T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, November 27, 2007, Vol. 11, No. 281 Headlines 1031 TAX GROUP: Ch. 11 Trustee Taps Deloitte as Financial Advisor 1755 AQUA: Largest Secured Lender Wants Bankruptcy Case Dismissed 1755 AQUA: Wants Court Approval to Auction Property 1755 AQUA: Selects Sheldon Good as Real Estate Auctioneer ALLTEL CORP: Units' Tender Offer for Debt Securities Expires AMERICAN AXLE: Moody's Affirms Ba3 Corporate Family Rating AMERICAN HOME: DBSP Appeals Servicing Business Sale Order AMERICAN HOME: First American's Motion to Dismiss Lawsuit Denied AMERICAN HOME: Court Okays Kekst as Corp. Communications Advisor AMR HOLDCO: Moody's Lifts Corporate Family Rating to Ba3 from B1 ANNETTE PASSE: Case Summary & Two Largest Unsecured Creditors ARLINGTON HOSPITALITY: Plan Confirmation Hearing Set for Dec. 12 BUILDING MATERIALS: Earns $4.2 Million in Third Quarter of 2007 C2K2 MOTORS: Wants Access to Sovereign Bank's Cash Collateral C2K2 MOTORS: Sovereign Bank Says Debtor is "Out of Business" CHIEF CONSOLIDATED: Sept. 30 Balance Sheet Upside-Down by $63.3MM CITY CAPITAL: Posts $1.4 Million Net Loss in Third Quarter CONEXANT SYSTEMS: Donald R. Beall Retires from the Board DOMTAR CORP: Unit To Redeem Series A & B Pref. Shares on Dec. 21 DUNMORE HOMES: Court Approves Interim DIP Financing of $500,000 DUNMORE HOMES: Court Gives Interim Okay to Use Cash Collateral E*TRADE FINANCIAL: Rumors on Sale Talks Spur Stock Price Increase ECCO DRILLING: Case Summary & 20 Largest Unsecured Creditors EXIDE TECH: Posts $14.8 Mil. Net Loss in Fiscal 2008 2nd Quarter FEDDERS CORP: Wants Until February 19 to Remove Civil Actions FIELDSTONE MORTGAGE: Case Summary & 20 Largest Unsecured Creditors FISHER COMMUNICATIONS: S&P Affirms B- Corporate Credit Rating FORD MOTOR: Retirees' Health-Fund Risk Greater than GM Workers' GENERAL MOTORS: Retirees' Fund Risk Lesser than Ford Workers' GENESCO INC: Gets U.S. Attorney's Subpoena on Finish Line Merger GMAC LLC: ResCap Support Cues Moody's to Put Ba2 Rating on Review GPS INDUSTRIES: Sept. 30 Balance Sheet Up-Side-Down by $1.03 Mil. IKON OFFICE: Board Approves $500 Mil. Common Stock Redemption INTELLIGENTIAS INC: Posts $4.2 Million Net Loss in Third Quarter LAFAYETTE NEIGHBORHOOD: City Wants Home Program Funds Returned LAFAYETTE NEIGHBORHOOD: Bank and Receiver Want 43 Lots Abandoned LAFAYETTE NEIGHBORHOOD: First Financial Wants Stay Lifted MATTRESS GALLERY: Final Hearing on OMG Financing Moved to Dec. 7 MONITOR OIL: Files for Bankruptcy Protection in New York MONITOR OIL: Voluntary Chapter 11 Case Summary NETBANK INC: Committee Taps Kilpatrick Stockton as Counsel NETBANK INC: Committee Taps Rogers Towers as Co-Counsel NEUMANN HOMES: Taps Epiq Bankruptcy as Claims and Noticing Agent NEUMANN HOMES: Wants Court Okay to Hire Skadden Arps as Counsel NEUMANN HOMES: Wants Drinker Biddle as Special Counsel PERFORMANCE TRANS: Has Until December 23 to File Schedules PERFORMANCE TRANS: Obtains Interim OK to Access Cash Collateral PERFORMANCE TRANS: Gets Interim Nod on $3.5 Mil. DIP Financing PERKINELMER INC: Inks $300 Mil. Unsecured Interim Credit Facility PETRO ACQUISITIONS: Voluntary Chapter 11 Case Summary POLAR MOLECULAR: Selling Fuel Tech Patents & Trademarks on Jan. 14 POPE & TALBOT: PwC Recommends Extension of Stay Period to Jan. 15 POPE & TALBOT: Obtains Interim Authority to Borrow Up to $68 Mil. POPE & TALBOT: Obtains Interim Nod to Use of Cash Collateral PRIVA INC: Files Proposal to Creditors Under BIA QUEBECOR WORLD: To Suspend Dividends on Preferred Shares RAM HOLDINGS: Voluntary Chapter 11 Case Summary SOLOMON DWEK: Case Summary & 253 Largest Unsecured Creditors TEKTRONIX INC: Completes $2.8 Bil. Merger Deal with Danaher TRANSOCEAN INC: Moody's Slices Preferred Shelf Rating to (P)Ba1 TRUE NORTH: Secures $133,487 in Advance from Quorum Investment UNITED RENTALS: Should Honor Merger Agreement Terms, Cerberus Says * Large Companies with Insolvent Balance Sheets ********* 1031 TAX GROUP: Ch. 11 Trustee Taps Deloitte as Financial Advisor ----------------------------------------------------------------- Gerard A. McHale, Jr., the Chapter 11 Trustee for 1031 Tax Group LLC and its debtor-affiliates, asks the United States Bankruptcy Court for the Southern District of New York for authority to employ Deloitte Financial Advisory Services LLP as his financial advisor, nunc pro tunc to Nov. 2, 2007. The firm is expected to: a) assist the Trustee in the development of real estate appraisals, real estate financing and marketing materials; b) assist the Trustee with the identification, recovery and realization of the Debtors' assets; c) assist the Trustee in the negotiation and development of distribution plans and plans of reorganization and liquidation; d) review the Debtor's liquidity and assist the Trustee in the assessment of cash funding requirements; e) assist the Trustee in connection with the inventory and security of the Debtor's records and assets; f) assist the Trustee in connection with the tracing of fund flows and asset movement; g) assist the Trustee in the development of periodic reports and other communications to creditors, the Bankruptcy Court and other interested parties; h) assist the Trustee in the reconciliation of claims and resolution of related disputes; i) attend and participate in meetings in an advisory capacity relating to matters within the scope of the firm's services; j) assist the Trustee in analyzing various causes of action; and k) provide testimony with respect to any related matters. The firm's professionals charge their fees at these hourly rates: Partner, Principal, Director $660 Senior Manager $480 Manager $400 Senior Consultants $300 Staff $265 John P. Sordillo, a partner at the firm, assures the Court that his firm is a "disinterested person" as that term is defined in Sec. 101(14) of the Bankruptcy Code. Headquartered in Richmond, Virginia, The 1031 Tax Group LLC -- http://www.ixg1031.com/-- is a privately held consolidated group of qualified intermediaries created to service real property exchanges under Section 1031 of the Internal Revenue Code. The company and 15 of its affiliates filed for Chapter 11 protection on May 14, 2007 (Bankr. S.D.N.Y. Case No. 07-11447 through 07-11462). Paul Traub, Esq., Norman N. Kinel, Esq., and Steven E. Fox, Esq., at Dreier LLP, represent the Debtors in their restructuring efforts. The Debtors selected Kurtzman Carson Consultants LLC as their claims agent. Thomas J. Weber, Esq., Melanie L. Cyganowski, Esq., and Allen G. Kadish, Esq., at Greenberg Traurig, LLP, represent the Official Committee of Unsecured Creditors. As of Sept. 30, 2007, the Debtors had total assets of $164,231,012 and total liabilities of $168,126,294, resulting in a total stockholders' deficit of $3,895,282. Gerard A. McHale, Jr., was appointed as the Debtors' Chapter 11 trustee on Oct. 25, 2007. 1755 AQUA: Largest Secured Lender Wants Bankruptcy Case Dismissed ----------------------------------------------------------------- North Bay Village Investment Trust LLC, 1755 Aqua Vista II LLC's single largest secured creditor, asks the U.S. Bankruptcy Court for the Southern District of Florida to dismiss the chapter 11 bankruptcy case of the Debtor and remove its automatic stay alleging bad faith filing. The Debtor, according to North Bay, has nothing to reorganize, has no equity in property, is a single asset real estate with raw land only, and has no liability insurance on its property. North Bay points to the Debtor's parcel of land in North Bay Village, Florida with a market value of $9,408,955. North Bay tells the Court that its the secured debt accrues interest of at least $6,000 a day. In addition, North Bay says that the Debtor's bankruptcy was filed less than one day prior to a foreclosure sale and that the Debtor was reactivated as a company the same date as the bankruptcy filing. North Bay relates that it tried to settle that matter outside the Court by contacting the Debtor's counsel, Scott Alan Orth, Esq., but failed to make contact. North Bay's Secured Debt On May 17, 2006, the Debtor obtained a first mortgage from Peninsula Bank, North Bay's predecessor-in-interest, for the prinicipal sum of $7,000,000 under a mortgage deed and security agreement. Concurrently, the Debtor issued Peninsula Bank a promissory note for the same amount. Due to the Debtor's failure to pay its debt, the debt was declared in default and was later assigned to a movant/creditor who then filed a foreclosure action in Miami Dade County Circuit Court. A final judgment of foreclosure was granted on Sept. 10, 2007 against the Debtor. The judgment provided, among others, for the foreclosure sale of the Debtor's property scheduled on Oct. 25, 2007, and specifically liquidate the debt, for at least $8,580,291 with interest of 25% per annum. The judgment also held that Peninsula Bank's lien was superior to that of the defendants. About 1755 Aqua Vista North Miami, Florida-based 1755 Aqua Vista II LLC owns and develops real estate in North Bay Village in Miami-Dade County, Florida. The Debtor filed for chapter 11 bankruptcy on Oct. 24, 2007 (Bankr. S.D. Fl. Case No. 07-19056). Scott Alan Orth, Esq. at The Law Offices of Scott Alan Orth, PA, represents the Debtor in its restructuring efforts. North Bay Village Investment Trust LLC, formerly Peninsula Bank, is the Debtor's largest secured creditor with an $8 million claim under a final judgment of mortgage foreclosure issued by the Miami-Dade Circuit Court. North Bay holds a first priority lien on the Debtor's real property. James B. Miller, Esq., is North Bay's counsel. The Debtor's schedules show total assets of $14,000,000 and total liabilities of $6,140,958. The Debtor's exclusive period to file a chapter 11 plan expires on Feb. 21, 2008. 1755 AQUA: Wants Court Approval to Auction Property --------------------------------------------------- 1755 Aqua Vista II LLC asks the U.S. Bankruptcy Court for the Southern District of Florida for permission to sell its real estate assets at an auction. The Debtor discloses that it acquired the property for $11,250,000 in April 2006. The Debtor also discloses that various parties have claims secured by the assets, including North Bay Village Investment Trust LLC, which asserts $7,000,000, plus interest and fees, in first mortgage claims. In addition, the Debtor relates that Jeffery Levitan, holds a $1,900,000 second mortgage against the assets, and Wexford High Yield Debt Fund I, LLC holds $2,350,000 third mortgage. The Debtor further relates that the property was scheduled for a state court foreclosure sale on Oct. 25, 2007. However, the Debtor says that based on discussion with its junior mortgage holders, the sale would not return a fair price for the property. Hence the Debtor wants to publicly sell the property believing that a well advertised sale of the property will bring the best price for it. Proposed Bidding Procedures The Debtor proposes that bidders may participate in the auction by depositing 5% of their bid and providing evidence of their financial wherewithal to close on a proposed sale. The proposed minimum initial bid will be $8,000,000. Overbids at the auction will be in $50,000 increments. Additionally, the Debtor proposes that the auction be scheduled the same day as the sale hearing. About 1755 Aqua Vista North Miami, Florida-based 1755 Aqua Vista II LLC owns and develops real estate in North Bay Village in Miami-Dade County, Florida. The Debtor filed for chapter 11 bankruptcy on Oct. 24, 2007 (Bankr. S.D. Fl. Case No. 07-19056). Scott Alan Orth, Esq. at The Law Offices of Scott Alan Orth, PA, represents the Debtor in its restructuring efforts. North Bay Village Investment Trust LLC, formerly Peninsula Bank, is the Debtor's largest secured creditor with an $8 million claim under a final judgment of mortgage foreclosure issued by the Miami-Dade Circuit Court. North Bay holds a first priority lien on the Debtor's real property. James B. Miller, Esq., is North Bay's counsel. The Debtor's schedules show total assets of $14,000,000 and total liabilities of $6,140,958. The Debtor's exclusive period to file a chapter 11 plan expires on Feb. 21, 2008. 1755 AQUA: Selects Sheldon Good as Real Estate Auctioneer --------------------------------------------------------- 1755 Aqua Vista II LLC asks the U.S. Bankruptcy Court for the Southern District of Florida for permission to employ Sheldon Good & Company Auctions Inc. as its real estate assets auctioneer. Sheldon will market and conduct the sale of the Debtor's real estate property, about 60,900 square feet of unimproved waterfront land on 1755 Kennedy Causeway in Miami Dade County, Florida. The property also includes architectural plans designed by Kobi Karp, zoning approvals and other rights. The proposed minimum initial bid will be $8,000,000. Overbids at the auction will be in $50,000 increments. The Debtor will pay Sheldon commission of 6% of the total purchase price. The Debtor and Sheldon have agreed that a 7.5% buyer's premium will be added to the high bid price, which will constitute part of the total purchase price. The Debtor assures the Court that Sheldon holds no interest adverse to the Debtor and is disinterest as defined withing Section 101(14) of the Code. The firm can be reached at: Alan R. Kravets Sheldon Good & Company Auctions Inc. 333 W. Wacker Drive, Suite 400 Chicago, IL 60606 Tel: (312) 346-1500 http://www.sheldongood.com/ About 1755 Aqua Vista North Miami, Florida-based 1755 Aqua Vista II LLC owns and develops real estate in North Bay Village in Miami-Dade County, Florida. The Debtor filed for chapter 11 bankruptcy on Oct. 24, 2007 (Bankr. S.D. Fl. Case No. 07-19056). Scott Alan Orth, Esq. at The Law Offices of Scott Alan Orth, PA, represents the Debtor in its restructuring efforts. North Bay Village Investment Trust LLC, formerly Peninsula Bank, is the Debtor's largest secured creditor with an $8 million claim under a final judgment of mortgage foreclosure issued by the Miami-Dade Circuit Court. North Bay holds a first priority lien on the Debtor's real property. James B. Miller, Esq., is North Bay's counsel. The Debtor's schedules show total assets of $14,000,000 and total liabilities of $6,140,958. The Debtor's exclusive period to file a chapter 11 plan expires on Feb. 21, 2008. ALLTEL CORP: Units' Tender Offer for Debt Securities Expires ------------------------------------------------------------ Alltel Corporation disclosed the expiration, as of 8:00 a.m., New York City time, on Nov. 16, 2007, of the cash tender offers and consent solicitations by its subsidiaries, Alltel Communications Inc. and Alltel Ohio Limited Partnership, for their outstanding debt securities. The final results of the tender offers and consent solicitations for the Securities are: a) Issuer: ACI Title of Security: 6.65% Senior Notes due 2008 CUSIP No.: 885571AE9 Principal Amount Outstanding: $38,981,000 Amount of Securities Tendered: $26,189,000 Approximate Percentage Tendered: 67.18% b) Issuer: ACI Title of Security: 7.60% Senior Notes due 2009 CUSIP No.: 885571AD1 Principal Amount Outstanding: $52,974,000 Amount of Securities Tendered: $49,272,000 Approximate Percentage Tendered: 93.01% c) Issuer: Alltel Ohio Title of Security: 8% Notes due 2010 CUSIP No.: 02003XAA8 Principal Amount Outstanding: $297,338,000 Amount of Securities Tendered: $280,038,000 Approximate Percentage Tendered: 94.18% As a result of receiving consents from holders of more than a majority in aggregate principal amount of each series of Securities, each Issuer has entered into a supplemental indenture implementing the proposed amendments to the relevant indentures governing the Securities, which eliminate or make less restrictive certain restrictive covenants and conditions to defeasance, well as certain events of default with respect to certain series of Securities, and related provisions in the indentures. Citi and Goldman, Sachs & Co. acted as dealer managers for the tender offers and as solicitation agents for the consent solicitations. For additional information regarding the terms of the tender offers and consent solicitations, please contact: Citi at (800) 558-3745 (toll-free) or Goldman, Sachs & Co at (877) 686- 5059 (toll free). Requests for documents may be directed to Global Bondholder Services, which acted as the depositary and information agent for the tender offers and consent solicitations, at (866) 540-1500 (toll-free). About Alltel Corporation Headquartered in Little Rock, Arkansas, ALLTEL Corporation (NYSE:AT) -- http://www.alltel.com/-- operates a wireless network, which delivers voice and advanced data services nationwide to 12 million customers. * * * As reported in the Troubled Company Reporter on Nov. 22, 2007, Moody's Investors Service has downgraded Alltel's $2.3 billion legacy senior unsecured notes to Caa1 from A2 and has assigned a Caa1 rating with an LGD 5 (79%) to Alltel's $1.0 billion PIK toggle notes following the leveraged buyout by TPG Capital and Goldman Sachs Capital Partners which closed on Nov. 16, 2007. The corporate family rating remains unchanged at B2. The ratings are subject to Moody's review of final documentation. This concludes the review initiated on Nov. 2, 2007. The rating outlook for Alltel is stable. AMERICAN AXLE: Moody's Affirms Ba3 Corporate Family Rating ---------------------------------------------------------- Moody's Investors Service affirmed American Axle & Manufacturing Holdings, Inc.'s Corporate Family rating of Ba3 as well as the senior unsecured rating of Ba3 to American Axle & Manufacturing, Inc.'s notes and term loan. At the same time, the rating agency revised the rating outlook to stable from negative and renewed the Speculative Grade Liquidity rating of SGL-1. The change in outlook to stable reflects both the considerable progress that American Axle has made in reducing its cost structure as a result of recent restructuring initiatives and the successful resolution of the UAW contract negotiations with General Motors Corporation - which accounts for some 78% of American Axle's revenues. In addition, the company maintains a very strong liquidity position consisting of $362 million in cash and access to a $600 million credit facility that is largely unutilized. Moody's believes that these operational and financial strengths should enable American Axle to maintain credit metrics that are supportive of a Ba3 rating despite near-term challenges its faces. These challenges include the need to renegotiate its own UAW labor contract early next year, the prospect of lower light vehicle production levels during 2008, and the continued shift in consumer preference away from trucks and SUVs to smaller vehicles. American Axle's current leverage and coverage metrics adjusted for qualitative factors are consistent with the Ba3 rating category. Savings realized from earlier restructuring programs have gained traction, capital expenditures related to the GMT-900 platform have peaked, content per vehicle has increased, free cash flow has been generated, and capital raising earlier in 2007 has placed substantial liquidity on the balance sheet. Combined with ongoing access to a $600 million revolving credit, American Axle's liquidity is viewed as sufficient to finance any further restructuring actions that could occur from its labor negotiations in early 2008 without requiring any material increase in indebtedness, if any. Moreover, if programs under a new labor agreement were structured that generate incremental savings in addition to those associated with the announced Buffalo Separation Program and earlier 2006 actions, operational efficiencies could be further enhanced. As a result of its more robust long-term operating model and its strong liquidity position, credit measures are likely to remain positioned in the Ba3 category. This operational and financial profile, combined with the recent renewal of labor agreements between the UAW and Michigan based OEMs, support a stable rating outlook. The Speculative Grade Liquidity rating of SGL-1 represents excellent liquidity. This develops from significant internal resources, expectations of free cash flow, and minimal near term debt maturities. However, internal sources may be subject to change once terms of a new labor contract are known. External sources consist of a $600 million revolving credit under which there were no borrowings at the end of the third quarter. The company has ample room under its principal financial covenants which measure debt net of cash and exclude certain non-recurring charges from the measurement of EBITDA and their related impact on deemed net worth. All of the company's bank obligations and notes are currently unsecured, which establishes some flexibility to generate alternative liquidity, if needed, subject to lien baskets and sale/leaseback limitations in the respective indentures. Ratings affirmed and updated loss given default assessments: -- American Axle & Manufacturing Holdings, Inc. -- Corporate Family, Ba3 -- Probability of Default, Ba3 -- Unsecured guaranteed convertible note, Ba3 (LGD-4, 56%) American Axle & Manufacturing, Inc. -- Unsecured guaranteed notes, Ba3 (LGD-4, 56%) -- Unsecured guaranteed term loan, Ba3 (LGD-4, 56%) -- Speculative Grade Liquidity, SGL-1 Holdings' obligations are guaranteed by American Axle and vice versa. The last rating action was on June 5, 2007 when American Axle's $250 million unsecured term loan was rated and the Speculative Grade Liquidity rating of SGL-1 was affirmed. American Axle & Manufacturing, Inc., headquartered in Detroit, MI, is a world leader in the manufacture, design, engineering and validation of driveline systems and related components and modules, chassis systems, and metal formed products for light truck, SUV's and passenger cars. The company has manufacturing locations in the USA, Mexico, the United Kingdom, Brazil, China and Poland. The company reported revenues of $3.2 billion in 2006. AMERICAN HOME: DBSP Appeals Servicing Business Sale Order --------------------------------------------------------- DB Structured Products Inc. notified the U.S. Bankruptcy Court for the District of Delaware that it will take an appeal to the U.S. District Court for the District of Delaware from Judge Sontchi's order approving the sale of American Home Mortgage Investment Corp. and its debtor-affiliates' loan servicing business to Wilbur Ross' AH Mortgage Acquisition Co., Inc., free and clear of liens, claims and interests. The Debtors recently obtained Bankruptcy Court approval to sell their loan servicing business to AHM Acquisition Co. Inc. for approximately $500,000,000, under a two-stage closing process. Included in the approved sale are certain of the Debtors' rights and obligations arising out of a Master Mortgage Loan Purchase and Servicing Agreement between the Debtors and DBSP. Accordingly, DBSP asked the District Court to determine whether the Bankruptcy Court erred: -- in finding that the master mortgage loan purchase and servicing agreement between the Debtors and DBSP could be sold by the Debtors pursuant to Section 363 of the Bankruptcy Code, even if the agreement provides that the Debtors' ability to assign the MLPSA is conditioned on DBSP's approval; -- in finding that the Debtors can sell the MLPSA, pursuant to Section 363, without the need for the buyer of the Debtors' loan servicing business to comply with the provisions of the agreement requiring that the servicer under the MLPSA meet the qualifications of a Fannie Mae and a Freddie Mac servicer; -- in finding that the Debtors can sell the MLPSA without the need for the Buyer to comply with the MLPSA's provisions that require the servicer to remit to DBSP any payment required to be made under the MLPSA's terms; -- in finding that the MLPSA's indemnity and payment waterfall provisions were unenforceable cross-default provisions that could not be enforced by DBSP; -- in finding that otherwise enforceable contractual restrictions upon assignment are unenforceable in bankruptcy pursuant to Section 363(1); -- in determining that the MLPSA's servicing provisions constituted a separate, independent agreement that could be severed from the remainder of the MLPSA and sold separately by the Debtors; and -- in finding that the Debtors had satisfied Section 363(f) with respect to the Debtors' sale of the servicing provisions contained in the MLPSA, so as to allow the Debtors to sell the MLPSA free and clear of any claims of DBSP. Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors has selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. The Debtors' exclusive period to file a plan expires on Dec. 4, 2007. (American Home Bankruptcy News, Issue No. 16, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: First American's Motion to Dismiss Lawsuit Denied ---------------------------------------------------------------- The Hon. Jose L. Linares of the U.S. District Court for the District of New Jersey has denied a request by the First American Title Insurance Company to dismiss a civil action filed by American Home Mortgage Investment Corp. and its debtor-affiliates. Civil Action In March 2007, the Debtors commenced a lawsuit against First American before the District Court, seeking, among others, compensatory and consequential damages in an amount to be determined at trial, but currently estimated at $400,000, exclusive of interest and costs, for breach of its obligations to the Debtors. First American is the underwriter for the property title insurance for certain mortgage loans which the Debtors funded for seven real properties in the state of New Jersey. In the complaint, the Debtors' counsel, Peter J. Leyh, Esq., at Braverman Kaskey, in Philadelphia, Pennsylvania, told the District Court that First American is liable for the fraudulent actions of its closing agents, which resulted to American Home's losses. Mr. Leyh pointed out that First American's closing agents intentionally prepared settlement statements that were misleading and were designed to hide the fraudulent transactions from lenders, including American Home. Additionally, Mr. Leyh noted that on the closing of the loans, the closing agents disregarded the closing instructions provided by American Home, and failed to disburse funds in accordance with the HUD-1 settlement statements of the United States Department of Housing and Urban Development. Due to that failure, Mr. Leyh argued, American Home was, among others: -- forced to defend its lien; -- precluded from exercising its foreclosure rights in response to the default of the borrowers of those loans; and -- forced to write off certain Subject Loans. Subsequently, First American filed a request asking the District Court to dismiss the complaint arguing that the case "cannot proceed until all indispensable parties have been joined." American Home responded that First American's contentions to dismiss the complaint for failure to join necessary and indispensable parties is remarkable insofar as it never actually specifies which persons are "necessary and indispensable" to the maintenance of the action. Representing First American, Robert L. Grundlock, Jr., Esq., at Rubin, Ehrlich & Buckley, P.C., in Princeton, New Jersey, asserted that American Home ignored the procedural ramifications of failing to join those who allegedly defrauded American Home. According to Mr. Grundlock, American Home has identified in its complaint, but failed to join: (1) George Otlowski, Esq.; (2) Mitchell Fishman, Esq.; (3) County Line Title Agency, Inc.; (4) Wayne Puff; (5) New Jersey Affordable Home Corp.; (6) Jeffrey Neuman; (7) Carol Edelman; and (8) United Funding Capital, Inc. The actual fraudsters need to be joined to determine the existence and nature of an underlying liability or damages, Mr. Grundlock said. He noted that without a factual determination, a plaintiff cannot proceed against a party against which it has alleged a secondary liability. District Court's Ruling In its order denying First American's request, Judge Linares noted that courts considering a Civil Rule 19 request must undertake a two-step inquiry, in which the court must determine whether the absent party is "necessary" to the action, and whether the party is "indispensable." Judge Linares noted that, among other things, County Line and Mssrs. Otlowski and Fishman, are not "necessary" parties under Rules 19(a)(1), (a)(2), or 19(b), so, they need not be joined for the action to proceed appropriately. In factors used to consider Civil Rule 19(b) analysis, of "whether the plaintiff will have an adequate remedy if the action is dismissed for nonjoinder," Judge Linares concluded that the factor allows the complaint to proceed. He maintained that without addressing whether American Home will sustain any harm if it is required to wait to bring the action, the Court finds that if American Home have no other sufficient remedy "at this time," the action should not be dismissed for failure to join certain non- parties. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors has selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. The Debtors' exclusive period to file a plan expires on Dec. 4, 2007. (American Home Bankruptcy News, Issue No. 16, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Court Okays Kekst as Corp. Communications Advisor ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized American Home Mortgage Investment Corp. and its debtor-affiliates to employ Kekst and Company Incorporated as their corporate communications advisor, effective as of Aug. 6, 2007. Judge Sontchi authorized Kekst and Company to apply its $50,000 retainer to its outstanding fees and expenses. He directed Kekst to apply the retainer first to any postpetition fees and expenses, and then, to any prepetition fees. The Court also ruled that Kekst may file a general unsecured claim for any unpaid fees incurred before the Debtors' bankruptcy filing. James L. Patton, Jr., Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, informed the Court that the Debtors previously engaged Kekst to provide corporate and crisis communications services and in the short time in which they have been engaged, Kekst's professionals have worked closely with the Debtors' management team and have become well acquainted with the Debtors' operations and businesses. The Debtors require Kekst to render corporate communications services as needed throughout the course of its Chapter 11 cases that includes: (a) providing general strategic public relations advice related to the reorganization of the Debtors' management; (b) preparing, distributing, and following up on press releases and responsive statements relevant to the Chapter 11 cases and its progress; (c) assisting in answering questions from the media on the Debtors' behalf and contacting the media as necessary to convey information; (d) preparing various correspondence and other communications related to the reorganization for the Debtors to use with its employees, customers, and other key business constituencies; (e) preparing and editing materials to anticipate the concerns and likely questions from various constituencies affected by the reorganization and development of appropriate information for the Debtors to use in response; (f) attending meetings and participating in phone conferences with, among others, the Debtors' management and its attorneys and financial advisors as required; (g) attending court hearings and developing information about them for the benefit of internal and external constituencies; and (h) consulting and reviewing drafts of all materials with all appropriate company officials and attorneys. Kekst will be paid base on its hourly rates: Senior Partners $600 - $875 Partners $380 - $870 Senior Associates $375 - $425 Associates/Analyst $200 - $325 The firm will also be reimbursed for it's reasonable out-of- pocket expenses. According to Mr. Patton, Kekst has received a non-refundable minimum fee of $50,000 in connection with prepetition services rendered and postpetition representation of the Debtors' chapter 11 cases. Kekst's charges for services will be applied against the Kekst Fee, with any charges in excess of the Kekst Fee billed separately. The Debtors will indemnify and hold harmless Kekst, its officers, directors, employees, and agents from any and all losses, claims, damages, liabilities, costs, and expenses, which Kekst may be subject to or incur at any time in connection with the services rendered by Kekst in the Debtors' cases. Robert Siegfried, an employee of the firm, assures the Court that Kekst does not hold or represent any interest adverse to the Debtors' estates, and is a disinterested person under Section 101(14) of the Bankruptcy Code. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors has selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. The Debtors' exclusive period to file a plan expires on Dec. 4, 2007. (American Home Bankruptcy News, Issue No. 16, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMR HOLDCO: Moody's Lifts Corporate Family Rating to Ba3 from B1 ---------------------------------------------------------------- Moody's Investors Service upgraded the Corporate Family Rating on co-issuers AMR Holdco, Inc. and EmCare Holdco Inc. to Ba3 from B1. The co-issuers are operated through a holding company, Emergency Medical Services L.P. which is in turn owned by Emergency Medical Services Corporation. Moody's concurrently upgraded the rating on the $450 million senior secured credit facility, consisting of a $100 million senior secured revolver due 2011 and a $350 million senior secured term loan due 2012, to Ba1 from Ba2. Moody's also upgraded the ratings on the $250 million senior subordinated notes due 2015 to B1 from B3. Following this action, the outlook has been changed to stable from positive. The upgrade in the Corporate Family Rating to Ba3 from B1 primarily reflects the following factors: 1) continued improvement in balance sheet leverage; 2) strong cash flow generation capabilities; and 3) a solid and continually improving track record as a standalone operation. Other factors that support the ratings are the company's leading market shares in both of the markets that it serves; its strong customer and geographic diversification; a stable, recurring revenue base; strong underlying industry demand dynamics; and lastly, sound employee retention experience. Factors that serve to depress the company's ratings include modest EBITDA margins; reimbursement risk with respect to physician fee payments during 2008 and beyond; collection risk due to a high percentage of uninsured patients served and the high concentration of compensation and benefits as a percentage of total costs. The company's sensitivity to increases in liability insurance and fuel costs as well as the fee for service risk inherent in the company's revenue stream also weigh negatively on the company's ratings. The ratings outlook is stable, reflecting the company's sound top- line revenue growth generated from both the solid organic expansion of operations as well as the completion of numerous, small accretive acquisitions. The outlook also reflects Moody's expectation for further margin expansion driven by operational efficiencies, successful expansion into contiguous markets and improving economies of scale. The outlook also anticipates that continued progress will be made with respect to the difficulties that the company has experienced with regard to obtaining provider numbers from insurers on the EmCare side of the business with free cash flow to adjusted debt on the order of 7% or better to be achieved by the end of 2008. Upgrade potential is constrained by the company's active acquisition strategy. Nevertheless, the ratings could be upgraded if the company continues to demonstrate sound revenue growth through new contract wins coupled with cost containment in salaries and benefits and cost savings in technology initiatives such as billing and patient records management, resulting in improving margins and cash flows that drive the ratio of free cash flow to debt to be maintained in the 12% to 15% range on a sustained basis. Conversely, while the likelihood of a downgrade is considered to be small, the ratings could be adjusted downward if government reimbursement levels are significantly reduced in either segment of the company's business, professional liability claims rise materially above current levels, competitive cost pressures build in the area of compensation and benefits, or the company embarks on a more aggressive acquisition strategy that re- leverages the company, resulting in adjusted total debt to EBITDA of 4.25 times or more or a decline in the ratio of EBIT to interest expense to 1.9 times or less on a sustained basis. Following is a list of actions: -- Upgraded the Corporate Family Rating, to Ba3 from B1 -- Upgraded the Probability of Default Rating, to Ba3 from B1 -- $100 million Senior Secured Revolving Credit Facility due 2011, to Ba1 (LGD2, 18%) from Ba2 (LGD2, 20%) -- $350 million Senior Secured Term Loan B Facility due 2012, to Ba1 (LGD2, 18%) from Ba2 (LGD2, 20%) -- $250 million, 10%, Senior Subordinated Notes, due 2015, to B1 (LGD5, 74%) from B3 (LGD5, 77%) The outlook has been changed to stable from positive. Headquartered in Greenwood Village, Colorado, Emergency Medical Services Corporation is a leading provider of emergency medical services in the U.S. EMS operates through two business segments: EmCare Holdings Inc. and American Medical Response, Inc. EmCare is the company's emergency department and hospital-based management services segment. AMR is the leading provider of ambulance services in the U.S. For the twelve months ended Sept. 30, 2007 EMSC reported revenues of approximately $2.1 billion. ANNETTE PASSE: Case Summary & Two Largest Unsecured Creditors ------------------------------------------------------------- Lead Debtor: Annette Passe 2085 Sandwood Drive, Condo 103 Lake havasu city, AZ 86403 Bankruptcy Case No.: 07-00629 Chapter 11 Petition Date: November 25, 2007 Court: District of Arizona (Yuma) Debtor's Counsel: Michael Reddig, Esq. P.O. Box 22143 Flagstaff, AZ 86002 Tel: (928) 774-9544 Fax: (928) 774-2043 Estimated Assets: $2,011,450 Estimated Debts: $1,382,692 Debtor's Two Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bank of America Credit Card $2,440 P.O. Box 26012 Nc4-105-03-14 Greensboro, NC 27420 Wilshire Credit Corp. Mortgage Unknown P.O. Box 8517 Portland, OH 97207 ARLINGTON HOSPITALITY: Plan Confirmation Hearing Set for Dec. 12 ---------------------------------------------------------------- The Honorable A. Benjamin Goldgar of the United States Bankruptcy Court for the Northern District of Illinois scheduled a hearing on Dec. 12, 2007, at 10:00 a.m., to consider confirmation of Arlington Hospitality Inc. and its debtor-affiliates' Amended Joint Plan of Orderly Liquidation. As reported in the Troubled Company Reporter on Oct. 19, 2007, Judge Goldgar had approved the adequacy of the Debtors' Amended Disclosure Statement describing their Amended Joint Liquidation Plan. The Plan will be funded by all property of the Debtors' estates, including proceeds received and remaining from the operation of the Debtors' business prior to the sales, remaining proceeds from the sales and preference recoveries, if any. Treatment of Claims Under the Plan, Administrative Claims and Priority Tax Claims will be paid in full. Holders of Secured Claims will receive either cash equal to the amount of the unpaid allowed secured claim or relief from the automatic stay arising under Section 362(a) of the Bankruptcy Code in order to collect and liquidate the property securing their claim. The Debtors disclosed that they have satisfied all priority claims. On the effective date, each holder of an Insurance Claim will automatically be granted relief from the automatic stay to permit the holder to proceed to prosecute and liquidate its claim against the Debtors. When the claim is liquidated, it will be paid first by the Debtors' insurance carrier to the extent of any insurance coverage. To the extent the Debtors would be required to pay a deductible, premium or retention before the insurance carrier will defend or satisfy the claim, the Debtors or the Plan Administrator, may elect to: a) pay such deductible, premium or retention; or b) have the entire claim treated as an unsecured claim. Holders of Convenience Claims, which the Debtors estimate to be $52,000, will receive cash equal to the lesser of 27% of their claims. General unsecured creditors will receive a pro rata share of the available cash. The Debtors estimate that unsecured claims total between $3.4 million to $5.5 million and holders will receive between 1% to 28% of their claims. Holders of Penalty Claims will also receive a pro rata share of the available cash after all valid claims have been paid. Equity Interests will be cancelled and holders will not receive anything under the Plan. A full-text copy of the Disclosure Statement is available for a fee at: http://ResearchArchives.com/t/s?25b5 About Arlington Hospitality Based in Arlington Heights, Illinois, Arlington Hospitality, Inc., dba Amerihost Properties, Inc., and its affiliates develop and construct limited service hotels and own, operate, manage and sell those hotels. The Debtors operate 15 AmeriHost Inn Hotels under leases from PMC Commercial Trust. Arlington Hospitality, Inc., serves as a guarantor under these leases. Arlington Inns Inc., an affiliate, filed for bankruptcy protection on June 22, 2005 (Bankr. N.D. Ill. Case No. 05-24749), the Honorable A. Benjamin Goldgar presiding. Arlington Hospitality and additional debtor-affiliates filed for chapter 11 protection on Aug. 31, 2005 (Bankr. N.D. Ill. Lead Case No. 05-34885). Catherine L. Steege, Esq., at Jenner & Block LLP, provides the Debtors with legal advice and Chanin Capital LLC serves as the company's investment banker. David W. Wirt, Esq., at Winston & Strawn, represents the Official Committee of Unsecured Creditors. As of March 31, 2005, Arlington Hospitality reported $99 million in total assets and $94 million in total debts. BUILDING MATERIALS: Earns $4.2 Million in Third Quarter of 2007 --------------------------------------------------------------- Building Materials Holding Corporation reported sales for the third quarter of 2007 decreased 24% to $618 million from $818 million in the same quarter a year ago. For the nine months, sales decreased 28% to $1.9 billion from $2.6 billion in the same period of 2006. Net income for the third quarter of 2007 decreased to $4.2 million from $35.3 million in the same quarter a year ago. For the nine months ended Sept. 30, 2007, net income decreased to $18.6 million from $97.6 million or $3.30 per share in the same period of 2006. Income from discontinued operations included a gain from the September 2007 sale of three BMC West distribution operations and their related operating results. Net income from these discontinued operations was $3.1 million for the quarter, $900,000 in the same quarter a year ago, $4.3 million for the nine months and $2.0 million for the same period a year ago. "Our third quarter results reflect the continued deterioration of the homebuilding market," Robert E. Mellor, Chairman, President and Chief Executive Officer, stated. "Throughout the quarter, negative macroeconomic factors such as declining housing permits, ongoing mortgage market difficulties and the substantial inventory of unsold homes have continued to impact participants in the homebuilding industry. In this challenging business environment, we have remained focused on managing costs, maintaining a solid balance sheet and generating operating cash flow." At Sept. 30, 2007, the company's balance sheet showed total assets of $1.3 billion and total liabilities of $717.1 million, resulting in a stockholders' equity of 589.2 million. Equity at Dec. 31, 2006 was $572.6 million. Based in San Francisco, California, Building Materials Holding Corp., a Fortune 1000 company, provides residential construction services and building materials in the United States. BMHC serves the homebuilding industry through two subsidiaries: SelectBuild provides construction services to high-volume production homebuilders in key growth markets across the country; and BMC West distributes building materials and manufactures building components for professional builders and contractors in the western and southern states. * * * As reported in the Troubled Company Reporter on Nov. 22, 2007, Standard & Poor's Ratings Services lowered its corporate credit rating on San Francisco-based Building Materials Holding Corp. to 'BB-' from 'BB' and its senior secured bank loan rating to 'BB' from 'BB+'. C2K2 MOTORS: Wants Access to Sovereign Bank's Cash Collateral ------------------------------------------------------------- C2K2 Motors Inc. asks the U.S. Bankruptcy Court for the Middle District of Pennsylvania for permission to access the cash collateral securing repayment of its obligations to Sovereign Bank. The Debtor needs the funds to cover ordinary and necessary operating expenses, including payment of wages due to its employees on its next payday of Nov. 30, 2007. The Debtor will use the funds pursuant to a three-month cash flow projection, a copy of which is available for free at: http://researcharchives.com/t/s?25c1 Sovereign Bank asserts a claim of approximately $1,300,000 as of the Debtor's bankruptcy filing, which claim is secured by liens on the Debtor's assets. The Bank also claims that it holds a security interest in all prepetition accounts receivable from the operation of the Debtor's business. The cash proceeds of any accounts receivable may constitute cash collateral securing the Bank's claim. As of bankruptcy filing, the Debtor's cash balance was approximately $1,408, and the Debtor's accounts receivable balance was approximately $78,971. As adequate protection, the Debtor grants the Bank a postpetition lien on postpetition cash and accounts receivable, and the proceeds will replace any cash collateral used by the Debtor. The hearing to consider the Debtor's request has been set for Dec. 6, 2007, 9:30 a.m., at 197 South Main Street, Courtroom 2, Max Rosenn US Courthouse, in Wilkes-Barre, Pa. Objections are due December 4. Headquartered in Mill Hall, Pennsylvania, C.2.K.2. Motors Inc. sells new and used automobiles in retail. It also leases passenger cars and trucks. The company filed for chapter 11 protection on November 9, 2007 (Bankr. M.D. Pa. Case No. 07-52925). Faith M. Lucchesi, Esq. at De Boef Lucchesi & Associates, P.C. serves as the Debtor's counsel. When the Debtor filed for bankruptcy, it listed assets and debts between $1 million to $100 million. The Debtor has yet to file a list of its 20 largest unsecured creditors. No Official Committee of Unsecured Creditors has been appointed to date. C2K2 MOTORS: Sovereign Bank Says Debtor is "Out of Business" ------------------------------------------------------------ Sovereign Bank asks the U.S. Bankruptcy Court for the Middle District of Pennsylvania to deny C2K2 Motors Inc.'s request to access its cash collateral contending that the Debtor is "effectively out of business." According to the Bank, the Debtor has lost its franchise with Daimler Chrysler and therefore no longer has a new vehicle franchise. Additionally, the Bank says it placed the Debtor on finance hold prepetition. The Bank denies that the Debtor has need for the use of cash collateral. Attorney for Sovereign Bank, William P. Carlucci, Esq., at Elion, Wayne, Grieco, Carlucci Shipman & Irwin, P.C. points out that the Debtor has little or no inventory and has lost the use of lines of credit to purchase new or used motor vehicles. Mr. Carlucci notes that the Debtor's "projection of cash flow" for the use of the cash collateral is hypothetical at best and that the Debtor cannot establish a reasonable likelihood of an effective reorganization. The Bank believes that the Debtor has used cash collateral without its consent or an appropriate order from the Court, in violation of the bankruptcy code. It also believes that the Debtor has failed to repay to the Bank sums advanced by the Bank in order to permit the Debtor to purchase new vehicles and used vehicles with the result that the Debtor has operated "out of trust" in violation of the terms of loan documents executed by the Debtor. Headquartered in Mill Hall, Pennsylvania, C.2.K.2. Motors Inc. sells new and used automobiles in retail. It also leases passenger cars and trucks. The company filed for chapter 11 protection on November 9, 2007 (Bankr. M.D. Pa. Case No. 07-52925). Faith M. Lucchesi, Esq. at De Boef Lucchesi & Associates, P.C. serves as the Debtor's counsel. When the Debtor filed for bankruptcy, it listed assets and debts between $1 million to $100 million. The Debtor has yet to file a list of its 20 largest unsecured creditors. No Official Committee of Unsecured Creditors has been appointed to date. CHIEF CONSOLIDATED: Sept. 30 Balance Sheet Upside-Down by $63.3MM ----------------------------------------------------------------- Chief Consolidated Mining Company's consolidated balance sheet at Sept. 30, 2007, showed $2.0 million in total assets, $65.3 million in total liabilities, and $24,727 in minority interest in consolidated subsidiaries, resulting in a $63.3 million total shareholders' deficit. The company's consolidated balance sheet at Sept. 30, 2007, also showed strained liquidity with $439,136 in total current assets available to pay $2.3 million in total current liabilities. The company reported a net loss of $280,499 on $0 of revenues for the third quarter ended Sept. 30, 2007, compared with a net loss of $59,274 on $-0- of revenues in the same period in 2006. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?25bf Going Concern Doubt Hansen, Barnett & Maxwell P.C., in Salt Lake City, expressed substantial doubt about Chief Consolidated Mining Company's ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2006, and 2005. The auditing frim reported that the company has little unrestricted cash, has a working capital deficiency and a capital deficiency, has incurred significant losses from operations, and has significant reclamation and EPA settlement obligations and environmental contingencies. About Chief Consolidated Headquartered in Eureka, Utah, Chief Consolidated Mining Company (NASD: CFCM.PK) -- http://www.chiefmines.com/ -- owns or controls approximately 16,000 acres of mining land in Utah and Juab counties in Utah. These properties include the Burgin Mine, whose mining rights are owned by the company's subsidiary Tintic Utah Metals LLC, a Colorado limited liability company, and the Trixie Mine, owned by the company's subsidiary Chief Gold Mines Inc., a Delaware corporation. Of these 16,000 acres, approximately 6,000 acres are subject to being sold, pursuant to a Consent Decree with the Environmental Protection Agency. CITY CAPITAL: Posts $1.4 Million Net Loss in Third Quarter ---------------------------------------------------------- City Capital Corp. reported a net loss of $1,464,876 on revenues of $120,264 for the third quarter ended Sept. 30, 2007, compared with a net loss of $306,612 on $0 of revenues in the same period last year. For the three months ended Sept. 30, 2007, the company sold 1 redeveloped home. Operating expenses for the three months ended Sept. 30, 2006, was $243,473. This compares to operating expenses for the same period in 2007 totaling $1,395,664. The majority of the increase for the period ending Sept. 30, 2007, over Sept. 30, 2006, was attributable to consulting cost, including stock for services of $1,062,697. At the end of the second quarter, most of the company's outstanding consulting agreements were canceled due to a downturn in business. At Sept. 30, 2007, the company's consolidated balance sheet showed $4,028,426 in total assets, $2,969,363 in total liabilities, and $1,059,063 in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?25c0 Going Concern Doubt As reported in the Troubled Company Reporter on April 24, 2007, De Joya, Griffith & Company LLC, in Henderson, Nevada, expressed substantial doubt about City Capital Corporation's ability to continue as a going concern after auditing the company's financial statements for the year ended Dec. 31, 2006. The auditing firm pointed to the company's recurring losses from operations and negative cash flows. About City Capital Headquartered in Franklin, Tennessee, City Capital Corp. (OTCBB: CCCN) -- http://www.citycapitalcorp.net/-- is engaged in leveraging investments, holdings and other assets to create self- sufficiency for communities around the country and the world. CONEXANT SYSTEMS: Donald R. Beall Retires from the Board -------------------------------------------------------- Donald R. Beall retired from Conexant Systems Inc.'s board of directors. Mr. Beall had served as a Conexant director from the time of the company's inception. "Don played a pivotal role in Conexant's spin-off from Rockwell International in 1999 and has been a key member of the company's board of directors since then," Dan Artusi, Conexant president and chief executive officer, said. "On behalf of the company's employees and shareholders, I'd like to thank Don for his numerous contributions over many years of dedicated service. We'll miss his strategic insights and guidance, and we wish him the best moving forward." "I enjoyed serving on Conexant's board of directors and am confident that the company has a bright future," Mr. Beall said. "Dan and the team are committed to taking the actions necessary to improve the company's performance and create value for customers and shareholders. I look forward to following Conexant's progress." Mr. Beall retired as chairman and chief executive officer of Rockwell International Corp. in 1998. He held board positions with Jazz Semiconductor, Mindspeed Technologies Inc., and Skyworks Solutions Inc., companies that were originally part of Conexant. He is also a former director of Amoco, ArvinMeritor, Proctor & Gamble, and Times Mirror. He continues to serve as a director on the board of Rockwell Collins, is chairman of the Beall Family Foundation, and is an overseer of Stanford University's Hoover Institution. In addition, he is involved with numerous professional, educational, public service, and philanthropic organizations. About Conexant Systems Inc. Headquartered in Newport Beach, California, Conexant Systems Inc. (NASDA: CNXT) -- http://www.conexant.com/-- designs, develops and sells semiconductor system solutions that connect personal access products such as set-top boxes, residential gateways, PCs and game consoles to voice, video and data processing services over broadband and dial-up connections. Key semiconductor products include digital subscriber line and cable modem solutions, home network processors, broadcast video encoders and decoders, digital set-top box components and systems solutions, and the company's foundation dial-up modem business. * * * As reported in the Troubled Company Reporter on Aug. 2, 2007, Standard & Poor's Ratings Services lowered its corporate credit rating on Conexant Systems Inc to 'B-' from 'B', and its senior secured debt rating to 'B+' from 'BB-', based on recent unfavorable operating trends. The outlook is stable. DOMTAR CORP: Unit To Redeem Series A & B Pref. Shares on Dec. 21 ---------------------------------------------------------------- Domtar Inc., a subsidiary of Domtar Corporation, sent on Nov. 21, 2007, notices of redemption to the registered holders of all of its Series A Preferred Shares and Series B Preferred Shares. In accordance with the share provisions applicable to such Preferred Shares and the notices of redemption, the Series A Preferred Shares will be redeemed on Dec. 21, 2007, at CDN$25.4932 per Series A Preferred Share, representing the redemption price of CDN$25.00 plus accrued dividends of CDN$0.4932, accruing as of and from Oct. 2, 2007, being the last dividend payment date. The Series B Preferred Shares will be redeemed on Dec. 21, 2007, at CDN$25.2466 per Series B Preferred Share, representing the redemption price of CDN$25.00 plus accrued dividends of Canadian $0.2466, accruing as of and from Oct. 2, 2007. Holders of the Series A or Series B Preferred Shares should direct any questions regarding surrender of their certificate(s) to Computershare Trust Company of Canada at 1-866-245-4053, or e-mail to corporateactions@computershare.com. About Domtar Corporation Headquartered in Montreal, Quebec, Canada, Domtar Corporation (NYSE/TSX: UFS) -- http://www.domtar.com/-- is an integrated producer of uncoated freesheet paper in North America and is also a manufacturer of papergrade pulp. The company designs, manufactures, markets and distributes a wide range of business, commercial printing, publication well as technical and specialty papers with recognized brands such as First Choice(R), Domtar Microprint(R), Windsor Offset(R), Cougar(R) well as its full line of environmentally and socially responsible papers, Domtar EarthChoice(R). Domtar owns and operates Domtar Distribution Group, a network of strategically-located paper distribution facilities. Domtar also produces lumber and other specialty and industrial wood products. The company employs nearly 14,000 people. * * * As reported in the Troubled Company Reporter on Oct 1, 2007, Moody's Investors Service affirmed Domtar Corporation's and Domtar Inc.'s existing credit ratings and assigned a B1 senior unsecured rating to Domtar's proposed $1.5 billion of new bonds which will replace Domtar Inc's existing bonds. DUNMORE HOMES: Court Approves Interim DIP Financing of $500,000 --------------------------------------------------------------- The Hon. Judge Martin Glenn of the United States Bankruptcy Court for the Southern District of New York has granted Dunmore Homes Inc., on an interim basis, permission to borrow up to $500,000 from Sidney B. Dunmore pursuant to a DIP Financing Agreement. The Court permits the Debtor to grant Mr. Dunmore, the liens, mortgages and security interests provided for under the DIP facility. The obligations under the DIP facility are administrative expenses and thus, the Debtor is authorized to grant Mr. Dunmore, a valid, binding, enforceable and perfected senior lien and security interest in all of the Debtor's property and assets, subject only to the carve-out and to any valid prepetition lien, the Court holds. The Debtor is also authorized to grant each prepetition creditor holding a prepetition lien in the Debtor's assets, including cash collateral, valid replacement liens and security interests in the collateral, subject to the carve-out and junior to the DIP lender's lien and the prepetition liens as adequate protection for the Debtor's use of prepetition cash collateral. As reported in the Troubled Company Reporter on Nov. 22, 2007, RBC Centura Bank told the Court that it opposes any effort by the Debtor to encumber assets that were fraudulently transferred to it by Dunmore Homes LLC as part of the September 2007 sale of Dunmore California's assets, and therefore the request for DIP financing should be denied. The amount of the replacement liens is equal to the lesser of: (a) the amount of the secured portion of a valid, enforceable, properly perfected, and unavoided prepetition security interest of the secured party in the cash collateral; (b) the cash collateral used; and (c) the aggregate diminution of the value after the bankruptcy filing of the secured party's valid, enforceable, properly perfected, and unavoided prepetition security interest in the prepetition collateral as of the bankruptcy filing. If sufficient funds are not otherwise available from the Debtor's estate, the Court rules, the Collateral may be used by the Debtor to pay (i) U.S. Trustee fees pursuant to Section 1930(a)(6) of the Judicial and Judiciary Code and fees payable to the Clerk of the Bankruptcy Court, and (ii) expenses of the Committee member and the reasonable fees and expenses of the Debtor's and the Committee's bankruptcy professionals, provided that those fees and expenses are provided for in the cash collateral budget and does not exceed $100,000. If Mr. Dunmore elects to permanently cease making loans after the first date of an "Event of Default" under the DIP Financing Agreement, he may send a notice to the Debtor, the Debtor's general bankruptcy counsel and financial advisors, and the general bankruptcy counsel to any Court-approved official committees. No fees or expenses incurred thereafter will increase the pre-trigger carve-out amount. Mr. Dunmore may seek the Court's assistance to implement a process to determine amounts owing for the carve-out. Pursuant to the Interim DIP Order, the DIP facility will be in effect through Dec. 18, 2007, unless extended by Mr. Dunmore in writing and in his sole discretion. The Court will convene a hearing on Dec. 14, 2007, to consider the Debtor's request on a final basis. Headquartered in Granite Bay, California, Dunmore Homes Inc. is a privately-owned homebuilder. The company filed for Chapter 11 protection on Nov. 8, 2007 (Bankr. S.D.N.Y. Case No. 07-13533). Maria A. Bove, Esq., and Debra I. Grassgreen, Esq., at Pachulski Stang Ziehl & Jones LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection against its creditors, it listed assets and liabilities of more than $100 million. The Debtor's exclusive period to file a plan expires on March 7, 2008. (Dunmore Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). DUNMORE HOMES: Court Gives Interim Okay to Use Cash Collateral -------------------------------------------------------------- The Hon. Judge Martin Glenn of the United States Bankruptcy Court for the Southern District of New York authorizes Dunmore Homes Inc., on an interim basis, to use cash collateral for all purposes permitted by the DIP facility up to the aggregate amount of disbursements and accruals in the cash collateral budget. Cash collateral for which the Debtor is granted use does not include cash collateral generated postpetition from the Montecito, Diamond Ridge, Stone Creek or Providence projects as to which RBC Centura Bank alleges to provide financing. As reported in the Troubled Company Reporter on Nov. 22, 2007, RBC Centura Bank told the Court that it objects to the use of cash collateral as it relates to the Montecito, Diamond Ridge, Stone Creek and Providence projects, on the basis that it has a security interest in those projects, and the adequate protection proposed by the Debtor is not sufficient. The Court will conduct a hearing on Dec. 14, 2007, to consider the Debtor's request, on final basis. Headquartered in Granite Bay, California, Dunmore Homes Inc. is a privately-owned homebuilder. The company filed for Chapter 11 protection on Nov. 8, 2007 (Bankr. S.D.N.Y. Case No. 07-13533). Maria A. Bove, Esq., and Debra I. Grassgreen, Esq., at Pachulski Stang Ziehl & Jones LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection against its creditors, it listed assets and liabilities of more than $100 million. The Debtor's exclusive period to file a plan expires on March 7, 2008. (Dunmore Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). E*TRADE FINANCIAL: Rumors on Sale Talks Spur Stock Price Increase ----------------------------------------------------------------- E*Trade Financial Corp. stock price went up last week following speculations that the company is mulling a sale of all or part of its assets, according to various papers citing a CNBC television report. Quoting unnamed sources, the CNBC report identified Charles Schwab Corp. and TD Ameritrade Holding Corp. as two of the bidders for E*Trade's either entire company or brokerage operations. Both E*Trade and Charles Schwab have declined to comment. TD Ameritrade is in the pursuit of expansion through mergers and acquisitions, Reuters reports, but has not specifically identified E*Trade. As reported in the Troubled Company Reporter on Nov. 16, 2007, E*Trade's CEO, Mitchell H. Caplan, has been considering two options to save the online brokerage firm from bankruptcy, a cash infusion or sale of the brokerage firm. TCR previously disclosed that a 59% plunge in E*Trade's shares following an analyst's statement that mounting credit losses could lead customers to pull out deposits and likely put the company at the risk of bankruptcy. Despite the firm assuring customers that it can take a $1 billion write-down and is well capitalized, investors remained unconvinced pushing the company's shares to $3.55, the lowest since August 2002. Based in New York City, E*Trade Financial Corp. (NasdaqGS: ETFC) -- http://us.etrade.com/-- provides financial services including trading, investing, banking and lending for retail and institutional customers. Securities products and services are offered by E*Trade Securities LLC. Bank and lending products and services are offered by E*Trade Bank, a Federal savings bank or its subsidiaries. * * * As reported in the Troubled Company Reporter on Nov. 15, 2007, Standard & Poor's Ratings Services lowered its ratings on E*Trade Financial Corp. to 'B' from 'BB-' and on its subsidiary E*Trade Bank to 'BB-' from 'BB+'. At the same time, S&P placed the ratings on CreditWatch with negative implications. Moody's Investors Service lowered its rating outlook on E*Trade Financial Corporation (Senior debt at Ba2) and its lead thrift subsidiary, E*Trade Bank (LT deposits at Baa3) to stable from positive. ECCO DRILLING: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Lead Debtor: Ecco Drilling Co., Ltd. 12540 State Highway 155 North Tyler, TX 75708 Tel: (903) 877 3535 Bankruptcy Case No.: 07-60987 Type of Business: The Debtor offers oil well drilling and gas well drilling services. Chapter 11 Petition Date: November 23, 2007 Court: Eastern District of Texas (Tyler) Judge: Bill Parker Debtor's Counsel: Jason R. Searcy, Esq. P.O. Box 3929 Longview, TX 75606 Tel: (903) 757-3399 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Suncoast Resources, Inc. $594,196 P.O. Box 972321 Dallas TX 75397 Reed HyCalog $460,707 P.O. Box 201409 Houston TX 772216 Alan Fielding Electric $378,550 P.O. Box 112 Whitehouse TX 75791 Mega Fluids, L.L.C. $279,241 Lindale TX 75771 P.O. BOx 447 Kilgore Rental Tools, Inc. $276,605 P.O. Box 189 Laird Hill TX 75666 Stallion Heavy Haulers $209,584 Applied Machinery Corp $144,000 T.E.S.C.O. Services, Inc. $140,316 Smith International, Inc. $135,669 Ecco Drilling International $113,220 Co. Spencer Harris Machine & Tool $110,367 Petromax Operating Co., Inc. $100,000 Wilson $94,499 Bergfeld Agency, L.L.C. $88,612 P.&W. Sales, Inc. $87,507 Dales Oil Well $84,427 Sonpetrol Espa�a, S.A. $75,500 R.E.X. Morgan Welding $71,637 Farley Machineworks Co. $70,939 Mud King Products, L.L.C. $67,060 EXIDE TECH: Posts $14.8 Mil. Net Loss in Fiscal 2008 2nd Quarter ---------------------------------------------------------------- Exide Technologies reported its financial results for its fiscal 2008 second quarter, which ended Sept. 30, 2007. The company reported a net loss of $14.8 million for the second quarter of fiscal 2008 as compared with a net loss of $35.1 million in the second quarter of fiscal 2007. Included in the current period's net loss was a non-cash tax charge of $16.7 million resulting from an adjustment to the company's net deferred tax asset in Germany to recognize the impact of a lower corporate tax rate. Foreign currency remeasurement gains in the current quarter aggregated $9.6 million compared with a $1.3 million remeasurement loss in the prior year period favorably impacting year-over-year pre-tax results by $10.9 million. Operationally, gross profit aggregated $130.3 million in the second quarter of fiscal 2008, an increase of $24.9 million over the prior year comparable period. Increased gross profit resulted principally from higher pricing and continued improved manufacturing performance, partially offset by the rapid escalation of lead costs and recognition of an incremental $4.5 million environmental remediation provision. Total selling, general, and administrative expenses for the second quarter of fiscal 2008 amounted to $107.9 million compared with $102.3 million in the fiscal 2007 second quarter. The fiscal 2008 second quarter costs were unfavorably impacted by the weaker U.S. dollar, but were also impacted by targeted incremental marketing spending. The net loss for the first half of fiscal 2008 was $50.5 million and compared with a net loss of $73.0 million in the comparable prior year period. In addition to the aforementioned tax charge in the second quarter of fiscal 2008, current year six month results were unfavorably impacted by the $21.3 million loss on early debt extinguishment disclosed in the company's 10-Q for the first quarter of this fiscal year, associated with the company's lower cost refinancing effort. Liquidity and Capital Resources As of Sept. 30, 2007, the company had total liquidity of $167.7 million consisting of cash and cash equivalents of $91.6 million and availability under the company's revolving loan facility and other loan facilities of $40.1 million and $36.0 million. This compared to a total liquidity position of $145.9 million at March 31, 2007, consisting of cash and cash equivalents of $76.2 million and availability under the revolving loan facility and other credit facilities of $59.3 million and $10.4 million. At Sept. 30, 2007, the company's balance sheet showed total assets of $2.39 billion, total liabilities of $2.0 billion and total sheholders' equity of $394.7 million. About Exide Technologies Headquartered in Princeton, New Jersey, Exide Technologies (NASDAQ: XIDE) -- http://www.exide.com/-- manufactures and distributes lead acid batteries and other related electrical energy storage products. The company filed for chapter 11 protection on Apr. 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represented the Debtors in their successful restructuring. The Court confirmed Exide's Amended Joint Chapter 11 Plan on April 20, 2004. The plan took effect on May 5, 2004. * * * Moody's Investor Service placed Exide Technologies' senior secured debt and probability of default ratings at 'Caa1' in September 2006. The ratings still hold to date with a stable outlook. FEDDERS CORP: Wants Until February 19 to Remove Civil Actions ------------------------------------------------------------- Fedders Corp. and its debtor-affiliates seek authority from the United States Bankruptcy Court for the District of Delaware to extend the period within which they can remove civil actions until Feb. 19, 2008. The Debtors tell the Court that they are parties to numerous judicial proceedings in various claims in multiple forums throughout the United States as of the Aug. 22, 2007. The Debtors say that they need sufficient time to evaluate, analyze and determine each actions and which action, if any, to remove. The Debtors together with their counsel devoted substantial time to administer their Chapter 11 cases, including, among others, preparing monthly operating reports, statements of assets and liabilities and statement of financial affairs, as well as obtaining Court approval of their postpetition financing agreement. The Debtors assure the Court that the extension request will not prejudice any of their adversaries because each of the action is stayed as set forth in Section 362(a) of the Bankruptcy Court. A hearing to consider the Debtor's request has been scheduled at 10:00 a.m., on Dec. 20, 2007. Based in Liberty Corner, New Jersey, Fedders Corporation -- http://www.fedders.com/-- manufactures and markets air treatment products, including air conditioners, air cleaners, dehumidifiers, and humidifiers. The company filed for Chapter 11 protection on Aug. 22, 2007, (Bankr. D. Del. Case No. 07-11182). Its debtor-affiliates filed for separate Chapter 11 cases. Norman L. Pernick, Esq. of Saul, Ewing, Remick & Saul LLP represents the Debtors in their restructuring efforts. The Debtors have selected Logan & Company Inc. as claims and noticing agent. The U.S. Trustee for region 3 has appointed an Official Committee of Unsecured Creditors on this case. When the Debtors filed for protection from its creditors, it listed total assets of $186,300,000 and total debts of $322,000,000. The company has production facilities in the United States in Illinois, North Carolina, New Mexico, and Texas and international production facilities in the Philippines, China and India. FIELDSTONE MORTGAGE: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Lead Debtor: Fieldstone Mortgage Co. 11000 Broken Land Parkway, Suite 600 Columbia, MD 21044 Bankruptcy Case No.: 07-21814 Type of Business: The Debtor is a direct lender that offers mortgage loans for multiple credit situations. See http://www.fieldstonemortgage.com/ Chapter 11 Petition Date: November 23, 2007 Court: District of Maryland (Baltimore) Judge: James F. Schneider Debtor's Counsel: Joel I. Sher, Esq. Shapiro, Sher, Guinot & Sandler 36 South Charles Street, Suite 2000 Baltimore, MD 21201 Tel: (410) 385-4278 Fax: (410) 539-7611 Estimated Assets: $1 Million to $100 Million Estimated Debts: More than $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Morgan Stanley $38,460,058 2002 T-Rex Avenue, Suite 300 Boca Raton, FL 33431 Household $23,262,063 3023 H.S.B.C. Way Fort Mill, SC 29715 Bear, Stearns & Co., Inc. $15,299,474 800 State Highway 121 Bypass Lewisville, TX 75067-4180 Countrywide $10,442,925 8521 Fallbrook Avenue West Hills, CA 91304 C.S.F.B. $6,053,683 Eleven Madison Avenue West Hills, CA 91304 U.B.S. Securities, L.L.C. $3,626,488 1285 Avenue of the Americas, 11th Floor New York, NY 10019 J.P. Morgan Chase $2,030,530 10790 Rancho Bernardo Road San Diego, CA 92127 Merrill Lynch $1,781,007 4 World Financial Center New York, NY 10080 Blue Cross Blue Shield $700,000 10455 Mill Run Circle Owings Mills, MD 21117 Washington Mutual $389,912 7255 Baymeadows Way Jacksonville, FL 32256 Lehman Brothers, Inc. $254,688 327 Inverness Drive South Englewood, CO 80122 M.C.I. $231,878 M.S.D.W. Southwest Partners, $230,633 L.P. Moody's Investor Service $123,950 E. Appraise It $116,350 Staples $105,600 L.I.S. Tax $100,375 First American Credco $88,868 Hunton & Williams, L.P. $88,843 Clayton First Income Services $83,639 FISHER COMMUNICATIONS: S&P Affirms B- Corporate Credit Rating ------------------------------------------------------------- Standard & Poor's Ratings Services removed from CreditWatch and affirmed its ratings on Seattle, Washington-based TV broadcaster Fisher Communications Inc., including the 'B-' corporate credit rating. The outlook is positive. Standard & Poor's had originally placed the ratings on CreditWatch with positive implications on June 14, 2007. "The rating action is based on uncertainty regarding the pace of improvement in the company's credit quality, especially given acquisitions in process," explained Standard & Poor's credit analyst Debbie Kinzer. The ratings on Fisher reflect the company's high debt leverage, concentrated cash flow base, and weak EBITDA margin. They also reflect S&P's concerns about prospects for discretionary cash flow growth and competition from other major network-affiliated stations whose parent companies have greater financial resources. These factors are only partially offset by broadcasting's good margin and discretionary cash flow potential, resilient station asset values, and the liquidity derived from the company's ownership of shares in Safeco Corp. FORD MOTOR: Retirees' Health-Fund Risk Greater than GM Workers' -------------------------------------------------------------- Ford Motor Company retirees face a higher risk of paying their own medical expenses compared to their General Motors Corp. counterparts under a newly ratified union provision, which analysts claim works better for Ford than for its workers, Jeff Green and Bill Koenig write for Bloomberg News. The Troubled Company Reporter disclosed on Nov. 16, 2007, that the United Auto Workers union membership employed at Ford Motor had ratified a memorandum of understanding that covers post-retirement medical care and a new national collective bargaining agreement governing the wages, hours and terms and conditions of employment for UAW-represented employees. A new retiree health care plan will be established and maintained by either an independent committee or a joint labor-management committee and will be funded by a newly established Voluntary Employee Beneficiary Association trust, which will be responsible for payment of all the Retiree Medical Benefits. Almost half of the $13.6 billion that Ford Motor had agreed to contribute into the VEBA trust, is pledged against either Ford shares or assets, compared with about 14% of GM's $32 billion, Bloomberg states. Ford will use a $3.3 billion bond convertible to Ford shares that matures in 2013 and a $3 billion, 10-year, second lien against the company's assets to pay part of the $13.6 billion, Bloomberg reveals. "Ford's health care scheme fails to achieve one of the primary goals of the UAW -- a separation between the financing for retiree health care and the fate of Ford," Fitch Ratings credit analyst Mark Oline said in an interview, Bloomberg notes. When the VEBAs take effect on Jan. 1, 2010, Ford and GM will end their obligation to pay an estimated $70.7 billion in retiree health care costs, Bloomberg relates. To sweeten the deal, Ford agreed to keep open until 2011 five plants that it had intended to close. The carmaker also committed to manufacture new models in many factories. "The GM structure is better for the workers," Pete Hastings, an analyst at Morgan Keegan & Co. in Memphis, Tennessee, said. "Ford's structure is better for Ford, the way it's structured, than for the workers." About GM Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 280,000 people around the world and manufactures cars and trucks in 33 countries, including the United Kingdom, Germany, France, Russia, Brazil and India. In 2006, nearly 9.1 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn and Vauxhall. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. * * * As reported in the Troubled Company Reporter on Nov. 9, 2007, Moody's Investors Service affirmed its rating for General Motors Corporation (B3 Corporate Family Rating, Ba3 senior secured, Caa1 senior unsecured and SGL-1 Speculative Grade Liquidity rating) but changed the outlook to Stable from Positive. In an environment of weakening prospects for US auto sales GM has announced that it will take a non-cash charge of $39 billion for the third quarter of 2007 related to establishing a valuation allowance against its deferred tax assets (DTAs) in the US, Canada and Germany. As reported in the Troubled Company Reporter on Oct. 23, 2007, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating and other ratings on General Motors Corp. and removed them from CreditWatch with positive implications, where they were placed Sept. 26, 2007, following agreement on the new labor contract. The outlook is stable. About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company provides financial services through Ford Motor Credit Company. The company has operations in Japan in the Asia Pacific region. In Europe, the company maintains a presence in Sweden, and the United Kingdom. The company also distributes its brands in various Latin American regions, including Argentina and Brazil. * * * As reported in the Troubled Company Reporter on Nov. 19, 2007, Moody's Investors Service affirmed the long-term ratings of Ford Motor Company (B3 Corporate Family Rating, Ba3 senior secured, Caa1 senior unsecured, and B3 probability of default), but changed the rating outlook to Stable from Negative and raised the company's Speculative Grade Liquidity rating to SGL-1 from SGL-3. Moody's also affirmed Ford Motor Credit Company's B1 senior unsecured rating, and changed the outlook to Stable from Negative. These rating actions follow Ford's announcement of the details of the newly ratified four-year labor agreement with the UAW. GENERAL MOTORS: Retirees' Fund Risk Lesser than Ford Workers' ------------------------------------------------------------- Ford Motor Company retirees face a higher risk of paying their own medical expenses compared to their General Motors Corp. counterparts under a newly ratified union provision, which analysts claim works better for Ford than for its workers, Jeff Green and Bill Koenig write for Bloomberg News. The Troubled Company Reporter disclosed on Nov. 16, 2007, that the United Auto Workers union membership employed at Ford Motor had ratified a memorandum of understanding that covers post-retirement medical care and a new national collective bargaining agreement governing the wages, hours and terms and conditions of employment for UAW-represented employees. A new retiree health care plan will be established and maintained by either an independent committee or a joint labor-management committee and will be funded by a newly established Voluntary Employee Beneficiary Association trust, which will be responsible for payment of all the Retiree Medical Benefits. Almost half of the $13.6 billion that Ford Motor had agreed to contribute into the VEBA trust, is pledged against either Ford shares or assets, compared with about 14% of GM's $32 billion, Bloomberg states. Ford will use a $3.3 billion bond convertible to Ford shares that matures in 2013 and a $3 billion, 10-year, second lien against the company's assets to pay part of the $13.6 billion, Bloomberg reveals. "Ford's health care scheme fails to achieve one of the primary goals of the UAW -- a separation between the financing for retiree health care and the fate of Ford," Fitch Ratings credit analyst Mark Oline said in an interview, Bloomberg notes. When the VEBAs take effect on Jan. 1, 2010, Ford and GM will end their obligation to pay an estimated $70.7 billion in retiree health care costs, Bloomberg relates. To sweeten the deal, Ford agreed to keep open until 2011 five plants that it had intended to close. The carmaker also committed to manufacture new models in many factories. "The GM structure is better for the workers," Pete Hastings, an analyst at Morgan Keegan & Co. in Memphis, Tennessee, said. "Ford's structure is better for Ford, the way it's structured, than for the workers." About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company provides financial services through Ford Motor Credit Company. The company has operations in Japan in the Asia Pacific region. In Europe, the company maintains a presence in Sweden, and the United Kingdom. The company also distributes its brands in various Latin American regions, including Argentina and Brazil. About GM Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 280,000 people around the world and manufactures cars and trucks in 33 countries, including the United Kingdom, Germany, France, Russia, Brazil and India. In 2006, nearly 9.1 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn and Vauxhall. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. * * * As reported in the Troubled Company Reporter on Nov. 9, 2007, Moody's Investors Service affirmed its rating for General Motors Corporation (B3 Corporate Family Rating, Ba3 senior secured, Caa1 senior unsecured and SGL-1 Speculative Grade Liquidity rating) but changed the outlook to Stable from Positive. In an environment of weakening prospects for US auto sales GM has announced that it will take a non-cash charge of $39 billion for the third quarter of 2007 related to establishing a valuation allowance against its deferred tax assets (DTAs) in the US, Canada and Germany. As reported in the Troubled Company Reporter on Oct. 23, 2007, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating and other ratings on General Motors Corp. and removed them from CreditWatch with positive implications, where they were placed Sept. 26, 2007, following agreement on the new labor contract. The outlook is stable. GENESCO INC: Gets U.S. Attorney's Subpoena on Finish Line Merger ---------------------------------------------------------------- Genesco Inc. has received a subpoena from the Office of the U.S. Attorney for the Southern District of New York for documents relating to the company's negotiations and merger agreement with The Finish Line Inc. The subpoena states that the documents are sought in connection with alleged violations of federal fraud statutes. "The U.S. Attorney subpoena comes on the heels of the baseless fraud allegations made by UBS ten days ago," Genesco Chairman and Chief Executive Officer Hal Pennington stated. "These allegations are completely without merit and are simply part of UBS' litigation tactics to avoid their contractual obligations; we will fully cooperate with the U.S. Attorney in connection with their inquiry. Most importantly, we will not be deterred from enforcing our rights under the merger agreement." As reported in the Troubled Company Reporter on June 20, 2007, the Boards of Directors of The Finish Line and Genesco have unanimously approved a definitive merger agreement under which The Finish Line will acquire all of the outstanding common shares of Genesco for $54.50 per share in cash. The total transaction value is approximately $1.5 billion. Headquartered in Nashville, Tennessee, Genesco Inc. (NYSE: GCO) -- http://www.genesco.com/-- is a specialty retailer of footwear, headwear and accessories in more than 1,900 retail stores in the U.S. and Canada, principally under the names Journeys, Journeys Kidz, Shi by Journeys, Johnston & Murphy, Underground Station, Hatworld, Lids, Hat Zone, Cap Factory, Head Quarters and Cap Connection. The company also sells footwear at wholesale under its Johnston & Murphy brand and under the licensed Dockers. * * * As reported in the Troubled Company Reporter on Nov. 5, 2007, Moody's Investors Service downgraded Genesco Inc.'s corporate family and probability of default ratings to B1 from Ba3 and maintained the review for possible downgrade. In addition, Moody's downgraded the company's convertible senior subordinated debentures to B2 from B1. GMAC LLC: ResCap Support Cues Moody's to Put Ba2 Rating on Review ----------------------------------------------------------------- Moody's Investors Service placed GMAC LLC's Ba2 senior unsecured rating on review for possible downgrade. The action was in response to GMAC's affirmation of support for Residential Capital, LLC, as disclosed in ResCap's Nov. 21, 2007 debt tender announcement. ResCap's ratings and outlook (Ba3 senior unsecured, negative outlook) were not affected by the tender announcement or this GMAC rating action. Moody's said that GMAC's most recent expressions of support for ResCap have raised additional concerns as to the extent to which the firm might entertain a leveraging of its credit profile to support ResCap through its operating difficulties. Moody's position is that any capital support GMAC extends to ResCap, other than that for which GMAC serves only as a conduit for GMAC's owners, would result in an equalization of GMAC's ratings with ResCap's. In Moody's view, GMAC's high stand-alone leverage position has no capacity to provide un-backed support at the current credit grade. In Moody's last rating action on GMAC and ResCap, GMAC's ratings were downgraded one notch to Ba2 while ResCap's ratings were downgraded two notches to Ba3. GMAC's ratings were kept in proximity to ResCap's, reflecting Moody's view that GMAC could be required to provide support to ResCap that weakens GMAC's stand- alone credit profile. Moody's believes that the probability of such support may have shifted higher, in light of the explicit indications of support recently provided by management. During its review of GMAC's ratings, Moody's will seek greater definition regarding the tolerances GMAC's owners exhibit regarding the uses of GMAC's capital and credit worth to support ResCap in ways that could heighten risks to GMAC's creditors. Moody's will also explore the owners' ability and willingness to take actions that neutralize the impact of GMAC's extensions of support to ResCap that would otherwise diminish GMAC's stand-alone credit profile. Moody's anticipates concluding its review by the end of December 2007. According to Moody's, investments or pursuit of endeavors that primarily benefit ResCap could evidence a use of GMAC capital that constitutes ResCap support, if not backed by injections or other explicit support from GMAC's owners. Moody's is also concerned that current market conditions have delayed GMAC's pursuit of other intended capital management initiatives designed to strengthen its capital position. Moody's view is that GMAC's auto finance and insurance businesses have continuing and important strategic value to GM. GM's consent is required on many significant matters relating to GMAC's strategic direction, investment, and capitalization. GM's interest could act as a countervailing influence on investor pressures to further involve GMAC in supporting ResCap through its difficulties. ResCap's ratings (senior unsecured at Ba3) and negative outlook are not affected by Moody's review of GMAC's ratings or the announced $750 million tender offer. ResCap's current rating assumes its parent is willing and able to provide capital support if needed. Moody's added that it believes that the maturities selected for tender and overall size of the program are appropriate considering ResCap's current liquidity position. Detroit-based GMAC LLC provides retail and wholesale auto financing, auto extended warranty and insurance products, and residential mortgage finance through wholly-owned subsidiary Residential Capital, LLC. GMAC reported a consolidated nine-month net loss of $1.6 billion. GPS INDUSTRIES: Sept. 30 Balance Sheet Up-Side-Down by $1.03 Mil. ----------------------------------------------------------------- GPS Industries Inc. reported net loss of $3.53 million for three months ended Sept. 30, 2007, compared to a net loss of $3.48 million for the same period in the previous year. Net loss for the three-month period, was substantially similar to the net loss in the 2006 three-month period even though the company's 2007 loss from operations was $1.17 million greater than its loss from operations in the 2006 three-month period. Net losses were substantially similar because the company's other losses, mostly in interest expense and derivative liability changes, were $1.12 million higher during the three-month period ended Sept. 30, 2006. For the nine months ending Sept. 30, 2007, net loss was $20.55 million as a result of the $12.50 million deemed preferred stock dividend. Liquidity And Capital Resources The company has incurred significant losses from operations. As of Sept. 30, 2007, the company has a working capital deficit of $ 5.20 million. The company's operations currently do not generate sufficient cash to internally fund its working capital needs. Accordingly, to date, the company's operating deficits was funded by outside sources of funding, including funds raised from: (i) the sale of shares of our common stock and preferred stock; (ii) the issuance of debentures; (iii) the issuance of shares as payment for services and in satisfaction of indebtedness; (iv) bank lines of credit; and (v) short-term loans made to us by the company's affiliates and by third parties. The company incurred a loss on extinguishment of debt in