/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/060815.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, August 15, 2006, Vol. 10, No. 193 Headlines ADELPHIA COMMS: Can Implement Post-Closing Incentive Program ADELPHIA COMMS: Court OKs Local Franchising Settlement Procedures ADVANCED VENDING: Case Summary & 20 Largest Unsecured Creditors AFFILIATED COMPUTER: Fitch Initiates Coverage with Low-B Ratings ALL CAPS: Case Summary & 4 Largest Unsecured Creditors ALLIED HOLDINGS: Court Approves Assumption of BOA and GECC Leases ANDREW CORP: 3rd Quarter 2006 Net Income Narrows to $7 Million AMERICAN G.I.: Case Summary & Nine Largest Unsecured Creditors ARAMARK CORPORATION: Board Declares Quarterly Cash Dividend ASARCO LLC: 3 Parties Object Tax Refund Deposit in Escrow Account ASARCO LLC: AMC Wants to Compel Decision on Tax Sharing Agreement ASIA PREMIUM: March 31 Balance Sheet Upside-Down by $2.7 Million ATARI INC: Posts $7.1MM Net Loss in 1st Fiscal Qtr. Ended June 30 ATLANTIC MUTUAL: A.M. Best Withdraws CCC Rating on $100 Mil. Note B/E AEROSPACE: Acquires NY Fasteners for $68 Million in Cash B/E AEROSPACE: S&P Rates Proposed $450 Million Secured Loan at BB+ BARBARA LOCKWOOD: Case Summary & 12 Largest Unsecured Creditors BEACON CULTURAL: Case Summary & 12 Largest Unsecured Creditors BERNARD MCCLELLAN: Case Summary & 20 Largest Unsecured Creditors BIOENVELOP TECH: Defaults Under QSET's $1.7 Million Debentures CA INC: To Cut 1,700 Jobs to Gain $200 Million Annualized Savings CALHOUN CARPET: Case Summary & 20 Largest Unsecured Creditors CALPINE CORP: Taps Watson Wyatt as Human Resource Consultant CALPINE CORP: Wants Davis Wright to Handle Immigration Matters CAMERA PLATFORMS: March 31 Balance Sheet Upside-Down by $2.2 Mil. CATHOLIC CHURCH: Morning Star Opposes ACE Insurers Settlement Pact CATHOLIC CHURCH: Kukuk Farms Balks at Spokane's I-90 Property Sale CENTURYTEL INC: Earns $73.6 Million First Quarter 2006 CENTURY THEATRES: Sells Equity to Cinemark USA for $681 Million CHARLES JACOBS: Case Summary & Four Largest Unsecured Creditors CINCINNATI BELL: June 30 Balance Sheet Upside-Down by $704.7 Mil. CINEMARK INC: To Buy Century Theatres' Equity for $681 Million COI MIDWEST: Files Schedules of Assets and Liabilities COI MIDWEST: Taps Cushman & Wakefield as Real Estate Brokers COLLINS & AIKMAN: Inks Settlement Pact with Magna and GECC COLLINS & AIKMAN: ACT Wants $320,654 Claim Deemed Timely Filed COMPLETE RETREATS: Club Ex-Members Want Refund Payment Secured COMPLETE RETREATS: Panel Says DIP Loan is Low Risk & Oversecured DALE JARRETT: March 31 Balance Sheet Upside-Down by $1 Million DANA CORP: Court Gives Final Okay on Claims Trading Procedures DANA CORPORATION: Wants to Assume Toyota Motor Tooling Agreements DEATH ROW: Chapter 11 Trustee Taps Kaye Scholer as Bankr. Counsel DELPHI CORP: Inks Fifth Amendment to $2 Billion DIP Credit Pact ELINEAR INC: Has Until August 31 to Comply with Amex Listing Rule ELLENSTEIN STORES: Case Summary & 20 Largest Unsecured Creditors EMERSON TRAILERS: Case Summary & 20 Largest Unsecured Creditors EMISPHERE TECH: March 31 Balance Sheet Upside-Down by $26 Million ENTERGY NEW ORLEANS: Plan Filing Period Continued Until Sept. 18 ENTERGY NEW ORLEANS: Wants United National & Norco Pact Approved FTD INC: Resolves False Claims Lawsuit Against Provide Commerce GENTA INC: Incurs $9.8 Million Net Loss in First Quarter 2006 GREENPARK GROUP: Wants Gary Miura to Provide Tax-Related Services HAGERMAN FARMS: Case Summary & Five Largest Unsecured Creditors HART GALLERIES: Case Summary & 20 Largest Unsecured Creditors HCA INC: Moody's Says Leveraged Buyout May Result in Downgrade HEALTHSOUTH CORP: June 30 Balance Sheet Upside-Down by $2 Billion HINES HORTICULTURE: Inks Amendment and Limited Waiver with Lender IIRSA NORTE: S&P Rates $213 Million 8.75% Senior Notes at BB IIRSA NORTE: Toll Road Concession Prompts Fitch's BB Rating INTRAWEST CORP: Moody's Holds Low-B Ratings with Negative Outlook INTRAWEST CORP: Fortress Merger Deal Cues S&P's Negative Watch J.P. MORGAN: S&P Holds Low-B Ratings on Class F & G Certificates KENTUCKY GOLD: Case Summary & 20 Largest Unsecured Creditors KULLMAN INDUSTRIES: Disclosure Statement Hearing Set on Aug. 24 L-3 COMMUNICATIONS: Net Income Down by $69.6 Mil. in 2nd Quarter LAIDLAW INT'L: Inks New $500MM Term Loan to Fund Self-Tender Offer LB-UBS: Fitch Cuts Rating on $9.8 Million Class K Certs. to BB LE GOURMET: Organizational Meeting Set at 2:00 p.m. Tomorrow LEHMAN BROTHERS: Narrow Business Scope Cues Fitch's B Rating LOOMIS COMMUNITIES: Good Financial Profile Cues S&P to Up Ratings MAGUIRE PROPERTIES: Completes $485 Million Funding for Gas Company MARCHFIRST INC: Oracle's Late-Filed Proof of Claim Won't be Paid MARTY MCDANIEL: Case Summary & 19 Largest Unsecured Creditors MARY POINTE: Case Summary & Two Largest Unsecured Creditors MCKESSON CORP: Earns $184 Million in First Quarter Ended June 30 MID-SOUTH DOOR: Case Summary & 20 Largest Unsecured Creditors MOVIE GALLERY: Hires Turnaround Experts Amidst Flagging Sales N-STAR REAL: Fitch Holds BB Rating on $15 Million Class D Notes NAPIER ENVIRONMENTAL: Lenders Waive July Interest Payments NETRA SYSTEMS: Case Summary & 20 Largest Unsecured Creditors NEWPARK RESOURCES: S&P Rates Proposed $150 Mil. Senior Loan at BB- NOVELIS INC: Lenders Extend Waiver Period Until Sept. 18 OLD SOUTH: Case Summary & Five Largest Unsecured Creditors OMNICARE INC: Reports $8.4 Mil. Net Income in Second Quarter 2006 ORTHOFIX INTERNATIONAL: Earns $12.7 Million in 2006 Second Quarter PARMALAT USA: Objects to Sun Co. and NY Finance Dept. Claims PARMALAT USA: Asks Court to Extend Claims Objection Deadline PENN NATIONAL: To Amend Purchase Agreement With Mohegan Tribal PENN TRAFFIC: Lenders Further Extend Financials Release Deadline PHOTOWORKS INC: Employs Andrew Wood as President and CEO PHOTOWORKS INC: June 30 Balance Sheet Upside-Down by $2.3 Million PLAYTEX PRODUCTS: Reduced Leverage Cues S&P to Lift Rating to B+ QUANTA CAPITAL: Posts $42.9 Million Net Loss in 2nd Quarter REAL ESTATE: Files for Bankruptcy; Hotel not in Danger of Closing REAL ESTATE: Voluntary Chapter 11 Case Summary REFCO INC: Chap. 11 Trustee Hires Conyers Dill as Bermuda Counsel REFCO INC: Ch. 7 Trustee Has Until Sept. 12 to Decide on Contracts RESOURCE REAL: Fitch Holds Low-B Ratings on $43.12 Mil. Notes REVLON CONSUMER: Incurs $85.2 Million Net Loss in Second Quarter RICHARD ROWELLA: Case Summary & 5 Largest Unsecured Creditors RIVERSTONE NETWORKS: Court Approves Revised Disclosure Statement ROSAMOND LAND: Case Summary & Largest Unsecured Creditor ROTECH HEALTHCARE: Moody's Junks $300 Million Sr. Notes' Rating SEA CONTAINERS: Restructuring Program Continues as Planned SEA CONTAINERS: S&P Holds Negative Watch on Junk Rating SAINT VINCENTS: Court Approves Sun Life Escrow Agreement Changes SAINT VINCENTS: Court Approves Settlement Pact with Curevax STARBOUND RE: S&P Lifts Rating on $91 Million Senior Bank Loan STEVE'S SHOES: Court Sets Disclosure Statement Hearing on Sept. 11 SUFFIELD CLO: Fitch Affirms Low-B Ratings on $16.9 Million Notes THE REYNOLDS: Moody's May Withdraw Ba1 Ratings on Merger Closing TOP CONSTRUCTION: Case Summary & 20 Largest Unsecured Creditors UTILITY CRAFT: Get Court Nod on Nexsen Pruet as Bankruptcy Counsel WARD PRODUCTS: Case Summary & 20 Largest Unsecured Creditors WARNACO GROUP: To Restate Financial Statements for FY 2005 & 2006 WEST VIRGINIA CONSUMERS: Case Summary & 4 Unsecured Creditors WESTERLY HOSPITAL: S&P Cuts Rating on Series 1994 Bonds to BB WILLIAM LAUGHERY: Case Summary & 20 Largest Unsecured Creditors WINN-DIXIE: Wants to Sell Seven Florida Stores & Equipment WINN-DIXIE: Wants to Sell Harahan Warehouse Facility to Ackel YUKOS OIL: Court to Decide on Bankruptcy Legitimacy on Aug. 23 YUKOS OIL: Appellate Court Reduces Tax Claims by $1.6 Billion * Large Companies with Insolvent Balance Sheets ********* ADELPHIA COMMS: Can Implement Post-Closing Incentive Program ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York allowed Adelphia Communications Corporation and its debtor- affiliates to implement a post-closing incentive program to ensure that certain key employees will continue their employment with the Debtors through a transition and wind-down period. Upon consummation of the sale of substantially all of the Debtor's assets to Time Warner NY Cable, LLC, and to Comcast Corporation, the ACOM Debtors' cable operations will largely cease, Shelley C. Chapman, Esq., at Willkie Farr & Gallagher LLP, in New York, told the Court. Accordingly, on the closing date of the Sale, the ACOM Debtors intend to terminate approximately 98% of their workforce. However, the ACOM Debtors will need to retain key personnel in order to continue administering their estates and preserve value for stakeholders. Out of the ACOM Debtors' 13,500 employees, approximately 275 employees will be asked to remain with ACOM to handle important accounting, tax, administrative, and financial matters, Ms. Chapman disclosed. According to Ms. Chapman, most of the Key Transition Employees have irreplaceable institutional knowledge of matters and projects within their particular expertise, including, among other things, oversight and assistance with the audit, the restatement, claims reconciliation, compliance with the post- close requirements under the asset purchase agreements, the government settlement, and the completion of certain tax filings. Ms. Chapman noted that thousands of employees have continued their employment with the ACOM Debtors during the reorganization due, in large part, to their loyalty to senior management. Given that the tasks are critical, time sensitive, and, for the most part, required by applicable law, the ACOM Debtors need to ensure that the Key Transition Employees remain with ACOM until those tasks are complete, or, in some cases, until transition can be made to a new administrative team, Ms. Chapman asserted. Ms. Chapman noted that the Key Transition Employees, who have been so critical to the monumental effort for the ACOM Debtors' Chapter 11 cases, are anxious to move on and are entitled to do so upon the closing of the Sale. "They have been under enormous pressure and strain for extended periods, compounded by the uncertainty inherent in working for years for a company operating in chapter 11 and on the auction block since the spring of 2004." Based on current compensation and benefit entitlements, the Key Transition Employees have little financial incentive to remain in ACOM's employ after the Closing Date. Specifically, the Key Transition Employees will become entitled to receive substantially all of their retention incentives on the Closing Date. Like their colleagues whose employment will terminate upon the close of the Sale, eligible Key Transition Employees will receive their short term and long term incentive bonuses, the first installment of their bonus on the Closing Date and, to the extent they elect to terminate their employment for "good reason," eligible VP Transition Employees -- employees at the Vice President or Senior Vice President level -- may receive severance. If new incentives are not put in place prior to the Closing Date, the ACOM Debtors anticipate that most of the Key Transition Employees will elect to terminate their employment, Ms. Chapman contends. Without the Key Transition Employees in place, the ACOM Debtors stand to lose an enormous resource pool, a loss that imperils the value the ACOM Debtors have worked so hard to preserve, Ms. Chapman said. The Court also authorized the ACOM Debtors to: (a) enter into new employment agreements with certain VP Transition Employees to provide for their day-to-day compensation after the Closing Date; and (b) increase the base compensation of EVPs to provide for their day-to-day compensation after the Closing Date pursuant to new letter agreements. According to Ms. Chapman, the ACOM Debtors currently maintain a compensation structure that is fair to employees, reasonably calculated to preserve, rather than squander, estate assets through the retention of qualified personnel, and comparable to the compensation available to employees in the marketplace. Specifically, the Existing Compensation Programs are: Nature of Compensation Rationale ------------ --------- Base Salary Employees' annual base salaries constitute compensation for the performance of day to day tasks. STIP The Short Term Incentive Plan provides employees with the opportunity to earn an annual bonus, which is tied to the satisfaction of certain predetermined targets. Short term incentives are one of the three elements of an employees' core compensation. For 2006's first seven months, most of the ACOM Debtors' STIP targets were based on metrics that were intended to comply with provisions of the Asset Purchase Agreements with the Buyers. PRP The PRP Awards are intended to replace the long-term incentives provided by the ACOM Debtors' competitors and comparable companies not in Chapter 11. Together with base salary and the STIP, the PRP Awards are a core component of an executives basic compensation, which is designed to ensure that the ACOM Debtors' employees are paid at market rates. Severance Severance benefits -- whether afforded under the ACOM Debtors' Severance Plan or under an employment agreement -- are intended to provide compensation in lieu of employment. Severance is not a retention device. Stay Bonus The Stay Bonus and Sale Bonus were designed to Sale Bonus reflect the unique circumstances of these cases, and specifically intended to encourage certain key managers to: (a) work diligently through the Debtors' dual- track emergence; and (b) remain with the Debtors until the closing of the Sale. The occurrence of the Closing in the context of the Joint Venture Plan for the Century-TCI and Parnassos Debtors has created a new and somewhat unique set of circumstances imposing risk and uncertainty on a subset of the ACOM Debtors' key managers. The Parnassos Debtors are comprised of: * Parnassos Communications, L.P., * Parnassos Distribution Company I, LLC, * Parnassos Distribution Company II, LLC, * Parnassos, L.P., * Parnassos Holdings, LLC, and * Western NY Cablevision, L.P. The Debtors now believe that the Existing Compensation Programs are no longer sufficient to retain the Key Transition Employees, Ms. Chapman said. Closing and Post-Closing Compensation On the Closing Date, all eligible Senior Transition Employees will be paid their 2006 STIP, their PRP Award and 50% of their Sale Bonus. Ms. Chapman clarified that these are not incentives or entitlements that can be altered or utilized as an inducement for the Key Transition Employees to remain with ACOM. Rather, these are entitlements, which have been bargained for, earned, and approved by the ACOM's Board of Directors or the Court, and now must be paid, Ms. Chapman said. The ACOM Debtors anticipate that many, if not all, of the VP Transition Employees will elect to terminate their employment as of the Closing Date for "good reason" and collect their severance and other entitlements. The ACOM Debtors also got Court authority to rehire the VP Transition Employees pursuant to the terms of their New VP/SVP Agreements. The New Employment Agreements will provide that all Senior Transition Employees who remain with the Debtors after the Closing Date will be entitled to earn an adjusted base salary calculated by adding that employee's Base Salary, STIP opportunity and PRP Award opportunity at their target levels. The Adjusted Base Salary will be paid pro rata every two weeks during the course of an employee's post-Sale employment with the ACOM Debtors. The ACOM Debtors estimate that the Adjusted Base Salaries for Senior Transition Employees during the Transition will be approximately $4,000,000 in the aggregate, Ms. Chapman disclosed. With regards to the Directors, the ACOM Debtors will calculate an Adjusted Base Salary for Directors by adding that employee's Base Salary and annual STIP at target level to ensure that the Directors are compensated at market rates during the Transition. The ACOM Debtors estimate that the Adjusted Base Salaries for Directors will be approximately $1,500,000 in the aggregate. According to Ms. Chapman, while those at the Director level and below will not be entitled to a severance payment on the Closing Date, these employees will be given a date certain on which their employment will conclude. If these employees do not voluntarily terminate their employment before the Guaranteed Severance Date, they will automatically be entitled to receive payment under the Severance Plan on that date. A full-text copy of the Post-Closing Employment Agreements is available for free at http://ResearchArchives.com/t/s?e72 Post-Closing Incentive Program According to Ms. Chapman, virtually all employees who remain with the ACOM Debtors after the Closing Date will be entitled to participate in the Post-Closing Incentive Program. Pursuant to the Post-Closing Incentive Program, the ACOM Debtors will advise each employee of the length of time his or her post- Closing Date assignment is expected to last. Upon the Key Transition Employee's eligible separation from ACOM, the employee will be entitled to receive a payment equal to a percentage of that employee's Base Salary -- prior to any STIP or PRP additions to the employee's Adjusted Base Salary -- pro-rated for the number of days in the Assignment Period. If an eligible employee works until the earlier of the end of the Assignment Period, the employee will receive his or her entire bonus under the Post-Closing Incentive Program. To the extent the ACOM Debtors require that employee to remain longer than the Assignment Period, the Debtors will need to negotiate a compensation package with the employee for the rest of their post-close tenure. The total funding of the Post-Closing Incentive Program is estimated to be approximately $5,000,000 and the average bonus to any one employee will be approximately 50% of base salary. A full-text copy of ACOM's Post Closing Incentive Program is available for free at http://ResearchArchives.com/t/s?e73 About Adelphia Communications Based in Coudersport, Pa., Adelphia Communications Corporation (OTC: ADELQ) -- http://www.adelphia.com/-- is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Manged Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision, LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642). Their cases are jointly administered under Adelphia Communications and its debtor-affiliates chapter 11 cases. (Adelphia Bankruptcy News, Issue No. 144; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) ADELPHIA COMMS: Court OKs Local Franchising Settlement Procedures ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York allowed Adelphia Communications Corporation and its debtor- affiliates to enter into settlement agreements with certain local franchising authorities without further Court approval, and upon notice to: -- the Official Committee of Unsecured Creditors, -- the Official Committee of Equity Security Holders, and -- the agents for the prepetition and postpetition lenders. As previously reported, a number of local franchising authorities objected to the ACOM Debtors' proposed assumption and assignment of the franchise agreements to Time Warner NY Cable, LLC, and Comcast Corporation -- the buyers of substantially all of the Debtors' assets. Roger Netzer, Esq., Willkie Farr & Gallagher LLP, in New York, relates that many of the Objections have been resolved, but the Debtors are still negotiating with a small number of the LFAs regarding certain Objections that remain pending. "The Debtors are working expeditiously to craft settlement agreements with the remaining LFAs that will resolve the Objections and allow the transfer of the Franchise Agreements to the Buyers as of the Closing Date or shortly thereafter. However, once [those] agreements have been finalized, rapid approval of [those] compromises is imperative," Mr. Netzer says. Mr. Netzer explains that expedited approval of the Settlement Agreements is necessary because, absent approval of the negotiated resolution of the LFAs' Objections, the Debtors may be unable to transfer the Franchise Agreements to the Buyers on the Closing Date or shortly thereafter. If the Franchise Agreements cannot be transferred in the very near future, the Debtors may be forced to divert estate resources to: (a) attempt to continue to operate under those Franchise Agreements without sufficient personnel or equipment to do so; or (b) reject those Franchise Agreements and satisfy claims brought by the LFAs for damages related to the Debtors' inability to perform their obligations under the Franchise Agreements. Accordingly, the Debtors propose to implement uniform guidelines and procedures with respect to the approval of the Settlement Agreements: (a) The ACOM Debtors will provide notice via fax or e-mail to: -- the Official Committee of Unsecured Creditors, -- the Official Committee of Equity Security Holders, -- the agents for the prepetition and postpetition lenders, and -- the Buyers, of the proposed settlement along with a copy of the Settlement Agreement in substantially final form. (b) If any Constituent objects to the proposed settlement within one business day of service of the Settlement Notice, the Debtors may either: (1) renegotiate the settlement and re-submit a revised Settlement Notice to the Constituents with the revised Settlement Agreement; or (2) file a motion pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure with the Court seeking approval of the existing Settlement Agreement on no less than three days notice. (c) In the absence of an objection to a Settlement Notice within the timeframe, the ACOM Debtors will be deemed authorized to enter into the Settlement Agreement without prior Court approval. (d) Upon deemed approval of a Settlement Agreement, the ACOM Debtors will present to the Court for signature a proposed Order, authorizing the assumption and assignment to the Buyers of the Franchise Agreements that were addressed in the Settlement Agreement. The Settlement Agreement will be annexed as an exhibit to the Assignment Order, and the Assignment Order will be filed under seal. The ACOM Debtors propose that each Assignment Order remain confidential, be filed under seal and be served on and made available only to: (i) the United States Trustee for the Southern District of New York; (ii) the Constituents; (iii) counsel to the LFA that is a party to the Franchise Agreement addressed in the Assignment Order; and (iv) other parties as may be ordered by the Court, and will not be made available to the general public. The terms of the Settlement Agreements will contain competitive and proprietary information about the Franchise Agreements and the Buyers' obligations on a going-forward basis. "Disclosure of the terms of any Settlement Agreement may adversely impact the ability of the LFAs and the Buyers to negotiate favorable franchise agreements with third parties. Furthermore, the Debtors continue to negotiate with certain LFAs that have objected to the assumption and assignment of their franchise agreements. Disclosure of the terms of any Settlement Agreement may detrimentally affect the course of such ongoing negotiations," Mr. Netzer says. Thus, the ACOM Debtors have agreed with the LFAs and the Buyers to protect the confidential terms of the Settlement Agreements. The Debtors seek the Court's authority to file those agreements under seal and to provide for only limited disclosure of the Settlement Agreements. Absent approval of the settlement procedures, Mr. Netzer says, the Debtors would be required to seek specific Court approval for each individual resolution of an Objection. Given the exigent circumstances of the impending Closing Date, holding individual hearings, filing individual pleadings, and sending notice of each proposed settlement to every one of the numerous creditors and interested parties entitled to receive notice in the Debtors' cases would be an expensive, cumbersome, and highly inefficient way to resolve the LFAs' Objections and effect the assumption and assignment of the Franchise Agreements. If the ACOM Debtors are authorized to settle the Objections their way, Mr. Netzer relates, their estates will be spared the expense, delay, and uncertainty, while preserving an oversight function for key parties-in-interest. About Adelphia Communications Based in Coudersport, Pa., Adelphia Communications Corporation (OTC: ADELQ) -- http://www.adelphia.com/-- is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Manged Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision, LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642). Their cases are jointly administered under Adelphia Communications and its debtor-affiliates chapter 11 cases. (Adelphia Bankruptcy News, Issue Nos. 143 & 144; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) ADVANCED VENDING: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Advanced Vending Systems, Inc. P.O. Box 987 Ringgold, Georgia 30736 Bankruptcy Case No.: 06-12523 Type of Business: The Debtor operates snack food vending machines. See http://www.avsvend.com/ Chapter 11 Petition Date: August 7, 2006 Court: Eastern District of Tennessee (Chattanooga) Judge: John C. Cook Debtor's Counsel: Richard C Kennedy, Esq. Kennedy, Koontz & Farinash 320 North Holtzclaw Avenue Chattanooga, Tennessee 37404 Tel: (423) 622-4535 Estimated Assets: Less than $50,000 Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Walter Champion $791,666 12811 Scenic Highway Lookout Mt., TN 37350 Catoosa Enterprises, LLC $561,666 c/o CBL & Assoc. Attn: John Foy 2030 Hamilton Place Boulevard Chattanooga, TN 37421 Vend Service $442,927 Department 3445 P.O. Box 2153 Birmingham, AL 35287-3445 Chambliss, Bahner & Stophel, P.C. $106,061 1000 Tallan Building Two Union Square Chattanooga, TN 37402 William Brown and Carrie McCann $104,898 4500 Orange Grove Road Hillsborough, NC 27278 Tennessee Dept. of Revenue $80,283 Miller & Martin LLP $74,394 American Express $71,922 Mayfield Dairy Farms, Inc. $71,194 Commercial Collections $50,104 AMF Bowling Centers $41,777 GE Commercial Finance $31,988 Regal - Citrus Park $28,169 BJ Wholesale Club $27,334 Chelsea GCA $24,060 Royal Pin Leisure Center $23,826 The Leasing Department $20,305 Florida Dept. of Revenue $20,229 Georgia Dept. of Revenue $20,120 Lassiter High School $19,376 AFFILIATED COMPUTER: Fitch Initiates Coverage with Low-B Ratings ---------------------------------------------------------------- Fitch Ratings has initiated coverage on Affiliated Computer Services, Inc., and assigned these ratings: -- Issuer default rating at 'BB'; -- Senior secured revolving bank credit facility at 'BB'; -- Senior secured term loan at 'BB'; -- Senior notes at 'BB-'; The Rating Outlook is Negative. Approximately $2.3 billion of debt, including the bank revolving facility and term loan, is affected by Fitch's action. Rating concerns mainly center on: -- ACS's increasingly leveraged balance sheet and deteriorating credit protection measures due to debt- financed share repurchases; -- the company's acquisitive nature which could lead to further increases in total debt; -- limited organic revenue growth in the government segment; and -- services pricing pressures arising from increasing competition and global sourcing. Fitch is also concerned about the company's decreased financial flexibility and competitive position due to non-investment grade credit ratings. Positively, the ratings are supported by ACS's: * consistent although pressured free cash flow; * significant recurring revenue base from long-term outsourcing contracts; * strong commercial contract signings; and * favorable growth prospects for business process outsourcing, which accounted for approximately 74% of ACS's total revenue in fiscal year 2005. The Negative Rating Outlook reflects: * an ongoing informal SEC investigation and grand jury subpoena issued by the U.S. Attorney for the Southern District of New York related to the company's timing of historical stock option grants; * pressured operating margins from two underperforming contracts that Fitch expects to weigh on profitability through fiscal 2007 ending June 30, 2007; and * the anticipated continuation of ACS's greater emphasis on shareholder-friendly initiatives that could result in additional debt-financed share buybacks via utilization of the company's $3 billion uncommitted accordion feature under the ACS's term loan facility. Full utilization of the company's term loan accordion feature would likely lead to negative rating actions. Even though under the terms of the related indenture the company's senior notes are equally and ratably secured with the senior secured credit facilities, the 'BB-' $500 million of senior notes incorporates the fact that secured credit facilities have the sole rights to ACS's accounts receivable, which represented approximately 22% of total assets and 48% of tangible assets as of June 30, 2006. The credit facility is secured by a first priority perfected pledge of all notes owned by the borrowers and guarantors, all capital stock of predominantly all domestic subsidiaries and certain foreign subsidiaries of ACS, and a first priority perfected security interest in all other assets owned by ACS, including tangible and intangible assets. As of June 30, 2006, covenants for the company's secured bank credit facility include a bank-defined maximum consolidated senior leverage ratio of 3 times (x) and maximum consolidated total leverage ratio of 4x. The bank-defined interest coverage covenant is currently 4.5x. For fiscal year 2006 ended June 30, 2006, Fitch estimates pro forma leverage (total debt/operating EBITDA), increased to 1.7x from 0.8x for fiscal 2005. However, due to an approximate $500 million of debt-financed stock buybacks since June 30, 2006, along with the company's announcement that its Board of Directors authorized a second share repurchase program of up to $1 billion, incremental to the $1 billion program announced June 12, 2006, Fitch expects leverage to increase significantly. Pro forma for the completion of these two stock buybacks, Fitch estimates leverage would be slightly above 3.0x with interest coverage below 4.5x. Fitch believes credit protection measures could deteriorate further if ACS uses the full term loan accordion feature to support additional share repurchase programs, and this could lead to negative rating actions. In addition, due to higher debt levels and increased interest expense, Fitch believes free cash flow to total debt will remain pressured. This metric was approximately 13% for fiscal 2006 ending June 30, 2006, and Fitch estimates it would be less than 3% pro forma for the completion of the aforementioned $2 billion of stock repurchases. Similarly, total debt to cash flow from operations would decline to approximately 20% from nearly 40%. Total debt as of June 30, 2006, was approximately $1.6 billion, consisting mostly of borrowings under the company's $1 billion secured revolving credit facility expiring 2012, an $800 million senior secured term loan due 2013, $250 million of senior notes due June 2010, and $250 million of senior notes due June 2015. ACS's near-term debt maturities are manageable with a very limited amount of debt due in the next three fiscal years aside from $28 million in annual amortization associated with assumed pro forma secured term loans of $2.8 billion. The next material debt obligation is $268 million in fiscal year 2010, consisting of $250 million of senior notes and $18 million of term loan amortization. Fitch believes ACS's liquidity is adequate and was supported by approximately $100 million of cash at June 30, 2006 and a partially drawn $1 billion secured revolving credit facility expiring 2012. The credit facility also includes an uncommitted accordion feature enabling ACS to increase it by up to $750 million for general corporate purposes under certain circumstances. Fitch expects ACS will continue to utilize the revolver over the near term to support further stock repurchases, which the company will ultimately refinance by utilizing its term loan accordion feature. Liquidity is further supported by ACS's consistent free cash flow that has averaged approximately $290 million for the last three fiscal years ended June 30, 2006. However, Fitch expects free cash flow will be pressured in the near term, approximating $100 million to $150 million annually, to support higher debt levels and necessary capital spending for new contract signings. ALL CAPS: Case Summary & 4 Largest Unsecured Creditors ------------------------------------------------------ Debtor: Samir Billan 1623 Third Avenue, Apartment 17AB New York, New York 10128 Bankruptcy Case No.: 06-11878 Type of Business: The Debtor owns and manages Michelle's Foodland Inc., a restaurant located in New York. Chapter 11 Petition Date: August 11, 2006 Court: Southern District of New York (Manhattan) Debtor's Counsel: Nicholas Fitzgerald, Esq. Fitzgerald & Associates 649 Newark Avenue Jersey City, New Jersey 07306 Tel: (201) 435-7372 Total Assets: $2,051,770 Total Debts: $1,885,939 Debtor's 4 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Verizon Yellow Pages Personal guarantee $114,000 f/m/a Bell Atlantic Joel Stuttman, Esq. 303 Old Tarrytown Road White Plains, NY 10603 El-Kam Realty Co. Back rent for business $50,000 Calabro & Associates 1412 Broadway New York, NY 10018 Barry S. Schwartz Counsel fees $40,000 Attorney at Law 119 West 57th Street New York, NY 10019 Gramercy Produce Inc. Personal guarantee $28,935 Mullooly, Jeffrey, Rooney & Flynn, LLP 4 Bridge Street Glen Cove, NY 11542 ALLIED HOLDINGS: Court Approves Assumption of BOA and GECC Leases ----------------------------------------------------------------- The Honorable Coleman Ray Mullins of the U.S. Bankruptcy Court for the Northern District of Georgia authorizes Allied Holdings, Inc., and its debtor-affiliates to assume the BancBoston Leasing, Inc., and General Electric Capital Corporation Master Leases, the BOA and GECC Guaranties, and the BOA and GECC Supplements. Allied Systems, Ltd. (L.P.) will remit the cure payments pursuant to the lease documents to IBJTC Business Credit Corporation. All amounts owed by Allied Systems to IBJTC under the Lease Documents will constitute administrative expenses. On June 30, 1998, BancBoston, predecessor to Banc of America Leasing & Capital, LLC, entered into a master equipment lease agreement with Allied Systems, Ltd. (L.P.). In March 1999, BancBoston and Allied Systems entered into a lease supplement -- the Fourth BOA supplement -- that was assigned to IBJ Whitehall Business Credit Corporation, now known as IBJTC Business Credit Corporation. Under the BOA Master Lease, IBJ leased to Allied Systems certain truck tractors and car haul trailers. Subsequently, Allied Systems entered into another master lease agreement with General Electric Capital Corporation on July 22, 1999. Similarly, IBJ leased to Allied Systems certain truck tractors and car haul trailers, under the GECC Master Lease. GECC and Allied Systems entered into Lease Supplement No. 2 on September 20, 1999, and Lease Supplement No. 3 on October 20, 1999. The GECC Supplements were also assigned to IBJ. Under separate Equipment Lease Guaranties for each of the BOA and GECC Master Leases, Allied Holdings, Inc., agreed to be liable for the payment and performance of all Allied Systems' obligations to IBJ under the Master Leases. TRAC Leases Ezra H. Cohen, Esq., at Troutman Sanders LLP, in Atlanta, Georgia, related that the BOA and GECC Master Leases, and the BOA and GECC Supplements, create "TRAC" leases. TRAC stands for "terminal rental adjustment clause." The BOA and GECC TRACs provide that if the equipment under the Leases are returned to IBJ and sold, a one-time lump sum adjustment will be due based on the amount of the Equipment's sale proceeds. The adjustment will be based on the amount by which the sale proceeds are either greater or less than 25% of the Acquisition Cost -- the TRAC Amount. If the sale proceeds are grater than the TRAC Amount, IBJ is obligated to pay the overage to the Allied Systems. However, if the sale proceeds are less than the TRAC Amount, Allied Systems is obligated to pay the deficiency to IBJ. The BOA Supplement expired on March 31, 2006. The Second GECC Supplement will expire on October 1, 2006, while the Third GECC Supplement will expire on November 1, 2006. The Debtors wanted the Court to approve the amendment and assumption of the BOA and GECC Master Leases, the BOA and GECC Guaranties, and the BOA and GECC Supplements. Amendment Must be Assumed According to Mr. Cohen, the first amendment to "IBJ Specified Lease Documents" with respect to the BOA and GECC Supplements set forth the agreement among Allied Systems, Allied Holdings, and IBJ as to the extension of the: -- the BOA Supplement, the BOA Guaranty and the BOA Master Lease; and -- the GECC Supplement, the GECC Guaranty and the GECC Master Lease. Among other things, the terms and conditions of: (1) the BOA/IBJ Amendment's with respect to the BOA Supplement are: * Allied Systems will cure any rent defaults including those arising prepetition; * the term of the lease will be extended for one year; * during the BOA Extended Term, Allied Systems will pay monthly rent at the pre-expiry rate set forth in the BOA Supplement; * the Allied Systems' obligation to pay rent and any BOA TRAC Amount will be an administrative expense; and * the BOA TRAC Amount, which is also the amount of the purchase price, will be reduced by 90% of the rent paid during the BOA Extended Term. (2) the GECC/IBJ Amendment's with respect to the GECC Supplements are: * Allied Systems will cure any rent defaults including those arising prepetition for $475,829, consisting of: (a) the aggregate amount of accrued and unpaid Basic Rent owed under the IBJ Specified Lease Documents related to the GECC Lease Documents that was due and payable on August 1, 2005, which equals $61,910; and (b) the Casualty Loss Value of the Specified Damaged Equipment based on a Casualty Loss Value Payment Date as of November 1, 2005, which equals $41,918; * the term of the GECC Master Lease will be extended for one year; * during the GECC Extended Term, Allied Systems will pay monthly rent at the pre-expiry rate set forth in the GECC Supplements, specifically the rent will be: (a) in the case of the Second GECC Supplement, the amount of Basic Rent that accrues on and after October 1, 2006; and (b) in the case of the Third GECC Supplement, the amount of Basic Rent that accrues on and after November 1, 2006; * Allied Systems' obligation to pay rent and any GECC TRAC Amount will be an administrative expense; and * the GECC TRAC Amount, which is also the amount of the purchase price, will be reduced by 90% of the rent paid during the GECC Extended Term. The BOA/IBJ Amendment and the GECC/IBJ Amendment will allow continued use of the BOA and GECC Equipment, which are used by the Debtors to produce revenue, Mr. Cohen pointed out. Mr. Cohen noted that the BOA and GECC Master Leases, the BOA and GECC Supplements, and the BOA and GECC Guaranties are valuable to the Debtors ongoing business operations. Headquartered in Decatur, Georgia, Allied Holdings, Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provides the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provides financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Allied Holdings Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) ANDREW CORP: 3rd Quarter 2006 Net Income Narrows to $7 Million -------------------------------------------------------------- For the third quarter ended June 30, 2006, Andrew Corporation reported net income of $7 million, compared to net income of $13 million in the same period last year. The Company's total sales for the third quarter of 2006 increased 13% to $551 million from $487 million in the prior year quarter. Commenting on the results, Ralph Faison, the Company's president and chief executive officer, said, "[o]ur third quarter financial results reflect positive operational improvement. Our price surcharges on cable products have now been implemented across all customers in all geographic regions. Despite an unfavorable product mix in Base Station Subsystems and approximately $3.0 million of filter product line transition costs, gross margin for the company increased 150 basis points versus the prior quarter." Mr. Faison continued, "[o]verall global demand trends have continued to be positive for the wireless infrastructure industry as demonstrated by record sales and orders for the company during the third quarter. We believe our industry-leading product portfolio and globally diversified customer base provides the company with a strategic ability to benefit from network upgrades and expansions that are occurring in each major region around the globe." Balance Sheet and Cash Flow Highlights The Company's cash and cash equivalents at June 30, 2006, were $116 million compared to $155 million at March 31, 2006 and $189 million at Sept. 30, 2005. Accounts receivable were $539 million and days' sales outstanding were 85 days at June 30, 2006, compared to $478 million and 83 days at March 31, 2006 and $471 million and 76 days at Sept. 30, 2005. Inventories were $391 million and inventory turns were 4.4x at June 30, 2006, compared to $369 million and 4.1x at March 31, 2006 and $353 million and 4.6x at Sept. 30, 2005. The acquisition of Precision in April 2006 added approximately $17 million of accounts receivable and $9 million of inventory. Total debt outstanding and debt to capital were $302 million and 16.1% at June 30, 2006, compared to $313 million and 16.7% at March 31, 2006 and $303 million and 16.3% at Sept. 30, 2005. Cash flow from operations was $24.5 million for the third quarter, compared to cash flow from operations of $13.4 million in the prior quarter and cash flow from operations of $27.2 million in the prior year quarter. Capital expenditures were $17.7 million for the third quarter, compared to $20.8 million in the prior quarter and $16.2 million in the prior year quarter. About Andrew Headquartered in Westchester, Illinois, Andrew Corporation (NASDAQ:ANDW) -- http://www.andrew.com/-- designs, manufactures and delivers equipment and solutions for the global communications infrastructure market. The company serves operators and original equipment manufacturers from facilities in 35 countries. * * * As reported in yesterday's Troubled Company Reporter, Standard & Poor's Ratings Services revised its CreditWatch implications on Andrew Corp. to negative from developing. The 'BB' corporate credit rating and other ratings on the company were placed on CreditWatch developing on Aug. 7, 2006. AMERICAN G.I.: Case Summary & Nine Largest Unsecured Creditors -------------------------------------------------------------- Debtor: American G.I. Forum of San Jose aka American GI Forum San Jose Chapter aka American G.I. Forum Of San Jose, A California Corp. 765 Story Road Suite 150 San Jose, California 95122 Bankruptcy Case No.: 06-51497 Type of Business: The Debtor is community based membership enterprise dedicated to promoting education, advancing cultural understanding and quality of life for Mexican Americans. See http://www.sjgif.org/ Chapter 11 Petition Date: August 8, 2006 Court: Northern District of California (San Jose) Judge: Marilyn Morgan Debtor's Counsel: Sidney C. Flores, Esq. Law Offices of Flores and Barrios 97 East St. James Street #102 San Jose, California 95112 Tel: (408) 292-3400 Estimated Assets: Less than $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 9 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ City of San Jose Trade Debt $2,082,224 200 East Santa Clara Street San Jose, CA 95113 County of Santa Clara Trade Debt $2,041,113 70 West Hedding Street San Jose, CA 95110 County of Santa Clara Trade Debt $750,000 Tax Collector 70 West Hedding Street San Jose, CA 95110-1767 Heritage Bank Bank Loan $440,336 150 Almaden Boulevard San Jose, CA 95113 City of San Jose Trade Debt $300,000 200 East Santa Clara Street San Jose, CA 95113 Christina Dewstone Trade Debt $59,400 917 El Lisa Drive #B San Jose, CA 95123 Internal Revenue Service Trade Debt $54,655 55 South Market Street San Jose, CA 95110-1767 Flores & Barrios Law Firm Trade Debt $45,000 97 East St. James Street Suite 102 San Jose, CA 95112 PGE Trade Debt $4,652 P.O. Box 997300 Sacramento, CA 95112 Board of Equalization Trade Debt $4,464 P.O. Box 942879 Sacramento, CA 94279-7072 ARAMARK CORPORATION: Board Declares Quarterly Cash Dividend ----------------------------------------------------------- The Board of Directors of ARAMARK Corporation declared a quarterly cash dividend of $0.07 per share on its Class A and Class B common stock. The dividend will be payable on September 8, 2006 to ARAMARK shareholders of record at the close of business on August 18, 2006. About ARAMARK Corporation Headquartered in Philadelphia, Pennsylvania, ARAMARK Corporation (NYSE:RMK) -- http://www.aramark.com/-- is a leader in professional services, providing award-winning food services, facilities management, and uniform and career apparel to health care institutions, universities and school districts, stadiums and arenas, and businesses around the world. In FORTUNE magazine's 2006 list of "America's Most Admired Companies," ARAMARK was ranked number one in its industry, consistently ranking since 1998 as one of the top three most admired companies in its industry as evaluated by peers and industry analysts. The company was also ranked first in its industry in the 2006 FORTUNE 500 survey. ARAMARK has approximately 240,000 employees serving clients in 20 countries. * * * As reported on the Troubled Company Reporter on Aug. 10, 2006, Fitch downgraded the Issuer Default Rating and senior unsecured debt ratings for both ARAMARK Corporation and its wholly owned subsidiary, Aramark Services, Inc., to 'BB-' from 'BBB'. The ratings remain on Rating Watch Negative. At the same time, Standard & Poor's Ratings Services lowered its ratings on ARAMARK Corp. and its subsidiary, Aramark Services Inc., including its corporate credit rating to 'BB+' from 'BBB-'. ASARCO LLC: 3 Parties Object Tax Refund Deposit in Escrow Account ----------------------------------------------------------------- Americas Mining Corporation, Asarco Incorporated, and the Official Committee of Unsecured Creditors for the Asbestos Subsidiary Debtors filed responses to ASARCO LLC's motion to permit ASARCO, the U.S. government and Wells Fargo Bank, National Association, as escrow agent to enter into the Stipulation and the Escrow Agreement and the deposit of the Tax Refund in the Escrow Account. Responses 1. AMC and Asarco, Inc. Americas Mining Corporation and Asarco Incorporated argue that ASARCO LLC is not entitled to the Tax Refunds. ASARCO has acknowledged that the Tax Refund is based on the carryback of operating losses of Asarco NJ, a corporation that no longer exists as a result of the merger between Asarco Incorporated and ASARCO LLC in February 2005. The recitals to the Setoff Agreement state that ASARCO succeeded Asarco NJ's rights to the refund since it was the surviving entity after the merger. However, Brook Hamilton, Esq., at Haynes and Boone LLP, in Houston, Texas, argues, the Setoff Agreement completely ignores the fact that ASARCO is a limited liability company that is a "disregarded entity" for federal income tax purposes. Pursuant to Treasury Regulation Section 301.7701-3(a), ASARCO does not exist for federal income tax purposes as a separate legal entity and thus, cannot possess tax attributes, Mr. Hamilton contends. It is ASARCO's immediate corporate parent Asarco Inc. that has succeeded all the tax attributes of Asarco NJ, including its net operating losses under the Internal Revenue Code, Mr. Hamilton argues. Accordingly, AMC and Asarco Inc. object to the Setoff Motion to the extent that any finding is required from the Court with respect to ASARCO's right to the Refund. Mr. Hamilton clarifies that AMC and Asarco Inc. do not object to the portion of the Setoff Motion that seeks to have the Refund deposited into an escrow to cut off the accrual of statutory interest, pending the Court's determination of which party is entitled to receive it. 2. Asbestos Committee The Official Committee of Unsecured Creditors for the Asbestos Subsidiary Debtors seeks to preserve its rights to assert an interest in the $40,000,000 Tax Refund. Jacob L. Newton, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in Dallas, Texas, notes that the Escrow Agreement specifies that "proceeds of the Claims for Refund deposited into the Escrow Account shall not be issued or paid to any affiliate of ASARCO, LLC." The Asbestos Debtors are not party to the Lift Stay Motion and the Escrow Agreement, and should not be bound by the Agreement, Mr. Newton asserts. The $40,000,000 Tax Refund is based on carryback losses attributable to the Consolidated Group, of which the Asbestos Debtors are members. Therefore, the Asbestos Debtors and their estates may have rights to or interests in the $40,000,000 Tax Refund, Mr. Newton 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. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/). ASARCO LLC: AMC Wants to Compel Decision on Tax Sharing Agreement ----------------------------------------------------------------- Americas Mining Corporation and Asarco, Inc., ask the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to compel ASARCO to immediately decide whether to assume or reject a tax sharing agreement. Americas Mining Corporation is the parent company of a consolidated group of companies for United States federal income tax purposes that includes all of the Debtors. Asarco Inc. is ASARCO LLC's immediate parent and a member of the AMC Consolidated Group. When ASARCO LLC filed for bankruptcy, AMC, Asarco Inc. and ASARCO were parties to a tax sharing agreement dated Jan. 22, 2004. Pursuant to the TSA, the Debtors are to be treated as if ASARCO was the corporate parent of a separate consolidated tax group comprised of ASARCO and its subsidiaries for tax accounting purposes. On the other hand, AMC and its subsidiaries, excluding the ASARCO LLC Subgroup, are to be treated as a separate consolidated tax group. Since ASARCO is a limited liability company that is a "disregarded entity" for federal income tax purposes, the TSA had to deem ASARCO to be a corporation for purposes of computations, as well as to provide to ASARCO the benefits of any favorable tax attributes possessed by its corporate predecessor, Brook Hamilton, Esq., at Haynes and Boone LLP, in Houston, Texas, tells the Court. The U.S. federal income tax law requires AMC to file tax returns and to pay the federal income tax due on behalf of the entire AMC Consolidated Group, including the ASARCO LLC Subgroup, Mr. Hamilton relates. ASARCO, in return, will pay to AMC any income tax amount that the ASARCO LLC Subgroup would have incurred if it had not been part of the AMC Consolidated Group. Knowing that AMC will be required to make estimated tax payments in September and December 2006 on account of the income of the Asarco LLC Subgroup for the taxable year 2006 has profound implications for AMC's tax planning, Mr. Hamilton contends. AMC needs to reduce its potential tax liability so that it will have enough cash to pay the AMC Consolidated Group's tax liability, Mr. Hamilton says. To evaluate properly any measures to reduce AMC's tax liability, it needs to be certain as to whether its rights to reimbursement under the TSA will be respected. Without the TSA, ASARCO would never receive the benefit of the Tax Refund from the Internal Revenue Services, Mr. Hamilton asserts. "ASARCO's filing of the Escrow Agreement with the Department of Agriculture and the Department of the Interior makes it even more imperative for ASARCO to decide whether to assume or reject the TSA immediately." It would be patently inequitable for ASARCO to reap benefits under the TSA and then escape its obligations under the TSA by rejecting the TSA thereafter, Mr. Hamilton says. 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. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/). ASIA PREMIUM: March 31 Balance Sheet Upside-Down by $2.7 Million ---------------------------------------------------------------- Asia Premium Television Group, Inc. has filed its financial report for the year ended March 31, 2006 with the Securities and Exchange Commission. Asia Premium's balance sheet at March 31, 2006 showed a total stockholders' deficit of $2,702,824 from total assets of $16,179,000 and total liabilities of $18,881,824. The Company's balance sheet also showed strained liquidity with total current assets of $15,238,272 and total current liabilities of $18,776,992. For the year ended March 31, 2006, the Company reported $1,116,177 of net income from $61,793,864 of revenues. A full-text copy of the Company's annual report is available for free at http://researcharchives.com/t/s?cf2 Asia Premium Television Group, Inc., provides marketing, brand management, advertising, media planning, public relations and direct marketing services to clients in the People's Republic of China. The Company's primary operating activities are Publishing advertisements as agents for clients; Media consulting services; and Advertising production. ATARI INC: Posts $7.1MM Net Loss in 1st Fiscal Qtr. Ended June 30 ----------------------------------------------------------------- Atari, Inc., filed its first fiscal quarter financial statements for the three months ended June 30, 2006, with the Securities and Exchange Commission on Aug. 9, 2006. The Company reported a $7.114 million net loss on $19.474 million of net revenues for the first fiscal quarter ended June 30, 2006, compared with a $32.817 million net loss on $23.877 million of net revenues for the same period in 2005. The Company said the net loss is the result of the lack of new products released in the current quarter combined with soft sales on its catalogue product. At June 30, 2006, the Company's balance sheet showed $143.670 million in total assets, $70.458 million in total liabilities, and $73.212 million in total stockholders' equity. The Company's June 30 balance sheet showed strained liquidity with $66.398 million in total current assets available to pay $69.789 million in total current liabilities. Need for Additional Funding On May 31, 2006, the Company's credit facility with HSBC Business Credit (USA) Inc. expired and no alternative method of short-term financing has been established. Historically, the Company has relied on Infogrames Entertainment S.A., the Company's majority stockholder, to provide limited financial support; however, as IESA continues to address its own financial condition, its ability to fund its subsidiaries' operations, including Atari, remains limited. Atari said there can be no assurance that it will ultimately receive any funding from IESA. Atari is exploring various alternatives to improve its financial position and secure other sources of financing. Those possibilities include a new credit facility, new arrangements to license intellectual property, the sale of selected intellectual property rights and sale of development studios. To reduce working capital requirements and further conserve cash, it needs to take additional actions in the near-term, which may include further personnel reductions and suspension of certain development projects. These actions may or may not prove to be consistent with the Company's long-term strategic objectives. Since April 2006, the Company raised approximately $9 million through sales of a certain intellectual property, and subsequent to June 30, 2006, Atari sold the Driver intellectual property, as well as certain assets of its wholly-owned studio, Reflections Interactive Ltd., to a third party for approximately $24 million. However, these amounts are insufficient to fully address the uncertainties of Atari's financial position. The Company continues to seek additional funding. Full-text copies of the Company's first quarter financials are available for free at http://ResearchArchives.com/t/s?f6e Going Concern Doubt As reported in the Troubled Company Reporter on July 3, 2006, Deloitte & Touche LLP expressed substantial doubt about Atari, Inc.'s ability to continue as a going concern after auditing the Company's financial statements for the for the fiscal years ended March 31, 2006 and 2005. The auditing firm pointed to Atari's significant operating losses and the expiration of its line of credit facility. New York-based Atari, Inc. (Nasdaq: ATAR) -- http://www.atari.com/ -- develops interactive games for all platforms and is one of the largest third-party publishers of interactive entertainment software in the U.S. The Company's 1,000+ titles include hard- core, genre-defining franchises such as The Matrix(TM) (Enter The Matrix and The Matrix: Path of Neo), and Test Drive(R); and mass- market and children's franchises such as Nickelodeon's Blue's Clues(TM) and Dora the Explorer(TM), and Dragon Ball Z(R). Atari, Inc. is a majority-owned subsidiary of France-based Infogrames Entertainment SA (Euronext - ISIN: FR-0000052573), the largest interactive games publisher in Europe. ATLANTIC MUTUAL: A.M. Best Withdraws CCC Rating on $100 Mil. Note ----------------------------------------------------------------- A.M. Best Co. has affirmed the financial strength rating of B- (Fair) and the issuer credit ratings of "bb-"of the Atlantic Mutual Companies and its property/casualty members. A.M. Best has also affirmed the debt rating of "ccc" of the $100 million 8.15% 30-year surplus notes issued by Atlantic Mutual Insurance Company (both of New York). The outlook for all ratings is negative. Subsequently, A.M. Best has withdrawn all ratings and assigned a rating of NR-4 (Company Request) in response to management's request that Atlantic be removed from A.M. Best's interactive rating process. Theis debt rating has been affirmed and withdrawn: Atlantic Mutual Insurance Company -- "ccc" on $100 million 8.15% 30-year surplus note, due 2028 The FSR of B- (Fair) and the ICRs of "bb-"have been affirmed and withdrawn for the Atlantic Mutual Companies and its following members: -- Atlantic Mutual Insurance Company -- Centennial Insurance Company A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. B/E AEROSPACE: Acquires NY Fasteners for $68 Million in Cash ------------------------------------------------------------- B/E Aerospace, Inc., agreed to acquire New York Fasteners Corp. for approximately $68 million in cash. NYF, founded in 1956, had revenues of approximately $56 million for its most recent fiscal year ended June 30, 2006, and is a distributor of a wide variety of aerospace fasteners and hardware primarily to the military sector. The acquisition, which will be funded with borrowings under B/E's senior secured credit facility, is subject to customary closing conditions and is expected to be completed in August 2006. B/E plans to merge NYF's complementary hardware distribution and vendor-managed inventory business with its own distribution operations based in Miami, Florida. The transaction is expected to be modestly accretive to earnings per share in 2007 and significantly accretive in 2008. The integration of NYF with B/E's distribution segment is expected to create procurement and operational synergies and significantly expand B/E's overall penetration into the military sector. The combination of NYF's vendor-managed inventory and third-party logistics capabilities and strong military and defense customer relationships, coupled with B/E's advanced automated stocking and retrieval systems is expected to allow B/E to offer a significantly wider range of products and services to a larger and broader customer base. Over 70% of NYF's annual revenues are derived from military and defense customers. The acquisition of NYF, when considered together with B/E's acquisition of aircraft oxygen supplier Draeger Aerospace GmbH and other B/E products, including its position on the Airbus A400M, is expected to bring B/E's total sales to the military and defense market to over $100 million annually and favorably position the company for cross-sell opportunities in this sector. "The NYF and Draeger acquisitions provide us with access to important customers in the large and growing military market," commented Amin J. Khoury, Chairman and CEO of B/E Aerospace, Inc. "We intend to build upon these strong new customer relationships and, over time, work with them to develop and supply a broader range of products and solutions from across the company." Shearman & Sterling LLP is outside legal counsel to B/E and Houlihan Lokey Howard & Zukin's Aerospace Defense Government Group acted as exclusive financial advisor to NYF. About NYF Headquartered in Paramus, New Jersey, New York Fasteners Corp. -- http://www.nyf.com/-- is a customer-driven, team-based distributor of assembly components. Founded in 1956, the Company distributes aerospace, military, telecommunications, and industrial fasteners with quality requirements based on the critical nature of applications. NYF also offers value added services, designed to reduce or eliminate customers' costs of purchasing, receiving, inspecting, processing and managing inventories. About B/E Aerospace Based in Wellington, Florida, B/E Aerospace, Inc. (Nasdaq:BEAV) -- http://www.beaerospace.com/-- manufactures aircraft cabin interior products, and is an aftermarket distributor of aerospace fasteners. B/E designs, develops and manufactures a broad range of products for both commercial aircraft and business jets. B/E manufactured products include aircraft cabin seating, lighting, oxygen, and food and beverage preparation and storage equipment. The company also provides cabin interior design, reconfiguration and passenger-to-freighter conversion services. B/E sells and supports its products through its own global direct sales and product support organization. B/E AEROSPACE: S&P Rates Proposed $450 Million Secured Loan at BB+ ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its ratings, including the corporate credit to 'BB' from 'BB-', on aerospace supplier B/E Aerospace Inc. The outlook is stable. At the same time, Standard & Poor's assigned its 'BB+' bank loan rating and '1' recovery rating, indicating high expectations of full (100%) recovery of principal in the event of a payment default, to the company's proposed $450 million secured bank credit facility. "The upgrade is based on a material improvement in the firm's credit protection measures, aided by higher revenues, margin expansion, and generally more favorable industry conditions," said Standard & Poor's credit analyst Roman Szuper. In 2006, debt to EBITDA is expected to be 3x-3.5x and EBITDA interest coverage 4x- 4.5x. Further strengthening is likely in the intermediate term, as the company benefits from record bookings and backlog, new products, and operating leverage. Pro forma for the new credit facility and the recent $80 million acquisition of Draeger Aerospace GmhH, a leading supplier of oxygen systems and components for commercial and military aircraft, about $550 million of debt would be outstanding. The ratings on Wellington, Florida-based B/E Aerospace reflect risks associated with the cyclical global airline industry, the firm's primary customer base (approximately 85% of sales), and potential for additional acquisitions. This is offset by the company's position as the largest manufacturer of aircraft cabin interior products and sufficient liquidity. The ratings also acknowledge improving profitability and a stronger capital structure following large equity issuances and debt repayment. The commercial aerospace and airline sectors continued to recover in 2006, reversing a sharp downturn after the Sept. 11, 2001, attacks and other shocks to the aviation system, though current airline profitability is affected by high fuel prices. Improving global air traffic, driven primarily by a healthier economy, is aiding aftermarket demand for BE Aerospace's generally higher margin, recurring retrofit, refurbishment, and spare parts (60%- 65% of revenues). The bookings and backlog are primarily from relatively stronger international airlines, as most U.S. carriers are struggling and have postponed their fleet refurbishment plans. Midterm forecasts of new airplane deliveries also show an upward trend, which should lead to better prospects for the firm's original equipment part of the business (35%-40%), enhanced by market share gains. B/E Aerospace's improving financial performance should support moderate growth initiatives, including bolt-on acquisitions, with credit protection measures remaining appropriate for the rating. A continued favorable market environment and further material strengthening of the firm's financial profile could lead to an outlook revision to positive from stable in the intermediate term. The outlook revision to negative is less likely, but could be driven by a large debt-financed acquisition or renewed problems in the airline industry. BARBARA LOCKWOOD: Case Summary & 12 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Barbara A. Lockwood 2614 Dunford Way Erie, Pennsylvania 16509 Bankruptcy Case No.: 06-10941 Chapter 11 Petition Date: August 11, 2006 Court: Western District of Pennsylvania (Erie) Debtor's Counsel: John C. Melaragno, Esq. Melaragno & Placidi 502 West 7th Street, Erie, Pennsylvania 16502 Tel: (814) 459-5557 Fax: (814) 459-6778 Total Assets: $327,240 Total Debts: $2,737,603 Debtor's 12 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ DaimlerChrysler Services Guarantor for $2,269,704 27777 Inkster Road Lockwood Auto Group Oakland County Farmington Hills, MI 48034 DaimlerChrysler Services Loan for $176,638 27777 Inkster Road Lockwood Auto Group Oakland County Farmington Hills, MI 48034 National City Bank Promissory Note $103,542 Managed Assets Dept. Value of Security: LOC017521 $102,515 23000 Millcreek Boulevard Highland Hills, OH 44122 MBNA Credit Card $19,465 First Corp. (IFC) Deficient Equipment $16,767 Lease Capital One Bank Credit Card $13,139 Bank of America Credit Card $8,106 Discover Credit Card $2,225 University Hosp. of Medical Bills $455 Cleveland Revenue Group Collection for Univ. $330 Hosp. Cleveland Bureau of Compliance State Sales $132 Tax Lien Univ. Hospitals Faculty Medical Bills $18 Services BEACON CULTURAL: Case Summary & 12 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Beacon Cultural Foundation, Inc. 211 Fishkill Avenue Beacon, New York 12508 Bankruptcy Case No.: 06-35798 Type of Business: The Beacon Cultural Foundation was founded in 2002 to stimulate cultural development in Beacon and the Hudson River Valley and to create a national model for new works program support, creative community initiatives and leveraged investment in the arts. The Foundation acquired the 121,000 square foot former Beacon High School to help build an infrastructure for artists, and the people and places that sustain their creative work. The building, now called the Bulldog Studios, provides working studio space for more than 50 visual artists, craftspeople, performers, writers and others engaged in creative work. The Foundation has also established dance residencies for NYC-based David Dorfman Dance Company, a community visual art residency with artist/photographer Carrie Mae Weems, visual art exhibitions of work by contemporary artists including Robin Winters, Kazumi Tanaka and Alison Moritsugu, and a series of artist slide talks and conversations. See http://www.bulldogstudios.org/ Chapter 11 Petition Date: August 10, 2006 Court: Southern District of New York (Poughkeepsie) Judge: Cecelia G. Morris Debtor's Counsel: Thomas Genova, Esq. Genova & Malin Hampton Business Center 1136 Route 9 Wappingers Falls, NY 12590 Tel: (845) 298-1600 Fax: (845) 298-1265 Total Assets: $1,266,690 Total Debts: $4,470,720 Debtor's 12 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Beacon City School District Value of Collateral: $4,250,000 10 Education Drive $1,200,000 Beacon, NY 12508 Central Hudson $72,442 244 South Avenue Poughkeepsie, NY 12601 William S. Ehrlich $14,000 18 East 22nd Street New York, NY 10024 Vergillis, Stenger, Roberts $13,090 & Partners Stacey Shurgin $9,000 Abigail Watson $1,575 Gellert & Klein, P.C. $1,537 Landmark Building Services $1,318 Protemp Heating & Air $1,070 Conditioning Inc. MVP Health Care, Inc. $918 Receivable Management Services $539 Fishkill Plate Glass Company $143 BERNARD MCCLELLAN: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Bernard J. McClellan Christina M. McClellan W13085 640th Avenue Prescott, Wisconsin 54021 Bankruptcy Case No.: 06-11888 Chapter 11 Petition Date: August 11, 2006 Court: Western District of Wisconsin (Eau Claire) Debtors' Counsel: Mart W. Swenson Laman & Swenson Law Offices 118 East Grand Avenue P.O. Box 185 Eau Claire, Wisconsin 54702 Tel: (715) 835-7779 Fax: (715) 835-2573 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtors' 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Mortgage Electronic W13085 640th Avenue $595,843 Registration System Prescott, WI fka GMAC Mortgage (homestead) 500 Enterprise Road, #150 Value of Security: Horsham, PA 19044-0969 $500,000 BCBG Azria Group MAC-K Construction $125,000 2761 Fruitland Avenue Inc. of WI Los Angeles, CA 90058 Corporate debt - Potential personal liability Wells Fargo BusinessLine Purchases - credit $47,673 P.O. Box 6426 card Carol Stream, IL 60197-6426 Construction Inc. of WI Corporate debt - Potential personal liability Sherwin Williams Co. Judgment $39,603 Pierce County Case No. 03CV209 US Bank Purchases - credit $36,700 card Construction Inc. of WI Corporate debt - Potential personal liability Washington County Bank Personal Overdrafts $22,471 Bank of America Judgment of replevin $20,049 Pierce County Case No. 06CV068 (deficiency balance due) Simplicity Mfg./Ferris Deficiency on $16,635 Industries repossessed equipment MBNA America Purchases - credit $15,393 card BCBG Azria Group MAC - East $15,000 Construction Inc. Corporate debt - Potential personal Liability US Bank Purchases - credit $10,471 card Hudson Hospital Medical $10,437 S&C Bank Loan $10,000 Chase Auto Finance 2004 Subaru $8,729 General Motors Acceptance Judgment of replevin $8,315 Pierce County (deficiency balance due) US Bank Purchases - credit $5,729 card MAC-K Construction Inc. of WI Corporate debt - Potential personal liability Pierce County EDC Loan $4,920 Continental Nitrogen & Judgment $4,204 Resources St. Croix County Case No. 06SC828 Morton Salt Purchases $3,589 Thomas B. Olson & Assoc. PA Services $3,512 MAC-K Construction Inc. of WI Corporate debt - Potential personal Liability BIOENVELOP TECH: Defaults Under QSET's $1.7 Million Debentures -------------------------------------------------------------- BioEnvelop Technologies Corporation was served on Aug. 10, 2006, with a notice of default from Quorum Secured Equity Trust under the secured convertible debentures issued by the Corporation on March 2, 2006, and May 11, 2006, in the principal amount of $1.7 million. QSET is an arm's length party to the Corporation. Under the terms of the Debentures, the Corporation must remedy the event of default within 10 business days following reception of the notice of default. Unless the Corporation remedies the event of default, QSET has informed the Corporation that it intends to realize on its security. There is no guarantee that the Corporation will be able to cure this event of default, in which case the Corporation may be forced to seek protection under the Companies' Creditors Arrangement Act (Canada) or file for bankruptcy under the Bankruptcy and Insolvency Act (Canada). The Quorum Secured Equity Trust (formerly known Quorum P.I.P.E. Trust) is an unincorporated, open ended, limited purpose trust established under the laws of Ontario by a Trust Agreement and will be governed by the Trust Agreement between the Trust and Royal Trust Company (Trustee). The registered office of the Trust is at 150 King Street West, Suite 1505, Sun Life Tower, Toronto, Ontario, M5H 1J9, Canada. About Bioenvelop Based in Quebec, Canada, BioEnvelop Technologies Corporation (TSX-V: BIE) -- http://www.bioenvelop.com/-- develops, manufactures and markets Longevita(R) coating solution, a biodegradable and edible protein-based coating treatment that prolongs shelf life and inhibits humidity transfer in fresh and frozen food products, Bari-Kad(TM), a gel or solid film aimed at the agri-food market, and Miracle Glacage(TM), which addresses the fruit coating and glaze market. CA INC: To Cut 1,700 Jobs to Gain $200 Million Annualized Savings ----------------------------------------------------------------- CA Inc. disclosed a fiscal year 2007 cost reduction and restructuring plan designed to significantly improve the Company's expense structure and increase its competitiveness. The plan's objectives include a workforce reduction of approximately 1,700 positions, including 300 positions associated with consolidated joint ventures, and global facilities consolidations and other cost reduction initiatives, which CA expects to deliver about $200 million in annualized savings when completed in late fiscal year 2008. The Company expects to incur pre-tax restructuring charges of $200 million associated with the workforce reductions and facilities consolidations, with the majority of these charges to be incurred over the next two quarters. The Company also expects to implement other programs over the remainder of its fiscal year to further reduce costs throughout the organization including tighter control of travel and a reduction in the use of consultants. The Company estimates that half of the workforce reductions will take place in North America. "CA's senior management is focused on making the Company's cost structure competitive with that of its peers and aligning it with CA's strategic market opportunities and initiatives," said Michael Christenson, CA's chief operating officer. "The initiative we announced today reflects our ongoing commitment to improve the efficiency of our operations, reduce our operating expenses, improve our rate of return on invested capital and deliver a stronger bottom-line performance." FY 2007 Financial Results Revenue for the first quarter of the fiscal year 2007 ended June 30, 2006, was $956 million, an increase of 3% over the $927 million reported in the similar period last year. The increase in revenue was primarily attributed to growth in subscription and professional services revenue. The Company recorded GAAP net income of $35 million for the first quarter, compared to net income of $97 million in the prior year comparable period. "We continue to focus on building and integrating our solutions portfolio to meet the needs of customers and we are encouraged by their positive reaction to our Enterprise IT Management vision," John Swainson, CA's president and chief executive officer, said. "However, we are not satisfied with our cost structure and we are implementing an expense reduction plan to improve the Company's efficiency and competitive position. These are the first steps in a long-term program to achieve a best-of-breed cost structure." For the first quarter, CA reported a use of cash flow from operations of $46 million, compared to $93 million in cash flow generated from operations reported in the prior year period. The decline in cash flow from operations was the result of increased disbursements to vendors associated with a concerted effort to reduce the Company's payable cycle, 401(k) contributions not pre- funded in fiscal year 2006 and increased commission payments related to the fourth quarter of fiscal year 2006. Capital Structure The balance of cash, cash equivalents and marketable securities at June 30, 2006 was $1.522 billion. With $1.811 billion in total debt outstanding, the Company has a net debt position of $289 million. Repurchase Program The Company expects to commence the first phase of its $2 billion stock repurchase program through a tender offer that will price and launch this week. CA plans to repurchase $1 billion in common stock in the first phase through a combination of cash on hand and bank financing and will provide further information when it commences the tender offer. CA is considering various options to execute the second phase of the program and will provide further details when appropriate. The Company expects to complete the full $2 billion share repurchase plan by the end of fiscal year 2007. During the quarter, the Company repurchased 7 million shares of its common stock at an aggregate cost of $157 million. About CA Headquartered in Islandia, New York, CA Inc. (NYSE:CA) -- http://www.ca.com/-- is an information technology management software company that unifies and simplifies the management of enterprise-wide IT. Founded in 1976, CA serves customers in more than 140 countries. * * * As reported in the Troubled Company Reporter on Aug. 7, 2006, Moody's Investors Service confirmed CA Inc.'s Ba1 senior unsecured rating and assigned a negative rating outlook, concluding a review for possible downgrade initiated on June 30, 2006. The Ba1 rating confirmation reflects the company's completed accounting review and reestablishment of current filing of its 10-K and subsequent 10-Q's, including the company's filing of its 10-K for its March 2006 fiscal year on July 31, 2006. Standard & Poor's Rating Services affirmed its 'BB' corporate credit and senior unsecured debt ratings on CA Inc., and removed them from CreditWatch where they were placed on July 5, 2006 with negative implications. The outlook is negative. CALHOUN CARPET: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Calhoun Carpet Sales, Inc. 1701 South Dirksen Parkway Springfield, Illinois 62703 Bankruptcy Case No.: 06-71018 Type of Business: The Debtor sells carpets and hardwood flooring. See http://www.calhouncarpet.com/ Chapter 11 Petition Date: August 7, 2006 Court: Central District of Illinois (Springfield) Judge: Mary P. Gorman Debtor's Counsel: John S. Narmont, Esq. 209 Bruns Lane Springfield, Illinois 62702 Tel: (217) 787-4130 Total Assets: $961,000 Total Debts: $2,291,258 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ State Bank of Lincoln $850,000 508 Broadway P.O. Box 529 Lincoln, IL 62656 Mohawk Factorial Incl. $368,000 150 East Crossroads Bolingbrook, IL 60440 Donald Edgerton $250,000 205 West 15th Street Panama City, FL 62401 Mohawk Carpet Corporation $173,000 Calhoun Carpet Sales, Inc. Trade debt $118,000 Value of Collateral: $100,000 Illinois Dept. of Revenue $94,591 EFTPS $58,130 American Express $56,262 Donald & Joetta Curtis Trade debt $46,000 Shaw Industries $33,680 Internal Revenue Service $32,952 Mid America National Bank $30,000 Jaeckle Sholesale $26,000 E J WELCH $18,620 Main Street Bank & Trust $15,980 W.C. Tingle Co $15,420 Sikich LLP $14,000 All Tile $11,231 Beaulieu Residential $11,200 Hrrega Distributors $7,610 CALPINE CORP: Taps Watson Wyatt as Human Resource Consultant ------------------------------------------------------------ Calpine Corp. and its debtor-affiliates ask authority from the U.S. Bankruptcy Court for the Southern District of New York to employ Watson Wyatt as their human resource consultant pursuant to Sections 327(a) and 328(a) of the Bankruptcy Code. The Debtors have engaged Watson Wyatt & Company as their human resource consultant since Dec. 6, 2005. Watson Wyatt was employed as an ordinary course professional. Watson Wyatt has assisted the Debtors in the review, design and communication of important employee messages and human resources risks. The Debtors originally contemplated that Watson Wyatt would primarily provide executive compensation services for which the total fees were estimated to range from $175,000 through $275,000. David R. Seligman, Esq., at Kirkland & Ellis LLP, in New York, relates that beginning March 2006, at the Debtors' request, Watson Wyatt provided additional compensation assistance and established benchmarks for all positions in Calpine Corp. These requests, as well as other matters concerning the executive compensation portions of the project, caused Watson Wyatt's fees to go beyond the $500,000 limit set in the Court's Ordinary Course Professional Order. Moreover, Mr. Seligman says, the Debtors anticipate that they will continue to use Watson Wyatt's services throughout the course of their Chapter 11 cases. Watson Wyatt will: (a) review and analyze the current compensation and benefits programs at Calpine and identify the risks each program may contain in light of the Chapter 11 cases; (b) assist in the development of an employee communication strategy and drafting of employee communications as needed; (c) review the current compensation and benefits programs and assess the need for new or revised programs for certain key employees designated by the company and, if needed, assist in the design and modification of the programs. Key elements of those programs might consist of a new annual incentive program, a revised cash retention program, and a severance program; (d) compare the terms, conditions and cost of any proposed program to competitive practice; (e) review and determine whether to enhance existing severance programs in light of the changed circumstances; (f) prepare reports summarizing the new programs; (g) assist in negotiations with creditors' groups to obtain their support for the company's assumption of any bonus or other compensation program; (h) provide expert witness testimony with respect to the company's compensation programs; (i) provide compensation benchmarking data and advice as needed; and (j) develop and implement other compensation or compensation administration programs as needed. The Debtors will pay Watson Wyatt based on its customary hourly rates: Professional Hourly Rate ------------ ----------- Analysts $200 to $350 Consultants $375 to $500 Senior Consultants $550 to $700 The Debtors will also reimburse Watson Wyatt for any necessary out-of-pocket expenses incurred. Mr. Seligman informs the Court that Watson Wyatt has received a $75,000 retainer on Dec. 12, 2005. The Debtors have also paid $300,000 to Watson Wyatt for its services since Dec. 6, 2005. Ann Costolloe, a senior consultant at Watson Wyatt & Company, in San Francisco, California, assures the Court that her firm does not hold any interest adverse to the Debtors and their estates, and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About Calpine Corp. Headquartered in San Jose, California, Calpine Corporation -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The Company filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed $26,628,755,663 in total assets and $22,535,577,121 in total liabilities. (Calpine Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) CALPINE CORP: Wants Davis Wright to Handle Immigration Matters -------------------------------------------------------------- Calpine Corp. and its debtor-affiliates ask permission from the U.S. Bankruptcy Court for the Southern District of New York to expand Davis Wright Tremaine LLP's responsibilities to include human resources-related immigration matters, nunc pro tunc to May 11, 2006. Pursuant to the Expanded Services, Davis Wright will be providing day-to-day advice and counsel regarding immigration law matters relating to the Debtors' employees, including the handling of: 1. applications and petitions to the U.S. Department of Homeland Security, the U.S. Department of Labor, and to the U.S. Department of State to obtain: -- non-immigrant visas and employment authorizations for new employees, and to renew, amend, or extend existing non-immigrant visas and employment authorization for current employees; and -- immigrant visas and employment and travel authorizations for existing employees; and 2. any appeals or requests for reconsideration arising from a governmental agency's denial, refusal, or rejection of an application or petition. Davis Wright will also be providing day-to-day advice and counsel to the Debtors' human resources staff on matters related to compliance with federal immigration laws and regulations in the hiring and retention of the Debtors' employees. The Debtors disclosed that DWT's professionals bill: Professional Hourly Rates ------------ ------------ Partners $350 to $445 Counsel $350 to $400 Associates $245 to $325 Paraprofessionals $140 to $160 The Debtors will also reimburse DWT for its necessary out-of- pocket expenses. Steven F. Greenwald, Esq., a partner at Davis Wright Tremaine LLP, assures the Court that his firm does not represent any interest adverse to the Debtors and their estates. Mr. Greenwald maintains that his firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About Calpine Corp. Headquartered in San Jose, California, Calpine Corporation -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The Company filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed $26,628,755,663 in total assets and $22,535,577,121 in total liabilities. (Calpine Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) CAMERA PLATFORMS: March 31 Balance Sheet Upside-Down by $2.2 Mil. ----------------------------------------------------------------- Camera Platforms International, Inc. has filed its financial report for the quarter ended March 31, 2006 with the Securities and Exchange Commission. The Company's balance sheet at March 31, 2006 showed total assets of $70,000 and total liabilities $2,342,000 resulting to a total shareholders' deficit of $2,272,000. The Company's balance sheet also showed strained liquidity with $48,000 in total current assets and $2,342,000 in total current liabilities. For the three months ended March 31, 2006, Camera Platforms incurred a $63,000 net loss out of $59,000 in revenues from rental operations. A full-text copy of the Company's financial report for the quarter ended March 31, 2006 is available for free at: http://researcharchives.com/t/s?ca5 Going Concern Doubt Rose, Snyder & Jacobs expressed substantial doubt about Camera Platforms International, Inc.'s ability to continue as a going concern after auditing the Company's financial statements for the years ended December 31, 2005, 2004 and 2003. The auditors pointed to the Company's recurring losses from operations, negative cash flows from operations, and net capital deficiency. Based in North Hollywood, California, Camera Platforms International, Inc., dba The Shotmaker Company (OTC: CPFR) -- http://www.shotmaker.com-- leases and rents production equipment, including camera cars, dollies, cranes, and accessories, to the film and video industries. Camera Platforms International carries the Shotmaker, Pegasus, Enlouva, and Panther brand names. CATHOLIC CHURCH: Morning Star Opposes ACE Insurers Settlement Pact ------------------------------------------------------------------ As reported in the Troubled Company Reporter on July 12, 2006, the Diocese of Spokane and ACE Property entered into a settlement agreement to resolve all claims with respect to the Alleged Aetna Policy, including coverage for Tort Claims and any other present or future liabilities that might be covered. A full-text copy of the Settlement, Release and Buy Back Agreement between the Diocese and ACE Property is available for free at: http://researcharchives.com/t/s?d8d Objections (A) Morning Star Morning Star Boy's Ranch wants the Diocese's Settlement, Release and Policy Buy Back Agreement with ACE Property & Casualty Insurance Company to provide satisfactory resolution of Morning Star's interest in the ACE policies and related coverages, indemnities, and rights of defense. Morning Star has been individually named as defendant in proceedings arising from sexual abuse involving priests or clergy affiliated or associated with the Spokane Diocese. Christopher J. Kerley, Esq., at Keefe, King & Bowman, P.S., in Spokane, Washington, contends that the settlement language has, or has the capacity, to deprive Morning Star of coverage that it purchased and that was intended to provide protection to Morning Star for claims and causes of action. According to Mr. Kerley, Morning Star has a legally protected interest in the ACE policy. Mr. Kerley explains that Morning Star paid for and is entitled to all benefits under the insurance coverage afforded under the policy, is or may be an additional named insured under each policy, and is an intended beneficiary under any and all relevant and applicable policies issued by ACE. (B) Future Claims Representative The Diocese's Settlement Agreement with ACE must be denied unless changes and clarifications or assurances are effected, Gayle E. Bush, in his capacity of Future Claims Representative, tells Judge Williams. Under the ACE Settlement Agreement, the insurer is required to immediately pay the settlement funds. However, the Settlement Effective Date is set for October 1, 2007, and until that time, the Diocese would have no right, title or interest in the funds. The Diocese has advanced no business justification for barring the availability of the settlement fund to the financially starved estate for over 14 months, Mr. Bush asserts. The Effective Date should occur commensurate with ACE's payment, he says. The delayed Effective Date is also problematic with respect to the proposed releases, Mr. Bush points out. Under the Settlement Agreement, to the extent the Effective Date does not occur as described, the settlement funds will remit to ACE. As a result, interested parties may forgo exercising their rights against ACE for over a year, only to have the settlement funds remitted to ACE in October 2007. The FCR also objects to provisions relating to "indemnity for Tort Claims" and "Causal link" claimants. Mr. Bush explains that the ACE Settlement Agreement is unclear precisely what "indemnity for Tort Claims" would encompass. The FCR objects to the extent this could in any way serve as a restriction on Future Tort Claimants' right to share in the Settlement proceeds and would result in greater restrictions regarding the use of funds than are present in the insurance policies themselves. The FCR notes that "Causal link" claimants are not defined in the Settlement Agreement or the Diocese's Motion. There is no discussion of whether "causal link claimants" is intended to refer to Future Tort Claimants represented by the FCR or some subset. More importantly, there is no discussion of the significance or impact of the provision on the FCR's constituency. (C) Association of Parishes The Association of Parishes is not opposed to a settlement of coverage issues, Ford Elsaesser, Esq., at Elsaesser Jarzabek Anderson Marks Elliott & McHugh, tells Judge Williams. However, to the extent the settlement purports to prevent any use of the proceeds for the defense or indemnification of parishes, and the settlement purports to earmark the proceeds for payment of sexual abuse tort claims in the bankruptcy proceeding, then its terms and conditions impair the parishes' abilities to assert their rights to the settlement proceeds, Mr. Elsaesser contends. Mr. Elsaesser further argues that any settlement and release of ACE contemplated under the Settlement Agreement should include and provide for the parishes' right to claim against the settlement proceeds to the extent that the parishes are entitled to defense or indemnification. The parishes' rights must be protected particularly since the ACE Settlement Agreement purports to "sell free and clear of liens" the liability policies impacted by the Settlement to the insurer, with the limited exception of Morning Star's claims. Mr. Elsaesser says the parishes should either be subject to the same exclusion as is being made for Morning Star or the order approving the Settlement should reserve the parishes' right to make legal claim to the insurance settlement proceeds, if and when the parishes' rights to defense and indemnity are ever implicated. About Diocese of Spokane The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 66; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) CATHOLIC CHURCH: Kukuk Farms Balks at Spokane's I-90 Property Sale ------------------------------------------------------------------ Don and Sandy Kukuk, dba Kukuk Farms, objects to the Diocese of Spokane's attempt to sell, free and clear of liens, the property identified as "Property west of I-90, Spokane County Parcel #14121.9027." Kukuk Farms has a leasehold interest in the I-90 Property pursuant to the terms of a Crop Share Farm Lease dated August 18, 1997, as amended, with Francis L. Adley. Christopher G. Varallo, Esq., at Witherspoon, Kelley, Davenport & Toole, P.S., in Spokane, Washington, tells Judge Williams that pursuant to the terms of the Lease and an Addendum to Crop Share Farm Lease, if its tenancy in the I-90 Property, or at least that portion of the I-90 Property which the Diocese actually owns, is to be terminated, Kukuk Farms is due certain compensation. No compensation has been forthcoming from the Diocese, Mr. Varallo says. If the Lease is terminated, Kukuk Farms is entitled to adequate protection of its interest under the Lease and Addendum pursuant to Section 363(e) of the Bankruptcy Code, Mr. Varallo asserts, citing In re Qualitech Steel Corp, 327 F.3d 537, 548 (3d. Cir. 2003). If the I-90 Property is to be sold free of the Lease and Addendum, Kukuk Farms is entitled to compensation for its leasehold interest. Mr. Varallo also contends that while the Diocese and its counsel have issued notices of termination which purport to terminate the Lease and the Addendum, those notices are defective and do not comport with Washington State law, or the Lease or Addendum. The Diocese, Mr. Varallo argues, has failed to show grounds under Sections 105 or 363 for its request to be granted. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 66; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) CENTURYTEL INC: Earns $73.6 Million First Quarter 2006 ------------------------------------------------------ CenturyTel, Inc., earned $73.6 million of net income, excluding nonrecurring items, in second quarter 2006 compared to $85.1 million in second quarter 2005. The decrease was primarily driven by the decline in operating cash flow. "CenturyTel delivered solid results as we experienced strong demand for broadband services and communications bundles during the quarter," Glen F. Post, III, chairman and chief executive officer, said. "The 60% growth in high-speed Internet customers and 45% growth in related revenues over the past twelve months reflect CenturyTel's focus on being the broadband provider of choice in our markets." Operating revenues rose 0.4% to $609.1 million in second quarter 2006 from $606.4 million in second quarter 2005. This increase primarily resulted from revenues from metro fiber assets acquired in mid-2005 and data revenue growth from high-speed Internet subscribers. These increases more than offset revenue declines attributable to access line losses and lower access revenues. Operating expenses increased 5.6% to $443.9 million from $420.5 million in second quarter 2005 primarily due to growth in our high-speed Internet connections and expenses related to the metro fiber assets acquired in mid-2005. Operating cash flow decreased to $297.1 million from $316.3 million. CenturyTel achieved an operating cash flow margin of 48.8% during the quarter versus 52.2% in second quarter 2005. This margin decline was principally driven by access line losses and lower USF and access revenues, along with the growth in lower margin services such as high-speed Internet, fiber transport and CLEC. As reported in the Troubled Company Reporter on July 25, 2006, all repurchases under the Company's February 2006 accelerated share repurchase agreements entered into with investment banks for approximately 14.36 million shares were recently completed and CenturyTel paid the banks $28.4 million cash as final settlement of the agreements. The Company has $500 million remaining under its $1 billion share repurchase program authorized in February of this year. "We are pleased that the accelerated share repurchase program was completed in less than five months. We currently expect to continue purchasing shares under the remaining $500 million in the open market," Mr. Post said. Headquartered in Monroe, Louisiana, CenturyTel, Inc. (NYSE: CTL) -- http://www.centurytel.com/-- provides communications, high- speed Internet and entertainment services in small-to-mid-size cities through its broadband and fiber transport networks. Included in the S&P 500 Index, CenturyTel delivers advanced communications with a personal touch to customers in 25 states. * * * Moody's Investors Services affirmed CenturyTel's Baa2 senior unsecured long-term rating following the company's authorization of a $1 billion share repurchase program on Feb. 22, 2006. Moody's believes that given the strength of the company's cash flows and strong balance sheet at Dec. 31, 2005, the execution of the share repurchase program will not materially weaken the company's credit metrics. Moody's also affirmed the Company's Baa2 Senior Unsecured Rating; its (P)Baa2 Senior Unsecured Shelf; and (P)Ba1 Preferred Shelf rating. The rating outlook is stable. CENTURY THEATRES: Sells Equity to Cinemark USA for $681 Million --------------------------------------------------------------- Cinemark USA, Inc., inked a definitive purchase agreement to acquire all of the outstanding stock of Century Theatres, Inc., for a combination of cash and stock of Cinemark's parent company. The equity purchase price is approximately $681 million in addition to the assumption of debt. To finance the acquisition, the company plans to refinance its current senior facility of $254 million and Century's senior facility of $360 million with a new $1.120 billion senior secured term loan and will issue to Century $150 million of common stock in Cinemark's parent. The company will utilize approximately $50 million of its current cash to fund the payment of transaction expenses and the balance of the cash purchase price. The Company also plans to increase its revolver capacity to $150 million with no amount drawn at closing. "The real winners here are people around the country who love movies," said Lee Roy Mitchell, Chairman and CEO. "Customers of Cinemark theatres enjoy the best available presentation of movies in an environment that is fun, comfortable and exciting. This heritage will continue with the addition of Century Theatres into our enterprise given the high standards of customer service and quality that the Syufy family insisted on at Century." "This transaction establishes the premier international movie theatre circuit, empowered with extraordinary employees at every level," said Raymond Syufy, Chairman, Century Theatres. "My brother Joe and I are very proud that our customers will continue to enjoy the high quality presentation and movie going experience that has earned such wonderful loyalty over the years. We are very pleased to be playing an important role in the creation of such an exciting, international enterprise in entertainment." Upon closing of the acquisition, Cinemark's stockholders will include Lee Roy Mitchell, its founder and Chief Executive Officer, Syufy Enterprises, LP, Quadrangle Capital Partners and Madison Dearborn Capital Partners, which will remain the controlling shareholder. The combined enterprise will exhibit movies to over 200 million patrons annually in approximately 391 theatres with 4,395, screens in 37 states and 13 countries. Lee Roy Mitchell will remain the Chairman of the Board and Chief Executive Officer of the Company. Raymond Syufy and Joseph Syufy will join the Board of Directors, representing Syufy Enterprises, LP. The acquisition will be financed with a senior credit facility led by an affiliate of Lehman Brothers Inc. and an affiliate of Morgan Stanley & Co. Incorporated. The merger will not constitute a change of control for purposes of Cinemark, Inc.'s 9-3/4% Senior Discount Notes or Cinemark's 9% Senior Subordinated Notes. A portion of the new credit facility will be used to repay Century's outstanding indebtedness under its existing credit facility. Lehman Brothers Inc. served as financial advisor to Cinemark. Kirkland & Ellis LLP, and Akin Gump Strauss Hauer & Feld LLP served as legal counsel to Cinemark. Morgan Stanley & Co. Incorporated served as financial advisor to Century and its shareholders. Morrison & Foerster LLP represented Century. Completion of the acquisition is subject to the satisfaction of customary closing conditions for transactions of this type, including antitrust approval and completion of financing. About Cinemark Inc. Cinemark Inc. -- http://www.cinemark.com/-- operates 202 theatres and 2,469 screens in 34 states in the United States and operates 112 theatres and 932 screens internationally in 13 countries, mainly Mexico, South and Central America. Cinemark was founded in 1987 by its Chief Executive Officer and Chairman of the Board, Lee Roy Mitchell. In 2004 a controlling interest in Cinemark was sold to Madison Dearborn Capital Partners. Cinemark was among the first theatre exhibitors to offer advanced real-time Internet ticketing at its own website. About Century Theatres Headquartered in California, Century Theatres Inc. operates 78 theaters with 994 screens in 12 western states. The company was founded in 1941 by Raymond J. Syufy and is now led by his sons, Raymond W. Syufy and Joseph Syufy. Since 1996, the company has added 641 screens and has expanded into 8 additional states. In 2000, it launched its CineArts division, with screens in California and Illinois. * * * Moody's Investors Services assigned a Ba3 long-term corporate family rating and a Ba3 bank loan debt rating on Jan. 27, 2006. CHARLES JACOBS: Case Summary & Four Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Charles Maxwell Jacobs aka Max Jacobs P.O. Box 1421 Mandeville, Louisiana 70470 Bankruptcy Case No.: 06-10773 Chapter 11 Petition Date: August 7, 2006 Court: Eastern District of Louisiana (New Orleans) Judge: Elizabeth W. Magner Debtor's Counsel: Phillip K. Wallace, Esq. Phillip K. Wallace, PLC 2027 Jefferson Street Mandeville, Louisiana 70448 Tel: (985) 624-2824 Fax: (985) 624-2823 Total Assets: $396,903 Total Debts: $1,919,439 Debtor's 4 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Whitney National Bank Judgment made $1,708,512 228 St. Charles Avenue executory New Orleans, LA 70130 Newton Harris Business loan $50,000 75483 Beverly Drive Covington, LA 70435 Gemb/sams Club Dc Credit card $1,841 P.O. Box 981400 El Paso, TX 79998 Chevron Credit card $465 P.O. Box 5010 Concord, CA 94524 CINCINNATI BELL: June 30 Balance Sheet Upside-Down by $704.7 Mil. ----------------------------------------------------------------- Cincinnati Bell Inc. reported earnings growth driven by increased wireless and data revenue and by lower interest expense. For the quarter, revenue was $323 million with operating income of $83 million and net income of $24 million. Net income excluding special items was $23 million, an increase of $8 million, from the second quarter of 2005 also excluding special items. Special items in the current quarter include a $2 million benefit from the expiration of certain guarantees and warranties associated with the broadband segment. At June 30, 2006, the Company's balance sheet showed $1.892 billion in total assets and $2.597 billion in total liabilities, resulting in a $704.7 million shareholders' deficit. "By focusing on consistent execution of our strategy, Cincinnati Bell has delivered revenue, earnings and subscriber growth in one of the most competitive telecommunications markets in the country," Jack Cassidy, president and chief executive officer of Cincinnati Bell Inc, said. "During the quarter, we completed the wireless subscriber migration to our GSM network. This is another significant milestone for Cincinnati Bell Wireless. Now, all of our customers share the experience of communicating on the best wireless network in Cincinnati and Dayton and the company no longer incurs the added expense of converting customers from one network to another." Second Quarter Highlights -- Quarterly revenue increased to $323 million, up 3% or $8 million from a year ago, as increased wireless service, data and managed services revenue and equipment sales offset a decrease in local voice revenue. -- Net postpaid wireless activations in the quarter totaled 12,000, an increase of 15,000 from the second quarter of 2005. Postpaid average revenue per user was $48, even with a year ago. By completing the wireless subscriber migration, Cincinnati Bell has discontinued the operation of its legacy TDMA network. -- Cincinnati Bell's "Super Bundle" subscriber base reached 160,000, an increase of 11% from a year ago. As a result, consumer bundle penetration totaled 28% of Cincinnati Bell households within its traditional operating area. In addition to increasing household bundle penetration, revenue per household increased to an all-time high of $83, up 5% from a year ago. -- Cincinnati Bell's DSL subscriber base grew to 177,000, a 22% increase versus the second quarter of 2005. DSL penetration of in-territory consumer primary access lines was up 7 percentage points from a year ago to 29%, representing 154,000 subscribers. -- Free cash flow of $52 million increased 23% versus the second quarter of 2005, primarily due to reduced interest payments. Net debt declined by $48 million in the quarter to $2.1 billion. Capital expenditures during the quarter were $39 million, or 12% of revenue. Financial and Operations Overview "We are very pleased with the financial performance in each of our business segments," Brian Ross, chief financial officer of Cincinnati Bell Inc., said. "Wireless service revenue growth validates that we have turned our wireless business around. Profitability in our core wireline business remains stable despite declining access lines. Reduced interest payments are improving free cash flow." Revenue of $323 million grew 8 percent and adjusted EBITDA of $116 million improved 4% sequentially. Adjusted EBITDA declined $8 million from the second quarter of 2005, primarily the result of increased expenses related to wireless subscriber growth and migration to the GSM network. Local Segment Quarterly access line performance improved sequentially and was nearly equal to the second quarter of 2005 as the rate of decline slowed to 3.6%. The rate of in-territory access line loss remained relatively unchanged at 5.0% as wireless substitution remained the key contributor to in-territory decline. Access lines in expansion markets adjacent to the company's traditional marketing area grew 36 percent from a year ago. The Local segment produced quarterly revenue of $187 million, nearly even with the second quarter of 2005. Adjusted EBITDA of $96 million was approximately equal to a year ago as an 8% increase in data revenue and a 3% decrease in the cost of providing service partially offset lower voice revenue. Wireless Services Strong subscriber growth continued in the second quarter with postpaid net activations of 12,000, an increase of 15,000 from a year ago as churn remained low at 1.6%. Postpaid ARPU of $48 represented the second consecutive quarter of improvement and was essentially even with a year ago. During the quarter, Cincinnati Bell discontinued the operation of its TDMA network with the migration of 51,000 customers to the GSM network. The Wireless segment generated quarterly revenue of $66 million, up 10 percent from the second quarter of 2005 reflecting growth in subscriber voice, data and equipment revenue. Postpaid data revenue doubled from a year ago, which resulted in a data ARPU of $5 per postpaid subscriber. Adjusted EBITDA for the quarter of $13 million was down $6 million compared to the second quarter of 2005. Higher expenses supporting a 63% increase in postpaid gross activations and accelerated network migration accounted for the decline. Hardware and Managed Services The Hardware and Managed Services segment produced quarterly revenue of $58 million, a 7% increase from a year ago as equipment sales, data center and related managed service activity remained strong. Sequentially, revenue improved by 50% driven by an increase in seasonal equipment sales. Adjusted EBITDA was $5 million even with the second quarter of 2005 as increased margin from higher computer hardware sales and managed services revenue offset margin declines in telephony hardware and related services. Other Communications Services The Other Communications Services segment, which includes long distance, security monitoring, and payphone operations generated revenue of $20 million, which was equal to the second quarter of 2005. Adjusted EBITDA of $8 million was also equal to the second quarter of 2005 as increased long distance profitability offset a decline in payphone operations. About Cincinnati Bell Inc. Headquartered in Cincinnati, Ohio, Cincinnati Bell Inc. (NYSE: CBB) -- http://www.cincinnatibell.com/-- provides a wide range of local exchange and wireless telecommunications products and services to residential and business customers in Ohio, Kentucky, and Indiana. CINEMARK INC: To Buy Century Theatres' Equity for $681 Million -------------------------------------------------------------- Cinemark USA, Inc., inked a definitive purchase agreement to acquire all of the outstanding stock of Century Theatres, Inc., for a combination of cash and stock of Cinemark's parent company. The equity purchase price is approximately $681 million in addition to the assumption of debt. To finance the acquisition, the company plans to refinance its current senior facility of $254 million and Century's senior facility of $360 million with a new $1.120 billion senior secured term loan and will issue to Century $150 million of common stock in Cinemark's parent. The company will utilize approximately $50 million of its current cash to fund the payment of transaction expenses and the balance of the cash purchase price. The Company also plans to increase its revolver capacity to $150 million with no amount drawn at closing. "The real winners here are people around the country who love movies," said Lee Roy Mitchell, Chairman and CEO. "Customers of Cinemark theatres enjoy the best available presentation of movies in an environment that is fun, comfortable and exciting. This heritage will continue with the addition of Century Theatres into our enterprise given the high standards of customer service and quality that the Syufy family insisted on at Century." "This transaction establishes the premier international movie theatre circuit, empowered with extraordinary employees at every level," said Raymond Syufy, Chairman, Century Theatres. "My brother Joe and I are very proud that our customers will continue to enjoy the high quality presentation and movie going experience that has earned such wonderful loyalty over the years. We are very pleased to be playing an important role in the creation of such an exciting, international enterprise in entertainment." Upon closing of the acquisition, Cinemark's stockholders will include Lee Roy Mitchell, its founder and Chief Executive Officer, Syufy Enterprises, LP, Quadrangle Capital Partners and Madison Dearborn Capital Partners, which will remain the controlling shareholder. The combined enterprise will exhibit movies to over 200 million patrons annually in approximately 391 theatres with 4,395, screens in 37 states and 13 countries. Lee Roy Mitchell will remain the Chairman of the Board and Chief Executive Officer of the Company. Raymond Syufy and Joseph Syufy will join the Board of Directors, representing Syufy Enterprises, LP. The acquisition will be financed with a senior credit facility led by an affiliate of Lehman Brothers Inc. and an affiliate of Morgan Stanley & Co. Incorporated. The merger will not constitute a change of control for purposes of Cinemark, Inc.'s 9-3/4% Senior Discount Notes or Cinemark's 9% Senior Subordinated Notes. A portion of the new credit facility will be used to repay Century's outstanding indebtedness under its existing credit facility. Lehman Brothers Inc. served as financial advisor to Cinemark. Kirkland & Ellis LLP, and Akin Gump Strauss Hauer & Feld LLP served as legal counsel to Cinemark. Morgan Stanley & Co. Incorporated served as financial advisor to Century and its shareholders. Morrison & Foerster LLP represented Century. Completion of the acquisition is subject to the satisfaction of customary closing conditions for transactions of this type, including antitrust approval and completion of financing. About Century Theatres, Inc. Headquartered in California, Century Theatres Inc. operates 78 theaters with 994 screens in 12 western states. The company was founded in 1941 by Raymond J. Syufy and is now led by his sons, Raymond W. Syufy and Joseph Syufy. Since 1996, the company has added 641 screens and has expanded into 8 additional states. In 2000, it launched its CineArts division, with screens in California and Illinois. About Cinemark Inc. Cinemark Inc. -- http://www.cinemark.com/-- operates 202 theatres and 2,469 screens in 34 states in the United States and operates 112 theatres and 932 screens internationally in 13 countries, mainly Mexico, South and Central America. Cinemark was founded in 1987 by its Chief Executive Officer and Chairman of the Board, Lee Roy Mitchell. In 2004 a controlling interest in Cinemark was sold to Madison Dearborn Capital Partners. Cinemark was among the first theatre exhibitors to offer advanced real-time Internet ticketing at its own website. * * * Standard & Poor's Ratings Services placed on Aug. 8, 2006, all its ratings on Cinemark Inc. and subsidiary company Cinemark USA Inc., which are analyzed on a consolidated basis, including the 'B+' corporate credit ratings, on CreditWatch with negative implications. The CreditWatch listing follows the company's announcement that it will be financing the acquisition of Century Theatres Inc. (B+/Negative/--) with a senior credit facility. Cinemark had US$1 billion in debt and $846 million in present value of operating leases as of March 31, 2006. COI MIDWEST: Files Schedules of Assets and Liabilities ------------------------------------------------------ COI Midwest Investment LLC, delivered to the U.S. Bankruptcy Court for the Central District of California their schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $14,000,000 B. Personal Property $756,000 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $8,011,098 E. Creditors Holding Unsecured Priority Claims F. Creditors Holding $15,000 Unsecured Nonpriority Claims ----------- ---------- Total $14,756,000 $8,026,098 Headquartered in the City of Industry, California, COI Midwest Investments LLC leases its real property in Canyon Road. The Company filed for bankruptcy protection on June 1, 2006 (Bankr. C.D. Calif. Case No. 06-12329). Ron Bender, Esq., and David B. Golubchik, Esq., at Levene, Neale, Bender, Rankin & Brill, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it reported assets amounting between $10 million and $50 million and debts aggregating between $1 million and $10 million. COI MIDWEST: Taps Cushman & Wakefield as Real Estate Brokers ------------------------------------------------------------ COI Midwest Investment LLC asks the U.S. Bankruptcy Court for the Central District of California for permission to employ Cushman & Wakefield as its real estate brokers. The Debtor reminds the Court that its primary asset is a real property located at 900 South Turnbull Canyon Road in City of Industry, California. Wells Fargo Bank, N.A. holds an $8,011,098 claim secured by a first priority deed of trust against the property. The Debtor believes that the value of the property is approximately between $12.5 million and $14 million. Cushman & Wakefield will: a. advertise and market the Debtor's property to interested parties; b. show the Debtor's property to interested parties; c. represent the Debtor's estate as seller in connection with the sale of the Debtor's property; d. advise the Debtor with respect to obtaining the highest and best offer available in the present market for its property; and e. execute all documents necessary to consummate a sale of the Debtor's property to the highest and best buyer, including an offer sheet, escrow instructions, a grant deed and all other purchase and sale and closing documents. The Debtor tells the Court that David Hasbrouck, executive vice- president of Cushman & Wakefield, and Stuart Milligan, a director at Cushman & Wakefield, will be the agents primarily responsible for this engagement. The Debtor discloses that under a Sales Listing Agreement with Cushman & Wakefield, the Debtor will reimburse Cushman & Wakefield for expenses incurred but not to exceed $20,000. In the event of a sale of the Debtor's property: * Cushman & Wakefield will receive a 1% commission if the gross sales price in less than or equal to $12.8 million; * if the gross sales price is greater than $12.8 million but less than $13.8 million, Cushman & Wakefield will receive an additional commission equal to 3% of the gross sales price in excess of $12.8 million; and * if the gross sales price is greater than $13.8 million, in addition to the 1% base commission and 3% incremental commission, Cushman & Wakefield will receive further additional commission equal to 20% of the gross sales price in excess of $13.8 million. If the Debtor's property is not sold during the term of the agreement, Cushman & Wakefield will receive a $20,000 flat rate commission. Mr. Hasbrouck assures the Court that Cushman & Wakefield does not represent any interest adverse to the Debtor or its estate. Headquartered in the City of Industry, California, COI Midwest Investments LLC leases its real property in Canyon Road. The Company filed for bankruptcy protection on June 1, 2006 (Bankr. C.D. Calif. Case No. 06-12329). Ron Bender, Esq., and David B. Golubchik, Esq., at Levene, Neale, Bender, Rankin & Brill, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it reported assets amounting between $10 million and $50 million and debts aggregating between $1 million and $10 million. COLLINS & AIKMAN: Inks Settlement Pact with Magna and GECC ---------------------------------------------------------- Collins & Aikman Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Michigan to approve their stipulation with Magna International Inc. and General Electric Capital Corporation. The Debtors purchase certain component parts or services from Magna. Magna asserts that the Debtors owe it $1,047,409 for parts and services provided prior to the Debtors' bankruptcy filing. Likewise, Magna purchases component parts, tooling and services from the Debtors. The Debtors assert that Magna owe them $3,808,663 for parts and tooling provided prior to the Petition Date. In addition, the Debtors believe that they continue to be owed from Magna an additional $165,495 on account of prepetition shipments. GECC claims to own and hold a valid perfected first priority lien on and security interest in the Magna prepetition debt, Christopher A. Grosman, Esq., at Carson Fischer, P.L.C., in Bloomfield Hills, Michigan, relates. Mr. Grosman explains that under certain agreements, the Debtors had sold, assigned and transferred certain of their accounts receivables to CarCorp Inc. who, in turn, assigned all of those accounts receivables to GECC. Pursuant to a stipulation among the Debtors, Magna and GECC, the parties agreed that Magna will pay $2,761,254 to a CarCorp account related to prepetition receivables. Upon receipt of payment by CarCorp, the parties will exchange mutual releases. 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. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) COLLINS & AIKMAN: ACT Wants $320,654 Claim Deemed Timely Filed -------------------------------------------------------------- ACT Laboratories, Inc., asks the U.S. Bankruptcy Court for the Eastern District of Michigan to deem its $320,654 claim against Collins & Aikman Corporation and its debtor-affiliates as timely filed. ACT is a multimillion-dollar supplier to Collins & Aikman Corporation under a Strategic Supply Agreement. Renee Sophia Coulter, Esq., at Cummings, McClorey, Davis & Acho, PLC, in Livonia, Michigan, asserts that the Debtors owe ACT $320,653 for certain prepetition invoices. Ms. Coulter tells the Court that the Debtors' bankruptcy cases were not properly noticed to ACT. Among other things, ACT was not provided with any notice of the Debtors' voluntary petition. Furthermore, ACT's Accounting/Treasury Department did not receive a blank Proof of Claim with bar codes for ACT to fill out, Ms. Coulter says. There was also significant restructuring and changing of personnel in ACT's Accounting/Treasury Department. All these factors, Ms. Coulter says, contributed to ACT's late claim filing. Ms. Coulter asserts that ACT's failure to file a timely claim was clearly the result of excusable neglect. Ms. Coulter points out that: -- there has been no danger of prejudice to the Debtors; -- the length of ACT's delay will have a minimal impact on judicial proceedings; -- allowing ACT's claim filing will not impact the administration of the Debtors' bankruptcy cases in any significant way; -- the reason for the delay was not within the reasonable control of ACT; and -- ACT has acted in good faith at all times in the matter. 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. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) COMPLETE RETREATS: Club Ex-Members Want Refund Payment Secured -------------------------------------------------------------- An ad hoc committee of former members in Complete Retreats LLC and its debtor-affiliates' destination clubs contends that the Debtors are in default of their obligation to refund membership deposits. The Ad Hoc Committee of Withdrawn Members consists of more than 100 members who had resigned prior to the Debtors' bankruptcy filing, but did not obtain refunds as required by their membership agreements. The current members of the Ad Hoc Committee are: 1. Christopher Swann, 2. Natasha Swann, 3. Frank Bomher, 4. W. Michael Reichert, 5. Michael Shalett, 6. Robert Higgins, 7. Vince Walls, 8. Chad Carpenter, 9. Steven F. Maier, 10. Michael G. Knox, 11. Tom Gruber, 12. George Greenwald, 13. Gilmore S. Haynie, 14. Amy George, and 15. Guy Bond. Harris B. Winsberg, Esq., at Troutman Sanders LLP, in Atlanta, Georgia, tells the U.S. Bankruptcy Court for the District of Connecticut that the Ad Hoc Committee does not object to the Debtors obtaining postpetition financing. However, the Ad Hoc Committee is concerned that the Debtors are burning through cash to support services for the current members at an unsustainable economic level. "Simply put, the Debtors are providing services to current members at a significant loss to the detriment of the members who have withdrawn," Mr. Winsberg asserts. Mr. Winsberg notes that as reflected in their Budget, the Debtors will burn approximately $8,400,000 over the course of the next 10 weeks, which is $120,000 per day. The Debtors project $2,100,000 in revenues versus $10,500,000 in expenses over the next couple of months. Accordingly, drastic action is needed to either increase fees or to slash costs, Mr. Winsberg contends. About Complete Retreats Headquartered in Westport, Connecticut, Complete Retreats LLC operates five-star hospitality and real estate management businesses. In addition to its mainline destination club business, the Debtor also operates an air travel program for destination club members, a villa business, luxury car rental services, wine sales services, fine art sales program, and other amenity programs for members. Complete Retreats and its debtor- affiliates filed for chapter 11 protection on July 23, 2006 (Bankr. D. Conn. Case No. 06-50245). Nicholas H. Mancuso, Esq. and Jeffrey K. Daman, Esq. at Dechert LLP represent the Debtors in their restructuring efforts. Michael J. Reilly, Esq., at Bingham McCutchen LP, in Hartford, Connecticut, serves as counsel to the Official Committee of Unsecured Creditors. No estimated assets have been listed in the Debtors' schedules, however, the Debtors disclosed $308,000,000 in total debts. (Complete Retreats Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/). COMPLETE RETREATS: Panel Says DIP Loan is Low Risk & Oversecured ---------------------------------------------------------------- The Official Committee of Unsecured Creditors in Complete Retreats LLC and its debtor-affiliates' chapter 11 cases asks the U.S. Bankruptcy Court for the District of Connecticut to deny the Debtors' request for a short-term debtor-in-possession financing to the extent that it: (a) seeks to condition any refinancing of the DIP Loan upon repayment of the Existing Loans; and (b) constrains the Debtors' and the Committee's ability to seek and obtain alternative DIP Financing to repay the DIP Loan without contemporaneously repaying the Existing Loans. The Troubled Company Reporter on July 28, 2006 noted that the Court gave the Debtors interim authority to borrow up to $4,900,000 of the DIP financing pledged by The Patriot Group, LLC, as lender and agent, and LPP Mortgage, Ltd. In the loan agreement, The Patriot agreed to provide the Debtors with a $10,000,000 postpetition revolving line of credit to give them some time to secure a longer-term DIP financing arrangement. The Committee asserts that the DIP Loan, which provides up to a meager $8,500,000 advance, is a low risk short-term investment that appears to be substantially oversecured. The benefit of the DIP Loan to the Debtors' estates is as meager as the risk to the Lenders, Jonathan B. Alter, Esq., at Bingham McCutchen LLP, in Hartford, Connecticut, contends. "The DIP Loan provides the Debtors with a small amount of cash to cover the bare bones operation of [their] business for up to two months in [C]hapter 11," Mr. Alter asserts. "In contrast, the burden to the Debtors' estates and their other creditors is substantial, as are the benefits that inure exclusively to the Lenders." Mr. Alter argues that the DIP Credit Agreement and the proposed orders approving the DIP Loan: -- prohibit the Debtors and the Creditors Committee from seeking any alternative long term DIP financing solution other than one provided by the Lenders or one that pays all of the Lenders' purported $63,000,000 claims; -- significantly limit the Creditors Committee's ability to investigate the Existing Loans and the propriety of the Debtors' admissions to the validity, amount, liens and priority of the Existing Loans and the Debtors' broad releases of any defense or claim against the Lenders with respect to the Existing Loans. The DIP Loan provides virtually no funding for any Investigation; -- seek to mandate that the investigation take place on a highly expedited basis to be completed no later than two months from the date of the Committee's formation; -- attempts to divest the Committee of its right to exercise any discovery rights under Rule 2004 of the Federal Rules of Bankruptcy Procedure or otherwise in connection with any investigation, leaving the investigation dependent upon the Lenders' "informal" cooperation. Consequently, the DIP Loan and the Orders prevent the Debtors and the Committee from complying with their fiduciary duties to unsecured creditors and other stakeholders of the estates, Mr. Alter maintains. The Existing Loans refer to the $53,000,000 prepetition secured loan the Debtors borrowed from The Patriot Group LLC and LPP Mortgage, Ltd. While the DIP Credit Agreement and the Orders contemplate that the Committee could file an "Objection" if it finds a basis to challenge the Existing Loans, the documents provide that any action by the Committee to actually prosecute any challenge is an "Event of Default" under the DIP Credit Agreement requiring immediate "full and indefeasible payment" of both the DIP Loan and the Existing Loans and lifting the automatic stay to permit the Lenders to liquidate the Debtors' business and assets, Mr. Alter tells Judge Shiff. Mr. Alter also points out that the DIP Credit Agreement seek a number of extraordinary items, including: (1) a waiver of all rights to surcharge the Lenders' collateral for the cost incurred by the Debtors' estates to preserve the collateral under Section 506(c) of the Bankruptcy Code; (2) an attempt to insulate the $1,480,000 postpetition payment to Patriot relating to the Existing Loans from challenge by declaring the payment to be "indefeasible in all respects"; (3) seeking to limit any claims by "creditors and security holders" of the Debtors against the Lenders to "direct damages," even in the case of meritorious claims for willful misconduct by the Lenders; and (4) a cross-default provision in the DIP Credit Agreement that provides that any default under the Existing Loans will constitute an Event of Default. The DIP Loan seeks to inextricably link itself to the Existing Loans and provide the Lenders with disproportionate benefits that far outweigh the benefits provided to the Debtors and their creditors, Mr. Alter argues. "In this regard, the DIP Loan is little more than a disguised 'roll up' of the Existing Loans." The Committee does not seek to prejudice the Lenders' rights as secured lenders under the Existing Loans, Mr. Alter explains. It simply seeks to maintain a fair balance in the bankruptcy proceedings to permit it and the Debtors a reasonable opportunity to reorganize the Debtors' affairs. The Committee objects to several other provisions of the DIP Credit Agreement and the Proposed Final Order. The Committee also asks the Court to include these changes in the Final Order: (1) The Professional Fee Carve Out is insufficient to permit the Debtors' and the Committee's counsel to perform the tasks necessary for both to satisfy their fiduciary duties; (2) The Investigation Rights provided under the Order must be expanded to authorize and reserve all rights with respect to any claim or cause of action that creditors or the estates may have against the Lenders related to the Existing Loans and their relationship and conduct with respect to the Debtors; (3) The Committee's investigation rights under the Orders should be expanded to a period of at least 90 days, subject to further extension for good cause shown, and clarified that all transfers, payments, adequate protection granted to the Lenders and other transactions related to the Existing Loans remain subject to the Committee's rights of investigation and, if warranted after the investigation, potential recovery, disgorgement or other appropriate relief; (4) The Committee's investigation rights should not exclude the right to employ formal discovery pursuant to Bankruptcy Rule 2004 or otherwise; (5) The DIP Credit Agreement should not contain a cross- default to the Existing Loans. The terms of the Existing Loans have not been disclosed in the DIP Motion. Moreover, the Existing Loans are presumably already in default due to the Debtors' Chapter 11 filings; (6) The DIP Loan collateral should not include any avoidance actions under Chapter 5 of the Bankruptcy Code; (7) The Debtor's waiver of Section 506(c) rights should be limited to the DIP Loan collateral, not any collateral securing the Existing Loans; (8) Section 10.5 of the DIP Credit Agreement should be disapproved to the extent that it seeks to limit the rights and potential claims of creditors and other stakeholders; (9) The provisions of the order relating to Events of Default, the Lenders' enforcement rights and automatic stay relief should be modified to provide at least five business days notice to the Court, the Committee and other parties through a court filed document that describes in reasonable detail the basis for any claimed default. Moreover, the DIP order should provide the Committee and the Debtors with the right to seek an emergency hearing to contest the existence of any event of default and to seek affirmative relief; (10) The payment of accrued interest as adequate protection for the Existing Loans should be clarified to be interest at the "non-default rate" under the Existing Loans; (11) The Committee's counsel should receive contemporaneous copies of all notices, disclosure and reports provided to or received from the Lenders pursuant to the DIP Credit Agreement or the Court's Final Order; (12) Certain Event of Default notice and cure periods under the DIP Credit Agreement should be extended to a more reasonable period; and (13) Section 5.09 of the DIP Credit Agreement should be clarified to not limit the right of the Debtors or the Committee to seek relief under Section 365 of the Bankruptcy Code. "The Lenders have not provided DIP financing sufficient to provide the Debtors with a reasonable possibility of reorganization," Mr. Alter says. "They have only provided sufficient financing to explore whether there is an opportunity to refinance their claims as quickly as possible, while at the same time neutralizing the automatic stay and other bankruptcy risks attendant to their liquidation of the Debtors' estate through foreclosure." Lastly, Mr. Alter relates that the Committee was appointed recently and has not had a reasonable opportunity to explore other DIP financing structures but it is possible that given the appearance of collateral value underlying the Existing Loans, a new DIP lender may be willing to provide financing to repay the DIP Loan on a non-priming basis secured by liens junior to existing liens on the Debtors' assets. "Unsecured creditors, including those who deposited more than $300,00,000 for memberships with the Debtors, should not be precluded from pursuing that option." About Complete Retreats Headquartered in Westport, Connecticut, Complete Retreats LLC operates five-star hospitality and real estate management businesses. In addition to its mainline destination club business, the Debtor also operates an air travel program for destination club members, a villa business, luxury car rental services, wine sales services, fine art sales program, and other amenity programs for members. Complete Retreats and its debtor- affiliates filed for chapter 11 protection on July 23, 2006 (Bankr. D. Conn. Case No. 06-50245). Nicholas H. Mancuso, Esq. and Jeffrey K. Daman, Esq. at Dechert LLP represent the Debtors in their restructuring efforts. Michael J. Reilly, Esq., at Bingham McCutchen LP, in Hartford, Connecticut, serves as counsel to the Official Committee of Unsecured Creditors. No estimated assets have been listed in the Debtors' schedules, however, the Debtors disclosed $308,000,000 in total debts. (Complete Retreats Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/). DALE JARRETT: March 31 Balance Sheet Upside-Down by $1 Million -------------------------------------------------------------- Dale Jarrett Racing Adventure, Inc. has filed its financial report for the quarter ended March 31, 2006 with the Securities and Exchange Commission. Dale Jarrett's balance sheet at March 31, 2006 showed total assets of $629,050 and total liabilities of $1,691,660 resulting in a $1,062,610 stockholders' deficit. The Company's balance sheet also showed strained liquidity with $406,845 in total current assets and $1,687,827 in total current liabilities. For the three months ended March 31, 2006, the Company reported net loss of $240,184 from a $151,162 sales. A full-text copy of the Company's financial report for the quarter ended March 31, 2006 is available for free at: http://researcharchives.com/t/s?c9c Going Concern Doubt As reported in the Troubled Company Reporter on May 17, 2006, Stark Winter Schenkein & Co., LLP, in Denver, Colorado, raised substantial doubt about Dale Jarrett Racing Adventure, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's significant losses from operations and working capital and stockholder deficiencies. Dale Jarrett Racing Adventure, Inc.-- http://www.dalejarrett.com/ -- offers entertainment based oval driving schools and events. These classes are conducted at various racetracks throughout the country. The Corporation owns fifteen race cars. The Corporation also offers a number of add-on sale items including CDs from its Adventure Cam located in the car (four cameras and complete GPS data), clothing, souvenirs and photography. DANA CORP: Court Gives Final Okay on Claims Trading Procedures -------------------------------------------------------------- The Honorable Burton R. Lifland of the U.S. Bankruptcy Court for the Southern District of New York approved the claims trading procedures of Dana Corporation and its debtor-affiliates on a final basis. The Claims Trading Procedures refer to notification and hearing procedures that must be satisfied before certain transfers of claims against the Debtors, and equity securities in Dana are deemed effective. American Real Estate Holdings has agreed to dismiss its appeal of the Court's April 2006 Interim Order upon entry of the final order. All other objections to Debtors' request to the extent not resolved are overruled. Judge Lifland directed each Substantial Claimholder to: -- report its holdings as directed in various notices including the Notice of 382(1)(5) Plan and Disclosure Statement, the Notice of Claimholder Acceptance of 382(1)(5) Plan, and the Sell-Down Notice; and -- "sell-down" its holdings of Claims to the extent required. A 382(1)(5) Plan refers to a Chapter 11 plan of reorganization for the Debtors that provides for or contemplates the use of net operating loss carryforwards and other tax attributes under Section 382(1)(5) of the Internal Revenue Code and that restricts transfers of Beneficial Ownership of Affected Securities for not less than two years after the reorganization in order to avoid an "ownership change", as the term is defined in the Internal Revenue Code and related promulgated regulations. If and only to the extent that a 382(l)(5) Plan is confirmed by the Court and the largest class of unsecured Claims has voted to accept the 382(l)(5) Plan, each Substantial Claimholder will sell an amount of Claims equal to its share of the Sell-Down Amount so that no Substantial Claimholder will hold Claims in excess of their Maximum Amount. No Beneficial Claimholder will sell any of its Claims if the sale would result in the Beneficial Claimholder having Beneficial Ownership of an aggregate amount of Claims that is less than the Beneficial Claimholder's Protected Amount. Each Substantial Claimholder will sell its Claims subject to the Sell-Down to unrelated persons or entities, provided that the Substantial Claimholder will not have a reasonable basis to believe that the person would own, immediately after the contemplated consummation of the transfer, an amount of Claims in excess of the Maximum Amount for the claimholder. Any Beneficial Claimholder that participates in formulating any Chapter 11 plan of reorganization will not disclose to the Plan Proponent that any Claims in which the Beneficial Claimholder has a beneficial ownership are Newly Traded Claims, provided, no remedy will be imposed with respect to any alleged non-willful violation of this Participation Restriction without a further Court final determination that the remedy is fair and equitable to all parties, including the Beneficial Claimholder, under the circumstances. Any Claimholder found by the Court to have violated the Participation Restriction and who, as a result, would prevent the Debtors from implementing a 382(l)(5) Plan, will be required to dispose of Newly Traded Claims of which the Entity has Beneficial Ownership and will be subject to Forfeiture Remedy. If any Substantial Claimholder fails to comply with the Sell- Down applicable to it, the Substantial Claimholder will not be entitled to receive Beneficial Ownership of any Affected Securities in connection with the implementation of the 382(l)(5) Plan. Any Substantial Claimholder that violates the Final Order will be required to forfeit the Affected Securities. The Plan Proponent and the Debtors may seek to enforce the Forfeiture Remedy on an expedited basis. The Plan Proponent and the Debtors also reserve the right to seek from the Court other sanctions for a willful violation of the Final Order, including damages for loss of any tax benefits caused by the violation and any injunction appropriate to remedy the violation. Any distribution of Affected Securities pursuant to the implementation of the 382(l)(5) Plan that is precluded by an order enforcing the Forfeiture Remedy will be void ab initio. Any Entity that receives Forfeited Equity will immediately return the Forfeited Equity to the reorganized Debtors or, if all of the shares properly issued to the Entity and all of the Forfeited Equity have been sold before the time the Entity becomes aware of the fact, the Entity will return to the reorganized Debtors any Forfeited Equity still held by that Entity and the proceeds attributable to the sale of Forfeited Equity. About Dana Corporation Toledo, OH-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $7.9 billion in assets and $6.8 billion in liabilities as of Sept. 30, 2005. (Dana Corporation Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/). 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. DANA CORPORATION: Wants to Assume Toyota Motor Tooling Agreements ----------------------------------------------------------------- Dana Corp. and its debtor-affiliates ask permission from the U.S. Bankruptcy Court for the Southern District of New York to assume the tooling agreements they entered into with Toyota Motor Engineering & Manufacturing North America Inc. The Debtors also ask the Court to establish the cure amounts to be paid in connection with the assumption and assignment of the Tooling Agreements. The operation of the Debtors' structures division requires them to purchase tooling for use in the manufacturing process to meet specialized customer orders. The structures division manufactures vehicle frames. For many of their major projects, the Debtors are required to arrange for the manufacture of so- called "customer paid tooling" by third parties that is sold to them, and then resold to original equipment manufacturers. The TEMA Agreements The Debtors have arranged for a number of Tooling purchases with respect to the production of frames for the Toyota Tundra light truck and Toyota Sequoia sport-utility vehicle. Accordingly, the Debtors and Toyota Motor Engineering & Manufacturing North America, Inc., are parties to certain agreements, which commit Toyota to purchase more than $100,000,000 worth of Tooling from the Debtors. The TEMA Agreements include these Supplier Tooling Business Unit Toyota Motor Engineering & Manufacturing Purchase Orders: Amount of Version Dated Purchase Order April 2006 -------------- ----------------------- NATOL-WT00607290 $28,094,423 NATOL-WT00607300 1,944,501 NATOL-WT00607310 46,295,768 The amount Toyota pays under the TEMA Agreements exceeds the amount the Debtors pay to third parties by nearly $5,000,000. The excess payments cover the Debtors' internal costs, including costs incurred in overseeing and coordinating the Tooling procurement process and in integrating the Tooling into Dana's production processes, Corinne Ball, Esq., at Jones Day, in New York, relates. With respect to the Toyota Tundra light truck Program, the TEMA Agreements are comprised of three purchase orders requiring Toyota to pay $76,334,692, in the aggregate, Ms. Ball states. As of Mar. 3, 2006, the Debtors have delivered to Toyota some of the Tooling required for the Toyota Tundra Program. With respect to the Toyota Sequoia sport-utility vehicle, the TEMA Agreements are comprised of a commitment letter, where Toyota agrees to purchase Tooling from the Debtors with a value of at least $28,000,000. As of Mar. 3, 2006, the Debtors have not yet delivered any Tooling to Toyota in connection with the Toyota Sequoia Program. The Third Party Tooling Agreements To fulfill their obligations under the TEMA Agreements, the Debtors entered into a number of agreements with Tooling Suppliers for the manufacture of Tooling for both Toyota Tundra and Toyota Sequoia Programs. Certain of those agreements were fully completed by the Tooling Supplier and are not likely to be executory contracts because the Tooling Supplier has delivered the Tooling to the Debtors as of Mar. 3, 2006, Ms. Ball says. A list of the Third Party Tooling Agreements is available for free at http://researcharchives.com/t/s?f8f In May 2006, the Debtors sought and obtained the Court's authority to pay the claims of several Tooling Suppliers to the extent their claims were unpaid as of Mar. 3, 2006. Other third-party tooling agreements were not executed until after Mar. 3, 2006. August 2006 Agreement To provide greater certainty relating to the programs in process with the Debtors, Toyota asked the Debtors to negotiate the terms of assumption of the TEMA and the Third Party Tooling Agreements, Ms. Ball avers. Toyota also asked the Debtors to negotiate the terms of the Debtors' assumption and assignment of the Tooling Agreements with Ogihara Corporation and Toyota Tsusho Corporation to Toyota. In return, Toyota offered to make certain valuable concessions to the Debtors. As a result of those negotiations, the parties entered into the August 2006 Agreement with these salient terms: (a) The Debtors will assume the TEMA Agreements. No amounts need to be paid to Toyota and no actions need be taken to cure any outstanding defaults by the Debtors under the TEMA Agreements; (b) Toyota agrees to a definitive and accelerated payment schedule under the TEMA Agreements; (c) Toyota has not yet committed to the terms or timing of any reimbursement of about $6,000,000 in costs that may be incurred by the Debtors. The costs will be the subject of additional good faith negotiations between the parties; (d) The Debtors will pay certain amounts to tooling suppliers under the authority previously obtained through the Customer Paid Tooling Order, and Toyota will reimburse the Debtors for amounts so paid; (e) The Debtors will assume the Third Party Tooling Agreements; (f) The Debtors will perform under various purchase orders that were issued to toolmakers since Mar. 3, 2006 and issue certain new purchase orders to toolmakers; (g) The Debtors will assume and assign to Toyota the Japanese Tooling Agreements, and Toyota will pay any cure costs associated with that assumption and assignment. The portion of the TEMA Agreements relating to tooling to be purchased under the Japanese Tooling Agreements will be terminated. (h) The Debtors will communicate with the various Tooling Suppliers and Japanese Toolmakers to seek confirmation that they have paid various amounts owed to the Suppliers. The TEMA Agreements do not permit invoicing until certain approvals were received, thus delaying reimbursement and required the Debtors to pay the Tooling Suppliers before being reimbursed by Toyota, Ms. Ball relates. As of July 7, 2006, the Debtors have paid more than $50,000,000 to Tooling Suppliers, but have been paid less than $36,000,000 by Toyota, Ms. Ball tells the Court. Upon implementation of the August 2006 Agreement, Toyota will make those payments to the Debtors. Ms. Ball asserts that by entering into the August 2006 Agreement, the Debtors will: -- obtain a substantial cash flow benefit by avoiding costs relating to having to make out-of-pocket expenditures; and -- avoid the risk that Toyota later could determine that certain of the Tooling costs the Debtors incurred are not reimbursable. Ms. Ball adds that the assumption of the Third Party Tooling Agreements and the assumption and assignment of the Japanese Tooling Agreements will: -- serve to prevent disruptions of the Debtors' business operations; and -- allay the Tooling Suppliers' fears by removing the risk that Tooling Suppliers and the Japanese Toolmakers will not be paid accordingly. Nevertheless, the Debtors acknowledge that assumption of the Tooling Agreements carries little downside for their estates. Ms. Ball explains that this is largely because of the "customer paid" nature of the Tooling at issue. The assumption of the Third Party Tooling Agreements will unlikely result in any net cash expenditure by the Debtors, as nearly every dollar paid to a Tooling Supplier is to be reimbursed by Toyota to the Debtors under the TEMA Agreements. Pursuant to the August 2006 Agreement, Toyota commits to pay the Debtors more than $110,000,000, more than 95% of the Debtors' total costs, while leaving only an additional $6,000,000 remaining open to future negotiation. In light of the nature of these costs, the Debtors believe that they will be able to demonstrate to Toyota that the additional costs are actual and necessary and should be compensated. The assumption and assignment of the Japanese Tooling Agreements also takes the Debtors out of their "middleman" position between Toyota and the Japanese Tooling Suppliers and at the same time, allow the Debtors to continue to receive all of the benefits of the agreements, Ms. Ball points out. Moreover, the assumption of the Tooling Agreements is an important step for the Debtors to help solidify their relationship with Toyota, one of their key customers, Ms. Ball contends. About Dana Corporation Toledo, OH-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $7.9 billion in assets and $6.8 billion in liabilities as of Sept. 30, 2005. (Dana Corporation Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/). 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. DEATH ROW: Chapter 11 Trustee Taps Kaye Scholer as Bankr. Counsel ----------------------------------------------------------------- R. Todd Neilson, the Chapter 11 Trustee appointed in Death Row Records Inc.'s bankruptcy case, asks the U.S. Bankruptcy Court for the Central District of California in Los Angeles for permission to retain Kaye Scholer LLP as his general bankruptcy counsel, nunc pro tunc to July 19, 2006. Kaye Scholer's responsibilities in this engagement will include: a) determining the viability of proposing and confirming a plan of reorganization; b) pursuing adversary proceedings where appropriate to avoid prepetition and postpetition preferential or fraudulent transfers and to recover estate property; c) prosecuting claims objections where appropriate to the extent that funds are generated for the estate; d) investigating the propriety of certain insider loans; e) analyzing the assets of the Debtor's estate; and f) performing services related to other legal matters as may arise in the administration of the Debtor's estate. The attorneys currently designated to represent the Trustee and their standard hourly rates include: Attorney Hourly Rate -------- ----------- Ronald L. Leibow, Esq. $685 Pater L. Haviland, Esq. $650 Rhonda R. Trotter, Esq. $520 Corrine J. Rebhun, Esq., $460 The hourly rates for the firm's other professionals are: Designation Hourly Rate ----------- ----------- Partners $535 - $750 Counsel $495 - $775 Associates $235 - $480 Paraprofessionals $100 - $195 To the best of the Trustee's knowledge, Kaye Scholer does not hold or represent any interest adverse to the Debtor or the Estate and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Kaye Scholer -- http://www.kayescholer.com/-- is an international law firm with approximately 500 lawyers in eight offices around the world. The firm's global transaction and litigation capability covers a multitude of practices in areas including litigation, corporate, real estate, business reorganization, wills and estates and tax. Headquartered in Compton, California, Death Row Records Inc. -- http://www.deathrowrecords.net/-- is an independent record producer. The company and its owner, Marion Knight, Jr., filed for chapter 11 protection on April 4, 2006 (Bankr. C.D. Calif. Case No. 06-11205 and 06-11187). Daniel J. McCarthy, Esq., at Hill, Farrer & Burrill, LLP, and Robert S. Altagen, Esq., represent the Debtors in their restructuring efforts. R. Todd Neilson serves as Chapter 11 Trustee for the Debtor's estate. When the Debtors filed for protection from their creditors, they listed total assets of $1,500,000 and total debts of $119,794,000. DELPHI CORP: Inks Fifth Amendment to $2 Billion DIP Credit Pact --------------------------------------------------------------- Delphi Corporation and its debtor-affiliates have entered into a Fifth Amendment to their $2 billion Amended and Restated Revolving Credit, Term Loan and Guaranty Agreement with arranged by J.P. Morgan Securities Inc. and Citigroup Global Markets, Inc. The Fifth Amendment provides Delphi with additional time to deliver the quarterly financial statements for the periods ended March 31, 2006, and June 30, 2006. The unaudited quarterly financial statements for the periods ended March 31, 2006, and June 30, 2006, will be due no later than 60 days after the date on which the audited financial statements for the year ended December 31, 2005, were delivered. In a regulatory filing with the Securities and Exchange Commission, Delphi said that its quarterly report on Form 10-Q for the quarter ended June 30, 2006, could not be filed within the prescribed time period because the company could not complete the preparation of the required information without unreasonable effort and expense. Delphi had previously disclosed that once it files its Annual Report on Form 10-K for the year ended December 31, 2005, it would then begin preparing the Form 10-Q. Delphi recently filed its Form 10-K on July 11, 2006, and has begun preparing the Form 10-Q for the quarters ended March 31, 2006 and June 30, 2006, simultaneously. Once the process is complete, Delphi intends to become current again in its SEC filings. Based in Troy, Mich., Delphi Corporation -- http://www.delphi.com/ -- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. ELINEAR INC: Has Until August 31 to Comply with Amex Listing Rule ----------------------------------------------------------------- eLinear, Inc. received a letter from the American Stock Exchange, on July 31, 2006, indicating that the Company is in non-compliance with the Exchange's continued listing standards of Section 1003 of the AMEX Company Guide. Specifically, AMEX noted the Company's failure to comply with Section 1003(a)(i) of the AMEX Company Guide relating to shareholders' equity of less than $2,000,000 and losses from continuing operations or net losses in two out of three most recent fiscal years and Section 1003(a)(ii) of the AMEX Company Guide relating to shareholders' equity of less than $4,000,000 and losses from continuing operations or net losses in three out of its four most recent fiscal years. The notice was based on a review by the AMEX of the Company's Form 10-QSB for the three months ended March 31, 2006. The Company has been afforded the opportunity to submit a plan of compliance to the AMEX by Aug. 31, 2006 advising AMEX of the action the Company has taken, or will take, that would bring it into compliance with the continued listing standards listed above by June 30, 2007. If AMEX accepts the plan, the Company may be able to continue its listing during the plan period of up to ten months, during which time the Company will be subject to periodic review to determine whether it is making progress consistent with the plan. If AMEX does not accept the Company's plan, or even if accepted, if the Company is not in compliance with the continued listing standards at the end of the plan period or the Company does not make progress consistent with the plan during such period, then AMEX may initiate delisting proceedings. On July 12, 2006, the Company signed a Letter of Intent to acquire the operating assets of SweetWater Security Systems, LLC, a Houston based provider of complex wireless video security systems for Public Housing Projects throughout the Southeastern United States. In the transaction, it is contemplated that eLinear will issue 25,000,000 shares of its common stock from authorized but unissued shares for certain assets of SweetWater. Those assets consist of certain accounts receivable, equipment, inventory, contractual agreements and up to $3 million in cash. SweetWater primarily operates in Louisiana, Mississippi, Alabama, and Tennessee and has completed over $3 million in projects to date. The proposed transaction, if completed, will result in a substantial increase in shareholders' equity. This transaction is scheduled for closing sometime in the fourth quarter and is subject to shareholder approval. Another critical factor affecting eLinear's capability to regain compliance will be the achievement of one of the Company's main goals of operating income profitability on a month-to-month basis during 2006. The Company is considering what other actions it may take to regain compliance with the AMEX listing standards and intends to submit a compliance plan to the AMEX Staff in a timely manner. About eLinear, Inc. Headquartered in Houston, Texas, eLinear, Inc. (AMEX: ELU) -- http://www.elinear.com/-- is a communications, security and compliance company providing integrated technology solutions including information and physical security, IP Telephony and network and storage solutions infrastructure. The Company's customers are Fortune 2000 and small to medium sized business organizations. As of Dec. 31, 2005, eLinear had four wholly owned subsidiaries, NetView Technologies, Inc., NewBridge Technologies, Inc., TanSeco Systems, Inc. and UTEK Corporation and a 51% interest in eLinear Middle East FZ, LLC. At March 31, 2006, the company's balance sheet showed $6.8 million in total assets and $10.1 million in total liabilities, resulting in a $3.2 million stockholders' deficit. Going Concern Doubt As reported in the Troubled Company Reporter on July 26, 2006, Lopez, Blevins, Bork & Associates, LLP, in Houston, Texas, raised substantial doubt about eLinear, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's recurring operating losses and need to raise additional financing in order to satisfy its vendors and other creditors and execute its business plan. ELLENSTEIN STORES: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Ellenstein Stores, Inc. dba Rogers Jewelers dba Starrs Jewelers fdba Michaels Jewelers 330 Main Street Evansville, Indiana 47708 Bankruptcy Case No.: 06-70622 Type of Business: The Debtor sells jewelry through its Rogers and Starrs retail outlets. See http://www.rogersjewelers.com/ Chapter 11 Petition Date: August 8, 2006 Court: Southern District of Indiana (Evansville) Judge: Basil H. Lorch III Debtor's Counsel: Paul T. Deignan, Esq. Sommer Barnard, PC 1 Indiana Square, Suite 3500 Indianapolis, Indiana 46204 Tel: (317) 713-3500 Fax: (317) 713-3699 Total Assets: $6,352,604 Total Debts: $7,216,362 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Romance Ring Trade Debt $125,443 9256 Owensmouth Avenue Chatsworth, CA 91311 Leer Gem Trade Debt $91,039 1 Rockefeller Plaza New York, NY 10020 Seiko Time Corporation Trade Debt $90,184 1111 MacArthur Boulevard Mahwah, NJ 07430 Diamond Direct LLC Trade Debt $88,723 EFD Inc Trade Debt $70,115 Multidev Technologies Trade Debt $65,673 Honey Creek Mall Rent $55,085 c/o Retail Leasing Presentation Box & Displays Supplier $53,000 Simon De Bartolo Group Rent $52,193 Citizens Watch Company Trade Debt $43,739 BKD LLP Accounting Services $35,627 International Import Corp. Trade Debt $34,566 Kentucky Oaks Mall Rent $28,432 Northbrook Shopping Center Rent $26,467 Oswald Communications Inc. Advertising $24,592 Greenwood Mall Rent $24,330 Nelson Jewelry Trade Debt $23,614 Towne Square Mall Rent $22,210 Northwest Imports Trade Debt $20,329 Star Ring, Inc Trade Debt $18,381 EMERSON TRAILERS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Emerson Trailers, Inc. 740 E. Alfred Drive Lake Alfred, Florida 33850 Bankruptcy Case No.: 06-04142 Type of Business: The Debtor sells utility trailers. Chapter 11 Petition Date: August 11, 2006 Court: Middle District of Florida (Tampa) Debtor's Counsel: David S. Jennis, Esq. Jennis Bowen & Brundage, P.L. 400 North Ashley Drive, Suite 2540 Tampa, Florida 33602 Tel: (813) 229-1700 Fax: (813) 229-1707 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Center State Bank Bank Debt $269,957 1101 First Street South Winter Haven, FL 33880-3902 Quality Trailer Products Trade Debt $256,153 of Ocala P.O. Box 847063 Dallas, TX 75284-7063 Infra-Metals Trade Debt $244,165 5208 24th Avenue South Tampa, FL 33619 Palm Harbor Logistics Group Trade Debt $202,125 10133 Miracle Lane N.P. Richey, FL 34654 Carlisle Tire & Wheel Trade Debt $193,177 P.O. Box 905768 Charlotte, NC 28290-5768 Porter Paint Trade Debt $50,085 Florida Hydraulic Industrial Trade Debt $49,917 Co. Universal Forrest Products Trade Debt $36,775 Fidelity Bank Trade Debt $31,587 Airgas South Trade Debt $29,945 American Battery Company Trade Debt $19,162 Sale Insurance $15,585 Ledra Holding $13,133 NT of America $12,607 Niles Expanded Metals Trade Debt $8,702 Webb Bolt & Nut Trade Debt $8,107 Expanded Solutions Trade Debt $8,079 Home Depot Trade Debt $8,039 Interstate Chemical Company Trade Debt $7,279 MTSPC, Inc. $7,213 EMISPHERE TECH: March 31 Balance Sheet Upside-Down by $26 Million ----------------------------------------------------------------- At March 31, 2006, Emisphere Technologies, Inc. reported a $26,267,000 total stockholders' deficit resulting from total assets of $12,743,000 and total liabilities of $39,010,000. The Company's balance sheet also showed a negative working capital with $4,937,000 in total current assets and $15,844,000 in total current liabilities. For the three months ended March 31, 2006, the Company incurred a $26,836,000 net loss out of $1,696,000 in revenues. A full-text copy of the Company's financial report for the quarter ended March 31, 2006 is available for free at: http://researcharchives.com/t/s?ca7 Going Concern Doubt PricewaterhouseCoopers LLP expressed substantial doubt about Emisphere Technologies, Inc.'s ability to continue as a going concern after auditing the Company's financial statements for the years ended December 31, 2005, 2004 and 2003. The auditing firm pointed to the Company's sustained operating losses, limited capital resources and significant future commitments. Headquartered in Tarrytown, New York, Emisphere Technologies, Inc. (Nasdaq: EMIS) -- http://www.emisphere.com/-- is a biopharmaceutical company which develops oral forms of injectable drugs. ENTERGY NEW ORLEANS: Plan Filing Period Continued Until Sept. 18 ---------------------------------------------------------------- The Hon. Jerry A. Brown of the U.S. Bankruptcy Court for the Eastern District of Louisiana rules that Entergy New Orleans, Inc.'s request to extend the period by which it has the exclusive right to file a plan of reorganization until Dec. 19, 2006, and the period to solicit and obtain acceptance of that plan until Feb. 15, 2007, cannot be heard until Sept. 18, 2006, due to the Court's calendar. Judge Brown orders that the Court's previously ordered extension until August 21, 2006, for ENOI to exclusively file a plan is continued until the September 18 hearing. R. Patrick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, LLP, in New Orleans, Louisiana, tells the Court that the largest obstacle facing the Debtor in its efforts to formulate and negotiate a plan of reorganization is that key unresolved contingencies continue to obscure the Debtor's financial future. One critical unresolved contingency is whether the Debtor will receive financial assistance in the form Community Development Block Grants, Mr. Vance says. Without receipt of CDBG funds, the Debtor's financial strength will be weakened and additional rate relief will be needed. ENOI hopes to know whether it will receive CDBG money in December 2006, but until then, filing a plan without approval of the CDBG funds would require erroneous assumptions and speculation that could be dangerous for ENOI. Mr. Vance relates that among other unresolved contingencies is whether the Council for the City of New Orleans will render a decision with respect to ENOI's formula rate plan filings and determination on ENOI's storm cost recovery riders and storm reserve rider applications during the requested extended exclusivity periods. Additionally, the Debtor's recoverable losses through insurance will become clearer over the next few months and it should be in a better position to predict when the recoveries will be realized. The Debtor prefers to resolve most of the unresolved contingencies before formulating and filing a meaningful plan of reorganization, Mr. Vance says. About Entergy New Orleans 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. Carey L. Menasco, Esq., Philip Kirkpatrick Jones, Jr., Esq., and Joseph P. Hebert, Esq., at Liskow & Lewis, APLC, represent the Official Committee of Unsecured Creditors. 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. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) ENTERGY NEW ORLEANS: Wants United National & Norco Pact Approved ---------------------------------------------------------------- In the normal operation of Entergy New Orleans, Inc.'s business, minor claims for personal injuries and property damage occur from time to time, R. Patrick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, LLP, in New Orleans, Louisiana, relates. Norco Construction, Inc., provided ENOI labor for its gas department. The contract between Norco and ENOI had a defense and indemnification clause whereby Norco, through its insurer, United National Insurance Company, would defend and indemnify ENOI from any claims as a result of work provided by Norco. Pursuant to its contract, Norco provided a defense and indemnity for ENOI. On December 20, 1993, a gas explosion and fire occurred on at a duplex residence at 334 West Robert E. Lee Boulevard in New Orleans, Louisiana. State Farm Fire & Casualty Company, which insured the owner of the complex, asserted a subrogation claim for all sums paid under its policy. State Farm filed a suit in the Civil District Court for the Parish of New Orleans against ENOI, Norco and United National arising out of the accident at the duplex residence. The case is State Farm vs. Sewerage Board of New Orleans, et al., Case No. 94-1079. Following negotiations, ENOI, Norco and United National agree to settle the State Farm lawsuit for $162,500, payment of which is to be made entirely by Norco's insurer, United National. ENOI, pursuant to its contract with Norco, will not be responsible for any portion of the settlement payment. Out of an abundance of caution, ENOI seeks the U.S. Bankruptcy Court for the Eastern District of Louisiana's authority to enter into the settlement. About Entergy New Orleans 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. Carey L. Menasco, Esq., Philip Kirkpatrick Jones, Jr., Esq., and Joseph P. Hebert, Esq., at Liskow & Lewis, APLC, represent the Official Committee of Unsecured Creditors. 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. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000) FTD INC: Resolves False Claims Lawsuit Against Provide Commerce --------------------------------------------------------------- FTD, Inc., have resolved the false advertising and unfair competition claims each asserted against each other in a lawsuit initially filed by the Company against Provide Commerce in August 2005. In the settlement, neither party admitted to the allegations contained in the claims brought against each other and no money will be paid by either side. The settlement includes a compromise in which FTD agreed to dismiss a separate trademark action brought against Provide Commerce, and in return Provide Commerce agreed to make certain modifications to future advertising. The parties also mutually agreed to abide by certain other guidelines in their advertising after December 31, 2006. About Provide Commerce Provide Commerce(SM) operates an e-commerce for perishable goods that consistently delivers products direct from the supplier to the customer. The Company launched its marketplace in 1998 to sell and deliver fresh cut flowers for everyday and special occasions. Also, it offers fresh fruit, delectable sweets and premium meat direct from the supplier through its Gourmet Food Business Unit. About FTD Group FTD Group, Inc. provides of floral products to consumers and retail florists, as well as other retail locations offering floral products, in the U.S., Canada and the U.K. The company's business is supported by the FTD and Interflora brands. * * * As reported in the Troubled Company Reporter on Aug. 11, 2006, Moody's Investors Service assigned a Ba3 rating to the new senior secured term loan of FTD, Inc. and affirmed other ratings. The outlook remains positive. Moody's assigned its Ba3 rating on the Company's $75 million Senior Secured Revolving Credit Facility maturing 2012 at Ba3. Moody's also affirmed its Ba3 rating on the Company's $150 million Senior Secured Term Loan B maturing 2013; B1 Corporate family rating; and B3 rating on the Company's Senior subordinated notes. GENTA INC: Incurs $9.8 Million Net Loss in First Quarter 2006 ------------------------------------------------------------- For the three months ended March 31, 2006, Genta Incorporated reported a $9,895,000 net loss out of $67,000 in total revenues. The Company's balance sheet at March 31, 2006 showed a total stockholders' equity of $44,173,000 resulting from total assets of $52,485,000 and total liabilities of $8,312,000. The Company's balance sheet also showed $48,809,000 in total current assets and $8,312,000 in total current liabilities. A full-text copy of the Company's financial report for the quarter ended March 31, 2006 is available for free at: http://researcharchives.com/t/s?ca8 Going Concern Doubt Deloitte & Touche LLP expressed substantial doubt about Genta Incorporated's ability to continue as a going concern after auditing the Company's financial statements for the years ended December 31, 2005 and 2004. The auditing firm pointed to the Company's recurring losses and negative cash flows. Based in Berkeley Heights, New Jersey, Genta Incorporated -- http://www.genta.com/-- is a biopharmaceutical company which focuses on the treatment of patients with cancer. GREENPARK GROUP: Wants Gary Miura to Provide Tax-Related Services ----------------------------------------------------------------- GreenPark Group LLC and California/Nevada Developments LLC ask the U.S. Bankruptcy Court for the Central District of California for permission to employ Gary C. Miura as their tax accountant. Mr. Miura will: a) prepare 2005 federal and applicable state limited liability company tax returns; and b) perform additional accounting functions and render additional accounting services as the Debtors and their general insolvency counsel deem necessary and appropriate in connection with the administration of the Debtors' chapter 11 cases. Mr. Miura discloses that his current hourly rate is $165. Mr. Miura estimates that the charge for preparation of the 2005 tax returns will be in the range from $18,000 to $21,000, plus out-of- pocket expenses. Mr. Miura has received a $21,000 prepetition retainer from the Debtors. Mr. Miura assures the Court that he does not represent any interest adverse to the Debtor, its estate or its creditors. Headquartered in Seal Beach, California, GreenPark Group LLC is a real estate developer and building contractor. The Company and its affiliates, California/Nevada Developments LLC, filed for chapter 11protection on June 23, 2006 (Bankr. C.D. Calif. Case Nos. 06-10988 & 06-10989). Alan J. Friedman, Esq., at Irell & Manella, LLP, represents the Debtors. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million and $50 million. HAGERMAN FARMS: Case Summary & Five Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Hagerman Farms, Inc. 4600 North 600 East Buhl, Idaho 83316 Bankruptcy Case No.: 06-40389 Type of Business: Michael L. Larson and Beth A. Larson, officers of the Debtor, filed for chapter 11 protection on May 15, 2006 (Bankr. D. Idaho Case No. 06-40172). Chapter 11 Petition Date: August 10, 2006 Court: District of Idaho (Twin Falls) Judge: Jim D. Pappas Debtor's Counsel: Howard R. Foley, Esq. Foley Freeman Borton, PLLC P.O. Box 10 Meridian, Idaho 83680 Tel: (208) 888-9111 Fax: (208) 888-5130 Total Assets: $1,704,529 Total Debts: $2,707,438 Debtor's 5 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ John R. Davis 1,400 Acres of $650,000 521 University Drive Farm Ground Pocatello, ID 83201 Value of Security: $1,700,000 Senior Lien: $1,400,000 Farrell J. Jones 1,400 Acres of $650,000 204 Valley View Drive Farm Ground Pocatello, ID 83204 Value of Security: $1,700,000 Senior Lien: $1,400,000 Farm Plan Trade Debt - $7,200 P.O. Box 5328 Farm Chemical Madison, WI 53705-0328 Napa Auto Parts Trade Debts - $150 P.O. Box 1425 Parts Twin Falls, ID 83303-1425 Jack Tire Twin Falls Trade Debt - $88 P.O. Box 6337 Service & Repair Logan, UT 84341 HART GALLERIES: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Hart Galleries, Inc. 2301 South Voss Road Houston, Texas 77057 Bankruptcy Case No.: 06-33923 Type of Business: The Debtor operates a fine and decorative arts facility and buys and sells antique and pre-owned furnishings, paintings and decorative arts. See http://www.hartgalleries.com/ Chapter 11 Petition Date: August 11, 2006 Court: Southern District of Texas (Houston) Judge: Jeff Bohm Debtor's Counsel: Richard L Fuqua, II, Esq. Fuqua & Keim 2777 Allen Parkway, Suite 480 Houston, Texas 77019 Tel: (713) 960-0277 Fax: (713) 960-0277 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Nouri Oriental Rugs #1 $298,347 6524 San Felipe #195 Houston, TX 77057 Nouri Oriental Rugs #2 $232,034 6524 San Felipe #195 Houston, TX 77057 Eliko Oriental Rugs $164,815 102 Madison Avenue 4th Floor New York, NY 10016 Royal Antiques $119,667 Houston Oriental Rugs $105,057 Harounian Rugs Int. $103,448 Choate, Calanne D. $94,500 DGB $91,075 Attn: David Greenberg Cemex, Inc. $81,617 Hartmann Estate $53,030 Nouri Oriental Rugs #3 $47,516 Galloway, Jan $44,700 Reidy, Mrs. Thomas P. $41,200 Smith, Harry K. Estate $38,393 Pickett, Richard $37,506 Antique Gems $36,788 RJM Jewelry $33,402 Comerica Bank $30,900 Worth, Jacqueline E.P. Trust $29,713 Avis USA Diamond, Ltd. $27,555 HCA INC: Moody's Says Leveraged Buyout May Result in Downgrade -------------------------------------------------------------- In connection with its rating review for possible downgrade of HCA, Inc., Moody's Investors Service said that the proposed financing of the leveraged buyout of HCA could result in a downgrade of the Corporate Family Rating as low as the mid single B rating category. Moody's preliminary view is based on information HCA recently filed with the SEC that includes discussion about the amounts and types of financing that could be used to close the proposed transaction. Moody's notes that the ultimate financing for the transaction could differ from that disclosed and, therefore, will maintain the current HCA ratings, which were placed on review for possible downgrade on July 24, 2006, until such financing becomes certain. The potential for a multiple notch downgrade of the Corporate Family Rating reflects the significant increase in financial leverage expected to result from the proposed transaction. Based on the information provided in the SEC filings, Moody's estimates that the pro forma adjusted debt to adjusted EBITDA would exceed 6.7 times for the twelve months ended June 30, 2006. Additionally, the pro forma interest coverage, measured as the ratio of adjusted EBITDA less capital expenditures to estimated interest expense, would be relatively weak at just over 1.0 time for the twelve months ended June 30, 2006. Financial leverage of this magnitude would be expected to result in a significant decrease in financial flexibility in a period in which the acute care hospital sector faces challenges from weak volume trends and increasing exposure to uninsured and under-insured patients. "The financing plan disclosed in the SEC filing calls for a significant amount of new secured debt that will have a priority claim over HCA's existing unsecured, unguaranteed notes," said Dean Diaz, Vice President, Senior Analyst. The transaction is still subject to shareholder approval, Hart- Scott-Rodino Antitrust provisions and customary closing conditions. Additionally, alternative proposals may still be solicited by the company under the terms of the agreement. Moody's will therefore continue its review of HCA's existing ratings and may undertake interim rating actions as more information becomes available. HCA, Inc. is a holding company that owns and operates hospitals and related health care entities through various affiliates. At June 30, 2006, HCA owned and operated 176 hospitals, 92 freestanding surgery centers and facilities that provide extensive outpatient and ancillary services. HEALTHSOUTH CORP: June 30 Balance Sheet Upside-Down by $2 Billion ----------------------------------------------------------------- HealthSouth Corporation filed its quarterly financial statements on Form 10-Q for the period ended June 30, 2006 with the Securities and Exchange Commission. The Company reported a pretax loss from continuing operations in the second quarter of $28.9 million, an improvement of $17 million over the second quarter 2005 pretax loss from continuing operations of $45.9 million. Revenues for the second quarter were $787.5 million, a 3.8% decline from the same quarter a year ago. The revenue decline is a result of: (i) the continued negative impact of the 75% Rule and negative pricing in the Inpatient Division; (ii) facility closures (which do not qualify as discontinued operations) primarily in the Outpatient, Surgery, and Diagnostic Divisions; and (iii) three surgery center facilities that became equity method investments rather than consolidated entities. "Overall, I'm encouraged by the progress we made in the second quarter," said HealthSouth President and CEO Jay Grinney. "We saw improved results from the prior year and our development pipeline indicates there are excellent growth opportunities in the post- acute, surgery and outpatient segments. Additionally, our Diagnostic Division is stabilizing and we believe there will be strong interest in these assets when we begin marketing them later this year." However, Mr. Grinney disclosed that he received four inquiries from private equity firms on the planned sale of its surgery and outpatient units to cut debt, according to Bloomberg. Inpatient Division Revenue in the Inpatient Division was lower by $7.8 million or 1.7% from declining volumes as a result of the continued implementation of the 75% Rule and negative Medicare pricing pressure. In August 2006, the division signed a letter of intent to partner with TMC Healthcare in Tucson, Arizona to provide rehabilitation services and concluded its non-U.S. operations with the sale of its Australian facility, Cedar Court Rehabilitation Hospital. Surgery Centers Division The Surgery Centers Division revenue decline in the second quarter is an improvement over the first quarter 2006 performance where this division experienced a 6.7% decline. The decline in the quarter was $6.7 million or 3.4% with the majority of the decrease the result of three surgery centers that became equity method investments rather than consolidated entities after the second quarter of 2005 and the closure of seven facilities that did not qualify as discontinued operations. Outpatient Division The Outpatient Division experienced a decline in revenues of $12.8 million in the second quarter as a result of continued competition, closures of underperforming facilities and the annual per-beneficiary limitation on Medicare outpatient therapy services. In July 2006, the division completed a transaction to acquire the assets of Hurrle Orthopaedic Physical Therapy, P.C. in Indianapolis, Indiana. Diagnostic Division The Diagnostic Division, which is not considered part of the Company's core business, experienced a decline in revenues of $5.6 million or 9.8% less than the second quarter a year ago due to competitive pressures and the closure of underperforming facilities that did not qualify as discontinued operations. Cash Flow and Balance Sheet Cash and cash equivalents were $53.9 million at June 30, 2006. Total debt was $3.334 billion. Payments on government and litigation were $56.2 million and capital expenditures were $43.2 million in six months ended June 30, 2006. At June 30, 2006, the Company's balance sheet showed a stockholders' deficit of $2,019,789,000, compared to a deficit of $1,540,721,000 at Dec. 31, 2005. About HealthSouth Headquartered in Birmingham, Alabama, HealthSouth Corporation (OTC Pink Sheets: HLSH) -- http://www.healthsouth.com/-- provides outpatient surgery, diagnostic imaging and rehabilitative healthcare services, operating facilities nationwide. * * * As reported in the Troubled Company Reporter on May 30, 2006, Standard & Poor's Ratings Services assigned its 'CCC+' rating to HealthSouth Corp.'s $1 billion of floating-rate senior unsecured notes due 2014 and fixed-rate senior unsecured notes due 2016. At the same time, existing ratings on HealthSouth, including the 'B' corporate credit rating, were affirmed. The rating outlook is stable. Moody's placed HealthSouth's debt and corporate family ratings at B2 and B3 respectively. The ratings were placed on April 18, 2006, with a stable outlook. HINES HORTICULTURE: Inks Amendment and Limited Waiver with Lender ----------------------------------------------------------------- Hines Horticulture, Inc., disclosed that on June 30, 2006, it was not in compliance with its minimum fixed charge coverage ratio covenant under its Senior Credit Facility due to the decline in sales during the second quarter. The Company, on August 8, 2006, negotiated and entered into the Third Amendment and Limited Waiver to the Credit Agreement dated as of September 30, 2003. The Amendment waives the required minimum fixed charge coverage ratio for the periods ended June 30, 2006 and September 30, 2006. The Amendment also established a reduction in the aggregate revolving loan commitment under the credit facility from $120 million to $100 million and instituted a maximum revolving utilization restriction. The Amendment also increased the interest rate spread by 25 basis points on outstanding prime and LIBOR borrowings, increased unused line fees and established new fixed charge covenant ratios beginning in the fourth quarter of 2006. It also required the Company to generate a minimum amount of aggregate proceeds from the sale of certain assets by no later than December 31, 2006. The Company's Board of Directors, on August 8, 2006, approved the sale of its four color nursery facilities in the Northeast and certain assets in Miami, Florida, to comply with the requirements in the Amendment. Based in Irvine, California, Hines Horticulture Inc. (NASDAQ: HORT) -- http://www.hineshorticulture.com/-- operates commercial nurseries in North America, producing a broad assortment of container grown plants. Hines Horticulture sells nursery products primarily to the retail segment, which includes premium independent garden centers, as well as leading home centers and mass merchandisers, such as Home Depot, Lowe's and Wal-Mart. IIRSA NORTE: S&P Rates $213 Million 8.75% Senior Notes at BB ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'BB' rating to IIRSA Norte Finance Ltd.'s $213 million 8.75% senior secured notes due 2024. The 'BB' rating is based on these factors: -- The sound legal and financial structure of the transaction, which includes a true sale of the underlying assets; -- The unconditional and irrevocable payment obligation of the government of Peru under the certificados de reconocimiento de derechos del pago anual por obras; -- An irrevocable $60 million partial credit guarantee provided by the Inter-American Development Bank to cover any unpaid amounts by the GOP on the outstanding CRPAOs (certificates issued by the GOP), which complies with Standard & Poor's multiple-credit-dependent obligation criteria; -- The credit-linked notes, which are subject to the credit risk of Peru and Morgan Stanley; -- The 'BB' rating of the GOP; -- The 'A+' rating of Morgan Stanley; -- The 'AAA' rating assigned to the IDB; and -- An expense reserve account that initially will have an amount equal to $1.083 million to cover maintenance expenses on the securities, including a semiannual payment of the IDB's partial guarantee fees. The 'BB' rating also addresses the timely payment of principal and interest when due. IIRSA NORTE: Toll Road Concession Prompts Fitch's BB Rating ----------------------------------------------------------- Fitch Ratings has assigned a 'BB' rating to IIRSA Norte Finance Limited, a Peruvian securitization of government payment obligations in connection with a toll road concession. The $213 million in transaction proceeds will be used to cover the costs of expansion and improvements on IIRSA Amazonas Norte, a 960 kilometer network of existing toll roads in northern Peru. The transaction also benefits from a $60 million partial guarantee provided by the Inter-American Development Bank. Upon completion, the road is not expected to generate sufficient revenues to cover its construction costs. In lieu of strong toll revenue, the government of Peru compensates the concessionaire for construction progress with annual payments in U.S. dollars (Certificados de Reconocimiento de Pago Annual de Obras [CRPAOs]) prorated to the advance of works. This transaction will be a securitization of the CRPAOs. CRPAOs delivered from the GOP to the concessionaire will be sold to the issuer. Once generated, CRPAOs are not subject to any condition or performance obligation relating to the concession agreement. Noteholders are not exposed to construction risk. Cash flow to maintain timely debt service on the transaction will depend on the GOP's continued payment on CRPAOs. While CRPAOs are backed by the full faith and credit of the GOP, on a stand-alone basis, CRPAOs would not receive the same rating as Fitch rated dollar-denominated sovereign obligations. The expected rating of the notes reflects the strength of the underlying CRPAO payments and the enhanced recovery in the event of default derived from the PG provided by the IDB. INTRAWEST CORP: Moody's Holds Low-B Ratings with Negative Outlook ----------------------------------------------------------------- Moody's Investors Service affirmed all ratings of Intrawest Corporation including its B1 senior unsecured debt ratings and Ba3 corporate family rating. In addition, Moody's changed the outlook to negative from developing. The change in outlook was prompted by Intrawest's recent announcement that it has entered into a definitive agreement under which it will be acquired by funds managed by affiliates of Fortress Investment Group, LLC for an estimated purchase price of $2.8 billion, including existing debt. The transaction is expected to close in the third quarter of 2006. The negative outlook reflects the uncertainty as to the timing of the transaction and the ultimate capital structure. Under Intrawest's current notes agreement, in the event of a change in control triggering event, as defined, Intrawest would be required to offer to purchase all outstanding notes. In the event all rated debt is tendered for as part of the transaction the notes ratings and corporate family rating would likely be withdrawn. Intrawest operates ten mountain ski resorts in North America, six in the United States and four in Canada. The company also owns, develops, and manages residential and commercial in areas adjoining its resorts. Additionally, the company owns Abercrombie & Kent Group a luxury travel company, as well as a resort community and golf course in Florida, a golf course in Arizona, and Alpine Helicopter Ltd. a Canadian helicopter skiing and hiking company. INTRAWEST CORP: Fortress Merger Deal Cues S&P's Negative Watch -------------------------------------------------------------- Standard & Poor's Ratings Services revised its CreditWatch implications on resort operator Intrawest Corp., including the 'BB-' long-term corporate credit rating, to developing from negative, where the ratings were placed March 1, 2006. The revision follows the company's announcement that it agreed to be acquired, in an all-cash equity offer, by Fortress Investment Group LLC. Vancouver, British Columbia-based Intrawest has about $682 million in unsecured debentures outstanding. Developing implications suggest that ratings could be affected either positively or negatively, depending on whether a transaction ultimately occurs. An example of an event that would have a positive impact would be the early redemption of the bonds following the purchase of Intrawest by Fortress. An example of an event that would have a negative effect would be if Intrawest were to adopt a more aggressive financial profile to accommodate shareholder expectations should the transaction not succeed. "In resolving the CreditWatch, we will continue to monitor developments within Intrawest as they become publicly available," said Standard & Poor's credit analyst Christian Green. "As the company may not provide ongoing guidance relative to its progress, we might decide to resolve the CreditWatch listing at a later date if it appears a transaction is unlikely," Mr. Green added. J.P. MORGAN: S&P Holds Low-B Ratings on Class F & G Certificates ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on eight classes of J.P. Morgan Chase Commercial Mortgage Securities Corp.'s commercial mortgage pass-through certificates from series 2001-A. The affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. The ratings are constrained by concerns regarding the largest loan in the pool. Additionally, this transaction contains "kick-out" loans that were removed from prior securitizations. As of the remittance report dated July 17, 2006, the trust collateral consisted of 17 mortgage loans with an outstanding principal balance of $83.3 million, down from 25 loans totaling $113.8 million at issuance. The master servicer, Capmark Finance Inc., reported primarily year-end 2005 financial information for 100% of the pool. Based on this information, Standard & Poor's calculated a weighted average debt service coverage ratio (DSCR) of 1.13x for the pool, down from 1.49x at issuance. To date, the trust has experienced three losses representing 5.1% of the initial pool balance. Additionally, two loans totaling $5.4 million (6.5%) have been defeased. The top 10 loan exposures secured by real estate have a balance of $72.1 million (86.6%). Year-end 2005 financial information was available for seven of the top 10 loans. Based on this information, Standard & Poor's calculated a weighted average DSCR of 1.19x, down from 1.53x at issuance. Five of the top 10 loans have DSCRs significantly below issuance levels, and seven are on the master servicer's watchlist and are discussed below. In addition, two of the top 10 loans have expected maturities in the second half of 2007. Standard & Poor's reviewed the property inspection reports obtained from Capmark, and all properties but two were said to be in "good" condition. There were no loans with the special servicer, also Capmark. The master servicer reported nine loans totaling $60.7 million (72.9%) on the watchlist. Southgate USA, the largest loan exposure, has a current balance of $23 million (27.6%) and is secured by a mortgage on a 795,500-sq.-ft. community shopping center in Maple Heights, Ohio, a submarket of Cleveland. The loan was placed on the watchlist due to a significant decrease in the DSCR, to 0.71x at year-end 2005 from 1.36x at issuance, resulting from high vacancy rates and increased operating expenses. Occupancy stood at 69% as of May 17, 2006. The anchor tenant is Home Depot, with 15% of the space leased through January 2024. The remaining leases largely roll in 2008 and 2009. The property, which was built in 1954 and renovated in 1999, faces competition from recently built retail projects. One new retail project under construction will include a Super Wal-Mart and a Lowe's store. As such, these new retail projects have drawn tenants from Southgate and are expected to continue to do so. Should the loan default, a negative rating action is likely. The second-largest loan exposure, Country Fair Mall, has an outstanding balance of $11.4 million (13.7%) and is secured by a one-story, 261,100-sq.-ft. regional retail mall in Woodland, Calif. The loan is on the watchlist due to a low DSCR of 1.10x as of year-end 2004, compared with 1.32x at issuance. The drop in DSCR is attributable to increased operating expenses. The property was 90% occupied as of March 31, 2006. The third-largest loan exposure, the Crossing Center portfolio, has a current balance of $6.6 million (7.9%) and is secured by two class B suburban office parks totaling 160,800 sq. ft. The properties are situated in Norcross, Georgia, 17 miles northeast of Atlanta. Capmark placed this loan on the watchlist due to a low third-quarter 2005 DSCR of 0.42x, which compares with 1.86x at issuance. The decline in the DSCR is due to high vacancy rates and increased operating expenses. Combined occupancy was 67% as of April 5, 2006. Southside Gardens, secured by a 115-bed independent senior housing/assisted living facility in Baton Rouge, Louisiana, is the fifth-largest loan exposure and has an outstanding balance of $5.6 million (6.7%). Occupancy is currently 100%. The loan is on the watchlist due to a decrease in the DSCR below its threshold. At March 31, 2006, the DSCR was 1.14x, down from 1.31x at year-end 2005 and 1.29x at issuance. The decrease is due to increased operating expenses. The sixth-largest loan exposure, Jewelry Center, has a current balance of $4.9 million (5.9%) and is secured by a 12-story, 108,500-sq.-ft. mixed-use retail/industrial property in Los Angeles, California. The low 0.81x DSCR at year-end 2005 is primarily attributable to high vacancy rates and compares with 2.20x at issuance. Reported occupancy was 70% as of Jan. 19, 2006, a significant decline from 98% in 2003. A 24,500-sq.-ft. retail center in Kissimmee, Florida, secures Holiday Trail Plaza, the seventh-largest loan exposure with a current balance of $4.5 million (5.4%). Reported occupancy was 100% as of March 28, 2006. The loan was placed on the watchlist due to a decline in the DSCR to 0.88x for the three months ended Dec. 31, 2005, from 1.39x as of Dec. 31, 2004, and 1.27x at issuance. According to the master servicer, the decline in DSCR can be attributed to a financial reporting error; revised operating statements received from Capmark showed a DSCR of 1.39x for the three months ended Dec. 31, 2005. As such, the master servicer is investigating whether the loan should be removed from the watchlist next month. The Independent Quality Care portfolio, the 10th-largest loan exposure, has an outstanding balance of $2.3 million (2.7%) and is secured by two assisted living facilities. One of the facilities contains 45 beds and is located in San Bruno, California, and the other has 56 beds and is located in Castro Valley, California Combined occupancy was 89% as of April 30, 2006. The loan had a DSCR of 1.94x as of Jan. 31, 2006, compared with 1.61x at issuance. The master servicer has stated that it placed the loan on the watchlist because occupancy for January 2006 was calculated erroneously at 59%. As such, Capmark is evaluating whether the loan should be taken off the watchlist next month. The remaining loans are on the watchlist due to low DSCRs. Standard & Poor's stressed various assets in the mortgage pool, including those on the watchlist, as part of its analysis. The resultant credit enhancement levels adequately support the affirmed ratings. Ratings Affirmed J.P. Morgan Chase Commercial Mortgage Securities Corp. Commercial mortgage pass-through certificates series 2001-A Class Rating Credit enhancement(%) ----- ------ --------------------- A-2 AAA 60.65 B AA+ 52.45 C A+ 43.23 D BBB 30.24 E BBB- 26.14 F BB 19.99 G B- 10.60 X AAA N/A N/A - Not applicable KENTUCKY GOLD: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Kentucky Gold II, Inc. 12900 34th Street North Clearwater, Florida 33762 Bankruptcy Case No.: 06-04089 Type of Business: The Debtor operates a powder coating job shop that provides powder coating services for a broad area of manufacturers, contractors and individual business entities. Chapter 11 Petition Date: August 10, 2006 Court: Middle District of Florida (Tampa) Judge: K. Rodney May Debtor's Counsel: Douglas N. Menchise, Esq. Douglas N. Menchise, P.A. 300 Turner Street Clearwater, Florida 33756 Tel: (727) 442-2186 Fax: (727) 461-2096 Total Assets: $561,080 Total Debts: $1,299,061 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ AFS Metal Fabricators, Inc. Blanket lien all $300,000 nka JJ&D Paint Stripping Inc assets 1015 Harbor Lake Drive Value of Security: Safety Harbor, FL 34695 $561,080 Senior Lien: $451,068 Infinite Energy, Inc. $37,118 P.O. Box 31514 Tampa, FL 33631-3514 TECO Gas Services $35,348 P.O. Box 31017 Tampa, FL 33631-3017 Synovus Bank $30,000 GE Capital Lease of oven $27,820 Jim-Joe Enterprises, Inc. $26,658 Lazzari & Company, P.A. $26,050 Chempoint $12,150 Tiger Drylac U.S.A., Inc. $12,010 Randstad $8,983 FL Dept. of Revenue Sales tax $8,004 Citicorp Leasing Inc. Lease of Mitsubishi $6,859 forklift Verizon Directories Corp. $6,453 Progress Energy $5,171 TCI Powder Coating, Inc. $4,023 Crosslink $3,564 Tax Collector 2005 tangible $3,371 Pinellas City personal property taxes Steven W. Moore, Esq. $2,520 Spraylat Corporation $2,360 Cardinal Industrial Finishes $2,294 KULLMAN INDUSTRIES: Disclosure Statement Hearing Set on Aug. 24 --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey will convene a hearing at 11:00 a.m., on Aug. 24, 2006, at Courtroom 2 in 402 East State Street, Trenton, New Jersey, to consider approval of Kullman Industries, Inc.'s Disclosure Statement describing its chapter 11 liquidating plan of reorganization. Plan Funding The Plan will be funded by (i) cash on the effective date, (ii) funds available after the effective from, among other things, any payments received by the Trust from (a) the liquidation of the Debtor's remaining assets, (b) the prosecution and enforcement of the pending litigation and potential avoidance actions, and (c) any release of funds from the Disputed Claims Reserve. On and after the Confirmation Date, the Trustee, without further approval of the Court, may compromise, use, sell, assign, transfer, abandon or otherwise dispose of at a public or private sale of any of the Debtor's remaining assets for the purpose of liquidating and converting these assets to cash, making distributions and fully consummating the plan. Treatment of Claims Under the Plan, all administrative claims will be paid in full. Holders of Allowed Secured Claims will, at the option of the Debtor, either receive title to the property securing the claims or will be paid in full on the effective date. The Debtor believes that the only potential holder of the claim is Bank of New York, as Indenture Trustee, which presently holds a junior, subordinated claim. Each holder of Allowed General Unsecured Claims will receive interests in the Trust equal to their pro rata share of total claims. The Debtor says that all of its common stock is owned by Robert Kullman, and under the Plan, will receive nothing. A full-text copy of the Debtor's Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=060814213438 About Kullman Industries Headquartered in Lebanon, New Jersey, Kullman Industries, Inc. -- http://www.kullman.com/-- is a modular construction builder. The company filed for chapter 11 protection on Oct. 17, 2005 (Bankr. D. N.J. Case No. 05-60002). James N. Lawlor, Esq., at Wollmuth, Maher & Duetsch, LLP represents the Debtor in its restructuring efforts. Bruce D. Buechler, Esq., Peter J. D'Auria, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets between $1 million and $10 million and debts between $10 million to $50 million. L-3 COMMUNICATIONS: Net Income Down by $69.6 Mil. in 2nd Quarter ---------------------------------------------------------------- L-3 Communications reported results for the 2006 second quarter, with sales of $3,083.4 million, including organic sales growth of 10.3%, net cash from operating activities of $287.2 million and free cash flow of $247.2 million. Including the Litigation and Stock-Based Charges, for the 2006 second quarter as compared to the 2005 second quarter, operating income decreased by $76.5 million to $148.4 million from $224.9 million, operating income as a percentage of sales declined by 6.0 percentage points to 4.8% from 10.8%, net income decreased by $69.6 million to $49.8 million from $119.4 million. The Litigation Charge reduced consolidated operating margin by 4.2 percentage points and the Stock-Based Charge reduced consolidated operating margin by 1.3 percentage points. "Operationally, this was an excellent quarter with record sales and free cash flow," said Michael T. Strianese, interim chief executive officer and chief financial officer of L-3 Communications. "It is a tribute to Frank Lanza, our former chairman and chief executive officer, that the company performed so well given his untimely passing on June 6, 2006. Mr. Lanza was regarded as a visionary in the industry and is greatly missed." Results for this quarter were impacted by two matters, first, as announced on May 25, 2006, a jury verdict was rendered against the company in connection with litigation concerning a non-binding letter of intent with OSI Systems, Inc., and, as a result, the company recorded a pre-tax charge of $129.0 million ($78.2 million after income taxes). Second, the Company recorded a pre-tax charge of $39.2 million ($25.5 million after income taxes) related to stock-based awards granted during the period from May 1998 to July 2003. "Our continued focus on performance resulted in L-3 generating record operating income of $316.6 million, an increase of $91.7 million, or 40.8%, over 2005, and earnings per share of $1.24 reflecting a 25% growth in EPS over 2005, before giving effect to both of these charges," said Mr. Strianese. For the 2006 second quarter, consolidated sales increased by $1,007.8 million to $3,083.4 million from consolidated sales of $2,075.6 million for the 2005 second quarter. The increase in consolidated sales from acquired businesses was $793.4 million, or 38.2%, including $665.1 million from The Titan Corporation, which was acquired on July 29, 2005. Consolidated organic sales growth was 10.3%, or $214.4 million. Organic sales growth for the company's defense businesses was 11.8%, or $219.5 million, driven primarily by strong demand for training, intelligence support services, intelligence, surveillance and reconnaissance systems, secure networked communications systems, combat vehicle propulsion systems, naval power and control systems, navigation and guidance products, and acoustic undersea anti-submarine warfare products. Organic sales for the company's commercial businesses declined by $5.1 million, or 2.4%, primarily due to certain deliveries of mobile command centers, which slipped into the 2006 third quarter because of customer funding delays. Consolidated operating income increased by $91.7 million to $316.6 million before giving effect to the Litigation Charge of $129.0 million and the Stock-Based Charge of $39.2 million for the 2006 second quarter, compared to $224.9 million for the 2005 second quarter, and consolidated operating margin declined by 0.5 percentage points to 10.3% for the 2006 second quarter, compared to 10.8% for the 2005 second quarter. Improved contract performance and cost reductions increased consolidated operating margin by 0.2 percentage points, and was offset by a 0.7 percentage point reduction for the Titan acquired businesses, which primarily generate their sales from lower margin and lower risk cost-reimbursable type and time-and-material type contracts, and SFAS 123R stock-based compensation expense. Interest and other expense, net was income of $2.0 million for the 2006 second quarter, compared with income of $2.9 million for the 2005 second quarter. The decrease is primarily related to foreign currency exchange losses on certain equity method investments. Interest expense for the 2006 second quarter increased by $34.4 million, or 89.4%, to $72.9 million, compared to the 2005 second quarter, primarily due to interest incurred on debt issued to finance the Titan acquisition. The effective income tax rate for the 2006 second quarter decreased to 33.6% from 36.2% for the 2005 second quarter. The effective income tax rate for the 2006 second quarter excluding the Litigation and Stock-Based Charges was 36.9%. The increase in the effective income tax rate excluding these charges was primarily due to the expiration of certain income tax benefits relating to research and experimentation credits on Dec. 31, 2005, partially offset by income tax benefits relating to foreign tax credits on the repatriation of certain foreign earnings. Funded orders for the 2006 second quarter increased by $846.3 million, or 37.0%, to $3,132.2 million, from $2,285.9 million for the 2005 second quarter. Funded backlog at June 30, 2006 increased by $924.2 million, or 13.2%, to $7,925.1 million from $7,000.9 million at Dec. 31, 2005. Net cash from operating activities for the 2006 second quarter increased by $56.3 million, or 24.4%, to $287.2 million from $230.9 million for the 2005 second quarter. Free cash flow for the 2006 second quarter increased by $40.9 million, or 19.8%, to $247.2 million, compared to free cash flow of $206.3 million for the 2005 second quarter. About L-3 Headquartered in New York City, L-3 Communications Corporation (NYSE: LLL) -- http://www.L-3com.com/-- is a leading provider of Intelligence, Surveillance and Reconnaissance systems, secure communications systems, aircraft modernization, training and government services. The company is a leading merchant supplier of a broad array of high technology products, including guidance and navigation, sensors, scanners, fuzes, data links, propulsion systems, simulators, avionics, electro optics, satellite communications, electrical power equipment, encryption, signal intelligence, antennas and microwave components. L-3 also supports a variety of Homeland Security initiatives with products and services. Its customers include the Department of Defense, Department of Homeland Security, selected U.S. Government intelligence agencies and aerospace prime contractors. * * * L-3 Communications Corporation's 7-5/8% Senior Subordinated Notes due 2012 carry Moody's Investors Service's Ba3 rating and Standard & Poor's BB+ rating. LAIDLAW INT'L: Inks New $500MM Term Loan to Fund Self-Tender Offer ------------------------------------------------------------------ Laidlaw International, Inc. reported preliminary results of its modified "Dutch Auction" self-tender offer. Laidlaw expects to accept for payment an aggregate of 15,609,197 shares of its common stock at a purchase price of $26.90 per share. These tendered shares represent 16% of the shares outstanding as of Aug. 7, 2006. The offer to purchase shares expired on Monday, Aug. 7, 2006, at 5:00 p.m., New York time. Based on the initial results, Laidlaw expects to purchase the 15 million shares the Company initially offered to purchase, and in accordance with applicable securities laws, to exercise its right to purchase an additional 609,197 shares of common stock, without extending the tender offer. Based on the preliminary count by the depositary for the tender offer, an aggregate of 15,609,197 shares were properly tendered and not withdrawn at or below a price of $26.90 per share, including 4,183,943 shares that were tendered through notice of guaranteed delivery. Under the terms of the tender offer, Laidlaw offered to purchase shares of its common stock at a price not less than $25.50 and not greater than $28.50 per share. The results are preliminary and subject to verification by the depositary of the proper delivery of the shares validly tendered and not withdrawn. Final results will be reported following the completion of the verification process. The Company expects payment for the shares accepted for purchase, and the return of all shares tendered and not accepted for purchase, to occur within a week. The tender offer is part of Laidlaw's intention to return approximately $500 million to holders of its common stock through share repurchases. As authorized by Laidlaw's board of directors, the Company may make additional purchases of $80 million of its common stock through open market purchases beginning on the 11th business day after the expiration of the tender offer. Laidlaw may conduct its share repurchases in the open market, in privately negotiated transactions, through derivative transactions and through purchases made in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934. The repurchase program does not require Laidlaw to acquire any specific number of shares and may be terminated at any time. The repurchase of the shares will be funded with proceeds from a new $500 million Term B credit facility that was entered into on July 31, 2006. The Term B facility will have a seven-year term and an interest cost of LIBOR plus 175 basis points through maturity. The dealer managers for the self-tender offer are Morgan Stanley & Co. Incorporated and UBS Securities LLC. The information agent is D. F. King & Co., Inc., and the depositary is Mellon Investor Services. Any questions about the self-tender offer may be directed to the information agent at (212) 269-5550 (banks and brokerage firms) or (800) 290-6427 (all others toll free). About Laidlaw Inc. Headquartered in Arlington, Texas, Laidlaw, Inc., nka Laidlaw International, Inc. (NYSE:LI) -- http://www.laidlaw.com/-- is a North American bus operator. Laidlaw's school buses transport more than 2 million students daily, and its Transit and Tour Services division provides daily city transportation through more than 200 contracts in the US and Canada. Laidlaw filed for chapter 11 protection on June 28, 2001 (Bankr. W.D.N.Y. Case No. 01-14099). Garry M. Graber, Esq., at Hodgson Russ LLP, represented the Debtors. Laidlaw International emerged from bankruptcy on June 23, 2003. * * * As reported in the Troubled Company Reporter on July 11, 2006, Moody's Investors Service affirmed Laidlaw International Inc.'s corporate family rating at Ba2 following the Company's announcement of a $500 million debt-financed share repurchase program. Moody's also assigned a Ba2 rating to the Company's new senior secured term loan. The rating outlook is stable. LB-UBS: Fitch Cuts Rating on $9.8 Million Class K Certs. to BB -------------------------------------------------------------- Fitch Ratings upgrades LB-UBS Commercial Mortgage, series 2000-C3 commercial mortgage pass-through certificates, as: -- $49 million class C to 'AAA' from 'AA+'; -- $19.6 million class D to 'AAA' from 'AA'; -- $13.1 million class E to 'AAA' from 'AA-'; -- $13.1 million class F to 'AA+' from 'A+'; -- $11.8 million class G to 'AA' from 'A-; -- $20.9 million class H to 'A+' from 'BBB'; -- $16.3 million class J to 'BBB+' from 'BBB-'; -- $9.8 million class K to 'BBB' from 'BB'. In addition Fitch affirms these classes: -- $66.7 million class A-1 at 'AAA'; -- $641.3 million class A-2 at 'AAA'; -- Interest only class X at 'AAA'; -- $71.8 million class B at 'AAA'. Fitch does not rate the $10.4 million class L, $11.8 million class M, $3.9 million class N and $8.1 million class P certificates. Fitch's upgrades are the result increased credit enhancement levels due to 14% paydown and 13.8% defeasance since Fitch's last rating action. As of the July 2006 remittance report, the transaction has paid down 25.9% to $967.4 million from $1.3 billion at issuance. The largest loan in the transaction, Cherry Creek Mall (11.4% at issuance), has paid off since Fitch's last review. Since issuance, 27 loans, 21.2% of the pool, have defeased. There are currently four assets in special servicing representing 2.4% of the transaction. The largest loan (1%) is an office property located in Minneapolis, Minnesota. The loan transferred to the special servicer due to a technical default when the borrower cancelled a letter of credit which secured its obligation to perform required repairs at the property. The borrower has cured the default and the special servicer anticipates the loan to be returned to the master servicer. The loan remains current. The second largest specially serviced asset (0.6%) is an office property in Albany, New York. The loan was transferred to the special servicer because of the borrower's inability to make the January 2006 principal and interest payment due to a decrease in occupancy to 46.8% as of year end 2005 from 84% at YE 2004. The borrower is using a debt service reserve to keep the loan current while actively marketing the vacant space. The third largest specially serviced asset (0.4%) is a multifamily property in Newton, North Carolina, and is real estate owned. The special servicer has listed the property for sale and has received interest from potential purchasers. Fitch expects losses at liquidation which are expected to be absorbed by the unrated class P. Fitch reviewed the performance of the Annapolis Mall (11.9%), Westfield Portfolio (9.5%) and Sangertown Square Mall (6.1%) loans which maintain investment grade credit assessments. The Fitch adjusted debt service coverage ratios based on the pooled trust portions as of YE 2005 were 2.15 times(x), 1.79x and 1.63x, respectively. As of YE 2005, all three loans reported occupancy greater than 90%. LE GOURMET: Organizational Meeting Set at 2:00 p.m. Tomorrow ------------------------------------------------------------ Kelly Beaudin Stapleton, the U.S. Trustee for Region 3, will hold an organizational meeting to appoint an official committee of unsecured creditors in Le Gourmet Chef, Inc.'s Chapter 11 case, at 2:00 p.m., on Aug. 16, 2006, at the U.S. Trustee's Office, 14th Floor, Room 1401 in Newark, New Jersey. The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' cases. The meeting is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. However, a representative of the Debtors will attend and provide background information regarding the cases. Creditors interested in serving on a Committee should complete and return to the U.S. Trustee a statement indicating their willingness to serve on an official committee. Official creditors' committees, constituted under Section 1102 of the Bankruptcy Code, ordinarily consist of the seven largest creditors who are willing to serve on a committee. In some Chapter 11 cases, the U.S. Trustee is persuaded to appoint multiple creditors' committees. Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes that the reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in Paramus, New Jersey, Le Gourmet Chef, Inc., -- http://www.legourmetchef.com/-- is a retailer specializing in solutions for entertaining and gift giving. The Company filed for bankruptcy on Aug. 8, 2006 (Bankr. D. N.J. Case No. 06-17364). John DiIorio, Esq., at Shapiro & Croland, and Wendy G. Marcari, Esq., at Traub, Bonacquist, & Fox, LLP, represent the Debtor. When the Debtor filed for bankruptcy, the Debtor estimated its assets and debts at $10 million to $50 million. LEHMAN BROTHERS: Narrow Business Scope Cues Fitch's B Rating ------------------------------------------------------------ Fitch assigns Lehman Brothers Commercial Bank an Individual rating of 'B' and a Support rating of '1', and affirms all other outstanding ratings. LBCB is an industrial bank chartered in Utah, and is an indirect wholly owned subsidiary of Lehman Brothers Holdings, Inc. LBHI uses various legal entities to diversify funding sources and reduce short-term credit risk. For example, LBHI has chartered several banks, including LBCB, in order to generate retail brokered deposits and borrow directly from the Federal Home Loan Bank. LBCB commenced operations on August 24, 2005. The primary activities of the bank include commercial and industrial and commercial real estate lending (primarily to major investment- grade corporations), short-term warehouse lending secured by specific assets, and interest rate derivative products (offered primarily to municipalities and quasi-government entities). All of LBCB's clients have pre-existing relationships with LBHI. LBCB's assets are primarily funded via brokered CDs distributed through thirteen approved retail brokers. The assigned 'B' Individual rating reflects LBCB's narrow business scope and reliance on LBHI for clients, expertise, infrastructure, and administrative support. That said, the Individual rating also reflects LBCB's strong profitability, healthy balance sheet, limited risk profile (LBCB passes most interest rate risk and some credit risk on to Lehman affiliates), and experienced management team. The assigned '1' Support rating reflects Fitch's belief that support for LBCB would be willfully and easily provided by LBHI, if necessary. Liquidity and capital are managed conservatively, and in concert with LBHI's overall objectives. Fitch affirms and/or assigns the following ratings: Lehman Brothers Commercial Bank -- Long-Term Issuer Default Rating (IDR) affirmed at 'A+' -- Short-Term IDR affirmed at 'F1+' -- Individual: 'B' -- Support: '1' -- Long-Term Deposits affirmed at 'AA-' -- Short-Term Deposits affirmed at 'F1+' The Rating Outlook is Positive for all ratings. LOOMIS COMMUNITIES: Good Financial Profile Cues S&P to Up Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its rating on the Massachusetts Development Finance Agency's bonds, issued for Loomis Communities, to 'BBB-' from 'BB+', reflecting Loomis' strong financial performance, solid balance sheet, and low debt level. The outlook is stable. "We expect that Loomis Communities will continue to improve its operations and excess profits, while maintaining and growing its current cash reserves and without any significant additional debt over the next year to two years," said Standard & Poor's credit analyst Jennifer Soule. "If this trend is realized, with no erosion of utilization, a positive outlook or a higher rating might be warranted." Loomis' financial performance has strengthened considerably over the past year to 18 months, following the fill-up of 70 new independent living units over that time period. Loomis' balance sheet has consistently been solid, with 300 days' cash on hand through fiscal 2005, and it maintains a relatively low level of debt with an adjusted debt-to-capitalization ratio of 40%. In addition, occupancy levels are strong and improving at all three of the system's residential communities and its nursing home. Through the first six months of fiscal 2006, all of Loomis' facilities were performing well above budgeted expectations and management projects that the year will close favorable to budget overall. Loomis anticipates that its improvement will carry through fiscal 2007 as well. In addition, Loomis' debt service coverage (revenue only) has improved considerably. Additionally, Loomis completed adding 70 independent-living units to its Loomis Village campus in late 2003 and 12 new skilled- nursing beds, with significant capital expenditures. This level of capital spending alleviates the need for major projects in the near future and is further reflected in Loomis' low age of plant of 8.6 years. MAGUIRE PROPERTIES: Completes $485 Million Funding for Gas Company ------------------------------------------------------------------ Maguire Properties, Inc. has completed a new $458 million, 10-year fixed rate, interest only financing at a rate of 5.10% for Gas Company Tower. The net proceeds of the refinancing after repayment of the existing $280 million mortgage loan, payment of prepayment penalties, closing costs and loan reserves were approximately $165 million and proceeds were used to pay down the Company's term loan to a present balance of $167 million. Gas Company Tower is an architecturally significant, 52-story office building located on Bunker Hill in Downtown Los Angeles. The property is currently 96.5% leased and features 1.3 million square feet. About Maguire Properties Maguire Properties, Inc. (NYSE:MPG) operates office properties in the Los Angeles central business district. The Company is a full- service real estate company with substantial resources in property management, marketing, leasing, acquisitions, development and financing. * * * As reported in the Troubled Company Reporter on Aug. 1, 2006, Standard & Poor's Ratings Services affirmed its 'BB' corporate credit ratings assigned to Maguire Properties Inc. and Maguire Properties L.P. At the same time, the rating assigned to a $332 million term loan and $100 million revolving credit facility (collectively referred to as "the facilities") is raised to 'BB+', and the related recovery rating is revised to '1' from '3'. The outlook is stable. MARCHFIRST INC: Oracle's Late-Filed Proof of Claim Won't be Paid ---------------------------------------------------------------- Andrew J. Maxwell, Esq., the chapter 7 trustee overseeing the liquidation of marchFirst, Inc. and its debtor-affiliates, objected to Oracle USA, Inc.'s late-filed proof of claim. Oracle sought allowance of its claim as timely filed contending that it did not receive proper notice of the bar date. The Honorable John D. Schwartz of the U.S. Bankruptcy Court for the Northern District of Illinois sustained the Trustee's objection. Reasonable notice is what's required, Judge Schwartz says, but that doesn't require the very best method of service of process. A notice is reasonable if it is reasonably calculated under all circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections, Judge Schwartz opined in a decision published at 2006 WL 2055721, citing a Supreme Court ruling in Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 657, 94 L.Ed. 865 (1950). Oracle, pointing to AM International, Inc. v. Wella Corp., 142 B.R. 252 (Bankr. N.D. Ill. 1992), argued that even creditors who have knowledge of a reorganization case have a right to assume that they will receive reasonable notice before their claims are barred. The Court found that Oracle had actual knowledge of the bankruptcy case in plenty of time to file a timely proof of claim. As a result, Oracle is not entitled to participate in the distribution from the estate on par with creditors that timely filed proofs of claim. Oracle further argued that its claim should be deemed timely because the late filing was a result of "excusable neglect." The Court disagreed, stating that excusable neglect standard applies to tardy proofs of claim in chapter 11 cases, but not chapter 7 cases due to policy differences between the different chapters of the Bankruptcy Code. Gus A. Paloian, Esq., at Seyfarth Shaw LLP represented Oracle USA, Inc., in this matter. Headquartered in Chicago, Illinois, marchFirst, Inc., was an Internet professional services provider. marchFirst and its debtor-affiliates filed for chapter 11 protection on April 12, 2001 (Bankr. N.D. Ill. Case No. 01-24742). On April 26, 2001, the chapter 11 cases were converted into chapter 7 proceedings. Andrew J. Maxwell, Esq., was appointed chapter 7 trustee to oversee the liquidation of the Debtors' estate, and is represented by Steven S. Potts, Esq., and Kathleen M. Mcguire, Esq., at Maxwell and Potts, LLC. MARTY MCDANIEL: Case Summary & 19 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Marty Christopher McDaniel Martha Mae Reid McDaniel dba Pro Auto Collision (sole prop) dba Antiques in the Valley (sole prop) fdba Southern Pride Antiques (partnership) 3140 McDaniel Street Newton, North Carolina 28658 Bankruptcy Case No.: 06-50664 Chapter 11 Petition Date: August 8, 2006 Court: Western District of North Carolina (Wilkesboro) Judge: J. Craig Whitley Debtor's Counsel: Richard M. Mitchell, Esq. Mitchell & Culp, PLLC 1705 Scott Avenue Charlotte, North Carolina 28203 Tel: (704) 333-0630 Fax: (704) 333-4975 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Beneficial Loan $14,121 P.O. Box 17574 Baltimore, MD 21297 Ford Motor Credit Co. Loan $10,543 c/o Smith, Debnam P.O. Box 26268 Raleigh, NC 27611-6268 Catawba Valley Bank Loan $10,217 P.O. Box 2328 Hickory, NC 28603 Kennedy, David Loan $8,400 Neteller $7,267 Catawba County Taxes $7,133 Tax Collector Lingle, Charles Loan $5,700 Woodruff, Randall Loan $5,300 Foglers Automotive Trade $4,797 Fire Pay $4,065 Shrum, Claude R. $4,000 Capital One Credit Card $3,668 Young Ford Trade $3,074 Paramount Volkswagen Trade $2,997 LKQ Salisbury Trade $2,791 Merhar, John Loan $2,600 Foothills Paint & Eq. Trade $2,333 Finishmasters Trade $2,329 Modern Toyota Trade $2,324 MARY POINTE: Case Summary & Two Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Mary Pointe, L.L.C. 42076 Sweetspring Lane Leesburg, Virginia 20176 Bankruptcy Case No.: 06-10900 Chapter 11 Petition Date: August 4, 2006 Court: Eastern District of Virginia (Alexandria) Judge: Stephen S. Mitchell Debtor's Counsel: James P. Campbell, Esq. Campbell Miller Zimmerman, P.C. 19 East Market Street Leesburg, Virginia 20176 Tel: (703) 771-8344 Fax: (703) 777-1485 Total Assets: $4,000,000 Total Debts: $5,512,242 Debtor's 2 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Virginia Commerce Bank Bank Loan $5,500,000 5350 Lee Highway Value of collateral: Arlington, VA 22207 $4,000,000 Loudoun County Treasurer $12,242 One Harrison Street Leesburg, VA 20175 MCKESSON CORP: Earns $184 Million in First Quarter Ended June 30 ---------------------------------------------------------------- McKesson Corporation earned $184 million of net income on $23.6 billion of net revenues, compared to $171 million of net income on $20.9 billion of net revenues in 2005, the Company disclosed in a Form 10-Q filing delivered to the Securities and Exchange Commission. The Company's First quarter results included a total of $26 million in previously announced pre-tax charges associated with McKesson's investment in Parata Systems and a restructuring charge in Provider Technologies. The quarter also included $8 million in pre-tax share-based compensation expense as the FAS123R requirement took effect for the company. First quarter results a year ago included a $51 million pre-tax anti-trust settlement credit and a $52 million pre-tax charge to Securities Litigation expense. "McKesson is off to a solid start in Fiscal 2007, with strong momentum in our Pharmaceutical Solutions and Provider Technologies segments," said John H. Hammergren, chairman and chief executive officer. "We are pleased with the balance we are achieving, continuing to deliver improved operating results in our core businesses while also deploying capital in a disciplined way to create additional shareholder value." "Our activities in the quarter were an excellent example of how we take a balanced approach to our corporate strategy and use of capital. We made several acquisitions, sold non-strategic assets and continued to return capital to our shareholders through a steady repurchase of our shares and our quarterly dividend." During the first quarter of Fiscal 2007, McKesson repurchased $283 million of common stock and on June 30, 2006, had $217 million remaining on the previous $500 million share repurchase authorization. At its most recent meeting, the company's Board of Directors authorized an additional $500 million share repurchase and a six cent per share quarterly dividend. Cash flow from operations during the quarter was $295 million, and McKesson ended the quarter with a cash balance of $2 billion and a gross debt-to-capital ratio of 14%. "Our strong balance sheet and solid cash flow enable us to continue our portfolio approach to capital deployment," said Mr. Hammergren. "Combined with consistently strong operating results from having focused businesses in attractive, growing markets for healthcare services, we believe we are well-positioned to deliver sustained shareholder value creation." Corporate Highlights The first quarter of Fiscal 2007 included the following additional news at the company: -- McKesson combined its retail pharmacy automation business with Parata Systems and made an investment in the combined company, and is now a significant minority investor in a stronger organization that has a market-leading product offering and more efficient operations. -- McKesson continues to lead the pharmaceutical distribution industry in contract price accuracy, according to a comparative study of third-party pricing data validated by S/T Health Group Consulting, Inc., an independent healthcare consulting firm, which reviewed more than $1.89 billion of invoices from a variety of U.S. hospital pharmacies. -- On July 1, McKesson and the Illinois Department of Healthcare and Family Services launched a comprehensive disease management program for more than 168,000 Illinois Medicaid beneficiaries who are disabled or chronically ill. -- McKesson acquired HealthCom Partners LLC, a provider of virtual business office capabilities and consumer- interactive patient billing solutions, and RelayHealth Corporation, a provider of online physician-patient communication services. -- On July 18, 2006, the Certification Commission on Healthcare Information Technology announced its first round of vendors that have passed certification requirements. McKesson's Horizon Ambulatory Care, Release 9.4, passed 100% of the required criteria and is one of only 18 products on the market to carry the CCHIT-certified seal. In June, we signed a second agreement with Triad Hospitals, Inc., to install Horizon Ambulatory Care in 195 clinics across the country. -- In the Top 20: KLAS 2006 Mid-Year Report Card issued in June by KLAS Enterprises, McKesson's Paragon(R) solution received the No. 1 ranking in the community hospital information system category and Horizon Medical Imaging(TM) was ranked No. 1 for the community PACS segment. In all, McKesson solutions are ranked in the top three for 16 KLAS categories, five of which are category leaders. -- At its July meeting, the Board of Directors authorized a new repurchase from time to time of up to $500 million of the company's shares of common stock in open market or private transactions. The Board's authorization follows a previous $500 million share repurchase program authorized in April 2006, which has approximately $217 million remaining. -- Due to the company's strong balance sheet and cash flow, McKesson renewed its annual committed accounts receivable sales facility under substantially the same terms to those previously in place, with the exception that the facility amount was reduced from $1.4 billion to $700 million. -- McKesson intends to withdraw its common stock from listing on NYSE Arca, Inc. (formerly the Pacific Stock Exchange) as a cost-saving measure and to reduce administrative costs. The company's common stock will continue to be listed on the New York Stock Exchange. A full-text copy of the regulatory filing is available for free at http://researcharchives.com/t/s?f88 About McKesson Corp. Headquartered in San Francisco, California, McKesson Corp. (NYSE: MCK) -- http://www.mckesson.com/-- is a Fortune 15 healthcare services and information technology company dedicated to helping its customers deliver high-quality healthcare by reducing costs, streamlining processes and improving the quality and safety of patient care. Over the course of its 172-year history, McKesson has grown by providing pharmaceutical and medical-surgical supply management across the spectrum of care; healthcare information technology for hospitals, physicians, homecare and payors; hospital and retail pharmacy automation; and services for manufacturers and payors designed to improve outcomes for patients. * * * McKesson Corp.'s Junior Subordinated Notes carry Moody's Investors Service's Ba1 rating. MID-SOUTH DOOR: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Mid-South Door Company, Inc. P.O. Box 15487 Baton Rouge, Louisiana 70895 Bankruptcy Case No.: 06-10581 Chapter 11 Petition Date: August 4, 2006 Court: Middle District of Louisiana (Baton Rouge) Judge: Douglas D. Dodd Debtor's Counsel: Arthur A. Vingiello, Esq. Steffes, Vingiello & McKenzie, LLC 13702 Corsey Boulevard, Building 3 Baton Rouge, Louisiana 70817 Tel: (225) 751-1751 Fax: (225) 751-1998 Estimated Assets: Less than $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ The Shutter Shop $52,837 7146 Sullivan Road Greenwell Springs, LA 70739-3121 Rogue Valley Door $43,569 P.O. Box 2710 Grants Pass, OR 97528 BlueLinx Corporation $42,532 P.O. Box 102110 Atlanta, GA 30368-0110 Masonite Door Corporation $38,532 Gaiennie Lumber Co $34,965 Dyke Indutstries, Inc. $23,848 Fireside Forest $20,714 Lugenbuhl, Wheaton, Peck, Rankin, Hubbard $20,475 Penske Truck Leasing Co., LP $19,042 C&S Door $17,275 Capital One HNB MC Account-S/S $15,420 Hutting Building Products $13,659 U.S. Lumber $13,588 Dixie Plywood & Lumber Company of Houston $13,159 Capital One HNB Mastercard Account $12,916 Moulding Associates, Inc. $12,073 Milton Culotta $12,000 Gulf Coast Cypress $11,528 US Bancorp $11,030 AAW, Inc. $11,000 MOVIE GALLERY: Hires Turnaround Experts Amidst Flagging Sales ------------------------------------------------------------- Movie Gallery Inc., has turned to Merrill Lynch & Co. and Alvarez & Marsal, Inc., in an effort to boost its finances. Merrill Lynch will explore opportunities to strengthen the company's balance sheet. Alvarez & Marsal will immediately fill several vacancies in Movie Gallery's accounting and finance functions, shorten the lead time for implementing specific turnaround initiatives, assist in the remediation of previously identified material weaknesses and deficiencies in internal control over financial reporting, facilitate the ongoing integration process and improve the Company's overall operating performance. Joe Malugen, the Company's Chairman, President and Chief Executive Officer said: "Our business continues to be affected by a weak home video release schedule and other industry-wide challenges, but we are making great progress on a number of internal initiatives intended to improve Movie Gallery's financial and operational performance. We continue to expect a slow late summer, as is typical due to the seasonality of our industry, with gradually improving business conditions beginning in October when the first of several $100 million titles will be released to home video. "In the meantime, Movie Gallery is aggressively pursuing opportunities to increase revenues and further improve operating efficiencies. We have engaged Merrill Lynch to advise us on ways to improve our capital structure as well as Alvarez & Marsal, a leading turnaround management, restructuring and corporate advisory firm. This great company, together with its dedicated associates and partners, is taking the steps necessary to reposition Movie Gallery for renewed success." The Company reported a net loss of $14.9 million in the second quarter of 2006. The Company's year-to-date net income was $25.5 million. For the second quarter of 2006, total revenues were $601.3 million as compared to $504.7 million in the comparable period last year. The Company's year-to-date revenues were approximately $1.3 billion for the twenty-six weeks ended July 2, 2006 as compared to revenue of $738.5 million in the comparable 2005 period. As of July 2, 2006, Movie Gallery had cash and cash equivalents of $21.2 million and $39.3 million in available borrowings under its revolving credit facility. Furthermore, as of Aug. 9, 2006, the Company had no borrowings on its revolving credit facility apart from open letter of credit commitments. As of July 2, 2006, Movie Gallery was in compliance with the financial covenants contained in its credit facility. Operational Improvement Initiatives In conjunction with the continuing integration of Hollywood Entertainment Corporation, Movie Gallery is also pursuing cost savings and cash generation opportunities through a combination of real estate optimization strategies, lower capital spending, and non-core asset divestitures. Real Estate Optimization Movie Gallery is implementing several strategies to better manage store leases and sales floor space to generate significant savings over the next three years. The Company plans to reduce the overall footprint of its store base by returning under-utilized portions to landlords and negotiating subleases where economically feasible. Movie Gallery is experiencing better than expected progress from this effort to restructure the Company's real estate assets, manage occupancy costs and unlock unrealized value. However, these real estate projects are long-term in nature will take some time to implement. Most of the financial benefits associated with these projects are expected to begin in 2007, with the bulk of the financial benefits to be realized in 2008 and beyond. In addition, Movie Gallery continues to evaluate underperforming stores and stores that have overlapping trade areas in order to close stores in those markets at an accelerated pace. The Company anticipates closing approximately 175 underperforming and overlapping stores during fiscal 2006 and believes it can transfer a sufficient percentage of the customer base to other Movie Gallery and Hollywood Video stores to improve profitability in these markets. Reduced Capital Spending During the second quarter of 2006 Movie Gallery opened 32 new stores and closed 42 of its existing stores. Through the remainder of 2006, the Company currently plans to open approximately 30 new stores, which were already in the pipeline for 2006. In order to maximize free cash flow, the Company plans to curtail new store openings over the next several years. Divestiture of Certain Non-Core Assets Movie Gallery is continuing to review the Company's overall asset portfolio. Net proceeds from any divestitures will be used for debt reduction, working capital and other general corporate purposes. Expense Reductions As a part of the Company's integration process and ongoing cost reduction efforts, Movie Gallery has reduced its salaried and administrative office staff from the date of the merger by approximately 21%, or 380 positions, as of the end of the second quarter of 2006. While this exceeds the Company's previously announced staff reduction target of 17%, or 300 positions, the Company will continue to pursue opportunities to reduce expenses and streamline the organization to improve its bottom-line results. About Movie Gallery Headquartered in Dothan, Alabama, Movie Gallery, Inc. -- http://www.moviegallery.com/-- is the second largest North American video rental Company with approximately 4,800 stores located in all 50 U.S. states, Canada and Mexico. Since the Company's initial public offering in August 1994, Movie Gallery has grown from 97 stores to its present size through acquisitions and new store openings. * * * As reported in the Troubled Company Reporter on March 15, 2006, Moody's Investors Services downgraded the corporate family rating of Movie Gallery to Caa1 from B2. The Company's $920 million of senior secured credit facilities carry Moody's Caa1 rating while its $325 million of guaranteed senior notes are rated at Caa3. N-STAR REAL: Fitch Holds BB Rating on $15 Million Class D Notes --------------------------------------------------------------- Fitch Ratings upgrades five classes and affirms four classes of the notes issued by N-Star Real Estate CDO II Ltd: -- $216,992,130 class A-1 notes affirmed at 'AAA'; -- $42,000,000 class A-2A notes affirmed at 'AAA'; -- $15,000,000 class A-2B notes affirmed at 'AAA'; -- $12,000,000 class B-1 notes upgraded to 'AA+' from 'A+'; -- $14,500,000 class B-2 notes upgraded to 'AA-' from 'A'; -- $24,000,000 class C-1 notes upgraded to 'A+' from 'A-'; -- $6,000,000 class C-2A notes upgraded to 'A-' from 'BBB+'; -- $16,000,000 class C-2B notes upgraded to 'A-' from 'BBB+'; -- $15,000,000 class D notes affirmed at 'BB'. N-Star II is a collateralized debt obligation, which closed July 1, 2004, supported by a static pool of commercial mortgage-backed securities (CMBS: 70.52%), senior unsecured real estate investment trust (REIT: 24.71%) securities, collateralized debt obligations (CDO: 4.25%), and commercial real estate loans (CREL: 0.52%). NS Advisors, LLC (rated 'CAM2' by Fitch) selected the initial collateral and serves as the collateral administrator. The upgrades are driven primarily by the improved credit quality, seasoning of the collateral, and deleveraging of the transaction. Since Fitch's last review, the collateral has shown positive rating migration, as evidenced by the improvement in the weighted average rating factor to 5.94, as of July 2006 trustee report, from 6.98 at last review. All overcollateralization and interest coverage ratios have remained stable since inception. There are currently no defaulted assets in the portfolio. The ratings of the classes A-1, A-2A, and A-2B notes address the likelihood that investors will receive timely payments of interest, as per the governing documents, as well as the aggregate principal amount by the June 2039 maturity date. The ratings of the classes B-1, B-2, the C-1, C-2A, C-2B, and D notes address the likelihood that investors will receive ultimate interest payments, as per the governing documents, as well as the aggregate principal amount by the June 2039 maturity date. Fitch will continue to monitor and review this transaction for future rating adjustments. NAPIER ENVIRONMENTAL: Lenders Waive July Interest Payments ---------------------------------------------------------- Napier Environmental Technologies Inc. reports that its lenders have agreed to waive their rights to interest for the month of July 2006 in an effort to help Napier during this time of re- building their customer base. These interest payments have been waived and the interest otherwise payable shall not be paid or payable currently or in the future. Headquartered in Delta, British Columbia, Napier Environmental Technologies, Inc. -- http://wwwbiowash.com/-- is a Canadian company primarily engaged in the development, manufacture and distribution of a wide range of products utilizing environmentally advanced technology. The product lines include coating removal and wood restoration products for both the industrial/commercial market and the consumer/retail market. Napier is currently operating under the protection of the Canadian Bankruptcy and Insolvency Act. NETRA SYSTEMS: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Netra Systems USA, Inc. aka NTS, Inc. aka NTS, USA 700 Dividend Drive, Suite 100 Peachtree City, GA 30269 Bankruptcy Case No.: 06-11376 Type of Business: NTS Legendre, the Debtor's affiliate, filed for bankruptcy in Belgium in the spring of 2006. Chapter 11 Petition Date: August 7, 2006 Court: Northern District of Georgia (Newnan) Judge: W. Homer Drake Debtor's Counsel: J. Robert Williamson, Esq. Scroggins and Williamson 1500 Candler Building 127 Peachtree Street, Northeast Atlanta, Georgia 30303 Tel: (404) 893-3880 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ American Express Company $279,499 World Financial Center 200 Vesey Street New York, NY 10285 Nitesco $180,150 A. Starcevica 10 51000 Rijeka, Croatia Intec Solutions, Inc. $81,026 199 14th Street #1809 Atlanta, GA 30309 ATESYA $49,750 Deloitte & Touche LLP $44,000 Clasquin USA, Inc. $37,126 SEAI $34,991 Eric Blanchart $33,066 Avis Rent A Car SYstem, Inc. $29,432 Eagle Control Systems, LLC $22,219 Zanara Ltd. $22,176 United Rental $21,096 Ste FEGE $16,200 Birnbey, Minsk & Minsk, LLC $14,000 Universal Electric Service $13,961 Phoenix International $13,855 Yaskawa $13,819 Catapult Search Group Inc. $13,600 Index Controls $11,345 Verizon Wireless $10,805 NEWPARK RESOURCES: S&P Rates Proposed $150 Mil. Senior Loan at BB- ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'BB-' rating and '1' recovery rating to oil field services company Newpark Resources Inc.'s (B+/Watch Neg/--) planned $150 million senior secured term loan. The 'BB-' rating was also placed on CreditWatch with negative implications. All the ratings on the company are on CreditWatch. Pro forma for the term loan closing, the Metarie, Louisiana-based company is anticipated to have about $210 million of debt outstanding. S&P expects Newpark to use the proceeds of the term loan in part to repay $125 million senior subordinated notes due 2007. The company received a notice of default on July 20, 2006 from its subordinated noteholders due to Newpark's delay in filing financial statements. Standard & Poor's lowered its ratings on the company to 'B+' from 'BB-' following the announcement. Finalization of the term loan reduces our concern that Newpark lacks the financial resources to retire the subordinated notes in the event that noteholders accelerate repayment," said Standard & Poor's credit analyst Ben Tsocanos. "However, the CreditWatch with negative implications still reflects the continued uncertainty regarding Newpark's filing of restated financial statements," said Mr. Tsocanos. Newpark's ability to file restated financial statements and to file statements for the first quarter of 2006 is crucial to maintaining the current ratings. Standard & Poor's expects the company to file within the waiver period provided by the revolver lenders and that adjustments to the statements will be manageable. Conversely, findings of material or widespread accounting problems, extended delays in the process, or deterioration in relations with its credit counterparties would almost certainly lead to a downgrade. NOVELIS INC: Lenders Extend Waiver Period Until Sept. 18 -------------------------------------------------------- Lenders under Novelis Inc.'s Credit Agreement have agreed to extend until Sept. 18, 2006, the deadline for filing the company's 2005 Annual Report on Form 10-K and its 2006 first quarter report on Form 10-Q. The filing deadlines for these two reports had become accelerated to Aug. 18, 2006, following the receipt of an effective notice of default on July 21, in connection with the Company's Senior Notes due 2015. The Credit Agreement lenders also agreed to extend the deadlines for filing the Company's 2006 second and third quarter reports on Form 10-Q. The second quarter report will be due the earlier of 59 days after the receipt of a new notice of default, should one occur in connection with the second quarter filings, and Nov. 30, 2006. The third quarter report will be due the earlier of 30 days after the receipt of a new notice of default, should one occur in connection with the third quarter filings, and Dec. 29, 2006. About Novelis Based in Atlanta, Georgia, Novelis Inc. (NYSE: NVL) (TSX: NVL) -- http://www.novelis.com/-- provides customers with a regional supply of technologically sophisticated rolled aluminum products throughout Asia, Europe, North America, and South America. The company operates in 11 countries and has approximately 13,000 employees. Through its advanced production capabilities, the company supplies aluminum sheet and foil to the automotive and transportation, beverage and food packaging, construction and industrial, and printing markets. * * * As reported in the Troubled Company Reporter on May 18, 2006, Moody's Investors Service placed the ratings of Novelis Inc., and its subsidiary, Novelis Corp., under review for possible downgrade. Novelis Corporation's Ba2 senior secured bank credit facility rating was placed on review for possible downgrade. Novelis Inc.'s Ba3 corporate family rating; Ba2 senior secured bank credit facility and B1 senior unsecured regular bond/debenture were placed on review for possible downgrade. OLD SOUTH: Case Summary & Five Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Old South Golf Plantation, LLC 2451 Cumberland Parkway, Suite 3112 Atlanta, Georgia 30339 Bankruptcy Case No.: 06-69477 Chapter 11 Petition Date: August 4, 2006 Court: Northern District of Georgia (Atlanta) Judge: Joyce Bihary Debtor's Counsel: Russell S. Bogue, III, Esq. DLA Piper Rudnick Gray Cary 2800 One Atlantic Center 1201 West Peachtree Street Atlanta, Georgia 30309-3450 Tel: (404) 736-7802 Fax: (404) 682-7802 -- and -- Sandford Frey, Esq. Creim Marcias Koenig & Frey 633 North Fifth Street, 51st Floor Los Angeles, California 90071 Tel: (213) 614-1944 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 5 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ International Metropolitan Loan and Damage $500,000 Holding Claim (may constitute 2451 Cumberland Parkway insider) Suite 3112 Atlanta, GA 30339 Rodney Sampson Loan and Damage $250,000 Holding Claim (may constitute 2451 Cumberland Parkway insider) Suite 3112 Atlanta, GA 30339 Colonial Capital Funding Loan $250,000 Group, Inc. 4607 Downman Road Suite 1012 New Orleans, LA 70126 Stuckey Law Offices Attorney Fees $13,500 123 Meeting P.O. Box 1755 Charleston, SC 29402-1755 Alston & Bird LLP Attorney Fees Unknown One Atlantic Center 1201 West Peachtree Street Atlanta, GA 30309-3424 OMNICARE INC: Reports $8.4 Mil. Net Income in Second Quarter 2006 ----------------------------------------------------------------- Omnicare, Inc., disclosed its financial results for the second quarter ended June 30, 2006, to the Securities and Exchange Commission on Aug. 9, 2006. For the three months ended June 30, 2006, the Company reported $8.4 million of net income on $1.6 billion of net revenues, compared to a $61.7 million net income on $1.1 billion of net revenues in 2005. The Company's Cash and cash equivalents at June 30, 2006, were $339.0 million compared with $218.1 million at Dec. 31, 2005. At June 30, 2006, the Company did not have outstanding borrowings under the $800 million revolving credit facility, and $700 million in borrowings were outstanding under the senior term A loan facility due 2010. As of June 30, 2006, the Company had approximately $23.5 million outstanding relating to standby letters of credit, substantially all of which are subject to automatic annual renewals. A full-text copy of the Company's Quarterly Report is available for free at http://researcharchives.com/t/s?f6a Headquartered in Covington, Kenturcy, Omnicare, Inc., -- http://www.omnicare.com/-- provides pharmaceutical care for the elderly. Omnicare serves residents in long-term care facilities comprising approximately 1,090,000 beds in 47 states in the United States and in Canada, making it the largest U.S. provider of professional pharmacy, related consulting and data management services for skilled nursing, assisted living and other institutional healthcare providers. Omnicare also provides clinical research services for the pharmaceutical and biotechnology industries in 30 countries worldwide. * * * Omnicare Inc.'s 8-1/8% Series B Senior Subordinated Notes, maturing on 2011, carry Moody's Investors Service's Ba3 rating. ORTHOFIX INTERNATIONAL: Earns $12.7 Million in 2006 Second Quarter ------------------------------------------------------------------ Orthofix International N.V. disclosed that sales for the second quarter ended June 30, 2006, were a record $84.7 million, an increase of 7% over the $79.5 million reported during the same period in 2005. The impact of foreign currency on sales for the second quarter of 2006 was a negative $300,000. Net income in the second quarter was $12.7 million compared with $9.4 million for the same period in 2005. Net income in the second quarter of 2006 included a non-recurring net tax benefit of $2.9 million resulting from the Company's election to adopt a new tax provision in Italy allowing for the revaluation of trademarks for tax purposes only. Additionally, results in the second quarter of this year included a charge of $1.6 million ($1.1 million after taxes) related to FAS 123R, a new accounting standard adopted in the first quarter of 2006 that revised the requirements of accounting for share-based compensation expense and the treasury method of calculating fully diluted shares outstanding. "Orthofix's second quarter results demonstrate the fundamental strength of the Company's core operations," said CEO Alan Milinazzo. "The Company's operating earnings per share, which have been at the high end of our range of guidance for the first two quarters of this year, reflect the continued strong growth in demand for our market-leading spine stimulation products coupled with the successful launch of a new line of functional braces at our Breg subsidiary. Additionally, we are pleased with the positive response we have received in the U.S. and abroad for our most recently introduced internal fixation products." Furthermore, reflecting normal seasonality, the Company indicated that third quarter revenues are expected to be between $82 and $84 million. Balance Sheet and Cash Flow At June 30, 2006, total cash increased by $1.4 million during the quarter, to $50 million. The cash flow from operations during the first six months of 2006 totaled $1.6 million, down from $13.1 million over the first half of last year. Year-to-date cash flow during the first half of 2006 was impacted by increased investments in inventory and a higher level of accounts receivable. The inventory increase was the result of the Company's previously announced restructuring activities around the world, including the opening of a new international distribution center in Italy and the purchase of a safety stock associated with the relocation of A-V Impulse System pad production from the U.K to Mexico. Orthofix International, N.V. (NASDAQ: OFIX) -- http://www.orthofix.com/-- is a global diversified orthopedic products company. It offers a broad line of minimally invasive surgical, and non-surgical, products for the Spine, Reconstruction, and Trauma market sectors that address the lifelong bone-and-joint health needs of patients of all ages- helping them achieve a more active and mobile lifestyle. Orthofix's products are widely distributed around the world to orthopedic surgeons and patients via Orthofix's sales representatives and its subsidiaries, including Breg, Inc., and via partnerships with other leading orthopedic product companies, such as Medtronic Sofamor Danek and Kendall Healthcare. In addition, Orthofix is collaborating in R&D partnerships with leading medical institutions such as the Orthopedic Research and Education Foundation, Rutgers University, the Cleveland Clinic Foundation, and National Osteoporosis Institute. * * * As reported in the Troubled Company Reporter on Aug. 9, 2006, Standard & Poor's Ratings Services revised the CreditWatch implications on its 'BB-' corporate credit rating for Orthofix International to negative from positive. PARMALAT USA: Objects to Sun Co. and NY Finance Dept. Claims ------------------------------------------------------------ Parmalat USA Corporation, Milk Products of Alabama, LLC, and Farmland Dairies, LLC, together with the Farmland Dairies LLC Unsecured Creditors' Trust object to five recently discovered proofs of claim filed in the U.S. Bankruptcy Court for the Southern District of New York's electronic claims filing system. Bankruptcy Services LLC, the Debtors' official claims agent, has included the Electronically Filed Claims on the claims register and assigned the Claims with specific numbers: Assigned Claimant Claim No. Debtor Claim Amount -------- --------- ------ ------------ Sun Company, Inc. (R&M) 1045 & 1046 Farmland $6,127 City of New York 1047 Farmland 352,180 Dept. of Finance 1048 Sunnydale 1,170,121 1049 Parmalat USA 749,950 Sun Company asserts general unsecured claims for credit card debt against Farmland. The NYC Department Claims are priority tax claims against the U.S. Debtors for commercial rent tax and general corporation tax deficiencies. Since the Debtors have BSI as their claims and noticing agent, the Claimants should have not filed the Claims electronically, David M. LeMay, Esq., at Chadbourne & Parke LLP, in New York, argues. The Debtors believe that the NYC Department, as well as its related divisions, received actual notice of the bar date for filing claims. The Bar Date Notice provides specific instructions on how to file a claim against the Debtors in their Chapter 11 cases. Among others, the Court-approved Bar Date Notice provides that a proof of claim must be in writing and must be received by BSI on or before the Bar Date by overnight or hand delivery, or mailing of the original proof of claim to the U.S. Bankruptcy Court- Parmalat USA Claims Docketing Center. The Claims Docketing Center will not be required to accept proofs of claim sent by facsimile, telecopy or electronic mail transmission. Hence, the U.S. Debtors and the Farmland Trust ask the Court to disallow the Claims as being filed electronically. Mr. LeMay also argues that the U.S. Debtors did not have any potential liability in their books and records with respect to Sun Company. The Claimant was not included in the U.S. Debtors' schedules of assets and liabilities. The U.S. Debtors further contend that the Claims lack merit. With respect to the NYC Department Claims, Parmalat USA and Farmland included in their Schedules, contingent and unliquidated liabilities to the Department, Mr. LeMay says. According to Mr. LeMay, after Farmland learned of the NYC Claims, it contacted the NYC Department to gain a better understanding of the origin and basis of the Claims. The Department was, however, unable to provide any information other than that set forth in the Claims -- unsubstantiated amounts requesting priority payment for commercial rent tax and general corporation tax deficiencies. Had the U.S. Debtors and the Farmland Trust been aware of the Claims prior to the Claims Objection Deadline, they would have certainly filed objections seeking disallowance of the Claims, Mr. LeMay says. Absent an order expunging and disallowing the Claims, the Claims will be allowed and the NYC Department and Sun Company will be excepted from the Bar Date Notice and Order. The allowance of the Claims is severely prejudicial to the Debtors' entire claims process, as well as each claimant whose claims were previously expunged because of improper filing, Mr. LeMay maintains. About Parmalat Headquartered in Wallington, New Jersey, Parmalat USA Corporation -- http://www.parmalatusa.com/-- generates more than 7 billion euros in annual revenue. The Parmalat Group's 40-some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices and employs over 36,000 workers in 139 plants located in 31 countries on six continents. The Company filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than $200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. (Parmalat Bankruptcy News, Issue No. 75; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) PARMALAT USA: Asks Court to Extend Claims Objection Deadline ------------------------------------------------------------ Parmalat USA Corporation, Milk Products of Alabama, LLC, and Farmland Dairies, LLC, together with the Farmland Unsecured Creditors' Trust, ask the U.S. Bankruptcy Court for the Southern District of New York to reconsider its last order extending their Claim Objection Deadline, and, to the extent necessary, the Confirmation Order, to permit them to file objections to recently discovered claims. The confirmed Plan of Reorganization of Farmland Dairies LLC, and Plans of Liquidation of Parmalat USA Corp. and Farmland Stremicks Sub, LLC -- formerly known as Milk Products of Alabama -- established the deadlines for the Debtors to object to claims: -- Aug. 11, 2005, for Farmland and MPA; and -- Sept. 23, 2005, for Parmalat USA. Through various extension requests, the Court extended the U.S. Debtors' Claim Objection Deadline to December 16, 2005. Bankruptcy Services LLC, the Debtors' official claims agent, has informed the U.S. Debtors of its discovery of five proofs of claim filed electronically on the Court's electronic case filing system, David M. LeMay, Esq., at Chadbourne & Parke LLP, in New York, relates. Two claims were filed by Sun Company, Inc., and the remaining three by the City of New York Department of Finance. The procedures and instructions for filing a proof of claim on ECF, which can be found at the Court's official Web site, provide very specific instructions when it is appropriate to file a claim electronically, Mr. LeMay notes. Pursuant to the Instructions, an attorney should not proceed with the filing of a claim on the ECF in certain situations, including on bankruptcy cases with claims agent, in which instance, the attorney should refer to the bar date notice or contact the claims agent. The U.S. Debtors believe that the Claimants of the Electronically Filed Claims received actual notice of the Bar Date. Mr. LeMay points out that the Bar Date Notice and the Bar Date Order unambiguously provide that all creditors must submit a proof of claim "in writing" so that any the claim is received on or before the Bar Date. "A plain reading of the Instructions and Bar Date Order clearly demonstrates that the Electronically Filed [Claims] must be disallowed and expunged," Mr. LeMay asserts. Even if the Electronically Filed Claims were improperly filed and should be disallowed and expunged on that basis alone, the U.S. Debtors further contend that the Claims lack merit and assert liabilities that are absent from the Debtors' books and records. However, because no objection was filed to the Claims by the Claim Objection Deadline, the Claims are deemed allowed pursuant to Section 502(a) of the Bankruptcy Code. The U.S. Debtors believe that reconsideration is warranted under the circumstances. About Parmalat Headquartered in Wallington, New Jersey, Parmalat USA Corporation -- http://www.parmalatusa.com/-- generates more than 7 billion euros in annual revenue. The Parmalat Group's 40-some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices and employs over 36,000 workers in 139 plants located in 31 countries on six continents. The Company filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than $200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. (Parmalat Bankruptcy News, Issue No. 75; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) PENN NATIONAL: To Amend Purchase Agreement With Mohegan Tribal -------------------------------------------------------------- Penn National Gaming, Inc. has agreed with the Mohegan Tribal Gaming Authority to amend its October 14, 2004 Purchase Agreement, under which the MTGA will irrevocably waive any post-closing termination rights under the Purchase Agreement and will release Penn National from substantially all liability arising out of the Purchase Agreement. Pursuant to the amended agreement, Penn National will make payments to the MTGA totaling $30 million over a five-year period beginning with the one year anniversary of the commencement of slot operations at Pocono Downs. "The amended purchase agreement finalizes the Pocono Downs sale and eliminates potential disputes related to the transaction," Peter M. Carlino, Chief Executive Officer of Penn National commented. "We look forward to directing our full energies and resources in Pennsylvania to the development of Hollywood Casino at Penn National." Penn National Gaming, Inc. (Nasdaq: PENN) -- http://www.pngaming.com/-- owns and operates casino and horse racing facilities with a focus on slot machine entertainment. The Company presently operates fifteen facilities in thirteen jurisdictions including Colorado, Illinois, Indiana, Iowa, Louisiana, Maine, Mississippi, Missouri, New Jersey, Ohio, Pennsylvania, West Virginia, and Ontario. In aggregate, Penn National's facilities feature over 17,500 slot machines, over 400 table games, over 2,000 hotel rooms and approximately 575,000 square feet of gaming floor space. The property statistics in this paragraph exclude two Argosy properties which the company anticipates divesting, but are inclusive of the Company's Casino Magic - Bay St. Louis, in Bay St. Louis, Mississippi and the Boomtown Biloxi casino in Biloxi, Mississippi, which remain closed following extensive damage incurred as a result of Hurricane Katrina. * * * As reported in the Troubled Company Reporter on Feb. 2, 2006, Moody's Investors Service raised the ratings of Penn National Gaming, Inc., and assigned a stable ratings outlook, including its Corporate family rating, to Ba2 from Ba3; $750 million revolver due 2010, to Ba2 from Ba3; $325 million term loan due 2011, to Ba2 from Ba3; $1,650 million term loan B due 2012, to Ba2 from Ba3; $175 million 8.875% guaranteed senior subordinated notes due 2010, to Ba3 from B2; $200 million 6.875% guaranteed senior subordinated notes due 2011, to Ba3 from B2; and $250 million 6.750% not guaranteed senior subordinated notes due 2015, to B1 from B3. As reported in the Troubled Company Reporter on Jan. 16, 2006, Standard & Poor's Ratings Services raised its ratings on casino owner and operator Penn National Gaming Inc., including its issuer credit rating to 'BB' from 'BB-'. PENN TRAFFIC: Lenders Further Extend Financials Release Deadline ---------------------------------------------------------------- In light of the governmental investigations seeking information relating to The Penn Traffic Company's promotional and allowance practices and policies, Penn Traffic would be further delaying the finalization and release of its audited financial statements for its 2003, 2004, 2005 and 2006 fiscal years. At Penn Traffic's request, lenders under its $164 million revolving credit facilities have agreed to extend the Sept. 30, 2006 deadline for delivery of its audited financial statements to Dec. 31, 2006, enabling Penn Traffic to continue to access fully its working capital facility. At July 28, 2006, Penn Traffic had undrawn availability of approximately $44 million and a 30-day average undrawn availability of approximately $43 million under this revolving credit facility. "We continue to be extremely gratified that our lenders have been understanding in working with us," said Robert Chapman, Penn Traffic's President and Chief Executive Officer, "and we look forward to getting past this disruption so that we can achieve the goals we established for our reorganized Company and its more than 8,500 employees." Headquartered in Rye, New York, The Penn Traffic Company operates 109 supermarkets in Pennsylvania, upstate New York, Vermont and New Hampshire under the BiLo, P&C and Quality trade names. Penn Traffic also operates a wholesale food distribution business serving 80 licensed franchises and 39 independent operators. The Company filed for chapter 11 protection on May 30, 2003 (Bankr. S.D.N.Y. Case No. 03-22945). Kelley Ann Cornish, Esq., at Paul Weiss Rifkind Wharton & Garrison, represents the Debtors in their restructuring efforts. When the grocer filed for protection from their creditors, they listed $736,532,614 in total assets and $736,532,610 in total debts. The Court confirmed the Debtor's First Amended Plan of Reorganization on March 17, 2005. The Plan took effect on Apr. 13, 2005. PHOTOWORKS INC: Employs Andrew Wood as President and CEO -------------------------------------------------------- PhotoWorks, Inc., disclosed that Andrew Wood will commence his employment as President and Chief Executive Officer on August 16, 2006. Mr. Wood currently serves on the Company's board of directors. Pursuant to his employment agreement, Mr. Wood will receive a base salary of $250,000 per year. He will also receive a grant of options to purchase 500,000 shares of the Company's common stock. The grant will vest over four years, with 25% vested immediately and the remainder vesting ratably on a monthly basis over the following four years. The Company will also pay Mr. Wood an annual bonus up to 50% of his base salary. In connection with his relocation to the Seattle area, the Company has also agreed to reimburse him for his accommodation costs in the Seattle area for a period of six months for a furnished one bedroom apartment or studio, as well as his air travel expenses between Seattle and San Francisco on a weekly return basis. The Company disclosed that Mr. Wade Pfeiffer's last day as chief financial officer and chief operating officer was August 11, 2006. Headquartered in Seattle, Washington, PhotoWorks(R), Inc. (OTCBB:FOTO) -- http://www.photoworks.com/-- is an Internet based digital photo-publishing company. The company's web based services allow PC and Mac users to create hard bound photo books, customized greeting cards, calendars, prints and other photography sourced products straight from their computers. Formerly known as Seattle Film Works, PhotoWorks has a 30-year national heritage of helping photographers share and preserve their memories with innovative and inspiring products and services. Going Concern Doubt Williams & Webster, PS, expressed substantial doubt about the Company's ability to continue as a going concern after it audited the financial statements for the year ending Sept. 30, 2005. The auditing firm pointed to the Company's net losses and cash flow shortages. PHOTOWORKS INC: June 30 Balance Sheet Upside-Down by $2.3 Million ----------------------------------------------------------------- PhotoWorks, Inc., reported its financial results for the third quarter ended June 30, 2006, to the Securities and Exchange Commission on Aug. 4, 2006. For the three months ended June 30, 2006, the Company incurred a $1.3 million net loss on $2.7 million of net revenues, compared to a $1.6 million net loss on $3.1 million of net revenues in 2005. At June 30, 2006, the Company's balance sheet showed $2.3 million in total assets and $4.6 million in total liabilities, resulting in a $2.3 million stockholders' deficit. The Company's June 30 balance sheet showed strained liquidity with $1.7 million in total current assets available to pay $2.1 million in total current liabilities coming due within the next 12 months. A full-text copy of the Company's Quarterly Report is available for free at http://researcharchives.com/t/s?f67 Going Concern Doubt Williams & Webster, PS, expressed substantial doubt about the Company's ability to continue as a going concern after it audited the financial statements for the year ending Sept. 30, 2005. The auditing firm pointed to the Company's net losses and cash flow shortages. Headquartered in Seattle, Washington, PhotoWorks(R), Inc. (OTCBB:FOTO) -- http://www.photoworks.com/-- is an online photography services company. Every day, photographers send film, memory cards and CDs, or go to the Company's website to upload, organize and email their pictures, order prints, and create Signature Photo Cards and Custom Photo. PLAYTEX PRODUCTS: Reduced Leverage Cues S&P to Lift Rating to B+ ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Playtex Products Inc. The corporate credit rating was raised to 'B+' from 'B'. The rating outlook is stable. As of July 31, 2006, approximately $585 million of debt is affected by this action. "The rating upgrade is based on Playtex's significantly reduced leverage and improved operating performance over the past two years, which resulted in key credit measures that are in line with the 'B+' rating category," explained Standard & Poor's credit analyst Patrick Jeffrey. "The company has improved its cost structure while focusing on core business segments to enhance its operating performance. While we expect that the company will continue to reduce debt through free cash flow generation, further upside to the rating is limited over the near term by the highly competitive operating environment in Playtex's core domestic markets." The rating on Playtex reflects the company's participation in the highly competitive consumer and personal products sector, where it faces much larger competitors. The rating also reflects modest sales trends and high leverage. However, Playtex has helped stabilize its operations during the past two years through debt reduction and improved operating efficiencies. Playtex's strengthened operating performance is a result of an improved cost structure, the divestment of noncore business segments, and an increased focus on new product development. Operating margins rose to 20.1% for the past 12 months ended June 30, 2006, from 18.4% in fiscal 2004, through better cost-control management. However, margins remain well below the 23.8% level in 2001, and are expected to continue to be challenged by promotional activity from competitors and increasing raw material costs over the near term. The company generates most of its sales from products in sectors in which Playtex maintains leading market positions. However, sales growth remains challenging due to competition from larger players (such as Procter & Gamble Co. and Schering-Plough Corp.), which limits pricing flexibility. QUANTA CAPITAL: Posts $42.9 Million Net Loss in 2nd Quarter ----------------------------------------------------------- Quanta Capital Holdings Ltd. reported financial results for the second quarter ended June 30, 2006. The company reported a $42.9 million net loss for the second quarter 2006, compared with an $8.5 million net income in the same period last year. Net loss excluding net realized losses on investments for the second quarter of 2006 was $36.2 million, compared with net income excluding realized gains on investments for the second quarter of 2005 of $7.7 million. Second quarter 2006 results include additional provision for employee severance of approximately $10.7 million which is a direct result of the Company's decision to place most of its specialty insurance and reinsurance lines into orderly run-off and $3.6 million in additional losses from the 2005 hurricanes. The Company also recognized $12.6 million as goodwill impairment expense related to its investment in ESC as Quanta's insurance companies are no longer writing environmental policies that complement ESC's ongoing business. Strategic Alternatives The Company continues to pursue strategic alternatives, which may include: -- the sale of the Company or some or all of its businesses; -- the commutation of certain contracts; -- sale of renewal rights of certain business lines; -- the engagement of an administrator to run-off all or a portion of its book of business; or -- a combination of one or more of these alternatives. Key developments during the second quarter of 2006 also included the decision to cease underwriting or seeking new business and to place most of its remaining specialty insurance and reinsurance lines into orderly run-off following A.M. Best rating actions and the subsequent withdrawal of its ratings. Quanta's Lloyd's syndicate and environmental consulting business, ESC, are not included in the run-off plan and will continue to seek new business. Gross written premiums for the second quarter of 2006 were $32.9 million and net written premiums were $10.1 million. This includes $23.3 million and $15.8 in gross and net written premium from Lloyd's and $24.9 million and $10.4 million in gross and net written premium from the Company's homebuilder's program, known as HBW. We expect that HBW will continue to generate premium until December 2006 when it will be terminated. The Company also returned $27.7 million in gross written premium to policyholders following policy cancellation and commutations. In future periods, the Company believes that comparisons versus prior year results are not meaningful as the Company is underwriting a limited amount of new policies. Net premiums earned in the second quarter were $60.4 million. Specialty insurance contributed $51.2 million of the net premiums earned and specialty reinsurance contributed $9.2 million. Technical services revenues for the second quarter of 2006 were $7.8 million compared to revenues of $7.2 million for the second quarter of 2005. The company also disclosed that it has started the process of communicating its run-off plan with its regulators during the second quarter of 2006. About the Company Headquartered in Hamilton, Bermuda, Quanta Capital Holdings Ltd. (NASDAQ: QNTA) -- http://www.quantaholdings.com/-- operates its Lloyd's syndicate in London and its environmental consulting business through Environmental Strategies Consulting in the United States. The Company is in the process of running off its remaining business lines. The Company maintains offices in Bermuda, the United Kingdom, Ireland and the United States. * * * As reported in yesterday's Troubled Company Reporter, Quanta Capital Holdings Ltd. continues to work with its lenders regarding an amendment to its credit facility and an extension to its waiver period, which expired Aug. 11, 2006. On June 7, 2006, A.M. Best Co. downgraded the financial strength ratings to B from B++ and the issuer credit ratings to bb from bbb for the insurance/reinsurance subsidiaries of Quanta Capital Holdings Ltd. These rating actions apply to Quanta Reinsurance Ltd., its subsidiaries and Quanta Europe Ltd. A.M. Best also downgraded Quanta's ICR to b from bb and the securities rating to ccc from b+ for its $75 million 10.25% Series A non-cumulative perpetual preferred shares. All ratings have been removed from under review with negative implications and assigned a negative outlook. The company disclosed that the A.M. Best rating action triggered a default under Quanta's credit facility. REAL ESTATE: Files for Bankruptcy; Hotel not in Danger of Closing ----------------------------------------------------------------- Officials of The Decatur Conference Center and Hotel disclosed that the former Holiday Inn would not close its business operations, after its parent company, Real Estate Investors of Decatur LLC, filed for Chapter 11 bankruptcy protection with the U.S. Bankruptcy Court for the Central District of Illinois on August 9, 2006, Herald & Review reports. Tim Raycraft, attorney of the Decatur developer John S. Cardwell, said in an interview that the Debtor will not close its doors and Central Illinois Bank will not try and close the doors. "It's a big asset to Decatur. Everybody wants to see the hotel stay in business." Mr. Raycraft commented. According to Mr. Raycraft, the parent company's bankruptcy filing resulted to the Bank's foreclosure action involving the former Holiday Inn Select Hotel and Conference Center after efforts to reach another short-term loan extension failed. The Bank filed a complaint on June 27, 2006, against the Debtor, alleging the Debtor was in default on the hotel's mortgage for more than $12.6 million. Another complaint involves a $500,000 second mortgage, for which $37,218.21 was due. The Bank claimed that no payments have been made toward the retirement of either debt in nearly a year. In addition, the Bank sought the Court's authority to sell the property. The Bank also wanted to take possession of the hotel or to have a receiver in place to collect money taken in by the hotel and put it toward the debt. Scott Perry, writing for Herald & Review, stated that Mr. Cardwell, Decatur Hospitality Services LLC, fka Cardwell and Randall Hospitality Services LLC, and James R. Randall, are involved in a pending local case. Mr. Cardwell and Mr. Randall are named in two additional counts each as being personally liable for the debt based on their having signed as guarantors of the note. On Aug. 10, 2006, Judge Mary P. Gorman issued an order that the Debtor will retain possession of the hotel for the time being. Judge Garman set Dec. 8, 2006, as the deadline to file a chapter 11 plan. Moreover, the Debtor has until Aug. 25, 2006, to file its schedules and financial statements, Mr. Perry added. REAL ESTATE: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Real Estate Investors of Decatur, LLC 101 South Main Street Suite 400 Decatur, Illinois 62523 Bankruptcy Case No.: 06-71033 Type of Business: The Debtor owns four hotels in Illinois. Chapter 11 Petition Date: August 9, 2006 Court: Central District of Illinois (Springfield) Judge: Mary P. Gorman Debtor's Counsel: John Barr, Esq. Barr & Barr P.O. Box 50 Decatur, Illinois 62525 Tel: (217) 875-5311 Fax: (217) 875-5742 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. REFCO INC: Chap. 11 Trustee Hires Conyers Dill as Bermuda Counsel ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorizes Marc Kirschner, the Chapter 11 trustee overseeing the Refco Capital Markets, Ltd.'s estate, to employ Conyers Dill & Pearman, as his special Bermuda counsel. Judge Robert Drain rules that if Conyers Dill seeks a waiver to represent Russia Growth Fund Ltd., on any matter in which the counsel would be adverse to RCM, and the RCM Trustee chooses not to grant the requested waiver, then: (i) Conyers Dill may withdraw from further representation of RCM and may represent RGF on any matter; and (ii) neither RCM nor the RCM Trustee will assert, or permit anyone on RCM's behalf to assert, that Conyers Dill's prior representation of RCM should disqualify it from representing RGF in any manner. Conyers Dill may be compensated in accordance with an engagement letter with the RCM Trustee, subject to applicable requirements for payment of fees and disbursements. No party may challenge Conyers Dill's fees under Section 328(c) of the Bankruptcy Code to the extent the Bermuda counsel provides services to RGF consistent with the provisions of the Order and the Agreement. Tina L. Brozman, Esq., at Bingham McCutchen LLP in New York, tells the Court that on October 19, 2005, RCM and Refco Global Finance, Ltd., filed voluntary winding up petitions in Bermuda. On October 26, 2005, the Bermuda court appointed joint provisional liquidators in the Bermuda Proceedings. Conyers Dill will: (1) advise the Trustee with respect to his powers and duties under Bermuda law in the management and operation of RCM's business and properties; (2) attend meetings and negotiate with representatives of creditors and other parties-in-interest of RCM in Bermuda and advise and consult on the conduct of the case, including all of the legal and administrative requirements of operating in a provisional liquidation parallel to a U.S. bankruptcy proceeding; (3) take all necessary actions to protect and preserve the RCM estate, including the prosecution of actions on its behalf, the defense of any actions commenced against it, negotiations concerning all litigation in which RCM and the Trustee may be involved in Bermuda and objections to claims filed in Bermuda against the estate; (4) interface and coordinate with the joint provisional liquidators and any analogous parties that may be appointed under the laws of various jurisdictions; (5) prepare on behalf of the Trustee all motions, applications, answers, orders, reports and papers necessary to the administration in Bermuda of the RCM estate; (6) negotiate and prepare on the Trustee's behalf, a scheme of arrangement or other resolution of the RCM estate, explanatory statements and all related agreements and documents and take any necessary action on behalf of RCM to obtain approval of the scheme or other resolution of the RCM estate; and (7) appear before the Bermuda Supreme Court, the Bermuda Court of Appeal, Bermuda Magistrate Courts and Bermuda regulatory bodies and protect the interests of RCM's estate before the Bermuda courts and regulators. Robin J. Mayor, Esq., a partner at Conyers Dill, is one of the lead professionals from her firm performing services to the Trustee. Ms. Mayor charges $575 per hour her services. Other Conyers Dill expected to be primarily involved in the case and their current hourly rates are: Professional Designation Hourly Rate ------------ ----------- ----------- David Cooke Partner $605 Paul Smith Counsel $575 Daina Casling Associate $350 Guy Cooper Associate $340 The firm's customary rates are: Designation Hourly Rate ----------- ----------- Partners $420 - $620 Associates $300 - $540 Ms. Mayor assures the Court that Conyers Dill does not represent any interest materially adverse to RCM, its creditors and its estate. About Refco Inc. Based in New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. Refco LLC, an affiliate, filed for chapter 7 protection on Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is a regulated commodity futures company that has businesses in the United States, London, Asia and Canada. Refco, LLC, filed for bankruptcy protection in order to consummate the sale of substantially all of its assets to Man Financial Inc., a wholly owned subsidiary of Man Group plc. Albert Togut, the chapter 7 trustee, is represented by Togut, Segal & Segal LLP. On April 13, 2006, the Court appointed Marc S. Kirschner as Refco Capital Markets Ltd.'s chapter 11 trustee. Mr. Kirschner is represented by Bingham McCutchen LLP. RCM is Refco's operating subsidiary based in Bermuda. 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. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/). REFCO INC: Ch. 7 Trustee Has Until Sept. 12 to Decide on Contracts ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York extended, until September 12, 2006, the time within which Albert Togut, the Chapter 7 trustee overseeing Refco, LLC's estate, may assume or reject certain executory contracts. The Chapter 7 trustee continues to identify and analyze executory contracts to which the Chapter 7 Debtor is a counterparty, to determine which contracts the estate will need to assume or reject, Scott E. Ratner, Esq., at Togut, Segal & Segal LLP, in New York, explains. To date, Mr. Ratner tells the Court, the Refco LLC Trustee has identified, evaluated and disposed of more than 700 executory contracts, by either rejection or assumption and assignment of the contracts to Man Financial, Inc. Nearly all of the assumed and assigned executory contracts involved broker agreements. Approximately 70 executory contracts, mostly equipment or vendor contracts, are still being evaluated and whose final disposition has not yet been determined, Mr. Ratner reports. Since the Chapter 7 Filing Date, the Refco LLC Trustee has met all obligations imposed on Refco LLC's estate under Section 365 with respect to executory contracts, Mr. Ratner says. The Trustee also is performing all of the estate's obligations under Refco LLC's Acquisition Agreement with Man Financial. Mr. Ratner contends that Man Financial is entitled to receive performance under, and the benefit of, certain of Refco LLC's executory contracts for a specified period of time pursuant to the Acquisition Agreement. Mr. Ratner assures the Court that the Extension Request is (i) without prejudice to the rights of any of the non-debtor counterparties to seek, for cause shown, an earlier date upon which the Refco LLC Trustee must assume or reject a specific contract and (ii) without prejudice to the Trustee's right to seek a further extension if necessary and appropriate. About Refco Inc. Based in New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. Refco LLC, an affiliate, filed for chapter 7 protection on Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is a regulated commodity futures company that has businesses in the United States, London, Asia and Canada. Refco, LLC, filed for bankruptcy protection in order to consummate the sale of substantially all of its assets to Man Financial Inc., a wholly owned subsidiary of Man Group plc. Albert Togut, the chapter 7 trustee, is represented by Togut, Segal & Segal LLP. On April 13, 2006, the Court appointed Marc S. Kirschner as Refco Capital Markets Ltd.'s chapter 11 trustee. Mr. Kirschner is represented by Bingham McCutchen LLP. RCM is Refco's operating subsidiary based in Bermuda. 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. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/). RESOURCE REAL: Fitch Holds Low-B Ratings on $43.12 Mil. Notes ------------------------------------------------------------- Fitch assigns these ratings to Resource Real Estate Funding CDO 2006-1, Ltd. and Resource Real Estate Funding CDO 2006-1, LLC: -- $129,370,000 class A-1 senior secured floating-rate term notes due 2046 'AAA'; -- $17,420,000 class A-2-FL second priority senior secured floating- rate term notes due 2046 'AAA'; -- $5,000,000 class A-2-FX second priority senior secured fixed- rate term notes due 2046 'AAA'; -- $6,900,000 class B third priority floating-rate term notes due 2046 'AA'; -- $20,700,000 class C fourth priority floating-rate deferrable interest term notes due 2046 'A+'; -- $15,520,000 class D fifth priority floating-rate deferrable interest term notes due 2046 'A-'; -- $20,700,000 class E sixth priority floating-rate deferrable interest term notes due 2046 'BBB+'; -- $19,830,000 class F seventh priority floating-rate deferrable interest term notes due 2046 'BBB'; -- $17,250,000 class G eighth priority floating-rate deferrable interest term notes due 2046 'BBB-'; -- $12,930,000 class H ninth priority floating-rate deferrable interest term notes due 2046 'BBB-'; -- $14,660,000 class J tenth priority fixed-rate deferrable interest term notes due 2046 'BB'; -- $28,460,000 class K eleventh priority fixed-rate deferrable interest term notes due 2046 'B'. The ratings of the class A-1, A-2-FL, A-2-FX and B notes address the likelihood that investors will receive fully and timely payments of interest, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. The ratings of the class C, D, E, F, G, H, J and K notes address the likelihood that investors will receive ultimate interest and capitalized interest payments, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. The ratings are based upon the credit quality and mixture of the underlying assets and credit enhancement provided to the capital structure through subordination and excess spread. Proceeds from the issuance will be invested in a portfolio of primarily unrated commercial mortgage B-notes, mezzanine loans, whole loans and bank loans, as well as commercial mortgage backed securities, commercial real estate collateralized debt obligations and credit tenant leases. Approximately 83% or $285.8 million of the target portfolio was purchased at closing. The collateral was selected and will be monitored by Resource Real Estate, Inc. as the collateral manager. RRE will have 270 days from the closing date to ramp up the portfolio to the target amount of $345 million. The notes have a stated maturity of 2046 and monthly payments on the notes will begin in September 2006. RREF CDO 206-1 will have a five-year reinvestment period, during which principal proceeds may be used to invest in substitute collateral subject to certain covenants and reinvestment parameters outlined in the governing documents. RRE will be the collateral manager for RREF CDO 2006-1. RRE, originates, acquires, invests in, and manages a diversified portfolio of commercial real estate loans and securities, including whole loans, B notes, mezzanine loans and CMBS investments. As of March 31, 2006, RRE has an equity portfolio in excess of $600 million diversified across 6,000 apartments and 1.6 million square feet of commercial space. RRE is a wholly owned subsidiary of Resource America, Inc., a publicly traded specialized asset management company, which as of March 31, 2006 manages approximately $9.5 billion, including 15 CDOs through its affiliates Ischus, Trapeza, and Apidos. Fitch views favorably RRE's plans to use Wachovia Bank, National Association (rated 'CPS 2+' by Fitch) as the primary servicer for this transaction. RRE will act as the special servicer. Fitch finds RRE to be an acceptable CREL CDO manager for RREF CDO 2006-1. Resource Real Estate Funding CDO 2006-1, Ltd. is a Cayman Islands exempted company. Resource Real Estate Funding CDO 2006-1, LLC is a Delaware limited liability company. REVLON CONSUMER: Incurs $85.2 Million Net Loss in Second Quarter ---------------------------------------------------------------- Revlon Consumer Products Corporation disclosed its financial results for the second quarter ended June 30, 2006, to the Securities and Exchange Commission on Aug. 4, 2006. For the three months ended June 30, 2006, the Company incurred a $85.2 million net loss on $321.1 million of net revenues, compared to a $36 million net loss on $318.3 million of net revenues in 2005. At June 30, 2006, the Company's balance sheet showed $969.7 million in total assets and $2.09 billion in total liabilities, resulting in a $1.1 billion stockholders' deficit. A full-text copy of the Company's Quarterly Report is available for free at http://researcharchives.com/t/s?f68 Revlon, Inc. (NYSE:REV) -- http://www.revloninc.com/-- is a worldwide cosmetics, skin care, fragrance, and personal care products company. The Company's vision is to deliver the promise of beauty through creating and developing the most consumer preferred brands. The Company's brands include Revlon(R), Almay(R), Vital Radiance(R), Ultima(R), Charlie(R), Flex(R), and Mitchum(R). Revlon Consumer Products Corporation is Revlon, Inc.'s wholly-owned operating subsidiary. * * * As reported in the Troubled Company Reporter on July 14, 2006, Standard & Poor's Ratings Services revised its outlook on Revlon Consumer Products Corp. to negative from stable, following its proposed $75 million add-on term loan, and affirmed its 'B-' rating and its recovery rating of '2' on Revlon's existing senior secured term loan facilities that will now total $775 million. The 'B-' bank loan rating remains at the same level as the corporate credit rating; this and the '2' recovery rating indicate that the secured lenders can expect substantial (80%-100%) recovery of principal in the event of default. RICHARD ROWELLA: Case Summary & 5 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Richard A. Rowella 486 North Salem Road Ridgefield, Connecticut 06877 Bankruptcy Case No.: 06-50328 Chapter 11 Petition Date: August 8, 2006 Court: District of Connecticut (Bridgeport) Judge: Alan H.W. Shiff Debtor's Counsel: Jeffrey Hellman, Esq. Gregory B. Schiller, Esq. Zeisler & Zeisler 558 Clinton Avenue P.O. Box 3186 Bridgeport, Connecticut 06605 Tel: (203) 368-4234 Fax: (203) 397-5149 Total Assets: $1,018,539 Total Debts: $1,429,190 Debtor's 5 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ QuesTech Financial LLC Residence located at $444,000 33 Mill Plain Road, 486 North Salem Road 2nd Floor in Ridgefield, Danbury, CT 06810 Connecticut jointly owned with wife. Debtor's interest is one half. Market value is $968,000. College Loan Corporation Plus student loan $61,000 16855 West Bernardo Drive, Suite #100 San Diego, CA 92127 Carmody & Torrance $18,000 P.O. Box 1950 New Haven, CT 06509 Sears $700 P.O. Box 182156 Cincinnati, OH 45218 Krystal Pool $250 43 Gaylord Road Gaylordsville, CT 06755 RIVERSTONE NETWORKS: Court Approves Revised Disclosure Statement ---------------------------------------------------------------- The Hon. Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delware approved the Revised Disclosure Statement explaining the Joint Disclosure Statements of Riverstone Networks, Inc., nka RNA Wind Down Corp., and its debtor-affiliates on August 9, 2006. The Court determined that the Disclosure Statement contained adequate information -- the right amount of the right kind of information to allow creditors to make informed decisions -- as required in Section 1125 of the Bankruptcy Code. Terms of the Plan Pursuant to the Plan, the Debtors' assets will be transferred to a Liquidating Trust on the effective date and would be tasked to make distributions under the Plan. The Debtors' Plan classifies these claims as unimpaired and proposes to pay them in full: (a) administrative claims, (b) unclassified priority tax claims, (c) the secured claims of: -- Riverstone Networks, Inc., -- The OASys Group, Inc., -- Riverstone Networks SPC, Inc., -- Pipal Systems, Inc., -- Blue Coast, Inc., (d) the priority claims of: -- Riverstone Networks, Inc., -- The OASys Group, Inc., -- Riverstone Networks SPC, Inc., -- Pipal Systems, Inc., -- Blue Coast, Inc., (e) personal injury and other insured claims against Riverstone Networks, Inc. Holders of general unsecured claims and indemnification claims will be paid in full over time and their claims will earn a 5% interest per annum until fully paid. Each holder of the Debtors' bonds will be paid a pro-rata share of the allowed aggregate bondholder claim. Holders of equity interests will get nothing under the Plan. Schedules A hearing to consider confirmation of the Debtors' Plan is set on Sept. 12, 2006. Ballots and objections are due by Sept. 5, 2006. A copy of the Revised Disclosure Statement is available for a fee at http://www.ResearchArchives.com/bin/download?id=060814221509 Based in Santa Clara, California, Riverstone Networks, Inc. -- http://www.riverstonenet.com/-- provides carrier Ethernet infrastructure solutions for business and residential communications services. The company and four of its affiliates filed for chapter 11 protection on Feb. 7, 2006 (Bankr. D. Del. Case Nos. 06-10110 through 06-10114). Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor LLP, represent the Debtors. Kerri K. Mumford, Esq., at Landis Rath & Cobb LLP, represents the Official Committee of Unsecured Creditors. The firm Brown Rudnick Berlack Israels LLP serves as counsel to the Official Committee of Equity Security Holders. As of Dec. 24, 2005, the Debtors reported assets totaling $98,341,134 and debts totaling $130,071,947. ROSAMOND LAND: Case Summary & Largest Unsecured Creditor -------------------------------------------------------- Debtor: Rosamond Land Company 7125 McAdams Lane Felton, California 95018 Bankruptcy Case No.: 06-51525 Chapter 11 Petition Date: August 11, 2006 Court: Northern District of California (San Jose) Judge: Roger L. Efremsky Debtor's Counsel: Henry B. Niles, III, Esq. Law Offices of Henry B. Niles, III 340 Soquel Avenue, Suite 105 Santa Cruz, California 95062 Tel: (831) 457-4545 Fax: (831) 457-4555 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million Debtor's Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ Franchise Tax Board 1994 to present $17,000 P.O. Box 1468 Sacramento, CA 95812 ROTECH HEALTHCARE: Moody's Junks $300 Million Sr. Notes' Rating --------------------------------------------------------------- Moody's Investors Service downgraded the credit ratings of Rotech Healthcare, Inc., reflecting significantly lower than anticipated cash flow, creating a potential liquidity shortfall, and increasing the probability of a default. The outlook remains negative. Due to continuing Medicare reimbursement pressure, particularly for the compounded version of Budesonide and other respiratory drugs, Rotech's revenue declined by 5% for the six months ended June 30 2006. More importantly, the company only reported approximately $2 million of operating cash flow and generated negative free cash flow of approximately $32 million during the same time period. In its April 27, 2006 credit opinion, Moody's had originally expected that Rotech would generate between $40 million to $50 million of operating cash flow and negative free cash flow of $10 to $15 million for the twelve months ended December 31, 2006. Based on current operating trends, Moody's now anticipates that the Rotech will barely generate positive operating cash flow, resulting in negative free cash flow of $55 million to $70 million for fiscal 2006. Moody's believes that the larger than anticipated deterioration in cash flow could create a liquidity short-fall for the following reasons. First, Rotech has only $28 million in available cash as of July 31, 2006. Second, while the company has $13 million of available borrowings on its $75 million revolving credit facility, Moody's notes that the company was not in compliance with its financial covenants for the quarter ended June 30, 2006. The company has obtained a waiver from its bank through September 15, 2006, and is currently seeking to refinance its current senior secured credit facility. If Rotech is not able to successfully restructure its facility and access additional funds, it is conceivable that the company would not have sufficient funds to continue operating by the end of the year, considering its low cash position and deteriorating cash flow. Moody's also commented that the company's liquidity is being affected by unfavorable trends in receivables, which have generally been outstanding for longer periods of time than just a year ago. Moody's also notes that Rotech, along with two other firms, received an FDA warning letter to stop the manufacturing and distributing certain inhalation drugs. If the company does not address the issues identified in the FDA warning letter, Rotech risks enforcement action. The negative outlook reflects the near term likelihood of weak cash flow and limited liquidity available to grow the business and to pay existing debt. The outlook also considers continued reimbursement pressure, particularly from Medicare, and additional potential unfavorable legislative and regulatory changes, including competitive bidding from home medical equipment. These ratings were downgraded with a negative outlook: * $75 million revolving credit facility, due 2007, to B2 from Ba3 * $42 million senior term loan, due 2008, to B2 from Ba3 * $300 million face amount senior subordinated notes, due 2012, to Caa3 from B3 * Corporate Family Rating, to Caa2 from B2 Rotech Healthcare, Inc., headquartered in Orlando, Florida, provides home respiratory therapy, including service, medication and equipment, as well as durable home medical equipment to over 100,000 patients nationally. Net revenue for the year ended December 31, 2005 was $533 million. SEA CONTAINERS: Restructuring Program Continues as Planned ---------------------------------------------------------- Sea Containers Ltd. disclosed certain information regarding the Company's operations and financial position including the performance of its subsidiary Great North Eastern Railway. The Company has not yet completed its 2005 annual report on Securities and Exchange Commission Form 10-K or its first and second 2006 quarterly reports on SEC Form 10-Q. Commenting on Sea Containers' current financial position, Bob MacKenzie, President and Chief Executive Officer, said: "Our priority is to tackle the underperforming operations, simplify and reduce the cost base and place the Company on a sound footing through necessary financial restructuring. GNER in particular faces significant challenges, as outlined below, and I believe the original projections for the franchise now appear optimistic. I intend to devote attention over the coming months to address this situation, spending time in the business and with the UK Government's Department for Transport. "Armed with the business plan which the Company has prepared over the past few months, we are now able to engage in dialogue with financial stakeholders and embark on the active phase of our restructuring program. We are pleased to have achieved the sale of Silja within the desired timeframe and that the disposal of other ferry and non-core assets is well underway. Both partners in the GE SeaCo joint venture are firmly focused on improving the competitiveness through reduced cost and improved technology. But the anticipation that we will not be able to pay the senior notes due on October 15, 2006 unless we have adequate working capital and can be sure of our ability to pay the other public notes maturing in subsequent years, puts a critical time pressure on the restructuring process. Although the seas are rough, we are navigating a route through this." Sea Containers' total consolidated cash position at June 30, 2006 was $178 million. Of this amount, approximately $79 million was restricted as security for obligations to third parties, and approximately $57 million was held in subsidiaries and could not be remitted back to the Company for various legal, regulatory or bank covenant reasons. The combined $136 million is described as "unavailable cash" while the remaining $42 million at June 30, 2006 is described as "free cash". The Company has not applied this free cash to retire its public notes and is treating it as available to meet ongoing operating requirements. At July 31, 2006, the Company's total cash was approximately $144 million, a reduction of $34 million from total cash of $178 million at June 30, 2006. Of the $144 million at July 31, 2006, $64 million was unavailable cash and $80 million was free cash. Unavailable cash has therefore reduced by $72 million, and free cash has increased by $38 million. The reduction in unavailable cash reflected principally the application of restricted cash of $51 million to repay partially one of the Company's secured container debt facilities. A further $7 million was paid from restricted cash to repay partially a second secured container debt facility. In addition, there was a release from unavailable cash to free cash of $14 million held within Silja on completion of the sale. The main contribution to the increase in free cash during July was $65 million from the sale of Silja, offset by payment of $14 million to settle the GE SeaCo arbitration with GE Capital and a $13 million net outflow for operating, interest and capital expenditure payments. Status of Ferry Sales As reported on July 19, 2006, the Company completed the sale of its Baltic ferry subsidiary Silja Oy Ab and the six vessels deployed on Silja's core routes. Sea Containers has separately completed the sale of the Walrus, Rapide and SuperSeaCat 1 for a total of $48 million, all of which was used to repay debt secured by the vessels Sea Containers is continuing its efforts to sell its remaining ferry assets and businesses and is in active dialogue with a number of parties regarding the sale of several of its vessels. To maximize value, the Company may decide to continue operating or chartering certain vessels for a period of time before ultimately selling them. The Company estimates that the ferry vessels shown in the table above are presently valued in a range $127 million to $137 million. At July 31, 2006, Sea Containers had $610 million of consolidated debt outstanding associated with these businesses: Business Debt Outstanding -------- ---------------- Rail (largely GNER) $15 Million Containers $140 Million Ferries $68 Million Public Notes $385 Million Other $2 Million -------- ---------------- Total $610 Million In addition to the outstanding debt to financial institutions and public note holders, the Company has a $20 million unsecured liability to a shipyard that is due for payment by Sept. 29. Except for GNER, the Company is either the primary obligor or the guarantor of substantially all of this outstanding debt. Pursuant to a forbearance agreement signed earlier this year with one of its container banking syndicates, the Company formally granted a security interest over cash balances held on deposit with the banks over which the banks had legal rights of set off. The Company further agreed in exchange for continued forbearance to apply the pledged cash, after the completion of the Silja sale, to repay in part secured debt outstanding to the syndicate. Accordingly, after Silja was sold, the Company repaid approximately $51 million of debt secured by containers. The Company is in active discussions with a number of financial institutions to refinance its existing container debt facilities. The primary purpose of a refinancing would be to replace liquidity used to repay secured container debt following the Silja sale. The Company remains in default under many of its secured credit facilities due to breaches of certain financial covenants and other requirements contained in these facilities. The Company's secured and other credit facilities also generally include cross- default provisions so that non-compliance with a covenant in one secured credit facility constitutes a default under substantially all other credit facilities. No lender has taken any action to exercise remedies in respect of any events of default, and the Company is in continuing discussions with its remaining lenders regarding such defaults. The Company is also in default under various covenants in its public note indentures including failure to apply asset sale proceeds to retire public notes. As previously reported on June 12, 2006, the Company has not made an "excess proceeds offer" under those indentures to retire public notes. The Company's free cash balance at July 31, 2006 of $80 million included the benefit of approximately $100 million of excess proceeds as described in its news release of June 12, 2006. No action has been taken against the Company under the public note indentures. The Company has prepared a business plan which includes certain strategic and financial alternatives for the Company, including a potential refinancing or permanent restructuring of the Company's unsecured financial obligations. The Company has provided financial projections and other information under confidentiality agreements to advisors who act for an ad hoc committee of public note holders and, separately, to advisors for pension trustees. The Company intends in the next few weeks to begin discussions with these advisors in respect of a potential restructuring of the Company's unsecured financial obligations. The Company is due to pay the $115 million principal amount of its 10_% senior notes on October 15. Payment will not be made unless the Company concludes that it will be able to pay in full when due its other public notes maturing in 2008, 2009 and 2012 and all other unsecured creditors, and to retain sufficient working capital. The interest coupon on the Company's 7.875% senior notes due on August 15 will be paid. GNER Results In summary, GNER has underperformed the financial projections in its franchise plan. The Company says that the most important variance to date arises from a shortfall in passenger revenue, but additional pressure on financial performance is expected from higher costs as well. In the first 14 months of the new franchise to June 30, 2006, several significant events outside GNER's control have materially adversely affected GNER's financial results over that period and its future prospects over the franchise period. These include the terrorist activity in London in July 2005, the decision by the UK Office of Rail Regulation to allow additional open access operators to compete with GNER, a weakening in the UK GDP growth, significant increases in electricity prices, and improvement in Network Rail's performance. Passenger revenue for the period May 1, 2005 to June 30, 2006 was $918 million. This represents a 3.3% increase compared to the projected 9.9% increase in the franchise plan, causing passenger revenue to be $60 million lower than projected for the 14-month period. GNER believes that just more than half of the shortfall is due to the July 2005 terrorist activity in London. GNER was disproportionately affected by the terrorist activity compared to other UK rail operators due to GNER's greater dependence on the long-distance travel market to and from London and the focus of the terrorist activity around Kings Cross Station in London. A claim has been submitted to the UK Department for Transport for the partial recovery of lost revenue under the force majeure mechanism of the franchise agreement. This mechanism will not compensate GNER fully, however, and the DfT has not concluded its review of that claim. GNER expects that its revenue projections may also be materially adversely affected in the future by the ORR's decision in connection with open access arrangements for competitors, recently upheld by the High Court in London. GNER's ability to meet its original projections will also be materially impacted by the variable infrastructure payments to or from Network Rail, which are largely outside GNER management control. There are two components. One relates to payments to GNER by Network Rail for its performance failure or disruption to timetable through planned maintenance work by Network Rail, and the other relates to payments from GNER to Network Rail for providing improved rail infrastructure performance. Network Rail's performance is now expected to be better than anticipated in GNER's franchise plan so that net payments to Network Rail should continue at a higher level than planned. A further issue that is likely to affect materially GNER's profitability relates to electricity charges. These rose in April 2006 by 26%, considerably more than forecast in GNER's franchise plan. GNER has also received initial notification that a further 65% increase is likely to occur in April 2007, far in excess of the assumptions made at the time of the bid. Taken together the 2006 increase and expected 2007 increase would have an average annual cost impact compared with the original franchise plan assumption of approximately $20 million per annum from April 2007. GNER understands there is a further increase possible in April 2008. Although GNER management has begun to implement initiatives to reduce aggregate controllable costs, these costs are not sufficiently large to provide scope for improvements which could significantly offset the potential shortfall in profitability. In light of this, GNER currently expects to make a profit or loss result much lower than the net profit margin before tax of 3.75% originally estimated in its plan. In order to make dividend payments to the Company, GNER must earn distributable profits and also meet certain financial criteria under the franchise agreement. GNER does not presently expect to make any dividend payments for the short to medium term. Financial Support for GNER Sea Containers is providing certain financial support arrangements for GNER. Under the franchise agreement, there is a bond in favor of the DfT securing GNER's performance under the agreement. This can be used by the DfT in limited circumstances for specific purposes. A bank has issued the bond pursuant to a facility with GNER which the Company has guaranteed. The amount of the performance bond is currently $27.5 million rising to $51.7 million in May 2007. It is a condition of the franchise that GNER has in place a $54 million standby credit facility during the term of the franchise, callable by GNER in the event of liquidity need. It is also a condition of the franchise that GNER has an $18 million overdraft facility to provide additional working capital if needed. This facility is provided by a bank and guaranteed by the Company. About Sea Containers London-based Sea Containers -- http://www.seacontainers.com/-- engages in passenger and freight transport and marine container leasing. The Bermuda registered company is primarily owned by U.S. shareholders and its common shares have been listed on the New York Stock Exchange (SCRA and SCRB) since 1974. Through its GNER subsidiary, Sea Containers Passenger Transport operates Britain's fastest railway, the Great North Eastern Railway, linking England and Scotland. It also conducts ferry operations, serving Finland and Estonia as well as a commuter service between New York and New Jersey in the U.S. * * * In June 2006, Moody's Investors Service downgraded the senior unsecured ratings and confirmed the senior secured rating of Sea Containers -- Senior Unsecured to Caa3, Senior Secured at B3. Moody's said the outlook is negative. The downgrades were due to the increased probability of a payment default following Sea Containers' disclosure that it is unable to confirm whether it will pay the $115 million principal amount of 10-3/4% senior unsecured notes due October 2006. SEA CONTAINERS: S&P Holds Negative Watch on Junk Rating ------------------------------------------------------- Standard & Poor's Ratings Services said that its ratings on Sea Containers Ltd., including the 'CCC-' corporate credit rating, remain on CreditWatch with negative implications. Ratings were lowered to current levels May 1, 2006; they were initially placed on CreditWatch with negative implications on Aug. 25, 2005. The CreditWatch update follows Sea Containers' update on its operational and financial restructuring efforts, including the statement that it will not pay its $115 million due Oct. 15, 2006, on the 10-3/4% senior notes "unless the company concludes that it will be able to pay.its other public notes maturing in 2008, 2009, and 2012, and all other unsecured creditors, and retain sufficient working capital." Sea Containers also said it "intends in the next few weeks to begin discussions with. advisors [to public noteholders and others] in respect of a potential restructuring of the company's unsecured financial obligations." "If a restructuring is undertaken that does not provide full value to the noteholders, we would lower our ratings on the affected notes to 'D' and the corporate credit rating to 'SD' [selective default]," said Standard & Poor's credit analyst Betsy Snyder. Sea Containers provided also an update on various other ongoing restructuring efforts: * Sale of its Silja ferry unit was completed July 19, 2006, and proceeds applied to reduce debt (which has declined by $648 million since Dec. 31, 2005, to $610 million at July 31, 2006); * Three ferries were sold for $48 million, which was used to repay secured debt on the vessels, and the company is seeking to sell other ferries with an estimated value of $127 million to $137 million; * Cash used in operating activities was $88 million for the first six months of the year, almost double the $46 million cash consumption of the prior-year period; and * The Great North Eastern Railway is significantly underperforming original projections, due to lower-than- forecast revenues (including the effect of terrorist attacks in London in July 2005) and higher-than-forecast costs. The company noted also that it remains in covenant default on various debt instruments, including its public notes, though no creditors has taken action to exercise remedies. SAINT VINCENTS: Court Approves Sun Life Escrow Agreement Changes ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved the modification and supplements to the terms of St. Vincents Catholic Medical Centers of New York and Sun Life Assurance Company of Canada's Escrow Agreement. The agreement provides for the release and payment of certain account funds. On February 11, 2005, Sun Life made a $30,000,000 loan to SVMC evidenced by certain notes and secured by a Mortgage and Security Agreement, covering real property owned by SVCMC located at 275 North Street in Harrison, New York. As additional security, SVCMC also entered into an escrow agreement with Sun Life and Northmarq Capital, Inc., as escrow agent, pursuant to which the Debtor delivered $1,000,000 to Northmarq for deposit into an escrow account. Under the terms of the Escrow Agreement, the Account was funded to assure the performance of, and payment for, certain environmental Remediation Work to the Mortgaged Property. The Escrow Agreement provided that so long as SVCMC is not in default under the Escrow Agreement, the Mortgage, the Notes or any of the Loan Documents, the funds in the Account could be released under the performance criteria and the time periods established. SVCMC is in default under the Agreement, the Mortgage, the Notes and the Loan Documents. The parties stipulated and agreed that: (1) Prior to the release of any funds from the Account, SVCMC will provide Sun Life with: (a) evidence that the amounts to be released from the Account represent out-of-pocket expenses that are reasonable, necessary, and actually incurred to perform the Remediation Work; and (b) lien waivers from the providers of the Remediation Work. (2) Funds will be disbursed from the Account, in this manner: (a) Fifty percent of the Remediation Work will be deemed completed by SVCMC, and the Escrow Agent will release up to $450,000 from the Account to SVCMC, at that time SVCMC has provided Sun Life with evidence reasonably satisfactory to Sun Life that the 10,000-gallon USTs and all contaminated soil associated with those USTs have been excavated and removed from the Mortgaged Property. (b) One hundred percent of the Remediation Work will be deemed completed by SVCMC, and the Escrow Agent will release up to $450,000 from the Account to SVCMC, at the time SVCMC has provided Sun Life with evidence reasonably satisfactory to Sun Life that the installation of appropriate replacement fuel storage tanks for those 10,000-gallon USTs has been completed. (c) The conditions to release up to $100,000 remaining in the Account to SVCMC will be deemed to be satisfied when Sun Life receives a letter from the New York State Department of Environmental Conservation indicating that no further work is necessary at the Mortgaged Property. Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 30 Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) SAINT VINCENTS: Court Approves Settlement Pact with Curevax ----------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates to enter into separate settlement agreements with Curevax, LLC, and Marc K. Wallack, M.D. In 1999, Saint Vincent Catholic Medical Centers and Dr. Wallack entered into an assignment agreement, pursuant to which Dr. Wallack assigned to SVCMC all interest in certain technology relating to a vaccine for the treatment of melanoma. SVCMC and Dr. Wallack agreed to an income-sharing arrangement governing all income received from the Technology. A patent application covering the Technology was then filed. In September 2000, SVCMC and Curevax entered into: (i) a License Agreement, under which SVCMC granted Curevax an exclusive, worldwide license to develop and sell products and processes related to the Patent Application. In return, SVCMC was to receive payment of an initiation fee, royalties relating to sales and sublicensing or assignment, and milestone payments associated with the completion of various phases of the research; and (ii) a Clinical Trials Agreement, which provided that SVCMC would be engaged to study the safety and efficacy of the vaccine, with Curevax funding much of the research. Since 2000, SVCMC has expended considerable resources in connection with the Vaccine Research. However, the research has experienced numerous delays and no clinical trials have begun. Andrew M. Troop, Esq., at Weil, Gotshal & Manges LLP, in New York, relates that SVCMC has decided to terminate involvement with the Vaccine Research because: -- the project is expensive; -- the potential future economic value of SVCMC's rights flowing from royalty payments under the contract are speculative and difficult to quantify; -- the Vaccine Research presents SVCMC with significant administrative and personnel challenges as there are no investigators or ancillary staff available to run the necessary clinical trials; and -- the Joint Commission on Accreditation of Healthcare Organizations instructed SVCMC to increase storage space available to reduce overcrowding in some areas of its facilities. As a result of negotiations between SVCMC, Curevax and Dr. Wallack, several agreements were entered into to fully terminate SVCMC's involvement in the Vaccine Research and its relationship with Dr. Wallack. In combination, the agreements effectively: * transfer the rights and equipment associated with the Vaccine Research to Curevax; * settle disputes over termination with Dr. Wallack consistent with SVCMC's general severance policies; and * result in the exchange of releases and waiver of claims against the estates. Wallack Settlement The Wallack Settlement, among other things, assigns all rights and interests that Dr. Wallack may have retained under the Assignment Agreement to SVCMC, and provides for the mutual releases of all claims Dr. Wallack and SVCMC may have had against each other under the Assignment Agreement, the License Agreement, and the Clinical Trials Agreement. Obtaining a release from Dr. Wallack of any retained rights under the Assignment Agreement arguably is a prerequisite to the ability to perform under the Curevax Settlement. A full-text copy of the Wallack Settlement is available for free at http://researcharchives.com/t/s?de9 Wallack Separation Agreement Dr. Wallack will receive a severance benefit totaling six months' salary over the three-month period following the date a final, non-appealable order approving the Wallack Separation Agreement is received. The severance benefit is subject to offset provisions should Dr. Wallack's salary at Metropolitan Hospital be raised or should he secure regular employment elsewhere during the term of the severance payments. The Wallack Separation Agreement includes standard releases of SVCMC from any liability associated with Dr. Wallack's employment, and provides that SVCMC will purchase tail insurance coverage concerning future claims arising out of Dr. Wallack's employment at SVCMC. Because the Wallack Separation Agreement contains, among other things, information relating to Dr. Wallack's current employment, it is a confidential agreement. Curevax Settlement The Curevax Settlement provides both Curevax and SVCMC with releases from all potential claims or liability associated with the Clinical Trials Agreement, the License Agreement, or any other agreement or transaction between the parties. The Curevax Settlement also assigns to Curevax all of SVCMC's right, title, and interest in and to: -- the Patent Application, together with a related application made a year later, and all patents issued with respect to the applications; -- all trade secrets and confidential information related to the applications; -- all work papers, notebooks, and other materials embodying or practicing the Patent Applications, the Patents, or Related Technology; -- all of SVCMC's books and records relating to the Patent Applications, the Patents, the Related Technology and the Materials; -- all Study Data and unused Vaccine, materials and supplies in SVCMC's possession for the purposes of the Study; and -- certain equipment and other tangible assets listed under the Curevax Settlement. A full-text copy of the Curevax Settlement is available for free at http://researcharchives.com/t/s?de8 Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 30 Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) STARBOUND RE: S&P Lifts Rating on $91 Million Senior Bank Loan -------------------------------------------------------------- Standard & Poor's Ratings Services raised its bank loan rating on Starbound Re Ltd.'s $46.5 million senior unsecured bank loan (Debt II) to 'BBB+' from 'BBB-', and raised its rating on Starbound's $91 million senior secured bank loan (Debt I) to 'BBB-' from 'BB+'. At the same time, Standard & Poor's affirmed its 'A+' bank loan rating on the Debt III senior unsecured $46.5 million loan. The differences in ratings reflect the probability of the debt becoming impaired. Starbound is a limited-life, special-purpose Class 3 reinsurance company domiciled in Bermuda and set up specifically to provide additional capacity to the Florida insurance market, and Renaissance Reinsurance Ltd. (Ren Re; A+/Stable/--) has agreed to underwrite policies on behalf of the facility. Standard & Poor's assigned its initial ratings to Starbound based on conservative assumptions for the sidecar's portfolio of exposures and capital structure. Two changes reduced the modeled probability of impairing the debt from 22 basis points to 17 bps. First, favorable market conditions enabled Starbound to achieve better than expected prices. Second, lower leverage has created more claims paying resources that are subordinated to debt. "Starbound benefited from a significant imbalance between supply and demand for reinsurance of Florida property risk," explained Standard & Poor's credit analyst James Brender. "The sidecar's actual rate on line (premium divided by limits provided) was significantly higher than expectations. Higher rate on line reduces a sidecar's probability of default assuming the risk profile has not changed." Standard & Poor's analysis determined that some of the increase in rate on line is due to a slightly greater portion of layers that are more likely to incur losses, but the adequacy of Starbound's rates has clearly improved from its forecast. The second factor precipitating the upgrades was the decline in the ratio of debt to total capital to 59% from 67%. Although leverage is not an explicit ratings factor for sidecars, increasing the structure's equity increases the amount of claims paying resources that are subordinated to debt. In addition to lowering the probability of attachment, the above changes also eliminated Debt I's exposure to impairment from a single event. Standard & Poor's caps ratings at 'BB+' for securities that expose investors to the loss of principle or interest from a single event. Previously, exposed limits exceeded claims paying resources, excluding debt. Now, Starbound has in force limits that are less than pure premium plus equity. Standard & Poor's calculated the modeled probability of attachment of 17 bps by subtracting expected claims paying resources subordinated to debt (premium, investment income, equity) from expected expenses. Then, output from software created by RMS, a major catastrophe modeling agency, is used to estimate the likelihood of experiencing catastrophe losses greater than claims paying resources net of expenses, which would cause a default. STEVE'S SHOES: Court Sets Disclosure Statement Hearing on Sept. 11 ------------------------------------------------------------------ The Hon. Robert D. Berger of the U.S. Bankruptcy Court for the District of Kansas will convene a hearing at 5:30 p.m., on Sept. 11, 2006, to consider approval of Steve's Shoes, Inc.'s disclosure statement explaining its Chapter 11 Plan of Liquidation. Overview of the Plan The Plan provides the distribution to claimholders against the Debtor. Pursuant to the Plan, the Debtor ceased its business operations and reduced substantially all of its assets to cash. As of July 28, 2006, the Debtor's remaining value of its assets was approximately $870,000. After the Plan is confirmed, the Debtor, through the Responsible Person, and in consultation with the Counsel of the Official Committee of Unsecured Creditors, will continue to wind up its affairs, including, without limitation: * liquidating its remaining assets, if any, * investigating Committee Actions, * finalizing claims reconciliation * objecting to Disputed Claims * administering the Plan and * filing appropriate tax returns. Treatments of Claims Under the Debtor's Plan, all Allowed Administrative Claims, Administrative Professional Fee Claims, U.S. Trustee Fees and Priority Tax Claims are paid in full. Holders of Allowed Secured Claims will receive either: a) cash in an amount equal to the secured claim, including interest on that claim or b) the collateral securing its secured claim and any interest, in full and complete satisfaction of their claim on the later of: i) the Effective Date; and ii) 15th Business Day of the first month following the month in which that claim becomes an Allowed Secured Claim. Allowed Priority Claim holders will receive cash in an amount equal to the priority claim on the later of the: i) Effective Date; and ii) 15th Business Day of the first month following the month in which that claim becomes an Allowed Priority Claim. After all Allowed Administrative Claims, Allowed Administrative Professional Fee Claims, U.S. Trustee Fees, Allowed Priority Tax Claims, Allowed Priority Claims, Allowed Secured Claims, and all then existing and outstanding Post Confirmation Date Costs have been paid in full, holders of Unsecured Claims with an estimated amount of $7 million, will be entitled to receive its pro rata share of cash on the later of the: i) Initial Distribution Date and ii) 15th Business day of the first month following the month in which that claim becomes an Allowed Unsecured Claim. All Equity Interests holders will not receive any distribution under the Plan. A copy of the Disclosure Statement explaining the Chapter 11 plan is available for a fee at: http://www.researcharchives.com/bin/download?id=060814212530 Headquartered in Lenexa, Kansas, Steve's Shoes, Inc. -- http://www.stevesshoes.com/-- is a shoe retailer. The Company filed for chapter 11 protection on Jan. 6, 2006 (Bankr. D. Kans. Case No. 06-20015). Thomas M. Mullinix, Esq., and Joanne B. Stutz, Esq., Evans & Mullinix, P.A., represent the Debtor in its restructuring efforts. Brent Weisenberg, Esq., and Jay R Indyke, Esq., at Kronish Lieb Weiner & Hellman LLP, represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $9,494,325 and total debts of $20,200,821. SUFFIELD CLO: Fitch Affirms Low-B Ratings on $16.9 Million Notes ---------------------------------------------------------------- Fitch Ratings affirms 11 classes of notes issued by Suffield CLO, Limited. These rating actions are effective immediately: -- $359,540,772 class I senior notes at 'AAA'; -- $53,000,000 class II senior notes at 'AA+'; -- $42,000,000 class III-A mezzanine notes at 'A'; -- $15,000,000 class III-B mezzanine notes at 'A'; -- $35,000,000 class IV mezzanine notes at 'BBB+'; -- $6,000,000 class V-A mezzanine notes at 'BBB'; -- $15,000,000 class V-B mezzanine notes at 'BBB'; -- $2,235,048 class VI participation notes at 'BB'; -- $36,750,000 preferred shares at 'B-'; -- $20,000,000 class K combination notes at 'BBB+'; -- $14,700,000 class L combination notes at 'BB'. Suffield is a collateralized loan obligation managed by Babson Capital Management LLC which closed Sept. 13, 2000. Suffield is composed of approximately 95.9% senior secured loans and 4.1% high yield bonds. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. Since the last rating action, the collateral has continued to perform within expectations. According to the most recent trustee report dated July 20, 2006, the weighted average rating factor is currently passing its trigger of 'B+'. The senior, class III/IV mezzanine and class V mezzanine par value test ratios have improved and continue to pass their respective thresholds as reported in the most recent trustee report dated July 20, 2006. As of the most recent trustee report dated July 20, 2006, assets rated 'CCC' or lower represented approximately 2.7% of the total collateral and eligible investments. The ratings of the class I and class II notes address the likelihood that investors will receive full and timely payments of interest on scheduled interest payment dates, as well as the stated balance of principal by the legal final maturity date. The ratings of the class III-A, class III-B, class IV, class V-A and class V-B notes address the likelihood that investors receive ultimate and compensating interest payments, as well as the stated balance of principal by the legal final maturity date. The rating of the participation notes addresses the receipt of the stated balance of principal by the legal final maturity date and an internal rate of return on the original investment of 6%. The rating of the preferred shares addresses the return of original investment only. The rating of the class K combination securities addresses the likelihood that investors will receive the stated balance of principal by the legal final maturity date. The rating of the class L combination securities addresses the likelihood that investors will receive the stated balance of principal by the legal final maturity date, as well as a yield of 8.4% on the original investment. Fitch will continue to monitor and review this transaction for future rating adjustments. THE REYNOLDS: Moody's May Withdraw Ba1 Ratings on Merger Closing ---------------------------------------------------------------- Moody's Investors Service comments on The Reynolds & Reynolds Company's ratings following the company's announcement of its planned merger with Universal Computer Systems. Subsequent to the merger's closing, the company's Ba1 corporate family rating and Ba1 medium term note program rating will likely be withdrawn, given the liklihood that subsequent to the potential merger, The Reynolds & Reynolds Company would cease to file public financial statements with the SEC. In addition, the positive rating outlook for the company's $100 million notes due December 2006 reflects their continued in- substance defeasance. On August 25th, Moody's expects it will upgrade the rating for the $100 million notes to A3. Ratings for The Reynolds & Reynolds Company: * $100 Million Senior Unsecured Notes due December 2006 rated Ba1 * $130 million Senior Unsecured Medium Term Note Program rated Ba1 * Corporate Family Rating of Ba1 The Reynolds and Reynolds Company, headquartered in Dayton, Ohio, is an automotive dealership computer services and forms management company. TOP CONSTRUCTION: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Top Construction Company, Inc. 8422 Ballew Avenue College Park, Maryland 20740 Bankruptcy Case No.: 06-14721 Type of Business: The Debtor is a general contractor. Chapter 11 Petition Date: August 9, 2006 Court: District of Maryland (Greenbelt) Judge: Thomas J. Catliota Debtor's Counsel: Tae Kyong Chung, Esq. Law Offices of Tae Kyong Chung 501 Hungerford Drive, Suite #321 Rockville, Maryland 20805 Tel: (301) 424-1940 Total Assets: $509,775 Total Debts: $772,373 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Ohio Casualty Group $201,848 136 North Third Street Hamilton, OH 45025 IRS $103,054 Tax Return Form: 941 Metro -Plex 1 8401 Corporate Drive Lnadover, MD 20785 Lexus Financial Services $57,607 [address not provided] Richard M. Sissman, Esq. $43,145 Charton Heights Properties Unexpired lease $40,000 Tarrant H. Lomax, Esq., P.C. Trade debt $34,950 Gleason, Flynn, Emig & $28,000 Fogleman Center Capitol Corp. $25,457 Center Capital Corp. $25,457 Charton Heights Properties $16,755 IRS $14,087 ABC/Amega, Inc. $13,016 Hilltop Sand & Gravel Co. $10,770 DLLR $10,000 United Recovery Systems, LP $9,975 Transworld Systems $9,098 Rode & Armstrong, PA $7,886 Kind & Dashoff $7,829 Kind & Dashoff $7,793 American States Insurance Co. $7,621 UTILITY CRAFT: Get Court Nod on Nexsen Pruet as Bankruptcy Counsel ------------------------------------------------------------------ Utility Craft, Inc., obtained authority from the U.S. Bankruptcy for the Middle District of North Carolina to employ Nexsen Pruet Adams Kleemeier, PLLC, as its bankruptcy counsel. Nexsen Pruet is expected to: (a) assist the Debtor in the investigation and examination of contracts, loans, leases, financing statements, and other related documents; (b) advise the Debtor in the administration of its bankruptcy estate; (c) advise the Debtor in determining the best manner in which to liquidate its assets. The Debtor tells the Court that attorneys at Nexsen Pruet bill between $165 to $325 per hour. The Debtor discloses that the attorneys who will render services in its chapter 11 case bill: Professional Designation Hourly Rate ------------ ----------- ----------- Christine L. Myatt, Esq. Member $325 Benjamin A. Kahn, Esq. Member $265 J. David Yarbrough, Jr., Esq. Associate $190 Mr. Kahn assures the Court that his firm does not represent any interest adverse to the Debtor or its estate. Mr. Kahn can be reached at: Benjamin A. Kahn, Esq. Nexsen Pruet Adams Kleemeier 701 Green Valley Road Suite 100 Greensboro, North Carolina, 27408 Tel: (336) 373-1600 Fax: (336) 273-5357 http://www.nexsenpruet.com/ Headquartered in High Point, North Carolina, Utility Craft, Inc., dba Wood Armfield Furniture, specializes in manufacturing high quality furniture and accessories. The Company filed for chapter 11 protection on July 20, 2006 (Bankr. M.D. N.C. Case No. 06- 10816). 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. WARD PRODUCTS: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Ward Products, LLC 301 West Fourth Street, Suite 200 Royal Oak, Michigan 48067 Bankruptcy Case No.: 06-50527 Type of Business: The Debtor manufactures receiving antennas. Chapter 11 Petition Date: August 7, 2006 Court: Eastern District of Michigan (Detroit) Judge: Thomas J. Tucker Debtor's Counsel: Jay L. Welford, Esq. Judith Greenstone Miller, Esq. Paige E. Barr, Esq. Richard E. Kruger, Esq. Jaffe Raitt Heuer & Weiss, P.C. 27777 Franklin Road, Suite 2500 Southfield, Michigan 48034 Tel: (248) 351-3000 Fax: (248) 351-3082 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ International Wire Group Trade debt $522,309 12 Masonic Avenue Camden, NY 13316 North American Production Trade debt $434,580 910 Camino del Mar, Suite F Del Mar, CA 92014 ZAPP USA Trade debt $424,271 475 International Circle Summerville, SC 29483 Universal Grinding Corp. Trade debt $306,428 1234 West 78th Street Cleveland, OH 44102 Tyco Electronics Corp. Trade debt $278,061 2800 Fulling Mill Road Middletown, PA 17057 Manth Brownell Trade debt $273,088 1120 Fyler Road P.O. Box 59 Kirkville, NY 13082 Giering Metal Finishing Trade debt $246,075 Vimelsa International, S. Trade debt $238,164 BEC Manufacturing Corp. Trade debt $210,081 UPS Supply Chain Solution Trade debt $178,097 Condumex Trade debt $174,149 Carteret Die Casting Corp. Trade debt $166,016 Gem Manufacturing Co. Trade debt $109,971 Quality Automatics, Inc. Trade debt $105,105 ABF Freight System Inc. Trade debt $104,472 Blue Shield of Northeast Insurance $102,167 Dynacast Canada Trade debt $94,300 Commscope Trade debt $92,019 Syntex Rubber Co. Trade debt $81,618 Cary Compounds Trade debt $79,294 WARNACO GROUP: To Restate Financial Statements for FY 2005 & 2006 ----------------------------------------------------------------- The Audit Committee of Warnaco Group, Inc.'s Board of Directors has concluded that the Company will restate its previously reported financial statements for its fiscal year ended December 31, 2005 and first fiscal quarter ended April 1, 2006. The restatements are required as a result of certain irregularities and errors discovered by the Company during the Company's second quarter closing review. The irregularities primarily relate to the accounting for certain returns and vendor allowances at its Chaps(R) menswear division. These matters were reported to the Company's Audit Committee, which engaged outside counsel, who in turn retained independent forensic accountants, to investigate and report to the Audit Committee. Based on information obtained in that investigation, and also to correct for an error which resulted from the implementation of its new systems infrastructure at its Swimwear Group in the first quarter of fiscal 2006, and certain immaterial errors, the Audit Committee has accepted management's recommendation that the Company restate its financial statements. The Company intends to file an amended annual report for the fiscal year ended December 31, 2005 and an amended quarterly report for the quarter ended April 1, 2006 with the Securities and Exchange Commission. Until these restated financial statements are filed with the SEC, neither the Company's consolidated financial statements for the fiscal year ended December 31, 2005 and the related reports of the Company's independent registered public accounting firm, nor the Company's consolidated financial statements for the first fiscal quarter ended April 1, 2006, should be relied upon. The Company has discussed the matters relating to the accounting irregularities and errors with Deloitte & Touche LLP, the Company's independent registered public accounting firm and is filing a Form 8-K with the SEC in connection with its restatement decision. The Company expects that the effect of the restatement for the fiscal year ended December 31, 2005 will be to reduce reported net income from continuing operations per diluted share from $1.12 to between approximately $1.05 and $1.07 per diluted share, and for the first fiscal quarter ended April 1, 2006 to reduce reported net income per diluted share from $0.34 to between approximately $0.28 and $0.30 per diluted share. Warnaco believes that the matters causing the restatements have been identified and that management has taken appropriate corrective action. However, because the Audit Committee and its advisors have not fully completed their investigation, the Company's analysis of the restatement adjustments has not been finalized. Accordingly, the estimated restatement amounts disclosed above remain preliminary, unaudited and subject to adjustment, possibly by amounts that could be material individually or in the aggregate. In addition, it is possible that the Company may identify additional new issues which could also impact its previously issued financial statements and the scope of the restatements described in this press release. In the event that new issues requiring restatement arise, it is possible that such additional adjustments could be material individually or in the aggregate. Additionally, in connection with the Company's investigation, three employees in the Chaps(R) menswear division, who are not "Executive Officers" as defined by the rules of the SEC, have either resigned or been terminated. "Warnaco is committed to maintaining an internal culture and external reputation for practicing the highest standards in all of our business affairs and has zero tolerance for violations of our Code of Business Conduct and Corporate Ethics," Joe Gromek, Warnaco's President and Chief Executive Officer, said. "We are deeply disappointed by the recent events at our Chaps menswear division and believe, based on information provided to date by the outside counsel to the Audit Committee and forensic accountants, that the inappropriate behavior was confined to that division. We remain confident in the potential of our brands and the prospects for our businesses." The Company has evaluated the impact of the restatements of the previously issued financial statements on the Company's assessments of the effectiveness of its internal control over financial reporting as of the applicable periods, and concluded that material weaknesses existed in the Company's internal control over financial reporting for the second and first fiscal quarters of 2006 and the fiscal year ended December 31, 2005. Such assessment will be included in the Company's quarterly report for the quarter ended July 1, 2006, which the Company expects to file with the SEC on August 15, 2006, and in amendments to the Company's annual report for the fiscal year ended December 31, 2005 and quarterly report for the quarter ended April 1, 2006, which the Company expects to file with the SEC shortly thereafter. A material weakness, as defined by the Public Company Accounting Oversight Board, is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Based on this definition, restatement of financial statements in prior filings with the SEC is a strong indicator of the existence of a "material weakness" in the design or operation of internal control over financial reporting. In connection with the restatements, the Company is seeking a waiver of certain technical defaults under its credit agreement. Although no assurances can be given, based on conversations with the agent for the lenders, the Company is confident that it will obtain the waiver in a timely fashion. Second Quarter Information Warnaco announced it will release results for the second fiscal quarter ended July 1, 2006 after the market closes on Monday, August 14, 2006. The Company expects, based on information currently available, that earnings for the second quarter of fiscal 2006 will be in the range of approximately $0.06 to $0.08 per diluted share. The Company notes that these results include the operations of the Calvin Klein Jeans and related businesses in Europe and Asia, which were acquired on January 31, 2006. Last year, the Company reported earnings for the second quarter ended July 2, 2005 of $0.14 per diluted share. The Company also expects, based on information currently available, that revenues for the second quarter of fiscal 2006, including the CKJEA Business, will be approximately 20% above reported revenues for the second quarter of fiscal 2005, with approximately 3% growth in the Company's pre-acquisition businesses. About Warnaco Group The Warnaco Group, Inc., headquartered in New York, is a leading apparel company engaged in the business of designing, marketing and selling intimate apparel, menswear, jeanswear, swimwear, men's and women's sportswear and accessories under such owned and licensed brands as Warner's(R), Olga(R), Lejaby(R), Body Nancy Ganz(TM), Speedo(R), Anne Cole Collection(R), Cole of California(R) and Catalina(R) as well as Chaps(R) sportswear and denim, JLO by Jennifer Lopez(R) lingerie, Nautica(R) swimwear and Calvin Klein(R) men's and women's underwear, men's accessories, men's, women's, junior women's and children's jeans and women's * * * As reported in the Troubled Company Reporter on Aug. 14, 2006, Standard & Poor's Ratings Services revised its outlook on The Warnaco Group Inc.'s ratings to stable from positive. At the same time, the ratings on Warnaco were affirmed, including its 'BB-' corporate credit rating. Total debt outstanding at April 1, 2006, was about $431 million. "The outlook revision follows the company's announcement that it will restate its financial statements for the fiscal year ended December 2005 and the first quarter of 2006 ended April 1, 2006, as a result of certain irregularities and errors related to its accounting for returns and vendor allowances at its Chaps menswear division," said Standard & Poor's credit analyst Susan H. Ding. WEST VIRGINIA CONSUMERS: Case Summary & 4 Unsecured Creditors ------------------------------------------------------------- Debtor: West Virginia Consumers for Justice P.O. Box 344 Charleston, West Virginia 25322 Bankruptcy Case No.: 06-20478 Chapter 11 Petition Date: August 10, 2006 Court: Southern District of West Virginia (Charleston) Judge: Ronald G. Pearson Debtor's Counsel: Joseph W. Caldwell, Esq. Caldwell & Riffee 3818 MacCorkle Avenue Southeast, Suite 101 P.O. Box 4427 Charleston, West Virginia 25364 Tel: (304) 925-2100 Fax: (304) 925-2193 Total Assets: $1,534 Total Debts: $300,062,129 Debtor's 4 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Don Blankenship Civil Proceeding $300,000,000 c/o Massey Energy Company 4 North 4th Street Richmond, VA 23219 Williams & Connolly Attorney Fees 2006 $61,969 725 Twelfth Street Northwest Washington, DC 20005 Plante & Associates Consulting Fee $160 1614 Kanawha Boulevard East Charleston, WV 25311 Kenneth M. Perdue Contribution & Unknown 501 Leon Sullivan Way indemnification Charleston, WV 25301 WESTERLY HOSPITAL: S&P Cuts Rating on Series 1994 Bonds to BB ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Rhode Island Health and Educational Facilities Building Corp.'s series 1994 bonds, issued for Westerly Hospital, to 'BB' from 'BBB-', reflecting the hospital's continued financial decline related to an unsuccessful turnaround plan. The outlook remains negative. "Although Westerly Hospital's management has made incremental changes to operations, they have not been sweeping enough to affect profitability," said Standard & Poor's credit analyst Cynthia Keller Macdonald. "If losses, liquidity erosion, and minimal capital investment continue, another negative rating action over the next one to two years is possible." More specifically, the speculative-grade rating reflects the hospital's failure to reach budgeted goals for fiscal 2006, coupled with continued substantial operating and bottom line losses since 2000; and erosion of liquidity, which had historically provided some rating stability in the face of operating losses. Westerly has made progress lowering its heavy concentration of registered nurses on staff, but salaries and wages at 63% of net patient service revenue is high compared to the median for the rating category. In addition, management's ability to act quickly is hampered by a largely union staff. Westerly also faces rising bad debt expense and slightly eroded patient volumes. A lower rating is precluded at this time because Westerly's debt service coverage is adequate due to an extremely light debt burden, and competition is limited in its service area, although there is capacity at other Rhode Island hospitals that also serve this market. Before the outlook can return to stable, the operating loss must be substantially reduced, and a return to investment grade would require break-even operations and dramatically increased liquidity, added Ms. Keller Macdonald. The lowered rating affects $11.8 million in rated debt. WILLIAM LAUGHERY: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: William K. Laughery P.O. Box 261 Marietta, Ohio 45750 Bankruptcy Case No.: 06-54150 Type of Business: The Debtor previously filed for chapter 11 protection on April 3, 2001 (Bankr. S.D. Ohio Case No. 01-53766). Chapter 11 Petition Date: Aug. 9, 2006 Court: Southern District of Ohio (Columbus) Judge: Charles M. Caldwell Debtor's Counsel: Robert E. Bardwell, Jr., Esq. 995 South High Street Columbus, Ohio 43206 Tel: (614) 445-6757 Fax: (614) 386-2039 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Capital One Credit card purchases $4,097 P.O. Box 790216 Saint Louis, MO 63179 Washington Mutual Card Credit card purchases $3,117 Services P.O. Box 660433 Dallas, TX 75266 Household Bank Credit card purchases $1,433 P.O. Box 4155 Carol Stream, IL 60197 MBNA America Credit card purchases $970 P.O. Box 15102 Wilmington, DE 19886 Settlors Bank Promissory note $750 P.O. Box 755 115 3rd Street Marietta, OH 45750 Citibank Credit card purchases $712 P.O. Box 8103 South Hackensack, NJ 07606 American Express Centurian Credit card purchases $643 Suite 0002 Chicago, IL 60679 BB&T Bankcard Corp. Credit card purchases $505 P.O. Box 580364 Charlotte, NC 28258 People's Bancorp Promissory note $500 P.O. Box 738 Marietta, OH 45750 First USA Bank Credit card purchases $495 P.O. Box 94014 Palatine, IL 60094 American Express Gold Credit card purchases $487 Suite 0001 Chicago, IL 60679 Aspire Credit card purchases $352 P.O. Box 23007 Columbus, GA 31902 American Express Credit card purchases $311 Suite 0001 Chicago, IL 60679 United National Bank Misc. charges $288 514 Market Street Parkersburg, WV 26101 AAA Financial Services Credit card purchases $270 P.O. Box 15019 Wilmington, DE 19886 Lowes Credit card purchases $269 P.O. Box 105981 Atlanta, GA 30353 Capital One Credit card purchases $266 P.O. Box 30285 Salt Lake City, UT 84130 Sears Plus Account Credit card purchases $173 P.O. Box 12149 Columbus, OH 43218 Capital One Credit card purchases $153 P.O. Box 30285 Salt Lake City, UT 84130 Citibank Drivers Edge Credit card purchases $153 P.O. Box 6500 Sioux Falls, SD 57117 WINN-DIXIE: Wants to Sell Seven Florida Stores & Equipment ---------------------------------------------------------- Winn-Dixie Stores, Inc., and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Middle District of Florida to sell the Additional Stores and assume and assign the applicable leases for the highest or best offer, which the Debtors receive and find acceptable at or before the Auction on Aug. 29, 2006, at 10:00 a.m. D.J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, in New York, tells the Court that to date, the Debtors have sold or rejected more than 361 leases. The Debtors have now determined that seven additional stores located in Florida should be closed and the leases either sold or rejected. The Debtors have extensively marketed the Additional Stores through The Food Partners and DJM Asset Management. These brokers have directly contacted more than 2,500 potential purchasers. On July 27, 2006, the Debtors posted information on the Additional Stores on an Internet Web site as part of their efforts to market the Additional Stores. Potential purchasers who have signed a confidentiality agreement may access the Merrill Site. The Merrill Site includes financial performance information, copies of the applicable leases and amendments, a site and fixture plan for each store, a summarized environmental assessment, a form asset purchase agreement, and, when available, real property title information. The Debtors propose to pay the cure amounts related to the assumed leases. Proposed Store No. Location Cure --------- -------- -------- 124 2910 Kerry Forest Parkway, Tallahassee $8,915 162 14286 Beach Boulevard, Jacksonville 8,410 202 13841 Wellington Trace, West Palm Beach 6,685 380 12141 Pembroke Road, Pembroke Pines 24,908 565 400 North Navy Boulevard, Pensacola 0 605 1199 East Bay Drive, Largo 15,466 2308 2820 Doyle Road, Deltona 50,932 If no bid is received for any one or more of the Additional Stores, upon notice to the Creditors' Committee, the Debtors will ask the Court to approve the Debtors' rejection of those leases effective on the Rejection Date and to establish a claims bar date for any rejection damage claims at 30 days after the Rejection Date. The Debtors will comply with the Court-approved bidding procedures. Bids for any one or more of the Additional Stores must be submitted by 5:00 p.m. E.T. on Aug. 23, 2006. A qualified bidder must execute an asset purchase agreement, which provides for the assumption and assignment of the relevant lease to the Purchaser. Landlords who dispute the proposed cure amount for their lease are required to file with the Court and serve on the Debtors an objection on or before August 23, 2006. The Debtors will hold the Auction at the Omni Hotel, 225 Water Street, Jacksonville, Florida 32202, for any of the Additional Stores on which the Debtors have received an acceptable bid. At the conclusion of the Auction, the Debtors will determine, after consultation with the DIP Lender Agent Representatives and the Committee's Professionals, which, if any, is the highest or best offer for any particular store or group of stores. A hearing to approve the Successful Bid(s) will be held at 1:00 p.m. E.T. on Sept. 7, 2006. 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. 48; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/). WINN-DIXIE: Wants to Sell Harahan Warehouse Facility to Ackel ------------------------------------------------------------- Winn-Dixie Stores, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Middle District of Florida to authorize Winn-Dixie Logistics, Inc., to sell its fee simple title in a warehouse facility located in Jefferson Parish, Louisiana -- Harahan Warehouse Facility -- to Ackel Real Estate, LLC, and John Georges, subject to higher and better offers. Before the Petition Date, the Debtors used the Harahan Warehouse Facility to supply stores located in Louisiana. Since the Petition Date, the Debtors have consolidated their warehouse operations for this area into their Hammond, Louisiana Facility and no longer need the Harahan Warehouse Facility. Since filing for bankruptcy, the Debtors have marketed the Harahan Warehouse Facility extensively through DJM Asset Management, Inc. DJM sent over 2,500 sale notices for the Harahan Warehouse Facility to potential purchasers. Through DJM's efforts, the Debtors have received four offers, including the offer by Ackel for $6,750,000. According to the Debtors, Ackel's offer is the highest or otherwise best offer for the Harahan Warehouse Facility. On Aug. 3, 2006, WD Logistics and Ackel entered into a Facility Agreement, which provides, among other things, that: -- Ackel has deposited $2,000,000 in escrow; -- The assets will be transferred free and clear of any liens, claims, interests and encumbrances other than the Permitted Encumbrances; -- The initial minimum overbid that may be accepted by the Debtors at any auction must have a value of at least $6,952,500; and -- WD Logistics has agreed to pay Ackel a termination fee of $50,000 for Ackel's expenses in the event Ackel is not the successful bidder at the Auction for the Assets. A full-text copy of the Facility Agreement is available for free at http://ResearchArchives.com/t/s?f87 Bids must be sent to James Avallone at DJM, 445 Broadhollow Road, Suite 417, Melville, NY 11747, with a copy to the Debtors' counsel, no later than 12:00 p.m. (prevailing Eastern Time) on August 21, 2006. To qualify as a competing bid, the offer must net the Debtors' estates at least $6,952,500 and be accompanied by a certified check made out to Smith, Gambrell & Russell, LLP, as Escrow Agent, in an amount not less than $2,000,000. If the Debtors receive a higher or better offer for the Assets, they will conduct an auction for the Assets in accordance with the Court-approved Bidding Procedures. The Auction will take place at 10:00 a.m. (prevailing Eastern Time) at the offices of Smith Hulsey & Busey, 225 Water Street, Suite 1800, Jacksonville, Florida, on Tuesday, August 23, 2006. The Debtors will conduct the Auction in consultation with the Official Committee of Unsecured Creditors and their DIP Lender. 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. 47; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/). YUKOS OIL: Court to Decide on Bankruptcy Legitimacy on Aug. 23 -------------------------------------------------------------- The Arbitration Court of Moscow will hear on Aug. 23 the legitimacy of a creditors' decision to recognize OAO Yukos Oil Co. bankrupt and start liquidation proceedings, ANTARA News reports. The Hon. Pavel Markov of the Moscow Arbitration Court upheld the July 25 vote by creditors to liquidate OAO Yukos Oil Co. and declared what was once Russia's biggest oil firm bankrupt on Aug. 1. Company executives filed a motion with the court against the vote on the same day. The court also appointed former Yukos temporary manager Eduard Rebgun as bankruptcy receiver. As reported in TCR-Europe on Aug. 2, Yukos's creditors, led by the Federal Tax Service and state-owned OAO Rosneft Oil Company, will oversee the liquidation and distribution of the company's assets. About Yukos Headquartered in Moscow, Yukos Oil -- http://yukos.com/-- is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved in energy industry substantially through its ownership of its various subsidiaries, which own or are otherwise entitled to enjoy certain rights to oil and gas production, refining and marketing assets. The Company filed for Chapter 11 protection Dec. 14, 2004 (Bankr. S.D. Tex. Case No. 04-47742), but the case was dismissed on Feb. 24, 2005, by the Hon. Letitia Z. Clark. A few days later, the Government sold its main production unit Yugansk, to a little- known firm Baikalfinansgroup for $9.35 billion, as payment for $27.5 billion in tax arrears for 2000- 2003. Yugansk eventually was bought by state-owned Rosneft, which is now claiming more than $12 billion from Yukos. On March 10, a 14-bank consortium led by Societe Generale filed a bankruptcy suit in the Moscow Arbitration Court in an attempt to recover the remainder of a $1 billion debt under outstanding loan agreements. The banks, however, sold the claim to Rosneft, prompting the Court to replace them with the state-owned oil company as plaintiff. On April 13, court-appointed external manager Eduard Rebgun filed a chapter 15 petition in the U.S. Bankruptcy Court for the Southern District of New York (Bankr. S.D.N.Y. Case No. 06- 0775), in an attempt to halt the sale of Yukos' 53.7% ownership interest in Lithuanian AB Mazeikiu Nafta. On May 26, Yukos signed a $1.49 billion Share Sale and Purchase Agreement with PKN Orlen S.A., Poland's largest oil refiner, for its Mazeikiu ownership stake. The move was made a day after the Manhattan Court lifted an order barring Yukos from selling its controlling stake in the Lithuanian oil refinery. YUKOS OIL: Appellate Court Reduces Tax Claims by $1.6 Billion ------------------------------------------------------------- The Arbitration Appeal Court in Moscow has reduced the Federal Tax Service's claims against OAO Yukos Oil Co. from $13.2 billion to $11.6 billion, RIA Novosti relates. According to the report, the court's decision partially upheld Yukos' motion against a RUB108 billion claim the tax agency was demanding in back taxes for 2004. As widely reported, the Hon. Pavel Markov of the Moscow Arbitration Court declared what was once Russia's largest oil producer bankrupt on Aug. 1 upholding a creditors' July 25 vote to liquidate the company. Creditors have asserted up to $16.6 billion in claims against the company including, among others: Yuganskneftegas $4.07 billion Federal Tax Service $11.6 billion OAO Rosneft Oil Co. $482 million As reported in TCR-Europe on Aug. 10, Russian prosecutors have accused former Yukos officials of embezzling money by securing a $4.5 billion loan from its Luxembourg-based unit and major creditor, Yukos Capital SARL, through legal entities affiliated with the company. According to the report, investigators alleged that the ex-Yukos officials masterminded a plan to sell crude oil through trading companies Fargoil and Ratibor under their control, acting both as fictitious owners and buyers. About Yukos Headquartered in Moscow, Yukos Oil -- http://yukos.com/-- is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved in energy industry substantially through its ownership of its various subsidiaries, which own or are otherwise entitled to enjoy certain rights to oil and gas production, refining and marketing assets. The Company filed for Chapter 11 protection Dec. 14, 2004 (Bankr. S.D. Tex. Case No. 04-47742), but the case was dismissed on Feb. 24, 2005, by the Hon. Letitia Z. Clark. A few days later, the Government sold its main production unit Yugansk, to a little- known firm Baikalfinansgroup for $9.35 billion, as payment for $27.5 billion in tax arrears for 2000- 2003. Yugansk eventually was bought by state-owned Rosneft, which is now claiming more than $12 billion from Yukos. On March 10, a 14-bank consortium led by Societe Generale filed a bankruptcy suit in the Moscow Arbitration Court in an attempt to recover the remainder of a $1 billion debt under outstanding loan agreements. The banks, however, sold the claim to Rosneft, prompting the Court to replace them with the state-owned oil company as plaintiff. On April 13, court-appointed external manager Eduard Rebgun filed a chapter 15 petition in the U.S. Bankruptcy Court for the Southern District of New York (Bankr. S.D.N.Y. Case No. 06- 0775), in an attempt to halt the sale of Yukos' 53.7% ownership interest in Lithuanian AB Mazeikiu Nafta. On May 26, Yukos signed a $1.49 billion Share Sale and Purchase Agreement with PKN Orlen S.A., Poland's largest oil refiner, for its Mazeikiu ownership stake. The move was made a day after the Manhattan Court lifted an order barring Yukos from selling its controlling stake in the Lithuanian oil refinery. On July 25, Yukos creditors voted to liquidate the oil firm after rejecting a management rescue plan, which valued the company's assets at about $30 billion. This would have permitted Yukos to continue its operations and attempt to pay off $18 billion in debts through asset sales. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Abraxas Petro ABP (22) 125 (6) AFC Enterprises AFCE (44) 176 31 Alaska Comm Sys ALSK (17) 565 24 Alliance Imaging AIQ (23) 682 26 AMR Corp. AMR (508) 30,752 (1,392) Atherogenics Inc. AGIX (124) 211 165 Biomarin Pharmac BMRN 49 469 307 Blount International BLT (123) 465 166 CableVision System CVC (2,468) 12,832 2,643 Centennial Comm CYCL (1,069) 1,409 32 Cenveo Inc CVO 24 941 128 Choice Hotels CHH (118) 280 (58) Cincinnati Bell CBB (705) 1,893 18 Clorox Co. CLX (156) 3,616 (123) Columbia Laborat CBRX 10 29 23 Compass Minerals CMP (63) 664 161 Crown Holdings I CCK 144 7,287 174 Crown Media HL CRWN (393) 1,018 133 Deluxe Corp DLX (90) 1,330 (235) Domino's Pizza DPZ (609) 395 (4) Echostar Comm DISH (512) 9,105 1,589 Emeritus Corp. ESC (111) 721 (29) Emisphere Tech EMIS 2 43 19 Encysive Pharm ENCY (64) 93 66 Foster Wheeler FWLT (38) 2,224 (93) Gencorp Inc. GY (88) 990 (28) Graftech International GTI (166) 900 250 H&E Equipment HEES 226 707 22 I2 Technologies ITWO (55) 211 (9) ICOS Corp ICOS (36) 266 116 IMAX Corp IMAX (25) 238 33 Incyte Corp. INCY (55) 375 155 Indevus Pharma IDEV (147) 79 35 J Crew Group Inc. JCG (489) 353 97 Koppers Holdings KOP (95) 625 140 Kulicke & Soffa KLIC 65 398 230 Labopharm Inc. DDS (8) 46 9 Level 3 Comm. Inc. LVLT (33) 9,751 1,333 Ligand Pharm LGND (238) 286 (155) Lodgenet Entertainment LNET (66) 262 15 Maytag Corp. MYG (187) 2,954 150 McDermott Int'l MDR 125 3,181 64 McMoran Exploration MMR (21) 434 (38) NPS Pharm Inc. NPSP (164) 248 168 New River Pharma NRPH 0 93 68 Omnova Solutions OMN (6) 366 67 ON Semiconductor ONNN (75) 1,423 279 Qwest Communication Q (2,826) 21,292 (2,542) Riviera Holdings RIV (30) 219 7 Rural/Metro Corp. RURL (93) 302 50 Sepracor Inc. SEPR (109) 1,277 928 St. John Knits Inc. SJKI (52) 213 80 Sulphco Inc. SUF 31 42 32 Sun Healthcare SUNH 10 523 (34) Sun-Times Media SVN (261) 965 (324) Tivo Inc. TIVO (33) 143 19 USG Corp. USG (313) 5,657 (1,763) Vertrue Inc. VTRU (16) 443 (72) Weight Watchers WTW (110) 857 (72) WR Grace & Co. GRA (515) 3,612 929 ********* 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. 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