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/raid1/www/Hosts/bankrupt/TCR_Public/070123.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, January 23, 2007,` Vol. 11, No. 19 Headlines AMERICO LIFE: Moody's Holds Ba1 Rating & Says Outlook is Positive ARCA FUNDING: Moody's Rates $10 Million Class VII Notes at Ba1 ARVINMERITOR INC: Moody's Lowers Corporate Family Rating to Ba3 ASTRATA GROUP: Nov. 30 Balance Sheet Upside-Down by $18.7 Million ATLANTIC CAPITAL: Case Summary & Three Largest Unsecured Creditors BANKRUPTCY MANAGEMENT: Moody's Cuts Corporate Family Rating to B3 BLAST ENERGY: Files for Chapter 11 Protection in S.D. Texas BLAST ENERGY: Case Summary & 40 Largest Unsecured Creditors BMS HOLDINGS: Moody's Junks Rating on $150 Million PIK Notes CABLEVISION SYS: Dolan Offer Rejection Cues S&P to Hold Ratings CALIBRE ENERGY: Posts $804,274 Net Loss in Quarter Ended Sept. 30 CHIPPEWA COUNTRY: Weak Financial Profile Cues S&P to Cut Rating DELTA AIR: Says Disclosure Statement Has Adequate Information DELTA AIR: Wants Court Nod on Solicitation & Tabulation Procedures DIAGNOSTIC CLINIC: Voluntary Chapter 11 Case Summary EARTHSHELL CORP: Production Unimpeded Despite Chapter 11 Filing EARTHSHELL CORP: Case Summary & 20 Largest Unsecured Creditors EMISPHERE TECHN: Board Appoints Lewis H. Bender as Interim CEO ENCORE ACQUISITION: Moody's Places Ratings on Review ENESCO GROUP: Wants Auction for Assets Scheduled on February 7 FINANCIAL MEDIA: Nov. 30 Balance Sheet Upside-Down by $1.7 Million FORD MOTOR: Eyes Partnership With Toyota FORD MOTOR: Mark Fields Giving Up Use of Company Plane GAP INC: Pressler Resigns as President & Chief Executive Officer GEO GROUP: S&P Rates New $515 Million Senior Facility at BB GLASSMASTER CO: Posts $122,673 Net Loss in Period Ended December 3 GREAT CANADIAN: Moody's Rates Proposed CDN$400 Mil. Loan at Ba2 GREAT CANADIAN: S&P Rates Proposed CDN$400 Mil. Senior Loan at BB GSAMP TRUST: Moody's Rates Class B-2 Certificates at Ba2 HEADWATERS INC: S&P Rates Proposed $135 Million Senior Notes at B HEBER HOMES: Voluntary Chapter 11 Case Summary HUDSON RESEARCH: Case Summary & 20 Largest Unsecured Creditors INTELSAT BERMUDA: Issues $600 Million Floating Rate Senior Notes INZON CORP: DeJoyaGriffith Raises Going Concern Doubt J.P. MORGAN: S&P Downgrades Rating on Class L Certificates to BB JOHN SLIEMERS: Case Summary & 20 Largest Unsecured Creditors KGEN LLC: S&P Rates Planned $400 Million Credit Facilities at BB- KIRKLAND KNIGHT: Gets Court Nod to Use Madison's Cash Collateral LENNAR CORP: Posts $195.6 Mil. Net Loss in 4th Qtr. Ended Nov. 30 LOUISIANA WORSHIP: Case Summary & 20 Largest Unsecured Creditors MAHESH GOPALAKRISHNA: Case Summary & 20 Largest Unsec. Creditors MATTRESS HOLDINGS: Moody's Rates $210 Million Senior Loans at Ba3 MERRILL LYNCH: Fitch Holds CCC Rating on $28.4 Mil. Certificates MESABA AVIATION: Files Chapter 11 Reorganization Plan in Minnesota MESABA AVIATION: MAIR Inks Agreement with Northwest Airlines MESABA AVIATION: Inks Pact Resolving Wayne County Airport's Claim MILLSAPS: Voluntary Chapter 11 Case Summary MTS EQUITY: Case Summary & Five Largest Unsecured Creditors NAPIER ENVIRONMENTAL: Lenders Waive Dec. 2006 Interest Payments NORTHWEST AIRLINES: Mesaba to Become Wholly-Owned Subsidiary NORTHWEST AIRLINES: Inks Agreement with MAIR Holdings PITTSBURGH BREWERY: Union Workers Approves Three-Year Deal QUEST TRUST: S&P Lowers Ratings on Class M-2 and M-3 Certificates REFCO INC: Court Denies Plan Confirmation Order Reconsideration SANMINA-SCI: S&P Retains Negative CreditWatch on BB- Ratings SEA CONTAINERS: Principal Financial Discloses 9.5% Equity Stake SEA CONTAINERS: Committee Taps Morris Nichols as Delaware Counsel SIGMAN & SIGMAN: Case Summary & 20 Largest Unsecured Creditors SIRIUS SATELLITE: Could Not Merge With XM Says FCC Chairman SIRIUS SATELLITE: Howard Stern Gets $82.9 Mil. Incentive Payment TCR I: Court Continues Disclosure Statement Hearing to March 13 TITAN GLOBAL: Nov. 30 Balance Sheet Upside-Dow by $15.2 Million TOTAL TRAVEL: Case Summary & 20 Largest Unsecured Creditors TRANSAX INTERNATIONAL: Plans to Sell Brazil Unit to Gestao U.S. ENERGY: Inks Pact Granting Countryside $99 Mil. Secured Claim UWINK INC: Restates Sept. 30 Third Quarter Financial Statements VESTA INSURANCE: Administrative Claims Bar Date Set for January 25 VESTA INSURANCE: Parker Hudson Wants Payment Procedures Amended WELLS FARGO: S&P Holds B Rating and Removes Watch on Two Certs. WESTERN MEDICAL: Chapter 7 Trustee Taps Lane & Nach as Counsel WILLOWBEND NURSERY: Chap. 11 Trustee Hires Cowden as Counsel WILLOWBEND NURSERY: Chap. 11 Trustee Hires V. Gaudio as Accountant XM SATELLITE: Could Not Merge With SIRIUS Says FCC Chairman * Ravin Greenberg Opens Manhattan Office * Large Companies with Insolvent Balance Sheets ********* AMERICO LIFE: Moody's Holds Ba1 Rating & Says Outlook is Positive ----------------------------------------------------------------- Moody's Investors Service affirmed the Baa1 insurance financial strength rating of Americo Financial Life and Annuity Insurance Company and the Ba1 senior unsecured debt rating of Americo Life, Inc. The outlook on the ratings was changed to positive from stable for both companies. Americo Financial is a wholly-owned subsidiary of Americo, and Americo is a wholly-owned subsidiary of privately-held Financial Holding Corporation. Moody's said that the change in the outlook on Americo's ratings to positive from stable reflects certain key positive developments. "Americo's continued development of its niche marketing strategy, whereby it concentrates its sales, marketing, and product development efforts on a few chosen market segments, has been positive" says Moody's Vice President-Senior Credit Officer, Robert P. Donohue. "The company is better able to compete in its chosen niches of mortgage insurance, final expense insurance, and annuities for seniors. In addition, the company has made progress in streamlining its operations, resulting in a low unit costs and better profitability. Its transition to a more efficient and technologically advanced operating platform has also helped with cost control" added Mr. Donohue. The rating agency said that Americo's credit strengths include good statutory capital adequacy, moderate financial leverage, a sound investment portfolio, and a sizeable block of profitable life insurance policies. In addition, the company's private ownership allows management to maintain a long-term focus on profitability. Americo's strengths are mitigated by its relatively small scale of operations, concentration of distribution through a single, independent channel, and potential statutory earnings volatility due to its niche market focus. In addition, the company remains exposed to spread compression and other asset-liability management risks, particularly in its annuity business, and has had flat premium growth on a consolidated GAAP basis in recent years. Moody's said that developments that could positively impact Americo's ratings include: * development of a significant distribution channel in addition to existing IMO channel; * consolidated NAIC risk-based capital at United Fidelity Life Insurance Company (United Fidelity; the intermediate statutory holding company between Americo and Americo Financial) consistently above 325%; * maintenance of adjusted financial leverage below 30%; * continued improvement in cash flow coverage of holding company interest expense and preferred dividends; and * maintenance of EBIT interest coverage of 4 times or better. The ratings agency added that developments that could adversely affect the ratings of Americo include: * consolidated NAIC RBC below 250% at United Fidelity; * cash flow coverage of holding company interest expense and preferred dividends below 1.5 times; * adjusted financial leverage above 30%; * consolidated EBIT interest coverage of less than 4 times; * a significant financial loss related to a failure of the company's hedging program; * a loss of a significant number of IMO distributors; and * exiting from a major line of business, leaving the company with only two significant business lines. Moody's affirmed these ratings with a positive outlook: Americo Financial Life and Annuity Insurance Company -- Insurance Financial Strength at Baa1 Americo Life, Inc. -- Senior Unsecured Debt at Ba1 The last rating action on the companies was on April 23, 2003 when a Ba1 senior unsecured debt rating was assigned to Americo's senior notes due 2013, and the Baa1 IFS rating was assigned to Americo Financial. Americo and Americo Financial are based in Kansas City, Missouri. As of September, 30, 2006, Americo Financial reported total statutory assets of approximately $3.6 billion and capital of about $238 million. Moody's insurance financial strength ratings are opinions of the ability of insurance companies to repay punctually senior policyholder claims and obligations. ARCA FUNDING: Moody's Rates $10 Million Class VII Notes at Ba1 -------------------------------------------------------------- Moody's Investors Service has assigned these ratings to the notes issued by Arca Funding 2006-II, Ltd.: * Aaa to the $70,000,000 Class II Funded Senior Notes Due 2047, * Aa2 to the $56,000,000 Class III Funded Senior Notes Due 2047, * A2 to the $29,500,000 Class IV-A Funded Mezzanine Deferrable Notes Due 2047, and to the $10,000,000 Class IV- B Funded Mezzanine Variable Notes Due 2047, * Baa2 to the $36,500,000 Class V Funded Mezzanine Deferrable Notes Due 2047, * Baa3 to the $7,000,000 Class VI Funded Mezzanine Deferrable Notes Due 2047, and * Ba1 to the $10,000,000 Class VII Funded Mezzanine Deferrable Notes Due 2047. Moody's ratings of the Notes address the ultimate cash receipt of all required interest and principal payments, as provided in the Notes' governing documents, and are based on the expected loss posed to the Noteholders relative to receiving the present value of such payments. The ratings of the Notes reflect the consideration of the transaction's legal structure, credit quality of the static pool of underlying assets, which consist primarily of residential mortgage backed securities and ABS CDOs, as well as the credit enhancement for the Notes inherent in the transaction's capital structure. ARVINMERITOR INC: Moody's Lowers Corporate Family Rating to Ba3 --------------------------------------------------------------- Moody's Investors Service has downgraded ArvinMeritor's Corporate Family Rating to Ba3 from Ba2. Ratings on the company's secured bank obligations and unsecured notes were lowered one notch as a result. The actions follow a decline in the company's margins over the last year and anticipates expectations expect that, despite recent progress in reducing its aggregate indebtedness and leverage, ARM's profitability and related coverage metrics will remain under pressure likely over the intermediate term as commercial vehicle volumes in North America will significantly decline and conditions in its light vehicle segment remain very challenging. ARM's metrics will increasingly fall short of Ba2 comparables as the year progresses and will assume the complexion of the Ba3 rating category. Moody's also affirmed ARM's liquidity rating of SGL-2 to reflect the actions that the company has taken to strengthen is capital structure which includes minimal near term debt maturities and improved availability under its committed revolving credit. The outlook is stable at the lower rating. Ratings lowered: ArvinMeritor, Inc. -- Corporate Family Rating to Ba3 from Ba2 -- Senior Secured bank debt to Ba1, LGD-2, 20% from Baa3, LGD-2, 18% -- Senior Unsecured notes to B1, LGD-4, 65% from Ba3, LGD-4, 64% -- Probability of Default to Ba3 from Ba2 -- Shelf unsecured notes to (P)B1, LGD-4, 65% from (P)Ba3, LGD-4, 64% Arvin Capital I -- Trust Preferred to B2, LGD-6, 96% from B1, LGD-6, 96% Arvin International PLC -- Unsecured notes guaranteed by ArvinMeritor, Inc. to B1, LGD-4, 65% from Ba3, LGD-4, 64% Ratings affirmed: ArvinMeritor, Inc. -- Speculative Grade Liquidity rating, SGL-2 The last rating action was in September 2006 at which time ratings were aligned with Moody's Loss Given Default Methodology. The outlook had been negative since April 2006. The Ba3 Corporate Family rating continues to reflect solid scores under the Auto Supplier Methodology for the company's scale, market position and diversification spread across two business segments. Nonetheless, key credit metrics of EBITA margin and interest coverage constrain these qualitative strengths and pull the overall rating into the Ba3 category. A downturn in North American commercial vehicle production volumes is anticipated as 2007 progresses and is likely to yield softer margins and coverage metrics over the intermediate term. While leverage has been reduced as a result of its 2006 tender offer and application of proceeds from business dispositions, it remains high. Financing actions taken in 2006 have improved the company's liquidity profile, lengthened the company's debt maturity schedule, enhanced its financial flexibility and lend further support to the rating and stable outlook. The Ba1 ratings on the bank obligations, two notches above the Corporate Family Rating, flow from their perfected liens on substantial assets at the borrower and guaranteeing subsidiaries as well as a significant level of junior capital beneath their claims. Similarly, the B1 rating on the unsecured notes, one level below the Corporate Family Rating, reflects their lower priority as well as the benefits of up-streamed guarantees from material domestic subsidiaries. Arvin Capital's trust preferred issue considers its underlying investment in subordinated notes of ARM, which are not guaranteed by any operating subsidiaries. The SGL-2 Speculative Grade Liquidity rating represents good liquidity over the next twelve months. Moody's notes that ARM finished fiscal 2006 with $350 million of consolidated cash on the balance sheet and is expected to generate a modest amount of free cash flow during fiscal 2007. External sources of liquidity include availability under its $980 million revolving credit facility with ample cushions under its financial covenants. ArvinMeritor, Inc., headquartered in Troy, MI, is a global supplier of a broad range of integrated systems, modules and components serving light vehicles, commercial trucks, trailers, and specialty original equipment manufacturers as well as certain aftermarkets. Revenues in fiscal 2006 were approximately $9.2 billion. ASTRATA GROUP: Nov. 30 Balance Sheet Upside-Down by $18.7 Million ----------------------------------------------------------------- Astrata Group Inc. reported a $6.3 million net loss on $758,035 of net sales for the third quarter ended Nov. 30, 2006, compared with a $3.4 million net loss on $1.1 million of net sales for the same period in 2005. Gross profit decreased approximately $75,000 to approximately $334,000 for the quarter ended Nov. 30, 2006, compared to approximately $409,000 for the same period in 2005. Gross profit as a percentage of revenue increased from 38% to 44%. Operating loss was approximately $1.9 million for the quarter ended Nov. 30, 2006, and approximately $1.7 million for the quarter ended Nov. 30, 2005. The increase in net loss is mainly due to the $211,098 increase in operating loss, the $689,176 increase in interest expenses, and the $4.4 million loss on debt extinguishment, partly offset by a $1.5 million benefit from a change in fair value of derivative warrant liability. The loss on debt extinguishment is related to the Oct. 13, 2006, conversion of 1.5 million shares of preferred stock issued to creditors in exchange for notes payable, into 3 million shares of the company's restricted common stock. At Nov. 30, 2006, the company's balance sheet showed $3.2 million in total assets, $21.8 million in total liabilities, and $40,114 in minority interest, resulting in an $18.7 million total stockholders' deficit. The company's balance sheet at Nov. 30, 2006, also showed strained liquidity with $2.1 million in total current assets available to pay $21.8 million in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended Nov. 30, 2006, are available for free at http://researcharchives.com/t/s?18ca Going Concern Doubt Squar, Milner, Reehl & Williamson, LLP, expressed substantial doubt about Astrata's ability to continue as a going concern after auditing the company's financial statements for the fiscal year ended Feb. 28, 2006. The auditing firm pointed to the company's negative working capital of approximately $11.5 million at Feb. 28, 2006, a net loss of $14.9 million for the year then ended, negative operating cash flow in fiscal 2006 of $3.6 million, and a stockholders' deficit of $9.6 million as of Feb. 28, 2006. About Astrata Group Astrata Group Inc. (OTC BB: ATTG.OB) -- http://www.astratagroup.com/ -- is engaged in the telematics and Global Positioning System industry, focused on advanced location- based IT products and services that combine positioning, wireless communications, and information technologies. The company provides advanced positioning products, as well as monitoring and airtime services to industrial, commercial, governmental entities, academic/research institutions, and professional customers in a number of markets including surveying, utility, construction, homeland security, military, intelligence, mining, agriculture, marine, public safety, and transportation. ATLANTIC CAPITAL: Case Summary & Three Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Atlantic Capital Partners, Inc. 175 Crispin Street Merritt Island, FL 32952 Bankruptcy Case No.: 07-70147 Chapter 11 Petition Date: January 17, 2007 Court: Eastern District of New York (Central Islip) Judge: Dorothy Eisenberg Debtor's Counsel: Avrum J. Rosen, Esq. The Law Offices Of Avrum J. Rosen 38 New Street Huntington, NY 11743 Tel: (631) 423-8527 Fax: (631) 423-4536 Total Assets: $3,289,600 Total Debts: $1,327,635 Debtor's Three Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Fisher Egan Golden LLP Professional Fees $60,000 475 East Main Street, Suite 114 Patchogue, NY 11772 Ford Credit Loan $38,635 P.O. Box 31111 Collateral: Tampa, FL 33631-3111 $14,000 Unsecured: $24,635 WMJC-FM Trade Debt $29,000 234 Airport Plaza, Suite 5 Farmingdale, NY 11735 BANKRUPTCY MANAGEMENT: Moody's Cuts Corporate Family Rating to B3 ----------------------------------------------------------------- Moody's Investors Service downgraded Bankruptcy Management Solutions, Inc.'s corporate family rating to B3 from B2. The downgrade was prompted by the proposed increase in debt to be used to finance a shareholder distribution. The company is planning to issue approximately $150 million in senior unsecured pay-in-kind notes at a newly formed holding company, BMS Holdings, Inc. The ratings on the existing first and second lien debt however remain unchanged at Ba3 and Caa1 respectively. The outlook is stable. These ratings are affected: * Corporate Family Rating to B3 from B2 * Probability of Default Rating to B3 from B2 * $15 million Senior Secured Revolving Credit Facility due 2011, Ba3, LGD2, 19% * $220 million Senior Secured First Lien due 2012, Ba3, LGD2, 19% * $125 million Senior Secured Second Lien due 2013, Caa1, LGD4, 62% At BMS Holdings, Inc. Moody's assigned this first time rating: * $150 million Senior unsecured PIK notes due 2014, Caa2, LGD5, 88% The ratings change is driven by an increase in leverage by approximately 2 times pro forma for the new debt issuance. Moody's notes that the company exhibits good stability and predictability of the underlying Chapter 7 trustee business which could potentially support the higher leverage. While the trustee business is very predictable, BMS's cash flow is very sensitive to interest rate declines. Although the company has put in place an interest rate management program to minimize the impact of rate declines, Moody's believes there is still sufficient potential volatility to EBITDA and leverage to merit a B3 rating. Moody's does note that even in a case of prolonged low interest rates, the company should remain cash flow positive (after debt service) until the various debt instruments mature. The B3 corporate family rating also reflects (i) company's very small size and narrow focus on bankruptcy case management services; (ii) vulnerability to changes in economic environments or changes to the bankruptcy code, both of which could result in a decline in bankruptcy filings. The ratings also incorporate BMS's leading share in the duopolistic Chapter 7 trustee market, high barriers to entry, large diversified customer base with "sticky" deposits that provide a stable source of recurring revenues, high customer retention rate, high pro forma EBITDA margins and resultant positive free cash flow generation and personal filing trends that should continue to drive bankruptcy growth. The stable outlook reflects expectations that the company will continue to generate positive free cash flow after minimal working capital changes and limited capital expenditures, albeit at a lower level constrained by the debt servicing burden, and will use most of its free cash flow for possible debt reduction. Irvine, CA-based Bankruptcy Management Solutions, Inc is a leading provider of bankruptcy case management solutions to Chapter 7 trustees. BLAST ENERGY: Files for Chapter 11 Protection in S.D. Texas ----------------------------------------------------------- Blast Energy Services Inc. and its wholly owned subsidiary, Eagle Domestic Drilling Operations LLC filed voluntary petitions on Friday, Jan. 19, 2007, with the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, in order that they may dispose of burdensome and uneconomical assets and reorganize their financial obligations and capital structure. The action will also stay any existing lawsuits filed against the Debtors, regardless of jurisdiction. The Debtors will continue to operate their business as "debtors-in possession" under the jurisdiction of the Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Court. The Debtors used assumptions in the August 2006 acquisition of the land rig drilling business that included high revenue and full utilization rate expectations based upon the five two-year term drilling contracts in place at the time. The subsequent cancellation of these contracts by Hallwood Energy Petroleum and Quicksilver Resources in the fall of 2006 has reduced the Debtors revenue expectations and consequently their ability to meet the scheduled payments on the senior debt incurred for the acquisition of the land drilling business. The cancellation was in violation of the terms of their drilling contracts and the Debtors have filed suit for breach of contract. Subsequently, the Debtors have received written notice from their senior lender of various events of default under the loan agreements and related agreements with the senior lender. Further discussions with the senior lender resulted in the mutual decision that the company should file for protection under the applicable bankruptcy law. In part, these discussions also resulted in a consensual stipulation that will enable the Debtors to continue to use cash collateral during the course of the Chapter 11 case, subject to certain reservations and provisions for adequate protection. Additionally, the Debtors have reached an agreement with the senior lender on the terms of an asset purchase agreement intended to offset the full amount of the $40.6 million senior note, accrued interest and default penalties. Under the terms of this agreement, only the five land drilling rigs and associated spare parts will be sold. The potential benefit of the customer litigation, the satellite communication business and the abrasive fluid jetting technology will remain with the Debtor Blast. The asset purchase agreement and plan of reorganization are subject to the approval of the Court. Litigation The Debtors are involved with two additional lawsuits. Second Bridge LLC has filed suit in Cleveland County, Okla., claiming breach of contract under a consulting agreement signed on Aug. 25, 2006 and claiming damages of $4.8 million. Second, Chrisman Ready Mix has filed a complaint in Franklin County, Ark., claiming they are owed approximately $126,000 for drilling rig transportation expenses incurred on behalf of the Debtors. The Debtors intend to vigorously defend themselves in these proceedings, which now fall under the jurisdiction of the Bankruptcy Court. Blast Energy Services Inc. -- http://www.blastenergyservices.com/ -- owns and contracts land drilling rigs to third parties. The Debtor also provides services relating to drilling rig operations. Blast Energy owns and develops abrasive jetting intellectual property, technology and equipment providing downhole production enhancement and drilling solutions, and satellite broadband access for Internet, data, email, applications, VoIP and video streaming as energy industry management tools providing real-time supervisory control and data acquisition. BLAST ENERGY: Case Summary & 40 Largest Unsecured Creditors ----------------------------------------------------------- Lead Debtor: Blast Energy Services Inc. dba Rocker & Spike Entertainment Inc. dba Reconstruction Data Group Inc. dba Verdisys Inc. 14550 Torrey Chase Boulevard, Suite 330 Houston, TX 77014 Bankruptcy Case No.: 07-30424 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Eagle Domestic Drilling Operations LLC 07-30426 Type of Business: The Debtor owns and contracts land drilling rigs to third parties. The Debtor also provides services relating to drilling rig operations. Blast Energy owns and develops abrasive jetting intellectual property, technology and equipment providing downhole production enhancement and drilling solutions, and satellite broadband access for Internet, data, email, applications, VoIP and video streaming as energy industry management tools providing real-time supervisory control and data acquisition. See http://www.blastenergyservices.com/ Chapter 11 Petition Date: January 19, 2007 Court: Southern District of Texas (Houston) Judge: Jeff Bohm Debtors' Counsel: H. Rey Stroube, III, Esq. Attorney at Law 701 Buckingham Drive Houston, TX 77024 Tel: (713) 688-4331 Total Assets Total Debts ------------ ----------- Blast Energy Services Inc. $63,500,851 $51,019,486 Eagle Domestic Drilling Operations LLC $50,763,183 $48,758,626 A. Blast Energy Services Inc.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Second Bridge, LLC Consulting Contract $4,800,000 1126 Rambling Oaks Drive Norman, OK 73072 Alberta Energy Partners Licensing Fees $2,000,000 43 Brookgreen Circle North Montgomery, TX 77356 Berg McAfee Companies Secured Note on $1,061,924 10600 North DeAnza Boulevard AFJ rig #250 Cupertino, CA 95014 Eagle Drilling LLC Balance of Holdback $704,750 1126 rambling Oaks Drive Norman, OK 73072 Charles Steinberg Legal Settlement $500,000 c/o Anthony Pantoni 401 West "A" Street Suite 2300 San Diego, CA 92101 Adkins Hill Property Rig Yard Lease $232,500 Joseph Connolly Promissory Note $72,097 Hogan & Hartson, L.L.P. Legal Fees $57,087 Joseph P. Penbera Board of Director $40,500 fees Pro-Fab Equipment, L.P. Trade $40,394 Andrews & Kurth, L.L.P. Legal Fees $37,425 O. James Woodward, III Board of Director $35,500 fees Immeon Trade $35,273 The Frontline Group of Texas Office Lease $33,966 LLC Cargan McAfee Broker Fees $27,000 Roger P. Herbert Board of Director $24,000 fees VJI Natural Resources, LLC Legal Settlement $20,000 Fred Ruiz Board of Director $20,000 fees John Block Board of Director $18,500 fees Spacenet Inc. Trade $15,752 B. Eagle Domestic Drilling Operations LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Chrisman Ready Mix, Inc. Lawsuit Claim $126,044 c/o Lonnie Turner Plaintiff Attorney 801 East Commercial Ozark, AR 72949 AICCO, Inc. Insurance Premium $94,124 1630East Shaw Avenue Suite 160 Fresno, CA 93710 National Oilwell Trade $42,371 P.O. Box 200838 Dallas, TX 75320-0838 Dealer's Electric Supply Trade $25,740 Fluid End Sales, Inc. Trade $21,360 Midwest Hose & Specialty Trade $21,087 Inc. T.K. Stanley, Inc. Trade $15,345 Oil Works, Inc. Trade $11,274 Champion Hi-Tech Mfg. of Trade $10,256 Oklahoma H&E Equipment Services, LLC Trade $9,823 Sun Coast Resources, Inc. Trade $9,720 Haigood & Campbell LLC Trade $9,417 Allied Bearings Supply Co. Trade $8,700 Summit Supply Inc. Trade $7,962 Reds Satellite Service Corp. Trade $7,292 Blue Cross Insurance Premium $6,858 EWRC, Inc. Trade $6,500 P-B-H Oilfield Supply, Inc. Trade $6,212 K&L Clutch Trade $4,422 Warren Cat Depot Trade $2,485 BMS HOLDINGS: Moody's Junks Rating on $150 Million PIK Notes ------------------------------------------------------------ Moody's Investors Service downgraded Bankruptcy Management Solutions, Inc.'s corporate family rating to B3 from B2. The downgrade was prompted by the proposed increase in debt to be used to finance a shareholder distribution. The company is planning to issue approximately $150 million in senior unsecured pay-in-kind notes at a newly formed holding company, BMS Holdings, Inc. The ratings on the existing first and second lien debt however remain unchanged at Ba3 and Caa1 respectively. The outlook is stable. These ratings are affected: These ratings are affected: * Corporate Family Rating to B3 from B2 * Probability of Default Rating to B3 from B2 * $15 million Senior Secured Revolving Credit Facility due 2011, Ba3, LGD2, 19% * $220 million Senior Secured First Lien due 2012, Ba3, LGD2, 19% * $125 million Senior Secured Second Lien due 2013, Caa1, LGD4, 62% At BMS Holdings, Inc. Moody's assigned this first time rating: * $150 million Senior unsecured PIK notes due 2014, Caa2, LGD5, 88% The ratings change is driven by an increase in leverage by approximately 2 times pro forma for the new debt issuance. Moody's notes that the company exhibits good stability and predictability of the underlying Chapter 7 trustee business which could potentially support the higher leverage. While the trustee business is very predictable, BMS's cash flow is very sensitive to interest rate declines. Although the company has put in place an interest rate management program to minimize the impact of rate declines, Moody's believes there is still sufficient potential volatility to EBITDA and leverage to merit a B3 rating. Moody's does note that even in a case of prolonged low interest rates, the company should remain cash flow positive (after debt service) until the various debt instruments mature. The B3 corporate family rating also reflects (i) company's very small size and narrow focus on bankruptcy case management services; (ii) vulnerability to changes in economic environments or changes to the bankruptcy code, both of which could result in a decline in bankruptcy filings. The ratings also incorporate BMS's leading share in the duopolistic Chapter 7 trustee market, high barriers to entry, large diversified customer base with "sticky" deposits that provide a stable source of recurring revenues, high customer retention rate, high pro forma EBITDA margins and resultant positive free cash flow generation and personal filing trends that should continue to drive bankruptcy growth. The stable outlook reflects expectations that the company will continue to generate positive free cash flow after minimal working capital changes and limited capital expenditures, albeit at a lower level constrained by the debt servicing burden, and will use most of its free cash flow for possible debt reduction. Irvine, CA-based Bankruptcy Management Solutions, Inc is a leading provider of bankruptcy case management solutions to Chapter 7 trustees. CABLEVISION SYS: Dolan Offer Rejection Cues S&P to Hold Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed the ratings on Bethpage, New York-based cable TV operator Cablevision Systems Corp. and its related entities, including the 'BB' corporate credit rating, and removed all the ratings from CreditWatch. The outlook is negative. "These actions follow the rejection by Cablevision's Board of Directors of the Dolan Family Group's revised buyout offer to public shareholders of about $7 billion," said S&P credit analyst Catherine Cosentino. Ratings had initially been placed on CreditWatch with negative implications on Oct. 10, 2006, when the Dolan Family made its first buyout offer of about $6 billion. If the company had funded the first buyout offer with debt, its leverage would have significantly increased to approximately 10x. The Dolan Family subsequently raised its offer to $30 per share from $27 in the original offer, but this was rejected by Cablevision Board's Special Transaction Committee on Jan. 16, 2007. The ratings on Cablevision reflect the solid investment-grade characteristics of Cablevision's core cable TV business composed of three million basic subscribers in the metropolitan New York/New Jersey area. These favorable business characteristics are partly offset by the company's aggressive financial policy, including its April 2006 payment of a $3 billion dividend to shareholders. Debt to EBITDA is expected to be in the mid-6x area on an operating lease-adjusted basis for 2006, including contractual purchase commitments, but excluding collateralized indebtedness for monetization transactions. The company's favorable business profile includes very attractive demographics, healthy broadband penetration, and good market acceptance of its telephony service. As of Sept. 30, 2006, Cablevision had cable modem and telephony penetration of homes passed of 43.3% and 24.3%, respectively. Unlike many other cable TV operators, which have suffered from aggressive satellite inroads, Cablevision has also grown its basic subscriber base over the past several quarters, albeit at moderate levels, because of its success in bundling multiple services. As a result of these factors, the company has continued to expand its overall EBITDA from the cable business, and its margins for this business remain healthy, at about 40%. Cablevision also owns valuable programming assets through its Rainbow National Services LLC subsidiary, including American Movie Classics, WE tv and Independent Film Channel. AMC and WE TV, in particular, have tended to be main staples of cable TV operators' programming lineups and have very limited cash requirements, the primary of which is payment for content. These assets provide additional bondholder protection, although the value to Cablevision and CSC Holdings Inc. debtholders would be net of debt obligations at RNS, which totals about $1.3 billion. While its other businesses such as Madison Square Garden and the attendant sports teams, and Radio City Music Hall have higher business risk characteristics, these are modest in cash funding requirements relative to the cable TV business. CALIBRE ENERGY: Posts $804,274 Net Loss in Quarter Ended Sept. 30 ----------------------------------------------------------------- Calibre Energy Inc. reported an $804,274 net loss on $245,262 of revenues for the third quarter ended Sept. 30, 2006, compared with a $1.5 million net loss on zero revenues from inception date on Aug. 17, 2005 until Sept. 30, 2005. During the period from Aug. 17, 2005, until Sept. 30, 2005, the company says that its operations were very limited. For the quarter ended Sept. 30, 2006, seven additional wells began producing which resulted in an increased revenue rate in the quarter. During the quarter ended Sept. 30, 2006, the company incurred significantly higher general and administrative expenses in comparison to the period from Aug. 17, 2005, until Sept. 30, 2005, due to the addition of operational and financial personnel and increased business activity. For the quarter ended Sept. 30, 2006, the net loss was primarily attributable to minimal operating revenues to support general and administrative costs. During the period from Aug. 17, 2005, until Sept. 30, 2005, the company incurred compensation expense for option granted to founders, executive and directors which the company did not incur in the quarter ended Sept. 30, 2006. As a result, net loss was lower. At Sept. 30, 2006, the company's balance sheet showed $22.5 million in total assets, $2.2 million in total liabilities, and $20.3 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2006, are available for free at http://researcharchives.com/t/s?18c8 Net Cash For the nine month period ended Sept. 30, 2006, net cash used in operating activities was $2 million primarily attributed to a net loss of $2.1 million in the period. Net cash used in investing activities was $12.1 million, driven primarily by the investment in oil and gas properties in the Ft. Worth Basin, an initial investment in properties in the Arkoma Basin and in the Bina-Bawi project. Net cash provided by financing activities was $15.4 million, which was attributed to the sale of common stock and purchase warrants. Going Concern Doubt Malone & Bailey, PC in Houston, Texas, expressed substantial doubt about Calibre Energy, Inc.'s ability to continue as a going concern after auditing the company's financial statements for the year ended Dec. 31, 2005. The auditing firm pointed to the company's operating losses since inception. About Calibre Energy Headquartered in Washington, DC, with operating offices in Houston, Texas, Calibre Energy Inc. (OTC BB: CBRE) -- http://www.calibreenergy.com/-- is a publicly traded exploration and production company focused on the acquisition and development of high quality unconventional gas and oil shale properties in selected producing basins in North America. Calibre's current concentration is the active drilling and development of its leasehold interests in the Barnett Shale as well as continuing to add selective new properties to its acreage inventory. CHIPPEWA COUNTRY: Weak Financial Profile Cues S&P to Cut Rating --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Chippewa County Hospital Finance Authority to 'BB+' from 'BBB-', reflecting a weakened financial profile. The outlook is negative. "We expect that War Memorial's management will exercise prudent judgment in moving forward with its capital projects to avoid further balance sheet erosion, and will continue to recruit physicians, streamline operations, and reduce expenses where necessary," said S&P credit analyst Antionette Maxwell. "However, a lower rating is likely if profit margins continue to trend downward, coupled with declines in already slim liquidity levels and in service volumes." The rating reflects the hospital's growing operating losses in four of the past five years, slim liquidity, sharp decline in inpatient admissions, additional debt associated with capital projects that could further stress profitability and increase leverage, and departures of key physicians and difficulties in recruiting replacements and additions to the medical staff. War Memorial's credit strengths include: * its dominant business position as a sole community hospital in a market area that has virtually no competition; * financial results that have improved in the six months period from Jun. to Nov. 2006, over the same period in 2005; and * the implementation of several operational and financial improvements, spearheaded by a CEO who joined the organization during the summer of 2005. Although War Memorial's management team has right-sized coverage by employed anesthesiologists, eliminated the defined benefit pension plan, recruited several replacement and new physicians, and implemented other ongoing cost-containment measures, S&P questions the sustainability of these positive accomplishments given that War Memorial had taken similar steps three years ago. The lowered rating affects $8.7 million in rated debt. DELTA AIR: Says Disclosure Statement Has Adequate Information ------------------------------------------------------------- Delta Air Lines, Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the Southern District of New York to approve the Disclosure Statement explaining their Joint Plan of Reorganization, filed on December 19, 2006, as containing adequate information within the meaning of Section 1125 of the Bankruptcy Code. Section 1125 provides that plan proponents must afford holders of impaired claims with adequate information regarding a debtor's proposed plan. Thus, a debtor's disclosure statement must provide information that is reasonably practicable to permit an informed judgment by impaired creditors entitled to vote on the plan. The Plan provides for the separate deemed substantive consolidation of each of the estates of the Comair Debtors and the estates of the Delta Debtors for purposes of voting, confirmation and distribution. Marshall S. Huebner, Esq., at Davis Polk & Wardwell, in New York, contends that the Disclosure Statement accompanying the Plan addresses the salient types of information that provide holders of impaired claims entitled to vote to accept or reject the Plan with adequate information to allow them to make an informed judgment about the Plan. Mr. Huebner tells the Court that the Disclosure Statement includes a summary of the Plan, together with a discussion of, among other things: (a) the operation of the Debtors' businesses during the course of the their Chapter 11 cases; (b) certain events preceding the commencement of the Debtors' Chapter 11 cases; (c) the Debtors' indebtedness; (d) the range of recovery estimates for creditors; (e) risk factors affecting the Plan; (f) the administration of the Debtors' estates following confirmation of the Plan; (g) tax consequences of the Plan; (h) information regarding claims against the estates; (i) a liquidation analysis of the Debtors; (j) the Debtors' valuation as a going-concern enterprise; and (k) the Debtors' financial projections. About Delta Air Headquartered in Atlanta, Georgia, Delta Air Lines (OTC: DALRQ) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. (Delta Air Lines Bankruptcy News, Issue No. 56; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELTA AIR: Wants Court Nod on Solicitation & Tabulation Procedures ------------------------------------------------------------------ Delta Air Lines, Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the Southern District of New York to: (i) approve the form and contents of their proposed solicitation package relating to their Joint Plan of Reorganization and accompanying Disclosure Statement, both filed on December 19, 2006, and the procedures for distribution thereof; (ii) approve the forms of ballots and establish procedures for voting on the Plan; and (iii) schedule a hearing, and establish notice and objection procedures in respect of confirmation of the Plan. Pursuant to Rule 3017(c) of the Federal Rules of Bankruptcy Procedure, the Debtors ask the Court to schedule the hearing to consider the confirmation of the Plan on April 25, 2007, at 2:00 p.m., prevailing Eastern Time. The proposed Confirmation Hearing date is approximately 75 days after the Debtors' anticipated date for the entry of an order approving the Disclosure Statement. Upon approval of the Disclosure Statement, the Debtors propose to provide all creditors and equity security holders with the distribution of a Confirmation Hearing Notice, setting forth: (a) the date of the Court's approval of their Disclosure Statement; (b) the record date for voting on the Plan; (c) the date established by which Bankruptcy Services, LLC, the Debtors' solicitation agent, must receive all ballots voting to accept or reject the Plan; (d) the time fixed for filing objections to confirmation of the Plan; and (e) the time, date and place for the Confirmation Hearing. The Debtors also propose to publish the Confirmation Hearing Notice in The Wall Street Journal (National Edition), The Atlanta-Journal-Constitution, The Salt Lake Tribune, The Cincinnati Enquirer, and on http://www.deltadocket.com/ The Debtors will provide the Publication Notice in not less than 25 days before the deadline to file objections to the Plan Confirmation. The Debtors ask the Court to deem their proposed procedures as adequate notice of the Confirmation Hearing. Plan Confirmation Objection In accordance with Rules 2002(b) and 2002(d), and to permit them adequate time to respond to objections prior to the Confirmation Hearing, the Debtors propose to establish April 9, 2007 as the deadline for filing written objections to the confirmation of the Plan. Plan Confirmation Objections must specify in detail: (i) the name and address of the objector, (ii) all grounds for the objection, and (iii) the amount of the claims or other interests held by the objector. Solicitation Package Upon Court approval of the Disclosure Statement, the Debtors intend to distribute solicitation packages to all claimholders in the classes allowed to vote on the Plan. Under the Plan, these classes are entitled to vote: Class Description ----- ----------- Delta Class 4 General Unsecured Claims Delta Class 5 Non-Convenience Class Retiree Claims Delta Class 6 Convenience Class Claims Comair Class 4 General Unsecured Claims Comair Class 5 Convenience Class Claims Each Solicitation Package will include copies of: -- a cover letter describing the contents of the Solicitation Package, the contents of any enclosed CD-ROM and instructions for how hard copies of any materials provided on CD-ROM can be obtained at no charge; -- the Court's order approving, inter alia, the Disclosure Statement; -- a written notice regarding the Confirmation Hearing Date; -- a ballot and a pre-addressed postage paid envelope. A full-text copy of the Ballots is available for free at: http://ResearchArchives.com/t/s?18d2 -- the Disclosure Statement with the Plan; and -- any other materials as the Court may direct, including, but not limited to, any letters from the various official committees recommending acceptance of the Plan. The Debtors expect to complete distribution of the Solicitation Packages no later than 13 days after Court approval of the Disclosure Statement. Notices of Non-Voting Status Under the Plan, claims in these classes are designated as unimpaired, and are conclusively presumed to accept the Plan: Class Description ----- ----------- Delta Class 1 Other Priority Claims Delta Class 2 Secured Aircraft Claims Delta Class 3 Other Secured Claims Delta Class 7b Interests in the Delta Subsidiary Comair Class 1 Other Priority Claims Comair Class 2 Secured Aircraft Claims Comair Class 3 Other Secured Claims Comair Class 6 Interests in the Comair Debtors Accordingly, the Debtors propose to send to holders of Unimpaired Claims a notice informing them that their claims are unimpaired and sets forth the manner in which a copy of the Plan and Disclosure Statement may be obtained at no charge. On the other hand, these Classes are not receiving distributions under the Plan, and are conclusively presumed to reject the Plan pursuant to Section 1126(g): Class Description ----- ----------- Delta Class 7a Interests in Delta Delta Class 8 Securities Litigation Claims Comair Class 7 Securities Litigation Claims The Debtors propose to mail to the claimholders of the classes presumed to reject the Plan a Notice of Non-Voting Status With Respect to Impaired Classes Deemed to Reject the Plan. The Debtors also propose to send a Notice of Non-Voting Status With Respect to Impaired Classes Deemed to Reject the Plan to the holders of Delta's publicly traded stock as reflected in the records maintained by the Debtors' transfer agents and the trustee of any debt securities in non-voting classes as of the close of business on the Voting Record Date. The Debtors recognize that the records maintained by those transfer agents or trustees reflect the brokers, dealers, commercial banks, trust companies or other nominees through which the beneficial owners hold the Non-Voting Securities. Accordingly, the Debtors ask the Court to: (i) authorize them to provide the Non-Voting Nominees with sufficient copies of the Notice of Non-Voting Status With Respect to Impaired Classes Deemed to Reject the Plan to forward to the beneficial owners of the Non-Voting Securities; and (ii) direct the Non-Voting Nominees to forward the Notice of Non-Voting Status With Respect to Impaired Classes Deemed to Reject the Plan or copies of it to the beneficial owners of the Non-Voting Securities within 5 business days of the receipt by that Non-Voting Nominees of the Notice. The Debtors seek the Court's authority to reimburse the Non- Voting Nominees for the reasonable and customary out-of-pocket expenses without further Court order in connection with the distribution of the Notice of Non-Voting Status With Respect to Impaired Classes Deemed to Reject the Plan. A full-text copy of the Notices of Non-Voting Status With Respect to Impaired Classes Deemed to Accept or Deemed to Reject the Plan is available for free at http://ResearchArchives.com/t/s?18cf The Debtors also ask the Court to determine that they are not required to distribute Solicitation Packages to: * parties to executory contracts who do not hold either allowed claims, or filed or scheduled claims listed as contingent, unliquidated or disputed; or * holders of claims against the Debtors that have not been classified in the Plan pursuant to Section 1123(a)(1). Mr. Huebner asserts that the Debtors have shown good cause for implementing the proposed notice and service procedures and that the notice and service satisfy the requirements of Bankruptcy Rule 3017(d). Voting Record Date In accordance with Rules 3017(d) and 3018(a), the record date for non-securities claims is often the date an order approving the disclosure statement is entered. The record holders of a debtor's public securities, however, generally require advance notice to enable those responsible for assembling ownership lists of that debtor's public securities to compile a list of holders as of a date certain. Accurate lists often cannot be prepared retroactively as to ownership on a prior date, Mr. Huebner informs the Court. Accordingly, the Debtors ask the Court to establish February 1, 2007, as the record date for purposes of determining: (a) the creditors who are entitled to vote on the Plan; (b) in the case of the Aircraft Claims, the holders of aircraft securities entitled to instruct the applicable Aircraft Trustees as to how to vote their Aircraft Claims with respect to the Plan; and (c) in the case of non-voting classes, the creditors and interest holders who are entitled to receive certain non-voting materials. Voting Deadline The Debtors propose that all Ballots from a holder of a Claim in a Class entitled to vote must be properly executed, completed, and delivered so as to be received by BSI no later than 4:00 p.m., prevailing Eastern Time, on April 9, 2007. The Debtors submit that the solicitation period is sufficient for creditors to make an informed decision to accept or reject the Plan. However, the Debtors also seek the Court's authority, to extend, after consultation with the Official Committee of Unsecured Creditors, the Voting Deadline, if necessary, without further Court order, to not later than five business days before the Confirmation Hearing. The Debtors will publish on http://www.deltadocket.com/an announcement of the extension. Procedures for Ballot Tabulation The Debtors propose that each claimholder under the Voting Classes is entitled to vote the amount of its claim as set forth in their Schedules of Liabilities, as amended. If that claimholder has filed a proof of claim, it would be entitled to vote the amount of its claim as set forth in the proof of claim. The Debtors' proposed general tabulation procedures are subject to these exceptions: (a) If a claim is deemed allowed under the Plan or a Court order, the claim is allowed for voting purposes in the deemed Allowed amount; (b) If a claim for which a proof of claim has been timely filed is wholly contingent, unliquidated or disputed, the claim is temporarily allowed only for voting purposes at $1, and the Ballot mailed to the holder of the claim will be marked as voting at $1; (c) If a claim is partially liquidated and partially unliquidated, the holder of that claim is allowed for voting purposes only in the liquidated amount; (d) If a claim has been estimated or allowed for voting purposes by Court order, the claim is temporarily allowed in the amount so estimated or allowed for voting purposes only; (e) If a claim is listed in the Schedules as contingent, unliquidated or disputed and a proof of claim was not: * filed on or before the applicable Court-established bar date for the filing of proofs of claim; or * deemed timely filed by a Court order prior to the Voting Deadline, then, unless the Debtors have consented in writing, the the claim is disallowed for voting purposes and for purposes of allowance and distribution pursuant to Bankruptcy Rule 3003(c); (f) If the Debtors have filed an objection to a claim before the Voting Deadline, the claim is disallowed for voting purposes only, except to the extent and in the manner as may be set forth in the objection; (g) In light of the Court-approved stipulations entered into between the Debtors, the Creditors Committee and DP3, Inc., neither the Debtors nor their agents will have an obligation to consider any proofs of claim filed in respect of the Delta Pilots Bridge Plan and the Delta Pilots Annuity Plan for purposes of determining whether and in what amounts holders of the claims will vote; and (h) Any creditor who has filed or purchased duplicate claims, whether against the same or multiple Debtors, that are classified under the Plan in the same class, will be provided with only one Solicitation Package and one ballot for voting a single claim in that class, regardless of whether the Debtors have objected to the duplicate claims. The Debtors propose, without further Court order, not to count: (i) any Ballot properly completed and executed, but does not indicate an acceptance or rejection of the Plan, or indicates both an acceptance and rejection of the Plan; (ii) any Ballot actually received by the Solicitation Agent after the Voting Deadline unless the Debtors, after consultation with the Creditors Committee, have granted in writing an extension of the Voting Deadline with respect to that Ballot; (iii) any Ballot that is illegible or contains insufficient information to permit the identification of the claimant; (iv) any Ballot cast by a person or entity that does not hold a claim in a Voting Class; (v) any Ballot cast for a claim scheduled as unliquidated, contingent or disputed for which no proof of claim was timely filed; (vi) any unsigned or non-originally signed Ballot; (vii) any Ballot sent directly to any party other than the BSI; (viii) any Ballot cast for a claim that has been disallowed; and (ix) any Ballot transmitted to BSI by facsimile or other electronic means. The Debtors also propose that brokers, banks, dealers or other agents or nominees through which beneficial owners hold the Debtors' public securities and are entitled to vote be required to receive and summarize on a Master Ballot all Beneficial Ballots cast by the beneficial holders and timely returned. The Debtors further propose to apply additional rules for the tabulation of Master Ballots and Ballots cast by Voting Nominees and Beneficial Holders: -- Votes cast by the Beneficial Holders through a Voting Nominee will be applied against the positions held by the entities in the applicable securities as of the Voting Record Date, as evidenced by the record and depository listings. Votes submitted by a Voting Nominee, whether pursuant to a Master Ballot or pre-validated Beneficial Ballots, will not be counted in excess of the Record Amount of the securities held by that Voting Nominee; -- To the extent that conflicting votes or "overvotes" are submitted by a Voting Nominee, BSI will make a reasonable attempt to reconcile discrepancies with the Voting Nominees; -- To the extent that overvotes on a Master Ballot or pre-validated Beneficial Ballots are not reconcilable prior to the preparation of the vote certification, BSI will apply the votes to accept and to reject the Plan in the same proportion as the votes to accept and reject the Plan submitted on the Master Ballot or pre-validated Beneficial Ballots that contained the overvote, but only to the extent of the Voting Nominee's position in the applicable security; and -- For purposes of tabulating votes, each Voting Nominee or Beneficial Holder will be deemed to have voted the principal amount of its Claim relating to the security, although BSI may be asked to adjust the principal amount to reflect the claim amount, including prepetition interest. About Delta Air Headquartered in Atlanta, Georgia, Delta Air Lines (OTC: DALRQ) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. (Delta Air Lines Bankruptcy News, Issue No. 56; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) DIAGNOSTIC CLINIC: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Diagnostic Clinic of Houston, P.A. 1200 Binz Houston, TX 77004 Bankruptcy Case No.: 07-30396 Type of Business: The Debtor offers medical services. See http://www.diagnosticclinic.com/ Chapter 11 Petition Date: January 18, 2007 Court: Southern District of Texas (Houston) Judge: Karen K. Brown Debtor's Counsel: Edward L. Rothberg, Esq. Weycer Kaplan Pulaski & Zuber 11 Greenway Plaza, Suite 1400 Houston, TX 77046 Tel: (713) 961-9045 Fax: (713) 961-5341 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. EARTHSHELL CORP: Production Unimpeded Despite Chapter 11 Filing --------------------------------------------------------------- Unimpeded by EarthShell(R) Corporation's Chapter 11 bankruptcy filing, ReNewable Products, Inc., the primary license holder and manufacturer of earth-friendly biodegradable plates and bowls from EarthShell(R) Corporation, will continue production and delivery of EarthShell(R) branded products. RPI, based in Lebabon, Missouri, manufactures the plates and bowls made from natural renewable resources (limestone and potato and corn starches) which fully biodegrade in a commercial or backyard compost system. EarthShell(R) branded products manufactured by RPI also occupy significantly less space in a landfill environment than traditional food service disposable products. "While we are saddened about this turn of events for EarthShell(R) Corporation, RPI is and will continue to be the primary customer contact for the EarthShell(R) brand," explains Bob Pondo, RPI vice president of sales. "Our customers will continue to receive EarthShell(R) branded products without interruption." Further, Matthew Wardle, RPI vice president of operations says, "We are working with all suppliers to ensure existing contracts and transactions are uninterrupted, while also developing relationships with new material suppliers that share the same vision of providing environmentally preferable food service products to the retail and institutional markets." The increasing demand for environmentally preferable products continues to drive growth at RPI. Media attention and government legislation directed toward environmental issues such as global warming are building consumer awareness and initiating action. EarthShell(R) dinnerware is currently available at more than 3,500 premier retailers across the nation including Acme, Demoula's Market Basket, Penn Traffic, Schnucks, Smart & Final, and Wegmans. RPI will soon be announcing EarthShell(R) availability in many other supermarket, mass merchandiser and drug store outlets for 2007. Headquartered in Lutherville, Maryland, EarthShell(R) Corporation (OTCBB: ERTH) -- http://www.earthshell.com/-- is a technology company and innovator of a revolutionary development in food service packaging. The company makes fast-food packaging from biodegradable materials like limestone and food starch. EARTHSHELL CORP: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: EarthShell Corporation 1301 York Road, Suite 200 Lutherville, MD 21093-6005 Bankruptcy Case No.: 07-10086 Type of Business: The Debtor is engaged in the commercialization of composite material technology for the manufacture of foodservice disposable packaging designed with the environment in mind. See http://www.earthshell.com/ Chapter 11 Petition Date: January 19, 2007 Court: District of Delaware (Delaware) Judge: Kevin Gross Debtor's Counsel: Derek C. Abbott, Esq. Morris, Nichols, Arsht & Tunnell 1201 North Market Street P.O. Box 1347 Wilmington, DE 19899 Tel: (302) 658-9200 Fax: (302) 658-3989 Total Assets: $16,173 Total Debts: $11,865,460 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ E. Khashoggi Industries, LLC Notes Payable $1,859,634 800 Miramonte Drive Santa Barbara, CA 93109 S F Capital Partners Debenture Settlement $1,236,734 3600 South Lake Drive St. Francis, WI 53235-3716 S F Capital Partners Damages & Interest $1,108,351 3600 South Lake Drive St. Francis, WI 53235-3716 D. Scott Houston Deferred Salary $399,370 100 North Patterson Avenue Santa Barbara, CA 93111 Gibson Dun & Crutcher Accrued Debt $296,000 333 South Grand Avenue 48th Floor Los Angeles, CA 90071 Paul Klefel GmbH Trade Debt $245,025 Renewable Products Inc. Notes Payable $151,924 Simon K. Hodson Deferred Salary $150,041 Orix SBAP Goleta Venture Trade Debt $130,000 Synagro Trade Debt $119,175 Huhtamaki Van Leer Trade Debt $103,695 Joseph E. Hohenwarter, Esq. Trade Debt $70,833 Vincent J. Truant Note Payable $61,000 Control System Design Inc. Trade Debt $45,382 Essam Khashoggl Trade Debt $35,500 Kirkpatrick & Lockhart LLP Trade Debt $34,047 Layle Khashoggl Trade Debt $32,000 Serotte, Rockman & Trade Debt $31,200 Wescott PA Farber, Hass, Hurley Trade Debt $31,075 & McEwen Alcalde & Fay Trade Debt $28,640 EMISPHERE TECHN: Board Appoints Lewis H. Bender as Interim CEO -------------------------------------------------------------- The Board of Directors of Emisphere Technologies Inc. appointed Lewis H. Bender as Interim Chief Executive Officer and President. Michael M. Goldberg, M.D, was terminated as Chief Executive Officer and Chairman of the Board effective Jan. 16, 2007. Mr. Bender, 47, was Vice President of Business Development. He received a B.S and a M.S. in chemical engineering from the Massachusetts Institute of Technology, a M.A. in international studies from the University of Pennsylvania and a M.B.A. from the Wharton School of the University of Pennsylvania. In 1993, Mr. Bender joined Emisphere and became Senior Vice President of Business Development in April 1997. Headquartered in Tarrytown, New York, Emisphere Technologies, Inc. (Nasdaq: EMIS) -- http://www.emisphere.com/-- is a biopharmaceutical company which develops oral forms of injectable drugs. At Sept. 30, 2006, the company's balance sheet showed a stockholder's deficit of $5,557,000, compared to a deficit of $14,895,00 at Dec. 31, 2005. ENCORE ACQUISITION: Moody's Places Ratings on Review ---------------------------------------------------- Moody's Investors Service placed Encore Acquisition's Ba3 corporate family rating and all other existing ratings on review for downgrade upon its announced $400 million acquisition of Anadarko Petroleum's Big Horn Basin (northern Rocky Mountains) assets. Until EAC launches a planned initial public offering of a planned master limited partnership, it will fund the acquisition 100% with secured bank revolver debt, a portion of which will be non- recourse to parent EAC. Prior to the MLP IPO, we estimate that consolidated leverage would exceed $7/boe of PD reserves. The review for downgrade reflects the pending major increase in leverage to fund the acquisition, even accounting for the potential deleveraging through the planned MLP IPO later in 2007, as well as our perception that EAC may be adopting a sustained shift in financial policy to a more leveraged attempt to rejuvenate operating trends and diversify asset portfolio risk. These actions also follow a year in which EAC incurred downhole restraints that reduced air injection volumes and largely caused its missed production targets at its Cedar Creek Anticline high- pressure air injection tertiary recovery program. EAC also incurred disappointing drilling results in East Texas and Oklahoma. The acquired property package includes approximately 20 mmboe of total proven reserves, 90% of which is proven developed and currently generating approximately 4,000 boe of production per day and 350 barrels of natural gas liquids per day. EAC is paying approximately $20 per boe of proven reserves and approximately $91,955 per Boe of total daily liquids production. EAC estimates modest sustaining capital spending relative to an estimated approximately $50 million of free cash flow after hedging for the properties. The very mature Big Horn properties exhibit low production rates and comparatively high production costs but also exhibit growth potential and a slow production decline. As such, and initially supported by two years of in-the-money puts of $65.00 per barrel on approximately two thirds of the acquired production, EAC believes the properties are suitable for its planned MLP. EAC appears to be paying a very full price, in part due to their attraction to the properties' comparatively long reserve life and suitability for the planned MLP IPO. EAC has undertaken the acquisition at up-cycle prices in a soft oil price environment. Due to the typically higher multiple at which MLP units trade and would be issued in comparison to common share multiples, MLP acquirers have been willing to pay more richly for what they deem to be suitable assets. Upon the launch of its potential MLP, EAC would also reduce MLP debt with IPO proceeds. Prior to approaching the market, Encore needs to complete three years of audited revenues less direct operating expenses of the newly acquired assets operating results and gain go-active status with its IPO filing after SEC review. Given the distance to the earliest possible launch of the MLP IPO, price volatility, the several steps and risks along the way to getting the IPO ready for launch, and given our expectation that EAC will henceforth routinely carry significantly more leverage that in the past, a ratings downgrade is the more likely outcome. If downgraded, it would likely be by one notch though, depending on the degree of future leveraging activities as well as expected operating trends, further ratings pressure cannot be ruled out at this time. Encore Acquisition Company is headquartered in Fort Worth, Texas. ENESCO GROUP: Wants Auction for Assets Scheduled on February 7 -------------------------------------------------------------- Enesco Group Inc. asks the U.S. Bankruptcy Court for the Northern District of Illinois in Chicago, for approval to sell its assets on Feb. 7, 2006, the Associated Press reports. The company wants the sale hearing on February 8. Tinicum Capital Partners II LP, the company's proposed lead buyer, agreed to open bidding for the Debtors' assets with an undisclosed offer that would wrap the company's $56 million senior secured debt. Court papers show that Tinicum would get a 3% break-up fee of the purchase price if it's beat out during auction. Enesco began talks with Tinicum late October 2006 following a failed discussion with a potential buyer for about a month, according to court documents. As reported in the Troubled Company Reporter on Jan. 15, 2007, after the deal, substantially all of Enesco's assets would be owned by the Tinicum Capital. Enesco doesn't anticipate any distribution to its stockholders from the transaction. About Enesco Group Headquartered in Itasca, Illinois, Enesco Group, Inc. --- http://www.enesco.com/-- is a producer of giftware, and home and garden d,cor products. Enesco's product lines include some of the world's most recognizable brands, including Disney, Heartwood Creek, Nickelodeon, Cherished Teddies, Lilliput Lane, Border Fine Arts, among others. Enesco distributes products to a wide array of specialty gift retailers, home d,cor boutiques and direct mail retailers, as well as mass-market chains. The company serves markets operating in Europe, Australia, Mexico, Asia and the Pacific Rim. With subsidiaries in Europe, Canada and a business unit in Hong Kong, Enesco's international distribution network leads the industry. Enesco Group and its two affiliates, Enesco International Ltd. and Gregg Manufacturing, Inc., filed for chapter 11 protection on Jan. 12, 2007 (Bankr. N.D. Ill. Lead Case No. 07-00565). Shaw Gussis Fishman Glantz Wolfson & Tow and Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors. The Debtors' financial condition as of Nov. 30, 2006, showed total assets of $155,350,698 and total debts of $107,903,518. FINANCIAL MEDIA: Nov. 30 Balance Sheet Upside-Down by $1.7 Million ------------------------------------------------------------------ Financial Media Group Inc. reported an $871,805 net loss on $1.6 million of revenues for the first quarter ended Nov. 30, 2006, compared with a $553,192 net loss on $1.3 million of revenues for the same period in 2005. Selling, general and administrative expenses for the quarter ended Nov. 30, 2006, were $1.3 million compared to $791,986 for the same period in 2005. Impairment of marketable securities for the quarter ended Nov. 30, 2006, were $1.1 million compared to $1.15 million for the same period in 2005. Realized loss on sale of marketable securities for the three month period ended Nov. 30, 2006, was $64,681 compared to realized gain of $96,005 for the same period in 2005. At Nov. 30, 2006, the company's balance sheet showed $6.5 million in total assets and $8.2 million in total liabilities, resulting in a $1.7 million total stockholders' deficit. The company's balance sheet at Nov. 30, 2006, also showed strained liquidity with $6.4 million in total current assets available to pay $6.7 million in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended Nov. 30, 2006, are available for free at http://researcharchives.com/t/s?18c7 Going Concern Doubt Kabani & Company Inc. expressed substantial doubt about Financial Media's ability to continue as a going concern after auditing the company's financial statements for the fiscal year ended Aug. 31, 2006. The auditing firm pointed to the company's accumulated deficit of $3.7 million as of Aug. 31, 2006, and net loss of $1.6 million for the year ended Aug. 31, 2006. About Financial Media Financial Media Group Inc. (OTC BB: FNGP.OB) -- http://www.financialmediagroupinc.com/-- is a diversified media and advertising company that owns and operates http://www.wallst.net/a branded financial consumer gateway that provides in-depth, original multimedia editorial content, up-to- the-minute business news, and comprehensive financial tools and data for investors. In addition to WallSt.net, Financial Media Group Inc. owns and operates http://www.mywallst.net/the Web's first multimedia social network for the global financial community. Financial Media Group Inc. also owns The Wealth Expo, a leading producer of educational investor expositions that are held across the United States. FORD MOTOR: Eyes Partnership With Toyota ---------------------------------------- Ford Motor Co. and Toyota Motor Corp. are considering forming an alliance since the mid-December talks between Ford Chief Executive Alan Mulally and Toyota Chairman Fujio Cho, Norihiko Shirouzu and Jeffrey McCracken of the Wall Street Journal report. WSJ says the meeting has run for more than two hours and the two executives may meet again soon. A Toyota spokesman disclosed that the parties did not schedule another meeting but stressed that Toyota is open-minded to forming a bond to share costs of developing new technology. The Japanese business daily newspaper Nihon Keizai Shimbun relates that Toyota aims to have a partnership with Ford as a way to ease potential friction with the U.S. auto industry. According to WSJ, Ford could be interested in a partnership with Toyota that could focus on powertrain technology such as gasoline- electric hybrid engines or on smaller, four-cylinder engines. It is dubious Toyota would seek to buy a Ford stake albeit Toyota's market capitalization far exceeds Ford's, Analysts told WSJ, pointing out to Ford founder Henry Ford's descendants who controlled the 40% voting stock as a primary barrier. Analysts add that Toyota has avoided large-scale acquisitions and unions with rival auto makers while Ford has too many financial troubles to buy a Toyota stake. Analysts, WSJ notes, expect Toyota to outsell Ford in the U.S. on an annual basis as early as this year. About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures and distributes automobiles in 200 markets across six continents. With more than 324,000 employees worldwide, including Mexico, the company's core and affiliated automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury, and Volvo. Its automotive- related services include Ford Motor Credit Company and The Hertz Corp. * * * As reported in the Troubled Company Reporter on Dec. 12, 2006, Standard & Poor's Ratings Services affirmed its 'B' bank loan and '2' recovery ratings on Ford Motor Co. after the company increased the size of its proposed senior secured credit facilities to between $17.5 billion and $18.5 billion, up from $15 billion. As reported in the Troubled Company Reporter on Dec. 7, 2006, Fitch Ratings downgraded Ford Motor Company's senior unsecured ratings to 'B-/RR5' from 'B/RR4' due to the increase in size of both the secured facilities and the senior unsecured convertible notes being offered. As reported in the Troubled Company Reporter on Dec. 6, 2006, Moody's Investors Service assigned a Caa1, LGD4, 62% rating to Ford Motor Company's US$3 billion of senior convertible notes due 2036. FORD MOTOR: Mark Fields Giving Up Use of Company Plane ------------------------------------------------------ Mark Fields, the head of North American operations at Ford Motor Co., told the United Press Institute that he would give up his free use of a company plane to fly home to south Florida from Detroit on weekends. According to UPI, Mr. Fields had been widely criticized for using Ford Motor's jet when the firm is trying to make up for a projected $4.5 billion loss in its North American operations last year, out of the total $7 billion loss. UPI notes that the Detroit-Florida flights cost Ford Motor $214,479 in the fourth quarter of 2005, the only period Ford Motor has made public. The full cost for last year is likely to be disclosed later this year. Mr. Fields was put in charge of the North American operations, Ford Motor's largest business sector in October 2005. His compensation that year was $3.2 million, including a $1-million bonus to take the job, UPI states. Bryce G. Hoffman of The Detroit News writes that part of Mr. Fields' compensation contract when he was promoted to head Ford's Americas group in 2005, was the use of the Ford corporate jet for personal travel. Mr. Hoffman relates that Ford spokesman Tom Hoyt confirmed Mr. Field's decision. Mr. Fields was worried that the controversy was distracting Ford's efforts to turnaround its North American automobile operations. "He doesn't want this or any other issue to distract the team," Mr. Hoyt said, adding that decision was Fields' alone. "This was Mark's decision. The company supported his commitment to his family." Mr. Fields will continue his weekly commute from south Florida, where his family lives, using a commercial carrier, Mr. Hoffman reports. During his career at Ford, Mr. Fields and his family have relocated several times. He felt the deal would allow him to give Ford his undivided attention during the week while avoiding another disruption for his wife and children, Mr. Hoffman says. Mr. Fields was credited for turning around Ford's European and Premier Automotive Group as head for 17 months, the Associated Press relates. Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures and distributes automobiles in 200 markets across six continents. With more than 324,000 employees worldwide, including Mexico, the company's core and affiliated automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive- related services include Ford Motor Credit Company and The Hertz Corp. * * * As reported in the Troubled Company Reporter on Dec. 12, 2006, Standard & Poor's Ratings Services affirmed its 'B' bank loan and '2' recovery ratings on Ford Motor Co. after the company increased the size of its proposed senior secured credit facilities to between $17.5 billion and $18.5 billion, up from $15 billion. As reported in the Troubled Company Reporter on Dec. 7, 2006, Fitch Ratings downgraded Ford Motor Company's senior unsecured ratings to 'B-/RR5' from 'B/RR4' due to the increase in size of both the secured facilities and the senior unsecured convertible notes being offered. As reported in the Troubled Company Reporter on Dec. 6, 2006, Moody's Investors Service assigned a Caa1, LGD4, 62% rating to Ford Motor Company's $3 billion of senior convertible notes due 2036. GAP INC: Pressler Resigns as President & Chief Executive Officer ---------------------------------------------------------------- The Gap Inc. president and chief executive officer Paul Pressler will step down from his position, as well as resign his seat on the company's board, effective immediately. Robert J. Fisher, the company's current non-executive chairman of the board of directors, will also serve as president and chief executive officer on an interim basis, effective immediately. Robert J. Fisher, chairman of Gap Inc.'s board of directors said, "We want to thank Paul for the hard work and dedication that he has shown Gap Inc. over the past four years. "Under his leadership, the company has meaningfully improved its operations, strengthened its balance sheet, greatly enhanced its on-line presence across the brand portfolio and improved its standing as a global corporate citizen. We appreciate all of his efforts and wish Paul every success in the future," Mr. Fisher added. "I have enjoyed the opportunity to lead this iconic company over the past four years. It has been a pleasure to work with the management team and such talented people throughout the organization," Mr. Pressler said. "Gap Inc. is a company with tremendous potential and I wish all the employees much success in the years ahead." The board will begin a search for a new chief executive officer. A search committee has been formed by the board and will be led by independent Gap Inc. director Adrian D. Bellamy, chairman of The Body Shop International plc. Additional directors serving on the committee include: -- Donald G. Fisher, Gap Inc.'s founder and Chairman Emeritus, -- Domenico De Sole, former president and chief executive officer, Gucci Group NV, and -- Bob L. Martin, the company's lead independent director and former president and chief executive officer of Wal-Mart International. The search committee's preference is to focus their efforts on recruiting a chief executive officer who has deep retailing and merchandising experience ideally in apparel, understands the creative process, and can effectively execute strategies in large, complex environments while maintaining strong financial discipline. "I look forward to serving our employees, customers, and shareholders as interim CEO," Mr. Fisher said. "My personal ties and nearly 30-year professional history in operating roles at the company and as a board member have resulted in a deep appreciation for the creative process, gratitude to our customers who have supported us for the past 38 years and profound respect for the talented and passionate employees, past and present who have built this company. "During this important transition period for our company, the board of directors and I are committed to working with our employees to enhance our focus on what has been at the heart of the company's past success, reinvigorating our brands and charting a new course for the future that will deliver strong returns for our shareholders." During his nearly 30-year history at Gap Inc., Mr. Fisher started with the company as a store manager in 1980 and worked his way up through the company's merchandising ranks. He also held a variety of senior executive leadership positions at the company, including chief operating officer, chief financial officer, president of Banana Republic and president of Gap brand. Mr. Fisher has served on the company's board of directors since 1990. Pursuant to Mr. Pressler's employment agreement dated Sept. 25, 2002, which was disclosed at the time of his hire, Mr. Pressler is eligible for severance benefits subject to certain conditions as described in more detail in his agreement: -- Salary of up to $1.5 million per annum payable over a 24-month period, subject to cessation or reduction if he accepts other employment or compensation, -- Future bonuses he would have otherwise received during the 24-month period, up to an aggregate $1.5 million, if company financial performance targets are met and subject to elimination or reduction if he accepts other employment or compensation; he will not receive a bonus for fiscal 2006, -- Stock option acceleration with approximately $9.5 million of in-the-money value, assuming a company stock price of $20 per share. In total, and subject to reduction if Mr. Pressler accepts other employment or compensation during the 24-month period, he is eligible for up to approximately $14 million associated with his severance with the company, assuming a company stock price of $20 per share. He is also eligible to receive nominal health benefits. The company will release 2006 fourth quarter and full-year earnings on March 1, 2007, and continues to expect 2006 earnings per share of $0.83 to $0.87 per share, 2006 full-year operating margins of about 7% and free cash flow to be about $650 million for the full year. The company also continues to expect the percent increase in inventory per square foot at the end of the fourth quarter of fiscal 2006 to be in the low single digits versus prior year. About Gap Inc. Gap Inc. (NYSE: GPS) -- http://www.gapinc.com/-- is an international specialty retailer offering clothing, accessories and personal care products for men, women, children and babies under the Gap, Banana Republic, Old Navy, Forth & Towne and Piperlime brand names. Gap Inc. operates more than 3,100 stores in the United States, the United Kingdom, Canada, France, Ireland and Japan. In addition, Gap Inc. is expanding its international presence with franchise agreements for Gap and Banana Republic in Southeast Asia and the Middle East. * * * As reported in the Troubled Company Reporter on Jan. 10, 2007, Fitch has downgraded its ratings on The Gap Inc.'s Issuer Default Rating to 'BB+' from 'BBB-' and Senior unsecured notes to 'BB+' from 'BBB-'. The Rating Outlook is Negative. As reported in the Troubled Company Reporter on Nov. 21, 2006, Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured ratings on San Francisco-based The Gap Inc. to 'BB+' from 'BBB-'. S&P said the outlook is stable. GEO GROUP: S&P Rates New $515 Million Senior Facility at BB ----------------------------------------------------------- Standard & Poor's Ratings Services assigned its loan and recovery ratings to The GEO Group Inc.'s new $515 million senior secured credit facility. It comprises an upsized $150 million revolving credit facility due 2010 and a proposed $365 million term loan B due 2014. The facility was rated 'BB', with a recovery rating of '1', indicating a high expectation for full recovery of principal in the event of a payment default. S&P has affirmed its 'BB-' corporate credit rating on GEO and revised the rating outlook to negative from stable. Also, the rating on GEO's senior unsecured debt rating was lowered to 'B' from 'B+', reflecting unsecured lenders' less favorable recovery position than the senior secured lenders under the company's pro forma capital structure. Accordingly, we have also lowered our preliminary senior unsecured shelf debt rating to 'B' from 'B+'. Proceeds from the $365 million term loan facility will be used in conjunction with cash to fund the acquisition of CentraCore Properties Trust, a correctional and detention facility REIT, for about $396.1 million plus related transaction fees. Pro forma for the transaction, GEO is expected to have about $515 million in total debt outstanding, excluding nonrecourse debt. "The 'BB-' corporate credit rating reflects GEO's narrow business focus, customer concentration, and highly leveraged financial profile," said S&P credit analyst Mark Salierno. "These factors are somewhat mitigated by the company's strong market position in the highly regulated U.S. private correctional facility management industry, as well as favorable demographic trends." When the transaction closes, GEO's capital structure will be more highly leveraged and its credit measures will weaken, despite a reduction in operating lease obligations. On a pro forma basis, we expect lease- and pension-adjusted total debt to EBITDA to be about 5.4x. We believe GEO will improve credit measures in the near term by maintaining its strong operating performance and by applying free cash flow to debt reduction. The company has limited flexibility at the current rating level for additional debt-financed acquisitions. GLASSMASTER CO: Posts $122,673 Net Loss in Period Ended December 3 ------------------------------------------------------------------ Glassmaster Company Inc. reported a $122,673 net loss on $4.5 million of sales for the first quarter ended Dec. 3, 2006, compared with a $98,886 net loss on $5.3 million of sales for the same period ended Dec. 4, 2005. The loss during the quarter ended Dec. 3, 2006, is due to lower sales in the Industrial Products segment leading to a consolidated decrease of $791,239 in sales from the first quarter of the prior year. The sales decrease is due to working capital constraints that have limited the company's ability to purchase raw materials. Margins remained consistent at 14% over the two periods. At Dec. 3, 2006, the company's balance sheet showed $12.08 million in total assets and $12.15 million in total liabilities, resulting in a $71,492 total stockholders' deficit. The company's balance sheet at Dec. 3, 2006, also showed strained liquidity with $7.3 million in total current assets available to pay $11.3 million in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 3, 2006, are available for free at http://researcharchives.com/t/s?18c6 Going Concern Doubt As reported in the Troubled Company Reporter on Dec. 19, 2006, Elliott Davis LLC expressed substantial doubt about Glassmaster Company Inc.'s ability to continue as a going concern after auditing the company's financial statements for the fiscal year ended Aug. 31, 2006. The auditing firm pointed to the company's loss from operations during the past fiscal year and working capital deficit at Aug. 31, 2006. About Glassmaster Company Based in Lexington, South Carolina, Glassmaster Company Inc. (OTC: GLMA.OB) -- http://www.glassmaster.com/ -- develops and manufactures extruded monofilaments, fishing and cutting line, abrasive nylon monofilaments, flexible control cables, switch panels, electronic test equipment, and the Modular T-slotted Composite Framework System. The company employs 300 process engineers, marketing specialists, management personnel and production technicians at Lexington, South Carolina, and Kalamazoo, Michigan. GREAT CANADIAN: Moody's Rates Proposed CDN$400 Mil. Loan at Ba2 --------------------------------------------------------------- Moody's Investors Service assigned a Ba3 corporate family rating, Ba3 probability of default rating and stable ratings outlook to Great Canadian Gaming Corporation. A Ba2/LGD-2 was assigned to the company's proposed CDN$200 million senior secured 5-year revolver and CDN$200 million senior secured term loan B due 2014. A B2/LGD-5 was assigned to the company's CDN$200 million proposed senior subordinated notes due 2015. Proceeds from the proposed offerings will be used to repay Great Canadian's existing bridge facilities that expire later this year. Although the revolver will be un-drawn at closing, the company expects to use it along with cash from operations and proceeds from any new debt or equity offering (to the extent necessary) to finance expansion, business development activity and for general corporate purposes. The proposed offerings are part of a recapitalization plan that began in August 2006 designed to obtain a more flexible debt structure that would more easily allow the funding of future development opportunities. The ratings consider the company's leading market position, eligibility for capital spending reimbursement programs in British Columbia and Nova Scotia, and substantial barriers to entry. The rating also acknowledges that over 50% of its consolidated cash flow currently comes from two casinos, and that the company's debt increased significantly to acquire and expand its properties over the past few years without a corresponding increase in profitability. As a result, it is expected to take several additional quarters for the relatively new management team to further improve profitability as it continues to focus on cost containment and cutting. The stable ratings outlook anticipates further profitability improvement as a result of ongoing cost cutting and containment efforts along with Great Canadian's considerable capital investment over the past three years. As a result of this investment, the company can allocate the majority of its capital expenditures for growth initiatives. The stable outlook also recognizes that the company retroactively changed its accounting policy with respect to capital spending reimbursements. Great Canadian now records reimbursements from British Columbia as revenue in the period it is earned and no longer records it as an asset accrual. Nova Scotia, which also gives capital expenditure reimbursements, will continue to be recorded as an asset accrual. Despite the different accounting treatments, the stable outlook gives positive credit to the favorable cash flow impact of reimbursements from British Columbia and Nova Scotia. Higher debt levels, failure to achieve further margin improvement over the next 18-24 month period, and/or another round of significant senior manager turnover could have a negative impact on ratings. Ratings improvement is limited over the near-term given the expectation that it will take several quarters for Great Canadian's relatively new management team to improve profitability as it focuses on expense management and the optimization of existing assets. Longer-term, ratings improvement is possible to the extent margin and leverage improvement is achieved and sustainable. Targeted metrics calculated according to Moody's standard financial adjustment methodology (and excluding capital spending reimbursements from Nova Scotia) include debt/EBITDA at/or below 4.0x, pre-tax income/revenues above 8%, and pre-tax income/average assets above 5%. Great Canadian Gaming Corporation, a TSX-listed company (SYMBOL: GCD) headquartered in Richmond, British Columbia, is a multi- jurisdictional gaming and entertainment operator in Canada with operations in British Columbia, Ontario and Nova Scotia. The company also operates four card rooms in the State of Washington. Ross McLeod, Chairman and Chief Executive Officer, together with immediate family and affiliates, beneficially owned 25.8% of outstanding common shares as of Dec. 31, 2006. Revenue for the last twelve months ended Sept. 30, 2006 was CDN$930 million. GREAT CANADIAN: S&P Rates Proposed CDN$400 Mil. Senior Loan at BB ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' bank loan rating and '2' recovery rating to Great Canadian Gaming Corporation's proposed CDN$400 million senior secured credit facility, reflecting S&P expectation of a substantial (80%-100%) recovery of principal in the event of a payment default. S&P also assigned its 'B+' rating to the company's planned $173 million senior subordinated notes due 2015. These securities will be issued under Rule 144a without registration rights. S&P also assigned its 'BB' corporate credit rating to GCG and the outlook is stable. The ratings on GCG reflect the limited level of competition in the markets in which the company operates, its solid market share in British Columbia, and the company's ability to receive reimbursements from some of the provincial governments for capital expenditures. Still, these factors are somewhat tempered by GCG's high effective tax rate and its moderate-size cash flow base. GSAMP TRUST: Moody's Rates Class B-2 Certificates at Ba2 -------------------------------------------------------- Moody's Investors Service has assigned a Aaa rating to the senior certificates issued by GSAMP Trust 2006-HE8, and ratings ranging from Aa1 to Ba2 to the mezzanine certificates in the deal. The securitization is backed by fixed-rate and adjustable-rate subprime mortgage loans acquired by SouthStar Funding, LLC, Aames Capital Corporation, and NovaStar Mortgage, Inc. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, excess spread, overcollateralization, and an interest rate swap and rate cap agreement between the trust and Goldman Sachs Mitsui Marine Derivative Products, L.P. Moody's expects collateral losses to range from 6.00% to 6.50%. Litton Loan Servicing LP (Litton), and Avelo Mortgage, L.L.C. will service the loans. Wells Fargo Bank, N.A. (Wells Fargo) will act as master servicer. Moody's has assigned Litton its top servicer quality rating of SQ1 as primary servicer of subprime loans. Furthermore, Moody's has assigned Wells Fargo its top servicer quality rating of SQ1 as a master servicer. The Complete Rating Actions are: GSAMP Trust 2006-HE8 Mortgage Pass-Through Certificates, Series 2006-HE8 * Cl. A-1, Assigned Aaa * Cl. A-2A, Assigned Aaa * Cl. A-2B, Assigned Aaa * Cl. A-2C, Assigned Aaa * Cl. A-2D, Assigned Aaa * Cl. M-1, Assigned Aa1 * Cl. M-2, Assigned Aa2 * Cl. M-3, Assigned Aa3 * Cl. M-4, Assigned A1 * Cl. M-5, Assigned A2 * Cl. M-6, Assigned A3 * Cl. M-7, Assigned Baa1 * Cl. M-8, Assigned Baa2 * Cl. M-9, Assigned Baa2 * Cl. B-1, Assigned Ba1 * Cl. B-2, Assigned Ba2 HEADWATERS INC: S&P Rates Proposed $135 Million Senior Notes at B ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' subordinated debt rating to the proposed $135 million 2.5% convertible senior subordinated notes due 2014 of Headwaters Inc. The notes are to be issued under Rule 144a with registration rights. Proceeds from the notes offering will be used to repay a portion of the company's senior secured credit facility. Headwaters had about $655 million of debt, adjusted for operating leases, at Sept. 30, 2006. The ratings on South Jordan, Utah-based Headwaters reflect meaningful business risks, including an aggressive acquisition strategy, an alternative energy business whose prospects are uncertain, and cyclical demand for its products. These factors overshadow Headwaters' strengths, including its favorable position within selected niche businesses for construction materials, healthy operating margins, moderate capital spending requirements, and demonstrated willingness to issue equity to help fund growth. HEBER HOMES: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Heber Homes, Inc. 117 East County Line Road Springdale, AR 72764 Bankruptcy Case No.: 07-10268 Type of Business: The Debtor's president, Benjamin Franklin Caston, filed for chapter 11 protection on Jan. 9, 2007 (Bankr. W.D. Ark. Case No. 07-70063) Chapter 11 Petition Date: January 18, 2007 Court: Eastern District of Arkansas (Batesville) Judge: Audrey R. Evans Debtor's Counsel: Stanley V. Bond, Esq. Attorney at Law P.O. Box 1893 Fayetteville, AR 72702-1893 Tel: (479) 444-0255 Fax: (479) 444-7141 Total Assets: Not Stated Total Debts: $1,303,965 The Debtor did not file a list of its 20 Largest Unsecured Creditors. HUDSON RESEARCH: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Hudson Research, Inc. 115 Hoyt Avenue Mamaroneck, NY 10543 Bankruptcy Case No.: 07-22046 Type of Business: In addition to its Internet & Web Development activities, the Debtor's facility in Mamaroneck include the first full service Electro-Optics Foundry, an optical shop, an electronics lab, an electro-optics lab, mechanical fabrication areas, design facilities, technical library, conference and office areas. See http://www.hudsonresearch.com/ Chapter 11 Petition Date: January 17, 2007 Court: Southern District of New York (White Plains) Judge: Adlai S. Hardin Jr. Debtor's Counsel: Lawrence R. Reich, Esq. Reich Reich & Reich, P.C. 175 Main Street Suite 300 White Plains, NY 10601 Tel: (914) 949-2126 Fax: (914) 949-1604 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Anthony Catanese, Jr. Consulting fees $250,000 724 First Street Mamaroneck, NY 10543 115 Hoyt LLC Rent arrears $180,000 724 First Street Mamaroneck, NY 10543 Cubic Defense Applications Loans $150,000 9333 Balboa Avenue San Diego, CA 92123 Anthony Catanese, Jr. Loan $100,000 724 First Street Mamaroneck, NY 10543 Sandra Birnbach Salary $96,000 Alan Roth Sales commissions $45,000 Richard Hein, Inc. Machining services $42,623 Judgment entered 11/28/06 Eileen Harris-Norton Loan $35,000 Eric Davis Loan $20,000 Anthony Catanese Estimated back $10,000 salary Ostrolenk Faber Gerb & Legal fees $8,000 Soofe, Esqs. David Mahl Loan $7,500 Con Edison Utilities $6,700 Global Industrial Equipment Factory equipment $6,400 and supplies Joanna Stein Loan $5,000 Bronx Welding Supplies $3,400 Home Depot Supplies $2,900 Allied Electronics, Inc. Electronic parts $2,500 Kurt J. Lesker Vacuum hardware $1,750 Newark Inone Electronic parts $1,700 INTELSAT BERMUDA: Issues $600 Million Floating Rate Senior Notes ---------------------------------------------------------------- Intelsat Bermuda Ltd. issued $600 million in aggregate principal amount of Floating Rate Senior Notes due 2015. The Refinancing Notes bear interest at LIBOR plus 350 basis points. The net proceeds from the Refinancing Notes, together with cash on hand, were used to refinance the company's outstanding $600 million senior unsecured credit facility. The Indenture contains covenants which include, among other things: -- a limitation on Intelsat Bermuda and some of its subsidiaries' ability to incur or guarantee additional debt or issue disqualified or preferred stock; -- a limitation on Intelsat Bermuda's and some of its subsidiaries' ability to pay dividends, make other equity distributions or repurchase or redeem capital stock; -- a limitation on Intelsat Bermuda's and some of its subsidiaries' ability to make certain investments; -- a limitation on Intelsat Bermuda's and some of its subsidiaries' ability to enter into transactions with affiliates; -- a limitation on merger, consolidation, amalgamation and sale of assets applicable to Intelsat Bermuda and some of its subsidiaries; and -- a limitation on Intelsat Bermuda's and some of its subsidiaries' ability to incur liens on any of Intelsat Bermuda's assets securing other indebtedness. The Indenture also contains events of default with respect to: -- default in payments of interest after a 30-day grace period or a default in the payment of principal when due; -- subject to a certain exception, default in the performance of any covenant in the Indenture that continues for more than 60 days after notice of default has been provided to Intelsat Bermuda; -- failure to make any payment when due, including applicable grace periods, under any indebtedness for money borrowed by Intelsat, Ltd., Intelsat Bermuda or a significant subsidiary thereof having a principal amount in excess of $75 million; -- the acceleration of the maturity of any indebtedness for money borrowed by Intelsat, Ltd., Intelsat Bermuda or a significant subsidiary thereof having a principal amount in excess of $75 million; -- failure by Intelsat, Ltd., Intelsat Bermuda or a significant subsidiary to pay final judgments aggregating in excess of $75 million, which judgments are not discharged, waived or stayed for 60 days; and -- certain events of bankruptcy, insolvency or reorganization of Intelsat, Ltd., Intelsat Bermuda or a significant subsidiary. The Refinancing Notes are redeemable on the dates, at the redemption prices and in the manner specified in the Indenture. Intelsat Bermuda agreed pursuant to a registration rights agreement to make an offer to exchange the Refinancing Notes for registered, publicly tradable notes that have substantially identical terms to the Refinancing Notes. A full-text copy of the Company's Indenture is available for free at: http://ResearchArchives.com/t/s?18c4 A full-text copy of the Company's Registration Rights Agreement is available for free at: http://ResearchArchives.com/t/s?18c5 Intelsat, Ltd. - http://www.intelsat.com/-- offers telephony, corporate network, video and Internet solutions around the globe via capacity on 25 geosynchronous satellites in prime orbital locations. Customers in approximately 200 countries rely on Intelsat's global satellite, teleport and fiber network for high-quality connections, global reach and reliability. * * * On Oct. 17, 2006, Fitch Ratings assigned a 'CCC+' rating and 'RR6' Recovery Rating to the $600 million senior unsecured credit facility of Intelsat Bermuda, Ltd., which is a subsidiary of Intelsat, Ltd. INZON CORP: DeJoyaGriffith Raises Going Concern Doubt ----------------------------------------------------- DeJoyaGriffith and Company LLC, Henderson, NV, expressed substantial doubt about Inzon Corp.'s ability to continue as a going concern after auditing the company's financial statements for the year ended Sept. 30, 2006. The auditing firm pointed to the company's accumulated deficit of $3,755,183 at Sept. 30, 2006, losses from start-up operations and substantial need for working capital. Inzon Corp. reported a $2.4 million net loss on $5.4 million of revenues for the year ended Sept. 30, 2006, compared with a $1.2 million net loss on $556,344 of revenues for the year ended Sept. 30, 2005. The increase in net loss was due to the first full year of operations and increased expenses in the first year. At Sept. 30, 2006, the company's balance sheet showed $1.1 million in total assets and $2.7 million in total liabilities, resulting in a $1.6 million total stockholders' deficit. The company's balance sheet at Sept. 30, 2006, also showed strained liquidity with $70,709 in total current assets available to pay $2.6 million in total current liabilities. Full-text copies of the company's consolidated financial statements for the year ended Sept. 30, 2006, are available for free at http://researcharchives.com/t/s?18c9 About InZon Based in Delray Beach, Florida, InZon Corporation (OTC BB: IZONE) -- http://www.inzon.net/-- uses Voice over Internet Protocol technology to provide voice, fax, data and conference call services on an ASP platform using its own hybrid VoIP/TDM network. J.P. MORGAN: S&P Downgrades Rating on Class L Certificates to BB ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on seven classes of commercial mortgage pass-through certificates from J.P. Morgan Chase Commercial Mortgage Securities Corp.'s series 2004- FL1. Concurrently, the rating on one class was lowered. At the same time, the ratings on five classes from the same transaction were affirmed. The upgrades and affirmations reflect Standard & Poor's analysis of the remaining loans in the pool, as well as increased credit enhancement levels resulting from loan payoffs. The lowering of the rating on class L reflects our estimated valuation decline for the sole specially serviced asset, which has experienced decreases in occupancy and net cash flows since issuance. As of the Jan. 16, 2007, remittance report, the trust collateral consisted of the senior participation interests in three one-month LIBOR indexed floating-rate partial or interest-only mortgage loans and one real estate owned asset. The pool balance has declined 72% since issuance, to $207.7 million. The remaining loans each have subordinate interests that are held outside of the trust. All of the remaining loans have maturities in 2007 or 2008 with extension options remaining. To date, the trust has experienced no losses. Block at Orange is the largest exposure in the pool, with a trust balance of $120 million (58%) and a whole-loan balance of $135 million. The loan is secured by a 729,900-sq.-ft. open-air anchored retail center in Orange, Calif. The master servicer, Midland Loan Services Inc. (Midland), placed this loan on the watchlist because the sponsor of the loan, The Mills Corp. (Mills; not rated), a Virginia-based REIT, has disclosed that it is being investigated by the SEC and plans to restate its earnings. On Jan. 17, 2007, Mills agreed to be acquired by a Canadian asset manager, Brookfield Asset Management Inc. The transaction is scheduled to close in the second half of the year. S&P will continue to monitor the situation and evaluate the financial and operational effects, if any, on the performance of the trust collateral. As of June 2006, the servicer reported a debt service coverage (DSC) of 1.96x and an occupancy rate of 98%. Standard & Poor's derived net cash flow has increased 12% compared with the level at issuance. The loan maturity was extended 12 months to January 2008, and one 12-month extension option remains. The second-largest loan is secured by Shops at Sunset Place, a 519,100-sq.-ft. lifestyle retail center in South Miami, Fla. The whole-loan balance is $91.4 million and the trust balance is $81.5 million. The servicer reported a 76% occupancy rate as of September 2006 and a 1.29x DSC as of June 2006. Standard & Poor's adjusted NCF is comparable to its level at issuance. The loan matures in May 2007 with two 12-month extension options remaining. The fourth-largest loan is secured by Oasis Apartments, a 128-unit garden-style apartment complex in Las Vegas, Nev. The trust balance is $2.5 million and a junior participation of $2.1 million resides outside the trust. The loan was previously transferred to the special servicer because the property was unable to meet certain DSC test requirements to exercise its extension option upon the loan's maturity. The special servicer has waived the DSC test requirements and allowed a one-year extension. The loan has since been returned to the master servicer. The servicer reported a DSC of 1.51x as of June 2006 and occupancy of 96% as of May 2006. The loan matures in August 2007 and has one 12-month extension option remaining. According to the master servicer, any special servicing or workout fees related to the asset have been waived by the special servicer. The sole specially serviced asset, West Park Apartments, is a 200- unit garden-style apartment complex in Dallas, Texas. The loan was transferred to the special servicer in April 2006 due to imminent default after the borrower was unable to extend or refinance the loan upon its maturity and the asset became REO in June 2006. The total trust exposure, including advancing, was $4.0 million as of December 2006. A junior participation of $2.5 million resides outside the trust. The current occupancy is 83%, and the last reported DSC was 0.91x as of December 2005. Standard & Poor's adjusted NCF for December 2005 had declined by 28% since issuance. The special servicer recently listed the property for sale, and it will be marketed by the end of the month. An appraisal reduction amount of $1.9 million is in effect as of December 2006. Based on discussions with the master servicer, the junior participation will be the first to bear any losses on the asset, including special servicing fees. Ratings Raised J.P. Morgan Chase Commercial Mortgage Securities Corp. Commercial mortgage pass-through certificates series 2004-FL1 Rating ------ Class To From Credit enhancement(%) ----- -- ---- --------------------- B AAA AA+ 40.42 C AAA AA 34.53 D AAA AA- 29.82 E AA+ A+ 24.88 F AA- A 20.59 G A+ A- 16.73 H A- BBB+ 12.87 Rating Lowered J.P. Morgan Chase Commercial Mortgage Securities Corp. Commercial mortgage pass-through certificates series 2004-FL1 Rating ------ Class To From Credit enhancement(%) ----- -- ---- --------------------- L BB BBB- 0.00 Ratings Affirmed J.P. Morgan Chase Commercial Mortgage Securities Corp. Commercial mortgage pass-through certificates series 2004-FL1 Class Rating Credit enhancement(%) ----- ------ --------------------- A-2 AAA 47.62 J BBB 9.44 K BBB- 5.79 X-1B AAA N/A X-FL AAA N/A N/A - Not applicable. JOHN SLIEMERS: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: John D. Sliemers Jane A. Sliemers 8406 Gleneagles Court Dublin, OH 43017 Bankruptcy Case No.: 07-50301 Chapter 11 Petition Date: January 17, 2007 Court: Southern District of Ohio (Columbus) Judge: John E. Hoffman Debtors' Counsel: Mark Ditullio, Esq. Mark Ditullio, Attorney at Law 169 East Livingston Avenue, Suite 1100 Columbus, OH 43215-1516 Tel: (614) 461-1516 Fax: (614) 461-1520 Total Assets: $1,269,323 Total Debts: $1,713,346 Debtors' 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Greenpoint Mortgage Mortgage $552,000 P.O. Box 1093 Value: Branford, CT 06405-8093 $552,000 Net Unsecured: $52,000 WM Specialty Mortgage LLC Mortgage $214,000 c/o Ameriquest Mortgage Co. Value: 505 City Parkway West $193,000 Orange, CA 92868 Net Unsecured: $21,000 Deutsche Bank National Trust Mortgage $207,000 c/o Ameriquest Mortgage Co. Value: 505 City Parkway West $186,000 Orange, CA 92860 Net Unsecured: $21,000 Deutsche Bank National Trust Mortgage $194,000 c/o Ameriquest Mortgage Co. Value: 505 City Parkway West $183,000 Orange, CA 92860 Net Unsecured: $11,000 Deutsche Bank National Trust Mortgage $194,000 c/o Ameriquest Mortgage Co. Value: 505 City Parkway West $183,000 Orange, CA 92860 Net Unsecured: $11,000 Greenpoint Mortgage Mortgage $104,507 c/o GMAC Value: P.O. Box 4622 $440,000 Waterloo, IA 50704-4622 Net Unsecured: $104,507 Keybank Business debt $51,317 Advanta Bank Corp. Business debt $30,273 MBNA America Credit card $27,506 purchases Discover Credit card $22,565 purchases AT&T Universal Card Credit card $22,388 purchases MBNA America Credit card $19,301 purchases Chase Mastercard Credit card $16,872 purchases Chase Visa Credit card $12,091 purchases Sam's Club Business debt $11,207 Discover Business debt $11,064 US Bank Credit card $8,888 purchases American Express Business debt $7,530 Capital One Bank Business debt $3,168 US Bank Business debt $2,778 KGEN LLC: S&P Rates Planned $400 Million Credit Facilities at BB- ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' rating to KGen LLC's planned credit facilities, including: * a $200 million first-lien term loan due 2014, * a $120 million synthetic LOC due 2014, and * an $80 million revolving working-capital facility due 2012. The outlook is stable. S&P assigned its '1' recovery rating to the facilities. It indicates that lenders can expect to receive full recovery of principal in a default scenario. Houston, Texas-based KGen generates cash flow through ownership of five natural gas-fired power plants totaling 3,030 MW in the southeastern U.S. The stable outlook reflects favorable prospects for stable cash flow from the Georgia Power purchase-power agreement, large liquidity balances, declining reserve margins in the Entergy and Southern subregions, and a relative low debt per kW debt burden on the assets. A 50% cash flow sweep could reduce debt balances during the PPA period, if other assets can realize decent levels of cash flow. "An upgrade would require material debt reduction before maturity, and favorable prospects for market power prices and growing capacity factors for KGen's units, or favorable long-term contracting of capacity, " said S&P credit analyst Terry A. Pratt. "A downgrade could occur if market prices decline to levels that would not support sufficient deleveraging, or if operational problems emerge," he continued. KIRKLAND KNIGHT: Gets Court Nod to Use Madison's Cash Collateral ---------------------------------------------------------------- The U.S Bankruptcy Court for the Northern District of California gave Kirkland Knightsbridge LLC permission to use cash collateral securing repayments of its obligations to Madison Capital Group LLC. As reported in the Troubled Company Reporter on Dec. 14, 2006, the Debtor and its affiliate, Kirkland Cattle Company, on Feb. 2, 2004, jointly borrowed $20,000,000 from The Travelers Insurance Co.. The loan was to be used in consolidating and refinancing obligations as well as for working capital. The loan was later assigned to Met Life Insurance Company of Connecticut and then finally assigned to Madison Capital Group LLC. The Debtor says that this loan was evidenced by a promissory note, deed of trust, and other collateral documentation. Pursuant to the loan documents, Madison Capital holds lien on the Debtor's grape crop, certain other personal property, and their proceeds. The Debtor said it needs the cash to pay ongoing operational expenses in order to promulgate a plan of reorganization, and to pay postpetition payroll and other critical operating expenses. To provide Madison Capital with adequate protection required under Sections 361(2) and 363(e) under the U.S. Bankruptcy Code for any diminution in the value of its collateral, the Debtor will grant Madison Capital replacement liens to the same extent, validity and priority as the prepetition liens. The Debtor believed that, even without the replacement lien, Madison Capital Group is adequately protected for the use of its cash collateral because the loan is secured by a first deed of trust on real property assets of the debtor and its affiliate Kirkland Cattle Company worth well in excess of $75,000,000. A full-text copy of the Debtor's cash collateral budget is available for free at http://ResearchArchives.com/t/s?16ce Kirkland Knightsbridge LLC dba Kirkland Ranch Winery -- http://www.kirklandranchwinery.com/-- operates vineyards and wineries in the Napa Valley region and breeds cattle for commercial consumption. The company filed a chapter 11 petition on September 21, 2006 (U.S. Bankr. N.D. Calif. Case No. 06-10628). The company's affiliate, Kirkland Cattle Company, filed a separate chapter 11 petition in the same court under Case No. 06-10630. John H. MacConaghy, Esq. at MacConaghy and Barnier, PLC represents the Debtors in their restructuring efforts. When the Debtors sought protection from their creditors, they listed assets and debts between $10 million to $100 million. LENNAR CORP: Posts $195.6 Mil. Net Loss in 4th Qtr. Ended Nov. 30 ----------------------------------------------------------------- Lennar Corp. reported results for its fourth quarter and fiscal year ended Nov. 30, 2006. Fourth quarter net loss in 2006 was $195.6 million, compared with net earnings of $581.2 million in 2005. Stuart Miller, president and chief executive officer of Lennar Corporation, said, "... market conditions have remained depressed through the end of our fourth quarter. "In this environment, we have continued to focus on strengthening our balance sheet. We have continued to build-out our inventory, deliver our backlog and convert inventory into cash. "With a balance sheet-first focus, we have priced our homes to market conditions and maintained an 'inventory neutral' position. Accordingly, our land inventory and homes under construction have declined throughout the second half of 2006." Mr. Miller continued, "As we look ahead to 2007, the strength of our balance sheet, together with our renegotiated land positions that reflect current market conditions, provide the springboard from which we will rebuild our margins. "To that end, we have identified four focal points that will drive our margin improvement in 2007: right-sizing SG&A expenses to match both current volume and efficiencies, reducing construction costs, redesigning product to meet today's market demand, and building on land at current market prices. "We will also continue to carefully match our starts to demand, and as a result, we estimate deliveries will decline in excess of 20% in 2007, compared to 2006." Mr. Miller concluded, "Uncertain market conditions make it difficult to provide a 2007 earnings goal. While we know that the margin in our backlog will result in lower profitability in the first half of 2007, we believe that if the current environment of strong employment, low interest rates and a healthy economy continues, and the market for new homes demonstrates traditional, seasonal improvement, we will meet or exceed our 2006 earnings of $3.69 per share." Fourth Quarter Results of Operations Homebuilding Revenues from home sales decreased 14% in the fourth quarter of 2006 to $4 billion from $4.7 billion in 2005. Revenues were lower primarily due to a 4% decrease in the number of home deliveries and an 11% decrease in the average sales price of homes delivered in 2006. New home deliveries, excluding unconsolidated entities, decreased to 13,285 homes in the fourth quarter of 2006 from 13,851 homes last year. In the fourth quarter of 2006, new home deliveries were lower primarily due to a decrease in the company's Homebuilding West segment and Homebuilding Other, partially offset by an increase in its Homebuilding East segment, compared to 2005. The average sales price of homes delivered decreased to $302,000 in the fourth quarter of 2006 from $338,000 in 2005, primarily due to higher sales incentives offered to homebuyers ($47,300 per home delivered in the fourth quarter of 2006, compared to $10,600 per home delivered last year). Gross margins on home sales excluding inventory valuation adjustments were $576.6 million, or 14.4%, in the fourth quarter of 2006, compared with $1.3 billion, or 27.0%, in the same quarter of 2005. Gross margin percentage on home sales decreased compared to last year in all of its homebuilding segments and Homebuilding Other primarily due to higher sales incentives offered to homebuyers. Gross margins on home sales including inventory valuation adjustments were $336.8 million, or 8.4%, in the fourth quarter of 2006 due to $239.8 million of inventory valuation adjustments ($138.9 million, $25.6 million, $59.7 million and $15.6 million, respectively, in its Homebuilding East, Central, and West segments and Homebuilding Other). Selling, general and administrative expenses as a percentage of revenues from home sales increased to 12.1% in the fourth quarter of 2006, from 9.8% in 2005. The 230 basis point increase was primarily due to lower revenues and increases in broker commissions and advertising expenses, partially offset by lower incentive compensation expenses. Management fees of $11.8 million received during the fourth quarter of 2005 from unconsolidated entities in which the company has investments, which were previously recorded as a reduction of selling, general and administrative expenses, have been reclassified to management fees and other income, net in order to conform to the 2006 presentation. Loss on land sales totaled $119.9 million in the fourth quarter of 2006, net of $111.1 million of write-offs of deposits and pre- acquisition costs ($73.4 million, $100,000, $27.2 million and $10.4 million, respectively, in its Homebuilding East, Central, and West segments and Homebuilding Other) related to 9,395 homesites under option that it does not intend to purchase and $33.3 million of inventory valuation adjustments ($16.6 million, $4 million and $12.7 million, respectively, in its Homebuilding East and Central segments and Homebuilding Other), compared with gross profit of $58.2 million in 2005. Equity in loss from unconsolidated entities was $59.6 million in the fourth quarter of 2006, which included $109.7 million of valuation adjustments ($24.6 million, $78.4 million and $6.7 million, respectively, in its Homebuilding East and West segments and Homebuilding Other) to its investments in unconsolidated entities, compared with $79.1 million last year. Management fees and other income, net, totaled $9.0 million in the fourth quarter of 2006, compared with $37.2 million in the fourth quarter of 2005. Minority interest expense, net was $1.4 million and $11.2 million, respectively, in the fourth quarter of 2006 and 2005. Sales of land, equity in earnings (loss) from unconsolidated entities, management fees and other income, net and minority interest expense, net may vary significantly from period to period depending on the timing of land sales and other transactions entered into by the company and unconsolidated entities in which it has investments. Financial Services Operating earnings for the Financial Services segment were $42.9 million in the fourth quarter of 2006, compared with $34.6 million last year. The increase was primarily due to improved results from the segment's mortgage operations as a result of an increased capture rate and a higher percentage of fixed-rate loans. Corporate General and Administrative Expenses Corporate general and administrative expenses as a percentage of total revenues were 0.8% in the fourth quarter of 2006, compared with 1.3% in the same period last year. The 50 basis point decrease was primarily due to lower incentive compensation expenses. 2006 Fiscal Results of Operations Homebuilding Revenues from home sales increased 17% in the year ended Nov. 30, 2006, to $14.9 billion from $12.7 billion in 2005. Revenues were higher primarily due to a 15% increase in the number of home deliveries in 2006. New home deliveries, excluding unconsolidated entities, increased to 47,032 homes in the year ended Nov. 30, 2006, from 40,882 homes last year. In the year ended Nov. 30, 2006, new home deliveries were higher in each of its homebuilding segments and Homebuilding Other, compared to 2005. The average sales price of homes delivered increased to $315,000 in the year ended Nov. 30, 2006, from $311,000 in 2005 despite higher sales incentives offered to homebuyers ($32,000 per home delivered in 2006, compared with $9,000 per home delivered in 2005). Gross margins on home sales excluding inventory valuation adjustments were $3 billion, or 20.3%, in the year ended Nov. 30, 2006, compared with $3.3 billion, or 26.0%, in 2005. Gross margin percentage on home sales decreased compared to last year in all of its homebuilding segments and Homebuilding Other primarily due to higher sales incentives offered to homebuyers. Gross margins on home sales including inventory valuation adjustments were $2.7 billion, or 18.4%, in the year ended Nov. 30, 2006 due to $280.5 million of inventory valuation adjustments ($157.0 million, $27.1 million, $79.0 million and $17.4 million, respectively, in its Homebuilding East, Central and West segments and Homebuilding Other). Selling, general and administrative expenses as a percentage of revenues from home sales were 11.9% and 11.1%, respectively, for the years ended Nov. 30, 2006, and 2005. The 80 basis point increase was primarily due to increases in broker commissions and advertising expenses, partially offset by lower incentive compensation expenses. Management fees of $37.4 million received during the year ended Nov. 30, 2005, from unconsolidated entities in which it has investments, which were previously recorded as a reduction of selling, general and administrative expenses, have been reclassified to management fees and other income, net in order to conform to the 2006 presentation. Loss on land sales totaled $30.0 million in the year ended Nov. 30, 2006, net of $152.2 million of write-offs of deposits and pre-acquisition costs ($80.5 million, $2.9 million, $44 million and $24.8 million, respectively, in its Homebuilding East, Central and West segments and Homebuilding Other) related to 24,235 homesites under option that it does not intend to purchase and $69.1 million of inventory valuation adjustments ($24.7 million, $17.3 million and $27.1 million, respectively, in its Homebuilding East and Central segments and Homebuilding Other), compared with gross profit of $200.8 million in 2005. Equity in loss from unconsolidated entities was $12.5 million in the year ended Nov. 30, 2006, which included $126.4 million of valuation adjustments ($25.5 million, $92.8 million and $8.1 million, respectively, in its Homebuilding East and West segments and Homebuilding Other) to its investments in unconsolidated entities, compared with $133.8 million last year. Management fees and other income, net, totaled $66.6 million in the year ended Nov. 30, 2006, compared with $99.0 million in 2005. Minority interest expense, net was $13.4 million and $45 million, respectively, in the years ended Nov. 30, 2006, and 2005. Sales of land, equity in earnings (loss) from unconsolidated entities, management fees and other income, net and minority interest expense, net may vary significantly from period to period depending on the timing of land sales and other transactions entered into by the Company and unconsolidated entities in which it has investments. Financial Services Operating earnings from continuing operations for the Financial Services segment were $149.8 million in the year ended Nov. 30, 2006, compared with $104.8 million last year. The increase was primarily due to a $17.7 million pretax gain generated from monetizing the segment's personal lines insurance policies, as well as increased profitability from the segment's mortgage operations as a result of increased volume and profit per loan. Corporate General and Administrative Expenses Corporate general and administrative expenses as a percentage of total revenues were 1.2% in the year ended Nov. 30, 2006, compared with 1.4% in the same period last year. About Lennar Corp. Lennar Corporation (NYSE: LEN and LEN.B) -- http://www.lennar.com/ -- founded in 1954, builds affordable, move-up and retirement homes primarily under the Lennar name. Lennar's Financial Services segment provides primarily mortgage financing, title insurance, and closing services for both buyers of the company's homes and others. * * * In March 2006, Moody's Investors Service raised Lennar Corp.'s senior subordinated debt rating to Ba1. LOUISIANA WORSHIP: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Louisiana Worship Hospitality, L.L.C. dba New Orleans Grand Palace Hotel 1732 Canal Street New Orleans, LA 70112 Bankruptcy Case No.: 07-10102 Type of Business: The Debtor operates a hotel. See http://www.neworleansgrandpalacehotel.com/ Chapter 11 Petition Date: January 18, 2007 Court: Eastern District of Louisiana (New Orleans) Judge: Jerry A. Brown Debtor's Counsel: Douglas S. Draper, Esq. Heller, Draper, Hayden, Patrick & Horn, L.L.C. 650 Poydras Street, Suite 2500 New Orleans, LA 70130 Tel: (504) 581-9595 Fax: (504) 525-3761 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Entergy $299,757 P.O. Box 8106 Baton Rouge, LA 70891-8106 City of New Orleans Personal Property $122,218 1300 Perdido Street Taxes Room 1W40 New Orleans, LA 70112-2184 Entergy $82,879 P.O. Box 8106 Baton Rouge, LA 70891-8106 Kone Inc. $19,359 River Parish Disposal, Inc. Disposal Charge $11,488 City of New Orleans Personal Property $11,315 Taxes The Time-Picayune Classified Ad $2,851 Cox Communications, Inc. Cable Service $1,310 Eddie J. Jordan, Jr. NSF check issued to $1,000 Dept. of Revenue - (DA Fess for Worthless Check) Sewerage and Water Board of $864 New Orleans Touristick Verlag GMBH Travel Publications $860 Sewerage and Water Board of $855 New Orleans Bell South Telephone Charge $764 Hotaling, Marybeth Listing in Corporate $660 Rate Hotel Directory Entergy $532 Philip B. Willette Co. LPA General Counsel for $509 AmerAssist A/R Solutions, Inc. Bell South Telephone Charge $228 TravelClick $29 LA Department of Revenue Unknown Tyco/Simplex Grinnell Fire Alarm System Unknown MAHESH GOPALAKRISHNA: Case Summary & 20 Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: Mahesh Gopalakrishna Hosanagara Suryakala R. 619 Deforest Court Coppell, TX 75019 Bankruptcy Case No.: 07-40077 Chapter 11 Petition Date: January 17, 2007 Court: Eastern District of Texas (Sherman) Judge: Brenda T. Rhoades Debtors' Counsel: Charles R. Chesnutt, Esq. Charles R. Chesnutt, P.C. P.O. Box 703816 Dallas, TX 75370 Tel: (972) 735-0757 Fax: (972) 767-4600 Total Assets: $1,469,431 Total Debts: $10,578,509 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Cathay Bank First lien $3,918,750 777 North Broadway Value: Los Angeles, CA 96002 $3,730,753 Cathay Bank First lien $2,362,500 777 North Broadway Value: Los Angeles, CA 90012 $2,300,000 M&T Bank First lien $447,000 P.O. Box 4560 Buffalo, NY 14203 North O'Connor, Ltd. Judgment $240,000 c/o Epstein Becker Green 500 North Akard Street Suite 2700 Dallas, TX 75201 American Express Credit card $75,000 Bank of America Credit card $72,000 Raul Bello Contract $61,600 SalsaDallas.com Contract $61,500 Luis Delgadillo Contract $61,500 Tap Industries Non-residential $42,000 lease 28 Commerce Center Non-residential $40,000 lease Choice Hotels International Franchise agreement $27,670 K.B. Alexander Services $26,951 Capital One NA Line of credit $26,000 Chase Credit card $20,000 Capital One Credit card $19,000 Joselyne Manilapaz Lawsuit $18,000 Chase Master Card Credit card $17,000 Chase Credit card $16,516 Coppell ISD Statutory lien $15,177 MATTRESS HOLDINGS: Moody's Rates $210 Million Senior Loans at Ba3 ----------------------------------------------------------------- Moody's Investors Service assigned first time ratings to Mattress Holdings Corp., including a corporate family rating of B2 and a Ba3 for the senior secured term credit facilities. The rating outlook is stable. The ratings are conditioned upon review of final documentation. These ratings are assigned: * Corporate family rating at B2; * Probability-of-default rating at B2; * $25 million senior secured revolving credit facility at Ba3 (LGD2-28%); * $185 million senior secured term loan facility at Ba3 (LGD2-28%). The ratings are being assigned in connection with the acquisition of Mattress Holding Corp. by J.W. Childs Associates for approximately $450 million, including the repayment of existing debt. The acquisition will be financed with the proceeds of the proposed $185 million term loan along with an unrated privately placed subordinated notes offering, and an equity contribution by J.W. Childs and management. The B2 corporate family rating of Mattress Holdings reflects post- transaction credit metrics that will be weak, particularly the very high leverage and low cash flow coverage. The B2 rating is further supported by the company's very small scale with top line revenues for the LTM period ended October 31, 2006 of $362 million, and its shareholder friendly financial policies. Offsetting these high yield characteristics are several investment grade characteristics including: its low seasonality, the stability of the U.S. retail mattress market, the company's credible market position in the very defined specialty retail sleep channel, and its strong comparable store sales growth over the past two years. Lastly, the rating category is supported by the company's primarily regional presence and its modest profitability. The stable outlook reflects Moody's expectation that the company will continue to grow comparable store revenues, improve operating margins, and maintain moderately positive free cash flow and adequate liquidity. Given the magnitude of Mattress Holdings post-transaction leverage, an upgrade is unlikely in the intermediate term. Over the longer term, an upgrade would require continuing solid operating performance coupled with Debt/EBITDA (as calculated by Moody's) being sustained below 5.5x and FCF/Debt above 5% on a sustainable basis. Conversely, negative rating pressure would develop if: operating performance is weaker than expected, liquidity erodes, or if overall comparable store sales were to become negative. Quantitatively, ratings would be lowered should, as calculated using Moody's standard adjustments, Debt/EBITDA rise above 7.25x, EBITA/IE fall below 1.0x, or if FCF/Debt remains negative. Moody's has applied its Probability of Default and Loss-Given- Default rating methodology to Mattress Holdings resulting in Ba3 ratings on the senior secured credit facilities, two notches higher than the corporate family rating. The ratings on the senior secured credit facilities primarily reflect: their collateral package, which includes a first lien all asset pledge, and the junior support provided by the mezzanine financing. In addition the ratings on the bank facilities reflect their size relative to the whole capital structure and the guarantees provided by the operating subsidiaries. Mattress Holding Corp., headquartered in Houston, TX, is a leading specialty retailer of conventional and specialty mattresses. The company operates 295 company owned stores and 54 franchised stores in 19 states. Revenues for the LTM period ended October 31, 2006 are estimated to be nearly $362 million. MERRILL LYNCH: Fitch Holds CCC Rating on $28.4 Mil. Certificates ---------------------------------------------------------------- Fitch Ratings affirms Merrill Lynch Mortgage Investors, Inc.'s mortgage pass-through certificates, series 1996-C1 as: -- Interest-only class IO at 'AAA'; -- $28.4 million class F at 'CCC'. The rating affirmations are due to increased credit enhancement from loan payoffs and by increasing concentrations within the transaction. The transaction has paid down 96% since issuance with 16 of the original 159 loans still outstanding. There are currently no delinquent or specially serviced loans. MESABA AVIATION: Files Chapter 11 Reorganization Plan in Minnesota ------------------------------------------------------------------ Mesaba Airlines, a subsidiary of MAIR Holdings Inc., signed a stock purchase and reorganization agreement with Northwest Airlines under which Mesaba would become a wholly owned subsidiary of Northwest Airlines Inc. Intensive negotiations with Northwest Airlines officials concluded this week with the boards for both Mesaba Aviation and MAIR Holdings, Inc. approving the deal. "Mesaba now is positioned to form a new partnership with Northwest Airlines and meet the on-going challenges of the airline industry," Mesaba President and Chief Operating Officer John Spanjers said. "The support of Northwest and the cooperation of our first-rate, dedicated employees and our vendors have allowed us to use this process to lay the groundwork for Mesaba's future success." The stock purchase and reorganization agreement is part of Mesaba's Plan of Reorganization that it filed on Jan. 22, 2007, with the U.S. Bankruptcy Court for the District of Minnesota. The company intends to file its related Disclosure Statement with the Court in the coming days. "We have achieved exceptional results across the board during this restructuring process and today's filing represents a significant step toward a successful future for Mesaba," Mr. Spanjers said. "Our efforts will ensure that we emerge from Chapter 11 as a competitive regional carrier with a solid financial foundation and a continued focus on unmatched operational performance." Mesaba intends to exit from Chapter 11 bankruptcy protection by the spring of this year. In addition to the stock purchase and reorganization agreement, the POR addresses the treatment of creditors' claims and assumes the new agreements with Mesaba's labor groups and certain vendors and suppliers. Restructuring Progress Mesaba's comprehensive restructuring plan reduces costs by $68 million a year, secures its core business with Northwest for the 49 Saab 340Bs and positions the company for future growth opportunities. As a result of its on-going restructuring initiatives, the company has achieved reductions in its fixed costs, vendor costs, aircraft and engine leases, and labor costs. "Mesaba employees have made a considerable sacrifice to achieve that cost structure," Mr. Spanjers said. "Our employees have exemplified the true commitment and professionalism that makes Mesaba the exceptional airline that it is." Plan Highlights Under the Stock Purchase and Reorganization Agreement with Northwest Airlines, all of the existing equity securities of Mesaba will be cancelled and terminated. Northwest has agreed that Mesaba has an allowed $145 million unsecured claim in Northwest's Chapter 11 case in exchange for 100 percent of Mesaba's new common stock to be issued on the effective date of the Plan. It is expected that the $145 million claim will be sold to fund the plan distributions to creditors, with the remainder of the sale proceeds being distributed to MAIR Holdings, Mesaba's parent. Timing The Plan is expected to become effective approximately two weeks after the Bankruptcy Court confirms the Plan. The confirmation hearing will be set by the Bankruptcy Court at a later point in time, but is expected to occur in mid-April 2007. About Northwest Airlines Northwest Airlines Corp. (OTC: NWACQ) -- http://www.nwa.com/ -- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. About Mesaba Aviation Headquartered in Eagan, Minnesota, Mesaba Aviation, Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- a subsidiary of MAIR Holdings, Inc. (NASDAQ:MAIR) operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. MESABA AVIATION: MAIR Inks Agreement with Northwest Airlines ------------------------------------------------------------ MAIR Holdings, Inc., Mesaba Airlines' parent company, reported the terms of two agreements, one a definitive agreement between MAIR and Northwest Airlines and the other a definitive agreement between MAIR's Mesaba Airlines subsidiary and NWA under which Mesaba will exit bankruptcy as an operating subsidiary of NWA. "We believe that the transition of Mesaba to Northwest is a good outcome for all parties in Mesaba's bankruptcy," said Paul Foley, MAIR Holdings' president and chief executive officer. "It provides potential value for our shareholders and allows us to fully pursue other opportunities, both through Big Sky and in new areas." The agreement between MAIR and NWA contains these terms: -- MAIR will purchase from NWA all of the MAIR stock NWA currently owns for an aggregate purchase price of $6.25 per share, or approximately $35 million. NWA owns approximately 5.7 million shares. -- Approximately $24 million of the aggregate purchase price, or $4.25 per share, will be paid upon the initial closing of the transaction, expected to occur prior to April 15, 2007. -- The remainder of the purchase price, approximately $11 million, or $2.00 per share, will be paid on the earlier of the date upon which MAIR receives at least $25 million in equity distributions from Mesaba's bankruptcy estate or nine months from the execution of the agreement. -- NWA's Warrant to purchase 4.1 million shares of MAIR's stock will terminate upon closing of the agreement. -- NWA's bankruptcy claim of $7.3 million in Mesaba's bankruptcy will be assigned to MAIR at the time of the closing of the Stock Purchase and Reorganization Agreement. -- NWA will allow Mesaba, upon closing of the SPRA, to use up to $4.5 million to satisfy certain contracts to be assumed by Mesaba in its bankruptcy proceedings, thereby reducing the claim pool in Mesaba's bankruptcy estate. -- NWA and MAIR will execute a mutual release of all claims against each other, including MAIR's bankruptcy claim against NWA. -- MAIR will provide its consent to allow Mesaba to sign the SPRA and to file its plan of reorganization. The agreement between MAIR and Northwest is dated Jan. 22, 2007. In a related but separate transaction, Mesaba and NWA agreed under the SPRA to these terms: -- NWA will allow a claim of $145 million by Mesaba in NWA's bankruptcy case. -- Mesaba's current equity will be cancelled and new equity will be issued to NWA under Mesaba's plan, making Mesaba a subsidiary of NWA. -- Mesaba will be allowed to monetize its $145 million claim against NWA through a sale which is expected to occur in the next 30 days. -- Mesaba will file a plan of reorganization with its bankruptcy court that will implement the terms of the SPRA and provide for a release of any claims Mesaba may have against MAIR. -- NWA and Mesaba will execute a mutual release of all claims against each other. The agreement between Mesaba and Northwest is also dated Jan. 22, 2007. Mesaba currently estimates that the final allowed amount of bankruptcy claims against Mesaba will be $90 million. Assuming Mesaba's claims are between $90 million and $100 million, and assuming that Mesaba is able to monetize its NWA claim at the current market price of 85%-95% of the total allowed claim, MAIR estimates that it could receive approximately $30 million to $60 million after all distributions are made in accordance with Mesaba's plan of reorganization. The bankruptcy courts overseeing, separately, the NWA and Mesaba Chapter 11 proceedings, must approve both agreements. About Northwest Airlines Northwest Airlines Corp. (OTC: NWACQ) -- http://www.nwa.com/ -- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. About Mesaba Aviation Headquartered in Eagan, Minnesota, Mesaba Aviation, Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- a subsidiary of MAIR Holdings, Inc. (NASDAQ:MAIR) operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. MESABA AVIATION: Inks Pact Resolving Wayne County Airport's Claim ----------------------------------------------------------------- Wayne County Airport Authority is the owner and operator of the Detroit Metropolitan Wayne County Airport. Mesaba Aviation, Inc. as a regional air carrier providing scheduled passenger service under an airline services agreement between itself and Northwest Airlines, Inc. The Debtor operates at many airport facilities, including the Detroit Airport. The Debtor and the Authority are parties to two lease agreements: (a) the Airport Use and Lease Agreement dated September 29, 2004; and (b) the Ground Lease Construction of Hanger and Ramp dated May 18, 1990. Payments to be made during a fiscal year by the Debtor pursuant to the Airport Use Agreements are based on (a) the Debtor's projected activity at the Detroit Airport for the fiscal year, and (b) the Authority's projection of the expenses and revenues of the Detroit Airport. The Airport Use Agreement provides for a "true up" process at the conclusion of each fiscal year, which includes preparation of a Final Audit. If the payments actually made by the Debtor during the fiscal year exceed the amounts chargeable to the Debtor for based on actual Airport expenses, revenues and airline activity at the Detroit Airport, the Debtor is entitled to a refund -- 80% of which is payable after a preliminary calculation, with the balance payable after completion of the Final Audit. The entire refund is subject to change based on the results of the Final Audit. For FY 2005, the Authority has calculated all year-end adjustments on a final basis, and the Final Audit for FY 2005 has been provided to the Debtor. According to the Final Audit, for the Authority's FY ended September 30, 2005, the Debtor failed to make payments due under the Airport Use Agreement for $459,751. The Debtor also failed to pay obligations due to the Authority outside of the Airport Use Agreement for $129,862. For FY 2006, the Authority has prepared a preliminary calculation of the amounts chargeable to the Debtor for the fiscal year, with the final calculation subject to the completion of the Final Audit. The Authority has also provided to the Debtor the preliminary calculation of the refund due to the Debtor for FY 2006. According to the Authority, for the FY ended September 30, 2006, the Debtor failed to make payments due under the Airport Use Agreement for $240,198, which amounts were incurred during the prepetition portion of FY 2006. The Debtor also failed to pay obligations due to the Authority outside of the Airport Use Agreement for $29,554, which amounts were incurred during the prepetition portion of FY 2006. The Authority filed Claim No. 532 for $859,366 -- composed of the FY 2005 Underpayment and the FY 2006 Underpayment. Claim No. 532 purports to be secured by rights of recoupment and set-off. The Debtor acknowledges the gross amount claimed by the Authority in Claim No. 532 but disputes certain characterizations of the Authority's rights to set-off and recoupment. To resolve the dispute related to Claim No. 532, the parties have agreed to permit the Authority to reduce: (a) the calculation of the Debtor's FY 2005 refund by the 2005 Use Agreement Underpayment, and to set off the FY 2005 Non-Use Agreement Underpayments and FY 2006 Non-Use Agreement Underpayments from the FY 2005 refund. Upon final approval of the Stipulation, the Authority will pay the Debtor $139,031 as a final refund for FY 2005; (b) the calculation of the Debtor's FY 2006 refund by the 2006 Use Agreement Underpayment. Upon final approval of the Stipulation, the Authority will immediately pay the Debtor $810,641, which constitutes 80% of the Debtor's preliminary FY 2006 refund. The Debtor will receive the remaining 20% of the FY 2006 refund on the later of the final approval of the Stipulation or in accordance with the Use Agreement. The Debtor's FY 2006 refund remains subject to adjustment pending the Final Audit. The Stipulation further provides that the Authority will amend Claim No. 532 to reflect that there's no prepetition unsecured claim but reserves the right to amend Claim No. 532 if further additional prepetition unsecured claims arise. The Debtor acknowledges the amount of prepetition debt owed to the Authority, and desires to receive the FY 2005 and FY 2006 refunds. The Debtor believes that the Stipulation is in the best interests of the estate and that the Authority likely has a right to set off the obligations as set forth in the Stipulation. Accordingly, the Debtor asks the U.S. Bankruptcy Court for the District of Minnesota to (1) approve the Stipulation, and (2) modify the automatic stay for the limited purpose of permitting the Authority to perform according to the Stipulation. Unless a response in opposition is filed on January 25, 2007, the Court may grant the Stipulation without a hearing. About Mesaba Aviation Headquartered in Eagan, Minnesota, Mesaba Aviation, Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) MILLSAPS: Voluntary Chapter 11 Case Summary ------------------------------------------- Debtor: Millsaps Chevrolet-Pontiac-Buick-GMC Truck, Inc. 200 Highway 25 South Post Office Box 389 Starkville, MS 39760 Bankruptcy Case No.: 07-10164 Type of Business: The Debtor offers automobile body-repairing and painting. Chapter 11 Petition Date: January 18, 2007 Court: Northern District of Mississippi (Aberdeen) Judge: David W. Houston III Debtor's Counsel: Craig M. Geno, Esq. Harris Jernigan & Geno, PLLC P.O. Box 3380 Ridgeland, MS 39158-3380 Tel: (601) 427-0048 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. MTS EQUITY: Case Summary & Five Largest Unsecured Creditors ----------------------------------------------------------- Debtor: MTS Equity, LLC aka MTS Equity, LLC of Nevada 3968 Haines Street San Diego, CA 92109 Bankruptcy Case No.: 07-00170 Chapter 11 Petition Date: January 17, 2007 Court: Southern District of California (San Diego) Judge: Louise DeCarl Adler Debtor's Counsel: Chance E. Gordon, Esq. The Gordon Law Firm 16541 Gothard Street, Suite 205 Huntington Beach, CA 92647 Tel: (714) 841-4900 Estimated Assets: $1 Million to $100 Million Estimated Debts: $100,000 to $1 Million Debtor's Five Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ New Century Mtg. Corp. Loan $720,293 P.O. Box 54285 Irvine, CA 92619 AMC Mtg. Services Loan $705,100 Customer Care P.O. Box 11000 Santa Ana, CA 92711 Homecoming Financial Loan $454,000 2711 North Haskell Avenue Suite 900 Dallas, TX 75204 ASC Mtg. Services Loan $400,000 P.O. Box 1225 Charlottee, NC 28201 AMC Mtg. Services Loan $283,184 Customer Care P.O. Box 11000 Santa Ana, CA 92711 NAPIER ENVIRONMENTAL: Lenders Waive Dec. 2006 Interest Payments --------------------------------------------------------------- Napier Environmental Technologies Inc.'s lenders have agreed to waive their rights to interest for the month of December 2006 in an effort to help Napier during this time of re-building their customer base. These interest payments have been waived and the interest otherwise payable shall not be paid or payable currently or in the future. Based in Delta, British Columbia, Napier Environmental Technologies, Inc. (TSX:NIR) -- http://wwwbiowash.com/-- is a Canadian company primarily engaged in the development, manufacture and distribution of a wide range of products utilizing environmentally advanced technology. The product lines include coating removal and wood restoration products for both the industrial/commercial market and the consumer/retail market. Napier is currently operating under the protection of the Canadian Bankruptcy and Insolvency Act. NORTHWEST AIRLINES: Mesaba to Become Wholly-Owned Subsidiary ------------------------------------------------------------ Mesaba Airlines, a subsidiary of MAIR Holdings Inc., signed a stock purchase and reorganization agreement with Northwest Airlines under which Mesaba would become a wholly owned subsidiary of Northwest Airlines Inc. Intensive negotiations with Northwest Airlines officials concluded this week with the boards for both Mesaba Aviation and MAIR Holdings Inc. approving the deal. "Mesaba now is positioned to form a new partnership with Northwest Airlines and meet the on-going challenges of the airline industry," Mesaba President and Chief Operating Officer John Spanjers said. "The support of Northwest and the cooperation of our first-rate, dedicated employees and our vendors have allowed us to use this process to lay the groundwork for Mesaba's future success." The stock purchase and reorganization agreement is part of Mesaba's Plan of Reorganization that it filed on Jan. 22, 2007, with the U.S. Bankruptcy Court for the District of Minnesota. The company intends to file its related Disclosure Statement with the Court in the coming days. "We have achieved exceptional results across the board during this restructuring process and today's filing represents a significant step toward a successful future for Mesaba," Mr. Spanjers said. "Our efforts will ensure that we emerge from Chapter 11 as a competitive regional carrier with a solid financial foundation and a continued focus on unmatched operational performance." Mesaba intends to exit from Chapter 11 bankruptcy protection by the spring of this year. In addition to the stock purchase and reorganization agreement, the POR addresses the treatment of creditors' claims and assumes the new agreements with Mesaba's labor groups and certain vendors and suppliers. Restructuring Progress Mesaba's comprehensive restructuring plan reduces costs by $68 million a year, secures its core business with Northwest for the 49 Saab 340Bs and positions the company for future growth opportunities. As a result of its on-going restructuring initiatives, the company has achieved reductions in its fixed costs, vendor costs, aircraft and engine leases, and labor costs. "Mesaba employees have made a considerable sacrifice to achieve that cost structure," Mr. Spanjers said. "Our employees have exemplified the true commitment and professionalism that makes Mesaba the exceptional airline that it is." Plan Highlights Under the Stock Purchase and Reorganization Agreement with Northwest Airlines, all of the existing equity securities of Mesaba will be cancelled and terminated. Northwest has agreed that Mesaba has an allowed $145 million unsecured claim in Northwest's Chapter 11 case in exchange for 100% of Mesaba's new common stock to be issued on the effective date of the Plan. It is expected that the $145 million claim will be sold to fund the plan distributions to creditors, with the remainder of the sale proceeds being distributed to MAIR Holdings, Mesaba's parent. Timing The Plan is expected to become effective approximately two weeks after the Bankruptcy Court confirms the Plan. The confirmation hearing will be set by the Bankruptcy Court at a later point in time, but is expected to occur in mid-April 2007. About Mesaba Aviation Headquartered in Eagan, Minnesota, Mesaba Aviation, Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- a subsidiary of MAIR Holdings, Inc. (NASDAQ:MAIR) operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. About Northwest Airlines Northwest Airlines Corp. (OTC: NWACQ) -- http://www.nwa.com/ -- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. NORTHWEST AIRLINES: Inks Agreement with MAIR Holdings ----------------------------------------------------- MAIR Holdings, Inc., Mesaba Airlines' parent company, reported the terms of two agreements, one a definitive agreement between MAIR and Northwest Airlines and the other a definitive agreement between MAIR's Mesaba Airlines subsidiary and NWA under which Mesaba will exit bankruptcy as an operating subsidiary of NWA. "We believe that the transition of Mesaba to Northwest is a good outcome for all parties in Mesaba's bankruptcy," said Paul Foley, MAIR Holdings' president and chief executive officer. "It provides potential value for our shareholders and allows us to fully pursue other opportunities, both through Big Sky and in new areas." The agreement between MAIR and NWA contains these terms: -- MAIR will purchase from NWA all of the MAIR stock NWA currently owns for an aggregate purchase price of $6.25 per share, or approximately $35 million. NWA owns approximately 5.7 million shares. -- Approximately $24 million of the aggregate purchase price, or $4.25 per share, will be paid upon the initial closing of the transaction, expected to occur prior to April 15, 2007. -- The remainder of the purchase price, approximately $11 million, or $2.00 per share, will be paid on the earlier of the date upon which MAIR receives at least $25 million in equity distributions from Mesaba's bankruptcy estate or nine months from the execution of the agreement. -- NWA's Warrant to purchase 4.1 million shares of MAIR's stock will terminate upon closing of the agreement. -- NWA's bankruptcy claim of $7.3 million in Mesaba's bankruptcy will be assigned to MAIR at the time of the closing of the Stock Purchase and Reorganization Agreement. -- NWA will allow Mesaba, upon closing of the SPRA, to use up to $4.5 million to satisfy certain contracts to be assumed by Mesaba in its bankruptcy proceedings, thereby reducing the claim pool in Mesaba's bankruptcy estate. -- NWA and MAIR will execute a mutual release of all claims against each other, including MAIR's bankruptcy claim against NWA. -- MAIR will provide its consent to allow Mesaba to sign the SPRA and to file its plan of reorganization. The agreement between MAIR and Northwest is dated Jan. 22, 2007. In a related but separate transaction, Mesaba and NWA agreed under the SPRA to these terms: -- NWA will allow a claim of $145 million by Mesaba in NWA's bankruptcy case. -- Mesaba's current equity will be cancelled and new equity will be issued to NWA under Mesaba's plan, making Mesaba a subsidiary of NWA. -- Mesaba will be allowed to monetize its $145 million claim against NWA through a sale which is expected to occur in the next 30 days. -- Mesaba will file a plan of reorganization with its bankruptcy court that will implement the terms of the SPRA and provide for a release of any claims Mesaba may have against MAIR. -- NWA and Mesaba will execute a mutual release of all claims against each other. The agreement between Mesaba and Northwest is also dated Jan. 22, 2007. Mesaba currently estimates that the final allowed amount of bankruptcy claims against Mesaba will be $90 million. Assuming Mesaba's claims are between $90 million and $100 million, and assuming that Mesaba is able to monetize its NWA claim at the current market price of 85%-95% of the total allowed claim, MAIR estimates that it could receive approximately $30 million to $60 million after all distributions are made in accordance with Mesaba's plan of reorganization. The bankruptcy courts overseeing, separately, the NWA and Mesaba Chapter 11 proceedings, must approve both agreements. About Mesaba Aviation Headquartered in Eagan, Minnesota, Mesaba Aviation, Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- a subsidiary of MAIR Holdings, Inc. (NASDAQ:MAIR) operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. About Northwest Airlines Northwest Airlines Corp. (OTC: NWACQ) -- http://www.nwa.com/ -- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. PITTSBURGH BREWERY: Union Workers Approves Three-Year Deal ---------------------------------------------------------- The union workers of IUE/Communications Workers of America approved the three-year contract with Pittsburgh Brewing Company Inc. allowing the company to emerge from bankruptcy, Dan Nephin writes for the Associated Press. According to the report, the union voted 66-52 to accept the contract, which includes a wage reduction of 15%, from about $17 to $15.50 per hour, along with a reduction of about one week's vacation. A 401K plan will replace the pension. Tim Hickman told AP that their focus is to keep the brewery feasible. "We want the bankruptcy to be history and we want to concentrate on the future," he added. Union worker Ken Ream said the deal is definitely a big step. He commented that if they did not accept the deal, the brewery would not survive. As reported in the Troubled Company Reporter on Jan. 18, 2007, the U.S. Bankruptcy Court for the Western District of Pennsylvania extended the company's time to file an amended plan to Feb. 6, 2007, allowing the union to vote a deal with Pittsburgh Brewing Acquisition the company formed to buy the brewery out of bankruptcy. The Acquisition is hoping to take over the brewer of Iron City and other beers in March, AP relates. Headquartered in Pittsburgh, Pennsylvania, Pittsburgh Brewing Company Inc. -- http://www.pittsburghbrewingco.com/-- manufactures malt liquors, such as beer and ale. Its products include Iron City Beer, IC Light Beer, and Augustiner Amber Lager. The company filed for chapter 11 protection on Dec. 7, 2005 (Bankr. W.D. Penn. Case No. 05-50347). Robert O. Lampl, Esq., at Law Office Robert O. Lampl, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, its assets and debts were estimated at $1 million to $10 million. Keystone Brewers Holding Co, a holding company for PBC's intellectual property assets, also filed a voluntary chapter 11 petition on March 10, 2006. QUEST TRUST: S&P Lowers Ratings on Class M-2 and M-3 Certificates ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class M-2 and M-3 certificates from Quest Trust 2004-X1 to 'BB' and 'B' from 'BBB+' and 'BBB-', respectively. Concurrently, these ratings are placed on CreditWatch with negative implications. In addition, three ratings from Quest Trust series 2002-X1, 2004-X2, and 2004-X3 are placed on CreditWatch negative. Furthermore, the ratings on three classes from Quest Trust series 2003-X3 and 2003-X4 are raised. Moreover, the M-3 certificate from Quest Trust 2003-X4 remains on CreditWatch negative, where it was placed Nov. 21, 2006. Lastly, the remaining ratings from these and other Quest Trust transactions were affirmed. The lowered ratings and CreditWatch placements reflect excessive realized losses that have continuously reduced overcollateralization. During the past six remittance periods, realized losses have outpaced excess spread by an average of 3.66x. The failure of excess spread to cover monthly losses has resulted in an erosion of O/C. As of the December 2006 distribution date, O/C was below its target balance by approximately 40%. Cumulative realized losses range from 2.90% to 6.64% of the original pool balances, while severely delinquent loans (90-plus-days, foreclosure, and REO) range 13.01% to 22.16% of the current pool balances. Standard & Poor's will continue to monitor the performance of these transactions. If realized losses continue to outpace excess interest, and the level of O/C continues to decline, S&P will take further negative rating actions. Conversely, if realized losses cease to outpace monthly excess interest, and O/C rebuilds toward its target balance, S&P will affirm the ratings and remove them from CreditWatch. The raised ratings reflect an increase in actual and projected credit support percentages. Although cumulative realized losses and total delinquencies are relatively high, the upgraded classes have at least 2x the credit support levels needed for the higher rating categories. The increased credit support percentages are the result of breached cumulative loss triggers and the subordination feature of the transactions. Since the cumulative loss thresholds have been exceeded, the upgraded transactions are prohibited from releasing O/C. Additionally, these transactions will continue to pay down sequentially, which will preserve the current level of subordination. As of the December 2006 distribution date, total delinquencies for the upgraded transactions ranged from 33.70% to 36.22% of the current pool balances, while cumulative realized losses ranged from 5.65% to 6.87% of the original pool balances. The affirmations are based on credit support percentages that are sufficient to maintain the current ratings. Credit support for these transactions is provided through a combination of subordination, excess spread, and O/C. The pools were initially composed of performing, reperforming, conventional, subprime, fixed- and adjustable-rate mortgage loans. The mortgage loans are secured mostly by first liens on one- to four-family residential properties. Ratings Raised Quest Trust Rating ------ Series Class To From ------ ----- -- ---- 2003-X3 M-1 AAA AA+ 2003-X3 M-2 AA A 2003-X4 M-1 AA- A Ratings Lowered and Placed on Creditwatch Negative Quest Trust Rating ------ Series Class To From ------ ----- -- ---- 2004-X1 M-2 BB/Watch Neg BBB+ 2004-X1 M-3 B/Watch Neg BBB- Ratings Placed on Creditwatch Negative Quest Trust Rating ------ Series Class To From ------ ----- -- ---- 2002-X1 M-2 BBB+/Watch Neg BBB+ 2004-X2 M-5 BBB-/Watch Neg BBB- 2004-X3 M-7 BB/Watch Neg BB Rating Remaining on Creditwatch Negative Quest Trust Series Class Rating ------ ----- ------ 2003-X4 M-3 BBB-/Watch Neg Ratings Affirmed Quest Trust Series Class Rating ------ ----- ------ 2002-X1 M-1 AAA 2003-X1 M-1 AAA 2003-X1 M-2 AA 2003-X2 M-1 AAA 2003-X2 M-2 AA 2003-X3 M-3 BBB 2003-X4 A AAA 2003-X4 M-2 BBB 2004-X1 A AAA 2004-X1 M-1 A 2004-X2 A AAA 2004-X2 M-1 AA 2004-X2 M-2 A 2004-X2 M-3 BBB+ 2004-X2 M-4 BBB 2004-X3 A-1, A-2, A-3, A-4 AAA 2004-X3 M-1 AA 2004-X3 M-2 A 2004-X3 M-3 BBB+ 2004-X3 M-4 BBB 2004-X3 M-5 BBB- 2004-X3 M-6 BB+ 2005-X1 A-3 AAA 2005-X1 M-1 AA 2005-X1 M-2 A 2005-X1 M-3 A- 2005-X1 M-4 BBB+ 2005-X1 M-5 BBB 2005-X1 M-6, M-7 BBB- 2005-X1 M-8 BB+ 2005-X2 A-1, A-2 AAA 2006-X1 A-1, A-2, A-3 AAA 2006-X1 M-1 A 2006-X1 M-2 A- 2006-X1 M-3 BBB+ 2006-X1 M-4 BBB 2006-X1 M-5 BBB- REFCO INC: Court Denies Plan Confirmation Order Reconsideration --------------------------------------------------------------- The Hon. Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York denies, as moot, Allied World Assurance Company (U.S.), Inc.'s request to reconsider the December 15, 2006 order confirming the Refco Inc. and its debtor- affiliates' Modified Chapter 11 Plan. Judge Drain finds that notwithstanding entry of the Confirmation order or occurrence of the Plan Effective Date, the Court will retain exclusive jurisdiction over all matters arising out of, and related to, the Debtors' Chapter 11 cases; the Modified Plan; and the global settlement agreement among Refco Capital Markets, Ltd., and its unsecured creditors and securities customers, to the fullest extent permitted by law, including the Plan provisions. Moreover, Judge Drain points out, the Plan Confirmation Order states that to the extent of any inconsistency between the Plan provisions and the Confirmation Order, the terms and conditions contained in the Confirmation Order will govern. Consequently, the Plan does not confer on the Court exclusive jurisdiction beyond that permitted to the fullest extent by applicable law. Specifically, Judge Drain states, if AWA's rights to alternative dispute resolution under its Excess Directors and Officers Insurance and Company Reimbursement Policy would deprive the Court of jurisdiction, neither the Plan nor the Confirmation Order confer that jurisdiction on the Court. About Refco Inc. Headquartered in New York City, Refco Inc. (OTC: RFXCQ) -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported US$16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. Refco LLC, an affiliate, filed for chapter 7 protection on Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is a regulated commodity futures company that has businesses in the United States, London, Asia and Canada. Refco, LLC, filed for bankruptcy protection in order to consummate the sale of substantially all of its assets to Man Financial Inc., a wholly owned subsidiary of Man Group plc. Albert Togut, the chapter 7 trustee, is represented by Togut, Segal & Segal LLP. On April 13, 2006, the Court appointed Marc S. Kirschner as Refco Capital Markets Ltd.'s chapter 11 trustee. Mr. Kirschner is represented by Bingham McCutchen LLP. RCM is Refco's operating subsidiary based in Bermuda. Three more affiliates of Refco, Westminster-Refco Management LLC, Refco Managed Futures LLC, and Lind-Waldock Securities LLC, filed for chapter 11 protection on June 6, 2006 (Bankr. S.D.N.Y. Case Nos. 06-11260 through 06-11262). Refco Commodity Management, Inc., formerly known as CIS Investments, Inc., a debtor-affiliate of Refco Inc., filed for chapter 11 protection on Oct. 16, 2006 (Bankr. S.D.N.Y. Case No. 06-12436). (Refco Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) Plan Update On Sept. 14, 2006, Refco, Inc., and 25 of its subsidiaries, along with Marc S. Kirschner, the Chapter 11 Trustee for the estate of Refco Capital Markets, Ltd., delivered a Chapter 11 plan of reorganization and accompanying Disclosure Statement to the Court. On Oct. 10, 2006, the Debtors filed an Amended Plan and Disclosure Statement and on Oct. 13, filed a Modified Amended Disclosure Statement. On Oct. 16, 2006, the Court gave its tentative approval on the Disclosure Statement and the Court Clerk entered an order on Oct. 20, 2006. On Dec. 15, the Modified Joint Chapter 11 Plan of Refco Inc. and certain of its direct and indirect subsidiaries, including Refco Capital Markets, Ltd., and Refco F/X Associates LLC, was confirmed by the Court. That Plan became effective on Dec. 26, 2006. SANMINA-SCI: S&P Retains Negative CreditWatch on BB- Ratings ------------------------------------------------------------ Standard & Poor's Ratings Services left its 'BB-' ratings on San Jose, California-based Sanmina-SCI Corp. on CreditWatch with negative implications because of delayed financial-statement filings. The company has filed required statements, but the ratings remain on CreditWatch, reflecting concerns about the company's deteriorating profitability levels, negative cash flow and weakening credit protection measures. For the quarter ended Sept. 30, 2006, EBITDA margin dropped to about 2.7% from a historic range of between 3.5% and 4.0%, after adjusting for one-time charges related to the termination of its original design manufacturer initiative and the stock-option investigation. "Weakened profitability is attributable to ongoing inefficiencies in the migration of production from closed European facilities to new, low-cost plants," said S&P credit analyst Lucy Patricola. The company continues to experience declining revenue and poor profitability in its personal computing business, down about 20% for the year and generating a 2% gross profit margin. Cash flow from operations continues negative on expanding inventory levels, resulting in borrowings under its line of credit and declining cash balances. Debt protection measures weakened, with debt to EBITDA at 5.2x for the trailing 12 months, up from 4.2x in the previous quarter. If the company continues to report execution issues or further weakness in the personal computing business, causing weak profitability, the rating could be lowered one notch. SEA CONTAINERS: Principal Financial Discloses 9.5% Equity Stake --------------------------------------------------------------- In a regulatory filing with the U.S. Securities and Exchange Commission dated Jan. 11, 2007, Principal Financial Group, Inc., disclosed that it beneficially owns 2,480,300 shares of Sea Containers Ltd.'s common stock, which represents 9.5% of the total outstanding shares issued. Principal Financial's subsidiary, Post Advisory Group, LLC, also holds beneficial ownership of the 2,480,300 shares of SCL stock. Post Advisory is the beneficial owner of the shares on behalf of the numerous clients who have the right to receive and the power to direct the receipt of dividends from, or the proceeds of the sale of, the Common Stock. No client has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, more than 5% of SCL's Common Stock. Principal Financial and Post Advisory have shared voting and selling power over the shares. About Sea Containers Headquartered in Hamilton, Bermuda, Sea Containers Ltd. (NYSE: SCRA, SCRB) -- http://www.seacontainers.com/-- provides passenger and freight transport and marine container leasing. Registered in Bermuda, the company has regional operating offices in London, Genoa, New York, Rio de Janeiro, Sydney, and Singapore. The company is owned almost entirely by United States shareholders and its primary listing is on the New York Stock Exchange (SCRA and SCRB) since 1974. On October 3, the company's common shares and senior notes were suspended from trading on the NYSE and NYSE Arca after the company's failure to file its 2005 annual report on Form 10-K and its quarterly reports on Form 10-Q during 2006 with the U.S. Securities and Exchange Commission. Through its GNER subsidiary, Sea Containers Passenger Transport operates Britain's fastest railway, the Great North Eastern Railway, linking England and Scotland. It also conducts ferry operations, serving Finland and Estonia as well as a commuter service between New York and New Jersey in the U.S. Sea Containers Ltd. and two subsidiaries filed for chapter 11 protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156). Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported $1.7 billion in total assets and $1.6 billion in total debts. (Sea Containers Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SEA CONTAINERS: Committee Taps Morris Nichols as Delaware Counsel ---------------------------------------------------------------- The Official Committee of Unsecured Creditors in Sea Containers, Ltd. and its debtor-affiliates bankruptcy case ask authority from the Honorable Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware to retain Morris, Nichols, Arsht & Tunnell LLP as its Delaware counsel, nunc pro tunc to Oct. 26, 2006. The Creditors Committee selected Morris Nichols because of the firm's extensive experience, knowledge and resources in the fields of, inter alia, debtors' and creditors' rights and business reorganizations under Chapter 11 of the Bankruptcy Code, Andrew B. Cohen, managing director of Dune Capital LLC, relates. Mr. Cohen adds that Morris Nichols is well qualified to represent the Creditors Committee because of its expertise, experience and knowledge practicing before the U.S. Bankruptcy Court for the District of Delaware, as well as its proximity to the Court, and its ability to respond quickly to emergency hearings and other emergency matters in the Court. Specifically, Morris Nichols will: (a) advise the Creditors Committee with respect to its rights, duties and powers in the Debtors' Chapter 11 cases; (b) assist and advise the Creditors Committee in its consultations with the Debtors relative to the administration of their cases; (c) assist the Creditors Committee in analyzing the claims of the Debtors' creditors in negotiating with them; (d) assist with the Creditors Committee's investigation of the acts, conduct, assets liabilities and financial condition of the Debtors and of the operation of their business; (e) assist the Creditors Committee in its analysis of, and negotiations with, the Debtors or their creditors concerning matters related to, among other things, the terms of a plan of reorganization for the Debtors; (f) assist and advise the Creditors Committee with respect to its communications with the general creditor body regarding significant matters in the Debtors' bankruptcy cases; (g) assist and counsel the Creditors Committee in respect to its organization, the conduct of its business and meetings, the dissemination of information to its constituency, and other matters as are reasonably deemed necessary to facilitate the administrative activities of the Committee; (h) attend the meetings of the Creditors Committee; (i) represent the Creditors Committee at all hearings and other proceedings; (j) review and analyze all applications, orders, statements of operations and schedules filed with the Court and advise the Creditors Committee as to their propriety; (k) assist the Creditors Committee in preparing pleadings and applications as may be necessary in furtherance of the Creditors Committee's interests and objectives; and (1) perform other legal services as may be required and are deemed to be in the interests of the Creditors Committee in accordance with the Committee's powers and duties as set forth in the Bankruptcy Code. Morris Nichols will be paid on an hourly basis, plus reimbursement of actual and necessary expenses incurred: Designation Hourly Rate ----------- ----------- Partners $425 - $625 Associates $220 - $400 Paraprofessionals $175 Case Clerks $100 William H. Sudell, Jr., Esq., a partner at Morris Nichols, assures the Court that his firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Morris Nichols does not hold or represent any interest adverse to the Debtors' estates or their creditors, Mr. Sudell adds. About Sea Containers Headquartered in Hamilton, Bermuda, Sea Containers Ltd. (NYSE: SCRA, SCRB) -- http://www.seacontainers.com/-- provides passenger and freight transport and marine container leasing. Registered in Bermuda, the company has regional operating offices in London, Genoa, New York, Rio de Janeiro, Sydney, and Singapore. The company is owned almost entirely by United States shareholders and its primary listing is on the New York Stock Exchange (SCRA and SCRB) since 1974. On October 3, the company's common shares and senior notes were suspended from trading on the NYSE and NYSE Arca after the company's failure to file its 2005 annual report on Form 10-K and its quarterly reports on Form 10-Q during 2006 with the U.S. Securities and Exchange Commission. Through its GNER subsidiary, Sea Containers Passenger Transport operates Britain's fastest railway, the Great North Eastern Railway, linking England and Scotland. It also conducts ferry operations, serving Finland and Estonia as well as a commuter service between New York and New Jersey in the U.S. Sea Containers Ltd. and two subsidiaries filed for chapter 11 protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156). Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported $1.7 billion in total assets and $1.6 billion in total debts. (Sea Containers Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SIGMAN & SIGMAN: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Sigman & Sigman Gutters Inc. 4420 Commerce Circle Atlanta, GA 30336 Bankruptcy Case No.: 07-60829 Type of Business: The Debtor provides exterior home products and services. Chapter 11 Petition Date: January 18, 2007 Court: Northern District of Georgia (Atlanta) Debtor's Counsel: Charles C. Black, Esq. Bannister & Black 231 Maxham Road, Suite 100 Austell, GA 30168 Tel: (770) 944-3032 Estimated Assets: Less than $10,000 Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Beth Sigman Rent for Building $930,000 1635 Reflection Trail Stockholder spouse Powder Sprongs, GA 30127 Bellsouth Advertising Open account $225,000 P.O. Box 105024 Atlanta, GA 30348-5024 Gutter Buster Wholesale Open account $169,070 Supply Related company 1470 Dale Court Amelia, OH 45102 Carl Sigman Open account $154,285 American Express Platinum Cs2 Company expenses on personal AMEX card WSB-TV Open account $132,000 American Wholesale Open account $109,172 William Sigman Open account $47,319 American Express Platinum Cs2 Company expenses on personal AMEX card TBS Open account $29,466 Atlanta Journal/Clipper Open account $26,950 The Home Depot Crc Open account $17,797 Gutter Topper, Ltd. Contract claim $10,557 Auto-Owners Insurance Open account $9,354 Hlb Gross Collins, P.C. Open account $8,034 WWTN-FM Open account $6,000 Lease Acceptance Corp. Contract claim $4,583 Pitney-Bowes-Postage Open account $3,069 Gk Services Open account $2,973 Bellsouth Open account $2,572 State Farm 0391-8975-27 Open account $2,416 Newsouth Communications Open account $2,292 SIRIUS SATELLITE: Could Not Merge With XM Says FCC Chairman ----------------------------------------------------------- Federal Communications Commission's chairman Kevin Martin said that SIRIUS Satellite Radio Inc. and XM Satellite Radio Holdings Inc. could not merge under current FCC rules, reports say. "The commission looks at anything that is presented to it. All of the commission's rules are open to be changed," Mr. Martin said in a Reuters report. According to industry analysts, the regulatory guidelines need to be changed before a merger between the two is approved. Also, antitrust regulators need to approve it. According to industry sources, XM's units are not equipped to play SIRIUS' stations, and vice versa, Kevin Shult of Blogging Stocks say. About XM Satellite Headquartered in Washington, D.C., XM Satellite Radio Inc. (Nasdaq: XMSR) -- http://www.xmradio.com/-- is a wholly owned subsidiary of XM Satellite Radio Holdings Inc. XM has been publicly traded on the NASDAQ exchange since Oct. 5, 1999. XM's 2007 lineup includes more than 170 digital channels of choice from coast to coast: commercial-free music channels, premier sports, news, talk, comedy, children's and entertainment programming; and the most advanced traffic and weather information. XM has broadcast facilities in New York and Nashville, and additional offices in Boca Raton, Fla.; Southfield, Mich.; and Yokohama, Japan. About SIRIUS New York-based SIRIUS Satellite Radio Inc. (NASDAQ: SIRI) -- http://www.sirius.com/-- delivers more than 125 channels of the best programming in all of radio. SIRIUS is the original and only home of 100% commercial free music channels in satellite radio, offering 69 music channels available nationwide. SIRIUS also delivers 65 channels of sports, news, talk, entertainment, traffic, weather, and data. SIRIUS is the Official Satellite Radio Partner and broadcasts live play-by-play games of the NFL, NBA, and NHL and. All SIRIUS programming is available for a monthly subscription fee of only $12.95. SIRIUS products for the car, truck, home, RV and boat are available in more than 25,000 retail locations, including Best Buy, Circuit City, Crutchfield, Costco, Target, Wal-Mart, Sam's Club, RadioShack and at http://shop.sirius.com/ SIRIUS radios are offered in vehicles from Audi, BMW, Chrysler, Dodge, Ford, Infiniti, Jaguar, Jeep(R), Land Rover, Lexus, Lincoln-Mercury, Mazda, Mercedes-Benz, MINI, Nissan, Rolls Royce, Scion, Toyota, Porsche, Volkswagen and Volvo. Hertz also offers SIRIUS in its rental cars at major locations around the country. At Sept. 30, 2006, the company's balance sheet showed $1.6 billion in total assets and $1.8 billion in total liabilities, resulting in a $200.3 million stockholders' deficit. SIRIUS SATELLITE: Howard Stern Gets $82.9 Mil. Incentive Payment ---------------------------------------------------------------- SIRIUS Satellite Radio Inc. delivered to radio personality Howard Stern's affiliates 22,058,824 million shares of common stock, valued at approximately $82.9 million. This is based on the company's subscriber count on Dec. 31, 2006, and pursuant to the October 2004 agreement with Mr. Stern. This stock-based payment resulted from Sirius' Dec. 31, 2006, subscriber count exceeding a specified target by more than two million subscribers. This target was agreed upon in October 2004 based upon the consensus estimate of securities analysts at that time of approximately 3.5 million Sirius subscribers at Dec. 31, 2006. Sirius ended 2006 with approximately 6,024,000 subscribers. "The decision to bring Howard Stern to SIRIUS required a very significant commitment and we are very pleased that our investment has dramatically paid off," SIRIUS chief executive officer Mel Karmazin said. "SIRIUS has significantly outperformed earlier subscriber expectations, now generating over $300 million more revenue than Wall Street expected at the time Howard agreed to join us. "Our exceptional programming, product offerings, and brand have led SIRIUS to set a satellite radio record in 2006 with 2.7 million net subscriber additions." Sirius' agreement with Mr. Stern provides for additional stock- based performance bonuses if the company exceeds an escalating set of specified subscriber targets by increasing amounts substantially greater than two million. The shares of SIRIUS common stock issued, or any likely to be issued to Mr. Stern in the future, will not increase the company's fully diluted share count, as certain other currently outstanding warrants will expire without exercise in the ordinary course. Expense related to this payment has been reflected in its operating results throughout 2006. SIRIUS intends to file a registration statement with the Securities and Exchange Commission to register these shares of common stock being delivered to affiliates of Howard Stern. About SIRIUS New York-based SIRIUS Satellite Radio Inc. (NASDAQ: SIRI) -- http://www.sirius.com/-- delivers more than 125 channels of the best programming in all of radio. SIRIUS is the original and only home of 100% commercial free music channels in satellite radio, offering 69 music channels available nationwide. SIRIUS also delivers 65 channels of sports, news, talk, entertainment, traffic, weather, and data. SIRIUS is the Official Satellite Radio Partner and broadcasts live play-by-play games of the NFL, NBA, and NHL and. All SIRIUS programming is available for a monthly subscription fee of only $12.95. SIRIUS products for the car, truck, home, RV and boat are available in more than 25,000 retail locations, including Best Buy, Circuit City, Crutchfield, Costco, Target, Wal-Mart, Sam's Club, RadioShack and at http://shop.sirius.com/ SIRIUS radios are offered in vehicles from Audi, BMW, Chrysler, Dodge, Ford, Infiniti, Jaguar, Jeep(R), Land Rover, Lexus, Lincoln-Mercury, Mazda, Mercedes-Benz, MINI, Nissan, Rolls Royce, Scion, Toyota, Porsche, Volkswagen and Volvo. Hertz also offers SIRIUS in its rental cars at major locations around the country. At Sept. 30, 2006, the company's balance sheet showed $1.6 billion in total assets and $1.8 billion in total liabilities, resulting in a $200.3 million stockholders' deficit. The company's September 30 balance sheet also showed strained liquidity with $534.9 million in total current assets available to pay $641.4 million in total current liabilities. TCR I: Court Continues Disclosure Statement Hearing to March 13 --------------------------------------------------------------- The Honorable Robert G. Mayer of the U.S. Bankruptcy Court for the Eastern District of Virginia will continue the hearing to consider approval of TCR I, Inc.'s Disclosure Statement explaining its Joint Chapter 11 Plan of Reorganization on March 13, 2007, at 11:00 a.m. The hearing will be held at 200 South Washington Street, 3rd Floor, Courtroom III in Alexandria, Virginia. As reported in the Troubled Company Reporter on July 18, 2006, the Debtor's Plan will be funded from normal cash flow generated by operations. The Debtor functions as a management organization for seven assisted living facilities and is also a holding company that owns, directly or indirectly, six assisted living facilities. According to the Debtor 50% of the net cash flow from these facilities will be placed in the Plan Funds to pay creditors. Under the Debtor's Plan, all administrative claims will be paid in full. Priority Tax Claims from the Internal Revenue Service amounting $9,847 plus statutory interest will be paid equal quarterly installments of principal and interest at the statutory rate over a one-year period until paid in full. Union Bank & Trust holding Secured Claims totaling $800,000 plus interest will receive in full payment, with interest: * $2,400 monthly payment will be applied to the $375,000 note held by Union Bank; and * secured by a first deed of trust on the residence of Charles V. Rice, the Debtor's principal. Creditors holding Unsecured Claims against TCR and Mr. Rice will be paid annually over five years. Payments will be comprised of 50% of the net cash flow from the TCR and Rice Assets, which amounts will be placed into the TCR and the Rice Plan Fund and paid annually to the TCR and Rice creditors. Interest Holders will receive no distributions under the Plan. TCR I, Inc., filed for chapter 11 protection on September 8, 2005 (Bankr. E.D. Va. Case No. 05-13450). Bruce W. Henry, Esq., at Henry, O'Donnell, Dahnke & Walther, PC, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $6,980,559 in assets and $37,059,268 in debts. TITAN GLOBAL: Nov. 30 Balance Sheet Upside-Dow by $15.2 Million --------------------------------------------------------------- Titan Global Holdings Inc. filed its financial statements for the first quarter ended Nov. 30, 2006, with the Securities and Exchange Commission on Jan. 16, 2007. Titan Global reported a $6.8 million net loss for the quarter ended Nov. 30, 2006, compared with a $6.3 million net loss for the same period ended Nov. 30, 2005. The company also reported record financial results for the fiscal quarter ended Nov. 30, 2006, with the company's divisions generating a total $29.9 million in revenues for the period, representing a $2.3 million gain over the same period the previous year. Titan's Communication Division reported strong financial performance, with revenues reaching $24.6 million in the first quarter of 2007 with a significant gain in EBITDA to $2.3 million, an 82% increase from the first quarter of 2006. Titan's Electronics and Homeland Security division reported revenues reaching $5.4 million in the first quarter of 2007, a solid 23% increase from the first quarter of 2006. "We are energized by the dramatic gains that Titan made during this period through our continued growth and the overall success," said Bryan Chance, Chief Executive Officer of Titan Global Holdings. "The company entered fiscal 2007 with specific goals to increase revenue and earnings both organically and through acquisitions. During the first quarter of 2007 we leveraged our market position in each division to increase revenues and dramatically improve earnings in our Communications division." At Nov. 30, 2006, the company's balance sheet showed $54.3 million in total assets and $69 million in total liabilities, resulting in $15.2 million total stockholders' deficit. At Nov. 30, 2006, the company's balance sheet showed strained liquidity with $23.1 million in total current assets available to pay $58.9 million in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended Nov. 30, 2006, are available for free at http://researcharchives.com/t/s?18c3 New Financing Agreements Titan also disclosed that it recently entered into new financing agreements with Greystone Business Credit II LLC to replace existing agreements with Laurus Master Funds and CapitalSource Finance. The company repurchased 1.25 million shares from Laurus upon the closing of its new financing agreements. About Titan Global Headquartered in Salt Lake City, Utah, Titan Global Holdings Inc. (OTCBB: TTGL) -- http://www.titanglobalholdings.com/-- is a diversified holding company with a dynamic portfolio of subsidiaries that capitalize on the ever-expanding worldwide demand for new communications and connectivity services and products. Titan's Telecommunications Division includes Oblio Telecom Inc., a market leader in prepaid telecommunications and the second largest publicly-owned company in the international prepaid telecommunications space, StartTalk Inc., Pinless, Inc. and Titan Wireless Communications, Inc., a prepaid wireless communications and mobile virtual network operator. Titan's Electronics and Homeland Security Division includes Titan PCB East Inc. and Titan PCB West Inc. These companies specialize in the manufacturing of advanced circuit boards and other high tech products for military and high-tech clients. TOTAL TRAVEL: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Total Travel Management dba Global Experts in Travel 1441 East Maple Troy, MI 48084 Bankruptcy Case No.: 07-41108 Type of Business: The Debtor operates a travel management company. See http://www.globalconnected.net/ Chapter 11 Petition Date: January 18, 2007 Court: Eastern District of Michigan (Detroit) Judge: Marci B. McIvor Debtor's Counsel: David M. Miller, Esq. Erman, Teicher, Miller, Zucker & Freedman, P.C. 400 Galleria Officentre, Suite 444 Southfield, MI 48034-2162 Tel: (248) 827-4100 Total Assets: $384,938 Total Debts: $5,910,625 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ World Span $1,112,575 300 Galleria Parkway Atlanta, GA 30339 Garback, Brent $625,000 1125 Point Sylvan Court, Apt. C Orlando, FL 32825 Homecomings Financial $412,525 c/o Dykema Gossett 39577 Woodward, Suite 300 Bloomfield Hills, MI 48304 Avaya/CIT Communications $396,000 c/o Buonocore & Trevisan 1719 Route 10, Suite 301 Parsippany, NJ Delphi Corporation $374,551 5725 Delphi Drive Troy, MI 48098 Daimler Chrysler $344,317 1000 Chrysler Drive Auburn Hills, MI 48326 General Motors $323,091 c/o ACS P.O. Box 62530 Phoenix, AZ 85082 BMW of North America $306,011 300 Chestnut Ridge Road Woodcliff Lake, NJ 07677 Concur Technologies $214,182 Ingersoll Rand $150,000 Sabre, Inc. $130,019 Lossing, John $110,000 Lossing, Linda $80,000 ARIEL Enterprises $67,852 Delphi - Brickyard 400 $63,358 Western World Insurance $61,628 Cornerstone Information System $56,105 Reservation Center $54,796 South Allen Association $50,000 Blue Cross / Blue Shield $34,108 TRANSAX INTERNATIONAL: Plans to Sell Brazil Unit to Gestao ---------------------------------------------------------- Transax International Ltd. has signed a Letter of Intent with Gestao e Processamento de Infomacoes de Saude Ltda. to sell its wholly owned Brazil subsidiary Medlink Conectividade em Saude Ltda. and related intellectual property held by its subsidiary Medlink Technologies Inc for 12.625 million Brazilian Reais. "We are pleased to have been able to reach an agreement with CBGS in monetizing our Brazilian operations" Stephen Walters, President & CEO of Transax, commented. "Transax will continue to retain certain licensing rights outside of Latin America and IP rights for the U.S. market at no cost. This transaction will also significantly strengthen our Balance Sheet. As a result we intend to pay off all outstanding debts, including the $1.6 million preferred equity investment by Cornell Capital, as well as drastically increasing our cash position. Additionally, we will evaluate future business opportunities and update investors as warranted." Under specific terms of the Letter of Intent CBGS will pay all cash and retain operating control of Medlink's assets and intellectual property rights in Brazil. The transaction is subject to operating, financial and legal due diligence any closing balance sheet adjustments and signing of definitive agreements which both parties anticipate completing by Feb. 28, 2007. About Transax International Based in Miami, Florida, Transax International Limited (OTCBB: TNSX) -- http://www.transax.com/-- provides hospitals, physicians and health insurance companies using health information management systems to manage coding, compliance, abstracting and recording of management processes. The Company's subsidiaries, TDS Telecommunication Data Systems LTDA provides services in Brazil; ransax Australia Pty Ltd. provides those services in Australia; and Medlink Technologies, Inc., initiates research and development. At Sept. 30, 2006, the company's balance sheet showed $2,003,214 in total assets, $6,179,904 in total liabilities, resulting in a $4,176,690 in total stockholders' deficit. U.S. ENERGY: Inks Pact Granting Countryside $99 Mil. Secured Claim ------------------------------------------------------------------ U.S. Energy Biogas Corp. has reached an agreement in principle with Countryside Power Income Fund concerning the principal issue in USEB's Chapter 11 filing in the U.S. Bankruptcy Court for the Southern District of New York. The agreement will enable USEB and its parent, U.S. Energy Systems, Inc. to establish new financing for USEB that should enable it to pay all of its creditors in full, exit bankruptcy quickly, and support the growth of the business for the benefit of USEY's shareholders. Upon approval of the agreement by the Court, well as each party's respective boards, USEB expects to be able to move immediately toward an expedited confirmation of a Chapter 11 plan of reorganization. "We are elated with the agreement we were able to reach with Countryside," said Asher E. Fogel, Chairman of USEB and Chief Executive Officer of USEY. "With approval of this agreement, USEB can move forward to establish new financing, its management can move forward to capitalize on USEB's attractive growth opportunities, and USEY shareholders can benefit from the value of USEB. We also are very pleased that our settlement should expedite the conclusion of USEB's restructuring and facilitate the payment in full of existing creditors' claims." The agreement, in principle, provides for Countryside Canada Power Inc, a subsidiary of Countryside, to have an allowed secured claim of approximately $99 million. Under the agreement, the secured claim is the only allowed claim that Countryside will have in the Chapter 11 case. Countryside has agreed to forgo any claim concerning USEB's Apr 8, 2004 Royalty Agreement with Countryside, well as any claim against USEY under its Apr 8, 2004 Development Agreement with Countryside. The agreement provides for installment cash payments of $3 million on or before Jan. 31, 2007, $30 million on or before Mar 31, 2007, and the remaining balance of the secured claim on or before maturity at May 31, 2007. Outstanding principal amounts shall be deemed over secured for purposes of adequate protection and the use of cash collateral in the USEB bankruptcy cases and shall bear interest at a rate of 10% per annum from Feb. 1, 2007, payable monthly in U.S. dollars to the Fund. The parties will work together to pursue a "take-out" financing before the final installment date of May 31, 2007. Mutual general releases will be exchanged among the parties involved and will cover certain individuals affiliated with the Fund who have been threatened with lawsuits arising out of their prior employment by USEY. The settlement resulted from a mediation that took place in New York City on Jan. 12 and 13, 2007, and the Court is expected to consider USEB's motion to approve the settlement later this month. Ronald Barliant of the law firm of Goldberg Kohn of Chicago, a former US bankruptcy judge, presided over the mediation. Peter S. Partee, Esq., at Hunton & Williams LLP served as lead counsel to USEB in connection with the mediation and its Chapter 11 cases, assisted by Benjamin C. Ackerly, Esq., and Michael Wilson, Esq., also of Hunton & Williams LLP. Philip Anker, Esq., at Wilmer Cutler Pickering Hale and Dorr LLP served as special counsel to USEY in connection with the mediation and serves as special counsel to USEY in connection with USEB's Chapter 11 cases. Court action follows USEB's Nov. 30, 2006 announcement that it had voluntarily filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code, as well as the Court's Dec 1, 2006 approval of the Subsidiary's critical "first day pleadings". USEB's Chapter 11 filing did not include USEB's parent co., USEY, or the parent company's other subsidiary, a UK-based natural gas exploration and development business, UK Energy Systems (UKES). Moreover, neither USEY's nor UKES's operations are affected by USEB's Chapter 11 filing. About U.S. Energy Systems, Inc. U.S. Energy Systems, Inc. is an owner of green power and clean energy and resources. USEY owns and operates energy projects in the US and UK that generate electricity, thermal energy and gas production. UWINK INC: Restates Sept. 30 Third Quarter Financial Statements --------------------------------------------------------------- uWink Inc. restated its financial statements for the third quarter ended Sept 30, 2006, by filing an amended quarterly report with the Securities and Exchange Commission on Jan. 19, 2007. The amendment was made in view of questions raised by the Securities and Exchange Commission as to the accounting treatment of financing warrants issued during 2006, whereby the fair value of financing warrants was treated as a cost of raising equity with a corresponding amount debited to additional paid-in capital. In consultation with external auditors, the chief executive officer and chief financial officer determined to amend and restate the financial statements to recognize an expense for the fair value of the financing warrants issued during the period and to book a corresponding amount as short term warrant liability on the balance sheet at Sept. 30, 2006, as well as to reflect the change in the fair value of the warrant liability as of Sept. 30,2006. In the amended and restated financial statements, uWink Inc. reported a $7.1 million net loss on net sales of $35,720 for the third quarter ended Sept. 30, 2006, compared to a $610,103 net loss on negative sales of $76,290 for the same period in 2005. The negative sales of $76,290 for the third quarter ended Sept. 30, 2005, is a result of an accounting error in recording sales in said period. The increase in net loss is primarily due to the increase in operating expenses and the recognition of a $6.2 million expense for the fair value of financing warrants issued during the period. At Sept. 30, 2006, the company's balance sheet showed $1.9 million in total assets and $8.3 million in total liabilities, resulting in a $6.4 million total stockholders' deficit. The company's balance sheet at Sept. 30, 2006, also showed strained liquidity with $991,899 in total current assets available to pay $8.3 million in total current liabilities. Full-text copies of the company's amended consolidated financial statements for the third quarter ended Sept. 30, 2006, are available for free at http://researcharchives.com/t/s?18cd Going Concern Doubt Kabani & Company, Inc., in Los Angeles, California, raised substantial doubt about uWink's ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the company's significant losses and negative cash flow from operations since its inception, its working capital deficit and its difficulty in developing a substantial source of revenue. About uWink Inc. Based in Los Angeles, California, uWink, Inc. (OTCBB: UWNK) -- http://wwwuwink.com/-- is a digital entertainment company that develops interactive entertainment software and platforms for restaurants, bars, and mobile devices. uWink opened it's first uWink Bistro restaurant in Los Angeles in October of 2006. VESTA INSURANCE: Administrative Claims Bar Date Set for January 25 ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of Alabama confirmed Vesta Insurance Group, Inc.'s Third Amended Chapter 11 Plan of Liquidation, the Troubled Company Reporter disclosed on Jan. 3, 2007. The effective date of Plan was Dec. 26, 2006. Vesta made certain non-material modifications to the Second Amended Chapter 11 Plan of Liquidation in response to certain of the objections to the Plan's confirmation. Deadline of Payment Requests Lloyd T. Whitaker, Vesta's Plan Trustee, informs parties-in- interest that the deadline for filing requests for payment of administrative claims, except for claims for professional compensation, is on January 25, 2007. According to Mr. Whitaker, each holder of an Allowed Priority Tax Claim will receive, in full satisfaction of the Claim, cash in the amount of the Claim on the later to occur of the Effective Date or 30 days after the Claim was allowed, except to the extent the Holder agrees to a different treatment of his Claim. The Debtor will have the right to satisfy administrative expenses incurred in the ordinary course of business by means of the Debtor's performance of the obligations in accordance with the terms and conditions of the agreement or applicable law. However, the Debtor's failure to perform those obligations will not relieve the claimant from the requirement to timely file and serve an administrative claim request. Any person who asserts non-ordinary course Administrative Claims that arise before the Confirmation Date, including claims under Section 503(b)(2) to (5) of the Bankruptcy Code, but excluding claims for professional compensation and claims under Sections 3.3, 3.4, or 3.5 of the Plan, must file on or before the Claims Bar Date an application with the Bankruptcy Court for the allowance of the Claim. The application will be served upon both: (1) Todd C. Meyers Kilpatrick Stockton LLP 1100 Peachtree Street NE Suite 2800 Atlanta, Georgia 30309 (2) J. Thomas Corbett Chief Deputy Bankruptcy Administrator 1800 5th Avenue North Suite 132 Birmingham, Alabama 35203. Failure to timely file the application will bar the claimant from seeking recovery on the Administrative Claim. Mr. Whitaker will have until March 25, 2007, or longer as allowed by the Court, to review and object to the Administrative Claims. Allowed Administrative Claims will be paid in full in single cash payments on the later to occur of the Effective Date or 30 days after the Court allowed the Claim, unless the Holder agrees in writing to a different treatment of the Claim. All professionals entitled to Professional Compensation for services rendered to the Debtor or the Official Committee of Unsecured Creditors must file an application for final allowance of compensation and reimbursement of expenses not later than February 24, 2007. Each Indenture Trustee entitled under its Indenture documents to receive Indenture Trustee fees should have forwarded to Vesta and the Plan Trustee, on or before January 6, 2007, a statement of its Indenture Trustee Fees accrued during the period from the Involuntary Petition Date through the Effective Date. The fees will be promptly paid, unless a written objection is made by the Plan Trustee within 15 days after the later to occur of the receipt of the statement, or the Effective Date. If rejection of an executory contract or unexpired lease results in a Claim, the Claim is forever barred and will not be enforceable against Vesta or the Estate, unless a proof of claim is filed on or before February 7, 2007, and served upon Mr. Meyers at the Kilpatrick Stockton office, and the Plan Committee at: (1) Wilmington Trust Company Attn: Steven M. Cimalore Rodney Square North 1100 North Market Street Wilmington, Delaware 19890-1615 (2) Sterne, Agee & Leach, Inc. Attn: Ryan C. Medo 800 Shardes Creek Parkway Suite 700 Birmingham, Alabaman 35209 (3) U.S. Bank National Association Attn: Charles S. Hodges 214 North Tryon Street 27th Floor Charlotte, North Carolina 28202 Requests for payment of Administrative Claims and applications for allowance of Fee Claims must be filed with the Bankruptcy Court, located at 1800 5th Avenue North, Birmingham, Alabama. Gaines' Claims Bar Dates Set As reported in the Troubled Company Reporter on Jan. 3, 2007, the Court also confirmed J. Gordon Gaines, Inc.'s Third Amended Chapter 11 Plan of Liquidation. Kevin O'Halloran, Plan Trustee for J. Gordon Gaines, Inc., informs parties-in-interest that the deadline for filing requests for allowance and payment of administrative expenses, other than for professional services, is on January 25, 2007. As previously reported, the Court confirmed Gaines' Third Amended Chapter 11 Plan of Liquidation on December 22, 2006, with the Plan's Effective Date set to December 26, 2006. Claimants filing administrative claims requests after January 25, 2007 will be barred from seeking recovery of their claims. The Plan Trustee will have until March 25, 2007, to review and object to the Administrative Claims. Professional fee and reimbursement of expense applications are due on February 24, 2007. Proofs of claim for rejected executory contracts or unexpired leases will be filed and served upon the Plan Trustee, if after the Effective Date, on or before February 7, 2007. Applications for allowance of Administrative Claims and Professional Compensation, and proofs of claim for rejection damages must be sent to the Clerk's Office, United States Bankruptcy Court, 1800 5th Avenue North, Birmingham, Alabama. About Vesta Insurance Headquartered in Birmingham, Alabama, Vesta Insurance Group, Inc. (Other OTC: VTAI.PK) -- http://www.vesta.com/-- is a holding company for a group of insurance companies that primarily offer property insurance in targeted states. Wyatt R. Haskell, Luther S. Pate, UV, and Costa Brava Partnership III, L.P., filed an involuntary chapter 7 petition against the Company on July 18, 2006 (Bankr. N.D. Ala. Case No. 06-02517). The case was converted to a voluntary chapter 11 case on Aug. 8, 2006 (Bankr. N.D. Ala. Case No. 06-02517). Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP, represents the Debtor. R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, represents the petitioning creditors. In its schedules of assets and liabilities, Vesta listed $14,919,938 in total assets and $214,278,847 in total liabilities. J. Gordon Gaines, Inc., is a Vesta Insurance-owned unit that manages the company's numerous insurance subsidiaries and employs the headquarters workers. The Company filed for chapter 11 protection on Aug. 7, 2006 (Bankr. N.D. Ala. Case No. 06-02808). Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP, represent the Debtor in its restructuring efforts. In its schedules of assets and liabilities, Gaines listed $19,818,094 in total assets and $16,046,237 in total liabilities. On Aug. 1, 2006, the District Court of Travis County, Texas entered the Order appointing the Texas Commissioner of Insurance as Liquidator of Vesta Insurance's Texas-domiciled subsidiaries: Vesta Fire Insurance Corporation; The Shelby Insurance Company; Shelby Casualty Insurance Corporation; Texas Select Lloyds Insurance Company; and Select Insurance Services, Inc. (Vesta Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). VESTA INSURANCE: Parker Hudson Wants Payment Procedures Amended --------------------------------------------------------------- Parker, Hudson, Rainer & Dobbs LLP, counsel for Vesta Insurance Group, Inc., and J. Gordon Gaines, Inc., for their Chapter 11 cases, asks the U.S. Bankruptcy Court for the Northern District of Alabama to amend the Sept. 12, 2006, order approving Debtors' motion to establish procedures for payment of interim fees and expenses for professionals. Specifically, PHRD requests the elimination of Paragraph 3(e) of the Order, which requires each Professional to file a comprehensive interim application every 120 days after the entry of the Order, or in the alternative, waive the requirement. Rufus T. Dorsey, IV, a member of the firm, states that the requirement in Paragraph 3(e) of the Interim Fee Order is unnecessary as each of the Debtors' Plan of Liquidation have been confirmed, the Effective Dates declared, and the Professionals will soon file final applications for allowance of fees and expenses. Under the terms of the Interim Fee Order, the first comprehensive fee application is due on January 10, 2007, and each professional must file a final application for the allowance of fees and reimbursements no later than February 24, 2007, Mr. Dorsey says. Mr. Dorsey points out that the filing of the comprehensive fee application when the deadline for filing final applications is only about a month away will unnecessarily consume resources of the Professionals and the Court. Furthermore, other Professionals in the Debtors' Chapter 11 cases also agree with the relief, Mr. Dorsey informs the Court. About Vesta Insurance Headquartered in Birmingham, Alabama, Vesta Insurance Group, Inc. (Other OTC: VTAI.PK) -- http://www.vesta.com/-- is a holding company for a group of insurance companies that primarily offer property insurance in targeted states. Wyatt R. Haskell, Luther S. Pate, UV, and Costa Brava Partnership III, L.P., filed an involuntary chapter 7 petition against the Company on July 18, 2006 (Bankr. N.D. Ala. Case No. 06-02517). The case was converted to a voluntary chapter 11 case on Aug. 8, 2006 (Bankr. N.D. Ala. Case No. 06-02517). Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP, represents the Debtor. R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, represents the petitioning creditors. In its schedules of assets and liabilities, Vesta listed $14,919,938 in total assets and $214,278,847 in total liabilities. J. Gordon Gaines, Inc., is a Vesta Insurance-owned unit that manages the company's numerous insurance subsidiaries and employs the headquarters workers. The Company filed for chapter 11 protection on Aug. 7, 2006 (Bankr. N.D. Ala. Case No. 06-02808). Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP, represent the Debtor in its restructuring efforts. In its schedules of assets and liabilities, Gaines listed $19,818,094 in total assets and $16,046,237 in total liabilities. On Aug. 1, 2006, the District Court of Travis County, Texas entered the Order appointing the Texas Commissioner of Insurance as Liquidator of Vesta Insurance's Texas-domiciled subsidiaries: Vesta Fire Insurance Corporation; The Shelby Insurance Company; Shelby Casualty Insurance Corporation; Texas Select Lloyds Insurance Company; and Select Insurance Services, Inc. (Vesta Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). WELLS FARGO: S&P Holds B Rating and Removes Watch on Two Certs. --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on the B-5 classes issued by Wells Fargo Mortgage Backed Securities Trust series 2004-G and 2004-8 and removed them from CreditWatch with negative implications, based on the timing and receipt of updated performance statistics. The removal of the ratings from CreditWatch reflects improved delinquency performance as of the December 2006 distribution period. Series 2004-G has no delinquent loans, and series 2004-8 now contains only one delinquent mortgage loan for $332,535 (30 days). Ratings Affirmed and Removed from Creditwatch Negative Wells Fargo Mortgage Backed Securities Trust Mortgage pass-through certificates Rating ------ Series Class To From ------ ----- -- ---- 2004-8 B-5 B B/Watch Neg 2004-G B-5 B B/Watch Neg WESTERN MEDICAL: Chapter 7 Trustee Taps Lane & Nach as Counsel -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Arizona gave William E. Pierce, the chapter 7 trustee appointed in Western Medical Inc.'s liquidation proceedings, permission to retain Lane & Nach, P.C., as its bankruptcy counsel. Mr. Pierce is expected to: a) advise and consult with the Case Trustee concerning questions arising in the conduct of the administration of the estate and concerning Case Trustee's rights and remedies with regard to the estate's and the claims of secured, preferred and unsecured creditors and other parties in interest; b) appear for, prosecute, defend and represent Case Trustee's interest in the suits arising in or related to the Debtors' case; c) investigate and prosecute preference and other actions arising under the Case Trustee's avoiding powers; d) assist in the preparation of the pleadings, motions, notices and orders as are required for the orderly administration of this estate; and e) consult with and advise the Chapter 7 Trustee in connection with the operation of or the termination of the operation of the business of the Debtor. The firm's professionals billing rates are: Designation Hourly Rate ----------- ----------- Attorneys $250-$150 Paralegals $100-$50 To the best of the Trustee's knowledge the firm does not hold any interest adverse to the Debtor's estate and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Lane & Nach , P.C. Suite 157 2025 North 3rd Street Phoenix, AZ 85004-1425 Tel: (602) 258-6000 Fax: (602) 258-6003 Headquartered in Phoenix, Arizona, Western Medical, Inc. -- http://www.westernmedicalinc.net/-- sells and distributes medical and hospital equipment. The company filed for chapter 11 protection on June 15, 2006 (Bankr. D. Ariz. Case No. 06-01784). Brenda K. Martin, Esq., at Osborn Maledon, P.A., represents the Debtor. Pachulski Stang Ziehl Jones and Weintraub LLP, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets between $1 million to $10 million and debts between $10 million and $50 million. The Debtor's chapter 11 case was converted to chapter 7 liquidation proceeding on Nov. 21, 2006. William E, Pierce was appointed as the Chapter 7 Trustee. WILLOWBEND NURSERY: Chap. 11 Trustee Hires Cowden as Counsel ------------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of Ohio gave Andrew W. Suhar, the Chapter 11 Trustee appointed in Willowbend Nursery Inc. and its debtor-affiliates' bankruptcy cases, permission to employ Frederic P. Schwieg, Esq., and Cowden Humphrey Nagorney & Lovett, as his counsel. Mr. Schwieg is expected to prepare pleadings and services incidental thereto and conduct examinations or depositions of witnesses, participation in negotiations for the sale of assets of the estate and production of related documents. The Trustee discloses that Mr. Schwieg will bill $225 per hour for this engagement. Mr. Schwieg and the firm assure the Court that they are a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Schwieg can be reached at: Frederic P. Schwieg, Esq. Cowden Humphrey Nagorney & Lovett Suite 1414 50 Publich Square Cleveland, OH 44113-2204 Tel: (216) 241-2880 Ext. 133 Headquartered in Perry, Ohio, Willowbend Nursery, Inc. -- http://www.willowbendnursery.com/-- owns and operates a nursery and grow quality bareroot plants & shrubs. The company and its affiliates filed for chapter 11 protection on Sept. 20, 2006 (Bankr. N.D. Ohio Case No. 06-14353). When the Debtors filed for protection from their creditors, they listed estimated assets between $1 million and $10 million and estimated debts between $10 million and $50 million. On Oct. 27, 2006, the Court approved Fifth Third Bank's request for a chapter 11 trustee in the Debtors' chapter 11 cases. On Nov. 3, 2006, the Court appointed Andrew W. Suhar as the chapter 11 trustee. WILLOWBEND NURSERY: Chap. 11 Trustee Hires V. Gaudio as Accountant ------------------------------------------------------------------ The Hon. Arthur I. Harris the U.S. Bankruptcy Court for the Northern District of Ohio in Cleveland gave Andrew Suhar, the Chapter 11 Trustee appointed in Willowbend Nursery Inc. and its debtor-affiliates' chapter 11 cases, authority to employ Vincent Gaudio, CPA, as his accountant. As reported in Troubled Company Reporter on Dec. 15, 2006, Vincent Gaudio, CPA, will assist in preparing payroll, payroll taxes, general corporate accounting, and corporate taxes. Mr. Gaudio bills at $135 per hour. Mr. Gaudio assured the Court that he does not hold any interest adverse to the Debtors or their estates. Headquartered in Perry, Ohio, Willowbend Nursery, Inc. -- http://www.willowbendnursery.com/-- owns and operates a nursery and grow quality bareroot plants & shrubs. The company and its affiliates filed for chapter 11 protection on Sept. 20, 2006 (Bankr. N.D. Ohio Case No. 06-14353). When the Debtors filed for protection from their creditors, they listed estimated assets between $1 million and $10 million and estimated debts between $10 million and $50 million. On Oct. 27, 2006, the Court approved Fifth Third Bank's request for a chapter 11 trustee in the Debtors' chapter 11 cases. On Nov. 3, 2006, the Court appointed Andrew W. Suhar as the chapter 11 trustee. XM SATELLITE: Could Not Merge With SIRIUS Says FCC Chairman ----------------------------------------------------------- Federal Communications Commission's chairman Kevin Martin said that XM Satellite Radio Holdings Inc. and SIRIUS Satellite Radio Inc. could not merge under current FCC rules, reports say. "The commission looks at anything that is presented to it. All of the commission's rules are open to be changed," Mr. Martin said in a Reuters report. According to industry analysts, the regulatory guidelines need to be changed before a merger between the two is approved. Also, antitrust regulators need to approve it. According to industry sources, SIRIUS' units are not equipped to play XM's stations, and vice versa, Kevin Shult of Blogging Stocks say. About SIRIUS New York-based SIRIUS Satellite Radio Inc. (NASDAQ: SIRI) -- http://www.sirius.com/-- delivers more than 125 channels of the best programming in all of radio. SIRIUS is the original and only home of 100% commercial free music channels in satellite radio, offering 69 music channels available nationwide. SIRIUS also delivers 65 channels of sports, news, talk, entertainment, traffic, weather, and data. SIRIUS is the Official Satellite Radio Partner and broadcasts live play-by-play games of the NFL, NBA, and NHL and. All SIRIUS programming is available for a monthly subscription fee of only $12.95. SIRIUS products for the car, truck, home, RV and boat are available in more than 25,000 retail locations, including Best Buy, Circuit City, Crutchfield, Costco, Target, Wal-Mart, Sam's Club, RadioShack and at http://shop.sirius.com/ SIRIUS radios are offered in vehicles from Audi, BMW, Chrysler, Dodge, Ford, Infiniti, Jaguar, Jeep(R), Land Rover, Lexus, Lincoln-Mercury, Mazda, Mercedes-Benz, MINI, Nissan, Rolls Royce, Scion, Toyota, Porsche, Volkswagen and Volvo. Hertz also offers SIRIUS in its rental cars at major locations around the country. About XM Satellite Headquartered in Washington, D.C., XM Satellite Radio Inc. (Nasdaq: XMSR) -- http://www.xmradio.com/-- is a wholly owned subsidiary of XM Satellite Radio Holdings Inc. XM has been publicly traded on the NASDAQ exchange since Oct. 5, 1999. XM's 2007 lineup includes more than 170 digital channels of choice from coast to coast: commercial-free music channels, premier sports, news, talk, comedy, children's and entertainment programming; and the most advanced traffic and weather information. XM has broadcast facilities in New York and Nashville, and additional offices in Boca Raton, Fla.; Southfield, Mich.; and Yokohama, Japan. At Sept. 30, 2006, XM Satellite Radio Inc.'s balance sheet showed a stockholders' deficit of $253,183,000, compared with a deficit of $358,079,000, at June 30, 2006. * * * As reported in the Troubled Company Reporter on April 21, 2006, Standard & Poor's Ratings Services assigned its 'CCC' rating to XM Satellite Radio Inc.'s $600 million senior unsecured notes. At the same time, Standard & Poor's assigned its 'B-' rating and recovery rating of '1' to XM's $250 million first-lien secured revolving credit facility, indicating an expectation of full recovery of principal in the event of a payment default. * Ravin Greenberg Opens Manhattan Office ---------------------------------------- Ravin Greenberg PC, a long-time New Jersey boutique law firm specializing in personal and corporate bankruptcy and restructuring, will be opening its New York City office, effective immediately. The new office is located at 888 Seventh Avenue. "We are expanding to New York to accommodate our anticipated growth in the bankruptcy and restructuring market sectors," said Stephen B. Ravin, Esq., who is a partner in the firm. "New York represents a market which we believe could benefit from our principles of economical representation. Our firm abides by a practical model of representation, which necessarily envisions, among other things, a focus on value. Chad B. Friedman, Esq., whose practice concentrates on corporate reorganization, is providing leadership in the New York office. With offices in New York and New Jersey, Ravin Greenberg PC -- http://www.ravingreenberg.com/-- has been a trusted provider of legal and business counsel to financially challenged individuals and corporations and a pre-eminent practitioner in the United States Bankruptcy Court for more than 60 years. On the cutting edge in the insolvency arena, the firm is a Bankruptcy Court pioneer, helping shape and change the practice of law. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Accorda Therapeut. ACOR (8) 40 5 AFC Enterprises AFCE (40) 157 4 Affymax Inc. AFFY (114) 61 53 Alaska Comm Sys ALSK (25) 566 26 Alliance Imaging AIQ (18) 674 30 AMR Corp. AMR (514) 30,128 (1,202) Armstrong World AWI (1,197) 4,721 1,132 Atherogenics Inc. AGIX (136) 197 146 Bare Essentials BARE (620) 139 42 Bearingpoint Inc. BE (46) 1,972 229 Blount International BLT (107) 441 121 CableVision System CVC (5,400) 9,777 (400) Carrols Restaurant TAST (104) 497 (25) Centennial Comm CYCL (1,092) 1,422 112 Charter Comm-a CHTR (5,632) 15,198 (999) Choice Hotels CHH (78) 286 (48) Cincinnati Bell CBB (679) 1,889 55 Claymont Stell H PLTE (30) 177 112 Clorox Co. CLX (55) 3,539 (20) Compass Minerals CMP (74) 671 145 Corel Corp. CRE (22) 113 11 Crown Media HL CRWN (449) 917 190 Dayton Superior DSUP (171) 281 63 Delphi Corp DPHIQ (7,756) 17,514 2,250 Deluxe Corp DLX (68) 1,296 (188) Denny's Corporation DENN (231) 454 (73) Domino's Pizza DPZ (592) 360 (20) Double-Take Soft DBTK (54) 19 (2) Echostar Comm DISH (365) 9,352 1,696 Emeritus Corp. ESC (115) 713 (34) Emisphere Tech EMIS (6) 35 12 Empire Resorts I NYNY (25) 61 (2) Encysive Pharm ENCY (88) 69 33 Gencorp Inc. GY (98) 1,017 (3) Graftech International GTI (157) 875 253 Guidance Software GUID (2) 22 (1) Hansen Medical I HNSN (32) 38 33 HealthSouth Corp. HLS (1,339) 3,310 (314) I2 Technologies ITWO (46) 208 1 ICO Global C-New ICOG (60) 657 (380) ICOS Corp ICOS (18) 285 112 IMAX Corp IMAX (33) 243 84 Immersion Corp IMMR (22) 47 31 Immunomedics Inc IMMU (21) 50 21 Incyte Corp INCY (66) 465 295 Indevus Pharma IDEV (124) 92 55 Inergy Holdings NRGP (19) 1,647 (12) Investools Inc. IEDU (64) 120 (79) IPG Photonics IPGP (31) 115 24 J Crew Group Inc. JCG (55) 414 128 Kaiser Aluminum KALU (3,105) 1,598 123 Koppers Holdings KOP (86) 637 148 Life Sciences LSR (25) 205 23 Ligand Pharm LGND (239) 232 (162) Lodgenet Entertainment LNET (62) 269 18 McMoran Exploration MMR (18) 431 (27) Navisite Inc. NAVI (3) 100 (9) New River Pharma NRPH (65) 170 135 Nexstar Broadc-A NXST (78) 679 27 Northwest Airlines NWACQ (7,718) 13,498 659 NPS Pharm Inc. NPSP (182) 237 150 Obagi Medical OMPI (51) 50 12 ON Semiconductor ONNN (1) 1,417 316 Qwest Communication Q (2,576) 21,114 (1,569) Radnet Inc. RDNT (74) 127 (1) Riviera Holdings RIV (29) 222 10 Rural Cellular RCCC (540) 1,410 164 Rural/Metro Corp. RURL (89) 305 51 Savvis Inc. SVVS (142) 442 16 Sealy Corp. ZZ (188) 933 89 Sepracor Inc. SEPR (33) 1,352 424 St. John Knits Inc. SJKI (52) 213 80 Sun-Times Media SVN (322) 905 (383) Town Sports Inte. CLUB (25) 417 (55) Vertrue Inc. VTRU (9) 441 (75) Weight Watchers WTW (103) 935 (72) Worldspace Inc. WRSP (1,574) 604 140 WR Grace & Co. GRA (480) 3,641 902 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Marie Therese V. Profetana, Cecil R. Villacampa, Shimero R. Jainga, Joel Anthony G. Lopez, Melvin C. Tabao, Rizande B. Delos Santos, Cherry A. Soriano-Baaclo, Ronald C. Sy, Jason A. Nieva, Lucilo M. Pinili, Jr., Tara Marie A. Martin, and Peter A. Chapman, Editors. Copyright 2007. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***