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/raid1/www/Hosts/bankrupt/TCR_Public/060707.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, July 7, 2006, Vol. 10, No. 160 Headlines ADB SYSTEMS: Completes Sale of Norwegian Biz Unit for $2.8 Mil. APHTON CORP: Court Approves Eckert Seamans as Bankruptcy Counsel APHTON CORP: Defers Salary of Three Employees Pending Sale Closing APHTON CORPORATION: Asset Sale Hearing Slated for July 14 AQUACELL TECHNOLOGIES: Posts $1.8 Mil. Net Loss in Third Quarter ARMSTRONG WORLD: Committee Files Post-Trial Brief v. Confirmation ARMSTRONG WORLD: Asbestos Entities Slam Brickman's Testimony Anew ASARCO LLC: Wants Spieth Bell as Special Labor Counsel ASARCO LLC: Wants RECON Real Estate as Broker for 3 El Paso Land BAREFOOT RESORT: Delivers Second Amended Plan of Reorganization BAYOU GROUP: Files 25 Lawsuits Against Former Investors BROOKLYN HOSPITAL: Court Approves Ernst & Young as Accountants CALPINE CORP: Wants to Sell Fox Energy Plant for $16.2 Million CALPINE CORP: Wants Lien Investigation Deadline Extended CALPINE CORP: Wants 3 Executive VPs' Employment Agreement Okayed CATHOLIC CHURCH: Portland Wants Continued Use of Funds CENTRAL AMERICAN: Paritz & Co. Replaces Killman Murrell as Auditor CHOICE ONE: Completes Merger with Conversent Comms & CTC Comms CLICKABLE ENT: Simontacchi & Co. Raises Going Concern Doubt CLINICAL DATA: Deloitte & Touche Raises Going Concern Doubt CLINICAL DATA: Announces $17 Million Private Placement COLLINS & AIKMAN: May Get $5 Mil. From Settlement with Insurers COLLINS & AIKMAN: SEC Has Until July 31 to File Proofs of Claim COLLINS & AIKMAN: Moves to Reject Manchester and Farmville Leases CONSUMERS ENERGY: Settles Two Class Action Lawsuits CONVERSENT COMMS: Completes Merger with Choice One & CTC Comms CRESCENT JEWELERS: Has Until August 15 to Decide on Leases CSK AUTO: Receives $221 Mil. of Tenders from Holders of 7% Notes D&I INVESTMENTS: Case Summary & Four Largest Unsecured Creditors DANA CORP: Rejects 22 Executory Contracts and Unexpired Leases DANA CORP: Employing 31 Additional OCPs and Service Providers DANA CORP: Files 2005 Employee Incentive & Savings Plan Report DELTA MUTUAL: March 31 Balance Sheet Upside-Down by $1.2 Million DIAGNOSTIC IMAGING: Moody's Holds B2 Rating on $140MM of Sr. Loans DREWCAT CAPITAL: S&P Rates $50 Million Senior Notes at BB- E.A. VINER INT'L: Moody's Rates $125 Mil. Sr. Sec. Facility at B1 ENDEVCO INC: March 31 Balance Sheet Upside Down by $1.9 Million ENRON CORP: Court Approves Five Settlement Agreements ENTERGY NEW ORLEANS: Agrees to Alteration of FTI's Payment Terms ENTERGY NEW ORLEANS: Hibernia Nat'l Wants Secured Claim Allowed FLYI INC: Wants 62 Late-Filed Claims Disallowed FOAMEX INTERNATIONAL: Plan Filing Period Extended to Sept. 14 FOAMEX INT'L: Inks Stipulation to Set Off Guilford Mills Debts GENERAL MOTORS: Board Braces for Dissent on Renault-Nissan Deal GENESCO INC: Board Approves $20 Million Common Stock Repurchase GREAT COMMISSION: Committee Wants to Hire Blank Rome as Counsel GULF COAST: Gets Court Approval to Hire Hughes & Luce as Counsel GULF COAST: Hires David Hull as Chief Restructuring Officer HOME ECHO: Voluntary Chapter 11 Case Summary IMAGE INNOVATIONS: Case Summary & 22 Largest Unsecured Creditors INTEGRATED ELECTRICAL: Amends 2006 First Quarter Report INT'L THOROUGHBRED: Posts $3.9MM Net Loss in 2006 Fiscal 1st Qtr. KAISER ALUMINUM: Emerges from Chapter 11 Protection in Delaware LEVITZ HOME: Court Approves More Lease Assignments to PLVTZ LEVITZ HOME: Can Proceed with Robbinsville Lease Rejection LOCAL TELECOM: Posts $786,715 Net Loss in 2006 Fiscal 1st Qtr. LONDON FOG: Panel Has Until July 25 to Question Sub. Lenders' Lien MERIDIAN AUTOMOTIVE: Panel Wants Deposition from Credit Suisse MESABA AVIATION: Incurs $45.6 Million Net Loss in Fourth Quarter MESABA AVIATION: Walks Away from Northwest Aircraft Leases MESABA AVIATION: Reports May 2006 Traffic Results MIRANT CORP: Bankrupt Units Have Until Aug. 7 to File Ch. 11 Plan MIRANT CORP: Mirant NY-Gen Wants DIP Facility Raised to $9.5 Mil. NEPTUNE INDUSTRIES: Expects $2 Mil. Offering Completed in 30 Days NORTEL NETWORKS: Completes $2 Billion Senior Notes Offering NORTHPOINT COMMS: Court Closes Case After Distribution of Funds NORTHWESTERN CORP: Inks Electric Supply Pact with PPL Montana OPAL CONCEPTS: Wants to Pay U.S. Trustee from Trust Funds OWENS CORNING: Court OKs Plan Support Agreement Despite Objections OWENS CORNING: Court Approves J.P. Morgan Equity Commitment Accord PCS EDVENTURES!.COM: HJ & Associates Raises Going Concern Doubt RADAMES SANTIAGO: Case Summary & 21 Largest Unsecured Creditors RECORP GROUP: Voluntary Chapter 11 Case Summary REFCO INC: Chapter 11 Trustee Wants Capstone as Financial Advisor REFCO INC: Refco Group Inks Settlement With West and Contractors RICHARD SHIELDS: Case Summary & 20 Largest Unsecured Creditors SILICON GRAPHICS: Wants Solicitation & Tabulation Protocol Okayed SILICON GRAPHICS: Court Fixes August 4 as General Bar Date SILICON GRAPHICS: Inks Financing Agreement with Lenders SIVAULT SYSTEMS: Names Richard Moore as New President and CEO SOLUTIA INC: Gets Court Nod to Amend & Assume Linde Gas Contracts SOLUTIA INC: Can Amend and Assume Saint Gobain Agreement SOLUTIA INC: Gets Court Nod to Amend & Assume Ammonia Supply Pact SOUTHAVEN POWER: Gets Court Nod to Amend DIP Credit Agreement SOUTHAVEN POWER: Court Extends Plan-Filing Period to Jan. 15, 2007 STRATUS SERVICES: Completes Activities for Staffing Unit Sale TENET HEALTHCARE: Gets $340 Million from Katrina Insurers U.S. CONCRETE: Buying Two Companies for $165 Million U.S. CONCRETE: Initiates Private Offer for $75 Mil. Senior Notes U.S. ENERGY: Posts $2 Million Net Loss in Quarter Ended March 31 VALASSIS COMMS: To Acquire ADVO Inc. for $1.3 Billion VARIG S.A.: Preliminary Injunction in Effect Until July 21 VARIG S.A.: Brazilian Court Sets New Auction Date for Assets VESTA INSURANCE: Moody's Junks Rating on Senior Debt WERNER LADDER: Gets Court Nod to Pay Priority Vendor Claims WERNER LADDER: Gets Court Nod to Pay Critical Vendor Claims WERNER LADDER: Wants to Employ Ordinary Course Professionals WINN-DIXIE: Court Okays Rejection of Libman Company Supply Pact WINN-DIXIE: Wants to Reject Two Grocery Stores Leases WORLDCOM INC: Trustee Will Accept Bids in Columbus Lumber Interest WORLD HEALTH: Wants Chapter 11 Cases Converted to Chapter 7 WORLD HEALTH: Panel Poses Limited Objection to Ch. 7 Conversion ZOOMERS HOLDING: Court Denies Request for DIP Financing * Buchanan & Klett Rooney Team-Up Creates Powerhouse Bankr. Group * BOOK REVIEW: Shark Tank: Greed, Politics, and the Collapse of Finley Kumble, One of America's Largest Law Firms ********* ADB SYSTEMS: Completes Sale of Norwegian Biz Unit for $2.8 Mil. --------------------------------------------------------------- Northcore Technologies Inc., formerly ADB Systems International Ltd., successfully completed the sale of its Norwegian business unit for $2.8 million in cash and debt settlement as well as a four-year revenue share agreement. The transaction was approved by shareholders at the company's annual general meeting. At the meeting, shareholders also voted to change the company's name to Northcore Technologies. The company will continue to trade under the symbols ADY on the TSX and ADBYF on the over-the-counter market until further notice. New trading symbols are expected to be introduced within two weeks pending regulatory approvals and process. About ADB Systems Headquartered in Ontario, Canada, ADB Systems International Ltd. (TSX: ADY; OTCBB: ADBYF) -- http://www.adbsys.com/-- delivers asset lifecycle management solutions that help organizations source, manage and sell assets for maximum value. ADB works with a growing number of customers and partners in a variety of sectors including oil and gas, government, healthcare, manufacturing and financial services. Through its wholly owned subsidiary, ADB Systems USA, Inc., ADB owns a 50% interest in GE Asset Manager, a joint business venture with GE. ADB has offices in Toronto (Canada), Stavanger (Norway), Tampa (U.S.), Dublin (Ireland), and London (U.K.). At Dec. 31, 2005, the Company's balance sheet showed a stockholders' deficit of CDN$2,710,000, compared to a CDN$1,009,000 deficit at Dec. 31, 2004. APHTON CORP: Court Approves Eckert Seamans as Bankruptcy Counsel ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware allowed Aphton Corporation to employ Eckert Seamans Cherin & Mellot, LLC, as its bankruptcy counsel. Eckert Seamans will: a. provide legal advice with respect to the reorganization and sale of assets, and it powers and duties as debtor-in- possession; b. attend meetings and negotiate with representative of creditors or other parties in interest as required of the Debtor; c. take actions to protect and preserve the Debtor's estate as necessary and as they arise; d. negotiate and prepare a plan of reorganization, disclosure statement and pursue confirmation and approval; e. prepare, on behalf of the Debtor, other necessary applications, motions, answers, orders, reports, and other legal papers in connection with the Debtor's bankruptcy proceedings; f. appear before the bankruptcy court, any appellate courts and the U.S. Trustee and protect the interest of the Debtor's estate before the courts and the U.S. Trustee; and g. perform all other legal services for the Debtor which may be necessary and appropriate. The Debtor told the Court that the Firm's professional bill: Professional Hourly Rate ------------ ----------- Members $235 - $525 Associates $150 - $250 Paralegals $95 - $160 The Debtor disclosed that the attorneys who will be involved in this engagement bill: Counsel Designation Hourly Rate ------- ----------- ----------- Michael Busenkell, Esq. Member $335 Ronald S. Gellert, Esq. Member $310 Diane R. Sirull, Esq. Associate $235 Ronald S. Gellert, Esq., a member at Eckert Seamans, told the Court that the firm has received a $90,000 retainer. Mr. Gellert assured the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The Firm's attorneys can be reached at: Michael Busenkell, Esq. Ronald S. Gellert, Esq. Diane R. Sirull, Esq. Eckert Seamans Cherin & Mellott, LLC 300 Delaware Avenue, Suite 1360 Wilmington, Delaware 19801 Tel: (302) 425-0430 Fax: (302) 425-0432 Headquartered in Philadelphia, Pennsylvania, Aphton Corporation -- http://www.aphton.com/-- is a clinical stage biopharmaceutical company focused on developing targeted immunotherapies for cancer. Aphton's products seek to empower the body's own immune system to fight disease. Aphton filed for chapter 11 protection on May 23, 2006. (Bankr. D. Del. Case No. 06-10510). Michael G. Busenkell, Esq., at Eckert Seamans Cherin & Mellot, LLC, represents the Debtor in its restructuring efforts. William J. Burnett, Esq., at Flaster Greenberg, represents the Official Committee of Unsecured Creditors. Aphton estimated its assets and debts at $1 million to $10 million when it filed for protection from its creditors. At Dec. 31, 2005, Aphton's balance sheet showed assets totaling $6,775,858 and debts totaling $11,641,182. APHTON CORP: Defers Salary of Three Employees Pending Sale Closing ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware allowed Aphton Corporation to defer payment of salaries for some of its employees and to grant incentives once the Debtor succeeds in selling substantially all of its assets. The Debtor is currently trying to sell its assets. The Court will consider approving a sale on July 14, 2006. The Debtor and the Official Committee of Unsecured Creditors said that the Debtor's employees need to support the due diligence process and to market the assets. They say the Debtor's remaining employees have the necessary skill and experience to implement the sale procedures approved by the Court. The Debtor and the Committee propose to pay Patrick Mooney, Chairman of the Debtor's Board of Directors, $66,666 in deferred salary and incentive bonus once a sale closes. John McCafferty, the Debtor's corporate counsel, will get $30,000 in deferred salary and incentive bonus. Steve Goth will get $5,750 in deferred salary and incentive bonus. Headquartered in Philadelphia, Pennsylvania, Aphton Corporation -- http://www.aphton.com/-- is a clinical stage biopharmaceutical company focused on developing targeted immunotherapies for cancer. Aphton's products seek to empower the body's own immune system to fight disease. Aphton filed for chapter 11 protection on May 23, 2006. (Bankr. D. Del. Case No. 06-10510). Michael G. Busenkell, Esq., at Eckert Seamans Cherin & Mellot, LLC, represents the Debtor in its restructuring efforts. William J. Burnett, Esq., at Flaster Greenberg, represents the Official Committee of Unsecured Creditors. Aphton estimated its assets and debts at $1 million to $10 million when it filed for protection from its creditors. At Dec. 31, 2005, Aphton's balance sheet showed assets totaling $6,775,858 and debts totaling $11,641,182. APHTON CORPORATION: Asset Sale Hearing Slated for July 14 --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware will conduct a hearing regarding the sale of substantially all of Aphton Corp.'s assets at 11:00 a.m., Eastern Time, on July 14, 2006. Objections to the Asset Sale must be filed with the Clerk of the Bankruptcy Court by 4:00 p.m., Eastern Time, on July 12, 2006. The Objections must also be served upon: a) the Debtor's counsel: Ronald S. Gellert, Esq. Eckert Seamans Cherin & Mcllott, LLC Suite 1360, 300 Delaware Ave. Wilmington, DE 19081 b) the Committee's counsel: William J. Burnett, Esq. Flaster/Greenberg, P.C. Suite 1001 913 Market Street Wilmington, Delaware 19801 c) the Office of the United States Trustee: Margaret Harrison, Esq. J. Caleb Boggs Federal Building 844 King Street, Lockbox 2313 Wilmington, Delaware, 19801 The Debtor obtained Court-approval on the bidding procedures for the auction of its assets. The initial bid deadline was set on June 15, 2006. Pursuant to the court-approved procedures, bidders are required to make a minimum initial bid deposit of $500,000. A stalking-horse bidder is entitled to a break-up fee equal to 3% of its qualified bid if another bidder wins at the auction. Subject to final determination, the Court authorized the Debtor to exercise its discretion, after consultation with the Official Committee of Unsecured Creditors, to: a) determine, which of qualified bids submitted for the auction is the highest or otherwise best offer; and b) properly reject bids that are: -- inadequate or insufficient; -- not in conformity with the requirements of the Bankruptcy Code, or the terms and conditions of the Sale; or -- contrary to the best interest of the Debtor, its estate and creditors. The Debtor has listed 28 potential purchasers. No stalking-horse bidder has been identified. The auction was scheduled on June 21, 2006, at the Offices of Eckert Seamans Cherin & Mellott, LLC, in Philadephia. No updates are available to date regarding the Auction Sale. Headquartered in Philadelphia, Pennsylvania, Aphton Corporation -- http://www.aphton.com/-- is a clinical stage biopharmaceutical company focused on developing targeted immunotherapies for cancer. Aphton filed for chapter 11 protection on May 23, 2006. (Bankr. D. Del. Case No. 06-10510). Michael G. Busenkell, Esq., at Eckert Seamans Cherin & Mellot, LLC, represents the Debtor in its restructuring efforts. William J. Burnett, Esq., at Flaster Greenberg, represents the Official Committee of Unsecured Creditors. Aphton estimated its assets and debts at $1 million to $10 million when it filed for protection from its creditors. At Dec. 31, 2005, Aphton's balance sheet showed assets totaling $6,775,858 and debts totaling $11,641,182. AQUACELL TECHNOLOGIES: Posts $1.8 Mil. Net Loss in Third Quarter ---------------------------------------------------------------- AquaCell Technologies, Inc., incurred a net loss of $1,824,000 on revenues of $27,000 for its third fiscal quarter ended March 31, 2006. At March 31, 2006, the Company's balance sheet showed $1,847,000 in total assets and $2,071,000 in total liabilities, resulting in a $224,000 in stockholders' deficit. The Company's March 31 balance sheet also showed strained liquidity with $562,000 in total current assets available to pay $1,620,000 in total current liabilities coming due within the next 12 months. Full-text copies of the Company's financial statements are available for free at http://ResearchArchives.com/t/s?d20 Going Concern Doubt Wolinetz, Lafazan & Company, P.C., in Rockville Centre, New York, raised substantial doubt about AquaCell Technologies' ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended June 30, 2005. The auditing firm pointed to the Company's significant operating losses for the years ended June 30, 2005, and 2004 as well as its working capital and stockholders' deficiency at June 30, 2005. Headquartered in Rancho Cucamonga, California, AquaCell Technologies, Inc. (OTCBB: AQUA) -- http://www.aquacell.com/-- has two operating subsidiaries, AquaCell Media, Inc., which operates in the out-of-home advertising segment of the advertising industry, and Aquacell Water Inc. (formerly Water Science Technologies, Inc.), which is engaged in the manufacture and sale of products for water filtration and purification, addressing various water treatment applications for municipal, industrial, commercial, and institutional purposes. ARMSTRONG WORLD: Committee Files Post-Trial Brief v. Confirmation ----------------------------------------------------------------- The Official Committee of Unsecured Creditors filed its post-trial briefs, proposed findings of fact and conclusions of law against confirmation of Armstrong World Technologies, Inc., and its debtor-affiliates' plan of reorganization. The Plan Supporters' evidence presented at the Confirmation hearing establishes that the Debtors' Chapter 11 plan discriminates against the Class 6 Commercial Creditors, who will receive a 59.9% recovery under the Plan, in favor of the Class 7 asbestos personal injury claimants, who will receive a 91.3% recovery under the Plan, Jeffrey Waxman, Esq., at Cozen O'Connor, in Wilmington, Delaware, asserts. The 31.8% disparity in treatment is both unfair and without justification under the Bankruptcy Code, Mr. Waxman contends. AWI, Mr. Waxman argues, must prove the absence of unfair discrimination by a preponderance of the evidence or by clear and convincing evidence. The Plan Supporters' experts, Drs. Mark Peterson and Thomas Florence, simply roll forward the fraud-ridden history of the 1990s to produce inflated estimates for the future, Mr. Waxman tells Judge Robreno. "They jack up the already inflated historical numbers to produce exaggerated projections of future liability." Dr. Peterson's and Dr. Florence's estimates incorporate and perpetuate payment of numerous illegitimate claims, or legitimate claims at inflated values, Mr. Waxman adds. Hence, Mr. Waxman says the District Court should not accept the Plan Supporters' estimate. The District Court should instead adopt Dr. Chambers' $1,960,000,000 for AWI's present and future asbestos liability. By any standard, a 31.8% difference in the treatment of two co-equal classes is unfair, Mr. Waxman contends. "Armstrong's justification for the unfair discrimination amounts to invoking as a defense for discriminatory class treatment the split of Class 7 consideration between the present and future claimants under the Trust Distribution Procedures -- a private arrangement struck by representatives of present and future asbestos claimants, subject to modification without any court involvement, and trumpeting the benefits of a section 524(g) injunction." Because of the unfair treatment of the Class 6 Commercial Creditors, Armstrong's Plan violates Section 1129(b)(1) of the Bankruptcy Code. The Creditors Committee, therefore, asks Judge Robreno to deny confirmation of the Debtors' Plan. Moreover, the Creditors Committee wants the District Court to rule that the most reasonable of the estimates offered by the experts in the proceeding with respect to AWI's pending and future asbestos liability is Dr. Chamber's $1,960,000,000 estimate. Among other things, the Creditors Committee wants the District Court to find that: * AWI's limited asbestos-related activities supports the medical conclusion that the Debtors' asbestos liability should be decreasing; * AWI's liability will decline in the future because asbestos- related disease itself is declining; * as a member of the Center for Claims Resolution, AWI was overnamed as a defendant and likely paid numerous meritless claims in the 1990s; and * abusive practices and lax evidentiary standards in the asbestos litigation environment of the 1990s places additional pressures on AWI to settle meritless claims. A full-text copy of the Creditors Committee's Post-Trial Brief is available for free at http://ResearchArchives.com/t/s?d2c A full-text copy of the Creditors Committee's proposed Findings of Fact and Conclusions of Law is available for free at http://ResearchArchives.com/t/s?d2e About Armstrong World Headquartered in Lancaster, Pennsylvania, Armstrong World Industries, Inc. -- http://www.armstrong.com/-- the major operating subsidiary of Armstrong Holdings, Inc., designs, manufactures and sells interior floor coverings and ceiling systems, around the world. The Company and its debtor-affiliates filed for chapter 11 protection on December 6, 2000 (Bankr. Del. Case No. 00-04469). Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, and Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. The Debtors tapped the Feinberg Group for analysis, evaluation, and treatment of personal injury asbestos claims. Mark Felger, Esq. and David Carickhoff, Esq., at Cozen and O'Connor, and Robert Drain, Esq., Andrew Rosenberg, Esq., and Alexander Rohan, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Houlihan Lokey for financial and investment advice. The Official Committee of Asbestos Personal Injury Claimant hired Ashby & Geddes as counsel. When the Debtors filed for protection from their creditors, they listed $4,032,200,000 in total assets and $3,296,900,000 in liabilities. (Armstrong Bankruptcy News, Issue No. 95; Bankruptcy Creditors' Service, Inc., 215/945-7000) ARMSTRONG WORLD: Asbestos Entities Slam Brickman's Testimony Anew ----------------------------------------------------------------- The Official Committee of Asbestos Claimants and Dean M. Trafelet, the legal representative for future asbestos personal injury claimants of Armstrong World Industries, Inc., and its debtor- affiliates, ask the U.S. District Court for the District of Delaware to disregard Professor Lester Brickman's testimony because it did not meet the Daubert standard for reliability. As previously reported, Judge Robreno denied the Asbestos Committee and the Futures Representative's initial request to exclude Prof. Brickman's testimony. Prof. Brickman was permitted to testify at the Confirmation Hearing. The District Court, however, stated that the Plan Supporters' Daubert objections could be renewed and argued as part of the post-trial briefing. In the case of Daubert v. Merrell Dow Pharm. Inc., 509 U.S. 579 (1993), the District Court acts as a "gatekeeper" to exclude expert testimony that does not satisfy the test for admissibility under Rule 702 of the Federal Rules of Evidence, Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, in New York, pointed out. That gate-keeping function applies to all expert testimony, not just scientific testimony. In Armstrong's case, Prof. Brickman's testimony fails the "relevance" and "reliability" aspects of Daubert and must be excluded, Mr. Inselbuch asserted. The purpose of the Confirmation Hearing was for the District Court to hear, among other things, testimony regarding the parties' estimates of the number and value of Armstrong's present and future Asbestos Personal Injury Claims. Prof. Brickman, who was qualified as an expert on the history of asbestos litigation and who is not an estimation expert, had very little to say about Armstrong's asbestos liabilities because he has no specific knowledge about Armstrong. Mr. Inselbuch noted that Prof. Brickman admitted he: -- had neither spoken with anyone representing Armstrong regarding its specific experience in the tort system nor any representative from the Center for Claims Resolution concerning the Debtors' experience in the tort system; -- had never spoken to any individual Armstrong claimant; and -- did not make any study of Armstrong's litigation strategies or of its verdicts, settlements or defense costs, including both during the period prior to Armstrong joining the ACF and CCR, as well as during Armstrong's experience in the ACF or CCR. As a result, many of Prof. Brickman's principal opinions about Armstrong are not based on any knowledge about Armstrong but rather on inadmissible speculation, Mr. Inselbuch pointed out. Prof. Brickman is not a reliable source of expert information about Armstrong's asbestos litigation history because he lacks knowledge about Armstrong. The issue of relevance or "fit" depends upon "a connection between the expert opinion offered and the particular disputed factual issues in the case." Prof. Brickman made no showing in his trial testimony that the generalities discussed in his report are applicable to the facts regarding Armstrong, and his principal conclusions regarding Armstrong have no foundation whatsoever, Mr. Inselbuch asserted. His testimony therefore does not "fit" to the facts of the case and should be excluded. Creditors Committee Objects The ACC and the Futures Representative's "renewed motion" to exclude Prof. Brickman is identical to their prior motion and should be denied, Jeffrey Waxman, Esq., at Cozen O'Connor, in Wilmington, Delaware, asserted. The ACC and the Futures Representative offer neither new arguments nor evidentiary issues in support of their request. The U.S. Court of Appeals for the Third Circuit has clarified in Habecker v. Copperloy Corp., 893 F.2d 49, 51 (3d Cir. 1990), that expert testimony is liberally admissible under Rule 702 of the Federal Rules of Evidence, Mr. Waxman pointed out. The Third Circuit also ruled that courts have "considerable leeway" in making the determination of admissibility. Mr. Waxman argued that Prof. Brickman's opinion testimony satisfies the threshold for admissibility. In addition, Prof. Brickman's opinions are reliable. Prof. Brickman's report and testimony are based on a discernable and appropriate methodology that meets the measure for reliability standard in his professional field. Certain Armstrong and CCR representatives may have disagreed with some of Prof. Brickman's opinions but that does not lead to the conclusion that his opinions are unreliable and, therefore, in admissible under Daubert, Mr. Waxman said. Moreover, Prof. Brickman's opinions "fit the facts of this case," Mr. Waxman asserted. Prof. Brickman's report and testimony demonstrates that his opinions are, in fact, based on specific knowledge of Armstrong and its claiming experience. Court Affirms Previous Denial Judge Robreno denies the Asbestos Committee and the Futures Representative's request to exclude Prof. Brickman's expert testimony. The District Court finds Professor Brickman as a qualified expert, under Rule 702, by virtue of his skill, education and experience. Judge Robreno finds Prof. Brickman's report reliable because he "relies on sources and data, which are recently relied by experts in his field and others have relied upon his opinion." The District Court says Prof. Brickman's testimony fits well with the facts of the case and in the posture where the case is now. About Armstrong World Headquartered in Lancaster, Pennsylvania, Armstrong World Industries, Inc. -- http://www.armstrong.com/-- the major operating subsidiary of Armstrong Holdings, Inc., designs, manufactures and sells interior floor coverings and ceiling systems, around the world. The Company and its debtor-affiliates filed for chapter 11 protection on December 6, 2000 (Bankr. Del. Case No. 00-04469). Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, and Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. The Debtors tapped the Feinberg Group for analysis, evaluation, and treatment of personal injury asbestos claims. Mark Felger, Esq. and David Carickhoff, Esq., at Cozen and O'Connor, and Robert Drain, Esq., Andrew Rosenberg, Esq., and Alexander Rohan, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Houlihan Lokey for financial and investment advice. The Official Committee of Asbestos Personal Injury Claimant hired Ashby & Geddes as counsel. When the Debtors filed for protection from their creditors, they listed $4,032,200,000 in total assets and $3,296,900,000 in liabilities. (Armstrong Bankruptcy News, Issue No. 95; Bankruptcy Creditors' Service, Inc., 215/945-7000) ASARCO LLC: Wants Spieth Bell as Special Labor Counsel ------------------------------------------------------ ASARCO LLC seeks authority from the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to employ Spieth, Bell, McCurdy & Newell Co., LPA, as special counsel to address labor-related matters. ASARCO has selected Spieth Bell as its special counsel because of the firm's extensive experience, expertise and recognized national reputation in handling complex labor negotiations in which labor unions are actively involved, James R. Prince, Esq., at Baker Botts LLP, in Dallas, Texas, relates. Labor Matters In July 2005, ASARCO LLC's unionized workers, represented by the United Steelworkers of America, and 1,500 other employees went on strike. As a result, ASARCO's non-striking employees operated the mines on a limited basis. In November 2005, after prolonged negotiations and multiple court hearings, ASARCO and Union representatives reached an agreement that settled the strike. The Interim Labor Agreement generally extended the existing labor agreements until December 31, 2006. Although the Interim Labor Agreement does not expire until the end of 2006, ASARCO and the Union representatives believe that labor negotiations can be protracted and complex and agree that labor negotiations should start as soon as possible. Due to Spieth Bell's familiarity with the USW and its past experience negotiation with the USW on behalf of large companies in the context of other bankruptcy proceedings, ASARCO believes that Spieth Bell is uniquely qualified to assist it in upcoming Union negotiations. Spieth Bell will carefully coordinate its efforts with ASARCO's bankruptcy counsel and general labor counsel, Quarles & Brady Streich Lang, L.L.P, so as to prevent any duplication of effort to the fullest extent possible, Stanley Dan Pace, Esq., a partner at Spieth Bell, assures the Court. Mr. Pace informs the Court that he will be performing most of the work for ASARCO. ASARCO will pay $345 per hour for Mr. Pace's services. ASARCO will pay $280 to $325 per hour for every other additional attorney who may provide services on its behalf. Mr. Pace and the other attorneys will be reimbursed of all necessary out-of-pocket expenses that they incur while providing services to ASARCO. Spieth Bell does not hold any interests adverse to ASARCO and its estates, and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code, Mr. Pace maintains. 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. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASARCO LLC: Wants RECON Real Estate as Broker for 3 El Paso Land ---------------------------------------------------------------- ASARCO LLC seeks permission from the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to employ RECON Real Estate Consultants, Inc., as its broker, for the sale of three tracts of land located in El Paso County, Texas: 1. Tract 1, John Barker Survey #10, containing approximately 125.956 acres; 2. Crazy Cat 1 and 2, containing approximately 42 acres; and 3. a portion of Tract 2A, John Barker Survey #10, containing approximately 246.97 acres and located just South of Executive Center Drive and East of Interstate 10. As payment for its marketing services to ASARCO, RECON will receive a commission equal to 4.5% of the gross sales price of the Property. Matt M. Blaugrund, vice president of RECON Real Estate Consultants, assures the Court that his firm does not hold interests adverse to ASARCO and its estate, and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. 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. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000). BAREFOOT RESORT: Delivers Second Amended Plan of Reorganization --------------------------------------------------------------- Barefoot Resort Yacht Club Villas, LLC, delivered its second amended plan of reorganization to the U.S. Bankruptcy Court for the District of New Jersey. Under the Second Amended Plan, the allowed general unsecured claims of Dargan Construction, Sally Stowe Interiors, Drake Development Company USA, Inc., W. Russell Drake, Grand Strand Disposal, Horry Electric Cooperative, Jenkins Hancock and Sides, Lewis & Babcock, Robert Young, P.A., Rogers Townsend Thomas, SW Associates, and any other allowed general unsecured claim will share pro rata in the funds that remain after payment of the Class 1, Class 2, and Class 3 allowed claims. In addition, the Debtor rejects its Contract of Sale with Premier Holdings of South Carolina, LLC. The Debtor, Premier SC, and Coastal Federal entered into a Tri-Party Agreement, dated Jan. 9, 2004, which provides certain rights to Coastal Federal vis-a-vis the Contract of Sale. Prior to the second plan amendment, the Court approved the Debtor's Disclosure Statement explaining its Original Plan of Reorganization. The Court 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 Debtor did not submit an amended Disclosure Statement for its second amended plan. The Debtor said 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. Original Plan As reported in the Troubled Company Reporter on May 26, 2006, the National Bank of South Carolina holds a $48 million claim against the Debtor. Its claim is secured by a first mortgage on the Debtor's condominium assets. Under the Original Plan, 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 told 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 explained, "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 further told 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 according to the Original Plan: (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 said that W. Russell Drake's claim will be paid in full. Premier Holdings' Claim The Debtor disclosed 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 also disclosed 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 projected total costs to be $1 million. The Debtor stated 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 noted 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. 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. BAYOU GROUP: Files 25 Lawsuits Against Former Investors ------------------------------------------------------- The Bayou Group of Hedge Funds filed another 25 lawsuits against former investors who received alleged investment returns from the failed hedge funds. The lawsuits seek to recover the entirety of the distributions made by the failed hedge funds, including principal and fictitious profits. The lawsuits were commenced in connection with the Bayou Group of Hedge Funds' pending Chapter 11 cases. Jeff J. Marwil, a partner at Jenner & Block LLP and the sole Managing Member of the Chapter 11 debtors, said "the intent and purpose of the lawsuits and these Chapter 11 cases is to make fair and equitable distributions to all creditors, and to undo the circumstances where certain investors received a return of principal and fictitious profits, while other investors lost everything. Equality of distribution is the goal." In a related matter, the Hon. Adlai Hardin of the U.S. Bankruptcy Court for the Southern District of New York, who presides over Bayou's Chapter 11 cases, denied a request of the U.S. Trustee for the appointment of a Chapter 11 Trustee, finding that pursuant to a "lawful, proper and enforceable" order of the District Court Mr. Marwil has full and sole corporate authority to manage the affairs of the Bayou debtors. Bayou bankruptcy counsel H. Jeffrey Schwartz, a partner in the Dechert LLP international law firm, resident in New York, commented that in denying the Trustee motion, the Court's reliance on the Federal District Court Order appointing Mr. Marwil as Bayou's independent fiduciary was "appropriate, and is supported by fact and law." Headquartered in Chicago, Illinois, Bayou Group, LLC, operates and manages hedge funds. The company and its affiliates filed for chapter 11 protection on May 30, 2006 (Bankr. S.D.N.Y. Case No. 06-22306). Elise Scherr Frejka, Esq., at Dechert LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. BROOKLYN HOSPITAL: Court Approves Ernst & Young as Accountants -------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of New York allowed The Brooklyn Hospital Center and Caledonian Health Center, Inc., to retain Ernst & Young, LLP, as their accountants and auditors. Ernst & Young will: a) perform agreed-upon procedures services under the attestation standards of the American Institute of Certified Public Accountants, related to certain portions of the Annual Report of Hospitals and Hospital Healthcare Complexes, which procedures have been agreed to by the Debtors' Board of Trustees and the New York State Department of Health, solely to assist the specified parties in evaluating the Debtors' compliance with the New York State Department of Health, Commissioner of Health's Administrative Rules and Regulations, Part 86-1.6(a) for the year ended Dec. 31, 2005; b) perform agreed-upon procedures services under the attestation standards of the AICPA, which procedures have been agreed to by the Debtors' Board of Trustees and the Department, solely to assist the specified parties in evaluating the Debtors' compliance with subdivisions (9) and (12) of section 2807-k of New York State Public Health Law for the year ended Dec. 31, 2005; c) audit and report on the consolidated financial statements of the Debtor for the year ended Dec. 31, 2005; d) provide tax compliance service to the Debtors, including the review of Form 990, Return of Organization Exempt From Income Tax and New York State tax returns, for the year ended Dec. 31, 2005; and e) perform accounting and auditing services for the Debtor, including auditing and reporting on the special-purpose financial statements of the Debtors for the year ended Dec. 31, 2004. The firm's professionals bill: Designation Hourly Rate ----------- ----------- Partners and Principals $456 - $498 Senior Managers $414 - $450 Managers $300 - $354 Seniors $219 - $282 Staff $144 - $174 The Debtors assure the Court that Ernst & Young does not hold or represent any interest adverse to the Debtors or to their estates. Headquartered in Brooklyn, New York, The Brooklyn Hospital Center -- http://www.tbh.org/-- provides a variety of inpatient and outpatient services and education programs to improve the well being of its community. The Debtor, together with Caledonian Health Center, Inc., filed for chapter 11 protection on Sept. 30, 2005 (Bankr. E.D.N.Y. Case No. 05-26990). Lawrence M. Handelsman, Esq., and Eric M. Kay, Esq., at Stroock & Stroock & Lavan LLP represent the Debtors in their restructuring efforts. Glenn B. Rice, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., represents the Official Committee of Unsecured Creditors. Mark Dominick Alvarez at Alvarez & Marsal, LLC, serves as the Committee's financial advisor. When the Debtors filed for protection from their creditors, they listed $233,000,000 in assets and $337,000,000 in debts. CALPINE CORP: Wants to Sell Fox Energy Plant for $16.2 Million -------------------------------------------------------------- Calpine Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for permission to take all actions necessary to effectuate the sale of the Fox power plant for $16.25 million. On Nov. 19, 2004, Fox Energy Company LLC and Fox Energy OP, LP, leased Fox Energy Center, a 490-megawatt, natural gas-fired power plant in Kaukauna, Outgamie County, Wisconsin to Calpine Fox LLC. Fox Energy Company and Fox Energy OP are affiliates of GE Energy Financial Services. GE Energy is the existing equity-owner of the Fox power plant. CPN Fox is a non-debtor, indirect wholly owned subsidiary of Calpine Corporation. The Debtors have determined that CPN Fox is not eligible to receive proceeds from their DIP facility and other funding because the Fox power plant cannot maximize nor sustain its overall enterprise value. Bennett L. Spiegel, Esq., at Kirkland & Ellis LLP, in New York, notes that CPN Fox defaulted in its March 2006 rent payment for the Fox power plant. CPN Fox anticipates that it also cannot pay its June 2006 rent. Thus, CPN Fox and the Debtors negotiated for the sale of CPN Fox's leasehold interest in the Fox power plant back to Fox Energy Company and Fox Energy OP. On May 24, 2006, the Debtors, CPN Fox, Fox Energy Company and Fox Energy OP entered into a Letter of Intent, which provides that: 1. CPN Fox will sell the Fox Assets to Fox Energy Company and Fox Energy OP for $16.25 million, subject to post-closing adjustments: * $13.5 million will be paid on closing date, * $1 million will be paid 82 days after the closing date, * $500,000 will be paid 120 days after closing date, and * $1.25 million will be paid after occurrence of certain conditions delineated in the LOI; 2. CPN Fox will surrender the Fox Plant to Fox Energy; 3. Fox Energy's assignment to CPN Fox of certain interests will be terminated and those interests will revert automatically to Fox Energy; 4. CPN Fox and Debtors Calpine Operating Services Company, Inc., and Calpine Construction Management Company, Inc., will terminate certain contracts and assume and assign certain sub-contracts relating to the Fox plant. Among the contracts that will be terminated are: * the Lease, * the Memorandum of Lease, * the Site Lease, * the Memorandum of Site Lease, * the Assignment and Assumption Agreement, * the Project Management Agreement, * the Security Agreement, * the Pledge Agreement, * the Participation Agreement, * the Tax Indemnity Agreement, * the Calpine TIA Guaranty, * the Depositary Agreement, * the Tolling Guaranty and Reimbursement Agreement, * the Guaranty Note, * the Precautionary Pledge Agreement, and * the OP Guaranty; 5. CPN Fox and the Debtors will mutually release all liabilities arising under the terminated agreements; 6. CPN Fox and the Purchasers will execute a transition services agreement; and 7. All parties and their affiliates will mutually release all claims and liabilities related to Fox. A full-text copy of the Letter of Intent is available for free at http://ResearchArchives.com/t/s?d31 Mr. Bennett asserts that the sale proceeds is enough to fully satisfy CPN Fox's liabilities. The remainder of the proceeds can be applied to the Debtors' DIP Facility. To preserve the value of the Fox Assets, Mr. Bennett argues that it is critical that the Debtors close the sale as soon as possible. Headquartered in San Jose, California, Calpine Corporation -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The Company filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed $26,628,755,663 in total assets and $22,535,577,121 in total liabilities. (Calpine Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000) CALPINE CORP: Wants Lien Investigation Deadline Extended -------------------------------------------------------- Calpine Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to extend, until October 31, 2006, its deadline to further investigate the validity of the First and Second Lien Debt liens and challenge any default interest or "makewhole" demands made by the First and Second Lien Noteholders. The Debtors and the Official Committee of Unsecured Creditors have until July 30, 2006, to assert any claims related to the Debtors' obligations to the First and Second Lien Noteholders. Any claims not asserted by that date will be waived, Richard M. Cieri, Esq., at Kirkland & Ellis LLP, in New York, relates. Mr. Cieri tells the Court that the Debtors need more time to investigate the validity of the Liens since they are preoccupied in the restructuring processes of more than 270 Debtors. The June 21, 2006, Order extending the time for the Debtors and the Committee to respond to Law Debenture Trust Company of New York's First Amended Complaint requires equivalent extension of time for the Debtors and the Committee to be able to assert any claims against the First Lien Noteholders' makewhole premium demand. Mr. Cieri discloses that the Unofficial Committee for the Second Lien Noteholders has agreed to the extension of the Investigation Date, provided that there is a "carve-out" for any claims arising from the Debtors' default or repayment before the Second Lien Debt's maturity date. Headquartered in San Jose, California, Calpine Corporation -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The Company filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed $26,628,755,663 in total assets and $22,535,577,121 in total liabilities. (Calpine Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000) CALPINE CORP: Wants 3 Executive VPs' Employment Agreement Okayed ---------------------------------------------------------------- Calpine Corp. and its debtor-affiliates ask the Hon. Burton R. Lifland of the U.S. Bankruptcy Court for the Southern District of New York to approve the Employment Agreements with three executive vice presidents: 1. Robert E. Fishman, executive vice president for Power Operations; 2. Thomas N. May, executive vice president and president for Calpine Merchant Services Company, Inc.; and 3. Gregory L. Doody, executive vice president, general counsel and secretary. In connection with their restructuring process, the Debtors need talented and experienced executives who can manage their operations and compliment their current management team. Accordingly, the Debtors entered into employment agreements with the three executive vice presidents Fishman EVP Agreement Mr. Fishman will manage the Debtors' 27,000-megawatt portfolio of natural gas-fired and geothermal facilities. He will be responsible for the production and execution of business plans, strategies, and goals for Power Operations. He will also oversee all daily power plant operations, major maintenance and capital project planning, asset management and project development. The salient terms of the Fishman EVP Agreement are: (a) The EVP Agreement will end on June 13, 2007. After termination, Mr. Fishman's employment will be automatically renewed for an additional 12 months; (b) Mr. Fishman will receive: (i) $500,000 annual base salary, subject to the Chief Executive Officer and the Board of Directors' review; (ii) annual cash performance bonus of at least 90% of the base salary; and (iii) a guaranteed minimum success fee, and a one-time success fee on the effective date of a plan of reorganization; (c) Mr. Fishman is eligible to participate in the Debtors' benefit plans and programs available for senior executives; and (d) Mr. Fishman is restricted to be in any way connected to certain energy companies during his tenure and 12 months after his termination. A full-text copy of the Fishman EVP Agreement is available for free at http://ResearchArchives.com/t/s?d3e May EVP Agreement Mr. May will oversee Calpine Merchant, one of the energy commodity trading arms of the Calpine enterprise. The salient terms of the May EVP Agreement are: (a) The EVP Agreement will end on May 30, 2007. After termination, Mr. Fishman's employment will be automatically renewed for an additional 12 months; (b) Mr. May will receive: (i) $500,000 annual base salary, subject to the CEO and the Board's review; (ii) a $500,000 one-time payment, after approval of his Employment Agreement; (iii) $500,000 annual bonus in 2007; and (iv) a guaranteed minimum success fee and a one-time success fee on the effective date of a plan; (c) Mr. May is eligible to participate in the Debtors' benefit plans and programs for senior executives; (d) If Mr. May resigns without good reason, he will pay back to the Debtors a pro rata portion of his signing bonus; (e) Mr. May will be reimbursed of all reasonable commuting expenses from his residence in Princeton, New Jersey, and housing and living expenses for six months commencing on May 30, 2006; and (f) Mr. May is restricted to be in any way connected to certain energy companies during his tenure and 12 months after his termination. A full-text copy of the May EVP Agreement is available for free at http://ResearchArchives.com/t/s?d3f Doody EVP Agreement Mr. Doody will manage all of the Debtors' legal matters, especially the legal aspects of the Debtors' restructuring process. The salient terms of the Doody EVP Agreement are: (a) The EVP Agreement will end on July 17, 2007. After termination, Mr. Fishman's employment will be automatically renewed for an additional 12 months; (b) Mr. Doody will receive: (i) $500,000 annual base salary, subject to the CEO and Board's review; (ii) a $500,000 one-time payment after approval of his Employment Agreement; (iii) $450,000 annual bonus in 2007; and (iv) a guaranteed success fee and a one-time success fee payment on the effective date of the Debtors' plan; (c) Mr. May is eligible to participate in the Debtors' benefit plans and programs for senior executives; (d) If Mr. May resigns without good reason, he will pay back to the Debtors a pro rata portion of his signing bonus; (e) Mr. May will be reimbursed of all reasonable commuting expenses from his residence in Princeton, New Jersey and housing and living expenses for six months commencing July 17, 2006; and (f) Mr. May is restricted to be in any way connected to certain energy companies during his tenure and 12 months after his termination. A full-text copy of the Doody EVP Agreement is available for free at http://ResearchArchives.com/t/s?d34 Matthew A. Cantor, Esq., at Kirkland & Ellis LLP, in New York, asserts that Messrs. Fishman, May and Doody are well qualified for their appointed positions. The executives have had significant experience in the fields that they will be working on. The EVP Agreements are structured to reward value creation, Mr. Cantor says. The EVP Agreements provide that a portion of Messrs. Fishman, May and Doody's potential compensation will be received only after the Debtors' successful emergence from bankruptcy. Headquartered in San Jose, California, Calpine Corporation -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The Company filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed $26,628,755,663 in total assets and $22,535,577,121 in total liabilities. (Calpine Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Portland Wants Continued Use of Funds ------------------------------------------------------ The Archdiocese of Portland in Oregon maintains funds and investments for itself, and as a fiduciary trustee or custodian for various parishes, schools, charitable trusts and other entities. The funds and investments are held in accounts located at Key Bank and Union Bank of California. The Official Committee of Tort Claimants appointed in the Archdiocese's Chapter 11 case asserts that the parishes and schools have no legal existence separate from the Archdiocese and are analogous to divisions of a corporation. The Tort Committee also contends that, among others, the Archdiocese's bankruptcy estate includes the parishes and schools, and the Accounts, including the Archdiocesan Loan and Investment Program, the Catholic Education Endowment Fund, and the parish and school bank accounts. The U.S. Bankruptcy Court for the District of Oregon has ruled on the issue, but the ruling is pending on appeal with the U.S. District Court for the District of Oregon. The Archdiocese uses a procedure that allows it, the parishes, and the schools to continue to utilize the funds and investments in the Accounts without the necessity of the Bankruptcy Court's or the District Court's determination of the disputed legal issues at this time and without waiver of any rights by the parties to pursue determination of those issues in the future. The Archdiocese requires the continued use of what it deems to be its own funds in the Accounts for its ordinary day-to-day operations. The parishes and schools require the use of funds in the Accounts for their day-to-day operations. In addition, the funds in the ALIP are used to fund certain building projects at parishes and schools and other expenditures. The Archdiocese asserts that the use of the funds is within the ordinary course of its financial affairs, the parishes and the schools. The funds are necessary for the continuance of their existing religious, pastoral and educational ministries. The Archdiocese has prepared: * a budget, which provides for the estimated cash to be used for day-to-day operations for the period from July 1, 2006, through December 31, 2006; and * lists of anticipated expenditures from the ALIP and the CEEF for the period from July 1, 2006, through December 31, 2006. The Accounts are replenished as funds are received by the Archdiocese from parishes and schools. The parishes typically pay 8% of the amounts collected from their non-designated offertory to the Archdiocese on a monthly basis. These funds are used by the Archdiocese to defray day-to-day operating expenses and for its programs and ministries. Most of the parishes place all their other funds in excess of the amounts they anticipate will be needed for three months' operating expenses in the ALIP. Without the use of the funds in the Accounts, the Archdiocese, the parishes and the schools may have insufficient funds to meet their anticipated expenses and to complete ongoing or needed building projects, and to carry out their ministries. To allow the Archdiocese, the parishes and the schools to continue to operate in the ordinary course, and to provide adequate oversight over the use and administration of the funds and investments in the Accounts, the Tort Committee agrees that Portland may continue to utilize the funds and investments in the Accounts and in accordance with the Operating Budget, the ALIP Budget, and the CEEF Budget. The Archdiocese agrees to provide the Tort Committee with advance notice and an opportunity for a hearing before it will make any expenditure in excess of the budget, or outside of the ordinary course of business. A full-text copy of the parties' Stipulation and the Archdiocese's proposed budget is available for free at: http://researcharchives.com/t/s?d37 The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, represents the Official Tort Claimants Committee in Portland, and scores of abuse victims are represented by other lawyers. David A. Foraker serves as the Future Claimants Representative appointed in the Archdiocese of Portland's Chapter 11 case. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 63; Bankruptcy Creditors' Service, Inc., 215/945-7000) CENTRAL AMERICAN: Paritz & Co. Replaces Killman Murrell as Auditor ------------------------------------------------------------------ The Board of Directors of Central American Equities Corp. dismissed Killman, Murrell & Company, P.C., as the Company's principal independent accountant on June 26, 2006. Paritz & Company, P.A., replaces Killman Murrell as the Company's principal independent accountant and will audit the Company's financial statements for the fiscal year ended June 30, 2006. The Company says that it did not have any disagreement with Killman Murrell prior to the firm's dismissal. Going Concern Doubt As reported in the Troubled Company Reporter on May 4, 2006, Killman, Murrell raised substantial doubt about Central American Equities Corp.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the company's sales growth uncertainty and inability to raise sufficient capital. About Central American Central American Equity Corp. provides an integrated eco-vacation experience in Costa Rica, and owns and operates hotels and real property in that place. At March 31, 2006, the Company's balance sheet showed $5,447,653 in total assets, $674,289 in total liabilities, and $4,773,364 in stockholders' equity. CHOICE ONE: Completes Merger with Conversent Comms & CTC Comms -------------------------------------------------------------- Choice One Communications, CTC Communications and Conversent Communications have completed their merger. The merged organization will be called "One Communications" as of July 24 and will serve businesses in sixteen states within the Northeast, Mid- Atlantic and upper Midwest regions. With revenues of over $800 million, One Communications is the largest privately held competitive local exchange carrier in the United States. "This transaction transforms three telecommunications companies that were strong in their own right into a single broadband IP- based telecommunications powerhouse," said Thomas J. Casey, CEO of One Communications. "We will offer a unique combination of advanced telecommunications solutions and exceptional customer service. Businesses throughout our target markets will benefit from a new competitor that is large enough to make substantial investments in enhanced services while being nimble and focused enough to serve every customer with exceptional support provided by accessible and friendly experts." The One Communications network spans from Maine to West Virginia and the eastern seaboard to Wisconsin. The company will maintain substantial operations centers in Rochester, New York; Waltham, Massachusetts; Marlborough, Massachusetts and Charleston, West Virginia. In addition, One Communications will maintain dozens of regional offices in local business communities to serve small and medium sized business customers. Financing for the transaction includes a $75 million additional equity investment by both Columbia Ventures Corporation (the sole shareholder of CTC Communications), and Choice One shareholders (backstopped by Camulos Capital LP and Varde Investment Partners LP), and a $590 million credit facility arranged by Goldman Sachs Credit Partners LP. The credit facility includes $30 million in revolving credit, a $435 million first lien term loan, and a $125 million second lien term loan. Proceeds from the debt and equity offerings enabled the company to refinance existing debt, purchase 100% of the outstanding shares of Conversent and fund transaction and merger integration costs and provide additional working capital. The Choice One Board was advised by The Blackstone Group L.P.'s Corporate Advisory Services team, Akin Gump Strauss Hauer & Feld LLP, and Mintz Levin Cohn Ferris Glovsky & Popeo P.C. Choice One's largest shareholder is an advisee of Camulos Capital LP. The CTC Board was advised by Columbia Ventures Corporation and Kelley Drye & Warren LLP. The Conversent Board was advised by Miller Buckfire and Co., LLC and Edwards, Angell Palmer and Dodge, LLP. As reported in the Troubled Company Reporter on March 30, 2006, Choice One and CTC disclosed their intent to purchase Conversent Communications including FiberNet, Conversent's provider of communications services in West Virginia. About CTC Communications CTC Communications -- http://www.ctcnet.com/-- is a leading integrated communications carrier providing business customers from Maine to Maryland with a full range of converged voice, data and Internet services, dynamically allocated on a next-generation, all-IP packet-based network. The company serves small, medium and larger business customers. CTC's Cisco-powered IP+ATM packet network runs over a fully managed and CTC-owned fiber optic network. CTC has provided cost-effective communication solutions since 1981 and is today part of Columbia Ventures Corporation's worldwide family of businesses. In 2005, CTC acquired Lightship Telecom and Connecticut Broadband. About Conversent Communications, Inc. Conversent Communications, Inc. was formed through the April 2005 merger of its subsidiaries, Conversent Holdings, Inc. -- http://www.conversent.com/-- headquartered in Marlborough, Massachusetts, and FiberNet -- http://www.wvfibernet.net/-- headquartered in Charleston, West Virginia. CHI was cofounded by cable entrepreneur Robert Fanch and Robert Shanahan in 1998. FN was founded in 1997 by Fanch and other investors. CCI serves clients from West Virginia to Maine with innovative and flexible communication solutions backed by a reliable network and a dedicated customer support staff. CCI has been recognized by small, mid-sized, and enterprise business customers as a preferred provider for all their communication needs. About Choice One Communications Choice One Communications -- http://www.choiceonecom.com/-- is a leading provider of voice and data services, including local and long distance phone service, high-speed Internet, T1 access, and web hosting, design and development services in the Northeast and Midwest. The company's expansive network footprint, including 490 collocation facilities, reduces its dependency on local exchange carriers, enabling it to be highly responsive to clients needs. * * * As reported in the Troubled Company Reporter on June 9, 2006, Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Rochester, New York- and Boston-based Choice One Communications Inc. The outlook is stable. As reported in the Troubled Company Reporter on June 8, 2006, Moody's Investors Service assigned a B1 corporate family rating, a Ba3 rating for the proposed $30 million senior secured revolving credit facility and for the proposed $400 million first lien term loan facility, and a B2 rating for the $160 million second lien term loan facility at Choice One Communications, Inc. The outlook is stable. CLICKABLE ENT: Simontacchi & Co. Raises Going Concern Doubt ----------------------------------------------------------- Simontacchi & Company, LLP, expressed substantial doubt about Clickable Enterprises, Inc.'s ability to continue as a going concern after auditing the Company's financial statements for the fiscal year ended March 31, 2006. The auditing firm pointed to the Company's $2,223,302 net loss and $697,503 negative cash flow from operations for the year ended March 31, 2006 as well as the Company's $336,532 stockholders' deficiency at March 31, 2006. The Company generated $5,052,237 of total sales revenue for the year ended March 31, 2006, compared to $2,442,466 for the year ended March 31, 2005. The increase of $2,609,771, or 106.8%, can be attributed principally to a sharp increase in the average selling price per gallon of heating oil to $2.25 from $1.58, or 42.3%, caused by worldwide market conditions, and an increase in gallons sold of 45.3%. The increase in gallons sold is attributable to a larger customer base that increased principally through acquisition of three heating oil distributors' businesses, and, to a lesser extent marketing activities, partially offset by fewer degree days in the current period due to warmer weather conditions in January-March 2006 compared to the same period in 2005. A full-text copy of the Company's annual report is available for free at http://researcharchives.com/t/s?d1c Clickable Enterprises, Inc. -- http://www.clickableoil.com/-- through its wholly owned subsidiary ClickableOil, provides a low cost and efficient means of servicing the heating oil market utilizing the Internet. ClickableOil is one of the first internet-based heating oil companies, replacing the traditional fuel oil administrative functions and expenses with a Web-based infrastructure. ClickableOil streamlines the process of heating oil ordering and delivering by providing a more accessible point of contact for the customer. CKEI subcontracts with local delivery companies to deliver the heating oil and services to its customers. CLINICAL DATA: Deloitte & Touche Raises Going Concern Doubt ----------------------------------------------------------- Deloitte & Touche LLP expressed substantial doubt about Clinical Data, Inc.'s ability to continue as a going concern after auditing the Company's financial statements for the fiscal years ended March 31, 2006 and 2005. The auditing firm pointed to the Company's accumulated deficit, negative cash flows from operations and the expectation that the Company will continue to incur losses in the future. Clinical Data incurred a $50.9 million net loss for the year ended March 31, 2006, compared to $3.3 million of net income earned in the prior year. Total revenue for the year ended March 31, 2006, increased 22% to $68.8 million as compared to $56.4 million in fiscal 2005. The increase was primarily due to the inclusion of operating results for Genaissance Pharmaceuticals, Inc., and Icoria, Inc., from the dates of their acquisition. Genaissance was acquired in October 2005 and Icoria was acquired in December 2005. At March 31, 2006, the Company's balance sheet showed $108.2 million in total assets and $48.3 million in total liabilities, resulting in a stockholders' equity of $59.7 million. A full-text copy of the Company's annual report is available for free at http://researcharchives.com/t/s?d21 Clinical Data, Inc. (NASDAQ: CLDA) -- http://www.clda.com/-- is a worldwide leader in providing comprehensive molecular and pharmacogenomics services as well as genetic tests to improve patient care. The Company, founded in 1972, is organized under three worldwide divisions segmented by service offerings and varying client constituents: PGxHealth(TM); Cogenics(TM); and Vital Diagnostics(TM). Clinical Data currently employs a staff of over 430. The Company is headquartered in Newton, Massachusetts with operations in Texas, Connecticut, RTP - North Carolina, Rhode Island, and California as well as internationally in the UK, France, the Netherlands, Italy and Australia. CLINICAL DATA: Announces $17 Million Private Placement ------------------------------------------------------ Clinical Data, Inc., has entered into definitive agreements with certain institutional and other accredited investors with respect to the private placement of 1,039,783 shares of newly issued common stock, and warrants to purchase 519,889 shares of common stock, for a total purchase price of approximately $17 million. "This transaction enhances Clinical Data's capacity to deliver shareholder value," company president and chief executive officer Drew Fromkin said. "We believe the additional capital will strengthen our ability to advance our key initiatives: commercializing molecular diagnostics designed to improve patient outcomes; continuing the Phase III clinical development of Vilazodone, the Company's novel dual- mechanism antidepressant, while moving to spin off Vilazodone into Precigen Therapeutics; and enhancing our genetic services and analysis business while continuing to position the Vital Diagnostics division as a leader in its space." Gross proceeds from this financing will be used for general working capital purposes, executing the Company's previously announced restructuring activities, and launching its proprietary clozapine-induced agranulocytosis and warfarin response tests. Management also anticipates pursuing new product initiatives through the development and in-licensing of clinically relevant biomarkers in several therapeutic classes. Clinical Data, Inc. -- http://www.clda.com/-- is a worldwide leader in providing comprehensive molecular and pharmacogenomics services as well as genetic tests to improve patient care. The Company, founded in 1972, is organized under three worldwide divisions segmented by service offerings and varying client constituents: PGxHealth(TM); Cogenics(TM); and Vital Diagnostics(TM). Clinical Data currently employs a staff of over 430. The Company is headquartered in Newton, Massachusetts with operations in Texas, Connecticut, RTP - North Carolina, Rhode Island, and California as well as internationally in the UK, France, the Netherlands, Italy and Australia. COLLINS & AIKMAN: May Get $5 Mil. From Settlement with Insurers --------------------------------------------------------------- Collins & Aikman Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Michigan to approve a settlement agreement with their insurers, OneBeacon Insurance Company and National Indemnity Company. As part of their prepetition acquisition of the Consumer & Industrial Products Group, the Debtors inherited certain environmental liabilities. The Debtors incurred expenses to defend claims for damages brought by federal and state environmental regulatory agencies and remediate the environment. After paying the Environmental Claims, the Debtors sought reimbursement from their insurers. In particular, the Debtors believed that they are entitled to reimbursement from OneBeacon and National Indemnity for at least a portion of the payments. The Insurers argued that the Environmental Claims did not arise during the insurance coverage period. They asserted that the Debtors' other insurers should contribute to any reimbursement of payments made on account of the Environmental Claims. The Debtors and the Insurers conducted discussions to attempt to resolve the dispute. However, in April 2003, after three years of unsuccessful negotiations, the Debtors commenced an action against the Insurers in the United States District Court for the Western District of North Carolina. In February 2006, the Debtors and the Insurers resumed settlement discussions. After extensive arm's-length negotiations, the parties reached a settlement. Under the Settlement, the Debtors will: (a) receive $5,500,000 from the Insurers; (b) dismiss with prejudice the Coverage Action; (c) release the Insurers from all obligations in connection with the Environmental Claims; and (d) indemnify and hold the Insurers harmless from certain claims made against them arising from the Environmental Claims; provided that, the indemnification will not exceed the $5,500,000 settlement payment. "If the parties did not agree to the Settlement Agreement, the Debtors and the Insurance Defendants would continue to be embroiled in litigation over the Coverage Action," Marc J. Carmel, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, contends. "The expenses incurred in this litigation would be an additional burden to the estates and their creditors." 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. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000) COLLINS & AIKMAN: SEC Has Until July 31 to File Proofs of Claim --------------------------------------------------------------- Collins & Aikman Corporation and its debtor-affiliates and the Securities and Exchange Commission agree, with the consent of the U.S. Bankruptcy Court for the Eastern District of Michigan, to further extend the SEC's deadline to file proofs of claim to July 31, 2006. As reported in the Troubled Company Reporter on March 21, 2006, the SEC is currently conducting an investigation of controls over financial reporting and review of certain accounting issues of the Debtors. The SEC sought documents and information relating to the company's financial statements for the fiscal years 2000-2005, as well as documents and information pertaining to accounts receivable, customer and/or supplier rebates and other matters. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represents C&A in its restructuring. Lazard Freres & Co., LLC, provides the Debtor with investment banking services. Michael S. Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors Committee. When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000) COLLINS & AIKMAN: Moves to Reject Manchester and Farmville Leases ----------------------------------------------------------------- Collins & Aikman Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Michigan for permission to reject their leases on properties located at Manchester, Michigan and Farmville, North Carolina. The Debtors entered into an amended lease agreement with Fabric (DE) GP on June 27, 2002, which amends the parties' original Lease Agreement, dated September 28, 2001. The Master Lease relates to six demised premises in six different locales. Marc J. Carmel, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, relates that the Manchester and Farmville leases among the demised premises included in the Master Lease. The Manchester Premises operated as a stand-alone plastics plant dedicated to the Debtors' General Motors instrument and door panel program, up until the plant's closure in February 2006. The Farmville Premises continues to operate as a stand-alone plant in the Debtors' Fabrics business unit dedicated to the Debtors' production of automotive and non-automotive knit products. Due to the unprofitability of the Debtors' Fabrics business, the Debtors anticipate that the Farmville plant will be closed in the Fall of 2006. The Debtors are currently paying rent for the Manchester and Farmville Premises. Because the continued rent payment provides no benefit to the estates, the Debtors ask the Court to find that the Master Lease severable as to those premises. Mr. Carmel points out that the Master Lease is severable as to the Manchester and Farmville Premises because of the differing nature and purpose of the agreements, the separate and distinct consideration for the agreements, and the non-interrelatedness of the obligations of the parties to the document. 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. 32; Bankruptcy Creditors' Service, Inc., 215/945-7000) CONSUMERS ENERGY: Settles Two Class Action Lawsuits --------------------------------------------------- The Honorable George Caram Steeh of the U.S. District Court for the Eastern District of Michigan entered an Order and Final Judgment on June 27, 2006, approving an agreement to settle two consolidated lawsuits filed in 2002 as putative class actions on behalf of participants and beneficiaries of CMS Energy's Employees' Savings Plan who participated in the Plan between August 3, 2000 and December 27, 2004. CMS Energy, Consumers, CMS Marketing, Services and Trading Company, nka now known as CMS Energy Resource Management Company, and certain officers and directors were defendants in the lawsuits. A full-text copy of Judge Steeh's order is available for free at http://researcharchives.com/t/s?d32 Headquartered in Jackson, Michigan, Consumers Energy Company -- http://www.consumersenergy.com/-- the primary subsidiary of CMS Energy, is a combination electric and natural gas utility that serves more than 3.3 million customers in Michigan's Lower Peninsula. * * * As reported in the Troubled Company Reporter on April 4, 2006, Fitch assigned a rating of 'BB+' to Consumers Energy Company's $300 million 364-day revolving credit facility. Fitch said the rating outlook is stable. CONVERSENT COMMS: Completes Merger with Choice One & CTC Comms -------------------------------------------------------------- Choice One Communications, CTC Communications and Conversent Communications have completed their merger. The merged organization will be called "One Communications" as of July 24 and will serve businesses in sixteen states within the Northeast, Mid- Atlantic and upper Midwest regions. With revenues of over $800 million, One Communications is the largest privately held competitive local exchange carrier in the United States. "This transaction transforms three telecommunications companies that were strong in their own right into a single broadband IP- based telecommunications powerhouse," said Thomas J. Casey, CEO of One Communications. "We will offer a unique combination of advanced telecommunications solutions and exceptional customer service. Businesses throughout our target markets will benefit from a new competitor that is large enough to make substantial investments in enhanced services while being nimble and focused enough to serve every customer with exceptional support provided by accessible and friendly experts." The One Communications network spans from Maine to West Virginia and the eastern seaboard to Wisconsin. The company will maintain substantial operations centers in Rochester, New York; Waltham, Massachusetts; Marlborough, Massachusetts and Charleston, West Virginia. In addition, One Communications will maintain dozens of regional offices in local business communities to serve small and medium sized business customers. Financing for the transaction includes a $75 million additional equity investment by both Columbia Ventures Corporation (the sole shareholder of CTC Communications), and Choice One shareholders (backstopped by Camulos Capital LP and Varde Investment Partners LP), and a $590 million credit facility arranged by Goldman Sachs Credit Partners LP. The credit facility includes $30 million in revolving credit, a $435 million first lien term loan, and a $125 million second lien term loan. Proceeds from the debt and equity offerings enabled the company to refinance existing debt, purchase 100% of the outstanding shares of Conversent and fund transaction and merger integration costs and provide additional working capital. The Choice One Board was advised by The Blackstone Group L.P.'s Corporate Advisory Services team, Akin Gump Strauss Hauer & Feld LLP, and Mintz Levin Cohn Ferris Glovsky & Popeo P.C. Choice One's largest shareholder is an advisee of Camulos Capital LP. The CTC Board was advised by Columbia Ventures Corporation and Kelley Drye & Warren LLP. The Conversent Board was advised by Miller Buckfire and Co., LLC and Edwards, Angell Palmer and Dodge, LLP. As reported in the Troubled Company Reporter on March 30, 2006, Choice One and CTC disclosed their intent to purchase Conversent Communications including FiberNet, Conversent's provider of communications services in West Virginia. About Choice One Communications Choice One Communications -- http://www.choiceonecom.com/-- is a leading provider of voice and data services, including local and long distance phone service, high-speed Internet, T1 access, and web hosting, design and development services in the Northeast and Midwest. The company's expansive network footprint, including 490 collocation facilities, reduces its dependency on local exchange carriers, enabling it to be highly responsive to clients needs. About CTC Communications CTC Communications -- http://www.ctcnet.com/-- is a leading integrated communications carrier providing business customers from Maine to Maryland with a full range of converged voice, data and Internet services, dynamically allocated on a next-generation, all-IP packet-based network. The company serves small, medium and larger business customers. CTC's Cisco-powered IP+ATM packet network runs over a fully managed and CTC-owned fiber optic network. CTC has provided cost-effective communication solutions since 1981 and is today part of Columbia Ventures Corporation's worldwide family of businesses. In 2005, CTC acquired Lightship Telecom and Connecticut Broadband. About Conversent Communications, Inc. Conversent Communications, Inc. was formed through the April 2005 merger of its subsidiaries, Conversent Holdings, Inc. -- http://www.conversent.com/-- headquartered in Marlborough, Massachusetts, and FiberNet -- http://www.wvfibernet.net/-- headquartered in Charleston, West Virginia. CHI was cofounded by cable entrepreneur Robert Fanch and Robert Shanahan in 1998. FN was founded in 1997 by Fanch and other investors. CCI serves clients from West Virginia to Maine with innovative and flexible communication solutions backed by a reliable network and a dedicated customer support staff. CCI has been recognized by small, mid-sized, and enterprise business customers as a preferred provider for all their communication needs. * * * As reported in the Troubled Company Reporter on June 13, 2006, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating and senior secured debt ratings on Marlborough, Massachusetts-based competitive local exchange carrier Conversent Communications Inc., and removed them from CreditWatch. The outlook is stable. CRESCENT JEWELERS: Has Until August 15 to Decide on Leases ---------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of California gave Crescent Jewelers until Aug. 15, 2006, to decide whether to assume, assume and assign, or reject non-residential real property leases. According to the Debtor, the leases of approximately 97 of its current 103 stores are subject to assumption or rejection. The Debtors said that the store leases provide for the payment of lease rentals plus real estate taxes, insurance, common area maintenance fees, mall association dues, or contingent rentals based on the store's gross sales. The Debtor explained that without the benefit of the leases, it would: * be incapable of conducting its retail business, * lose the value of the goodwill that it has developed in the retail market, and * lose any equity in the leases and its valuable leasehold improvements on the leased premises. The Debtor cited four reasons why the extension is warranted: 1. the Debtor's chapter 11 case is large and complex and there is large number of leases involved; 2. the leases are among the primary assets of the Debtor; 3. the Debtor will satisfy its postpetition rental obligations; and 4. the Lessors will not be prejudiced by the extension. Headquartered in Oakland, California, Crescent Jewelers, Inc. -- http://www.crescentonline.com/-- sells jewelry and operates over 160 stores in six western states. The Company filed for chapter 11 protection on August 11, 2004 (Bankr. N.D. Cal. Case No. 04- 44416). Lee R. Bogdanoff, Esq. at Klee, Tuchin, Bogdanoff and Stern represents the Debtor in its chapter 11 case. John D. Fiero, Esq., Kenneth H. Brown, Esq., and Tobias S. Keller, Esq., at Pachulski, Stang, Ziehl, Young and Jones represent the Official Committee of Unsecured Creditors. In its April 2006 Monthly Operating Report, the Debtor reported $77,372,000 in total assets and $134,972,000 in total debts. CSK AUTO: Receives $221 Mil. of Tenders from Holders of 7% Notes ---------------------------------------------------------------- A total of $221 million in aggregate principal amount of 7% Notes (representing 98% of the outstanding principal amount) had been tendered by noteholders as of 5:00 p.m., New York City time, on Friday, June 30, 2006, which was the early settlement deadline for the cash tender offer and consent solicitation of CSK Auto, Inc., with respect to its outstanding $225 million aggregate principal amount of 7% Notes. Payment of the tender consideration for the 7% Notes validly tendered and not withdrawn at or prior to the Early Settlement Deadline is expected to be made promptly. The requisite consents to adopt the proposed amendments to the indenture governing the 7% Notes have been received and a supplemental indenture containing such amendments has been executed by Auto, the guarantors party thereto and the trustee under the indenture. The tender offer is scheduled to expire at 5:00 p.m., New York City time, on July 18, 2006, unless extended or earlier terminated. Payments of the tender consideration for 7% Notes validly tendered and not withdrawn after the Early Settlement Deadline and at or prior to the Expiration Time will be made promptly after the Expiration Time. The Altman Group, Inc. is Information Agent and Depositary for the tender offer. Questions and requests for documents related to the tender offer may be directed to The Altman Group, Inc. at (201) 806-7300. Term Credit Agreement As reported in the Troubled Company Reporter on June 28, 2006, CSK Auto Corporation reported that its wholly owned subsidiary CSK Auto, Inc., entered into a Term Credit Agreement relating to a senior secured credit facility of $450,000,000, with: * the Lenders party, * JPMorgan Chase Bank, N.A., as Administrative Agent, and * Lehman Commercial Paper Inc. and Wachovia Bank, National Association, as Co-Syndication Agents. The loans under the Credit Agreement can be made on up to five occasions until Dec. 16, 2006. The proceeds of the Term Loans may be used solely: (i) to refinance or repurchase some or all of CSK Auto Inc.'s 7% Senior Subordinated Notes due 2014, 3-3/8% Senior Exchangeable Notes due 2025, and 4 5/8% Senior Exchangeable Notes due 2025, and (ii) provided that some or all of the Existing Notes have been refinanced or repurchased with the proceeds of Term Loans, to pay consent fees to holders of Existing Notes not so refinanced or repurchased and related transaction fees and expenses. About CSK Auto Headquartered in Phoenix, Arizona, CSK Auto Corporation (NYSE: CAO) -- http://www.cskauto.com/-- is the parent company of CSK Auto, Inc., a specialty retailer in the automotive aftermarket. As of Jan. 29, 2006, the Company operated 1,273 stores in 22 states under the brand names Checker Auto Parts, Schuck's Auto Supply, Kragen Auto Parts and Murray's Discount Auto Parts. * * * As reported in the Troubled Company Reporter on June 5, 2006, Moody's Investors Service downgraded all long-term ratings of CSK Auto, Inc., and lowered the company's speculative grade rating to SGL-4 from SGL-2. Ratings downgraded and left on review for further possible downgrade include corporate family rating to B1 from Ba3; $100 million senior unsecured convertible notes due 2025 to B1 from Ba3; $125 million senior unsecured notes due 2025 to B1 from Ba3, and $225 million senior subordinated notes due 2014 to B3 from B2. D&I INVESTMENTS: Case Summary & Four Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: D&I Investments LLC 26738 Oakmont Drive Sun City, California 92586 Bankruptcy Case No.: 06-11696 Type of Business: The Debtor is a real estate developer. Chapter 11 Petition Date: July 5, 2006 Court: Central District Of California (Riverside) Judge: David N. Naugle Debtor's Counsel: Vincent Renda, Esq. Steinberg Fineo Berger Fischoff P.C. 40 Crossways Park Drive Woodbury, New York 11797 Tel: (516) 747-1136 Fax: (516) 747-0382 Total Assets: $1,600,000 Total Debts: $884,658 Debtor's Four Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Kenstar Corp. Pension Plan $25,000 Federal Home Loans P.O. Box 421217 San Diego, CA 92590 Fraco Enterprises, Inc. $7,100 Maria Fraser PE 12139 Mount Vernon Avenue, Suite 210 Grand Terrace, CA 92324 CLE Engineering, Inc. $4,000 41601 Data Street Murrieta, CA 92562 Metro Housing Redevelopment Inc. $5,000 15697 Ladera Vista Drive Chino Hills, CA 91709 DANA CORP: Rejects 22 Executory Contracts and Unexpired Leases -------------------------------------------------------------- The Honorable Burton R. Lifland of the U.S. Bankruptcy Court for the Southern District of New York authorized Dana Corporation and its debtor-affiliates to reject these executory contracts and unexpired leases of certain equipment and related service agreements effective as of June 30, 2006: Contracting Party Description ----------------- ----------- Banc of America Leasing and Capital Equipment Lease CCA Financial, LLC Equipment Lease CCA Financial, LLC Equipment Lease CCA Financial, LLC Equipment Lease CCA Financial, LLC Equipment Lease CCA Financial, LLC Equipment Lease CIT Technology Financing Services Lease Agreement De Lage Landen Financial Services Equipment Lease Entergy Systems and Service, Inc. Service Agreement General Electric Capital Corp. Equipment Lease General Electric Capital Corp. Equipment Lease General Electric Capital Corp. Equipment Lease General Electric Capital Corp. Equipment Lease Pitney Bowes Credit Corporation Equipment Lease Pitney Bowes Inc. Equipment Service Richard J. Miller, Esq. Vehicle Lease Sleight Business Machines, Inc. Maintenance Agreements Xerox Corporation Equipment Agreement Xerox Corporation Equipment Agreement Xerox Corporation Equipment Agreement Xerox Corporation Equipment Agreement Xerox Corporation Equipment Agreement The Debtors have determined that the Contracts and Leases are no longer necessary to their ongoing business operations or restructuring efforts. The Debtors assured the Court that they have surrendered, or will surrender by June 30, 2006, possession of any property leased under the Contracts and Leases to the Contracting Party. Siemens Lease Siemens Financial Services, Inc. is the successor lessor under Equipment Schedule No. 1 to Master Lease No. 2641, both dated as of Aug. 1, 2003, between Fleet Capital Leasing Healthcare Finance and the Debtors. Siemens asserted that the information provided regarding the Lease is incorrect and misleading. Siemens wants the description of the Lease clarified. According to Siemens, under the terms of the Lease, unless the Debtors exercise the Return Option, the term of the Lease commenced on Aug. 1, 2003, and continues for 84 months, expiring on Aug. 1, 2010. The Return Option provides that if the Debtors are not in default of their obligations under the Lease, they have the option to return all of the Equipment under the Lease to Siemens, together with a payment of a Return Option Price as specified in the Lease. Siemens emphasized that the Return Option under the Lease can only be exercised if the Debtors are not in default of their obligations under the Lease. Therefore, by their Rejection Motion, the Debtors would be in default of their obligations under the Lease. As a result, the term of the Lease would expire on Aug. 1, 2010. Siemens asked the Court to require the Debtors to amend their Schedule to reflect that the Siemens Lease expires as of August 1, 2010. The Debtors have withdrawn their request with respect to the Siemens Lease. The Debtors reserve their right to assume, assume and assign and reject the Siemens Lease and Siemens reserves its right to object to any proposed assumption, assumption and assignment or rejection. 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 Nos. 12 and 13; Bankruptcy Creditors' Service, Inc., 215/945-7000). DANA CORP: Employing 31 Additional OCPs and Service Providers ------------------------------------------------------------- Dana Corp. and its debtor-affiliates advised U.S. Bankruptcy Court for the Southern District of New York that they will employ 31 more professionals in the ordinary course of business. As reported in the Troubled Company Reporter on Mar. 23, 2006, the Debtors obtained authority from the Court to employ and pay Ordinary Course Professionals and Service Providers, without the submission of separate retention applications and the issuance of separate retention orders. The 31 additional ordinary course professionals are: Professional Type of Services ------------ ---------------- AWA Patent AB Legal Bustamante & Bustamante Legal Patentes y Marcas Cia Ltda. CCPIT Patent & Trademark Law Ofc Legal Evert & Weathersby Legal Forrester Ketley & Co. Legal Forrester & Boehmert Legal Looney & Grossman LLP Legal ONDA Techno Int'l Patent Atty. Legal Rubin & Levin, P.C. Legal Sedin SA Legal Tyler Cooper & Alcorn, LLP Legal William Vaughan Company Regulatory Compliance Auditing KPMG LLP and these affiliates: * Sibille Sociedad Civil Tax Advisory * Australia Pty Limited Tax Advisory * Alpen-Treuhand GmbH Tax Advisory * Tax and Legal Advisers CVBA Tax Advisory * Assessores Tributarios Ltd. Tax Advisory * Huazhen Tax Advisory * Deutsche Treuhand-Gesellschaft Tax Advisory * Tanacsado Kft. Tax Advisory * BSR & Co. Tax Advisory * Kstudio Associato Tax Advisory * Tax Corporation Tax Advisory * Cardenas Dosal S.C. Tax Advisory * Slovensko spol s.r.o. Tax Advisory * Abogados S.L. Tax Advisory * Fides Tax Advisory * Certified Public Accountants Tax Advisory * Phoomchai Tax & Legal Ltd. Tax Advisory * Calcaraz Cabrera Vazquez Tax Advisory 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. The Debtors' consolidated balance sheet at March 31, 2006, showed a $456,000,000 total shareholder' equity resulting from total assets of $7,788,000,000 and total liabilities of $7,332,000,000. 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. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000). DANA CORP: Files 2005 Employee Incentive & Savings Plan Report -------------------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission, Dana Corporation disclosed financial reports related to the Company's Employee Incentive and Savings Investment Plan. The Dana Investment Plan is a contributory defined contribution employee benefit plan, which is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended. Dana Corporation Statement of Net Assets Available For Benefits As of December 31, 2005 Assets Investments, at fair value $40,982,000 Investments in Master Trust 17,478,000 ---------------- Total Investments $58,460,000 Employee contributions receivable 78,000 Employer contributions receivable 8,000 ---------------- Net assets available for benefits $58,546,000 ================ Dana Corporation Statement of Changes in Net Assets Available for Benefits As of December 31, 2005 Investment income Interest in earnings from Master Trust $96,000 Dividend income 2,295,000 Net appreciation (depreciation) of investment (2,470,000) Interest on employee loans 53,000 ---------------- Total investment income ($26,000) Contributions Employee Contributions $1,228,000 Employer Contributions 205,000 ---------------- Total contributions $1,433,000 Deductions Benefit payments ($11,679,000) Administrative expenses (5,000) ---------------- Total deductions ($11,684,000) Net transfers out (55,728,000) Net increase (decrease) (66,005,000) ---------------- Net assets available for benefits At the beginning of the year $124,551,000 At the end of the year $58,546,000 ================ A full-text copy of the Dana Investment Plan 2005 financial report on Form 11-K is available for free at http://researcharchives.com/t/s?d30 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. The Debtors' consolidated balance sheet at March 31, 2006, showed a $456,000,000 total shareholder' equity resulting from total assets of $7,788,000,000 and total liabilities of $7,332,000,000. 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. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000). DELTA MUTUAL: March 31 Balance Sheet Upside-Down by $1.2 Million ---------------------------------------------------------------- Delta Mutual, Inc., reported an $802,700 net loss on $160,722 of revenues for the three months ended March 31, 2006, compared to a $534,620 net loss with no revenue for the three months ended March 31, 2005. At March 31, 2006, the Company's balance sheet showed $1,176,571 in total assets and $2,018,111 in total liabilities, resulting in a $1,211,634 stockholders' deficit. The Company's March 31 balance sheet also showed strained liquidity with $585,303 in total current assets available to pay $2,018,111 in total current liabilities coming due within the next 12 months. Full-text copies of the Company's financial statements are available for free at http://ResearchArchives.com/t/s?d1d Delta Mutual, Inc. (OTCBB: DLTM) specializes in energy recovery and construction services through environmentally friendly technologies that recover energy sources from soil, water and other waste streams. Delta Mutual and its subsidiaries provide environmental and construction technologies and services to certain geographic reporting segments in the Far East, the Middle East, the United States and Puerto Rico. DIAGNOSTIC IMAGING: Moody's Holds B2 Rating on $140MM of Sr. Loans ------------------------------------------------------------------ Moody's Investors Service confirmed Diagnostic Imaging, Inc.'s credit ratings, concluding a rating review initiated on February 16, 2006. Following this rating action, the outlook is negative. Ratings confirmed: * $25 million, senior secured revolver due 2010, at B2 * $115 million, senior secured term loan B due 2012, at B2 * Corporate Family Rating, at B2 * The ratings outlook is negative. Confirmation of DIG's Corporate Family rating at the B2 level reflects Moody's belief that the company will experience relatively modest reductions in revenues and cash flows as a result of forthcoming changes in Medicare reimbursements for its diagnostic imaging services. The impact of the changes will be manageable because only approximately 12% of DIG's payor mix is sourced from Medicare reimbursements. The negative outlook reflects the fact that the company's growth plans have exceeded Moody's expectations at the time of the original assignment of the ratings and, as a result, the company has not begun to reduce debt in accordance with Moody's expectations. Other factors that affect the ratings negatively include the company's small size, its regional presence and the lack of diversification of its operations. Moody's anticipates that the implementation of the Medicare cuts will only moderately affect the company. The reason for this is that the component of Medicare reimbursements as a percent of total sales is low at 12%, a level that is roughly half the average for the largest independent diagnostic imaging companies. In addition, the company's MRI scans represent only 31% of revenues, a level that is less than half that for the major players in the industry, which average 60% to 75% of total sales. The contiguous body part cuts will negatively affect the company's operational results only negligibly during 2006 and beyond because the company performs only a small number of such scans. Moody's estimates that the technical component of the DRA changes will result in a reduction of DIG's sales and cash flow by $7 million in 2007. This figure represents 4% of estimated net sales for 2006. Adjusted free cash flow to adjusted debt is nevertheless estimated to be a negative value for 2006 due to the company's aggressive capital buildout well in excess of Moody's expectations a year ago. This metric is expected to improve in excess of 5% during 2007, a level that is more consistent with a B1 rating, provided that capital expenditures are ramped back to more normalized levels. Other factors that affect the ratings negatively include: 1) the company's small size; 2) the regional presence and lack of diversification of its operations; 3) the high degree of involvement in the operations by some of the founding members of management; 4) concerns related to the scalability of the business model; and 5) succession planning. The diversity of revenue mix resulting from its largely multi- modality focus and the company's early adoption of emerging technologies in the diagnostic space offset somewhat the negative effects of the aforementioned factors. The negative outlook reflects the fact that the company's growth plans have exceeded Moody's expectations at the time of the original assignment of the ratings. It is Moody's belief that the company's access to its senior secured revolving credit facility may be lessened as a consequence of the company's aggressive acquisition and expansion plans. The magnitude of cushion under the company's financial covenant structure is also expected to be stressed by the company's aggressive growth posture. Further downward rating pressure could develop if there is a decline in the company's ratio of adjusted free cash flow to debt below roughly 3% on a sustained basis or if the ratio of adjusted total debt to EBITDA increases above 5.5 times. Upward rating pressure could materialize if the ratio of adjusted free cash flow to debt improves to a level of 8% to 10% or if the DRA changes are in some way modified or repealed. For additional information please refer to Moody's Credit Opinion on DIG published on Moodys.com. Headquartered in Hicksville, New York, Diagnostic Imaging Group provides certain equipment and administrative services on an exclusive basis pursuant to a 40-year management services agreement to Doshi Diagnostic Imaging Services, P.C., a New York based provider of diagnostic imaging services, including MRI, CT scans, mammography and nuclear medicine, through a network of 38, mostly multi-modality centers in the New York metropolitan area, Florida and New Jersey. DREWCAT CAPITAL: S&P Rates $50 Million Senior Notes at BB- ---------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' senior debt rating to DREWCAT Capital Ltd.'s $50 million principal at-risk variable-rate notes, which are due Dec. 28, 2006. The proceeds from the issuance of the notes will provide Dominion Resources Inc. (BBB/Stable/A-2) with a source of parametric coverage for hurricanes in three hurricane calculation locations on a per-occurrence basis over a six-month period. DREWCAT is an exempted company incorporated under the laws of the Cayman Islands, the sole business of which will consist of the issuance of the notes, entering into the transaction agreements, and the performance of activities related thereto. After issuing the notes, DREWCAT invested the proceeds in high-quality permitted investments within a collateral account. DREWCAT will swap the total return of the asset portfolio with Lehman Brothers Special Financing Inc., which has been guaranteed by Lehman Brothers Holdings Inc. (A+/Stable/A-1) in exchange for quarterly LIBOR- based payments. As part of the transaction, DREWCAT also entered into a counterparty contract with Dominion. Under this agreement, Dominion will make quarterly payments to DREWCAT of 20.60% multiplied by the principal amount on an actual/360 basis. This payment -- along with the proceeds received under the total return swap -- will be used to make the scheduled interest payments to the noteholders. DREWCAT's obligations under the counterparty contract will require it to make payments for any hurricane event meeting certain established criteria with respect to wind speed and location, up to $50 million. This structure essentially provides Dominion resources with insurance coverage for certain of its energy assets located in Gulf of Mexico off the coast of Louisiana. If a hurricane with a maximum sustained wind speed in excess of the threshold amount were to pass through any of these locations, then the noteholders would be at risk for a loss of principal. The rating on the notes reflects the probability of attachment for the three hurricane calculation locations based on EQECAT Inc.'s near-term analysis. If a storm has been declared a hurricane by the National Hurricane Center/Tropical Prediction Center, Dominion will notify EQE who will prepare an event report based on the best track data for the hurricane event as well as reported maximum sustained wind speeds. If EQE determines that a covered event has occurred, it would notify the relevant parties that DREWCAT will be required to make a payment to Dominion for the resulting calculated loss. E.A. VINER INT'L: Moody's Rates $125 Mil. Sr. Sec. Facility at B1 ----------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to the seven-year $125 million senior secured bank facility for E.A. Viner International, Inc., a wholly-owned subsidiary of Oppenheimer Holdings Inc., that will also guarantee the bank facility. The rating outlook is stable. E.A Viner is refinancing $160.8 million of convertible debentures with the $125 million senior secured facility, as well as $30-35 million of a subordinated convertible placement to employees, and the remainder in cash. E.A Viner is the U.S. holding company for Oppenheimer's operating subsidiaries. Oppenheimer is a recognized retail brokerage brand name with a footprint of 82 offices and 1700 brokers and a small asset management business. The brokerage force has above average experience and has enjoyed relatively low turnover. The firm's trading activities are low risk and the firm has good expense flexibility and reasonable liquidity. Oppenheimer's pre-tax margins lag behind industry leaders that enjoy greater scale and wider product sets. Also the firm's narrow business mix leaves Oppenheimer more exposed to the cycle of retail investor activity and sentiment than more diversified firms. As Oppenheimer expanded, the firm experienced several regulatory problems, which raises Moody's concerns about the firm's overall control environment. The presence or absence of new regulatory issues will be an important rating driver in the future, Moody's said. Factors that could change the rating up include: 1) resolution of existing regulatory issues, and strengthening the risk governance infrastructure 2) sustainable improvement of the pretax margin percentage into the mid-teens combined with reduced leverage. Factors that could change the rating down include: 1) significant new regulatory issues 2) elevated turnover amongst most productive brokers that results in franchise erosion 3) no improvement in leverage. Moody's assigned these new ratings: Oppenheimer Holdings Inc.: * Foreign Currency Corporate Family Rating -- B1 with a Stable Outlook E.A. Viner International Inc.: * $125 million seven year Bank Facility -- B1 with a Stable Outlook Oppenheimer Holdings Inc is a Canadian holding company that operates a regulated U.S. broker-dealer and reported net income of $17.2 million in the first quarter of 2006. ENDEVCO INC: March 31 Balance Sheet Upside Down by $1.9 Million --------------------------------------------------------------- EnDevCo Inc. reported a $2,383 net loss on $491,405 of revenues for the three months ended March 31, 2006. At March 31, 2006, the Company's balance sheet showed $5,545,549 in total assets, $2,157,833 of minority interest and $5,295,235 in total liabilities resulting in a $1,907,519 stockholders' deficit. The Company's March 31 balance sheet also showed strained liquidity with $465,132 in total current assets available to pay $3,432,011 in total current liabilities coming due within the next 12 months. A full-text copy of the regulatory filing is available for free at http://ResearchArchives.com/t/s?d28 Going Concern Doubt Killman, Murrell & Company, P.C, in Odessa, Texas, raised substantial doubt about EnDevCo Inc.'s Inability 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 losses from operations and limited capital resources. About EnDevCo EnDevCo Inc. (OTCBB: ENDE.OB) -- http://www.endevcoinc.com/-- is a dynamic and growing energy company establishing an identity that is consistent with its business development activities. The Company participates in three sectors the energy industry: 1) oil and gas exploration and production, 2) development of new technologies which increase oil and gas production, using that technology to gain leverage in the purchase of domestic natural gas production, and 3) merchant power and integrated industrial site development. EnDevCo is pursuing oil and gas exploration and production opportunities in both domestic and international venues. ENRON CORP: Court Approves Five Settlement Agreements ----------------------------------------------------- Pursuant to Rule 9019(a) of the Federal Rules of Bankruptcy Procedure, Reorganized Enron Corporation and its debtor-affiliates obtained the U.S. Bankruptcy Court for the Southern District of New York's approval on five settlement agreements between: (i) Enron Energy Services, Inc., and Barnabas Building Properties LLC; (ii) Enron Capital & Trade Resources International Corp., on one hand, and Lunds Energikoncernen AB and Lunds Energi Forsaljning AB, on the other; (iii) EESI and S&Z Tool & Die Co., Inc.; (iv) EESI and Enron Energy Services Operations, Inc., on one hand, and 21 entities, including Promus Hotels, Inc., Doubletree Hotel at Hazard Center Drive San Diego, California, and Felcor Suites, Ltd., on the other; and (v) ECTRIC and Sorum kommune. Before the Petition Date, the parties entered into contracts relating to the Debtors' sale of power and other services, Evan R. Fleck, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, relates. Following negotiations, the parties entered into the Settlement Agreements, which provide that: (a) each Counterparty will make settlement payments to the applicable Reorganized Debtor or Debtor; and (b) they will mutually release each other from all claims related to the contracts. Most of the Settlement Agreements also provide that each scheduled liability or proof of claim related to the Counterparties will be deemed irrevocably withdrawn, with prejudice, and to the extent applicable, expunged and disallowed in its entirety. The parties also agree that: -- Adversary Proceeding No. 05-01485 commenced by EESI and ESOI against Promus Hotels will be dismissed; -- Claim No. 14836 filed by Felcor Suites against EESI for $5,319, and Claim No. 14831 filed by Doubletree Hotel against EESOI for $3,777 will be allowed; and -- ECTRIC will withdraw all claims against Lunds in Case Nos. T-586-05 and T-587-05 pending before the Lund District Court (Sw. Lunds tingsratt); and -- ECTRIC will withdraw Case No. 05-149081TV1-NERO pending against Sorum before the Nedre Romerike District Court, in Norway. 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. 175; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENTERGY NEW ORLEANS: Agrees to Alteration of FTI's Payment Terms ---------------------------------------------------------------- Entergy New Orleans, Inc., consents to the Official Committee of Unsecured Creditors' request to modify the terms of FTI Consulting, Inc.'s compensation and retention. As reported in the Troubled Company Reporter on June 21, 2006, the Committee sought the U.S. Bankruptcy Court for the Eastern District of Louisiana to modify the firm's compensation to allow the fee caps from January 2006 through July 2006 to be cumulative. The Court's order approving the Committee's continued retention of FTI provides that the firm's compensation is capped at $100,000 for the month of January 2006 and at $75,000 for all subsequent months, plus reimbursement of actual and necessary expenses. The Committee relates that the fees incurred by FTI for 2006 have been: Month Fee Cap Fees Incurred ----- ------- ------------- January $100,000 $15,050 February 75,000 50,923 March 75,000 83,734 April 75,000 126,487 Although FTI was authorized to receive up to $325,000 for the months of January through April, FTI billed only $276,194, Carey L. Menasco, Esq., at Liskow & Lewis, APLC, in New Orleans, Louisiana, pointed out. ENOI, however, objects to the Creditors Committee's allegation that the Debtor or its affiliate has delayed production of documents or has not engaged in substantive discussions on a plan of reorganization. Carey L. Menasco, Esq., at Liskow & Lewis, APLC, in New Orleans, Louisiana, tells Judge Brown that the Entergy Companies have been in constant contact with the Creditors Committee, its attorneys and financial consultants throughout the duration of the Chapter 11 case. Ms. Menasco also clarifies that the Debtor's responses to discovery requests from FTI or any of the Creditors Committee's advisors are not delayed, considering the complexity of the subject matter. According to Ms. Menasco, the Creditors Committee's advisors have received bi-weekly, informal briefings from the Debtor's senior financial officers and the Committee was asked several times earlier in the year to discuss refining its discovery requests to fit its needs. The Committee has redefined its discovery requests and, in cooperation with the Debtor's counsel, streamlined the task. "Indeed, all requested materials were provided within the time frame suggested by the Committee," Ms. Menasco says. The Entergy Companies have not hesitated to reach out to the Creditors Committee to suggest that informal suggestions might expedite the process more sensibly than formal, written discovery requests, Ms. Menasco relates. She adds that, although the Committee's inquiries have been satisfied, the Committee may contact the Debtor if further information is required. Ms. Menasco also explains that substantive discussions have taken place with the bondholders and the Creditors Committee given the uncertainties on the various issues that the Debtor must deal with in formulating the best Chapter 11 plan that addresses the concerns of both creditors and interest holders. The Debtor's resolution of its application for Community Development Block Grant funds is the indispensable condition of a feasible plan that could satisfy all the creditors and interest holders in its bankruptcy case, Ms. Menasco notes. She says that the approval process for the CDBG funds is in the hands of the State of Louisiana and the United States, not the Debtor. While the Debtor has kept the creditors, interest holders and Court informed of the progress of the approval process for the CDBG funds, predictions about the time and outcome of the process are not easy given the situation in New Orleans after hurricane Katrina, Ms. Menasco avers. Additionally, the Debtor has explored an alternative plan process in the event that it is unsuccessful in obtaining CDBG funds and creditors have been advised of the alternative. The clarity of success for the CDBG fund application is required before meaningful discussions about plan distributions can be conducted, Ms. Menasco relates. Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc. -- http://www.entergy-neworleans.com/-- is a wholly owned subsidiary of Entergy Corporation. Entergy New Orleans provides electric and natural gas service to approximately 190,000 electric and 147,000 gas customers within the city of New Orleans. Entergy New Orleans is the smallest of Entergy Corporation's five utility companies and represents about 7% of the consolidated revenues and 3% of its consolidated earnings in 2004. Neither Entergy Corporation nor any of Entergy's other utility and non-utility subsidiaries were included in Entergy New Orleans' bankruptcy filing. Entergy New Orleans filed for chapter 11 protection on Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J. Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $703,197,000 and total debts of $610,421,000. (Entergy New Orleans Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENTERGY NEW ORLEANS: Hibernia Nat'l Wants Secured Claim Allowed --------------------------------------------------------------- Capital One, National Association, formerly known as Hibernia National Bank, asks the U.S. Bankruptcy Court for the Eastern District of Louisiana to declare, under Section 541 of the Bankruptcy Code and other applicable law, that the funds sent by Entergy Services, Inc., or Entergy Corp. to the Debtor's account were earmarked to only cover the negative balance in the account and do not constitute property of the estate. Alternatively, if the Court decides that ESI or Entergy Corp. decided to transfer ownership of the funds to the Debtor, Hibernia asks the Honorable Jerry A. Brown to declare that it has no liability for ESI's or Entergy Corporation's decision in this regard. Hibernia also asks Judge Brown to: -- allow its secured claim in the Debtor's Chapter 11 case; -- declare that it is an oversecured creditor; and -- recognize its security rights in the Debtor's accounts receivable and any other assets of the Debtor as well as its set-off rights to any funds owned by the Debtor. Hibernia and Entergy New Orleans, Inc., entered into a loan agreement effective as of July 6, 2004, which was amended in July 2005. The Debtor also executed a promissory note dated July 6, 2005, for $15,000,000, plus interest, fees and other amounts in favor of Hibernia. In a security agreement executed on July 20, 2005, ENOI granted Hibernia a security interest in, among other things, accounts receivable from the Debtor's retail electric and natural gas utility customers. Hibernia filed a Uniform Commercial Code-1 Financing Statement covering the assets over which it had a security interest. ESI and Entergy Corp. signed an agreement with Hibernia in November 2000 granting Hibernia the right of set off in the event of any overdrafts in any account of Entergy Corp. or a subsidiary account maintained with Hibernia. Brent C. Wyatt, Esq., at Lemle & Kelleher, L.L.P., in New Orleans, Louisiana, relates that the bank accounts with Hibernia are governed by certain terms and conditions stated in the rules governing accounts. The rules also grant security interests and rights to set-off to Hibernia and specifically provide for additional rights in favor of Hibernia. Hibernia's claims in the Debtor's Chapter 11 case are secured by assets and property owned by the Debtor and set-off rights to funds owned by the Debtor, whose value exceed the amount of Hibernia's claims, Mr. Wyatt relates. On Sept. 21, 2005, Hibernia debited the Debtor's Remittance Processing Center account for a $15,057,050 loan, resulting in a $13,623,873 negative account balance. Hibernia decided to reverse the debit to the RPC account and informed the Entergy Entities on September 22, 2005. In response to the negative balance in the RPC account, ESI sent $13,548,000 on September 22, 2005, to the Debtor's General Fund account to cover the negative balance, resulting in the GF account containing $13,604,271. The Court's interim order approving the DIP Financing provided that $15,057,050, the last amount on the Debtor's books as a total payoff of Hibernia be set aside in the RPC account and frozen pending a determination of the issues. All parties reserved all of their rights. ESI and Entergy Corp. have recently stated to Hibernia that it is responsible and liable to them for ESI's sending money to cover the negative balance in the RPC account despite Hibernia's prior notice that the debit that caused the negative balance was reversed. Until ESI and Entergy Corp. recently stated that ESI sent the funds only to cover the negative balance in the RPC account, Hibernia had assumed that ESI had decided for other reasons to transfer ownership of the funds to the Debtor, Mr. Wyatt tells the Court. If ESI or Entergy Corp. did not decide to transfer ownership of the funds, the funds are not property of the estate but are still subject to any and all rights that Hibernia may have to them. "[Hibernia] cannot transfer ownership of funds from ESI or Entergy Corporation to the Debtor; only ESI or Entergy Corporation can do so," Mr. Wyatt notes. Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc. -- http://www.entergy-neworleans.com/-- is a wholly owned subsidiary of Entergy Corporation. Entergy New Orleans provides electric and natural gas service to approximately 190,000 electric and 147,000 gas customers within the city of New Orleans. Entergy New Orleans is the smallest of Entergy Corporation's five utility companies and represents about 7% of the consolidated revenues and 3% of its consolidated earnings in 2004. Neither Entergy Corporation nor any of Entergy's other utility and non-utility subsidiaries were included in Entergy New Orleans' bankruptcy filing. Entergy New Orleans filed for chapter 11 protection on Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J. Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $703,197,000 and total debts of $610,421,000. (Entergy New Orleans Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000) FLYI INC: Wants 62 Late-Filed Claims Disallowed ----------------------------------------------- FLYi, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for District of Delaware to disallow Late-Filed Claims. The Debtors identified 62 claims, which were filed after the Bar Date. M. Blake Cleary, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, tells the Court that the Claimants were served a copy of the Bar Date Notice and therefore had adequate notice of the bar dates. Among the Late-Filed Claims are: Claimant Claim No. Claim Amount -------- --------- ------------ ACTS Limited Partnership 5074 $392,362 Coffield, John A. 5054 49,365 Coffield, John A. 5072 49,365 Crespo, Michael 5266 300,000 CSC 4538 25,254 Eaddy, Willie 5180 10,965 Eaddy, Willie B. 5055 10,965 Greater Rochester Int'l Airport 5412 33,546 Infinity Broadcasting Corp. 5283 12,015 Kramer, Jason 5133 14,000 Kramer, Jason 5168 14,000 Race, William 5181 45,570 Race, William 5271 45,570 Ransone, Tammy R. 5131 24,170 Ransone, Tammy R. 5166 24,170 Summit Security Services Inc. 5264 11,757 Vargas, Saul 5317 15,558 Womble, Jeronda 5290 180,000 Woods III, George 5477 15,250 Headquartered in Dulles, Virginia, FLYi, Inc., aka Atlantic Coast Airlines Holdings, Inc. -- http://www.flyi.com/-- is the parent of Independence Air Inc., a small airline based at Washington Dulles International Airport. The Debtor and its six affiliates filed for chapter 11 protection on Nov. 7, 2005 (Bankr. D. Del. Case Nos. 05-20011 through 05-20017). Brendan Linehan Shannon, Esq., M. Blake Cleary, Esq., and Matthew Barry Lunn, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. Brett H. Miller, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., represents the Official Committee of Unsecured Creditors. As of Sept. 30, 2005, the Debtors listed assets totaling $378,500,000 and debts totaling $455,400,000. (FLYi Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000). FOAMEX INTERNATIONAL: Plan Filing Period Extended to Sept. 14 ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware further extended Foamex International Inc. and its debtor-affiliates' exclusive periods to: (i) file a Chapter 11 plan through September 14, 2006; and (ii) solicit acceptances of the plan through November 13, 2006. As reported in the Troubled Company Reporter on June 6, 2006, Pauline K. Morgan, Esq., at Young, Conaway, Stargatt & Taylor LLP, in Wilmington, Delaware, said that a further extension of the exclusive periods will allow the Debtors to: (a) explore various financing alternatives to fund a plan of reorganization; (b) formulate a revised plan and negotiate its terms with key creditor and shareholder constituents; and (c) prepare and file a revised plan and disclosure statement and seek their approval. 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. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000) FOAMEX INT'L: Inks Stipulation to Set Off Guilford Mills Debts -------------------------------------------------------------- Foamex International Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to approve a stipulation with Guilford Mills, Inc. The parties stipulate that: (a) the automatic stay under Section 362 of the Bankruptcy Code will be modified to permit the set-off of mutual prepetition debts and the payment of the Guilford Mills Obsolescence Claim; (b) pursuant to the set-off, Guilford Mills will pay Foamex $242,467 in cash within five business days after the Court approves the parties' stipulation; and (c) if the Debtors receive any payment from the original equipment manufacturers on account of the Guilford Mills Obsolescence Claim, they will transmit the funds within three business days after receipt. As of the Debtors' bankruptcy filing, Guilford Mills, Inc., owed Foamex L.P. $417,467 for prepetition services. Foamex also owed Guilford Mills $183,495 for fabric provided to Foamex prepetition and $175,000 for certain prepetition obligations pursuant to the parties' supply agreement. Joseph M. Barry, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, tells the Court that Foamex inadvertently paid Guilford Mills $183,495 postpetition. Foamex's Prepetition Obligation is reduced to $175,000. In addition, Foamex owed Guilford Mills $74,711 for certain obsolete fabric that Guilford Mills produced to meet the production requirements of certain original equipment manufacturers supplied by Foamex. Since the Petition Date, a portion of the Guilford Mills Obsolescence Claim has been paid by the original equipment manufacturers. The remaining amount totals $23,610. The Debtors and Guilford Mills have negotiated to settle and resolve all prepetition claims between them, Mr. Barry relates. 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. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000) GENERAL MOTORS: Board Braces for Dissent on Renault-Nissan Deal --------------------------------------------------------------- General Motors Corp.'s scheduled meeting today on the proposed alliance with the French-Japanese company, Renault-Nissan, will likely meet potential objections, The Wall Street Journal reports. Renault-Nissan is a collaboration between Nissan Motor Co., Ltd., and Renault S.A. As reported in the Troubled Company Reporter yesterday, a GM shareholder Kirk Kerkorian broached the idea of pulling in GM into the two-way tie-up. Mr. Kerkorian owns 9.9% equity stake in GM through his investment firm Tracinda Corporation. The US$3-billion proposed alliance is seen as a hostile move by some of GM's management even after Renault-Nissan's president and chief executive officer Carlos Ghosn publicly declared that the ball is in GM's hands. Though Mr. Ghosn received a go signal from Renault-Nissan's board to negotiate a deal, Mr. Ghosn said GM has to initiate the three-way alliance. 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 June 30, 2006, Standard & Poor's Ratings Services held all its ratings on General Motors Corp. -- including the 'B' corporate credit rating and the 'B+' bank loan rating, but excluding the '1' recovery rating -- on CreditWatch with negative implications, where they were placed March 29, 2006. As reported in the Troubled Company Reporter on June 22, 2006, Fitch assigned a rating of 'BB' and a Recovery Rating (RR) of 'RR1' to General Motor's (GM) new $4.48 billion senior secured bank facility. The 'RR1' (recovery of 90%-100%) is based on the collateral package and other protections that are expected to provide full recovery in the event of a bankruptcy filing. GENESCO INC: Board Approves $20 Million Common Stock Repurchase --------------------------------------------------------------- Genesco Inc.'s board of directors has authorized the Company to use of up to $20 million of cash to repurchase shares of the Company's common stock. The purchases may be made from time to time on the open market or in privately negotiated transactions, depending on market conditions and other factors. About Genesco Headquartered in Nashville, Tennessee, Genesco Inc. (NYSE: GCO) -- http://www.genesco.com/-- sells footwear, headwear and accessories in more than 1,750 retail stores in the United States and Canada, principally under the names Journeys, Journeys Kidz, Johnston & Murphy, Underground Station, Hat World, Lids, Hat Zone, Cap Factory, Head Quarters and Cap Connection, and on internet websites http://www.journeys.com/http://www.journeyskidz.com/ http://www.undergroundstation.com/http://www.johnstonmurphy.com/ http://www.lids.com/http://www.hatworld.com/and http://www.lidscyo.com/ The Company also sells footwear at wholesale under its Johnston & Murphy brand and under the licensed Dockers and Perry Ellis brands. * * * As reported in the Troubled Company Reporter on Mar. 17, 2006, Standard & Poor's Ratings Services revised Genesco Inc.'s outlook to positive from stable. S&P also raised Genesco's senior secured credit facility to 'BB' from 'BB-' and to '1' from '2'. S&P also affirmed the company's other ratings, including its 'BB-' corporate credit rating. GREAT COMMISSION: Committee Wants to Hire Blank Rome as Counsel --------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in the chapter 11 cases of The Great Commission Care Communities, Inc., dba The Woods at Cedar Run, wants to hire Blank Rome LLP as its counsel, nunc pro tunc to June 7, 2006. The Committee tells the U.S. Bankruptcy Court for the Middle District of Pennsylvania that Blank Rome has broad-base experience and a national reputation in bankruptcy and reorganization proceedings. Through Blank Rome, it will have the benefit of that knowledge and experience, as well as the ability to call on other lawyers within the firm with expertise in other specialized areas of law as may be needed. Blank Rome will represent the Committee and perform services in connection with carrying out its fiduciary duties and responsibilities under the Bankruptcy Code. Michael B. Schaedle, Esq., a partner at the firm, discloses that he will primarily represent the Committee, charging $405 per hour. David W. Carickhoff, Esq., will be helping Mr. Schaedle, charging $320 per hour. Mr. Schaedle further discloses his firm's standard hourly rates: Designation Hourly Rate ----------- ----------- Partners $300 to $675 Associates $195 to $400 Paralegals $105 to $250 Mr. Schaedle assures the Court that his firm and its professionals do not hold any material interest adverse to the Debtor's estate and are disinterested as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Camp Hill, Pennsylvania, The Great Commission Care Communities, Inc., dba The Woods at Cedar Run -- http://www.woodsatcedarrun.com/-- is a non-profit retirement community providing independent housing and assisted living services. The company filed for chapter 11 protection on May 10, 2006 (Bankr. M.D. Penn. Case No. 06-00914). Robert E. Chernicoff, Esq., at Cunningham and Chernicoff, P.C., represents the Debtor. When the Debtor filed for protection from its creditors, it estimated assets between $1 million and $10 million and debts between $10 million and $50 million. GULF COAST: Gets Court Approval to Hire Hughes & Luce as Counsel ---------------------------------------------------------------- Gulf Coast Holdings, Inc., dba Unidynamics, Inc., obtained permission from the U.S. Bankruptcy Court for the Northern District of Texas to employ Hughes & Luce LLP as its bankruptcy counsel, nunc pro tunc to April 26, 2006. H&L is a Texas limited liability partnership specializing in bankruptcy, insolvency, corporate reorganization, and debtor- creditor laws. The Debtor told the Court that H&L attained a familiarity with its case prepetition, hence, H&L's retention would avoid unnecessary duplication of effort and expense. H&L's services will include: a. the preparation, filing and prosecution of the Debtor's bankruptcy petition, schedules, statements of financial affairs, and various motions essential to or required in the bankruptcy case; b. the preparation, filing and defense of objections to various motions, claims and actions by creditors and parties-in-interest; c. negotiation with various creditors, including any creditors committees, and the preparation of related agreements; d. negotiations with potential plan proponents and/or purchasers of the Debtor's assets, and the preparation of related agreements; e. matters regarding the restructuring of the Debtor's debts and equity structure; and f. all other necessary legal services in connection with the Debtor's chapter 11 case. Jeffrey R. Fine, Esq., a partner at the firm, charges $450 per hour for his services. Other individuals representing the Debtor and their negotiated hourly rates as of Oct. 1, 2005, are: Professional Hourly Rate ------------ ----------- Daniel I. Morenoff $250 Jay L. Krystinik $210 David A. Alexander $190 Trish Brim (Paralegal) $170 On April 11, 2006, H&L received a $5,000 retainer from the Debtor to be held in H&L's client trust account. On April 27, 2006, the Debtor provided H&L an additional $90,000 to be held as a retainer in H&L's client trust account. Prepetition, the Debtor authorized H&L to draw on the account for all amounts owing to H&L for work performed prepetition; the amounts aggregated to $27,587.65, as well as Chapter 11 filing fees of $1,039. H&L continues to hold the remaining $66,373.35 of the Debtor's funds as a retainer. H&L has been fully paid for its prepetition services or has waived such fees and holds no remaining claim against the Debtor. Mr. Fine disclosed that the only creditor or vendor of the Debtor with which H&L has a relationship is Lockheed Martin Corporation. The Debtor has a contract with Marinette Marine Corporation, a Lockheed subsidiary. H&L has been employed by a different Lockheed aerospace subsidiary in labor matters unrelated to the Debtor's bankruptcy. H&L does not believe that representation in matters unrelated to the Debtor's case poses any potential conflict. Mr. Fine contended that his Firm and its professionals do not hold material interest adverse to the Debtor's interest and are disinterested as the term is defined in Section 101(14) of the Bankruptcy Code. 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. J. Frasher Murphy, Esq., and Jaime Myers, Esq., at Winstead, Sechrest & Minick represent the Official Committee of Unsecured Creditors. In its schedules filed with the Court, the Debtor reported assets amounting to $18,258,575 and debts totaling $19,553,664. GULF COAST: Hires David Hull as Chief Restructuring Officer ----------------------------------------------------------- Gulf Coast Holdings, Inc., obtained authority from the U.S. Bankruptcy Court for the Northern District of Texas to employ David Hull as its chief restructuring officer. The Debtor was also authorized to enter into postpetition agreement with CRP Services, LLC, which will allow Mr. Hull's services. Pursuant to the agreement, the Debtor paid CRP Services a $26,000 prepetition retainer. As stated in the Cash Collateral Budget, the Debtor will pay Mr. Hull's fees directly to CRP Services. Mr. Hull is entitled to receive up to $13,000 per week. As CRO, Mr. Hull will: a) make decisions with respect to all aspects of the management and operations of the Debtor's business, subject to appropriate governance by the Board of Directors, the Debtor's shareholder and in accordance with the Plan, the Debtor's Bylaws, and applicable law; b) analyze and prepare business plans and forecasts for the Client; and c) provide testimony in court on behalf of the Client, if necessary. The Debtor disclosed that Mr. Hull will be paid $200 per hour for his services. The Debtor told the Court that Mr. Hull's services are necessary to enable the Debtor to maintain management continuity and to execute its duties as debtor-in-possession. The Debtor assured the Court that Mr. Hull is a "disinterested person" as that term is defined in Sec. 101(14) of the Bankruptcy Code. 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. J. Frasher Murphy, Esq., and Jaime Myers, Esq., at Winstead, Sechrest & Minick represent 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. HOME ECHO: Voluntary Chapter 11 Case Summary -------------------------------------------- Debtor: Home Echo Club, Inc. aka Echo Manner Extended Care Center 102701 Blacklick Eastern Road Northwest Pickerington, Ohio 43147 Bankruptcy Case No.: 06-53329 Type of Business: The Debtor filed for chapter 11 protection on Nov. 14, 2005 (Bankr. S.D. Ohio Case No. 05-78386). Chapter 11 Petition Date: July 5, 2006 Court: Southern District of Ohio (Columbus) Debtor's Counsel: Grady L. Pettigrew, Jr., Esq. Cox Stein & Pettigrew Co. LPA 115 West Main, Suite 400 Columbus, Ohio 43215-5099 Tel: (614) 224-1113 Fax: (614) 228-0701 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 largest unsecured creditors. IMAGE INNOVATIONS: Case Summary & 22 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Image Innovations Holdings, Inc. fdba Busanda Explorations, Inc. 6093 Main Street P.O. Box 157 Tannersville, New York 12485 Bankruptcy Case No.: 06-11540 Debtor's subsidiaries filing separate chapter 11 petitions: Entity Case No. ------ -------- Image Innovations, Inc. 06-11541 Imaging Innovations Sports and 06-11542 Entertainment Inc. Image Innovations Sports and 06-11543 Entertainment Inc. Type of Business: Image Innovations Holdings, Inc. (OTC BB:IMGV.OB) markets low-cost electronic devices with sports logos. According to Michael Preston, the sole officer and director of Image Innovations, the Debtor is no longer operating. Image Innovations Sports & Entertainment Inc. sells celebrity artwork and collectibles through a targeted, and is becoming a recognized leader in the fast growing, multi-billion dollar industries of artwork collectibles. Image Innovations Inc. is in the business of adding value to a wide variety of relatively low-cost, but desirable electronic products, by endorsing them with the brand logos of sports teams, leagues and other recognized trademarks. Imaging Innovations Sports and Entertainment Inc. was incorporated to acquire a warehouse and storage facility in Tannersville, New York, located near the Debtors' existing facility in Tannersville. Chapter 11 Petition Date: July 6, 2006 Court: Southern District of New York (Manhattan) Debtors' Counsel: Sydney G. Platzer, Esq. Platzer, Swergold, Karlin, Levine, Goldberg & Jaslow, LLP 1065 Avenue of the Americas, 18th Floor New York, New York 10018 Tel: (212) 593-3000 Fax: (212) 593-0353 Debtors' Total Assets and Liabilities as of July 5, 2006: Total Assets Total Debts ------------ ----------- Image Innovations $70,529 $3,997,092 Holdings, Inc. Image Innovations, Inc. $1 $2,169,910 Imaging Innovations Sports and $273,180 $304,046 Entertainment Inc. Image Innovations Sports & $273,180 $304,046 Entertainment Inc. A. Image Innovations Holdings, Inc. did not file a list of its 20 largest unsecured creditors. B. Image Innovations, Inc.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Marquis & Aurbach Legal Services $80,000 10001 Park Run Drive Las Vegas, NV 89145 S.R. Mickelberg Co. Settlement agreement $30,000 The Plaza for alleged trademark 1250 Greenwood Avenue infringement Jenkintown, PA 19046 CTC Logistics (USD) $22,367 140-10451 Shellbridge Way Richmond, British Columbia V6X 2W8 Canada NFL $21,761 280 Park Avenue New York, NY 10017 Maple Leaf Property-Landlord $10,093 Suite 615-100 Park Royal West Vancouver, British Columbia V7T 1A2 Canada Norman Jensen Inc. Goods Sold $9,114 Riddell $6,649 Federal Express $4,843 Star Orient Trading $3,643 CBV Collections $3,226 CTC Logistics Canada Inc. $2,893 Van Auken Express Inc. $2,040 VIP Travel Ltd. $1,852 Kunick Associates Commission $1,456 Ricoh Image Communication $1,277 Rubin Associates Commission $1,278 Grainger $900 Pezzella & Associates Commission $822 International Market Access $794 DHL Custom Brokers $771 C. Imaging Innovations Sports and Entertainment, Inc. and Image Innovations Sports & Entertainment, Inc.'s Two Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Green County Treasurer Real Estate Tax $12,816 P.O. Box 909 Tannersville, NY 12485 Village of Tannersville Village and Water $4,005 One Park Lane Relevey Tannersville, NY INTEGRATED ELECTRICAL: Amends 2006 First Quarter Report ------------------------------------------------------- Integrated Electrical Services, Inc, amended its quarterly report for the three months ended March 31, 2006, originally filed on May 10, 2006, to correct a misstatement of insurance expense for the three months and six months ended March 31, 2006, as well as Amendment No. 1 to its December 31, 2005 Form 10-Q. The misstatement of insurance expense understated cost of services on the Consolidated Statements of Operations by $1.2 million and $1.6 million for the three and six months ended March 31, 2006, respectively. On the Consolidated Statements of Operations, net loss from continuing operations and net loss increased by these amounts for the three and six months ended March 31, 2006. Accounts payable and accrued expenses on the Consolidated Balance Sheet at March 31, 2006, were understated by $1.6 million. There was no effect on net cash flows from operating, investing or financing activities. A full-text copy of the amended quarterly report is available for free at http://researcharchives.com/t/s?d22 Headquartered in Houston, Texas, Integrated Electrical Services, Inc. (NASDAQ: IESC) -- http://www.ielectric.com/-- and -- http://www.ies-co.com/-- is an electrical and communications service provider with national roll-out capabilities across the U.S. Integrated Electrical Services offers seamless solutions and project delivery of electrical and low-voltage services, including communications, network, and security solutions. The Company provides everything from system design, installation, and testing to long-term service and maintenance on a wide array of projects. With approximately 140 locations nationwide, the Company is prepared to seamlessly manage and deliver all your electrical, security, and communication requirements. The Debtor and 132 of its affiliates filed for chapter 11 protection on Feb. 14, 2006 (Bankr. N.D. Tex. Lead Case No. 06-30602). Daniel C. Stewart, Esq., and Michaela C. Crocker, Esq., at Vinson & Elkins, L.L.P., represent the Debtors in their restructuring efforts. Marcia L. Goldstein, Esq., and Alfredo R. Perez, Esq., at Weil, Gotshal & Manges LLP, represent the Official Committee of Unsecured Creditors. As of Dec. 31, 2005, Integrated Electrical reported assets totaling $400,827,000 and debts totaling $385,540,000. The Court confirmed the Debtors' Modified Second Amended Joint Plan of Reorganization on Apr. 26, 2006. That plan became effective on May 12, 2006. INT'L THOROUGHBRED: Posts $3.9MM Net Loss in 2006 Fiscal 1st Qtr. ----------------------------------------------------------------- International Thoroughbred Breeders, Inc., reported a $3,946,299 net loss on $9,393,596 of revenues for the three months ended March 31, 2006. At March 31, 2006, the Company's balance sheet showed $75,375,275 in total assets, $1,541,473 deferred income and $51,017,415 in total liabilities resulting in $22,816,387 stockholders' equity. The Company's cash flow and working capital declined during the three months ended March 31, 2006, due to: (1) operating losses suffered by the Big Easy commercial vessel from January 1st to January 31st due to her limited sailing schedule in which scheduled cruises were cancelled due to Coast Guard restrictions, mechanical problems, high seas, or scheduling conflicts with the Palm Beach Princess vessel. (2) costs to carry the Big Easy after the vessel was taken out of service on Feb. 1, 2006, (3) costs to carry the Royal Star vessel; and (4) expenses paid for costs of the Holding Company and other developmental costs of $692,000. As of May 22, 2006, the Company is in default on the forbearance agreement entered with PDS effective March 22, 2006. It is negotiating with its lender to waive or extend the terms of the agreement. The Company says its has no present commitments for funds to meet its working capital deficiency, debt service needs and operating losses. A full-text copy of the regulatory filing is available for free at http://ResearchArchives.com/t/s?d26 Going Concern Doubt Stockton Bates, LLP, in Philadelphia, Pennsylvania, raised substantial doubt about International Thoroughbred'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 violation of its loan covenants with its major lender. About International Thoroughbred International Thoroughbred Breeders, Inc., owns and operates racetracks in New Jersey. KAISER ALUMINUM: Emerges from Chapter 11 Protection in Delaware --------------------------------------------------------------- Kaiser Aluminum Corporation's Plan of Reorganization became effective on July 6, 2006, and the company emerged from Chapter 11. "Today is a great day for Kaiser Aluminum," said Jack Hockema, Chairman, President and CEO of Kaiser Aluminum. "I would like to express my gratitude to every one of our stakeholders -- customers, suppliers, employees and other partners -- who stood by us over the past four-plus years of challenging times. "The new Kaiser Aluminum emerges with fabricated aluminum products as the core business and is a vastly different company from the one that filed for reorganization in early 2002. Non-strategic commodity businesses were divested, and we have addressed all of the material debt, legacy and asbestos-related liabilities that confronted the company prior to bankruptcy. It is particularly gratifying that we were able to develop a consensual plan that was overwhelmingly accepted by our constituents. "We are very excited about the future for Kaiser Aluminum. Our financial and competitive strength positions us to grow and withstand the inevitable ebb and flow of business cycles. We will continue organic growth with emphasis on plate products, forgings and custom extrusions. Our current $75 million expansion initiative at the Spokane, Washington rolling mill is the cornerstone of this strategy. In addition, we have an excellent platform for external growth, and will consider acquisitions that are complementary to our current business structure with an emphasis on value creation for our shareholders. "We remain intensely focused on providing Best In Class performance for our customers. We will continue to produce a broad array of fabricated aluminum products for customers that require highly engineered applications while deploying lean enterprise principles to be a low cost producer. "While our markets are cyclic, they are growing. The global market for aerospace and high-strength products is now exceptionally strong, and our customers forecast additional usage of aluminum plate over the next several years. As energy prices rise, demand for more fuel-efficient vehicles will provide opportunities to grow our current business in the automotive industry. Looking out beyond the current business cycle where the industry is experiencing historically high pricing, we anticipate our sales growth and cost reduction initiatives to cushion the impact of prices returning to more normal levels," concluded Hockema. Kaiser Aluminum began the distribution of shares of common stock on July 6, 2006. Shares will commence trading today, July 7, on NASDAQ under the ticker symbol KALU. About Kaiser Aluminum Corp. Based in Foothill Ranch, California, Kaiser Aluminum Corporation (NASDAQ: KALU) -- http://www.kaiseraluminum.com/-- is a leading producer of fabricated aluminum products for aerospace and high- strength, general engineering, automotive, and custom industrial applications. The Company filed for chapter 11 protection on Feb. 12, 2002 (Bankr. D. Del. Case No. 02-10429), and sold off a number of its commodity businesses during course of its cases. Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. LEVITZ HOME: Court Approves More Lease Assignments to PLVTZ ----------------------------------------------------------- PLVTZ, LLC, and Pride Capital Group, dba Great American Group, as purchasers of substantially all of Levitz Home Furnishings, Inc., and its debtor-affiliates' assets, provided the Debtors with Lease Assumption Notices for 31 store leases, as reported in the Troubled Company Reporter on May 18, 2006. The Debtors sought authority from the U.S. Bankruptcy Court for the Southern District of New York to assume and assign these leases to PLVTZ and pay the cure amounts: Store# Address Landlord Cure Amount ------ ------- -------- ----------- 10204 New York, 125th Street Gateway $50,653 New York Ventures LLC 20106 Bridgewater, Jerome & Joan Leflien & $19,004 New Jersey Joseph & Joan Leflein 20309 Eatontown, Gage II Family Limited $19,528 New Jersey Partnership 30502 Irvine, Spectrum V Management $0 California (Klaff Realty, L.P. as paying agent), and SJRD - Spectrum V Partners 30203 Los Angeles, Walter N. Marks (Klaff $0 California Realty, L.P. as paying agent), and Helms Hall of Fame 20505 Yonkers, Acklinis Original $127,958 New York Building, L.L.C. 30205 Arroyo Grande, Waddell Family Trust $20,650 California 40203 San Carlos, Brittan Corners $99,230 California Shopping Center, LLC, 101 San Carlos Partners, c/o Davila Group, Inc. 40304 Pleasanton, Excel Realty Trust, and $55,977 California New Plan Excel Realty Trust, Inc. 40404 Rohnert Park, Commercial Realty $107,966 California Group, Inc. 40504 Phoenix, Red Mountain West $105,038 Arizona Properties, Inc., and RMRGJFL Portfolio, LLC, c/o Red Mountain West Properties, Inc. 10202 New York, Consolidated Edison of $0 New York New York, Inc. 10402 Mohegan Lake, Galileo Cortlandt LLC, $61,842 New York ERT Australian Management, LP. 10702 Jersey City, Inland Mid-Atlantic $0 New Jersey Management #150 Inland Southeast Jersey City, LLC, c/o Inland Mid-Atlantic Management Corp., 10801 Brick, Inland Mid-Atlantic $40,860 New Jersey Management #152 Inland Southeast Jersey City, LLC, c/o Inland Mid-Atlantic Management Corp., 20202 Garden City, Feinco, LLC, c/o Buy $128,100 New Jersey Buy Baby 20203 Nesconset, KIMCO Realty $0 New York Corporation, and PL Smithtown, LLC, c/o Kimco Realty Corp. 20506 Staten Island, MRP Family Holdings, $0 New York LLC 30103 Victorville, Carol H. Rodman, $15,486 California Trustee, and Hillary S. Gilson 30503 Corona, KIMCO Realty Corp. $107,840 California 30603 Silverdale, Silverdale Ridgetop, $9,753 Washington LLC, and SRW Properties, LLC 30604 Tacoma, Krausz Enterprises, $48,307 Washington Krausz FT One, LP, c/o The Krausz Companies 30605 Tukwila, Klaff Realty, L.P., $130,167 Washington Levitz Tukwila, LLC, c/o Klaff Realty LP 30702 Portland, Sears, Roebuck & $26,371 Oregon Company 40302 Fresno, Lowenberg Corporation $36,549 California 40305 Stockton, Krausz Enterprises, $40,190 California Krausz FT One, LP, c/o The Krausz Companies 40403 Pinole, Krausz Enterprises, $12,934 California Krausz FT One, LP, c/o The Krausz Companies 40501 Glendale, KIMCO Realty $0 Arizona Corporation, and PL Smithtown, LLC, c/o Kimco Realty Corp. 40503 North Phoenix, Louise Partners, c/o $50,322 Arizona Richard E. Caruso, Inc. 40601 Henderson, KIMCO Realty $59,624 Nevada Corporation, and PL Smithtown, LLC, c/o Kimco Realty Corp. 71201 Clackamas, Clackamas Commerce $16,925 Oregon Center The Court grants the Debtors' request as it relates to the lease for Store No. 10720. Judge Lifland also allows the cure amounts for: Store No. Proper Cure Amount --------- ------------------ 10801 $51,302 10402 $79,396 40304 $5,000 20106 $27,375 20202 $225,052 10204 $64,045 With respect to Store No. 20202, the Purchasers agree to take responsibility and provide timely payment for all amounts due, if any, to Racanelli Construction Company, Inc., or its affiliates, agents or subcontractors, whether contracted for or performed pre- or post-assignment. With respect to Store No. 10204, the cure amount already includes payment for a $3,579 mechanics' lien. Within September 2006, PLVTZ will either: (i) at its own expense, replace the facade signage on the Premises if permitted to do so by the city of New York; or (ii) if the Signage replacement is not approved by New York, reimburse $12,000 to 125th Street Gateway Ventures LLC, for the costs of repairing the fa?ade. If PLVTZ receives approval from New York to replace the Signage, PLVTZ will timely submit the proposed new facade signage to 125th Street for review and approval, which approval will not be unreasonably withheld. Judge Lifland also previously granted the Debtors' request as it relates to the leases for Store Nos. 30103, 30203, 20505, 40404, 40504, 10202, 30503, 30604, 30605, 30702, 40302, 40305, 40403, 40501, 40503, 40601 and 71201. Judge Lifland fixed the cure amount for Store No. 40504 at $115,825 and for Store No. 20203 at $49,890. The Court approved the assumption and assignment of Store No. 20506, to the extent that, among other things: * The proper cure amount is $11,501; * MRP Family Holdings, LLC, will not be affected or otherwise bound in the event the Purchasers file a petition for bankruptcy under any section of the Bankruptcy Code; * The Purchasers agree to take responsibility and provide timely payment for all amounts due, if any, to Racanelli, or its affiliates, agents or subcontractors, or to any other mechanic, materialman, vendor, provider, or contractor for any services rendered or materials furnished in connection with the premises under the Lease, whether contracted for or performed pre-assignment or post-assignment; and * Nothing will be construed as a waiver of, prejudice to, or otherwise limit the rights of Racanelli or MRP under the Lease, if any, to pursue state court remedies against the Purchasers or any other person or entity to seek payment for amounts due to Racanelli for services rendered in the Premises. Objections (A) Gage II Gage II Family Limited Partnership informs Judge Lifland that it recently received adequate assurance information projecting PLVTZ, LLC's financial position in 2007. Gage II complains that the information does not sufficiently demonstrate PLVTZ's financial health as required by Section 325 (b)(1) of the Bankruptcy Code. To compensate for the deficiency, Gage II says PLVTZ must provide a three-month security deposit or letter of credit, and PLVTZ must agree to post a bond for any improvement to be done at the premises costing $10,000 or more annually. Moreover, Gage II amends its asserted cure amount from $49,149 to $50,223. The revised cure amount does not include interest continuing to accrue after June 16, 2006. (B) Sanderson-J. With respect the lease for Store No. 30502, Sanderson-J. Ray- Spectrum V Partners submits that the Debtors or PLVTZ must provide adequate assurance and agreement regarding: (a) PLVTZ's ability to cure all monetary defaults, including the $183,662 cure amount currently liquidated, due and owing. Spectrum anticipates that other charges including common area maintenance charges will be liquidated shortly; (b) adequate assurance of future performance, including financial and other information sufficient to demonstrate PLVTZ's ability to perform all Lease obligations when they become due; and (c) PLVTZ's compliance with all the terms of the Lease, including the "use clause". PLVTZ's proposed "retail" use is overly broad. Robert J. Feinstein, Esq., at Pachulski, Stang, Ziehl, Young Jones & Weintraub P.C., in New York, asserts that there is no evidence in the Debtors' request that the Debtors or PLVTZ can satisfy any of the stated requirements. Accordingly, Sanderson-J asks the Court to deny the Debtors' request in its entirety as it relates to Store No. 30502, or in the alternative, adjourn the hearing on the request to a later date to allow Sanderson-J to conclude its discovery. (C) Brittan Corners Brittan Corners Shopping Center, LLC, and Levitz Furniture Corporation of the Pacific, Inc., were parties to a lease located in San Carlos, California, dated November 2, 1983. The San Carlos Property is part of a multi-tenant retail shopping center. The Lease pertains to Levitz's Store No. 40203. David Duperrault, Esq., at Silicon Valley Law Group, in San Jose, California, relates that pursuant to a written guaranty, Levitz Furniture Corporation guaranteed the obligations of Levitz Pacific under the Lease. In February 2001, Levitz Pacific purportedly subleased the San Carlos Property to Levitz Furniture, LLC. Neither Levitz Pacific nor Levitz LLC obtained the Brittan's consent to the Sublease, or even disclosed the fact of the purported Sublease, Mr. Duperrault tells the Court. In March 2002, Levitz Pacific was merged into Levitz Corporation. According to Mr. Duperrault, Brittan does not know the current status of the Sublease -- whether it has been assumed, or whether the Debtors propose to assume and assign it. Mr. Duperrault says the Debtors' sought the Court's permission to assume and assign Store No. 40203. However, the request did not address the Sublease. Brittan points out that the Debtors have not cured the monetary and non-monetary defaults under the San Carlos Lease. The Debtors have also failed to provide adequate assurance of future performance in the shopping center lease. Mr. Duperrault asserts that although the Debtors have indicated a willingness to cure the monetary defaults under Store No. 40203, there is a dispute about the cure amount because the Debtors have not confirmed that the amount will be fully paid in cash as a condition of assumption. Mr. Duperrault further notes that: * The Debtors failed to correct violations of health and safety codes that were first identified by the Fire Marshal in 2003; * The pro forma financial projections provided by the Debtors may not be accurate or complete because the projections failed to prove that PLVTZ is financially and operationally as strong as the original lessee and its guarantor; and * The Debtors have not shown that the proposed assignment is subject to all provisions of the original lease, including use restrictions. Therefore, the Debtors may not assume or assign Store No. 40203 to PLVTZ, Brittan tells Judge Lifland. (D) Jerome & Joan Leflien, et al. Six landlords ask the Court to condition the Debtors' proposed assumption and assignment to PLVTZ, LLC, of their Leases upon payment of the proper cure amounts that are due and owing. The objecting parties are: Debtors' Landlords' Asserted Asserted Store No. Objecting Party Cure Amount Cure Amount --------- --------------- ----------- ----------- 20106 Jerome & Joan Leflien $19,004 $40,800 20309 Gage II Family Limited $19,528 $49,149 Partnership 10702 Inland Southeast Brick, $0 - 10801 L.L.C., and Inland $40,860 $51,302 Southeast Jersey City, L.L.C. 30603 Silverdale Ridgetop, $9,753 $32,382 LLC, and SRW Properties, LLC 10204 125th Street Gateway $50,653 $76,984 Ventures LLC Inland Southeast does not object to the proposed cure amount for Store No. 10702. However, as part of their cure obligations, the Debtors must be required to pay additional amounts, including amounts that may become due under their leases in the future based on reconciliation or adjustments, to the extent they are liabilities retained by the Debtors in accordance with the Sale Order. Accordingly, Inland Southeast asks the Court to require the Debtors to escrow or reserve sufficient funds to pay the Debtors' portion of year-end reconciliations under the Leases. The Landlords assert outstanding defaults with respect to their Leases, consisting of: * real estate taxes; * rent and additional rent; * unsatisfied mechanic's liens; * base rent; and * common area maintenance charges. Most amounts do not include interest continuing to accrue after June 1, 2006, and hence, the Landlords reserve their right to amend, supplement or modify their asserted Cure Amounts for any reason, including attorneys' fees. Moreover, some of the Landlords ask the Court not to permit the Debtors to assign their Leases to PLVTZ, unless PLVTZ agrees and is required to comply with all of the terms of their Leases, including maintenance obligations. Some of the Landlords assert that they did not receive documentation providing information for adequate assurance. Accordingly, the Landlords further ask the Court that they be provided the information demonstrating PLVTZ's financial health and experience managing the property to be assigned. (E) Racanelli Racanelli Construction Company, Inc., was retained by the Debtors to provide extensive general contracting services to a number of the Debtors' store locations in New York, New Jersey, and Connecticut. Racanelli asserts it is owed not less than $27,310 for Store No. 20309. Racanelli disputes the Debtors' proposed cure amount for Store Nos. 20202 and 20506. Racanelli objects to the proposed assumption and assignment of the Store Leases to the extent that it does not contemplate a cure that satisfies the amount due and owing in connection with the Leases. Accordingly, Racanelli asks the Court to condition the approval of the Debtors' request upon payment of the proper amounts due, or otherwise resolve Racanelli's liens and claims. (F) Pergament Mall Debtor Levitz Furniture, LLC, is the tenant of a nonresidential real property located in Staten Island, New York. A lease agreement between MRP Family Holdings, LLC, as the original landlord, and Levitz Furniture, as tenant, memorialized the lease of the Property. In March 2004, an amendment to the Staten Lease was entered into between MRP and Levitz Furniture. Pergament is the successor-in-interest to MRP with respect to Store No. 20506. Pergament asks the Court to deny the Debtors' request with respect to Store No. 20506 until these issues are resolved: (a) The proper and outstanding cure obligation for Store No. 20506 is $1,1501, in view of the utility charges for the Property during the period June 7, 2005, to December 7, 2005; (b) There are open issues that remain unresolved despite a negotiation with Levitz Furniture for the form of the order to authorize the assumption and assignment of Store No. 20506. The open unresolved issues are: * Pergament requires that all pre-assumption or assignment defaults must be cured by payment, in cash and in full, prior to consummation of the assignment; * Pergament wants clarification that any order approving the Debtors' request does not prejudice Pergament's rights and entitlements as landlord with respect to the enforcement of any post-assignment obligations of the assignee-tenant; and * Pergament wants clarification that any order approving the Debtors' request is binding upon any subsequent bankruptcy trustee in the Chapter 11 cases or in Chapter 7 cases for any of the Debtors; (c) Pergament has not yet consented to the assignment of Store No. 20506 to PVLTZ, and the three parties, including PLVTZ, have not reached an agreement yet on the terms of the assignment agreement and consent. Pergament also asks the Court to condition the assignment of Store No. 20506 until Racanelli's objection is resolved. Pergament submits that, to the extent that Levitz Furniture or PLVTZ fails to satisfy the obligations to Racanelli in full or before the consummation of the proposed assignment, Pergament and its property could be exposed to the assertion of mechanic's or materialman's liens under non-bankruptcy law. Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc. -- http://www.levitz.com/-- is a leading specialty retailer of furniture in the United States with 121 locations in major metropolitan areas principally the Northeast and on the West Coast of the United States. The Company and its 12 affiliates filed for chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case No. 05-45189). David G. Heiman, Esq., and Richard Engman, Esq., at Jones Day, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported $245 million in assets and $456 million in debts. Jay R. Indyke, Esq., at Kronish Lieb Weiner & Hellman LLP represents the Official Committee of Unsecured Creditors. Levitz sold substantially all of its assets to Prentice Capital on Dec. 19, 2005. (Levitz Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000) LEVITZ HOME: Can Proceed with Robbinsville Lease Rejection ---------------------------------------------------------- The Honorable Burton R. Lifland of the U.S. Bankruptcy Court for the Southern District of New York authorized Levitz Home Furnishings, Inc., and its debtor-affiliates to reject their lease for a warehouse located in Robbinsville, New Jersey, with Matrix Realty, Inc. The lease rejection is effective on the later of May 26, 2006, or the date on which the new lease between Matrix and PLVTZ takes effect. Upon PLVTZ's provision of a $1,500,000 letter of credit and $1,875,0000 cash to Matrix, $3,350,000 in cash, which is equivalent to the amount of the Robbinsville L/C, will be delivered to Matrix's counsel. The Counsel will hold the proceeds in an interest bearing account until the Court issues a final ruling directing the distribution of the funds. Resurgence Asset Management, L.L.C., releases Matrix and the Debtors from any claims related to, or are connected with the L/C Proceeds, provided that any of those claims will attach and may be asserted against the Escrowed Funds. As reported in the Troubled Company Reporter on June 12, 2006, Debtor Seaman Furniture Company, Inc., leased the Robbinsville warehouse from Matrix Realty. Seaman Furniture provided Matrix with a $3,350,000 letter of credit as security for payment of rent and other charges. As result of various defaults under the Lease, Matrix has drawn down on the Robbinsville L/C and is presently holding the proceeds of the Robbinsville L/C. Since April 2006, PLVTZ, LLC, and Matrix have been negotiating regarding the possible assumption and assignment or rejection of the Robbinsville Lease. On May 18, 2006, the PLVTZ provided a notice of its election not to assume the Robbinsville Lease. PLVTZ and Matrix will instead enter into a new lease for the warehouse property and Matrix will provide PLVTZ with a waiver needed under PLVTZ's new credit facility. M.D. Sass Corporate Resurgence Partners III, L.P., and its affiliate, Resurgence Asset, had asserted their right to receive the balance of the proceeds remaining after the payment of the proper amount of Matrix Realty's claim against the Robbinsville L/C. The Resurgence Entities claimed they caused Fleet National Bank to issue that $3,350,000 L/C, which is provided to Matrix as security for payment of rent and other charges. Since it is the Resurgence Entities -- and not Debtor Seaman Furniture Company, Inc. -- that provided Matrix with the Robbinsville L/C, any L/C Proceeds remaining after payment of Matrix's claims belongs to Resurgence. They insisted the L/C Proceeds are not property of the Debtors' estates. Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc. -- http://www.levitz.com/-- is a leading specialty retailer of furniture in the United States with 121 locations in major metropolitan areas principally the Northeast and on the West Coast of the United States. The Company and its 12 affiliates filed for chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case No. 05-45189). David G. Heiman, Esq., and Richard Engman, Esq., at Jones Day, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported $245 million in assets and $456 million in debts. Jay R. Indyke, Esq., at Kronish Lieb Weiner & Hellman LLP represents the Official Committee of Unsecured Creditors. Levitz sold substantially all of its assets to Prentice Capital on Dec. 19, 2005. (Levitz Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000) LOCAL TELECOM: Posts $786,715 Net Loss in 2006 Fiscal 1st Qtr. -------------------------------------------------------------- Local Telecom Systems, Inc., filed its first quarter financial statements for the three months ended March 31, 2006, with the Securities and Exchange Commission on June 22, 2006. The Company reported a $786,715 net loss on $1,312,005 of revenues for the three months ended March 31, 2006. At March 31, 2006, the Company's balance sheet showed $4,976,338 in total assets and $6,585,128 in total liabilities, resulting in a $1,608,790 stockholders' deficit. The Company's March 31 balance sheet also showed strained liquidity with $524,919 in total current assets available to pay $2,734,640 in total current liabilities coming due within the next 12 months. A full-text copy of the regulatory filing is available for free at http://ResearchArchives.com/t/s?d2a Going Concern Doubt Killman, Murrell & Co., P.C., in Odessa, Texas, raised substantial doubt about Local Telecom Systems' 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 losses from operations and limited capital resources. About Local Telecom Headquartered in Fort Worth, Texas, Local Telecom Systems, Inc., provided local and long distance telecom service on a prepaid basis. The Company's local services included a bare bones product providing unlimited local dial tone and 911 emergency access. On June 30, 2004, the Company closed its operations in its principal business of providing local phone service to individuals. The Company is now engaged in the mortgage loan business. LONDON FOG: Panel Has Until July 25 to Question Sub. Lenders' Lien ------------------------------------------------------------------ The Official Committee of Unsecured Creditors appointed in the chapter 11 cases of London Fog Group, Inc., and its debtor- affiliates has until July 25, 2006, to question the lien held by lenders under the Debtors' junior secured financing agreement. The Debtors owed the subordinated lenders approximately $39,500,000 when they filed for bankruptcy. The Honorable Gregg W. Zive of the U.S. Bankruptcy Court for the District of Nevada in Reno approved the stipulation on the extension between the Committee and DDJ Capital Management, LLC, as the agent for the financing agreement. By allowing the Debtors to use the cash collateral securing repayment of their debts to the subordinated lenders, the Court granted the subordinated lenders an allowed superpriority administrative claim under Sections 364(c)(1) and 507(b), subordinate to the claim of Wachovia Bank National Association, the debtor-in-possession lender. Headquartered in Seattle, Washington, London Fog Group, Inc. -- http://londonfog.com/-- designs and retails the latest styles in jackets and other professional apparel. The company and six of its affiliates filed for chapter 11 protection on March 20, 2006 (Bankr. D. Nev. Case No. 06-50146). Stephen R. Harris, Esq., at Belding, Harris & Petroni, Ltd., represents the Debtors in their restructuring efforts. Avalon Group, Ltd., serves as the Debtors' financial advisor. When the Debtors filed for protection from their creditors, they estimated assets and debts between $50 million to $100 million. MERIDIAN AUTOMOTIVE: Panel Wants Deposition from Credit Suisse ------------------------------------------------------------ The Official Committee of Unsecured Creditors asks the U.S. Bankruptcy Court for the District of Delaware to: (a) grant summary judgment in its favor; or (b) in the alternative, direct Credit Suisse, Cayman Islands Branch, the First Lien Agent, to appear for its deposition to permit the Committee to develop the record prior to the ruling on its request. Don A. Beskrone, Esq., at Ashby & Geddes, P.A., in Wilmington, Delaware, argues that Credit Suisse, Cayman Islands Branch, as First Lien Administrative Agent and First Lien Collateral Agent, of a U.C.C. financing statement, has presented no admissible evidence sufficient to establish a dispute of material fact with regard to Section 547(b)(5) of the Bankruptcy Code. Statements of counsel are not evidence, Mr. Beskrone maintains. The First Lien Agent's reliance on its domestic UCC filings is insufficient to render that its security interests perfected in the applicable foreign jurisdictions, Mr. Beskrone contends. As a hypothetical lien creditor under Section 544 of the Bankruptcy Code, the Official Committee of Unsecured Creditors maintains that it holds a security interest properly perfected in each of the foreign jurisdictions and is thus entitled to avoid the First Lien Agent's unperfected security interests in the assets. The First Lien Agent has not offered any evidence of any actions it has taken in Brazil or Mexico with respect to its purportedly perfected security interests and has failed to appear at its deposition to respond to questions on that issue, Mr. Beskrone asserts. Mr. Beskrone also points out that the First Lien Agent concedes that it does not hold valid, perfected and enforceable security interests in the Vehicles and liens on the Real Property. Thus, summary judgment in favor of the Committee on those liens is appropriate. Moreover, the First Lien Agent's intentional refusal to appear for the Committee's deposition is a direct violation of its discovery obligations and justifies the imposition of sanctions pursuant to Rule 7037(b) of the Federal Rule of Bankruptcy Procedures, Mr. Beskrone argues. "The Committee is unaware of any provision of the Federal Rules of Civil Procedure, Federal Rules of Bankruptcy Procedure or the Local Rules that relieve a deponent from appearing at a properly noticed deposition because the deponent believes it is unnecessary," Mr. Beskrone says. Mr. Beskrone maintains that First American Title Insurance Company: -- acted as agent for the First Lien Agent with respect to the UCC-3 Financing Statement; and -- filed the First Lien Termination Statement with implied actual authority granted by the First Lien Agent. Thus, the filing of the First Lien Termination Statement terminated the First Lien Agent's security interest in Meridian Automotive Systems-Composites Operations, Inc.'s assets, Mr. Beskrone emphasizes. As reported in the Troubled Company Reporter on June 21, 2006, the escrow officer at First American Title Insurance Company, the Debtors' closing agent, assigned to the closing on the sale of the Debtors' Centralia Facility, mistakenly checked the termination box on the financing statement amendment. Credit Suisse had no connection to the sale other than to release its perfected security interest in the assets being sold. As reported in the Troubled Company Reporter on June 13, 2006, the Panel contends that the filing by Credit Suisse of a U.C.C. financing statement creating a lien on substantially all the assets of Meridian Automotive Systems-Composites Operations, Inc., five days prior to bankruptcy filing is avoidable as a preferential transfer. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. Eric E. Sagerman, Esq., at Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. The Committee also hired Ian Connor Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A., to prosecute an adversary proceeding against Meridian's First Lien Lenders and Second Lien Lenders to invalidate their liens. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 215/945-7000). MESABA AVIATION: Incurs $45.6 Million Net Loss in Fourth Quarter ---------------------------------------------------------------- MAIR Holdings, Inc. (NASDAQ:MAIR) incurred a net loss of $54.1 million for the fiscal 2006 fourth quarter ended March 31, 2006 compared to a net loss of $1.7 million during the same period in 2004. The Company's $54.1 million net loss in the fourth quarter of fiscal 2006 was primarily the result of a $45.6 million net loss at the Company's subsidiary, Mesaba Aviation, Inc. Mesaba's losses were driven by: -- $20.2 million of reorganization items, mostly due to additional unsecured creditors' claims filed in the quarter; -- $19.6 million in income tax expense due to recording a full valuation allowance on Mesaba's net deferred tax assets; and -- $6.2 million in operating losses as Mesaba reduced its flying by 12 fewer Avros and 11 fewer Saabs in the fourth quarter year-over-year. The Company also recorded an $8.9 million impairment charge in the fourth quarter to write off its remaining equity investment in Mesaba. For the fiscal year ended March 31, 2006, the Company reported a net loss of $82.8 million, compared to net income of $7.4 million in fiscal 2005. "Fiscal 2006 financial results were very disappointing," said Paul F. Foley, MAIR's president and chief executive officer. "Northwest Airlines' decision to withhold approximately $30 million in regularly scheduled payments to Mesaba, its bankruptcy filing in September 2005, and its subsequent decision to reduce Mesaba's fleet by more than 50% led to Mesaba's own bankruptcy in October 2005 and to the Company incurring substantial financial losses in fiscal 2006. In fiscal 2007, we will explore growth opportunities, including acquisitions to diversify both within and outside the airline industry." The Company's $82.8 million net loss in fiscal 2006 was primarily the result of a $70.7 million net loss at Mesaba. Mesaba's losses were due to the $45.6 million fourth fiscal quarter loss described above and a $29.1 million reserve for the unsecured prepetition receivables due from Northwest to Mesaba for services provided by Mesaba prior to the date on which Northwest filed its bankruptcy petition (net of certain offsetting liabilities). In addition, the Company recorded the following charges in fiscal 2006: -- a $4.8 million charge for MAIR's guaranty related to the Cincinnati hangar that Mesaba vacated in October 2005; -- an $8.9 million charge to write off MAIR's remaining equity investment in Mesaba; and -- a $2.5 million goodwill impairment charge associated with Big Sky Transportation Co., the Company's subsidiary. Headquartered in Eagan, Minnesota, Mesaba Aviation, Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. MESABA AVIATION: Walks Away from Northwest Aircraft Leases ---------------------------------------------------------- The U.S. bankruptcy Court for the District of Minnesota gave Mesaba Aviation, Inc., dba Mesaba Airlines, authority to walk away from the leases applicable to the Grounded Aircraft effective as of June 8, 2006. The Debtor and Northwest Airlines, Inc., are parties to an Airline Services Agreement dated August 29, 2005, under which the Debtor operates a fleet of commercial aircraft leased or subleased from Northwest. Under the ASA, Northwest schedules flights for Debtor's aircraft. Shortly after Mesaba filed for bankruptcy, Northwest unilaterally, and in breach of the ASA, took 12 British Aerospace Avro 146-RJ85A Aircraft -- the Grounded Aircraft -- out of the Debtor's flight schedule, Will R. Tansey, Esq., at Ravich Meyer Kirkman McGrath & Nauman, in Minneapolis, Minnesota, relates. Consequently, the Debtor was forced to prepare the Grounded Aircraft for long-term storage, and to arrange for storage in Arizona while Northwest considered its options related to the Grounded Aircraft. Northwest rejected the leases and subleases related to Debtor's use and possession of the Grounded Aircraft on May 12, 2006. Northwest also abandoned the Grounded Aircraft. Notwithstanding its rejection and abandonment of the Grounded Aircraft, Northwest agreed to maintain, store and insure the Grounded Aircraft until the earlier of June 11, 2006, or the time at which the head lessor or first priority secured lender took possession of the Grounded Aircraft. On June 7, 2006, U.S. Bank, N.A., notified the Debtor that the Bank had placed insurance coverage on the Grounded Aircraft. U.S. Bank made arrangements to take possession of the Grounded Aircraft. The day after U.S. Bank gave its notice, the Debtor: -- rejected the leases applicable to the Grounded Aircraft by notice to Northwest; -- terminated its storage contract with regard to the Grounded Aircraft; -- transferred possession of the Grounded Aircraft to Northwest; -- cancelled its insurance related to the Grounded Aircraft; and -- removed the Grounded Aircraft from its op specs. Northwest's rejection of the leases or subleases applicable to the Debtor's possession and use of the Grounded Aircraft constitutes a material breach of the Leases, Mr. Tansey tells the Court. "Northwest's rejection of the Leases relieves the Debtor from any and all liabilities or obligations pursuant to the terms of the Leases," he adds. Headquartered in Eagan, Minnesota, Mesaba Aviation, Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945- 7000). MESABA AVIATION: Reports May 2006 Traffic Results ------------------------------------------------- Mesaba Aviation, Inc., a subsidiary company of MAIR Holdings, Inc. (NASDAQ:MAIR), reported capacity and traffic for May. Mesaba Aviation flew 174.6 million available seat miles (ASMs) in May, which was down 33.8% year over year. Mesaba Aviation carried 393,104 passengers in the month, which was down 21.0% year over year generating 127.5 million revenue passenger miles (RPMs). Passenger load factor, representing capacity filled, increased 6.2 points year over year to 73.0%. Separately, Mesaba Aviation disclosed its operating performance for the month of May: Mesaba Airlines May Operating Performance 2006 2005 Change ---- ---- ------ Completion Factor 99.2% 98.8% (0.4 pts.) Arrivals within 14 minutes 87.3% 88.5% 1.2 pts. Mesaba Airlines May Traffic Results 2006 2005 Change ---- ---- ------ ASMs (000) 174,568 263,649 (33.8%) RPMs (000) 127,470 176,177 (27.6%) Load Factor 73.0% 66.8% 6.2 pts. Passengers 393,104 497,301 (21.0%) May and Fiscal Year to Date (2 Months) -------------------------------------- FY 2007 FY 2006 Change ------- ------- ------ ASMs (000) 356,882 517,160 (31.0%) RPMs (000) 257,309 337,461 (23.8%) Load Factor 72.1% 65.3% 6.8 pts. Passengers 763,564 971,755 (21.4%) Calendar Year to Date (5 Months) ------------------------------- CY 2006 CY 2005 Change ------- ------- ------ ASMs (000) 915,771 1,273,840 (28.1%) RPMs (000) 628,439 812,882 (22.7%) Load Factor 68.6% 63.8% 4.8 pts. Passengers 1,845,190 2,305,265 (20.0%) Headquartered in Eagan, Minnesota, Mesaba Aviation, Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945- 7000). MIRANT CORP: Bankrupt Units Have Until Aug. 7 to File Ch. 11 Plan ----------------------------------------------------------------- The Honorable Michael D. Lynn of the U.S. Bankruptcy Court for the Northern District of Texas fixes the exclusive period within which these excluded Mirant Corporation debtor-affiliates can adopt or abandon their plan of reorganization or to file a plan of reorganization until Aug. 7, 2006: (a) the New York Debtors -- Mirant Bowline, LLC; Mirant Lovett, LLC; and Mirant New York, Inc.; (b) Mirant NY-Gen, LLC; and (c) Hudson Valley Gas Corporation. As previously reported, the Bankruptcy Court confirmed the Plan of Reorganization with respect to all of the Debtors, except the Excluded Debtors. The Excluded Debtors' exclusive period to solicit acceptances of the Plan or another plan is also extended until Oct. 6, 2006. Jeff P. Prostok, Esq., at Forshey & Prostok LLP, in Fort Worth, Texas, noted that the Confirmation Order did not disturb the exclusive solicitation period of the Excluded Debtors. The Bankruptcy Court adjourned the confirmation hearing on the Plan with respect to the Excluded Debtors until further Court notice or order. Out of an abundance of caution, the Excluded Debtors sought the ability to continue the pre-confirmation process under the terms of the Plan and the Confirmation Order. Mr. Prostok told Judge Lynn that the New York Debtors are working tirelessly to resolve all outstanding issues with the New York Taxing Authorities. The New York Debtors are, or were, petitioners in 41 proceedings challenging the assessed value of certain generating plants determined by their local taxing authorities. The New York Taxing Authorities are the: 1. town of Haverstraw; 2. Haverstraw Assessor; 3. Haverstraw Board Assessment; 4. town of Stony Point; 5. the Haverstraw-Stony Point Central School District; and 6. the county of Rockland. Mr. Prostok recounted that the Confirmation Order also provides that the Confirmation Hearing was adjourned as to Hudson Valley and Mirant NY-Gen. Mr. Prostok related that Mirant NY-Gen is in the process of working with federal, state and local agencies in connection with remediation work being done at one of its facilities. "Preserving the exclusivity period . . . will permit the Excluded Debtors to keep their efforts on track with continued negotiations. Denying the requested extension and opening up the cases of the Excluded Debtors to competing plans would destabilize the process, risk unnecessary litigation, and delay the timely emergence of the Excluded Debtors from Chapter 11," Mr. Prostok said. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590), and emerged under the terms of a confirmed Second Amended Plan on January 3, 2006. Thomas E. Lauria, Esq., at White & Case LLP, represented the Debtors in their successful restructuring. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 100; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on Dec. 8, 2005, Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to power generator and developer Mirant Corp. and said the outlook is stable. That rating reflected the credit profile of Mirant, based on the structure the company expects to have on emergence from bankruptcy at or around year-end 2005, S&P said. MIRANT CORP: Mirant NY-Gen Wants DIP Facility Raised to $9.5 Mil. ----------------------------------------------------------------- Mirant NY-Gen, LLC, a Mirant Corporation debtor affiliate, has discovered that its $4,500,000 existing DIP Facility is not enough to finance the final remediation plan approved by the Federal Energy Regulatory Commission. The Final Remediation Plan provides for the remediation of Mirant NY-Gen's Swinging Bridge hydroelectric facility. Accordingly, Mirant NY-Gen asks Judge Michael D. Lynn of the U.S. Bankruptcy Court for the Northern District of Texas to permit it to amend its DIP Facility. The First Amendment provides that: (1) the amount of the commitment of the DIP Facility will be increased by $5,000,000 -- from $4,500,000 to $9,500,000; and (2) the original revolving credit facility will be changed to a term loan or term loans not to exceed $9,500,000 which, once repaid or prepaid, may not be reborrowed. Mirant NY-Gen also seeks Judge Lynn's permission to execute the First Amendment to the DIP Facility Agreement and all other related documents. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590), and emerged under the terms of a confirmed Second Amended Plan on January 3, 2006. Thomas E. Lauria, Esq., at White & Case LLP, represented the Debtors in their successful restructuring. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 100; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on Dec. 8, 2005, Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to power generator and developer Mirant Corp. and said the outlook is stable. That rating reflected the credit profile of Mirant, based on the structure the company expects to have on emergence from bankruptcy at or around year-end 2005, S&P said. NEPTUNE INDUSTRIES: Expects $2 Mil. Offering Completed in 30 Days ----------------------------------------------------------------- Neptune Industries, Inc., met the initial minimum investment amount in its Convertible Debenture offering, currently being offered through Dawson James Securities, Inc. The remainder of the $2,000,000 offering is anticipated to be completed over the next 30 days. "We are very encouraged that Dawson James was able to raise the initial funds to open the escrow so quickly," Ernest Papadoyianis, President, of Neptune stated. "We have been assured that the balance of the offering should be placed over the next 30 days. Proceeds from this offering will be immediately utilized in bringing the S.A.F.E.(TM) technology to a market-ready status; expanding our existing operations to double our fish production; and utilizing the completed S.A.F.E.(TM) System to develop the first of six quarry aqua-farms in South Florida. Once the S.A.F.E.(TM) System has been fully tested and implemented, we intend to produce fish that are able to meet any organic production requirements that are established for the seafood industry, and in an environmentally friendly process." About Neptune Industries Headquartered in Boca Raton, Florida, Neptune Industries Inc. (OTCBB: NPDI) -- http://www.neptuneindustries.net/-- is a public corporation that engages in commercial fish farming and related production and distribution activities in the seafood and aquaculture industries. Going Concern Doubt Dohan and Company CPAs, PA, expressed substantial doubt about Neptune Industries' ability to continue as a going concern after it audited the Company's financial statements for the year ended June 30, 2005. The auditing firm pointed to the Company's recurring losses from operations and deficiencies in working capital. NORTEL NETWORKS: Completes $2 Billion Senior Notes Offering ----------------------------------------------------------- Nortel Networks Corporation closes the offering of $2 billion aggregate principal amount of senior notes by its principal direct operating subsidiary, Nortel Networks Limited, to qualified institutional buyers pursuant to Rule 144A under the U.S. Securities Act of 1933, as amended, and to persons outside of the United States pursuant to Regulation S under the Securities Act. As reported in the Troubled Company Reporter on July 3, 2006, the Notes issued by NNL consist of $450 million of Senior Notes due 2016, $550 million of Senior Notes due 2013 and $1 billion of Floating Rate Senior Notes due 2011 and are fully and unconditionally guaranteed by the Company and initially guaranteed by the Company's indirect subsidiary, Nortel Networks Inc. The 2016 Fixed Rate Notes will pay interest semi-annually at a rate per annum of 10.75%, the 2013 Fixed Rate Notes will pay interest semi-annually at a rate per annum of 10.125%, and the Floating Rate Notes will pay interest quarterly at a rate per annum, reset quarterly, equal to three-month LIBOR plus 4.25%. NNL expects that the net proceeds from the sale of the Notes will be approximately $1,956 million, after deducting commissions payable to the initial purchasers and other offering expenses. NNL has used $1.3 billion of these net proceeds to prepay the $1.3 billion one-year credit facility that NNI entered into in February 2006, and expects to use the remainder for general corporate purposes, including to replenish recent cash outflows of $150 million for the repayment at maturity of the outstanding aggregate principal amount of the 7.40% Notes due June 15, 2006, issued by the Company's indirect finance subsidiary, Nortel Networks Capital Corporation, and fully and unconditionally guaranteed by NNL, and US$575 million (plus accrued interest of $5 million) deposited into escrow on June 1, 2006, pursuant to the proposed class action settlement first announced on Feb. 8, 2006. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world's most critical information. Serving both service provider and enterprise customers, Nortel delivers innovative technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel does business in more than 150 countries. * * * As reported in the Troubled Company Reporter on June 20, 2006, Moody's Investors Service affirmed the B3 corporate family rating of Nortel; assigned a B3 rating to the proposed $2 billion senior note issue; downgraded the $200 million 6.875% Senior Notes due 2023 and revised the outlook to stable from negative. Standard & Poor's also affirmed its 'B-' long-term and 'B-2' short-term corporate credit ratings on the company, and assigned its 'B-' senior unsecured debt rating to the company's proposed $2 billion notes. The outlook is stable. NORTHPOINT COMMS: Court Closes Case After Distribution of Funds --------------------------------------------------------------- The Honorable Thomas E. Carlson of the U.S. Bankruptcy Court for the Northern District of California issued a final decree closing Northpoint Communications Group, Inc.'s chapter 7 liquidation proceedings. Michael M. Ozawa, the Debtor's chapter 7 trustee, disclosed that all of the Debtor's assets and funds which came under his control have all been disbursed and accounted for in accordance with the law. Mr. Ozawa received $86,058,564 and held for the Debtor's estate. He spent $1,345,484 for his administrative fees and expenses. Around $84,713,080 was used to pay general unsecured creditors holding $421,400,000 in claims. Northpoint Communications Group, Inc., was based in San Francisco, California and provided dedicated Internet access service via DSL technology. The Company filed for bankruptcy on January 16, 2001 (Bankr. N.D. Calif. Case NO. 01-30127). The Court converted the Debtor's chapter 11 case to a chapter 7 liquidation proceeding on June 12, 2001, and appointed Michael M. Ozawa as chapter 7 trustee. Sidney P. Levinson, Esq., Hennigan, Bennett and Dorman represented the chapter 7 trustee. This report concludes the TCR's coverage of Northpoint Communications Group, Inc., unless and until circumstances change that warrant reporting in the TCR. NORTHWESTERN CORP: Inks Electric Supply Pact with PPL Montana ------------------------------------------------------------- NorthWestern Corporation, dba NorthWestern Energy, signed a seven- year power purchase agreement with PPL Montana. The Agreement, which takes effect after NorthWestern's current contract with PPLMT expires next year, provides NorthWestern's Montana default supply customers with a source of reliable electricity supply beginning July 1, 2007, at a significant discount to current market prices. The Agreement calls for NorthWestern to initially purchase 325 megawatts to meet more than one-third of its near-term electricity supply requirements. The megawatt hours purchased decline over the seven-year period, allowing NorthWestern to methodically transition its electricity supply mix to more diverse resources. Over the life of the agreement, NorthWestern will purchase 13.7 million megawatt hours at a cost of approximately $675 million. This procurement strategy provides NorthWestern with flexibility to pursue other long-term electricity supply options and is consistent with NorthWestern's 2005 Electricity Default Supply Resource Plan that was filed with the Montana Public Service Commission in December. "Electric supply continues to be one of the most significant and challenging issues we face at NorthWestern today," Mike Hanson, President and CEO, said. "There is probably no single item that receives as much time and attention. This Agreement with PPLMT represents months of negotiations and is a testament to the quality of our team in Montana. They have worked hard to find a solution that provides reliable electric supply at reasonable prices while allowing us the flexibility to pursue the more permanent and longer-term electric supply options we feel are in the best interest of our customers." The Agreement is intended to limit customers' exposure to market volatility by providing supply at a fixed price throughout the life of the contract. The fixed-price cost per kilowatt-hour gradually increases over the span of the Agreement at a rate that is less than recent inflation rates. While the cost of electricity will gradually increase by a fixed amount over time, the volumes purchased will also decline by a fixed amount. This will enable NorthWestern to make future electricity purchases at regular intervals to maintain a diversified portfolio that takes advantage of, among other things, potential new generation sources and demand side management activities. "This Agreement addresses concerns regarding the evolution of the default supply procurement strategy," Dave Gates, Vice President - Wholesale Operations, said. "Our customers have an assured source of electricity supply beginning next July that is structured in a manner that enables us to continue with our long-term planning strategy emphasizing price stability and supplier diversity. Obviously, the default supply obligation has changed significantly since it was first implemented almost 10 years ago. This Agreement reflects the reality of today's situation and provides the necessary flexibility that we need to provide the best possible portfolio of resources to provide reliable and reasonably priced electricity for our customers for many years to come." As a result of this new power supply agreement, typical residential electric bills are expected to increase by approximately 7% beginning July 1, 2007. NorthWestern's billing statements provide customers with detailed costs for the various components that comprise their total billed amount. This change affects the energy supply portion of their bill, which is a "pass- through" cost, meaning that NorthWestern does not make a profit on the sale of energy supply to the customer. Later this year, NorthWestern will conduct its auction process to purchase additional electricity supply. About NorthWestern Energy Headquartered in Sioux Falls, South Dakota, NorthWestern Energy (NASDAQ:NWEC) -- http://www.northwesternenergy.com/-- provides electricity and natural gas in the Upper Midwest and Northwest, serving approximately 628,500 customers in Montana, South Dakota and Nebraska. * * * As reported in the Troubled Company Reporter on May 1, 2006, Moody's Investors Service affirmed the ratings of NorthWestern Corporation. The rating outlook for Northwestern remains positive. The action follows the announcement that Northwestern had entered into a purchase and sale agreement with Babcock & Brown Infrastructure, for BBI's purchase of all of the shares of NOR. Moody's also affirmed NOR's other ratings, including its senior secured debt of Ba1, senior unsecured debt of Ba2 and its SGL-2 liquidity rating. OPAL CONCEPTS: Wants to Pay U.S. Trustee from Trust Funds --------------------------------------------------------- Howard M. Ehrenberg, the responsible person appointed in the chapter 11 cases of Opal Concepts, Inc., and its debtor- affiliates, and the Joint Committee of Creditors ask the U.S. Bankruptcy Court for the Central District of California for permission to use certain settlement funds to pay the U.S. Trustee quarterly fees. After the sale of substantially all of the Debtors' assets, the estates' remaining assets are claims that the Committee is pursuing against some of the Debtors' former directors and officers and the Debtors' former outside accounting and auditing firm. The Debtors' remaining prepetition liabilities total $27 million. Despite of the Debtors' lack of business operations, the U.S. Trustee continues to charge quarterly fees. The Debtors currently owe the U.S. Trustee $18,250. The Debtor wants to use funds from the trust account of Winthrop Couchet, the Creditors Committee's former counsel. The trust account, which has a $264,058 balance, was created by the Committee to hold proceeds from the sale of some claims to Cheveux Acquisition, LLC. Opal Concepts, Inc., used to manage Fantastic Sams, one of the largest franchised hair salon chains in the country with approximately 1,300 salons operating under its name. The Company and its affiliates filed for bankruptcy on July 16, 2002 (Bankr. C.D. Calif. Case No. 02-15441). Michael A. Morris, Esq., of Los Angeles, Calif., represent the Debtors in their restructuring efforts. Ames Davis, Esq., of Nashville, Tenn., and Derek W Edwards, Esq., at Waller Lansden Dortch & Davis, represent the Joint Committee of Creditors. The Debtors no longer have business operations after selling substantially all of their assets. Howard M. Ehrenberg is the Debtors' sole employee and responsible person handling the Debtors' estates. OWENS CORNING: Court OKs Plan Support Agreement Despite Objections ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware approved the plan support agreement entered into by Owens Corning and its debtor-affiliates with their key creditor groups despite the U.S. Trustee's objection that the agreement is an improper solicitation. Parties to the agreement include the Official Committee of Asbestos Claimants, the Official Committee of Unsecured Creditors, the Legal Representative for Future Claimants, the Official Representatives of Bondholders and Trade Creditors, the Ad Hoc Bondholders Committee, and the Ad Hoc Equity Holders Committee. Kelly Beaudin Stapleton, the United States Trustee for Region 3, said that the Plan Support Agreement is a lock-up agreement to secure the votes to the Debtors' Sixth Amended Plan of Reorganization of the registered holders holding a majority in aggregate principal amount of prepetition bonds issued by Owens Corning. Century Indemnity Company, Central National Insurance Company of Omaha, Cravens Dargan & Company, Pacific Coast and Pacific Employers Insurance Company also objected to the agreement. They have filed an appeal from the District Court's order estimating the Debtors' asbestos liabilities. Judge Fitzgerald overruled the objections. She made it clear that the order is binding on all creditors and parties-in-interest. However, the rights of CIC, CNIC and PEIC with respect to the appeal before the Third Circuit Court of Appeals, to object to the approval of any disclosure statement or confirmation of any plan of reorganization filed in the Debtors' Chapter 11 cases are expressly reserved. Pursuant to the Plan Support Agreement, the Plan Proponents agree to file a Sixth Amended Joint Plan of Reorganization for the Debtors, related Disclosure Statement and other related plan documents. As an initial and critical step towards transforming the platform of the Fifth Amended Plan into, what is anticipated to be, a consensual Sixth Amended Plan on an expedited basis, and their ultimate emergence from Chapter 11, the Debtors seek the U.S. Bankruptcy Court for the District of Delaware's authority to execute and implement the terms of the Plan Support Agreement. The salient terms of the Plan Support Agreement are: A. Treatment of the Key Creditor Constituencies under the Settlement Term Sheet The Debtors have agreed to modify their Plan with respect to the treatment of these claims: a. Owens Coming & Fibreboard Asbestos Personal Injury Claims On the Effective Date, the Debtors will pay the Asbestos Personal Injury Trust a total of: * $2,872,000,00 in cash; and * a contingent payment which, subject to certain conditions precedent, will consist of $1,390,000,000 plus interest in cash and 28,600,000 shares of common stock, par value $0.10 per share, of Reorganized Owens Coming -- New OCD Common Stock. Owens Corning has entered into a backstop agreement with J.P. Morgan Securities, Inc., and a syndicate of investors consisting of D.E. Shaw Laminar Portfolios, L.L.C., Plainfield Special Situations Master Fund Limited or their affiliates, and certain other bondholders, in connection with a proposed equity rights offering. Pursuant to the Plan Support Agreement, the Asbestos PI Trust will grant the Backstop Providers options to purchase the 28,600,000 shares at an exercise price of $37.50 per share. The options will expire 12 months after the date the Trust receives the shares. The Backstop Providers will grant the Asbestos PI Trust options to sell to them 28,600,000 shares in the aggregate at a $25 per share exercise price. The options will expire three months after the date the Trust receives the shares. b. Owens Corning Bank Debt Holders Claims The Banks will receive the treatment afforded to them under the Fifth Amended Plan. c. Owens Corning Bondholders Claims In full satisfaction of their claims, the Bondholders will receive 26,600,000 shares of New OCD Common Stock on the Effective Date and, if exercised, their pro rata share of 72,900,000 shares of New OCD Common Stock at $30 per share pursuant to the Rights Offering. d. Owens Corning General Unsecured Claims In full satisfaction of their claims, the senior and junior unsecured creditors in Classes A6-A and A6-B will receive $248,500,000 in cash on the Effective Date and, if exercised, their pro rata share of 72,900,000 shares of New OCD Common Stock at $30 per share pursuant to the Rights Offering. e. Owens Corning Subordinated Claims Holders of the subordinated claims against Owens Corning in Class A11 will receive warrants -- with customary market protections, exercisable within seven years of the Effective Date -- to obtain 10% of the fully diluted New OCD Common Stock at a strike price of $43 per share. Upon the occurrence of certain events, holders of certain subordinated claims against Owens Corning in Class A11 will have the right to exchange the warrants for 5.5% of the fully diluted New OCD Common Stock. If the holders of certain subordinated claims against Owens Corning in Class A11 vote to reject the Plan, they will get the corresponding cramdown treatment provided in the Fifth Amended Plan. f. OCD Interests Holders of Interests in Owens Corning in Class A12 will receive warrants -- with customary market protections, exercisable within seven years of the Effective Date -- to obtain 5% of the fully diluted New OCD Common Stock at a strike price of $45.25 per share. Upon the occurrence of certain events, holders of Interests in Owens Corning in Class A12 will have the right to exchange the warrants for 14.75% of the fully diluted New OCD Common Stock. If the holders of Interests in Owens Corning in Class A12 vote to reject the Plan, they will get the corresponding cramdown treatment set forth in the Fifth Amended Plan. B. Support of the Plan Proposal Each of the Holders agrees: a. to vote to accept the Sixth Amended Plan; b. to recommend and support confirmation of the Sixth Amended Plan and to approve any other action or document necessary to implement the terms of the Plan Support Agreement; c. to permit disclosure in the Amended Disclosure Statement and any filings with the Securities and Exchange Commission regarding the execution and contents of the Plan Support Agreement; d. not to object or commence any proceedings to oppose the Sixth Amended Plan, Amended Disclosure Statement or Plan Support Agreement; e. not to support, solicit or participate in the formulation of any other plan of reorganization, restructuring or settlement with respect to the Debtors; and f. not to take any other action that is materially inconsistent with or would materially delay the confirmation of the Sixth Amended Plan, Amended Disclosure Statement or Plan Support Agreement. C. Conditions The Holders' undertakings are subject to certain conditions, including: a. each of the Sixth Amended Plan, Amended Disclosure Statement and all of the documents relating to the Rights Offering will be reasonably satisfactory to the Holders; b. the material terms of the Plan Documents will be substantially identical to the terms set forth in the Plan Support Agreement; c. the Court's approval of the Amended Disclosure Statement; d. there is no material modification of the Plan Documents and no material breach of the Plan Support Agreement; and e. each of the Holders agrees, subject to certain exceptions, not to transfer or otherwise dispose of its Holdings unless, among others, the transferee agrees in writing to be bound by all of the terms of the Plan Support Agreement. D. Termination The Plan Proponents and the Holders have the right to terminate the Plan Support Agreement where there has been a material breach of the agreement, any Holder fails to satisfy a material term or condition of the agreement, or the Plan Effective Date does not occur by October 30, 2006, or at a later date as the Plan Proponents will agree. Owens Corning (OTC: OWENQ.OB) -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. Headquartered in Toledo, Ohio, the Company filed for chapter 11 protection on Oct. 5, 2000 (Bankr. Del. Case. No. 00-03837). Norman L. Pernick, Esq., at Saul Ewing LLP, represents the Debtors. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, represents the Official Committee of Asbestos Creditors. James J. McMonagle serves as the Legal Representative for Future Claimants and is represented by Edmund M. Emrich, Esq., at Kaye Scholer LLP. (Owens Corning Bankruptcy News, Issue No. 134; Bankruptcy Creditors' Service, Inc., 215/945-7000) OWENS CORNING: Court Approves J.P. Morgan Equity Commitment Accord ------------------------------------------------------------------ The Honorable Judith K. Fitzgerald allowed Owens Corning and its debtor-affiliates to enter into an Equity Commitment Agreement, dated May 10, 2006, with J.P. Morgan Securities Inc, despite the U.S. Trustee's objection over the fees involved. Kelly Beaudin Stapleton, the United States Trustee for Region 3, questioned, among others, the reasonableness of the $100 million Backstop Fee. Owens Corning is now authorized to pay J.P. Morgan the Backstop Fee and the Termination Fee, if applicable, as provided in the Equity Agreement, as well as any Extension Fee in exchange for an increase in length of the Backstop Commitment. The Court directs J.P. Morgan to submit all Transaction Expenses, to be paid to the U.S. Trustee with reasonable supporting detail. The U.S. Trustee and the Debtors have 30 calendar days to object to the Transaction Expenses. If all required documents under the Equity Agreement are timely filed, the approval of the Agreement will have full force and effect commencing on July 10, 2006, and the Debtors will pay the Backstop Fee no later than that date. As reported in the Troubled Company Reporter on May 29, 2006, the Equity Commitment Agreement is an integral part of the settlement term sheet among the Debtors, the Asbestos Claimants Committee, the Future Claimants Representative, the bondholders and trade creditors, the Ad Hoc Bondholders' Committee and the Ad Hoc Equity Holders Committee, with respect to a consensual plan of reorganization, Norman L. Pernick, Esq., at Saul Ewing LLP, in Wilmington, Delaware, said. The Settlement Term Sheet provides holders of Bondholder Claims in Classes A5, A6-A and A6-B of the Fifth Amended Plan, the right to purchase 72,900,000 shares in reorganized Owens Corning at $30 per share. Under the Equity Commitment Agreement, J.P. Morgan will backstop the rights offering. The Debtors contend that the Equity Committee Agreement is indispensable to their prompt and successful reorganization and the implementation of their Sixth Amended Plan. The salient terms of the Equity Commitment Agreement are: Investor J.P. Morgan Securities Inc. Backstop Commitment To purchase, for $30 per share, any of the 72,900,000 shares of New Common Stock not purchased pursuant to the Rights Offering. Rights Terms Each Eligible Holder will have until the 20th calendar day after distribution of the ballots for voting on the Sixth Amended Plan to purchase up to its pro rata share of 72,900,000 shares. Owens Corning will deliver, reasonably in advance of the Effective Date of the Sixth Amended Plan, a Purchase Notice indicating the number of the shares not purchased by the Eligible Holders pursuant to the Rights Offering. J.P. Morgan will purchase a number of shares of New Common Stock equal to the number of shares set forth on the Purchase Notice. Conditions to Backstop Commitment The Equity Commitment Agreement is conditioned on, among others: (1) J.P. Morgan will have approved the Sixth Amended Plan and Confirmation Order to the extent they are consistent in all material respects with the Settlement Term Sheet and the Equity Commitment Agreement; (2) Owens Corning will not have publicly supported or entered into a competing transaction; (3) the Confirmation Order will have been entered; (4) the Debtors' shelf registration statement becoming effective by the Agreement Effective Date; (5) fees and other amounts payable under the Equity Commitment Agreement will have been paid; (6) New Common Stock will be exchange- listed; (7) J.P. Morgan will have received an opinion of Owens' counsel relating to the Registration Statement and Prospectus; and (8) Owens Corning will file with the Bankruptcy Court definitive Put Agreements and Call Agreements reasonably satisfactory to J.P. Morgan. Termination Right of Investor J.P. Morgan will terminate its commitment to backstop the rights offering: (1) on or after June 30, 2006, if the the Court has not approved the Agreement; (2) on or after October 31, 2006, with the opportunity to extend the deadline to December 15, 2006, upon Owens Corning's satisfaction of certain conditions and payment of a $30,000,000 Extension Fee; (3) Owens Corning's failure to satisfy conditions precedent set forth in the Equity Commitment Agreement or pay the Extension Fee, if any, when due; and (4) Owens Corning publicly supports or enters into a Competing Transaction. Termination Right of Debtor Prior to Court approval, Owens Corning notifies J.P. Morgan that it has no intent to proceed with the deal. Owens Corning, however, will pay a $20,000,000. Backstop Commitment Fee $100,000,000, plus Transaction Expenses. OC Representations Limited representations similar to, but in many respects diluted from, those given in an underwriting agreement for a public offering of stock. OC Covenants Owens Corning covenants with J.P. Morgan to: (1) file Court papers seeking approval of, and use reasonable best efforts to support, the Equity Commitment Agreement and entry of the Agreement Order; (2) file the Sixth Amended Plan consistent with the Settlement Term Sheet; (3) make necessary filings pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976; (4) prepare and file a shelf registration statement; (5) create a clear market for 180 days after the Closing Date; and (6) file forms of the Put Agreements, the Call Agreements and the Registration Rights Agreement. Indemnification The Debtors will indemnify and hold harmless J.P. Morgan, the ultimate stock purchasers, and certain affiliates with respect to claims, liabilities and expenses related to transactions contemplated in the Equity Commitment Agreement absent a judicial determination of bad faith, gross negligence or willful misconduct. A full-text copy of the Equity Commitment Agreement is available for free at http://ResearchArchives.com/t/s?9ff The Equity Commitment Agreement is a commitment of enormous magnitude, in size, duration and complexity, Mr. Pernick asserts. The Debtors anticipate that the 72,900,00 shares covered in the Agreement will constitute approximately 55% of the fully diluted equity of reorganized Owens Corning. In the event that none of the eligible creditors were to purchase the shares offered, J.P. Morgan will purchase all shares and pay Owens Corning $2,187,000,000 in cash to fund the Sixth Amended Plan. Syndication Agreement The Court also approved a syndication agreement between J.P. Morgan and some investor parties including D. E. Shaw Laminar Portfolios, L.L.C. and Plainfield Special Situations Master Fund Limited. The Investor Parties were members of the Ad Hoc Bondholders' Committee and heavily involved in the negotiation of the Settlement Term Sheet. The Debtors believe that majority of the Investor Parties are creditors in Class A5 as of May 10, 2006, and some of them hold other positions within the Debtors' capital structure. The Syndication Agreement sets forth the terms and conditions by which the Investor Parties have committed to purchase from J.P. Morgan any unsubscribed shared of reorganized Owens Corning that it purchased under the Equity Commitment Agreement. In obligating itself under the Commitment Agreement, J.P. Morgan relies on the Investor Parties' obligations, representations and warranties as provided in the Syndication Agreement. Therefore, the execution and delivery of the Syndication Agreement is a condition precedent to J.P. Morgan 's obligations under the Equity Commitment Agreement. Specifically, the Syndication Agreement provides that to the extent J.P. Morgan will purchase the unsubscribed shares under the Commitment Agreement, it will sell to each Investor Party, for $30 per share, the party's pro rata share of the aggregate amount of the unsubscribed shares. Pro Rata Share will mean, for each Investor Party, the fraction equal to: * the investor's purchase commitment specified in writing by J.P. Morgan; divided by * $2,187,000,000, with appropriate rounding. For the Investor Parties' commitment, J.P. Morgan will share with them a material portion of the Backstop Fee. J.P. Morgan's delivery of purchased shares to each Investor Party will be effected through the facilities of Depository Trust Company. J.P. Morgan contends that some provisions of the Syndication Agreement addressing fee sharing, as well as references to the identity of some of the Investor Parties and the magnitude of their commitments, are commercial, sensitive and proprietary information. Therefore, the Debtors seek the Court's permission to file under seal the unredacted version of the Syndication Agreement. A full-text copy of a redacted version of the Syndication Agreement is available for free at: http://ResearchArchives.com/t/s?a00 Owens Corning (OTC: OWENQ.OB) -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. Headquartered in Toledo, Ohio, the Company filed for chapter 11 protection on Oct. 5, 2000 (Bankr. Del. Case. No. 00-03837). Norman L. Pernick, Esq., at Saul Ewing LLP, represents the Debtors. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, represents the Official Committee of Asbestos Creditors. James J. McMonagle serves as the Legal Representative for Future Claimants and is represented by Edmund M. Emrich, Esq., at Kaye Scholer LLP. (Owens Corning Bankruptcy News, Issue No. 134; Bankruptcy Creditors' Service, Inc., 215/945-7000) PCS EDVENTURES!.COM: HJ & Associates Raises Going Concern Doubt --------------------------------------------------------------- HJ & Associates, LLC, expressed substantial doubt about PCS Edventures!.com, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the fiscal years ended March 31, 2006 and 2005. The auditing firm pointed to the Company's recurring losses from operations and working capital deficit. For the fiscal year ended March 31, 2006, the Company reported a net loss of $1,204,504, a 28% increase from the $938,632 net loss incurred in the prior year. Revenues for the twelve-month period ended March 31, 2006, increased to $2,602,039 or 77.2% as compared to $1,468,671 for the twelve-month period ended March 31, 2005. This increase is due to increased sales and marketing efforts throughout the country, as well as increased international sales. At March 31, 2006, the Company's balance sheet showed total assets of $1,755,851 and total liabilities of 1,253,018. The Company's balance sheet also showed a working capital deficit of $154,843 at March 31, 2006. The working capital deficit for the fiscal year ended March 31, 2005 was $756,669. A full-text copy of the Company's annual report is available for free at http://researcharchives.com/t/s?d1f PCS Edventures!.com, Inc. -- http://www.edventures.com/-- is the recognized leader in design, development and delivery of hands-on, project based learning labs to the K-14 market worldwide. It has sold and installed more than 2,750 hands-on, Engineering, Robotics & Science labs at public and private schools, pre-schools, Boys & Girls Clubs, YMCAs, and other after-school programs in all 50 states in the U.S., as well as sites in 15 countries internationally. The Labs are supported by Edventures! OnLine, which is an Internet-based and accessed program available in multiple languages, through its curriculum, communication, assessment capabilities, and online community features. RADAMES SANTIAGO: Case Summary & 21 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Radames R. Santiago, Inc. dba Farmacia Santa Teresita Calle San Lorenzo, Suite 51 San Lorenzo, Puerto Rico 00754 Tel: (787) 736-3221 Bankruptcy Case No.: 06-02190 Chapter 11 Petition Date: July 5, 2006 Court: District of Puerto Rico (Old San Juan) Debtor's Counsel: Jose Raul Cancio-Bigas, Esq. 134 Mayaguez Street Hato Rey, Puerto Rico 00917 Tel: (787) 763-1940 Fax: (787) 758-9238 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 Million to $10 Million Debtor's 21 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Borshow Hospital and Supplies $614,852 Medical Supplies, Inc. P.O. Box 36211 San Juan, PR 00936 Attn: Pedro Parrilla Tel: (787) 625-4100 Banco Popular PR Loan $65,000 Special Loan Department P.O. Box 362708 San Juan, PR 00963-2708 Attn: Migdalia Guasp Tel: (787) 765-9800 Farmacia Aliadas Supplies $13,144 P.O. Box 9660 Caguas, PR 00726 Attn: Roberto Peirats Tel: (787) 746-8878 Medi-Data Corporation Supplies $5,137 Xerox Capital Services Services $3,738 Hallmark PR, Inc. Supplies $2,618 GlaxoSmithKline Supplies $2,325 Price and Novelties, Inc. Supplies $1,339 Ferrero Caribe Supplies $1,302 F. Pont Flores Supplies $1,031 Wella PR Supplies $1,020 ADT Security Systems Services $927 Avent Naturally America Inc. Supplies $687 Agencia de Publicaciones Services $576 Wyeth Consumer Supplies $539 M&J, Inc. Supplies $413 Almacenes Pemar Supplies $322 Energizar PR, Inc. Supplies $319 Per-se Technologies Supplies $202 JS Paloch Co. Inc. Supplies $170 Cesar Castillo, Inc. Supplies $30 RECORP GROUP: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Recorp Group Inc. 920 Rockmore Georgetown, Texas 78628 Bankruptcy Case No.: 06-33031 Chapter 11 Petition Date: July 3, 2006 Court: Southern District of Texas (Houston) Judge: Marvin Isgur Debtor's Counsel: Matt Freeman, Esq. Matt Freeman & Association L.P. 230 Westcott, Suite 202 Houston, Texas 77007 Tel: (713) 255-7400 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million The Debtor has no unsecured creditors who are not insiders. REFCO INC: Chapter 11 Trustee Wants Capstone as Financial Advisor ----------------------------------------------------------------- Marc S. Kirschner, the Chapter 11 Trustee of the estate of Refco Capital Markets, Ltd., seeks the U.S. Bankruptcy Court for the Southern District of New York's authority to employ Capstone Advisory Group, LLC, as his special financial advisor with respect to intercreditor and intercompany interests, nunc pro tunc to June 2, 2006. There are significant intercreditor and other issues, including intercompany claims, which are unique to RCM and with respect to which RCM's interests are, or may be, in direct conflict with the interests of the other Chapter 11 Debtors' estates and stakeholders, Timothy B. DeSieno, Esq., at Bingham McCutchen LLP, in New York, explains. Capstone will: a. assist the Trustee with analysis of RCM's books and records relating to intercompany transactions, intercompany accounting and related accounts of RCM; b. advise the Trustee regarding any proposed transactions affecting the RCM estate or the resolution of the RCM case; c. advise the Trustee regarding negotiations with stakeholders; d. assist the Trustee and his counsel in negotiating and effecting a comprehensive resolution of the RCM bankruptcy; e. perform other necessary financial advisory services for the Trustee in connection with the Chapter 11 case; and f. provide valuation work and expert testimony as determined by the Trustee to be necessary. Capstone will be paid based on the actual hours worked charged at its standard hourly rates and reimbursed for its out-of-pocket expenses. The firm's current rates are: Position Hourly Rate -------- ----------- Executive Director $530 - $575 Staff $250 - $450 Support Staff $75 - $175 Capstone professionals who will have primary responsibility for representing the Trustee are: Professional Position at Capstone ------------ -------------------- David Galfus Member and Executive Director Robert Manzo Executive Director Jack Surdoval Managing Director Other Capstone professionals may assist in the representation as needed. Mr. Galfus attests that Capstone (i) is not a creditor, an equity security holder or an insider of RCM, or any other Chapter 11 Debtor; (ii) is not and was not within two years before the Petition Date, a director, officer or employee of RCM or any other Chapter 11 Debtor; and (iii) does not hold or represent any interest that is materially adverse to the interest of the RCM estate or of any class of creditors or equity security holders. Capstone's professionals have played significant roles in many of the largest and most complex cases under the Bankruptcy Code, including the chapter 11 cases of Adelphia Communications Corporation, Ames Department Stores, Inc., Enron Corp., Federal Mogul, Inc., Mirant Energy, Inc., Owens Corning, Inc., Vencor, Inc., and W.R. Grace. About Refco Inc. Based in New York, New York, Refco Inc. -- http://www.refco.com/ -- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. Refco Capital Markets Ltd. is Refco's operating subsidiary based in Bermuda. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. Refco LLC, an affiliate, filed for chapter 7 protection on Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is a regulated commodity futures company that has businesses in the United States, London, Asia and Canada. Refco, LLC, filed for bankruptcy protection in order to consummate the sale of substantially all of its assets to Man Financial Inc., a wholly owned subsidiary of Man Group plc. Three more affiliates of Refco, Westminster-Refco Management LLC, Refco Managed Futures LLC, and Lind-Waldock Securities LLC, filed for chapter 11 protection on June 6, 2006 (Bankr. S.D.N.Y. Case Nos. 06-11260 through 06-11262). (Refco Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000). REFCO INC: Refco Group Inks Settlement With West and Contractors ---------------------------------------------------------------- Refco Group Ltd., LLC, Albert Togut, the Chapter 7 Trustee appointed to oversee the liquidation of Refco, LLC's estate, West Loop Associates LLC and the Contractors, Alps Construction, Inc., KCE Ltd. and Griswold, Heckel & Kelly Associates, Inc., have reached a comprehensive settlement to resolve West Loop's request, the Mechanic's Liens and the Claims. In a stipulation approved by the Hon. Robert Drain of the United States Bankruptcy Court for the Southern District of New York, each of the Contractors agree to: (i) reduce by 5% the outstanding principal amount of each of its Claim pertaining to the Properties; (ii) waive all attorney's fees and accrual of any interest to which each Contractor may be entitled; (iii) take the necessary steps to discharge and release the Mechanic's Liens so that the threatened default against West Loop may be averted; (iv) release Refco LLC from any further claims relating to the Contracts, the Mechanic's Liens, and their Claims; (v) withdraw their Claims against Refco LLC; and (vi) file no additional proofs of claim against Refco LLC. Refco Group will pay the Contractors $747,579 in the aggregate in full satisfaction of the Mechanic's Liens, the Claims, and any other amounts due in connection with the Contracts. West Loop's Motion to Compel West Loop had asked the Court to compel Refco Group to comply with its postpetition lease obligations. Refco Group leases seven floors of an 18-story office building owned by West Loop in the central business district of Chicago, Illinois. Refco, LLC, occupied some or all of the leased premises. Refco Group continues to occupy the Premises pursuant to a March 2006 Stipulated Order among Debtors, West Loop and Man Financial, Inc. The Stipulated Order contemplates rejection of the Lease effective August 15, 2006. Sidney P. Levinson, Esq., at Hennigan, Bennett & Dorman LLP, in Los Angeles, California, contends that until the effective rejection date, RGL is required "to timely perform all obligations under the Lease to the extent required by Section 365(d)(3) of the Bankruptcy Code. Among those obligations, Mr. Levinson said, is a Lease covenant to either discharge or bond any mechanic's liens filed against the Property as a result of work performed or alleged to have been performed on the Premises. Mr. Levinson noted that Refco LLC has entered into a series of agreements with Alps Construction, Inc., KCE Ltd. and Griswold, Heckel & Kelly Associates, Inc., for the construction work to be performed at the leased Premises. The Contractors have sought relief from the bankruptcy stay to commence a foreclosure action in Illinois against RGL, Refco LLC, and West Loop. The Contractors assert that Refco LLC or RGL failed to pay for the work, leaving a balance in excess of $700,000, including amounts owed for work that was not completed until nearly one month after RGL's bankruptcy filing. The Contractors have filed mechanic's liens of more than $700,000 against the Property. Although the Bankruptcy Court denied the Contractors' request, the ruling did not fully resolve the problems West Loop faced. Mr. Levinson relates that by letter dated April 19, 2006, West Loop's mortgage lender, Greenwich Capital Financial Products, Inc., issued a notice of default to West Loop based on the existence of the Mechanic's Liens. The notice of default provides that, unless the Mechanic's Liens are discharged or bonded, West Loop will be held in default under its purchase money loan agreement dated October 7, 2005. Unless the Court compels RGL to discharge or bond the Mechanic's Liens, West Loop and, by consequence, RGL's estate will suffer substantial damages that could and should otherwise be avoided if RGL complies with its lease obligations, Mr. Levinson told Judge Drain. RGL Costs Reimbursement Mr. Togut, informed the Court that he reviewed West Loop's request and RGL's contracts with Alps, KCE and GHK. Mr. Togut believed that the Contractors' Claims and Mechanic's Liens are legitimate obligations and that Refco LLC is responsible for payment of the Claims. Thus Mr. Togut asks the Court for permission to reimburse $747,579 to RGL for the payment of the Claims, pointing out that Refco LLC was the contracting party and the beneficiary of the Contractors' services. About Refco Inc. Based in New York, New York, Refco Inc. -- http://www.refco.com/ -- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. Refco Capital Markets Ltd. is Refco's operating subsidiary based in Bermuda. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. Refco LLC, an affiliate, filed for chapter 7 protection on Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is a regulated commodity futures company that has businesses in the United States, London, Asia and Canada. Refco, LLC, filed for bankruptcy protection in order to consummate the sale of substantially all of its assets to Man Financial Inc., a wholly owned subsidiary of Man Group plc. Three more affiliates of Refco, Westminster-Refco Management LLC, Refco Managed Futures LLC, and Lind-Waldock Securities LLC, filed for chapter 11 protection on June 6, 2006 (Bankr. S.D.N.Y. Case Nos. 06-11260 through 06-11262). (Refco Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000). RICHARD SHIELDS: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Richard J. Shields dba Shields Trucking 1055 Ohio Street Gridley, California 95948 Bankruptcy Case No.: 06-22377 Type of Business: The Debtor filed for chapter 11 protection on May 11, 2006 (Bankr. E.D. Calif. Case No. 06-21524). Chapter 11 Petition Date: July 5, 2006 Court: Eastern District of California (Sacramento) Judge: Christopher M. Klein Debtor's Counsel: Charles L. Rathbun, Esq. 2445 Oro Dam Boulevard, Suite 4 Oroville, California 95966 Tel: (530) 532-1492 Total Assets: $3,658,398 Total Debts: $3,120,195 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Neal McLean Loan $357,000 c/o Russell Longaway, Esq. 369 Pine Street, Suite 818 San Francisco, CA 94104 Lakeview Petroleum Fuel $73,092 P.O. Box 510 Marysville, CA 95901 99 Travel Center, LLC Gas $70,000 c/o Al J. Carrion, Esq. 1528 Starr Drive, Suite B Yuba City, CA 95993 Butte County Tax Collector Property Taxes $44,605 25 County Center Drive Oroville, CA 95965 Dennis Diver Accountant $40,291 1638 Huntoon Street Oroville, CA 95965 Carson Oil Fuel $35,000 Harris Sanford & Hamman Attorneys Fees $29,286 State Fund Worker's $25,375 Compensation Insurance First Insurance Funding Insurance $20,126 Gildermeister Enterprises Trucking $20,000 Shifflett Brothers Truck Repair $18,227 Sacramento Truck Center Truck Parts $16,580 Gridley Utilities Utility Bills $16,123 Whitchurch & Son Hauling $15,869 Star Insurance Insurance $14,723 Butte Auto Parts Truck Parts $12,069 Aldridge Keylock Fuel $10,703 Max's Diesel Repair Truck Repair $9,372 Les Schwab Truck Tires $8,503 Franchise Tax Board 2001 State $8,494 Income Taxes SILICON GRAPHICS: Wants Solicitation & Tabulation Protocol Okayed ----------------------------------------------------------------- Silicon Graphics, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to: (a) fix: * July 7, 2006, as the record date solely with respect to holders of Silicon Graphics Inc.'s 6.125% Convertible Subordinated Debentures due 2011 -- the Cray Voting Record Date; * July 27, 2006, as the record date with respect to all other creditors that are entitled to vote -- the General Voting Record Date; * Aug. 3, 2006, as the deadline for mailing solicitation packages and confirmation hearing notices; * Aug. 31, 2006, as the deadline for filing objections to confirmation or proposed modifications to the Debtors' First Amended Joint Plan of Reorganization; * Sept. 14, 2006, as the confirmation hearing date; and * September 11, 2006, as the deadline for the Debtors to file and serve replies to Confirmation Objections; (b) approve: -- notice and objection procedures in respect of confirmation of the Plan; -- Solicitation Packages and the procedures for their distribution; -- the forms of ballots and the establishment of procedures for voting on the Plan; -- the forms of notices to non-voting classes under the Plan; and -- the Subscription Forms for purposes of the Rights Offering. In addition, the Debtors ask the Court to establish the General Voting Record Date as the date for determining which creditors and equity interest holders in non-voting classes are entitled to receive an appropriate "Notice of Non-Voting Status". Record Dates Shai Y. Waisman, Esq., at Weil, Gotshal & Manges LLP, in New York, tells the Court that the Cray Voting Record Date is appropriate because it coincides with the record date applicable to the holders of Cray Notes for purposes of determining which of the holders are entitled to participate in the Rights Offering. Similarly, Mr. Waisman says, the General Voting Record Date is appropriate as it (i) coincides with the record date applicable to the holders of the Secured Notes for purposes of determining which of the holders are entitled to participate in the Rights Offering, and (ii) facilitates the determination of which creditors are entitled to vote on the Plan or, in the case of non-voting classes of creditors and equity interest holders, to receive the Notice of Non-Voting Status. The nominees and registered holders of the Debtors' equity interests need advance notice to enable those responsible for assembling ownership lists of the public equity securities to compile a list of holders as of a certain date because accurate lists often cannot be prepared retroactively as to ownership on a prior date, Mr. Waisman explains. Solicitation Procedures The Debtors relate that Solicitation Packages distributed to: (a) Creditors holding claims in Classes 5, 6 and 7 will contain a copy of the Disclosure Statement Order, a notice of the Confirmation Hearing, the appropriate form of ballot to accept or reject the Debtors' Joint Plan of Reorganization with instructions and a return envelope, the Disclosure Statement with the Plan, and other materials as the Court may direct; and (b) Holders of claims and interests in the Unimpaired Classes or Non-Voting Impaired Classes will contain a copy of the Confirmation Hearing Notice and a Notice of Non-Voting Status. The Debtors will distribute the Disclosure Statement Order, the Confirmation Hearing Notice, the Disclosure Statement with the Plan, and other materials as the Court may direct to: (1) the U.S. Trustee, (2) counsel for the: -- Official Committee of Unsecured Creditors, -- Wells Fargo Foothill, Inc. and Ableco Finance LLC, -- Ad Hoc Committee of Secured Noteholders, -- U.S. Bank National Association, -- JPMorgan Chase Bank, and -- Morgan Stanley Senior Funding, Inc., (3) the Securities and Exchange Commission, (4) the District Director of the Internal Revenue Service for the Southern District of New York, and (5) all parties entitled to notice. Holders of the 6.50% Secured Notes, 11.75% Secured Notes, and the 6.125% Convertible Subordinated Debentures due 2011 as of the applicable Voting Record Dates will also receive a Subscription Form for purposes of the Rights Offering. The Debtors will not send Solicitation Packages to creditors with claims that have been paid in full unless the creditor would be entitled to receive a Solicitation Package for any reason other than by virtue of the paid claim. According to Mr. Waisman, the Debtors anticipate that some Notices may be returned as undeliverable by the United States Postal Service. To avoid the costs, the Debtors seek the Court's approval to excuse them from mailing Solicitation Packages unless they are provided with accurate addresses before the Solicitation Date. The Debtors ask the Court to determine that they are not required to distribute copies of the Plan or Disclosure Statement to any party to an executory contract who holds a claim that is not allowed, filed, or scheduled, or who holds a claim listed in the Schedules as contingent, unliquidated or disputed, unless the party makes a specific request in writing. Confirmation Hearing Notice The Debtors propose that by August 3, 2006, all parties that are provided Solicitation Packages, will also be provided a notice setting forth: * the Voting Deadline; * the deadline to file Confirmation Objections; and * the time, date, and place for the Confirmation Hearing. In addition to mailing, the Debtors will publish the Confirmation Hearing Notice once in the national edition of The New York Times on a date not less than 25 days prior to the Confirmation Objection Deadline. Objections to confirmation of the Plan or proposed modifications to the Plan must: (i) be in writing; (ii) state the name and address of the objecting party and the amount and nature of its claim or interest; (iii) detail the basis and nature of any objection or proposed modification; and (iv) be filed, together with proof of service, with the Court, and be served so that they are actually received no later than Aug. 31, 2006, by the Clerk of the Court and the attorneys for the: * Debtors, * U.S. Trustee, * Creditors' Committee, and * Ad Hoc Committee. Notice of Non-Voting Status - Impaired Classes The Debtors will send a Notice of Non-Voting Status - Impaired Classes to the holders of the Debtors' publicly traded stock as reflected in the records maintained by the Debtors' transfer agents as of the close of business on the General Voting Record Date. The Debtors recognize that the records maintained by the transfer agents or trustees reflect the brokers, dealers, commercial banks, trust companies, or other nominees -- the Non-Voting Nominees -- through which the beneficial owners hold the Non- Voting Securities. Accordingly, the Debtors ask the Court to authorize: (i) them to provide the Non-Voting Nominees with sufficient copies of the Notice of Non-Voting Status - Impaired Classes to forward to the beneficial stockholders; and (ii) the Non-Voting Nominees to forward the Notice of Non- Voting Status - Impaired Classes or copies of the notices to the beneficial stockholders within five days of the Non-Voting Nominee's receipt of the Notices. The Debtors seek the Court's authority to reimburse the Non- Voting Nominees for their reasonable and customary expenses incurred. Voting Deadline To be counted as a vote to accept or reject the Plan, each Ballot must be properly executed, completed, and delivered to the voting agent or the Voting Nominee, as appropriate, (i) by first-class mail, in the return envelope provided with each Ballot, (ii) by overnight courier, or (iii) by hand delivery, so that it is actually received no later than 4:00 p.m., prevailing Eastern Time, on Sept. 6, 2006. Tabulation Procedures Among other things, the Debtors propose that each claim within a class of claims entitled to vote to accept or reject the Plan be temporarily allowed in an amount equal to the amount of the claim as set forth in the Schedules. Creditors seeking to challenge the allowance of their claims for voting purposes, must serve on the Debtors, the Creditors' Committee, the Ad Hoc Committee, and file with the Court a motion pursuant to Rule 3018(a) of the Federal Rules of Bankruptcy Procedure, temporarily allowing the claim in a different amount for purposes of voting to accept or reject the Plan, on or before the 10th day after the later of: (i) service of the Confirmation Hearing Notice; and (ii) service of notice of an objection or request for estimation, if any, as to the claim. Moreover, the Debtors request that whenever a creditor casts more than one Ballot voting the same claim before the Voting Deadline, the last Ballot received before the Voting Deadline will be deemed to reflect the voter's intent. That Ballot will supersede any prior Ballots. Creditors also must vote all of their claims within a particular class under the Plan either to accept or reject the Plan and may not split their vote. A Ballot that partially rejects and partially accepts the Plan will not be counted. A full-text copy of the Debtors' proposed Tabulation Procedures is available for free at http://ResearchArchives.com/t/s?d56 Subscription Forms for the Rights Offering Pursuant to the Plan, holders of: -- Secured Note Claims, as of the General Record Date, have the right to subscribe for their pro rata share of 6,800,000 shares of new common stock; and -- Cray Unsecured Debenture Claims, as of the Cray Voting Record Date, may exercise Subscription Rights for their pro rata share of 700,000 shares of new common stock. On Aug. 1, 2006, the Debtors will mail subscription forms to each holder of a Secured Note Claim and Cray Unsecured Debenture Claim together with instructions for the completion, execution, and delivery of the Subscription Form, as well as instructions for the payment of the applicable purchase price for the new common stock that the holder may be entitled to acquire. Not later than 10 business days following the Voting Deadline -- which is also the final date by which a holder of a Secured Note Claim and Cray Unsecured Debenture Claim may elect to subscribe to the Rights Offering -- the Debtors will deliver to each holder that has sought to exercise its Subscription Rights, a written statement specifying the number of shares of new common stock that it validly and effectively acquired. To exercise the Subscription Rights, each holder of a Secured Note Claim and Cray Unsecured Debenture Claim must: (i) return a duly completed Subscription Form to Financial Balloting Group LLC, as subscription agent for the Rights Offering or, in the case of Secured Notes or Cray Notes held through a bank or brokerage firm, arrange for the firm to effect their subscription through the Depository Trust Company, so that the form or DTC instruction is actually received by FBG on or before the Subscription Expiration Date; and (ii) pay or arrange for payment to FBG on or before the Subscription Expiration Date, or by DTC to FBG, the holder's purchase price in accordance with the wire instructions or by certified bank or cashier's check delivered to FBG along with the Subscription Form. Mr. Waisman says that if FBG does not receive a duly completed Subscription Form or equivalent instructions from DTC and immediately available funds equal to the holder's Subscription Purchase Price or payment by DTC on or prior to the Subscription Expiration Date, the holder will be deemed to have relinquished and waived its right to participate in the Rights Offering. Each holder of an Secured Note Claim and Cray Unsecured Debenture Claim intending to participate in the Rights Offering must affirmatively elect to exercise its Subscription Right on or prior to the Subscription Expiration Date. The Debtors also seek the Court's authority to adopt any additional procedures consistent with the provisions of the Rights Offering, Mr. Waisman adds. 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. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000) SILICON GRAPHICS: Court Fixes August 4 as General Bar Date ---------------------------------------------------------- At Silicon Graphics, Inc., and its debtor-affiliates' request, Judge Lifland of the U.S. Bankruptcy Court for the Southern District of New York: (i) fixes August 4, 2006, at 5:00 p.m. (prevailing Eastern Time) as the bar date by which persons or entities may file proofs of claim based on prepetition claims against any of the Debtors; and (ii) fixes November 4, 2006, at 5:00 p.m. (prevailing Eastern Time) as the bar date for governmental units to file proofs of claims against any of the Debtors; (iii) approves the Debtors' Proof of Claim form; (iv) approves the form and manner of notice of the Bar Date; and (v) approves the notice and publication procedure. Each person or entity that asserts a prepetition claim against the Debtors must file an original, written proof of the claim that conforms to the Proof of Claim Form or Official Form No. 10 so as to be received on or before the applicable Bar Date by Bankruptcy Services, LLC, either by: -- overnight or hand delivery to: United States Bankruptcy Court SGI Claims One Bowling Green, New York, New York 10004-1408 -- mailing the original Proof of Claim to: United States Bankruptcy Court SGI Claims P.O. Box 180, Church Street Station, New York, New York, 10008-0180 Any person or entity that holds a claim that arises from the rejection of an executory contract or an unexpired lease must file a proof of claim based on the rejection by the later of the applicable bar date or the 30th day after the effective date of that rejection. The proposed Proof of Claim Form, based on the Official Form 10, is tailored to the Debtors' Chapter 11 cases. Any holder of a claim against the Debtors who is required, but fails, to file a proof of the claim on or before the applicable Bar date will be forever barred, estopped and enjoined from asserting the claim, Judge Lifland says. The Debtors and their property will be forever discharged from any indebtedness with respect the claim. Moreover, the holder will not be permitted to vote to accept or reject any plan of reorganization in the Debtors' Chapter 11 cases, participate in any distribution on account of the claim, or receive further notices regarding the claim. Copies of the Proof of Claim Forms will be served on each party who receives a copy of the Bar Date notice, including: * the U.S. Trustee; * counsel to: -- the Official Committee of Unsecured Creditors; -- Wells Fargo Foothill, Inc., and Ableco Finance LLC; -- the ad hoc committee of the Debtors' senior noteholders; -- U.S. Bank, N.A.; -- JPMorgan Chase Bank; and -- Morgan Stanley Senior Funding, Inc.; * all known holders of claims listed on the Debtors' Schedules of Statements and Liabilities at the stated addresses; * all parties known to the Debtors as having potential claims against their estate; * all counterparties to the Debtors' executory contracts and unexpired leases; * all parties to litigation with the Debtors; * the District Director of Internal Revenue of the Southern District of New York; * the Securities and Exchange Commission; and * all parties to whom the Debtors are required to give notice. Judge Lifland directs the Debtors to publish notice of the Bar Dates in The New York Times (National Edition), on or before July 10, 2006. 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. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000) SILICON GRAPHICS: Inks Financing Agreement with Lenders ------------------------------------------------------- Following the U.S. Bankruptcy Court for the Southern District of New York's approval of the $130,000,000 financing facility, Silicon Graphics, Inc., and its debtor-affiliates entered into the Postpetition Loan and Security Agreement on June 28, 2006, with: * Quadrangle Master Funding, Ltd., Watershed Technology Holdings, LLC, and Encore Funding, LP -- the Lenders; * Morgan Stanley Senior Funding, Inc., as administrative agent, sole lead arranger and sole bookrunner, and * Wells Fargo Foothill, Inc., as collateral agent, revolving agent and syndication agent. Barry Weinert, Esq., vice president and general counsel of Silicon Graphics, Inc., disclosed in a regulatory filing with the Securities and Exchange Commission that the $130,000,000 financing facility consists of a $100,000,000 term loan and a $30,000,000 revolving line of credit comprising two types of advances, as secured by some assets of the Debtors. The interest rate under: -- the Term Loan is the per annum rate equal to the sum of the rate of interest announced, from time to time, within Wells Fargo Bank, N.A., at its principal office in San Francisco as its prime rate plus 700 basis points; -- the Revolver A Advances is the per annum rate equal to, at the Debtors' election, (i) the Base Rate plus 75 basis points; or (ii) the rate based on the applicable rate on the London interbank market plus 300 basis points; and -- the Revolver B Advances is the per annum rate equal to, at the Debtors' election, (i) the Base Rate plus 325 basis points; or (ii) the LIBOR Rate plus 525 basis points. As prepayment on the outstanding obligations under the Financing Agreement, in any fiscal year in which any sale or disposition by the Debtors of property or assets exceeds: (a) $500,000, the Debtors are required to pay 100% of the net proceeds to the Lender; and (b) $250,000, the Debtors are required to pay 100% of the excess to the Lender. Furthermore, the Financing Agreement terminates -- and all outstanding borrowed amounts under the Financing Agreement become due -- on the earliest to occur of the date: (i) a confirmed plan of reorganization becomes effective; (ii) on which an event of default occurs and is continuing; (iii) of any decision by the board of directors of any Debtor to proceed with the sale or liquidation without the consent of all of the Lenders; (iv) November 10, 2006; or (v) the Borrowers pay all of the required Lenders in full and terminate the term loan, unless terminated earlier, pursuant to the Financing Agreement. A full-text copy of the Postpetition Loan and Security Agreement is available for free at http://researcharchives.com/t/s?d13 Payoff Letters Pursuant to the Final DIP Order, the Debtors filed with the Court: (i) a Payoff Letter dated June 21, 2006, between Silicon Graphics, Inc., and Quadrangle Master Funding, Ltd., Watershed Technology Holdings, LLC, and Encore Funding, LP -- the DIP Lenders; and (ii) a Payoff Letter dated June 26, 2006, between Silicon Graphics, Inc., and Wells Fargo Foothill, Inc. In the Payoff Letter with the DIP Lenders, the Debtors expressed their desire to repay the total unpaid balance of all amounts owed to the DIP Lenders with respect to the Postpetition Loan and Security Agreement and related documents. The Payoff Letter provides that if paid by the close of business on June 21, 2006, the amount necessary to payoff all principal, interest, expenses, fees and other charges as of that time is $28,231,250. For each day after June 21 that the charges are not paid, the Unpaid Balance will be increased by $11,666 -- the Per Diem Charge. The payments will be made via wire transfer of federal funds to the accounts listed on Schedule D-2 to the DIP Loan Agreement in amounts equal to each DIP Lender's pro rata share of the Term Loan Commitment. The DIP Lenders agree that upon their receipt of the total amount of the Unpaid Balance and Per Diem Charge, all liabilities will be satisfied and the Financing Documents will automatically terminate. The DIP Lenders will then cancel and release all encumbrances that they may have against the assets of the Debtors. A full-text copy of the Payoff Letter with the DIP Lenders is available for free at http://researcharchives.com/t/s?d14 Among other things, the Payoff Letter with Wells Fargo confirm that all prepetition obligations, other than those that survive termination of the Prepetition Credit Agreement, will be terminated and satisfied in full, upon: * Wells Fargo Foothill's receipt of: (i) a wire transfer of $58,774,298 -- the Payoff Amount; (ii) a copy of the Final DIP Order; and (iii) a fully executed counterpart of the letter agreement signed by the Debtors, the DIP Administrative Agent, and Ableco Finance, LLC; and * Issuing Lender's receipt of $4,813,093 to fund the L/C Prepaid Account as provided in the DIP Loan Agreement. Issuing Lender refers to Wells Fargo or any other Lender that, in its sole discretion, agrees to become an Issuing Lender for the purpose of issuing L/Cs or L/C Undertakings. Wire Transfers of the Payoff Amount and the L/C Prepaid Account Amount were due June 28, 2006. A full-text copy of the Payoff Letter with Wells Fargo Foothill is available for free at http://researcharchives.com/t/s?d15 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. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000) SIVAULT SYSTEMS: Names Richard Moore as New President and CEO ------------------------------------------------------------- SiVault Systems Inc. named Richard "Dick" Moore as its new chief executive officer and President on July 3, 2006. Prior to joining SiVault Systems Inc. Dick had spent 4 years as President and Chief Operating Officer of Financial Fusion Inc., a software development company whose primary market was the top 100 Banks in the World. Financial Fusion provided sophisticated end user applications, which included a Retail Banking Suite as well as a fully integrated Corporate Banking solution. During his tenure at Financial Fusion the company was recognized as best in class and acquired a number of prestigious customers such as Bank of America, Bank of China and Citizens Bank to name a few. Before Financial Fusion, Dick was Senior Vice president of Cygent Systems and later become CEO. Cygent provided web-enabled applications designed for the telecommunications sector. Prior to Cygent, Dick was the Senior Vice President of Pyramid Systems a high end Unix manufacturer. Prior to Pyramid Systems Dick started his career with the Burroughs Corporation as an entry-level sales person progressing over 17 years in a variety of sales management positions. Dick graduated from Syracuse University in 1974. "Dick is an unbelievably strong operations guy, who we are fortunate to bring in at this stage in the restructuring of the company" Wayne Taylor, SiVault Systems Chief Financial Officer said. Mr. Moore stated, "I am very pleased to be involved with SiVault during this transition. I believe my background and experience along with my competitive intensity will assist in reshaping SiVault into a growth company delivering shareholder value." About SiVault Systems SiVault Systems, Inc., fka Security Biometrics, Inc. -- http://www.sivault.com/-- provides products and services for the secure authentication, processing, storage and retrieval of signature-based medical, financial and retail electronic transactions and documents. Going Concern Doubt As reported in the Troubled Company Reporter on May 1, 2006, Miller, Ellin & Company, LLP, in New York, raised substantial doubt about SiVault Systems, Inc., fka Security Biometrics, Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended June 30, 2004, and 2005. The auditor pointed to the company's significant operating losses since inception and working capital deficiency. SOLUTIA INC: Gets Court Nod to Amend & Assume Linde Gas Contracts ----------------------------------------------------------------- Solutia Inc. and its debtors-affiliates obtained permission from the U.S. Bankruptcy Court for the Southern District of New York to enter into an Assumption Agreement, assume the Linde Gas Contracts, and disallow and expunge Claim No. 416. As reported in the Troubled Company Reporter on June 26, 2006, Solutia Inc. has two contracts related to operations of its facility in Decatur, Alabama, with Linde Gas LLC: (i) a Hydrogen Supply Agreement dated Aug. 28, 1997, between Solutia, as assignee of Monsanto Company, and Linde Gas, as successor to Lagus Corporation; and (ii) a Carbon Dioxide Sales Agreement dated August 6, 2003, between Solutia and Linde Gas, as successor to Linde Gas, Inc. Solutia purchases hydrogen to produce hexamethylenediamine, which it needs to manufacture nylon, and sells the carbon dioxide produced during the HMD production. Linde Gas built a $20,000,000 hydrogen production facility at Solutia's Decatur Facility and operates it pursuant to a lease and operating agreement with Solutia. Because, Linde Gas provides hydrogen at cost, Solutia pays for the hydrogen below the market prices charged by other hydrogen producers, Jonathan S. Henes, Esq., at Kirkland & Ellis LLP, in New York, told the Court. Under the CO2 Sales Agreement, Solutia sells the carbon dioxide produced during the HMD production to Linde Gas. Solutia could not sell the carbon dioxide to other parties without incurring significant costs associated with liquifying and transporting the gas, Mr. Henes related. Linde Gas filed Claim No. 416, dated June 30, 2004, against Solutia asserting a general unsecured claim for $238,315 for amounts allegedly owed by Solutia under the Hydrogen Supply Agreement prior to the bankruptcy filing. In addition, various disputes arising out of performance, payment, applicable covenants and other obligations under the Linde Gas Contracts exist between the two parties. Assumption Agreement Recognizing the importance of their relationship, Solutia and Linde Gas entered into negotiations to resolve their disputes, including the Claim, and any applicable cure amounts associated with the assumption of the Linde Gas Contracts. In February 2006, the parties entered into an Assumption Amendment and Waiver Agreement, pursuant to which the Hydrogen Supply Agreement will be amended to, among other things: (i) grant Linde Gas a right to extend the term of the Supply Agreement for another four years upon at least 24 months written notice to Solutia; and (ii) clarify that Solutia's option to purchase the Linde Hydrogen Facility is only triggered in circumstances where Linde Gas fails to perform its obligations under the Supply Agreement. The parties also agree that: -- the Linde Gas Contracts, as amended, will be assumed; -- Claim No. 416 will be disallowed and expunged in its entirety; and -- Linde Gas will waive any applicable claims for cure costs resulting from the assumption of the Linde Gas Contracts. Mr. Henes tells the Court that: (a) the Hydrogen Supply Agreement is the most cost-effective method through which Solutia can fill its hydrogen requirements for its Decatur Facility at below market prices; (b) the assumption of the CO2 Agreement will ensure that Solutia continues to receive substantial revenue; and (c) the Assumption Agreement will enable Solutia to preserve liquidity and consensually resolve the various outstanding disputes and claims relating to the Linde Gas Contracts. 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 December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., at Kirkland & Ellis. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. (Solutia Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 215/945-7000) SOLUTIA INC: Can Amend and Assume Saint Gobain Agreement -------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York granted Solutia Inc. and its debtor-affiliates' request to amend its agreement, dated Jan. 1, 2003, with Saint Gobain Glass France SA. Pursuant to the Agreement, Solutia was granted rights with respect to Saint Gobain-owned patents related to acoustic interlayers and glazings. At the time the parties entered into the Agreement, Saint Gobain was in the process of negotiating licenses for the Patents with various customers that manufactured acoustic glazing products for automotive applications. Under the Agreement, Solutia was authorized to manufacture and sell acoustic interlayers to the customers. Saint Gobain waived its rights to allege or assert patent infringement against Solutia relating to these products. In exchange for its freedom of operation under the Patents, Solutia was required to make royalty payments to Saint Gobain. The royalty payments were to be calculated based on the production and sale of certain laminated glass glazing products by the customers, which utilized Solutia's acoustic interlayer in a manner within the scope of the Patents. A dispute arose when Saint Gobain began invoicing Solutia in November 2004 for royalty payments that Solutia refused to pay because it contends that no glazing product produced and sold by the customers falls within the scope of the Patents, Jonathan S. Henes, Esq., at Kirkland & Ellis LLP, in New York, relates. Saint Gobain, according to Mr. Henes, threatened to sue Solutia to collect royalty payments alleged to be due both before and after Solutia's bankruptcy filing. Prior to Dec. 17, 2003, Saint Gobain has invoiced Solutia for $140,321, including the $60,443 asserted in Saint Gobain's Claim No. 5636, for payments allegedly owed by Solutia under the original Agreement. Solutia disputed the claim in its entirety. Amendment Agreement To resolve their disputes, Solutia and Saint Gobain entered into settlement negotiations that led to their First Amendment and Settlement and Release Agreement. The parties agree to replace the complex, formula-based royalty provisions with a lump sum royalty amount payable in annual installments. Solutia will make make: (a) three equal payments on or before: * five days following approval of the Amended Agreement; * Dec. 31, 2006; * Dec. 31, 2007; and (b) one final payment of a lesser amount to be made on or before Dec. 31, 2008. The Debtors redacted the Lump Sum Royalty Amount and other confidential items from the Amendment Agreement filed with the Court. In addition, the Amendment Agreement: -- provides for fully paid-up rights under the Patents that are perpetual and irrevocable and extend for the full term of the Agreement; and -- amends other terms relating to Saint Gobain's offering, negotiation, and granting of licenses to any customers to whom Solutia intends to sell acoustic interlayers and who are not currently party to the license agreement. Mr. Henes asserts that the fixed total payment schedule under the Amendment Agreement provides Solutia these benefits: (1) It resolves the current dispute over the Claim and the Disputed Amount allegedly due under the Agreement; (2) It eliminates the need for costly litigation with a major customer regarding any current and future royalty disputes under the Agreement; (3) The Amendment Agreement enables Solutia to maintain a continued profitable relationship with Saint Gobain; (4) Solutia's profitability will be enhanced since its costs under the Agreement will remain stable; and (5) Saint Gobain will waive any cure amounts in connection with the assumption of the Agreement, aside from the Amendment Payments. 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 December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., at Kirkland & Ellis. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. (Solutia Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 215/945-7000) SOLUTIA INC: Gets Court Nod to Amend & Assume Ammonia Supply Pact ----------------------------------------------------------------- Solutia, Inc., and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the Southern District of New York to enter into a Claim Agreement that amends and assumes the Ammonia Supply Agreement. As reported in the Troubled Company Reporter on June 23, 2006, as part of the examination and analysis of their prepetition contracts, the Debtors reviewed an ammonia sales and exchange agreement dated March 30, 1998, between Solutia Inc. and El Paso Merchant Energy-Petroleum Company, formerly known as Coastal Refining & Marketing, Inc. Solutia buys ammonia for its facility in Chocolate Bayou, Texas, which produces acrylonitrile needed in the manufacture of nylon. The facility has no ammonia storage on site and no cost-effective alternatives for delivery other than through El Paso's pipeline system, Jonathan S. Henes, Esq., at Kirkland & Ellis LLP, in New York, relates. Under the Ammonia Supply Agreement, Solutia is obligated to buy the first 10,000 tons of ammonia required for use by the Chocolate Bayou facility each month from El Paso. The pricing for the first 5,000 tons is based on a set formula and the pricing for the next 5,000 tons is calculated by discounting the market price for ammonia. In the event less than 10,000 tons of ammonia are required for that month, Solutia is not obligated to pay for any shortfall. If the Chocolate Bayou facility requires more than 10,000 tons of ammonia in a given month, Solutia may purchase it from a third party producer located in Freeport, Texas. El Paso is required to transport the purchased ammonia via its pipeline connected to the third party's terminal. El Paso's delivery fee, which is substantially below market rates, will not increase for the term of the Ammonia Supply Agreement. Thus, the Agreement is favorable to Solutia both with respect to the supply component and the delivery component, Mr. Henes points out. El Paso asserts unsecured Claim No. 1264 for $3,630,261 on account of outstanding invoices allegedly due prepetition from Solutia under the Ammonia Supply Agreement. On the other hand, Solutia asserts a claim against El Paso for certain damages relating to a 27-day ammonia pipeline outage that caused a shutdown of one unit at the Chocolate Bayou facility during September and October 2004. On Dec. 12, 2005, Solutia filed Adversary Proceeding No. 05-0334 against El Paso for the avoidance and recovery of preferential transfers totaling $6,778,396. Claim Agreement On Dec. 1, 2005, El Paso completed the sale of certain assets, including the ammonia pipeline system and the Ammonia Supply Agreement, to Buckeye Gulf Coast Pipe Lines, L.P. In connection with the sale of the pipeline assets, El Paso requested that Solutia not only assume the Ammonia Supply Agreement but also consent to the sale of the Agreement to Buckeye. The request led to extensive negotiations, the result of which was the resolution of El Paso's Claim and Solutia's Outage Claim, and Solutia's agreement to assume the Ammonia Supply Agreement. Pursuant to the Claim Agreement: (a) El Paso's Claim No. 1264 will be reduced and allowed as a general unsecured claim for $2,600,000; (b) the Outage Claim and all related claims, including any claim for cure amounts that El Paso may have with respect to the assumption of the Ammonia Supply Agreement, will be released; (c) Solutia will withdraw the Preference Action; and (d) Solutia will consent to El Paso's assignment of the Ammonia Supply Agreement to Buckeye. El Paso will waive any claim for outstanding prepetition amounts due under the Ammonia Supply Agreement in exchange for the allowance of Claim No. 1264. Mr. Henes asserts that entry into the Claim Agreement is in the estate's best interest because: (1) it provides a favorable resolution of the outstanding claims between the parties; (2) it secures a critical source of ammonia supply and transportation at below market prices; (3) it will conserve cash for Solutia's estate since El Paso agreed to reduce the amount of its Claim and waive its right to a cure payment; and (4) Solutia will avoid the cost and expense associated with litigating its disputes with El Paso while preserving the value of the Ammonia Supply Agreement. 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 December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., at Kirkland & Ellis. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. (Solutia Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 215/945-7000) SOUTHAVEN POWER: Gets Court Nod to Amend DIP Credit Agreement ------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of North Carolina authorized Southaven Power, LLC, to amend its DIP Credit Agreement with Calyon New York Branch. Existing DIP Financing On June 9, 2005, the Court approved the Debtor's DIP Credit Agreement with Calyon, acting as Administrative Agent. The DIP credit agreement authorized the Debtor to secure up to $25 million in loans from Calyon. As security for the repayment of the loans, the Debtor granted the DIP Agent and the DIP Lenders liens and claims for substantially all of its assets. The DIP Credit Agreement expired on June 30, 2006. DIP Amendment No. 2 Under the DIP Credit Agreement, the amendment will: 1) extend the maturity date of the agreement from June 30, 2006 to Sept. 30, 2007; 2) eliminate the existing $15 million sublimit applicable to working capital loans; and 3) require the Debtor to pay an amendment fee of $375,000. The Debtor believes that the DIP Amendment is in the best interest of its estate and its creditors, and will preserve the value for all stakeholders in this chapter 11 case. Headquartered in Charlotte, North Carolina, Southaven Power, LLC, operates an 810-megawatt, natural gas-fired electric power plant located in Southaven, Mississippi. The Company filed for chapter 11 protection on May 20, 2005 (Bankr. W.D.N.C. Case No. 05-32141). Mark A. Broude, Esq., at Latham & Watkins LLP represents the Debtor in its restructuring efforts, and Hillary B. Crabtree, Esq., at Moore & Van Allen, PLLC, represents the Debtor in litigation against PG&E Energy Trading-Power, L.P. To date, no official committee of unsecured creditors has been appointed in the Debtor's case. Erie Power Technologies, Inc. and Centro Inc., have expressed interest in serving on an official committee. No other creditors have indicated their interest or willingness, and the U.S. Bankruptcy Administrator for the Western District of North Carolina won't appoint a two-member committee. When the Debtor filed for protection from its creditors, it estimated assets and debts of more than $100 million. SOUTHAVEN POWER: Court Extends Plan-Filing Period to Jan. 15, 2007 ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Western District of North Carolina extended Southaven Power, LLC's exclusive period to file a chapter 11 plan until Jan. 15, 2007. The Court also extended the Debtor's exclusive period to solicit acceptances of that plan until March 12, 2007. As reported in the Troubled Company Reporter on Nov. 30, 2005, the most important asset in the Debtor's estate is the ongoing arbitration against PG&E Energy Trading-Power, L.P., nka NEGT Energy Trading - Power, L.P. The arbitration relates to a Dependable Capacity and Conversion Services Agreement dated June 1, 2000, with ET Power. ET Power's obligations under the Agreement were partially guaranteed by its parent, PG&E National Energy Group, nka National Energy & Gas Transmission, Inc. ET Power filed a lawsuit asserting an $8 million breach of contract claim against the Debtor. In turn, the Debtor asserted a $500 million rejection damage claim against ET Power and a $176.2 million claim against NEGT, as guarantor. The litigation was subject to an arbitration proceeding scheduled for Oct. 17 to Oct. 28, 2005. The Debtor explained that although the arbitration proceeding took place on schedule, it was not concluded. The hearings were scheduled to resume on Feb. 6 to Feb. 24, 2006. The Debtor said the arbitration may not be concluded until the end of May 2006. The Debtor disclosed that until the arbitration proceeding is resolved, it has no way to determine the value of its assets and thus cannot determine which creditors are entitled to share. The Debtor said that it is impossible to file a plan of reorganization until the arbitration proceeding is resolved. Headquartered in Charlotte, North Carolina, Southaven Power, LLC, operates an 810-megawatt, natural gas-fired electric power plant located in Southaven, Mississippi. The Company filed for chapter 11 protection on May 20, 2005 (Bankr. W.D.N.C. Case No. 05-32141). Mark A. Broude, Esq., at Latham & Watkins LLP represents the Debtor in its restructuring efforts, and Hillary B. Crabtree, Esq., at Moore & Van Allen, PLLC, represents the Debtor in litigation against PG&E Energy Trading-Power, L.P. To date, no official committee of unsecured creditors has been appointed in the Debtor's case. Erie Power Technologies, Inc. and Centro Inc., have expressed interest in serving on an official committee. No other creditors have indicated their interest or willingness, and the U.S. Bankruptcy Administrator for the Western District of North Carolina won't appoint a two-member committee. When the Debtor filed for protection from its creditors, it estimated assets and debts of more than $100 million. STRATUS SERVICES: Completes Activities for Staffing Unit Sale ------------------------------------------------------------- Stratus Services Group, Inc., the SMARTSolutions(R) Company, has completed the trailing activities associated with the sale of the assets of its commercial staffing units. The Company spent considerable time, money and effort in the collection of the receivables for its senior lender, which has now been paid in full. Through the first four months of the year, the Company spent a substantial amount of its time and resources on the proper disposition of its assets to make the transition as smooth as possible. Joseph J. Raymond, Chairman and CEO, commented: "The work and strain on our limited resources associated with the disposition of the assets and old banking relationships is substantially behind us. The Company will continue dealing with the old creditor issues, but as for the operation our turnaround is in full effect. We have been spending considerable time towards growing our new business model. The Company believes that the higher margins associated with the IT business, which is not as sensitive to workers' compensation risks, is a great platform for it to rebuild in the staffing industry, and we will continue to keep the shareholders apprised of our progress." Headquartered in Manalapan, New Jersey, Stratus Services Group Inc. (OTCBB: SSVG.OB) -- http://www.stratusservices.com/-- provides a wide range of staffing and productivity consulting services nationally through a network of offices located throughout the United States. At March 31, 2006, the Company had a stockholders' deficiency of $8,321,043. Going Concern Doubt E. Randall Gruber, CPA, PC, expressed substantial doubt about Stratus Services' ability to continue as a going concern after it audited the Company's financial statements for the year ended Sept. 30, 2005. The auditing firm pointed to the Company's recurring losses from operations, and working capital deficit. TENET HEALTHCARE: Gets $340 Million from Katrina Insurers --------------------------------------------------------- Tenet Healthcare Corporation reached agreement with its 2005-2006 property insurers to settle all claims related to physical damage and business interruption sustained by Tenet as a result of Hurricane Katrina. The insurers will pay Tenet a total of $340 million, all of which has been received by the company as of July 6, 2006. On Aug. 29, 2005, when Hurricane Katrina made landfall, Tenet operated five hospitals in the New Orleans market and one in Biloxi, Mississipi, as well as five Diagnostic Imaging Services outpatient radiology centers and other support property in New Orleans. All the facilities sustained significant storm damage. At Memorial Medical Center and Lindy Boggs Medical Center, the damage was so extensive that those two hospitals have not been able to reopen. Tenet said that resolution of its claims avoided a potential dispute, which could have taken months or years to resolve. The settlement is one of the first major commercial property insurance settlements resulting from Hurricane Katrina damage. "Instead of engaging in a protracted resolution process with our insurers, we sat down with them and worked out a collaborative and equitable settlement that permits us to move forward after the devastation of Katrina," said Trevor Fetter, Tenet's president and chief executive officer. "By settling this matter quickly, we have avoided the disagreements and differences over interpretation that can occur in insurance claims of this magnitude and complexity. As provided in our contracts, this also gives us the flexibility to apply these funds to meet the company's overall capital needs." The settlement is being paid by various interested insurers who underwrote Tenet's property insurance in 2005-2006. The company said $240 million of the settlement will be recorded in the second quarter ended June 30. The other $100 million was recorded in previous quarters. Before Katrina hit, Tenet's operating hospitals in Louisiana and Mississippi were: * Kenner Regional Medical Center, 203 beds -- Kenner, Louisiana * Lindy Boggs Medical Center, 187 beds -- New Orleans * Meadowcrest Hospital, 207 beds - Gretna, Louisiana * Memorial Medical Center, 317 beds - New Orleans * NorthShore Regional Medical Center, 165 beds -- Slidell, Louisiana * Gulf Coast Medical Center, 189 beds -- Biloxi, Mississippi (On May 31, Tenet completed the sale of this hospital to Health Management Associates Inc.) On June 29, the company reported its intention to divest Kenner, Lindy Boggs, Meadowcrest and Memorial by mid-2007. About Tenet Based in Dallas, Texas Tenet Healthcare Corporation (NYSE: THC) -- http://www.tenethealth.com/-- through its subsidiaries, owns and operates acute care hospitals and related health care services. Tenet's hospitals aim to provide the best possible care to every patient who comes through their doors, with a clear focus on quality and service. * * * As reported in the Troubled Company Reporter on July 4, 2006, In light of the announcement of the settlement of investigations being conducted by the Department of Justice and a number of State Attorneys into Medicare outlier payments, Fitch Ratings affirmed 'B-' issuer default rating and 'B-/RR4' senior unsecured debt recovery rating for Tenet Healthcare Corp., with a Negative Rating Outlook. U.S. CONCRETE: Buying Two Companies for $165 Million ---------------------------------------------------- U.S. Concrete, Inc., has signed a stock purchase agreement to acquire all of the outstanding capital stock of Alberta Investments, Inc., and Alliance Haulers, Inc., for $165 million, subject to specified adjustments. The closing of the acquisition is subject to customary conditions. U.S. Concrete expects to complete the acquisition in early July 2006. Alberta Investments owns two subsidiaries through which it conducts the substantial majority of its operations: Redi-Mix, L.P. and Ingram Enterprises, L.P. Redi-Mix operates 13 ready- mixed concrete plants in the Dallas/Fort Worth Metroplex and in areas north of the Metroplex. Ingram Enterprises operates 17 ready-mixed concrete plants and three sand and gravel plants in West Texas. Redi-Mix and Ingram operate a combined fleet of approximately 310 mixer trucks and produced approximately 2.4 million cubic yards of ready-mixed concrete and 1.2 million tons of aggregates in 2005. Alliance Haulers provides cement and aggregates hauling services with a fleet of approximately 260 hauling trucks owned by Redi-Mix and third-party haulers. For the twelve months ended March 31, 2006, Alberta Investments and Alliance Haulers generated revenues of approximately $181 million. "The acquisition of Alberta Investments and Alliance Haulers would represent a significant expansion of our overall business and particularly of our operations in the Dallas/Fort Worth Metroplex, one of the leading markets in the U.S.," Eugene P. Martineau, president and chief executive officer of U.S. Concrete, stated. "The acquisition would also provide us with a strong position in the West Texas ready-mixed concrete market and includes a complement of aggregates operations with substantial reserves. In addition to acquiring an excellent base of additional assets, we are excited about the outstanding management team associated with these assets, which we believe will add value to U.S. Concrete." In connection with the transaction, U.S. Concrete intends to enter into an amendment and restatement of its senior secured credit facility. U.S. Concrete Inc. (NASDAQ: RMIX) -- http://www.us-concrete.com/ -- provides ready-mixed concrete and related concrete products and services to the construction industry in several major markets in the United States. The Company has 106 fixed and seven portable ready-mixed concrete plants, 10 pre-cast concrete plants, three concrete block plants and three aggregates quarries. During 2005, these facilities produced approximately 6.6 million cubic yards of ready-mixed concrete, 5.3 million eight-inch equivalent block units and 1.9 million tons of aggregates. * * * As reported in the Troubled Company Reporter on June 20, 2006, Standard & Poor's Ratings Services revised its outlook on Houston, Texas-based U.S. Concrete Inc. to positive from stable and affirmed its 'B+' corporate credit rating. U.S. CONCRETE: Initiates Private Offer for $75 Mil. Senior Notes --------------------------------------------------------------- U.S. Concrete, Inc. has commenced a private placement of $75 million of its 8-3/8% senior subordinated notes due 2014. The notes are expected to be eligible for resale under Rule 144A. The private placement, which is subject to market and other conditions, will be made within the United States only to qualified institutional buyers and outside the United States only to non-U.S. investors under Regulation S of the Securities Act of 1933. U.S. Concrete intends to use the net proceeds from the offering to fund a portion of the purchase price of its pending acquisition of Alberta Investments, Inc. and Alliance Haulers, Inc. The note offering is conditioned on the closing of that acquisition. U.S. Concrete Inc. (NASDAQ: RMIX) -- http://www.us-concrete.com/ -- provides ready-mixed concrete and related concrete products and services to the construction industry in several major markets in the United States. The Company has 106 fixed and seven portable ready-mixed concrete plants, 10 pre-cast concrete plants, three concrete block plants and three aggregates quarries. During 2005, these facilities produced approximately 6.6 million cubic yards of ready-mixed concrete, 5.3 million eight-inch equivalent block units and 1.9 million tons of aggregates. * * * As reported in the Troubled Company Reporter on June 20, 2006, Standard & Poor's Ratings Services revised its outlook on Houston, Texas-based U.S. Concrete Inc. to positive from stable and affirmed its 'B+' corporate credit rating. U.S. ENERGY: Posts $2 Million Net Loss in Quarter Ended March 31 ---------------------------------------------------------------- U.S. Energy Initiatives Corporation reported a $2,031,118 net loss on $168,100 of revenues for the period ended March 31, 2006. At March 31, 2006, the Company's balance sheet showed $3,479,087 in total assets and $5,253,177 in total liabilities, resulting in a $1,774,090 shareholders' deficit. The Company's March 31 balance sheet also showed strained liquidity with $2,002,657 in total current assets available to pay $5,253,177 in total current liabilities coming due within the next 12 months. Full-text copies of the Company's financial statements are available for free at http://ResearchArchives.com/t/s?d1b U.S. Energy Initiatives Corporation fka Hybrid Fuel Systems, Inc. (OTCBB: HYFS) manufactures and markets retrofit systems for the conversion of gasoline and diesel engines, stationary or vehicular, to non-petroleum based fuels like compressed natural gas and liquefied natural gas. The Company holds a worldwide exclusive license to commercialize the technology embodied in five issued and one pending US patent. The Company currently offers HFS dual-fuel conversion system designed to convert medium and heavy-duty mobile diesel engines to operate in a natural gas/diesel dual-fuel mode. VALASSIS COMMS: To Acquire ADVO Inc. for $1.3 Billion ----------------------------------------------------- Valassis Communications, Inc., entered into a definitive merger agreement with ADVO Inc., under which it will acquire all of the outstanding common shares of ADVO stock for $37 per share in cash in a merger. The fully financed transaction is valued at $1.3 billion (on a diluted basis), including $125 million in existing ADVO debt which Valassis expects to refinance. This acquisition will create the nation's largest integrated media services provider. The combination will feature the most comprehensive product and customer offering in the industry serving 20,000 advertisers worldwide, including 94 of the top 100 advertisers in the United States. The combined company will be positioned to capture growth across the expanded product and service portfolio, delivering customized, targeted solutions on a national, regional, zip code, sub-zip code and household basis. ADVO's shared mail distribution business penetrates up to 114 million households, or 90% of U.S. homes, adding substantially to Valassis' weekly newspaper distribution of over 60 million households. The combined company will have 7,900 employees with operations in nine countries. "Together, Valassis and ADVO will be well positioned for growth as a more diversified company with complementary capabilities, product offerings and clients," said Alan F. Schultz, Valassis Chairman, President and CEO. "We will have an unsurpassed ability to deliver value and savings to consumers where, when and how they want -- and to do so with advanced analytics and targeting capabilities that maximize advertisers' return on investment. This combination is a first in the media services industry and uniquely positions us to capture growth by anticipating the needs of the marketplace and evolving to meet them." "Advertisers' needs are becoming increasingly sophisticated and require solutions that are both scalable and customized," S. Scott Harding, ADVO Chief Executive Officer, added. "Our new company will deliver on these requirements with an unrivaled portfolio of products, leadership across multiple media platforms, proven targeting expertise and unmatched reach. In today's media world, that is an undeniably attractive combination." "We are very pleased to welcome ADVO into the Valassis family," Mr. Schultz continued. "This is an exciting opportunity for employees, clients and shareholders." Transaction Overview Valassis expects the transaction to be accretive in 2007 on a cash EPS basis, excluding estimated amortization of intangibles arising from purchase accounting. Annual cost synergies of approximately $40 million are anticipated to be achieved beginning in 2007. The combined company expects revenue of approximately $2.65 billion in calendar year 2007. EBITDA in 2007 for the combined company is anticipated to be between $305 million and $315 million. The combined company will be headquartered in Livonia, Michigan, and maintain a substantial presence in Windsor, Connecticut. Mr. Schultz will remain Chairman, President and Chief Executive Officer and Mr. Robert L. Recchia will remain Chief Financial Officer. Mr. Harding will serve as a consultant to the combined company. The Valassis Board of Directors will remain intact. The merger agreement, which has been approved by the Boards of Directors of both companies, remains subject to the approval of ADVO shareholders, regulatory approvals and other customary conditions. The transaction is expected to close in three to four months. Valassis' financial advisors are Bear, Stearns&Co. Inc., who also provided committed financing for the transaction, with McDermott Will&Emery LLP as legal counsel. ADVO's financial advisors are Citigroup Global Markets, Inc. with Wachtell, Lipton, Rosen&Katz and Kirkpatrick&Lockhart Nicholson Graham LLP as legal counsel. About ADVO Inc. Headquartered in Windsor, Connecticut, ADVO, Inc., a direct mail media company, engages in soliciting and processing printed advertising from retailers, manufacturers, and service companies in the United States and Canada. It offers direct mail marketing products and services, such as shared mail, which provides the addresses of the households receiving the mail packages; and sorts, processes, and transports the advertising material for ultimate delivery primarily through the United States Postal Service. About Valassis Headquartered in Livonia, Michigan, Valassis Communications Inc. -- http://www.valassis.com/-- offers a wide range of marketing services to consumer packaged goods manufacturers, retailers, technology companies and other customers with operations in the United States, Europe, Mexico and Canada. * * * As reported in the Troubled Company Reporter on June 29, 2006, Standard & Poor's Ratings Services lowered its ratings on Livonia, Michigan-headquartered marketing services provider Valassis Communications Inc. to 'BB+' from 'BBB-', and placed them on CreditWatch with negative implications. VARIG S.A.: Preliminary Injunction in Effect Until July 21 ---------------------------------------------------------- The Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York has extended the preliminary injunction for VARIG S.A. and its debtor-affiliates until July 21, 2006, Executive Travel Associates reports. The U.S. Court directed Eduardo Zerwes, the court-appointed Foreign Representative for the Debtors to submit a revised proposed order detailing the airline's plans as it seeks another buyer, ETA says. Mr. Zerwes had presented another reason for the U.S. Court to extend the preliminary injunction for a short period of time. Rick B. Antonoff, Esq., at Pillsbury Winthrop Shaw Pittman LLP, in New York, tells Judge Drain that VARIG Logistica S.A., the former cargo and logistics affiliate of the Foreign Debtors that was sold to Volo Logistics Brasil, an entity partially controlled by MatlinPatterson Global Advisors LLP, made a proposal to acquire VARIG's assets on June 23, 2006. The VarigLog Proposal has not yet been accepted by the Commercial Bankruptcy and Reorganization Court in Rio de Janeiro, Brazil. The VarigLog Proposal provides for the infusion of up to $20,000,000 in emergency funds and up to $485,000,000 in additional funding based on a timetable contained in a business plan. The Proposal contemplates the transfer of 30 leased aircraft. VarigLog's representatives also are in discussions with various VARIG lessors to accomplish a consensual transfer of the Foreign Debtors' rights under the relevant lease agreements, as well as their consent to permit the Foreign Debtors to continue to operate, or otherwise retain, aircraft pending completion of the sale to VarigLog or other successful bidder under the terms of the VarigLog Proposal. The existence of the VarigLog Proposal does not affect the Foreign Debtors' voluntary implementation of the Contingency Return Plan with respect to any aircraft leased under operating leases where the lessor has made a formal demand for the return of aircraft, Mr. Antonoff clarifies. To preserve the Foreign Debtors' going concern value during the pendency of the VarigLog Proposal, Mr. Antonoff says the Foreign Debtors have requested VarigLog to promptly identify which aircraft it seeks to retain in the VARIG fleet and to obtain consent from the lessors to retain those aircraft. However, the Foreign Debtors will continue to implement the Contingency Return Plan with respect to aircraft under operating leases whose return has been formally demanded, Mr. Antonoff assures the Court. Furthermore, to the extent that aircraft are now grounded and in the custody of VARIG Engineering and Maintenance, the Foreign Debtors have notified and instructed VEM not to remove or permit the removal of parts other than for the purpose of returning parts to their proper airframe and normal maintenance. A full-text copy of the certified English translation of the VarigLog Proposal is available for free at http://ResearchArchives.com/t/s?d36 Trustees Plea for Court to Protect Lessors U.S. Bank National Association, Wells Fargo Bank Northwest, N.A., and Wells Fargo Bank Northwest, N.A., as aircraft trustees, insist that the Preliminary Injunction should be allowed to expire so they may take actions necessary to protect their interests in the Aircraft and seek immediate implementation of the Contingency Plan at least as to their Aircraft. "It is time for [the U.S.] Court to protect the U.S. aircraft lessors," Ann Acker, Esq., at Chapman and Cutler LLP, in Chicago, Illinois, says. If there is something to save with VARIG -- a deal to be made -- it should be left to the aircraft lessors and the economics of the market, Ms. Acker asserts. Ms. Acker reminds Judge Drain that VARIG had promised the U.S. Court, and the aircraft lessors, that if the $75,000,000 was not deposited by NVP on June 23, 2006, VARIG would "continue, essentially, the implementation of the contingency return plan by grounding the remaining aircraft that are operating and performing its other obligations under the contingency return plan." Ms. Acker also points out that the Court conditioned continuation of the Preliminary Injunction and non-implementation of the Contingency Return Plan on (i) VARIG allowing the lessors access to their aircraft so that the lessors could provide their own security; and (ii) VARIG's assembling and preparing the steps necessary to return not only grounded aircraft, but other aircraft as well. The $75,000,000 was not deposited, however, the Contingency Plan has not been implemented. The Foreign Debtors owe more than $8,618,477 in basic and supplemental rent for the leased U.S. Bank and Wells Fargo Aircraft through June 23, 2006, not including the Lessors' fees and expenses Lessors. The U.S. Bank Aircraft have been grounded since March 2006, or earlier, and no payments have been made on either Aircraft for March, April, May or June 2006. Aircraft SPC Snubs Volo Offer The Court should give little, if any, weight to Volo's bid, Michael Luskin, Esq., at Luskin, Stern & Eisler LLP, in New York, argues on Aircraft SPC-6, Inc.'s behalf. Mr. Luskin points out that MatlinPatterson and Volo have had two opportunities to purchase VARIG, first, in the "Plan A" sale presented by the Foreign Representatives at the April 27, 2006 hearing and again at the auction held June 8, 2006. According to Mr. Luskin, Volo has yet to demonstrate a commitment to curing postpetition payment and maintenance defaults. MatlinPatterson's "Plan A" offer centered on a fleet cherry-picked from the best aircraft VARIG had to offer without consideration for the wishes of the Lessors. Aircraft SPC-6 leases one Boeing 737-4YO aircraft to VARIG together with two CFM International, Inc. CFM56-3C1, pursuant to a four- year lease dated as of April 2, 2004. VARIG owes Aircraft SPC-6 $364,375 in postpetition rent, maintenance reserves and other payments. The debt increases by $125,000 per month, according to Mr. Luskin. "Unless MatlinPatterson and Volo present credible evidence of sincerity to move expeditiously and in a manner which does not prejudice any lessor, neither VARIG, the foreign representative nor the Court should delay the Contingency Return Plan based on Volo's reported interest," Mr. Luskin contends. "The Court must require the Foreign Representatives to face reality and begin returning aircraft to the Lessors. Each hearing before the Court has resulted in the Court's granting the foreign representatives' request for extended relief - a few days or a few weeks, depending on the hearing. As the Lessors have time and again predicted, all of VARIG's expected breaks have resulted in disappointment." Mr. Luskin also points out that VARIG's fuel crisis has escalated. The airline has operated on credit to Petrobas for jet fuel for some time, and that Petrobas will cut VARIG's credit at any day, if it has not done so already. It would be imprudent to convert the preliminary injunction to a permanent injunction at this time, Mr. Luskin says. No Lessor should be forced to deal with any buyer of VARIG which does not demonstrate a commitment to the Lessors, Mr. Luskin tells Judge Drain. 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. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000) VARIG S.A.: Brazilian Court Sets New Auction Date for Assets ------------------------------------------------------------ VARIG, S.A., is back on the auction block after Judge Luiz Roberto Ayoub of the 8th District Bankruptcy Court in Rio de Janeiro, Brazil, scheduled a new auction of its assets. According to published reports, the auction will take place after a meeting of VARIG's creditors on July 10, 2006, to consider Volo Logistics Brasil's $500,000,000 offer. The auction will be held on July 12, 2006, The Associated Press says. Macauhub.com reports that the airline will be auctioned off on July 11. Volo acquired VARIG's cargo transport unit, Varig Logistica S.A. in January 2006. Volo have been extending help to keep VARIG running. As previously reported, Volo gave VARIG more than $3,000,000 on June 26, 2006, so the airline could pay its bills and avert a shutdown. Volo made another deposit on July 4, 2006, to guarantee VARIG's cash flow for another 24 hours, according to Investnews (Brazil). The amount was not disclosed. Since June 28, Volo had already deposited $4.8 million, Investnews says. Macauhub.com says the funds will be returned, together with a 10% premium, if Volo lose out in the auction. Cinzel Will Bid for VARIG The Cinzel Partners fund has created a consortium of investors to come up with a $600,000,000 bid for VARIG, Investnews reports. O Estado de Sao Paulo says the Cinzel consortium will submit its proposal to Judge Ayoub before the July 10 creditors meeting. Roberto Lima Netto, former president of Brazilian steel maker Companhia Siderurgica Nacional and representative of Cinzel, told Estado that the consortium intends to acquire as much as 30% of VARIG's operations. According to Estado, Cinzel will allow the airline's employees to acquire the 20% while the remainder would be sold in a public offering. 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. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000) VESTA INSURANCE: Moody's Junks Rating on Senior Debt ---------------------------------------------------- Moody's Investors Service lowered the senior debt rating of Vesta Insurance Group to C from B3 and the trust preferred rating of Vesta Capital Trust I to C from Caa2. This rating action follows the company's announcement on July 3, 2006 that six of its insurance subsidiaries had been placed into court-ordered rehabilitation in Texas and that the company's two other insurance subsidiaries have consented to entry of similar orders in other regulatory jurisdictions. The company believes that the placement of its subsidiaries into rehabilitation constitutes a default under the terms of its long term debt securities. The outlook on the ratings is stable. Moody's said that Vesta's ability to service and repay its holding company debt obligations appears to be severely strained due to: 1) the likely acceleration of the remaining approximately $70 million of debt securities outstanding given the technical default status, 2) inability of Vesta Fire Insurance Corporation to provide statutory dividend capacity given its large negative unassigned surplus position, and 3) potential adverse impact on cash flow from management companies due to possible regulator cancellation or modification of service agreements between the operating subsidiaries and the management companies. Moody's also noted that the placement of the company's operating subsidiaries into regulatory rehabilitation, coupled with delays in filing of 2005 financials, will likely place substantial strain on the company's business and its continuing efforts to implement strategic options. Further, the likely adverse impact on the company's business prospects is a potential source of adverse selection within Vesta's hurricane-exposed residential portfolio of business. In 2005, the company incurred significant storm losses of $91 million and $36 million, gross and net, respectively. Commenting on the potential loss given default for the senior debt and capital securities, Moody's said that there is much uncertainty and limited information about the value of the insurance subsidiaries to the holding company given they are now under regulatory supervision and about the assets currently at the holding company given the company hasn't filed GAAP financial statements with the SEC for 2005. The last rating action occurred on August 12, 2005, when Moody's downgraded the ratings of Vesta Insurance Group and Vesta Capital Trust I and changed the outlook to negative. Vesta Insurance Group writes homeowners primarily in Florida, Texas, the Northeast, and Hawaii, and automobile insurance primarily in West Virginia and Pennsylvania. For the quarter ended March 31, 2006, Vesta Fire Insurance Corporation reported net premiums earned of $30.1 million and net income of $3.3 million. As of March 31, 2006, statutory surplus for Vesta Fire Insurance Corporation was $83 million. WERNER LADDER: Gets Court Nod to Pay Priority Vendor Claims ----------------------------------------------------------- Werner Holding Co. (DE), Inc., aka Werner Ladder Company, and its debtor-affiliates obtained permission from the U.S. Bankruptcy Court for the District of Delaware to pay, in the ordinary course of business, the prepetition claims of suppliers and vendors entitled to administrative priority under Sections 503(b)(9) and 507(a)(2) of the Bankruptcy Code. The Court orders the Debtors to pay the critical vendors' claims, which should not exceed $2,000,000 in the aggregate. In the ordinary course of the Debtors' businesses, numerous priority suppliers and vendors provide the Debtors with goods that are essential to their sustained operations. If the suppliers and vendors are not paid in the ordinary course on account of their claims, the suppliers and vendors may discontinue their supply of goods to the Debtors after the Petition Date. Any delay or disruption in the flow of goods to the Debtors could result in an immediate shutdown of their businesses. Larry V. Friend, vice president, chief financial officer and treasurer of Werner Holding Co., Inc., relates that the Debtors will condition the payment of priority vendor claims on the agreement of individual vendors to continue supplying goods to the Debtors on the customary trade terms that the vendors provided to the Debtors on a historical basis prior to the Petition Date. The Debtors will pay the priority vendors under the terms of a proposed trade agreement to be approved by the Court and sent to each vendor for execution. The Debtors propose that each trade agreement will include: (1) The amount of the relevant priority vendor's estimated priority claims; that amount will be used only for determining the vendor's claim under the Court's order and will not be deemed an allowed claim by the Court, and the rights of all interested persons objecting to the claim will be fully preserved until further Court order; (2) The customary trade terms applicable to the priority vendor, or other terms as the vendor and the Debtors may agree on, and the vendor's agreement to provide goods or services to the Debtors pursuant to the terms for a period of at least 18 months from the date of the trade agreement; (3) The priority vendor's agreement not to file or assert any lien or reclamation claim against the Debtors and their estates, regardless of the statute or other legal authority upon which the lien or reclamation claim may be asserted, related in any way to any remaining prepetition amounts allegedly owed to the vendor by the Debtors arising from agreements or other arrangements entered prior to the Petition Date, and to the extent the vendor has already obtained or asserted the lien or reclamation claim, the vendor will take the necessary actions to remove the lien or withdraw the reclamation claim; (4) The priority vendor's acknowledgement that it has reviewed the terms and provisions of the proposed Court order; and (5) the priority vendor's agreement that it will not separately seek payment for reclamation claims outside the terms of the proposed Court order unless the vendor's participation in the program to pay vendor claims pursuant to the order is terminated. The Debtors also propose that any trade agreement terminated as a result of the vendor's refusal to comply with the agreement's terms may be reinstated if: (1) the underlying default under the trade agreement is fully cured by the vendor not more than five days following the Debtors' notification to the vendor of the default; and (2) the Debtors reach a favorable alternative agreement with the priority vendor. The Debtors also seek the Court's authority to pay the priority vendor claims even if they are not reasonably able to achieve a trade agreement with the relevant vendor if the Debtors determine that failure to pay the claims will result in irreparable harm to their business operations. Headquartered in Greenville, Pennsylvania, Werner Co. -- http://www.wernerladder.com/-- manufactures and distributes ladders, climbing equipment and ladder accessories. The company and three of its affiliates filed for chapter 11 protection on June 12, 2006 (Bankr. D. Del. Case No. 06-10578). Kara Hammond Coyle, Esq., Matthew Barry Lunn, Esq., and Robert S. Brady, Esq., Young, Conaway, Stargatt & Taylor, LLP, serves as the Debtors' counsel. The firm of Willkie Farr & Gallagher LLP represents the Debtors as its co-counsel. The Debtors have retained Rothschild Inc. as their financial advisor and investment banker. At March 31, 2006, the Debtors reported total assets of $201,042,000 and total debts of $473,447,000. (Werner Ladder Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) WERNER LADDER: Gets Court Nod to Pay Critical Vendor Claims ----------------------------------------------------------- The U.S. Bankruptcy Court of the District of Delaware authorized Werner Holding Co. (DE), Inc., aka Werner Ladder Company, and its debtor-affiliates to pay, in the ordinary course of business, up to $6,800,000 to the Critical Vendors. To maintain the high quality standards of climbing products that the Debtors manufacture, they rely on a number of discrete critical vendors who provide them with critical goods and services, including whole goods, components, raw materials and mechanical and administrative services. The Debtors also rely heavily on foreign vendors that supply goods and services that are crucial to their ongoing operations. The critical vendors are the only source of certain goods for the Debtors' products and the goods cannot be immediately replicated with goods from other suppliers or vendors. If the Debtors don't pay their critical vendors, the vendors could refuse to provide goods or services to the Debtors that would have immediate and adverse affect to the Debtors' businesses. The Debtors have 44 Critical Vendors out of a total vendor population of between 1,000 and 5,000. Larry V. Friend, vice president, chief financial officer and treasurer of Werner Holding Co., Inc., relates that the Debtors propose to condition the payment of critical vendor claims on the agreement of individual vendors to continue supplying goods to the Debtors on the customary trade terms that the vendors provided to the Debtors on a historical basis prior to the Petition Date. The Debtors will pay the critical vendors under the terms of a proposed trade agreement to be approved by the Court and sent to each vendor for execution. The Debtors propose that each trade agreement will include: (1) The amount of the relevant critical vendor's estimated critical claims; that amount will be used only for determining the vendor's claim under the Court's order and will not be deemed an allowed claim by the Court and the rights of all interested persons objecting to the claim will be fully preserved until further Court order; (2) The customary trade terms applicable to the critical vendor, or other terms as the vendor and the Debtors may agree on, and the vendor's agreement to provide goods or services to the Debtors pursuant to the terms for a period of at least 18 months from the date of the trade agreement; (3) The critical vendor's agreement not to file or assert any lien or reclamation claim against the Debtors and their estates, regardless of the statute or other legal authority upon which the lien or reclamation claim may be asserted, related in any way to any remaining prepetition amounts allegedly owed to the vendor by the Debtors arising from agreements or other arrangements entered prior to the Petition Date, and to the extent the vendor has already obtained or asserted the lien or reclamation claim, the vendor will take the necessary actions to remove the lien or withdraw the reclamation claim; (4) The critical vendor's acknowledgement that it has reviewed the terms and provisions of the proposed Court order; and (5) The critical vendor's agreement that it will not separately seek payment for reclamation claims outside the terms of the proposed Court order unless the vendor's participation in the program to pay vendor claims pursuant to the order is terminated. The Debtors also propose that any trade agreement terminated as a result of the vendor's refusal to comply with the agreement's terms may be reinstated if: (1) the underlying default under the trade agreement is fully cured by the vendor not more than five days following the Debtors' notification to the vendor of the default; and (2) the Debtors reach a favorable alternative agreement with the critical vendor. Headquartered in Greenville, Pennsylvania, Werner Co. -- http://www.wernerladder.com/-- manufactures and distributes ladders, climbing equipment and ladder accessories. The company and three of its affiliates filed for chapter 11 protection on June 12, 2006 (Bankr. D. Del. Case No. 06-10578). Kara Hammond Coyle, Esq., Matthew Barry Lunn, Esq., and Robert S. Brady, Esq., Young, Conaway, Stargatt & Taylor, LLP, serves as the Debtors' counsel. The firm of Willkie Farr & Gallagher LLP represents the Debtors as its co-counsel. The Debtors have retained Rothschild Inc. as their financial advisor and investment banker. At March 31, 2006, the Debtors reported total assets of $201,042,000 and total debts of $473,447,000. (Werner Ladder Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) WERNER LADDER: Wants to Employ Ordinary Course Professionals ------------------------------------------------------------ Werner Holding Co. (DE), Inc., aka Werner Ladder Company, and its debtor-affiliates ask authority from the U.S. Bankruptcy Court for the District of Delaware to retain the Ordinary Course Professionals in the ordinary course of business without submitting separate retention applications and the issuance of orders approving the retention of each individual professional. Prior to June 12, 2006, the Petition Date, the Debtors retained a number of professionals who provided services that are important to their day-to-day operations. The Ordinary Course Professionals provide services to the Debtors with regards to product liability litigation, contract disputes, labor issues, employee benefits and maintenance of intellectual property rights. Retention of the Ordinary Course Professionals is essential to avoid any disruption in the Debtors' day-to-day business operations, Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, LLP, in Wilmington, Delaware, tells the Court. Since the amount of fees to be paid to the Ordinary Course Professionals is relatively small, retention of the Professionals will allow the Debtors to avoid any additional fees that would be incurred by the Professionals in connection with preparing and prosecuting numerous interim fee applications. The Debtors assure the Court that: (1) each Ordinary Course Professional will have a $40,000 monthly fee cap and all Ordinary Course Professionals will have a $150,000 total monthly fee cap; (2) none of the Ordinary Course Professionals represents any interest adverse to the Debtors or their estates; and (3) each Ordinary Course Professional will be required to file an affidavit of disinterestedness and copies of the affidavit will be served to the Debtors, the United States Trustee, the counsel to the agent for the Debtors' prepetition and postpetition secured lenders, and the Unsecured Creditors Committee's counsel. The Ordinary Course Professionals to be retained by the Debtors are: Professionals Providing Product Liability Advice ------------------------------------------------ Arnett, Draper and Hagood Barr, Murman Tonelli Slother & Sleet, P.A. Barrett, Lazar & Lincoln, LLC Beason Willingham LLP Brown & James, P.C Butt, Thornton & Baehr, P.C. Campbell, Campbell, Edwards & Conroy Christian & Small, LLP Deutsch, Kerrigan & Stiles, LLP Dickie, McCamey & Chilcote, P.C. Ewbank & Byrom, P.C. Foliart, Huff, Ottaway & Bottom Gieger, Laborde & Laperouse, LLC Hall, Rodgers, Gaylord, Millikan & Croom, PLLC Hardin, Jesson & Terry, PLC Hoover Hull LLP Howd & Ludorf, LLC Koeller, Nebeker, Carlson & Haluck, LLP Lathrop & Gage L.C. Law Offices of David W. Kloss Law Offices of Robert Buckley Lee, Smart, Cook, Martin & Patterson, P.S., Inc. Lemons, Grundy & Eisenberg, P.C. Locke, Liddell & Sapp, LLP Mansour, Gavin, Gerlack & Manes Co., L.P.A. Melito & Adolfsen P.C. Murphy and O'Connor Nelson Mullins Riley & Scarborough, LLP Shaw, Terhar & LaMontagne LLP Stephenson & Dickinson Swift, Currie, McGhee & Hiers, LLP Vogel, Weir, Hunke & McCormick, Ltd. Watkins & Eager PLLC Wyatt, Tarrant & Combs, LLP Professionals Providing Various Services: ----------------------------------------- Firm Services ---- -------- Ladas & Parry LLP Intellectual Property Schwartz, Ansel Intellectual Property Baker & McKenzie Intellectual Property, International and Commercial Tax Barr & Shaffer Workers' Compensation Cohen & Grigsby P.C. Corporate, Labor, Real Estate and Litigation Dryden, Margoles, Schimaneek & Wertz Labor, Litigation and Product Liability Gibson, Dunn & Cruteher LLP Corporate Howrey LLP CPSC, Administrative and Government Jones & Ayers, LLC Labor and Litigation, Workers' Compensation McDermott, Will & Emery LLP Intellectual Property and Antitrust Schnader, Harrison, Segal & Lewis LLP Labor and Litigation The Benefits Department Benefits Tribler Orpett & Meyer, P.C. Labor, Litigation and Product Liability Headquartered in Greenville, Pennsylvania, Werner Co. -- http://www.wernerladder.com/-- manufactures and distributes ladders, climbing equipment and ladder accessories. The company and three of its affiliates filed for chapter 11 protection on June 12, 2006 (Bankr. D. Del. Case No. 06-10578). Kara Hammond Coyle, Esq., Matthew Barry Lunn, Esq., and Robert S. Brady, Esq., Young, Conaway, Stargatt & Taylor, LLP, serves as the Debtors' counsel. The firm of Willkie Farr & Gallagher LLP represents the Debtors as its co-counsel. The Debtors have retained Rothschild Inc. as their financial advisor and investment banker. At March 31, 2006, the Debtors reported total assets of $201,042,000 and total debts of $473,447,000. (Werner Ladder Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000) WINN-DIXIE: Court Okays Rejection of Libman Company Supply Pact --------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida authorized Winn-Dixie Stores, Inc., and its debtor-affiliates to reject, effective as of June 30, 2006, its supply agreement dated as of Dec. 5, 2002, with The Libman Company. The Bankruptcy Court also approved the resolution of Libman's claims, including Libman's waiver of all claims for damages arising from the rejection of the Prepetition Supply Agreement and all other claims -- except for a scheduled unsecured claim for $100,722 and any unpaid postpetition invoices -- it has or may have had against the Debtors. As reported in the Troubled Company Reporter on June 26, 2006, the Debtors have for several years purchased cleaning tools -- stickgoods and smallwares -- from Libman. Although the Debtors want to continue their relationship with Libman, the terms of the Prepetition Supply Agreement are no longer feasible, due, in part, to the reduction in the Debtors' store count. In particular, the Prepetition Supply Agreement requires the Debtors to offer Libman's products in 950 stores and obligates the Debtors to purchase at least 35% of its cleaning products from Libman until net sales reached $4,500,000. The Debtors want to continue their relationship with Libman on more favorable terms under a new ordinary course agreement. Libman has agreed to this approach, with a specific waiver of all claims -- except for a scheduled unsecured claim for $100,722 and any unpaid postpetition invoices -- it has or may have had against the Debtors, including claims for rejection damages. In addition, Libman has agreed that the new agreement, which will take effect upon the rejection of the Prepetition Supply Agreement, may be terminated by the Debtors without liability in the event the Debtors' Chapter 11 plan of reorganization is not confirmed or does not become effective. "By rejecting the Prepetition Supply Agreement in favor of a new agreement with Libman, the Debtors will avoid the burdensome obligation of the $4,500,000 volume requirement as well as the incurrence of a significant rejection damage claim, and will be able to continue offering Libman's products to their customers on terms that better reflect the current and future needs of their operating stores," Cynthia C. Jackson, Esq., at Smith Hulsey & Busey, in Jacksonville, Florida, said. 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. 42; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Wants to Reject Two Grocery Stores Leases ----------------------------------------------------- Pursuant to Rule 3002(c)(4) of the Federal Rules of Bankruptcy Procedure and Section 365(a) of the Bankruptcy Code, Winn-Dixie Stores, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Middle District of Florida to: (i) approve the rejection of two non-residential real property leases; and (ii) establish the deadline for the landlords to file rejection damage claims to 30 days after entry of an order approving the rejection. In November 1997, Winn-Dixie Raleigh, Inc., and Gem Cedar, LLC, entered into a lease for Store No. 997. Under the terms of the lease, Winn-Dixie pays the Gem Cedar $503,782 annual rent. Winn-Dixie subleased the premises to Cornerstone Christian Church in August 2002. Under the Sublease, Cornerstone agreed to pay Winn-Dixie monthly rent at graduated rates between $8,298 and $23,744. According to Cynthia C. Jackson, Esq., at Smith Hulsey & Busey, in Jacksonville, Florida, Cornerstone was in substantial default under the Sublease and has stopped paying any rent since the Debtors' bankruptcy filing. Cornerstone failed to cure the default and Winn-Dixie terminated the Sublease effective March 14, 2006. As of the termination date, Cornerstone owes Winn-Dixie nearly $405,780 in back rent. Ms. Jackson relates that the Store 997 Lease is no longer within the continuing footprint of the Debtors. By rejecting the Lease, the Debtors will save nearly $500,000 a year and terminate liability for administrative rental expenses. In addition, Winn-Dixie Louisiana, Inc., a predecessor in interest to Winn-Dixie Montgomery, Inc., and James S. Henderson and Maybeline S. Henderson are parties to a lease dated Nov. 11, 1970. The Lease relates to Store No. 1361 located in Greenwood, Mississippi. Before the Debtors filed for bankruptcy, the Lease was assigned to WV, Inc. The document evidencing the WV Assignment Agreement did not release Winn-Dixie from its obligations under the Lease if WV defaults, Ms. Jackson discloses. On May 24, 2006, the Hendersons notified the Debtors of WV's default and informed them that WV had vacated the premises. The Hendersons also alleged that Winn-Dixie remains liable to them under the Lease. Ms. Jackson asserts that the Store 1361 Lease or any related documents, including a separate guarantee, provide no tangible benefit to the Debtors' estates or creditors. By rejecting the Lease, the Debtors will ensure that: (a) any continuing obligations allegedly arising under the Lease or the related documents will cease and be treated as prepetition obligations; and (b) rejection damage claims filed by the Landlord will be addressed through the claims reconciliation process. 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. 42; Bankruptcy Creditors' Service, Inc., 215/945-7000). WORLDCOM INC: Trustee Will Accept Bids in Columbus Lumber Interest ------------------------------------------------------------------ Development Specialists, Inc., as Trustee, pursuant to a Trust that was created under a settlement agreement In re: WorldCom, Inc., Securities Litigation 02-Civ. 3288 (S.D.N.Y.), will accept bids to purchase membership interests in Columbus Lumber, LLC, on July 17, 2006, 2:00 p.m., at the offices of: Burr & Forman, LLP 401 East Capitol Street, Suite 100 Jackson, MS 39201 Columbus Lumber's primary business contains a southern yellow pine sawmill operation including a log yard, wet yard, sawmill equipment, planer mill, material handling equipment, kilns, a wood treating facility, rolling rock, sheds and buildings all situated on approx. 91 acres of property. Assets also include inventory of timber tracts, logs, lumber and accounts receivable. The Trustee has received a qualified bid of $17.7 million, less certain long-term debts of approximately $3.1 million as of Dec. 31, 2005, for a net bid of $14.6 million. Any competing bids must be at least $18.5 million, less that debt, or net of $15.4 million, in cash, and include terms that are equal to or better than the terms within the initial bid. Bidders must make an initial deposit of $1,543,000 to be considered as a qualified bidder, and must post a cashier's check or wire transfer with the Trustee five days prior to the sale. Parties interested in receiving a bid package, conducting due diligence or viewing the property and submitting offer for the property must contact the Trustee's counsel, Burr & Forman LLP, and the Trustee's representatives: Development Specialists, Inc. Attn: Brian C. Weepie 70 West Madison Street, Suite 2300 Chicago, IL 60602 Tel: (312) 263-4141 Fax: (312) 263-1180 -- and -- Development Specialists, Inc. Attn: Joseph J.Luzinski 200 South Biscayne Boulevard, Suite 1818 Miami, FL 33131 Tel: (305) 374-2717 Fax: (305) 374-2717 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 Oct. 31, 2003, and on Apr. 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. WORLD HEALTH: Wants Chapter 11 Cases Converted to Chapter 7 ----------------------------------------------------------- World Health Alternatives, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to convert their chapter 11 cases to chapter 7 liquidation proceedings. The Debtors explain that engaging in a plan process will unnecessarily deplete the Debtors' limited assets and will not result in any economic benefit for the estates. Instead, the Debtors believe that the interests of the estates are best served by the conversion of these chapter 11 cases to chapter 7 proceedings so that the Debtors' remaining assets can be effectively liquidated and distributed to stakeholders. As reported in the Troubled Company Reporter on May 3, 2006, the Debtors completed the sale of all their assets to Jackson Healthcare Staffing, LLC, an affiliate of Jackson Healthcare Solutions, LLC, for a purchase price of approximately $43 million in cash plus the assumption of certain liabilities, including liabilities to retained employees and staffing professionals. The purchase price was sufficient to pay in full the secured debts owed to CapitalSource Finance, LLC, and generated an additional $1.35 million in sale proceeds, which are being held in escrow by the Debtors. They believe that the escrow fund is sufficient to cover all postpetition professional fees incurred on or prior to the closing of the sale of the Debtors' assets. In addition, the Debtors have causes of action against third parties under their directors and officers insurance policies, with an approximate $5-million face value, that should be pursued for the benefits of the estates. 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. Lawyers at Young, Conaway, Stargatt & Taylor, LLP, represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets and debts between $50 million and $100 million. WORLD HEALTH: Panel Poses Limited Objection to Ch. 7 Conversion --------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in World Health Alternatives, Inc., and its debtor-affiliates' chapter 11 cases, objects to: a) the request of the U.S. Trustee for directing the appointment a chapter 11 Trustee or, alternatively, converting the Debtors' cases to chapter 7 liquidation proceedings; and b) the Debtors' motion to convert their cases to proceedings under chapter 7 of the Bankruptcy Code. Letter Agreement and Approval Motion On April 21, 2006, the Debtors, along with the Committee and CapitalSource Finance, LLC, entered into a Letter Agreement giving the Committee the right to pursue certain claims, causes of action and recoveries on behalf of the Debtors' estates. The Letter Agreement also provided for CapitalSource's payment of a $1.6 million, carved out from its lien, for the Debtors' general unsecured creditors. Limited Objection Pauline K. Morgan, Esq., at Young, Conaway, Stargatt & Taylor, LLP, tells the U.S. Bankruptcy Court for the District of Delaware that while the Committee would have preferred the cases to remain in chapter 11 so that it could have pursued the estate Causes of Action, as contemplated by the Letter Agreement, the Committee recognizes the Debtors' right to convert the cases under Section 1112(a) of the Bankruptcy Code. Accordingly, the Committee limits its objection to a request that the Court delay converting the cases to chapter 7 until after the Debtors' request to approve the Letter Agreement with CapitalSource has been decided and effectuated. If the Approval Motion is granted, Ms. Morgan says, the Committee submits that the effective date of conversion be delayed until after the Collateral Carve-Out is paid. 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. Lawyers at Young, Conaway, Stargatt & Taylor, LLP, represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets and debts between $50 million and $100 million. ZOOMERS HOLDING: Court Denies Request for DIP Financing ------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida denied Zoomers Holding Company, LLC's request to obtain debtor-in- possession financing from D'Alessandro Equity Funding, Inc. The Court did not state reasons behind its decision to deny the Debtor's request. As reported in the Troubled Company Reporter on May 31, 2006, D'Alessandro agreed to lend the Debtor up to $3,500,000. The Debtor will pay the loan by executing a promissory note on a 24-month term and accruing interest on unpaid note balance at the annual rate of 12.49%. The Note would be secured by a first lien against all of the Debtor's real property. The loan will be guaranteed by the Debtor's manager, Ronald Heromin, and will prime existing first lien holder, Florida Community Bank. The Debtor told the Court that it failed to obtain better financing terms from other sources. The Debtor said it will use the loan, among others, to: -- payoff all construction liens on its property and its outstanding construction indebtedness; -- provide additional funds to complete the construction of its family amusement park in Southwest Florida; -- provide working capital for approximately six months to be able to commence operations at the Park and develop an operational record; -- pay officers' compensation; and -- pay for the administrative costs of its chapter 11 case. Headquartered in Osprey, Florida, Zoomers Holding Company, LLC, filed for chapter 11 protection on Apr. 28, 2006 (Bankr. M.D. Fla. Case No. 06-02008). Richard Johnston, Jr., Esq., at Kiesel Hughes & Johnston, represents the Debtor. No Official Committee of Unsecured Creditors has been appointed in this. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. * Buchanan & Klett Rooney Team-Up Creates Powerhouse Bankr. Group ----------------------------------------------------------------- The combination of Buchanan Ingersoll P.C. with Klett Rooney has resulted in a new powerhouse bankruptcy and creditor's rights group of over 36 attorneys along the East Coast. Buchanan Ingersoll is one of the largest full service law firms in the country and Klett Rooney is a 130-attorney firm with offices that mirror much of Buchanan's existing footprint in cities that include Philadelphia, Harrisburg, Pittsburgh and Wilmington, Delaware. In total, approximately 250 Klett Rooney attorneys, government affairs professionals and staff members will join Buchanan. The new group includes nationally known leaders such as William Schorling and Louis DeLucia, as well as Wall Street "go to" attorneys like Bill O'Connor and Terri Currier. Most law firms seek out local counsel with respect to big bankruptcy cases filed in Manhattan and Wilmington, Delaware. The firm will have the unique ability to act as true New York and Delaware firms in both jurisdictions, allowing their clients better access to those courts on a more efficient basis. Bill O'Connor, together with his colleague, Susan Persichilli, has represented many major investment banks in matters such as Global Crossing and World Com. Louis DeLucia is responsible for the pre-packaged plan in the Ranch One bankruptcy and represented bondholder's committee in Conseco, the largest Chapter 11 bankruptcy filed to date. Bill Schorling, a dean of the national bankruptcy bar, is known for his intellectual creativity in cases such as In Re Matlack and Printing Arts. Terri Currier, a leader of the Delaware bankruptcy bar, is considered a "lawyer's lawyer" whose counsel is sought by other bankruptcy lawyers from across the country. She is well known for her current representation of the equity committee in the pending W.R. Grace Chapter 11 bankruptcy. This union between Buchanan Ingersoll P.C. and Klett Rooney forming Buchanan Ingersoll & Rooney, will likely boost the firm to become one of the 80 largest law firms in the United States, with combined gross revenues of $265 million and a head count of more than 550 attorneys and government relations professionals across the country. * BOOK REVIEW: Shark Tank: Greed, Politics, and the Collapse of Finley Kumble, One of America's Largest Law Firms ---------------------------------------------------------------- Author: Kim Isaac Eisler Publisher: Beard Books Paperback: 256 Pages List Price: $34.95 Order your personal copy at http://amazon.com/exec/obidos/ASIN/1587982382/internetbankrupt Affirming that facts can be more engaging than fiction, this book portrays the spellbinding story of the rise and fall of the law firm Finley, Kumble, Wagner, Heine, Underberg, Manley, Myerson & Casey. Formed in the late '70s with the belief that a corporate client would need only one law firm if it had branches in other cities, it became the largest law firm in the nation. Gobbling up small law firms and stealing lawyers and clients from rivals, it began the era of the megafirm as it grew to 250 partners, 450 associates and attorneys of counsel, and 1,000 support people. This is the inside account of the clash of personalities, the ruthlessness, the double-crossing, and the strategies which eventually led to the firm shooting itself in the foot and its ultimate demise. This book is must reading for every attorney, as well as for those interested in how the legal profession has been transformed from its provincial early days to today's supersized, dominant law firms. ********* 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, Robert Max Victor M. Quiblat II, Shimero R. Jainga, Joel Anthony G. 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 ***