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/raid1/www/Hosts/bankrupt/TCR_Public/060912.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, September 12, 2006, Vol. 10, No. 217 Headlines ACME INT'L: Selling Collateral on September 14 to Pay $8.5MM Loan ACTIVECORE TECH: Posts $2.2 Mil. Net Loss in 2nd Quarter of 2006 AGRICORE UNITED: Secures $138 Million Senior Secured Term Loan AIRBASE SERVICES: Chapter 11 Trustee Can Reject Employment Pact AMES DEP'T: Benderson Wants Claims Deemed Administrative Claims ANALYTICAL SURVEYS: Accumulated Deficit Tops $33.8 Mil. at June 30 ANIXTER INT'L: Good Performance Cues Fitch to Hold Low-B Ratings ASARCO LLC: Court Okays Brown McCarroll as Environmental Counsel ASARCO LLC: Ct. Okays Hydrometrics to Perform Remediation Services ASARCO LLC: Can Pay Up to $500K USW Professionals' Fees & Expenses ATRIUM CORP: Likely Weak Earnings Prompt S&P's Negative Outlook AZTEC METAL: Taps Halperin Battaglia as Bankruptcy Counsel BETONSPORTS PLC: District Court Extends Ban on U.S. Operations BUILDERS FIRSTSOURCE: Debt Reduction Cues S&P to Hold Ratings CA INC: Amends Credit Facility to Repurchase $2 Billion of Stocks CATHOLIC CHURCH: Parishes File 151 Proofs of Claim Against Spokane CATHOLIC CHURCH: Spokane Pact Mediation to Continue to Sept. 14 CINEMARK INC: S&P Rates Proposed $1.27 Billion Bank Loan at B COMMUNICATION INTELLIGENCE: Incurs $925,000 Net Loss in 2nd Qtr. COMPANIA DE ALIMENTOS: Bondholders File Involuntary Ch 11 Petition COMPANIA DE ALIMENTOS: Involuntary Chapter 11 Case Summary COMPLETE RETREATS: U.S. Trustee Amends Objection to Fee Procedures COMPLETE RETREATS: Creditors Panel Supports Compensation Procedure COMPLETE RETREATS: D.G. Capital Seeks Rule 2004 Exam on 2 Officers CONCORD RE: Moody's Rates $365 Million Senior Sec. Loan at Ba2 CORNELL TRADING: Creditors Lose Bid to Dismiss Chapter 11 Case CRIIMI MAE: Fitch Lowers $12 Million Class F Bond's Rating to C DANA CORP: Court OKs Pact Dismissing AREH's Trading Order Appeal DANA CORP: Intermet Wants Stay Lifted to Commence Avoidance Action DANA CORP: Agrees to Sell Trailer Axle-Making Biz for $38 Million DELL INC: SEC Accounting Probe Delays Quarterly Report Filing DELPHI CORP: Officials Optimistic About UAW Talks DVI INC: Inks Securities Suit Settlement Deals with Noteholders FALCONBRIDGE: Xstrata Acquires Company's Remaining Common Shares FALCONBRIDGE LTD: Xstrata Appoints Claude Ferron as COO FALCONBRIDGE LTD: Inks Option & Joint Venture Accord with Benton FREESCALE SEMICONDUCTOR: In Buyout Talks with Investment Firms FORD MOTOR: Turnaround Plan Could Cost Up to 40,000 Jobs FOSTER WHEELER: Secures New Sinclair Engineering Contract FOUNDATION PA: Solid Earnings Prompt Moody's to Lift Ratings GENESIS WORLDWIDE: Has Until April 30, 2007 to File Chap. 11 Plan GEO GROUP: Good Performance Prompts S&P to Upgrade Rating to BB- GREAT COMMISSION: Can Enter Into AICCO Insurance Financing Pact GULF COAST: Files Liquidating Plan and Disclosure Statement GULF COAST: Committee Wants Loewinsohn Flegle as Special Counsel IELEMENT CORP: June 30 Stockholders' Deficit Tops $1.2 Million INTERSTATE BAKERIES: Wants CONSOR Intellectual as IP Consultant INTERSTATE BAKERIES: Wants to Implement Management Incentive Plan IPSCO INC: Inks Pact to Acquire NS Group for $1.46 Billion in Cash IPSCO INC: $1.46 Billion NS Group Buy Cues S&P's Positive Watch LE-NATURES INC: Buy-Out Prompts Moody's to Review Ratings LEVCOR INTERNATIONAL: June 30 Balance Sheet Upside-Down by $12.4MM MAGNOLIA VILLAGE: Case Summary & 58 Largest Unsecured Creditors MERIDIAN AUTOMOTIVE: Amended Plan Revises Treatment on Two Classes MERIDIAN AUTOMOTIVE: Wants Until January 25 to Decide on Leases NAPIER ENVIRONMENTAL: Lenders Waive August Interest Payments NEXTEL PARTNERS: Moody's Says Outlook is Developing OPEN TEXT: S&P Rates Proposed $490 Million Senior Facility at BB- PLAY OF THE DAY: Case Summary & Largest Unsecured Creditor POWERLINX INC: June 30 Stockholders' Deficit Tops $1.9 Million RUSSELL CORP: Bershire Merger Deal Cues Moody's to Review Ratings SCOTTISH RE: Gives Former Employees 60 Days to Exercise Options SILICON GRAPHICS: Gets Court Nod to Enter Into Backstop Agreements SILICON GRAPHICS: LG Electronics Withdraws Lift Stay Motion TELEX COMMS: Robert Bosch Merger Cues Moody's to Withdraw Ratings TCM MEDIA: Constrained Liquidity Prompts Moody's to Hold Ratings TITAN FINANCIAL: Hires Kings & Spalding as Bankruptcy Counsel TOWER RECORDS: Selling All Assets on October 5 in Delaware TYRINGHAM HOLDINGS: Case Summary & 20 Largest Unsecured Creditors UBIQUITEL OPERATING: Moody's Says Outlook is Developing UNITY WIRELESS: Joins Three Acquired Companies Into One Facility VALENTEC SYSTEMS: Has $6 Mil. Working Capital Deficit at June 30 VARIG S.A.: Preliminary Injunction Continued Until October 27 WAVE SYSTEMS: Posts $4.5 Million 2006 Second Quarter Net Loss WENAMERICA LLC: Involuntary Chapter 11 Case Summary WERNER LADDER: Committee Members Want to Trade in 10% Senior Notes WERNER LADDER: Wants Court to Permit HALNA to Exercise Recoupment WEST HILLS: Section 341(a) Meeting Scheduled on September 21 WINN-DIXIE: Court Okays Assumption of 20 Employment-Related Pacts WINN-DIXIE: Court Okays Rejection of 95 Employment-Related Pacts ZULTYS TECHNOLOGIES: Case Summary & 20 Largest Unsecured Creditors * Winston & Strawn Names S. Gavin as Head of Corporate Practice * Large Companies with Insolvent Balance Sheets ********* ACME INT'L: Selling Collateral on September 14 to Pay $8.5MM Loan ----------------------------------------------------------------- Acme International Enterprises Inc. will be selling substantially all of its personal properties through an auction at 10:30 a.m., on Sept. 14, 2006, at the offices of Richards Kibbe & Orbe LLP, One World Financial Center, 29th Floor, in New York City. The assets secure Acme's obligations to its lenders under a loan and security agreement dated Oct. 14, 1998, through Patriarch Partners Agency Services LLC, as agent to the lenders. The sale is being held in connection with Acme's $8,504,632 outstanding indebtedness to the lenders. For questions or inquiries, contact: Michael Friedman, Esq. Richards Kibbe & Orbe LLP 29th Floor One World Financial Center New York City, New York 10281 Tel: (212) 530-1800 Based in Maplewood, New Jersey, Acme International Enterprises, Inc. -- http://www.acme-usa.com/-- is a 100-year-old housewares and home accessories company. Acme offers a wide array of kitchen accessories, home organization, outdoor accessories and decorative refrigerator magnets. ACTIVECORE TECH: Posts $2.2 Mil. Net Loss in 2nd Quarter of 2006 ---------------------------------------------------------------- Activecore Technologies, Inc., filed its second quarter financial statements for the three months ended June 30, 2006, with the Securities and Exchange Commission on Aug. 21, 2006. The Company reported a $2,273,016 net loss on $1,582,317 of revenues for the three months ended June 30, 2006, compared with a $1,556,591 net loss on $1,409,104 of revenues for the same period in 2005. At June 30, 2006, the Company's balance sheet showed $9,129,503 in total assets, $7,357,225 in total liabilities, and $1,772,278 in stockholders' equity. The Company's June 30 balance sheet showed strained liquidity with $3,670,418 in total current assets available to pay $6,695,377 in total current liabilities coming due within the next 12 months. Full-text copies of the Company's second quarter financials are available for free at http://ResearchArchives.com/t/s?115b Going Concern Doubt As reported in the Troubled Company Reporter on April 25, 2006, Weinberg & Company, P.A., in Boca Raton, Florida, raised substantial doubt about ActiveCore Technologies' ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2005. The auditors pointed to the Company's net loss, negative cash flow from operations, working capital deficiency, and accumulated deficit. About ActiveCore Technologies ActiveCore Technologies, Inc. -- http://www.ActiveCore.com/-- fka IVP Technology Corporation operates a group of subsidiaries and divisions in the U.S. and Canada that offer a Smart Enterprise Suite of products and services. The Company integrates, enables, and extends functions performed by current and legacy IT systems. Its products encompass web portals, enterprise middleware, mobile data access, data management and system migration applications. AGRICORE UNITED: Secures $138 Million Senior Secured Term Loan -------------------------------------------------------------- Agricore United Limited obtained a senior secured institutional term loan for $138 million, repayable in quarterly installments of $345,000 with the balance at maturity in September 2013 or in full at any time before maturity without premium. Scotia Capital acted as the lead arranger for the Term B Loan. "We're pleased with both the U.S. institutional market's interest in participating in this facility as well as the level of interest expressed by our existing term lenders," says Brian Hayward, Chief Executive Officer of Agricore United. "Although the initial commitments from the institutional lenders came in at almost twice the amount we were seeking to borrow, we had specific needs for the proceeds and limited our borrowing to the level necessary for the company's purposes." Proceeds of US$50 million will be applied to repay a bridge loan used by the company's wholly owned U.S. subsidiaries, Agricore United Holdings Inc. and Unifeed Hi-Pro Inc., for the acquisition of Hi-Pro Feeds completed on Aug. 14, 2006. The balance of US$88 million, swapped into Canadian funds, will be used to repay the company's existing Syndicated Term Loan of CDN$83 million maturing Nov. 30, 2007 and for general corporate purposes. The new Term B Loan carries a floating interest rate of US LIBOR plus 1.75% (or currently about 7.25%), while the company's existing Syndicated Term Loan facility carried a fixed rate of 9.65%. The Term B Loan will rank pari passu with the company's remaining Term Notes, Series A Notes and Series B Notes, secured by specific charges over material fixed assets and a floating charge over all other assets of the company and its material wholly-owned subsidiaries. In connection with the refinancing, the company terminated an interest rate swap on the Syndicated Term Loan resulting in a loss on settlement of CDN$2.2 million. The company purchased a new interest rate swap of US$50 million with a Schedule I bank to fix the interest rate on a portion of the new Term B Loan's floating rate. Concurrent with the Term B Loan, the company also arranged for a three-year Revolving Facility with its existing syndicate of banks to replace a 364-day Revolving Facility maturing on Feb. 26, 2007. The new Revolving Facility matures on Nov. 30, 2009, increases the seasonal limit between January 1 and May 31 from CDN$475 million to CDN$525 million and reduces the carrying cost to between prime and prime plus 0.9% (depending on the company's fixed charge ratio). The security for this facility is consistent with the security pledged on the existing Revolving Facility and the terms of this facility have been harmonized with the company's term debt. "As a result of these successful refinancing efforts, the company has extended the tenure of its short- and long-term financing on improved terms and at lower rates," Mr. Hayward said. "This further enhances the company's ability to execute on its previously reported strategic intents." 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. AIRBASE SERVICES: Chapter 11 Trustee Can Reject Employment Pact --------------------------------------------------------------- The Honorable D. Michael Lynn of the U.S. Bankruptcy Court for the Northern District of Texas in Ft. Worth authorized Dennis Faulker, the Chapter 11 Trustee for Airbase Services, Inc., to reject an employment agreement between the Debtor and Edgar Wyngaarde, as of June 30, 2006. As reported in the Troubled Company Reporter on July 14, 2006, The Debtor hired Mr. Wyngaarde on Oct. 25, 2005, as its U.S. Controller. Under the employment agreement, Mr. Wyngaarde is entitled to an $8,000 monthly salary. The Debtor has sold substantially all of its assets to Regent Aerospace Corp. and Regent Aerospace has orally notified the Chapter 11 Trustee that it does not intend to employ Mr. Wyngaarde. Headquartered in Grand Prairie, Texas, Airbase Services, Inc. -- http://www.airbaseservices.com/-- maintains and repairs a wide range of cargo equipment and cabin interior designs for commercial airlines, and provides maintenance and management services for the airline industry. Due to bankruptcies filed by several of its airline customers, the Company filed for bankruptcy protection on May 1, 2006 (Bankr. N.D. Tex. Case. No. 06-41231). The Court approved the appointment of Dennis Faulkner as Chapter 11 Trustee in the Debtor's chapter 11 case on May 3, 2006. Mark J. Petrocchi, Esq., at Goodrich Postnikoff Albertson & Petrocchi, LLP, represents the Trustee. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. In its schedules of assets and liabilities, the Debtor listed $12,628,078 in total assets and $28,311,883 in total liabilities. AMES DEP'T: Benderson Wants Claims Deemed Administrative Claims --------------------------------------------------------------- Benderson Properties, Inc., asks the United States Bankruptcy Court for the Southern District of New York to allow its claims as administrative expense claims in the chapter 11 cases of Ames Department Stores and its debtor-affiliates. When the Debtors filed for bankruptcy, Ames Realty II and Ben-Mil Associates, Inc., were parties to a nonresidential real property lease for Store Number 1096 in Ames Plaza, Niagara Falls, New York. Benderson Properties, Inc., fka Benderson Development Company, Inc., managed the premises for Ben-Mil Associates. The Debtors rejected the Lease effective March 13, 2002. On March 22, 2002, Ben-Mil Associates filed a proof of claim seeking: (i) a $650,403 general unsecured claim, including rejection damages; and (ii) a $24,072 administrative expense claim for unpaid postpetition obligations under the Lease. In May 2002, Ben-Mil Associates amended the Proof of Claim to increase the general unsecured portion to $700,403. After the bankruptcy filing, but before the March 13 Rejection Date -- the administrative period -- several obligations arose under the Lease including: * rent from March 1 to 13, 2002, for $9,687; * general liability insurance from January 1 to March 13, 2002, for $3,614; * common area maintenance charges from Aug. 20, 2001, to March 13, 2002, for $1,693; and * county tax from January 1 to March 13, 2002, for $9,076. Benderson was also served with a complaint from Michael J. Gallagher seeking $3,250,000 in damages arising out of an alleged personal injury that occurred at the Premises during the Administrative Period. Ames Realty is required to indemnify and hold the Landlord harmless against any liability in connection with personal injury arising from its occupancy and use of the Premises pursuant to the Lease, James S. Carr, Esq., at Kelley Dye & Warren LLP, in New York, said. Since the $3,250,000 liability arose during the Administrative Period, the Incident falls squarely within the terms of the Indemnity Provision and Ames Realty is obligated to indemnify Benderson, Mr. Carr asserts. Mr. Carr further notes that under Section 365(d)(3) of the Bankruptcy Code, the Debtors are required to pay all obligations and liabilities under the Lease as administrative expenses because they all arose during the Administrative Period. A full-text copy of the Lease for Store Number 1096 is available for free at http://bankrupt.com/misc/Ames_BendersonLease.pdf Ames Department Stores filed for chapter 11 protection on Aug. 20, 2001 (Bankr. S.D.N.Y. Case No. 01-42217). Albert Togut, Esq., Frank A. Oswald, Esq. at Togut, Segal & Segal LLP and Martin J. Bienenstock, Esq., and Warren T. Buhle, Esq., at Weil, Gotshal & Manges LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $1,901,573,000 in assets and $1,558,410,000 in liabilities. (AMES Bankruptcy News, Issue No. 83; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ANALYTICAL SURVEYS: Accumulated Deficit Tops $33.8 Mil. at June 30 ------------------------------------------------------------------ Analytical Surveys Inc. filed its third quarter financial statements for the three months ended June 30, 2006, with the Securities and Exchange Commission on Aug. 14, 2006. The Company reported a $76,000 net loss on $1,049,000 of net revenues for the three months ended June 30, 2006, compared to a $795,000 net loss on $1,400,000 million of net revenues in 2005. As of June 30, 2006, the Company's accumulated deficit widened to $33.8 million compared to an accumulated deficit of $33.7 million at Sept. 30, 2005. A full-text copy of the Company's Quarterly Report is available for free at http://researcharchives.com/t/s?1158 Going Concern Doubt As reported in the Troubled Company Reporter on Jan. 9, 2006, Pannell Kerr Forster Of Texas, P.C., expressed substantial doubt about Analytical Surveys' ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended Sept. 30, 2005. The Company has suffered significant operating losses in 2005 and prior years and does not currently have external financing in place to fund working capital requirements. Headquartered in San Antonio, Texas, Analytical Surveys Inc. -- http://www.anlt.com/-- provides technology-enabled solutions and expert services for geospatial data management, including data capture and conversion, planning, implementation, distribution strategies and maintenance services. Through its affiliates, ASI has played a leading role in the geospatial industry for more than 40 years. The Company is dedicated to providing utilities and government with responsive, proactive solutions that maximize the value of information and technology assets. ASI maintains operations in Waukesha, Wisconsin. ANIXTER INT'L: Good Performance Cues Fitch to Hold Low-B Ratings ---------------------------------------------------------------- Fitch Ratings affirmed these ratings for Anixter International Inc. and its wholly owned operating subsidiary, Anixter Inc.: Anixter: -- Issuer Default Rating 'BB+' -- Senior unsecured debt 'BB-' AI: -- Issuer Default Rating 'BB+' -- Senior unsecured notes 'BB+' -- Senior unsecured bank credit facility at 'BB+' Fitch's action affects approximately $700 million of public debt securities. The Rating Outlook is Stable. The ratings and Outlook reflect Anixter's improved operating performance driven by a combination of: * a stable end-market demand environment; * market share gains in the company's small but growing sales of fasteners and C-class components to original equipment manufacturers (approximately 18% of current sales); * operating leverage enhanced by higher than anticipated copper prices; and * cost savings from integrating recent acquisitions. Also considered is Anixter's well-diversified product, customer and supplier portfolios, and the information technology distribution industry's ability to generate cash from working capital during a downturn. Fitch also expects that Anixter will continue to be able to generate cash from operations even at growth rates in the low double-digits. Rating concerns mainly center on the company's adequate but reduced liquidity position and Fitch's expectations that Anixter will continue using free cash flow for a combination of special dividends and acquisitions, although the company expects the pace of acquisition activity to slow over the near term as it shifts focus to integrating recent acquisitions. Fitch also considers the thin operating EBIT margins associated with the IT distributors and Anixter's unhedged exposure to commodity prices, which would affect operating income negatively if copper prices were to decline significantly. Fitch believes that Anixter's EBITDA margins, which have steadily increased to 7% for the first half of 2006 compared to 5% in 2004, will remain near current levels due to the company's expectations for revenue growth of 2-3x world-wide gross domestic product over the next few years and ongoing benefits from integrating historical acquisitions. Cost reductions should be somewhat mitigated by moderating benefits from rising copper prices, which have contributed meaningfully to Anixter's margin expansion over the past six quarters due to the company's cost plus pricing model. As a result, Anixter's credit protection measures should be flat to slightly stronger over the next few years, with EBITDA to interest expense near 11.0x, up from 10.3x for the latest 12 months ended June 30, 2006, and total debt adjusted for rent expense to EBITDAR remaining between 3.0x and 3.5x. After using approximately $65 million of cash over the past six quarters to fund organic revenue growth and working capital, Fitch expects Anixter will generate up to $100 million of annual free cash flow the next few years. Anixter's cash conversion cycle, which Fitch estimates fell to just under 90 days for the second quarter ended June 30, 2006, from almost 95 days in the prior year's quarter, is likely to remain near current levels and should enable Anixter to grow in excess of 10% without using cash from operations. Fitch believes debt reduction from record high levels is unlikely given the company's historical bias of using excess cash for shareholder-friendly actions. For example, Anixter paid almost $210 million in special dividends in 2004 and 2005 and repurchased $36 million of shares in 2003. Nonetheless, the ratings incorporate Fitch's expectations that Anixter will use increasing cash balances over the next few years for additional special dividends and/or small acquisitions. Fitch believes Anixter's liquidity was sufficient but limited consisting of these as of June 30, 2006: -- approximately $21 million of cash and cash equivalents; -- $275 million, five-year revolving credit agreement maturing June 2009 ($163 million undrawn and available); -- $40 million Canadian revolving credit facility expiring June 2009 (approximately $6 million undrawn and available); -- revolving credit facilities at other foreign subsidiaries totaling approximately $35 million (nominal amounts undrawn and available); and -- $225 million on-balance-sheet accounts receivable securitization program expiring September 2007 (approximately $60 million was available as of June 30, 2006). Total debt as of June 30, 2006, was approximately $700 million and consisted of: -- AI's $200 million 6% senior unsecured notes due 2015; -- Anixter's approximately $158 million accreted value of 3.25% zero coupon convertible senior notes due 2033; and -- the aforementioned $178 million and $165 million of borrowings under the company's credit facilities and accounts receivable securitization program, respectively. Anixter's zero coupon convertible senior notes are not guaranteed by AI and, therefore, are structurally subordinated to AI's debt. ASARCO LLC: Court Okays Brown McCarroll as Environmental Counsel ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi authorized ASARCO LLC 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. As reported in the Troubled Company Reporter on Aug. 22, 2006, ASARCO'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, related. Subsequently, ASARCO chose 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 contendd 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 informed 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, assured 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. About ASARCO LLC Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. (ASARCO Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000). ASARCO LLC: Ct. Okays Hydrometrics to Perform Remediation Services ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi authorized ASARCO LLC to enter into contracts with Hydrometrics, Inc., for remediation work at the East Helena, Montana, lead smelter plant. As reported in the Troubled Company Reporter on Aug. 10, 2006, ASARCO obtained the Court's permission to enter into a demolition pact to satisfy the Environmental Protection Agency and the Montana Department of Environmental Quality's requirement to clean up the East Helena Facility by the end of 2006. In conjunction with the demolition process, ASARCO contacted Hydrometrics regarding three projects dealing with the waste from the Facility's demolition: 1. Corrective Action Management Unit Project Hydrometrics will submit a proposal for the design of the second phase of a Corrective Action Management Unit, which will be filled with construction debris from the smelter. In relation to this, Hydrometrics will: -- conduct a site geotechnical investigation; -- prepare a preliminary design to submit for regulatory review; -- respond to comments on the design; and -- make the necessary changes for inclusion in a final construction bid package. This project will take approximately five months to finish and is estimated to cost approximately $76,000. 2. Remediation Cap Design Hydrometrics will design the remediation cap components for the smelter site, for use once the demolition is completed. The project will involve: -- conducting a site survey; -- preparing a preliminary design to submit for regulatory review; -- responding to comments on the design; and -- making the necessary changes for inclusion in a final construction bid package. The project will take approximately six months to finish and will cost approximately $99,000. 3. Interim Measures Project Hydrometrics will provide ASARCO with certain technical support for 2006 interim measure and groundwater sampling activities at the Facility. The project will include ongoing groundwater and surface water monitoring, and field and technical support for site characterization activities associated with design and implementation of remedial action measures. The total cost for the project will not exceed $101,000. Payments will be made based on the actual hours performed and invoices, according to Hydrometrics' hourly rates. Tony M. Davis, Esq., at Baker Botts L.L.P., in Houston, Texas, related that Hydrometrics has previously worked on the Facility. Hydrometrics designed the Phase I CAMU cell for the Facility, which was completed in 2001. Hydrometrics also designed the cap for the Tacoma, Washington smelter. Mr. Davis added that Hydrometrics' previous experience with landfill design at the Facility will save on redundant engineering costs. About ASARCO LLC Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. (ASARCO Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000). ASARCO LLC: Can Pay Up to $500K USW Professionals' Fees & Expenses ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi authorized ASARCO LLC to pay up to $500,000 of professional fees and expenses of United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, specifically: -- $45,000 per month to Potok and Co., Inc., USW's investment banker and financial advisor, for the months of July, August and September 2006; -- $30,000 to Potok for every month after September 2006 until the conclusion of Potok's work; -- a success fee to Potok, the amount of which will still be addressed in further negotiations with USW; and -- the fees and reasonable expenses of USW's other professionals working on the labor negotiations. As reported in the Troubled Company Reporter on Aug. 11, 2006, ASARCO LLC's bargaining unit employees are represented by several labor organizations. The United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union represents majority of ASARCO's employees. In August 2005, ASARCO experienced labor stoppage as hundreds of hourly employees went on strike. The issues were not resolved until November 2005 pursuant to a Memorandum of Agreement, which provided for the extension of the labor contracts with ASARCO's labor unions until the end of 2006. With ASARCO's collective bargaining agreement expiring at the end of this year, James R. Prince, Esq., at Baker Botts L.L.P., in Dallas, Texas, said, it is imperative that ASARCO and Union officials commence negotiations immediately regarding ASARCO's collective bargaining agreements and benefit programs. "These negotiations will not only involve complex financial and legal issues relating to ASARCO's labor contracts, but will also require legal and financial analysis relating to ASARCO's business plan and ultimate strategy for confirming a plan of reorganization." To adequately represent the interests of ASARCO's bargaining unit employees and retirees, the USW has expressed its need for assistance from qualified professionals to address legal and financial issues. While relations between ASARCO and the Unions that represent its bargaining unit employees have improved since the resolution of the labor strike in November 2005, ASARCO must continue to build on good will it has recently generated, especially leading up to and during the upcoming labor negotiations, Mr. Prince asserted. About ASARCO LLC Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. (ASARCO Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000). ATRIUM CORP: Likely Weak Earnings Prompt S&P's Negative Outlook --------------------------------------------------------------- Standard & Poor's Rating Services revised its outlook on Atrium Cos. Inc. and its parent, Atrium Corp., to negative from stable. At the same time, the rating agency affirmed all of its ratings on both entities, including the 'B' corporate credit ratings. "Our outlook revision reflects the likelihood that Atrium's earnings could continue to be weaker than previously expected and that credit metrics could deteriorate further from their already weak levels," said Standard & Poor's credit analyst Lisa Wright. "We expect residential construction and repair and remodeling spending to drop meaningfully over the next two years from mid- 2005 peak levels and, as a result, expect Atrium's earnings and cash flow to remain under pressure." Atrium is a consolidator in the fragmented residential window industry, with about 65% of its sales going to new construction. Ms. Wright said, "We could lower the ratings if we expect the slowdown in residential construction to be more severe -- past downturns have typically seen about a 50% decline in housing starts -- and cause Atrium's earnings to fall further. We could also lower the ratings if liquidity narrows from its already tight levels, or if the company plans meaningful debt-financed acquisitions. We could revise the outlook to stable if end-market demand stabilizes at higher-than-anticipated levels and Atrium's debt leverage improves toward the 5x area." AZTEC METAL: Taps Halperin Battaglia as Bankruptcy Counsel ---------------------------------------------------------- Aztec Metal Maintenance Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to employ Halperin Battaglia Raicht, LLP, as their bankruptcy counsel, nunc pro tunc to Aug. 31, 2006. Halperin Battaglia will: a) advise the Debtors with respect to their powers and duties as debtors-in-possession in the continued operation of their business and the management of their property. b) assist the Debtors to emerge from their chapter 11 cases. c) assist the Debtors in confirming a plan of reorganization in these cases. d) prepare, on behalf of the Debtors, necessary applications, answers, orders, reports and other motions, complaints, pleadings and documents. e) appear before the bankruptcy judge and the U.S. Trustee and represent the interest of the Debtors before said bankruptcy judge and the U.S. Trustee. f) perform any and all other legal services for the Debtors that may be necessary and appropriate herein. Alan D. Halperin, Esq., a member of Halperin Battaglia, tells the Court that the firm's professionals bill: Designation Hourly Rates ----------- ------------ Attorneys $165 Clerks $100 Paraprofessionals $75 - $95 Mr. Halperin assures the Court that his firm is a "disinterested person" as that term defined in Section 101(14) of the Bankruptcy Code. Mr. Halperin can be reached at: Alan D. Halperin, Esq. Halperin Battaglia Raicht, LLP 555 Madison Avenue, 9th Floor New York, NY 10022 Tel: (212) 765-9100 Fax: (212) 765-0964 http://www.halperinlaw.net/ Headquartered in Bronx, New York, Aztec Metal Corp. engages in the business of restoration, refinishing & maintenance of metal, marble, masonry & wood surfaces, and installation, facade & construction cleaning. The Company and two of its affiliates filed for chapter 11 protection on Aug. 31, 2006 (Bankr. S.D.N.Y. Case No. 06-12050). When Aztec Metal filed for protection from its creditors, it listed total assets of $3,595,188 and total debts of $12,480,942 BETONSPORTS PLC: District Court Extends Ban on U.S. Operations -------------------------------------------------------------- The Hon. Carol Jackson of the U.S. District Court for the Eastern District of Missouri extended the temporary restraining order against U.K. gaming company BetonSports Plc until Sept. 20 to give the Justice Department extra time to serve pleadings on the company in Costa Rica and London, Bloomberg News says. Judge Jackson extended the ban, which was to expire on Sept. 1, at the request of U.S. prosecutor Marty Woelfle. The Court issued the restraining order on July 17, the day the Justice Department unsealed a 22-count indictment against BetonSports founder Gary Kaplan and Chief Executive Officer David Carruthers. Charges include racketeering, mail fraud and facilitation of gambling across state and national boundaries -- all as results of taking bets from customers residing in the U.S. According to the indictment, BetonSports in 2003 had 100,000 active players who placed 33 million wagers worth $1.6 billion through the company's Web sites. "The primary goal has been to serve Betonsports so we can move forward, because it is essential that the company be notified," Judge Jackson said from the bench. She then issued a written order extending the restraining order until Sept. 20. Meanwhile, BetonSports issued an update on its Web site, saying that "after thoroughly reviewing possible alternative business plans," the group's Board of Directors "no longer consider the U.S. facing operations of the Company, which are based in Costa Rica and Antigua, to be viable." The company also set three goals related to its current case: -- cease its operations in Costa Rica and Antigua as soon as practicable; -- pay any liabilities to staff and creditors in an orderly manner; and -- repay balances due to US customers in an orderly manner. The company added that the repayments would depend on the company's ability to "persuade banks and cash processors to release its funds." BetonSports added the repayments would also depend on "the Company's ability to realize further and sufficient funds from its assets and operations outside Costa Rica and Antigua and to earn sufficient profits from operations which are not U.S. facing." BetonSports also assured that it would not "knowingly accept any wagering transactions from U.S. based customers." Class Action Suits As reported in the Class Action Reporter on Sept. 6, BetonSports is also facing a complaint filed by gambling information portals The Online Wire, Gambling 911, Alternative Investments Market Regulatory News Service over alleged corporate fraud. The complaint is directed at BetonSports' Aug. 11 announcement that payments to its customers after the shutdown of its Costa Rican and Antiguan operations are being held by banks and cash processors. BetonSports is an online gaming company publicly trading on the London Stock Exchange, but has no operations in the United Kingdom. Around 80% of the company's business operates in the United States, where sports betting is illegal except in the State of Nevada. The group also has operations in Asia, Argentina and Mexico. BUILDERS FIRSTSOURCE: Debt Reduction Cues S&P to Hold Ratings ------------------------------------------------------------- Standard & Poor's Rating Services revised its outlook on Dallas, Texas-based building materials manufacturer and distributor Builders FirstSource Inc. to stable from positive. At the same time, the rating agency affirmed all of its ratings on the company, including the 'B+' corporate credit rating. "The outlook revision reflects our expectations that residential construction and repair and remodeling spending could drop meaningfully during the next two years from their mid-2005 peak levels and that, as a result, BLDR is less likely to maintain the credit metrics necessary for a higher rating over this period," said Standard & Poor's credit analyst Lisa Wright. The ratings are supported by the company's 2005 debt reduction from IPO proceeds and currently strong credit protection measures following peak housing market conditions. However, Standard & Poor's expects that the declining housing market and debt-financed acquisitions could weaken credit metrics moderately over the next two years. "We could revise the outlook to negative if we believe the slowdown in residential construction will be as severe as past downturns (which have typically seen about a 50% decline in housing starts), or if debt-financed acquisitions or dividends increase debt leverage more than expected, Ms. Wright said. "We could revise the outlook to positive if end-market demand stabilizes at higher-than-anticipated levels and the company remains committed to its current financial policy." CA INC: Amends Credit Facility to Repurchase $2 Billion of Stocks ----------------------------------------------------------------- CA Inc. has entered into an amendment to its existing credit facility that satisfies the financing condition under its $1 billion tender offer. The amendment modifies certain covenants in the credit agreement in order to permit CA to repurchase up to $2 billion of its common stock under its fiscal year 2007 share repurchase program and incur additional indebtedness in connection with those repurchases. CA expects to use the borrowings under the revolving credit facility to complete a portion of the $1 billion tender offer launched Aug. 16, 2006, and to pay related fees and expenses. CA has stated that it plans to use a combination of available cash and bank borrowings to finance the tender offer. The successful completion of debt financing on terms and conditions satisfactory to CA in an amount sufficient to purchase shares offered in the tender offer was a condition to the completion of the tender offer. This condition has now been satisfied by CA. The $1 billion tender offer is the first phase of the $2 billion stock repurchase program announced June 29, 2006 by the company. CA is considering various options to execute the second phase of the program and will provide further details when appropriate. The Company expects to complete the full $2 billion share repurchase plan by the end of its 2007 fiscal year. About CA Headquartered in Islandia, New York, CA Inc. (NYSE:CA) -- http://www.ca.com/-- is an information technology management software company that unifies and simplifies the management of enterprise-wide IT. Founded in 1976, CA serves customers in more than 140 countries. In Latin America, CA has operations in Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela. * * * As reported in the Troubled Company Reporter on Aug. 7, 2006, Moody's Investors Service confirmed CA Inc.'s Ba1 senior unsecured rating and assigned a negative rating outlook, concluding a review for possible downgrade initiated on June 30, 2006. The Ba1 rating confirmation reflects the company's completed accounting review and reestablishment of current filing of its 10-K and subsequent 10-Q's, including the company's filing of its 10-K for its March 2006 fiscal year on July 31, 2006. Standard & Poor's Rating Services affirmed its 'BB' corporate credit and senior unsecured debt ratings on CA Inc., and removed them from CreditWatch where they were placed on July 5, 2006, with negative implications. S&P said the outlook is negative. CATHOLIC CHURCH: Parishes File 151 Proofs of Claim Against Spokane ------------------------------------------------------------------ Various parishes and the Immaculate Heart Retreat Center filed 151 proofs of claim against the Catholic Diocese of Spokane, exclusive of amended claims. Of the 151 claims, 69 claims are defined as "money loaned" or "money on deposit," the dates on which the debts were incurred are 1972 or earlier. In many cases, the dates when the debt was incurred either are not stated or are indicated as "various dates" to December 6, 2004. Of the 151 claims, 82 are asserted on account of improvements to parish properties identified in miscellaneous terms like services performed, money loaned, building as an improvement, "church built", materials, fixtures, services provided by parish parishioners, construction or improvement to grounds. The dates on which the debts were incurred are stated as going as far back as 1861 to the present. The Tort Litigants' Committee in May 2006 objected to approximately 70 Parish Claims on the grounds that they were barred in whole or in part by the three-year statute of limitations set forth at R.C.W. 4.15.080. The Tort Litigants Committee required the Parishes to accordingly amend their Claims. The Tort Litigants Committee also objected to nine Parish Claims, which were characterized as secured claims or claims based on an equitable lien, on the grounds that the Claims were without documentary support as required by Rule 3001 of the Federal Rules of Bankruptcy Procedure. The Tort Litigants Committee wanted to reclassify the alleged secured or lien claims as general unsecured claims. The U.S. Bankruptcy Court for the Eastern District of Washington directed the Parishes to file amended proofs of claim for the nine Secured Claims. Consequently, the Parishes filed: * Claim Nos. 424 amending Claim Nos. 235 and 210 asserted by St. Bernard's Catholic Church and St. Jude Parish; and * Claim No. 425 amending Claim No. 236 asserted by St. Bernard's Catholic Church. The Tort Litigants Committee further objected to the Amended Claims asserting that the Claims referenced an equitable lien and attached documents purportedly evidencing the claimed lien right. The Tort Litigants Committee contended that the two Amended Claims and other lien claims, which were left unamended, leave the Parish and the Retreat Center lien claims both unresolved and undefined. Additionally, the Tort Litigants Committee asserted that the 70 claims objected to on the basis of R.C.W. 4.15.080 also remain unresolved. The Parishes, the Retreat Center, and the Tort Litigants Committee stipulate regarding the treatment of 151 claims to avoid the cost of litigation and to facilitate a resolution of the Objections: (a) All 151 Parish Claims are general unsecured claims and not secured or lien claims; (b) The Parish Claims are categorized into three kinds: (1) D&L Claims, which are claims representing funds allegedly deposited by a Parish in the Diocese Deposit & Loan Fund, which funds the Parishes assert they are entitled to recover; (2) $1,268 of the Retreat Center's Claim No. 331 for $3,501,268, on account of prepetition services performed by the Retreat Center on behalf of the Diocese; and (3) Equitable Lien Theory Claims or all other Parish claims and the residual portion of the Claim No. 331 irrespective of whether that Claim makes reference to an equitable lien or any other form of lien; (c) D&L Claims will remain as general unsecured claims subject to pending or further objections filed by the Tort Litigants Committee, Tort Claimants Committee, Future Claims Representative, the Diocese, or any other party entitled to file an objection to D&L Claims. The classification and voting rights of D&L Claims are reserved by all parties to be addressed in the Disclosure Statement and Plan confirmation process; and (d) For purposes of any plan of reorganization on which a Disclosure Statement has been approved or noted for approval prior to December 6, 2006, and thereafter approved within 45 days, the Retreat Center Services Claims: * are subordinated for distribution purposes; and * may be classified separately in any plan of reorganization and disclosure statement. The Retreat Center: * may waive the application of confirmation-related provisions and rights pursuant to Sections 1129(a)(7)(A)(ii), 1129(b)(2)(B), and 1126(g) of the Bankruptcy Code; and * will not be entitled to a vote for any Plan in which a Disclosure Statement has been approved within the time periods. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 68; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CATHOLIC CHURCH: Spokane Pact Mediation to Continue to Sept. 14 --------------------------------------------------------------- The parties in the Chapter 11 case of the Diocese of Spokane agreed to a third mediation session on September 14 and 15, 2006, in Reno, Nevada, before former Bankruptcy Court Judge Zive, Shaun M. Cross, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, in Spokane, Washington, relates. The mediation previously talks involving the Diocese, Association of Parishes, the Tort Litigants Committee, the Tort Claimants Committee and the Future Claims Representative were held twice, in Reno on July 7, 2006, and in Spokane on August 21, 22 and 23, 2006. The second round of mediation wrapped up with no deal in sight, the SpokesmanReview.com reports. The mediation aims to resolve several issues that the Diocese faces, including claims settlement and Judge Quackenbush's ruling that parishes are separate and distinct from the Diocese and can, therefore, sue and be sued. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 68; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CINEMARK INC: S&P Rates Proposed $1.27 Billion Bank Loan at B ------------------------------------------------------------- Standard & Poor's Ratings Services' ratings, including the 'B+' corporate credit ratings, on Cinemark Inc. and subsidiary company Cinemark USA Inc., which are analyzed on a consolidated basis, remained on CreditWatch with negative implications because of the pending debt-financed acquisition of Century Theatres Inc. (B+/Negative/--). After the transaction is completed, Standard & Poor's will lower the ratings, including lowering the corporate credit rating to 'B' from 'B+', and assign a stable outlook. "The downgrade will be based on the increased credit risk from the proposed acquisition and our concerns about rising industry risk," said Standard & Poor's credit analyst Tulip Lim. The rating agency will also lower the ratings on the company's senior subordinated notes and senior discount notes to 'CCC+' from 'B-'. Standard & Poor's also assigned a 'B' rating to Cinemark's proposed $1.27 billion bank loan facility, the same as the post- acquisition corporate credit rating, with a '2' recovery rating, indicating expectations of a substantial (80%-100%) recovery of principal in a payment default scenario. The new bank loan and recovery ratings are not on CreditWatch. Upon closing of the acquisition, Standard & Poor's will withdraw the ratings on the existing senior secured credit facilities. Pro forma for the transaction, the Plano, Texas-based movie exhibitor will have $3.1 billion in debt, including holding company notes and capitalized operating leases. The ratings on Cinemark reflect: * the company's high lease-adjusted leverage and financial risk; * the mature and highly competitive nature of the U.S. motion picture exhibition industry; * exposure to the fluctuating popularity of Hollywood films; * shortening windows between theatrical and DVD/video-on-demand release; and * competition from other exhibitors and alternative entertainment sources. These concerns outweigh the benefits of: * Cinemark's and Century's quality theater circuits; * the combined company's above-average profit margins; * Cinemark's experienced management team; and * the modest diversity provided by its profitable non-U.S. operations. COMMUNICATION INTELLIGENCE: Incurs $925,000 Net Loss in 2nd Qtr. ---------------------------------------------------------------- Communication Intelligence Corp. filed its consolidated financial statements for the second quarter ended June 30, 2006, with the Securities and Exchange Commission on Aug. 14, 2006. The Company incurred a $925,000 net loss on $448,000 of net revenues for the three months ended June 30, 2006, compared to a $834,000 net loss on $1.2 million of net revenues in 2005. As of June 30, 2006, the Company's accumulated deficit widened to $86.3 million from $84.6 million of deficit at Dec. 31, 2005. A full-text copy of the Company's Quarterly Report is available for free at http://researcharchives.com/t/s?1153 Going Concern Doubt Stonefield Josephson, Inc., in San Francisco, California, raised substantial doubt about MDwerks, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's recurring operating losses and accumulated deficit. Headquartered in Redwood Shores, California, Communication Intelligence Corporation -- http://www.cic.com/-- supplies electronic signature solutions for business process automation in the Financial Industry and a leader in biometric signature verification. CIC's products enable companies to achieve paperless workflow in their eBusiness processes by enabling them with "The Power to Sign Online(R)" with multiple signature technologies across virtually all applications. Industry leaders such as AIG, Charles Schwab, Prudential, Nationwide (UK) and Wells Fargo chose CIC's products to meet their needs. CIC sells directly to enterprises and through system integrators, channel partners and OEMs. COMPANIA DE ALIMENTOS: Bondholders File Involuntary Ch 11 Petition ------------------------------------------------------------------ Bondholders took steps to place, on Sept. 11, 2006, one of Argentina's Compania de Alimentos Fargo S.A. under Chapter 11 bankruptcy protection in the US, in a move highlighting deep tensions between international investors and Argentinian law. The Chapter 11 petition against insolvent Argentine bread company Compania de Alimentos Fargo S.A., was filed in the US Bankruptcy Court for the Southern District of New York, by a group of bondholders in the company in a bid to protect their interests as the largest creditor base. The filing follows the effective exclusion of the bondholders from earlier Concurso bankruptcy proceedings in Argentina, following an Argentine court decision in March 2005 to disallow bondholders from voting the principal amount of their claims. The Concurso ruling effectively enabled Fargo to ignore the bondholders, marking a dangerous development for international bond investors abroad. The bondholders, Rainbow Global High Yield Fund, Argo Capital Investors Fund SPC, The Star Fund and The Rainmac Fund hold in excess of 65% of the 13-1/4 Senior Notes due 2008, governed by New York law. Concurrently, the bondholders have requested that the US Bankruptcy Court authorize examinations of, among others, Fargo and associated joint owners Grupo Bimbo Sociedad Anonima de Capital Variable S.A. and Mr Fernando Chico Pardo, in connection with their activities in the Concurso. By initiating the proceedings, the Funds aim to preserve value for creditors and ultimately secure a fair restructuring of the company. Ian McCall of Rainbow Advisers said, "We believe Bimbo is attempting to control the industry and use any means necessary to get this business as cheap as they can. We want to be treated fairly and get priority treatment in the capital structure over equity." Fargo entered into Concurso bankruptcy proceedings in Argentina in 2002. In response to a loan default, Deutsche Bank enforced its security and sold its equity interest in Fargo and a $30 million loan to entities controlled by Mexican businessman Chico Pardo. In turn, Mr Pardo disposed of 30% of the Interests to Bimbo, Fargo's closest competitor in the Argentine bread market. These transactions have allowed control of the Concurso process to lie in the hands of Bimbo and Mr. Pardo to the detriment of the general creditor body. In March 2005, in a decision, which stunned the local and international financial community, an Argentine court agreed to prevent any bondholders from voting the principal face amount of their bonds in the Concurso proposal submitted by Fargo. "The ruling contravenes predominant Concurso case law in Argentina and goes against general principles of Argentine Concurso matters," commented Matias Zaefferer, legal counsel for the Funds in Argentina. The Funds hope that the involuntary Chapter 11 filing will deter other non-US entities that have availed themselves of the US capital markets, from subsequently manipulating equity and secured debt positions in local insolvency proceedings in order to negate the rights of international bondholders. Mr. McCall of Rainbow Advisors added, "In Mexico, there have been similar problems for bondholders disenfranchised from bankruptcy processes. Mexican law favors equity holders and we believe the shareholders want the same result in Argentina." "This unusual decision by the Argentine courts has disenfranchised 90% of the company's creditors from the restructuring process," David Eaton, partner at Kirkland & Ellis LLP and legal counsel to the Funds in the US, commented. "It means a company could borrow an untold amount of money in the US capital markets and then file a Concurso proceeding in Argentina, and be able to pass through a restructuring that negatively impacts bondholders, without them being allowed to vote on it. It is a major adverse precedent for US bond investors and threatens the sanctity of the US capital markets." About Compania de Alimentos Based in Buenos Aires, Argentina, Compania de Alimentos Fargo S.A. -- http://www.fargo.com.ar/-- produces and distributes packaged bread. It is also the sole bread supplier for McDonald's in Agrentina. The Company is controlled by the Mexican investor Chico Pardo (70%) and the Bimbo group (30%). The company has a debt of $185 million, from which $120 million belong to Obligaciones negociables. COMPANIA DE ALIMENTOS: Involuntary Chapter 11 Case Summary ---------------------------------------------------------- Alleged Debtor: Compania de Alimentos Fargo, S.A. Av. Leandro N. Alem 928 Piso 7 Oficina 721 Buenos Aires, Republic of Argentina Involuntary Petition Date: September 11, 2006 Case Number: 06-12128 Chapter: 11 Court: Southern District of New York (Manhattan) Judge: Stuart M. Bernstein Petitioners' Counsel: David Eaton, Esq. Kirkland & Ellis LLP 200 East Randolph Chicago, IL 60601 Tel: (312) 861-2000 Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Rainbow Global High Yield Fund 13-1/4% Senior $20,190,000 P.O. Box 9934, Ansbacher House Notes Due 2008 2nd Floor, East Street Nassau, The Bahamas Argo Capital Investors Fund SPC 13-1/4% Senior $27,585,000 Century Yard, Cricket Square Notes Due 2008 Hutchins Drive, P.O. Box 2681 George Town Grand Cayman Islands British West Indies The Star Fund 13-1/4% Senior $20,515,000 P.O. Box 9934 Notes Due 2008 Ansbacher House 2nd Floor, East Street Nassau, The Bahamas The Rainmac Fund 13-1/4% Senior $14,100,000 c/o Walkers BVI Ltd. Notes Due 2008 Walkers Chambers, Mill Mall P.O. Box 92 Roadtown, Tortola, BVI COMPLETE RETREATS: U.S. Trustee Amends Objection to Fee Procedures ------------------------------------------------------------------ Diana G. Adams, the Acting U.S. Trustee for Region 2, amended her objection to Complete Retreats LLC and its debtor-affiliates' request asking the U.S. Bankruptcy Court for the District of Connecticut to establish uniform procedures for compensating and reimbursing Court-approved professionals on an interim basis. Only very few Court-approved Professionals have been employed in the Debtors' Chapter 11 cases, the U.S. Trustee notes. At this stage, the retainers received by the Professionals, as well as the administrative priority granted them by the Bankruptcy Code, sufficiently insulate them from the risk of non-payment. However, the U.S. Trustee anticipates that in the next few months, the expenses the Debtors expect to incur in their Chapter 11 cases will greatly exceed the income they generate. The U.S. Trustee thus asks the Court to deny the Debtors' request until: (a) the Debtors have filed their Schedules of Assets and Liabilities, Statements of Financial Affairs, and monthly operating reports; (b) parties-in-interest have had an opportunity to examine the Debtors with respect to the filings; and (c) the Debtors have, at a minimum, made a showing that their Chapter 11 cases are not expected to end in an administrative insolvency where the payment of Professionals in accordance with the Motion prejudices the payment of other administrative claims. The U.S. Trustee maintains that to the extent the Court approves the Debtors' request, each Professional should forfeit its ability to receive monthly payments from the Debtors unless they file a formal fee application with the Court within 30 days of the end of each 120-day cycle. The U.S. Trustee also reiterates its request for the Court to schedule a hearing on the Motion so that the issues she has presented may be considered. As reported in the Troubled Company Reporter on Aug 24, 2006, the U.S. Trustee opposed the Debtors' request contending that the compensation of professionals should wait until the filing of the Debtors' Schedules and Statements. Without those Schedules and Statements, the U.S. Trustee explained, it is not possible to fully and accurately evaluate the Debtors' ability to fund professional fees without risk to the bankruptcy estates. The Debtors' proposed procedure for interim compensation, as published in the Troubled Company Reporter on Aug. 17, 2006, states that: (a) By the 20th day of each month, after the month for which compensation is sought, each Professional will serve a monthly statement to: * the Debtors, * the counsel for the Debtors, * the counsel for the Debtors' postpetition DIP lenders, * the counsel for the Creditors Committee; and * the Office of the United States Trustee. The first Monthly Statement will be due on Sept. 20, 2006, for the period covering the Debtors' bankruptcy filing through and including Aug. 31, 2006; (b) Any party that objects to a Monthly Statement is required to serve on the Affected Professional and the Notice Parties, within 20 days after the service of the Monthly Statement, a written statement that: -- describes the precise nature and basis of the Objection; and -- specifies the amount of objectionable fees or expenses at issue; (c) If an Objection is served, the Objecting Party and the Affected Professional are required to make a good-faith attempt to resolve the Objection on a consensual basis. All Objections that are not resolved by the parties will be preserved and presented to the Court at the next interim or final fee application hearing; (d) If no Objection to a Monthly Statement has been served prior to the relevant Objection Deadline, the Affected Professional will serve on the Debtors and their counsel a certification that there has been no Objection to its Monthly Statement, and the Debtors are authorized to pay 80% of the sought fees and 100% of the sought expenses. If an Objection is timely served, the Affected Professional will serve on the Debtors and their counsel a certification indicating that there has been an Objection and stating the total fees and expenses in the Monthly Statement not subject to the Objection. The Debtors are then authorized to pay the Affected Professional an amount equal to 80% of the fees and 100% of the expenses not subject to the Objection; (e) From July 23, 2006 through Oct. 31, 2006, and at four- month intervals afterwards, each Professional will file with the Court, within 30 days of the end of the Interim Fee Period, an interim fee application for interim Court approval and allowance of 100% of the compensation and expense reimbursement sought in the Monthly Statements served during the Interim Fee Period; (f) If an Objection to all or part of the Interim Fee Application is timely and properly filed within 30 days from the filing of the Interim Fee Application, the Objection will be considered at the Interim Fee Hearing; (g) If no Objection to the Interim Fee Application is timely and properly filed by the applicable Fee Objection Deadline, the Professional will file with the Court and serve on the Debtors and their counsel a certification that there have been no Objections to its Interim Fee Application; (h) The Court will convene an Interim Fee Hearing on pending Interim Fee Applications, once every four months. The Debtors will provide notice of all Interim Fee Hearings to the Notice Parties; and (i) A pending objection to a Monthly Statement or an Interim Fee Application will not disqualify a Professional from the future payment of compensation or reimbursement of expenses that are requested in accordance with the Compensation Procedures. 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. 7; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). COMPLETE RETREATS: Creditors Panel Supports Compensation Procedure ------------------------------------------------------------------ The Official Committee of Unsecured Creditors in Complete Retreats LLC and its debtor-affiliates' Chapter 11 cases supports the Debtors' request asking the U.S. Bankruptcy Court for the District of Connecticut to establish uniform procedures for compensating and reimbursing Court-approved professionals on an interim basis. The Committee says the Compensation Procedures also apply to its members seeking reimbursement of expenses pursuant to Section 503(b)(3)(F) of the Bankruptcy Code. Section 503(b)(F) provides that a member of a committee appointed under Section 1102 of the Bankruptcy Code will be allowed an administrative expense if the expense is incurred in the performance of the duties of that committee. The Creditors Committee asks the Court to permit its counsel to collect statements of expenses incurred by the Committee members in the performance of their duties, and submit the statements for reimbursement in accordance with the Monthly Compensation Procedures so that the Committee Member Expenses are reimbursed on a monthly basis. Jonathan B. Alter, Esq., at Bingham McCutchen LLP, in Hartford, Connecticut, notes that Robert Glanville has asked the Court to require Professionals to "file their Monthly Statements with the Court and serve them in accordance with the procedures governing other pleadings." Mr. Glanville's request could require additional service by United States Mail on those parties who do not receive electronic notices, Mr. Alter points out. In the interest of cost-efficiency, the Committee asks the Court: (a) not to require the Professionals to serve the Monthly Statements in accordance with the procedures governing other pleadings; and (b) to limit service of the Monthly Statements to the Notice Parties, namely, the Debtors, counsel for the Debtors, counsel for the Committee and the Office of the U.S. Trustee. The Committee believes that it is not necessary to wait for the Debtors to file their Schedules and Statements before the Court enters an order on the Debtors' request. The deadline for the Debtors to file their Schedules and Statements is on September 21, 2006, and the Committee can discern no meaningful purpose to delay the entry of the order, Mr. Alter notes. As for waiting until retention orders are entered prior to entering the Compensation Procedures Order, Mr. Alter argues that the mere entry of the proposed Order at this point in the cases does not obligate the Debtors to pay professionals that do not become duly retained in their bankruptcy cases. Mr. Alter asserts that establishing the Monthly Compensation Procedures will: -- enable the Debtors to monitor the costs of administration of their estates; -- enable the Debtors to forecast level cash flows; -- enable the Debtors to implement efficient cash management procedures; and -- allow the Court and parties-in-interest, including the U.S. Trustee, to ensure the reasonableness and necessity of the compensation sought in the Debtors' Chapter 11 cases. The Committee does not object to the U.S. Trustee's request requiring Professionals to file an interim fee application within 30 days of the end of each 120-day cycle or forfeit the opportunity to receive further monthly payments of compensation or reimbursement of expenses until the Professional's fee applications are made and brought fully up-to-date. The Debtors' proposed procedures for interim compensation, as published in the Troubled Company Reporter on Aug. 17, 2006, states that: (a) By the 20th day of each month, after the month for which compensation is sought, each Professional will serve a monthly statement to: * the Debtors, * the counsel for the Debtors, * the counsel for the Debtors' postpetition DIP lenders, * the counsel for the Creditors Committee; and * the Office of the United States Trustee. The first Monthly Statement will be due on Sept. 20, 2006, for the period covering the Debtors' bankruptcy filing through and including Aug. 31, 2006; (b) Any party that objects to a Monthly Statement is required to serve on the Affected Professional and the Notice Parties, within 20 days after the service of the Monthly Statement, a written statement that: -- describes the precise nature and basis of the Objection; and -- specifies the amount of objectionable fees or expenses at issue; (c) If an Objection is served, the Objecting Party and the Affected Professional are required to make a good-faith attempt to resolve the Objection on a consensual basis. All Objections that are not resolved by the parties will be preserved and presented to the Court at the next interim or final fee application hearing; (d) If no Objection to a Monthly Statement has been served prior to the relevant Objection Deadline, the Affected Professional will serve on the Debtors and their counsel a certification that there has been no Objection to its Monthly Statement, and the Debtors are authorized to pay 80% of the sought fees and 100% of the sought expenses. If an Objection is timely served, the Affected Professional will serve on the Debtors and their counsel a certification indicating that there has been an Objection and stating the total fees and expenses in the Monthly Statement not subject to the Objection. The Debtors are then authorized to pay the Affected Professional an amount equal to 80% of the fees and 100% of the expenses not subject to the Objection; (e) From Jul. 23, 2006 through Oct. 31, 2006, and at four- month intervals afterwards, each Professional will file with the Court, within 30 days of the end of the Interim Fee Period, an interim fee application for interim Court approval and allowance of 100% of the compensation and expense reimbursement sought in the Monthly Statements served during the Interim Fee Period; (f) If an Objection to all or part of the Interim Fee Application is timely and properly filed within 30 days from the filing of the Interim Fee Application, the Objection will be considered at the Interim Fee Hearing; (g) If no Objection to the Interim Fee Application is timely and properly filed by the applicable Fee Objection Deadline, the Professional will file with the Court and serve on the Debtors and their counsel a certification that there have been no Objections to its Interim Fee Application; (h) The Court will convene an Interim Fee Hearing on pending Interim Fee Applications, once every four months. The Debtors will provide notice of all Interim Fee Hearings to the Notice Parties; and (i) A pending objection to a Monthly Statement or an Interim Fee Application will not disqualify a Professional from the future payment of compensation or reimbursement of expenses that are requested in accordance with the Compensation Procedures. 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. 7; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). COMPLETE RETREATS: D.G. Capital Seeks Rule 2004 Exam on 2 Officers ------------------------------------------------------------------ D.G. Capital LLC asks the U.S. Bankruptcy Court for the District of Connecticut to direct Robert L. McGrath, former president of Debtor Distinctive Retreats, and James H. Mitchell, vice president of Distinctive, to appear for an examination regarding certain matters, within the scope of Rule 2004 of the Federal Rules of Bankruptcy Procedure, including: (1) the capital structure of Distinctive; (2) the number of series within the LLC structure; (3) the membership interests in each series; (4) the assets and liabilities of each series; and (5) the circumstances and details of the adoption of a resolution to file the case by its governing board. Michael R. Enright, Esq., at Robinson & Cole LLP, in Hartford, Connecticut, recounts that Distinctive borrowed $2,850,000 from D.G. Capital in May 2006, to finance the purchase of a condominium in Maui. The loan was secured by a first mortgage on the condominium and by a pledge of membership interests in Distinctive Retreats. The loan has matured and remains unpaid while interest and other charges continue to accrue, Mr. Enright tells the Court. Distinctive is a Delaware limited liability company and its Certificate of Formation and Limited Liability Company Agreement contain: (i) special limitations as a series LLC under Delaware law, including provisions pursuant to Section 18-215 of the Delaware Limited Liability Company Act; and (ii) special purpose entity restrictions which require written unanimity among directors and the Class A Member regarding filing authority. In connection with the joint administration of Complete Retreats LLC and its debtor-affiliates' Chapter 11 cases, relief accorded to the Debtors may unjustifiably favor the creditors or equity holders of one or more Debtors over other Debtors if the applicable distinctions among the creditor bodies are not observed, Mr. Enright asserts. "This concern may be exacerbated within Distinctive [Retreats] because of its status as a series LLC pursuant to the Delaware Limited Liability Company Act. Distinctive itself may need to be viewed and treated as a number of discrete Debtors, given the nature of a series LLC." In essence, Delaware law permits each series of the LLC to be a unit unto itself, with assets and liabilities of each series considered separately for purposes of creditors' rights, Mr. Enright points out. According to Mr. Enright, the rights of Distinctive Retreats' creditors may vary depending on: -- whether the formalities required by the Delaware statute were satisfied prepetition; and -- how Distinctive designated the assets and liabilities which were to be included in each series. "Nothing in the filings made by Distinctive to date sheds any light on these details, [the] consideration of [which] is essential to an understanding of the rights of [Distinctive's creditors]," Mr. Enright asserts. Accordingly, a full exploration through the Rule 2004 process of the capital structure of Distinctive Retreats, its multiple series and the assets and liabilities of each series, to consider, among other things, the implications of this structure in Distinctive Retreats' Chapter 11 case, is necessary, Mr. Enright contends. The only filing as of Aug. 29, 2006, in this regard was appended to the petition of Distinctive and is a certificate from Mr. McGrath certifying that the form of resolution attached to the certificate was adopted by the boards of each of the related entities prior to filing of their petitions, Mr. Enright notes. Mr. Enright argues that Mr. McGrath's certification is insufficient to evidence Distinctive' authority to file and does not address whether the special purpose entity provisions in Distinctive Retreats' governance documents were satisfied. To evidence authority to file, a copy of the written unanimous consent of the Class A Member and the Board of Managers is required because that is the prerequisite to filing established by the governance documents, Mr. Enright maintains. If the Court grants its request, D.G Capital will seek Mr. McGrath's and Mr. Mitchell's attendance and production of relevant documents by subpoena. D.G. Capital proposes to hold the examinations at the offices of Robinson & Cole, LLP, at 280 Trumbull Street, in Hartford, Connecticut on September 22, 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. 7; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). CONCORD RE: Moody's Rates $365 Million Senior Sec. Loan at Ba2 -------------------------------------------------------------- Moody's Investors Service assigned a definitive Ba2 rating to the $365 million senior secured term loan facility of Bermuda- domiciled Concord Re Limited. Moody's also assigned a definitive Baa2 insurance financial strength rating to Concord Re. The outlook for both ratings is stable. These definitive ratings replace the provisional ratings previously assigned to Concord Re on August 21, 2006, pending receipt and review of final executed documents. These definitive ratings were assigned: * senior secured term loan facility due 2012 at Ba2. * insurance financial strength at Baa2. The senior secured term loan facility of Concord Re, which is being syndicated to financial institutions and other institutional lenders, is scheduled to mature in February 2012. The loan is secured by the capital stock of Concord Re, and is non-amortizing, but allows for voluntary prepayments, and requires mandatory prepayments under certain circumstances. According to Moody's, Concord Re is a limited-life, newly formed Class 3 Bermuda reinsurer that has entered into a collateralized quota share reinsurance treaty with its sole cedant, Lexington Insurance Company, a property-casualty company of American International Group, Inc. Concord Re will assume a pro rata share of the gross written premiums and losses for the first $10 million of limits per policy, for lines of business underwritten by Lexington's Property Division. This portfolio includes energy manufacturing, general property, real estate, communications, construction services, and the inland marine and specialty classes of Lexington's domestic commercial property book. Initial capitalization for Concord Re is $730 million, comprised of $365 million in the senior secured term loan and $365 million of common equity. Concord Re has posted its total paid-in capital, net of transaction expenses, as cash and securities into a trust to collateralize its reinsurance obligations to Lexington. Funds in the trust will be invested in investment- grade securities with restrictions similar to those specified by Regulation 114. Moody's stated that Concord Re's ratings reflect an analysis of the structural and contractual features of the Concord Re vehicle, as well as probabilistic analysis to determine both the probability of loss and expected severity of loss to both Concord Re's debt holders and its sole cedant, Lexington Insurance Company. The Ba2 rating for the senior secured term loan facility is supported by Concord Re's capitalization level relative to its loss exposure, a balance sheet that is unencumbered by legacy exposures, and certain structural characteristics that are designed to offer protection to debt holders during the wind-down period. These fundamental strengths are tempered by Concord Re's relatively high debt leverage profile and parameter risk in the modeling assumptions that form the basis of the company's capitalization, particularly assumptions regarding attritional loss ratios. Moody's further noted four structural elements of the transaction which impacted its assessment. First, the minimal collateral requirement, as it is currently structured, may not always rise in lockstep with risk exposure, making it less likely that risk exposure will be reduced -- via an adjustment to the cession percentage -- if funds in the collateral trust fall below the minimum collateral requirement. The minimal collateral requirement was an important quantitative consideration given that the interests of equity holders, cedant, and debt holders are partially aligned through that structural feature. Second, subsequent reinsurance purchased by Lexington or AIG will not inure to the benefit of Concord Re. Third, the ability of equity holders to extract dividends out of net income on a quarterly basis also impacted Moody's assessment. Last, debt holders are exposed to uncertainty surrounding the exact amount of liabilities that are owed to Lexington when the liabilities are commuted at the end of the vehicle's life. Concord Re's Baa2 insurance financial strength rating reflects the probability of default and expected loss profiles for cedant obligations, which are enhanced by the establishment of a collateral trust for the benefit of its sole cedant. The ratings contemplate a maximum underwriting period of 36 months, assuming that equity holders -- having suffered a cumulative net loss after 18 months -- will elect to extend the underwriting period by another 18 months and that debt remains in place accordingly, for the full tenor of 5.5 years. The ratings also assume no additional debt above the original $365 million committed and fully funded initial term loan. Moody's noted that its expectations at the current rating level are that Concord Re will continue to maintain a financial leverage profile of no more than 50% debt to total capital. That said, the ratings going forward will reflect updated analysis of the cumulative performance of the company, its future overall risk-adjusted capitalization level, and updated prospective probabilistic analysis of its reinsurance portfolio at future points in time. Concord Re Limited, based in Bermuda, is a licensed Class 3 reinsurer that has entered into a collateralized quota share reinsurance treaty with its sole cedant, Lexington Insurance Company, a property-casualty company of New York-based American International Group, Inc. CORNELL TRADING: Creditors Lose Bid to Dismiss Chapter 11 Case -------------------------------------------------------------- The Honorable Joan N. Feeney of the U.S. Bankruptcy Court for the District of Massachusetts denied the request of Cornell Trading, Inc., and its Official Committee of Unsecured Creditors to dismiss the Debtor's chapter 11 case, according to Burlington Free Press. Burlington Free Press staff writer Dan McLean reports that the request would have prearranged some 1,200 unsecured creditors, which includes companies, utilities, landlords, employment agencies, employees, suppliers, customers and the Vermont Department of Taxes or about 5.3% of the estimated $8.89 million general unsecured claims against the Debtor. Creditors had agreed to split $493,634 carve out funds from the sale of store leases, but the deal needed Court approval. The motion to dismiss the case was denied for "reasons stated on the record," Mr. McLean adds. Headquartered in Williston, Vermont, Cornell Trading, Inc. -- http://www.aprilcornell.com/-- sells women's and children's apparel including dresses, skirts, blouses, and sleepwear. Cornell also offers books and housewares like table linens, placemats and napkins, bedding, and dolls and stuffed animals. The Company filed for chapter 11 protection on January 4, 2006 (Bankr. D. Mass. Case No. 06-10017). Christopher J. Panos, Esq., at Craig & Macauley, P.C., represents the Debtor in its restructuring efforts. Lawrence C. Gottlieb, Esq., at Kronish Lieb Weiner & Hellman LLP represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed estimated debts and assets between $10 million to $50 million. CRIIMI MAE: Fitch Lowers $12 Million Class F Bond's Rating to C --------------------------------------------------------------- Fitch Ratings downgraded CRIIMI MAE Trust I's commercial mortgage bonds, series 1996-C1: -- $62.7 million class E to 'B-' from 'B' -- $12.0 million class F to 'C' from 'B-' and assigned a Distressed Recovery rating of DR5 Fitch did not rate the $3.9 million issuer's equity. The downgrades are the result of expected losses to the underlying transactions as well as the increasing concentrations of the deal. The certificates are collateralized by all or a portion of eight classes in six separate underlying fixed rate CMBS transactions. The weighted average rating factor of the underlying classes is 53.9 ('CCC''), stable from issuance. The classes' ratings are based on Fitch's actual rating, or on Fitch's internal credit assessment for those classes not rated by Fitch. Approximatley 56% of the underlying collateral consists of classes in the first loss position. Of these classes, the Fitch expected losses are anticipated to impact class F. The majority of the Fitch expected losses are in the Asset Securitization Corporation, Series 1996-D2 transaction. Delinquencies in the underlying transactions are: * 30 days: 0%; * 60 days: 0%; * 90+ days: 11%; * in foreclosure: 0%; and * real estate owned 1.3%. DANA CORP: Court OKs Pact Dismissing AREH's Trading Order Appeal ---------------------------------------------------------------- In a stipulation approved by the U.S. Bankruptcy Court for the Southern District of New York, Dana Corporation and its debtor- affiliates agreed with the American Real Estate Holdings Limited Partnership to dismiss, as moot, AREH's appeal of the Bankruptcy Court's April 2006 interim order on the Debtors' request to establish notice and hearing procedures to limit claims and equity trading. The Debtors and AREH further agreed that each party will bear its own costs. AREH is one of the broker-dealers and market makers who declared claimholder status with anticipated claim in excess of $100,000,000 against the Debtors. As reported in the Troubled Company Reporter on May 16, 2006, AREH challenged the Bankruptcy Court's interlocutory order continuing the hearing on the Debtors' request to establish notice and hearing procedures for trading in claims and equity securities to June 28, 2006. AREH sought leave to appeal the Continuance Order to the U.S. District Court for the Southern District of New York. In its interim order published in the Troubled Company Reporter on May 11, 2006, the Bankruptcy Court ruled among others that no party may use any acquisitions of Debtors' securities that close after April 4, 2006, as evidence, basis for standing, claims of prejudice or any other consideration in opposing or otherwise in connection with disputing or litigating the relief sought in the Debtors' Trading Procedures Motion. AREH along with other objectors challenged the Bankruptcy Court's authority to approve the Trading Procedures. They argued that the Debtors' request should be properly filed in an adversary proceeding because, among others, (i) Section 362 of the Bankruptcy Code does not provide the Court the authority to enter the Trading Procedures Order because claims trading does not violate the automatic stay; and (ii) The Trading Procedures Order is an injunction. In its appeal, AREH asked the District Court to find: 1. whether the Bankruptcy Court erred in entering the Trading Order, which finally determined that any claims trading restrictions imposed after a future hearing will have retroactive effect, denied standing to contest the restrictions to parties who might, by acquiring claims against the Debtors, be most aggrieved by the restrictions and thereby deprived AREH and other claimholders of procedural due process; 2. whether the Bankruptcy Court erred in entering the Trading Order because the order, in effect, constituted a ruling that the automatic stay under Section 362(a)(3) supplied sufficient statutory authority to interfere with third party transactions involving claims against the Debtors; and 3. whether the Bankruptcy Court erred in interfering with third party transactions involving claims against the Debtors by the Trading Order without requiring the Debtors to establish the elements necessary to support injunctive relief. 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. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. 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. 20; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DANA CORP: Intermet Wants Stay Lifted to Commence Avoidance Action ------------------------------------------------------------------ Intermet Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to: (a) lift the automatic stay to allow them to commence an avoidance action against Dana Corporation and its debtor- affiliates in the U.S. Bankruptcy Court for the Eastern District of Michigan, Southern Division; or (b) direct the Dana Debtors to enter into an appropriate tolling agreement. According to the Intermet Debtors, their Books and Records reveal that they made one or more transfers by check, wire transfer, or its equivalent of an interest in their property, aggregating $1,383,908, to one or more of the Dana Debtors on or within 90 days before Intermet filed for bankruptcy. The Intermet Debtors believe that those Transfers constitute preferential transfers, which, subject to defenses available to the transferees, may be avoided and recovered for their benefit. The Michigan Bankruptcy Court has established Sept. 28, 2006, as the last day for filing any avoidance actions. Richard M. Meth, Esq., at Pitney Hardin, LLP, in New York, asserts that without immediate relief from the automatic stay, the Intermet Debtors will be unable to commence the Avoidance Action by the Filing Date, and thus will be prejudiced by the loss of a valuable cause of action. Mr. Meth argues that the harm that will fall on the Intermet Debtors if they are prevented from timely filing the Avoidance Action outweighs any potential added burden that the Dana Debtors might incur in having to defend the Avoidance Action. About Intermet Troy, MI-based Intermet Corporation -- http://www.Intermet.com/-- emerged from bankruptcy in November 2005. Intermet provides machining and tooling services for the automotive and industrial markets specializing in the design and manufacture of cast automotive components for the global light truck, passenger car, light vehicle and heavy-duty vehicle markets. Intermet, along with its debtor-affiliates, filed for chapter 11 protection on Sept. 29, 2004 (Bankr. E.D. Mich. Case Nos. 04-67597 through 04- 67614). Salvatore A. Barbatano, Esq., at Foley & Lardner LLP, represented the Intermet Debtors. When the Intermet Debtors filed for protection from their creditors, they listed $735,821,000 in total assets and $592,816,000 in total debts. 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. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. 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. 20; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DANA CORP: Agrees to Sell Trailer Axle-Making Biz for $38 Million ----------------------------------------------------------------- Dana Corporation and two affiliates have entered into asset purchase agreements with Hendrickson USA, L.L.C., a subsidiary of The Boler Company, and its affiliates for the sale of Dana's trailer axle-manufacturing business. Under terms of the agreements, the buyers will acquire certain assets located in Lugoff, S.C., USA; Barrie, Ontario, Canada; and Wuxi, China, which are used to manufacture heavy-duty trailer axles and suspensions for an aggregate price of approximately $38 million in cash. The buyer will also assume certain liabilities related to the business. The transactions are subject to the approval of the United States Bankruptcy Court for the Southern District of New York, which has jurisdiction over Dana's Chapter 11 reorganization proceedings. As a standard part of the divestiture process, Dana has filed a motion with the Bankruptcy Court seeking approval of procedures that will provide an opportunity for competitive bids on the trailer axle assets before the sale is approved by the Court. Dana expects the bidding process to be completed and the sale to close in the fourth quarter of 2006. Dana Heavy Vehicle Products President Nick Stanage said the asset sale will support the company's efforts to focus more intently on its core commercial vehicle drivetrain product lines. "This divestiture will benefit our Commercial Vehicle group by concentrating its resources on our core products and competencies -- namely drive and steer axles, driveshafts, brakes and tire inflation systems for commercial vehicles," he said. Mr. Stanage added, "We view this transaction as a strategic opportunity for both Dana and the buyer. This is a good business that has the opportunity to become even better by teaming with a company that considers trailer products a core pursuit and has the resources to further develop this group's capabilities to address this market segment." Dana's trailer products business employs approximately 180 people at two principal locations: Lugoff, S.C., and Barrie, Ontario. Under terms of the agreements with Hendrickson, 90 employees, a commercial vehicle building, and trailer manufacturing assets at Lugoff will go to the buyer. In Barrie and Wuxi, China, only trailer manufacturing assets will be sold to the buyer. Approximately 90 positions in Barrie will be eliminated when the assets are relocated by the buyer. In Wuxi, employees will be reassigned to Dana's remaining operations within the facility. In conjunction with the asset purchase agreements, Bendix Spicer Foundation Brake LLC, a joint venture in which Dana has an interest, has agreed to continue to supply Bendix(R) brake systems to Hendrickson. About Dana Corporation Headquartered in Toledo, Ohio, Dana Corporation (OTC Bulletin Board: DCNAQ) -- 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. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. 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. DELL INC: SEC Accounting Probe Delays Quarterly Report Filing ------------------------------------------------------------- Dell Inc. is delaying filing of the Form 10-Q for its fiscal second quarter ended Aug. 4, 2006. The company said it plans to file the report as soon as possible. The Company disclosed that it is unable to file its quarterly report because of questions raised in connection with an informal investigation by the U.S. Securities and Exchange Commission into certain accounting and financial reporting matters and the subsequently initiated independent investigation by the Audit Committee of its board of directors. The investigations have indicated the possibility of misstatements in prior period financial reports, including issues relating to accruals, reserves and other balance sheet items that may affect the company's previously reported financial results. The company is working with the Audit Committee and with the company's independent auditors to determine if any restatements of prior period financial reports will be necessary. "We have not yet reached any conclusion on materiality as to these issues," said Don Carty, chairman of the Audit Committee reviewing the matter. "We are continuing to investigate the matter fully," Mr. Carty added. The SEC requests for information have been joined by a similar request from the United States Attorney for the Southern District of New York, who has subpoenaed documents related to the company's financial reporting from 2002 to the present. "We are fully cooperating with the investigations and working to resolve any and all issues raised in connection with those investigations as quickly as possible, and we will take any appropriate remedial or corrective actions to address any problems," Chairman Michael Dell said. In light of these developments, the company has suspended its ongoing share repurchase program until further notice. In addition, given the delay in its 10-Q filing, the company has postponed the meeting with analysts that was to be held tomorrow, September 13 and will reschedule it to a later date. Dell, Inc. (NASDAQ: DELL) -- http://www.dell.com-- designs, develops, manufactures, markets, sells, and provides support for various computer systems and services to customers worldwide. DELPHI CORP: Officials Optimistic About UAW Talks ------------------------------------------------- "I am optimistic we'll come to a reasonable conclusion," General Motors Corp.'s chairman and CEO Richard Wagoner said about negotiations with Delphi Corp. and the United Auto Workers union, Bloomberg News relates. GM's chief financial officer Fritz Henderson, during a Credit Suisse automotive conference in New York, shared that same conviction. "I am absolutely convinced we will find a equitable solution," Mr. Henderson said, according to Bloomberg News. Mr. Wagoner clarified, however, that talks are complex and taking some time, Bloomberg News relates. "We would like to get it done as soon as we can," Mr. Wagoner said. Delphi is seeking to reject its collective bargaining agreements with unions and to modify obligations to provide insurance benefits for its hourly retirees. To restructure its U.S. operations, Delphi is planning to cut 4/5 of its 33,100 U.S. hourly workers, close 21 of its 29 U.S. union plants and slash wages and benefits for workers who stay. 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. 40; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) DVI INC: Inks Securities Suit Settlement Deals with Noteholders --------------------------------------------------------------- DVI, Inc., entered into Partial Settlement Agreements with OnCURE Medical Corp., fka OnCURE Technologies, Corp., Dolphin Medical, Inc. and PresGar Imaging, L.C. on behalf of those who purchased the Securities of DVI in respect to the DVI, Inc. Securities Litigation. DVI settled their claims against OnCURE for $1,175,000, Dolphin for $960,000, and PresGar for $750,000, for total Partial Settlements of $2,885,000. The final amount distributed to Class Members will depend upon the amount of interest earned on these funds and the amount of Court-approved attorneys' fees, costs and expenses, and Notice and Administration Costs. DVI is proposing the Partial Settlements because, upon consideration of, among other things, the record, the potential damages, the strength of the Class' claims and the risks and cost of continued litigation, the Partial Settlements provide substantial recovery to the Class, is fair, reasonable and adequate, and is preferable to continued litigation. OnCURE, Dolphin and PresGar deny any liability or wrongdoing, but desire to resolve the claims asserted under the terms set forth herein and, in more detail, in the Settlement Agreements. A hearing will be held before the Honorable Legrome D. Davis in the U.S. District Court for the Eastern District of Pennsylvania on Nov. 9, 2006 at 10:00 a.m. to determine whether: * the proposed Partial Settlements are fair, reasonable and adequate to the Class and should be approved; * the proposed Plan of Allocation is fair, reasonable and adequate to the Class and should be approved; * a proposed Final Judgment should be entered; * the amount of fees and expenses that should be awarded to Plaintiffs' Lead Counsel; and * to rule upon such other matters as the Court may deem appropriate. Copies of a Proof of Claim form and the full printed Notice of (i) Proposed Partial Settlements of Class Action, (ii) Hearing on Proposed Settlements and Petition for Attorneys' Fees and Costs, and (iii) Right to Share in Settlement Funds, are available at the Claims Administrator at: DVI, Inc. Securities Litigation c/o Strategic Claims Services Claims Administrator 2710 Concord Road, Suite 5 Aston, PA 19104 Telephone (610) 364-2693 DVI, Inc., the parent company of DVI Financial Services, Inc., and DVI Business Credit Corporation, provide lease or loan financing to healthcare providers for the acquisition or lease of sophisticated medical equipment. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. Del. Case No. 03-12656) on Aug. 25, 2003. Bradford J. Sandler, Esq., at Adelman Lavine Gold and Levin PC, represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,866,116,300 in total assets and $1,618,751,400 in total debts. On Nov. 24, 2004, Judge Walrath confirmed the Amended Joint Plan of Liquidation filed by DVI, Inc., and its debtor-affiliates. FALCONBRIDGE: Xstrata Acquires Company's Remaining Common Shares ---------------------------------------------------------------- Xstrata plc has mailed a notice of compulsory acquisition to all remaining holders of Falconbridge Limited common shares. Following Xstrata's offer to acquire all of the Common Shares not already owned by it, the company beneficially owns approximately 97.1% of the issued and outstanding Common Shares on a fully diluted basis. Since the Xstrata offer was accepted by holders of more than 90% of the Common Shares, Xstrata is now exercising its right under the compulsory acquisition provisions of the Business Corporations Act (Ontario) to acquire all outstanding Common Shares not already owned by Xstrata at the Offer price of CDN$62.50 per Common Share. Falconbridge shareholders with questions or requests for copies of the documents, may contact: CIBC Mellon Trust Company Tel: 1-416-643-5500 1-800-387-0825 About Xstrata Xstrata plc -- 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 United Kingdom and Canada. Xstrata holds a 97% stake in Falconbridge. 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. * * * Falconbridge's CDN$150 million 5% convertible and callable bonds due April 30, 2007, carry Standard & Poor's BB+ rating. FALCONBRIDGE LTD: Xstrata Appoints Claude Ferron as COO ------------------------------------------------------- Xstrata Copper declares a new senior management appointment following its assumption on full management control of Falconbridge Limited on Aug. 21, 2006. Claude Ferron, formerly President of Canadian Copper and Recycling for Falconbridge, has been appointed as Chief Operating Officer for the newly established division Xstrata Copper Canada, reporting to Xstrata Copper's Chief Executive, Charlie Sartain. Mr. Ferron is based in Toronto, and is responsible for Xstrata Copper's operations in Canada. These comprise the Kidd Creek mining and metallurgical operations in Ontario, the Horne smelter and the Canadian Copper Refinery business in Montreal, and the copper recycling business (Noranda Recycling). Mr. Ferron will also be appointed as a member of the Xstrata Copper Executive Committee. Charlie Sartain, Chief Executive Xstrata Copper, commented, "I am delighted that Claude has joined Xstrata Copper in a senior management position. He brings a wealth of experience and knowledge of the former Falconbridge operations in Canada and their respective markets and we look forward to the significant contribution that he will make to the expanded Xstrata Copper. "The acquisition of Falconbridge has positioned Xstrata Copper as the third largest producer of copper in the world, with managed production of over one million tonnes of copper per annum, and mining operations in five countries. It is an exciting time for Xstrata Copper and we look forward to integrating the former Falconbridge copper assets with our existing global businesses as soon as possible." About Xstrata Xstrata plc -- 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. * * * Falconbridge's CDN$150 million 5% convertible and callable bonds due April 30, 2007, carry Standard & Poor's BB+ rating. FALCONBRIDGE LTD: Inks Option & Joint Venture Accord with Benton ---------------------------------------------------------------- Falconbridge Limited has entered into an option and joint venture agreement with Benton Resources Corp. Falconbridge Limited is a subsidiary of the Xstrata group, whereby Xstrata has the exclusive right and option at its election to earn up to a 70% interest in the Goodchild Lake Ni- Cu-PGM Project by spending $25,000,000 or completing a feasibility study, which ever comes first. The specific terms of the agreement are as follows: a) to maintain the right and option and earn a 50% interest Xstrata must complete aggregate exploration expenditures of $3,000,000 by Aug. 1, 2009, and make payments to Benton totaling $335,000 over the term of the earn-in: * an initial $50,000 cash payment on signing of the agreement; * an additional $60,000 cash payment and spend $750,000 on exploration by Aug. 1, 2007; * an additional $75,000 cash payment and spend an aggregate of at least $1,750,000 on exploration by Aug. 1, 2008; and * an additional $150,000 cash payment and spend an aggregate of $3,000,000 on exploration by Aug. 1, 2009; b) to earn a further 10% interest to bring its interest to 60%, Xstrata must spend a further $2,000,000 on exploration by Aug. 1, 2011; c) to earn a further 10% to bring its total interest up to 70%, Xstrata must spend a further $20,000,000 on exploration or complete a feasibility study, which ever comes first, by Aug. 1, 2014; d) provided Xstrata earns a minimum of a 50% interest, Xstrata and Benton will form a joint venture (JV) based on the respective interests of the parties at the stage that Xstrata ceases to increase its interest; and e) After the JV is formed, if either party dilutes to a 10% interest, such interest shall automatically be converted to a 3% Net Smelter Royalty of which 1.5% can be purchased for $1.5 million by the other party. The Goodchild Lake Project is located approximately 15 km. north of Marathon, Ontario and is host to several nickel showings with grab samples assaying up to 5.67% nickel -- collected by Benton personnel -- and 6.72% nickel -- collected by Xstrata personnel. The large ultramafic intrusion measures approximately 5x8km and has numerous untested airborne electromagnetic anomalies. Benton will keep their shareholders updated on developments at the property as exploration moves forward. 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. * * * Falconbridge's CDN$150 million 5% convertible and callable bonds due April 30, 2007, carry Standard & Poor's BB+ rating. FREESCALE SEMICONDUCTOR: In Buyout Talks with Investment Firms -------------------------------------------------------------- Freescale Semiconductor, Inc. is in discussions with parties relating to a possible business transaction. According to Associated Press, a group of investment companies, including Texas Pacific Group Ventures Inc. and The Blackstone Group, is planning to buy the chipmaker. There can be no assurances that any transaction will result from these discussions. To protect the interests of its stockholders, employees and customers, Freescale said that it will not comment further on these discussions unless and until it is appropriate to do so. Based in Austin, Texas, Freescale Semiconductor, Inc. (NYSE:FSL) (NYSE:FSL.B) -- http://www.freescale.com/-- designs and manufactures embedded semiconductors for the automotive, consumer, industrial, networking and wireless markets. Freescale became a publicly traded company in July 2004. The company has design, research and development, manufacturing or sales operations in more than 30 countries. The Company's 7-1/8% Senior Notes due 2014 carry Moody's Investors Service's Ba1 rating. FORD MOTOR: Turnaround Plan Could Cost Up to 40,000 Jobs -------------------------------------------------------- Ford Motor Co. could opt to cut its workforce by up to 40,000 as the Company braces to accelerate its restructuring efforts, the Associated Press reports. Ford, which had previously disclosed a reduction of plant-related employment by 25,000 to 30,000 by 2012 as part of its "Way Forward" plan, may speed up the lay-offs as pressure for a faster turnaround mounts. The Company had disclosed changes to its "Way Forward" plan as it reeled from a $254 million net loss in the second quarter of 2006. According to the Associated Press, the Company's Board or Directors will meet tomorrow and on Thursday to consider the additional job cuts. About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Company (NYSE: F) -- http://www.ford.com/-- manufactures and distributes automobiles in 200 markets across six continents. With more than 324,000 employees worldwide, the company's core and affiliated automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive-related services include Ford Motor Credit Company and The Hertz Corporation. * * * As reported in the Troubled Company Reporter on Aug. 22, 2006, 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 lowered on July 21, 2006, Ford Motor Company's long-term debt rating to B from BB, and lowered its short-term debt rating to R-3 middle from R-3 high. DBRS also lowered Ford Motor Credit Company's long-term debt rating to BB(low) from BB, and confirmed Ford Credit's short-term debt rating at R-3(high). Fitch Ratings also 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. Standard & Poor's Ratings Services also 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. As reported in the Troubled Company Reporter on July 24, 2006, Moody's Investors Service lowered the Corporate Family and senior unsecured ratings of Ford Motor Company to B2 from Ba3 and the senior unsecured rating of Ford Motor Credit Company to Ba3 from Ba2. The Speculative Grade Liquidity rating of Ford has been confirmed at SGL-1, indicating very good liquidity over the coming 12 month period. The outlook for the ratings is negative. FOSTER WHEELER: Secures New Sinclair Engineering Contract --------------------------------------------------------- Foster Wheeler Ltd. disclosed that its subsidiary, Foster Wheeler USA Corporation, part of its Global Engineering and Construction Group, has been awarded a reimbursable engineering, procurement and construction contract by Sinclair Oil Corporation for a 30,000 barrel per stream day delayed coker, gas plant and coke handling facilities at its refinery at Tulsa, Oklahoma, United States. The new coker, which will use Foster Wheeler's Selective Yield Delayed Coking process, will allow the refinery to process heavier crudes while maximizing the production of higher value products. Terms of the award were not disclosed. The project was included in the company's second-quarter 2006 bookings. "Foster Wheeler is delighted to be awarded this strategic project by Sinclair Oil," said Troy Roder, president and chief executive officer of Foster Wheeler USA Corporation. "This award increases our strong, diversified client base and reflects the quality and depth of our personnel and of our project execution expertise." "Sinclair considers Foster Wheeler a leader in delayed coking technology and its execution approach fits with our plan to have the unit operational by 2009," added Paul Moote, Sinclair's vice president, Refinery Construction. About Foster Wheeler With operational headquarters in Clinton, New Jersey, Foster Wheeler Ltd. -- http://www.fwc.com/-- offers a broad range of engineering, procurement, construction, manufacturing, project development and management, research and plant operation services. Foster Wheeler serves the refining, upstream oil and gas, LNG and gas-to-liquids, petrochemical, chemicals, power, pharmaceuticals, biotechnology and healthcare industries. * * * As reported in the Troubled Company Reporter on Aug 7, 2006, Standard & Poor's Ratings Services assigned its 'BB-' bank loan rating and '1' recovery rating on Foster Wheeler Ltd.'s proposed five-year, $350 million senior secured credit facilities due 2011, reflecting a high expectation of full recovery of principal (100%) in the event of a payment default. As reported in the Troubled Company Reporter on May 30, 2006, Moody's Investors Service upgraded Foster Wheeler's corporate family rating to B1 from B3 and assigned a Ba3 rating to the Company's $250 million senior secured bank revolving credit facility. The rating outlook is changed to Positive. FOUNDATION PA: Solid Earnings Prompt Moody's to Lift Ratings ------------------------------------------------------------ Moody's Investors Service raised Foundation PA Coal Company, LLC's, corporate family rating to Ba2 from Ba3. At the same time, the company's senior unsecured rating was raised to Ba3 from B1. Moody's also affirmed Foundation's SGL-1 speculative grade liquidity rating. The upgrade reflects Foundation's solid earnings performance and generation of free cash flow, coupled with modest debt reduction since the company's re-capitalization in 2004. Foundation PA Coal Company, LLC is an affiliate of Foundation Coal Corporation. Upgrades: Issuer: Foundation PA Coal Company * Corporate Family Rating, Upgraded to Ba2 from Ba3 * Senior Unsecured Regular Bond, Upgraded to Ba3 from B1 The Ba2 corporate family rating reflects Foundation's strong earnings performance, generation of free cash flow, and solid book of committed and priced contracts that give it a significant degree of price certainty over the next few years. At the same time, the rating reflects Foundation's concentration in four mines, two of which are underground longwall mines, a relatively high debt level, and inflationary pressures on key input costs, including energy, steel and labor. Moody's last rating action on Foundation was the withdrawal of Foundation's revolving credit and Term Loan B ratings in July 2005. Foundation PA Coal Company, LLC, based in Linthicum Heights, Maryland, is engaged in the mining and marketing of coal and had coal sales revenues of $1.3 billion in 2005. GENESIS WORLDWIDE: Has Until April 30, 2007 to File Chap. 11 Plan ----------------------------------------------------------------- The Honorable Thomas F. Waldron of the U.S. Bankruptcy Court for the Southern District of Ohio in Dayton extended until April 30, 2007, Genesis Worldwide, Inc., and its debtor-affiliates' time to exclusively file a plan of reorganization and disclosure statement. As reported in the Troubled Company Reporter on Aug. 2, 2006, the Debtors said that the extension will provide them and the Official Committee of Unsecured Creditors with more time to remain focused on collecting assets for the estates, avoiding the unnecessary expenditure of limited funds in connection with the formulation of Plans. The Debtors also have until June 29, 2007, to exclusively solicit acceptances of that plan. Headquartered in Dayton, Ohio, Genesis Worldwide Inc., fka The Monarch Machine Tool Company, engineers and manufactures high quality metal coil processing and roll coating and electrostatic oiling equipment. Genesis Worldwide and its debtor-affiliates filed for chapter 11 protection on September 17, 2001 (Bankr. S.D. Ohio Case No. 01-36605). Nick V. Cavalieri, Esq., at Bailey Cavalieri LLC, represents the Debtors in their chapter 11 proceedings. Daniel M Anderson, Esq., at Schottenstein Zox & Dunn represents the Official Committee of Unsecured Creditors. As of June 30, 2001, the Debtors reported assets totaling $122,766,000 and debts totaling $121,999,000. GEO GROUP: Good Performance Prompts S&P to Upgrade Rating to BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on prison and correction services company The GEO Group Inc. The corporate credit rating was raised to 'BB-' from 'B+'. The ratings were removed from CreditWatch, where they were placed with positive implications May 31, 2006, following the company's announcement that it would offer 3 million shares of its common stock in an underwritten public offering, intending to use proceeds to pay down its term loan bank debt. The rating outlook is stable. Boca Raton, Florida-based GEO had about $172.5 million in total nonrecourse debt outstanding at July 2, 2006, excluding operating and pension-related obligations. "The rating upgrade follows GEO's improved operating performance, more favorable industry fundamentals, and an improved capital structure following the reduction of $74.6 million in term loan debt, funded through proceeds obtained from the recently completed common stock offering," said Standard & Poor's credit analyst Mark Salierno. The ratings reflect the company's: * narrow business focus; * customer concentration; and * leveraged financial profile. These factors are somewhat mitigated by GEO's strong market position in the highly regulated U.S. private correctional facility management industry and favorable demographic trends. GEO is a narrowly focused company that provides a range of prison and correctional services to U.S. federal, state, local, and overseas government agencies. With more than 50,000 beds, a substantial portion of which are in the U.S., the company is the second-largest player in the U.S. privatized corrections industry, behind market leader Corrections Corp. of America (BB-/Positive/--), which has more than 70,000 beds. GEO maintains a strong market position in the consolidating niche privatized corrections industry. Nonetheless, Standard & Poor's believes that the company still faces competitive pressures from CCA and smaller competitors, including Cornell Cos. Inc. (B-/Stable/--) and Management & Training Corp. (unrated). Pro forma for the paydown of term loan debt and for the acquisition of Correctional Services Corporation completed in November 2005, Standard & Poor's now expects lease- and pension- adjusted EBITDA coverage of interest expense to be in the 2.5x area, and adjusted total debt to EBITDA to be in the 3.5x area (excluding GEO's nonrecourse debt, which Standard & Poor's considers to be true pass-through arrangements). GREAT COMMISSION: Can Enter Into AICCO Insurance Financing Pact --------------------------------------------------------------- The Honorable Mary D. France of the U.S. Bankruptcy Court for the Middle District of Pennsylvania in Harrisburg authorized The Great Commission Care Communities, Inc., dba The Woods at Cedar Run to enter into an Insurance Premium Financing Agreement with AICCO, Inc. The Debtor must maintain blanket building and business insurance to its assets and business operations. AICCO is willing to finance the payment of the premiums for the Policy and to enter into a Premium Financing Agreement. The cash price for the Policies premium is $159,500.79. The Agreement requires that the Debtor make cash down payment in the amount of $55,825.28. The remaining $103,675.51 will be paid in installments yielding a finance charge in the amount of $2,748.22, with an annual percentage rate of 7.90%. A portion of the down payment will be funded by Wells Fargo Bank, as Indenture Trustee of approximately $40,453 from a tax and insurance escrow fund that it holds. The Debtor will continue to fund the balance of the tax and insurance payments. To secure payment of the amounts owed to AICCO under the Insurance Agreement, the Debtor will grant AICCO a security interest in all sums payable to the Debtor with reference to the Policies including without limitation any gross returned premiums and any payment on account of loss that results in reduction of unearned premium in accordance with the terms of the Policies. Headquartered in Camp Hill, Pennsylvania, The Great Commission Care Communities, Inc., dba The Woods at Cedar Run -- http://www.woodsatcedarrun.com/-- is a non-profit retirement community providing independent housing and assisted living services. The company filed for chapter 11 protection on May 10, 2006 (Bankr. M.D. Penn. Case No. 06-00914). Robert E. Chernicoff, Esq., at Cunningham and Chernicoff, P.C., represents the Debtor. David W. Carickhoff, Esq., at Blank Rome LLP represents the Official Committee of Unsecured Creditors. Howard S. Cohen, CPA, at Parente Randolph, LLC, gives financial advice to the Committee. When the Debtor filed for protection from its creditors, it estimated assets between $1 million and $10 million and debts between $10 million and $50 million. GULF COAST: Files Liquidating Plan and Disclosure Statement ----------------------------------------------------------- Gulf Coast Holdings, Inc., filed a liquidating plan and a disclosure statement explaining that plan with the U.S. Bankruptcy Court Northern District of Texas in Dallas. Summary of the Plan The Debtor will transfer the $4.2 million proceeds of the sale of substantially all of its assets to a Liquidating Trust created under the Plan. The Trustee will liquidate any remaining assets. On the effective date, a Liquidating Trust will be formed. A Liquidating Trust Board will also be established consisting of a minimum of two and a maximum of five persons who are either members of the Creditors Committee or creditors of the Debtor. These persons wish to serve on the Board and have a claim on the effective date. Treatment of Claims Administrative Claims, Priority Tax Claims, and Class 1 Unsecured Non-Tax Priority Claims will be paid in full at the later of the effective date or the date the claim becomes an allowed claim. At the sole discretion of the Debtors, Allowed Class 2 Secured Claim Holders will either (a) receive the collateral securing the Secured Claim, or (b) be paid in full and in Cash, plus interest, as determined by the Bankruptcy Court, as soon as reasonably practicable after the later of (i) the Initial Distribution Date or (ii) the date that the Claim becomes an Allowed Claim. Holders of Allowed Class 3 Convenience Claims will be paid 50% of the amount of the Allowed Convenience Claim in cash and in full at the later of (a) the Initial Distribution Date or (b) the date that the Claim becomes an Allowed Claim, in full satisfaction of the Allowed Convenience Claim. Holders of Allowed Class 4 General Unsecured Claims will receive a pro rata distribution of the remaining cash proceeds in the Trust after all claims in Classes 1, 2, and 3 have been paid in full. In the event that Class 4 Holders will be paid in full, they will be entitled to receive interest calculated at the then-applicable federal rate of interest as of the effective date. Holders of Class 5 Equity Interests will only receive the remaining proceeds on a pro rata basis from the Trust if Holders of Classes 1, 2, 3, and 4 are paid in full plus interest. A full-text copy of the Debtor's disclosure statement is available for a fee at: http://www.researcharchives.com/bin/download?id=060911215522 About Gulf Coast Headquartered in Conroe, Texas, Gulf Coast Holdings, Inc., filed for bankruptcy protection on April 28, 2006 (Bankr. N.D. Tex. Case No. 06-31695). Daniel I. Morenoff, Esq., and Jeffrey R. Fine, Esq., at Hughes & Luce, LLP, represent the Debtor in its restructuring efforts. The Debtor has employed David Hull as its chief restructuring officer. J. Frasher Murphy, Esq., Jaime Myers, Esq., and Phillip L. Lamberson, Esq., at Winstead, Sechrest & Minick represent the Official Committee of Unsecured Creditors. In its schedules filed with the Court, the Debtor reported assets amounting to $18,258,575 and debts totaling $19,553,664. GULF COAST: Committee Wants Loewinsohn Flegle as Special Counsel ---------------------------------------------------------------- The Official Committee of Unsecured Creditors of Gulf Coast Holdings, Inc., asks the Honorable Barbara J. Houser of the U.S. Bankruptcy Court Northern District of Texas in Dallas for authority to retain Loewinsohn Flegle, LLP, as its special counsel. The Committee wants Loewinsohn Flegle to represent it in prosecuting causes of action against MTGLQ Investors, L.P., Treadstone Partners, LLC, and related parties. The Committee proposes to pay Loewinsohn Flegle a contingency fee of 33-1/3% of the gross recoveries of any causes of action pursued on behalf of the Committee. The Firm's engagement is premised on the Committee's ability to obtain the Court's approval of a $500,000 retainer from the Debtor for ordinary and reasonable expenses including expert consultants and witnesses. To the best of the Committee's knowledge, the Firm does not hold nor represent any interest adverse to the Debtor or to the Committee with respect to the matters upon which Loewinsohn Flegle is to be engaged. Judge Houser will convene a hearing at 9:00 a.m. on Sept. 25, 2006, to consider the Committee's request. Headquartered in Conroe, Texas, Gulf Coast Holdings, Inc., filed for bankruptcy protection on April 28, 2006 (Bankr. N.D. Tex. Case No. 06-31695). Daniel I. Morenoff, Esq., and Jeffrey R. Fine, Esq., at Hughes & Luce, LLP, represent the Debtor in its restructuring efforts. The Debtor has employed David Hull as its chief restructuring officer. J. Frasher Murphy, Esq., Jaime Myers, Esq., and Phillip L. Lamberson, Esq., at Winstead, Sechrest & Minick represent the Official Committee of Unsecured Creditors. In its schedules filed with the Court, the Debtor reported assets amounting to $18,258,575 and debts totaling $19,553,664. IELEMENT CORP: June 30 Stockholders' Deficit Tops $1.2 Million -------------------------------------------------------------- iElement Corporation filed its financial statements for the first fiscal quarter ended June 30, 2006, with the Securities and Exchange Commission. The Company reported a $248,579 net loss on $1,023,204 of operating revenue for the first fiscal quarter compared with a $146,381 net loss on $1,215,479 of operating revenue for the same period in 2005. At June 30, 2006, the Company's balance sheet showed $1,628,313 in total assets and $2,894,296 in total liabilities, resulting in a $1,265,983 stockholders' deficit. The Company's June 30 balance sheet showed strained liquidity with $717,930 in total current assets available to pay $2,485,182 in total current liabilities coming due within the next 12 months. Full-text copies of the Company's first fiscal quarter financials are available for free at http://ResearchArchives.com/t/s?115c Going Concern Doubt Bagell, Josephs Levine & Company, L.L.C., in Gibbsboro, New Jersey, raised substantial doubt about IElement Corporation, fka Mailkey Corporation's ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended March 31, 2006. The auditor pointed to the Company's operating losses and capital deficits. About iElement Corporation iElement Corporation fka Mailkey Corporation (OTCBB: IELM) -- http://www.ielement.com/-- provides telecommunications services to small and medium sized businesses. IElement provides broadband data, voice and wireless services by offering integrated T-1 lines as well as a Layer 2 Private Network and VOIP solutions. IElement has a network presence in 18 major markets in the United States, including facilities in Los Angeles, Dallas, and Chicago. INTERSTATE BAKERIES: Wants CONSOR Intellectual as IP Consultant --------------------------------------------------------------- Interstate Bakeries Corporation and its debtor-affiliates seek permission from the U.S. Bankruptcy Court for the Western District of Missouri to employ CONSOR Intellectual Asset Management to provide intellectual property consulting services. CONSOR's IP consulting services is needed to aid the Debtors in evaluating their reorganization options, Ronald B. Hutchison, chief financial officer of Interstate Bakeries Corporation, says. Pursuant to an Engagement Letter between the parties, CONSOR agree to value the intellectual property owned and operated by the Debtors. The valuation analysis will focus on the portfolio of trademarks and other brand assets. CONSOR will provide a calculation of "Fair Value" under: -- the liquidation value for the IP Assets, as defined under Chapter 7 of the Bankruptcy Code; and -- an orderly disposal value based on a liquidation of the IP Assets over a six to twelve month marketing period. To accomplish the Fair Value determinations, CONSOR will: (a) explain the basic elements of value for trademarks and trade names and brand names in general; (b) review the history of the IP Assets, including use, development and awareness; (c) identify all specific components of value for the IP Assets; (d) review the current use of the IP Assets by various business segments in key geographies; (e) review the current licensing situation, including existing license agreements; (f) understand current market research as to brand awareness and share of market in various geographies; (g) review revenues, projections, profitability, and other available financial information related to the IP Assets; (h) research internal and external sources of data, as well as averages and ranges of data from licensing industry research, to identify marketplace royalty rates and transaction information; (i) assemble exhibits of comparable transactions based on marketplace data for consumer product-based trademarks; and (j) provide professional opinions as to Fair Value for the IP Assets under each valuation scenario. According to Mr. Hutchison, the Debtors may also seek to utilize CONSOR's extensive experience in areas like brand extension, trademark licensing strategies and tactics, and trademark portfolio management. The Debtors will pay CONSOR $425 per hour for the IP Valuation Services, with a cap of $200,000 on professional fees. CONSOR will receive a $25,000 retainer before the commencement of its work. CONSOR will also be reimbursed for the necessary expenses it incurs while providing services to the Debtors. After CONSOR delivers its final report to Debtors, any additional work will be paid in accordance with CONSOR's standard hourly rates: Professional Hourly Rates ------------ ------------ Chairman, Chief Executive Officer $695 Officers and Directors $550 Senior Staff $425 Junior Staff $275 Administrative Staff $125 Daryl Martin, vice president of Domain Assets, LLC, doing business as CONSOR Intellectual Asset Management, assures the Court that his firm does not represent any interest adverse to the Debtors or their estates, and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014 on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) INTERSTATE BAKERIES: Wants to Implement Management Incentive Plan ----------------------------------------------------------------- Interstate Bakeries Corporation and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Western District of Missouri to implement the IBC Management Incentive Bonus Plan Fiscal 2007. According to J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom LLP, in Chicago, Illinois, the Incentive Plan is designed to encourage eligible employees to increase the Debtors' enterprise value, and thus increase value and returns for all stakeholders, during the Debtors' Chapter 11 cases by paying cash bonuses to certain eligible employees if the Debtors achieve certain predetermined financial projections. Mr. Ivester contends that the Plan is particularly important because the Participants have not received merit pay increases for two years, and the Debtors' base salaries are below market in most regions of the country. Moreover, since the Petition Date, the Debtors have suspended or terminated their employee profit sharing program, supplemental retirement plan and deferred compensation plan. The Debtors, with the assistance of Alvarez & Marsal, LLC, evaluated their existing compensation structure and obtained input from their Board of Directors and senior executives to identify Participants and consider the appropriate incentive levels. Annual Incentive Bonus Plan The Debtors have identified 859 employees eligible under the Incentive Plan. The designated bonus target amount for each Participant is determined based on a specified percentage of his base salary. The specified percentages range from approximately 3% to 25%. A Participant's eligibility to receive the annual bonus depends on: (1) whether the Debtors achieve their projected EBITDAR target for fiscal year 2007; (2) whether the Participant's profit center or unit achieves its projected EBITDAR target; and (3) the Participant's individual performance rating. Under the Incentive Plan, the Participants are divided into different categories: * The Corporate Group, * The Business Units Group, and * The Profit Centers and other operating units group. If the Debtors do not achieve their EBITDAR target, the Corporate Group will not receive their designated bonus and the Non- Corporate Groups will only be eligible for 50% of their designated bonuses. For the Non-corporate Groups, if their business unit does not achieve their EBITDAR target, then they will not receive their designated bonuses, irrespective of whether the Debtors achieve their EBITDAR target, unless a discretionary pool is funded. A Participant's designated bonus may be reduced to zero or increased to as much as 150% of the designated amount based on his individual performance ratings. A Participant may receive more if a discretionary pool is funded. Individual performance ratings will be dependent on achieving metrics designated by its unit's leadership. For instance, the sales management's ratings will depend on achieving the profit center sales plan, meeting profit center route return goals, and satisfying profit center safety goals, Mr. Ivester notes. Discretionary Bonus Pool If the Debtors exceed their EBITDAR target before adjustment for the designated bonuses, a separate discretionary bonus pool will be created that will be in addition to the designated bonuses, Mr. Ivester notes. Funding for the discretionary bonus pool will be derived from: -- 15% of the excess of the Debtors' EBITDAR over their EBITDAR target; and -- the funds earmarked to pay the designated bonuses for the business units that do not meet their EBITDAR targets. Bonuses paid from the discretionary bonus pool will be based on each Participant's individual performance and contribution to the Debtors' business objectives. The recipients and bonus amounts will be determined by the IBC Compensation Committee, and the determinations will be reviewed by the Compensation Committee of IBC's Board of Directors. Assuming all EBITDAR and other targets are met and the Participants' individual performance ratings entitle them to 100% of their designated bonuses, the aggregate cost would be less than $6,000,000, Mr. Ivester informs the Court. The Designated Bonus Amount is equal to approximately 9% of the aggregate amount of the Participants' base salaries, Mr. Ivester adds. Mr. Ivester says the potential cost of the Designated Bonus Amount would be equal to only 0.2% of the Debtors' projected fiscal year 2007 revenue. Moreover, the aggregate cost of the Designated Bonus Amount is approximately $7,000,000 less than the average aggregate designated bonus target amounts under the Debtors' annual incentive plans from fiscal years 2000 to 2003. Mr. Ivester asserts that the potential costs associated with adoption of the Incentive Plan are more than justified by the benefits that are expected to be realized by encouraging the Participants to achieve the designated EBITDAR and other targets. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014 on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) IPSCO INC: Inks Pact to Acquire NS Group for $1.46 Billion in Cash ------------------------------------------------------------------ IPSCO Inc. and NS Group, Inc. entered into a definitive agreement pursuant to which IPSCO will acquire NS Group for $66 per share in cash. The acquisition will strengthen IPSCO's position as a leading North American producer of tubular products for the energy sector, while also maintaining its position as the leading North American supplier of steel plate products. The transaction strategically joins complementary product lines and broadens IPSCO's energy product offering by adding NS Group's highly attractive businesses, including seamless pipe and premium oilfield services provided by Ultra, NS Group's recent acquisition. Following the transaction, the Company is expected to have combined annual revenues exceeding $4 billion. Under the terms of the agreement, approved by both companies' Boards of Directors, IPSCO will acquire all of the outstanding shares of NS Group for $66 per share in cash, for an aggregate price of approximately $1.46 billion, including NS Group's net cash. The share price represents a premium of approximately 43% to NS Group's closing share price on Sept. 8, 2006, and a premium of approximately 33% to its 90-day average trading price. IPSCO will finance the acquisition through a combination of cash on hand and debt obtained under a fully committed bank credit facility. The transaction is expected to be accretive to IPSCO's 2007 earnings per share before giving effect to synergies. In addition, it is estimated that the transaction will generate more than $50 million in annual pre-tax operating synergies, which are anticipated to be fully realized within three years. This acquisition will also position the Company for further growth as a supplier to the energy sector. "This transaction represents a compelling strategic opportunity for IPSCO to become the leading North American supplier to the robust oil and natural gas sector by significantly expanding our pipe product offering and production capacity, as well as our geographic footprint," David Sutherland, IPSCO's President and CEO, said. "We are excited about the opportunity to enter the highly attractive seamless business in a leadership position and to enhance our position in welded products. From a production standpoint, this acquisition will enhance IPSCO's steel short strategy by offering additional outlets for steel while preserving the competitive advantage of IPSCO's fully integrated operating platform in both welded and seamless energy tubular products. With a comprehensive portfolio of products, enhanced production capabilities, excellent positions in both welded and seamless pipe, and a strong commitment to quality, service and innovation, IPSCO is well positioned to be the provider of choice in the North American energy pipe industry. "This strategic transaction significantly broadens our customer base and augments our leadership team by bringing together the tremendous talent of our respective employee bases as we continue to grow our Company. Moreover, we believe that this transaction will further enhance our ability to provide value-added products and services to our customers and create value for shareholders." "We believe the transaction with IPSCO serves the best interests of our shareholders, providing them with significant immediate value," Ren, J. Robichaud, President and CEO of NS Group, stated. "The combination of IPSCO and NS Group will provide our employees an opportunity to be part of a larger enterprise. IPSCO has indicated that it is their intent to build on our exceptional platform and continue to grow the business over the long term." The transaction, which is expected to close by year-end 2006, is subject to approval of NS Group's shareholders and other customary closing conditions, including regulatory approvals. Banc of America Securities LLC acted as financial advisor and Davis Polk & Wardwell acted as legal counsel to IPSCO. Raymond James & Associates, Inc. acted as financial advisor and Bryan Cave LLP acted as legal counsel to NS Group. About NS Group, Inc. Headquartered in Newport, Kentucky, NS Group Inc. (NYSE:NSS) -- http://www.nsgrouponline.com/-- produces tubular products serving the energy industry and certain industrial markets. The Company manufactures and markets seamless and welded tubular steel products used in the drilling, exploration and transmission of oil and natural gas and operates a steel manufacturing facility that produces billets as feedstock for its seamless products. Through its acquisition of the Ultra business, NS Group manufactures premium connections for oil and gas drilling and production. About IPSCO Inc. Headquartered in Lisle, Illinois, IPSCO, Inc. (NYSE/TSX:IPS) -- http://www.ipsco.com/-- operates steel mills at three locations and pipe mills at six locations in the United States and Canada. IPSCO is a low cost North American steel producer, and has a combined annual steel making capacity of 3,500,000 tons. IPSCO INC: $1.46 Billion NS Group Buy Cues S&P's Positive Watch --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on IPSCO Inc. on CreditWatch with positive implications after the company announced the $1.46 billion acquisition of NS Group Inc. CreditWatch with positive implications means the ratings could be raised or affirmed. IPSCO will fund the acquisition with a large portion of its $750 million of cash on hand, as well as drawings under committed unsecured credit facilities. "Although the transaction will increase total debt to more than US$1 billion from $332 million at June 30, 2006, the combined entity's financial profile is expected to remain strong for the ratings, with pro forma total debt-to-EBITDA of only about 1x for the 12 months ended June 30, 2006," said Standard & Poor's credit analyst Donald Marleau. Furthermore, the addition of NS Group's facilities will enhance IPSCO's operating diversity and product offering, which has been a key constraint on the ratings, while improving the company's position in the buoyant North American oil country tubular goods market. An upward ratings revision will likely be limited to one notch, and will depend on Standard & Poor's assessment of the company's ability to maintain good financial performance through the volatile North American steel price cycle. Industry conditions are currently very good, contributing to a valuation for NS Group that significantly exceeds the book value of the target company's assets. Hence, even though IPSCO's debt to capital will remain low for the ratings and within the company's target range of 25%-35%, the combined entity must demonstrate midcycle cash generation that will support solid investment-grade cash flow protection metrics to offset the inherent instability of industry conditions and the heavy reliance on unpredictable oil and gas drilling activity. LE-NATURES INC: Buy-Out Prompts Moody's to Review Ratings --------------------------------------------------------- Moody's Investors Service placed all debt ratings of Le-Nature's Inc. under review for possible downgrade following the recent disclosure that the company may seek to buy-out its preferred shareholders through measures that may include incremental debt financing. Under a settlement agreement with the company, the preferred shareholders have indicated their willingness to drop a lawsuit against the company if they are fully paid out by September 26, 2006 or soon thereafter. Moody's also assigned a B1 rating to the company's amended and restated $285 million senior secured credit agreement, which replaced the existing $275 million credit agreement. This rating is also on review for possible downgrade. The amended agreement consists of a new $20 million revolving credit facility that matures in September 2010 and a $90 million add-on to the existing Term Loan B that now matures in March 2011, bringing the total Term Loan B to $265 million. The refinancing of the prior secured credit facilities via the amended and restated credit agreement avoided an alledged event of default stemming from a preferred shareholder lawsuit in July seeking the appointment of a custodian The amended facility remains secured by a first priority lien on receivables, inventory, non-leased equipment, real estate, all other tangible and intangible assets plus the stock of Le-Nature's and its domestic subsidiaries and 65% of the stock of foreign subsidiaries. Guarantees by each domestic subsidiary also continue to support the facility. In its review for possible downgrade, Moody's will focus on the impact on the company's capital structure arising from the potential buy-out of the preferred shareholders. Moody's will also review the company's ongoing operating and financial performance, future growth plans, and liquidity as a result of the reduction in the committed revolver to $20 million from $100 million. Ratings assigned: Le Nature's, Inc. * B1 rating on $20 million senior secured revolving credit facility due 2010, * B1 on the incremental $90 million term loan B due 2011. Ratings withdrawn: * B1 rating on the $100 million senior secured revolving credit facility due 2008. * Ratings placed under review for possible downgrade: * B1 corporate family rating * B1 rating on the $265 million senior secured Term Loan B due 2011 * B3 rating on the subordinated notes due 2013 Headquartered in Latrobe, Pennsylvania, Le-Nature's, Inc. is a developer, producer, and marketer of all-naturally flavored, fully pasteurized alternative beverages, including natural and flavored bottled waters, teas, lemonades, vitamin and mineral fortified juice beverages, and the new launch of Redeem organic teas and juices. For the latest twelve month period ending June 30, 2006, revenue was approximately $313 million and EBITDA was approximately $127 million. LEVCOR INTERNATIONAL: June 30 Balance Sheet Upside-Down by $12.4MM ------------------------------------------------------------------ Levcor International, Inc., filed its third quarter financial statements for the three months ended June 30, 2006, with the Securities and Exchange Commission on Aug. 14, 2006. The Company earned $40,000 of net income on $4,962,000 of net revenues for the three months ended June 30, 2006, compared to a $377,000 net loss on $5,157,000 of net revenues in 2005. At June 30, 2006, the Company's balance sheet showed $15,471,000 in total assets and $27,956,000 in total liabilities, resulting in a $12,485,000 stockholders' deficit. The Company's June 30 balance sheet also showed strained liquidity with $10,129,000 in total current assets available to pay $7,966,000 in total current liabilities coming due within the next 12 months. Liquidity and Capital Resources The Company's principal sources of cash flow are from internally generated funds, borrowings under revolving credit facilities, advances under its factoring agreement and advances from Robert A. Levinson, a principal stockholder, Chief Executive Officer and director of the Company. The Company reports that the current year has produced a number of favorable financial results, including operating profits, positive cash flow, an ongoing orderly liquidation of the textile segment inventory and an improved working capital position. Credit Facility Amendment In addition, on July 26, 2006, the Company's $3 million Promissory Note in favor of J. P. Morgan Chase Bank, N.A. was amended to extend the maturity date of the Note to Jan. 1, 2008 from April 30, 2007. Also on July 26, 2006 the Company's credit facility with CIT Group/Financial Services, Inc., was amended to increase the advance percentage against the value of Eligible Inventory to 40% from 20% of Eligible Inventory, a dollar increase of approximately $1.1 million in borrowing availability at current inventory levels, with respect to the revolving credit portion of the Facility. Total borrowing availability under the entire Facility remains at $7.5 million. In addition, the guaranty of the Facility of Mr. Levinson was terminated other than with respect to the term loan portion and the applicable interest rate was changed to the Chase Rate on the first $2,500,000 of average net balances owed, and the Chase Rate plus .50% per annum on average net balances owed in excess of $2,500,000, but in either case not less than 5% per annum. At June 30, 2006, the Company's principal sources of liquidity included cash of $83,000 and trade accounts receivable of $2.9 million. A full-text copy of the Company's Quarterly Report is available for free at http://researcharchives.com/t/s?1159 Going Concern Doubt Friedman LLP expressed substantial doubt about Levcor International's ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended Dec. 30, 2005. The auditor pointed to the Company's recurring operating losses and negative cash flows from operations. About Levcor International Headquartered in New York City, Levcor International, Inc., manufactures and distributes buttons and other craft products to the home sewing and craft customers. It offers buttons, embellishments, and craft products, as well as complimentary product lines, including appliques, craft kits, and fashion and jewelry accessories. The company sells its products to mass merchandisers, fabric and craft specialty chains, and independent retailers and wholesalers. MAGNOLIA VILLAGE: Case Summary & 58 Largest Unsecured Creditors --------------------------------------------------------------- Lead Debtor: Magnolia Village, LLC 4790 Caughlin Parkway, Box 519 Reno, NV 89509 Bankruptcy Case No.: 06-50649 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Magnolia Double R. I, LLC 06-50650 Magnolia South Meadows III, LLC 06-50651 Magnolia South Meadows IV, LLC 06-50652 Type of Business: The Debtor is a luxurious resort-style Class A Office Park located in Reno. Chapter 11 Petition Date: September 8, 2006 Court: District of Nevada (Reno) Judge: Gregg W. Zive Debtors' Counsel: Stephen R. Harris, Esq. Belding, Harris & Petroni, Ltd. 417 W. Plumb Lane Reno, NV 89509 Tel: (775) 786-7600 Fax: (775) 786-7764 Estimated Assets Estimated Debts ---------------- --------------- Magnolia Village, LLC $10 Million to $100,000 to $50 Million $500,000 Magnolia Double R. I, LLC $10 Million to $1 Million to $50 Million $10 Million Magnolia South Meadows $10 Million to $0 to $50,000 III, LLC $50 Million Magnolia South Meadows $10 Million to $0 to $50,000 IV, LLC $50 Million A. Magnolia Village, LLC's 12 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Mark Combs Money Loaned $269,000 4790 Caughlin Pkwy Box 519 Reno, NV 89509 Colliers Nevada Mgmt, LLC Goods/Services $7,500 5345 Kietzke Lane Reno, NV 89511 Truckee Meadows Office Goods/Services $4,938 Cleaning P.O. Box 3358 Reno, NV 89509 Trane Goods/Services $4,879 File 56718 Los Angeles, CA 90074 Truckee Meadows Office Goods/Services $4,500 Cleaning P.O. Box 3358 Reno, NV 89505 CFO Group Goods/Services $3,341 4745 Caughlin Pkwy. #200 Reno, NV 89509 Reno Green Landscape Goods/Services $2,065 P.O. Box 34433 Reno, NV 89533 Otis Elevator Goods/Services $1,551 725 Trademark #102 Reno, NV 89521 Securitas Security Services Goods/Services $1,050 USA File 57220 Los Angeles, CA 90074 Waste Management Goods/Services $665 P.O. Box 78251 Phoenix, AZ 85062 Jet Plumbing Goods/Services $608 1553 Hymer Avenue Sparks, NV 89431 State Of Nevada Osha $50 1301 N. Green Valley Parkway #200 Henderson, NV 89074 B. Magnolia Double R. I, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Mark R. Combs Money Loaned $1,325,135 4790 Caughlin Parkway Box 519 Reno, NV 89509 St. Pauls Travelers Goods/Services $5,364 C & L Specialty Remittance Center Hartford, CT 06183-1008 Colliers Nevada Mgt. LLC Goods/Services $3,684 5345 Kietzke Lane Reno, NV 89511 CFO Group Goods/Services $2,505 4745 Caughlin Parkway #200 Reno, NV 89509 South Meadows Assoc. Goods/Services $1,321 P.O. Box 70278 Reno, NV 89570 Truckee Meadows Office Goods/Services $1,069 Cleaning P.O. Box 3358 Reno, NV 89509 Colliers Nevada Mgmt., LLC Goods/Services $1,000 5345 Kietzke Lane Reno, NV 89511 CFO Group Goods/Services $863 4745 Caughlin Parkway #200 Reno, NV 89509 South Meadows Assoc. Goods/Services $618 P.O. Box 70278 Reno, NV 89570 Reno Green Landscape Goods/Services $540 P.O. Box 34433 Reno, NV 89533 Reno Green Landscape Goods/Services $494 P.O. Box 34433 Reno, NV 89533 Waste Management Goods/Services $306 P.O. Box 78251 Phoenix, AZ 85062 Washoe County Utility Goods/Services $282 P.O. Box 30085 Reno, NV 89520-3085 Washoe Dept. Of Water Goods/Services $192 Resource 4930 Energy Way Reno, NV 89502 Reno Engineering Corp. Goods/Services $150 9476 Double R Blvd. #A Reno, NV 89521 Charter Communications Goods/Services $142 P.O. Box 78063 Phoenix, AZ 85062 High Standard Security Goods/Services $82 Systems P.O. Box 50831 Sparks, NV 89435 High Standard Security Goods/Services $82 P.O. Box 50831 Sparks, NV 89435-0831 Crane Pest Control Goods/Services $70 2700 Geary Blvd. San Francsico, CA 94118 Home Depot Goods/Services $66 P.O. Box 6031 The Lakes, NV 88901 C. Magnolia South Meadows III's 11 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Mark R. Combs Money Loaned $22,000 4790 Caughlin Parkway Box 519 Reno, NV 89509 Colliers Nevada Mgmt. LLC Goods/Services $2,500 5345 Kietzke Lane Reno, NV 89511 Executive Building Maint. Goods/Services $1,576 P.O. Box 783 Sparks, NV 89432 CFO Group Goods/Services $1,467 4745 Caughlin Parkway #200 Reno, NV 89509 CFO Group Goods/Services $1,125 4745 Caughlin Parkway #200 Reno, NV 89509 Reno Green Landscape Goods/Services $542 P.O. Box 34433 Reno, NV 89533 South Meadows Association Goods/Services $419 Waste Management Goods/Services $322 P.O. Box 78251 Phoenix, AZ 85062 Washoe County Utility Goods/Services $254 P.O. Box 30085 Reno, NV 89520 Crane Pest Control Goods/Services $71 2700 Geary Blvd. San Francisco, CA 94118 Home Depot Goods/Services $64 P.O. Box 6031 The Lakes, NV 88901 D. Magnolia South Meadows IV's 15 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Sun West Building Service Goods/Services $1,998 960 Matley Lane #7 Reno, NV 89502 Colliers Nevada Management Goods/Services $1,800 5345 Kietzke Lane Reno, NV 89511 Executive Building Maint. Goods/Services $1,566 P.O. Box 783 Reno, NV CFO Group Goods/Services $1,200 4745 Caughlin Parkway #200 Reno, NV 89509 CFO Group Goods/Services $990 4745 Caughlin Parkway #200 Reno, NV 89509 Otis Elevator Goods/Services $607 725 Trademark #102 Reno, NV 89521 Reno Green Landscape Goods/Services $492 P.O. Box 34433 Reno, NV 89533 South Meadows Association Goods/Services $416 P.O. Box 70278 Reno, NV 89570 Waste Management Goods/Services $322 P.O. Box 78251 Phoenix, AZ 85062 Advanced Locksmith Goods/Services $314 P.O. Box 4707 Sparks, NV 89432 Jet Plumbing Goods/Services $188 1553 Hymer Sparks, NV 89431 Washoe County Utility Goods/Services $126 P.O. Box 30085 Reno, Nv 89520-3085 Washoe County Utility Goods/Services $83 P.O. Box 30085 Reno, NV 89520-3085 Crane Pest Control Goods/Services $71 2700 Geary Blvd. San Francisco, Ca 94118 Home Depot Goods/Services $6 P.O. Box 6031 The Lakes, NV 88901-6031 MERIDIAN AUTOMOTIVE: Amended Plan Revises Treatment on Two Classes ------------------------------------------------------------------ On Sept. 8, 2006, Meridian Automotive Systems, Inc., and its eight debtor-affiliates delivered to the U.S. Bankruptcy Court for the District of Delaware their Fourth Amended Joint Plan of Reorganization and Disclosure Statement. The Fourth Amended Plan revises the treatment of Classes 3 and 4 Claims and DIP Claims. The Plan also contemplates the issuance of New Common Stock and New Warrants on the Effective Date. The Disclosure Statement provides updates on the Debtors' exit facility. Meridian president and chief executive officer Richard E. Newsted discloses that during discussions with potential lenders regarding the financing commitments necessary to fund the projected distributions to creditors under the Third Amended Joint Plan of Reorganization, the company realized that, given the uncertainty concerning the automotive industry outlook and the resulting deterioration of the automotive sector financing market, the commitments would be available only on non-underwritten and economically unfeasible terms. "After careful consideration of both the amount and terms of available exit financing and the impact of continuing uncertainty concerning the automotive industry outlook, [we] decided to abandon the Third Amended Plan and to instead focus on implementing a plan that provides for a substantially de-leveraged capital structure after [our] emergence from bankruptcy," Mr. Newsted relates. Subsequently, on Aug. 18, 2006, Ford reported a 21% reduction in its North American production for the last four months of 2006. Because Ford remains one of the Debtors' largest customers, its recent announcement combined with the Debtors' strategic decision to keep their interiors and lighting businesses and to transition out of their GM-related interiors business, caused the Debtors to revise their long-range business plan and to seek for a revision of the enterprise valuation that formed the basis for the Third Amended Plan and the projected distributions, Mr. Newsted relates. Consequently, the Debtors initiated discussions with their principal creditor constituencies and formulated the Fourth Amended Plan, Mr. Newsted says, which complies with the requirements of Section 1129 of the Bankruptcy Code and is in the best interests of the company's estates. Treatment of Class 3 Prepetition First Lien Claims The Prepetition First Lien Claims will be deemed Allowed in the aggregate amount of $294,612,241, of which an estimated $58,800,000 will constitute Prepetition First Lien Deficiency Claims. Each Holder of an Allowed Prepetition First Lien Claim will receive, on the Effective Date and in full and complete settlement, release and discharge of the Claim: (i) on account of its Prepetition First Lien Secured Claim, its Pro Rata share of $98,000,000 in cash and: (a) 95.5% of the total shares of New Common Stock to be issued on the Effective Date if Class 4 accepts the Plan; or (b) 100% of the New Common Stock if Class 4 rejects the Plan; and (ii) on account of its Prepetition First Lien Deficiency Claim and any Administrative Expense Claim, its Pro Rata share of the Prepetition First Lien Claim Trust Interests. Each Prepetition Letter of Credit will be returned to the issuer undrawn and marked cancelled. Treatment of Class 4 Prepetition Second Lien Secured Claims Prepetition Second Lien Claims will be deemed Allowed in the aggregate amount of $179,808,222, provided that all Prepetition Second Lien Claims will be deemed to be Unsecured Claims. The treatment to be provided to Holders of Allowed Prepetition Second Lien Claims will depend on whether Class 4 accepts or rejects the Plan. If Class 4 accepts the Plan, each Holder of an Allowed Prepetition Second Lien Claim will receive, on the Effective Date and in full and complete settlement, release and discharge of the Claim: (i) its Pro Rata share of 4.5% of the total shares of New Common Stock; (ii) its Pro Rata share of the New Warrants; and (iii) its Pro Rata share of the Prepetition Second Lien Claim Trust Interests. On the other hand, if Class 4 rejects the Plan, each Holder of an Allowed Prepetition Second Lien Claims will receive, on the Effective Date and in full and complete satisfaction, settlement and discharge of the Claim, its Pro Rata share of the Prepetition Second Lien Claim Trust Interests. Treatment of DIP Claims DIP Claims consist of all Claims against the Debtors in favor of the DIP Agent and the DIP Lenders pursuant to the terms of the DIP Credit Agreement. The Allowed DIP Claims will total approximately $56,600,000, plus approximately $3,000,000 of reimbursement obligations for undrawn DIP Letters of Credit. Issuance of New Common Stock & New Warrants On the Effective Date, Reorganized Meridian will issue 2,000,000 shares of the New Common Stock. Reorganized Meridian will reserve shares of the New Common Stock for issuance pursuant to any Management Incentive Plan that it may implemented after the Effective Date. Furthermore, on the Effective Date, Reorganized Meridian will issue the New Warrants for distribution to Holders of Prepetition Second Lien Claims if Class 4 accepts the Plan. If Class 4 rejects the Plan, the New Warrants will not be issued. Exit Facility The Reorganized Debtors expect the Exit Facility, aggregating $255,000,000, to consist of: (i) a senior secured revolving line of credit totaling approximately $75,000,000; and (ii) a senior secured term loan in the principal amount of approximately $150,000,000, plus an approximately $30,000,000 synthetic letter of credit facility. Mr. Newsted reports that Meridian is currently in discussions with several lenders to arrange the Exit Facility. The company is confident that it will obtain one or more formal commitments to provide the Exit Facility prior to the Confirmation Date. The closing of the Exit Facility is a condition to the effectiveness of the Plan. The Debtors will present commitment letters with respect to the Exit Facility to the Court at or prior to the Confirmation Hearing. A full-text copy of the Fourth Amended Plan of Reorganization is available for free at http://ResearchArchives.com/t/s?1154 A full-text copy of the Fourth Amended Disclosure Statement is available for free at http://ResearchArchives.com/t/s?1155 Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. Eric E. Sagerman, Esq., at Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. The Committee also hired Ian Connor Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A., to prosecute an adversary proceeding against Meridian's First Lien Lenders and Second Lien Lenders to invalidate their liens. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). MERIDIAN AUTOMOTIVE: Wants Until January 25 to Decide on Leases --------------------------------------------------------------- Meridian Automotive Systems, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to further extend their time to assume, assume and assign, or reject unexpired non-residential real property leases through and including Jan. 25, 2007. Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, relates that the Debtors are party to 12 major facility lease agreements: Lessor Location ------ -------- Etkin Equities 2001 Centerpointe Parkway Pontiac, Michigan DEMBS/Roth Group 4280 Haggerty Road Canton, Michigan Ford Motor Land Development Corp. 999 Republic Drive Allen Park, Michigan Growth Properties, LLC 300 Growth Parkway Angola, Indiana Communite Improvement Corp. 1020 E. Main Street Jackson, Ohio L.E. Tassell, Inc. 3075 Brenton Road, S.E. Grand Rapids, Michigan Meri (NC) LLC 6701 Stateville Blvd. Salisbury, North Carolina North-South Properties LLC 747 Southport Drive Shreveport, Louisiana P&E Realty Inc. 13811 Roth Road Grabill, Indiana Rushville Manufacturing Mall 1350 Commerce Street Land Trust # 101 Rushville, Indiana Westfield Industrial Center 13881 West Chicago Street Detroit, Michigan Brent Trade & Industrial Park Inc. 225 Henry Street Brantford, Ontario The Leases include several of the Debtors' primary production facilities and warehousing centers, which are at the core of the Debtors' operations, Mr. Brady notes. Many of the locations subject to the Leases will play a significant role in the Debtors' reorganization process. Due to the complexity of the Debtors' business operations, evaluation of the Leases requires the Debtors to devote considerable time and effort to carefully review each Lease, Mr. Brady asserts. Mr. Brady argues that if the Debtors are forced to prematurely assume the Leases the Debtors may be required to pay cure obligations, and lessor claims may be elevated to administrative expense status prior to confirmation of a plan of reorganization. Conversely, if the Debtors precipitously reject the Leases, the Debtors may lose valuable property interests that are essential to their reorganization, Mr. Brady points out. The Debtors are in the process of evaluating the economics of the Leases to determine whether the assumption or rejection of each would benefit their estates and creditors. However, the Debtors' ultimate decision to assume or reject the Leases will also depend on their review of their overall businesses and an analysis of each location and purpose in connection with the ongoing restructuring efforts, Mr. Brady emphasizes. Pending their election to assume or reject the Leases, the Debtors will perform all their undisputed obligations in a timely fashion, including the payment of postpetition rent due, as required by Section 365(d)(3) of the Bankruptcy Code, Mr. Brady assures the Court. The Debtors are current on all postpetition obligations under the Real Property Leases, according to Mr. Brady. Thus, there should be little or no prejudice to the lessors if the Lease Decision Period will be further extended. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. Eric E. Sagerman, Esq., at Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. The Committee also hired Ian Connor Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A., to prosecute an adversary proceeding against Meridian's First Lien Lenders and Second Lien Lenders to invalidate their liens. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). NAPIER ENVIRONMENTAL: Lenders Waive August Interest Payments ------------------------------------------------------------ Napier Environmental Technologies Inc.'s lenders have agreed to waive their rights to interest for the month of August 2006 in an effort to help Napier during this time of re-building their customer base. These interest payments have been waived and the interest otherwise payable shall not be paid or payable currently or in the future. Headquartered in Delta, British Columbia, Napier Environmental Technologies, Inc. (TSX:NIR) -- http://wwwbiowash.com/-- is a Canadian company primarily engaged in the development, manufacture and distribution of a wide range of products utilizing environmentally advanced technology. The product lines include coating removal and wood restoration products for both the industrial/commercial market and the consumer/retail market. Napier is currently operating under the protection of the Canadian Bankruptcy and Insolvency Act. NEXTEL PARTNERS: Moody's Says Outlook is Developing --------------------------------------------------- Moody's Investors Service changed the rating outlooks of Nextel Partners, Inc., its subsidiary Nextel Partners Operating Corp. and Ubiquitel Operating Company to developing pending a decision by Sprint Nextel Corporation as to its plans for the debt of these two companies. Sprint Nextel acquired both these companies recently as Sprint Nextel continues the process of acquiring its former affiliates. Sprint Nextel recently indicated in a filing with the U.S. Securities and Exchange Commission that it will no longer be filing public financial reports for these companies and has not yet stated whether it will guarantee their debt. Should Sprint Nextel choose to unconditionally and irrevocably guarantee Nextel Partners and Ubiquitel's debt, there will be full credit substitution and Nextel Partner's and Ubiquitel's rating will be upgraded to that of Sprint Nextel. Should the guarantee process not begin by October 31, 2006, and the companies no longer provide financial statements, their debt ratings will be withdrawn. Debt securities affected by this outlook change: Ubiquitel Operating Company; outlook changed to developing from stable * Corporate Family Rating, B3 * $420 Million 9.875% Senior Unsecured Notes due 2011, Caa1 Nextel Partners, Inc.; outlook changed to developing from positive * Corporate Family Rating, Ba2 * $475 million 8.125% Senior Notes due 2011, Ba3 Nextel Partners Operating Corp.; outlook changed to developing from positive * $100 million senior secured revolving credit facility expiring 2009, Ba1 * $550 million senior secured term loan D maturing May 2012, Ba1 Ubiquitel was acquired by Sprint Nextel in July 2006. Nextel Partners was acquired by Sprint Nextel Corporation in June 2006. OPEN TEXT: S&P Rates Proposed $490 Million Senior Facility at BB- ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' long-term corporate credit rating to Waterloo, Ontario-based enterprise software provider, Open Text Corp. At the same time, Standard & Poor's assigned its 'BB-' bank loan rating, with a recovery rating of '2', to the company's proposed $490 million senior secured bank facility, which consists of a $75 million five-year revolving credit facility and a $415 million seven-year term loan B. The '2' recovery rating reflects expectations for a substantial (80%-100%) recovery of principal in the event of default. The outlook is negative. Concurrently with the closing of the bank facility, Open Text plans to complete the 100% acquisition of Toronto-based enterprise software provider, Hummingbird Ltd. The $500 million acquisition will be financed by the $415 million term loan B and pro forma cash balances. Pro forma for the Hummingbird acquisition, Open Text has fiscal 2006 revenues of $668 million and balance-sheet debt of $428 million. Open Text is a leading provider of Enterprise Content Management software targeting large Global 2000 enterprise customers. ECM software and support services -- an estimated $2.25 billion addressable market -- help businesses capture, store, and manage unstructured corporate data. The company's flagship product, Livelink ECM, has an installed base in excess of 20 million seats in more than 114 countries. "The ratings on Open Text reflect its stable market position within a niche segment of the software industry, its solid scale given a large installed base of customers, good customer and geographic diversity, a large base of recurring revenues, and a history of generating good free operating cash flow," said Standard & Poor's credit analyst Madhav Hari. These factors are partially offset by a highly competitive and consolidating technology marketplace characterized by: * the presence of bigger and better-integrated vendors; * an aggressive financial policy; * declining organic software license revenue growth; * weaker execution; and * significant integration risk from the Hummingbird acquisition. The company will have aggressive leverage on completion of the Hummingbird acquisition and will likely remain acquisitive, albeit on a smaller scale. The negative outlook reflects concerns over weak operating performance in the past several quarters, specifically with regard to the negative organic license revenue growth. The potential execution risk associated with the Hummingbird acquisition and associated ability to bring key credit measures in line with the ratings are other factors governing the negative outlook. The outlook could be revised to stable if the company meets expectations and reverses the trend of declining organic license revenue growth. Should the company fail to integrate Hummingbird as planned, or lose significant market share, resulting in a deterioration of credit metrics, the ratings could be lowered. PLAY OF THE DAY: Case Summary & Largest Unsecured Creditor ---------------------------------------------------------- Debtor: Play Of The Day, Inc. 1590 East Flamingo Road Las Vegas, NV 89119-5200 Bankruptcy Case No.: 06-12440 Type of Business: The Debtor operates a restaurant. Chapter 11 Petition Date: September 11, 2006 Court: District of Nevada (Las Vegas) Judge: Mike K. Nakagawa Debtor's Counsel: Stephanie L. Cooper, Esq. 820 S. Valley View Boulevard Las Vegas, NV 89107 Tel: (702) 435-4175 Total Assets: $2,400,000 Total Debts: $1,600,000 Debtor's Largest Unsecured Creditor: Entity Claim Amount ------ ------------ Nevada State Bank $68,000 4170 South Maryland Parkway Las Vegas, NV 89119 POWERLINX INC: June 30 Stockholders' Deficit Tops $1.9 Million -------------------------------------------------------------- PowerLinx, Inc., filed its financial statements for the second quarter ended June 30, 2006, with the Securities and Exchange Commission on Aug. 21, 2006. The Company reported net income of $566,718 on $287,832 of net revenues for the second quarter of 2006 as compared with net loss of $1,175,603 on $504,194 of net revenues for the same period in 2005. At June 30, 2006, the Company's balance sheet showed $2,743,244 in total assets and $4,680,117 in total liabilities, resulting in a $1,936,873 stockholders' deficit. At Dec. 31, 2005, the Company had a $925,386 stockholders' deficit. The Company's June 30 balance sheet also showed strained liquidity with $2,108,499 in total current assets available to pay $4,590,744 in total current liabilities coming due within the next 12 months. Full-text copies of the Company's second quarter financials are available for free at http://ResearchArchives.com/t/s?115a Going Concern Doubt Aidman, Piser & Company, PA, expressed substantial doubt about PowerLinx, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005, and 2004. The auditing firm pointed to the Company's recurring losses, use of significant cash in its operating activities, negative working capital, and stockholders' deficiencies. PowerLinx, Inc. (OTCBB:PWLX) -- http://www.power-linx.com/-- develops, manufactures, and markets, among other devices, products and applications developed to transmit voice, video, audio and data either individually or any and all combinations over power lines, twisted pair wires and coax in AC and DC power environments, on any and all power grids. The Company also develops, manufactures and markets underwater video cameras, lights and accessories for the marine, commercial and consumer retail markets. RUSSELL CORP: Bershire Merger Deal Cues Moody's to Review Ratings ----------------------------------------------------------------- Moody's Investor Service placed the ratings of Russell Corporation on review for a possible upgrade following its announcement that it had entered into a merger agreement with a wholly owned subsidiary of Berkshire Hathaway Corporation. On August 2, 2006, the shareholders of Russell Corporation approved the merger and on that date the merger of Russell Corporation with a wholly owned subsidiary of Berkshire Hathaway was concluded. On August 8, 2006, Moody's withdrew its rating on the $375 million revolving credit facility in anticipation of its termination, which took place effective August 22, 2006. On September 1, 2006 the company redeemed all outstanding 9.25% senior unsecured notes due 2010. As a result of the redemption of all remaining rated debt Moody's has withdrawn the B2 rating on the company's unsecured debt obligations. The company's B1 corporate family rating has been withdrawn for business reasons. This withdrawal concludes the rating review commenced in April, 2006. SCOTTISH RE: Gives Former Employees 60 Days to Exercise Options --------------------------------------------------------------- Scottish Re Group Limited revealed, by way of explanation in response to a number of investor inquiries, that under existing employment contracts and executive compensation plans, former employees have 60 days from the date of their separation from Scottish Re to exercise their stock options. As a result, the Company expects that former Scottish Re executives Scott Willkomm and Seth Vance will likely sell Scottish Re stock in the coming weeks at prevailing market prices as a result of their accumulation of shares and options under the Company's 401K, Deferred Compensation and stock option plans. About Scottish Re Scottish Re Group Limited -- http://www.scottishre.com/-- offers reinsurance of life insurance, annuities and annuity-type products through its operating companies in Bermuda, Charlotte, North Carolina, Grand Cayman Dublin, Ireland, and Windsor, United Kingdom. At March 31, 2006, the reinsurer's balance sheet showed $12.2 billion assets and $10.8 billion in liabilities. * * * Moody's Investors Service changed the direction of review for Scottish Re Group Limited's ratings to uncertain from possible downgrade. The change in the direction of the ratings review impacts the company's Ba3 senior unsecured debt rating and the Baa3 insurance financial strength ratings of the company's core insurance subsidiaries, Scottish Annuity & Life Insurance Company (Cayman) Ltd. (SALIC) and Scottish Re (U.S.), Inc. Moody's Rates Scottish Re Group Limited as: -- Senior Unsecured, to Ba2 from Baa2; -- Senior Unsecured Shelf, to (P)Ba2 from (P)Baa2; -- Subordinate Shelf, to (P)Ba3 from (P)Baa3; -- Junior subordinate Shelf, to (P)B1 from (P)Ba1; -- Preferred Stock, to B1 from Ba1; -- Preferred Shelf, to (P)B1 from (P)Ba1 Fitch Ratings also initiated these rating actions: -- IDR downgraded to 'BBB-' from 'BBB'; -- 4.5% $115 million senior convertible notes downgraded to 'BB+' from 'BBB-'; -- 5.875% $142 million hybrid capital units downgraded to 'BB' from 'BB+'; -- 7.25% $125 million non-cumulative perpetual preferred stock downgraded to 'BB' from 'BB+'. A.M. Best likewise downgraded the ICR of Scottish Re to "bb+" from "bbb-". A.M. Best Co. also downgraded the financial strength rating to B++ from A- and the issuer credit ratings to "bbb+" from "a-" of the primary operating insurance subsidiaries of Scottish Re Group Limited (Scottish Re) (Cayman Islands). All FSR and debt ratings have been placed under review with negative implications. The FSR has been downgraded to B++ from A- and the ICRs have been downgraded to "bbb+" from "a-" and placed under review with negative implications for these subsidiaries of Scottish Re Group Limited: -- Scottish Annuity & Life Insurance Company (Cayman) Ltd; -- Scottish Re (U.S.), Inc.; -- Scottish Re Life Corporation; -- Scottish Re Limited; and -- Orkney Re, Inc. The ICR has been downgraded to "bb+" from "bbb-" and placed under review with negative implications for Scottish Re Group Limited. These debt ratings have been downgraded and placed under review with negative implications: Scottish Re Group Limited -- "bb+" from "bbb-" on $115 million 4.5% senior unsecured convertible notes, due 2022; -- "bb-" from "bb" on $143 million 5.875% of hybrid capital units, due 2007; and -- "bb-" from "bb" on $125 million non-cumulative preferred shares; Stingray Pass-thru Trust -- "bbb+" from "a-" on $325 million senior unsecured pass-thru certificates, due 2012 These indicative ratings for debt securities under the shelf registration have been downgraded and placed under review with negative implications: Scottish Re Group Limited -- "bb-" from "bb" on preferred stock; -- "bb" from "bb+" on subordinated debt; and -- "bb+" from "bbb-" on senior unsecured debt. Scottish Holdings Statutory Trust II and III -- "bb" from "bb+" on preferred securities. Standard & Poor's Ratings Services placed its 'BBB- counterparty credit rating on Scottish Re Group Ltd. on CreditWatch with negative implications. Standard & Poor's also said that it placed its various ratings on Scottish Re's operating subsidiaries and other related entities on CreditWatch negative. The ratings will remain on CreditWatch until the capital has been raised and the company's strategic alternatives have been clarified. As a result, the ultimate ratings will depend on the resulting capital, liquidity, and business position of the company. SILICON GRAPHICS: Gets Court Nod to Enter Into Backstop Agreements ------------------------------------------------------------------ Silicon Graphics, Inc., and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the Southern District of New York to enter into Backstop Commitment Agreements in connection with rights offering under their Plan of Reorganization. As reported in the Troubled Company Reporter on Aug. 10, 2006, the Debtors' Plan of Reorganization contemplates that some of the New Common Stock to be issued by Reorganized Silicon Graphics will be issued pursuant to a rights offering. Under the Rights Offering, each holder of an Allowed Secured Note Claim will receive subscription rights entitling the holder to purchase its Ratable Proportion of 6,800,000 shares of the New Common Stock, while each holder of an Allowed Cray Unsecured Debenture Claim will receive subscription rights entitling the holder to purchase its Ratable Proportion of 700,000 shares of the New Common Stock, each at $6.67 per share. Backstop Agreements are Necessary Stephen A. Youngman, Esq., at Weil, Gotshal & Manges LLP, in New York, explained that by entering into the Backstop Commitment Agreements, the Debtors can be sure that all of the Rights and the Cray Rights offered pursuant to the Rights Offering are subscribed and exercised, thus ensuring an infusion of funds of approximately $50,000,000. Moreover, Mr. Youngman informed the Court that the Backstop Commitment Agreements enable the Backstop Purchasers to purchase the Overallotment Shares, potentially netting the Debtors an additional $7,503,750. A full-text copy of the master form for the Backstop Commitment Agreements is available for free at: http://researcharchives.com/t/s?f32 About Silicon Graphics Headquartered in Mountain View, California, Silicon Graphics, Inc. (OTC: SGID) -- http://www.sgi.com/-- offers high-performance computing. SGI helps customers solve their computing challenges, whether it's sharing images to aid in brain surgery, finding oil more efficiently, studying global climate, providing technologies for homeland security and defense, enabling the transition from analog to digital broadcasting, or helping enterprises manage large data. The Debtor and 13 of its affiliates filed for chapter 11 protection on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977 through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $369,416,815 and total debts of $664,268,602. The Debtors' exclusive plan-filing period will expire on Dec. 29, 2006, and its exclusive solicitation period will expire on Feb. 28, 2007. (Silicon Graphics Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SILICON GRAPHICS: LG Electronics Withdraws Lift Stay Motion ----------------------------------------------------------- LG Electronics asked the U.S. Bankruptcy Court for the Southern District of New York to lift the automatic stay to allow it to proceed against Silicon Graphics, Inc., in the appropriate district court for damages and injunctive relief related to historic, prepetition infringements of its patents, as reported in the Troubled Company Reporter on Aug. 10, 2006. To resolve the dispute, the Debtors and LGE agree that: * LGE withdraws the lift stay request, without prejudice, provided that it will not seek again for relief from the automatic stay prior to the confirmation of the Plan; * Upon Court approval of the stipulation, LGE agrees that it will not file any objection on any ground and will not oppose the confirmation of the Plan; * LGE withdraws with prejudice its protective claims, which are deemed expunged and will not be entitled to payment. LGE's Claim No. 623 against Silicon Graphics, Inc., the Debtors' objection to the Claim, and the Ad Hoc Committee's joinder to the objection, will not be impaired provided that: -- Claim No. 623 will be treated as a General Unsecured Silicon Graphics Claim in Class 6 and discharged under the Plan; -- the validity of the Claim will be adjudicated and determined in the Court unless the Parties agree or the Court orders otherwise. The Plan and any order confirming the Plan will enjoin LGE from taking any action against the Debtors or Reorganized Debtors outside of the Court to assert patent infringement claims to the extent the claims first arise before the Petition Date. The Reorganized Debtors will not be liable to LGE or its subsidiaries for any claims of infringement of the LGE Patents which first arise prior to the Petition Date; * any valid administrative expense claim asserted by LGE will be paid as provided by the Plan, or as provided in a Court order or by agreement of the parties. However, the Debtors will not be required to pay LGE on account of any Administrative Expense Claim in excess of $1,500,000. Any Administrative Expense Claim asserted by LGE against Silicon Graphics may be asserted outside of the Court in the same action in which LGE may assert any post-effective date claims alleging infringement of the LGE Patents. LGE waives any Administrative Expense Claims alleging infringement of the LGE Patents against any of the Debtors except Silicon Graphics. The Plan and Confirmation Order will not enjoin LGE from commencing litigation against Silicon Graphics asserting patent infringement claims relating to the LGE Patents, to the extent the claims first arise between May 8, 2006, and the Plan Effective Date; and * the Plan and Confirmation Order will not enjoin LGE from commencing litigation against the Reorganized Debtors asserting patent infringement claims relating to the LGE Patents, but only insofar as the claims first arise after the Plan's Effective Date. Headquartered in Mountain View, California, Silicon Graphics, Inc. (OTC: SGID) -- http://www.sgi.com/-- offers high-performance computing. SGI helps customers solve their computing challenges, whether it's sharing images to aid in brain surgery, finding oil more efficiently, studying global climate, providing technologies for homeland security and defense, enabling the transition from analog to digital broadcasting, or helping enterprises manage large data. The Debtor and 13 of its affiliates filed for chapter 11 protection on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977 through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $369,416,815 and total debts of $664,268,602. The Debtors' exclusive plan-filing period will expire on Dec. 29, 2006, and its exclusive solicitation period will expire on Feb. 28, 2007. (Silicon Graphics Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) TELEX COMMS: Robert Bosch Merger Cues Moody's to Withdraw Ratings ----------------------------------------------------------------- Moody's Investors Service withdrew all ratings of Telex Communications, Inc. The action follows the merger of Telex and a wholly owned subsidiary of Robert Bosch Corporation, which was completed on August 31, 2006, at which time Telex's rated debt was satisfied and discharged. Outlook Actions: Issuer: Telex Communications, Inc. * Outlook, Changed To Rating Withdrawn From Rating Under Review Withdrawals: Issuer: Telex Communications, Inc. * Corporate Family Rating, Withdrawn, previously rated B3 * Senior Secured Regular Bond/Debenture, Withdrawn, previously rated B3 Based in Burnsville, Minnesota, Telex Communications designs and manufactures audio and communications products to commercial, professional and industrial customers. TCM MEDIA: Constrained Liquidity Prompts Moody's to Hold Ratings ---------------------------------------------------------------- Moody's Investors Service changed the rating outlook of TCM Media, Inc. to negative from stable, while affirming all current ratings. Details of the rating action: Ratings affirmed: * $20 million first lien senior secured revolving credit facility, due 2009 -- B2 * $89 million first lien senior secured term loan B, due 2010 -- B2 * $30 million second lien senior secured term loan, due 2010 -- B3 * Corporate Family rating -- B2 The rating outlook is changed to negative from stable. The change in rating outlook to negative reflects relatively weak operating performance year-to-date and a constrained liquidity which have contributed to the company's request for covenant relief under its senior secured loan agreements. On August 31, 2006, TCM requested its lenders to approve an amendment to its senior secured credit facilities, including a waiver of its financial covenants and permission to conclude a proposed acquisition. The change in outlook is underscored by performance to date which has failed to meet Moody's expectations and the company's need to seek a modification of its financial covenants less than one year after closing its senior secured credit facilities. Moody's considers that cash funding for the proposed acquisition would not be available to the company, absent covenant relief. In addition, Moody's is concerned with management's decision to use cash on its balance sheet coupled with a drawing under its revolving credit for acquisition purposes, rather than to maintain or bolster liquidity and preserve financial flexibility, assuming that the existing lenders agree to the proposed amendment. Nevertheless, the ratings affirmation reflects the customer diversification and relative stability of TCM's newspaper publishing business model, and to a lesser degree, its sports marketing and production businesses. Because the company recently changed its financial reporting to a June fiscal year-end, TCM has yet to provide current audited financial statements which reflect the combined operations of the merged entity since its establishment in December 2005. Meaningful comparative financial analysis is further complicated by an asset swap concluded in April 2006 and the currently proposed acquisition. TCM Media is headquartered in Lexington, Kentucky. TITAN FINANCIAL: Hires Kings & Spalding as Bankruptcy Counsel ------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Georgia gave Titan Financial Group II, L.L.C., and its debtor-affiliates permission to employ King & Spalding, L.L.P., as their bankruptcy counsel, nunc pro tunc to Sept. 3, 2006. King & Spalding is expected to: a) advise the Debtors with respect to their powers and duties as debtor-in-possession in the continued management and operation of their business; b) take all necessary action to protect and preserve the estates of the Debtors, including the prosecution of actions on the Debtors' behalf, the defense of any actions commenced against the Debtors, the negotiation of disputes in which the Debtors are involved, and the preparation of objections to claims filed against the Debtors' estates; c) prepare on behalf of the Debtors all necessary motions, applications, answers, orders, reports, and other papers in connection with the administration of the Debtors' estates; d) negotiate and prepare on behalf of the Debtors a plan of reorganization, a disclosure statement, and all related documents; e) negotiate and prepare documents relating to the disposition of assets, as requested by the Debtors; f) advise the Debtors, where appropriate, with respect to federal and state regulatory matters; g) advise the Debtors on finance, and finance-related matters and transactions, and matters relating to the sale of the Debtor's assets; and h) perform legal services for the Debtors as may be necessary and appropriate. The Debtors tells the Court that it paid the Firm $158,043.39. Sarah R. Borders, Esq., a partner of the King & Spalding, discloses that the firm's standard hourly rates are: Designation Hourly Rate ----------- ----------- Senior Partners $215 - $750 Paralegals $90 - $250 Legal Assistants $90 - $250 Clerks $90 - $250 Ms. Borders assures the Court that her Firm does not hold any interest adverse to the Debtors' estates and is a "disinterest person" as the term defined in Section 101(14) of the Bankruptcy Code. Ms. Borders can be reached at: Sarah R. Borders, Esq. King & Spalding, L.L.P. 1180 Peachtree Street Atlanta, Georgia 30309 Tel: (404) 572-4600 Fax: (404) 572-5129 http://www.kslaw.com/ Headquartered in Atlanta, Georgia, Titan Financial Group II, LLC, provides standard installment loans and serves approximately 80,000 customers through its 125 retail branches across Georgia, South Carolina and Texas. The Company and 11 of its affiliates filed for chapter 11 protection on Sept. 3, 2006 (Bankr. N.D. Ga. Case No. 06-70852). When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million to $50 million. TOWER RECORDS: Selling All Assets on October 5 in Delaware ---------------------------------------------------------- MTS Inc., dba Tower Records, and its debtor-affiliates will be selling substantially all of their assets through an auction on Oct. 5, 2006, 10:00 a.m., at the offices of Richards, Layton & Finger P.A., One Rodney Square, 920 North King Street in Wilmington, Delaware. Submission of bids is until noon (Eastern Time) of Sept. 26, 2006. To qualify as lead bidder, interested parties must submit bids no later than 10:00 a.m., today. A hearing to consider approval of proposed bid protections is scheduled on Sept. 15, 2006, at 10:00 a.m. A hearing to consider the sale of assets to the successful bidder will be on Oct. 6, 2006 at 10:00 a.m. Objections to the sale motion are due Sept. 29, 2006 at 4:00 p.m. For more information and for copies of documents with regards to the sale motion, contact the proposed special counsel to the Debtors: Akin, Gump, Strauss, Hauer & Feld LLP Attn: Patrick J. Ivie, Esq., Suite 2400 2029 Century Park East Los Angeles, California 90067 Tel: (310) 229-1000 Fax: (310) 229-1001 http://www.akingump.com/ Headquartered in West Sacramento, California, MTS, Inc., dba Tower Records -- http://www.towerrecords.com/-- is a retailer of music in the U.S., with nearly 100 company-owned music, book, and video stores. The Company and seven of its affiliates filed for chapter 11 protection on Aug. 20, 2006 (Bankr. D. Del. Case Nos. 06-10886 through 06-10893). Richards, Layton & Finger, P.A. and O'Melveny & Myers LLP represent the Debtors. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. The Debtors' exclusive period to file a chapter 11 plan expires on Dec. 18, 2006. The Company and its affiliates previously filed for chapter 11 protection on Feb. 9, 2004 (Bankr. D. Del. Lead Case No. 04-10394). The Court confirmed the plan on March 15, 2004. TYRINGHAM HOLDINGS: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Tyringham Holdings, Inc. dba Shreve Crump & Low dba Schwarzschild Jewelers fdba Schwarzschild Jewelers, Inc. fdba Shreve Crump & Low Co., Ltd. P.O. Box 73628 Richmond, Virginia Bankruptcy Case No.: 06-32385 Type of Business: The Debtor sells premium brand name jewelry to a broad base of middle and upper income customers. Chapter 11 Petition Date: September 6, 2006 Court: Eastern District of Virginia (Richmond) Judge: Douglas O. Tice Jr. Debtor's Counsel: Lynn L. Tavenner, Esq. Paula S. Beran, Esq. Tavenner & Beran, PLC 20 North Eighth Street, Second Floor Richmond, Virginia 23219 Tel: (804) 783-8300 Fax: (804) 783-0178 Financial Condition as of August 30, 2006: Total Assets: $25 Million Total Debts: $23.7 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Mikimoto (America) Co. Ltd. Trade debt $218,642 680 Fifth Avenue, 8th Floor New York, NY 10019 Hermes of Paris Inc. Trade debt $204,060 55 East 59th Street 3rd Floor Attn: Accounts Receivable New York, NY 10022 Yurman Design Inc. Trade debt $195,381 P.O. Box 200606 Pittsburgh, PA 15251-0606 ISM Travel & Leisure Trade debt $178,140 Marketing Seaman Scheppes Co, Inc. Trade debt $121,067 Rosy Blue Fine Trade debt $110,048 Marco Bicego SRL Trade debt $100,160 Oscar Heyman & Brothers Trade debt $99,347 LVMH Watch & Jewelry USA Trade debt $95,143 Jaeger-Le Coultre Trade debt $85,843 Boston Red Sox Trade debt $70,000 Nstar Electric Utility $61,811 John Hardy Collection Trade debt $58,158 Roberto Coin Inc. Trade debt $56,421 Breitling USA Inc. Trade debt $51,340 Baume & Mercier Trade debt $43,824 J Mavec Company Ltd. Trade debt $41,778 Keiter Ste Hurst Gary & Trade debt $41,728 Shrev Temple St. Clair Trade debt $40,615 LG Enterprises Trade debt $38,611 UBIQUITEL OPERATING: Moody's Says Outlook is Developing ------------------------------------------------------- Moody's Investors Service changed the rating outlooks of Nextel Partners, Inc., its subsidiary Nextel Partners Operating Corp. and Ubiquitel Operating Company to developing pending a decision by Sprint Nextel Corporation as to its plans for the debt of these two companies. Sprint Nextel acquired both these companies recently as Sprint Nextel continues the process of acquiring its former affiliates. Sprint Nextel recently indicated in a filing with the U.S. Securities and Exchange Commission that it will no longer be filing public financial reports for these companies and has not yet stated whether it will guarantee their debt. Should Sprint Nextel choose to unconditionally and irrevocably guarantee Nextel Partners and Ubiquitel's debt, there will be full credit substitution and Nextel Partner's and Ubiquitel's rating will be upgraded to that of Sprint Nextel. Should the guarantee process not begin by October 31, 2006, and the companies no longer provide financial statements, their debt ratings will be withdrawn. Debt securities affected by this outlook change: Ubiquitel Operating Company; outlook changed to developing from stable * Corporate Family Rating, B3 * $420 Million 9.875% Senior Unsecured Notes due 2011, Caa1 Nextel Partners, Inc.; outlook changed to developing from positive * Corporate Family Rating, Ba2 * $475 million 8.125% Senior Notes due 2011, Ba3 Nextel Partners Operating Corp.; outlook changed to developing from positive * $100 million senior secured revolving credit facility expiring 2009, Ba1 * $550 million senior secured term loan D maturing May 2012, Ba1 Ubiquitel was acquired by Sprint Nextel in July 2006. Nextel Partners was acquired by Sprint Nextel Corporation in June 2006. UNITY WIRELESS: Joins Three Acquired Companies Into One Facility ---------------------------------------------------------------- Unity Wireless Corporation completed the consolidation of the operations of three recently acquired companies into one facility, harmonized its sales and marketing initiatives under the Unity Wireless brand and has completed a corporate restructuring to reduce headcount in redundant positions. The combination of consolidating the facilities of the three acquired companies and reducing the employee headcount from approximately 135 to 80 people is expected to result in significant savings for the integrated company. With the harmonization of the sales and marketing groups completed, cross-selling opportunities are being exploited and are already generating significant interest in many accounts around the world -- particularly in accounts where one of the pre- acquisition companies had a strong presence prior to the transactions. Unity Wireless now has an established presence in many of the most active markets for wireless infrastructure products around the world. The Company anticipates efficiencies that come from increased levels of business should result in reducing the overall cost of many of the Company's product lines in many different ways. The consolidation of operations and harmonization of the sales and marketing functions across Unity Wireless and the three recently acquired companies are expected to significantly contribute to the ability of Unity Wireless to become profitable. About Unity Wireless Based in Bellingham, Washington, Unity Wireless Corporation (OTCBB: UTYW) -- http://www.unitywireless.com/-- is a developer of wireless subsystems and coverage-enhancement solutions for wireless communications networks. At June 30, the Company's Balance sheet showed a stockholders' deficit of $2,370,166, compared to a deficit of $760,000 at Dec. 31, 2005. Going Concern KPMG LLP expressed doubt about Unity Wireless' ability to continue as a going concern after auditing the Company's 2005 financial statements. The auditing firm pointed to the Company's recurring losses from operations. VALENTEC SYSTEMS: Has $6 Mil. Working Capital Deficit at June 30 ---------------------------------------------------------------- Valentec Systems, Inc., filed its second quarter financial statements for the three months ended March 31, 2006, with the Securities and Exchange Commission on Aug. 14, 2006. The Company incurred a $1.98 million net loss on $4.77 million of net revenues for the three months ended June 30, 2006, compared to a $445,665 net loss on $4.38 million of net revenues in 2005. The Company's June 30 balance sheet also showed strained liquidity with $17.7 million in total current assets available to pay $23.7 million in total current liabilities coming due within the next 12 months. Master Factoring Agreement The Company has entered into a Master Factoring Agreement with Rockland Credit Finance as an additional source of financing. A credit line of $7,500,000 was increased on July 1, 2006 to $10,000,000 to provide additional working capital for the Company's operations. The Company plans to use the additional funding for facilitization, additional equipment needed to support the increased backlog. At June 30, 2006, $6,660,009 was outstanding under this line of credit. The Agreement with Rockland Credit Finance has the option to increase to $15,000,000 if the Company has the collateral of accounts receivable and unbilled accounts receivable to support the increase. The use of funds would assist in long term contracts in the interim until the Company collects through the milestone payment schedules for the long term contracts. In addition, the Company has other lines of credit of $6,500,000 in the aggregate. At June 30, 2006, $6,429,546 was outstanding under these lines of credit. A full-text copy of the Company's Quarterly Report is available for free at http://researcharchives.com/t/s?1157 Going Concern Doubt As reported in the Troubled Company Reporter, June 1, 2006, Webb & Company, P.A., in Boynton Beach, Florida, raised substantial doubt about Valentec Systems, 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 working capital deficiency and negative cash flow from operations. Valentec Systems, Inc., designs, develops, manufactures, and sells ammunition and light weapons for military use. VARIG S.A.: Preliminary Injunction Continued Until October 27 ------------------------------------------------------------- The Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York continues the preliminary injunction imposed in VARIG S.A. and its debtor-affiliates' Section 304 cases through and including Oct. 27, 2006. The Court will hold a hearing on Oct. 26, 2006, at 10:00 a.m., to consider whether to extend the Preliminary Injunction or, if appropriate, convert it into a Permanent Injunction. About 14 parties-in-interest had objected to the extension of the Preliminary Injunction or entry of a Permanent Injunction: * Sojitz Corporation of Japan; * Willis Lease Finance Corporation; * Mitsui & Co. Ltd.; * U.S. Bank National Association; * Wells Fargo Bank Northwest, N.A., as Trustee; * Wells Fargo Bank National Association, as Trustee; * International Lease Finance Corporation; * Aircraft SPC-6, Inc.; * The Boeing Company; * Ansett Worldwide Aviation U.S.A., et al.; * GATX Capital; * The Port Authority of New York and New Jersey; * Los Angeles World Airports; and * The United States of America by the U.S. Attorney for the Southern District of New York The Objectors consented to the continuation of the existing Preliminary Injunction, provided their Objections will be deemed carried over to the October 26 hearing. Any other objections must be filed with the Court by Oct. 23, 2006. Headquartered in Rio de Janeiro, Brazil, VARIG S.A. is Brazil's largest air carrier and the largest air carrier in Latin America. VARIG's principal business is the transportation of passengers and cargo by air on domestic routes within Brazil and on international routes between Brazil and North and South America, Europe and Asia. VARIG carries approximately 13 million passengers annually and employs approximately 11,456 full-time employees, of which approximately 133 are employed in the United States. The Company, along with two affiliates, filed for a judicial reorganization proceeding under the New Bankruptcy and Restructuring Law of Brazil on June 17, 2005, due to a competitive landscape, high fuel costs, cash flow deficit, and high operating leverage. The Debtors may be the first case under the new law, which took effect on June 9, 2005. Similar to a chapter 11 debtor-in-possession under the U.S. Bankruptcy Code, the Debtors remain in possession and control of their estate pending the Judicial Reorganization. Sergio Bermudes, Esq., at Escritorio de Advocacia Sergio Bermudes, represents the carrier in Brazil. Each of the Debtors' Boards of Directors authorized Vicente Cervo as foreign representative. In this capacity, Mr. Cervo filed a Sec. 304 petition on June 17, 2005 (Bankr. S.D.N.Y. Case Nos. 05-14400 and 05-14402). Rick B. Antonoff, Esq., at Pillsbury Winthrop Shaw Pittman LLP represents Mr. Cervo in the United States. As of March 31, 2005, the Debtors reported BRL2,979,309,000 in total assets and BRL9,474,930,000 in total debts. WAVE SYSTEMS: Posts $4.5 Million 2006 Second Quarter Net Loss ------------------------------------------------------------- Wave Systems Corp.'s net revenues rose over 250% to $910,000, compared to 2005 second quarter net revenues of $258,000 and an increase of 85% versus Q1 2006 net revenues of $493,000. The improvement in the 2006 second quarter net revenues reflected increases in both license and services revenues as compared to Q2 2005 and Q1 2006. The increase in license revenues was principally due to higher royalties earned from increased shipments of Wave software. Services revenue increased versus the year ago and Q1 2006 quarters primarily due to the substantial completion of a service contract for the U.S. government. In the second quarter of 2006, Wave reported a $4.5 million net loss, including non-cash, share-based compensation expense of $408,000, which was recorded in accordance with the implementation of SFAS 123(R) for "Share-based Payment," effective Jan. 1, 2006. Wave's Q2 2005 net loss of $4.2 million did not include any share- based compensation expense. For the first six months of 2006, Wave's net revenues rose to $1.4 million, compared to net revenues of $335,000 in the year-ago six month period. For the first six months of 2006 Wave reported a net loss of $9.5 million including non-cash, share-based compensation expense of $761,000. Wave's net loss of $8.7 million in the first six months of 2005 did not include any share based compensation expense. The weighted average number of basic shares outstanding in the first six months of 2006 and 2005 were 33,998,000 and 26,393,000, respectively. As of June 30, 2006 Wave had total current assets of $3 million and no long-term debt. Deferred revenue increased to $564,000 at June 30, 2006 compared to $440,000 at March 31, 2006 and $504,000 at year-end 2005. Steven Sprague, Wave's president and CEO, commented, "We are very pleased that our OEMs' shipments have increased this quarter. We believe our strategy to partner with major manufacturers and OEMs is beginning to yield positive results, and we continue to make significant investments in our software and in the marketing of trusted computing solutions to support those relationships. It is our view that the integration of hardware security into the PC provides an excellent platform to address many of the security issues that have plagued PC users. As the industry discovers this new capability, we believe Wave should be well positioned to participate in resulting growth opportunities. As with many previous PC industry standards, we believe that there will be broad based adoption of Trusted Computing in the PC industry, and we look forward to helping the industry realize the full security benefit of this technology. "Of course, there is significant work still to be done. Wave will continue to invest in our software solutions to support three core markets for trusted computing: Strong Authentication, Data Protection including Full disk encryption, and Network Access control. We believe that ongoing investments will continue to support our market share, our revenue and our intellectual property portfolio. Though it has been and continues to be a challenging road, this is an exciting time for Wave and its employees and shareholders." Going Concern Doubt KPMG, LLP, expressed substantial doubt about Wave Systems Corp.'s ability to continue as a going concern after auditing the Company's financial statements for the years ended Dec. 31, 2005, and 2004. The auditing firm pointed to the Company's recurring losses from operations and accumulated deficit. About Wave Systems Wave Systems Corp. -- http://www.wave.com/-- holds a portfolio of significant fundamental patents in security and e-commerce applications. WENAMERICA LLC: Involuntary Chapter 11 Case Summary --------------------------------------------------- Alleged Debtor: WenAmerica, LLC 400 South Woodsmill Road, Suite 120 Chesterfield, Missouri 63017 Involuntary Petition Date: September 8, 2006 Case Number: 06-44137 Chapter: 11 Court: Eastern District of Missouri (St. Louis) Judge: Barry S. Schermer Petitioners' Counsel: Gary L. Vincent, Esq. Husch & Eppenberger, LLC Clayton, Missouri 63105 Tel: (314) 480-1500 Sandra L. Hughes, Esq. Harrison & Hughes, P.C. 3016 Williams Drive, Suite 15 Fairfax, Virginia 22031 Tel: (703) 876-0909 Petitioner Nature of Claim Claim Amount ---------- --------------- ------------ SPCP Group, LLC Money Loaned $3,102,026 Silverpoint Capital, 2 Greenwich Plaza Greenwich, Connecticut 06836 MDF, Inc. Arbitration Award/ $149,102 Attn: David J. Norman Judgment 1657 Crofton Boulevard Crofton, Maryland 21114 Crescent P&E of Marion, Inc. Trade Debt $2,780 dba Scotsman/Refrigeration Supplies Attn: Mike Kochanski 2817 Breckenridge Industrial Court St. Louis, Missouri 631444 WERNER LADDER: Committee Members Want to Trade in 10% Senior Notes ------------------------------------------------------------------ The Official Committee of Unsecured Creditors appointed in the bankruptcy cases of Werner Holding Co. (DE), Inc., aka Werner Ladder Company, and its debtor-affiliates, asks the U.S. Bankruptcy Court for the District of Delaware to permit Committee members, acting in any capacity, to trade in, during the pendency of the Debtors' Chapter 11 cases, the 10% Senior Subordinated Notes due Nov. 15, 2007 issued by Werner Holding Co. (DE) Inc., subject to the implementation of an Ethical Wall. Dennis A. Meloro, Esq., at Greenberg Traurig, LLP, in Wilmington, Delaware, explains that certain members of the Committee are directly themselves or are affiliated with investment advisors or managers that provide investment-advisory services to institutional, pension, mutual fund and high net-worth clients and affiliated funds and accounts. The Committee Members, according to Mr. Meloro, may also buy and sell the Subordinated Notes for their own portfolios. As part of their regular business activities, the Committee Members have duties to maximize returns for their clients or shareholders through the buying and selling of the Subordinated Notes. The Committee Members acknowledge that they have certain legal duties regarding material nonpublic information about the Debtors. In addition, they acknowledge that their trading in of the Subordinated Notes may implicate various federal laws limiting or attaching consequences to trading in the Subordinated Notes on the basis of material nonpublic information. However, according to Mr. Meloro, if the Committee Members are barred from trading the Subordinated Notes during the pendency of the Debtors' cases because of their service on the Committee, they risk the loss of potentially beneficial investment opportunities for their clients, shareholders and themselves. Alternatively, if Committee Members resign from the Committee, the Committee Members relinquishing a more active role in the reorganization process may likewise compromise their clients' interests. The Committee proposes that the Ethical Wall procedures to be employed by a Committee Member or its Affiliates, if it wished to trade in the Subordinated Notes, include these information- blocking procedures: (1) the Ethical Wall Entity will cause all its designated personnel to execute a letter, acknowledging that they may receive nonpublic information and that they are aware of, and agree to comply with, the Ethical Wall procedures that are in effect with respect to the Subordinated Notes; (2) Committee Personnel will not share nonpublic Committee information with its employees except: a. its senior managements who, due to their duties and responsibilities, have a legitimate need to know the information, provided that the individuals: (i) otherwise comply with the Ethical Wall, and (ii) use the information only in connection with senior managerial responsibilities, and b. regulators, auditors and designated legal personnel that will render legal advice to Committee Personnel and who will not share the nonpublic information generated from Committee activities with other employees and will keep the nonpublic information in files inaccessible to other employees; (3) Committee Personnel will keep nonpublic information generated from Committee activities in files, including electronic files, inaccessible to other employees; (4) Committee Personnel will receive no information regarding the Ethical Wall Entity's trades in the Subordinated Notes in advance of such trades, except that Committee Personnel may receive the usual and customary internal and public reports showing the Ethical Wall Entity's purchases and sales and the amount and class of securities owned by the Ethical Wall Entity, including the Subordinated Notes; and (5) the Ethical Wall Entity's compliance department personnel or internal counsel will review from time to time the Ethical Wall procedures employed by the Ethical Wall Entity as necessary to ensure compliance with a Court Order and will maintain records of their review, provided however, the Court is not precluded from taking any action necessary in the event that it is determined that an actual breach of fiduciary duty has occurred because the procedures employed have not been effective or for reasons unrelated to the fact of the Entity's ability to trade based upon the establishment of the procedures. Mr. Meloro asserts there is no legal impediment in the federal securities laws or the Bankruptcy Code to the Committee's request. The U.S. Securities and Exchange Commission has also recognized the value and legitimacy of Ethical Walls in the securities law context. Mr. Meloro adds that bankruptcy courts, with increasing regularity, have allowed committee members of official committees to trade in the securities of a debtor while still serving as committee members. Any current or future Committee Members that engage in the business of trading the Subordinated Notes should not be precluded from trading in the Subordinated Notes while serving as a member on the Committee, Mr. Meloro asserts. He notes that these Members have resources and experience, including knowledge of the Debtors' business, industry and capital structure, that render them particularly valuable for official creditors committee service. In addition, because the Committee Members are among the Debtors' largest creditors (or representatives thereof), they have a great incentive to pursue the Committee's work diligently toward the goal of promptly confirming a Chapter 11 plan, Mr. Meloro avers. Beyond any negative consequences it would have in the Debtors' cases, denial of the Committee's request also will discourage large creditors with expertise and experience in reorganizations from joining creditors committees in other cases, despite the presumption in the Bankruptcy Code that the committee will "ordinarily" consist of the largest creditors, Mr. Meloro says. 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. Greenberg Traurig LLP is counsel to the Official Committee of Unsecured Creditors. Jefferies & Co serves as the Committee's 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. 9; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) WERNER LADDER: Wants Court to Permit HALNA to Exercise Recoupment ----------------------------------------------------------------- Werner Holding Co. (DE), Inc., aka Werner Ladder Company, and its debtor-affiliates, ask the U.S. Bankruptcy Court for the District of Delaware to: (1) confirm that Hydro Aluminum North America, Inc., properly satisfied the Petition Date Accounts Receivables by exercising its state law right of recoupment; or alternatively, (2) modify the automatic stay for the limited purpose of permitting HALNA to exercise its state law right of set- off. Werner Co. and HALNA, are parties to a prepetition Aluminum Supply Agreement dated Dec. 20, 2004, Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, LLP, in Wilmington, Delaware, relates. Pursuant to the Aluminum Contract, which expires by its terms on Dec. 31, 2007, HALNA sells and delivers to Werner Co. aluminum extrusion log, which is manufactured from two separate sources and referred to as either conversion log or non-conversion log. A conversion log is aluminum log processed from by-product of scrap aluminum, while non-conversion log is produced exclusively from aluminum obtained from third-party sources. HALNA provides Werner with a credit for the aluminum scrap equal to the value of 98% of the aluminum scrap delivered, calculated using the Contract price for conversion log. As of June 5, 2006, the price under the Aluminum Contract for conversion log was $0.2125 per pound, and the price for non- conversion aluminum log was $1.3305 per pound, on the aluminum spot market. Under the Aluminum Contract, Werner Co. maintains minimum aluminum scrap credits that equal or exceed the value of the aluminum shipped to Werner on credit, so that HALNA would have no credit exposure to Werner. To the extent the value of the aluminum scrap credits exceeds the value of the minimum scrap credits, HALNA sells Werner conversion log at the agreed upon contract price on cash-in-advance terms. To the extent the aluminum scrap credits equaled or were less than the minimum scrap credits, HALNA sells Werner non-conversion log at the agreed upon contract price on cash-in-advance terms. According to Mr. Brady, as of the Petition Date, Werner Co. owed HALNA $505,517 for aluminum log delivered to and accepted by Werner prepetition, and Werner maintained aluminum scrap credits equal to 963,426 lbs. of aluminum scrap. Pursuant to the Aluminum Contract, Werner has agreed to permit HALNA to effectuate a recoupment of the Petition Date Accounts Receivable with aluminum scrap credits equal to 476,188 lbs. of aluminum scrap. Since aluminum is one of the principal components of the Debtors' products, the importance of their ability to continually procure aluminum extrusion log from HALNA cannot be overstated, Mr. Brady asserts. Without consistent and timely shipments from HALNA and the ability to set off the costs of aluminum by delivering aluminum scrap to HALNA, the Debtors would be unable to manufacture and distribute their product lines, which could jeopardize their restructuring efforts. Under Third Circuit Law, it states, "so long as the creditor's claim arises out of the identical transaction as the debtor's, the claim may be offset against the debt owed to the debtor." In re University Medical Center, 973 F.2d 1065, 1081 (3d. Cir 1993), the Third Circuit Court rules "both debts must arise out of a single integrated transaction so that it would be inequitable for the debtor to enjoy the benefits of the transaction without also meeting its obligations." In HALNA's situation, the Petition Date Accounts Receivables and the aluminum scrap credits arise out of the Aluminum Contract, and are therefore part of the same transaction, which entitles HALNA to recoup the Receivables by application of the aluminum scrap credits, Mr. Brady contends. Mr. Brady adds that, even if HALNA cannot recoup, it can still argue that it has a state law right to set off the Petition Date Accounts Receivables against the aluminum scrap credits that have accrued as of the Petition Date. HALNA's argument is supported by the ruling of Citizens Bank of Maryland v. Strumpf, 516 U.S. 16, 18-19 (1195), which states "although no federal right of set off is created by the Bankruptcy Code, Section 553 provides that, with certain exceptions, whatever right of set off otherwise exists is preserved in bankruptcy." 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. Greenberg Traurig LLP is counsel to the Official Committee of Unsecured Creditors. Jefferies & Co serves as the Committee's 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. 9; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) WEST HILLS: Section 341(a) Meeting Scheduled on September 21 ------------------------------------------------------------ The U.S. Trustee for Region 7 will convene a meeting of West Hills Park Joint Venture's creditors at 1:00 p.m. on Sept. 21, 2006, at Suite 3401, 515 Rusk Avenue, in Houston, Texas. This is the first meeting of creditors as required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Montgomery, Texas, West Hills Park Joint Venture and its affiliate, J.A. Development, L.C., filed for chapter 11 protection on Aug. 17, 2006 (Bankr. S.D. Tx Case No. 06-33996). Lawrence J. Maun, Esq. at Lawrence J. Maun, P.C., represents the Debtors in its restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million to 50 million. WINN-DIXIE: Court Okays Assumption of 20 Employment-Related Pacts ----------------------------------------------------------------- Judge Funk of the U.S. Bankruptcy Court for the Middle District of Florida allows Winn-Dixie Stores, Inc., and its debtor-affiliates to assume 20 employment-related contracts effective as of the effective date of the Debtors' proposed joint plan of reorganization. As reported in the Troubled Company Reporter on Aug. 14, 2006, the employees whose contracts are to be assumed are: Kwentoh, Emeka I. Barton, Joel Baxley, William R. Cavin, Margaret M. Chisholm, Paul M. Doss, Gary W. Gore, Curtis M. Gue, George T. Jr. Matta, Mark Mitchell, Mary Moore, Dwight A. Jr. Opasinski, John Seeley, Jim Sheehan, John Strother, Justin D. Thatcher, James H. Timbrook, Stanley R. Jr. Tulko, Robert Wong, Roy Zahra, E. Ellis Jr. The Debtors withdrew their employment contract with Dennis Hanley from the list of contracts they wanted to assume. The Hanley Contract will remain pending. The Debtors reserve the right to include the Hanley Contract in a request to assume or reject to be filed at a later date. 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. 51; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). WINN-DIXIE: Court Okays Rejection of 95 Employment-Related Pacts ---------------------------------------------------------------- Judge Funk of the U.S. Bankruptcy Court for the Middle District of Florida authorizes Winn-Dixie Stores, Inc., and its debtor- affiliates' rejection of 95 employment-related contracts. Claims for any rejection damages resulting from the rejection of the contracts must be filed by Sept. 23, 2006. As reported in the Troubled Company Reporter on Aug. 14, 2006, the offer letters, retention agreements, and other contracts of former employees are not necessary to the Debtors' ongoing businesses, D.J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, related. A list of the 48 Former Employee Contracts and 50 Current Employee Contracts for rejection is available free of charge at http://ResearchArchives.com/t/s?f86 The Debtors withdraw, without prejudice, their request to reject the contracts of Robin Everhart and Dennis Hanley. The Debtors reserve their right to include the Everhart and Hanley contracts in a subsequent request to reject. The Debtors continue their Motion with respect to their contract with J. Adrian Barrow. 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. 51; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ZULTYS TECHNOLOGIES: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Zultys Technologies 771 Vaqueros Avenue Sunnyvale, California 94085 Bankruptcy Case No.: 06-51764 Type of Business: The Debtor designs and manufactures products that converge telecommunications and data communications for businesses. Zultys develops its hardware and software specifically to create products that deliver completely integrated solutions, allowing for ease of deployment, management, and use. These products support multiple languages and are based on open standards to ensure interoperability in a network. Zultys sells its products worldwide and has distribution in 115 countries. See http://www.zultys.com/ Chapter 11 Petition Date: September 8, 2006 Court: Northern District of California (San Jose) Judge: Arthur S. Weissbrodt Debtor's Counsel: Michael W. Malter, Esq. Binder & Malter, LLP 2775 Park Avenue Santa Clara, California 95050 Tel: (408) 295-1700 Fax: (408)295-1531 Total Assets: $1,804,276 Total Debts: $45,040,725 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Foretek International Trade debt $648,259 Co., Ltd. 7F, No. 447-1 through 6 SEC. 2, PATEH Road Taipei, Taiwan Shenzhen Gaoxinqi Trade debt $438,659 Technology Co Ltd Liuxian 1st Road District 67 Baoan, Shenzhen 518102, China FAI Trade debt $278,401 3273 Paysphere Circle Chicago, IL 60674 Avnet Electronics Marketing Trade debt $196,523 PO Box 60000 File 30107 San Francisco, CA 94160 Bell Microproducts Inc. Trade debt $151,250 File 57266 Los Angeles, CA 90074-7266 Arrow Electronics, Inc. Trade debt $147,231 P.O. Box 60000 File 21174 San Francisco, CA 94160-1174 Text 100 Corp. Trade debt $85,068 Arista Systems Corporation Trade debt $72,048 Hunter Technology Corp. Trade debt $70,268 Matthews Metal Products Trade debt $68,185 TTI, Inc. Trade debt $64,206 Mitchell, Silberberg & Knupp Legal services $53,086 De Anza Manufacturing Trade debt $46,327 Merix Corporation Trade debt $39,713 Digi -Key Corporation Trade debt $39,180 Digital Power Corporation Trade debt $39,064 Dynamic Details Incorporated Trade debt $39,031 Whizz Systems Inc. Trade debt $38,056 Holthouse, Carlin & Audit services $37,287 Van Trigt Venkel, Ltd. Trade debt $32,268 * Winston & Strawn Names S. Gavin as Head of Corporate Practice --------------------------------------------------------------- Winston & Strawn LLP named Steven J. Gavin to head its global corporate practice group, which includes more than 220 attorneys in eight offices working in financial and general corporate legal matters. Chambers and Partners, a U.K.-based legal research publisher, has recognized Winston & Strawn's corporate practice as particularly strong and growing in corporate finance, private equity, hedge funds, mergers and acquisitions, and bankruptcy matters. "Steve is the ideal choice to lead the practice," said Tom Fitzgerald, Winston & Strawn's managing partner elect. "He is highly respected throughout the firm and business community, and will be a terrific leader for the practice area." Mr. Gavin, 46, has been with the firm since 1985 and concentrates his practice in corporate finance, private equity, and mergers and acquisitions. He succeeds John L. MacCarthy, who headed the practice for several years before moving to an in-house position. Mr. Gavin is a member of the firm's executive committee, and is chairman of the board of LINK Unlimited. Mr. Gavin is a graduate of Stanford Law School, and earned his bachelor's degree, Phi Beta Kappa, from Yale College. Winston & Strawn -- http://www.winston.com/-- is a 152-year-old commercial law firm with nearly 900 attorneys in nine offices, including Chicago, New York, Washington, D.C., Los Angeles, San Francisco, London, Paris, Geneva, and Moscow. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($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) Cogdell Spencer CSA 126 370 N.A. 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) Denny's Corporation DENN (258) 500 (68) 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 (83) 362 102 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, Rizande B. Delos Santos, Cherry A. Soriano-Baaclo, Christian Q. Salta, Jason A. Nieva, Lucilo M. Pinili, Jr., Tara Marie A. Martin and Peter A. Chapman, Editors. Copyright 2006. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $725 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***