TCR_Public/060526.mbx          T R O U B L E D   C O M P A N Y   R E P O R T E R

              Friday, May 26, 2006, Vol. 10, No. 124

                             Headlines

2135 GODBY: Legg Mason Wants Chapter 11 Case Dismissed
2135 GODBY: Has Until June 12 to File Schedules
ACURA PHARMACEUTICALS: Secures $800K Bridge Funding due Sept. 1
AIRADIGM COMMUNICATIONS: Hires Goldberg Kohn as Bankruptcy Counsel
AIRADIGM COMMS: Disclosure Statement Hearing Scheduled on June 29

ALLIED HOLDINGS: Retirees Oppose Planned Benefit Plan Termination
ALLIED HOLDINGS: Wants Until October 13 to Remove Civil Actions
ALPHA-200: Chapter 15 Petition Summary
ASARCO LLC: Court Okays Tennessee Mines Sale to Glencore for $40MM
ASARCO LLC: Wants Until Oct. 6 to File Plan of Reorganization

ASARCO LLC: Has Until Sept. 15 to Make Lease-Related Decisions
ASSET BACKED: S&P Downgrades Class B Certificates' Rating to BB
BANC OF AMERICA: Fitch Affirms $5.9 Mil. Class O Certs.' B- Rating
BAREFOOT RESORT: Plan Confirmation Hearing Set for June 14
BEAR STEARNS: DBRS Places Low-B Rating on $8.6 Million NIM Notes

BRIDGE INFORMATION: 8th Cir. Tells Gulfcoast to Return $2,155,000
BUEHLER FOODS: Wants June 12 as Administrative Claims Bar Date
C-BASS: Moody's Assigns Ba1 Rating on Class B-4 Certificates
C.M.E. INVESTMENT: Voluntary Chapter 11 Case Summary
CABLEVISION SYSTEMS: Posts $58.9 Mil. Net Loss in 2006 1st Quarter

CALPINE CORP: Clear Lake, Celanese & Old World Deal Get Court's OK
CALPINE CORP: Court OKs Dominion's Pact with Texas Cogeneration
CAM CBO: Fitch Holds $34.27 Million Class C Notes' C Rating
CARIBBEAN RESTAURANTS: S&P Lowers Corporate Credit Rating to B
CATHOLIC CHURCH: Court Rejects Spokane's $45 Mil. Settlement Bid

CATHOLIC CHURCH: Keen Realty Hired as Spokane's Consultant
CATHOLIC CHURCH: Spokane Can Continue Using Cash Management System
CLEAN EARTH: Completes Asset Sale to Alamo Group for $8.8 Million
COLLINS & AIKMAN: Files Amended GM Agreement Under Seal
COLLINS & AIKMAN: Court Approves TR Associates' Lease Amendment

COLUMN CANADA: DBRS Holds Low-B Rating on 3 Certificate Classes
CONTINENTAL AIR: Moody's Puts BI Rating on Class B Certificates
CUMULUS MEDIA: S&P Rates Proposed $850 Mil. Credit Facility at B
DANA CORP: Wants to Sell Atmoplas-Related Assets to BTU for $474K
DANA CORP: Court Amends Order on Foreign Vendor Claims Payments

DANA CORP: Furillo & Buono Wants Stay Lifted to Pursue Claims
DELPHI CORP: BorgWarner Wants to Liquidate Warranty Claims
DELPHI CORP: Hires Pagemill Partners as Financial Advisor
DELPHI CORP: Wants to Reject Inovise OEM Agreement
EASY GARDENER: 341(a) Creditors Meeting Scheduled for June 1

EL PASO CORP: Expects $500.7 Million Proceeds from Equity Offering
ENERGY PARTNERS: Offers to Acquire Stone Energy for $2 Billion
ENERGY PARTNERS: Stone Purchase Offer Cues Moody's Rating Review
ENERGY PARTNERS: S&P Puts B+ Corp. Credit Rating on Negative Watch
ENRON CORP: Saras SpA Buys Out Enron Stake at Sardinia Power Plant

ENRON CORP: Sells Prisma Unit for $2.9 Billion to Ashmore Energy
ENRON CORP: U.S. Senators Want $400-Million Settlement Rejected
EYI INDUSTRIES: Working Capital Deficit Cues Going Concern Doubt
FLUTIE ENT: Lawyer Sleeping through Deposition Not Malpractice
FOAMEX INTERNATIONAL: Court Denies Bagnatos' Lift Stay Motion

FOSTER WHEELER: S&P Upgrades Senior Secured Notes' Rating to B+
FRONTIER: Moody's Puts B3 Rating on $315MM Sr. Sec. Debt Facility
FUTURE MEDIA: Trustee Appoints Two New Members in Creditors' Panel
FUTURE MEDIA: Judge Mund Okays Pachulski Stang as Panel's Counsel
GENERAL MOTORS: Offers Gas Credit to Consumers with Eligible Cars

GLOBAL HOME: Gets Court OK on $33.55-MM Asset Sale to C.R. Gibson
GLOBAL HOME: Court Approves Pachulski Stang's Retention as Counsel
GRAHAM PACKAGING: Moody's Holds Rating on $375MM Notes at Caa2
GSR MORTGAGE: S&P Affirms Class 1B5 & 2B5 Certificates' B Ratings
GULF COAST: CapSource Added to Panel After Bath Iron Resigns

HEARTLAND PARTNERS: Hires Popowcer Katten as Accountants
HEARTLAND PARTNERS: Hires Environ as Environmental Consultant
HEARTLAND PARTNERS: Hires Le Petomane as Sale Consultant
HI-LIFT OF NEW YORK: Wants to Use Toyota's Cash Collateral
IVOW INC: Posts $814,638 Net Loss In 2006 First Fiscal Quarter

JERNBERG INDUSTRIES: Ch. 7 Trustee Wants to Terminate Pension Plan
KINGS RIVER: Real Estate Broker Disqualified & Compensation Denied
KMART CORP: Wants to File National Settlement Under Seal
LANOGA CORP: Moodys Puts Low-B Rating on 1.3 Billion of Loans
LARRY'S MARKETS: Gets Interim Nod on Giuliani Capital as Advisor

LARRY'S MARKETS: Gets Interim Nod on Smith Bunday as Accountant
LARRY'S MARKETS: Gets Interim Nod on Heller as Asst. Controller
LEHMAN XS: Moody's Assigns Ba3 Rating to Class A-3 Certificates
MAVERICK TUBE: Moody's Rates $250 Million Sr. Subor. Notes at B2
MCCLATCHY CO: Advertising Revenues Down 2.2% in April 2006

MORTGAGE ASSISTANCE: Posts $308,489 Net Loss in First Fiscal Qtr.
NRG VICTORY: U.S. Court to Hear Chapter 15 Petition on June 12
ORIUS CORP: Exclusive Plan Filing Period Intact Until June 21
ORIUS CORP: Rejects Seven Real Property Leases
PLIANT: Success Unlikely Under Plan Says First Lien Panel

PLIANT: 2nd Lien Panel Says Plan Doesn't Comply with Bankr. Code
PLIANT CORP: Reports $298 Million First Quarter Sales
QUANTEGY INC: Court Says Plant Shutdown Notices Were Inadequate
RADNOR HOLDINGS: Implements Company-Wide Cost Reduction Program
RED TAIL: Court Dismisses Case After Debtor Pledges to Pay Claims

REXNORD CORP: Plans to Launch Tender Offer for 10.125% Sr. Notes
REXNORD CORP: To Be Acquired by Apollo Management for $1.825 Bil.
ROBERT FRYAR: Case Summary & 18 Largest Unsecured Creditors
SAMSONITE CORP: Good Performance Cues S&P to Raise Rating to BB-
SILICON GRAPHICS: Wants Equity Trading Restricted to Protect NOLS

SILICON GRAPHICS: Will Grant Priority to Prepetition Orders
SILICON GRAPHICS: Will Honor Prepetition Custom Duties up to $1MM
SIMMONS BEDDING: S&P Puts BB- Rating on Proposed $490 Million Loan
SOLUTIA INC: Agrees to Sell Pharmaceutical Business for $74.5 Mil.
STONE ENERGY: Gets $2 Billion Purchase Offer from Energy Partners

STRUCTURED ASSET: Fitch Downgrades Class B3 Cert.'s Rating to CCC
STRUCTURED ASSEST: Moody's Puts Low-B Rating on 2 Cert. Classes
TELOS CORP: Dec. 31 Balance Sheet Upside Down by $97.2 Million
TIME WARNER: Shareholders Have Until June 28 to File Objections
TRANSMONTAIGNE INC: Inks Revised Merger Agreement with SemGroup

TRUST ADVISORS: Plans to Pay Creditors in Full under Ch. 11 Plan
UAL CORP: Setting Off $2.15MM Loan Against Chicago's $15MM Debt
VALEANT PHARMA: S&P Affirms BB- Rating & Revises Outlook to Neg.
VARIG S.A.: Creditors Approve Plan to Auction Routes and Assets
VARIG S.A.: Brazilian Court Directs Government to Pay for Losses

VARIG S.A.: Foreign Representatives Make $3.9 Mil. ILFC Payments
VILLAJE DEL RIO: Section 341(a) Meeting Scheduled for June 5
VILLAJE DEL RIO: Taps Hohmann Taube as New Bankruptcy Counsel
WELLS FARGO: S&P Affirms Four Certificate Classes' Low-B Ratings
WINN-DIXIE: Panel Wants Houlihan's Retention Amendment Approved

WINN-DIXIE: Committee Seeks Approval of A&M's Retention Amendment
WORLD HEALTH: Court Okays $39MM DIP Loan & Cash Collateral Use
WORLDCOM INC: Court Allows Teleserve Systems Claim for $7.3 Mil.
WORLDCOM INC: Beepwear Responds to Settlement Pact with SkyTel
XM SATELLITE: Lowers 2006 Subscriber & Financial Guidance

* BOOK REVIEW: Hospital Turnarounds: Lessons in Leadership

                             *********

2135 GODBY: Legg Mason Wants Chapter 11 Case Dismissed
------------------------------------------------------
Legg Mason Real Estate Holdings 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 dismiss
the Debtor's chapter 11 case.

Legg Mason asserts a first priority lien on the Debtor's property
and revenue to secure repayment of the Debtor's $11.6 million
debt.  

Legg Mason argues that the Debtor's bankruptcy proceeding should
be dismissed because its chapter 11 filing was unauthorized and
violated special stipulations under an Amended and Restated
Operating Agreement.

2135 Godby has only two members.  When the Debtor entered into the
loan agreement with Legg Mason:   

    * the Hartunian Family Trust held a 50% interest in the
      company, and

    * Howard and Helene Regen held the other 50% interest.

Pursuant to the Amended and Restated Operating Agreement, the
Debtor's manager cannot file for bankruptcy on behalf of the
Company without obtaining an affirmative vote or written consent
of a majority interest of the members.  A special stipulation
embodied in the agreement also prevented the company from filing
for bankruptcy until its loan to Legg Mason is paid in full.

According to Legg Mason, rendering a true majority is impossible
since the Company only had two members and it follows that both
members must give their consent to the filing of the bankruptcy
petition.  However, Legg Mason alleges that because of a capital
call, the Regens gained the majority interest in the company and
thus were able to unilaterally authorize the filing of the
bankruptcy petition.  

Legg Mason discloses that Lynette Gridley, as Trustee for the
Hartunian Family Trust, did not approve the filing of the
bankruptcy petition.  In fact, Legg Mason says that Ms. Gridley
never received the capital call and thus the trust was not given
an opportunity to make an additional contribution in order to
preserve and avoid dilution of its 50% interest.

                       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: Has Until June 12 to File Schedules
-----------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Georgia
gave 2135 Godby Property, LLC, until June 12, 2006, to file its
Schedules and Statements of Financial Affairs.

The Debtor tells the Court that it needs the extension in order to
review numerous financial records and provide an accurate picture
of its financial condition.  The Debtor says that it hopes to
complete the review by May 26, 2006.

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.


ACURA PHARMACEUTICALS: Secures $800K Bridge Funding due Sept. 1
---------------------------------------------------------------
Acura Pharmaceuticals, Inc. (OTCBB:ACUR) secured gross proceeds of
$800,000 under a term loan agreement with:

     * Essex Woodlands Health Ventures V, L.P.,
     * Care Capital Investments II, L.P.,
     * Care Capital Offshore Investments II, L.P.,
     * Galen Partners III, L.P.,
     * Galen Partners International III, L.P. and
     * Galen Employee Fund III, L.P.

The Loan matures on Sept. 1, 2006, bears an annual interest rate
of 10%, is secured by a lien on all assets of the Company and its
subsidiary, and is senior to all other Company debt.  The Loan
permits the funding of additional cash amounts subject to
agreement by the Company and the Bridge Lenders.  No assurance can
be given, however, that any additional funding will be advanced to
the Company under the terms of the Loan.

               Bridge Loan Maturity Date Extended

The Company also reported that the maturity date for all earlier
bridge loans originally due June 1, 2006 has been postponed to
Sept. 1, 2006.  The Company has a total of $4.85 million in bridge
loans outstanding and due on Sept. 1, 2006.

The Company will utilize the net proceeds from the Loan to
continue funding product development and licensing activities
relating to OxyADF(tm) tablets and other product candidates
utilizing its Aversion(r) Technology.

                      Cash Reserves Update

The Company estimates that its current cash reserves, including
the net proceeds from the Loan, will fund product development and
licensing activities through June 2006.  To continue operating
thereafter, the Company must raise additional financing or enter
into appropriate collaboration agreements with third parties
providing for cash payments to the Company.  In the absence of
such financing or third-party collaborative agreements, the
Company will be required to scale back or terminate operations or
seek protection under applicable bankruptcy laws.

                   About Acura Pharmaceuticals

Headquartered in Palatine, Illinois, Acura Pharmaceuticals, Inc.
-- http://www.acurapharm.com/-- is a specialty pharmaceutical
company engaged in research, development and manufacture of
innovative and proprietary abuse deterrent, abuse resistant and
tamper resistant formulations intended for use in orally
administered opioid-containing prescription analgesic products.
Acura is actively collaborating with contract research
organizations for laboratory and clinical evaluation and testing
of product candidates formulated with its Aversion(R) Technology.

                          *     *     *

At March 31, 2006, Acura Pharmaceuticals, Inc.'s balance sheet
showed a stockholders' deficit of $7.3 million, compared to a
$6.1 million deficit at Dec. 31, 2005.


AIRADIGM COMMUNICATIONS: Hires Goldberg Kohn as Bankruptcy Counsel
------------------------------------------------------------------
Airadigm Communications, Inc., obtained authority from the U.S.
Bankruptcy Court for the Western District of Wisconsin to employ
Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz, Ltd., as its
bankruptcy counsel, nunc pro tunc to May 8, 2006.

Goldberg Kohn is expected to:

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

    (b) pursue approval of a disclosure statement and confirmation
        of a plan;

    (c) prepare, on behalf of the Debtor, all necessary
        applications, motions, answers, orders, reports and other
        legal papers as required by applicable bankruptcy or non-
        bankruptcy law, as dictated by the demands of this case,
        or as required by the Court, and represent the Debtor in
        any hearings or proceedings related thereto;

    (d) appear in Court and protecting the interests of the Debtor
        before the Court; and

    (e) perform all other legal services for the Debtor that may
        be necessary and proper in this case.

The Debtor tells the Court that the Firm's professionals bill:

    Professional                Designation        Hourly Rate
    ------------                -----------        -----------
    Ronald Barliant, Esq.       Principal             $600
    Alan P. Solow, Esq.         Principal             $600
    Kathryn A. Pamenter, Esq.   Counsel               $370
    Anna R. Marks, Esq.         Associate             $235
    Kristina A. Bunker          Legal Assistant       $170

    Title                                           Hourly Rate
    -----                                           -----------
    Principals                                      $350 - $600
    Associates                                      $200 - $350
    Legal Assistants and Paralegals                 $125 - $185

Ronald Barliant, Esq. a principal at Goldberg Kohn, assures the
Court that his firm is disinterested as that term is defined in
Section 101(14) of the Bankruptcy Code.

Mr. Barliant can be reached at:

         Ronald Barliant, Esq.
         Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz, Ltd.
         55 East Monroe Street, Suite 3700
         Chicago, Illinois 60603
         Tel:  (312) 201-4000
         Fax:  (312) 332-2196
         http://www.goldbergkohn.com/

                    About Airadigm Communications

Headquartered in Little Chute, Wisconsin, Airadigm Communications,
Inc. -- http://www.eisnteinpcs.com/-- provides local wireless  
phone services through its Einstein PCS wireless networking
technology.  The company filed for chapter 11 protection on July
28, 1999 (Bankr. W.D. Wis. Case No. 99-33500).  The Court
confirmed its plan of reorganization in 2000.

The company filed a new chapter 11 petition on May 8, 2006 (Bankr.
W.D. Wis. Case No. 06-10930).  Kathryn A. Pamenter, Esq., and
Ronald Barliant, Esq., at Goldberg, Kohn, Bell, Black, Rosenbloom
& Moritz, Ltd., represent the Debtor in its new bankruptcy
proceedings.  No Official Committee of Unsecured Creditors has
been appointed in the Debtor's new bankruptcy case.  In its second
bankruptcy filing, the Debtor estimated assets between $10 million
to $50 million and debts of more than $100 million.


AIRADIGM COMMS: Disclosure Statement Hearing Scheduled on June 29
-----------------------------------------------------------------
The Hon. Robert D. Martin of the U.S. Bankruptcy Court for the
Western District of Wisconsin will convene a hearing at 9:30 a.m.,
on June 29, 2006, to consider the adequacy of the information
contained in the Disclosure Statement explaining Airadigm
Communications, Inc.'s Chapter 11 Plan of Reorganization.

Objections to the Disclosure Statement, if any, must be filed with
the Court by June 22, 2006.

                       Previous Chapter 11 Case

The Debtor previously filed for chapter 11 protection in 1999.  
The Federal Communications Commission automatically cancelled the
Debtor's Licenses after it filed for bankruptcy.  The Debtor
relates that in 2000, the Court confirmed a plan of reorganization
that provided for the sale of the Debtor's assets, including its
Licenses, to TDS and Telecorp Communications Corp.

The Debtor says that the proceeds of those sales would have been
sufficient to pay in full all claims of creditors in the 1999
case, including the FCC, and to make a distribution to the owners
of the equity interests.  However, the Debtor says it was unable
to complete the sale of its assets owing to the fact that the FCC
did not rule on its request to reinstate its Licenses until 2003.  
The Debtor relates that in the nearly three-year period from the
confirmation of the plan to the FCC's decision on the Licenses,
the obligations of TDS and Telecorp to purchase its assets expired
and the value of the Licenses fell.  The Debtor says that the
FCC's actions and delay made it impossible to implement the 2000
Plan.

                        New Chapter 11 Case

Because of the decline in the value of the Licenses, the Debtor
claims it was forced to filed another chapter 11 case on May 8,
2006.  The Debtor relates that when it filed for bankruptcy:

    * it owed the FCC about $64 million for the balance of the
      purchase price of the Licenses;

    * its indebtedness to TDS was approximately $136 million; and

    * the Debtor's value as a going concern was far less that the
      indebtedness, thus it couldn't refinance its debts.

The Debtor discloses that it can't pay the debts on their
respective terms and if it defaults on the FCC debt, then it will
lose its Licenses and will be unable to continue as a going
concern.

The Debtor tells the Court that it is currently not servicing its
secured debt, and has a sufficient amount of cash for its day-to-
day operations.  The Debtor says its operations are constrained by
its cash flow but it has been operating on a cash available basis
since 1999.

The Debtor argues that if FCC's claim was reduced to the value of
the Licenses, it would be able to obtain the financing needed to
pay TDS' claim.  The Debtor discloses that TDS has indicated its
willingness to restructure its claims.

                 Overview of the 2006 Plan

The 2006 Plan provides for the restructuring of the FCC and TDS
indebtedness, and payment of general unsecured creditors in full.
The Debtor says that without the restructuring, it would be unable
to make payments to the FCC and TDS, resulting in the loss of its
Licenses and other assets and its inability to continue as a going
concern.

In any liquidation, the FCC and TDS, as the senior secured
creditors with liens on all assets, would be entitled to payment
before any other creditor.  The Debtor asserts that since it
doesn't have enough assets to satisfy FCC and TDS' claims,
unsecured creditors would receive nothing in a liquidation.

However, if the 2006 Plan is confirmed, the Debtor says that it
will continue to operate and expects to be a profitable enterprise
that will continue to provide service to its customers and to pay
its employees, suppliers, roaming partners, lessors and all other
creditors in full in the ordinary course of business.

                           Plan Funding

The Debtor tells the Court that payments required under the 2006
Plan will be made from the Reorganized Debtor's cash on hand.
However, if the Reorganized Debtor has insufficient cash or
reserves, the 2006 Plan provides that TDS or its designee will
make the Confirmation Loan in order to advance sufficient funds to
the Reorganized Debtor.  The Confirmation Loan will be combined
with the allowed Secured Claim amounts owed to TDS, and will be
paid in accordance with the 2006 Plan's treatment of TDS' Secured
Claim.  The 2006 Plan also includes the conversion of FCC and TDS'
unsecured claims to equity in the Reorganized Debtor.

                       Treatment of Claims

Under the 2006 Plan, all Administrative Expense Claims, Priority
Claims, and General Unsecured Claims will be paid in full.

The Debtor says that the amount of FCC's Secured Claim will be
determined by the Court and will receive these treatments:

    (1) the Reorganized Debtor will determine no later than the
        eleventh day after the Confirmation Date which Licenses or
        Partial Licenses it elects to retain and which it elects
        to surrender; provided that any election is subject to the
        approval of TDS.  All Licenses and Partial Licenses will
        either be paid or surrendered;

    (2) with respect to each License that the Reorganized Debtor
        elects to retain, it will pay the holder of the claim the
        full amount of that claim, without interest, except as
        provided in Section 506(b) of the Bankruptcy Code, in cash
        on the Payment Date, less a credit for the full amount of
        payments made by the Debtor on account of the License
        before filing the new bankruptcy case;

    (3) with respect to each Partial License that the Reorganized
        Debtor elects to retain, it will pay the claim secured by
        the License from which the Partial License was Partitioned
        or Disaggregated an amount equal to the Retained Pro Rata
        Portion of that claim, without interest, except as
        provided in Section 506(b) of the Bankruptcy Code, in cash
        on the Payment Date, less a credit for the full amount of
        payments made by the Debtor on account of the entire
        License before filing the new bankruptcy case;

    (4) with respect to each License that the Reorganized Debtor
        elects to surrender, the Reorganized Debtor will surrender
        that License on the Payment Date to the holder of the
        claim secured by that License and will receive a credit
        against any claim held by the holder in an amount equal to
        the greater of:

         (a) the current market value of the License as determined
             by the Court, or

         (b) the net original bid price for that License, plus the
             amount of any other payments made by the Debtor on
             account of the License before filing the new
             bankruptcy case;

    (5) with respect to each Partial License that the Reorganized
        Debtor elects to surrender, the Reorganized Debtor will
        surrender that Partial License on the Payment Date to the
        holder of the claim secured by the License from which the
        Partial License was Partitioned or Disaggregated and will
        receive a credit against any claim held by the holder in
        an amount equal to the Surrendered Pro Rata Portion of
        the greater of either:

         (a) the current market value of the License as determined
             by the Court, or

         (b) the net original bid price for that License.

The Debtor tells the Court pursuant to the Plan, upon satisfaction
of FCC's Secured Claims, the Liens in the Licenses securing the
Claims will be released, and the Reorganized Debtor will own any
Licenses or Partial Licenses it has retained free and clear of all
liens, claims or encumbrances.

The Debtor says that if the holder of a FCC Secured Claim makes
the election described in Section 1111(b) of the Bankruptcy Code,
treating its entire Claim as a Secured Claim, then:

    (i) the holder of the claim will retain its Lien to the extent
        of the allowed amount of the Secured Claim, and

   (ii) the Reorganized Debtor will satisfy the Secured Claim with
        respect to which the election is made by investing the
        cash amount that would otherwise be payable, if no Section
        1111(b) election had been made, under Section 1111(a) to
        purchase, for the benefit of the holder, either, at
        the election of the Reorganized Debtor:

         (x) a security representing either an obligation of the
             United States or an obligation guaranteed by an
             agency of the United States and backed by the full
             faith and credit of the United States, or

         (y) an annuity contract issued by an insurance company
             having an "A" rating or better from A.M. Best Company
             or Standard & Poor's.  The terms of such security or
             annuity shall be such that the FCC will receive, in
             no more than 30 years, deferred cash payments
             totaling at least the full amount of its Secured
             Claim, of a value, as of the effective date, of the
             License or Partial License that secures such Secured
             Claim.

TDS will retain it Liens until its Secured Claim is satisfied in
full.  TDS' Secured Claim will receive these treatments:

    (a) TDS' Secured Claim will bear interest from and after the
        effective date at a certain percentage rate.  Documents
        filed with the Court did not state what that percentage
        is;

    (b) for the first three years after the effective date, the
        Reorganized Debtor will pay only accrued interest in six
        semi-annual payments, making the first such payment on the
        first day of the seventh month following the month in
        which the effective date occurs and each of the next five
        interest payments on the first day of each sixth month
        thereafter; and

    (c) beginning on the first day of the forty-second month after
        the month in which the effective date occurs, TDS' Secured
        Claim will be amortized over a term of 84 months, and the
        Reorganized Debtor will make equal semi-annual installment
        payments of principal plus accrued interest, with a
        balloon payment on the first day of the one-hundred-second
        month after the month in which the effective date occurs
        of the entire unpaid balance of principal and accrued
        interest.

Holders of Miscellaneous Secured Claims will retain their Liens
until paid.  On the effective date, the Reorganized Debtor will,
at its election, either:

    * pay the Miscellaneous Secured Claims in full and in cash, or

    * surrender the collateral securing the Claim to the holder,
      in full and complete satisfaction of the Claim.

FCC and TDS' Unsecured Claims will be converted to common shares
of voting stock in the Reorganized Debtor on the effective date.

Equity Interests in the Debtor will be cancelled on the effective
date.

A full-text copy of the Debtor's Disclosure Statement is available
for a fee at:

    http://www.researcharchives.com/bin/download?id=060524231434


                    About Airadigm Communications

Headquartered in Little Chute, Wisconsin, Airadigm Communications,
Inc. -- http://www.eisnteinpcs.com/-- provides local wireless  
phone services through its Einstein PCS wireless networking
technology.  The company filed for chapter 11 protection on July
28, 1999 (Bankr. W.D. Wis. Case No. 99-33500).  The Court
confirmed its plan of reorganization in 2000.

The company filed a new chapter 11 petition on May 8, 2006 (Bankr.
W.D. Wis. Case No. 06-10930).  Kathryn A. Pamenter, Esq., and
Ronald Barliant, Esq., at Goldberg, Kohn, Bell, Black, Rosenbloom
& Moritz, Ltd., represent the Debtor in its new bankruptcy
proceedings.  No Official Committee of Unsecured Creditors has
been appointed in the Debtor's new bankruptcy case.  In its second
bankruptcy filing, the Debtor estimated assets between $10 million
to $50 million and debts of more than $100 million.


ALLIED HOLDINGS: Retirees Oppose Planned Benefit Plan Termination  
-----------------------------------------------------------------
Robert Harrison, Julia Jessup, Tex Flippin, Dean Fuller, Joseph
Collier, Stan Weaver, Ed Salter, Dan Routzahn and 13 other
retirees ask the U.S. Bankruptcy Court for the Northern District
of Georgia to deny Allied Holdings, Inc., and its debtor-
affiliates' request to terminate their Employee Death Benefit Plan
and Retiree Benefit Plan.

The 13 retirees are:

     1. Andrew J. Barlass
     2. Ashley S. Grandy
     3. Barbara and Michael E. Tracy
     4. Carolyn Fotner on behalf of Gloria McFarland
     5. Daniel W. Wright
     6. Forrest A. Perry
     7. John H.D. Williams
     8. John R. Harris
     9. Mary Lee and Robert D. Nordstrom
    10. Philip J. Roberts
    11. Richard E. Kee
    12. Vernon E. Grimes
    13. William M. Lawson, Jr., on behalf of Sadie Vines

According to John A. Christy, Esq., at Schreeder, Wheeler &
Flint, LLP, in Atlanta, Georgia, the Debtors rely heavily on the
fact that they can terminate both Plans in their discretion.

Yet, Section 1114 (e) of the Bankruptcy Code states that
"notwithstanding any other provision . . . the debtor-in-
possession . . . shall timely pay and shall not modify any
retiree benefits."

"It is little more than sophistry to contend, as the Debtors do,
that a termination is not a modification and so Section 1114
does not apply," Mr. Christy asserts.

Mr. Christy tells the Court that the Debtors take inconsistent
positions on the applicably of Section 365 of the Bankruptcy Code
in their request to terminate the benefits.  On the one hand,
they appear to embrace Section 365 by arguing that the business
judgment test is the correct standard to apply when determining
whether they can terminate the benefits at issue.  On the other
hand, they argue in the context of the ipso facto clause that
Section 365 does not apply because the contract in issue is not
an executory contract and so the Debtors benefit from its
inclusion.

"The Debtors can't have it both ways," Mr. Christy tells the
Court.

                   Retirees Pre-funded Benefits

In September 1997, the Debtors' acquired the Automotive Carrier
Division from Ryder System.  Prior to the acquisition, some Ryder
employees had taken early retirement under various Voluntary
Retirement Programs.

The ACD implemented a Prefunded Early Retirement Medical Benefits
Plan on January 1, 1993, Mr. Christy explains.  The employees
retiring early had to participate in this Plan and prefund their
benefits.  Some retirees were even informed that they would enjoy
the same benefits as active employees up to age 65.

Accordingly, the Debtors are not providing the benefits at their
expense because the retirees already paid for them, Mr. Christy
points out.

The Debtors also have at least four retirees who participated in
a Voluntary Early Retirement Program, wherein participants
retired early in return for an obligation from the Debtors to
provide them with health benefits until age 65 when they
qualified for Medicare.  The Retirees assert that they are
entitled to coverage under the existing active employee health
plan, which the Debtors are not seeking to modify.  There is no
basis to terminate their coverage, Mr. Christy contends.

         Debtors Want to Circumvent Section 1114 Process

The Section 1114 process is a substantive process designed to
enable retirees with limited resources and capabilities to have
their rights protected.  The process provides more than
just an opportunity to be heard as the Debtors suggest, Mr.
Christy asserts.

According to Mr. Christy, the Debtors cannot prevail and
demonstrate that retirees "are treated fairly and equitably" and
that the relief they seek is "clearly favored by the balance of
the equities."

Only by circumventing the 1114 process can the Debtors obtain a
windfall of over $875,000 from the cash surrender value of the
life insurance policy supporting the Death Benefit Plan and evade
their obligation to provide medical benefits to people who have
already paid for them and to which they are entitled
to receive not as gift, but because they paid for them, Mr.
Christy adds.

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


ALLIED HOLDINGS: Wants Until October 13 to Remove Civil Actions
---------------------------------------------------------------
Allied Holdings, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Northern District of Georgia to further
extend their removal period deadline through and including
Oct. 13, 2006.

According to Thomas R. Walker, Esq., at Troutman Sanders LLP, in
Atlanta, Georgia, the Debtors have not had the opportunity to
conduct a meaningful review of the numerous civil lawsuits of
which they are parties to, to determine if removal of any of them
is warranted under Section 1452 of the Judiciary Code.

Mr. Walker explains that the Debtors have been focusing on a
myriad of matters attendant to their large and complex Chapter 11
cases.  The Debtors have expended energy rejecting burdensome
leases and executory contracts and addressing matters concerning
organized labor.

The Debtors are also in the process of formulating a program to
deal with the large volume of prepetition civil litigation in
which they are involved, Mr. Walker relates.  The Debtors believe
that this may involve a form of alternate dispute resolution or
other orderly process for resolving claims.

Mr. Walker tells Judge Mullins that the extension will provide
the Debtors an opportunity to make informed decisions concerning
the removal of the causes of action and will assure that the
Debtors do not forfeit any of their rights under Section 1452.
It will also permit them to continue focusing their time and
energy on reorganizing, Mr. Walker adds.

The extension will not prejudice the rights of other parties to
the causes of action, Mr. Walker assures the Court.  In the event
of removal, any party to a removed action may seek to have the
action remanded pursuant to Section 1452.

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


ALPHA-200: Chapter 15 Petition Summary
--------------------------------------
Petitioner: Dr. Oliver Kirschneck
            Kriegerst 3, 70197 Stuttgart
            Tel: 0711-225583-0
            Fax: 0711-225583-20

Debtor: Alpha-200 GmbH & Co. KG
        aka Erwin Behr GmbH & Co. KG
        Behrstrasse 100
        73420 Wendlingen
        Germany

Case No.: 06-46562

Type of Business: The Debtor previously filed for chapter 15
                  protection on April 11, 2006 (Bankr. E.D. Mich.
                  Case No. 06-44520).

Chapter 15 Petition Date: May 24, 2006

Court: Eastern District of Michigan (Detroit)

Judge: Steven W. Rhodes

Petitioner's Counsel: Andrew J. Munro, Esq.
                      Munro and Zack, P.C.
                      363 West Big Beaver Road, Suite 450
                      Troy, Michigan 48084
                      Tel: (248) 928-9000
                      Fax: (248) 928-9001

Estimated Assets: Less than $50,000

Estimated Debts:  $1 Million to $10 Million


ASARCO LLC: Court Okays Tennessee Mines Sale to Glencore for $40MM
------------------------------------------------------------------
As reported in the Troubled Company Reporter on April 24, 2006,
ASARCO LLC sought permission from the U.S. Bankruptcy Court for
the Southern District of Texas in Corpus Christi to:

   (a) sell the Tennessee Mines assets for $40,000,000, to
       Glencore Ltd., subject to higher and better offers; and

   (b) assume and assign certain executory contracts and
       unexpired leases to Glencore.

The Tennessee Mines Assets included in the sale are:

   1. all of Tennessee Mines' major equipment;

   2. all Royalties;

   3. all tangible and intangible personal property assets used
      solely for business;

   4. all inventories, including all raw materials, finished
      goods, component parts and work in process;

   5. all Assumed Contracts, including all of their rights,
      claims and obligations;

   6. all machinery, equipment, vehicles, consumables, supplies,
      spare parts, and tools used solely for business;

   7. all personal property owned or leased by ASARCO;

   8. all real property leases, all patented and unpatented
      claims, leases and water rights;

   9. all permits, registrations, approvals, licenses and
      certifications issued by any government agency;

  10. all business records, including sales data, customer lists,
      accounts, bids, contracts, supplier records, but excluding
      corporate minute books and tax records; and

  11. all authorizations, environmental permits and other
      permits.

Judge Schmidt authorizes ASARCO to:

    (a) sell the assets of the Tennessee Mines to Glencore Ltd.
        free and clear of all liens;

    (b) set aside $3,011,227 of the sales proceed, as adequate
        protection of the alleged Judgment Liens;

    (c) assign the Assumed Contracts to Glencore; and

    (d) pay $150,000 out of the sale proceeds to satisfy in full
        the delinquent property taxes, as of the Closing Date, on
        the Property.

The Court rules that Glencore will not be liable to pay for
obligations accrued before the Closing Date.  Glencore will have
the right to enforce any claims or causes of action accruing to
ASARCO, before the Closing Date, under the Assumed Contracts and
the Young Mine Tailings and Access Easement Agreement, dated
Oct. 24, 2002, between ASARCO and Mossy Creek Mining Company
LLC.

Glencore and ASARCO may agree to designate additional contracts
or leases to be deemed Assumed Contracts provided that the
assumption of the Additional Contracts will not materially
increase the aggregate Cure Amounts owed by ASARCO, and if the
assumption of the Additional Contracts causes material increase
in the aggregate Cure Amounts owed by ASARCO, then Glencore will
pay the Cure Amounts resulting from the assumption of the
Additional Contracts.

On or before the Closing Date, Glencore may designate one or more
affiliates to be the direct transferee of a portion, or all, of
the Assets.  Within 30 days after the Closing Date, Glencore may
assign a portion, or all, of the Assets to any affiliate, which
assignment will be deemed to be as having been a direct transfer
by ASARCO to that assignee at the Closing Date.

The Closing Date will occur on the earliest date after the
satisfaction of each party's conditions to Closing, but will not
be later than June 30, 2006.  In the event a HSR Act filing is
required, the Closing must occur before July 31, 2006.

                 Glencore Responds to Mossy Creek

Glencore Ltd., the buyer of ASARCO LLC's Tennessee Mines Division
Assets, points out that the sale of the Tennessee Mines Assets
will not affect Mossy Creek Mining Company LLC's ownership of the
Young Mine and Tailing, the New Market Mine and certain equipment
located on the New Market Mine Property.

Deirdre B. Ruckman, Esq., in Gardere Wynne Sewell LLP, in Dallas,
Texas, points out that the Debtor seeks to reject its Option
Agreement, dated as of Aug. 13, 2002, with Mossy Creek.  The
Option Agreement provides that Mossy Creek has a right, under
certain circumstances, to purchase the Young Mine property.  The
Rejection Motion seeks to reject the Option Agreement to
invalidate the Purchase Right, rather than to affect Mossy
Creek's rights in the Option Property and under the Easement
Agreement, Ms. Ruckman explains.

Ms. Ruckman adds that Mossy Creek's rights in the Option Property
has already closed.

While Glencore agrees that the Assets will be transferred subject
to Mossy Creek's rights under the Easement Agreement and to
assume the Debtor's obligations under the Easement Agreement, Ms.
Ruckman says, Mossy Creek's objections mischaracterize certain of
its rights and obligations under the Easement Agreement.

Glencore and Mossy Creek are currently engaged in good faith
settlement negotiations to resolve their differences over the
Easement Agreement, Ms. Ruckman relates.

Glencore reserves its right, under the Court-approved Bidding
Procedures, to file and serve a Supplemental Objection in respect
of the conduct of the Auction.

Glencore asked the Court to approve the Sale Motion and overrule
all objections to it.

Headquartered in Tucson, Arizona, ASARCO LLC --
http://www.asarco.com/-- is an integrated copper mining,  
smelting and refining company.  Grupo Mexico S.A. de C.V. is
ASARCO's ultimate parent.  The Company filed for chapter 11
protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207).
James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A.
Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter
Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq.,
at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor
in its restructuring efforts.  Lehman Brothers Inc. provides the
ASARCO with financial advisory services and investment banking
services.  Paul M. Singer, Esq., James C. McCarroll, Esq., and
Derek J. Baker, Esq., at Reed Smith LLP give legal advice to
the Official Committee of Unsecured Creditors and David J.
Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee.  When the Debtor filed for protection
from its creditors, it listed $600 million in total assets and
$1 billion in total debts.

The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521
through 05-20525).  They are Lac d'Amiante Du Quebec Ltee, CAPCO
Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos of Quebec, Ltd., and LAQ Canada, Ltd.  Details about
their asbestos-driven chapter 11 filings have appeared in the
Troubled Company Reporter since Apr. 18, 2005.

Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No.
05-21346) also filed for chapter 11 protection, and ASARCO has
asked that the three subsidiary cases be jointly administered
with its chapter 11 case.  On Oct. 24, 2005, Encycle/Texas' case
was converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee.  Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7
Trustee. (ASARCO Bankruptcy News, Issue No. 22; Bankruptcy
Creditors' Service, Inc., 215/945-7000).


ASARCO LLC: Wants Until Oct. 6 to File Plan of Reorganization
-------------------------------------------------------------
ASARCO LLC and its debtor-affiliates ask the U.S. Bankruptcy Court
for the Southern District of Texas in Corpus Christi to further
extend their exclusive period to file a plan of reorganization
until Oct. 6, 2006, and their exclusive period to solicit
acceptances of that plan until Dec. 8, 2006.

James R. Prince, Esq., at Baker Botts LLP, in Dallas, Texas,
relates that ASARCO LLC and some of its non-operating
subsidiaries are subject to actual and potential environmental
remediation obligations at numerous sites around the United
States.

In addition, ASARCO and its Asbestos Subsidiaries are burdened by
more than 95,000 asbestos-related personal injury claims.  ASARCO
also has $490,000,000 in funded bond debt and lease obligations.

Furthermore, Mr. Prince says, the Debtors' Chapter 11 cases
involve unique labor issues, adding complexity to their
bankruptcy cases.  Because of the labor strike, the
reorganization process was stalled.  The Debtors also needed to
obtain DIP facility and address the problems with their Board of
Directors' independence.

A change in ASARCO LLC's corporate governance in December 2005
also warrants an extension of the exclusive periods, Mr. Prince
asserts.  Each of ASARCO's three directors is new.  The Board and
senior management have addressed operational, financial and legal
issues.  However, Mr. Prince says, they have given significant
attention to financial reporting and budgeting, capital
expenditures and increasing production, cost reduction, employee
morale, the loss of skilled technical, supervisory, operating and
corporate personnel and recruiting to fill those vacancies,
internal controls, the annual audit process, and tax and
bankruptcy reporting and compliance.

Having made progress in establishing a solid financial foundation
for their operations, the Debtors are now able to turn their
attention to resolving their environmental and asbestos
liabilities, addressing labor negotiations for future time
periods, and developing a comprehensive strategy to address both
their contingent and non-contingent debts in a viable plan of
reorganization.

According to Mr. Prince, a further extension of the exclusive
periods will provide the Debtors with additional time to
quantify, either by estimation or negotiation, contingent claims
and move forward with presenting a confirmable Chapter 11 plan
for the benefit of all creditors and shareholders.

During the extension period, Mr. Prince says, the Debtors will
continue their efforts to resolve various cases and controversies
with their various creditor constituencies, and to work with all
deliberate speed in resolving issues necessary to formulate a
confirmable chapter 11 plan in an orderly manner, which will, in
the Debtors' opinion, be of substantial benefit to their estates
and creditors.

Headquartered in Tucson, Arizona, ASARCO LLC --
http://www.asarco.com/-- is an integrated copper mining,  
smelting and refining company.  Grupo Mexico S.A. de C.V. is
ASARCO's ultimate parent.  The Company filed for chapter 11
protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207).
James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A.
Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter
Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq.,
at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor
in its restructuring efforts.  Lehman Brothers Inc. provides the
ASARCO with financial advisory services and investment banking
services.  Paul M. Singer, Esq., James C. McCarroll, Esq., and
Derek J. Baker, Esq., at Reed Smith LLP give legal advice to
the Official Committee of Unsecured Creditors and David J.
Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee.  When the Debtor filed for protection
from its creditors, it listed $600 million in total assets and
$1 billion in total debts.

The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521
through 05-20525).  They are Lac d'Amiante Du Quebec Ltee, CAPCO
Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos of Quebec, Ltd., and LAQ Canada, Ltd.  Details about
their asbestos-driven chapter 11 filings have appeared in the
Troubled Company Reporter since Apr. 18, 2005.

Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No.
05-21346) also filed for chapter 11 protection, and ASARCO has
asked that the three subsidiary cases be jointly administered
with its chapter 11 case.  On Oct. 24, 2005, Encycle/Texas' case
was converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee.  Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7
Trustee. (ASARCO Bankruptcy News, Issue No. 22; Bankruptcy
Creditors' Service, Inc., 215/945-7000).


ASARCO LLC: Has Until Sept. 15 to Make Lease-Related Decisions
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas in
Corpus Christi extended, through Sept. 15, 2006, ASARCO LLC and
its debtor-affiliates' time to decide whether to assume, assume
and assign or reject non-residential real property leases.

As reported in the Troubled Company Reporter on April 24, 2006,
the Debtors are parties to numerous non-residential real property
leases and are in the process of determining what Leases to assume
or reject.

The shrinking number of salaried employees, coupled with many
crises faced by ASARCO in the early stages of its bankruptcy --
including a labor strike, a severe liquidity crisis, the need to
obtain DIP financing, and the necessity of quickly moving to
restore operations and production following the strike --
required its employees to focus on only the most critical aspects
of day-to-day operations, Judith W. Ross, Esq., at Baker Botts
LLP, in Dallas, Texas, told the Court.

Although ASARCO's employees have not completed the evaluation of
all Leases, Ms. Ross relates that ASARCO has attempted to make
progress with certain key landlords toward reaching agreements
concerning ASARCO's obligations under the Leases.

Headquartered in Tucson, Arizona, ASARCO LLC --
http://www.asarco.com/-- is an integrated copper mining,  
smelting and refining company.  Grupo Mexico S.A. de C.V. is
ASARCO's ultimate parent.  The Company filed for chapter 11
protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207).
James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A.
Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter
Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq.,
at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor
in its restructuring efforts.  Lehman Brothers Inc. provides the
ASARCO with financial advisory services and investment banking
services.  Paul M. Singer, Esq., James C. McCarroll, Esq., and
Derek J. Baker, Esq., at Reed Smith LLP give legal advice to
the Official Committee of Unsecured Creditors and David J.
Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee.  When the Debtor filed for protection
from its creditors, it listed $600 million in total assets and
$1 billion in total debts.

The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521
through 05-20525).  They are Lac d'Amiante Du Quebec Ltee, CAPCO
Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos of Quebec, Ltd., and LAQ Canada, Ltd.  Details about
their asbestos-driven chapter 11 filings have appeared in the
Troubled Company Reporter since Apr. 18, 2005.

Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No.
05-21346) also filed for chapter 11 protection, and ASARCO has
asked that the three subsidiary cases be jointly administered
with its chapter 11 case.  On Oct. 24, 2005, Encycle/Texas' case
was converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee.  Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7
Trustee. (ASARCO Bankruptcy News, Issue No. 22; Bankruptcy
Creditors' Service, Inc., 215/945-7000).


ASSET BACKED: S&P Downgrades Class B Certificates' Rating to BB
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on the class
B certificate from Asset Backed Securities Corp. Home Equity Loan
Trust Series 2002-HE2 to 'BB' from 'BBB'.  Concurrently, the
rating is placed on CreditWatch with negative implications.
     
The lowered rating and CreditWatch placement reflect excessive
realized losses that have continuously reduced
overcollateralization.  As of the May 2006 distribution date,
cumulative realized losses represented 2.42% of the original pool
balance, while severely delinquent loans (90-plus days,
foreclosure, and REO) represented 18.98% of the current pool
balance.

Over the past six remittance periods, realized losses have
outpaced excess interest by approximately 2.50x.  Current
overcollateralization is $3,078,707, which is below the target
balance of $5,165,575 by approximately 40%.
     
Standard & Poor's will continue to monitor the performance of this
transaction.  If realized losses continue to outpace excess
interest, and the level of overcollateralization continues to
decline, the rating agency will take further negative rating
actions.

Conversely, if realized losses no longer outpace monthly excess
interest, and the level of overcollateralization rebuilds to its
target balance, the rating on this class will be affirmed and
removed from CreditWatch.  
     
Credit support for this transaction is provided through a
combination of:

   * excess spread,
   * overcollateralization, and
   * subordination.  

The underlying collateral consists of closed-end, first-lien,
fixed- and adjustable-rate mortgage loans with original terms to
maturity of no more than 30 years.
     
Rating Lowered And Placed On Creditwatch Negative:
     
Asset Backed Securities Corp. Home Equity Loan Trust
   
                             Rating

           Series      Class         To          From
           ------      -----         --          ----
          2002-HE2       B      BB/Watch Neg.    BBB
   
Other Outstanding Rating:
   
Asset Backed Securities Corp. Home Equity Loan Trust
   
                   Series      Class   Rating
                   ------      -----   ------
                  2002-HE2      M2       A


BANC OF AMERICA: Fitch Affirms $5.9 Mil. Class O Certs.' B- Rating
------------------------------------------------------------------
Fitch upgraded Banc of America Commercial Mortgage Inc.'s
commercial mortgage pass-through certificates, series 2001-1 as:

   -- $35.6 million class B to 'AAA' from 'AA+'
   -- $21.3 million class C to 'AAA' from 'AA-'
   -- $19 million class D to 'AA+' from 'A'
   -- $9.5 million class E to 'AA' from 'A-'
   -- $9.5 million class F to 'A+' from 'BBB+'
   -- $19 million class G to 'A-' from 'BBB'
   -- $14.2 million class H to 'BBB' from 'BBB-'
   -- $13.3 million class J to 'BBB-' from 'BB+'

In addition, Fitch affirms these classes:

   -- $513.6 million class A-2 at 'AAA'
   -- $48.7 million class A-2F at 'AAA'
   -- Interest-only class X at 'AAA'
   -- $23.5 million class K at 'BB'
   -- $2.1 million class L at 'BB-'
   -- $5.5 million class M at 'B+'
   -- $6.8 million class N at 'B'
   -- $5.9 million class O at 'B-'

Fitch does not rate the $5.1 million class P certificates.  Class
A-1 has been paid in full.

The rating upgrades reflect increased subordination levels due to
payoffs and scheduled amortization, as well as additional
defeasance (4.3%) since Fitch's last rating action.  As of the May
2006 distribution date, the pool's aggregate balance has decreased
20.6% to $752.6 million from $948.1 million at issuance.  Thirteen
loans (7.4%) have defeased since issuance.

Currently, six assets (2.5%) are in special servicing, two (0.2%)
of which are real estate-owned.  The largest specially serviced
loan (1.4%) is a multi-family property in Lindenwold, New Jersey,
and is current.  The loan transferred to the special servicer in
March 2006 due to imminent default.  The property is located in a
depressed suburb of Philadelphia and, as a result, has been
experiencing occupancy problems.  The special servicer is
assessing its options with regard to the workout of this loan.

The second largest specially serviced loan (0.7%) is a retail
shopping center in Arabi, Louisiana, and is 90+ days delinquent.
The borrower and the special servicer continue to negotiate with
the insurance company over payment for property damages sustained
during Hurricanes Katrina and Rita.

Fitch expects that projected losses on the specially serviced
assets will be absorbed by the nonrated class P.

Fitch reviewed the 315 Park Avenue South loan (11.6%), the only
credit assessed loan in the transaction, and affirms its
investment grade credit assessment based on stable performance.

Occupancy improved to 92.4% as of December 2005 from 87.7% as of
December 2004. Credit Suisse First Boston Corp. currently occupies
74% of the space and is committed to occupying 89% by year-end
2010, continuing through 2017.  CSFB is rated 'AA-' by Fitch.


BAREFOOT RESORT: Plan Confirmation Hearing Set for June 14
----------------------------------------------------------
The Hon. John E. Waites of the U.S. Bankruptcy Court for the
District of New Jersey approved the Disclosure Statement
explaining the Plan of Reorganization filed by Barefoot Resort
Yacht Club Villas, LLC.

Judge Waites determined that the Disclosure Statement contains
adequate information -- the right amount of the right kind -- for
creditors to make informed decisions when the Debtor asks them to
vote to accept the Plan.

The Court will convene a hearing at 9:00 a.m. on June 14, 2006, to
consider confirmation of the Debtor's Plan of Reorganization.

                      Overview of the Plan

The Debtor says that its plan is a liquidating plan and allows for
the payment of all creditors in full.  Upon confirmation, the
Debtor expects that all condominium sales will have closed.

                      Treatment of Claims

Under the plan, administrative claims will be paid in full.

The National Bank of South Carolina holds a $48 million claim
against the Debtor.  Its claims is secured by a first mortgage on
the Debtor's condominium assets.  The Debtor says that as the sale
of each condominium unit closes, the net proceeds will be used to
pay the principal and interest, including postpetition interest,
owed on the NBSC Loan.

The Coastal Federal Bank holds a secured claim of $540,000.  The
Debtor tells the Court that Coastal Federal has agreed to
subordinate its mortgage to the liens securing the NBSC loan.  
Coastal Federal's claim will be paid in full after payment of the
principal and interest of the NBSC Loan and before payment of
NBSC's remaining claims.

Dargan Construction's unsecured claim will be paid in full.
However, the plan explains, "if the NBSC loan is insufficient to
pay Dargan's claim in full, then Dargan's allowed claim will be
paid within 30 days after the Court enters an order confirming the
Debtor's plan but prior to any subsequent class."

The Debtor tells the Court that Drake Development Company USA,
Inc., is the sole member of the Debtor.  The Debtor says that for
each condominium unit sold, Drake Development is owed a commission
pursuant to the Contract of Sale.  Upon closing of the sale of all
145 units, Drake Development's fees will total $3,849,562.  The
Debtor says that Drake will be paid in full within 30 days after
the Court enters an order confirming its Plan.

Sally Stowe Interiors' $1,413,855 unsecured claim will be paid in
full.

These General Unsecured Creditors will be paid in full:

    (1) Grand Strand Disposal;
    (2) Horry Electric Cooperative;
    (3) Jenkins Hancock and Sides;
    (4) Lewis & Babcock;
    (5) Robert Young, P.A.;
    (6) Rogers Townsend Thomas; and
    (7) SW Associates,

The Debtor obtained additional equity financing from W. Russell
Drake in the amount of $1,040,000.  Pursuant to the Contract of
Sale, the cost and interest associated with this loan will be
repaid before the distribution of net cash flow, as defined in the
Contract of Sale.  The Debtor says that W. Russell Drake's claim
will be paid in full.

                   Premier Holdings' Claim

The Debtor tells the Court that under the Contract of Sale, the
Debtor will enter into a contingent interest note giving Premier
Holdings of South Carolina, LLC, a 50% interest in the proceeds of
the sale remaining after payment of all costs associated with the
cost of the phase, including, but not limited to, taxes,
construction loan cost and interest, equity loan cost and
interest, closing cost and attorney fees, real estate commissions,
construction, architectural and engineering fees and cost and
discounts or incentives.

The Debtor tells the Court that the note is subject to offsets
owed by Premier to the Debtor due to its filing of the lis pendens
which caused damages to the Debtor.  The Debtor projects total
costs to be $1 million.  The Debtor discloses that, in the
alternative, if the Court determines or the parties agree there
will be no offsets against the note, the 50% payment to Premier
will be used to pay Premier's mortgage debt to Coastal Federal.
The Debtor will hold in escrow $200,000 of the proceeds of the
sale for three years in the event of any claims that may arise
against the Debtor.  The Debtor says that if there are no claims
against the Debtor after the third year or no offset was done,
$100,000 of the escrowed amount will be paid to Premier.

                     About Barefoot Resort

Headquartered in Columbia, South Carolina, Barefoot Resort Yacht
Club Villas, LLC -- http://www.drakedevelopment.com/-- operates a  
resort located in North Myrtle Beach, South Carolina.  Drake
Development Company USA owns Barefoot Resort.  The Debtor filed
for chapter 11 protection on Feb. 21, 2006 (Bankr. D. S.C. Case
No. 06-00640).  William McCarthy, Jr., Esq., and Daniel J.
Reynolds, Jr., Esq., at Robinson, Barton, McCarthy, Calloway &
Johnson, P.A., represent the Debtor.  No Official Committee of
Unsecured Creditors has been appointed in the Debtor's case.  When
the Debtor filed for protection from its creditors, it listed
$69,003,578 in assets and $60,980,655 in debts.


BEAR STEARNS: DBRS Places Low-B Rating on $8.6 Million NIM Notes
----------------------------------------------------------------
Dominion Bond Rating Service assigned these ratings to the group V
and group VI NIM Notes, Series 2006-17, issued by Bear Stearns
Structured Products Inc.  NIM Trust 2006-17.

  * $12.6 million, NIM Notes, Series 2006-17, Class V-A-1 New
    Rating A (low)
  * $22.0 million, NIM Notes, Series 2006-17, Class VI-A-1 New
    Rating A (low)
  * $1.7 million, NIM Notes, Series 2006-17, Class V-A-2 New
    Rating BBB (low)
  * 2.9 million, NIM Notes, Series 2006-17, Class VI-A-2 New
    Rating BBB (low)
  * $625 thousand, NIM Notes, Series 2006-17, Class V-A-3 New
    Rating BB (high)
  * $1.2 million, NIM Notes, Series 2006-17, Class VI-A-3 New
    Rating BB (high)
  * 3.1 million, NIM Notes, Series 2006-17, Class V-A-4 New
    Rating B
  * 5.5 million, NIM Notes, Series 2006-17, Class VI-A-4 New
    Rating B --  May 24, 2006

The NIM Notes are backed by a 100% interest in Classes I-C and II-
C Certificates issued by SACO I Trust, 2006-5.  The underlying
Class I-C and II-C Certificates will be entitled to receive the
excess cash flows as well as prepayment charges, if any, generated
by the group I and group II Mortgage Loans each month after
payment of all the required distributions.  The NIM Notes will
also be entitled to the benefits of the Underlying Swap Agreements
with Bear Stearns Financial Products Inc.

Payments on the group V and group VI NIM Notes will be made on the
second business day after the 25th of each month, commencing in
May 2006. Interest and principal payments will be made
concurrently to the group V and group VI noteholders.

The distribution of interest and principal within each group will
be made sequentially to noteholders of Classes V-A-1 through V-A-4
from group V and noteholders of Classes VI-A-1 through VI-A-4 from
group VI until the principal balance of each such class has been
paid to zero.  Any remaining amounts will be paid in full to the
holders of the Class V-C and Class VI-C Notes issued by the NIM
Trust.  The Classes V-C and VI-C Notes as well as groups I through
IV NIM Notes are not rated by DBRS.

The mortgage loans in the Underlying Trust were originated or
acquired by various originators, including Aames Capital
Corporation, SouthStar Funding, LLC, and First Horizon Home Loan
Corporation.  All loans are fixed-rate, second-lien mortgage
loans, which are subordinate to the senior-lien mortgage loans on
the respective properties.


BRIDGE INFORMATION: 8th Cir. Tells Gulfcoast to Return $2,155,000
-----------------------------------------------------------------
Scott P. Peltz, the court-appointed plan administrator in the
jointly administered chapter 11 bankruptcy cases of Bridge
Information Systems, Inc., and certain of its affiliates, filed an
adversary proceeding against Gulfcoast Workstation Corporation,
seeking to avoid more than $2.155 million in alleged preferential
transfers pursuant to 11 U.S.C. Sec. 547.  

After a trial in the bankruptcy court, the Honorable David P.
McDonald found that the payments were preferential transfers and
that Gulfcoast failed to establish a valid defense to the
avoidance of the payments (See 311 B.R. 774).  Gulfcoast appealed
to the U.S. District Court, lost, and appealed again to the U.S.
Court of Appeals for the Eighth Circuit.  The Eighth Circuit says
the payments were preferential and must be returned to Bridge's
estate.  

Gulfcoast has asked the three courts to agree that the use of
remittance advice notations to direct its application of Chapter
11 debtor's payments to specific invoices was ordinary in the
computer resale industry, as required to establish the "ordinary
course" defense to preference avoidance.  

The Eighth Circuit's decision, reported at 2006 WL 1348556,
explains that although Gulfcoast's witnesses offered testimony
about (i) its payment relationship with the debtor, (ii) its
relationship with other customers, and (iii) industry-wide
practices related to payment terms and delinquency, this did not
constitute objective evidence of the industry-wide use of
remittance advice notations to direct the application of payments
to specific invoices.  Even if other terms of the debtor-supplier
relationship were objectively ordinary, the three-judge appellate
panel said, this did not mitigate the fact that a key element of
that relationship was not.

Bridge Information Systems Inc. filed a voluntary petition for
bankruptcy under Chapter 11 of the U.S. Bankruptcy Code on Feb.
15, 2001 (Bankr. E.D. Mo. Case Nos. 01-41593-293 through 01-41614-
293, inclusive).  On February 13, 2002, Judge McDonald confirmed a
chapter 11 plan of liquidation, which, among other items,
transferred ownership of the company's assets to the holders of
Bridge's secured creditors.  Thomas J. Moloney, Esq., Seth A.
Stuhl, Esq., and Kurt A. Mayr, Esq., at Cleary, Gottlieb, Steen &
Hamilton in New York served as lead counsel to Bridge in its
chapter 11 cases.  Gregory D. Willard, Esq., Lloyd A. Palans,
Esq., and David M. Unseth, Esq., at Bryan Cave LLP in St. Louis,
served as local counsel.


BUEHLER FOODS: Wants June 12 as Administrative Claims Bar Date
--------------------------------------------------------------
Reorganized Debtors Buehler Foods, Inc., Buehler, LLC, and Buehler
of Carolinas, LLC, and Liquidating Debtor, Buehler of Kentucky,
LLC, ask the U.S. Bankruptcy Court for the Southern District of
Indiana in Evansville to set June 12, 2006 as the bar date for
requests for payment of administrative expense claims arising
after May 5, 2005 in connection with their bankruptcy cases.

Jeffrey J. Graham, Esq., at Sommer Barnard Attorneys, PC, tells
the Court that the Debtors need to finally determine the amount
and number of their administrative claims so that they can
determine what administrative claims need responses and to prepare
to make distribution on allowed administrative expense claims.

BFI's, Carolinas' and LLC's amended plans of reorganization and
BOK's amended plan of liquidation were confirmed on March 29,
2006.  The Plans became effective on April 9, 2006.

As reported in the Troubled Company Reporter on March 20, 2006,
the Reorganized Debtors and BOK submitted separate Reorganization
Plans and Disclosure Statements on Feb. 15, 2006.  Their
individual plans provide for the allocation of payments with
regard to their $6 million joint debtor-in-possession obligation
to Harris N.A. and a consortium of lenders as well as other
payments to their respective creditors.

A copy of Buehler of Carolinas, LLC's Plan of Reorganization is
available for free at http://researcharchives.com/t/s?9dc

A copy of Buehler of Buehler Foods, Inc.'s Plan of Reorganization
is available for free at http://researcharchives.com/t/s?9dd

A copy of Buehler, LLC's Plan of Reorganization is available for
free at http://researcharchives.com/t/s?9de

A copy of Buehler of Kentucky, LLC's Plan of Liquidation is
available for free at http://researcharchives.com/t/s?9df

Headquartered in Jasper, Indiana, Buehler Foods, Inc., owns and
operates grocery stores under the BUY LOW and Save-A-Lot banners
in Illinois, Indiana, and Kentucky, North Carolina, and Virginia.
The company also sells gas at about a dozen locations.  In 2004
Buehler Foods acquired 16 Winn-Dixie stores in Louisville,
Kentucky, and renamed them Buehler's Markets.  Founded in 1940,
the company is still run by the Buehler family.  The Company,
along with its three affiliates, filed for chapter 11 protection
on May 5, 2005 (Bankr. S.D. Ind. Case No. 05-70961).  Jerald I.
Ancel, Esq., at Sommer Barnard Attorneys, PC, represents the
Debtors in their restructuring efforts.  Scott L. Hazan, Esq., at
Otterbourg, Steindler, Houston & Rosen, P.C., represents the
Official Committee of Unsecured Creditors.  When the Debtor filed
for protection from its creditors, it estimated assets between
$10 million to $50 million and debts between $50 million to
$100 million.  The Debtors' separate  plans of reorganization and
liquidation were confirmed on March 29, 2006.  The Plans became
effective on April 9, 2006.


C-BASS: Moody's Assigns Ba1 Rating on Class B-4 Certificates
------------------------------------------------------------
Moody's Investors Service assigned a Aaa rating to the senior
certificates issued by C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2006-RP1, and ratings ranging from Aa2 to Ba1
to the subordinate certificates in the deal.

The securitization is backed by Credit-Based Asset Servicing and
Securitization LLC acquired adjustable-rate and fixed-rate re-
performing loans.  Therefore the credit quality of this seasoned
mortgage pool was weaker than typical newly originated mortgage
loans.  The ratings are based primarily on the credit quality of
the loans, and on the protection from subordination, excess
spread, overcollateralization, and an interest rate swap
agreement. Moody's expects collateral losses to range from 6.70%
to 7.20%.

Litton Loan Servicing LP will service the loans.  Moody's assigned
Litton its top servicer quality rating both as a primary servicer
of subprime loans and as a special servicer.

The Complete Rating Actions:

C-BASS Mortgage Loan Asset-Backed Certificates, Series 2006-RP1

   * Cl. A-1, Assigned Aaa
   * Cl. A-2, Assigned Aaa
   * Cl. M-1, Assigned Aa2
   * Cl. M-2, Assigned A2
   * Cl. M-3, Assigned A3
   * Cl. B-1, Assigned Baa1
   * Cl. B-2, Assigned Baa2
   * Cl. B-3, Assigned Baa3
   * Cl. B-4, Assigned Ba1


C.M.E. INVESTMENT: Voluntary Chapter 11 Case Summary
----------------------------------------------------
Debtor: C.M.E. Investment Co.
        56568 North Bay Drive
        Chesterfield, Michigan 48051

Bankruptcy Case No.: 06-46648

Chapter 11 Petition Date: May 25, 2006

Court: Eastern District of Michigan (Detroit)

Judge: Thomas J. Tucker

Debtor's Counsel: Gerald L. Decker, Esq.
                  19900 East Ten Mile Road, Suite 102
                  St. Clair Shores, Michigan 48080
                  Tel: (586) 777-1200

Estimated Assets: Less than $50,000

Estimated Debts:  $1 Million to $10 Million

The Debtor does not have any creditors who are not insiders.


CABLEVISION SYSTEMS: Posts $58.9 Mil. Net Loss in 2006 1st Quarter
------------------------------------------------------------------
Cablevision Systems Corporation filed its first quarter financial
statements for the three months ended March 31, 2006, with the
Securities and Exchange Commission on May 10, 2006.

The Company reported a $58,932,000 net loss on $1,409,272,000 of
net revenues for the three months ended March 31, 2006.

At March 31, 2006, the Company's balance sheet showed
$12,832,054,000 in total assets and $15,349,496 in total
liabilities, resulting in a $2,517,442,000 stockholders' deficit.

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?9c0

Headquartered in Manhattan, Cablevision Systems Corporation
(NYSE: CVC) -- http://www.cablevision.com/-- is one of the  
nation's leading telecommunications and entertainment companies.  
Cablevision currently operates the nation's single biggest cable
cluster, serving 3 million households in the New York metropolitan
area.  Its portfolio of operations ranges from high-speed internet
access, robust digital cable television as well as advanced
digital telephone services, professional sports teams, world-
renowned entertainment venues and national television program
networks.

At Mar. 31, 2006, Cablevision System Corp.'s balance sheet showed
a $2,517,442,000 stockholders' deficit compared to a
$2,468,766,000 deficit at Dec. 31, 2005.

                           *     *     *

As reported in the Troubled Company Reporter on April 12, 2006,
Dominion Bond Rating Service confirmed the ratings of CSC
Holdings, Inc., at BB (low), B (high), and B, and its parent,
Cablevision Systems Corporation, at B (low).  The trends are
Stable.  With this action, the ratings are removed from "Under
Review with Developing Implications".

As reported in the Troubled Company Reporter on March 22, 2006,
Fitch Ratings assigned a 'BB' rating and a Recovery Rating of
'RR1' to the $2.4 billion senior secured bank facility entered
into by CSC Holdings, Inc.  CSC is a wholly owned subsidiary of
Cablevision Systems Corporation.  Fitch also assigned
Cablevision's Issuer Default Rating at 'B+', and senior unsecured
debt issue rating at 'CCC+' and recovery rating at 'RR6'.  CSC's
IDR is affirmed at 'B+', while the Rating Outlook for all CSC and
Cablevision ratings remains Negative.

As reported in the Troubled Company Reporter on March 22, 2006,
Moody's Investors Service assigned a Ba3 rating to the $3.5
billion senior secured term loan of CSC Holdings, Inc., a wholly
owned subsidiary of Cablevision Systems Corporation.  Moody's also
lowered the SGL rating to SGL-2 from SGL-1, and affirmed all other
ratings and the stable outlook.  Moody's plans to withdraw the Ba3
rating assigned to the Term Loan A-2 following its repayment.

As reported in the Troubled Company Reporter on March 1, 2006,
Standard & Poor's Ratings Services raised its selected ratings
on Cablevision Systems Corp. and related entities, including
the corporate credit rating to 'BB' from 'BB-'; and the short term
rating to 'B-1' from 'B-2'.  All other ratings also were raised,
except CSC Holdings Inc.'s affirmed 'BB' senior secured bank loan
and 'B+' senior unsecured debt ratings.


CALPINE CORP: Clear Lake, Celanese & Old World Deal Get Court's OK
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
approved a settlement among Clear Lake Cogeneration, L.P., a
debtor-affiliate of Calpine Corporation, Celanese Ltd. and Old
World Industries I, Ltd. relating to a Steam Purchase and Sale
Agreement.

Clear Lake owns and operates a 344-megawatt combined cycle
cogeneration plant in Pasadena, Texas.  The Clear Lake Facility
consists of power generation equipment as well as four boilers
used to generate steam.

Bennett L. Spiegel, Esq., at Kirkland & Ellis LLP, in Los
Angeles, California, relates that as a result of existing market
conditions and the Debtors' burdensome obligations under an
existing steam agreement with Celanese and Old World, the Debtors
cannot operate the Clear Lake Facility at a profit.

Mr. Spiegel explains that under the present Steam Purchase and
Sale Agreement:

   -- Clear Lake is obligated to sell steam to Celanese and Old
      World at a price that has proven to be significantly below
      the aggregate cost that Clear Lake incurs to generate the
      steam; and

   -- Clear Lake, to comply with the "reliability requirements,"
      must operate its power generation equipment to supply
      back-up steam capacity to Celanese and Old World,
      resulting in substantial financial losses during periods
      when the revenue associated with power sales does not
      cover operating costs.

The Debtors negotiated a short-term, interim agreement with
Celanese and Old World pursuant to which Celanese and Old World
will cover significant portions of Clear Lake's operating costs.  
This agreement allows the Debtors to operate the Clear Lake
Facility at or near a general break-even level.  However, Mr.
Spiegel points out that both parties do not favor operating
indefinitely under the Letter Agreement because:

   -- it is costly to Celanese and Old World;

   -- it does not provide the steam reliability Celanese and Old
      World require; and

   -- it does not generate a profit for the Debtors.

Celanese and Old World had advised the Debtors that they are
evaluating their options to pursue alternative sources for the
supply of their steam requirements, including the purchase and
operation of replacement boilers.

The Debtors engaged in several months of good faith, arm's-length
negotiations with Celanese and Old World to determine whether
they could reach a comprehensive agreement regarding the parties'
ongoing relationship that would allow the Debtors to continue to
operate the Clear Lake Facility, and to do so at a profit.  

The parties have arrived at a settlement as a product of those
negotiations.

The parties agree that:

   (1) The Current Steam Purchase Agreement will be terminated
       and the parties will enter into an Economy Steam Agreement
       and a Service Agreement.  The Economy Steam Agreement:

       a. removes the existing steam-related reliability
          requirements thereby allowing the Debtors to run the
          Clear Lake Facility only when power sales would be
          profitable;

       b. permits, but does not require, the Debtors to provide
          steam to the Claimants on a "put" basis;

       c. increases the price paid for steam supplied to the
          Celanese and Old World; and

       d. shortens the steam supply period from 12 remaining
          years under the Current Steam Purchase Agreement to
          10 years.

       The related Service Agreement provides that Celanese will
       provide water and waste water services to Clear Lake for
       no charge or essentially at Celanese's cost during the
       term of the Economy Steam Agreement and thereafter at
       market rates.  Clear Lake will allow Celanese to use its
       back up transformer if available and provide Celanese a
       right of first refusal on back-up transformer if Clear
       Lake intends to sell it to a third party.

   (2) The existing Ground Lease between Celanese and Clear Lake
       will be amended and assumed.  The Ground Lease will be
       amended to:

       a. lengthen the period for the Debtors' ability to quit
          the leased premises after the end of the Ground Lease
          term;

       b. lengthen the remaining term of the Ground Lease from 12
          years to 15 years;

       c. grant Clear Lake the right to use certain electric
          transmission and distribution equipment within the
          landlord's property as an incident of tenancy;

       d. modify the description of the Demised Premises to
          reflect the assignment of the Leasehold Interests,
          which include the Boiler Tract Interest and the Boiler
          Infrastructure Tracts Interests; and

       e. grant certain easements to Debtor on, over and across
          the Leasehold Interests conveyed to Celanese.

   (3) Clear Lake will sell the assets to Celanese and Old World,
       including auxiliary boilers, associated equipment and
       piping, and leasehold interests.

                       About Calpine Corp.

Headquartered in San Jose, California, Calpine Corporation --
http://www.calpine.com/-- supplies customers and communities with        
electricity from clean, efficient, natural gas-fired and
geothermal power plants.  Calpine owns, leases and operates
integrated systems of plants in 21 U.S. states and in three
Canadian provinces.  Its customized products and services include
wholesale and retail electricity, gas turbine components and
services, energy management and a wide range of power plant
engineering, construction and maintenance and operational
services.  The Company filed for chapter 11 protection on Dec. 20,
2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200).  Richard M. Cieri,
Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert
G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in
their restructuring efforts.  Miller Buckfire & Co. serves as the
Debtors' financial advisor.  Michael S. Stamer, Esq., at Akin
Gump Strauss Hauer & Feld LLP, represents the Official Committee
of Unsecured Creditors.  Lazard Freres & Co. LLC serves as the
Committee's financial advisor.  As of Dec. 19, 2005, the Debtors
listed $26,628,755,663 in total assets and $22,535,577,121 in
total liabilities.  (Calpine Bankruptcy News, Issue No. 16;
Bankruptcy Creditors' Service, Inc., 215/945-7000)


CALPINE CORP: Court OKs Dominion's Pact with Texas Cogeneration
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
approves a settlement among Texas Cogeneration Company, a debtor-
affiliate of Calpine Corporation, Dominion Cogen, Inc., and
Dominion Energy, Inc.

Texas Cogeneration owns all of the equity of Clear Lake
Cogeneration, L.P., and Texas City Cogeneration, L.P.  Clear Lake
operates a 344-megawatt combined cycle cogeneration plant in
Pasadena, Texas, while Texas City Cogeneration operates a 457-
megawatt combined cycle cogeneration plant in Texas City.

Prior to March 31, 1998, Texas Cogeneration was 50% owned by
Calpine TCCL Holdings, Inc., and 50% by Dominion Cogen.  Through
a Stock Purchase and Redemption Agreement, Texas Cogeneration
redeemed all of Dominion's equity interest.

Bennett L. Spiegel, Esq., at Kirkland & Ellis LLP, in Los
Angeles, California, tells the Court that Texas Cogeneration was
required to make redemption payments to Dominion over time.  The
Redemption Payments were calculated based on the revenues of the
Clear Lake Facility and the Texas City Facility.

On March 31, 1998, the initial balance of the Redemption Payments
was $56,750,000.  As a result of the Debtors' Chapter 11 cases,
the Redemption Payment Balance has been accelerated and the full
balance is due.  Remaining unpaid balance of the Redemption
Payments is $59,639,287.

The Debtors believe that to continue operation of the Clear Lake
Facility, the Debtors must reduce any potential claim of
Dominion.  Thus, after good faith negotiations, the parties enter
into a settlement, which provides that:

   a. Dominion will be allowed an $18,000,000 administrative
      expense claim to be paid in six separate installments:

      -- a first installment of $11,000,000 to be paid by
         July 31, 2006; and

      -- five equal payments of $1,400,000 each on the last
         business day of the four consecutive months beginning on
         August 31, 2006.  The final Installment Payment will be
         paid by December 20, 2006.

   b. Pending timely receipt of the Initial Payment and the
      Installment Payments, Dominion will be allowed a
      $59,639,287 general unsecured claim.

The parties will also exchange mutual releases.

                       About Calpine Corp.

Headquartered in San Jose, California, Calpine Corporation --
http://www.calpine.com/-- supplies customers and communities with        
electricity from clean, efficient, natural gas-fired and
geothermal power plants.  Calpine owns, leases and operates
integrated systems of plants in 21 U.S. states and in three
Canadian provinces.  Its customized products and services include
wholesale and retail electricity, gas turbine components and
services, energy management and a wide range of power plant
engineering, construction and maintenance and operational
services.  The Company filed for chapter 11 protection on Dec. 20,
2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200).  Richard M. Cieri,
Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert
G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in
their restructuring efforts.  Miller Buckfire & Co. serves as the
Debtors' financial advisor.  Michael S. Stamer, Esq., at Akin
Gump Strauss Hauer & Feld LLP, represents the Official Committee
of Unsecured Creditors.  Lazard Freres & Co. LLC serves as the
Committee's financial advisor.  As of Dec. 19, 2005, the Debtors
listed $26,628,755,663 in total assets and $22,535,577,121 in
total liabilities.  (Calpine Bankruptcy News, Issue No. 16;
Bankruptcy Creditors' Service, Inc., 215/945-7000)


CAM CBO: Fitch Holds $34.27 Million Class C Notes' C Rating
-----------------------------------------------------------
Fitch Ratings upgraded one class of notes issued by CAM CBO I.
This rating action is the result of Fitch's review process:

  -- $20,845,611 class B notes upgraded to 'BB' from 'B+'
  -- $34,276,198 class C notes remain at 'C' / 'DR4'

CAM CBO is a collateralized debt obligation managed by Conning
Asset Management which closed Nov. 13, 1998.  CAM CBO is composed
of mainly high yield bonds.  Included in this review, Fitch
discussed the current state of the portfolio with the asset
manager and their portfolio management strategy going forward.

The upgrade is due to increased credit enhancement resulting from
the deleveraging of the transaction's capital structure.  Since
the last rating action, the remaining $37.5 million of class A
notes have been fully redeemed, and the class B notes have
received $154,389 of principal redemptions.  In addition, the
class B overcollateralization ratio increased to 144.5% as of the
April 28, 2006 trustee report from 114.1% as of Oct. 29, 2004.

Although the performing portfolio is becoming increasingly
concentrated with only six non-impaired positions, the transaction
holds approximately $9.5 million of principal collections.  These
funds will further delever the remaining class B notes on the next
payment date.  In addition, two collateral holdings representing
approximately $4.6 million are scheduled to repay at maturity this
summer.  This would further strengthen the credit enhancement of
the class B notes.

The class C notes are receiving residual interest distributions
and are expected to continue to do so, unless the class B coverage
tests are triggered.  However, ultimate principal recovery of the
class C notes will likely be nominal.  The distressed recovery
rating takes into account both expected future interest
distributions as well as any principal recovery.

The ratings of the class B and C notes address the likelihood that
investors will receive ultimate and compensating interest
payments, as per the governing documents, as well as the stated
balance of principal by the legal final maturity date.

Fitch will continue to monitor and review this transaction for
future rating adjustments.


CARIBBEAN RESTAURANTS: S&P Lowers Corporate Credit Rating to B
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating and secured bank loan rating on San Juan, Puerto Rico-based
Caribbean Restaurants LLC to 'B' from 'B+'.  The outlook is
stable.
      
"The downgrade is based on the company's deteriorating cash flow
protection measures due to negative operating trends over the past
four quarters," said Standard & Poor's credit analyst Diane Shand.

Total debt to EBITDA is expected to increase to more than 6.0x in
fiscal 2006, from mid-5.0x in fiscal 2005.

"We do not expect these measures to improve over the next year,"
said Ms. Shand.
     
CRI's narrow geographic focus leaves it susceptible to changes in
the Puerto Rican economy.  Sales trends in the fiscal year ended
April 30, 2006, should be negative due to an economic slowdown in
Puerto Rico, and margins are expected to narrow as a result of:

   * lack of sales leverage,
   * higher utility costs, and
   * wage incentives.

Operating trends are not expected to improve until the economy in
Puerto Rico strengthens.  The company's profitability had also
declined during a regional economic downturn in 2001 and 2002.
Operating performances had been good from fiscal 2003 to fiscal
2005.
     
The ratings on Caribbean Restaurants reflect:

   * the company's highly leveraged capital structure;

   * the risks of operating in the extremely competitive quick-
     service restaurant industry; and

   * its regional concentration.

Overall business risk for this fourth-largest franchisee of Burger
King restaurants is influenced heavily by strong competition in
the fast-food segment, especially from McDonald's Corp. and Subway
in Puerto Rico, where CRI operates all 170 of its units.  Somewhat
tempering these factors is the strength the company derives from
its exclusive franchise agreement with Burger King for Puerto
Rico.
     
CRI is the leading player in the $1 billion Puerto Rican fast-food
market.  It controls about 18% of total units and about 25% of
total revenues.  Subway, with a 19% share of total fast-food
units, and McDonald's, with 12%, are its closest competitors.


CATHOLIC CHURCH: Court Rejects Spokane's $45 Mil. Settlement Bid
----------------------------------------------------------------
The Hon. Patricia Williams denied approval of the Diocese of
Spokane's $45,750,000 settlement agreement with 75 sexual abuse
claimants.  Judge Williams urged the Diocese, the Tort Litigants
Committee and the Objecting Parties to consider mediation.

                   Accord Is Not Sub Rosa Plan

Before the settlement agreement was denied, Judge Williams has
directed the Diocese of Spokane and the Tort Litigants Committee
to file additional brief to address whether:

   -- Spokane's $45,750,000 settlement offer would make the plan
      confirmation process futile and violate Section 1123(a)(4)
      of the Bankruptcy Code; and

   -- the Diocese's request is ripe for adjudication.

In this regard, Shaun M. Cross, Esq., at Paine, Hamblen, Coffin,
Brooke & Miller, LLP, in Spokane, Washington, on the Diocese's
behalf, clarifies that approving the Settlement Motion and the
Settlement Offer does not mean that the Court is:

   -- pre-approving any reorganization plan; nor

   -- being asked to determine the treatment of the settling
      parties' aggregate allowed claim vis-a-vis the claims of
      the other sex abuse victims.

"The treatment of all claims will be handled through the plan and
reviewed by the Court at the time of confirmation," Mr. Cross
clarifies.  "Each and every party-in-interest will retain the
right to object to the confirmation of the contemplated plan.  
The Court's approval of the Motion will not have any effect on
those objections."

The only immediate impact of the Court's granting of the
Diocese's proposed settlement, Mr. Cross says, is the allowance of
the Aggregate Allowed Claim.  All other aspects of the settlement
must be addressed in the Diocese's contemplated plan, which is
subject to the Court's approval through plan confirmation.

Moreover, the Diocese's request does not offend Section
1123(a)(4)'s proscription that all claims within a class receive
equal treatment, Mr. Cross contends.  "In fact, the Settlement
Offer and the Motion either expressly provided that all holders of
allowed sex abuse claims would be treated the same or were silent
regarding the treatment of sex abuse creditors other than the
Settling Parties."

The term "all holders of allowed sex abuse claims" does not refer
only to the Settling Parties who accept the Diocese's Settlement
Offer, Mr. Cross points out.  Rather, the term is all-inclusive of
any and all other holders of allowed sex abuse claims.

The Settlement Offer only provides for allowance and contemplated
plan treatment of sex abuse claims of the Settling Parties, Mr.
Cross explains.  However, the Non-Settling Parties will have the
opportunity to allow and liquidate their own claims either through
a future settlement with the Diocese, through a plan process, or
at trial.

Once a Non-Settling Party's claim is allowed and liquidated, that
claim will be treated equally to those of the Settling Parties,
Mr. Cross further explains.  The equal treatment provided in the
Settlement Offer and Motion entails a payment process by which all
holders of allowed sex abuse claims -- Settling Parties and Non-
Settling Parties who subsequently liquidate their claims -- will
receive the same percentage of their claim amounts on the same
days as part of a payment schedule.  

The assets mortgaged to the trust will secure, pari passu, all of
the allowed sex abuse claims, Mr. Cross assures.  Thus, the
impairment of one allowed sex abuse claim will be identical to
that of all other allowed sex abuse claims.  

To the extent Non-Settling Parties liquidate their claims after a
payment has been distributed, Mr. Cross says that those claimants
will be caught up with the rest of the class before the next
distribution is made.  "In this way, all holders of allowed sex
abuse claims will be treated equally."

Mr. Cross admits that the Settlement Offer and the Motion did not
spell out all aspects of the Non-Settling Parties' plan treatment.

"This omission was not an oversight," Mr. Cross says.  "The [Tort
Litigants Committee] did not believe that it could appropriately
negotiate for the Non-Settling Parties."

Furthermore, Mr. Cross argues that the Diocese's request is ripe
for a ruling as to whether the Settlement Offer should be approved
pursuant to Rule 9019 of the Federal Rules of Bankruptcy
Procedure.  As a matter of law, the fact that the Settlement
Offer is subject to conditions subsequent to Court approval does
not render the request unripe.

Approval of the Settlement will function as the gateway to the
successful reorganization of the Archdiocese, Mr. Cross further
tells the Court.

                             Responses

The Association of Parishes, holders of Claim Nos. 321 to 325, the
Official Committee of Future Tort Claimants, and the Official
Committee of Tort Claimants ask Judge Williams to deny the
Diocese's Settlement Motion because it renders the plan
confirmation process futile, violates Section 1123(a)(4), and
fails to present a case or controversy.

(a) Association of Parishes

John D. Munding, Esq., at Crumb & Munding, P.S., in Spokane,
Washington, on behalf of the Association of Parishes, notes that
the Diocese and the Tort Litigants Committee modified their
request and sought approval of an "aggregate allowed claim."  

No matter how the argument is presented or how the relief is re-
drafted, the substantive terms of the Settlement Offer control the
transaction, Mr. Munding argues.  Because the Settlement Offer is
conditioned upon a subsequent plan that is unconfirmable, that
Settlement Offer is self-defeating.

The subsequent Plan is unconfirmable because the Settlement Offer
proposes a transaction that requires the Diocese to terminate
rights of non-debtors, indirectly commit all assets to a
liquidating plan, and discriminates between members of the same
class of a mandatory plan of reorganization.

(b) Holders of Claim Nos. 321 to 325

Beth Mary Bollinger, Esq., in Spokane, Washington, attorney for
the holders of Claim Nos. 321 to 325, contends that through the
Settlement Motion, the Diocese is proposing to 75 unsecured
creditors the benefit of settlement without going through the
process of identifying or evaluating harm, as expected by the
other creditors.

Ms. Bollinger points out that while certain of the 75 settling
claimants have been deposed, a majority have not, and even more
have not had psychological evaluations.  In addition, 18 cases
have not been litigated at all.  But certain of these settling
claimants, Ms. Bollinger contends, would be allowed to settle in a
format that requires no identification of the amount of money
given.

Ms. Bollinger asserts that the process of valuation of claims
alone creates a disparate treatment in violation of Section
1123(a)(4).

Moreover, Ms. Bollinger says her clients relied on Bishop
Skylstad's statement that they would be treated equally.  "The
Bishop's assurance should be treated as an oral contract, upon
which relied and acted accordingly, and the settlement should not
be approved for that very reason alone."

(c) FCR

Gayle Bush, the legal representative for future claimants, alleges
that the Tort Litigants Committee has a different agenda in
pushing for approval of the Settlement Motion.  According to
Mr. Bush, the Tort Litigants Committee wants control over the plan
process to the detriment of the Diocese of Spokane's estate and
other creditors.

Mr. Bush notes that the Diocese is chained to the Tort Litigants
Committee, "unfailingly bound to seek approval of a plan of
reorganization to provide for the specified treatment of Settling
Parties' claims."

Mr. Bush points out that if another party or group of parties file
a different plan of reorganization which was better for the
bankruptcy estate by providing more money and equal treatment
among all creditors, under the Settlement, the Diocese could not
amend its plan to provide for relief which was better for it and
others, without the Tort Litigants Committee's prior approval.

Unequal treatment abounds, Mr. Bush says.  He notes that the
Diocese is also seeking to provide the Settling Parties -- but not
non-settling parties -- liquidated damages under certain
circumstances.

Moreover, the proposed settlement trust is a first-in, first-out
payment method.  By obtaining allowance of the $45,700,000 claim
first, the Settling Parties under the terms of the trust would be
paid out those funds first.

Mr. Bush also points out that Shaun M. Cross, Esq., at Paine,
Hamblen, Coffin, Brooke & Miller, LLP, the Diocese's counsel, has
acknowledged that Spokane's estate would only have, at most, less
than $15,000,000 to pay all unsecured claims in the case other
than the Settling Parties.  Mr. Bush says it was the collective
strategy of Mr. Cross and James P. Stang, Esq., at Pachulski
Stang Ziehl Young Jones & Weintraub LLP, the Tort Litigants
Committee's counsel, to:

   -- aggressively resist any other claims in the case;

   -- force the unfairly and unequally treated parties to "attack
      the settlement"; and

   -- avoid defeat of the Settlement Motion by eliminating any
      discussion of feasibility.

Mr. Bush further asserts that Spokane's Chapter 11 case does not
need an unfair settlement, rather, a plan of reorganization,
which:

   (1) treats creditors fair and equitably; and

   (2) creates sufficient funding to meet the allowed
       obligations, to the extent of available assets.

(d) Tort Committee

The Tort Committee finds the Diocese and the Tort Litigants
Committee's statements irreconcilable with the actual terms and
conditions of the Settlement Offer.

Joseph E. Shickich, Jr., Esq., at Riddell Williams P.S., in
Seattle, Washington, argues that the Brief, among other things,
belies the claim that the Settlement Motion's only immediate
impact would be the allowance of the Aggregate Allowed Claim when
the Diocese and Tort Litigants Committee:

   -- concede that the Settlement Offer "provides for allowance
      and contemplated plan treatment" of the Offerees' claims;
      and

   -- admit that they "did not spell out all aspects of the . . .
      plan treatment [for the Excluded Parties]."

Moreover, the approval of the Settlement Offer would have the
impermissible effect of dictating the terms of the plan of
reorganization and making the Plan process futile, Mr. Shickich
tells the Court.  The Diocese may not avoid the requirements of
plan confirmation by seeking approval of a motion that would
dictate the terms of the Plan.

Additionally, the Diocese seeks approval of an offer to settle,
not approval of a settlement agreement, Mr. Shickich asserts.  
The Settlement Offer has not been accepted, and it might not ever
be accepted.  Until the Settlement Offer is actually accepted, the
Diocese's Settlement Motion is not ripe for adjudication and will
constitute as a request for an advisory opinion.

                   Spokane's Closing Brief

Nothing adduced in the Responses supports the Objecting Parties'
position that the Settlement Offer's contemplated plan of
reorganization will permit unequal treatment of their claims as
against the Settling Parties' claims, Shaun M. Cross, Esq., at
Paine, Hamblen, Coffin, Brooke & Miller, LLP, in Spokane,
Washington, asserts.

Mr. Cross contends that the Settlement Offer will function as a
cornerstone of the eventual resolution of the bankruptcy case
through a confirmed plan of reorganization that will fairly and
equitably, and in the best interests of the estate, treat all
liquidated sex abuse claims equally.

The benefit of the Settlement Offer cannot be overstated, Mr.
Cross notes.  The Settlement Offer has focused attention on plan
confirmation, which the Court has indicated must be accomplished
by December 2006.

The fact that the Tort Claimants' Committee and the Future Claims
Representative filed a competing plan on May 15, illustrates how
the Settlement Motion and the Settlement Offer have spurred
various constituencies to accelerate resolution of the case, Mr.
Cross points out.

Mr. Cross also notes that only after the Settlement Offer was
announced was the Diocese able to consummate settlements with
three of its insurers.  Those settlements will, in part, fund the
plan.

Moreover, no party-in-interest is precluded from raising its
concerns in the Plan process, Mr. Cross tells the Court.  
Claimants can object to the Diocese's contemplated second amended
plan.

While the key to the Settlement Offer and Settlement Motion is the
confirmation of the Diocese's anticipated second amended plan, Mr.
Cross tells Judge Williams that her approval of the Motion remains
essential.  

In the Diocese's business judgment, the settlement structure in
the Settlement Offer will be jeopardized if the Settlement Motion
is not granted, even if the Diocese files its second amended plan
containing many of the material terms and conditions encapsulated
in the Settlement Offer, Mr. Cross explains.

Mr. Cross argues that the confirmation of a plan is not a
predicate for claims resolution.  The Bankruptcy Code does not
require that the claims objection process or the settlement of
claims await plan confirmation.  

The Settlement Motion and the Offer are premised on the common-
sense position that resolution of the Settling Parties' Aggregate
Allowed Claim creates a structure for a confirmable plan,
Mr. Cross insists.  The ability of the Diocese, or any other
party-in-interest, to resolve claims through the objection process
similarly will streamline the plan process by reducing the number
of claims, fixing a definitive dollar amount to pay on all claims,
and obviating the time and expense of an extensive claims
estimation process.

The Roman Catholic Church of the Diocese of Spokane filed for
chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on
Dec. 6, 2004.  Michael J. Paukert, Esq., at Paine, Hamblen,
Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in
its restructuring efforts.  When the Debtor filed for protection
from its creditors, it listed $11,162,938 in total assets and
$81,364,055 in total debts. (Catholic Church Bankruptcy News,
Issue No. 58; Bankruptcy Creditors' Service, Inc., 215/945-7000)


CATHOLIC CHURCH: Keen Realty Hired as Spokane's Consultant
----------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Washington
approved the Diocese of Spokane's request to employ Keen Realty as
its special real estate consultant.

Keen Realty LLC will be compensated in accordance with the Real
Estate Retention Agreement dated February 13, 2006, it entered
into with the Diocese.

As reported in the Troubled Company Reporter on Mar. 27, 2006,
Keen Realty will:

   a. review all pertinent documents and consult with the
      Diocese's counsel;

   b. develop and implement a marketing program, which may
      include newspaper, magazine or journal advertising, letter
      or flyer solicitation, placement of signs, direct
      telemarketing, and other methods;

   c. locate and communicate with all potential purchasers of the
      Properties including investors, developers, tenants, and
      others;

   d. respond and provide information to, negotiate with, and
      solicit offers from prospective purchasers, and make
      recommendations to the Diocese as to the advisability of
      accepting particular offers;

   e. meet periodically with the Diocese, its accountants
      and attorneys, in connection with the status of its
      efforts;

   f. implement, manage and run an auction process, as
      appropriate and in consultation with the Diocese and its
      counsel;

   g. work with the attorneys responsible for the implementation
      of the proposed transactions, reviewing documents,
      negotiating and assisting in resolving problems which may
      arise; and

   h. if required, appear in Court during the duration of its
      employment, to testify or to consult with the Diocese in
      connection with the marketing or disposition of the
      Properties.

Keen Realty's compensation will be determined by the "gross
proceeds" of the sale or disposition.  Gross proceeds include the
sum of the total consideration transferred to, or for the benefit
of, the Diocese, unless the Properties are sold or disposed of as
part of a package of properties.

The Roman Catholic Church of the Diocese of Spokane filed for
chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on
Dec. 6, 2004.  Michael J. Paukert, Esq., at Paine, Hamblen,
Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in
its restructuring efforts.  When the Debtor filed for protection
from its creditors, it listed $11,162,938 in total assets and
$81,364,055 in total debts. (Catholic Church Bankruptcy News,
Issue No. 58; Bankruptcy Creditors' Service, Inc., 215/945-7000)


CATHOLIC CHURCH: Spokane Can Continue Using Cash Management System
------------------------------------------------------------------
The Hon. Patricia C. Williams of the U.S. Bankruptcy Court for the
Eastern District of Washington authorized the Diocese of Spokane
to continue using its Cash Management System on a permanent basis.

As reported in the Troubled Company Reporter on Dec. 23, 2004, The
Diocese of Spokane seeks authority from the U.S. Bankruptcy
Court for the Eastern District of Washington to continue using its
existing cash management system.

Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke &
Miller, LLP, in Spokane, Washington, explained that Spokane's cash
flow, tracking and reconciliation practices permit the Diocese to
control and account for its funds, and ensure that funds will be
readily available as needed.  Keeping those practices in place,
Mr. Paukert points out, will save the Diocese and its estate the
cost in time and money.

As of the chapter 11 filing, the Diocese of Spokane maintained
four bank accounts at U.S. Bank, N.A.:

   1. operating checking account,
   2. savings account,
   3. Automated Clearing House account, and
   4. impressed pension account

The Roman Catholic Church of the Diocese of Spokane filed for
chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on
Dec. 6, 2004.  Michael J. Paukert, Esq., at Paine, Hamblen,
Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in
its restructuring efforts.  When the Debtor filed for protection
from its creditors, it listed $11,162,938 in total assets and
$81,364,055 in total debts. (Catholic Church Bankruptcy News,
Issue No. 58; Bankruptcy Creditors' Service, Inc., 215/945-7000)


CLEAN EARTH: Completes Asset Sale to Alamo Group for $8.8 Million
-----------------------------------------------------------------
Alamo Group Inc. completed the purchase of the vacuum truck and
sweeper lines of Clean Earth Environmental Group, LLC and Clean
Earth Kentucky, LLC, collectively referred to as Clean Earth.  
This includes the product lines, inventory and certain other
assets that relate to this business.

As reported in the Troubled Company Reporter on May 16, 2006, the
purchase price for the assets was $8.875 million and sales for the
acquired product lines were approximately $15 million in 2005.

The vacuum truck products include VacAll and Clean Earth, and will
be organized into a new subsidiary called VacAll Industries, Inc.  
They will continue to be based in Birmingham, Alabama, with Jack
Fernandes serving as Vice President of Sales and Marketing.  
However, the production for these lines will be moved to Alamo's
Gradall subsidiary in New Philadelphia, Ohio.

The SHARC street sweeper business, which is currently in
Lexington, Kentucky, will be consolidated into Alamo's Schwarze
street sweeper operation in Huntsville, Alabama.

"Vacuum trucks are a product line that we have wanted to add to
our Industrial Division for some time," Ron Robinson, Alamo
Group's President and CEO commented.  "They are a good fit with
our existing product offering, which already includes mowing
equipment, street sweepers and excavators, all of which are
primarily sold to governmental entities and related contractors.  
The addition of these product lines should further strengthen our
ties to dealers and customers in this segment.

"We do not expect this acquisition to be accretive to our results
in 2006 as we will be focusing on relocating manufacturing and
bringing production levels back up to where they were before the
Chapter 11 proceedings of Clean Earth.  However, we feel confident
that this business will be a good contributor in 2007 and beyond
and a growing part of Alamo's business as we provide the resources
that it has needed to expand and grow."

"This product line fits well with our manufacturing capabilities
and we are excited about the potential this brings to Gradall and
the overall Alamo Group," Mike Haberman, President of Gradall
Industries, Inc. added.

                        About Alamo Group

Headquartered in Seguin, Texas, Alamo Group Inc. --
http://www.alamo-group.com/-- is a leader in the design,  
manufacture, distribution and service of high quality equipment
for right-of-way maintenance and agriculture.  Its products
include tractor-mounted mowing and other vegetation maintenance
equipment, excavators, street sweepers, snowblowers, pothole
patchers, agricultural implements and related after market parts
and services.  The Company, founded in 1969, has over 2,290
employees and operates fourteen plants in North America, Europe
and Australia as of March 31, 2006.  The corporate offices of
Alamo Group Inc.'s headquarters for the Company's European
operations are located in Salford Priors, England.

                        About Clean Earth

Headquartered in Cynthiana, Kentucky, Clean Earth Kentucky, LLC --
http://www.cleanearthllc.com/-- manufactures specialized sewer
machines, street sweepers, and refuse trucks.  The Company and its
affiliate, Clean Earth Environmental Group, LLC, filed for chapter
11 protection on Jan. 24, 2006. (Bankr. E.D. Ky. Lead Case No. 06-
50052). Laura Day DelCotto, Esq., at Wise DelCotto PLLC,
represents the Debtors in their restructuring efforts.  R. Scott
Williams, Esq., at Haskell Slaughter Young & Rediker, LLC,
represents the Official Committee of Unsecured Creditors.  When
the Debtors filed for protection from its creditors, they
estimated individual assets and debts between $10 million to $50
million.


COLLINS & AIKMAN: Files Amended GM Agreement Under Seal
-------------------------------------------------------
Ray C. Schrock, Esq., at Kirkland & Ellis LLP, informs the U.S.
Bankruptcy Court for the Eastern District of Michigan that the
sole basis upon which the Court previously sustained the objection
filed by the Official Committee of Unsecured Creditors to Collins
& Aikman Corporation and its debtor-affiliates' agreement with
General Motors Corporation -- regarding the resourcing and
transition of a GM program -- has been consensually resolved by
the Debtors, GM, the Committee and the agent to the prepetition
senior secured lenders.  The Debtors have incorporated the
resolution into an amended agreement.

The Debtors seek the Court's authority to enter into the amended
GM Agreement.  With the Court's permission, the Debtors have filed
the Amended Agreement under seal.

As reported in the Troubled Company Reporter on April 4, 2006, the
Bankruptcy Court rejected the Debtors' request to assist GM in
resolving commercial and legal issues related to the resourcing
and transition of their supply agreements based on a sealed
objection submitted by the Official Committee of Unsecured
Creditors.

The Debtors manufactured cockpit, instrument panel and center
consoles for GM under a supply program.  GM elected to resource
the GM Program from the Debtors to another supplier and requested
the Debtors to assist in the transition.

Pursuant to the GM transition agreement:

   (a) the Debtors will cooperate with and assist GM in the
       resourcing of the GM Program to another supplier by
       providing certain transition services;

   (b) GM will reimburse the Debtors for expenses incurred in
       connection with the transition services;

   (c) GM will transfer and award certain existing and future
       business to the Debtors;

   (d) The Debtors will grant GM a license to use certain
       intellectual property necessary for the manufacture and
       production of certain GM programs; and

   (e) GM will issue tooling purchase orders to the Debtors and
       fund the tooling.

Headquartered in Troy, Michigan, Collins & Aikman Corporation
-- http://www.collinsaikman.com/-- is a global leader in cockpit   
modules and automotive floor and acoustic systems and is a leading
supplier of instrument panels, automotive fabric, plastic-based
trim, and convertible top systems.  The Company has a workforce of
approximately 23,000 and a network of more than 100 technical
centers, sales offices and manufacturing sites in 17 countries
throughout the world.  The Company and its debtor-affiliates filed
for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case
No. 05-55927).  Richard M. Cieri, Esq., at Kirkland & Ellis LLP,
represents C&A in its restructuring.  Lazard Freres & Co., LLC,
provides the Debtor with investment banking services.  Michael S.
Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents
the Official Committee of Unsecured Creditors Committee.  When the
Debtors filed for protection from their creditors, they listed
$3,196,700,000 in total assets and $2,856,600,000 in total debts.
(Collins & Aikman Bankruptcy News, Issue No. 30; Bankruptcy
Creditors' Service, Inc., 215/945-7000)


COLLINS & AIKMAN: Court Approves TR Associates' Lease Amendment
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Michigan
authorized Collins & Aikman Corporation and its debtor-affiliates
to amend the terms of a lease agreement between TR Associates,
LLC, and Debtor Dura Convertible Systems, Inc.

As reported in the Troubled Company Reporter on April 24, 2006,
the Debtors determined that they were paying commercially
unreasonable terms under their lease with TR Associates.   The
Lease was for real property at 2011 West Beecher Street, in
Adrian, Michigan.

The Debtors engaged in a series of arm's-length and good faith
negotiations with TR Associates to determine if the Lease could be
amended.  Based on these negotiations, the parties were able to
arrive at a commercially reasonable amendment to the Lease.

The material terms of the Amendment are:

   (1) The lease term is extended by 17 months up to December 31,
       2010;

   (2) Monthly rent is reduced to $6,958 from April 1, 2006
       through January 31, 2007, and $8,208 from February 1,
       2007, through December 31, 2010; and

   (3) If Dura rejects the Lease, the effective date of the
       rejection will be no less than six months after the date
       of notification of the rejection.  If Dura vacates the
       Property before the six-month notice, the Debtors will be
       required to continue to pay rent under the Lease up
       through the effective date of the rejection and the rents
       will be accorded administrative expense status under
       Section 503(b)(1)(A) of the Bankruptcy Code.

If DCS rejects the lease in accordance with the Bankruptcy Code,
Judge Rhodes says the effective date of rejection will be no less
than six months from the date of notification of rejection.

If DCS vacates the leased premises before the six month effective
date of any rejection of the Lease, the Debtors are required to
continue to pay rent under the Lease, as amended by the Amendment,
up through the effective date of the rejection.  The rents will be
accorded administrative expense status under Section 503(b)(1)(A)
of the Bankruptcy Code.

Headquartered in Troy, Michigan, Collins & Aikman Corporation
-- http://www.collinsaikman.com/-- is a global leader in cockpit   
modules and automotive floor and acoustic systems and is a leading
supplier of instrument panels, automotive fabric, plastic-based
trim, and convertible top systems.  The Company has a workforce of
approximately 23,000 and a network of more than 100 technical
centers, sales offices and manufacturing sites in 17 countries
throughout the world.  The Company and its debtor-affiliates filed
for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case
No. 05-55927).  Richard M. Cieri, Esq., at Kirkland & Ellis LLP,
represents C&A in its restructuring.  Lazard Freres & Co., LLC,
provides the Debtor with investment banking services.  Michael S.
Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents
the Official Committee of Unsecured Creditors Committee.  When the
Debtors filed for protection from their creditors, they listed
$3,196,700,000 in total assets and $2,856,600,000 in total debts.
(Collins & Aikman Bankruptcy News, Issue No. 30; Bankruptcy
Creditors' Service, Inc., 215/945-7000)


COLUMN CANADA: DBRS Holds Low-B Rating on 3 Certificate Classes
---------------------------------------------------------------
Dominion Bond Rating Service upgraded the ratings of five classes
of Column Canada Issuer Corporation, Commercial Mortgage Pass-
Through Certificates, Series 2002-CCL1:

   * Class A-1 Confirmed AAA Stb
   * Class A-2 Confirmed AAA Stb
   * Class A-X Confirmed AAA Stb
   * Class B Upgraded AAA Stb
   * Class C Upgraded AA (low)
   * Class D Upgraded BBB (high)
   * Class E Upgraded BBB Stb
   * Class F  Upgraded BB (high)
   * Class G Confirmed BB (low) Stb
   * Class H Confirmed B Stb
   * Class J Confirmed B (low) Stb

Class A-1, Class A-2, and Class A-X have been confirmed at AAA and
the remaining classes have been confirmed as follows: Class G at
BB (low), Class H at B, and Class J at B (low).

DBRS does not rate the CA$5.0 million first loss piece, Class K.
All trends are Stable.

The upgrades follow the defeasance of the third-largest loan,
Castel Royale, along with 7% paydown and improved performance of
many loans.

The pool consists of 53 loans, with a total balance of
CA$286,884,871. The weighted average debt service coverage ratio
for the pool has improved to 1.73 times from 1.50 times at
issuance and the weighted-average loan-to-value has improved from
66.4% at issuance to 56.5%.

The deal is highly concentrated in both retail properties and
properties located in the province of Ontario.  Thirty-six of the
loans provide recourse to the borrower/guarantor, excluding the
defeased loans.  There are no loans on the DBRS HotList.


CONTINENTAL AIR: Moody's Puts BI Rating on Class B Certificates
---------------------------------------------------------------
Moody's Investors Service assigned a rating of Aaa to the Class G
Certificates and a B1 rating to the Class B Certificates of
Continental Airlines, Inc.'s 2006-1 Pass Through Trusts Pass
Through Certificates, Series 2006-1.

The Aaa rating of the Class G Certificates is based upon a
Financial Guarantee Insurance Policy issued by the Financial
Guaranty Insurance Company.  The Policy guarantees the timely
payment of interest when due and the ultimate payment of principal
at the final maturity date for the Class G Certificates only,
which is 24 months after the final expected distribution date.

There is no such policy in place for the Class B Certificates.
Moody's rating of the Insurance Financial Strength of FGIC is Aaa.  
A liquidity facility supports eight quarterly payments for the
Class G Certificates following default, although there is no such
liquidity facility for the Class B Certificates.  Most of the
proceeds from the offering will be used to refinance Continental's
Floating Rate Secured Notes due 2007 and Floating Rate Secured
Subordinated Notes Due 2007 which are secured by the collateral
that will secure the 2006-1 Certificates.

The structure is similar to that of a typical Enhanced Equipment
Trust Certificate financing. The primary differences are the
collateral, the cross collateralized nature of the collateral
coverage, required semi-annual appraisal, and a mechanism that
maintains the Loan to Value ratio at or below 45% for the Class G
Certificates and 75% for the Class B Certificates.

In the event the value of the collateral, as determined from the
appraisal, declines such that the LTV exceeds these specified
amounts, Continental is required to add collateral, repay debt or
place cash collateral in an escrow account sufficient to achieve
the LTV threshold.

Under Section 1110 of the US Bankruptcy Code, if Continental fails
to pay its obligations under the 2006-1 Certificates, the
collateral trustee would have the right to repossess the spare
parts.  Unlike typical EETC transactions for aircraft in which the
company can accept or reject individual aircraft, the
documentation requires Continental to accept or reject the entire
collateral pool.

Without access to these parts, or a similar pool, Continental
could not continue to effectively fly most of its main line fleet.  
The collateral includes all of the spare parts located in the
United States in Continental's inventory for Boeing 737-700, 737-
800, 737-900, Boeing 757-200, 757-300, Boeing 767-200, 767-400 and
Boeing 777-200 model aircraft and all rotable spare parts for
Boeing 737-300 and 737-500 model aircraft.

In reorganization, Continental will be required to continue
payments on the entire transaction in order to keep even a single
aircraft type, among those affected, flying.

If Continental fails to make interest payments as scheduled, a
liquidity facility for eight quarterly interest payments defers a
default on the Class G Certificates only.  The initial Primary
Liquidity Provider is Morgan Stanley Bank and the initial Above-
Cap Liquidity Provider is Morgan Stanley Capital Services.

The liquidity provider has a priority claim on proceeds from
liquidation ahead of any of the holders of the 2006-1 Certificates
and is also the controlling party following default.

Moody's notes that in certain default circumstances, LIBOR used to
calculate interest on the 2006-1 Certificates will be capped at
10%; however the above-cap liquidity facility ensures payment of
the full, uncapped interest due.  Moody's also notes that the
above-cap liquidity provider does not have a claim on the
collateral.

The ratings assigned to the Certificates considers the ability of
Continental to make timely payment of interest and the ultimate
payment of principal at a date no later than the final expected
distribution date.

The ratings are based upon the credit quality of Continental, as
obligor, the value of the spare parts pool collateralizing the
2006-1 Certificates, the Policy for the Class G Certificates and
the liquidity facilities for the Class G Certificates.

The Class B Certificates do not benefit from a liquidity facility.  
Any future changes in the underlying credit quality or ratings of
Continental, and/or material changes in the value of the spare
parts pledged as collateral, and/or changes in the status of the
liquidity facility or the credit quality of the liquidity provider
could cause a change in the ratings assigned to the Certificates.

Ratings assigned:

Continental Airlines, Inc.'s 2006-1 Pass Through Trusts Pass
Through Certificates Series 2006-1

  * Class G at Aaa
  * Class B at B1


CUMULUS MEDIA: S&P Rates Proposed $850 Mil. Credit Facility at B
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on Cumulus
Media Inc., including lowering the corporate credit rating to 'B'
from 'B+'.  The ratings were removed from CreditWatch, where they
were placed with negative implications on May 11, 2006.  The
outlook is stable.
     
At the same time, Standard & Poor's assigned its 'B' rating and a
recovery rating of '3' to Cumulus Media's proposed $850 million
credit facility, indicating an expectation of a meaningful (50%-
80%) recovery of principal in the event of a payment default.
     
Atlanta, Georgia based radio broadcaster Cumulus Media had
approximately $576 million of debt outstanding at March 31, 2006.
     
"The rating action recognizes the two-turn increase in Cumulus
Media's leverage, pro forma for its proposed $200 million debt-
financed share buyback," said Standard & Poor's credit analyst
Alyse Michaelson Kelly.
     
Given the broader secular challenges facing the radio advertising
sector, Standard & Poor's is skeptical about Cumulus Media's
ability to restore its leverage profile to the range appropriate
for the prior rating in the intermediate term.  Demand for radio
advertising is stagnant, and a catalyst to propel the industry
back to mid- to high-single-digit revenue growth does not appear
likely in the near term.


DANA CORP: Wants to Sell Atmoplas-Related Assets to BTU for $474K
-----------------------------------------------------------------
Pursuant to the order approving procedures to sell or transfer
certain de minimis assets, Dana Corporation and its debtor-
affiliates ask the U.S. Bankruptcy Court for the Southern District
of New York to approve the sale of their assets associated with
the development and commercialization of the technology known as
AtmoPlas to BTU International, Inc., for approximately $474,563.

The Assets consist of:

   (a) all of the Debtors' Intellectual Property related solely
       to the development and commercialization of the AtmoPlas
       technology, which enables material processing via high
       density plasma at atmospheric pressure using microwave
       energy;

   (b) all tangible materials related to the Debtors' development
       of AtmoPlas technology;

   (c) all rights, benefits and obligations contained in the
       contracts assumed, or to be assumed, by the Debtors and
       assigned to BTU;

   (d) all tangible assets or contractual rights related solely
       to the AtmoPlas technology; and

   (e) certain accounts receivable related to the AtmoPlas
       technology.

The gross consideration to be provided for the Assets is $474,563
in cash at closing, plus the payment of these amounts:

   Time Period                       Payment Amount
   -----------                       --------------
   For the Year beginning            The greater of $300,000, and
   on the second anniversary         4% of the Year 3 Net Sales
   of the Closing Date               for which BTU has received
                                     full payment.

   For the Year beginning            The greater of $300,000, and
   on the third anniversary of       the sum of 4% of Year 4 Net
   the Closing Date                  Sales for which BTU has
                                     received full payment; and
                                     Accrued Payments associated
                                     with Year 3 Net Sales for
                                     which BTU received full
                                     payment in the year starting
                                     on the third anniversary
                                     of the Closing Date.

   For the Year beginning            The sum of 4% of Year 5 Net
   on the fourth anniversary         Sales and Accrued Payments
   of the Closing Date               associated with Year 3 Net
                                     Sales and Year 4 Net Sales
                                     for which BTU received full
                                     payment in the year starting
                                     on the fourth anniversary of
                                     the Closing Date.

   For the Year beginning            The sum of 3% of Year 6 Net
   on the fifth anniversary of       Sales and Accrued Payments
   the Closing Date                  associated with Year 3, Year
                                     4 and Year 5 Net Sales for
                                     which BTU received full
                                     payment in the year starting
                                     on the fifth anniversary of
                                     the Closing Date.


   For the Year beginning            The sum of 3% of Year 7 Net
   on the sixth anniversary of       Sales and Accrued Payments
   the Closing Date                  associated with Year 3, Year
                                     4, Year 5, and Year 6 Net
                                     Sales for which BTU received
                                     full payment in the year
                                     starting on the sixth
                                     anniversary of the Closing
                                     Date.

   For the period from the           20% of all IP Asset
   Closing Date to the seventh       Licensing Revenues for
   anniversary of the Closing        Developed Technology and
   Date                              10% of all IP Asset
                                     Licensing Revenues for
                                     Undeveloped Technology.

Eight executory contracts and unexpired leases will be assigned to
BTU at the Closing:

   1. Hitachi Metals America, Ltd.,

   2. Richardson Electronics, Ltd.,

   3. Rubig GmbH & Co. KG,

   4. Institut Francais du Petrole,

   5. Purchase Order No. P191891-00 issued by EFMG LLC to Gerling
      Applied Engineering Inc.,

   6. Inventions and Works Assignment Agreement, effective as of
      May 9, 2006 among Steven Schultz, Steven Schultz, Inc., and
      the Debtors,

   7. License from Autodesk for AutoCAD Inventor (v7) software,
      and

   8. License to Labview (v7.1) software.

The executory contracts and unexpired leases that in BTU's
discretion, may be assigned after the Closing are:

   1. Joint Technology Development Agreement with General
      Electric Company, acting through its GE-Aviation operating
      component, dated January 12, 2006,

   2. Joint Development Agreement with ALD Vacuum Technologies
      GmbH dated May 27, 2005, and

   3. Professional Services Agreement with Venture Management
      Services LLC dated February 22, 2006.

Corinne Ball, Esq., at Jones Day, in New York, discloses that two
parties hold liens or have other interests in the Assets:

   1. Citicorp North America, Inc., as Administrative Agent under
      a Court-approved Senior Secured Superpriority DIP Credit
      Agreement dated March 3, 2006; and

   2. Citicorp USA, Inc., as Administrative Agent under the
      Security Agreement dated November 18, 2005.

Each Lienholder either has consented to the proposed sale or the
Lienholder's lien or interest can be extinguished, has been
waived, or is capable of monetary satisfaction.

BTU believes that its financials and other public documents
demonstrate its ability to perform under the Assigned Contracts in
the future, as required by Section 365(f)(2)(B) of the
Bankruptcy Code.

Ms. Ball assures the Court that BTU is not an insider of any of
the Debtors, within the meaning of Section 101(31) of the
Bankruptcy Code.

A full-text copy of the BTU Asset Purchase Agreement is available
for free at http://researcharchives.com/t/s?9db

                      About Dana Corporation

Headquartered in Toledo, Ohio, Dana Corporation --
http://www.dana.com/-- designs and manufactures products for
every major vehicle producer in the world, and supplies
drivetrain, chassis, structural, and engine technologies to those
companies.  Dana employs 46,000 people in 28 countries.  Dana is
focused on being an essential partner to automotive, commercial,
and off-highway vehicle customers, which collectively produce more
than 60 million vehicles annually.  The company and its affiliates
filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y.
Case No. 06-10354).  Corinne Ball, Esq., and Richard H. Engman,
Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey
B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at
Jones Day in Cleveland, Ohio, represent the Debtors.  Henry S.
Miller at Miller Buckfire & Co., LLC, serves as the Debtors'
financial advisor and investment banker.  Ted Stenger from
AlixPartners serves as Dana's Chief Restructuring Officer.  Thomas
Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP,
represents the Official Committee of Unsecured Creditors.  When
the Debtors filed for protection from their creditors, they listed
$7.9 billion in assets and $6.8 billion in liabilities as of Sept.
30, 2005.  (Dana Corporation Bankruptcy News, Issue No. 10;
Bankruptcy Creditors' Service, Inc., 215/945-7000).


DANA CORP: Court Amends Order on Foreign Vendor Claims Payments
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
amends its Prior Order and authorizes Dana Corporation and its
debtor-affiliates to pay the Foreign Claims, up to $79,500,000 in
the aggregate.

Judge Lifland directs the Debtors to provide FTI Consulting,
Inc., the Official Committee of Unsecured Creditors' financial
advisors, with:

   (a) a report that identifies the potential Foreign Vendors
       holding estimated prepetition unsecured claims equal to or
       greater than $2,000,000; and

   (b) on a weekly basis after May 22, 2006, a summary report of
       all transactions effected.

On or before June 1, 2006, the Debtors will also provide FTI
Consulting with a report of transactions that were effected
pursuant to the authority granted by the Prior Order until
April 17, 2006.

                      About Dana Corporation

Headquartered in Toledo, Ohio, Dana Corporation --
http://www.dana.com/-- designs and manufactures products for
every major vehicle producer in the world, and supplies
drivetrain, chassis, structural, and engine technologies to those
companies.  Dana employs 46,000 people in 28 countries.  Dana is
focused on being an essential partner to automotive, commercial,
and off-highway vehicle customers, which collectively produce more
than 60 million vehicles annually.  The company and its affiliates
filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y.
Case No. 06-10354).  Corinne Ball, Esq., and Richard H. Engman,
Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey
B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at
Jones Day in Cleveland, Ohio, represent the Debtors.  Henry S.
Miller at Miller Buckfire & Co., LLC, serves as the Debtors'
financial advisor and investment banker.  Ted Stenger from
AlixPartners serves as Dana's Chief Restructuring Officer.  Thomas
Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP,
represents the Official Committee of Unsecured Creditors.  When
the Debtors filed for protection from their creditors, they listed
$7.9 billion in assets and $6.8 billion in liabilities as of Sept.
30, 2005.  (Dana Corporation Bankruptcy News, Issue No. 10;
Bankruptcy Creditors' Service, Inc., 215/945-7000).


DANA CORP: Furillo & Buono Wants Stay Lifted to Pursue Claims
-------------------------------------------------------------
In separate pleadings, Carl Furillo and Joseph Buono ask the
U.S. Bankruptcy Court for the Southern District of New York to
lift the stay to:

   -- complete all of the documents necessary for the
      distribution of their settlement proceeds with regards to
      their claim against the Dana Corporation and its debtor-
      affiliates; and

   -- enforce their right granted under the Debtors' pension
      plan.

On April 14, 2005, Messrs. Furillo and Buono commenced an action
before the United States District Court for the Eastern District
of Pennsylvania, alleging that Dana Corporation failed to pay them
disability pension benefits in connection with an application of
that benefits filed in December 2000.

The Claimants alleged that they were covered by a Pension
Agreement issued by Dana and governed by the Employee Retirement
Income Security Act of 1974.  A Dana Corporation Pension Plan for
members of Local Union Number 3733 United Steel Workers' of
America {AFL-CIO) Parish Division-Reading Plant govern the
Claimants' pension rights.

On February 2, 2006, Messrs. Furillo and Buono resolved their
pension claim for a lump sum of $65,000 each, to be paid out of
the trust fund established pursuant to Dana's pension plan.

Gregory J. Boles, Esq., at Fenner & Boles, LLC, in Philadelphia,
Pennsylvania, asserts that the assets of the trust fund are not
necessary for an effective reorganization.

In the event that the stay is not lifted, the Messrs. Furillo and
Buono ask the Court to:

   -- require adequate protection for their interests; or

   -- deem the automatic stay inapplicable because the property
      is not the property of the estate.

                      About Dana Corporation

Headquartered in Toledo, Ohio, Dana Corporation --
http://www.dana.com/-- designs and manufactures products for
every major vehicle producer in the world, and supplies
drivetrain, chassis, structural, and engine technologies to those
companies.  Dana employs 46,000 people in 28 countries.  Dana is
focused on being an essential partner to automotive, commercial,
and off-highway vehicle customers, which collectively produce more
than 60 million vehicles annually.  The company and its affiliates
filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y.
Case No. 06-10354).  Corinne Ball, Esq., and Richard H. Engman,
Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey
B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at
Jones Day in Cleveland, Ohio, represent the Debtors.  Henry S.
Miller at Miller Buckfire & Co., LLC, serves as the Debtors'
financial advisor and investment banker.  Ted Stenger from
AlixPartners serves as Dana's Chief Restructuring Officer.  Thomas
Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP,
represents the Official Committee of Unsecured Creditors.  When
the Debtors filed for protection from their creditors, they listed
$7.9 billion in assets and $6.8 billion in liabilities as of Sept.
30, 2005.  (Dana Corporation Bankruptcy News, Issue No. 9;
Bankruptcy Creditors' Service, Inc., 215/945-7000)


DELPHI CORP: BorgWarner Wants to Liquidate Warranty Claims
----------------------------------------------------------
BorgWarner Turbo Systems, Inc., asks the U.S. Bankruptcy Court for
the Southern District of New York to lift the automatic stay to
permit it to liquidate its prepetition warranty claim against
Delphi Corporation in the proper non-bankruptcy forum.

BorgWarner designs, manufactures and distributes a wide variety
of parts and components to automotive and commercial vehicle
OEMs.  Under certain prepetition purchase orders, BorgWarner
purchased components from the Debtors, which it incorporated into
its turbo chargers and actuator kits for sale to customers.

The Purchase Order selects Michigan Law as the governing law and
the courts of the state of Michigan as the proper forum to
litigate any dispute between the parties.

Postpetition, BorgWarner continues to purchase components from
the Debtors pursuant to the Purchase Order and incorporates those
components into its Turbos.

Seth A. Drucker, Esq., at Clark Hill PLC, in Detroit, Michigan,
relates that BorgWarner incurred significant costs and damages
resulting from failures of the Turbos.  After a thorough
investigation and engineering analysis, BorgWarner has determined
that the root cause of the Turbo failures stems from a defect in
the component supplied to it by the Debtors.  BorgWarner
continues to incur warranty costs as a result of additional Turbo
failures every day.

The parties have been engaged in lengthy and detailed
negotiations to amicably liquidate and consensually resolve the
Warranty Claim and BorgWarner's set-off or recoupment rights.

To protect its right to set off the Warranty Claim against its
accounts payable to the Debtors, BorgWarner informed them that it
would administratively freeze its accounts payable to Delphi to
the extent necessary to protect its set-off and recoupment
rights.  

BorgWarner had offered to participate in the informal procedures
available to the Debtors and set-off claimants to reconcile
set-off claims so long as the Debtors agreed to waive the
requirement that BorgWarner participate in binding arbitration.
Mr. Drucker asserts that on numerous occasions, BorgWarner
repeated its offer; however; the Debtors have not responded to
any of these.

In November 2005, Delphi had completed the analysis of a
sufficient number of returned defective Turbos to determine their
warranty obligations and conclude negotiations with BorgWarner.  
Nevertheless, shortly after the Petition Date, Delphi requested
additional voluminous and detailed statistical warranty data of
every turbo failure to date.  Much of this data was in possession
of International Truck, BorgWarner's customer.  BorgWarner then
worked with International Truck to compile the data in a form
acceptable to Delphi.

Despite BorgWarner's continued cooperation, the negotiations seem
to have stalled and it does not appear that the parties will be
able to consensually liquidate the Warranty Claim, Mr. Drucker
notes.

By letter dated April 7, 2006, the Debtors have requested that
BorgWarner agree to participate in non-binding meditation.  The
Debtors still have not responded to BorgWarner's request that
they acknowledge that the matter will not be referred to binding
arbitration.  Thus, BorgWarner is prompted to bring the matter to
Court.

Headquartered in Troy, Michigan, Delphi Corporation --
http://www.delphi.com/-- is the single largest global supplier of     
vehicle electronics, transportation components, integrated systems
and modules, and other electronic technology.  The Company's
technology and products are present in more than 75 million
vehicles on the road worldwide.  The Company filed for chapter 11
protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No.
05-44481).  John Wm. Butler Jr., Esq., John K. Lyons, Esq., and
Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP,
represent the Debtors in their restructuring efforts.  Robert J.
Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude,
Esq., at Latham & Watkins LLP, represents the Official Committee
of Unsecured Creditors.  As of Aug. 31, 2005, the Debtors' balance
sheet showed $17,098,734,530 in total assets and $22,166,280,476
in total debts.  (Delphi Bankruptcy News, Issue No. 25; Bankruptcy
Creditors' Service, Inc., 215/945-7000)


DELPHI CORP: Hires Pagemill Partners as Financial Advisor
---------------------------------------------------------
Delphi Corporation and its debtor-affiliates obtained authority
from the U.S. Bankruptcy Court for the Southern District of New
York to employ Pagemill Partners, LLC, as their financial
advisors, nunc pro tunc to March 14, 2006.

Pagemill, a technology-focused investment bank located in Silicon
Valley in California, is a member of the National Association of
Securities Dealers and the Securities Investor Protection
Corporation.  Pagemill provides financial advisory services in
connection with mergers and acquisitions, divestitures, private
placements, and specialized financial services.  The firm
services both public and private companies, focusing on emerging
and middle market transactions.

As financial advisor, Pagemill will:

   (a) collaborate with MobileAria, Inc., one of the Debtors, to
       prepare descriptive materials, presentations, and develop
       a strategy for marketing MobileAria to potential
       acquirors;

   (b) identify and evaluate strategic partners in cooperation
       with MobileAria;

   (c) assist MobileAria in coordinating the material and
       information to be made available to prospective partners
       and the due diligence investigations;

   (d) contact prospective partners approved in advance by
       MobileAria to determine their level of interest in a
       potential transaction;

   (e) evaluate the proposed terms and conditions of a potential
       Transaction, and make such other analyses and
       investigations as may be appropriate;

   (f) advise MobileAria in the negotiation of all aspects of a
       proposed Transaction;

   (g) present summaries to MobileAria's senior management and
       board of directors as requested by MobileAria; and

   (h) provide declarations and live testimony to this Court as
       requested by MobileAria.

The Debtors will pay Pagemill's professionals these fees:

   (1) A non-refundable engagement fee of $40,000; and

   (2) In the case of a Transaction, a Success Fee equal to the
       sum of $300,000 plus 1.5% of the Aggregate Value of the
       Transaction; and

The Debtors will also reimburse Pagemill for all reasonable out-
of-pocket, out of Bay Area travel expenses incurred in connection
with the engagement.

Milledge A. Hart, a member of the firm, assures the Court that
Pagemill and its professionals are "disinterested persons" as
defined in Section 101(14) of the Bankruptcy Code.

Headquartered in Troy, Michigan, Delphi Corporation --
http://www.delphi.com/-- is the single largest global supplier of     
vehicle electronics, transportation components, integrated systems
and modules, and other electronic technology.  The Company's
technology and products are present in more than 75 million
vehicles on the road worldwide.  The Company filed for chapter 11
protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No.
05-44481).  John Wm. Butler Jr., Esq., John K. Lyons, Esq., and
Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP,
represent the Debtors in their restructuring efforts.  Robert J.
Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude,
Esq., at Latham & Watkins LLP, represents the Official Committee
of Unsecured Creditors.  As of Aug. 31, 2005, the Debtors' balance
sheet showed $17,098,734,530 in total assets and $22,166,280,476
in total debts.  (Delphi Bankruptcy News, Issue No. 25; Bankruptcy
Creditors' Service, Inc., 215/945-7000)


DELPHI CORP: Wants to Reject Inovise OEM Agreement
--------------------------------------------------
Delphi Corporation and its debtor-affiliates seek the U.S.
Bankruptcy Court for the Southern District of New York's authority
to reject an OEM License and Supply Agreement between Delphi
Medical Systems Corporation and Inovise Medical, Inc.

Pursuant to the OEM Agreement, Inovise granted Delphi Medical
licenses of its Audicor software, which was to be used in Delphi
Medical's multi-parameter vital signs monitors.  Inovise also
agreed to sell to Delphi Medical certain Inovise single-use
disposable sensors, which would be necessary to be used with the
Monitors incorporating the Audicor Software.

John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher &
Flom LLP, in Chicago, Illinois, relates that the Inovise Devices
are in the developmental stages.  Although Inovise has developed
prototypes of vital signs monitors incorporating the Inovise
Devices, the actual functionality of the Inovise Devices in a
clinical setting has not yet been determined.  Mr. Butler
explains that it is crucial to Delphi Medical's successful launch
of the Monitors that they incorporate technologies with proven
functionality.  In this regard, Delphi Medical decided that it
could not assume the inherent risk created by the unproven nature
of the Inovise Devices in bringing the Monitors to market
successfully.

In addition, Mr. Butler maintains that to be successful in the
marketplace, the Inovise Devices will require a broad base of
physicians to be aware of the technology, understand it, and
request it.  Acceptance by physicians does not currently exist
and Delphi Medical believes that it will be a considerable period
of time, if ever, before a critical mass of physicians supporting
the Inovise Devices develops.  Therefore, Delphi Medical believes
that marketing the Monitors incorporating the Inovise Devices is
likely to be a significant hindrance to market acceptance.

Mr. Butler explains that Delphi Medical can incorporate existing
and widely accepted ECG technology into the Monitors, thereby
improving the likelihood of a successful market launch.  However,
absent the immediate rejection of the Agreement, Delphi Medical
cannot take steps to integrate alternative technology into the
Products because of certain exclusivity restrictions contained in
the Agreement.

Furthermore, Delphi Medical has determined that the cost of the
Inovise Devices is not competitive with the cost of alternative
and more widely-accepted ECG technologies.  When combined with
the significant concerns regarding the marketability of Products
incorporating the Inovise Devices, Delphi Medical is concerned
that the cost of the Inovise Devices would likely make the
Products unprofitable.

Headquartered in Troy, Michigan, Delphi Corporation --
http://www.delphi.com/-- is the single largest global supplier of     
vehicle electronics, transportation components, integrated systems
and modules, and other electronic technology.  The Company's
technology and products are present in more than 75 million
vehicles on the road worldwide.  The Company filed for chapter 11
protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No.
05-44481).  John Wm. Butler Jr., Esq., John K. Lyons, Esq., and
Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP,
represent the Debtors in their restructuring efforts.  Robert J.
Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude,
Esq., at Latham & Watkins LLP, represents the Official Committee
of Unsecured Creditors.  As of Aug. 31, 2005, the Debtors' balance
sheet showed $17,098,734,530 in total assets and $22,166,280,476
in total debts.  (Delphi Bankruptcy News, Issue No. 25; Bankruptcy
Creditors' Service, Inc., 215/945-7000)


EASY GARDENER: 341(a) Creditors Meeting Scheduled for June 1
------------------------------------------------------------
The U.S. Trustee for Region 3 will convene a meeting of Easy
Gardener Products, Ltd.'s creditors at 2:00 p.m., on June 1,
2006, at Room 2112, 2nd Floor, J. Caleb Boggs Federal Building,
844 King Street, Suit 2207, Lock Box 35, Wilmington Delaware.

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.

Easy Gardener Products, Ltd. -- http://www.easygardener.com/--   
manufactures and markets a broad range of consumer lawn and garden
products, including weed preventative landscape fabrics,
fertilizer spikes, decorative landscape edging, shade cloth and
root feeders, which are sold under various recognized brand names
including Easy Gardener, Weedblock, Jobe's, Emerald Edge, and
Ross.  The Company and four of its affiliates filed for bankruptcy
on April 19, 2006 (Bankr. D. Del. Case Nos. 06-10393 to 06-10397).
James E. O'Neill, Esq., Laura Davis Jones, Esq., and Sandra G.M.
Selzer, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP
represent the Debtors in their restructuring efforts.  Young
Conaway Stargatt & Taylor, LLP, represents the Official Committee
of Unsecured Creditors.  When the Debtors filed for bankruptcy,
they reported assets amounting to $103,454,000 and debts totaling
$107,516,000.


EL PASO CORP: Expects $500.7 Million Proceeds from Equity Offering
------------------------------------------------------------------
El Paso Corporation priced its public offering of 35,700,000
shares of its Common Stock.  Banc of America Securities LLC is
offering the shares under El Paso's shelf registration statement.

Net proceeds from the offering will be $500.7 million.  

As reported in the Troubled Company Reporter on May 25, 2006, 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
     Capital Markets Operations
     100 West 33rd Street, 3rd Floor
     New York, NY 10001

                       About El Paso Corp.

Based in Houston, Texas, El Paso Corp. (NYSE:EP) --
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.


ENERGY PARTNERS: Offers to Acquire Stone Energy for $2 Billion
--------------------------------------------------------------
Energy Partners, Ltd. made an offer to the Board of Directors of
Stone Energy Corporation to acquire all of the outstanding shares
of Stone for a combination of cash and stock valued at $52 per
Stone share.

Under the terms of the EPL proposal, each share of Stone common
stock will be exchanged for $26 in cash and a variable number of
shares of EPL common stock having a value of $26 based on the
average closing price of EPL stock over the 20 trading days
preceding the closing of the merger.  The number of EPL shares to
be issued for each Stone share will range from a maximum of 1.287
to a minimum of 1.053, assuming 27.7 million fully diluted Stone
shares.  This would equate to 1.21 EPL shares for each Stone
share, based upon the closing price of EPL's stock on May 24,
2006.  Stone shareholders will be given the option to elect to
receive the consideration in cash or EPL common stock, subject to
the limitation that the total value of the cash consideration
payable for the shares will be approximately $720 million.

EPL's offer represents a premium of approximately 26% over the
$41.20 per share value proposed to be paid for Stone shares under
the merger agreement between Plains Exploration and Production
Company and Stone, based on the closing price of Plains's common
stock on May 24, 2006; a premium of approximately 10% over the
closing price of Stone's common stock on April 21, 2006, the last
trading day prior to the announcement of the proposed Plains-Stone
agreement; and a premium of approximately 28% over the May 24,
2006 closing price of Stone's common stock, the last trading day
before the EPL offer was made public.

The proposed transaction is valued at approximately $2 billion,
which includes approximately $1.4 billion in equity and the
assumption of approximately $563 million of Stone debt.  This
represents aggregate additional consideration of $300 million over
the current value provided to Stone shareholders under the Plains-
Stone agreement.  On a pro forma basis, the combined company will
be the third most active driller of operated wells in federal and
state waters in the Gulf of Mexico (based on 2005 figures).  The
transaction is expected to be immediately accretive to EPL's cash
flow per share.  Assuming the timeline set forth in the offer
letter, it is anticipated that the proposed transaction will close
in the third quarter of 2006.  The equity portion of the
transaction is expected to be structured to be tax free to Stone
shareholders who elect to receive EPL shares.

"The financial benefits of this offer are extremely compelling for
Stone shareholders," said Richard A. Bachmann, EPL's Chairman and
Chief Executive Officer, said.  "Our offer clearly provides Stone
shareholders superior value over that contemplated by the Plains-
Stone agreement, including a substantial premium, the certainty of
cash, and a variable exchange ratio subject to a collar to provide
downside protection.  In addition, given our highly complementary
operating assets, we expect to achieve significantly greater
synergies than those identified in the Plains-Stone agreement."

The proposed transaction is not subject to any financing
contingency.  EPL has received a commitment letter from Bank of
America, N.A. and affiliates for the financing of the transaction.

Evercore Group L.L.C. and Banc of America Securities LLC are
acting as financial advisors to EPL and Cahill Gordon & Reindel
LLP is acting as legal counsel.

                           About Stone

Stone Energy (NYSE: SGY) -- http://www.stoneenergy.com/-- is an   
independent oil and gas company headquartered in Lafayette,
Louisiana, and is engaged in the acquisition and subsequent
exploration, development, operation and production of oil and gas
properties located in the conventional shelf of the Gulf of
Mexico, deep shelf of the GOM, deep water of the GOM, Rocky
Mountain Basins and the Wiliston Basin.

                            About EPL

Headquartered in New Orleans, Louisiana Energy Partners Ltd. --
http://www.eplweb.com/-- is an independent oil and natural gas  
exploration and production company.  Founded in 1998, the
Company's operations are focused along the U. S. Gulf Coast, both
onshore in south Louisiana and offshore in the Gulf of Mexico.


ENERGY PARTNERS: Stone Purchase Offer Cues Moody's Rating Review
----------------------------------------------------------------
Moody's Investors Service placed Energy Partners, Ltd.'s ratings
under review for possible downgrade.  Moody's also changed Stone
Energy Corporation's rating review for possible upgrade to review
direction uncertain.  These actions follow Energy Partners'
announcement that it made a counter offer to acquire Stone Energy
for approximately $2 billion, including the assumption of about
$563 million of debt, with debt accounting for approximately 65%
of the acquisition cost.

This bid counters Plains Exploration & Production's stock-for-
stock merger agreement with Stone.  The $1.4 billion equity
portion of the purchase is expected to be financed 50% with cash
and 50% with Energy Partners stock.

Energy Partners expects to fund the cash portion of the
transaction with debt.  The transaction is subject to the approval
of Stone's Board of Directors and shareholders, as well as final
approval from Energy Partners' Board of Directors and
shareholders, and, if approved, is expected to close in the third
quarter of 2006.

Energy Partners' review for possible downgrade reflects the
substantial increase in the company's financial leverage as a
result of the acquisition.  Moody's estimates that Energy
Partners' debt/proved developed reserves will increase from $5.85
to $13.78, as of March 31, 2006, which is not consistent with a B2
rating.

While Moody's notes that the acquisition will increase Energy
Partners total proved reserves to 158 million boe from
approximately 59 million boe at year-end 2005, with approximately
73% of reserves proved developed, this increase in scale comes at
the high price, although not as high as several recent
transactions in the sector, of $20.23/boe of proved reserves and
$61,742/boe of first quarter 2006 daily production and involves
substantial execution risk.

Moody's estimates that the combined company will continue to have
a rather short proved developed producing reserve life, with heavy
reserve replacement capital outlays and risk, and, despite
improved geographic diversification, will remain concentrated in
the Gulf of Mexico.

Moody's is concerned that with a fairly short proved developed
producing reserve life in the high decline Gulf of Mexico, high
financial leverage on the merged asset base would represent an
elevated risk profile.

The review also considers the performance challenges facing the
merged business, including high cost structures, the investment
focus on short lived Gulf of Mexico shallow water and the high
cost, high risk, long lead time deepwater Gulf of Mexico
exploration and development activity, which represent a new area
of focus for Energy Partners.

Stone has faced major operational challenges, very week capital
reinvestment productivity, and the de-booking of 20% of its proven
reserves, and is undergoing an SEC review of prior reserve booking
practices.  These operational risks and their wide range of
potential operating outcomes may require the greater flexibility
of a lower debt rating.  Moody's notes that Energy Partners has
not yet commenced due diligence on Stone or presented pro forma
results.

During the review process, Moody's will focus on:

   (1) the likelihood that Energy Partners will be able to reduce
       its debt burden in a timely manner through free cash flow,
       equity issuance, and/or asset sales;
   (2) the ability for the company to successfully mitigate the
       performance challenges facing the merged business; and
   (3) the benefits to Energy Partners of the acquisition,
       including increased scale, certain operating synergies,
       and improved geographic diversification. Moody's notes
       that a multiple notch downgrade of the B2 senior unsecured
       note rating is possible, depending on the post-merger
       capital structure.

Energy Partners, Ltd. is headquartered in New Orleans, Louisiana.

Stone Energy Corporation is headquartered in Lafayette, LA.


ENERGY PARTNERS: S&P Puts B+ Corp. Credit Rating on Negative Watch
------------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B+' corporate
credit rating on independent exploration and production company
Energy Partners Ltd. on CreditWatch with negative implications.

At the same time, Standard & Poor's revised the CreditWatch
implications for its 'B+' rating on Stone Energy Corp. to
developing from positive.
     
The CreditWatch listing for Energy Partners follows its
announcement that it has made an offer to Stone Energy's board of
directors to purchase all its outstanding stock for $52 per share.
Energy Partners' offer is $10 per share higher than Plains
Exploration & Production Co.'s (BB/Watch Neg/--) offer for
Stone Energy that was announced in late April 2006.
     
The developing CreditWatch listing for Stone Energy indicates that
the ratings could be raised, affirmed, or lowered in the near
term.  The ratings would likely be raised if Plains' bid in its
current form were to be successful.  The ratings could be lowered
or affirmed if Energy Partners were able to consummate the
transaction.
     
The negative CreditWatch listing for Energy Partners, which
reflects the potential for the ratings to be either lowered or
affirmed in the near term, incorporates concerns that leverage for
the combined entity would materially worsen.
      
"Despite the expected increased scale in both reserves and daily
production for the combined entity, pro forma leverage is not
expected to be consistent with Energy Partners' current rating,"
said Standard & Poor's credit analyst Jeffrey Morrison.
     
Standard & Poor's said that whether this would result in ratings
falling beyond one notch is unclear at this time and will depend
on our meeting with management in the near term to further discuss
the transaction, including business risk profile and strategic
issues, and the likely financing of the transaction.


ENRON CORP: Saras SpA Buys Out Enron Stake at Sardinia Power Plant
------------------------------------------------------------------
Saras S.p.A won an arbitration judgment that will permit it to
acquire the remaining stake of a joint venture with Enron Corp.,
the company said in an e-mailed statement to Bloomberg News.

Bloomberg News says the International Chamber of Commerce based
in Geneva, Switzerland, has ruled that Saras will pay
EUR117,000,000 or $145,000,000 to Enron for the remaining 45%
stake in the Sarlux power plant located in the island of
Sardinia, south of Italy.  Saras will also claim EUR66,300,000 in
dividend payments from the refinery.

The dividend payments, Saras told Bloomberg, date back to January
2002 when it tried to exercise an option to buy Enron's stake in
the joint venture.

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)


ENRON CORP: Sells Prisma Unit for $2.9 Billion to Ashmore Energy
----------------------------------------------------------------
Enron Corp. reported that Ashmore Energy International Limited,
which is majority-owned by funds managed by Ashmore Investment
Management Ltd., has agreed to acquire Prisma Energy International
Inc., a wholly owned subsidiary of Enron in a two-stage
transaction.  The realizable value to Enron from Prisma Energy
during 2006 is expected to be approximately $2.9 billion, which
includes approximately $800 million in cash dividends received
earlier in 2006 by Enron from Prisma Energy.

"We are pleased that the expected value is over three times
greater than the estimated value of Prisma Energy contained in the
disclosure statement filed with Enron's Bankruptcy Plan, and is a
substantial benefit to the Enron creditors," John J. Ray III,
Enron's President and Board Chairman, said.

The first stage of the Transaction closed on May 25, 2006, with
Ashmore Energy acquiring an equity stake in Prisma Energy,
initially representing just less than 25% of the aggregate voting
interest.  Ashmore Energy's purchase of the remaining equity
interest in Prisma Energy will be consummated only after certain
required consents and regulatory approvals have been obtained,
which is expected to occur later this year.

Prior to entering into the Transaction, Prisma Energy transferred
to Enron a majority of Prisma Energy's interest in the Promigas
business in Colombia, which is expected to be subject to a
separate auction process after the closing of the second stage of
the Transaction.

"We appreciate the substantial effort that Enron and Prisma Energy
personnel put into this transaction.  The Transaction represents
an enormous milestone for the Enron Estate," Mr. Ray concluded.  
Prisma Energy is the last of the three major platform entities
under the Bankruptcy Plan to be distributed to Enron's creditors
or sold.

Enron is represented by The Blackstone Group, as investment
bankers, and Milbank Tweed Hadley & McCloy, as legal counsel.

                          About Ashmore

Headquartered in London, England, Ashmore Investment Management
Limited -- http://www.ashmoregroup.com/-- launched Ashmore Energy  
International Limited at the beginning of the year with the
contribution of 5 gas and electric, transmission, and distribution
companies owned by its funds.  Ashmore Energy's aim is to deliver
quality service to its customers and contribute to the continued
expansion and upgrading of the energy systems of the countries in
which it operates.

                           About Enron

Based in Houston, Tex., Enron Corporation -- http://www.enron.com/
-- filed for chapter 11 protection on Dec. 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 CORP: U.S. Senators Want $400-Million Settlement Rejected
---------------------------------------------------------------
Senators from 10 western states in the United States asked the
Federal Energy Regulatory Commission to reject a $400,000,000
settlement proposed by Enron Corp, according to Bloomberg News.

The proposed settlement resolves Enron's claims disputes with the
city of Santa Clara, California, and Valley Electric Association
Inc., a Nevada cooperative, in connection with Enron's power and
natural gas sales contracts in the western United States.

The senators called on federal regulators to reject the
settlement, questioning a provision that would withhold Enron
audiotapes and e-mails from the public.  They questioned a
provision in the settlement that would prevent and seal from
public scrutiny and investigation unknown amounts of audiotapes
and e-mails that they say could hold vital evidence with regards
to claims against 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. 171; Bankruptcy Creditors'
Service, Inc., 15/945-7000)


EYI INDUSTRIES: Working Capital Deficit Cues Going Concern Doubt
----------------------------------------------------------------
Williams & Webster, P.S., in Spokane, Washington, raised
substantial doubt about EYI Industries, Inc.'s ability to continue
as a going concern after auditing the Company's consolidated
financial statements for the year ended Dec. 31, 2005.  The
auditing firm pointed to the Company's significant losses from
operations, insufficient revenues, and working capital deficit.

The Company reported a $4,262,011 net loss on $4,980,408 of
revenues for the year ended Dec. 31, 2005.

At Dec. 31, 2005, the Company's balance sheet showed $514,375 in
total assets, $2,722,431 in total liabilities, with $262,057 in
minority interest, resulting in a $2,470,113 stockholders'
deficit.

The Company's Dec. 31 balance sheet also showed strained liquidity
with $382,057 in total current assets available to pay $2,347,087
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?9d5

Headquartered in Burnaby, British Columbia, EYI Industries, Inc.
(OTCBB:EYII) -- http://www.eyicom.com/-- sells, markets, and  
distributes a product line consisting of approximately 27
nutritional products in three categories, dietary supplements,
personal care products, and water filtration systems.  EYI
Industries' most successful product is Calorad, a liquid collagen-
based dietary supplement.


FLUTIE ENT: Lawyer Sleeping through Deposition Not Malpractice
--------------------------------------------------------------
Anthony Lin, writing for the New York Law Journal, reports that
the Honorable Deborah A. Batts of the U.S. District Court for the
Southern District of New York dismissed a legal malpractice
lawsuit against Edward W. Hayes, Esq.  Robert Flutie, Mr. Lin
explains, retained Mr. Hayes in 2003 to defend Flutie Bros. and
Flutie Entertainment USA, Inc. (successors to bankrupt Flutie
Entertainment Corp.) against a lawsuit brought by the chapter 7
trustee in that proceeding.  

The Honorable Burton R. Lifland in the U.S. Bankruptcy Court for
the Southern District of New York entered a $190,000 judgment
against Mr. Flutie's companies.  Mr. Flutie, Mr. Lin relates,
blamed his lawyer for the outcome, claiming the lawyer reassured
him the trustee had no case, then did almost nothing to prepare
for trial.  In his complaint, Mr. Flutie alleged that, during his
deposition by the trustee's lawyer, Mr. Hayes "positioned himself
on a couch . . . put his hat over his face and slept through much,
if not most, of Flutie's deposition."

Judge Batts held in Flutie Bros. v. Hayes (S.D.N.Y. Case No. 04
Civ. 4187) that Mr. Flutie failed to show, as required in legal
malpractice cases, that "but for" the lawyer's alleged mistakes,
the outcome would have been different.  Judge Batts says Judge
Lifland's reasoning would lead to the same result whether or not
Mr. Hayes nodded off.  

Asked by Mr. Lin whether he slept through his client's
depositions, Mr. Hayes laughed.

"Only through the boring parts," Mr. Hayes told Mr. Lin.

Mr. Flutie was represented by Jeffrey L. Rosenberg, Esq., and Alex
Spizz, Esq., at Todtman, Nachamie, Spizz & Johns.


FOAMEX INTERNATIONAL: Court Denies Bagnatos' Lift Stay Motion
-------------------------------------------------------------
For reasons stated in open court, Judge Peter J. Walsh of the U.S.
Bankruptcy Court for the District of Delaware denied, without
prejudice, Michael Bagnato and Susan Bagnato's request to modify
the automatic stay to enable them to:

   (a) proceed with the State Court Action through judgment and
       appeal, if any, and liquidate their claims; and

   (b) collect against any applicable insurance coverage held by
       Foamex for their benefit.

As reported in the Troubled Company Reporter on May 10, 2006, in
September 2004, Michael and Susan Bagnato filed a complaint
against numerous individuals and entities, including Foamex
International, Inc., in the State of New York Supreme Court,
County of Erie.

The Complaint seeks negligence and products liability damages for
injuries suffered by the Bagnatos due to exposure to carpet and
carpet padding that emitted and secreted chemical and organic
compounds within their home.

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)


FOSTER WHEELER: S&P Upgrades Senior Secured Notes' Rating to B+
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on Clinton, New Jersey-based engineering and construction
company Foster Wheeler Ltd. to 'B+' from 'B-'.
     
At the same time, Standard & Poor's assigned its 'BB-' bank loan
rating and '1' recovery rating to the company's five-year, $250
million credit facility due 2010, indicating a high expectation
(100%) of full recovery of principal in the event of a payment
default.
     
Standard & Poor's also raised its rating on the company's senior
secured notes to 'B+' from 'CCC+'.  $50 million of the notes were
exchanged for common equity on April 27, 2006, with the remaining
$61.5 million to be redeemed for cash on May 25, 2006.  Upon
completion of the redemption, Standard & Poor's will remove its
ratings on the senior notes.
     
All ratings were removed from CreditWatch where they were placed
with positive implications on March 22, 2006.  The outlook is
stable.
      
"The upgrade reflects Foster Wheeler's stronger business risk
profile, as new orders, backlog levels, risk management policies
and profitability have all markedly improved in the past couple of
years," said Standard & Poor's credit analyst James T. Siahaan.

The ratings also reflect improvements in the company's financial
risk profile, marked by the company's leverage reduction
initiatives this year.
     
Backlog in the company's engineering and construction segment has
risen to $3.4 billion as of March 31, 2006, up from $1.3 billion
for the corresponding period in 2004; this was driven by backlog
increases of 489% in oil and gas and 469% in petrochemicals.  The
U.S. power market, after a period of weakness, has also seen a
renewal in capital spending: Backlog in the company's Global Power
Group totaled $1.2 billion at the end of the first quarter, which
is an 89% increase from 2004.  Backlog levels are the company's
highest since 2002, and are now more in line with historical
levels.  More importantly, the quality of the backlog seems
strong, as the scope in the backlog (defined as the portion
excluding zero-margin reimbursable flow-through costs) has also
increased, to $2.5 billion from $1.5 billion.


FRONTIER: Moody's Puts B3 Rating on $315MM Sr. Sec. Debt Facility
-----------------------------------------------------------------
Moody's Investors Service assigned a B3 to Frontier Drilling's
proposed $315 million first-lien senior secured credit facilities
and assigned a B3 corporate family rating.  Proceeds from the
facilities will be used to fund current and planned upgrading
projects on two drillships, the Frontier Deepwater and the
Frontier Discoverer.

Both ships are committed to long term contracts with Shell Oil
Company following refurbishment and will be ready for work in mid-
2007 and mid-2008.  The outlook is stable.  The ratings are
subject to final documentation of the credit agreement.

The $315 million facilities consist of a $165 million senior
secured Term Loan B, a $100 million senior secured delayed draw
Term Loan B and a $50 million senior secured revolving credit
facility.  Proceeds from both term loans will fund the Discoverer
and Deepwater upgrade projects and refinance approximately $69
million of senior secured debt.  The company does not anticipate
drawing funds from the revolving credit facility for the capital
spending projects or debt refinancing.

The ratings are restrained by Frontier's considerably high
leverage that will remain high at least over the next 18 months
given that the bulk of its cashflows will not be realized until
completion of the two vessel upgrades while the debt will be drawn
prior to the commencement of those cashflows; the risk associated
with the upgrade programs and the potential for cost overruns
and/or delays which if experienced, could pressure liquidity and
the financial profile of the company if additional funding is
required or debt reduction is materially delayed; a relatively
specialized use and aged drillship fleet; potential cost overruns
possibly triggering the need for additional funding; and the
inherent volatility of the offshore contract drilling markets
which could affect the ability to rollover expiring contracts at
comparable dayrates especially in light of a significant number of
newly built semi-submersible rigs expected to enter the market
over the next couple of years and put pressure on the currently
tight demand/supply fundamentals of the market.

The B3 Corporate Family Rating is supported by Frontier's position
as a niche provider of offshore contract drilling and production
services to the oil and gas industry; the firm, long-term
contracts for both upgraded drillships with Shell Oil Company
which provide visible cash flows for the ensuing three years for
each contract and also appear to contain certain protections of
cashflows against cancellation; the current contracts for its two
currently operating ships with KNOC then Petronas, and Petrobras,
which should provide cash flows to service the debt while the
upgrade of the two drillships is completed; and the favorable
outlook for the offshore drilling market at least over the next
year which should help support asset values.

The stable outlook assumes that the upgrade of the two vessels
going to work under contract with Shell Oil will be done on time
and within budget and does not require material additional funding
ahead of cash flows.

The stable outlook also assumes the continued supportive outlook
for the offshore drilling market which should aid the company in
obtaining a new contract by early 2007 on Frontier's Duchess
drillship beyond the current contract which ends Q2'08 and
provides additional cash flow visibility through the next three to
four years as part of Shell's long-term Arctic drilling program.

The credit facilities are rated at the corporate family rating of
B3.  Although there is a meaningful amount of junior debt present
within the capital structure and the credit facilities have a
first lien on all of the assets of the company, Moody's does not
believe it is enough to boost the credit facility's ratings
particularly given that upon closing of the facilities, Frontier
will have weak collateral coverage.

According to the evaluation by ODS Petrodata, Frontier's assets,
before upgrade, are valued at $285 million as they are, which is
an upcycle valuation and barely covers the $265 million of
expected funded debt and falling well short of the $315 million of
secured capital raised before any upgrades are completed. The
facilities also do not call for any funding restrictions other
than meeting a minimum EBITDA test through 2008, which even if
met, would still result in very high leverage without any
assurance that the vessels will be done on time and without
additional funding.

The other covenant during the construction period calls for an
Asset Coverage ratio of at least 1.25 times, but that assumes that
every dollar spent on the upgrades results in a dollar of
increased value without regard to cost overruns and delays. While
there are leverage and coverage tests, they do not commence until
the earlier of:

   a) a completion of the Deepwater construction or;
   b) three years from closing of the facilities.

In addition, some of the vessels have a degree of a specialization
that makes them less versatile as they may not be able work in
some other markets around the world.  For example, the Duchess is
geared for exploration use and is not suitable for more durable
development work.

The credit facilities do have a cash flow sweep that requires 75%
of the company's excess cash flows each year to be used for
repayment of the term loan B outstandings.  However, given the
cash flows are expected to be minimal through 2007, Moody's does
not expect any significant debt reduction until 2008.

The company owns and operates three conventional drillships and
one floating production, storage and offloading unit.  Frontier is
also engaged in a management contract with Shell for the Arctic
drilling unit Kulluk.

At the time of the offering the drillship Duchess and the FPSO
Seillean are the only assets working, this will continue for an
additional thirteen months until the Discoverer upgrade is
completed and then another twelve months after that for the
Deepwater upgrade is expected to be completed.

Frontier has commenced an $80 million refurbishment program on the
drillship Discoverer.  The Discoverer is set to be completed in
mid-2007 at which point it will begin three year contract with
Shell Oil working in its long-term Arctic program.

The Frontier Deepwater will undergo a $175 million refurbishment,
commencing later this year and finishing in mid-2008.  The
Deepwater is slated for a three year contract with Shell Oil in
offshore West Africa.

Frontier Drilling ASA is incorporated in Norway, however,
maintains its administrative offices in Houston, Texas.


FUTURE MEDIA: Trustee Appoints Two New Members in Creditors' Panel
------------------------------------------------------------------
The U.S. Trustee for Region 16 modified the composition of the
Official Committee of Unsecured Creditors of Future Media
Productions, Inc., by adding East-West Staffing, LLC, and Bayer
Polemers, LLC, as members.

The Committee appointed in Future Media Productions, Inc., is now
composed of:

   1.  East-West Staffing, LLC

   2.  Bayer Polemers, LLC

   3.  Select Personnel Services, Inc.

   4.  Concept One Staffing, Inc., and

   5.  Avion Tool Manufacturing Inc.

Headquartered in Valencia, California, Future Media Productions,
Inc. -- http://www.fmpi.com/-- provides CD and DVD replication    
and packaging services on the West Coast.  The Company filed for
chapter 11 protection on Feb. 14, 2006 (Bankr. C. D. Calif. Case
No. 06-10170).  David I. Neale, Esq. at Levene, Neale, Bender,
Rankin & Brill, LLP, represent the Debtor in its restructuring
efforts.  When the Debtor filed for protection from its creditors,
it listed $12,370,783 in total assets and $30,650,669 in total
debts.


FUTURE MEDIA: Judge Mund Okays Pachulski Stang as Panel's Counsel
-----------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in Future
Media Productions, Inc.'s bankruptcy case obtained permission from
the Honorable Geraldine Mund of the U.S. Bankruptcy Court for the
Central District of California in San Fernando Valley to hire
Pachulski Stang Ziehl Young Jones & Weintraub LLP as its
bankruptcy counsel.

Pachulski Stang will:

   (1) assist, advise and represent the Committee in its
       consultations with the Debtor regarding the administration
       of its case;

   (2) assist, advise and represent the Committee in analyzing the
       Debtor's assets and liabilities, investigate the extent and
       validity of liens and participate in and review any
       proposed asset sale, any asset dispositions, financing
       arrangements and cash collateral stipulations or
       proceedings;

   (3) assist, advise and represent the Committee in any manner
       relevant in reviewing and determining the Debtor's rights
       and obligations under leases and other executory contracts;

   (4) assist, advise and represent the Committee in investigating
       the acts, conduct, assets, liabilities and Debtor's
       financial condition, Debtor's business operation and the
       desirability of the continuance of any portion of the
       business, and any other matters relevant to the Debtor's
       case or formulation of a plan;

   (5) assist, advise and represent the Committee in its
       participation in the negotiation, formulation and drafting
       of a plan of liquidation or reorganization;

   (6) provide advice to the Committee on the issues concerning
       the appointment of a trustee or examiner under Section 1104
       of the Bankruptcy Code;

   (7) assist, advise and represent the Committee in the
       performance of all of its duties and powers under the
       Bankruptcy Code and the Bankruptcy Rules and in the
       performance of other services as are in the interests of
       those represented by the Committee; and

   (8) assist, advise and represent the Committee in the
       evaluation of claims and on any litigation matters.

Jeremy V. Richards, Esq., a member at Pachulski Stang Ziehl Young
Jones & Weintraub LLP, discloses that the Firm did not receive any
retainer.

Mr. Richards and Hamid R. Rafatjoo, Esq., are the primary
attorneys who will represent the Committee.  Mr. Richards and Mr.
Rafatjoo will bill $625 and $395 per hour, respectively.

Mr. Richards assures the Court that Pachulski Stang does not
represent any interest adverse to the Committee and is
disinterested as that term is defined in Section 101(14) of the
Bankruptcy Code.

Headquartered in Valencia, California, Future Media Productions,
Inc. -- http://www.fmpi.com/-- provides CD and DVD replication    
and packaging services on the West Coast.  The Company filed for
chapter 11 protection on Feb. 14, 2006 (Bankr. C. D. Calif. Case
No. 06-10170).  David I. Neale, Esq. at Levene, Neale, Bender,
Rankin & Brill, LLP, represent the Debtor in its restructuring
efforts.  When the Debtor filed for protection from its creditors,
it listed $12,370,783 in total assets and $30,650,669 in total
debts.


GENERAL MOTORS: Offers Gas Credit to Consumers with Eligible Cars
-----------------------------------------------------------------
On May 24, General Motors Corp. launched "GM Fuel Price Protection
Program," a regional program that caps what consumers pay for gas
at $1.99 a gallon when they purchase select 2006 and 2007 GM full-
size utilities and mid-size cars.

"This program gives consumers an opportunity to experience the
highly fuel-efficient vehicles GM has to offer in the mid-size
segment," Dave Borchelt, GM Southeast regional general manager,
said.  "It helps protect consumers against rising fuel prices by
providing them with a partial credit for their fuel purchases for
one year."

The credit is based on the consumer's estimated fuel usage each
month.  Fuel consumption is calculated based on the mileage
driven, as recorded by OnStar and the EPA city fuel economy
mileage rating for the vehicle.

Using the calculation of the consumer's estimated fuel usage each
month, they will be credited for the difference between the
average price per gallon of premium fuel in their state, as
published by the Automobile Association of America, and the $1.99
gas price protection cap.

The credit will be applied each month to a pre-paid card, which
will be issued to the consumer.  The credits are good until
Dec. 31, 2007 and may be used for any type of purchase at any
location that accepts MasterCard.  There is no mileage limitation.

"This is a unique offer that only GM is making," Mike Jackson, GM
North America vice president, Vehicle Brand Marketing/Advertising,
said.  "This program leverages some of our greatest strengths,
including great new GM vehicles, often with some of the best fuel
economy ratings in their class, and leading edge OnStar
technology.  To top it off, we're now offering consumers in
Florida and California protection against rising fuel prices."

A California resident who purchases a 2007 Chevrolet Tahoe and
drives it 1,000 miles a month, would realize an estimated $103.75
monthly credit, based on the current average premium fuel price of
$3.65/gallon (as of May 15).  A Florida resident who purchases a
2006 Buick LaCrosse with the standard V-6 engine and drives about
1,000 a month, would see an estimated monthly credit of $60, based
on the current average premium fuel price of $3.19/gallon in that
state.

"The services offered by OnStar are another example of how GM is
using technology and innovation to deliver added value to its
customers," Chet Huber, OnStar president, said.  "The diagnostic
e-mail service is a GM-exclusive and enables only GM to offer
consumers a credit for their gas purchases based on the actual
mileage that they drive."

Beginning on May 25, consumers will be able to go to a special web
site -- http://www.fuelprotection.com/-- to calculate their  
potential savings based on their vehicle selection.

To participate in the program, consumers who reside in California
and Florida must purchase or lease and take delivery of an
eligible vehicle between May 25 - July 5, 2006 and enroll in the
OnStar Vehicle Diagnostics service.  The diagnostic service is a
GM exclusive service that automatically runs hundreds of
diagnostic checks on key vehicle operating systems and then sends
a monthly e-mail to subscribers about their vehicle.

Eligible vehicles in California include the 2006 and 2007
Chevrolet Tahoe and Suburban (one-half ton models only), Impala
and Monte Carlo; GMC Yukon and Yukon XL (one-half ton models
only); HUMMER H2 and H3; Cadillac SRX; Pontiac Grand Prix; and
Buick Lucerne.

Eligible vehicles in Florida include the 2006 and 2007 Chevrolet
Impala and Monte Carlo, Pontiac Grand Prix and Buick LaCrosse.

The vehicles selected for this program were chosen because of
their outstanding fuel economy and great consumer appeal.  The
2007 Chevrolet Tahoe leads the full-size utility segment in fuel
economy and has a two-wheel-drive EPA highway estimate of 22 mpg.  
The Chevrolet Suburban and GMC Yukon XL have EPA highway estimates
of 21 mpg.

GM's mid-size cars also offer very competitive fuel economy with
the Pontiac Grand Prix achieving an EPA estimated 30mpg highway.  
That is better than a comparably equipped Honda Accord 6-cylinder
(29mpg highway).  The Buick LaCrosse also has an estimated highway
mileage of 30 mpg (with standard V6 engine).

                          About OnStar

OnStar -- http://www.onstar.com/-- a wholly owned subsidiary of  
General Motors, is the world's leading provider of in-vehicle
safety, security and communication services.  OnStar is available
on more than 50 2006 GM models and includes one year of
complimentary services, and will become standard on GM retail
vehicles in the United States and Canada by the end of 2007.  
OnStar provides services to more than 4 million subscribers in the
U.S. and Canada.

                      About General Motors

General Motors Corp. -- http://www.gm.com/-- the world's largest   
automaker, has been the global industry sales leader for 75 years.
Founded in 1908, GM today employs about 327,000 people around the
world.  With global headquarters in Detroit, GM manufactures its
cars and trucks in 33 countries including Mexico.  In 2005, 9.17
million GM cars and trucks were sold globally under the following
brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden,
HUMMER, Opel, Pontiac, Saab, Saturn and Vauxhall.  GM operates one
of the world's leading finance companies, GMAC Financial Services,
which offers automotive, residential and commercial financing and
insurance.  GM's OnStar subsidiary is the industry leader in
vehicle safety, security and information services.

                       *     *     *

As reported in the Troubled Company Reporter on May 9, 2006,
Moody's Investors Service placed the B3 senior unsecured rating of
General Motors Corporation under review for possible downgrade,
and affirmed the company's Corporate Family Rating at B3.  The
rating actions are in response to the company's disclosure that it
is pursuing various options to replace or amend its existing
$5.6 billion bank credit facility, and that these options could
result in providing its bank lenders with a security interest in
certain GM assets.  GM anticipates that any credit facility
replacement or amendment will be completed by the end of the
second quarter or early in the third quarter.


GLOBAL HOME: Gets Court OK on $33.55-MM Asset Sale to C.R. Gibson
-----------------------------------------------------------------
The Honorable Kevin Gross of the U.S. Bankruptcy Court for the
District of Delaware gave Global Home Products, LLC, and its
debtor-affiliates permission to sell the assets of some of its
affiliates to C.R. Gibson, Inc., for $33.55 million

The assets sold includes substantially all of the assets of these
debtor-affiliates:

   * Burnes Acquisition, Inc.,
   * Intercraft Company,
   * Burnes Puerto Rico, Inc.,
   * Picture LLC,
   * Burnes Operating Company LLC.

The sale also includes the assets of these non-debtor affiliates:

   * Intercraft Brunes, S.de R.L. de C.V.; and
   * 690629 BC Ltd.

A full-text copy of the Court's order along with the Asset
Purchase Agreement is available for a fee at:

   http://www.researcharchives.com/bin/download?id=060525232636

Headquartered in Westerville, Ohio, Global Home Products, LLC
-- http://www.anchorhocking.com/and http://www.burnesgroup.com/   
-- sells houseware and home products and manufactures high
quality glass products for consumers and the food services
industry.  The company also designs and markets photo frames,
photo albums and related home decor products.  The company and
16 of its affiliates, including Burnes Puerto Rico, Inc., and
Mirro Puerto Rico, Inc., filed for Chapter 11 protection on Apr.
10, 2006 (Bankr. D. Del. Case No. 06-10340).  Laura Davis Jones,
Esq., Bruce Grohsgal, Esq., James E. O'Neill, Esq., and Sandra
G.M. Selzer, Esq., at Pachulski, Stang, Ziehl, Young, Jones &
Weintraub LLP, represent the Debtors.  Bruce Buechler, Esq., at
Lowenstein Sandler P.C., represents the Official Committee Of
Unsecured Creditors.  When the company filed for protection from
their creditors, they estimated assets between US$50 million and
US$100 million and debts of more than US$100 million.


GLOBAL HOME: Court Approves Pachulski Stang's Retention as Counsel
------------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware gave Global
Home Products, LLC, and its debtor-affiliates permission to retain
Pachulski Stang Ziehl Young Jones & Weintraub LLP as their
bankruptcy counsel.

As reported in the Troubled Company Reporter on April 13, 2006,
Pachulski Stang will:

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

   b. prepare on behalf of the Debtors necessary applications,
      motions, answers, orders, reports, and other legal papers;

   c. appear in Court on behalf of the Debtors and in order to
      protect the interests of the Debtors before the Court;

   d. prepare and pursue confirmation of a plan and approval of a
      disclosure statement; and

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

Laura Davis Jones, Esq., a partner at Pachulski Stang, told the
Court that the Firm's professionals bill:

      Professional                Designation   Hourly Rate
      ------------                -----------   -----------
      Laura Davis Jones, Esq.     Attorney         $675
      David M. Bertenthal, Esq.   Attorney         $475
      Bruce Grohsgal, Esq.        Attorney         $475
      Joshua M. Fried, Esq.       Attorney         $395
      Sandra G.M. Selzer, Esq.    Attorney         $295
      Karina Yee                                   $155

Ms. Jones assured the Court that the Firm is "disinterested" as
that term is defined in Section 101(14) of the Bankruptcy Code.

Headquartered in Westerville, Ohio, Global Home Products, LLC
-- http://www.anchorhocking.com/and http://www.burnesgroup.com/   
-- sells houseware and home products and manufactures high
quality glass products for consumers and the food services
industry.  The company also designs and markets photo frames,
photo albums and related home decor products.  The company and
16 of its affiliates, including Burnes Puerto Rico, Inc., and
Mirro Puerto Rico, Inc., filed for Chapter 11 protection on Apr.
10, 2006 (Bankr. D. Del. Case No. 06-10340).  Laura Davis Jones,
Esq., Bruce Grohsgal, Esq., James E. O'Neill, Esq., and Sandra
G.M. Selzer, Esq., at Pachulski, Stang, Ziehl, Young, Jones &
Weintraub LLP, represent the Debtors.  Bruce Buechler, Esq., at
Lowenstein Sandler P.C., represents the Official Committee Of
Unsecured Creditors.  When the company filed for protection from
their creditors, they estimated assets between US$50 million and
US$100 million and debts of more than US$100 million.


GRAHAM PACKAGING: Moody's Holds Rating on $375MM Notes at Caa2
--------------------------------------------------------------
Moody's Investors Service affirmed the ratings on Graham
Packaging, L.P.  Graham recently amended its credit facilities to
increase its existing first lien term loan by $150 million.
Proceeds were used to reduce the existing second-lien term loan by
$100 million and to reduce the outstanding balance on the revolver
by $50 million.

Moody's affirmed ratings:

   * Corporate family rating, B2
   * $250 million senior secured first lien revolver due
     October 7, 2010, B2
   * $1,582 million senior secured first lien term loan due
     October 7, 2011, B2
   * $250 million second lien term loan C due April 7, 2012, B3
   * $250 million 8.5% senior unsecured notes due
     October 15, 2012, Caa1
   * $375 million senior subordinated notes due
     October 15, 2014, Caa2

Key ratings factors for packaging companies include:

   1) financial leverage and interest coverage,
   2) operating profile as reflected in operating profitability
      and asset efficiency, and
   3) competitive position as reflected in revenue size, the
      value-added nature of the company's products, ability of
      customers to switch to other suppliers, and substrate
      diversity.

In affirming the B2 corporate family rating, Moody's gave
significant consideration to Graham's high financial leverage and
modest interest coverage.  Adjusted for operating leases and
unfunded pension obligations, adjusted total debt to EBITDA of
over 6.0 times and EBIT interest coverage of about 1.0 times are
consistent with the current rating.  The ratings are supported by
Graham's competitive position as evidenced by its $2.5 billion in
2005 sales, production of value-added packaging for consumer
companies, and barriers its customers have to switching suppliers.

The ratings outlook is stable.  Any material deviation from
performance expectations would put pressure on the ratings or
outlook, including negative free cash flow or an increase in
leverage that resulted in adjusted total debt to EBITDA trending
toward 7.0 times.

The ratings would likely move up if Graham improves free cash flow
to debt to above 5% of adjusted total debt on a sustained basis
while lowering adjusted total debt to EBITDA to below 5.0 times
and maintaining a stable to improving competitive position.

Based in York, Pennsylvania, Graham Packaging Company, L.P. is a
leading global designer and manufacturer of customized blow-molded
plastic containers for branded food and beverages, household and
personal care products, and automotive lubricants. Blackstone
Capital Partners of New York is the majority owner. Revenues in
2005 amounted to $2.5 billion.


GSR MORTGAGE: S&P Affirms Class 1B5 & 2B5 Certificates' B Ratings
-----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on 22
classes of mortgage pass-through certificates from GSR Mortgage
Loan Trust 2005-AR3.
     
The affirmed ratings are based on credit support percentages that
are sufficient to maintain the current ratings.  This transaction
benefits from credit enhancement provided by subordination.
     
As of the April 2006 remittance date, total delinquencies were
0.58%, and there were no cumulative losses.  The outstanding pool
balance was 69.04% of its original size.
     
The collateral for this transaction consists primarily of 30-year
mortgage loans secured by residential properties.
   
Ratings Affirmed:
   
GSR Mortgage Loan Trust 2005-AR3
   
        Class                                      Rating
        -----                                      ------
        1A1, 2A1, 3A1, 3A2, 4A1, 5A1, 6A1, 6A2      AAA
        7A1, 8A1, 8A2, X                            AAA
        2B1                                         AA
        1B1                                         AA-
        2B2                                         A
        1B2                                         A-
        1B3, 2B3                                    BBB
        1B4, 2B4                                    BB
        1B5, 2B5                                    B


GULF COAST: CapSource Added to Panel After Bath Iron Resigns
------------------------------------------------------------
Jon A. Fitzgerald, Vice President and General Counsel for Bath
Iron Works, resigned from the Official Committee of Unsecured
Creditors in Gulf Coast Holdings, Inc.'s chapter 11 case.  William
T. Neary, the United States Trustee for Region 6, added CapSource
Financial to the Committee.  The Committee is now composed of:

   1. Salvatore J. Mira
      42 Redbud Ridge Place
      The Woodlands TX 77380
      Tel: 281-367-4113
      Fax: 281-298-8799

   2. Dave Wencka
      President
      InstaTech, Inc.,
      7010 NW 100 Drive, Suite A-103
      Houston, TX 77092
      Tel: 713-869-9900
      Fax: 713-880-1144

   3. Eugene L. Butler
      Managing Director
      CapSource Financial, Inc.
      14505 Torrey Chase, Suite 325
      Houston, TX 77014
      Tel: 281-893-9494
      Fax: 281-893-4508

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.


HEARTLAND PARTNERS: Hires Popowcer Katten as Accountants
--------------------------------------------------------
Heartland Partners, LP, and its debtor-affiliates obtained
authority from the U.S. Bankruptcy Court for the Northern District
of Illinois to employ Popowcer Katten, Ltd., as their accountants.

Popowcer Katten is expected to:

    a. maintain the Debtors' books and records and assist with
       cash management procedures;

    b. assist the Debtors in the preparation of monthly operating
       reports required by the U.S. Trustee;

    c. assist the Debtors in the preparation of their state and
       federal income tax returns; and

    d. perform any and all other tax and accounting services on
       behalf of the Debtors which may be required to aid in the
       proper administration of their estates.

The Debtors tell the Court that the Firm's professionals bill:

         Professional                   Hourly Rate
         ------------                   -----------
         Tax Partners                   $220 - $275
         Managers                       $180 - $210
         Supervisors                    $150 - $175
         Staff                          $120 - $145
         Paraprofessionals               $75 - $120

Lois West, a principal at Popowcer Katten, assures the Court that
his firm is "disinterested" as that term is defined in
Section 101(14) of the Bankruptcy Code.

Headquartered in Chicago, Illinois, Heartland Partners, LP,
(Amex: HTL) is a based real estate limited partnership with
properties, primarily in the upper Midwest and northern United
States.  CMC Heartland is a subsidiary of Heartland Partners, L.P.
and is the successor to the Milwaukee Road Railroad, founded in
1847.  The company and four of its affiliates filed for chapter 11
protection on Apr. 28, 2006 (Bankr. N.D. Ill. Case No. 06-04764).
Steven B. Towbin, Esq., at Shaw Gussis Fishman Glantz Wolfson &
Towbin LLC, represents the Debtor.  No Official Committee of
Unsecured Creditors has been appointed in the Debtors' chapter 11
cases.  When the Debtors filed for protection from their
creditors, they listed total assets of $4,375,000 and total debts
of $3,951,000.  The Debtors' consolidated list of 20 largest
unsecured creditors however showed more than $30 million in
environmental litigation claims.


HEARTLAND PARTNERS: Hires Environ as Environmental Consultant
-------------------------------------------------------------
Heartland Partners, LP, and its debtor-affiliates obtained
authority from the U.S. Bankruptcy Court for the Northern District
of Illinois to employ Environ International Corporation as their
environmental consultant.

Environ International is expected to:

    a. provide general environmental consulting for the Debtors'
       current and former leased or owned real properties;

    b. review the work product of the Debtors' former and current
       local environmental contractors;

    c. implement environmental investigation or remedial
       activities at the Debtors' current and historical real
       estate holdings;

    d. provide litigation support for the Miles City, Montana site
       and the Debtors' Lite Yard Minneapolis, Minnesota site;

    e. provide consultation regarding the disposition, including
       abandonment or sale, of the Debtors' current real estate
       holdings; and

    f. perform any and all other environmental consulting services
       on behalf of the Debtors which may be required to aid in
       the proper administration of their estates.

The Debtors tell the Court that the firm's professionals bill:

         Professional                      Hourly Rate
         ------------                      -----------
         Principals                            $215
         Managers                          $145 - $185
         Science Advisors                  $145 - $185
         Consultants                       $145 - $185
         Associates                         $75 - $130
         Support Staff                      $60 - $75

Mark Travers, a principal at Environ International, assures the
Court that his firm is "disinterested" as that term is defined in
Section 101(14) of the Bankruptcy Code.

Headquartered in Chicago, Illinois, Heartland Partners, LP,
(Amex: HTL) is a based real estate limited partnership with
properties, primarily in the upper Midwest and northern United
States.  CMC Heartland is a subsidiary of Heartland Partners, L.P.
and is the successor to the Milwaukee Road Railroad, founded in
1847.  The company and four of its affiliates filed for chapter 11
protection on Apr. 28, 2006 (Bankr. N.D. Ill. Case No. 06-04764).
Steven B. Towbin, Esq., at Shaw Gussis Fishman Glantz Wolfson &
Towbin LLC, represents the Debtor.  No Official Committee of
Unsecured Creditors has been appointed in the Debtors' chapter 11
cases.  When the Debtors filed for protection from their
creditors, they listed total assets of $4,375,000 and total debts
of $3,951,000.  The Debtors' consolidated list of 20 largest
unsecured creditors however showed more than $30 million in
environmental litigation claims.


HEARTLAND PARTNERS: Hires Le Petomane as Sale Consultant
--------------------------------------------------------
Heartland Partners, LP, and its debtor-affiliates obtained
authority from the U.S. Bankruptcy Court for the Northern District
of Illinois to employ Le Petomane XVI, Inc., as their liquidation
and asset sale consultant.

Le Petomane is expected to:

    a. assist the Debtors in the management of the liquidation of
       their assets;

    b. assist in the administration of the estates with respect to
       environmental issues in the bankruptcy setting;

    c. advise the Debtors on issues relating to the sale or
       disposition of the Debtors' current or former leased or
       owned real properties;

    d. assist the Debtors in negotiating with state environmental
       agencies and other environmental claimants asserting claims
       in the Debtors' cases;

    e. advise the Debtors on remedial activities at the Debtors'
       current and historical real estate holdings; and

    f. perform any and all other consulting services to the
       Debtors which may be required to aid in the proper
       administration of their estates.

The Debtor tells the court that Le Petomane will be paid their
usual hourly rates.  Documents submitted to the Court did not
state those rates.

Jay A. Steinberg, President of Le Petomane, assures the Court that
his firm is "disinterested" as that term is defined in
Section 101(14) of the Bankruptcy Code.

Headquartered in Chicago, Illinois, Heartland Partners, LP,
(Amex: HTL) is a based real estate limited partnership with
properties, primarily in the upper Midwest and northern United
States.  CMC Heartland is a subsidiary of Heartland Partners, L.P.
and is the successor to the Milwaukee Road Railroad, founded in
1847.  The company and four of its affiliates filed for chapter 11
protection on Apr. 28, 2006 (Bankr. N.D. Ill. Case No. 06-04764).
Steven B. Towbin, Esq., at Shaw Gussis Fishman Glantz Wolfson &
Towbin LLC, represents the Debtor.  No Official Committee of
Unsecured Creditors has been appointed in the Debtors' chapter 11
cases.  When the Debtors filed for protection from their
creditors, they listed total assets of $4,375,000 and total debts
of $3,951,000.  The Debtors' consolidated list of 20 largest
unsecured creditors however showed more than $30 million in
environmental litigation claims.


HI-LIFT OF NEW YORK: Wants to Use Toyota's Cash Collateral
----------------------------------------------------------
Hi-Lift of New York, Inc., and TMR Realty Inc. ask the U.S.
Bankruptcy Court for the Eastern District of New York for
permission to use cash collateral securing repayment of their loan
to Toyota Motor Credit Corporation.

The Debtors owed Toyota $4.5 million when they filed for
bankruptcy protection.  $2.23 million of that loan was for floor
plan financing.  $2.28 million was used to fund the Debtors'
rental fleet.  The remaining $213,000 was used for their residual
fleet financing.  

Use of the cash collateral will allow the Debtor to meet current
operating expenses, which include insurance, utilities and
supplies, Kevin J. Nash, Esq., at Finkel Goldstein Rosenbloom &
Nash, LLP, in Manhattan tells the Court.

As adequate protection for its interests, the Debtors will grant
Toyota replacement liens and security interests to the extent of
any diminution in value of its collateral.

Headquartered in Farmingdale, New York, Hi-Lift of New York, Inc.,
sells and distributes Toyota tractors and forklifts.  The Company
and its affiliate TMR Realty Inc., which is engaged in the real
estate business, filed for bankruptcy protection on April 3, 2006  
(Bank. E.D.N.Y. Case Nos. 06-40943 and 06-40942) Kevin J. Nash,
Esq., at Finkel Goldstein Rosenbloom & Nash, LLP, represent the
Debtors in their restructuring.  Hi-Lift of New York reported
assets amounting between $1 million and $10 million and debts
totaling between $10 million and $50 million when it filed for
bankruptcy.  TMR Realty had assets amounting between $50,000 and
$1 million and debts totaling between $100,000 and $10 million.


IVOW INC: Posts $814,638 Net Loss In 2006 First Fiscal Quarter
--------------------------------------------------------------
iVOW, Inc., filed its first quarter financial statements for the
three months ended March 31, 2006, with the Securities and
Exchange Commission on May 15, 2006.

The Company reported an $814,638 net loss on $604,072 of revenues
for the three months ended March 31, 2006.

The Company noted that $325,000 of the increase in revenue came
from its Sound Health Solutions subsidiary, which the Company
acquired in November 2005.

At March 31, 2006, the Company's balance sheet showed $4,001,046
in total assets, $1,326,962 in total liabilities, and $2,674,084
in total stockholders' equity.

Subsequent to the quarter, the Company announced an agreement for
a pediatric pilot weight management program with Microsoft
Corporation.

In the summer of 2005, Microsoft and Premera Blue Cross of
Washington received a national award for innovation in obesity
management from the National Institute of Health Care Management,
which prominently featured the program designed by SHS and its two
physician co-founders, Drs. Francis Gough and Teresa Girolami.

"The acquisition of SHS and the favorable CMS-Medicare ruling
covering bariatric surgery in February are already proving to have
a positive impact on our business.

"SHS is emerging as a strong complement to our other service
offerings," Dr. Michael Owens, President and CEO of iVOW, Inc.,
stated.  

"We intend to continue the expansion of our leadership position
within the weight management industry and believe SHS and the
recent CMS ruling will continue to provide momentum to fuel our
success."

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?9bd

                        Going Concern Doubt

As reported in the Troubled Company Reporter on April 12, 2006,
J.H. Cohn LLP in San Diego, California, expressed substantial
doubt about iVOW, Inc.'s ability to continue as a going concern
after auditing its financial statements for the fiscal year ended
Dec. 31, 2005.  The auditing firm pointed the Company's recurring
net losses and negative net cash flows from operating activities
since inception.

Based in San Diego, California, iVow, Inc. (NASDAQ: IVOW) --
http://www.ivow.com/-- provides program management, healthcare  
services, operational consulting and clinical training services to
employers, payors, physicians and hospitals involved in the
medical and surgical treatment of the chronic and morbidly obese.  
The Company also provides specialized vitamins to patients who
have undergone obesity surgery.


JERNBERG INDUSTRIES: Ch. 7 Trustee Wants to Terminate Pension Plan
------------------------------------------------------------------
Richard J. Mason, the chapter 7 trustee appointed in the
liquidation cases of JII Liquidating, Inc., fka Jernberg
Industries, Inc., and its debtor-affiliates, asks the U.S.
Bankruptcy Court for the Northern District of Illinois for
permission to designate himself as plan administrator of Old
Jernberg's defined benefit pension plan and enter into certain
agreement with the Pension Benefit Guaranty Corporation pertaining
to the termination of said plan and the appointment of PBGC as
trustee.

Michael M. Schmahl, Esq., at McGuireWoods LLP, in Chicago,
Illinois, reminds the Court that on Sept. 7, 2005, Old Jernberg
sold substantially all of its operating assets pursuant to a third
party.  Effective October 10, 2005, the cases were converted to
cases under chapter 7 of the Bankruptcy Code, and Mr. Mason was
appointed as trustee in bankruptcy.

When Old Jernberg and its affiliates filed for bankruptcy
protection they maintained for their employees certain defined
contribution benefit plans, and Old Jernberg maintained for
certain of its employees a defined benefit plan, known as the
"Jernberg Hourly Pension Plan."

Pursuant to an earlier Court order, the termination and wind-up
of the Defined Contribution Plans by the Trustee was approved.  
The Trustee is thus in the process of terminating the Defined
Contribution Plans.  The Defined Benefit Plan, certain benefits
of which are guaranteed by the PBGC, maintains approximately
$10.3 million in assets and has approximately 659 participants,
some of whom are now employed by New Jernberg.  Investors Bank &
Trust Company is presently acting as the trustee of the trust
forming a part of the Defined Benefit Plan.  The PBGC has advised
the Trustee that the Defined Benefit Plan is substantially
underfunded.

The PBGC has also advised the chapter 7 trustee that it will file
substantial priority or secured claims against the Debtors.  Since
his appointment, the chapter 7 trustee has attempted to cooperate
with the PBGC in his efforts relative to the termination of the
Defined Benefit Plan.

Pursuant to Section 4042(c) of the Employee Retirement Income
Security Act of 1974, as amended, PBGC can enter into an agreement
with the plan administrator of a defined benefit pension plan
subject to Title IV of ERISA as to the termination of the plan and
as to the appointment of a trustee.  PBGC now proposes to enter
into an agreement with the Trustee titled "Agreement for
Termination of Plan and Appointment of Trustee."

The principal features of the Proposed Agreement are that:

   (a) the Defined Benefit Plan will be terminated as of
       September 7, 2005; and

   (b) the PBGC will be appointed trustee of the Defined Benefit
       Plan.

Mr. Schmahl contends that the proposed agreement will also relieve
the chapter 7 trustee of any ongoing burdens arising from
administration of the Defined Benefit Plan.

Headquartered in Chicago, Illinois, Jernberg Industries, Inc., --
http://www.jernberg.com/-- is a press forging company that
manufactures formed and machined products.  The Company and its
debtor-affiliates filed for chapter 11 protection on June 29, 2005
(Bankr. N.D. Ill. Case No. 05-25909).  Jerry L. Switzer, Jr.,
Esq., at Jenner & Block LLP, represented the Debtors.  When the
Debtors filed for chapter 11 protection, they estimated assets and
debts of $50 million to $100 million.  CM&D Management Services,
LLC's A. Jeffery Zappone served as the Debtors' Chief
Restructuring Officer.  The Bankruptcy Court converted the
Debtors' chapter 11 case to a chapter 7 liquidation proceeding on
Sept. 26, 2005.


KINGS RIVER: Real Estate Broker Disqualified & Compensation Denied
------------------------------------------------------------------
Prior to filing for bankruptcy protection, Kings River Resorts,
Inc., hired Jeff Mishkin at Marcus & Millichap to market property
that was the subject of a mortgage in foreclosure.  That pre-
petition relationship with the debtor was not disclosed when the
Chapter 7 trustee sought permission to employ the broker to sell
the same property on behalf of the estate.  

The chapter 7 trustee sold the property for roughly $2 million and
the broker applied for payment of a $125,000 commission on the
sale.  

The broker's duty to disclose ran to the court, not just to the
trustee, the Honorable W. Richard Lee finds, and was not satisfied
by statements allegedly made solely to the trustee.  The
appropriate remedy for the broker's disclosure violations, Judge
Lee concludes, is disqualification from employment and denial of
all compensation.  

The Bankruptcy Court's decision is reported at 2006 WL 1331334 and
a copy of the Slip Opinion is available at
http://researcharchives.com/t/s?9d0at no charge.  Maureen  
McQuaid, Esq., at the Law Offices of Maureen McQuaid represented
Marcus & Millichap, Inc., in this matter.

Kings River Resorts, Inc., filed for bankruptcy protection (Bankr.
E.D. Calif. Case No. 04-60523-N-11), and is represented by David
R. Jenkins, Esq., in Fresno, Calif.  Michael T. Hertz, Esq., at
Lang, Richert & Patch represents the Official Committee of
Unsecured Creditors appointed in the Debtor's case.


KMART CORP: Wants to File National Settlement Under Seal
--------------------------------------------------------
Kmart Corporation asks the U.S. Bankruptcy Court for the Northern
District of Illinois to:

    -- permit the filing of the Settlement Agreement and all
       related papers, including the request for approval of the
       Agreement, under seal; and

    -- prevent the disclosure of confidential information related
       to the Sealed Pleadings or any related proceedings by any
       person with knowledge of the matter.

William J. Barrett, Esq., at Barack Ferrazzano Kirschbaum Perlman
& Nagelberg LLP, in Chicago, Illinois, relates that National
Property Analysts Master Limited Partnership is currently the
ground tenant -- and Arjax Railroad Associates II, LLC, the ground
lessor -- under a lease dated October 13, 1972, for real property
located at 1700 South Delaware Street, in San Mateo, California.

Kmart Corporation, in turn, is currently the subtenant -- and
National is currently the sublessor -- under a lease and sublease
agreement dated December 1, 1973, under which Kmart presently
subleases from National the San Mateo Property and several
improvements.

According to Mr. Barrett, Kmart and ARJAX are parties to a
settlement agreement dated November 21, 1983, originally between
Kmart and Concar Enterprises, Inc., the predecessor-in-interest to
ARJAX, as the owner-in-fee of the San Mateo Property and the
ground lessor under the Lease.

Kmart and National are also parties to a Court-approved
stipulation that authorized Kmart's assumption of the Sublease and
established a framework for resolving Kmart and National's
differences with respect to disputed aspects of the monetary and
non-monetary cure claims -- the Outstanding Claims - asserted by
National with respect to the Sublease.

Pursuant to a settlement agreement dated May 16, 2006, the parties
agreed to resolve their differences with regards:

    (i) the terms and conditions of the continued use of the
        Premises under the Lease and Sublease; and

   (ii) the Outstanding Claims.

However, Kmart and National entered into the Settlement Agreement
under the condition that it be held "strictly confidential [and]
not be disclosed."

Some aspects of the information contained in the Settlement
Agreement are confidential and highly business sensitive,
Mr. Barrett tells the Court.

Therefore, release in the public domain could be significantly
detrimental to Kmart in its continuing operations, Mr. Barrett
adds.

Mr. Barrett reminds the Court that Kmart is authorized by law to
file the Settlement Agreement and related papers under seal
pursuant to Section 107 of the Bankruptcy Code, Rule 9018 of the
Federal Rules of Bankruptcy Procedure, and Local Bankruptcy Rule
5005-4.

Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART
Holding Corporation) -- http://www.bluelight.com/-- operates  
approximately 2,114 stores, primarily under the Big Kmart or Kmart
Supercenter format, in all 50 United States, Puerto Rico, the U.S.
Virgin Islands and Guam.  The Company filed for chapter 11
protection on January 22, 2002 (Bankr. N.D. Ill. Case No.
02-02474).  Kmart emerged from chapter 11 protection on May 6,
2003.  John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate,
Meagher & Flom, LLP, represented the retailer in its restructuring
efforts.  The Company's balance sheet showed $16,287,000,000 in
assets and $10,348,000,000 in debts when it sought chapter 11
protection.  Kmart bought Sears, Roebuck & Co., for $11 billion to
create the third-largest U.S. retailer, behind Wal-Mart and
Target, and generate $55 billion in annual revenues.  The waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act
expired on Jan. 27, without complaint by the Department of
Justice.  (Kmart Bankruptcy News, Issue No. 111; Bankruptcy
Creditors' Service, Inc., 215/945-7000)


LANOGA CORP: Moodys Puts Low-B Rating on 1.3 Billion of Loans
-------------------------------------------------------------
Moody's Investors Service assigned a first-time B1 corporate
family rating and a Ba3 senior secured credit facilities ratings
to The Strober Organization and Lanoga Corporation that are co-
borrowers on a joint and several basis.  The guarantor of the
facilities is Pro-Build Holdings, Inc., an entity formed by the
merging of Lanoga with Strober.

In 1997, Fidelity Capital acquired Strober and in February 2006,
Fidelity Capital acquired Lanoga Corporation thereby becoming the
largest distributor of building supplies to professional
homebuilders and remodeling contractors.

The funds received from the current transaction are to be used
primarily to refinance the debt used in the Lanoga acquisition as
well as to refinance existing debt at Strober.

Moody's notes that part of the capital structure will be
refinanced with $600 million of subordinated notes that will be
privately held and not rated by Moody's.

These ratings were assigned:

   * $550 million Revolving Credit Facility, assigned Ba3;
   * $750 million Term Loan B, assigned Ba3;
   * Corporate Family Rating, assigned B1.
   * The ratings outlook is stable.

The credit facilities are guaranteed by Pro-Build Holdings, Inc.
and each existing and future direct and indirect material domestic
subsidiary excluding finance subsidiaries.

The debt is secured by all assets and capital stock.  The company
can take advantage of the following incremental facilities:
   
   (1) incremental revolving facility in the aggregate amount of
       maximum $100 million;
   (2) incremental term loan facility in the aggregate amount of
       $100 million.

The key rating factors affecting the assigned ratings:

   (1) credit metrics indicative of a B1 corporate family rating;
   (2) the potential for aggressive balance sheet management;
   (3) revenue and customer concentration in the homebuilding
       industry; and
   (4) acquisition driven growth.

Pro-Build Holdings, Inc. is the largest distributor of building
supplies to professional homebuilders and remodeling contractors
in the United States, operating over 400 locations across 38
states.  Combined actual revenues for FYE 2005 were approximately
$4.6 billion.


LARRY'S MARKETS: Gets Interim Nod on Giuliani Capital as Advisor
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Washington
gave its interim approval for Larry's Markets, Inc., to employ
Giuliani Capital Advisors LLC as its financial advisor and
investment banker.

The Debtor tells the Court that Giuliani Capital's services is
necessary and essential in expediting the completion of a sale of
substantially all of its assets and in order to continue to
support and facilitate its operations.

Giuliani Capital will be the Debtor's financial advisor regarding
the potential sale of the Debtor's stocks or assets in the form of
a sale, merger, joint venture or other similar transaction whether
consummated in a single transaction or a series of transactions.  
In this matter, Giuliani Capital is expected to:

    a. advise the Debtor on the development of the Debtor's
       business plans, cash flow forecasts, financial projections
       and cash flow reporting;

    b. advise the Debtor with respect to available capital
       restructuring, sale and financing alternatives, including
       recommending specific courses of action and assisting with
       the design, structuring and negotiation of alternative
       restructuring or transaction structures;

    c. advise the Debtor in its preparation of financial
       information that may be required by its creditors and other
       stakeholders, and in its coordination of communication with
       interested parties and their respective advisors;

    d. advise the company in preparing for, meeting with, and
       presenting information to interested parties and their
       respective advisors, specifically including the Debtor's
       senior lenders, other debt holders and potential sources of
       new financing and their respective advisors;

    e. advise the Debtor in the development of a restructuring
       plan and negotiation with parties-in-interest in connection
       with a potential sale of the Debtor's stocks or assets in
       the form of a sale, merger, joint venture or other similar
       transaction whether consummated in a single transaction or
       a series of transactions;

    f. at the Debtor's request, advise and assist the Debtor in
       preparing a memorandum and due diligence material to be
       used in connection with a potential sale of all or
       substantially all of the equity, assets or liabilities of
       the Debtor, or an investment in the Debtor;

    g. advise the Debtor's management on proposals from third
       parties for new sources of capital or the sale of the
       company; and

    h. other services as may be reasonably requested in writing
       from time to time by the Debtor and agreed to by Giuliani
       Capital.

The Debtor tells the Court that it has a duly appointed
restructuring committee to make and implement decisions regarding
the restructuring of the company.  The Debtor says the Giuliani
Capital will assist the restructuring committee and in this
capacity will:

    a. assist with the ongoing negotiations with lenders and other
       third parties with respect to any restructuring plan,
       including but not limited to, the negotiation of
       replacement financing for the debtor and any required
       amendments, forbearances, waivers, modification and
       restructuring of the present financing agreements of the
       Debtor;

    b. advise the restructuring committee and assist management in
       the development of financial projections and the
       dissemination of appropriate information to all relevant
       persons;

    c. assist the restructuring committee in the retention of
       other financial advisors for the Debtors as deemed
       appropriate;

    d. advise the restructuring committee in the development and
       implementation of an internal restructuring;

    e. consult with the Debtor's legal counsel and other advisors
       as necessary; and

    f. assist the restructuring committee with the review of all
       documentation required to complete any refinancing or
       restructuring of the debt of equity of the Debtor or the
       proposed sale of a portion or substantially all of the
       equity, assets or liabilities of the Debtor.

The Debtor tells the Court that Giuliani Capital will be paid a
$65,000 monthly advisory fee.  The Debtor discloses that Giuliani
Capital will also receive a fee of 5% of the transaction value in
a sale or orderly liquidation of the Debtor's assets.

Teri Stratton, a director at Giuliani Capital, assures the Court
that the firm is "disinterested" as that term is defined in
Section 101(14) of the Bankruptcy Code.

                     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: Gets Interim Nod on Smith Bunday as Accountant
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Washington
gave its interim approval for Larry's Markets, Inc., to employ
Smith Bunday Berman Britton, P.S., as its accountants.

Smith Bunday is expected to:

    a. prepare income tax returns;

    b. consult with the Debtor regarding IRS examinations;

    c. consult with the Debtor regarding ordinary business
       transactions; and

    d. audit, review or complies financial statements on an as
       requested basis.

Patrick Gree, shareholder of Smith Bunday, tells the Court that he
will bill $250 per hour for this engagement.  Mr. Gree discloses
that the firm's professionals and support personnel bill between
$102 to $250.

Mr. Gree assures the Court that his firm is "disinterested" as
that term is defined in Section 101(14) of the Bankruptcy Code.

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 Heller as Asst. Controller
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Washington
gave its interim approval for Larry's Markets, Inc., to employ
R.I. Heller & Co., LLC, as its assistant controller.

The Debtor tells the Court that it selected R.I. Heller because of
its experience in accounting matters and it specialization in
providing interim management and crisis consulting.

R.I. Heller is expected to:

    a. perform as Assistant Controller for the Debtor;
    b. collect accounts receivables;
    c. oversee the COD process for the Debtor's stores;
    d. execute bankruptcy reporting as necessary; and
    e. perform other finance functions as directed by the Debtor.

Erin Davis, a director at R.I. Heller, tells the Court that the
Firm will be paid a flat monthly fee of $12,500.  Ms. Davis
discloses that the firm has already received a payment of $12,500
for services that have been and are to be performed in May 2006.

Ms. Davis assures the Court that her firm is "disinterested" as
that term is defined in Section 101(14) of the Bankruptcy Code.

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.


LEHMAN XS: Moody's Assigns Ba3 Rating to Class A-3 Certificates
---------------------------------------------------------------
Moody's Investors Service assigned a rating of A3 to the Class A-1
notes, a rating of Baa3 to the Class A-2 notes, and a rating of
Ba3 to the Class A-3 notes issued by Lehman XS Net Interest Margin
Notes, Series 2006-AR2.

The notes are backed by residual and prepayment penalty cash flows
from an underlying securitization of Alt-A, negative amortization
residential mortgage loans: IndyMac INDX Mortgage Loan Trust 2006-
AR2.

The cash flows available to repay the notes are impacted by the
level of prepayments and the timing and amount of losses on the
underlying mortgage pool.

The Complete Rating Actions:

Issuer: Lehman XS NIM Company 2006-AR2

Co-Issuer: SASCO ARC Corporation

Securities: Lehman XS Net Interest Margin Notes, Series 2006-AR2

   * Cl. A-1, Assigned A3
   * Cl. A-2, Assigned Baa3
   * Cl. A-3, Assigned Ba3

The notes are being offered in privately negotiated transactions
without registration under the 1933 Act.  The issuance was
designed to permit resale under Rule 144A.


MAVERICK TUBE: Moody's Rates $250 Million Sr. Subor. Notes at B2
----------------------------------------------------------------
Moody's assigned new ratings to Maverick Tube Corporation.  With a
stable outlook, Moody's assigned a Ba3 Corporate Family Rating to
Maverick, and a B2 rating to the company's existing 1.875% $250
million senior subordinated convertible notes issued in November
2005.  Moody's does not rate the $120 million senior subordinated
convertible notes offering issued in 2003.

The stable outlook assumes the company will maintain its leverage
in within the 2.5 times to 3.0 times range in the upcycle.  Given
the current level of about 1.5 times, the outlook and ratings
accommodates some softness in the business, continued acquisition
activity, and even a modest amount of additional stock buyback.

However, the outlook and/or ratings could quickly be pressured if
the company's strategy for leverage changes and upcycle leverage
rises above 3.0 times without clear visibility for near-term
reduction given the high level of volatility inherent in the
company's business; or if material equity buybacks are completed,
let alone leveraged equity re-purchases; or if Maverick executed
large debt funded acquisitions without clear visibility for debt
reduction ahead of the next cyclical downturn.

The Ba3 rating reflects Maverick's position as a leading provider
of Oil Country Tubular Goods, line pipe and steel electrical
conduit manufacturing; the comparatively solid financial profile
which compares favorably to the Ba3 rated oilfield services peer
group; provides some cushion against the inherent volatility of
the energy related business which is approximately 85% of the
company's revenues and earnings; the still favorable outlook for
the company's energy related business at least over the next year;
the degree of product diversification within the energy related
products and the market diversification provided by the electrical
product business which is used in industrial applications
unrelated to energy; and the company's growing higher margin,
premium price products business which has helped support overall
margins despite pressure on its more commodity type products that
is exposed to competition from imports.

However, the ratings are restrained by the company's exposure to
the inherently volatile oil and gas industry, and more
specifically, the drilling cycle which moves in conjunction with
commodity prices; the cost pressures associated with steel prices
which can significantly impact margins despite robust market
conditions and could even put added pressure on margins if demand
for its products slows and reduces the company's ability to pass
along higher steel costs; intense competition from imports, which
puts pressure on pricing of about half of its OCTG products sales;
and the company's use of debt to repurchase a significant amount
of stock in 2005 which signals the willingness to use the balance
sheet to support shareholder friendly activities.

Moody's notes that the company's $120 million of convertible
subordinated notes issued in 2003 are in the money and freely
convertible at the shareholder's option which would require a cash
payment of about $115 million plus the issuance of new shares for
the remaining $5 million of notes not exchanged in 2004 for the
net share settlement and the conversion premium, which could be
sanitized through equity re-purchases.

The notes are rated two notched below the Corporate Family Rating
due to their subordinated position in the capital structure.

Maverick Tube Corporation is headquartered in Chesterfield,
Missouri.


MCCLATCHY CO: Advertising Revenues Down 2.2% in April 2006   
----------------------------------------------------------
The McClatchy Company disclosed that consolidated advertising
revenues in April 2006 decreased 2.2% and total revenues declined
2.4%.  Year-to-date advertising revenues grew 0.3% and total
revenues were down 0.4%.

Commenting on April's results, Gary Pruitt, McClatchy's Chairman
and CEO, said, "We knew that Easter falling in April of 2006 would
depress our classified advertising results compared to 2005 when
Easter was in March.  So while revenues were down this April
compared to last year, it was not unexpected.  Based on current
trends, we believe that second quarter advertising revenues will
grow in the low-single-digit range, similar to our first quarter
2006 advertising revenue growth."

Advertising revenue performance at the Company's newspapers is
summarized by region in McClatchy's statistical report that
follows.  The Company has also included supplemental advertising
revenue data by category in a schedule that follows.

                   About The McClatchy Company

Headquartered in Sacramento, California, The McClatchy Company
(NYSE: MNI) -- http://www.mcclatchy.com/-- is a leading newspaper  
and Internet publisher.  It publishes 12 daily and 16 non-daily
newspapers located in western coastal states, North and South
Carolina, and the Twin Cities of Minneapolis/St. Paul.  McClatchy
has daily circulation of 1.4 million and Sunday circulation of 1.8
million.  McClatchy's newspapers include, among others, the Star
Tribune in Minneapolis, The Sacramento Bee, The Fresno Bee and The
Modesto Bee in California, The News & Observer (Raleigh, N.C.),
The News Tribune (Tacoma, Wash.), the Anchorage Daily News and
Vida en el Valle, a bilingual Spanish weekly newspaper distributed
throughout California's Central Valley.  McClatchy also operates
leading local websites in each of its daily newspaper markets,
offering readers information, comprehensive news, advertising,
e-commerce and other services, and owns and operates McClatchy
Interactive, an interactive operation that provides websites with
content, publishing tools and software development.

                             *   *   *

As reported in the Troubled Company Reporter on April 24, 2006,
Moody's Investors Service assigned a Ba1 Corporate Family Rating
to The McClatchy Company and a Ba1 rating to McClatchy's proposed
$3.75 billion senior unsecured bank credit facility, and lowered
its commercial paper rating to Not Prime from Prime-3.  The rating
actions conclude the review for downgrade initiated on March 13,
2006 in connection with the company's announced $6.5 billion
acquisition of Knight-Ridder.  The rating outlook is stable.


MORTGAGE ASSISTANCE: Posts $308,489 Net Loss in First Fiscal Qtr.
-----------------------------------------------------------------
Mortgage Assistance Center Corporation filed its first quarter
financial statements for the three months ended March 31, 2006,
with the Securities and Exchange Commission on May 19, 2006.

The Company reported a $308,489 net loss on $102,788 of total
revenues for the three months ended March 31, 2006.

At March 31, 2006, the Company's balance sheet showed $1,205,928
in total assets and $2,733,941 in total liabilities, resulting in
a $1,528,013 stockholders' deficit.

The Company's March 31 balance sheet also showed strained
liquidity with $877,847 in total current assets available to pay
$1,822,290 in total current liabilities coming due within the next
12 months.

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?9b3

                        Going Concern Doubt

As reported in the Troubled Company Reporter on May 25, 2006,
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.

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.


NRG VICTORY: U.S. Court to Hear Chapter 15 Petition on June 12
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
will convene a hearing at 10:00 a.m., on June 12, 2006, to
consider the chapter 15 petition of Alan Boyce, as foreign
representative of NRG Victory Reinsurance Limited.

Copies of the Scheme of Arrangement and other relevant documents
are available upon written request to Mr. Boyce's U.S. counsel at:

         Clifford Chance U.S. LLP
         31 West 52nd Street
         New York, New York 10019
         U.S.A.
         Attn: Sara M. Tapinekis, Esq.
         Fax: (212) 878-8375
         E-mail: sara.tapinekis@cliffordchance.com

Objections to the petition may be submitted no later than 4:00
p.m. (Eastern Time) on June 7 at:

         The Office of the Clerk of Court
         Room 534, One Bowling Green
         New York, New York 10004
         U.S.A.

and served upon the petitioner's counsel.

Headquartered in Ashford, England, NRG Victory Reinsurance Ltd.
operated a reinsurance company but ceased underwriting operations
in 1993.  Alan Boyce, in his capacity as foreign representative
for the company, filed a chapter 15 petition on May 12, 2006
(Bankr. S.D.N.Y. Case No. 06-11052).  Sara M. Tapinekis, Esq.,
Andrew P. Brozman, Esq., David A. Sullivan, Esq., at Clifford
Chance US LLP, represents Mr. Boyce in the U.S. proceedings.  As
of the petition date, the Debtor estimated more than US$100
million in assets and debts.

The Debtor is currently undergoing a Scheme of Arrangement in the
High Court of Justice in England and Wales.


ORIUS CORP: Exclusive Plan Filing Period Intact Until June 21
-------------------------------------------------------------
The Hon. Bruce W. Black of the U.S. Bankruptcy Court for the
Northern District of Illinois, Eastern Division, extended until
June 21, 2006, the period within which Orius Corp. and its debtor-
affiliates have the exclusive right to file a Plan of
Reorganization.  The Debtors also have until Aug. 22, 2006 to
solicit acceptances of that Plan.

The Debtors sought to extend their exclusive plan filing and
solicitation periods to resolve certain contingencies that will
substantially affect their proposed plan.

Forrest B. Lammiman, Esq., at Lord, Bissel & Brook LLP, tells the
Court that the Debtors are currently negotiating the terms of a
consensual plan with the agent for its Secured Lenders and with
the counsel for the Official Committee of Unsecured Creditors.

The Debtors anticipate filing a plan that will provide for the
orderly liquidation of its remaining assets and the resolution of
all outstanding claims.  The Court had approved the sale of
substantially all of the Debtors assets to Schatz Enterprises,
Inc. and a joint venture composed of Hilco Industries LLC and
Rabin Worldwide on Feb. 16, 2006.  The Debtors and the buyers
closed the sale on March 1, 2006.

                         About Orius Corp.

Headquartered in Barrington, Illinois, Orius Corp. --
http://www.oriuscorp.com/-- is a nationwide provider of    
construction, deployment and maintenance services to customers
operating within the telecommunications; broadband; gas and
electric utilities; and government industries.  The Company and
its affiliates filed for chapter 11 protection on Dec. 12, 2005
(Bankr. N.D. Ill. Case No. 05-63876).  Aaron C. Smith, Esq., and
Folarin S. Dosunmu, Esq., at Lord, Bissell & Brook LLP represent
the Debtors in their restructuring efforts.  Aaron L. Hammer,
Esq., Joji Takada, Esq., Thomas R. Fawkes, Esq., at Freeborn &
Peters LLP, represent the Official Committee of Unsecured
Creditors. When the Debtors filed for protection from their
creditors, they listed estimated assets of $10 million to
$50 million and estimated debts of $50 million to $100 million.


ORIUS CORP: Rejects Seven Real Property Leases
----------------------------------------------
The Hon. Bruce W. Black of the U.S. Bankruptcy Court for the
Northern District of Illinois, Eastern Division, allowed Orius
Corp. and its debtor-affiliates to reject seven unexpired non-
residential real property leases.  A list of the rejected leases
is available for free at http://researcharchives.com/t/s?9da

The Debtors asked for permission to reject these lease following
the sale of substantially all of their assets to Schatz
Enterprises, Inc. and a joint venture composed of Hilco Industries
LLC and Rabin Worldwide on Feb. 16, 2006.  

The Debtors told the Court that the buyers no longer have any use
for these locations.  Timothy S. McFadden, at Lord, Bissell &
Brook LLP, said that the immediate rejection of the leases will
minimize administrative expenses, maximize distributions to
creditors and quickly return the properties to the landlord.

The Debtors will pay rent due on the leases on a pro-rated basis
for each day between Dec. 12, 2005 and the rejection date.

                         About Orius Corp.

Headquartered in Barrington, Illinois, Orius Corp. --
http://www.oriuscorp.com/-- is a nationwide provider of    
construction, deployment and maintenance services to customers
operating within the telecommunications; broadband; gas and
electric utilities; and government industries.  The Company and
its affiliates filed for chapter 11 protection on Dec. 12, 2005
(Bankr. N.D. Ill. Case No. 05-63876).  Aaron C. Smith, Esq., and
Folarin S. Dosunmu, Esq., at Lord, Bissell & Brook LLP represent
the Debtors in their restructuring efforts.  Aaron L. Hammer,
Esq., Joji Takada, Esq., Thomas R. Fawkes, Esq., at Freeborn &
Peters LLP, represent the Official Committee of Unsecured
Creditors. When the Debtors filed for protection from their
creditors, they listed estimated assets of $10 million to
$50 million and estimated debts of $50 million to $100 million.


PLIANT: Success Unlikely Under Plan Says First Lien Panel
---------------------------------------------------------
The Ad Hoc Committee of Holders of Certain of the 11-5/8% Senior
Secured Notes due 2009 and the 11-1/8% Senior Secured Notes due
2009 -- the First Lien Notes -- in the chapter 11 cases of Pliant
Corporation and its debtor-affiliates is concerned that:

    1. the Debtors' Plan of Reorganization, which contains two
       alternative forms of treatment for the Subordinated
       Noteholders, purports to render the First Lien Noteholders
       unimpaired under the first alternative, despite the fact
       that the proposed distribution materially alters the
       contractual rights of the First Lien Noteholders; and

    2. the Debtors will emerge with more than $650,000,000, in
       senior secured debt under a Plan that is premised on
       aggressive projections and optimistic estimates of future
       growth, despite past failures to reach targeted performance
       levels, thus raising feasibility concerns.

The Notes were issued by the Debtors pursuant to an amended and
restated Indenture, originally dated as of February 17, 2004.

Karen M. McKinley, Esq., at Richards, Layton & Finger, P.A., in
Wilmington, Delaware, asserts that the Plan contemplates cash
payments, the incurrence of debt and other actions that impair
the contractual rights of the First Lien Noteholders as of the
Effective Date.

"Specifically, the issuance to the Debtors' prepetition unsecured
subordinated noteholders of (i) the $20,000,000 in Tack-On Notes;
and (ii) the 1% cash consent fee, each violates several
provisions of the First Lien Indenture, and thus, the Plan
renders the First Lien Noteholders 'impaired' within the meaning
of Section 1124 of the Bankruptcy Code," Ms. McKinley argues.

In terms of feasibility, the Debtors bear the burden of
demonstrating that the Plan is not likely to be followed by the
need for further financial reorganization.

Ms. McKinley contends that these factors demand further
explanation from the Debtors at the confirmation hearing as to
whether the projections contained in the Plan are reasonable
enough to find the Plan feasible:

    (i) the Debtors' high debt to EBITDA ratio upon emergence;

   (ii) the volatility of the oil markets;

  (iii) past failures to meet financial projections; and

   (iv) a less than clear picture of the Debtors' liquidity on the
        Effective Date.

Certain of the Debtors' financial results during the course of
these Chapter 11 cases create particular concern, Ms. McKinley
points out, given that the Debtors need near-perfect execution of
their aggressive projections in order to manage such a heavy debt
burden upon exit.

The Debtors have recently executed a commitment letter with an
exit lender -- a critical step towards emergence.  However, as of
May 22, 2006, the Debtors have not provided counsel to the First
Lien Committee with forms of the exit financing documents, Ms.
McKinley informs the U.S. Bankruptcy Court for the District of
Delaware.

Thus, neither the First Lien Committee nor the Court is presently
in a position to properly determine if all of the First Lien
Noteholders' rights with respect to the their collateral will
indeed remain unaltered as of the Effective Date, Ms. McKinley
maintains.

                           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.  (Pliant Bankruptcy News, Issue No. 14; Bankruptcy
Creditors' Service, Inc., 215/945-7000)


PLIANT: 2nd Lien Panel Says Plan Doesn't Comply with Bankr. Code
----------------------------------------------------------------
The Ad Hoc Committee of certain Holders of 11-1/8% Senior Secured
Notes due 2009 -- the Second Lien Notes -- in the chapter 11 cases
of Pliant Corporation and its debtor-affiliates complains that the
Debtors' Plan of Reorganization fails to comply with numerous
provisions of the Bankruptcy Code and thus, should not be
confirmed.

James E. O'Neill, Esq., at Pachulski Stang Ziehl Young Jones &
Weintraub LLP, in Wilmington, Delaware, contends that:

    1. the Plan improperly classifies the Second Lien Note Claims
       as unimpaired and therefore does not comply with Sections
       1129(a)(1) and (8) of the Bankruptcy Code;

    2. the Plan fails to comply with several of the "applicable
       provisions" of the Bankruptcy Code; and

    3. the Court cannot find that confirmation of the Plan is not
       likely to be "followed by the liquidation, or the need for
       further financial reorganization of the [Debtors]".

Mr. O'Neill asserts that the Plan improperly classifies the
Class 5 Second Lien Note Claims as unimpaired by violating the
Subordination and Turnover provisions contained in the
Subordinated Notes Indentures:

Plan Provision                    Objection
--------------                    ---------
The Plan proposes to issue to     If issued, the Tack-On Notes
the holders of Class 7 Claims     would constitute additional
(Subordinated Noteholders)        First Lien Notes that would be
$20,000,000 in "Tack-On Notes."   senior in priority to the
                                  Second Lien Notes.  The
                                  issuance of those senior notes
                                  violates the Subordination and
                                  Turnover Provisions of the
                                  Subordinated Notes Indentures.

The Plan provides that if the     The terms of the issuance of
issuance of the Tack-On Notes     the New Subordinated Notes
results in "First Lien            would violate the Subordination
Impairment" or "Second Lien       and Turnover Provisions.
Impairment," the Debtors will
issue $35,000,000 in New          The Plan provides that holders
Subordinated Notes to the         of New Subordinated Notes may
holders of Class 7 Claims.        receive a cash redemption of
                                  their notes within one year
                                  after the Plan's Effective Date
                                  totaling $20,000,000, and
                                  barring that redemption, will
                                  receive cash interest payments
                                  starting one year after the
                                  Effective Date.  The
                                  Subordination and Turnover
                                  Provisions, however, require
                                  that any consideration be
                                  surrendered to the holders of
                                  "Senior Indebtedness" under the
                                  Subordinated Notes Indentures.
                                  The Plan violates that
                                  requirement.

The Plan provides for the         The terms of the issuance of
issuance of Series AA Preferred   Series AA Preferred Stock and
Stock and New Common Stock to     New Common Sock would violate
the holders of Class 7 claims.    the Subordination and Turnover
                                  Provisions.  The Series AA
                                  Preferred Stock cannot be
                                  redeemed prior to payment in
                                  full of "Senior Indebtedness."
                                  Likewise, the Debtors cannot
                                  redeem or pay dividends on the
                                  New Common Stock to the extent
                                  those dividends would not be
                                  permitted under the same
                                  Subordination and Turnover
                                  Provisions.

The Plan proposes to issue        This provision violates the
Bondholder Additional             Subordination and Turnover
Consideration to the holders      Provisions, which apply to any
of Class 7 claims equal to 1%     payments or distributions made
of the principal outstanding      to the holders of Old Note
on the Old Note Claims,           Claims.
representing a $3,200,000 cash
payment.

The Plan provides that holders     The proposed payments violate
Class 7 claims will receive        the Subordination and Turnover
cash in an amount equal to the     Provisions.
Consenting Noteholders'
Professional Fees, which will
be paid directly by Pliant to
the Consenting Noteholders'
advisors.

The Plan provides that the         This provision improperly
classification and treatment of    seeks to cut off the rights of
of claims comply with the          the Second Lien Noteholders by
subordination provisions of the    mischaracterizing the Plan as
relevant indentures.               effecting subordination
                                   provisions, when in fact it
                                   does not.

Mr. O'Neill emphasizes that the issuance of Bondholder
Consideration violates the "applicable provisions" of the
Bankruptcy Code and other applicable law, including:

    (i) the requirement that a Plan classify and treat claims and
        interests; and

   (ii) the implied covenant of good faith and fair dealing.

The Plan improperly proposes to pay the Consenting Noteholders'
Professional Fees by means of assuming, under Section 365 of the
Bankruptcy Code, the "fee letter entered into between Pliant and
such professionals prior to the Petition Date", Mr. O'Neill
points out.

Moreover, Mr. O'Neill asserts, the proposed Emergence Bonus
Payments to the Debtors' insiders violates Section 503(c)(1) of
the Bankruptcy Code.

Mr. O'Neill says that the Plan presents a host of problems that
prevent the Court from finding that the Plan is feasible,
including:

    (a) the Debtors' high leverage and upside-down capital
        structure upon emergence;

    (b) the Debtors' unrealistic projections in light of their
        past performance and repeated failure to meet projections;

    (c) the necessity that the Debtors execute flawlessly under
        their business plan, including avoiding adverse economic,
        climatic mid geo-political events, and other matters
        entirely outside their control;

    (d) the Plan's utter failure to address the impending
        maturities of approximately $650,000,000 in secured debt
        just 36 months after the proposed emergence date; and

    (e) the Debtors' limited credit availability on emergence that
        will greatly restrict their ability to borrow their way
        out of a crisis.

Well Fargo Bank, N.A., in its capacity as successor indenture
trustee to Wilmington Trust Company under an Indenture dated as
of May 30, 2003, between Pliant Corporation and Wilmington Trust
Company, agrees with the assertions, contentions and arguments of
the Second Lien Committee.

                           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.  (Pliant Bankruptcy News, Issue No. 14; Bankruptcy
Creditors' Service, Inc., 215/945-7000)


PLIANT CORP: Reports $298 Million First Quarter Sales
-----------------------------------------------------
Pliant Corporation filed its Form 10-Q, which included results for
the 1st quarter of 2006.  Sales, EBITDA(R) and cash flow from
operations all improved versus the prior year.

                            Sales Growth

First quarter sales were a company record at $298 million.  This
represents a $35 million increase over the first quarter of 2005
-- a 13.2% increase.  The company grew sales in each operating
unit -- Engineered Films, Industrial Films and the Specialty
Products Group.  The company grew sales in each of its geographies
-- US, Canada, Mexico, Germany and Australia.  Included in this
sales growth was a 1.3% increase in volume, measured in pounds.

                             EBITDA(R)

EBITDA(R) results for the quarter were $24.1 million.  This
represents an 11% increase over the 1st quarter of 2005.  This is
also a sequential increase of $0.6 million versus the 4th quarter
of 2005.  The company remains focused on growing EBITDA(R) via
accretive sales growth, lean business practices, cost reduction
and innovation.  EBITDA(R) is defined as EBITDA with the
company's financial restructuring expenses added back.  These
restructuring expenses include the write-off of unamortized
original issue discounts and capitalized financing fees, as well
as legal fees and financial advisor fees.

                      Cashflow and Liquidity

The company had $19.4 million of cash on hand at the end of the
quarter, which exceeded its forecast by $1 million.  Additionally,
the company has a still-unused DIP financing facility that can
provide up to approximately $69 million of additional liquidity.   
The company has yet to need or use this DIP financing facility.

Resin prices have steadily declined in the first 4 months of 2006,
and this is positively contributing to reductions in the dollar
value of the company's working capital accounts.

             Chapter 11 Financial Restructuring Process

The company's financial restructuring program is underway and
on-track.  The company's restructuring plan calls for a reduction
of debt and redeemable stock by up to $585 million and a reduction
in annual interest expense of up to $85 million.

As part if its financial restructuring, the company is writing off
$46.3 million of unamortized financing costs:

      * Write-off of unamortized original discount related to
        preferred stock $24.6 million;

      * Write-off of unamortized capitalized financing fees $15.8
        million; and

      * Write-off of unamortized original discount related to its
        bonds $ 5.9 million.

This will further reduce the company's ongoing interest expense.

A hearing to consider confirmation of the company's proposed Plan
of Reorganization is scheduled for May 31, 2006, and the company
currently anticipates this proposed Plan to be confirmed in the
second quarter

                      Exit Financing Proposals

The company has conducted a comprehensive process to obtain exit
financing, geared toward maximizing available liquidity and
financial flexibility, and received a strong response to its
request for formal proposals.  All of the final proposals provide
for maximum availability of $175 million or higher, which
significantly exceeds the $140 million of maximum availability
under our pre-petition revolving credit facility.  The company
expects to obtain an excellent financial package from a premier
financial institution that will meet or exceed its expected
liquidity needs upon emergence from bankruptcy and beyond.

                   Restoration of Working Capital

The company is working toward re-instatement of normal working
capital balances.  This has been a gradual, explicitly planned
process and the company believes that it is on-track to achieve
its goals at emergence.

                           Resin Prices

Total raw material costs, which consist primarily of resin costs,
were $27 million higher in the 1st quarter of 2006 versus the 1st
quarter of 2005 and comprise 60% of sales.  The company increased
its selling prices and these increases accounted for $31 million
in incremental sales.  The value of the company's net waste
increases when resin prices increase, however, the impact of these
resin price increases on gross margin was completely offset by a
14.5% decline in waste rates, as a result of the company's
operational excellence programs.

                Operating Expenses and SG&A Programs

The company's operating expenses were $20.4 million in the 1st
quarter of 2006.  This is a decrease of 8% or $1.8 million in the
1st quarter 2006 versus the 1st quarter 2005, prior to
restructuring costs.

The company realigned its executive management team in the 1st
quarter as part of its commitment to keep SG&A costs flat.  The
company realigned into three business units by merging its
previously reported Performance Films Division into its Specialty
Products Group, and eliminated several executive positions.  
Prior year segment information has been restated in the company's
10-Q to reflect this streamlined management structure.

The company is also underway with a centralization of its Graphics
Services in the United States and Canada.  This will eliminate
redundant costs, improve its responsiveness and improve the
quality of its services.

The company also added two new key senior executives with solid
top-line growth track records:

      * Drew McLean - Senior Vice President of Sales, Marketing
        and Customer Service

      * Jim Kingsley - Senior Vice President and General Manager
        of Engineered Films

                             Innovation

Pliant continued its focus on innovation programs in the 1st
quarter of 2006.  The company's innovation programs are focused
on accretive growth and cost reduction with a 60/40 split of
technical resources along these lines.  The company is in the
final qualification stages with customers in the Personal Care
and Medical market with innovations aimed at form, fit and
comfort advancements in film performance.

In the 1st quarter, the company installed $1 million of new
process technology equipment specifically targeted at new barrier
film product offerings.  We are currently scaling up with several
customers on these products and technologies.

To continue our focus on new packaging innovations and cost
reductions in 2006 and beyond, we announced and funded a major
expansion of our Chippewa Falls R&D center.  The expansion will
be complete in the latter part of 2006 and will house new and
existing pilot equipment used to support Pliant's internal
product development as well as our Government-funded R&D
packaging programs.

                          Packaging Awards

Pliant won 2 Silver Awards from the Flexible Packaging Association
in the 1st quarter.  These awards honor innovative advancements in
flexible packaging and Pliant's awards were for a new
Institutional Fry Bag film and a new Cracker Slug Wrap film.  We
are proud of these recognitions and continually strive for
breakthroughs from our innovation programs.

                Expansion and Major Capital Projects

The company has a $47 million capital spending plan for the year.  
This spending rate is equivalent to the company's depreciation
rate and benchmarks out vis-a-vis its competitors.  The company's
investment spending is on plan, with major capital expansions in
the 1st quarter including:

      * Expansion of the company's printing press capacity and bag
        machine capacity;

      * Expansion of the company's chill cast, flat cast and
        elastomeric films capacity; and

      * Expansion of the company's PVC production operations in
        Germany.

The company has a balanced program to invest in cost reduction,
accretive growth capacity and innovation projects

                          Full Year Update

The company's April results are also ahead of its EBITDA(R) plan.  
The company is reconfirming its guidance of $107 million of
EBITDA(R) for the year of 2006.

                             Conclusion

Harold Bevis, President and CEO of Pliant Corporation said, "We
were pleased with our performance in the 1st quarter.  We have
approved our next round of capital spending, customer investment
programs and innovation investments.  We remain firmly committed
to our strategically sound business plan built on accretive sales
growth, lean business practices, cost reduction and innovation."

                           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.  (Pliant Bankruptcy News, Issue No. 14; Bankruptcy
Creditors' Service, Inc., 215/945-7000)


QUANTEGY INC: Court Says Plant Shutdown Notices Were Inadequate
---------------------------------------------------------------
On Jan. 19, 2005, a group of employees filed a class action
complaint against Quantegy, Inc., for alleged violations of the
Worker Adjustment and Retraining Notification Act, 29 U.S.C. Secs.
2101-2109.  On March 29, 2005, Mary Ann Hutchinson, a named
plaintiff, filed a timely class proof of claim in Quantegy's
bankruptcy cases.  The Official Committee of Unsecured Creditors
appointed in Quantagy's cases moved to intervene and further moved
to dismiss the adversary proceeding (Adv. Pro. No. 05-8002), deny
class certification, and for partial summary judgment.  On Jan. 3,
2006, the employee-plaintiffs filed a motion for summary judgment.  
Those motions were set for hearing on Jan. 30, 2006.  At the
hearing, Max A. Moseley, Esq., at Johnston Barton Proctor & Powell
LLP, appeared on behalf of the Committee, and Mary E. Olsen, Esq.,
and M. Vance McCrary, Esq., Gardner, Middlebrooks, Gibbons,
Kittrell & Olsen, P.C., appeared on behalf of the employee-
plaintiffs.

The notices of plant closing and cessation in operations Quantegy
provided did not contain a brief statement of the basis for
reducing the 60-day notice period, as required for the debtor to
take advantage of the statutory defenses set forth in the WARN
Act, the Honorable Dwight H. Williams, has held.  The notice
posted by the debtor on the factory doors merely stated that the
plant was closed until further notice pending financial
restructuring.  The notice provided to local authorities explained
that the cessation in operations was due to financial issues that
had plagued the industry and the debtor for some time.  Therefore,
neither notice contained a statement, brief or otherwise, of the
basis for reducing the notification period.  Judge Williams'
decision is reported at 2006 WL 1302193.

Headquartered in Opelika, Alabama, Quantegy, Inc. --
http://www.quantegy.com/-- provides a full line of audio, video,  
data, storage, logging and instrumentation recording media
products.  The Company along with its debtor-affiliates filed for
chapter 11 protection on Jan. 10, 2005 (Bankr. M.D. Ala. Case No.
05-80042).  Cameron-RRL A. Metcalf, Esq., at Metcalf & Poston, PC,
represents the Debtors in their restructuring efforts.  When
Quantegy, Inc., filed for protection from its creditors, it
estimated assets between $1 million and $10 million and debts
between $10 million to $50 million.


RADNOR HOLDINGS: Implements Company-Wide Cost Reduction Program
---------------------------------------------------------------
Radnor Holdings Corporation has initiated a company-wide cost
reduction program.  The Company is taking actions to respond to
the unprecedented rise in energy, transportation and raw materials
costs and to restore profitability.  The Company has also
announced management changes.

The Company has implemented a reduction in force for salaried and
hourly personnel across all of its U.S. business segments by
approximately 10% of its current domestic workforce.  In addition,
the Company will consolidate its Jacksonville, FL manufacturing
operations with other plants.  Additional company-wide cost
containment measures being taken include reductions in production
costs, improving manufacturing efficiencies and reducing non-
operating costs.  When fully implemented, the Company expects
annualized pre-tax savings of approximately $16 to $19 million as
a result of the cost reduction program before implementation
costs.  Cash costs related to implementation of the program are
estimated to be in the range of $2 to $4 million.

"Our goal is to restore profitability and drive improved
performance at each of our business units," said Michael T.
Kennedy, the Company's President and CEO.  "The cost reductions,
together with improvements in manufacturing efficiencies and
management changes, will enhance our long-term growth without
impacting our quality and service level commitments to customers."

The Company also announced the retirement of Donald D. Walker,
Senior Vice President of Operations, effective June 1, 2006.  Mr.
Walker will continue as a consultant to the Company through year-
end to assist with implementation of the cost reduction program
and transition matters.  Scott Myers, the former Vice President of
Product Development and Planning, has been appointed Vice
President of Operations and will assume Mr. Walker's
responsibilities for manufacturing and engineering.  Mr. Myers has
been with the Company since January 2006.  Prior to joining the
Company, Mr. Myers served in various executive capacities for
Superior Tube Company, Inc., most recently as President.

In addition, the Company has engaged Stan Springel to serve as
interim Chief Operating Officer.  Mr. Springel has significant
experience in assisting companies develop and implement business
plans and improve operations.  Mr. Springel has served in various
interim, senior executive capacities and as an advisor to both
publicly and privately held companies.

                       About Radnor Holdings

Radnor Holdings Corporation -- http://www.radnorholdings.com/--   
is a leading manufacturer and distributor of a broad line of
disposable foodservice products in the United States and specialty
chemical products worldwide. The Company operates 15 plants in
North America and 3 in Europe and distributes its foodservice
products from 10 distribution centers throughout the United
States.

The Company reported a $94,034,000 net loss for the year ending
December 31, 2005.  At Dec. 31, 2005, the Company's assets
amounted to $361,454,000.  As of Dec. 31, 2005, the Company's
equity deficit widened to $87,404,000 from a $770,000 deficit at
Dec. 31, 2004.


RED TAIL: Court Dismisses Case After Debtor Pledges to Pay Claims
-----------------------------------------------------------------
The Honorable Trish M. Brown of the U.S. Bankruptcy Court for the
District of Oregon dismissed Red Tail Canyon LLC's chapter 11 case
at the Debtor's request.

J. Stephen Werts, Esq., at Cable Huston Benedict Haagensen & Lloyd
LLP, informed the Court that the Debtor has already entered into a
settlement with GECCMC 2002-2 Foster Road LLC regarding settlement
of its $12.5 million loan.  West Coast Bank has committed to loan
the Debtor sufficient funds to pay GECCMC.  The Debtor also plans
to pay all general unsecured claims, in full.  Powell Family
Limited Partnership's $400,000 claim will also be paid in full.

Headquartered in Portland, Oregon, Red Tail Canyon LLC owns and
operates the Red Tail Canyon townhouse apartments located in South
Aspen Summit Drive, Multnomah County, Portland, Oregon.  The
Company filed for chapter 11 protection on Sept. 19, 2005 (Bankr.
D. Ore. Case No. 05-41235).  J. Stephen Werts, Esq., at Cable
Huston Benedict Haagensen & Lloyd LLP, represents the Debtor in
its restructuring efforts.  When the Debtor filed for protection
from its creditors, it listed estimated assets and debts of
$10 million to $50 million.


REXNORD CORP: Plans to Launch Tender Offer for 10.125% Sr. Notes
----------------------------------------------------------------
Rexnord Corporation intends to begin a cash tender offer in the
near future to purchase all of its 10.125% Senior Subordinated
Notes due 2012, and a related consent solicitation, in conjunction
with the announcement that private equity firm Apollo Management
has signed an agreement to purchase Rexnord from private equity
firm The Carlyle Group.

The acquisition of Rexnord by Apollo Management is subject to
various regulatory and other conditions and is expected to close
in the third calendar quarter of 2006.

The tender offer for the Notes and consent solicitation will be
conditioned on consummation of the acquisition and subject to
other customary terms and conditions.

Affiliates of Apollo Management have obtained financing
commitments to fund the cash tender offer and refinance the
company's existing senior secured credit facilities.

Headquartered in Milwaukee, Wisconsin, Rexnord Corporation --
http://www.rexnord.com/-- is a worldwide manufacturer of highly  
engineered precision motion technology products, primarily focused
on power transmission with approximately 5,800 employees
worldwide.  Rexnord products are sold around the world by over 300
direct sales representatives through a network of multiple service
centers and warehouses backed by hundreds of independent stocking
distributors.  The company manufactures gears, couplings,
industrial bearings, flattop chain and modular conveyor belts, a
variety of special components, industrial chain and aerospace
bearings and seals.  Rexnord's products are used in plants and
equipment in a range of industries, including aerospace,
aggregates and cement, air handling, construction equipment,
chemicals, energy, food and beverage, forest and wood products,
mining, material and package handling, marine, natural resource
extraction and petrochemical.

                          *     *     *

As reported in the Troubled Company Reporter on Feb. 7, 2006,
Standard & Poor's Ratings Services placed its ratings on Rexnord
Corp., including the 'B+' corporate credit rating, on CreditWatch
with developing implications.  At Jan. 1, 2006, the Milwaukee,
Wisconsin-based diversified industrial manufacturer had
$797 million of total debt outstanding.


REXNORD CORP: To Be Acquired by Apollo Management for $1.825 Bil.
-----------------------------------------------------------------
Rexnord Corporation reported that an affiliate of the private
equity firm, Apollo Management, L.P., has signed an agreement to
purchase RBS Global, Inc., the corporate parent of Rexnord, for
$1.825 billion from private equity firm The Carlyle Group and
management.  The transaction is subject to government approvals
and other customary conditions and is expected to close in the
third calendar quarter of 2006.

"Carlyle has been a supportive partner in positioning Rexnord to
be a strategic player in the power transmission and aerospace
industries and I look forward to working with Apollo to continue
our growth trajectory," George Sherman, Non-executive Chairman of
Rexnord said.

"I am excited to have another high-quality owner to work with and
support us as we enhance Rexnord's leadership position in our
industry," Bob Hitt, President and Chief Executive Office of
Rexnord, said.

Headquartered in Milwaukee, Wisconsin, Rexnord Corporation --
http://www.rexnord.com/-- is a worldwide manufacturer of highly  
engineered precision motion technology products, primarily focused
on power transmission with approximately 5,800 employees
worldwide.  Rexnord products are sold around the world by over 300
direct sales representatives through a network of multiple service
centers and warehouses backed by hundreds of independent stocking
distributors.  The company manufactures gears, couplings,
industrial bearings, flattop chain and modular conveyor belts, a
variety of special components, industrial chain and aerospace
bearings and seals.  Rexnord's products are used in plants and
equipment in a range of industries, including aerospace,
aggregates and cement, air handling, construction equipment,
chemicals, energy, food and beverage, forest and wood products,
mining, material and package handling, marine, natural resource
extraction and petrochemical.

                          *     *     *

As reported in the Troubled Company Reporter on Feb. 7, 2006,
Standard & Poor's Ratings Services placed its ratings on Rexnord
Corp., including the 'B+' corporate credit rating, on CreditWatch
with developing implications.  At Jan. 1, 2006, the Milwaukee,
Wisconsin-based diversified industrial manufacturer had $797
million of total debt outstanding.


ROBERT FRYAR: Case Summary & 18 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Robert B. Fryar and Lumber Company, Inc.
        2591 CR602
        Dumas, Mississippi 38625

Bankruptcy Case No.: 06-11077

Type of Business: The Debtor is a logging company.

Chapter 11 Petition Date: May 25, 2006

Court: Northern District of Mississippi (Aberdeen)

Judge: David W. Houston III

Debtor's Counsel: William C. Walter, Esq.
                  William C. Walter, PLLC
                  4209 Lakeland Drive, #392
                  Flowood, Mississippi 39232
                  Tel: (801) 520-0126

Total Assets: $1,125,750

Total Debts:  $2,994,661

Debtor's 18 Largest Unsecured Creditors:

   Entity                        Nature of Claim     Claim Amount
   ------                        ---------------     ------------
GE Capital                       Vehicle & Equipment     $760,000
P.O. Box 532617
Atlanta, GA 30353-2617

Merchant & Farmers Bank          Real Estate             $498,000
P.O. Box 700
Holly Springs, MS 38635

Internal Revenue Service                                 $300,000
Memphis, TN 37501-0030

AmSouth Bank                     Land                    $262,468
Commercial Loan Center
Birmingham, AL 35246-0054

Bank of New Albany               Real Estate              $93,000

American Express                                          $56,923

MS State Tax Commission                                   $55,000

Key Equipment Finance                                     $33,000

Miller Logging                   Timber                   $30,903

Mike Vandiver                    Timber                   $25,788

AWTC                             Timber                   $24,637

MS Department of                                          $15,000
Employment Security

Bennet & Sons Logging                                     $13,779

Lamar Flemons                    Timber                    $7,176

Southern Timber Ventures         Timber                    $6,926

Jesco, Inc.                      Parts                     $5,184

Fitch Oil Co.                    Fuel                      $4,768

Darrell's Tire Service           Tires                     $4,532


SAMSONITE CORP: Good Performance Cues S&P to Raise Rating to BB-
----------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on Samsonite
Corp. due to the company's continued improvement in operating
performance and its improved financial risk profile.  The
corporate credit rating was raised to 'BB-' from 'B+'.  The rating
outlook is stable.

Denver, Colorado-based Samsonite had about $307.2 million in total
debt outstanding as of Jan. 31, 2006, excluding operating lease
obligations.

"The rating on Samsonite reflects its leveraged financial profile,
narrow business focus, and exposure to the travel and tourism
industry," said Standard & Poor's credit analyst Mark Salierno.
"These factors are offset by the company's strong market position
as a leading global manufacturer and distributor of luggage,
casual bags, business cases, and other travel-related products."
     
Despite a somewhat narrow business focus, the company has
established and well-known brands (e.g., Samsonite and American
Tourister) in the competitive hard- and soft-sided global luggage
industry.

In September 2005, Samsonite launched the premium Samsonite Black
Label line, geared toward the high end of the market.  The company
also has agreements to license well-known brands such as Lacoste
and Timberland.  

Samsonite benefits from its global sourcing capabilities and
broad, geographically diverse distribution network, selling in
more than 100 countries worldwide.


SILICON GRAPHICS: Wants Equity Trading Restricted to Protect NOLS
-----------------------------------------------------------------
Silicon Graphics, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Southern District of New York to
establish restrictions and notification requirements that must be
satisfied before ownership and certain transfers of the Debtors'
common stock, are deemed effective.

The Debtors estimate that they currently have consolidated net
operating loss carryforwards in excess of $1,000,000 and other
valuable tax attributes.

Gary T. Holtzer, Esq., at Weil, Gotshal & Manges LLP, in New York
relates that the Debtors' consolidated NOL carryforwards are
valuable assets of the estates.  The Internal Revenue Code
generally permits corporations to carry forward NOLs to offset
future income.

David Wheatley, tax director of Silicon Graphics, Inc., tells the
Court that the NOL carryforwards could significantly reduce the
Debtors' future federal income tax liability:

    * depending on future operating results and potential asset
      dispositions; and

    * absent any intervening limitations prior to the Effective
      Date.

Although NOL carryforwards remaining as of the effective date may
be reduced pursuant to a plan of reorganization as a result of the
discharge of debt, Mr. Wheatley maintains that the Debtors' NOL
carryforwards are substantially in excess of any possible
reduction.

The Debtors' NOLs could potentially translate into substantial
future tax savings over time.  The savings would enhance the
Debtors' cash position for the benefit of all parties-in-interest
and significantly contribute to the Debtors' efforts toward a
successful reorganization, Mr. Wheatley adds.

The Debtors intend to avail themselves of the special relief
afforded by Section 382 of the Tax Code for changes in ownership
under a confirmed Chapter 11 plan.  Mr. Holtzer notes that the
relief may not be available if the trading and accumulation of
Silicon Graphics Stock prior to the Effective Date is left
unrestricted.

Accordingly, the Debtors ask Judge Gropper to enforce the
automatic stay to preclude certain transfers, and monitor other
changes, in the ownership of Silicon Graphics Stock to ensure that
a 50% change of ownership does not occur before the effective
date.

Mr. Holtzer asserts that restrictions and notice procedures are
necessary to preserve the Debtors' ability to use their NOL
carryforwards.

         Trading Restrictions and Notification Requirements

Judge Gropper grants the Debtors' request on an interim basis.

Effective as of May 10, 2006, the salient procedures for trading
in Silicon Graphics Stock are:

(a) Notice of Substantial Equityholder Status

     Any person who beneficially owns as of the Petition Date or
     who becomes a beneficial owner of at least 4.75% of Silicon
     Graphics Stock will file with the Court and serve on the
     Debtors and their counsel, a notice of the status,
     unredacted, within 15 calendar days of the later of May 10,
     2006, and the date the person becomes a beneficial owner of
     4.75% or more stock.

(b) Acquisition of Equity Securities

     At least 15 calendar days prior to the proposed date of any
     transfer of stock that would result in an increase in the
     amount owned by a person that beneficially owns 4.75% or more
     or that would result in a person becoming a beneficial owner
     of 4.75 % or more Stock, the person will file with the Court
     and serve on the Debtors and their counsel, an unredacted
     notice of intent to purchase, acquire or otherwise accumulate
     an equity interest, specifying the intended transaction.

(c) Objection Procedures

     The Debtors will have 15 calendar days after the filing of an
     Equity Acquisition Notice to file with the Court and serve on
     a proposed equity transferee an objection to any proposed
     transfer of Silicon Graphics Stock on the grounds that the
     transfer may adversely affect the Debtors' ability to utilize
     their NOLs or other tax attributes as a result of an
     ownership change under Section 382 or Section 383 of the
     Internal Revenue Code.

     If the Debtors file an objection by the deadline, then the
     Proposed Equity Acquisition Transaction will not be effective
     unless approved by a final and non-appealable order of the
     Court.  The Debtors will bear the burden of establishing the
     adverse effect of the proposed transfer on their ability to
     utilize their NOLs or other tax attributes.

     If the Debtors do not file an objection by the deadline, or
     if the Debtors provide written authorization to the Proposed
     Equity Transferee approving the Proposed Equity Acquisition
     Transaction prior to the Equity Objection Deadline, then the
     proposed transaction may proceed solely as described in the
     notice.

(d) Unauthorized Transactions in Equity Securities

     Effective as of May 10, 2006, and until further Court order
     to the contrary, any acquisition of Silicon Graphics Stock in
     violation of the procedures will be null and void ab initio
     as an act in violation of the automatic stay under Sections
     362 and 105(a) of the Bankruptcy Code.

                      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: Will Grant Priority to Prepetition Orders
-----------------------------------------------------------
Silicon Graphics, Inc., and its debtor-affiliates obtained
approval from the U.S. Bankruptcy Court for the Southern District
of New York granting their Vendors administrative expense priority
status for undisputed obligations arising from the postpetition
delivery of goods and services ordered in the prepetition period.  
The Debtors are authorized to pay their obligations in the
ordinary course of their business.

As of their bankruptcy filing, the Debtors have certain
prepetition purchase orders outstanding with various vendors for
goods and services -- estimated at $18,000,000.

Gary T. Holtzer, Esq., at Weil, Gotshal & Manges LLP, in New York,
notes that the Debtors rely on providers of goods, including
manufacturers, packagers, and distributors, to provide the Debtors
with the components necessary for assembly of their products and
the distribution of their products and spare parts to their
customers.

As a consequence of the Debtors' bankruptcy filing, the Vendors
may be concerned that goods shipped or services ordered before the
Petition Date, which will be delivered to the Debtors
postpetition, will render the Vendors as general unsecured
creditors, Mr. Holtzer tells the Court.

Mr. Holtzer adds that the Vendors may then refuse to ship the
goods, recall shipments, or refuse to perform services with
respect to the Prepetition Orders unless the Debtors:

    -- issue substitute postpetition purchase orders; or

    -- obtain a Court decision providing that, among other things,
       all undisputed obligations of the Debtors arising from the
       postpetition delivery of goods and services subject to
       Prepetition Orders are afforded administrative expense
       priority.

Pursuant to Section 503(b) of the Bankruptcy Code, most
obligations that arise in connection with the postpetition
delivery of goods and services, including goods and services
ordered prepetition, are in fact administrative expense priority
claims.

                      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: Will Honor Prepetition Custom Duties up to $1MM
-----------------------------------------------------------------
The Hon. Allan L. Gropper of the U.S. Bankruptcy Court for the
Southern District of New York allowed Silicon Graphics, Inc., and
its debtor-affiliates to pay prepetition Customs Duties, Broker's
Fees, Export Charges, Common Carrier Charges, fees owed to
Software Solutions Unlimited, Inc., and Facility Charges, provided
that the total amount will not exceed $1,095,600.

Shipment of the sub-components of the Debtors' products to the
Debtors' manufacturing facility in Wisconsin, and ultimately,
delivery of the Debtors' finished products as well as spare parts
to customers, distributors, and non-Debtor foreign subsidiaries
throughout the world, is typically effectuated through the
services of common carriers, customs brokers, and third parties
that own and operate storage facilities.

In addition to ensuring the production of their products
consistent with customer specifications, the Debtors must also
ensure that their products are delivered to their customers in a
timely manner, Gary T. Holtzer, Esq., at Weil, Gotshal & Manges
LLP, in New York, relates.

In the ordinary course of their businesses, the Debtors import
into, and export from, the United States computer sub-components,
software and finished computer products to and from vendors,
customers, and distributors located in Asia, Europe and Canada,
among other places.  The Debtors import and export millions of
dollars of goods per quarter.

Most of the products imported by the Debtors are duty free.
Certain imported products, however, are subject to customs import
duties, including merchandise processing fees, imposed by the laws
of the United States.

In addition to paying Import Duties, the Debtors must pay freight,
storage, and document charges to effectuate the release of the
Surcharged Goods.  The Debtors engage KSI Corporation, a customs
broker, to take all actions necessary, including making payment,
to obtain the release of imported Surcharged Goods for delivery to
the Debtors.

KSI's invoices are paid on the Debtors' behalf by Software
Solutions Unlimited, Inc., a freight payment service utilized by
the Debtors.

Similar to imported goods, some of the products exported by the
Debtors are subject to import charges in the foreign countries to
which the goods are delivered as well as Port Charges.  The
Debtors use the services of several United Parcel Services
entities, DHL Worldwide Express, and Danzas DHL Freight to take
actions necessary to procure delivery of exported goods.

Like KSI, UPS Customs and DHL are paid a Broker's Fee for its
services and the fees, along with Port Charges and Export Charges
paid on the Debtors' behalf, are paid through SSI.

The Debtors estimate that, as of the Petition Date, they owe:

    -- KSI approximately $8,000 for Broker's Fees and
       reimbursement of Customs Duties; and

    -- UPS Customs approximately $480,000 for Broker's Fees, Port
       Charges, and Export Charges.

The Debtors employ Common Carriers to expedite the shipment of
components from Vendors, and the delivery of their products and
spare parts to their customers, distributors and non-debtor
subsidiaries throughout the world.

SSI oversees the process of reviewing, auditing, and paying
domestic invoices for services provided by the Common Carriers to
the Debtors.  SSI charges the Debtors for its services based on
the number of invoices processed.

As of the Petition Date, the Debtors estimate that they owe SSI:

    * $582,0005 for Common Carrier Charges; and
    * $4,600 for its service fee.

To distribute products to their customers and to facilitate the
repair of products, the Debtors utilize the storage accommodations
of facility providers.  The Debtors' primary repair vendor is
Pinnacle Data Systems, Inc.  The Debtors also utilize the services
of DHL for spare parts warehouse and logistics services in Europe.

As of their chapter 11 filing, the Debtors estimate that they owe:

    * $5,000 to PDSI for storage of the Debtors' goods; and
    * $16,000 to DHL for warehouse and logistics services.

                      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)


SIMMONS BEDDING: S&P Puts BB- Rating on Proposed $490 Million Loan
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' bank loan
rating and '1' recovery rating to Altanta, Georgia-based Simmons
Bedding Co.'s proposed $490 million senior secured term loan D
due 2011, indicating that lenders can expect full (100%)
recovery of principal in the event of a payment default.
      
"The new term loan will be issued through the second amendment and
restatement of the company's existing credit agreement; the
ratings on the proposed term loan are based on preliminary
offering statements and are subject to review upon final
documentation," said Standard & Poor's credit analyst David Kang.
     
Standard & Poor's also raised its rating on the company's existing
$75 million revolving credit facility to 'BB-' from 'B+', and
assigned a '1' recovery rating to the facility, indicating that
lenders can expect full recovery of principal in the event of a
default.
     
At the same time, Standard & Poor's affirmed its 'B+' corporate
credit and other existing ratings on Simmons Co. (Simmons Co. is
the indirect parent company of Simmons Bedding Co.  For analytical
purposes, Standard & Poor's views Simmons Co. and Simmons Bedding
Co. as one economic entity and maintains the corporate credit
rating at Simmons Co.)
     
Proceeds from the new term loan will be used to refinance the
company's existing term loan C and senior unsecured term loan,
approximately $350 million and $140 million of which were
outstanding on April 1, 2006, respectively.  As such, ratings on
these loans will be withdrawn upon the closing of the proposed
transaction.
     
The outlook is negative.  Simmons will have about $890 million of
total debt at closing.


SOLUTIA INC: Agrees to Sell Pharmaceutical Business for $74.5 Mil.
------------------------------------------------------------------
Solutia Inc.'s subsidiary, Solutia Europe SA/NV, reached a
definitive agreement to sell its Pharmaceutical Services business,
comprised of CarboGen AG and AMCIS AG.

                     Terms of the Agreement

Under the terms of the agreement, Dishman Pharmaceuticals &
Chemicals Ltd. will purchase 100% of the stock of CarboGen and
AMCIS, as well as certain other assets used in the Pharmaceutical
Services business, for $74.5 million, subject to working capital
adjustment.  This transaction is subject to removal of the
restrictions related to the sale under SESA's Euronotes,
authorization by the bankruptcy court overseeing Solutia's
reorganization, and government and regulatory approvals, which are
expected by Aug. 31, 2006.

CarboGen and AMCIS -- http://www.carbogen-amcis.com/-- provide  
seamless drug development and commercialization services for
leading pharmaceutical and biotechnology companies.  During the
year 2005, the business had sales of approximately CHF80 million.  
The Pharmaceutical Services business has world-class research and
development facilities at three sites in Switzerland: Aarau,
Bubendorf, and Neuland.  All intellectual property, patents and
trademarks, customer contracts, as well as employees of the
Pharmaceutical Services business are included in the transaction.

                          About Dishman

Headquartered in Ahmedabad, India, Dishman Pharmaceuticals &
Chemicals Ltd. -- http://www.dishmangroup.com/-- is a globally  
focused company, involved in the manufacture of APIs (active
pharmaceutical ingredients), API intermediates, quaternary
compounds and fine chemicals.  Dishman has exports spanning all
continents.

                          About Solutia

Based in St. Louis, Mo., 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 Dec. 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.


STONE ENERGY: Gets $2 Billion Purchase Offer from Energy Partners
-----------------------------------------------------------------
The Board of Directors of Stone Energy Corporation received a
proposal from Energy Partners, Ltd., to acquire all of the
outstanding shares of Stone for a combination of cash and stock
valued at $52 per Stone share.

Under the terms of the EPL proposal, each share of Stone common
stock will be exchanged for $26 in cash and a variable number of
shares of EPL common stock having a value of $26 based on the
average closing price of EPL stock over the 20 trading days
preceding the closing of the merger.  The number of EPL shares to
be issued for each Stone share will range from a maximum of 1.287
to a minimum of 1.053, assuming 27.7 million fully diluted Stone
shares.  This would equate to 1.21 EPL shares for each Stone
share, based upon the closing price of EPL's stock on May 24,
2006.  Stone shareholders will be given the option to elect to
receive the consideration in cash or EPL common stock, subject to
the limitation that the total value of the cash consideration
payable for the shares will be approximately $720 million.

EPL's offer represents a premium of approximately 26% over the
$41.20 per share value proposed to be paid for Stone shares under
the merger agreement between Plains Exploration and Production
Company and Stone, based on the closing price of Plains's common
stock on May 24, 2006; a premium of approximately 10% over the
closing price of Stone's common stock on April 21, 2006, the last
trading day prior to the announcement of the proposed Plains-Stone
agreement; and a premium of approximately 28% over the May 24,
2006 closing price of Stone's common stock, the last trading day
before the EPL offer was made public.

The proposed transaction is valued at approximately $2 billion,
which includes approximately $1.4 billion in equity and the
assumption of approximately $563 million of Stone debt.  This
represents aggregate additional consideration of $300 million over
the current value provided to Stone shareholders under the Plains-
Stone agreement.  On a pro forma basis, the combined company will
be the third most active driller of operated wells in federal and
state waters in the Gulf of Mexico (based on 2005 figures).  The
transaction is expected to be immediately accretive to EPL's cash
flow per share.  Assuming the timeline set forth in the offer
letter, it is anticipated that the proposed transaction will close
in the third quarter of 2006.  The equity portion of the
transaction is expected to be structured to be tax free to Stone
shareholders who elect to receive EPL shares.

"The financial benefits of this offer are extremely compelling for
Stone shareholders," said Richard A. Bachmann, EPL's Chairman and
Chief Executive Officer, said.  "Our offer clearly provides Stone
shareholders superior value over that contemplated by the Plains-
Stone agreement, including a substantial premium, the certainty of
cash, and a variable exchange ratio subject to a collar to provide
downside protection.  In addition, given our highly complementary
operating assets, we expect to achieve significantly greater
synergies than those identified in the Plains-Stone agreement."

The proposed transaction is not subject to any financing
contingency.  EPL has received a commitment letter from Bank of
America, N.A. and affiliates for the financing of the transaction.

Evercore Group L.L.C. and Banc of America Securities LLC are
acting as financial advisors to EPL and Cahill Gordon & Reindel
LLP is acting as legal counsel.

                            About EPL

Headquartered in New Orleans, Louisiana Energy Partners Ltd. --
http://www.eplweb.com/-- is an independent oil and natural gas  
exploration and production company.  Founded in 1998, the
Company's operations are focused along the U. S. Gulf Coast, both
onshore in south Louisiana and offshore in the Gulf of Mexico.

                        About Stone Energy

Headquartered in Lafayette, Louisiana, Stone Energy Corporation --
http://www.stoneenergy.com/-- is an independent oil and gas  
company and is engaged in the acquisition and subsequent
exploration, development, operation and production of oil and gas
properties located in the conventional shelf of the Gulf of
Mexico, deep shelf of the GOM, deep water of the GOM, Rocky
Mountain Basins and the Wiliston Basin.

                          *     *     *

As reported in the Troubled Company Reporter on Feb. 23, 2006,
Moody's Investors Service lowered the Corporate Family Rating for
Stone Energy Corp., to B2 from B1 and the ratings on the senior
subordinated notes to Caa1 from B3.  The ratings are under review
for further possible downgrade.  Moody's also affirmed Stone's
SGL-3 rating.


STRUCTURED ASSET: Fitch Downgrades Class B3 Cert.'s Rating to CCC
-----------------------------------------------------------------
Fitch upgraded five, downgraded one and affirmed 19 classes of
Structured Asset Securities Corp. residential mortgage-backed
certificates, as:

  Series 2001-9:

    -- Class A affirmed at 'AAA'

    -- Class B1 upgraded to 'AAA' from 'AA'

    -- Class B2 affirmed at 'A'

    -- Class B3 L-T downgraded to 'CCC' from 'B'; assigned 'DR2'
       Distressed Recovery rating

    -- Class B4 remains at 'C/DR5'

  Series 2002-1A Pool 1:

    -- Class 1A affirmed at 'AAA'
    -- Class B1-I affirmed at 'AAA'
    -- Class B2-I affirmed at 'AA+'
    -- Class B3-I affirmed at 'BBB+'
    -- Class B4-I affirmed at 'BBB-'
    -- Class B5-I affirmed at 'BB'

  Series 2002-1A Pool 2:

    -- Class 2A affirmed at 'AAA'
    -- Class B1-II upgraded to 'AAA' from 'AA+'
    -- Class B2-II upgraded to 'AA-' from 'A+'
    -- Class B3-II affirmed at 'BBB+'
    -- Class B4-II affirmed at 'BB+'
    -- Class B5-II affirmed at 'B+'

  Series 2002-1A Pools 3, 4 and 5:

    -- Classes 3A, 4A, 5A affirmed at 'AAA'
    -- Class B1-III affirmed at 'AAA'
    -- Class B2-III affirmed at 'AAA'
    -- Class B3-III affirmed at 'BBB+'
    -- Class B4-III upgraded to 'A+' from 'A'
    -- Class B5-III upgraded to 'A-' from 'BBB+'

Classes B3-I, B3-II, and B3-III of Series 2002-1A Pool 1, Series
2002-1A Pool 2, and 2002-1A Pools 3-5, respectively, are known as
component bonds.  Each group of components (B3-1, B3-II and B3-
III) is backed by a separate mortgage pool or group of pools (Pool
1, Pool 2 and Pools 3-5).  Although each mortgage pool or group of
pools performs differently, since the component bonds are not
severable, each component bond reflects the performance of the
weakest of all of its fellow components.  In this transaction,
mortgage group (or loan pool) 2 is the poorest performer and as
such, its component B3-II determines the ratings of all related
components (at 'BBB+').

The affirmations reflect adequate relationships of credit
enhancement to future loss expectations and affect $69.459 million
of outstanding certificates.  The upgrades reflect an improvement
in the relationship of CE to future loss expectations and affect
$19.715 million of outstanding certificates.  The negative rating
action taken on series 2001-9 class B3 affects $3.348 million of
outstanding certificates and is the result of cumulative pool
losses and high delinquency levels.

All of the above classes have maintained CE or experienced slight
growth in CE since the last rating action date.  Series 2001-9
Class B3 currently has 0.71% of credit support remaining
(originally 0.70%).  Even though the CE has increased as a
percentage of the original pool balance, class B3 only has
$191,983 of remaining CE (originally $6,599,627) and 13.26% of the
pool is currently over 90 days delinquent.  Cumulative losses have
ranged from $0.00 for series 2002-1A pools 2, 3, 4 and 5 to
$3,195,508 (0.34% of the original collateral balance) for series
2001-9.

The mortgage loans were originated or acquired by various
originators or their correspondents in accordance with such
originator's respective underwriting standards and guidelines.  
The mortgage pools consist of conventional, adjustable and fixed-
rate, fully amortizing residential mortgage loans extended to
prime/AltA borrowers.  The mortgage loans are master serviced by
Aurora Loan Services, Inc., which is rated 'RMS1-'by Fitch.


STRUCTURED ASSEST: Moody's Puts Low-B Rating on 2 Cert. Classes
---------------------------------------------------------------
Moody's Investors Service assigned a Aaa rating to the senior
certificates issued by Structured Asset Investment Loan Trust,
Mortgage Pass-Through Certificates, Series 2006-BNC2, and ratings
ranging from Aa2 to Ba2 to the subordinate certificates in the
deal.

The securitization is backed by BNC Mortgage, Inc. originated
adjustable-rate and fixed-rate subprime mortgage loans acquired by
Lehman Brothers Holdings Inc.  The ratings are based primarily on
the credit quality of the loans, and on the protection from
subordination, excess spread, overcollateralization, mortgage
insurance, an interest rate swap agreement, and an interest rate
cap agreement.  After taking into account the benefit from the
mortgage insurance, Moody's expects collateral losses to range
from 3.75% to 4.25%.

Wells Fargo Bank, N.A. and JPMorgan Chase Bank National
Association will service the loans and Aurora Loan Services LLC
will act as master servicer.  Moody's assigned Wells Fargo and
JPMorgan Chase its top servicer quality rating as a primary
servicer of subprime 1st lien loans.

The Complete Rating Actions:

Issuer: Structured Asset Investment Loan Trust 2006-BNC2

Securities: Mortgage Pass-Through Certificates, Series 2006-BNC2

   * Cl. A1, Assigned Aaa
   * Cl. A2, Assigned Aaa
   * Cl. A3, Assigned Aaa
   * Cl. A4, Assigned Aaa
   * Cl. A5, Assigned Aaa
   * Cl. A6, Assigned Aaa
   * Cl. M1, Assigned Aa2
   * Cl. M2, Assigned Aa3
   * Cl. M3, Assigned A1
   * Cl. M4, Assigned A2
   * Cl. M5, Assigned A3
   * Cl. M6, Assigned Baa1
   * Cl. M7, Assigned Baa2
   * Cl. M8, Assigned Baa3
   * Cl. B1, Assigned Ba1
   * Cl. B2, Assigned Ba2


TELOS CORP: Dec. 31 Balance Sheet Upside Down by $97.2 Million
--------------------------------------------------------------
Telos Corporation filed its financial statements for the year
ended Dec. 31, 2005, with the Securities and Exchange Commission
on May 23, 2006.

The Company reported a $14,060,000 net loss on $142,595,000 of
total revenues for the year ended Dec. 31, 2005.

At Dec. 31, 2005, the Company's balance sheet showed $41,862,000
in total assets and $139,066,000 in total liabilities, resulting
in a $97,204,000 stockholders' deficit.

The Company's Dec. 31 balance sheet also showed strained liquidity
with $31,097,000 in total current assets available to pay
$32,882,000 in total current liabilities coming due within the
next 12 months.

                 Senior Revolving Credit Facility

On Oct. 21, 2002, the Company entered into a $22.5 million Senior
Revolving Credit Facility with Wells Fargo Foothill, Inc., fka
Foothill Capital Corporation that was originally scheduled to
mature on Oct. 21, 2005.

In April 2005, the Facility was renewed to include amended terms,
primarily a revolving line limit of $15 million and an interest
rate of Wells Fargo prime rate plus 1%, and extended to mature on
Oct. 21, 2008.

Pursuant to the terms of the Facility, in lieu of having interest
charged at the rate based on the Wells Fargo prime rate, the
Company has the option to have interest on all or a portion of the
advances on the Facility be charged at a rate of interest based
upon the LIBOR Rate, plus 4%.  The Company has not exercised this
option to date.

Borrowings under the Facility are collateralized by substantially
all of the Company's assets including inventory, equipment, and
accounts receivable.  The amount of available borrowings
fluctuates based on the underlying asset-borrowing base, as
defined in the Facility agreement.

At Dec. 31, 2005, and March 31, 2006, the Company was not in
compliance with certain of its covenants pursuant to the Facility.  
Due to the late filing of the 2005 Form 10-K, the Company has not
provided audited annual financial statements to the bank within
the required 90-day period.  In addition, certain cash flow
covenants were not achieved.

Accordingly, the Company has obtained waivers for any covenant
violations and the Company and Wells Fargo Foothill have agreed
upon modified cash flow covenants to more accurately reflect the
Company's future performance based upon revised projections.

In addition, as of May 22, 2006, the Company and Wells Fargo
Foothill have amended the Facility, to temporarily provide for a
four-month over-advance in the amount of $3 million, the available
balance of which declines over the term.  The over-advance is
subject to certain additional covenants and reporting
requirements, including a minimum sales requirement.

At Dec. 31, 2005, the Company had outstanding borrowings of
$12.2 million and unused borrowing availability of $3.3 million on
the Facility.  As of Dec. 31, 2005, the interest rate on the
Facility was 8.25%.

                    Senior Subordinated Notes

In 1995, the Company issued Senior Subordinated Notes to certain
shareholders.  Those Notes are classified as either Series B or
Series C.

The Series B Notes are secured by the Company's property and
equipment.  The Series C Notes are unsecured.

The maturity date of those Notes is Oct. 31, 2008, with interest
rates ranging from 14% to 17%, and payable quarterly on Jan. 1,
April 1, July 1, and October 1 of each year.

The Notes can be prepaid at the Company's option.

However, the Notes have a cumulative prepayment premium of 13.5%
per annum payable only upon certain circumstances, which include,
but are not limited to, an initial public offering of the
Company's common stock or a significant refinancing to the extent
that net proceeds from either of the above events are received to
pay the cumulative prepayment premium.

The Company retired $3 million of the Series B Notes in October
2002 upon the initial funding of the Facility.  In consideration
for the requested payment, the note holders waived the prepayment
penalty on those Notes, which were due in May 2003.

The balances of the Series B and C Notes were $2.5 million and
$2.7 million, respectively, each at Dec. 31, 2005, and 2004.

A full-text copy of the Company's 2005 Annual Report is available
for free at http://ResearchArchives.com/t/s?9cf

Telos Corporation is a systems integration and services company
addressing the information technology needs of U.S. Government
customers worldwide.  The Company also owns all of the issued and
outstanding share capital of Xacta Corporation, a subsidiary that
develops, markets and sells U.S. Government-validated secure
enterprise solutions to federal, state and local government
agencies and to financial institutions.


TIME WARNER: Shareholders Have Until June 28 to File Objections
---------------------------------------------------------------
The Hon. Shirley Wohl Kram of the U.S. District Court for the
Southern District of New York set a final hearing on June 28,
2006, at 2:30 p.m., for all shareholders of Time Warner Telecom
Inc., fka AOL Time Warner Inc., to file objections to the proposed
Settlement of Derivative Actions with the Company's current and
former directors.

                         Derivative Actions

Certain Time Warner shareholders, the Plaintiffs, filed claims
against the Company's current and former directors alleging that
the Defendants breached their fiduciary duties of care, good faith
and loyalty to the Company.  The Plaintiffs said that as a result
of wrongdoing, the Company has suffered substantial harm in the
form of government investigations, fines, liabilities and other
monetary and reputational damages.

The Derivative Actions to be resolved pursuant to the proposed
Settlement include:

    (i) the No-Demand Actions;

   (ii) the Demand-Refused Action;

  (iii) Section 220 books and records proceedings, all pending in
        federal Court in Southern District of New York; and

   (iv) no-demand actions brought in the Delaware Court of
        Chancery.

                      The Proposed Settlement

Pursuant to the settlement, the Company will obtain $200 million
in additional funds from insurance proceeds available only for the
direct benefit of the Company.  The Company has also agreed to
certain changes in its corporate governance, compliance and
internal control practices, which represent substantial benefits
to the Company achieved by the Settlement.

               Plaintiffs Counsel Wants Fees Awarded

Time Warner Shareholders' lead attorneys will make an application
to the Court on behalf of all its counsel for an award of
attorneys' fees for $9.6 million.  The Settlement, together with
the amount and payment terms of the attorneys' fee award, were
agreed to by Time Warner and approved by its Board of Directors.

The full amount will be paid from the insurance proceeds if the
Court approves the request.

Objections to the Settlement or the Plaintiffs' Counsel's motion
for attorney fees, must be received by:

   a) Clerk of the Court
      United States Courthouse
      500 Pearl Street
      New York, NY 10007-1312

   b) Plaintiffs' Counsel

      Karen L. Morris, Esq.
      Morris and Morris LLC
      4001 Kennett Pike, Suite 300
      Wilmington, DE 19807

      Richard D. Greenfield, Esq.
      Greenfield & Goodman LLC
      7426 Tour Drive
      Easton, MD 21601

      John G. Emerson, Jr., Esq.
      Emerson Poynter LLP
      830 Apollo Lane
      Houston, TX 77058

      Daniel E. Bacine, Esq.
      Barrack Rodos & Bacine
      3300 Two Commerce Square
      2001 Market Street
      Philadelphia, PA 19103

   c) Time Warner's Counsel

      Peter T. Barbur, Esq.
      Cravath, Swaine & Moore LLP
      Worldwide Plaza
      825 Eighth Avenue
      New York, NY 10019

                  About Time Warner Telecom Inc.

Headquartered in Littleton, Colorado, Time Warner Telecom Inc., is
a leading provider of managed network solutions to a wide array of
businesses and organizations in 44 U.S. metropolitan areas that
require telecommunications intensive services.

                           *   *   *

As reported in the Troubled Company Reporter on March 27, 2006,
Moody's Investors Service assigned a Caa1 rating to the proposed
$200 million convertible senior notes at Time Warner Telecom Inc.  
The net proceeds of the offering will be used to redeem a portion
of the $400MM 10-1/8% senior notes at TWT.  Moody's said the
outlook remained stable.


TRANSMONTAIGNE INC: Inks Revised Merger Agreement with SemGroup
---------------------------------------------------------------
TransMontaigne Inc. entered into a revised amended and restated
merger agreement with SemGroup, L.P. and certain of its affiliated
entities.  

On May 22, 2006, SemGroup delivered to the Company a revised
amended and restated merger agreement that increased the cash
payment to holders of the Company's common stock from $10.75 per
share to $11.25 per share.  

In addition, the amended SemGroup merger agreement includes a
$10 million termination fee payable by SemGroup in the event that
the amended SemGroup merger agreement is terminated due to an
order by any governmental antitrust authority that prohibits or
prevents closing of the merger.  Before SemGroup would be
permitted to  terminate the amended SemGroup merger agreement, the
effects of complying with the governmental antitrust authority's
order would have to result in a material adverse effect upon the
combined entities, taken as a whole.

As reported in the Troubled Company Reporter on May 12, 2006, the
Company's Board of Directors approved a definitive proposal by
Morgan Stanley Capital Group Inc. under which Morgan Stanley
offered to acquire all of its outstanding common stock for cash
consideration of $11 per share.

On May 23, 2006, the Company's Board of Directors determined that
the terms of the amended SemGroup merger agreement are at least as
favorable to its stockholders as the Morgan Stanley proposal.  As
a result, the Board of Directors authorized the Company's officers
to enter into the amended SemGroup merger agreement providing for
a cash payment to the holders of our common stock of $11.25 per
share.

           Second Request from Federal Trade Commission

On May 22, 2006, TransMontaigne Inc. and SemGroup received a
second request from the Federal Trade Commission for additional
information with respect to the proposed merger.  The second
request extends and expands both the scope and the time frame
covered by the FTC's previous information request to which the
Company responded in full in its original filing with the FTC.

The second request seeks detailed information with respect to 14
terminal areas located in the Southeast and Midwest in which both
the Company and Magellan Midstream Partners, L.P., each own
terminals.  The Magellan terminals are included in the second
request apparently due to the cross-ownership interests of the
Carlyle/Riverstone Group in both SemGroup and Magellan.

Receipt of the second request from the FTC extends the original
30-day waiting period until 30 days following the Company's
compliance with the FTC's supplemental information request.  The
Company currently estimates that it may take up to three months to
compile the supplemental information requested by the FTC.  
Alternatively, the FTC's concerns may be resolved earlier through
negotiations.  In the event the merger has not received antitrust
clearance by Dec. 31, 2006, either party, at its option, may
terminate the merger agreement.

                      About TransMontaigne

TransMontaigne Inc. (NYSE:TMG) -- http://www.transmontaigne.com/
-- is a refined petroleum products marketing and distribution
company based in Denver, Colorado with operations in the United
States, primarily in the Gulf Coast, Florida, East Coast and
Midwest regions.  The Company's principal activities consist of
(i) terminal, pipeline, tug and barge operations, (ii) marketing
and distribution, (iii) supply chain management services and (iv)
managing the activities of TransMontaigne Partners L.P.  The
Company's customers include refiners, wholesalers, distributors,
marketers, and industrial and commercial end-users of refined
petroleum products.

                         *     *     *

As reported in the Troubled Company Reporter on May 1, 2006,
Standard & Poor's Ratings Services held its 'B+' corporate
credit rating on petroleum storage and distribution company
TransMontaigne Inc. on CreditWatch with developing implications,
following the announcement that Morgan Stanley Capital Group
Inc. has made a competing offer to acquire TransMontaigne for
$10.50 per share.

As reported in the Troubled Company Reporter on March 30, 2006,
Standard & Poor's Ratings Services revised the CreditWatch
implications for its 'B+' corporate credit rating on petroleum
storage and distribution company TransMontaigne Inc. to developing
from positive.


TRUST ADVISORS: Plans to Pay Creditors in Full under Ch. 11 Plan
----------------------------------------------------------------
Trust Advisors Stable Value Plus Fund filed a chapter 11 plan of
reorganization and an accompanying disclosure statement with the
U.S. Bankruptcy Court for the District of Connecticut on
May 18, 2006.

The Plan contemplates the orderly liquidation and distribution of
the Debtors' assets.  No classes of creditors are impaired under
the Plan.  Two classes of interest holders are impaired.  

Holders of general unsecured claims will be paid in full plus
interest.  The allowed general unsecured claims aggregate
$500,000.  The Debtor is currently disputing these claims:

   * Grafton Partners Trustee's $31,793,386 claim;
   * Circle Trust Company's $120,000 claim;
   * Trust Advisors LLC's $390,000 claim.  

Hongkong and Shanghai Banking Corporation will retain its rights
under the HSBC Amended Liquidating Account Agreement.

Investors with asset interest of $70,000 will be paid a pro-rata
share of the remaining Fund assets after all creditors are paid.  
If there is anything left after this distribution, investors with
asset interest of more than $70,000 will be paid a pro-rata share
of the remaining Fund assets.

A full-text copy of the Disclosure Statement is available for a
fee at:

  http://www.researcharchives.com/bin/download?id=060525233009

Headquartered in Darien, Connecticut, Trust Advisors Stable Value
Plus Fund is a collective trust for employee benefit plan
investors and was created to serve as an investment vehicle for
various types of pension plans qualified under Section 401(a) of
the Internal Revenue Code, which plans are also governed by the
Employee Retirement Income Security Act of 1974.  The Company
filed for chapter 11 protection on Sept. 30, 2005,
(Bankr. D. Conn. Case No. 05-51353).  Scott D. Rosen, Esq., at
Cohn Birnbaum & Shea P.C. represents the Debtor in its
restructuring efforts.  Robert A. White, Esq., Robert E. Kaelin,
Esq., and Lissa J. Paris, Esq., at Murtha Cullina LLP, represent
the Official Committee of Unsecured Investor Creditors.  When the
Debtor filed for protection from its creditors, it estimated
assets and debts of more than $100 million.


UAL CORP: Setting Off $2.15MM Loan Against Chicago's $15MM Debt
---------------------------------------------------------------
UAL Corporation and its debtor-affiliates and the city of Chicago,
Illinois, entered into a stipulation resolving Chicago's objection
to the Debtors' Plan of Reorganization.

Under the Plan Stipulation, the Debtors agreed to:

   * assume all of their existing executory contracts or
     unexpired leases with Chicago; and

   * cure any defaults under the Assumed Chicago Agreements,
     including any non-monetary obligations -- other than non-
     curable, non-monetary obligations which the Debtors would be
     excused from performing under Section 365 of the Bankruptcy
     Code -- identified by Chicago on or before 30 days after
     the Assumption Date.

However, the Debtors' cure obligations will not include payment
or performance of any of their obligations under the special
facility revenue bonds related to Chicago-O'Hare International
Airport.

Subsequently, Chicago and the Debtors entered into another
stipulation with regards the Debtors' cure obligations in
connection with the Assumed Chicago Agreements.

Under the Cure Stipulation, the parties agree that:

   (1) In connection with the 2002 and 2003 O'Hare domestic
       audits, Chicago owes the Debtors $15,000,000;

   (2) $2,148,246 will be offset against the $15,000,000,
       representing the amount of cure obligations under the
       Assumed Chicago Agreements;

   (3) United Air Lines, Inc., and United Aviation Fuels Corp.
       will waive all claims to refunds due to either entity for
       Vehicle Fuel Taxes through December 31, 2005;

   (4) United will be bound by the terms of the agreement which
       was in the process of negotiation known as Amendment No. 2
       (DRAFT 9/14/00) and commonly referred to as the GEM
       Building agreement.  United also agrees that:

       -- $297,374 will be offset against the $15,000,000 in
          satisfaction of the overdue rent and charges in
          connection with the use and occupancy of the leased
          property; and

       -- both United and Chicago will continue to negotiate in
          good faith to reach agreement on a final version of the
          Agreement;

   (5) The Debtors will be deemed to have assumed and have
       agreed to perform all obligations under:

          * the Chicago-O'Hare Amended and Restated Airport Use
            Agreement and Terminal Facilities International
            Airport, International Terminal Use Agreement and
            Facilities Lease;

          * the Chicago-O'Hare International Airport, Amended and
            Restated Airport Use Agreement and Terminal
            Facilities Lease; and

          * all other Assumed Chicago Contracts,

       in the ordinary course -- including any obligations with
       regard to environmental claims, maintenance requirements
       and accrued/deferred revenue audit obligations -- as
       required pursuant to Section 365.  The Debtors' cure
       obligations will not include payment or performance of any
       of the Debtors' obligations, if any, under the special
       facility revenue bonds related to Chicago-O'Hare
       International Airport;

   (6) Through, from, and after May 2, 2006, the Debtors will
       continue to pay charges and amounts incurred to the date
       of assumption under the Assumed Chicago Agreements in the
       ordinary course when billed, and will continue to comply
       with their non-monetary covenants and agreements in the
       Assumed Chicago Agreements in the ordinary course;

   (7) The Stipulation will not resolve Chicago's claim regarding
       the indemnification obligations to the city in connection
       with the special facility revenue bond documents related
       to Chicago-O'Hare International Airport, which Chicago
       asserted in Claim No. 42467, filed in the Debtors' Chapter
       11 cases.  The Indemnification Claim will be resolved, if
       ever, by Chicago and United in a separate proceeding or by
       separate stipulation;

   (8) After offset of the stated amounts, Chicago will promptly
       remit the remainder of the $15,000,000 to the Debtors by
       wire transfer in immediately available funds as provided
       in a written direction from the Debtors to Chicago; and

   (9) All of Chicago's remaining claims -- other than the
       Indemnification Claim -- filed in the Chapter 11 cases
       will be deemed withdrawn and discharged.

Nothing constitutes an admission by the Debtors of any default
under, or non-compliance with, any of the Assumed Chicago
Agreements.

Nothing constitutes a waiver or otherwise prejudice any defense
or other argument of either party regarding the existence of any
default, breach or non-compliance of the Debtors with respect to
any of the Assumed Chicago Agreements, nor will resolve the
pending litigation between the Debtors and Chicago in Adversary
Case No. 03-A-03927, with respect to the issues arising under the
Chicago-O'Hare International Airport, Amended and Restated
Airport Use Agreement and Terminal Facilities Lease.

                            About UAL

Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through United Air Lines, Inc., is the
holding company for United Airlines -- the world's second largest
air carrier.  The Company filed for chapter 11 protection on
Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191).  James H.M.
Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,
and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the
Debtors in their restructuring efforts.  Fruman Jacobson, Esq., at
Sonnenschein Nath & Rosenthal LLP represented the Official
Committee of Unsecured Creditors before the Committee was
dissolved when the Debtors emerged from bankruptcy.  When the
Debtors filed for protection from their creditors, they listed
$24,190,000,000 in assets and $22,787,000,000 in debts.  Judge
Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20,
2006.  The Company emerged from bankruptcy protection on Feb. 1,
2006.  (United Airlines Bankruptcy News, Issue No. 122; Bankruptcy
Creditors' Service, Inc., 215/945-7000)


VALEANT PHARMA: S&P Affirms BB- Rating & Revises Outlook to Neg.
----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Costa
Mesa, California-based specialty pharmaceutical company Valeant
Pharmaceuticals International to negative from stable.  

Ratings on the company, including the 'BB-' corporate credit
rating, were affirmed.  The outlook revision reflects Valeant's
recent setback in the development of its lead product prospect
(viramidine), as well as other business challenges.
      
"The speculative-grade rating on Valeant reflects the uncertainty
relating to the company's recently announced restructuring plan,
challenges to drive earnings and cash flow growth, and setbacks in
its R&D pipeline," said Standard & Poor's credit analyst Arthur
Wong.  "These factors are somewhat offset by Valeant's diverse
product portfolio, significant on-hand cash, and limited debt
maturities over the intermediate term."
     
Valeant manufactures and distributes a wide range of
pharmaceutical products.  The company largely built its product
portfolio via acquisitions.  Valeant markets its products mainly
in:

   * North America (28% of total revenues),
   * Europe (33%), and
   * Latin America (19%).

The company also earns a high-margin royalty stream from its
anti-infective, ribavirin (11%).  Management has made significant
progress over the past couple of years in restructuring its
operations to cut costs and restore sales growth to its important
North American specialty drug franchise.  The company has also,
through a combination of internal development and acquisitions,
stocked its product portfolio with some promising prospects.
     
Valeant has recently announced a restructuring of its operations
to cut costs and increase focus on select products and prospects.
The company intends to incur a restructuring charge of $80
million-$100 million, with 25%-35% of it representing cash
charges.  Valeant's free cash flows have been weak, at under $20
million in 2005.  Funds from operations to debt is less than 10%,
and debt to EBITDA is 4.3x.  While these measures are an
improvement over 2004, they are still weak for the rating
category.


VARIG S.A.: Creditors Approve Plan to Auction Routes and Assets
---------------------------------------------------------------
Creditors of VARIG, S.A., approved on May 9, 2006, a bankruptcy
reorganization plan allowing the airline to auction its assets.  
The plan offers investors the right to buy all of the company's
operations or just the domestic part.  

The plan won acceptance after creditors, workers and Alvarez &
Marsal, the court-appointed manager of VARIG's assets, reached a
consensus on the asset sale, and job and salary cuts needed to
reduce the company's losses, Bloomberg News reports.

According to Romina Nicaretta at Bloomberg, the plan grants
VARIG two alternatives:

   1. VARIG will be split into an operating and a service unit.
      The operating unit, which will handle both domestic and
      international flights, will be sold for a minimum of
      $860,000,000.  Proceeds will be used to reduce the debt of
      the service unit.

   2. The airline will be split into a domestic carrier and an
      international airline.  The debt-free domestic unit would
      be put up for auction for at least $700,000,000.  The
      proceeds will be used to pay part of the international
      unit's debt.

The auction is expected to take place sometime in July.  The
overall VARIG fleet to be offered includes 46 planes.  The
domestic operation would consist of 30 aircraft.

Reuters says that financial investors can bid for the whole
operation.  For the local unit, they must bid together with
an airline.

In a U.S. bankruptcy court filing dated May 19, 2006, VARIG
Foreign Representative Eduardo Zerwes noted that approximately 14
entities publicly announced their intention to participate in the
auction.

A VARIG spokesman said that 17 companies have already shown
interest to bid for VARIG's operations, according to Dow Jones.

Interested parties include local and foreign airlines and
investment funds.  Among the potential bidders, the spokesman
said, are rival airlines TAM SA, Gol Linhas Aereas Inteligentes,
WebJet and OceanAir.

Gol operations vice president David Barioni told O Estado de S.
Paulo, a local newspaper, that the company will decide whether to
invest or not after the sale rules are clear and VARIG makes
available data on the company.

VARIG has established a data room allowing potential bidders
access to information about the company starting June 9, 2006.

As previously reported, Banco Nacional de Desenvolvimento
Economico e Social, a national development bank run by the
Brazilian government, offered to lend money to investors.

The bank will loan nearly $100,000,000 to VARIG to keep its
operations running until the auction, Reuters reports.  
Bloomberg, citing Marcelo Gomes, a consultant of Alvarez &
Marsal, says that BNDES plans to finance up to 50% of the sale
price.  Banco do Brasil SA, Latin America's largest bank, is also
willing to provide loans to potential investors, Mr. Gomes said.

According to local reports, BNDES already rejected three requests
for bridge loans as part of their bids for VARIG's operations:

   1. TGV, a group representing VARIG workers;
   2. Banco BRJ, a local mortgage bank; and
   3. an undisclosed Sao Paulo investment bank.

The candidates purportedly gave insufficient guarantees.  Despite
rejecting the loan applications, BNDES said it did not reject the
possibility of financing an eventual buyer.

                           About VARIG

Headquartered in Rio de Janeiro, Brazil, VARIG S.A. is Brazil's
largest air carrier and the largest air carrier in Latin America.
VARIG's principal business is the transportation of passengers and
cargo by air on domestic routes within Brazil and on international
routes between Brazil and North and South America, Europe and
Asia.  VARIG carries approximately 13 million passengers annually
and employs approximately 11,456 full-time employees, of which
approximately 133 are employed in the United States.

The Company, along with two affiliates, filed for a judicial
reorganization proceeding under the New Bankruptcy and
Restructuring Law of Brazil on June 17, 2005, due to a competitive
landscape, high fuel costs, cash flow deficit, and high operating
leverage.  The Debtors may be the first case under the new law,
which took effect on June 9, 2005.  Similar to a chapter 11
debtor-in-possession under the U.S. Bankruptcy Code, the Debtors
remain in possession and control of their estate pending the
Judicial Reorganization.  Sergio Bermudes, Esq., at Escritorio de
Advocacia Sergio Bermudes, represents the carrier in Brazil.

Each of the Debtors' Boards of Directors authorized Vicente Cervo
as foreign representative.  In this capacity, Mr. Cervo filed a
Sec. 304 petition on June 17, 2005 (Bankr. S.D.N.Y. Case Nos.
05-14400 and 05-14402).  Rick B. Antonoff, Esq., at Pillsbury
Winthrop Shaw Pittman LLP represents Mr. Cervo in the United
States.  As of March 31, 2005, the Debtors reported
BRL2,979,309,000 in total assets and BRL9,474,930,000 in total
debts. (VARIG Bankruptcy News, Issue No. 18; Bankruptcy Creditors'
Service, Inc., 215/945-7000)


VARIG S.A.: Brazilian Court Directs Government to Pay for Losses
----------------------------------------------------------------
Brazil's Supreme Appeals Court upheld a ruling that the Brazilian
Federal Government must pay VARIG, S.A., around BRL3,000,000,000
-- $1.4 billion -- in compensation, a court press release said.

VARIG sought compensation for losses incurred as a result of the
Federal Government's policy controlling airfares between 1985 and
1992.  The policy was among the Government's attempt to control
inflation during the period.

VARIG asserted $675,000,000 in losses resulting in a price freeze
on fares, according to an Airfinance Journal report.

The appellate court's decision will potentially offer VARIG major
relief from huge debts.

                           About VARIG

Headquartered in Rio de Janeiro, Brazil, VARIG S.A. is Brazil's
largest air carrier and the largest air carrier in Latin America.
VARIG's principal business is the transportation of passengers and
cargo by air on domestic routes within Brazil and on international
routes between Brazil and North and South America, Europe and
Asia.  VARIG carries approximately 13 million passengers annually
and employs approximately 11,456 full-time employees, of which
approximately 133 are employed in the United States.

The Company, along with two affiliates, filed for a judicial
reorganization proceeding under the New Bankruptcy and
Restructuring Law of Brazil on June 17, 2005, due to a competitive
landscape, high fuel costs, cash flow deficit, and high operating
leverage.  The Debtors may be the first case under the new law,
which took effect on June 9, 2005.  Similar to a chapter 11
debtor-in-possession under the U.S. Bankruptcy Code, the Debtors
remain in possession and control of their estate pending the
Judicial Reorganization.  Sergio Bermudes, Esq., at Escritorio de
Advocacia Sergio Bermudes, represents the carrier in Brazil.

Each of the Debtors' Boards of Directors authorized Vicente Cervo
as foreign representative.  In this capacity, Mr. Cervo filed a
Sec. 304 petition on June 17, 2005 (Bankr. S.D.N.Y. Case Nos.
05-14400 and 05-14402).  Rick B. Antonoff, Esq., at Pillsbury
Winthrop Shaw Pittman LLP represents Mr. Cervo in the United
States.  As of March 31, 2005, the Debtors reported
BRL2,979,309,000 in total assets and BRL9,474,930,000 in total
debts. (VARIG Bankruptcy News, Issue No. 18; Bankruptcy Creditors'
Service, Inc., 215/945-7000)


VARIG S.A.: Foreign Representatives Make $3.9 Mil. ILFC Payments
----------------------------------------------------------------
As reported in the Troubled Company Reporter on May 3, 2006, the
U.S. Bankruptcy Court directed VARIG, S.A.'s Foreign
Representative Eduardo Zerwes to show cause why an order should
not be entered granting the International Lease Finance
Corporation's request.

On May 2, 2006, ILFC's counsel notified the Court that it intended
to limit the hearing on the Order to Show Cause on the issue of
VARIG, S.A.'s nonpayment as it relates to the September 2005
Stipulation, Rick B. Antonoff, Esq., at Pillsbury Winthrop Shaw
Pittman LLP, in New York, relates.

Mr. Antonoff informs Judge Drain that the Foreign Debtors had
already undertaken to cure their nonpayment to ILFC in two
installments.  The Foreign Representative, he says, already made
the promised payments on these dates:

         Date Paid                    Amount Paid
         ---------                    -----------
         May 4, 2006                   $2,000,000
         May 9, 2006                    1,900,000
      
The Foreign Debtors believe that there is no need at this time to
conduct a hearing on the Order to Show Cause.  

Accordingly, the Foreign Representative asks the Court to carry
over the Motion to Enforce Stipulation to the hearing on the
Foreign Debtors' request to convert preliminary injunction, which
is scheduled on May 31, 2006.

                ILFC Says Debtors Still in Breach

"[T]he payments received from the Foreign Debtors did not relieve
them of their continuing obligation to ground and return [ILFC's]
Aircraft," John Yard Amason, Esq., at Klestadt & Winters, LLP, in
New York, argues.  "Once the cure period set forth in the
Stipulation had passed, the obligation to ground and return them
became absolute."

Even though VARIG managed to pay amounts, which were then
overdue, ILFC notes that the airline immediately committed new
payment defaults.

According to Mr. Amason, ILFC is owed, as of May 19, 2006,
$1,600,000 on account of rent and other payments, excluding
amounts owing for legal fees, late interest and other amounts
payable pursuant to the terms of the Leases.

ILFC believes that the Foreign Debtors' defaults extend well
beyond non-payment to include maintenance defaults.

Furthermore, Mr. Amason adds, the Foreign Debtors failed to
return ILFC's Aircraft, which leases have expired.  The Debtors'
failure means that ILFC will lose the new leases it has for the
aircraft since it will be unable to timely deliver the Aircraft
to a new lessee.

Some of the Aircraft engines also needed overhauling.  ILFC has
proposed to advance to engine overhaul facilities necessary funds
so that its assets can be restored to productive use, Mr. Amason
tells the Court.  The Foreign Debtors, however, did not respond
to ILFC's financing proposal.

ILFC asks the Court to:

   a. direct the Foreign Debtors to comply with the terms of the
      September 2005 Stipulation by removing all Aircraft leased
      by ILFC to the Foreign Debtors from revenue service and
      returning the Aircraft to ILFC;

   b. adjudge the Foreign Representative and the Foreign Debtors
      in contempt for having willfully violated the terms of the
      September 2005 Stipulation and direct them to pay all
      reasonable attorneys' fees, costs and damages ILFC
      incurred; and

   c. assess against the Foreign Representative and the Foreign
      Debtors a $50,000 fine per day until the Stipulation is
      complied with.

                   VARIG Admits Non-Compliance

VARIG continues to make as many payments to ILFC as it possibly
can and intends to be current on its payment obligations, Mr.
Antonoff tells Judge Drain.

However, VARIG admits that it has not remained in strict
compliance with all of the terms of the Stipulation.  Among
others, VARIG paid ILFC later than the dates the Stipulation
required, and despite having received notices, did not remove the
Aircraft from revenue service.

The Foreign Debtors insist that VARIG's failures:

   -- have not been material to the overall purposes of the
      Stipulation;

   -- have been consistently cured as quickly as possible; and

   -- have not been done out of disrespect for the Court's Order
      or  otherwise in a contemptuous manner.

The Debtors' restructuring efforts are proceeding in a positive
manner, Mr. Antonoff says.  On May 9, 2006, creditors approved a
bridge loan by the Brazilian national development bank, Banco
Nacional de Desenvolvimento Economico e Social.  The bridge loan
is intended to cure all arrearages to aircraft and engine lessors
and provide working capital pending an auction of either the
entire VARIG business or just the domestic operations.

The Foreign Representative, therefore, asks Judge Drain not to
direct the removal of the Aircraft from revenue service.

VARIG has cured all monetary defaults under the Stipulation.  The
severe consequences of requiring VARIG to ground and return the
Aircraft would be, to VARIG, to all its creditors and to the
ongoing restructuring process in Brazil which is at a critical
stage, immediate and irreparable, Mr. Antonoff alleges.  In
contrast, the Foreign Representative contends, the harm to ILFC
is minimal by virtue of VARIG's continuing, albeit tardy,
payments.

The Foreign Representative further asks the Court that, to the
extent a penalty is assessed against VARIG for its failure to
meet its obligations under the Stipulation, that the penalty not
be in an amount and not be required to be paid in a manner that
would effectively frustrate the progress that has been made in
the Foreign Proceeding.

                           About VARIG

Headquartered in Rio de Janeiro, Brazil, VARIG S.A. is Brazil's
largest air carrier and the largest air carrier in Latin America.
VARIG's principal business is the transportation of passengers and
cargo by air on domestic routes within Brazil and on international
routes between Brazil and North and South America, Europe and
Asia.  VARIG carries approximately 13 million passengers annually
and employs approximately 11,456 full-time employees, of which
approximately 133 are employed in the United States.

The Company, along with two affiliates, filed for a judicial
reorganization proceeding under the New Bankruptcy and
Restructuring Law of Brazil on June 17, 2005, due to a competitive
landscape, high fuel costs, cash flow deficit, and high operating
leverage.  The Debtors may be the first case under the new law,
which took effect on June 9, 2005.  Similar to a chapter 11
debtor-in-possession under the U.S. Bankruptcy Code, the Debtors
remain in possession and control of their estate pending the
Judicial Reorganization.  Sergio Bermudes, Esq., at Escritorio de
Advocacia Sergio Bermudes, represents the carrier in Brazil.

Each of the Debtors' Boards of Directors authorized Vicente Cervo
as foreign representative.  In this capacity, Mr. Cervo filed a
Sec. 304 petition on June 17, 2005 (Bankr. S.D.N.Y. Case Nos.
05-14400 and 05-14402).  Rick B. Antonoff, Esq., at Pillsbury
Winthrop Shaw Pittman LLP represents Mr. Cervo in the United
States.  As of March 31, 2005, the Debtors reported
BRL2,979,309,000 in total assets and BRL9,474,930,000 in total
debts. (VARIG Bankruptcy News, Issue No. 18; Bankruptcy Creditors'
Service, Inc., 215/945-7000)


VILLAJE DEL RIO: Section 341(a) Meeting Scheduled for June 5
------------------------------------------------------------
The U.S. Trustee for Region 7 will convene a meeting of Villaje
Del Rio, Ltd.'s creditors at 8:30 a.m., June 5, 2006, at San
Antonio Room 333, U.S. Post Office Building, 615 East Houston
Street in San Antonio, Texas.

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 San Antonio, Texas, Villaje Del Rio, Ltd., is a
real estate developer.  The company filed for chapter 11
protection on May 1, 2006 (Bankr. W.D. Tex. Case No. 06-50797).  
Eric J. Taube, Esq., at Hohmann, Taube & Summers, L.L.P.,
represents the Debtor.  No Official Committee of Unsecured
Creditors has been appointed in the Debtor's case.  When the
Debtor filed for protection from its creditors, it estimated
assets of less the $50,000 and estimated debts between $10 million
and $50 million.


VILLAJE DEL RIO: Taps Hohmann Taube as New Bankruptcy Counsel
-------------------------------------------------------------
Villaje Del Rio, Ltd., asks the U.S. Bankruptcy Court for the
Western District of Texas for permission to employ Hohmann, Taube
& Summers, L.L.P., as its bankruptcy counsel.

The Debtor reminds the Court that Michael J. O'Connor, Esq., was
the attorney responsible in filing its bankruptcy petition.  The
Debtor says that Mr. O'Connor does not oppose the substitution of
Hohmann Taube as the new counsel.

Hohmann Taube will:

    (a) advise the Debtor as to its rights and responsibilities;

    (b) take all necessary action to protect and preserve the
        estate of the Debtor including, if necessary, the
        prosecution of actions or adversary or other proceedings
        on the Debtor's behalf;

    (c) develop, negotiate and promulgate the Chapter 11 plan for
        the Debtor and prepare the disclosure statement;

    (d) prepare on behalf of the Debtor all necessary
        applications, motions, and other pleadings and papers in
        connection with the administration of the estate; and

    (e) perform all other legal services required by the Debtor in
        connection with the Debtor's Chapter 11 case.

The Debtor tells the Court that the firm's attorneys bill between
$175 and $400 per hour while paralegals bill $75 to $85 per hour.

Eric J. Taube, Esq., a partner at Hohmann Taube, discloses that
George Geis, the manager of the Debtor's general partner, has paid
the Firm a $50,000 retainer and has guaranteed payment of an
additional $100,000.

To the best of the Debtor's knowledge, the firm represents no
interest adverse to the Debtor or its estate.

Mr. Taube can be reached at:

         Eric J. Taube, Esq.
         Hohmann, Taube & Summers, L.L.P.
         100 Congress Avenue, 18th Floor
         Austin, Texas 78701
         Tel: (512) 472-5997
         Fax: (512) 472-5248
         http://www.hts-law.com/

Headquartered in San Antonio, Texas, Villaje Del Rio, Ltd., is a
real estate developer.  The company filed for chapter 11
protection on May 1, 2006 (Bankr. W.D. Tex. Case No. 06-50797).  
Eric J. Taube, Esq., at Hohmann, Taube & Summers, L.L.P.,
represents the Debtor.  No Official Committee of Unsecured
Creditors has been appointed in the Debtor's case.  When the
Debtor filed for protection from its creditors, it estimated
assets of less the $50,000 and estimated debts between $10 million
and $50 million.


WELLS FARGO: S&P Affirms Four Certificate Classes' Low-B Ratings
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on 39
classes of mortgage pass-through certificates from two Wells Fargo
Mortgage Backed Securities transactions.
     
The affirmations 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
0.22% for series 2005-AR9 and 0.02% for series 2005-AR10.  There
were no cumulative losses for either series.  The outstanding pool
balances, as a percentage of their original size, were 80.45% for
series 2005-AR9 and 84.92% for series 2005-AR10.
     
The collateral for both transactions consists of fully amortizing,
one- to four-family, adjustable interest rate, residential first-
lien mortgage loans, nearly all of which have terms to maturity of
30 years.
   
Ratings Affirmed:
   
Wells Fargo Mortgage Backed Securities
   
   Series     Class                                       Rating
   ------     -----                                       ------
   2005-AR9   I-A-1, I-A-2, II-A-1, II-A-2, III-A-1        AAA
   2005-AR9   III-A-2, IV-A-1, IV-A-2                      AAA
   2005-AR9   B-1                                          AA
   2005-AR9   B-2                                          A
   2005-AR9   B-3                                          BBB
   2005-AR9   B-4                                          BB
   2005-AR9   B-5                                          B
   2005-AR10  I-A-1, I-A-2, II-A-1, II-A-2, II-A-3         AAA
   2005-AR10  II-A-4, II-A-5, II-A-6, II-A-7, II-A-8       AAA
   2005-AR10  II-A-10, II-A-11, II-A-12, II-A-13, II-A-14  AAA
   2005-AR10  II-A-15, II-A-16, II-A-17, II-A-18           AAA
   2005-AR10  II-A-19, II-A-20                             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


WINN-DIXIE: Panel Wants Houlihan's Retention Amendment Approved
---------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in Winn-
Dixie Stores, Inc., and its debtor-affiliates' bankruptcy cases
asks the U.S. Bankruptcy Court for the Middle District of Florida
to reduce Houlihan Lokey Howard & Zukin Capital, Inc.'s
Distribution Fee by:

    (a) 50% of each Monthly Fee paid during the first six months
        after the 12th Monthly Fee is paid -- March 2006 through
        August 2006; and

    (b) 75% of each Monthly Fee paid from September 2006 and
        onward.

Houlihan Lokey has and continues to provide additional services
and analyses to the Committee that are above and beyond the
services contemplated at the time the parties executed their
Original Engagement Letter, Patrick P. Patangan, Esq., at Akerman
Senterfitt, in Jacksonville, Florida, informs the Court.

Houlihan has assisted, Mr. Patangan notes, the Committee in:

    (a) opposing the formation of, and seeking the disbandment of,
        an equity committee;

    (b) determining whether substantive consolidation is
        appropriate in the Debtors' cases; and

    (c) continuing to evaluate the Debtors' business in an effort
        to assist in proposing a consensual plan of agreement.

In addition, due to the complexity of the financial, legal and
operational issues that were raised, the Debtors believe that the
engagement will take longer than either party had anticipated.

Houlihan's compensation provides that the firm will receive:

    -- a $100,000 monthly fee; and

    -- a Distribution Fee equal to 75% of the aggregate value
       received by non-priority unsecured creditors of the
       Debtors.

The Distribution Fee will be reduced by 100% of all Monthly Fees
paid to Houlihan after the 12th monthly fee that was timely paid,
but in no event will the Distribution Fee be reduced to less than
zero.

"The amendment will ensure that Houlihan continues to receive
reasonable compensation commensurate with the increased services
that [the Debtors'] Chapter 11 cases have required from
Houlihan," Mr. Patangan contends.

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: Committee Seeks Approval of A&M's Retention Amendment
-----------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in
Winn-Dixie Stores, Inc., and its debtor-affiliates asks the U.S.
Bankruptcy Court for the Middle District of Florida to amend the
previously approved retention of Alvarez & Marsal, LLC, as its
operational and real estate advisors.

The Committee also asks the Court to reduce A&M's Restructuring
Fee by:

    -- 50% of each Monthly Fee paid from March 2006 through August
       2006; and

    -- 75% of each Monthly Fee paid from September 2006 onward.

Patrick P. Patangan, Esq., at Akerman Senterfitt, in
Jacksonville, Florida, tells the Court that A&M has and continues
to provide additional services and analyses to the Committee that
are broader in scope and breadth, as well as longer in duration,
than was originally anticipated.

The parties have agreed to amend A&M's compensation terms, which,
if granted, would reduce the amount of Monthly Fees that are set
off against A&M's Restructuring Fee.

The parties have agreed that A&M's retention in the Debtors'
Chapter 11 cases will otherwise remain the same, Mr. Patangan
says.

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).


WORLD HEALTH: Court Okays $39MM DIP Loan & Cash Collateral Use
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware allowed
World Health Alternatives, Inc., and its debtor-affiliates, on a
final basis, to borrow as much as $39 million from CapitalSource
Finance LLC to fund their business operations in the ordinary
course.  

The Court further allowed the Debtors to use the cash collateral
securing repayment of their prepetition debt to CapitalSource.  
The Debtors owed CapitalSource $39,421,961 when they filed for
bankruptcy protection.  

The Court granted CapitalSource perfected first priority claims
and priming liens on the Debtors' asset pursuant to the DIP Loan.
CapitalSource holds superpriority administrative claims and all
other benefits and protections allowable under Sections 507(b) and
503(b)(1) of the Bankruptcy Code, senior in right to all other
administrative claims against the estate, including its
prepetition claim.  CapitalSource, as a prepetition lender, is
granted replacement lien to the same extent, validity and priority
as the prepetition lien.  

The Internal Revenue Service also asserts liens on all of the
assets of World Health Staffing, Inc. (California) and Better
Solutions, Inc.  The IRS said World Health California owes the
U.S. Government $1,256,241.  BSI is said to owe the government
$2,274,316.  The Court will grant to the IRS the same protection
extended to CapitalSource, on account of its prepetition loan,
once there is final determination of the Debtors' actual
liability.

A portion of the DIP loan proceeds and the cash collateral are
reserved to pay professional hired in the Debtors' cases.  The
Court limited this carve-out to $250,000.  

Headquartered in Pittsburgh, Pennsylvania, World Health
Alternatives, Inc. -- http://www.whstaff.com/-- is a premier
human resource firm offering specialized healthcare personnel for
staffing and consulting needs in the healthcare industry.  The
company and six of its affiliates filed for chapter 11 protection
on Feb. 20, 2006 (Bankr. D. Del. Case Nos. 06-10162 to 06-10168).
Stephen M. Miller, Esq., at Morris, James, Hitchens & Williams
LLP, represents the Debtors in their restructuring efforts.  The
Official Committee of Unsecured Creditors elected Young, Conaway,
Stargatt & Taylor, LLP, as its counsel.  When the Debtors filed
for protection from their creditors, they estimated assets and
debts between $50 million and $100 million.


WORLDCOM INC: Court Allows Teleserve Systems Claim for $7.3 Mil.
----------------------------------------------------------------
The Hon. Arthur Gonzalez of the U.S. Bankruptcy Court for the
Southern District of New York allows Teleserve Systems, Inc.'s
claim for $7,366,101, subject to WorldCom, Inc., and its debtor-
affiliates' right to object to Teleserve's designation of that
claim as a Class 6A claim and payable after a determination by the
Court or by stipulation between the parties.

Teleserve filed a proofs of claim based on an arbitration award.  
The Debtors and Teleserve have stipulated to expunge Claim Nos.
9450 and 36920, thus leaving Claim No. 9449 as the sole remaining
claim.

Judge Gonzalez finds that Teleserve's reliance on the doctrines of
claim and issue preclusion is misplaced.  The rules permitting
court review of an arbitral award under the Federal Arbitration
Act provide the applicable analytical framework.  Section 10(a) of
the FAA provides certain grounds for vacating an arbitral award.  
The Debtors want to avail of Section 10(a)(4), which provides
vacation in instances "where the arbitrators exceeded their
powers, or so imperfectly executed them that a mutual, final, and
definite award upon the subject matter submitted was not made."

However, the inquiry under Section 10(a)(4) focuses on whether the
arbitrators had the power, based on the parties' submissions or
the arbitration agreement, to reach a certain issue, and not
whether the arbitrators correctly decided that issue.

The Debtors' argument that the arbitrators violated New York law
is inapposite under FAA Section 10(a)(4) because it does not
permit vacatur for legal errors.

The Debtors urged the Court to modify the arbitral award under
Section 11(a) of the FAA, which requires an evident material
miscalculation.  A miscalculation is evident if it appears on the
face of the award.  The judicially selected Arbitrator Panel
examined a great quantity of complex information from the parties
to reach a final decision, thus precluding a finding of "evident"
mistake.

Moreover, the Debtors carve out statements by Teleserve and one of
Teleserve's experts to claim that both parties admit the same
error.  The Court notes, however, that Teleserve's application to
correct mentioned other errors and that its computations led to a
request to increase damages, not reduce them.

Manifest disregard of the law, a judicially created doctrine, can
also provide grounds on which to vacate an arbitral decision.  
The Debtors contended that the arbitrator manifestly disregarded
New York contract law, which generally requires sufficient proof
of causation and damages and limits recovery to the benefit of the
bargain.  The Second Circuit refuses to find manifest disregard of
the law where an arbitral award rests on the application of an
unclear rule of law to a complex factual situation.

Furthermore, the arbitrators were aware of the legal principles to
which the Debtors refer and applied them.  Given the vagueness of
those legal principles, the Debtors appear to challenge how the
Panel applied them, and do not argue that the arbitrators refused
to apply them or ignored them altogether.  Therefore, the
Court finds that the arbitrators did not consciously disregard
well defined, explicit, and clearly applicable law.

Mere errors of law and fact are not grounds for vacating an
arbitral award, Judge Gonzalez says.  To the extent the Debtors
challenge the arbitrators' application of other contract
provisions or legal principles, it has not demonstrated that the
arbitrators acted in manifest disregard of the law.

Therefore, the Court finds that the Debtors' arguments challenging
the Panel's assessment of the evidence are to no avail.  
Accordingly, the Court denies the Debtors' objection to Claim No.
9449.

                          About WorldCom

Headquartered in Clinton, Mississippi, WorldCom, Inc., now known
as MCI -- http://www.worldcom.com/-- is a pre-eminent global  
communications provider, operating in more than 65 countries and
maintaining one of the most expansive IP networks in the world.  
The Company filed for chapter 11 protection on July 21, 2002
(Bankr. S.D.N.Y. Case No. 02-13532).  On March 31, 2002, the
Debtors listed $103,803,000,000 in assets and $45,897,000,000 in
debts.  The Bankruptcy Court confirmed WorldCom's Plan on October
31, 2003, and on April 20, 2004, the company formally emerged from
U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News,
Issue No. 117; Bankruptcy Creditors' Service, Inc., 215/945-7000)


WORLDCOM INC: Beepwear Responds to Settlement Pact with SkyTel
--------------------------------------------------------------
As reported in the Troubled Company Reporter on Sept. 1, 2005,
Beepwear Paging Products, LLC, asked the U.S. Bankruptcy Court for
the Southern District of New York for partial summary judgment
against SkyTel Corporation holding that:

   (a) the Debtors' rejection of the Joint Marketing Agreement
       and the Settlement Agreement constitutes breach of the
       Agreements which, in turn, gave rise to a valid unsecured
       claim for damages; and

   (b) the Debtors' breach of the Settlement Agreement reinstated
       Beepwear's claims under the JMA.

Michael S. Davis, Esq., at Zeichner, Ellman & Krause LLP, in New
York, contends that if the Court were to adopt SkyTel's approach
and prevent Beepwear from reverting to the JMA based on the
boilerplate language contained in the Settlement Agreement,
Release and Covenant Not to Sue, the Court would have to nullify
two principles:

   (1) The rule of accord and satisfaction, which permits the
       obligee to enforce either the original duty or the accord
       if the obligor breaches the contract of accord; and

   (2) The rule that a novation is never presumed and, in fact
       must be proven by the party asserting a novation.

Moreover, when Beepwear filed Claim No. 10335 for $1,013,000, the
Debtors' Modified Second Amended Joint Plan of Reorganization had
not been confirmed.  Thus, at that time, the bankruptcy filings of
Worldcom and SkyTel have not yet been consolidated.  An election
of remedies against one corporation cannot be considered an
election of remedies against another corporation, Mr. Davis
maintains.

Accordingly, Beepwear asserts that it never elected to seek
damages against SkyTel for breach of Settlement Agreement, and is
therefore, permitted to pursue remedies against SkyTel for breach
of the JMA.

                          About WorldCom

Headquartered in Clinton, Mississippi, WorldCom, Inc., now known
as MCI -- http://www.worldcom.com/-- is a pre-eminent global  
communications provider, operating in more than 65 countries and
maintaining one of the most expansive IP networks in the world.  
The Company filed for chapter 11 protection on July 21, 2002
(Bankr. S.D.N.Y. Case No. 02-13532).  On March 31, 2002, the
Debtors listed $103,803,000,000 in assets and $45,897,000,000 in
debts.  The Bankruptcy Court confirmed WorldCom's Plan on October
31, 2003, and on April 20, 2004, the company formally emerged from
U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News,
Issue No. 118; Bankruptcy Creditors' Service, Inc., 215/945-7000)


XM SATELLITE: Lowers 2006 Subscriber & Financial Guidance
---------------------------------------------------------
XM Satellite Radio Holdings Inc. reported a change to its
subscriber and financial guidance for 2006, projecting that it
will end 2006 with 8.5 million subscribers, resulting in
subscriber revenues of $835 million and EBITDA loss (excluding
stock-based compensation, other income/expense, equity in net
losses of affiliates, and loss from deleveraging transactions) of
$235 million.  XM reaffirmed that it remains on track to have
positive cash flow from operations for the fourth quarter of 2006
and on an annual basis for 2007.

"Subscriber growth for the first quarter of 2006 was consistent
with our initial guidance of nine million subscribers by the end
of 2006," said Hugh Panero, President and CEO of XM Satellite
Radio.  "Although XM has regained retail market share since the
first of the year, the satellite radio category has seen an
overall softness at retail during the second quarter to date, and
we have been later than anticipated with broad availability of our
new products."

The revised guidance of 8.5 million subscribers represents growth
of more than 40% over the course of the year.  The revised
subscriber guidance leads to a reduction in subscriber revenues
and a narrower EBITDA loss for the year.  XM expects to add a
total of more than 2.5 million net new subscribers this year.  XM
ended 2005 with 5,932,957 subscribers, and the company added more
than 568,000 net new subscribers during the first quarter of 2006
for a total of more than 6.5 million subscribers.  XM is currently
working through regulatory and legal challenges, the resolution of
which could affect future product availability and operating
results, and require us to review this revised guidance.

                      About XM Satellite

Headquartered in Washington, D.C., XM Satellite Radio Inc.
(Nasdaq: XMSR) -- http://www.xmradio.com/-- is a wholly owned
subsidiary of XM Satellite Radio Holdings Inc.  XM has been
publicly traded on the NASDAQ exchange since Oct. 5, 1999.  XM's
founding was prompted by the radio industry's first major
technological change since the popularization of FM radio in the
1970s: the creation of a third broadcast medium, transmitted by
satellite, now taking its place alongside AM and FM on the radio
dial.  One of only two companies with a license for this new
national audio service, XM has assembled a "dream team" of
creative radio professionals and a management team committed to
leading the world into the next generation of radio.  XM's 2006
lineup includes more than 170 digital channels of choice from
coast to coast: the most commercial-free music channels, plus
premier sports, talk, comedy, children's and entertainment
programming; and 21 channels of the most advanced traffic and
weather information.  XM has broadcast facilities in New York and
Nashville, and additional offices in Boca Raton, Florida;
Southfield, Michigan; and Yokohama, Japan.

At Dec. 31, 2005, XM Satellite Radio Inc.'s balance sheet showed a
stockholders' deficit of $362,713,000, compared to $43,582,000
positive equity at Dec. 31, 2004.

                         *     *     *

As reported in the Troubled Company Reporter on April 21, 2006,
Standard & Poor's Ratings Services assigned its 'CCC' rating to
XM Satellite Radio Inc.'s proposed $600 million senior unsecured
notes.  The senior unsecured notes are rated one notch below the
corporate credit rating because of the sizable amount of secured
debt in the company's capital structure relative to its asset
base.  Proceeds from the proposed notes issue are expected to be
used to refinance existing debt.

At the same time, Standard & Poor's assigned its 'B-' rating and
recovery rating of '1' to XM's proposed $250 million first-lien
secured revolving credit facility, indicating an expectation of
full recovery of principal in the event of a payment default.


* BOOK REVIEW: Hospital Turnarounds: Lessons in Leadership
----------------------------------------------------------
Author:     Terence F. Moore and Earl A. Simendinger
Publisher:  Beard Books
Softcover:  248 pages
List Price: $34.95

Order your personal copy at
http://amazon.com/exec/obidos/ASIN/1893122093/internetbankrupt

If the health care institution you administer is, like so many
others, experiencing a period of financial distress, find the time
to read this book.  The fourteen health care executives who
contributed to the work have been in your position.

Here, They share the lessons in techniques, tactics, and politics
they learned from managing successful turnarounds in a myriad of
healthcare environments.  Each chapter presents a separate case
history and focused on a particular strategy, allowing the reader
to concentrate on the issues of greatest individual interest.

A good place to begin might be by properly diagnosing your
facility's problems and potential, following the guidelines in
Chapter 1.  

Marketing and public relations tips (e.g., community meetings, a
health kiosk in a local shopping center, direct mailings of
hospital newsletters and physician directories) are provided in
Chapter 2.

An overall plan for a turnaround, including financial strategies
and methods of streamlining administration, is laid out in
Chapter 3, one of the most comprehensive sections of the book.

Chapters 4-6 focus on people management.  Issues addressed include
turnarounds in which substantial employee reduction was required;
the value of education in handling people issues, including staff
retreats; and the revitalization of a rural hospital where staff
already had been cut to the bone and the facility's survival
depended upon volunteerism at all levels, whether medical or
administrative.

Reducing expenses is never enough; a successful turnaround
requires revenue as well.  Chapter 7 describes a turnaround
accomplishes by emphasizing the hospital's best-performing core
services while letting go of non-performing peripherals such as
its retail pharmacy.

This facility also developed a targeted marketing plan that
concentrated on doing a few things very well, rather than trying
to be all things to all people.

Leadership techniques, which include a strong consumer orientation
and good employee communications, are discussed in Chapter 8,
while Chapter 9 tracks a lengthy turnaround over an eight-year
period, including a description of the problems that lead to the
health care organization's decline in the first place.

Trying something entirely different might be the key to your
turnaround.  Chapter 10 documents the beneficial effect of
initiating high-quality specialty programs such as cosmetics and
cataract surgeries and impotency solutions in a small hospital.
Chapter 11 analyzes the programs that were expanded and those that
had to be discontinued to turn around in a mid-sized hospital.

Almost anyone can downsize an organization.  The art of the
turnaround is to minimize the trauma while maximizing the
hospital's potential, and protecting the turnaround artist's own
job in the process.  The principles in this book, first published
in 1993, are equally sound and instructive in this 1999 reprint.

                             *********

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 ***