across six continents. With more than 324,000 employees worldwide, the company's core and affiliated automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive-related services include Ford Motor Credit Company and The Hertz Corporation. * * * As reported on March 15, 2006, Fitch Ratings downgraded the Issuer Default Rating of Ford Motor Company and Ford Motor Credit Company to 'BB' from 'BB+'. As reported in the Troubled Company Reporter on Jan. 13, 2006, Moody's Investors Service lowered its ratings on Ford Motor Company (Corporate Family and long-term to Ba3 from Ba1). The rating outlook for Ford Motor is negative. As reported in the Troubled Company Reporter on Jan. 9, 2006, Standard & Poor's Ratings Services lowered its corporate credit ratings on Ford Motor Co., Ford Motor Credit Co. (Ford Credit), and all related entities to 'BB-/B-2' from 'BB+/B-1' and removed them from CreditWatch, where they were placed on Oct. 3, 2005, with negative implications. The outlook is negative. FUNCTIONAL RESTORATION: Taps Xroads as Financial Advisor -------------------------------------------------------- Functional Restoration Medical Center, Inc., asks the U.S. Bankruptcy Court for the Central District of California for permission to employ XRoads Solutions Group, LLC, as its financial advisor. XRoads Solutions will: a. assist the Debtor in preparing operating budgets and cash forecasts; b. analyze and advise the Debtor on restructuring alternatives; c. assist the Debtor and its legal counsel, SulmeyerKupetz, P.C., in negotiations with the Debtor's creditor constituencies; d. assist the Debtor in the sale of assets; e. assist the Debtor and counsel in the preparation of schedules, statements of financial affairs, monthly operating reports, and other reports for the Court and the U.S Trustee; f. manage claims, including analysis and reconciliation of unsecured claims, identification and analysis of claims for objection, providing documentation to support objections, and providing analysis and support as requested by the counsel; and g. submit a 30-day work plan to the counsel starting on the second month of retention, and perform the projects set forth in the work plan. The Debtor tells the Court that for the first month of the Firm's services, the Debtor will pay the Firm a flat fee of $40,000 for no less than 400 hours of work. Accordingly, the Firm will charge an effective blended rate of $100 per hour, or less. The Debtor discloses that for the second and subsequent months, the Debtor will pay the Firm a monthly fee of $40,000 and the Firm will make its personnel available for at least 175 hours per month. The Debtor will pay the Firm a rate of $275 per hour if the Firm's personnel performs more than 175 hours in any month. John F. Walters, a principal at XRoads Solutions, assures the Court that the Firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Encino, California, Functional Restoration Medical Center, Inc. is the second largest owner and operator of MRI centers in Southern California. The Debtor filed for chapter 11 protection on Mar. 9, 2006 (Bankr. C.D. Calif. Case No. 06- 10306). Daniel A. Lev, Esq., at SulmeyerKupetz, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, its estimated assets and debts between $10 million and $50 million. GENERAL MOTORS: First Quarter Sales Rise 4.4% --------------------------------------------- Strong sales performance in General Motors Corp.'s Asia Pacific and Latin America regions during the first three months of 2006 helped the Company sell more than 2.2 million vehicles globally, a 4.4% increase compared with the same period in 2005. GM sales outside of its North America region grew 15.9%, up 148,000 vehicles, more than twice the industry growth rate of 7.4%. "Our strong global sales performance during the first quarter was fueled by the growth of GM's global brands - Chevrolet, HUMMER, Saab and Cadillac - in key markets," says GM Chairman and CEO Rick Wagoner. "These brands account for one out of every two GM vehicles sold globally and complement our well known regional brands like Opel, GMC and Holden." Chevrolet sales in Asia Pacific, the industry's second-largest region, grew 62% compared with year-ago levels. The brand's performance dramatically outpaced the region's industry growth rate of 9%. Chevrolet sales in China, up 180%, and India, up 19.3%, powered much of this growth. In Latin America - a traditional Chevrolet stronghold - sales grew 27.4% compared with the same period a year ago and compared to an industry growth rate of 19%. Chevrolet's sales performance in Argentina, up 18%, Brazil, up 26.8%, and Venezuela, up 57%, accounted for most of this growth. Chevrolet sales in Europe also contributed to the brand's solid first-quarter results, growing 8.1% compared with regional growth of 4.5%. Chevrolet sales in Russia grew 23% over the same period last year. The introduction of the Chevrolet Captiva compact SUV later this year in Europe, Asia, Latin America and the Middle East is expected to bolster the brand's global sales performance in these markets. Chevrolet sales in North America were down slightly; however demand for Chevrolet's recently launched vehicles, including the all-new 2007 Tahoe full-size SUV, HHR retro wagon and mid-size Impala sedan, exceeded expectations. GM's global premium brands - HUMMER, Saab and Cadillac - also enjoyed global growth. Strong reception of HUMMER's H3 mid-size SUV helped the brand grow sales by 202% over last year. Much of its growth occurred in the United States, up 185%; however, HUMMER also achieved solid sales performances in Canada, Dubai and Saudi Arabia. In the United States, the H3 widened its sales lead in the entry luxury utility segment, capturing over 70% of the segment so far this year. Further growth is expected outside North America with the availability of a left-hand-drive version of the H3, which will be produced in South Africa later this year. Saab sales continue to accelerate at a record-breaking pace, with all-time volume records achieved globally and in Europe for the first quarter of 2006. Worldwide Saab sales increased 23.2% against the same period last year, built on strong performances in Europe, up 27.7%, and the United States, up 12%, due in part to the launch of a top-of-the-line 2.8 V6 turbo engine and the Saab 9-5 BioPower in Sweden, where it is the best-selling environmentally-friendly ethanol vehicle. Sales of Cadillac outside of the United States grew 19.4% in the first quarter, supported by strong growth of the brand in Canada,32%, and China, 246%. Cadillac expects a further boost in the second quarter with broader availability of the all-new Escalade around the globe and the all-new Cadillac BLS luxury sedan, which launched in Europe in early April. About General Motors General Motors Corp. -- http://www.gm.com/-- the world's largest automaker, has been the global industry sales leader for 75 years. Founded in 1908, GM today employs about 327,000 people around the world. With global headquarters in Detroit, GM manufactures its cars and trucks in 33 countries. In 2005, 9.17 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn and Vauxhall. GM operates one of the world's leading finance companies, GMAC Financial Services, which offers automotive, residential and commercial financing and insurance. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. * * * As reported in the Troubled Company Reporter on April 3, 2006, Moody's Investors Service lowered the ratings of General Motors Corporation: Corporate Family Rating and senior unsecured to B3 from B2 and Speculative Grade Liquidity Rating to SGL-3 from SGL-2. The outlook is negative. GMAC and ResCap are unaffected. The GM rating actions came in response to the company's disclosure that restatements of its 2002, 2003 and 2004 financial statements could result in the acceleration of as much as $3 billion in various lease obligations and in the company potentially not being be able to borrow under its $5.6 billion unused revolving credit facility. As reported in the Troubled Company Reporter on April 6, 2006, Standard & Poor's Ratings Services held all of its ratings on General Motors Corp., including its 'B' long-term and 'B-3' short- term corporate credit ratings, on CreditWatch with negative implications after the Company announced that it entered into an agreement to sell a 51% ownership stake in General Motors Acceptance Corp. to a consortium headed by Cerberus Capital Management L.P. As reported in the Troubled Company Reporter on April 6, 2006, Fitch Ratings retained General Motors Corp. Issuer Default Rating of 'B', Rating Watch Negative, following the Company's announcement of the sale of its controlling interest in GMAC. GT BRANDS: Files Disclosure Statement & Liquidation Plan -------------------------------------------------------- GT Brands Holdings LLC and its debtor-affiliates delivered a disclosure statement explaining their Chapter 11 Plan of Liquidation to the U.S. Bankruptcy Court for the District of Colorado on April 10, 2006. The Court has scheduled a hearing on May 18, 2006, 11:00 a.m., to consider the adequacy of the Debtor's Disclosure Statement. Overview of the Plan The Plan provides for the distribution of the cash proceeds to the holders of Administrative Expense Claims, Priority Tax Claims, Priority Non-Tax Claims and Other Secured Claims of 100% of the Allowed amount of those Claims. The Plan also provides for the Pro Rata distribution to holders of Allowed Senior Lender Secured Claims of substantially all of the Debtors' remaining assets constituting Collateral securing Allowed Senior Lender Secured Claims, other than the affiliate Debtors Carve-Out Fund, the Asset Recovery Fund, the Plan Operations Fund, the Company Causes of Action and Company Avoidance Actions, and a partial interest in the affiliate Debtors Avoidance Actions. Treatment of Claims Under the Plan, Holders of Allowed Administrative Expense Claims will be paid in full and will receive either: a) an amount in cash equal to that Allowed Administrative Expense Claim, or b) lesser amount as the holder of that Allowed Administrative Expense Claim and the Debtors or the Plan Administrator. Holders of Allowed Priority Tax Claims will receive deferred cash payments over a period not exceeding six years from the date of assessment of Allowed Priority Tax Claim. Priority Non-Tax Claims will receive an amount in cash equal to Allowed amount of that Priority Non-Tax Claim. Senior Lender Secured Claims will receive the holder's Pro Rata share of 1) all Cash held by the Plan Administrator in excess of the cash: a) necessary to pay holders of Allowed Administrative Expense Claims, Allowed Priority Claims and Allowed Other Secured Claims (to the extent not paid by surrender of the Collateral securing any Allowed Other Secured Claim) on the Effective Date, and b) utilized to establish the Disputed Claims Reserves (except the Disputed General Unsecured Claims Reserve), the affiliate Debtors Carve-Out Fund, the Asset Recovery Fund and the Plan Operations Fund; 2) partial ownership interest in the affiliate Debtors Avoidance Actions (thereby entitling holders of Allowed Senior Lender Secured Claims to a portion of the proceeds distributed in connection with the Affiliate Debtors Avoidance Actions); 3) 100% ownership interest in the Company Causes of Action and the Company Avoidance Actions (provided that the proceeds, if any, of Company Avoidance Actions shall be shared with the holders of Allowed affiliate Debtors General Unsecured Claims); and 4) 100% ownership interest in the affiliate Debtors Causes of Action (thereby entitling holders of Allowed Senior Lender Secured Claims to the proceeds distributed in connection with the Affiliate Debtors Causes of Action). Holders of Other Secured Claims will: 1) receive an amount in Cash equal to Allowed amount of Other Secured Claim; 2) receive the sale or disposition proceeds of the property securing Allowed Other Secured Claim, to the extent of the value of the Company's or Affiliate Debtors' interest in any property, as the case may be; 3) receive the property securing other Secured Claim; or 4) receive other distributions as necessary to satisfy the requirements of the Bankruptcy Code. Company General Unsecured claims will recover pro rata share of the proceeds of the Company Causes of Action and the Company Avoidance Actions, if any, subject to the enforcement by the Senior Lenders of the Seller Note Agreement, the Seller Notes and the Quadrangle Notes. Old Equity Interest will receive no distribution and will be cancelled. A full-text copy of the Debtors' Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=060420051057 Headquartered in New York, New York, GT Brands Holdings LLC, supplies home video titles to mass retailers. The Debtors also develop and market branded consumer, lifestyle and entertainment products. The Company and its affiliates filed for chapter 11 protection on July 11, 2005 (Bankr. S.D.N.Y. Case No. 05-15167). Brian W. Harvey, Esq., at Goodwin Procter LLP, represents the Debtors in their chapter 11 proceedings. When the Debtors filed for protection from their creditors, they listed total assets of $79 million and total debts of $212 million. HARRY FERRYMAN: Case Summary & 5 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Harry E. Ferryman aka H.E. Ferryman dba Ferryman Enterprises 9110 Northeast Highway 99 Vancouver, Washington 98665 Bankruptcy Case No.: 06-40748 Type of Business: The Debtor operates as a general contractor. Chapter 11 Petition Date: April 13, 2006 Court: Western District of Washington (Tacoma) Judge: Paul B. Snyder Debtor's Counsel: John D. Nellor, Esq. Nellor Retsinas Crawford PLLC 1201 Main Street P.O. Box 61918 Vancouver, Washington 98666 Tel: (360) 695-8181 Fax: (360) 695-8787 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 5 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Ramada Worldwide Inc. Franchise Termination $500,000 c/o Craig Koster Ramada Inn - Tacoma Attorney at Law Dome Tacoma Sold 100 Mulberry Street July 2005 Newark, NJ 071024079 Cendent Franchise Termination $361,857 DBA Howard Johnson's Property turned over Franchise to OCI 10/2005 1 Sylvan Way Parsippany, NJ 07054 Clark County Treasurer Property Taxes $143,231 P.O. Box 9808 Vancouver, WA 98666 Cendendent Corp. Travelodge Franchise Termination $135,000 Lake Oswego Travelodge 15700 Southwest Upper Boones Ferry Road Lake Oswego, OR OCI reclaimed property 10/2005 State of Oregon Civil Penalties $10,000 (Worker's Compensation) HEXION SPECIALTY: Raising $86M in Stock Offering to Pay Off Debts ----------------------------------------------------------------- Hexion Specialty Chemicals Inc. is selling 3,703,704 shares of its common stock to repay $100 million of its term loan under its new senior secured credit facilities. The Company is filing a registration statement for 18,518,519 common shares. 14,814,815 of the Company's shares will be sold by its parent, Hexion LLC. Additionally, these underwriters have an option to purchase a maximum of 2,777,778 additional common shares from LLC to cover over-allotments of common shares: * Credit Suisse; * Goldman, Sachs & Co.; * JPMorgan; * Lehman Brothers; * Bear, Stearns & Co. Inc.; * Citigroup; * Deutsche Bank Securities; * Morgan Stanley; * UBS Investment Bank; * William Blair & Company; * KeyBanc Capital Markets. The Company will not receive any of the proceeds from common shares sold by LLC, including if the underwriters exercise their option to purchase additional shares. The Company expects to net, after deducting underwriting discounts and other expenses, around $86 million, assuming the common shares are offered at $27 per share. In the aggregate, LLC expects to net $380 million, or around $451 million if the underwriters' option to purchase additional common shares is exercised in full, assuming the shares are offered at $27 per share. Dividend Policy The Company does not currently intend to pay any cash dividends on its common stock, and instead intend to retain earnings, if any, for future operations and debt reduction. The Company's new senior secured credit facilities and the indentures governing its notes impose restrictions on its ability to pay dividends. The Company's ability to pay dividends will depend on, among other things, its level of indebtedness at the time of the proposed dividend and whether the Company is in default under any of its debt instruments. The Company's common stock has just been approved for listing on the New York Stock Exchange under the symbol "HXN." A full-text copy of the Registration Statement is available for free at http://ResearchArchives.com/t/s?7f4 Based in Columbus, Ohio, Hexion Specialty Chemicals Inc. -- http://hexionchem.com/-- combines the former Borden Chemical, Bakelite, Resolution Performance Products and Resolution Specialty Materials companies into the global leader in thermoset resins. With 86 manufacturing and distribution facilities in 18 countries, Hexion serves the global wood and industrial markets through a broad range of thermoset technologies, specialty products and technical support for customers in a diverse range of applications and industries. Hexion Specialty Chemicals is owned by an affiliate of Apollo Management, L.P. * * * Moody's Investors Service placed a B1 rating on Hexion Specialty Chemicals Inc.'s $675 million guaranteed senior secured credit facilities ($275 million revolver due 2010 & $400 million term loan due 2011), and a Caa3 rating to its $350 million preferred stock, in May 2005. IDI GLOBAL: Files for Chapter 11 Reorganization ----------------------------------------------- IDI Global, Inc. (OTC BB: IDIB) and two wholly owned subsidiaries, Chief Financial, Inc., and IDI Small Business, Inc., and a subsidiary of Chief Financial, Professional Consulting Services, Inc., filed a Chapter 11 reorganization proceeding in Salt Lake City, Utah. Four subsidiaries that will operate outside of Chapter 11 are: * Internet Development, Inc., * IDI Technology, Inc., * Sports Media International, Inc., and * Worldwide Recruiting Solutions, Inc. Form 10-K Filing The Company also filed its 2005 Annual Report on Form 10-KSB reflecting certain write-downs for impairment on goodwill and a write-off for a large receivable, which the Company has been unable to collect. IDI Global, together with its auditors, determined that certain assets booked as goodwill on IDI Global's balance sheet have not been performing and are unlikely to perform in the near future. Among the non-performing assets requiring impairment are: * $1.5 million of goodwill related to Sports Media International, * approximately $1.8 million of goodwill related to assets acquired from HG Marketing, Inc. and Mentoring of America, LLC, * approximately $1.3 million of goodwill for Chief Financial, Inc., * an unpaid receivable from New Connexions, Inc., totaling approximately $1.1 million dollars. Certain smaller write-downs have also been identified and the appropriate adjustments have been made on IDI Global's financial statements. In the aggregate, IDI Global has recognized an impairment loss on goodwill of $4,791,884. Breach of Agreements Litigation IDI Global recently responded to a lawsuit commenced by HG Marketing, Inc. and Mentoring of America, LLC, which asserts claims against IDI Global and IDI Small Business. IDI Global has denied the allegations of MOA and HG and filed counter-claims asserting that MOA and HG breached agreements between the parties on numerous occasions. IDI Global believes that MOA and HG's actions have caused IDI Global to incur substantial damages, including the loss of hundreds of thousands of dollars in net operating income which IDI Global believes MOA and HG misappropriated and diverted from IDI Global's St. George call center. "In January 2005, IDI Global paid MOA and HG $1.8 million dollars and agreed to issue 4,356,436 shares of IDI Global stock as consideration for assets purchased from HG, including a continuing stream of high quality leads for our call centers," Kevin Griffith, the CEO of IDI Global, said. "HG and MOA were contractually obligated to provide leads that would generate at least $150,000 in net income per month for the first two years after the closing. However, in February of this year, HG and MOA stopped performing and took other actions, which have substantially harmed IDI Global, including taking control of our St. George call center. "Because of the significant loss of income caused by these actions IDI Global has determined that it is in the best interest of the company to file for Chapter 11 reorganization and restructure its operation with the appropriate legal action to prove its claims against MOA and HG. We intend to pursue additional claims against HG and MOA in the Bankruptcy Court." Mr. Griffith continued, "IDI Global is confident about the merits of its claims against MOA and HG. IDI Global intends to emerge from the Chapter 11 proceeding with an acceptable reorganization plan which will allow for continued operations and success." About IDI Global Headquartered in Orem, Utah, IDI Global, Inc., is a holding company whose wholly owned subsidiaries are involved in internet-based application services, seminar training and mentoring, and web-based products, software and tools. The Company and its debtor-affiliates filed for chapter 11 protection on April 17, 2006 (Bankr. D. Utah Case No. 06-21261). Mary Margaret Hunt, Esq., at Ray Quinney & Nebeker, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $9,022,581 and total debts of $3,608,506. IFCO SYSTEMS: 1/3 of Workforce Apprehended & 7 Managers Indicted ---------------------------------------------------------------- U.S. Immigration and Customs Enforcement agents arrested seven current and former managers of IFCO Systems North America, Inc., pursuant to criminal complaints issued in the Northern District of New York. All these individuals are charged with conspiring to transport, harbor, and encourage and induce illegal aliens to reside in the United States for commercial advantage and private financial gain, in violation of Title 8, USC Section 1324(a). The conspiracy charge carries a penalty of up to 10 years in prison and a fine of up to $250,000 for each alien with respect to whom the violation takes place. Two other IFCO employees were arrested on criminal charges relating to fraudulent documents. In addition to the criminal arrests, ICE agents yesterday conducted "consent" searches or executed criminal search warrants at more than 40 IFCO plants and related locations in 26 states that resulted in the apprehension of approximately 1,187 illegal alien IFCO employees. Three of the criminal search warrants were executed at residences in Guilderland, N.Y., where IFCO was allegedly housing illegal alien employees. The consent searches and search warrants were conducted at locations in Alabama, Arizona, Arkansas, California, Colorado, Florida, Georgia, Illinois, Indiana, Louisiana, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, New Jersey, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, South Carolina, Virginia and Utah. The arrests and search warrants are part of an ongoing criminal investigation of IFCO's Pallet Management Services division that began more than a year ago. The investigation is being conducted by ICE, New York State Police - Upstate New York Regional Intelligence Center, Social Security Administration Inspector General, Internal Revenue Service - Criminal Investigation, and the Department of Labor Inspector General. The Guilderland Town Police Department and Schenectady Police Department also provided assistance. According to a government affidavit filed in the Northern District of New York, the investigation began in February 2005 when ICE agents received information that IFCO workers in Guilderland, N.Y., were witnessed ripping up their W-2 tax forms and that an IFCO assistant general manager had explained that these workers were illegal aliens, had fake Social Security cards and did not intend to file tax returns. According to the affidavit, subsequent investigation indicated that IFCO officials transported illegal aliens to and from work; paid rent for the housing of illegal alien employees; and deducted money from the aliens' monthly paychecks to cover these expenses. Former IFCO employees also said it was common practice for IFCO to hire workers who lacked social security cards or produced bogus identification cards. The affidavit also alleges that IFCO officials knowingly hired an illegal alien who was an informant for ICE. In numerous recorded conversations, IFCO officials reimbursed this person for obtaining fraudulent identity documents for other illegal alien employees; used the person to recruit other illegal workers; and advised the person and other illegal alien employees on how to avoid law enforcement detection, the affidavit alleges. The affidavit further alleges that approximately 53.4 percent of the Social Security numbers contained on the IFCO Systems North America Inc. payroll of roughly 5,800 workers during 2005 were either invalid, did not match the true name registered with the Social Security Administration for that number, or belonged to children or deceased persons. The Social Security Administration sent at least 13 written notifications to IFCO headquarters about such discrepancies on its payroll records in 2004 and 2005, the affidavit alleges. Those arrested yesterday pursuant to the criminal complaints are: * Robert Belvin, 43, of Clifton Park, N.Y., the former general manager of the IFCO plant in Guilderland, N.Y.; arrested yesterday in Guilderland. * Abelino "Lino" Chicas, 40, of Houston, Tex., the assistant general manager of the Houston West IFCO plant in Houston, Tex.; arrested yesterday in Atlanta. * James Rice, 36, of Houston, Tex., a former IFCO new market development manager and regional general manager; arrested yesterday in Houston. * William "Billy" Hoskins, 29, of Cincinnati, Ohio, an IFCO new market development manager and the general manager of the Cincinnati IFCO plant; arrested yesterday in Milwaukee. * Michael Ames, 44, of Shrewsbury, Mass., the general manager of the IFCO plant in Westborough, Mass.; arrested yesterday in Westborough. * Dario Salzano, 36, of Amsterdam, N.Y., the assistant general manager of the IFCO plant in Guilderland, N.Y.; arrested yesterday in Guilderland. * Scott Dodge, 43, of Amsterdam, N.Y., a former foreman at the IFCO plant in Guilderland and at the IFCO satellite location within the Target Distribution Center in Amsterdam, N.Y.; arrested yesterday in Amsterdam. * Vincente Araus-Rivera, 44, an employee at the IFCO plant in Guilderland, N.Y.; arrested yesterday in Guilderland. * Ovidio Umana, 28, an employee at the IFCO plant in Guilderland, N.Y.; arrested yesterday in Guilderland. It is important to note that criminal complaints contain mere allegations. Defendants are presumed innocent unless and until proven guilty in a court of law. U.S. Immigration and Customs Enforcement was established in March 2003 as the largest investigative arm of the Department of Homeland Security. ICE is comprised of four integrated divisions that form a 21st century law enforcement agency with broad responsibilities for a number of key homeland security priorities. About IFCO Systems IFCO SYSTEMS is an international logistics service provider with more than 150 locations worldwide. IFCO SYSTEMS operates a pool of more than 87 million Reusable Plastic Containers globally, which are used primarily to transport fresh produce from producers to leading grocery retailers. In the United States, IFCO SYSTEMS also provides a national network of pallet management services. With more than 60 million wooden pallets recycled annually, IFCO SYSTEMS is the market leader in this industry. In 2005, IFCO SYSTEMS generated revenues of $576 million. IFCO SYSTEMS' balance sheet at Dec. 31, 2005, shows $243 millio0n in assets and $153 million in liabilities. IFCO SYSTEMS is listed on the Frankfurt Stock Exchange in the Prime Standard segment (IFE1). Employee Headcount Worldwide, IFCO Systems' Web site at http://www.ifcosystems.de/ says, the pallet recycler "employs over 3,000 people." INTEGRATED HEALTH: IRS Wants More Time to File Amended Claim ------------------------------------------------------------ On behalf of the Internal Revenue Service, the U.S. Government asks the U.S. Bankruptcy Court for the District of Delaware to extend the period within which the IRS may file its second amendment to Claim No. 2316. According to Stuart M. Fischbein, Esq., trial attorney for the U.S. Department of Justice-Tax Division, in Washington, D.C., the IRS first amended the Claim on June 20, 2002, to change the status from general unsecured to priority. To determine the true value of the IRS claim against VTA Management Services, Inc., the U.S. Government requested the Bankruptcy Specialist in the Insolvency Unit of the IRS to prepare a second amendment to Claim No. 2316. The second amendment consists of the same liabilities but divided between: -- the withholding taxes for $13,835,502, which constitute a priority claim; and -- the balance of the liabilities for $12,901,758, which are classified as general claims. The second amendment is an accurate statement of the IRS' employment tax claim, Mr. Fischbein notes. The IRS uses an automated proof of claim system that automatically files proofs of claim after they are printed. Mr. Fischbein recounts that in preparing the second amended claim, the IRS Bankruptcy Specialist started out by printing a copy of the first amendment dated June 20, 2002. When the Specialist printed that claim, she erroneously failed to put a date in a field that was necessary to prevent the automatic mailing of the first amended claim to the IHS Debtors' claims agent. As a result, the system printed and redated the claim with the current date and mailed it to IHS Debtors' claims agent without the Bankruptcy Specialist realizing it. The IHS Debtors' claims agent assigned Claim No. 14146 to this accidentally filed claim. In October 2005, IHS Liquidating LLC objected to Claim No. 14146 on the basis that it was filed after the bar date. The U.S. Government immediately informed IHS Liquidating that Claim No. 14146 was accidentally filed. Both parties agreed that Claim No. 14146 will be withdrawn as inadvertently filed, and the U.S. Government would file a request to enlarge the time to file the second amendment to Claim No. 2316. In November 2005, the U.S. Government filed its notice of withdrawal of Claim No. 14146. It is now requesting an enlargement of time to file the second amendment to Claim No. 2316. Mr. Fischbein notes that the U.S. Government in not filing a late claim due to inadvertence, ignorance of the rules, or mistakes in construing the rules. In failing to recognize that the withholding taxes in Claim No. 2316 were entitled to priority status, the IRS Bankruptcy Specialist preparing the claim made a mistake of law. When the mistake of law was discovered, the IRS promptly attempted to file a priority claim on June 20, 2002, that was apparently lost in the mailroom of the IHS Debtors' claims agent. To the extent it could, the IRS tried to correct the mistake in the classification of its original claim as soon as it became aware of it. In any event, Mr. Fischbein says, the U.S. Government's response to the objection to Claim No. 2316 put the IHS Debtors on notice of the priority nature of the claim when the U.S. Government indicated that the claim was erroneously filed as a general unsecured claim and would be amended to reflect its priority status. The U.S. Government further points out that due to the IHS Debtors' indemnification agreement with HealthSouth Corporation -- and HealthSouth's assumption of the liabilities -- the IHS Debtors did not believe they would have to pay Claim No. 2316. As previously reported, HealthSouth agreed to be responsible for all tax liabilities of subsidiaries whose stock was sold to the IHS Debtors as part of the sale, that accrued prior to the settlement of the sale, and to indemnify the IHS Debtors and those subsidiaries for any liabilities incurred by them. It is doubtful that there would have been any change in the IHS Debtors' Amended Joint Plan of Reorganization if Claim No. 2316 had been filed as a priority claim to the extent of the unpaid withholding tax assessments, Mr. Fischbein says. The IHS Debtors were relying on HealthSouth to pay any liability arising from the assessments. Under these circumstances, the fact that a portion of the IRS Claim was priority would not have been relevant. Mr. Fischbein assures the Court that the delay in the filing of the second amendment to Claim No. 2316 "would not prejudice" the IHS Debtors or the other creditors as they would be in the same position as they would have been if the priority portion of Claim No. 2316 had been filed prior to the Bar Date. For these reasons, the U.S. Government asks the Court to permit the filing of the second amendment to Claim No. 2316 on the basis of excusable neglect. IHS Liquidating Objects IHS Liquidating LLC asserts that the IRS should not be permitted to file a new "almost $14,000,000" priority claim more than five and one-half years after the Bar Date because: * the IRS' failure to timely file was entirely within its control and due to the negligence of the IRS "bankruptcy specialist" to fully comprehend the priority tax provisions of the Bankruptcy Code; * the IRS is solely to blame for its lengthy delay in attempting to file its late priority claim against VTA; * inextricably, the IRS never objected to the IHS Debtors' Disclosure Statement, notwithstanding that it must have known that the IHS Debtors had relied on the information collected from the Claims Agent, including the Original Unsecured Claim, in estimating both the IHS Debtors' potential exposure with respect to priority tax claims and the range of potential recoveries to holders of general unsecured claims under the Plan; and * the approval of the request would severely prejudice creditors of the IHS Debtors' estates because: -- throughout the Chapter 11 proceedings, the IHS Debtors estimated their maximum exposure with respect to Claim No. 2316 to be no more than approximately $800,000; and -- the Plan has been substantially consummated and distributions to general unsecured creditors would be reduced materially if the IRS' new "almost $14,000,000" priority claim were ultimately allowed. Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, asserts that the styling of the U.S. Government's newly asserted Priority Claim against VTA as a "second amendment" is a misnomer. The Claims Agent has no record of the first amendment having been filed by the IRS in June 2002, nor has the IRS ever produced a "file stamped" or acknowledgement copy of that Claim, Mr. Brady relates. Moreover, given that the purported "first amendment" would have been untimely and filed without the leave of the Court, the first amendment, even if it were filed, would have been a legal nullity. According to Mr. Brady, the circumstances presented in the request do not constitute "excusable neglect" justifying the late claim filing of the IRS' "second amended" claim under Rule 9006(b)(1) of the Federal Rules of Bankruptcy Procedure. Accordingly, IHS Liquidating asks the Court to deny the U.S. Government's request in all respects. The Post-Confirmation Committee of IHS, as successor-in-interest to IHS' Official Committee of Unsecured Creditors, supports IHS Liquidating's objection. Integrated Health Services, Inc. -- http://www.ihs-inc.com/-- operated local and regional networks that provide post-acute care from 1,500 locations in 47 states. The Company and its 437 debtor-affiliates filed for chapter 11 protection on February 2, 2000 (Bankr. Del. Case No. 00-00389). Rotech Medical Corporation and its direct and indirect debtor-subsidiaries broke away from IHS and emerged under their own plan of reorganization on March 26, 2002. Abe Briarwood Corp. bought substantially all of IHS' assets in 2003. The Court confirmed IHS' Chapter 11 Plan on May 12, 2003, and that plan took effect September 9, 2003. Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D. Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP, represent the IHS Debtors. On September 30, 1999, the Debtors listed $3,595,614,000 in consolidated assets and $4,123,876,000 in consolidated debts. (Integrated Health Bankruptcy News, Issue No. 103; Bankruptcy Creditors' Service, Inc., 215/945-7000) INTELSAT LTD: Incurs $325.3 Million Net Loss in 2005 ---------------------------------------------------- Intelsat, Ltd. and its subsidiaries reported revenue of $294.9 million and a net loss of $65.7 million for the quarter ended December 31, 2005. Total revenue increased $11.5 million, or 4 percent, to $294.9 million for the three months ended Dec. 31, 2005, from $283.4 million for the three months ended Dec. 31, 2004. The increase was primarily attributable to an increase in lease services revenue of $9.3 million, mostly from Intelsat's Network Services and Telecom aka NS&T sector. For the full-year 2005, Intelsat reported revenue of $1.171 billion and a net loss of $325.3 million. Total revenue increased $127.6 million, 12%, to $1.17 billion for the year ended Dec. 31, 2005, from $1.04 billion for the year ended Dec. 31, 2004. The increase was primarily attributable to an increase in lease services revenue of $68.8 million, largely consisting of new and expanded business signed by the NS&T sector and IGen, and an increase of $64.9 million in other revenues, which totaled $78.0 million, up from $13.1 million in the prior year, primarily due to mobile satellite services sold by IGen. Intelsat generated free cash flow from operations of $371.5 million for 2005. Free cash flow from operations is defined as net cash provided by operating activities, less payments for satellites and other property, plant and equipment and associated capitalized interest. "Our total year results, which included 12% revenue growth and strong EBITDA and cash generation, demonstrate the positive contribution of the fully integrated IGen business improved performance in our Network Services and Telecom sector," said Intelsat Chief Executive Officer -- Dave McGlade. "GlobalConnexSM, our managed solutions offering that is popular with Voice over IP providers in overseas markets, among other uses, continues to be a positive aspect of our business, growing to an annual revenue total of $110.9 million, up 47% from total 2004 results." Mr. McGlade added, "Our top priority in 2006 is to close the PanAmSat acquisition and to successfully execute on the detailed integration plan that is currently being put into place. Upon closing, we plan to bring to market the enhanced services afforded by the merger quickly, and also intend to capture the cost and operational synergies as we bring the two companies together." PanAmSat Acquisition Intelsat provided an update on the regulatory and operational activities regarding its previously announced acquisition of PanAmSat Holding Corporation. Intelsat is not aware of any non- US regulatory approvals that will be required in advance of closing the transaction, beyond those already obtained. With respect to the United States, on Jan. 20, 2006, Intelsat was informed by the Committee on Foreign Investment in the United States aka CFIUS that its review of the proposed acquisition was concluded, and that there were no issues of national security sufficient to warrant further investigation. There are two additional US regulatory approvals required before the PanAmSat transaction may close, from the Federal Communications Commission aka FCC and the Department of Justice aka DoJ. With respect to the DoJ, as previously disclosed, Intelsat and PanAmsat received second requests for additional information and documentary materials in connection with the merger. Both the DoJ and the FCC continue to review the transaction under their normal procedures. A disciplined integration planning process has been prepared for back office and technical operations, and a number of decisions have been made regarding personnel, facilities and systems that are expected not only to generate strong operational synergies, but also to provide improved operational abilities, resulting in a stronger competitive profile as the companies combine. Mr. McGlade said, "Our integration planning is already yielding decisions regarding facilities, systems and platforms, and also regarding the people who will lead our new company. By making these decisions now, we are positioned for an accelerated start once we obtain the approvals to close the transaction. I am pleased with our progress on the regulatory and operational fronts, and believe that we are on-track to close the transaction in the second or third quarter of 2006." At Dec. 31, 2005, Intelsat's backlog, representing expected future revenue under contracts with customers, was $3.8 billion. At Sep. 30, 2005, Intelsat's backlog was also $3.8 billion. About Intelsat Intelsat, Ltd., offers telephony, corporate network, video and Internet solutions around the globe via capacity on 25 geosynchronous satellites in prime orbital locations. Customers in approximately 200 countries rely on Intelsat's global satellite, teleport and fiber network for high-quality connections, global reach and reliability. * * * As reported in the Troubled Company Reporter on April 11, 2006, Standard & Poor's Ratings Services held all ratings on fixed satellite services provider Intelsat Ltd. (BB-/Watch Neg/--) on CreditWatch with negative implications after the company failed to file its 2005 form 10-K by March 31, 2006, as required by the SEC. The bank agreement also required the company to provide financial statements by the same date. KAISER ALUMINUM: Dist. Court Sets Confirmation Hearing for May 11 ----------------------------------------------------------------- The District Court has set a hearing for May 11, 2006, to consider confirmation of the Second Amended Joint Plan of Reorganization of Kaiser Aluminum Corporation, Kaiser Aluminum & Chemical Corporation and certain of their debtor-affiliates. The Plan, therefore, will not become effective and the Debtors will not be able to emerge from bankruptcy before the May 11, 2006, maturity date of the Replacement Financing Facility and expiration of the Exit Facilities Commitment. To preserve the Debtors' current access to postpetition financing until the Plan becomes effective, the Debtors and the Lenders stipulate and agree to: (a) extend the May 11, 2006, maturity date of the Replacement Financing Facility to May 17, 2006, (b) extend the May 11, 2006, termination date of the Exit Facilities Commitment to May 17, 2006, and (c) extend the May 11, 2006, date for payment of the supplemental termination fee in the Amended and Restated Fee Letter to May 17, 2006. The Court approved the parties' stipulation. According to Daniel DeFranceschi, Esq., at Richards Layton & Finger, the Debtors have also negotiated with the Lenders for an extension of the maturity Date of the Replacement Financing Facility to Aug. 31, 2006, as memorialized in the Second Amendment to the credit agreement. A full-text copy of the Second Amendment is available for free at http://bankrupt.com/misc/kaiser_2ndDIPamendment.pdf As consideration for entering into the Second Amendment, upon emergence and closing of the Exit Revolving Credit Facility, the Debtors will pay certain fees. At the Debtors' request, The CIT Group/Business Credit, Inc., and JPMorgan Chase Bank, National Association, have agreed to extend the termination date of the commitment to provide the Exit Facilities to August 31, 2006. By this motion, the Debtors seek the Court's authority to enter into the Second Amendment and pay related fees. Mr. DeFranceschi asserts that the Second Amendment is necessary to meet the Debtors' ongoing working capital and general business financing requirements while the Debtors remain in Chapter 11. "It is essential to the ongoing operation of the Debtors' businesses that the Debtors continue to have access to adequate postpetition financing to continue their ordinary course business operations and maintain the confidence of the Debtors' vendors, suppliers and customers." Fee Letters are Confidential The Debtors signed amended fee letters in connection with the Second Amendment to the Replacement Financing Facility. Mr. DeFranceschi asserts that the confidentiality provisions of each Fee Letter preclude the Debtors from: (a) filing either letter with the Court unless it is filed under seal, and (b) disclosing the substance of the Fee Letters except to certain of the Debtors' principal creditor constituencies that agree, and are obligated, to keep the terms of the Fee Letters confidential. Accordingly, the Debtors seek the Court's authority to file the Fee Letters under seal. To the extent a hearing is held on the Replacement Financing Motion that requires the disclosure of the terms of the Fee Letters, the Debtors ask Judge Fitzgerald to conduct those portions of the hearing in camera. About Kaiser Aluminum Headquartered in Foothill Ranch, California, Kaiser Aluminum Corporation -- http://www.kaiseraluminum.com/-- is a leading producer of fabricated aluminum products for aerospace and high- strength, general engineering, automotive, and custom industrial applications. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429), and has sold off a number of its commodity businesses during course of its cases. Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 94; Bankruptcy Creditors' Service, Inc., 215/945-7000) LEAR CORP: S&P Affirms Proposed $1 Billion Term Loan's B+ Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned a recovery rating of '3' to a proposed $1 billion first-lien bank term loan being issued by auto supplier Lear Corp. The previous rating on this loan was '2'; however, Lear has since increased the amount of the loan by $400 million. The '3' recovery rating reflects the rating agency's expectation that lenders will recover only a meaningful amount of principal (50%-80%) in the event of a payment default. Standard & Poor's also affirmed the 'B+' rating on the term loan (which is the same as the 'B+' corporate credit rating on Lear Corp.). Meanwhile, Lear has canceled plans to issue a $200 million second- lien term loan, and the ratings on that facility have been withdrawn. Lear's existing $1.7 billion revolving credit facility ranks pari passu with the first-lien term loan, but is not rated by Standard & Poor's. Standard & Poor's corporate credit rating on Southfield, Michigan- based Lear Corp. is B+/Negative/B-2. The speculative-grade rating reflects the company's depressed operating performance caused by severe industry pressures. Earnings and cash flow generation will likely remain below previously expected levels for the next few years. Ratings: Lear Corp.: Corporate credit rating -- B+/Negative/B-2 Ratings Assigned: $1 billion first-lien term loan -- B+ (Recovery rtg: 3) LEVITZ HOME: Rejects Eight Store Leases --------------------------------------- Nicholas M. Miller, Esq., at Jones Day, in New York, notifies the U.S. Bankruptcy Court for the Southern District of New York that Levitz Home Furnishings, Inc., and its debtor-affiliates will reject eight Store Leases, effective as of the rejection date, and will abandon their interest in any personal property located at these Premises: Rejection Store No. Location Landlord Date --------- -------- -------- --------- 11103 Elmhurst, 8812 Queens Boulevard - New York LLC 10701 Staten Island, Ken Bar Development 04/01/06 New York Company 20404 Springfield, Jeffrey Blank and 03/26/06 Pennsylvania Associates 30102 Cathedral City, Transcontinental 03/26/06 California Management, Inc. 11002 Philadelphia, Kahn Joint Venture 03/31/06 Pennsylvania 20308 Lawrenceville, Park Lane Furniture 03/31/06 New Jersey 20406 Reading, C&D Enterprises 03/31/06 Pennsylvania 20407 Hatfield, Elaine & David 03/31/06 Pennsylvania Bagelman Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc. -- http://www.levitz.com/-- is a leading specialty retailer of furniture in the United States with 121 locations in major metropolitan areas principally the Northeast and on the West Coast of the United States. The Company and its 12 affiliates filed for chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case No. 05-45189). David G. Heiman, Esq., and Richard Engman, Esq., at Jones Day, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported $245 million in assets and $456 million in debts. Jay R. Indyke, Esq., at Kronish Lieb Weiner & Hellman LLP represents the Official Committee of Unsecured Creditors. Levitz sold substantially all of its assets to Prentice Capital on Dec. 19, 2005. (Levitz Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) LEVITZ HOME: Birchfield Responds to Landlord's Lease Objection -------------------------------------------------------------- As reported in the Troubled Company Reporter on April 7, 2006, Levitz Home Furnishings, Inc. and its debtor-affiliates asked the U.S. Bankruptcy Court for the Southern District of New York to approve their assumption and assignment of the Woodbridge Lease to Birchfield Ventures, LLC. Franell Realty Company, as landlord, complained that the Assumption Notice it received does not contain any information concerning (a) the intended use for the Premises or (b) the Debtors' proposed cure claim. S. Jason Teele, Esq., Lowenstein Sandler PC, in Roseland, New Jersey, told the Court that Birchfield intends to operate a discount liquor store at the Premises. In order to operate a liquor store at the Premises, Birchfield will be required to obtain a retail liquor license. "Among other concerns, Franell fears that a discount liquor store would bring ignominy to the Premises, thus devaluing the Premises and the surrounding area," Mr. Teele says. Franell objects to the assignment of the lease to Birchfield because: (a) The Debtors have not established Birchfield's ability to perform under the terms of the lease; (b) The Lease Assumption Notice delivered by the Purchaser does not contain the information required by the Sale Order; and (c) The proposed use creates an undue hardship for Franell. Birchfield Responds to Franell's Objection Birchfield Ventures, LLC, contends that it has provided Franell Realty Co. with adequate assurance of future performance. Mark E. Felger, Esq., at Cozen O'Connor, in New York, asserts that the proposed used of the Premises does not violate the terms of the Lease and does not create an actual and substantial detriment to Franell. Moreover, Mr. Felger says, the cure amount will be paid from sale proceeds. Mr. Felger further argues that Franell's new bid is untimely and should not be considered. Thus, Birchfield asks the Court to: -- overrule Franell's objection, -- deny Franell's Cross-Motion, and -- grant the Debtors' Assignment Motion. Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc. -- http://www.levitz.com/-- is a leading specialty retailer of furniture in the United States with 121 locations in major metropolitan areas principally the Northeast and on the West Coast of the United States. The Company and its 12 affiliates filed for chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case No. 05-45189). David G. Heiman, Esq., and Richard Engman, Esq., at Jones Day, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported $245 million in assets and $456 million in debts. Jay R. Indyke, Esq., at Kronish Lieb Weiner & Hellman LLP represents the Official Committee of Unsecured Creditors. Levitz sold substantially all of its assets to Prentice Capital on Dec. 19, 2005. (Levitz Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) LEVITZ HOME: Can Terminate and Reject Jennifer Sublease ------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York allowed Levitz Home Furnishings, Inc., and its debtor-affiliates to terminate and reject a lease with 88-12 Queens Blvd. LLC, as successor to Moderama Furniture, Inc., effective as of March 31, 2006. The Debtors are party to a Lease with 88-12 Queens, dated as of July 15, 1997, for the premises located at 88-12 Queens Blvd., in Elmhurst, New York. Under the Lease, the Debtors' initial tenancy consisted of approximately 12,500 square feet of the 20,000 square feet at the Premises. At the time, the Landlord had conveyed leasehold interest in the other 7,500 square feet to Jennifer Convertibles, Inc., and Jennifer Leathers, Inc., pursuant to a lease for approximately 2,500 square feet that expired on September 30, 2000, and a lease for approximately 5,000 square feet that expired on Dec. 31, 2003. Under the Lease, the Landlord conveyed to the Debtors the leasehold interest in the portions of the Premises that had been granted to the Jennifer Affiliates on Oct. 1, 2000, and Jan. 1, 2004. Notwithstanding the termination of their leasehold interests, the Jennifer Affiliates continued to remain on the Premises after the term of their Expired Leases and, for some period of time, negotiated with the Debtors regarding the terms of a possible sublease. Although the Debtors and the Jennifer Affiliates never entered into an extended sublease, the Debtors have allowed the Jennifer Affiliates to remain as subtenants on the premises on a month to month basis pursuant to an oral agreement. Having sold substantially all of their assets, including the right to receive rent under the Sublease, the Debtors no longer derive a benefit from the continuation of the Sublease. Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc. -- http://www.levitz.com/-- is a leading specialty retailer of furniture in the United States with 121 locations in major metropolitan areas principally the Northeast and on the West Coast of the United States. The Company and its 12 affiliates filed for chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case No. 05-45189). David G. Heiman, Esq., and Richard Engman, Esq., at Jones Day, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported $245 million in assets and $456 million in debts. Jay R. Indyke, Esq., at Kronish Lieb Weiner & Hellman LLP represents the Official Committee of Unsecured Creditors. Levitz sold substantially all of its assets to Prentice Capital on Dec. 19, 2005. (Levitz Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) LINN ENERGY: Delayed 10-K Filing Prompts Nasdaq Delisting Notice ---------------------------------------------------------------- Linn Energy, LLC (Nasdaq: LINE) received a Nasdaq Staff Determination letter dated April 18, 2006, indicating that the Company failed to comply with the filing requirements for continued listing set forth in Marketplace Rule 4310(c)(14). The Company has not yet filed its Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2005. As a result, the Company's units are subject to delisting from The Nasdaq Stock Market. The Company intends to request a hearing before a Nasdaq Listing Qualifications Panel to appeal the Staff's determination. Pending a decision by the Panel, the Company's units will remain listed on The Nasdaq Stock Market. The delay in filing of the Company's 2005 Form 10-K will allow for the completion of the audit of certain restatement adjustments to prior period financial statements. Linn Energy does not anticipate that the restatement will have a material effect on its reported earnings for the year ended Dec. 31, 2005, or its 2006 guidance included in the Company's 2005 earnings release. Linn Energy currently anticipates that it will file the 2005 Form 10-K containing restated financial statements of the Company and its subsidiaries for the period March 13, 2003 (inception) through Dec. 31, 2003, and for the year ended Dec. 31, 2004, on or before May 30, 2006. Headquartered in Pittsburgh, Pennsylvania, Linn Energy, LLC -- http://www.linnenergy.com/-- is an independent natural gas company focused on the development and acquisition of natural gas properties in the Appalachian Basin, primarily in West Virginia, Pennsylvania, New York and Virginia. LONDON FOG: Court Okays Avalon Group as Financial Advisor --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Nevada gave London Fog Group, Inc., and its debtor-affiliates permission to employ Avalon Group, Ltd., as their financial advisor, and assume their prepetition engagement agreement with Avalon. Avalon Group will: (a) identify opportunities for a transaction involving all or portions of the Debtors' businesses; (b) advise Debtors concerning opportunities for a transaction; and (c) participate in negotiations concerning a transaction at the Debtors' request. Lynda Davey, the Chief Executive Officer of Avalon Group, Ltd., discloses that the Firm already received a $30,000 retainer. The Firm is due to receive a $20,000 retainer for April. In addition, the Firm will also receive at least $475,000 upon closing of a transaction. Under the Engagement Letter, a sale of the Debtors' subsidiary or a licensing transaction for the Pacific Trail brand constitutes a transaction. Ms. Davey assured the Court that Avalon Group does no hold or represent any interest adverse to the Debtors or their estates and is disinterested as that term is defined in Section 101(14) of the Bankruptcy Code. A full-text copy of the Debtors' Engagement Letter with Avalon Group is available for free at http://ResearchArchives.com/t/s?81b Avalon Group, Ltd., is an independent financial advisory company, offering an array of strategic advisory, financial restructuring, and mergers and acquisitions advice to its clients. Ms. Davey can be contacted at: Lynda Davey Avalon Group, Ltd. 1375 Broadway New York, NY 10018 Tel: (212) 764-5610 Fax: (212) 764-6013 Headquartered in Seattle, Washington, London Fog Group, Inc. -- http://londonfog.com/-- designs and retails the latest styles in jackets and other professional apparel. The company and six of its affiliates filed for chapter 11 protection on March 20, 2006 (Bankr. D. Nev. Case No. 06-50146). Stephen R. Harris, Esq., at Belding, Harris & Petroni, Ltd., represents the Debtors in their restructuring efforts. Avalon Group, Ltd., serves as the Debtors' financial advisor. When the Debtors filed for protection from their creditors, they estimated that their assets and debts totaled $50 million to $100 million. LONGVIEW FIBRE: Board Says Obsidian Undervalues Timber Assets ------------------------------------------------------------- The Board of Directors of Longview Fibre Company (NYSE: LFB) rejected the proposal from Obsidian Finance Group, LLC, and The Campbell Group, LLC, to acquire all of the outstanding shares of the company. Longview Fibre's Board concluded that the Obsidian/Campbell proposal is highly conditional and, even if it could be executed on, undervalues Longview Fibre and its high quality timber assets. The Board believes that completing the company's conversion to a real estate investment trust and implementing an improved operating plan represents a superior alternative for enhancing shareholder value. Effect of REIT Conversion The company's improved operating plan and the REIT conversion are expected to result in: -- a special distribution to shareholders of approximately $385 million, of which up to approximately $77 million, representing approximately $1.50 per share, is expected to be distributed in cash, with the remainder to be distributed in shares of the company's common stock; -- an initial 20% increase in the company's annual cash dividend rate to $1.20 per share (excluding the effect of shares to be issued in the special distribution); -- an increase in cash flow as a result of: a) accelerating the company's timber harvest rate consistent with Sustainable Forestry Initiative practices; b) implementing a program to monetize the company's higher and better use lands; c) restructuring the company's manufacturing operations, including exploring the potential divestiture of the company's sawmill and select converting plants; and d) reducing taxes; and e) a reduction in the company's borrowing rate and aggregate interest expense through refinancing. "We are taking steps to accelerate the delivery of value to shareholders," Richard H. Wollenberg, Longview Fibre's President, Chief Executive Officer and Chairman of the Board, said. "We expect the REIT conversion, in combination with our improved operating plan, to drive shareholder value by, among other things, increasing the company's cash flow, enabling us to pay a larger dividend and positioning the company to increase its timberland holdings. "We also expect the potential divestiture of selected manufacturing assets to enhance our operating performance and provide additional cash to reduce debt." The Board of Directors, with the assistance of its financial and legal advisors, carefully considered the Obsidian/Campbell proposal and the company's improved operating plan. In making its unanimous decision to reject the Obsidian/Campbell proposal, the Board considered, among other things: -- the significant shareholder value enhancements expected to be delivered by the REIT conversion and the company's improved operating plan; -- management's record of delivering value to shareholders; and -- the highly conditional nature of the Obsidian/Campbell proposal, which is subject to significant due diligence and financing contingencies and associated risks. Mr. Wollenberg added, "We are committed to acting in the best interests of the company and its shareholders and have already taken steps to accelerate value creation. In the past few years, we have implemented a number of operational improvements and we are now poised to reap the benefits from these initiatives. "We believe that the REIT conversion process has begun to unlock the inherent value in our strong portfolio of assets and that the intrinsic value of Longview Fibre is not reflected in our current or historical stock price. "Engaging in a transaction with Obsidian/Campbell at this time, before the company has had the opportunity to fully implement its strategy, would prevent the company and our shareholders from realizing the potential value of the company's REIT conversion and improved operating plan." The company also reported that Bank of America, N.A. and Goldman Sachs Credit Partners L.P. have provided commitments for the funds necessary to complete the REIT conversion. About Longview Fibre Headquartered in Longview, Washington, Longview Fibre Company -- http://www.longviewfibre.com/-- is a diversified timberlands owner and manager, and a specialty paper and container manufacturer. Using sustainable forestry methods, the company manages approximately 587,000 acres of softwood timberlands predominantly located in western Washington and Oregon, primarily for the sale of logs to the U.S. and Japanese markets. Longview Fibre's manufacturing facilities include a pulp-paper mill at Longview, Washington; a network of converting plants; and a sawmill in central Washington. The company's products include: logs; corrugated and solid-fiber containers; commodity and specialty kraft paper; paperboard; and dimension and specialty lumber. * * * As reported in the Troubled Company Reporter on March 13, 2006, Standard & Poor's Ratings Services placed its ratings, including its 'BB' corporate credit rating, on Longview Fibre Co. on CreditWatch with negative implications. LONGVIEW FIBRE: S&P Holds BB Corp. Credit Rating on Negative Watch ------------------------------------------------------------------ Standard & Poor's Ratings Services held its ratings, including the 'BB' corporate credit rating, on Longview Fibre Co. on CreditWatch with negative implications where they were placed on March 9, 2006. The CreditWatch update followed Longview's announcement that it has again rejected the unsolicited acquisition proposal from Obsidian Finance Group LLC, a private equity firm, and The Campbell Group LLC, a timber investment management organization. Longview intends to continue with its plans to covert to a real estate investment trust and announced strategic initiatives to enhance shareholder value. However, Obsidian and Campbell want to convene a special shareholder meeting to vote on the proposed acquisition. "If the acquisition is completed, we could lower Longview Fibre's ratings if debt leverage increases and the private equity firms separate Longview's manufacturing operations from its timber business," said Standard & Poor's credit analyst Kenneth L. Farer. The original CreditWatch placement occurred after Longview Fibre announced that it had postponed its debt and equity offerings and cancelled its related tender offer and consent solicitation. Longview announced strategic initiatives: -- increasing its annual dividend by 20%; -- accelerating its timber harvest; -- monetizing its higher and better use lands; and -- restructuring its manufacturing operations, including selling certain assets. "We will continue to monitor developments regarding the unsolicited proposal and will meet with management to discuss the company's strategic plans, the potential impact of these initiatives on its credit profile, and the timing of proposed financings," Mr. Farer said. LORBER INDUSTRIES: Wants to Hire Fineman West as Accountants ------------------------------------------------------------ Lorber Industries of California asks the U.S. Bankruptcy Court for the Central District of California for permission to employ Fineman West & Co., LLP, as its accountants. Fineman West will prepare the Debtor's California and Federal income tax returns, and perform any other accounting services that the Debtor might need. Gary M. Fineman, a partner at Fineman West, tells the Court that the Firm's professionals bill: Professional Hourly Rate ------------ ----------- Partners $350 Tax Managers $235 - $295 Tax Senior $175 Mr. Fineman assures the Court that the Firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Gardena, California, Lorber Industries of California -- http://www.lorberind.com/-- manufactures texturized and knitted fabrics. The company filed for chapter 11 protection on Feb. 10, 2006 (Bankr. C.D. Calif. Case No. 06-10399). Joseph P. Eisenberg, Esq., at Jeffer, Mangels, Butler & Marmaro LLP, represents the Debtor in its restructuring efforts. The Debtor's schedules show $25,580,387 in assets and $24,740,726 in liabilities. MAGSTAR TECH: Equity Deficit Prompts Auditor's Going Concern Doubt ------------------------------------------------------------------ Virchow, Krause & Company, LLP, expressed substantial doubt about MagStar Technologies, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the years ended Dec. 31, 2005 and 2004. The auditing firm pointed to the Company's recurring losses from operations and stockholders' deficit. In its 2005 annual report on Form 10-K submitted with the Securities and Exchange Commission on April 10, 2006, MagStar reported total revenues of $8,104,646 for 2005, compared to $7,350,319 for 2004. In 2005, the Company had net income of $192,844, in contrast to a net loss of $213,317 for 2004. MagStar's balance sheet at Dec. 31, 2005, showed $2,511,263 in total assets and $7,021,421 in total liabilities, resulting in a stockholders' deficit of $4,510,158. At Dec. 31, 2005, the Company had a working capital deficit of $3,004,467, compared to a working capital deficit of $3,039,095 at Dec. 31, 2004. Management says that the decrease in the working capital deficit is primarily due to a decrease in senior debt. The Company disclosed positive cash flows from operations of $34,972 for the year ended Dec. 31, 2005, compared to negative cash flows from operations of $161,982 for the year ended Dec. 31, 2004. MagStar's ability to meet its continuing cash requirements in the future is dependent on sustaining adequate sales and margins from its manufacturing operations. Through most of 2005, the Company experienced sustained sales for its blood centrifuge spindles and conveyors to the Company's largest customers compared to 2004. The Company's backlog of orders and releases on Dec. 31, 2005 was approximately $4.2 million, compared to approximately $2.7 million on Dec. 31, 2004. Quickdraw Conveyor and spindle orders account for the majority of the Dec. 31, 2005 backlog. The Company sees conveyor and spindle sales growing and being important to the Company's strategic growth. A full-text copy of the regulatory filing is available for free at http://researcharchives.com/t/s?813 Based in Hopkins, Minnesota, MagStar Technologies, Inc., -- http://www.magstar.com/-- is a prototype developer and manufacturer of centrifuges, conveyors, medical devices, spindles, and sub assemblies. Its technical abilities in design, process, and manufacturing specialize in the "concept-to-production" process designed to result in short manufacturing cycles, high performance, and cost effective products such as electro- mechanical assemblies and devices for over two dozen medical, magnetic, motion control, factory and laboratory automation and industrial original equipment manufacturers -- OEMs. MARSH SUPERMARKETS: S&P Holds CCC Sub. Debt Rating on CreditWatch ----------------------------------------------------------------- Standard & Poor's Ratings Services held its 'B-' corporate credit and 'CCC' subordinated debt ratings on Indianapolis, Indiana-based Marsh Supermarkets Inc. on CreditWatch with developing implications. The ratings were placed on CreditWatch with developing implications on Nov. 29, 2005, following the company's announcement that it had retained Merrill Lynch & Co. to explore strategic alternatives for the enhancement of shareholder value, including a possible sale of the company to a strategic or financial buyer. "Ratings could be lowered while on CreditWatch if the company's operating and cash flow generation trends do not improve," said Standard & Poor's credit analyst Stella Kapur. Marsh does not expect to announce any decisions with respect to the exploration of strategic alternatives until they have been approved by its board. Standard & Poor's will monitor developments associated with this process to assess the implications for the ratings. The company remains very highly leveraged, with lease-adjusted debt to EBITDA of 8.1x for the 12 months ended Jan. 7, 2006. Interest coverage is weak at 1.5x. As of Jan. 7, 2006, the company's consolidated fixed-charge coverage ratio, under its 8.875% senior subordinated notes, fell below the minimum ratio required. As a result, the company's permitted indebtedness is limited to all debt existing at Jan. 7, 2006, plus the full capacity under its credit facility. MASTEC INC: Settles $10 Million Claims in Securities Litigation --------------------------------------------------------------- Bernstein Litowitz Berger & Grossmann LLP and Yourman Alexander & Parekh LLP, the Court-appointed Co-Lead Counsel for the Class in In re MasTec Securities Litigation, reported that MasTec, Inc. (NYSE: MTZ) and certain of its current and former officers and directors have agreed to settle all claims asserted against them in this Action for the sum of $10 million in cash. The settlement comes after two years of litigation in the U.S. District Court for the Southern District of Florida, before the Honorable Federico A. Moreno, U.S. District Court Judge. The Court appointed the Arkansas Teacher Retirement System and Alex Meruelo Living Trust as Co-Lead Plaintiffs on behalf of the class of investors who purchased MasTec common stock between Aug. 12, 2003, and May 11, 2004. After an extensive investigation, Lead Plaintiffs filed their Consolidated Second Amended Class Action Complaint on behalf of the Class on Feb. 22, 2005. The Complaint alleges that MasTec and members of its senior management made false statements regarding the Company's financial performance for the second and third quarters of 2003, which had the effect of artificially inflating MasTec's stock price. In September 2005, the Court denied Defendants' Motion to Dismiss the Action in its entirety. Since that time, Lead Plaintiffs have engaged in intensive discovery. The case was set for trial beginning in September of this year. "We are very pleased to achieve this outstanding recovery, which represents a substantial percentage of the Class' likely recoverable damages," BLB&G partner Steven B. Singer said. "The settlement represents the hard work and commitment of the Court-appointed Lead Plaintiffs who were actively involved in all phases of the litigation. "The settlement was the result of a hard fought process, and we believe it represents an exceptional result for the Class," YA&P partner Behram V. Parekh said. "This settlement shows how shareholders can make a difference." The settlement is subject to Court approval, after notice to the members of the Class. Headquartered in Coral Gables, Florida, MasTec Inc. -- http://www.mastec.com/-- is a leading specialty contractor operating throughout the United States and in Canada across a range of industries. The Company's core activities are the building, installation, maintenance and upgrade of communication and utility infrastructure systems. * * * Mastec Inc.'s 7-3/4% Senior Subordinated Notes due 2008 carry Moody's Investors Service's B2 rating. MESABA AVIATION: MAIR Won't Renew DIP Financing Commitment ---------------------------------------------------------- In a Form 8-K filing with the Securities and Exchange Commission on Apr. 5, 2006, MAIR Holdings, Inc., disclosed that it would not renew its commitment to provide DIP financing to Mesaba Aviation, Inc., dba Mesaba Airlines. MAIR says that in October 2005, it delivered to the Debtor a commitment letter and term sheet to provide DIP financing. The terms of the original commitment letter required that the U.S. Bankruptcy Court for the District of Minnesota approve the DIP Financing within 45 days after the filing of the bankruptcy petition or Nov. 27, 2005. MAIR says that it extended that deadline twice, most recently to March 24, 2006, at which time, its commitment to provide DIP financing expired. As reported in the Troubled Company Reporter on Apr. 6, 2006, the Court rescheduled the final hearing of the Debtor's financing agreement with MAIR Holdings to Apr. 25, 2006. On Apr. 11, 2006, the Debtor withdrew its request for a final order for a postpetition financing from MAIR. The Debtor is currently in negotiations with other potential DIP lenders. Mesaba Aviation, Inc., d/b/a Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945- 7000). MESABA AVIATION: Court OKs Mercer's Retention as Consultant ----------------------------------------------------------- Mesaba Aviation, Inc., dba Mesaba Airlines, sought and obtained authority from the U.S. Bankruptcy for the District of Minnesota to employ Mercer Human Resource Consulting, Inc., to assist it in the evaluation and revision of its compensation and severance programs, nunc pro tunc to November 22, 2005. Specifically, Mercer HR will: 1. conduct a review of the Debtor's existing compensation and severance programs; 2. assist the Debtor in developing revised programs; and 3. provide expert testimony, to the extent necessary, with regard to compensation or severance matters. The Debtor believes that by assessing its compensation and severance programs relative to similar programs in the current market, it will be able to conform its compensation programs with current market trends and thereby retain the most qualified personnel at a reasonable cost. The Debtor believes that Mercer HR will carry out a unique, specific and very limited function and will use reasonable efforts to coordinate with the Debtor's other retained professionals to avoid the unnecessary duplication of services. Mercer HR will charge the Debtor on an hourly basis: Position Hourly Rate -------- ----------- Principal $500 to $700 Sr. Associate $300 to $500 Associate $200 to $300 Analysts $150 to $200 Administrative Support Included in Consultant Billing Rates In addition, the Debtor has agreed to pay Mercer HR's reasonable travel and out-of-pocket expenses. The Debtor also asks the Court to: -- hear Mercer HR's fee applications at 90-day intervals; -- allow Mercer HR to file a final fee application and hear that final fee application as soon as Mercer HR's services end; and -- allow it to pay Mercer HR's invoices as received on a monthly basis, subject to the holdback of 20% of the invoiced fees. Subject to certain exceptions, the Debtor has agreed to: -- limit Mercer HR's liability for consequential, indirect, special, incidental or similar damages; and -- indemnify Mercer HR from any litigation costs associated with litigation commenced against the Debtor. Notwithstanding anything to the contrary, the Debtor will not indemnify Mercer HR from claims, which have been finally determined to have arisen from Mercer HR's negligence. John Dempsey, a principal of Mercer HR, assures the Court that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. U.S. Trustee's Objection to the Retention Assistant U.S. Trustee for Region 12 , Robert B. Raschke, had asked the Court to deny employment of Mercer Human, noting that: -- the Engagement Letter between the Debtor and Mercer HR was dated December 21, 2005; -- the application was filed on January 27, 2006; -- the Debtor determined the need to employ Mercer HR at the end of November, based on the application; and -- upon information and belief, a large portion of the work to be performed by Mercer HR was done in December and January. Mr. Raschke contended that it was not clear why the Debtor or Mercer HR did not seek prior Court approval of the employment. Mr. Raschke argued that if the Court does not examine the purpose for the delay in seeking retroactive employment approval, the parties may abuse the nunc pro tunc procedure as a way to avoid requirements under Section 327(a) of the Bankruptcy Code and the due process. Mr. Raschke said that unless the Debtor can establish that its failure to timely file the application was due to excusable neglect, the Court should not approve the employment nunc pro tunc. In the alternative, the application should be approved as of the date it was filed with the Court. Debtor's Reply Will R. Tansey, Esq., at Ravich Meyer Kirkman McGrath & Nauman, in Minneapolis, Minnesota, asserted that the Debtor has satisfied the "excusable neglect" standard established by the Supreme Court in Pioneer Investment Services Co. v. Brunswick Assoc. Ltd. Partnership, 507 U.S. 380 (1993) and the "extraordinary circumstances" test used in several jurisdictions. The delay between the Debtor's retention of Mercer Human Resource Consulting, Inc., and the filing of the Application is primarily a result of the parties' justifiable focus on preparing for the Severance Motion, Mr. Tansey explains. Mr. Tansey adds that the delay was increased as a result of: -- the initial confusion relating to the need for a separate application for Mercer HR; -- the negotiations between the Debtor and Mercer HR regarding the structure, amount, and terms of Mercer HR's engagement; -- the intervening holiday season; -- an international trip by Mercer HR's primary representative in the matter; -- an incorrect e-mail address; and -- an assumption that nunc pro tunc approval was acceptable in the Debtor's case because several other professionals had been approved nunc pro tunc without objection by the U.S. Trustee or other party. "It would be fundamentally unfair to Mercer HR if it is not compensated for the Services [it] provided to [the] Debtor's estate where such Services were provided at [the] Debtor's request prior to court approval," Mr. Tansey contends. The U.S. Trustee also opposed language in the Engagement Letter providing for exclusive jurisdiction of New York courts to matters relating to the Engagement Letter. Mr. Tansey clarifies the Debtor and Mercer HR have addressed that concern by submitting a proposed order requiring that disputes arising in relation to the Engagement Letter or Mercer HR's engagement with the Debtor will be heard before the Bankruptcy Court. Mesaba Aviation, Inc., d/b/a Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945- 7000). NANOBAC PHARMACEUTICALS: Aidman Piser Raises Going Concern Doubt ---------------------------------------------------------------- Aidman, Piser & Company, P.A., expressed substantial doubt about Nanobac Pharmaceuticals Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2005. The auditing firm pointed to the company's recurring losses from operations, working capital and net capital deficiencies and its dependent upon continued financing from stockholders and outside investors. For the fiscal year ended Dec. 31, 2005, the company incurred a $3,687,337 net loss on $656,802 of revenues, in contrast to a $8,518,408 net loss on $358,361 of revenues in the prior year. Working Capital Deficit At Dec. 31, 2005, the Company's balance sheet showed $173,000 in current assets and $3.7 million in total current debts and a working capital deficit of $3.5 million. The Company is dependent on continued financing from outside investors including additional related party loans. Management believes that the Company will need to raise additional capital in order to: * launch new clinical trials, * fund research and development for new treatment areas, and * fund general working capital requirements. A full-text copy of Nanobac's latest quarterly report is available at no charge at http://researcharchives.com/t/s?80d Headquartered in Tampa, Florida, Nanobac Pharmaceuticals, Inc., fka American Enterprise.Com, Corporation and its subsidiaries -- http://www.nanobaclabs.com/-- is a research-based lifescience company. The Company's primary business is the study and development of therapeutic and diagnostic technologies related to calcifying nano-particles. NOMURA ASSET: Moody's Places Low-B Ratings on Two Cert. Classes --------------------------------------------------------------- Moody's Investors Service assigned Aaa rating to the senior certificates issued by Nomura Asset Acceptance Corporation, Alternative Loan Trust, Series 2006-AR2, and ratings ranging from Aa2 to B2 to the subordinate certificates in the deal. The securitization is backed by Alliance Bancorp for Groups I-III, Pinnacle Direct for Groups I-II, and various other originators originated adjustable rate Alternative-A mortgage loans acquired by Nomura Credit & Capital, Inc. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, overcollateralization and excess spread for Group III. Moody's expects collateral losses to range from 1.20% and 1.40% for Groups I-II, and 1.45% to 1.65% for Group III. GMAC Mortgage Corporation will service the mortgage loans, and Wells Fargo Bank, N.A. will act as master servicer. The complete rating actions are: Nomura Asset Acceptance Corporation, Alternative Loan Trust, Series 2006-AR2 * Class I-A, Assigned Aaa * Class II-A-1, Assigned Aaa * Class II-A-2, Assigned Aaa * Class II-A-3, Assigned Aaa * Class II-X, Assigned Aaa * Class C-B-1, Assigned Aa2 * Class C-B-2, Assigned A2 * Class C-B-3, Assigned Baa2 * Class C-B-4, Assigned Ba2 * Class C-B-5, Assigned B2 * Class III-A-1, Assigned Aaa * Class III-A-2, Assigned Aaa * Class III-M-1, Assigned Aa2 * Class III-M-2, Assigned A1 * Class III-M-3, Assigned A3 * Class III-M-4, Assigned Baa1 * Class III-M-5, Assigned Baa3 NORCRAFT HOLDINGS: S&P Rates $60 Million Credit Facility at BB -------------------------------------------------------------- Standard & Poor's Ratings Services assigned senior secured bank loan and recovery ratings to Norcraft Holdings LP's $60 million first-lien revolving credit facility. The revolving credit facility is rated 'BB' (two notches above the 'B+' corporate credit rating) with a recovery rating of '1', indicating the expectation for the full recovery of principal in the event of a payment default. The corporate credit rating on Norcraft is 'B+' and the outlook is stable. "The ratings on Eagan, Minnesota-based Norcraft Holdings and its subsidiary, Norcraft Cos. LP, reflect limited product diversity in a cyclical industry, a small sales and asset base, and a very aggressive financial policy," said Standard & Poor's credit analyst Lisa Wright. "The ratings also reflect the company's national presence, relatively good cost position, experienced management team, and currently strong industry demand." Ratings list: Norcraft Holdings L.P.: Corporate credit rating -- B+/Stable/-- Ratings Assigned: Senior secured bank loan -- BB (Recovery rtg: 1) O'SULLIVAN INDUSTRIES: Appoints Russ Steinhorst as CFO ------------------------------------------------------ The Board of Directors of O'Sullivan Industries, Inc., names Rick Walters as the company's President and Chief Executive Officer. "Naming Rick to lead O'Sullivan positions the company to continue the execution of the strategy and plans designed to turn O'Sullivan into a stronger company for the future," Tom Shandell, who was named chairman of the O'Sullivan board of directors, stated. Mr. Walters joined O'Sullivan as CFO in June 2004 from Newell Rubbermaid, where he served as group vice president and CFO of the company's Sharpie/Calphalon group. He has served as interim CEO of O'Sullivan since November 2005. The company also reported the promotion of Russ Steinhorst to Senior Vice President and Chief Financial Officer, succeeding Mr. Walters. Mr. Steinhorst joined O'Sullivan as Corporate Controller in August 2004 from Newell Rubbermaid, where he held progressively increasing responsibility in various accounting and finance roles, with his last position as Vice President - Finance for the Sharpie group. "Russ has done an outstanding job helping to guide O'Sullivan through our recently completed restructuring," commented Rick Walters. "He is a solid financial and business leader and we look forward to his continued contributions to O'Sullivan's successes into the future." Based 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). Joel H. Levitin, Esq., at Dechert LLP, represents the Debtors. Michael H. Goldstein, Esq., Eric D. Winston, Esq., and Christine M. Pajak, Esq., at Stutman, Treister & Glatt, P.C., represent the Official Committee of Unsecured Creditors. On Sept. 30, 2005, the Debtor listed $161,335,000 in assets and $254,178,000 in debts. ONEIDA LTD: Court Okays Shearman & Sterling as Bankruptcy Counsel ----------------------------------------------------------------- Oneida Ltd. and its debtor-affiliates sought and obtained permission from the U.S. Bankruptcy Court for the Southern District of New York to employ Shearman & Sterling LLP as their bankruptcy counsel. Shearman & Sterling is expected to: a. provide legal advice with respect to the Debtors' powers and duties as debtors in possession in the continued operation of their businesses and management of their properties; b. prepare on behalf of the Debtors all necessary applications, motions, objections, responses, answers, orders, reports and other legal papers; c. pursue confirmation of a plan of reorganization and approval of the corresponding solicitation procedures and disclosure statement; d. attend meetings and negotiate with representatives of creditors and other parties-in-interest; e. provide general corporate, capital markets, securitization, employment and litigation advice and other general non- bankruptcy legal services to the Debtors; f. appear before the Court, any appellate courts and the Office of the U.S. Trustee to protect the interests of the Debtors; and g. perform all other legal services for the Debtors which may be necessary and proper in the proceedings. Douglas P. Bartner, Esq., a member at Shearman & Sterling, tells the Court that the Firm's professionals bill: Professional Hourly Rate ------------ ----------- Partners $610 - $850 Counsel & Associate $245 - $675 Legal Assistants/Specialists $95 - $235 Mr. Bartner assures the Court that the Firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Bartner can be reached at: Douglas P. Bartner, Esq. Shearman & Sterling LLP 599 Lexington Avenue New York, New York 10022-6069 Tel: (212) 848-4000 Fax: (212) 848-7179 http://www.shearman.com Based in Oneida, New York, Oneida Ltd. -- http://www.oneida.com/ -- is the world's largest manufacturer of stainless steel and silverplated flatware for both the Consumer and Foodservice industries, and the largest supplier of dinnerware to the foodservice industry. Oneida is also a leading supplier of a variety of crystal, glassware and metal serveware for the tabletop industries. The Company and its 8 debtor-affiliates filed for Chapter 11 protection on March 19, 2006 (Bankr. S.D. N.Y. Case Nos. 06-10489 through 06-10496). Douglas P. Bartner, Esq., at Shearman & Sterling LLP represents the Debtors. Credit Suisse Securities (USA) LLC is the Debtors' financial advisor. When the Debtors filed for protection from their creditors, they listed $305,329,000 in total assets and $332,227,000 in total debts. ONEIDA LTD: Court Okays Kurtzman's Retention as Claims Agent ------------------------------------------------------------ Oneida Ltd. and its debtor-affiliates sought and obtained permission from the U.S. Bankruptcy Court for the Southern District of New York to employ Kurtzman Carson Consultants LLC, as their claims, noticing and balloting agent. Kurtzman Carson is expected to: a. notify all potential creditors of the filing of the Debtors' bankruptcy petitions and the setting of the first meeting of creditors, pursuant to section 341(a) of the Bankruptcy Code, in accordance with the relevant provisions of the Bankruptcy Code and Rules; b. maintain an official copy of the Debtors' schedules of assets and liabilities and statement of financial affairs if applicable, listing the Debtors' known creditors and the amounts owed; c. notify all potential creditors of the existence and amount of their respective claims as evidenced by the Debtors' books and records and as set forth in the schedules; d. furnish a notice of the last date for the filing of proofs of claim, and a form for the filing of proofs of claim, after the notice and form are approved by the Court; e. file with the Clerk within ten days of service an affidavit or certificate of service with a copy of the notice, a list of persons to whom it was mailed and the date the notice was mailed; f. docket all claims received, maintain the official claims registers for each Debtor on behalf of the Clerk, and provide the Clerk with certified duplicate unofficial Claims Registers on a monthly basis, unless otherwise directed; g. specify, in the applicable Claims Register, the following information for each claim docketed: -- the claim number assigned; -- the date received; -- the name and address of the claimant and, if applicable, the agent who filed the claim; and -- the classification of the claim; h. record all transfers of claims and provide any notices of the transfers required by Bankruptcy Rule 3001; i. make changes in the Claims Registers pursuant to orders of the Court; j. turn over to the Clerk copies of the Claims Registers for the Clerk's review, upon completion of the docketing process for all claims received to date by the Clerk's office; k. maintain the official mailing list for each Debtor of all entities that have filed a proof of claim, which list will be available upon request by a party-in-interest or the Clerk; l. assist with the solicitation and calculation of votes and distribution as required in furtherance of the confirmation of plan of reorganization; m. 30 days prior to the closing of these chapter 11 cases, submit an order dismissing the Firm as the Noticing Agent and terminating the services of the Firm upon completion of its duties and responsibilities; and n. upon the closing of these chapter 11 cases, pack and transport all original documents in proper format, as provided by the Clerk's office, to the Federal Archives and Record Administration. Eric S. Kurtzman, Esq., chief executive officer of Kurtzman Carson, tells the Court that the Firm's professionals bill: Professional Hourly Rate ------------ ----------- Clerical $40 - $65 Case Manager $75 - $115 Bankruptcy Consultant $125 - $210 Senior Bankruptcy Consultant $225 - $250 Technology/Programming Consultant $115 - $195 Mr. Kurtzman assures the Court that the Firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Based in Oneida, New York, Oneida Ltd. -- http://www.oneida.com/ -- is the world's largest manufacturer of stainless steel and silverplated flatware for both the Consumer and Foodservice industries, and the largest supplier of dinnerware to the foodservice industry. Oneida is also a leading supplier of a variety of crystal, glassware and metal serveware for the tabletop industries. The Company and its 8 debtor-affiliates filed for Chapter 11 protection on March 19, 2006 (Bankr. S.D. N.Y. Case Nos. 06-10489 through 06-10496). Douglas P. Bartner, Esq., at Shearman & Sterling LLP represents the Debtors. Credit Suisse Securities (USA) LLC is the Debtors' financial advisor. When the Debtors filed for protection from their creditors, they listed $305,329,000 in total assets and $332,227,000 in total debts. OWENS CORNING: Wants to Expand Scope of Ernst & Young's Employment ------------------------------------------------------------------ Owens Corning and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for permission to further expand the scope of Ernst & Young LLP's employment to include, pursuant to a Master Tax Services Agreement, these services: 1. tax advisory services 2. expatriate tax services 3. Global Employee Assignment Support services Specifically, Ernst & Young will: a. work with the Debtors' personnel or agents in developing an understanding of the tax issues and options related to the their Chapter 11 filing; b. assist and advise the Debtors in their bankruptcy restructuring objectives and post-bankruptcy operations by determining the tax manner to achieve these objectives; c. provide tax advisory services regarding availability, limitations and preservation of tax attributes, minimization of tax costs in connection with stock or asset sales, if any, assist with tax issues arising in the ordinary course of business while in bankruptcy; d. assist in assessing the validity of tax claims, including working with bankruptcy counsel to reclassify tax claims as non-priority; e. provide analysis of legal and other professional fees incurred during the bankruptcy period for purposes of determining future deductibility of the costs; f. provide documentation, as appropriate or necessary, of tax analysis, opinions, recommendations, conclusions and correspondence for any proposed restructuring alternative, bankruptcy tax issue or other tax matters; g. provide assistance with issues under Financial Accounting Standard 109 and evaluation and resolution of fresh start financial reporting issues, including but not limited to, assistance with developing fair market value estimates of assets and liabilities; h. provide access to the firm's personnel for other miscellaneous tax questions and advice; i. provide routine tax advice and assistance concerning issues as requested by the Debtors' tax department when the projects are not covered by a separate project addendum and do not involve any significant tax planning or projects; j. provide assistance with the preparation of various tax returns and tax filings for participants in the Debtors' expatriate program; and k. provide various GES Services covering existing global employee population of the Debtors who are covered by the Debtors' International Assignment Program and authorized by the Debtors. Given the nature of the services, the Debtors believe that the circumstances under which the firm's interest could be adverse to them is "virtually non-existent." The Debtors will identify the additional services that the firm will perform and will authorize the performance of those services on a project-by-project basis as set forth on a separate addendum for each project. For its tax advisory services, the Debtors will pay Ernst & Young professionals at its hourly rates: Professional Range ------------ ----------- National Partner $640 - $840 Principal/Partner $480 - $600 Manager/Senior Manager $345 - $480 Staff/Senior $150 - $320 A full-text copy of the affidavit filed by Steven T. Herman, a partner at Ernst & Young, and the schedule of the firm's rates for expatriate tax services and GES services is available for free at http://bankrupt.com/misc/StevenHermanAffidavit.pdf Pursuant to the Master Tax Agreement the firm may subcontract a portion of certain responsibilities to any of the firm's entities. The firm intends to pay its entities under the subcontracting arrangement directly for their services and to apply to the Court for reimbursement by the Debtors. Mr. Herman assures the Court that the firm is disinterested as defined in Section 101(14) of the Bankruptcy Code and as required by Section 327(a). Ernst & Young will not accept any engagement which would require it to represent interest adverse to the Debtors in any way relating to the matters in connection to which it is to be engaged in their Chapter 11 cases, Mr. Herman assures Judge Fitzgerald. 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). Norman L. Pernick, Esq., at Saul Ewing LLP, represents the Debtors. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, represents the Official Committee of Asbestos Creditors. James J. McMonagle serves as the Legal Representative for Future Claimants and is represented by Edmund M. Emrich, Esq., at Kaye Scholer LLP. (Owens Corning Bankruptcy News, Issue No. 128; Bankruptcy Creditors' Service, Inc., 215/945-7000). PACIFIC BIOMETRICS: Private Placement Proceeds Total $4.3 Million ----------------------------------------------------------------- Pacific Biometrics, Inc. (OTCBB:PBME) completed its private placement for shares and warrants of common stock, closing on an additional $500,000 in early April 2006. This closing was supplementary to the March 8, 2006 closing, which brought the Company $3,800,065 in gross proceeds. Total gross proceeds from the private placement were approximately $4.3 million. In addition, in early April 2006, the holders of the outstanding shares of Company Series A preferred stock entered into an agreement to voluntarily exchange all of their shares of Series A preferred stock for 1,791,907 shares of common stock. The effective date of the exchange is March 31, 2006. As a result of the transaction, the outstanding shares of Series A preferred stock will be cancelled, and the Company common stock will be the only class of stock issued and outstanding. "These recent events are significant for two reasons," Ron Helm, Chief Executive Officer, commented. "First, we achieved our financing goal for net proceeds, which ends our immediate focus on financing and which we believe gives us the necessary resources to move forward on our operations plan during 2006. "Second, we completed a very important capital restructuring by converting the Series A preferred into common, which simplifies and cleans up our capital structure. We view both of these events as positive results for PBI, positioning the Company for future growth and value for our stockholders." About Pacific Biometrics Established in 1989, Pacific Biometrics Inc. -- http://www.pacbio.com/-- provides specialized central laboratory and contract research services to support pharmaceutical and diagnostic manufacturers conducting human clinical trial research. The company provides expert services in the areas of cardiovascular disease, diabetes, osteoporosis, arthritis, and nutrition. The PBI laboratory is accredited by the College of American Pathologists and through its non-profit affiliate Pacific Biometrics Research Foundation is one of only three U.S.-based laboratories approved and accredited by the Center for Disease Control as a Cholesterol Reference Laboratory. * * * Going Concern Doubt As reported in the Troubled Company Reporter on Feb. 16, 2006, Williams & Webster, PS, in Spokane, Washington, expressed substantial doubt about Pacific Biometrics' ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended June 30, 2005. The auditing firm pointed to the Company's recurring net losses and cash flow shortages. PARMALAT GROUP: Citibank Can Sue Parmalat Paraguay S.A. ------------------------------------------------------- In a stipulation approved by the Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York, Citibank, N.A., and Citibank, N.A., International Banking Facility, on one hand, and Dr. Enrico Bondi, CEO of Parmalat S.p.A. and extraordinary administrator of Parmalat Finanziaria S.p.A. and certain of its affiliates, on the other hand, agree that at 5:00 p.m. New York time on May 1, 2006, the Preliminary Injunction Order will automatically be deemed modified to permit Citibank to take any action to enforce its rights against Parmalat Paraguay S.A. or otherwise with respect to the obligations of Parmalat Paraguay to Citibank in Paraguay. During the Standstill Period, Parmalat Finanziaria and its debtor-affiliates will provide Citibank with: -- access to company management; -- access to their Paraguayan advisers; -- access to their books and records; -- copies and access to forecasts, budgets, restructuring plans, term sheets relating to a sale or other disposition of the assets, purchase and sale agreements, and correspondence of any kind or nature relating to a sale or other disposition of the assets or the restructuring of the indebtedness. Any information obtained by Citibank will be used exclusively for accessing and seeking a restructuring of the debt of Parmalat Paraguay. Citibank will maintain the information as confidential. The Standstill Period may be extended for an additional period of time upon the parties' written agreement. Headquartered in Wallington, New Jersey, Parmalat USA Corporation -- http://www.parmalatusa.com/-- generates more than 7 billion euros in annual revenue. The Parmalat Group's 40-some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices and employs over 36,000 workers in 139 plants located in 31 countries on six continents. The Company filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than $200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. (Parmalat Bankruptcy News, Issue No. 71; Bankruptcy Creditors' Service, Inc., 215/945-7000) PILLOWTEX CORP: Wants to Settle Dispute Over Duke's $1.5MM Claims ----------------------------------------------------------------- Pillowtex Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to approve their settlement agreement with Duke Energy Royal LLC. On June 3, 1998, Pillowtex Corporation and DukeSolutions, Inc., Duke Energy's predecessor-in-interest, entered into a Master Energy Services Agreement. Under the agreement, Duke will install certain lighting fixtures, lamps and electronic ballasts in nine of the Debtors' facilities and a new wastewater heat recovery system at the Debtors' Columbus, Georgia, plant, while the Debtors will make certain monthly payments based on Pillowtex's contemplated annual energy savings generated by the Equipment Collateral over an eight-year term. Duke and Pillowtex entered into a settlement agreement and release to resolve a dispute on June 13, 2003. Pillowtex agreed to pay Duke $1,584,000, which represented the secured portion of the claim. The parties entered into Consent Order and Judgment, awarding Duke judgment in the same amount as the 2003 Settlement. However, Pillowtex failed to make any payment pursuant to the 2003 Settlement and the 2003 Consent Order before Pillowtex commenced the instant cases on the bankruptcy filing. On Dec. 23, 2003, Duke filed a proof of claim with respect to the MESA. On the same date, Duke filed multiple proofs of claim against other Debtors. Duke asserted a secured claim of $4,365,000 and a general unsecured claim of $5,501,454, totaling $9,866,454. To settle their dispute, the parties have agreed that in full satisfaction of all of Duke's claims, Duke will have an allowed general unsecured claim of $1.5 million against the Debtors. Headquartered in Dallas, Texas, Pillowtex Corporation -- http://www.pillowtex.com/-- sold top-of-the-bed products to virtually every major retailer in the U.S. and Canada. The Company filed for Chapter 11 protection on November 14, 2000 (Bankr. Del. Case No. 00-4211), emerged from bankruptcy under a chapter 11 plan, and filed a second time on July 30, 2003 (Bankr. Del. Case No. 03-12339). The second chapter 11 filing triggered sales of substantially all of the Company's assets. David G. Heiman, Esq., at Jones Day, and William H. Sudell, Jr., Esq., at Morris Nichols Arsht & Tunnel, represent the Debtors. On July 30, 2003, the Company listed $548,003,000 in assets and $475,859,000 in debts. PLIANT: Creditors Panel Wants Bonus Plan Documents & Buck Report ---------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in Pliant Corporation and its debtor-affiliates' cases asks the U.S. Bankruptcy Court for the District of Delaware to compel the Debtors and Buck Consultants, LLC, to produce certain documents no later than April 28, 2006, at 4:00 p.m. (Eastern Time). The Committee wants the documents sent to the offices of its bankruptcy counsel, Lowenstein Sandler PC, in Roseland, New Jersey. The Committee also wants the Debtors and Buck to make available one or more individuals designated by the Debtors and Buck as having the most extensive knowledge of the documents and subject matter for oral examination at the offices of Ashby & Geddes PA, the Committee's Delaware counsel, in Wilmington, beginning on May 8, 2006 (Eastern Time). Don A. Beskrone, Esq., at Ashby & Geddes, notes that under the Debtors' Plan of Reorganization, the Debtors intend to restructure their balance sheet by converting certain prepetition bond debt into equity in the Reorganized Debtors. The Debtors also propose to distribute preferred and common stock to affiliates of JP Morgan Partners, LLC, in an amount sufficient to maintain JPMC's controlling stake, to avoid triggering certain "put" rights of the Debtors' secured noteholders and to leave JPMC in control of the Reorganized Debtors' board of directors. The Plan also includes an emergence bonus plan benefiting seven members of senior management. Pursuant to the Bonus Plan, the Senior Executives will receive significant cash bonuses on the Debtors' emergence from Chapter 11, subject to the achievement of certain "goals". The "goals" include (a) emergence from Chapter 11 by certain dates, (b) payment in full to trade creditors and (c) a subjective assessment by the Board of the capital structure of the Reorganized Debtors. The Committee notes that JPMC elected four of the seven members of the Debtors' board, including three employees of JPMC. Mr. Beskrone informs the Court that on March 23, 2006, the Debtors made a telephonic presentation to the Committee's representatives regarding the Bonus Plan and delivered a report by Buck purporting to show the necessity and reasonableness of the Bonus Plan. Buck informed the Committee's representative that they had compared the Bonus Plan to similar plans filed in other bankruptcy cases. During the course of that presentation, the Committee's representatives raised various questions regarding the Bonus Plan and the Buck Report, and requested that the Debtors disclose to the Committee the information relied upon in preparing the Buck Report. The Debtors and Buck repeatedly refused to provide the information, which the Committee believes consists primarily of public information. In addition to the Bonus Plan, the Plan also includes a Management Stock Plan and Deferred Cash Incentive Plan. Under the Stock Incentive Plan, 8,000 shares of Preferred Stock will be issued by the Debtors and distributed to members of senior management. Neither the Plan nor the Disclosure Statement clarify which or how many members of senior management will receive shares under the Stock Incentive Plan, how that determination will be made, or how and when those shares will vest. Mr. Beskrone says the Committee also made various inquiries to the Debtors regarding the involvement of JPMC in the negotiation of the Support Agreement and the approval of the Plan. To date, the Debtors have refused to adequately respond to the Committee's inquiries regarding the Plan. Mr. Beskrone asserts that the information sought will further the Committee's performance of its statutory duty under Section 1103(c) of the Bankruptcy Code. The information sought is necessary for the Committee to "investigate the acts, conduct, assets, liabilities, and financial condition of the debtor, the operation of the debtor[s'] business and the desirability of the continuance of such business . . . [and it is] relevant to the case or to the formulation of the plan." 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). James F. Conlan, Esq., at Sidley Austin LLP, and Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. The Debtors tapped McMillan Binch Mendelsohn LLP, as their Canadian bankruptcy counsel. The Ontario Superior Court of Justice named RSM Richter, Inc., as the Debtors' information officer in their restructuring proceeding under Companies Creditors Arrangement Act in Canada. 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. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000) PLIANT CORP: Wants Until August 1 to Remove State Court Actions --------------------------------------------------------------- Pursuant to Section 1452 of the Judiciary Code, a party may remove any claim or cause of action in a civil action other than a proceeding before the United States Tax Court or a civil action by a governmental unit to enforce the governmental unit's police or regulatory power, to the district court for the district where the civil action is pending, if that district court has jurisdiction of the claim or cause of action under 28 U.S.C. Section 1334. Rule 9027(a)(2) of the Federal Rules of Bankruptcy Procedure provides, in pertinent part: "If the claim or cause of action in a civil action is pending when a case under the Code is commenced, a notice of removal may be filed only within the longest of (A) 90 days after the [Petition Date], (B) 30 days after entry of an order terminating a stay, if the claim or cause of action in a civil action has been stayed under [Section] 362 of the Code, or (C) 30 days after a trustee qualifies in a chapter 11 reorganization case but not later than 180 days after the [Petition Date]." Pliant Corporation and its debtor-affiliates have not yet been able to comprehensively evaluate the potential need to remove any of their pending prepetition civil actions, Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, tells Judge Walrath. Since the Debtors filed for bankruptcy, Mr. Brady explains, they have focused on the transition into Chapter 11, as well the formulation and filing of their Plan of Reorganization and Disclosure Statement. The Debtors ask the U.S. Bankruptcy Court for the District of Delaware to extend the time by which they may file notices of removal through and including Aug. 1, 2006, with respect to civil actions pending as of the Petition Date. The Debtors assert that the extension will afford them additional time to make fully informed decisions concerning removal of each pending prepetition civil action. The extension will also assure that they do not forfeit valuable rights under Section 1452 of the Judiciary Code. Mr. Brady assures the Court that the rights of the Debtors' adversaries will not be prejudiced by the extension because any party to the action that is removed may seek to have it remanded to the state court. The Debtors further ask the Court that an extension be without prejudice to: a. any position they may take regarding whether Section 362 of the Bankruptcy Code applies to stay any given civil action pending against them; and b. their rights to seek further extensions of the removal period. Headquartered in Schaumburg, Illinois, Pliant Corporation -- http://www.pliantcorp.com/-- produces value-added film and flexible packaging products for personal care, medical, food, industrial and agricultural markets. The Debtor and 10 of its affiliates filed for chapter 11 protection on Jan. 3, 2006 (Bankr. D. Del. Lead Case No. 06-10001). James F. Conlan, Esq., at Sidley Austin LLP, and Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. The Debtors tapped McMillan Binch Mendelsohn LLP, as their Canadian bankruptcy counsel. The Ontario Superior Court of Justice named RSM Richter, Inc., as the Debtors' information officer in their restructuring proceeding under Companies Creditors Arrangement Act in Canada. 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. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000) PREMIER ENT: S&P Puts CCC Corp. Credit Rating on Watch ------------------------------------------------------ Standard & Poor's Ratings Services placed its ratings on Premier Entertainment Biloxi LLC, including its 'CCC' corporate credit rating, on CreditWatch with developing implications. The CreditWatch listing follows Premier's recent announcement that a tender offer for the company's $160 million 10.75% first mortgage notes due 2012 at a price of 101 would likely follow the completion of the purchase by GAR LLC (owner of 55% of the company's membership interest) of AA Capital Partners Inc.'s 45% membership interest in the company. GAR's purchase of AA Capital's membership interest would be financed by Leucadia National Corp., at which time Leucadia would cause Premier to commence a tender offer for all of the outstanding notes. Ratings upside potential could result from the successful tendering of the notes. Ratings downside potential could result in the absence of a successful tender offer, given: * the lack of resolution on insurance claims in amounts sufficient to repay the $160 million first mortgage notes; and * the possibility that Premier could face difficulties making upcoming interest payments. Following a successful tender, Standard & Poor's would likely withdraw its ratings on the notes. QUEEN'S SEAPORT: Howard Ehrenberg Appointed as Chapter 11 Trustee ----------------------------------------------------------------- The Office of the United States Trustee selected Howard Ehrenberg, Esq., a partner at SulmeyerKupetz, as Chapter 11 Trustee of Queen's Seaport Development Inc.'s bankruptcy effective April 13, 2006. Queen's Seaport Development Inc., which oversees the 66 year lease of the Queen Mary and surrounding 40 acres, filed for bankruptcy protection in March 2005 when the city of Long Beach claimed that Queen's Seaport Development, Inc., had taken rental credits it wasn't entitled to take and owes the city $4.53 million in back rent. Had the parties not agreed to the appointment of a Chapter 11 Trustee, then the bankruptcy judge overseeing the case could have dismissed the case or liquidated QSDI's assets. As Chapter 11 Trustee of QSDI, Mr. Ehrenberg immediately takes over all finances and operations of the company. "My first duty as the trustee is to meet with all of the parties involved in the case as well as interested third-party investors in order to develop a reorganization plan," Mr. Ehrenberg said. "Ultimately, our goal in reorganizing Queen's Seaport Development, Inc. is to restore the enterprise to profitability." Mr. Ehrenberg is a member of the Chapter 7 Bankruptcy Panel of Trustees, appointed by the Office of the United States Trustee, and a state court receiver. He is certified as a Business Bankruptcy Law Specialist by the American Bankruptcy Board of Certification and member of the Los Angeles Bankruptcy Forum, the Financial Lawyers Conference, American Bankruptcy Institute and Council of Certified Bankruptcy Specialists. He is also a member of the Executive Board of the Commercial Law and Bankruptcy Section of the Los Angeles County Bar Association and a former commissioner in the City of Burbank, California. About SulmeyerKupetz Headquartered in Los Angeles, California, SulmeyerKupetz -- http://www.sulmeyerlaw.com/-- is a law firm that specializes in bankruptcy, business reorganizations, litigation and commercial collections. Established in 1952, SulmeyerKupetz has vast experience representing a variety of clients in all aspects of insolvency proceedings, including out-of-court debt restructurings, negotiation and implementation of complex Chapter 11 plans, debtor-in-possession financing, acquisitions and asset sales for distressed businesses, and bankruptcy litigation. The firm represents both secured and unsecured creditors, lessors, creditors' committees, debtors, governmental entities, trustees and receivers. The firm also serves as local counsel on cases being managed outside of California. About Queen's Seaport Headquartered in Long Beach, California, Queen's Seaport Development, Inc. -- http://www.queenmary.com/-- operates the Queen Mary ocean liner, various attractions and a hotel. The Company filed for chapter 11 protection on March 15, 2005 (Bankr. C.D. Calif. Case No. 05-15175). Joseph A. Eisenberg, Esq., at Jeffer Mangles Butler & Marmaro LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of $10 million to $50 million. REFCO INC: Chap. 7 Trustee Wants Stay Modified to Liquidate Claims ------------------------------------------------------------------ Albert Togut, Esq., the interim Chapter 7 trustee appointed to oversee the liquidation of Refco LLC's estate, asks the United States Bankruptcy Court for the Southern District of New York to modify the automatic stay in Refco, LLC's chapter 7 proceedings in order to liquidate customer claims that are asserted in a "specialized tribunal" in which the Customer Litigation is currently pending. As of Nov. 25, 2005, Refco, LLC, was a defendant in certain lawsuits pending in federal or state courts, in preparation proceedings pending before the Commodity Futures Trading Commission, and in arbitration proceedings pending before the National Futures Association. Vincent E. Lazar, Esq., at Jenner & Block LLP, in Chicago, Illinois, relates that substantially all of the Customer Litigation involves claims asserted by customers of Refco LLC arising out of trading in accounts maintained at Refco LLC. Certain of the Customer Litigation Claims are subject to mandatory arbitration under the applicable agreements and law. In accordance with Section 362 of the Bankruptcy Code, prosecution of the Customer Litigation is currently stayed as to Refco LLC. However, certain of the Customer Litigation, in particular preparations proceedings pending before the CFTC where an employee or introducing broker has been named as a co- defendant with Refco LLC, is continuing against the non-debtor defendants. Prior to filing for chapter 7 liquidation, Refco LLC was represented in a significant percentage of the Customer Litigation by in-house counsel, who on occasion, also jointly represented employees or introducing brokers who had been named as co- defendants in the litigation. Mr. Lazar asserts that the employees and introducing brokers named in continuing Customer Litigation generally have continued to be represented by counsel, but Refco LLC has not been represented or participated in any ongoing litigation. Refco LLC was also represented in litigation against customers by several sets of outside counsel. Mr. Lazar says that two of those two law firms have been engaged by Mr. Togut, to represent him in Customer Litigation and other specialized commodities disputes with customers or brokers. A list of Refco LLC's Customer Litigation Claims is available for free at http://ResearchArchives.com/t/s?81c Mr. Togut will be represented in the Customer Litigation by a special counsel with experience in litigation and who previously represented Refco LLC in similar matters. Therefore, Mr. Togut believes that he is in the best position to effectively contest the Customer Litigation Claims. With respect to Customer Litigation where an employee or introducing broker has been named as a co-defendant with Refco LLC, Mr. Lazar contends that the estate's interests could be prejudiced if Mr. Togut is not represented in the ongoing litigation. Mr. Togut notes that certain of the Customer Litigation Claims are subject to mandatory arbitration, and likely could not be litigated before the Court in any event. Considering the bar date that has been established for filing proofs of claim against the Debtor's estate, Mr. Togut intends to expeditiously review all claims and promptly file objections to any invalid or contested claims. Mr. Togut asserts that commencing immediately the process of liquidating Customer Litigation Claims will facilitate the prompt administration and distribution of the Debtor's estate. Mr. Togut notes that there may be additional Customer Litigation Claims of which he is unaware. In the event he determines that it is in the estate's interests for the automatic stay to be lifted, Mr. Togut seeks the Court's authority to file a supplemental document to identify any Additional Customer Litigation Claims. About Refco Inc. Headquartered in New York, New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. Refco LLC, an affiliate, filed for chapter 7 protection on Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is a regulated commodity futures company that has businesses in the United States, London, Asia and Canada. Refco, LLC, filed for bankruptcy protection in order to consummate the sale of substantially all of its assets to Man Financial Inc., a wholly owned subsidiary of Man Group plc. (Refco Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 215/945-7000) REFCO INC: Refco LLC Trustee Wants Expenses Paid Before Conversion ------------------------------------------------------------------ Albert Togut, Esq., the interim Chapter 7 trustee appointed to oversee the liquidation of Refco LLC's estate, tells the United States Bankruptcy Court for the Southern District of New York that he takes no position on Refco LLC's Conversion Motion. As reported in the Troubled Company Reporter on Mar. 3, 2006, the U.S. Trustee appointed Mr. Togut, a senior member of Togut Segal & Segal LLP, as interim Chapter 7 trustee of Refco LLC. Mr. Togut explains that as a fiduciary, he does not believe it is appropriate for him to oppose or support the Conversion Motion. Notwithstanding, if the Court determines to convert Refco LLC's case from Chapter 7 to Chapter 11, Mr. Togut asks the Court to condition the conversion upon payment of administrative expenses incurred in the Chapter 7 administration of the Debtor's estate and any applicable commission payable to the Trustee. Refco LLC should be required to pay, in the ordinary course, all undisputed operating and other routine Chapter 7 administrative expenses without the need for further Court order. Mr. Togut also suggests that the Court set a date for the filing of requests for allowance and payment of Chapter 7 administrative expenses not otherwise paid in the ordinary course and establish a procedure for consideration, allowance and prompt payment of those expenses. Mr. Togut says that the Court should also: (i) set a deadline 45 days after the date of conversion for the Trustee and his professionals to file final applications for allowance of compensation for services rendered and reimbursement of expenses incurred in connection with the case, including any Trustee's commission; (ii) set a deadline for the filing of objections, if any, to those applications; (iii) schedule a hearing for consideration and approval of the applications; and (iv) direct Refco LLC to promptly pay the approved fees and expenses. No fees or commissions have been paid to date, Mr. Togut relates. Mr. Togut notes that he was able to close the sale of Refco LLC's business to Man Financial, Inc., mere hours after the Chapter 7 filing. Thus, he was able to preserve substantial value for the Debtor's estate. Thereafter, the Chapter 7 Trustee worked diligently to operate Refco LLC's business on a limited basis, preserve and liquidate estate assets, and otherwise administer the Debtor's estate. As part of this process, the Trustee has incurred, and continues to incur, substantial administrative expenses on Refco LLC's behalf. Mr. Togut explains that the parties and professionals providing services giving rise to the administrative expenses have done so based on an expectation that they would be paid promptly in the ordinary course of Refco LLC's Chapter 7 case. However, if Refco LLC's case is converted to Chapter 11 absent approval of the Trustee's request, payment of the administrative expense claims held by those parties and professionals could be substantially delayed, potentially until after any Chapter 11 plan is confirmed. Mr. Togut assures the Court there is no risk that Refco LLC's estate is, or might become, administratively insolvent. The estate has assets in excess of $750,000,000, and administrative expenses should never total more than a small fraction of this amount. Mr. Togut also notes that the Chapter 7 administrative expenses should have the same priority as Chapter 11 administrative expenses arising after any conversion. He points out In re Hages, 252 B.R. 789, 798 (Bankr. N.D. Calif. 2000), where the court held that upon conversion of case from Chapter 7 to Chapter 13, Chapter 7 administrative expenses had same priority as Chapter 13 administrative expenses. Mr. Togut says the court in In re Rodriguez, No. 99-10597, 1999 Bankr. LEXIS 1074, at *12-13 (Bankr. D. Colo. Nov. 8, 1999), had a similar conclusion. About Refco Inc. Headquartered in New York, New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. Refco LLC, an affiliate, filed for chapter 7 protection on Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is a regulated commodity futures company that has businesses in the United States, London, Asia and Canada. Refco, LLC, filed for bankruptcy protection in order to consummate the sale of substantially all of its assets to Man Financial Inc., a wholly owned subsidiary of Man Group plc. (Refco Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 215/945-7000) RHODES INC: Files Third Amended Joint Liquidation Plan in Georgia ----------------------------------------------------------------- Rhodes, Inc., and its two debtor-affiliates, Rhodes Holdings, Inc., and Rhodes Holdings II, Inc., filed with the U.S. Bankruptcy Court for the Northern District of Georgia their Third Amended and Restated Joint Plan of Liquidation. Overview of the Plan Under the plan Rhodes will continue to exist after the effective date as a separate corporate entity and Rhodes Holdings and Rhodes Holdings II will be dissolved. Treatment of Claims Under the Plan, Administrative Expense Claims, Priority Tax Claims, and DIP Lender Claims will be paid in full. Other Secured Claims will receive, in full satisfaction of their claims, either: (a) reinstatement of the legal, equitable and contractual rights of the claim, or (b) surrender of the collateral securing the claim by the Liquidating Agent. Priority Claims will be paid in full and in cash. Holders of General Unsecured Claims will a receive their pro rata share of the liquidation proceeds remaining after payment of administrative, priority tax, DIP lender, other secured claims, priority claims and unsecured convenience claims. The third amended plan did not quantify how much unsecured creditors will get. Unsecured Convenience Claims will receive a one-time cash payment equal to 25% of their claims. Holders of Subordinated Claims will receive their pro rate distribution of the liquidation proceeds remaining after payment of all other claims except Rhodes Holdings and Rhodes Holdings II unsecured claims. Holder of Rhodes Holdings II unsecured claims will receive a pro rata distribution of the liquidation proceeds remaining after payment of all other claims. Holders of these claims will also receive their pro rata share of any net recoveries on account of causes of action attributable to the assets of Rhodes Holdings II. Otherwise, the Debtors say, holders of general unsecured claims will also be entitled to the distribution. Under the plan, holders of Rhodes Holdings unsecured claims will receive no distributions on account of their respective claims. Holders of interests in the Debtors will receive nothing under the Plan and those interests will be cancelled and extinguished. A full-text copy of the Debtors' Third Amended and Restated Joint Plan of Liquidation is available for a fee at: http://www.researcharchives.com/bin/download?id=060419210729 The Court has set a hearing at 10:00 a.m. on May 4, 2006, to consider confirmation of the plan. Headquartered in Atlanta, Georgia, Rhodes, Inc., will continue to offer brand-name residential furniture to middle- and upper- middle-income customers through 63 stores located in 11 southern and midwestern states (after disposing of the locations listed above). The Company and two of its debtor-affiliates filed for chapter 11 protection on Nov. 4, 2004 (Bankr. N.D. Ga. Case No. 04-78434). Paul K. Ferdinands, Esq., and Sarah Robinson Borders, Esq., at King & Spalding represent the Debtors. Clifford A. Katz, Esq., at Platzer, Swergold, Karlin, et al, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated less than $50,000 in total assets but more than $50 million in total debts. ROTECH HEALTHCARE: Annual Stockholders' Meeting Slated for June 30 ------------------------------------------------------------------ In a regulatory filing with the Securities and Exchange Commission, Rotech Healthcare, Inc., discloses that it will hold its Annual Meeting of Stockholders on June 30, 2006. The Stockholders' meeting was originally scheduled for June 21. The record date for the determination of stockholders entitled to notice of, and to vote at, the 2006 Annual Meeting has been fixed by the Company's Board of Directors as May 1, 2006. Stockholders who wish to present proposals for inclusion in the proxy materials to be distributed by the Company in connection with the 2006 Annual Meeting must submit their proposals to the Company's Secretary at the principal executive offices of the Company a reasonable time before the Company begins to print and mail its proxy materials for the 2006 Annual Meeting. The Company expects to begin printing and mailing proxy materials in early May 2006. Stockholder proposals submitted after that date will be excluded, unless otherwise required to be included pursuant to Rule 14a-8 under the Exchange Act, the rules and regulations of the Securities and Exchange Commission, and other applicable laws. Rotech Healthcare, Inc., is a provider of home respiratory care and durable medical equipment and services to patients with breathing disorders such as chronic obstructive pulmonary diseases. The Company provides its equipment and services in 48 states through approximately 485 operating centers, located principally in non-urban markets. The Company's local operating centers ensure that patients receive individualized care, while its nationwide coverage allows the Company to benefit from significant operating efficiencies. Integrated Health Services, Inc. -- http://www.ihs-inc.com/-- operated local and regional networks that provide post-acute care from 1,500 locations in 47 states. The Company and its 437 debtor-affiliates filed for chapter 11 protection on February 2, 2000 (Bankr. Del. Case No. 00-00389). Rotech Medical Corporation and its direct and indirect debtor-subsidiaries broke away from IHS and emerged under their own plan of reorganization on March 26, 2002. Abe Briarwood Corp. bought substantially all of IHS' assets in 2003. The Court confirmed IHS' Chapter 11 Plan on May 12, 2003, and that plan took effect September 9, 2003. Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D. Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP, represent the IHS Debtors. On September 30, 1999, the Debtors listed $3,595,614,000 in consolidated assets and $4,123,876,000 in consolidated debts. (Integrated Health Bankruptcy News, Issue No. 103; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on Feb. 2, 2006, Moody's Investors Service downgraded Rotech Healthcare, Inc.'s corporate family rating to B2 from Ba3; $75 million revolving credit facility, due 2007, to Ba3 from Ba2; $42 million senior term loan, due 2008, to Ba3 from Ba2; $300 million face amount senior subordinated notes, due 2012, to B3 from B2. Moody's said the ratings outlook is stable. RUSSELL CORP: S&P Puts B+ Corp. Credit Rating on Positive Watch --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Atlanta, Georgia-based athletic apparel and sports equipment manufacturer Russell Corp. on CreditWatch with positive implications, including the company's 'B+' long-term corporate credit rating. Russell Corp.'s total debt outstanding at Dec. 31, 2005, was $403.5 million. The CreditWatch placement follows the announcement that Berkshire Hathaway Inc. (AAA/Stable/A-1+) will acquire Russell's stock for $18.00 per share in cash, pursuant to a merger agreement. The transaction is estimated to be valued about $600 million, and is expected to close in the third quarter of 2006, subject to stockholder and regulatory approvals. Standard & Poor's will monitor events closely as they occur. Resolution of the CreditWatch will depend on Berkshire Hathaway's disposition of the existing Russell bonds and its financial support after the acquisition. SAXON CAPITAL: S&P Assigns B Rating to Senior Unsecured Debt ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B+/B' counterparty credit rating to Glen Allen, Virginia-based subprime mortgage lender Saxon Capital Inc. and a rating of 'B' to the company's senior unsecured debt. The outlook is stable. "The ratings reflect the risks associated with the company's focus on subprime residential mortgages, reliance on third-party sources for mortgage loan production, its REIT status, and its encumbered balance sheet," said Standard & Poor's credit analyst Daniel Martin. These concerns are offset to some degree by the company's relative longevity and senior management's experience in dealing with difficult funding markets and interest rate and economic cycles. The net interest margin had declined in 2005 as evidenced by continued margin compression as funding costs had risen at a faster pace than mortgage coupons. The decline in Saxon's net interest income in 2005 reveals a major vulnerability of profit drivers in the subprime mortgage sector to decreases in volume and pricing. Subprime lending is subject to specific risks such as a dependence on securitization and the whole loan market for funding. The current operating environment has been especially challenging as rising short-term interest rates have resulted in an increased cost of funding, but not yet translated into similar increases in subprime mortgage rates, as a result of intensifying competition in the sector. In an effort to diversify earnings away from net interest income, the company has been purchasing third-party servicing rights. As a result, servicing fees have grown to be close to about a quarter of total net revenues (net interest income plus other income) for the year ended Dec. 31, 2005, compared to approximately 10% for the same period in 2004. Standard & Poor's has concerns with this strategy. In periods of accelerating prepayments or credit losses, the value of its purchased mortgage servicing asset could be significantly impaired. Saxon's origination platform may not always be in a position to generate mortgage interest income and fees sufficient to offset impairments in its servicing rights. During such a period, Saxon's earnings performance could be very volatile. Nevertheless, Standard & Poor's acknowledges that such periods of accelerated prepayments have historically occurred during declining interest rate environments, and are unlikely to occur in the near term. The risk associated with earnings volatility could be exacerbated by Saxon's REIT status, which impedes the accumulation of capital since most taxable income must be paid out. Should the company exhibit earnings volatility, Saxon cannot be expected to readily raise capital externally given the inherent risks in the subprime market. Saxon operates a taxable REIT subsidiary whose income can be retained. Although the bulk of revenues are generated in the REIT, Saxon's servicing income is generated in the taxable REIT subsidiary. As a result of converting to a REIT recently (2004) and issuing a substantial amount of equity, Saxon is not likely to run short of capital anytime soon. Saxon's leverage compares well with that of peers, and in certain cases is superior to some very prominent lenders in the sector, e.g., New Century Financial. Nevertheless, the company is likely to lever up over time. The rating incorporates a certain level of volatility in earnings performance and asset quality. The company is vulnerable to funding disruptions if its performance becomes too erratic, and Standard & Poor's would move quickly to lower ratings if such a scenario began to unfold. Indeed, that the rating is noninvestment-grade reflects this vulnerability. For the medium term, however, Standard & Poor's does not foresee this occurring. SEALY CORP: Raising $294.2MM in IPO; 28MM Common Shares For Sale ---------------------------------------------------------------- Sealy Corporation will conduct an initial public offering of shares of its common stock. Its common stock has been approved for listing on the New York Stock Exchange under the symbol "ZZ." The Company expects to net $294.2 million from the IPO. The Company is offering 20 million common shares at $16 per share. These shareholders are also selling an aggregate of 8 million shares at the same price: Number of Shares Selling Shareholder Offered for Sale ------------------- ---------------- KKR Millenium GP LLC 6,632,130 The Northwestern Mutual 506,326 Life Insurance Company BCP V Grantor Trust 143,668 Bain Capital Partners V, L.P. 88,005 BCIP Associates 57,786 BCIP Trust Associates, L.P. 16,787 BancBoston Capital Inc. 20,142 CIBC WG Argosy Merchant Fund 2, L.L.C. 54,384 Co-Investment Merchant Fund, LLC 5,366 Co-Investment Merchant Fund 3, LLC 677 Harvard Private Capital Holdings, Inc. 100,712 JPMorgan Partners (BHCA), L.P. 120,854 Teachers Insurance and Annuity 253,163 Association of America The Company will not receive any proceeds from the sale of shares of its common stock by these selling stockholders. These selling stockholders will receive $119.68 million from the stock sale before expenses. Of the $448 million gross proceeds from the IPO, $29.12 million will be used to pay these underwriters: Underwriters Shares Underwritten ------------ ------------------- Citigroup Global Markets Inc. 7,840,000 Goldman, Sachs & Co. 6,440,000 J.P. Morgan Securities Inc. 5,600,000 Banc of America Securities LLC 2,800,000 Wachovia Capital Markets, LLC 2,520,000 Lehman Brothers Inc. 1,120,000 SunTrust Capital Markets, Inc. 840,000 Ferris, Baker Watts, Incorporated 840,000 ---------- Total 28,000,000 Use of Proceeds Of the approximately $294.2 million of net proceeds from the previously registered shares, the Company intends to use: -- approximately $86.7 million to redeem the outstanding principal amount of its Pay-In-Kind notes and pay a related redemption premium; -- approximately $37.7 million to redeem a portion of the outstanding principal amount of its 2014 notes and pay accrued interest and a related redemption premium; -- approximately $125.0 million to pay a special dividend to its existing stockholders; -- approximately $17.3 million to pay a transaction-related bonus to members of management and $11.0 million to Kohlberg Kravis Roberts & Co. to terminate the Company's future obligations under its management services agreement. Dividend Policy Immediately prior to the consummation of the offering, the Company will declare a one-time cash dividend of $125.0 million to its existing stockholders, to be paid from a portion of the net proceeds of this offering. In addition, on the completion of this offering, the Company currently intends to adopt a policy of declaring, subject to legally available funds, a quarterly cash dividend on each common share commencing in the third quarter of 2006, unless our board of directors, in its sole discretion, determines otherwise. A full-text copy of the Prospectus is available for free at http://ResearchArchives.com/t/s?801 About Sealy Sealy Corporation is the largest bedding manufacturer in the world. The Company manufactures and markets a broad range of mattresses and foundations under the Sealy(R), Sealy Posturepedic(R), Sealy Crown Jewel(R), Sealy Correct Comfort(R), Stearns & Foster(R), and Bassett(R) brands. Sealy has the largest market share and highest consumer awareness of any bedding brand in North America. Sealy is also a leading supplier to the hospitality industry. In its last Form 10-Q filing for the period ending Feb. 29, 2004, Sealy Corporation's balance sheet shows a stockholders' deficit of $61,850,000 compared to a deficit of $76,162,000 at Nov. 30, 2003. SND ELECTRONICS: Wants to Sell Assets to AstonTec for $710,000 -------------------------------------------------------------- SND Electronics, Inc., asks the U.S. Bankruptcy Court for the District of Connecticut for permission to sell substantially all of its assets to AstonTec Holdings, LLC, for $710,000. Over the past year, the Debtor experienced a significant downturn in sales resulting in insufficient working capital to maintain ongoing business operations. As a result, it suffered significant revenue loss, market share and the departure of key employees. The Debtor believes that selling its assets will avoid foreseeable continuing operating losses and diminution of the value of its assets. The Debtor will conduct an auction to any qualified bidder other than AstonTec, on the day of the sale hearing at the offices of: Neubert, Pepe & Monteith, P.C. 195 Church Street New Haven, Connecticut If the assets are sold to another bidder, the Debtor agrees and seeks Court's approval to pay AstonTec a $75,000 break-up fee. Furthermore, the Debtor wants to assume and assign executory contracts and unexpired leases to the successful bidder. Court documents don't disclose the Debtor's assumed contract and leases. Headquartered in Greenwich, Connecticut, SND Electronics, Inc. -- http://www.snd.com/-- distributes electronic equipment for computer and communications products. The company filed for chapter 11 protection on Mar. 9, 2006 (Bankr. D. Conn. Case No. 06-30286). Douglas S. Skalka, Esq., at Neubert, Pepe, and Monteith, P.C., represents the Debtor in its restructuring efforts. As of Feb. 24, 2006, the Debtor reported assets totaling $10,323,554 and debts totaling $12,703,812. SOUTHERN UNION: Asks Shareholders to OK Restructuring & Asset Sale ------------------------------------------------------------------ Southern Union Company plans to transfer all of remaining assets of its New England Gas Company division, all of which relate to operations in Massachusetts, to one of its subsidiaries. The Rhode Island operations of the Company's New England Gas Company division will also be sold to National Grid USA of for $575 million, subject to a working capital adjustment, less assumed debt of $77 million. The proposed asset sale is under a Feb. 16, 2006, agreement. Both proposals will be up for a vote during the Annual Meeting of Stockholders to be held at 11:00 a.m. (Eastern Time) on Tuesday, May 2, 2006, at The Regency, 540 Park Avenue at 61st Street, New York City. Restructuring of Massachusetts Operations The Company's Board of Directors determined that it will be preferable for the remaining assets of New England Gas to be held by a direct or indirect, wholly owned subsidiary of the Company, rather than through the current divisional structure. The recent repeal of the Public Utility Holding Company Act will now permit the Company to adopt this strategically advantageous structure. Under Massachusetts law, the Company must get the approval of its stockholders to transfer the Massachusetts operations of its New England Gas Company division to a Company subsidiary. Accordingly, the Company is seeking stockholder approval of the transfer. The Company may determine to transfer the Massachusetts operations of its New England Gas Company division to a subsidiary of the Company regardless of whether it completes the National Grid Transaction. Asset Sale As reported in the Troubled Company Reporter on Feb. 21, 2006, the Company will use proceeds from the sale to retire a portion of the bridge facility financing for the acquisition of Sid Richardson Energy Services. Merrill Lynch & Co. and Lehman Brothers served as financial advisors to Southern Union in this transaction. The assets to be conveyed to National Grid USA constitute less than 10% of Southern Union's total assets. Southern Union does not believe that Section 39-3-24 of the Rhode Island General Laws requires it to obtain stockholder approval to complete the National Grid Transaction. To be sure, the Company asked the Rhode Island Division of Public Utilities and Carriers for a ruling. However, the Company does not expect that the RI Division will issue its ruling soon. Consequently, to minimize the cost of obtaining any stockholder approval that may be required, and to obtain stockholder approval as soon as possible, the Company is requesting that its stockholders approve the National Grid Transaction at the Annual Meeting. If the RI Division ultimately rules that Section 39-3-24 of the Rhode Island General Laws does not require Southern Union to obtain stockholder approval to complete the National Grid Transaction, then Southern Union intends to proceed with the National Grid Transaction without regard to the results of the stockholder vote on this proposal. If approval of the National Grid Transaction is required under Section 39-3-24 of the Rhode Island General Laws, then the approval will require the affirmative vote of the holders of two- thirds of the issued and outstanding common stock. Broker non- votes and abstentions will have no impact on the vote for this proposal. Other Agenda Items Other items up for a vote during the Annual Meeting are: -- the election of nine directors to serve until the next annual meeting of stockholders or until their successors are duly elected and qualified; -- the adoption of the Company's Second Amended and Restated 2003 Stock and Incentive Plan; -- the adoption of the Amended and Restated Executive Incentive Bonus Plan; -- The ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent external auditor for the year ending December 31, 2006; and -- The transaction of other business as may properly come before the Annual Meeting or any adjournment thereof. A full-text copy of the Definitive Proxy Statement is available for free at http://ResearchArchives.com/t/s?7fe About Southern Union Southern Union Company -- http://www.sug.com/-- is engaged primarily in the transportation, storage and distribution of natural gas. Through Panhandle Energy, the Company owns and operates 100% of Panhandle Eastern Pipe Line Company, Trunkline Gas Company, Sea Robin Pipeline Company, Southwest Gas Storage Company and Trunkline LNG Company - one of North America's largest liquefied natural gas import terminals. Through CCE Holdings, LLC, Southern Union also owns a 50% interest in and operates the CrossCountry Energy pipelines, which include 100% of Transwestern Pipeline Company and 50% of Citrus Corp. Citrus Corp. owns 100% of the Florida Gas Transmission pipeline system. Southern Union's pipeline interests operate approximately 18,000 miles of interstate pipelines that transport natural gas from the San Juan, Anadarko and Permian Basins, the Rockies, the Gulf of Mexico, Mobile Bay, South Texas and the Panhandle regions of Texas and Oklahoma to major markets in the Southeast, West, Midwest and Great Lakes region. Through its local distribution companies, Missouri Gas Energy, PG Energy and New England Gas Company, Southern Union also serves approximately one million natural gas end-user customers in Missouri, Pennsylvania, Rhode Island and Massachusetts. * * * As reported in the Troubled Company Reporter on Feb. 27, 2006, Moody's Investors Service confirmed the Baa3 senior unsecured debt ratings of Southern Union Company with negative outlook and its transportation and storage subsidiary, Panhandle Eastern Pipe Line Company, LLC, with stable outlook. Moody's also confirmed the Ba2 rating on Southern Union Company's non-cumulative perpetual preferred securities. SYSTEMS MANAGEMENT: Malone & Bailey Expresses Going Concern Doubt ----------------------------------------------------------------- Systems Management Solutions, Inc.'s auditor, Malone & Bailey, PC, expressed substantial doubt about the Company's ability to continue as a going concern, pointing to the Company's recurring losses from operations and negative working capital. In its Annual Report in Form 10-K filed with the U.S. Securities and Exchange Commission on March 27, 2006, the Company reported $3,033,405 net loss from operations on $2,463,677 of net revenues for the year ending Dec. 31, 2005. At Dec. 31, 2005, the Company's balance sheet shows $712,945 in total assets and $4,289,748 stockholders equity. A full-text copy of the regulatory filing is available at no charge at http://ResearchArchives.com/t/s?819 Systems Management Solutions, Inc., is a diversified holding company that, through ASPECT (one of its operating subsidiaries) provides business services, software and solutions primarily to the small and mid-sized business sector and through SMS Envirofuels, Inc., (its most recent acquisition) provides biodiesel to distributors. TECO AFFILIATES: Court Closes Chapter 11 Cases ---------------------------------------------- The U.S. Bankruptcy Court for the District of Arizona entered a final decree on April 11, 2006, closing the Chapter 11 cases of Union Power Partners, L.P., Panda Gila River, L.P., Trans-Union Interstate Pipeline, L.P., and UPP Finance Co., LLC. The Court directed the reorganized Debtors to: * provide a notice of the Final Decree to all creditors and parties-in-interest; and * pay to the Office of the U.S. Trustee any unpaid fees in accordance with Section 1930(a)(6) of the Judiciary Procedures Code. The Debtors told the court that they have substantially consummated the confirmed Plan of Reorganization. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, LLP, in Phoenix, Arizona, relates that the Reorganized Debtors have completed, or are in the process of completing, all of the distributions required to be made under the Plan including distributions to unsecured creditors. Distributions that have not been completed concern some property tax claims entitled to administrative or priority status that have not yet been assessed against the Reorganized Debtors. However, the Reorganized Debtors anticipate that the claims will be paid in the ordinary course of business when, and as they come due, under the Plan, Mr. Hansen explains. In addition, the Reorganized Debtors tell the Court that they have already: * rejected unnecessary agreements, assumed all remaining executory contracts and unexpired leases, and paid all amounts necessary to effectuate the assumption; * obtained Court ruling disallowing Disputed Claims in their entirety; * paid all: -- administrative costs and expenses and anticipate that no further applications for payment of administrative claims will be made; and -- approved fees and expenses incurred through and including the Confirmation Date by the professionals retained in their Chapter 11 cases; and * paid, or will pay within 10 business days after entry of a final decree closing the Chapter 11 cases, all fees payable to the U.S. Trustee. All pending requests, contested matters, and fee applications have been resolved by final order, Mr. Hansen says. No appeals have been filed or are pending with respect to the Reorganized Debtors' Chapter 11 cases. As part of the consummation of the Plan, the ownership interests in the Reorganized Debtors have likewise been transferred to Entegra Power Group LLC, Mr. Hansen adds. Cases Should be Closed Section 350 of the Bankruptcy Code provides that "after an estate is fully administered and the court has discharged the trustee, the court shall close the case." Because the Bankruptcy Code does not define when a Chapter 11 case has been fully administered, courts look to certain factors identified in the Advisory Committee Note to Rule 3022 of the Federal Rules of Bankruptcy Procedure in determining whether this standard is met. These factors include whether: (1) the order confirming the plan has become final; (2) deposits required by the plan have been distributed; (3) the property proposed by the plan to be transferred has been transferred; (4) the debtor or the successor of the debtor under the plan has assumed the business or the management of the property dealt with by the plan; (5) payments under the plan have commenced; and (6) all motions, contested matters, and adversary proceedings have been finally resolved. Mr. Hansen assures the Court that all of these factors have been met in the Reorganized Debtors' Chapter 11 cases because: (i) the order entered on May 11, 2005, confirming the Reorganized Debtors' Plan, was not appealed and is now a final order; (ii) no deposits were required to be funded under the Plan; (iii) all property transfers required under the Plan have been completed; (iv) the Reorganized Debtors continue to manage their business and continue their operations as set forth in the Plan; (v) all payments to creditors required under the Plan have been commenced or completed; and (vi) all requests and contested matters have been fully resolved by final order. Panda Gila River, L.P., Union Power Partners, L.P., Trans-Union Pipeline, L.P., and UPP Finance Co., LLC -- http://www.tecoenergy.com/-- own and operate the two largest combined-cycle natural gas generation facilities in the United States. The Debtors filed for bankruptcy protection on Jan. 26, 2005 (Bank. D. Ariz. Case No. 05-01143, and 05-01149 through 05-01151). Craig D. Hansen, Esq., Thomas J. Salerno, Esq., and Sean T. Cork, Esq., at Squire, Sanders & Dempsey L.L.P., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,196,000,000 in total assets and $2,268,800,000 in total debts. The Court confirmed the Debtors' Amended Joint Plan of Reorganization on May 11, 2005 and that plan became effective on June 1, 2005. (TECO Affiliates Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000). TENET HEALTHCARE: To Sell $16MM Gulf Coast Medical Center to HMA ---------------------------------------------------------------- Tenet Healthcare Corporation (NYSE:THC) reported that a company subsidiary has signed a definitive agreement to sell the 189-bed Gulf Coast Medical Center in Biloxi, Mississippi, to Health Management Associates, Inc. (NYSE:HMA). Net after-tax proceeds, including the liquidation of working capital, are estimated to be approximately $16 million. The company expects to use the proceeds for general corporate purposes. Gulf Coast Medical Center is Tenet's only hospital in Mississippi. The company said the devastating impact of last summer's hurricanes had caused it to reevaluate its operations in Mississippi, mainly as a result of continuing uncertainty about the long-term health care needs of the area. Tenet decided that turning over the hospital to an operator with other significant health care operations in the area would be in the best interests of the community and would speed the return of services. HMA operates Biloxi Regional Medical Center in Biloxi. Terms of the Agreement Under the agreement, HMA has committed to offer employment to substantially all Gulf Coast Medical Center employees in good standing. The sale, which is expected to be completed by May 31, is subject to customary regulatory approvals. About Health Management Associates Health Management Associates, Inc. -- http://www.hma-corp.com/-- owns and operates general acute care hospitals in non-urban communities located throughout the United States. Upon completion of its previously announced transaction to acquire the 83-bed Cleveland Clinic Naples Hospital in Naples, Florida, HMA will operate 61 hospitals in 16 states with approximately 8,628 licensed beds. About Tenet Healthcare Tenet Healthcare Corporation -- http://www.tenethealth.com/-- through its subsidiaries, owns and operates acute care hospitals and related health care services. Tenet's hospitals aim to provide the best possible care to every patient who comes through their doors, with a clear focus on quality and service. * * * As reported in the Troubled Company Reporter on Jan. 25, 2006, Moody's Investors Service affirmed Tenet Healthcare Corporation's B3 ratings and speculative grade liquidity rating at SGL-4. Moody's says the outlook for the ratings remains negative. TEXAS PETROCHEMICALS: Moody's Rates $280 Million Term Loan at Ba3 ----------------------------------------------------------------- Moody's assigned a Ba3 corporate family rating to Texas Petrochemicals LP and a Ba3 rating to its $280 million senior secured term loan facility. The ratings were assigned in connection with the upcoming purchase of Huntsman's U.S. butadiene and MTBE business, which will be funded with the aforementioned rated debt. A stable outlook was also assigned. TPC is also establishing a $115 million five-year senior secured revolving credit facility, which is not rated. This is the first time Moody's has rated TPC following its emergence from bankruptcy. The ratings reflect TPC's narrow product line, concentrated operational and geographic profile, single operating division structure and increased capital expenditures needed to bring facilities into NOx compliance. Supporting the rating are its modest pro forma leverage, and cash flow and capitalization metrics, some of which would map to a "Baa" rating using Moody's chemical industry methodology. Moody's expects that TPC will enjoy more stable earnings due to contract pricing with a majority of its customers, which contractually insulates sales from feedstock, sales price and energy price fluctuations. Moody's believes that the integration of the acquired Huntsman assets should not be troublesome given TPC's familiarity with the business and experience operating similar plant assets. In the past methyl tertiary butyl ether has been a significant portion of revenues and earnings for TPC as well as the acquired Huntsman assets. TPC's and the entire industry's sales of MTBE are expected to drop sharply due to the lack of liability protection for MTBE producers and the move to a renewable fuels standard in the Energy Policy Act of 2005. TPC will likely cease production at their Houston facility and the purchased Huntsman facility in the next one to two years. Moody's notes there can be some risk associated with managing this decline in the MTBE business. The notching of the senior secured term loan at the corporate family rating reflects the fact that secured debt makes up the vast majority of TPC's debt. The term loan is secured by a first priority lien on substantially all real property of the borrower other than inventory and accounts receivable, and a second priority lien on inventory and accounts receivable. The revolving credit facility has a first priority lien on the inventory and accounts receivable. The term loan agreement will not contain any financial covenants. The stable outlook reflects Moody's expectation that the company will continue to grow its sales and that free cash flow will be sufficient to pay down debt. Texas Petrochemicals, LP is a processor of C4 hydrocarbons, and MTBE. TPC emerged from bankruptcy in May 2004 and many of its current shareholders are former holders of the predecessor firm's distressed debt. As of the fiscal year ended June 30, 2005, TPC had sales of $936 million. TITANIUM METALS: Company's Request Prompts S&P to Withdraw Ratings ------------------------------------------------------------------ Standard & Poor's Ratings Services withdrew its 'B+' corporate credit and its other ratings on Titanium Metals Corp. at the Denver, Colorado, company's request. UAL CORP: Battles with Argenbright Over Prepetition Obligations --------------------------------------------------------------- Before UAL Corporation and its debtor-affiliates filed for bankruptcy protection, Argenbright Security, Inc., and United Air Lines, Inc., were parties to numerous contracts pursuant to which Argenbright performed necessary and vital passenger screening and airport security services as well as sky cap, transportation and other aviation services for United at numerous airports throughout the country. United owed Argenbright $7,898,311 for services rendered prior to the Debtors' bankruptcy filing. On May 12, 2003, Argenbright filed a claim for the prepetition debt. In November 2001, shortly after the Sept. 11, 2001, terrorist attacks, Congress passed the Aviation and Transportation Security Act, Pub L. No. 107-71, 115 Stat. 597. Under the ATSA, the Transportation Security Administration was formed headed by the Under Secretary of Transportation for Security to assume responsibility for passenger and cargo screening and airport security functions at all domestic airports by Feb. 17, 2002. UAL-FAA Contract On February 17, 2002, United and the Federal Aviation Administration entered into a contract to address the provision of security services because the U.S. Government was not yet in a position to take over the performance of those services. The Contract states that the U.S. Government will reimburse United for its continued performance of certain aviation screening functions until the TSA was in a position to assume responsibility for the actual performance of the security services by federal employees. The Contract expressly provides that United will continue its contracts with Argenbright, and the FAA, through the TSA, will reimburse United for its costs of continuing its contracts with Argenbright. Argenbright provided security services on behalf of United and the Government at various airports through early December 2002, at which time the TSA took over the responsibility. Christopher H. Murphy, Esq., at Cozen O'Connor, in Chicago, Illinois, tells Judge Wedoff that on the Petition Date, Argenbright was owed $2,767,774 for security services performed after the passage of the ATSA and prior to the Petition Date. The TSA Debt consists about 35% of Argenbright's Claim against the Reorganized Debtors. Argenbright's Motion to Compel Pursuant to the order approving the Debtors' debtor-in-possession financing, the Debtors are required to remit funds received from TSA to Argenbright for Security Services. During the first few months after the Petition Date, Mr. Murphy relates, Argenbright attempted to collect the TSA Debt on an informal basis to no avail. Thus, Argenbright filed a request in Court seeking to compel payment. In response, United told Argenbright that it has submitted an invoice to the TSA on Jan. 3, 2003, for $2,469,599. United informed Argenbright that the January Invoice did not equal the amount of the TSA Debt because United disputed whether certain invoices that Argenbright submitted were reimbursable by the TSA under the Contract. Furthermore, United indicated that it surmised that the TSA had not paid the January Invoice because of the pendency of an audit by the TSA and the fact that United was embroiled in a dispute with the U.S. Government. UAL vs. Government During the early months of the Reorganized Debtors' Chapter 11 cases, the U.S. Government effectively froze any payment to the Reorganized Debtors from any of its various administrative bodies, including the TSA. Due to the U.S. Government's refusal to make payments, the Reorganized Debtors commenced an adversary proceeding against the U.S. Government on March 3, 2003. Argenbright agreed to adjourn the hearing on its Motion to Compel in anticipation of a consensual resolution of its Motion to Compel in the context of a settlement of the Debtors' Adversary Proceeding. The Debtors and the U.S. Government settled the adversary proceeding by a Court-approved stipulation but it did not resolve issues raised in the Motion to Compel, Mr. Murphy notes. The stipulation provided for the release of substantial funds -- over $300 million -- to the Debtors and postponed any final resolution of the issues until after the June 9, 2003, deadline for government entities to file proofs of claim. On June 5, 2003, the TSA filed proofs of claim against United for $2,853,441. TSA's claim is largely for unpaid monthly Aviation Infrastructure Fees. Subsequently, the TSA admitted that it owed United $4,444,777 under the Contracts and that the TSA decided to set off the amount that it owed United against of its claim against United. In late June 2003, the TSA remitted a check to United for the $1,591,336 excess of United's claim over the TSA's Claim. TSA Debt Payments United initially refused to turn over the TSA Partial Payment to Argenbright. However, as a result of Argenbright's persistence and the TSA's ultimate acknowledgement that the TSA Partial Payment was remitted to United on account of Argenbright's services, United turned over these funds to Argenbright in late July 2003. Argenbright withdrew the Motion to Compel without prejudice. As a result of the TSA Partial Payment, the TSA Debt was reduced to $1,176,438. In November 2003, United submitted an additional invoice to the TSA for services rendered by Argenbright prior to the Petition Date. Recently, after numerous requests for payment, the TSA remitted payment in satisfaction of the November 2003 invoice for $193,971. The remaining TSA Debt after the reduction for the TSA Partial Payment and the Second Partial Payment is $982,467. Despite Argenbright's continued informal efforts over the past two years to collect the Remaining TSA Debt, United and the Government have refused to make payments. Furthermore, in addition to the Remaining TSA Debt, Argenbright and United entered into an agreement whereby Argenbright agreed to purchase and install certain security devices for use at the Dulles Airport in Washington, D.C. United agreed to pay Argenbright for the Screening Equipment in monthly installments over a five-year period, from November 2000 through November 2005. The Screening Equipment has been used by the TSA in performing its security functions as mandated by the ATSA since the TSA took over the performance of those functions from Argenbright around December 2002. Mr. Murphy relates that Argenbright has not received payment for the Screening Equipment from United or TSA since prior to the Petition Date. Argenbright is currently owed $154,805 for the equipment. United has informed Argenbright that it believes that the TSA is responsible for the Screening Equipment Claim. Argenbright has made several demands for payment of the Screening Equipment Claim and for payment of the Remaining TSA Debt to which it has received no response from the Government. Against this backdrop, Argenbright asks the Court to: a. find that the Government is in breach of the Contract and award Argenbright $982,467; b. find that it would be unjust for the Government to receive the benefit of Argenbright's services without compensating Argenbright, and award Argenbright $982,467; c. declare that the set-off by the Government was improper and direct the Government to remit $878,454 to United and for remittance forthwith to Argenbright; d. direct United to remit $878,454 to Argenbright; e. direct the Government to turn over the Screening Equipment to Argenbright or pay $154,805 to Argenbright; f. direct the Government to pay $154,805 for the Screening Equipment; g. disallow the Government's Claim against United; h. direct United to remit the remaining invoices to the Government for payment forthwith; and i. award Argenbright its costs and reasonable attorneys' fees and expenses. 1. United Jeffrey W. Gettleman, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, points out that Argenbright, by its own admission, only performed prepetition services for United. Any debts that arose from the provision of these services are prepetition debts. Either these prepetition debts are subsumed in Argenbright's claim in United's bankruptcy case, in which case they will be resolved in due course during the claims allowance/disallowance process, or Argenbright failed to file a proof of claim in United's bankruptcy for those debts. Mr. Gettleman notes that this appears to be the case for the Screening Equipment Claim, which as Argenbright admits was "in addition to" the prepetition "Remaining TSA Debt." Any attempt to assert a prepetition claim now is time-barred, Mr. Gettleman argues. Furthermore, to the extent the remaining invoices represent prepetition debts to Argenbright that is not included in the proof of claim it filed, Mr. Gettleman asserts any attempt to assert that claim now is time-barred. Moreover, the Screening Equipment was installed at Dulles Airport in 2002 and is being used by the TSA at the airport. There is no suggestion that United has the Screening Equipment in its possession. Therefore, to the extent that Argenbright seeks a money judgment against United for the equipment claim, this would be a general, unsecured prepetition debt of United, for which Argenbright did not file a proof of claim. Thus, the Screening Equipment Claim would also be time-barred. 2. U.S. Government Mary A. DeFalaise, Esq., at the United States Department of Justice, in Washington, D.C., argues that Argenbright's claims against the Government Defendants should be dismissed because Argenbright fails to establish certain issues. Ms. DeFalaise points out that Argenbright failed to plead a waiver of sovereign immunity for any of its claims against the Government Defendants. Argenbright also failed to establish subject matter jurisdiction and a cause of action before bringing against the United States, Ms. DeFalaise adds. Furthermore, Ms. DeFalaise notes, Argenbright's claims against the United States or the other Government Defendants do not arise under, arise in or are related to the Bankruptcy Code. Ms. DeFalaise argues that Argenbright's turnover and lifting of the automatic stay requests should also be dismissed because Argenbright has failed to state a claim on which relief can be granted. Ms. DeFalaise explains that these requests do not involve property of the Reorganized Debtors' estates and the United States is permitted to place an administrative freeze on the funds that are potentially subject to set-off. About UAL 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. The Company emerged from bankruptcy protection on February 1, 2006. (United Airlines Bankruptcy News, Issue No. 121; Bankruptcy Creditors' Service, Inc., 215/945-7000) US AIRWAYS: Adopts Incentive Compensation Plan Targets for 2006 --------------------------------------------------------------- In a regulatory filing with the Securities & Exchange Commission, James E. Walsh, III, senior vice president and general counsel of US Airways Group, Inc., discloses that USAir executives and other key management employees are eligible to participate in US Airways Group's Incentive Compensation Plan. Within 90 days of the beginning of each plan year under the Incentive Compensation Plan, the Compensation and Human Resources Committee of USAir's Board of Directors may award qualified incentive awards. According to Mr. Walsh, the awards are intended to be performance-based awards under Section 162(m) of the Internal Revenue Code of 1986 by establishing the target awards as a percentage of base salary and the performance measures against which the target awards will be measured, which are generally related to the company's performance. If the performance measures are met at the maximum level, the participant may be paid the qualified incentive award at up to 200% of the target amount, subject to decrease by the Committee based on individual performance. The maximum qualified award may not exceed two times the lesser of the participant's base salary: -- on May 19, 2004; or -- on the date the Committee establishes the qualified award. After Committee approval, the qualified awards are paid as lump sum cash distributions as soon as practicable after the end of the plan year. The Committee may also grant incentive awards, discretionary bonus awards or qualified bonus awards in lieu of or, in some cases, in addition to, the qualified incentive awards. Mr. Walsh further discloses that on Jan. 17, 2006, the Committee established: (a) corporate financial targets based on net earnings for fiscal year 2006; and (b) a pool from which to make awards to participants in the Incentive Compensation Plan based on the attainment in fiscal year 2006 of the corporate financial targets. Mr. Walsh says that if the fiscal year 2006 corporate performance target is met, the Committee can award a qualified incentive award to the individual based on the achievement of the corporate goal, as well as individual performance, up to a maximum of two times the target award. The Committee established the target awards at these percentages of base salary: Position Percentage -------- ---------- Chief Executive Officer 80 Executive Vice Presidents 60 Senior Vice Presidents 45 Vice Presidents 35 However, if the performance target is not met, no award will be paid, Mr. Walsh explains. No awards will also be paid if there is no payout under the profit-sharing plan. In no event will the aggregate amount of awards paid out to the participants exceed the established pool. The Committee reserves the right to decrease the awards or to make no payment of an award regardless of the attainment of the performance target, Mr. Walsh adds. About US Airways Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on Sept. 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. The Debtors' chapter 11 plan for its second bankruptcy filing became effective on Sept. 27, 2005. The Debtors completed their merger with America West on the same date. (US Airways Bankruptcy News, Issue No. 114; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on April 5, 2006, Moody's Investors Service placed a B2 rating on the $1.1 billion secured credit facility of US Airways Group, Inc. Moody's also assigned a B3 corporate family rating at the Parent level and withdrew the corporate family rating previously assigned to America West Airlines, Inc. The outlook has been changed to stable. VARIG S.A.: Reaches $400 Mil. Purchase Pact with Varig Logistica ---------------------------------------------------------------- Viacao Aerea Rio Grandense aka Varig reached last week a purchase agreement with its former logistics arm -- Varig Logistica S.A. -- for the airline's purchase for US$400 million, 14% higher than VarigLog's offer made on April 4, Bloomberg News reports. The proposed sale, once approved by the U.S. Bankruptcy Court for the Southern District of New York, will help the bankrupt airline from collapsing. As previously reported, Varig is in danger of being grounded as a result of non-payment of airport fees and rising costs of fuel. The air carrier is also planning to return 15 of its leased planes to cut costs. "Varig will definitely keep on flying if this proposal is approved," Marco Antonio Audi, chairman of Varig Log told Bloomberg in a telephone interview from Sao Paulo, Brazil. "We will keep all Varig's domestic and international routes." Brazilian President Luiz Inacio Lula da Silva said that the government won't bail out the airline, and state- controlled oil company Petroleo Brasileiro SA refused loans to the carrier for jet fuel despite pleas from workers. Mr. Audi informed Bloomberg that Varig Log plans to acquire a company that will be spun off from Varig in a bankruptcy reorganization plan approved by creditors and the U.S. Court last year. Under the offer, Varig Log will buy a company that controls Varig's assets such as routes and service contracts and will be free of the airline's debt. Varig Log is willing to let the airline's 10,600 workers acquire a minority stake in the new company. Treatment of Varig's Debts According to Mr. Audi, Varig Log will assume some liabilities of Varig such as its mileage program and already-sold tickets. Varig Log will finance the purchase with its own cash and debt, Bloomberg relates. Furthermore, majority of Varig's 7 billion reals liabilities will be held by a separate, non-company, Mr. Audi continued. That company will pay Varig's creditors out of funds the federal government is giving the airline to compensate for losses stemming from a mandatory freeze on ticket prices in late 1980s and early 1990s to quell inflation, Bloomberg relates. Varig's biggest creditor is the government and state-controlled companies, which it owes about 3.5 billion reals for social security taxes, airport fees and jet fuel. The airline's employee pension fund Aerus is the biggest private creditor, owed about 2.3 billion reals. About VARIG Headquartered in Rio de Janeiro, Brazil, VARIG S.A. is Brazil's largest air carrier and the largest air carrier in Latin America. VARIG's principal business is the transportation of passengers and cargo by air on domestic routes within Brazil and on international routes between Brazil and North and South America, Europe and Asia. VARIG carries approximately 13 million passengers annually and employs approximately 11,456 full-time employees, of which approximately 133 are employed in the United States. The Company, along with two affiliates, filed for a judicial reorganization proceeding under the New Bankruptcy and Restructuring Law of Brazil on June 17, 2005, due to a competitive landscape, high fuel costs, cash flow deficit, and high operating leverage. The Debtors may be the first case under the new law, which took effect on June 9, 2005. Similar to a chapter 11 debtor-in-possession under the U.S. Bankruptcy Code, the Debtors remain in possession and control of their estate pending the Judicial Reorganization. Sergio Bermudes, Esq., at Escritorio de Advocacia Sergio Bermudes, represents the carrier in Brazil. Each of the Debtors' Boards of Directors authorized Vicente Cervo as foreign representative. In this capacity, Mr. Cervo filed a Sec. 304 petition on June 17, 2005 (Bankr. S.D.N.Y. Case Nos. 05-14400 and 05-14402). Rick B. Antonoff, Esq., at Pillsbury Winthrop Shaw Pittman LLP represents Mr. Cervo in the United States. As of March 31, 2005, the Debtors reported BRL2,979,309,000 in total assets and BRL9,474,930,000 in total debts. VILLAGES AT SARATOGA: Court Approves Amended Disclosure Statement ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Utah approved the Amended Disclosure Statement explaining The Villages at Saratoga Springs, LC's Amended Chapter 11 Plan of Liquidation. The Court determined that the Amended Disclosure Statement contains adequate information -- the right amount of the right kind of information -- required under Section 1125 of the Bankruptcy Code. Overview of the Plan The Plan contemplates the liquidation of the Debtor's assets and distribution of the cash proceeds to its creditors and interest holders. The Debtor's principal assets are $8.2 million in cash. The Debtor expects that the available cash will be further reduced by payment of additional administrative expenses and professional compensation on an ongoing basis as services are rendered. The available cash was received from the sale of the Debtor's assets to Deer Canyon Saratoga, LLC. The Debtor says that its remaining assets are a contingent payment of up to $2 million from the sale of the property and some small prepetition receivables subject to offset by creditors. Treatment of Claims Under the Plan, all Allowed General Unsecured claims are impaired and will be paid in full with interest, after the payment, in full, of all then Allowed Administrative Expense Claims. Holders of Class A claims will first be paid up to the allowed amounts of their claims, and then, to the extent there are sufficient funds to do so, will receive interest on the allowed amounts of their claims from the Petition Date until the allowed amount and all interest are paid in full. Undisputed Allowed Claims will be paid in full on the Effective Date. Disputed Claims will be paid in full upon entry of Court's final order allowing the claim in fixed amount. Holders of Equity Interest will receive no distribution and will be paid their pro rata portions of the Debtors' profits after all Allowed Class A Claims have been paid in full. Holders of Class B interest are impaired. The Court has set a hearing on May 5, 2006, at 8:30 a.m., to consider confirmation of the Debtors' amended plan. A full-text copy of the Amended Disclosure Statement explaining its Amended Plan of Liquidation is available for a fee at: http://www.researcharchives.com/bin/download?id=060419210241 Headquartered in Spanish Fork, Utah, The Villages at Saratoga Springs, LC, filed for chapter 11 protection on Aug. 29, 2005 (Bankr. D. Utah Case No. 05-33380). Robert Fugal, Esq., at Bird & Fugal, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $26,002,293 in assets and $15,188,610 in debts. VIOQUEST PHARMACEUTICALS: Auditor Expresses Going Concern Doubt --------------------------------------------------------------- VioQuest Pharmaceuticals, Inc.'s auditor, J.H. Cohn LLP, expressed substantial doubt about the Company's ability to continue as a going concern pointing to the Company's net loss, cash burn and accumulated deficit. In its Annual Report in Form 10-KSB filed with the Securities and Exchange Commission on March 27, 2006, the Company reported $12,834,629 net loss from operations on $3,804,654 of net revenues for the year ending Dec. 31, 2005. At Dec. 31, 2005, the Company's balance sheet shows $8,379,303 in total assets and $2,040,294 in total debts. The Company used up $3,741,854 of cash in operating activities during the year ended Dec. 31, 2005. As of that date, it had an accumulated deficit of $20,269,392. A full-text copy of the regulatory filing is available at no charge at http://ResearchArchives.com/t/s?81a VioQuest Pharmaceuticals, Inc., has two distinct business units -- Drug Development and Chiral Products and Services. The Company's drug development business focuses on acquiring, developing and eventually commercializing human therapeutics in the areas of oncology, and antiviral diseases and disorders for which there are current unmet medical needs. The Company currently has the exclusive rights to develop and commercialize two oncology drug candidates. Its chiral business, which it operates through its wholly owned subsidiary, Chiral Quest, Inc., provides innovative chiral products, technology and custom synthesis development services to pharmaceutical and fine chemical companies in all stages of a products' lifecycle. VIRGIN MOBILE: Moody's May Downgrade Ratings After Loan Default --------------------------------------------------------------- Moody's Investors Service placed the B3 Corporate Family and B3 Senior Secured ratings of Virgin Mobile USA, LLC, under review for possible downgrade. The rating action reflects the company's disclosure that it failed to meet a minimum net service revenue requirement under its primary bank facility, triggering an event of default at Dec. 31, 2005. Furthermore, the company anticipates it will not be in compliance with other financial covenants in 2006. Accordingly, the company's $498 million term facility has been classified as current. While Virgin's $100 million operating facility remains unused, given the event of default described above Moody's assumes the company may not have access to this facility which raises significant liquidity concerns. The ratings review will focus on: 1) the likelihood that Virgin may negotiate an amendment to, or restructure, its credit agreement; 2) the company's ability to restore its liquidity profile; and 3) Moody's expectations for the company's performance going forward in context of the factors outlined in Moody's rating methodology for the global telecommunications industry. On Review for Possible Downgrade: Issuer: Virgin Mobile USA, LLC * Corporate Family Rating, Placed on Review for Possible Downgrade, currently B3 * Senior Secured Bank Credit Facility, Placed on Review for Possible Downgrade, currently B3 Outlook Actions: Issuer: Virgin Mobile USA, LLC * Outlook, Changed To Rating Under Review From Positive Headquartered in Warren, New Jersey, Virgin Mobile USA is a provider of wireless services targeting the youth market with over 3.8 million subscribers. WESTPOINT STEVENS: Court Delays Case Dismissal Hearing to April 25 ------------------------------------------------------------------ As reported in the Troubled Company Reporter on August 16, 2005, WestPoint Stevens, Inc., and its debtor-affiliates asked the U.S. Bankruptcy Court for the Southern District of New York to dismiss their chapter 11 cases. The Debtors inform the Court that they have no ongoing business operations and are administratively insolvent, thus, confirmation of a chapter 11 plan is impossible in accordance with the Bankruptcy Code. The Debtors believe that a chapter 7 conversion is not advisable because it will increase administrative cost to the estate and require the appointment of a chapter 7 trustee. * * * Judge Robert D. Drain adjourns the hearing on the Debtors' request to dismiss their Chapter 11 cases to April 25, 2006. Headquartered in West Point, Georgia, WestPoint Stevens, Inc. -- http://www.westpointstevens.com/-- is the #1 US maker of bed linens and bath towels and also makes comforters, blankets, pillows, table covers, and window trimmings. It makes the Martex, Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as well as the Martha Stewart bed and bath lines; other licensed brands include Ralph Lauren, Disney, and Joe Boxer. Department stores, mass retailers, and bed and bath stores are its main customers. (Federated, J.C. Penney, Kmart, Sears, and Target account for more than half of sales.) It also has nearly 60 outlet stores. Chairman and CEO Holcombe Green controls 8% of WestPoint Stevens. The Company filed for chapter 11 protection on June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. (WestPoint Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 215/945-7000) WESTPOINT STEVENS: 2nd Cir. Nixes Aretex Parties' Mandamus Request ------------------------------------------------------------------ As previously reported, Judge Laura Taylor Swain of the U.S. District Court for the Southern District of New York denied Aretex LLC, WestPoint International, Inc., and WestPoint Home, Inc.'s request for clarification of her Nov. 16, 2005, Order, as amended on Dec. 7, 2005. Judge Swain also overruled the Aretex Parties' objection to the December 7 Order and held that the Amended Order accurately reflects the District Court's determinations with respect to the appeal. Judge Swain further denied Aretex and the Purchasers' request for certification of an interlocutory appeal from her November 16, 2005 Order, pursuant to Section 1292(b) of the Judiciary Code. Consequently, the Aretex Parties ask the U.S. Court of Appeals for the Second Circuit to issue a writ of mandamus directing Judge Swain to vacate her order and judgment: (1) reversing several determinations of the Bankruptcy Court; (2) vacating aspects of the Bankruptcy Court's July 2005 Order Sale Order; and (3) remanding to the Bankruptcy Court for further proceedings. A writ of mandamus is a writ issued by a superior court to compel a lower court to perform mandatory or purely ministerial duties correctly. Aretex and the Purchasers also ask the Second Circuit to stay the District Court's remand pending disposition of their mandamus petition. Beal Bank, S.S.B., as the First Lien Collateral Trustee, acting on behalf of First Lien Lenders other than Aretex LLC, and the Steering Committee object to the Aretex Parties' request to stay the District Court's remand. The members of the Steering Committee are: * Wayland Distressed Opportunities Fund I-B, LLC, * Wayland Distressed Opportunities Fund I-C, LLC, * CP Capital Investments, LLC, * Satellite Senior Income Fund, LLC, and * Contrarian Funds LLC 2nd Circuit Denies Mandamus Petition The Second Circuit denies Aretex and the Purchasers' request for issuance of a writ of mandamus. The Appeals Court holds that Aretex and the Purchasers have not demonstrated that they are entitled to mandamus relief. The Stay Request was denied as moot. Circuit Judges Dennis Jacobs and Richard C. Wesley and District Court Judge John G. Koeltl presided the hearing. Headquartered in West Point, Georgia, WestPoint Stevens, Inc. -- http://www.westpointstevens.com/-- is the #1 US maker of bed linens and bath towels and also makes comforters, blankets, pillows, table covers, and window trimmings. It makes the Martex, Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as well as the Martha Stewart bed and bath lines; other licensed brands include Ralph Lauren, Disney, and Joe Boxer. Department stores, mass retailers, and bed and bath stores are its main customers. (Federated, J.C. Penney, Kmart, Sears, and Target account for more than half of sales.) It also has nearly 60 outlet stores. Chairman and CEO Holcombe Green controls 8% of WestPoint Stevens. The Company filed for chapter 11 protection on June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. (WestPoint Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 215/945-7000) WINDOW ROCK: Court Approves Winthrop Couchot as Insolvency Counsel ------------------------------------------------------------------ Window Rock Enterprises Inc. sought and obtained permission from the U.S. Bankruptcy Court for the Central District of California to employ Winthrop Couchot Professional Corporation as its general insolvency counsel. As reported in the Troubled Company Reporter on Dec. 29, 2005, Winthrop Couchot will: 1) advise and assist the Debtor in complying with the requirements of the Office of the U.S. Trustee and in matters regarding bankruptcy law, including the rights and remedies of the Debtor in connection with its asset and creditors' claims; 2) advise and assist the Debtor regarding matters of bankruptcy law, including the rights and remedies of the Debtor in connection with its asset and creditors' claims; 3) represent the Debtor in any proceedings or hearings before the Bankruptcy Court and in other proceedings in any other court where the Debtor's rights under the Bankruptcy Code may be affected or litigated; 4) conduct examination of witnesses, claimants or adverse parties and assist the Debtor in preparing accounts, reports and pleadings related to its chapter 11 case; 5) advise the Debtor concerning the requirements of the Bankruptcy Court and applicable federal and local bankruptcy rules and file any motions, applications and other pleadings necessary in the Debtor's reorganization; 6) represent the Debtor in litigation affecting it, including the action pending in the Superior Court for the State of California, County of Orange, Case No. 04CC00610; 7) assist the Debtor in the negotiation, formulation, confirmation and implementation of a plan of reorganization; and 8) perform all other necessary legal services to the Debtor in connection with its chapter 11 case. Robert E. Opera, Esq., a member at Winthrop Couchot, disclosed that his Firm received a $250,000 retainer. Mr. Opera charged $525 per hour for his services. Mr. Opera reported that Winthrop Couchot's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Marc J. Winthrop Shareholder $550 Sean A. O'Keefe Shareholder $525 Paul J. Couchot Shareholder $500 Richard H. Golubow Shareholder $395 Peter W. Lianides Shareholder $395 Garrick A. Hollander Shareholder $325 William J. Wall Associate $375 P.J. Marksbury Paralegal $180 Joan Murphy Paralegal $180 Legal Assistants $80 - $150 Winthrop Couchot assured the Court that it does not represent any interest materially adverse to the Debtor and is disinterested as that term is defined in Section 101(14) 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: Taps MacPherson Kwok as Intellectual Property Counsel ------------------------------------------------------------------ Window Rock Enterprises Inc. asks the U.S. Bankruptcy Court for the Central District of California for permission to employ MacPherson Kwok Chen & Heid LLP as its special intellectual property counsel. MacPherson Kwok will: a) provide legal advisory services related to its prosecution and procurement of trademarks and patents, and litigation and licensing of intellectual property, including follow-up matters regarding compliance settlements; and b) perform other related services as the Debtor may require. Steven M. Levitan, Esq., a member at MacPherson Kwok, discloses that the Firm's professionals bill: Professional Hourly Rate ------------ ----------- Steve Levitan $395 Thomas Chen $365 Jennifer Lantz $325 John Kim $75 The Firm received two retainers from the Debtor: i) $50,000 for representing the Debtor with respect to the prosecution and procurement of trademarks; and ii) $50,000 for representing the Debtor with respect to intellectual property litigation matters. Mr. Levitan assures the Court that MacPherson Kwok does not hold any interest adverse to the Debtor or its 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. WORLDCOM INC: Hansen Corporation Moves for Summary Judgment ----------------------------------------------------------- In November 1998, Hansen Corporation Pty Ltd. and MCI Telecommunications Corporation, now know as MCI WorldCom Network Services, Inc., entered into a Master Software License & Services Agreement, whereby Hansen provided MCI a non-exclusive, non- transferable license to use Hansen's proprietary billing software known as "HUB". Hansen also provided software maintenance, development and support services to MCI, including: -- the creation of custom software to meet MCI's specifications; -- support for the correction of errors in software licensed to MCI; -- product updates and installation; and -- testing and training services. MCI has since then adapted or modified the HUB Software. However, the security features of the HUB Software remains in place, Kenneth L. Cannon II, Esq., at Durham Jones & Pinegar, in Salt Lake City, Utah, tells the U.S. Bankruptcy Court for the Southern District of New York. Sometime after September 20, 2000, MCI permitted at least two other entities, Concert Communications Company and Bell Canada, to use the HUB Software outside the United States of America. MCI contended that Concert and Bell Canada's use of the HUB Software has been limited to the "thin-client" portion of the HUB Software. Mr. Cannon maintains that Hansen has never authorized Concert or Bell Canada's use of the HUB Software in the United States or overseas, nor did Hansen authorized MCI to sublicense the HUB Software to Concert, Bell Canada, or others. Hansen has never permitted MCI to assign any of its license rights in the HUB Software to any third party, including Concert or Bell Canada. Based on MCI's improper sublicense, Mr. Cannon asserts that MCI has breached the License Agreement and is liable to Hansen for damages. It also appears that MCI may have continued, and is continuing, to breach the Agreement until today, Mr. Cannon says. Accordingly, Hansen asks the Court to grant summary judgment in its favor as to MCI's liability so that the parties can proceed with discovery relating to the damages. 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. 116; Bankruptcy Creditors' Service, Inc., 215/945-7000) WORLDCOM INC: Inks Pact Settling U.S. Telepacific's Claims ---------------------------------------------------------- In January 2003, U.S. TelePacific Corp. filed Claim Nos. 11155, 11156, 11157, 11158 and 11159, each in the aggregate amount of $2,151,994, against the Debtors. WorldCom, Inc., and its debtor-affiliates objected to U.S. TelePacific's Claims. In December 2005, the U.S. Bankruptcy Court for the Southern District of New York approved the Debtors' request for further implementation of the Chapter 11 Plan and merger with Verizon Communications, Inc. To resolve their dispute, the parties agree that: (a) $2,150,385 of the total amount asserted in Claim No. 11158 will be allowed and paid as a Class 6 WorldCom General Unsecured Claim under the Debtors' Plan of Reorganization, subject to the conditions set forth in the Merger Order; (b) $1,609 of the total amount asserted in of Claim No. 11158 will be allowed and paid as a Class 4 Convenience Claim under the Plan; and (c) the Debtors' objections to Claim No. 11158 are withdrawn; (d) the Allowed Amounts of Claim No. 11158 will be in full and complete satisfaction of all Claims that have been, or that could have been, asserted by or on behalf of U.S. TelePacific in the Debtors' cases; and (e) U.S. TelePacific will not receive any distribution from the Debtors or their estates on account of Claim Nos. 11155, 11156, 11157, and 11159. Each of the Claims will remain, and will forever be, expunged and disallowed in its entirety. About WorldCom 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. 116; Bankruptcy Creditors' Service, Inc., 215/945-7000) XM SATELLITE: S&P Rates Planned $600 Mil. Sr. Unsec. Notes at CCC ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'CCC' rating to XM Satellite Radio Inc.'s proposed $600 million senior unsecured notes. The senior unsecured notes are rated one notch below the corporate credit rating because of the sizable amount of secured debt in the company's capital structure relative to its asset base. Proceeds from the proposed notes issue are expected to be used to refinance existing debt. At the same time, Standard & Poor's assigned its 'B-' rating and recovery rating of '1' to XM's proposed $250 million first-lien secured revolving credit facility, indicating an expectation of full recovery of principal in the event of a payment default. Standard & Poor's also revised its outlook on XM to negative from stable, reflecting heightened concerns about XM's large discretionary cash flow deficits and significant cash burn in the near term. The 'CCC+' corporate credit rating on the company and its parent company, XM Satellite Radio Holdings Inc., which are analyzed on a consolidated basis, was affirmed. The Washington- based satellite radio broadcasting company had approximately $1.1 billion in debt at Dec. 31, 2005. "The very low speculative-grade corporate credit rating on XM reflects high financial risk from the company's substantial debt burden and significant cash burn, persisting negative EBITDA and large discretionary cash flow losses in 2006, reliance on the equity markets to boost liquidity, and uncertainty surrounding the long-term viability of the subscription-based satellite radio niche," said Standard & Poor's credit analyst Alyse Michaelson Kelly. "These risks are only partially offset by XM's near-term liquidity and good growth in subscribers." * BOOK REVIEW: The Logic and Limits of Bankruptcy Law ----------------------------------------------------- Author: Thomas H. Jackson Publisher: Beard Books Paperback: 300 pages List Price: $34.95 Order your personal copy at: http://amazon.com/exec/obidos/ASIN/1587981149/internetbankrupt The Logic and Limits of Bankruptcy Law is clearly the culmination of a long career of reflective attention to overriding issues and trends in bankruptcy. In it, Thomas Jackson presents a theoretical framework on which bankruptcy law is built, and emphasizes the need for a workable theory on what bankruptcy law can and should do. Problems in bankruptcy cases, he believes, are resolved too often in an ad hoc manner because the field of bankruptcy analysis lacks the discipline of determining if and why those problems are proper concerns of bankruptcy law to begin with. The objective of The Logic and Limits of Bankruptcy Law is to "show why bankruptcy's principal role limits what other functions it can usefully perform." Mr. Jackson explores the idea that bankruptcy law has become more controversial because its scope has been extended beyond its mandate. Bankruptcy law's original, historical function is debt collection. Indeed, bankruptcy law is principally "an ancillary, parallel system of debt collection law," and provides creditors with a compulsory and collective forum to sort out their relative entitlements to a debtor's assets." Since the 1980s, according to Jackson, it has become "... fashionable, for example, to state that keeping firms in operation is a goal of bankruptcy law. It is likewise fashionable to see bankruptcy law as embodying substantive goals of its own that need to be "balanced" with (among others) labor law, with environmental law, or with the rights of secured creditors or other property claimants. . . . [I]ncluding too much in bankruptcy law can undermine what everyone agrees it should be doing in the first place. Mr. Jackson allows that bankruptcy law historically has had a second role as well: to provide for "some sort of a financial fresh start for individuals." He devotes the tenth chapter of this book to his views on the difference between a financial fresh start for individuals and a financial fresh start for corporations. The first nine chapters of The Logic and Limits of Bankruptcy Law deal with the question of how assets in a bankruptcy case are to be used. The goal, Mr. Jackson says, should be "to permit the owners of assets to use those assets in a way that is most productive to them as a group in the face of incentives by individual owners to maximize their own positions." Bankruptcy law should concern itself with converting ownership of assets from debtor to creditor and reducing the cost of said conversion. Throughout his book, Mr. Jackson applies his theoretical framework to a variety of pertinent issues while testing the current provision of the Bankruptcy Code. These issues include: -- determining liabilities and the basic role of non-bankruptcy law; -- redefining liabilities (the basic trustee avoiding powers of Section 544); -- determining the assets available for distribution; -- executory contracts in bankruptcy; -- pre-bankruptcy opt-out activity and the role of preference law; -- running bankruptcy's collective proceeding; -- timing the bankruptcy proceedings; -- reconsidering reorganizations; and -- the scope of discharge and exempt property. The Logic and Limits of Bankruptcy Law will prove enlightening and thought provoking to the lay reader and businessperson interested in the interplay between business, economics, and policy, as well as to the bankruptcy professional with a desire to distinguish forest from tree. ********* 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/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. 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. Marie Therese V. Profetana, Shimero Jainga, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Cherry A. Soriano-Baaclo, Christian Q. Salta, Jason A. Nieva, Lucilo Junior M. Pinili, Tara Marie A. Martin and Peter A. Chapman, Editors. Copyright 2006. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $725 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***