T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, January 9, 2007, Vol. 11, No. 7 Headlines ADELPHIA COMMS: Plan Expected to Become Effective on January 17 ADELPHIA COMMS: Bondholders Object to 5th Amended Plan Changes ADVANCED MARKETING: Organizational Meeting Scheduled on Friday AES CORP: Increases Revolving Credit Facility to $750 Million AIR AMERICA: CACI International Can Pursue Defamation Suit ARAMARK CORP: Buyout Prompts Moody's Low-B Ratings on Debentures ASARCO LLC: Has Until May 11 to Remove Civil Actions ASARCO LLC: 3 Subsidiaries Want Until Jan. 26 to File Schedules BALDOR ELECTRIC: S&P Places Corporate Credit Rating at BB- BLUEGREEN CORP: S&P Revises Outlook to Stable From Positive CAROLINA COUNTRY: Case Summary & 20 Largest Unsecured Creditors CC FUNDING: S&P Holds Rating on 2003-2 Class B-5 Debenture at B CENTENNIAL COMMS: Posts $33.4 Mil. Net Loss in Qtr. Ended Nov. 30 CHARMING CASTLE: Court Okays Burr & Forman as Committee Counsel CHASE MORTGAGE: Fitch Holds Low-B Ratings on Various Certificates CMS ENERGY: Unit Gets $25MM Claim Award from American Arbitration CMS ENERGY: Inks MOU to Settle Securities Class Action Suits COLLINS & AIKMAN: Wants Second Stipulation on Lear Pact Approved COMPLETE RETREATS: Court OKs $98MM Asset Sale to Ultimate Resort COMPLETE RETREATS: Court Approves $3.14 Mil. Real Property Sale DAIMLERCHRYSLER: Chrysler Arm to Double International Sales DAIMLERCHRYSLER: Chrysler's '06 Sales Outside North America Up 15% DANA CORP: Completes Asset Sale to Hendrickson USA for $31 Million DANA CORP: Unions Will Appeal Judge Lifland's Officers' Pay Order DANA CORP: DCC Finalizes Forbearance Agreement with Noteholders DELPHI CORP: Highland Capital Offers $4.7 Bil. Equity Commitment DELPHI CORP: GM Says Highland Rival Offer Could Delay Delphi Deal DELPHI CORP: Equity Purchase and Commitment Agreement Draws Fire DELPHI CORP: Ct. OKs $4.495B Replacement Credit Pact From JPMorgan DIRECTV GROUP: S&P Holds Corporate Credit Rating at BB DLJ COMMERCIAL: Fitch Holds Junk Rating on Class B-8 Certificates DOGGIEDAY HOLDINGS: Case Summary & 22 Largest Unsecured Creditors DURA AUTOMOTIVE: Creditors Committee Taps Kramer Levin as Counsel DURA AUTOMOTIVE: Panel Taps Chanin Capital as Financial Advisors DURA AUTOMOTIVE: Auction Sets Bond Price at 24.125% of Face Value EFREN REYNOSO: Case Summary & Six Largest Unsecured Creditors ENESCO GROUP: Bank Lenders Limit Credit Facility Advances FAIRCHILD SEMICONDUCTOR: To Appeal $8.4-Mil. ZTE Lawsuit Judgment FAIRCHILD SEMICONDUCTOR: Launching Tender Offer for System General FORD MOTOR: Partners with Microsoft on In-Car Digital Systems FORD MOTOR: Strong Brazilian Ops Spurs Group to Invest $1 Billion FOREST OIL: Acquiring Houston Exploration in $1.5 Billion Deal FORT JAMES: Moody's Completes Withdrawal of Ratings FRANK GRILLO: Voluntary Chapter 11 Case Summary GAP INC: Goldman Sachs Hiring Sparks Rumors on Strategic Options GAP INC: December Sales Down 4%; Comparable Store Sales Down 8% GENERAL MOTORS: Says Highland Rival Offer Could Delay Delphi Deal GENERAL MOTORS: Awards Lithium-Ion Battery Development Contracts GMAC MORTGAGE: Fitch Holds Low-B Ratings on 3 Certificate Classes GOODYEAR TIRE: Fitch Removes Ratings from Watch Negative GREENMAN TECH: Sept. 30 Balance Sheet Upside-Down by $11.4 Million INFRASOURCE SERVICES: Changes Status, Amends CEO's Management Pact INSTITUTE FOR CANCER PREVENTION: Court Confirms Trustee's Plan ISTAR FINANCIAL: Consent Solicitation for Notes Ends Today J.C.'S GRADING: Case Summary & 19 Largest Unsecured Creditors JAMES URBAN: Voluntary Chapter 11 Case Summary JOHN B. SANFILIPPO: Posts $4.8 Mil. Net Loss in 1st Fiscal Quarter JOHN ESSMAN: Case Summary & 17 Largest Unsecured Creditors JOHNSFIELD II: Case Summary & Two Largest Unsecured Creditors JP MORGAN: Moody's Affirms Low-B Ratings on Six Cert. Classes KEARNY INDUSTRIAL: Case Summary & 5 Largest Unsecured Creditors KEYSTONE TRUCK: Case Summary & 40 Largest Unsecured Creditors KIMBERLY BODNAR: Case Summary & 18 Largest Unsecured Creditors KINDER MORGAN: S&P Lowers Corporate Credit Rating to BB- K-TEL INTERNATIONAL: Grant Thornton Raises Going Concern Doubt LAIDLAW INT'L: Earns $40.1 million in Fiscal Quarter Ended Nov. 30 LENOX GROUP: Marc Pfefferle is Interim Chief Executive Officer LENOX GROUP: Poor Performance Cues Moody's Ratings Downgrade LENOX GROUP: Weak Performance Cues S&P's Negative CreditWatch MANARIS CORP: Unit Inks Technology License Agreement with iMetrik MANUFACTURERS & TRADERS: Fitch Holds BB Rating on Class B-4 Certs. MARION TOWN: Mayor Says Town Can't Pay $350K Sewage Treatment Fee MCCLINTOCK DIARY: Case Summary & 13 Largest Unsecured Creditors MEDICALCV INC: Posts $3.1 Mil. Net Loss in Quarter Ended Oct. 31 MESABA AVIATION: Shareholder Opposes Northwest's Purchase Proposal MICHELEX CORP: Wins More Time to Complete Ag-Pro Purchase MIDLAND OIL: Case Summary & 30 Largest Unsecured Creditors MILLS CORP: Secures March 31 Senior Term Loan Maturity Extension MIRANT CORP: Has Until February 15 to File Chapter 11 Plan MORGAN STANLEY: Moody's Hold Low-B Ratings on Six Cert. Classes MORGAN STANLEY: Moody's Holds Junk Rating on Class N Certificates MORGAN STANLEY: Fitch Holds Rating on Class H Certificates at BB+ MORTGAGE ASSET: Fitch Holds Low-B Ratings on Various Certificates MORTGAGE ASSET: Fitch Holds Rating on Class B-I-4 Certs. at BB MT. PLEASANT: Case Summary & Eight Largest Unsecured Creditors NEWCOMM WIRELESS: Court Sets Feb. 28 Auction for All Assets NEWPARK RESOURCES: Secures New $100 Mil. Revolving Line of Credit NORTHWEST AIRLINES: MAIR Shareholder Balks at Mesaba Purchase Bid OMEGA HEALTHCARE: Earns $14.6 Million in Quarter Ended Sept. 30 ON ASSIGNMENT: Buys Oxford Global for $200 Million ORION DIVERSIFIED: Posts $9,758 Net Loss in Quarter Ended Oct. 31 RADIO ONE: $30 Million Entercom Sale Cues S&P's CreditWatch RAYMOND PEDDEN: Case Summary & 15 Largest Unsecured Creditors RESIDENTIAL ASSET: Fitch Lifts Rating on Class B-2 Certs. to BB- ROO GROUP: Posts $3.7 Million Net Loss in Quarter Ended Sept. 30 SAMSONITE CORP: Earns $8.9 Million in Quarter Ended October 31 SANKOFA SHULE: Moody's Affirms Caa3 Rating with Negative Outlook SCOTTISH RE: Shareholder To Vote Against MassMutual/Cerberus Deal SMITTY INVESTMENT: Case Summary & 20 Largest Unsecured Creditors SONTRA MEDICAL: To Sell 6 Million Common Shares for $600,000 SOUNDVIEW HOME: Moody's Rates Class M-10 Certificates at Ba1 SOUTHERN DATA: Case Summary & 20 Largest Unsecured Creditors STRUCTURED ASSET: Fitch Places Class B5 Certs. on Watch Negative TECHNICAL OLYMPIC: Shareholder Class Action Filed in S.D. Fla. TERASEN INC: S&P Pares Corporate Credit Rating to BB- from BBB TOWER AUTOMOTIVE: Court Okays Increased Equity Investors Payments TOWER AUTOMOTIVE: Wants to Employ Pay Foley & Lardner as an OCP TYRINGHAM HOLDINGS: Disclosure Statement Hearing Set for Jan. 24 UNITED HOUSING: Case Summary & 41 Largest Unsecured Creditors US MORTGAGE: Case Summary & 17 Largest Unsecured Creditors VICTORIA INGENIERO: Voluntary Chapter 11 Case Summary WALTER BEARD: Case Summary & 20 Largest Unsecured Creditors WASTEQUIP INC: Moody's Places Corporate Family Rating at B2 WEIGHT WATCHERS: S&P Holds Corporate Credit Rating at BB WILLIAM LEACH: Case Summary & 41 Largest Unsecured Creditors WINNING EDGE: Posts $668,468 Net Loss in Quarter Ended October 31 * David Sweet's 3-Attorney Team Joins Buchanan Ingersoll & Rooney * Large Companies with Insolvent Balance Sheets ********* ADELPHIA COMMS: Plan Expected to Become Effective on January 17 --------------------------------------------------------------- The Honorable Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York has entered an order confirming the first modified fifth amended joint Chapter 11 plan of reorganization of Adelphia Communications Corporation and Certain Affiliated Debtors. Under the Federal Rules of Bankruptcy Procedure, the order is subject to a stay pending appeal, which will expire on Jan. 16, 2007. If no additional stay is issued, the ACOM Debtors expect the Plan to become effective on Jan. 17, 2007. The Plan was jointly proposed by the ACOM Debtors, the Official Committee of Unsecured Creditors, and bank lender agents Wachovia Bank, N.A., the Bank of Montreal, and the Bank of America, N.A. The ACOM Debtors intend to set the close of business on Jan. 10, 2007, as the record date for distributions for holders of claims in the Bank Claims Classes, Trade Claims Classes, and Other Unsecured Claims Classes. The ACOM Debtors also intends to set the record date for holders of claims in Notes Claims Classes and holders of Equity Interests as the close of business on Jan. 17, 2007. The record dates are subject to change if the Plan is not effective on or about Jan. 17, 2007. Judge Gerber had said, in a 267-page bench decision, that he is confirming the Plan. The Plan will distribute the approximately $15,000,000,000 in value remaining after the ACOM Debtors sold substantially all of their assets to Time Warner and Comcast, and after the distribution of the first $2,600,000,000 in value under the confirmed Joint Venture Plan of Reorganization for the Century-TCI and the Parnassos Debtors. The Debtors' counsel -- Marc Abrams, Esq., at Willkie Farr & Gallagher LLP, in New York -- and the Creditors Committee's counsel -- David Friedman, Esq., at Kasowitz, Benson, Torres & Friedman LLP, in New York -- advised the Court that creditors have overwhelmingly voted to accept the Fifth Amended Plan. Judge Gerber accedes that the Fifth Amended Plan has secured the assent of: (a) over $10,000,000,000 in claims, representing approximately 84% of the claims in the ACOM Debtors' Chapter 11 cases; (b) in both number and amount, of "30 of the 30 classes" who voted on the Plan. After having reviewed all of the requirements of Section 1129, the reasonableness of the settlement of the interdebtor disputes, Judge Gerber has determined that the Plan fully conforms to the requirements of the Bankruptcy Code. No Cramdown Situation Judge Gerber notes that satisfaction of some of the Section 1129(a) requirements is disputed in connection with the Plan. Section 1129(a), Judge Gerber explains, has two requirements for ensuring that the Plan has the requisite support: (a) Section 1129(a)(10) provides that if any class of claims is impaired under the Plan, at least one class of claims has accepted it, without including any acceptance by an insider; and (b) Section 1129(a)(8) requires that all of the classes of impaired claims and interests have accepted the Plan. However, Section 1129(b) states that if the only deficiency in the plan is the inability to satisfy Section 1129(a)(8), the plan can be confirmed if the additional requirements of Section 1129(b) are satisfied. Those requirements include, most significantly, that the plan "does not discriminate unfairly," and that it be "fair and equitable", Judge Gerber states. This scenario is colloquially referred to as "cramdown." In accordance with the decision in Heins v. Ruti-Sweetwater, Inc. (In re Ruti-Sweetwater, Inc.), 836 F.2d 1263 (10th Cir. 1988), Judge Gerber rules that the 30 of 30 accepting classes satisfy Section 1129(a)(8). Thus, a cramdown situation does not exist, and the additional requirements of Section 1129(b) are inapplicable, Judge Gerber declares. Propriety of Settlement Judge Gerber notes that Section 1123(b)(3), which describes what a plan may contain, expressly includes settlements. The Settlement of Intercreditor Issues that the Plan contains is one of its most important, and controversial features, Judge Gerber says. All parties agree that while a plan may contain a settlement, that settlement must pass muster for fairness, under standards articulated by the Supreme Court, the Second Circuit and lower courts. The Plan has been vigorously opposed by a group of bondholders of Senior Notes of Adelphia Communications Corp. who "vociferously" oppose the Settlement, Judge Gerber notes. The ACC Bondholders have argued that the Plan is unconfirmable notwithstanding the overwhelming support for it. The Plan Proponents have contended that months of exposure to the Motion in Aid litigation in connection to the Intercreditor Issues, and the events that preceded it, dramatically increased Judge Gerber's ability to understand the issues and to form informed views as to the MIA's outcome possibilities and settlement fairness. In response, the ACC Bondholders asserted that Judge Gerber must examine the controversy as if he was a "visiting judge" who had come in to the case as an outsider, and had read only the record. The ACC Bondholders are: -- Aurelius Capital Management, LP, -- Catalyst Investment Management Co., LLC, -- Drawbridge Global Macro Advisors LLC, -- Drawbridge Special Opportunities Advisors LLC, -- Elliott Associates, LP, -- Farallon Capital Management LLC, -- Noonday Asset Management LP, and -- Perry Capital LLC; Judge Gerber disagrees with the ACC Bondholders' argument because it runs flatly inconsistent with the long-time practice in judicial consideration of settlements and if ever accepted, would represent a sea of change in the manner in which settlements are evaluated -- requiring the individual with more knowledge than anyone of the propriety of the settlement to abandon the benefits of his or her expertise with respect to the matter to be decided. According to Judge Gerber, the approval of settlements is a matter within the discretion of the bankruptcy court. The exercise of discretion, at least in the context of settlements, typically involves consideration of the applicable law with respect to the underlying issues to be litigated, the facts that are put forward or alleged with respect to the underlying controversy, and the consideration of judicially prescribed factors to be taken into account in exercising one's discretion for considering approval of the settlement. In the bankruptcy context, Judge Gerber adds, it also includes judicial experience, knowledge of the past proceedings in the case and the alternatives for its future, and consideration of what is best for the future of the parties and the estate. Judge Gerber states that there is nothing in the law that requires a court approving a settlement to approach the case with blinders, and to disregard its knowledge of the case, and the litigants' "strategies, positions and proofs." A. Assent to Settlement Judge Gerber rejects the ACC Bondholders' contentions that: (a) only the now-dormant ACC Senior Notes Committee was empowered to propose the Settlement; (b) only an "independent fiduciary" could propose the Settlement; or (c) nobody could propose the Settlement. Judge Gerber further rejects the ACC Bondholders' argument that the ACOM Debtors, with the assent of the affected classes, did not have the power to propose the Settlement. Judge Gerber contends that the ACOM Debtors have always had the rights of debtors and debtors-in-possession, which include the right to propose settlements in a reorganization plan, under Section 1123(b)(3), or under Rule 9019 of the Federal Rules of Bankruptcy Procedure. Judge Gerber also notes that Tudor Investment Corporation and Highfields Capital originally were designated by the ACC Senior Noteholders Committee to be its representatives in the MIA negotiations, and were the earliest members of the ACC Senior Noteholders Committee to negotiate a settlement of MIA issues. They had participated in the settlement discussions with the knowledge of most of the other members of the ACC Senior Noteholders Committee. However, Tudor and Highfields executed a Plan Agreement with, among others, the ACOM Debtors. Tudor and Highfields each were acting in its individual capacity, and not in a fiduciary capacity as an authorized representative of any other ACC senior bondholders -- including the ACC Senior Noteholders Committee. "[W]ith the ACC Senior Noteholders Committee having split and become disabled, and with at least some members now believing that the Settlement would be a good thing, it is ludicrous to believe that dissenters on that committee could prevent ACC Senior Noteholders from considering the Settlement proposal," Judge Gerber says. Judge Gerber relates that counsel for Tudor and Highfields determined at closing arguments during the Confirmation Hearing that the ACC Bondholders, the objectors to the Settlement, are not an official committee and "do not have ... standing to hold the majority of the ACC noteholders hostage to their own desires..." With regards to the ACC Bondholders' argument that only an independent ACOM fiduciary could propose the Settlement if the now-paralyzed ACC Senior Noteholders Committee didn't support it, Judge Gerber asserts that it misses the mark in several respects: (a) he has previously ruled that it was unnecessary to appoint trustees or nonstatutory fiduciaries to deal with the conflicts resulting from the MIA; and (b) the ACC Senior Noteholders Committee, before it split, had taken exactly the opposite position. B. Settlement Analysis In reviewing a compromise, a bankruptcy court need not be aware of or decide the particulars of each individual claim resolved by the settlement agreement, or "assess the minutia of each and every claim," Judge Gerber explains. Rather, the court "need only canvass the issues and see whether the settlement falls 'below the lowest point in the range of reasonableness.'" The expense and delay occasioned by a continued litigation of the MIA would prejudice many parties-in-interest, most particularly, the creditors of ACOM. As the MIA continued, administrative expenses would continue to accrue or have to be paid in cash. Interest on secured bank debt would have to continue to be paid. After looking initially solely at the Settlement's economic terms, Judge Gerber finds that the Settlement is plainly reasonable, well within the range of reasonableness, fair and equitable, and in the best interests of the ACOM estate. Classification of Certain Claims The ACC Bondholders have objected to classification of ACC Trade Claims and Allowed Other Unsecured Claims in two separate classes, arguing that creditors comprising either class are general unsecured creditors of equal rank and priority. The ACC Bondholder Group further argued that the placement of the those claims in two separate classes is arbitrary, and suggested that the only reasonable conclusion for segregating these substantially similar claims into two classes is the Plan Proponents' desire to gerrymander an accepting impaired class of ACC claims. In response, the Plan Proponents ask the Court to reject allegations of gerrymandering, arguing that Claims and Equity Interests were not classified separately "solely to create an impaired assenting class". Rather, they argue, the Plan's classification structure was created with a view towards recognizing and respecting legal rights and obligations, and maximizing and protecting value for all creditors of each of the Debtors. Judge Gerber points out that although Section 1122(a), by its terms, doesn't require that all similarly situated claims be classified together, rulings in In re One Times Square Assocs. Ltd. P'ship, 159 B.R. 695, 703 (Bankr. S.D.N.Y. 1993), has made clear that separate classification of substantially similar unsecured claims is permissible only when there is a reasonable basis for doing so or when the decision to separately classify "does not offend one's sensibility of due process and fair play." When considering assertions of gerrymandering, courts in the Second Circuit in Boston Post Rd. Ltd. P'ship v. FDIC (In re Boston Post Rd. Ltd. P'ship), 21 F.3d 477, 483 (2d Cir. 1994), have inquired whether a plan proponent has classified substantially similar claims in separate classes for the sole purpose of obtaining at least one impaired assenting class, Judge Gerber states. Judge Gerber notes that the classification structure in the Plan is based on the requirement that the ACOM Debtors recognize: (a) the similar legal character of the claims and equity interests grouped together; and (b) the different legal character of those Claims and Equity Interests that are classified separately. Accordingly, Judge Gerber finds that the Plan complies with Section 1122 of the Bankruptcy Code and relevant Second Circuit case law. Plan Proposed in Good Faith Judge Gerber finds that the Plan plainly satisfies Section 1129(a)(3), which requires the Plan to have been proposed in good faith and not by any means forbidden by law. "I have seen, first hand, how [the ACOM Debtors and the Creditors Committee] have balanced . . . their responsibilities as fiduciaries to maximize value and bring these cases to a successful end, with the demands that have been placed upon them by feuding individual creditor groups with parochial desires to maximize the return on their individual investments in these cases," Judge Gerber relates. "Likewise, the bank agents acted vigorously, but always properly, in addressing the concerns in their domain." Equal Treatment under the Plan The ACC Noteholders have argued that the solicitation process has been irreparably tainted by offers of special consideration to some, but not all members of the Senior Notes class. Thus, they say, the Plan violates Section 1123(a)(4). Judge Gerber contends that neither the Bankruptcy Code nor its legislative history precisely defines the standards of "equal treatment." However, courts in See In re AOV Industries Inc., 792 F.2d 1140, 1154 (D.D.C. 1986), have held that the statute does not require identical treatment for all class members in all respects under a plan, and that the requirements of Section 1123(a)(4) apply only to a plan's treatment on account of particular claims or interests in a specific class -- not the treatment that members of the class may separately receive under a plan on account of the class members' other rights or contributions. Judge Gerber notes that the exculpation and release provisions of the Plan are separate and independent provisions negotiated and agreed to as part of the Settlement -- available to any and all who also support the Settlement. All holders of ACC Senior Notes, including members of the ACC Bondholders, were entitled to avail themselves of the protection afforded by the release and exculpation provisions. Thus, Judge Gerber finds that the exculpation and release provisions under the Plan have no bearing on the Plan's treatment of claims. Equal treatment of claims is all that is required by Section 1123(a)(4), Judge Gerber explains. "I hold that the treatment of each ACC Senior Note claim under the Plan is the same whether the holder of [that] claim voted to accept or to reject the Plan, and that the requirements of section 1123(a)(4) are satisfied." Best Interests of Creditors As opposed to the ACC Bondholders' contentions, Judge Gerber finds that the Plan easily meets the requirements of the Best Interests test. "No dissenting creditor is receiving less than it would receive in the event of a liquidation of the Debtor against whom that creditor has a claim," Judge Gerber states. Possible Payment More Than In Full The bulk of the consideration that was paid for the Time Warner/Comcast acquisition was in cash, but a major portion of it was in TWC stock -- whose value is in some respects subjective, and which is subject to fluctuations in value. Most unsecured creditors will be paid at least in part in TWC stock. Judge Gerber disagrees with the ACC Bondholders' contentions that some creditors might be getting paid more than par plus accrued, due to the increased value of TWC stock since the Sale Transaction, will be contrary to law, and makes the Plan unconfirmable. Among others, Judge Gerber points out that the "fair and equitable" requirement of Section 1129(b) of the Code prohibits payment of more than par plus accrued in any instance where Section 1129(b) applies, that is any situation where cramdown is proposed. However, there is no cramdown situation in the ACOM Debtors' cases. Judge Gerber adds that at the $6,500,000,000 valuation for TWC stock that he has found, dissenting creditors do much better under the Plan than they would under a liquidation proceeding. Classes Where No Creditor Voted Judge Gerber disagrees with the ACC Bondholders' argument that the Plan Proponents had to proceed by cramdown because there were classes for six ACOM Debtors wherein no creditor voted and they cannot be said to have accepted the Plan. Judge Gerber notes that the Plan adopts a presumption that if no holders of Claims or Equity Interests eligible to vote in a particular Class vote to accept or reject the Plan, the Plan will be deemed accepted by the holders of those Claims or Equity Interests in that Class. The presumption was explicit and well advertised, appearing in both the Plan and the Second Disclosure Statement Supplement. Judge Gerber upholds the Plan presumption with respect to the non-voting creditors in those classes. Judge Gerber points out that case law at the Circuit Court of Appeals level -- "the only law at that high a level" -- supports the presumption. He refers to the Ruti-Sweetwater case, in where the Tenth Circuit affirmed a bankruptcy court's decision that "a non-voting, non-objecting creditor who is the only member of a class . . . is deemed to have accepted the Plan for purposes of [Section] 1129(b)." Forfeited Rigas Sub Debt The Plan cancels $567,000,000 in Subordinated Note Claims purportedly purchased by James Rigas and Michael Rigas that they later forfeited to the U.S. Government under the ACOM Debtors' court-approved settlement with the U.S. Department of Justice. The Sub Debt class under the Plan covers bona fide third-party holders of Sub Debt, but expressly excludes the Rigas Sub Debt. In connection with the confirmation of the Plan, Judge Gerber has been asked to decide on the issue. In a separate opinion, Judge Gerber has determined that the Rigas Sub Debt was never validly issued, and was not the subject of an allowed claim and to subordination provisions that would make it subject to turnover to more senior debt. Thus, Judge Gerber concludes, the Rigas Sub Debt was properly cancelled under the Plan, and was not subject to turnover to holders of ACC Senior Notes. Equity Committee's Objection to CVV Judge Gerber finds that the Official Committee of Equity Security Holders' various objections to confirmation, principally with respect to the Contingent Value Vehicle, are without merit and will be overruled. Judge Gerber disagrees, among others, with the Equity Committee's arguments that: (a) the Court "lacks jurisdiction" to remove the Equity Committee as a plaintiff in the Bank Litigation, to transfer the Equity Committee claims to the CVV, or to substitute the CVV Trustees as plaintiffs, because the reference has been withdrawn; (b) the ACOM Debtors can't transfer the Equity Committee claims to the CVV; and (c) the Plan's proposed distribution of proceeds from the CVV violates the Absolute Priority Rule. The Equity Committee also objects to the Plan provision providing that the Equity Committee will terminate on the Plan's effective date, except for the narrow purpose of final applications for fees. Judge Gerber, however, rules that the provision is entirely appropriate. Judge Gerber says, "[t]he Equity Committee served responsibly and well. But now its job is done." Calyon Issues Under the Bank Lenders' loan agreements, the secured bank lenders are entitled to the repayment of their principal, interest, and attorneys fees. They also have a contractual right under their loan agreements to indemnification for losses they may suffer in connection with their loans, unless they are judicially determined to have acted in a way that would disqualify them from that entitlement. The Plan offers the bank lenders that are a party to the Bank Lenders Action an additional $80,000,000 -- which totals $90,000,000 if coupled with the Joint Venture Plan for the Parnassos and the Century-TCI Debtors -- to pay their post- effective date indemnification claims. The amount is in addition to upwards of $170,000,000 that has been paid to the banks for their expenses through the effective date. The amount is satisfactory to all except for one of the approximately 400 bank lenders. Calyon New York Branch has voted against the Plan and raised objections to confirmation, notwithstanding the acceptance of the Plan by each of the classes in which it is a member. Calyon asserts that the amount it would get is insufficient to fund its desired expenditures in its litigation defense, and that it must be provided the funds, which would range from $4,000,000 to $39,000,000, that it wishes to spend on the defense of the Bank Lenders Action. Judge Gerber says that consistent with past practice in the Court and elsewhere, he estimating Calyon's future expenses for the purposes of establishing a fair reserve, and not for the purposes of ultimate allowance. With respect to estimation and the means to do it, Judge Gerber states that he takes guidance from the decision in Ralph Lauren Womenswear, 197 B.R. 771 (Bankr. S.D.N.Y. 1996). Neither the Bankruptcy Code nor the Federal Rules of Bankruptcy Procedure prescribes any method for estimating a claim. "Here we are talking about a prediction as to the future, where the fact that some future fees will have to be paid is certain (or nearly so), but the amount is highly uncertain," Judge Gerber explains. "There is also uncertainty as to whether the future fees, to the extent incurred, will be reasonable." Judge Gerber states that Section 506(b) limits oversecured lenders' claims for fees and costs to an amount sufficient to pay "reasonable" expenses. The Plan Proponents propose to estimate Calyon's post-effective date indemnification claims against the ACOM Debtors in an amount not to exceed approximately $632,000, which represents Calyon's pro rata share of the $12,000,000 LIF that was consensually established under the Plan for Calyon and the other non- administrative agent banks. However, Calyon objects to its $632,000 pro rata share of that $12,000,000 fund. After analyzing the record to determine a reasonable amount to reserve to award Calyon for its LIF, Judge Gerber estimates Calyon's claim for post-effective date indemnification claims to $700,000, bringing its LIF to a total of approximately $1,330,000. A full-text copy of Judge Gerber's 267-page Decision is available for free at http://ResearchArchives.com/t/s?1823 A full-text copy of the proposed Confirmation Order is available for free at http://ResearchArchives.com/t/s?1822 A full-text copy of Judge Gerber's Decision on Rigas Sub Debt is available for free at http://ResearchArchives.com/t/s?1824 Based in Coudersport, Pa., Adelphia Communications Corporation (OTC: ADELQ) -- http://www.adelphia.com/-- is a cable television company. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the Debtors in their restructuring efforts. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Manged Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision, LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642). Their cases are jointly administered under Adelphia Communications and its debtor-affiliates chapter 11 cases. (Adelphia Bankruptcy News, Issue No. 160; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ADELPHIA COMMS: Bondholders Object to 5th Amended Plan Changes -------------------------------------------------------------- The ACC Bondholders Group objects to the proposed modifications to Adelphia Communications Corp. and its debtor-affiliates' Fifth Amended Plan of Reorganization. The ACC Bondholders ask the U.S. Bankruptcy Court for the Southern District of New York, based on the material nature of the modifications, to either: (a) deny the proposed modifications and confirmation of the Plan; or (b) direct the Plan Proponents to re-solicit the votes of all ACOM creditors based on the modified form of Plan. The ACC Bondholders are: -- Aurelius Capital Management, LP, -- Catalyst Investment Management Co., LLC, -- Drawbridge Global Macro Advisors LLC, -- Drawbridge Special Opportunities Advisors LLC, -- Elliott Associates, LP, -- Farallon Capital Management LLC, -- Noonday Asset Management LP, and -- Perry Capital LLC; During the course of the confirmation hearing for the Fifth Amended Plan of Reorganization, the Plan Proponents announced, "in various formats and guises", several material modifications to the Plan that adversely impact the ACOM creditors, relates Sylvia A. Mayer, Esq., at Weil, Gotshal & Manges LLP, in New York, on behalf of a group of Adelphia Communications Corp. bondholders. Ms. Mayer asserts that the ACOM creditors who voted to accept the Plan should be notified of the proposed Plan modifications, informed of the higher valuation and intent to determine contractual subordination rights, and afforded an opportunity to reconsider their acceptance. Ms. Mayer argues that the modifications: (a) further reduce funds originally promised to be made available for the ACOM creditors, rather than set aside for various litigation indemnification funds, from $175,000,000 to $77,000,000 million; (b) continue to force the ACOM creditors to pay, out of the residual value otherwise available to them, the professional fees of other creditors whose interests are adverse to those of the ACOM creditors, and with no notice or opportunity to reconsider their vote, increase this requirement by $4,175,000; (c) recognize the material undervaluation of the TWC Stock and attempt a purely cosmetic fix to bring the highest point under the collar in line with the Plan Proponents' own expert's valuation -- a valuation known by the Debtors, yet not disclosed, before the vote was complete; and (d) potentially strip all holders of ACOM Senior Notes of the benefit of contractual subordination provisions, without notice and an opportunity to be heard, in the context of the Plan. Ms. Mayer asserts that other than announcements in open court and certain Court filings, no notice has been given to the ACOM creditors, especially to accepting ACC creditors, of the proposed modifications to the Plan, which adversely impact their recoveries. Ms. Mayer contends that while the ACC Bondholder Group actively participated in the Confirmation Hearing as an objecting party and made clear that each of its members voted to reject the Plan, other ACC creditors -- particularly the ACC Accepting Creditors -- have not been similarly involved. Ms. Mayer points out that pursuant to Sections 1125 and 1127(a) of the Bankruptcy Code and Rule 3019 of the Federal Rules of Bankruptcy Procedure, those ACC creditors who voted to accept the Plan -- 10 to 20 days prior to any public announcement of the materially adverse Plan modifications -- must be re-solicited. Based in Coudersport, Pa., Adelphia Communications Corporation (OTC: ADELQ) -- http://www.adelphia.com/-- is a cable television company. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the Debtors in their restructuring efforts. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Manged Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision, LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642). Their cases are jointly administered under Adelphia Communications and its debtor-affiliates chapter 11 cases. (Adelphia Bankruptcy News, Issue No. 160; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ADVANCED MARKETING: Organizational Meeting Scheduled on Friday -------------------------------------------------------------- The U.S. Trustee for Region 3 will hold an organizational meeting to appoint an official committee of unsecured creditors in Advanced Marketing Services, Inc. and its debtor-affiliates' chapter 11 cases at 10:00 a.m., on Friday, Jan. 12, 2006, at the Double Tree Hotel, 700 King Street, Salon L in Wilmington, Delaware. The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' cases. The meeting is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. However, a representative of the Debtors will attend and provide background information regarding the cases. Creditors interested in serving on a Committee should complete and return to the U.S. Trustee a statement indicating their willingness to serve on an official committee. Official creditors' committees, constituted under Section 1102 of the Bankruptcy Code, ordinarily consist of the seven largest creditors who are willing to serve on a committee. In some Chapter 11 cases, the U.S. Trustee is persuaded to appoint multiple creditors' committees. Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes that the reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Based in San Diego, California, Advanced Marketing Services, Inc. -- http://www.advmkt.com/-- provides customized merchandising, wholesaling, distribution and publishing services, currently primarily to the book industry. The company has operations in the U.S., Mexico, the United Kingdom and Australia and employs approximately 1,200 people Worldwide. The company and its two affiliates, Publishers Group Incorporated and Publishers Group West Incorporated filed for chapter 11 protection on Dec. 29, 2006 (Bankr. D. Del. Case Nos. 06-11480 through 06-11482). Chun I. Jang, Esq., Mark D. Collins, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A., represent the Debtors. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. The Debtors' exclusive period to file a chapter 11 plan expires on Apr. 28, 2007. AES CORP: Increases Revolving Credit Facility to $750 Million ------------------------------------------------------------- AES Corporation disclosed in a regulatory filing with the U.S. Securities and Exchange Commission that on Dec. 6 and Dec. 26, 2006, it entered into amendments for its senior secured credit facility. The amendments are part of a single plan and increase the size of the revolving credit facility from $650 million to $750 million. The amendment was entered into by: * AES Corp., as borrower; * AES Hawaii Management Company, Inc., AES New York Funding, L.L.C., AES Oklahoma Holdings, L.L.C., and AES Warrior Run Funding, L.L.C., as Subsidiary Guarantors; * Citicorp Usa, Inc., as Agent and as a Revolving Fronting Bank; * Citibank N.A., as Collateral Agent; * Bank of America, N.A., Deutsche Bank Trust Company Americas, Lehman Commercial Paper, Inc., UBS AG, Stamford Branch, Union Bank California, N.A., CALYON - New York Branch, and Societe Generale - New York Branch, as Revolving Fronting Banks; and * Barclays Bank PLC, as a Committing Bank. A full-text copy of Amendment No. 9 to the Third Amended and Restated Credit and Reimbursement Agreement, dated as of Dec. 29, 2006, is available for free at: http://ResearchArchives.com/t/s?182c A full-text copy of Amendment No. 8 to the Third Amended and Restated Credit and Reimbursement Agreement, dated as of Dec. 6, 2006, is available for free at: http://ResearchArchives.com/t/s?182d AES Corp. (NYSE:AES) -- http://www.aes.com/-- is a global power company. The Company operates in South America, Europe, Africa, Asia and the Caribbean countries. Generating 44,000 megawatts of electricity through 124 power facilities, the company delivers electricity through 15 distribution companies. AES's Latin America business group is comprised of generation plants and electric utilities in Argentina, Brazil, Chile, Colombia, Dominican Republic, El Salvador, Panama and Venezuela. Fuels include biomass, diesel, coal, gas and hydro. The group also pursues business development activities in the region. AES has been in the region since May 1993, when it acquired the CTSN power plant in Argentina. * * * The company's senior secured term loan due 2011 and senior secured revolving credit facility due 2010 carry Moody's Ba1 rating. AIR AMERICA: CACI International Can Pursue Defamation Suit ---------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York has allowed CACI International Inc. to pursue its defamation suit against Air America Radio, aka Piquant LLC, and Randi Rhodes, a host at Air America, the Associated Press reports. CACI is seeking $1 million in compensatory damages and $10 million in punitive damages. According to AP, the suit arose from statements Ms. Rhodes made on her show allegedly accusing CACI employees of raping and murdering Iraqi civilians at the Abu Ghraib prison. Claims against CACI are covered by Air America's insurance policy, AP reports. CACI says any damages would be paid out of that policy and not from the company's assets. Arlington, Va.-based CACI is an information technology-consulting firm. The company generates most of its revenue from government contracts. A CACI subsidiary company provided civilian interrogators for the U.S. military in Iraq. About Air America Air America Radio, aka Piquant LLC -- http://www.airamerica.com/ -- is a full-service radio network and program syndication service in the United States. The network features discussion and information programs reflecting a liberal, left wing, or progressive point of view. Air America filed a voluntary Chapter 11 petition on Oct. 13, 2006 (Bankr. S.D. N.Y. Case No: 06-12423) Tracy L. Klestadt, Esq., at Klestadt & Winters, LLP, represents the Debtor. No Official Committee of Unsecured Creditors has been appointed in this case. When the Debtor filed for bankruptcy, it disclosed total assets of approximately $4.3 million and total debts of over $20 million. ARAMARK CORP: Buyout Prompts Moody's Low-B Ratings on Debentures ---------------------------------------------------------------- Moody's Investors Service assigned provisional ratings to the proposed financing of the leveraged buyout of Aramark Corporation. Moody's concurrently downgraded to B3 from B2 the rating on the existing 5% senior notes due 2012 of Aramark Services, Inc., a wholly-owned subsidiary of Aramark Corporation. This concludes a review for possible downgrade initiated on May 1, 2006. The rating outlook is stable. Ratings Assigned: * Aramark -- $600 million secured revolving credit facility due 2013, Ba3, LGD3, 32%; -- $3.660 billion secured term loan due 2014, Ba3, LGD3, 32%; -- $250 million secured synthetic letter of credit facility due 2013, Ba3, LGD3, 32%; -- $1.7 billion senior unsecured notes due 2015, B3, LGD5, 80%; -- $570 million senior subordinated notes due 2016, B3, LGD6, 93%; -- Corporate family rating at B1; and, -- Probability of Default rating, B1. These ratings are subject to Moody's review of final documentation. Ratings Downgraded: * Aramark -- Corporate Family Rating, to B1 from Ba3; -- Probability of Default rating, to B1 from Ba3; -- Senior unsecured shelf registration, to B3, LGD6, 96% from B2, LGD6, 96%; and, -- Senior subordinated shelf registration, to B3, LGD6, 97% from B2, LGD6, 97%. Ratings Downgraded: * Aramark Services: -- $250 million senior unsecured notes due 2012, to B3, LGD6, 96% from B2, LGD6, 96%; -- Senior unsecured shelf registration, to B3, LGD6, 96% from B2, LGD6, 96%; and, -- Senior subordinated shelf registration, to B3, LGD6, 97% from B2, LGD6, 97%. Ratings affirmed: * Aramark Services -- $300 million senior unsecured notes due 2007, Baa3; -- $31 million senior unsecured notes due 2007, Baa3; and, -- $300 million senior unsecured notes due 2008, Baa3. The review of the ratings was initiated on May 1, 2006, after the dislcosure that the company had received a proposal to be acquired in a leveraged buyout led by its chairman and private equity investors GS Capital Partners, J.P. Morgan Capital Partners, CCMP Capital Partners, Thomas H. Lee Partners and Warburg Pincus LLC. On Aug. 8, 2006, the board of directors of ARAMARK approved a definitive merger agreement. The merger is valued at approximately $8.6 billion, including the assumption or repayment of approximately $2.1 billion of existing debt, and is expected to close in the first quarter of 2007. The merger is expected to be financed with a $3.66 billion secured term loan, $1.7 billion of senior unsecured notes, $570 million of senior subordinated notes and an equity contribution of $2.1 billion. The company has received commitments to increase the size of its receivable securitization facility from $225 million to $250 million and expects to have $225 million outstanding at closing. Moody's will withdraw the ratings on the senior notes due 2007- 2008 upon the closing of the buyout since these notes are expected to be redeemed by the company. The existing corporate family rating of ARAMARK will also be withdrawn upon the closing of the buyout. The senior notes due 2012 will remain outstanding after the consummation of the buyout. The downgrade of the senior notes due 2012 reflects the structural subordination of these notes to high levels of secured and guaranteed debt in the post-acquisition capital structure. The provisional ratings of ARAMARK will be converted into definitive ratings upon the closing of the buyout. The B1 Corporate Family Rating is supported by the large size of the company, significant geographic, customer and service line diversification and good growth fundamentals. Financial strength will weaken significantly post-merger because of the approximately $4.5 billion in incremental debt needed to fund the buyout. The ratings are constrained by cash flow, leverage and interest coverage metrics that are weak for the B1 rating category. The stable outlook reflects Moody's expectation of 2%-4% organic revenue growth and modest EBIT margin improvement over the next 12-24 months. Cash flow, leverage and interest coverage metrics are expected to remain weak for the rating category during this period. Aramark Corporation, headquartered in Philadelphia, Pennsylvania, is one of the largest U.S. providers of food and support services to a variety of end markets across the country, including businesses, the educational and healthcare sectors, sports and entertainment venues and correctional institutions. The company also operates the second largest uniform and career apparel rental services and sales business in the U.S., catering to a diversified client portfolio through an extensive national service network. For the twelve month period ending Sept. 30, 2006, revenues were approximately $11.6 billion. ASARCO LLC: Has Until May 11 to Remove Civil Actions ---------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi further extends until May 11, 2007, the period within which ASARCO LLC and its debtor-affiliates may remove civil actions. As reported in the Troubled Company Reporter on Dec. 18, 2006, the Debtors were parties to a myriad of lawsuits in various state and federal courts. The issues involved in many of those lawsuits are complex and many require individual analysis of each case. Nathaniel Peter Holzer, Esq., at Jordan, Hyden, Womble, Culbreth, & Holzer, P.C., asserted that the Debtors need additional time to review the lawsuits at issue to determine whether removal of the various cases is in the best interest of the bankruptcy estates. About ASARCO LLC Tucson, Ariz.-based 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's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for chapter 11 protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). (ASARCO Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ASARCO LLC: 3 Subsidiaries Want Until Jan. 26 to File Schedules --------------------------------------------------------------- Debtors AR Sacaton LLC, ASARCO Exploration Company Inc., and Southern Peru Holdings LLC ask the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to extend the time for them to file their schedules of assets and liabilities, statement of financial affairs and lists of leases until Jan. 26, 2007. The Subsidiary Debtors explain that due to the administrative load on ASARCO LLC's employees, they need more time to compile and verify the accuracy of the data needed for the preparation and filing of their Schedules. The Subsidiary Debtors also ask the Court to schedule the meeting of creditors shortly after the date they are ordered to file their Schedules. About ASARCO LLC Tucson, Ariz.-based 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's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for chapter 11 protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). (ASARCO Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). BALDOR ELECTRIC: S&P Places Corporate Credit Rating at BB- ---------------------------------------------------------- Standard & Poor's Rating Services assigned its 'BB-' corporate credit rating to Fort Smith, Arkansas-based Baldor Electric Co. At the same time, Standard & Poor's assigned its 'BB' bank loan ratings and recovery ratings of '1' to the company's proposed $1 billion seven-year, senior secured term loan and $200 million five-year revolving credit facility, indicating the expectation of full recovery of principal in the event of a payment default. Also, the company's proposed $550 million 10-year senior unsecured notes were rated 'B' and the proposed $150 million three-year mandatory redeemable preferred stock was rated 'B-'. The rating on the preferred stock applies to the company's obligation to service the preferred stock until conversion, as well as its obligation to issue common shares under the conversion terms. The rating does not pertain to the safety of principal. The preferred stock value depends on the market value of the company's common shares, and is not addressed by the credit rating. Proceeds from the financing will be used to acquire the Power Systems business from Rockwell Automation and to refinance existing debt. Total balance sheet debt following the transaction will be approximately $1.55 billion. "The ratings reflect Baldor's aggressive financial profile following the proposed acquisition of Rockwell Automation's Power Systems business and the highly competitive and cyclical industry in which the company operates. This is somewhat offset by the company's leading share in the domestic industrial electric motors market and good operating margins," said Standard & Poor's credit analyst Dan Picciotto. After the acquisition, Baldor Electric will design and manufacture motors, power transmission systems, drives, and generators. The company will have leading domestic share in the industrial electric motor market offered under the Baldor and Reliance brands. BLUEGREEN CORP: S&P Revises Outlook to Stable From Positive ----------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Bluegreen Corp. to stable from positive. The outlook revision reflects Standard & Poor's expectation that ratings are unlikely to be raised over the intermediate term given increased leverage at Bluegreen to fund aggressive growth in the timeshare and residential home sites businesses. At the same time, Standard & Poor's affirmed its 'B' corporate credit rating on the Boca Raton, Florida-based timeshare developer. Total lease adjusted debt, including $470 million in off-balance-sheet securitized obligations, was about $775 million as of September 2006. This compares to total lease adjusted debt of about $630 million at December 2005. Standard & Poor's believes that including off-balance-sheet securitized obligations more accurately reflects the capital necessary to sustain current cash flow levels. The ratings on Boca Raton, Florida-based Bluegreen reflect the capital-intensive nature of the timeshare industry, reliance on the capital market's appetite for debt backed by the company's timeshare receivables, and a highly leveraged capital structure. Higher leverage is due primarily to an increase in debt to finance notes receivable and inventory investments, but also partly a result of flat EBITDA during 2006 due to higher expenditures related to new offsite sales locations and new marketing alliances. In addition, Bluegreen has experienced lower sales year to date in 2006 in its Communities business due to earlier-than-expected sellouts of developments in 2005. While the timeshare marketing investments would reasonably be expected to produce increased sales levels, and the inventory shortfalls in the Communities business may be temporary, Standard & Poor's expects that Bluegreen will continue to have sizable financing needs over the intermediate term to fund its growth objectives. Bluegreen expects to develop new timeshare inventory during the next several years, with investments in Las Vegas, Williamsburg, Virginia, and Wisconsin Dells, Wisconsin. Bluegreen has also made significant investments in 2006 in inventory for its Communities business, spending about $80 million year to date. CAROLINA COUNTRY: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Carolina Country Barbecue, Incorporated P.O. Box 2727 Gastonia, NC 28053 Bankruptcy Case No.: 07-30017 Chapter 11 Petition Date: January 4, 2007 Court: Western District of North Carolina (Charlotte) Judge: J. Craig Whitley Debtor's Counsel: Geoffrey A. Planer, Esq. P.O. Box 1596 Gastonia, NC 28053 Tel: (704) 864-0235 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ First National Bank of Bank loan $2,756,000 Shelby Value of Collateral: 529 S. New Hope Rd. $1,378,000 Gastonia, NC 28054 Internal Revenue Service Trade debt $1,131,196 P.O. Box 21126 Philadelphia, PA 19114 Wesley, Mark and D. Norman Trade debt $956,138 Morris c/o Fred W. DeVore, III 831 E. Morehead St. Suite 245 Charlotte, NC 28202 NC Dept. of Revenue Trade debt $184,000 Bankruptcy Unit P.O. Box 1168 Raleigh, NC 27602 Tyson Meat Company Trade debt $28,000 2545 E. Ozark Ave. Gastonia, NC 28054 City of Gastonia Trade debt $27,820 Tax Collector P.O. Box 9000 Gastonia, NC 28053 First Gaston Bank Bank loan $25,000 c/o Mark Heavner, Attorney P.O. Box 488 Gastonia, NC 28053 BB&T Insurance Services Inc. Trade debt $24,688 c/o Gerald H. Groon, Jr. Attorney P.O. Box 26268 Raleigh, NC 27611 Mecklenburg Co. Tax Trade debt $16,338 Collector P.O. Box 32247 Charlotte, NC 28232 Douglas P. Arthurs Trade debt $10,550 Arthurs & Foltz, Attorney at Law P.O. Box 2206 Gastonia, NC 28053 Prime Rate Premium Trade debt $8,500 Finance Corp., Inc. P.O. Box 100507 Florence, SC 29501 Starr Electric Trade debt $3,827 1808 Norland Road P.O. Box 18726 Charlotte, NC 28218 NCO Financial Systems Trade debt $2,692 For BellSouth Advertising 3850 N. Causeway Blvd. Suite 300 Metairie, LA 70002 Bradford and Bradford, PA Trade debt $2,280 Attorney at Law P.O. Box 977 York, SC 29745 McCannon Rogers Driscoll & Trade debt $2,214 Assoc. P.O. Box 339 Gastonia, NC 28053 Chicago Title Co. Trade debt $2,200 P.O. Box 1076 Gastonia, NC 28053 Receivables Control Corp. Trade debt $1,160 For Ecolab Inc. P.O. Box 9658 Minneapolis, MN 55440 York Chester Investment Co. Trade debt $0 209 W. 2nd Avenue Gastonia, NC 28052 UMC Investments Trade debt $0 c/o Paul I. Klein, Esq. P.O. Box 221648 Charlotte, NC 28222 City County Tax Collector Trade debt $0 P.O. Box 31577 Charlotte, NC 28231 CC FUNDING: S&P Holds Rating on 2003-2 Class B-5 Debenture at B --------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on five classes from CC Funding Corp.'s series 2003-1 and 2003-2. At the same time, ratings were affirmed on 11 other classes from these series. The upgrades reflect positive collateral performance that had significantly increased current and projected credit support levels for the respective classes as of the December 2006 remittance period. Significant principal prepayments and the shifting interest structure of the transactions have allowed the level of available credit support to build. The projected credit support multiples for the upgraded classes range from 1.94x to 2.17x the original percentages at the new rating levels. Total delinquencies to date have been low for the 2003 vintage: 3.54% for series 2003-1 and 5.22% for series 2003-2. Cumulative losses to date are 0% for series 2003-1 and 0.03% for series 2003-2, and the pools have paid down to 13.59% and 16.42% of their original sizes, respectively. The affirmations reflect actual and projected credit support levels that are sufficient to maintain the current ratings. The overall performance of both pools remains positive. These transactions utilize a senior subordinate structure; each class is supported only by the rated and unrated classes subordinate to it. The underlying collateral for these transactions consists primarily of prime, 30-year, negatively amortizing, adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties. Ratings Raised CC Funding Corp. Rating ------ Series Class To From ------ ----- -- ---- 2003-1 B-1 AA+ AA 2003-1 B-2 AA- A 2003-1 B-3 A- BBB 2003-2 B-1 AA+ AA 2003-2 B-2 A+ A Ratings Affirmed CC Funding Corp. Series Class Rating ------ ----- ------ 2003-1 A-1, A-2, A-NA AAA 2003-1 B-4 BB 2003-1 B-5 B 2003-2 A-1, A-2, A-NA AAA 2003-2 B-3 BBB 2003-2 B-4 BB 2003-2 B-5 B CENTENNIAL COMMS: Posts $33.4 Mil. Net Loss in Qtr. Ended Nov. 30 ----------------------------------------------------------------- Centennial Communications Corp. reported a $33.4 million net loss for the second fiscal quarter ended Nov. 30, 2006, compared with $8.2 million of net income for the same period in 2005. Centennial Communications Corp. reported income from continuing operations of $1 million for the second fiscal quarter of 2007 as compared to income from continuing operations of $9.9 million in the second fiscal quarter of 2006. The second fiscal quarter of 2007 included $2.9 million of stock-based compensation expense. Consolidated adjusted operating income from continuing operations for the second fiscal quarter was $88.2 million, as compared with $87.7 million for the prior-year quarter. "We have a strong history of growing retail cash flow in each of our businesses, and continue to take important steps to reassert our market leadership in both the U.S. and Puerto Rico," Centennial chief executive officer Michael J. Small said. "We operate great networks, have recently enhanced our direct distribution channels and continue to showcase the continuity and power of our brand. Our successful unlimited offering in Puerto Rico builds on our heritage of bringing simplicity and value to our customers." Centennial reported fiscal second-quarter consolidated revenue from continuing operations of $229.2 million, which included $121.5 million from U.S. wireless and $107.7 million from Puerto Rico operations. Consolidated revenue from continuing operations grew 6 percent versus the fiscal second quarter of 2006. The company ended the quarter with 1,058,700 total wireless subscribers, which compares with 992,200 for the year-ago quarter and 1,041,500 for the previous quarter ended Aug. 31, 2006. The company reported 387,500 total access lines and equivalents at the end of the second fiscal quarter, which compares with 324,100 for the year-ago quarter. U.S. wireless operations revenue was $121.5 million, a 10% increase from last year's second quarter. Retail revenue increased 17% from the year-ago period primarily driven by a 9% increase in total retail subscribers, and supported by strong feature, data and access revenue. Roaming revenue decreased 21% from the year-ago quarter as a result of a 20% decline in total roaming traffic. Puerto Rico wireless operations were $78.9 million, unchanged from the prior-year second quarter. Puerto Rico broadband operations were $31.8 million, an 11% year- over-year increase. About Centennial Communications Headquartered in Wall, New Jersey, Centennial Communications Corp. (NASDAQ: CYCL) -- http://www.centennialwireless.com/-- provides regional wireless and integrated communications services in the United States and the Puerto Rico with approximately 1.1 million wireless subscribers and 387,500 access lines and equivalents. The U.S. business owns and operates wireless networks in the Midwest and Southeast covering parts of six states. Centennial's Puerto Rico business owns and operates wireless networks in Puerto Rico and the U.S. Virgin Islands and provides facilities-based integrated voice, data and Internet solutions. Welsh, Carson, Anderson & Stowe and an affiliate of the Blackstone Group are controlling shareholders of Centennial. * * * As reported in the Troubled Company Reporter on July 3, 2006, Fitch assigned Centennial Communications Corp.'s issuer default rating at 'B-' and senior unsecured notes rating at 'CCC/RR6'. The rating outlook is stable. CHARMING CASTLE: Court Okays Burr & Forman as Committee Counsel --------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Alabama approved the application of the Official Committee of Unsecured Creditors in Charming Castle LLC's chapter 7 case to retain Burr & Forman LLP as its counsel, nunc pro tunc to Oct. 23, 2006. As counsel, Burr & Forman will: a) assist the Committee in analyzing the reorganization or liquidation efforts of the Debtor; b) give legal advice with respect to its duties and powers in the Debtor's chapter 11 case; c) assist in its investigation of the acts, conduct, assets, liabilities and continuance of the business, and any other matter relevant to the case or to the formulation of a plan of reorganization or liquidation; d) participate in the formulation of the plan; e) assist in requesting the appointment of a trustee or examiner, if necessary; and f) perform other legal services as required in the interest of the creditors. The firm's professionals bill: Professional Position Hourly Rate ------------ -------- ----------- Robert B. Rubin, Esq. Partner $400 Derek F. Meek, Esq. Partner $285 Jennifer B. Kimble, Esq. Associate $190 Julie Crawford, Esq. Paralegal $150 To the best of the Committee's knowledge, Burr & Forman is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Hackleburg, Alabama, Charming Castle LLC, dba Indies House -- http://www.indieshouse.net/-- manufactures mobile homes. The Company filed for chapter 11 protection on Oct. 5, 2006 (Bankr. N.D. Ala. Case No. 06-71420). Robert L. Shields, III, Esq., at the Shields Law Firm represents the Debtor. On Dec. 11, 2006, the Court converted the Debtor's case into chapter 7. Robert A. Morgan serves as trustee and is represented by William Dennis Schilling in Birmingham, Alabama. When the Debtor filed for protection from its creditors, it listed estimated assets of less than $50,000 but estimated debts between $10 million and $50 million. The Debtor's exclusive period to file a chapter 11 plan expires on Feb. 2, 2007. CHASE MORTGAGE: Fitch Holds Low-B Ratings on Various Certificates ----------------------------------------------------------------- Fitch Ratings affirmed these Chase Mortgage Finance Trust transactions: Series 2002-S4: -- Class A at 'AAA'. Series 2002-S8: -- Class A at 'AAA'; -- Class M at 'AAA'; -- Class B-1 at 'AAA'; -- Class B-2 at 'AA'; -- Class B-3 at 'A'; and, -- Class B-4 at 'BBB'. Series 2003-S1: -- Class A at 'AAA'; -- Class M at 'AAA'; -- Class B-1 at 'AA+'; and, -- Class B-4 at 'BB'. Series 2003-S5: -- Class A at 'AAA'; -- Class B-1 at 'A+'; -- Class B-2 at 'BBB'; -- Class B-3 at 'BB'; and, -- Class B-4 at 'B'. Series 2003-S6: -- Class A at 'AAA'; -- Class B-1 at 'A'; -- Class B-2 at 'BBB'; and, -- Class B-4 at 'B'. Series 2003-S7: -- Class A at 'AAA'. Series 2003-S8: -- Class A at 'AAA'; -- Class B-1 at 'A'; and, -- Class B-4 at 'B'. Series 2003-S12: -- Class A at 'AAA'; -- Class M at 'AA-'; -- Class B-1 at 'A'; and, -- Class B-4 at 'B'. Series 2003-S13: -- Class A at 'AAA'. Series 2004-S1: -- Class A at 'AAA'. Series 2004-S3: -- Class A at 'AAA'; -- Class M at 'AA'; -- Class B-1 at 'A'; -- Class B-2 at 'BBB'; -- Class B-3 at 'BB'; and, -- Class B-4 at 'B'. Series 2004-S4 -- Class A at 'AAA'; -- Class M at 'AA'; -- Class B-1 at 'A'; -- Class B-2 at 'BBB'; -- Class B-3 at 'BB'; and, -- Class B-4 at 'B'. The affirmations, affecting approximately $2.1 billion of the outstanding certificates, reflect a stable relationship between credit enhancement and expected loss. In addition, all of the above transactions have experienced growth in CE and have suffered minimal to no losses to date. The collateral for the above transaction consists of 15-year and 30-year fixed-rate mortgage loans extended to prime borrowers and secured by first liens on one to four-family residential properties. The loans were originated or acquired by Chase Manhattan Mortgage Corporation and are serviced by Chase Home Finance, LLC, which is rated 'RPS1' by Fitch. As of the December 2006 distribution date, the pool factors range from 5% to 70%. In addition, the transactions are seasoned from 32 months to 58 months. CMS ENERGY: Unit Gets $25MM Claim Award from American Arbitration ----------------------------------------------------------------- CMS Energy Corporation's indirect wholly owned subsidiary, Dearborn Industrial Generation LLC, received a $25 million award from the American Arbitration Association regarding disputes with Duke/Flour Daniel and others pertaining to the construction of the Dearborn Industrial Generation Project, a 710 megawatt natural gas-fueled cogeneration facility located in Dearborn, Michigan. In October 2001, DFD, the primary construction contractor for the DIG Project, presented the Dearborn Industrial Generation, LLC, developer of the DIG Project, with a change order to their construction contract and filed an action in Michigan state court against DIG, claiming contractual damages in the amount of $110 million, plus interest and costs. DFD also filed a construction lien for the $110 million. DIG contested both of the claims made by DFD. The company disclosed that, in addition to drawing down on three letters of credit totaling approximately $30 million that it obtained from DFD, DIG filed an arbitration claim against DFD asserting in excess of an additional $75 million. The judge in the Michigan state court case entered an order staying DFD's prosecution of its claims in the court case and permitting the arbitration to proceed and the claims of both parties to be considered. The arbitration hearing concluded on Sept. 28, 2006. The AAA arbitration panel awarded DIG approximately $25 million, including interest, on its various claims against DFD presented in the arbitration. The panel also awarded DFD approximately $5 million on its claims and credited DFD approximately $30 million, plus $2 million in interest, for the three letters of credit DIG drew against DFD. The result is a net amount due DFD, inclusive of interest, in the amount of approximately $12 million, which is payable upon entry of judgment in Wayne County Circuit Court and within the applicable time periods contained in the Michigan Court Rules. The company has previously accrued a liability of approximately $30 million on the matter and has recorded fourth quarter pre-tax earnings of approximately $18 million because of the arbitration result. CMS Energy Corporation -- http://www.cmsenergy.com/-- is a Michigan-based company that has as its primary business operations an electric and natural gas utility, natural gas pipeline systems, and independent power generation. Through its regulated utility subsidiary, Consumers Energy Co., the company provides natural gas and electricity to almost 60% of nearly 10 million customers in Michigan's lower-peninsula counties. * * * As reported in the Troubled Company Reporter on Oct. 16, 2006, Moody's Investors Service lowered its Corporate Family Rating for CMS Energy Corp. to Ba2 from Ba1, in connection with its new Probability-of-Default and Loss-Given-Default rating methodology. CMS ENERGY: Inks MOU to Settle Securities Class Action Suits ------------------------------------------------------------ CMS Energy Corporation's special committee of independent directors and its full board of directors approved a memorandum of agreement regarding the settlement of shareholder class action lawsuits linked to round-trip energy trading that took place at CMS Marketing, Services and Trading Company, its former Texas- based subsidiary. The lawsuits alleged that the company violated U.S. securities laws and regulations by making allegedly false and misleading statements about its business and financial condition, particularly with respect to revenues and expenses recorded in connection with round-trip trading by CMS Marketing between 2000 and 2002. The special committee of independent directors and the company's full board of directors, both judged that it was in the best interests of shareholders to eliminate the business uncertainty. The company expects the MOU to lead to a detailed stipulation of settlement that will be presented to the assigned federal judge and the affected class in the first quarter of 2007. The District Court appointed Andover Brokerage LLC and Herbert Steiger as lead plaintiffs and the law firms of Entwistle & Cappucci LLP and Milberg Weiss Bershad Hynes & Lerach LLP as plaintiffs' co-lead counsel, and the law firms of Mantese, Miller, and Shea, PLLC, and Elwood S. Simon & Associates as plaintiffs' liaison counsel for the Class action suits. Terms of the MOU Under the terms of the MOU, the litigation will be settled for a total of $200 million, including the cost of administering the settlement and any attorney fees the court awards. The company will make a payment of $123.5 million plus an amount equivalent to interest on the outstanding unpaid settlement balance beginning on the date of preliminary approval of the Court and running until the balance of the settlement funds is paid into a settlement account. Of the amount, the company's insurers will pay $76.5 million. The company disclosed that it has established a $123.5 million reserve and taken a resulting pre-tax charge to 2006 earnings in the fourth quarter. The company says that, in entering the MOU, it makes no admission of liability under the Actions. The company further disclosed that the settlement amount can be paid and its liquidity needs for continuing operations can be met from cash from operations and available cash. A full text-copy of the MOU may be viewed at no charge at http://ResearchArchives.com/t/s?1821 CMS Energy Corporation -- http://www.cmsenergy.com/-- is a Michigan-based company that has as its primary business operations an electric and natural gas utility, natural gas pipeline systems, and independent power generation. Through its regulated utility subsidiary, Consumers Energy Co., the company provides natural gas and electricity to almost 60% of nearly 10 million customers in Michigan's lower-peninsula counties. * * * As reported in the Troubled Company Reporter on Oct. 16, 2006, Moody's Investors Service lowered its Corporate Family Rating for CMS Energy Corp. to Ba2 from Ba1, in connection with its new Probability-of-Default and Loss-Given-Default rating methodology. COLLINS & AIKMAN: Wants Second Stipulation on Lear Pact Approved ---------------------------------------------------------------- Collins & Aikman Corp. and its debtor-affiliates ask the Honorable Steven W. Rhodes of the U.S. Bankruptcy Court for the Eastern District of Michigan to approve a second stipulation between the Debtors and Lear Corporation and its affiliates and subsidiaries resolving the remaining disputed prepetition debt, which will mark the end of the dispute. Before filing for bankruptcy, the Debtors and Lear provided each other with certain automotive component parts. It was agreed on the first stipulation that the prepetition Lear receivable owed to the Debtors was $4,441,028. The Debtors also believed that they were owed an additional $866,622 from Lear on account of prepetition shipments to Lear. It was also agreed in the First Stipulation that Lear was owed $331,899. At the time of the First Stipulation, Lear asserted that it continued to be owed on account of prepetition shipments to the Debtors an additional $88,209 from the Debtors. Both parties have reconciled and agreed that the additional receivable is due to Lear. On Nov. 3, 2006, Lear filed a motion seeking a declaration that the automatic stay did not prohibit it from recouping the prepetition amounts owed to Lear against prepetition amounts that Lear owed the Debtors. Under certain agreements, the Debtors transferred certain accounts to Carcorp Inc., who in turn assigned substantially all accounts receivable to General Electric Capital Corporation. GECC alleged that under the terms of the Agreements, around $1,776,305 of the Lear Receivable was assigned to GECC. It was agreed in the First Stipulation that $1,323,907 was owed in respect to the assigned accounts. On Dec. 22, 2005, GECC filed a complaint for declaratory judgment and related relief against the Debtors and Lear seeking payment of the portion of the Lear Receivable assigned to GECC. In accordance with the First Stipulation, Lear paid the Debtors $2,697,683 and paid GECC $1,323,907. On Oct. 13, 2006, the Court approved a stipulation regarding a Receivables Transfer Agreement between the Debtors and GECC. The Debtors and Lear now agree that $513,168 of the disputed prepetition debt is actually owed by various other customers of the Debtors or is otherwise not payable by Lear; and $273,272 is based on invoices that were paid by Lear, and therefore, were not properly categorized as part of the Lear Receivable. The remaining Disputed Prepetition Debt is $79,512. Pursuant to the Second Stipulation, the Debtors and Lear have agreed that: * Lear will pay $39,756 to the Debtors within five business days from the entry of Court order, and the payment will absolve Lear of any and all liability for any debt on account of the Lear Receivable or the Disputed Prepetition Debt; and * Lear may recoup the Reserve and apply it in full settlement of the Additional Receivable. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represents C&A in its restructuring. Lazard Freres & Co., LLC, provides the Debtor with investment banking services. Michael S. Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors Committee. When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and US$2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) COMPLETE RETREATS: Court OKs $98MM Asset Sale to Ultimate Resort ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Connecticut has approved an Asset Purchase Agreement and a Management Contract by and between the Debtors and Ultimate Resort, LLC. The Hon. Alan H.W. Shiff authorized the transfer, conveyance, and assignment of the Acquired Assets to Ultimate, free and clear of all liens, claims, encumbrances, and other interests on the closing of the Sale. Judge Shiff does not exempt the transfer of real estate in Florida from stamp and similar taxes under Section 1146(a) as per the request of the Florida Department of Revenue. The Court explains that it has not found any authority for a Section 1146(a) exemption in a case where a plan had not been filed as of the time of the Sale. Contracts & Liabilities Assumed by Ultimate The Court also authorized the Debtors to assume and assign the Assumed Contracts and the Assumed Liabilities to Ultimate. Each of the Assumed Contracts will, upon assignment to Ultimate, be deemed to be valid and binding on Ultimate and in full force and effect and enforceable in accordance with their terms, Judge Shiff says. The Debtors and the non-Debtor party to an Assumed Contract will endeavor in good faith to resolve any disputed cure amount objections, Judge Shiff rules. If a resolution cannot be reached, the Court directs the Debtors to promptly schedule a hearing to address the unresolved Cure Objections. Pursuant to agreements between the Debtors and the applicable non-Debtor parties, the cure amounts for the Debtors' contracts with 16 counterparties are: Counterparty Cure Amount ------------ ----------- Akira, LLC $49,503 Angela Meyer 13,709 BDL Associates 20,587 Ben and Holly Gill 30,141 Chris Laukenmann 19,193 Curtis D. Stoldt 15,080 David Stephens 39,205 Dennis Gurevich 21,798 Doug and Cynthia Harmon 39,508 F-4 Crystal Springs, LLC 20,564 Kiawah Island Golf Resort 78,451 Moshe Kedan 23,208 Paul J. Morrissey 13,709 Susan Bergeron 31,161 Thrall Enterprises, Inc. 13,866 Trump International Management Corp. 246,994 Except for the right to enforce the Debtors' obligation to pay the Cure Amounts, each non-Debtor party to an Assumed Contract is forever barred, precluded, estopped, and permanently enjoined from asserting against the Debtors or Ultimate any default existing as of the date of the Sale Hearing. The Court permits the Debtors to reject certain executory contracts and unexpired leases since those contracts or leases are not going to be either assumed by the Debtors or assumed and assigned to Ultimate in connection with the Sale. A nine-page list of the Rejected Contracts is available for free at http://ResearchArchives.com/t/s?1826 A full-text copy of the Ultimate Asset Sale Order is available for free at http://ResearchArchives.com/t/s?1827 Debtors File Management Agreement In connection with the proposed sale of substantially all of their assets to Ultimate Resort, LLC, the Debtors delivered to the Court their management agreement with Ultimate. Pursuant to the Management Agreement, Ultimate will fund operating disbursements with respect to the Debtors' destination club business from Dec. 29, 2006, until the Closing Date of the Ultimate Asset Purchase Agreement. Specifically, Ultimate will be responsible for funding any disbursements set forth in the Budget that are up to, but in no event in excess of: -- 10% more than the amount of total disbursements for any line item forecasted in the Budget for the applicable time period if that forecasted line item disbursement is equal to or more than $50,000 in the forecasted week; or -- 20% more than the amount of total disbursements forecasted in the Budget for the applicable time period if that forecasted line item disbursement is less than $50,000 in the forecasted week. Under the Management Agreement, the Debtors and Ultimate will continue, consistent with the practices developed in connection with the execution of the APA, to cooperate with regard to the day-to-day operations and management of the Business. Moreover, the Debtors will continue to own the Acquired Assets and be responsible for all liabilities they incur, including without limitation the Assumed Liabilities. The Management Agreement will commence as of the Funding Date and will remain in effect until the Management Termination Date, unless terminated earlier in accordance with its provisions. The Management Termination Date will occur on the earliest of: (a) the APA Closing Date; (b) the date on which the APA terminates by its terms; (c) the date on which the Ableco DIP Facility or any successor terminates or is accelerated in accordance with its terms; (d) the date on which the Debtors' bankruptcy case is converted to a proceeding pursuant to Chapter 7 of the Bankruptcy Code; (e) at the option of the non-breaching party, upon a breach of the Management Agreement's terms, if that breach is not cured within 10 days after notice of the breach is given; or (f) a later date as the parties may mutually agree in writing. During the term of the Management Agreement, Ultimate is entitled to the benefits of all the Debtors' licenses, contracts, leases and agreements, and the Debtors will cooperate in making those licenses, contracts, leases and agreements available to Ultimate. The Management Agreement permits Ultimate, in its sole discretion, to contract with third parties and former employees at its own expense for assistance. In addition, Ultimate will have the right to collect amounts under the Consent Documents on or after the Funding Date. A full-text copy of the Ultimate Resort Management Agreement is available for free at http://ResearchArchives.com/t/s?1828 Payment to Patriot On the closing of the Sale, Judge Shiff permits the Debtors to pay in full all outstanding secured DIP financing obligations owed to The Patriot Group LLC. As reported in the Troubled Company Reporter on Nov. 27, 2006, in connection with the closing of the Debtors' DIP Financing with Ableco Finance LLC on Nov. 15, 2006, the Debtors paid all of the amounts due and owing to The Patriot Group LLC except for $3,500,000. Patriot agreed that the Debtors could delay repaying the remaining DIP amount in exchange for an $875,000 financing fee. If the Debtors pay the DIP Obligation by Nov. 30, 2006, Patriot agreed that the Debtors would only be obligated to pay a $175,000 financing fee. Ultimate Resort permits the Debtors to utilize $3,675,000 of the $10,000,000 Deposit to pay the outstanding secured DIP financing obligations owed to Patriot, Mr. Daman states. In exchange, the Debtors agree to substitute Ultimate Resort for Patriot with all of the protections and security interests that Patriot currently has, as a DIP lender, with respect to the amount of the Remaining Patriot DIP Obligation that will be repaid from the Deposit. To the extent Ultimate Resort will be entitled to a return to all or a portion of its Deposit under the terms and conditions of the APA, Ultimate Resort would be granted a second priority lien and superpriority administrative expense claim for $3,675,000. At the Closing, the entire amount of the Deposit will be deemed applied to the final $98,000,000 Purchase Price. 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, Conn., 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. The Debtors' exclusive period to file a plan expires on Feb.18, 2007. They have until April 19, 2007, to solicit acceptance to that plan. (Complete Retreats Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). COMPLETE RETREATS: Court Approves $3.14 Mil. Real Property Sale --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Connecticut authorized Complete Retreats LLC and its debtor-affiliates to sell the Princeville Property to Gary P. Siracuse for $1,290,000, and the Bluffton Property to Thomas Gibbons for $550,000, free and clear of all liens, claims, and encumbrances. Property Address Proposed Buyer Purchase Price ---------------- -------------- -------------- 7447 Royal Street East Ladd Tanner $1,300,000 Unit 351 Park City, Utah 4165 Kamalani Lane Gary P. Siracuse 1,290,000 Princeville, Hawaii 14 West Cottage Circle Thomas Gibbons 550,000 Bluffton, South Carolina The Park City Property includes two 1,475-square foot houses. Each of the houses has two bedrooms and two bathrooms. The Princeville Property includes a nearly 2,500-square foot house with three bedrooms, three and a half bathrooms, and a nearly 500-square foot garage. The Princeville Property is located on the Princeville Mallon Golf Course. The Bluffton Property, which includes a 2,131-square foot house with four bedrooms and four bathrooms, is located in a community resort development known as the Belfair Plantation. Amenities at the Bluffton Property and the Belfair Plantation include views of a golf course and the Colleton River, a health and fitness center, an indoor lap pool, an outdoor pool, tennis courts, a basketball court, a volleyball court, and an athletic field. The Hon. Alan H.W. Shiff directs the Debtors to pay $25,800 to CIT Capital USA, Inc., and $64,500 to Century 21 All Islands, in full satisfaction of the brokers' fees in connection with the sale of the Princeville Property. Judge Shiff also directs the Debtors to pay $5,500 to CIT Capital and $33,000 to Corabett Thomas Realty for the brokers' fees in connection with the sale of the Bluffton Property. Pursuant to the Ableco DIP Facility, the Court directs the Debtors to pay Ableco Finance, LLC, 100% of the Net Cash Proceeds from the sale of the Princeville Property and the Bluffton Property.