TCR_Public/060822.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 22, 2006, Vol. 10, No. 199

                             Headlines

2135 GODBY: Wants Legg Mason Appraisal Stricken Off the Records
ADELPHIA COMMS: Details of Fifth Amended Chapter 11 Plan Draft
ADELPHIA COMMS: iN DEMAND Holds $15,865,161 Allowed Unsec. Claim
ADELPHIA COMMS: Senior Noteholders Want Plan Record Unsealed
ACTUANT CORP: Buys Actown-Electrocoil Stock for $24 Mil. in Cash

ADVOCAT INC: Completes $30.6-Mil. Refinancing with Capmark Finance
AGRICORE UNITED: Acquires Hi Pro Feeds for $38.5 Million
ALLIED HOLDINGS: Judge Mullins Allows Allens to File PI Suit
AMERIVEST PROPERTIES: Completes Sale of Dallas Office Building
ASARCO LLC: Bids for El Paso Property Must Be Received by Sept. 14

ASARCO LLC: Wants Brown McCarroll as Environmental Counsel
ASARCO LLC: Wants Lease-Decision Period Extended Until January 16
ATLANTIC MUTUAL: Interest Non-Payment Cues S&P's Default Rating
AUSTIN CO: Wants to Sell U.K. Unit to Austin (GB) Ltd. for $200K
BOYD GAMING: Fitch Affirms Low-B Ratings With Stable Outlook

CALPINE CORP: Court Okays Fishman, May and Doody Employment Pacts
CALPINE CORP: Wants Interim Injunction of Nevada Power Litigation
CELL THERAPEUTICS: June 30 Balance Sheet Upside-Down by $102 Mil.
CERADYNE INC: 2006 Second Quarter Net Income Increases to $30 Mil.
CIGNA CORP: S&P Assigns BB+ Pref. Stock Rating With Pos. Outlook

CLEAR CHOICE: RJ Easton Takes Equity Stakes on Bay Capital Merger
CLECO CORP: Prices Six Million Shares Offering at $23.75 per Share
CNET NETWORKS: Form 10-Q Filing Delay Prompts Notice of Default
CNET NETWORKS: Covenant Default Cues NASDAQ Delisting Notice
CNET NETWORKS: Form 10-Q Filing Delay Cues S&P's Negative Watch

COLLINS & AIKMAN: Contests Huron's First Lien on Molds
COLLINS & AIKMAN: Gains Panel's Support Over GM Tooling Dispute
COMMSCOPE INC: Moody's Confirms Low-B Corporate and Debt Ratings
COMPLETE RETREATS: Gets Final Court Nod for $12 Million DIP Loan
COMPLETE RETREATS: Robert McGrath Quits as CEO of Tanner & Haley

CONCORD RE: S&P Assigns BB+ Rating to $375 Million Debt Facility
CORNELL COMPANIES: Earns $3.9 Million in 2006 Second Quarter
CONVERIUM AG: Obtains $250 Million Loan from Bank Group
CREATIVE VISTAS: CEO Issues Letter to Shareholders on Biz Outlook
DANA CORP: Wants Modified Burns, et al. Employment Pacts Approved

DANA CORP: Wants Second Toledo Press Settlement Pact Approved
DEL MONTE: $100 Mil. Loan Add-On Cues S&P to Affirm Low-B Ratings
DELPHI CORP: DAS LLC Inks Settlement Pact with Flex-Tech Trustee
DELPHI CORP: Posts $2.6 Billion Net Loss in First Half of 2006
ENRON CORP: Court Approves ONEOK Settlement Agreement

ENTERPRISE PRODUCTS: Likely to Acquire $50 Million in Insurance
FALCONBRIDGE LTD: Board Resigns After Xstrata Acquisition
FEDERAL-MOGUL: 51 U.K. Debtors to File Voluntary Arrangements
FEDERAL-MOGUL: Wants Court OK on Insurance-Related Changes to Plan
FEDDERS CORP: Equity Deficit Widens to $17.04 Mil. in Six Months

FEDDERS CORP: Hires Blackstone to Sell Indoor Air Quality Business
FOOT LOCKER: Evercore Engagement Prompts S&P's Negative Watch
FORD MOTOR: Lower Production Schedule Cues S&P's Negative Watch
FORD MOTOR: Production Cutbacks Prompt Fitch to Downgrade Ratings
FORD MOTOR: Reduced Vehicle Production Cues DBRS to Review Rating

FRENCH LICK: S&P Affirms B- Rating & Revises Outlook to Negative
GENERAL NUTRITION: Aborted IPO Plan Prompts S&P to Affirm B Rating
IGI INC: Posts $368,000 Net Loss in Three Months Ended June 30
INTEGRATED ELECTRICAL: Earns $36.8 Million in Third Fiscal Quarter
INTERMEC INC: S&P Upgrades Ratings to BB- With Stable Outlook

INLAND FIBER: Unsecured Creditors to Receive 68.57% of Claims
KINETIC CONCEPTS: Earns $46.6 Million in Second Quarter
KMART CORP: Delivers Results for 13 Weeks Ended July 29
KMART CORP: Store in Stow, Ohio to Close in January 2007
LEVITZ HOME: Rejecting Nanuet Lease Effective August 2

LEVITZ HOME: Seeks to Assign Three More Leases to PLVTZ LLC
LONE STAR: Buys 40% Stake in Valin Tube's Unit for $132 Mil. Cash
LYONDELL CHEMICAL: Citgo Interest Buy Cues Fitch to Affirm Ratings
MIRANT CORP: NY-Gen Unit Can Increase DIP Facility to $9.5 Mil.
MIRANT CORP: Wants ConEd & O&R to Comply with Purchase Agreement

NATIONAL COAL: Poor Performance Prompts S&P to Junk Ratings
OPBIZ LLC: Form 10-Q Filing Delay Prompts S&P's Negative Watch
OWENS CORNING: Schultze Wants List of Class A5 Creditors
PEP BOYS: S&P Removes Developing Watch & Says Outlook is Negative
PERFORMANCE TRANSPORTATION: Modified Incentive Program Draws Fire

PERFORMANCE TRANSPORTATION: Taps @Road as MRM Solutions Provider
PLIANT CORP: 1st Interest Payment on 13% Senior Notes on Jan. 2007
PREMIER ENTERTAINMENT: S&P Holds Junk Rating on Developing Watch
QUANTUM CORP: S&P Ups Sr. Secured First-Lien Debt's Rating to B+
RADNOR HOLDINGS: Files for Chapter 11 Protection to Sell Assets

RADNOR HOLDINGS: Case Summary & 30 Largest Unsecured Creditors
SAFENET INC: Form 10-Q Filing Delay Prompts Notice of Default
SAFENET INC: Late Form 10-Q Filing Prompts Nasdaq Delisting Notice
SATELITES MEXICANOS: Court Gives Interim OK on Milbank as Counsel
SATELITES MEXICANOS: Court Approves Employees Obligation Payment

SATELITES MEXICANOS: Gets Interim Use of Cash Management System
SCOTTISH RE: S&P Lowers Counterparty Credit Rating to B+ from BB+
SMARTIRE SYSTEMS: Employs BDO Dunwoody as Accountants
SOLO CUP: Weak Performance Cues S&P to Lower Rating to B from B+
SUPERIOR ESSEX: Offers to Buy Optical Cable for $36 Mil. in Cash

SYNAGRO TECHS: S&P Lowers Corp. Credit & Sr. Debt Ratings to B+
TOWER RECORDS: Files for Chapter 11 Protection to Sell All Assets
TOWER RECORDS: Case Summary & 40 Largest Unsecured Creditors
TRANS ENERGY: Buys Cobham Gas Industries' Assets for $600,001
TURNER-DUNN HOMES: Files for Bankr. to Stay Foreclosure Lawsuit

UNICO INC: Inks Mining Deal with Polymet for Silver Bell Mine
USG CORP: Asks Court to Close Chapter 11 Cases of 10 Affiliates
VESTA INSURANCE: Organizational Meeting Scheduled for August 30
VESTA INSURANCE: Taps Parker Hudson as Bankruptcy Counsel
W.R. GRACE: Objects to D. Slaughter's $1.375 Mil. Unsecured Claim

WERNER LADDER: Wants to Walk Away from Greenville Property Lease
WERNER LADDER: U.S. Trustee Wants Court to Deny Bonus Plans
WINN-DIXIE: Completes Sale of 12 Stores in Bahamas to BSL Holdings
WINN-DIXIE: Wants Florida Tax Claims Reduced and Allowed
WINN-DIXIE: Wants 17 Scheduled Claims Disallowed

WISE METALS: Crown Cork Business Loss Prompts S&P to Junk Ratings
WORLDCOM INC: Court Expunges Dobie's Claim Nos. 17042 and 38241
WORLDCOM INC: Michael Jordan Wants $8 Mil. Claim Allowed in Full
WORLDCOM INC: Wants Michael Jordan's Claim Reduced to $4 Million
WORKFLOW MANAGEMENT: S&P Affirms BB- Rating With Negative Outlook

WORNICK CO: Continued Losses Prompt S&P to Downgrade Rating to B

* Large Companies with Insolvent Balance Sheets

                             *********

2135 GODBY: Wants Legg Mason Appraisal Stricken Off the Records
---------------------------------------------------------------
2135 Godby Property, LLC, asks the U.S. Bankruptcy Court for the
Northern District of Georgia to strike out from the Court's
records the appraisal filed by Legg Mason Real Estate Holdings,
VI, Inc., and prohibit Legg Mason from using it as evidence on
certain pending matters.

The Court is currently considering the Debtor's request to use
cash collateral securing the repayment of a $11.6 million debt to
Legg Mason.  Legg Mason opposed the request and further asked the
Court to dismiss the Debtor's case.  Legg Mason argued that the
Debtor's bankruptcy proceeding should be dismissed because its
chapter 11 filing was unauthorized and violated special
stipulations under an Amended and Restated Operating Agreement.  
The Court is also considering a motion to dismissed filed by an
entity asserting an ownership interest in the Debtor's LLC, the
Hartunian Trust.

The Court heard initial arguments on June 28, 2006, and had
continued hearings on Aug. 4 and 9.  As part of the scheduling of
the matter, the Court directed that the parties exchange evidence
and witness list by June 23, 2006.  The parties did so.  Legg
Mason included only Chander Bains as its sole witness.  No
appraisals or other designations of purported experts were
included by Legg Mason.  

On Aug. 3, 2006, Legg Mason filed a purported expert report and
appraisal with the Court.  As is disclosed in the report, the
appraisers were retained on April 25, 2006, and the report was
completed and transmitted to Legg Mason on May 17, 2006.

Todd E. Hennings, Esq., at Macey, Wilensky, Kessler, Howick &
Westfall, LLP, in Atlanta, Ga., points out that Legg Mason did not
disclose any expert, or include any purported expert report in its
documents submitted to be used as evidence.  Legg Mason did not
disclose the fact that it intended to use any expert and report
despite the fact that the Debtor's counsel requested for those
documents and disclosures as far back as May 30, 2006.  

Mr. Hennings laments that this apparent "sandbagging" is made even
more egregious because it is clear from the face of the appraisal
that it was, in its own words, "complete" as of the transmittal
date of the appraisal, May 17, 2006.  Legg Mason has not amended
its witness list or otherwise provided any advance notice to the
Debtor that it intended to call any experts or introduce new
documents in evidence.  

Disclosure of an expert opinion, literally on the eve of a
continued trial, where the witness has never been disclosed, the
report has never been disclosed despite the requests of the
Debtor's counsel, the evidence listing have not been amended, and
the witness lists do not disclose the witness is inherent bad
faith, Mr. Hennings argues.  

Headquartered in Calabasas, California, 2135 Godby Property, LLC,
dba Quail Creek Apartments, owns and operates a 486-unit apartment
in 2135 Godby Road, College Park, Georgia.  The company filed for
chapter 11 protection on May 1, 2006 (Bankr. N.D. Ga. Case No.
06-65007).  Todd E. Hennings, Esq., at Macey, Wilensky, Kessler,
Howick & Westfall, LLP, represents the Debtor in its restructuring
efforts.  No Committee of Unsecured Creditors has been appointed
in the Debtor's case.  When the Debtor filed for protection from
its creditors, it estimated assets and debts between $10 million
and $50 million.


ADELPHIA COMMS: Details of Fifth Amended Chapter 11 Plan Draft
--------------------------------------------------------------
As reported in the Troubled Company Reporter yesterday, Adelphia
Communications Corp. and its debtor-affiliates delivered to the
U.S. Bankruptcy Court for the Southern District of New York a
draft of their Fifth Amended Plan of Reorganization and Second
Disclosure Statement Supplement relating to the Fifth Amended
Plan.

The ACOM Debtors and the Official Committee of Unsecured
Creditors are co-proponents of the Plan.  However, the ACOM
Debtors are not proponents of the Plan in connection with:

    (a) the treatment of the Bank Claims;

    (b) any Class of Claims as and to the extent to which that
        proponency is restricted by Court; and

    (c) the Global Settlement under the Plan.

The key terms of the Plan is based on the amended and restated
agreement concerning the terms and conditions of a modified
Chapter 11 plan among the ACOM Debtors and certain unsecured
creditors on June 21, 2006.

The Plan reflects the compromise among the major creditor groups
pursuant to which approximately $1.08 billion in value will be
transferred from certain unsecured creditors of various ACOM
subsidiaries to certain unsecured senior and trade creditors of
the Adelphia Communications parent corporation, subject, in some
cases, to reimbursement from contingent sources of value,
including the proceeds of a litigation trust to be established
under the plan to pursue claims against third-parties that are
alleged to have damaged ACOM.

                     Summary of Plan Recoveries

Generally, the Plan contemplates that its treatment of Claims and
Equity Interests represents, among other things, the settlement
and compromise of the Intercreditor Dispute pursuant to the Plan
Agreement.

The Plan groups the ACC Debtors together and the Subsidiary
Debtors together, solely for purposes of describing treatment
under the Plan, confirming the Plan, and making Plan
Distributions with respect to the Claims and Equity Interests.

The groupings do not:

     * effect any Debtor's status as a separate legal entity;

     * change the organizational structure of the ACOM Debtors'
       business enterprise;

     * constitute a change of control of any Debtor for any
       purpose;

     * cause a merger or consolidation of any legal entities; or

     * cause the transfer of any assets.

Except otherwise provided or permitted in the Plan, all Debtors
will continue to exist as separate legal entities.

The ACOM Debtors and the Creditors Committee reserve the right to
substantively consolidate any two or more Debtors, provided that
the substantive consolidation does not materially and adversely
impact the amount of the distributions to any Person under the
Plan.

A. Allowed Claims Against the Subsidiary Debtors

    Allowed Claims against the Subsidiary Debtors will be paid in
    full from the Commencement Date through the Effective Date,
    subject to:

     * the specified "give-ups" in varying amounts of Plan
       Consideration, which would be transferred to the creditors
       of the ACC Debtors; and

     * the deduction of fees payable to various ad hoc committees
       associated with each Class.

    The "give-ups" include:

    (a) $750,000,000 from amounts otherwise allocable to the
        Arahova Notes;

    (b) $85,000,000 from amounts otherwise allocable to the
        FrontierVision holding company notes;

    (c) $30,000,000 from amounts otherwise allocable to the
        Olympus notes and the FPL note;

    (d) $39,200,000 from amounts otherwise allocable to subsidiary
        trade claims; and

    (e) $6,800,000 from amounts otherwise allocable to other
        subsidiary unsecured creditors.

    Creditors of the Subsidiary Debtors, other than holders of the
    Olympus Notes and the FOL Notes, would have the ability to be
    repaid:

     * those "give-ups," plus interest at specified rates;

     * deducted fees from recoveries obtained by the Contingent
       Value Vehicle; and

     * in certain cases, releases from Identified Sources.

    A True-Up Reserve will also be created to protect creditors of
    the Subsidiary Debtors against an up to 15% decline in the
    value of the TWC Class A Common Stock during a 60-day test
    period.

B. Allowed Claims for ACC Debtors' Senior Creditors

    Senior creditors of the ACC Debtors holding Allowed Claims
    would receive:

     * $1,080,000,000 of settlement consideration;

     * the residual sale consideration after funding all other
       distributions and reserves under the Plan;

     * proceeds from retaining assets not sold to Time Warner NY
       Cable, LLC, and Comcast Corporation; and

     * interests in the Contingent Value Vehicle.

    Holders of ACC Subordinated Note Claims, Preferred Stock
    Interest and Equity Interests in ACOM would not receive any
    distributions, unless the senior creditors in the ACC Debtors
    vote to accept the Plan and those holders also vote to accept
    the Plan, in which case, they would receive junior interests
    in the Contingent Value Vehicle.

C. Bank Claims

    All Bank Claims are deemed disputed and are subject to
    disallowance in whole or in part.  Unless and until otherwise
    allowed, no Bank will receive any distributions under the
    Plan, and the liens or security interest securing those Claims
    would be transferred to and attach to the proceeds of the Sale
    Transaction in an amount sufficient to pay in full the maximum
    amount of the Disputed Bank Claims as determined by the Court.

    Each Class of Bank Claims will have the right to elect, by
    accepting the Plan, to receive payment in full in cash on the
    Effective Date of all outstanding principal and accrued
    interest at the non-default interest rate in effect at the
    Petition Date, subject to disgorgement upon the entry of a
    final order directing the return of some or all of the
    distribution.

           True-Up Mechanism for TWC Class A Common Stock

The Plan contemplates the creation of a true-up reserve on the
Effective Date consisting of TWC Class A Common Stock, or cash to
the extent there is no sufficient stock available.

The True-Up Mechanism is intended, subject to certain
limitations, to be sufficient to permit the adjustment of the
total number of shares received by creditors of the Subsidiary
Debtors based on a Market value of the TWC Class A Common Stock
that is up to 15% higher or lower than the Deemed Value used for
initial distributions under the Plan.

The ultimate value of the recoveries to Claim holders will be
impacted by, among others, the effect of the True-Up Mechanism
and the value and timing of distributions from the Contingent
Value Vehicle.

To assist creditors in evaluating the Plan, the ACOM Debtors and
the Creditors Committee provided, in the Disclosure Statement to
the Plan, two sets of sensitivity tables to illustrate the
potential impact that the True-Up Mechanism has on the estimated
total recoveries.

A full-text copy of Fifth Amended Joint Plan of Reorganization is
available for free at http://ResearchArchives.com/t/s?ff8

A full-text copy of the Disclosure Statement is available for free
at http://ResearchArchives.com/t/s?ff9

                  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. 146; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000)


ADELPHIA COMMS: iN DEMAND Holds $15,865,161 Allowed Unsec. Claim
----------------------------------------------------------------
iN DEMAND filed multiple proofs of claim against Adelphia
Communications Corp. and its debtor-affiliates in connection with
prepetition amounts due to iN DEMAND.  Each of the Claims was
filed for $16,806,524, with the exception of Claim No. 17716,
which was filed for $17,886,995.

The Debtors dispute certain fees included in the Claims.

Pursuant to a settlement between the ACOM Debtors and Viacom,
Inc., and certain of its subsidiaries and affiliates, including
Paramount Pictures Corporation:

    -- the ACOM Debtors assert that they have paid $836,611 to
       Viacom in satisfaction of a portion of the Disputed Claim
       Amount, and that the amount is no longer owed by the ACOM
       Debtors to iN DEMAND or to Paramount Pictures Corporation;
       and

    -- iN DEMAND asserts that it no longer owed $836,611 to
       Paramount.

The ACOM Debtors asked the U.S. Bankruptcy Court for the Southern
District of New York to disallow and expunge certain of the Claims
as duplicative.

The ACOM Debtors and iN DEMAND have executed a Settlement and
Release Agreement dated as of July 26, 2006, which resolves all
disputes related to the Claims.

Pursuant to the Settlement Agreement, the ACOM Debtors and iN
DEMAND mutually agree that:

    a. Claim No. 17716 will be allowed as an unsecured claim for
       $15,865,161 against the ACOM Debtors;

    b. the rest of the claims will be disallowed;

    c. iN DEMAND is authorized to file one master proof of claim
       -- the Additional Claim -- against the ACOM Debtors in the
       event Paramount seeks and obtains recovery of $836,611 from
       iN DEMAND; and

    d. they will mutually release each other from any and all
       claims provided that the release will not apply to the
       Additional Claim.

The ACOM Debtors will provide notice of the Settlement Agreement
to both Viacom and Paramount.

                  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. 145; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000)


ADELPHIA COMMS: Senior Noteholders Want Plan Record Unsealed
------------------------------------------------------------
Aurelius Capital Management, LP, Catalyst Investment Management
Co., LLC, Drawbridge Global Macro Advisors LLC, Drawbridge
Special Opportunities Advisors, LLC, Elliot Associates, LP,
Farallon Capital Management LLC, Noonday Asset Management LP, and
Perry Capital LLC, as holders or investment advisors to holders
of certain notes and debentures issued by Adelphia Communications
Corporation, ask the U.S. Bankruptcy Court for the Southern
District of New York to unseal and make publicly available:

    -- responses to Judge Cecelia's Monitor's Report filed under
       seal by:

        * JPMorgan Chase Bank, N.A., as administrative agent for
          FrontierVision Lenders; and

        * certain lenders, namely: Bank of America, N.A., in its
          individual capacity and in its capacity as
          administrative agent of the Century Cable Holdings
          Credit Facility; The Bank of Nova Scotia; Bank of
          Montreal, in its capacity as administrative agent of the
          Olympus Facility; Barclays Bank, PLC; the Ad Hoc
          Committee of Non-Agent Secured Lenders; Credit Suisse,
          Cayman Branch; The Royal Bank of Scotland PLC; Toronto
          Dominion (Texas), LLC; PNC Bank, National Association;
          Calyon New York Branch; The Bank of New York and The
          Bank of New York Company, Inc.; Societ, General, S.A.;
          and Wachovia Bank National Association, in its capacity
          as administrative agent for the UCA Lenders;

    -- the transcript for the status conference held on July 6,
       2006, on global plan issues;

    -- all information relating to the Monitor process; and

    -- all pleadings filed and all proceedings held before the
       Court that relate to or implicate negotiations or proposals
       in respect of a reorganization or liquidation plan.

The ACC Senior Noteholders also ask the Court to adjudicate all
remaining intercreditor disputes.

The Court has previously established a procedure -- the MIA
Process -- to litigate the Intercreditor Disputes, including
determination of the intercompany claims.  In conjunction with
the MIA Process, to preserve both fairness and the appearance of
fairness and to ensure that the ACOM Debtors have fulfilled their
fiduciary duties to all estates, the Court ordered the ACOM
Debtors to remain neutral and designated certain participants to
litigate the issues.

Martin J. Bienenstock, Esq., at Weil, Gotshal & Manges LLP, tells
the Court that the ACOM Debtors have violated their Court-ordered
neutrality by, among others, signing the amended and restated
agreement, dated July 21, 2006, concerning terms and conditions
of a modified Chapter 11 plan, purporting to settle the
Intercreditor Disputes in an "extreme and lopsided manner."

Mr. Bienenstock notes that in its regulatory filing with the
Securities and Exchange Commission, the ACOM Debtors disclosed
that they intend to propose a nonconsensual plan based on a term
sheet as contemplated in the Plan Agreement.  As the Term Sheet
was being prepared, pleadings were filed under seal raising
serious concerns about the "settlement" and the Court held a
status conference on July 6, 2006, under seal, on the global plan
issues related to it.

                    Open Access to Court Records
                       Is a Fundamental Right

The bankruptcy process is heavily dependent on creditor
participation and full financial disclosure, Mr. Bienenstock
asserts.  To foster that participation, subject to certain
exceptions, the Bankruptcy Code mandates full and open access to
court records.  The directive for public access is most critical
in the context of the plan process, determination of the ACOM
Debtors' assets and liabilities, and the resolution of the
Intercreditor Disputes.

Transparency enhances informed creditor participation and
maintains confidence in the system of justice, Mr. Bienenstock
says.

"[I]t is neither just nor functional to allow a partisan plan
proposal to be endorsed and publicized by the [ACOM] Debtors, but
criticized under seal; to discourage and threaten to punish open
criticism of the [ACOM] Debtors' handling of these cases; or to
employ threats behind closed doors to force a settlement that no
rational person would otherwise accept," Mr. Bienenstock asserts.

Mr. Bienenstock clarifies that the ACC Senior Noteholders do not
seek full-blown disclosure to jeopardize the ACOM Debtors and
their estates.

                  Determination of the Intercompany
                         Claim Is Mandatory

Mr. Bienenstock asserts that the creditors have a right to the
adjudication and determination of each estate's assets and
liabilities.  "Determining the assets and liabilities of each
Debtor's estate is mandatory, not discretionary."

Mr. Bienenstock contends that by ordering the ACOM Debtors to
remain neutral and establishing the MIA Process, the Court
established a construct to preserve a level-playing field.  He
relates that if the Ad Hoc Committee of ACC Senior Noteholders is
silenced and stripped of its authorization to litigate or settle
the Intercreditor Disputes or if the ACOM Debtors' patent lack of
neutrality is tolerated, "then the field will no longer be level
and the rules will change in the middle of the game."

Mr. Bienenstock points out that the creditors have relied on the
Court's insistence on due process and fundamental fairness
through the MIA Process and neutralization of the ACOM Debtors.

The purported settlement set forth in the Term Sheet is neither
operative as a settlement nor entitled to the deference otherwise
given a settlement proposed by a non-conflicted representative of
the estate based on an evaluation of the merits of the underlying
dispute, Mr. Bienenstock contends.

Mr. Bienenstock asserts that any proposed plan that sidesteps the
merits of the Intercreditor Disputes and ignores the ACOM
Debtors' inherent conflicts cannot be confirmed.  The only viable
exit strategy, according to Mr. Bienenstock, is to adjudicate the
Intercreditor Disputes and the Intercompany Claims, unless the
authorized committees determine to settle them, which no one
contends has occurred.

                  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. 145; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000)


ACTUANT CORP: Buys Actown-Electrocoil Stock for $24 Mil. in Cash
----------------------------------------------------------------
Actuant Corporation completed the purchase of all of the
outstanding stock of Actown-Electrocoil, Inc. for approximately
$24 million in cash.  Funding was provided from borrowings under
Actuant's revolving credit facility.

Actown will be a part of Actuant's Tools & Supplies Segment.  

"Actown is a great addition to our Professional Electric product
line, which also includes Amveco and Acme Transformer," Mark
Goldstein, Executive Vice President of Actuant and Tools &
Supplies Leader, stated.  "Actown's focus on the OEM customer base
within the magnetics and sign markets is an excellent complement
to our existing businesses.  Its engineering expertise, long-
standing customer relationships and global footprint allow us to
offer the market a broader range of products and services.  We are
excited that Dave Weisberg, Steve Duffy and the rest of the
current Actown management team will continue to play an important
role in the Company's future."

                       About Actuant Corp

Headquartered in Glendale, Wisconsin, Actuant Corp. (NYSE:ATU)
-- http://www.actuant.com/-- is a diversified industrial company    
with operations in more than 30 countries.  The Actuant businesses
are market leaders in highly engineered position and motion
control systems and branded hydraulic and electrical tools and
supplies.  Since its creation through a spin-off in 2000, Actuant
has grown its sales from $482 million to over $1 billion and its
market capitalization from $113 million to over $1.5 billion.  The
company employs a workforce of approximately 6,000 worldwide.
Actuant Corporation trades on the NYSE under the symbol ATU.

Actuant Corp.'s 2% Convertible Senior Subordinated Debentures due
2023 carry Standard & Poor's B+ rating.


ADVOCAT INC: Completes $30.6-Mil. Refinancing with Capmark Finance
------------------------------------------------------------------
Advocat Inc. completed its comprehensive refinancing transaction
Capmark Finance, Inc.

On Aug. 7, 2006, the Company entered into a $30.6 million
refinancing with Capmark which retired existing mortgage and bank
term debt and provided funds for a $1.1 million renovation of a
nursing center.

The new debt includes $22.5 million in mortgages with 25-year
principal amortization and a five year term, and an $8.1 million
term note with a four year term.  In addition, the Company made a
payment of approximately $2.5 million to reduce outstanding debt.  
The refinancing allows Advocat to classify $24.5 million in debt
that was refinanced in the transaction as long-term at June 30,
2006.  Advocat is now in compliance with all its debt covenants.

Headquartered in Brentwood, Tennessee, Advocat Inc. (OTCBB: AVCA)
-- http://www.irinfo.com/avc-- provides long-term care services
to nursing home patients and residents of assisted living
facilities in nine states, primarily in the Southeast.  The
Company has 43 centers containing 4,505 licensed nursing beds.

                         *     *     *

As reported in the Troubled Company Reporter on April 3, 2006,
BDO Seidman LLP raised substantial doubt about Advocat Inc.'s
ability to continue as a going concern after it audited the
Company's financial statements for the year ended Dec. 31, 2005.

The Company is not in compliance with certain debt covenants that
allow the holders to demand immediate repayment.  It has limited
resources, including working capital, available to fund the
reserve recorded for retained professional liability risk and to
meet its debt service requirements during 2006.


AGRICORE UNITED: Acquires Hi Pro Feeds for $38.5 Million
--------------------------------------------------------
Agricore United reported the acquisition of Hi Pro Feeds, a
Goldsmith Agio Helms client, for $38.5 million plus working
capital.

"We were delighted to be a part of this exceptional transaction
outcome for Friona Industries as well as helping to form Agricore
United's first U.S. acquisition" Barry D. Freeman, Managing
Director and shareholder of Goldsmith Agio Helms disclosed.   
"Agricore United should benefit tremendously with the addition
of Hi Pro's management team, quality products, excellent brand
reputation, and strong growth trajectory in the dairy markets of
west Texas and eastern New Mexico.  The Hi Pro transaction was our
fourth completed sale mandate in the animal nutrition sector for
our firm's active agribusiness practice and representative
of the strong outcomes we are securing for our clients."

"The sale of Hi Pro, a business Friona established nearly 40 years
ago, was highly opportunistic and based on the tremendous interest
we had been receiving in the strong franchise that had been built
in our area" James E. Herring, President and Chief Executive
Officer of Friona Industries, L.P., commented.  "We at Friona all
would like to thank the good people at Hi Pro for their years of
service with us and wish them only continued success with their
new partners at Agricore United.  We would also like to recognize
the exceptional job executed by the team at Goldsmith Agio Helms
who played a key role in orchestrating this entire transaction."

                        About Agricore United

Headquartered in Winnipeg, Manitoba, Agricore United Limited (TSX:
AU.LV, TSE: AU) -- http://www.agricoreunited.com/-- is an agri-
business with extensive operations and distribution capabilities
across western Canada.  The Company's operations are diversified
into sales of crop inputs and services, grain merchandising,
livestock production services and financial services.

                          *     *     *

As reported on the Troubled Company Reporter on Aug. 2, 2006,
Moody's Investors Service assigned a Ba3 rating to new senior
secured credit facilities for Agricore United and AU Holdings
Inc., a Ba2 rating to Agricore United's $525 million senior
secured revolving credit, and a Ba3 corporate family rating.
Moody's also assigned an SGL-2 speculative grade liquidity rating
to Agricore United.  The outlook on all ratings is stable.  These
represent first-time ratings for this company.


ALLIED HOLDINGS: Judge Mullins Allows Allens to File PI Suit
------------------------------------------------------------
The Honorable Coleman Ray Mullins of the U.S. Bankruptcy Court for
the Northern District of Georgia signed a consent order modifying
the automatic stay solely to permit Joseph and Zula Allen to:

     (i) resolve or to file and maintain an action against the
         Debtors, with respect their personal injury tort claims
         and property damage claims, so as to proceed to final
         judgment or settlement of the claims; and

    (ii) attempt to recover any liquidated final judgment, or
         settlement of, the Claims from the Debtors' available
         insurance policies.

Recovery will be limited to the Debtors' applicable insurance
policies.  Any insurance policy proceeds received by the Allens
will be in full satisfaction of their Claims.

The Allens were seriously injured when a truck, driven by an
employee of the Debtors, struck their vehicle.

The Allens have not commenced a lawsuit when the Debtors filed for
Bankruptcy.  The Allens asked  the Court to modify the automatic
stay to allow them to pursue a settlement or to bring suit against
Allied Holding, Inc., Allied Systems, LTD. (L.P), or Allied
Automotive Group, Inc., in a non-bankruptcy court of their
choosing, to pursue a claim for injuries and damages.

On February 14, 2006, the Allens filed proofs of claim in the
Debtors' bankruptcy cases.

Mitchell S. Rosen, Esq., at Rosen Law Group, LLC, in Atlanta,
Georgia, relates that the Allens will look solely to the Debtors'
liability insurance coverage for the settlement or the
satisfaction of any judgment obtained.

Mr. Rosen asserted that relief is warranted because:

    -- the Debtors' insurer will bear the costs of litigation and
       the responsibility of satisfying any judgment so that
       neither the Debtors nor their estate will be prejudiced by
       permitting the Allens to bring suit against them;

    -- if the Debtors accept primary responsibility for the
       claims, their estate will not be diminished, given that the
       benefit conferred on them by the transfer of responsibility
       from the insurer will be essentially equal to the burden so
       assumed;

    -- if the stay is not lifted, the Allens will likely be unable
       to recover for the damages they suffered as a result of the
       Debtors' negligence; and

    -- the Allens will very likely succeed on the merits of their
       case against the Debtors.

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.,
http://bankrupt.com/newsstand/or 215/945-7000)  


AMERIVEST PROPERTIES: Completes Sale of Dallas Office Building
--------------------------------------------------------------
AmeriVest Properties, Inc., completed the sale of its Greenhill
Park office building in Dallas, Texas.  

The estimated cash proceeds of $28.4 million, after closing
costs and adjustments, will be available, subject to the expenses
and other costs of the Company, for distribution to shareholders
under the plan of liquidation approved by its shareholders.  
Greenhill Park is the first property to close under the purchase
and sale agreement dated July 17, 2006, with Koll/PER.

As reported in the Troubled Company Reporter on AmeriVest
Properties Inc. entered into a definitive agreement to
sell its entire portfolio of office properties to Koll/PER LLC, a
limited liability company owned by The Koll Company of Newport
Beach, California, and the Public Employee Retirement System of
Idaho.  The gross purchase price is $273 million, less a reserve
for capital expenditures of approximately $850,000, and includes
an assumption of existing property level debt of approximately
$126 million.

The sale is being made pursuant to the plan of liquidation
previously adopted by AmeriVest and approved by its shareholders
on May 24, 2006.  AmeriVest Properties Inc.'s stockholders
approved a Plan of Liquidation at its annual meeting, previously
approved by the Company's Board of Directors on Feb. 9, 2006.  
Under the Plan, the Company's remaining 12 office properties will
be sold on an orderly basis and proceeds distributed to
stockholders.

Additional closings are anticipated to be scheduled as loan
assumption approvals are received from AmeriVest's mortgage
lenders and other traditional closing activities are completed.  

The Board of Directors of AmeriVest has not established any
dates for the payment of liquidating distributions.  There can
be no assurance with respect to the timing or amount of any
distribution or distributions to be made by AmeriVest, or that any
other closings will occur under the purchase and sale agreement or
otherwise.

A full-text copy of the Purchase and Sale Agreement is available
for free at http://ResearchArchives.com/t/s?1010

                   About AmeriVest Properties

Headquartered in Denver, Colorado, AmeriVest Properties Inc.
(AMEX: AMV) -- http://www.amvproperties.com/-- provides Smart  
Space for Small Business(TM) in Denver, Phoenix, and Dallas
through the acquisition, repositioning and operation of multi-
tenant office buildings in those markets.


ASARCO LLC: Bids for El Paso Property Must Be Received by Sept. 14
------------------------------------------------------------------
ASARCO LLC seeks authority from the U.S. Bankruptcy Court for the
Southern District of Texas in Corpus Christi to sell 125.957 acres
of vacant real property located in the city of El Paso, Texas, to
MEGACON, LLC, for $3,650,000.  The proposed sale will include all
of the Property's rights and interests, including oil, gas and
other minerals, except the rights and interests retained by prior
grantors.

During the course of ASARCO's Chapter 11 case, RECON Real Estate
Consultants, Inc., marketed the Property to more than 50
potential purchasers.  RECON delivered offering materials and
invited the potential purchasers to meet with ASARCO's
management, and provided the potential purchasers the opportunity
to conduct due diligence.

Pursuant to a purchase agreement dated July 21, 2006, MEGACON
will deliver a $67,500 deposit to Del Norte Title Company for the
benefit of ASARCO.  MEGACON will pay the remaining balance of the
Purchase Price on or before the closing of the sale.

ASARCO proposes to sell the Property, free and clear of all
liens, claims, charges and encumbrances.  ASARCO is not aware of
any Claims on the Property.

To enhance its ability to receive the best value for the
Property, ASARCO will solicit higher and better offers for the
Property through uniform bidding procedures.

Any entity that wishes to participate in the bidding process must
deliver a competing offer to Tom Aldrich, Jack Gracie, Ruth Kern,
Baker Botts, L.L.P., and Reed Smith, LLP, not later than
Sept. 14, 2006.

Each Competing Offer must:

   (a) be accompanied by an executed copy of the Purchase
       Agreement, marked to show the modifications;

   (b) be accompanied by a $ 67,500 good faith deposit, which
       will be transferred by wire to Del Norte Title Company;

   (c) provide consideration to ASARCO's estate amounting to at
       least $150,000 greater than the purchase price; and

   (d) remain open and be irrevocable through the consummation of
       the Sale.

For a bid to be considered a "Qualifying Bid," it must create
value to the Property in an amount of at least $150,000 greater
than the purchase price.

If one or more Qualifying Bid is received, an Auction will be
held on Sept. 18, 2006, at 10:00 a.m., at the offices of
RECON Real Estate, at 700 N. Stanton St., Third Floor, in El
Paso, Texas.  The Auction will begin with the highest Qualifying
Bid and will continue in minimum increments of at least $25,000
higher than the previous bid.

If ASARCO chooses a bidder other than MEGACON, MEGACON will be
awarded a $100,000 Break-up Fee.  MEGACON indicated that it would
not proceed with the purchase of the Property unless it had
reasonable assurance that it would receive payment of the Break-
up Fee, Tony M. Davis, Esq., at Baker Botts L.L.P., in Houston,
Texas, relates.

Mr. Davis adds that MEGACON's willingness to commit to a purchase
of the Property, subject to higher and better offers, may
encourage third parties to submit higher bids for the Property
and will serve as a catalyst for subsequent bids.

If there are no other competing offers, a hearing to consider the
proposed sale will be held at 10:00 a.m., on Sept. 22, 2006.

Based 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. 27; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/
or 215/945-7000).


ASARCO LLC: Wants Brown McCarroll as Environmental Counsel
----------------------------------------------------------
ASARCO LLC seeks authority from the U.S. Bankruptcy Court for the
Southern District of Texas in Corpus Christi to employ Brown
McCarroll, L.L.P., as its special litigation counsel, nunc pro
tunc to June 1, 2006.  Brown McCarroll will be assisting ASARCO
with the environmental permitting litigation.

ASARCO LLC's prior counsel handling the air permitting hearing at
the El Paso, Texas, copper smelter withdrew his representation of
ASARCO after a conflict arose when the counsel changed firms,
James R. Prince, Esq., at Baker Botts L.L.P., in Dallas, Texas,
relates.

Subsequently, ASARCO choose Brown McCarroll, L.L.P., to represent
it in the El Paso air permitting hearing.  Before the Debtor filed
for bankruptcy, Brown McCarroll represented ASARCO as one of the
company's environmental counsel, advising ASARCO on many issues,
including environmental permitting of its El Paso smelter.

Mr. Prince contends that Brown McCarroll is best suited for the
job because of the firm's familiarity with ASARCO's business and
environmental issues.

ASARCO will pay Brown McCarroll according to the firm's customary
hourly rates:

         Professional               Hourly Rate
         ------------               -----------
         Primary Attorney           $200 to $500
         Paraprofessionals          $135

ASARCO will also reimburse Brown McCarroll for any necessary out-
of-pocket expenses the firm incurred or will incur.

Mr. Hopson informs the Court that his firm has a $121,575 general
unsecured claim for prepetition services for which ASARCO has not
yet paid.

Keith Hopson, Esq., a partner at Brown McCarroll, L.L.P., in
Austin, Texas, assures the Court that his firm does not represent
any interest adverse to ASARCO and its estate, and is a
"disinterested person" as defined in Section 101(14) of the
Bankruptcy Code.

Based 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. 27; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/
or 215/945-7000).


ASARCO LLC: Wants Lease-Decision Period Extended Until January 16
-----------------------------------------------------------------
ASARCO LLC and its debtor-affiliates ask the U.S. Bankruptcy Court
for the Southern District of Texas in Corpus Christi to further
extend the time for them to decide whether to assume, assume and
assign, or reject their non-residential real property leases until
Jan. 16, 2007.

The vast majority of the Debtors' Leases relate to the Mission
Mine that ASARCO LLC operates on Native American Indian lands
leased from the Tohono O'Odham Nation San Xavier District and
certain individual members of the Nation.  ASARCO operates the
mine on those lands pursuant and subject to federal regulations
imposed by the U.S. Department of the Interior Bureau of Land
Management and Bureau of Indian Affairs.

Judith W. Ross, Esq., at Baker Botts L.L.P., in Dallas, Texas,
relates that the Indian Leases contain provisions imposing on
ASARCO an obligation to conduct post-mining reclamation.  The
nature and scope of the reclamation obligation, however, is the
subject to significant disagreement among the parties.  Ms. Ross
contends that until the precise nature and scope of the
reclamation obligation is established, the Debtors cannot
determine whether ASARCO should assume or reject the Indian
Leases.

As of Aug. 14, 2006, the Bureaus have given ASARCO access only
to a small portion of the administrative records responsive to
ASARCO's latest Freedom of Information Act request, Ms. Ross
tells the Court.  Also, the correspondence with the Bureaus has
not yet resulted in an understanding concerning ASARCO's mine
reclamation obligation.  The Debtors, however, still seek a
resolution of the reclamation questions and to that end, continue
to participate in face-to-face meetings with representatives of
the Nation, the Allottees and the Bureaus.

With the current uncertainty regarding the nature and scope of
ASARCO's reclamation obligations, Ms. Ross says ASARCO is not
sure whether, in assuming the Indian Leases, it will be
undertaking responsibility to perform millions of dollars in
reclamation or more than a billion dollars in reclamation.

Ms. Ross maintains that the uncertainty must be resolved before
ASARCO can make a reasonable, informed business decision whether
to assume or reject the Indian Leases.

The Debtors have tried to bring certainty to ASARCO's obligations
under the Indian Leases by establishing a bar date procedure that
would require the Bureaus to file claims for all defaults
existing under the Indian Leases.  However, the Bureaus resisted
ASARCO's request, and instead filed a proof of claim that failed
to address ASARCO's reclamation obligation under the majority of
the Indian Leases, Ms. Ross points out.

Based 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. 27; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/
or 215/945-7000).


ATLANTIC MUTUAL: Interest Non-Payment Cues S&P's Default Rating
---------------------------------------------------------------
Standard & Poor's Ratings Services revised its counterparty credit
rating on Atlantic Mutual Insurance Co. to 'R' from 'B+' and its
surplus note rating to 'D' from 'CCC' following the company's
nonpayment of interest on its $100 million 8.15% surplus notes
that was due on Aug. 15, 2006.

Standard & Poor's has learned from more than one source that the
New York State Insurance Department disallowed the interest
payment.

Atlantic Mutual's net loss of $4.6 million for the six months
ended June 30, 2006, was greater than the net loss of $1.9 million
for the three months ended March 30, 2006, demonstrating continued
weakness in earnings.

"Based on year-to-date results, we believe Atlantic Mutual is
unlikely to meet our prior expectations of earnings of at least 1x
interest coverage," said Standard & Poor's credit analyst Jason A.
Jones.

Another surplus notes issue in the amount of $15 million has
interest due shortly, and Standard & Poor's believes it is likely
that Atlantic Mutual will default on this payment as well.


AUSTIN CO: Wants to Sell U.K. Unit to Austin (GB) Ltd. for $200K
----------------------------------------------------------------
The Austin Company and its debtor-affiliates ask the United States
Bankruptcy Court for the Northern District of Ohio for permission
to consummate a Share Purchase Agreement with Austin (GB) Limited
for the sale of 100% of the capital shares of The Austin Company
of U.K. Ltd for $200,000.

The Debtors further ask the Court for authority to sell the shares
free and clear of liens, claims, interests, and encumbrances and
the assignment of certain intercompany receivables owed by Austin
UK to the Debtors and for exemption of the sale from transfer
taxes.

                       Austin UK Business

Austin UK is the Debtor's wholly owned subsidiary that has
operated in the United Kingdom for more than 45 years. Based in
London, Austin UK primarily provides design, engineering, and
construction services to the pharmaceutical industry.  Most of
Austin UK's projects are repeat business from a handful of
clients. Eleven employees maintain the Austin UK operations, which
include two locations, the headquarters and one sales office.

Austin UK's "backlog" has been significantly reduced in recent
years.  "Backlog" is a term used by Austin UK and the engineering
and construction industry to refer to current work under contract
remaining to be performed.  As of Dec. 31, 2004, Austin UK's
backlog was down 85% from the prior year, which resulted in
operating losses in 2004 and 2005.  No significant revenue is
projected for 2006.

The reduction in backlog and revenues for Austin UK has been
primarily based on the Debtors' financial instability.  In the UK,
construction and engineering projects are generally not bonded as
they are in the United States.  In contrast, UK projects
frequently require parent company guaranties.  In recent years,
the Debtors' financial statements were not strong enough to obtain
the confidence of potential UK clients.  

           Austin UK's Pension Liabilities and Deficit

G. Christopher Meyer, Esq., at Squire, Sanders & Dempsey L.L.P.,
in Cleveland, Ohio, tells the Court that Austin UK's pension plan
is significantly underfunded.  As of December 2005, the value of
the Pension Plan's assets were GBP5,086,000 and the value of the
Pension Plan's liabilities were GBP7,819,000, for a total deficit
of approximately GBP2.733 million, or $4 million.  In February
2006, the Pension Plan's actuaries, SBJ Benefit Consultants
Limited, projected that the Pension Plan's deficit would grow in
2006 to GBP2.742 million. As of December 2005, the Pension Plan's
liabilities are allocated as follows:

   -- active members, GBP2,710,000;
   -- deferred members, GBP1,069,000;
   -- current pensioners, GBP3,487,000; and
   -- insured pensioners GBP553,000.

SBJ estimates that the cost of winding up the Pension Plan is
GBP10.7 million.

If the Pension Plan is not wound up, it will be burdened with
significant annual costs, Mr. Meyer asserts.  SBJ estimates that
future costs for removing the Pension Plan's funding deficit
within 10 years will require annual funding payments of
GBP350,000, which does not include the cost of maintaining the
Pension Plan's necessary funding; this amount would merely work
toward reducing the deficit.  Austin UK's projected annual cost
for maintaining the Pension Plan includes Austin UK's:

   (1) cost for funding individuals' benefits, GBP70,000;

   (2) ongoing expenses for running the Pension Plan, GBP50,000;

   (3) insurance premiums for insuring death benefits, GBP25,000;
       and

   (4) Pension Protection Fund levy payment, GBP20,000.

Accordingly, the estimated total annual cost for maintaining the
Pension Plan and overcoming the deficit is GBP515,000.

According to Mr. Meyer if Austin UK is not sold, then it will
probably be liquidated and the Pension Plan will be admitted to
the PPF after a one to two year assessment period.  If the Pension
Plan is administered by the PPF, then pensioners and those members
past the normal retirement age of the Pension Plan, age 65, will
receive up to a maximum of GBP25,000 each year.  Non-pensioners,
and any pensioners that are below age 65 will receive 90% of their
accrued entitlement, again limited to GBP25,000 each year.  During
the PPF's assessment period, the PPF will most likely assert its
power to obtain assets of Austin UK and the Debtors to make up any
deficit.

                            Valuation

A formal valuation of Austin UK has not been conducted.  However,
Austin UK's financial instability, lack of ability to obtain new
projects due to the insolvency of its parent company (the
Debtors), the lack of any offers to purchase any or all of the
Austin UK assets, and the underfunded Pension Plan all suggest a
going concern or liquidation value that is nominal or negative.

                    About The Austin Company

Headquartered in Cleveland, Ohio, The Austin Company is an
international firm offering a comprehensive portfolio of  
in-house architectural, engineering, design-build, construction  
management and consulting services.  The Company also offers  
value-added strategic planning services including site location,
transportation and distribution consulting, and facility and
process audits.  The Company and two affiliates filed for  
chapter 11 protection on Oct. 14, 2005 (Bankr. N.D. Ohio Lead  
Case No. 05-93363).  Christine M. Pierpont, Esq., at Squire,  
Sanders & Dempsey, LLP, represents the Debtors in their  
restructuring efforts.  M. Colette Gibbons, Esq., and Victoria E.  
Powers, Esq., at Schottenstein Zox & Dunn Co., LPA, represent the  
Official Committee of Unsecured Creditors.  When the Debtors filed  
for protection from their creditors, they estimated assets and  
debts between $10 million to $50 million.


BOYD GAMING: Fitch Affirms Low-B Ratings With Stable Outlook
------------------------------------------------------------
Fitch Ratings affirmed Boyd Gaming's credit ratings:

  -- Issuer Default Rating at 'BB-'
  -- Senior Secured Credit Facility at 'BB'
  -- Senior Subordinated Debt at 'B+'

The ratings apply to roughly $2.6 billion of outstanding debt as
of June 30.  The Rating Outlook remains Stable.  The ratings
reflect Boyd's:

   * sizable and diversified portfolio of quality assets;
   * successful operating history; and
   * solid credit metrics.

An improving near-term credit profile with improved leverage
fueled by an asset sale and a modest level of capital expenditures
over the next 12 months is mitigated by:

   * near-term softness in a core market;

   * the potential for a budget increase to a large-scale project;
     and

   * additional competition.

                        South Coast Sale

The company announced the sale of the South Coast, which just
opened on December 22, 2005, to Michael Gaughan, the CEO of the
Coast properties.  Coast was acquired in 2004.  Gaughan agreed to
sell 15.8 million shares of BYD to finance the purchase and has
agreed to provisions that protect BYD.  Gaughan can not sell the
property for a 5-year period (other than to Boyd) and Boyd also
retains the right of first refusal on a future sale for an
additional three years.  Boyd is using roughly 75% of the proceeds
to pay down its bank debt and the remaining 25% to repurchase
stock.

South Coast was off to a disappointing start, as it only generated
$16 million of EBITDA in 1H'06, which is only a 5%-6% annualized
return on the nearly $600 million investment.  The property has
been hampered by poor roadway access from I-15 that will not
likely be resolved until mid-to-late-2007 at the earliest.  And
the property, which is located on Las Vegas Boulevard roughly 5
miles south of Mandalay Bay (the unofficial southern border of the
LV Strip), may be too large for the current market.  As a result,
Fitch believes Boyd's spending for its North Las Vegas project,
which is expected to open in 2009, will be lower than South Coast.

Given the time and investment it may take to fix the property,
Fitch views the sale of South Coast positively, particularly given
the terms of the transaction.  The net sale price is roughly $513
million, so BYD is recouping roughly 85%-90% of the project cost
and receiving roughly 16x annualized EBITDA.  And Boyd gets
competitive protection since Gaughan agreed to a 5-year non-sale
provision (except to Boyd) and an additional 3-year right of first
refusal on a future sale.

Fitch recognizes that as a result of the South Coast sale,
investors will likely question the health of the Las Vegas locals
market.  There has been evidence of some weakness in the lower-end
consumer and the LV locals market is currently showing some
softness exacerbated by the increase in capacity from South Coast
and Station Casino's Red Rock opening in April.  Fitch believes
the current softness will be temporary and the capacity increase
will be absorbed, as the long-term fundamentals of the LV locals
market remain intact.

With a mega-project like Echelon Place in the works, investors
will also likely question management's development ability
following the disappointing results of South Coast.  Fitch notes
that the project's scale and scope was already set when it
acquired Coast (other than an additional hotel tower that was
added by BYD management).

Also, Coast was run semi-autonomously within Boyd, which prevented
maximizing synergies from the acquisition.  Furthermore, Boyd
developed the highly successful Borgata in Atlantic City as part
of a joint venture with MGM MIRAGE and BYD is the current operator
of that property.  Therefore, Fitch views positively that the
Borgata management team is now leading the Echelon development.

                             Borgata

Ratings also take into account Boyd's equity stake in the Borgata
mega resort in Atlantic City.  The property has performed beyond
expectations and began upstream cash distributions to the parent
companies (Boyd and MGM MIRAGE) last year.  Boyd received $29
million from Borgata in 2005 and $43 million in 1H'06.

Fitch expects the cash distributions to continue to accelerate, as
Borgata benefits from its public space expansion that recently
opened on June 30 and the Water Club expansion that is scheduled
to open in Q4'07.

                          Echelon Place

Fitch is concerned about the level of a budget increase at Echelon
Place, its $4 billion mixed-use development on the Stardust site
($2.9 billion of which will be wholly-owned by Boyd.)  In its most
recent quarterly filing, Boyd indicated that the budget is likely
to increase as it continues to progress on development and refine
the exact project costs.

Furthermore, the large-scale development on the north end of the
Las Vegas Strip is targeting a more upscale, destination-focused
consumer, so it is somewhat of a departure from the company's core
demographic.  The Borgata is the company's only higher-end
property and the Atlantic City market is still primarily a drive-
in market.  Therefore, a successful development will nicely
diversify the company's cash flow.

The project is scheduled to open in mid-2010 and Fitch expects
BYD's direct investment to be funded with accumulated free cash
flow, dividends from its Borgata investment and additional
borrowings.  Ratings will be monitored as there is more clarity
with respect to the project's scale, scope, and ultimate cost.

The non wholly-owned portion of the project ($1.1 billion) will be
funded with land from Boyd, cash contributions from its partners,
and project finance debt.  Funding the project in this manner will
likely result in peak leverage in the 5x-range.

                           Competition

Other concerns include the increased competition at key
properties, including Suncoast in West Las Vegas and Blue Chip in
Indiana.  Station Casinos opened Red Rock Station in April 2006
and BYD's greatest competitive impact will be felt at Suncoast,
which had a revenue and EBITDA decline of 11% and 23%,
respectively in Q2.  Fitch expects the property's results to
continue to be negatively impacted by Red Rock over the next few
quarters.

Boyd's Blue Chip riverboat casino in Michigan City, Indiana will
face significant competition from the Pokagon tribal casino (Four
Winds Casino Resort in New Buffalo Township) that is just 15 miles
away and scheduled to open in Q3'07.  It will be a larger facility
than Blue Chip, as Four Winds will have a 130,000 square foot
casino with 3,000 slots, 90 table games and a 20-table poker room,
and a 164-room hotel compared to Blue Chip, which has a 65,000
square foot casino, 2,170 slots, 53 table games and 184-room
hotel.

Earlier this year, the tribe had land taken into trust in January
and completed financing in June.  Harrah's is also undergoing a
$485 million construction of a new boat facility for its Horseshoe
property in Hammond, Indiana that is scheduled to open in mid-
2008.  HET's Horseshoe primarily taps the southeastern Chicago
market.  BYD's Blue Chip taps the Chicago market for only a small
percentage of its business (less than 5%), so the Pokagon tribal
casino will have a greater impact to the property's results.

               Improving Near-term Credit Profile

Boyd is likely to benefit from an improving credit profile over
the next 12 months.  Its last 12 months total debt-to-EBITDA ratio
(excluding Borgata operating income, but including pre-opening
expenses) was 4.7x as of the end of 2005 and improved to 4.5x at
the end of Q2'06.

Fitch expects leverage to decline to 3.7x by year-end 2006 driven
by the sale of South Coast and modest capital expenditures.  That
assumes Boyd's $152.5 million purchase of the Dania Jai Alai
facility in Florida closes in Q4'06.  

Free cash flow over the next 12-18 months will likely be used to
fund that acquisition and begin construction of an expansion to
the facility, which should open at the beginning of 2008.  Boyd
will also benefit from the acceleration of Borgata's cash
distributions noted above, which will help the company's FFO
Adjusted Leverage to be lower.

Fitch estimates that leverage measure to be 3.4x by year end. (FFO
Adjusted Leverage is cash from operations less working capital
relative to total debt adjusted for capitalized leases.)

Total debt levels as of June 30 were $2.61 billion with $1.46
billion (55%) secured, which consists mostly of its bank facility.
Proforma for the South Coast transaction, debt levels reduce to
roughly $2.2 billion with $1.1 billion secured (roughly 50%.)
Given the limited capital expenditures over the next 12 months,
liquidity is adequate with $170 million in cash and roughly $740
million-$755 million available on its bank facility after it pays
it down with the South Coast proceeds.  Boyd's next maturity does
not occur until June 2010 when the revolver comes due.

Fitch expects the company to negotiate expanding its credit
facility, as it will likely need to have additional capital
access, as it starts to pay for its North Las Vegas and Echelon
Place projects.  Capital expenditures should ramp up significantly
in 2008 to mid-2010 when Echelon opens, with 2009 likely being the
heaviest year for spending.

Fitch's ratings incorporate only one notch differential on the
subordinated debt relative to the IDR because Fitch believes there
is significant asset value and over collateralization of debt.
Fitch's ratings also incorporate a one notch differential on the
bank debt relative to the IDR because of its secured status.  If
there are changes to asset values or security levels, Fitch will
revisit its current notching.


CALPINE CORP: Court Okays Fishman, May and Doody Employment Pacts
-----------------------------------------------------------------
The Hon. Burton R. Lifland of the U.S. Bankruptcy Court for the
Southern District of New York approved the Employment Agreements
of Calpine Corp. and its debtor-affiliates with three executive
vice presidents:

    1. Robert E. Fishman, executive vice president for Power
       Operations;

    2. Thomas N. May, executive vice president and president for
       Calpine Merchant Services Company, Inc.; and

    3. Gregory L. Doody, executive vice president, general counsel
       and secretary.

In connection with their restructuring process, the Debtors need
talented and experienced executives who can manage their
operations and compliment their current management team.
Accordingly, the Debtors entered into employment agreements with
the three executive vice presidents

                      Fishman EVP Agreement

Mr. Fishman will manage the Debtors' 27,000-megawatt portfolio of
natural gas-fired and geothermal facilities.  He will be
responsible for the production and execution of business plans,
strategies, and goals for Power Operations.  He will also oversee
all daily power plant operations, major maintenance and capital
project planning, asset management and project development.

The salient terms of the Fishman EVP Agreement are:

    (a) The EVP Agreement will end on June 13, 2007.  After
        termination, Mr. Fishman's employment will be
        automatically renewed for an additional 12 months;

    (b) Mr. Fishman will receive:

          (i) $500,000 annual base salary, subject to the Chief
              Executive Officer and the Board of Directors'
              review;

         (ii) annual cash performance bonus of at least 90% of the
              base salary; and

        (iii) a guaranteed minimum success fee, and a one-time
              success fee on the effective date of a plan of
              reorganization;

    (c) Mr. Fishman is eligible to participate in the Debtors'
        benefit plans and programs available for senior
        executives; and

    (d) Mr. Fishman is restricted to be in any way connected to
        certain energy companies during his tenure and 12 months
        after his termination.

A full-text copy of the Fishman EVP Agreement is available for
free at http://ResearchArchives.com/t/s?d3e

                         May EVP Agreement

Mr. May will oversee Calpine Merchant, one of the energy
commodity trading arms of the Calpine enterprise.

The salient terms of the May EVP Agreement are:

    (a) The EVP Agreement will end on May 30, 2007.  After
        termination, Mr. Fishman's employment will be
        automatically renewed for an additional 12 months;

    (b) Mr. May will receive:

          (i) $500,000 annual base salary, subject to the CEO and
              the Board's review;

         (ii) a $500,000 one-time payment, after approval of his
              Employment Agreement;

        (iii) $500,000 annual bonus in 2007; and

         (iv) a guaranteed minimum success fee and a one-time
              success fee on the effective date of a plan;

    (c) Mr. May is eligible to participate in the Debtors' benefit
        plans and programs for senior executives;

    (d) If Mr. May resigns without good reason, he will pay back
        to the Debtors a pro rata portion of his signing bonus;

    (e) Mr. May will be reimbursed of all reasonable commuting
        expenses from his residence in Princeton, New Jersey, and
        housing and living expenses for six months commencing on
        May 30, 2006; and

    (f) Mr. May is restricted to be in any way connected to
        certain energy companies during his tenure and 12 months
        after his termination.

A full-text copy of the May EVP Agreement is available for free
at http://ResearchArchives.com/t/s?d3f

                        Doody EVP Agreement

Mr. Doody will manage all of the Debtors' legal matters,
especially the legal aspects of the Debtors' restructuring
process.

The salient terms of the Doody EVP Agreement are:

    (a) The EVP Agreement will end on July 17, 2007.  After
        termination, Mr. Fishman's employment will be
        automatically renewed for an additional 12 months;

    (b) Mr. Doody will receive:

           (i) $500,000 annual base salary, subject to the CEO and
               Board's review;

          (ii) a $500,000 one-time payment after approval of his
               Employment Agreement;

         (iii) $450,000 annual bonus in 2007; and

          (iv) a guaranteed success fee and a one-time success
               fee payment on the effective date of the Debtors'
               plan;

    (c) Mr. May is eligible to participate in the Debtors' benefit
        plans and programs for senior executives;

    (d) If Mr. May resigns without good reason, he will pay back
        to the Debtors a pro rata portion of his signing bonus;

    (e) Mr. May will be reimbursed of all reasonable commuting
        expenses from his residence in Princeton, New Jersey and
        housing and living expenses for six months commencing
        July 17, 2006; and

    (f) Mr. May is restricted to be in any way connected to
        certain energy companies during his tenure and 12 months
        after his termination.

A full-text copy of the Doody EVP Agreement is available for free
at http://ResearchArchives.com/t/s?d34

Matthew A. Cantor, Esq., at Kirkland & Ellis LLP, in New York,
asserts that Messrs. Fishman, May and Doody are well qualified
for their appointed positions.  The executives have had
significant experience in the fields that they will be working
on.

The EVP Agreements are structured to reward value creation, Mr.
Cantor says.  The EVP Agreements provide that a portion of
Messrs. Fishman, May and Doody's potential compensation will be
received only after the Debtors' successful emergence from
bankruptcy.

                       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., http://bankrupt.com/newsstand/or   
215/945-7000)


CALPINE CORP: Wants Interim Injunction of Nevada Power Litigation
-----------------------------------------------------------------
Calpine Corp. and its debtor-affiliates ask the U.S. Bankruptcy
Court for the Southern District of New York to:

   (a) enter a declaratory judgment that the continued
       prosecution of the Nevada Power Action is stayed under
       Section 362 of the Bankruptcy Code; or

   (b) in the alternative, enjoin and prohibit the continued
       prosecution of the Nevada Power Action.

Nevada Power Company and Debtors Calpine Corporation and Moapa
Energy Center, LLC, are parties to two Transmission Service
Agreements, involving the Centennial Project in Las Vegas,
Nevada.  The Centennial Project is intended to provide for the
transmission of electric power to markets in Nevada and the
Western United States.  The Debtors originally planned to build
one of the new power plants contemplated by the Centennial
Project.

From 2000 to 2001, a series of disputes arose between Nevada
Power and various power generators, including the Debtors.  
Subsequently, the parties negotiated and entered into a global
settlement agreement that, among others:

   -- terminated one of the Debtors' TSAs; and

   -- required the Debtors to post a $33,000,000 bond for the
      Centennial TSA.

The bond became effective on July 16, 2001, and expired by its
own terms on May 1, 2004.

Fireman's Fund Insurance Company served as the guarantor of the
Debtors' surety bond under the remaining TSA.  Fireman's Fund
agreed that it would pay for Nevada Power's damages up to the
bond's value if the Debtors defaulted on their obligations.

In September 2004, Nevada Power filed a lawsuit against the
Debtors and Fireman's Fund in the Nevada state court, alleging
breach of contract, breach of good faith and fair dealing,
specific performance and sought a declaratory judgment against
the Defendants.

Nevada Power alleged that the Debtors breached the TSAs and that
Fireman's failed to pay Nevada Power pursuant to the surety bond.
Nevada Power asserted that Fireman's Fund's liability is
derivative of the Debtors' alleged breach of their contractual
obligation under the TSA.  Nevada Power also sought recovery of
the full value of the surety bond from Fireman's Fund based on
the Debtors' alleged breach.

Jeffrey S. Powell, Esq., at Kirkland & Ellis LLP, in New York,
tells the Court that Nevada Power and Fireman's Fund have
conducted only "minimal" discovery as of Aug. 4, 2006.

Both Nevada Power's and Fireman's Funds' discovery plans confirm
that there would be a considerable burden imposed on Calpine, Mr.
Powell relates.

Mr. Powell assert that the Court should extend the automatic stay
to prohibit the continuation of the Nevada Power case because:

   -- a finding of liability against Fireman's Fund would amount
      to a finding of liability against its principal, Calpine;

   -- a finding of liability against Fireman's Funds would result
      in a claim by Fireman's Funds against the Debtors, further
      jeopardizing property of the Debtors' estate; and

   -- continuation of the case would impose a significant burden
      on the Debtors and constitute a major distraction of time
      and resources away from the Debtors' reorganization
      efforts.

If the Nevada Power case is allowed to proceed, Mr. Powell
contends that the Debtors face a significant risk of collateral
estoppel, evidentiary prejudice, depletion of estate resources
and distraction of key employees.  These risks pose a danger to a
successful reorganization.

Mr. Powell clarifies that the Debtors do not seek a permanent
injunction, only an injunction until the Debtors successfully
emerges from their Chapter 11 proceedings.

A delay in the Nevada Power case proceedings will not diminish
the potential liability of Fireman's Funds or complicate the
evidentiary burdens of Nevada Power, Mr. Powell points out.

                       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. 24; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or   
215/945-7000)


CELL THERAPEUTICS: June 30 Balance Sheet Upside-Down by $102 Mil.
-----------------------------------------------------------------
Cell Therapeutics, Inc., reported financial results for the
quarter ended June 30, 2006.  Net loss for the quarter totaled
$21.0 million compared to a net loss of $36.2 million for the same
quarter in 2005.  For the six months ended June 30, 2006, CTI
posted a net loss of $74.2 million compared to $75.3 million for
the six months ended June 30, 2005.  The net loss for the six
months ended June 30, 2006, included $24.5 million in make-whole
interest expense due to payments made upon conversions of the
Company's 6.75% and 7.5% convertible senior notes.  Operating
expenses were reduced by 40% compared with the same period in
2005.

The Company ended the quarter with approximately $48.1 million in
cash and cash equivalents, securities available-for-sale, and
interest receivable.

"We have worked diligently over the past year to lower our burn
rate to the current level," said James A. Bianco, M.D., President
and CEO of CTI.  "And we now have established regulatory pathways
in the United States and in Europe for XYOTAX with the FDA and the
EMEA. Bringing XYOTAX to patients can be a major break-through for
patients suffering from a disease that is so deadly to so many and
only now is just beginning to be recognized as a major cancer
killer."

As of June 30, 2006, the Company's equity deficit narrowed to
$102.173 million from a $107.097 equity deficit at Dec. 31, 2005.

                          Recent Events

   -- announced encouraging interim results of the EXTEND phase
      III clinical trial of pixantrone for relapsed non-Hodgkin's
      lymphoma;

   -- reached agreement with the U.S. Food and Drug Administration
      to review a new drug application (NDA) submission for
      XYOTAX(TM) (paclitaxel poliglumex) based on interim results
      of the PIONEER trial with the results of the STELLAR 3 and 4
      trials to support the filing;

   -- announced that the Scientific Advice Working Party of the
      European Medicines Agency agreed in principle that a switch
      from the superiority endpoints in the STELLAR trials to non-
      inferiority endpoints could be justified as a pathway to
      approval using the existing data from the STELLAR clinical
      trials and that a shift in the non-inferiority margin may
      also be justified if the safety profile of XYOTAX is
      superior to comparators in terms of important (serious) side
      effects and quality of life or use of rescue medications;

   -- raised $33 million in a 7.5% convertible debt issuance
      (gross proceeds, prior to interest payments or fees);

   -- since November 2005, retired, exchanged, or converted
      approximately $161 million of debt from balance sheet as of
      June 21, 2006;

   -- reported the dismissal, with prejudice, of the shareholder
      class action lawsuit and the dismissal of the shareholder
      derivative lawsuit;

   -- reported on results of a phase I/II study of pixantrone
      combined with fludarabine, dexamethasone, and rituximab for
      treatment of patients with relapsed indolent non-Hodgkin's
      lymphoma (NHL);

   -- reported on results of XYOTAX non-small cell lung cancer
      clinical trials and a phase I trial of CT-2106 presented at
      the 2006 Annual Meeting of the American Society of Clinical
      Oncology; and

   -- commissioned and reported the results of a national poll
      showing that women are unaware of the rise and dangers of
      lung cancer, despite the fact that lung cancer is the number
      one cancer killer of women and is expected to kill more than
      70,000 women this year -- more than breast and ovarian
      cancers combined.

A full-text copy of the Quarterly Report in Form 10-Q filed with
the Securities and Exchange Commission is available for free at
http://ResearchArchives.com/t/s?ffe

                    About Cell Therapeutics

Based in Seattle, Washington, Cell Therapeutics, Inc. (NASDAQ and
MTAX: CTIC) -- http://www.cticseattle.com/-- engages in the
development, acquisition, and commercialization of treatments for
cancer.  The company was co-founded by James A. Bianco, Louis A.
Bianco, and Jack W. Singer in 1991.


CERADYNE INC: 2006 Second Quarter Net Income Increases to $30 Mil.
-----------------------------------------------------------------
Ceradyne, Inc., reported increased sales for the second quarter
2006 of $162 million, up from $89.9 million in second quarter
2005.  Net income increased to a record $30 million, compared to a
net income of $11.4 million in second quarter 2005.

Sales for the six months ended June 30, 2006 were $298.4 million,
up from $159.7 million in the comparable period last year.  Net
income for the first six months of 2006 increased to $54.6 million
from $17.4 million for the first six-month period in 2005.

Total backlog as of June 30, 2006 rose to a record $256.6 million
compared to total backlog at June 30, 2005 of $215.6 million.

"We are very pleased with the significant increase in our second
quarter 2006 financial performance," Joel P. Moskowitz, chief
executive officer, commented.  "The expansion of production
capacity at our Lexington, Kentucky technical ceramic
manufacturing facility this year allowed us to ramp up in order to
meet the U.S. government's continuing requirements for lightweight
ceramic body armor.  The award to Ceradyne for ESBI (side plates)
in early July of a $59.8 million, 2006 delivery order, as part of
a new 5-year indefinite delivery/indefinite quantity contract with
a maximum value of $611.7 million, indicates the continued demand
for our lightweight ceramic body armor.

"The exclusive agreement with Alcan, the establishing of a
manufacturing facility in Chicoutimi, Quebec, Canada, and the
acquisition of the nuclear radiation shielding business which were
announced in July 2006 will put Ceradyne in the aluminum/boron
carbide metal matrix composite business in order to produce
structural elements for the fabrication of nuclear waste
containment vessels.  Ceradyne intends to develop ballistic grade
aluminum compositions for armored vehicles and use its new
Canadian facility as a base for working with the aluminum smelting
industry regarding advanced technical ceramic applications.

"Additionally, the Company intends to break ground this quarter on
a technical ceramic manufacturing plant in Tianjin, China.  This
117,000 square foot factory will be Ceradyne's first manufacturing
facility in China.  Although its initial ceramic product will be
related to the Chinese manufacture of silicon solar energy cells,
we anticipate it will expand our presence in China and complement
our Beijing sales office.

Mr. Moskowitz further stated: "We recently commenced a voluntary
review of our historical stock option grants and related
accounting treatment. This review was initiated by Ceradyne in
response to concerns raised by several non-regulatory parties
about our stock option granting policies and wide public media
coverage of stock option grant issues involving other companies.  
This review is being conducted by a Special Committee of our Board
of Directors, comprised solely of independent directors, with the
assistance of independent legal counsel.  The review is focusing
on stock option grants made during the period of 1997 to the
present.

"Although the Special Committee's review has not been completed,
management has concluded that the measurement dates for accounting
purposes differ from recorded dates for certain stock option
grants made during 1997 through 2003. As a result of these
findings, in the 2006 second quarter, the Company recorded an
estimated after-tax, non-cash charge of approximately $1.5 million
pertaining to the years ended December 31, 1997 to 2005 and the
first six months of 2006.  However, because the review has not
been completed, the charge we have recorded in the 2006 second
quarter may be modified or significantly changed."

Ceradyne, Inc. (Nasdaq: CRDN) -- http://www.ceradyne.com/--
develops, manufactures and markets advanced technical ceramic
products and components for defense, industrial,
automotive/dieseland consumer applications.

                           *     *     *

As reported in the Troubled Company Reporter on July 24, 2006,
Ceradyne's $50 million revolving credit facility due 2009 carries
Standard & Poor's BB- rating.  The Company's credit rating is also
rated BB- by Standard & Poor's.


CIGNA CORP: S&P Assigns BB+ Pref. Stock Rating With Pos. Outlook
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary 'BBB'
senior debt, 'BBB-' subordinated debt, and 'BB+' preferred stock
ratings to Cigna Corp.'s (NYSE:CI) recently filed universal shelf.

At the same time, Standard & Poor's affirmed its 'BBB'
counterparty credit rating on Cigna Corp.  The outlook remains
positive.

The new shelf has an undesignated notional amount in accordance
with the new SEC rules, effective Dec. 1, 2005.

"The counterparty credit rating on CIGNA reflects its strong
consolidated competitive position, national scope, diversified
health and related businesses, and strong capitalization,"
explained Standard & Poor's credit analyst Shellie Stoddard.

"Operating gains have been very strong in the past two years -- a
turnaround from the two years before that."

Membership has stabilized following prior-year declines because of
service problems and corrective pricing actions.  

These positive factors are partially offset by:

   * operating expense challenges associated with lower membership
     (compared with historical levels);

   * the loss of retirement services business; and

   * lingering, though diminished exposure to run-off reinsurance
     operations.

CIGNA's operating performance has been strong since 2004 because
of significant improvement in its health care segment.  Through
the second quarter of 2006, CIGNA reported consolidated pretax
earnings (excluding realized investment gains) of $786 million,
which translates into a strong ROR of 9.8%  

The health care segment reported pretax earnings (excluding
realized investment gains) of $484 million, which constituted the
bulk, or 62% of consolidated pretax earnings.  Health care segment
earnings are expected to constitute an increasing portion of
consolidated earnings as the company's medical membership
stabilizes, operating expense management improves, and the
retirement and reinsurance segments continue to run-off.

Although health care earnings were reduced from the prior year
because of lower overall revenue and lower guaranteed cost product
earnings, the company continued to record favorable claim
developments ($16 million in the second quarter), and expense
reductions in the segment.  Excluding favorable claim
developments, CIGNA's medical loss ratio on its guaranteed cost
products was 87.6% through the second quarter of 2006.

CIGNA's financial flexibility is good.  Debt to total
capitalization (excluding unrealized capital gains from fixed-
income investments but including the minimum pension liability,
which is a negative factor in equity) was 22.1% as of June 30,
2006.  Debt to tangible capital was 31.1%. EBITDA interest
coverage is more than 20x.

Connecticut General Life Insurance Co. remains CIGNA's primary
operating subsidiary.  Consolidated capitalization is currently
very strong, estimated at 175% at year-end 2005, and is expected
to decline but remain at a level supporting the rating.

CIGNA's liquidity is good.  As of June 30, 2006, the parent
company held cash and short-term investments of approximately $550
million.  Through July 2006, the company repurchased $1.5 billion
in stock, compared with $1.6 billion for full-year 2005.  The
company still has $800 million of stock repurchase authority
available.  CIGNA is expected to return a large portion of the
capital generated from the sale of the retirement business to
shareholders through share repurchases as it has reduced its
annual common stock dividend.

As of June 30, 2006, CIGNA had $376 million in short-term debt and
$950 million in long-term debt.  During May 2006, CIGNA updated
its committed lines of credit to $1.75 billion with a letter of
credit sublimit facility of up to $1.25 billion.

In 2006, CIGNA's membership is expected to grow 1%-2%, with the
company's recent acquisition of Star HRG expected to add about
200,000 members in the third quarter of 2006.  After-tax operating
income for 2006 should be $960 million to $1.02 billion, up from
previous expectations of $900 million-$960 million.  The company
will generate higher levels of cash from operations relative to
prior years, and although Standard & Poor's does not expect CIGNA
to retain all of these earnings, they do signal enhanced financial
flexibility.

Debt to capitalization is expected to remain at 25%-30%, even if
the company finances a portion of its acquisitions in the near
term.  On a consolidated basis with its health affiliates, CIGNA's
capital adequacy ratio is expected to decline in 2006 but remain
at a level supporting the rating.

Debt to total capital is expected to be 25%-30%.  EBITDA interest
coverage is projected at 16x-18x for 2006.

On a consolidated basis, as of year-end 2005, CIGNA's current year
contractual obligations (excluding insurance liabilities) of $1.20
billion, primarily in other long-term liabilities and purchase
obligations, was considerably below its $1.7 billion in cash and
equivalents.  Dividends from operating companies totaled $1.3
billion in 2005 and are expected to remain the same, at $1.3
billion, in 2006 as CIGNA begins to take excess capital from
its regulated subsidiaries.  

The company continues to fight a number of outstanding claims
associated with workers' compensation and personal accident, but
Standard & Poor's views the remaining liability to be largely
reserved for.  CIGNA took a $14 million fourth quarter 2005 charge
on one such settlement.


CLEAR CHOICE: RJ Easton Takes Equity Stakes on Bay Capital Merger
-----------------------------------------------------------------
Clear Choice Financial, Inc., reported the acquisition of Bay
Capital Corporation, a wholesale and retail provider of
residential mortgages.  RJ Easton acted as the exclusive financial
advisor to Bay Capital in the sale as well as investor in the
transaction.

"Our investment in this transaction reflects our confidence in the
Clear Choice Financial investment strategy and our dedication to
our client Bay Capital," RJ Easton Chairman and CEO Richard Easton
said.  "We are selective with the clients we represent and invest
in their continued success.  I have been orchestrating the mergers
and acquisitions of middle-market companies since 1978 and believe
the Clear Choice/Bay Capital merger is an excellent opportunity
for both firms."

"The Bay Capital acquisition demonstrates our strategy to develop
synergistic opportunities that will position us for growth as a
full-service, client-focused, financial solutions provider,"
Darren Dierich, CFO of Clear Choice Financial Inc. said.  "Bay
Capital's committed management team, dedicated employees, and
experience in the mortgage industry made Bay Capital an ideal
acquisition for Clear Choice Financial."

                  About Clear Choice Financial

Headquartered in Tempe, Arizona, Clear Choice Financial, Inc.
(OTCBB: CLRC) -- http://www.clearchoicecorp.com/-- is a publicly  
traded company that specializes in assisting consumers with the
settlement of unsecured debt through its debt resolution business
unit.  The Company has acquired Bay Capital Corporation as part of
the company's strategy to build a comprehensive financial
solutions organization with a national presence.

                       Going Concern Doubt

As reported in the Troubled Company Reporter on July 6, 2006,
Farber & Hass LLP expressed substantial doubt about Clear Choice's
ability to continue as a going concern after it audited the
Company's financial statements for the years ended June 30, 2005
and 2004.  The auditing firm pointed to the Company's significant
net losses and stockholders' deficit.


CLECO CORP: Prices Six Million Shares Offering at $23.75 per Share
------------------------------------------------------------------
Cleco, Corp., priced an offering of 6 million shares of common
stock at $23.75 per share.

The Company granted the underwriters an option to purchase up to
an additional 900,000 shares of common stock.

Goldman, Sachs & Co. acted as the sole book running lead manager
with KeyBanc Capital Markets serving as joint lead manager.  A.G.
Edwards and Howard Weil Inc. acted as co-managers.  The
underwriters have a 30-day option to purchase the additional
shares at the initial public offering price less the underwriting
discount to the extent they sell more than 6 million shares.

Net proceeds from the sale will be used to fund a portion of the
estimated $1 billion cost of constructing a new 600-megawatt
solid-fuel unit at the Company's Rodemacher Power Station in
Boyce.

Headquartered in Pineville, Louisiana, Cleco Corp. (NYSE: CNL)
-- http://www.cleco.com/-- is a regional energy provider, which  
operates a regulated electric utility company that serves about
267,000 customers across the state.  Cleco also operates a
wholesale energy business that has approximately 1,350 megawatts
of generating capacity.

                           *     *     *

Moody's Investors Service assigned a Ba2 rating to Cleco Corp.'s
Preferred Stock in March 2003.


CNET NETWORKS: Form 10-Q Filing Delay Prompts Notice of Default
---------------------------------------------------------------
CNET Networks, Inc., disclosed that it received a notice from the
trustee under the indenture governing the Company's $125 million
aggregate principal amount of 0.75% Convertible Senior Notes due
2024, stating that the company is in default of its covenant to
file its Form 10-Q with the trustee within fifteen days after it
is required to be filed with the SEC.  

If the default is not cured within 60 days, the bonds may be
accelerated by the holders of 25% outstanding principal amount or
the trustee.  As of June 30, 2006, the Company had approximately
$143.3 million of cash and investments.

                        Filing Delay

The Company previously disclosed that its board of directors
established a special committee of independent directors to review
the Company's stock option practices and related accounting.  The
Company intends to file its Form 10-Q once the special committee
has completed its review and the company's independent registered
public accountants have completed their procedures.

CNET Networks, Inc. (Nasdaq: CNET) is a global media company.  
The company's brands -- CNET, GameSpot, TV.com, MP3.com, Webshots,
BNET and ZDNet -- serve the technology, games and entertainment,
business, and community categories.  CNET Networks was founded in
1993 and has always been "a different kind of media company"
creating engaging media experiences through a combination of
world-class content and technology infrastructure.


CNET NETWORKS: Covenant Default Cues NASDAQ Delisting Notice
------------------------------------------------------------
CNET Networks, Inc. intends to request a hearing before the Nasdaq
Listing Qualifications Panel in response to the receipt of a
Nasdaq Staff Determination notice stating that the company is not
in compliance with Nasdaq Marketplace Rule 4310(c)(14).

The letter, which was expected, was issued in accordance with
Nasdaq procedures because the company has not timely filed its
Quarterly Report on Form 10-Q for the period ended June 30, 2006.  
Pending a decision by the hearing panel, CNET's common stock will
remain listed on The Nasdaq National Market.  There can be no
assurance that the hearing panel will grant the company's
request for continued listing.

The Company previously reported that a special committee
of the Board of Directors is conducting a review of the company's
stock option practices and related accounting.  The Company
intends to file its Form 10-Q once the special committee has
completed its review and the company's independent registered
public accountants have completed their procedures.

                       About CNET Networks

CNET Networks, Inc. (Nasdaq: CNET) is a global media company.  
The company's brands -- CNET, GameSpot, TV.com, MP3.com, Webshots,
BNET and ZDNet -- serve the technology, games and entertainment,
business, and community categories.  CNET Networks was founded in
1993 and has always been "a different kind of media company"
creating engaging media experiences through a combination of
world-class content and technology infrastructure.


CNET NETWORKS: Form 10-Q Filing Delay Cues S&P's Negative Watch
---------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings, including
the 'B' corporate credit rating, on San Francisco-based Internet
publisher CNET Networks Inc. on CreditWatch with negative
implications.

"The action is due to the possible acceleration of $125 million of
debt maturities," said Standard & Poor's credit analyst Andy Liu.

The potential acceleration of debt stems from CNET's inability to
file its quarterly 10-Q on time.  If not cured in 60 days, the
maturity on the 0.75% convertible senior notes due 2024 may be
accelerated by holders of one-quarter of the $125 million
outstanding principal amount.  While the company has sufficient
liquid assets with about $143 million in cash and investment to
meet the potential acceleration, this would still represent a
significant decrease in liquidity.

CNET was identified as one of many companies with questionable
stock option granting practices.  This led the company to appoint
a special committee of independent directors to investigate option
grants and their timing.  Subsequently, CNET announced that it
expects to restate financial statements for 2003, 2004, and 2005
to correct errors related to accounting for stock-based
compensation.  CNET may also restate its financial statements for
earlier years and its operating results for the first quarter of
2006.

In addition, CNET has received a delisting notice from the Nasdaq
as a result of a breach of exchange rules after it failed to file
its quarterly 10-Q report on time.

The resolution of the CreditWatch listing will depend on the
company filing the delayed financial reports and Standard & Poor's
evaluation of CNET's business performance and liquidity at that
time.


COLLINS & AIKMAN: Contests Huron's First Lien on Molds
------------------------------------------------------
Collins & Aikman Corporation and its debtor-affiliates ask the
U.S. Bankruptcy Court for the Eastern District of Michigan to deny
Huron Mold and Tools, Ltd., motion to obtain immediate possession
of certain molds from the Debtors or receive adequate protection
for its $1,496,126 secured claim.  

The Debtors contend that Huron has not established that it has a
valid and enforceable first lien on the Molds.

Jason C. Seewer, Esq., at Carson Fischer, PLC, in Bloomfield
Hills, Michigan, points out that Huron failed to file any
financing statement pursuant to the Uniform Commercial Code for
several Molds and also failed to present any documentation
regarding other Molds to prove that it satisfied the lien
requirement of the Michigan Mold Lien Act.  Huron contractually
waived any Mold lien claims pursuant to the Debtors' standard
terms as provided in their purchase orders.

Furthermore, Mr. Seewer argues that Huron failed to provide any
evidence that the Molds are diminishing in value or that certain
programs are ending.  In fact, Mr. Seewer adds, most of the Mold
programs will continue for up to five more years.

Mr. Seewer notes that the Molds cannot decline in value because
they would have no value outside the Debtors' use of them.

The Official Committee of Unsecured Creditors supports the
Debtors' arguments.

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. 37; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or  
215/945-7000)


COLLINS & AIKMAN: Gains Panel's Support Over GM Tooling Dispute
---------------------------------------------------------------
The Official Committee of Unsecured Creditors of Collins & Aikman
Corporation and its debtor-affiliates agrees with the Debtors'
conclusion that, pursuant to Rule 7001 of the Federal
Rules of Bankruptcy Procedure, General Motors Corporation's
request to obtain possession of certain tooling must be coursed
through an adversary proceeding.

GM is seeking a "contingent" lift stay to take possession of all
tooling related to a particular purchase order upon the happening
of certain speculative future events.  Under the tooling purchase
orders, upon GM's payment of amounts properly invoiced by the
Debtors and validly due, GM would own the Tooling.  GM asserted it
had paid all the amounts due to the Debtors and as a consequence,
the Tooling is GM's property and the Debtors' obligation to turn
the Tooling over to GM was absolute and unconditional.

The Debtors sought to dismiss GM's request to obtain possession of
the tooling.  The Debtors argued that GM has failed to remit all
amounts due for the Tooling and that the request is not properly
the subject of a motion, but rather an adversary proceeding,
which GM has failed to commence.

Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP,
in New York, points out that although GM attempts to disguise its
request to recover property as a lift stay request, it seeks
"immediate access to and possession of the Tooling."

This is clearly an action to recover property, Mr. Stamer says.

"GM plainly seeks not merely a cursory adjudication as to whether
it has a colorable claim to the Tooling, but an order of this
Court granting it the authority to access the Debtors' facilities
to take immediate possession of Tooling," argues Mr. Stamer.

Mr. Stamer explains that a determination of these issues requires
the commencement of an adversary proceeding resulting in a trial
on the merits, during which GM must submit evidence
substantiating its claims.

Accordingly, the Committee asks the Court to approve the Debtors'
request to dismiss GM's Lift Stay Motion.

                    GM Responds to Objections

Scott A. Wolfson, Esq., at Honigman Miller Schwartz and Cohn LLP,
in Detroit, Michigan, argues that the Debtors' dismissal request:

   -- misinterprets the fundamental purpose of a lift stay
      request;

   -- ignores express provisions of the Federal Rules of
      Bankruptcy Procedure; and

   -- fails to address GM's specific requests.

Mr. Wolfson explains that GM never asserted that approval of its
request would give it immediate possession of the Tooling.  
Instead, GM asked the Court to lift the automatic stay to take
all "necessary actions" to recover the Tooling upon the
occurrence of certain events.  These "necessary actions" may
include filing a complaint in state court for a final
adjudication of GM's interest in the Tooling and ultimately
recovery by GM, Mr. Wolfson says.

Mr. Wolfson contends that GM does not request recovery of the
Tooling; the determination of the validity, priority or extent of
its interest in the Tooling; and a declaratory judgment.

No adversary proceeding is required for disposition of the
Tooling Request because the Court need only determine whether GM
has presented a colorable claim to lift the automatic stay, Mr.
Wolfson notes.

If the Court wants to consider the Debtors' claims and defenses
as they relate to GM's interest in the Tooling, the Court may do
so without requiring an adversary proceeding, maintains Mr.
Wolfson.

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. 37; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or  
215/945-7000)


COMMSCOPE INC: Moody's Confirms Low-B Corporate and Debt Ratings  
----------------------------------------------------------------
Moody's Investors Service concluded its review of CommScope, Inc.,
and confirmed its Ba2 Corporate Family Rating and B1 subordinated
debt rating.  The ratings were confirmed after CommScope withdrew
its debt financed $1.7 billion offer for Andrew Corporation.   
While Moody's believes the Company will continue to evaluate
acquisitions within their markets, the Ba2 rating provides room
for smaller debt financed acquisitions to fill gaps in its product
offering.

The Company's Ba2 rating is supported by its low leverage of
2.2x adjusted LTM EBITDA, , successful integration of the
previously acquired Connectivity Solutions business from Avaya,
leading global market positions supplying coaxial cable, fiber
optics, complex wiring systems and environmental enclosures for
the cable, telecom and enterprise markets, and continued growth in
telecom and enterprise customer spending.  Although the
credit metrics and market position may support a higher rating,
the firm's acquisition appetite, the cyclicality of the cable,
telecommunications and enterprise connectivity businesses and
competition from larger, well capitalized competitors constrain
the rating. The outlook is stable.

Ratings confirmed include:

   * Corporate Family Rating -- Ba2

   * Convertible Senior Subordinated Debentures $250 million due
     2024 - B1

The ratings could be positively impacted by continued growth in
revenue, EBITDA and free cash flow along with increased market
share within its business segments.

CommScope's ratings may be negatively impacted by greater than
expected increases in material costs, severe downturn in customer
spending across segments, or a large debt financed acquisition,
share repurchase or dividend.

CommScope is a provider of cable and connectivity solutions for
enterprise, cable, and telecom industries.  The Company is
headquartered in Hickory, North Carolina.


COMPLETE RETREATS: Gets Final Court Nod for $12 Million DIP Loan
----------------------------------------------------------------
The Honorable Alan H.W. Shiff of the U.S. Bankruptcy Court for the
District of Connecticut authorized Complete Retreats LLC and its
debtor-affiliates, on a final basis, to borrow up to $12,223,000
from The Patriot Group, LLC, as lender and agent, and LLP
Mortgage, Ltd.

All objections to the Debtors' request for the entry of the Final
DIP Order are deemed overruled to the extent not withdrawn.

The Court approved the Debtors' DIP Credit Agreement, as
modified:

   1. The maximum amount of the DIP Facility Commitment is
      increased from $10,000,000 to $12,223,000, plus up to
      $1,900,000 in Carve-Out Expenses if Lenders elect to fund
      Carve-Out Expenses.

   2. The 13-week Budget for postpetition operating expenses and
      other costs for the administration of the Debtors' cases is
      amended.

      A copy of the 13-week Budget is available at no charge at:

               http://researcharchives.com/t/s?1002

   3. Events of default include the Debtors' failure to:

         * provide the DIP Lenders with an executed financing
           commitment for a New DIP facility which has been
           approved by the Official Committee of Unsecured
           Creditors, in form and substance acceptable to the
           Lenders, with a third- party lender, by
           Sept. 30, 2006; and

         * file with the Bankruptcy Court a motion to approve the
           New DIP Facility Commitment by Oct. 10, 2006.

   4. The DIP loan will mature on the earliest of:

         (i) Oct. 15, 2006;

        (ii) Oct. 31, 2006, if the New DIP Conditions are met;

       (iii) the effective date of a plan of reorganization
             concerning any Debtor; or

        (iv) the date on which an Event of Default occurs.

   5. All DIP Loan Advances under and after the entry of the
      Final Order after Sept. 30, 2006, will be conditioned on
      the New DIP Facility Commitment or an alternative New DIP
      Facility financing commitment in form and substance
      acceptable to the Lenders.

The Lenders are granted valid and perfected security interests
and liens, superior to all other liens, claims, security
interests and encumbrances.  The Lenders are also granted an
allowed superpriority administrative claim for all of the
Debtors' postpetition obligations.

The Lenders' liens and security interests in the Collateral and
the Superpriority Claim will be subject only to:

   * U.S. Trustee fees pursuant to 28 U.S.C. Sec. 1930(a)(6);
   * Clerk of Court fees;
   * professional fees, up to $1,500,000; and
   * unpaid business payroll expenses, up to $400,000.

As further adequate protection, the Debtors will pay monthly to
the Lenders:

   1. the reasonable attorneys' fees and expenses incurred by
      each Lender in connection with the Debtors' cases and the
      Existing Loans; and

   2. accrued interest on the Existing Loans.

The rights granted to the Lenders relating to the Existing Loans
and the Prepetition Obligations are without prejudice to the
right of the Official Committee of Unsecured Creditors to:

   1. object to or challenge the provisions of the Final Order
      and the Interim Order related to

      -- the validity, extent, perfection or priority of the
         mortgages, security interests and liens of the Lenders
         in connection with the Existing Loans and the
         Prepetition Obligations; or

      -- the validity, priority, status or amount of the Existing
         Loans or the Prepetition Obligations; or

   2. assert any claim or cause of action at law or in equity
      against the Lenders related to the Existing Loans,
      Prepetition Obligations and the Lenders' relationship or
      conduct with respect to the Debtors.

The Committee and any party-in-interest with requisite standing
will have until Oct. 3, 2006, to object to the validity of the
Prepetition Obligations or assert any Lender Claims.  The Court
may extend the Objection Period for up to two successive periods
of not more than 30 days each for good cause shown.

A full-text copy of the Final DIP Order is available for free at:

               http://researcharchives.com/t/s?1003

A full-text copy of the Modified DIP Credit Agreement is
available for free at:

               http://researcharchives.com/t/s?1004

The Debtors relate that they will use their best efforts to
deliver to the Lenders an executed New DIP Facility Commitment by
Aug. 31, 2006, as approved by the Committee and to file a New
DIP Facility Motion by Sept. 10, 2006.

                     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. 6; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).


COMPLETE RETREATS: Robert McGrath Quits as CEO of Tanner & Haley
----------------------------------------------------------------
Robert McGrath has resigned as chief executive officer of Tanner &
Haley Resorts.

In a letter dated Aug. 15, 2006, Holly Felder Etlin, chief
financing officer of Tanner & Haley, stated that in his
resignation, Mr. McGrath concluded that he could best enable the
company he founded to successfully complete its financial
reorganization by stepping down.  

According to Ms. Etlin, Mr. McGrath is widely credited with
inventing the destination club business, which currently numbers
more than twenty major players and generates total revenues of
more than a billion dollars.

                     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. 6; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).


CONCORD RE: S&P Assigns BB+ Rating to $375 Million Debt Facility
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB+' senior
secured debt rating to Concord Re Ltd.'s term loan debt facility
of up to $375 million.

Concord is a limited-life, special-purpose, Class 3 reinsurance
company domiciled in Bermuda and set up specifically to offer
quota share reinsurance to Lexington Insurance Co. (Lexington;
AA+/Negative/--).

"The rating reflects the application of our criteria for single-
event risk," explained Standard & Poor's credit analyst James
Brender.

"Ratings for securities that expose investors to a loss of
principal or interest from a single natural peril are capped at
'BB+'."

Perils that could impair Concord's debt include a New Madrid
earthquake or a very severe hurricane in either Florida or along
the northern part of the East Coast.  Output from modeling
agencies indicates the probability of any of these events
occurring is extremely remote.

Concord has a very strong modeled cumulative probability of
attachment of 25 basis points over at least three years and an
investment-grade adjusted probability of attachment of 62 bps.  
The difference between the modeled and adjusted probabilities is
mainly because of charges for modeling risk, operational risk, and
the possibility of unfavorable attritional losses.

It is important to the financial strength of any sidecar that it
accepts business from a cedent capable of attracting quality
submissions within appropriate risk tolerances.  The quota share
treaty between Concord and Lexington is a good example of such a
relationship and one from which Concord will in fact benefit from
Lexington's strong competitive position, thorough risk management,
and strong alignment of interests with Concord.  The alignment of
interest encourages the cedent to attempt to maximize the
sidecar's risk-adjusted profit.

Standard & Poor's views the ratio of risk retained by the cedent
to risk assumed by the sidecar as the best measure of the
alignment of interest between the sidecar and its cedent.  This
ratio for Lexington and Concord's relationship will be at least 2,
which is higher (better) than previously rated sidecars.

Concord may borrow up to $375 million from a consortium of lenders
for up to five and a half years.  The entity's capital structure
will include an equal amount of equity.  The net proceeds from
capital-raising transactions will be placed in a collateral
account, which will provide Lexington with a source of indemnity
cover for losses relating to its domestic commercial property
lines of business.  The duration of Concord's assets will be
consistent with that of its obligations.

Lexington will cede a pro rata portion of the premium from
specified lines of its domestic commercial property business --
excluding exposures from program business, terrorism, personal
lines, and boiler and machinery -- to Concord through a policy
attaching quota share reinsurance treaty.  The agreement covers
policies incepting between July 15, 2006, and Jan. 15, 2008,
but Concord will continue reinsuring Lexington until all covered
policies cancel or expire.

If Concord has suffered a cumulative net loss as of Oct. 15, 2007,
Concord can elect to extend the quota share treaty for an
additional 18 months.  The sidecar will follow Lexington's
fortunes for the first $10 million of coverage ($5 million for the
line of construction services).  The agreement provides for the
periodic testing of the level of Concord's capital and adjustment
of the quota share cession downward if capital is inadequate.  The
tests are based on both projected premium in force and probable
maximum losses.


CORNELL COMPANIES: Earns $3.9 Million in 2006 Second Quarter
------------------------------------------------------------
Cornell Companies, Inc., earned $3.9 million on $90.5 million of
revenues for the second quarter ending June 30, 2006, the Company
disclosed on a Form 10-Q filing delivered to the Securities and
Exchange Commission on Aug. 9, 2006.

Revenues increased around $12 million, or 15.3% for the three
months ended June 30, 2006 from $78.5 million for the three months
ended June 30, 2005.

As of June 30, 2006, the Company's balance sheet disclosed assets
amounting to $514.29 million, liabilities totaling $341.88 million
and a $172.41 million equity.

                 Liquidity and Capital Resources

The Company's primary capital requirements are for

   (1) purchases, construction or renovation of new facilities;

   (2) expansions of existing facilities;

   (3) working capital;

   (4) pre-opening and start-up costs related to new operating
contracts;

   (5) acquisitions;

   (6) information systems hardware and software; and

   (7) furniture, fixtures and equipment.  

Working capital requirements generally increase immediately prior
to commencing management of a new facility as we incur start-up
costs and purchase necessary equipment and supplies before
facility management revenue is realized.

              Cash Flows From Operating Activities

Cash provided by operations was approximately $10.8 million for
the six months ended June 30, 2006 compared to $20.5 million for
the six months ended June 30, 2005.  The decrease in 2006 is due
to an increase in accounts receivable (due to the activation of
Moshannon Valley Correctional Center in April 2006) as well as the
related timing of collections on accounts receivable in 2006 and
2005.

              Cash Flows From Investing Activities

Cash used in investing activities was approximately $17.1 million
for the six months ended June 30, 2006 due to net purchases of
investment securities of $1.7 million, capital expenditures of
approximately $9.1 million and net payments to the restricted debt
payment account of approximately $6.3 million.  Cash used in
investing activities was approximately $17.1 million for the six
months ended June 30, 2005 due to net sales of investment
securities of $12.3 million offset by capital expenditures of
$23.7 million comprised of approximately $14.6 million for the
development of Moshannon Valley Correctional Center and
approximately $9.1 million (net) for the acquisition of CSI.  
Additionally, there were net payments to the restricted debt
payment account of approximately $5.8 million.

              Cash Flows From Financing Activities

Cash provided by financing activities was $1.7 million due
primarily to proceeds from the exercise of stock options.  Cash
used by financing activities was approximately $400,000 for the
six months ended June 30, 2005, due primarily to repayments of
approximately $1.9 million in debt acquired from CSI offset by
stock option proceeds received of $1.7 million.

A full-text copy of the regulatory filing is available for free at
http://ResearchArchives.com/t/s?ffb

Headquartered in Houston, Texas, Cornell Companies, Inc.
(NYSE:CRN) -- http://www.cornellcompanies.com/-- provides a  
diversified portfolio of services for adults and juveniles,
including incarceration and detention, transition from
incarceration, drug and alcohol treatment programs, behavioral
rehabilitation and treatment, and grades 3-12 alternative
education in an environment of dignity and respect, emphasizing
community safety and rehabilitation in support of public policy.  
The Company has 83 facilities in 18 states and the District of
Columbia, which includes one facility under construction.  Cornell
has a total service capacity of 19,506, including capacity for
1,300 individuals that will be available upon completion of the
facility under construction.

                         *     *     *

Standard & Poor's Ratings Services lowered its ratings on
corrections, treatment, and educational services provider
Cornell Companies Inc., including its corporate credit rating to
'B-' from 'B' in May 2005.


CONVERIUM AG: Obtains $250 Million Loan from Bank Group
-------------------------------------------------------
Converium Holding A.G. has secured a $250 million letter of credit
facility from a leading European banking group, at market
conditions and available to Converium Ltd with immediate effect.

The facility is uncollateralized.  It will be used primarily to
support third party claims related to the underwriting business.

"Our ability to arrange this major uncollateralized facility
testifies to the renewed strength of Converium's balance sheet,"
Paolo De Martin, Chief Financial Officer, said.  "From a business
perspective, the facility further enhances our competitive
position as we prepare for the forthcoming year-end treaty
renewals."

Converium has made it a policy not to provide any quarterly or
annual earnings guidance and it will not update any past outlooks
for full-year earnings.  It will, however, continue to provide
investors with perspectives on its value drivers, certain
financial guidance for the full year, its strategic initiatives
and those factors critical to understanding its business and
operating environment.

                         About Converium

Headquartered in Zug, Switzerland, Converium Holding AG --
http://www.converium.com/-- provides treaty and individual  
coverage for risks including accident and health, credit and
surety, e-commerce, third party and professional liability,
life, and special casualty.  Converium employs about 600 people
in 20 offices around the globe and is organized into four
business segments: Standard Property & Casualty Reinsurance,
Specialty Lines and Life & Health Reinsurance, which are based
principally on ongoing global lines of business, as well as the
Run-Off segment, which primarily comprises the business from
Converium Reinsurance (North America) Inc., excluding the U.S.
originated aviation business portfolio.

                        *     *     *

Following its publication of its 2005 year-end results, restated
financial information for the periods 1998 to 2004, and for each
quarter from March 31, 2003, to June 2005, Fitch Ratings
affirmed Converium AG's Insurer Financial Strength BBB- rating
and removed it from Rating Watch Negative on which it had been
placed since Nov. 4, 2005.

Fitch also affirmed Converium Holding AG IDR at BB and Converium
Finance S.A.'s $200 million subordinated debt due 2032 at BB+.  
Fitch also removed these ratings from Rating Watch Negative.


CREATIVE VISTAS: CEO Issues Letter to Shareholders on Biz Outlook
-----------------------------------------------------------------
Sayan Navaratnam, chairman and chief executive officer of Creative
Vistas, Inc., issued a Special Letter to Shareholders in an effort
to update existing Creative Vistas investors on the current status
of the Company, and more importantly, management's perspective on
the Company's future growth outlook.

Mr. Navaratnam discloses CVAS' latest financial results for the
first quarter ending March 31, 2006.  Revenues are up 127% year-
over-year.  The increase is primarily due to the acquisition this
January of Cancable, Inc.

                        Business Outlook

The letter also reports CVAS' anticipation of:

   -- robust organic growth, running at annual rates of 20% to
      30%, on average, across all our divisions;

   -- revenues to reach at least $26 million in 2006, up
      significantly from $8.7 million for 2005.

   -- a widening of gross margins, to 35% in the current quarter
      from 32% in the first quarter of 2005 -- yet another sign
      that CVAS is growing not just in revenues but also, as a
      result only steps away from achieving profitability.

                      Subsidiaries' Profit

The letter also reveals profit at the division level of two
subsidiaries.  AC Technical Systems and Cancable have both already
achieved positive EBIDTA excluding company-wide expenses.  CVAS as
a whole has seen much more bottom-line volatility, primarily
because of financing activities, significant non-cash expenses and
one-time costs associated with the acquisition of Cancable.

Mr. Navaratnam declares that the wide swings do not reflect the
much more steady operational performance of CVAS.  The real
question for its shareholders is whether finance-related factors
will continue to have such a large impact on the Company's bottom
line going forward.  On that score, the Company believes it is
reasonable to expect that CVAS' revenue growth and improving
margins will enable it to continue to reduce its debt and other
obligations to the point where it can achieve steady company-wide
profitability.  Financing costs, in other words, are a short-term
component of a long-term strategy.  The long-term strategy is one
of consistent growth ahead in an extremely favorable market.

                  Cancable Acquisition Benefit

With the acquisition of Cancable, a provider of contract field
technical support services and help-desk technical support for
cable companies, CVAS now is poised to carry out its strategy of
developing and deploying video and data processing technologies to
two converging markets -- surveillance and IP/broadband.

The letter asserts that the security surveillance industry is
booming in a world forced to confront terrorism and other threats
to property and physical safety.  Video security systems are
everywhere, delivering advanced digital technology for reasonable
prices.  One CVAS subsidiary, AC Technical Systems, has been
planning, engineering, integrating and installing such systems
since 1990.  It is now one of the leading such providers in Canada
and is gaining US based customers.  Its clients include the Air
Canada Centre in Toronto (home to the Maple Leafs and Raptors),
BMW, PeopleSoft, various government ministries and the Canadian
grocery giant Loblaws.

Another CVAS unit, Iview Digital Video Solutions, provides
surveillance technology to a wide range of customers in
manufacturing, government, and health care.  Its products include
unique state of the art panoramic camera and digital systems for
compressing, transmitting and analyzing images.  Its new I-VMS
(Intelligent Video Management Systems) line is capable of managing
over 1,000 cameras.  Iview DVSI's products are being used by a
blue chip customer base that includes the Air Canada Centre, a
large pharmaceutical company and a police department in Michigan.

With the acquisition of Cancable, which is involved in computer
networking as well as services to cable companies, CVAS now can
develop surveillance systems and technology that take advantage of
broadband and the Internet.  Video surveillance has gone from
analog to digital, enabling systems to manage, analyze and
distribute images over the Internet.  Video security and
information technology are converging to create more powerful,
complex and specialized systems, built around broadband
connectivity.  With the combined forces of Cancable, AC Technical
Systems and Iview, the Company has a great platform for growth,
not just in Canada but throughout North America and globally.

The letter also states that in the coming months, shareholders
will likely be hearing about a number of new CVAS contracts and
installations, both in Canada and the U.S.  The Company also plans
to continue to seek acquisitions through a strong M&A program that
fits within our strategy of providing a fully integrated suite of
video surveillance products and services.

               Planned Investor Relations Program

Finally, Mr. Navaratnam reports that CVAS has retained the
investor relations services of Investor Relations International to
help increase its exposure to the investment community.  The
Company urges shareholders to contact its representative, Haris
Tajyar, of IRI to further discuss the Creative Vistas story and
its outlook.

In conclusion, the Company is looking forward to a new era of
growth and expansion for Creative Vistas and is looking forward to
keeping its shareholders updated through new and aggressive
communications, according to Mr. Navaratnam.

                      Creative Vistas, Inc.

Based in Whitby, Ontario, Creative Vistas, Inc. (OTCBB: CVAS),
provides advanced security and surveillance products and
solutions.  It also provisions the deployment and servicing of
broadband technologies to the commercial and residential market.  
It primarily operates through its wholly owned subsidiaries AC
Technical Systems Ltd and Iview Digital Video Solutions Inc, to
provide integrated electronic security and surveillance systems
and technologies.  It provides its systems to various high profile
clients including: Government, School Boards, Retail Outlets,
Banks, and Hospitals.  The Company operates through its subsidiary
Cancable Inc. to provision the deployment of broadband
technologies to the commercial and residential market.  The
Company has offices in Ontario, Canada.

At June 30, 2006, Creative Vistas' balance sheet showed a
stockholders' deficit of $9,886,638, compared to a deficit of
$3,328,935 at Sept. 30, 2005.


DANA CORP: Wants Modified Burns, et al. Employment Pacts Approved
-----------------------------------------------------------------
Dana Corporation and its debtor-affiliates ask the U.S. Bankruptcy
Court for the Southern District of New York to approve the
employment agreements of Michael J. Burns, president and chief
executive officer, and five key executives of Mr. Burns' core
management team, as modified.

The Debtors previously asked the Court to approve the employment
agreements of Mr. Burns and five key executives of Mr. Burns' core
management team.

Corinne Ball, Esq., at Jones Day, in New York, informs the Court
that the Debtors have continuously engaged in extensive
discussions with, among others, the Official Committee of
Unsecured Creditors regarding concerns relating to certain terms
of the Original Employment Agreements.

Based on those discussions and the Debtors' continuing review of
the Original Agreements, the Debtors have made these
modifications:

   Item                             Modified Agreements
   ----                             -------------------
   Performance Metric               Consummation of a plan of
                                    reorganization.

                                    Total Enterprise Value is six
                                    months after the Effective
                                    Date of a plan.

   Threshold Completion Bonus       66% of Target Completion
                                    Bonus if employed on pay-out
                                    date and TEV on the Valuation
                                    Date is equal to
                                    $2,000,000,000.

   Minimum Completion Bonus         50% of Target Completion
                                    Bonus if employed on pay-out
                                    date.

   Variable Pay-out                 Above Minimum Completion
                                    Bonus, pay-out varies
                                    depending on TEV, without a
                                    cap.

   Form of Payment                  Minimum Completion Bonus is
                                    payable in cash.  Amounts in
                                    excess of Minimum Completion
                                    Bonus payable in common stock
                                    of reorganized Dana, provided
                                    that the common stock is (i)
                                    listed and readily tradable,
                                    or (ii) subject to repurchase
                                    by reorganized Dana if the
                                    Senior Executive is not
                                    employed by reorganized Dana
                                    after the Effective Date,
                                    otherwise payable in cash.

   Timing Pay-out                   Minimum Completion Bonus will
                                    be paid on Effective Date
                                    with the remainder payable
                                    six months after Effective
                                    Date.

   Impact of Death, Disability      Prior to completion of
   or Involuntary Termination       business plan: None.
   Without Cause or Voluntary
   Termination for Good Reason      Prior to Effective Date:
   (with respect to Mr. Burns)      Pro rata.
   on Completion Bonus    
                                    After Effective Date:
                                    Full pay-out.

   Impact of Voluntary              Prior to Effective Date:
   Termination Without              No pay-out.
   Good Reason (with
   respect to Mr. Burns)            After Effective Date:
                                    Full pay-out.

The Original Agreements were further modified to reflect that:

   (a) The term of the Employment Agreements of Mr. Burns and the
       Executives is until the Effective Date of a plan of
       reorganization;

   (b) If Mr. Burns and the Executives are (i) involuntarily
       terminated without cause, (ii) are voluntarily terminated
       for good reason, or (iii) failed to complete a replacement
       employment agreement upon expiration of the Agreement
       prior to the Plan Effective Date, they are to enter into
       an 18-month non-compete agreement in exchange for
       compensation equal to 12 months salary, plus annual bonus;

   (c) Prior to the Plan Effective Date, if Mr. Burns and the
       Executives are involuntarily terminated for cause or are
       voluntarily terminated without good reason, they are to
       enter into an 18-month non-compete agreement;

   (d) Issues regarding termination after the Plan Effective Date
       and a change of control after the Plan Effective Date are
       deferred; and

   (e) The Senior Executive Retention Program will be assumed on
       earlier of termination without cause, with good reason
       with respect to Mr. Burns, confirmation of a plan, death
       or disability.

Ms. Ball asserts that the Modified Employment Agreements will
permit the Senior Executives to make the difficult choices that
must be made in any restructuring while incentivizing them to
maximize the enterprise value of the reorganized Debtors for the
benefit of all stakeholders.

                             Responses

In separate letters to the Court, Gudrun Carr and an unidentified
person argue that the Debtors' executive officers and members of
the Board of Directors should not be awarded high salaries,
bonuses and fringe benefits.

Mr. Carr and the unidentified person are both retirees and
stockholders of Dana Corp.

The Retirees assert that if the Debtors' Executives are
compensated because their stock holdings are at a very low dollar
value, then the employees and retirees that are shareholders
should also be compensated.

The Retirees contend that the employees and retirees' health care
benefits should not be rid of just to pay the Debtors'
Executives.

                      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.,
http://bankrupt.com/newsstand/or 215/945-7000).

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 CORP: Wants Second Toledo Press Settlement Pact Approved
-------------------------------------------------------------
Dana Corporation and its debtor-affiliates ask the U.S. Bankruptcy
Court for the Southern District of New York to approve their
second Settlement Agreement with Toledo Press Company.

The Debtors and Toledo Press are parties to several equipment
purchase agreements pursuant to which the Debtors bought two
2,500-ton presses and two 1,000-ton presses and certain related
equipment from Toledo Press.

As reported in the Troubled Company Reporter on June 9, 2006, the
Debtors entered into a Settlement Agreement with Toledo Press,
resolving certain disputes between the parties relating to
shipping charges incurred in connection with the delivery of
certain equipment sold by Toledo Press to the Debtors.

The purchase price of the Equipment amounts to more than
$10,000,000, which will be paid through a series of quarterly
payments until July 2006.  The Equipment was used in the Debtors'
Structures Division for the manufacture of frames for light
trucks and automobiles.

Toledo Press procured the Equipment from China and shipped it to
the Debtors' facility in Hopkinsville, Kentucky.  Toledo Press was
responsible for installing the Equipment and providing other
related services.  The Purchase Agreements provided that the
Debtors grant purchase money security interests to Toledo Press to
secure payment of the Purchase Price.

According to Toledo Press, the Equipment arrived at the
Hopkinsville Facility from October 2005 through January 2006.  
After the delivery of the Equipment to the Debtors, Toledo Press
then filed financing statements in the Commonwealth of Virginia,
seeking to perfect the security interests granted pursuant to the
Equipment Purchase Agreements.

As of Mar. 3, 2006, the Debtors owed Toledo Press $3,825,100 under
the Equipment Purchase Agreements, Corinne Ball, Esq., at Jones
Day, in New York disclosed.

Subsequently, the Debtors and Toledo Press disputed:

   (a) whether the Equipment Charges represented a prepetition or
       postpetition claim, and whether any portion of the amounts
       should be paid on a postpetition basis;

   (b) whether the Alleged Perfection properly perfected the
       Security Interests; and

   (c) even if the Security Interests were properly perfected,
       whether the perfection would be subject to avoidance under
       Chapter 5 of the Bankruptcy Code.

On May 5, 2006, the Debtors and Toledo Press entered into a letter
agreement resolving certain of their disputes on a provisional
basis:

   * The Debtors agreed to pay $2,361,850 to Toledo Press;

   * The provisional payments would be disgorged to the extent
     that any Court order resolving the Secured/Administrative
     Claim Dispute provide that the perfection of the Security
     Interests should be avoided or that Toledo Press' claims are
     not secured or administrative claims; and

   * The Debtors would be entitled to hold the $700,000 balance
     owed under the Equipment Purchase Agreements pending the
     outcome of the Secured/Administrative Claim Dispute, but
     ultimately would pay that amount to Toledo Press if Toledo
     Press was successful in litigation.

The Debtors were scheduled to make a second provisional payment
of $763,250 to Toledo Press by the end of July 2006.  However,
because of the negotiation of a resolution of the issues, the
parties agreed that the Second Payment would not be paid as
scheduled, Ms. Ball says.

Also, in May 2006, the Equipment designated by the parties as
Press No. 27 malfunctioned and experienced certain mechanical
problems.  Toledo Press and the Debtors dispute whether the
actions of Toledo Press employees or the Debtors' employees caused
the mechanical problems with Press 27, Ms. Ball states.

Toledo Press was required to provide various warranties with
respect to the Equipment under the Purchase Agreements.  The
Debtors have advised Toledo Press that they are asserting a claim
with respect to Press 27 based on Toledo Press' breach of the
warranties.  Ms. Ball says the Debtors have paid approximately
$91,000 to third parties for the repair of Press 27.  The Debtors
expect to incur $5,000 in additional costs in connection with the
Press 27 Warranty Claim.

In June 2006, Toledo Press notified the Debtors that in addition
to the Security Interests, its claims were secured by a statutory
lien on the Equipment arising under Kentucky law.

The Debtors have found that litigating the Secured/Administrative
Claim Dispute and the Press 27 Warranty Claim in the Court could
take substantial time and resources.  Given the nature of the
dispute, litigation with Toledo Press would be highly fact-
intensive and require multiple witnesses, Ms. Ball notes.

Thus, the Debtors and Toledo Press negotiated a resolution of the
issues and ultimately agreed that:

   (a) Toledo Press will be permitted to retain the First Payment
       totaling $2,361,850;

   (b) the Debtors will not be required to make the Second
       Payment totaling $763,250, or pay the $700,000 Remaining
       Balance to Toledo Press;

   (c) Toledo Press will be have an allowed general unsecured
       non-priority claim for $1,433,250 against the Debtors;

   (d) Toledo Press will release the Debtors and other related
       parties from any claims it may have relating to the
       Equipment Purchase Agreements;

   (e) the Debtors will release Toledo Press from any claims they
       may have under Sections 544 through 550 relating to the
       potential avoidance of transfers under the Equipment
       Purchase Agreements and the Press 27 Warranty Claim; and

   (f) Toledo Press will continue to perform its warranty
       obligations under the Equipment Purchase Agreements and
       the Debtors will retain its warranty rights and claims,
       other than the Press 27 Warranty Claim.

                      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.,
http://bankrupt.com/newsstand/or 215/945-7000).

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.


DEL MONTE: $100 Mil. Loan Add-On Cues S&P to Affirm Low-B Ratings
-----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB' bank loan and
'1' recovery rating following Del Monte Corp.'s $100 million add-
on to the company's term loan B that was used to reduce borrowings
under the revolving credit facility and expand its liquidity.  The
terms and conditions of the incremental borrowing are the same as
the existing term loan B loan.

Following the $100 million add-on term loan, the company has
$400 million remaining under its $500 million term loan accordion
feature.  Del Monte's bank facilities now consist of a:

   * $450 million revolving credit facility maturing Feb. 8, 2011;

   * $407 million term loan A maturing Feb. 8, 2011; and

   * approximately $893 million in term loan B debt maturing
     Feb. 8, 2012.

Standard & Poor's notes that even with the incremental borrowing,
the revised facility of approximately $1.75 billion is slightly
less than the $1.88 billion anticipated at the time of its
recovery report on Del Monte Corp. published on April 25, 2006.

The reduction primarily reflects greater cash flow generation, and
changes in tax timing and fees that were used to reduce the
borrowing needed to fund Meow Mix and Milk Bone acquisitions.
These changes do not materially affect Standard & Poor's simulated
default and recovery analysis of Del Monte's bank loan that the
rating agency published on April 25, 2006.  

As of April 30, 2006, the company had approximately $1.3 billion
of total debt outstanding.

The long-term corporate credit rating on Del Monte is 'BB-' and
the rating outlook is negative.  The short-term rating on the
company is 'B-1'.  The ratings reflect San Francisco, California-
based Del Monte's aggressive debt levels and exposure to commodity
pricing.  

Partially offsetting these risk factors is the company's diverse
product portfolio with leading market shares and high
brand recognition in the stable, domestic canned fruit and
vegetable processing industry and pet food sector.

Ratings Affirmed:

  Del Monte Corp.

    * Corporate credit rating:         BB-/Negative/B-1
    * $100 million add-on term loan:   BB (Recovery Rating 1)


DELPHI CORP: DAS LLC Inks Settlement Pact with Flex-Tech Trustee
----------------------------------------------------------------
Delphi Automotive Systems LLC and Ericka S. Parker, the Chapter 7
Trustee of Toledo Professional Temps, Inc., fka Flex-Tech
Professional Services, Inc., have reached a settlement resolving
their dispute.

Ms. Parker had sought to lift the automatic stay to pursue a
litigation pending in the U.S. Bankruptcy Court for the Northern
District of Ohio.

In April 2004, DAS LLC filed an adversary proceeding against Ms.
Parker, seeking a declaratory judgment to receive a judicial
determination of various issues under its 2003 settlement
agreement with Flex-Tech, and Initial Transfer FT,  Ltd.  The
Settlement Agreement relates to the payment of DAS
LLC's third-party suppliers.

Ms. Parker filed her an Answer, Counterclaim, and Third-Party
Complaint in June 2004.

A year later, DAS LLC amended the Complaint to include three
third-party suppliers -- Northwest Controls, Inc., REM Electrics
Supply Company, Inc., and Comptrol, Inc. -- as parties in the
Litigation.  In response, Ms. Parker also filed an Amended
Answer, Counterclaim, and Third-Party Complaint.

In a Court-approved stipulation, the parties agree, among other
things, that:

   (a) the automatic stay will be lifted for the sole purpose of
       permitting Ms. Parker to liquidate her claim against the
       Debtors by continuing the Amended Answer and Counterclaim
       in the Litigation.  Ms. Parker, however, will not further
       amend the Amended Answer and Counterclaim without further
       leave of the U.S. Bankruptcy Court for the Southern
       District Of New York;

   (b) In the event that the Ohio Bankruptcy Court finds DAS LLC
       liable to Toledo and Comptrol, Ms. Parker will return to
       the New York Bankruptcy Court for any further relief of
       the automatic stay.

The parties clarify that the automatic stay will not be modified
to allow the Ohio Bankruptcy Court, or any other court, to
determine (i) whether the funds allegedly owed by DAS LLC under
the Settlement Agreement are assets of the Debtors' estates or
(ii) the priority of any claim related to the Litigation.

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.  (Delphi Bankruptcy News, Issue No. 37; Bankruptcy
Creditors' Service, Inc.,  http://bankrupt.com/newsstand/or  
215/945-7000)


DELPHI CORP: Posts $2.6 Billion Net Loss in First Half of 2006
--------------------------------------------------------------
Delphi Corp. reported first half 2006 financial results with
revenues of $14 billion, and a GAAP net loss of $2.6 billion,
including charges of $1.9 billion associated with the company's
special attrition program.  The company generated $187 million in
GAAP cash flow from operations in the first half of the year.
Non-GM revenues grew 9% year-over-year to $7.7 billion,
representing 55 percent of global revenues.

"In the first half of the year, Delphi achieved an 85% acceptance
rate of UAW employees signing up for its special attrition
program," said Robert Dellinger, Delphi chief financial officer.  
"The attrition programs are a step in our transformation; however,
we continue to experience losses reflecting an uncompetitive U.S.
cost structure.  Our leadership is addressing these issues with
our stakeholders, including our unions and General Motors, as part
of our reorganization proceedings through the bankruptcy court."

     First Quarter 2006 Financial Results:

        * Revenue of $7.0 billion, up approximately 2% from
          $6.9 billion in 2005.

        * Non-GM revenue for the quarter was $3.8 billion, up
          approximately 8% from $3.5 billion in 2005.  Non-GM
          business represented 54% of revenues, compared to year-
          ago levels of 50%.

        * GAAP cash flow used in operating activities was
          $93 million, as compared to $529 million provided by
          operating activities for first quarter 2005.  Cash used
          in operations was negatively impacted by the timing of
          cash collections on sales for first quarter 2006.

        * GAAP net loss of $363 million or a loss of $0.65 per
          share compared to net loss of $403 million or a loss of
          $0.73 per share.

     Second Quarter 2006 Financial Results:

        * Revenue of $7.0 billion, the same as in second quarter
          2005.

        * Non-GM revenue for the quarter was $3.9 billion, up
          approximately 9% from $3.6 billion in second quarter
          2005.  Non-GM business reached 56% of second quarter
          revenues, compared to year-ago levels of 51%.

        * GAAP cash flow provided by operating activities was
          $280 million, as compared to cash flow used in
          operating activities of $305 million in second quarter
          2005.

        * GAAP net loss of $2.3 billion compared to second
          quarter 2005 net loss of $338 million.  Included in the
          second quarter 2006 GAAP net loss are charges related
          to the previously announced special attrition programs.
          These charges include a net pension and post-employment
          benefit curtailment charge of $1.5 billion, primarily
          due to reductions in anticipated future service as a
          result of the retirements, and $392 million of charges
          related to the pre-retirement and buyout portions of
          the special attrition programs.

     First Half 2006 Financial Results:

        * Revenue of $14.0 billion, up slightly from
          $13.9 billion in first half 2005.

        * Non-GM revenue for first half 2006 was $7.7 billion, up
          approximately 9% from $7.1 billion in first half 2005.
          Non-GM business reached 55% of first half 2006
          revenues, compared to year-ago levels of 51%.

        * GAAP cash flow provided by operating activities was
          $187 million, as compared to $224 million provided by
          operating activities for first half 2005.

        * GAAP net loss of $2.6 billion compared to first half
          2005 net loss of $741 million.  Included in the first
          half 2006 GAAP net loss are charges related to the
          previously announced special attrition programs.  These
          charges include a net pension and post-employment
          benefit curtailment charge of $1.5 billion, primarily
          due to reductions in anticipated future service as a
          result of the retirements, and $392 million of charges
          related to the pre-retirement and buyout portions of
          the special attrition programs.

A full-text copy of Delphi's Form 10-Q report for the first
quarter ended March 31, 2006, filed with the Securities and
Exchange Commission is available for free at:

          http://researcharchives.com/t/s?1005


A full-text copy of Delphi's Form 10-Q report for the second
quarter ended June 30, 2006, filed with the Securities and
Exchange Commission is available for free at:

          http://researcharchives.com/t/s?1006

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.  (Delphi Bankruptcy News, Issue No. 36; Bankruptcy
Creditors' Service, Inc.,  http://bankrupt.com/newsstand/or  
215/945-7000)


ENRON CORP: Court Approves ONEOK Settlement Agreement
-----------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
approved the settlement agreement between Enron Corp. and Enron
North America Corp., on one hand, and ONEOK Energy Services
Company, L.P., formerly known as ONEOK Energy Marketing and
Trading Company, L.P.; ONEOK, Inc.; and King Street Acquisition
Company, L.L.C., on the other hand.

Frederick W. H. Carter, Esq., at Venable LLP, in Baltimore,
Maryland, related that, ENA and ONEOK entered into various
financial and physical trading transactions related to the
purchase and sale of natural gas, fuel oil, crude oil, other
energy products and other products related thereto and those
transactions were governed by various contracts.  Enron Corp.
guaranteed ENA's obligations to ONEOK under the contracts.

After the Debtors filed for bankruptcy, ONEOK transferred its
claims against Enron Corp. and ENA to Bear, Stearns & Co.  Bear
Stearns subsequently transferred its claims to Silver Oak Capital,
LLC, as agent for and on behalf of AG Capital Recovery Partners
III, LP.  Silver Oak subsequently filed Claim Nos. 11322 and 11317
against the Reorganized Debtors.

On Nov. 28, 2003, the Debtors filed Adversary Proceeding No.
03-93568 against Silver Oak and AG Capital, seeking to avoid the
guarantee agreements.

ONEOK later re-acquired from Silver Oak the portion of the Claims
at issue in the Adversary Proceeding.  Silver Oak later
transferred its remaining interests in the Claims to Bear Stearns
Investment Products, Inc., and BSIP in turn, transferred its
interests in the Claims to King Street, Stark, Seneca Capital,
L.P., and Quantum Partners LDC.

To settle their disputes, the parties reached the settlement
agreement, which provides that:

  (a) Claim No. 11322 will become an allowed Class 5 general
      unsecured claim against ENA in an agreed amount, with any
      interest previously held by Quantum or Seneca to be
      disallowed and expunged;

  (b) Claim No. 11317 will become an allowed Class 185 general
      unsecured claim against ENA in an agreed amount, with any
      interest previously held by ONEOK, Quantum or Seneca to
      be disallowed and expunged;

  (c) Claim Nos. 1132201, 1132203, 1131701, 1131702 and 1131704
      will be withdrawn with prejudice and to the extent
      applicable, expunged;

  (d) the Adversary Proceeding will be dismissed with prejudice;
      and

  (e) the parties will mutually release each other from all
      claims arising from the contracts, guarantees and the
      Adversary Proceeding.

Headquartered in Houston, Texas, Enron Corporation filed for
chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case
No. 01-16033) following controversy over accounting procedures,
which caused Enron's stock price and credit rating to drop
sharply.  Judge Gonzalez confirmed the Company's Modified Fifth
Amended Plan on July 15, 2004, and numerous appeals followed.  The
Debtors' confirmed chapter 11 Plan took effect on Nov. 17, 2004.
Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil,
Gotshal & Manges, LLP, represent the Debtors in their
restructuring efforts.  Luc A. Despins, Esq., Matthew Scott Barr,
Esq., and Paul D. Malek, Esq., at Milbank, Tweed, Hadley & McCloy,
LLP, represent the Official Committee of Unsecured Creditors.
(Enron Bankruptcy News, Issue No. 177; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000)


ENTERPRISE PRODUCTS: Likely to Acquire $50 Million in Insurance
---------------------------------------------------------------
Enterprise Products Partners L.P. expects to receive approximately
$50 million during the third quarter ending Sept. 30, 2006, from
the partial recovery of business interruption insurance claims
associated with Hurricanes Katrina, Rita and Ivan.

The collection of these recoveries would increase net income
by approximately $0.12 per unit.  Currently during the third
quarter, Enterprise has collected approximately $42 million of the
estimated total.

"We have made substantial progress in our efforts to document,
submit and work with our insurance adjusters and underwriters on
business interruption and property damage claims with respect to
Hurricanes Katrina, Rita and Ivan," said Robert G. Phillips,
Enterprise's President and Chief Executive Officer.  "As a result
of these efforts, we are receiving a significant amount of cash
recoveries from business interruption insurance in advance of the
definitive settlement of these claims.  These recoveries will be
used to partially fund our capital investment in organic growth
projects and for general partnership purposes.  We expect
additional insurance recoveries during the remainder of 2006
and 2007 for business interruption claims, as well as
reimbursement of costs already incurred to repair facilities
damaged by the storms. We continue to work with our insurance
providers regarding property damage claims."

Enterprise also expects, based on current market conditions, that
net income for the third quarter of 2006 will exceed the mean
estimate of net income for the third quarter of $0.27 per common
unit as monitored by First Call.  Enterprise is scheduled to
announce earnings for the third quarter on October 24, 2006.

Headquartered in Houston, Texas, Enterprise Products Partners L.P.
(NYSE:EPD) -- http://www.epplp.com/-- provides midstream energy  
services to producers and consumers of natural gas, NGLs and crude
oil.  Enterprise transports natural gas, NGLs and crude oil
through 33,100 miles of onshore and offshore pipelines and is an
industry leader in the development of midstream infrastructure in
the United States and the Gulf of Mexico.  Services include
natural gas transportation, gathering, processing and storage; NGL
fractionation (or separation), transportation, storage, and import
and export terminaling; crude oil transportation and offshore
production platform services.

                           *     *    *

As reported in the Troubled Company Reporter on June 19, 2006,
Standard & Poor's Ratings Services affirmed the 'BB+' corporate
credit rating on master limited partnership Enterprise Products
Partners L.P. and subsidiary Enterprise Products Operating L.P.,
as well as the 'B+' corporate credit on EPCO Holdings Inc.


FALCONBRIDGE LTD: Board Resigns After Xstrata Acquisition
---------------------------------------------------------
Following the acquisition by Xstrata plc of 257,700,100 common
shares of Falconbridge Limited, giving Xstrata ownership of 92.1%
of the Common Shares on a fully diluted basis, each of the members
of the board of directors has resigned at Xstrata's request, with
the exception of James Wallace who has agreed to remain as a
member of the interim Falconbridge Board.  The board has been
replaced by Xstrata nominees Benny Levene, Thras Moraitis, William
Ainley, Douglas Knight and James Wallace.  Mr William Ainley will
serve as chair of the Board.

The Company also reported the departure of Derek Pannell, former
Chief Executive Officer of Falconbridge Limited and Steve Douglas,
former Chief Financial Officer.

The Company also disclosed that the New York Stock Exchange has
notified the Company that the trading of Common Shares on the New
York Stock Exchange will be suspended prior to the commencement of
trading on Aug. 18, 2006.

                        About Xstrata

Xstrata plc (LSE: XTA) -- http://www.xstrata.com/-- is a major
global diversified mining group, listed on the London and Swiss
stock exchanges.  The Group is and has approximately 24,000
employees worldwide, including contractors.

Xstrata does business in six major international commodities
markets: copper, coking coal, thermal coal, ferrochrome,
vanadium and zinc, with additional exposures to gold, lead and
silver.  The Group's operations and projects span four
continents and nine countries: Australia, South Africa, Spain,
Germany, Argentina, Peru, Colombia, the U.K. and Canada.

                      About Falconbridge

Headquartered in Toronto, Ontario, Falconbridge Limited
(TSX:FAL.LV)(NYSE: FAL) -- http://www.falconbridge.com/-- is a
leading copper and nickel company with investments in fully
integrated zinc and aluminum assets.  Its primary focus is the
identification and development of world-class copper and nickel
orebodies.  It employs 14,500 people at its operations and
offices in 18 countries.  The Company owns nickel mines in
Canada and the Dominican Republic and operates a refinery and
sulfuric acid plant in Norway.  It is also a major producer of
copper (38% of sales) through its Kidd mine in Canada and its
stake in Chile's Collahuasi mine and Lomas Bayas mine.  Its
other products include cobalt, platinum group metals, and zinc.

                        *    *    *

As reported in the Troubled Company Reporter on Aug. 4, 2006,
Standard & Poor's Ratings Services revised the CreditWatch
implications on Inco Ltd. and Falconbridge Ltd. to positive from
developing, where they were placed July 18, 2006.  This action
stems from the lower probability under all current takeover
scenarios that ratings will be lowered into the speculative-grade
category.

The ratings on Falconbridge will likely be raised or affirmed at
'BBB-', assuming that Xstrata PLC (parent of Xstrata Queensland
Ltd. (BBB+/Watch Neg/--)) is successful in acquiring Falconbridge
on Aug. 14, 2006, which now appears highly probable after Inco
dropped its bid last week.

Falconbridge Ltd.'s CDN$0.9 Million Cumulative Preffered Shares
Series 1, CDN$119.7 Million Cumulative Preferred Shares Series 2,
and CDN$150 Million Preferred Shares Series H, all carry Standar &
Poor's BB rating.


FEDERAL-MOGUL: 51 U.K. Debtors to File Voluntary Arrangements
-------------------------------------------------------------
As previously reported, the U.K. Global Settlement approved by the
U.S. Bankruptcy Court for the District of Delaware Agreement
resolved issues between Federal-Mogul Corp. and its debtor-
affiliates and the other co-plan proponents on the one hand, and
the administrators of Federal-Mogul's affiliates in the United
Kingdom, on the other hand, as to the reorganization of the U.K.
Debtors

The cornerstone of the U.K. Global Settlement Agreement is that
the Administrators will propose company voluntary arrangements
for certain of the U.K. Debtors.

Initially, the Administrators intended to propose CVAs for the 20
principal U.K. Debtors.  However, after negotiations over the
past several months, the Administrators agreed to propose CVAs
for 51 of the U.K. Debtors, which comprise virtually all of the
U.K. Debtors that have material assets or third-party
liabilities, Scotta E. McFarland, Esq., at Pachulski Stang Ziehl
Young Jones & Weintraub LLP, in Wilmington, Delaware, relates.

The CVAs will principally be funded by cash held by the U.K.
Debtors and cash that was transferred to the Administrators in
exchange for certain intercompany loan notes held by T&N Limited,
one of the U.K. Debtors.

Pursuant to the CVAs, the holders of most claims against the U.K.
Debtors will receive a payment under the CVAs in satisfaction of
their claims.  The Debtors believe that the CVAs becoming
effective will be the most important step in facilitating the
conclusion of the U.K. Debtors' administration proceedings.

The Administrators have scheduled for September 7, 2006, meetings
of creditors and shareholders to consider approval of the CVAs,
in Manchester, England.  If the CVAs are approved at those
meetings, the CVAs could become effective as soon as mid-October
2006, after the expiration of a statutorily required 28-day
waiting period.

The U.K. Global Settlement Agreement provided that the CVAs would
contain certain indemnities from Federal-Mogul, to fund the
payment of dividends and various classes of claims under the
CVAs.  Specifically, the Global Settlement and the CVAs provided
for an indemnity -- the FMC Revenue Indemnity -- on the part of
Federal-Mogul to cover the payment of:

   -- claims for U.K. corporation tax against any CVA Company
      that rank as an expense of the administration of that CVA
      Company; and

   -- dividends on other claims for U.K. corporation tax against
      all of the CVA Companies, as well as the payment of U.K.
      corporation tax claims against those U.K. Debtors that did
      not propose CVAs.

T&N Limited also agreed to grant a similar indemnity after the
conclusion of its U.K. administration proceedings.

The U.K. Global Settlement Agreement and the CVAs also provided
for an indemnity on Federal-Mogul's part to fund the payment of
any costs relating to asbestos property damage claims and the
dividends payable on the claims that may be allowed under the
CVAs, to the extent the costs and dividends are together in
excess of GBP5.5 million (approximately $10 million) -- the APD
Indemnity.  

Ms. McFarland asserts that the FMC Revenue Indemnity and the APD
Indemnity benefit the Debtors in that they allow for
indeterminate classes of claims against the CVA Companies to be
addressed under and compromised by the CVAs, yet the Debtors are
not required to fund large reserves for the claims that might,
given the unknown scope of the claims, take some time to refund
in the event claims to draw on the reserves never materialize.

During the negotiation process of the terms of the CVAs, the Plan
Proponents and the Administrators agreed to a number of
compromises, beyond those contemplated under the U.K. Global
Settlement Agreement, concerning the terms of the CVAs.

Three of the compromises are:

   1. the Ancillary CVA Indemnity;
   2. the Long Tail Liability Claims Indemnity; and
   3. the Tax Neutrality Undertaking.

By this motion, the Debtors ask the Court to authorize Federal-
Mogul to enter into and perform the three compromises.

                      Ancillary CVA Indemnity

The first of the relevant compromises concerns the granting by
Federal-Mogul of an indemnity to cover unsecured claims, if any,
that might be brought in the CVAs of two of the U.K. Debtors --
F-M UK Holding Limited and Federal-Mogul Global Growth Limited.

The two companies are the senior-most U.K. holding companies
within the Federal-Mogul corporate family and conduct no
manufacturing or distribution operations of their own.  Given the
unique position of the two companies within the Federal-Mogul
group corporate structure, both have different creditor profiles
and classes of claims against them than the other U.K. Debtors
covered by the CVAs.

F-M UK Holding Limited has prepetition bank claims, surety
claims, and noteholder claims asserted against it, while Federal-
Mogul Global has in excess of $1.3 billion in intercompany claims
against it.  

The Debtors have determined that F-M UK Holding Limited and
Federal-Mogul Global's distinctiveness require an individualized
structure for the CVAs, as opposed to integrating the terms of
the CVAs for those companies into the principal CVA document.
The Administrators also made it clear that they were only willing
to accept the inclusion of the two companies into the joint CVA
if Federal-Mogul were willing to establish substantial cash
reserves for potential unsecured claims against those companies,
which was an undesirable alternative from Federal-Mogul's
perspective.

To address these issues, the Plan Proponents and the
Administrators agreed that the two companies would have separate
CVAs proposed for them.  According to Ms. McFarland, the CVAs for
those two companies are structurally similar to and containing
many of the same provisions as the CVAs jointly being proposed
for the other 49 CVA Companies.

The Plan Proponents and the Administrators further agreed that
general unsecured claims against both companies, if any, would
not require a reserve to be established out of which they may be
paid, but could instead be funded by an indemnity to be given by
Federal-Mogul.

The Ancillary CVA Indemnity will cover the payment of an
appropriate dividend on any general unsecured claims that may
successfully be asserted against F-M UK Holding Limited or
Federal-Mogul Global and certain fixed payments of GBP1.00
payable on account of certain other claims under the Ancillary
CVAs.  The Ancillary CVA Indemnity is capped at the realizable
value of the assets of each of those companies.

The Debtors believe that there are few or no general third-party
unsecured claims against either F-M UK Holding Limited or
Federal-Mogul Global Growth Limited.  Hence the Debtors expect
that the Ancillary CVA Indemnity is likely to be called very
infrequently, and may ultimately be called only to pay the
limited GBP1.00 amounts payable to certain claims under the CVAs.  

The Debtors anticipate that general unsecured claims against
Federal-Mogul Global will be paid a 3% dividend, while general
unsecured claims against F-M UK Holding at a 0.24%dividend.

               Long Tail Liability Claims Indemnity

The second compromise concerns the establishment under the
Principal CVAs of the Lone Tail Liability Claims Indemnity.  The
parties agree that certain claims that were contingent at the
Petition Date, but which crystallized after the date of the U.K.
Global Settlement Agreement -- the Lone Tail Liability Claims --
should be compromised under the CVAs and, hence, paid a dividend
rather than in full.

The Administrators believe that the claims are beyond the scope
of those that they agreed would be paid out of the reserves to be
established under the CVAs, and that as a result the Debtors
should bear responsibility for funding the payment of any
dividends to be paid out on account of the Long Tail Liability
Claims.  The Plan Proponents agreed that the Debtors should
assume the responsibility.

However, rather than provide a cash reserve for the potential
claims, the Plan Proponents and the Administrators agreed that
the Debtors could fund the claims through the grant of an
indemnity covering the dividends to be payable on the claims.

The Long Tail Liability Claims Indemnity provides that in the
event that any Long Tail Liability Claims are allowed under the
CVAs, the supervisors of the CVAs will be entitled to call on the
Long Tail Liability Claims Indemnity to fund the payment of any
Long Tail Liability Claims.

The CVAs identify only a single claim, which relates to the
proposed termination of the lease relating to the facility
currently leased by Federal-Mogul Sealing Systems (Slough)
Limited, as a Long Tail Liability Claim.  That lease has not yet
been terminated by FMSS-Slough, however, and as a result the
ultimate amount of the claim is unknown, although the Debtors
estimate that the cost of terminating the lease is in the range
of GBP2 million to GBP2.5 million.  The CVAs project a 27%
dividend on general unsecured claims against FMSS-Slough.

Assuming the breach-of-lease claim is ultimately treated as a
Long Tail Liability Claim, the amount payable under the Long Tail
Liability Claims indemnity would be around GBP540,000 to
GBP675,000.  If the claim is not treated as a Long Tail Liability
Claim, however, it would be payable in full, Ms. McFarland points
out.

The Debtors admit that other potential Long Tail Liability Claims
may emerge as the claims process under the CVAs unfolds.

                  Federal-Mogul Tax Undertaking

The third compromise relates to an undertaking to be given by
Federal-Mogul in connection with certain "tax neutrality"
provisions in the CVAs.  The CVAs contain exceptionally detailed
and intricate provisions intended to ensure that any commutation
of the Hercules Policy -- a GBP500 million policy that covers
Debtor T&N Limited and certain other Debtors for losses relating
to asbestos personal injury claims -- or settlement of associated
claims has no adverse tax consequences to the Debtors.

In connection with the tax neutrality provisions of the CVAs,
Federal-Mogul has provided an undertaking that commits it to
perform some obligations, which relate to the commutation of the
Hercules Policy or settlement of related claims.  Pursuant to the
undertaking, Federal-Mogul agrees to perform two principal
obligations:

   1. The determination of a reserve or other provision for U.K.
      taxes in the event that a request is made by the U.K.
      Asbestos Trustee and the U.S. Asbestos Trust to settle or
      commute the Hercules Policy; and

   2. The preparation of a draft application under HM Revenue &
      Customs Code of Practice 10.  

T&N is not required under the CVAs to enter into any agreement
settling or commuting the Hercules Policy unless the settlement
or commutation is tax neutral in the United Kingdom to T&N and
each of the other entities covered by the Hercules Policy.

There may be uncertainty as to the amount of any future charge to
U.K. tax in respect of asbestos-related receipts.  To address
that uncertainty, the CVAs require Federal-Mogul to calculate a
reasonably prudent provision or reserve for U.K. tax in respect
of the asbestos-related receipts, to the extent that Federal-
Mogul reasonably considers that the provision or reserve can
properly be quantified.

In the event that the U.K. Asbestos Trustee and the U.S. Asbestos
Trust disagree either with the amount that Federal-Mogul
calculates, the disagreement will be referred to a firm of
accountants to be agreed by the parties or, failing in that
agreement, to be appointed by the President of the Institute of
Chartered Accountants in England and Wales.  That determination
of the firm will be binding on each of Federal-Mogul, the U.K.
Asbestos Trustee and the U.S. Asbestos Trust.

The draft application, Ms. McFarland relates, will seek
confirmation from the U.K. taxing authorities that the effect of
any commutation of or settlement of claims under the Hercules
Policy in accordance with the CVAs would be U.K. tax neutral for
U.K. corporation tax purposes for all entities covered by the
Hercules Policy, which are taxpayers in the United Kingdom.

           Debtors to Comply with Other CVA Obligations

In addition, the Debtors seek the Court's authority to:

   a. comply with their obligations under the CVAs and associated
      documents; and

   b. enter into and perform any other transactions ancillary to
      the CVAs and associated documents that may be necessary to
      give effect to the CVAs.

The Debtors and the other Plan Proponents have negotiated for the
inclusion of these provisions into the CVAs to ensure that
Federal-Mogul is properly informed regarding various matters
relating to the CVAs and has the ability to consider and raise
issues concerning the matters.

According to Ms. McFarland, Federal-Mogul's consent is required
on a number of issues throughout the CVAs.

The Debtors seek authority to perform any other tasks incidental
to the CVAs in anticipation of possible other limited tasks that
will be needed to be performed so that the CVAs may become
effective.

                      About Federal-Mogul

Headquartered in Southfield, Michigan, Federal-Mogul Corporation
-- http://www.federal-mogul.com/-- is one of the world's largest
automotive parts companies with worldwide revenue of some
$6 billion.  The Company filed for chapter 11 protection on
Oct. 1, 2001 (Bankr. Del. Case No. 01-10582).  Lawrence J. Nyhan
Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley
Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski,
Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the
Debtors in their restructuring efforts.  When the Debtors filed
for protection from their creditors, they listed $10.15 billion
in assets and $8.86 billion in liabilities.  Federal-Mogul
Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill,
Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath &
Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq.,
and Eric M. Sutty, Esq., at The Bayard Firm represent the Official
Committee of Unsecured Creditors.  (Federal-Mogul Bankruptcy News,
Issue No. 112; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)


FEDERAL-MOGUL: Wants Court OK on Insurance-Related Changes to Plan
------------------------------------------------------------------
Federal-Mogul Global Inc., T&N Limited, et al., the Official
Committee of Asbestos Claimants and Professor Eric D. Green, the
duly appointed legal representative for future asbestos-related
personal injury claimants, ask the U.S. Bankruptcy Court for the
District of Delaware  to approve a stipulation with certain
insurers that defines the scope of permissible objections to
confirmation of the Debtors' Third Amended Plan of Reorganization
that may be prosecuted by the Stipulating Insurers.

The Stipulating Insurers include:

   * Hartford Accident and Indemnity Co., First State Insurance
     Co. and New England Insurance Co.;

   * The Travelers Indemnity Co. and certain affiliates, and
     Travelers Casualty and Surety Company;

   * American International Underwriters Insurance Co., American
     Home Assurance Co., Birmingham Fire Insurance Co. of
     Pennsylvania, Granite State Insurance Co., Insurance Co. of
     the State of Pennsylvania, Lexington Insurance Co. and
     National Union Fire Insurance Co. of Pittsburgh, PA;

   * Century Indemnity Co., ACE Property & Casualty Insurance
     Co., Central National Insurance Co. of Omaha, Insurance
     Company of North America, Pacific Employers Insurance Co.,
     St. Paul Mercury Insurance Co., U.S. Fire Insurance Co. and
     TIG Insurance Co.;

   * Globe Indemnity Co. and Royal Indemnity Co.;

   * Fireman's Fund Insurance Co. and National Surety Corp.;

   * Allstate Insurance;

   * Lumbermens Mutual Casualty Co.;

   * Columbia Casualty Co., Continental Casualty Company and The
     Continental Insurance Co.;

   * Allianz Versicherungs AG, Allianz Global Risks U.S.
     Insurance Co. and Allianz Underwriters Insurance Co.;

   * Federal Insurance Co.;

   * Liberty Mutual Insurance Co.; and

   * Evanston Insurance Co., Associated International Insurance
     Co. and Northwestern National Insurance Co.

The Stipulation is conditioned on the Plan Proponents modifying
the Plan to incorporate the negotiated resolution of various
confirmation issues raised by the Stipulating Insurers and to
include certain "insurance neutrality" provisions.  

According to James E. O'Neill, Esq., at Pachulski Stang Ziehl
Young Jones & Weintraub LLP, in Wilmington, Delaware, the
Stipulation and the proposed Plan modifications together
eliminate the bases for the majority of the insurers' objections
to the Plan.

As previously reported, several groups of insurers filed
objections to confirmation of the Third Amended Plan.  Each of
those objections was extensive and presented numerous discrete
factual and legal issues for determination by the Court.  Prior
to the parties' entry into the Stipulation, none of the
objections had been resolved.

The insurers, Mr. O'Neill relates, indicated their intention to
prosecute those objections with respect to any Plan filed by the
Plan Proponents.

While the Plan Proponents believe that they would ultimately
prevail over all of the insurers' objections if litigated, there
is a significant prospect that the result would not be achieved
until after substantial discovery or significant litigation
before the Bankruptcy Court.

The Plan Proponents believe that the Stipulation would shorten
the likely timetable for the confirmation process.

The Stipulation principally addresses issues relating to the
insurance that the Plan Proponents believe covers asbestos
personal injury claims arising from the so-called "Wagner" stream
of asbestos personal injury claims, Mr. O'Neill notes.  These
claims relate to friction products manufactured, sold or
distributed by predecessors of Federal-Mogul Products, Inc.  

Insurance policies relating to two other "streams" of asbestos
personal injury claims against the Debtors -- the so-called Fel-
Pro Claims and Vellumoid Claims -- are provided for a "pass-
through" structure under the Plan.  Under the structure, the
claims would simply be tendered to the relevant insurers for
handling and payment after the effective date of the Plan.  

The Stipulation contemplates that certain issues concerning the
Fel-Pro and Vellumoid claims raised by the insurers will be the
subject of a subsequent agreement between the Plan Proponents and
the relevant insurers or, alternatively, decided by the
Bankruptcy Court in connection with the agreed Plan objections
that may be made by the insurers.

              Stipulation and Plan Modifications

The Stipulation, in addition to providing Plan Modifications,
sets out various limitations on Plan-related discovery and
litigation by the Stipulating Parties.  In particular, the
Stipulating Insurers and the Plan Proponents agree that neither
will issue written discovery to the other, and that neither the
Stipulating Insurers nor the Plan Proponents will take any
depositions of one another.

The proposed Plan Modifications provide that Asbestos Insurer
Coverage Defenses, which consist of all rights and defenses
available to the Asbestos Insurance Companies under the Asbestos
Insurance Policies or applicable nonbankruptcy law, will be
assertable by the Asbestos Insurance Companies in any Coverage
Litigation, subject to the terms of the Stipulation.  However, in
the Coverage Litigation, the Asbestos Insurance Companies will
not be able to assert as a defense that the Plan or any of the
Plan Documents do not comply with the Bankruptcy Code.

In addition, if the Court determines that the Bankruptcy Code
authorizes the assignment of the Asbestos Insurance Policies,
their proceeds, or other Asbestos Insurance Assets to the
asbestos trust under the Plan, the Asbestos Insurance Companies
will be barred from asserting any defense that the assignment is
prohibited by the Asbestos Insurance Policies or applicable non-
bankruptcy law.

The Plan Modifications also provides that none of the Plan, the
Plan Documents, or the Confirmation Order will limit the ability
of the Asbestos Insurance Companies to assert the Asbestos
Insurer Coverage Defenses.  In addition, approval by the
Bankruptcy Court or the U.S. District Court for the District of
Delaware of the Plan will not constitute a trial on the merits,
adjudication, or judgment, or be used as evidence to prove:

   -- any liability of the Debtors, the Trust, or any Asbestos
      Insurance Company with respect to any individual Asbestos
      Personal Injury Claims or Demands;

   -- that the procedures specified in the Plan for evaluating
      and paying Asbestos Personal Injury Claims are reasonable,
      or that the procedures are consistent with the procedures
      that were used by the Debtors prior to the Petition Date to
      evaluate and settle Asbestos Personal Injury Claims;

   -- that the settlement or valuation of individual Asbestos
      Personal Injury Claims under the Plan and Asbestos Personal
      Injury Trust Distribution Procedures are reasonable or
      appropriate;

   -- that the Asbestos Insurance Companies have participated in
      or consented to the negotiation of the Plan and Plan
      Documents;

   -- that any of the Debtors or the Trust has suffered an
      insured loss with respect to any Asbestos Personal Injury
      Claim or Demand; or

   -- the liability, on an aggregate or individual basis, of the
      Debtors or the Trust for any Asbestos Personal Injury
      Claims and Demands, or their valuation.

The insurance neutrality provision also provides that none of the
Plan, the Plan Documents, or the Confirmation Order will be used
to accelerate the obligations of any Asbestos Insurance Company
under its Asbestos Insurance Policies.

Furthermore, the proposed Plan Modifications include:

   a. a clarification that any entity that tenders a claim to an
      Asbestos Insurance Company is responsible for any
      applicable retrospective premiums, self-insured retentions,
      deductibles, or similar obligations, and that the Asbestos
      Insurance Companies have rights to set off any amounts owed
      to them against any amounts they may be obligated to pay or
      assert as a defense that the obligations have not been
      fulfilled;

   b. a provision that prepetition settlement agreements relating
      to Asbestos Insurance Policies will not be treated as
      executory contracts under the Plan;

   c. a provision that the Debtors and the Trust may ask the
      District Court to extend the Supplemental Injunction
      provided for in the Plan to include any additional Settling
      Insurance Companies, and that the District Court will have
      exclusive jurisdiction to extend the Supplemental
      Injunction;

   d. a provision that the Trust may request that the District
      Court terminate, reduce or limit the scope of the Asbestos
      Insurance Entity Injunction provided in the Plan with
      respect to any Asbestos Insurance Company on notice to any
      affected Asbestos Insurance Company;

   e. a clarification that the retention of jurisdiction by the
      Bankruptcy Court or the District Court under the Plan
      with respect to Plan-related matters will not constitute a
      finding or conclusion that the Bankruptcy Court has
      jurisdiction in fact over any Asbestos Insurance Action, or
      that any jurisdiction is exclusive with respect to any
      Asbestos Insurance Action, or that abstention respecting
      or dismissal of any Asbestos Insurance Action by the
      Bankruptcy Court or the District Court is or is not
      warranted;

   f. a provision that except as set forth in the Stipulation,
      nothing in the Plan operates as a waiver of any claim,
      right or cause of action that a Debtor, Reorganized Debtor,
      or the Trust has against any insurer under any insurance
      policy or insurance agreement, except to the extent the
      insurer is a Settling Insurance Company; and

   g. a clarification that nothing in the Plan, the Plan
      Documents or the Confirmation Order relieves any entity any
      duty to cooperate that may be required by any insurance
      policy or under applicable law with respect to the defense
      or settlement of any claim for which coverage is sought
      under the Asbestos Insurance Policy.

The Stipulating Insurers additionally agree that their
objections, if any, to the Plan will be limited to:

   a. whether, under the Bankruptcy Code and as a matter of law,
      the proposed assignment of insurance rights and proceeds to
      the Trust is valid and enforceable against the insurers  
      despite the anti-assignment provisions of the Asbestos
      Insurance Policies and applicable non-bankruptcy laws; and

   b. whether the Plan complies with Sections 524(g)(2)(B)(i)(II)
      and (III) of the Bankruptcy Code.

The Stipulating Insurers retain their rights under the
Stipulation to conduct discovery and object to confirmation of
the Plan as to any amendments to the Plan that would:

   -- add an additional party as a "Protected Party" or "Released
      Party" under the Plan that had not been covered by those
      definitions in the Third Amended Plan; and

   -- provide for claims that were not channeled to or assumed by
      the Trust under the Third Amended Plan to be channeled to
      or assumed by the Trust under the Plan as so amended.

The Parties also agree to limit the submission of factual
evidence to the Bankruptcy Court and stipulate to certain facts
in connection with the Plan confirmation process.

While the Plan will be revised, the fundamental structure of the
Plan will remain unchanged from the prior version of the Plan,
Mr. O'Neill asserts.

The Parties believe that the Stipulation will significantly
shorten the likely timetable for the confirmation process.

Mr. O'Neill assures the Court that the Stipulation and the
attendant Plan Modifications are the product of substantial
arm's-length, good-faith negotiations among the Debtors, the ACC,
the FCR and the bulk of the Asbestos Insurance Companies.

A full-text copy of the Stipulation with the Plan Modifications
is available for free at http://ResearchArchives.com/t/s?ffa

                             Responses

At least three parties filed objections, or joinders to
objections, on the request for approval of the Stipulation:

   1. MagneTek, Inc.;

   2. Mt. McKinley Insurance Company and Everest Reinsurance Co.;
      and

   3. Certain Underwriters at Lloyds London and certain London
      Market Companies.

MagneTek holds more than $2,000,000 in asbestos personal injury
claims arising from exposure to Wagner Industrial Brakes.  
MagneTek objects to the Stipulation to the extent it limits its
rights to insurance proceeds or as against Federal-Mogul, or the
taking of discovery to support its claims.

The London Underwriters assert that the insurance neutrality
language in the proposed Plan Modifications is not "adequate."  
The London Underwriters assert that the language should ensure
that their prepetition rights under the "London Policies" are not
affected and that nothing in the Debtors' Chapter 11 proceedings
imposes new duties on them.

The London Underwriters further complain that the Stipulation
would appear to limit their rights with respect to the
determination of coverage issues because it requires that issues
of state law, which are normally tried in a coverage action, are
to be tried in the confirmation hearing.

The London Underwriters want the Court to clarify that
notwithstanding any order approving the Stipulation, the Plan, or
any of the Plan Documents, the Trust may not:

   (i) tender FM Products, Vellumoid or Fel-Pro Claims under the
       procedures set out in the Trust Distribution Procedures to
       the London Underwriters;

  (ii) allow judgment to be entered against the London
       Underwriters or the Debtors; and

(iii) enter into settlements with any claimants by assigning to
       the claimants any rights it may have to pursue recovery
       against the London Underwriters unless and until a court
       of competent jurisdiction has entered a final order
       determining the rights and obligations of the parties to
       any insurance policies subscribed by the London
       Underwriters.

Moreover, none of the Court's confirmation of the Plan, entry of
the Confirmation Order, or any Plan provision will impose a duty
on the London Underwriters to defend claims.

Mt. McKinley and Everest clarify that they do not object to the
Stipulation to the extent it affects "only the rights of the
executing parties."

                      About Federal-Mogul

Headquartered in Southfield, Michigan, Federal-Mogul Corporation
-- http://www.federal-mogul.com/-- is one of the world's largest
automotive parts companies with worldwide revenue of some
$6 billion.  The Company filed for chapter 11 protection on
Oct. 1, 2001 (Bankr. Del. Case No. 01-10582).  Lawrence J. Nyhan
Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley
Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski,
Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the
Debtors in their restructuring efforts.  When the Debtors filed
for protection from their creditors, they listed $10.15 billion
in assets and $8.86 billion in liabilities.  Federal-Mogul
Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill,
Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath &
Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq.,
and Eric M. Sutty, Esq., at The Bayard Firm represent the Official
Committee of Unsecured Creditors.  (Federal-Mogul Bankruptcy News,
Issue No. 112; Bankruptcy Creditors' Service, Inc.
http://bankrupt.com/newsstand/or 215/945-7000)


FEDDERS CORP: Equity Deficit Widens to $17.04 Mil. in Six Months
----------------------------------------------------------------
Fedders Corp. incurred a $10.04 million net loss on $95.57 million
of net sales for the second quarter ending June 30, 2006, the
Company disclosed on a Form 10-Q filing delivered to the
Securities and Exchange Commission on Aug. 9, 2006.

As of June 30, 2006, the Company's balance sheet showed
$330.07 million in assets and $347.11 million in liabilities.
The Company's equity deficit widened to $17.04 million at
June 30, 2006, from a $62,000 deficit at Dec. 31, 2005.

                 Liquidity and Capital Resources

The Company's working capital requirements are seasonal, with cash
balances peaking in the third quarter of each calendar year and
the greatest utilization of its lines of credit occurring early in
the calendar year.  Cash on hand amounted to $11.8 million at June
30, 2006 compared with $17.8 million a year earlier.  Short-term
borrowings under the Company's working capital credit facilities
amounted to $45.8 million at June 30, 2006, compared with
$90.5 million a year earlier.  Current portion of long-term
debt amounted to $2.3 million at June 30, 2006, compared with
$1.5 million a year earlier.

Net cash provided by operating activities for the six-month period
ended June 30, 2006, amounted to $9.2 million, compared with cash
used of $17.7 million in the prior-year period.  Cash was provided
by operations primarily as a result of increased accounts
receivable as the Company was in a more active selling season,
partly offset by increased accounts payable.  Accounts receivable
increased $15.0 million versus an increase of $58.0 million in
the prior year.  Net inventories at June 30, 2006, were
$61.7 million compared with $74.3 million at Dec. 31, 2005, and
$103.7 million at June 30, 2005.  The reduced inventory levels
reflect the Company's decision to discontinue room air conditioner
and dehumidifier sales to The Home Depot United States retail
stores and management's focus on reducing inventory. Accounts
payable at June 30, 2006, were $65.7 million compared with
$44.0 million at Dec. 31, 2005, and $55.5 million at June 30,
2005, and reflect increased production compared with prior year.

Net cash used in investing activities in the six-month period
ended June 30, 2006, of $0.7 million compared with cash used of
$12.6 million in the prior-year period.  Investing activities
included $1.6 million for additions to property, plant, and
equipment, compared with $3.3 million for the prior-year period.
This was partly offset by $0.9 million proceeds from asset sales
in the first quarter.

Net cash used by financing activities for the six-month period
ended June 30, 2006, amounted to $11.5 million, primarily for
repaying debt.  Net cash provided by financing activities in the
prior-year period was $26.3 million, comprised primarily of $31.2
million in short-term borrowings that were used to support
operating needs, and $4.0 million of cash dividends.

The Company did not declare quarterly dividends in the three
months ended June 30, 2006.  The First Supplemental Indenture
limits, among other things, the Company from making any dividend
payments without sufficient consolidated net income beginning
January 1, 2006.  The Company declared quarterly dividends of
$0.03 on each share of outstanding common and Class B stock and
$0.5375 on each share of outstanding preferred stock in the three
months ended June 30, 2005 and $0.06 on each share of outstanding
common and Class B stock and $1.076 on each share of outstanding
preferred stock in the six months ended June 30, 2005.

A full-text copy of the regulatory filing is available for free at
http://ResearchArchives.com/t/s?fff

Headquartered in Liberty Corner, New Jersey, Fedders Corporation
(NYSE: FJC) -- http://www.fedders.com/-- manufactures air   
treatment products, including air conditioners, furnaces, air
cleaners, dehumidifiers and humidifiers for residential,
commercial and industrial markets.


FEDDERS CORP: Hires Blackstone to Sell Indoor Air Quality Business
------------------------------------------------------------------
Fedders Corp. engaged The Blackstone Group to explore the possible
sale of the company's global indoor air quality businesses.  The
IAQ businesses are not core to the company's principal global
residential and commercial HVAC businesses.

Included in a possible sale would be the company's North American
IAQ production facility located in North Carolina, two factories
in Suzhou, China and sales offices located in the U.S., the U.K.,
Germany, China, Malaysia and India.  

Headquartered in Liberty Corner, New Jersey, Fedders Corporation
(NYSE: FJC) -- http://www.fedders.com/-- manufactures air   
treatment products, including air conditioners, furnaces, air
cleaners, dehumidifiers and humidifiers for residential,
commercial and industrial markets.


FOOT LOCKER: Evercore Engagement Prompts S&P's Negative Watch
-------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings, including
the 'BB+' corporate credit rating, on New York-based specialty
footwear retailer Foot Locker Inc. on CreditWatch with negative
implications.  This rating action follows the announcement that
the company has hired Evercore Partners to advise the company on a
range of matters.

"The rating action reflects Standard & Poor's concern that the
range of matters could include shareholder friendly initiatives
that could potentially weaken protection measures for bondholders
if there are changes in the company's financial policy," said
Standard & Poor's credit analyst Ana Lai.

Standard & Poor's will monitor developments associated with this
process in order to assess the implications for the ratings.


FORD MOTOR: Lower Production Schedule Cues S&P's Negative Watch
---------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B+' long-term and
'B-2' short-term ratings on Ford Motor Co., Ford Motor Credit Co.,
and related entities on CreditWatch with negative implications.

The 'BB-' long-term rating and 'B-2' short-term ratings on FCE
Bank PLC, Ford Motor Credit's European bank, were also placed on
CreditWatch with negative implications, reflecting its linkage to
the Ford rating.

The Ford CreditWatch placement reflects Standard & Poor's decision
to review the ratings in light of the sharply lower production
schedule just announced for light trucks in the fourth quarter
(down 155,000 units, or 28%, versus fourth-quarter production in
2005).  These cuts, along with the very likely significant cost
reductions to be announced in September, reveal the magnitude of
turnaround efforts needed to deal with Ford's deteriorating
product mix, lower market share, and excess production capacity in
North America.

"The lower production will have a significant negative effect on
Ford's cash flow in the fourth quarter," said Standard & Poor's
credit analyst Robert Schulz.

Although Ford's North American automotive operations are cash-flow
negative, Ford's liquidity should still be sufficient relative to
near-term requirements, as the company has a large liquidity
position.

Standard & Poor's plans to resolve its review by the end of
September.  As part of the review, Standard & Poor's will meet
with Ford's management to discuss the company's evolving plans to
address the heightened challenges it faces in North America.


FORD MOTOR: Production Cutbacks Prompt Fitch to Downgrade Ratings
-----------------------------------------------------------------
Fitch Ratings downgraded the Issuer Default Rating of Ford Motor
Company and Ford Motor Credit Company to 'B' from 'B+'.

Fitch also lowered the Ford's senior unsecured rating to 'B+/RR3'
from 'BB-/RR3' and Ford Credit's senior unsecured rating to 'BB-
/RR2' from 'BB/RR2'.  The Rating Outlook remains Negative.

The downgrade is based on the significant production cutbacks in
the third and fourth quarter that reflect persistent share losses
across key product categories.  Negative cash flows, including
restructuring costs, could exceed $7 billion in 2006, including
working capital and restructuring outflows.  Cash outflows related
to restructuring actions will continue in 2007, although operating
losses could moderate as cost reduction efforts are realized.

Sustained market share losses or a decline in economic conditions
through 2007 would result in continued high levels of cash
outflows and erosion of liquidity.  Although liquidity remains
adequate, progress in achieving structural cost reductions and
maintaining the confidence of trade creditors will remain critical
over the near term.

Implicit in the production cutbacks are expectations of continued
weak pickup sales that have resulted in extended inventories.
Volume declines in Ford's pickup segment, along with continued
declines in mid-size and large SUVs, are likely to accelerate
revenue declines and negative cash flows in 2006.  Although
continued share losses and price erosion were anticipated as a
result GM's upcoming refreshed pickup line and the start-up of
Toyota's new pickup plant, vulnerability to this segment has
increased as a result of high gas prices, a potential slowdown in
economic conditions, and a contracting construction segment.

Ford has demonstrated recent growth in certain car segments, where
industry sales have been migrating, but volumes and profitability
in these segments will be insufficient in the short-term to offset
the decline in higher-margin mid-size and large SUVs and pickups.
Ford's product pipeline is modest over the near term, although two
crossover products to be introduced in 2006 (the Ford Edge and
Lincoln MKX) are expected to partially offset continued share
erosion.

Ford's 'RR3' Recovery Rating reflects good recovery prospects of
50-70% in the event that the company is forced to seek protection
under Chapter 11.  Recovery values benefit from:

   * Ford's holdings in Mazda;

   * operations in Asia and South America;

   * very modest recoveries from Premier Automotive Group
     operations; and

   * 100% ownership in Ford Credit.

Recovery for senior unsecured holders also benefits from being in
a superior position to the Capital Trust II securities (which
represents approximately 29% of consolidated debt).  Recovery
values associated with Ford Credit are likely to decline as Ford
Credit's balance sheet shrinks and repatriated capital is used to
finance operating losses.

Fitch's recovery analysis also projects that due to declining
market share and low current capacity utilization, at least one
additional assembly plant will be shut down (in addition to those
already announced).

Fitch's recovery scenario incorporates a Chapter 11 filing of
North American operations only, and would result in significant
claims from working capital liabilities (trade creditors, dealers,
fleet customers, etc.) in addition to unsecured debtholders.

Fitch also factored in liabilities related to on and off-balance
sheet liabilities that could augment claims.  Fitch did not factor
in claims related to potential termination or alteration of legacy
OPEB and pension costs.

In the event of a filing, Fitch anticipates that Ford would not
attempt to terminate its pension plans.  Changes to OPEB
liabilities, are expected to be negotiated as part of a new labor
agreement in the event of a Chapter 11 filing (as is taking place
at Delphi), without resulting in claims against the estate.  The
restructured enterprise value includes reduced production volumes,
and structural cost reductions to an extent that a 3% operating
margin could be achieved in North America.

Declining revenues are unlikely to reverse through 2007 due to
market share losses and declining mix.  Despite modest progress on
the cost side, the pace of cost reductions is not expected to keep
up with revenue losses (assuming continued high commodity costs),
thereby continuing negative cash flows.  

Over the intermediate-term, reducing inventories and producing
closer to demand will enhance even-flow production and production
efficiencies, and reduce reliance on ruinous incentive programs.
However, lower production levels, coupled with already weak
capacity utilization will increase short-term cash outflows and
heighten the urgency of achieving substantive structural cost
reductions.

Ford's production cutbacks will also heighten operating and
financial stresses throughout the supply chain, increasing the
risks of further bankruptcies or other supply disruptions.  Supply
chain stresses are expected to result in increased risks of
financial support and will limit the potential for any cost
savings to accrue to Ford over the near term from the
restructuring of the supply base.

Ford Credit's (FMCC) IDR remains linked to those of Ford due to
the close business relationship between them.  Fitch expects
FMCC's earnings and dividends to decline noticeably in 2006
primarily due to lower receivables outstanding and margins.  FMCC
has benefited from lower provision expense, as the quality of its
receivables pool has increased, but the pace of these improvements
is expected to slow going forward.  

Fitch believes that FMCC maintains a good degree of liquidity
relative to its rating.  Supporting this is FMCC's ability to sell
or securitize a broad spectrum of assets such as retail finance,
lease, and wholesale loans.  

Moreover, FMCC continues to hold high cash balances and its assets
mature faster than its debt.  FMCC's 'RR2' Recovery Rating
indicates superior recovery prospects on unsecured debt resulting
from solid unencumbered asset protection, although discounted to
account for stressed performance and/or disposition.

Fitch downgraded these ratings with a Negative Rating Outlook:

  Ford Motor Co.:

    -- Issuer Default Rating to 'B' from 'B+'
    -- Senior debt to 'B+' from 'BB-'

  Ford Motor Credit Co.:

    -- Issuer Default Rating to 'B' from 'B+'
    -- Senior debt to 'BB-' from 'BB'

  FCE Bank Plc:

    -- Issuer Default Rating to 'B' from 'B+-'
    -- Senior debt to 'BB-' from 'BB'

  Ford Capital B.V.:

    -- Issuer Default Rating to 'B' from 'B+'
    -- Senior debt to 'BB-' from 'BB'

  Ford Credit Canada Ltd.:

    -- Issuer Default Rating to 'B' from 'B+'
    -- Senior debt to 'BB-' from 'BB'

  Ford Motor Capital Trust II:

    -- Preferred stock to 'CCC+/RR6' from 'B-/RR6'

  Ford Holdings, Inc.:

    -- Issuer Default Rating to 'B' from 'B+'
    -- Senior debt to 'B+' from 'BB-'

  Ford Motor Co. of Australia:

    -- Issuer Default Rating to 'B' from 'B+'
    -- Senior debt to 'B+' from 'BB-'

  Ford Credit Australia Ltd.:

    -- Issuer Default Rating to 'B' from 'B+'
    -- Senior debt to 'BB-' from 'BB'

  PRIMUS Financial Services (Japan):

    -- Issuer Default Rating to 'B' from 'B+'

  Ford Credit de Mexico, S.A. de C.V.:

    -- Issuer Default Rating to 'B' from 'B+'

  Ford Motor Credit Co. of New Zealand:

    -- Issuer Default Rating to 'B' from 'B+'
    -- Senior debt to 'BB-' from 'BB'

  Ford Credit Co S.A. de CV:

    -- Issuer Default Rating to 'B' from 'B+'
    -- Senior debt to 'BB-' from 'BB'

Fitch also affirms these short-term ratings:

  Ford Motor Credit Co.:

    -- Commercial Paper 'B'

  FCE Bank Plc:

    -- Commercial Paper and short-term debt 'B'

  Ford Credit Canada Ltd.:

    -- Commercial Paper 'B'

  Ford Credit Australia Ltd.:

    -- Commercial Paper 'B'

  Ford Motor Credit Co. of New Zealand:

    -- Commercial Paper 'B'


FORD MOTOR: Reduced Vehicle Production Cues DBRS to Review Rating
-----------------------------------------------------------------
Dominion Bond Rating Service placed long-term debt rating of Ford
Motor Company Under Review with Negative Implications following
announcement that Ford will sharply reduce its North American
vehicle production in 2006.

DBRS notes that the planned production cuts, which are part of the
Company's accelerated "Way Forward" plan, will be most significant
in fourth quarter 2006 and are expected to have a substantially
negative impact on 2006 operating results.  DBRS expected Ford's
near-term operating performance to deteriorate, but the extent of
the planned production cuts was greater than anticipated.

DBRS placed Ford Under Review -- Negative in order to assess the
financial impact of today's announcement on the Company's credit
profile and to gain additional information regarding further
actions under the Way Forward plan, which will be revealed in
September.


FRENCH LICK: S&P Affirms B- Rating & Revises Outlook to Negative
----------------------------------------------------------------
Standard & Poor's Ratings Services revised its ratings outlook on
French Lick Resorts & Casino LLC to negative from stable, and
affirmed all ratings, including the 'B-' corporate credit rating.

"The outlook revision reflects concerns that heightened disputes
between the two primary owners over control of the project, which
have led to various legal actions, could result in cost overruns
in the next several months or operating disruptions after the
project opens," said Standard & Poor's credit analyst Peggy Hwan
Hebard.

"Still, assuming an on-time opening, FLRC's liquidity position
during the casino's first full year of operations is expected to
be adequate, given an interest reserve for 2.5 payments, with the
first project-funded payment of $7 million due on Oct. 15, 2007."

The ratings on FLRC reflect:

   * its narrow business position as an operator of a single
     casino, once the facility opens in phases beginning in late
     2006;

   * competitive market conditions in its southern Indiana gaming
     market;

   * expected challenges associated with developing a loyal gaming
     customer base; and

   * some construction risks associated with the development of
     the facility.

Also, the company's high pro forma debt leverage and moderate-size
cash flow base increase the risks that a slower-than-expected
ramp-up period could strain the company's liquidity position.

French Lick, Indiana-based FLRC was created to develop, own, and
operate the French Lick Resorts & Casino, which is situated on
about 750 acres, and located about 90 miles south of Indianapolis
and 50 miles northwest of Louisville, Kentucky.  The project,
which includes the renovation of the historic French Lick Springs
Hotel and West Baden Springs Hotel, broke ground in August 2005,
with full completion currently scheduled for mid-2007.  It is
expected to open with 1,200 slot machines, about 42 table games
(including 10 poker tables), the renovation of the approximately
680 rooms contained in the two existing hotels, 2,100 parking
spaces, a few golf courses, and various nongaming amenities.

The total project cost is about $380 million and is being funded
mostly with debt.  A contingency of about 15% of the remaining
hard construction costs exists.  In addition, the company has
entered into guaranteed maximum price contracts that equal 100% of
the "hard" construction costs, and the company entered into a $25
million FF&E revolver.  Also, a phased development in which
the casino becomes operational by the end of 2006 is planned.  The
combination of these factors helps to mitigate construction risk
and provide comfort that the project will be completed on time.

The negative outlook reflects the heightened risks related to the
viability of the project, in the absence of a satisfactory
resolution of the dispute between the owners.  This uncertainty,
in conjunction with the potential for a weaker-than-expected
opening, could result in ratings being lowered if management fails
to attract locals or drive-to destination visitors to the
property.

If the opening of the casino is successful and a satisfactory
resolution of the dispute between the equity partners is reached,
the outlook would be revised to stable.


GENERAL NUTRITION: Aborted IPO Plan Prompts S&P to Affirm B Rating
------------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings, including
the 'B' corporate credit rating, on Pittsburgh, Pennsylvania-based
General Nutrition Centers Inc.  

The ratings are removed from CreditWatch, where they were placed
with positive implications on June 19, 2006.  The outlook is
stable.

"The rating actions reflect the withdrawal of the company's
planned IPO," said Standard & Poor's credit analyst Ana Lai.

If completed, the IPO could have resulted in an upgrade.

The stable outlook reflects GNC's improved operating performance
for the past three quarters due to solid comparable-store sales
growth and better margins.  U.S.-based company-owned stores
experienced 11.5% comparable-store growth for the quarter ended
June 30, 2006; U.S. franchised stores posted 5.9% growth.

For the six months ended June 30, 2006, EBITDA increased to about
$79 million from $58 million a year ago.  Profitability improved
due to positive sales leverage as well as lower selling expenses,
and operating margins increased to about 10% from 9% a year
earlier.  With better cash flow, total debt to EBITDA (adjusted
for operating leases) declined to 5.6x, from 6.5x at Dec. 30,
2005.

Despite GNC's position as a large player with a worldwide network
of more than 5,800 locations, the company remains vulnerable.  The
nutritional supplements industry is very fragmented and GNC faces
significant competition from other specialty retailers, drugstore
chains, and mass merchants, as well as independents.  Mass
merchants and drugstores exert significant margin pressure on
commodity products, such as vitamins and minerals, while specialty
retailers like Vitamin Shoppe Industries Inc. target sophisticated
vitamin, mineral, and supplement users.


IGI INC: Posts $368,000 Net Loss in Three Months Ended June 30
--------------------------------------------------------------
IGI, INC. reported earnings for second quarter of 2006.

Total revenues for the three months ended June 30, 2006, were
$817,000, compared to $825,000 for the three months ended June 30,
2005.

Total revenues for the six months ended June 30, 2006, were
$1,398,000, compared to $1,600,000 for the six months ended June
30, 2005.

"Our proprietary MIAJ(TM) anti-aging line of new products is being
well received and our nano-particle Novasome(R) delivery
technology is moving forward with new dermatologic and
cosmeceutical products," stated Frank Gerardi, Chairman and CEO.

Net loss for the three months ended June 30, 2006, was $368,000,
compared to $191,000 for the three months ended June 30, 2005.

Net loss for the six months ended June 30, 2006, was $820,000,
compared to $374,000 for the six months ended June 30, 2005.

The Company's operating activities used $594,000 of cash during
the six months ended June 30, 2006, compared to $423,000 used in
the comparable period of 2005.  This use of cash is substantially
related to the net loss for the Company.

The Company investing activities used no cash in the six months
ended June 30, 2006, compared to $68,000 used in investing
activities in the first three months of 2005.  The money used
represents capital expenditures to purchase machinery and
equipment related to the electroless nickel boride finishing
operations in 2005.

The Company's financing activities provided $253,000 of cash in
the six months ended June 30, 2006 compared to $325,000 provided
by financing activities in the six months ended June 30, 2005.  
The cash provided in 2005 and 2006 represents proceeds from the
exercise of stock options.

Currently, the Company's cash from operations are not sufficient
to maintain operations or provide financing for the Company's
future growth and business plan.

In order to generate the working capital needed, the Company has
signed an agreement of sale for a sale-leaseback of its corporate
building for $1,600,000, to be accounted for as a financing
transaction and a sale of a vacant parcel of land adjacent to its
building for $225,000.  The closing of the sale-leaseback
transaction is subject to a contingency and is terminable by
either party on or after Aug. 17, 2006, if the contingency is not
met by such date.  Upon the earlier of the closing of the sale-
leaseback transaction or Sept. 30, 2006, the Company must repay
the $1,000,000 loan provided to the Company by Univest Management
EPSP an entity controlled by Frank Gerardi, its Chief Executive
Officer, together with accrued interest, which accrued interest,
as of June 30, 2006, was approximately $90,000.

If the sale-leaseback transaction does not materialize, the
Company will be forced to seek alternative funding, of which there
can be no assurance.  If consummated, this transaction if
accompanied by an increase in product sales that the Company hopes
to achieve during 2006 through new business arrangements may be
sufficient to provide the capital needed to fund the Company
through the end of August 2007.  The Company received a $30,000
refundable deposit in the first quarter of 2006 relating to the
sale-leaseback transaction.  The Company's ability to continue as
a going concern is ultimately dependent on its ability to increase
sales to a level that will allow it to operate profitably and
sustain positive operating cash flows.

IGI's business operations have been partially funded over the past
two years through the exercise of stock options by its directors
and officers.  If necessary, the Company may continue to seek
additional capital through the sale of its equity.  The Company
may accomplish this via a strategic alliance with a third party.  
There may be additional acquisition and growth opportunities that
may require external financing.  There can be no assurance that
this financing will be available or available on terms acceptable
to the Company.

                       Going Concern Doubt

Amper, Politziner & Mattia, P.C. expressed substantial doubt on
IGI, Inc.'s ability to continue as going concern after it audited
the Company's financial statement for the year ending Dec. 31,
2005.  The auditing firm pointed to the Company's recurring
operating losses and a working capital deficiency of $501,000.

                         About IGI, Inc.

Headquartered in Buena, New Jersey, IGI Inc. (AMEX:IG) --
http://www.askigi.com/-- is a technology company focused on the  
development of custom products using the patented Novasome(R)
delivery technology.  The Company offers the patented Novasome(R)
lipid vesicle encapsulation technology which contributes value-
added qualities to cosmetics, skin care products, dermatological
formulations and other consumer products, providing improved
dermal absorption, low potential for irritations, controlled and
sustained release as well as improved stability.  IGI has licensed
Novasome(R) lipid vesicle encapsulation technology to leading
global dermatological and skin care companies including Johnson &
Johnson Consumer Products, Inc., Estee Lauder Companies, Chattem
Inc., Genesis Pharmaceutical, Inc. and Apollo Pharmaceutical, Inc.


INTEGRATED ELECTRICAL: Earns $36.8 Million in Third Fiscal Quarter
------------------------------------------------------------------
Integrated Electrical Services, Inc., disclosed financial results
for the period ended June 30, 2006, and implementation of fresh
start accounting.

                Third Quarter Fiscal 2006 Results

Results for the fiscal third quarter of 2006 are comprised of
predecessor one-month results ended April 30, 2006 and successor
two-month results ended June 30, 2006.  Total revenues for the
fiscal third quarter were $259.4 million.  Gross profit for the
period was $33.8 million, a gross profit margin of 13.0 percent.
Selling, general and administrative expenses for the third quarter
were $33.7 million, 13% of revenues.  Income from operations for
the third quarter was $100,000.  The company reported total net
income for the third quarter of $36.8 million.  During the three
months ended June 30, 2006, the company recorded reorganization
items totaling a net gain of approximately $39.2 million.  

Backlog in the Go-Forward Operations remained steady at
$336 million on June 30, 2006, compared to $341 million as of
March 31, 2006.  Backlog in the Wind-down Units as of June 30,
2006 dropped to $6 million from $21 million as of March 31, 2006,
in line with the company's expectations. As a result, total
backlog as of June 30, 2006 declined to $342 million, from
$362 million as of March 31, 2006.

              Execution of Financial Restructuring

On May 12, 2006, Integrated Electrical Services, Inc. and all of
its domestic business units consummated a plan of reorganization
and exited from Chapter 11.  The Plan provided for, among other
things, reducing IES' outstanding indebtedness by exchanging its
$173 million of senior subordinated notes for 82% of the new IES
common stock, refinancing the company's $50 million of outstanding
senior convertible notes with the proceeds of a new term loan,
converting IES' existing outstanding common stock into shares
representing approximately 15% of the new IES common stock and
issuing to management restricted shares representing approximately
3.0% of the new IES common stock.

As part of the restructuring, the company decided to wind down
operations at certain of its underperforming units.  The remaining
operations will be referred to as "Go-forward Operations."  The
Wind-down Units and the Go-forward Operations combined make up
Continuing Operations.

                       Debt and Liquidity

In connection with its emergence from Chapter 11, the company
entered into a two-year revolving credit facility with a syndicate
of lenders led by Bank of America, in which the lenders will
provide revolving borrowings in the aggregate amount of up to
$80 million, with a $72 million sub-limit for letters of credit.

In addition to the revolving credit facility, the company has
entered into a seven-year, $53 million term facility with Eton
Park Fund, L.P. and an affiliate, and Flagg Street Partners LP and
affiliates.  The term loan was used to refinance the company's
outstanding senior convertible notes.

As of June 30, 2006, unrestricted cash totaled approximately
$10.9 million.  In addition, the company has posted $20.0 million
of cash collateral with its senior credit facility lenders, which
is in other non-current assets, for total cash of $30.9 million.

                     Fresh-Start Accounting

On April 30, 2006, the company implemented fresh-start accounting
and reporting in accordance with the American Institute of
Certified Public Accountants Statement of Position No. 90-7,
"Financial Reporting by Entities in Reorganization under the
Bankruptcy Code."  Fresh-start accounting required the company to
re-value its assets and liabilities based upon their estimated
fair values.  Adopting fresh-start accounting has resulted in
material adjustments to the carrying amount of the company's
assets and liabilities.  The company engaged an independent expert
to compute the fair market value of its assets, to assist in the
allocation of its reorganization value and in determining the fair
market value of its property and equipment and intangible assets.  
The fair values of the assets as determined for fresh-start
reporting were based on estimates of anticipated future cash flows
as generated from each market and applying business valuation
techniques.  Liabilities existing on April 30, 2006, are stated at
the present values of amounts to be paid discounted at appropriate
rates.  The determination of fair values of assets and liabilities
is subject to significant estimation and assumptions.

Under the provisions of fresh start accounting, a new entity is
deemed created for financial reporting purposes. References to
successor company refer to the company on and after May 1, 2006,
and references to predecessor company relate to the company
through April 30, 2006. As a result of implementing fresh start
accounting, IES' financial statements for the successor company
are not comparable to financial statements of the predecessor
company.

A full-text copy of the Quarterly Report on Form 10-Q filed with
the Securities and Exchange Commission is available for free at
http://ResearchArchives.com/t/s?1000

Headquartered in Houston, Texas, Integrated Electrical Services,
Inc. (Nasdaq: IESC) -- http://www.ielectric.com/and  
http://www.ies-co.com/-- is an electrical and communications  
service provider with national roll-out capabilities across the
U.S.  Integrated Electrical Services offers seamless solutions and
project delivery of electrical and low-voltage services, including
communications, network, and security solutions.  The Company
provides system design, installation, and testing to long-term
service and maintenance on a wide array of projects.  The Debtor
and 132 of its affiliates filed for chapter 11 protection on
Feb. 14, 2006 (Bankr. N.D. Tex. Lead Case No. 06-30602).  Daniel
C. Stewart, Esq., and Michaela C. Crocker, Esq., at Vinson &
Elkins, L.L.P., represent the Debtors in their restructuring
efforts.  Marcia L. Goldstein, Esq., and Alfredo R. Perez, Esq.,
at Weil, Gotshal & Manges LLP, represent the Official Committee of
Unsecured Creditors.  As of Dec. 31, 2005, Integrated Electrical
reported assets totaling $400,827,000 and debts totaling
$385,540,000.

The Court confirmed the Debtors' Modified Second Amended Joint
Plan of Reorganization on Apr. 26, 2006.  That plan became
effective on May 12, 2006.  


INTERMEC INC: S&P Upgrades Ratings to BB- With Stable Outlook
-------------------------------------------------------------
Standard & Poor's Rating Services raised its ratings on Everett,
Washington-based Intermec Inc. to 'BB-' from 'B+'.  The upgrade
reflects expectations that Intermec will sustain current levels of
profitability and leverage.  The outlook is stable.

"The rating reflects a relatively narrow business profile,
competitive market conditions, and ongoing product development
requirements driven by evolving technology standards," said
Standard & Poor's credit analyst Stephanie Crane.

These factors are partly offset by a good market position with a
strong patent portfolio and an improving financial profile with
leverage at 3.5x.

Intermec is a global provider of supply chain solutions, including
the development, sales, and integration of wired and wireless
automated data collection, radio frequency identification tags,
mobile computing systems, bar code printers, and label media.
These products are used primarily for the routing and distribution
of goods, inventory management, transportation, and logistics.

In the fourth quarter of 2005, Intermec completed the sale of its
industrial automation systems businesses.  Revenue growth and
profitability are expected to benefit from greater management
focus on the core business, which centers around automated data
collection and radio frequency identification.

Standard & Poor's expects revenue to grow in the high single
digits in the near term as next-generation RFID technology is
driven by market demand and the company focuses on building its
emerging market exposure.  EBITDA margins should also trend in the
high single digits assuming cost efficiencies gleaned from
restructuring.


INLAND FIBER: Unsecured Creditors to Receive 68.57% of Claims
-------------------------------------------------------------
Inland Fiber Group LLC and Fiber Finance Corp. delivered to the
U.S. Bankruptcy Court for the District of Delaware a disclosure
statement explaining their pre-packaged Joint Plan of
Reorganization.

Under the Plan, Priority Claims and Secured Claims will be paid in
full.

Holders of General Unsecured Claims will receive cash equal to
68.57% of the amount of their allowed claim while holders of
Allowed Notes Claims are entitled to 68.57% of the principal
amount of the Notes.

All Intercompany Claims will be reviewed by the Debtors and
adjusted, continued or discharged, as the Debtors determine is
appropriate.

Existing Interests in the Debtors will be unaffected by the Plan

                          Settlement

As reported in the Troubled Company Reporter on Aug. 21, 2006,
the Debtors reached a final settlement on Aug. 18, 2006, resolving
all of the outstanding claims in the litigation between them and
certain other defendants, and the trustee under the indenture
governing the $225 million principal amount of 9-5/8% senior notes
due 2007 issued by the Debtors.  

Under the settlement agreement, the noteholders and the indenture
trustee have also agreed to forbear from exercising any rights and
remedies under the indenture, or from pursuing any claim
pertaining to the notes or the subject matter of the litigation.

In addition, as part of the Debtors' reorganization efforts,
Inland Fiber has reached an agreement to sell certain of its
assets, including its seed orchard, to a third party.  The
purchase price for the assets is $83 million.  The Debtors have
also entered into an agreement with their insurance carriers to
contribute a total of $8.3 million towards payment under the plan
of reorganization.  

Moreover, Inland Fiber's affiliates agreed to sell certain of
their Oregon assets to the third party purchaser and certain of
their assets in the State of Washington to a related party of the
Debtors.  The proceeds of those sales will fund the remaining
amounts payable pursuant to the settlement agreement and plan of
reorganization.

Headquartered in Klamath Falls, Oregon, Inland Fiber Group LLC,
aka U.S. Timberlands Klamath Falls LLC, and its affiliate Fiber
Finance Corp., grow trees and sell logs, standing timber, and
timberland.  The Debtors filed a chapter 11 petition on Aug. 18,
2006 (Bankr. D. Del. Case Nos. 06-10884 & 06-10885).  William P.
Bowden, Esq. at Ashby & Geddes P. A. and Glenn E. Siegal, Esq. at
Dechert LLP represent the Debtors in their restructuring efforts.  
When the Debtors filed for protection from their creditors, Inland
Fiber reported $81,890,311 in total assets and $264,433,754 in
total liabilities while its debtor-affiliate,  Fiber Finance,
disclosed $1,048 in total assets and $263,074,983 in total debts.


KINETIC CONCEPTS: Earns $46.6 Million in Second Quarter
-------------------------------------------------------
Kinetic Concepts, Inc., reported second quarter 2006 total
revenue of $330 million, an increase of 12% from the second
quarter of 2005.  Total revenue for the first half of 2006 was
$649.3 million, a 13% increase from the prior-year period.  
Foreign currency exchange movements favorably impacted total
revenue for the second quarter of 2006 by 1% compared to the
corresponding period of the prior year, but did not impact first
half revenue results significantly.

Net earnings for the second quarter of 2006 were $46.6 million, up
17%, compared to $39.8 million for the same period one year ago.  
For the first half of 2006, net earnings were $95.1 million, up
24% from the prior-year period.  

"The fundamentals of our business remain strong," said Dennert O.
Ware, President and Chief Executive Officer of KCI.  "In the
second quarter, we faced challenges resulting from significant
business litigation, lower homecare reimbursement and increased
marketing of unproven competing therapies.  Despite these
challenges, we delivered revenue growth both sequentially and
year-over-year.  We believe that our innovative and effective
products, supported by our clinically-focused sales and service
team and backed by industry leading medical research, help
caregivers and payers achieve improved patient outcomes at a lower
overall cost of care."

                          Revenue Recap
              Second Quarter and First Half of 2006

Domestic revenue was $238.6 million for the second quarter and
$471.3 million for the first six months of 2006, representing an
increase of 10% and 14%, from the prior year due primarily to
increased rental and sales volumes for V.A.C. wound healing
devices and related disposables.  Domestic V.A.C. revenue of
$193.4 million for the 2006 second quarter increased 12% from the
prior-year period, due to higher V.A.C. rental units in use partly
offset by lower realized pricing.  The year-to-year unit growth
was broad-based, with increased unit volume across all care
settings.  Lower realized V.A.C. pricing resulted from lower
canister reimbursement rates under Medicare Part B combined with
higher homecare receivable reserves related primarily to
invoices/claims greater than one year old.

International revenue of $91.4 million for the second quarter and
$178.0 million for the first half of 2006 increased 18% and 11%,
compared to the prior year due to increased V.A.C. revenue.   
International V.A.C. revenue of $62.7 million for the second
quarter and $119.6 million for the first half of 2006 increased
28% and 26%, compared to the same periods of the prior year due
primarily to higher unit volume.  International surfaces revenue
for the second quarter of 2006 was comparable to the prior year,
while surfaces revenue for the first half of 2006 declined
$6.8 million, or 10%.  The year-to-date decline in international
surfaces revenue was due in large part to a $5.1 million sale in
the first quarter of 2005 to the Canadian Government.  In
addition, unfavorable foreign currency exchange movements
negatively impacted first-half 2006 international surfaces revenue
by $1.3 million compared to the prior-year period.  In total,
foreign currency exchange movements favorably impacted
international revenue by 3% in the second quarter while negatively
impacting first-half 2006 international revenue by 1%.

Worldwide V.A.C. revenue was approximately $256.1 million for the
second quarter of 2006 and $499.1 million for the first half of
2006, representing increases of 16% and 19%, due to increased
rental and sales volumes for V.A.C. partly offset by lower price
realization on unit placements.  Foreign currency exchange
movements favorably impacted worldwide V.A.C. revenue by 1%
compared to the second quarter of the prior year, but did not have
a significant impact on overall V.A.C. revenue for the first six
months of 2006.  The growth in V.A.C. revenue stemmed from volume
increases driven by our continued focus on selling and marketing
efforts, partly offset by lower U.S. homecare reimbursement for
V.A.C. canisters and higher homecare receivable reserves.

Worldwide surfaces revenue was $73.9 million for the second
quarter of 2006, up 1% from the prior-year period.  Worldwide
surfaces revenue for the first six months of 2006 was
$150.2 million, a $5.6 million, or 4% decline from the first half
of 2005, of which $5.1 million was attributable to the prior-year
sale to the Canadian government as noted previously.  Foreign
currency exchange movements favorably impacted worldwide surfaces
revenue by 1% for the second quarter while unfavorably impacting
first half surfaces revenue by 1%.  Domestic surfaces revenue for
the second quarter and first six months of 2006 each increased 1%
from the same periods one year ago.

                       Gross Profit Margin

Gross profit for the second quarter and first six months of 2006
was $152.6 million and $302.8 million, representing increases of
12% and 15% from the same periods of the prior year.  Gross profit
margin for the current quarter was negatively impacted by lower
homecare reimbursement for V.A.C. canisters and increased homecare
receivable reserve levels, which had the effect of reducing
revenue growth in the period.  In addition, field sales and
service costs increased as a percent of revenue during the period.

In addition, KCI has historically presented licensing fees
associated with our Rental Revenue in Rental Expenses and
licensing fees associated with our Sales Revenue in Selling,
General and Administrative Expenses.  

                         Legal Expenses

As compared to the prior-year period, second quarter 2006 SG&A
expenses include an additional $3.5 million related to our patent
litigation case.  Legal costs are expensed as incurred.

                    Stock-Based Compensation

During the second quarter and first six months of 2006, the
Company recorded stock-based compensation expense totaling
approximately $4.4 million and $7.4 million, before income taxes.

                         Income Tax Rate

The effective income tax rate for the second quarter of 2006 was
30.0% compared to 34.5% for the same period in 2005.  The income
tax rate reduction was primarily attributable to the favorable
resolution of two foreign tax contingencies during the period.
Going forward, we expect our effective tax rate to be in the 33%
to 35% range.

                             Outlook

KCI is reaffirming its projections for 2006 total revenue of
$1.34 billion to $1.39 billion based on continued demand for its
V.A.C. negative pressure wound therapy devices and related
supplies.  

A full-text copy of the Quarterly Report on Form 10-Q filed with
the Securities and Exchange Commission is available for free at
http://ResearchArchives.com/t/s?ffc

                     About Kinetic Concepts

Kinetic Concepts, Inc. (NYSE: KCI) -- http://www.kci1.com/--  
designs, manufactures, markets and provides a wide range of
proprietary products that can improve clinical outcomes while
helping to reduce the overall cost of patient care.

                         *     *     *

As reported in the Troubled Company Reporter on Aug. 21, 2006,
Moody's Investors Services upgraded its corporate family rating on
Kinetic Concepts, Inc.'s from Ba3 to Ba2.  The Company's ratings
on its guaranteed senior secured revolving credit facility, due
2009, and guaranteed senior secured term loan B, due 2010, were
upgraded to Ba2 from Ba3.  Moody's rating on the Company's
guaranteed unsecured subordinated notes, due 2013, was upgraded to
B1 from B2.


KMART CORP: Delivers Results for 13 Weeks Ended July 29
-------------------------------------------------------
In a Form 8-K filed with the Securities and Exchange Commission,
Sears Holdings Corporation discloses Kmart Corporation's sales
for 13 weeks ended July 29, 2006.

Aylwin Lewis, chief executive officer and president of Sears
Holdings Corporation, relates that the improvement in second
quarter 2006 earnings reflects improved profitability at both
Kmart and Sears Domestic, largely due to reduced expenses and an
increase of 120 basis points in gross margin rate from 27.2% in
2005 to 28.4% in 2006.

                 Kmart's Results and Key Statistics
               (In millions, except number of stores)

                                               13 Weeks Ended
                                             -------------------
                                             07/29/06   07/29/05
                                             --------   --------
    Merchandise sales and services             $4,472     $4,642
    Cost of sales, buying and occupancy         3,389      3,529

    Gross margin rate                            24.2%      24.0%

    Selling and administrative                    874        964

    Selling and administrative expense
       as a percentage of total revenues         19.5%      20.8%

    Depreciation and amortization                  18         10
    Gain on sales of assets                         -         (2)
    Restructuring charges                           -         42
                                              -------    -------
    Total costs and expenses                    4,281      4,543
                                              -------    -------
    Operating income                             $191        $99
                                              =======   ========
    Number of Stores                            1,398      1,445

According to Mr. Lewis, Kmart's comparable stores sales declined
0.6%.  The sales declines in home goods were partially offset by
increased sales within a number of merchandise categories,
including apparel, general merchandise, pharmacy and food, and
other consumable goods.

Total revenues at Kmart declined $1,000,000 as compared to the
prior year period, primarily reflecting a reduction in the total
number of Kmart stores in operation, Mr. Lewis says.

Furthermore, Kmart's operating income shows an increase of
$92,000,000.

                        About Kmart Corp.

Headquartered in Troy, Michigan, Kmart Corporation nka KMART
Holding Corporation -- http://www.bluelight.com/-- operates
approximately 2,114 stores, primarily under the Big Kmart or Kmart
Supercenter format, in all 50 United States, Puerto Rico, the U.S.
Virgin Islands and Guam.  The Company filed for chapter 11
protection on January 22, 2002 (Bankr. N.D. Ill. Case No.
02-02474).  Kmart emerged from chapter 11 protection on May 6,
2003.  John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate,
Meagher & Flom, LLP, represented the retailer in its restructuring
efforts.  The Company's balance sheet showed $16,287,000,000 in
assets and $10,348,000,000 in debts when it sought chapter 11
protection.  Kmart bought Sears, Roebuck & Co., for $11 billion to
create the third-largest U.S. retailer, behind Wal-Mart and
Target, and generate $55 billion in annual revenues.  The waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act
expired on Jan. 27, without complaint by the Department of
Justice.  (Kmart Bankruptcy News, Issue No. 115; Bankruptcy
Creditors' Service Inc. http://bankrupt.com/newsstand/or 215/945-
7000)


KMART CORP: Store in Stow, Ohio to Close in January 2007
--------------------------------------------------------
Kimberly Freely, spokeswoman for Sears Holding, Corp., told Akron
Beacon Journal that a Kmart store located in 4332 Kent Road, in
Stow, Ohio, is permanently closing in January 2007.

According to the Beacon Journal, officials at the Kmart store --
which opened in 1968, and employs about 60 workers -- informed
employees that they may apply at other Kmart and Sears stores,
but no positions were guaranteed.

Clearance sales at the Stow Kmart store will begin in November,
the paper says.

                        About Kmart Corp.

Headquartered in Troy, Michigan, Kmart Corporation nka KMART
Holding Corporation -- http://www.bluelight.com/-- operates
approximately 2,114 stores, primarily under the Big Kmart or Kmart
Supercenter format, in all 50 United States, Puerto Rico, the U.S.
Virgin Islands and Guam.  The Company filed for chapter 11
protection on January 22, 2002 (Bankr. N.D. Ill. Case No.
02-02474).  Kmart emerged from chapter 11 protection on May 6,
2003.  John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate,
Meagher & Flom, LLP, represented the retailer in its restructuring
efforts.  The Company's balance sheet showed $16,287,000,000 in
assets and $10,348,000,000 in debts when it sought chapter 11
protection.  Kmart bought Sears, Roebuck & Co., for $11 billion to
create the third-largest U.S. retailer, behind Wal-Mart and
Target, and generate $55 billion in annual revenues.  The waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act
expired on Jan. 27, without complaint by the Department of
Justice.  (Kmart Bankruptcy News, Issue No. 115; Bankruptcy
Creditors' Service Inc. http://bankrupt.com/newsstand/or 215/945-
7000)


LEVITZ HOME: Rejecting Nanuet Lease Effective August 2
------------------------------------------------------
Nicholas M. Miller, Esq., at Jones Day, in New York, notifies the
U.S. Bankruptcy Court for the Southern District of New York that
Levitz Home Furnishings, Inc., and its debtor-affiliates will
reject the lease for Store No. 20509 located in Nanuet, New York,
effective as of Aug. 2, 2006.  The Debtors will abandon their
interest in any personal property located at the premises.

Josephine Tritt and Dorothy Altman are the landlords for Store No.
20509.

Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc.
-- http://www.levitz.com/-- is a leading specialty retailer of   
furniture in the United States with 121 locations in major
metropolitan areas principally the Northeast and on the West Coast
of the United States.  The Company and its 12 affiliates filed for
chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case
No. 05-45189).  David G. Heiman, Esq., and Richard Engman, Esq.,
at Jones Day, represent the Debtors in their restructuring
efforts.  When the Debtors filed for protection from their
creditors, they reported $245 million in assets and $456 million
in debts.  Jay R. Indyke, Esq., at Kronish Lieb Weiner & Hellman
LLP represents the Official Committee of Unsecured Creditors.
Levitz sold substantially all of its assets to Prentice Capital on
Dec. 19, 2005.  (Levitz Bankruptcy News, Issue No. 18; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or   
215/945-7000)


LEVITZ HOME: Seeks to Assign Three More Leases to PLVTZ LLC
-----------------------------------------------------------
PLVTZ, LLC, and the Pride Capital Group, as purchasers of
substantially all of Levitz Home Furnishings, Inc., and its
debtor-affiliates' assets, provided the Debtors with Lease
Assumption Notices for three store leases.

The Debtors, hence, seek the Court's authority to assume and
assign these leases to PLVTZ, and pay the cure amounts:

     Store#   Address         Landlord                Cure Amount
     ------   -------         --------                -----------
      10205   Soundview,      BR Bruckner Corporation;    $55,649
              New York        First New York Partners

      10401   Middletown,     Topper Associates, LLC       44,688
              New York

      10504   Kenilworth,     Grand Pop Realty Co.,        16,500
              New Jersey      Inc.

Nicholas M. Miller, Esq., at Jones Day, in Cleveland, Ohio, tells
the Court that the proposed assumption and assignment provide the
Landlords with adequate assurance of future performance.

Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc.
-- http://www.levitz.com/-- is a leading specialty retailer of   
furniture in the United States with 121 locations in major
metropolitan areas principally the Northeast and on the West Coast
of the United States.  The Company and its 12 affiliates filed for
chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case
No. 05-45189).  David G. Heiman, Esq., and Richard Engman, Esq.,
at Jones Day, represent the Debtors in their restructuring
efforts.  When the Debtors filed for protection from their
creditors, they reported $245 million in assets and $456 million
in debts.  Jay R. Indyke, Esq., at Kronish Lieb Weiner & Hellman
LLP represents the Official Committee of Unsecured Creditors.
Levitz sold substantially all of its assets to Prentice Capital on
Dec. 19, 2005.  (Levitz Bankruptcy News, Issue No. 18; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or   
215/945-7000)


LONE STAR: Buys 40% Stake in Valin Tube's Unit for $132 Mil. Cash
-----------------------------------------------------------------
Lone Star Technologies, Inc. entered into a definitive agreement
to form a joint venture with Hunan Valin Steel Tube & Wire Co.,
Ltd., one of China's largest steelmakers.

Under the agreement, Lone Star would acquire a 40% stake in one of
Valin Tube and Wire's subsidiaries, Hengyang Valin MPM Steel Tube
Co. Ltd., for a consideration of $132 million (approximately
CNY1.059 billion) in cash.  Lone Star will also provide
significant technical and related operational support for the
Joint Venture.  Lone Star contemplates a series of future
transactions related to the steel tube assets of Valin Tube and
Wire in Hengyang, Hunan Province with the expectation that Lone
Star would eventually contribute up to an aggregate of $238
million (approximately CNY1.909 billion) for 47% of the Joint
Venture.  All transactions being contemplated are subject to
relevant regulatory approvals and consents.

Upon injection of the $132 million into the Joint Venture, Lone
Star and Valin Tube and Wire will also jointly establish a sales
company with an initial equity investment of $15 million each to
manage the North American sales and marketing of tubular products
produced by the Joint Venture.  Lone Star will have exclusive
marketing and sales rights in North America to a minimum of
200,000 tons annually of oilfield tubular products produced by the
Joint Venture.

Valin Tube and Wire steel tube and related assets in Hengyang have
an estimated annual manufacturing capacity of approximately one
million pipe tons.  The Joint Venture will also have small- and
large-diameter billet casting capabilities, including two electric
arc furnace melt shops, and oilfield tubular finishing
capabilities.   The new pipe mill and related melt shop became
fully operational early this year.

Lone Star expects to achieve a number of important strategic,
operational and financial benefits from this transaction,
including:

   -- An expanded product offering that will encompass a full
      range of seamless and welded oilfield tubular products,
      significantly enhancing Lone Star's ability to provide
      oilfield products and service solutions to its customers
      worldwide;

   -- Access through the joint venture to a stable supply of high-
      quality, globally competitive seamless tubular products and
      services;

   -- A substantial equity stake in seamless pipe mills (melt
      shops through product finishing), including a newly built,
      state-of-the-art seamless pipe manufacturing and OCTG
      finishing plant;

   -- Participation in the Chinese oilfield tubular markets;

   -- Opportunities for growth in the specialty tubing
      (mechanical) sector; and

   -- Enhanced, sustainable long-term revenue generation and value
      creation potential, including expected EPS accretion in
      2007.

"Establishing both a manufacturing base and stable supply source
in China represents a major milestone for Lone Star, our
distributors and our customers. Through our participation in this
Joint Venture, Lone Star will add a broad range of high-quality
seamless tubular products and oilfield services to our extensive
line of premium welded OCTG offerings," Rhys J. Best, Lone Star's
Chairman and Chief Executive Officer, said.  "As a result, our
customers can look forward to having access to an even larger
array of products and services from a single source, when and
where they need them.  This transaction also gives us a highly
attractive point of entry into the most rapidly growing steel
market in the world, further strengthening our competitive
capabilities and positioning us for accelerated international
growth and profitability.

"We are particularly pleased to be forging this relationship with
Valin Tube and Wire, whose well-established presence in the
Chinese market and modern, efficient operating facilities, make
them an excellent partner for us.  This is an exciting transaction
that reflects the culmination of a great deal of hard work, mutual
respect and good faith collaboration on both sides.  I am
confident that our highly complementary fit and shared objectives
will enable us to deliver tangible and sustainable value to the
customers and shareholders of both of our companies," added Mr.
Best.

"Our strategic alliance with Lone Star marks Valin Tube and Wire's
entrance into the oilfield service industry and is an important
step in our company's overall development strategy," Xiao Wei Li,
Chairman of Valin Tube and Wire, said.  "This Joint Venture is a
true collaboration that will enable us to leverage our
complementary strengths and expertise in different industry
sectors to achieve synergies from our expanded market coverage and
enhance our overall competitiveness.

"We are committed to working closely with Lone Star to smoothly
integrate our operations so that we can begin to realize the many
benefits we expect this Joint Venture to create for both of us.  
From Valin Tube and Wire's perspective, we believe this alliance
will rapidly improve our capability to produce high-grade, high-
quality seamless steel pipe and tubes.  This will allow us to
adjust the mix of our product portfolio to address the huge
increase in demand we are seeing in the oilfield industry, both
domestically and globally.  As a result, we will be well
positioned to generate enhanced value for our shareholders,"
concluded Mr. Li.

                        Transaction Terms

Lone Star and Valin Tube and Wire will share the profits generated
by the Sales Company from the sale of oilfield tubular products
based upon a predetermined schedule that provides Lone Star with a
preferential return until the earlier date of: (i) the recovery of
the full value of its investment in the Joint Venture and the
Sales Company; or (ii) 10 years after the Sales Company is
established, after which time the profits will be shared equally
between the two parties.  Profits of the Joint Venture will be
shared based upon the joint venture partners' ownership stakes.

Under the terms of the agreement, currency fluctuations of less
than 10% that occur between the date of signing and the closing
will be borne equally by both Valin Tube and Wire and Lone Star.  
Should a fluctuation of greater than 10% occur, both parties have
the option to terminate or renegotiate the agreement as
appropriate.

In addition to the satisfaction of customary conditions, the
transaction is subject to the approval of the relevant regulatory
authorities in the Peoples Republic of China, including the State-
owned Assets Supervision and Administration Commission in Hunan,
the National Development and Reform Commission, and the Ministry
of Commerce.

Upon completion of the transaction, which is anticipated to be by
early 2007, both companies will participate in management
appointments and board member nominations for the Joint Venture
Company.  The Board of Directors of the Joint Venture will be
composed of 10 directors: four designated by Lone Star and six
designated by Valin Tube and Wire and affiliates.  The Chairman
of the Board of Directors is appointed by Valin Tube and Wire.  An
extensive number of matters require the affirmative vote of not
less than two-thirds of the members of the Board of Directors, of
which at least two votes must be cast by directors designated by
Lone Star.  These matters are intended to include all of the
important decisions that would come before the Board of Directors.

Management of the Joint Venture will be headed by a General
Manager who is nominated by Valin Tube and Wire.  Lone Star will
nominate the Chief Financial Officer, Chief Operating Officer,
Director of Quality Assurance and Director of International
Marketing.

The Sales Company will be overseen by a Board of Directors
composed of six directors: three designated by Lone Star and three
designated by Valin Tube and Wire.  The Chairman of the Sales
Company's Board of Directors is appointed by Lone Star.

Lone Star will fund its investment in the Joint Venture from its
general corporate resources which, at the end of the second
quarter of 2006, included $236.8 million in cash and short-term
investments and an available $125 million revolving credit
facility.

Weil, Gotshal & Manges LLP is acting as legal counsel to Lone Star
and Goldman Sachs & Co. is acting as financial advisor.

                  About Lone Star Technologies

Headquartered in Dallas, Texas, Lone Star Technologies, Inc.
(NYSE: LSS) -- http://www.lonestartech.com/-- is a holding  
company whose principal operating subsidiaries manufacture and
market oilfield casing, tubing, and line pipe, specialty tubing
products, including finned tubes used in a variety of heat
recovery applications, and flat rolled steel and other tubular
products and services.

Lone Star Technologies Inc.'s principal operating subsidiaries
manufacture, market and provide custom services related to
oilfield casing, tubing, couplings, and line pipe, specialty
tubing products used in a variety of applications, and flat rolled
steel and other tubular products.

                          *     *     *

In October 2005, Moody's Investors Service assigned Lone Star
Technologies' senior subordinate debt and long-term corporate
family ratings at B2 and Ba3 respectively.  The ratings were
placed with a stable outlook.

In the same year, Standard & Poor's placed the Company's long-term
foreign and local issuer credit ratings at BB- with a stable
outlook.


LYONDELL CHEMICAL: Citgo Interest Buy Cues Fitch to Affirm Ratings
------------------------------------------------------------------
Fitch Ratings affirmed and removed from Rating Watch Evolving the
ratings for Lyondell Chemical Company and Equistar Chemicals L.P.
following Lyondell's announcement to acquire the remaining 41.25%
interest held by Citgo Petroleum Corporation in Lyondell-Citgo
Refinery LP for $2.1 billion.  The affirmed ratings are:

  Lyondell:

    -- Issuer default rating 'BB-'
    -- Senior secured credit facility 'BB+'
    -- Senior secured notes and debentures 'BB+'

  Equistar:

    -- Issuer default rating 'B+'
    -- Senior secured credit facility 'BB+/RR1'
    -- Senior unsecured notes 'BB-/RR3'

At the same time, Fitch downgraded Lyondell's senior subordinated
notes rating to 'B' from 'B+' and prospectively assigns a 'BB+'
rating to Lyondell's new $800 million senior secured revolving
credit facility and $2.65 billion senior secured term loan.

Fitch also affirmed these:

  Millennium Chemicals Inc.'s:

    -- Issuer Default Rating 'B+'
    -- Convertible senior unsecured debentures 'BB/RR2'

  Millennium America Inc.:

    --Issuer Default Rating 'B+'
    --Senior secured credit facility and term loan 'BB+/RR1'
    --Senior unsecured notes 'BB/RR2'

The Rating Outlook for Lyondell, Equistar and Millennium is
Stable.  

For Lyondell, approximately $5.4 billion of debt is covered; for
Equistar, approximately $2.2 billion of debt is covered; and for
Millennium Chemicals, approximately $900 million of debt is
covered by these actions.

The rating actions resolve the Rating Watch Evolving status put in
place on July 21, 2006, following Lyondell's and its partner,
CITGO, announcement to discontinue the auction of LCR.

The rating affirmations for Lyondell's IDR, senior secured credit
facility, and senior secured notes and debentures are supported by
the increased access to cash flow from LCR as a result of its
acquisition of CITGO's remaining 41.25% in the refinery.

Given the fact that the refinery will be operating under a new
crude supply agreement between LCR and PDVSA (which is expected to
be based fully on market prices) and Fitch's outlook for continued
strength in refining margins, Fitch expects Lyondell's benefit as
the sole owner of LCR will offset the initial increase in
indebtedness to fund the purchase of CITGO's minority share.

Additionally Lyondell is expected to benefit from LCR's unique
operating capabilities, its advantaged location and recent capital
investments made to the refinery.

Lyondell's consolidated total debt decreased, by $457 million, to
$5.84 billion at June 30, 2006, from Dec. 31, 2005.  On a proforma
basis, Fitch expects total consolidated debt subsequent to the
acquisition to be $8.49 billion and Lyondell's parent debt level
to reach $5.42 billion.

Fitch also expects Lyondell credit metrics will rebound within
less than 18 months due to higher EBITDA levels and moderate debt
reduction.  By 2007 year-end Fitch anticipates Lyondell's
consolidated as well as Lyondell parent level credit metrics to
improve and surpass 2005 levels.  Total balance sheet debt is
expected to return to near current levels by the end of 2008.

The affirmation also considers debt reduction at Lyondell parent
will be heavily dependent on cash flow received from LCR and
Equistar.  Even though Fitch perceives integration and operating
risks to be low, event risk associated with potential hurricane
activity in the US Gulf and future political actions taken by the
Venezuelan government could have a material negative affect on the
refinery operations.  Fitch views political risk as it relates to
refinery operations higher than before due to the exit of CITGO as
a partner and the potential for Venezuelan heavy sour crude
supplies to be diverted away from the U.S. to other geographies.

The one notch downgrade of Lyondell's senior subordinated notes to
'B' reflects deep subordination with the increased amount of
senior secured debt post acquisition.

Lyondell's exposure to potential weakness in methyl tertiary butyl
ether markets and the loss of profitability if alternative
products are produced remains a rating concern, as does continued
volatility of raw material prices and its impact on demand,
dividends and debt levels.  Operating results in 2006 and 2007 are
likely to be unstable quarter to quarter, but overall tight supply
demand fundamentals coupled with low inventories should prove
favorable for Lyondell and its businesses in the short term.

The Stable Outlook reflects favorable business conditions for the
markets Lyondell participates in and the expectation that Lyondell
and its subsidiaries will continue to use excess cash for debt
repayment.  

Fitch also expects that energy and raw material prices will
continue to be volatile and remain a headwind for the company.
Potential weaknesses related to MTBE as well as Millennium's
business are likely to be offset by strong operations from
petrochemical and refining operations.

The rating affirmations for Equistar are supported by Fitch's view
that the credit profile at Equistar will not materially change as
a result of the purchase of CITGO's remaining share of LCR.
Lyondell's management has been consistent that the target debt
level at Equistar is $1.8 billion (approximately $500 million
lower than $2.3 billion total debt level during the last cyclical
trough).

Fitch expects Lyondell will continue to be committed to previously
stated debt reduction targets.  Furthermore the rating
affirmations incorporate Fitch's outlook for favorable market
conditions for the chemical sector in the near-term; however in
any one quarter margins may be under pressure from volatile raw
materials (crude oil and natural gas).  Margins are expected to
remain well above a mid-cycle level for 2006 and 2007.

Lastly, the ratings also include Equistar's product offerings of
ethylene, ethylene derivatives and co-products, its significant
earnings leverage, as well as strong cash generation.  However,
Equistar's ratings are limited by Lyondell's strong access to its
cash flow, its focus on North American markets, and a narrower
product portfolio compared to Lyondell.

The rating affirmations for Millennium reflect Fitch's view that
the credit profile at Millennium will also not materially change
as a result of the purchase of CITGO's remaining share of LCR.  
The ratings consider the cyclical nature of Millenniun's commodity
products, strong dividends through its 29.5% interest in Equistar,
sizable debt reduction during the last 15-months and Lyondell's
ownership of the company.

Currently, Millennium cannot declare dividends to Lyondell due to
certain restrictions in its existing bond indentures.  Concerns
include weaker than expected results for Millennium's core
businesses and expectations for future cash outflows for
distributions to Lyondell.  Furthermore, Fitch continues to
monitor any new developments regarding Millennium's ongoing lead
paint litigation.

Lyondell holds leading global positions in propylene oxide and
derivatives, plus TiO2, as well as leading North American
positions in ethylene, propylene, polyethylene, aromatics, acetic
acid, and vinyl acetate monomer.  With the recent acquisition of
LCR, Lyondell also expands it refining operations.  The company
benefits from strong technology positions and barriers to entry in
its major product lines.

Lyondell owns 100% of Equistar; 70.5% directly and 29.5%
indirectly through its wholly owned subsidiary Millennium.  Post-
acquisition, LCR is a wholly owned subsidiary of Lyondell as well.

In 2005, Lyondell and subsidiaries generated $2.22 billion of
EBITDA on $18.6 billion in sales.


MIRANT CORP: NY-Gen Unit Can Increase DIP Facility to $9.5 Mil.
---------------------------------------------------------------
The Honorable Michael D. Lynn of the U.S. Bankruptcy Court for the
Northern District of Texas allowed Mirant NY-Gen, LLC, a Mirant
Corporation debtor affiliate, to amend and increase its existing
lending facility with Mirant Americas, Inc., to $9,500,000
pursuant to a First Amendment to the Debtor-in-Possession Credit
Agreement.

The Court authorizes Mirant NY-Gen to execute and deliver the
First Amendment and the Amended DIP Facility Documents to Mirant
Americas.

As reported in the Troubled Company Reporter on July 7, 2006,
Mirant NY-Gen discovered that its $4,500,000 existing DIP Facility
is not enough to finance the final remediation plan approved by
the Federal Energy Regulatory Commission.  The Final Remediation
Plan provides for the remediation of Mirant NY-Gen's Swinging
Bridge hydroelectric facility.

Headquartered in Atlanta, Georgia, Mirant Corporation (NYSE: MIR)
-- http://www.mirant.com/-- is an energy company that produces
and sells electricity in North America, the Caribbean, and the
Philippines.  Mirant owns or leases more than 18,000 megawatts of
electric generating capacity globally.  Mirant Corporation filed
for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-
46590), and emerged under the terms of a confirmed Second Amended
Plan on Jan. 3, 2006.  Thomas E. Lauria, Esq., at White & Case
LLP, represented the Debtors in their successful restructuring.
When the Debtors filed for protection from their creditors, they
listed $20,574,000,000 in assets and $11,401,000,000 in debts.
The Debtors emerged from bankruptcy on Jan. 3, 2006.  (Mirant
Bankruptcy News, Issue No. 103; Bankruptcy Creditors' Service
Inc., http://bankrupt.com/newsstand/or 215/945-7000)

                           *     *     *

As reported in the Troubled Company Reporter on July 17, 2006,
Moody's Investors Service downgraded the ratings of Mirant
Corporation and its subsidiaries Mirant North America, LLC and
Mirant Americas Generation, LLC.  The Ba2 rating for Mirant Mid-
Atlantic, LLC's secured pass through trust certificates was
affirmed.  Additionally, Mirant's Speculative Grade Liquidity
rating was revised to SGL-2 from SGL-1.  The rating outlook is
stable for Mirant, MNA, MAG, and MIRMA.

Moody's downgraded Mirant Americas Generation, LLC's Senior
Unsecured Regular Bond/Debenture, to B3 from B2.  Moody's also
downgraded Mirant Corporation's Corporate Family Rating, to B2
from B1, and Speculative Grade Liquidity Rating, to SGL-2 from
SGL-1.  Mirant North America, LLC's Senior Secured Bank Credit
Facility, was also downgraded to B1 from Ba3 and its Senior
Unsecured Regular Bond/Debenture, to B2 from B1.

As reported in the Troubled Company Reporter on July 13, 2006,
Fitch Ratings placed the ratings of Mirant Corp., including the
Issuer Default Rating of 'B+', and its subsidiaries on Rating
Watch Negative following its announced plans to buy back stock and
sell its Philippine and Caribbean assets.

Ratings affected are Mirant Corp.'s 'B+' Issuer Default Rating and
Mirant Mid-Atlantic LLC's 'B+' Issuer Default Rating and the Pass-
through certificates' 'BB+/Recovery Rating RR1'.

Fitch also placed Mirant North America, Inc.'s Issuer Default
Rating of 'B+', Senior secured bank debt's 'BB/RR1' rating, Senior
secured term loan's 'BB/RR1' rating, and Senior unsecured notes'
'BB-/RR1' rating on Rating Watch Negative.  Mirant Americas
Generation, LLC's Issuer Default Rating of 'B+' and Senior
unsecured notes' 'B/RR5' rating was included as well.

Standard & Poor's Ratings Services also placed the 'B+' corporate
credit ratings on Mirant Corp. and its subsidiaries, Mirant North
American LLC, Mirant Americas Generating LLC, and Mirant Mid-
Atlantic LLC, on CreditWatch with negative implications.


MIRANT CORP: Wants ConEd & O&R to Comply with Purchase Agreement
----------------------------------------------------------------
In 1998, Mirant Corp.'s debtor-affiliates in New York, entered
into four agreements to purchase certain generation facilities of
Consolidated Edison Company of New York, Inc., and Orange and
Rockland Utilities, Inc.

Old Mirant or MC 2005, LLC, guaranteed the New York Debtors'
obligations under the Purchases Agreements and transferred as
purchase price (i) $349,272,262 to O&R and (ii) $136,920,555 to
ConEd.

In December 2000, O&R, the New York Debtors and Mirant Americas
Energy Marketing, LP, reconciled the amounts then owed to or from
the Sellers:

    (a) O&R cancelled its $3,987,435 claim against Mirant NY-Gen,
        LLC, Mirant Lovett, LLC, and Mirant Bowline, LLC;

    (b) O&R transferred $2,362,812 to Mirant Bowline by wire
        transfer;

    (c) MAEM cancelled its $6,350,248 claim against O&R;

    (d) Mirant NY-Gen cancelled $1,071,843 of indebtedness due to
        it from MAEM;

    (e) Mirant Lovett agreed to pay $2,819,754 to MAEM at a future
        but unspecified date; and

    (f) Mirant Bowline agreed to pay $2,458,651 to MAEM at a
        future but unspecified date.

                       Liability Obligations

Pursuant to the Purchase Agreements, the New York Debtors assumed
certain liabilities with respect to the Purchased Assets, except
those identified as excluded liabilities.

Craig H. Averch, Esq., at White & Case LLP, in Miami, Florida,
notes that O&R and ConEd represented in the Purchase Agreements
that:

    * they possessed no non-disclosed liabilities relating to the
      business or operations of the Purchased Assets;

    * there had not been any damage, destruction or casualty loss
      which had a material adverse effect on the Purchased
      Assets; and

    * they were in compliance with all applicable environmental
      laws.

O&R and ConEd agreed to indemnify Mirant NY-Gen, Mirant Bowline,
and Mirant Lovett from all claims asserted against the Debtors,
and arising out of the Excluded Liabilities or from any breach of
the covenants.

The Purchase Agreements also provide that O&R and ConEd would be
responsible for its prorated portion of taxes accrued by the
Purchased Assets through the Closing Date.

                      Plan of Reorganization

In accordance with the Debtors' Plan, Old Mirant and MAEM were
transferred to Mirant Corporation on the Effective Date.  All
assets of MAEM and other "Trading Debtors" were transferred to
Mirant Energy Trading, LLC.

                    Deficiencies and Problems
                 Indemnification and Tax Payments

Mr. Averch relates that during the past two years, the New York
Debtors have discovered various deficiencies and problems with
the Purchased Assets resulting in continuing liabilities, damages
and costs.

Based on the New York Debtors' investigation, many of the
liabilities, damages and costs are "Excluded Liabilities" under
the Purchase Agreements and further result from breaches of O&R
and ConEd's covenants.

The New York Debtors have identified these deficiencies and
problems at the facilities that are Excluded Liabilities:

    (1) Improper closure at the Lovett coal ash management
        facility;

    (2) Leaking from the underground pipeline at the Hillburn
        generating facility;

    (3) Inadequate secondary containment storage capacity for oil
        tanks at the Lovett facility and at the Bowline facility;
        and

    (4) Existence of a sinkhole at the Swinging Bridge Dam near
        the Swinging Bridge Hydroelectric Station.

The New York Debtors have asserted indemnification from the O&R
and ConEd, but the Sellers failed to abide by their contractual
obligations.

In addition, since the Closing Date, the New York Debtors and Old
Mirant paid the property taxes on behalf of O&R and ConEd that
should have been prorated under the Purchase Agreements, Mr.
Averch says.  The New York Debtors and Old Mirant have asserted
reimbursement for those tax payments, but O&R and ConEd failed to
do so.

                         Claim Objections

O&R filed Claim No. 8411 for $962,037, while ConEd filed Claim
No. 8036 for $85,843 on account of certain unpaid services.

The New York Debtors seek to disallow the Claims pursuant to
Section 502(d) of the Bankruptcy Code.  Section 502(d) provides
that a court will disallow any otherwise allowable claim of an
entity that is the recipient of a transfer avoidable under
Chapter 5 of the Bankruptcy Code, unless the recipient surrenders
the transfer.

ConEd has not surrendered the Transfers made to it by Old Mirant,
hence, the Claim should be disallowed under Section 502(d), Mr.
Averch argues.  In addition, an invoice for $1,880, which was
attached to ConEd's Claim No. 8036 should be disallowed for
untimely filing, Mr. Averch says.

Moreover, Mr. Averch asserts that the Old Mirant Transfers
constitute as fraudulent transfers to ConEd that is avoidable
pursuant to Section 544 and under applicable state law.

Section 544(b)(1) provides that any debtor may avoid any transfer
of an interest in property or any obligation incurred that is
avoidable under applicable law by a creditor holding an unsecured
claim that is allowable or not allowable under Section 502.  The
phrase "under applicable law" has been interpreted to mean the
state's fraudulent transfer law that would govern the potentially
fraudulent transaction.

The New York Debtors also dispute the validity and timing of
O&R's Claim No. 5517, Mr. Averch notes.  Pursuant to Section
550(a), to the extent that a transfer is avoided under Section
544, 545, 547, 548, 549, 553(b), or 724(a), the trustee may
recover, for the benefit of the estate, the property transferred,
or, if the court so orders, the value of the property, from:

    (1) the initial transferee of the transfer or the entity for
        whose benefit the transfer was made; or

    (2) any immediate or mediate transferee of the initial
        transferee.

For these reasons, the Mirant Entities ask Judge Lynn to:

    (a) disallow the O&R Claim and the ConEd Claim;

    (b) avoid Old Mirant's guaranty obligations pursuant Section
        544;

    (c) avoid the Transfers pursuant to Section 544;

    (d) rule that Mirant and MET may recover the value of the
        property transferred, with interest, attorney's fees, and
        costs of suit and collection allowable by law;

    (e) disallow in accordance with Section 502(d), any claim held
        by O&R and ConEd until they satisfy the judgment;

    (f) rule that:

        (1) the deficiencies and problems at the facilities
            included in the Purchased Assets are Excluded
            Liabilities under certain of the Purchase Agreements;

        (2) O&R and ConEd are obligated to indemnify the New York
            Debtors for the liabilities, damages and costs arising
            out of the Excluded Liabilities; and

        (3) O&R and ConEd are required to defend the New York
            Debtors against those liabilities; and

    (g) award the Mirant Entities damages for breach of contract
        according to proof, interest, attorney's fees, and other
        costs.

              ConEd and O&R Seek Dismissal of Complaint
                  and Withdrawal of the Reference

Martin A. Sosland, Esq., at Weil, Gotshal & Manges LLP, in
Dallas, Texas, asserts that the time for the Debtors to assert
claims for fraudulent transfers has expired.

Pursuant to Section 24.010(a)(2) of the Texas Business & Commerce
Code Annotated, claims for constructive fraudulent transfer are
time-barred when they are brought more than four years after the
transfer, Mr. Sosland points out.

The transfers occurred on November 24, 1998, when the agreements
were entered into, Mr. Sosland says.  Moreover, even if the
closing date of June 30, 1999, were considered as the transfer
date, still, more than four years passed between the transfers
and the Debtors' July 14, 2003, Petition Date.

Hence, O&R and ConEd ask Judge Lynn to dismiss the fraudulent
transfer claims for failure to state a claim on which relief can
be granted.

With respect to the breach of contract claims, O&R and ConEd ask
the U.S. District Court for the Northern District of Texas to
withdraw the reference pursuant to Section 157(d) of the
Judiciary and Judicial Procedures Code.

Mr. Sosland contends that the claims for breach of contract are
non-core proceedings.  Absent the Debtors' bankruptcy, the claims
for beach of contract would have been brought in a state or
federal court in New York, Mr. Sosland points out.

The pendency of the New York Debtors' bankruptcy cases and the
fact that Mirant was once in bankruptcy does not alter the
substance of the causes of action, nor does the fact that the
claims for breach of contract are couched as counterclaims to
proofs of claim, Mr. Sosland asserts.

The Breach of Contract Counterclaims are state law contract
claims relating to environmental and tax issues, which do not
constitute core proceedings, Mr. Sosland says.  They do not
implicate any federally created or bankruptcy-related rights.

Additionally, O&R and ConEd seek the transfer of the adversary
proceedings with respect to the Breach of Contract Counterclaims
to the New York District Court in the interest of justice and for
the convenience of the witnesses and the parties.

Judge Lynn will conduct a status conference on the motion to
withdraw the reference on August 30, 2006, at 10:30 a.m.

                          About Mirant

Headquartered in Atlanta, Georgia, Mirant Corporation (NYSE: MIR)
-- http://www.mirant.com/-- is an energy company that produces
and sells electricity in North America, the Caribbean, and the
Philippines.  Mirant owns or leases more than 18,000 megawatts of
electric generating capacity globally.  Mirant Corporation filed
for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-
46590), and emerged under the terms of a confirmed Second Amended
Plan on Jan. 3, 2006.  Thomas E. Lauria, Esq., at White & Case
LLP, represented the Debtors in their successful restructuring.
When the Debtors filed for protection from their creditors, they
listed $20,574,000,000 in assets and $11,401,000,000 in debts.
The Debtors emerged from bankruptcy on Jan. 3, 2006.  (Mirant
Bankruptcy News, Issue No. 103; Bankruptcy Creditors' Service
Inc., http://bankrupt.com/newsstand/or 215/945-7000)

                           *     *     *

As reported in the Troubled Company Reporter on July 17, 2006,
Moody's Investors Service downgraded the ratings of Mirant
Corporation and its subsidiaries Mirant North America, LLC and
Mirant Americas Generation, LLC.  The Ba2 rating for Mirant Mid-
Atlantic, LLC's secured pass through trust certificates was
affirmed.  Additionally, Mirant's Speculative Grade Liquidity
rating was revised to SGL-2 from SGL-1.  The rating outlook is
stable for Mirant, MNA, MAG, and MIRMA.

Moody's downgraded Mirant Americas Generation, LLC's Senior
Unsecured Regular Bond/Debenture, to B3 from B2.  Moody's also
downgraded Mirant Corporation's Corporate Family Rating, to B2
from B1, and Speculative Grade Liquidity Rating, to SGL-2 from
SGL-1.  Mirant North America, LLC's Senior Secured Bank Credit
Facility, was also downgraded to B1 from Ba3 and its Senior
Unsecured Regular Bond/Debenture, to B2 from B1.

As reported in the Troubled Company Reporter on July 13, 2006,
Fitch Ratings placed the ratings of Mirant Corp., including the
Issuer Default Rating of 'B+', and its subsidiaries on Rating
Watch Negative following its announced plans to buy back stock and
sell its Philippine and Caribbean assets.

Ratings affected are Mirant Corp.'s 'B+' Issuer Default Rating and
Mirant Mid-Atlantic LLC's 'B+' Issuer Default Rating and the Pass-
through certificates' 'BB+/Recovery Rating RR1'.

Fitch also placed Mirant North America, Inc.'s Issuer Default
Rating of 'B+', Senior secured bank debt's 'BB/RR1' rating, Senior
secured term loan's 'BB/RR1' rating, and Senior unsecured notes'
'BB-/RR1' rating on Rating Watch Negative.  Mirant Americas
Generation, LLC's Issuer Default Rating of 'B+' and Senior
unsecured notes' 'B/RR5' rating was included as well.

Standard & Poor's Ratings Services also placed the 'B+' corporate
credit ratings on Mirant Corp. and its subsidiaries, Mirant North
American LLC, Mirant Americas Generating LLC, and Mirant Mid-
Atlantic LLC, on CreditWatch with negative implications.


NATIONAL COAL: Poor Performance Prompts S&P to Junk Ratings
-----------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Nashville, Tennessee-based National Coal Corp., to 'CCC'
from 'CCC+', in response to continued weak financial performance
and concerns about the company's very limited liquidity.

At the same time, Standard & Poor's lowered its senior secured
debt rating on the company to 'CCC-' from 'CCC'.  The outlook is
negative.

At June 30, 2006, the company had only $1.5 million in cash and
had generated only $500,000 in cash from operations during the
first half of 2006.

"We could lower the ratings further if the company's liquidity
position continues to erode because of any combination of
significant operating disruptions, a deterioration of market
conditions, markedly higher capital expenditures, or unexpectedly
high costs," said Standard & Poor's credit analyst Marie Shmaruk.

"We could raise the ratings should the company execute its
expansion programs in a way that materially enhances its cash
flow, diversity, and cost profile, while reducing its debt
leverage."

National Coal is a very small producer of thermal coal in the
difficult mining region of central Appalachia.


OPBIZ LLC: Form 10-Q Filing Delay Prompts S&P's Negative Watch
--------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B-' corporate
credit and senior secured ratings for Las Vegas, Nevada-based
OpBiz LLC on CreditWatch with negative implications following
the announcement by BH/RE, L.L.C. (the parent company of OpBiz)
that OpBiz will delay filing its 10-Q for the three months ended
June 30, 2006.

"The delay is the result of ongoing negotiations between OpBiz and
its contractors relative to the company's intention to enter into
gross maximum price contracts for a substantial portion of the
planned renovation work to the Aladdin Resort and Casino, which is
ongoing," said Standard & Poor's credit analyst Michael Scerbo.

Under the terms of these proposed contracts, OpBiz expects to make
advanced payments to the contractors in exchange for a discount
on the total cost of the renovations.  These payments are expected
to exceed the minimum spend requirements defined in the company's
bank agreement, particularly the requirement that at least
$72 million be spent by Aug. 31, 2006.

As a result, the company does not anticipate that it will be
required to make a mandatory prepayment of amounts outstanding
under the bank facility for a renovation spend shortfall, which is
a condition in the bank agreement.  However, in the event that a
prepayment of the bank facility is required, the company's
liquidity situation could be pressured and the viability of the
renovation project in question.  

In resolving our CreditWatch listing, Standard & Poor's will
monitor the negotiations between OpBiz and its bank group for a
resolution to the minimum renovation spend issue.  The outcome of
Standard & Poor's ratings review ranges from an affirmation to a
multiple notch downgrade if the company's liquidity position
becomes constrained.


OWENS CORNING: Schultze Wants List of Class A5 Creditors
--------------------------------------------------------
Schultze Asset Management LLC asks the U.S. Bankruptcy Court for
the District of Delaware to direct Owens Corning and its debtor-
affiliates to produce names and mailing addresses of creditors in
Class A5.

As previously reported, Schultze objected to the Disclosure
Statement attached to the Debtors' Sixth Amended Plan of
Reorganization, asserting that some parties to the Plan Support
Agreement that are members of Class A5 may have conflicting
interests in Classes A11, A12 or A4.

Schultze, holder of approximately $60,000,000 in face amount of
notes in Class A5, believes that those parties' commitments to
support the Plan may be motivated by the conflicting interests
rather than by actual belief in the fairness of treatment of
Class A5 creditors under the Plan.

The Court overruled Schultze's Disclosure Statement Objection but
directed the Debtors to insert certain language reflecting its
concern in the Plan, Thomas J. Francella, Jr., at Reed Smith LLP,
in Wilmington, Delaware, says.  The Court noted that Schultze
could independently express its concerns in a letter to other
creditors.

Schultze has already prepared the letter, which it asserts is
accurate and complies with the provisions of the Bankruptcy Code,
Mr. Francella tells Judge Fitzgerald.

Schultze therefore wants the list of names and addresses so it
could distribute the letter.

Schultze believes that Court approval of the content of the
letter is not required.

Mr. Francella points out that the U.S. Court of Appeals for the
Third Circuit ruled in Century Glove, Inc., v. First Am Bank of
N.Y. 860 F.2d 94 (3rd Cir. 1998), that once adequate information
has been provided a creditor, Section 1125(b) of the Bankruptcy
Code does not limit communication between creditors.

       Debtors Say Letter Has Misstatements and Omissions

The Debtors relate that they have informed Schultze that they
would provide the requested mailing information before Schultze
filed its request.  The Debtors, however, conditioned furnishing
the information upon Schultze's removal of what they believe are
legal and factual inaccuracies in the letter and the correction
of some material omissions.

The Debtors provided proposed revisions to Schultze, Norman L.
Pernick, Esq., at Saul Ewing LLP, in Wilmington, Delaware,
informs Judge Fitzgerald.  However, Schultze would not agree to
the proposed modifications.

Still, the Debtors are willing to mail the letter provided that:

   -- the misstatements and omissions are corrected prior to the
      letter's dissemination; or

   -- the Debtors, the Official Representatives, the Ad Hoc
      Committee of Bondholders and the Class A5 bondholders are
      provided an opportunity to provide their own letters in the
      same mailing to Class A5 creditors with Schultze's letter
      so that Class A5 creditors receive a broader, more balanced
      perspective on the Plan.

"Permitting Schultze's proposed letter to be circulated without
. . . opposing views would do the voting process . . . and Class
A5 creditors, a disservice," Mr. Pernick maintains.

                        Schultze Talks Back

Schultze merely requested a mailing list; It did not ask the
Debtors to include the letter in the Plan's solicitation package
nor did it ask them to provide any imprimatur whatsoever to the
letter, Mr. Francella points out.

Instead of giving the mailing list, the Debtors demanded
reviewing and editing the letter, holding the mailing list
hostage until Schultze acceded to their demands, Mr. Francella
complains.

According to Mr. Francella, Schulze made certain of the changes
that the Debtors requested.

Schulze just does not want to give the Debtors complete control
over its communications with other creditors, Mr. Francella
contends.  But from their objection, that is exactly what the
Debtors want from the Court.

Schultze ask the Court to overrule the Debtors' Objection in its
entirety.

                 Court Grants Schultze's Request

The Court granted Schulze request over the Debtors' objection.

The Court compels the Debtors to provide Schultze with the names
and addresses of Class A5 Claimants.

Since no request for approval of the letter was filed with the
Court, Judge Fitzgerald rules that the letter will not be
included in the Plan's solicitation package.

"[I]f Schultze . . . desires to sent the letter it shall do so
itself at its own expense and risk," Judge Fitzgerald adds.

The Order is without prejudice to any party-in-interest to
include in the solicitation package a response to Schultze's
letter.

A full-text copy of Owens Corning's Sixth Amended Plan is
available for free at http://ResearchArchives.com/t/s?b1c

A full-text copy of Owens Corning's Sixth Amended Disclosure
Statement is available for free at:

               http://ResearchArchives.com/t/s?b1d

Owens Corning (OTC: OWENQ.OB) -- http://www.owenscorning.com/--
manufactures fiberglass insulation, roofing materials, vinyl
windows and siding, patio doors, rain gutters and downspouts.
Headquartered in Toledo, Ohio, the Company filed for chapter 11
protection on Oct. 5, 2000 (Bankr. Del. Case. No. 00-03837).
Norman L. Pernick, Esq., at Saul Ewing LLP, represents the
Debtors.  Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered,
represents the Official Committee of Asbestos Creditors.  James J.
McMonagle serves as the Legal Representative for Future Claimants
and is represented by Edmund M. Emrich, Esq., at Kaye Scholer LLP.
(Owens Corning Bankruptcy News, Issue No. 138; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or   
215/945-7000)


PEP BOYS: S&P Removes Developing Watch & Says Outlook is Negative
-----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook for
Philadelphia-based Pep Boys- Manny Moe & Jack to negative and
removed its ratings, including the 'B-' corporate credit rating,
from CreditWatch, where they were placed with developing
implications on Feb. 10, 2006.

"This action follows the company's conclusion of its strategic
review process and its decision not to pursue a sale," said
Standard & Poor's credit analyst Stella Kapur.

Progress in turning around the company's operating performance
continues to be limited.  Same-store sales at the auto parts
retailer for the first half of 2006 decreased 0.3%, following a
1.3% decline for all of 2005.  However, EBITDA improved
marginally, growing 10% to $57 million in the first half of 2006,
and operating cash flow generation increased significantly to $86
million from $19 million in the first half of 2005.  The higher
operating cash flow primarily reflected better working capital
management.  This, combined with much lower capital spending,
enabled the company to reduce its outstanding debt to $526 million
at July 29, 2006, from $587 million at the end of 2005.

While credit metrics have improved since the end of 2005, they
still remain very weak.  At July 29, 2006, lease-adjusted debt to
EBITDA was 8.3x, compared with more than 9x at 2005, and last-12-
month EBITDA coverage of interest remained flat at 1.3x due to
higher interest expenses following its refinancing activity
earlier this year.

Standard & Poor's anticipates that it will be difficult for Pep
Boys to experience significant improvements in operating
performance from its remerchandising and remodeling programs,
particularly given the more challenging environment for consumers
and the company's reduced capital spending activity.  

As a result, Standard & Poor's does not anticipate significant
improvement in EBITDA generation and operating performance in the
near term.  Near-term credit metrics improvement is also not
expected to be meaningful.

The ratings on Pep Boys-Manny, Joe & Jack reflect:

   * weak operating trends;

   * the risks of operating in the highly competitive and
     consolidating auto parts retail sector;

   * highly leveraged capital structure; and

   * somewhat limited financial flexibility.

The company faces considerable challenges and needs to turn around
its service segment and reinvest capital in its store base.


PERFORMANCE TRANSPORTATION: Modified Incentive Program Draws Fire
-----------------------------------------------------------------
The Teamsters National Automobile Transporters Industry
Negotiating Committee and the Official Committee of Unsecured
Creditors of Performance Transportation Services, Inc., and its
debtor-affiliates object to the Debtors' motion to a modified
performance incentive program.

As reported in the Troubled Company Reporter on July 31, 2006, The
Debtors came up with a modified performance-based program
consisting of two components:

   1. the EBITDAR Realization Bonus; and

   2. the Value Added Bonus.

Under the terms of the Modified Program, the Debtors increased the
number of their management personnel eligible to achieve a bonus
payment, to include all 54 participants that were eligible for a
bonus payment under the Debtors' prepetition bonus plan.  The
Modified Program does not include any type of severance payments.

                         Objections

(A) Teamsters

The Teamsters and its local unions threaten a strike if the
Debtors' proposed incentive plan is approved.

Frederick Perillo, Esq., at Previant, Goldberg, Uelmen, Gratz,
Miller and Brueggeman, S.C., in Milwaukee, Wisconsin, tells the
Court that the Incentive Plan will de facto be funded by
significant benefit and wage reductions to rank and file
employees, who will bear unfairly the whole burden of cost-
savings of "reorganizing" the estate.

However, Mr. Perillo continues, rank-and-file Teamsters will not
pay a penny of tribute to upper management.  Teamsters will not
sacrifice alone to prop up an estate weighed down by the fatness
of management greed, he says.

Mr. Perillo notes that the Debtors have sought $10,000,000 to
$13,000,000 in concessions from Teamster-represented employees.  
On the other hand, since February, the Debtors have modified the
bonus program by removing the upward limit on the size of "value
added" bonuses to the top executives, and by adding 50 more
executives and managers.

If the Debtors achieve the "maximum" EBITDAR goal of the Plan,
and effectuate an early sale of the company, Mr. Perillo says the
apparent bonuses called for by the Plan would be in excess of
$4,000,000, weighted heavily to their two top executives.

The Incentive Program rewards select executives and managers with
a windfall for doing no more than their regular job duties, Mr.
Perillo points out.

Despite the re-casting of the incentive program in a "goal-
oriented" fashion, Mr. Perillo cites two indications that the
Plan is a sham:

   (1) The Debtors specifically discussed designing a bonus
       program with their financial experts from FTI Consulting
       prior to the bankruptcy.  In particular, they discussed
       the new proscriptions in Section 503(c) of the Bankruptcy
       Code, as amended by the Bankruptcy Abuse Prevention and
       Creditor Protection Act of 2005.  There is therefore a
       very strong reason to believe that the Debtors were
       attempting to evade the prohibitions in the Act through
       artful program design; and

   (2) The employment contracts of the managers and executives
       already require these employees to devote their "best"
       efforts to performance of their duties.  Because no one
       from the Debtors can identify specifically how the
       executives or managers will achieve the goals, or what
       particular steps need to be taken, other than to "work
       harder" at their current assignments, the bonus program is
       nothing more than an increase in pay for people who
       already have contracts requiring them to perform their
       duties.

"A plan which increases [employees'] compensation on the theory
that they will give 'better' than their 'best' effort is a mere
caricature of high school coach's exhortation to a team of
adolescents to 'give 110%,'" Mr. Perillo adds.

Teamsters believes that the incentive program is part of a sub
rosa plan of reorganization by management, to be achieved
entirely on the backs of current employees.

"The sub rosa plan is simple: Step One is the Court's approval of
this bonus program. Step Two is the Section 1113 hearing.  The
executives get rich -- very rich -- very quickly," according to
Mr. Perillo.

Step Three, Mr. Perillo adds, is the strike the Teamsters will
call, which will prevent the reorganization of the Debtors.  That
strike cannot be enjoined by the Court, as the bankruptcy court
lacks federal subject matter jurisdiction to do so.

The TNATINC and Local Unions 25, 63, 104, 120, 215, 222, 294,
299, 312, 355, 377, 449, 490, 492, 560, 580, 651, 657, 710, 745,
957, 964, and 988 are affiliated with the International
Brotherhood of Teamsters.  Teamsters is the exclusive
representatives for collective bargaining purposes of
approximately 2,100 of the employees of the Debtors and their
affiliates in the United States and Canada.

The Debtors and Teamsters are parties to a single master
collective bargaining agreement, known as the National Master
Automobile Transporters Agreement.  Teamsters estimates accrued
but unpaid benefits under the NMATA to exceed $8,000,000 as of
February 3, 2006.

(B) Creditors Committee

The Official Committee of Unsecured Creditors tells Judge Kaplan
that the Modified Incentive Program merely expands the eligible
participates in an attempt to justify the top-heavy bonuses to
insiders and increases the cost of the Original Program while
still providing a windfall to the Debtors' two top insiders.  The
Modified Program, like the Original Program, is nothing more than
a stealth key employee retention plan intended to reward
insiders.

Beth Ann Bivona, Esq., at Damon & Morey LLP, in Buffalo, New
York, notes that bonuses under the Modified Program may be
payable irrespective of the executives' performance.  Given that
the two major causes of the Debtors' woes -- production cutbacks
by original equipment manufacturers and high fuel prices -- are
beyond the executives' control, they can hardly be said to be
essential or even necessary to a turnaround.  Positive movements
in these areas, Ms. Bivona says, will directly impact EBITDAR,
which is the benchmark for payments under the Modified Plan.  
This means the executives will receive substantial payments if
these metrics move in a favorable direction even if they do
nothing.

In addition, Ms. Bivona notes that the chief restructuring
officer retained by the Debtors has many duties and
responsibilities that overlap those of the executives. If the
Modified Program is approved, the estates will be paying
significant and duplicative bonuses to the executives for actions
taken by the CRO.

It is also doubtful that the Modified Program is necessary to
retain talented managers as the auto-haul transportation sector
is facing significant problems, according to Ms. Bivona.  The
Debtors' number one competitor -- Allied Automotive Group -- is
also in bankruptcy.  Thus, she says, attractive employment
alternatives in this industry would appear to be limited.

In sharp contrast, Ms. Bivona relates, the Debtors seem much less
concerned about the approximately 2,100 rank and file employees
that drive the machine.  The Debtors seek approval to pay its
upper management significant bonuses, while attempting to
renegotiate downwards what hourly employees will earn.

"This is clearly the wrong message to send to the thousands of
employees supporting the company, particularly when there is a
national shortage of long-distance truckers," Ms. Bivona says.

The Debtors have survived for many months in bankruptcy without
paying bonuses, Ms. Bivona reminds the Court.  She contends that
bonuses to insiders have proven to be unnecessary as the Debtors
have been in bankruptcy for nearly eight months with only limited
and normal attrition rates.  However, bonuses to executive
insiders could eviscerate recoveries to unsecured creditors.  
Bonuses to executive insiders could irreparably damage the
Debtors' reorganization efforts if, as a result of these bonuses,
the Debtors' employees strike.

                         Debtors Respond

The Debtors assert that their Modified Incentive Performance
Program satisfies all applicable requirements of the Bankruptcy
Code.

The Debtors assure Judge Kaplan that the Modified Incentive
Program was designed to ensure that any potential bonuses are
commensurate with the value that eligible employees create for
the estate.

"No employee will be entitled to incentive compensation simply
for remaining with the Debtors through the bankruptcy period.  
Nor will any employee be entitled to incentive compensation
simply for being terminated," Garry M. Graber, Esq., at Hodgson
Russ, LLP, in Buffalo, New York, says.

Mr. Graber admits that the Debtors sought input from major
constituents in developing the Modified Incentive Program.  The
Debtors, Mr. Graber relates, negotiated terms of the Program with
their first lien lenders, second lien lenders and DIP lenders.  
After the Creditors Committee and the Teamsters voiced objections
to the Original Plan, the Debtors hired Watson Wyatt & Company as
compensation experts to review and modify the program to address
those concerns.

The Teamsters and the Committee never expressed a willingness to
negotiate, let alone agree to, any of the terms of the Modified
Incentive Program, Mr. Graber notes.

Mr. Graber also relates that the Modified Incentive Program is
substantially similar to the incentive programs approved by
the courts in In re Nobex Corp., No. 05-20050 (Bankr. D. Del.
Jan. 12, 2006), and In re Calpine Corp., No. 05-60200 (Bankr.
S.D.N.Y. Apr. 26, 2006).

In Nobex, the debtor sought approval of an incentive program that
would pay certain senior executives, who were hired prior to the
Petition Date, a percentage of the price achieved upon the sale
of the debtors' assets.  Under the Nobex incentive program, the
executives received no compensation unless they created
additional value above the stalking horse bid that was already
proposed by the date the incentive program was to be approved.

In Calpine, the New York court approved performance incentive
programs under which bonus payments to management personnel were
based on the achievement of a certain enterprise value, a
specific annual cash flow target and certain cost savings.

Mr. Graber also contends that the Debtors' Modified Incentive
Program is not subject to Sections 503(c)(1) and 503(c)(2) of the
Bankruptcy Code.  Those sections describe certain conditions that
must be satisfied before an insider can receive retention or
severance bonus, not an incentive bonus.

The Modified Incentive Program, Mr. Graber insists, falls within
the purview of Section 503(c)(3), which provides the standards
that govern all management bonus programs other than "stay" bonus
programs or severance programs.

In approving the Nobex incentive program, Mr. Graber notes, the
Delaware court concluded that the program's structure was not
similar to a retention or severance plan.  The court also
recognized that if the proposed sale did not provide sufficient
funds, the senior executives could remain employed with the
debtor indefinitely and they would receive no bonus.

In Calpine, the New York court held that even if the incentive
programs had the incidental effect of making employees "excited
enough to stay at the company," Calpine's programs were not
retention plans to be assessed under Section 503(c)(1) because
the programs focus on maximizing the value of the estate and not
to retain employees.

Mr. Graber also points Judge Kaplan to the approval by the U.S.
Bankruptcy Court for the Northern District of Georgia of Allied
Holdings, Inc.'s key employee retention plan and severance plan.  
The Allied plan amounts to more than $10,000,000 in payments for
80 employees.

Mr. Graber notes that the $10,000,000 in potential payments,
which represent 1.13% of Allied's revenues -- was not in any way
tied to the performance of eligible employees.

As compared to the Allied bonus plan, the Modified Incentive Plan
offers a smaller total payout and requires greater effort to
achieve it, Mr. Graber tells Judge Kaplan.  Moreover, unlike
participants in the Allied plan, the Debtors' employees will only
be eligible for incentive pay under the Modified Program if they
achieve meaningful financial goals.

Additionally, Mr. Graber contends that the Teamsters' objection
highlights the fallacy that it will be too easy for eligible
participants to achieve financial goals necessary to trigger
bonus payments under the Modified Programs.  The Teamsters'
representation that there will be a strike if the Program is
approved makes clear that the financial milestones will be
anything but easy.

                        About Performance

Headquartered in Wayne, Michigan, Performance Transportation
Services, Inc. -- http://www.pts-inc.biz/-- is the second largest       
transporter of new automobiles, sport-utility vehicles and light
trucks in North America.  The Company provides transit stability,
cargo damage elimination and proactive customer relations that are
second to none in the finished vehicle market segment.  The
company's chapter 11 case is administered jointly under Leaseway
Motorcar Transport Company.

Headquartered in Niagara Falls, New York, Leaseway Motorcar
Transport Company Debtor and 13 affiliates filed for chapter 11
protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Case No. 06-00107).
James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A.
Hirsch, Esq., at Kirkland & Ellis, LLP, and Garry M. Graber, Esq.,
at Hodgson Russ LLP represent the Debtors in their restructuring
efforts.  David Neier, Esq., at Winston & Strawn LLP, represents
the Official Committee of Unsecured Creditors.  When the Debtors
filed for protection from their creditors, they estimated assets
between $10 million and $50 million and more than $100 million in
debts.  (Performance Bankruptcy News, Issue No. 12; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or   
215/945-7000)


PERFORMANCE TRANSPORTATION: Taps @Road as MRM Solutions Provider
----------------------------------------------------------------
@Road, Inc., disclosed that Performance Transportation Services,
Inc., has selected @Road as its MRM solutions provider.  Under the
terms of the agreement, PTS intends to deploy the flagship
@Road(R) GeoManager(SM) MRM solution designed to give PTS greater
location intelligence, manageability and real-time visibility into
the work of up to 1,544 commercial carrier drivers and trucks.

"After a competitive MRM vendor evaluation and solution pilot
program, we are pleased to announce that PTS has chosen @Road,"
said Krish Panu, @Road CEO.  "The PTS customer win reaffirms @Road
as the MRM solutions provider of choice.  We look forward to
working with PTS and helping it to achieve a sizable reduction in
fuel and other operating costs as well as increased productivity
for delivering new cars and trucks to dealers throughout North
America."

PTS operates under three key transportation business lines
including: E. and L. Transport, Hadley Auto Transport and Leaseway
Motorcar Transport, and employs more than 2,000 employees who
deliver approximately 3.8 million new cars and light trucks
annually.  PTS Operates from thirty-one strategically located
facilities throughout the U.S. and Canada and has responsibility
for seventy-two different customer vehicle delivery centers.

"Of the five vendors we evaluated, @Road demonstrated strength in
all areas including user interface, North American deployment
capability and technical interfaces," said Jeff Cornish, PTS
president and chief executive officer.  "Moreover, with more than
150,000 vehicles and mobile workers managed using @Road MRM
solutions, we like the fact that it maintains redundant data
systems and has the infrastructure and staff to support this
project.  @Road also provided us with the most flexible and
competitive pricing."

PTS plans to also deploy an @Road on-board vehicle diagnostics and
reporting solution based on J1708 industry standards.  @Road
Vehicle Diagnostics is designed to retrieve vehicle-operating
information from the vehicle's electronic on-board control module.
Information generated from the J1708 appliance is designed to be
transmitted via the @Road iLM(R) in-vehicle wireless communication
device to PTS managers in the form of daily or real-time online
reports detailing such vehicle data as fuel usage and Power Take-
Off, as well as engine fault codes related to oil pressure,
coolant temperature, excessive engine speed and more.  This
information can be used to remotely monitor important engine
parameters for proactive preventative maintenance, which can also
help reduce vehicle down time, fuel and other operating costs.

As part of @Road's relationship with PTS, @Road is also working
with PTS's wholly-owned subsidiary, Logistics Computer Services
("LCS"), a custom software solutions provider for the automotive
transportation sector, to develop a joint marketing relationship
designed to bring a combination of @Road and LCS technology and
solutions to the commercial carrier transportation market.  As
part of the joint arrangement, @Road and LCS plan to market a
solution that includes a streamlined process for vehicle delivery,
with electronic signature capture, exception data collection at
the point of dealership contact, trip related messaging services,
fuel tax reporting, pre and post trip equipment reporting,
integrated geofence event triggers and other proprietary automated
processes.

"We are asking LCS and @Road to develop a joint solution for
commercial carrier transporters that would be designed to
significantly reduce paper intensive daily processes and which
would also reduce 'out of route' miles as well as provide
electronic Department of Transportation Logs and JBus interface to
their equipment," said Cornish.  "A primary goal is that this
solution would have a complete extension of a customer's existing
system to the driver and have enhanced capabilities to
dramatically improve the overall vehicle delivery process."

                           About @Road

@Road, Inc. is a global provider of solutions designed to automate
the management of mobile resources and to optimize the service
delivery process for customers across a variety of industries.  
@Road delivers Mobile Resource Management solutions in three key
areas: Field Force Management, Field Service Management and Field
Asset Management.

                 About Performance Transportation

Headquartered in Wayne, Michigan, Performance Transportation
Services, Inc. -- http://www.pts-inc.biz/-- is the second largest      
transporter of new automobiles, sport-utility vehicles and light
trucks in North America.  The Company provides transit stability,
cargo damage elimination and proactive customer relations that are
second to none in the finished vehicle market segment.  The
company's chapter 11 case is administered jointly under Leaseway
Motorcar Transport Company.

Headquartered in Niagara Falls, New York, Leaseway Motorcar
Transport Company Debtor and 13 affiliates filed for chapter 11
protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Case No. 06-00107).
James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A.
Hirsch, Esq., at Kirkland & Ellis, LLP, and Garry M. Graber, Esq.,
at Hodgson Russ LLP represent the Debtors in their restructuring
efforts.  David Neier, Esq., at Winston & Strawn LLP, represents
the Official Committee of Unsecured Creditors.  When the Debtors
filed for protection from their creditors, they estimated assets
between $10 million and $50 million and more than $100 million in
debts.  (Performance Bankruptcy News, Issue No. 12; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or  
215/945-7000)


PLIANT CORP: 1st Interest Payment on 13% Senior Notes on Jan. 2007
------------------------------------------------------------------
As previously reported, Pliant Corporation and certain of its
subsidiaries entered into an Indenture with The Bank of New York
Trust Company, N.A., regarding the issuance of the company's 13%
Senior Subordinated Notes due 2010.

On a Form 8-K filing with the Securities and Exchange Commission,
Pliant Corporation Senior Vice President and Chief Financial
Officer Joseph Kwederis discloses that pursuant to the Indenture,
interest that accrues on the New Subordinated Notes will be
payable semi-annually on each January 15 and July 15, commencing
Jan. 15, 2007, to holders of record on the immediately
preceding January 1 or July 1.  The New Subordinated Notes will
accrue payment-in-kind interest with respect to the first two
interest payment dates and then will accrue semi-annual cash pay
interest with respect to the interest payment dates afterwards.

Among other things, the Indenture contains:

   -- covenants limiting the incurrence of indebtedness and
      restricting certain payments;

   -- covenants limiting restrictions on the ability of
      subsidiaries to make distributions to the company;

   -- covenants limiting sales of assets and subsidiary stock and
      the entry into affiliate transactions; and

   -- provisions governing merger and change of control
      transactions.

Mr. Kwederis relates that the company may be required under
certain circumstances to offer to repurchase New Subordinated
Notes with the proceeds of certain asset sales.

The New Subordinated Notes will automatically become due and
payable without notice upon the occurrence of an event of default
involving insolvency or bankruptcy of the company or certain of
its subsidiaries.  In addition, upon the occurrence and during
the continuation of any other event of default under the
Indenture, by notice given to the company, the Trustee or holders
of at least 25% in principal amount of the New Subordinated Notes
may declare the principal of and accrued and unpaid interest on
all the New Subordinated Notes to be immediately due and payable.

Headquartered in Schaumburg, Illinois, Pliant Corporation --
http://www.pliantcorp.com/-- produces value-added film and
flexible packaging products for personal care, medical, food,
industrial and agricultural markets.  The Debtor and 10 of its
affiliates filed for chapter 11 protection on Jan. 3, 2006
(Bankr. D. Del. Lead Case No. 06-10001).  James F. Conlan, Esq.,
at Sidley Austin LLP, and Edmon L. Morton, Esq., and Robert S.
Brady, Esq., at Young, Conaway, Stargatt & Taylor, represent the
Debtors in their restructuring efforts.  The Debtors tapped
McMillan Binch Mendelsohn LLP, as their Canadian bankruptcy
counsel.   The Ontario Superior Court of Justice named RSM
Richter, Inc., as the Debtors' information officer in their
restructuring proceeding under Companies Creditors Arrangement Act
in Canada.  Kenneth A. Rosen, Esq., at Lowenstein Sandler, P.C.,
serves as counsel to the Official Committee of Unsecured
Creditors.  Don A. Beskrone, Esq., at Ashby & Geddes, P.A., is
local counsel to the Creditors' Committee.  As of Sept. 30, 2005,
the company had $604,275,000 in total assets and $1,197,438,000 in
total debts.  The Debtors emerged from chapter 11 protection on
July 19, 2006 (Pliant Bankruptcy News, Issue No. 20; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)


PREMIER ENTERTAINMENT: S&P Holds Junk Rating on Developing Watch
----------------------------------------------------------------
Standard & Poor's Ratings Services held its ratings on Premier
Entertainment Biloxi LLC, including the 'CCC' corporate credit
rating, on CreditWatch with developing implications where they
were placed on April 19, 2006, reflecting:

   * Upside ratings potential in the event the company's
     $160 million first mortgage notes due 2012 are successfully
     tendered at par or better, or if it appears that equity
     holders will financially support the rebuilding effort; and

   * Downside ratings potential in the event there is no
     successful tender of the notes, and if equity holders do not
     appear likely to continue to support the project.

"Premier announced in its June 2006 10-Q that BHR Holdings Inc.
has agreed to make its third tender offer for the notes at 101%
plus accrued interest upon the receipt of additional insurance
proceeds by the company, expected by Aug. 31, 2006, per terms of
settlement agreements with carriers; however, BHR's agreement to
make another tender offer is subject to conditions, one of which
is a concurrent tender offer by Premier to partially redeem the
notes at 100%," said Standard & Poor's credit analyst Emile
Courtney.

BHR, an affiliate of Leucadia National Corp., acquired a
controlling interest in Premier through a subsidiary in April
2006.  BHR's first two tender offers expired with no notes
tendered.

Insurance receivables under settlement agreements with carriers
total $160 million; however, collections as of August 15, 2006,
were $122 million, with $38 million in collections expected by
Aug. 31, 2006.

Premier has estimated the costs of opening the Hard Rock Hotel &
Casino Biloxi, including construction, interest and expenses
through the reconstruction period, and existing overdue
obligations, would be approximately $195 million.  Premier was
formed to construct and operate the Hard Rock Biloxi, which was
destroyed by Hurricane Katrina on August 29, 2005.


QUANTUM CORP: S&P Ups Sr. Secured First-Lien Debt's Rating to B+
----------------------------------------------------------------
Standard & Poor's Ratings Services revised its rating and recovery
rating on Quantum Corp.'s proposed first-lien bank facility to
'B+' and '1' from 'B' and '3', respectively, following a recent
amendment to the terms of the proposed financing of Quantum's
acquisition of Advanced Digital Information Corporation.

The bank loan rating, along with the '1' recovery rating,
reflect Standard & Poor's expectation of full recovery of
principal by first-lien creditors in the event of a payment
default.

The newly proposed first-lien senior secured bank facility will
consist of:

   * a $150 million revolving credit facility (due 2009); and
   * a $225 million term loan (due 2012).

Additionally, Quantum will now issue a $125 million second-lien
senior secured term loan (due 2013), which will not be rated.

Furthermore, an accelerated maturity clause has been added to the
terms of the credit facilities, such that the failure to either
refinance or convert existing 4.375% convertible subordinated
notes prior to January 1, 2010, would accelerate maturities of the
first- and second-lien facilities to April 2, 2010 and May 2,
2010, respectively.

Scheduled amortization also was amended such that Quantum will be
required to repay $50 million of the first-lien term loan by
September 2008 in equal quarterly installments beginning in
December 2006.  Thereafter, annual amortization will be $2.25
million, paid quarterly, until maturity, at which point the
remaining balance is due.

Quantum's corporate credit rating is 'B' with a stable outlook.
The corporate credit rating reflects increased financial leverage
and debt servicing burdens resulting from the ADIC acquisition
financing and relatively weak operating profitability stemming
from mixed industry fundamentals and competition.  These factors
are partially offset by the potential for an improved business
position, and incremental improvements in profitability and cash
flow generation, resulting from cost cuts and synergies from the
acquisition of ADIC.

Ratings List:

  Quantum Corp.

    * Sr. secured first-lien debt's rating revised to B+ (Recovery
      Rating 1) from B (Recovery Rating 3)


RADNOR HOLDINGS: Files for Chapter 11 Protection to Sell Assets
---------------------------------------------------------------
Radnor Holdings Corp. and 21 of its affiliates filed for
chapter 11 protection in the U.S. Bankruptcy Court for the
District of Delaware on Aug. 21, 2006.

Paul D. Ridder, the Company's Vice-President, Chief Financial
Officer and Assistant Secretary tells the Court that the Debtors
have a highly leveraged capital structure, as a result of both
operational decisions and circumstances beyond their control.
Specifically, during 2005 and 2006, the Debtors launched certain
new products in response to customer requirements and an effort to
improve profitability.  Although the new product launches were
successful and the Debtors obtained valuable customer contracts as
a result, the Debtors made significant expenditures related to the
new products, including investments in equipment and research.  To
make such expenditures and meet operating expenses, the Company
incurred substantial debt.  A significant percentage of that debt
is at variable interest rates that have steadily risen.  

When the Debtors filed for bankruptcy, the principal amount of
their secured indebtedness was in excess of $201 million,
consisting of:

    * a prepetition term loan under which approximately
      $118.5 million is outstanding,

    * a prepetition revolving facility under which approximately
      $63.4 million is outstanding, and

    * additional secured debt of approximately $19.2 million
      outstanding under miscellaneous secured credit documents.  

The Debtors also have unsecured bond indebtedness in the principal
amount of $135 million, an unsecured note in the principal amount
of $7 million in connection with the acquisition of the Debtors'
plastics manufacturing operations in 2003, and approximately
$47.2 million in unpaid ordinary course trade debt, including
certain accrued expenses.

             Operational and Financial Difficulties

Mr. Ridder adds that over the past 12 months, the Debtors have
experienced an unprecedented increase in raw material prices and
escalating energy costs.  Specifically, the Company's products
require a variety of raw materials, including styrene monomer and
pentane in the production of expandable polystyrene (EPS), and
plastic resins such as polystyrene and polypropylene for the
manufacture of plastic packaging products.  Each of these raw
materials is petrochemical based.  Thus, escalating petrochemical
and petrochemical derivatives product prices have significantly
increased the cost of the raw materials the Company uses to
produce its products, which increased costs the Debtors have not
been able to fully pass through to their customers.  Moreover,
even when the Debtors were able to pass costs through to
customers, they experienced a lag between the increase in cost and
the benefit of the increased prices.

The rising cost of energy (both crude oil and natural gas) also
increased the Debtors' operating expenses, including shipping
costs and the cost of running their manufacturing facilities. As a
result, the Debtors' operating margins have suffered,
notwithstanding the fact that the Debtors have been able to
increase the average selling prices of certain of their products,
Mr. Ridder says.

Mr. Ridder contends that the Debtors' highly leveraged capital
structure has limited not only their ability to respond to
thoseconditions, but also their ability to exploit business
opportunities and respond to unpredictable business challenges,
such as the 2005 Gulf Coast hurricanes.

                Prepetition Restructuring Efforts

Earlier this year, the Company undertook more aggressive measures
to improve operating performance and address its liquidity
concerns.  In particular, the Debtors began to implement a
company-wide cost reduction program.  These efforts included
consolidating the Debtors' Jacksonville, Florida manufacturing
operation into other plants, and reducing the Debtors' workforce
by approximately 10%.  The Debtors have also made strides in
improving manufacturing efficiencies and reducing nonoperating
costs.  Although the Debtors benefited from these initiatives,
their liquidity problems continued, according to Mr. Ridder.

By June of this year, the Debtors had been advanced approximately
$20 million in excess of permitted advances under the Prepetition
Revolving Facility.  Accordingly, on June 15, 2006, the Debtors
publicly announced that they had reached an agreement with
National City Business Credit, Inc. -- the Prepetition Revolving
Agent -- and Bank of America, N.A. as syndication agent and
KeyBank, National Association, pursuant to which the Debtors
agreed to undertake efforts to reduce the Over Advance in exchange
for such lenders' agreement to forbear from exercising
rights and remedies on account of the Over Advance.   NCBC, BofA
and Keybank are the Original Prepetition Revolving Lenders.

                         Sale Process

At the same time, the Debtors began evaluating strategic
alternatives, and engaged Lehman Brothers as their financial
advisor to advise and assist with the evaluation of such
alternatives.  Lehman immediately commenced due diligence and
worked with the Company to develop a preliminary business plan for
2006 and 2007.  Based on that plan, the Debtors and their
financial advisers pursued a variety of transactions, including an
equity or capital infusion as well as a sale of all or a portion
of the Company's business.  In addition, Lehman began to search
for debtor-in-possession financing, in the event that the Company
determined to commence Chapter 11 cases.

Although the Company and Lehman contacted numerous potentially
interested parties regarding financing and sales, it became
apparent that the Prepetition Term Loan Agent was the most likely
potential purchaser of the Debtors' assets and that the Original
Prepetition Revolving Lenders were the most likely providers of
debtor in possession financing.

Accordingly, the Debtors and their advisors approached Tennenbaum
Capital Partners, LLC, regarding its interest in serving as a
"stalking horse" bidder in a bankruptcy court-supervised sale of
the Debtors' business.  At the same time, the Debtors began to
negotiate the terms and conditions of a debtor in possession
financing facility with the Original Prepetition Revolving
Lenders.

                    Negotiations with Lenders

While negotiating the terms of a stalking horse bid, the Debtors
entered into the First Amendment to the Agreement Regarding Loans,
dated as of July 18, 2006, pursuant to which the Prepetition
Revolving Agent and the Prepetition Revolving Lenders agreed to
continue to fund the Debtors, and forbear from exercising rights
and remedies, through July 27, 2006.  The primary purposes of the
First Amendment were to afford the Debtors an opportunity to
negotiate the stalking horse agreement and to arrange debtor in
possession financing by proving the Company with additional
liquidity of $3.2 million.  

In connection with the First Amendment, the Prepetition Term Loan
Agent and the Prepetition Term Loan Lenders entered into an
intercreditor agreement, dated July 18, 2006, with the Prepetition
Revolving Agent and the Original Prepetition Revolving Lenders,
pursuant to which the Prepetition Term Loan Lenders contractually
agreed to subordinate to the Increased Overadvance.  Subsequently,
the Debtors and the Prepetition Revolving Agent and the
Original Prepetition Revolving Lenders extended the forbearance
period through July 31, 2006.

On August 1, 2006, the Current Prepetition Revolving Lender
purchased the interests of the Original Prepetition Revolving
Lenders with respect to the Prepetition Revolving Facility, and
concurrently therewith provided the Debtors with additional
liquidity of $5 million and a forbearance through August 21, 2006.
The Debtors used the additional time and liquidity provided by the
Current Prepetition Revolving Lenders to further explore their
restructuring alternatives, and negotiate the terms of a stalking
horse agreement with the Prepetition Term Loan Agent and the terms
of debtor in possession financing with the Current Prepetition
Revolving Lenders.

The Debtors' efforts culminated in the Debtors entering into two
agreements.  The first is a stalking horse asset purchase
agreement, pursuant to which the Debtors would sell substantially
all of their assets, subject to higher and better offers, to TR
Acquisition Company, Inc., an affiliate of the Prepetition Term
Loan Agent.  The second agreement is a debtor in possession
financing credit agreement that provides the Debtors with
sufficient liquidity to commence a bankruptcy court supervised
sale process that will enable the Debtors to maximize value for
creditors and other interested parties through a sale of
substantially all of its assets or some other restructuring
alternative.

Accordingly, the Debtors filed for bankruptcy to use the section
363 sale process as a means to maximize value and provide
themselves with a vehicle to explore any and all of their
restructuring alternatives, Mr. Ridder explains.

Headquartered in Radnor, Pennsylvania, Radnor Holdings Corporation
-- http://www.radnorholdings.com/-- is a private holding company.  
The Company's domestic operations are conducted through Radnor's
wholly owned subsidiaries, WinCup Holdings, Inc., WinCup Texas,
Ltd., and StyroChem U.S., Ltd.  The Company's subsidiaries
manufacture and distribute a broad line of disposable foodservice
products in the United States, and specialty chemical products
worldwide.


RADNOR HOLDINGS: Case Summary & 30 Largest Unsecured Creditors
--------------------------------------------------------------
Lead Debtor: Radnor Holdings Corporation
             150 Radnor Chester Road, Suite A300
             Radnor, Pennsylvania 19087

Bankruptcy Case No.: 06-10894

Debtor affiliates filing separate chapter 11 petitions:

      Entity                                     Case No.
      ------                                     --------
      Benchmark Holdings, Inc.                   06-10895
      Radnor Asset Management, Inc.              06-10896
      Radnor Chemical Corporation                06-10897
      Radnor Delaware II, Inc.                   06-10898
      Radnor Investments II, Inc.                06-10899
      Radnor Investments III, Inc.               06-10900
      Radnor Investments, Inc.                   06-10901
      Radnor Investments, L.L.C.                 06-10902
      Radnor Management Delaware, Inc.           06-10904
      Radnor Management, Inc.                    06-10905
      StyroChem Delaware, Inc.                   06-10906
      StyroChem Europe Delaware, Inc.            06-10907
      StyroChem GP, L.L.C.                       06-10908
      StyroChem LP, L.L.C.                       06-10909
      StyroChem U.S., Ltd.                       06-10910
      WinCup Europe Delaware, Inc.               06-10911
      WinCup GP, L.L.C.                          06-10912
      WinCup Holdings, Inc.                      06-10913
      WinCup LP, L.L.C.                          06-10914
      WinCup RE, L.L.C.                          06-10915
      WinCup Texas, Ltd.                         06-10916

Type of Business: The Debtor manufactures and distributes
                  a broad line of disposable food service
                  products in the United States, and specialty
                  chemicals worldwide.
                  See http://www.radnorholdings.com/

Chapter 11 Petition Date: August 21, 2006

Court: District of Delaware

Judge: Peter J. Walsh

Debtors' Counsel: Gregg M. Galardi, Esq.
                  Mark L. Desgrosseilliers, Esq.
                  Skadden, Arps, Slate, Meagher
                  One Rodney Square
                  Wilmington, DE 19899
                  Tel: (302) 651-3000
                  Fax: (302) 651-3001

Total Assets: $361,454,000

Total Debts:  $325,300,000

Debtors' Consolidated List of 30 Largest Unsecured Creditors:

   Entity                               Claim Amount
   ------                               ------------
   Unsecured Bondholders                   $135,000,000
   U.S. Trust
   Attn: Constantine Hromych
   123 South Broad Street
   Philadelphia, PA 19109
   Tel: (215) 772-1500
   Fax: (215) 772-7620

   Polar Plastics                            $9,035,257
   P.O. Box 428
   Mount Mourne, NC 28123
   Tel: (336) 784-8880
   Fax: (336) 785-1815

   Lyondell Chemical Company                 $8,349,001
   Attn: Dominic Ching
   2640 Collections Drive Center
   Chicago, IL 60693
   Tel: (713) 309-4726
   Fax: (713) 309-7595

   Nova Chemicals Inc.                       $6,709,672
   Nova c/o Citibank N.A.
   P.O. Box 2399
   Carol Stream, IL 60132-2
   Tel: (412) 490-4000
   Fax: (412) 490-4155

   Total Petrochemicals USA, Inc.            $2,329,605
   P.O. Box 932437
   Atlanta, GA 31193
   Tel: (713) 483-5451
   Fax: (713) 483-5466

   Formosa Plastics Corp.                    $1,994,735
   P.O. Box 7062
   Los Angeles, CA 90074
   Tel: (973) 992-2090
   Fax: (973) 992-9627

   WeyerHaeuser                              $1,440,090
   Attn: Steven R. Rogel
   Box 75146
   Charlotte, NC 28275
   Tel: (704) 334-5222
   Fax: (253) 924-3380

   Swift Transportation                      $1,354,562
   Attn: Brian Alexander
   P.O. Box 643116
   Cincinnati, OH 45264
   Tel: (800) 446-4051
   Fax: (614) 308-2385

   WS Packaging Group                        $1,354,562
   1102 Jefferson St.
   Algoma, WI 54201
   Tel: (800) 236-3424
   Fax: (920) 487-5644

   South Hampton Resources, Inc.               $698,152
   FM 418 West
   Silsbee, TX 77656
   Tel: (409) 385-14000
   Fax: (409) 385-2453

   Temple Inland                               $666,450
   1000 Erwin Thompson Dr.
   Minden, LA 71055
   Tel: (512) 434-3739
   Fax: (512) 434-3750

   KHS                                         $639,429
   880 Bahcall Court
   Waukesha, WI 83186
   Tel: (262) 786-2188
   Fax: (262) 786-2155

   Exelon Energy Inc.                          $546,317
   21425 Network Place
   Chicago, IL 60673
   Tel: (877) 617-8593
   Fax: (877) 212-2630

   Service Transport                           $510,298
   P.O. Box 751418
   Houston, TX 77275
   Tel: (713) 209-2500
   Fax: (713) 209-2656

   Richlen Construction                        $453,745
   115 Aspen Drive
   Pacheco, CA 94553
   Tel: (415) 904-0900
   Fax: (415) 904-0905

   Waller Logistics                            $446,136
   Attn: Robert Waller
   P.O. Box 872835
   Kansas City, MO 64187
   Tel: (816) 629-3400
   Fax: (816) 629-3460

   Brady Services                              $445,346
   Attn: Jim Brady
   1915 Church Street
   Greensboro, NC 27405
   Tel: (336) 510-6404
   Fax: (336) 378-0677

   M&N Plastics Inc.                           $416,170
   Attn: Robert Waller
   2706 S. Turkey Creek Rd.
   Plant City, FL 33566
   Tel: (503) 252-8811
   Fax: (503) 252-6796

   Bright Transportation                       $406,609
   Attn: Paul Miller
   P.O. Box 348
   South Holland, IL 60473

   Eagle Express                               $386,786
   Attn: Danny Fulmah
   P.O. Box 348
   South Holland, IL 60473
   Tel: (708) 333-8401
   Fax: (708) 333-4747

   Heartland Express                           $360,310
   Attn: Larry Byrd
   2777 Heartland Dr.
   Coralville, IA 52241
   Tel: (319) 545-2728
   Fax: (319) 545-1349

   Enbridge Gathering                          $318,135
   Attn: Kurt Knight
   2358 Payshare Circle
   Chicago, IL 60674
   Tel: (972) 367-2640
   Fax: (214) 750-7120

   Temple Inland                               $312,357
   1000 Erwin Thompson Dr.
   Minden, LA 71055
   Tel: (512) 434-7339
   Fax: (512) 434-3750

   Tango Transport                             $296,815
   Attn: Laurence Vaugn
   P.O. Box 11407
   Birmingham, AL 35246
   Tel: (800) 368-0599
   Fax: (318) 683-4454

   Dolphin Cartage                             $294,961
   Attn: Andy Gegtmeyer
   2832 Eagle Way
   Chicago, IL 60678
   Tel: (773) 767-1234
   Fax: (773) 767-7610

   National Freight                            $292,223
   Attn: Leon Cobb
   P.O. Box 12852
   Philadelphia, PA 19101
   Tel: (856) 691-7000
   Fax: (856) 794-4653

   Integrated Packaging                       $263,304
   P.O. Box 23680
   Newark, NJ 07189
   Tel: (732) 247-5200
   Fax: (732) 247-9559

   Plastic Packaging Inc.                     $249,414
   P.O. Box 245
   Aberdeen, NC 28315
   Tel: (828) 328-2466
   Fax: (828) 322-1830

   Transco Lines                              $235,642
   Attn: Danny Fulmah
   P.O. Box 1400
   Russelville, AR 72811
   Tel: (479) 967-5700
   Fax: (479) 968-3373

   Suez Energy Resources                      $228,837
   P.O. Box 25237
   Lehigh Valley, PA 18002-5237
   Tel: (713) 636-0000
   Fax: (713) 636-1364


SAFENET INC: Form 10-Q Filing Delay Prompts Notice of Default
-------------------------------------------------------------
SafeNet, Inc., disclosed that on Aug. 14, 2006, it received a
purported Notice of Default from Citibank, N.A., Trustee, under
the Indenture relating to the issuance of its $250 million 2-1/2%
Convertible Subordinated Notes Due 2010, as a result of the
failure to file the Form 10-Q.  This purported notice of default
demands that the Company cure the purported default within 60 days
from the receipt of the notice of default.  The Indenture provides
that the trustee or holders of at least 25% of the aggregate
principal amount of the Notes may accelerate repayment of the
Notes if a default under the Indenture is not cured within 60 days
after the Company receives notice of the default.

The Company contemplates that the required SEC filings would be
made within such 60-day period.  However, SafeNet cannot assure
such filings will be made within this period.

Headquartered in Belcamp, Maryland, SafeNet, Inc. (NASDAQ:SFNT) --
http://www.safenet-inc.com/-- provides complete security  
utilizing its encryption technologies to protect communications,
intellectual property and digital identities, and offers a full
spectrum of products including hardware, software, and chips. is a
global leader in information security.


SAFENET INC: Late Form 10-Q Filing Prompts Nasdaq Delisting Notice
------------------------------------------------------------------
SafeNet, Inc., which has delayed filing its Form 10-Q for the
quarter ended June 30, 2006, reported that it has in place a plan
that, if achieved, would allow for this Form 10-Q to be filed by
early October.

The Company received a letter from the NASDAQ Listing
Qualifications Staff indicating that the failure to timely file
the Form 10-Q, as required by NASDAQ Marketplace Rule 4310(c)(14),
could serve as a basis for the delisting of the Company's stock
from The NASDAQ Global Select Market.  The Company plans to
request a hearing before a NASDAQ Listings Qualifications Panel to
address the filing delay.  At the hearing, the Company will
present its plan to regain compliance with NASDAQ's filing
requirements.  The Company's common stock will remain listed on
The NASDAQ Global Select Market pending the issuance of a formal
decision by the NASDAQ Panel.

SafeNet hopes to remedy its filing delay before NASDAQ effects the
de-listing of SafeNet's common shares, but SafeNet cannot assure
that the Panel will grant a request for continued listing.

The plan would also allow the filing of a previously delayed
amendment to Form 8-K containing certain financial information
regarding the Company's acquisition of Eracom Technologies AG.

Headquartered in Belcamp, Maryland, SafeNet, Inc. (NASDAQ:SFNT) --
http://www.safenet-inc.com/-- provides complete security  
utilizing its encryption technologies to protect communications,
intellectual property and digital identities, and offers a full
spectrum of products including hardware, software, and chips. is a
global leader in information security.


SATELITES MEXICANOS: Court Gives Interim OK on Milbank as Counsel
-----------------------------------------------------------------
The Honorable Robert D. Drain, of the U.S. Bankruptcy Court for
the Southern District of New York, granted Satelites Mexicanos,
S.A. de C.V., application to employ Milbank, Tweed, Hadley &
McCloy LLP, on an interim basis.

The Court will convene a hearing on Sept. 6, 2006, to consider the
Application on a permanent basis.  Objections, if any, are due  
Aug. 31, 2006.

The Debtor needs bankruptcy lawyers to prosecute its Chapter 11
Plan of Reorganization to confirmation.  In this regard, the
Debtor has chosen Milbank because of the firm's substantial
expertise and familiarity in the Debtor's business operations and
capital structure.

The Debtor retained Milbank on March 6, 2001, to advise it on
various corporate and restructuring matters, including, with
respect to the Debtor's procurement of financing and insurance for
its satellites as well as with various general U.S. corporate and
securities legal issues.  Milbank has also represented the Debtor
in connection with its restructuring efforts prior to its filing
for chapter 11 protection, including the Section 304 Proceeding,
the U.S. issues relating to its Concurso Proceeding in Mexico, and
the negotiation and execution of its Restructuring Agreement with
major parties-in-interest.

As legal counsel, Milbank is expected to:

   (a) advise the Debtor of its rights, powers, and duties as
       Debtor and debtor-in-possession in the continued management
       And operation of its business and properties;

   (b) advise and assist the Debtor in connection with the
       solicitation and confirmation of the plan of reorganization
       and related documents;

   (c) advise the Debtor concerning actions that it might take to
       collect and recover property for the benefit of its estate;

   (d) prepare on behalf of the Debtor all necessary and
       Appropriate applications, motions, draft orders, other
       pleadings, notices, schedules, and other documents, and
       review all financial and other reports to be filed in the
       Debtor's Chapter 11 case;

   (d) advise the Debtor concerning, and prepare responses to,
       applications, motions, other pleadings, notices, and other
       papers that may be filed and served in the Debtor's
       Chapter 11 case;

   (e) review the nature and validity of any liens asserted
       against the Debtor's property and advise the Debtor
       concerning the enforceability of those liens;

   (f) advise and assist the Debtor in connection with any
       potential asset dispositions;

   (g) advise the Debtor concerning executory contract and
       unexpired lease assumptions, assignments and rejections;

   (h) assist the Debtor in reviewing, estimating, and resolving
       claims asserted against its estate;

   (j) commence and conduct any and all litigation necessary or
       appropriate to assert rights held by the Debtor, protect
       assets of its estate, or otherwise further the goal of
       completing a successful reorganization;

   (k) advise and assist the Debtor with the preparation and
       filing of various documents required for the Debtor's
       compliance with U.S. securities laws; and

   (l) perform all other necessary legal services in connection
       with the Debtor's Chapter 11 case and other general
       corporate matters concerning the Debtor's business.

The Debtor will pay Milbank for its services in accordance with
the firm's standard hourly rates:

          Position                        Hourly Rate
          --------                        -----------
          Partners                        $600 - $850
          Of Counsel                      $590 - $715
          Associates & Senior Attorneys   $225 - $565
          Legal Assistants                $155 - $295

Matthew S. Barr, Esq., a member of Milbank, Tweed, Hadley & McCloy
LLP, discloses that on June 26, 2003, the Debtor provided his firm
with a $200,000 retainer.  Over time, the Debtor provided Milbank
with additional payments to increase the Retainer and, as of the
Debtor's filing for chapter 11 protection, Milbank held $454,250.  
The Retainer remains unapplied.

In addition, Mr. Barr notes that according to Milbank's books and
records for the year prior to the Debtor's filing for chapter 11
protection, Milbank was paid $3,608,660 by the Debtor for legal
services performed and expenses incurred in contemplation of or in
connection with the Debtor's restructuring efforts, including,
among other things, representing the Debtor in connection with the
involuntary Chapter 11 case filed against it, the Section 304
Proceeding, the U.S. issues relating to the Concurso Proceeding,
the negotiation and execution of the Restructuring Agreement, and
the preparation of various "first day" motions, the Chapter 11
Plan and related Disclosure Statement.

Mr. Barr assures the Court that Milbank does not represent and
will not represent any entity, other than the Debtor, in matters
related to its Chapter 11 case.

Mr. Barr, however, discloses that Milbank currently represents The
Bank of New York Company, Inc., the indenture trustee for the
Debtor's 10-1/8% Unsecured Senior Notes due November 1, 2004, and
Citibank, N.A., the indenture trustee for the Senior Secured
Floating Rate Notes due June 30, 2004, on matters unrelated to the
bankruptcy case.  Fees derived from Citibank matters represented
over 1% of Milbank's 2005 revenues.

According to Mr. Barr, Milbank has obtained a waiver from Bank of
New York and Citibank to allow it to represent the Debtor.

In the event the Debtor seeks advice with respect to an adversary  
proceeding in which either Bank is named as an adverse party or  
with respect to a challenge of the claims of the unsecured  
creditors for which the Banks act as trustee, Mr. Barr says  
the Debtor will retain conflicts counsel.

                   About Satelites Mexicanos

Satelites Mexicanos, S.A. de C.V., provides fixed satellite
services in Mexico.  Satmex provides transponder capacity via its
satellites to customers for distribution of network and cable
television programming, direct-to-home television service, on-site
transmission of live news reports, sporting events and other video
feeds.  Satmex also provides satellite transmission capacity to
telecommunications service providers for public telephone networks
in Mexico and elsewhere and to corporate customers for their
private business networks with data, voice and video applications.  
Satmex also provides the government of the United Mexican States
with approximately 7% of its satellite capacity for national
security and public purposes without charge, under the terms of
the Orbital Concessions.

The Debtor filed for chapter 11 petition on August 11, 2006
(Bankr. S.D.N.Y. Case No. 06-11868).  Luc A. Despins, Esq., at
Milbank, Tweed Hadley & McCloy LLP represents the Debtor in the
U.S. Bankruptcy proceedings.  Attorneys from Galicia y Robles,
S.C., and Quijano Cortina Lopez y de la Torre give legal advice in
the Debtor's Mexican Bankrutpcy proceedings.  UBS Securities LLC
and Valor Consultores, S.A. de C.V., give financial advice to the
Debtor.  Steven Scheinman, Esq., Michael S. Stamer, Esq., and
Shuba Satyaprasad, Esq., at Akin Gump Strauss Hauer & Feld LLP
give legal advice to the Ad Hoc Existing Bondholders' Committee.
Dennis Jenkins, Esq., and George W. Shuster, Jr., Esq., at Wilmer
Cutler Pickering Hale and Dorr LLP give legal advice to Ad Hoc
Senior Secured Noteholders' Committee.  As of July 24, 2006, the
Debtor has $905,953,928 in total assets and $743,473,721 in total
liabilities.

On May 25, 2005, certain holders of Satmex's Existing Bonds and
Senior Secured Notes filed an involuntary chapter 11 petition
against the Company (Bankr. S.D.N.Y. Case No. 05-13862).
On June 29, 2005, Satmex filed a voluntary petition for a Mexican
reorganization, known as a Concurso Mercantil, which was assigned
to the Second Federal District Court for Civil Matters for the
Federal District in Mexico City.

On August 4, 2005, Satmex filed a petition, pursuant to Section
304 of the Bankruptcy Code to commence a case ancillary to the
Concurso Proceeding and a motion for injunctive relief seeking,
among other things, to enjoin actions against Satmex or its assets
(Bankr. S.D.N.Y. Case No. 05-16103).  (Satmex Bankruptcy News,
Issue No. 2; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).


SATELITES MEXICANOS: Court Approves Employees Obligation Payment
----------------------------------------------------------------
The Honorable Robert D. Drain, of the U.S. Bankruptcy Court for
the Southern District of New York, granted the request of
Satelites Mexicanos, S.A. de C.V., to:

   (a) pay certain obligations to the Employees, through the
       Employee Affiliates, where applicable, and to continue its
       employee benefit plans and practices postpetition; and

   (b) authorize and direct applicable banks and other financial
       institutions to receive, honor and pay all checks and
       electronic payment requests drawn on the Debtor's
       disbursement accounts and automatic payroll transfers
       related to the Employee Obligations,

provided that:

    -- the Debtor has not requested and is not authorized at this  
       time to make payments to its executive Employees:

        (a) under the Performance Bonus Plan; and  

        (b) in excess of the $10,000 statutory cap provided for  
            under Sections 507(a)(4) and 507(a)(5) of the  
            Bankruptcy Code; and

    -- if, as of December 31, 2006, no order has been entered
       confirming a plan of reorganization under Chapter 11 with  
       respect to the Debtor, nothing in the Order will prejudice
       the rights of the Ad Hoc Senior Secured Noteholders
       Committee and the Ad Hoc Bondholders Committee to seek the
       Court's reconsideration of amounts paid to individual
       Employees in excess of the $10,000 statutory cap.

The Debtor says that it employs about 187 full-time and 19 part-
time employees.  Other than the chief executive officer, who is
directly employed by the Debtor, all of the Debtor's Employees are
employed through three non-debtor affiliates -- Satmex Servicios
Tecnicos, S. de R.L. de C.V.; Satmex Administracion, S. de R.L. de
C.V.; and Satmex Corporativo, S. de R.L. de C.V.
  
Tecnicos employs 53 technical Employees all of whom are members of
the Mexican Television and Radio Labor Union.  Administracion and
Corporativo employ 111 administrative and 23 executive Employees,
none of which are unionized.

The Employee Affiliates have no material assets and their only
liabilities are the payment of the Employees' wages, compensation
and benefits.  They exist solely for the purpose of employing the
Debtor's Employees.  

Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in
New York, relates that the Debtor realizes substantial savings by
employing and paying the Employees through the Employee
Affiliates.  However, while most of the Debtor's Employees are
employed directly by one of the Employee Affiliates, under Mexican
law, the Debtor and its Employee Affiliates are jointly liable for
payment of each Employee's wages and benefits.

Pursuant to contracts between the Debtor and each Employee
Affiliate, each Employee is paid directly by the Employee
Affiliate by which it is employed, and the Debtor prepays the
Employee Affiliates for estimated amounts to be paid plus a fee of
up to 10% of gross payroll.

The Debtor, according to Mr. Despins, has incurred costs and
obligations in respect of its Employees that remain unpaid as of
the filing for chapter 11 protection.  Although these obligations
arose prepetition, they will only become due and payable in the
ordinary course of the Debtor's business on or after the filing
for chapter 11 protection.  

In the ordinary course of business, the Debtor also provides
various Employee Benefits for the benefit of its Employees, Mr.
Despins added.

The Debtor estimates that it owes $1,600,000 in prepetition
Employee Obligations.

A) Compensation

   -- Salaries

      The Debtor pays its Employees approximately $314,000 in
      salaries on a bi-weekly basis.  As of the Petition Date, no
      prepetition Salary obligations are due to Employees.  Out
      of an abundance of caution, the Debtor seeks the Court's
      authority to pay any prepetition Salary obligations that
      may be outstanding.

   -- Commissions

      Certain directors and managers in the Debtor's sales force,
      who are trained to cultivate new business, are paid
      commissions, aggregating $300,000 annually, under the
      Debtor's sales bonus program.  As of the filing for chapter
      11 protection, $75,000 in Commissions were accrued but
      unpaid.  

   -- Bonuses

      Certain Employees are entitled to bonus payments under
      several prepetition bonus programs maintained by the Debtor,
      either to motivate the Debtor's Employees or as required by
      Tecnicos' collective bargaining agreement.

   -- Performance Bonuses

      The Debtor spends $1,560,000 annually for employees who are
      eligible to receive bonus payments under its performance
      bonus plans.  The Debtor does not seek to pay prepetition
      amounts owing to its executives under the Performance Bonus
      Plan at this time.

   -- Statutory Annual Bonus

      Pursuant to Mexican law, the Debtor pays an annual bonus to
      each employee in an amount equal to one month's salary.
      The Debtor pays an aggregate annual amount of $630,000 to
      Employees on account of the Statutory 13th Month Bonus
      Plan.

   -- Holiday Bonus

      The Debtor also pays an aggregate of $21,500 for annual
      Christmas bonus to approximately 100 Employees who are
      union personnel, support personnel and analysts.

   -- Vacation Premium

      The Debtor provides a statutory benefit to each Employee
      that has been employed by Satmex for at least one year.  The
      Debtor's average yearly Vacation Premium obligations do not
      exceed $331,000.  As of the filing for chapter 11
      protection, approximately $182,000 in Vacation Premium
      obligations were accrued but unpaid.

   -- Medical Aid Plan

      The Debtor makes monthly payments to its non-union Employees
      to cover medical expenses not included in the Medical
      Insurance at an annual aggregate cost to the Debtor of
      approximately $170,000.  As of the filing for chapter 11
      protection, approximately $51,000 in Medical Aid Plan
      obligations were accrued but unpaid.

   -- Education Plan

      The Debtor makes an aggregate of $24,500 in annual payments
      (through Tecnicos) to all of its unionized Employees to
      assist with education costs for their children.  As of the
      filing for chapter 11 protection, the Debtor has no accrued
      but unpaid obligations relating to the Education Plan.

   -- Severance

      In accordance Mexican labor laws, the Debtor spends $352,400
      annually for severance to Employees whose employment
      relationship are terminated.  As of the filing for chapter
      11 protection, the Debtor has no accrued but unpaid
      Severance Pay obligations.

   -- Reimbursement of Expenses

      The Debtor pays for certain approved business-related
      Expenses of its Employees, including airplane tickets,
      taxis, gasoline, accommodations, phone calls and Internet
      access.  Based on historic practices, as of the filing for
      chapter 11 protection, the accrued but unreimbursed Employee
      Expenses that remain outstanding totaled approximately
      $80,000.

B) Employee Benefits

   -- Vacation Time

      The Debtor provides vacation time to each Employee as a paid
      time off benefit.  Based on historical practices, the
      amount outstanding for unpaid Vacation Time that accrued
      prepetition for all Employees does not exceed $100,000.

   -- Social Security

      At the time of hiring by the Debtor, Mexican law requires
      that each Employee become affiliated to the Instituto
      Mexicano del Seguro Social (Mexican Social Security
      Institute), Mexico's social security program.  The Debtor's
      average yearly Social Security obligations aggregate
      approximately $1,100,000.  As of the filing for chapter 11
      protection, approximately $74,000 in Social Security
      obligations were accrued but unpaid.

   -- Social Security Quota Support

      Each Employee is required to pay a quota to IMSS,
      aggregating $176,000 annually.  As of the filing for chapter
      11 protection, approximately $15,000 remained outstanding
      for the Debtor's Social Security Quota Support obligations.

   -- Spending Vouchers

      The Debtor provides spending vouchers to its employees as a
      tax-free benefit in an amount equivalent to 10% of each
      Employee's monthly base wage, at an aggregate annual cost
      of $280,000.  As of the filing for chapter 11 protection, no
      Spending Vouchers obligations were accrued but unpaid.

   -- Automobile Allowance

      The Debtor provides certain of its Employees with
      Automobiles owned by the Debtor for personal and business
      use and, in connection therewith, provides the Employees
      with debit cards, which the Employees can use for gasoline
      and maintenance expenses.  The Automobile Allowance has an
      annual cost of approximately $73,000.  The Debtor believes
      that no Automobile Allowance obligations were accrued but
      unpaid as of the filing for chapter 11 protection.

   -- Medical Insurance

      The Debtor provides each Employee with medical insurance
      from Allianz Mexico S.A. Compana de Seguros.  The Debtor's
      aggregate annual cost for the Medical Insurance is
      approximately $175,000.  As of the filing for chapter 11
      protection, approximately $55,000 of its Medical Insurance
      obligations were accrued but unpaid.

   -- Life Insurance

      The Debtor spends $15,000 annually for Allianz-provided life
      insurance for each Employee.  As of the filing for chapter
      11 protection, approximately $3,600 of the Debtor's Life
      Insurance obligations were accrued but unpaid.

   -- Savings Fund Program

      The Debtor pays $340,000 annually for matching contributions
      to a savings fund for the benefit of each Employee in an
      amount equivalent to 10% of the respective Employee's
      monthly base wage up to a statutory limit.  As of the
      filing for chapter 11 protection, the Debtor has no accrued
      but unpaid obligations under the Savings Fund Program.

                   About Satelites Mexicanos

Satelites Mexicanos, S.A. de C.V., provides fixed satellite
services in Mexico.  Satmex provides transponder capacity via its
satellites to customers for distribution of network and cable
television programming, direct-to-home television service, on-site
transmission of live news reports, sporting events and other video
feeds.  Satmex also provides satellite transmission capacity to
telecommunications service providers for public telephone networks
in Mexico and elsewhere and to corporate customers for their
private business networks with data, voice and video applications.  
Satmex also provides the government of the United Mexican States
with approximately 7% of its satellite capacity for national
security and public purposes without charge, under the terms of
the Orbital Concessions.

The Debtor filed for chapter 11 petition on August 11, 2006
(Bankr. S.D.N.Y. Case No. 06-11868).  Luc A. Despins, Esq., at
Milbank, Tweed Hadley & McCloy LLP represents the Debtor in the
U.S. Bankruptcy proceedings.  Attorneys from Galicia y Robles,
S.C., and Quijano Cortina Lopez y de la Torre give legal advice in
the Debtor's Mexican Bankrutpcy proceedings.  UBS Securities LLC
and Valor Consultores, S.A. de C.V., give financial advice to the
Debtor.  Steven Scheinman, Esq., Michael S. Stamer, Esq., and
Shuba Satyaprasad, Esq., at Akin Gump Strauss Hauer & Feld LLP
give legal advice to the Ad Hoc Existing Bondholders' Committee.
Dennis Jenkins, Esq., and George W. Shuster, Jr., Esq., at Wilmer
Cutler Pickering Hale and Dorr LLP give legal advice to Ad Hoc
Senior Secured Noteholders' Committee.  As of July 24, 2006, the
Debtor has $905,953,928 in total assets and $743,473,721 in total
liabilities.

On May 25, 2005, certain holders of Satmex's Existing Bonds and
Senior Secured Notes filed an involuntary chapter 11 petition
against the Company (Bankr. S.D.N.Y. Case No. 05-13862).
On June 29, 2005, Satmex filed a voluntary petition for a Mexican
reorganization, known as a Concurso Mercantil, which was assigned
to the Second Federal District Court for Civil Matters for the
Federal District in Mexico City.

On August 4, 2005, Satmex filed a petition, pursuant to Section
304 of the Bankruptcy Code to commence a case ancillary to the
Concurso Proceeding and a motion for injunctive relief seeking,
among other things, to enjoin actions against Satmex or its assets
(Bankr. S.D.N.Y. Case No. 05-16103).  (Satmex Bankruptcy News,
Issue No. 2; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).


SATELITES MEXICANOS: Gets Interim Use of Cash Management System
---------------------------------------------------------------
The Honorable Robert D. Drain of the U.S. Bankruptcy Court for the
Southern District of New York, authorized Satelites Mexicanos,
S.A. de C.V., to continue, on an interim basis, to manage its cash
pursuant to its existing Cash Management System.

Judge Drain also directed the Debtor to maintain records of all
transfers within the cash management system so that all transfers
and transactions will be adequately and promptly documented in,
and readily ascertainable from, its books and records, to the same
extent maintained by the Debtor prepetition.

The Debtor's cash management system consists of 18 bank accounts
at various banks located in Mexico, Luxemburg and the United
States.

The Debtor maintains investment accounts at IXE Casa de Bolsa,
S.A., (in Mexican Pesos), JPMorgan Chase (in U.S. Dollars), and
BBVA Bancomer, S.A. (in U.S. Dollars).

The Debtor also maintains:

   (i) four operating accounts;

  (ii) six collection accounts;

(iii) two operating and collection accounts; and

  (iv) one savings fund at Banco INVEX, S.A.

To comply with the United States Trustee's operating guidelines
for debtors-in-possession, the Debtor modified its Cash Management
System to ensure that its Bank Accounts with HSBC Mexico, S.A.
Institucion de Banca Multiple, Grupo Financiero HSBC, serve as its
primary Bank Accounts during the pendency of its Chapter 11 case,
with its other Bank Accounts utilized only to the extent necessary
to facilitate the collection of funds from its customers.

Additionally, the Debtor opened two investment accounts, in
Mexican Pesos and U.S. Dollars, at HSBC Mexico to serve as its
primary investment accounts.  Satmex transferred all of the funds
maintained at IXE into the HSBC Investment Account maintained in
Mexican Pesos and all of the funds maintained in its investment
accounts at Chase and BBVA into the HSBC Investment Account
maintained in U.S. Dollars.  The other investment accounts will
remain dormant during the pendency of its Chapter 11 case.

Revenues generated by the Debtor are deposited in the Collection
Accounts as received and then swept primarily into the Operating
Accounts maintained with HSBC Mexico.  At the close of each
business day, all of the Debtor's accounts are reviewed and cash
gains are swept into the corresponding HSBC Investment Account.

Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in
New York, relates that the Cash Management System provides
significant benefits to the Debtor, including its ability to:

   (a) control corporate funds;

   (b) ensure the maximum availability of funds when necessary;

   (c) fund its operations efficiently and seamlessly; and

   (d) reduce administrative expenses by facilitating the
       movement of funds and the development of timely and
       accurate account balance information.

Continuation of the current Cash Management System, including the  
network of Collection Accounts, is essential to a smooth and  
orderly transition into and operation in Chapter 11, thereby  
causing minimum disruption to the Debtor's operations, Mr. Despins  
contends.

                   About Satelites Mexicanos

Satelites Mexicanos, S.A. de C.V., provides fixed satellite
services in Mexico.  Satmex provides transponder capacity via its
satellites to customers for distribution of network and cable
television programming, direct-to-home television service, on-site
transmission of live news reports, sporting events and other video
feeds.  Satmex also provides satellite transmission capacity to
telecommunications service providers for public telephone networks
in Mexico and elsewhere and to corporate customers for their
private business networks with data, voice and video applications.  
Satmex also provides the government of the United Mexican States
with approximately 7% of its satellite capacity for national
security and public purposes without charge, under the terms of
the Orbital Concessions.

The Debtor filed for chapter 11 petition on August 11, 2006
(Bankr. S.D.N.Y. Case No. 06-11868).  Luc A. Despins, Esq., at
Milbank, Tweed Hadley & McCloy LLP represents the Debtor in the
U.S. Bankruptcy proceedings.  Attorneys from Galicia y Robles,
S.C., and Quijano Cortina Lopez y de la Torre give legal advice in
the Debtor's Mexican Bankrutpcy proceedings.  UBS Securities LLC
and Valor Consultores, S.A. de C.V., give financial advice to the
Debtor.  Steven Scheinman, Esq., Michael S. Stamer, Esq., and
Shuba Satyaprasad, Esq., at Akin Gump Strauss Hauer & Feld LLP
give legal advice to the Ad Hoc Existing Bondholders' Committee.
Dennis Jenkins, Esq., and George W. Shuster, Jr., Esq., at Wilmer
Cutler Pickering Hale and Dorr LLP give legal advice to Ad Hoc
Senior Secured Noteholders' Committee.  As of July 24, 2006, the
Debtor has $905,953,928 in total assets and $743,473,721 in total
liabilities.

On May 25, 2005, certain holders of Satmex's Existing Bonds and
Senior Secured Notes filed an involuntary chapter 11 petition
against the Company (Bankr. S.D.N.Y. Case No. 05-13862).
On June 29, 2005, Satmex filed a voluntary petition for a Mexican
reorganization, known as a Concurso Mercantil, which was assigned
to the Second Federal District Court for Civil Matters for the
Federal District in Mexico City.

On August 4, 2005, Satmex filed a petition, pursuant to Section
304 of the Bankruptcy Code to commence a case ancillary to the
Concurso Proceeding and a motion for injunctive relief seeking,
among other things, to enjoin actions against Satmex or its assets
(Bankr. S.D.N.Y. Case No. 05-16103).  (Satmex Bankruptcy News,
Issue No. 2; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).


SCOTTISH RE: S&P Lowers Counterparty Credit Rating to B+ from BB+
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its counterparty credit
rating on Scottish Re Group Ltd. to 'B+' from 'BB+'.

In addition, Standard & Poor's lowered its counterparty credit and
financial strength ratings on Scottish Re's operating subsidiaries
to 'BBB-' from 'BBB+'.  All of these ratings remain on CreditWatch
with negative implications, where they were placed on July 31,
2006.

In addition, the ratings on several securitization transactions
related to Scottish Re have been lowered and remain on CreditWatch
with negative implications.

"The ratings were lowered reflecting our concerns that the group's
access to credit facilities is more limited than we had previously
believed," explained Standard & Poor's credit analyst Neil
Strauss.

This conclusion was acknowledged by the company in its recent
representations in its recently filed second-quarter 2006 10-Q.
Liquidity sources have decreased such that the holding company's
liquidity situation has been impaired.

"It is our belief that without additional capital, the company is
likely to be unable to satisfy future needs, including potential
debt redemption in December 2006," added Mr. Strauss.

The company disclosed in their just filed 10-Q that while as of
June 30, 2006, there was significant unused commitment under a
$200 million bank credit facility, in light of second-quarter
results and recent downgrades, there was uncertainty whether the
lenders under this facility, and other facilities, would honor
commitments to fund any borrowing requests and if so whether they
would insist upon collateral for funding.

The holding company's liquidity is further strained by the
existing credit facility, which contains restrictions on the
ability of Scottish Annuity & Life Insurance Co. (Cayman) Ltd. and
certain of its operating subsidiaries to pay dividends or make
loans to the holding company.  This means that although the
operating coverage may be generating strong cash flows, and have
strong current liquid assets, dividends to the holding company are
severely restricted, given current conditions.

The operating companies' liquidity position is better than that of
the holding company.  In fact, the inability to dividend from the
operating companies to the holding company makes the operating
company's financial position somewhat more protected.  However,
financial stress at the group level will indirectly adversely
impact the operating company's ability to write new business until
Scottish Re's longer term financial security situation is more
certain.  Thus, Standard & Poor's downgrade at the operating
companies was two notches versus three for the holding company
ratings.

Standard & Poor's continues to believe that there is substantial
value in the underlying businesses in the operating companies,
however, the franchise has been impaired by the continuing
recurring disclosures of the operational issues at Scottish Re and
the company will need to find funding sources to fund ongoing
business.

The ratings will remain on CreditWatch until:

   * capital has been raised;
   * the tight liquidity situation has been mitigated; and
   * the company's strategic alternatives have been clarified.

As a result, the ultimate ratings will depend on the resulting
capital, liquidity, and competitive position of the company.


SMARTIRE SYSTEMS: Employs BDO Dunwoody as Accountants
-----------------------------------------------------
SmarTire Systems, Inc., has accepted the resignation of KPMG LLP,
as the Company's independent registered public accounting firm and
engaged BDO Dunwoody LLP, as its new independent registered public
accounting firm for the fiscal year ending July 31, 2006.

The Company's Audit Committee made the decision to change
independent accountants and that decision was approved, ratified
and adopted by the Company's Board of Directors.

The Company disclosed that, the audit report of KPMG on the
consolidated financial statements as of and for the year ended
July 31, 2004, did not contain an adverse opinion or disclaimer of
opinion and was not qualified or modified as to uncertainty, audit
scope, or accounting principles but was modified as to uncertainty
due to substantial doubt regarding the Company's ability to
continue as a going concern.  The audit report of KPMG on the
consolidated financial statements as of and for the year ended
July 31, 2005 did not contain an adverse opinion or disclaimer of
opinion and was not qualified, but was modified as to uncertainty
due to substantial doubt regarding the Company's ability to
continue as a going concern.

The Company also disclosed that BDO will perform procedures
related to the financial statements included in the Company's
quarterly reports on Form 10-QSB, beginning with, and including,
the quarter ended Oct. 31, 2006.  The Company's Audit Committee
considered BDO's experience and expertise related to public
companies traded on the Over-the-Counter Bulletin Board as well as
reviewed auditor independence issues and existing commercial
relationships with BDO.  The Audit Committee concluded that BDO
has no commercial relationship that would impair its independence
and had the appropriate expertise that the Company required
regarding its current operations.

                     About BDO International

BDO International is a worldwide network of public accounting
firms, called BDO Member Firms, serving international clients.
Each BDO Member Firm is an independent legal entity in its own
country.

At Sept. 30, 2005, the 93 BDO member firms in 105 countries
employed 27,828 professionals in 601 offices throughout Europe,
North and Southern Africa, North America and the Caribbean, Latin
America, the Middle East and the Asia Pacific region.

                  About Smartire Systems Inc.

Based in British Columbia, Canada, SmarTire Systems Inc. (OTC
Bulletin Board: SMTR) -- http://www.smartire.com-- develops and  
markets technically advanced tire pressure monitoring systems for
the transportation and automotive industries that monitor tire
pressure and tire temperature.  Its TPMSs are designed for
improved vehicle safety, performance, reliability and fuel
efficiency.  The Company has three wholly owned subsidiaries:
SmarTire Technologies Inc., SmarTire USA Inc. and SmarTire Europe
Limited.

                         Going Concern

In an addendum to its audit report, KPMG pointed to the Company's
uncertainty in meeting its current operating and capital expense
requirements after auditing the Company 's financial statements
for the fiscal years ended July 31, 2005 and 2004.


SOLO CUP: Weak Performance Cues S&P to Lower Rating to B from B+
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on Solo Cup
Co. and placed them on CreditWatch with negative implications.  
The corporate credit rating was lowered to 'B' from 'B+'.

These rating actions follow several quarters of weak performance,
with funds from operations to total adjusted debt of 7.4% and
total adjusted debt to EBITDA of 6.6x as of April 2, 2006.  
Standard & Poor's adjusted debt to include about $200 million of
capitalized operating leases and tax-effected, unfunded
postretirement obligations.

Standard & Poor's rating actions also factor in significant recent
management changes, and the company's announcement that it will
delay filing its second-quarter 2006 financial statements pending
an internal review of certain accounting practices and procedures
related to the current and/or prior periods.  The primary issues
identified so far relate to the timely recognition of certain
customer credits, accounts payable, and accrued expenses, and the
valuation of certain tangible and intangible assets.

"We will monitor events and expect to resolve the CreditWatch once
the outcome of the accounting review is known and the company has
reported its second-quarter results," said Standard & Poor's
credit analyst Cynthia Werneth.

"However, we could lower the ratings again before then if there
are significant negative developments such as rapid raw material
cost escalation or weaker-than-expected general business
conditions."

Standard & Poor's ratings incorporate expectations that the
company will obtain waivers from its banks for the reporting
delay, and that the delay will not precipitate a default under its
bonds.  Although the rating agency believes that the company has
made meaningful changes to improve its ability to pass on raw
material cost increases to customers and should maintain
sufficient liquidity to meet near-term obligations, these remain
key concerns.

In addition, Standard & Poor's now expects the financial profile
to remain weak in the near term as the company continues to face
issues related to the integration of the 2004 acquisition of
Sweetheart Holdings Inc.  These include the planned launch of a
new information technology platform later this year.

With annual revenues of $2.4 billion, Solo, based in Highland
Park, Illinois, is a leading provider of disposable paper and
plastic cups, plates, and cutlery to foodservice distributors,
quick-service restaurants, and retailers.


SUPERIOR ESSEX: Offers to Buy Optical Cable for $36 Mil. in Cash
----------------------------------------------------------------
Superior Essex, Inc., offered to acquire all of the outstanding
shares of Optical Cable Corporation (Nasdaq: OCCF), a leading
manufacturer of fiber optic cables primarily sold into the
enterprise market, for $6.00 per share in cash.  Superior Essex's
proposal represents a premium of almost 70% over Optical Cable's
closing share price on Aug. 14, 2006.

The proposal, which was approved by Superior Essex's Board of
Directors, is valued at approximately $36 million.  Superior Essex
expects the combined company to be one of the industry's leading
fiber optic and copper cable manufacturing companies.  Superior
Essex's strong commercial and telephone company relationships
complement Optical Cable's strong international, military and
government relationships, and the combination would result in
greater diversification and substantial cross selling
opportunities.

"Under our proposal, Optical Cable shareholders will receive a
substantial cash premium for their shares over recent trading
prices and immediate liquidity," said Stephen Carter, chief
executive officer of Superior Essex.  "We believe this represents
a generous offer based on Optical Cable's profitability and cash
flow.  For Superior Essex shareholders, we believe this
transaction represents an opportunity to create value and
earnings accretion through diversification, growth, enhanced
operating capabilities and reduced costs.  We look forward to
working with Optical Cable's Board and management team in a
cooperative fashion to move quickly towards a definitive merger
agreement."

"We expect Optical Cable's Roanoke manufacturing facility to
become a valuable component of our overall fiber optic and premise
cable production base," said Justin Deedy, executive vice
president of Superior Essex and president of its Communications
Group.  "We are excited by the cross-selling opportunities among
customers of Superior Essex and Optical Cable and the extension of
our complementary product lines.  We believe that the combined
businesses would have annualized fiber and premise revenues in
excess of $250 million and enhance our presence in the market."

Superior Essex would finance the transaction through cash and its
existing credit facility.  The Company also confirmed that it does
not expect the combination to have significant contingencies other
than completion of due diligence and customary conditions that
would be included in a definitive merger agreement.  Superior
Essex believes that with cooperation from Optical Cable's Board
and management, a transaction could be completed during the fourth
quarter of 2006.

Superior Essex is advised in connection with the proposed
transaction by SunTrust Robinson Humphrey, as financial advisors,
and Troutman Sanders LLP, as outside counsel.

                      About Superior Essex

Headquartered in Atlanta, Georgia, Superior Essex Inc.
(Nasdaq:SPSX)  -- http://www.superioressex.com/-- manufactures a   
broad portfolio of wire and cable products with primary
applications in the communications, magnet wire and related
distribution markets.  It is a manufacturer and supplier of copper
and fiber optic communications wire and cable products to
telephone companies, distributors and system integrators; a
leading manufacturer and supplier of magnet wire and fabricated
insulation products to major original equipment manufacturers for
use in motors, transformers, generators and electrical controls;
and a distributor of magnet wire, insulation, and related products
to smaller OEMs and motor repair facilities.

                          *     *     *

As reported in the Troubled Company Reporter on March 27, 2006,
Standard & Poor's Rating Services revised its outlook on
Atlanta, Georgia-based Superior Essex Inc. to positive from
stable, and affirmed its 'B+' corporate credit rating; 'BB'
secured bank loan rating; and 'B' senior unsecured debt rating.


SYNAGRO TECHS: S&P Lowers Corp. Credit & Sr. Debt Ratings to B+
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating and senior secured debt ratings on Synagro Technologies
Inc. by one notch to 'B+' from 'BB-'.  The outlook is stable.

"The downgrade reflects our concerns that recent delays in the
startup of new facilities, higher utility and fuel costs, and
sizable dividend payments are likely to limit discretionary cash
flow, preventing credit measures from returning to levels
appropriate for the former ratings.  Therefore, the company will
remain more highly leveraged for longer than previously expected,"
said Standard & Poor's credit analyst Robyn Shapiro.

Incorporated into the former and current ratings is the company's
reduced financial flexibility as a result of the quarterly
dividend payment implemented in 2005.  Operating performance and
cash flow generation remain under pressure due to the material
delays in commencing operations at the composting facility in
Kern, California, and at the expanded municipal incinerator in
Woonsocket, Rhode Island.  They are currently expected to start
operating during the first quarter of 2007.

The ratings on Houston, Texas-based Synagro reflect its aggressive
financial policies, narrow scope of operations, and highly
leveraged financial risk profile that heightens vulnerability to
adverse weather conditions or other business disruptions.  These
factors are partially offset by its position as the largest full-
service provider in the fragmented wastewater residuals management
industry and its efficient operations.

With annual revenues of about $340 million, Synagro manages the
organic, non-hazardous residuals generated by public and privately
owned water and wastewater treatment facilities. (Materials that
meet federal and state regulations for beneficial reuse by land
application or other methods are referred to as biosolids.)  

The company provides processing, land application, transportation,
site monitoring, and environmental regulatory compliance services
to more than 600 municipal and industrial accounts, with
operations in 37 states and the District of Columbia.

Stability is enhanced by long-term contracts, mostly with
municipalities, which generate about 80% of revenues and have a
high 85%-90% renewal rate; and a backlog that equals several times
annual revenues.  However, considerable seasonality of some
aspects of the business can disrupt operations during winter
months or periods of heavy rainfall.


TOWER RECORDS: Files for Chapter 11 Protection to Sell All Assets
-----------------------------------------------------------------
MTS Incorporated, dba Tower Records, and its subsidiaries
disclosed its intent to sell the Company through a Section 363
process under Chapter 11 of the Bankruptcy Code.  This process,
which is subject to court approval, sets in motion a timeline of
events that will ultimately insure a sale of the Company within
approximately 60 days of the filing date.

According to Joseph D'Amico, Tower's recently named CEO, the
filing is a necessary vehicle to execute his commitment to sell
the Company.  "Tower Records has conducted an extensive sale
process and this step will allow buyers to complete a sale in time
for the holiday season while maximizing the value for
stakeholders."  In March of 2006, the Company retained Houlihan
Lokey Howard & Zukin as its marketing and sales agent.  The
Company is evaluating Letters of Intent from parties interested in
acquiring the Company.  Mr. D'Amico stated, "Potential parties
seeking to acquire Tower Records recognize the strength of the
brand and its unique position within the marketplace, making it a
very attractive opportunity."

                          DIP Financing

The Company also entered into an $85 million Debtor-in-Possession
Financing with its current bank group led by CIT as agent.  This
financing will fund its operations and purchases of new product
while the Company completes the sale.  Tower has also been able to
renegotiate delivery terms for product with the trade.  D'Amico
commented, "The trade has always supported Tower through difficult
times and we recognize that their support is imperative to the
consummation of a transaction."

                       About Tower Records

Founded in Sacramento, California, Tower Records owns and operates
89 stores in the U.S. with 144 additional stores run by licensees
in nine different countries.  The Company opened one of the first
Internet music stores on America Online in June 1995 and followed
a year later with the launch of Tower.com.  Tower Records has
filed for Chapter 11 bankruptcy protection from its creditors, its
second such filing in less than three years.


TOWER RECORDS: Case Summary & 40 Largest Unsecured Creditors
------------------------------------------------------------
Lead Debtor: M T S, Incorporated
             dba Tower Records
             2500 Del Monte Street
             West Sacramento, California 95691

Bankruptcy Case No.: 06-10891

Debtor affiliates filing separate chapter 11 petitions:

      Entity                                     Case No.
      ------                                     --------
      Three A's Holdings, L.L.C.                 06-10886
      Jeremy's Holdings, L.L.C.                  06-10887
      Tower Direct, LLC                          06-10888
      33rd Street Records, Incorporated          06-10889
      Pipernick Corp.                            06-10890
      Columbus & Bay, Inc.                       06-10892
      R.T. Records, Incorporated                 06-10893

Type of Business: The Debtor is a retailer of music in the U.S.,
                  with nearly 100 company-owned music, book, and
                  video stores.  See http://www.towerrecords.com/

                  The Company and its affiliates previously filed
                  for chapter 11 protection on Feb. 9, 2004
                  (Bankr. D. Del. Lead Case No. 04-10394).

Chapter 11 Petition Date: August 20, 2006

Court: District of Delaware

Judge: Brendan Linehan Shannon

Debtor's Counsel: Mark D. Collins, Esq.
                  Richards Layton & Finger
                  One Rodney Square
                  P.O. Box 551
                  Wilmington, Delaware 19899
                  Tel: (302) 651-7531
                  Fax: (302) 651-7701

                            Estimated Assets    Estimated Debts
                            ----------------    ---------------
M T S, Incorporated         More than $100      More than $100
                            Million             Million

Three A's Holdings, L.L.C.  $10 Million to      $50 Million to
                            $50 Million         $100 Million

Jeremy's Holdings, L.L.C.   $500,000 to         $500,000 to
                            $1 Million          $1 Million

Tower Direct, LLC           $1 Million to       $1 Million to
                            $10 Million         $10 Million

33rd Street Records,        $100,000 to         $100,000 to
Incorporated                $500,000            $500,000

Pipernick Corp.             $0 to $50,000       $0 to $50,000

Columbus & Bay, Inc.        $0 to $50,000       $0 to $50,000

R.T. Records, Incorporated  $0 to $50,000       $0 to $50,000

Debtors' Consolidated List of 40 Largest Unsecured Creditors:

   Entity                     Nature of Claim       Claim Amount
   ------                     ---------------       ------------
Six Degrees Records           Trade Debt              $1,898,564
540 Hampshire St.
San Francisco, CA 94110

International Periodical      Trade Debt              $1,282,247
Beth Oja
350 N. Orleans St.
Suite 6458
Chicago, IL 60654

Super D/Phantom Imp.          Trade Debt                $846,823
James Navales
17822 Gillette Ave. #A
Irvine, CA 92614

Harmonia Mundi U.S.           Trade Debt                $791,218
Christine Rodriguez
1117 Chestnut Street
Burbank, CA 91506

Ingram Entertainment          Trade Debt                $760,084
Karen Carter
Two Ingram Blvd.
La Vergne, TX 37086

Entertainment UK Ltd.         Trade Debt                $758,584
Gary Woods
Auriol Drive
Greenford Park
Greenford, Middlesex
UK UB6 0DS

Image Entertainment           Trade Debt                $750,593
Kristi Katilavas
20525 Nordhoff St., Ste. 200
Chatsworth, CA 91311

City Hall Records             Trade Debt                $595,441
David Evans
101 Glacier Point Rd.
Suite C
San Rafael, CA 94901

Allegrio Corp.                Trade Debt                $548,458
Linda Richardson
14134 N.E. Airport Way
Portland, OR 97230

Select-O-Hits, Inc.           Trade Debt                $524,514
Denise Johnson
1981 Fletcher Creek Dr.
Memphis, TN 38133

Baker & Taylor Book Sherry    Trade Debt                $437,452
1205 Payshpere Circle
Chicago, IL 60674

Ventura Home Entertainment    Trade Debt                $427,712
Cheryl Hernandez
2590 Conejo Spectrum St.
Thousand Oaks, CA 91320

MSI Music Corp.               Trade Debt                $407,115
Roger Pena
14620 NW 60th Ave.
Miami Lakes, FL 33014

Gotham Distributing Corp.     Trade Debt                $389,492
60 Portland Rd.
Conshohocken, PA 19428

Music Video Distib.           Trade Debt                $333,831
David Bruno
H-840 422 Business Center
Oaks, PA 19456

C.E.D. Entertainment Dist.    Trade Debt                $323,948
1035 S. Semoran Blvd.
Bldg #2, Ste. 1049
Winter Park, FL 32792

Model Distributors            Trade Debt                $300,475
Howard Schisler
318 West 39th St., 9th Fl.
New York, NY 10018

BCI Eclipse Co. LLC           Trade Debt                $287,104
NW5186
P.O. Box 1450
Minneapolis, MN 55485

Telarc International          Trade Debt                $274,888
Karen Burns
23307 Commerce Park Rd.
Cleveland, OH 44122

HEP CAT Dist.                 Trade Debt                $233,058

Lincoln West Partners         Trade Debt                $231,357

Maxell Corp. of America       Trade Debt                $227,852

Brown Bear Music Marketing    Trade Debt                $225,673

Sedgwick Rd. Inc.             Trade Debt                $213,919

Emmis Communications - KPWR   Trade Debt                $208,505

Musicrama, Inc.               Trade Debt                $207,571

New York Times                Trade Debt                $206,415

Mountain Apple Co.            Trade Debt                $201,560

Baker & Taylor Video          Trade Debt                $197,970

Wab Management Ltd.           Trade Debt                $192,938

Innovative Distribution       Trade Debt                $190,224
Network

Big Daddy Music Dist.         Trade Debt                $188,304

Albany Music Dist.            Trade Debt                $182,408

RetailVision                  Trade Debt                $181,208

Hal Leonard Publ. C           Trade Debt                $178,493

Speedimpex USA, Inc.          Trade Debt                $171,093

Redeye Distribution           Trade Debt                $170,125

TDK Electronics Cor.          Trade Debt                $167,189

Ingram Book Co.               Trade Debt                $160,905

Import Images                 Trade Debt                $153,199


TRANS ENERGY: Buys Cobham Gas Industries' Assets for $600,001
-------------------------------------------------------------
Trans Energy, Inc., entered into an Assignment and Bill of Sale
with George Hillyer, Trustee of Texas Energy Trust Company, BOK
Operating Company, and Prima Oil Company, Inc., wholly-owned by
the Company.

TETCO, BOK and Prima agreed to sell, assign and convey to the
Company all of their rights, title and interest in the assets of
Cobham Gas Industries, Inc., including certain oil and gas wells,
both producing and non-producing, leases, pipelines, equipment and
rolling stock.  Also, assigned and conveyed to the Company are
certain rights-of-way and roads that may be needed to maintain,
produce and abandon the conveyed Wells.

In consideration for the acquisition of assets, the Company will
pay Mr. Hillyer and BOK, the sole owner of Cobham, $600,001 and
1 million shares of Trans Energy common stock.  The shares of
common stock are subject to certain restrictions regarding the
future sale of the shares.

The Agreement and assignment of Assets is made without warranty of
title to the wells, either express or implied, and the Company
becomes responsible for the plugging and abandoning of the Wells,
in accordance with the applicable rules and regulations of the
State of West Virginia, and for any reclamation of the lands after
plugging and abandoning operations are completed.

All production, revenue, costs, expenses and other liabilities
attributable to the assigned Wells occurring before Aug. 14, 2006,
will belong to the sellers, and those occurring after Aug. 14,
2006, shall belong to the Company.

The Assets being acquired include:

   -- Certain interests in oil and gas wells, located in Marion
      County, West Virginia assigned to BOK by TETCO in May 2006;

   -- Certain interests in oil and gas wells located in Marion
      County, West Virginia assigned to TETCO by Prima in
      August 2005; and

   -- Certain rights-of-way, related facilities and miscellaneous
      vehicles and equipment.

A text-copy of the Assignment and Bill of Sale may be viewed at no
charge at http://ResearchArchives.com/t/s?1001

Trans Energy, Inc., -- http://www.transenergy.com-- has been in  
the business of production, transportation, transmission, sales
and marketing of oil and natural gas in the Appalachian and Powder
River basins since 1993.  With interests in West Virginia, Ohio,
Pennsylvania, Virginia, Kentucky, New York, and Wyoming; Trans
Energy and its subsidiaries own and operate oil and gas wells, gas
transmission lines, transportation systems and well construction
equipment and services.

                      Going Concern Doubt

HJ & Associates, LLC, in Salt Lake City, Utah, raised substantial
doubt about Trans Energy 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 losses from operations, accumulated deficit and
working capital deficit.


TURNER-DUNN HOMES: Files for Bankr. to Stay Foreclosure Lawsuit
---------------------------------------------------------------
Turner-Dunn Homes, Inc., and two affiliates, filed for chapter 11
petition on Aug. 14, 2006, the U.S. Bankruptcy Court for the
District of Arizona to stay the $23-million foreclosure suit filed
by Ohio Savings Bank.

The foreclosure proceedings were commenced in the Superior Court
of Arizona in Pinal County on Aug. 8, 2006, against the Debtors'
450 housing lots in Casa Grande and Maricopa.  Those lots were
used as collateral for millions of dollars in loans and credit
lines.  The loans were supposed to be used in the development of
houses on those lots.  Around 200 unfinished homes are still
unfinished, though many home buyers have already paid earnest
money.  Ohio Savings would ask the Bankruptcy Court to lift the
stay so it can proceed with the foreclosure and auction of the
lots, The Arizona Republic reports.  

The Arizona Department of Real Estate and the Registrar of
Contractors are also investigating the Debtors.  Several
subcontractors were also not paid amounting to millions.  Those
subcontractors are claiming liens on the housing units, some of
which have already been habited.    

According to the Debtors' counsel, Alan A. Meda, Esq., at Stinson
Morrison Hecker LLP, in Phoenix, Ariz., the Debtors ran out of
cash, disclosing that the liquidity problems were just recently
uncovered after the Debtors' former partner and president, Louis
Turner, left the Company.

Headquartered in Phoenix, Arizona, Turner-Dunn Homes, Inc.,
develops housing units.  Its developments include: (1)
Fiesta Series at Maricopa Meadows, in Maricopa City, Pinal; (2)
Celebration Series at Maricopa Meadows, in Maricopa City, Pinal;
(3) Fiesta Series at McCartney Center, in Casa Grande City, Pinal;
and (4) Celebration Series at McCartney Center in Casa Grande
City, Pinal.


UNICO INC: Inks Mining Deal with Polymet for Silver Bell Mine
-------------------------------------------------------------
Unico, Inc., reached an initial agreement for a joint venture with
the Polymet Company, LLC, for mining at the Silver Bell Mine, held
by Unico's wholly owned subsidiary, Silver Bell Mining Company,
Inc.  A subsequent definitive agreement, which will finalize the
details of the joint venture, is expected to be signed by Aug. 31,
2006.

Under terms of the letter of intent, Polymet will be responsible
for all mining activity and bear all mining expenses.  Polymet
will also conduct certain resource definition and exploration work
designed to identify other ore bodies and further develop the
value of the property.  Polymet will also pay lease payments to
the Silver Bell Mining Company, as agreed upon by the parties.  
The agreement covers all 17 mining claims owned by Silver Bell
Mining Company and which comprise the property commonly known as
the Silver Bell Mine.

Unico subsidiary, Deer Trail Mining Company, LLC, which is
completing reconstruction of an on-site mill and processing
facility, will be responsible to mill the ore into concentrates.  
All of the ore mined pursuant to the joint venture arrangement and
milled into concentrates shall be sold to Polymet subsidiary, PGM,
LLC, which previously entered into an agreement to purchase
concentrates from the Deer Trail Mine.

"We are pleased to extend our relationship with the Polymet
Company and its subsidiary, PGM, LLC to include a joint venture
for the Silver Bell Mine," said Unico chief executive officer Mark
A. Lopez.  "As we have repeatedly stated when discussing the long-
term plan to build value for Unico stockholders, there are a
number of initiatives that the company expects to undertake to
develop and grow revenues streams, and a mining program at the
Silver Bell is one of these."

"A joint venture was judged to be an excellent method to initiate
mining activity at the Silver Bell, while Unico concurrently
supports the development of processing capabilities at the Deer
Trail mill facility and continues to oversee the geological and
analytic process from the Phase II exploratory drilling program
conducted at the Deer Trail Mine in 2005," said Mr. Lopez.

"All of this activity was made possible through the ongoing
support of our shareholders, who approved the restructuring plan,
allowing Unico to undertake many of these activities.  We look
forward to the continued progress at the Deer Trail Mine, as well
as the initiation of mining at the Silver Bell, and we will keep
shareholders updated on these operations as they develop," added
Mr. Lopez.

The Silver Bell Mine was discovered in 1871 and in 1880 there was
recorded production of 120 tons of 100 ounce per ton silver from
the mine.  Production at the Silver Bell has been was sporadic,
including long periods of inactivity. In 1978, the mine was re-
opened and was expanded with three inclines on the main vein. The
mine changed hands again in 1980 and was developed further.  Pre-
feasibility and confirmation work conducted under different
ownership in the mid-1990s led to plans for a three-phase drilling
program at the Silver Bell mine.

                         About Unico

Headquartered in San Diego, California, Unico, Inc. (OTCBB: UCOI)
-- http://www.uncn.com/-- is a publicly traded natural resource  
company in the precious metals mining sector focused on the
exploration, development and production of gold, silver, lead,
zinc, and copper concentrates at its three mine properties: the
Deer Trail Mine, the Bromide Basin Mine and the Silver Bell Mine.

At March 31, 2006, the Company's balance sheet showed a
stockholders' deficit of $5,100,381, compared to a deficit of
$2,863,214 at Nov. 30, 2005.

                       Going Concern Doubt

As reported in the Troubled Company Reporter on July 25, 2006,
HJ Associates & Consultants, LLP, expressed substantial doubt
about Unico, Incorporated's ability to continue as a going concern
after auditing the Company's financial statements for the years
ended Feb. 28, 2006 and 2005.  The auditing firm pointed to the
Company's recurring losses from operations and stockholders'
deficit.


USG CORP: Asks Court to Close Chapter 11 Cases of 10 Affiliates
---------------------------------------------------------------
As previously reported, the U.S. Bankruptcy and District Courts
for the District of Delaware confirmed on June 16, 2006, the First
Amended Joint Plan of Reorganization of USG Corp. and its debtor-
affiliates.  On June 20, the Plan became effective in accordance
with its terms, and the Debtors emerged from bankruptcy as
reorganized entities.  In addition, the four official committees
appointed in the Debtors' Chapter 11 cases were dissolved and the
representative for future asbestos claimants was discharged on the
Effective Date.

Section 350(a) of the Bankruptcy Code and Rule 3022 of the Federal
Rules of Bankruptcy Procedure provide that a court will close a
bankruptcy case "[a]fter an estate is fully administered."  The
term "fully administered" is not defined in the Bankruptcy Code or
in the Bankruptcy Rules, however, courts have utilized these
factors identified in an Advisory Committee Note to Bankruptcy
Rule 3022 in determining whether an estate has been fully
administered:

   (a) Whether an order confirming a plan has become final;

   (b) Whether deposits required by a plan have been
       distributed;

   (c) Whether a property proposed by a plan to be transferred
       has been transferred;

   (d) Whether the debtor or the debtors' successor under a plan
       has assumed business or management of the property dealt
       with by the plan;

   (e) Whether payments under the plan have commenced; and

   (f) Whether all motions, contested matters and adversary
       proceedings have been finally resolved.

Applying those factors and in light of Rule 5009-1 of the Local
Rules of Bankruptcy Practice and Procedure for the Delaware
Bankruptcy Court, the Debtors ask Judge Fitzgerald to issue a
final decree order closing 10 bankruptcy cases.

The Closing Debtors are:

   * United States Gypsum Company,
   * USG Interiors, Inc.,
   * USG Interiors International, Inc.,
   * L&W Supply Corporation,
   * Beadex Manufacturing, LLC,
   * B-R Pipeline Company,
   * La Mirada Products Co., Inc.,
   * USG Industries, Inc.,
   * USG Pipeline Company, and
   * Stocking Specialists, Inc.

The Debtors are not seeking to close the lead case of Debtor USG
Corporation because certain issues in connection with claims
settlement and Plan consummation are still yet to be determined by
the Bankruptcy Court.  

Paul N. Heath, Esq., at Richards, Layton & Finger, P.A., in
Wilmington, Delaware, relates that any deposits and property
transfers provided for by the Plan have been completed following
the Effective Date.

Moreover, Mr. Heath notes that the Debtors have assumed the
business and management of their assets as reorganized entities.
The distributions provided for under the Plan, to the extent
proper tax documentation has been received from the relevant
creditors, have been or will be substantially completed by end of
September 2006.

With the exception of the contingent $3,050,000,000 payment to the
Asbestos Personal Injury Trust, all distributions on account of
Allowed Claims were made within 60 days of the Effective Date, Mr.
Heath states.  A hearing on various professionals' final fee
applications will also occur on December 18, 2006, and all allowed
professional fees or expenses will be paid in accordance with the
Bankruptcy Court's order.  In addition, all other claims either
have been paid or will be paid once pending and to be filed claim
objections have been resolved or, if reinstated under the Plan or
the Confirmation Order, in the ordinary course of business.

Furthermore, Mr. Heath relates that any adversary proceedings in
the closing cases either have been or likely will be resolved or
dismissed by end of September.

Considering that USG's lead case will remain open, Mr. Heath
contends that the Closing Debtors and the Closing Cases are
unnecessary to the Court's retention of jurisdiction over these
matters.  However, it is possible that the Court may be asked to
address issues relating to the Closing Debtors, which cannot be
addressed in USG's lead case.

Nevertheless, Mr. Heath maintains, the Closing Debtors' estates
have been fully administered, and their estates should be closed.
As the Advisory Committee Note states, "[t]he court should not
keep the case open only because of the possibility that the
court's jurisdiction may be invoked in the future."  The Advisory
Committee Note also states that the Court may continue to exercise
its jurisdiction after closure of the Debtors' cases to enforce or
interpret its own orders, and the Court may also reopen the
Debtors' cases on a sufficient showing of cause pursuant to
Section 350(b).

Mr. Heath insists that leaving USG's case open at this time will
provide an additional avenue for resolving any issues that may
arise that relate to the Closing Cases, without the need to reopen
those cases.

The Court will convene a hearing to consider the Debtors' request
on September 25, 2006, at 9:00 a.m.

                            About USG

Headquartered in Chicago, Illinois, USG Corporation --
http://www.usg.com/-- through its subsidiaries, is a leading
manufacturer and distributor of building materials producing a
wide range of products for use in new residential, new
nonresidential and repair and remodel construction, as well as
products used in certain industrial processes.

The Company filed for chapter 11 protection on June 25, 2001
(Bankr. Del. Case No. 01-02094).  David G. Heiman, Esq., Gus
Kallergis, Esq., Brad B. Erens, Esq., Michelle M. Harner, Esq.,
Mark A. Cody, Esq., and Daniel B. Prieto, Esq., at Jones Day
represent the Debtors in their restructuring efforts.

Lewis Kruger, Esq., Kenneth Pasquale, Esq., and Denise Wildes,
Esq., represent the Official Committee of Unsecured Creditors.
Elihu Inselbuch, Esq., and peter Van N. Lockwood, Esq., at Caplin
& Drysdale, Chartered, represent the Official Committee of
Asbestos Personal Injury Claimants.  Martin J. Bienenstock, Esq.,
Judy G. Z. Liu, Esq., Ralph I. Miller, Esq., and David A.
Hickerson, Esq., at Weil Gotshal & Manges LLP represent the
Statutory Committee of Equity Security Holders.  Dean M. Trafelet
is the Future Claimants Representative.  Michael J. Crames, Esq.,
and Andrew  A. Kress, Esq., at Kaye Scholer, LLP, represent the
Future Claimants Representative.  Scott Baena, Esq., and Jay
Sakalo, Esq., at Bilzen Sumberg Baena Price & Axelrod LLP,
represent the Asbestos Property Damage Claimants Committee.

When the Debtors filed for protection from their creditors, they
listed $3,252,000,000 in assets and $2,739,000,000 in debts.  The
Debtors emerged from bankruptcy protection on June 20, 2006.


VESTA INSURANCE: Organizational Meeting Scheduled for August 30
---------------------------------------------------------------
J. Thomas Corbett, the Chief Deputy Bankruptcy Administrator for
the Northern District of Alabama, advises that he has contacted
Vesta Insurance Group, Inc.'s largest unsecured creditors and
solicited their indications of interest in serving on an Official
Committee of Unsecured Creditors in the Debtors' cases.  

If a sufficient number of creditors indicate their interest and
willingness to serve on a Committee, the Bankruptcy Administrator
will convene an Organizational Meeting at 1:30 p.m. on Wednesday,
Aug. 30, 2006, in Birmingham, Alabama.  Mr. Corbett can be reached
by telephone at (205) 714-3838.

                       About Vesta Insurance

Headquartered in Birmingham, Alabama, Vesta Insurance Group, Inc.
(Other OTC: VTAI.PK) -- http://www.vesta.com/-- is a holding
company for a group of insurance companies that primarily offer
property insurance in targeted states.

Wyatt R. Haskell, Luther S. Pate, UV, and Costa Brava Partnership
III, L.P., filed an involuntary chapter 7 petition against the
Company on July 18, 2006 (Bankr. N.D. Ala. Case No. 06-02517).  
The case was converted to a voluntary chapter 11 case on Aug. 8,
2006 (Bankr. N.D. Ala. Case No. 06-02517).  Eric W. Anderson,
Esq., at Parker Hudson Rainer & Dobbs, LLP, represents the Debtor.  
R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker,
LLC, represents the petitioning creditors.  At Dec. 31, 2004,
Vesta Insurance's balance sheet showed $1,764,247,000 in total
assets and $1,810,022,000 in total liabilities resulting in a
$45,775,000 stockholders' deficit.

On Aug. 1, 2006, the District Court of Travis County, Texas
entered the Order appointing the Texas Commissioner of Insurance
as Liquidator of Vesta Insurance's Texas-domiciled subsidiaries:
Vesta Fire Insurance Corporation; The Shelby Insurance Company;
Shelby Casualty Insurance Corporation; Texas Select Lloyds
Insurance Company; and Select Insurance Services, Inc.  (Vesta
Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).


VESTA INSURANCE: Taps Parker Hudson as Bankruptcy Counsel
---------------------------------------------------------
Vesta Insurance Group Inc. and J. Gordon Gaines Inc. seek
permission from the U.S. Bankruptcy Court for the Northern
District of Alabama to employ Parker, Hudson, Rainer & Dobbs, LLP,
as their bankruptcy attorneys.

Donald Thornton, Esq., VIG senior vice president, tells the Court
that the Debtors' cases are likely to be complex and will
require counsel with extensive experience in bankruptcy,
insolvency, restructuring, and reorganization cases.  Parker
Hudson has approximately 60 lawyers and has extensive experience
and expertise in bankruptcy and restructuring cases and in
analyzing bankruptcy issues.

According to Mr. Thornton, Parker Hudson has had a significant
practice in the area of bankruptcy restructuring and workouts.  
The firm's bankruptcy practice includes representing debtors,
creditor and noteholder committees, secured creditors, trustees,
and examiners.  The firm's attorneys regularly appear in
bankruptcy courts in Alabama, Delaware, Georgia, Florida, New
York, North Carolina, South Carolina, Tennessee, Texas, and
Virginia.

Mr. Thornton relates that the partners, counsel and associates of
Parker Hudson who will advise the Debtors have considerable
knowledge and experience in the field of bankruptcy law, and
debtors' and creditors' rights, including insolvencies,
restructurings and business organizations, and liquidations under
Chapter 11 of the Bankruptcy Code, as well as in other areas of
law related to the Debtors' Chapter 11 case.

As the Debtors' bankruptcy counsel, Parker Hudson is expected to:

   (a) advise the Debtors with respect to their powers and duties
       as debtors and debtors-in-possession in the continued
       management and operation of their business and properties;

   (b) attend meetings and negotiate with representatives of
       creditors and other parties-in-interest, and advise and
       consult with the Debtors on the conduct of the case,
       including all of the legal and administrative requirements
       of operating in Chapter 11;

   (c) take all necessary actions to protect and preserve the
       Debtors' estate, including the prosecution of actions
       commenced under the Bankruptcy Code on the Debtors'
       behalf, and object to claims filed against the estate;

   (d) prepare on the Debtors' behalf all motions, applications,
       answers, orders, reports, and papers necessary to the
       administration of the estate;

   (e) negotiate and prepare on the Debtors' behalf sales or
       other disposition of assets, plans of reorganization,
       disclosure statements, and all related agreements and
       documents, and take any necessary action to obtain
       confirmation of a plan;

   (f) appear before the Court, any appellate courts, and the
       Bankruptcy Administrator, and protect the interests of the
       Debtors' estate before those courts and the Bankruptcy
       Administrator; and

   (g) perform all other necessary services in connection with
       the Debtors' Chapter 11 cases.

The firm's current hourly rates range:

          Position              Hourly Rate
          --------              -----------
          Partners              $290 to $495
          Of counsel            $340
          Associates            $170 to $275
          Paralegals             $70 to $160

The attorneys and paralegals that will likely provide services to
the Debtors are:

     Professional                               Hourly Rate
     ------------                               -----------
     C. Edward Dobbs, Esq.                         $495
     Rufus T. Dorsey, IV, Esq.                     $450
     Eric W. Anderson, Esq.                        $420
     Jack C. Basham, Jr., Esq.                     $340
     James S. Rankin, Jr., Esq.                    $290
     Tyronia Morrison, Esq.                        $180
     Stephanie Phillips (bar admission pending)    $170
     Paralegals                                 $55 to $130

In addition, the firm customarily charges its clients for all
costs and expenses incurred.

Edward Dobbs, Esq., a partner at Parker, Hudson, Rainer & Dobbs
LLP, relates that on July 21, 2006, his firm received from VIG a
$30,000 retainer to secure payment for future service rendered
and expenses incurred.  On July 27, the firm received from Gaines
a $75,000 retainer.  Parker Hudson received an additional $75,000
from VIG on August 4, 2006.

Prior to the entry of the Conversion Order, on August 7, 2006,
the firm applied $39,222 of the VIG retainer and $55,113 of the
Gaines retainer to payment of prepetition fees and expenses and
the payment of filing fees.  The remainder of the VIG retainer --
$65,777 -- and the Gaines retainer -- $19,886 -- will be held by
Parker Hudson as a general retainer for postpetition services and
expenses.

"Based upon a review of [Parker Hudson's] records and using the
available information, I believe that [Parker Hudson] is a
disinterested person within the meaning of [Section 327 of the
Bankruptcy Code]," Mr. Dobbs tells Judge Bennett.

Mr. Thornton informs the Court that the Debtors intend to employ
the law firm of Balch & Bingham as special counsel.  Balch also
has extensive knowledge regarding the corporate history of the
Debtors and is in a position to provide valuable information and
advice on an array of corporate issues.  "Retention of Balch as
special counsel will prove to be cost effective and beneficial to
[the Debtors].  [Parker Hudson] and Balch have agreed to make
every effort to avoid duplication of services in [the Debtors']
Chapter 11 case[s]," Mr. Thornton says.

According to Mr. Dobbs, his firm is unaware of any undisclosed
connection with the Debtors, their creditors, any other parties-
in-interest, their attorneys and accountants, or the Bankruptcy
Administrator.

                       About Vesta Insurance

Headquartered in Birmingham, Alabama, Vesta Insurance Group, Inc.
(Other OTC: VTAI.PK) -- http://www.vesta.com/-- is a holding
company for a group of insurance companies that primarily offer
property insurance in targeted states.

Wyatt R. Haskell, Luther S. Pate, UV, and Costa Brava Partnership
III, L.P., filed an involuntary chapter 7 petition against the
Company on July 18, 2006 (Bankr. N.D. Ala. Case No. 06-02517).  
The case was converted to a voluntary chapter 11 case on Aug. 8,
2006 (Bankr. N.D. Ala. Case No. 06-02517).  Eric W. Anderson,
Esq., at Parker Hudson Rainer & Dobbs, LLP, represents the Debtor.  
R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker,
LLC, represents the petitioning creditors.  At Dec. 31, 2004,
Vesta Insurance's balance sheet showed $1,764,247,000 in total
assets and $1,810,022,000 in total liabilities resulting in a
$45,775,000 stockholders' deficit.

On Aug. 1, 2006, the District Court of Travis County, Texas
entered the Order appointing the Texas Commissioner of Insurance
as Liquidator of Vesta Insurance's Texas-domiciled subsidiaries:
Vesta Fire Insurance Corporation; The Shelby Insurance Company;
Shelby Casualty Insurance Corporation; Texas Select Lloyds
Insurance Company; and Select Insurance Services, Inc.  (Vesta
Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).


W.R. GRACE: Objects to D. Slaughter's $1.375 Mil. Unsecured Claim
-----------------------------------------------------------------
David Slaughter filed in September 2001 a petition for damages in
the 14th Judicial District Court, Calcasieu Parish, in the state
of Louisiana, seeking recovery from Turner Industries, Ltd., and
W. R. Grace & Company for a personal injury that he suffered when
asphalt crumbled beneath his feet while making a delivery to
Grace's Lake Charles Louisiana facility in December 2000.

Mr. Slaughter subsequently filed Claim No. 5703, asserting a
$1,375,000 unsecured non-priority claim.

In August 2004, Mr. Slaughter asked the Bankruptcy Court to
modify the automatic stay imposed under Section 362(a) of the
Bankruptcy Code to pursue the state court action.

The Debtors argued that:

   (i) Mr. Slaughter sought favorable treatment from other
       claimants, without providing any meaningful substantive
       support or justification for his request; and

  (ii) the Complaint was filed after the Petition Date, in
       violation of the Automatic Stay.

The Bankruptcy Court denied the Lift Stay Motion in November 2004
and directed the Debtors to file an objection to Claim No. 5073.

By this objection, the Debtors ask Judge Fitzgerald to disallow
and expunge Claim No. 5703 because Grace is not liable for Mr.
Slaughter's alleged injuries and, in any event, Mr. Slaughter
cannot support the amount of damages requested in the Claim.

According to James E. O'Neill, Esq., at Pachulski, Stang, Ziehl,  
Young, Jones & Weintraub LLP, in Wilmington, Delaware, Mr.
Slaughter fails to provide any evidence that he is injured, let
alone an evidence enough to satisfy a "preponderance of the
evidence" standard as is required in these circumstances.

To the extent Mr. Slaughter was injured, his alleged injury was
due to his own negligence when he fell while exiting his truck,
Mr. O'Neill asserts.  Grace inspected the asphalt after the
incident, and there was no evidence that the asphalt crumbled or
was otherwise defective.

In addition, Mr. O'Neill contends that Mr. Slaughter failed to
name all necessary parties, including "I.M.C.," the contractor
that built the asphalt containment barrier.  To the extent that
the barrier was defective, I.M.C. would also be liable for Mr.
Slaughter's alleged injuries.

Mr. O'Neill argues that Mr. Slaughter failed to establish any
basis for the $1,375,000 claim amount sought in the Complaint or
the Claim.  He explains that Mr. Slaughter bears the burden of
establishing all elements of his Claim, hence, it must fail
unless and until Mr. Slaughter provides evidence to support that
amount.

Moreover, Mr. O'Neill notes that Mr. Slaughter has neither pled
that he is nor was an employee of Grace.

Mr. O'Neill points out that Mr. Slaughter is an employee of
Turner Industries or one of its affiliated entities.  Therefore,
Mr. Slaughter's alleged injuries would be covered by workers'
compensation through Turner, which serves as Mr. Slaughter's sole
avenue for recourse.  In addition, any amount owed to Mr.
Slaughter by Grace would necessarily be reduced to reflect all
amounts that he has received for workers' compensation or
otherwise.

Mr. O'Neill further avers that Mr. Slaughter failed to support
that his Claim is non-dischargeable, as alleged in the Lift Stay
Motion.  Based on Mr. Slaughter's description of his Claim, it is
subject to discharge under Section 1141.

                         About W.R. Grace

Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA)
-- http://www.grace.com/-- supplies catalysts and silica     
products, especially construction chemicals and building
materials, and container products globally.  The Company and its
debtor-affiliates filed for chapter 11 protection on April 2, 2001
(Bankr. D. Del. Case No. 01-01139).  James H.M. Sprayregen, Esq.,
at Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski,
Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the
Debtors in their restructuring efforts.  The Debtors hired
Blackstone Group, L.P., for financial advice.
PricewaterhouseCoopers LLP is the Debtors' accountant.

Stroock & Stroock & Lavan LLP represent the Official Committee of
Unsecured Creditors.  The Creditors Committee tapped Capstone
Corporate Recovery LLC for financial advice.  David T. Austern,
the legal representative of future asbestos personal injury
claimants, is represented by Orrick Herrington & Sutcliffe LLP and
Phillips Goldman & Spence, PA.  Elihu Inselbuch, Esq., and
Nathan D. Finch, Esq., at Caplin & Drysdale represent the
Official Committee of Asbestos Personal Injury Claimants.  
The Asbestos Committee of Property Damage Claimants tapped
Scott L. Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin
Sumberg Baena Price & Axelrod LLP to represent it.  Lexecon,
LLP, provided asbestos claims consulting services to the Official
Committee of Equity Security Holders.  


WERNER LADDER: Wants to Walk Away from Greenville Property Lease
----------------------------------------------------------------
Werner Holding Co. (DE), Inc., aka Werner Ladder Company, and its
debtor-affiliates ask authority from the U.S. Bankruptcy Court for
the District of Delaware to reject a non-residential real property
lease in Greenville, Pennsylvania.

On Aug. 7, 1992, Olympus Properties, Inc., and BLS Limited
Partnership entered into a non-residential real property lease
for the premises located at 109 Woodfield Drive, Greenville,
Pennsylvania, for a term of 15 years.

The Lease commenced on Dec. 1, 1992 and expires on Nov. 30, 2007.
The minimum annual rent through the lease term is $86,900, payable
in monthly installments of $7,242.

Olympus merged with Werner Co., one of the Debtors, on Dec. 31,
1998.  The Debtors vacated the leased premises on June 30, 2006
and determined that they have no more need for the space, relates
Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, LLP
in Wilmington, Delaware.

Section 365(a) of the Bankruptcy Code provides that a debtor-in-
possession, subject to the court's approval, may assume or reject
an executory contract or unexpired lease of the debtor.  Section
554(a) provides that after notice and a hearing, the trustee may
abandon any property.

The Lease, according to Mr. Brady, holds no material economic
value to the Debtors or their estates because assignment of the
lease is unlikely and delaying the rejection of the Lease will
cause them to continue to accrue additional and potentially
administrative obligations under the lease.

To the extent that the Debtors leave any property that they own
or lease at the leased premises on or after June 30, the Debtors
request that the property be deemed abandoned.

Mr. Brady asserts that any personal property remaining at the
leased premises will be of inconsequential value, burdensome for
the Debtors to remove and provides no benefit to their estates.

                       About Werner Ladder

Headquartered in Greenville, Pennsylvania, Werner Co. --
http://www.wernerladder.com/-- manufactures and distributes
ladders, climbing equipment and ladder accessories.  The company
and three of its affiliates filed for chapter 11 protection on
June 12, 2006 (Bankr. D. Del. Case No. 06-10578).  The firm of
Willkie Farr & Gallagher LLP serves as the Debtors' counsel.  Kara
Hammond Coyle, Esq., Matthew Barry Lunn, Esq., and Robert S.
Brady, Esq., Young, Conaway, Stargatt & Taylor, LLP, represents
the Debtors as its co-counsel.  The Debtors have retained
Rothschild Inc. as their financial advisor.  At March 31, 2006,
the Debtors reported total assets of $201,042,000 and total debts
of $473,447,000.  (Werner Ladder Bankruptcy News, Issue No. 6;
Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)


WERNER LADDER: U.S. Trustee Wants Court to Deny Bonus Plans
-----------------------------------------------------------
Kelly Beaudin Stapleton, the U.S. Trustee for Region 3, asks the
U.S. Bankruptcy Court for the District of Delaware to deny the
request of Werner Holding Co. (DE), Inc., aka Werner Ladder
Company, and its debtor-affiliates, to approve the Bonus Plans and
authorize them to fund the Bonus Plans.

The U.S. Trustee says that the Debtors have not demonstrated that
the proposed payments under the Bonus Plans are appropriate under
Section 503(c) of the Bankruptcy Code.

Based on the scant information contained in the Debtors' request,
the Bonus Plans are nothing more than key employee retention
plans in disguise, Mark S. Kennedy, Esq., trial attorney of the
U.S. Trustee, avers.

Mr. Kennedy notes that the Motion is devoid of facts to support
authorization of the proposed bonus plan payments.  Among other
things, it does not:

   (1) provide copies of the Business Optimization Bonus Plan and
       Chicago Transition Plan and identify the employees
       eligible to receive the proposed bonus payments and the
       bonus amounts for which each employee is eligible;

   (2) disclose the performance objectives that each employee
       must meet to be eligible for bonus payments and disclose
       whether individual performance objectives require each
       participating employee to perform at an objectively  
       measurable higher level than in the past in order to
       receive a bonus;

   (3) disclose how the performance objectives for each
       participating employee were established and whether each
       participating employee bears any true performance risk;

   (4) disclose whether partial or reduced bonus payments will be
       made to any eligible employees if the employees or the
       Debtors fail to meet their established objectives;

   (5) disclose other compensation paid to each eligible
       employee;

   (6) disclose the recipients of previous payments made under
       the bonus plans described in the motion and the amounts of
       the payments;

   (7) disclose the existence of any other bonus, incentive or
       severance payment plans and amounts paid for those plans,  
       both prepetition and postpetition; and

   (8) disclose whether any of the employees eligible for bonus
       payments are officers, directors, persons in control,
       other insiders, or management of the Debtors because the
       motion only indicates that all eligible employees work at
       the supervisory and professional level or above.  

The U.S. Trustee notes that retention bonus payments to insiders
are prohibited under Section 503(c)(1) of the Bankruptcy Code.

Mr. Kennedy also notes that the Debtors are asking the Court to
employ Section 105(a) to approve a bonus program under the
business judgment rule, a test that puts a judicial imprimatur on
gross management blunders as long as management is minimally
informed, is disinterested and acts in good faith.  

The Debtors' citing of Section 105(a) is contrary to Section
503(c)(3), which disallows and bars payment of transfers or
obligations outside of the ordinary course of business unless
justified by the facts and circumstances of the case,
Mr. Kennedy says.

Because the Debtors have not met the burden of demonstrating that
the proposed bonus payments are justified, the U.S. Trustee wants
the Court to deny the Debtors' request.

                         Debtors React

The Debtors maintain that neither the BOB Plan nor the Chicago
Transition Plan is a key employee retention plan governed by
Section 503(c)(1).

Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, LLP
in Wilmington, Delaware, explains that, although the BOB Plan and
the Chicago Plan would cover four insiders, the plans were
crafted with care to motivate select employees to meet individual
specific performance objectives that would have a direct impact
on the Debtors' ability to meet their organizational performance
targets.

Moreover, according to Mr. Brady, an indirect benefit of the
Bonus Plans is reducing the Debtors' attrition rate among the
covered employees.  Every incentive-based plan that is crafted
correctly will motivate eligible employees to remain with a
debtor because the performance objectives in the plans are
reasonable.  

Because of the reduced attrition rate as a benefit of the Bonus
Plans, the Debtors have neither converted the Plans to retention
plans nor reduced their performance-based characterization of the
Plans to window dressing a key employee retention plan, Mr. Brady
relates.

To the extent Section 503(c)(3) governs the approval of the Bonus
Plans, the Debtors note that the standard for approval of non-
ordinary course transactions under the section is essentially the
same as the standard for similar transactions under Section
363(b)(1).  Section 503(c)(3) precludes payment as an
administrative expense "other transfers or obligations that are
outside the ordinary course of business and not justified by the
facts and circumstances of the case. . ."

Mr. Brady notes that the court in Committee of Equity Security
Holders v. Lionel Corp. (In re Lionel), 722 F.2d 1063 (2d Cir.
1983), held, "Whether or note there are sufficient business
reasons to justify a transaction depends upon the facts and
circumstances of each case."

The facts supporting approval of the Debtors' request under
Section 363(b)(1) are sufficient to justify the approval of the
Bonus Plans under Section 503(c)(3), Mr. Brady asserts.

                       About Werner Ladder

Headquartered in Greenville, Pennsylvania, Werner Co. --
http://www.wernerladder.com/-- manufactures and distributes
ladders, climbing equipment and ladder accessories.  The company
and three of its affiliates filed for chapter 11 protection on
June 12, 2006 (Bankr. D. Del. Case No. 06-10578).  The firm of
Willkie Farr & Gallagher LLP serves as the Debtors' counsel.  Kara
Hammond Coyle, Esq., Matthew Barry Lunn, Esq., and Robert S.
Brady, Esq., Young, Conaway, Stargatt & Taylor, LLP, represents
the Debtors as its co-counsel.  The Debtors have retained
Rothschild Inc. as their financial advisor.  At March 31, 2006,
the Debtors reported total assets of $201,042,000 and total debts
of $473,447,000.  (Werner Ladder Bankruptcy News, Issue No. 6;
Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)


WINN-DIXIE: Completes Sale of 12 Stores in Bahamas to BSL Holdings
------------------------------------------------------------------
Winn-Dixie Stores, Inc., has completed the sale of its 12
supermarkets in the Bahamas -- nine operated by Winn-Dixie
under the City Markets banner and three under the Winn-Dixie
banner.

The stores were sold to BSL Holdings Limited, a Bahamian investor
group represented by Fidelity Merchant Bank & Trust Limited, for
nearly $54 million.  All 12 stores are remaining open under their
new owners.

Pursuant to a definitive agreement with BSL Holdings Limited, W-D
(Bahamas) Ltd., a Bahamas Company and a wholly owned subsidiary of
Winn-Dixie, has sold all of its shares of Bahamas Supermarkets
Limited to BSL Holdings Limited.  W-D (Bahamas) owned about 78% of
the common shares of BSL.  The remainder of BSL's common shares
will remain publicly traded in the Bahamas.

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 527 stores in Florida,
Alabama, Louisiana, Georgia, and Mississippi.  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.,
http://bankrupt.com/newsstand/or 215/945-7000).


WINN-DIXIE: Wants Florida Tax Claims Reduced and Allowed
--------------------------------------------------------
Winn-Dixie Stores, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Middle District of Florida to reduce and
allow these tax claims in the amounts based on Assessment
Technologies, Ltd.'s revised tax amounts.  

The Debtors object to the tax claims filed on behalf of a group of
tax collectors, treasurers and officers for 65 different
jurisdictions within the State of Florida.

Based on the analysis of Assessment Technologies, Ltd., their
property tax consultants, the Debtors conclude that the imposed
2004 and 2005 tax amounts are excessive.

The Tax Liabilities include:

                             Base Tax      Revised
     Location                Asserted     Tax Amount
     ---------             -----------   -----------
     Brevard County        $1,740,299    $1,582,956
     Broward County        12,764,906    11,474,206
     Collier County         1,099,822       961,080
     Duval County           6,448,549     5,206,101
     Hillsborough County    3,394,102     2,865,307
     Lee County             1,174,577       962,213
     Miami-Dade County     14,365,657    12,908,358
     Orange County          3,981,494     3,350,574
     Osceola County         1,294,639     1,041,373
     Palm Beach County      6,862,625     6,302,537
     Pinellas County        3,308,899     2,797,364
     Polk County            1,335,242       937,021
     Seminole County        1,464,607     1,146,033
     Volusia County         1,995,874     1,700,040

The Debtors further ask the Court to determine that the
adjusted market values of their properties are the correct
values the Florida Tax Collectors should use in computing
the tax liabilities for 2006.  A list of the 2006 market
values of the properties is available for free at
http://ResearchArchives.com/t/s?1007

      http://bankrupt.com/misc/Wdix_2006MarketValues.pdf

To the extent that their claims are secured by liens against the
Debtors' property and the value of the property exceeds the
amount of the tax claim, the Florida Tax Collectors impose
interest for their claims of 18% per annum.

Cynthia C. Jackson, Esq., at Smith Hulsey & Busey, in
Jacksonville, Florida, notes that the court in In re Davison, 106
B.R. 1021, 1022 (Bankr. Neb. 1989), held that a debtor is
obligated to pay interest at the statutory rate "unless the court
determines that the statutory interest rate constitutes a
penalty."

Based upon the average 3.61% one-year London Interbank Offered
Rate and 5.68% prime lending rate, the Debtors submit that the
rates asserted by the Florida Tax Collectors contain a penalty
and should be reduced.

Accordingly, the Debtors ask the Court to determine that the
adjusted rate of 6% per annum is the appropriate interest rate to
be used to calculate accrued interest on any Allowed Tax Claim.

The proposed Adjusted Rate represents Prime plus one-half percent
for the period the taxes remain unpaid, and adequately accounts
for the appropriate credit risk of the Debtors and the Florida
Tax Collectors' secured status, Ms. Jackson relates.

Moreover, the Debtors ask the Court to:

   (a) authorize them to set off any excess amount paid against
       their liability on other accounts within the same
       jurisdiction and for the same or other tax years; and

   (b) extinguish any liens relating to their secured tax
       liabilities addressed in the objection upon payment of the
       allowed Florida Tax Claims and revised tax amounts.

Objections to the Debtors' request are due on Aug. 28, 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.,
http://bankrupt.com/newsstand/or 215/945-7000).


WINN-DIXIE: Wants 17 Scheduled Claims Disallowed
------------------------------------------------
Winn-Dixie Stores, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Middle District of Florida to deem their
schedules of assets and liabilities and schedules of executory
contracts and unexpired leases amended to disallow, reduce or
reclassify 23 scheduled claims.

A. No Liability Claims

The Debtors have identified 17 scheduled claims, aggregating
$476,038, that their books and records reflect as zero balance
claims, as a result of:

   (a) prepetition payments that were not reflected in their
       books and records at the time the Schedules were filed;

   (b) accounts payable credits or accounts payable balances due
       to the Debtors; or

   (c) the correction of erroneous entries in the books and
       records that were scheduled as claims.

The Debtors ask the Court to disallow these No Liability
Scheduled Claims:

     Claimant                    Claim No.
     --------                    ---------
     AAF International             30038
     Bran Luebbe Inc.              30248
     City of Montgomery            33422
     The Dispatch                  36859
     Ferrania USA Inc.             34823
     GE Capital                    30828
     Hauer Custom Manufacturing    40054
     Levlad Inc.                   35043
     Mountaineer                   36578
     Murzan                        31242
     Napa Auto Parts               31251
     Pearlstine Dist. Inc.         32180
     Safeline Metal Detection      31506
     Southern Eagle Dist.          32209
     Town Talk                     34265
     Triangle Package Machinery    31768
     Triangle Package Machinery    32294

B. Overstated Claims

Upon review of their books and records, the Debtors have also
identified five overstated scheduled claims aggregating $967,941.

The Overstated Scheduled Claims are:

                                                     Reduced
     Claimant                       Claim Amount   Claim Amount
     --------                       ------------   ------------
     Premium Beverage                 $209,270       $1,072
     RH Barringer Dist.                383,216          873
     Savannah Dist. Company              1,304          958
     Silver Eagle Dist. Key West       370,800        2,789
     Velt Sherman Residuary Trust        3,351          505

The Debtors seek to reduce the Overstated Scheduled Claims to
account for postpetition amounts that were inadvertently included
in the scheduled claims that have been paid and the correction of
erroneous entries in the books and records that were scheduled as
claims.

C. Garnier Claim

Claim No. 34865 was filed by Garnier for $71,065, asserting an
unsecured non-priority class status.  The Debtors have determined
that the Garnier Claim is overstated and partially misclassified.

According to the Debtors, the Garnier Claim partially duplicates
its reclamation demand.  The Debtors and Garnier have previously
agreed to Garnier's allowed reclamation claim.

The Debtors seek to reduce the claim amount to $69,768 to reflect
accounts receivable balance of $1,298, and to reclassify $22,349
as administrative priority and the $47,419 remains as unsecured
non-priority claim.

The Debtors reserve their rights with respect to potential
preference and avoidance actions under Chaoter 5 of the
Bankruptcy Code against any of the claimants.

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.,
http://bankrupt.com/newsstand/or 215/945-7000).


WISE METALS: Crown Cork Business Loss Prompts S&P to Junk Ratings
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Linthicum, Maryland-based Wise Metals Group LLC to
'CCC-' from 'CCC+'.

At the same time, the rating agency lowered its senior secured
note rating on the company to 'C' from 'CCC-'.  The outlook is
negative.

The downgrade follows disclosures in the company's Form 10-Q
filing on Aug. 15, 2006, that it will lose the beverage-can sheet
business from Crown Cork & Seal Inc. for the fourth quarter of
2006 and for all of 2007.  

Wise Metals did not inform Standard & Poor's of the loss of the
Crown business when the rating agency was lowering the corporate
credit rating to 'CCC+/Negative--' from 'B-/Negative/--' on Aug.
15.  

Sales to Crown during 2005 accounted for 20% of Wise Metal's 2005
total revenue, the vast majority of which was from beverage-can
sheet business.

"We expect the company to experience financial distress because of
the loss of this business and think there is a strong likelihood
the company will seek bankruptcy protection," said Standard &
Poor's credit analyst Dominick D'Ascoli.

"Wise has been experiencing negative cash flows and has thin
liquidity, and debt has been increasing.  We had already been
expecting liquidity to decline in the third quarter and now, with
the loss of a significant customer, we expect negative free cash
flow in the fourth quarter of 2006 and full year 2007.  We are
also doubtful that the company will be able to secure additional
financing to bolster its thin liquidity level."

Mr. D'Ascoli added, "We will lower the rating further if the
company fails to service its debt obligation.  We could upgrade
the rating if the company can successfully replace its lost
business, liquidity improves, and the company reduces its onerous
debt level."


WORLDCOM INC: Court Expunges Dobie's Claim Nos. 17042 and 38241
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of New York expunged
Dobie Properties LLC's Claim Nos. 17042 and 38241 against WorldCom
Inc. and its debtor-affiliates.

The Court directed Gaylord Merlin Ludovici Diaz & Bain to
disburse the principal sum of $1,600,000 held in the Escrow
Account and 100% of its accrued interest, to date, to Dobie.

Upon compliance with the terms of the Order, the Court will
relieve Gaylord Merlin from any further obligation with respect
to the Escrow Account.

As reported in the Troubled Company Reporter on July 13, 2006,
the Honorable Arthur Gonzalez granted Dobie's request for the
enforcement of the amended settlement agreement it entered into
with the Debtors.

The Court required the Debtors to disburse to Dobie the
$1,600,000 in Proceeds held in escrow by Gaylord Merlin Ludovici
Diaz & Bain.

                         About WorldCom

WorldCom, Inc., a Clinton, MS-based global communications company,
filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y.
Case No. 02-13532).  On March 31, 2002, WorldCom listed
$103,803,000,000 in assets and $45,897,000,000 in debts.  The
Bankruptcy Court confirmed WorldCom's Plan on Oct. 31, 2003, and
on Apr. 20, 2004, the Company formally emerged from U.S. Chapter
11 protection as MCI, Inc.  On Jan. 6, 2006, MCI merged with
Verizon Communications, Inc.  MCI is now known as Verizon
Business, a unit of Verizon Communications.  (WorldCom Bankruptcy
News, Issue No. 123; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)


WORLDCOM INC: Michael Jordan Wants $8 Mil. Claim Allowed in Full
----------------------------------------------------------------
Michael Jordan asks the U.S. Bankruptcy Court for the District of
New York to allow his $8,000,000 claim against WorldCom Inc. and
its debtor-affiliates in full.

The Debtors pointed to Mr. Jordan's Claim No. 36077, seeking
payment of:

   (1) $2,000,000 for an annual compensation payment due on
       June 30, 2002; and

   (2) three $2,000,000 annual payments due on June 30 of 2003,
       2004 and 2005.

Jason M. Torf, Esq., at Schiff Hardin LLP, in Chicago, Illinois,
argues that Michael Jordan's Endorsement Agreement is not an
"employment contract" and that Mr. Jordan was not an "employee"
for the Debtors because under the Agreement:

   -- the term "employment" was never utilized and Mr. Jordan was
      never referred to as an "employee";

   -- Mr. Jordan was an "independent contractor";

   -- employment taxes were not withheld from Mr. Jordan's
      payments; and

   -- Mr. Jordan never agreed to provide any consulting services
      to the Debtors.

Mr. Torf relates that as testified by David Falk, Mr. Jordan's
agent, an "independent contractor" provision was standard in all
of Mr. Jordan's endorsement agreements.  In addition, Curtis
Polk, Mr. Jordan's financial and business advisor, testified that
it was important to the parties to include the "independent
contractor" provision so that they could structure Mr. Jordan's
stock options in the manner they desired and avoid reporting
obligations that otherwise would apply to the options.

According to Mr. Torf, the Debtors overlooked the fact that:

   -- the primary purpose of the Agreement was not to obtain the
      benefit of any "services" from Mr. Jordan but to provide
      the Debtors with an exclusive worldwide license to use Mr.
      Jordan's name and likeness to promote their products and
      services;

   -- Mr. Jordan's commitment was limited to a maximum of four
      hours per day for each of the four days per year that he
      was required to make himself available to produce
      advertisements or for promotional appearances; and

   -- Mr. Jordan exercised a high degree of control concerning
      when and where he would make any appearances.

The legislative history of Section 502(b)(7) of the Bankruptcy
Code is not applicable to Mr. Jordan's Claim, Mr. Torf argues.
Under the 1973 Commission on the Bankruptcy Laws of the United
States, Section 502(b)(7) was intended principally to apply to
long-term contracts providing substantial compensation to
management executives of corporate debtors, Mr. Torf relates.
Mr. Jordan, however, was never the Debtors' "management
executive," and had nothing to do with the circumstances that
resulted in the Debtors' bankruptcy.

In addition, the Debtors' breach of the Agreement did not provide
Mr. Jordan with time that he otherwise would not have had to
enter into additional endorsement agreements, Mr. Torf contends.
Even if Mr. Jordan had entered into an additional endorsement
contract, that contract would not constitute mitigation because
he already had the opportunity to enter into the contract prior
to the Debtors' rejection.

The Debtors have not satisfied their burden of establishing that
Mr. Jordan could have entered into a substantially similar
endorsement contract, Mr. Torf maintains.

Mr. Torf argues that the Debtors' attempt to rely on a 2000
Chicago Sun-Times newspaper article as evidence that Mr. Jordan
withdrew from the endorsement market in 2003 is improper for
three reasons:

   -- The statements purportedly made by Mr. Jordan in the
      article are inadmissible hearsay and cannot not be
      considered for purposes of summary judgment;

   -- Any statements allegedly made by Mr. Jordan to the author
      of the Article are not evidence of Mr. Jordan's state of
      mind at the time when the Debtors breached the Agreement
      three years later; and

   -- Both of Mr. Jordan's advisors testified that the article
      was not accurate.

Mr. Torf asserts that Mr. Jordan made a reasonable decision not
to pursue another telecommunications endorsement after WorldCom,
Inc.'s collapse because doing so would harm his reputation and
dilute his impact as an endorser.  It would also be inconsistent
with Mr. Jordan's overall business strategy.

                         About WorldCom

WorldCom, Inc., a Clinton, MS-based global communications company,
filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y.
Case No. 02-13532).  On March 31, 2002, WorldCom listed
$103,803,000,000 in assets and $45,897,000,000 in debts.  The
Bankruptcy Court confirmed WorldCom's Plan on Oct. 31, 2003, and
on Apr. 20, 2004, the Company formally emerged from U.S. Chapter
11 protection as MCI, Inc.  On Jan. 6, 2006, MCI merged with
Verizon Communications, Inc.  MCI is now known as Verizon
Business, a unit of Verizon Communications.  (WorldCom Bankruptcy
News, Issue No. 123; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)


WORLDCOM INC: Wants Michael Jordan's Claim Reduced to $4 Million
----------------------------------------------------------------
WorldCom Inc. and its debtor-affiliates ask the U.S. Bankruptcy
Court for the District of New York to limit Michael Jordan's
claim to $4,000,000, the amount the Debtors owed to Mr. Jordan
when they filed for bankruptcy, plus one year's compensation
under the Agreement.

The Debtors maintain that Claim No. 36077 is capped by Section
507(b)(2) and that Mr. Jordan did not make reasonable efforts to
mitigate his damages from their rejection of the Endorsement
Agreement.

Mark A. Shaiken, Esq., at Stinson Morrison Hecker LLP, in Kansas
City, Missouri, contends that the Agreement is an employment
contract for these reasons:

   (1) It is written;

   (2) It provides for Mr. Jordan to produce television
       commercials and print advertisements and to make personal
       appearances;

   (3) It provides for a substantial cash compensation and for
       stock options;

   (4) It precludes Mr. Jordan from providing endorsement
       services for other telecommunications companies;

   (5) It is not assignable by Mr. Jordan;

   (6) It ceases, at the Debtors' option, upon Mr. Jordan's
       death;

   (7) It has provisions for termination by both parties;

   (8) Mr. Jordan, through his agents, played an active role in
       creating and negotiating its terms, including insisting
       that the compensation should be more that six figures and
       that the term should be at least 10 years; and

   (9) It is the basis for Mr. Jordan's claim and defines the
       terms of his employment.

Consequently, if the Agreement is an employment contract under
Section 502(b)(7), then Mr. Jordan is an "employee" as he is the
person hired to provide services for the Debtors, Mr. Shaiken
avers.

The plain language of the Agreement designates Mr. Jordan as an
independent contractor for tax purposes only, Mr. Shaiken
clarifies.

In fact, after the Debtors rejected the Agreement, Mr. Jordan was
obligated to make reasonable efforts to find substitute
employment, Mr. Shaiken states.

Mr. Shaiken points out that David Falk, Mr. Jordan's agent,
Curtis Polk, Mr. Jordan's financial and business advisor, and
expert Willian A. Cartner, whose business is to help corporate
sponsors identify and secure professional athletes for the
purpose of product endorsement, testified that Mr. Jordan could
have obtained an endorsement agreement to replace the Agreement.
However, Mr. Jordan's agents admit that no efforts were made to
find alternate endorsement opportunities because Mr. Jordan did
not want new endorsements.

Because Mr. Jordan made no effort to mitigate his damages, the
reasonableness of his refusal to entertain other endorsement
opportunities is irrelevant, Mr. Shaiken contends.  "[Mr.] Jordan
had the right to decide to focus his time and talents on other
endeavors, but the reasonableness of that decision from his
perspective has no bearing on his right to be paid by the
bankruptcy estate."

                         About WorldCom

WorldCom, Inc., a Clinton, MS-based global communications company,
filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y.
Case No. 02-13532).  On March 31, 2002, WorldCom listed
$103,803,000,000 in assets and $45,897,000,000 in debts.  The
Bankruptcy Court confirmed WorldCom's Plan on Oct. 31, 2003, and
on Apr. 20, 2004, the Company formally emerged from U.S. Chapter
11 protection as MCI, Inc.  On Jan. 6, 2006, MCI merged with
Verizon Communications, Inc.  MCI is now known as Verizon
Business, a unit of Verizon Communications.  (WorldCom Bankruptcy
News, Issue No. 123; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)


WORKFLOW MANAGEMENT: S&P Affirms BB- Rating With Negative Outlook
-----------------------------------------------------------------
Standard & Poor's Ratings Services raised its recovery rating on
Workflow Management Inc.'s first-lien credit facilities to '2'
from '3', indicating expectations for a substantial recovery (80%-
100%) of principal in the event of a payment default.

At the same time, the rating agency affirmed the other ratings on
the company, including the 'BB-' corporate credit rating.  The
outlook is negative.

"The higher first-lien recovery rating reflects lower pro forma
first-lien debt levels because of the planned sale of Workflow's
Relizon Canada unit.  The reduced first-lien borrowings result in
improved recovery prospects for this debt under our simulated
payment default scenario," said Standard & Poor's credit analyst
Donald Wong.

The ratings on Greenwich, Connecticut-headquartered Workflow
reflect the company's:

   * heavy debt levels;
   * moderate-size cash flow base; and
   * competitive operating climate.  

These factors are tempered by Workflow's solid market position in
the niche print management segment and its adequate liquidity.

The company is a provider of document and business process
outsourcing services.  Operations were substantially expanded with
the November 2005 acquisition of Relizon Co.

Workflow benefits from:

   * a sizable and diversified customer base;
   * long-standing customer relationships;
   * significant recurring revenues; and
   * high retention rates.

The Relizon acquisition provides the company with cost savings due
to its increased scale and from facilities consolidation, and
prospects for incremental revenues from cross-selling
opportunities.  

Workflow is expected to continue to focus on integrating Relizon's
operations in coming periods.  The print management segment is
highly fragmented, resulting in competitive market conditions.

On Aug. 10, 2006, Workflow agreed to sell its Relizon Canada unit
to DATA Group Income Fund for about CDN$141 million, consisting of
CDN$112 million in cash and about 3 million units of the fund.  
The transaction is expected to close during this 2006 third
quarter.  

Net cash proceeds will be used to repay borrowings under the
first-lien credit facilities.  Workflow will be subject to a
90-day standstill agreement for the shares of DATA Group Income
Fund received.  

Standard & Poor's assumes in its ratings that Workflow will sell
these shares, proceeds of which are required to be used to repay
the first-lien facilities.


WORNICK CO: Continued Losses Prompt S&P to Downgrade Rating to B
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on Wornick
Co. (The) and its parent, TWC Holdings LLC, and placed the ratings
on CreditWatch with negative implications.  The corporate credit
rating on both entities were lowered to 'B' from 'B+'

"The downgrade and CreditWatch placement reflect concerns about
the company's near-term liquidity and continued losses despite
good demand in key end markets," said Standard & Poor's credit
analyst Christopher DeNicolo.

In the first six months of 2006, Wornick reported an $8 million
operating loss despite a 15% increase in revenue.  The loss was
due to:

   * costs related to consolidation efforts;
   * inefficiencies in the comanufacturing business; and
   * lower margins on certain military ration sales.

Free cash flow was negative in the first half of 2006 due to the
losses and higher working capital.  Subsequent to the end of the
quarter, the company made its scheduled semiannual coupon payment
on the $125 million secured notes and had further working capital
investments, resulting in zero cash balances and borrowings of $12
million on the $15 million revolver.

In addition, the company stated in its 10-Q that, although it
expects to repay the revolver drawings by the end of the year, it
could violate the financial covenants in its credit agreement.
Overall Wornick's financial profile is likely to remain weak due
to high debt leverage and poor profitability.

Standard & Poor's will meet with management to discuss plans to
restore profitability and cash flow generation and a further
downgrade is possible.

Cincinnati, Ohio-based Wornick specializes in the production,
packaging, and distribution of shelf-life, shelf-stable, and
frozen foods in flexible pouches and semirigid products.  
The firm's two main lines of business are military rations
(approximately 70% of revenues) and comanufacturing for
leading food brands (30%).  The company produces both individual
(including Meals Ready to Eat or MRE) and group rations (including
Unitized Group Rations-A or UGR-A) for the U.S. military.  MREs
comprise about 65% of military revenues.

In the most recent MRE contract award Wornick received the
lowest share of the three approved suppliers.  The high number
and increasing tenor of overseas troop deployment and the
replenishment of war reserves is likely to sustain demand for
MREs in the intermediate term, although sales in the near term are
likely to decline from unusually high levels in late 2005 and
early 2006.


* Large Companies with Insolvent Balance Sheets
-----------------------------------------------  
                                Total  
                                Shareholders  Total     Working  
                                Equity        Assets    Capital  
Company                 Ticker  ($MM)          ($MM)     ($MM)  
-------                 ------  ------------  -------  --------  
Abraxas Petro           ABP         (21)         132       (6)
AFC Enterprises         AFCE        (46)         172        5
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      126
CableVision System      CVC      (2,468)      12,832    2,643
Centennial Comm         CYCL     (1,062)       1,436       23
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
Empire Resorts I        NYNY        (26)          62       (3)
Encysive Pharm          ENCY        (64)          93       56
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        (21)         244       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         (92)         143      105
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         (29)         214        7
Rural/Metro Corp.       RURL        (93)         302       50
Sepracor Inc.           SEPR       (109)       1,277      363
St. John Knits Inc.     SJKI        (52)         213       80
Sulphco Inc.            SUF          25           34       12
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.

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.  Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.

The TCR subscription rate is $725 for 6 months delivered via e-
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for the term of the initial subscription or balance thereof are
$25 each.  For subscription information, contact Christopher Beard
at 240/629-3300.

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