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/raid1/www/Hosts/bankrupt/TCR_Public/060525.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, May 25, 2006, Vol. 10, No. 123 Headlines 2135 GODBY: Hires Macey Wilensky as Bankruptcy Counsel 2135 GODBY: Wants Access to Legg Mason's Cash Collateral 2135 GODBY: Legg Mason Says There Is No Cash Collateral to Use 2929 PANTHERSVILLE: Section 341(a) Meeting Scheduled for June 15 2929 PANTHERSVILLE: Can Use Lender's Cash Collateral Until June 14 ADELPHIA COMMS: Asks Court to Approve Century/ML Settlement Accord ADELPHIA COMMS: Sets Discovery Schedule Over Boies Schiller Fees AES CORPORATION: Fitch Affirms Senior Subordinated Notes' B Rating AFFINITY TECH: Sets Annual Stockholders' Meeting on June 15 AIR CONDITIONING: Case Summary & 20 Largest Unsecured Creditors AIRNET COMMS: Bankruptcy Filing Prompts Nasdaq's June 1 Delisting ALLIED HOLDINGS: Teamsters Appeal CBA Rejection in District Ct. ALLIED HOLDINGS: Seeks Declaratory Judgment on Insurance Deals ARGENT SECURITIES: Moody's Reviews Low-B Rating on 2 Cert. Classes ARVINMERITOR: Fitch Places Debts' BB+ Ratings on Negative Watch BALMORAL GOLF: Seeks Protection Under Canada's Bankruptcy Act BOMBARDIER: Moody's Puts B1 Rating on C$880M Sr. Sec. Term Loan BROOKS AUTOMATION: E.N.Y. Atty. Investigates Stock Options Grant CARSSX FINANCE: S&P Places Note Classes' Low-B Ratings on Watch CATHOLIC CHURCH: Portland Files Second Modified Plan CATHOLIC CHURCH: Portland Tort Panel Files Amended Chapter 11 Plan CATHOLIC CHURCH: HR&A Pegs Claims Against Portland at $41.7M Max CHARTER COMMS: Refinances $6.85 Bil. Sr. Secured Credit Facilities CHARTER COMMS: Posts $459 Million Net Loss in 2006 1st Fiscal Qtr. CHEMED CORP: Shareholders Reelect 13 Directors to Board CINRAM INT'L: Declares CA$0.2177 Initial Cash Distribution CONSOLIDATED ENERGY: Killman Murrell Raises Going Concern Doubt DLJ MORTGAGE: Moody's Cuts Rating on 2 Cert. Classes to Caa2 DYNEGY INC: Launches 35 Million Class A Common Stock Offering DYNEGY INC: Redeeming $400 Mil. Series C Pref. Stock Tomorrow EASTMAN KODAK: Fitch Downgrades Sr. Unsecured Debt Rating to B- EL PASO CORPORATION: Launches 35 Million Common Stock Offering ENRON CORP: Settle MegaClaim Lawsuit with Credit Suisse for $90M ERIE TOBACCO: Moody's Withdraws Rating on Term Bonds FEDERAL-MOGUL: U.S. Trustee Seeks Court Approval for Kenesis Pact FEDERAL-MOGUL: Wants to Hire Kenesis Group as Insurance Consultant FIDELITY NATIONAL: Acquires 70% Interest in Cascade Timberlands FIRST UNION: Moody's Holds Low-B Rating on 3 Certificate Classes FOAMEX INTERNATIONAL: Panel Hires Synergetics as Business Advisor FOAMEX INTERNATIONAL: Assumes Amended Inolex Chemical Contract FRANK'S OILFIELD: Voluntary Chapter 11 Case Summary GENELABS TECHNOLOGIES: Nasdaq Issues Delisting Notice GRANDE COMMS: Moody's Ups Corporate Family & Notes Rating to Caa1 GT BRANDS: Files Amended Disclosure Statement with S.D.N.Y. GULF COAST: Court Schedules Auction for Some Assets on June 1 GULF COAST: Creditors' 341(a) Meeting Scheduled for June 7 HANGER ORTHOPEDIC: Gets Required Consents for $215MM Senior Notes HAWK CORP: Moody's Rates $110 Million Sr. Unsec. Notes at B2 INSEQ CORPORATION: Posts $1.8 Mil. Net Loss in 2005 INTERLINE BRANDS: Commences Tender Offer 11-1/2% Senior Sub. Notes INTERPLAY ENTERTAINMENT: Auditor Raises Going Concern Doubt KINETIC CONCEPTS: Earns $43.7 Million in Quarter Ended March 31 KOEN BOOK: Can Solicit Votes for Plan After Disclosure Approval LARRY'S MARKETS: Panel Hires Preston Gates as Bankruptcy Counsel LARRY'S MARKETS: Files Schedules of Assets and Liabilities LARRY'S MARKETS: Gets Interim Nod on Scarff as Special Counsel LEVITZ HOME: Balks at Remediation Contract Payment LEVITZ HOME: PetSmart Calls for Compliance with Sublease Terms LEVITZ HOME: Moves to Reject Eletto-Seaman Delivery Contract LING HSU: Case Summary & 11 Largest Unsecured Creditors MAGELLAN HEALTH: Moody's Affirms B1 Sr. Sec. Debt Facility Rating MANITOWOC CO: Moody's Holds Corporate Family Rating at Ba3 MOLECULAR DIAGNOSTICS: Hires Amper Politziner as New Auditors MORTGAGE ASSISTANCE: Sutton Robinson Raises Going Concern Doubt OCA INC: Taps Spencer Stuart as Executive Search Consultants PANTRY INC: Earns $9 Million in Three Months Ended March 31 PERFORMANCE TRANSPORTATION: Timothy Skillman to Serve as CRO PERFORMANCE TRANSPORTATION: GECC Seeks Decision on Five Leases PLIANT: Files Exit Financing Committee Letter & Plan Supplements PRG-SCHULTZ: March 31 Balance Sheet Upside-Down by $101.7 Million RAMP SERIES: DBRS Places Low-B Rating on $6.8 Million NIM Notes. RESIDENTIAL ASSET: Fitch Holds Low-B Rating on Four Cert. Classes RIVERSTONE NETWORKS: Wants Until August 7 to File Civil Actions ROBERT INGRAHAM: Case Summary & 20 Largest Unsecured Creditors ROTECH HEALTHCARE: Incurs $2.9 Million Net Loss in First Quarter SAINT VINCENTS: Proposes Bidding Procedures for St. Mary's Sale SAINT VINCENTS: Files Statement of Reclamation Claims SAINT VINCENTS: Intends to Pay $425,000 Break-Up Fee to NAL SAINT VINCENTS: Balks at NYH's Demands for Agreements Decision SAV-ON LTD: Court Approves $4.62-Million Asset Sale to R. Waghorne SEALY MATTRESS: Moody's Ups Rating on $565 Mil. Term Loan to Ba3 SILICON GRAPHICS: Inks Restructuring Agreement with SGI Holders SILICON GRAPHICS: Wants Adequate Assurance for Utility Companies SILICON GRAPHICS: Seeks Court's Nod to Reject 3 Unexpired Leases SOLO CUP: Posts $22.1 Million Net Loss in First Fiscal Quarter SOLUTIA INC: Balance Sheet Upside-Down by $1.47 Bil. at March 31 SOLUTIA INC: Asks Court to Approve Solicitation Procedures SOLUTIA INC: Bank of N.Y. says Disclosure Statement is Inadequate SOTHEBY'S HOLDINGS: Can Access $50MM More Under BofA Credit Deal SPX CORP: Fitch Upgrades Issuer Default Rating to BB+ from BB SWIFT INSTRUMENTS: Case Summary & 20 Largest Unsecured Creditors SYDNEY SHABER: Voluntary Chapter 11 Case Summary TELOGY INC: Court Confirms Fifth Amended Plan of Reorganization TOYS "R" US: Plans to Relaunch E-Commerce Sites on July 1 UNUMPROVIDENT CORP: Moody's Holds Ba1 Rating on Sr. Unsec. Debt VILLAGES AT SARATOGA: Court OKs Appointment of Chapter 11 Trustee VITESSE SEMICONDUCTOR: Gets Delisting Notice from Nasdaq WAMU MORTGAGE: S&P Affirms Four Certificate Classes' Low-B Ratings WHIRLPOOL CORP: Expects $400MM Cost Savings Due to Maytag Merger W.R. GRACE: Asks Court to Approve Lloyd's London Settlement Pact W.R. GRACE: Row Ensues Over Fees of Libby Claimants' Professionals W.R. GRACE: CHL Administration's Claim Cut 65% to $1.7 Million WINN-DIXIE: Associated Grocers Buys Pompano Center for $51 Million WINN-DIXIE: Wants to Assume 75 Store Leases on Plan Effective Date WINN-DIXIE: Assumption of Modified Hallmark Marketing Pact Okayed * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ********* 2135 GODBY: Hires Macey Wilensky as Bankruptcy Counsel ------------------------------------------------------ 2135 Godby Property, LLC, obtained authority from the U.S. Bankruptcy Court for the Northern District of Georgia to employ Macey, Wilensky, Kessler, Howick & Westfall, LLP, as its bankruptcy counsel. Macey Wilensky is expected to: a. give the Debtor legal advice with respect to its powers and duties as debtor-in-possession in the management of its property; b. prepare on behalf of the Debtor as debtor-in-possession, necessary schedules, application, motions, answers, orders, reports and other legal matters; c. assist in the examination of the claims of creditors; d. assist with the formulation and preparation of the disclosure and plan of reorganization and with the confirmation and consummation; and e. perform all other legal services for the Debtor, as necessary. The Debtor discloses that the Firm's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Frank B. Wilensky, Esq. Attorney $375 Todd E. Hennings, Esq. Attorney $315 William A. Rountree, Esq. Attorney $240 Judith A. Miniatis Paralegal $110 Sandra H. McConnell Paralegal $110 Patricia G. Benjamin Paralegal $110 To the best of the Debtor's knowledge, the firm has no connection with the creditors, or any other party-in-interest, or their respective attorneys. Headquartered in Calabasas, California, 2135 Godby Property, LLC, dba Quail Creek Apartments, owns and operates a 486-unit apartment in 2135 Godby Road, College Park, Georgia. The company filed for chapter 11 protection on May 1, 2006 (Bankr. N.D. Ga. Case No. 06-65007). Todd E. Hennings, Esq., at Macey, Wilensky, Kessler, Howick & Westfall, LLP, represents the Debtor in its restructuring efforts. No Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. 2135 GODBY: Wants Access to Legg Mason's Cash Collateral -------------------------------------------------------- 2135 Godby Property, LLC, asks the U.S. Bankruptcy Court for the Northern District of Georgia for permission to use cash collateral, securing repayment of a $11.6 million debt to Legg Mason Real Estate Holdings, VI, Inc. The Debtor operates a 486-unit apartment complex at 2135 Godby Road in College Park, Georgia. Legg Mason asserts a first priority lien on the apartment complex and any revenue from the property. The Debtor tells the Court that as of March 7, 2005, the property was valued at $15 million and operates at 65% occupancy. Use of Cash Collateral The Debtor says that it will use the cash collateral to meet ordinary operating expenses and maintain the property. The Debtor plans to use the cash collateral, in accordance with a budget, from May 2006 to April 2007. A copy of that budget is available for free at http://ResearchArchives.com/t/s?9b0 As adequate protection, the Debtor will grant Legg mason replacement liens in rents and associated revenues generated post- petition of the same kind, extent and priority as the prepetition lien. Renovation Reserve The Debtor also asks the Court for permission to use the $400,000 renovation reserve fund held by Legg Mason. The Debtor will use the fund to rehabilitate the apartment units in order to increase the value of the estate. According to the Debtor, Legg Mason has a sizable equity cushion and its interest on the property is adequately protected. The Debtor assures the Court that it can make payments against interests on the Legg Mason claims. About 2135 Godby Headquartered in Calabasas, California, 2135 Godby Property, LLC, dba Quail Creek Apartments, owns and operates a 486-unit apartment in 2135 Godby Road, College Park, Georgia. The Company filed for chapter 11 protection on May 1, 2006 (Bankr. N.D. Ga. Case No. 06-65007). Todd E. Hennings, Esq., at Macey, Wilensky, Kessler, Howick & Westfall, LLP, represents the Debtor in its restructuring efforts. No Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. 2135 GODBY: Legg Mason Says There Is No Cash Collateral to Use -------------------------------------------------------------- Legg Mason Real Estate Holding VI, Inc., a secured creditor in 2135 Godby Property, LLC's chapter 11 case asks the United States Bankruptcy Court for the Northern District of Georgia to prohibit the Debtor from using the rent proceeds of its apartment complex in College Park, Georgia. The Debtor is seeking permission from the Court to use Legg Mason's cash collateral. Legg Mason asserts a first priority lien on the apartment complex and any revenue from the property. Promissory Note The Debtor executed and delivered a Promissory Note in the amount of $11.6 million to Legg Mason Real Estate Capital, Inc., on May 6, 2005. Legg Mason says that to secure repayment of that debt, the Debtor executed a Deed to Secure Debt and Security Agreement. Under that agreement, the Debtor conveyed to Legg Mason a security interest in and title to the Debtor's property. Legg Mason issued the Debtor a notice of default on March 16, 2006, after the Debtor failed to make interest payments due in February and March 2006. On Mar. 17, 2006, Legg Mason gave notice that it was accelerating the obligations owed under the note. Legg Mason further notified Regions Bank, where rents from the property were deposited, of the default. Under the terms of the Deposit Account Agreement, the Bank will hold the account for Legg Mason. Legg Mason will have the exclusive right to direct the Bank regarding the disposition of all checks deposited into the account. According to Legg Mason, the Debtor remains in default and as of May 1, 2006, owes it $12,146,017. Legg Mason says interest continues to accrue on the debt. No Cash Collateral to Use Legg Mason claims that the Debtor no longer has any right to those funds applied against its indebtedness prior to May 1, 2006. Legg Mason argues that it has absolute assignment of the Debtor's rents, thus these rents are not property of the Debtor's estate. Legg Mason also contends that in accordance with the loan document provisions, the renovation reserve, funds deposited in a deposit account, as well as certain other tax and insurance reserves that the Debtor requested to use as cash collateral no longer exist. About 2135 Godby Headquartered in Calabasas, California, 2135 Godby Property, LLC, dba Quail Creek Apartments, owns and operates a 486-unit apartment in 2135 Godby Road, College Park, Georgia. The company filed for chapter 11 protection on May 1, 2006 (Bankr. N.D. Ga. Case No. 06-65007). Todd E. Hennings, Esq., at Macey, Wilensky, Kessler, Howick & Westfall, LLP, represents the Debtor in its restructuring efforts. No Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. 2929 PANTHERSVILLE: Section 341(a) Meeting Scheduled for June 15 ---------------------------------------------------------------- The U.S. Trustee for Region 21 will convene a meeting of 2929 Panthersville Associates' creditors at 2:00 p.m., on June 15, 2006, at Room 365, Russell Federal Building, 75 Spring Street Southwest in Atlanta, Georgia. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Atlanta, Georgia, 2929 Panthersville Associates owns a 518-unit apartment known as the Spanish Trace East Apartments in Decatur, Georgia. The company filed for chapter 11 protection on May 1, 2006 (Bankr. N.D. Ga. Case No. 06-64988). John A. Christy, Esq., at Schreeder, Wheeler & Flint, LLP, represents the Debtor. No Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for protection from its creditors, it estimated assets between $1 million and $10 million and debts between $10 million and $50 million. 2929 PANTHERSVILLE: Can Use Lender's Cash Collateral Until June 14 ------------------------------------------------------------------ The Hon. Margaret H. Murphy of the U.S. Bankruptcy Court for the Northern District of Georgia gave 2929 Panthersville Associates interim access to cash collateral securing repayment of its debt to LaSalle Bank National Association. LaSalle Bank is Trustee for the registered holders of Morgan Stanley Capital I, Inc. Commercial Pass-through Certificates, Series 1999-RM1. Use of the cash collateral will allow the Debtor to meet current operating expenses, which include insurance, utilities and supplies. The Debtor is authorized to use the cash collateral until June 14, 2006, in accordance to a budget filed with the Court. A copy of the budget is available for free at: http://ResearchArchives.com/t/s?9b8 As adequate protection for its interests, the Debtor grants La Salle Bank replacement liens and security interests to the extent of any diminution in value of its collateral. Headquartered in Atlanta, Georgia, 2929 Panthersville Associates owns a 518-unit apartment known as the Spanish Trace East Apartments in Decatur, Georgia. The company filed for chapter 11 protection on May 1, 2006 (Bankr. N.D. Ga. Case No. 06-64988). John A. Christy, Esq., at Schreeder, Wheeler & Flint, LLP, represents the Debtor. No Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for protection from its creditors, it estimated assets between $1 million and $10 million and debts between $10 million and $50 million. ADELPHIA COMMS: Asks Court to Approve Century/ML Settlement Accord ------------------------------------------------------------------ Adelphia Communications Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to approve a Settlement Agreement and Mutual General Release with Century/ML Cable Venture. Adelphia Communications and its wholly owned, indirect subsidiary, Century Communications Corp., entered into a Settlement Agreement and Mutual General Release on May 11, 2006, with the: -- post-confirmation bankruptcy estate of Century/ML Cable Venture; and -- ML Media Partners, LP, former co-owner of Century/ML. Century/ML is a joint venture that was owned 50% by Century and 50% by ML Media; and sold, pursuant to an Interest Acquisition Agreement dated June 3, 2005, to San Juan Cable, LLC, an entity formed by MidOcean Partners, and its partner, Crestview Partners. The sale was consummated on Oct. 31, 2005, with one-half of the net proceeds placed in an escrow account for the benefit of ML Media and the other half placed in an escrow account for the benefit of Century. Pursuant to the Settlement Agreement, ML Media will receive: a. approximately $264,000,000 in the ML Media Escrow Account; b. $87,000,000 settlement payment from Century out of the Century Escrow Account funds; and c. general releases and indemnities related to the continuing relationship with San Juan Cable, which the Debtors will provide. The Debtors, on the other hand, will receive: a. approximately $264,000,000 in the Century Escrow Account, less the $87,000,000 Settlement Payment and a $3,600,000 payment to San Juan Cable; b. $24,400,000 from ML Media's transfer of right to receive half of the Delayed Consideration. As provided by the Interest Acquisition Agreement and Century/ML's Plan of Reorganization, the Delayed Consideration consists of: -- the funds remaining in the Plan Funding Reserve, at least $6,000,000 of which will become immediately available to Century on the Settlement Agreement's consummation; -- the $25,000,000 in the Indemnity Escrow Account. Pursuant to the Settlement Agreement, Century will now be entitled to all recoveries from the Indemnity Escrow Account, half of which is scheduled to be released on June 31, 2006, and the other half on December 31, 2006; and -- the $31,500,000 Deferred Purchase Price that secures the obligations of Century/ML to pay certain tax liabilities. The deferred purchase price will be paid out in installments over several years. Pursuant to the Settlement Agreement, the Debtors will be entitled to receive ML Media's share of the Deferred Purchase Price. The Debtors presently estimate a maximum recovery of approximately $11,800,000 of the Deferred Purchase Price; and c. general releases, including those relating to claims of Century/ML, and dismissal of all litigation. A copy of the Settlement Agreement is available for free at http://ResearchArchives.com/t/s?9b4 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. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. (Adelphia Bankruptcy News, Issue No. 132; Bankruptcy Creditors' Service, Inc., 215/945-7000) ADELPHIA COMMS: Sets Discovery Schedule Over Boies Schiller Fees ---------------------------------------------------------------- Adelphia Communications Corporation and its debtor-affiliates, the Official Committee of Unsecured Creditors, the United States Trustee, the Official Fee Committee, and Boies Schiller & Flexner, LLP, stipulate and agree to this discovery schedule with respect to the firm's final fee application, filed October 3, 2005: 1. The Parties will serve responses and objections to all requests for discovery by July 14, 2006. 2. The Parties will complete all document production by July 31, 2006. 3. The Parties will start depositions of fact witnesses no earlier than September 5, 2006. 4. The Parties will complete depositions of fact witnesses by October 30, 2006. 5. The Parties will exchange lists of expert witnesses and expert reports by November 6, 2006, and will complete depositions of experts by December 4, 2006. 6. Objections to the Application are due by January 5, 2007. 7. Boies Schiller will file its reply by February 5, 2007. The U.S. Bankruptcy Court for the Southern District of New York approved the parties' stipulation. 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. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. (Adelphia Bankruptcy News, Issue No. 132; Bankruptcy Creditors' Service, Inc., 215/945-7000) AES CORPORATION: Fitch Affirms Senior Subordinated Notes' B Rating ------------------------------------------------------------------ Fitch affirmed The AES Corporation's Issuer Default Rating at 'B+'. Fitch also affirmed and withdrew the ratings for the company's junior convertible debt. The Rating Outlook for all remaining instruments is Stable. AES's ratings reflect: * the high degree of parent company recourse debt; * the structural subordination of that debt to project level debt; and * the reliance on distributions from its subsidiaries for parent company debt service. Offsetting, in part, the company's financial risk is the solid base of utility and contracted generation as well as the unparalleled diversity of cash flow sources. Reflecting the uniqueness of its investments and franchises, AES is frequently lumped in the category of 'merchant generators.' In actuality, this is inaccurate. The vast majority of the company's cash flows are derived from utility operations and contracted generation (i.e. generation with at least 75% of its capacity contracted for not less than five years). For 2005, utility and contracted generation segments accounted for more than 80% of distributions to the parent company. This number is abnormally high and in part reflects the timing of certain distributions. However, Fitch expects that these two segments will continue to account for approximately 70% of distributions to the parent for the next several years which refutes the view that AES is a merchant generating company. The company's ratings also reflect the significant progress the company has made in reducing debt and enhancing liquidity. However, it is clear that the company has shifted its focus from credit improvement to growth. Debt retirement has slowed and this slowing has coincided with the announcement of a host of projects, both greenfield (Martiza East, Buffalo Gap) and acquisitions (Tehachappi). In the past, AES has been aggressive with 'double leverage'; funding the 'equity' portion of new investments with borrowings at the parent company level. Management has disavowed this practice going forward and committed to funding future investments with a prudent mix of true equity and debt. A drawback of the company's extensive international operations relates to coordinating and reconciling financial reporting of the company's disparate operations. AES was required to restate its financial statements twice in the last 18 months due to errors made in the process of preparing consolidated financials. While the resulting restatements were relatively minor and non-cash in nature, the company's difficulties in this regard point to the challenges of managing its far-flung operations. Moreover, the withdrawal of the company's financial statements caused a default under its secured credit facility. While AES was able to obtain a waiver of the default, should such an event recur in the future under a less forgiving credit environment, it may present an operating challenge to the company. The current rating action does not affect the ratings of other AES affiliates rated by Fitch. In general, these rated entities are bankruptcy remote from AES by virtue of their legal structure or by virtue of their country of location. AES is a leading global power company, with 2005 sales of $11.1 billion. AES operates in 26 countries, with generating capacity of 44,000 megawatts of electricity through 127 power facilities and delivers electricity through 14 distribution companies. Fitch affirmed these ratings: AES Corporation: -- Senior secured credit facility 'BB+/RR1' -- Junior secured notes 'BB+/RR1' -- Senior unsecured notes 'BB/RR2' -- Senior subordinated notes 'B/RR5' AES Trust III: -- Trust preferred securities 'B/RR5' AES Trust VII: -- Trust preferred securities at 'B/RR5' The Outlook on all Ratings is Stable. Fitch also affirmed the rating of AES's convertible notes at 'B' and simultaneously withdraws the rating. AFFINITY TECH: Sets Annual Stockholders' Meeting on June 15 ----------------------------------------------------------- The Annual Meeting of the Stockholders of Affinity Technology Group, Inc., will be held at the Ramada Plaza Hotel, 8105 Two Notch Road, in Columbia, South Carolina, on June 15, 2006, at 10:00 a.m. During the meeting stockholders will be asked to: a) elect three members to the Board of Directors; b) consider and vote upon a proposal to amend the Certificate of Incorporation of the Company to increase the number of authorized shares of common stock, par value $0.0001 per share, from 60 million shares to 100 million shares; and c) consider and vote upon a proposal to ratify the appointment of Scott McElveen L.L.P. as the Company's independent public accounting firm for the year ending Dec. 31, 2006. The Board of Directors fixed the close of business on April 17, 2006, as the record date for the determination of stockholders entitled to vote at the meeting. A full-text copy of the proxy statement for the annual stockholders' meeting is available for free at: http://researcharchives.com/t/s?9a6 About Affinity Technology Through its subsidiary, decisioning.com, Inc., Affinity Technology Group, Inc. -- http://www.affi.net/-- owns a portfolio of patents that covers the automated processing and establishment of loans, financial accounts and credit accounts through an applicant- directed remote interface, such as a personal computer or terminal touch screen. Affinity's patent portfolio includes U. S. Patent No. 5,870,721C1, No. 5,940,811, and No. 6,105,007. * * * Going Concern Doubt As reported in the Troubled Company Reporter on April 19, 2006, Scott McElveen, L.L.P., expressed substantial doubt about Affinity Technology Group, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2005. The auditing firm pointed to the company's recurring operating losses, accumulated deficit, and certain convertible notes in default. As of Dec. 31, 2005, the company's balance sheet showed total assets of $152,311 and total debts of $2,200,682. At Dec. 31, 2005, the company had an accumulated deficit of $69.2 million compared to an accumulated deficit of $68.7 million for the same period in 2004. At Dec. 31 2005, Affinity Technology's equity deficit widened to $2,048,371, from a $1,513,523 equity deficit at Dec. 31, 2004. AIR CONDITIONING: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Air Conditioning Enterprises, Inc. dba Heating & Cooling Services, Inc. P.O. Box 31443 Independence, Ohio 44131-0443 Bankruptcy Case No.: 06-12027 Type of Business: The Debtor offers air conditioner repair services. Chapter 11 Petition Date: May 23, 2006 Court: Northern District of Ohio (Cleveland) Judge: Randolph Baxter Debtor's Counsel: Kenneth J. Freeman, Esq. Kenneth J. Freeman Co., LPA 515 Leader Building 526 Superior Avenue Cleveland, Ohio 44114-1903 Tel: (216) 771-9980 Fax: (216) 771-9978 Total Assets: $123,694 Total Debts: $1,093,876 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ SN Servicing Corp. Real Estate $244,183 323 5th Street Eureka, CA 95501 Avery Engineering Co., Inc. Judgment $113,802 8693 Lake Forest Court Chagrin Falls, OH 44023 Ameritech Publishing Inc. Advertising $24,077 30600 Telegraph Road Bingham Farms, MI 48025 Thomas Reising Commissions $23,061 Shell Oil Credit Card $12,975 Gardiner Service Supplier $7,544 Commercial Crane Supplier $4,950 National City Bank Credit Card Purchases $4,919 The Trane Company Supplier $4,853 Ware-Shearer Supplier $3,685 Virginia Air Distributors, Inc. Supplier $3,139 Crane Ohio Supplier $2,600 Ralco Industrial Supplier $2,158 York International Supplier $1,901 Lennox Industries, Inc. Supplier $1,878 Jasher Roofing Supplier $1,750 Arzel Technology Supplier $1,443 Grainger, W.W. Inc. Supplier $1,261 Pliotron Corp. of America Supplier $1,091 Marles Business Systems Inc. Supplier $1,028 AIRNET COMMS: Bankruptcy Filing Prompts Nasdaq's June 1 Delisting ----------------------------------------------------------------- The Nasdaq Stock Market Inc. advised AirNet Communications Corporation that the Company will be delisted from The Nasdaq Stock Market at the opening of business on June 1, 2006 pursuant to Marketplace Rules 4300, 4450 (f), and IM-4300. Nasdaq's determination is based on these factors: -- the Company's voluntary filing under Chapter 11 of the U.S. Bankruptcy Code on May 22, 2006, and the public interest concerns raised by the Filing; -- concerns regarding the residual equity interest of the existing listed securities holders; and -- concerns about the Company's ability to sustain compliance with all requirements for continued listing on The Nasdaq Stock Market. The Company has the right to request an expedited hearing to appeal the Nasdaq's delisting determination under the Marketplace Rule 4800 Series. In the event of such an appeal, the Company would have to address continued listing requirements including minimum bid price, market value of securities in the public float, and stockholders equity. The Company currently has no plans to appeal the Nasdaq determination. Since the Company does not plan to appeal the Nasdaq's delisting determination, the Company's securities will not be immediately eligible to trade on the OTC Bulletin Board or in the "Pink Sheets." The securities may become eligible if a market maker makes application to register in and quote the security in accordance with SEC Rule 15c2-11, and such application is cleared. Only a market maker, not the Company, may file a Form 211. Pursuant to Marketplace Rules 6530 and 6540, a Form 211 cannot be cleared if the Company is not current in its filing obligations. As of May 25, 2006, the Company was not current in its filing obligations. About AirNet Based in Melbourne, Florida, AirNet Communications Corporation -- http://www.airnetcom.com/-- is a supplier of wireless base stations and other telecommunications equipment that allow service operators to cost-effectively and simultaneously offer high-speed wireless data and voice services to mobile subscribers. The Company filed for chapter 11 protection on May 22, 2006 (Bankr. M.D. Fla. Case No. 06-01171). R. Scott Shuker, Esq., at Gronek & Latham LLP, in Orlando, Florida, represents the Debtor. When the Debtor filed for protection from its creditors, it listed assets of $15,701,881, and debts of 21,615,346. ALLIED HOLDINGS: Teamsters Appeal CBA Rejection in District Ct. --------------------------------------------------------------- Teamsters National Automobile Transporters Industry Negotiating Committee and certain Local Unions, all affiliated with the International Brotherhood of Teamsters in the United States, took an appeal to the U.S. District Court for the Northern District of Georgia from the U.S. Bankruptcy Court for the Northern District of Georgia's decision granting Allied Holdings, Inc., and its debtor-affiliates interim relief from their collective bargaining agreement. The Teamsters want the District Court to review whether the Bankruptcy Court's erred in: * permitting a motion under Section 1113(e) of the Bankruptcy Code for interim relief to proceed in the absence of a pending proceeding initiated under Section 1113(b); * giving standing to the agent for the DIP lenders and in giving decisional weight to the lenders' demand that Section 1113(e) relief be granted; * failing to require the Debtors to prove the collective bargaining agreement was the cause of their imminent collapse; * permitting the Debtors to breach their collective bargaining agreement for the benefit of the DIP lenders, by imposing wage cuts to pay interest on the lenders' loans; * permitting the Debtors to breach their collective bargaining agreement for the benefit of executives, managers and restructuring professionals, by imposing wage cuts as a transfer payment from rank-and-file workers to other constituencies; and * refusing to supplement the record with an offer of proof that the Debtors continued to spend cash on discretionary items on the day after the hearing. Teamsters Seek Leave to File Appeal The Teamsters ask the District Court to rule that only parties-in- interest in the proceeding are the parties to the collective bargaining agreement, specifically, the Debtors, Morgan Stanley Senior Funding, and the Teamsters. The Teamsters also seek for a reversal of the Bankruptcy Court's Order granting interim relief from the collective bargaining agreement, and an order that the wage cuts imposed be re-paid to employees covered by the collective bargaining agreement as expenses of administration entitled to priority. Frederick Perillo, Esq., at Previant, Goldberg, Uelmen, Gratz, Miller and Brueggeman, s.c., in Milwaukee, Wisconsin, says the order under appeal is arguably a final order. Mr. Perillo tells the District that if the order is not final, the request for leave to appeal should be granted because: -- denial of leave to appeal will effectively terminate the litigation and will cause irreparable harm to the employees. For the employees who will lose over $4,000,000 in the next 50 days, the interlocutory appeal is the only chance to make a legal argument to an appellate body why their wages should not have been cut; -- there are substantial weaknesses in the Court's opinion including improperly granting: * interim relief without taking into account the requirements of Section 1113; * standing to the Secured Lender's Agent; and * relief in the absence of proof that the contract is the "but for" cause of the Debtors' imminent collapse. -- the issues presented are primarily legal issues, important in themselves and to the litigation, some of which will escape review entirely if not heard now; and -- the "emergency" nature and status of the litigation supports leave to appeal. Headquartered in Decatur, Georgia, Allied Holdings, Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provides the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provides financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Allied Holdings Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALLIED HOLDINGS: Seeks Declaratory Judgment on Insurance Deals -------------------------------------------------------------- During the 1980s and 1990s, Allied Holdings, Inc., and its debtor-affiliates offered certain executives the opportunity to participate in split-dollar life insurance arrangements, which were then common forms of executive benefits. Under the arrangement, the Debtors advanced the premium payments required to maintain whole or universal life insurance on the lives of their executives. The owners of the policies were trusts established by the executives. The life insurance policies were assigned to the insurance trusts, but the trusts collaterally assigned to the Debtors the policies for the purpose of providing the Debtors with a security interest in both the policies' cash value and the policies' death benefit equal to the total of the Debtors' interest in the premiums they had advanced. The relationships between the Debtors and insurance trusts are governed by insurance agreements entered into with the trustees of the various insurance trusts. The insurance agreements contain provisions defining the circumstances under which the Debtors are entitled to be reimbursed their interest in the premiums advanced. Pursuant to the Sarbanes-Oxley Act of 2002, which in part prohibits loans by the Debtors to their officers and directors, the Debtors ceased advancing funds for the payment of premiums in 2002. Berner F. Wilson, Jr. Berner F. Wilson, Jr. is a member of the Board of Directors of Allied Holdings, Inc. Between January 1, 1992, and September 1, 1995, three life insurance policies were issued on the life of Mr. Wilson: Debtors' Net Cash Policies Interest Surrender Value -------- -------- --------------- General American Policy $63,941 $86,201 No. 3916882 General American Policy 148,187 17,004 No. 3936472 New York Life Policy 550,795 546,856 No. 44772597 -------- TOTAL $762,932 ======== The BFW Trust Agreement dated May 3, 1994, was entered into between the Mr. Wilson as the grantor and Beverly Wilson and Michael Axelrod as the trustees. The BFW Trust was funded with the BFW Policies. Jeffrey W. Kelley, Esq., at Troutman Sanders LLP, in Atlanta, Georgia, notes that the Debtors and the Trustees entered into a BFW Split-Dollar Agreement, dated May 3, 1994, under which the Debtors advanced sums for the payment of the premiums necessary to maintain the BFW Policies. Collateral assignments for each of the BFW Policies were executed by the Debtors and the BFW Trust. Pursuant to the BFW Split-Dollar Insurance Agreement, and the Collateral Assignments, the Debtors hold a collateral interest in the BFW Policies to the extent of their Net Cash Surrender Value. The BFW Split-Dollar Insurance Agreement terminated on July 31, 2005, due to the filing of the Debtors' Chapter 11 petition. The BFW Split-Dollar Insurance Agreement provides that each of the of the subject insurance policies are to be collaterally assigned by the Trustees to an escrow agent, on behalf of the Debtors, to secure the payment to the Debtors of their interests in the Policies. Each of the Collateral Assignments provides that the Debtors' security interest in the Policy will be limited to: * the right to realize against the cash value of the policy in the event of the termination of employment by the Insured; * the right to realize against the cash value in the event of failure by the Insured or his transferee to pay that portion of the premium; * the right to realize against the cash value in the event the Agreement is terminated by either party; and * the right to realize against the proceeds of the Policy, as provided in the Agreement, in the event of the death of the Insured. Under the terms of the BFW Split-Dollar Insurance Agreement and the Collateral Agreements, the Debtors are presently due their interest in the proceeds of the Policies calculated as of July 31, 2005, Mr. Kelley says. However, the Trustees refuse to surrender the Policies to provide funds for the payment of the Debtors' interests in the Policies. Mr. Kelley asserts that the Debtors' estates will be irreparably harmed if the Trustees fail to surrender the Policies. The Debtors are entitled to judgment compelling the Trustees to surrender the Policies and declaring that the Trustees are not authorized to use the cash values of the Policies to pay premiums prior to its surrender. In addition, the Trustee must repay all postpetition loans against the cash values of the Policies to the extent the loans exceed the amounts of the equity cushion, Mr. Kelley tells the U.S. Bankruptcy Court for the Northern District of Georgia. A. Mitchell Poole, Jr. A. Mitchell Poole, Jr. is a former officer and member of the Board of Directors of Allied Holdings, Inc. Between December 26, 1991, and March 20, 1995, five life insurance policies were issued on the life of Mr. Poole: Debtors' Net Cash Policies Interest Surrender Value -------- -------- --------------- General American Policy $156,060 $133,518 No. 3936473 General American Policy 43,351 59,847 No. 3916947 General American Policy 10,862 14,096 No. 3917195 New York Life Policy 381,063 407,609 No. 44772807 New York Life Policy 102,429 98,360 No. 44775492 -------- TOTAL $693,756 ======== The Poole Insurance Agreement was entered into between Mr. Poole as the grantor, and Rebecca C. Poole and Donna D. Glenn as the trustees. The Debtors and the Trustees entered into a certain Poole Split-Dollar Insurance Agreement. The Poole Split-Dollar Agreement was subsequently amended. Pursuant to the terms of the Poole Split-Dollar Insurance Agreement, the Debtors advanced sums for the payment of the premiums necessary to maintain the Poole Policies. Similarly, the Poole Insurance Trust and the Debtors executed collateral assignments for each Poole Policies, Mr. Kelley relates. Pursuant to the Poole Split-Dollar Insurance Agreement and the Collateral Assignments, the Debtors hold a collateral interest in the Poole Policies to the extent of their Net Cash Surrender Value. The Poole Split-Dollar Insurance Agreement terminated on July 31, 2005 due to the filing of the Debtors' voluntary chapter 11 petition. Pursuant to Paragraph 9(a) of the Poole Insurance Agreement, upon termination, the Debtors are entitled to the return of its interest in each Policy. Under the terms of the Poole Split-Dollar Insurance Agreement and the Collateral Agreements, the Debtors are presently due their interest in the proceeds of the Policies calculated as of July 31, 2005. A. Mitchell Poole and Rebecca C. Poole On March 20, 1998 a Manufacturers Life Insurance Company Policy No. 58582073 was issued on the life of Mr. Poole. The AMP Family Insurance Trust Agreement dated January 23, 1998, was entered into between A. Mitchell Poole, Jr. and Rebecca C. Poole as the grantors, and Donna D. Glenn as the trustee. The AMP Insurance Trust was funded with the AMP Policy. Subsequently, the Debtors and the Trustees entered into the AMP Split-Dollar Agreement dated March 13, 1998 under which the Debtors advanced sums for payment of the premiums necessary to maintain the AMP Policy. The AMP Insurance Trust and the Debtors executed a collateral assignment of the AMP Policy. Pursuant to the AMP Split-Dollar Insurance Agreement and the Collateral Assignment, the Debtors hold a $146,806 collateral interest in the AMP Policy to the extent of their Net Cash Surrender Value of $133,297. The AMP Split-Dollar Insurance Agreement terminated on July 31, 2005, due to the filing of the Debtors' Chapter 11 petition. Pursuant to the AMP Insurance Agreement, upon termination, the Debtors are entitled to the return of its interest in each Policy. Robert J. Rutland Several insurance policies were issued on the life of Robert J. Rutland, the chairman of the Board of Directors of Allied Holdings, Inc. (A) The RJR/CBR Policies On December 29, 2000, September 17, 1989, and June 25, 1995, three life insurance policies -- the RJR/CBR Policies -- were issued on the life of Mr. Rutland: Debtors' Net Cash Policies Interest Surrender Value -------- -------- --------------- Nationwide Policy $327,815 $1,284,461 No. N101030340 Prudential Policy 300,681 980,362 No. 62289761 Prudential Policy 412,125 461,231 No. 77775190 -------- TOTAL $1,040,621 ======== The RJR/CBR Insurance Trust dated August 11, 1993 was entered into between Robert J. Rutland and Cherry B. Rutland as the grantors, and H. Anthony McCullar and Charles W. Burge, as the trustees. The RJR/CBR Insurance Trust was funded with the RJR/CBR Policies. The Debtors and the Trustees entered into a RJR/CBR Split-Dollar Insurance Agreement on December 31, 1993. Under the terms of the RJR/CBR Split-Dollar Insurance Agreement, the Debtors advanced sums for the payment of the premiums necessary to maintain the RJR/CBR Policies. According to Mr. Kelley, collateral assignments for each RJR/CBR Policies were executed by the RJR/CBR Insurance Trust and the Debtors. Pursuant to the RJR/CBR Split-Dollar Insurance Agreement, and the Collateral Assignments, the Debtors hold a collateral interest in the RJR/CBR Policies to the extent of their Net Cash Surrender Value. The RJR/CBR Split-Dollar Insurance Agreement terminated on July 31, 2005 due to the filing of the Debtors' voluntary chapter 11 petition. Under the RJR/CBR Insurance Agreement, upon termination, the Debtors are entitled to the return of their interest in each Policy. (B) The AR-JA-AR Policies On June 1, 1999, and June 1, 2006, two life insurance policies -- AR-JA-AR Policies -- were issued on the life of Mr. Rutland: Debtors' Net Cash Policies Interest Surrender Value -------- -------- --------------- Nationwide Policy $285,075 $256,162 No. N056062860 Nationwide Policy 700,484 1,105,533 No. N056138820 -------- TOTAL $985,559 ======== The AR-JA-AR Trust Agreement was entered into by Mr. Rutland and three Trustees: * Cherry B. Rutland, * H. Anthony McCullar, and * Linda B. Rutland. The Debtors and the Trustees entered into a certain AR-JA-AR Split-Dollar Insurance Agreement on August 1, 1999, under which the Debtors advance sums for the payment of the premiums necessary to maintain the AR-JA-AR Policies. Collateral assignments for each of the AR-JA-AR were executed by the AR-JA-AR Trust and the Debtors. In addition, pursuant to the AR-JA-AR Split-Dollar Insurance Agreement and the Collateral Assignments, the Debtors holds a collateral interest in the AR- JA-AR Policies to the extent of their "Net Cash Surrender Value." The AR-JA-AR Split-Dollar Insurance Agreement terminated on July 31, 2005, due to the filing of the Debtors' Chapter 11 petition. Pursuant to AR-JA-AR Insurance Agreement, upon termination, the Debtors are entitled to the return of their interest in each Policy. Guy W. Rutland III and Linda B. Rutland Guy W. Rutland III is a member of the Board of Directors of Allied Holdings, Inc. On December 29, 2000, September 17, 1989, and June 25, 1995, three life insurance policies were issued on the life of Mr. Guy Rutland: Policies Debtors' Net Cash Interest Surrender Value -------- -------- --------------- Nationwide Policy $644,533 $1,860,515 No. N100977230 Prudential Policy 508,965 573,006 No. 77775186 Prudential Policy 400,688 1,150,512 No. 62289760 ========== TOTAL $1,544,186 Guy Rutland and Linda B. Rutland, as the grantors, entered into the GWR,III/LBR Insurance Trust dated August 11, 1993 with H. Anthony McCullar and Charles W. Burge, as the trustees. The GWR,III/LBR Insurance Trust was funded with the GWR,III/LBR Policies. The Debtors and the Trustees entered into the GWR,III/LBR Split-Dollar Insurance Agreement dated December 31, 1993. Under the terms of the GWR,III/LBR Split-Dollar Insurance Agreement, the Debtors advanced sums for the payment of the premiums necessary to maintain the GWR,III/LBR Policies. Collateral assignments for each GWR,III/LBR Policies were executed by the GWR,III/LBR Insurance Trust and the Debtors. Pursuant to the GWR,III/LBR Split-Dollar Insurance Agreement and the Collateral Assignments, the Debtors hold a collateral interest in the GWR,III/LBR Policies to the extent of their Net Cash Surrender Value. When the Debtors filed its Chapter 11 petition on July 31, 2005, the GWR,III/LBR Split-Dollar Insurance Agreement was terminated. The GWR,III/LBR Insurance Agreement provides that upon termination of the Agreement, the Debtors are entitled to the return of their interest in each Policy. Mr. Kelley tells the Court that the Trustees refuse to surrender the Policies to provide funds for the payment of the Debtors' interest in the Policies. Debtors Seek Declaratory Judgment For these reasons, the Debtors ask the Court to declare that: (1) these agreements terminated as of July 31, 2005: * BFW Split-Dollar Insurance Agreement, * Poole Split-Dollar Agreement, * RJR/CBR Split-Dollar Insurance Agreement, * GWR,III/LBR Split-Dollar Insurance Agreement, * AR-JA-AR Split-Dollar Insurance Agreement, and * AMP Split-Dollar Insurance Agreement. (2) they are presently entitled to receive their interest in the proceeds of these Policies calculated as of July 31, 2005: * BFW Policies, * Poole Policies, * RJR/CBR Policies, * GWR,III/LBR Policies, * AR-JA-AR Policies, and * AMP Policies. (3) they are presently entitled to obtain loans or other withdrawals from the Policies to the extent of their interest in the Policies. The Debtors further ask the Court to compel the Trustees to: -- surrender the Policies and turnover the Debtors' interest in the Policies; and -- repay all postpetition loans against the cash value of the Policies to the extent that the loans are greater than the equity cushion in cash value of the Policies. A full-text copy of the BFW Trust Agreement, Insurance Agreement and the Collateral Assignment is available for free at: http://researcharchives.com/t/s?9a9 A full-text copy of the Poole Trust Agreement, Insurance Agreement and the Collateral Assignment is available for free at: http://researcharchives.com/t/s?9aa A full-text copy of the RJR/CBR Trust Agreement, Insurance Agreement and the Collateral Assignment is available for free at: http://researcharchives.com/t/s?9ab A full-text copy of the GWR,III/LBR Trust Agreement, Insurance Agreement and the Collateral Assignment is available for free at: http://researcharchives.com/t/s?9ac A full-text copy of the AR-JA-AR Trust Agreement, Insurance Agreement and the Collateral Assignment is available for free at: http://researcharchives.com/t/s?9ad A full-text copy of the AMP Trust Agreement, Insurance Agreement and the Collateral Assignment is available for free at: http://researcharchives.com/t/s?9ae About Allied Holdings Headquartered in Decatur, Georgia, Allied Holdings, Inc. (OTC Pink Sheets: AHIZQ.PK) -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provides the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provides financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Allied Holdings Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000) ARGENT SECURITIES: Moody's Reviews Low-B Rating on 2 Cert. Classes ------------------------------------------------------------------ Moody's Investors Service placed under review for possible upgrade seventeen certificates from seven 2003 deals originated by Ameriquest Mortgage Company and Argent Mortgage Company, the retail and wholesale mortgage loan originators of ACC Capital Holdings. The transactions are backed by adjustable- and fixed-rate subprime mortgage loans. These certificates are being placed on review for upgrade based on their levels of credit enhancement provided by the excess spread, overcollateralization, subordinate classes, and in some cases mortgage insurance. Moody's review will focus on the degree to which projected losses are expected to be covered by credit support for these certificates. In addition, Moody's placed under review for possible downgrade fifteen certificates from ten deals originated by Ameriquest Mortgage Company and Argent Mortgage Company. The review was prompted by existing credit enhancement levels being low relative to the current projected losses on the underlying pools. Moody's review will focus on the degree to which projected losses are likely to cause eventual erosion of credit enhancement and potential loss to certificateholders. Moody's complete rating actions: Review for possible upgrade: Issuer: Ameriquest Mortgage Securities Inc. * Series 2003-3; Class M-1, current rating Aa2, under review for possible upgrade * Quest Trust 2003-X1; Class M-1, current rating Aa2, under review for possible upgrade * Quest Trust 2003-X1; Class M-2, current rating A1, under review for possible upgrade * Series 2003-AR1; Class M-1, current rating Aa2, under review for possible upgrade * Series 2003-AR1; Class M-2, current rating A2, under review for possible upgrade * Series 2003-AR3; Class M-1, current rating Aa2, under review for possible upgrade * Series 2003-AR3; Class M-2, current rating A2, under review for possible upgrade * Series 2003-AR3; Class M-3, current rating A3, under review for possible upgrade * Series 2003-AR3; Class M-4, current rating Baa1, under review for possible upgrade Issuer: Argent Securities Inc. * Series 2003-W1; Class M-1, current rating Aa2, under review for possible upgrade * Series 2003-W1; Class M-2, current rating A2, under review for possible upgrade * Series 2003-W4; Class M-1, current rating Aa2, under review for possible upgrade * Series 2003-W4; Class M-2, current rating A2, under review for possible upgrade * Series 2003-W4; Class M-3, current rating Baa1, under review for possible upgrade * Series 2003-W5; Class M-1, current rating Aa2, under review for possible upgrade * Series 2003-W5; Class M-2, current rating A2, under review for possible upgrade * Series 2003-W5; Class M-3, current rating A3, under review for possible upgrade Review for possible downgrade: Issuer: Ameriquest Mortgage Securities Inc. * Series 2002-3; Class M-4, current rating Baa3, under review for possible downgrade * Series 2002-C; Class M-2, current rating Baa3, under review for possible downgrade * Series 2003-1; Class M-4, current rating Baa3, under review for possible downgrade * Series 2003-2; Class M-3, current rating Baa2, under review for possible downgrade * Series 2003-2; Class M-4, current rating Baa3, under review for possible downgrade * Series 2003-5; Class M-3, current rating A3, under review for possible downgrade * Series 2003-7; Class M-5, current rating Baa3, under review for possible downgrade * Series 2003-8; Class M-5, current rating Baa2, under review for possible downgrade * Series 2003-8; Class MV-6, current rating Baa3, under review for possible downgrade * Series 2003-8; Class MF-6, current rating Baa3, under review for possible downgrade * Quest Trust 2003-X4; Class M-3, current rating Baa3, under review for possible downgrade * Series 2003-AR2; Class M-3, current rating Baa1, under review for possible downgrade Issuer: Argent Securities Inc. * Series 2004-PW1; Class M-9, current rating Baa3, under review for possible downgrade * Series 2004-PW1; Class M-10, current rating Ba1, under review for possible downgrade * Series 2004-PW1; Class M-11, current rating Ba2, under review for possible downgrade ARVINMERITOR: Fitch Places Debts' BB+ Ratings on Negative Watch --------------------------------------------------------------- Fitch Ratings placed the ratings of ArvinMeritor on Rating Watch Negative following the company's announcement that it will be replacing its existing $900 million unsecured revolving bank facility with a senior secured facility, including a new Term Loan-B tranche. Fitch's current ratings on ArvinMeritor are: -- Issuer Default Rating 'BB+' -- Senior unsecured debt ratings 'BB+' -- Trust preferred rating 'BB-' Since the company will be granting security in the new bank facility, the relative position of the unsecured debt holders is likely to become impaired. Fitch will analyze the size, structure, collateral and covenants contained in the new facility before assigning ratings to the bank facilities and to outstanding senior unsecured debt. Under ArvinMeritor's unsecured indentures, the company has a limitation on liens of up to 15% of the value of consolidated net tangible assets, which is defined to exclude certain 'principal property' assets. Continued stresses in ARM's core automotive market and an anticipated decline of 35%-45% in the 2007 heavy truck market will impact ARM's cash generation in 2007, leading to a review of the IDR. ARM's 2006 operating performance will continue to benefit from the strength of the heavy-duty truck market. Together with recent asset sales, this could provide a modest strengthening of ARM's balance sheet through year-end, potentially enhancing the company's resources upon entering the pending downcycle. The covenants contained in the new senior secured facility will also be a factor in the review of the IDR. BALMORAL GOLF: Seeks Protection Under Canada's Bankruptcy Act ------------------------------------------------------------- Balmoral Golf Club is seeing protection under the Bankruptcy and Insolvency Act of Canada in order to protect the investments, privileges and rights of the club's members, as well as the jobs of its staff and the agreements with its suppliers. The Company's Board of Directors said Balmoral must resort to this transitory and preventive measure because of legal procedures instigated against the Company. The lawsuits pertain primarily to decisional and administrative issues. The Board is awaiting the court ruling before it will take further action. Balmoral says the temporary situation will interfere with its regular activities. All services will be maintained. Balmoral Golf Club -- http://www.balmoralgolf.com/-- is an 18-hole golf course located at Morin Heights in Quebec, Canada. BOMBARDIER: Moody's Puts B1 Rating on C$880M Sr. Sec. Term Loan --------------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to Bombardier Recreational Products' C$250 million senior secured revolver and a B1 rating to BRP's C$880 million senior secured term loan. At the same time, Moody's affirmed BRP's B1 corporate family rating and revised the ratings outlook to negative from stable. The ratings assigned are subject to the receipt of final documentation with no material changes to the terms as originally reviewed by Moody's. In the fourth paragraph, the first sentence should be reworded as follows: "BRP is contemplating issuing roughly C$900 million of debt through a term loan for a shareholder distribution, share repurchase, refinance US$200 million of subordinated notes and for other corporate purposes", rather than "BRP is contemplating issuing roughly C$900 million of debt through a term loan to repurchase shares and issue a dividend aggregating roughly C$600 million and to refinance C$230 million of subordinated notes." The change in ratings outlook to negative reflects Moody's concern over the company's reduced financial flexibility to withstand a cyclical downturn in the recreational sports industry following its planned leverage recapitalization, which would increase adjusted leverage to 4.8x from 2.1x. In addition, the outlook reflects Moody's view that the recapitalization marks a departure from management's historically conservative financial posture at a time when there are increased uncertainties around consumer spending and high oil prices. The CFR affirmation and new rating assignments reflect BRP's consistent strong operating performance and cash flow generation, which it has historically used to repay debt, despite operating in a highly cyclical industry. The affirmation also reflects BRP's diverse product offerings, geographic diversification, brand recognition and strong market share in addition to its concentration in the marine industry, foreign exchange fluctuations and operating in a highly seasonal/cyclical industry. Because of the cyclicality of its business, Moody's expects BRP to steadily reduce its debt and to maintain higher credit metrics for its rating category. BRP is contemplating issuing roughly C$900 million of debt through a term loan for a shareholder distribution, share repurchase, refinance C$230 million of subordinated notes and for other corporate purposes. The undrawn senior secured revolver and term loan will be issued by BRP, will be guaranteed by substantially all North American operating subsidiaries and will be pari passu with each other in all respects except for security. The revolver has a first priority interest in accounts receivable and inventory and a second priority interest in all other tangible and intangible assets of the company and its subsidiaries; the term loan has a first priority interest in all other tangible and intangible assets of the company and its subsidiaries and a second priority interest in accounts receivable and inventory. The Ba2 rating of the revolver is rated two notches above the B1 CFR because of its senior position in the capital structure and its modest amount relative to overall funded debt. The B1 rating on the term loan is at the same level as the corporate family rating principally due to the preponderance of the loan in the capital structure and reasonable asset coverage based on a distressed enterprise value analysis. If the recapitalization is completed as proposed, Moody's will withdraw its ratings on BRP's existing subordinated notes rated B3 and revolver rated Ba3. For additional information, please refer to our Credit Opinion of BRP dated May 15, 2006 published on Moodys.com. Ratings assigned: * C$250 million senior secured revolver, due 2011, at Ba2; * C$880 million senior secured term loan, due 2013, at B1; Rating affirmed: * Corporate family rating to Ba3 from B1. Rating withdrawn: * $50 million senior secured term loan at Ba3 With corporate headquarters in Valcourt, Quebec, Bombardier Recreational Products Inc. is a leading designer, manufacturer, and distributor of motorized recreational products worldwide. Net sales for the twelve-month period ended January 2006 were approximately C$2.4 billion. BROOKS AUTOMATION: E.N.Y. Atty. Investigates Stock Options Grant ---------------------------------------------------------------- Brooks Automation, Inc., received a grand jury document subpoena from the U.S. Attorney for the Eastern District of New York requesting records pertaining to the granting of stock options. Brooks intends to fully cooperate with the U.S. Attorney in responding to this subpoena. Options give their holders the right to buy shares at a fixed, or exercise, price. Holders can profit by buying shares at the exercise price and selling them when the stock-market price exceeds it. Brooks Automation, Inc. (NASDAQ: BRKS) -- http://www.brooks.com/ -- is a provider of automation solutions and integrated subsystems to the global semiconductor and related industries. Brooks' products and global services are used in semiconductor fab in a number of diverse industries outside of semiconductor manufacturing. * * * As reported in the Troubled Company Reporter on May 19, 2006, holders of more than 25% of the aggregate outstanding principal amount of Brooks Automation's 4.75% Convertible Subordinated Notes due 2008 notified the Company that its previously announced failure to file its Quarterly Report on Form 10-Q for the period ended March 31, 2006, on a timely basis represented a breach of its obligations under the indenture governing the notes. CARSSX FINANCE: S&P Places Note Classes' Low-B Ratings on Watch --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on series B-3, B-4, and B-5 from CARSSX Finance Ltd. Credit Linked Notes Series 2004-A on CreditWatch with positive implications. The rating actions reflect the May 3, 2006, placement of the ratings on the underlying securities, the class B-3, B-4, and B-5 notes issued by CARSS Finance L.P. 2004-A, on CreditWatch with positive implications. This issue is a swap-independent synthetic transaction that is weak-linked to the reference obligations on the underlying collateral for each class. Ratings Placed On Creditwatch Positive: CARSSX Finance Ltd. Credit Linked Notes Series 2004-A $30 million credit linked notes Rating Referenced obligation Series Class To From --------------------- ------ ----- -- ---- Class B-3 of CARSS B-3 B-3 BB/Watch Pos BB Finance L.P. 2004-A Class B-4 of CARSS B-4 B-4 BB-/Watch Pos BB- Finance L.P. 2004-A Class B-5 of CARSS B-5 B-5 B/Watch Pos B Finance L.P. 2004-A CATHOLIC CHURCH: Portland Files Second Modified Plan ---------------------------------------------------- The Archdiocese of Portland in Oregon delivered its Second Modified Plan of Reorganization and accompanying Disclosure Statement to the U.S. Bankruptcy Court for the District of Oregon on May 22, 2006. Leonard Vuylsteke, the Archdiocese's Director of Financial Services, notes that the Second Modified Disclosure Statement and Plan provide for minimal changes. The modifications mainly deal on provisions relating to claims estimation by the U.S. District Court for the District of Oregon, insurance recoveries, and the claims resolution facility. District Court's Claim Estimation The Second Modified Plan requires the District Court to make rulings, which will: * establish the estimated aggregate amount of allowed claims for the purpose of the Reorganized Portland's providing funding for claims up to the estimated amount; and * permit the Bankruptcy Court to determine that all conditions to confirmation have been met. Absent those Rulings, Mr. Vuylsteke says, there will be no Plan confirmation. Insurance Recoveries The Archdiocese has claims against insurance companies relating to insurance coverage. The Archdiocese also has additional claims arising out of the Insurers' actions with respect to coverage and settlement of the tort claims. Mr. Vuylsteke says that at this time, the Archdiocese does not have a reliable estimate of the total value of the Insurance Claims. However, the Archdiocese believes that the Insurers owe it approximately $20,000,000 on account of prepetition claims it has settled. The Archdiocese paid approximately $18,000,000 to claimants before the Petition Date, and approximately $2,000,000 remains unpaid. Additionally, the Archdiocese believes it is entitled to substantial additional coverage for the remaining tort claims, including any future claims that may be filed. The additional coverage would include amounts due for defense costs and for payment of the remaining tort claims. Because many of the underlying tort claims have not been liquidated, and the number and nature of future claims is unknown, it is very difficult for the Archdiocese to make projections regarding the value of the claims for insurance coverage, Mr. Vuylsteke explains. The Archdiocese does not believe that it will realistically recover in excess of $100,000,000 from its insurers. The APCRF Except for rights relating to tort claims that the Archdiocese settled and paid prepetition, Portland will assign its rights that have accrued for covered losses relating to the tort claims to the Archdiocese of Portland Claims Resolution Facility, including the right to receive all Insurance Recoveries. APCRF may be joined as a co-plaintiff with the Archdiocese in any existing action for Insurance Coverage, Mr. Vuylsteke notes. APCRF will be entitled, in its sole discretion, to pursue or not pursue the Insurance Claims, except those settled prepetition, against the Insurers. Upon resolution of the Insurance Claims, all Insurance Recoveries will be paid to the APCRF for deposit in a Depository Trust and will be used to pay tort claims. Mr. Vuylsteke also notes that the Plan is intended to be "insurance neutral," meaning that all claims and defenses of Portland Archdiocese as a debtor and as a reorganized entity, any additional insurers, the APCRF, and the Insurers relating to the Insurance Claims, and all of their rights relating to the Insurance Policies, will remain unaffected by the Plan and the Confirmation Order. By including an insurance-neutrality language in the Plan, the Archdiocese and the APCRF are seeking a determination that Portland's assignment of its rights that have accrued for covered losses relating to the tort claims, to the APCRF, including the right to receive all Insurance Recoveries, does not violate the terms of the Insurance Policies or applicable non-bankruptcy law. Mr. Vuylsteke adds that all injunctions or stays protecting an Insurer that has purchased its insurance policy or policies in a sale under Section 363 of the Bankruptcy Code will remain in full force and effect following the Effective Date. Conditions to be Effective The Effective Date will not occur in the event there is an appeal taken from the Confirmation Order, challenging the limits of required funding and the Claims Resolution Facility Agreement for the release, satisfaction and discharge of all tort claims. If an Appeal regarding any discharge or funding issue has been filed, that Appeal must be denied or dismissed and the limits of the required funding must have been affirmed in all respects pursuant to a Final Order. A blacklined copy of Portland Archdiocese's Second Modified Disclosure Statement is available for free at: http://researcharchives.com/t/s?9d8 A blacklined copy of Portland Archdiocese's Second Modified Plan of Reorganization is available for free at: http://researcharchives.com/t/s?9d7 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: Portland Tort Panel Files Amended Chapter 11 Plan ------------------------------------------------------------------ The Official Committee for Tort Claimants appointed in the Chapter 11 case of the Archdiocese of Portland in Oregon filed its first amended plan of reorganization for Portland and an accompanying disclosure statement on May 22, 2006, with the U.S. Bankruptcy Court for the District of Oregon. Tort Committee Chairman Donn Christiansen says all classes of claims, except Class 7 Punitive Damages, are unimpaired and are not entitled to vote to accept or reject the Committee's Plan. Class 7 Claims will be subordinated in right of payment to all Class 5 and Class 6 Claims. Each holder of a Class 7 Claim that becomes liquidated, by settlement, arbitration or Final Order, will be entitled to be paid in Cash the full amount of the Claim, including all interest, from the Trust. Claims for punitive damages will not be paid for at least 15 years under the Committee's Plan, Mr. Christiansen notes. After January 1, 2022, punitive damage claims can be paid if all other known claims have been paid and sufficient assets are available to pay punitive damages. The Plan, however, contains no assurance as to the timing or amount of payment of punitive damages. The Plan provides for payment in full of all non-punitive damage claims as soon as the funds are available after: * the later date of the Effective Date of the Plan; or * the claim becomes due by Final Order, settlement or arbitration. The Plan establishes a Trust for the benefit of general creditors with claims in excess of $7,500. The Archdiocese will transfer to the Trust: (1) $35,000,000; (2) all of its insurance rights under certain insurance policies covering tort claims; (3) all of the Archdiocese's interests in all distributions, payments or contributions from Oregon Catholic Press; and (4) Trust Deeds on all of the Archdiocese's real property. In the event that the Trust exercises its right to foreclose Trust Deeds and sell real property, it must prioritize foreclosure of the Trust Deeds covering "Schedule A Real Property," then the Trust Deeds covering "Investment Real Property." Thereafter, the Trust will foreclose Trust Deeds in its sole discretion after a written request from the Archdiocese. Mr. Christiansen tells the Court that the Tort Committee's Plan does not require the sale of any church or school, or otherwise impair the continued operation of the Archdiocese's churches and schools, but there is no assurance that no churches will be sold. The Tort Committee cannot make an independent assessment with respect to how much certain insurance companies owe the Archdiocese in terms of insurance coverage claims because Portland refuses to provide the Committee with the necessary information, Mr. Christiansen notes. According to Mr. Christiansen, the Committee's Plan and the Confirmation Order will not have "any effect of res judicata, constitute a trial or hearing on the merits, a finding, adjudication or judgment for any purpose concerning coverage under any insurance policy issued or allegedly issued by any insurance company." Mr. Christiansen says that the Plan is insurance neutral. No provision in the Plan will have the effect of impairing the Archdiocese's, the Trust's or the Insurers' legal, equitable, or contractual rights relating to the insurance policies in any respect. Mr. Christiansen assures the Bankruptcy Court that the Plan satisfies the requirements under Section 1129(a)(11) of the Bankruptcy Code. "The Plan is feasible both as a practical matter and as a legal matter. [The Archdiocese] can perform all obligations to be performed under the Plan on the Effective Date." A blacklined copy of the Tort Claimants Committee's Disclosure Statement and Plan of Reorganization is available for free at: http://researcharchives.com/t/s?9d9 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: HR&A Pegs Claims Against Portland at $41.7M Max ---------------------------------------------------------------- Total future sex abuse claims and liability against the Archdiocese of Portland in Oregon range from 89 to 168 claims, and from $16,700,000 to $41,700,000, net present value, Hamilton, Rabinovitz & Anschuler, Inc., discloses in a report filed with the U.S. Bankruptcy Court for the District of Oregon. The forecast includes any claims that have been filed since April 29, 2005, the deadline to file proofs of claim. Hamilton was appointed by the Court as consultant to evaluate future tort claims against Portland. Hamilton reports that there is considerable uncertainty surrounding the number of future sex abuse claims that may be filed against the Archdiocese of Portland and the indemnity values that may be paid to future claims. Hamilton's estimates are based on the Archdiocese's abuse claims made or closed from 2000 through June 2004 -- the calibration period. The Period captures (i) the claim environment following the decision of the Supreme Court of the State of Oregon in Fearing v. Bucher and Lourim v. Swensen in 1999 and (ii) the prepetition claims. The uncertainties that Hamilton identified in the estimation of future abuse include: (1) Long lag between when abuse incidents occur and when claims are made -- ranges from less than 10 to over 50 years; (2) Patterns of abuse by priests that are bit homogeneous -- number of claims and annual patterns of abuse vary considerably and a small number of accused priests account for a large number of claims; (3) Abrupt change in liability standards following Fearing and Lourim decisions, which compresses most filings into a five-year period that includes the bankruptcy filing; and (4) Substantial variation in national and local publicity regarding abuse generally, church and non-church, specific to claims made against the Archdiocese, and following bankruptcy declaration. As a consequence, Hamilton discloses, the existing claims data -- 368 claims and 133 accused -- are not sufficient to support causal statistical models of abuse and claim filing behavior. Hamilton also reports two future uncertainties that complicate a future claims forecast: (1) The resolution of the large number of unresolved claims in the bankruptcy proceeding by settlement or trial may increase or decrease average indemnity values estimated from existing data; and (2) The structure and provisions of Claims Resolution Facility or other entity created to compensate future plaintiffs including: a. magnitude of assets available to compensate claimants may influence future claiming behavior -- increasing the asset pool may increase the likelihood of future claim filings, holding everything else equal; and b. allowance of punitive damages may increase the likelihood of future claim filings, holding everything else equal. A full-text copy of Hamilton's Report, entitled "Estimating the Number and Value of Future Child Sex Abuse Claims Filed Against the Archdiocese of Portland in Oregon" dated March 10, 2006, and revised on May 22, 2006, is available for free at: http://researcharchives.com/t/s?9d6 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. CHARTER COMMS: Refinances $6.85 Bil. Sr. Secured Credit Facilities ------------------------------------------------------------------ Charter Communications, Inc., has closed the refinancing of its $6.85 billion senior secured credit facilities held by Charter Communications Operating, LLC. The $6.85 billion credit facilities include: -- an increased $350 million revolver and term credit facility, -- a $5 billion term loan due in 2013, and -- certain amendments to the existing $1.5 billion revolving credit facility. The term loan pricing is LIBOR plus 2.625%. "We're very pleased with the results of this new credit facility, as we continue to make progress on our opportunistic strategy to extend debt maturities, improve liquidity, and reduce interest costs," JT Fisher, Charter's chief financial officer, said. J.P. Morgan Securities, Inc., Banc of America Securities LLC, and Citigroup Global Markets, Inc., arranged the refinance. A full-text copy of the Amended and Restated Credit Agreement is available for free at http://ResearchArchives.com/t/s?9bc Based in St. Louis, Missouri, Charter Communications, Inc. (NASDAQ: CHTR) -- http://www.charter.com/-- is a broadband communications company providing a full range of advanced broadband services to homes, including advanced digital video entertainment programming (Charter Digital(TM)), Charter High- Speed(TM) Internet access service, and Charter Telephone(TM) services. Charter Business(TM) similarly provides scalable, tailored and cost-effective broadband communications solutions to business organizations, such as business-to-business Internet access, data networking, and video and music entertainment services. Charter's advertising sales and production services are sold under the Charter Media(R) brand. * * * As reported in the Troubled Company Reporter on May 5, 2006, Fitch Ratings removed Charter Communications, Inc., and its wholly owned subsidiaries' ratings from Ratings Watch Negative and affirmed its 'CCC' issuer default rating. Fitch also assigned 'B' and 'RR1' recovery ratings to the $6.85 billion senior secured credit facility entered into by Charter Communications Operating, LLC, an indirect wholly owned subsidiary of Charter. As reported in the Troubled Company Reporter on April 17, 2006, Standard & Poor's Ratings Services assigned a 'B' rating to Charter Communications Operating LLC's $5.3 billion senior secured bank financing. As reported in the Troubled Company Reporter on Jan. 27, 2006, Moody's Investors Service assigned a Caa1 rating to the $400 million senior notes issuance at CCH II, LLC, an indirect minority-owned subsidiary of Charter Communications, Inc. Moody's also affirmed Charter Communications, Inc.'s Caa1 corporate family rating; stable outlook; and SGL-3 rating. CHARTER COMMS: Posts $459 Million Net Loss in 2006 1st Fiscal Qtr. ------------------------------------------------------------------ Charter Communications, Inc., filed its first quarter financial statements for the three months ended March 31, 2006, with the Securities and Exchange Commission on May 2, 2006. The Company reported a $459 million net loss on $1.374 billion of revenues for the three months ended March 31, 2006. At March 31, 2006, the Company's balance sheet showed $16.203 billion in total assets, $20.090 billion in total liabilities, $188 million in total minority interest, and $4 million in redeemable preferred stock, resulting in a $5.383 billion stockholders' deficit. The Company's March 31 balance sheet also showed strained liquidity with $1.030 billion in total current assets available to pay $1.304 billion in total current liabilities coming due within the next 12 months. "Disciplined execution of our growth and operating strategies is driving consistent improvement in a range of key metrics, including customer counts, average revenue per customer, total revenue, and churn," Neil Smit, the Company's president and chief executive officer, said. "Simply put, we're selling more products to more customers at better prices. We remain sharply focused on achieving profitable revenue growth by executing our strategies to enhance the end-to- end customer experience, improve operating effectiveness, grow sales and increase retention," Smit said. "The increase in average revenue per customer across all product lines, coupled with the declines in churn and the bad debt rate, indicates that we're adding high-quality customers - consistent with the results we expect from our targeted marketing and bundled product strategies," Mr. Smit said. Full-text copies of the Company's financial statements for the three months ended March 31, 2006, are available for free at http://ResearchArchives.com/t/s?9ba Based in St. Louis, Missouri, Charter Communications, Inc. (NASDAQ: CHTR) -- http://www.charter.com/-- is a broadband communications company providing a full range of advanced broadband services to homes, including advanced digital video entertainment programming (Charter Digital(TM)), Charter High- Speed(TM) Internet access service, and Charter Telephone(TM) services. Charter Business(TM) similarly provides scalable, tailored and cost-effective broadband communications solutions to business organizations, such as business-to-business Internet access, data networking, and video and music entertainment services. Charter's advertising sales and production services are sold under the Charter Media(R) brand. * * * As reported in the Troubled Company Reporter on May 5, 2006, Fitch Ratings removed Charter Communications, Inc., and its wholly owned subsidiaries' ratings from Ratings Watch Negative and affirmed its 'CCC' issuer default rating. Fitch also assigned 'B' and 'RR1' recovery ratings to the $6.85 billion senior secured credit facility entered into by Charter Communications Operating, LLC, an indirect wholly owned subsidiary of Charter. As reported in the Troubled Company Reporter on April 17, 2006, Standard & Poor's Ratings Services assigned a 'B' rating to Charter Communications Operating LLC's $5.3 billion senior secured bank financing. As reported in the Troubled Company Reporter on Jan. 27, 2006, Moody's Investors Service assigned a Caa1 rating to the $400 million senior notes issuance at CCH II, LLC, an indirect minority-owned subsidiary of Charter Communications, Inc. Moody's also affirmed Charter Communications, Inc.'s Caa1 corporate family rating; stable outlook; and SGL-3 rating. CHEMED CORP: Shareholders Reelect 13 Directors to Board ------------------------------------------------------- Chemed Corporation's shareholders elected a slate of 13 directors at the company's 2006 annual stockholders' meeting on May 15, 2006. Each of the directors continues from the prior term. Shareholders also adopted the company's 2006 Stock Incentive Plan, increased the number of authorized shares of Capital Stock from 40,000,000 to 80,000,000 shares, and ratified the continuation of PricewaterhouseCoopers LLP as the company's independent accountants for 2006. Following the stockholders' meeting, Chemed's Board of Directors declared a quarterly cash dividend of 6 cents per share on the company's capital stock, payable on June 9, 2006, to stockholders of record May 27, 2006. This represents the 140th consecutive quarterly dividend paid to shareholders in Chemed's 35 years as a public company. Headquartered in Cincinnati, Ohio, Chemed Corporation (NYSE:CHE) -- http://www.chemed.com/-- operates VITAS Healthcare Corporation, the nation's largest provider of end-of-life care, and Roto-Rooter, the nation's largest commercial and residential plumbing and drain cleaning services provider. * * * Chemed's 8-3/4% Senior Notes due Feb. 24, 2011, carry Moody's Ba3 rating and Standard & Poor's B+ rating. CINRAM INT'L: Declares CA$0.2177 Initial Cash Distribution ---------------------------------------------------------- Cinram International Income Fund declared an initial cash distribution of CA$0.2177 per unit pro-rated for the period from May 5, 2006, the effective date of the conversion of Cinram International Inc. into the Fund, to May 31, 2006. This distribution will be paid on or about June 15, 2006 to unitholders of record at the close of business on May 31, 2006. Cinram International Limited Partnership also disclosed that it will be making an initial cash distribution of CA$0.2177 per Class B limited partnership unit for the period from May 5, 2006 to May 31, 2006. This distribution will also be paid on or about June 15, 2006 to unitholders of record at the close of business on May 31, 2006. The distribution policy of both the Fund and the Partnership is that unitholders of record at the close of business on the last business day of each calendar month will receive a distribution on or about the 15th day of the following month. The monthly distribution will be CA$0.25 per unit, representing $3 per unit on an annualized basis. About Cinram Cinram International Inc. (TSX: CRW.UN) - http://www.cinram.com/ -- an indirect wholly owned subsidiary Cinram International Income Fund, provides pre-recorded multimedia products and related logistics services. With facilities in North America and Europe, Cinram International Inc. manufactures and distributes pre- recorded DVDs, VHS video cassettes, audio CDs, audio cassettes and CD-ROMs for motion picture studios, music labels, publishers and computer software companies around the world. * * * As reported in the Troubled Company Reporter on May 11, 2006, Standard & Poor's Ratings Services lowered its corporate credit rating on prerecorded multimedia manufacturer Cinram International Inc. to 'BB-' from 'BB' following the company's announcement that it had successfully converted into an income trust. The ratings were removed from CreditWatch with negative implications, where they were placed March 3, 2006. As reported in the Troubled Company Reporter on April 13, 2006, Moody's Investors Service downgraded Cinram International Inc.'s Corporate Family Rating and existing Senior Secured debt ratings to B1 from Ba3 and assigned provisional ratings of (P) B1 to the company's proposed Senior Secured bank facilities. The outlook is stable. The downgrade reflected the company's plans to recapitalize itself as an income trust, which will result in essentially all of Cinram's future free cash flow being paid out to shareholders without any upfront reduction in leverage. CONSOLIDATED ENERGY: Killman Murrell Raises Going Concern Doubt --------------------------------------------------------------- Killman, Murrell & Company, P.C., Houston, Texas, raised substantial doubt about Consolidated Energy, Inc.'s ability to continue as a going concern after auditing the Company's financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's recurring losses from operations and limited capital resources. The Company reported a $7,745,493 net loss on $2,052,748 of total revenues for the year ended Dec. 31, 2005. At Dec. 31, 2005, the Company's balance sheet showed $26,069,821 in total assets, $24,935,825 in total liabilities, and $1,133,996 in total stockholders' equity. The Company's Dec. 31 balance sheet also showed strained liquidity with $81,956 in total current assets available to pay $13,637,447 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?9b9 Consolidated Energy, Inc. (OTCBB: CEIW) mines coal in Eastern Kentucky. The Company conducts business through its wholly owned coal-mining subsidiary, Eastern Consolidated Energy, Inc. The Company is also engage in gas and oil exploration and development, and develops related clean energy technologies that are environment friendly. DLJ MORTGAGE: Moody's Cuts Rating on 2 Cert. Classes to Caa2 ------------------------------------------------------------ Moody's Investors Service downgraded three certificates from two transactions, issued by DLJ Mortgage Acceptance Corp. The class B-2 and B-3 from Series 1996-QJ, and the class B-1 from Series 1996-QB have been downgraded based on the weak performance of the underlying loans with historical and expected cumulative losses exceeding original expectations. The B-3 certificate from the 1996-QJ and the B-1 certificate from the 1996-QB have already assumed some writedowns. Complete rating actions: Issuer: DLJ Mortgage Acceptance Corporation Downgrade * Series 1996-QJ; Class B-2, downgraded to Ba3 from Baa3 * Series 1996-QJ; Class B-3, downgraded to Caa2 from B3 * Series 1996-QB; Class B-1, downgraded to Caa2 from B3 DYNEGY INC: Launches 35 Million Class A Common Stock Offering ------------------------------------------------------------- Dynegy Inc. plans to make a public offering of approximately 35 million shares of its Class A common stock pursuant to an effective shelf registration statement on Form S-3 previously filed with the Securities and Exchange Commission. Dynegy has granted the underwriters a 30-day option to purchase up to an additional 5,250,000 shares. As of May 22, 2006, stock price was $4.85. J.P. Morgan Securities Inc. and Lehman Brothers Inc. will act as joint book-running managers for the offering. Dynegy intends to use the net proceeds from the offering, together with approximately $250 million in cash on hand, to redeem all of its outstanding Series C Convertible Preferred Stock at its aggregate liquidation preference of $400 million, plus accrued and unpaid dividends, and to pay related fees and expenses. The Series C preferred is convertible into 69.2 million shares of Dynegy's common stock, all of which are included in Dynegy's fully diluted share count for fully diluted earnings-per-share calculations. A copy of the prospectus supplement and the related base prospectus relating to the offering may be obtained from: J.P. Morgan Securities Inc. Attention: Chase Distribution & Support Service Northeast Statement Processing 4 Chase Metrotech Center, CS Level Brooklyn, New York 11245 Telephone (718) 242-8002 or Lehman Brothers Inc. c/o ADP Financial Services, Prospectus Fulfillment 1155 Long Island Avenue Edgewood, New York 11717 Fax (631) 254-7268 About Dynegy Inc. Headquartered in Houston, Texas, Dynegy Inc. (NYSE:DYN) -- http://www.dynegy.com/-- produces and sells electric energy, capacity and ancillary services in key U.S. markets. The company's power generation portfolio consists of more than 12,800 megawatts of baseload, intermediate and peaking power plants fueled by a mix of coal, fuel oil and natural gas. * * * As reported in the Troubled Company Reporter on April 11, 2006, Moody's Investors Service assigned a Ba3 rating to Dynegy Holdings Inc.'s $600 million senior secured bank facility. Moody's says the rating outlook is stable. DYNEGY INC: Redeeming $400 Mil. Series C Pref. Stock Tomorrow ------------------------------------------------------------- Dynegy Inc. entered into an agreement with Chevron U.S.A. Inc., a wholly owned subsidiary of Chevron Corporation, to redeem all of Dynegy's outstanding Series C Convertible Preferred Stock at par for $400 million in cash, plus accrued and unpaid dividends. The Series C preferred is convertible into 69.2 million shares of Dynegy's common stock, all of which are included in Dynegy's fully diluted share count for fully diluted earnings-per-share calculations. Pursuant to the preferred stock redemption agreement between Dynegy and CUSA, Dynegy intends to redeem the Series C preferred on or about May 26, 2006. The closing of the preferred stock redemption agreement is subject to customary closing conditions as well as the consummation of the related financing, among other conditions. After giving effect to the redemption, CUSA will continue to hold approximately 97 million shares of Dynegy's Class B common stock, which represents an approximate 20% ownership interest in Dynegy based on the outstanding shares of Dynegy's common stock as of May 19, 2006. "As a result of our liability management plan activities to date, which have addressed our senior debt and publicly held convertible securities, we significantly deleveraged the company and extended our maturities," said Bruce A. Williamson, Chairman and Chief Executive Officer of Dynegy Inc. "We are now taking the next step of addressing the Series C preferred, the sole remaining security that bears a coupon and also participates in equity upside. This transaction will result in the significant reduction of our diluted shares outstanding and the elimination of a long-term call on cash in the form of $22 million in annual preferred dividends." In order to redeem the Series C preferred, the company intends to use approximately $250 million of cash on hand, with the net proceeds of an equity offering of Class A common stock to be applied to the remaining balance. The use of cash is expected to be partially offset with the proceeds from the sale of the Rockingham Power Generation Facility, a summer-rated capacity 830- megawatt peaking plant in North Carolina, to Duke Power Company LLC, a Duke Energy subsidiary, for approximately $195 million in cash. That transaction, which is expected to close before the end of 2006, is conditioned upon the expiration or termination of the Hart-Scott-Rodino waiting period, approval by the Federal Energy Regulatory Commission and the North Carolina Utilities Commission, and the fulfillment of customary closing conditions. "We believe the opportunistic sale of the Rockingham facility at a favorable price, together with the redemption of the Series C preferred, will allow us to capture significant value while maintaining our very strong liquidity and simplifying our capital structure," Mr. Williamson added. Dynegy Holdings Inc. arranged a $150 million term loan as an interim source of liquidity. The $150 million term loan, which will be repaid with Rockingham sales proceeds, will be structured as a new tranche under DHI's existing fourth amended and restated credit agreement. The term loan facility will mature on the earlier of five business days after the consummation of the sale of the Rockingham facility or Jan. 31, 2012. The lead arrangers for the facility are J.P. Morgan Securities Inc. and Lehman Brothers Inc. About Dynegy Inc. Headquartered in Houston, Texas, Dynegy Inc. (NYSE:DYN) -- http://www.dynegy.com/-- produces and sells electric energy, capacity and ancillary services in key U.S. markets. The company's power generation portfolio consists of more than 12,800 megawatts of baseload, intermediate and peaking power plants fueled by a mix of coal, fuel oil and natural gas. * * * As reported in the Troubled Company Reporter on April 11, 2006, Moody's Investors Service assigned a Ba3 rating to Dynegy Holdings Inc.'s $600 million senior secured bank facility. Moody's says the rating outlook is stable. EASTMAN KODAK: Fitch Downgrades Sr. Unsecured Debt Rating to B- --------------------------------------------------------------- Fitch downgraded Eastman Kodak Company's Issuer Default Rating to 'B' from 'BB-' and the company's senior unsecured debt to 'B-' from 'B+' on May 16, 2006. The Outlook remains Negative. The ratings reflect Fitch's growing concern regarding EK's ability to generate profitable organic digital revenue growth and sufficient free cash flow to offset continual declines in the company's traditional business. Fitch also assigned a Recovery Rating of RR5 to the senior unsecured debt, indicating below average (10-30%) recovery for bondholders in the event of a default scenario. The recovery ratings reflect Fitch's expectations that the enterprise value of the company, and hence, recovery rates for its creditors, will be maximized in a restructuring scenario rather than a liquidation scenario. EL PASO CORPORATION: Launches 35 Million Common Stock Offering -------------------------------------------------------------- El Paso Corporation agreed to issue 35,700,000 shares of its Common Stock to Banc of America Securities LLC. Banc of America Securities LLC is offering the shares under El Paso's shelf registration statement. As of May 23, 2006, common stock was priced at $14.14. El Paso intends to use the net proceeds of the offering to repay debt under its El Paso Exploration & Production Company bank credit facility and any net excess, if any, for general corporate purposes. The Offering is being made only by means of a prospectus and related prospectus supplement, a copy of which may be obtained from Banc of America Securities LLC by mail to: Banc of America Securities LLC Capital Markets Operations 100 West 33rd Street, 3rd Floor New York, NY 10001 About El Paso Corp. Based in Houston, Texas, El Paso Corp. -- http://www.elpaso.com/ -- provides natural gas and related energy products in a safe, efficient, and dependable manner. The company owns North America's largest natural gas pipeline system and one of North America's largest independent natural gas producers. * * * As reported in the Troubled Company Reporter on Feb. 17, 2006, Moody's Investors Service placed under review for possible upgrade the ratings on the debt and supported obligations of El Paso Corporation and its subsidiaries. These rating actions reflect the prospect of EP reducing more than previously expected amount of debt in the near future, the company's progress in reducing its business risks and contingent liabilities, and signs of recovery in its production operations. These positive factors, combined with a large available cash balance, help to improve the outlook for its near-term liquidity and its credit profile overall. The ratings on review for possible upgrade include: B3 Corporate Family Rating; SGL-3 Speculative Grade Liquidity Rating; (P)Ca Preferred Stock Shelf; B3 Senior Secured Bank Credit Facility; Caa3 Subordinated Conv./Exch. Bond/Debenture; and (P)Caa3 Subordinated Shelf. ENRON CORP: Settle MegaClaim Lawsuit with Credit Suisse for $90M ---------------------------------------------------------------- Enron Corp. reached an agreement with Credit Suisse Securities (USA) LLC, fka Credit Suisse First Boston LLC, to settle MegaClaims litigation in the Enron bankruptcy case. Pursuant to the terms of the settlement, CSFB will pay Enron $90 million. The settlement further provides that approximately $337 million in claims against the Enron estate held by CSFB will be subordinated and receive no distribution from the Enron estate and approximately $92 million in CSFB claims will be allowed. The settlement reflects that CSFB was involved in fewer transactions with Enron than certain of the other MegaClaim defendants. CSFB did not admit liability or wrongdoing and both parties agreed to settle the litigation to avoid the costs and uncertainties of further proceedings. The "megaclaim" litigation refers to Enron's adversary proceedings in U.S. Bankruptcy Court seeking avoidance and recovery of various alleged preferential, illegal and fraudulent transfers; disallowance and equitable subordination of Credit Suisse and its affiliates' claims in the bankruptcy proceedings and damages, attorneys' fees and costs for alleged aiding and abetting of fraud and breaches of fiduciary duty by Enron employees and civil conspiracy. "This settlement is further evidence of the proactive steps we continue to take to resolve the myriad of issues with respect to the Enron estate," said John J. Ray III, Enron's President and Chairman of the Board. "We are gratified with the progress we have made to date in the MegaClaims litigation and remain eager to reach resolution with the remaining financial institutions." Remaining MegaClaim defendants include Citigroup Inc., Deutsche Bank AG, Barclays PLC, Fleet National Bank and Merrill Lynch & Co. The settlement remains subject to the execution of definitive agreements and the approval of the United States Bankruptcy Court for the Southern District of New York. Enron is represented in this matter by Susman Godfrey LLP; Togut, Segal & Segal; and Venable LLP. About Credit Suisse As one of the world's leading banks, Credit Suisse -- http://www.credit-suisse.com/-- provides its clients with investment banking, private banking and asset management services worldwide. Credit Suisse offers advisory services, comprehensive solutions and innovative products to companies, institutional clients and high-net-worth private clients globally, as well as retail clients in Switzerland. Credit Suisse is active in over 50 countries and employs approximately 40,000 people. Credit Suisse's parent company, Credit Suisse Group, is a leading global financial services company headquartered in Zurich. Credit Suisse Group's registered shares (CSGN) are listed in Switzerland and, in the form of American Depositary Shares (CSR), in New York. In its Investment Banking business, Credit Suisse offers securities products and financial advisory services to users and suppliers of capital around the world. Operating in 57 locations across 26 countries, Credit Suisse is active across the full spectrum of financial services products including debt and equity underwriting, sales and trading, mergers and acquisitions, investment research, and correspondent and prime brokerage services. About Enron Headquartered in Houston, Texas, Enron Corporation filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033) following controversy over accounting procedures, which caused Enron's stock price and credit rating to drop sharply. Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Debtors' confirmed chapter 11 Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., Matthew Scott Barr, Esq., and Paul D. Malek, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, represent the Official Committee of Unsecured Creditors. (Enron Bankruptcy News, Issue No. 172; Bankruptcy Creditors' Service, Inc., 15/945-7000) ERIE TOBACCO: Moody's Withdraws Rating on Term Bonds ---------------------------------------------------- Moody's Investors Service withdrawn the ratings of all classes of notes issued by Erie Tobacco Asset Securitization Corporation, Series 2000A and 2000B. The bonds have been pre-refunded, but Moody's has not been asked to review the escrow arrangement and assign a new rating. The complete rating action: Issuer: Erie Tobacco Asset Securitization Corporation, Series 2000A and 2000B * Series 2000A Senior Serial Bonds, Rated Maturity Date of July 15, of 2006; current rating Baa3, withdrawn * Series 2000A Senior Serial Bonds, Rated Maturities of 2007 to 2015; current rating Ba1, withdrawn * Series 2000A Senior Term Bonds, Rated Maturity Date of July 15, 2020; current rating Ba1, withdrawn * Series 2000A Senior Term Bonds, Rated Maturity Date of July 15, 2024; current rating Ba1, withdrawn * Series 2000A Senior Term Bonds, Rated Maturity Date of July 15, 2030; current rating Ba1, withdrawn * Series 2000A Senior Term Bonds, Rated Maturity Date of July 15, 2032; current rating Ba1, withdrawn * Series 2000A Senior Term Bonds, Rated Maturity Date of July 15, 2040; current rating Ba1, withdrawn * Series 2000B Subordinated Term Bonds, Rated Maturity Date of July 15, 2040; current rating Ba2, withdrawn FEDERAL-MOGUL: U.S. Trustee Seeks Court Approval for Kenesis Pact ----------------------------------------------------------------- Federal Mogul Corporation and its debtor-affiliates are parties to a July 11, 2002, Consulting Services Agreement with Kenesis Group, LLC, pursuant to which Kenesis was to perform services and pursuant to which all bills were submitted directly from Kenesis to Federal-Mogul. Kenesis was paid $1.7 million directly by Federal-Mogul pursuant to the Consulting Services Agreement through December 31, 2004. Kelly Beaudin Stapleton, the United States Trustee for Region 3, asserts that Kenesis should have sought retention as a professional pursuant to Section 327(a) of the Bankruptcy Code. Kenesis argued that its services were ministerial in nature and do not rise to the level of professional services requiring retention under Section 327(a). Kenesis also asserts that even if it were deemed a professional requiring retention under Section 327(a), its services were more akin to those of an expert than in the nature of a professional requiring retention under the Bankruptcy Code. The U.S. Trustee has not filed any objections to the retention or payment to Kenesis. In October 2004, the U.S. Trustee and Kenesis commenced discussions to resolve issues of payments to and services by Kenesis in Region 3, including a protocol for future retentions and some reimbursement to estates for payments received by Kenesis. After several months of negotiations, the U.S. Trustee and Kenesis worked out the parameters of a potential settlement. The parties drafted settlement documents that encompassed the terms for a Global Settlement of the cases in Region 3, with a specific provision for payments to three bankruptcy estates: (1) Federal-Mogul Global, Inc., and T&N Limited et al.; (2) Burns & Roe Enterprises, Inc. (Bank. D. N.J. Case No. 00-41610); and (3) ACandS, Inc. (Bank. D. Del. Case No. 02-12687). In the ACandS and Burns & Roe cases, Kenesis worked directly for and was paid by Gilbert Heintz & Randolph, special counsel retained by the debtors in those cases. The U.S. Trustee and Kenesis believe the settlement terms are in the best interests of the Debtors' estates and their creditors. Richard L. Schepacarter, Esq., trial attorney for the U.S. Trustee, in Wilmington, Delaware, says the Global Settlement provides a framework for Kenesis' future retention in bankruptcy cases in Region 3, and preserves the U.S. Trustee's ability to object in any case in which it does not believe that Kenesis has made full and fair disclosures in good faith. The essential terms of the Settlement are: (a) Retention of Kenesis Any entity that wishes to hire Kenesis for any services related to a bankruptcy matter in Region 3 will file an application requesting the retention of Kenesis pursuant to Sections 327(a) or 363 of the Bankruptcy Code and in compliance with all applicable federal and local rules. The U.S. Trustee retains her right to object to the application on any grounds including the assertion that the application must be brought under Section 327(a). (b) Acknowledgment of Amended and Good Faith Disclosures Kenesis acknowledges that all disclosures made in any case in which it was retained in Region 3 were made in good faith. The U.S. Trustee reserves her rights to assert any position she deems appropriate if she determines that any of Kenesis's disclosures were not made in good faith. (c) Approval of Settlement Agreement Contingent Upon Orders Entered in the Settled Cases The Global Settlement is contingent upon entry of final non-appealable orders being entered in each of the Settled Cases. Failure to obtain a final non-appealable order in each of the three Settled Cases voids the Settlement Agreement. (d) Monetary Settlement Terms Kenesis agrees to pay $1,530,000 -- $388,950 of which will be paid to the estate of Federal-Mogul in this manner: (1) $305,040 will be paid shortly after approval of the Settlement Agreement; (2) five monthly payments of $12,710; (3) four monthly payments of $5,090. Kenesis will pay to the estates of ACandS $1,103,970 and Burns & Roe $37,080, under a similar schedule. (e) Limitation on U.S. Trustee Claims The U.S. Trustee will not assert, at any time, any claim or causes of action against Kenesis related to the issues under the Settlement Agreement. The U.S. Trustee asks Judge Fitzgerald to approve the Settlement Agreement with Kenesis. ACE Insurers Want Request Denied Century Indemnity Company, ACE Property & Casualty Insurance Company, Central National Insurance Company of Omaha, Insurance Company of North America, Pacific Employers Insurance Company, St. Paul Mercury Insurance Company, and U.S. Fire Insurance Company ask the Court to deny approval of the U.S. Trustee- Kenesis Settlement Agreement. Pursuant to the Settlement Agreement, Kenesis will dismiss its appeal of the ACandS court's order requiring it to disgorge fees to the ACandS estate and, upon doing so, the ACandS court will vacate the Disgorgement Order. Brian L. Kasprzak, Esq., at Marks O'Neill O'Brien & Courtney, in Wilmington, Delaware, contends that the arrangement between the U.S. Trustee and Kenesis is improper as a matter of law and precludes approval of the Settlement Agreement by the Bankruptcy Court. The Disgorgement Order directed Kenesis to disgorge $2,400,000 in fees for asbestos claims reviewing services provided to ACandS, based on a finding by the ACandS court that Kenesis had willfully concealed facts relevant to its retention. Kenesis and ACandS each appealed the Disgorgement Order, and there is no indication that ACandS intends to dismiss its appeal. So long as ACandS continues prosecuting its own appeal, the appeal of the Disgorgement Order is not moot, Mr. Kasprzak argues. Thus, Mr. Kasprzak insists, the parties cannot seek vacatur of the Disgorgement Order upon dismissal of the Kenesis appeal, in any event. Moreover, the Disgorgement Order has been repeatedly cited by other courts, including by the Court of Appeals for the Third Circuit in In re Congoleum Corp., 426 F.3d 675, 683 (3d Cir. 2005). According to Mr. Kasprzak, parties in other cases, including the ACE Insurers, may have reason to cite to the Disgorgement Order, including in disputes with Kenesis. The ACE Insurers also object to the Settlement in that it threatens to impermissibly cut off the claims of third parties. The Settlement Agreement states that it is intended to finally settle and resolve any and all claims and all other potential claims for or relating to the provision of services by Kenesis to any debtor, committee, Chapter 7 or 11 trustee, examiner or any other party, Mr. Kasprzak notes. The ACE Insurers are therefore concerned that the settlement or resolution is not limited solely to claims by the settling parties. Prepetition, the ACE Insurers issued certain insurance policies to Federal-Mogul Products, Inc., Felt Products Inc. and Federal- Mogul Corporation, under which the Debtors seek coverage for their asbestos-related claims. Mr. Kasprzak says the ACE Insurers have rights of contribution, indemnity, subrogation or recoupment against the Debtors and other third parties. INA filed a claim against FMP, which claim has not been objected to, nor disallowed or estimated at $0. The ACE Insurers believe they have claims against Kenesis arising out of its provision of claims-related services to Federal-Mogul or other companies that resulted in the bad faith submission of claims to one or more ACE Insurers for payment. Likewise, they expect to have claims against Kenesis for its participation in submitting invalid claims to the ACE Insurers for payment. The Settlement cannot properly terminate the rights of those outside of the agreement, Mr. Kasprzak argues. Its attempt to do so raises serious due process concerns. Any order approving the Settlement must clarify that the ACE Insurers' rights to pursue claims against Kenesis are not affected, Mr. Kasprzak maintains. About Federal-Mogul Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some US$6 billion. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed US$10.15 billion in assets and US$8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. (Federal-Mogul Bankruptcy News, Issue Nos. 107 & 108; Bankruptcy Creditors' Service, Inc., 215/945-7000) FEDERAL-MOGUL: Wants to Hire Kenesis Group as Insurance Consultant ------------------------------------------------------------------ On July 11, 2002, Federal Mogul Corporation and its debtor- affiliates entered into a consulting services agreement with The Kenesis Group LLC to secure insurance consulting services, James E. O'Neill, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, in Wilmington, Delaware, relates. Kenesis, formed in 2002 by Gilbert Heintz & Randolph LLP and other parties, is a consulting firm specializing in the analysis of insurance assets and liabilities. Under the supervision of Gilbert Heintz, Kenesis provided the Debtors with specialized non-legal consulting services related to various insurance-related matters including: a. assembling detailed and extensive insurance and accounting records; b. collecting and capturing in the firm's proprietary database key provisions of the over 1,000 complicated insurance policies issued by approximately 140 insurance companies; c. estimating the value of insurance polices associated with certain streams of asbestos liability by allocating liability and defense costs between the insurance policies under specified scenarios; and d. creating reports and other visual representations of those data, and the firm's related analyses. Additionally, Kenesis assisted the Debtors with their attempts to recover costs involving non-asbestos related environmental issues at certain contaminated sites, Mr. O'Neill says. The cost recovery efforts involved the firm's analysis of the Debtors' insurance policies and a determination of how certain costs should be allocated between the policies. The firm also collected and then submitted copies of invoices documenting the Debtors' expenditures to their insurance companies. The Debtors clarify that Kenesis does not play an intimate role in their reorganization. Based on the limited nature of Kenesis' insurance consulting services, the Debtors believe that the firm is not a "professional person" as the term is used in Section 327(a) of the Bankruptcy Code. Accordingly, the Debtors have not previously sought the Court's authority to employ the firm. As previously reported, Kelly Beaudin Stapleton, the United States Trustee for Region 3, asked the Court to approve a settlement agreement with Kenesis. The Settlement proposed a framework for the firm's future retention in bankruptcy cases in Region 3. Among others, the parties agreed that Kenesis must require any entity that wishes to utilize its services related to a bankruptcy matter in Region 3 to file an employment application pursuant to Sections 327(a). The effectiveness of the Settlement is conditioned on the Court's entry of a final non-appealable order approving it. The Debtors currently -- and wish to continue -- using Kenesis' services. Hence, they seek the Court's permission pursuant to Section 327(a) to employ the firm as their insurance consultants effective May 8, 2006. In addition, the Debtors seek the Court's authority to expand the scope of Kenesis' employment to include: -- assistance in the development of trust distribution procedures that reflect the Debtors' insurance assets; and -- preparation of an analysis of the separate and shared insurance assets and liabilities available to Pneumo Abex, Cooper Industries and the Debtors. The Debtors intend to authorize Kenesis to share its findings and analysis with the other proponents of their Chapter 11 Plan. The Debtors believe that sharing the firm's consulting services will result in significant cost savings and efficiencies for their estates and prevent unnecessary delays in their reorganization. Kenesis will bill the Debtors at its standard hourly rates, which range from $125 for staff consultants to $400 for Vice Presidents. The standard hourly rates for Kenesis officers who will supervise the engagement are: Officers Hourly Rate -------- ----------- Jonathan R. Terrell $450 Leslie Delagran $400 Elizabeth Hanke $400 Mr. Terrell, Kenesis president and CEO, asserts that the firm: -- does not hold or represent any interest adverse to the Debtors or their estates; and -- is a "disinterested person" as that phrase is defined in Section 101(14). The Settlement Agreement, if approved, requires Kenesis to refund $389,000 in fees and expenses to the Debtors. In this regard, the Debtors propose that the Court's order authorizing Kenesis' employment should not be entered until the firm pays all sums due to them pursuant to the Settlement. About Federal-Mogul Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some US$6 billion. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed US$10.15 billion in assets and US$8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. (Federal-Mogul Bankruptcy News, Issue No. 108; Bankruptcy Creditors' Service, Inc., 215/945-7000) FIDELITY NATIONAL: Acquires 70% Interest in Cascade Timberlands --------------------------------------------------------------- Fidelity National Financial, Inc. acquired a 70% approximate controlling interest in Cascade Timberlands LLC. The Financial terms of the acquisition were not disclosed. The primary assets of Cascade Timberlands are approximately 293,000 acres of productive timberlands, known as Oregon tree farm, located on the eastern side of the Cascade mountain range extending from Bend, Oregon south on State Highway 20 toward the California border. Cascade Timberlands was created by the secured creditors of Crown Pacific LP upon the conclusion of the bankruptcy case of Crown Pacific LP in December 2004. "We intend to review all twenty-six properties in the Oregon tree farm and determine the optimal use for each property on its own and in relation to the other properties," said Chairman and Chief Executive Officer William P. Foley, II. "This may entail utilizing the timber assets themselves, conservation and preservation of the land or the exploration of other alternative development uses for the timberland. We have also had preliminary conversations with Deschutes Basin Land Trust concerning the Skyline Forest section of the timberlands and we will continue to work with that Land Trust in pursuit of our respective goals." About Fidelity National Financial Headquartered in Jacksonville, Florida, Fidelity National Financial, Inc. -- http://www.fnf.com/-- provides outsourced products and services to a variety of industries. Through its majority-owned, publicly traded subsidiary, Fidelity National Title Group, Inc. -- http://www.fntg.com/-- FNF is one of the nation's largest title insurance companies, with nearly 31% national market share. Through its majority-owned, publicly traded subsidiary, Fidelity National Information Services, Inc. -- http://www.fidelityinfoservices.com/-- FNF provides an industry leading suite of data processing, payment and risk management services to financial institutions and retailers. Through its wholly owned subsidiaries, FNF is also a leading provider of specialty insurance products, including flood insurance, homeowners insurance and home warranty insurance. Through its minority-owned unit, Sedgwick CMS -- http://www.sedgwickcms.com/-- FNF is a leading provider of outsourced insurance claims management services to large corporate and public sector entities. * * * As reported in the Troubled Company Reporter on May 2, 2006, Moody's Investors Service affirmed the ratings of Fidelity National Financial, Inc., and its various related subsidiaries following the announcement by FNF that it would change its organizational structure. Moody's 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 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. FIRST UNION: Moody's Holds Low-B Rating on 3 Certificate Classes ---------------------------------------------------------------- Moody's Investors Service upgraded the ratings of eight classes and affirmed the ratings of nine classes of First Union National Bank Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 2001-C2: * Class A-1, $85,183,350, Fixed, affirmed at Aaa * Class A-2, $590,647,000, Fixed, affirmed at Aaa * Class IO, Notional, affirmed at Aaa * Class B, $42,565,000, Fixed, upgraded to Aaa from Aa1 * Class C, $12,520,000, Fixed, upgraded to Aaa from Aa2 * Class D, $12,519,000, Fixed, upgraded to Aaa from A1 * Class E, $20,031,000, Fixed, upgraded to Aa2 from A2 * Class F, $10,015,000, Fixed, upgraded to Aa3 from A3 * Class G, $15,023,000, Fixed, upgraded to A2 from Baa1 * Class H, $17,527,000, Fixed, upgraded to Baa1 from Baa2 * Class J, $12,519,000, WAC, upgraded to Baa2 from Baa3 * Class K, $15,023,000, Fixed, affirmed at Ba1 * Class L, $20,031,000, Fixed, affirmed at Ba2 * Class M, $5,008,000, Fixed, affirmed at Ba3 * Class N, $6,048,000, Fixed, affirmed at B1 * Class O, $5,908,000, Fixed, affirmed at B2 * Class P, $3,939,000, Fixed, affirmed at B3 As of the May 12, 2006 distribution date, the transaction's aggregate balance has decreased by approximately 10.8% to $894.5 million from $1.0 billion at securitization. The Certificates are collateralized by 100 mortgage loans ranging in size from less than 1.0% to 5.6% of the pool, with the top ten loans representing 36.8% of the pool. The pool includes a shadow rated component, representing 12.5% of the pool. Twenty-one loans, representing 21.9% of the pool, have defeased and are collateralized with U.S. Government securities. Three of the pool's top ten loans have defeased, including Villa La Jolla Apartments, Gardiner Manor Malland Wynnton Multi Portfolio. Five loans have been liquidated from the trust resulting in aggregate realized losses of approximately $3.4 million. One loan, representing less than 1.0% of the pool, is in special servicing. Moody's estimated a loss of $1.5 million for this specially serviced loan. Twenty-three loans, representing 10.7% of the pool, are on the master servicer's watchlist. Moody's was provided with partial or full year 2005 operating results for 91.2% of the performing loans. Moody's loan to value ratio for the conduit component is 85.6%, compared to 86.0% at Moody's last full review in May 2005 and compared to 87.9% at securitization. The upgrade of Classes B, C, D, E, F, G, H and J is due to a high percentage of defeased loans, stable overall conduit performance, improved performance of the shadow rated loan component and increased credit support. The largest shadow rated loan is the Innkeepers Portfolio Loan, which is secured by six extended stay hotels totaling 807 guestrooms. The properties, which operate under the Residence Inn franchise, are managed by Marriott International. The properties are located in Texas, Georgia, Florida, California and Connecticut. The portfolio's performance has improved since Moody's last review. The portfolio's overall RevPAR is $77.36, compared to $61.26 at last review and compared to $85.00 at securitization. Moody's current shadow rating is Ba2, compared to B3 at last review. The second shadow rated loan is the One Franklin Plaza Loan, which is secured by a 607,000 square foot office building located in downtown Philadelphia, Pennsylvania. The property is 100.0% occupied, the same as at securitization. GlaxoSmithKline occupies 98.0% of the premises on a lease expiring in March 2013. Moody's current shadow rating is Baa2, the same as at last review. The third shadow rated loan is the HRT Portfolio Loan, which consists of eight cross collateralized loans. Five of the loans are secured by medical office facilities totaling 375,900 square feet. Three loans have defeased and are secured by U.S. Government securities. The properties are located in Alabama, Texas and Virginia. The portfolio's overall occupancy is 98.6%, essentially the same as at last review and at securitization. The portfolio has experienced increased net cash flow due to increased rents and stable expenses. The loan has amortized by approximately 40.2% since securitization. Moody's current shadow rating is Aaa, compared to Aa1 at last review. The top two non-defeased conduit loans represent 8.4% of the outstanding pool balance. The largest conduit loan is the 1330 Connecticut Avenue Loan, which is secured by a 252,000 square foot Class A office building located in Washington, D.C. The property is 100.0% occupied, essentially the same as at last review. The law firm of Steptoe & Johnson LLP occupies 92.0% of the premises under a lease that expires in December 2017. Moody's LTV is 72.0%, compared to 76.5% at last review. The second largest conduit loan is the Stadium Crossing Loan, which is secured by a 156,000 square foot mixed use property located in Anaheim, California. The property consists of 112,500 square feet of office space, a 35,500 square foot free-standing fitness center, a 7,650 square foot food court and two ground leases. The office component is 93.0% occupied, compared to 100.0% at securitization. The largest office tenants are Hewlett Packard Company and CB Richard Ellis. Moody's LTV is 86.2%, essentially the same as at last review. The pool's collateral is a mix of office and mixed use, U.S. Government securities, multifamily, retail, industrial and self storage, lodging and CTL. The collateral properties are located in 29 states plus Washington, D.C. The highest state concentrations are California, Pennsylvania, Florida, Texas and Washington, D.C. All of the loans are fixed rate. FOAMEX INTERNATIONAL: Panel Hires Synergetics as Business Advisor ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized the Official Committee of Unsecured Creditors to retain Synergetics Installations Worldwide, Inc., as its business operations consultant, effective as of April 17, 2006. As reported in the Troubled Company Reporter on May 8, 2006, Synergetics will provide, among others, these services: (a) Organizational and business review; identification of specific opportunities for improving operations, planning, inventory and operational efficiency; identification of financial benefits to be gained from implementation of opportunities; (b) Evaluation of manufacturing and distribution efficiency; identification of "bottlenecks" and opportunities for increased effectiveness; (c) Evaluation of management operating systems, including forecasting/planning, data management, logistics management, sales force, project management and financial management; and (d) Review of the Debtors' business plan and performance. The Debtors will pay Synergetics: -- a $200,000 flat fee for work performed within the first five weeks; and -- $175 per hour, subject to a $100,000 cap, for additional work after the first five weeks. James O'Neill, president and chief operating officer of Synergetics, assures the Court that the firm does not hold or represent an interest adverse to the Debtors' estates. Thus, Synergetics is a "disinterested person," as the term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. Kenneth A. Rosen, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC and Donald J. Detweiler, Esq., at Saul Ewings, LP, represent the Official Committee of Unsecured Creditors. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) FOAMEX INTERNATIONAL: Assumes Amended Inolex Chemical Contract -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware allowed Foamex International Inc. to assume an amdned Contract with Inolex Chemical Company. The Court directs Foamex L.P. to pay $1,217,304 to Inolex Chemical Company in four equal installments to be made on: -- May 8, 2006, -- May 15, 2006 -- May 22, 2006, and -- May 29, 2006. As reported in the Troubled Company Reporter on May 9, 2006, the Amendment provides that: (a) the payment terms is resumed to 2.75% 25, net-30; (b) Inolex will issue a new quarterly rebate to Foamex for the balance of 2006, subject to a $115,000 cap on the total rebate amount; (c) Foamex will have four weeks within which to satisfy its $1,217,304 prepetition debt; and (d) the Parties will mutually release each other's claims. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. Kenneth A. Rosen, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC and Donald J. Detweiler, Esq., at Saul Ewings, LP, represent the Official Committee of Unsecured Creditors. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) FRANK'S OILFIELD: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Frank's Oilfield Service, Inc. dba Frank's Well Service 5976 Highway 64 Farmington, New Mexico Tel: (505) 632-5948 Bankruptcy Case No.: 06-10826 Type of Business: The Debtor offers excavating and haulage services. Chapter 11 Petition Date: May 23, 2006 Court: District of New Mexico (Albuquerque) Judge: James S. Starzynski Debtor's Counsel: William F. Davis, Esq. Davis & Pierce, P.C. P.O. Box 6 Albuquerque, New Mexico 87103 Tel: (505) 243-6129 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. GENELABS TECHNOLOGIES: Nasdaq Issues Delisting Notice ----------------------------------------------------- Genelabs Technologies, Inc., received a staff determination letter from the Nasdaq Stock Market Inc. stating that the company's common stock is subject to delisting from the Nasdaq Capital Market because the company does not meet Nasdaq Marketplace Rule 4310(c)(2)(B) which requires the company to have a minimum of $2,500,000 in shareholder's equity or a market capitalization of $35,000,000. Genelabs has the right to appeal the Nasdaq staff determination to a Nasdaq Listings Qualification Panel and intends to timely request a hearing. The request for a hearing will automatically stay the delisting of Genelabs' common stock until the panel reaches a decision. At the hearing, Genelabs intends to present a plan for its continued listing on the Nasdaq Capital Market. About Genelabs Based in Redwood City, California, Genelabs Technologies, Inc. -- http://www.genelabs.com/-- discovers and develops pharmaceutical products to improve human health. The company has built drug discovery capabilities that can support various research and development projects. Genelabs is currently concentrating these capabilities on discovering novel compounds that selectively inhibit replication of the hepatitis C virus and advancing preclinical development of compounds from this hepatitis C virus drug discovery program, while also developing a late-stage product for lupus. At March 31, 2006, the Company's balance sheet showed $9,827,000 in total assets and $10,610,000 in total liabilities, resulting in a $783,000 stockholders' deficit. * * * Going Concern Doubt As reported in the Troubled Company Reporter on May 1, 2006, Ernst & Young LLP expressed substantial doubt about Genelabs Technologies, Inc.'s ability to continue as a going concern after it audited the company's financial statement for the year ended Dec. 31, 2005. The auditing firm points to the Company's recurring losses from operations, accumulated deficit and availability of funds for use in operations. GRANDE COMMS: Moody's Ups Corporate Family & Notes Rating to Caa1 ----------------------------------------------------------------- Moody's Investors Service upgraded the corporate family rating for Grande Communications Holdings, Inc., to Caa1 from Caa2 and also raised the rating on Grande's senior secured notes to Caa1 from Caa2. The upgrade reflects a more measured growth strategy under Grande's new management, which will likely accelerate the transition to positive free cash flow, and the company's now fully funded business plan. Grande's liquidity improved following the issuance of additional notes in March 2006. The more established track record of Grande and of overbuilders in general also supports the upgrade. Grande's ratings reflect its lack of scale, high financial risk, and Moody's concerns over competition, offset by an upgraded network, high penetration of multiple services, and the positive demographic trends in its markets. Leverage is in the mid 6 times range, fixed charge coverage remains negative, and Moody's expects Grande to consume cash throughout 2006 and 2007, albeit at a declining rate of cash absorption. Moody's also revised the outlook to stable from positive. Given Grande's lack of scale, high financial risk, and the competitive environment in which the company operates, Moody's considers ratings above Caa1 unlikely over the intermediate term absent a meaningful improvement in liquidity, either through equity issuance or bank availability. A summary of today's actions. Grande Communications Holdings, Inc. * Corporate Family Rating Upgraded to Caa1 from Caa2 * Senior Secured Bonds, Upgraded to Caa1 from Caa2 * Outlook, Changed To Stable From Positive Grande Communications Holdings, Inc. is a retail provider of video, Internet and telephony services primarily serving communities in six Texas markets. The company also serves enterprise customers and has a wholesale Internet and telephony business. Grande maintains its headquarters in San Marcos, Texas. GT BRANDS: Files Amended Disclosure Statement with S.D.N.Y. ----------------------------------------------------------- GT Brands Holdings LLC and its debtor-affiliates amended the Disclosure Statement explaining their Plan of Liquidation delivered to the U.S. Bankruptcy Court for the Southern District of New York on May 17, 2006. The Plan is a product of substantial discussions and negotiations among the Debtors, the Senior Lenders and the Creditors Committee. The Debtors estimate that, in addition to non-cash assets, they will transfer approximately $7.6 million in cash to a Plan Administrator. The Plan Administrator will ultimately distribute an aggregate of approximately $3.7 million to $4.1 million to the Senior Lenders. This amount represents the Debtors' cash, less amounts to establish and fund: -- the Affiliate Debtors Carve-Out Fund amounting to $1 million; -- the Asset Recovery Fund amounting to $400,000; -- the Plan Operations Fund, approximately $1,500,000, based on an estimated windup date of June 30, 2006, which includes around $500,000 to fund the Disputed Claims Reserves; and -- distributions on account of Administrative Expense Claims and Priority Claims, totaling between $700,000 and $1,300,000. The Debtors estimate that these distributions, together with other amounts paid to the Senior Lenders since their bankruptcy filing, including amounts paid under the Court's Cash Collateral Order, will aggregate approximately $29.5 million to $29.9 million. Holders of general unsecured claims against GT Brands, amounting to $77.09 million, will receive a pro rata share of the proceeds of the Causes of Action and the Avoidance Actions, if any. Holders of general unsecured claims against the affiliate debtors, amounting to $28.4 million to $31.9 million, will receive a pro rata share of: -- Affiliate Debtors Carve-Out Fund; -- proceeds of the Affiliate Debtors Avoidance Actions. Equity holders will get nothing under the Plan. A copy of the Amended Disclosure Statement is available for a fee at http://www.researcharchives.com/bin/download?id=060523224502 Headquartered in New York, New York, GT Brands Holdings LLC, supplies home video titles to mass retailers. The Debtors also develop and market branded consumer, lifestyle and entertainment products. The Company and its affiliates filed for chapter 11 protection on July 11, 2005 (Bankr. S.D.N.Y. Case No. 05-15167). Brian W. Harvey, Esq., at Goodwin Procter LLP, represents the Debtors in their chapter 11 proceedings. Patrick J. Orr, Esq., and Sean C. Southard, Esq., at Klestadt & Winters, LLP, represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed total assets of $79 million and total debts of $212 million. GULF COAST: Court Schedules Auction for Some Assets on June 1 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas approved procedures for the sale of certain of Gulf Coast Holdings, Inc.'s assets to PaR Systems, Inc., or to a bidder submitting the highest and best offer, during the auction for these assets on June 1, 2006. PaR Systems offered to pay $3 million in cash for those assets. The assets to be sold exclude: (a) interest in approximately 14.8009 acres of land and the improvements on that land located at 188 FM 3083, Conroe, Texas; (b) furniture fixtures and equipment designated by the successful bidder not to be acquired; (c) cash and cash equivalents; (d) accounts receivable and other receivables; (e) rights under a definitive agreement and other agreements and instruments entered into in connection; (f) stock records, shares of stock, insurance policies and rights and claims of refunds of taxes and other governmental charges; and (g) causes of action against third-parties, including, without limitation, bankruptcy avoidance claims. In connection with the sale, the Debtor will assume and assign various executory contracts and unexpired leases to the successful bidder. Any party wishing to submit a competing bid has until May 30, 2006, to file its offer. Competing bids should be at least $3.2 million. An auction will take place on June 1, 2006, commencing at 9:00 a.m., CST, at the offices of Hughes & Luce LLP, 1717 Main Street, Suite 2800, Dallas, Texas 75201. In the event a purchaser other than PaR Systems wins at the auction, the Debtor would pay PaR Systems a $75,000 breakup fee, plus reimbursement for actual out-of pocket expenses up to a maximum of $40,000. A hearing on the sale of the Debtor's assets will be held at 9:00 a.m, on June 7, 2006. Objections against the sale of the properties to the highest bidder must be filed with the Bankruptcy Court Clerk no later than 12:00 p.m. noon, prevailing central time on June 5, 2006. Objections should also be served to: (a) Counsel for the Debtor Hughes & Luce, L.L.P Attention: Jeffrey R. Fine 1717 Main Street, Suite 2800 Dallas, Texas 75201 (b) Counsel for Jered LLC Bell, Boyd & Lloyd LLC Attention: Dennis A. Peterson and Steven A. Domanowski 70 W. Madison Street, Suite 3100 Chicago, Illinois, 60602 (c) Counsel for MTGLQ Investors, L.P. Vinson & Elkins, LLP Attention: William L. Wallander 2001 Ross Avenue, 3700 Trammell Crow Center Dallas, Texas 75201 (d) Counsel for the Official Committee of Unsecured Creditors Winstead Sechrest & Minick P.C. Attention: Phillip L. Lamberson 5400 Renaissance Tower, 1201 Elm Street Dallas, Texas 75270 Headquartered in Conroe, Texas, Gulf Coast Holdings, Inc., field for bankruptcy protection on April 28, 2006 (Bankr. N.D. Tex. Case No. 06-31695). Daniel I. Morenoff, Esq., and Jeffrey R. Fine, Esq., at Hughes & Luce, LLP, represent the Debtor in its restructuring efforts. Jaime Myers, Esq., at Myers Winstead, Sechrest & Minick, P.C., represents the Official Committee of Unsecured Creditors. In its schedules filed with the Court, the Debtor reported assets amounting to $18,258,575 and debts totaling $19,553,664. GULF COAST: Creditors' 341(a) Meeting Scheduled for June 7 ---------------------------------------------------------- The U.S. Trustee for Region 11 will convene a meeting of Gulf Coast Holdings, Inc.'s creditors at 2:00 p.m., on June 7, 2006, at Office of the U.S. Trustee, 1100 Commerce St.,Room 976 in Dallas, Texas 75242. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Conroe, Texas, Gulf Coast Holdings, Inc., field for bankruptcy protection on April 28, 2006 (Bankr. N.D. Tex. Case No. 06-31695). Daniel I. Morenoff, Esq., and Jeffrey R. Fine, Esq., at Hughes & Luce, LLP, represent the Debtor in its restructuring efforts. Jaime Myers, Esq., at Myers Winstead, Sechrest & Minick, P.C., represents the Official Committee of Unsecured Creditors. In its schedules filed with the Court, the Debtor reported assets amounting to $18,258,575 and debts totaling $19,553,664. HANGER ORTHOPEDIC: Gets Required Consents for $215MM Senior Notes ----------------------------------------------------------------- Hanger Orthopedic Group, Inc. reported that on May 9, 2006, the Company commenced tender offers to purchase for cash any and all of its outstanding $200,000,000 aggregate principal amount of 10-3/8% Senior Notes due 2009 (CUSIP No. 41043FAE9) and its outstanding $15,562,000 aggregate principal amount of 11-1/4% Senior Subordinated Notes due 2009 (CUSIP No. 41043FAB5) and consent solicitations for certain proposed amendments to the indentures pursuant to which the Notes were issued. The Company reported that as of 5:00 p.m., New York City time, on Friday, May 19, 2006, it had received consents from holders of at least a majority of the Notes. As a result of the receipt of these consents, tendered Notes of the above series may not be withdrawn and consents may no longer be revoked with respect to the Notes, except in limited circumstances. The Consent Date for the Offers was May 22, 2006, unless such date is extended or earlier terminated. Consequently, any holders of Notes who tender their Notes and deliver their consents by 5:00 p.m., New York City time, on May 22, 2006 was still be eligible to receive the Total Consideration set forth in the Offer to Purchase and Consent Solicitation Statement, dated May 9, 2006. Holders of Notes who tender their notes after 5:00 p.m., New York City time, on May 22, 2006, but before 11:59 p.m., New York City time, on June 6, 2006, unless such date is extended or earlier terminated, will be eligible to receive only the Tender Offer Consideration set forth in the Statement. Holders who tender Notes must also deliver consents to the proposed amendments with respect to the series of such Notes and with respect to the indentures which governs such Notes. Holders may not deliver consents without also tendering their Notes and Holders who validly tender their Notes will be deemed to have delivered their consents. The Offers are conditioned upon the consummation of a new $75 million revolving credit facility and $230 million bank term loan, the issuance of $190 million aggregate principal amount of new senior notes and the issuance of $50 million of Series A Convertible Preferred Stock or other similar financing, on terms and conditions satisfactory to the Company, which terms may be revised in the Company's sole discretion. The Company intends to use the net proceeds from such financing to fund the purchase of the Notes in connection with the Offers. Lehman Brothers Inc. and Citigroup Corporate and Investment Banking are the co-dealer managers for the Offers and co- solicitation agents for the Solicitations. Questions about the Offers should be directed to: Lehman Brothers Inc. Attn: Liability Management and Citigroup Corporate and Investment Banking Telephone (212) 528-7581 (collect) Toll Free at (800) 438-3242 or (800) 558-3745 The information agent for the Offers is D.F. King & Co. Inc. Requests for additional sets of the tender offer materials may be directed to: D.F. King & Co. Inc. Toll Free (800) 735-3107 About Hanger Orthopedic Headquartered in Bethesda, Maryland, Hanger Orthopedic Group, Inc. -- http://www.hanger.com/-- is the world's premier provider of orthotic and prosthetic patient care services. Hanger is the market leader in the United States, owning and operating 621 patient care centers in 46 states including the District of Columbia, with 3,290 employees including 1,021 practitioners (as of 12/31/05). Hanger is organized into four units. The two key operating units are patient care, which consists of nationwide orthotic and prosthetic practice centers and distribution which consists of distribution centers managing the supply chain of orthotic and prosthetic componentry to Hanger and third party patient care centers. The third is Linkia, which is the first and only provider network management company for the orthotics and prosthetics industry. The fourth unit, Innovative Neurotronics, introduces emerging neuromuscular technologies developed through independent research in a collaborative effort with industry suppliers worldwide. * * * As reported in the Troubled Company Reporter on May 8, 2006, Standard & Poor's Ratings Services assigned its 'B' senior secured bank loan rating to Hanger Orthopedic Group Inc.'s (B/Negative/--) proposed $75 million revolving credit facility due in 2011 and $230 million term loan B due in 2013. A recovery rating of '2' also was assigned to the secured loan, indicating the expectation for substantial recovery of principal in the event of a payment default. At the same time, Standard & Poor's assigned its 'CCC+' senior unsecured debt rating to the company's proposed $190 million of senior unsecured notes due in 2014. The rating agency also affirmed its 'B' corporate credit rating. The rating outlook remains negative. HAWK CORP: Moody's Rates $110 Million Sr. Unsec. Notes at B2 ------------------------------------------------------------ Moody's Investors Service changed the rating outlook of Hawk Corporation to negative from positive. The company's B2 Corporate Family and guaranteed senior unsecured note ratings were affirmed. The change in outlook to negative reflects Moody's concerns relating to the extended delays the company has encountered in achieving an effective start-up of its Tulsa friction products facility. Since it commenced operations in early 2005, this facility has continued to operate well below the level of operational efficiency that had been anticipated. As a result of these start up-related operating inefficiencies, Hawk's performance has continued to erode and credit metrics have deteriorated to a level that is weak for the B2 rating level despite strong demand in most of the company's key markets. Hawk also remains burdened with high commodity costs, rising energy prices, and the prospect of lower demand from the heavy truck market during 2007 as more stringent emissions regulations take effect. If Hawk is unable to begin operating the Tulsa facility more efficiently during the near term, its rating will come under increasing pressure and liquidity could become stressed. For the twelve months ended through March 2006, the company's operating margin was 4.9%, interest coverage was 1.0 times, debt/EBITDA approximated 5.8 times, and free cash flow was approximately negative $7 million. Principal sources of liquidity include $9 million in cash, and $12.3 million available under a bank credit facility. However, continued erosion in operating performance could narrow the degree of headroom under the facility's covenant provisions and thereby diminish access. If Hawk's Tulsa facility begins to operate near the levels of efficiency that had been anticipated, the resulting cost savings, in combination with robust market demand during 2006, should enable the company to generate credit metrics that are more solidly supportive of the B2 rating and to preserve adequate levels of liquidity. Hawk has stated that the start up challenges facing the facility have been addressed and that it should begin to contribute to more robust operating results during the second and third quarters. Ratings affirmed: * B2, Hawk's $110 million guaranteed senior unsecured notes due November 2014; * B2 Corporate Family rating Hawk has a five-year $30 million asset-based revolving credit facility, which is not rated by Moody's. Moody's last rating action was on Oct. 11, 2004, confirming the Corporate Family ratings. Hawk, headquartered in Cleveland, Ohio, is a leading supplier of friction products and powdered metal precision components for industrial, agricultural, powersports and aerospace applications. Friction products include parts for brakes, clutches, transmissions, lawn and garden products, and other equipment. Powdered metal precision components include components in pumps, motors, transmissions and other equipment. Annual revenues approximate $265 million. INSEQ CORPORATION: Posts $1.8 Mil. Net Loss in 2005 --------------------------------------------------- INSEQ Corporation filed with the Securities and Exchange Commission on April 18, 2006, its amended annual report for the fiscal year ended Dec. 31, 2005. The Company's Statement of Operations for the period ended Dec. 31, 2005 showed a net loss of $1,876,262 on revenues of $2,427,196. At Dec. 31, 2005, the Company's balance sheet showed $4,895,334 in total assets and $3,588,756 in total liabilities, resulting in a $1,306,578 in stockholders' equity. The Company's Dec. 31 balance sheet also showed strained liquidity with $927,888 in total current assets available to pay $2,692,808 in total current liabilities coming due within the next 12 months. Going Concern Doubt Rosenberg Rich Baker Berman & Company, P.A., in Bridgewater, New Jersey, raised substantial doubt about INSEQ Corporation'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 and working capital deficits. A full-text copy of the Company's Amended 2005 Annual Report is available for free at http://researcharchives.com/t/s?9a0 Headquartered in Mount Arlington, New Jersey, INSEQ Corporation (OTCBB:INSQ) -- http://www.inseq.com/-- manufactures and sells products that facilitate the efficient use of virgin and partially consumed natural resources, including metals, chemicals, fuels, and plastics. INTERLINE BRANDS: Commences Tender Offer 11-1/2% Senior Sub. Notes ------------------------------------------------------------------ Interline Brands, Inc.'s operating subsidiary, Interline Brands, Inc., a New Jersey corporation, commenced a cash tender offer for any and all of its outstanding 11-1/2% Senior Subordinated Notes Due 2011 (CUSIP No. 458743 AB 7). In conjunction with the tender offer, Interline New Jersey is soliciting the consent of holders of a majority in aggregate principal amount of the Notes to eliminate substantially all of the covenants and certain events of default under the indenture for the Notes. The terms and conditions of the tender offer and consent solicitation are set forth in an Offer to Purchase and Consent Solicitation Statement dated May 23, 2006. Subject to certain conditions precedent described in the Offer to Purchase and Consent Solicitation Statement, holders who validly tender Notes and deliver consents prior to 5:00 p.m., Eastern Time, on June 7, 2006, unless extended, will be entitled to receive the Total Consideration, which includes a consent payment of $30 per $1,000 principal amount of Notes. Payment in such case will be made promptly after Interline New Jersey determines to accept the Notes tendered prior to 5:00 p.m., Eastern Time, on the Consent Date, which acceptance date is expected to be on or about June 23, 2006 or such later date as the financing transactions described below are expected to be completed. Holders who validly tender Notes after 5:00 p.m., Eastern Time, on the Consent Date but prior to 5:00 p.m., Eastern Time, on June 23, 2006, unless extended, will be entitled to receive the Tender Consideration, which is equal to the Total Consideration less the Consent Payment. Payment in such case will be made promptly after the Expiration Time. Subject to certain limited exceptions, tendered Notes may be withdrawn and related consents may be revoked only at any time prior to 5:00 p.m., Eastern Time, on the Consent Date. The Total Consideration for each $1,000 principal amount of the Notes validly tendered pursuant to the tender offer and not validly withdrawn is equal the sum of (a) the present value on an assumed Early Settlement Date of $1,057.50 per $1,000 principal amount of the Notes, representing the amount at which Interline New Jersey optionally may redeem the Notes on May 15, 2007, plus (b) the present value on the assumed Early Settlement Date of the interest that would be payable on, or accrue from, the last interest payment date until May 15, 2007 determined on the basis of a yield to May 15, 2007 equal to the sum of (x) the bid-side yield on 4.375% U.S. Treasury Note due May 15, 2007 as calculated by the dealer managers in accordance with standard market practice, as of 2:00 p.m., Eastern Time, on the second business day following the Consent Date (such pricing date expected to be June 9, 2006, unless extended), plus (y) 50 basis points, minus (c) accrued and unpaid interest with respect to the Notes from the last interest payment date through, but not including, the applicable settlement date. All Notes accepted for payment will (subject to the terms and conditions of the tender offer) also receive accrued and unpaid interest to, but excluding, the applicable settlement date on the tendered Notes. The tender offer is being conducted contemporaneously with the debt financings reported on May 23, 2006. Interline New Jersey expects to use part of the proceeds from these financing transactions to fund the consideration in the tender offer. The tender offer is subject to the satisfaction of certain conditions, including: (i) there being validly tendered and not withdrawn not less than a majority of the aggregate principal amount of the Notes, (ii) the execution of a supplemental indenture giving effect to the proposed amendments to the indenture for the Notes, (iii) the successful receipt of net proceeds of the financing transactions described above sufficient to finance the tender offer on terms satisfactory to Interline New Jersey and (iv) certain other customary conditions. Credit Suisse Securities (USA) LLC and Lehman Brothers Inc. are serving as the exclusive Dealer Managers and Solicitation Agents for the tender offer and consent solicitation. Questions regarding the terms of the tender offer or consent solicitation should be directed to: Credit Suisse Securities (USA) LLC Attn: Liability Management Group Telephone (800) 820-1653 (toll free) or Lehman Brothers Inc. Attn: Liability Management Group Telephone (800) 438-3242 (toll free) Any questions or requests for assistance or additional copies of documents may be directed to the Tender Agent and Information Agent: D.F. King & Co., Inc. Telephone (212) 269-5550 (bankers and brokers call collect) Toll Free (800) 290-6426 New Bank Facility In addition, Interline New Jersey intends to enter into a new bank credit facility. Interline New Jersey intends to use the proceeds of the offering, along with borrowings under the new credit facility, to finance its planned acquisition of American Sanitary and to refinance its existing debt, including Interline New Jersey's outstanding 11-1/2% Senior Subordinated Notes Due 2011. These financings are expected to be completed by the beginning of the third quarter of 2006. About Interline Headquartered in Jacksonville, Florida, Interline Brands, Inc. -- http://www.interlinebrands.com/-- is a leading national distributor and direct marketer of maintenance, repair and operations products to approximately 160,000 professional contractors, facilities maintenance professionals, and specialty distributors across North America and Central America. At March 31, 2006, Interline Brands, Inc.'s balance sheet showed a stockholders' deficit of $159,234,000, compared to a $152,878,000 deficit at Dec. 30, 2005. INTERPLAY ENTERTAINMENT: Auditor Raises Going Concern Doubt ---------------------------------------------------------------- Jeffrey S. Gilbert in Los Angeles, California, raised substantial doubt about Interplay Entertainment Corp.'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 limited liquid resources, a history of losses, and working capital and stockholders' deficiencies. The Company earned $5,928,000 of net income on $7,158,000 of total revenues for the year ended Dec. 31, 2005. The Company's net operating income of $5.9 million was primarily derived through the reversal of deferred income related to advance minimum royalties on licensing agreements that expired in 2005. At Dec. 31, 2005, the Company's balance sheet showed $673,000 in total assets and $12,163,000 in total current liabilities, resulting in an $11,490,000 stockholders' deficit. A full-text copy of the Company's 2005 Annual Report is available for free at http://ResearchArchives.com/t/s?9b7 Interplay Entertainment Corp. (OTCBB: IPLY) develops and publishes interactive entertainment software for both core gamers and the mass market. Titus Interactive, S.A., a France-based developer, publisher and distributor of interactive entertainment software, which owns 62% of the Company's common stock, is in bankruptcy as of Dec. 31, 2005. KINETIC CONCEPTS: Earns $43.7 Million in Quarter Ended March 31 --------------------------------------------------------------- Kinetic Concepts, Inc., filed its financial statements for the quarter ended March 31, 2006, with the Securities and Exchange Commission on May 9, 2006. The Company earned $48,517,000 of net income on $319,245,000 of revenues for the three months ended March 31, 2006. At March 31, 2006, the Company's balance sheet showed $787,240,000 in total assets and $531,590,000 in total liabilities, resulting in a stockholders' equity of $255,650,000. A full-text copy of the Company's financial statements for the quarter ended March 31, 2006, is available at no charge at: http://ResearchArchives.com/t/s?9a8 Kinetic Concepts, Inc. -- http://www.kci1.com/-- designs, manufactures, markets and provides a wide range of proprietary products that can improve clinical outcomes while helping to reduce the overall cost of patient care. * * * As reported in the Troubled Company Reporter on April 20, 2005, Moody's Investors Service upgraded Kinetic Concepts's guaranteed senior secured revolving credit facility due 2009 to Ba3 from B1; guaranteed senior secured term loan B due 2010 to Ba3 from B1; guaranteed unsecured subordinated notes due 2013 to B2 from B3; senior implied rating to Ba3 from B1; and senior unsecured issuer rating to B1 from B2. The ratings outlook was also changed from stable to positive. As reported in the Troubled Company Reporter on Mar. 16, 2005, Standard & Poor's Ratings Services raised its corporate credit rating on Kinetic Concepts to 'BB' from 'BB-'. At the same time, Standard & Poor's raised its rating on the senior secured credit facility and raised its rating on KCI's senior subordinated debt. The outlook remains stable. KOEN BOOK: Can Solicit Votes for Plan After Disclosure Approval --------------------------------------------------------------- The Honorable Judith H. Wizmur of the U.S. Bankruptcy Court for the District of New Jersey approved the Disclosure Statement explaining Koen Book Distributors, Inc., nka Book Distributors, Inc., and its Official Committee of Unsecured Creditors' Joint Plan of Liquidation. The Court determined that the Disclosure Statement contained adequate information -- the right amount of the right kind of information necessary for the creditors to make an informed decision -- as required under Section 1125 of the Bankruptcy Code. The Debtor is now authorized to solicit acceptances for the Plan. Judge Wizmur will consider confirmation of the Plan on July 11, 2006. Overview of the Plan The plan will be funded using any cash remaining and proceeds of the liquidation of the assets and causes of action of the Debtor's estate. On Sept. 22, 2005, the Debtor entered into an Inventory Purchase Agreement with Baker & Taylor for the purchase and sale of the Debtor's book inventory for $4.5 million. The Court approved that agreement on Oct. 7, 2005. On Oct. 3, 2005, the Debtor entered into an Asset Purchase Agreement with Levy Home Entertainment pursuant to which Levy will purchase the Debtor's assets, the name "Koen Book Distributors" and certain unexpired executory contracts for $300,000. The Court approved the Debtor's agreement with Levy on Oct. 17, 2005. Treatment of Claims Under the plan, Administrative Claims, Priority Tax Claims and Priority Claims will be paid in full. Holders of general unsecured claims will receive their pro rata share of the cash remaining after payment of all other claims, exclusive of any reserves established by the Koen Trustee for Disputed Claims. Unsecured claim holders will also receive their pro rata share of the beneficial interests in the Koen Trust. The Debtor tells the Court that if there are sufficient funds to pay unsecured claims in full, then holders of unsecured claims will also receive 3.52% interest. Holders of interests in the Debtor will receive no distribution and those interests will be cancelled. A copy of the Debtor and Committee's disclosure statement explaining their Joint Plan of Liquidation is available for a fee at: http://www.researcharchives.com/bin/download?id=060404023256 About Koen Book Headquartered in Moorestown, New Jersey, Koen Book Distributors, Inc., nka Book Distributors, Inc. -- http://www.koen.com/-- is a book wholesaler specializing in bestsellers and independent press titles. The company filed for chapter 11 protection on July 11, 2005 (Bankr. D. N.J. Case No. 05-32376). Aris J. Karalis, Esq., at Ciardi, Maschmeyer & Karalis, P.C., represents the Debtor. Bruce D. Buechler, Esq., and Bruce S. Nathan, Esq., at Lowenstein Sandler, PC, 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. LARRY'S MARKETS: Panel Hires Preston Gates as Bankruptcy Counsel ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Washington gave its interim approval for the Official Committee of Unsecured Creditors appointed in Larry's Markets, Inc.'s chapter 11 case to employ Preston Gates & Ellis, LLP, as its bankruptcy counsel. Preston Gates will: a. assist the Committee in the investigation of the financial affairs of the Debtor; b. assist the Committee in the negotiation, formulation and confirmation of a plan of reorganization. c. prepare all necessary pleadings in these proceedings; and d. perform all other legal services for the Committee as may be necessary. Michael J. Gearin, Esq., a partner at Preston Gates, tells the Court that he will bill $320 for his services. Mr. Gearin further tells the Court that Marc Barreca, Esq., will bill $370 per hour while Mr. Matt Goldberg will bill $170 per hour for this engagement. Mr. Gearin discloses that the firm's other attorneys and professionals bill between $75 to $450 per hour. Mr. Gearin assures the Court that his firm does not hold any interest adverse to the Debtor, to any class of creditors, or to any equity security holders. Mr. Gearin can be reached at: Michael J. Gearin, Esq. Preston Gates & Ellis LLP 925 Fourth Avenue, Suite 2900 Seattle, Washington 98104-1158 Tel: (206) 623-7580 http://www.prestongates.com/ About Larry's Markets Headquartered in Kirklan, Washington, Larry's Markets, Inc. -- http://www.larrysmarkets.com/-- operates several supermarkets and department stores in the U.S. Northwest. The company filed for chapter 11 protection on May 7, 2006 (Bankr. W.D. Wash. Case No. 06-11378). Armand J. Kornfeld, Esq., at Bush Strout & Kornfeld, represents the Debtor. The Official Committee of Unsecured Creditors has selected Marc L. Barreca, Esq., and Michael J. Gearin, Esq., at Preston Gates & Ellis LLP, to represent it in the Debtor's case. When the Debtor filed for protection from its creditors, it listed total assets of $12,574,695 and total debts of $21,489,800. LARRY'S MARKETS: Files Schedules of Assets and Liabilities ---------------------------------------------------------- Larry's Markets, Inc., delivered its Schedules of Assets and Liabilities to the U.S. Bankruptcy Court for the Western District of Washington disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property B. Personal Property $12,574,694 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $11,258,098 E. Creditors Holding Unsecured Priority Claims $298,524 F. Creditors Holding $9,763,860 Unsecured Nonpriority Claims ----------- ----------- Total $12,574,694 $21,320,482 Headquartered in Kirklan, Washington, Larry's Markets, Inc. -- http://www.larrysmarkets.com/-- operates several supermarkets and department stores in the U.S. Northwest. The company filed for chapter 11 protection on May 7, 2006 (Bankr. W.D. Wash. Case No. 06-11378). Armand J. Kornfeld, Esq., at Bush Strout & Kornfeld, represents the Debtor. The Official Committee of Unsecured Creditors has selected Marc L. Barreca, Esq., and Michael J. Gearin, Esq., at Preston Gates & Ellis LLP, to represent it in the Debtor's case. When the Debtor filed for protection from its creditors, it listed total assets of $12,574,695 and total debts of $21,489,800. LARRY'S MARKETS: Gets Interim Nod on Scarff as Special Counsel -------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Washington gave its interim approval for Larry's Markets, Inc., to employ Scarff & Wilson PLLC as its special counsel. Scarff & Wilson is expected to: a. provide general corporate advice, including but not limited to matters involving the purchase and sale of assets; and b. provide advice involving employment, tax, and other issues that may arise under Washington law. Stuart Scarff, Esq., a member at Scarff & Wilson, tells the Court that he will bill $250 per hour for this engagement. Mr. Scarff discloses that the firm's other professionals and support personnel bill between $95 to $200 per hour. Mr. Scarff assures the Court that his firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Scarff can be reached at: Stuart Scarff, Esq. Scarff & Wilson PLLC 3035 Island Crest Way Mercer Island, Washington 98040 Tel: (206) 236-1500 Fax: (206) 686-3030 http://scarffwilson.com/ Headquartered in Kirklan, Washington, Larry's Markets, Inc. -- http://www.larrysmarkets.com/-- operates several supermarkets and department stores in the U.S. Northwest. The company filed for chapter 11 protection on May 7, 2006 (Bankr. W.D. Wash. Case No. 06-11378). Armand J. Kornfeld, Esq., at Bush Strout & Kornfeld, represents the Debtor. The Official Committee of Unsecured Creditors has selected Marc L. Barreca, Esq., and Michael J. Gearin, Esq., at Preston Gates & Ellis LLP, to represent it in the Debtor's case. When the Debtor filed for protection from its creditors, it listed total assets of $12,574,695 and total debts of $21,489,800. LEVITZ HOME: Balks at Remediation Contract Payment -------------------------------------------------- Levitz Home Furnishings, Inc., and its debtor-affiliates ask the U.S Bankruptcy Court for the Southern District of New York to deny AMEC Earth & Environmental, Inc.'s request for immediate payment of amounts due under a Remediation Contract. The Debtors and AMEC are parties to an environmental remediation contract for continuing remedial operations pursuant to a corrective action plan. The Corrective Plan was intended to fulfill requirements of the Arizona Department of Environmental Quality Underground Storage Tank Section implemented by the Debtors for petroleum soil and groundwater contamination caused by a leaking underground storage tank incident at the former Levitz Furniture store located at Phoenix, Arizona. As reported in the Troubled Company Reporter on May 4, 2006, the Court lifted the automatic stay to permit AMEC to terminate its Environmental Remediation Contract with the Debtors. However, AMEC's request for allowance and immediate payment of an administrative claim was adjourned. AMEC is asking the Court to Compel the Debtors to immediately pay the outstanding amounts due under the Remediation Contract for $55,169, plus attorneys' fees and costs. Debtors Response The Debtors assert that AMEC's request for immediate payment for services provided under the Remediation Contract is premature because there is no basis for it in the Bankruptcy Code. The Debtors tell the Court that AMEC has not provided any evidence that its services provided any benefit to the Debtors' estate. PLVTZ's Response PLVTZ, LLC, tells the Court that AMEC Earth & Environmental, Inc., failed to meet the burden to prove that its $55,169 claim is entitled to administrative expense priority. PLVTZ asserts that, rather than showing that the services performed under the Remediation Contract were necessary and beneficial to the Debtors' estate, AMEC incorrectly argues that the Debtors are liable for an administrative claim because they elected to receive the postpetition benefits of an executory contract. AMEC's argument lacks merit because the Remediation Contract is not an executory contract, PLVTZ says. Furthermore, in the event the Court will allow AMEC's Administrative Claim, PLVTZ asks the Court to limit the amounts due to the services rendered subsequent to the Petition Date. Specifically, PLVTZ wants its liability limited to $4,248: * $2,532 for the March 20, 2006, invoice; and * $1,715 for services performed since the March 20, 2006 invoice. PLVTZ also asks the Court to schedule an evidentiary hearing if the matters raised by the parties are not resolved consensually. 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. 13 Bankruptcy Creditors' Service, Inc., 215/945-7000) LEVITZ HOME: PetSmart Calls for Compliance with Sublease Terms -------------------------------------------------------------- PetSmart, Inc., as sublessor under an unexpired lease for a nonresidential real property located in Valencia, California, asks the U.S. Bankruptcy Court for the Southern District of New York to compel Levitz Home Furnishings, Inc., its debtor-affiliates and PLVTZ, LLC, to comply with the terms of a sublease. PetSmart and Levitz Furniture Corporation, as sublessee, are parties to a sublease dated February 17, 1999. The Debtor subleased certain premises from PetSmart in Valencia Crossing Shopping Center, which is designated as Store No. 30206. The Sublease will expire on January 31, 2009. Robert Kolodney, Esq., at Kane Kessler, P.C., in New York, relates that, pursuant to the terms of the Sublease, the Debtor agreed to be bound by all of PetSmart's liabilities and obligations as the Tenant under a Shopping Center Lease, as amended, between The Newhall Land and Farming Company, as landlord, and PetSmart, as tenant. According to Mr. Kolodney, PLVTZ agreed, under the Asset Purchase Agreement, to timely perform and discharge all obligations under the Debtors' leases. The Sublease, among other things, requires the Debtors to pay: -- monthly rent of not less than $27,577; -- its proportionate share of common area charges, real property taxes and insurance costs. PetSmart is also entitled to interest on all unpaid obligations due under the Sublease, Mr. Kolodney adds. PetSmart relates that the Debtors, despite written notice and demand as provided in the Sublease, are in default under the Sublease due to the Debtors' failure to, among others: (i) maintain the required letter of credit; (ii) pay monthly rent and other charges due on October 1, 2005, for $27,577; (iii) pay real property taxes for the period from July 1, 2005, to June 30, 2006, which are all presently due to the taxing authority in California. PetSmart submits that the sums due PetSmart under the Sublease continue to increase and the Debtors' failure to pay as required and to otherwise abide by the terms of the Sublease caused harm to PetSmart. Specifically, PetSmart asks the Court to: (a) compel the immediate payment of $18,681, which represents the prorated amount of October 2005 rent accruing from the Petition Date through the end of October 2005; (b) compel the immediate payment of $48,195 for real property taxes due under the Sublease; Alternatively, in the event PetSmart is not awarded those payments, PetSmart asks the Court to: -- compel the immediate payment of $25,167, which represents the estimated amount of unpaid real property taxes, insurance and other charges provided under the Sublease accruing from the Petition Date through the end of March 2006; -- direct, beginning with the monthly payment due on April 1, 2006, the payment of $32,010 per month to PetSmart, which includes, in addition to the rent and estimated CAM charges for $27,577 per month, estimated prorated amounts accruing for real property taxes and insurance; -- award interest on the delinquent amounts from five days after the date due until paid, as provided in the Sublease, and direct its immediate payment to PetSmart; and -- immediately award PetSmart its reasonable costs and attorney's fees incurred in the litigation. PLVTZ Objects PLVTZ argues that, while initially it does not dispute that the stub rent and certain real estate tax payments are outstanding, PetSmart is not entitled to immediate payment of the amounts pending a decision by PLVTZ and the Debtors whether to assume or reject the Sublease. PLVTZ reminds the Court that, on April 18, 2006, it has designated the Sublease for assumption and assignment, and has notified the Debtors and PetSmart of the designation. Thus, PLVTZ will pay to PetSmart all outstanding amounts currently due and owing as part of a cure payment upon approval of the assumption and assignment of the Sublease. Accordingly, by that time, PLVTZ says PetSmart's request will be rendered moot. PLVTZ reserves its right to contest the amount and validity of PetSmart's claim for interest, late fees, costs and attorney's fees at or before the hearing on the assumption and assignment of the Sublease. 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. 13 Bankruptcy Creditors' Service, Inc., 215/945-7000) LEVITZ HOME: Moves to Reject Eletto-Seaman Delivery Contract ------------------------------------------------------------ Debtor Seaman Furniture Company seeks authority from the U.S. Bankruptcy Court for the Southern District of New York to reject a Delivery Services Agreement with Joseph Eletto Transfer, Inc., effective as of May 7, 2006. Joseph Eletto and Seaman were parties to a delivery services agreement, as amended. Under the Agreement, Eletto delivered furniture in certain East Coast delivery areas. On April 27, 2006, the Purchasers of the Debtors' assets served a notice to the Debtors identifying the Eletto-Seaman Delivery Services Agreement as an Excluded Contract. Nicholas M. Miller, Esq., at Jones Day, in New York, notes that since that the Debtors have sold all of their operating stores to the Purchasers, they no longer need Eletto's delivery services. The Delivery Services Agreement no longer provides a benefit to the Debtors' estates or creditors. 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. 13 Bankruptcy Creditors' Service, Inc., 215/945-7000) LING HSU: Case Summary & 11 Largest Unsecured Creditors ------------------------------------------------------- Debtor: Ling T.L. Hsu 2810 East Hemberg Drive Flagstaff, Arizona 86004 Bankruptcy Case No.: 06-01501 Debtor affiliate filing separate chapter 11 petition: Entity Case No. ------ -------- Hank H. Hsu 06-01508 Chapter 11 Petition Date: May 23, 2006 Court: District of Arizona (Phoenix) Judge: Redfield T. Baum, Sr. Debtors' Counsel: Pernell W. McGuire, Esq. Aspey Watkins & Diesel, PLLC 123 North San Francisco, 3rd Floor Flagstaff, Arizona 86001-5231 Tel: (928) 774-1478 Fax: (928) 774-8404 Total Assets Total Debts ------------ ----------- Ling T.L. Hsu $1,769,359 $1,063,578 Hank H. Hsu $1,196,969 $1,065,978 Debtors' Consolidated List of their 11 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Citi Goods & Services $42,207 P.O. Box 6003 Hagerstown, MD 21747 Chase Goods & Services $30,227 4915 Independence Parkway Tampa, FL 33634 Greentree Village Unpaid Rent $30,000 c/o Duane Weston 120 North Beaver Street Suite 120 Flagstaff, AZ 86001 Wolpoff & Abramson, LLP $29,000 Federated Financial Corp. Goods & Services $27,929 Capital One Goods & Services $23,795 CACH, LLC Bank Account $13,828 Internal Revenue Service Federal Tax $11,018 NCO Financial Group Collection $3,990 Bank One Goods & Services $3,320 Northern Leasing Systems, Inc. Goods & Services $2,058 MAGELLAN HEALTH: Moody's Affirms B1 Sr. Sec. Debt Facility Rating ----------------------------------------------------------------- Moody's Investors Service changed the ratings outlook for Magellan Health Services Inc. to positive from stable, reflecting a decline in leverage over the past two years. Moody's noted that the company has reduced total debt outstanding from over $350 million at the beginning of 2004 to $63 million at December 31, 2005. Moody's affirmed ratings: * Senior Secured Bank Credit Facility, rated B1 * Corporate Family Rating, rated B1 The ratings outlook reflects Moody's expectations that Magellan will generate between $125 million to $150 million in operating cash flow and $100 million to $125 million in free cash flow during 2006. Moody's anticipates that the company will use its cash flow to retire debt while continuing to rebuild its cash position, which totals $197 million as of March 31, 2006. Moody's estimates that the company will have approximately $265 million to $300 million of unrestricted cash by December 31, 2006 if it does not make any significant acquisitions. In the first quarter of 2006, Magellan spent $120 million to acquire all of the stock of National Imaging Associates, a privately held radiology benefits management firm based in Hackensack, New Jersey. NIA manages diagnostic imaging services on a non- risk basis for its through contracts with health plans customers, which totals covering approximately 17 million members. Moody's believes that Magellan can generate more revenue for NIA by cross-selling radiology benefit management services to Magellan's existing behavioral health client base, moving some contracts to a risk basis, and adding new contracts. Magellan's expertise in underwriting claims payment and provider network management, along with its financial resources and information systems should facilitate NIA's product expansion and transition to risk-based contracts. The acquisition allows Magellan to manage a larger portion of the healthcare dollar for its clients while improving its diversity and mix of revenues. Moody's is concerned, however, that neither Magellan nor NIA has any experience in managing risk based radiology benefits for customers. Moody's is skeptical that the Magellan can generate meaningful growth in its core behavioral business because of the maturity of the business, increasing competition from managed care providers such as United Health and others, the potential loss of the WellPpoint contract in 2008, the continued threat that managed care customers will in-source behavioral health services, and the restructuring of the existing Tennessee contract. Moody's expects the company's revenues to decline by 5% to 10% in 2006 with the loss of its Aetna contract, in addition to other contracts with existing customers. Due to slower growth in its core behavioral health business, Moody's believes that the company will make acquisitions in the radiology business and other areas to diversify its revenue and customer base. Magellan Health Services Inc. provides behavioral health and radiology benefit services to health plans, corporations and government agencies. For the fiscal year ended December 31, 2005, the company generated over $1.8 billion in revenues. MANITOWOC CO: Moody's Holds Corporate Family Rating at Ba3 ---------------------------------------------------------- Moody's Investors Service affirmed the debt ratings of The Manitowoc Company, Inc. -- Corporate Family Rating at Ba3, Senior Unsecured Notes at B1, and Senior Subordinate Notes at B2. The outlook is changed to positive from stable. Moody's said that the rating action is prompted by the redemption of the ?175 million Senior Subordinate Notes due 2011, which represented about 40% of the company's FYE05 debt. In conjunction with strong operating performance, the reduction in debt is expected to result in improvement in credit metrics. The Ba3 corporate family rating also reflects Manitowoc's solidly competitive position in all its businesses including its crane segment, the company's largest, and the continued growth of other business units. This improvement in credit metrics has been driven by the success of the strong North American economy, the ongoing robust non- residential construction market, and the continuous reduction in debt. These strengths, however, are balanced against the ongoing cyclicality of the construction market. The positive outlook reflects Moody's expectations that Manitowoc's debt protection measures will continue to improve as a result of the strong demand in the non-residential construction market, the main driver of the crane business, and the prudent financial policies being embraced by management. The key risk that Manitowoc will continue to face is the cyclicality in the construction market. Nevertheless, Manitowoc should be able to weather future cyclical downturns much better than in the past due to its diversification into other business segments, expanding product offerings, an improving balance sheet, and a commitment to maintain ample liquidity. The Manitowoc Company, Inc., based in Manitowoc, Wisconsin, is a diversified industrial manufacturer and provider of support services in three principal business segments -- Cranes and Related Products, Foodservice Equipment, and Marine Operations. MOLECULAR DIAGNOSTICS: Hires Amper Politziner as New Auditors ------------------------------------------------------------- Molecular Diagnostics, Inc., engaged Amper, Politziner & Mattia, P.C., to act as its registered public accounting firm on May 15, 2006. Amper Politziner replaces Altschuler, Melvoin and Glasser LLP, which resigned on May 10, 2006. The Company disclosed in a Securities and Exchange Commission filing that there have been no disagreements with Altschuler Melvoin in connection with the firm's audits of the Company's financial statements for the two most recent fiscal years and through May 10, 2006. Amper Politziner -- http://www.amper.com/-- is a regional firm of Certified Public Accountants and Consultants with offices throughout the New Jersey and New York areas. The firm has a total staff of about 375. Molecular Diagnostics, Inc. -- http://www.molecular-dx.com/-- formerly Ampersand Medical Corporation, is a biomolecular diagnostics company focused on the design, development and commercialization of cost-effective screening systems to assist in the early detection of cancer. MDI has currently curtailed its operations focused on the design, development and marketing of its InPath(TM) System and related image analysis systems, and expects to resume such operations only when additional capital has been obtained by the Company. The InPath System and related products are intended to detect cancer and cancer-related diseases, and may be used in a laboratory, clinic or doctor's office. As of Dec. 31, 2005, Molecular Diagnostics' balance sheet showed a $10,049,000, equity deficit, compared to a $12,123,000 equity deficit at Dec. 31, 2004. MORTGAGE ASSISTANCE: Sutton Robinson Raises Going Concern Doubt --------------------------------------------------------------- Sutton Robinson Freeman & Co., P.C., in Tulsa, Oklahoma, raised substantial doubt about Mortgage Assistance Center Corporation'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 recurring losses from operations, and working capital and stockholders' deficiencies. The Company reported a $1,508,073 net loss on $678,824 of total revenues for the year ended Dec. 31, 2005. At Dec. 31, 2005, the Company's balance sheet showed $1,462,918 in total assets and $2,682,442 in total liabilities, resulting in a $1,219,524 stockholders' deficit. The Company's Dec. 31 balance sheet also showed strained liquidity with $995,173 in total current assets available to pay $1,911,659 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?9b2 Mortgage Assistance Center Corporation, fka Safe Alternatives Corporation of America, Inc., buys, sells and manages distressed real estate and non-performing mortgages secured by real estate in the secondary market in the United States through its subsidiary, Mortgage Assistance Corporation. MAC purchases non performing, charged-off, sub-prime first and second lien mortgages. Those mortgages are secured by real estate, and are typically 90 days to two years past due at the time MAC buys them. Those mortgages are purchased in pools or portfolios of assets from lending institutions and usually at discounts to the outstanding principal balance. OCA INC: Taps Spencer Stuart as Executive Search Consultants ------------------------------------------------------------ OCA, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Louisiana for permission to employ Spencer Stuart as their executive search consultants. Spencer Stuart will assist the Debtors, on an exclusive basis, in recruiting a new senior executive officer. The Firm will be paid a professional fee equal to one-third of its recruit's projected first year's total cash compensation, including any potential first year bonus. In addition, the Firm will receive a $200,000 retainer to be applied towards the professional fee in four monthly installments. Each installment will include a $5,000 overhead fee to cover the average cost, on a typical assignment, of office telephone, postage, computer communication, reprographics and contracted research. The Debtors assure the Court that Spencer Stuart does not hold any interest adverse to the Debtors' estates. About Spencer Stuart Spencer Stuart is a global executive search firm that identifies, interviews and evaluates potential executive and board candidates for corporations seeking to hire such candidates. Spencer Stuart has nearly 50 years of industry experience and employs nearly 300 consultants and operates a cohesive network of more than 50 offices in 25 countries. Spencer Stuart has developed an international network of professionals experienced in both local and multi-national businesses, conducting more than 4,000 executive searches annually. About OCA Based in Metairie, Louisiana, OCA, Inc. -- http://www.ocai.com/ -- provides a full range of operational, purchasing, financial, marketing, administrative and other business services, as well as capital and proprietary information systems to approximately 200 orthodontic and dental practices representing approximately almost 400 offices. The Company's client practices provide treatment to patients throughout the United States and in Japan, Mexico, Spain, Brazil and Puerto Rico. The Company and its debtor-affiliates filed for Chapter 11 protection on March 14, 2006 (Bankr. E.D. La. Case No. 06-10179). William H. Patrick, III, Esq., at Heller Draper Hayden Patrick & Horn, LLC, represents the Debtors. Patrick S. Garrity, Esq., and William E. Steffes, Esq., at Steffes Vingiello & McKenzie LLC represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $545,220,000 in total assets and $196,337,000 in total debts. PANTRY INC: Earns $9 Million in Three Months Ended March 31 ----------------------------------------------------------- The Pantry, Inc., filed its financial statements for the quarter ended March 30, 2006, with the Securities and Exchange Commission on May 9, 2006. The Company reported a $9,196,000 of net income on $1,315,746,000 of revenues for the three months ended March 30, 2006. At March 30, 2006, the Company's balance sheet showed $1,472,960,000 in total assets and $1,184,962,000 in total liabilities resulting in a stockholders' equity of $287,998,000. A full-text copy of the Company's financial statements for the quarter ended March 30, 2006, is available at no charge at: http://ResearchArchives.com/t/s?9a7 Headquartered in Sanford, North Carolina, The Pantry, Inc. -- http://www.thepantry.com/-- is the leading independently operated convenience store chain in the southeastern United States and one of the largest independently operated convenience store chains in the country, with net sales for fiscal 2005 of approximately $4.4 billion. As of Sept. 29, 2005, the Company operated 1,400 stores in eleven states under a number of banners including Kangaroo Express(SM), Golden Gallon(R), and Cowboys(SM). The Pantry's stores offer a broad selection of merchandise, as well as gasoline and other ancillary services designed to appeal to the convenience needs of its customers. As reported in the Troubled Company Reporter on May 16, 2006, Standard & Poor's Ratings Services raised its corporate credit rating on The Pantry Inc. to 'BB-' from 'B+'. At the same time, the bank loan rating was raised to 'BB' from 'BB-', with the recovery rating unchanged at '1', indicating expectations for full recovery of principal in the event of a default. The subordinated debt rating was also raised to 'B' from 'B-'. The outlook is stable. PERFORMANCE TRANSPORTATION: Timothy Skillman to Serve as CRO ------------------------------------------------------------ The U.S. Bankruptcy Court for the Western District of New York authorized Performance Transportation Services, Inc., and its debtor-affiliates to appoint Timothy Skillman of Alvarez & Marsal, LLC, as their chief restructuring officer pursuant to the terms of the postpetition engagement letter dated March 13, 2006. As reported in the Troubled Company Reporter on April 26, 2006, the Debtors are required to retain a chief restructuring officer under the terms of their DIP financing agreement with Credit Suisse, Cayman Islands Branch. The Debtors' Board of Directors decided to retain Mr. Skillman as CRO. Under the terms of a postpetition engagement letter between the Debtors and Alvarez & Marsal dated March 13, 2006, the CRO will: a. work with the Debtors' management to perform a financial review of the Debtors, including a review and assessment of financial information that has been, and will be, provided to the creditors; b. undertake an analysis of the Debtors' major customer contracts and collective bargaining agreements, and, if necessary, have primary responsibility for negotiating any modifications and resulting managing disputes; c. assist the Debtors' management with the development of possible restructuring plans or strategic alternatives for maximizing the enterprise value of the Debtors' business lines; d. work with the Debtors' management to assess operations and explore potential for implementing operational improvements; e. assist the Debtors with their efforts to reduce liabilities relating to workers' compensation insurance; and f. provide other services as requested by the respective boards of directors of the Debtors and agreed to by the CRO. The Debtors agreed to pay Alvarez a $90,000 flat monthly fee for the services provided by the CRO and the Additional Officers. In addition, Alvarez will seek reimbursement for reasonable and necessary expenses incurred in connection with the Debtors' Chapter 11 cases. Mr. Skillman, a managing director at Alvarez, specializes in developing and implementing turnaround strategies for retailers and manufacturing, distribution and financial services companies. About Performance Transportation Headquartered in Wayne, Michigan, Performance Transportation Services, Inc. -- http://www.pts-inc.biz/-- is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America. The Company provides transit stability, cargo damage elimination and proactive customer relations that are second to none in the finished vehicle market segment. The company's chapter 11 case is administered jointly under Leaseway Motorcar Transport Company. Headquartered in Niagara Falls, New York, Leaseway Motorcar Transport Company Debtor and 13 affiliates filed for chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Case No. 06-00107). James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A. Hirsch, Esq., at Kirkland & Ellis, LLP, and Garry M. Graber, Esq., at Hodgson Russ LLP represent the Debtors in their restructuring efforts. David Neier, Esq., at Winston & Strawn LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $50 million and more than $100 million in debts. (Performance Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000) PERFORMANCE TRANSPORTATION: GECC Seeks Decision on Five Leases -------------------------------------------------------------- Debtor Hadley Auto Transport rents equipment from General Electric Capital Corporation pursuant to five lease agreements. Pursuant to Section 365(d)(10) of the Bankruptcy Code, the Debtor is obligated to pay GECC the rental under the leases beginning no later than 60 days after the Petition Date, Frank Peretore, Esq., at Peretore & Peretore P.C., notes. Since it has been more than 60 days since the Petition Date and the Debtor has failed to make the monthly rental payments, GECC says the Debtor is in default. In view of the Bankruptcy Code's automatic stay provision, GECC is stayed from commencing or continuing any proceeding against the Debtor to collect its rent or recover the equipment. GECC is unable to determine whether the Debtor will voluntarily abandon the leased property. As long as the Debtor does not seek the Court's permission to accept or reject the Leases, GECC will be irreparably harmed, Mr. Peretore asserts. GECC believes the Debtor is using the equipment thus, depreciating the property's value. GECC asks the U.S. Bankruptcy Court for the Western District of New York to compel the Debtor to either: a. assume the Leases, cure the default and pay the rental for the use of the equipment, plus counsel fees, taxes and late charges; or b. reject the Leases and surrender the possession of the equipment to GECC's possession. Alternatively, GECC asks the Court to lift the automatic stay to collect the Debtor's lease payments or recover the property. About Performance Transportation Headquartered in Wayne, Michigan, Performance Transportation Services, Inc. -- http://www.pts-inc.biz/-- is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America. The Company provides transit stability, cargo damage elimination and proactive customer relations that are second to none in the finished vehicle market segment. The company's chapter 11 case is administered jointly under Leaseway Motorcar Transport Company. Headquartered in Niagara Falls, New York, Leaseway Motorcar Transport Company Debtor and 13 affiliates filed for chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Case No. 06-00107). James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A. Hirsch, Esq., at Kirkland & Ellis, LLP, and Garry M. Graber, Esq., at Hodgson Russ LLP represent the Debtors in their restructuring efforts. David Neier, Esq., at Winston & Strawn LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $50 million and more than $100 million in debts. (Performance Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000) PLIANT: Files Exit Financing Committee Letter & Plan Supplements ---------------------------------------------------------------- Pliant Corporation and its debtor-affiliates delivered to the U.S. Bankruptcy Court for the District of Delaware supplemental documents relating to their Second Amended Joint Plan of Reorganization: A. The Exit Financing Commitment Letter On May 19, 2006, the Debtors and Merill Lynch Commercial Finance Corporation entered into a commitment letter for the establishment of a $200,000,000 credit facility consisting of: (a) a Working Capital Revolving Credit Facility; and (b) a Foreign Fixed Asset Revolving Credit Facility. The proceeds of the Revolving Credit Facilities will be used by the Debtors to: -- refinance the existing prepetition $140,000,000 Amended and Restated Credit Facility and the $200,000,000 DIP Credit Facility; -- pay related transaction costs, fees and expenses; -- provide working capital; -- make intercompany investments in the form of loans and distributions; and -- for other general corporate purposes. Merrill Lynch has agreed to provide for the entire amount of the Revolving Credit Facilities. Merrill Lynch will act as Working Capital Agent and lender under the Working Capital Facility, and Fixed Asset Agent and lender under the Fixed Asset Facility. Merrill Lynch reserves the right to syndicate all or a portion of its commitments to one to three other financial institutions reasonably acceptable to the Debtors. Merrill Lynch will manage all aspects of the syndication of the Revolving Credit Facilities in consultation with the Debtors. Merrill Lynch will act as sole arranger and book manager in the event of a syndication on the Revolving Credit Facilities. The Debtors will indemnify Merrill Lynch, each Lender and their representatives from and against all claims, damages, losses, liabilities and expenses that may incurred by or asserted or awarded against any Indemnified Person. The Debtors will reimburse Merrill Lynch for all reasonable out-of-pocket costs and expenses it incurs in connection with the Revolving Credit Facilities. The Debtors will, however, not be required to pay costs and expenses in excess of the expense deposit they previously provided to Merrill Lynch without court approval. Merrill Lynch's commitment will terminate on the earlier of: (i) the date the Operative Documents become effective; and (ii) July 31, 2006. A full-text copy of the Summary of the Terms and Conditions of the Secured Working Capital Facility is available for free at: http://ResearchArchives.com/t/s?9d2 A full-text copy of the Summary of the Terms and Conditions of the Secured Fixed Asset Credit Facility is available for free at http://ResearchArchives.com/t/s?9d3 B. A list of the Reorganized Debtors' Directors and Officers The new directors of the New Pliant will be: 1. Harold C. Bevis, 2. John D. Bowlin, 3. Eugene I. Davis, 4. David G. Elkins, 5. Edward A. Lapekas, 6. Stephen McKenna, and 7. Timothy J. Walsh. C. The Amended Employment Agreement between the Debtors and Harold Bevis The Debtors and Harold Bevis entered into an employment agreement dated January 1, 2005, which provides for the continued employment of Mr. Bevis as the Debtors' president and chief executive officer. Mr. Bevis will be responsible for the management and direction of the Debtors' businesses on a day-to-day basis and other duties as the Board of Directors will assign to him from time to time. All operations and staff personnel will report directly to Mr. Bevis or through one or more officers designated by Mr. Bevis. Mr. Bevis will report directly and exclusively to the Board. Under the Employment Agreement, Mr. Bevis will be entitled to: 1. a base salary of $650,000 per annum; 2. participate in all bonus and incentive plans; 3. participate in all savings and retirement plans; 4. participate in all welfare and insurance benefit plans; 5. fringe benefits; 6. an office with furnishings and other appointments; 7. secretarial and other assistance; 8. four weeks of paid vacation annually; and 9. a cash incentive bonus for each calendar year ending. Mr. Bevis' employment will terminate upon the earliest to occur of: (i) January 1, 2008; (ii) the effective date of his resignation; (iii) his death or disability; (iv) his retirement; or (v) the effective date of a termination of his employment. If Mr. Bevis' appointment is terminated without cause or if he resigns for a good reason, Mr. Bevis will receive: 1. a lump sum payment of the unpaid portion of the Base Salary, computed on a pro rata basis to the Termination Date, payable on the next payroll date; 2. the monthly portion of the Base Salary, payable each month for the period beginning on the Termination Date and ending on the second anniversary of the Termination Date; 3. an amount equal to the Bonus Compensation that was paid or is payable for the year preceding the calendar year in which the Termination Date occurs, multiplied by a fraction, the numerator of which is the number of days of the then-current calendar year that elapse before the Termination Date, and the denominator of which is 365. 4. a lump sum reimbursement for any expenses payable on the next payroll date following the date on which the reimbursement expense request is submitted to the Debtors; and 5. continued participation in the Debtors' comprehensive medical and dental plan for the period beginning on the Termination Date and ending on the second anniversary of the Termination Date. A copy of Harold Bevis' Employment Agreement is available for free at http://ResearchArchives.com/t/s?9d4 About Pliant 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. PRG-SCHULTZ: March 31 Balance Sheet Upside-Down by $101.7 Million ----------------------------------------------------------------- PRG-Schultz International, Inc., submitted its Form 10-Q for the quarter ended Mar. 31, 2006, with the U.S. Securities and Exchange Commission. The Company reported a net loss of $10,294,000 on $65,538,000 of revenues for the quarter ended March 31, 2006, compared to a net loss of $4,896,000 on $75,147,000 of revenues for the quarter ended March 31, 2005. At March 31, the Company's balance sheet showed total assets of $159,141,000 and total liabilities of $245,891,000, resulting in a $101,737,000 shareholders' deficit. The Company's balance sheet also showed strained liquidity with current assets totaling $101,467,000 and current liabilities totaling $104,855,000. Exchange of Convertible Notes On Mar. 17, 2006, the Company completed an exchange offer for its $125 million of 4.75% Convertible Subordinated Notes due 2006. As a result of the exchange offer, virtually all of the outstanding convertible notes were exchanged for: (a) $51.6 million in principal amount of 11.0% Senior Notes Due 2011, (b) $59.8 million in principal amount of 10.0% Senior Convertible Notes Due 2011, and (c) 124,530 shares, or $14.9 million liquidation preference, of 9.0% Senior Series A Convertible Participating Preferred Stock. New Senior Indebtedness On Dec. 23, 2005, the Company entered into a Credit Agreement, Security Agreement and Pledge Agreement with Petrus Securities L.P. and Parkcentral Global Hub Limited and Blum Strategic Partners II GmbH & Co. K.G. and Blum Strategic Partners II, L.P. These agreements evidence a term loan to PRG-Schultz USA Inc., a wholly owned subsidiary of the Company, in an aggregate principal amount of $10 million. This loan was repaid upon closing of the new senior credit facility on March 17, 2006. As a part of its financial restructuring, the Company entered into a new senior secured credit facility with Ableco LLC and The CIT/Group/Business Credit, Inc., a portion of which is being syndicated to the Company's prior bridge financing lenders, the Petrus Entities and the Blum Entities. The new credit facility includes: (1) a $25 million term loan, and (2) a revolving credit facility that provides for revolving loan borrowings of up to $20 million. No borrowings are currently outstanding under the revolving credit facility. About PRG-Schultz Headquartered in Atlanta, Georgia, PRG-Schultz International, Inc. -- http://www.prgx.com/-- is the world's leading recovery audit firm, providing clients throughout the world with insightful value to optimize and expertly manage their business transactions. Using proprietary software and expert audit methodologies, PRG- Schultz industry specialists review client purchases and payment information to identify and recover overpayments. RAMP SERIES: DBRS Places Low-B Rating on $6.8 Million NIM Notes. ---------------------------------------------------------------- Dominion Bond Rating Service assigned new ratings of A (low), BBB (low), BB, and BB (low) to these NIM Notes, Series 2006-RS3, issued by Soundview CI-13. * $17.5 million, NIM Notes, Series 2006-RS3, Class N1 New Rating A (low) * $3.9 million, NIM Notes, Series 2006-RS3, Class N2 New Rating BBB (low) * $1.9 million, NIM Notes, Series 2006-RS3, Class N3 New Rating BB * $1.0 million, NIM Notes, Series 2006-RS3, Class N4 New Rating BB (low) The NIM Notes are backed by a 100% interest in the Class SB Certificates issued by RAMP Series 2006-RS3 Trust. The Class SB Certificates will be entitled to all excess interest and prepayment premiums or charges received from the underlying mortgage loans. The NIM Notes will also be entitled to the benefits of an underlying swap with HSBC Bank USA, National Association. Payments on the NIM Notes will be made on the 25th of each month, commencing in May 2006. The interest payment amount will be distributed sequentially to the holders of Class N1 through N4 Notes, followed by the principal payment amount distributed sequentially to the holders of Class N1 through N4 Notes until the note balance of such class has been reduced to zero. Any remaining amounts will be distributed to the Issuer, the Indenture Trustee, and holders of preference shares. The mortgage loans in the Underlying Trust were originated or acquired by various originators, including First National Bank of Nevada and SunTrust Mortgage, Inc. RESIDENTIAL ASSET: Fitch Holds Low-B Rating on Four Cert. Classes ----------------------------------------------------------------- Fitch Ratings took rating actions on these Residential Asset Mortgage Products, Inc. issues: RAMP Series 2002-RM1 Group 1: -- Classes A-I-1 to A-I-3, AP-1, AV-1 affirmed at 'AAA' -- Class M-I-1 affirmed at 'AAA' -- Class M-I-2 upgraded to 'AA+' from 'AA' -- Class M-I-3 upgraded to 'A+' from 'A' -- Class B-I-1 upgraded to 'A-' from 'BBB' -- Class B-I-2 upgraded to 'BB', from 'B+' RAMP Series 2002-RM1 Group 2: -- Classes A-II, AP-II, AV-II affirmed at 'AAA' -- Class M-II-1 affirmed at 'AAA' -- Class M-II-2 upgraded to 'AA+' from 'AA' -- Class M-II-3 upgraded to 'A+' from 'A' -- Class B-II-1 upgraded to 'BBB-' from 'BB+' -- Class B-II-2 upgraded to 'B+' from 'B' RAMP Series 2003-RM1: -- Classes A-2 to A-8, A-8A, A-P, A-V affirmed at 'AAA' -- Class M-1 affirmed at 'AA+' -- Class M-2 affirmed at 'AA' -- Class M-3 affirmed at 'A' -- Class B-1 affirmed at 'BB+' -- Class B-2 affirmed at 'B+' RAMP Series 2003-RM2 Groups 1 & 2: -- Classes A-I-1 to A-I-6, AP-I, AV-I, A-II, AP-II, AV-II affirmed at 'AAA' -- Class M-1 affirmed at 'AA' -- Class M-2 affirmed at 'A' -- Class M-3 affirmed at 'BBB' -- Class B-1 affirmed at 'BB' -- Class B-2 affirmed at 'B' RAMP Series 2003-RM2 Group 3: -- Classes A-III, AP-III, AV-III affirmed at 'AAA' -- Class M-III-1 upgraded to 'AAA' from 'AA+' -- Class M-III-2 upgraded to 'AA+' from 'A+' -- Class M-III-3 upgraded to 'AA-' from 'A-' -- Class B-III-1 upgraded to 'A' from 'BBB' -- Class B-III-2 upgraded to 'BBB' from 'B+' The upgrades reflect an improvement in the relationship of credit enhancement to future loss expectations and affect about $10 million of outstanding certificates, as of the April 25, 2006 distribution date. The affirmations reflect satisfactory CE relationships to future loss expectations and affect about $355 million of outstanding certificates. The collateral in the 2002-RM1 and 2003-RM2 transactions consists of 15- and 30-year fixed-rate mortgage loans secured by first liens on one- to four-family residential properties. The collateral in the 2003-RM1 transaction consists of 30-year fixed- rate mortgage loans secured by first liens on one- to four-family residential properties. Residential Funding Corporation (rated 'RMS1', Rating Watch Evolving by Fitch), is the master servicer for these loans. As of the April 25, 2006 distribution date, the transactions were seasoned from a range of 35 to 40 months and the pool factors (current principal balance as a percentage of original balance) ranged from 18% to 45%. The upgraded classes benefit from CE (in the form of subordination) three to four times the original levels. RIVERSTONE NETWORKS: Wants Until August 7 to File Civil Actions --------------------------------------------------------------- Riverstone Networks, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to extend until Aug. 7, 2006, the period within which they can remove prepetition civil actions pending in various state and federal courts. The Debtors tell the Court that they were unable to evaluate the need to remove any of their pending prepetition civil actions because they have been: -- focused on the solicitation and consummation of the sale of their business to Lucent Technologies; -- preparing their schedules of assets and liabilities and statements of financial affairs; and -- working with the Committees to formulate a plan and disclosure statement. The extension, the Debtors say, will give them more time to make fully informed decisions concerning removal of each pending prepetition civil action. This will also assure that they don't forfeit valuable rights under Section 1452 of the Bankruptcy Code. Based in Santa Clara, California, Riverstone Networks, Inc. -- http://www.riverstonenet.com/-- provides carrier Ethernet infrastructure solutions for business and residential communications services. The company and four of its affiliates filed for chapter 11 protection on Feb. 7, 2006 (Bankr. D. Del. Case Nos. 06-10110 through 06-10114). Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor LLP, represent the Debtors. Jeffrey S. Sabin, Esq., at Schulte Roth & Zabel LLP represents the Official Committee of Unsecured Creditors. As of Dec. 24, 2005, the Debtors reported assets totaling $98,341,134 and debts totaling $130,071,947. ROBERT INGRAHAM: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Robert Ingraham Homes, Inc. P.O. Box 667970 Charlotte, North Carolina 28266-7970 Bankruptcy Case No.: 06-30790 Type of Business: The Debtor is a project contractor specializing in building single-family houses. Chapter 11 Petition Date: May 23, 2006 Court: Western District of North Carolina (Charlotte) Judge: J. Craig Whitley Debtor's Counsel: James H. Henderson, Esq. James H. Henderson, P.C. 1201 Harding Place Charlotte, North Carolina 28204-2248 Tel: (704) 333-3444 Fax: (704) 333-5003 Total Assets: $3,222,220 Total Debts: $5,490,758 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Regions Bank Line of Credit $250,000 Department 2521 P.O. Box 2153 Birmingham, AL 35287-2521 Wachovia Prime Equity Line Line of Credit $210,000 P.O. Box 96074 Charlotte, NC 28296-0074 BB&T Preferred Line Line of Credit $200,000 P.O. Box 580002 Charlotte, NC 28258-0002 American Express Credit Card $78,089 Horack Talley Pharr and Legal Services $50,587 Lowndes P.A. Masco/Gale Insulation Trade Debt $36,703 Boral Bricks Trade Debt $31,551 Wayne W. Ledbetter Trade Debt $26,003 dba Turn Key Drywall Queen City TV & Appliance Trade Debt $24,508 Birmingham Hardwood Floors Trade Debt $24,002 American Burglar Alarm Inc. Trade Debt $20,919 L&L Carpet Discount Center Real Estate $19,872 BB&T Credit Card $19,547 Wachovia Platinum Plus Credit Card $19,087 For Business Standard Residential Insulation Trade Debt $17,747 Bank of America Credit Card $15,779 Max Brooks Construction Supplies $14,334 Southeastern Materials Trade Debt $14,000 Hood Hargett & Associates $13,968 Miller-Sanders, Inc. Collection $13,710 ROTECH HEALTHCARE: Incurs $2.9 Million Net Loss in First Quarter ---------------------------------------------------------------- Rotech Healthcare Inc. generated net revenues for the quarter ended March 31, 2006 of $132.5 million versus net revenues of $123.3 million for the quarter ended March 31, 2005. The Company reported a net loss of $2.9 million for the quarter ended March 31, 2006 as compared to a net loss of $3 million for the quarter ended March 31, 2005. The financial results for the current year were negatively impacted by Medicare reimbursement reductions for respiratory medications, specifically, from reductions to nebulizer medication dispensing fees and certain nebulizer medications such as compounded budesonide. The combined effect of these two items for the quarter was a reduction of recorded revenues of approximately $11.25 million. Respiratory therapy equipment and services revenues represented 87.8% of total revenue for the quarter ended March 31, 2006 versus 88.3% for the quarter ended March 31, 2005. Durable medical equipment revenues represented 11.2% of total revenue for the quarter ended March 31, 2006, versus 10.7% for the same period last year. EBITDA was $20.2 million for the quarter ended March 31, 2006 as compared to $19.9 million for the quarter ended March 31, 2005. Philip L. Carter, president and chief executive officer, commented, "The Company reported solid growth numbers related to patients in both oxygen and nebulizer medications, growing the patient base by 4% over the fourth quarter of 2005, and 14% over the first quarter of 2005. Nebulizer medication revenue was affected by the potential compounded budesonide rate decreases by approximately $7.5 million in the first quarter of 2006." As of March 31, 2006, the Company is not in compliance with the fixed charge ratio in its credit agreement. The Company is currently negotiating with its lenders to obtain a waiver or amendment to the credit agreement and anticipates obtaining such an amendment or waiver. If it does not, the non-compliance will become a technical default when the Company files its Form 10-Q for the first quarter. As of May 2, 2006, under its revolving credit facility, the Company had $19.0 million outstanding, $12.7 million committed under letters of credit and $43.3 million available. Additionally, as of May 2, 2006, the Company had $42.1 million outstanding under its term loan facilities. About Rotech Healthcare Rotech Healthcare, Inc., (NASDAQ:ROHI) is a provider of home respiratory care and durable medical equipment and services to patients with breathing disorders such as chronic obstructive pulmonary diseases. The Company provides its equipment and services in 48 states through approximately 485 operating centers, located principally in non-urban markets. The Company's local operating centers ensure that patients receive individualized care, while its nationwide coverage allows the Company to benefit from significant operating efficiencies. * * * As reported in the Troubled Company Reporter on May 28, 2006, Moody's Investors Service affirmed Rotech Healthcare's credit ratings: * $75 Million Revolving Credit Facility, due 2007, rated Ba3 * $42 million Senior Term Loan, due 2008, rated Ba3 * $300 million face amount Senior Subordinated Notes, due 2012, rated B3 * Corporate Family Rating, rated B2 Moody's changed the ratings outlook to negative from stable. SAINT VINCENTS: Proposes Bidding Procedures for St. Mary's Sale --------------------------------------------------------------- Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to establish uniform bidding procedures, which will govern the submission of bids relating to the sale of St. Mary's Hospital Complex. As reported in the Troubled Company Reporter on May 24, 2006, the Debtors are seeking to sell St. Mary's Hospital located at Section 5, Block 1362, Lot 1, Kings County, New York, free and clear of all liens, claims, encumbrances, and other interests, to NAL of N.Y. Corp., subject to higher or better bids. Bidding Procedures To participate in the bidding process, a Qualified Bidder must first deliver to the Debtors: (a) an executed confidentiality agreement; and (b) a written non-binding expression of interest and, thereafter, a Qualified Bid. A Qualified Bid must: (a) be on the same terms and conditions as those in the Purchase Agreement, and must include an agreement substantially similar to the Purchase Agreement; (b) include a purchase price that is greater than $17,525,000 in cash; (c) be accompanied by a deposit, by bank or certified check, or by wire transfer, in an amount equal to at least $500,000; and (d) provide for a Supplemental Downpayment in an amount equal to at least $1,200,000. All bids for the St. Mary's Premises must be received by June 16, 2006. To maximize the value they will receive for the St. Mary's Premises, the Debtors propose to hold an Auction at 10:00 a.m. New York Time on June 22, 2006. The Auction will be held if one or more Qualified Bids is received pursuant to the Bidding Procedures before the Bid Deadline. In evaluating competing bids, the Debtors intend to consider, among others and without limitation: (a) the amount and type of consideration offered; (b) the changes to the Purchase Agreement required by the competing bid; (c) the bidder's ability to finance and timely consummate the transaction contemplated by the bid; and (d) the bidder's ability to use the St. Mary's Premises in a manner consistent with the Debtors' mission. The Debtors propose to publish the Notice of Auction and Sale Hearing once in The Wall Street Journal (National Edition). About Saint Vincents Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000) SAINT VINCENTS: Files Statement of Reclamation Claims ----------------------------------------------------- In accordance with the U.S. Bankruptcy Court for the Southern District of New York's Reclamation Procedures Order, Saint Vincents Catholic Medical Centers of New York and its debtor- affiliates filed a statement summarizing all reclamation claims asserted against them. The Debtors have concluded that as of March 28, 2006, $474,043 of the 14 Reclamation Claims recorded are valid and entitled to relief pursuant to Section 546(c) of the Bankruptcy Code: Valid Claim Amount ------------------ As of As of As of Claimant Claim Date 10/11/05 10/21/05 03/28/06 -------- ---------- -------- -------- -------- Aramark 07/11/05 - - - US Food Service 07/07/05 - - - Source One 07/06/05 $15,335 $15,335 $15,335 Smith and Nephew 07/08/05 5,546 5,546 5,546 Abbott 07/07/05 9,467 9,467 9,467 Medtronic 07/13/05 - - 37,440 Johnson & Johnson 07/06/05 14,318 14,318 14,318 Cardinal 07/11/05 187,243 187,243 266,738 Caligor 07/07/05 14,261 14,261 14,261 Corporate Express 07/12/05 42,974 42,974 42,974 Bayer Healthcare 07/07/05 32,383 32,383 32,383 Fisher Scientific 07/11/05 6,282 6,282 6,282 AFI Food Service 07/15/05 5,082 5,082 5,082 Mallinckrodt 07/06/05 - 32,619 24,218 -------- -------- -------- TOTAL $332,891 $365,510 $474,044 ======== ======== ======== Frank A. Oswald, Esq., at Togut, Segal & Segal LLP, in New York, Oswald notes that the balance of the Reclamation Claims are currently disputed either in whole or in part, and are under further review by the Debtors pending receipt of documentation and other information substantiating the Reclamation Claims from the relevant claimants. The Debtors and other parties-in-interest reserve their rights to contest, at a later date, the extent, validity, and enforceability of any Reclamation Claim allowed by the Bankruptcy Court as administrative expenses pursuant to Section 503(b) of the Bankruptcy Code. About Saint Vincents Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000) SAINT VINCENTS: Intends to Pay $425,000 Break-Up Fee to NAL ----------------------------------------------------------- Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to allow the payment of a break-up fee to NAL of N.Y. Corp., if NAL isn't the Successful Bidder for the St. Mary's Hospital Complex. As reported in the Troubled Company Reporter on May 24, 2006, the Debtors are seeking to sell St. Mary's Hospital located at Section 5, Block 1362, Lot 1, Kings County, New York, free and clear of all liens, claims, encumbrances, and other interests, to NAL of N.Y. Corp., subject to higher or better bids. The Debtors propose to pay NAL a $425,000 break-up fee. The Debtors also propose to reimburse NAL of certain de minimis expenses related to title examination and survey. George A. Davis, Esq., at Weil, Gotshal & Manges LLP, in New York, asserts that the Break-Up Fee is reasonable in relation to the size of the proposed sale -- NAL proposes to buy St. Mary's for $17,000,000 in case. The Break-Up Fee constitutes 2.5% of the total consideration to be provided to the Debtors under their Purchase Agreement with NAL. Mr. Davis adds that the Break-Up Fee is not so large as to have a "chilling effect" on other prospective bidders' interest in the St. Mary's Premises. The Break-Up Fee constitutes actual and necessary costs and expenses of preserving the Debtors' estates within the meaning of Section 503(b) of the Bankruptcy Code, Mr. Davis says. Thus, the Break-Up Fee should be treated as an allowed administrative expense claim under Sections 503(b) and 507(a)(1) of the Bankruptcy Code. About Saint Vincents Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000) SAINT VINCENTS: Balks at NYH's Demands for Agreements Decision -------------------------------------------------------------- Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to deny New York Hyperbaric and Wound Care Centers, LLC's request to compel them to: (a) assume or reject certain agreements pursuant to Section 365 of the Bankruptcy Code; and (b) turn over funds held in trust for its benefit, pursuant to Section 541 of the Bankruptcy Code. As reported in the Troubled Company Reporter on May 9, 2006, NYH entered into Management Services Agreements with the Debtors at St. John's Queens Hospital dated November 2003, and at St. Vincent's Hospital Staten Island dated November 2004. The Agreements each run for a term of three years, subject to automatic renewal for additional one-year terms thereafter. Debtors Object Andrew M. Troop, Esq., at Weil, Gotshal & Manges LLP, in Boston, Massachusetts, contends that the only factor addressed by New York Hyperbaric and Wound Care Centers, LLC, is the alleged damage to the non-debtor party in the absence of a prompt assumption or rejection of the Agreements. Mr. Troop relates that the Debtors are in the process of deciding what to do with St. John's Queens Hospital and St. Vincent's Hospital Staten Island. They may sell or close the Hospitals. The Agreements may prove to be important assets for which the Debtors may obtain value for the benefit of their creditors and their reorganization efforts. Alternatively, the Agreements may prove to be unnecessary. However, if the Debtors were to reject the Agreements at this time, it could adversely impact the marketing of their hospitals, resulting in a lower sale price, Mr. Troop notes. The Debtors have recently obtained Court approval to extend their exclusive periods to file a plan and solicit acceptances for that plan. Therefore, the Debtors should be given the allotted time to reorganize their assets without having to prematurely reject or assume the Agreements, Mr. Troop contends. Mr. Troop tells the Court that: (a) the Debtors have not requested NYH to install any additional chambers at either hospital, and NYH is under no obligation to install a chamber. This potential capital commitment by NYH is completely hypothetical at this point in time, and any motion to compel assumption or rejection of the Agreements, to the extent it is based on this commitment, is premature; (b) the Debtors are not aware of any significant investment by NYH above its normal recurring expenses is currently required; (c) the Agreements can be terminated without cause upon prior written notice. Thus, outside of bankruptcy, NYH could have been required to make long-term commitments and capital improvements with little or no protection from the Agreements being subsequently terminated. There is no relationship between how much the Debtors were paid and how much they owed to NYH under the Agreements, Mr. Troop asserts. Rather, the Agreements provided that NYH would receive a "service fee" -- a sum certain for each hyperbaric procedure for which the Debtors received payment. The parties' negotiation for postpetition amendments to the Agreements altered the payment terms, reducing the service fee which NYH was to be paid for each reimbursed treatment from $625 to $500, in exchange for SVCMC making advance payments for the period from July to December 2005, Mr. Troop tells the Court. The Debtors are current on all of their postpetition obligations to NYH under the Agreements and NYH does not contend otherwise. About Saint Vincents Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000) SAV-ON LTD: Court Approves $4.62-Million Asset Sale to R. Waghorne ------------------------------------------------------------------ The Honorable Harlin DeWayne Hale of the U.S. Bankruptcy Court for the Northern District of Texas gave Sav-On, Ltd., permission to sell substantially all of its assets to Richard C. Waghorne, one of the debtor's limited partners and debtor-in-possession financing providers, for $4,625,000. The sale, conducted pursuant to an April 21, 2006 Asset Purchase Agreement, will include the Debtor's 37 stores. Mr. Waghorne is the president of Sav-On GP. Sav-On GP is the Debtor's general partner. Mr. Waghorne along with Phoenix Partners Inc., provided the Debtor with $1 million in debtor-in- possession financing. Headquartered in Dallas, Texas, Sav-On, Ltd., operates 37 retail and commercial stores that sell a wide range of standard office supplies and products predominantly in small towns located in Texas, New Mexico, Colorado, Oklahoma, Louisiana, Tennessee and Alabama. The Debtor filed for chapter 11 protection on Nov. 19, 2005 (Bankr. N.D. Tex. Case No. 05-86875). Donald R. Rector, Esq., at Glast Phillips & Murray, PC, represents the Debtor in its restructuring efforts. Bracewell & Giuliani LLP represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed $7,844,155 in total assets and $14,971,386 in total debts. SEALY MATTRESS: Moody's Ups Rating on $565 Mil. Term Loan to Ba3 ---------------------------------------------------------------- Moody's Investors Service upgraded the debt ratings of Sealy Mattress Company by one notch following the repayment of debt and preferred stock held by its parent with a portion of the IPO proceeds. The outlook remains stable. These ratings were upgraded by this action: * Senior secured $565 million Term Loan D due 2012 to Ba3 from B1; * $125 million senior secured revolving credit facility due 2010 to Ba3 from B1; * $390 million senior subordinated notes due 2014 to B2 from B3; * Corporate family rating to Ba3 from B1 The ratings upgrade reflects the company's improved financial flexibility accorded by the IPO and the commensurate reduction of debt. The company completed its IPO in April 2006, raising roughly $300 million of net proceeds, which went towards the repayment of an aggregate $137 million of Sealy's subordinated debt and preferred stock held by its parent as well as a $125 million special dividend. The IPO proceeds went towards the repayment of an aggregate $140 million of subordinated debt and preferred stock held by its parent as well as $ million of special dividend. The upgrade also reflects Moody's expectation that the industries strong growth dynamics will continue and that Sealy will continue to delever based on its strong operating and competitive position and strong cash flow generating abilities. Moody's expects management to sustain its strategic direction, which is centered on premium priced segment, continuous new product offering, cost and asset efficiency measures, and debt reduction. In addition to the leverage reduction and operating performance improvements, the ratings upgrade and stable outlook considered Sealy's strong cash flow generation, history of product innovation, leading market position, and Moody's expectation of continued strong demand offset, in part, by uncertainties in consumer spending created by rising oil prices and the softening in the housing market. Sealy Mattress Company, a wholly-owned subsidiary of Sealy Corporation, is headquartered in Trinity, North Carolina. The company is the world's largest bedding manufacturer which sells mattresses and box springs under the Sealy, Sealy Posturepedic, Stearns & Foster and Bassett brand names. Net sales for the LTM ended February 2006 approximated $1.5 billion. SILICON GRAPHICS: Inks Restructuring Agreement with SGI Holders --------------------------------------------------------------- On May 7, 2006, Silicon Graphics, Inc., entered into a Restructuring Agreement, with certain holders of SGI's 6.50% Senior Secured Convertible Notes due 2009 representing approximately 47% of the outstanding principal amount of those Notes. The Restructuring Agreement requires the Supporting Noteholders to vote in favor of and support a financial restructuring to be effectuated through a chapter 11 plan of reorganization on the terms and subject to certain conditions. The material terms of the financial restructuring are embodied in a term sheet. The Restructuring Agreement may be terminated in the event that, among other things: * the Court will not have entered an interim order approving SGI's debtor-in-possession financing on or before May 12, 2006, and will not have entered a final order approving that financing within 30 days after the closing of the financing; * SGI's plan of reorganization will not have been filed with the Court within 30 days after SGI files its chapter 11 cases, provided that that date may be extended an additional five days under certain circumstances; * SGI's disclosure statement is not approved by the Court on or before July 21, 2006; * SGI fails to obtain confirmation by the Court of its plan of reorganization on or before September 20, 2006; * SGI's plan of reorganization is modified to provide for terms that are materially adverse from the Plan Term Sheet; * SGI's plan of reorganization is confirmed by the Court on or before September 20, 2006, and is not effective within 30 days thereafter; * SGI ceases to have the exclusive right to file or solicit acceptance of its plan of reorganization; or * an event of default will have occurred and be continuing under SGI's debtor-in-possession financing. A full-text copy of the Restructuring Agreement is available for free at http://researcharchives.com/t/s?9bb About Silicon Graphics Headquartered in Mountain View, California, Silicon Graphics, Inc. (OTC: SGID) -- http://www.sgi.com/-- offers high-performance computing. SGI helps customers solve their computing challenges, whether it's sharing images to aid in brain surgery, finding oil more efficiently, studying global climate, providing technologies for homeland security and defense, enabling the transition from analog to digital broadcasting, or helping enterprises manage large data. The Debtor and 13 of its affiliates filed for chapter 11 protection on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977 through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $369,416,815 and total debts of $664,268,602. (Silicon Graphics Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) SILICON GRAPHICS: Wants Adequate Assurance for Utility Companies ---------------------------------------------------------------- Silicon Graphics, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to: (a) determine that their Utility Providers have been provided with adequate assurance of payment within the meaning of Section 366; (b) approve their proposed Adequate Assurance and Adequate Assurance Procedures where Utility Providers may seek additional or different adequate assurance; (c) prohibit the Utility Providers from altering, refusing or discontinuing services on account of prepetition amounts outstanding or on account of any perceived inadequacy of the Debtors' proposed adequate assurance; (d) establish procedures for the Utility Providers to opt out of the proposed Adequate Assurance Procedures; (e) determine that they are not required to provide any additional adequate assurance beyond what they proposed; and (f) set a final hearing on their proposed adequate assurance. Section 366(a) of the Bankruptcy Code prevents utility companies from discontinuing, altering or refusing service to a debtor during the first 20 days of a bankruptcy case. However, 30 days from the Petition Date, a utility company has the option of terminating its services, pursuant to Section 366(c)(2), if a debtor has not furnished adequate assurance of payment. The Debtors obtain electricity, natural gas, trash collection, water, telephone services and other similar services from a number of utility companies. The Debtors estimate that their average monthly obligations to the Utility Providers total $450,000. The Debtors have a very good payment history with the Utility Companies, according to Gary T. Holtzer, Esq., at Weil, Gotshal & Manges LLP, in New York. The Debtors intend to pay all postpetition obligations owed to the Utility Companies in a timely manner, Mr. Holtzer tells the Court. The Debtors expect that availability under their proposed postpetition credit facility will be more than sufficient to pay all obligations. Mr. Holtzer points out that uninterrupted utility services are essential to the Debtors' operations. Any interruption in the utility services, even for a brief period, could be damaging. The impact on the Debtors' business operations, customer dealings, revenue and profits would be extremely harmful and would jeopardize the Debtors' restructuring efforts. Adequate Assurance Procedures The Debtors propose to provide a deposit equal to two weeks of utility service to any Utility Provider who seeks a deposit in writing provided that the requesting Utility Provider (i) does not already hold a deposit equal to or greater than two weeks of utility services, and (ii) is not currently paid in advance for its services. As a condition of requesting and accepting an Adequate Assurance Deposit, the requesting Utility Provider will be deemed to have stipulated that the Deposit comprises adequate assurance of future payment within the meaning of Section 366, and will be considered to have waived any right to seek additional adequate assurance during the course of the Chapter 11 cases. Any Utility Provider desiring an Adequate Assurance Deposit must serve a request on: (1) Silicon Graphics, Inc. Attn: Barry Weinert, Esq. 1500 Crittenden Lane Mountain View, California 94043 (2) Weil, Gotshal & Manges LLP Attn: Gary T. Holtzer, Esq., and Shai Y. Waisman, Esq. 767 Fifth Avenue New York, New York 10153 Adequate Assurance Requests must: (i) be made in writing; (ii) state the location for which utility services are provided; (iii) include a summary of the Debtors' payment history relevant to the affected accounts; and (iv) state why the Utility Provider believes the Proposed Adequate Assurance is not sufficient. The parties will have at most a month to resolve that request. If the parties can't reach an agreement, the Debtors can seek a Court hearing. Pending resolution of any Determination Hearing, that Utility Provider will be restrained from discontinuing, altering, or refusing service to the Debtors on account of unpaid charges for prepetition services or on account of any objections to the Proposed Adequate Assurance. Any Utility Provider who objects to the Adequate Assurance Procedures must file an objection. All Utility Providers who do not timely file a Procedure Objection are deemed to consent to the Adequate Assurance Procedures. About Silicon Graphics Headquartered in Mountain View, California, Silicon Graphics, Inc. (OTC: SGID) -- http://www.sgi.com/-- offers high-performance computing. SGI helps customers solve their computing challenges, whether it's sharing images to aid in brain surgery, finding oil more efficiently, studying global climate, providing technologies for homeland security and defense, enabling the transition from analog to digital broadcasting, or helping enterprises manage large data. The Debtor and 13 of its affiliates filed for chapter 11 protection on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977 through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $369,416,815 and total debts of $664,268,602. (Silicon Graphics Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000) SILICON GRAPHICS: Seeks Court's Nod to Reject 3 Unexpired Leases ---------------------------------------------------------------- Silicon Graphics, Inc., and its debtor-affiliates have identified three unexpired non-residential real property leases and their subleases that are no longer integral to their ongoing business operations. Gary T. Holtzer, Esq., at Weil, Gotshal & Manges LLP, in New York, tells the U.S. Bankruptcy Court for the Southern District of New York that the leases present burdensome contingent liabilities, are unprofitable, and are unnecessary for the Debtors' restructuring efforts. The Debtors seek the Court's permission to reject the Leases, effective on the later of the Petition Date or the date that the Debtors surrender possession of the leased property. The three unexpired leases are: Lessee Lessor Property Location ------ ------ ----------------- Silicon OTR - MCC LLC Morris Corporate Center 1 Graphics, Inc. 300 Interpace Parkway, 3d Floor Parsippany, New Jersey 07054 Silicon Great Lakes 1750 East Golf Road, Suite 295 Graphics, Inc. REIT L.P. Schaumburg, Illinois 60173 Aeronet, Inc. Silicon 1750 East Golf Road, Suite 295 (sublessee) Graphics, Inc. Schaumburg, Illinois 60173 (sublessor) Silicon Seattle Seattle Tower Graphics, Inc. Landmark LLC 1218 Third Avenue, Suite 800 Seattle, Washington 98101 Network Silicon Seattle Tower Clarity, Inc. Graphics, Inc. 1218 Third Avenue, Suite 800 (sublessee) (sublessor) Seattle, Washington 98101 If no objection is timely filed and served, the Debtors' request will be considered granted on a final basis. The Debtors also seek to abandon all Expendable Property remaining on the leased premises, which primarily consist of office furniture, materials, and other equipment, effective as of the lease rejection date. About Silicon Graphics Headquartered in Mountain View, California, Silicon Graphics, Inc. (OTC: SGID) -- http://www.sgi.com/-- offers high-performance computing. SGI helps customers solve their computing challenges, whether it's sharing images to aid in brain surgery, finding oil more efficiently, studying global climate, providing technologies for homeland security and defense, enabling the transition from analog to digital broadcasting, or helping enterprises manage large data. The Debtor and 13 of its affiliates filed for chapter 11 protection on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977 through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $369,416,815 and total debts of $664,268,602. (Silicon Graphics Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000) SOLO CUP: Posts $22.1 Million Net Loss in First Fiscal Quarter -------------------------------------------------------------- Solo Cup Company disclosed first quarter 2006 financial results. For the thirteen weeks ended April 2, 2006, Solo Cup reported net sales of $564 million, an increase of $17.9 million, or 3.3%, compared to $546.1 million for the three months ended March 31, 2005. The increase in net sales reflected a 2.6% increase in average realized sales price and a 0.7% increase in sales volume compared to the three months ended March 31, 2005. The increase in average realized sales price reflects the impact of pricing increases implemented during the second half of 2005 in response to higher raw material costs. Gross profit was $51.3 million for the thirteen weeks ended April 2, 2006. Selling, general, and administrative expenses were $66.6 million. The Company reported a net loss of $22.1 million for the thirteen weeks ended April 2, 2006 compared to a net loss of $18.6 million for the three months ended March 31, 2005. Adjusted EBITDA for the thirteen weeks ended April 2, 2006 was $11.9 million versus $20.3 million for three months ended March 31, 2005. Commenting on the first quarter 2006 results, Robert M. Korzenski, President and Chief Operating Officer said, "While we experienced positive growth in both sales and margins during the quarter, we continue to face the challenges of increasing energy costs and competitive pricing pressures. In addition, this quarter we experienced higher SG&A and we are currently taking measures to control expenses. We believe our recently announced restructuring has better aligned our organizational structure with the needs of our business." Headquartered in Highland Park, Illinois, Solo Cup Company -- http://www.solocup.com/-- manufactures disposable foodservice products for the consumer and retail, foodservice, packaging, and international markets. Solo Cup has broad expertise in plastic, paper, and foam disposables and creates brand name products under the Solo, Sweetheart, Fonda, and Hoffmaster names. The Company was established in 1936 and has a global presence with facilities in Asia, Canada, Europe, Mexico, Panama and the United States. * * * As reported in the Troubled Company Reporter on Apr. 4, 2006, Moody's Investors Service assigned ratings on Solo Cup Company's $80 million senior secured second lien term loan due 2012 at B3; $150 million senior secured revolving credit facility maturing Feb. 27, 2010, at B2; $638 million senior secured term loan B due Feb. 27, 2011, at B2; $325 million 8.5% senior subordinated notes due Feb. 15, 2014, at Caa1; and Corporate Family Rating at B2. SOLUTIA INC: Balance Sheet Upside-Down by $1.47 Bil. at March 31 ---------------------------------------------------------------- Solutia Inc. filed its financial results for the quarter ending March 31, 2006 with the Securities and Exchange Commission. A full-text copy of regulatory filing is available for free at http://ResearchArchives.com/t/s?9b1 Solutia, Inc. Condensed Consolidated Balance Sheet As of March 31, 2006 (Unaudited) ASSETS Current Assets: Cash and cash equivalents $342,000,000 Trade receivables, net 291,000,000 Miscellaneous receivables 79,000,000 Inventories 302,000,000 Prepaid expenses and other assets 35,000,000 -------------- Total current assets 1,049,000,000 Property, plant and equipment, net 809,000,000 Investments in affiliates 200,000,000 Goodwill 89,000,000 Identified intangible assets, net 39,000,000 Other assets 108,000,000 -------------- TOTAL ASSETS $2,294,000,000 ============== LIABILITIES AND SHAREHOLDERS' DEFICIT Current liabilities: Accounts payable $209,000,000 Accrued liabilities 236,000,000 Short-term debt 650,000,000 -------------- Total current liabilities 1,095,000,000 Long-term debt 251,000,000 Other liabilities 269,000,000 -------------- Total liabilities not subject to compromise 1,615,000,000 Liabilities subject to compromise 2,154,000,000 Total shareholders' deficit (1,475,000,000) -------------- TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $2,294,000,000 ============== Solutia, Inc. Condensed Consolidated Statement of Operations Three Months Ended March 31, 2006 Net sales $700,000,000 Cost of goods sold 619,000,000 -------------- Gross profit 81,000,000 Marketing expenses 34,000,000 Administrative expenses 23,000,000 Technological expenses 12,000,000 -------------- Operating income 12,000,000 Equity earnings (loss) from affiliates 10,000,000 Interest expense (23,000,000) Other income, net 3,000,000 Loss on debt modification (8,000,000) Reorganization items, net (14,000,000) -------------- Loss before income tax expense (benefit) (20,000,000) Income tax expense (benefit) 2,000,000 -------------- NET INCOME (LOSS) ($22,000,000) ============== Solutia, Inc. Condensed Consolidated Statement of Cash Flows Three Months Ended March 31, 2006 Increase (decrease) in cash and cash equivalents Operating Activities: Net income (loss) ($22,000,000) Adjustments to reconcile to Cash From Operations: Depreciation and amortization 29,000,000 Amortization of deferred credits (2,000,000) Deferred income taxes (1,000,000) Equity earnings from affiliates, net (10,000,000) Restructuring expenses and other charges 18,000,000 Changes in assets and liabilities: Income taxes payable 3,000,000 Trade receivables (38,000,000) Inventories (29,000,000) Accounts payable (1,000,000) Liabilities subject to compromise (22,000,000) Other assets and liabilities 10,000,000 -------------- Cash used in operating activities (65,000,000) Investing activities: Property, plant and equipment purchases (25,000,000) Acquisition, net of cash acquired (16,000,000) -------------- Cash provided by (used in) investing activities (41,000,000) Financing activities: Net change in short-term debt obligations 350,000,000 Net change in cash collateralized letters of credit - Deferred debt issuance costs (9,000,000) Other financing activities - -------------- Cash provided by (used in) financing activities 341,000,000 -------------- Increase (Decrease) in cash and cash equivalents 235,000,000 -------------- Cash and cash equivalents: Beginning of year 107,000,000 -------------- End of period $342,000,000 ============== Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., at Kirkland & Ellis. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. (Solutia Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) SOLUTIA INC: Asks Court to Approve Solicitation Procedures ---------------------------------------------------------- Solutia Inc. and its debtor-affiliates ask Judge Prudence Carter Beatty of the U.S. Bankruptcy Court for the Southern District of New York to approve uniform procedures associated with the solicitation and tabulation of votes on their Joint Plan of Reorganization. The Debtors filed their Plan and Disclosure Statement on Feb. 14, 2006. A hearing on the adequacy of the Disclosure Statement explaining the Plan is scheduled on June 7, 2006. Record Date The Debtors ask Judge Beatty to establish the second business day after the Court approves the Disclosure Statement as the record date for purposes of determining which creditors are entitled to vote on the Plan. Solicitation Packages After the Court approves the Disclosure Statement as containing adequate information, the Debtors intend to distribute solicitation packages containing copies of: (a) the Disclosure Statement Order; (b) the Confirmation Hearing Notice; (c) either: (i) an appropriate Ballot form with a return envelope, and if applicable, the Rights Offering Procedures and a Rights Subscription Exercise form with a return envelope, and the Disclosure Statement; or (ii) a Notice of Non-Voting Status; and (d) other materials that the Court may direct. The Debtors expect to complete the distribution of the Solicitation Packages no later than seven business days after the Record Date. In addition, the Debtors will distribute the Disclosure Statement Order, the Confirmation Hearing Notice, the Disclosure Statement, and other materials the Court may direct to: -- the U.S. Trustee, -- the counsel for Monsanto Company; -- the counsel for Pharmacia Corporation; -- the Securities and Exchange Commission; -- the Internal Revenue Service; -- the Department of Justice; -- the Environmental Protection Agency; -- Pension Benefit Guaranty Corporation; -- the Official Committee of Unsecured Creditors; -- the Retirees' Committee; -- the Equity Committee; -- all Professionals; -- all administrative creditors of the Debtors; -- all relevant environmental, taxing and other regulatory authorities; -- all landlords and other parties to executory contracts and unexpired leases; -- all plaintiffs to tort lawsuits regarding conduct before the Spin-off; -- all parties who have submitted a written demand against Solutia; -- all parties who filed reclamation claims; and -- all other parties-in-interest that have requested for notices pursuant to Rule 2002 of the Federal Rules of Bankruptcy Procedure. To avoid duplication and further reduce expenses, the Debtors propose that Solicitation Packages for holders of claims or interests, which are classified within a class that is presumed to accept or reject the Plan, will not include a ballot. The Solicitation Packages for those holders will instead include a Notice of Non-Voting Status. The Debtors will provide parties-in-interest copies of the Plan and the Disclosure Statement upon written request. The Plan and the Disclosure Statement maybe viewed at http://fbgdocuments.com/soior obtained for free by contacting Financial Balloting Group LLC at (646) 282-1800. Creditors who have filed duplicate Claims, which are classified in the same Class under the Plan, will receive only one Solicitation Package and one Ballot with respect to that class. Ballot Forms The Debtors propose to distribute ballots to Holders of Claims in Classes 8, 9, 10, 11 and 12 under the Plan. The Ballot Forms will be based on Official Form No. 14, but will be modified to address the particular aspects of the Debtors' Chapter 11 cases. The Debtors propose to send Ballots to record holders of Unsecured Notes Claims, including brokers, banks, dealers or other agents or nominees. Each Nominee will receive a number of Ballots and Solicitation Packages reasonably sufficient to distribute to the beneficial owners of the Unsecured Notes Claims for whom the Nominee acts. Holders of Claims in Classes 14, 15 and 16, which are deemed to reject the Plan; and Holders of Claims in Classes 1, 2, 3, 4, 5, 6 and 7, which are deemed to accept the Plan, will receive a Notice of Non-Voting Status. Voting Deadline The Debtors anticipate commencing the solicitation period within three days after Record Date. To be counted as a vote to accept or reject the Plan, each Ballot must be properly executed, completed and delivered to the Balloting Agent either by first- class mail, overnight courier, or personal delivery so as to be received no later than 5:00 p.m., prevailing Eastern Time, on July 31, 2006. Ballot Tabulation Solely for purposes of voting to accept or reject the Plan, each Claim within a class of Claims entitled to vote to accept or reject the Plan will be temporarily allowed in an amount equal to the amount of that Claim as set in a timely-filed proof of claim or as set in the Debtors' Schedules of Assets and Liabilities. If any creditor seeks to challenge the allowance of its Claim for voting purposes in accordance with the proposed procedures, the Debtors ask the Court to direct that creditor to file a motion for temporary allowance of the Claim in a different amount for purposes of voting to accept or reject the Plan on or before the 10th day after the later of: -- the service of the Confirmation Hearing Notice; and -- service of a notice of objection to a Claim. For purposes of voting, the amount that will be used to tabulate acceptance or rejection of the Plan will be the principal amount of Solutia's 6.72% Debentures due October 15, 2037, and the 7.735% Debentures due October 15, 2027, held as of the Record Date; provided that the Balloting Agent will adjust the principal amount to reflect the claim amount as of the Record Date for the Unsecured Notes. With respect to the tabulation of master ballots, votes submitted by a Nominee, whether pursuant to a Master Ballot or prevalidated Ballot, will not be counted in excess of the Record Amount of those securities held by that Nominee. If a Nominee submits "over-votes", the Debtors will attempt to reconcile discrepancies with the Nominees. If "over-votes" are not reconciled before the preparation of the vote certification, the Debtors will apply the votes to accept and to reject the Plan in the same proportion as the votes to accept and reject the Plan submitted on the Master Ballot or prevalidated Ballot that contained the overvote, but only to the extent of the Nominee's position in the Unsecured Notes. For purposes of tabulating votes, each Nominee or Beneficial Owner will be deemed to have voted the principal amount of its Unsecured Notes Claim. Votes reflected on multiple Master Ballots will be counted, except to the extent they are duplicative of other Master Ballots. If two or more Master Ballots are inconsistent, the latest dated Master Ballot received before the Voting Deadline will supersede and revoke any prior Master Ballot. Beneficial Holders may not split their votes with respect to Unsecured Notes. Any Ballot that partially rejects and partially accepts the Plan will not be counted. Any Ballot received by facsimile or e-mail and sent to the Debtors, any indenture trustee or the Debtors' financial or legal advisors will not be counted. Confirmation Hearing The Debtors propose that the Confirmation Hearing be scheduled on August 10, 2006, at 11:00 a.m., prevailing Eastern Time, and may be continued from time to time by the Court or the Debtors without further notice other than adjournments announced in open court or filed on the Court's docket. The Debtors will also publish the Confirmation Hearing Notice in the national editions of The Wall Street Journal, The New York Times and The St. Louis Post-Dispatch. Objections to confirmation of the Plan or proposed modifications to the Plan, if any, must: a. be in writing; b. state the name and address of the objecting party and the amount and nature of the claim or interest of that party; c. state with particularity the basis and nature of any objection to the confirmation of the Plan; and d. be filed, together with proof of service, with the Court and served so as to be received no later than July 31, 2006, at 5:00 p.m., prevailing Eastern Time. Rights Offering and Backstop Fee Pursuant to a Global Settlement between the Debtors and Monsanto Corporation, Monsanto commits to share the responsibilities in the Legacy Liabilities that Solutia inherited from its spin-off from Pharmacia Corporation in 1997. The Legacy Liabilities include: -- retiree welfare benefits for retirees before the 1997 Spin-Off, -- environmental remediation costs, and -- toxic tort litigation costs. In accordance with the Global Settlement and Plan, each Holder of a General Unsecured Claim as of the Record Date has the right, but not the obligation, to purchase New Common Stock. The Debtors will send Rights Offering Subscription Exercise Form to each Eligible Holder. The Rights Subscription Exercise Form will indicate the price per share of the New Common Stock, and provide that Eligible Holders may indicate the amount of additional Rights that they commit to purchase in the event that the Rights Offering is under- subscribed as of the Voting Deadline. Pursuant to the Global Settlement, Monsanto has agreed to backstop the Rights Offering. As consideration and a critical inducement for the Rights Offering Backstop, the Debtors and Monsanto agreed that Monsanto would receive a backstop fee of $12,500,000. In the event the Plan is confirmed, Monsanto, as of the Effective Date, will waive its right to receive, and will not seek payment of, the Backstop Fee. However, Monsanto will be entitled to collect the Backstop Fee if the Plan is not confirmed by the later of: a. the date on which Solutia provides written notice to Monsanto and the Committee that Solutia no longer seek confirmation of the Plan; and b. seven days after Monsanto provides written notice to Solutia and the Committee that it believes Solutia has ceased to seek confirmation of the Plan, if Solutia has not provided, during that seven-day period, written affirmation of its intent to diligently pursue confirmation of the Plan. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., at Kirkland & Ellis. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. (Solutia Bankruptcy News, Issue No. 61; Bankruptcy Creditors' Service, Inc., 215/945-7000) SOLUTIA INC: Bank of N.Y. says Disclosure Statement is Inadequate ----------------------------------------------------------------- The Bank of New York asks the U.S. Bankruptcy Court for the Southern District of New York deny approval of the Disclosure Statement explaining Solutia, Inc., and its debtor-affiliates' Plan of Reorganization. BNY is the indenture trustee for the 11.25% Senior Secured Notes due 2009 issued by Solutia, Inc. BNY complains that as described in the Disclosure Statement, the Debtors' Plan of Reorganization purports to impair the Senior Secured Notes, which are designated in Class 3. In doing so, the Debtors attempt to retain an option to either: (i) reinstate the Senior Secured Notes -- the Reinstatement Provision; or (ii) pay the allowed amount of the Senior Secured Notes in cash on the Effective Date of the Plan -- the Cash-Out Election. The Cash-Out Election blatantly violates Section 1124 of the Bankruptcy Code, Mr. Cunningham, Esq., at White & Case LLP, in New York, argues. A Chapter 11 plan, which proposes to pay a class of claims in cash on the effective date renders that class impaired. Thus, contrary to the alleged unimpairment of Class 3 in the Disclosure Statement and the Plan, the Debtors' Cash-Out Election renders the Plan unconfirmable as a matter of law because Class 3 is unquestionably impaired, and the holders of the Senior Secured Notes are entitled to vote on the Plan. Only the Reinstatement Provision would render Class 3 unimpaired under the Debtors' Plan. Thus, the Cash-Out Election should be deleted in its entirety, Mr. Cunningham contends. Mr. Cunningham also asserts that the Plan and the Disclosure Statement attempts to release non-debtors in violation of the Second Circuit's decision in In re Metromedia Fiber Network Inc., 416 F.3d 136, 143 (2d Cir. 2005). Those releases are illegal and render the Plan unconfirmable as a matter of law. Furthermore, the Disclosure Statement fails to provide adequate information to creditors to inform themselves whether to vote to accept or reject the Plan, Mr. Cunningham maintains. For instance, Mr. Cunningham points out, the Disclosure Statement gives only cursory discussion of the pending adversary proceeding commenced by JPMorgan Chase Bank against Solutia. The Court has stated on the record that the outcome of the JPMorgan Adversary Proceeding will have a major impact on recoveries to the Debtors' creditors. The Debtors acknowledge in the Disclosure Statement that in an event of an adverse decision in the JPMorgan Proceeding, the Plan may need to be renegotiated and they may not obtain exit financing to fund the Plan. In light of this situation, it is entirely premature and inappropriate to proceed with an approved Disclosure Statement until the JPMorgan Adversary Proceeding has been resolved, Mr. Cunningham avers. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., at Kirkland & Ellis. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. (Solutia Bankruptcy News, Issue No. 61; Bankruptcy Creditors' Service, Inc., 215/945-7000) SOTHEBY'S HOLDINGS: Can Access $50MM More Under BofA Credit Deal ---------------------------------------------------------------- Sotheby's Holdings, Inc. amended its long-term senior secured revolving credit agreement with Banc of America Securities LLC and LaSalle Bank N.A. to allow for $50 million in additional commitments from its existing lenders. This increases the total borrowing capacity under the BofA Credit Agreement from $250 million to $300 million. "This is a very positive step and a reaffirmation of our strong credit and balance sheet strength as well as sustained earnings growth," Bill Sheridan, Chief Financial Officer of Sotheby's Holdings, Inc., said. Headquartered in New York City, Sotheby's Holdings, Inc. -- http://www.search.sothebys.com/-- is the parent company of Sotheby's worldwide auction businesses, art-related financing and private sales activities. The Company operates in 34 countries, with principal salesrooms located in New York and London. The company also regularly conducts auctions in 13 other salesrooms around the world, including Australia, Hong Kong, France, Italy, the Netherlands, Switzerland and Singapore. Sotheby's Holdings, Inc. is listed on the New York Stock Exchange under the symbol BID. * * * As reported in the Troubled Company Reporter on April 18, 2006, Standard & Poor's Ratings Services raised its corporate credit and senior unsecured debt ratings on New York-based Sotheby's Holdings Inc. to 'BB' from 'BB-'. The outlook is positive. SPX CORP: Fitch Upgrades Issuer Default Rating to BB+ from BB ------------------------------------------------------------- Fitch Ratings upgraded SPX's issuer default rating to 'BB+' from 'BB' and affirmed existing ratings on the company's senior secured bank debt and senior unsecured debt. -- Issuer default rating 'BB+' -- Senior secured bank debt 'BB+' -- Senior unsecured debt 'BB' The Rating Outlook is Stable. At March 31, 2006, SPX had approximately $866 million of debt outstanding. The upgrade of SPX's issuer default rating recognizes: * SPX's progress in addressing its operating challenges; * the implementation during the past year of a more conservative and disciplined operating strategy; and * improved financial leverage. In February 2006, the company used its bank facilities to replace nearly all of its outstanding convertible liquid yield option notes. As a result, SPX's outstanding debt consists primarily of secured bank debt. The facilities are secured by capital stock, but would become secured by substantially all assets if credit ratings on the facilities fall to certain levels. The rating for senior unsecured debt, which is one notch lower than the IDR, reflects weaker recovery prospects relative to secured debt in a distressed scenario. Rating concerns include: * the impact of high raw material prices; * weak cash flow, potential litigation liabilities; and * uncertainty about SPX's long term operating profile as it continues to review its business portfolio. In addition, the company's competitive position will depend on its ability to realize benefits from programs initiated during 2005 to improve the company's performance with respect to productivity, cost controls, new product development and other operating issues. Free cash flow will remain constrained through the remainder of 2006. However, Fitch anticipates that upside potential for the ratings could eventually be realized as the company further refines its operating strategy and demonstrates its ability to generate consistent cash flow. During the first quarter of 2006, SPX utilized its bank facilities to redeem nearly all $668 million of outstanding LYONs. Related to the transaction, SPX incurred liabilities for taxes and interest that will absorb most of its free cash flow in 2006. However, on a normalized basis when excluding these charges, the company expects to generate free cash flow (cash flow from operations, less capital expenditures) of $200 million. Fitch believes SPX can achieve a similar, or possibly higher, level of free cash flow in 2007 considering favorable demand trends in SPX's end-markets and positive first quarter performance. Risks to the ratings include unexpected weakness in SPX's industrial markets and unresolved litigation, including shareholder lawsuits initiated in 2004. At March 31, 2006 SPX's liquidity included $364 million of unrestricted cash and $324 million of availability under its bank credit facilities that mature in 2010. Liquidity is reduced by $78 million of current debt. Total debt was $866 million at March 31 and included a $750 million bank term loan used to fund the recent payout of nearly all outstanding LYONs. SPX is currently within its targeted leverage range of 1.5x - 2.0x gross debt/EBITDA. Leverage can be expected to increase toward the high end of this range as SPX continues to repurchase shares. The company spent $248 million in the first quarter to complete its previous share repurchase program and recently approved another program to repurchase 2.5 million shares that would have a value of roughly $125 million at the current share price. SWIFT INSTRUMENTS: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Swift Instruments, Inc. dba Swift Optics 2055 Gateway Place, Suite 500 San Jose, California 95110-1082 Tel: (408) 200-7520 Fax: (408) 292-7967 Bankruptcy Case No.: 06-50896 Type of Business: The Debtor is a international manufacturer and distributor of microscopes and binoculars. See http://www.swift-optics.com Chapter 11 Petition Date: May 24, 2006 Court: Northern District of California (San Jose) Judge: Marilyn Morgan Debtor's Counsel: Janice M. Murray, Esq. Murray and Murray, P.C. 19400 Stevens Creek Boulevard, Suite 200 Cupertino, California 95014-2548 Tel: (650) 852-9000 Fax: (650) 852-9244 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Carton Optical Industry $453,627 27-11 Higashi Taito-ku 100-0015 Tokyo, Japan Kama-Tech Corporation $260,778 Suite 4, 9th Floor, Tower 3 33 Canton Road Tsim Sha Tsui Kowloon, Hong Kong Kamakura-Koki Co. Ltd-YEN $152,935 3-6-12 Tsukagoshi, Warabi Saitama Pref. 335-0002 Japan Fish and Richardson $34,887 Archimedes Associates $31,700 Nelson Staffing Solution $28,755 Western Overseas Corp. $17,751 Advanced Management Systems $14,733 Bridgeport Financial Inc. $13,500 Speed Fair Co. $10,680 Market Data Retrieval $8,119 NSTA Advertising Exhibits $5,974 Avaya Inc. $5,579 KPMG LLP $4,900 Pitney Bowes, Inc. $4,575 National Science Teachers Association $4,492 Hands-On Science Partnership $4,055 NSTAR Electric $3,512 Littler Mendelson P.C. $3,249 Underwriters Laboratories, Inc. $2,725 SYDNEY SHABER: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Sydney Stanley Shaber 187 El Dorado Monterey, California 93940 Bankruptcy Case No.: 06-50891 Type of Business: The Debtor filed for chapter 11 protection on June 5, 1997 (Bankr. N.D. California, Case No. 97-51092). Chapter 11 Petition Date: May 24, 2006 Court: Northern District of California (San Jose) Judge: James R. Grube Debtor's Counsel: Steven J. Sibley, Esq. DiNapoli and Sibley 10 Almaden Boulevard, Suite 1250 San Jose, California 95113-2233 Tel: (408) 999-0900 Estimated Assets: Less than $50,000 Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 largest unsecured creditors. TELOGY INC: Court Confirms Fifth Amended Plan of Reorganization --------------------------------------------------------------- The Honorable Edward D. Jellen of the U.S. Bankruptcy Court for the Northern District of California confirmed the Fifth Amended Plan of Reorganization filed by Telogy, Inc., and its debtor- affiliates. The Court determined that the Plan satisfies the 13 standards for confirmation under Section 1129(a) of the Bankruptcy Code. Under the Plan, the Debtors will reorganize through an asset disposition transaction of their businesses to the Reorganized Debtors -- newly formed Delaware limited liability companies that will have a significantly deleveraged capital structure as compared to the Debtors. The Reorganized Debtors will operate the Debtors' business funded from their ongoing business operations, and with the funding available under an exit facility. The Exit Facility The Exit Facility is a revolving credit facility of at least $20 million, partially drawn as of the Plan's effective date. It matures in five years. Interest will be payable quarterly in arrears. The Reorganized Debtors' debt under this facility will rank senior in right of payment to any and all subordinated indebtedness pari passu in right of payment with all other existing and future unsubordinated indebtedness. The debt is secured with a first priority security interest in and lien on substantially all of the Reorganized Debtors' assets. Creditor Recovery Holders of the Debtors' approximately $170.4 million of senior secured debt, including accrued and unpaid interest, would exchange their existing claims for equity interests in the Reorganized Telogy, and the Debtors' $75.2 million, excluding accrued and unpaid interest, of unsecured, subordinated and junior subordinated debt would be extinguished or exchanged for equity interests in Reorganized Telogy. Holders of general unsecured claims amounting to $1.15 million will receive less than 10% of their claims. Equity holders will get nothing. A copy of the Fourth Amended Disclosure Statement explaining the Fifth Amended Plan of Reorganization is available for a fee at: http://www.researcharchives.com/bin/download?id=060524230844 Headquartered in Union City, California, Telogy, Inc. -- http://www.tecentral.com/-- rents, sells, leases electronic test equipment including oscilloscopes, spectrum, network, logic analyzers, power meters, OTDRs, and optical, from manufacturers like Tektronix, Rohde & Schwarz. Telogy, Inc., and its debtor-affiliate, e-Cycle, LLC, filed for chapter 11 protection on Nov. 29, 2005 (Bankr. N.D. Calif. Case No. 05-49371). Ramon M. Naguiat, Esq., at Pachulski, Stang, Ziehl, Young Jones & Weintraub P.C. represents the Debtor in its restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. TOYS "R" US: Plans to Relaunch E-Commerce Sites on July 1 --------------------------------------------------------- Toys "R" Us, Inc. partnered with GSI Commerce, Inc., and Exel to support a new platform for the company's online business. The seamless transition of Toysrus.com and Babiesrus.com to the new e- commerce platform is expected to occur on July 1, 2006. "We look forward to reinforcing our authority position as the world's greatest toy and baby stores through the relaunch of our e-commerce sites, " Jerry Storch, Chairman and CEO of Toys "R" Us, Inc., said. "GSI Commerce and Exel are ideal partners for us, bringing proven expertise and a shared commitment to ensuring that Toysrus.com and Babiesrus.com continue to be the leading online destinations for toys and baby merchandise. Our team has been preparing for this transition for some time, and we are excited about the opportunity to offer customers an enhanced and more fully-integrated shopping experience at the biggest online toy and baby products stores in America." Under long-term agreements, GSI Commerce will provide technology, customer service and support, and Exel will provide fulfillment services for both Toysrus.com and Babiesrus.com. GSI Commerce and Exel have been trusted partners of Toys "R" Us, Inc. on other projects. As part of the transition, the company will relaunch the Toysrus.com and Babiesrus.com sites with an exciting new appearance and the addition of more product information to assist consumers in making informed selections. Following the July 1 relaunch, the company will make ongoing enhancements to the site, as it continually adds new merchandise offerings and features to provide customers with the best overall online shopping experience. "We are delighted to have the opportunity to partner with Toys "R" Us, Inc. as it works to provide a best-in-class online experience and product offerings," Michael G. Rubin, Chairman and CEO of GSI Commerce, said. "GSI Commerce is a proven leader in e-commerce, and we are eager to bring our experience in technology and customer service to bear in the redevelopment and successful growth of the Toysrus.com and Babiesrus.com businesses." "We are excited to join forces with Toys "R" Us, Inc. as it moves forward with new plans for its e-commerce business," Jim Gehr, Exel's President of Retail Americas, added. "We will take full advantage of our industry experience, while leveraging resources as part of the world's premier supply chain company to provide reliable order fulfillment for Toysrus.com and Babiesrus.com customers. We're looking forward to supporting the number one specialty toy and baby retailer online." On March 2006, the Chancery Court division of the Superior Court of New Jersey issued a decision severing the agreement between Toysrus.com and Amazon.com. This decision allowed Toysrus.com to move forward expeditiously to re-establish its own e-commerce business on the new platform supported by GSI Commerce and Exel. Customers will continue to access the online stores at http://www.toysrus.com/and http://www.babiesrus.com/ About GSI Commerce GSI Commerce is a leading provider of e-commerce solutions that enable retailers, branded manufacturers, entertainment companies and professional sports organizations to operate e-commerce businesses. The company provides solutions for its partners through its integrated e-commerce platform, which is comprised of three components: technology, logistics and customer care and marketing services. It provides e-commerce solutions for more than 50 partners. About Exel Headquartered in Westerville, Ohio, Exel -- http://www.exel.com/ -- is the North American leader in contract logistics, providing customer-focused solutions to a wide range of industries including retail, consumer, technology, automotive, healthcare, chemical and industrial. Exel's innovative supply chain solutions, skilled people and regional coverage, bring together all aspects of contract logistics in addition to a wide range of integrated, value-added and specialist services. Exel is a wholly owned entity of Deutsche Post World Net, the world's leading logistics group. For further information, visit About Toys "R" Us, Inc. Headquartered in Wayne, New Jersey, Toys "R" Us is the world's leading specialty toy retailer. Currently it sells merchandise through more than 1,400 stores, including 587 toy stores in the U.S. and 646 international toy stores, including licensed and franchise stores as well as through its Internet sites at http://www.toysrus.com/http://www.imaginarium.com/and http://www.sportsrus.com/ Babies "R" Us is the largest baby product specialty store chain in the world and a leader in the juvenile industry, and sells merchandise through 232 stores in the U.S. as well as on the Internet at http://www.babiesrus.com/ * * * Toys "R" Us Inc.'s 8-3/4 Debentures due 2021 carry Moody's Investors Service's B2 rating and Standard & Poor's CCC rating. UNUMPROVIDENT CORP: Moody's Holds Ba1 Rating on Sr. Unsec. Debt --------------------------------------------------------------- Moody's Investors Service affirmed UnumProvident Corporation's credit ratings, as well as the Baa1 insurance financial strength ratings of the company's U.S. life insurance subsidiaries. The outlook on the ratings changed to stable from negative. Commenting on the change in UnumProvident's outlook, Moody's said that the company had shown improvement in several of its key financial metrics. The rating agency said that this includes lower financial leverage, stronger cash flow interest coverage and earnings interest coverage ratios, and a more robust risk based capital ratio on a consolidated basis. Moody's noted that the company has eliminated its inter-company loans and has improved the maturity structure of its outstanding debt. According to the rating agency, statutory net income has stabilized in the past two years, reaching $641 million in 2005. In addition, Moody's stated that UnumProvident's ratings outlook reflected some improvement in the sales mix, as well as some progress in stabilizing persistency for the company's core disability insurance operations. However, Moody's believes UnumProvident still faces a competitive marketplace and challenges in the company's efforts to restore profitability to its core U.S. group long-term disability business. Furthermore, the rating agency believes that the recent California and multi-state regulatory settlements could continue to put pressure on expenses and profits as UnumProvident reassesses its claims reserves and changes its policy provisions and policy claims handling procedures to comply with the agreements. Moody's indicated that it is concerned that the company is still experiencing disruption in its employee benefits claims centers, following implementation of the multi-state claims settlement agreement. The rating agency added that it is concerned that these claims disruption costs could be permanent, and that claim center expenses could be higher than levels anticipated at the time of the settlement, resulting in lower than expected ongoing profitability. Moody's said that these expectations are incorporated into the stable outlook: * absence of additional one-time charges, including those related to the claims settlement agreements; * group income protection benefit ratio to decrease to 92% by year-end 2006; * RBC of at least 285% on a consolidated basis and on a legal entity basis; * continued improvement in statutory and GAAP earnings; * holding company liquidity equal to at least one year's interest payments; * earnings interest coverage and cash flow interest coverage of at least 4 times and 3.5 times respectively; * Moody's adjusted financial leverage of less than 30%. These ratings are affirmed, with a stable outlook: UnumProvident Corporation: * Senior unsecured debt at Ba1; * subordinated shelf at (P) Ba2; * preferred shelf at (P) Ba3 UNUM Corporation: * Senior unsecured debt at Ba1 Provident Companies, Inc.: * Senior unsecured debt at Ba1 Provident Financing Trust I: * Preferred stock at Ba2 Provident Financing Trusts II/III: * Backed preferred shelf at (P) Ba2 UnumProvident Finance Company plc: * Senior unsecured debt at Ba1 UNUM Life Insurance Company of America: * Insurance financial strength at Baa1 First UNUM Life Insurance Company: * Insurance financial strength at Baa1 Colonial Life & Accident Insurance Company: * Insurance financial strength at Baa1 Provident Life and Accident Insurance Co.: * Insurance financial strength at Baa1 Paul Revere Life Insurance Company: * Insurance financial strength at Baa1 Paul Revere Variable Annuity Insurance Co.: * Insurance financial strength at Baa1 Moody's last rating action on UnumProvident took place on April 15, 2005 when the rating agency changed the company's outlook to negative. UnumProvident Corporation is headquartered in Chattanooga, Tennessee. At March 31, 2006, UnumProvident had total assets of $50.5 billion and total shareholders' equity of $6.6 billion. VILLAGES AT SARATOGA: Court OKs Appointment of Chapter 11 Trustee ----------------------------------------------------------------- The Honorable William T. Thurman of the U.S. Bankruptcy Court for the District of Utah directed the U.S. Trustee for Region 19 to scout for a chapter 11 trustee to serve in The Villages at Saratoga Springs, LC's bankruptcy case. The Court entered the Chapter 11 Trustee appointment order at the request of Jerrold Cross, a creditor. Sherilyn A. Olsen, Esq., counsel for Mr. Cross, told the Court that the Debtor transferred $100,000 to Hearthstone Development, an insider, in direct violation of the Court's order authorizing the sale of the Debtor's principal asset. Ms. Olsen said the Debtor failed to disclose this transfer from the Court and creditors by failing to file monthly financial reports for March and April 2006. In addition, the Debtor has failed to pursue substantial preferential and fraudulent transfers made to insiders shortly before the Debtor filed for bankruptcy. Ms. Olsen added that in just over a year-and-a-half before filing for bankruptcy, the Debtor disbursed at least $859,565 to Hearthstone -- $180,000 of which was disbursed only a month before the bankruptcy filing. The Debtor has filed a liquidating plan with the Court and has no ongoing operations. Consents Hearthstone, an unsecured creditor, and the manager of the Debtor, and the holder of a 75% membership interest in the Debtor, has agreed to the Chapter 11 Trustee appointment. The Debtor also expressed its consent for the appointment. The Debtor explained that Hearthstone has successfully managed its bankruptcy proceedings and has created a fund in excess of $8,000,000, which is sufficient to pay all claims in full with interest and return a significant dividend to the equity holders of the debtor. Hearthstone has proposed a plan to effect the distributions. According to the Debtor, Mr. Cross has objected to the plan and objected to all claims of creditors except his own and that of Painted Horse, LC, an entity in which Mr. Cross holds half of the equity. Mr. Cross' actions have delayed payment to creditors, Robert Fugal, Esq., at Bird & Fugal, pointed out. Headquartered in Spanish Fork, Utah, The Villages at Saratoga Springs, LC, filed for chapter 11 protection on Aug. 29, 2005 (Bankr. D. Utah Case No. 05-33380). Robert Fugal, Esq., at Bird & Fugal, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $26,002,293 in assets and $15,188,610 in debts. VITESSE SEMICONDUCTOR: Gets Delisting Notice from Nasdaq -------------------------------------------------------- Vitesse Semiconductor Corporation received a Nasdaq staff determination on May 16, 2006, indicating that it failed to comply with the filing requirements for continued listing outlined in Marketplace Rule 4310(c)(14). The Company's securities are subject to delisting from the Nasdaq National Market. The Company anticipates that it will request and participate in a hearing before a Nasdaq Listing Qualifications Panel to review the Staff Determination. Nasdaq notified Vitesse of the possible delisting after the Company disclosed that it would be unable to file its Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 by the required filing date. The Company is currently conducting an internal investigation relating to past stock option grants, the timing of those grants and other related accounting and documentation issues. In the course of its investigation, issues have arisen relating to the integrity of documents concerning the Company's stock option grants. As reported in the Troubled Company Reporter on May 15, 2006, Vitesse Board of Directors determined that its previously reported financial statements for the three months ended Dec. 31, 2005, and the three years ended Sept. 30, 2005, and possibly earlier periods, should not be relied upon. About Vitesse Vitesse Semiconductor Corporation (Nasdaq:VTSS) -- http://www.vitesse.com/-- designs, develops and markets a diverse portfolio of high-performance, cost-competitive semiconductor solutions for communications and storage networks worldwide. Engineering excellence and dedicated customer service distinguish Vitesse as an industry leader in Gigabit Ethernet LAN, Ethernet- over-SONET, Advanced Switching, Fibre Channel, Serial Attached SCSI, Optical Transport, and other applications. * * * Moody's Investors Service revised Vitesse Semiconductor Corporation's outlook to stable from negative and affirmed all existing ratings for the company in October 2004. * Senior Implied Rating of B1; * Long-Term Issuer Rating of B1; and * $135.4 million 4% convertible subordinated debentures due March 2005, rated B3. WAMU MORTGAGE: S&P Affirms Four Certificate Classes' Low-B Ratings ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its ratings on 25 classes of mortgage pass through certificates from two WaMu Mortgage Pass-Through transactions. The affirmed ratings are based on credit support percentages that are sufficient to maintain the current ratings. These transactions benefit from credit enhancement provided by subordination. As of the April 2006 remittance date, total delinquencies were 0.20% for series 2005-AR4 and 0.47% for series 2005-AR10. Neither transaction has experienced any cumulative losses. The outstanding pool balances, as a percentage of the original sizes, were 87.26% for series 2005-AR4 and 92.71% for series 2005-AR10. The collateral for both transactions consists primarily of 30- year, hybrid adjustable-rate mortgage loans, secured by first liens on one- to four-family residential properties. Ratings Affirmed: WaMu Mortgage Pass-Through Certificates Series Class Rating ------ ----- ------ 2005-AR4 A-1, A-2A, A-2B, A-3, A-4A, A-4B, A-5, X AAA 2005-AR4 B-1 AA 2005-AR4 B-2 A 2005-AR4 B-3 BBB 2005-AR4 B-4 BB 2005-AR4 B-5 B 2005-AR10 1-A1, 1-A2, 1-A3, 1-A4, 1-A5, 2-A1, 3-A1 AAA 2005-AR10 B-1 AA 2005-AR10 B-2 A 2005-AR10 B-3 BBB 2005-AR10 B-4 BB 2005-AR10 B-5 B WHIRLPOOL CORP: Expects $400MM Cost Savings Due to Maytag Merger ---------------------------------------------------------------- Whirlpool Corporation reported that its merger with Maytag is expected to generate pre-tax annualized cost savings in excess of $400 million. Cost efficiencies are expected from all areas of the value chain, including product manufacturing, infrastructure and support areas, global procurement and logistics. The company expects to gain the majority of efficiencies during 2007, and anticipates savings to be fully realized in 2008. The company will incur approximately $450 million in pre-tax, one-time costs to realize the annualized savings estimates. Approximately $150 million of these costs are expected to impact earnings over the next three years with the remainder capitalized under purchase accounting. The company's previous estimated cost savings were $300-to-$400 million with one-time costs of $350-to-$500 million. "Our increased savings estimates further demonstrate the value creating opportunity of this acquisition," Jeff M. Fettig, Whirlpool's chairman and chief executive officer, said. "The actions we have recently announced, including the consolidation of laundry production into our Clyde and Marion, Ohio, facilities, will represent a significant portion of our expected annualized savings. We have moved quickly to integrate the Maytag business since closing the transaction seven weeks ago and we are pleased with our progress to date." Following a thorough review, Whirlpool reported its decision to sell the Hoover floor-care, Dixie-Narco vending systems, Amana commercial microwave and Jade commercial products appliance businesses. The financial results of these businesses will be classified as discontinued operations in the company's future financial statements. "The decision to divest the floor-care and commercial businesses will allow us to focus on our core appliance business," Mr. Fettig said. "We have received strong interest from a number of potential buyers and anticipate completing these transactions by the end of this year." The company also revised its guidance to reflect the integration of Maytag and now expects full-year 2006 earnings per diluted share from continuing operations of $6.00 to $6.25, compared to the pre-acquisition range of $7.00 to $7.25. Free cash flow is estimated to be in the $200-to-$300 million range for 2006. The company expects 2007 full-year earnings per diluted share to be approximately $9.00. Cash Flow Reconciliation The table below reconciles projected 2006 cash provided by operating activities determined in accordance with generally accepted accounting principles in the United States to free cash flow, a non-GAAP measure. Management believes that free cash flow provides shareholders with a relevant measure of liquidity and a useful basis for assessing the company's ability to fund its activities and obligations. There are limitations to using non- GAAP financial measures, including the difficulty associated with comparing companies that use similarly named non-GAAP measures whose calculations may differ from the company's calculations. As defined by the company, free cash flow is cash provided by operating activities after capital expenditures and proceeds from the sale of assets. Free cash flow does not include potential proceeds from the sale of discontinued businesses. The projections shown here are based upon many estimates and are inherently subject to change based on future decisions made by management and the board of directors of the company and significant economic, competitive and other uncertainties and contingencies. (millions of dollars) Cash provided by operating activities $725-$825 Capital expenditures ($600) Proceeds from sale of assets $75 Free Cash Flow $200-$300 About Whirlpool Corporation Headquartered in Benton Harbor, Michigan, Whirlpool Corporation (NYSE: WHR) -- http://www.whirlpoolcorp.com/-- is the world's leading manufacturer and marketer of major home appliances, with annual sales of more than $19 billion, more than 80,000 employees, and more than 60 manufacturing and technology research centers around the world. The company markets Whirlpool, Maytag, KitchenAid, Jenn-Air, Amana, Brastemp, Bauknecht and other major brand names to consumers in nearly every country around the world. * * * As reported in the Troubled Company Reporter on April 12, 2006, Moody's Investors Service downgraded the long-term senior unsecured debt rating of Whirlpool Corporation and its subsidiaries to Baa2 from Baa1, and preferred stock rating to Ba1 from Baa3. Moody's said the rating outlook is negative. W.R. GRACE: Asks Court to Approve Lloyd's London Settlement Pact ---------------------------------------------------------------- Certain underwriters at Lloyd's London subscribed to insurance policies that provide coverage to W.R. Grace & Co. and W.R. Grace & Co. Conn. Grace has incurred liabilities, expenses, and losses arising out of asbestos-related claims and other claims. Before the Debtors filed for bankruptcy, Grace and the Lloyd's Underwriters entered into a settlement agreement dated November 17, 1995, which governed the method by which the Lloyd's Underwriters and other insurance companies participating in the policies issued would reimburse Grace for asbestos-related claims. The 1995 London Agreement resolved disputes concerning policies that were issued to Grace by the Lloyd's Underwriters and London Market Companies before June 30, 1985. The Lloyd's Underwriters are obligated to make liability payments and pay defense costs in connection with asbestos-related and other claims according to the terms of the 1995 London Agreement. Subsequently, the parties entered into a settlement agreement and mutual release. The Lloyd's Underwriters agreed to promptly pay $90,000,000, in cash, into a settlement account in full and complete satisfaction of the obligations: -- under the 1995 London Agreement; and -- that the Lloyd's Underwriters may have to the Debtors under policies issued to Grace after June 30, 1985. The Settlement Agreement further provides that the funds in the settlement account will be paid to the Debtors upon the effective date of a plan of reorganization, which: (1) is confirmed by a final order; (2) is consistent with the terms of the Settlement Agreement; (3) does not materially or adversely affect the interests of Lloyd's Underwriters, Grace, or Equitas, a company that assumed responsibility for the payment and administration of all claims under the Subject Policies; and (4) provides for: -- a channeling injunction pursuant to Section 524(g) of the Bankruptcy Code that applies to Lloyd's Underwriters and Equitas; -- an injunction under Section 105(a) that is at least as broad and inclusive as the "Released Matters Injunction" provided in the Debtors' Amended Plan on January 13, 2005; -- an injunction that is at least as broad and inclusive as the "Asbestos Insurance Entity Injunction" provided in the Debtors' Amended Plan; -- an indemnification of Lloyd's Underwriters and Equitas by the Reorganized Debtors, absent a waiver from Lloyd's Underwriters; and -- the Reorganized Debtors and the Section 524(g) trust will be bound by the Settlement Agreement with the same force and effect as if they were parties from its date of execution. James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., in Wilmington, Delaware, tells the U.S. Bankruptcy Court for the District of Delaware that the funds in the settlement account will earn interest, which will inure to the benefit of the Debtors' estates when the funds are paid out. Accordingly, the Debtors ask Judge Fitzgerald to approve the Settlement Agreement in its entirety. Mr. O'Neill contends that the Settlement Agreement represents a full and final settlement that: (i) releases and terminates all rights, obligations and liabilities that Grace and Lloyd's Underwriters may owe one another; and (ii) resolves all claims that the parties asserted against one another pursuant to the Subject Policies and the 1995 London Agreement. "If the Settlement Agreement is not approved, the Debtors would need to pursue their claims against the Lloyd's Underwriters under the terms of the 1995 Settlement Agreement," Mr. O'Neill says. "This process would subject the Debtors to risk concerning the ultimate amount of recovery, and the Debtors believe their recovery is unlikely to be materially greater than the $90 million they will receive pursuant to the Settlement Agreement." Mr. O'Neill maintains that the Debtors' estates will benefit from the interest accrued on the $90,000,000 payment and the certainty associated with receiving payment now rather than in the future. According to Mr. O'Neill, the uncertainty of payment in the future is exacerbated by the fact that other insurance carriers have become insolvent. The certainty of receiving $90,000,000 will aid in developing a plan of reorganization. Moreover, after calculating the potential insurance coverage under various liability scenarios, the Debtors conclude that the Settlement Agreement is reasonable even in scenarios in which liabilities are far in excess of what they believe them to be. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor- affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan LLP represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., and Nathan D. Finch, Esq., at Caplin & Drysdalerepresent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott L. Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod LLP to represent it. Lexecon, LLP, provided asbestos claims consulting services to the Official Committee of Equity Security Holders. W.R. GRACE: Row Ensues Over Fees of Libby Claimants' Professionals ------------------------------------------------------------------ Claimants injured by exposure to tremolite asbestos from W.R. Grace's operations in and near Libby, Montana, ask Judge Fitzgerald to require the Debtors to pay: -- the Libby Claimants' legal fees incurred in connection with the asbestos personal injury claim estimation proceedings and the Chapter 11 plan process; and -- the expert witness fees the Libby Claimants incurred in the estimation process. Adam Landis, Esq., at Landis Rath & Cobb, LLP, in Wilmington, Delaware, contends that payment of the Libby Claimants' costs is necessary because while the Libby Claimants have certain interests in common with the Official Committee of Asbestos Personal Injury Claimants -- and for those purposes can be represented adequately by the PI Committee's professionals -- the Debtors have raised significant issues specific to Libby which the PI Committee does not plan to address. The PI Committee supports the Libby Claimants' request. Libby Claimants vs. PI Claimants Mr. Landis tells the Court that the claims of the Libby Claimants and others who suffer from Libby tremolite asbestos disease differ in material respects from claims of the personal injury claimants represented by the remaining members of the PI Committee. Mr. Landis explains that a typical PI claimant has a claim based on exposure to chrysotile asbestos, which was the type used in 95% of commercial applications. The Libby Claimants, by contrast, were exposed to tremolite asbestos, which: -- has demonstrated much higher toxicity than chrysotile asbestos; -- is about 10 times as carcinogenic and fibrogenic as chrysotile asbestos; and -- is hundreds of times more productive of mesothelioma, the type of lung cancer specific to asbestos. In addition, a person diagnosed with Libby tremolite asbestos disease has approximately a 76% likelihood of progressing to severe disease -- about three times the progressivity rate for chrysotile asbestos disease. According to Mr. Landis, the pleural disease pattern manifested by Libby tremolite asbestos disease often results in severe impairment or death without radiographic interstitial disease or typical chrysotile markers of radiographic severity which have commonly been used in trust distribution provisions of asbestos company Chapter 11 plans. Furthermore, Mr. Landis notes that since exposure pathways in Libby, are unprecedented and are not limited to the workplace, the Libby Claimants suffering from severe asbestos disease or death include not only former workers at the mine and milling facilities, but also the spouses and children of workers, and community members who had no direct contact with the mine. While substantial medical literature exists as to the differences between disease resulting from tremolite asbestos as compared to chrysotile asbestos, the differences are apparently disputed by the Debtors, placing the PI Committee in a difficult position. Since a huge majority of the Committee's constituents suffer from chrysotile asbestos disease, the Committee could benefit if Libby tremolite asbestos disease were treated the same as chrysotile, Mr. Landis points out. On the other hand, the Libby Claimants are part of the constituency that the PI Committee represents, and are entitled to adequate representation of their interests in the PI Claims Estimation and plan process even on matters where the PI Committee is unable to provide representation. Libby Claimants' Counsel & Experts About 750 Libby claimants are represented by Cohn Whitesell & Goldberg LLP; McGarvey, Heberling, Sullivan, and McGarvey, PC; Lewis Huppert & Slovak PC; and Landis Rath. Other claimants have been diagnosed with Libby tremolite asbestos disease but are not represented by the Libby Claimants' counsel. "[M]any of these people can also be expected to assert claims against the Debtors at an appropriate time," Mr. Landis says. The PI Committee has declined to designate witnesses on Libby- specific issues, but instead advised the Libby Claimants' Counsel that they must designate their own. The PI Committee does not plan to defend against Libby-specific evidence or positions that Grace may assert, except to the extent that the PI Committee determines that any matter may more generally affect the PI Claimants' interests. Subsequently, on December 19, 2005, the Libby Claimants designated Dr. Alan C. Whitehouse and Dr. David Egilman as thier experts in the PI Claims Estimation in the event that the Debtors raise medical issues specific to the Libby Claimants. Mr. Landis says that Grace's position concerning claims based on Libby tremolite asbestos disease will go unanswered in the PI Estimation by any official committee. In the interest of justice, the Libby Claimants will need to participate in the depositions of all Libby-specific witnesses and present evidence on Libby-specific issues. The Debtors' decision to raise Libby-specific issues in the context of the PI Claims Estimation effectively compels the Libby Claimants to participate in the PI Claims Estimation, Mr. Landis contends. Unless they are reimbursed of the costs incurred in connection with the PI Claims estimation, the Libby Claimants will be the only party required to participate in the PI Claims Estimation whose expense of so participating will not be borne by the estate. Libby Professionals' Fees The Libby Claimants intend to pay their Counsel and Expert Witnesses on an hourly basis. The current hourly rates of the Libby Claimants' Counsel are: Firm Category Hourly Rates ---- -------- ------------ Cohn Whitesell Partners $400 - $550 & Goldberg LLP Associates $195 - $270 Paralegal Assistants $105 McGarvey, Heberling, Partners $240 Sullivan & McGarvey Associates $150 Paralegal Assistants $75 Lewis, Huppert & Partners $240 Slovak, P.C. Associates $150 Paralegal Assistants $75 Landis Rath & Partners $400 - $480 Cobb LLP Associates $215 - $270 Paralegal Assistants $95 - $140 The current hourly rates of the Libby Expert Witnesses are $300 for Dr. Whitehouse and $450 for Dr. Egilman. The Libby Claimants further propose that the Libby Claimants' Counsel and Libby Expert Witnesses will be reimbursed by the estate for all reasonable out-of-pocket expenses incurred in connection with the services that are eligible for compensation. Objections (1) U.S. Trustee Kelly Beaudin Stapleton, the United States Trustee for Region 3, wants the Libby Claimants' request denied because there is no authority in the Bankruptcy Code or otherwise to allow the Libby Claimants to be paid their fees and expenses. David M. Klauder, Esq., trial attorney, explains that the Libby Claimants' Motion, which is best described as a request for payment of administrative expenses, is not authorized or supported in Section 503 of the Bankruptcy Code. Administrative expenses may be allowed for the actual, necessary costs and expenses of preserving the estate; for compensation and reimbursement awarded under Section 330(a); and for the actual and necessary expenses incurred by a creditor or an informal committee in making a substantial contribution in a case. According to Mr. Klauder, the Libby Claimants cannot make out a case for substantial contribution until it is determined what services they and their professionals performed and whether the Libby Claimants provided substantial contribution to the estate. Hence, it is impossible for the Libby Claimants to prove substantial contribution at this time because there is no way to show now that the Libby Claimants meet the required standard, which would be the first step in proving that the fees and expenses are allowable under Section 503(b)(4). Moreover, the payment of expenses for the Libby Claimants is in pursuit of their own interest, rather than pursuing benefit for the estate. The Libby Claimants want to represent and protect their own interest and want the estate to pay for that. While the Libby Claimants may have legitimate claims, the Bankruptcy Code is not set up to allow the Debtors' estate to pay these fees and expenses. Mr. Klauder notes that the Libby Claimants have asked the U.S. Trustee in March 2006 to appoint an official committee consisting of Libby Claimants or, alternatively, a sub-committee of the PI Committee. The U.S. Trustee filtered that request to the major constituents in the case, seeking their comments and positions. The U.S. Trustee has yet to make a decision on that committee request. (2) Creditors Committee The Official Committee of Unsecured Creditors contends that the Libby Claimants have not met their burden of proving that: -- they have materially different claims; -- they have vastly conflicting interests from the other creditors represented by the PI Committee; and -- they are not adequate represented. The Creditors Committee points out that at least one member of the PI Committee is a Libby Claimant and is represented on the PI Committee through McGarvey Heberling. In addition, the Creditors Committee argues that the Libby Claimants' Motion does not set forth any basis for the Court to determine that the injuries allegedly sustained by the Libby Claimants are significantly different than the injuries sustained by any other asbestos personal injury claimant. Moreover, that the PI Estimation may involve Libby-specific issues indicates that the evidence to prove or disprove the Libby Claimants' allegations is bound up with the PI Estimation itself and, thus, the Libby Claimants' request seems premature. The Creditors Committee also notes that the PI Committee represents the interests of all asbestos claimants -- those with mesothelioma, lung cancer, other types of malignancies and subgroups without malignancies. Each of these categories has interests somewhat diverse because the amounts ultimately to be paid to the claimants will differ depending on the disease. The Libby Claimants' position with respect to the group of claimants is no different, the Creditors Committee says. (3) Debtors By requesting that their attorneys be paid separately form the attorneys representing the PI Committee as a whole, the Libby Claimants, in essence, is asking the Court to appoint the Libby Claimants as a separate committee, the Debtors tell Judge Fitzgerald. The Debtors contend that the Libby Claimants have not demonstrated extraordinary circumstances that would warrant appointment of a new committee or payment of fees. The Libby Claimants have not alleged -- nor is there any indication -- that the PI Committee functions in anything other than an efficient and effective manner. The PI Committee also includes a representative of the Libby Claimants and through counsel, the Libby Claimants appear to be active on the PI Committee. The Debtors also assert that the Libby Claimants' allegation of "divergent interests" -- even if true -- does not require appointment of a new committee or payment of fees. These facts do not support the Libby Claimants' contention that the PI Committee cannot continue to present the common interests of the personal injury claimants. The Debtors point out that in past bankruptcies, PI Committees routinely represented claimants with diverging interests despite the fact that some would receive greater compensation than others. To the extent that the "Libby tremolite disease" assertion becomes an important issue in the estimation, and the PI Committee is "unable" to represent the Libby Claimants' interest due to a true conflict, the Debtors contend that the Libby Claimants' counsel will represent the Libby Claimants' interest as they have done since the Petition Date. PI Committee Supports Request The Official Committee of Asbestos Personal Injury Claimants does not believe it is in a position to assert the contentions of the Libby Claimants at the Estimation Hearing, as a result of its fiduciary obligations to all asbestos personal injury claimants in general. Mark T. Hurford, Esq., at Campbell & Levine, LLC, in Wilmington, Delaware, tells Judge Fitzgerald that the Debtors have identified numerous witnesses to address Libby-related issues at the Estimation Hearing. It is clear from the Debtors' actions that they recognize the importance and potential significance of the Libby Claimants' asbestos personal injury claims in these bankruptcy cases. The Debtors even acknowledged in their request for discovery from Dr. Alan C. Whitehouse, that the Libby Claimants' assertions "have emerged as critical issues in both the estimation litigation and with respect to settlement negotiations," and that "the Libby Claimants will continue to advocate their alleged uniqueness throughout the estimation proceeding." "[I]t is apparent to the PI Committee that the Libby Claimants will continue to push for separate treatment not only through the Estimation Hearing, but under any Trust Distribution Procedures approved under a Plan," Mr. Hurford says. According to Mr. Hurford, it is of critical importance to the PI Committee that it, and the Court, fully understand the Libby Claimants assertions concerning Libby tremolite asbestos disease as they continue to be an issue for not only the Estimation Hearing, but with respect to settlement and Plan negotiations. For the Libby Claimants to have an adequate voice, and not be disadvantaged in the case vis-a-vis other creditor groups, their counsel and experts should be compensated by the Debtors' estates like the other creditor groups. Libby Claimants Replace Dr. Egilman Dr. David Egilman has notified the Libby Claimants that he will be unavailable to act as an expert in the Debtors' Chapter 11 cases. Accordingly, the Libby Claimants propose to substitute Dr. Bruce W. Case for Dr. Egilman so that they may have an expert to call in the event that Grace raises medical issues specific to them. Dr. Case currently serves at the Department of Pathology of Montreal General Hospital, in Montreal, Quebec. Dr. Case has a diploma in Occupational Hygiene. The Libby Claimants assure Judge Fitzgerald that no party will be adversely affected by the substitution of Dr. Egilman by Dr. Case at this early stage of the estimation proceeding. The Libby Claimants did not disclose Dr. Case's hourly rate. The Libby Claimants reserve their rights to substitute and add experts as further discovery and investigation may warrant. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor- affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan LLP represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., and Nathan D. Finch, Esq., at Caplin & Drysdalerepresent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott L. Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod LLP to represent it. Lexecon, LLP, provided asbestos claims consulting services to the Official Committee of Equity Security Holders. W.R. GRACE: CHL Administration's Claim Cut 65% to $1.7 Million -------------------------------------------------------------- The Miller Products Company acquired in 1959 a property located at 7737 N.E. Killingsworth, in Portland, Oregon, and formulated horticultural chemicals on the site. W.R. Grace & Co. later acquired the Miller's assets in 1966 and expanded the pesticide formulation operations. Grace continued to operate the facility as its division under the Miller Products Company. In August 1970, CHL Administration, Inc., purchased the Killingsworth Street Property from Grace. CHL Administration continued to formulate pesticides at the Killingsworth Street Property until 1996, at which time CHL Administration ceased production at the facility and decommissioned the plant. CHL Administration entered into a voluntary agreement with the Oregon Department of Environmental Quality in December 2001 to perform a remedial investigation and potential remediation to address soil and groundwater contamination at the Killingsworth Street Property. CHL Administration then filed Claim No. 851 against the Debtors asserting an unsecured, non-priority claim for an unliquidated amount relating to remediation of the Killingsworth Street Property. Claim No. 851 alleged that Grace was liable to CHL Administration for remedial action costs pursuant to Oregon law and response costs under the Comprehensive Environmental Response, Compensation and Liability Act. Subsequently, the Debtors objected to Claim No. 851. In the course of discussions regarding cost recovery on the Killingsworth Street Property, CHL Administration provided to the Debtors documentation supporting its $4,800,000 estimate of the total costs to complete remediation. The costs consist of: -- $1,500,000 in past investigation costs; -- $730,000 in remaining costs to complete the ODEQ-approved onsite remedy; and -- $2,570,000 in estimated future costs for offsite investigation and possible remediation. Following consensual negotiations, the parties reached a settlement, which provides for the resolution and allowance of Claim No. 851 as an unsecured, prepetition, non-priority claim for $1,700,000. Under the Settlement, CHL Administration will not be entitled to interest on the allowed amount with respect to any period before the effective date of a continued Chapter 11 plan or plans with respect to the Debtors. The $1,700,000 Settlement Amount represents approximately 35% of the total investigation and remediation costs. Under one method of allocating responsibility, Grace could be responsible for as much as 64% of the response costs based on the years of chlorinated pesticide formulating activities at the site. CHL Administration has argued that Grace is responsible for substantially all of the response costs. Furthermore, the Settlement provides that all other amounts outlined in or related to Claim No. 851 will be disallowed and expunged. CHL Administration will be forever barred from asserting any additional claims against the Debtors with respect to the matters covered by the Settlement, including all costs of investigation, remediation, monitoring and maintenance associated with releases at or emanating from the Killingsworth Street Property. CHL Administration also agrees to indemnify the Debtors against any and all claims under CERCLA or the Oregon Environmental Cleanup Law by any party at any time with respect to the Settled Matters. In the event that the Settlement becomes null and void for any reason, Claim No. 851 will be deemed fully reinstated, subject, however, to the Debtors' defenses, counterclaims and offsets, and credits for payments that CHL Administration has received. However, neither the Settlement nor its nullification pursuant to its terms will create a right that does not presently exist for CHL Administration or any other party to file additional claims with respect to those matters, nor waive any defense that the Debtors may have against those claims. CHL Administration also agrees to settle its claim for a lesser sum than it believes is due, in reliance on the proposed treatment of general unsecured claims described in the Debtors' amended joint plan of reorganization dated January 13, 2005. James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub LLP, in Wilmington, Delaware, tells the Bankruptcy Court that under the 2005 Plan, general unsecured claims in Class 9 would be paid in full, with payment being made 85% in cash and 15 % in common stock of the reorganized Grace. In recognition of that reliance, CHL Administration has the option to void the Settlement if the Plan that is ultimately confirmed with respect to Grace does not provide for the full payment of Claim No. 851 in the allowed Settlement amount, or as soon as practicable, with the payment being at least 85% in cash and any remainder in common stock of the reorganized Grace. That option, however, is for the sole benefit of CHL Administration, Mr. O'Neill says. In the event CHL Administration sells or assigns its claim to another party at any time before the payment under the confirmed plan, that option terminates. The Debtors ask the U.S. Bankruptcy Court for the District of Delaware to approve the Settlement in its entirety. Mr. O'Neill asserts that the Settlement will allow the Debtors to resolve the disputes with CHL Administration that currently exist or may arise in the future with respect to the clean-up of the Killingsworth Street Property, while avoiding litigation expenses. In addition, because disposition of the claim through contested matters would result in increased expenditures both in terms of human and financial resources, Mr. O'Neill relates that the savings to the Debtors' estates resulting from the Settlement inures to the benefit of all of the Debtors and their estates. Mr. O'Neill maintains that if the Settlement is not approved by the Court before December 31, 2006, the Settlement will be null and void unless mutually agreed upon by the parties. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor- affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan LLP represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., and Nathan D. Finch, Esq., at Caplin & Drysdalerepresent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott L. Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod LLP to represent it. Lexecon, LLP, provided asbestos claims consulting services to the Official Committee of Equity Security Holders. WINN-DIXIE: Associated Grocers Buys Pompano Center for $51 Million ------------------------------------------------------------------ As reported in the Troubled Company Reporter on April 19, 2006, Winn-Dixie Stores, Inc., and its debtor-affiliates sought authority from the U.S. Bankruptcy Court for the Middle District of Florida to: (a) sell the Pompano Beach Distribution Center together with all attached improvements, to Associated Grocers or to the party submitting a higher or better offer, free and clear of liens, claims and interests; and (b) take all actions reasonably necessary to effectuate the sale of the Assets in accordance with a Facility Agreement. Associated Grocers of Florida, Inc., submitted the final bid of $51,000,000 representing the highest or otherwise best offer for the debtors' Pompano Beach Distribution Center and attached improvements. Judge Funk of the U.S. Bankruptcy Court for the Middle District of Florida approves the Debtors' sale of the assets to Associated Grocers. Any agreements or other instruments executed in connection with the sale may be modified or supplemented by the parties without further Court order, provided however that: (a) the Debtors will first obtain prior written consent of the DIP Lender and the Official Committee of Unsecured Creditors, which consent will not be unreasonably withheld; and (b) any modification or supplement does not have a materially adverse effect on the Debtors' estates. In accordance with the Final Financing Order and the Loan Documents: * the senior liens and superpriority administrative Claims or Interests of the DIP Lender will attach to the proceeds of the sale; and * the Debtors will pay the net proceeds from the sale to the DIP Lender. Judge Funk directs all entities presently in possession of the Assets to surrender them to the Debtors. Judge Funk clarifies that the Debtors' transfer of the Assets to Associated Grocers will not result in Associated Grocers' liability: (a) for any Claim Interest against the Debtors or against an insider of the Debtors; and (b) to the Debtors except as stated in the Facility Agreement and the Order. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14, 2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. Paul P. Huffard at The Blackstone Group, LP, gives financial advisory services to the Debtors. Dennis F. Dunne, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B. Macdonald, Esq., at Akerman Senterfitt give legal advice to the Official Committee of Unsecured Creditors. Houlihan Lokey & Zukin Capital gives financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Wants to Assume 75 Store Leases on Plan Effective Date ------------------------------------------------------------------ Winn-Dixie Stores, Inc., and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Middle District of Florida to assume 75 store leases as of the effective date of their plan of reorganization. To the extent any default exists under any of the Leases, the Debtors assure the Court that they will satisfy Section 365(b) of the Bankruptcy Code by paying their landlords the necessary cure amounts, if any, promptly after the Effective Date. The 75 Leases and their proposed cure amounts are: Store Proposed No. Store Location Cure ----- -------------- -------- 2 2220 County Rd 210 W Ste 200, Jacksonville, FL $21,807 6 10915 Baymeadows Rd. Unit 12, Jacksonville, FL 93,213 30 1080 New Santa Fe Blvd., High Springs, FL 10,875 80 9866 Baymeadows Road, Jacksonville, FL 10,347 81 800 S. Marion Street, Lake City, FL - 84 1722 S. 8th Street, Fernandina Beach, FL 81,591 138 3260 Highway 17, Green Cove Springs, FL - 144 1436 Sr 121 & 1-10, Macclenny, FL 8,427 153 7921 Normandy Blvd., Jacksonville, FL - 167 3000 Dunn Avenue, Jacksonville, FL - 176 8650 Argyle Forest Blvd., Jacksonville, FL - 209 701 Nw 99th Ave., Pembroke Pines, FL - 217 1199 South Federal Hwy, Pompano Beach, FL 10,810 218 2581 North Hiatus Road, Cooper City, FL 57,383 221 2675 S. Military Trail, West Palm Beach, FL - 222 901 North Nob Hill Road, Plantation, FL 71,770 231 5850 Nw 183rd Street, Miami, FL 140,478 243 541 West 49th Street, Hialeah, FL 1,500 250 17101 Miramar Pkwy, Miramar, FL - 254 11241 S.W. 40th Street, Miami, FL - 256 4770 N. Congress Avenue, Boynton Beach, FL - 260 6600 Hypoluxo Road, Lake Worth, FL 289,506 265 1101 S. Military Trail, Deerfield Beach, FL 14,738 278 15859 Pines Blvd., Pembroke Pines, FL - 279 Federal Hwy & NE 6th St., Fort Lauderdale, FL - 281 4105 State Road 7, Lake Worth, FL 132,097 287 14655 SW 104th St., Miami, FL 29,933 290 Federal Highway & NE 6th St., Fort Lauderdale, FL - 328 92100 Overseas Highway, Tavernier, FL 23,595 348 7139 W Broward Blvd., Plantation, FL 39,729 353 9565 W Flagler St., Miami, FL - 356 6356 Forest Hill Blvd., Greenacres, FL 45,284 359 7480 SW 117 Ave., Miami, FL - 375 3131 Forest Hill Blvd., West Palm Beach, FL 14,839 426 1571 Westgate Parkway, Dothan, AL 15,166 454 2131 Ross Clark Circle, Dothan, AL 20,451 460 5841 Atlanta Highway, Montgomery, AL - 463 2730 Eastern Boulevard, Montgomery, AL 9,181 517 3925 Crosshaven Drive, Birmingham, AL 12,774 556 4751 Bayou Blvd., Pensacola, FL - 599 187 Baldwin Square, Fairhope, AL 24,022 607 12975 Park Blvd., Seminole, FL - 611 18407 US Hwy 41, Lutz, FL 32,045 631 2900 Highland Road, Lakeland, FL 16,110 637 7851 Palm River Road, Tampa, FL 43,693 651 2126 Collier Parkway, Land O' Lakes, FL 69,679 656 7400 44 Ave West, Bradenton, FL 14,930 660 3500 53rd Ave. West, Bradenton, FL 84,429 662 14483 S Tamiami Trail, North Port, FL 17,250 672 12120 Moon Lake Road, New Port Richey, FL 9,098 698 1049 62 Ave North, St Petersburg, FL 16,834 736 3280 Tamiami Trail, Port Charlotte, FL - 737 2000 Kings Highway, Port Charlotte, FL 94,409 777 9535 E Fowler Ave., Thonotosassa, FL 900 1403 1841 Almonaster St., New Orleans, LA 1,400 1404 8601 Jefferson Highway, River Ridge, LA - 1449 804 W. Oak Street, Amite, LA 4,291 1537 2302 W. Thomas Street, Hammond, LA 46,526 1766 6825 Burlington Pike, Florence, KY - 1852 175 Haynes Bridge., Alpharetta, GA - 2211 2640 NE 14th St., Ocala, FL 13,409 2213 4417 NW Blitchton Road, Ocala, FL 84,435 2217 6405 W Gulf To Lake Hwy, Crystal River, FL 6,914 2230 190 Malabar Rd SW, Palm Bay, FL 21,996 2258 1541 Nova Road, Holly Hill, FL 8,629 2265 900 Cypress Parkway, Poinciana, FL 8,987 2267 7382 E. Curry Ford Rd., Orlando, FL 5,442 2289 8445 SW Hwy 200, Ste # 131, Ocala, FL - 2301 2722 N. Pine Hills Rd., Orlando, FL 13,869 2311 4025 S Nova Road, Port Orange, FL 95,391 2323 5739 Edgewater Drive, Orlando, FL - 2330 1450 N. Courtenay, Merritt Island, FL 2,631 2333 5270 Babcock St. Units 29 & 30, Palm Bay, FL 69,509 2348 281 SW Port St. Lucie Blvd., Pt St Lucie, FL - 2602 5134 Firestone Road, Jacksonville, FL 93,771 If there is no Effective Date, the Debtors tell the Court that they will not assume the Leases and no payments will be made on the cure amounts. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14, 2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. Paul P. Huffard at The Blackstone Group, LP, gives financial advisory services to the Debtors. Dennis F. Dunne, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B. Macdonald, Esq., at Akerman Senterfitt give legal advice to the Official Committee of Unsecured Creditors. Houlihan Lokey & Zukin Capital gives financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Assumption of Modified Hallmark Marketing Pact Okayed ----------------------------------------------------------------- Winn-Dixie Stores, Inc., and its debtor-affiliates obtained authority from Judge Funk of the U.S. Bankruptcy Court for the Middle District of Florida to: (a) approve their assumption of the Modified Expressions from Hallmark Marketing Agreement; (b) require the Debtors to pay $3,969,000 to Hallmark Marketing Corporation as cure; (c) hold that, with the payment, all requirements of Section 365(b)(1) are satisfied or waived; and (d) disallow Claim Nos. 7292 and 7293. As reported in the Troubled Company Reporter on May 12, 2006, procurement, Inc., and Hallmark Marketing Corporation are parties to the Expressions from Hallmark Marketing Agreement dated April 19, 2002, as amended. Under the Prepetition Agreement, Procurement obtains greeting cards and other personal expression products from Hallmark for sale in the Debtors' stores. According to D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, the Prepetition Agreement has become economically unfavorable to the Debtors because it: (1) contains a volume quota that obligates the Debtors to purchase from Hallmark, wholesale product valued at $262,886,000, with the term of the agreement continuing until the volume quota is satisfied. As of March 31, 2006, the Debtors have made wholesale product purchases of $84,000,000. At their current level of purchasing, the Debtors estimate that they would be bound to the Prepetition Agreement for at least another 10 years; and (2) requires the Debtors to devote an aggregate of 101,861 permanent linear feet of store space to the display of Hallmark's products. With the recent footprint reductions, the Debtors have fallen far short of that requirement. As a consequence, the Prepetition Agreement allows Hallmark, at its option: (a) to obtain a prorated refund from the Debtors of previously paid signing bonus and department replacement allowance amounts of $7,800,000; or (b) to increase the amount of the volume quota. Mr. Baker related that the Debtors and Hallmark agreed to modify the volume quota and linear footage terms of the Prepetition Agreement, which is reflected in the Second Addendum to Expressions from Hallmark Marketing Agreement. The Second Addendum provides that: (a) Hallmark will reduce the volume quota, of which $178,886,000 would otherwise remain outstanding, to $61,000,000 for the period after March 31, 2006; (b) Hallmark will eliminate the linear footage requirement and the penalties for failing to satisfy the linear footage requirement; and (c) the Debtors will pay Hallmark $3,969,000 in full and complete satisfaction of obligations existing under the Prepetition Agreement, representing a substantial discount of the amount that Hallmark would otherwise assert as cure. The Postpetition Amendment contemplates that the Debtors will move to assume the Prepetition Agreement as modified by the Postpetition Amendment. In conjunction with assumption of the Modified Agreement, Hallmark has agreed that, subject to payment of $3,969,000, all liabilities as to which cure or compensation would otherwise be required under Section 365(b)(1) of the Bankruptcy Code have been satisfied or waived. With the agreement, the proofs of claim filed by Hallmark against the Debtors would be disallowed in full including (i) Claim No. 7292 filed against Procurement for $38,829,976 and (ii) Claim No. 7293 filed against the Debtors for $38,829,976. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14, 2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. Paul P. Huffard at The Blackstone Group, LP, gives financial advisory services to the Debtors. Dennis F. Dunne, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B. Macdonald, Esq., at Akerman Senterfitt give legal advice to the Official Committee of Unsecured Creditors. Houlihan Lokey & Zukin Capital gives financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service, Inc., 215/945-7000). * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ------------------------------------------------------------- Recent chapter 11 cases filed with assets and liabilities below $1,000,000: In re Asset Verification Inc. Bankr. N.D. Ill. Case No. 06-05724 Chapter 11 Petition filed May 18, 2006 See http://bankrupt.com/misc/ilnb06-05724.pdf In re Broadway Palace Cafe, Inc. Bankr. S.D.N.Y. Case No. 06-11103 Chapter 11 Petition filed May 18, 2006 See http://bankrupt.com/misc/nysb06-11103.pdf In re Corporate Copy II, LLC Bankr. E.D. Va. Case No. 06-10507 Chapter 11 Petition filed May 18, 2006 See http://bankrupt.com/misc/vaeb06-10507.pdf In re Dayspring-Fitch & Sons Funeral Home Inc. Bankr. W.D. Wash. Case No. 06-11540 Chapter 11 Petition filed 18, 2006 See http://bankrupt.com/misc/wawb06-11540.pdf In re Fitness and Wellness Solutions, Inc. Bankr. W.D. Va. Case No. 06-70475 Chapter 11 Petition filed May 18, 2006 See http://bankrupt.com/misc/vawb06-70475.pdf In re Pied Piper Playhouse, Inc. Bankr. S.D. Miss. Case No. 06-00767 Chapter 11 Petition filed May 18, 2006 See http://bankrupt.com/misc/mssb06-00767.pdf In re Rage Creations, LLC Bankr. D. Md. Case No. 06-12856 Chapter 11 Petition filed May 18, 2006 See http://bankrupt.com/misc/mdb06-12856.pdf In re Shamrock Hills Golf Club, Inc. Bankr. N.D. Ind. Case No. 06-30571 Chapter 11 Petition filed May 18, 2006 See http://bankrupt.com/misc/innb06-30571.pdf In re Stratford Pipe & Engineering Bankr. D. Conn. Case No. 06-30715 Chapter 11 Petition filed May 18, 2006 See http://bankrupt.com/misc/ctb06-30715.pdf In re Weaver Custom Construction, Inc. Bankr. N.D. Ga. Case No. 06-20688 Chapter 11 Petition filed May 18, 2006 See http://bankrupt.com/misc/ganb06-20688.pdf In re Bruce Allen Seymour Bankr. E.D. Calif. Case No. 06-21675 Chapter 11 Petition filed May 19, 2006 See http://bankrupt.com/misc/caeb06-21675.pdf In re Century 23 Realty Corp. Bankr. E.D.N.Y. Case No. 06-71108 Chapter 11 Petition filed May 19, 2006 See http://bankrupt.com/misc/nyeb06-71108.pdf In re Green Knoll Concrete, Inc. Bankr. W.D.N.Y. Case No. 06-20815 Chapter 11 Petition filed May 19, 2006 See http://bankrupt.com/misc/nywb06-20815.pdf In re Margaret Blessing Bankr. W.D. Pa. Case No. 06-22232 Chapter 11 Petition filed May 19, 2006 See http://bankrupt.com/misc/pawb06-22232.pdf In re Payment Solutions of TN Inc. Bankr. M.D. Tenn. Case No. 06-02471 Chapter 11 Petition filed May 19, 2006 See http://bankrupt.com/misc/tnmb06-02471.pdf In re The Boathouse Cafe, Inc. Bankr. E.D. Va. Case No. 06-31219 Chapter 11 Petition filed May 19, 2006 See http://bankrupt.com/misc/vaeb06-31219.pdf In re Curb's Candle Co. LLC Bankr. N.D. Ohio Case No. 06-31178 Chapter 11 Petition filed May 22, 2006 See http://bankrupt.com/misc/ohnb06-31178.pdf In re M & T Ventures, Inc. Bankr. M.D. Ala. Case No. 06-10447 Chapter 11 Petition filed May 22, 2006 See http://bankrupt.com/misc/almb06-10447.pdf In re MV Trading Corporation Bankr. D. P.R. Case No. 06-01582 Chapter 11 Petition filed May 22, 2006 See http://bankrupt.com/misc/prb06-01582.pdf In re Royce L. Lewis Bankr. E.D. Ark. Case No. 06-11998 Chapter 11 Petition filed May 22, 2006 See http://bankrupt.com/misc/akeb06-11998.pdf In re Sidney Lester Soffer Bankr. D. Nev. Case No. 06-11091 Chapter 11 Petition filed May 22, 2006 See http://bankrupt.com/misc/nvb06-11091.pdf In re PC Drilling, Inc. Bankr. D. Ariz. Case No. 06-01520 Chapter 11 Petition filed May 23, 2006 See http://bankrupt.com/misc/azb06-01520.pdf ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Marie Therese V. Profetana, Shimero Jainga, 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. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $725 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***