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/raid1/www/Hosts/bankrupt/TCR_Public/060502.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, May 2, 2006, Vol. 10, No. 103 Headlines ADELPHIA COMMS: Court Approves Disclosure Statement Supplement AH-DH APARTMENTS: Files Schedules of Assets and Liabilities AIRBASE SERVICES: Case Summary & 19 Largest Unsecured Creditors AIRTRAN HOLDINGS: Posts $4.6 Million Fiscal First Quarter Net Loss ALLSERVE SYSTEMS: Chapter 7 Trustee Hires Bederson as Accountant AMERICAN TECH: Closes Whitco Asset Acquisition Transaction AMERICAN TOWER: Incurs $2.6M Net Loss in Quarter Ending March 31 APX HOLDINGS: Committee Wants Landau & Meadows as Counsel ASARCO LLC: Wants Mossy Creek Tennessee Mines Option Pact Rejected ASSET BACKED: DBRS Rates $9.1 Mil. Class M10 Certificates at BB ATA AIRLINES: Settles Dispute Over GE Entities' $138.5 Mil. Claims ATA AIRLINES: AFA Wants $828,484 Administrative Expense Paid ATLANTIC ROLL-OFF: Case Summary & 13 Largest Unsecured Creditors BAREFOOT RESORT: Disclosure Statement Hearing Scheduled for May 9 BAREFOOT RESORT: Premier Says Disclosure Statement is Inadequate BENJ FRANKLIN: Court Convenes $50 Mil. IRS Tax Deal Hearing Today BLOCKBUSTER INC: Incurs $1.9 Million Net Loss in First Quarter CALPINE CORP: Court OKs Payment of Prepetition Property Tax Claims CATHOLIC CHURCH: Portland Disclosure Hearing Continued to June 15 CATHOLIC CHURCH: Dist. Court Stays Document Production in Portland CEQUEL COMMS: S&P Rates Proposed $675 Mil. Credit Facility at B- CERTIFIED HR: Ch. 11 Trustee Settling Fraudulent Conveyance Suit CHASE MORTGAGE: Moody's Holds Low-B Ratings on Five Cert. Classes CITGO PETROLEUM: Hires UBS Investment to Market Asphalt Unit COKER CONSTRUCTION: Voluntary Chapter 11 Case Summary CURATIVE HEALTH: Court Gives Final Nod on Linklaters as Counsel CURATIVE HEALTH: Has Until June 30 to File Schedules & Statements CURATIVE HEALTH: Disclosure & Plan Objections Due by May 3 D'ARCY LABORATORIES: Case Summary & 20 Largest Unsecured Creditors DANA CORP: Transferring $1.57 Million Equipment to Mexico Plant DANA CORP: P. Schoenfeld Wants To Trade In Debtors' Securities DANA CORP: Wants to Walk Away from 35 Equipment Leases DELPHI CORP: General Motors Fights Proposed Contracts Rejection DELPHI CORP: Creditors Have Until July 31 to File Proofs of Claim DELTA AIR: Wants to Reject CVG Financed Leases and Contracts DEMMERT BUILDING: Case Summary & 5 Largest Unsecured Creditors ENTERGY NEW ORLEANS: To Release 2006 1st Quarter Earnings on May 2 ESE DUKE: Voluntary Chapter 11 Case Summary EXTENSITY SARL: Systems Deal Cues Moody's to Review Low-B Ratings EXTENSITY SARL: Systems Merger Cues S&P to Put B Ratings on Watch FIDELITY NATIONAL: Spin-out Prompts Moody's to Hold Ratings FINOVA GROUP: May Ask Del. Court to Stay Thaxton's Ch. 11 Cases GALVEX HOLDINGS: To Auction Subsidiaries' Equity Interests Today GLOBAL HOME: U.S. Trustee Appoints Seven-Member Creditors Panel HEADLINERS ENT: Bagell Josephs Raises Going Concern Doubt INSPIRE INSURANCE: Trustee Prepares Distribution to Creditors INTEREX INTERNATIONAL: Voluntary Chapter 11 Case Summary JP MORGAN: Moody's Holds Low-B Ratings on Six Certificate Classes KANSAS CITY: Strained Liquidity Cues Moody's to Downgrade Ratings KMART CORP: Wants N.J. Tax Court to Adjudicate 2005 Appeal LAFAYETTE COMMUNITY: Case Summary & 20 Largest Unsecured Creditors LEVITZ HOME: Spectrum Wants to Collect Unpaid Rent Obligations LEVITZ HOME: Court Allows Unitary Lease Assumption & Assignment LEVITZ HOME: Unit Names Tom Baumlin as Chief Executive Officer MANITOWOC CO: Net Revenues Increase 24% to $633M in First Quarter MECACHROME INT'L: S&P Places B- Rating on Sr. Subordinated Notes MEDICAL MALPRACTICE: Liquidator Wants Court to OK Status Report MEGA-C POWER: Nevada Court Approves Disclosure Statement MICROHELIX INC: Auditor Raises Going Concern Doubt MUSICLAND HOLDING: Wants Court to Fix May 30 as Admin. Bar Date NISKA GAS: Moody's Puts Ba3 Rating on $1.05 Billion Facilities NOMURA HOME: DBRS Puts BB Rating on $7.4 Million Class B-2 Certs. NORTEL NETWORKS: Incurs $2.3 Billion Net Loss in Fourth Quarter O'SULLIVAN: Inks $50M Exit Facility; Reports Post-Emergence Status OUTBOARD MARINE: Trustee Distributing $15.4 Million to Creditors OWENS CORNING: Court Rules Bank Lender Claim is Unimpaired PATRICK MOLLER: Case Summary & 14 Largest Unsecured Creditors PERRY ELLIS: S&P Affirms B+ Rating & Revises Outlook to Stable PHASE III: Holtz Rubenstein Raises Going Concern Doubt PLIANT CORP: Creditors Have Until May 5 to File Proofs of Claim PRIMA CAPITAL: Moody's Holds B2 Rating on $9.2MM Class H Certs. PROCARE AUTOMOTIVE: Court OKs $14MM Purchase Deal of Monro Muffler PROCARE AUTOMOTIVE: Wants Garden City Group as Noticing Agent PUREBEAUTY INC: U.S. Trustee Appoints Three-Member Creditors Panel PUREBEAUTY INC: To Auction Substantially All Assets on May 22 QUIGLEY COMPANY: Settles Stonewall Insurance Coverage Dispute R.L. TORBECK: Voluntary Chapter 11 Case Summary RENO CITY: Moody's Downgrades Rating on $18.4 Mil. Bonds to Ba2 REPUBLIC STORAGE: Selling Assets to Chrysalis Capital for $20 Mil. ROUGE INDUSTRIES: Can Use Lenders' Cash Collateral Until May 31 ROUSE CO: Moody's Rates $500MM Proposed Sr. Unsec. Notes at Ba1 SENSIENT TECHNOLOGIES: S&P Affirms BB+ Rating With Neg. Outlook SFBC INTERNATIONAL: S&P Affirms B+ Rating & Alters Outlook to Neg. STEAKHOUSE PARTNERS: Mayer Hoffman Raises Going Concern Doubt STEELCASE INC: Earns $11.2 Million in Fourth Fiscal Quarter TEMBEC INC: Settlement Prompts S&P to Place CCC- Rating on Watch THAXTON: Finova Wants Right to Appeal Equitable Subordination Suit THE INN AT WHITTIER: Voluntary Chapter 11 Case Summary TODD ADAMS: Case Summary & 17 Largest Unsecured Creditors VALHI INC: Earns $14.9 Million in Fourth Quarter of 2005 VARIG: NY Judge Extends Embargo on Aircraft Seizure to May 31 VTEX ENERGY: Posts $2.6M Net Loss in Third Quarter Ended Jan. 31 WHITCO CO: American Tech Closes Assets Acquisition Transaction YUKOS OIL: TRO vs. Equity Sale to Lithuanian AB Stretched to May 4 ZIM CORPORATION: Amends 2005 Financial Statements ZION GIN: Case Summary & 15 Largest Unsecured Creditors ZOOMERS HOLDING: Case Summary & 20 Largest Unsecured Creditors * Large Companies with Insolvent Balance Sheets ********* ADELPHIA COMMS: Court Approves Disclosure Statement Supplement -------------------------------------------------------------- On April 26, 2006, Adelphia Communications Corporation and its debtor-affiliates delivered to the U.S. Bankruptcy Court for the Southern District of New York a revised version of their Disclosure Statement Supplement, which incorporates their responses to the objections of various parties-in-interest to their Disclosure Statement Supplement. A full-text redlined copy of the ACOM Debtors' Fourth Amended Disclosure Statement Supplement is available for free at: http://www.adelphia.com/pdf/042706_ACC_%20Revised_DSS_042606.pdf The ACOM Debtors ask the Court to disregard all ballots previously submitted to vote for the Debtors' Plan of Reorganization dated November 2005, except for those ballots received from any creditor holding a Claim or an Equity Interest in one of the Non-Voting/Resolicitation Classes. ACOM Debtors File Revised Modified Fourth Amended Plan On April 26, 2006, the ACOM Debtors also delivered to the Court a revised version of their Modified Fourth Amended Joint Plan of Reorganization to reflect, among others, that the amount to be released from the FrontierVision Holdco dispute to the Holding Company Debtor Group will be the FrontierVision Holdco Holdback amount less $445,000,000. As of an assumed Effective Date of July 31, 2006, the release is estimated to be $60,000,000. A full-text redlined copy of the ACOM Debtors' Modified Fourth Amended Plan of Reorganization is available for free at: http://ResearchArchives.com/t/s?86e Court Approves Disclosure Statement Supplement The Bankruptcy Court entered an order approving the Supplement to the Disclosure Statement as containing "adequate information" to enable the company's Chapter 11 bankruptcy creditors and equity holders to make an informed judgment about the company's Modified Plan of Reorganization. Adelphia will now begin the process of soliciting its creditors and equity holders to vote on the Modified Plan of Reorganization. A full-text copy of the Revised Modified Plan is available for free at http://ResearchArchives.com/t/s?86f A full-text copy of the Final Disclosure Statement Supplement is available for free at http://ResearchArchives.com/t/s?870 Deadlines Judge Gerber set May 1, 2006, as the record date for purposes of determining which Rigas Managed Entities Stakeholders and holders of claims in the Re-Voting Classes are entitled to vote on the Plan. All ballots and master ballots must be delivered to the Balloting Agent by June 5, 2006, at 4:00 p.m. The Court rules that all previously filed objections to the confirmation of the November Plan need not be re-filed. Objections by: -- a RME Stakeholder, if any, to the Plan or Hearing I Issues; and -- any party-in-interest to the Hearing II Issues, must be filed not later than 4:00 p.m., prevailing New York Time, on June 1, 2006. Judge Gerber will convene a hearing on May 15, 2006, at 9:45 a.m. (prevailing New York Time) to consider certain issues in connection with confirmation of the Plan. Another hearing will commence on June 20, 2006, at 9:45 a.m. (prevailing New York Time) to consider additional issues not addressed in Confirmation Hearing I. 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. 130; Bankruptcy Creditors' Service, Inc., 215/945-7000) AH-DH APARTMENTS: Files Schedules of Assets and Liabilities ----------------------------------------------------------- AH-DH Apartments, Ltd., delivered its Schedules of Assets and Liabilities to the U.S. Bankruptcy Court for the Eastern District of Texas disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $62,698,000 B. Personal Property $1,876,793 C. Property Claimed as Exempt D. Creditors Holding $54,325,444 Secured Claims E. Creditors Holding $1,358,150 Unsecured Priority Claims F. Creditors Holding $845,330 Unsecured Nonpriority Claims ----------- ----------- Total $64,574,793 $56,528,924 Headquartered in Plano, Texas, AH-DH Apartments, Ltd., owns 16 apartment complexes. The company and three of its affiliates filed for chapter 11 protection on Mar. 22, 2006 (Bank. E.D. Tex. Case No. 06-40355). J. Mark Chevallier, Esq., at McGuire Craddock & Strother, P.C., represents the Debtors. No Official Committee of Unsecured Creditors has been appointed in these cases. When the Debtors filed for protection from their creditors, they estimated assets and debts between $50 million and $100 million. DH Holdings Limited Partnership and DH Holdings GP, Inc., filed for chapter 11 protection on Apr. 8, 2006 (Bankr. E.D. Tex. Case Nos. 06-40479 and 06-40480). Another affiliate, DB Holdings, LLC, filed for chapter 11 protection on Apr. 10, 2006 (Bankr. E.D. Tex. Case No. 06-40484). The Debtors' chapter 11 cases are jointly administered under Case No. 06-40355. AIRBASE SERVICES: Case Summary & 19 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Airbase Services, Inc. 902 Avenue T Grand Prairie, Texas 75050 Tel: (214) 677-9600 Fax: (214) 677-9601 Bankruptcy Case No.: 06-41231 Type of Business: The Debtor maintains and repairs a wide range of cargo equipment and cabin interior designs for commercial airlines, and provides maintenance and management services for the airline industry. See http://www.airbaseservices.com Chapter 11 Petition Date: May 1, 2006 Court: Northern District of Texas (Fort Worth) Judge: D. Michael Lynn Debtor's Counsel: Mark Xavier Mullin, Esq. Haynes & Boone, LLP 901 Main Street, Suite 3100 Dallas, Texas 75202-3789 Tel: (214) 651-5539 Fax: (214) 200-0695 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Harris, N.A. Loans $3,300,000 c/o James Spiotto, Esq. Chapman and Cutler, LLP 111 West Monroe Street Chicago, IL 60603-4080 BE Aerospace, Inc. Trade Debt $1,236,859 P.O. Box 65277 Charlotte, NC 28265-0277 The Estate of Brian McKeown Director Loan $785,000 Rod McKeown c/o Hoskin Scientific 239 East 6th Avenue Vancouver, BC V5T IJ7 Canada Aerotek Aviation Trade Debt $126,801 Aircraft Hardware West, Inc. Trade Debt $88,241 Lantal Textiles, Inc. Trade Debt $81,085 Tente Casters, Inc. Trade Debt $66,429 Telair International Trade Debt $50,597 H&S Manufacturing Co. Trade Debt $41,535 Perrone Leather Trade Debt $40,730 Estex Manufacturing Co., Inc. Trade Debt $40,376 AERISTO Trade Debt $29,889 The CIT Group/ Trade Debt $26,972 Commercial Services Mechanical Enterprises, Inc. CSC Aerospace, Inc. Trade Debt $26,786 Tandem Staffing Solutions, Inc. Trade Debt $23,191 Douglass Interior Trade Debt $23,189 Products, Inc. Alexander B. Zlatkus Trade Debt $19,935 Mario Paredes Trucking Trade Debt $19,243 A.H. Rice Corp. Trade Debt $19,033 AIRTRAN HOLDINGS: Posts $4.6 Million Fiscal First Quarter Net Loss ------------------------------------------------------------------ AirTran Holdings, Inc., the parent company of AirTran Airways, Inc., reported a $4.6 million net loss for the first quarter of 2006. The first quarter results included a credit of $4.2 million due to an accounting correction to reverse prior fuel charges. Commenting on the quarter, Joe Leonard, AirTran Airways' chairman and chief executive officer said, "Since last year we have grown our capacity more than 24% and taken delivery of fourteen new Boeing 737-700s and four Boeing 717-200s. We are encouraged by continued strong demand for our product, improved revenue performance and increased recognition of the quality service we provide." For the second year in a row, the Airline Quality Rating report, issued by the University of Nebraska at Omaha and Wichita State University, ranked AirTran Airways second overall in quality among major airlines. During the first quarter, AirTran Airways' unit revenue increased 11.1% primarily on the strength of a 10.6% improvement in yield. Load factor increased to 70.8%, setting an all-time first quarter record. "We are pleased with our first quarter unit revenue improvement of 11% on a 24% growth in capacity. This is particularly rewarding given the negative impact on unit revenue resulting from the shift in the Easter Holiday from March to April, which we believe slowed our first quarter unit revenue growth by 3 to 4% year over year," said Bob Fornaro, AirTran Airways' president and chief operating officer. "While we are not satisfied with a loss, we nevertheless want to acknowledge the hard work and dedication of every AirTran Airways crew member during the first quarter." AirTran Airways' unit operating costs increased 9.3%, including the effect of the accounting correction to reverse prior fuel charges, due largely to the 63% increase in the cost of fuel year- over-year. Non-fuel unit costs increased slightly by 1.1% to 6.51 cents. Stan Gadek, AirTran Airways' chief financial officer, said, "We continue to be challenged by the high cost of fuel impacting our bottom line. We have always viewed cost controls as an ongoing process, and as such, we are aggressively managing our cost structure and identifying opportunities for further cost reductions and productivity improvements." Highlights of AirTran Airways' accomplishments during the first quarter and to date include: -- exercised options for 24 additional Boeing 737-700s, confirming the remaining options on our 100 aircraft order placed in the summer of 2003. These aircraft will be delivered in 2008-2010. -- took delivery of six Boeing 737s. -- named Best Low-Fare airline for 2006 by Entrepreneur Magazine for the sixth time. -- entered into new distribution agreements with Worldspan and Kayak.com.AirTran Airways continues to expand its network with additional cities and expanded flight offerings. AirTran Airways, Inc. (NYSE: AAI) -- http://www.airtran.com/-- operates over 600 daily flights to 50 destinations. The airline's hub is at Hartsfield-Jackson Atlanta International Airport, where it is the second largest carrier. AirTran Airways recently added the fuel-efficient Boeing 737-700 aircraft to create America's youngest all-Boeing fleet. The airline is also the first carrier to install XM Satellite Radio on a commercial aircraft and the only airline with Business Class and XM Satellite Radio on every flight. * * * As reported in the Troubled Company Reporter on Feb. 17, 2006, Moody's Investors Service downgraded all ratings of the Series 1999-1 Enhanced Equipment Trust Certificates, which are supported by payments from AirTran Airways, Inc., and affirmed the Corporate Family Rating at B3 for the parent AirTran Holdings, Inc. Moody's also changed the outlook to stable from negative. Ratings affected include: AirTran Airways EETC Series 1999-1 * Class A -- to Ba1 from Baa2; * Class B -- to B1 from Ba1; and * Class C -- to B3 from B2. As reported in the Troubled Company Reporter on Aug. 26, 2005, Standard & Poor's Ratings Services placed a 'CCC' rating on AirTran Holdings Inc.'s senior unsecured and subordinated debt securities included in its $225 million Rule 415 shelf filing. Ratings on AirTran and its major operating subsidiary, AirTran Airways Inc., including the 'B-' corporate credit rating, were affirmed. S&P said the outlook is stable. ALLSERVE SYSTEMS: Chapter 7 Trustee Hires Bederson as Accountant ---------------------------------------------------------------- The Hon. Rosemary Gambardella of the U.S. Bankruptcy Court for the District of New Jersey authorized Charles A. Stanziale, Jr., the Chapter 7 Trustee appointed in Allserve Systems Corp.'s bankruptcy case, to retain Bederson & Company, LLP, as his accountants. Mr. Stanziale selected Bederson as his accountant based on the firm's extensive experience and expertise in insolvency and forensic accounting. Bederson also served as accountant for Bunce Atkinson, the Debtor's former Chapter 11 Trustee. Bederson will assist the Chapter 7 Trustee in performing his duties, including investigating the Debtor's pre-bankruptcy and post-bankruptcy financial affairs. Timothy J. King, a partner at Bederson, tells the Bankruptcy Court that the hourly rates for his firm's professionals are: Professional Designation Hourly Rate ------------ ----------- ----------- Edward P. Bond Sr. Partner $410 Timothy J. King Partner $360 Matthew Schwartz Partner $360 P. Dermott O'Neill Partner $360 Charles Lunden Partner $360 Kimberly Sevonty Manager $265 Shari Hartstein Manager $255 Sean Raquet Manager $255 Joseph Puskas Manager $215 Robert Pieloch Sr. Accountant $185 Harold Parnes Sr. Accountant $185 Joseph Sullivan Sr. Accountant $185 Eugene Boohoff Sr. Accountant $185 Christopher Phillipps Sr. Accountant $185 Aaron Todoroff Sr. Accountant $185 Lionel Parnes Staff Accountant $120 Carol Galante Paraprofessional $105 Mr. King assures the Bankruptcy Court that his firm does not hold any interest adverse to the Debtor's estate and is a "disinterested" person as that term is defined in Section 101(14) of the bankruptcy code. Bederson & Company LLP -- http://www.bederson.com/-- can be reached at: Timothy J. King Bederson & Company LLP 405 Northfield Avenue West Orange, New Jersey 07052 Phone: 888-222-8268 Fax: 973-736-3367 and -8786 Headquartered in North Brunswick, New Jersey, Allserve Systems Corp. was an outsourcing company for the IT industry. The Debtor filed for chapter 11 protection on November 18, 2005 (Bankr. D. N.J. Case No. 05-60401). Barry W. Frost, Esq., at Teich Groh represents the Debtor in its restructuring efforts. The Bankruptcy Court converted Allserve's Chapter 11 case to a liquidation proceeding under Chapter 7 of the Bankruptcy Code on Jan. 18, 2006. Charles A. Stanziale, Jr., Esq., at McElroy, Deutsch, Mulvaney & Carpenter, serves as chapter 7 Trustee. When the Debtor filed for protection from its creditors, it estimated assets between 10 million to $50 million and debts between $50 million to $100 million. AMERICAN TECH: Closes Whitco Asset Acquisition Transaction ---------------------------------------------------------- American Technologies Group, Inc. (OTC BB: ATGR) closed on the acquisition of certain of Whitco Company, LP's assets, as authorized by an April 25 order by the U.S. Bankruptcy Court of the Northern District of Texas, Fort Worth Division. Prior to closing of the sale, Whitco sought protection under Chapter 11 of the United States Bankruptcy Code, and the approval of the sale of its remaining assets to American Technologies. The purchase price paid at closing for the assets consisted of: * the issuance of 3.75 million warrants to purchase American Technologies' common shares at an exercise price of $0.001 per share; * the delivery of a registration rights agreement requiring American Technologies to register the shares issued upon the exercise of the Warrant; and * the cancellation of certain debtor-in-possession financing provided to Whitco prior to the closing of the asset sale. American Technologies has secured working capital for this new acquisition in the form of a $500,000 credit facility with Gryphon Master Fund and affiliates of Dallas, Texas. This acquisition expands the Company's product line. According to Barry Ennis, President of North Texas Steel, Inc., "The Whitco product line is a natural extension and leverages our manufacturing capabilities without the need for significant capital expenditures." About Whitco Company Headquartered in Fort Worth, Texas, Whitco Company, LP, sells and distributes structural steel and aluminum lighting poles worldwide. Whitco provides marketing expertise and engineering knowledge to a nationwide contracted lighting representative base as well as original equipment manufacturer customers. The Company filed for chapter 11 protection on March 15, 2006 (Bankr. N.D. Tex. Case No. 06-40721). Eric A. Liepins, Esq., at Eric A. Liepins, P.C., represents the Debtor. When the Debtor filed for protection from its creditors, they estimated less than $50,000 of assets and between $1 million and $10 million of debts. About American Technologies American Technologies Group, Inc., through its wholly owned subsidiary, North Texas Steel Company, Inc., is an American Institute of Steel Construction certified structural steel fabrication company and provides fabrication and detailing of structural steel components for commercial buildings, office buildings, convention centers, sports arenas, airports, schools, churches and bridges. * * * Going Concern Doubt Russell Bedford Stefanou Mirchandani LLP expressed substantial doubt about American Technologies' ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended July 31, 2005. The auditing firm pointed to the Company's recurring losses and insufficient cash flows to meet obligations and sustain its operations. AMERICAN TOWER: Incurs $2.6M Net Loss in Quarter Ending March 31 ---------------------------------------------------------------- American Tower Corporation's (NYSE: AMT) total revenues increased 74% to $320.4 million and rental and management segment revenues increased 74% to $316.3 million, of which $108.5 million was attributable to SpectraSite. Revenue for the quarter ended March 31, 2006, included approximately $4.3 million of net positive non-recurring items. Rental and Management Segment Gross Margin increased 76% to $240.2 million, of which $77.1 million was attributable to SpectraSite. Rental and Management Segment Operating Profit increased 80% to $224.5, of which $71.9 million was attributable to SpectraSite. Adjusted EBITDA increased 83% to $216.3 million, of which $68.9 million was attributable to SpectraSite. Adjusted EBITDA Margin was 67%. Income from operations increased to $69.0 million, of which $14.9 million was attributable to SpectraSite. Loss from continuing operations decreased to $2.2 million, which includes $9.1 million of income from continuing operations attributable to SpectraSite. Net loss decreased to $2.6 million, which includes $9.1 million of net income attributable to SpectraSite. Free Cash Flow was $123.3 million, of which $52.0 million was attributable to SpectraSite. Free Cash Flow was comprised of $151.7 million of cash provided by operating activities less $28.4 million of payments for purchase of property and equipment and construction activities, including $11.4 million of discretionary capital spending. The Company completed the construction of 54 towers and the installation of 13 in-building systems during the quarter. Jim Taiclet, American Tower's Chief Executive Officer stated, "American Tower made significant progress over the past quarter. We have substantially completed the integration related to our merger with SpectraSite, while continuing to deliver strong performance across our entire portfolio. When compared to pro forma results for the first quarter of 2005, our revenues and Adjusted EBITDA grew 14% and 29%. Additionally, we continue to lead the industry in operating margins, which are now meeting our pre-merger levels. "With our solid first quarter results and the strong performance of our wireless carrier customers, we expect to continue to deliver strong operating results as we focus on leveraging the quality of our diversified tower portfolio and integrated operations to meet our customers' needs. We are excited to build on our operational momentum as we continue to refine our processes to decrease our cycle times and improve our service to our customers, enabling them to deploy their networks in a cost effective, time efficient manner." Stock Repurchase Program and Financing Highlights The Company has repurchased a total of 9.9 million shares of its Class A common stock to date, for approximately $293.2 million, as part of its previously announced $750 million stock repurchase program. During the quarter ended March 31, 2006, the Company repurchased approximately 5.5 million shares of its Class A common stock for approximately $165.5 million, and, as of April 26, 2006, had repurchased an additional 1.6 million shares of its Class A common stock for approximately $51.1 million subsequent to the end of the first quarter of 2006. The Company expects to complete this stock repurchase program in the second half of 2006, and upon completion, expects that it will continue its stock repurchase activity by extending or supplementing the current program with additional repurchases. As previously reported, the Company completed the redemption of all outstanding 12.25% senior subordinated discount notes of American Towers, Inc. (ATI 12.25% Notes) in February 2006. During the quarter ended March 31, 2006, the warrants associated with the ATI 12.25% notes became exercisable, and the Company issued an aggregate of 9.7 million shares of its Class A common stock upon the exercise of 0.7 million warrants. American Tower Corporation -- http://www.americantower.com/-- is the leading independent owner, operator and developer of broadcast and wireless communications sites in North America. American Tower owns and operates over 22,000 sites in the United States, Mexico, and Brazil. Additionally, American Tower manages approximately 2,000 revenue producing rooftop and tower sites. * * * Moody's Investors Service upgraded the ratings of American Tower Corporation and its subsidiaries in Sept. 2005. American Tower Corporation: * Corporate family rating upgraded to Ba2 from B1 * Speculative grade liquidity rating affirmed at SGL-1 * 9.375% Senior Notes due 2009 upgraded to B1 from B3 * 7.5% Senior Notes due 2012 upgraded to B1 from B3 * 7.125% Senior Notes due 2012 upgraded to B1 from B3 * 5% Convertible Notes due 2010 upgraded to B1 from B3 American Towers, Inc. (fka American Tower Escrow Corp.): * 7.25% Senior Subordinated Notes due 2011 upgraded to Ba2 from B2 * 0% Senior Subordinated Discount Notes due 2008 upgraded to Ba2 from B2 American Tower, LP and American Towers, Inc. (co-borrowers): * Senior secured credit facility maturing 2011 upgraded to Baa3 from Ba3 Spectrasite Communications, Inc.: * Senior secured credit facility maturing 2011/2012 upgraded to Ba1 from Ba3 SpectraSite, Inc.: * Corporate family rating withdrawn * 8.25% Senior Notes due 2010 rating withdrawn. APX HOLDINGS: Committee Wants Landau & Meadows as Counsel --------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in the chapter 11 cases of APX Holdings, LLC, and its debtor-affiliates asks the U.S. Bankruptcy Court for the Central District of California for permission to employ Landau & Meadows, LLP, as its bankruptcy counsel. Landau & Meadows will: a. provide legal advice with respect to the Committee's duties, responsibilities and powers in the Debtors' chapter 11 cases, with respect to the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, the Guideline of the Office of the U.S. Trustee, and compliance with the Local Rules of the Court; b. provide legal advice with respect to the Debtors' proposed plans of reorganization, the orderly wind up and liquidation of its estates, and the determination of the allowed claims against the estate; c. provide legal advice with respect to the examination of all possible claims and causes of action that may belong to the estate with respect to, but not limited to, those against the Debtors' secured lender, and the Debtors' parent, other affiliates, and third parties; and d. perform other legal services ay required by the Committee. David W. Meadows, Esq., a partner at Landau & Meadows, tells the Court that he and his partner, Rodger M. Landau, Esq., will both bill $375 per hour for this engagement. Mr. Meadows assures the Court that his firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Messrs. Landau and Meadows can be reached at: Rodger M. Landau, Esq. David W. Meadows, Esq. Landau & Meadows, LLP 1801 Century Park East, Suite 1250 Los Angeles, CA 90067 Tel: (310) 557-0050 Fax: (310) 557-8493 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. ASARCO LLC: Wants Mossy Creek Tennessee Mines Option Pact Rejected ------------------------------------------------------------------ ASARCO LLC and Mossy Creek Mining Company LLC were parties to an Option to Purchase, effective Aug. 13, 2002. Under the Agreement, ASARCO granted Mossy Creek the exclusive right and option, for a specified period of time, to purchase the Young Mine Easements and Tailing, the New Market Mine, and certain equipment located on the New Market Mine Property. The Option Property is owned by ASARCO's Tennessee Mines Division. TMD is being sold to Glencore Ltd., subject to higher and better offers. Mossy Creek will be allowed to submit a bid on TMD, in accordance with the TMD Bidding Procedures and on the same terms and conditions as other bidders. Because ASARCO is selling TMD in its entirety, rather than separately selling TMD's Option Property, ASARCO does not believe that the proposed sale triggers Mossy Creek's option right. To the extent that Mossy Creek's option right is implicated, ASARCO believes that the Bidding Procedures constitute a full and complete satisfaction of the option right. Nevertheless, ASARCO LLC seeks authority from the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to reject its Option Agreement with Mossy Creek. Tony M. Davis, Esq., at Baker Botts LLP, in Dallas, Texas, tells the Court that ASARCO has carefully weighed the advantages and disadvantages of rejecting the Agreement and has concluded that the estate's interests are better served by its rejection. The Agreement is a burden on TMD and its property. By rejecting the Agreement, ASARCO will be able to sell TMD for a purchase price of more than $40,000,000, thereby greatly enhancing its prospects for a successful reorganization. The rejection of the Agreement will create an unsecured damages claim, which will be entitled to a pro rata distribution under the Debtors' plan of reorganization, Mr. Davis notes. "This negative aspect of the rejection is far outweighed by the substantial sales proceeds that the TMD sale will generate." Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. (ASARCO Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASSET BACKED: DBRS Rates $9.1 Mil. Class M10 Certificates at BB --------------------------------------------------------------- Dominion Bond Rating Service assigned these ratings to the Asset Backed Pass-Through Certificates, Series NC 2006-HE4 issued by Asset Backed Securities Corporation: * $153.5 million, Class A1 -- New Rating AA * $17.1 million, Class A1A -- New Rating AAA * $173.1 million, Class A2 -- New Rating AAA * $171.8 million, Class A3 -- New Rating AAA * $49.1 million, Class A4 -- New Rating AAA * $101.0 million, Class A5 -- New Rating AAA * $23.2 million, Class A6 -- New Rating AAA * $87.3 million, Class M1 -- New Rating AA * $25.0 million, Class M2 -- New Rating AA (low) * $17.7 million, Class M3 -- New Rating A (high) * $16.8 million, Class M4 -- New Rating A * $10.5 million, Class M5 -- New Rating A (low) * $11.4 million, Class M6 -- New Rating BBB (high) * $6.8 million, Class M7 -- New Rating BBB * $10.9 million, Class M8 -- New Rating BBB (low) * $11.4 million, Class M9 -- New Rating BB (high) * $9.1 million, Class M10 -- New Rating BB The AAA ratings on the Class A Certificates reflect 24.25% of credit enhancement provided by the subordinate classes, targeted overcollateralization (1.50%), and monthly excess spread. The AA rating on Class M1 reflects 14.65% of credit enhancement. The AA (low) rating on Class M2 reflects 11.90% of credit enhancement. The A (high) rating on Class M3 reflects 9.95% of credit enhancement. The "A" rating on Class M4 reflects 8.10% of credit enhancement. The A (low) rating on Class M5 reflects 6.95% of credit enhancement. The BBB (high) rating on Class M6 reflects 5.70% of credit enhancement. The BBB rating on Class M7 reflects 4.95% of credit enhancement. The BBB (low) rating on Class M8 reflects 3.75% of credit enhancement. The BB (high) rating on Class M9 reflects 2.50% of credit enhancement. The BB rating on Class M10 reflects 1.50% of credit enhancement. The ratings of the certificates also reflect the quality of the underlying assets and the capabilities of Select Portfolio Servicing, Inc., as Servicer. U.S. Bank National Association will act as the Trustee. The trust will enter into an interest rate swap agreement with Credit Suisse International. The trust will pay to the Swap Provider a fixed payment of 5.30% per annum and receive a floating payment at one-month LIBOR. Interest and principal payments collected from the mortgage loans will be distributed on the 25th day of each month commencing in May 2006. Interest will be first paid to the Senior Certificates on a pro rata basis and then sequentially to the subordinate classes. Until the step-down date, principal collected will be paid exclusively to the senior certificates unless they are paid down to zero. After the step-down date, and provided that certain performance tests have been met, principal payments will be distributed among the certificates of all classes on a pro rata basis. Additionally, provided that certain performance tests have been met, the level of overcollateralization may be allowed to step down to 3.0% of the then-current balance of the mortgage loans. All of the mortgage loans were originated or acquired by New Century Mortgage Corporation. As of the cut-off date Apr. 1, 2006, aggregate principal balance of the mortgage loans is $909,199,782. The weighted average mortgage rate is 8.27%, the weighted average FICO is 618, and the weighted average original loan-to-value ratio is 81.11%, without taking into consideration the combined loan-to-value on the piggybacked loans. ATA AIRLINES: Settles Dispute Over GE Entities' $138.5 Mil. Claims ------------------------------------------------------------------ Before filing for bankruptcy protection, ATA Airlines, Inc., and its debtor-affiliates were party to various agreements and other contracts with the GE Entities including agreements relating to 22 aircraft and four spare engines. Aircraft/Engine Type Serial No. U.S. Registration No. -------------------- ---------- --------------------- Boeing 737-800 32576 N302TZ Boeing 737-800 28648 N303TZ Boeing 737-800 32348 N306TZ Boeing 737-800 28653 N307TZ Boeing 737-800 32577 N309TZ Boeing 737-800 32578 N311TZ Boeing 737-800 32579 N312TZ Boeing 737-800 32580 N313TZ Boeing 737-800 32609 N316TZ Boeing 737-800 32610 N320TZ Boeing 737-800 32611 N322TZ Boeing 737-800 32882 N324TZ Boeing 737-800 32884 N325TZ Boeing 737-800 32612 N326TZ Boeing 737-800 32613 N327TZ Boeing 737-800 32614 N328TZ Boeing 737-800 32615 N329TZ Boeing 737-800 32616 N330TZ Boeing 757-200 26635 N512AT Boeing 757-200 32449 N513AT Boeing 757-200 27974 N518AT Boeing 757-200 27975 N519AT RB211-535EAC 31811 RB211-535EAC 31870 CFM56-7B27 888492 CFM56-7B27 888764 The GE Entities comprise of: * General Electric Corporation, * AFS Investments IX, LLC, * AFS Investments XII, Inc., * AFS Investments XLI, LLC, * Silvermine River Finance Two, Inc., and * Windy City Holdings, Inc. The GE Entities timely filed proofs of claim against: (1) ATA Airlines, Inc., arising from the: -- rejection of certain GE Aircraft Agreements; and -- tax indemnity damage claims arising under the Agreements; and (2) ATA Holdings Corp., for certain guaranty obligations under the GE Aircraft Agreements. After extensive negotiation, the Debtors and the GE Entities reached an agreement wherein both parties agreed that the asserted claims will be allowed as "Class 6 General Unsecured Claims" under the Reorganizing Debtor's First Amended Plan of Reorganization for $138,464,477. Additionally, for administrative convenience and in light of the substantive consolidation of the Reorganizing Debtors under the Plan, the Debtors and the GE Entities agreed, without prejudice to either party, that the Debtors' claims register will reflect the allowance of the Guarantee Proofs of Claim, and the disallowance of Claim No. 928, the Tax Indemnity Proofs of Claim, and the Rejection Damages Proofs of Claim. Specifically, the parties stipulate that: (a) Claim Nos. 931, 932, 933, 934, 935, 936 and 937 will be allowed; (b) Claim Nos. 928, 929, 930, 938, 968, 969, 970, 971, 972, 973, 974, 975, 976, 977, 978, 979, 980, 981, 982, 983, 984, 985, 986, 987, 988, 989, 990, 991, 992, 993, 994, 995, 996, 997, 998, 999, 1000, 1001, 1002, 1003, 1004, 1005, 1006, 1007, 1008, 1009, 1010, 1011, 1012, 1013, 1014, 1015, 1016, 1017 and 1022 will be disallowed; (c) the Allowed Claims will be used in calculating distributions to the GE Entities under the Plan; (d) they mutually waive and release each other from any claims or actions in respect of, or in any way related to prepetition and administrative obligations relating to the GE Aircraft Agreements, including any and all rights of the Debtors as set forth in Chapter 5 of the Bankruptcy Code. The waivers specifically exclude any claims arising under the new Leases entered into between the parties with regard to engines with Serial Nos. 31811, 888492, and 888764; and (e) the stipulation is binding as to claims arising from the GE Aircraft Agreements, and not as to any other claims filed by the GE Entities or any related entity, including GE Commercial Aviation Training Limited and Aviation Services LLC. 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) ATA AIRLINES: AFA Wants $828,484 Administrative Expense Paid ------------------------------------------------------------ The Association of Flight Attendants asks the U.S. Bankruptcy Court for the Southern District of Indiana to allow and direct ATA Airlines, Inc., and its debtor-affiliates to pay its $828,484 administrative expense claim. ATA Airlines and the AFA were parties to a collective bargaining agreement that was an extension of the parties' 2000-2004 collective bargaining agreement as modified by Letter Agreement No. 18. The bargaining unit of flight attendants of ATA Airlines is represented by the AFA. According to Richard J. Swanson, Esq., at Macey Swanson and Allman, in Indianapolis, Indiana, the CBA provides for health insurance coverage for AFA bargaining unit members. The bargaining unit members have $275,743 in unpaid medical expenses arising between the Petition Date and January 24, 2005. Mr. Swanson asserts that the $275,743 expense is an administrative expense pursuant to Sections 503(b)(1)(A) and 507(a)(1) of the Bankruptcy Code. Mr. Swanson further notes that the CBA contains a grievance- arbitration procedure. The AFA filed 16 grievances between the Petition Date and January 24, 2005, on behalf of terminated flight attendants. The grievances are still pending. The amount of back pay owed to the grievants is $552,741. This is likewise asserted as an administrative expense, Mr. Swanson maintains. 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) ATLANTIC ROLL-OFF: Case Summary & 13 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Atlantic Roll-off Services, Inc. 7171 Southern Boulevard West Palm Beach, Florida 33413 Tel: (561) 296-1929 Bankruptcy Case No.: 06-11592 Type of Business: The Debtor is a roll-off hauler that disposes of construction and demolition debris. Chapter 11 Petition Date: April 28, 2006 Court: Southern District of Florida (West Palm Beach) Judge: Steven H. Friedman Debtor's Counsel: Alvin S. Goldstein, Esq. Furr & Cohen 2255 Glades Road, Suite #337W Boca Raton, Florida 33431 Tel: (561) 395-0500 Fax: (561) 338-7532 Total Assets: $7,000,000 Total Debts: $3,049,364 Debtor's 13 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Waste Management, Inc. $1,130,763 c/o Ronald A. Shapo, Esq. Ruden McClosky 701 Brickell Avenue, Suite 1900 Miami, FL 33131 Wastequip Manufacturing Co. Judgment $334,272 2624 Mine & Mill Lane Lakeland, FL 33801 Internal Revenue Service Taxes $277,745 Insolvency Unit P.O. Box 17167, STOP 5760 Fort Lauderdale, FL 33318 L.T. Hampel Corp., Inc. Judgment $124,212 Five Peaks Technology, LLC Judgment $94,006 First Commercial Insurance Co. $90,974 Fairgrounds Road Property LLC $73,940 BellSouth Advertising and $52,175 Publishing Corp. BV Oil Company Judgment $34,472 Palm City Transfer and Judgment $5,483 Recycling, Inc. On-Site Wheel $2,471 Alignment of Florida Bank of America, N.A. Equipment Lease Unknown Citicapital Commercial Corp. Equipment Unknown BAREFOOT RESORT: Disclosure Statement Hearing Scheduled for May 9 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of South Carolina will convene a hearing at 10:30 a.m. on May 9, 2006, to consider the adequacy of information contained in the Disclosure Statement explaining Barefoot Resort Yacht Club Villas, LLC's chapter 11 plan of reorganization. Objections to the Disclosure Statement must be filed by May 5, 2006. Assets Remaining The Debtor tells the Court that as of Apr. 17, 2006, its primary assets consists of the remaining unsold condominium units and proceeds from the sales of its other assets. The Debtor says that it expects the proceeds for all 145 sales to exceed $62 million. Overview of the Plan The Debtor says that its plan is a liquidating plan and allows for the payment of all creditors in full. By confirmation, the Debtor expects that all condominium sales will have closed. Treatment of Claims Under the plan, administrative claims will be paid in full. The Debtor tells the court that National Bank of South Carolina holds a $48 million claim and is secured by a first mortgage on the Debtor's condominium assets. The Debtor says that as the sale of each condominium unit closes, the net proceeds will be used to pay the principal and interest, including postpetition interest, owed on the NBSC Loan. The Debtor says that Coastal Federal Bank holds a secured claim of $540,000. The Debtor tells the Court that Coastal Federal has agreed to subordinate its mortgage to the liens securing the NBSC loan. Coastal Federal's claim will be paid in full after payment of the principal and interest of the NBSC Loan and before payment of NBSC's remaining claims. Dargan Construction's unsecured claim will be paid in full. However, the plan explains, "if the NBSC loan is insufficient to pay Dargan's claim in full, then Dargan's allowed claim will be paid within 30 days after the Court enters an order confirming the Debtor's plan but prior to any subsequent class." The Debtor tells the Court that Drake Development Company USA, Inc., is the sole member of the Debtor. The Debtor says that for each condominium unit sold, Drake Development is owed a commission pursuant to the Contract of Sale. Upon closing of the sale of all 145 units, Drake Development's fees will total $3,849,562. The Debtor says that Drake will be paid in full within 30 days after the Court enters an order confirming its Plan. Sally Stowe Interiors' $1,413,855 unsecured claim will be paid in full. These General Unsecured Creditors will be paid in full: (1) Grand Strand Disposal; (2) Horry Electric Cooperative; (3) Jenkins Hancock and Sides; (4) Lewis & Babcock; (5) Robert Young, P.A.; (6) Rogers Townsend Thomas; and (7) SW Associates, The Debtor obtained additional equity financing from W. Russell Drake in the amount of $1,040,000. Pursuant to the Contract of Sale, the cost and interest associated with this loan will be repaid before the distribution of the Net Cash Flow (as defined in the Contract of Sale). The Debtor says that W. Russell Drake's claim will be paid in full. Premier Holdings' Claim The Debtor tells the Court that under the Contract of Sale, the Debtor will enter into a contingent interest note giving Premier Holdings of South Carolina, LLC, a 50% interest in the proceeds of the sale remaining after payment of all costs associated with the cost of the phase, including, but not limited to, taxes, construction loan cost and interest, equity loan cost and interest, closing cost and attorney fees, real estate commissions, construction, architectural and engineering fees and cost and discounts or incentives. The Debtor tells the Court that the note is subject to offsets owed by Premier to the Debtor due to its filing of the lis pendens which caused damages to the Debtor. The Debtor projects total costs to be $1 million. The Debtor discloses that, in the alternative, if the Court determines or the parties agree there will be no offsets against the note, the 50% payment to Premier will be used to pay Premier's mortgage debt to Coastal Federal. The Debtor will hold in escrow $200,000 of the proceeds of the sale for three years in the event of any claims that may arise against the Debtor. The Debtor says that if there are no claims against the Debtor after the third year or no offset was done, $100,000 of the escrowed amount will be paid to Premier. A full-text copy of the Debtor's Disclosure Statement is available for a fee at: http://www.ResearchArchives.com/bin/download?id=060501030705 A full-text copy of the Debtor's Chapter 11 Plan is available for a fee at: http://www.ResearchArchives.com/bin/download?id=060501030549 About Barefoot Resort Headquartered in Columbia, South Carolina, Barefoot Resort Yacht Club Villas, LLC -- http://www.drakedevelopment.com/-- operates a resort located in North Myrtle Beach, South Carolina. Drake Development Company USA owns Barefoot Resort. The Debtor filed for chapter 11 protection on Feb. 21, 2006 (Bankr. D. S.C. Case No. 06-00640). William McCarthy, Jr., Esq., and Daniel J. Reynolds, Jr., Esq., at Robinson, Barton, McCarthy, Calloway & Johnson, P.A., represent the Debtor. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for protection from its creditors, it listed $69,003,578 in assets and $60,980,655 in debts. BAREFOOT RESORT: Premier Says Disclosure Statement is Inadequate ---------------------------------------------------------------- Premier Resorts International, Inc., Premier Holdings, LLC, and Premier Holdings of South Carolina, LLC, ask the U.S. Bankruptcy Court for the District of South Carolina to deny approval of the Disclosure Statement explaining Barefoot Resort Yacht Club Villas, LLC's Chapter 11 Plan of Reorganization. Premier tells the Court that the disclosure statement fails to provide adequate information as required by Sections 1125(a)(1) and 1125(b) of the Bankruptcy Code. Premier contends that the disclosure statement does not: 1. include data on the sale proceeds and disbursements from sale proceeds resulting from the Debtor's sale of its condominiums; 2. explain why The National Bank of South Carolina or Coastal Federal Bank will be paid in full as secured creditors from the sale proceeds upon the completion of the closings of the sales and why any amount will remain due to NBSC or Coastal Federal at the time of the confirmation hearing; 3. address the serious issue of unlawful payment of co-broker fees to David Klein Realty in the amount of $563,085 and co-broker fees to Drake Development Company. Premier says that pursuant to the South Carolina Code, it is unlawful for an individual to act as a real estate broker without a valid license issued by the South Carolina Real Estate Commission. David Klein, Premier says, is not licensed in South Carolina as a broker, or in any other capacity; 4. provide information on what comprises the $1 million costs that the Debtor would set off against the contingent interest note to be issued to Premier SC; 5. mention the claims that Premier and Premier SC have stated that they have against the Debtor and for which they will be filing proofs of claim; 6. explain why $200,000 needs to be reserved for payment of future claims and what types of claims the Debtor is concerned may arise, and why those claims are not otherwise addressed; 7. provide information regarding amounts that the Debtor states it may need to pay to the homeowner's association of the Barefoot Resort Yacht Club Villas buildings; 8. state whether the Debtor intends to assume or reject its Contract of Sale with Premier SC; and 9. provide information on the current status of the amounts owed to Sally Stowe Interiors and to Dargan Construction. About Barefoot Resort Headquartered in Columbia, South Carolina, Barefoot Resort Yacht Club Villas, LLC -- http://www.drakedevelopment.com/-- operates a resort located in North Myrtle Beach, South Carolina. Drake Development Company USA owns Barefoot Resort. The Debtor filed for chapter 11 protection on Feb. 21, 2006 (Bankr. D. S.C. Case No. 06-00640). William McCarthy, Jr., Esq., and Daniel J. Reynolds, Jr., Esq., at Robinson, Barton, McCarthy, Calloway & Johnson, P.A., represent the Debtor. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for protection from its creditors, it listed $69,003,578 in assets and $60,980,655 in debts. BENJ FRANKLIN: Court Convenes $50 Mil. IRS Tax Deal Hearing Today ----------------------------------------------------------------- The Federal Deposit Insurance Company, as receiver of Benj Franklin Savings & Loan Association, and the Internal Revenue Service inked an agreement resolving a pending tax lawsuit between them. The settlement, which is subject to approval of the U.S. District Court for the District of Columbia, provides for a $50 million tax payment to the IRS, with a specific allocation of tax and interest as negotiated between the parties. Any remaining funds of the receivership estate will be paid to Benj Franklin's shareholders after all reserves, costs and expenses are paid. As part of the court-approved process, Judge Emmet G. Sullivan will convene a hearing at 2:00 p.m. today, May 2, 2006, at: Courtroom 24A E. Barrett Prettyman U.S. Courthouse 333 Constitution Avenue, N.W. Washington, D.C. 20001 A simultaneous session will be held at 11:00 a.m., Pacific Time, at the U.S. District Courthouse in Portland, Oregon, through a speaker phone connection to Judge Sullivan's hearing. Benj Franklin's shareholders are entitled to participate in the hearing in person in Washington or via speakerphone in Oregon. Benj Franklin's shareholders who did not receive a copy of the mailed notice can secure a copy from: Ben Burke Claims Department Federal Deposit Insurance Company 1910 Pacific Avenue Dallas, Texas, 75201 About Benj Franklin Founded in 1925 in Portland, Oregon, Benj Franklin was a large and successful thrift bank before the federal government seized it in 1990. Information on the Benj Franklin shareholders litigation fund is available at http://www.benfranklinoregon.org/ BLOCKBUSTER INC: Incurs $1.9 Million Net Loss in First Quarter -------------------------------------------------------------- Blockbuster Inc. reported significant year-over-year improvement in profitability and cash flow for the first quarter ended March 31, 2006. For the first quarter, net loss was $1.9 million, an improvement of $55.6 million as compared with net loss of $57.5 million for the first quarter of 2005. Adjusted net income for the first quarter of 2006 increased $61.6 million to $13.0 million as compared with adjusted net loss of $48.6 million for the first quarter of 2005. "Our first quarter 2006 results reflect the actions we have taken to improve our overall profitability and cash flow," said Blockbuster Chairman and CEO John Antioco. "For the first time in three years we saw an increase in domestic same-store rental revenues and we believe that our combined in-store and online rental offering will allow us to further increase our market share and outperform the domestic rental industry in 2006." First Quarter 2006 Financial Results Revenues for the first quarter of 2006 declined 7.7% to $1.43 billion compared to $1.55 billion for the first quarter of last year, primarily due to a reduction in revenues from lower margin retail sales, a 236 store decline in the company-operated store base since the first quarter of 2005 resulting from accelerated actions to optimize the store portfolio, and less advertising and promotional activity. These decreases were partially offset by an increase in revenues from BLOCKBUSTER Online(R) resulting from growth in the subscriber base, which totaled approximately 1.3 million subscribers at March 31, 2006. Worldwide same-store rental revenues for the first quarter decreased 0.7%, reflecting a 2.1% increase in domestic same-store rental revenues and a 9.0% decline in international same-store rental revenues. Worldwide same-store retail revenues for the first quarter of 2006 declined 16.2% from the same period last year. Operating income for the first quarter of 2006 increased $91.8 million to $19.7 million from an operating loss of $72.1 million for the first quarter of 2005. The significant improvement in operating income was driven by the Company's cost containment actions, including reduced advertising costs both in-store and online, lowered corporate overhead, and reduced store labor. The reduction in SG&A expenses was partially offset by a $61.5 million decrease in gross profit mostly due to the decline in total revenues. Gross margin for the first quarter increased to 56.1% from 55.8% for the same period last year largely due to a change in the revenue mix between rental and retail. Rental revenues represented 74.5% of total revenues for the first quarter of 2006 as compared to 71.4% for the same period last year. The Company's balance sheet continued to strengthen during the first quarter primarily driven by the improvement in profitability and a focus on maximizing the Company's cash flow. Cash flow provided by operating activities increased by $150.7 million to $41.0 million for the first quarter of 2006 from a $109.7 million deficit for the first quarter of 2005. Free cash flow -- net cash flow provided by operating activities less capital expenditures -- increased by $181.0 million to $32.9 million for the first quarter of 2006 from a negative $148.1 million for the first quarter of 2005. The outstanding balance on the Company's revolving credit facility decreased by $75.0 million during the quarter to $60.0 million at March 31, 2006. As a result, borrowing capacity under the revolving credit facility increased to $238.9 million at March 31, 2006. 2006 Business Outlook The Company continues to focus on profitability improvements and market share growth and is on track to reduce its SG&A costs above the store level and significantly lower its capital expenditures year-over-year. In addition, the Company expects to meet its goal of two million BLOCKBUSTER Online subscribers by the end of 2006. The Company believes that its rental offering at domestic company- operated stores, which no longer includes extended viewing fees, combined with BLOCKBUSTER Online will continue to have a positive impact on its domestic same-store rental revenues and enable it to outperform the domestic rental industry in 2006. About Blockbuster Blockbuster Inc. (NYSE: BBI, BBI.B) -- http://www.blockbuster.com/ -- is a global provider of in-home movie and game entertainment, with more than 9,000 stores throughout the Americas, Europe, Asia and Australia. * * * As reported in the Troubled Company Reporter on Mar. 15, 2006, Moody's Investors Service affirmed Blockbuster Inc. long-term debt ratings and its SGL-3 speculative grade liquidity rating: * Corporate family rating at B3; * Senior secured bank credit facilities at B3; and * Senior subordinated notes at Caa3. Standard & Poor's Ratings Services lowered, in November 2005, its corporate credit and bank loan ratings on Blockbuster Inc. to 'B-' from 'B' and the subordinated note rating to 'CCC' from 'CCC+'. S&P said the outlook is negative. Fitch downgraded, in August 2005, Blockbuster Inc.'s: -- Issuer default rating (IDR) to 'CCC' from 'B+'; -- Senior secured credit facility to 'CCC' from 'B+' with an 'R4' recovery rating; -- Senior subordinated notes to 'CC' from 'B-' with an 'R6' recovery rating. Fitch said the Rating Outlook remains Negative. CALPINE CORP: Court OKs Payment of Prepetition Property Tax Claims ------------------------------------------------------------------ Calpine Corp. and its debtor-affiliates obtained permission from the U.S. Bankruptcy Court for the Southern District of New York to increase the Initial Property Tax Cap by another $12,000,000 -- up to $37,000,000 -- to enable them to pay, in their sole discretion, certain undisputed prepetition Property Taxes to the relevant Taxing Authorities in the ordinary course of business. Debtors Want Tax Cap Raised Matthew A. Cantor, Esq., at Kirkland and Ellis LLP, in New York, recounts that in the Property Tax Order, the Court set $25,000,000 as the maximum amount the Debtors may pay for prepetition property tax claims -- the Initial Property Tax Cap. Mr. Cantor says that since several other Debtor affiliates that owe prepetition Property Taxes commenced their Chapter 11 cases following Calpine's bankruptcy filing, the Debtors are about to exhaust the Initial Property Tax Cap. To date, the Debtors have expended approximately $24,900,000 under the Initial Property Tax Cap. The Debtors tell the Court that the failure to pay certain undisputed prepetition Property Taxes could trigger a material adverse impact on their ability to operate in the ordinary course of business and Taxing Authorities may cause the Debtors to be audited. Mr. Cantor notes that a significant amount of certain prepetition Property Taxes is due by the end of March and in early April 2006. Judge Lifland's Decree The banks and other financial institutions on which checks were drawn or electronic payment request made in payment of the prepetition obligations approved are authorized to receive, process, honor and pay all checks presented for payment and related to the Property Taxes, provided that sufficient funds are available in the Debtors' bank accounts to cover the payments. The Debtors are authorized to reissue any check, electronic payment or otherwise that was drawn in payment of any prepetition amount that is not cleared by a depository. About Calpine Corp. 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. (Calpine Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Portland Disclosure Hearing Continued to June 15 ----------------------------------------------------------------- The Hon. Elizabeth L. Perris will continue on June 15, 2006, at 1:30 p.m., the hearing to consider the Disclosure Statements accompanying the competing Plans of Reorganization filed by the Archdiocese of Portland in Oregon and the Tort Claimants Committee. The U.S. Bankruptcy Court for the District of Oregon directs the Archdiocese and the Tort Committee to file revised Disclosure Statements on or before May 22, 2006. Judge Perris found the information in both Disclosure Statements inadequate in relation to Section 1125 of the Bankruptcy Code. Parties-in-interest may file objections to the revised Disclosure Statements on or before June 7, 2006. 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. 57; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Dist. Court Stays Document Production in Portland ------------------------------------------------------------------ On Jan. 14, 2005, the Bankruptcy Court directed the Archdiocese of Portland in Oregon to produce the personnel records of 37 priests against whom complaints of sexual misconduct with a minor had been made, except that the priests' medical records were "subject to the right of an attorney representing such priest to lodge objections to the production of such documents with the court." Michael B. Merchant, Esq., at Black Helterline LLP, in Portland, Oregon, relates that the Archdiocese withheld the medical records of several priests. The Archdiocese also identified the priests whose records were withheld in a privilege log. Of all the priests' medical records withheld, none, except Father J's and Father M's records, pertains to diagnosis or treatment following allegations of sexual misconduct. Father M objected to the discovery request asserting that his medical record is privileged and not subject to production. In the course of the proceedings, Father J and Father M entered into stipulation directing the Archdiocese to produce their records for in camera review only. Subsequently, the Court ruled that Father M's records are not protected from disclosure by the "psychotherapist-patient privilege." The Court directed the Archdiocese to produce to the tort claimants, through Erin K. Olson, Esq., in Portland, Oregon, documents in the Archdiocese's personnel file for Father M, which are identified by Bates Nos. 7118-7121. Father M took an appeal from Judge Perris' order to the U.S. District Court for the District of Oregon. At Father M's request, Judge Perris stayed the execution of her Order to permit Father M to seek a stay pending appeal from the District Court. District Court Stays Document Production Consequently, at Father M's behest, District Court Judge Michael Mossman stays the proceedings with respect to the discovery on Father M's medical records until the time that the District Court has considered and issued a final determination of the issues on appeal. Mr. Merchant says the stay is necessary otherwise Father M's confidential medical records will be published and his appeal will become moot. In the event there is delay in the Appeal, Judge Mossman tells the Tort Claimants that they may ask the District Court to alter or amend the term of the stay. 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) CEQUEL COMMS: S&P Rates Proposed $675 Mil. Credit Facility at B- ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its ratings to the proposed $675 million senior secured second-priority credit facility of Cequel Communications, LLC (formerly known as Cebridge III, LLC). The loan rating is 'B-' (two notches below the 'B+' corporate credit rating on the borrower) with a recovery rating of '5', indicating the expectation for negligible (0%-25%) recovery of principal in the event of a payment default. These ratings are based on preliminary information and remain subject to review upon receipt of final documentation. Standard & Poor's rated the borrower's $2.2 billion senior secured first-priority credit facility on April 17. The first-priority facility was rated 'B+' (at the same level as the corporate credit rating) with a recovery rating of '2', indicating the expectation for substantial (80%-100%) recovery of principal in the event of a payment default. Subsequent to Standard & Poor's rating the first-priority facility, the borrower's name was changed to Cequel Communications, LLC from Cebridge III, LLC, and the facility was upsized to $2.3 billion. The additional second-priority financing was anticipated at the time the first-priority facility was rated. Neither the upsizing nor the additional financing affects the ratings on the first-priority facility. Proceeds from the proposed second-priority transaction, in conjunction with $2.1 billion of senior secured first-priority debt, will be used to finance the acquisition of cable systems from Cox Communications Inc. and Charter Communications Inc. The remaining balance of first-priority debt consists of a $200 million revolver, which will be undrawn at the time of closing. Pro forma for the cable system acquisitions, Cequel (which does business under the brand name Cebridge Connections) is the eighth-largest cable company in the U.S., providing video, data, and voice communications services to approximately 1.3 million basic video subscribers located in 15 states, with concentrations in Texas, Louisiana, and West Virginia. The corporate credit rating on Cequel is 'B+'. The rating outlook is stable. "The rating reflects mature revenue growth prospects for basic video services, competitive pressure on the company's video customer base from direct-to-home satellite TV providers, integration risks associated with the Cox and Charter cable system acquisitions, the potential for increased high-speed data and video competition from telephone companies, and a highly leveraged financial profile," said Standard & Poor's credit analyst Susan Madison. "Partly tempering these factors are the company's position as the still-dominant provider of pay television services in its markets, revenue growth opportunities from high-speed data and advanced video services, and growth potential from cable telephony." Ratings List: Cequel Communications, LLC (formerly Cebridge III, LLC): * Corporate credit rating B+/Stable/-- * $2.3B first-priority credit facility B+ (Recov rtg: 2) Rating Assigned: * $675M second-priority credit facility B- (Recov rtg: 5) CERTIFIED HR: Ch. 11 Trustee Settling Fraudulent Conveyance Suit ---------------------------------------------------------------- James S. Feltman, the chapter 11 trustee overseeing Certified HR Services Company's bankruptcy cases, asked the U.S. Bankruptcy Court for the Southern District of Florida to approve a settlement agreement with: * Certified Services, Inc., * 02HR, LLC, * Midwest Merger Management, * W. Anthony Huff, * Danny Leo Pixler, * Brentwood Capital Corporation, * Charles Spinelli * the Certified subsidiaries, and * the 02HR subsidiaries. The Settlement Agreement calls for: * the sale of certain of the Debtor's assets to 02HR, LLC, free and clear of all liens, claims and encumbrances, and * the assumption and assignment of certain of the Debtor's contracts to 02HR, LLC. The settlement agreement resolves a dispute arising from the fraudulent transfer and constructive trust claims lawsuit (Adv. Pro. No. 05-2110) commenced by Mr. Feltman against these entities. A hearing was scheduled on April 25, 2006, before the Court to consider approval of the settlement. Bankruptcy Court records don't show whether that hearing occurred or if it did, what happened. Mr. Feltman also proposes a settlement with Laurus Master Fund, Ltd. That Settlement Agreement provides that Laurus will hold a $400,000 secured claim, which will be paid by the end of 2006. A copy of the chapter 11 trustee's motion on the settlement agreement with Laurus Master Fund, Ltd., is available at no charge at http://bankrupt.com/misc/Certified_HR.pdf Certified HR Services Company fka The Cura Group, Inc. filed for chapter 11 protection on May 12, 2005 (Bankr. S.D. Fla. Case No. 05-22912). James S. Feltman was appointed as the Company's chapter 11 trustee on May 26, 2005. John H. Genovese, Esq., at Genovese Joblove & Battista, P.A. represents the chapter 11 trustee. CHASE MORTGAGE: Moody's Holds Low-B Ratings on Five Cert. Classes ----------------------------------------------------------------- Moody's Investors Service upgraded the ratings of six classes and affirmed the ratings of eight classes of Chase Commercial Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2000: * Class A-1, $55,135,758, Fixed, affirmed at Aaa * Class A-2, $442,457,420, Fixed, affirmed at Aaa * Class X, Notional, affirmed at Aaa * Class B, $26,779,086, Fixed, upgraded to Aaa from Aa1 * Class C, $34,166,423, Fixed, upgraded to Aaa from A1 * Class D, $12,004,419, Fixed, upgraded to Aa1 from A2 * Class E, $23,085,420, WAC, upgraded to A1 from Baa2 * Class F, $12,927,835, WAC, upgraded to Baa1 from Baa3 * Class G, $12,927,835, Fixed, upgraded to Baa3 from Ba1 * Class H, $18,468,337, Fixed, affirmed at Ba2 * Class I, $5,540,501, Fixed, affirmed at Ba3 * Class J, $7,387,334, Fixed, affirmed at B1 * Class K, $7,387,335, Fixed, affirmed at B2 * Class L, $3,693,667, Fixed, affirmed at B3 As of the April 17, 2006 distribution date, the transaction's aggregate principal balance has decreased by approximately 8.6% to $674.9 million from $738.7 million at securitization. The Certificates are collateralized by 79 loans secured by commercial and multifamily properties. The loans range in size from less than 1.0% to 6.2% of the pool, with the ten largest loans representing 42.8% of the outstanding pool balance. Fifteen loans, representing 20.2% of the pool balance, have defeased and are collateralized by U.S. Government securities. The defeased loans include 32-42 Broadway, the second largest loan in the pool. No loans have been liquidated from the trust and there are no realized losses. Three loans, representing 2.4% of the pool, are in special servicing. Moody's estimates a loss of approximately $3.8 million for these loans. Twenty-one loans, representing 29.5% of the pool, are on the master servicer's watchlist. Moody's was provided with partial or year-end 2005 operating results for 96.3% of the performing loans. Moody's loan to value ratio is 85.0%, compared to 83.3% at Moody's last review in May 2005 and compared to 84.3% at securitization. Based on Moody's analysis, 21.0% of the pool has a LTV greater than 100.0%, compared to 0.0% at securitization. The upgrade of Classes B, C, D, E, F, and G is due to a relatively high percentage of defeased loans, increased subordination levels and stable overall pool performance. The top three loans represent 16.0% of the pool. The largest loan is the 111 Livingston Street Loan, which is secured by a 406,000 square foot Class B office building located in Brooklyn, New York. The largest tenants include the Legal Aid Society and the State of New York Disability Office. The loan is on the master servicer's watchlist due to the failure of the borrower to complete substantial required repairs by a specified due date. The property's performance has improved since securitization. Moody's LTV is 71.1%, compared to 68.9% at Moody's last review and compared to 73.9% at securitization. The second largest loan is the Embassy Suites Atlanta-Buckhead Loan, which is secured by 317-room full service hotel located in the Buckhead submarket of Atlanta, Georgia. Occupancy and ADR are 80.0% and $132.82, compared to 77.1% and $142.87 at securitization. RevPAR has decreased to $106.42 from $110.15 at securitization. Moody's LTV is 88.3%, compared to 97.3% at Moody's last review and compared to 76.9% at securitization. The third largest loan is the Cross County Plaza Loan, which is secured by a 352,000 square foot retail center located in West Palm Beach, Florida. The largest tenants include Kmart and Winn Dixie. The loan is on the master servicer's watchlist due to a decline in income. Moody's LTV is 83.2%, compared to 83.9% at Moody's last review and compared to 82.4% at securitization. The collateral properties are located in 18 states with approximately 66.1% of the pool balance concentrated in five states. The highest state concentrations are California, Texas, New York, Florida and Georgia. The pool's collateral is a mix of multifamily, retail, U.S. Government securities, office, lodging and industrial. All of the loans are fixed rate. CITGO PETROLEUM: Hires UBS Investment to Market Asphalt Unit ------------------------------------------------------------ CITGO Petroleum Corporation's Board of Directors commissioned UBS Investment Bank to conduct due diligence and solicit potential buyers for CITGO Asphalt Company. "This is part of a policy to continually review all of our assets," said Felix Rodriguez, CITGO president and CEO. "As a result, the board has decided to focus on our core, strategic business." CARCO is the largest supplier of asphalt on the U.S. East Coast, and operates two specialized asphalt refineries in Paulsboro, New Jersey, (84,000-bpd), and Savannah, Georgia, (28,000-bpd). The refineries typically process very heavy Venezuelan crude oil. "Our market reach, product quality, industry leadership and assets are all valuable," said Freddy Caraballo, CARCO president. "But it is our employee's knowledge of the asphalt business that will be valued the most by any potential buyer." About Citgo Headquartered in Houston, Texas, CITGO -- http://www.citgo.com/-- is owned by PDV America, an indirect, wholly owned subsidiary of Petroleos de Venezuela S.A., the state-owned oil company of Venezuela. PDVSA is Venezuela's state oil company in charge of the development of the petroleum, petrochemical and coal industry, as well as planning, coordinating, supervising and controlling the operational activities of its divisions, both in Venezuela and abroad. * * * As reported at the Troubled Company Reporter on Feb. 16, 2006, Standard and Poor's Ratings Services assigned a 'BB' rating on CITGO Petroleum Corp. COKER CONSTRUCTION: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Coker Construction Companies, L.P. The Coker Building, Suite 301 600 Walnut Street McKeesport, Pennsylvania 15132 Bankruptcy Case No.: 06-21879 Type of Business: The Debtor is a project contractor. The Debtor's affiliate, SAC Development, L.P., previously filed for chapter 11 protection on April 26, 2006 (Bankr. W.D. Pennsylvania, Case No. 06-21823). Chapter 11 Petition Date: April 28, 2006 Court: Western District of Pennsylvania (Pittsburgh) Debtor's Counsel: Robert O. Lampl, Esq. 960 Penn Avenue, Suite 1200 Pittsburgh, Pennsylvania 15222 Tel: (412) 392-0330 Fax: (412) 392-0335 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor has until May 15, 2006, to file a list of its 20 largest unsecured creditors. CURATIVE HEALTH: Court Gives Final Nod on Linklaters as Counsel --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave its final approval for Curative Health Services, Inc., and its debtor-affiliates to retain Linklaters as their bankruptcy counsel. Linklaters will: a. advise the Debtors of their rights, powers and duties as debtors-in-possession under chapter 11 of the Bankruptcy Code; b. prepare, on behalf of the Debtors, all necessary and appropriate applications, motions, proposed orders, other pleadings, notices, schedules and other documents, and review all financial and other reports, to be filed in these chapter 11 cases; c. advise the Debtors concerning, and prepare responses to, applications, motions, other pleadings, notices and other papers that may be filed and served in these chapter 11 cases; d. advise the Debtors with respect to, and assist in the negotiation and documentation of, financing agreements and related transactions; e. review the nature and validity of any liens asserted against the Debtors' property and advise the Debtors concerning the enforceability of such liens; f. advise the Debtors regarding their ability to initiate actions to collect and recover property for the benefit of their estates; g. as necessary, counsel the Debtors in connection with the formulation, negotiation and promulgation of any amendments to the Prepackaged Plan or the Disclosure Statement and any related documents; h. advise and assist the Debtors in connection with any potential property dispositions; i. advise the Debtors concerning executory contract and unexpired lease assumptions, assignments and rejections and lease restructurings and recharacterizations; j. assist the Debtors in reviewing, estimating and resolving claims asserted against the Debtors' estates; k. commence and conduct any and all litigation necessary or 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 corporate, executive compensation, finance, litigation, securities and tax expertise and other general nonbankruptcy services to the Debtors to the extent requested by the Debtors; and m. perform all other necessary or appropriate legal services in connection with these chapter 11 cases for or on behalf of the Debtors. Martin N. Flics, Esq., a partner at Linklaters, tells the Court that he will bill $700 per hour for this engagement. Mr. Flics discloses that the Firm's professionals bill: Professional Hourly Rate ------------ ----------- Senior Partner $700 Middle Partner $655 Junior Partner $605 Consultant $600 Senior Associate $515 Mid-Level Associate $425 Junior Associate $340 - $420 Paralegal $195 Mr. Flics further discloses that the firm will provide a 10% discount on all fees incurred in this engagement in excess of the first $200,000 incurred. Mr. Flics assures the Court that his firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Flics can be reached at: Martin N. Flics, Esq. Linklaters 1345 Avenue of the Americas New York, New York 10105 Tel: (212) 903-9000 Fax: (212) 903-9100 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. No Committee of Unsecured Creditors has been appointed in the Debtors' chapter 11 cases. The Debtors financial condition as of Sept. 30, 2005 showed $155,000,000 in total assets and $255,592,000 in total debts. CURATIVE HEALTH: Has Until June 30 to File Schedules & Statements ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York waived the requirement of Curative Health Services, Inc., and its debtor-affiliates to file their schedules for plan confirmation if the Court confirms the plan before June 30, 2006. The Debtors gave the Court four reasons why the filing of their schedules should not be required: (a) there are only 48 known prepetition general unsecured creditors, other than Senior Noteholders, as Mar. 27, 2006; (b) they have provided a going concern valuation in the Disclosure Statement and provided estimated recovery percentages to holders of claims against the Debtors; (c) the Debtors have received the requisite votes to confirm the Prepackaged Plan; and (d) filing their schedules and statements will result in an unnecessary burden to the debtors. In the event the plan is not confirmed, the Debtors are required to file their schedules of assets and liabilities, schedules of executory contracts and unexpired leases, lists of equity security holders, and statements of financial affairs by June 30, 2006. 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. No Committee of Unsecured Creditors has been appointed in the Debtors' chapter 11 cases. The Debtors financial condition as of Sept. 30, 2005 showed $155,000,000 in total assets and $255,592,000 in total debts. CURATIVE HEALTH: Disclosure & Plan Objections Due by May 3 ---------------------------------------------------------- The Hon. Stuart M. Bernstein of the U.S. Bankruptcy Court for the Southern District of New York set May 3, 2006, at 4:00 p.m., as the deadline to file objections to the adequacy of the Disclosure Statement explaining Curative Health Services Inc. and its debtor- affiliates' Prepackaged Chapter Plan of Reorganization and confirmation of that plan. A copy of any objections to the Debtors' Prepackaged Plan or the Disclosure Statement must be sent to: a) Counsel to the Debtors: Martin N. Flics, Esq. Brian E. Greer, Esq. Linklaters 1345 Avenue of the Americas New York, NY 10105 b) the Debtors: Curative Health Services, Inc. Attn: Kimberlee C. Seah 61 Spit Brook Road Executive Tower, Suite 505 Nashua, New Hampshire 03060 c) the U.S. Trustee: Office of the U.S. Trustee Attn: Lisa L. Lambert, Esq. 33 Whitehall Street, Suite 2100 New York, NY 10004 d) Counsel to the Ad Hoc Committee: Edward G. Perrault, Esq. Bingham McCutchen LLP One State Street Hartford, CT 06103 e) Counsel to the Debtors' prepetition & postpetition secured lenders: Marc L. Hamroff, Esq. Leslie A. Berkoff, Esq. Moritt Hock Hamroff & Horowitz LLP 400 Garden City Plaza Garden City, NY 11530 f) Counsel to any Official Committee appointed in the Debtors' chapter 11 cases. The Court has ordered that a meeting of creditors pursuant to Section 341(a) of the Bankruptcy Code will not be convened in the Debtors' chapter 11 cases. As previously reported, the Court scheduled a combined hearing on May 8, 2006, to determine the adequacy of the Debtors' Disclosure Statement and confirmation of their Prepackaged Chapter Plan of Reorganization. Treatment of Claims Under the Plan, * Administrative Expense Claims; * Professional Compensation and Reimbursement Claims; * DIP Claims; and * Priority Tax Claims, will be paid in full. Secured Bank Claims will be paid in full from the proceeds of the DIP Financing. Other secured claims and other priority claims of: * Curative Health; * Apex Therapeutic Care, Inc.; and * Ebiocare.com, Inc., will be paid in full. Holders of Allowed Senior Note Claims will be paid in cash approximately equal to 54.9% of their Senior Note Claim, unless a holder of an Allowed Senior Note Claim: (a) is an accredited investor or qualified institutional buyer, (b) holds Senior Notes in an aggregate principal face amount equal to or greater than $1 million, and (c) elects to receive its Pro Rata Share of New CURE Stock and Cash Consideration the value of which, on the Effective Date, will not exceed approximately 54.9% of the holder's Senior Note Claim. Holders of Curative general unsecured claims will receive a promissory note in face amount equal to approximately 56% of their claims. Apex general unsecured claims will also receive a promissory note equal to approximately 5.2% of their claims while eBioCare general unsecured claims will receive a promissory note equal to approximately 5.9%. Holders of general unsecured claims may elect to receive cash payment equal to 50% of the face amount of the holder's applicable promissory note. All Intercompany Claims will be extinguished. Holders of Equity Interests in the Debtors will receive nothing and those interests will be cancelled. 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. No Official Committee of Unsecured Creditors has been appointed in the Debtors' cases. The Debtors financial condition as of Sept. 30, 2005 showed $155,000,000 in total assets and $255,592,000 in total debts. D'ARCY LABORATORIES: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: D'Arcy Laboratories, LLC 2015 Southwest 2nd Street Pompano Beach, Florida 33069 Tel: (954) 334-1000 Bankruptcy Case No.: 06-11589 Type of Business: The Debtor develops and manufactures skin care products. See http://www.darcyskincare.com Chapter 11 Petition Date: April 27, 2006 Court: Southern District of Florida (Fort Lauderdale) Judge: Raymond B. Ray Debtor's Counsel: Bradley S. Shraiberg, Esq. Kluger Peretz Kaplan & Berlin, P.L. 2385 Northwest Executive Center Drive #300 Boca Raton, Florida 33431 Tel: (561) 961-1830 Fax: (561) 961-1831 Estimated Assets: Less than $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wormser Corp. Trade Debt $369,158 49 Smith Street Englewood, NJ 07631 Chicago Aerosol Trade Debt $285,835 1300 North Street Coal City, IL 60416 Norden, Inc. Trade Debt $106,847 230 Industrial Parkway Branchburg, NJ 08876 Sorg & Associates, Inc. Trade Debt $56,080 US Filter Trade Debt $53,477 Atlantic Business Center L.C. Trade Debt $47,636 IC Industries, Inc. Trade Debt $44,154 Disc Graphics Trade Debt $24,022 Kappa Laboratories, Inc. Trade Debt $18,835 Ablest Staffing Services Trade Debt $15,957 Uniquely EMU Oil Products, Inc. Trade Debt $15,300 Custom Chemical Services Trade Debt $14,769 Tectubes Trade Debt $12,893 Berry Plastics Trade Debt $12,000 ALLIAN Trade Debt $11,500 Pac Net Inc. Trade Debt $10,035 Jeen International Trade Debt $9,614 Stephan, Oringher, et. al. Trade Debt $9,560 FPL Trade Debt $8,031 EMD Chemicals, Inc. Trade Debt $7,750 DANA CORP: Transferring $1.57 Million Equipment to Mexico Plant --------------------------------------------------------------- Dana Corporation and its debtor-affiliates notify the U.S. Bankruptcy Court for the Southern District of New York that they will transfer production equipment and associated assets to facilities in Queretaro, Mexico, and Mexico City, Mexico. The facilities are operated by subsidiaries of Spicer S.A. de C.V., a Mexican joint venture in which the Debtors hold a 49% equity interest. Corinne Ball, Esq., at Jones Day, in New York, relates that, historically, Dana Corporation has owned, and operated a number of production facilities in Mexico. Dana holds 49% ownership interest in Spicer, which, together with its subsidiaries, currently manufactures transmissions, gaskets, axles, propeller shafts and gears and conduct forging operations at a number of different facilities in Mexico. A subsidiary of DESC Corporativo, a publicly traded Mexican corporation, owns the remaining interest in Spicer. The Debtors are currently in the process of negotiating and documenting with DESC an unwinding of the Spicer joint venture, under which (x) certain of the Debtors will acquire sole ownership of, among others, the Dana Spicer Subsidiaries, which are involved in the manufacture of axles, driveshafts and gears and the casting and forging businesses, and (y) DESC will acquire sole ownership of the remaining Spicer Entities. Ms. Ball tells the Honorable Burton R. Lifland that the Dana Spicer Subsidiaries' businesses fit well with the Debtors' core business operations and their long-term business strategy. In addition, the facilities owned by the Dana Spicer Subsidiaries currently have significant unused physical space, which can accommodate additional production capacity for the Debtors. To function in the highly competitive auto-parts industry, the Debtors, according to Ms. Ball, have been exploring opportunities to move production of certain parts to lower cost production centers. Moving the Assets from facilities in the United States to the unused space in the Dana Spicer Facilities is one part of the Debtors' plan to resource parts production to facilities with lower operating costs. To keep production running so that the Debtors can continue to fulfill customer orders on a timely basis, it is necessary to commence the relocation of the Assets even before the date on which the Debtors anticipate closing on the purchase of the Dana Spicer Subsidiaries in the Transaction, Ms. Ball avers. The Debtors will transfer: -- three heat treating furnaces from a facility in Statesville, North Carolina, to a facility in Queretaro, Mexico, owned by Engranes Conicos, S.A. de C.V. The furnaces have estimated fair market value of $90,000; -- various machinery used in the machining of differential cases from a facility in Fort Wayne, Indiana, to a facility in Mexico City, Mexico, owned by Ejes Tractivos, S.A. de C.V. The machinery has an estimated fair market value of $133,705; -- various machinery used in the assembly of differential cases from a facility in Fort Wayne, Indiana, to the Etrac Facility. The machinery has an estimated fair market value of $75,218; -- electrical distribution equipment, which has fair market value of $350, from a facility in Syracuse, Indiana, to the Etrac Facility; and -- Slip Yolks Line 2 and equipment used to manufacture idle steering joints from a facility in Bristol, Virginia, to a facility in Queretaro, Mexico, owned by Cardanes, S.A. de C.V. The equipment have fair market value of $1,270,000. The Debtors estimate that moving the Assets to Mexico will cost them $986,199. The Debtors will retain ownership of all of the Assets even after the Proposed Transfers, and the Assets will be leased to the Dana Spicer Subsidiaries. Following the transfers of the Assets, the Debtors will execute leases pursuant to which the Dana Spicer Subsidiaries will lease the Assets from the Debtors. Under the Leases, the Dana Spicer Subsidiaries will make rental payments to the Debtors equal to the arm's-length rent that the Debtors would charge a third party to lease the Assets, which payments will commence once the Assets are installed in the Dana Spicer Facilities and production has begun at those facilities using the Assets. The Debtors anticipate that they will have consummated the Spicer Transaction by the date on which rental payments will commence under the Leases. The Debtors are not proposing to assume and assign or reject any executory contracts or unexpired leases in connection with the Proposed Transfers. No broker commissions will be paid in connection with Proposed Transfers. With the exception of the Debtors' DIP Lenders, no parties hold liens in the Assets or are asserting other interests in the Assets. The Proposed Transfers are permitted under the Debtors' DIP financing arrangements with their DIP Lenders. The Debtors are not aware of any parties asserting Option Rights in the Assets. The Proposed Transfers relate to the Debtors' Court-approved de minimis asset sale procedure as modified pursuant to the Official Committee of Unsecured Creditors' request. As reported in the Troubled Company Reporter on Apr. 19, 2006, the Committee requested the modifications with respect to the procedures for selling assets to third parties and any proposed transactions among the Debtors and non-Debtor affiliates to enable it to effectively monitor any proposed transactions. 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. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). 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. The Official Committee of Unsecured Creditors selected Kramer Levin Naftalis & Frankel LLP, as its counsel. 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: P. Schoenfeld Wants To Trade In Debtors' Securities -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized P. Schoenfeld Asset Management, a member of the Official Committee of Unsecured Creditors in Dana Corporation and its debtor affiliates' chapter 11 cases, to trade in securities of, and claims against, the Debtors during the pendency of their Chapter 11 cases. Michael J. Kelly, Esq., at Willkie Farr & Gallagher LLP, in New York, told Judge Lifland that PSAM will implement a "Screening Wall" -- a procedure established by an institution to isolate its trading activities from its activities as a member of an official committee of unsecured creditors in a Chapter 11 case. The Screening Wall includes, among other things, the employment of different personnel to perform certain functions, physical separation of the office and file space, procedures for locking committee related files, and the restriction of access to e-mails and servers. Mr. Kelly assured the Court that the Screening Wall will prevent PSAM's personnel from the use or misuse of non-public information obtained by its personnel engaged in Committee-related activities and also will preclude its personnel from receiving inappropriate information regarding PSAM's trading in the Claims in advance of the trades. PSAM will cause to be filed with the Court a declaration stating that it will comply with the Screening Wall. PSAM, as the only bondholder member of the Creditors Committee, owes fiduciary duties to the creditors of these estates as well to its clients through trading securities, Mr. Kelly noted. To the extent that PSAM is barred from trading or investing in the Claims during the pendency of the Debtors' cases because of its duties to other creditors, PSAM: -- may risk the loss of a beneficial investment opportunity for itself or its clients and, -- may breach its fiduciary duty to its clients and may be compelled to resign from the Committee because of its inability to trade for the benefit of itself and its clients. Mr. Kelly noted that the Court has granted similar requests by creditors committee members in these Chapter 11 cases: -- In re Calpine Corporation, et al., -- In re Solutia Inc., et al., -- In re Loral Space & Communications Ltd., -- In re Adelphia Communications Corporation, et al., -- In re WorldCom, Inc., -- In re Global Crossing Ltd., -- In re Enron Corp., and -- In re Dairy Mart Convenience Stores, Inc. 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. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). 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. The Official Committee of Unsecured Creditors selected Kramer Levin Naftalis & Frankel LLP, as its counsel. 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: Wants to Walk Away from 35 Equipment Leases ------------------------------------------------------ Dana Corporation and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Southern District of New York to reject 35 unexpired leases for various equipment and other items. Corinne Ball, Esq., at Jones Day, in New York, relates that the Leases are not necessary to the Debtors' ongoing business operations or restructuring efforts. In addition, the Leases do not have any realizable value in the marketplace. The Debtors' obligations under the Leases aggregate approximately $244,000 per month and $2,900,000 per year. The Debtors believe that maintaining the Leases would unnecessarily deplete the assets of their estates to the direct detriment of their creditors. The Debtors request that the rejection of the Leases be effective April 30, 2006, with the exception of a Bombardier Challenger aircraft sublease with CCD Air 50, LLC. The Debtors want the rejection of the Sublease to be effective March 30, 2006, the return date of the Aircraft. A schedule of the Leases is available for free at: http://ResearchArchives.com/t/s?851 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. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). 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. The Official Committee of Unsecured Creditors selected Kramer Levin Naftalis & Frankel LLP, as its counsel. 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). DELPHI CORP: General Motors Fights Proposed Contracts Rejection --------------------------------------------------------------- General Motors Corporation and Appaloosa Management L.P. objected to the proposed rejection by Delphi Corporation and its debtor- affiliates of Delphi's executory supply contracts with General Motors. As reported in the Troubled Company Reporter on April 7, 2006, the Debtors asked the U.S. Bankruptcy Court for the Southern District of New York for authority to reject the supply contracts. The Debtors are restructuring their unprofitable supply relationships with GM. After studying the deteriorating financial health of their U.S. operations, the Debtors identified 21 operational sites that generate significant, and increasing, operating losses. The sites, which primarily produce parts for GM vehicles, are projected to generate $2.1 billion in operating losses in 2006. Prove Validity of Business Judgment, GM Says General Motors Corporation asserts that the Debtors' request should be denied because Delphi Corporation failed to demonstrate that its business judgment is valid for many reasons, including its failure to disclose: (a) financial calculations; (b) financial assumptions; (c) consideration or lack of consideration of the impact of its proposed rejections on its business; and (d) reliance or non-reliance on obtaining relief from its union contracts. GM reserves its rights to file a complete, final objection after discovery and to seek discovery from the Debtors as to any and all facts and allegations asserted. Appaloosa Backs GM The Debtors will not respond to discovery requests unless the party seeking it has filed an objection in response to one of Debtors' motions. Appaloosa Management L.P. believes that this is a delay tactic that results in needless expense to the Debtors' estates and to parties-in-interest. Based on the limited facts and analysis presented, Appaloosa asks the Court to deny the Debtors' request because they have not demonstrated that rejection of the GM contracts represents the sound exercise of their business judgment. Appaloosa reserves its rights to supplement its preliminary objection upon receipt of further discovery. About Delphi Corp Headquartered in Troy, Michigan, Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELPHI CORP: Creditors Have Until July 31 to File Proofs of Claim ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York set July 31, 2005 as the deadline for filing proofs of claim in the Chapter 11 cases of Delphi Corporation and its debtor- affiliates. As reported in the Troubled Company Reporter on April 4, 2006, the Debtors asked the Court to set the July 31 bar date in order to compile complete and accurate information regarding the nature, amount, and status of all claims filed against them. The Debtors also asked the Court to: (a) establish the later of (i) the General Bar Date or (ii) 30 calendar days after a claimant is served with notice that the Debtors have amended their Schedules of Asset and Liabilities and Statements of Financial Affairs reducing, deleting, or changing the status of a scheduled claim of the claimant, as the bar date for filing a proof of claim in respect of the amended scheduled claim; and (b) establish the later of (i) the General Bar Date or (ii) 30 calendar days after the effective date of any order authorizing the rejection of an executory contract or unexpired lease as the bar date by which a proof of claim relating to the Debtors' rejection of the contract or lease must be filed; and (c) approve the Debtors' proposed form and manner of notice of the Bar Date. For any Proof of Claim Form to be validly and properly filed, the original must either be mailed or delivered to: United States Bankruptcy Court, Southern District of New York, Delphi Corporation Claims, Bowling Green Station, P.O. Box 5058, New York, New York 10274-5058 or United States Bankruptcy Court, Southern District of New York, Delphi Corporation Claims, One Bowling Green, Room 534, New York, New York 10004-1408. Proofs of claim must (a) be signed, (b) include supporting documentation or an explanation as to why documentation is not available, (c) be written in the English language, and (d) be denominated in United States currency. All Persons and Entities which wish to assert Claims against more than one Debtor be required to file a separate proof of claim with respect to each Debtor. Any Person or Entity which is required to file a proof of claim but which fails to do so in a timely manner will be forever barred, estopped, and enjoined from asserting any Claim against the Debtors and voting upon, or receiving distributions under, any plan or plans of reorganization in their cases in respect of an Unscheduled Claim. About Delphi Corp Headquartered in Troy, Michigan, Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELTA AIR: Wants to Reject CVG Financed Leases and Contracts ------------------------------------------------------------ Delta Air Lines (Other OTC:DALRQ) asked the U.S. Bankruptcy Court for the Southern District of New York for permission to reject a number of leases and agreements related to certain facilities that were financed by 1992 special facility bonds at the Cincinnati/Northern Kentucky International Airport -- CVG. These facilities include Delta's Terminal 3 and Concourse B at the airline's second largest hub. Delta emphasized, however, that it remains committed to continuing full service to its CVG customers. Lease and contract rejections are a normal part of the Chapter 11 restructuring process and are subject to court approval. These actions are typically required to allow a restructuring company to meet its financial targets and achieve competitive costs in order to successfully reorganize. The Debtors said rejection of the leases and agreements will reduce their real estate costs and provide additional flexibility at its airport facilities. "We are reviewing every airport location where we fly to ensure we are utilizing airport facilities in the most efficient and cost- effective way possible," Edward H. Bastian, Delta's executive vice president, chief financial officer and head of the company's in- court restructuring efforts, said. "This action is an important step towards achieving our financial goals and will allow Delta to obtain greater flexibility in the event Delta's space needs at CVG change." In December 2005, Delta notified the Kenton County Airport Board (KCAB) and UMB Bank, N.A., the trustee for the 1992 special facility bonds (approximately $413.5 million outstanding), that it needed to restructure the costs of these facilities and that without a negotiated agreement it would expect to have to reject the various leases and agreements related to such facilities. Negotiations among the parties have failed to produce an acceptable agreement related to restructuring relevant financial and other obligations. As a result, Delta concluded that it should file today's motion prior to the May 1 end of the negotiating period agreed to by the parties pursuant to an earlier Court approved stipulation. "We value our business relationship with KCAB and plan to work closely with KCAB going forward," stated Mr. Bastian. "Our goal is to negotiate new agreements that are cost-effective, provide flexibility and support our transformation plan objectives for the use of these facilities." "This action does not signal a reduced commitment by Delta to the Cincinnati market. In fact, this should have no impact on Delta customers," emphasized Mr. Bastian. Delta offers more than 400 average daily departures to 125 non- stop destinations in the United States and the Bahamas from CVG. The airline also recently announced new direct summer service to such popular destinations as Cabo San Lucas and Anchorage, Alaska, and is resuming its international summer service to Rome and Amsterdam to supplement existing international service to London Gatwick, Paris and Frankfurt. The timing of the filing of the rejection motion corresponds with the expiration of the negotiation period with KCAB and the bond trustee. Earlier in the week the judge presiding over Delta's Chapter 11 restructuring process issued a ruling on a motion filed by Comair, a wholly owned subsidiary of Delta, under section 1113 of the Bankruptcy Code to reduce certain labor costs. "While it is a coincidence of timing, this week's Comair development further reinforces the need to provide flexibility in the restructuring of our Cincinnati operations," commented Mr. Bastian. "We are operating on borrowed money and borrowed time, so it is important that we become cost competitive in every aspect of our business as quickly as possible." Delta is working to achieve $3 billion in additional annual benefits by 2007, approximately one-third of which is targeted to be delivered through in-court restructuring initiatives. Barring any disruptions, the company is on track to achieve approximately 70 percent of its business plan's benefits by the end of this year, with the goal of successfully emerging from bankruptcy in 2007. 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. DEMMERT BUILDING: Case Summary & 5 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Demmert Building Company, Inc. 224 Seventh Street Garden City, New York 11530 Bankruptcy Case No.: 06-70942 Chapter 11 Petition Date: May 1, 2006 Court: Eastern District of New York (Central Islip) Debtor's Counsel: Michael G. McAuliffe, Esq. 48 South Service Road Melville, New York 11747 Tel: (631) 465-0044 Fax: (631) 465-0045 Total Assets: $3,616,608 Total Debts: $1,257,746 Debtor's 5 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Henry R. Hoke, III $35,000 11 Belknap Mountain Road Guilford, NH 03249 LIPA $2,182 333 Earle Ovington Boulevard Uniondale, NY 11553 Keyspan $1,261 P.O. Box 9083 Melville, NY 11747 Excellent Cleaning $1,073 Connors Associates, Ltd. $153 ENTERGY NEW ORLEANS: To Release 2006 1st Quarter Earnings on May 2 ------------------------------------------------------------------ Entergy Corporation disclosed that it expects to report its first quarter 2006 earnings, together with the quarterly results of Entergy New Orleans, Inc. ENOI's results will be reported as a special item beginning in 2006 given the uncertainty that remains for this business as it works toward emerging from bankruptcy. A teleconference will be held today, May 2, 2006 at 10:00 a.m. CDT to discuss Entergy's first quarter 2006 earnings announcement, and may be accessed by dialing (719) 457-2621 no more than 15 minutes prior to the start of the call. The confirmation number is 6287406. Internet users may also access the teleconference and view presentation slides by visiting Entergy's website at http://www.entergy.com/webcasts A tape delay will be available and may be accessed by dialing (719) 457-0820 until May 9, 2006. The confirmation number is the same. Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc. -- http://www.entergy-neworleans.com/-- is a wholly owned subsidiary of Entergy Corporation. Entergy New Orleans provides electric and natural gas service to approximately 190,000 electric and 147,000 gas customers within the city of New Orleans. Entergy New Orleans is the smallest of Entergy Corporation's five utility companies and represents about 7% of the consolidated revenues and 3% of its consolidated earnings in 2004. Neither Entergy Corporation nor any of Entergy's other utility and non-utility subsidiaries were included in Entergy New Orleans' bankruptcy filing. Entergy New Orleans filed for chapter 11 protection on Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J. Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $703,197,000 and total debts of $610,421,000. (Entergy New Orleans Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000) ESE DUKE: Voluntary Chapter 11 Case Summary ------------------------------------------- Debtor: Ese Duke fka Oghene Investments fka Duke Properties 363 Bruaw Drive York, Pennsylvania 17402 Bankruptcy Case No.: 06-00823 Chapter 11 Petition Date: April 28, 2006 Court: Middle District of Pennsylvania (Harrisburg) Judge: Mary D. France Debtor's Counsel: Robert E. Chernicoff, Esq. Cunningham and Chernicoff P.C. 2320 North Second Street Harrisburg, Pennsylvania 17110 Tel: (717) 238-6570 Fax: (717) 238-4809 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 largest unsecured creditors. EXTENSITY SARL: Systems Deal Cues Moody's to Review Low-B Ratings ----------------------------------------------------------------- Moody's Investors Service placed the ratings of Extensity S.A.R.L. on review for possible downgrade in light of the recent announcement of an agreement by a subsidiary of Extensity to acquire Systems Union Group plc, a United Kingdom based provider of financial management and performance management software. The review reflects the integration risk of the relatively large cross border acquisition and the possibility of increased leverage at Extensity. These ratings were placed under review for downgrade: * Corporate Family Rating -- B2 * $50 million revolving credit facility due 2011 -- B2 * $400 million senior secured first lien term loan due 2011 -- B2 On April 27, 2006, a newly formed subsidiary of Extensity, Sugar Acquisition Limited, and Systems Union announced that they had reached agreement for Sugar's cash acquisition of Systems Union for approximately GBP220 million. The details of the financing, capital structure and integration strategies of the proposed transaction have not been disclosed at this time. The proposed transaction is expected to close in July. The review will focus on the debt levels in the new capital structure, the integration plan for the two companies and potential synergies to be gained from the combination. Moody's recognizes that the existing debt facilities may be refinanced as part of the transaction upon which time their ratings would be withdrawn. Extensity is headquartered in Atlanta, Georgia. It provides financial applications to support a full-range of financial functions for mid-to-large enterprises. In addition, the Company's industry specific applications provide critical functionality for select vertical markets. Extensity generated pro forma revenues of $325 million, for the LTM period ending Nov. 30, 2005. EXTENSITY SARL: Systems Merger Cues S&P to Put B Ratings on Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B' corporate credit and senior secured ratings on Atlanta, Georgia-based Extensity S.a.r.l. on CreditWatch with negative implications following the company's announcement that it intends to acquire Systems Union Group plc, for $393 million. Systems Union and Extensity are providers of financial and performance management solutions. Systems Union, which generated about $200 million in revenue in 2005, and about $30 million in EBITDA, has a European orientation that complements Extensity's primarily U.S. customer base, and modestly strengthens Extensity's current business risk profile. The acquisition will be financed through equity capital to be provided by: * Golden Gate Capital, * Extensity's equity sponsor, * a bridge facility, and * an increase in Extensity's existing senior secured credit facilities. Extensity's current leverage measures, with debt/EBITDA of about 6x, are likely to weaken, depending on the final equity contribution and the extent of cost savings and operational synergies. Standard & Poor's will evaluate the complete financing plan and the expanded breadth of the combined businesses to determine the final impact on the rating. FIDELITY NATIONAL: Spin-out Prompts Moody's to Hold Ratings ----------------------------------------------------------- Moody's Investors Service affirmed the ratings of Fidelity National Financial, Inc. (NYSE: FNF) and its various related subsidiaries following the announcement by FNF that it would change its organizational structure. In addition to ultimate parent FNF, the related rated entities include Fidelity National Title Group, Inc. (NYSE: FNT); the primary title insurance operating subsidiaries of FNT; Sedgwick CMS Holdings, Inc.; and Fidelity National Information Services, Inc. (NYSE: FIS). The outlooks of these ratings remain stable. The rating affirmation follows FNF's announcement that it would eliminate the current holding company structure and effectively create two separate public companies consisting of an insurance- related group and a technology-related group. The insurance group will consist of the operations of the current FNT plus the various insurance-related holdings of FNF which include a specialty insurance segment and Sedgwick CMS, Inc. The new insurance group will be renamed FNF once the transaction is complete. The existing FNF will merge with the existing FIS to create a new technology-focused entity that will be named FIS and will consist of the assets of the old FIS. In discussing the rationale for its affirmation, Moody's noted that despite the significant shift in strategy and change in legal structure, the overall result will consist of two entities that will each have a very similar credit profile to their prior credit profile as part of the combined entity. Moody's had previously rated the various units of FNF as separate entities based on their "stand-alone" credit profile. The further separation of FNT from FIS and the shift of ownership of Sedgwick from FNF to FNT will not fundamentally change each entity's stand-alone credit characteristics. The addition of operating subsidiaries, will add diversification and equity to FNT, which Moody's considers a positive. Overall, however, as a result of the similar stand-alone characteristics of the continuing entities, and the fact that the announced transaction does not materially change the capital structure of the two new groups, Moody's believes that the ratings of Fidelity National's various entities are appropriately positioned. Moody's also downgraded and will withdraw the senior note ratings and provisional shelf ratings of FNF. There are $6.6 million outstanding of the original $250 million of FNF senior notes due in August 2011, which were downgraded to Ba1 from Baa3. The majority of the original notes, however, were exchanged for similar notes at FNT, and therefore are no longer outstanding. Moody's stated in January 2006, that any senior notes remaining at FNF, and not exchanged for equivalent notes at FNT, would be downgraded to Ba1. The rationale for the downgrade is the structural subordination of FNF to FNT when FNT issued its own debt. These ratings of Fidelity National Financial, Inc., were downgraded and will be withdrawn: * senior unsecured debt to Ba1 from Baa3; * prospective senior unsecured debt to (P)Ba1 from (P)Baa3; * prospective subordinated and junior subordinated debt to (P)Ba2 from (P)Ba1; * prospective preferred stock to (P)Ba3 from (P)Ba2. Moody's also assigned a rating of Ba1 to the senior credit facility of Fidelity National Financial, Inc., and a rating of Baa3 to the senior credit facility of Fidelity National Title, Inc. These ratings replace the prior provisional ratings of (P)Ba1 and (P)Baa3, respectively, assigned on October 14, 2005. The last rating action regarding FNF and its subsidiaries took place on Jan. 24, 2006, when Moody's assigned a B1 rating to the senior secured credit facility of Sedgwick CMS. Fidelity National Financial Inc., headquartered in Jacksonville, Florida, provides title insurance and various related services on a national scale. Also headquartered in Jacksonville, Florida, Fidelity National Title Group, Inc. is the nation's largest title insurance company, while Fidelity National Information Services, Inc., is a leading outsourced bank processor and mortgage servicing company. For the first quarter of 2006, Fidelity National Financial reported total revenues of $2.4 billion and net income of $106 million. As of March 31, 2006, shareholders' equity was $4.2 billion. FINOVA GROUP: May Ask Del. Court to Stay Thaxton's Ch. 11 Cases --------------------------------------------------------------- The Finova Group, Inc., threatened to ask the U.S. Bankruptcy Court for the District of Delaware to stay the chapter 11 cases of The Thaxton Group, Inc., if the Thaxton Debtors file a plan of reorganization barring the Finova Debtors from appealing the equitable subordination ruling the Delaware District Court handed down against Finova, The Deal reports. As reported in the Troubled Company Reporter on March 31, 2006, the Delaware District Court handed down a partial judgment on an action commenced by the Official Committee of Unsecured Creditors appointed in the Thaxton cases against the Finova Entities. The Dispute The Thaxton Debtors owed Finova $108 million at Dec. 31, 2005, under a senior secured loan agreement. Through an Adversary Proceeding, the Thaxton Committee sought, among other things, to avoid or equitably subordinate Finova's liens and claims against the Thaxton Debtors and recover $4 million of payments previously collected due to alleged securities fraud, violations of banking laws and regulations, preference payments and similar claims. In 2003, the Thaxton Debtors were declared in default under their loan agreement with Finova after they advised Finova that they would have to restate earnings for the first two fiscal quarters of 2003, and after suspending payments on their subordinated notes. As a result of the default, Finova exercised its rights under the loan agreement, and accelerated the indebtedness. The Thaxton Debtors then filed for bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware on Oct. 17, 2003, listing assets of approximately $206 million and debts of $242 million. The Thaxton Group had approximately 6,800 holders of its subordinated notes that were issued in several states, with total subordinated indebtedness of approximately $122 million. Delaware District Court Ruling The District Court found, among other things, that Finova engaged in fraudulent conduct by purposefully structuring its Loan Agreement in a way that allowed Thaxton to report to all of its creditors, and particularly prospective note purchasers, that an $8 million equity investment had been made, when in fact that $8 million continued to be debt, and that this enabled Thaxton to violate federal banking law. Fourth Circuit Appeal Finova is appealing an equitable subordination order entered in Gregory v. Finova, Case No. 04-CA-2612, in the U.S. District Court for the District of South Carolina, to the U.S. Court of Appeals for the Fourth Circuit (Case No. 05-2118). Briefs in the matter are due in three weeks, The Deal reports. Finova asked the Delaware Bankruptcy Court to terminate the Thaxton Debtors' exclusive period, within which only the Thaxton Debtors can file a chapter 11 plan. The Delaware Bankruptcy Court denied Finova's request. About Thaxton Headquartered in Lancaster, South Carolina, The Thaxton Group, Inc., is a diversified consumer financial services company. The Company filed for Chapter 11 protection on October 17, 2003 (Bankr. Del. Case No. 03-13183). Daniel B. Butz, Esq., Michael G. Busenkell, Esq., and Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnell, represent the Debtors in their restructuring efforts. Alan Kolod, Esq., at Moses & Singer LLP, represents the Offical Committee of Unsecured Creditors. As of Dec. 31, 2005, the Debtors reported assets totaling $98,889,297 and debts totaling $175,693,613. Thaxton plans to reorganize around its core business. About Finova Headquartered in Scottsdale, Arizona, The Finova Group, Inc., provides commercial financing to small and mid-sized businesses; other services include factoring, accounts receivable management, and equipment leasing. The firm has three segments: Commercial Finance, Specialty Finance, and Capital Markets. FINOVA targets such markets as transportation, wholesaling, communication, health care, and manufacturing. Loan write-offs had put the firm on shaky ground. The Company and its debtor-affiliates and subsidiaries filed for Chapter 11 protection on March 7, 2001 (U.S. Bankr. Del. 01-00697). Pachulski, Stang, Ziehl, Young & Jones P.C. and Wachtell, Lipton, Rosen & Katz represent the Official Committee of Unsecured Creditors. Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A., represents the Debtors. FINOVA has since emerged from Chapter 11 bankruptcy. Financial giants Berkshire Hathaway and Leucadia National Corporation (together doing business as Berkadia) own FINOVA through the almost $6 billion lent to the commercial finance company. Finova is winding up its affairs. At Dec. 31, 2005, The FINOVA Group Inc.'s equity deficit widened to $611,731,000 from a $534,677,000 stockholders' equity deficit at Dec. 31, 2004. GALVEX HOLDINGS: To Auction Subsidiaries' Equity Interests Today ---------------------------------------------------------------- Galvex Holdings Limited and its debtor-affiliates will hold an auction today, May 2, 2006, 10:00 a.m., to sell the equity interests of Galvex Holdings' debtor-affiliates at the offices of: Weil, Gotshal & Manges, LLP 767 Fifth Avenue, New York, NY 10153 SPCP Group LLC agreed to buy the equity interests in exchange for the discharge of $192 million of the Debtors' secured debt with SPCP Group, which includes $95,464,435 debt under a letter of credit facility. Competing bids must be $2 million higher than what SPCP Group is offering. Subsequent bids will be made in minimum increments of $1 million. In case another bidder outbids SPCP Group, the Debtors will pay SPCP Group a $1 million break-up fee. The U.S. Bankruptcy Court for the Southern District of New York will hold a hearing on the proposed sale of the equity interests to the winning bidder on May 4, 2006. About Galvex Holdings Headquartered in New York City, New York, Galvex Holdings Limited -- http://www.galvex.com/-- and its affiliates operate the largest independent galvanizing line in Europe. The Debtors have offices in New York, Tallinn, Bermuda, Finland, Ukraine, Germany and the United Kingdom. The company and four of its affiliates filed for chapter 11 protection on Jan. 17, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-10082). Galvex Capital, LLC, is represented by David Neier, Esq., at Winston & Strawn LLP, and Gerard DiConza, Esq., at DiConza Law, P.C. Galvex Holdings Ltd. and the other debtor-affiliates are represented by David Neier, Esq., at Winston & Strawn LLP, and Lori R. Fife, Esq., Marcia L. Goldstein, Esq., and Shai Waisman, Esq., at Weil, Gotshal & Manges, LLP. John P. McNicholas, Esq., and Thomas R. Califano, Esq., at DLA Piper Rudnick Gray Cary US LLP, represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. GLOBAL HOME: U.S. Trustee Appoints Seven-Member Creditors Panel --------------------------------------------------------------- Kelly Beaudin Stapleton, the U.S. Trustee for Region 3, appointed seven creditors to serve on an Official Committee of Unsecured Creditors in Global Home Products, LLC's chapter 11 cases: 1. Zhejiang Taizhou Aishida Electrical Equipment Co., Ltd. Attn: Stella Ye, Economic Development Zone, Wenling City Zhejiang, China, 317500 Tel: (86) 576-619-9021 Fax: (86) 576-619-9222 2. Zhejiang Supor Cookware Co., Ltd. c/o Marc Cohen, Esq. Kaye Scholer LLP 1999 Avenue of the Stars, Suite 1700 Los Angeles, Califonia 90067 Tel: (310) 788-1000 Fax:(310) 788-1203 3. Asia Trading Company Attn: Alex Lee Unit 401, Tower II South Seas Centre, 75 Mody Road Kowloon, Hong Kong Tel: (852) 2429-2018 Fax: (852) 2487-1105 4. United Steelworkers of America Attn: David R. Jury, Esq. Assistant General Counsel Five Gateway Center Pittsburgh, Pennsylvania 15222 Tel: (412) 562-2400 Fax: (412) 562-2429 5. Lewisburg Container Company Attn: Brian Thomas 1800 C Sarasota Business Park, Conyers, Georgia 30013 Tel: (770) 761-4628 Fax: (770) 761-3251 6. International Paper Company Attn: Bruce Gilliland 4049 Willow Lake Boulevard, Memphis, Tennessee 38118 Tel: (901) 419-1346 Fax: (901) 419-1238 7. Colorbox LLC c/o Miller Canfield Paddock & Stone, PLC Attn: Michael Traison, Esq. 150 West Jefferson Avenue, Suite 2500 Detroit, Michigan 48226 Tel: (313) 496-7657 Fax: (313) 496-8452 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the chapter 11 cases to a liquidation proceeding. The Committee has retained Bruce Buechler, Esq., at Lowenstein Sandler, P.C., as its counsel. Headquartered in Westerville, Ohio, Global Home Products, LLC -- http://www.anchorhocking.com/and http://www.burnesgroup.com/-- sells houseware and home products and manufactures high quality glass products for consumers and the food services industry. The company also designs and markets photo frames, photo albums and related home decor products. The company and 16 of its affiliates filed for Chapter 11 protection on Apr. 10, 2006 (Bankr. D. Del. Case No. 06-10340). Laura Davis Jones, Esq., Bruce Grohsgal, Esq., James E. O'Neill, Esq., and Sandra G.M. Selzer, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub LLP, represent the Debtors. When the company filed for protection from their creditors, they estimated assets between $50 million and $100 million and debts of more than $100 million. HEADLINERS ENT: Bagell Josephs Raises Going Concern Doubt --------------------------------------------------------- Bagell, Josephs, Levine & Company, L.L.C., in Gibbsboro, New Jersey, raised substantial doubt about Headliners Entertainment Group, Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the company's sustained operating losses and capital deficits. Headliners Entertainment filed its consolidated financial statements for the year ended Dec. 31, 2005, with the Securities and Exchange Commission on April 5, 2006. The company reported a $49,849,650 net loss on $8,623,734 of net sales for the year ended Dec. 31, 2005. At Dec. 31, 2005, the company's balance sheet showed $5,693,799 in total assets and $14,469,046 in total liabilities, resulting in an $8,775,247 stockholders' equity deficit. The company's Dec. 31 balance sheet also showed strained liquidity with $650,329 in total current assets available to pay $3,646,207 in total current liabilities coming due within the next 12 months. A full-text copy of the company's 2005 Annual Report is available for free at http://ResearchArchives.com/t/s?868 Based in Montclair, New Jersey, Headliners Entertainment Group, Inc. -- http://www.rascalscomedyclub.com/-- fka Rascals International, Inc., through its subsidiaries, engages in the operation of comedy clubs primarily in New Jersey. It operates embedded, hotel-based, and licensed comedy clubs. As of Sept. 30, 2005, the company owned a library of approximately 300 hours of recorded performances by comedic entertainers when they appeared at a Rascals Comedy Club. In addition, it operates an entertainment complex consisting of a dance club and other facilities in Cincinnati, Kansas City, Tucson, Jackson, Louisville, and Omaha. INSPIRE INSURANCE: Trustee Prepares Distribution to Creditors ------------------------------------------------------------- Michael G. Lawrence, the Liquidating Trustee of INSpire Trust, asks the Honorable D. Michael Lynn of the U.S. Bankruptcy Court for the Northern District of Texas in Forth Worth for approval of proposed procedures for distribution of Trust Assets. The Liquidating Trustee wants to: (a) finally fix for all purposes, the amount and identity of all allowed general unsecured claims against the Trust; (b) finally fix the number of outstanding unresolved claims against the Trust; (c) forever preclude any person or entity not identified as holding an allowed claim or an unresolved claim from asserting any claim against the Trust, as a creditor of any of the Debtors or by virtue of the Plan, subject only to the Trustee's power to correct any errors; and (d) make an interim distribution to creditors with allowed claims. The Liquidating Trustee is authorized to make distributions to holders of Allowed Claims and interests under Article 7 of the confirmed plan. While several substantial claims still remain unresolved, most of the claims asserted against the INSpire Trust have been resolved through litigation or settlement. Any person not identified in the Trustee's Distribution Procedures Motion as a creditor with either an allowed an unresolved claim will be forever barred from asserting a claim against the Trust. Judge Lynn will convene a hearing at 9:30 a.m. on May 16, 2006, to consider the Liquidating Trustee's request. A copy of the Liquidating Trustee's Distribution Procedures Motion is available from his lawyer: J. Robert Forshey, Esq. Forshey & Prostok, LLP 777 Main Street, Suite 1290 Forth Worth, TX 76102 Tel: (817) 877-4151 INSpire Insurance Solutions, Inc., and INSpire Claims Management, Inc., filed for chapter 11 protection on Feb. 15, 2002 (Bankr. N.D. Tex. Case No. 02-41228). The Bankruptcy Court confirmed the First Amended Plan of Reorganization of the Debtors on Nov. 13, 2002. Michael G. Lawrence is the Liquidating Trustee of INSpire Trust under the Plan. J. Robert Forshey, Esq., Forshey & Prostok, LLP, represents the Liquidating Trustee. INTEREX INTERNATIONAL: Voluntary Chapter 11 Case Summary -------------------------------------------------------- Debtor: Interex International Meridian Global Center One Park Plaza #650 Irvine, California 92614 Bankruptcy Case No.: 06-10613 Chapter 11 Petition Date: May 1, 2006 Court: Central District Of California (Santa Ana) Judge: John E. Ryan Debtor's Counsel: Ronald B. Talkov, Esq. MeridianGlobal Center 1 Park Plaza 6th Floor Irvine, California 92614 Tel: (877) 592-2873 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor has until May 16, 2006 to file its 20 largest unsecured creditors. JP MORGAN: Moody's Holds Low-B Ratings on Six Certificate Classes ----------------------------------------------------------------- Moody's Investors Service upgraded ratings of four classes and affirmed the ratings of 16 classes of J.P. Morgan Chase Commercial Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2003-C1: * Class A-1, $224,528,825, Fixed, affirmed at Aaa * Class A-2, $595,147,000, Fixed, affirmed at Aaa * Class X-1, Notional, affirmed at Aaa * Class X-2, Notional, affirmed at Aaa * Class B, $34,700,000, Fixed, upgraded to Aaa from Aa2 * Class C, $10,676,000, Fixed, upgraded to Aaa from Aa3 * Class D, $32,031,000, Fixed, upgraded to Aa3 from A2 * Class E, $14,680,000, Fixed, upgraded to A2 from A3 * Class F, $17,350,000, WAC, affirmed at Baa1 * Class G, $17,350,000, WAC, affirmed at Baa2 * Class H, $12,011,000, WAC, affirmed at Baa3 * Class J, $16,015,000, Fixed, affirmed at Ba1 * Class K, $10,677,000, Fixed, affirmed at Ba2 * Class L, $6,673,000, Fixed, affirmed at Ba3 * Class M, $8,007,000, Fixed, affirmed at B1 * Class N, $4,004,000, Fixed, affirmed at B2 * Class P, $1,776,000, Fixed, affirmed at B3 * Class CM-1, $2,230,242, Fixed, affirmed at Baa1 * Class CM-2, $4,101,659, Fixed, affirmed at Baa2 * Class CM-3, $13,832,405, Fixed, affirmed at Baa3 As of the April 12, 2006, distribution date, the transaction's aggregate principal balance has decreased by approximately 4.0% to $1.05 billion from $1.09 billion at securitization. The Certificates are collateralized by 104 loans, ranging in size from less than 1.0% to 15.0% of the pool, with the top ten loans representing 43.7% of the pool. The pool includes two shadow rated investment grade loans, which represent 18.5% of the pool. Twelve loans, representing 12.1% of the pool, have defeased and are collateralized by U.S. Government securities. To date there have been no realized losses. Two loans, representing 1.6% of the pool, are in special servicing. Moody's is estimating approximately $3.7 million of losses from the specially serviced loans. Nine loans, representing 11.8% of the pool, are on the master servicer's watchlist. Moody's was provided with year-end 2004 and partial or full year 2005 operating results for 98.7% and 82.2% of the performing loans, respectively. Moody's weighted average loan to value ratio for the conduit component is 85.4%, compared to 90.6% at securitization. The upgrade of Classes B, C, D and E is due to improved overall pool performance, a relatively high percentage of defeased loans and increased credit support. The largest shadow rated loan is the Concord Mills Loan, which represents the pooled component of a $173.8 million mortgage loan. The loan is secured by a 1.3 million square foot regional mall located 15 miles north of Charlotte in Concord, North Carolina. Major tenants include Bass Pro Outdoor World, Burlington Coat Factory and AMC Theatres. The property is 100.0% occupied, compared to 95.0% at securitization. The non-pooled component is held within the trust and is the security for non-pooled Classes CM-1, CM-2 and CM-3. The loan sponsor is the Mills Corporation and KanAm Group. Moody's current shadow rating of the senior loan component is A3, the same as at securitization. The second shadow rated loan is the Bishops Gate Loan, which is secured by a two office buildings totaling 484,000 square feet located in Mt. Laurel, New Jersey. The collateral is 100.0% leased to PHH Mortgage, a subsidiary of PHH Corporation. The lease to PHH Mortgage is triple net expiring in December 2022. Moody's current shadow rating is A3, the same as at securitization. The top three conduit exposures represent 11.1% of the pool. The largest conduit exposure is the Crossroads Mall Loan, which is secured by a 640,000 square foot regional mall located in Omaha, Nebraska. The mall is anchored by Dillard's and Sears. Younkers, an original anchor, closed in January 2005. The store was released from the loan collateral in June 2005 to facilitate a sale to Target. A Super Target is under construction and is scheduled to open in July 2006. In-line occupancy has been impacted by the closure of Younkers and the disruption caused by the construction of Target. Current occupancy is 66.0%, compared to 81.0% at securitization. The loan sponsor is Simon Property Group. Moody's LTV is 98.8%, compared to 84.5% at securitization. The second largest conduit exposure is the Crossways/Newington Portfolio, which consists of two cross-collateralized loans secured by two industrial and office buildings totaling 811,000 square feet. Both properties are located in Virginia. The two properties are 99.0% occupied, the same as at securitization. Moody's LTV is 79.9%, compared to 94.2% at securitization. The third largest conduit exposure is the Somerset Shoppes Loan, which is secured by a 187,000 square foot community shopping center located in Boca Raton, Florida. Major tenants include T.J. Maxx, Michaels and Loehmans. The center is 95.0% occupied, essentially the same as at securitization. Moody's LTV is 93.5%, compared to 94.4% at securitization. The pool's collateral is a mix of retail, office, multifamily, U.S. Government securities, industrial and self storage and lodging. The collateral properties are located in 31 states and Washington, D.C. The highest state concentrations are North Carolina, California, Texas, Virginia and Florida. All of the loans are fixed rate. KANSAS CITY: Strained Liquidity Cues Moody's to Downgrade Ratings ----------------------------------------------------------------- Moody's Investors Service downgraded the debt ratings of Kansas City Southern, and its wholly owned subsidiaries The Kansas City Southern Railway Company, and Kansas City Southern de Mexico, S.A. de C.V. In a related action, Moody's assigned a B1 rating to $371 million of new secured bank credit facilities available to KCSR. The outlook is negative. The rating actions complete the review of KCS's ratings initiated on April 5, 2006. The rating downgrades reflect the reduced financial flexibility and strained liquidity which limit KCS's ability to handle unexpected shocks to its railroad network. Higher consolidated leverage, along with weaker cash balances and lower availability under the revolver, resulted in part from a series of transactions related to the acquisition of KCSM. Capital investment over the last two quarters was also somewhat higher than expected, which added to debt levels and produced metrics of debt to EBITDA and EBIT to interest that are weaker than the median levels for single-B rated comparables. Offsetting the weak metrics, KCSR has strong asset protection for debt holders with over $2.2 billion of assets, compared to $738 million of debt at FYE 2005. The B1 rating on the bank credit facilities reflects the bank's security in substantially all of the non-investment assets of KCSR, and the B3 senior unsecured debt rating reflects the effective subordination of the notes to the bank facilities. The concession to operate the northeast railway in Mexico has a reported carrying value of approximately $1.36 billion at FYE 2005. Now that KCS has full control of the concession and the various claims from the prior joint ownership arrangement have been dismissed, the company could be a more attractive merger candidate for one of the larger railroads, in Moody's view. The negative outlook anticipates that debt to EBITDA for both KCS and KCSM will remain higher than for issuers with comparable ratings, and that financial flexibility will be limited as liquidity is likely to remain tight over the near term. The need for considerable incremental investment, particularly in rolling stock to handle the higher demand, will limit any material near term improvement. The ratings could come under pressure in the event of any unexpected shock to the rail system, which could include a weather-related event or decline in business activity; loss of fluidity in the rail network, evident through a decline in velocity; or, a deteriorating Operating Ratio approaching the 90% level. Ratings affected 1) Kansas City Southern * corporate family to B2 from B1; * Preferred Stock to Caa2 from Caa1; * shelf registration (P) Caa1 from (P)B3; and * (P)B3 from (P)B2 2) The Kansas City Southern Railway Company * senior unsecured to B3 from B2; senior secured to B1 from Ba3; * B1 secured assigned to the bank credit facilities; * shelf registration tp (P)B3 from (P)B2; and * (P)Caa1 from (P)B3. KMART CORP: Wants N.J. Tax Court to Adjudicate 2005 Appeal ---------------------------------------------------------- Subsequent to Kmart Corporation and its debtor-affiliates' confirmation and emergence from Chapter 11 in May 2003, Troy CMBC Property, LLC, in 2005, took an appeal of the 2005 valuation of its taxable assets located within the City of Linden, in New Jersey. Pursuant to New Jersey state law and procedure, the appeal was taken to the Tax Court of New Jersey, as a proceeding brought by Troy to reduce the 2005 taxable value of the property. Kimberly Robinson, Esq., at Barack Ferazzano Kirschbaum Perlman & Nagelberg LLP, in Chicago, Illinois, relates that simultaneous with the proceeding, the Debtors negotiated with Linden on some claimed 2002 taxes, to which the Debtors had timely objected. Subject to reinstatement, the Tax Court dismissed the 2005 Appeal because there were still taxes unpaid for prior years. Subsequently, the Debtors and Linden negotiated a settlement of the 2002 taxes, and jointly agreed to the 2005 Appeal's reinstatement. In response to a joint application of Troy and Linden, the Tax Court ordered reinstatement of the 2005 Appeal but was concerned about its authority to proceed absent closure of the Chapter 11 cases or an order from the U.S. Bankruptcy Court for the Northern District of Illinois authorizing the Tax Court to proceed. For this reason, Kmart Corporation and Troy ask the U.S. Bankruptcy Court for the Northern District of Illinois to issue an order authorizing the Tax Court to proceed and to adjudicate the 2005 Appeal. Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART Holding Corporation) -- http://www.bluelight.com/-- operates approximately 2,114 stores, primarily under the Big Kmart or Kmart Supercenter format, in all 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired on Jan. 27, without complaint by the Department of Justice. (Kmart Bankruptcy News, Issue No. 109; Bankruptcy Creditors' Service, Inc., 215/945-7000) LAFAYETTE COMMUNITY: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Lafayette Community Rehabilitation Hospital, LLC 516 Texas Street Shreveport, Louisiana 71101 Bankruptcy Case No.: 06-10667 Type of Business: The Debtor operates a hospital. Chapter 11 Petition Date: April 28, 2006 Court: Western District of Louisiana (Shreveport) Debtor's Counsel: John S. Hodge, Esq. Wiener, Weiss & Madison P.O. Box 21990 Shreveport, Louisiana 71120-1990 Tel: (318) 226-9100 Fax: (318) 424-5128 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Internal Revenue Services $661,508 P.O. Box 21136 Philadelphia, PA 19114 Allegiance Health Management $225,013 416 Travis Street, Suite 1004 Shreveport, LA 71101 Charles Dugal, M.D. $118,250 990 Napoleon Avenue Sunset, LA 70584 Robert D. Franklin, M.D. $118,250 101 B Energy Parkway Lafayette, LA 70508 Healthcare Transportation $99,781 L.A. Department of Revenue & Taxation $93,595 State of Louisiana $69,019 Dr. Charles Louis $66,000 Rick Johnson $64,800 PrimeCare $61,370 Golden Age of Welsh, LLC $60,000 Eddie Touchet, III $50,000 Acadiana Family Medical Center $45,600 Axis Medical, LLC $43,057 Gulf South Medical Supply $42,055 First Choice Medical $40,707 John Guidry, M.D. $39,800 Hebert & Thibodeaux $35,000 Melancon Pharmacy $33,152 United Medical Staff $32,146 LEVITZ HOME: Spectrum Wants to Collect Unpaid Rent Obligations -------------------------------------------------------------- On Jan. 13, 1997, Sanderson-J. Ray-Spectrum V Partners leased commercial real estate in a retail shopping center located at 16181 Lake Forest Drive, Irvine, California, to Sears, Roebuck and Co. Debtor Levitz Furniture Corporation, is the successor-in-interest to Sears with respect to the Lease. Pursuant to the terms of the Lease, the Debtor is obligated to pay Spectrum: a) $40,476 per month as base rent; b) costs and expenses with respect to the Premises, including common area maintenance expenses; and c) certain other obligations. According to Ilan D. Scharf, Esq., at Pachulski, Stang, Ziehl, Young Jones & Weintraub PC, in New York, while the Lease term expires on Dec. 31, 2007, it grants three successive five- year renewal options to the Debtor. As of Oct. 11, 2005, the Debtor was obligated to Spectrum for not less than $81,513 for unpaid Rent Obligations. The Debtor may also be obligated to pay Spectrum for prepetition Rent Obligations in an amount not yet determined, Mr. Scharf adds. Mr. Scharf reports that the while the Debtor continues to occupy the Premises and conducts its business from the Premises, it did not pay the Rent Obligations due on February 1, 2006, totaling $87,930. The Debtor has until May 31, 2006, to decide whether to assume or reject the Lease. To date, the Debtor has not indicated to Spectrum its plan for the Lease, and Spectrum is suffering undue hardship and irreparable injury based on the Debtor's failure to pay postpetition Rent Obligations while the Debtor occupies and conducts business from the Premises, Mr. Scharf says. Spectrum asks the U.S. Bankruptcy Court for the Southern District of New York to: a) direct the Debtor to immediately pay all postpetition Rent Obligations due to Spectrum; and b) grant Spectrum relief from the automatic stay to pursue its rights under the Lease. Moreover, pending the Debtor's decision regarding the Lease, Spectrum reserves its rights: * to assert any claim that it may hold against the Debtor for either prepetition or postpetition obligations, including payment of the Prepetition Arrears or rejection damages, if any; * to object to any assumption or assumption and assignment of the Lease on any grounds, including failure to provide adequate assurance of future payment; and * to amend its request if the Debtor fails to pay any additional Postpetition Obligations due to Spectrum under the terms of the Lease, including payment of Rent Obligations due on March 1, 2006. PLVTZ Objects PLVTZ, LLC, as purchaser of the Debtors' assets, asks the Court to deny Spectrum's request. In mid-February 2006, PLVTZ placed an amount in escrow for rental obligations, including taxes, for the Property with Kronish Lieb Weiner & Hellman LLP, counsel for the Official Committee of Unsecured Creditors, D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York relates. PLVTZ has paid over to the Committee $55,168 in respect of February obligations to Spectrum. Mr. Baker notes that Spectrum has been paid by the agent for various entities related to Levitz SL, L.L.C., for prior months amounting to $47,603, with the Unitary Landlord retaining payment for or otherwise satisfying any taxes due and owing on the Property. Therefore, PLVTZ has remitted to the Creditors Committee $55,168 to be held in escrow in respect of the $47,603 February amount to be paid by the agent for various entities related to Levitz SL, L.L.C., to Spectrum for rent and CAM charges, with the remaining $7,565 as payment to the Unitary Landlord for tax obligations. Additionally, PLVTZ remitted rental payments for $47,603 in respect of March rent and CAM charges directly to Spectrum. Spectrum, however, asserts that the February "Rent Obligations" owed totaled $87,930, which is an amount $40,327 in excess of the $47,603 standard monthly rent and CAM charges paid to Spectrum on a regular basis, Mr. Baker says. PLVTZ does not dispute that it is obligated to pay liabilities under the Lease to the extent the liabilities accrued after the Closing Date. But to the extent the $47,603 accrued before the Closing Date, PLVTZ asserts it is not liable under the Sale Order. Any payment of claims for real estate tax should await the Debtors' decision regarding whether to assume or reject the Lease, Mr. Baker contends. If PLVTZ directs the Debtors to assume and assign the Lease, any payments would be subsumed into the appropriate cure amount to be paid. PLVTZ reserves its rights to object to any request for prepetition payments in connection with the Property. About Levitz Home 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: Court Allows Unitary Lease Assumption & Assignment --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized Levitz Home Furnishings, Inc., and its debtor- affiliates to assume a Unitary Lease and assign that lease to PLVTZ, LLC. PLVTZ is required to pay a $230,793 Cure Amount before it can assume the lease. The Debtors and the Official Committee of Unsecured Creditors filed the joint request asking for the assumption and assignment of the Unitary Lease. Unitary Lease The Debtors and Levitz SL, L.L.C., and its related entities, are parties to a Unitary Lease dated June 8, 1999. From Oct. 8, 1999, through and including Oct. 28, 2004, the Debtors and the Unitary Landlord entered into 16 amendments to the Unitary Lease and two collateral agreements -- the HomeLife Agreement and the Huffman Koos Agreement. At the time of the Debtors' bankruptcy filing, the Unitary Lease governed the Debtors' occupancy of 42 of its retail and warehouse locations, and the Debtors' monetary obligations to the Unitary Landlord. On Dec. 14, 2005, the Court authorized the Debtors' sale of substantially all of their assets to PLVTZ, LLC, and the Pride Capital Group. Among other things, the Sale Order authorized the sale and transfer of all of the Debtors' rights to designate the ultimate assignee of all the Debtors' right, title and interest in, and to, certain unexpired nonresidential real property leases, including the Unitary Lease. On Feb. 14, 2006, the Official Committee of Unsecured Creditors commenced an adversary proceeding against the Unitary Landlord, seeking a declaration that the Unitary Lease is severable. The Lease Assignment Agreement To resolve their dispute, the Committee, PLVTZ, and the Unitary Landlord reached an agreement to provide for: * the amendment of the Unitary Lease to, among other things, reduce the number of lease locations to be governed by the Unitary Lease; * the assumption and assignment of the Unitary Lease as amended by a Seventeenth Amendment to PLVTZ; and * the resolution of all disputes concerning the Unitary Lease, including dismissal of the Adversary Proceeding filed by the Committee, in accordance with the terms of the parties' Lease Assignment Agreement dated April 17, 2006. According to Nicholas M. Miller, Esq., at Jones Day, in New York, the Unitary Landlord agreed under the Lease Assignment Agreement, not to object to the assumption and assignment of the Unitary Lease, as amended, based on PLVTZ's ability to provide adequate assurance of future performance or any other ground. Additionally, the Unitary Landlord agreed to accept $230,793, in full satisfaction of its cure claim in connection with the Unitary Lease, subject to its April 17, 2006 letter agreement with PLVTZ. The parties further agreed to seek court approval of the proposed assumption and assignment. The Unitary Landlord also consented to the assignment of the Unitary Lease to PLVTZ, if the order approving the assignment includes findings of fact and conclusions of law that the Unitary Lease, as amended by the Seventeenth Amendment: (a) constitutes one unitary, indivisible, non-severable lease of all the demised premises and that the Unitary Lease is a single lease, dealing with and covering one legal and economic unit which must be assumed, rejected or assigned as a whole with respect to all -- and only all -- the demised premises covered under the lease for the purposes of any assumption, rejection or assignment of the Unitary Lease under Section 365 of the Bankruptcy Code; (b) does not constitute separate leases contained in one document each governed by similar terms; (c) will at all times be construed, interpreted and applied so that the intention of the Unitary Landlord and PLVTZ to create a unitary lease will be preserved and maintained, and that neither the exclusion of the "Excluded Properties" pursuant to the Seventeenth Amendment, any dealings between the parties with respect to the Excluded Properties or the Demised Premises after the entry of the Approval Order nor any other terms or provisions of the Unitary Lease -- including the provisions regarding payment of Basic Rent and the severance of properties -- will be interpreted as evidence that the parties intended the lease to be, or otherwise form a basis for treating the Unitary Lease as, anything other than a single, non- severable agreement. Upon the Court's approval of the parties' request, the Creditors Committee will promptly file a notice of dismissal with prejudice in the Adversary Proceeding, Mr. Miller says. The Debtors acknowledge that they received a Lease Assumption Notice in connection with the Unitary Lease, as amended by the Seventeenth Amendment, and the Lease Assignment Agreement in accordance with the Purchasers' Designation Rights. By this motion, the Debtors and the Creditors Committee jointly ask the Court to authorize the Debtors' assumption and assignment of the Unitary Lease, as modified by the Seventeenth Amendment, and the Lease Assignment Agreement, to PLVTZ. Mr. Miller asserts that the proposed assumption and assignment is warranted because the Unitary Landlord consented to the assumption and assignment of the Unitary Lease to PLVTZ, and agreed not to object to PLVTZ's ability to provide adequate assurance of future performance. Moreover, PLVTZ can readily demonstrate to any interested party its financial health and experience in operating the business in the demised premises assigned on a prospective basis. A full-text copy of the Lease Assignment Agreement is available for free at: http://bankrupt.com/misc/lease_assignment_agreement.pdf A full-text copy of Unitary Lease, as amended on April 17, 2006, is available for free at: http://bankrupt.com/misc/unitary_lease_amendment.pdf Lease Assumption and Assignment Ruling Judge Lifland further rules, among other things, that: (a) The Adversary Proceeding filed by the Creditors Committee is dismissed with prejudice and the Committee will file a notice of dismissal, with prejudice, on April 30, 2006; (b) Notwithstanding anything to the contrary, the decision will have no preclusive or collateral estoppel effect on Crown, and will not be binding on Crown. The Unitary Landlord will not seek to use the decision in any litigation between Crown and the Unitary Landlord other than to show the intentions of the parties and for no other purpose whatsoever. All of Crown's rights and remedies under its Leases with the Unitary Landlord are preserved, including Crown's right to seek excess rent, to require that rent be allocated to Crown's properties under the Unitary Lease, and to terminate its Leases with the Unitary Landlord; and (c) The $27,000 currently being held in escrow by counsel to the Creditors Committee with respect to the Glendale property will be transferred to Crown's counsel upon joint written instructions from Crown and the Unitary Landlord, and upon the Court ruling becoming a final order. The funds will be held in escrow by Crown's counsel and will not be released from escrow until further order of a court of competent jurisdiction on notice to Crown and the Unitary Landlord, unless otherwise agreed in writing by Crown and the Unitary Landlord. All other objections to the assignment of the Unitary Lease to PLVTZ that have not been withdrawn, waived or settled, and all reservations of rights included in the objections or addressed by the Order, are overruled. About Levitz Home 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. 12; Bankruptcy Creditors' Service, Inc., 215/945-7000) LEVITZ HOME: Unit Names Tom Baumlin as Chief Executive Officer -------------------------------------------------------------- Levitz Furniture LLC disclosed the appointments of Elliott Wahle as Chairman of the Board, and Tom Baumlin as Chief Executive Officer. The new executive leadership team will spearhead the Company's revitalization and expansion efforts. Jonathan Duskin, Managing Director of Prentice Capital Management, LP, the new owner of Levitz Furniture, made the announcement. Mr. Wahle has nearly 25 years of retail executive experience. He was the founding President of Toys "R" Us Canada and further served the Toys "R" Us organization as President of the highly successful Babies "R" Us division, a dominant juvenile products market leader. Mr. Baumlin, who has been serving as interim CEO of Levitz Furniture since late December 2005, was a consultant to several large hedge funds through his own firm, Achilles Research LLC. He previously served as CEO of Norstan Apparel Shops, a privately held retail apparel company that operated the Fashion Cents chain of stores. Mr. Baumlin also spent five years at Footstar, Inc., a leading family footwear retailer, as Senior Vice President of Finance. "Elliott and Tom provide the new Levitz Furniture with strong leadership and the experience to succeed in retail that will convey confidence among our trade partners and energize this great consumer brand," said Mr. Duskin. "Elliott has a history of retail industry success and adds broad industry knowledge as we reinvigorate and expand the business. In the past few months, Tom has done an excellent job of engaging and reassuring our trade partners, improving our operations, and developing a plan that will make Levitz the premier specialty retailer of furniture, bedding and home furnishings in our markets." During Mr. Wahle's tenure at Toys "R" Us Canada, he grew the business to $500 million in sales and an over 20% market share. In his two years at the helm of Babies "R" Us, Mr. Wahle led a growth strategy that increased the stores base by 25%, overall sales by 35% and earnings by almost 50%. Wahle also served as President and Chief Executive Officer of Dylex Ltd., a publicly traded company that was Canada's leading specialty apparel organization, where he led the Company's return to profitability and creation of significant shareholder value. "I have worked with some world class organizations and brands, and am excited about the opportunity to help Levitz Furniture fulfill its potential," said Mr. Wahle. "I am very eager to work closely with Tom and the rest of our management team, our employees, and our trade partners as we strive to deliver a superior shopping experience for our valued customers." Commenting on his appointment as CEO, Mr. Baumlin said, "We are intently focused on improving the Levitz experience for our customers. We are committed to raising the style quotient in our assortment, offering our customers a broader range of solutions, while maintaining our unparalleled quality/value proposition. I am particularly grateful for the strong support we have received from our trade partners, our associates and other stakeholders as we revitalize the Levitz brand." Earlier in his career, Mr. Baumlin worked at Deloitte & Touche Consulting Group. He began his career as an entrepreneur, having started three different companies, including College Concepts, a leading wholesaler of licensed apparel, which he subsequently sold. He received his MBA from Columbia University and graduated Phi Beta Kappa from Stanford University in 1985. Consistent with its revitalization plans, Levitz Furniture recently announced plans to open several new stores: Staten Island, NY, Paramus, NJ and Bronx, NY in the April-May period, Summerlin, NV in early summer, Murrieta, CA in the early fall and Valley Stream, NY in the late fall. April Grand Opening celebrations are planned for the Staten Island, NY, Paramus, NJ, Farmingdale, NY, Hawthorne, CA and S. Sacramento, CA store locations. In addition, the Company announced it was proceeding with its store renovation plans slated for the late spring, including projects in Elmhurst, NY, Paramus, NJ, Anaheim, CA and Victorville, CA. Levitz Furniture LLC -- http://www.furniture.com-- is a debtor- affiliate of Levitz Home Furnishings, Inc. About Levitz Home 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. 12; Bankruptcy Creditors' Service, Inc., 215/945-7000) MANITOWOC CO: Net Revenues Increase 24% to $633M in First Quarter ----------------------------------------------------------------- The Manitowoc Company (NYSE: MTW) reported record levels of net sales and earnings during the first quarter ended March 31, 2006. Net sales increased 24% to $633.0 million from $510.3 million during the first quarter of 2005. "The Manitowoc Company . . . announced record first-quarter earnings. This impressive start reinforces our expectation that 2006 will be a record year for the company," said Terry D. Growcock, Manitowoc's chairman and chief executive officer. "We expect our market leadership in cranes to continue to generate strong shareholder returns during this period of robust global construction activity, especially because peak crane demand historically trails that of the general construction equipment industry. Our Foodservice and Marine segments also made solid contributions during the quarter and are on track for excellent performance in 2006. The strength of our balanced portfolio of market-leading businesses resulted in a first-quarter 2006 EVA contribution of $20 million, which exceeded the full year 2005 contribution." Business Segment Results First-quarter 2006 net sales in the Crane segment increased 33% to $477.5 million, from $358.0 million in the first quarter of 2005. Operating earnings increased 151% to $51.2 million, from $20.4 million last year. The strength of the Crane segment's end markets is reflected in its backlog, which totaled $987 million, an increase of 14% from December 31, 2005, and up 85% from March 31, 2005. "Our Crane segment's performance this quarter was truly outstanding," Mr. Growcock said. "We are seeing the dividends from our investments in a global crane strategy. Operating margins have increased from 5.7% to 10.7%, driven primarily by operating leverage from increased volume and improved product mix in all of our geographic markets. The federal highway and energy bills passed last year, along with a robust industrial construction market, are keeping U.S. fleet rental and utilization rates at high levels. Our global crane portfolio also performed very well in other regions. Demand for mobile cranes remains strong in the Europe, Middle East, and Asian regions. Our new production facility in China is providing complete tower cranes as well as crawler and mobile crane components for the growing Asian markets." In the Foodservice segment, first-quarter 2006 net sales decreased 3% to $93.6 million from $96.2 million last year. Operating earnings for the first quarter of 2006 were $10.6 million, a 14% decrease from the prior year period. The decrease in both revenue and operating margin was expected and reflects unusually strong beverage sales in the 2005 period from major chain rollouts and higher distributor sales. Margins were also impacted by increased commodity costs, specifically for copper and aluminum, in the 2006 period. First-quarter 2006 performance was aided by operating efficiencies from last year's plant consolidation in the refrigeration operations. The company has also implemented pricing actions and commodity hedging strategies to combat commodity costs and to improve foodservice performance for the balance of 2006. "The Foodservice segment is on track for another successful year in 2006," Mr. Growcock said. "Our new nugget and flake ice machines are increasing their penetration into various commercial markets, while new distribution channels are showing strong interest in our residential ice machine. The residential machine and a full line of under-counter ice makers are now in full production at our new China manufacturing facility. In addition, our refrigeration business is benefiting from robust new construction activity in the domestic lodging and restaurant markets." Revenues for the Marine segment during the first quarter of 2006 rose more than 10% to $61.9 million from $56.1 million in the 2005 quarter. Operating earnings for Marine were $3.7 million, more than double the $1.6 million achieved in the first quarter of 2005. "The Marine segment also had a solid quarter and is turning the corner to sustained profitability," Mr. Growcock said. "Its projects now all have reasonable pricing and delivery terms, which will allow the Marine segment to manage them effectively and profitably. The largest project, the Navy's Littoral Combat Ship, is on track for a September launch at Marinette and our backlog of nine OPA-90 tank barges at Bay Shipbuilding is leveraging the efficiencies and capabilities at that yard," Mr. Growcock said. Strategic Priorities "For more than a decade, we have been guided by the strategies of product innovation, strategic acquisitions, and geographic expansion. The benefits of those strategies are apparent in today's results," Mr. Growcock said. "We have recently adopted Vision 2010 as our new roadmap to continued performance improvement. As satisfying as our current situation is, we must anticipate changing demand from our global customer base and be ready to capture new opportunities. This more robust strategic platform sharpens the company's skill sets and better aligns our resources with the ultimate goal of profitable growth. We will achieve that goal by pursuing the six strategic imperatives of Vision 2010." The Manitowoc Company, Inc. -- http://www.manitowoc.com/-- is one of the world's largest providers of lifting equipment for the global construction industry, including lattice-boom cranes, tower cranes, mobile telescopic cranes, and boom trucks. As a leading manufacturer of ice-cube machines, ice/beverage dispensers, and commercial refrigeration equipment, the company offers the broadest line of cold-focused equipment in the foodservice industry. In addition, the company is a leading provider of shipbuilding, ship repair, and conversion services for government, military, and commercial customers throughout the maritime industry. * * * As reported in the Troubled Company Reporter on Mar. 27, 2006, Standard & Poor's Ratings Services raised its ratings on diversified equipment manufacturer The Manitowoc Co. Inc., including the corporate credit rating on the company, which rose to 'BB' from 'BB-'. S&P said the outlook is stable. MECACHROME INT'L: S&P Places B- Rating on Sr. Subordinated Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' long-term corporate credit rating to Montreal, Que.-based Mecachrome International Inc. Standard & Poor's also assigned its 'B-' rating to the company's senior subordinated notes; and its 'B+' bank loan rating, with a recovery rating of '2', to its senior secured credit facility. The outlook is stable. "The ratings on Mecachrome International reflect its high leverage and the risks inherent in executing its growth strategy in North America," said Standard & Poor's credit analyst Kenton Freitag. "The ratings are supported by the company's established operating assets in Europe, a diverse backlog with strong customers, and a demonstrated ability to deliver respectable margins," Mr. Freitag added. Mecachrome is a producer of precision parts for the: * aerospace, * automotive, and * autosport industries. With 2005 revenues of CDN$231 million, the company is relatively small but has a long operating history, an established reputation with key customers, and technical expertise that provides a reasonably secure competitive position. The company's primary operations are in France but it has recently developed operations in Canada, which is the focus of its growth. A primary risk for the company is its ability to successfully execute its somewhat aggressive growth strategy. The company's ability to build North American profitability to its European levels is unproven. Although the company's established operational record in Europe lends confidence to its ability to appropriately price and manage contracts, its expansion in North America will entail a greater degree of joint development programs with aerospace partners, a new operating environment in a different geographic location, and potentially more complex contracts with more costly engineering and design work. The operations in North America are not currently profitable given that they are in the early stages of contracts with expensive upfront costs. Mecachrome has demonstrated good and consistent margins from its European operations. Despite its somewhat modest size, the company has a reasonably diverse backlog with a strong group of customers. The risk of substitution is considered low given that Mecachrome is the sole-source supplier in a majority of its contracts and the stringent manufacturing standards of the parts it produces do not facilitate switching to new or lower cost competitors. The ratings on Mecachrome are constrained by its highly leveraged capital structure. Leverage is expected to run at about 5x EBITDA in the next year. Given potential EBITDA growth, however, this measure should improve in time. The company is private but has the ability to complete small equity issuance to bolster its balance sheet if required. The outlook is stable. Standard & Poor's expects that Mecachrome's substantial backlog and established European operations will provide a solid basis to support the current ratings as it works to establish its operations in North America. Ratings improvement will likely be constrained by the company's leverage and the currently negative margins in North America. Material deterioration in margins could lead to a negative outlook. MEDICAL MALPRACTICE: Liquidator Wants Court to OK Status Report --------------------------------------------------------------- The Superintendent of Insurance of the State of New York as the liquidator of Medical Malpractice Insurance Association asks the Supreme Court of the State of New York to approve his report disclosing the status of Medical Malpractice's liquidation. The Liquidator also asks the New York Supreme Court to: a. set June 30, 2006, as the deadline for all creditors of Medical Malpractice to file their claims; b. pay all administrative costs and expenses and pay to Medical Malpractice's creditors with allowed claims, consistent with Article 74 of the New York Insurance Law, with 6% interest; and c. transfer assets remaining, after payment of administrative costs, expenses and creditors, to the Miscellaneous Special Revenue Fund of the State of New York. The Court has set 9:30 a.m., on June 9, 2006, to hear the Liquidator's requests. On July 1, 200, Medical Malpractice Insurance Association policyholder liabilities were assumed by the Medical Liability Mutual Insurance Company. On May 4, 2001, Medical Malpractice was placed into liquidation with the Superintendent of Insurance of the State of New York appointed as liquidator. Pursuant to the New York Insurance Law and Liquidation Order, the Liquidator was tasked with marshalling Medical Malpractice's assets and adjudicating claims consistent with Article 74 of the Insurance Law. MEGA-C POWER: Nevada Court Approves Disclosure Statement -------------------------------------------------------- The U.S. Bankruptcy Court for the District of Nevada approved the adequacy of a disclosure statement prepared and submitted by William M. Noall -- Chapter 11 Trustee for the Estate of Mega-C Power Corporation -- Axion Power International, Inc., and others. The Bankruptcy Court Order dated April 25, 2006: -- authorizes service of the disclosure statement and a proposed plan of reorganization on creditors, equity security holders and other parties in interest; -- fixes May 18, 2006, as the last day for filing and serving objections to plan confirmation; -- fixes May 19, 2006, as the last day for creditors and equity security holders to vote with respect to the proposed plan; and -- fixes May 26, 2006, as the date of the confirmation hearing. Axion is a co-proponent of the proposed plan of reorganization which generally provides that: -- all disputes between Axion and Mega-C will be resolved and settled; -- all of Mega-C's claimed interests in Axion's e3 Supercell technology will be transferred to Axion; -- 5.7 million Axion shares held in trust for the benefit of Mega-C's creditors and shareholders will be used to implement the plan; -- up to 627,500 Axion shares will be used to pay the expenses of the trust; and -- a minimum of 1.5 million Axion shares will be surrendered to Axion for cancellation. The proposed share cancellation represents a 7.7% decrease in the number of outstanding Axion shares and a corresponding increase in value of each share. "We intend to vigorously pursue confirmation of the proposed plan, which will, if confirmed, allow us to achieve our long-standing goal of distributing the Axion stock in the Mega C Trust to the holders of allowed equity security interests in Mega C," John Petersen, Axion's chairman and general counsel, added. A full-text copy of the Company's disclosure statement is available for a fee at: http://www.researcharchives.com/bin/download?id=060501224935 A full-text copy of the Company's proposed plan of reorganization is available for a fee at: http://www.researcharchives.com/bin/download?id=060501224652 About Axion Power International Based in Woodbridge, Ontario Axion Power International, Inc. -- http://www.axionpower.com/-- is developing advanced energy storage devices that it refers to as e3 Supercells. Axion's e3 Supercells replace the lead-based negative electrodes found in conventional lead-acid batteries with nanoporous carbon electrodes. The result is a new class of hybrid energy storage devices that offer a unique combination of battery and supercapacitor performance characteristics. About Mega-C Mega-C Power Corporation is in the business of commercializing a hybrid capacitor/battery technology out of its premises in Vaughan, Ontario. In March 2003, the Ontario Securities Commission commenced an investigation into the activities of Mega-C Power Corporation and its promoters. The commencement of this investigation, with hindsight, was a key precursor to the demise of Mega-C Power's business activities and resale activities of its promoters. Axion Power Corporation initiated an involuntary chapter 11 proceeding against Mega-C on Apr. 6, 2004 (Bankr. D. Nev. Case No. 04-50962). Cecilia L. Rosenauer, Esq., in Reno, Nevada, represents Axion. The Court appointed William Noall, as a chapter 11 trustee, and Mr. Noall is represented by Matthew C. Zirzow, Esq., and Talitha B. Gray, Esq., at Gordon & Silver, Ltd. MICROHELIX INC: Auditor Raises Going Concern Doubt -------------------------------------------------- Stonefield Josephson, Inc., in Los Angeles, California, raised substantial doubt about microHelix, Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the company's operating losses since inception, and accumulated and working capital deficiency. microHelix, Inc., filed its consolidated financial statements for the year ended Dec. 31, 2005, with the Securities and Exchange Commission on April 17, 2006. The company reported a $1,553,995 net loss on $1,299,630 of net sales for the year ended Dec. 31, 2005. At Dec. 31, 2005, the company's balance sheet showed $6,071,851 in total assets, $5,446,192 in total liabilities, and $625,659 in total stockholder' equity. The company's Dec. 31 balance sheet also showed strained liquidity with $2,815,458 in total current assets available to pay $4,051,724 in total current liabilities coming due within the next 12 months. A full-text copy of the company's 2005 Annual Report is available for free at http://ResearchArchives.com/t/s?865 microHelix, Inc. (OTCBB: MHLX) -- http://www.microhelix.com/-- designs and manufactures cable assemblies for original equipment manufacturers. The company's products are used in medical ultrasound probes, patient monitoring devices, aerospace components and video surveillance assemblies. MUSICLAND HOLDING: Wants Court to Fix May 30 as Admin. Bar Date --------------------------------------------------------------- Section 3003(c)(3) of the Federal Rules of Bankruptcy Procedure provides that the Court will fix, and for a cause shown, may extend the time to file proofs of claim or interest. James H.M. Sprayregen, Esq., at Kirkland & Ellis LLP, in New York, avers that Musicland Holding Corp. and its debtor-affiliates need to solidify, as soon as possible, the full nature, extent and scope of administrative claims that creditors may assert. Once the Debtors can ascertain the value of administrative expenses that accrued through the closing of the sale of their assets to Trans World Entertainment Corporation, they will be better able to determine how much value exists for unsecured creditors and how best to distribute that value through liquidating a plan. Accordingly, the Debtors ask the U.S. Bankruptcy Court for the Southern District of New York to: (a) establish May 30, 2006, at 4:00 p.m. Eastern Standard Time, as the deadline for persons and entities holding administrative claims against the Debtors that arose as of April 13, 2006, to file their proofs of claim; (b) approve the proposed Proof of Administrative Form; and (c) approve the proposed form and manner of notice of the First Administrative Bar Date. The Proof of Administrative Claim Form is substantially identical to the Bankruptcy Rule Official Form 10, but has been slightly modified to reflect that the form is for an administrative claim. The Debtors propose to serve a copy of the Proof of Administrative Claim Form on each party who receives a copy of the First Administrative Bar Date notice. The Debtors will post a copy of the form on the official BMC Web Site, and provide a toll- free number in the First Administrative Bar Date Notice. The Debtors propose to serve the First Administrative Bar Date Notice on these parties: * the U.S. Trustee's Office for the Southern District of New York; * the counsel of the Official Committee of Unsecured Creditors; * all known counterparties to the Debtors' executory contracts and unexpired leases; * the District Director of Internal Revenue of the Southern District of New York; * any party who, on reasonable investigation, has provided postpetition goods or services to the Debtors and have not been paid; * all other parties that the Debtors believe may hold an Administrative Claim; and * all person or entities that have requested notice of the proceedings in the Chapter 11 cases. Each person or entity that asserts an Administrative Claim against the Debtors must file an original, written Proof of Administrative Claim Form to be received by BMC on or before the First Administrative Bar Date. The Debtors also seek that the First Administrative Bar Date Order bar any person or entity who fails to file a timely proof of Administrative Claim from asserting that claim after the First Administrative Bar Date. About Musicland Holding Headquartered in New York, New York, Musicland Holding Corp., is a specialty retailer of music, movies and entertainment-related products. The Debtor and 14 of its affiliates filed for chapter 11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-10064). James H.M. Sprayregen, Esq., at Kirkland & Ellis, represents the Debtors in their restructuring efforts. Mark T. Power, Esq., at Hahn & Hessen LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Musicland Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000) NISKA GAS: Moody's Puts Ba3 Rating on $1.05 Billion Facilities -------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to Niska Gas Storage's $1.05 billion senior secured credit facilities and a Ba3 corporate family rating. The ratings outlook is stable. Through the newly formed entities comprising Niska Gas Storage, Carlyle/Riverstone Global Energy and Power Funds II and III entered into agreements to purchase substantially all of the natural gas storage assets of the EnCana Corporation for approximately $1.5 billion. The credit facilities are comprised of a $700 million seven-year Term Loan B facility; a $250 million five-year revolving credit facility; and a $100 million five-year asset sale term loan facility that is expected to be paid down with proceeds from sale of non-cycling working gas inventory by the end of the storage cycles in 2007 and 2008. Along with approximately $750 million of sponsor equity, the $1.05 billion credit facilities will be used to fund the acquisition along with related fees and expenses. The assigned ratings and rating rationale are comparable to other midstream businesses rated in the speculative grade range by Moody's. In support of the ratings, Moody's observes large first- in cash equity; a long established business, operating at key strategic regional hubs in the North American natural gas logistical infrastructure; an underlying contracted core revenue and earnings base; the investment grade ratings of its contracted customer base; the company's position as the largest independent natural gas storage operator in North America; a well-structured collateral package; and a free cash flow sweep of 50% to 75% at certain leverage tests; to provide a stronger credit support and lower business risk profile for the Ba3 ratings than B1 rated midstream deals. The company's strategically positioned depleted gas reservoir assets have proven commercial value, recently received very substantial additional capital investment from Encana, and will have low cushion gas requirements after additional investments made by Niska. The AECO Hub assets in Alberta, Canada are situated in one of the largest and most liquid natural gas markets in North America. The company's U.S. assets, Wild Goose and Salt Plains are amongst the largest independent storage and highest deliverability operations in their respective regional markets, as well. Niska will also obtain the rights to develop a high multiple cycle salt dome facility in Louisiana, though, development of the project will require substantial capital outlays, which the company may fund with financing independent of the rated facilities. Niska's Ba3 ratings are restrained by considerable initial leverage; highly volatile working capital requirements and possible commodity price risk related to the company's optimization business; the limited ability of depleted reservoir storage systems to augment earnings by meet sharp surges in withdrawal demand and less frequent ability of depleted reservoir storage to turnover its volumes during a given year; and the on- going requirements to re-negotiate the current short-term storage contracts at prevailing market rates. Through its Canadian subsidiaries, the company will acquire approximately 125 Bcf of storage capacity at the AECO hub in Alberta, Canada. The U.S. subsidiaries will control approximately 24 Bcf of storage at Wild Goose, 15 Bcf of capacity at the Salt Plains facility in Oklahoma; along with the rights to possibly develop a new facility with 27 Bcf of storage capacity at the Starks facility in Louisiana; and 8.5 Bcf of capacity on the Natural Gas Pipeline System in the mid-continent market region. The increase of the effective capacity at the company's facilities without a material increase in leverage; the development of the Starks facility with a clear funding strategy supported with an equal portion of equity; a reduction in debt through the sale of NCWG with proceeds paying off the Asset Term Loan; and a continued supportive commodity price environment, may cause the ratings to go up. A materially debt funded acquisition; a shift in management strategy away from the durable contract storage business to more speculative marketing activities; development of the Starks facility with little or no equity; or a substantial fall in natural gas storage prices, would all contribute to pressuring the ratings downward. NOMURA HOME: DBRS Puts BB Rating on $7.4 Million Class B-2 Certs. ----------------------------------------------------------------- Dominion Bond Rating Service assigned these ratings to the Asset- Backed Certificates, Series 2006-HE2 issued by Nomura Home Equity Loan, Inc., Home Equity Loan Trust, Series 2006-HE2: * $361.2 million, Class A-1 -- New Rating AAA * $60.8 million, Class A-2 -- New Rating AAA * $103.1 million, Class A-3 -- New Rating AAA * $35.0 million, Class A-4 -- New Rating AAA * $30.1 million, Class M-1 -- New Rating AA (high) * $27.5 million, Class M-2 -- New Rating AA * $17.1 million, Class M-3 -- New Rating AA (low) * $13.4 million, Class M-4 -- New Rating A (high) * $14.1 million, Class M-5 -- New Rating A * $11.9 million, Class M-6 -- New Rating A (low) * $11.5 million, Class M-7 -- New Rating BBB (high) * $10.8 million, Class M-8 -- New Rating BBB * $7.8 million, Class M-9 -- New Rating BBB (low) * $8.2 million, Class B-1 -- New Rating BB (high) * $7.4 million, Class B-2 -- New Rating BB The AAA ratings on the Class A Certificates reflect 24.65% of credit enhancement provided by the subordinate classes, initial overcollateralization (3.15%), and monthly excess spread. The AA (high) rating on Class M-1 reflects 20.60% of credit enhancement. The AA rating on Class M-2 reflects 16.90% of credit enhancement. The AA (low) rating on Class M-3 reflects 14.60% of credit enhancement. The A (high) rating on Class M-4 reflects 12.80% of credit enhancement. The "A" rating on Class M-5 reflects 10.90% of credit enhancement. The A (low) rating on Class M-6 reflects 9.30% of credit enhancement. The BBB (high) rating on Class M-7 reflects 7.75% of credit enhancement. The BBB rating on Class M-8 reflects 6.30% of credit enhancement. The BBB (low) rating on Class M-9 reflects 5.25% of credit enhancement. The BB (high) rating on Class B-1 reflects 4.15% of credit enhancement. The BB rating on Class B-2 reflects 3.15% of credit enhancement. The ratings of the certificates also reflect the quality of the underlying assets and the capabilities of Ocwen Loan Servicing, LLC as Servicer, as well as Wells Fargo Bank, NA as Master Servicer and Securities Administrator. HSBC Bank USA, National Association will act as Trustee. In addition, the certificates will be entitled to the benefits of an interest rate swap agreement provided by Swiss Re Financial Products Corporation. The Trust will pay the Swap Provider a fixed payment at 5.2775% per annum in exchange for a floating payment at one-month LIBOR. Interest and principal payments collected from the mortgage loans will be distributed on the 25th day of each month commencing in May 2006. Interest will be first paid to the Senior Certificates concurrently and then sequentially to the subordinate classes. Until the step-down date, principal collected will be paid exclusively to the Senior Certificates unless they are paid down to zero. After the step-down date, and provided that certain performance tests have been met, principal payments will be distributed among the certificates of all classes on a pro rata basis. In addition, provided that certain performance tests have been met, the level of overcollateralization may be allowed to step down to 6.30% of the then-current balance of the mortgage loans. The mortgage loans were primarily originated or acquired by Ownit Mortgage Solutions, Inc., Quick Loan Funding Inc., along with other various originators. As of the April 1, 2006 cut-off date, the aggregate principal balance of the mortgage loans is $743,401,087. The weighted average mortgage rate is 7.727%, the weighted average FICO is 617, and the weighted average original loan-to-value ratio is 79.99%%, without taking into consideration the combined loan-to-value on the piggybacked loans. For more information on this credit or on this industry, visit http://www.dbrs.com/ NORTEL NETWORKS: Incurs $2.3 Billion Net Loss in Fourth Quarter --------------------------------------------------------------- Nortel Networks Corporation (NYSE/TSX:NT) has completed the filing of its audited financial statements for the year 2005 prepared in accordance with United States generally accepted accounting principles in U.S. dollars, and related Annual Report on Form 10-K and corresponding Canadian filings. The filings reflect the restatement of the years ended 2003 and 2004, and the first nine months of 2005. The filing of the 2005 audited financial statements and related filings of the Company's principal operating subsidiary, Nortel Networks Limited -- NNL, are in process. "The restatements have been completed and we have filed the Company's 2005 Annual Report on Form 10-K. I now look forward to completing our first quarter 2006 reporting and moving back to being a timely filer," said Mike Zafirovski, president and chief executive officer, Nortel. "Despite this delay, we have remained focused on our short term priorities of business transformation, integrity renewal, growth imperatives and on re-creating a great company, and I look forward to updating you on our progress in a planned mid-May business update." Restatement Impacts Revisions to the Company's previously reported 2003 and 2004 financial results reflect negative impacts on revenue of $261 million and $312 million and on net earnings/loss of $141 million and $156 million, as well as revisions to the Company's previously reported 2005 nine-month results reflecting negative impacts on revenue of $520 million and on net earnings/loss of $164 million in the aggregate. With respect to financial results prior to 2003, the revisions reflect negative impacts on revenue of $384 million and on net earnings/loss of $70 million in the aggregate. These revenue adjustments resulted in the deferral to later periods of revenue that was previously recognized in prior periods. Fourth Quarter 2005 Results Revenues were $3.00 billion for the fourth quarter of 2005 compared to $2.51 billion for the fourth quarter of 2004. Nortel reported a net loss in the fourth quarter of $2.30 billion compared to net earnings of $102 million in the fourth quarter of 2004. The fourth quarter of 2005 results included a litigation expense of $2,474 million, as a result of the agreement reached in principle for the proposed settlement of certain shareholder class action litigation, a tax benefit of approximately $140 million related to a liability release as a result of new information regarding transfer pricing issues, special charges of $25 million related to restructuring activities and $11 million of costs related to the sale of businesses and assets. Year 2005 Results For the year 2005, revenues were $10.52 billion compared to $9.52 billion for the year 2004. Nortel reported a net loss of $2.58 billion for the year 2005, compared to a net loss of $207 million for the year 2004. The year 2005 results included a litigation expense of $2,474 million, as a result of the agreement reached in principle for the proposed settlement of certain shareholder class action litigation, special charges of $170 million related to restructuring activities and $47 million of costs related to the sale of businesses and assets. The Company expects to file its and NNL's first quarter 2006 Quarterly Reports on Form 10-Q, and the corresponding filings under Canadian securities laws, no later than the week of June 5, 2006. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation -- http://www.nortel.com/-- is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world's most critical information. Serving both service provider and enterprise customers, Nortel delivers innovative technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel does business in more than 150 countries. * * * As reported in the Troubled Company Reporter on March 15, 2006, Standard & Poor's Ratings Services placed its ratings on Nortel Networks Ltd., including the 'B-' long-term corporate credit rating, on CreditWatch with negative implications, after: * Nortel's announced restatement of financial results for: -- 2003, -- 2004, and -- first nine months of 2005; and * a delay in meeting its filing requirements for 2005. The financial restatements are limited in scope and are expected to be modest in comparison with Nortel's previous restatement activities. In addition, Nortel expects to complete its restatements, as well as file its 2005 annual report by the end of April 2006. Nevertheless, Nortel will not be in compliance with its various regulatory filing requirements as of March 16, 2006, and as a result will be in breach of covenants under its recently completed US$1.3 billion credit facility, as well as the EDC support facility. It will subsequently (as of April 1) be in breach of covenants under its public indentures. O'SULLIVAN: Inks $50M Exit Facility; Reports Post-Emergence Status ------------------------------------------------------------------ The Modified Second Amended Joint Plan of Reorganization of O'Sullivan Industries, Inc., O'Sullivan Industries Holdings, Inc., O'Sullivan Industries - Virginia, Inc., and O'Sullivan Furniture Factory Outlet, Inc., became effective as of April 12, 2006, according to James C. Cifelli, Esq., at Lamberth, Cifelli, Stokes & Stout, P.A., in Atlanta, Georgia. Mr. Cifelli reports that O'Sullivan Industries Holdings, Inc., and its debtor-affiliates have completed the conditions precedent to the effectiveness of their Plan and have successfully emerged from bankruptcy. The Debtors will be released from all claims arising before the Confirmation Date or the Effective Date except as expressly provided in their Plan or in the Confirmation Order dated March 15, 2006. All Executory Contracts are deemed rejected except those that: -- have already been assumed by a Court order; -- were the subject of a duly noticed motion to assume pending on the Confirmation Date; -- were identified as "to be assumed" on the list of Executory Contracts to be assumed listed in the Disclosure Statement; or -- are otherwise expressly assumed under and pursuant to the terms of the Plan. All final applications for Professional Fees for services rendered in connection with the Debtors' Chapter 11 Cases should be filed with the U.S. Bankruptcy Court for the Northern District of Georgia by July 11, 2006. An Administrative Claim Holder, except those based on Professional Fees, arising in connection with the Debtors' Chapter 11 cases must file with the Court a request for payment by June 12, 2006, to be considered an Allowed Claim. Entry Into Five Agreements In a regulatory filing with the Securities and Exchange Commission, O'Sullivan Holdings and O'Sullivan Industries disclose that they have entered into five new material agreements in connection with the effectiveness of their Plan: 1. The Exit Loan Agreement, 2. The Senior Note Issuance Agreement, 3. The Key Employee Retention Plan, 4. The Stockholder Agreement, and 5. The Registration Rights Agreement. A. Exit Loan Agreement On April 11, 2006, the Company entered into a Loan and Security Agreement with Wachovia Bank, National Association, in which Wachovia Bank agrees to provide a five-year, asset-based revolving credit facility of up to $50,000,000, with a sub-facility of up to $15,000,000, for letters of credit. O'Sullivan Industries and O'Sullivan Virginia are the borrowers while O'Sullivan Holdings and O'Sullivan Furniture are the guarantors of the Exit Loan Agreement. Obligations under the Loan Agreement are secured with first liens on substantially all of the Company's assets. Under the Loan Agreement, borrowings bear interest, at the Company's option, at either a LIBOR rate plus a margin or the prime rate plus a margin. The initial margins are 2.00% per annum for LIBOR loans and 0.50% per annum for prime rate based loans. The applicable margin may vary each calendar quarter starting with the quarter beginning October 1, 2006, and based on the average unused availability under the loan agreement. The Loan Agreement contains representations, warranties and covenants similar to those in other asset-backed credit agreements, including limitations on borrowings, liens and dividends, obligations to deliver certain financial and other information, requirements to pay taxes, limitations on sales of assets, limitations regarding modification of corporate documents and changing lines of business and a requirement to maintain a fixed charge coverage ratio of at least 1.0 to 1.0. The Loan Agreement has customary events of default. The Company disclosed that it borrowed approximately $27,300,000, under the Loan Agreement to fund: a. payments required to consummate the Plan, including payment of all amounts due under the DIP financing agreement; b. fees and expenses associated with the Plan; and c. costs, expenses and fees in connection with the preparation, negotiation, execution and delivery of the loan agreement and related documents. The Company also disclosed that $2,700,000, of letters of credit are outstanding under the Loan Agreement and that it expects to borrow an additional $6,700,000, to fund additional fees and expenses associated with the Plan. According to Rick A. Walters, O'Sullivan Industries' chief executive officer, after those initial borrowings, the Company will be able to use the loan borrowings for general operating, working capital and other proper corporate purposes. Availability under the Loan Agreement after the additional $6,700,000 of borrowings is expected to be $4,500,000. B. Senior Note Issuance Agreement On April 11, 2006, the Debtors, Holders of Senior Secured Notes cancelled on the effectiveness of the Plan, and Wilmington Trust Company, as agent, entered into a Note Issuance Agreement. Under the Senior Note Issuance Agreement, the Debtors issued variable rate senior secured notes in the aggregate principal amount of $10,000,000, to the Senior Secured Noteholders. Under the Note Issuance Agreement, O'Sullivan Industries issued the notes, while O'Sullivan Virginia, O'Sullivan Holdings and O'Sullivan Furniture guaranteed all of O'Sullivan Industries' obligations. The Note Issuance Agreement contains representations, warranties and covenants similar to those in the Wachovia Exit Loan Agreement. The senior secured notes bear interest at a LIBOR rate plus 7%, payable quarterly, and will mature on October 11, 2011. Under certain circumstances, interest is payable with additional notes, in which case the interest on the notes will be the LIBOR rate, plus 8.5%. The senior secured notes are secured with liens on substantially all of the Debtors' assets. Those liens are junior to the liens securing the loan agreement. C. Key Employee Retention Plan Pursuant to the Plan, the Debtors' key employee retention plan is effective. The purpose of the KERP is to ensure the continued retention of certain of the Debtors' key employees through the conclusion of their restructuring process. Pursuant to the KERP, employees could potentially receive an aggregate of $1,100,000, over time. In addition, there is a discretionary pool of up to $200,000 that can be awarded to other employees. The KERP provides that the key employees have been divided into two tiers: -- The First Tier consists of four officers, potentially receiving a total amount equal to 37.5% of their annual salary. -- The Second Tier consists of the remaining key managers, potentially receiving a total amount equal to 25% of their annual salary. The payments are divided into an incentive component and a retention component. Half of the retention portion of the payment earned was paid subsequent to the effectiveness of the Plan. The remaining half will be paid by July 11, 2006. The first payment aggregated $224,000. The incentive portion of the KERP will be based on EBITDA and net sales goals, equally weighted, and will be paid on the earlier of: (i) the completion of the Debtors' fiscal 2006 audit; or (ii) 90 days after the end of fiscal 2006. Under the KERP, the executive officers are entitled a maximum of: -- $375,000 for Robert S. Parker, -- $131,250 for Rick A. Walters, -- $73,125 for Kelly D. Terry, and -- $56,775 for Rowland H. Geddie, III. D. Stockholder Agreement O'Sullivan Holdings has executed the Warrant Holder and Stockholder Rights Agreement, which, among other things, establishes certain agreements with various persons, regarding certain rights and obligations associated with the potential ownership of the New O'Sullivan Holdings common stock on and after the Effective Date. E. Registration Rights Agreement O'Sullivan Holdings also entered into the Registration Rights Agreement with certain holders of its new common stock, pursuant to which the common stock holders will be entitled to require the registration of their common stock under the Securities Act of 1933, as amended. Termination of Certain Agreements In connection with the Plan becoming effective, the Debtors also terminated material definitive agreements: a. DIP Credit Agreement All amounts due under the Debtors' DIP Credit Agreement with the CIT Group/Business Credit, Inc., were paid on April 11, 2006, with the proceeds of the Exit Loan Agreement, and CIT has released all of its liens and security interests under the DIP Credit Agreement. b. Stock Option Plans The effectiveness of the Plan also resulted in the termination of the Debtors' stock option plans and deferred compensation plan. The four stock option plans were: -- the 1999 Series A Stock Option Plan, -- the 2000 Common Stock Option Plan, -- the 2001 Director Common Stock Option Plan, and -- the 2004 Class A Common Stock Option Plan; c. Tax Sharing Agreement The Debtors' obligations under the Amended and Restated Tax Sharing Agreement dated July 19, 1997, between O'Sullivan Holdings, RadioShack Corporation and TE Electronics L.P., and the related Settlement Agreement dated May 13, 2002, were cancelled and discharged. Pursuant to the Plan, no distribution will be made with respect to the Tax Sharing Agreement. d. O'Sullivan Holdings' 12% senior note due 2009 was also cancelled and discharged on the Effective Date. No distribution was or will be made with respect to the senior note. Issuance of Senior Notes Mr. Walters reports that the Debtors are issuing securities to the holders of 10.63% senior secured notes due 2008 and the 13.375% senior subordinated notes due 2009 in connection with the effectiveness of the Plan. The securities were issued in full satisfaction and discharge of the Debtors' senior secured notes and senior subordinated notes. Obligations under the $100,000,000 principal amount of O'Sullivan Industries' senior secured notes are receiving: -- an aggregate of $10,000,000, of variable rate senior secured notes, subordinate to the Exit Loan Agreement; and -- 10,000,000 shares of new common stock of Reorganized O'Sullivan Holdings representing 100% of the outstanding equity, subject to dilution on the issuance of shares of restricted stock and the exercise of certain stock options under the equity compensation plan and of certain warrants issued to holders of senior subordinated notes. The holders of O'Sullivan Industries' $96,000,000 principal amount of senior subordinated notes will receive: -- Series A warrants to purchase an aggregate of 526,316 Reorganized O'Sullivan Holdings common stock shares for $7.06, which warrants will expire on the fourth anniversary of the Plan's Effective Date; and -- Series B warrants to purchase an aggregate of 554,017 Reorganized O'Sullivan Holdings common stock shares for $9.81, which warrants will expire on the fifth anniversary of the Plan's Effective Date. In accordance with the Plan, the issuance of the stock, notes and warrants was exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 1145 of the Bankruptcy Code. Departure of Directors & Officers Pursuant to the Plan, seven directors left the Company's Board of Directors as of the Effective Date: -- Keith E. Alessi, -- Richard D. Davidson, -- William J. Denton, -- Richard R. Leonard, -- Charles Macaluso, -- Robert S. Parker, and -- Harold O. Rosser. About O'Sullivan Industries Headquartered in Roswell, Georgia, O'Sullivan Industries Holdings, Inc. -- http://www.osullivan.com/-- designs, manufactures, and distributes ready-to-assemble furniture and related products, including desks, computer work centers, bookcases, filing cabinets, home entertainment centers, commercial furniture, garage storage units, television, audio, and night stands, dressers, and bedroom pieces. O'Sullivan sells its products primarily to large retailers including OfficeMax, Lowe's, Wal-Mart, Staples, and Office Depot. The Company and its subsidiaries filed for chapter 11 protection on Oct. 14, 2005 (Bankr. N.D. Ga. Case No. 05- 83049). 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. (O'Sullivan Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 215/945-7000) OUTBOARD MARINE: Trustee Distributing $15.4 Million to Creditors ---------------------------------------------------------------- Alex D. Moglia, the Chapter 7 Trustee appointed in Outboard Marine Corporation's bankruptcy cases, is distributing, on an interim basis, $15,434,740 in satisfaction of allowed unsecured claims. As reported in the Troubled Company Reporter on March 1, 2006, the Chapter 7 Trustee obtained authority from the U.S. Bankruptcy Court for the Northern District of Illinois, Eastern Division, to distribute, on an interim basis, $25 million to the holders of allowed claims as of Feb. 28, 2006. The Chapter 7 Trustee determined that there are unencumbered funds sufficient to satisfy payment in full of all allowed secured and priority claims and to provide a meaningful interim distribution to the allowed, non-priority, general unsecured claims. The Trustee anticipates that additional funds will be available for a final distribution to creditors, which will be sufficient to satisfy any claims that have not been allowed as of Feb. 28, 2006. Outboard Marine Corporation and its debtor-affiliates filed for chapter 11 protection on December 22, 2000 (Bankr. N.D. Ill. Case No. 00-37405). On August 22, 2001, the Chapter 11 cases were converted to Chapter 7. On Aug. 24, 2001, Alex D. Moglia was appointed to serve as the Chapter 7 Trustee. Kathleen H. Klaus, Esq., at Shaw Gussis Fishman Glantz Wolfson & Towbin, LLC serves as Counsel to the Chapter 7 Trustee. OWENS CORNING: Court Rules Bank Lender Claim is Unimpaired ---------------------------------------------------------- The Honorable Judith K. Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware, in the interim, rules that the payment in full and in cash of claims of prepetition bank lenders renders the claim unimpaired pursuant to Section 1124 of the Bankruptcy Code. Thus, the classes of Bank Holder Claims under the Debtors' Fifth Amended Plan of Reorganization are conclusively presumed to have accepted the Plan in accordance with Section 1126(f). Upon payment in full to the holders of the Bank Holder Claims: -- all Bank Holder Claims and remedies arising under or related to the Credit Agreement dated June 26, 1997, and the related guaranties against the Debtors, the Non-Debtors and the other Non-Debtor Subsidiaries, will be extinguished; -- the Debtors, the Non-Debtors and the other Non-Debtor Subsidiaries will have no further obligations under the Credit Agreement with respect to all Bank Holder Claims and will be deemed to be fully and completely discharged of the obligations, liabilities and responsibilities to the fullest extent of the law; -- each holder of a Bank Holder Claim will be permanently barred from taking any action against any of the Debtors, the Non-Debtors and the other Non-Debtor Subsidiaries with respect to all Bank Holder Claims; and -- each holder of a Bank Holder Claim will release each of the Debtors, the Non-Debtors and the other Non-Debtor Subsidiaries from the Bank Holder Claims. On May 10, 2006, at 9:00 a.m., the Court will hold a hearing to consider approval of Credit Suisse's request on a final basis. The Court also authorizes the Debtors to revise the definition of Bank Default Interest and Fee Amount in their Fifth Amended Plan of Reorganization to mean the sum of: a. the amount of interest accrued through the date of delivery of the Initial Bank Holders' Distribution on the amount of principal, interest and fees outstanding under the Credit Agreement as of the Petition Date, when calculated at the floating Base Rate plus 2% on compounding basis; and b. the amount of any accrued and unpaid postpetition fees payable under the Credit Agreement through the date of delivery of the Initial Bank Holders' Distribution. If Class A4 is deemed Unimpaired, or if Class A4 is deemed Impaired and accepts the Plan, then, in full satisfaction and in exchange for their Allowed Claims against the Debtors and claims against certain of the Non-Debtor Subsidiaries, each holder of an Allowed Class A4 Claim will receive his pro rata share of cash in an aggregate amount equal to the sum of the amount of the Allowed Class A4 Claims plus the Bank Default Interest and Fee Amount. About Owens Corning 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. PATRICK MOLLER: Case Summary & 14 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Patrick W. Moller 23822 Valley Oak Court Santa Clarita, California 91321 Bankruptcy Case No.: 06-10619 Chapter 11 Petition Date: April 28, 2006 Court: Central District Of California (San Fernando Valley) Judge: Kathleen Thompson Debtor's Counsel: Michael S. Kogan, Esq. Ervin, Cohen & Jessup, LLP 9401 Wilshire Boulevard, 9th Floor Beverly Hills, California 90212-2974 Tel: (310) 273-6333 Fax: (310) 859-2325 Total Assets: $1,561,200 Total Debts: $2,137,057 Debtor's 14 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ GE Capital Small $1,090,450 Business Finance 635 Maryville Center Drive Suite 120 St. Louis, MO 63141 United Film Laminating $191,500 c/o Leo Heydorff 740 South Orangegrove Boulevard Unit I Pasadena, CA 91105 Internal Revenue Service Tax Claim $41,642 Insolvency I Stop 5022 300 North Los Angeles Street Room 4062 Los Angeles, CA 90012 Ronald P. Slates $20,000 Chase $12,756 American Express $12,497 J. Steven Bingman $10,000 MBNA $7,406 Commercial Group $4,545 Direct Merchants Bank $3,841 Franchise Tax Board Tax Claim $409 Robinsons-May $400 Victoria's Secret $200 GE Capital Unknown PERRY ELLIS: S&P Affirms B+ Rating & Revises Outlook to Stable -------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on apparel company Perry Ellis International Inc. to stable from negative. At the same time, Standard & Poor's affirmed its ratings on the Miami, Florida-based company, including its 'B+' corporate credit rating. Total debt outstanding at Jan. 31, 2006, was about $259 million. The outlook revision incorporates: * the company's improved leverage; and * Standard & Poor's expectation that operating results and credit protection measures will remain satisfactory. Acquisitions have allowed the company to build its business and broaden its existing portfolio. With the February 2005 acquisition of the assets of Tropical Sportswear Inc., Perry Ellis is now a significant player in the mens' bottoms business. This transaction has also provided the company with a European platform to expand its brands overseas. Perry Ellis has steadily increased its revenue base by making acquisitions, and it is Standard & Poor's expectation that the company will continue to do so. As a result of the TSI acquisition, the company's revenue base for fiscal 2006 grew by 30%. The operating margin experienced some pressure, and declined to 8.3% from to 8.9% in the prior period. This was primarily driven by TSI's private label business. Nevertheless, operating cash flow is expected to be sufficient to meet PEI's minimal required capital investments in the next several years. PHASE III: Holtz Rubenstein Raises Going Concern Doubt ------------------------------------------------------ Holtz Rubenstein Reminick LLP in Melville, New York, raised substantial doubt about Phase III Medical, Inc., ability to continue as a going concern after auditing the company's financial statements for the year ended Dec. 31, 2004, and 2005. The auditor pointed to the company's recurring losses. Phase III Medical, Inc., filed its financial statements for the year ended Dec. 31, 2005, with the Securities and Exchange Commission on April 3, 2006. The company reported a $1,745,039 net loss on $35,262 of revenues for the year ended Dec. 31, 2005. At Dec. 31, 2005, the company's balance sheet showed $642,681 in total assets and $2,460,319 in total liabilities, resulting in a $1,817,638 in stockholders' equity deficit. The company's Dec. 31 balance sheet also showed strained liquidity with $507,319 in total current assets available to pay $1,752,403 in total current liabilities coming due within the next 12 months. A full-text copy of the company's 2005 Annual Report is available for free at http://ResearchArchives.com/t/s?869 Phase III Medical, Inc. (OTCBB:PHSM) is an innovative company. Through the acquisition of NeoStem, the company specializes in the collection and storage of adult stem cell. PLIANT CORP: Creditors Have Until May 5 to File Proofs of Claim --------------------------------------------------------------- The Honorable Mary J. Walrath of the U.S. Bankruptcy Court for the District of Delaware established May 5, 2006, at 4:00 p.m. Eastern Time, as the final date and time for filing proofs of claim in the chapter 11 cases of Pliant Corporation and its debtor-affiliates. Each person or entity asserting a claim against one or more of the Debtors is required to file a separate and original Proof of Claim in the Chapter 11 case of each Debtor against whom a claim is asserted. Each claim must: -- substantially comply with the Official Bankruptcy Form 10; and -- be actually received on or before the Bar Date by Bankruptcy Services, LLC, the Debtors' claims and noticing agent. The Debtors do not require these persons or entities to file a Proof of Claim on or before the Bar Date: a. any person or entity that has already properly filed a Proof of Claim against one or more of the Debtors; b. any person or entity: -- whose claim is listed in the Debtors' schedules of assets and liabilities, list of equity holders and statement of financial affairs; -- whose claim is not described in the Schedules as "disputed," "contingent," or "unliquidated"; and -- who does not dispute the amount or classification of its claim as set forth in the Schedules. c. professionals retained by the Debtors or the Official Committee of Unsecured Creditors who assert administrative claims for fees and expenses; d. any person or entity that asserts an administrative expense claim against the Debtors pursuant to Section 503(b) of the Bankruptcy Code; e. the Debtors' current officers and directors who assert claims for indemnification or contribution arising as a result of the officers' or directors' services to the Debtors; f. any Debtor asserting a claim against another Debtor; g. any of the Debtors' non-debtor subsidiary asserting a claim against a Debtor; and h. any person or entity whose claim against the Debtors has been allowed by an order of the Court entered on or before the Bar Date. 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. Kenneth A. Rosen, Esq., at Lowenstein Sandler, P.C., serves as counsel to the Official Committee of Unsecured Creditors. Don A. Beskrone, Esq., at Ashby & Geddes, P.A., is local counsel to the Creditors' Committee. 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. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000) PRIMA CAPITAL: Moody's Holds B2 Rating on $9.2MM Class H Certs. --------------------------------------------------------------- Moody's Investors Service upgraded the ratings of two classes and affirmed the rating of seven classes of Prima Capital CDO 2005-1 LTD: * Class A-1, $94,197,487, Fixed, affirmed at Aaa * Class A-2, $177,152,000, Fixed, affirmed at Aaa * Class B, $13,305,000, Fixed, upgraded to Aa1 from Aa2 * Class C, $12,281,000, Fixed, upgraded to Aa3 from A1 * Class D, $12,896,000, Fixed, affirmed at A3 * Class E, $24,563,000, Fixed, affirmed at Baa2 * Class F, $8,597,000, Fixed, affirmed at Baa3 * Class G, $12,281,000, Fixed, affirmed at Ba2 * Class H, $9,211,000, Fixed, affirmed at B2 As of the March 21, 2006 distribution date, the transaction's aggregate bond balance has decreased by approximately 7.6% to $364.5 million from $394.3 million at securitization. The Certificates are collateralized by 41 fixed rate classes of CMBS securities from 11 transactions, eight whole loans, three B Notes and two mezzanine loans. Moody's reviewed the ratings or shadow ratings of all the collateral supporting the Certificates. The upgrade of Classes B and C is due to stable pool credit characteristics and increased credit support due to principal amortization. There have been no losses in the underlying collateral since securitization. Moody's has upgraded three CMBS classes from two transactions. The shadow ratings for four CMBS classes and four whole loans have also been upgraded. No ratings or shadow ratings have been downgraded. Moody's uses a weighted average rating factor as an overall indicator of the credit quality of a CDO transaction. Based on Moody's analysis, the WARF is 2,806 compared to 2,870 at securitization. The distribution of ratings: -- Aaa -- Aa1 (19.4% compared to 12.7% at securitization) -- A1-A3 (13.5% compared to 18.0%) -- Baa1-Baa3 (7.6% compared to 8.7%) -- Ba1-Ba3 (9.7% compared to 8.6%) -- B1-B3 (10.7% compared to 10.1%) and -- Caa1-NR (39.1% compared to 41.9%) The CMBS certificates are from pools securitized between 1997 and 2004. The largest exposures are 1998 (27.3%), 1999 (21.6%), 2002 (19.7%) and 1997 (18.0%). The largest CMBS exposures are SMAFC 1998-C1 (12.0%), CAMC 2002-CAM2 (9.9%) and MSC 1999-CAM1 (7.9%). PROCARE AUTOMOTIVE: Court OKs $14MM Purchase Deal of Monro Muffler ------------------------------------------------------------------ The U.S. Bankruptcy Court has approved Monro Muffler Brake, Inc.'s (Nasdaq: MNRO) acquisition of substantially all of the assets of ProCare Automotive Service Solutions, L.L.C. for approximately $14,650,000 in cash. The Company had initially entered into an asset purchase agreement with ProCare on March 6, 2006, subject to an auction process and Bankruptcy Court approval. The transaction closed on April 29, 2006. "We are pleased that the Bankruptcy Court approved our acquisition of ProCare and look forward to integrating the 75 acquired locations and store employees into our existing store base in Ohio and Pennsylvania," Robert G. Gross, President and Chief Executive Officer, said. "Within the next week, we will have installed our point-of-sale system in all stores, trained store employees, delivered an initial inventory to each store and removed slower moving items. The addition of ProCare will effectively fill in key geographic locations and increase our overall market share. Following our typical acquisition strategy, we plan to utilize our buying power, market position, and marketing and operational expertise to enhance the stores' existing strengths and help to drive sales growth and margin expansion at these new locations. We will give additional financial guidance when we release the Company's full year earnings later in May." About Monro Muffler Brake Headquartered in Rochester, New York, Monro Muffler Brake operates a chain of stores providing automotive undercar repair and tire services in the United States, operating under the brand names of Monro Muffler Brake and Service, Mr. Tire and Tread Quarters Discount Tires. The Company currently operates 625 stores and has 16 dealer locations in New York, Pennsylvania, Ohio, Connecticut, Massachusetts, West Virginia, Virginia, Maryland, Vermont, New Hampshire, New Jersey, North Carolina, South Carolina, Indiana, Rhode Island, Delaware, Maine and Michigan. Monro's stores provide a full range of services for exhaust systems, brake systems, steering and suspension systems, tires and many vehicle maintenance services. About ProCare Automotive Based in Independence, Ohio, ProCare Automotive Service Solutions, LLC -- http://www.procareauto.com/-- offers maintenance and repair services to all makes and models of foreign, domestic, light truck, and commercial-fleet vehicles. ProCare operates 82 retail locations in eight metropolitan areas throughout three states. The Debtor filed for chapter 11 protection on March 5, 2006 (Bankr. N.D. Ohio Case No. 06-10605). Alan R. Lepene, Esq., Jeremy M. Campana, Esq., and Sean A. Gordon, Esq., at Thompson Hine LLP, represent the Debtor. Scott N. Opincar, Esq., at McDonald Hopkins Co., LPA, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. PROCARE AUTOMOTIVE: Wants Garden City Group as Noticing Agent ------------------------------------------------------------- ProCare Automotive Service Solutions LLC asks the Honorable Pat E. Morgenstern-Clarren of the U.S. Bankruptcy Court for the Northern District of Ohio in Cleveland for permission to employ Garden City Group, Inc., as its noticing agent, nunc pro tunc to March 5, 2006. Garden City will give sales notices and other notices and papers required throughout the Debtor's bankruptcy case. David Isaac, the president of Garden City Group, discloses that the Firm will charge a $5,800 flat fee for all services, expenses and postage in providing notice of the sale of assets and assumption and assignment of executory contracts. For other services, the Firm's professionals bill: Professional Hourly Rate ------------ ----------- Supervisor $70 - $95 Quality Assurance Staff $75 - $125 Project Manager $125 Senior Project Manager $150 Director/Assistant Vice President $175 Vice President $225 Senior VP Systems & Managing Director $275 Mr. Isaac assures the Court that Garden City Group, Inc., does not have any interest materially adverse to the Debtor or its estate and is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. About Garden City Group, Inc. Garden City Group, Inc. -- http://www.gardencitygroup.com/-- provides comprehensive solutions to administer class actions, design legal notice programs and manage Chapter 11 claims administrations. About ProCare Automotive Based in Independence, Ohio, ProCare Automotive Service Solutions, LLC -- http://www.procareauto.com/-- offers maintenance and repair services to all makes and models of foreign, domestic, light truck, and commercial-fleet vehicles. ProCare operates 82 retail locations in eight metropolitan areas throughout three states. The Debtor filed for chapter 11 protection on March 5, 2006 (Bankr. N.D. Ohio Case No. 06-10605). Alan R. Lepene, Esq., Jeremy M. Campana, Esq., and Sean A. Gordon, Esq., at Thompson Hine LLP, represent the Debtor. The Debtor estimated its assets and debts at $10 to $50 million when it filed for bankruptcy protection. PUREBEAUTY INC: U.S. Trustee Appoints Three-Member Creditors Panel ------------------------------------------------------------------ The U.S. Trustee for Region 16 appointed three creditors to serve on the Official Committee of Unsecured Creditors in the chapter 11 cases of PureBeauty, Inc., and Pure Salons, Inc.: 1. Weingarten Realty Investors Jenny J. Hyun 2600 Citadel Plaza Drive Houston, TX 77008 Tel: (731) 866-6057 2. Sunbelt Management Co. Robert F. Griffin 8095 Othello Avenue San Diego, CA 92111 Tel: (858) 495-4911 3. The Visual Identity Group Lynnette Perez 4130 Matthews Way Holiday, UT 84124 Tel: (801) 983-8728 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the chapter 11 cases to a liquidation proceeding. About PureBeauty PureBeauty, Inc. -- http://www.purebeauty.com/-- operates 48 retail stores and salons offering professional hair care and skincare services, featuring a leading assortment of professional and prestige personal care products. PureBeauty also operates six "brand" stores, providing customers with a variety of aspirational products and services. PureBeauty Inc. and Pure Salons, Inc., an affiliate, filed for chapter 11 protection on April 18, 2006 (Bankr. C.D. Calif. Case No. 06-10545). Stacia A. Neeley, Esq., at Klee, Tuchin, Bogdanoff & Stern LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $50 million and debts between $50 million and $100 million. PUREBEAUTY INC: To Auction Substantially All Assets on May 22 ------------------------------------------------------------- PureBeauty, Inc., and Pure Salons, Inc., will hold an auction to sell substantially all of their assets on May 22, 2006, 10:00 a.m., Pacific Time, at the offices of: Klee, Tuchin, Bognadoff, & Stern LLP Fox Plaza 2121 Avenue of the Stars, Thirty-Third Floor Los Angeles, Calif. 90067-5061 Cameron Capital Corporation, the stalking horse bidder, offered to pay $9 million for the assets. Cameron Capital will also pay $125,000 to satisfy cure claims on executory contracts the Debtors will assume and assign to Cameron Capital. Cameron Capital also offered $147,000 for employees and executives to continue working for the Debtors up until the closing of the sale. The Debtors will use proceeds of the sale to satisfy the secured claims of Webster Business Credit Corporation and Heritage Fund III Investment Corporation. Pursuant to a bidding procedures approved by the U.S. Bankruptcy Court for the Central District of California, other interested bidders have until May 18, 2006, to file their bids. If another bidder wins the auction, the Debtors will pay Cameron Capital a $500,000 break-up fee. Judge Kathleen Thompson will hold a hearing on May 25, 2006, to approve the sale to the winning bidder. Absent any hitches, the sale will likely close by month-end, the Debtors said. About PureBeauty PureBeauty, Inc. -- http://www.purebeauty.com/-- operates 48 retail stores and salons offering professional hair care and skincare services, featuring a leading assortment of professional and prestige personal care products. PureBeauty also operates six "brand" stores, providing customers with a variety of aspirational products and services. PureBeauty Inc. and Pure Salons, Inc., an affiliate, filed for chapter 11 protection on April 18, 2006 (Bankr. C.D. Calif. Case No. 06-10545). Stacia A. Neeley, Esq., at Klee, Tuchin, Bogdanoff & Stern LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $50 million and debts between $50 million and $100 million. QUIGLEY COMPANY: Settles Stonewall Insurance Coverage Dispute ------------------------------------------------------------- The Hon. Stuart M. Bernstein of the U.S. Bankruptcy Court for the Southern District of New York approved a settlement agreement resolving the dispute between Quigley Company, Inc., Pfizer Inc., and Stonewall Insurance Company. Stonewall Insurance Policy Pfizer secured a liability insurance policy from Stonewall that provides coverage for asbestos-related bodily injury claims from Dec. 5, 1972, through Jan. 1, 1975. During the same period, the insurance policy also provided coverage to Quigley, as Pfizer's subsidiary. Quigley, along with Pfizer, has been named in hundreds of thousands of asbestos-related bodily injury claims. In 1993, Pfizer and Quigley commenced an action against their insurers, including Stonewall in the U.S. District Court for the Eastern District of Pennsylvania. The suit involved disputes concerning the insurance companies' obligations for asbestos claims. Stonewall was dismissed from the litigation in 1999 after signing an agreement that stipulates the terms under which Quigley and Pfizer could bill for and Stonewall would pay asbestos-related claims under their insurance policy. The 1999 agreement did not define the coverage limits available under the Stonewall insurance policy. Under the agreement, the parties reserved their rights to determine the coverage limit through negotiations or litigation. Quigley and Pfizer claimed that the Stonewall insurance policy provides $3 million of coverage and wanted to collect an additional $928,082 from Stonewall on top of the approximately $2 million in payments the insurer had remitted to the Debtor. According to Quigley, it is entitled to $815,761 of the amount while the remaining $112,320.90 is owed to Pfizer. Stonewall contended that the policy provided $1 million of coverage and subsequently filed a $1,073,972 claim for reimbursement. Insurance Settlement Agreement After extensive negotiations, Stonewall, Quigley and Pfizer signed an agreement resolving issues related to the coverage limits provided under the insurance policy and Stonewall's reimbursement demands. The Agreement provides for the full and final resolution of Stonewall's obligations to Quigley and Pfizer under the insurance policy. The $815,761 settlement amount due to Quigley will be paid to the Asbestos PI Trust for eventual distribution to claimants under Quigley's reorganization plan. In addition, Stonewall's $1,073,972 reimbursement claim will be temporarily allowed in the amount of $1 for purposes of voting to accept or reject the plan. About Quigley Headquartered in Manhattan, Quigley Company, Inc., is a subsidiary of Pfizer, Inc., which used to produce and market a broad range of refractories and related products to customers in the iron, steel, glass and other industries. The Company filed for chapter 11 protection on Sept. 3, 2004 (Bankr. S.D.N.Y. Case No. 04-15739) to resolve legacy asbestos-related liability. When the Debtor filed for protection from its creditors, it listed $155,187,000 in total assets and $141,933,000 in total debts. Michael L. Cook, Esq., Lawrence V. Gelber, Esq., and Jessica L. Fainman, Esq., at Schulte Roth & Zabel LLP, represent the Company in its restructuring efforts. Albert Togut, Esq., at Togut Segal & Segal serves as the Futures Representative. Elihu Inselbuchm Esq., at Caplin & Drysdale, Chartered, represents the Official Committee of Unsecured Creditors. R.L. TORBECK: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: R.L. Torbeck Industries, Inc. dba Torbeck Industries 355 Industrial Drive Harrison, Ohio 45030 Tel: (513) 367-0080 Bankruptcy Case No.: 06-11210 Type of Business: The Debtor produces material handling and safety equipment, such as platforms and support structures. See http://www.torbeckind.com Chapter 11 Petition Date: April 29, 2006 Court: Southern District of Ohio (Cincinnati) Debtor's Counsel: Matthew A. Montgomery, Esq. Huddleson & Company, LPA 6061 Bridetown Road Cincinnati, Ohio 45248 Tel: (513) 574-8900 Fax: (513) 574-8887 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor will file the list of its 20 largest unsecured creditors on May 15, 2006. RENO CITY: Moody's Downgrades Rating on $18.4 Mil. Bonds to Ba2 --------------------------------------------------------------- Moody's Investors Service lowered to Ba2 from Baa3 the underlying rating of the City of Reno Redevelopment Agency Downtown Project Area Subordinate Lien Tax Allocation Bonds, Series 1995 A affecting approximately $18.4 million in bonds outstanding. The rating has been removed from Watchlist. The Ba2 rating and downgrade reflect Moody's expectation that pledged tax increment revenues will provide less than sum- sufficient coverage of debt service and recognizes the need for the RDA to rely on existing cash reserves and proceeds from the sale of property to meet debt service requirements over the short- and medium-term. Importantly, city officials have indicated a commitment to seeing the RDA through these difficulties, including approving a plan to extend the duration of the Redevelopment plan by ten years. The rating also incorporates the Downtown Project Area's relatively small tax base which has diminished significantly in the last few years as a result of successful tax base appeals by the area's casinos and a still significant exposure to the gaming industry. The project area's long-term prospects for reversing the negative tax base trend and plans for completely defeasing the existing bonds are noted, but were not heavily weighted in this rating review. In fiscal 2005, coverage of annual total debt service by pledged tax increment dollars was less than sum-sufficient at 0.8 times. This weak coverage of debt service was brought on by a series of consecutive tax base declines and corresponding losses in tax increment revenues, exacerbated by a peaking in debt service requirements starting in 2004. Coverage in 2004 was a thin 1.05 times; prior to 2004, coverage of total annual debt service generally averaged between 1.4 and 1.5 times. To address the shortfall in 2005, the RDA relied upon existing cash reserves, roughly totaling $4 million, which came from property sales. Coverage is expected to decline again in fiscal 2006 to 0.7 times with only $3.8 million in projected tax increment revenues. Moody's expects the RDA to cover the $1.4 million shortfall from available cash reserves as well as proceeds from property sales, all of which can be counted towards coverage of debt service. Cash flow estimates as of April 2006 provided by management indicate sufficient cash flow to meet debt service payments in the near term; additionally the RDA holds two properties with a total value of $1.1 million which are expected to be sold by 2007 with proceeds made available as cash reserves for debt service. Importantly, city officials have indicated a commitment to seeing the RDA through these difficulties, including approving a plan to extend the duration of the Redevelopment plan by ten years. The existing bonds are structured to decrease debt payments starting in 2007 to $4.2 million. Pledged tax increment revenues, assuming it remains stable, would still provide only 0.9 times coverage, with the $1.1 million in expected land sale funds more than adequately covering this gap. City officials hope to refund and restructure the all of the project area debt sometime in 2007, with the expectation of lowering total debt service to a more manageable level. The Downtown Project Area within Reno is fairly small, encompassing approximately 323 acres with a base valuation of $255.8 million. Starting in 2001, the Downtown Project Area experienced significant declines in assessed valuations averaging -10.4% decreases annually with a steep fall-off in 2005 of -30.3%. The losses are attributed to tax base adjustments for the area's casinos which represented nearly half of the total assessed value in the project area as of 2004. Assessment of the local casinos is conducted by the local county assessor and is based upon reviews of land and replacement values for the structure to determine a fair market value. If the taxable value exceeds fair market value, the assessor values the property based on net operating income of the property. Over the last several years, the county assessor has lowered assessed valuations for many of the casinos based upon this methodology; city officials attribute the lower net income levels to higher casino expenditures associated with health care, electricity, and remodeling costs combined with slight declines in hotel stays and flat gaming revenues. Additionally, many of the casinos were also successful in appealing and further lowering their taxable values. As a result, the fiscal 2006 project area's incremental assessed value now totals $125.2 million, which represents the area's lowest incremental taxable value over the last two decades. The largest reduction in assessed value for a single tax payer over the last four years is the Silver Legacy Casino Hotel, a joint venture between Circus Circus and Eldorado, which still represents the largest taxpayer as of 2005 at 17% despite reducing its A.V. by one-third since 2003. The remaining top nine taxpayers represented 32.4% of total assessed value with three large casinos representing 23.6%. City officials report that casino assessed valuations should stabilize going forward with a recovery in taxable values for the Downtown project area supported by several large development projects. To address casino tax base appeals, city officials plan to more closely engage with the county assessor, enlisting an external auditor to review the 2005 or 2006 casino financial statements. The completion of the ReTRAC and Event Center projects should also help improve downtown visitor activity. Additionally, the city has identified several large developments, including conversion of casino hotels into condos and various mix-use projects that are in various stages of planning and construction. According to city officials, these projects are anticipated to come on-line between 2007 and 2009 adding roughly $162.7 million in incremental A.V. and $5.3 million in total tax increment dollars. The completion of these projects would be considered a positive credit development both in terms of increasing incremental A.V. as well as diversification. Nevertheless, until these projects and their associated tax revenues are realized, the RDA will continue to face challenges in meeting debt service requirements, relying on cash and external resources. To alleviate this pressure, city officials extended the life of the RDA to July 2028. This will allow the RDA to fully refund and defease the project area's tax allocation bonds and reissue new bonds that extended the debt service structure by ten years. Key Statistics 2006 Incremental Assessed Value: $125.2 million FY05 Coverage of total annual debt service: 0.8 times Coverage of total peak debt service by estimated 2006 tax increment revenues: 0.7 times Average annual % change in A.V., 2001 to 2006: -10.4% Largest taxpayers as a % of total A.V., 2005: 17.0% Ten largest taxpayers as % of total A.V., 2005: 49.5% Casino/Hotels as a % of total A.V. in 2004: 49.9% REPUBLIC STORAGE: Selling Assets to Chrysalis Capital for $20 Mil. ------------------------------------------------------------------ Republic Storage Systems Company, Inc., accepted a bid submitted by Chrysalis Capital Partners, LP, a private equity investment firm, for the purchase of virtually all of the company's assets. According to Jim Mackinnon of the Akron Beacon Journal, Chrysalis Capital purchased Republic Storage for $20 million. The asset sale, which was approved by the U.S. Bankruptcy Court for the Northern District of Ohio at a hearing on April 28, 2006, is expected to close shortly. "We were attracted to Republic because, at its core, it is a solid company with a highly desirable combination of products, distributors, employees and management," Greg Segall, Managing Partner of Chrysalis, said. "We are excited to invest substantial capital and turnaround resources to help Republic remain a market leader and take advantage of its tremendous potential." Republic will continue normal operations pending completion of the sale. Following the closing of the transaction, Chrysalis plans to continue to operate the business under the Republic name. "This marks the beginning of an exciting chapter in Republic's long history," James T. Anderson, President and CEO of Republic, said. "Chrysalis is an experienced new owner and partner with deep experience in turnarounds. Its involvement gives us the resources to expand production and reduce lead times over our peak summer season and enables us to continue to provide customers with the same high level of service, while creating a foundation of financial reliability from which our key supplier, customer and employee constituencies should draw great comfort." Republic voluntarily filed for Chapter 11 protection on March 14, 2006, citing: * the negative impacts of a major flood resulting in a factory shutdown in 2003, * the doubling of steel prices in 2004 and * unsustainable legacy costs for retiree health care and pension benefits. At that time, Republic announced that it had entered into an asset purchase agreement with another private equity firm. In compliance with Section 363 of the Bankruptcy Code, qualifying bidders then had an opportunity to submit higher or better offers for Republic's assets through a court-supervised competitive bidding process. Republic, in consultation with key constituencies including the Official Committee of Unsecured Creditors, of which the United Steelworkers union is a member, and the company's senior secured lender, chose Chrysalis as the highest and best bidder after an auction that concluded on April 26, pursuant to the sales procedures approved by the Court. Proceeds from the sale will be distributed pursuant to further orders of the Court. While the bankruptcy will continue for some time to resolve the various claims and rights of historical creditors, the involvement of the Republic business in the bankruptcy process will conclude with the closing of the sale to Chrysalis. "We are pleased to have quickly resolved many of the issues that led to the Chapter 11 filing," said Mr. Anderson. "Going forward, we will be able to devote our full energies to meeting the needs of the customers and markets we serve so well." About Chrysalis Capital Partners Philadelphia area-based Chrysalis Capital Partners, Inc. -- http://www.ccpfund.com/-- is a private equity investment firm with $300 million in committed equity capital under management. Chrysalis focuses on "special situation" investments including turnarounds, restructurings, reorganizations and recapitalizations in a wide range of industries and circumstances throughout the United States. About Republic Storage Headquartered in Canton, Ohio, Republic Storage Systems Company, Inc. -- http://www.republicstorage.com/-- an employee-owned firm, manufactures industrial and commercial shelving, storage rack, mezzanine systems and shop equipment. The Company filed for Chapter 11 protection on March 14, 2006, (Bankr. N.D. Ohio Case No. 06-60316). James Michael Lawniczak, Esq., at Calfee, Halter & Griswold, LLP, represents the Debtor in its restructuring efforts. Dov Frankel, Esq., at Buckley King, LPA, represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. ROUGE INDUSTRIES: Can Use Lenders' Cash Collateral Until May 31 --------------------------------------------------------------- The Hon. Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware gave Rouge Industries, Inc., and its debtor-affiliates interim access to cash collateral securing repayment of their prepetition debts to Philip Environmental Services Corporation and Duke/Fluor Daniel. The Bankruptcy Court has entered 14 prior orders allowing the Debtors to use their lenders' cash collateral. The Debtors are authorized to use PESC and Duke/Fluor's cash collateral until May 31, 2006, in accordance with a monthly budget. A copy of the budget is available for free at: http://ResearchArchives.com/t/s?867 Use of the cash collateral will enable the Debtors to continue the administration of their estates, wind down their remaining businesses and operations, and liquidate their remaining assets and properties. To provide the prepetition lenders with adequate protection, the Debtors will grant replacement liens and security interests to the extent of any diminution in value of their collateral pursuant to Sections 361 and 363 of the Bankruptcy Code. A hearing to consider final approval of the Debtors' request to use cash collateral is scheduled at 10:30 a.m. on May 22, 2006. Headquartered in Dearborn, Michigan, Rouge Industries, Inc., an integrated producer of flat-rolled steel, filed for chapter 11 protection on October 23, 2003 (Bankr. D. Del. Case No. 03-13272). Donna L. Harris, Esq., Robert J. Dehney, Esq., Eric D. Schwartz, Esq., Gregory W. Werkheiser, Esq., and Alicia B. Davis, Esq., at Morris, Nichols, Arsht & Tunnell represent the Debtors in their restructuring efforts. Kurt F. Gwynne, Esq., Claudia Z. Springer, Esq., and Paul M. Singer, Esq., at Reed Smith LLP, serve as counsel to the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $558,131,000 in total assets and $558,131,000 in total debts. On Dec. 19, 2003, the Court approved the sale of substantially all of the Debtors' assets to SeverStal N.A. for $285.5 million. The Asset Sale closed on Jan. 30, 2005. ROUSE CO: Moody's Rates $500MM Proposed Sr. Unsec. Notes at Ba1 --------------------------------------------------------------- Moody's Investors Service assigned a Ba1 rating to the proposed $500 million senior unsecured notes of The Rouse Company LP, and concurrently affirmed the ratings of GGP Limited Partnership, senior secured debt at Ba2, The Rouse Company LP at Ba1 and Price Development Company, L.P. at Ba1. The ratings outlook remains stable. According to Moody's, the Ba1 rating for the proposed senior notes by Rouse, a subsidiary of General Growth, reflects the senior status and structural provisions of the issuance, which contains various covenants including debt limitations and minimum debt service coverage requirements, although no unencumbered asset test. The proposed notes would rank equal with Rouse's other senior unsecured debt. Net proceeds from the sale of these notes will be used to repay the firm's bridge loan. These notes are not guaranteed by General Growth. Moody's stated that General Growth's Ba2 senior secured bank debt ratings reflect its highly leveraged capital structure, high levels of variable rate debt and secured debt funding strategy, balanced by the resilience of the regional mall format, the REIT's sizable and good quality portfolio and strong competitive position. The REIT's debt leverage is high at about 75% of gross assets. Moody's expects General Growth to de-lever over time by utilizing proceeds from non-core asset sales to repay part of the bank debt incurred to finance the acquisition of Rouse. Almost all of the REIT's assets are encumbered with secured debt, resulting in limited asset coverage for unsecured creditors and strained financial flexibility. Secured debt is half of gross assets, and fixed charge coverage is weak at 1.31x, including principal amortization and joint venture-related mortgages. However, General Growth's debt maturity and lease expiration schedules are very manageable, and the REIT has substantial availability on its revolver. Moody's believes that General Growth will continue to utilize secured debt as its primary long-term funding source, constraining its senior unsecured rating and strategic flexibility. Acquisitions have been the REIT's primary source of growth. The size and scale of the REIT's portfolio provides it with a number of benefits, including geographic and asset diversification, and it bolsters its strong relationship with key national retail tenants and brokers. These factors enhance General Growth's competitive position within the regional mall sector, which in recent years has experienced much consolidation. The REIT's average sales per square foot rose from $276 in 1997 to $437 at 4Q05, while occupancy improved from 86% to 92.5%. General Growth has maintained strong portfolio fundamentals and generated solid internal growth due to resilience of consumer spending and the strength of the regional mall format. Moody's also stated that the Ba1 senior unsecured debt ratings of The Rouse Company LP and Price Development Company, L.P., another General Growth subsidiary, reflect these entities' stronger financial profiles, supported by their bond covenants. The stable rating outlook reflects Moody's expectation that General Growth will more smoothly complete the integration of Rouse's retail portfolio and community development business, and that the REIT will be addressing all of its Sarbanes-Oxley related material weakness. In addition, Moody's expects that General Growth will continue to reduce its leverage, and at least maintain its credit metrics both on a consolidated basis and at the Rouse level, as both entities have little rating cushion at their current financial levels. Moody's will also closely monitor the REIT's covenant compliance for all of Rouse's outstanding bonds. Moody's said that positive ratings movement would reflect: -- fixed charge coverage including principal amortization and joint venture-related debt closer to 1.8X; and -- effective leverage closer to mid 60% and secured debt under 40% of gross assets, supported by deeper market leadership. Negative ratings adjustments would likely reflect any further deterioration of current credit metrics, a reduction at the Rouse level of its current covenant compliance cushion and or an acute reversal in earnings strength or stability. This rating was assigned with a stable outlook: -- The Rouse Company LP -- $500 million senior notes at Ba1 These ratings were affirmed with a stable outlook: -- The Rouse Company LP -- Senior debt at Ba1 -- Price Development Company, L.P. -- Senior debt at Ba1 -- GGP Limited Partnership -- Senior secured debt at Ba2, and senior unsecured debt shelf at (P)Ba2 -- General Growth Properties, Inc. -- Preferred stock shelf at (P)B1 Moody's last rating action on the REIT was in November 2004, when Moody's lowered the senior debt ratings of The Rouse Company and Price Development Company L.P. to Ba1, from Baa3. Moody's also lowered the unsecured debt shelf rating of General Growth Properties to (P)Ba2, from (P)Ba1. These rating actions followed the announcement that General Growth Properties had completed its acquisition of The Rouse Company. General Growth Properties, Inc. [NYSE: GGP], headquartered in Chicago, Illinois, USA, is one of the largest owners and operators of regional malls in the United States. The REIT reported assets of $25.3 billion, and equity of $1.9 billion, at Dec. 31, 2005. SENSIENT TECHNOLOGIES: S&P Affirms BB+ Rating With Neg. Outlook --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings, including the 'BB+' corporate credit rating, on Sensient Technologies Corp., and removed them from CreditWatch, where they had been placed with negative implications on Feb. 14, 2006. The affirmation was based on the company's improved operating performance. The outlook is negative. Approximately $547 million of debt was outstanding as of March 31, 2006. "We expect that the company's operating performance will continue to strengthen following its improvement in the first fiscal quarter," said Standard & Poor's credit analyst Patrick Jeffrey. Standard & Poor's also expects that recent price increases and cost-saving initiatives will contribute to improved operating performance in fiscal 2006, reducing debt leverage. Still, the ratings on Sensient reflect the company's inconsistent operating performance and moderately high debt leverage after a large number of debt-financed acquisitions. These factors are offset somewhat by: * the company's position as a leading industrial marketer of value-added flavors, fragrances, and colors; and * Standard & Poor's expectation that management will continue to focus more on debt reduction and less on external investments. Sensient manufactures and markets components that add functionality to foods, cosmetics, pharmaceuticals, and other products. The company participates in highly competitive markets, and several players are larger and financially stronger. SFBC INTERNATIONAL: S&P Affirms B+ Rating & Alters Outlook to Neg. ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its rating outlook on Princeton, New Jersey-based contract research services provider SFBC International Inc. to negative from stable. Ratings on the company, including the 'B+' corporate credit rating, were affirmed. "The outlook revision reflects the unresolved issues facing SFBC, including an informal SEC investigation, a downturn in business at its Miami, Florida, facility related to bad press and structural issues, a continuing investigation by the Senate Finance Committee, a tuberculosis outbreak at a Canadian facility, and litigation," said Standard & Poor's credit analyst Alain Pelanne. After obtaining a covenant waiver at year-end, the company has continued negotiations with lenders and should soon have new covenants in place that reflect the revised operational forecast. While Standard & Poor's believes that the company has addressed (or is in the process of addressing) each of these issues, the inability to cope with any or all of them could result in a negative rating action. The speculative-grade rating on SFBC continues to reflect: * the company's short record of success as a growing participant in the global market for outsourced clinical trial services; and * its strategy of growth through acquisitions. These risks outweigh the company's: * moderate debt burden, * large cash balance, and * fairly strong cash flows. STEAKHOUSE PARTNERS: Mayer Hoffman Raises Going Concern Doubt ------------------------------------------------------------- Mayer Hoffman McCann P.C. in San Diego, California, raised substantial doubt about Steakhouse Partners, Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2004, and 2005. The auditor pointed to the company's losses and working capital deficiency. Steakhouse Partners, Inc., filed its consolidated financial statements for the years ended Dec. 31, 2005, with the Securities and Exchange Commission on April 5, 2006. The company reported a $455,000 net loss on $52,001,000 of net revenues for the year ended Dec. 31, 2005. At Dec. 31, 2005, the company's balance sheet showed $30,734,000 in total assets, $23,644,000 in total liabilities, and $7,090,000 in total stockholders' equity. The company's Dec. 31 balance sheet also showed strained liquidity with $2,624,000 in total current assets available to pay $12,297,000 in total current liabilities coming due within the next 12 months. A full-text copy of the company's 2005 Annual Report is available for free at http://ResearchArchives.com/t/s?866 Steakhouse Partners, Inc. owns and operates 25 full-service steakhouse restaurants located in eight states. The restaurants specialize in complete steak and prime rib meals, and also offer fresh fish and other lunch and dinner dishes. The Company serves approximately 2.5 million meals annually and operates principally under the brand names of Hungry Hunter, Hunter Steakhouse, Mountain Jack's and Carvers. Steakhouse Partners filed for Chapter 11 protection on Feb. 15, 2002 (Bankr. C.D. Calif. (Riverside Div.) Case No. 02-12648). The Company emerged from bankruptcy on Dec. 31, 2003, pursuant to a plan of reorganization. As a result of the Plan of Reorganization, all shares of the Company's common stock, preferred stock, stock options and warrants outstanding as of Dec. 31, 2003, were cancelled and no longer exist. On March 22, 2004, 4,500,000 shares of the Company's "new" common stock were issued in connection with the Company's emergence from bankruptcy. As of that date, the only validly issued and outstanding shares of the Company's common stock are those, which have been issued by the Company since March 22, 2004, and trade under the symbol "STKP.PK". STEELCASE INC: Earns $11.2 Million in Fourth Fiscal Quarter ----------------------------------------------------------- Steelcase Inc., reported fiscal 2006 revenue of $2.9 billion, a 9.8% increase compared to $2.6 billion last year and a net income of $50.8 million compared with a net income of $12.7 million in the prior year. The company also reported operating income of $85.5 million compared with the prior year's $18.2 million. The company's restructuring and other charges in fiscal 2006 totaled a net $23.0 million after-tax. Its cost of sales, which does not include restructuring charges, improved 1.9 percentage points to 69.3 percent of sales from 71.2 percent of sales in the prior year. The improvement, according to the company, reflects benefits from improved pricing yield, higher revenue and prior restructuring. Some of the operating improvement in the year was offset by disruption costs associated with ongoing restructuring activities. In fiscal 2006, the company's gross margins improved to 29.6% from 28.5% in fiscal 2005. Its operating expenses, which exclude restructuring charges, were $758.1 million, or 26.4% of sales compared to 27.6 percent of sales in the prior year. According to the company, the improvement reflects ongoing cost control and higher sales volume. Operating expenses increased $35.8 million year over year and included higher variable compensation expenses, increased sales and marketing costs in North America, and the effect of acquisitions. Steelcase increased the total of cash and short-term investments by $76 million to $424 million at the end of fiscal 2006. The company reduced debt by $62 million, to a year-end balance of $264 million. Fourth Quarter Results Steelcase reported revenue of $739.3 million for its fourth quarter, a 7% increase compared to $691 million in the prior year quarter. Current year sales included $14.2 million in service revenue, $7.4 million from acquisitions and $(18.5) million from currency effects, compared with the prior year. For the fourth quarter of fiscal 2006, Steelcase's net income is $11.2 million compared with $1 million in the same quarter of the prior year. As a result of the reduction in the full year tax rate to 36%, the fourth quarter tax rate fell to 27.7%, which had the effect of increasing net income by $1.3 million. The company's cost of sales improved 1.2 percentage points to 70.3% of sales in the fourth quarter compared to the prior year, primarily from improved pricing yield, benefits from prior restructuring, and higher revenue. Gross margins of 28.6% in the fourth quarter were up from 28.2 percent in the prior year quarter. Steelcase reduced operating expenses to 27.0% of sales from 27.7% of sales in the prior year. The improvement was related to continued cost control and leverage from higher sales volume, the company said. Business Outlook The company expects first quarter revenue to be 7% to 11% higher than the prior year quarter and a full year after-tax restructuring charges of $10 to $15 million for fiscal year 2007. About Steelcase Inc. Headquartered in Grand Rapids, Michigan, Steelcase, Inc. -- http://www.steelcase.com/-- is an office furniture industry. The company designs and manufactures architecture, furniture and technology products. Founded in 1912, Steelcase serves customers through a network of more than 800 independent dealers and approximately 13,000 employees worldwide. * * * Moody's Investor Services placed Steelcase's senior unsecured debt and corporate family ratings at Ba1 on Oct. 23, 2003, with a positive outlook. TEMBEC INC: Settlement Prompts S&P to Place CCC- Rating on Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'CCC-' corporate credit and senior unsecured credit ratings on Tembec Inc. on CreditWatch with positive implications, following the announcement that the Canadian and U.S. governments have reached a framework deal for a settlement of the softwood lumber dispute that includes a refund of about 80% of the duties paid. Tembec has paid duties totaling about CDN$327 million since 2002. A duty refund of 80% (paid in U.S. dollars) would be about CDN$230 million and would materially improve Tembec's precarious liquidity position. At March 25, 2006, Tembec had: * cash and in-the-money derivative financial instruments of CDN$16 million; and * unused operating lines of about CDN$42 million. "The timing of the duty refund is unclear, and any delay or a lengthy process could impair Tembec's survival, as the current liquidity situation is very weak," said Standard & Poor's credit analyst Dan Parker. "The ratings will remain on CreditWatch until there is clarity surrounding the timing of the refund. An upgrade would likely be limited to one notch," Mr. Parker added. The ratings on Montreal, Que.-based Tembec reflect its weakening liquidity position and the company's struggle to generate positive EBITDA, or improve its weak cost position. Tembec is not currently generating enough EBITDA to cover its interest and maintenance capital spending obligations. Standard & Poor's believes the company's cash generation will continue to be very weak because of the strong Canadian dollar (currently at more than 89 U.S. cents) and high energy and fiber costs. Tembec generated positive EBITDA of about CDN$5.3 million in the quarter ended March 25, 2006, but has only generated EBITDA of CDN$4.5 million for the trailing 12 months. Total adjusted debt is about CDN$1.8 billion. Standard & Poor's estimates that Tembec needs to generate about CDN$240 million in EBITDA annually to cover interest and capital spending. The company has quarterly interest payments of about CDN$33 million, and maintenance capital spending requirements of about CDN$30 million per quarter. There are no required interest payments in the third quarter (ending June 24, 2006). THAXTON: Finova Wants Right to Appeal Equitable Subordination Suit ------------------------------------------------------------------ The Finova Group, Inc., threatened to ask the U.S. Bankruptcy Court for the District of Delaware to stay the chapter 11 cases of The Thaxton Group, Inc., if the Thaxton Debtors file a plan of reorganization barring the Finova Debtors from appealing the equitable subordination ruling the Delaware District Court handed down against Finova, The Deal reports. As reported in the Troubled Company Reporter on March 31, 2006, the Delaware District Court handed down a partial judgment on an action commenced by the Official Committee of Unsecured Creditors appointed in the Thaxton cases against the Finova Entities. The Dispute The Thaxton Debtors owed Finova $108 million at Dec. 31, 2005, under a senior secured loan agreement. Through an Adversary Proceeding, the Thaxton Committee sought, among other things, to avoid or equitably subordinate Finova's liens and claims against the Thaxton Debtors and recover $4 million of payments previously collected due to alleged securities fraud, violations of banking laws and regulations, preference payments and similar claims. In 2003, the Thaxton Debtors were declared in default under their loan agreement with Finova after they advised Finova that they would have to restate earnings for the first two fiscal quarters of 2003, and after suspending payments on their subordinated notes. As a result of the default, Finova exercised its rights under the loan agreement, and accelerated the indebtedness. The Thaxton Debtors then filed for bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware on Oct. 17, 2003, listing assets of approximately $206 million and debts of $242 million. The Thaxton Group had approximately 6,800 holders of its subordinated notes that were issued in several states, with total subordinated indebtedness of approximately $122 million. Delaware District Court Ruling The District Court found, among other things, that Finova engaged in fraudulent conduct by purposefully structuring its Loan Agreement in a way that allowed Thaxton to report to all of its creditors, and particularly prospective note purchasers, that an $8 million equity investment had been made, when in fact that $8 million continued to be debt, and that this enabled Thaxton to violate federal banking law. Fourth Circuit Appeal Finova is appealing an equitable subordination order entered in Gregory v. Finova, Case No. 04-CA-2612, in the U.S. District Court for the District of South Carolina, to the U.S. Court of Appeals for the Fourth Circuit (Case No. 05-2118). Briefs in the matter are due in three weeks, The Deal reports. Finova asked the Delaware Bankruptcy Court to terminate the Thaxton Debtors' exclusive period, within which only the Thaxton Debtors can file a chapter 11 plan. The Delaware Bankruptcy Court denied Finova's request. About Finova Headquartered in Scottsdale, Arizona, The Finova Group, Inc., provides commercial financing to small and mid-sized businesses; other services include factoring, accounts receivable management, and equipment leasing. The firm has three segments: Commercial Finance, Specialty Finance, and Capital Markets. FINOVA targets such markets as transportation, wholesaling, communication, health care, and manufacturing. Loan write-offs had put the firm on shaky ground. The Company and its debtor-affiliates and subsidiaries filed for Chapter 11 protection on March 7, 2001 (U.S. Bankr. Del. 01-00697). Pachulski, Stang, Ziehl, Young & Jones P.C. and Wachtell, Lipton, Rosen & Katz represent the Official Committee of Unsecured Creditors. Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A., represents the Debtors. FINOVA has since emerged from Chapter 11 bankruptcy. Financial giants Berkshire Hathaway and Leucadia National Corporation (together doing business as Berkadia) own FINOVA through the almost $6 billion lent to the commercial finance company. Finova is winding up its affairs. About Thaxton Headquartered in Lancaster, South Carolina, The Thaxton Group, Inc., is a diversified consumer financial services company. The Company filed for Chapter 11 protection on October 17, 2003 (Bankr. Del. Case No. 03-13183). Daniel B. Butz, Esq., Michael G. Busenkell, Esq., and Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnell, represent the Debtors in their restructuring efforts. Alan Kolod, Esq., at Moses & Singer LLP, represents the Offical Committee of Unsecured Creditors. As of Dec. 31, 2005, the Debtors reported assets totaling $98,889,297 and debts totaling $175,693,613. Thaxton plans to reorganize around its core business. THE INN AT WHITTIER: Voluntary Chapter 11 Case Summary ------------------------------------------------------ Debtor: The Inn at Whittier, LLC 428 West 4th Avenue Anchorage, Alaska 99501 Bankruptcy Case No.: 06-00121 Type of Business: The Debtor operates a hotel and restaurant. See http://www.innatwhittier.com/ Chapter 11 Petition Date: April 28, 2006 Court: District of Alaska (Anchorage) Judge: Donald MacDonald IV Debtor's Counsel: Cabot C. Christianson, Esq. Christianson & Spraker 911 West 8th Avenue, Suite #302 Anchorage, Alaska 99501 Tel: (907) 258-6016 Fax: (907) 258-2026 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 largest unsecured creditors. TODD ADAMS: Case Summary & 17 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Todd Adams Chiropractic Inc. pdba Todd Adams DC Family Care Chiropractic 4121 Westerly Place #116 Newport Beach, California 92660 Bankruptcy Case No.: 06-10596 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Todd Adams and Melanie G. Adams 06-10597 Type of Business: The Debtor provides chiropractic care, corrective exercises, and nutritional counseling to patients. See http://www.adamschiroclinic.com Chapter 11 Petition Date: April 28, 2006 Court: Central District Of California (Santa Ana) Judge: Erithe A. Smith Debtor's Counsel: Joseph A. Weber, Esq. Weber Firman 3941-D So Bristol Street, PMB 346 Santa Ana, California 92704 Tel: (714) 433-7185 Estimated Assets: $50,000 to $100,000 Estimated Debts: $1 Million to $10 Million Debtor's 17 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Wachovia Bank $156,000 1620 East Roseville Parkway, #100 Roseville, CA 95661 GE Capital Colonial $136,738 3000 Lakeside Drive Bannick Burn, IL 60015 ABCO Leasing Inc. $134,000 122232 17th Avenue Southeast, $204 Botheli, WA 98021 ACC Capital $115,406 GE Health Care $90,000 Southwest Credit $70,000 Tip Capital $128,000 CIT $63,162 USXL $63,106 SUS Quehana Patriot $58,397 Southwest Credit $110,000 BB&T Leasing $55,000 Leaf Financial $52,000 Firmco Financial $50,000 Team Leasing $50,000 Union Bank Leasing $98,000 Balboa Capital $45,000 VALHI INC: Earns $14.9 Million in Fourth Quarter of 2005 -------------------------------------------------------- Valhi, Inc., reported $14.9 million of income from continuing operations in the fourth quarter of 2005 compared to a loss of $31.4 million in the fourth quarter of 2004. For the full year of 2005, the Company reported income from continuing operations of $81.7 million compared to income of $226.3 million for 2004. Valhi's chemicals sales increased $17.5 million in the fourth quarter of 2005 compared to the fourth quarter of 2004, and increased $68.1 million for the year. Valhi's general corporate interest and dividend income was higher in the fourth quarter and full-year of 2005 as compared to the same periods of 2004 due primarily to a higher level of dividend income related to its investment in The Amalgamated Sugar Company LLC. According to Valhi, the $21.6 million write-off of accrued interest receivable in the fourth quarter of 2005 relates to the forgiveness of interest receivable on the Company's loan to Snake River Sugar Company, which loan was prepaid in October 2005. Valhi, Inc. [NYSE: VHI] -- http://www.valhi.net/-- is engaged in the titanium dioxide pigments, component products (precision ball bearing slides, security products and ergonomic computer support systems), titanium metals products and waste management industries. * * * On Feb. 23, 2006, Standard & Poor's assigned Valhi, Inc.'s long term local and foreign issuer credit ratings at BB. Fitch placed the company's bank and senior unsecured debt ratings at BB- on June 3, 2003, with a stable outlook. VARIG: NY Judge Extends Embargo on Aircraft Seizure to May 31 ------------------------------------------------------------- Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York extended until May 31 the embargo on the seizure of VARIG Brazilian Airlines' aircraft by aircraft leasing companies. VARIG can now continue its financial recovery plan which hopefully may lead to a definitive resolution to the Airline's restructuring needs in the near future. "With his decision, which was based on information presented to him at the hearing, Judge Drain has demonstrated once again that our Company is viable and is on course to meet its objectives," Marcelo Bottini, VARIG's President said. "Furthermore, the Judge's findings are consistent with those of the Brazilian Judge, Roberto Ayoub, overseeing VARIG's Recovery Plan, both of whom have faith that the Company is on the road to financial stability," he added. Present at the hearings were VARIG's attorneys, Pillsbury Winthrop, as well as representatives of the consulting firm Alvarez & Marshal, which is advising VARIG on their restructuring. In addition, a team from VARIG LOG was also in attendance as an interested party since they have submitted an offer to acquire VARIG for $400 million. 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. VTEX ENERGY: Posts $2.6M Net Loss in Third Quarter Ended Jan. 31 ---------------------------------------------------------------- VTEX Energy, Inc., filed its financial statements for the nine months ended Jan. 31, 2006, with the Securities and Exchange Commission on April 24, 2006. The company reported a $2,685,467 net loss on $153,278 of total revenues for the nine months ended Jan. 31, 2006. At Jan. 31, 2006, the company's balance sheet showed $18,179,151 in total assets, $11,971,226 in total liabilities, and $6,207,925 in stockholders' equity. The company's Jan. 31 balance sheet also showed strained liquidity with $1,180,488 in total current assets available to pay $7,043,598 in total current liabilities coming due within the next 12 months. Full-text copies of the company's financial statements for the nine months ended Jan. 31, 2006, are available for free at http://ResearchArchives.com/t/s?85f Going Concern Doubt Pannell Kerr Forster of Texas, P.C., in Houston, Texas, raised substantial doubt about VTEX Energy, Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended April 30, 2005. The auditor pointed to the company's significant losses from operations, working capital deficiency, and additional funding requirement. VTEX Energy, Inc., explores for and produces oil and gas primarily in Louisiana and Texas. The company focuses on low-risk drilling developments, recompletions, and workovers, and has estimated proved preserves of 103,000 barrels of crude oil and 9.4 billion cu. ft. of natural gas. WHITCO CO: American Tech Closes Assets Acquisition Transaction -------------------------------------------------------------- American Technologies Group, Inc., (OTC BB: ATGR) closed on the acquisition of certain of Whitco Company, LP's assets as authorized by an April 25 order from the U.S. Bankruptcy Court of the Northern District of Texas, Fort Worth Division. Prior to closing of the sale, Whitco sought protection under Chapter 11 of the United States Bankruptcy Code, and the approval of the acquisition of its remaining assets by American Technologies. The purchase price paid at closing for the assets consisted of: * the issuance of 3.75 million warrants to purchase American Technologies' common shares at an exercise price of $0.001 per share, * the delivery of a registration rights agreement requiring American Technologies to register the shares issued upon the exercise of the Warrant, and * the cancellation of certain debtor-in-possession financing provided to Whitco prior to the asset sale closing. American Technologies has secured working capital for this new acquisition in the form of a $500,000 credit facility with Gryphon Master Fund and affiliates of Dallas, Texas. About American Technologies American Technologies Group, Inc., through its wholly owned subsidiary, North Texas Steel Company, Inc., is an American Institute of Steel Construction certified structural steel fabrication company and provides fabrication and detailing of structural steel components for commercial buildings, office buildings, convention centers, sports arenas, airports, schools, churches and bridges. About Whitco Company Headquartered in Fort Worth, Texas, Whitco Company, LP, sells and distributes structural steel and aluminum lighting poles worldwide. Whitco provides marketing expertise and engineering knowledge to a nationwide contracted lighting representative base as well as original equipment manufacturer customers. The Company filed for chapter 11 protection on March 15, 2006 (Bankr. N.D. Tex. Case No. 06-40721). Eric A. Liepins, Esq., at Eric A. Liepins, P.C., represents the Debtor. When the Debtor filed for protection from its creditors, they estimated less than $50,000 of assets and between $1 million and $10 million of debts. YUKOS OIL: TRO vs. Equity Sale to Lithuanian AB Stretched to May 4 ------------------------------------------------------------------ The Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York extended the temporary restraining order barring Yukos Oil Company from selling its assets absent his prior consent until May 4, 2006, 11:59 a.m. The TRO does not bar the Company from negotiating a possible sale. It bars the Company from signing a sale agreement, the Court's April 28, 2006, order clarified. Eduard K. Rebgun, in his capacity as foreign representative for Yukos Oil Company filed a chapter 15 petition on April 13 (Bankr. S.D.N.Y. Case No. 06-10775), in an attempt to halt the sale of Yukos' 53.7% ownership interest in Lithuanian AB Mazeikiu Nafta. Published reports suggest that the Company's stake may have a value at around US$1.2 billion to US$1.4 billion. As reported in the Troubled Company Reporter-Europe on March 31, 2006, the Moscow Arbitration Court banned Yukos from selling its assets worth more than RUB30 million without permission from court-appointed external manager Mr. Rebgun. Headquartered in Moscow, Russia, Yukos Oil Company -- http://yukos.com/-- is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved in the energy industry substantially through its ownership of its various subsidiaries, which own or are otherwise entitled to enjoy certain rights to oil and gas production, refining and marketing assets. The Company filed for Chapter 11 protection Dec. 14, 2004 (Bankr. S.D. Tex. Case No. 04-47742), but the case was dismissed on Feb. 24, 2005, by the Hon. Letitia Z. Clark. A few days after, its main production unit Yugansk, was sold by the government to a little-known firm Baikalfinansgroup for US$9.35 billion, as payment for US$27.5 billion in tax arrears for 2000- 2003. Yugansk eventually was bought by state-owned Rosneft, which is now claiming more than US$12 billion from Yukos. Yukos filed a Chapter 15 petition on April 13, 2006 (Bankr. S.D.N.Y. Case No. 06-10775). Howard Seife, Esq., at Chadbourne & Parke, LLP, represents the Company. ZIM CORPORATION: Amends 2005 Financial Statements ------------------------------------------------- ZIM Corporation filed with the Securities and Exchange Commission on April 24, 2006, its amended financial statements for: -- the year ended March 31, 2005; -- the first quarter ended June 30, 2005; -- the second quarter ended Sept. 30, 2005; and -- the third quarter ended Dec. 31, 2005. The company's Statement of Operations showed: For the period ended ---------------------------------------------- Year Quarter Quarter Quarter 03/31/05 06/30/05 09/30/05 12/31/05 ---------- ---------- --------- ----------- Revenue $4,342,321 $1,332,693 $908,839 $823,289 Net (Loss) ($3,964,107) ($196,881) ($368,720) ($2,391,930) The company's Balance Sheet showed: For the period ended ---------------------------------------------- Year Quarter Quarter Quarter 03/31/05 06/30/05 09/30/05 12/31/05 ---------- ---------- ---------- ---------- Current Assets $3,522,914 $3,728,627 $3,133,221 $2,465,537 Total Assets $5,806,694 $5,957,484 $5,480,744 $2,773,953 Current Liabilities $2,402,204 $2,543,097 $2,259,960 $1,903,479 Total Liabilities $2,402,204 $2,543,097 $2,259,960 $1,972,687 Total Stockholders' Equity $3,404,490 $3,414,387 $3,220,784 $801,266 Going Concern Doubt Raymond Chabot Grant Thornton LLP in Ottawa, Canada, raised substantial doubt about ZIM Corporation's ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended March 31, 2005. The auditor pointed to the company's net loss and negative cash flows from operations during the last five years. Full-text copies of the company's financial statements are available for free at: Year Ended March 31, 2005 http://ResearchArchives.com/t/s?861 First quarter ended June 30, 2005 http://ResearchArchives.com/t/s?862 Second quarter ended Sept. 30, 2005 http://ResearchArchives.com/t/s?863 Third quarter ended Dec. 31, 2005 http://ResearchArchives.com/t/s?864 ZIM Corporation -- http://www.zim.biz/-- is a mobile service provider, aggregator and application developer for the global SMS market. ZIM's products include mobile e-mail and office tools, such as ZIM SMS Chat, and its message delivery services include Bulk SMS, Premium SMS and Location Based Services. ZIM is also a provider of enterprise-class software and tools for designing, developing and manipulating database systems and applications. Through its two-way SMS expertise and mobile-enabling technologies, ZIM bridges the gap between data and mobility. ZION GIN: Case Summary & 15 Largest Unsecured Creditors ------------------------------------------------------- Debtor: Zion Gin Company, Inc. 4958 Highway 70 East Brownsville, Tennessee 38012 Bankruptcy Case No.: 06-10908 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Maurice Wayne Tritt 06-10906 Virginia Tritt Taylor 06-10907 Type of Business: The Debtor manufactures cotton gins. Maurice Wayne Tritt is the president of the Debtor, and Virginia Tritt Taylor is one of the Debtor's shareholders. Chapter 11 Petition Date: April 28, 2006 Court: Western District of Tennessee (Jackson) Judge: G. Harvey Boswell Debtor's Counsel: Michael T. Tabor, Esq. 203 South Shannon P.O. Box 2877 Jackson, Tennessee 38302-2877 Tel: (731) 424-3074 Total Assets: $2,416,041 Total Debts: $913,912 Debtor's 15 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Tritt & Son Fertilizer $143,279 4958 Highway 70 East Brownsville, TN 38012 Small Business Administration $105,935 2120 Riverfront Drive, Suite 100 Little Rock, AR 72202-1747 T&B Trucking $54,099 Dr. Hess Road Bells, TN 38006 Ricky Barnhart $9,505 Blytheville Sheet Metal, Inc. Equipment Repair $9,000 Southern Mechanical Co. Equipment Repair $6,663 Tennessee Department of Labor Unemployment Tax $3,179 Arthur J. Gallagher Car Insurance $2,885 The Press Doctor Equipment Repair $2,570 Columbus Life Insurance $2,200 Tire Treads, Inc. Equipment $1,000 Best One Tire of Jackson Equipment $640 George Eivazzadeh Labor Office Program $540 Gibson Enterprises Advertising $503 Lease Express Equipment $367 ZOOMERS HOLDING: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Zoomers Holding Company LLC 497 Webbs Cove Osprey, Florida 34229 Bankruptcy Case No.: 06-02008 Chapter 11 Petition Date: April 28, 2006 Court: Middle District of Florida (Fort Myers) Debtor's Counsel: Richard Johnston, Jr., Esq. Kiesel Hughes & Johnston P.O. Box 1000 Fort Myers, Florida 33902 Tel: (239) 337-3900 Fax: (239) 337-7968 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Anchor Group $636,828 15670 McGregor Boulevard Suite 4 Fort Myers, FL 33908 Christo, Inc. $194,830 4461-B Hancock Bridge Parkway North Fort Myers, FL 33903 Dan Fluharty, Inc. $152,833 P.O. Box 155 Estero, FL 33928 Aspen Electric, Inc. $52,861 Vend Lease Co., Inc. Equipment Lease $38,588 Southern Traditional $27,542 Landscape Contractors Hughes Supply, Inc. $25,393 Dufresne Henery, Inc. $25,242 Security Electric of $23,737 Southwest Florida, Inc. Viking Construction Corp. of $21,243 Southwest Florida Sun Coast Paving, Inc. $20,000 Parr Media Group $19,000 HPL USA, LLC $15,900 Coastal Decks & Fencing, Inc. $14,713 Viking Millwork, Inc. $13,150 Sanibel Glass & Mirror, Inc. $11,600 Nations Rent $10,441 Florida Flame $10,000 Dennie Miller Plumbing, Inc. $7,114 Commercial Voice & Data, LLC $6,578 * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Abraxas Petro ABP (24) 122 (5) Accentia Biophar ABPI (9) 39 (19) AFC Enterprises AFCE (49) 213 40 Adventrx Pharma ANX (8) 24 (9) Alaska Comm Sys ALSK (19) 576 28 Alliance Imaging AIQ (40) 675 1 AMR Corp. AMR (1,272) 29,918 (1,924) Atherogenics Inc. AGIX (115) 198 173 Bally Total Fitn BFT (1,463) 486 (442) Biomarin Pharmac BMRN (77) 195 (29) Blount International BLT (145) 455 112 CableVision System CVC (2,414) 9,845 (428) CCC Information CCCG (95) 112 34 Centennial Comm CYCL (1,069) 1,409 32 Cenveo Inc CVO (50) 1,080 122 Choice Hotels CHH (167) 265 (57) Cincinnati Bell CBB (710) 1,863 16 Clorox Co. CLX (528) 3,567 (205) Cogdell Spencer CSA (50) 178 N.A. Columbia Laborat CBRX (15) 15 (3) Compass Minerals CMP (79) 750 195 Crown Holdings I CCK (213) 6,885 171 Crown Media HL CRWN (123) 1,274 (99) Deluxe Corp DLX (82) 1,426 (277) Denny's Corporation DENN (265) 513 (86) Domino's Pizza DPZ (511) 461 4 DOV Pharmaceutic DOVP (19) 102 79 Echostar Comm DISH (867) 7,410 247 Emeritus Corp. ESC (113) 748 (29) Emisphere Tech EMIS (15) 19 (1) Encysive Pharm ENCY (11) 147 111 Foster Wheeler FWLT (313) 1,895 (146) Gencorp Inc. GY (84) 1,002 (3) Graftech International GTI (183) 887 245 Hercules Inc. HPC (25) 2,569 331 Hollinger Int'l HLR (170) 1,065 (354) I2 Technologies ITWO (71) 202 (34) ICOS Corp ICOS (59) 242 122 IMAX Corp IMAX (23) 243 35 Immersion Corp. IMMR (17) 45 29 Incyte Corp. INCY (19) 374 326 Indevus Pharma IDEV (126) 100 65 Investools Inc. IED (24) 73 (47) Koppers Holdings KOP (195) 552 132 Kulicke & Soffa KLIC (3) 440 217 Labopharm Inc. DDS (3) 55 17 Level 3 Comm. Inc. LVLT (476) 8,277 242 Ligand Pharm LGND (110) 315 (102) Linn Energy LLC LINE (45) 280 (51) Lodgenet Entertainment LNET (70) 261 7 Maxxam Inc. MXM (661) 1,048 101 Maytag Corp. MYG (187) 2,954 150 McDermott Int'l MDR (83) 1,668 230 McMoran Exploration MMR (58) 408 67 NPS Pharm Inc. NPSP (98) 331 234 New River Pharma NRPH (6) 54 47 Omnova Solutions OMN (15) 360 65 ON Semiconductor ONNN (276) 1,148 202 Qwest Communication Q (3,217) 21,497 (1,071) Revlon Inc. REV (1,096) 1,044 121 Riviera Holdings RIV (31) 212 2 Rural/Metro Corp. RURL (89) 310 54 Rural Cellular RCCC (481) 1,481 130 Sealy Corp. ZZ (288) 906 46 Sepracor Inc. SEPR (165) 1,275 769 St. John Knits Inc. SJKI (52) 213 80 Sun Healthcare SUNH (3) 512 (67) Tivo Inc. TIVO (27) 162 27 USG Corp. USG (302) 6,142 1,579 Unigene Labs Inc. UGNE (17) 13 (11) Uranium Res Inc. URRE (36) 18 (17) Vertrue Inc. VTRU (30) 446 (82) Warrior Energy WARR (16) 102 6 Weight Watchers WTW (81) 835 (38) Worldspace Inc. WRSP (1,492) 724 221 WR Grace & Co. GRA (559) 3,517 876 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. 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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, Joel Anthony Lopez, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Cherry A. Soriano-Baaclo, Christian Q. Salta, Jason A. Nieva, Lucilo M. Pinili, Jr., 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. 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