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/raid1/www/Hosts/bankrupt/TCR_Public/080221.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, February 21, 2008, Vol. 12, No. 44 Headlines ACA CAPITAL: Counterparties Waive Rights and Claims Until April 23 ACCENTIA BIOPHARMA: Dec. 31 Balance Sheet Upside-Down by $74.6 M. ADAM AIRCRAFT: Files Ch. 7 Petition in Colorado and Cuts 800 Posts ADVANCED LIVING: Hires Focus Management as Financial Advisor AEGIS MORTGAGE: Wells Fargo Wants Equity Title's Suit Dismissed AGILYSYS INC: Acquires Eatec Corporation for $23.2 Million Cash AMERICAN HOME: Withdraws Request to Hire Deloitte as Tax Experts AMERICAN HOME: Court Denies CB Richard as Real Estate Broker AMERICAN SOIL: McKennon Wilson Expresses Going Concern Doubt AMERICAN WENSHEN: Losses Cue Kabani to Raise Going Concern Doubt ATLANTIC EXPRESS: S&P Junks Corp. Credit and Secured Debt Ratings AVETA INC: S&P Puts 'CCC' Credit Rating Under Positive Creditwatch BANC OF AMERICA: Stable Performance Cues Fitch to Hold Ratings BENJAMIN ELLIS: Voluntary Chapter 11 Case Summary BEXAR COUNTY HOUSING: Moody's Affirms 'B1' Rating on Revenue Bonds BLACKHAWK AUTOMOTIVE: Wants Court's OK to Sell Assets for $20.7MM BLACKHAWK AUTOMOTIVE: Wants Plan Filing Deadline Moved to May 19 BUFFETS HOLDINGS: $385 Mil. DIP Facility Hearing Moved to Feb. 22 CHAMPION ENTERPRISES: Posts $6MM Net Loss in Quarter Ended Dec. 29 CHIQUITA BRANDS: Posts $26 Mil. Net Loss in Qtr. Ended December 31 COACH AMERICA: Profit Pressues Prompt S&P to Cut Rating to B- CONGOLEUM CORP: Court Approves Disclosure Statement CORNERSTONE-CAMERON: White Eagle Wins Bid for Apartments at $16MM CORPORATE EXPRESS: S&P Puts 'BB-' Credit Rating Under Pos. Watch CROSSFIRE ENERGY: Lender to Ask Alberta Court to Name Receiver CRYOPORT INC: Posts $1.2M Net Loss in 3rd Qtr. Ended Dec. 31 DELPHI CORP: Hearing to Consider Bearings Biz Sale Set Today DELPHI CORP: Wants to Strike Non-Conforming Cure Objections DELPHI CORP: Cuts CEO Rodney O'Neal's Emergence Incentive to $1MM DURA AUTOMOTIVE: Backstop Rights Deal with Pacificor LLC Expires DURA AUTOMOTIVE: Wants Court to Approve Amended 2008 KMIP ELITE PHARMA: Posts $2.8M Net Loss in 3rd Qtr. Ended Dec. 31 ESSENTIAL INNOVATION: Peterson Sullivan Raises Going Concern Doubt EUROFRESH INC: Moody's Rating Unmoved by Deal to Refinance Debt F.C.D.C. COAL: Involuntary Chapter 11 Case Summary FIRST MAGNUS: Seeks Court's Approval of Settlement Pact with UBS FIRST MAGNUS: Court Grants Allegra's Request for Deposition FIRST MAGNUS: Court Orders WNS' Subpoena for Arizona Bank Quashed FIRST NLC: Court Appoints Berger Singerman as Counsel FORTUNOFF: May Pay Up to $3 Million Prepetition Delivery Charges FORTUNOFF: El-Kam Realty and Century Road Demand Lease Payments FREEPORT-MCMORAN: Moody's Lifts Ratings on Strong Earnings FRONTLINE CAPITAL: Wants Plan Filing Deadline Moved to May 2 GE CAPITAL: Moody's Affirms B3 Rating on $5.944MM Class O Certs. GE CAPITAL: Moody's Junks Ratings on Two Certificate Classes GEN CON: Says Bankruptcy Won't Interrupt Operations and Events GENER8XION ENTERTAINMENT: Farber Hass Raises Going Concern Doubt GENERAL DATACOMM: Dec. 31 Balance Sheet Upside-Down by $32.3 Mil. G-I HOLDINGS: Court Approves Dewey & Lebeouf as Counsel GS MORTGAGE: Moody's Chips Rating on $28.18MM Class G Certs. to B1 GS MORTGAGE: S&P Junks Two Certs. Ratings, Removes Neg. Watch HDB LLC: Lenders Ask Court to Appoint Chapter 11 Trustee HOLLEY PERFORMANCE: Taps Epiq as Claims and Noticing Agent ICC WORLDWIDE: Holtz Rubenstein Expresses Going Concern Doubt INTRAOP MEDICAL: Dec. 31 Balance Sheet Upside-Down by $1.4M INTREPID TECH: Posts $731T Net Loss in 2nd Qtr. Ended Dec. 31 IWT TESORO: Judge Glenn Sets March 17 as Claims Bar Date KESSELRING HOLDING: Posts $1.3 Mil. Net Loss in Qtr. Ended Dec. 31 KIMBALL HILL: Gets Limited Access to Loan Facility Until March 14 KKR FINANCIAL: Gets Extension of SLN Maturity Date to March 3 KRONOS ADVANCED: Dec. 31 Balance Sheet Upside-Down by $2M LB COMMERCIAL: Moody's Cuts Ratings on $30.937 Mil. Certificates LEVITT & SONS: Wachovia Says It Is Not Obligated to Release Homes LEVITT AND SONS: SHR Bonita Wants Deed & Escrow Pact Approved LILLIAN VERNON: Case Summary & 30 Largest Unsecured Creditors MARCAL PAPER: Settles Federal Environmental Claims with EPA MBIA INC: Former CEO Returns to Lead Company Through Challenges MERRILL LYNCH: Moody's Holds Low-B Ratings on Two Cert. Classes MERRILL LYNCH: Moody's Holds B3 Rating on $3.513MM Class K Certs. MOHEGAN TRIBAL: $1 Bil. Credit Facility Amendment Gets Lenders OK MEDQUEST INC: $177MM Notes Redemption Cues S&P to Withdraw Ratings M/I HOMES: S&P Slashes Preferred Stock Rating to CCC+ from B- MORGAN STANLEY: S&P Affirms Low-B Ratings on Five Cert. Classes NAISER ADVERTISING: Case Summary & 11 Largest Unsecured Creditors NEW YORK RACING: Court Extends Exclusive Plan Filing Period NASH FINCH: Seeks $18 Mil. in Damages from Roundy's Supermarkets NOWAUTO GROUP: Dec. 31 Balance Sheet Upside-Down by $584T ORBIT PETROLEUM: Files for Chapter 11 Reorganization in New Mexico PEOPLE'S CHOICE: Fitch Chips Ratings on 15 Certificate Classes PLASTECH ENGINEERED: Johnson Controls Mulled on Acquiring Plastech PLASTECH ENGINEERED: Taps Lazard Freres as Financial Advisor PLASTECH ENGINEERED: To Hire Skadden Arps as Bankruptcy Counsel POLAR MOLECULAR: Case Dismissal Hearing Slated for March 13 PROSPECT MEDICAL: Inks Forbearance Arrangements with Lenders QUEBECOR WORLD: Quebec Court Extends CCAA Protection Until May 12 QUEBECOR WORLD: Joint Administrators Close British Printing Plant QUEBECOR WORLD: Franklin Resources Holds 1,105 Sub. Voting Shares QUEBECOR WORLD: New Pact with Clients to Yield $75 Mil. Annually REBECCA CARTEE: Case Summary & Three Largest Unsecured Creditors RED MILE: Posts $2.8M Net Loss in 3rd Quarter Ended Dec. 31 REMOTEMDX INC: Posts $2.3M Net Loss in 1st Qtr. Ended Dec. 31 RESIDENTIAL FUNDING: Fitch Junks Ratings on 22 Certificate Classes RESMAE MORTGAGE: Fitch Cuts Ratings on $421.4 Million Certificates ROUNDY'S SUPERMARKETS: Claims Nash Finch Violated APA Terms SANMINA-SCI: Inks Assets Sale Agreement with Foxteq Holdings SHARPER IMAGE: Files for Bankruptcy Protection SHARPER IMAGE CORP: Case Summary & 20 Largest Unsecured Creditors SITEL WORLDWIDE: Weak Profitability Cues S&P to Lower Rating to B SOLERA HOLDINGS: S&P Lifts Rating on Improved Credit Metrics SOTER 2007-GSC: S&P Slashes Notes Rating to B- from AAA SPACEHAB INC: Buying 55,000 Series D Pref. Shares for $5.5 Million SQUARED CDO: Moody's Downgrades Ratings on Six Note Classes to Ca ST. JOE COMPANY: Mulls Slashing 780 Out of 980 Direct Positions SYNOVICS PHARMACEUTICALS: Miller Ellin Raises Going Concern Doubt TEKNI-PLEX INC: Credit Amendment Cues S&P to Affirm 'CC' Rating TITAN GLOBAL: Board OKs Split into Four Separate Public Companies TYSON FOODS: Expects Business Success Despite Costs Challenges UAL CORPORATION: Various Entities Disclose Stake Ownership UNITED ENERGY: Posts $594T Net Loss in 3rd Qtr. Ended Dec. 31 UNITED SUBCONTRACTORS: Moody's Cuts Corporate Family Rating to B3 UPSNAP INC: Posts $80T Net Loss in 1st Quarter Ended Dec. 31 URSTADT BIDDLE: Secures $50 Mil. Unsec. Revolving Credit Facility VICTOR PLASTICS: Committee Taps Kalina Wills as Bankruptcy Counsel VICTOR PLASTICS: U.S. Trustee Appoints 5-Member Creditors Panel WALTER INDUSTRIES: To Close 36 Jim Walter Homes Sales Centers WESTSHORE GLASS: Files Schedules of Assets and Liabilities WESTMORELAND COAL: Inks Deal to Refinance Roanoke Valley Project WHOLE FOODS: Earns $39.1 Million in Quarter Ended January 20 WICKES FURNITURE: U.S. Trustee Appoints 7-Member Creditors Panel WICKES FURNITURE: Taps Greenberg Traurig as Bankruptcy Counsel WILLOW CREEK FUELS: Voluntary Chapter 11 Case Summary WORNICK COMPANY: Asks Court to Approve $35MM DIP Credit Facility WORNICK COMPANY: Asks Court to Approve Asset Sale to Viren ZIM CORPORATION: Earns $156T in Third Quarter Ended Dec. 31 * Fitch Says Equipment Lease Delinquencies Rise Slightly in 2007 * Real Estate Prices Drop to 1.5% in Dec., Moody's Report Shows * Moody's Sees Neg. Outlook for U.S. Gaming and Lodging Sectors * Moody's Says Fin'l Guarantors' Credit Risks Might Affect Banks * Moody's Says Failures in Auction Rate Markets May Press Ratings * S&P Lowers Ratings on 125 Tranches from 18 U.S. Hybrid CDOs *Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ********* ACA CAPITAL: Counterparties Waive Rights and Claims Until April 23 ------------------------------------------------------------------ ACA Capital Holdings Inc. entered into a third forbearance agreement with its Structured Credit and other similarly situated counterparties. This agreement, which is of longer term than the two preceding agreements, will remain effective through 6:00 p.m., New York City local time, on April 23, 2008. Under the agreement, the counterparties will continue to waive all collateral posting requirements, termination rights and policy claims relating to the rating of ACA Financial Guaranty Corporation, ACA Capital's financial guaranty insurance subsidiary, under their respective transaction documents including any credit support annexes and similar agreements. The extended forbearance period will permit the company and its counterparties to continue their productive discussions to develop a lasting solution for the company's capital and liquidity issues. During this period, the company plans to work with its financial advisor, The Blackstone Group, to further build upon the significant progress achieved since early December 2007. The company seeks to finalize the terms of a solution by the end of this extended forbearance period and to proceed to closing as soon as practicable thereafter. About ACA Capital ACA Capital Holdings Inc. (NYSE: ACA) (OTC BB: ACAH.PK) -- http://www.aca.com/-- is a holding company that provides financial guaranty insurance products to participants in the global credit derivatives markets, structured finance capital markets and municipal finance capital markets. It also provides asset management services to specific segments of the structured finance capital markets. The company participates in its target markets both as a provider of credit protection through the sale of financial guaranty insurance products, for risk-based revenues, and as an asset manager, for fee-based revenues. ACA Capital has offices in New York, London, and Singapore. ACA Capital, through ACA Financial Guaranty Corporation, provides credit protection products. ACA Financial insures the principal and interest of bonds issued in the public finance market and targets the low investment grade ("BBB-") to high non-investment grade ("BB") portion of the public finance market. Typically, ACA Financial is paid one payment for insurance, up-front, based on the total amount of principal and interest insured. The payments received are held in reserve and earn out over the life of the related financial guaranty, nominally 30 years. At Sept. 30, 2007, ACA Financial had $7.0 billion of gross par exposure in its public finance business. * * * ACA Capital's balance sheet as of Sept. 30, 2007, showed total assets of $4.9 billion, total liabilities of $5.8 billion, and minority interest of $9.5 million, resulting in total stockholders' deficit of $883.3 million. ACCENTIA BIOPHARMA: Dec. 31 Balance Sheet Upside-Down by $74.6 M. ----------------------------------------------------------------- Accentia Biopharmaceuticals Inc.'s consolidated balance sheet at Dec. 31, 2007, showed $37.8 million in total assets, $107.5 million in total liabilities, and $4.9 million in non- controlling interest in variable interest entities, resulting in a $74.6 million total stockholders' deficit. At Dec. 31, 2007, the company's consolidated balance sheet also showed strained liquidity with $18.7 million in total current assets available to pay $76.7 million in total current liabilities. Accentia's first quarter net loss, on a fully consolidated basis, including Biovest International Inc., was $24.8 million, compared to $30.6 million reported for the same three month period in fiscal 2007. Of this loss, $17.6 million, or approximately 71.0% was the result of non-cash charges such as accretion of capitalized finance cost, derivative loss and loss on extinguishment of debt. On a fully consolidated basis, net sales for the three months ended Dec. 31, 2007, were $4.3 million, compared with $5.9 million for the same period ended Dec. 31, 2006. This decrease was primarily attributed to a decrease of $1.3 million in net sales in the company's Specialty Pharmaceuticals segment primarily due to the divestiture of its Xodol and Histex product lines, the discontinuance of its Respi-Tann G product line, product returns and, to a lesser extent, a decrease in net sales of its Analytica subsidiary. Consolidated research and development costs were $3.8 million for the first fiscal quarter, compared with $4.4 million for the same fiscal quarter in 2007. This 13.0% decrease was largely due to the company's Biovest subsidiary reducing R&D expenses as its clinical trial costs have declined considerably in advance of the pending interim analysis of Phase 3 results for BiovaxID(TM). Biovest expects to file for conditional approval for BiovaxID in the U.S. and Europe, assuming positive results. The Biovest decrease in R&D expenses of $2.0 million was partially offset by an increase of $1.4 million in the Phase 3 clinical trial expense for SinuNase. At Dec. 31, 2007, Accentia had approximately $629,518 of cash and cash equivalents, and approximately $5.0 million in restricted cash, of which $3.2 million was attributed to Biovest. As previously reported, Biovest secured an $8.5 million financing in December. Subsequent to December 31, Accentia received proceeds from a private placement of approximately $8.7 million of convertible preferred stock. The company expects to have access to additional sources of capital following the unblinding of the SinuNase and BiovaxID Phase 3 clinical trials data, including through potential corporate collaborations and licensing agreements. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?2842 Going Concern Doubt Aidman, Piser & Company P.A., in Tampa, Florida, expressed substantial doubt about Accentia Biopharmaceuticals Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Sept. 30, 2007, and 2006. The auditing firm reported that the company incurred cumulative net losses of approximately $164.1 million during the three years ended Sept. 30, 2007, $57.8 million of which was attributable to their 76% owned subsidiary, and, as of that date, had a working capital deficiency of approximately $53.1 million. About Accentia Biopharmaceuticals Based in Tampa, Florida, Accentia BioPharmaceuticals Inc. (Nasdaq: ABPI) -- http://www.accentia.net/-- is a vertically integrated biopharmaceutical company focused on the development and commercialization of drug candidates that are in late-stage clinical development and typically are based on active pharmaceutical ingredients that have been previously approved by the FDA for other indications. The company's lead product candidate is SinuNase(TM), a novel application and formulation of a known therapeutic to treat chronic rhinosinusitis. Additionally, the company has acquired the majority ownership interest in Biovest International Inc. and a royalty interest in Biovest's lead drug candidate, BiovaxID(TM) and any other biologic products developed by Biovest. The company also has a specialty pharmaceutical business, which markets products focused on respiratory disease and an analytical consulting business that serves customers in the biopharmaceutical industry. ADAM AIRCRAFT: Files Ch. 7 Petition in Colorado and Cuts 800 Posts ------------------------------------------------------------------ Adam Aircraft Inc. filed for chapter 7 liquidation with the U.S. Bankruptcy Court for the District of Colorado on Feb. 15, 2008, Rocky Mountain News and Denver Business Journal relate, citing court documents. Adam Aircraft's 500 workers in Colorado and 300 in Utah will be laid off while chairman and chief executive officer, John Wolf, left his post effective as of the bankruptcy filing, Bizjournal reports. Rocky Mountain reveals the Debtor listed assets between $1 million and $10 million, and debts between $50 million and $100 million in a court filing. According to the filing, the Debtor owes money to almost a thousand creditors, Rocky Mountain adds. Colorado Biz Suspended As reported in the Troubled Company Reporter on Feb. 13, 2008, Adam Aircraft Inc. said on its Web site that it suspended operations Monday at its facilities in Colorado. Adam Aircraft said the move was "difficult but necessary." The measure, according to the company, was required due to its inability to come to terms with their lender for funding necessary to maintain business operations. At that time, the company was currently exploring all of its alternatives and will provide further guidance when decisions are made. Need for Financing The TCR related on Jan. 25, 2008, that Adam Aircraft must secure two financing transactions otherwise it would be forced to liquidate, as stated in a letter by CEO John Wolf to stockholders. Although the company had already secured $5.5 million in December 2007, it needed to obtain $30.5 million by the end of January. According to the letter, the company must successfully complete the $30.5 million transaction in order for the company to obtain at least a $100 million equity financing led by Citibank sometime in May 2008. The Debtor had tried to lure investors by offering 49.9% equity interest in a newly formed subsidiary in exchange for funding needed in January. About Adam Aircraft Denver, Colorado-based Adam Aircraft Inc., aka Adam Aircraft Industries -- http://www.adamaircraft.com/-- designs and manufactures advanced aircraft for civil and government markets. The A500 twin-engine piston aircraft has been Type Certified by the FAA, and the A700, which is currently undergoing flight test and development. ADVANCED LIVING: Hires Focus Management as Financial Advisor ------------------------------------------------------------ Focus Management Group has been appointed Financial Advisor to Advanced Living Technologies, Inc. under an Order entered by the United States Bankruptcy Court for the Western District of Texas, San Antonio Division effective Jan. 9, 2008. Advanced Living Technologies Inc. is a not for profit owner of nursing homes and rehabilitation centers. ALT owns and operates six facilities throughout southeast Texas. ALT filed a petition for voluntary reorganization under Chapter 11 in the Western District of Texas United States Bankruptcy Court on Jan. 9, 2008. Focus Management Group is providing ALT with advisory services in the planning of its Chapter 11 filing and is assisting the Company in the preparation of its Plan of Reorganization and the internal administration of its Chapter 11 case. The Focus restructuring and bankruptcy advisory team is led by James Hopwood, a managing director of Focus Management Group with over 20 years of experience supporting under-performing businesses in diverse industries including healthcare. Mr. Hopwood is a restructuring specialist with extensive leadership experience in Chapter 11 reorganizations, financial restructuring and operational turnarounds in the healthcare industry. He can be reached at (773) 724-2082. About Advanced Living Headquartered in Austin, Texas, Advanced Living Technologies, Inc., owns and operates nursing homes. The company filed for Chapter 11 protection on January 9, 2008 (Bankr. W.D. Tex. Case. No.08-50040). Patricia Baron Tomasco, Esq., at Brown McCarroll, L.L.P., represents the Debtor. When the company filed for protection from its creditors, it listed between $1 million and $10 million in assets and debts. AEGIS MORTGAGE: Wells Fargo Wants Equity Title's Suit Dismissed --------------------------------------------------------------- Wells Fargo Bank, N.A., formerly known as Wells Fargo Home Mortgage Inc., asks the U.S. Bankruptcy Court for the District of Delaware to dismiss a complaint filed by Equity Title of Nevada, in its entirety. Karen C. Bifferato, Esq., at Connolly Bove Lodge & Hutz LLP, in Wilmington, Delaware, contends that the Court cannot enter a declaratory judgment with respect to the disbursements made by Equity Title to Wells Fargo since the bank did not receive any property from Aegis Mortgage Corporation or its debtor-affiliates. Equity Title Lawsuit Equity Title sued Aegis Wholesale Corporation in September 2007 to recover certain payments Equity Title made before the Debtors filed for bankruptcy. Equity Title acted as agent for a sale transaction between Bernard and Gloria Rubins, and Joseph and Evelyn Reyeses in Nevada. The Reyeses intended to buy from the Rubinses certain real estate property. Aegis Wholesale acted as lender in the transaction and established a $199,000 loan. The Debtor allegedly provided the Reyeses a check for $199,954 to fund the loan. At the time of the transaction, Wells Fargo Home Mortgage, Inc. and Community One Federal Credit Union maintained secured loans with respect to the property, which amount to $58,481 and $94,287. Pursuant to the transaction, a promissory note naming the Debtor as payee, and a Deed of Trust with the Debtor as beneficiary, were executed and recorded. On August 1, 2007, Equity Title deposited the funding check into its trust account so that it could disburse the funds. The loan was used to pay the balances with Wells Fargo and Community One, and to pay certain closing costs. The Rubinses were paid the balance of the funds, which amounts to $20,681. Equity Title said it wasn't aware at that time that the Debtor has ceased all mortgage activity, closed its business and terminated its employees. After Equity Title disbursed the loan as it was required to do under the transaction, the funding check was returned for insufficient funds. Prior to the bankruptcy filing, the funding check was dishonored by the Debtor's bank. Consequently, the Loan was never funded by the Debtor. The Debtor refused Equity Title's requests to fund the loan or acknowledge that it does not own the loan due to its failure to provide funding. Wells Fargo and Community One, Equity Title says, refused to return the amounts paid to them pursuant to the transaction despite their knowledge that the loan was not funded by the Debtor. Aegis Wholesale has argued that the loan is a property of its bankruptcy estate despite the fact that there was no consideration for the loan. In its complaint, Equity Title asked the Court to declare that the loan and its proceeds are not property of Aegis Wholesale's estate, and that the loan and the transaction are invalid because the Debtor failed to provide consideration for the loan. Wells Fargo's Arguments "By Equity Title's own allegations, the funds used to make the disbursements came from Equity Title and not the Debtor. Because the money paid to Wells Fargo did not come from the Debtor, the disbursements cannot be considered property of the Debtor, or consequently, its estate," Ms. Bifferato points out. She adds that the Court does not have jurisdiction over non-estate property and thus, cannot enter a declaratory judgment. "[Equity Title] does not have a standing to challenge or rescind the loan or the [sale transaction]. It has failed to allege any facts that suggest it was a contracting party to either the loan or the transaction," Ms. Bifferato says. She points out that Equity Title can only ask for rescission of the loan and the transaction if the Court finds that it does not have any rights or interests in the loan. "In this case, it appears that [Equity Title] ended up simply loaning money to the Debtor. This makes [Equity Title] a creditor of the Debtor, not a contractual party to the loan or to the transaction," Ms. Bifferato argues. According to Ms. Bifferato, the proper remedy is monetary damages to Equity Title and not rescission since the loan and the transaction have been substantially performed. "Similarly, [Equity Title] cannot rescind the loan and the transaction if third party rights have vested," Ms. Bifferato points out, adding that the seller's debt to Wells Fargo was paid as part of the sale transaction. "Therefore, to the extent that Wells Fargo may be considered a beneficiary of the loan or the transaction, the [bank's] rights have vested," Ms. Bifferato argues. "Once vesting has occurred, the original parties to the contract are both bound to perform the contract, and any effort by a party to the contract to rescind or modify [it] is void." Rescission based on mutual mistake should not be permitted, Ms. Bifferato asserts, saying that Equity Title assumed the risk that the loan would not actually be funded by the Debtor by making disbursements and recording the deed of trust and promissory note before the funding check cleared. "Equity Title has failed to allege any facts in the complaint that address mistake by all parties to the transaction so that it should be rescinded," Ms. Bifferato notes. "Wells Fargo did not care or know what the source was or supposed to be of the disbursements that were made to the bank in the transaction." Aegis Disputes Equity Title Allegations In a separate filing, Aegis Mortgage Corporation asks the Court to issue a decision avoiding any interest Equity Title may have in the mortgage loan. James E. O'Neill, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, argues that any interest of Equity Title would be subject to: (a) a creditor that extends credit to the debtor at the time of the commencement of the case, and that obtains a judicial lien on all property, which a creditor on a simple contract could have obtained the judicial lien; and (b) a creditor that extends credit to the debtor at the time of the commencement of the case, and obtains an execution against the debtor that is returned unsatisfied at that time, whether or not the creditor exists. Mr. O'Neill further argues that the complaint failed to state facts sufficient to constitute a claim against Aegis Mortgage. He adds that Equity Title's claims are barred by the doctrine of set-off of claims Aegis Mortgage held against Equity Title. Equity Title Refutes Debtor's Counterclaim Equity Title says the mortgage loan is not property of the Debtors' estates. The Debtors, it notes, have mere legal title to the Loan, but Equity Title has equitable title to the Loan. Equity asks the Court to dismiss the Debtors' counterclaim with prejudice. About Aegis Mortgage Headquartered in Houston, Texas, Aegis Mortgage Corporation -- http://www.aegismtg.com/-- offers a variety of mortgage loan products to brokers through its subsidiaries. The company together with 10 affiliates filed for chapter 11 protection on Aug. 13, 2007 (Bankr. D. Del. Case No. 07-11119) Curtis A. Hehn, Esq., James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski, Stang, Ziehl, & Jones, L.L.P., serve as counsel to the Debtors. The Official Committee of Unsecured Creditors is represented by Landis Rath & Cobb LLP. In schedules filed with the Court, Aegis disclosed total assets of $138,265,342 and total debts of $4,125,470. The Debtors' exclusive period to file a plan of reorganization expires on April 9, 2008. (Aegis Bankruptcy News, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AGILYSYS INC: Acquires Eatec Corporation for $23.2 Million Cash --------------------------------------------------------------- Agilysys Inc. acquired Eatec Corporation for a purchase price of $23.2 million, net of cash. The acquisition will be funded with the company's cash on hand. Eatec's software, EatecNetX, is a recognized, open architecture- based, inventory and procurement management system. It provides customers with the data and information necessary to increase sales, reduce product costs, improve back-office productivity and increase profitability. Eatec customers include restaurants, hotels, stadiums and entertainment venues in North America and around the world well as many public service institutions. EatecNetX's core functions include purchasing, inventory, recipe, forecasting, production and sales analysis. Additionally, the solution offers catering, restaurant, concessions, manufacturing, retail/merchandising and airline catering modules in one integrated solution. "This acquisition further enhances our position as a leading inventory and procurement solution provider to the hospitality and foodservice markets," Arthur Rhein, chairman, president and chief executive officer of Agilysys, said. "Similar to our previous acquisitions of Visual One Systems and InfoGenesis, the Eatec acquisition complements and expands our offerings, allowing us to better serve our customers." In addition to being a stand-alone software application, EatecNetX will be interfaced with Agilysys' point-of-sale offerings to create a complete end-to- end solution for customers in the foodservice industry. Agilysys hospitality solution offerings are among the most comprehensive in the market, with solutions to cover the hospitality industry's information technology needs. Agilysys hospitality solutions include property management, inventory procurement, point-of-sale, golf management, club management, condo accounting, spa, sales and catering, dining reservations, business analytics and document management. About Eatec Corporation Eatec Corporation -- http://www.eatec.com/-- is a privately held developer and marketer of inventory and procurement software. with U.S. headquarters in Emeryville, California. About Agilysys Inc. Based in Mayfield Heights, Ohio, Agilysys Inc. (Nasdaq: AGYS) -- http://www.agilysys.com/-- is one of the distributors and resellers of enterprise computer technology solutions. The company is delivering complex server and storage hardware, software and services to resellers, large and medium-sized corporate customers, well as public-sector clients across a diverse set of industries. In addition, the company provides customer-centric software applications and services focused on the retail and hospitality markets. Agilysys has sales offices throughout the United States and Canada. * * * Standard and Poor's placed Agilysys Inc.'s long-term foreign and local issuer credit ratings at "BB-" in October 2004. The ratings still hold to date. AMERICAN HOME: Withdraws Request to Hire Deloitte as Tax Experts ---------------------------------------------------------------- American Home Mortgage Investment Corp. has withdrawn its request before the U.S. Bankruptcy Court for the District of Delaware, to employ Deloitte Tax LLP as their tax experts. The Debtors did not state the basis of the withdrawal Kelly Beaudin Stapleton, United States Trustee for Region 3, had objected to the Application saying that, among other things, Deloitte Tax is not a "disinterested person" because it has an interest materially adverse to both the interests of the Debtors' bankruptcy estates and a class of their equity security holders by reason of Deloitte & Touche LLP's prepetition connections with the Debtors. 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 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 March 3, 2008. (American Home Bankruptcy News, Issue No. 26, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Court Denies CB Richard as Real Estate Broker ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware denied American Home Mortgage Investment Corp.'s request to employ CB Richard Ellis Inc., as real estate broker. Kelly Beaudin Stapleton, United States Trustee for Region 3, previously questioned why, as a threshold matter, the Debtors are seeking to employ CB Richard Ellis to market a property, which is not property of the bankruptcy estates. 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 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 March 3, 2008. (American Home Bankruptcy News, Issue No. 26, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN SOIL: McKennon Wilson Expresses Going Concern Doubt ------------------------------------------------------------ McKennon Wilson & Morgan LLP in Ervine, Calif., raised substantial doubt about the ability of American Soil Technologies Inc., to continue as a going concern after it audited the company's financial statements for the year ended Sept. 30, 2007. The auditing firm stated that the company has incurred losses in recent history, and has significant working capital and accumulated deficits. The company posted a net loss of $3,112,030 on total revenues of $764,591 for the nine months ended Sept. 30, 2007, as compared with a net loss of $3,203,173 on total revenues of $586,003 in the year ended Dec. 31, 2006. At Sept. 30, 2007, the company's balance sheet showed $3,942,044 in total assets and $4,424,499 in total liabilities, resulting in $482,455 stockholders' deficit. The company's consolidated balance sheet at Sept. 30, 2007, also showed strained liquidity with $378,904 in total current assets available to pay $2,672,426 in total current liabilities. A full-text copy of the company's 2007 annual report is available for free at: http://ResearchArchives.com/t/s?282e About American Soil Based in Pacoima, California, American Soil Technologies Inc. (SOYLE.OB) -- http://www.americansoiltech.com-- develops, manufactures, and markets polymer soil amendments to the agricultural, turf, and horticulture industries in North America. It manufactures three primary products: Agriblend, a soil amendment developed for agriculture; Soil Medic, a slow release liquid fertilizer; and Nutrimoist, developed for homes, parks, golf courses, and other turf related applications. The company was founded in 1993. AMERICAN WENSHEN: Losses Cue Kabani to Raise Going Concern Doubt ---------------------------------------------------------------- Kabani & Company, Inc., raised substantial doubt about the ability of American Wenshen Steel Group, Inc., to continue as a going concern after it audited the company's financial statements for the year ended Sept. 30, 2007. The auditor pointed to the company's significant operating losses and insufficient capital The company posted a net loss of $595,290 on net sales of $1,162,555 for the year ended Sept. 30, 2007, as compared with a net loss of $117,544 on net sales of $93,707 in the prior year. At Sept. 30, 2007, the company's balance sheet showed $5,271,804 in total assets, $532,997 in total liabilities and $4,738,807 stockholders' equity. A full-text copy of the company's 2007 annual report is available for free at: http://ResearchArchives.com/t/s?282c About American Wenshen American Wenshen Steel Group, Inc. (OTC BB: AWSH.OB), through its subsidiary, Chaoyang Liaogang Special Steel Co., Ltd., manufactures tungsten carbide steel, stainless steel, and die steel in the People's Republic of China. Its tungsten carbide steel is used for tools, dies, and precision measuring instruments, as well as gears and bearings. The company produces stainless steel primarily for the cookware and tableware industry. The company was founded in 2004 and is based in New York City. ATLANTIC EXPRESS: S&P Junks Corp. Credit and Secured Debt Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit rating and senior secured debt ratings on Atlantic Express Transportation Corp. to 'CCC+' from 'B-' and placed the ratings on CreditWatch with negative implications. "The rating actions and CreditWatch placement reflect worse-than-expected operating performance, a deteriorating financial profile, and increasing liquidity constraints," said Standard & Poor's credit analyst Funmi Afonja. "The CreditWatch also reflects our expectations of continued earnings and cash flow pressures due to rising fuel prices at a time when the company does not hedge for its fuel cost, and higher labor costs trends that are likely to continue over the next 6 to 12 months." Atlantic Express is one of the larger providers of school bus transportation in the U.S. and the leading provider in New York City. School bus services account for about 88% of revenues. The company also provides paratransit services for disabled passengers, and other services, including express commuter lines and tour buses. Atlantic Express's liquidity is tightly constrained and may not be adequate to meet debt service requirements over the next year. At Dec. 31, 2007, the company had $1.2 million of cash, $10.5 million available under its $35 million revolving credit facility, and modest availability under its $10 million letter-of-credit facility. The revolving credit facility and the LOC facility both expire in 2011. The credit facility has a financial covenant requirement of minimum last-12-months EBITDA of $26 million, which will only be tested if excess availability falls below a certain threshold. Under the newest covenant amendment which expires on Feb. 19, 2009, excess availability at Dec. 31, 2007, was above the threshold. However, the senior lender recently increased borrowing base reserves for the company's interest rate swap agreements, further exacerbating liquidity constraints as the company approaches its peak borrowing requirement during the fiscal (Sept. 30, 2008) quarter. A continuation of or increase in these reserves would have a significant adverse effect on the company's liquidity over the next several months. S&P will assess the company's operating prospects and liquidity in resolving the CreditWatch. S&P could lower ratings further if liquidity constraints increase. AVETA INC: S&P Puts 'CCC' Credit Rating Under Positive Creditwatch ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its 'CCC' counterparty credit rating on Aveta Inc. on CreditWatch with positive implications. "The rating was placed on CreditWatch positive in connection with improved financial performance that is likely to result in better earnings quality and enhanced financial flexibility," said Standard & Poor's credit analyst Joseph Marinucci. For most of 2007, Aveta focused strongly on key remediation initiatives that included new senior executives, network recontracting, and buildup of medical management infrastructure. The 'CCC' rating on Aveta still best reflects the ongoing uncertainty about the company's credit profile. The rating could be raised by one or two notches in second-quarter 2008 if year-end 2007 results were to be in line with earnings and cash flow trends that have emerged throughout the second-half of 2007. S&P also expect Aveta to be compliant with all financial covenants for the first-quarter 2008 filing period. S&P intend to meet with Aveta's management soon to review year-end 2007 financial results and further discuss its prospective capital and strategic plans. Following the review, the ratings could be raised by as a much as two notches with a stable or positive outlook. BANC OF AMERICA: Stable Performance Cues Fitch to Hold Ratings -------------------------------------------------------------- Fitch Ratings affirmed Banc of America Commercial Mortgage Inc.'s commercial mortgage pass-through certificates, series 2001-1, as: -- $462.6 million class A-2 at 'AAA'; -- $43.8 million class A-2F at 'AAA'; -- Interest-only class X at 'AAA'; -- $35.6 million class B at 'AAA'; -- $21.3 million class C at 'AAA'; -- $19 million class D at 'AAA'; -- $9.5 million class E at 'AAA'; -- $9.5 million class F at 'AAA'; -- $19 million class G at 'AA'; -- $14.2 million class H at 'A-'; -- $13.3 million class J at 'BBB'; -- $23.5 million class K at 'BB'; -- $2.1 million class L at 'BB-'; -- $5.5 million class M at 'B+'; -- $6.8 million class N at 'B-/DR1'; -- $5.6 million class O at 'C/DR6'. Class A-1 has been paid in full. The affirmations are due to the stable performance of the transaction since Fitch's last rating action. As of the January 2008 distribution date, the pool's aggregate balance has decreased 27.1% to $691.2 million from $948.1 million at issuance. Thirty- eight loans (36.2%) have defeased since issuance. Fitch has designated 22 loans (17.1%) as Fitch Loans of Concern. These include the three specially serviced assets (2.6%) and four of the top ten loans in the transaction, as well as loans with low cash flow and occupancy. The largest Fitch Loan of Concern, which is the second largest loan (2.4%) in the pool, is an office property in Phoenix, Arizona, which has been performing poorly since 2003 due to occupancy issues and a competitive market. The loan remains current, and occupancy has increased to 88% as of June 2007 from 82% at year-end 2006. The second largest Loan of Concern (2.2%) is an office property Bellevue, Washington which has experienced a decline in cash flows due to fluctuations in occupancy. Occupancy as of September 2007 was 93% with a debt-service coverage ratio of 0.98 times. The two largest specially serviced assets (2.2%) are real-estate owned multi-family properties in Columbia, Missouri. The properties were transferred to special servicing due to monetary default. The third largest specially serviced asset (0.4%) is an REO office property in Greenville, South Carolina. The special servicer is working to stabilize the property before marketing the property. Fitch expected losses are anticipated to impact class O. BENJAMIN ELLIS: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtors: Benjamin Joseph Ellis Christine T.D. Ellis 553 North Kimberlee Way Chandler, AZ 85225 Bankruptcy Case No.: 08-01521 Chapter 11 Petition Date: February 19, 2008 Court: District of Arizona (Phoenix) Debtors' Counsel: Gary V. Ringer, Esq. 7303 West Boston Street Chandler, AZ 85226 Tel: (480) 705-7550 Fax: (480) 705-7503 garyvringler@earthlink.net Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million The Debtors do not file a list of their 20 largest unsecured creditors. BEXAR COUNTY HOUSING: Moody's Affirms 'B1' Rating on Revenue Bonds ------------------------------------------------------------------ Moody's Investors Service affirmed the ratings on Bexar County Housing Finance Corporation Multifamily Housing Revenue Bonds (American Opportunity for Housing - Colinas LLC Project) at Ba1 for Series 2001A and at B1 for Series 2001C. The affirmations are reflective of debt service coverage levels in 2006 that are in-line with the benchmarks for the current rating categories. The outlook on both Series is stable due to improved financial performance in 2007, balanced with weak occupancy at Las Colinas. The bonds are secured by the revenues from three cross collateralized properties, Las Colinas Apartments, Huebner Oaks Apartments and Perrin Crest Apartments, as well as by funds and investments pledged to the trustee under the indenture as security for the bonds. Las Colinas is a 232-unit garden style apartment complex built in 1978, composed of 30 two-story buildings and is located approximately 20 miles north west of the San Antonio central business district. Huebner Oaks is a 344-unit garden style apartment complex built in 1984, composed of 23 two-story buildings and is located approximately 12 miles north west of the San Antonio central business district. Perrin Crest is a 200-unit garden style apartment complex built in 1985, composed of 13 two- story buildings and is located approximately 12 miles north east of the San Antonio central business district. Legal Security: The bonds are limited obligations payable solely from the revenues, receipts and security pledged in the Trust Indenture. Credit Strengths -- Debt service reserves are fully funded as of 12/17/2007. -- Excess cash in the surplus fund of $319,895 as of 12/17/2007. -- Interim financial statements for 2007 indicate improved debt service coverage. Credit Challenges -- Weighted occupancy for the three projects is 90.6% in February 2008. -- Debt service coverage declined to 1.18x for Series 2001A and 1.01x for 2001C in 2006; interim financial statements indicate improvement in 2007. Recent Developments/Results: Debt service coverage ratios, derived from 2006 audited financial statements, are thin, but appropriate for the current rating categories, at 1.18 for 2001A and 1.01for 2001C. Weighted average monthly occupancy averaged 91% in 2007, with the weakness being relatively evenly distributed amount the three properties. February 2008 weighted average occupancy is 90.6%, with Las Colinas the weakest at 86%. Management credits the low occupancy to recent move-outs of students due to a semester change at a nearby university. The less than optimum occupancy is balanced by improved debt service coverage levels for 2007 - 1.32 for seniors and 1.13 subs. However, typically DSCR's for audited statements are lower than those from interim statements. Torto Wheaton Research forecasts rent growth of 2.3% in 2008 and 2.0% in 2009 for the Huebener Oaks' and Las Colinas' submarket. Occupancy in the submarket is forecasted to decline from 95.2% in 2007 to 94% in 2008. Perrin Crest's submarket is forecasted to under perform with 0.5% rent growth in 2008 and 1.3% in 2009. Occupancy is forecasted to decline to 92.2% in 2008. What could change the rating - Up -- Stable weighted average occupancy, improved debt service coverage and a fully funded debt service funds. What could change the rating - Down -- Declines in debt service coverage levels; or weakened occupancy; or the tapping of debt service reserves. Outlook The outlook for the bonds is stable as weakened occupancy is balanced by improved financial performance in 2007. BLACKHAWK AUTOMOTIVE: Wants Court's OK to Sell Assets for $20.7MM ----------------------------------------------------------------- Blackhawk Automotive Plastics Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the Northern District of Ohio for permission to sell substantially all of their assets to Flex-N-Gate LLC for $20,768,000,under an asset purchase agreement. Specifically, the Debtors are selling their operating assets, including equipment, inventory and certain leasehold rights, located at 800 Pennsylvania Avenue in Salem, Ohio, and at 4219 U.S. Rt. 42 in Mason, Ohio. As reported in the Troubled Company Reporter on Dec. 18, 2007, the Court approved the bidding procedure proposed by the Debtors for the public sale of their assets. Sale Protocol Qualified bidders must deliver their offers no later than 5:00 p.m., on Feb. 29, 2008, at: W.Y. Campbell & Company, c/o Ty T. Clutterbuck 1 Woodward Avenue, 26th Floor Detroit, MI 48226 An auction will take place March 3, 2008, at 11:00 a.m., at the offices of Honigman, Miller, Schwartz & Cohn LLP in Detroit, Michigan. During the auction, qualified bidders may submit bids in increments of at least $100,000. A sale hearing has been set on March 5, 2008, at 10:00 a.m., to consider approval of the Debtors' request. About Blawkhawk Automotive Salem, Ohio-based Blackhawk Automotive Plastics Inc., formerly Warren Molded/Custom Plastics, manufactures injection molded plastic products and motor vehicle parts and accessories. BAP's customers include General Motors, Delphi, Lear, Chrysler, Honda, Navistar, and Visteon. BAP employs about 1,574 workers domestically, and generated $136 million in sales in 2006. BAP owns Canadian subsidiary, Blackhawk Automotive Plastics Ltd. which operated a manufacturing facility in Ontario until Johnson Controls Inc. bought BAP Canada's assets in May 2005. BAP Canada's remaining assets consist primarily of net operating loss carryforwards for Canadian tax purposes. The NOLs had a book value of about $8.2 million as of December 2005. BAP also owns a plant in Upper Sandusky, Ohio, which ceased operations in 2006. The company filed for chapter 11 protection on Oct. 22, 2007 (Bankr. N.D. Ohio, Case No. 07-42671). Its parent company, Tier e Automotive Group Inc., filed a separate chapter 11 petition on the same day (Bankr. N.D. Ohio, Case No. 07-42673). Tier e acquired BAP from Worthington Industries Inc. in 1999. Tier e also owns 49% stake in Nescor Holdings Inc., a holding company for Nescor Plastics Corporation, also an automotive plastics supplier. William I. Kohn, Esq., David M. Neumann, Esq., Stuart A. Laven, Jr., Esq., at Benesch, Friedlander, Coplan & Aronoff LLP, represent the Debtors in their restructuring efforts. Donlin Recano & Company Inc. provides the Debtors with claims, noticing, balloting and distribution services. The Debtors' schedules disclosed total assets of $58,665,229 and total liabilities of $51,244,592. As of bankruptcy filing, BAP's aggregate debt to its senior facility lenders was about $33 million. BLACKHAWK AUTOMOTIVE: Wants Plan Filing Deadline Moved to May 19 ---------------------------------------------------------------- Blackhawk Automotive Plastics Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the Northern District of Ohio to further extend their exclusive period to file a Chapter 11 plan until May 19, 2008. The Debtors also ask the Court to further extend their exclusive period to solicit acceptances of that plan until July 18, 2008. William E. Schonberg, Esq., at Benesch, Friedlander, Coplan & Aronoff LLP in Cleveland, Ohio, says that the Debtors are in the midst of the sale process and the termination of the exclusivity before March 14 deadline to consummate a sale may unduly prejudice their creditors. The sale is part of the Debtors' postpetition financing agreement with certain of their lenders, Mr. Schonberg says. The Debtors' exclusive right to file a plan expired on Feb. 19, 2008. About Blawkhawk Automotive Salem, Ohio-based Blackhawk Automotive Plastics Inc., formerly Warren Molded/Custom Plastics, manufactures injection molded plastic products and motor vehicle parts and accessories. BAP's customers include General Motors, Delphi, Lear, Chrysler, Honda, Navistar, and Visteon. BAP employs about 1,574 workers domestically, and generated $136 million in sales in 2006. BAP owns Canadian subsidiary, Blackhawk Automotive Plastics Ltd. which operated a manufacturing facility in Ontario until Johnson Controls Inc. bought BAP Canada's assets in May 2005. BAP Canada's remaining assets consist primarily of net operating loss carryforwards for Canadian tax purposes. The NOLs had a book value of about $8.2 million as of December 2005. BAP also owns a plant in Upper Sandusky, Ohio, which ceased operations in 2006. The company filed for chapter 11 protection on Oct. 22, 2007 (Bankr. N.D. Ohio, Case No. 07-42671). Its parent company, Tier e Automotive Group Inc., filed a separate chapter 11 petition on the same day (Bankr. N.D. Ohio, Case No. 07-42673). Tier e acquired BAP from Worthington Industries Inc. in 1999. Tier e also owns 49% stake in Nescor Holdings Inc., a holding company for Nescor Plastics Corporation, also an automotive plastics supplier. William I. Kohn, Esq., David M. Neumann, Esq., Stuart A. Laven, Jr., Esq., at Benesch, Friedlander, Coplan & Aronoff LLP, represent the Debtors in their restructuring efforts. Donlin Recano & Company Inc. provides the Debtors with claims, noticing, balloting and distribution services. The Debtors' schedules disclosed total assets of $58,665,229 and total liabilities of $51,244,592. As of bankruptcy filing, BAP's aggregate debt to its senior facility lenders was about $33 million. BUFFETS HOLDINGS: $385 Mil. DIP Facility Hearing Moved to Feb. 22 ----------------------------------------------------------------- Buffets Holdings Inc. and its debtor-affiliates agreed with the request filed by the Official Committee of Unsecured creditors to postpone the hearing on their motion to incur $385,000,000 in postpetition financing. The Committee said it needed additional time to analyze the DIP Facility and its impact on the Debtors' restructuring and creditors, reports Bloomberg News. The Hon. Mary F. Walrath of the United States Bankruptcy Court for the District of Delaware continued the hearing to consider final approval of the DIP Facility to Feb. 22, 2008. More Parties Objects (a) WP East End The Debtors are parties to a certain lease agreement with WP East End Associates LP's predecessor-in-interest for the lease of about 10,000 square feet of space located in the East End Shopping Center in Wilkes-Barre, Pennsylvania. Same as with the other objecting landlords, WP East objects to the provision in the Debtors' request to obtain postpetition financing that would allow the DIP lenders to obtain a de facto assignment of lease agreements in an event of default. Jason W. Staib, Esq., at Blank Rome LLP, in Wilmington, Delaware, contends that all transfers of WP East's Lease Agreement must be subjected to a further hearing where any proposed assignee would be required to meet the strict terms and conditions of Section 365 of the Bankruptcy Code, including providing the Landlord with adequate assurance of future performance. Mr. Staib tells the Court that it should not grant any relief that allows the DIP Lenders to use a "drop dead" provision upon the the occurrence of a default under Section 362 to vitiate the Landlord's rights under Section 365. He says automatic relief from the stay under Section 362 would allow the DIP Lenders under the guise of Section 364 financing to void the Landlord's rights under Section 365. He argues that statutory construction of the Bankruptcy Code requires the Court to give meaning to both Sections. Accordingly, WP East asks the Court to modify the final order to be entered with respect to the Debtor's request to obtain postpetition financing. (b) HSBC HSBC Bank USA, National Association, as Indenture Trustee of $300,000 Principal Amount of 12-1/2% Senior notes due 2014, asks the Court to deny the Debtors' request. HSBC says the DIP Facility is not favorable to the Debtors and their creditors. HSBC argues that the DIP Facility is structured more to fix apparent collateral problems of prepetition senior lenders. The $300,000,000 roll-up is inappropriate as it will only enhance the position of prepetition lenders to the detriment of unsecured creditors. Pursuant to the roll-up, $300,000,000 of the $385,000,000 will be used to repay nearly half of Prepetition Lenders' claims. HSBC notes that the Debtors have failed to establish that the proposed roll-up is necessary. (c) Committee On behalf of the Official Committee of Unsecured Creditors, Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, contends that: -- the roll-up of the prepetition financing and the cross- collateralization of debt is inappropriate as the structure of the DIP Facility is solely for the benefit of the Lenders; -- the milestone restructuring covenants are inappropriate; -- the relief sought precludes the Committee from properly performing its duties on behalf of general unsecured creditors; -- the proposed waiver of Section 506(c) of the Bankruptcy Code is inappropriate; and -- the granting of superpriority liens and claims attaching to the proceeds of avoidance actions improperly transfers to the Lenders assets that are intended for the benefit of the estates. In addition, Ms. Jones mentions other objectionable provisions of the proposed financing including: (a) the budget; (b) payments to the Prepetition Lenders and the Postpetition Lenders; (c) the Lenders' professional fees; (d) events of default; (e) provisions which prevent challenge to the Debtors' sale lease back transactions; (f) inadequate notice upon default provisions; (g) the lease and real property rights given to the Lenders; (h) the prohibition of seeking the appointment of a responsible person, trustees and examiners with expanded powers, without triggering defaults; and (i) the "good faith" finding notwithstanding the insufficiency of any sworn factual record in support. In a separate request, the Committee asks the Court for authority to file its detailed objection under seal in order to maintain the confidentiality of information. Ms. Jones tells the Court that the Committee's detailed objection contain confidential information concerning the Debtors' business and operations. Headquartered in Eagan, Minnesota, Buffets Holdings Inc. -- http://www.buffet.com/-- is the parent company of Buffets, Inc., which operates 626 restaurants in 39 states, comprised of 615 steak-buffet restaurants and eleven Tahoe Joe's Famous Steakhouse restaurants, and franchises sixteen steak-buffet restaurants in six states. The restaurants are principally operated under the Old Country Buffet, HomeTown Buffet, Ryan's and Fire Mountain brands. Buffets, Inc. employs approximately 37,000 team members and serves approximately 200 million customers annually. The company and all of its subsidiaries filed Chapter 11 protection on Jan. 22, 2008 (Bankr. D. Del. Case Nos. 08-10141 to 08-10158). The Debtors' balance sheet as of Sept. 19, 2007, showed total assets of $963,538,000 and total liabilities of $1,156,262,000. (Buffets Holdings Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000) CHAMPION ENTERPRISES: Posts $6MM Net Loss in Quarter Ended Dec. 29 ------------------------------------------------------------------ Champion Enterprises Inc. reported results for fourth quarter and fiscal year ended Dec. 29, 2007. The company reported a net loss for the quarter of $6 million compared to net income of $3.6 million for the same period of the prior year. The loss before income taxes in the fourth quarter of 2007 included these items: -- $6.4 million of expense recorded in connection with the earn out provisions of the 2006 acquisition of Calsafe Group (Holdings) Ltd.; -- loss on debt retirement of $4.5 million as a result of the company's changes to its debt structure; and -- charges totaling $3.6 million related to the closure of a manufacturing facility. Pre- tax income for the fourth quarter of 2006 was reduced by a $0.4 million loss on debt retirement. Net income for 2007 totaled $7.2 million compared to net income of $138.3 million in 2006. Net income in 2006 included $101.9 million of income from the reversal of the recorded deferred tax valuation allowance and $4.7 million of pre-tax gains from property sales. "While our earnings continue to be pressured by deteriorating conditions in the U.S. housing markets, our efforts to diversify and build a strong international platform continue to mitigate these pressures," William Griffiths, chairman, president and chief executive officer of Champion Enterprises Inc., stated. "Our non- U.S. revenues increased 135% in 2007, contributing over 30% of our total revenues and strong cash returns. "Thanks to the focused work of our operations both in North America and internationally, our free cash flow improved over 60% to $69 million in 2007 despite a decline in reported earnings for the year," Mr. Griffiths added. "As a result, our cash position continued to improve, ending 2007 at $135 million. This, coupled with the successful refinancing we completed during the fourth quarter, leaves Champion well positioned to continue to execute its growth and diversification strategies." About Champion Enterprises Inc. Based in Auburn Hills, Michigan, Champion Enterprises Inc. (NYSE: CHB) -- http://www.championhomes.com/-- operates 31 manufacturing facilities in North America and the United Kingdom working with independent retailers, builders and developers. The Champion family of builders produces manufactured and modular homes, as well as modular buildings for government and commercial applications. * * * As reported in the Troubled Company Reporter on Dec. 12, 2007, Standard & Poor's Ratings Services raised its ratings on Champion Enterprises Inc.'s senior notes due 2009 and on Champion Home Builders Co.'s senior secured credit facility to 'B+' from 'B'. At the same time, S&P upgraded the recovery ratings on the senior notes and the credit facility to '3' from '5'. Concurrently, S&P affirmed the 'B+' corporate credit ratings. The outlook for both entities is stable. CHIQUITA BRANDS: Posts $26 Mil. Net Loss in Qtr. Ended December 31 ------------------------------------------------------------------ Chiquita Brands International Inc. released financial and operating results for the fourth quarter and full-year ended Dec. 31, 2007. The company reported a net loss of $26 million including a charge of $26 million related to the company's restructuring plan. In the year-ago period, the company reported a net loss of $42 million including a $25 million accrual related to the settlement of a U.S. Department of Justice investigation. The company's fourth quarter operating loss of $11 million was on the favorable end of the estimated operating loss range of $10-20 million provided in the company's preliminary selected results release on Jan. 28, 2008. For the full year, the company reported a net loss of $49 million, compared to a net loss of $96 million in 2006. "Our results reflect the proactive steps we took throughout the year to position us to transform and grow our business," said Fernando Aguirre, chairman and chief executive officer. "We have continued to focus on pricing in bananas and recovery in value- added salads to help offset persistent external cost challenges." "In 2008, we will be focused on maintaining our premium brands, improving North American profitability and completing the restructuring we implemented in October," Mr. Aguirre added. "We also will invest in the development of new value-added products to extend our brands, expand consumption and drive growth in higher- margin distribution channels and profitable geographies. We believe that these strategies will help us to achieve our vision of becoming the global leader in healthy, fresh and convenient foods." Business Restructuring The restructuring plan, disclosed in October 2007, is on track to generate new, sustainable cost savings of approximately $60-80 million this year. The savings are being generated from a reduction in compensation related expenses, which is already implemented, and consolidation of processing and distribution facilities, which will be completed at the end of the first quarter 2008. The plan is designed to accelerate the company's long-term strategy to become the leader in healthy, fresh foods well as to improve profitability and efficiency through consolidation of operations and simplification of overhead structure. The restructuring will drive greater integration and efficiency across business units and geographies, resulting in one relationship manager for customers, a supply chain, and an innovation program with targeted priorities and better execution. As reported, the company incurred a $26 million one-time charge in the fourth quarter 2007 related to severance costs and certain asset write-downs under the restructuring plan. Refinancing Progress The company also reported continued progress in a refinancing expected to lower interest expense, extend debt maturities and add significant additional covenant flexibility. After the consent solicitation from the holders of the company's 7-1/2% Senior Notes due 2014, the company issued $200 million aggregate principal amount of 4.25% Convertible Senior Notes due 2016. Net proceeds of approximately $194 million have been used to repay a portion of the outstanding amounts under the company's Term Loan C of its senior secured credit facility. The Notes are convertible, under certain circumstances, at an initial conversion rate of 44.5524 shares of common stock per $1,000 original principal amount of Notes, equivalent to an initial conversion price of approximately $22.45 per share of Chiquita common stock, subject to adjustment. This represents a premium of approximately 32.5% to the last reported sale price of Chiquita's common stock on Feb. 6, 2008 of $16.94. The company has also entered into a fully underwritten commitment with Cooperatieve Centrale Raiffeisen - Boerenleenbank B.A., "Rabobank Nederland," New York branch to refinance the company's existing $200 million revolving credit facility and the remaining portion of the company's Term Loan C. Pursuant to the terms of the commitment letter Rabobank has committed to provide to the company a six-year senior secured credit facility including a $200 million revolving credit facility and a $200 million term loan. The company expects to close the new facility by March 31, 2008. About Chiquita Brands International Inc. Cincinnati, Ohio-based Chiquita Brands International, Inc. (NYSE: CQB) -- http://www.chiquita.com/-- markets and distributes fresh food products including bananas and nutritious blends of green salads. The company markets its products under the Chiquita(R) and Fresh Express(R) premium brands and other related trademarks. Chiquita employs approximately 25,000 people operating in more than 70 countries worldwide, including Belgium, Columbia, Germany, Panama, Philippines, among others. * * * Chiquita Brands International Inc. continues to carry Moody's Investors Service's B3 long term corporate family and Caa2 senior unsecured debt ratings which were placed on Nov. 6, 2006. The outlook is negative. COACH AMERICA: Profit Pressues Prompt S&P to Cut Rating to B- ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Dallas, Texas-based Coach America Holdings Inc. to 'B-' from 'B'. All ratings were removed from CreditWatch, where they were placed with negative implications on Oct. 30, 2007. The outlook is now negative. "The downgrade reflects Coach America's recent profit pressures," said Standard & Poor's credit analyst Funmi Afonja. "While management is undertaking various actions to improve operating performance -- and we believe that this will result in improved results over time -- we still expect the financial profile to remain weaker than previously expected, at least over the near term," she added. At the same time, Standard & Poor's lowered the senior secured debt ratings to 'B', one notch above the corporate credit rating, while leaving the recovery rating unchanged at '2', indicating expectations of a substantial (70%-90%) recovery in the event of a payment default. Also, Standard & Poor's lowered the second-lien credit facility rating to 'CCC', two notches below the corporate credit rating, while leaving the recovery rating unchanged at '6', indicating expectations of a negligible (0%-10%) recovery in the event of a payment default. Coach America is the largest charter bus operator and the second- largest motorcoach services provider in the U.S. The company was formed in 2003 from the divestiture of the Western and South Central regional businesses of Coach USA to a private equity group. CONGOLEUM CORP: Court Approves Disclosure Statement --------------------------------------------------- The Honorable Kathryn C. Ferguson of the U.S. Bankruptcy Court for the District of New Jersey approved Congoleum Corp. and its debtor-affiliates' Disclosure Statement that describes their Chapter 11 Plan of Reorganization. Judge Ferguson said that the Debtors' Disclosure Statement contains adequate information within the meaning of Section 1125 of the U.S. Bankruptcy Code. As reported in the Troubled Company Reporter on Feb. 11, 2008, the Official Committee of Bondholders and the Committee of Asbestos Claimants in the Debtors' cases have agreed to support the Debtors' amended plan of reorganization. Congoleum's amended Chapter 11 reorganization plan was filed by the future claimants' representative in its Chapter 11 proceedings. If the plan is approved by the court and accepted by the requisite creditor constituencies, it will permit Congoleum to exit Chapter 11 free of liability for existing or future asbestos claims. Under the terms of the amended plan, a trust will be created that assumes the liability for Congoleum's current and future asbestos claims. That trust will receive the proceeds of various settlements Congoleum has reached with a number of insurance carriers, and will be assigned Congoleum's rights under its remaining policies covering asbestos product liability. The trust will also receive 50.1% of the newly issued common stock in reorganized Congoleum when the plan takes effect. Holders of Congoleum's $100 million in 8.625% senior notes due in August 2008 will receive on a pro rata basis $80 million in new 9.75% senior secured notes that mature five years from issuance. The new senior secured notes will be subordinated to the working capital facility that provides Congoleum's financing upon exiting reorganization. In addition, holders of the $100 million in 8.625% senior notes due in August 2008 will receive 49.9% of the common stock in reorganized Congoleum. Congoleum's obligations for the $100 million in 8.625% senior notes due in August 2008, including accrued interest -- which amounted to $44.6 million at Dec. 31, 2007 -- will be satisfied by the new senior secured notes and the common stock issued when the plan takes effect. Under the terms of the amended plan, existing Class A and Class B common shares of Congoleum will be cancelled when the plan takes effect and holders of those shares, including the current controlling shareholder American Biltrite will not receive anything on account of their cancelled shares. Congoleum expects existing management will continue post-reorganization. The insurers in the Debtors' cases are instructed to file and serve briefs as to whether they have standing with regard to confirmation of the proposed plan by Feb. 29, 2008. Responses shall be filed and served by March 14, 2008. No reply papers may be filed. Court will hold a hearing on the briefs on March 25, 2008 at 2:30 p.m. About Congoleum Corp. Based in Mercerville, New Jersey, Congoleum Corporation (AMEX:CGM) -- http://www.congoleum.com/-- manufactures and sells resilient sheet and tile floor covering products with a wide variety of product features, designs and colors. The company filed for chapter 11 protection on Dec. 31, 2003 (Bankr. N.J. Case No. 03-51524) as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago. Richard L. Epling, Esq., Robin L. Spear, Esq., and Kerry A. Brennan, Esq., at Pillsbury Winthrop Shaw Pittman LLP, and Paul S. Hollander, Esq., and James L. DeLuca, Esq., at Okin, Hollander & DeLuca, LLP, represent the Debtors. At March 31 2007, Congoleum reported $180,091,000 in total assets and $226,990,000 in total liabilities, resulting in a stockholders' deficit $46,899,000. The Asbestos Claimants' Committee is represented by Peter Van N. Lockwood, Esq., and Ronald Reinsel, Esq., at Caplin & Drydale, Chtd. The Bondholders' Committee is represented by Michael S. Stamer, Esq., and james R. Savin, Esq., at Akin Gump Strauss Hauer & Feld LLP. Nancy Isaacson, Esq., at Goldstein Isaacson, PC, represents the Official Committee of Unsecured Creditors. R. Scott Williams, Esq., of Haskell Slaughter Young & Rediker, LLC, the Court-appointed Futures Claimants Representative, is represented by Roger Frankel, Esq., Richard Wyron, Esq., and Jonathan P. Guy, Esq., at Orrick Herrington & Sutcliffe LLP, and Stephen B. Ravin, Esq., at Forman Holt Eliades & Ravin LLC. American Biltrite, Inc. (AMEX: ABL), which owns 55% of Congoleum, is represented by Matthew Ward, Esq., Mark S. Chehi, Esq., Christopher S. Chow, Esq., and Matthew P. Ward, Esq., at Skadden Arps Slate Meagher & Flom. CORNERSTONE-CAMERON: White Eagle Wins Bid for Apartments at $16MM ----------------------------------------------------------------- Two apartment complexes acquired in 1997 by bankrupt Cornerstone- Cameron & Stonegate Inc. are about to be sold to White Eagle Properties for $16 million, Andy Meek of The Daily News reports. The apartments, Stonegate Apartments in Raleigh and Autumnwood Apartments in Southeast Memphis, have a total of 532 units and is currently valued at $14.4 million, Daily News says. According to the report, White Eagle outbid 53 other interested buyers. Blake Pera at CB Richard Ellis, which serves as broker, told Daily News that they have been marketing the apartment complexes upon the order of the U.S. Bankrutpcy Court for the Western District of Tennessee. The Bank of New York Trust Co., indenture trustee of the bonds secured by the properties, asked Judge David S. Kennedy to approve the sale, Daily News reveals. The Debtor bought the properties from the proceeds of bonds issued by the Health, Educational and Housing Facility Board of Shelby County for $22 million in the aggregate, Daily News says. Background to Bankruptcy Filing The Daily News recalls that Cornerstone-Cameron was facing a lawsuit demanding the sale of the apartments, which was put on hold by the bankruptcy proceedings. Revenues from the apartments had been declining partly because of the crime problem and gang fights within the vicinity, Daily News quotes Douglas Margerum at Equity Management Inc. as saying. About Cornerstone-Cameron Laurel, Maryland-based Cornerstone-Cameron & Stonegate Inc. is a charitable organization engaged in housing development, construction and management. The Debtor filed for chapter 11 on Aug. 20, 2007 (Bankr. W.D. Tenn. Case No. 07-27849). Judge David S. Kennedy handles the case. Steven N. Douglass, Esq., at Harris Shelton Hanover Walsh, PLLC serves as counsel to the Debtor. When the Debtor filed for bankruptcy, it listed assets and debts between $1 million and $100 million. CORPORATE EXPRESS: S&P Puts 'BB-' Credit Rating Under Pos. Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BBB+' corporate credit and all other ratings on Framingham, Massachussetts-based Staples Inc. on CreditWatch with negative implications. The CreditWatch action follows the company's announcement that it made a cash offer to acquire all the outstanding shares of Netherlands-based office products distributor Corporate Express N.V.'s ordinary stock for a per share consideration of 7.25, representing a total enterprise value of approximately 2.5 billion ($3.7 billion). "Although specific financing details have not yet been disclosed regarding a potential transaction, we believe that in the event Corporate Express shareholders ultimately accept an offer, a substantial portion of the acquisition would be debt-financed," said Standard & Poor's credit analyst Stella Kapur, "which we expect would weaken Staples' credit protection measures below levels appropriate for the current ratings." At the same time, Standard & Poor's placed its 'BB-' corporate credit rating on Corporate Express on CreditWatch with positive implications. "Corporate Express' CreditWatch placement reflects the possibility that we could raise the ratings on the company if a potential transaction materializes," said Standard & Poor's credit analyst Mark Salierno, "given the stronger credit profile of Staples." Although Staples' offer has been initially rejected by Corporate Express, we believe there is a reasonable possibility that Staples could continue to pursue this acquisition. Standard & Poor's will seek to resolve or update the CreditWatch listings within 90 days. S&P will monitor developments and meet with the Staples and Corporate Express management teams to evaluate each company's respective financial policy and the potential impact that such an acquisition would have on both companies' credit profiles. CROSSFIRE ENERGY: Lender to Ask Alberta Court to Name Receiver -------------------------------------------------------------- Crossfire Energy Services Inc. received notice from its principal lender that the company is in default with respect to its financial covenants in its credit facility. Further, the Lender has made demand for immediate payment of the remaining balance under the credit facility. The Lender has notified it will proceed with the enforcement of its security should such payment not be made. In that regard, the Lender has advised that it will make application to the Court of Queen's Bench of Alberta for the appointment of a receiver to manage the company's affairs. The company will consent to this application. The company will issue further statements regarding the status of its affairs with its principal lender and other stakeholders in due course. The company also disclosed that the directors and officers have resigned their respective positions with the company. About Crossfire Energy Services Inc. Headquartered in Calgary, Alberta, Crossfire Energy Services Inc. (CVE:CFE) -- http://www.crossfireenergy.ca/-- fka Crossfire Energy Services, is a full-service provider of fabrication, construction, installation and maintenance for oilfield facilities and pipelines. The company also fabricates piping and process equipment for oil sands projects. It has fabrication, construction and maintenance facilities in Calgary, Edmonton, Grande Prairie and Zama City. CRYOPORT INC: Posts $1.2M Net Loss in 3rd Qtr. Ended Dec. 31 ------------------------------------------------------------ CryoPort Inc. reported a net loss of $1,217,193 on net sales of $9,678 for the third quarter ended Dec. 31, 2007, compared with a net loss of $399,348 on net sales of $27,931 in the corresponding period ended Dec. 31, 2006. Gross loss for the three month period ended Dec. 31, 2007, increased to $91,761 compared to a gross loss of $17,110 for the three month period ended Dec. 31, 2006. The increase in the gross loss is mainly attributable to increased manufacturing overhead costs incurred as the company added personnel and incurred additional equipment maintenance and repair costs related to the planning and preparation for production of the CryoPort Express(R) One-Way Shipper and to the production shut-down as a result of the relocation and restructuring of the company's production operations in Lake Forest, California, initiated in mid-September 2007. Selling, general and administrative expenses increased $153,021 to $461,358 for the three month period ended Dec. 31, 2007, as compared to $308,337 for the three month period ended Dec. 31, 2006. Interest expense increased $598,591 to $652,578 for the three month period ended Dec. 31, 2007, as compared to $53,997 for the three month period ended Dec. 31, 2006. Balance Sheet At Dec. 31, 2007, the company's consolidated balance sheet showed $4,159,145 in total assets, $3,215,152 in total liabilities, and $943,993 in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?283e Going Concern KMJ Corbin & Company LLP, in Irvine, California, expressed substantial doubt about CryoPort Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended March 31, 2007, and 2006. The auditing firm reported that the company has incurred recurring losses, and has a stockholders' deficit of $2,287,832 and negative working capital of $478,396 at March 31, 2007. About CryoPort Inc. Headquartered in Lake Forest, California, CryoPort Inc. (OTC BB: CYRX.OB) -- http://www.cryoport.com/-- develops proprietary, technology-driven shipping and storage products for use in the rapidly growing global biotechnology and biopharmaceutical cold chain. The products developed by CryoPort are essential components of the infrastructure required for the testing, research and end user delivery of temperature-sensitive medicines and biomaterials in an increasingly complex logistical environment. DELPHI CORP: Hearing to Consider Bearings Biz Sale Set Today ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York will consider approval of Delphi Corp. and its debtor-affiliates' Bearings Business Sale today, Feb. 21, 2008, at 10:00 a.m., prevailing Eastern time. Stalking horse bidder ND Acquisition Corp., a wholly owned subsidiary of private equity investment firm Resilience Capital Partners LLC, has proposed to buy the Debtors' Bearings Business for $44,200,000. Lease Assumption Objections Certain parties had opposed the assumption of their executory contracts in connection with the sale of the Debtors' global wheel bearings business. Barnes Group Inc. and Freudenberg-NOK General Partnership objected to the zero cures for the assumption of their executory contracts. The parties related that they have not yet completed their review of the Assumed Contracts. Barnes also objected to the zero cures to the extent it is limited to prepetition amounts owed by the Debtors. Cure obligations are not limited to prepetition defaults, Barnes reminds the Court, citing Section 365(b) of the Bankruptcy Code. Barnes asserts that the Debtors should be required to cure, or provide adequate assurance of prompt cure, of any postpetition defaults under the Assumed Contracts. The Timken Company and Timken U.S. Corp. complained that the Debtors have not provided them with sufficient information to identify the Assumed Contracts. Timken believes that some of the contracts may be related to a long-term agreement that the Debtors have not identified for assumption or assignment. According to Freudenberg-NOK and Timken, the Debtors have not demonstrated that the proposed contract assignees are capable of performing under the Assumed Contracts. S&Z Metal Works Ltd. asserts that the Debtors should pay it at least $163,451 for the assumption of its contracts. About Delphi Corp. Headquartered in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. (Delphi Bankruptcy News, Issue No. 112; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Jan. 16, 2008, Moody's Investors Service assigned thes ratings to Delphi Corporation for the company's financing for emergence from Chapter 11 bankruptcy protection: Corporate Family Rating of (P)B2; $3.7 billion of first lien term loans, (P)Ba3; and $0.825 billion of 2nd lien term debt, (P)B3. In addition, a Speculative Grade Liquidity rating of SGL-2 representing good liquidity was assigned. The outlook is stable. As reported in the Troubled Company Reporter on Jan. 11, 2008, Standard & Poor's Ratings Services expects to assign its 'B' corporate credit rating to Delphi Corp. upon the company's emergence from Chapter 11 bankruptcy protection, which may occur by the end of the first quarter of 2008. S&P expects the outlook to be negative. In addition, Standard & Poor's expects to assign these issue-level ratings: a 'B+' issue rating (one notch above the corporate credit rating), and '2' recovery rating to the company's proposed $3.7 billion senior secured first-lien term loan; and a 'B-' issue rating (one notch below the corporate creditrating), and '5' recovery rating to the company's proposed $825 million senior secured second-lien term loan. DELPHI CORP: Wants to Strike Non-Conforming Cure Objections ----------------------------------------------------------- Delphi Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to strike, pursuant to Section 105(a) of the Bankruptcy Code and Rule 9010 of the Federal Rules of Bankruptcy Procedure: (a) returned cure amount notices that do not conform with the Cure Claim Procedures; and (b) objections that were filed for which no cure amount notices were returned. The Debtors are party to thousands of executory contracts, many of which are with the Debtors' trade suppliers. In accordance with the confirmed First Amended Joint Plan of Reorganization and the Court-approved procedures relating to the assumption of executory contracts, the Debtors embarked on a process to assume ongoing prepetition Material Supply Agreements. John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, relates that the Debtors served a total of 1,669 cure amount notices on contract counterparties stating their intent to assume, or assume and assign, the parties' contracts and to provide cure for the assumption of the contracts. The Notices gave each Counterparty, among other things, the right to elect to be paid the proposed cure amounts in cash or Plan currency, and described certain Court-approved procedures for the Counterparties to object to the assumption of their contracts or to the proposed cure amounts. The Cure Claim Procedures require the Counterparties to sign and return the original Cure Amount Notices served on them. In contravention of the specific instructions on the Cure Amount Notices, however, a number of parties-in-interest submitted nonconforming Cure Amount Notices to the Debtors. The Debtors received more than 100 nonconforming Cure Amount Notices. Certain purchasers of claims also executed and returned self-made forms designed to appear identical in form to the Court-approved notices served by the Debtors, Mr. Butler tells the Court. "In fact, certain of these self-made forms were returned by purchasers of claims even though no cure amounts were owed to the purported assignors." The Debtors, he points out, imprinted unique bar codes upon the original Cure Amount Notices to prevent the submission of self-made forms. The Debtors have also been inundated with requests to deviate from the Court-approved Cure Claim Procedures, Mr. Butler relates. He notes that in early January, the Ad Hoc Committee of Delphi Trade Claim Holders sought but failed to convince the Court to exempt them from certain provisions of the Cure Claim Procedures, including enabling their committee members to execute cure amount notices and directing the Debtors to make cure payments directly to their members instead of paying the underlying contract counterparties. Judge Drain held that the Trade Committee's request was contrary to the Cure Claim Procedures and interferes with the Debtors' relationships with their trade suppliers, which are important to the Debtors' ongoing businesses. Specifically, the Debtors wish to strike: * cure amount notices that include instructions to pay a party other than the counterparty; * cure amount notices that were executed by a third party (rather than the contract counterparty), which third party did not satisfy the requirements of Bankruptcy Rule 9010; * cure amount notices from parties who failed to return an executed original cure amount notice and instead returned a self-made form for which a related assumable contract exists or a copy of the cure amount notice; * cure amount notices from parties who failed to return an executed original cure amount notice for which no related assumable contract exists; * objections that were filed to cure by parties who failed to return the cure amount notice; and * cure amount notices that were returned after the 7:00 p.m. prevailing Eastern time deadline on Jan. 11, 2008. To the extent the Court grants the Debtors' request with respect to a specific party, the Debtors ask the Court to entitle the applicable counterparty to receive only the default cure election treatment or the Plan currency to be distributed to holders of allowed general unsecured claims in the cure amount listed in the cure amount notice. A list of the Debtors' proposed cure amounts is available for free at: http://bankrupt.com/misc/Delphi_PlanCures.pdf Cure & Assumption Objections On Jan. 29, 2008, the Debtors delivered to the Court a list of proposed cures for the assumption and assignment of certain executory contracts as provided in the confirmed First Amended Plan and the First Amended Disclosure Statement. A number of parties-in-interest complain that the proposed cures for the assumption of their contracts are understated. Several objectors assert that they have not been given adequate assurance of any proposed assignee's performance under the Assumed Contracts. A dozen objectors assert that they should be paid these cures: Debtors' Objector's Proposed Proposed Cure Objector Cure Amt. Cure Amt. ------------- --------- ---------- Ambrake Corp. $113,072 $347,716 Citation Corp., et al. 577,482 595,681 Furukawa Electric Company Ltd. 31,308 58,992 Furukawa Electric North America APD 2,664,471 2,832,655 MacArthur Corp. 18,074 38,708 Magneti Marelli Powertrain USA Inc. - 29,435 Master Automatic, Inc. - 7,613 McGill Manufacturing Company Inc. - 36,493 Metal-Matic Inc. 43,080 86,009 PBR Columbia LLC - 195,469 Quasar Industries, Inc. - 528,714 Tinnerman Palnut Engineered Products 7,229 271,401 SKF USA Inc. contends that it is entitled to payment in full and in cash of all outstanding postpetition invoices under its contracts. SKF USA also points out that certain of its contracts have expired and are, thus, no longer executory contracts that can be assumed. United Plastics Group De Mexico, S. De R.L. De C.V., relates that its books and records do not show a contract with the account number ascribed by the Debtors. Accordingly, UPG Mexico has no way of determining whether or not the Debtors' proposed zero cure amount for the alleged UPG Contract is correct. UPG Mexico asserts that it is owed no less than $136,482 under its agreements with Delphi Automotive Systems LLC. Barnes Group Inc., Daewoo International Corp., DGC-Plastic Molding Inc., Freudenber-NOK General Partnership, and Hayes Lemmerz International, Inc., relate that they have not yet completed their review of the Assumed Contracts. Barnes objects to the proposed cures for its contracts to the extent the Debtors' cure obligations are limited to prepetition amounts. Furukawa relates that the Debtors have not provided it with sufficient information to identify two of the Assumed Contracts, thus, it is unable to verify whether the proposed cures are correct. AT&T Corp. and XM Satellite Radio Inc. note that the First Amended Plan provides for the assumption of all contracts not specifically rejected by the Debtors. The Debtors have not rejected, or proposed to reject, the parties' executory contracts. AT&T and XM Satellite assert that the Debtors must cure all defaults under their contracts before those contracts may be assumed and assigned. According to AT&T, the Debtors owe it $8,255,577 under the parties' contracts. XM Satellite asserts that $1,017,448 is outstanding under its contracts with the Debtors. About Delphi Corp. Headquartered in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. (Delphi Bankruptcy News, Issue 112; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Jan. 16, 2008, Moody's Investors Service assigned ratings to Delphi Corporation for the company's financing for emergence from Chapter 11 bankruptcy protection: Corporate Family Rating of (P)B2; $3.7 billion of first lien term loans, (P)Ba3; and $0.825 billion of 2nd lien term debt, (P)B3. In addition, a Speculative Grade Liquidity rating of SGL-2 representing good liquidity was assigned. The outlook is stable. As reported in the Troubled Company Reporter on Jan. 11, 2008, Standard & Poor's Ratings Services expects to assign its 'B' corporate credit rating to Troy, Michigan-based automotive supplier Delphi Corp. upon the company's emergence from Chapter 11 bankruptcy protection, which may occur by the end of the first quarter of 2008. S&P expects the outlook to be negative. In addition, Standard & Poor's expects to assign these issue-level ratings: a 'B+' issue rating (one notch above the corporate credit rating), and '2' recovery rating to the company's proposed $3.7 billion senior secured first-lien term loan; and a 'B-' issue rating (one notch below the corporate creditrating), and '5' recovery rating to the company's proposed $825 million senior secured second-lien term loan. DELPHI CORP: Cuts CEO Rodney O'Neal's Emergence Incentive to $1MM ----------------------------------------------------------------- As disclosed in a 10-K filing with the U.S. Securities and Exchange Commission, Delphi Corp. and its debtor-affiliates slashed the bonus payable to CEO Rodney O'Neal upon the company's emergence from bankruptcy protection, from $5.3 million to $1 million. Aside from receiving an emergence cash award value of $1,011,621, Mr. O'Neal will obtain an emergence equity award valued at $10,500,000. As reported in the Troubled Company Reporter on Jan. 24, 2008, the Honorable Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York said he will approve the Debtors' First Amended Joint Plan of Reorganization on the condition that the total payout of cash bonuses to top executives is reduced. "I am prepared to enter the confirmation order, provided the management compensation plan is changed," Judge Drain said at a confirmation hearing. The Court wanted the bonus for Delphi's officers reduced to $16.5 million in the aggregate from the $87.9 million that Delphi had proposed to award to 500 managers upon emergence. But the United Auto Workers and the International Union of Electronic Workers- Communications Workers of America objected to the payments, citing, among other things, that while unionized Delphi employees suffered pay-cuts, the managers, who are already adequately compensated, are given generous bonuses. The management compensation plan sought to grant an $8.3 million "performance payment" to Executive Chairman Robert Miller; and a $5.3 million cash emergence payment to Mr. O'Neal. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. * * * As reported in the Troubled Company Reporter on Jan. 16, 2008, Moody's Investors Service assigned ratings to Delphi Corporation for the company's financing for emergence from Chapter 11 bankruptcy protection: Corporate Family Rating of (P)B2; $3.7 billion of first lien term loans, (P)Ba3; and $0.825 billion of 2nd lien term debt, (P)B3. In addition, a Speculative Grade Liquidity rating of SGL-2 representing good liquidity was assigned. The outlook is stable. As reported in the Troubled Company Reporter on Jan. 11, 2008, Standard & Poor's Ratings Services expects to assign its 'B' corporate credit rating to Troy, Michigan-based automotive supplier Delphi Corp. upon the company's emergence from Chapter 11 bankruptcy protection, which may occur by the end of the first quarter of 2008. S&P expects the outlook to be negative. In addition, Standard & Poor's expects to assign these issue-level ratings: a 'B+' issue rating (one notch above the corporate credit rating), and '2' recovery rating to the company's proposed $3.7 billion senior secured first-lien term loan; and a 'B-' issue rating (one notch below the corporate creditrating), and '5' recovery rating to the company's proposed $825 million senior secured second-lien term loan. DURA AUTOMOTIVE: Backstop Rights Deal with Pacificor LLC Expires ---------------------------------------------------------------- DURA Automotive Systems, Inc., disclosed in a regulatory filing with the U.S. Securities and Exchange Commission, that its Backstop Purchase Agreement with Pacificor, LLC, was terminated as of Jan. 31, 2008. As a result of the termination, Pacificor has no further obligations under the agreement with respect to its backstop commitment, C. Timothy Trenary, DURA's vice president and chief financial officer, said. As reported in the Troubled Company Reporter on Jan. 7, 2008, Pacificor, under the Backstop Agreement, committed to purchase up to $160,000,000 in reorganized DURA by buying shares of new common stock that were not purchased in an equity rights offering. The Pacificor commitment, which expired Jan. 31, 2008, was contingent upon DURA obtaining the exit financing prior to that date. Rochester Hills, Mich.-based DURA Automotive Systems Inc. (Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. The company is also a supplier of similar products to the recreation vehicle and specialty vehicle industries. DURA sells its automotive products to North American, Japanese and European original equipment manufacturers and other automotive suppliers. The company has three locations in Asia -- China, Japan and Korea. It has locations in Europe and Latin-America, particularly in Mexico, Germany and the United Kingdom. The Debtors filed for chapter 11 petition on Oct. 30, 2006 (Bankr. D. Del. Case No. 06-11202). Richard M. Cieri, Esq., Marc Kieselstein, Esq., Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., of Kirkland & Ellis LLP are lead counsel for the Debtors' bankruptcy proceedings. Mark D. Collins, Esq., Daniel J. DeFranseschi, Esq., and Jason M. Madron, Esq., of Richards Layton & Finger, P.A. Attorneys are the Debtors' co-counsel. Baker & McKenzie acts as the Debtors' special counsel. Togut, Segal & Segal LLP is the Debtors' conflicts counsel. Miller Buckfire & Co., LLC is the Debtors' investment banker. Glass & Associates Inc., gives financial advice to the Debtor. Kurtzman Carson Consultants LLC handles the notice, claims and balloting for the Debtors and Brunswick Group LLC acts as their Corporate Communications Consultants for the Debtors. As of July 2, 2006, the Debtor had $1,993,178,000 in total assets and $1,730,758,000 in total liabilities. The Debtors have asked the Court to extend their plan filing period to April 30, 2008. (Dura Automotive Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DURA AUTOMOTIVE: Wants Court to Approve Amended 2008 KMIP --------------------------------------------------------- DURA Automotive Systems Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to approve their 2008 Key Management Incentive Plan, as amended. The Debtors reserve their right to seek approval of an incentive plan for their senior managers. Debtors Amend 2008 KMIP The Debtors have amended their 2008 KMIP to better focus on the non-senior management KMIP participants with respect to two aspects: (1) The Debtors are not going forward with the proposed 2008 KMIP payments to their chief executive officer, chief financial officer, chief operating officer, and vice president of human resources; and (2) The Debtors intend to make all payments to approximately 104 non-Debtor employee participants in the 2008 KMIP from the Debtors' European non-debtor affiliates. The Amended 2008 KMIP maintains a two three-month performance measurement and pay-out periods, ending on March 31 and June 30, 2008: * Threshold pay-out: If the Debtors achieve 90% of adjusted EBITDA goals, participants will receive 50% of their individual target bonus opportunities; * Target opportunity pay-out: If the Debtors achieve 100% of adjusted EBITDA goals, participants will receive 100% of their individual target bonus opportunities. * Maximum pay-out: If the Debtors achieve 120% of adjusted EBITDA goals, participants will receive 150% of their individual target bonus opportunities. Participant's individual target bonus opportunities range from 5% to 45% of each participant's base salary at the Target Opportunity Payout. The Debtors have previously proposed a target bonus opportunities range range of 5% to 80%. Distribution of participant to target opportunity percentages: Target Opportunity Number of 2008 KMIP (% of base salary) Participants ------------------ ------------------- 45% 7 30% 16 25% 20 20% 26 15% 1 12% 40 The Debtors estimate to pay approximately $2,500,000 at the Target Opportunity Payout, compared to their previous estimate of $6,000,000. Marc Kieselstein, P.C., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, relates the Official Committee of Unsecured Creditors and the Debtors are in discussions regarding the merits of the 2008 KMIP. As of Feb. 4, 2008, Mr. Kieseltein says, there has been no appreciable progress in resolving the differences between the Debtors and the Creditors Committee. Rochester Hills, Mich.-based DURA Automotive Systems Inc. (Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. The company is also a supplier of similar products to the recreation vehicle and specialty vehicle industries. DURA sells its automotive products to North American, Japanese and European original equipment manufacturers and other automotive suppliers. The company has three locations in Asia -- China, Japan and Korea. It has locations in Europe and Latin-America, particularly in Mexico, Germany and the United Kingdom. The Debtors filed for chapter 11 petition on Oct. 30, 2006 (Bankr. D. Del. Case No. 06-11202). Richard M. Cieri, Esq., Marc Kieselstein, Esq., Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., of Kirkland & Ellis LLP are lead counsel for the Debtors' bankruptcy proceedings. Mark D. Collins, Esq., Daniel J. DeFranseschi, Esq., and Jason M. Madron, Esq., of Richards Layton & Finger, P.A. Attorneys are the Debtors' co-counsel. Baker & McKenzie acts as the Debtors' special counsel. Togut, Segal & Segal LLP is the Debtors' conflicts counsel. Miller Buckfire & Co., LLC is the Debtors' investment banker. Glass & Associates Inc., gives financial advice to the Debtor. Kurtzman Carson Consultants LLC handles the notice, claims and balloting for the Debtors and Brunswick Group LLC acts as their Corporate Communications Consultants for the Debtors. As of July 2, 2006, the Debtor had $1,993,178,000 in total assets and $1,730,758,000 in total liabilities. The Debtors have asked the Court to extend their plan filing period to April 30, 2008. (Dura Automotive Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). ELITE PHARMA: Posts $2.8M Net Loss in 3rd Qtr. Ended Dec. 31 ------------------------------------------------------------ Elite Pharmaceuticals Inc. reported a net loss of $2,858,103 for the third quarter ended Dec. 31, 2007, compared with a net loss of $3,564,971 in the corresponding period ended Dec. 31, 2006. Revenues for the three months ended Dec. 31, 2007, were $176,171, a decrease of $55,263 or approximately 23.9%, from revenues of $231,434 for the comparable period of the prior year, and consisted of $116,366 in manufacturing fees and $59,805 in royalty fees. Revenues for the three months ended Dec. 31, 2006, consisted of $209,139 in manufacturing fees and $22,295 in royalty fees. Manufacturing fees declined by 44.0% due to fluctuations in the number of batches shipped each quarter because of seasonality of sales and inventory adjustments. Other expenses decreased $945,105, or approximately 64.0%, to $530,685 for the three months ended Dec. 31, 2007, primarily due to a decrease of $1,299,743 in charges related to the issuances of stock options and warrants. Cash and cash equivalents at Dec. 31, 2007, were $5.9 million, an increase of $2.3 million from the $3.6 million at Dec. 31, 2006. Balance Sheet At Dec. 31, 2007, the company's consolidated balance sheet showed $16,248,069 in total assets, $4,750,012 in total liabilities, and $11,498,057 in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?2834 Going Concern Doubt As of Dec. 31, 2007, Elite Pharmaceuticals Inc. had approximately six months of cash available based on current operations. The company is considering a number of different financing alternatives including seeking additional capital through private financing or collaborative agreements. If adequate funds are not available to the company when needed, it will have to curtail significantly or delay or eliminate one or more product development programs. These matters raise substantial doubt over the company's ability to continue as a going concern. About Elite Pharmaceuticals Headquartered in Northvale, New Jersey,Elite Pharmaceuticals Inc. (AMEX: ELI) -- http://www.elitepharma.com/-- is a specialty pharmaceutical company principally engaged in the development and manufacture of oral, controlled release products. The company has two products, Lodrane 24(R) and Lodrane 24D(R), currently being sold commercially, and a pipeline of seven drug candidates under development in the therapeutic areas that include pain management, allergy and infection. ESSENTIAL INNOVATION: Peterson Sullivan Raises Going Concern Doubt ------------------------------------------------------------------ Seattle-based Peterson Sullivan PLLC expressed substantial doubt about the ability of Essential Innovations Technology Corp. to continue as a going concern after it audited the company's financial statements for the year ended Oct. 31, 2007. The auditing firm reported that the company has experienced recurring losses from operations and has a substantial accumulated deficit. The company posted a net loss of $4,106,771 on total revenues of $2,754,372 for the year ended Oct. 31, 2007, as compared with a net loss of $7,689,324 on total revenues of $2,335,302 in the prior year. At Oct. 31, 2007, the company's balance sheet showed $1,250,260 in total assets and $3,671,093 in total liabilities, resulting in $2,420,833 stockholders' deficit. The company's consolidated balance sheet at Oct. 31, 2007, also showed strained liquidity with $636,826 in total current assets available to pay $3,671,093 in total current liabilities. A full-text copy of the company's 2007 annual report is available for free at: http://ResearchArchives.com/t/s?2826 About Essential Innovations Bellingham, Washington-based Essential Innovations Technology Corp. (OTCBB: ESIV) -- http://www.eitechcorp.com/-- through its wholly owned subsidiaries Essential Innovations Corp. and Earth Source Energy Inc., provides geothermal heat exchange, or geo- exchange, solutions for residential, commercial, and institutional applications as both a geo-exchange energy service company, or ESCO, and as a manufacturer of proprietary geothermal heat pump technology. EUROFRESH INC: Moody's Rating Unmoved by Deal to Refinance Debt --------------------------------------------------------------- Moody's Investors Service stated that the requirement that Eurofresh, Inc. have a signed commitment by March 31, 2008 to refinance obligations under its existing bank credit agreement has not at this point had any impact on the company's ratings, including its Caa3 corporate family rating. The rating outlook remains negative. On January 31, 2008, Eurofresh made the interest payment due January 15 on its 11 & half;% 2013 Senior Notes, within the applicable 30-day grace period. The payment followed the Jan. 29, 2008 execution of a Forbearance and Modification Agreement with the company's bank lenders. This Forbearance Agreement provided that the bank lenders would forbear from exercising their rights and remedies with respect to all existing defaults. The Forbearance Agreement, among other things, also changed the maturity date of the bank credit agreement to July 31, 2008, and requires that Eurofresh obtain a signed commitment letter from third party sources to refinance outstanding obligations due to existing bank lenders by March 31, 2008. (As of January 14, 2008, the company was indebted under its existing bank facilities for revolving credit loans and letters of credit of approximately $35.88 million and term loans of about $19.25 million.) Furthermore, on March 15, 2008, Eurofresh must reduce outstanding balances under the existing revolving credit agreement by $10 million, at which time the existing $40 million revolving credit commitment will be permanently reduced to $30 million. On and after March 15, 2008, existing revolving credit lenders have no obligation to make any advances unless there is availability under a borrowing base. In the Dec. 20, 2007 downgrade of Eurofresh's ratings, Moody's noted that a bank covenant had already been violated and anticipated another bank covenant violation at year end. Moody's expressed concern about Eurofresh's need to obtain an amendment and waiver from its banks, and the increased possibility that the company could have difficulty meeting its debt service requirements as scheduled. Moody's will monitor closely the company's progress in making the $10 million debt payment on March 15, in obtaining a signed commitment by March 31 to refinance its bank obligations and in executing new bank agreements by July 31st. Based in Wilcox, Arizona, Eurofresh, Inc., is a leading producer of greenhouse-grown tomatoes. Sales for the twelve months ended Sept. 30, 2007 were approximately $169 million. F.C.D.C. COAL: Involuntary Chapter 11 Case Summary -------------------------------------------------- Alleged Debtor: F.C.D.C. Coal, Inc. Attention: Black Diamond Resources, Inc. 3591 Paris Pike Lexington, KY 40511 Case Number: 08-50368 Debtor-affiliates that were filed separate involuntary Chapter 11 petitions: Entity Case No. ------ -------- Martin Coal Processing Corp. 08-50369 Spurlock Energy Corp. 08-50370 Turner Elkhorn Mining Co. 08-50371 Wolverine Resources, Inc. 08-50372 Black Diamond Mining Co., L.L.C. 08-70066 Black Diamond Land Co., L.L.C. 08-70067 Involuntary Petition Date: February 19, 2008 Court: Eastern District of Kentucky (Lexington) Petitioner's Counsel: Robert J. Brown, Esq. (lexbankruptcy@wyattfirm.com) Wyatt, Tarrant & Combs, L.L.P. 250 West Main Street, Suite 1600 Lexington, KY 40507-1746 Tel: (859) 233-2012 http://www.wyattfirm.com/ Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ C.I.T. Capital U.S.A., Inc. loan $125,802,807 505 Fifth Avenue New York, NY 10017 The Prudential Insurance Co. secured portion $29,775,000 of America of loan, including Two Prudential Plaza principal, interest 180 North Stetson, Suite 5600 and fees Chicago, IL 60601-6716 The C.I.T Group/Commercial secured loan $2,500,000 Services, Inc. 301 South Tryon Street Charlotte, NC 28202 FIRST MAGNUS: Seeks Court's Approval of Settlement Pact with UBS ---------------------------------------------------------------- First Magnus Financial Corporation asks the Hon. James Marlar of the U.S. Bankruptcy Court for the District of Arizona to approve a settlement agreement with UBS Real Estate Securities, Inc. The parties have agreed that by entering into the stipulation, UBS will vote for and will not object to the Debtor's Chapter 11 Plan of Liquidation. The stipulation reached on Feb. 6, 2008, specifically provides that: (1) UBS will assign to the Debtor its rights to $1,061,181 in funds that the Debtor collected in escrow as interim servicer of the mortgage loans, for the payment of taxes and insurance premiums with respect to the real properties securing the loans; (2) UBS will retain all cash and cash equivalents in its possession or in the possession of its affiliates that had business dealings with the Debtor, including all cash in the account UBS maintained pursuant to the two agreements; (3) UBS will relinquish any other claims against the Debtor; (4) the Debtor will relinquish any right, title, and interest in the cash to be retained by UBS, as well as other claims against UBS or its affiliates that had business dealings with the Debtor, and will provide a complete release as to UBS and its concerned affiliates; (5) the Settlement Agreement will be incorporated into the Plan; and (6) UBS will pay $150,000 to the Debtor, which payment is not subject to any right of appeal. The dispute between the parties ensued after the Debtor allegedly breached their agreements reached on June 1, 2006, under which the Debtor sold mortgage loans to UBS. As a result of the alleged breach of contracts, UBS incurred significant net loss. UBS alleged that as of Aug. 20, 2007, the Debtor is holding $1,061,181 in fund, which it did not turn over to UBS as required under their agreements. UBS Wants to Vote on Plan As reported in the Troubled Company Reporter on Jan. 31, 2008, UBS Real Estate Securities Inc., asked the Court to virtually allow its claim for voting purposes with respect to First Magnus' Chapter 11 Plan of Liquidation. "[UBS] intends to vote its claim based upon the $20,000,000 estimate contained in its proof of claim," said Kasey C. Nye, Esq., at Quarles & Brady LLP, in Tucson, Arizona. He added that UBS wants to ensure that its vote is counted and given appropriate weight under Section 1126 of the Bankruptcy Code although the Debtor has not objected to its claim. According to Mr. Nye, the claim is unliquidated since it is based on breaches by the Debtor of its obligations to UBS. About First Magnus Based in Tucson, Arizona, First Magnus Financial Corporation -- http://www.firstmagnus.com/-- purchases and sells prime and Alt-A mortgage loans secured by one-to-four unit residences. The company filed for chapter 11 protection on Aug. 21, 2007 (Bankr. D. Ariz. Case No.: 07-01578). John R. Clemency, Esq., at Greenberg Traurig LLP serves as the counsel for the Debtor. The Official Committee of Unsecured Creditors has selected the firm Warner Stevens LLP as its counsel. When the Debtor filed for bankruptcy, it listed total assets of $942,109,860 and total debts of $812,533,046. The Debtor's exclusive period to file a plan expired on Dec. 19, 2007. The confirmation hearing on the Debtor's liquidation plan commenced on Feb. 7, 2008. (First Magnus Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service Inc. http://bankrupt.com/newsstand/or 215/945-7000). FIRST MAGNUS: Court Grants Allegra's Request for Deposition ----------------------------------------------------------- Upon the request of Allegra Print & Imaging, U.S. Bankruptcy Court for the District of Arizona compelled First Magnus Financial Corporation to appear for deposition under oath upon reasonable notice, pursuant to Rule 2004(d) of the Federal Rules of Bankruptcy Procedure. Allegra says that the Debtor will be examined with respect to its acts, conduct, property, liabilities and financial condition, or to any matter that may affect the administration of its estate and its right to a discharge. In connection with the deposition, Allegra will ask the Debtor to produce these documents to Scott D. Gibson, Esq., at Gibson, Nakamura & Green PLLC, no later than 10 days after service of the notice of the examination: (i) payment, correspondence and employment records of Tyler Ford with regards to work it provided to the Debtor and Long Realty; (ii) advertising, marketing and copying records of a "Step By Step Guide to Buying a Home" for the Debtor and Long Realty; (iii) records of Tyler Ford's copyright with regards the "Step By Step Guide To Buying a Home". Allegra says that the examination would not be necessary if the Debtor produces the documents before the date of the examination. Rule 2004 examination will be conducted at the law offices of Gibson Nakamura at 2941 N. Swan Road, Suite 101, in Tucson, Arizona, or as agreed upon by the parties. In December, Allegra asked the Court to compel First Magnus to pay $166,755 as administrative expenses. The claim asserted is for the value of goods delivered and sold to the Debtor in its ordinary course of business within 20 days before the Petition Date, according to Allegra. Allegra said payments on the claim have been credited and deducted, and that the claim is neither held by security interest nor subject to any set-off or counterclaim. First Magnus have asked the Court to deny the administrative claims, saying that Allegra failed to prove that the Debtor received the goods within 20 days before the bankruptcy filing. The Debtor points out that Allegra provided the company with invoices that purport to evidence the purchase of goods but it did not provide proof of delivery or receipt confirming that the Debtor actually received the goods within 20 days preceding the bankruptcy filing. The Official Committee of Unsecured Creditors supports the Debtor's arguments. About First Magnus Based in Tucson, Arizona, First Magnus Financial Corporation -- http://www.firstmagnus.com/-- purchases and sells prime and Alt-A mortgage loans secured by one-to-four unit residences. The company filed for chapter 11 protection on Aug. 21, 2007 (Bankr. D. Ariz. Case No.: 07-01578). John R. Clemency, Esq., at Greenberg Traurig LLP serves as the counsel for the Debtor. The Official Committee of Unsecured Creditors has selected the firm Warner Stevens LLP as its counsel. When the Debtor filed for bankruptcy, it listed total assets of $942,109,860 and total debts of $812,533,046. The Debtor's exclusive period to file a plan expired on Dec. 19, 2007. The confirmation hearing on the Debtor's liquidation plan commenced on Feb. 7, 2008. (First Magnus Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service Inc. http://bankrupt.com/newsstand/or 215/945-7000). FIRST MAGNUS: Court Orders WNS' Subpoena for Arizona Bank Quashed ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Arizona granted The National Bank of Arizona's request to quash the subpoena served by WNS North America Inc., and issue a protective order denying discovery from the bank. As reported in the Troubled Company Reporter on Feb. 13, 2008, National Bank of Arizona told the Court that WNS failed to explain the relevance of the information WNS requested. "WNS failed to describe the relationship of the interrogatories to plan confirmation or the administration of the bankruptcy case. In addition, the discovery seeks privileged information which is not subject to discovery," said Sally M. Darcy, Esq., at McEvoy, Daniels & Darcy PC, in Tucson, Arizona. According to Ms. Darcy, the National Bank of Arizona could easily and readily obtained from the Debtor and its officers and directors most of the information requested by WNS, pointing out that Debtor knows who it did business with the National Bank of Arizona, and its officers can testify about who they know at the bank. "In fact, this was the bank's suggestion to WNS before it commenced taking the depositions of the Debtor's officers and the proposed Litigation and Liquidation Trustees," Ms. Darcy pointed out. She added WNS has failed to identify specific officers of the bank or a time frame for any personal, social or business relationships, or the relevance of these relationships to date. About First Magnus Based in Tucson, Arizona, First Magnus Financial Corporation -- http://www.firstmagnus.com/-- purchases and sells prime and Alt-A mortgage loans secured by one-to-four unit residences. The company filed for chapter 11 protection on Aug. 21, 2007 (Bankr. D. Ariz. Case No.: 07-01578). John R. Clemency, Esq., at Greenberg Traurig LLP serves as the counsel for the Debtor. The Official Committee of Unsecured Creditors has selected the firm Warner Stevens LLP as its counsel. When the Debtor filed for bankruptcy, it listed total assets of $942,109,860 and total debts of $812,533,046. The Debtor's exclusive period to file a plan expired on Dec. 19, 2007. The confirmation hearing on the Debtor's liquidation plan commenced on Feb. 7, 2008. (First Magnus Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service Inc. http://bankrupt.com/newsstand/or 215/945-7000). FIRST NLC: Court Appoints Berger Singerman as Counsel ----------------------------------------------------- The United States Bankruptcy Court for the Southern District of Florida approved the request of First N.L.C. Financial Services, L.L.C., N.L.C., Inc. and First N.L.C., Inc. to employ Berger Singerman, P.A. as their general counsel, on an interim basis. Berger Singerman will: a. advise the Debtors with respect to their powers and duties as debtors-in-possession and the continued management of their business operations; b. give advice with respect to their responsibilities in complying with the U.S. Trustee's Operating Guidelines and Reporting Requirements and with the rules of the court; c. prepare motions, pleadings, orders, applications, adversary proceedings, and other legal documents necessary in the administration of these cases; d. protect the interests of the Debtors in all matters pending before the court; and e. represent the Debtors in negotiations with their creditors and in the preparation of a plan. Paul Steven Singerman, Esq. and Arthur J. Spector, Esq., both shareholders at Berger Singerman, will be principally responsible for the representation of the Debtors. Mr. Singerman will bill at $510 an hour and Mr. Spector will bill at $480 an hour. Berger Singerman's standard hourly rates are: Designation Rates ----------- ----- Attorney $220-$510 Associate Attorney $250-$370 Legal Assistant $75-$170 Paralegal $75-$170 The Debtors believe that the employment of Berger Singerman is necessary and in the best interest of the Debtors' estates. The firm can be reached at: Arthur J. Spector, Esq. (aspector@bergersingerman.com) Berger Singerman, P.A. 350 East Las Olas Boulevard, Suite 1000 Fort Lauderdale, FL 33301 Tel: (954) 525-9900 Fax: (954) 523-2872 http://www.bergersingerman.com/ About First N.L.C. Financial Services, L.L.C. Based in Boca Raton, Florida, First N.L.C. Financial Services, L.L.C. -- http://www.firstnlc.com/-- originated, underwrote, and funded primarily non-prime residential mortgage loans to borrowers who don't quite meet underwriting standards. It originated some 70% of its loans through a wholesale channel of some 5,300 independent brokers in nearly 40 states. Its remaining loans were originated through a retail channel of more than 40 branch offices in 17 states. Its correspondent division bought and serviced nonprime loans. Most of its borrowers used their loans for home purchases, while some, some used theirs to consolidate debt or to refinance existing loans. The Company and two of its affiliates filed for Chapter 11 protection on Jan. 18, 2008 (Bankr. S.D. Fla. Lead Case No. 08- 10632). Arthur J. Spector, Esq., at Berger Singerman, P.A., represented the debtors in their restructuring efforts. When they filed for protection from their creditors, the debtors listed estimated assets of $10 Million to $50 Million and estimated debts of $10 Million to $50 Million. FORTUNOFF: El-Kam Realty and Century Road Demand Lease Payments --------------------------------------------------------------- Lessors El-Kam Realty Co. and Century Road Plaza LLC ask the Hon. James M. Peck of the U.S. Bankruptcy Court for the Southern District of New York to direct Fortunoff Fine Jewelry and Silverware LLC and its debtor-affiliates to pay its lease pursuant to separate lease agreements they signed with the Debtors. El-Kam Realty Lease The Debtors, as lessee, and El-Kam Realty Co., as lessor, entered into three lease agreements for nonresidential property, effective as of July 1, 2007. Pursuant to the Leases, the Debtors occupy floors 1, 2, and 11 of a building located at 3 West 57th Street, New York. The terms of the Leases were supposed to end on June 30, 2008, but the Debtors extended it to Jan. 31, 2009. The Leases' aggregate monthly rent for February 2008 is $474,863. David J. Mark, Esq., at Kasowitz Benson Torres & Friedman LLP, in New York, relates that although the Debtors have continuously occupied the Leased Premises, they have failed to pay rent to El- Kam since the bankruptcy filing. By this motion, El-Kam asks the Court to direct the Debtors to immediately pay the Landlord $442,114 -- for amounts accrued under the Leases since the bankruptcy filing -- and pay all future monthly rent in a timely manner. Mr. Mark asserts that the Debtors' failure to pay the full rent since the bankruptcy filing violates Sections 365(d)(3) and 503(1(A) of the Bankruptcy Code. "The Debtors cannot dispute that they are obligated to timely pay El-Kam the total Rent for the month of March, and all subsequent months until the lease is either assumed or rejected," Mr. Mark tells Judge Peck. Century Road Plaza Lease Prior to the bankruptcy filing, the Debtors, as lessee, and Century Road Plaza, LLC, as lessor, were parties to a nonresidential real property lease, pursuant to which, the Debtors occupy a building located at 150 N. State Route 17, Paramus, New Jersey 07652. Rick A. Steinberg, Esq., at Nowell Amoroso Klein Bierman P.A., in Hackensack, New Jersey, informs the Court that the term of the Lease runs to 2013, and the annual rent is for $1,740,000. Under the terms of the Lease, Mr. Steinberg notes, the Debtors are responsible for payment of real property taxes, inter alia. Mr. Steinberg tells the Court that although the Debtors have continuously occupied the Leased Premises since the Petition Date, the Debtors have failed to pay rent. Accordingly, Century Road Plaza asks the Court to compel the Debtors to: -- immediately pay all outstanding postpetition rent and related charges pursuant to the Lease; -- pay subsequent monthly rental in a timely manner; and -- immediately pay all real estate property taxes, and any other taxes due and outstanding for the postpetition period. About Fortunoff New York-based Fortunoff Fine Jewelry and Silverware LLC -- http://www.fortunoff.com/-- is a family owned business since 1922 founded by by Max and Clara Fortunoff. Fortunoff offers customers fine jewelry and watches, antique jewelry and silver, everything for the table, fine gifts, home furnishings including bedroom and bath, fireplace furnishings, housewares, and seasonal shops including outdoor furniture shop in summer and enchanting Christmas Store in the winter. It opened some 20 satellite stores in the New Jersey, Long Island, Connecticut and Pennsylvania markets featuring outdoor furniture and grills during the Spring/Summer season and indoor furniture (and in some locations Christmas trees and decor) in the Fall/Winter season. Fortunoff and two affiliates, M. Fortunoff of Westbury LLC and Source Financing Corp., filed for chapter 11 petition on Feb. 4, 2008 (Bankr. S.D.N.Y. Case Nos. 08-10353 through 08-10355) in order to effectuate a sale to NRDC Equity Partners LLC, -- http://www.nrdcequity.com/-- a private equity firm that owns of Lord & Taylor from Federated Department Stores. Sally M. Henry, Esq., and Shana Elberg, Esq., at Skadden, Arps, Slate, Meagher & Flom represents the Debtors in their restructuring efforts. Logan & Company, Inc., serves as the Debtors' claims, noticing, and balloting agent. FTI Consulting Inc. are the Debtors' proposed crisis manager. An Official Committee of Unsecured Creditors has been appointed in this case. When the Debtors filed for bankruptcy, they listed assets and debts between $100 million to $500 million. The Debtors' exclusive period to file a plan of reorganization ends on June 3, 2008. (Fortunoff Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FORTUNOFF: May Pay Up to $3 Million Prepetition Delivery Charges ---------------------------------------------------------------- The Hon. James M. Peck of the U.S. Bankruptcy Court for the Southern District of New York gave Fortunoff Fine Jewelry and Silverware LLC and its debtor-affiliates, authority, on a final basis, to pay prepetition shipping, warehousing, delivery charges, and related possessory liens, which are necessary to obtain the release of goods in the possession of shippers and warehousemen. The Court, however, limited payments of the Prepetition Delivery Charges to $3,000,000, in the aggregate. Judge Peck also authorized and directed all applicable banks and other financial institutions to receive, process, honor and pay any and all checks evidencing amounts paid by the Debtors to Shippers and Warehousemen, whether presented prior to or after Feb. 4, 2008. About Fortunoff New York-based Fortunoff Fine Jewelry and Silverware LLC -- http://www.fortunoff.com/-- is a family owned business since 1922 founded by by Max and Clara Fortunoff. Fortunoff offers customers fine jewelry and watches, antique jewelry and silver, everything for the table, fine gifts, home furnishings including bedroom and bath, fireplace furnishings, housewares, and seasonal shops including outdoor furniture shop in summer and enchanting Christmas Store in the winter. It opened some 20 satellite stores in the New Jersey, Long Island, Connecticut and Pennsylvania markets featuring outdoor furniture and grills during the Spring/Summer season and indoor furniture (and in some locations Christmas trees and decor) in the Fall/Winter season. Fortunoff and two affiliates, M. Fortunoff of Westbury LLC and Source Financing Corp., filed for chapter 11 petition on Feb. 4, 2008 (Bankr. S.D.N.Y. Case Nos. 08-10353 through 08-10355) in order to effectuate a sale to NRDC Equity Partners LLC, -- http://www.nrdcequity.com/-- a private equity firm that owns of Lord & Taylor from Federated Department Stores. Sally M. Henry, Esq., and Shana Elberg, Esq., at Skadden, Arps, Slate, Meagher & Flom represents the Debtors in their restructuring efforts. Logan & Company, Inc., serves as the Debtors' claims, noticing, and balloting agent. FTI Consulting Inc. are the Debtors' proposed crisis manager. An Official Committee of Unsecured Creditors has been appointed in this case. When the Debtors filed for bankruptcy, they listed assets and debts between $100 million to $500 million. The Debtors' exclusive period to file a plan of reorganization ends on June 3, 2008. (Fortunoff Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FREEPORT-MCMORAN: Moody's Lifts Ratings on Strong Earnings ---------------------------------------------------------- Moody's Investors Service upgraded Freeport's corporate family rating to Ba1 from Ba2 and undertook these related rating actions: (i) upgraded to Baa1 (LGD1, 4%) from Baa2 the senior secured rating on Freeport's $500 'million secured revolver; (ii) upgraded to Baa1 (LGD1, 9%) from Baa3 the senior secured ratings on Freeport's $1 billion secured revolver and Freeport's 6.875% senior secured notes; and (iii) upgraded to Ba2 (LGD5, 74%) from Ba3 Freeport's $6.0 billion of senior unsecured notes. Moody's also upgraded to Baa2 (LGD2, 16%) from Ba1 the ratings on Phelps Dodge's notes. The ratings outlook for Freeport and Phelps is stable. The upgrade reflects Freeport's very strong earnings and cash flow in the current elevated metals price environment, and significant debt reduction ($1.5 billion) in the fourth quarter of 2007. The stable ratings outlook reflects the favorable fundamentals of the copper market, as well as Freeport's long-life reserve base and relatively low cost profile. Rating upgraded are: * Issuer: Freeport-McMoRan Copper & Gold Inc. -- Corporate Family Rating: Ba1 -- Probability of Default Rating: Ba1 -- $0.5 billion Senior Secured Revolving Credit facility, Baa1, LGD1, 4% -- $1.0 billion Senior Secured Revolving Credit Facility, Baa1, LGD1, 9% -- $340.3 million 6.875% Senior Secured Notes due 2014, Baa1, LGD1, 9% -- $6 billion Senior Unsecured Notes: Ba2, LGD5, 74% * Issuer: Phelps Dodge Corporation -- $107.9 million 8.75% Senior Notes due 2011, Baa2, LGD2, 16% -- $115 million 7.125% Senior Notes due 2027, Baa2, LGD2, 16% -- $150 million 6.125% Senior Notes due 2034, Baa2, LGD2, 16% -- $193.8 million 9.50% Senior Notes due 2031, Baa2, LGD2, 16% Outlook Actions: * Issuer: Freeport-McMoRan Copper & Gold Inc. -- Outlook: Changed To Stable From Positive * Issuer: Phelps Dodge Corporation -- Outlook: Changed To Stable From Positive Moody's last rating action on Freeport was to assign a positive rating outlook in September 2007. Freeport-McMoRan Copper & Gold Inc. is a Phoenix based producer of copper, gold and molybdenum and had revenue in 2007 of $16.9 billion. FRONTLINE CAPITAL: Wants Plan Filing Deadline Moved to May 2 ------------------------------------------------------------ Frontline Capital Group asks the Hon. Robert Drain of the United States Bankruptcy Court for the Southern District of New York to further extend their exclusive periods to: a) file a Chapter 11 plan until May 2, 2008; and b) solicit acceptances of that plan until Aug. 1, 2008. The Debtor said that it needs additional time to enable to asses the effects of maximizing recoveries of the remaining Reckson Strategic Venture Partners LLC platform identified as the Illinois Toll Highway development project, a 19,000 square feet space along Illinois Toll Highway. The Debtor's wholly owned subsidiary, RSI Fund Management LLC, indirectly manages the business of Reckson Strategic. A hearing has been set on April 8, 2008, at 10:00 a.m., to consider the Debtor's request. If any, objections to approval must be filed by April 4, 2008. About Frontline Capital Based in New York City, FrontLine Capital Group is a holding company that develops and manages companies servicing small and medium-size enterprises and mobile workforces of larger companies. The company filed for chapter 11 protection on June 12, 2002 (Bankr. S.D.N.Y. Case No. 02-12909). John Edward Westerman, Esq., Thomas Alan Draghi, Esq., and Mickee M. Hennessy, Esq., at Westerman Ball Ederer & Miller, LLP, and Sanjay Thapar, Esq., at Proskauer Rose LLP, represent the Debtor in its restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in this case. When the Debtor filed for protection from its creditors, it listed $264,374,000 in assets and $781,374,000 in debts. GE CAPITAL: Moody's Affirms B3 Rating on $5.944MM Class O Certs. ---------------------------------------------------------------- Moody's Investors Service upgraded the ratings of five classes and affirmed the ratings of 15 classes of GE Capital Commercial Mortgage Corporation, Commercial Mortgage Pass-Through Certificates, Series 2003-C1 as: -- Class A-1, $5,381,935, affirmed at Aaa -- Class A-1A, $184,085,286, affirmed at Aaa -- Class A-2, $108,049,000, affirmed at Aaa -- Class A-3, $156,269,000, affirmed at Aaa -- Class A-4, $367,323,000, affirmed at Aaa -- Class X-1, Notional, affirmed at Aaa -- Class X-2, Notional, affirmed at Aaa -- Class B, $41,611,000, affirmed at Aaa -- Class C, $16,347,000, affirmed at Aaa -- Class D, $25,264,000, upgraded to Aaa from Aa1 -- Class E, $16,347,000, upgraded to Aa2 from Aa3 -- Class F, $10,403,000, upgraded to Aa3 from A1 -- Class G, $16,347,000, upgraded to A2 from A3 -- Class H, $16,347,000, upgraded to Baa1 from Baa2 -- Class J, $25,264,000, affirmed at Ba1 -- Class K, $8,916,000, affirmed at Ba2 -- Class L, $7,431,000, affirmed at Ba3 -- Class M, $2,972,000, affirmed at B1 -- Class N, $10,403,000, affirmed at B2 -- Class O, $5,944,000, affirmed at B3 As of the Feb. 11, 2008 distribution date, the transaction's aggregate principal balance has decreased by 12.2% to $1.04 billion from $1.19 billion at securitization. The Certificates are collateralized by 122 loans, ranging in size from less than 1.0% to 4.0% of the pool, with the top ten loans representing 24.0% of the pool. Twenty-eight loans, representing 30.5% of the pool, have defeased and been replaced with U.S. Government securities. Three loans have been liquidated from the trust resulting in aggregate realized losses of approximately $3.2 million. There are currently no loans in special servicing. Fifteen loans, representing 14.5% of the pool, are on the master servicer's watchlist. Moody's was provided with partial or full year 2006 operating results for 100.0% of the pool. Moody's weighted average loan to value ratio for the conduit component is 88.3%, compared to 89.0% at Moody's last full review in October 2006 and compared to 90.8% at securitization. The upgrade of Classes D, E, F, G and H is due to increased defeasance and credit support and overall stable conduit performance. The shadow rated loan is the Landmark Atrium III Loan ($40.6 million 3.9%), which is secured by a 445,000 square foot office building located in Secaucus, New Jersey. As of March, 2007, the property was 40.4% leased compared to 83.0% at last review and compared to 91.3% at securitization. The largest tenant is Buck Consultants, Inc. occupying 28% of NRA with the lease expiring July 2011. The Buck Consultants space is leased at $30 per square foot, while rents at the subject average $22.8 per square foot. Moody's current shadow rating is below investment grade compared to Baa3 at last review and at securitization. The top three conduit loans represent 9.9% of the pool. The largest conduit loan is the 801 Market Street Loan ($41.2 million -- 4.0%), which is secured by a 370,000 square foot office condominium situated within a one million square foot office building in Philadelphia, Pennsylvania. The condominium includes part of the basement, ground floor retail and all of floors 7 through 13. The office building was built in 1928 and is located in the Market Street East submarket of the Philadelphia CBD. Average in place rent and occupancy at securitization and currently is $16.60 and 75.0% and $19.50 and 94.0%, respectively. The largest tenant is the GSA, occupying 41% of NRA with the lease expiring in December 2012. Moody's LTV is in excess of 100.0% compared to 98.4% at last review and 96.5% at securitization. The second largest conduit loan is the Centennial Center Loan ($39.2 million -- 3.8%), which is secured by a 234,000 square foot community center located in Las Vegas, Nevada. The property was built between 2001 and 2002 and is situated 12 miles northwest of the Las Vegas Strip. This property is anchored by Home Depot (30% of NRA, lease expiring in January, 2031), Circuit City (9% of NRA, lease expiring in January, 2022) and Ross Stores (8% of NRA, lease expiring in January, 2017). It is also shadow anchored by Wal- Mart and Sam's Club. Moody's LTV is 96.4% compared to 97.2% at last review and 103.9% at securitization. The third largest conduit loan is the Laguna Gateway Loan ($23.4 million -- 2.2%), which is secured by a 207,500 square foot retail center located in Elk Grove, California. Moody's LTV is 70.7% compared to 71.4% at last review and 82.8% at securitization. GE CAPITAL: Moody's Junks Ratings on Two Certificate Classes ------------------------------------------------------------ Moody's Investors Service upgraded the rating of one class, downgraded the ratings of two classes and affirmed the ratings of six classes GE Capital Commercial Mortgage Corporation, Commercial Mortgage Pass-Through Certificates, Series 2000-1 as: -- Class A-2, $414,089,940, affirmed at Aaa -- Class X, Notional, affirmed at Aaa -- Class B, $28,293,243, affirmed at Aaa -- Class C, $31,829,898, affirmed at Aa3 -- Class D, $8,841,638, upgraded to A2 from A3 -- Class E, $22,988,260, affirmed at Baa2 -- Class F, $8,841,638, affirmed at Baa3 -- Class H, $6,189,147, downgraded to Ca from Caa1 -- Class I, $5,304,983, downgraded to C from Ca As of the Jan. 17, 2008 distribution date, the transaction's aggregate certificate balance has decreased by approximately 21.5% to $555.1 million from $707.3 million at securitization. The Certificates are collateralized by 91 mortgage loans ranging in size from less than 1.0% to 6.7% of the pool with the top 10 loans representing 30.1% of the pool. Thirty two loans, representing 38.9% of the pool, have defeased and are secured by U.S. Government securities. Ten loans have been liquidated from the pool, resulting in an aggregate realized loss of approximately $25.2 million. Currently one loan, representing 1.5% of the pool, is in special servicing. Moody's is estimating a $3.1 million loss from this specially serviced loan. Eighteen loans, representing 21.0% of the pool, are on the master servicer's watchlist. Moody's was provided with full-year 2006 and partial-year 2007 operating results for approximately 97.4% and 68.6% of the pool, respectively, excluding defeased and credit tenant lease loans. Moody's loan to value ratio is 93.1%, compared to 89.0% at Moody's last full review in March 2007 and 88.1% at securitization. Moody's is upgrading Class D due to the pool's increase in defeasance. Moody's is downgrading Classes H and I due to an overall decline in pool performance, realized and expected losses and LTV dispersion. Based on Moody's analysis, 32.7% of the pool has an LTV greater than 100.0%, compared to 18.9% at last review and 0.3% at securitization. Classes K, L and M have been eliminated due to realized losses. The top three non-defeased exposures represent 15.9% of the outstanding pool balance. The largest exposure is the Synergy Business Park I and II Portfolio Loans ($37.0 million - 6.7%), which consist of two cross collateralized and cross defaulted loans secured by eight office buildings located in Brentwood (Nashville), Tennessee. The portfolio totals 491,800 square feet and was 90.0% occupied as of September 2007, compared to 86.0% at last review. Property performance has been stable since last review, however leases for approximately 31.0% of the NRA roll within the next 12 months. According to Torto Wheaton market data, the Brentwood office market had an 8.7% vacancy rate as of year-end 2007 which is expected to increase to 19.1% by year-end 2008. The loan is on the servicer's watchlist due to low debt service coverage and lease rollover. Moody's LTV is in excess of 100.0%, compared to 96.1% at last review. The second largest loan is the Embassy Suites Loan ($29.1 million - 5.3%), which is secured by a 372-room full service hotel located in New Orleans, Louisiana. The hotel's performance has been significantly impacted by the decline in tourist and convention activity in New Orleans since hurricane Katrina. The loan sponsor is FelCor Lodging Trust, Inc. The loan is on the servicer's watchlist due low debt service coverage. Moody's LTV is significantly in excess of 100.0%, the same as at last review. The third largest loan is the Links at Oklahoma City Loan ($22.0 million -- 4.0%), which is secured by a 588-unit apartment complex located in Oklahoma City, Oklahoma. The property was 98.0% leased as of June 2007, essentially the same as at last review. Moody's LTV is 75.8%, compared to 76.9% at last review. GEN CON: Says Bankruptcy Won't Interrupt Operations and Events -------------------------------------------------------------- Bankruptcy won't stop Gen Con LLC from hosting a gamers' event this year, Indianapolis Convention & Visitors Association told Erika D. Smith of the IndyStar News. A summary of the bankruptcy petition of Gen Con was reported by the Troubled Company Reporter on Tuesday, Feb. 19, 2008. On Feb. 15, 2008, Gen Con LLC said its chapter 11 filing was necessary as a result of significant unforeseen expenses associated with attempts to expand its core business to encompass externally licensed events. Gen Con said its flagship show, Gen Con Indy, remains a vibrant and profitable event. Gen Con Indy will take place as scheduled Aug. 14 to 17, 2008, in Indianapolis, Indiana. IndyStar reveals that some 25,000 people will attend the event and will realize about $25 million in revenues to be hosted by Gen Con Indy. The Debtor has a contract with Indianapolis until 2010, IndyStar relates. Bob Schultz told IndyStar that Indiniapolis is the Gen Con's biggest event. In a statement published on its Web site, Gen Con disclosed that the protections afforded by chapter 11 will allow the Debtor to further its efforts to address its liquidity needs, preserve value for its creditors and explore strategic alternatives for the business. Peter D. Adkison, CEO of Gen Con said, "Because the fundamentals of our business are strong; and because our debt problems are challenges mostly linked to one-time events, we feel confident that the profile of our company will benefit under chapter 11 and come out strong in the end. Gen Con LLC assured the public that it will continue to operate without interruption during this process and looks forward to an expeditious resolution to the short-term challenges and the ability to focus entirely on producing Gen Con Indy, The Best Four Days in Gaming. International Gen Con events are unaffected by this situation and will continue to operate as scheduled. About Gen Con LLC Seattle, Washington-based Gen Con LLC -- http://www.gencon.com/ -- manages hobby gaming events and sponsors annual conventions. It produces the largest consumer fantasy, sci-fi and adventure game convention in North America. Its operations include Gen Con Indy and licensees for European and Asia Pacific Gen Con shows. It was acquired in 2002 by former CEO and founder of Wizards of the Coast Peter Adkison, who solely owns the company headquartered in Seattle, Washington. Gen Con is a consumer and trade experience dedicated to gaming culture and community. The company filed for chapter 11 protection on Feb. 15, 2008 (Bankr. W.D. Wa. Case No. 08-10844). Shelly Crocker, Esq., at Crocker Kuno LLC. When the Debtor filed for bankruptcy, it listed assets and debts between $1 million and $10 million. GENER8XION ENTERTAINMENT: Farber Hass Raises Going Concern Doubt ---------------------------------------------------------------- Los Angeles-based Farber Hass Hurley & McEwen LLP raised substantial doubt about the ability of Gener8Xion Entertainment, Inc., to continue as a going concern after it audited the company's financial statements for the year ended Oct. 31, 2007. The auditor pointed to the company's incurred operating losses since inception. The company posted a net loss of $592,570 on total revenues of $9,862,299 for the year ended Oct. 31, 2007, as compared with a net loss of $5,768,433 on total revenues of $5,708,329 in the prior year. At Oct. 31, 2007, the company's balance sheet showed $2,622,514 in total assets and $3,002,734 in total liabilities, resulting in $380,220 stockholders' deficit. The company's consolidated balance sheet at Oct. 31, 2007, also showed strained liquidity with $2,014,466 in total current assets available to pay $3,002,734 in total current liabilities. A full-text copy of the company's 2007 annual report is available for free at: http://ResearchArchives.com/t/s?2825 About Gener8Xion Entertainment Based in Burbank, California, Gener8Xion Entertainment Inc., (OTC BB: GNXE.OB) -- http://www.8x.com/-- is an integrated media company engaged in various operating activities including film and television production and distribution, sales and rentals of film and video equipment, systems integration and studio facility management. GENERAL DATACOMM: Dec. 31 Balance Sheet Upside-Down by $32.3 Mil. ----------------------------------------------------------------- General DataComm Industries Inc.'s consolidated balance sheet at Dec. 31, 2007, showed $9.9 million in total assets and $42.2 million in total liabilities, resulting in a $32.3 million total stockholders' deficit. At Dec. 31, 2007, the company's consolidated balance sheet also showed strained liquidity with $6.2 million in total current assets available to pay $36.9 million in total current liabilities. The company reported a net loss of $751,000 for the first quarter ended Dec. 31, 2007, compared with a net loss of $455,000 in the same period ended Dec. 31, 2006. Revenues for the three months ended Dec. 31, 2007, increased $521,000, or 14.6%, to $4.1 million from $3.6 million reported for the three months ended Dec. 31, 2006. Product revenues increased $454,000, or 15.3%, while service revenues increased by $67,000 or 11.3%. Gross Margin as a percentage of revenues, in the three months ended Dec. 31, 2007, was 52.6% as compared to 63.1% in the three months ended Dec. 31, 2006. Selling, general and administrative expenses increased to $1.6 million, or 38.1% of revenue in the three months ended Dec. 31, 2007, from $1.3 million, or 37.6% of revenue in the three months ended Dec. 31, 2006. Research and product development expenses increased to $683,000, or 16.7% of revenues in the three months ended Dec. 31, 2007, as compared to $608,000 or 17.1% of revenues in the three months ended Dec. 31, 2006. Interest expense decreased to $777,000 in the three months ended Dec. 31, 2007, from $795,000 in the three months ended Dec. 31, 2006. The lower interest charges resulted primarily from a reduction in high interest-bearing obligations which were paid off in 2007, and a repurchase of debentures from the company's then senior lender in 2007. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?2844 Going Concern Doubt Eisner LLP, in New York, expressed substantial doubt about General DataComm Industries Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Sept. 30, 2007, and 2006. The auditing firm reported that the company has both a working capital and stockholders' deficit at Sept. 30, 2007, and has no current ability to obtain new financing. In addition, the company does not have the ability to repay approximately $27.8 million of Debentures including accrued interest which mature on Oct. 1, 2008. About General DataComm Based in Naugatuck, Connecticut, General DataComm Industries Inc. (Other OTC: GNRD.PK) -- http://www.gdc.com/-- provides secure, NEBS-compliant networking for telcos, governments and businesses. GDC's solutions help customers to bridge technologies, maximize their investments in existing voice and data networks, and transition to the newest network architectures. GDC's product offerings enable legacy and DSL network access; bandwidth management, multiprotocol label switching (MPLS), voice over IP (VoIP), Ethernet, power over Ethernet (PoE), and wireless networking, and are supported by services for network installation, maintenance, operations, repair, enterprise security management and complete network outsourcing. G-I HOLDINGS: Court Approves Dewey & Lebeouf as Counsel ------------------------------------------------------- The United States Bankruptcy Court for the District of New Jersey gave G-I Holdings Inc. and its debtor-affiliates authority to employ Dewey & Leboeuf LLP as counsel, Bill Rochelle of Bloomberg News reports. Dewey & LeBoeuf will: a) advise the Debtors with respect to their powers and duties as debtor-in-possession in the continued operation of their business; b) advise the Debtors with respect to all general bankruptcy matters; c) prepare on behalf of the Debtors all necessary applications, answers, orders, and papers in connection with the administration of their estates; d) represent the Debtors at all critical hearings on matters relating to their affairs and interest as debtors-in- possession before this Court, any federal or state courts or administrative panels, any appellate courts, the United States Supreme Court, and protecting the interest of the Debtors; e) prosecute and defend litigated matters that may arise during these cases, including matters as may be necessary for the protection of the Debtors' rights, the preservation of estate assets, or the resolution of the Debtors' Chapter 11 cases; f) prosecute and implementing a plan or reorganization; g) negotiate appropriate transactions and prepare any necessary documentation related thereto; h) advise, assist and negotiate the sale of all or part of the Debtors' remaining assets pursuant to 11 U.S.C. Section 363 or the plan of reorganization; i) represent the Debtors on matters relating to the assumption or rejection of any remaining executory contracts and unexpired leases; j) advise the Debtors with respect to corporate, securities, real estate, litigation, labor, finance, insurance, regulatory, tax, healthcare and other matters which may arise during the pendency of these cases; and k) perform all other legal services that are necessary for the efficient and economic administration of these cases. The firm's professionals and their compensation rates are: Attorneys Hourly Rate --------- ----------- Martin Bienenstock, Esq. $950 Timothy Karcher, Esq. $625 Harry Garner, Esq. $550 Robert Cortes, Esq. $440 Designation Hourly Rate ----------- ----------- Partners $625-$950 Associates $325-$575 Paralegals $175-$230 To the best of the Debtors knowledge the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About G-I Holdings Based in Wayne, New Jersey, G-I Holdings, Inc., is a holding company that indirectly owns Building Materials Corporation of America, a manufacturer of premium residential and commercial roofing products. The company filed for chapter 11 protection on Jan. 5, 2001 (Bankr. D. N.J. Case No. 01-30135). An affiliate, ACI, Inc., filed its own voluntary chapter 11 petition on Aug. 3, 2001. The cases were consolidated on Oct. 10, 2001. Weil, Gotshal & Manges LLP, and Riker, Danzig, Scherer, Hyland & Perretti LLP, represent the Debtors. Lowenstein Sandler PC represents the Official Committee of Unsecured Creditors. C. Judson Hamlin was appointed by the Court as the Legal Representative for Present and Future Holders of Asbestos Related Demands. Keating, Muething & Klekamp, P.L.L., represents the Futures Representative. GS MORTGAGE: Moody's Chips Rating on $28.18MM Class G Certs. to B1 ------------------------------------------------------------------ Moody's Investors Service downgraded the ratings of one class and affirmed the ratings of seven classes of GS Mortgage Securities Corporation II, Commercial Mortgage Pass-Through Certificates, Series 1998-GL II as: -- Class A-2, $240,595,402, Fixed, affirmed at Aaa -- Class X, Notional Balance, affirmed at Aaa -- Class B, $91,595,000, Fixed, affirmed at Aaa -- Class C, $84,549,000, Fixed, affirmed at Aaa -- Class D, $98,641,000, Fixed, affirmed at Aaa -- Class E, $70,458,000, Fixed, affirmed at Aaa -- Class F, $63,411,000, Fixed, affirmed at Baa1 -- Class G, $28,183,997, Fixed, downgraded to B1 from Ba1 The securities are collateralized by six mortgage loans of which three loans have fully defeased, and one loan (Tharaldson Pool A) has partially defeased. The March 2008 distribution will indicate the payoff of the Tharaldson Pool B loan and the pay offs of both the defeased and non-defeased portions of the Tharaldson Pool A loan. These pay offs will result in the Marriott Desert Springs Loan ($82.8 million) being the sole non-defeased loan in the pool. Moody's is downgrading Class G due to the deteriorated performance of the Marriott Desert Springs Loan. The Marriott Desert Springs is an 884-room resort hotel located in Palm Desert, California. The hotel features two 18-hole golf courses, a 38,000 square foot spa, 49,000 square feet of meeting space, and other amenities typical of resort hotels. Major renovations to the lobby atrium and spa were recently completed at the hotel, which was originally built in 1987. RevPAR for calendar year 2007 was $128.15, representing approximately an 8.1% increase from RevPAR at securitization in 1998. However, total operating expenses increased approximately 23% during the same period. The hotel has experienced difficult market conditions with several hotels all competing for the same group business. Additionally, several new hotels are scheduled to open in the near future. The fixed rate loan, which has amortized approximately 19.1% since securitization, has an Anticipated Repayment Date of June 11, 2010 with a final maturity date of Dec. 11, 2022. The scheduled principal loan balance at the ARD will be approximately $75.1 million ($84,954 per room). The loan sponsor is an indirect wholly-owned subsidiary of Host Hotels & Resorts, Inc. (Moody's senior unsecured Ba1; outlook Stable). GS MORTGAGE: S&P Junks Two Certs. Ratings, Removes Neg. Watch ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on three classes of commercial mortgage-backed securities pass-through certificates from GS Mortgage Securities Corp.'s series 2006-RR2 and removed them from CreditWatch with negative implications, where they were placed on Jan. 23, 2008. Concurrently, S&P affirmed its ratings on 14 certificates from the same transaction, including the rating on class N, which S&P removed from CreditWatch with negative implications. The lowered ratings reflect the downgrade of Short-Term Asset Receivables Trust's net lease pass-through certificate series BC 2000-A to 'D' from 'BB'. This certificate is the largest trust asset in GS Mortgage Securities Corp. II's series 2006-RR2, at 4% of the trust balance. The affirmations reflect credit support levels that adequately support the current ratings. As of the Jan. 25, 2007, remittance report, the collateral pool consisted of 78 classes of subordinated fixed-rate CMBS pass- through certificates with an aggregate principal balance of $778.0 million, the same as at issuance. In addition, Standard & Poor's rates 84.2% of the certificates by balance, and the weighted average rating is 'BBB'; the remaining 15.8% of the certificates, by balance, are not rated by Standard & Poor's but have weighted average credit characteristics commensurate with 'BB+' rated obligations. Eighty-four percent of the certificates have investment-grade ratings or have received credit estimates commensurate with those for investment-grade obligations, the same as at issuance. The collateral pool includes 58 distinct CMBS transactions issued between 1996 and 2006. Additionally, 52% of the trust's collateral balance is concentrated in transactions that are currently in or are entering the peak default period for CMBS, as noted in Standard & Poor's annual CMBS default study. In addition, 27% of the trust's collateral balance is concentrated in the following five underlying transactions: -- Wachovia Bank Commercial Mortgage Trust's series 2006-C23 (6%); -- Greenwich Capital Commercial Funding Corp.'s series 2005-GG5 (6%); -- GS Mortgage Securities Trust's series 2006-GG6 (5%); -- Credit Suisse First Boston Mortgage Securities Corp.'s series 2005-C5 (5%); and -- Beckman Coulter Net Lease Pass-Through Certificate's series BC 2000-A (4%). The 58 CMBS transactions are collateralized by 9,393 loans with a current outstanding principal balance of $107.5 billion, down from 10,321 loans with an aggregate principal balance of $108.0 billion at issuance. The collateral consists of CMBS pass-through certificates rather than mortgage loans. As such, losses associated with the loans are first realized by the CMBS trusts that issued the pass-through certificates. Realized losses on the first-loss positions will result in principal losses in reverse sequential order to the classes from GS Mortgage Securities Corp. II. Currently, first- loss positions account for 4% of the collateral. Subordination is available to absorb various losses experienced by the remaining collateral before the GS Mortgage Securities Corp. II certificates are affected. Standard & Poor's analysis included loss projections on the underlying collateral and an evaluation of the impact of those losses on the transaction's capital structure. The resultant credit support levels adequately support the lowered and affirmed ratings. Ratings Lowered and Removed from Creditwatch Negative GS Mortgage Securities Corp. II Commercial mortgage pass-through certificates series 2006-RR2 Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ O B B+/Watch Neg 1.75% P CCC+ B/Watch Neg 1.13% Q CCC B-/Watch Neg 1.00% Rating Affirmed and Removed from Creditwatch Negative GS Mortgage Securities Corp. II Commercial mortgage pass-through certificates series 2006-RR2 Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ N BB- BB-/Watch Neg 2.75% Ratings Affirmed GS Mortgage Securities Corp. II Commercial mortgage pass-through certificates series 2006-RR2 Class Rating Credit enhancement ----- ------ ------------------ A-1 AAA 35.00% A-2 AAA 21.00% B AA+ 16.88% C AA 15.00% D AA- 13.50% E A+ 12.00% F A 10.88% G A- 9.75% H BBB+ 8.00% J BBB 6.75% K BBB- 5.75% L BB+ 4.75% M BB 3.75% HDB LLC: Lenders Ask Court to Appoint Chapter 11 Trustee -------------------------------------------------------- Nevada State Bank, Colonial Bank, TierOne Bank and Aspen Financial, lenders in HDB LLC's Chapter 11 case, ask the U.S. Bankruptcy Court for the District of Nevada to appoint a trustee to protect the lenders' interests and the interests of the estate. The lenders say that the Debtors halted the construction of approximately 113 condominium units in a 10.88-acre property when BergElectric filed a $5 million mechanic's lien against the property. The Debtor and Highland Development Co., the general contractor, terminated Berg as electrical subcontractor on the project. The lenders tell the Court that Mark Oiness, president of Highland Development Co., and manager of HDB LLC, owns 99% of the Debtor's estate. The remaining 1% is owned by Highland Development Co. which is in turn owned 100% by Mr. Oiness. The lenders relate that they have lost confidence in the contractor and the Debtors' present management and the appointment of a trustee is necessary to obtain additional financing and to complete the construction of the project. The lenders tell the Court that a trustee would effectively take control and administer the Debtors' reorganization in bankruptcy and properly conduct the Debtors' business operations. The lenders assures the Court that they are willing to work with the appointed trustee in an effort to protect their interests well as to enable the Debtor to effective reorganize, including extending financing to complete the project and to allow the trustee to market the property and its various units. The lenders note that the Debtor consents to the appointment of a trustee to operate the Debtor's business. Headquartered in Las Vegas, Nevada, HDB LLC filed for Chapter 11 protection on Jan. 28, 2008 (Bankr. D. Nev. Case No.: 08-10685.) Brett A. Axelrod, Esq. at Lewis and Roca LLP represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it has estimated assets and debts of $50 million to $100 million. HOLLEY PERFORMANCE: Taps Epiq as Claims and Noticing Agent ---------------------------------------------------------- Holley Performance Products Inc. and its debtor-affiliates seek permission from the U.S. Bankruptcy Court for the District of Delaware to engage Epiq Bankruptcy Solutions, LLC as their claims, noticing, and balloting agent. The Debtors expect the firm to: a) prepare and serve required notices and pleadings in these Chapter 11 cases, including: -- notice of the commencement of these chapter 11 cases; -- notice of objections to claims; -- notice of any hearings on a disclosure statement and confirmation of a plan of reorganization; and -- other miscellaneous notices or pleadings to any entities as the Debtors or the Court may deem necessary or appropriate for the orderly administration of these chapter 11 cases; b) with five days after the mailing of a particular notice or pleading, file with the Clerk's Office a certificate or affidavit of service that includes a copy of the notice involved, an alphabetical list of persons to whom the notice was mailed, and the date of mailing; c) maintain copies of all proofs of claim and proofs of interest filed in these chapter 11 cases; d) maintain official claims registers by docketing all proofs of claim and proofs of interest on claims registers, including these information: -- the name and address of the claimant and any agent thereof, if the proof of claim or proof of interest was filed by an agent; -- the date received; -- the claim number assigned; and -- the asserted amount and classification of the claim; e) implement necessary security measures to ensure the completeness and integrity of the claims register, including, but not limited to, keeping adequate backups of electronic date; f) as requested by the Clerk's Office, transmit to the Clerk's Office a copy of the claims register; g) maintain an up-to-date mailing list for all entities that have filed a proof of claim, proof of interest, or request for notice, which list shall be available upon request of a party-in-interest of the Clerk's Office; h) provide access to the public for examination of copies of the proofs of claim or interest without charge during regular business hours; i) respond to creditors' inquiries regarding their claims or the claims process; j) record all transfers of claims and provide notice of such transfers as required by Bankruptcy Rule 3001(e) and Local Rule 3001-1(b); k) prepare exhibits for objections to claims, as requested; l) keep undated records regarding the administration of claims in the Debtor's chapter 11 cases; m) to the extent necessary, gather data in the conjunction with the preparation of the Debtors' schedules of assets and liabilities and statements of financial affairs; n) assist the Debtors with other tasks as necessary to reconcile and resolve claims; including working with the Depository Trust Company and its participants to find and notice beneficial owners; o) mail voting documents to claimants, and serve notice thereof as appropriate; p) respond to claimants' inquiries regarding the disclosure statement and the voting procedures (restricting answers only to information contained in the plan documents); q) receive, examine, and tabulate returned ballots in accordance with established procedures, and prepare a certified report of voting results for delivery to the Court; r) maintain a website for the Debtors' chapter 11 cases; and s) comply with applicable federal, state, municipal, and local statutes, ordinances, rules, regulations, orders, and other requirements; and promptly comply with such further conditions and requirements as the Clerk's Office or the Court may at any time prescribe. The documents submitted to the Court do not disclose the firm's billing rate. Prior to the bankruptcy filing, the firm received from the Debtors a $25,000 retainer. Any remainder of the retainer will be applied by the firm in satisfaction of its initial postpetition invoices. About Holley Performance Bowling Green, Kentucky-based Holley Performance Products Inc. -- http://www.holley.com/-- was founded in 1903 by brothers George and Earl Holley. It currently employs 390 workers in Kentucky, California and Mississippi. It is the parent company of various companies offering the Holley brands, including Hooker, FlowTech and Nitrous Oxide Systems. Holley carburetors power every NASCAR(R) Sprint(R) Cup team and every NHRA(R) Pro-Stock champion. The Holley line also includes performance fuel pumps, fuel injection, intake manifolds, cylinder heads & engine dress-up products for street performance, race and marine applications. The company filed for Chapter 11 protection on Feb. 11, 2008 (Bankr. D.Del. Case No.08-10256). Evelyn J. Meltzer, Esq., and David B. Stratton, Esq., at Pepper Hamilton, L.L.P., represents the Debtors' in their restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in these cases to date. When the Debtors filed for protection against their creditors, it listed total assets of $106,000,000 and total debts of $243,000,000. ICC WORLDWIDE: Holtz Rubenstein Expresses Going Concern Doubt ------------------------------------------------------------- Holtz Rubenstein Reminick LLP in New York raised substantial doubt about the ability of ICC Worldwide Inc., to continue as a going concern after it audited the company's financial statements for the year ended Sept. 30, 2007. The auditor pointed to the company's losses for the nine months ended Sept. 30, 2007, and for the year ended Dec. 31, 2006, and negative cash flow used in operations of $433,157 for the nine months ended Sept. 30, 2007, and $167,808 for the year ended Dec. 31, 2006. The company posted a net loss of $559,352 on total revenues of $21,540 for the nine months ended Sept. 30, 2007, as compared with a net loss of $668,210 on total revenues of $0.00 in the year ended Dec. 31,2006. At Sept. 30, 2007, the company's balance sheet showed $2,195,535 in total assets, $1,685,158 in total liabilities and $510,377 stockholders' equity. A full-text copy of the company's 2007 annual report is available for free at: http://ResearchArchives.com/t/s?282a About ICC Worldwide Headquartered in Corona Del Mar, California, ICC Worldwide Inc., fka Acropolis Acquisition Corporation, Torbay Holdings Inc., (Pink Sheets: ICCW.PK) -- http://www.iccww.com-- provides communications products, Internet services, Financial & Document services and Entertainment and Alimentary products to the large and rapidly growing immigrant worker communities of Europe. The company changed its name to ICC Worldwide Inc. in November 2007. The company has operations in Italy, through its wholly owned subsidiary, ICC-Italy S.r.l. INTRAOP MEDICAL: Dec. 31 Balance Sheet Upside-Down by $1.4M ----------------------------------------------------------- Intraop Medical Corp.'s consolidated balance sheet at Dec. 31, 2007, showed $9,268,282 in total assets and $10,724,589 in total liabilities, resulting in a $1,456,307 in total stockholders' deficit. At Dec. 31, 2007, the company's consolidated balance sheet also showed strained liquidity with $8,397,302 in total current assets available to pay $10,719,810 in total current liabilities. The company reported a net loss of $1,627,675 on total revenues of $3,861,604 for the first quarter ended Dec. 31, 2007, compared with a net loss of $1,993,104 on total revenues of $249,616 in the same period ended Dec. 31, 2006. Loss from operations increased to $1,387,867 in the three months ended Dec. 31, 2007, versus an operating loss of $904,642 in the three months ended Dec. 31, 2006. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?283a Going Concern Doubt PMB Helin Donovan LLP, in San Francisco, expressed substantial doubt about Intraop Medical Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Sept. 30, 2007. The auditing firm reported that the company has incurred substantial net losses and incurred substantial monetary liabilities in excess of monetary assets over the past several years and as of Sept. 30, 2007, had an accumulated deficit of $34,041,656. About Intraop Medical Headquartered in Sunnyvale, California, Intraop Medical Corp. (OTC BB: IOPM) -- http://www.intraopmedical.com/-- develops, manufactures, markets, distributes and services Mobetron, a proprietary mobile electron-beam cancer treatment system designed for use in intraoperative electron-beam radiation therapy, or IOERT. INTREPID TECH: Posts $731T Net Loss in 2nd Qtr. Ended Dec. 31 ------------------------------------------------------------- Intrepid Technology and Resources Inc. reported a net loss of $731,178 on revenues of $22,843 for the second quarter ended Dec. 31, 2007, compared with a net loss of $558,247 on revenues of $47,310 in the same period ended Dec. 31, 2006. The increase in net loss is due to start-up plant operating costs without corresponding revenue and increased interest expense. The revenue decrease was mainly the result of decreased sales of contracted "work for others" over the corresponding period in 2006. At Dec. 31, 2007, the company had available cash of $275,754 and restricted cash of $779,319 compared to available cash of $1,414,831 and restricted cash of $1,767,290 at June 30, 2007. The company believes that it will be necessary to continue to supplement the cash flow from operations with the use of outside resources such as investment capital by issuance of debenture notes and stock. The company plans to use any additional funding to cover operating and developments costs. Balance Sheet At Dec. 31, 2007, the company's consolidated balance sheet showed $13,923,395 in total assets, $13,732,974 in total liabilities, and $190,421 in total stockholders' equity. The company's consolidated balance sheet at Dec. 31, 2007, also showed strained liquidity with $361,857 in total current assets available to pay $2,878,816 in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?2837 Going Concern Doubt As reported in the Troubled Company Reporter on Oct. 10, 2007, Logan, Utah-based Jones Simkins PC expressed substantial doubt about Intrepid Technology and Resources Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended June 30, 2007. The auditing firm reported that the company has incurred recurring losses, has negative working capital, and has negative cash flows from operations. About Intrepid Technology Headquartered in Idaho Falls, Idaho, Intrepid Technology and Resources Inc. (OTC BB: IESV.OB) -- http://www.intrepid21.com/ -- is an application innovator in alternative energy technology and production and of biogas products and services designed to assist in worldwide energy independence, reduce pollution and carbon emissions from renewable agriculture feedstock and industrial and agriculture waste materials. IWT TESORO: Judge Glenn Sets March 17 as Claims Bar Date -------------------------------------------------------- The Hon. Martin Glenn of the United States Bankruptcy Court for the Southern District of New York set March 17, 2008, at 5:00 p.m., as deadline for all creditors of IWT Tesoro Corporation and its debtor-affiliates, including governmental units, to file proofs of claim. The Debtors tell the Court that they need more time to quantify the amounts of the administrative claims to be able to determine the feasibility and structure of the contemplated liquidating plan. Failure to file claims will forever bar creditors from asserting any claims against the Debtors. I.W.T. Tesoro Corporation, fka Ponca Acquisition Company, -- http://www.iwttesoro.com/-- is headquartered in New York City. The company and its subsidiaries distribute building materials, specifically hard floor and wall coverings. They are wholesalers and do not sell directly to any end user. Their products consist of ceramic, porcelain and natural stone floor, wall and decorative tile. They import a majority of these products from suppliers and manufacturers in Europe, South America (Brazil), and the Near and Far East. Their markets include the United States and Canada. They also offer private label programs for branded retail sales customers, buying groups, large homebuilders and home center store chains. The Debtor and its debtor-affiliates, International Wholesale Tile, Inc. and American Gres, Inc., filed for Chapter 11 bankruptcy protection on Sept. 6, 2007 (Bankr. S.D. NY Lead Case No. 07-12841). John K. Sherwood, Esq., at Lowenstein Sandler P.C., represents the Official Committee of Unsecured Creditors. As of June 30, 2007, the Debtors had total assets of $39,798,579 and total debts of $47,940,983. KESSELRING HOLDING: Posts $1.3 Mil. Net Loss in Qtr. Ended Dec. 31 ------------------------------------------------------------------ Kesselring Holding Corp. reported a net loss of $1,307,628 on revenues of $2,697,874 for the first quarter ended Dec. 31, 2007, compared with a net loss of $121,652 on revenues of $3,372,314 in the corresponding period ended Dec. 31, 2006. Consolidated revenues decreased $674,440, or 20.0%, to $2,697,874 in 2007 compared to $3,372,314, for the prior year. Revenues from the company's Manufactured Products Segment increased $280,973 or 19.0%, to $1,789,156 in 2007 compared to $1,508,183 for the prior year. Revenues from the company's Construction Services Segment decreased $955,416, or 51.0%, to $908,718 in 2007 compared to $1,864,131 for the prior year. The company had five homes under construction in fiscal 2007, two were completed and three are over 95.0% complete as of Dec. 31, 2007. All of these homes were contracted for during 2005 and 2006. The company did not contract to build any new homes during 2007 and are not currently considering building other homes in the future. Consolidated cost of revenues decreased $381,569, or 15.0%, to $2,212,890 in 2007 compared to $2,594,459 for the prior year. Consolidated gross profit decreased $292,871, or 38.0%, to $484,984 in 2007 compared to $777,855 for the prior year. Consolidated operating expenses increased $887,237, or 87.0%, to $1,759,555 in 2007 compared to $942,318 for the prior year, mainly due the increase in salaries and benefits expense and the increase in other operating expenses due to the establishment of a separate corporate holding company and its associated expenses. Balance Sheet At Dec. 31, 2007, the company's consolidated balance sheet showed $5,430,254 in total assets, $4,764,850 in total liabilities, and $665,404 in total stockholders' equity. The company's consolidated balance sheet at Dec. 31, 2007, also showed strained liquidity with $2,581,399 in total current assets available to pay $3,145,623 in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?2843 Going Concern Doubt Lougheed & Company L.L.C., in Tampa, Florida, expressed substantial doubt about Kesselring Holding Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the quarter ended Sept. 30, 2007, and 2006. The auditing firm reported that the company has experienced recurring losses and management does not believe that working capital is sufficient to maintain operations at their current levels. About Kesseling Holding Headquartered in Sarasota, Florida, Kesselring Holding Corp. (OTC BB: KSSH) -- http://www.kesselringholding.com/-- is engaged in (i) restoration services, principally to commercial property owners, (ii) the manufacture and sale of cabinetry and remodeling products, principally to contractors and (iii) multifamily and commercial remodeling and building services on customer-owned properties. KIMBALL HILL: Gets Limited Access to Loan Facility Until March 14 ----------------------------------------------------------------- Kimball Hill Homes reached a limited duration waiver agreement with its lender group that extends until March 14, 2008, Ken Love, its president and CEO said in a regulatory filing with the Securities and Exchange Commission. Kimball Hill expects to spend that time working towards a new extended term financing agreement with its banking group that appropriately reflects realities of the current economic environment. The national home builder, which was not in compliance with several of its financing covenants, has been engaged in constructive discussions with its banking group since last year. The lender group voted to grant Kimball Hill a limited duration waiver, allowing continued access to its credit facility and allowing additional time to reach a final agreement. "We have always had an excellent, open and constructive relationship with our lenders," says David Hill, principal stockholder and Executive Chairman of Kimball Hill. "I expect that our long term relationship with our banking group will be to our benefit as we work towards a longer term agreement in the coming weeks." In the meantime, business operations at Kimball Hill continue as usual. The Company continues to build and sell homes in five states -- California, Nevada, Texas, Florida and Illinois. "While our management team works with our banks on this financing agreement, it is business as usual for the balance of our associates and our customers throughout our 85 open communities," Mr. Love said. "In fact, we have just learned that our customer satisfaction levels, as measured by internal and external surveys, are the highest we have ever achieved. A strong commitment to our customers remains a central element of our strategy to weather the industrys prolonged downturn." As reported in the Troubled Company Reporter on Feb. 20, 2008, Kimball Hill told the Securities and Exchange Commission that as of Dec. 31, 2007, it was not in compliance with certain of the covenants in its senior credit facility, including the covenant requiring the company to maintain a minimum tangible net worth. Acceleration under the company's senior credit facility would also trigger a cross-default under the indenture governing its senior subordinated notes. In addition, certain other credit facilities within the company's joint ventures to which it has provided guarantees include provisions for acceleration or events of default in the event of a default under the senior credit facility. Although the company has obtained a limited duration waiver and amendment in January 2008 with respect to its senior credit facility, the company is no longer in compliance with the covenants set forth therein as a result of recording additional impairment charges in connection with the preparation and review of the condensed consolidated financial statements for the period ended Dec. 31, 2007. If obligations under the senior credit facility or senior subordinated notes are accelerated, the company believes it will have insufficient assets to meet the obligations thereunder. Working with Alvarez & Marsal North America LLC, a financial advisory and consulting firm, the company is considering a number of alternatives, including the appointment of a chief restructuring officer and whether to seek a complete restructuring under Chapter 11 of the United States Bankruptcy Code. About Kimball Hill Kimball Hill Inc., -- http://www.kimballhillhomes.com/ -- still owned and operated by the Hill family, builds mid-priced single- family detached homes, townhomes, and condominiums under the name Kimball Hill Homes in the Chicago area and in California, Florida, Nevada, Texas, and Wisconsin. Subsidiary KH Financial offers mortgage financing and refinancing of investment properties in about half a dozen states. * * * As reported in the Troubled Company Reporter on Jan. 7, 2008, Standard & Poor's Ratings Services lowered its corporate credit rating on Kimball Hill Inc. to 'CCC+' from 'B' and lowered the rating on the company's senior subordinated notes to 'CCC-' from 'CCC+'. At the same time, S&P placed all of the ratings on CreditWatch with negative implications. The rating actions affect $203 million in rated senior subordinated notes. At Dec. 31, 2007, the company's consolidated balance sheet showed $795.5 million in total assets, $631.9 million in total liabilities, and $113.1 million in total stockholders' equity. Chicago-based Deloitte & Touche LLP has expressed substantial doubt about Kimball Hill's ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Sept. 30, 2007. The auditing firm pointed to the company's losses from operations and default under its senior credit facility. KKR FINANCIAL: Gets Extension of SLN Maturity Date to March 3 ------------------------------------------------------------- KKR Financial Holdings LLC's second postponement of its repayment of "billions of dollars" worth of mortgage-backed securities "is a further embarrassment for" Kohlberg Kravis Roberts & Co. LP, James Mackintosh at The Financial Times in London says. FT says that in September 2007, founders Henry Kravis and George Roberts drew out from their personal pockets to help bail out KKR Financial Holdings from a $270 million debt obligation. KKR Financial Holdings' SEC Filing In a filing with the Securities and Exchange Commission dated Feb. 15, 2008, KKR Financial said it entered into an extension amendment agreement with the holders of non-recourse secured liquidity notes issued by two asset-backed secured liquidity note conduit facilities to allow for restructuring discussions. On Oct. 18, 2007, the company announced that it had consummated a restructuring to extend the facilities. Pursuant to the terms of the October Restructuring, the original maturity date of the SLNs was extended so that approximately 50% of the principal balance was due on Feb. 15, 2008, and the remaining principal balance is due on March 13, 2008. Pursuant to the amendment agreement, the February Maturity Date has been extended to March 3, 2008, KKR Financial said. According to KKR Financial, the holders of a majority of the SLNs have the right to terminate the extension period upon one business day prior written notice. Upon the expiration or termination of the extension period without further agreement on restructuring, the SLNs will become due and payable. In connection with the October Restructuring, certain holders of the SLNs agreed to receive an in-kind distribution of the mortgage-backed securities serving as collateral for the Facilities in satisfaction of the outstanding principal balance of their SLNs. In connection with the amendment agreement, certain holders of SLNs have been given the option during the extension period to receive at their election an in-kind distribution of the mortgage- backed securities serving as collateral for the Facilities in satisfaction of the outstanding principal balance of their SLNs. Upon expiration or termination of the extension period, the remaining holders of SLNs have the right to receive at their election an in-kind distribution of the mortgage-backed securities serving as collateral for the Facilities in satisfaction of the outstanding principal balance of their SLNs, KKR Financial revealed. KKR Financial Corp., the company's real estate investment trust subsidiary, sold roughly $5.2 billion of residential mortgage- backed securities and recognized a loss of roughly $65 million during the quarter ended September 30, 2007. Included in the $5.2 billion of residential mortgage-backed securities that were sold were roughly $3.4 billion of residential mortgage-backed securities rated AAA/Aaa that were issued by securitization trusts where the company owns the subordinated interests. As of September 30, 2007, $600 million of residential mortgage loans and $4.5 billion of residential mortgage-backed securities were pledged as collateral for non-recourse SLNs issued by two asset-backed secured liquidity note conduit facilities that are accounted for as subsidiaries of the REIT Subsidiary. In August 2007, the company's board of directors approved a plan to exit its residential mortgage investment operations and to sell the REIT Subsidiary. Standard & Poor's Action On Feb. 15, 2008, Standard & Poor's Ratings Services lowered its rating on the extendible asset-backed commercial paper notes issued by KKR Pacific Funding Trust to 'A-3' from 'A-1'. The rating remains on CreditWatch with negative implications. KKR Pacific, is one of the two funding vehicles of KKR Financial Holdings. The rating action is based on deterioration in the pricing levels of the underlying assets in the program, which consist of 'AAA' rated residential mortgage-backed securities backed by Alternative-A mortgage loan collateral. While none of the ratings on the securities that serve as collateral in the KKR Pacific program have been lowered or are on CreditWatch with negative implications, there has been deterioration in the marks of the portfolio, S&P said. Consequently, while the combination of expected amortization and market liquidation proceeds from KKR Pacific's portfolio under current market conditions is adequate to cover the amount of the outstanding ABCP, this amount can only withstand marginal additional deterioration between now and the March 15, 2008, final payment date for all of the ABCP issued by KKR Pacific, according to S&P. S&P stated that any adverse economic conditions or changing circumstances will likely prevent KKR Pacific from meeting its financial commitments. The continued CreditWatch negative placement reflects the ongoing uncertainty as to whether the marks on the underlying portfolio will continue to decline between now and the final maturity of the ABCP program, S&P added. About KKR Financial Holdings KKR Financial Holdings LLC, formerly KKR Financial Corp., (NYSE: KFN) -- http://www.kkrkfn.com/-- is a specialty finance company that invests in multiple asset classes. Its investment objective is to allocate capital primarily to residential mortgage loans and mortgage-backed securities; corporate loans and debt securities; commercial real estate loans and debt securities; asset-backed securities, and marketable and non-marketable equity securities. It also makes certain investments from time to time, including debt, equity and derivative investments. As of Dec. 31, 2006, its investment portfolio consisted of residential mortgage loans and securities, corporate loans and securities, commercial real estate loans and securities, marketable equity securities, and investments in non-marketable equity securities. In May 2007, KKR Financial Corp. announced that KKR Financial Holdings LLC completed the restructuring transaction, whereby KKR Financial Corp. became a wholly owned subsidiary of KKR Financial Holdings LLC. KKR Financial Holdings LLC is externally managed by KKR Financial Advisors LLC. KKR Financial Holdings LLC and KKR Financial Advisors LLC are affiliates of Kohlberg Kravis Roberts & Co. LP. KRONOS ADVANCED: Dec. 31 Balance Sheet Upside-Down by $2M --------------------------------------------------------- Kronos Advanced Technologies Inc.'s consolidated balance sheet at Dec. 31, 2007, showed $1,999,473 in total assets and $4,031,186 in total liabilities, resulting in a $2,031,713 total stockholders' deficit. At Dec. 31, 2007, the company's consolidated balance sheet also showed strained liquidity with $270,491 in total current assets available to pay $1,925,966 in total current liabilities. The company reported a net loss of $2,007,571 on sales of $294,055 for the second quarter ended Dec. 31, 2007, compared with a net loss of $871,857 on sales of $102,282 in the same period ended Dec. 31, 2006. The increase in the net loss was principally the result of a $886,847 accretion of note discount, a $283,830, or 34.7%, increase in operating costs to $1,101,211, and $95,174, or 127.4%, increase in interest expense, partially offset by a $130,137, or 642.8%, increase in gross profit to $150,383. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?2838 Going Concern Doubt Sherb & Co. LLP expressed substantial doubt about Kronos Advanced Technologies Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the fiscal years ended June 30, 2007, and 2006. The auditing firm pointed to the company's significant losses and working capital deficiency at June 30, 2007. About Kronos Advanced Located in Belmont, Mass. Kronos Advanced Technologies Inc. -- http://www.kronosati.com/-- through its wholly owned subsidiary, Kronos Air Technologies Inc., has developed a new, proprietary air movement and purification system that utilizes high voltage electronics and electrodes to silently move and clean air without any moving parts. Kronos is commercializing its technology for standalone and embedded products across multiple residential, commercial, industrial and military markets. The company's business strategy includes a combination of building internal capabilities, establishing strategic alliances and structuring licensing arrangements. LB COMMERCIAL: Moody's Cuts Ratings on $30.937 Mil. Certificates ---------------------------------------------------------------- Moody's Investors Service downgraded the ratings of three classes and affirmed the ratings of nine classes of LB Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 1999- C1 as: -- Class A-2, $759,718,102, affirmed at Aaa -- Class X, Notional, affirmed at Aaa -- Class B, $90,854,000, affirmed at Aaa -- Class C, $86,904,000, affirmed at Aaa -- Class D, $63,202,000, affirmed at Aa3 -- Class E, $31,602,000, affirmed at A3 -- Class F, $19,750,000, affirmed at Baa3 -- Class G, $29,232,000, affirmed at Ba2 -- Class H, $10,270,000, affirmed at Ba3 -- Class J, $22,911,000, downgraded to Caa2 from B3 -- Class K, $7,900,000, downgraded to Ca from Caa2 -- Class L, $126,741, downgraded to C from Ca As of the Jan. 15, 2008 distribution date, the transaction's aggregate balance has decreased by approximately 29.0% to $1.1 billion from $1.6 billion at closing. The Certificates are collateralized by 145 mortgage loans ranging in size from less than 1.0% to 10.9% of the pool, with the top 10 loans representing 38.6% of the pool. The pool includes five shadow rated loans comprising 31.8% of the pool and 16 credit tenant lease loans comprising 2.8% of the pool. Sixty one loans, representing 44.9% of the pool, have defeased and are collateralized by U.S. Government securities. Eighteen loans have been liquidated from the trust, resulting in an aggregate realized loss of approximately $12.5 million. Five loans, representing 1.3% of the pool, are in special servicing. Moody's has estimated losses of $3.9 million for the specially serviced loans. Twenty-three loans, representing 19.1% of the pool, are on the master servicer's watchlist. Moody's was provided with year-end 2006 and full or partial year 2007 operating results for 95.8% and 82.3% of the pool, respectively, excluding defeased and CTL loans. Moody's loan to value ratio for the conduit component is 87.0%, compared to 85.1% at Moody's last full review in May 2006 and 88.8% at securitization. Moody's is downgrading Classes J, K and L due to realized and estimated losses. The largest shadow rated loan is the Starwood Financial Portfolio Loan ($122.3 million - 10.9%), which is secured by 17 full-service and two limited service hotels located in seven western states. The portfolio contains 3,988 rooms and the properties are operated as DoubleTree (11) and Red Lion Inn (6). The portfolio's performance has improved since Moody's last review. Overall occupancy and RevPAR for calendar year 2006 were 67.0% and $64.64, respectively, compared to 67.0% and $58.84 at last review. The loan is on the master servicer's watchlist due to deferred maintenance at several of the hotels. The loan is structured with a 262 month amortization schedule and has amortized 21.1% since securitization. Moody's current shadow rating is B2, compared to B3 at last review. The Woodlands Hills Mall Loan ($80.0 million -- 7.1%) is secured by the borrower's interest in a 1.1 million square foot regional mall located in Tulsa, Oklahoma. The center is anchored by Dillard's, Sears, Macy's and J.C. Penney. The in-line space was 98.0% occupied as of September 2007, compared to 95.4% at last review. Performance has improved due to increased revenues, stable expenses and amortization. The loan sponsor is Simon Property Group. Moody's current shadow rating is Aaa, compared to Aa1 at last review. The Penn Square Mall Loan ($67.0 million -- 6.0%) is secured by the borrower's interest in a 1.1 million square foot regional mall located in Oklahoma City, Oklahoma. The center is anchored by Dillard's, Macy's and J.C. Penney. The in-line space was 98.8% occupied as of September 2007, compared to 97.0% at last review. Performance has improved due to increased revenues, stable expenses and amortization. The loan sponsor is Simon Property Group. Moody's current shadow rating is Aaa, the same as at last review. The Grand Central Mall Loan ($46.9 million - 4.2%) is secured by the borrower's interest in a 1.0 million square foot regional mall located in Parkersburg, West Virginia. The center is anchored by Sears, J.C. Penney, Elder-Beerman and Belk. The center was 97.0% occupied as of August 2007, compared to 86.9% at last review. The property is owned by an affiliate of Glimcher Reality Trust. Moody's current shadow rating is Ba1, the same as at last review. The Crossroad Mall Loan ($40.7 million - 3.6%) is secured by the borrower's interest in a 765,000 square foot regional mall located in Portage, Michigan. The center is anchored by Sears, J.C. Penney, Marshall Field's and Mervyn's. The in-line space was 97.6% occupied, compared to 92.5% at last review. The property is owned by an affiliate of General Growth Properties Inc. Moody's current shadow rating is Aa1, compared to Aa2 at last review. The top three conduit loans represent 5.6% of the outstanding pool balance. The largest conduit loan is the Carmel Plaza Loan ($26.2 million - 2.3%), which is secured by an 115,000 square foot open-air specialty retail center located in Carmel, California. The property was 77.9% occupied as of June 2007, compared to 61.0% at last review. The mall does not have a traditional anchor. The largest tenants are Anthropologie and Wilkes Bashford. The loan is on the master servicer's watchlist due to low debt service coverage. Moody's LTV is in excess of 100.0%, the same as last review. The second largest conduit loan is the Wal-Mart Portfolio Loan ($18.6 million -- 1.7%), which is secured by 13 multi-tenant retail centers located in seven Midwestern states. The portfolio totals 373,810 square feet and was 79.3% occupied as of September 2007, compared to 96.4% at securitization. Moody's LTV is 72.7%, compared to 73.6% at last review. The third largest conduit loan is the Forest Plaza Loan ($17.5 million - 1.6%), which is secured by a 165,000 square foot retail center located in Staten Island, New York. The largest tenants are A&P, which occupies 31.5% of the GLA through February 2014 and Bally's Total Fitness, which occupies 15.1% of the GLA through October 2014. The center was 100.0% occupied as of September 2007, essentially the same as at securitization. Moody's LTV is 73.1%, compared to 77.1% at last review. LEVITT & SONS: Wachovia Says It Is Not Obligated to Release Homes ----------------------------------------------------------------- Wachovia Bank, N.A. seeks from the U.S. Bankruptcy Court for the Southern District of Florida a declaratory judgment against Levitt and Sons, LLC, Levitt and Sons of Horry County, LLC, Levitt and Sons of Hall County, LLC, Levitt and Sons of Cherokee County, LLC, Weinstock and Scavo, P.C., and The Floyd Law Firm, P.C., as to its obligation to release certain homes which were sold to consumers in three Levitt communities from the lien of certain mortgages. Robert N. Gilbert, Esq., at Carlton Fields, P.A., in West Palm Beach, Florida, relates that in January 2006, LAS and Wachovia Bank entered into a Loan Agreement. LAS' obligations under the Loan Agreement were secured by, inter alia, mortgages executed by LAS Horry County, LAS Hall County, and LAS Cherokee County. The Mortgages relate to certain homes in three Levitt communities -- Seasons at Laurel Canyon in Cherokee County, Georgia; Seasons at Lake Lanier in Hall County, Georgia; and Seasons at Prince Creek in Horry County, South Carolina. Note Default In September 2004, LAS executed a $21,500,000 promissory note in favor of Wachovia Bank. The World Golf Village Note matured on Sept. 29, 2007. At maturity, LAS failed to pay in full on the World Golf Village Note, Mr. Gilbert tells the Court. "This failure to make payment constituted a default under the World Golf Village Note," he avers. Moreover, he adds, LAS' default under the World Golf Village Note also constituted a direct default under the Loan Agreement and the Mortgages. At present, the amount due under the Loan Agreement exceeds $100,000,000, according to Mr. Gilbert. Home Sale Closings Weinstock and Scavo is the Debtors' special counsel which represents certain of the Debtors in connection with closings and lien issues in South Carolina and Georgia. The Floyd Law Firm was engaged by LAS to act as closing attorneys for the sale of homes at the Properties. Mr. Gilbert informs the Court that Weinstock and Floyd closed the sales of certain homes sold by the Debtors to third party purchasers without first seeking or obtaining any commitment from Wachovia Bank to release the lien of the Mortgages with respect to each sale. Those homes are referred to as the Unreleased Homes. Subsequent to the closing of home sales, the Law Firms prepared partial release documents and delivered those to Wachovia Bank for execution. In October 2007, Weinstock asked Wachovia Bank to deliver to it partial releases with respect to about 83 homes sold. At around the same time, Floyd requested one partial release for a home sale at the Seasons at Prince Creek. Mr. Gilbert reminds the Court that by October 2007, LAS was already in default under the Loan Agreement. Then, on Feb. 8, 2008, Weinstock demanded on Wachovia Bank to execute and deliver partial releases of the Mortgages with respect to the Unreleased Homes. Weinstock has indicated that it will file suit against Wachovia Bank to compel delivery of the partial releases unless those are delivered by February 12, Mr. Gilbert relates. The Law Firms appear to take the position that they are entitled to the partial releases in their own right, Mr. Gilbert contends. Certain provisions in the Loan Agreement and the Mortgages effectively cross-defaulted all loans owing by LAS to Wachovia Bank, Mr. Gilbert asserts. Thus, he maintains, a default under any of LAS' obligations to Wachovia Bank constituted a default under all of LAS' obligations to Wachovia Bank. Moreover, the Loan Agreement and the Mortgages set forth conditions precedent, which LAS is required to satisfy in order to receive partial releases of the Mortgages. Mr. Gilbert reiterates that at the time the Debtors and the Law Firms requested the releases, LAS was already in default under the terms of the Loan Agreement. Thus, Wachovia is not obligated to release the homes from the lien of the Mortgages, he asserts. Wachovia Bank points out that the value of its lien against the Unreleased Homes could significantly reduce its claim against the Debtors in their Chapter 11 cases. Wachovia believes that the aggregate sale price of the Unreleased Homes exceeds $25,000,000. Wachovia asserts that it continues to hold a valid and perfected first priority lien on the Unreleased Homes. Mr. Gilbert states that even if Wachovia Bank were obligated to release its Mortgage, many of the Unreleased Homes would still be subject to putative junior liens. Accordingly, Wachovia Bank asks the Court to declare that: (a) it has no obligation to release from the lien of the Mortgages any properties with respect to which the Debtors and the Law Firms' requests for partial release was delivered after September 29, 2007; and (b) Weinstock and Floyd do not have standing on their own right to request partial releases. Wachovia Bank also seeks to be awarded costs it incurred in pursuing the complaint. About Levitt and Sons Based in Fort Lauderdale, Florida, Levitt and Sons LLC -- http://www.levittandsons.com/-- is the homebuilding subsidiary of Levitt Corporation (NYSE:LEV). Levitt Corp. -- http://www.levittcorporation.com/-- together with its subsidiaries, operates as a homebuilding and real estate development company in the southeastern United States. The company operates in two divisions, homebuilding and land. The homebuilding division primarily develops single and multi-family homes for adults and families in Florida, Georgia, Tennessee, and South Carolina. The land division engages in the development of master-planned communities in Florida and South Carolina. Levitt and Sons LLC and 38 of its homebuilding affiliates filed for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at Berger Singerman, P.A., represent the Debtors in their restructuring efforts. The Debtors chose AP Services, LLC as their crisis managers, and Kurtzman Carson Consultants, LLC as their claims and noticing agent. Levitt Corp., the parent company, is not included in the bankruptcy filing. The Debtors' latest consolidated financial condition as of Sept. 30, 2007 reflect total assets of $900,392,000, and total liabilities of $780,969,000. The Debtors' exclusive plan filing period expires on March 8, 2008. (Levitt and Sons Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) LEVITT AND SONS: SHR Bonita Wants Deed & Escrow Pact Approved ------------------------------------------------------------- SHR Bonita Springs LLC, a successful bidder for a certain property owned by Levitt and Sons of Lee County LLC, asks the U.S. Bankruptcy Court for the Southern District of Florida to approve a deed and escrow agreement with LAS Lee County. Jerry M. Markowitz, Esq., at Markowitz, Davis, Ringel & Trusty, P.A., in Miami, Florida, counsel for SHR Bonita, relates that SHR Bonita and LAS Lee County have worked diligently to prepare for the closing on the sale of the Bonita Springs Property. However, a dispute has arisen as to the form of the deed necessary to transfer title of the Property to SHR Bonita. LAS Lee County has insisted that the deed must include newly imposed restrictive and affirmative covenants that would constitute additional encumbrances on the title to the Bonita Springs Property that did not exist when the Asset Purchase Agreement was signed. Mr. Markowitz argues that: (i) SHR Bonita never agreed to include New Covenants in the deed; (ii) neither the APA nor the order approving the sale of the Bonita Springs Property to SHR Bonita provides that the deed would include the New Covenants; (iii) SHR Bonita contends that some of the provisions of the New Covenants are incorrect, inconsistent with the intent of the parties, and would materially detract from the marketability of title of the Bonita Springs Property; and (iv) choosing SHR Bonita's form of deed over LAS Lee County's would not have any apparent effect on the Debtor or its bankruptcy estate. The Sale Order requires that funds be placed in escrow to pay the Court-approved fees and costs of the back-up bidder, and to pay, if necessary, certain documentary and stamp taxes. Neither the Sale Order nor the APA though dictate the form or content of the contemplated escrows or underlying escrow agreements, Mr. Markowitz clarifies. SHR Bonita has proposed that two escrows be created given that the funds to be placed in escrow benefit entirely different parties and serve entirely different purposes: -- Back-up Escrow involves only the back-up bidder and LAS Lee County; and -- Tax Escrow involves only the Florida Department of Revenue and SHR Bonita. Nevertheless, LAS Lee County has insisted that only one escrow be formed, Mr. Battista tells the Court. Although the Debtor has no claim to, or interest in, the Tax Escrow, and although the FDOR has waived its claims to interest on the taxes that are the subject of the escrow, LAS Lee County has refused to agree to place the funds in an interest-bearing account without explanation, he contends. Accordingly, SHR Bonita specifically asks the Court to: (a) approve the form of its deed; (b) approve the form of its escrow agreements; and (c) extend the February 19 closing date until the time the Court enters an order on SHR Bonita's request. About Levitt and Sons Based in Fort Lauderdale, Florida, Levitt and Sons LLC -- http://www.levittandsons.com/-- is the homebuilding subsidiary of Levitt Corporation (NYSE:LEV). Levitt Corp. -- http://www.levittcorporation.com/-- together with its subsidiaries, operates as a homebuilding and real estate development company in the southeastern United States. The company operates in two divisions, homebuilding and land. The homebuilding division primarily develops single and multi-family homes for adults and families in Florida, Georgia, Tennessee, and South Carolina. The land division engages in the development of master-planned communities in Florida and South Carolina. Levitt and Sons LLC and 38 of its homebuilding affiliates filed for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at Berger Singerman, P.A., represent the Debtors in their restructuring efforts. The Debtors chose AP Services, LLC as their crisis managers, and Kurtzman Carson Consultants, LLC as their claims and noticing agent. Levitt Corp., the parent company, is not included in the bankruptcy filing. The Debtors' latest consolidated financial condition as of Sept. 30, 2007 reflect total assets of $900,392,000, and total liabilities of $780,969,000. The Debtors' exclusive plan filing period expires on March 8, 2008. (Levitt and Sons Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) LILLIAN VERNON: Case Summary & 30 Largest Unsecured Creditors ------------------------------------------------------------- Lead Debtor: Lillian Vernon Corp. 2600 International Parkway Virginia Beach, VA 23452 Bankruptcy Case No.: 08-10323 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- L.V. Catalog Holding Corp. 08-10324 Lillian Vernon International, Ltd. 08-10325 L.V.C. Retail Corp. 08-10326 The Corporate Solution, Inc. 08-10327 Everyday Celebrations, Inc. 08-10328 Rue de France, Inc. 08-10329 Type of Business: The Debtors are direct mail specialty catalog and online companies concentrating on the marketing of gifts, holiday products, toys and children's products, personal and home accessories, kitchen and houseware products and garden and outdoor products. They have developed a proprietary customer database containing information about its customers, including such data as order frequency, size and date of last order and type of products purchased. The database contains information with respect to over 27 million customers, gift recipients and people who have requested its catalogs. In the fiscal year ended February 22, 2003, they published 33 catalog editions and mailed approximately 150,000,000 catalogs to past and prospective customers. They also offer products over the Internet. See www.lillianvernon.com and www.ruedefrance.com. Chapter 11 Petition Date: February 20, 2008 Court: District of Delaware (Delaware) Judge: Brendan Linehan Shannon Debtors' Counsel: Ann C. Cordo, Esq. (acordo@mnat.com) Daniel B. Butz, Esq. (dbutz@mnat.com) Robert J. Dehney, Esq. (rdehney@mnat.com) Morris, Nichols, Arsht & Tunnell, L.L.P. 1201 North Market Street P.O. Box 1347 Wilmington, DE 19899-1347 Tel: (302) 351-9459, (302) 575-7348, (302) 658-9200 Fax: (302) 225-2559, (302) 658-3989 http://www.mnat.com Lillian Vernon Corp. Financial Condition: Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtors' Consolidated List of 30 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Smart Post $2,181,043 Attention: Legal Department P.O. Box 360353 Pittsburgh, PA 15250-6353 Direct Holdings Worldwide, $1,368,630 L.L.C. Attention: Legal Department, Ripplewood Holdings, L.L.C. One Rockefeller Plaza, 32nd Floor New York, NY 10020 Gift (V.A.), L.L.C. $1,047,360 Attention: Legal Department, W.P. Carey & Co., L.L.C. 50 Rockefeller Plaza, 2nd Floor New York, NY 10020 Federal Express Corp. $990,360 Attention: Legal Department P.O. Box 371461 Pittsburgh, PA 15250-7461 Graphic Communication $901,101 Attention: Legal Department P.O. Box 933233 Atlanta, GA 31193-3233 Quad Graphics, Inc. $830,685 Attention: Legal Department P.O. Box 930505 Atlanta, GA 31193 Li & Fung (Trading), Ltd. $604,767 Attention: Legal Department 800 Sheung Sha Wa Road Hung Horn, Kowloon Hong Kong Linkshare Lockbox 30772 $498,619 Attention: Legal Department, J.P. Morgan Chase Bank, N.A. P.O. Box 30772 New York, NY 10087-0772 Paradysz Matera $473,431 Attention: Legal Department 5 Hanover Square, 6th Floor New York, NY 10004 International Paper Co. $455,298 Attention: Legal Department P.O. Box 644095 Pittsburgh, PA 15264-4095 American Express $334,376 Attention: Legal Department P.O. Box 1270 Newark, NJ 07101-1270 Yue Wing Cheogng $286,709 Manufacturing, Ltd. Attention: Legal Department 5d Winner Building 36 Man Yue Street Hunghom, Kowloon, Hong Kong Best Rank, Ltd. $257,451 Attention: Legal Department 9/F., Room 07 Vanda Industrial Centre, 21-33 Tai Lin Pai Road Kwai Chung, N.T. Hong Kong Labor Ready Mid-Atlantic, Inc. $130,850 A.T.&T. One Net Service $124,878 Dotomi, Inc. $123,106 ACerno, Inc. $112,101 Alexander Doll Co., Inc. $108,040 INFOUSA $94,453 Pier 91 International Corp. $89,823 M.G. Enterprises $87,875 Adobe Systems, Inc. $76,853 I.B.M. Corp.-J.N.X. $66,530 Syratech Acquisition Corp. $64,416 Southeastern Foam Rubber Co. $62,700 Brom Textile Industries, Ltd. $59,727 Enchante Accessories, Inc. $55,332 Virginia Power $55,224 Quigda Yijia Artex Import & $50,936 Export Travelon $50,782 MARCAL PAPER: Settles Federal Environmental Claims with EPA ----------------------------------------------------------- Highland Capital Management, L.P. and Marcal Paper Mills, Inc. have reached an agreement in principle with the Environmental Protection Agency and U.S. Department of Justice to settle all federal environmental claims and liabilities with respect to releases of contaminants allegedly affecting the Lower Passaic River Study Area. As reported in the Troubled Company Reporter on Sept. 27, 2007, the Environmental and Natural Resources Division of the U.S. Department of Justice had requested the U.S. Bankruptcy Court for the District of New York to approve the settlement entered by Marcal Paper with the United States on behalf of the EPA, the Department of the Interior and the Department of Commerce. With this agreement, one of two major remaining closing conditions for investment firm Highland Capital's proposed transaction to become the majority owner of the assets of Marcal has been satisfied. Before the transaction can close, an agreement also must be reached with the New Jersey Department of Environmental Protection regarding the state's Industrial Site Recovery Act and other applicable New Jersey laws. The proposed transaction was approved by the Hon. Morris Stern of the U.S. Bankruptcy Court for the District of New Jersey in Newark, on Jan. 22, 2008. In July 2007, the EPA filed a $947 million claim against Marcal Paper saying that it would use the amount to clean Passaic River. According to the EPA, the river was polluted by the company's paper plant. Marcal Paper sought Court approval of a settlement pursuant to which Marcal Paper will pay $3 million. The settlement will be classified as an unsecured prepetition claim, subject to the terms of the Plan of Reorganization already developed by the company with the support of its major creditors. The Lower Passaic River Study Area Cooperating Parties Group has objected to the settlement. About Marcal Paper Mills Based in Elmwood Park, New Jersey, Marcal Paper Mills Inc. -- http://www.marcalpaper.com/-- is a privately-held, fourth generation family business. Founded in 1932, it employs over 900 people in its Elmwood Park, New Jersey and Chicago, Illinois manufacturing operations. The company produces over 160,000 tons of finished paper products, including bath tissue, kitchen towels, napkins and facial tissue, distributed to retail outlets for home consumption and to distributors for away-from- home use in hotels, restaurants, hospitals, offices and factories. The Debtor filed for chapter 11 protection on Nov. 30, 2006 (Bankr. D. N.J. Case No. 06-21886). Gerald H. Gline, Esq., and Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard P.A. represent the Debtor. Kenneth Rosen, Esq., and Mary E. Seymour, Esq., at Lowenstein Sandler PC represent the Official Committee of Unsecured Creditors. In its schedules filed with the Court, the Debtor disclosed total assets of $178,626,436 and total debts of $178,890,725. MBIA INC: Former CEO Returns to Lead Company Through Challenges --------------------------------------------------------------- Joseph Jay W. Brown, 59, will return to MBIA Inc., resuming his positions as chairman and chief executive officer. He will become president of MBIA, effective immediately. Mr. Brown replaces Gary C. Dunton, 52, who has resigned from MBIA. Until May 2004, Mr. Brown had served as chairman and chief executive officer of MBIA Inc., and of its main operating unit, MBIA Insurance Corporation. Mr. Brown retired as executive chairman of MBIA Inc. in May 2007. He joined the company as chairman and CEO in January 1999, having been a director since 1986. "MBIA faces meaningful challenges," Mr. Brown said. "Thanks to Gary's hard work, we can now build on our enhanced capitalization and reframe our risk policies and strategies. I see significant opportunities ahead for MBIA. Our shareholders, policyholders, bond owners, and employees need us to re-examine our business model to address changing conditions. I look forward to working with the MBIA team to frame a new model for the financial guarantee business. In addition, it is critical that we expedite our communications with the New York State Insurance Department. I have already spoken with Superintendent Eric Dinallo. I believe we can look forward to improved dialog with the Department. [Mr. Dinallo] and I had a constructive discussion regarding MBIA's plans and he provided us with helpful guidance. We expect to rebuild confidence in the company and in the industry." "The board appreciates Gary Dunton's dedicated service to MBIA, particularly his hard work in recent months during our successful capital-raising initiatives. Our enhanced capitalization will enable MBIA to redesign its business to address conditions in the current market. We are grateful to Gary for his courageous leadership in this critical period," said David C. Clapp, lead director of the MBIA board. "The entire board joins me in thanking Gary for his contributions and his commitment to MBIA." "Moving forward, the board is unanimous in its belief that Jay Brown's deep understanding of MBIA and its challenges make him singularly qualified to lead the company and differentiate MBIA in the current environment," said Mr. Clapp. "Jay was present at the inception of the financial guarantee market and has been part of MBIA for more than 20 years. He has proven leadership in tough times. We are delighted that he is returning to the company." During the past two months, MBIA has increased its claims-paying resources by as much as $3.2 billion, including $1.1 billion from the sale of 94.6 million shares of common stock, $500 million from the sale of 16.1 million shares of common stock to Warburg Pincus, the sale of $1 billion in surplus notes, and $200 to $500 million (varies by rating agency) in additional net capital generated from operations due to maturing insured transactions during the fourth quarter of 2007. MBIA currently has over $17 billion in total claims-paying resources. Prior to joining MBIA in 1999, Mr. Brown was chairman and CEO of Talegen Holdings, Inc., an insurance holding company. While at Talegen, Mr. Brown successfully led the company's reorganization and restructuring, working closely with insurance regulators in all states, including the major state of domicile, New York. Before his election as chairman and CEO of Talegen, Mr. Brown was president and CEO of Fireman's Fund Insurance Company. Mr. Brown joined Fireman's Fund in 1974, where he held numerous executive positions including chief financial officer at the time of its IPO in 1985 from American Express and president and COO at the time of its sale to Allianz AG in 1990. Mr. Brown has a long history of board service in several industry- leading companies where he has also served on key committees within those boards. He served on the board of Oxford Health Plans from 2000 to 2004 and on the board of Fireman Fund Holdings prior to the sale of its insurance subsidiary to Allianz. He has served on the SAFECO board since 2001 and was elected non- executive chairman in January 2006. He steps down from that chairmanship in May 2008. Through service on each of these boards, Mr. Brown has also developed experience in serving on key committees including the Executive, Compensation, Finance, Risk, and Audit Committees. During Mr. Brown's leadership at MBIA, the company was repeatedly recognized by Institutional Shareholder Services, Governance Metrics International and Moody's for the quality of corporate governance practices adopted by MBIA. He is a 1974 graduate of Northern Illinois University, where he majored in Probability and Statistics. He is a fellow of the Casualty Actuarial Society, as well as a member of the American Academy of Actuaries and the Chartered Property Casualty Underwriters Society. About MBIA Headquartered in Armonk, New York, MBIA Inc. (NYSE:MBI) -- http://www.mbia.com-- provides financial guarantee insurance, investment management services, and municipal and other servicesto public finance and structured finance clients on a globalbasis. The company conducts its financial guarantee business through its wholly owned subsidiary, MBIA Insurance Corporation and provides investment management products and financial services through its wholly owned subsidiary MBIA Asset Management, LLC. MBIA manages its activities primarily through two principal business operations: insurance and investment management services. In February 2007, MBIA Corp. formed a new subsidiary, MBIA Mexico, S.A. de C.V. During the year ended Dec. 31, 2006, MBIA discontinued its municipal services operations. These operations included MBIA MuniServices Company. On Dece. 5, 2006, the company completed the sale of MBIA MuniServices Company. * * * As reported in the Troubled Company Reporter on Jan. 21, 2008, Moody's Investors Service placed the Aaa insurance financial strength ratings of MBIA Insurance Corporation and its affiliated insurance operating companies on review for possible downgrade. In the same rating action, Moody's also placed the surplus note rating of MBIA Insurance Corporation (Aa2-rated) and the ratings of the holding company, MBIA, Inc. (senior debt at Aa3), on review for possible downgrade. This rating action reflects Moody's growing concern about the potential volatility in ultimate performance of mortgage and mortgage-related CDO risks, and the corresponding implications for MBIA's risk-adjusted capital adequacy. Prior to this rating action, the rating outlook for MBIA was negative. MERRILL LYNCH: Moody's Holds Low-B Ratings on Two Cert. Classes --------------------------------------------------------------- Moody's Investors Service upgraded the ratings of one class, downgraded the ratings of two classes and affirmed the ratings of seven classes of Merrill Lynch Financial Asset Inc. Commercial Mortgage Pass-Through Certificates, 2001-Canada 5 as: -- Class A-1, $39,357,837 affirmed at Aaa -- Class A-2, $123,653,000 affirmed at Aaa -- Class B, $7,462,000 upgraded to Aaa from Aa1 -- Class C, $7,462,000 affirmed at A1 -- Class D, $9,949,000 affirmed at Baa2 -- Class E, $1,866,000 affirmed at Baa3 -- Class F, $4,974,000 affirmed at Ba2 -- Class G, $1,866,000 affirmed at Ba3 -- Class H, $3,109,000 downgraded to B3 from B2 -- Class J, $1,244,000 downgraded to Caa1 from B3 -- Class X, Notional, affirmed at Aaa As of the Jan. 15, 2008 distribution date, the transaction's aggregate certificate balance has decreased by approximately 17.7% to $204.7 million from $248.7 million at securitization. The Certificates are collateralized by 52 mortgage loans ranging in size from less than 1.0% to 9.3% of the pool, with the top ten loan exposures representing 52.4% of the pool. Eight loans, representing 7.2% of the pool, have defeased and have been replaced with Canadian Government securities. No loans have been liquidated from the pool and there have been no realized losses. Three loans, representing 8.7% of the pool, are in special servicing. Moody's is estimating $5.9 million of losses from all the specially serviced loans. Fourteen loans, representing 19.5% of the pool, are on the master servicer's watchlist. Moody's was provided with year-end 2006 operating results for 96.7% of the performing loans. Moody's loan to value ratio is 68.7% compared to 70.0% at Moody's last full review in August 2006 and 74.5% at securitization. Moody's is upgrading Class B due to increased subordination levels and defeasance. Moody's is downgrading Classes H and J due to projected losses from the specially serviced loans. Based on Moody's analysis, 8.7% of the pool has a LTV greater than 120.0%, compared to 0.0% at last review and at securitization. The top three loan exposures represent 25.7% of the pool. The largest exposure is the York Mills Gardens Loan ($19.0 million -- 9.3%), which is secured by an 89,740 square foot retail plaza built in 2000 and located in Toronto, Ontario. As of March 2007, occupancy was 100.0% compared to 98.5% at last review and 96.0% at securitization. The anchor tenants are Longos Market (37.5% GLA; lease expiration June 2020) and Shoppers Drug Mart (11.6% GLA; lease expiration June 2010). The loan has amortized 11.3% since securitization. Moody's LTV is 63.0% compared to 65.2% at last review and 73.2% at securitization. The second largest exposure is the Delta Bow Valley Loan ($17.0 million -- 8.3%), which is secured by a 398- room, 24-story Delta Hotel and Convention Centre built in 1980 and located in downtown Calgary. As of year-end 2006, occupancy was 71.0% compared to 65.6% at last review and 71.2% at securitization. RevPAR as of year-end 2006 was $96.09 compared to $79.85 at year- end 2004 and $91.97 at year-end 2000. The loan has amortized 14.7% since securitization. The loan is full recourse to the borrower. Moody's LTV is 46.7% compared to 64.1% at last review and 55.4% at securitization. The third largest exposure is the Sentinel Self Storage Portfolio ($16.6 million -- 8.1%), which is secured by eight cross- collateralized loans, totaling 477,181 square feet. Six of the eight properties were built in the 1980s and 1990s while the two other properties were built in 1960 and 1975. The properties are located in Alberta and Manitoba. As of December 2006, occupancy was 85.9% compared to 80.6% at last review and 85.9% at securitization. As of the distribution date three of the loans are on the master servicer's watch list due to their upcoming balloon. The loan has amortized 11.6% since securitization. Performance has improved due to increase in occupancy and benefit from amortization. The loan is full recourse to the borrower. Moody's LTV is 59.4% compared to 65.1% at last review and 70.9% at securitization. MERRILL LYNCH: Moody's Holds B3 Rating on $3.513MM Class K Certs. ----------------------------------------------------------------- Moody's Investors Service upgraded the ratings of three classes and affirmed the ratings of 10 classes of Merrill Lynch Financial Assets Inc., Commercial Mortgage Pass-Through Certificates, Series 2002-Canada 8 as: -- Class A-1, $36,283,308, affirmed at Aaa -- Class A-2, $188,450,000, affirmed at Aaa -- Class X-1, Notional, affirmed at Aaa -- Class X-2, Notional, affirmed at Aaa -- Class B, $11,700,000, affirmed at Aaa -- Class C, $12,880,000, upgraded to Aa2 from Aa3 -- Class D, $12,888,000, upgraded to A3 from Baa1 -- Class E, $4,684,000, upgraded to Baa2 from Baa3 -- Class F, $4,683,000, affirmed at Ba1 -- Class G, $4,683,000, affirmed at Ba2 -- Class H, $1,171,000, affirmed at Ba3 -- Class J, $4,683,000, affirmed at B2 -- Class K, $3,513,000, affirmed at B3 As of the Jan. 14, 2008 distribution date, the transaction's aggregate principal balance has decreased by approximately 37.3% to $293.8 million from $468.3 million at securitization. The Certificates are collateralized by 54 loans, ranging in size from less than 1.0% to 6.7% of the pool, with the top 10 loans representing 51.3% of the pool. Two loans, representing 1.9% of the pool, have defeased and are collateralized by Canadian Government securities. There have been no realized losses since securitization. One loan, representing 6.0% of the pool, is in special servicing. Moody's is not estimating losses from the specially serviced loan at this time. Eight loans, representing 17.8% of the pool, are on the master servicer's watchlist. Excluding defeased loans, Moody's was provided with year-end 2006 operating results for 78.6% of the pool. Moody's weighted average loan to value ratio is 74.2% compared to 75.1% at Moody's last full review in June 2006 and 80.6% at securitization. The upgrade of Classes C, D and E is due to increased subordination levels from loan pay offs and amortization. The top three loans represent 20.9% of the outstanding pool balance. The largest loan is the Crosswinds Apartments Loan ($23.8 million -- 8.1%), which is secured by a 347-unit, 26-story apartment building located in Ottawa, Ontario. The Loan is full recourse to the borrower and Shelter Canadian Properties Limited. Performance has been impacted by an increase in operating expenses. The loan is on the master servicer's watchlist due to low DSCR. Moody's LTV is 90.9% compared to 82.1% at last review and 81.2% at securitization. The second largest loan is the Galeries Des Sources Loan ($20.0 million -- 6.8%), which is secured by a 330,500 square foot community shopping center located in Dollard-Des-Ormeaux, Quebec, a suburb of Montreal. The anchor tenants include Canadian Tire (15.6% NRA; lease expiration in July 2009) and Super C (14.5% NRA; lease expiration in December 2012). The loan is full recourse to the borrower and amortizes on a 25-year schedule. Moody's LTV is 83.6% compared to 84.5% at last review and 86.6% at securitization. The third largest loan is the Cookstown Manufacturer's Mall Loan ($17.8 million -- 6.0%), which is secured by a 160,000 square foot outlet mall located in Cookstown, Ontario, 75 miles north of Toronto. As of December 2007 the mall's occupancy was 97.0% compared to 92% in December 2005 and 95% at securitization. Major tenants include Adidas, Reebok, Samsonite and Black & Decker/Philips Home Essentials. The loan was transferred to the special servicer in April 2007 when an unauthorized $13 million second mortgage and a $750,000 third mortgage was placed on the property. Moreover, the current borrower purchased the property from the original owner without lender's consent. The court appointed a receiver who took control of the property and its cash flow. Moody's is not projecting losses at the present time. The loan is non-recourse and amortizes on a 30-year schedule. Moody's LTV is 65.6% compared to 84.5% at last review and 76.2% at securitization. MOHEGAN TRIBAL: $1 Bil. Credit Facility Amendment Gets Lenders OK ----------------------------------------------------------------- The Mohegan Tribal Gaming Authority received approval on Feb. 13, 2008, from its lender banks to amend certain terms of its $1 billion bank credit facility. The amended agreement provides for an increase in the permissible amount of capital expenditures pertaining to Mohegan Sun's Project Horizon expansion project from $800 million to $950 million, well as an increase in the permissible amount of capital expenditures related to the Project Sunrise expansion project at Mohegan Sun at Pocono Downs from $200 million to $215 million. This amendment also modifies certain provisions of the loan agreement, including MTGA's total leverage, senior leverage and minimum fixed charge coverage ratio covenants to conform with the increase in projected project expenditures and the change in the projected completion dates for both projects. "We are pleased our existing bank group has supported the Tribe and MTGA during these difficult times in the credit markets," said Jeffrey E. Hartmann, chief operating officer of MTGA. "The approval of the amendment ensures that the Authority has the financing in place to complete Project Horizon in Connecticut and Project Sunrise in Pennsylvania, and validates the Mohegan Tribe's long-term vision of creating destination assets." "The fact that MTGA's bank group strongly supported this Amendment, enabling the increases in expenditures for Project Horizon and elsewhere, is evidence of the Tribe's excellent relationship with its banks," Bill Newby, managing director in Bank of America's Real Estate, Gaming and Lodging group, said. "The strongly affirmative vote bears further testament to the bank group's confidence in the Tribe, MTGA and its superb cadre of professional managers," Mr. Newby added. "Furthermore, the bank group recognizes that MTGA's projects at Mohegan Sun and Mohegan Sun at Pocono Downs are exactly the right response to potential competition in adjacent states and are equally suited to building long-term value in those properties." About Mohegan Tribal Mohegan Tribal Gaming Authority -- http://mtga.com/-- is an instrumentality of the Mohegan Tribe of Indians of Connecticut, a federally recognized Indian tribe with an approximately 507-acre reservation situated in southeastern Connecticut, adjacent to Uncasville, Connecticut. The Authority operates Mohegan Sun, a gaming and entertainment complex on a 240-acre site on the Tribe's reservation and, through its subsidiary, Downs Racing LP, owns and operates Mohegan Sun at Pocono Downs, a gaming and entertainment facility offering slot machines and harness racing in Plains Township, Pennsylvania and five off-track wagering facilities located elsewhere in Pennsylvania. Mohegan Sun currently operates in an about 3 million square foot facility, which includes the Casino of the Earth, Casino of the Sky, the Shops at Mohegan Sun, a 10,000-seat Arena, a 350-seat Cabaret, meeting and convention space and the about 1,200-room luxury Sky hotel. * * * As reported in the Troubled Company Reporter on Feb. 13, 2008, Moody's Investors Service placed Mohegan Tribal Gaming Authority's ratings on review for possible downgrade. Ratings affected include MTGA's Ba1 Corporate Family and Probability of Default ratings, Baa3 senior note rating, and Ba2 senior subordinated note ratings. MEDQUEST INC: $177MM Notes Redemption Cues S&P to Withdraw Ratings ------------------------------------------------------------------ Standard & Poor's Ratings Services withdrew its ratings on MedQuest Inc., including the 'B-' corporate credit rating and the 'CCC' rating on the company's $180 million 11.875% subordinated notes due 2012. This action follows MedQuest's redemption of $177 million of the outstanding notes via a tender offer. In addition, on Nov. 12, 2007, Novant Health, a not-for-profit integrated health care system in North and South Carolina, acquired MedQuest's parent company, MQ Associates Inc. M/I HOMES: S&P Slashes Preferred Stock Rating to CCC+ from B- ------------------------------------------------------------- On Feb. 19, 2008, Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on M/I Homes Inc. to 'B+' from 'BB-' and lowered the preferred stock rating to 'CCC+' from 'B-'. The outlook remains negative. The rating actions affect $200 million of senior unsecured notes and $100 million of preferred stock. "The rating actions reflect a prolonged housing market downturn that has stressed M/I's cash flow coverage measures and could limit its ability to maintain an adequate liquidity position," said Standard & Poor's credit analyst Tom Taillon. "With modest cushion under its tangible net worth covenant, M/I will likely need to pursue another amendment to its credit facility." Standard & Poor's anticipates that market conditions will remain difficult and does not expect the company to see operational improvements in 2008. S&P would lower the ratings further if M/I is unable to generate sufficient cash flow from operations and liquidity deteriorates. Positive ratings momentum is unlikely in the near term, although S&P would revise the outlook to stable if S&P begin to see signs of stabilization in M/I's housing markets and the company's liquidity position strengthens. MORGAN STANLEY: S&P Affirms Low-B Ratings on Five Cert. Classes --------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on the class C, D, and E commercial mortgage pass-through certificates issued by Morgan Stanley Dean Witter Capital I Trust 2001-TOP5. Concurrently, S&P affirmed its ratings on 12 classes from the same transaction. The upgrades of the certificates reflect the defeasance of 19% of the pool and increased credit enhancement levels. The affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. As of the Jan. 15, 2008, remittance report, the collateral pool consisted of 128 loans with an aggregate trust balance of $781.6 million, compared with 143 loans totaling $1.042 billion at issuance. The master servicer, Wells Fargo Commercial Mortgage Servicing, reported financial information for 99% of the loans. All of the servicer-provided information was full-year 2006 data or later. Using this information, Standard & Poor's calculated a weighted average debt service coverage of 1.90x, up from 1.58x at issuance. All of the loans in the pool are current, and there are no loans with the special servicer. To date, the trust has experienced one loss totaling $18,782. The top 10 loans have an aggregate outstanding balance of $263.6 million (34% of the aggregate pool balance) and a weighted average DSC of 1.92x, up from 1.60x at issuance. One of the top 10 loans appears on the master servicer's watchlist and is discussed below. Standard & Poor's reviewed property inspections provided by the master servicer for all of the assets underlying the top 10 loans, and all of the properties were characterized as "good." Credit characteristics for the Apache Mall and the Great America Technical Center loans are consistent with those of investment- grade obligations. Credit characteristics for the Gwinnent Pavilion and Town Point Business Park loan are no longer consistent with those of investment-grade obligations. Details of these loans are: -- The largest exposure in the pool, the Apache Mall loan, has a balance of $50.6 million (6%). The loan is secured by the fee interest in 603,165 sq. ft. of a 752,664-sq.- ft. regional mall in Rochester, Minnesota. For the year ended Dec. 31, 2006, the DSC was 2.21x and occupancy was 99%. Standard & Poor's adjusted net cash flow for this loan is up 14% from its level at issuance. -- The third-largest exposure in the pool, the Great America Technical Center, has a balance of $33.8 million (4%). The loan is secured by the fee interest in a 236,980-sq.- ft. office property in Santa Clara, California. For the year ended Dec. 31, 2006, the DSC was 2.67x and occupancy was 58%. The loan appears on Wells Fargo's watchlist because of the low occupancy. Broadcom Corp. is the sole tenant at the property and pays an average rent of $88 per sq. ft. As part of the analysis of the loan, Standard & Poor's considered the potential for Broadcom to vacate its space once its leases begin to expire in June 2009. Standard & Poor's analysis derived a value that is 18% higher than its level at issuance. -- The seventh-largest exposure in the pool, the Gwinnent Pavilion and Town Point Business Park loan, has a balance of $16.5 million (2%). The loan is secured by seven industrial flex properties totaling 556,660 sq. ft. Four of the properties are located in Norcross, Georgia, and three of the properties are located in Kennesaw, Georgia. For the year ended Dec. 31, 2006, the DSC was 1.75x and occupancy was 87%. As of June 1, 2007, occupancy at the properties was 79%, and Standard & Poor's adjusted net cash flow for this loan was down 18% from its level at issuance. Wells reported a watchlist of nine loans ($63.2 million; 8%), and none of the remaining loans on the watchlist had a principal balance greater than $7.5 million. Standard & Poor's stressed the loans on the watchlist and the other loans with credit issues as part of its analysis. The resultant credit enhancement levels support the raised and affirmed ratings. Ratings Raised Morgan Stanley Dean Witter Capital I Trust 2001-TOP5 Commercial mortgage pass-through certificates series 2001-TOP5 Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ C AA+ AA 12.33% D AA AA- 11.00% E A A- 8.33% Ratings Affirmed Morgan Stanley Dean Witter Capital I Trust 2001-TOP5 Commercial mortgage pass-through certificates series 2001-TOP5 Class Rating Credit enhancement ----- ------ ------------------ A-3 AAA 19.99% A-4 AAA 19.99% B AAA 16.00% F BBB+ 6.66% G BBB- 5.33% H BB+ 4.00% J BB 3.00% K BB- 2.33% L B 1.66% M B- 1.33% X-1 AAA N/A X-2 AAA N/A N/A -- Not applicable. NAISER ADVERTISING: Case Summary & 11 Largest Unsecured Creditors -----------------------------------------------------------------� Debtor: Naiser Advertising, Inc. 3432 Stony Spring Circle Louisville, KY 40220 Bankruptcy Case No.: 08-30645 Type of Business: The Debtor is a commercial art & graphic designer. See http://www.naiser.com Chapter 11 Petition Date: February 18, 2008 Court: Western District of Kentucky (Louisville) Debtor's Counsel: Neil Charles Bordy, Esq. (bordy@derbycitylaw.com) Seiller Waterman, L.L.C. 2200 Meidinger Tower 462 South 4th Street Louisville, KY 40202 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 11 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service $285,000 P.O. Box 21126 Philadelphia, PA 19114 Stock Yards Bank $225,475 P.O. Box 39511 Louisville, KY 40233 Kentucky Department of $49,000 Revenue Duplicator Sales $4,064 Languages Unlimited $3,937 Two Thomases Properties, real estate; value of $105,000 L.L.C. security: $525,000; Attention: Anne P. Thomas value of senior lien: 9701 Taylorsville Road $422,616 Louisville, KY 40299 Murphys Camera $1,640 A.T.&T. Advertising $1,371 Word Check $931 Hawkeye Security $924 Minit Print $823 NEW YORK RACING: Court Extends Exclusive Plan Filing Period ----------------------------------------------------------- The United States Bankruptcy Court for the Southern District of New York further extended New York Racing Association Inc.'s exclusive periods to file a Chapter 11 plan and solicit acceptances of that plan until March 7, 2008, Bill Rochelle of Bloomberg News reports. As reported in the Troubled Company Reporter on Feb. 11, 2008, the Debtor told the Court that it needs more time to resolve franchising issues that could allow it to operate racing at its racetrack. Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP in New York, said a draft legislation regarding the terms of the next franchise is currently in discussion among the Debtor, New York Governor Eliot Spitzer, the Assembly and the State Senate. The proposed bill will be passed by both branches of the New York State government by Feb. 13, 2008, Mr. Rosen says. However, there is no assurance that passage will occur by such date. The Debtor said that it does not seek to maintain the status quo in order to exert leverage. It just want to make sure that the governmental process to complete and the consummation of the plan is assured. According to The Associated Press, the Debtor already made an interim deal with the state to extend its contract over the racing tracks to 30 years. In turn, the Debtor will cede ownership of the tracks to the state. The governor proposed to let the Debtor retain the rights to operating the Belmont, Saratoga and Aqueduct racetracks but agreed to a revamp in the company's structure and management. Mr. Spitzer's proposal will, however, still need the approval of the Legislature. As reported in the Troubled Company Reporter on Jan. 25, 2008, New York state governor Eliot Spitzer considered having the Debtor retain the state's thoroughbred horse racing franchise. As reported in the Troubled Company Reporter on Jan. 16, 2008, the Debtor's exclusive period to file a Chapter 11 plan will expire on March. 14, 2008. About New York Racing Based in Jamaica, New York, The New York Racing Association Inc. aka NYRA -- http://www.nyra.com/-- operates racing tracks in Aqueduct, Belmont Park and Saratoga. The company filed for chapter 11 protection on Nov. 2, 2006 (Bankr. S.D.N.Y. Case No. 06-12618). Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, Henry C. Collins, Esq., at Cooper, Erving & Savage LLP, and Irena M. Goldstein, Esq., at Dewey Ballantine LLP represent the Debtor in its restructuring efforts. Jeffrey S. Stein of The Garden City Group Inc. serves as the Debtor's claims and noticing agent. The U.S. Trustee for Region 2 appointed an Official Committee of Unsecured Creditors and Edward M. Fox, Esq., Eric T. Moser, Esq., and Jeffrey N. Rich, Esq., at Kirkpatrick & Lockhart Preston Gates Ellis LLP, represent the Committee. When the Debtor sought protection from its creditors, it listed more than $100 million in total assets and total debts. NASH FINCH: Seeks $18 Mil. in Damages from Roundy's Supermarkets ---------------------------------------------------------------- Nash Finch Company answered a breach of contract suit filed by Roundy's Supermarkets Inc. on Feb. 11, 2008, claiming Nash Finch violated the terms of an Asset Purchase Agreement by not paying approximately $7.9 million as a purchase price adjustment. Nash Finch denies any additional monies were due to Roundy's, and asserted counterclaims against Roundy's for, among other things, breach of contract, misrepresentation and breach of the implied covenant of good faith and fair dealing. Nash Finch is seeking damages in its counterclaims in excess of $18 million. The efforts of Nash Finch and Roundy's to resolve their disputes concerning Nash Finch's 2005 acquisition of Roundy's Lima, Ohio and Westville, Indiana distribution centers have failed, and the matter has proceeded to litigation in the United States District Court for the Eastern District of Wisconsin. About Roundy's Roundy's Supermarkets, Inc. -- http://www.roundys.com/-- is a Fortune 500 company with 21,000 employees. It operates 133 retail grocery stores under the Pick 'n Save, Copps and Rainbow Foods banners in Wisconsin, Minnesota and Illinois. About Nash Finch Headquartered Minneapolis, Minnesota, Nash Finch Company (Nasdaq: NAFC) -- http://www.nashfinch.com/-- is an American food distribution company. Nash Finch's core business, food distribution, serves independent retailers and military commissaries in 31 states, the District of Columbia, Europe, Cuba, Puerto Rico, the Azores and Egypt. The company also owns and operates a base of retail stores, primarily supermarkets under the Econofoods(R), Family Thrift Center(R), and Sun Mart(R) trade names. * * * As reported in the Troubled Company Reporter on Nov. 22, 2007, Standard & Poor's Ratings Services revised its outlook on Nash Finch Co. to stable from negative. At the same time, S&P affirmed the Minneapolis, Minnesota-based company's 'B+' corporate credit and other ratings. This action reflects stabilized operating performance, improved credit metrics and adequate liquidity. NOWAUTO GROUP: Dec. 31 Balance Sheet Upside-Down by $584T --------------------------------------------------------- NowAuto Group Inc.'s consolidated balance sheet at Dec. 31, 2007, showed $7,150,239 in total assets and $7,734,353 in total liabilities, resulting in a $584,114 total stockholders' deficit. The company reported a net loss of $311,429 for the second quarter ended Dec. 31, 2007, compared with a net loss of $633,785 in the same period ended Dec. 31, 2006. Revenue for the quarter ended Dec. 31, 2007, was $1,063,650 versus revenue of $2,230,859 for the quarter ended Dec. 31, 2006. The decline in revenue was a result of significantly lower contract purchases during the quarter caused by a high volume of credit applications that did not meet the company's standards. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?2840 Going Concern Doubt As reported in the Troubled Company Reporter on Oct. 5, 2007, Moore & Associates Chartered in Las Vegas, Nevada expressed substantial doubt about NowAuto Group Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended June 30, 2007. The auditing firm said that the company has incurred recurring losses. About NowAuto Group NowAuto Group Inc. (OTC BB: NAUG) -- http://www.nowauto.com/-- operates four buy-here-pay-here used vehicle dealerships in Arizona. The company manages all of its installment finance contracts and purchases installment finance contracts from a select number of other independent used vehicle dealerships. Through its subsidiary, NavicomGPS Inc. the company markets GPS tracking devices, primarily to independent used vehicle dealerships. ORBIT PETROLEUM: Files for Chapter 11 Reorganization in New Mexico ------------------------------------------------------------------ Orbit Petroleum, Inc. filed a petition for protection under Chapter 11 of the United States Bankruptcy Code in Federal Court in New Mexico. The Company has taken this step because it encountered significant problems following its purchase of Tipton Enterprises, Inc., also known as Tipton Oil and Gas and its subsidiaries, Gilberts Lease Service, Toga Well Services and Blackrock Transportation. The problems are due to a number of unknown legal claims, disputes and litigation by Tipton, et al. creditors to which Orbit has been joined as a party defendant. Although Orbit is still investigating the claims made against the Company and its recently acquired subsidiaries, a stay for protection was necessary to protect the company s assets and shareholders. The company anticipates it will be able to pay all valid claims and accounts in full, plus any penalties or interest owed by the company and its Tipton subsidiaries. The company has sufficient on-going revenue from its oil and gas sales and services to sustain its operations and anticipates that it will be able to emerge from bankruptcy as a viable enterprise. The key objective in filing for protection in the US Bankruptcy Courts is to stay all legal actions and allow the company time to fully reconcile the validity and accuracy of the claims and liabilities of all parties including vendors and certain royalty owners against the company and it subsidiaries. Orbit intends to move quickly to put forth a plan which can be acceptable to all parties. Orbit had been working diligently since closing the purchase to secure investment capital for the development of the TOGA properties as well as the companys other assets. However, most of the funding partners have expressed reservations and even delayed possible commitments on potential funding until such time certain liabilities and legal matters, if valid, are resolved. The company anticipates that any interested funding partners will be more willing to invest with Orbit after the approval of a creditor plan. Orbit will be working to secure a funding partners commitment as a part of the funding of any creditor plan. Orbit Petroleum closed the Tipton Acquisition on Oct. 4, 2007. Orbit acquired Tipton Enterprises which includes properties in Chaves, Lea, Eddy and Roosevelt Counties, New Mexico for $8,825,000. Orbit paid $2,625,000 with $825,000 in stock and $1,800,000 in cash. Much of the $1,800,000 was paid with loans provided to Orbit by insiders and associates. The balance of $6,200,000 includes the assumption of roughly $3,000,000 in debt and $3,200,000 which is to be paid in cash to the Sellers over time. Orbit plans to adjust (reduce) the $3,200,000 to be paid to the Sellers of TOGA by certain liabilities for unpaid royalty and operating expenses and costs that were not disclosed and were unknown to Orbit at closing. The overall liability to Orbit for total debt incurred in the acquisition is still being reconciled. The TOGA properties include approximately 24,320 acres in 10 unitized fields with three fields comprising more than 16,000 acres. Current production is approximately 130 BOPD from 109 active wells. Headquartered in Oklahoma City, Oklahoma, Orbit Petroleum, Inc. (OBPT.PK) -- http://www.orbitpetro.com-- is the owner of oil and gas properties in New Mexico and Texas. PEOPLE'S CHOICE: Fitch Chips Ratings on 15 Certificate Classes ----------------------------------------------------------- Fitch Ratings has taken rating actions on People's Choice mortgage pass-through certificates. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are removed from Rating Watch Negative. Affirmations total $3.3 million and downgrades total $663.9 million. Additionally, $578.1 million was placed on Rating Watch Negative. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: People's Financial Realty 2006-1 -- $100.3 million class 1A1 rated 'AAA', remains on Rating Watch Negative (BL: 61.31, LCR: 1.78); -- $127.4 million class 1A2 downgraded to 'AA' from 'AAA', remains on Rating Watch Negative (BL: 44.83, LCR: 1.3); -- $64.4 million class 1A3 downgraded to 'BBB' from 'AAA', remains on Rating Watch Negative (BL: 40.38, LCR: 1.17); -- $41.2 million class 1A4 downgraded to 'BBB' from 'AAA', remains on Rating Watch Negative (BL: 38.36, LCR: 1.11); -- $122.4 million class 2A1 downgraded to 'BBB' from 'AAA', remains on Rating Watch Negative (BL: 38.66, LCR: 1.12); -- $122.4 million class 2A2 downgraded to 'BBB' from 'AAA', remains on Rating Watch Negative (BL: 38.66, LCR: 1.12); -- $36.6 million class M1 downgraded to 'CCC' from 'AA+' (BL: 33.66, LCR: 0.98); -- $33.6 million class M2 downgraded to 'CCC' from 'A+' (BL: 29.35, LCR: 0.85); -- $20.1 million class M3 downgraded to 'CCC' from 'A' (BL: 26.76, LCR: 0.78); -- $18.1 million class M4 downgraded to 'CC' from 'A-' (BL: 24.43, LCR: 0.71); -- $16.6 million class M5 downgraded to 'CC' from 'BBB' (BL: 22.29, LCR: 0.65); -- $15.5 million class M6 downgraded to 'CC' from 'BBB-' (BL: 20.24, LCR: 0.59); -- $14.5 million class M7 downgraded to 'CC' from 'BB+' (BL: 18.23, LCR: 0.53); -- $12.5 million class M8 downgraded to 'C' from 'BB-' (BL: 16.49, LCR: 0.48); -- $6.5 million class M9 downgraded to 'C' from 'B+' (BL: 15.52, LCR: 0.45); -- $12.0 million class M10 downgraded to 'C' from 'B' (BL: 14.06, LCR: 0.41); -- $3.3 million class B1 affirmed at 'BBB-', (BL: 53.99, LCR: 1.56); Deal Summary -- Originators: People's Choice -- 60+ day Delinquency: 30.43% -- Realized Losses to date (% of Original Balance): 1.76% -- Expected Remaining Losses (% of Current balance): 34.50% -- Cumulative Expected Losses (% of Original Balance): 28.46% The rating actions are based on changes that Fitch has made to its subprime loss forecasting assumptions. The updated assumptions better capture the deteriorating performance of pools from 2007, 2006 and late 2005 with regard to continued poor loan performance and home price weakness. PLASTECH ENGINEERED: Johnson Controls Mulled on Acquiring Plastech ------------------------------------------------------------------ Donald S. MacKenzie, a senior managing director at Conway MacKenzie & Dunleavy, testified before the U.S. Bankruptcy Court for the Eastern District of Michigan that Johnson Controls Inc., one of Plastech Engineered Products, Inc.'s major customers, considered acquiring the privately held company in the weeks before it sought Chapter 11, Reuters reports. Mr. MacKenzie also said that JCI may still be interested in acquiring Plastech. JCI and the three major U.S. car makers Ford Motor Company, General Motors Corporation, and Chrysler LLC have agreed to make advance payments to Plastech, a condition for Chrysler to obtain a $38,000,000 financing from a syndicate of lenders led by Bank of America, N.A. Plastech is seeking the Court's approval to hire Conway MacKenzie as its financial advisors in its Chapter 11 case. Plastech had hired the firm prepetition to help address its financial difficulties and explore alternatives for the company. About Plastech Engineered Based in Dearborn, Michigan, Plastech Engineered Products, Inc. -- http://www.plastecheng.com/-- is full-service automotive supplier of interior, exterior and underhood components. It designs and manufactures blow-molded and injection-molded plastic products primarily for the automotive industry. Plastech's products include automotive interior trim, underhood components, bumper and other exterior components, and cockpit modules. Plastech's major customers are General Motors, Ford Motor Company, and Toyota, as well as Johnson Controls, Inc. Plastech is a privately held company and is the largest family- owned company in the state of Michigan. The company is certified as a Minority Business Enterprise by the state of Michigan. Plastech maintains more than 35 manufacturing facilities in the midwestern and southern United States. The company's products are sold through an in-house sales force. The company and eight of its affiliates filed for Chapter 11 protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C., represent the Debtors in their restructuring efforts. The Debtors chose Jones Day as their special corporate and litigation counsel. Lazard Freres & Co. LLC serves as the Debtors' investment bankers, while Conway, MacKenzie & Dunleavy provide financial advisory services. The Debtors also employed Donlin, Recano & Company as their claims and noticing agent. An Official Committee of Unsecured Creditors has been appointed in the Debtors' cases. As of Dec. 31, 2006, the company's books and records reflected assets totaling $729,000,000 and total liabilities of $695,000,000. PLASTECH ENGINEERED: Taps Lazard Freres as Financial Advisor ------------------------------------------------------------ Plastech Engineered Products Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Michigan to employ Lazard Freres & Co., LLC, as their financial advisor and investment banker, nunc pro tunc to Feb. 1, 2008. Peter Smidt, executive vice president, finance, and chief financial officer of Plastech Engineered Products, Inc., relates that Lazard has provided prepetition services to the Debtors, and, as a result of those prepetition engagement, has acquired significant knowledge of the Debtors' businesses and financial structure. As financial advisor and investment banker, Lazard will: (a) review and analyze the Debtors' business, operations and financial projections; (b) evaluate the Debtors' potential debt capacity in light of their projected cash flows; (c) assist in the determination of a capital structure for the Debtors; (d) assist in the determination of a range of values for the Debtors on a going concern basis; (e) advise the Debtors on tactics and strategies for negotiating with the stakeholders; (f) render financial advice to the Debtors and participate in meetings or negotiations with the stakeholders and rating agencies or other appropriate parties in connection with any restructuring; (g) advise the Debtors on the timing, nature, and terms of new securities, other consideration or other inducements to be offered pursuant to the Restructuring; (h) advise and assist the Debtors in evaluating a potential DIP Financing transaction, in contacting potential sources of capital, in implementing a DIP Financing; (i) assist the Debtors, in preparing documentation within Lazard's area of expertise that is required in connection with the Restructuring; (j) assist the Debtors in identifying and evaluating candidates for a potential Sale Transaction, advise the Debtors in connection with negotiations and aid in the consummation of a Sale Transaction; (k) attend meetings of the Debtors' Board of Directors and its committees; (l) provide testimony with respect to financial matters; and (m) provide the Debtors with other financial restructuring advice. The Debtors will pay Lazard a $150,000 fee to be paid each month until the earlier of the completion of the Restructuring or the termination of Lazard's engagement; and a $3,500,000 restructuring fee. Monthly Fees paid in respect of the first four months of Lazard's engagement will be credited against any Restructuring Fee payable; provided that credit will only apply to the extent that the fees are approved in their entirety by the Court. If the Debtors consummate a sale of all or a majority of their assets, the Debtors will pay Lazard a Sale Transaction Fee equal to the greater of (x) the fee calculated based on the Aggregate Consideration or (y) the Restructuring Fee. If the Debtors consummate a "minor" sale of assets, Lazard will receive a fee based on the Aggregate Consideration. The total Sale Transaction Fee is calculated by breaking down the Aggregate Consideration and multiplying each increment by a corresponding incremental fee: Aggregate Consideration Incremental Fee (In Millions) Percentage ----------------------- --------------- $0 - $25 2.50% $25 - $50 2.20% $50 - $100 1.75% $100 - $200 1.30% $200 - $300 1.10% $300 - $400 1.00% $400 - $500 0.90% $500 - $600 0.86% $600 - $700 0.82% $700 - $800 0.78% $800 - $900 0.74% $900 above 0.70% The Debtors will also pay Lazard a DIP Financing fee equal to 1.0% of the aggregate gross proceeds raised in a DIP Financing Agreement. Any DIP Financing Fee paid will be credited against any Restructuring Fee subsequently payable. Mr. Smidt says the total fees payable to Lazard will not exceed $5,500,000. All fees payable to Lazard will be subject to a minimum fee equal to $750,000. In addition to all the fees payable to Lazard, the Debtors will reimburse Lazard for all reasonable expenses incurred. The Debtors also agree to indemnify Lazard from any claims or causes of action arising from its engagement as financial advisor and investment banker to the Debtors. Andrew Yearly, managing director at Lazard, assures the Court that his firm does not represent any interest adverse to the Debtors and their estates, and is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Mr. Yearly, however, discloses that Lazard has represented or may currently represent certain parties-in-interest in matters wholly unrelated to the Debtors' bankruptcy proceedings. About Plastech Engineered Based in Dearborn, Michigan, Plastech Engineered Products, Inc. -- http://www.plastecheng.com/-- is full-service automotive supplier of interior, exterior and underhood components. It designs and manufactures blow-molded and injection-molded plastic products primarily for the automotive industry. Plastech's products include automotive interior trim, underhood components, bumper and other exterior components, and cockpit modules. Plastech's major customers are General Motors, Ford Motor Company, and Toyota, as well as Johnson Controls, Inc. Plastech is a privately held company and is the largest family- owned company in the state of Michigan. The company is certified as a Minority Business Enterprise by the state of Michigan. Plastech maintains more than 35 manufacturing facilities in the midwestern and southern United States. The company's products are sold through an in-house sales force. The company and eight of its affiliates filed for Chapter 11 protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C., represent the Debtors in their restructuring efforts. The Debtors chose Jones Day as their special corporate and litigation counsel. Lazard Freres & Co. LLC serves as the Debtors' investment bankers, while Conway, MacKenzie & Dunleavy provide financial advisory services. The Debtors also employed Donlin, Recano & Company as their claims and noticing agent. An Official Committee of Unsecured Creditors has been appointed in the Debtors' cases. As of Dec. 31, 2006, the company's books and records reflected assets totaling $729,000,000 and total liabilities of $695,000,000. PLASTECH ENGINEERED: To Hire Skadden Arps as Bankruptcy Counsel --------------------------------------------------------------- Plastech Engineered Products Inc. and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Eastern District of Michigan to employ Skadden, Arps, Slate, Meagher & Flom LLP as their bankruptcy counsel, nunc pro tunc to their bankruptcy filing. Peter Smidt, executive vice president, finance, and chief financial officer of Plastech Engineered Products, Inc., relates that Skadden Arps has provided prepetition legal services to the Debtors to work out their financial difficulties, including a possible restructuring of their financial affairs and capital structure, and possible representation in any reorganization cases filed under Chapter 11 of the U.S. Bankruptcy Code. As a result of the prepetition engagement, Mr. Smidt believes Skadden Arps has become uniquely familiar with the Debtors' business affairs and many of the potential issues that may arise during the course of their bankruptcy proceedings. As bankruptcy counsel, Skadden Arps will: (a) advise the Debtors with respect to their powers and duties as debtors and debtors-in-possession in the continued management and operation of their businesses and properties; (b) attend meetings and negotiating with representatives of creditors and other parties-in-interest; and advise and consult on the conduct of the cases, including all of the legal and administrative requirements of operating in Chapter 11; (c) take all necessary action to protect and preserve the Debtors' estates, including the prosecution of actions on behalf of the Debtors' estates, the defense of any actions commenced against those estates, negotiations concerning litigation in which the Debtors may be involved and objections to claims filed against the estates; (d) prepare, on behalf of the Debtors, motions, applications, answers, orders, reports and papers necessary to the administration of the estates; (e) prepare and negotiate on the Debtors' behalf plan of reorganization, disclosure statement, and all related agreements or documents, and take any necessary action on behalf of the Debtors to obtain confirmation of the reorganization plan; (f) advise the Debtors in connection with any sale of assets; (g) perform other necessary legal services and provide other necessary legal advice to the Debtors in connection with their Chapter 11 cases; and (h) appear before the Court, any appellate courts, and the U.S. Trustee and protecting the interests of the Debtors' estates before those courts and the U.S. Trustee. The Debtors propose to pay Skadden Arps according to its customary hourly rates: Professionals Hourly Rate ------------- ----------- Partners & Of-counsel $680 - $950 Counsel & Associates $340 - $765 Legal Assistants $170 - $265 The Debtors will also reimburse Skadden Arps of its necessary out-of-pocket expenses. Mr. Smidt discloses that the Debtors have paid $150,000 to Skadden Arps, which amount is held as on-account cash for the advance payment of prepetition professional fees and expenses. During the 90-day period before the Petition Date, Skadden Arps billed the Debtors a total of $223,570, and received payments totaling $417,920, including the Initial On Account Cash and an additional $43,000 increase of the Initial On Account Cash. Gregg M. Galardi, Esq., a member at Skadden Arps, assures the Court that his firm does not represent any interest adverse to the Debtors and their estates, and is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Mr. Galardi discloses that Skadden Arps has represented the Debtors in connection with the potential acquisition of a third party, and in litigation arising in connection with bankruptcy proceedings filed by Meridian Automotive Systems, Inc., and certain of its affiliates. Mr. Galardi further discloses that Skadden Arps has represented or is currently representing certain parties-in-interest in matters wholly unrelated to the Debtors' bankruptcy proceedings. Those parties include: * Bank of America, N.A., * Goldman Sachs Credit Partners, L.P., * Ford Motor Company, * Johnson Controls, Inc., * Visteon Corporation, * Chrysler LLC, * Daimler AG, * Delphi Automotive Systems (Holding), Inc., * Honda Motors Company, * Exxon Mobil Corporation, * The Southern Company, * American International Group, * The Travelers Companies, Inc. Mr. Galardi tells the Court that Skadden Arps will promptly file a supplemental declaration if its client investigation reveals undisclosed material facts. About Plastech Engineered Based in Dearborn, Michigan, Plastech Engineered Products, Inc. -- http://www.plastecheng.com/-- is full-service automotive supplier of interior, exterior and underhood components. It designs and manufactures blow-molded and injection-molded plastic products primarily for the automotive industry. Plastech's products include automotive interior trim, underhood components, bumper and other exterior components, and cockpit modules. Plastech's major customers are General Motors, Ford Motor Company, and Toyota, as well as Johnson Controls, Inc. Plastech is a privately held company and is the largest family- owned company in the state of Michigan. The company is certified as a Minority Business Enterprise by the state of Michigan. Plastech maintains more than 35 manufacturing facilities in the midwestern and southern United States. The company's products are sold through an in-house sales force. The company and eight of its affiliates filed for Chapter 11 protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C., represent the Debtors in their restructuring efforts. The Debtors chose Jones Day as their special corporate and litigation counsel. Lazard Freres & Co. LLC serves as the Debtors' investment bankers, while Conway, MacKenzie & Dunleavy provide financial advisory services. The Debtors also employed Donlin, Recano & Company as their claims and noticing agent. An Official Committee of Unsecured Creditors has been appointed in the Debtors' cases. As of Dec. 31, 2006, the company's books and records reflected assets totaling $729,000,000 and total liabilities of $695,000,000. POLAR MOLECULAR: Case Dismissal Hearing Slated for March 13 ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Colorado will convene a hearing on March 13, 2008, to consider the request of a Polar Molecular Corp. creditor, which has a security interest in patents and trademarks, to dismiss the Debtor's Chapter 11 case, Bill Rochelle at Bloomberg News reports. Petroleum Enhancer LLC has asked the Court to dismiss the Chapter 11 case of the Debtor, saying that the bankruptcy petition was filed the day before a foreclosure date. Therefore, the Chapter 11 filing was in bad faith. Headquartered in Denver, Polar Molecular Corp. develops and sells fuel additives. The company also sells marketing rights to others to sell the same fuel additives. The company filed for Chapter 11 protection on Jan. 11, 2008 (Bank. D. Colo. Case No. 08-10346). D. Bruce Coles, Esq., at Quinn & Coles, represents the Debtor in its restructuring efforts. The Debtor reported $400,001,522 in total assets, including $400,000,000 in patents and other intellectual properties, and $5,123,574 in total debts, in its schedules of assets and liabilities filed with the Court. PROSPECT MEDICAL: Inks Forbearance Arrangements with Lenders ------------------------------------------------------------ Prospect Medical Holdings Inc. reached forbearance arrangements with all participating lenders in its $155 million senior secured credit facility. The 60-day forbearance is intended to give Prospect the necessary additional time to complete the Alta restatement exercise and finalize its Sept. 30, 2007, audited financial statements for delivery to the lenders. The lenders have agreed, subject to certain terms and conditions, to forbear from exercising their rights and remedies under the credit agreements resulting from Prospect's delay in submitting annual audited financial statements. The forbearance period expires March 31, 2008, but could be extended until April 10, 2008, under certain circumstances. Prospect believes that it will be in a position to deliver the required information to the lenders prior to the March 31 deadline. Prospect continues to make all required interest and principal payments under the loans. About Prospect Medical Prospect Medical Holdings Inc. (AMEX: PZZ) -- http://www.prospectmedicalholdings.com/-- manages the medical care of individuals enrolled in HMO plans in Southern California. The company, through its Independent Physician Associations, contracts with health care professionals to provide a full range of services to HMO enrollees. Services provided by Prospect include contract negotiations, physician recruiting and credentialing, HR, claims administration, financial services, provider relations, case management, quality assurance, data collection and MIS. * * * As reported in the Troubled Company Reporter on Feb. 5, 2008, Standard & Poor's Ratings Services said that its 'B-' counterparty credit rating on Prospect Medical Holdings remains on CreditWatch with negative implications. QUEBECOR WORLD: Quebec Court Extends CCAA Protection Until May 12 ----------------------------------------------------------------- Quebecor World Inc. provided update on its restructuring under the Companies' Creditors Arrangement Act (Canada). First Extension of Stay Period Quebecor World Inc. and the other Quebecor World companies involved in the CCAA restructuring process obtained an initial court order under the CCAA on Jan. 21, 2008 providing for a stay of proceedings until Feb. 20, 2008. Quebecor World said that on Tuesday, the Superior Court of Quebec extended the stay of proceedings up to and including May 12, 2008. Among other matters, the First Stay Extension Order relieves Quebecor World of its obligation to convene and hold its annual meeting of shareholders prior to June 30, 2008, and directs Quebecor World to hold its next annual shareholders' meeting within three (3) months following the ultimate termination date of the stay period. A copy of the First Stay Extension Order is available at http://www.quebecorworldinc.com/restructuring.aspx. About Quebecor World Based in Montreal, Quebec, Quebecor World Inc. (TSX: IQW) (NYSE: IQW), -- http://www.quebecorworldinc.com/-- provides market solutions, including marketing and advertising activities, well as print solutions to retailers, branded goods companies, catalogers and to publishers of magazines, books and other printed media. It has 127 printing and related facilities located in North America, Europe, Latin America and Asia. In the United States, it has 82 facilities in 30 states, and is engaged in the printing of books, magazines, directories, retail inserts, catalogs and direct mail. In Canada it has 17 facilities in five provinces, through which it offers a mix of printed products and related value-added services to the Canadian market and internationally. The company is an independent commercial printer in Europe with 19 facilities, operating in Austria, Belgium, Finland, France, Spain, Sweden, Switzerland and the United Kingdom. In March 2007, it sold its facility in Lille, France. Quebecor World (USA) Inc. is its wholly owned subsidiary. Quebecor World and 53 of its subsidiaries, including those in Canada, filed a petition under the Companies' Creditors Arrangement Act before the Superior Court of Quebec, Commercial Division, in Montreal, Canada, on Jan. 20, 2008. The Honorable Justice Robert Mongeon oversees the CCAA case. Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the Company in the CCAA case. Ernst & Young Inc. was appointed as Monitor. On Jan. 21, 2008, Quebecor World (USA) Inc., its U.S. subsidiary, along with other U.S. affiliates, filed for chapter 11 bankruptcy on Jan. 21, 2008 (Bankr. S.D.N.Y Lead Case No. 08-10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter LLP represents the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors is represented by Akin Gump Strauss Hauer & Feld LLP. Based in Corby, Northamptonshire, Quebecor World PLC -- http://www.quebecorworldplc.com/-- is the U.K. subsidiary of Quebecor World Inc. that specializes in web offset magazines, catalogues and specialty print products for marketing and advertising campaigns. The company employs around 290 people. Quebecor PLC was placed into administration with Ian Best and David Duggins of Ernst & Young LLP appointed as joint administrators effective Jan. 28, 2008. As of Sept. 30, 2007, Quebecor World's unaudited consolidated balance sheet showed total assets of $5,554,900,000, total liabilities of $3,964,800,000, preferred shares of $175,900,000, and total shareholders' equity of $1,414,200,000. The company has until May 20, 2008, to file a plan of reorganization in the Chapter 11 case. (Quebecor World Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Feb. 13, 2008 Moody's Investors Service assigned a Ba2 rating to the $400 million super priority senior secured revolving term loan facility of Quebecor World Inc. as a Debtor-in-Possession. The related $600 million super priority senior secured term loan was rated Ba3 (together, the DIP facilities). The RTL's better asset value coverage relative to the TL accounts for the ratings' differential. QUEBECOR WORLD: Joint Administrators Close British Printing Plant ----------------------------------------------------------------- Sylvain Larocque, writing for The Canadian Press, reports that Ian Best and David Duggins of Ernst & Young LLP, the joint administrators of Quebecor World Inc.'s British operation, have decided to shut down the printing plant in Corby. As previously reported, the Corby facility is located in the central U.K. about 70 miles north of London. It employed approximately 290 people and produced magazines, catalogs and specialty print products for marketing and advertising campaigns. According to the report, at least 250 workers will lose their jobs due to the closure. The Canadian Press relates that Messrs. Best and Duggins were not able to find a buyer who would continue operating the plant. "The only interest expressed by potential investors were in the assets, including the building and machinery, of Quebecor World in the United Kingdom," Sylvain Larocque reports. Tony Burke, assistant secretary-general of Unite, the union representing workers at the Corby plant, blamed the Quebecor parent company in Canada, The Canadian press noted. About Quebecor World Based in Montreal, Quebec, Quebecor World Inc. (TSX: IQW) (NYSE: IQW), -- http://www.quebecorworldinc.com/-- provides market solutions, including marketing and advertising activities, well as print solutions to retailers, branded goods companies, catalogers and to publishers of magazines, books and other printed media. It has 127 printing and related facilities located in North America, Europe, Latin America and Asia. In the United States, it has 82 facilities in 30 states, and is engaged in the printing of books, magazines, directories, retail inserts, catalogs and direct mail. In Canada it has 17 facilities in five provinces, through which it offers a mix of printed products and related value-added services to the Canadian market and internationally. The company is an independent commercial printer in Europe with 19 facilities, operating in Austria, Belgium, Finland, France, Spain, Sweden, Switzerland and the United Kingdom. In March 2007, it sold its facility in Lille, France. Quebecor World (USA) Inc. is its wholly owned subsidiary. Quebecor World and 53 of its subsidiaries, including those in Canada, filed a petition under the Companies' Creditors Arrangement Act before the Superior Court of Quebec, Commercial Division, in Montreal, Canada, on Jan. 20, 2008. The Honorable Justice Robert Mongeon oversees the CCAA case. Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the Company in the CCAA case. Ernst & Young Inc. was appointed as Monitor. On Jan. 21, 2008, Quebecor World (USA) Inc., its U.S. subsidiary, along with other U.S. affiliates, filed for chapter 11 bankruptcy on Jan. 21, 2008 (Bankr. S.D.N.Y Lead Case No. 08-10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter LLP represents the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors is represented by Akin Gump Strauss Hauer & Feld LLP. Based in Corby, Northamptonshire, Quebecor World PLC -- http://www.quebecorworldplc.com/-- is the U.K. subsidiary of Quebecor World Inc. that specializes in web offset magazines, catalogues and specialty print products for marketing and advertising campaigns. The company employs around 290 people. Quebecor PLC was placed into administration with Ian Best and David Duggins of Ernst & Young LLP appointed as joint administrators effective Jan. 28, 2008. As of Sept. 30, 2007, Quebecor World's unaudited consolidated balance sheet showed total assets of $5,554,900,000, total liabilities of $3,964,800,000, preferred shares of $175,900,000, and total shareholders' equity of $1,414,200,000. The company has until May 20, 2008, to file a plan of reorganization in the Chapter 11 case. The Debtors' CCAA stay has been extended to May 12, 2008. (Quebecor World Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Feb. 13, 2008 Moody's Investors Service assigned a Ba2 rating to the $400 million super priority senior secured revolving term loan facility of Quebecor World Inc. as a Debtor-in-Possession. The related $600 million super priority senior secured term loan was rated Ba3 (together, the DIP facilities). The RTL's better asset value coverage relative to the TL accounts for the ratings' differential. QUEBECOR WORLD: Franklin Resources Holds 1,105 Sub. Voting Shares ----------------------------------------------------------------- Franklin Resources, Inc., Charles Johnson, Rupert Johnson, Jr., and Franklin Templeton Investments Corp. disclose, in a regulatory filing with the Securities and Exchange Commission, that they may be deemed to beneficially own 1,105 shares of Quebecor World Inc.'s subordinate voting shares. According to Maria Gray, secretary of Franklin Resources, Inc., Charles B. Johnson and Rupert H. Johnson, Jr., are the principal stockholders of Franklin Resources, Inc., each owning in excess of 10% of the outstanding common stock. FRI and the Principal Shareholders may be deemed to be the beneficial owners of securities held by persons and entities for whom or for which FRI subsidiaries provide investment management services, Ms. Gray says. FRI, the Principal Shareholders and each of the Investment Management Subsidiaries disclaim any pecuniary interest in any of the Securities. About Quebecor World Based in Montreal, Quebec, Quebecor World Inc. (TSX: IQW) (NYSE: IQW), -- http://www.quebecorworldinc.com/-- provides market solutions, including marketing and advertising activities, well as print solutions to retailers, branded goods companies, catalogers and to publishers of magazines, books and other printed media. It has 127 printing and related facilities located in North America, Europe, Latin America and Asia. In the United States, it has 82 facilities in 30 states, and is engaged in the printing of books, magazines, directories, retail inserts, catalogs and direct mail. In Canada it has 17 facilities in five provinces, through which it offers a mix of printed products and related value-added services to the Canadian market and internationally. The company is an independent commercial printer in Europe with 19 facilities, operating in Austria, Belgium, Finland, France, Spain, Sweden, Switzerland and the United Kingdom. In March 2007, it sold its facility in Lille, France. Quebecor World (USA) Inc. is its wholly owned subsidiary. Quebecor World and 53 of its subsidiaries, including those in Canada, filed a petition under the Companies' Creditors Arrangement Act before the Superior Court of Quebec, Commercial Division, in Montreal, Canada, on Jan. 20, 2008. The Honorable Justice Robert Mongeon oversees the CCAA case. Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the Company in the CCAA case. Ernst & Young Inc. was appointed as Monitor. On Jan. 21, 2008, Quebecor World (USA) Inc., its U.S. subsidiary, along with other U.S. affiliates, filed for chapter 11 bankruptcy on Jan. 21, 2008 (Bankr. S.D.N.Y Lead Case No. 08-10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter LLP represents the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors is represented by Akin Gump Strauss Hauer & Feld LLP. Based in Corby, Northamptonshire, Quebecor World PLC -- http://www.quebecorworldplc.com/-- is the U.K. subsidiary of Quebecor World Inc. that specializes in web offset magazines, catalogues and specialty print products for marketing and advertising campaigns. The company employs around 290 people. Quebecor PLC was placed into administration with Ian Best and David Duggins of Ernst & Young LLP appointed as joint administrators effective Jan. 28, 2008. As of Sept. 30, 2007, Quebecor World's unaudited consolidated balance sheet showed total assets of $5,554,900,000, total liabilities of $3,964,800,000, preferred shares of $175,900,000, and total shareholders' equity of $1,414,200,000. The company has until May 20, 2008, to file a plan of reorganization in the Chapter 11 case. The Debtors' CCAA stay has been extended to May 12, 2008. (Quebecor World Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Feb. 13, 2008 Moody's Investors Service assigned a Ba2 rating to the $400 million super priority senior secured revolving term loan facility of Quebecor World Inc. as a Debtor-in-Possession. The related $600 million super priority senior secured term loan was rated Ba3 (together, the DIP facilities). The RTL's better asset value coverage relative to the TL accounts for the ratings' differential. QUEBECOR WORLD: New Pact with Clients to Yield $75 Mil. Annually ---------------------------------------------------------------- Quebecor World Inc. said that during the last several weeks it has signed new and renewed multi-year agreements with important customers across all its major business groups. The value of these agreements is estimated at more than $75,000,000 annually. This includes major publishers, retailers and direct marketers. "These multi-year agreements clearly demonstrate that major publishers, retailers, and direct marketing companies recognize the value Quebecor World provides to their business," said Jacques Mallette, President and CEO Quebecor World. "We appreciate the trust and commitment of our customers who continue to renew existing agreements and reward us with new work. This is due to the strength of our platform and the dedication of our employees across our network who consistently provide our customers with top-quality products, on-time delivery and exemplary customer service." Quebecor World expects to make additional announcements in the coming weeks with respect to new and renewed customer agreements. Today we are pleased to announce that Imagitas, Inc., an innovative marketing services company recently agreed to extend its partnership with Quebecor World. "Imagitas is one of America's most inventive direct marketing services companies," said Kevin J. Clarke, President of the Quebecor World Book and Directory Group. "They chose to renew and extend its agreement with Quebecor World because of our record of close collaboration in new product development and because of our consistent history of meeting critical delivery dates." Hughes R. Bakewell, Jr., President, Direct Marketing Solutions Division added, "We are pleased to be awarded this work by a company that is a clear leader in its field and look forward to building on our partnership in the years to come. Our relationship with Imagitas, Inc. exemplifies Quebecor World's commitment to creating the highest value for our clients." The Imagitas agreement covers products manufactured in Quebecor World's Book and Direct Mail facilities. Imagitas' total contract and non-contract billings are valued at more than $50,000,000 from 2008 through 2010. In our Magazine Division, Quebecor World has been awarded a five-year agreement to print 100% of a nine-title portfolio of magazines published by Stamats Business Media of Cedar Rapids, Iowa. The titles include Archi-Tech, Buildings, Interiors & Sources and four regional editions of Meetings magazine. In addition, Quebecor World received four new titles from F+W Publications a consumer hobby and enthusiast magazine and book publisher. The new titles are Scuba Diving, Deer & Deer Hunting, Turkey & Turkey Hunting, and Scrapbook Retailer and will be produced in Quebecor World's Lebanon, OH, Midland, MI, and St- Cloud, MN facilities. In our U.S. Retail Insert and Catalog Division we have secured long-term renewals and new work from five customers valued at more than $55,000,000 annually including Petco a leading supplier of pet products with 850 stores in 49 states. About Quebecor World Based in Montreal, Quebec, Quebecor World Inc. (TSX: IQW) (NYSE: IQW), -- http://www.quebecorworldinc.com/-- provides market solutions, including marketing and advertising activities, well as print solutions to retailers, branded goods companies, catalogers and to publishers of magazines, books and other printed media. It has 127 printing and related facilities located in North America, Europe, Latin America and Asia. In the United States, it has 82 facilities in 30 states, and is engaged in the printing of books, magazines, directories, retail inserts, catalogs and direct mail. In Canada it has 17 facilities in five provinces, through which it offers a mix of printed products and related value-added services to the Canadian market and internationally. The company is an independent commercial printer in Europe with 19 facilities, operating in Austria, Belgium, Finland, France, Spain, Sweden, Switzerland and the United Kingdom. In March 2007, it sold its facility in Lille, France. Quebecor World (USA) Inc. is its wholly owned subsidiary. Quebecor World and 53 of its subsidiaries, including those in Canada, filed a petition under the Companies' Creditors Arrangement Act before the Superior Court of Quebec, Commercial Division, in Montreal, Canada, on Jan. 20, 2008. The Honorable Justice Robert Mongeon oversees the CCAA case. Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the Company in the CCAA case. Ernst & Young Inc. was appointed as Monitor. On Jan. 21, 2008, Quebecor World (USA) Inc., its U.S. subsidiary, along with other U.S. affiliates, filed for chapter 11 bankruptcy on Jan. 21, 2008 (Bankr. S.D.N.Y Lead Case No. 08-10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter LLP represents the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors is represented by Akin Gump Strauss Hauer & Feld LLP. Based in Corby, Northamptonshire, Quebecor World PLC -- http://www.quebecorworldplc.com/-- is the U.K. subsidiary of Quebecor World Inc. that specializes in web offset magazines, catalogues and specialty print products for marketing and advertising campaigns. The company employs around 290 people. Quebecor PLC was placed into administration with Ian Best and David Duggins of Ernst & Young LLP appointed as joint administrators effective Jan. 28, 2008. As of Sept. 30, 2007, Quebecor World's unaudited consolidated balance sheet showed total assets of $5,554,900,000, total liabilities of $3,964,800,000, preferred shares of $175,900,000, and total shareholders' equity of $1,414,200,000. The company has until May 20, 2008, to file a plan of reorganization in the Chapter 11 case. The Debtors' CCAA stay has been extended to May 12, 2008. (Quebecor World Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Feb. 13, 2008 Moody's Investors Service assigned a Ba2 rating to the $400 million super priority senior secured revolving term loan facility of Quebecor World Inc. as a Debtor-in-Possession. The related $600 million super priority senior secured term loan was rated Ba3 (together, the DIP facilities). The RTL's better asset value coverage relative to the TL accounts for the ratings' differential. REBECCA CARTEE: Case Summary & Three Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Rebecca Angeline Cooper Cartee 1494 Old Hillsboro Road Franklin, TN 37069 Bankruptcy Case No.: 08-01356 Chapter 11 Petition Date: February 19, 2008 Court: Middle District of Tennessee (Nashville) Debtor's Counsel: John C. McLemore, Esq. McLemore & Walker PLLC P.O. Box 158249 Nashville, TN 37215-9848 Tel: (615) 383-9495 Fax: (615) 292-9848 gmwecfkr@gmwpllc.com Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's list of its Three Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ ------------ --------- Federal Land Bank $783,000 1013 Highway 72 East Tuscumbia, AL 35674 Williamson County Trustee 1494 Old Hillsboro $9,723 1320 West Main Street Road Property Tax Franklin, TN 37064 GMAC Unknown P.O. Box 130424 Roseville, MN 5513 RED MILE: Posts $2.8M Net Loss in 3rd Quarter Ended Dec. 31 ----------------------------------------------------------- Red Mile Entertainment Inc. reported a net loss of $2,818,959 on net revenues of $5,704,034 for the third quarter ended Dec. 31, 2007, compared with a net loss of $2,345,643 on net revenues of $502,503 in the same period ended Dec. 31, 2006. The increase in net revenues is primarily due to sales of Jackass: The Game in North America, Europe, Australia and Asia in fiscal 2008. Cost of sales were approximately $6,315,000 during the three months ended Dec. 31, 2007, as compared to approximately $1,323,000 during the comparable period from 2006. Research and development expenses were approximately $442,000 during the three months ended Dec. 31, 2007, as compared to approximately $144,000 during the three months ended Dec. 31, 2006. Virtually all of the costs for R&D during the three months ended Dec. 31, 2007, related to costs incurred in the development of Sin City: the Game and Jackass: The Game for the Nintendo DS prior to the related game reaching technological feasibility. General and administrative costs were approximately $1,156,000 in the three months ended Dec. 31, 2007, as compared to approximately $786,000 in the three months ended Dec. 31, 2006. During the three months ended Dec. 31, 2007, the company took a bad debt charge in the amount of approximately $380,000 related to one of its customers, Hollywood Video, who filed for Chapter 11 protection during the quarter. Sales, marketing and business development costs were approximately $429,000 during the three months ended Dec. 31, 2007, as compared to approximately $497,000 during the three months ended Dec. 31, 2006. During the three months ended Dec. 31, 2007, the company took a non-cash charge of approximately $190,000 related to contingent liability charges on the value of 192,000 warrants issued on July 18, 2007, that management now believes will not be cancelled as the company will not be able to realize a liquidity event in Canada before March 18, 2008. Balance Sheet At Dec. 31, 2007, the company's consolidated balance sheet showed $9,797,999 in total assets, $4,168,053 in total liabilities, and $5,629,946 in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?2841 Going Concern Doubt Burr, Pilger & Mayer LLP, in San Francisco, expressed substantial doubt about Red Mile Entertainment Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended March 31, 2007, and 2006. The auditing firm pointed to the company's recurring losses, negative cash flows from operations, and accumulated deficit. About Red Mile Headquartered in Sausalito, California, Red Mile Entertainment Inc. (OTC BB: RDML.OB) -- http://www.redmileentertainment.com/-- is a worldwide developer and publisher of interactive entertainment software. Red Mile creates, incubates, and licenses premier intellectual properties and develops products for console video-game systems, personal computers, and other interactive entertainment platforms. REMOTEMDX INC: Posts $2.3M Net Loss in 1st Qtr. Ended Dec. 31 ------------------------------------------------------------- RemoteMDx Inc. reported a net loss of $2,352,383 on net sales of $3,605,545 for the first quarter ended Dec. 31, 2007, versus a net loss of $7,813,649 on net sales of $988,237 in the comparable period ended Dec. 31, 2006. The increase in net sales resulted primarily from the sale and monitoring of offender tracking devices. On Dec. 1, 2007, the company acquired Midwest. For the month ended Dec. 31, 2007, Midwest had net sales of $351,583. These sales consisted of $311,631 from the monitoring of offender tracking devices, $36,046 from the sale of devices, and $3,906 from other miscellaneous sales. On Dec. 1, 2007, the company acquired Court Programs. For the month ended Dec. 31, 2007, Court Programs had net sales of $209,313 all from the monitoring of offender tracking devices and parolee services. For the three months ended Dec. 31, 2007, cost of goods sold was $2,184,100 compared to $2,205,393 during the three months ended Dec. 31, 2006, a decrease of $21,293. Liquidity and Capital Resources During the three months ended Dec. 31, 2007, the company financed its operations primarily from the sale and issuance of common stock of the company's subsidiary Volu-Sol Reagents and the exercise of warrants for the purchase of common stock of the company for net proceeds of $4,027,380. As of Dec. 31, 2007, the company had unrestricted cash of $7,713,104 and a working capital of $3,707,769, compared to unrestricted cash of $5,556,275 and a working capital of $2,596,985 at Sept. 30, 2007. During the three months ended December 31, 2007, the company's operating activities used cash of $1,284,739, compared to $552,722 of cash provided during the three months ended Dec. 31, 2006. Balance Sheet At Dec. 31, 2007, the company's consolidated balance sheet showed $21,988,109 in total assets, $11,700,567 in total liabilities, $2,765,051 in minority interest, $3,590,000 in SecureAlert Series A preferred stock, and $3,932,491 in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?2833 Going Concern Doubt As reported in the Troubled Company Reporter on Jan. 18, 2008, Salt Lake City, Utah-based Hansen, Barnett & Maxwell expressed substantial doubt about RemoteMDx Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Sept. 30, 2007. The auditing firm pointed to the company's recurring operating losses and accumulated deficit. About RemoteMDx Headquartered in Sandy, Utah, RemoteMDx Inc. (OTC BB: RMDX.OB) -- http://www.remotemdx.com/-- and its subsidiary, SecureAlert Inc., develop and market monitoring and surveillance products and services to the criminal justice system throughout the United States. RESIDENTIAL FUNDING: Fitch Junks Ratings on 22 Certificate Classes ------------------------------------------------------------------ Fitch Ratings has taken rating actions on Residential Funding Company Residential Asset Securities Corporation mortgage pass- through certificates. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are now removed. Affirmations total $618.1 million and downgrades total $1.2 billion. Additionally, $869.3 million remains on Rating Watch Negative. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: RASC 2006-KS6 -- $65.2 million class A-1 affirmed at 'AAA', (BL: 73.55, LCR: 3.06); -- $89.2 million class A-2 affirmed at 'AAA', (BL: 55.09, LCR: 2.3); -- $91.8 million class A-3 rated 'AAA', remains on Rating Watch Negative (BL: 45.07, LCR: 1.88); -- $47.2 million class A-4 downgraded to 'AA' from 'AAA' (BL: 41.91, LCR: 1.75); -- $20.7 million class M-1 downgraded to 'BBB' from 'AA+' (BL: 36.98, LCR: 1.54); -- $18.5 million class M-2 downgraded to 'BB' from 'AA+' (BL: 32.55, LCR: 1.36); -- $10.9 million class M-3 downgraded to 'BB' from 'AA' (BL: 29.93, LCR: 1.25); -- $9.5 million class M-4 downgraded to 'B' from 'AA-' (BL: 27.63, LCR: 1.15); -- $9.8 million class M-5 downgraded to 'B' from 'A+' (BL: 25.21, LCR: 1.05); -- $8.7 million class M-6 downgraded to 'CCC' from 'A' (BL: 22.95, LCR: 0.96); -- $8.4 million class M-7 downgraded to 'CCC' from 'A-' (BL: 20.57, LCR: 0.86); -- $7.6 million class M-8 downgraded to 'CCC' from 'BBB' (BL: 18.38, LCR: 0.77); -- $5.7 million class M-9 downgraded to 'CC' from 'BBB-' (BL: 16.60, LCR: 0.69); -- $5.4 million class B downgraded to 'CC' from 'BB-' (BL: 15.23, LCR: 0.63); Deal Summary -- Originators: HomeComings Financial Network, Inc. (29.4%), EFC Holdings Corporation (11.2%); -- 60+ day Delinquency: 19.26%; -- Realized Losses to date (% of Original Balance): 0.94%; -- Expected Remaining Losses (% of Current balance): 24.00%; -- Cumulative Expected Losses (% of Original Balance): 19.18%. RASC 2006-KS7 -- $69.7 million class A-1 affirmed at 'AAA', (BL: 78.33, LCR: 3.24); -- $90.3 million class A-2 affirmed at 'AAA', (BL: 55.69, LCR: 2.31); -- $80.3 million class A-3 rated 'AAA', remains on Rating Watch Negative (BL: 46.06, LCR: 1.91); -- $57.2 million class A-4 downgraded to 'AA' from 'AAA', remains on Rating Watch Negative (BL: 41.72, LCR: 1.73); -- $21.2 million class M-1 downgraded to 'BBB' from 'AA+' (BL: 36.73, LCR: 1.52); -- $18.7 million class M-2 downgraded to 'BB' from 'AA' (BL: 32.32, LCR: 1.34); -- $11.3 million class M-3 downgraded to 'B' from 'AA-' (BL: 29.60, LCR: 1.23); -- $10.4 million class M-4 downgraded to 'B' from 'A+' (BL: 27.07, LCR: 1.12); -- $9.6 million class M-5 downgraded to 'B' from 'A' (BL: 24.72, LCR: 1.02); -- $9.4 million class M-6 downgraded to 'CCC' from 'A-' (BL: 22.26, LCR: 0.92); -- $9.1 million class M-7 downgraded to 'CCC' from 'BBB+' (BL: 19.75, LCR: 0.82); -- $7.7 million class M-8 downgraded to 'CC' from 'BBB-' (BL: 17.60, LCR: 0.73); -- $6.3 million class M-9 downgraded to 'CC' from 'BB+' (BL: 15.99, LCR: 0.66); Deal Summary -- Originators: HomeComings Financial Network, Inc. (18.7%), EFC Holdings Corporation (16.1%); -- 60+ day Delinquency: 19.61%; -- Realized Losses to date (% of Original Balance): 1.05%; -- Expected Remaining Losses (% of Current balance): 24.14%; -- Cumulative Expected Losses (% of Original Balance): 19.42%. RASC 2006-KS8 -- $92.5 million class A-1 affirmed at 'AAA', (BL: 70.18, LCR: 2.71); -- $84.2 million class A-2 rated 'AAA', remains on Rating Watch Negative (BL: 51.48, LCR: 1.99); -- $83.6 million class A-3 downgraded to 'AA' from 'AAA' (BL: 42.46, LCR: 1.64); -- $69.1 million class A-4 downgraded to 'A' from 'AAA' (BL: 37.80, LCR: 1.46); -- $20.1 million class M-1 downgraded to 'BB' from 'AA+' (BL: 33.24, LCR: 1.28); -- $18.2 million class M-2 downgraded to 'B' from 'AA' (BL: 29.07, LCR: 1.12); -- $11.0 million class M-3 downgraded to 'B' from 'AA-' (BL: 26.52, LCR: 1.02); -- $9.9 million class M-4 downgraded to 'CCC' from 'A+' (BL: 24.19, LCR: 0.93); -- $9.6 million class M-5 downgraded to 'CCC' from 'A' (BL: 21.82, LCR: 0.84); -- $9.1 million class M-6 downgraded to 'CCC' from 'A-' (BL: 19.50, LCR: 0.75); -- $6.9 million class M-7 downgraded to 'CC' from 'BBB+' (BL: 17.65, LCR: 0.68); -- $4.1 million class M-8 downgraded to 'CC' from 'BBB' (BL: 16.48, LCR: 0.64); -- $7.4 million class M-9 downgraded to 'CC' from 'BB+' (BL: 14.56, LCR: 0.56); Deal Summary -- Originators: HomeComings (25.4%), Decision One (14.7%), Ownit (14.5%); -- 60+ day Delinquency: 21.08%; -- Realized Losses to date (% of Original Balance): 0.76%; -- Expected Remaining Losses (% of Current balance): 25.93%; -- Cumulative Expected Losses (% of Original Balance): 21.50%. RASC 2006-KS9 -- $211.2 million class A-I-1 affirmed at 'AAA', (BL: 64.64, LCR: 2.28); -- $164.8 million class A-I-2 rated 'AAA', remains on Rating Watch Negative (BL: 50.30, LCR: 1.77); -- $153.9 million class A-I-3 downgraded to 'AA' from 'AAA', remains on Rating Watch Negative (BL: 43.09, LCR: 1.52); -- $119.7 million class A-I-4 downgraded to 'A' from 'AAA', remains on Rating Watch Negative (BL: 38.86, LCR: 1.37); -- $117.4 million class A-II downgraded to 'A' from 'AAA', remains on Rating Watch Negative (BL: 39.02, LCR: 1.37); -- $47.5 million class M-1S downgraded to 'B' from 'AA+' (BL: 34.26, LCR: 1.21); -- $42.0 million class M-2S downgraded to 'B' from 'AA' (BL: 30.15, LCR: 1.06); -- $25.3 million class M-3S downgraded to 'CCC' from 'AA-' (BL: 27.66, LCR: 0.97); -- $22.8 million class M-4 downgraded to 'CCC' from 'A+' (BL: 25.38, LCR: 0.89); -- $22.2 million class M-5 downgraded to 'CCC' from 'A' (BL: 23.12, LCR: 0.81); -- $20.4 million class M-6 downgraded to 'CC' from 'A-' (BL: 20.92, LCR: 0.74); -- $20.4 million class M-7 downgraded to 'CC' from 'BBB+' (BL: 18.55, LCR: 0.65); -- $14.8 million class M-8 downgraded to 'CC' from 'BBB-' (BL: 16.75, LCR: 0.59); -- $13.6 million class M-9 downgraded to 'CC' from 'BB+' (BL: 15.30, LCR: 0.54); Deal Summary -- Originators: Ownit (20%), People's Choice (16%), Homecomings (11%), Aegis (10%); -- 60+ day Delinquency: 22.39%; -- Realized Losses to date (% of Original Balance): 0.70%; -- Expected Remaining Losses (% of Current balance): 28.40%; -- Cumulative Expected Losses (% of Original Balance): 24.47%. The rating actions are based on changes that Fitch has made to its subprime loss forecasting assumptions. The updated assumptions better capture the deteriorating performance of pools from 2007, 2006 and late 2005 with regard to continued poor loan performance and home price weakness. RESMAE MORTGAGE: Fitch Cuts Ratings on $421.4 Million Certificates ------------------------------------------------------------------ Fitch Ratings has taken rating actions on 100% ResMae mortgage pass-through certificates. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are removed. Downgrades total $421.4 million. Additionally, $297.4 million remains on Rating Watch Negative. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: ResMAE Mortgage Loan Trust 2006-1 -- $189.1 million class A-1A downgraded to 'BBB' from 'AAA', remains on Rating Watch Negative (BL: 50.49, LCR: 1.19); -- $21 million class A-1B downgraded to 'BBB' from 'AAA', remains on Rating Watch Negative (BL: 50.49, LCR: 1.19); -- $30.1 million class A-2A rated 'AAA', remains on Rating Watch Negative (BL: 76.67, LCR: 1.8); -- $21.7 million class A-2B downgraded to 'AA' from 'AAA', remains on Rating Watch Negative (BL: 60.64, LCR: 1.43); -- $20.9 million class A-2C downgraded to 'BBB' from 'AAA', remains on Rating Watch Negative (BL: 51.50, LCR: 1.21); -- $14.5 million class A-2D downgraded to 'BBB' from 'AAA', remains on Rating Watch Negative (BL: 49.08, LCR: 1.16); -- $29.2 million class M1 downgraded to 'B' from 'AA+' (BL: 42.59, LCR: 1); -- $26.9 million class M2 downgraded to 'CCC' from 'AA' (BL: 36.81, LCR: 0.87); -- $16.5 million class M3 downgraded to 'CCC' from 'AA-' (BL: 33.27, LCR: 0.78); -- $15 million class M4 downgraded to 'CC' from 'A+' (BL: 30.03, LCR: 0.71); -- $14.2 million class M5 downgraded to 'CC' from 'A-' (BL: 26.93, LCR: 0.63); -- $12.7 million class M6 downgraded to 'CC' from 'BBB+' (BL: 24.09, LCR: 0.57); -- $11.6 million class M7 downgraded to 'CC' from 'BBB' (BL: 21.41, LCR: 0.5); -- $10.5 million class M8 downgraded to 'C' from 'BB+' (BL: 19.00, LCR: 0.45); -- $8.6 million class M9 downgraded to 'C' from 'BB' (BL: 17.02, LCR: 0.4); -- $9 million class B downgraded to 'C' from 'BB-' (BL: 15.44, LCR: 0.36); Deal Summary -- Originators: 0.00 -- 60+ day Delinquency: 35.49% -- Realized Losses to date (% of Original Balance): 2.43% -- Expected Remaining Losses (% of Current balance): 42.49% -- Cumulative Expected Losses (% of Original Balance): 29.54% The rating actions are based on changes that Fitch has made to its subprime loss forecasting assumptions. The updated assumptions better capture the deteriorating performance of pools from 2007, 2006 and late 2005 with regard to continued poor loan performance and home price weakness. ROUNDY'S SUPERMARKETS: Claims Nash Finch Violated APA Terms ----------------------------------------------------------- Nash Finch Company answered a breach of contract suit filed by Roundy's Supermarkets Inc. on Feb. 11, 2008, claiming Nash Finch violated the terms of an Asset Purchase Agreement by not paying approximately $7.9 million as a purchase price adjustment. Nash Finch denies any additional monies were due to Roundy's, and asserted counterclaims against Roundy's for, among other things, breach of contract, misrepresentation and breach of the implied covenant of good faith and fair dealing. Nash Finch is seeking damages in its counterclaims in excess of $18 million. The efforts of Nash Finch and Roundy's to resolve their disputes concerning Nash Finch's 2005 acquisition of Roundy's Lima, Ohio and Westville, Indiana distribution centers have failed, and the matter has proceeded to litigation in the United States District Court for the Eastern District of Wisconsin. About Nash Finch Headquartered Minneapolis, Minnesota, Nash Finch Company (Nasdaq: NAFC) -- http://www.nashfinch.com/-- is an American food distribution company. Nash Finch's core business, food distribution, serves independent retailers and military commissaries in 31 states, the District of Columbia, Europe, Cuba, Puerto Rico, the Azores and Egypt. The company also owns and operates a base of retail stores, primarily supermarkets under the Econofoods(R), Family Thrift Center(R), and Sun Mart(R) trade names. About Roundy's Roundy's Supermarkets, Inc. -- http://www.roundys.com/-- is a Fortune 500 company with 21,000 employees. It operates 133 retail grocery stores under the Pick 'n Save, Copps and Rainbow Foods banners in Wisconsin, Minnesota and Illinois. * * * As reported in the Troubled Company Reporter on Jan. 18, 2008, Standard & Poor's Ratings Services revised the outlook on Roundy's Supermarkets Inc. to stable from negative and affirmed the 'B+' corporate credit rating. This action reflects the company's credit metrics, which have improved to levels adequate for the current rating, and adequate liquidity. At the same time, S&P affirmed all other ratings on the Milwaukee, Wisconsin-based company. SANMINA-SCI: Inks Assets Sale Agreement with Foxteq Holdings ------------------------------------------------------------ Sanmina-SCI Corporation signed a definitive agreement with Foxteq Holdings Inc., a member of Foxconn Technology Group, for the sale of certain assets of its personal computing business and associated logistics services located in Hungary, Mexico and the United States. Separately, the company has entered into a non-binding memorandum of understanding with Lenovo Group Limited to transition responsibility of its Monterrey, Mexico personal computing operation and to sell certain of its related assets to Lenovo. The company anticipates that the proceeds from the Foxteq transaction, along with the disposition of certain other related assets associated with, but not included in the Foxteq transaction, will be between $80 and $90 million, depending upon the book value of the assets at the time of closing. Other material terms related to the Foxteq transaction will be provided during the company's second quarter fiscal 2008 earnings conference call scheduled in April. The closing of the Foxteq transaction is subject to customary closing conditions, including regulatory approvals and is expected to close in the company's third fiscal quarter ending June 28, 2008. "This announcement is in line with our previous statements that we would sell or otherwise exit the personal computing business because the business is no longer integral to the company's long- term strategy," Jure Sola, chairman and chief executive officer of Sanmina-SCI, stated. "Since we disclosed our intentions to exit the personal computing business, several operating initiatives have allowed us to significantly reduce the net assets invested in this business," Mr. Sola concluded. "Accordingly, we anticipate that the financial benefits of these initiatives along with the total proceeds from these transactions and other related dispositions to be in excess of $200 million." About Sanmina-SCI Headquartered in San Jose, California, Sanmina-SCI Corporation (NasdaqGS: SANM) -- http://www.sanmina-sci.com/-- is an Electronics Manufacturing Services (EMS) provider focused on delivering complete end-to-end manufacturing solutions to technology companies around the world. Service offerings include product design and engineering, test solutions, manufacturing, logistics and post-manufacturing repair/warranty services. The company has locations in Brazil, China, Ireland, Finland, Malaysia, Mexico and Singapore, among others. * * * Moody's Investor Service placed Sanmina-SCI Corp.'s long term corporate family and probability of default ratings at 'B1' in December 2007. The outlook is stable. SHARPER IMAGE: Files for Bankruptcy Protection ---------------------------------------------- Sharper Image Corporation commenced a case under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The Company intends to continue to conduct business as usual while it devotes renewed efforts to resolve its operational and liquidity problems and develop a reorganization plan. As reported in the Troubled Company Reporter on Feb. 20, 2008, the company retained restructuring consultant Robert Conway as Chief Executive Officer, and a team of specialists from Conway, Del Genio, Gries & Co., LLC to assist Mr. Conway in addressing business improvements and help implement necessary operational changes. Company Sales Slump For the month ended Jan. 31, 2008, total company sales were $22.2 million compared to $28.7 million, a decrease of 23%. For the fourth quarter ended Jan. 31, 2008, total company sales were $164.1 million compared to $195.2 million, a decrease of 16%. For the fiscal year ended Jan. 31, 2008, total company sales were $374.9 million compared to $506.7 million, a decrease of 26%. Class Action Settlement In October 2007, the Hon. Cecilia Altonaga of the U.S. District Court for the Southern District Court of Florida rejected a proposed settlement of a purported class action against Sharper Image in relation to its purifier products. The proposed settlement would have required the company to distribute $19 coupons to millions of consumers who bought air purifiers that were allegedly defective. Court documents revealed that in arguments supporting the settlement proposal, Sharper Image depicted the settlement as the best consumers could hope for especially since the company is on the verge of bankruptcy. The company estimated the settlement could be worth $60 million to the 3.2 million consumers eligible to participate. Other documents in the case estimated about $25 million of the coupons would be redeemed. About Sharper Image The Sharper Image -- http://www.sharperimage.com/-- (NASDAQ:SHRP) is a specialty retailer whose principal selling channels include 186 Sharper Image specialty stores throughout the United States; the Sharper Image monthly catalog; and its primary Web site. The Company also has business-to-business sales teams for marketing its exclusive and proprietary products for corporate incentive and reward programs and wholesale to selected U.S. and international retailers. SHARPER IMAGE CORP: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Sharper Image Corp. 350 The Embarcadero, 6th Floor San Francisco, CA 94105 Bankruptcy Case No.: 08-10322 Type of Business: The Debtor is a multi-channel specialty retailer. It operates in three principal selling channels: the Sharper Image specialty stores throughout the U.S., the Sharper Image catalog and the Internet. In addition, through its Brand Licensing Division, it is also licensing the Sharper Image brand to select third parties to allow them to sell Sharper Image branded products in other channels of distribution. See http://www.sharperimage.com/ Chapter 11 Petition Date: February 19, 2008 Court: District of Delaware (Delaware) Judge: Kevin Gross Debtor's Counsel: Steven K. Kortanek, Esq. (skortanek@wcsr.com) Womble, Carlyle, Sandridge & Rice, P.L.L.C. 222 Delaware Avenue, Suite 1501 Wilmington, DE 19801 Tel: (302) 252-4363 Fax: (302) 661-7728 http://www.wcsr.com/ Financial Condition as of January 31, 2008: Total Assets: $251,500,000 Total Debts: $199,000,000 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ United Parcel Service trade debt $6,654,431 Attention: Amy Burwell P.O. Box 660586 Dallas, TX 75266-0586 Tel: (214) 323-7408 Fax: (214) 323-7400 Quebecor World (U.S.A.), Inc. trade debt $3,636,484 Attention: Larry Rigby 3700 Northwest 12th Street Lincoln, NE 68521 Tel: (402) 474-5824 Fax: (402) 474-5830 Tom Tom, Inc. trade debt $2,075,439 Attention: Kim Jackson 1915 Paysphere Circle Chicago, IL 60674 Tel: (609) 865-9874 Fax: (215) 563-2257 Garmin International, Inc. trade debt $2,070,133 Attention: Doug Jones P.O. Box 842603 Kansas City, MO 64184-2603 Tel: (913) 397-8200 Fax: (913) 397-8282 Novus Print Media, Inc. trade debt $1,738,481 Attention: Accounts Payable S.D.S. 12-0664 P.O. Box 86 Minneapolis, MN 55486-0664 Tel: (763) 476-7700 Fax: (763) 476-7701 N.E.W. trade debt $1,669,471 Attention: David Brosserman 22660 Executive Drive, Suite 122 Sterling, VA 20166 Tel: (800) 942-8763 Interactive Health trade debt $965,950 Attention: Craig Womack 330 Walnut Avenue Long Beach, CA 90807 Tel: (562) 733-7349 Fax: (562) 426-7127 Philips Consumer Electronics trade debt $913,399 Attention: Rich Sargente P.O. Box 846161 Department 1B 2234353 Dallas, TX 75284-6161 Tel: (951) 943-4035 Fax: (951) 943-7056 SkyMall, Inc. trade debt $840,000 Attention: Sophea Mathus P.O. Box 52854 Phoenix, AZ 85072-2854 Tel: (602) 254-9777 Fax: (602) 528-3293 Thelen, Reid, Rown, Raysman & professional $734,276 Steiner, L.L.P. services Attention: David Aronoff File 72947 P.O. Box 60000 San Francisco, CA 94160-2947 Tel: (213) 576-8000 Fax: (213) 576-8080 I.O.N. Audio trade debt $701,819 Attention: Dale Sprock 200 Scenic View Drive, Suite 201 Cumberland, RI 02864 Tel: (650) 572-2335 Fax: (650) 572-2377 Google, Inc. trade debt $663,197 Attention: Chantal Walton Department 33654 P.O. Box 39000 San Francisco, CA 94139 Tel: (650) 214-2667 Fax: (650) 253-8616 Panasonic Consumer Electronics trade debt $614,552 Attention: Jennifer Makoul 1 Panasonic Way 4A-7 Secaucus, NJ 07094 Tel: (201) 271-3314 Fax: (201) 392-6979 X.P.E.D.X. trade debt $588,522 Attention: Michael Jacobson File 050201 Los Angeles, CA 90074-0201 Tel: (630) 480-8406 UGobe, Inc. trade debt $537,636 Attention: Martin Hitch 5900 Hollis Street, Suite V Emeryville, CA 94608 Tel: (510) 665-0515, 21 (extension) Fax: (510) 655-0519 T.A.O. Music, Inc. trade debt $537,636 Attention: Ling Tao Wang 1215 Chrysler Drive Menlo Park, CA 94025 Tel: (650) 326-5000 Fax: (650) 326-5828 Aliph trade debt $534,025 Attention: Johnathan Harris 150 Executive Park Boulevard, Suite 4550 San Francisco, CA 94134 Tel: (415) 657-9757 Fax: (415) 657-3172 Eperformax Centers, Inc. trade debt $527,241 Attention: Andre Jaeckle 8001 Centerview Parkway, Suite 300 Cordova, IN 38018 Tel: (901) 751-4800 Fax: (901) 751-4900 C.C.L. Product trade debt $522,001 Attention: Kim Lam Flat A4, 4th Floor Block A Tseun Wan, Hong Kong Tel: (011) (852) 2432-7191 Fax: (011) (852) 2433-1608 Linkshare trade debt $517,430 Attention: Michael Maciaszek P.O. Box 30772 New York, NY 10087-0772 Tel: (646) 454-6000 Fax: (646) 602-0160 SITEL WORLDWIDE: Weak Profitability Cues S&P to Lower Rating to B ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Sitel Worldwide Corp. to 'B' from 'B+'. The outlook is negative. The downgrade reflects Sitel's weaker-than-expected profitability and S&P's expectation that the company's performance in the next few quarters will provide little cushion to its bank loan covenants, even with an expected equity infusion this quarter. "The ratings reflect Sitel's challenge to achieve postacquisition profitability targets, its 2008 leverage covenant step-downs, and the highly fragmented and competitive nature of the business segment it operates in," said Standard & Poor's credit analyst Joseph Spence. "These factors are offset somewhat by Sitel's position as a leading provider in a growing industry, its diversified blue-chip customer list, and its global end markets." Sitel provides outsourced customer care services to a broad array of end markets through its customer contact centers and distribution warehouses located across the globe. SOLERA HOLDINGS: S&P Lifts Rating on Improved Credit Metrics ------------------------------------------------------------ Standard & Poor's Ratings Services raised its corporate credit rating and senior secured debt ratings to 'BB-' from 'B+' on San Diego-based Solera Holdings Inc. The outlook is stable. The raised rating reflects the company's meaningful improvement in credit metrics, largely supported by strong operating results in both of the company's core segments. Solera's operating lease- adjusted leverage has declined to around 4.0x from above 6.5x at December 2006. "The ratings on Solera reflect its relatively narrow product focus within both the mature North America marketplace as well as the higher-growth EMEA and Asia markets. Also factoring into the rating is the company's improved, but still aggressive, capital structure," said Standard & Poor's credit analyst Clay Ching. "These aspects are in part offset by a largely recurring revenue base, well-established customer relationships, and solid operating margins." S&P expect EBITDA margins to remain at the current levels in the mid-30% area with possible expansion occurring from scale benefits and operating cost structure efficiencies. During the six months ended December 2007, Solera generated approximately $38 million in free operating cash flow. Given modest capital expenditures and limited working capital needs, we expect Solera to continue to generate moderate free operating cash flow. Operating lease- adjusted total debt to EBITDA is about 4.0x, which is an appropriate level for the current rating. Discretionary cash flow used for debt reduction, along with modest growth in EBITDA, is expected to drive continued improvement in leverage over time. Solera is the leading global provider of integrated software, information, and workflow management systems designed to support activities within the automotive claims process. SOTER 2007-GSC: S&P Slashes Notes Rating to B- from AAA ------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on one tranche from Soter 2007-GSC Ltd. and placed its ratings on four tranches from four other synthetic CDO transactions on CreditWatch with negative implications. The rating actions reflect the direct links between the ratings on these tranches and the ratings on their respective reference obligations. The downgrade of the Soter 2007-GSC Ltd. notes reflects the direct link of the note rating to the rating of its reference obligation, the class A-1LA notes issued by GSC CDO 2007-1r Ltd., which was lowered to 'B-' from 'AAA' on Feb. 12, 2008, and removed from CreditWatch with negative implications. The CreditWatch placement of the Soter 2007-CRN2 Ltd. notes reflects the direct link of the note rating to the 'AAA' rating of its reference obligation, the class A-1 VFN notes issued by Cairn Mezz ABS CDO II Ltd., which was placed on CreditWatch negative on Jan. 30, 2008. The CreditWatch placement of the Soter 2007-CRN3 Ltd. notes reflects the direct link of the note rating to the 'AAA' rating of its reference obligation, the class A1-VF notes issued by Cairn Mezz ABS CDO III Ltd., which was placed on CreditWatch negative on Jan. 30, 2008. The CreditWatch placement on the $20 million AMPST 2007-1 notes issued by UBS AG reflects the direct link of the note rating to the 'BBB-' rating on the class A-1J notes issued by Rockbound CDO I Ltd., which was placed on CreditWatch negative on Jan. 30, 2008. The CreditWatch placement of the class 2007-19 variable-rate units issued by PARCS-R Master Trust reflects the direct link of the trust unit rating to the 'AA' rating of its reference obligation, the class M-2 notes issued by ACE Securities Corp. Home Equity Loan Trust Series 2007-HE5, which was placed on CreditWatch negative on Jan. 30, 2008. Rating Lowered Soter 2007-GSC Ltd. Rating ------ Class To From ----- -- ---- Notes B- AAA Ratings Placed on Creditwatch Negative Soter 2007-CRN2 Ltd. Rating ------ Class To From ----- -- ---- Notes AAA/Watch Neg AAA Soter 2007-CRN3 Ltd. Rating ------ Class To From ----- -- ---- Notes AAA/Watch Neg AAA UBS AG $20 million AMPST 2007-1 notes Rating ------ Class To From ----- -- ---- Notes BBB-/Watch Neg BBB- PARCS-R Master Trust Series 2007-19 Rating ------ Class To From ----- -- ---- Trust units AA/Watch Neg AA SPACEHAB INC: Buying 55,000 Series D Pref. Shares for $5.5 Million ------------------------------------------------------------------ SPACEHAB Incorporated entered into a Stock Purchase Agreement with certain investors for the purchase of 55,000 shares of the company's Series D convertible preferred stock for a total price of $5.5 million. In addition, the company issued 150,150 shares of common stock upon entering into the Stock Purchase Agreement. Consummation of the transaction is contingent upon NASA awarding SPACEHAB a funded Space Act Agreement under the Commercial Orbital Transportation Services Program, scheduled to be awarded mid- February, and shareholder approval of the transaction. The Series D convertible preferred stock will be converted into common stock six months after issuance based on a ratio determined by dividing $100 by the average of (x) the average of the closing price of the company's common stock for the business days Jan. 18-25, 2008, and (y) the average of the closing price of the company's common stock for the five business days prior to the company's receipt of written notification from NASA indicating the company's receipt of a COTS award of at least $120 million. Headquartered in Webster, Texas, SPACEHAB Inc. (NASDAQ: SPAB) -- http://www.spacehab.com/-- offers space access and payload integration services, production of valuable commercial products in space, spacecraft pre-launch processing facilities and services, development and extension of space-based products to the consumer market, and program and engineering support ranging from development and manufacturing of flight hardware to large scale government project management. Going Concern Doubt PMB Helin Donovan LLP in Houston, Texas, expressed substantial doubt about Spacehab Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended June 30, 2007. The auditing firm reported that the company has sustained recurring losses and negative cash flow from operations. SQUARED CDO: Moody's Downgrades Ratings on Six Note Classes to Ca ----------------------------------------------------------------- Moody's Investors Service downgraded ratings of seven classes of notes issued by Squared CDO 2007-1, Ltd., and left on review for possible further downgrade ratings of one of these classes of notes. The notes affected by the rating action are: * Class Description: $935,000,000 Class A-1 Senior Secured Floating Rate Notes due 2057; -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: B3, on review for possible downgrade * Class Description: $70,000,000 Class A-2a Senior Secured Floating Rate Notes due 2057; -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Ca * Class Description: $10,000,000 Class A-2b Senior Secured Fixed Rate Notes due 2057; -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Ca * Class Description: $37,000,000 Class B Senior Secured Floating Rate Notes due 2057; -- Prior Rating: Aa2, on review for possible downgrade -- Current Rating: Ca * Class Description: $21,000,000 Class C Senior Secured Deferrable Floating Rate Notes due 2057; -- Prior Rating: A2, on review for possible downgrade -- Current Rating: Ca * Class Description: $5,000,000 Class D Senior Secured Deferrable Floating Rate Notes due 2057; -- Prior Rating: A3, on review for possible downgrade -- Current Rating: Ca * Class Description: $6,000,000 Class E Senior Secured Deferrable Floating Rate Notes due 2057; -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: Ca The rating actions reflect deterioration in the credit quality of the underlying portfolio, as well as the occurrence on Jan. 16, 2008, as reported by the Trustee, of an event of default caused by a failure of the ratio of the Portfolio Balance to the sum of the Aggregate Outstanding Amount of the Class A-1 Notes and the Class A-2 Notes to be greater than or equal to 100 percent, pursuant Section 5.1(g) of the Indenture dated May 11, 2007. Squared CDO 2007-1, Ltd. is a collateralized debt obligation backed primarily by a portfolio of Structured Finance securities. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, holders of Notes may be entitled to direct the Trustee to take particular actions with respect to the Collateral Debt Securities and the Notes. The rating downgrades taken reflect the increased expected loss associated with each tranche. Losses are attributed to diminished credit quality on the underlying portfolio. The severity of losses of certain tranches may be different, however, depending on the timing and choice of remedy to be pursued by certain Noteholders. Because of this uncertainty, the ratings assigned to Class A-1 Notes remain on review for possible further action. ST. JOE COMPANY: Mulls Slashing 780 Out of 980 Direct Positions --------------------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission, The St. Joe Company said it plans to further streamline operations by reducing its direct employee headcount from 980 to a projected headcount of approximately 200, pursuant to certain management agreements. The company said that it is focused on harvesting its non-core assets, strengthening its balance sheet and streamlining its operating structure. JOE is also building a business-to-business competency to market entitled land to strategic partners. As part of the October 2007 restructuring plan, JOE announced that it intended to accelerate marketing and sales of its inventory of existing developed home sites and homes. "Despite poor market conditions, we have seen some demand for high quality product priced to the market," said Mr. Greene. "To that end, JOE closed on 134 home sites and 31 homes in the fourth quarter. To harvest our embedded investment in existing inventory, we are focusing our efforts to be in position for the traditional buying season that starts in the spring." Strategic Relationship with Beazer Homes Earlier this month, Beazer Homes confirmed their plans to grow their position in Northwest Florida through a strategic relationship with JOE. Beazer also announced plans to exit a number of other markets nationwide. "JOE and Beazer have entered into a long-term relationship under which JOE entitles and sells home sites in a number of the region's markets to Beazer," said Mr. Greene. "We are working on several projects now and together plan to identify new opportunities as market conditions in the region improve." JOE has also taken important steps to streamline its organizational structure to focus more efficiently on regional planning, business-to-business commercial relationships, strategic alliances and demand-inducing economic development efforts. During the fourth quarter, JOE announced it had entered into management agreements with industry-leading hospitality strategic partners. Approximately 500 JOE employees are now employed by these strategic partners. JOE's capital expenditures have been significantly reduced and are focused on JOE's growth assets which are best developed with strategic partners. "We continue to evaluate our deployment of capital," said William S. McCalmont, JOE's CFO. "We currently expect our capital expenditures in 2008 to be less than $90 million and even lower in 2009, compared to approximately $250 million in 2007 and $600 million in 2006." Sale of Rural Lands to Pay Debt During the fourth quarter JOE announced it was marketing for sale approximately 100,000 acres of non-strategic rural lands. By Dec. 31, 2007, JOE had closed on the sale of 18,274 acres for a total of $28.2 million. JOE currently has contracts on multiple parcels totaling approximately 28,000 acres for an aggregate price of approximately $52 million and is engaged in on-going conversations with several parties on an additional 90,000 acres. These contracts are subject to various closing conditions and due diligence. JOE intends to use the proceeds of these sales primarily to pay down debt and for working capital purposes. Fourth Quarter and Full Year 2007 Results JOE reported a net income for the fourth quarter 2007 of $1.0 million, compared with $22.3 million for the fourth quarter of 2006. JOE's fourth quarter results included pre-tax restructuring charges of $6.2 million, and $4.3 million, related to the write- off of a minority position in a liquidating trust. Total revenues for the fourth quarter 2007 were $93.8 million and for the fourth quarter 2006 were $145.3 million. For the full year 2007, JOE had net income of $39.2 million, compared with $51.0 million for the full year 2006. Total revenues for the full year 2007 were $377.0 million and for the full year 2006 were $524.3 million. At Dec. 31, 2007, JOE's debt was $541.2 million, including $31 million of debt defeased in connection with the sale of our office building portfolio, as compared to $627 million on Dec. 31, 2006. At the end of the fourth quarter, JOE had approximately $348 million of available capacity under its $500 million revolving credit facility and approximately $55 million of cash and pledged securities on its balance sheet. At Dec. 31, 2007, the company's balance sheet showed total assets of $1.3 billion and total stockholders' equity of $480.3 million. Board Approves Succession Plan The JOE Board of Directors approved a succession plan that calls for the promotion of Britt Greene to president and CEO. Mr. Greene will be promoted to CEO at the Annual Shareholder Meeting on May 13, 2008. Mr. Rummell will continue in his role as the chairman of JOE's Board of Directors. Airport Progress Continues Since the start of 2008, several favorable federal court rulings have allowed construction to proceed at the new Panama City -- Bay County International Airport. On Jan. 28, 2008, the Panama City -- Bay County International Airport and Industrial District (Airport Authority) said that the U.S. Court of Appeals for the 2nd Circuit had issued a ruling lifting the temporary stay that had limited construction at the new airport site to areas outside jurisdictional wetlands. The ruling was in response to a motion filed in a lawsuit to overturn the Federal Aviation Administration's Record of Decision to relocate the airport. Late January this year, in response to a separate legal challenge to the issuance of a Section 404 permit by the U.S. Army Corps of Engineers, the U.S. District Court for the Middle District of Florida denied a request for a Temporary Restraining Order to halt construction. In the same case, on Feb. 14, 2008, the Court denied a request for a preliminary injunction to halt construction. The Airport Authority continues to estimate that the new airport will open in 2010, barring unexpected delays or additional legal challenges. A full-text copy of the company's 2007 financial report is available for free at http://ResearchArchives.com/t/s?2847 About JOE Based in Jacksonville, The St. Joe Company (NYSE:JOE), -- http://www.joe.com/-- is one of Florida's real estate development companies. It is primarily engaged in real estate development and sales, with significant interests in timber. SYNOVICS PHARMACEUTICALS: Miller Ellin Raises Going Concern Doubt ----------------------------------------------------------------- Miller, Ellin & Company, LLP, in New York, raised substantial doubt about the ability of Synovics Pharmaceuticals, Inc., to continue as a going concern after it audited the company's financial statements for the year ended Oct. 31, 2007. The auditing firm stated that the company has negative working capital and has experienced significant losses and negative cash flows. The company posted a net loss of $20,857,884 on total revenues of $23,466,311 for the year ended Oct. 31, 2007, as compared with a net loss of $8,571,021 on total revenues of $10,516,398 in the prior year. The company has sustained cumulative losses of around $74,000,000 through Oct. 31, 2007, and has a working capital deficit of around $18,900,000 at that date. Total expenses for the year ended Oct. 31, 2007, were $16,893,656 as compared with $5,977,000 for the year ended Oct. 31, 2006. The increases in year-to-year expenses were primarily caused by the inclusion of Kirk Pharmaceuticals and ANDAPharm. These entities were acquired in May, 2006 and partial year results were included in the prior year's financial statements. Net cash used in operating activities during the years ended Oct. 31, 2007, 2006 and 2005 was $368,386, $5,200,000, $2,258,000, respectively. The $15,600,000 in net cash used in operating activities during the year ended Oct. 31, 2007 was the result of the company's net loss of $20,200,000 offset by non cash expenses as well as changes in working capital levels. The $5,200,000 in net cash used in operating activities during the year ended Oct. 31, 2006, was the result of the net loss of around $8,600,000 in fiscal 2007, offset by non cash expense including the loss in the joint ventures of around $1,000,000 and the loan discount was around $1,200,000. At Oct. 31, 2007, the company's balance sheet showed $23,333,897 in total assets and $31,438,023 in total liabilities, resulting in $8,104,126 stockholders' deficit. The company's consolidated balance sheet at June 30, 2007, showed strained liquidity with $5,437,739 in total current assets available to pay $25,018,165 in total current liabilities. A full-text copy of the company's 2007 annual report is available for free at: http://ResearchArchives.com/t/s?2828 About Synovics Pharmaceuticals Phoenix-based Synovics Pharmaceuticals Inc., fka Bionutric, is focused on developing generics and improved formulations of already-approved prescription drugs. Its generic Metformin, a treatment for type 2 diabetes, is approved by the FDA but has not yet been launched. Synovics brings in revenue from over-the- counter drugmaker Kirk Pharmaceuticals, which it acquired in 2006. TEKNI-PLEX INC: Credit Amendment Cues S&P to Affirm 'CC' Rating --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'CC' rating on Tekni-Plex Inc.'s $150 million 10.875% first-lien secured notes due 2012 and its 'C' rating on the company's $275 million 8.75% second-lien secured notes due 2013, and removed these ratings from CreditWatch, where they were placed with negative implications on Dec. 18, 2007, when the company missed an interest payment on its subordinated notes. "The ratings action followed the company's announcement that it had entered into an amendment to its revolving credit facility that provided for up to $110 million of availability, up from $75 million, subject to certain limitations on borrowing," said Standard & Poor's credit analyst Liley Mehta. With this additional financing to meet its operating requirements, the company made the $8.2 million interest payment due on Feb. 15, 2008, on its first-lien senior secured notes due 2012. Tekni-Plex also announced that it had entered into an extension, through March 17, 2008, of its forbearance agreement dated Jan. 16, 2008, with holders of its 12.75% senior subordinated notes due 2010 and its 8.75% senior secured notes due 2013. Tekni-Plex expects to commence negotiations with respect to a possible restructuring of the subordinated notes. Subsequently, Standard & Poor's withdrew all its ratings on Tekni-Plex, including its 'D' corporate credit rating, at the company's request. With annual revenues of about $770 million, Coppell, Texas-based Tekni-Plex produces a variety of packaging products and materials for the consumer products, health care, and food-packaging industries. The company's limited ability to pass through elevated raw material costs to customers, weak volume trends, and loss of market share in garden hose products have hurt operating results. TITAN GLOBAL: Board OKs Split into Four Separate Public Companies ----------------------------------------------------------------- Titan Global Holdings Inc.'s board of directors approved a strategic reorganization plan that will effectively split Titan into four separate public companies to create significantly greater opportunities for building shareholder value. Titan anticipates filing a Form 10 for each entity with the Securities and Exchange Commission, to register each entity as a separate public company. Titan expects to file these documents with the SEC by March 31, 2008. Titan will set the shareholder record date for determination of those shareholders eligible for these share dividend distributions at a future date, once registration with the SEC is complete. "Titan has a unique opportunity to restore and increase the company's market capitalization," Bryan Chance, president and chief executive officer of Titan Global Holdings, said. "While we have taken bold and aggressive steps to put the Communications Division back on track, the reality is that the result of these events was substantial and long term. This reorganization will enable each of our divisions to stand alone to execute on each division's opportunities. We believe this strategy will restore shareholder value as our 'pieces' are presently worth more than the 'whole.'" Under the approved Plan, the various subsidiaries comprising Titan's Communications Division will be spun off to Titan's shareholders. Each existing Titan communication unit will become a division of Pinless Inc., a subsidiary of Titan since August 2005. Pinless Inc. will be renamed to Planet Direct Inc. As well, its prepaid phone card products will be marketed under the Planet Direct(TM) umbrella. The distribution of these shares may be taxable to the recipient as a dividend. With respect to Titan's Electronics and Homeland Security Division, these plan was approved: -- Titan PCB West Inc., which has manufacturing operations in Fremont, California, will be renamed to Titan Electronics Inc. and spun out as a separate public company; -- Titan PCB East Inc., and its Titan Nexus Inc., subsidiary, which together have manufacturing operations in Massachusetts and Vermont, will be renamed NEO Electronics, Inc. and spun out as a separate public company. As Titan has held each company's shares for over five years, the distribution of the shares from its electronics division may not be taxable to the recipient as a dividend. With respect to Titan's consumer product group, Titan has already disclosed its intentions to sell USA Detergents Inc. Titan is in active discussions with various interested parties. With respect to Titan Apparel Inc., Titan intends to divest the unit either through a sale to a strategic buyer or as an IPO as a separate public company. Titan will continue to explore these and other potentially beneficial strategic options for this unit. Once these transactions are completed, Titan's principal remaining operating asset will be its Energy Group, including Appalachian Oil Company Inc. Titan will rename itself to Xnergy Corporation and focus on its core energy operations and strategic acquisition opportunities in the energy space. In the quarter ended Nov. 30, 2007, Titan's Energy Group produced $90 million in revenues. With respect to exchange trading, each of Planet Direct Inc., Titan Electronics Inc., and Neo Electronics Inc. will seek to have their shares listed for quotation on the OTC BB. With respect to Xnergy Corporation, Titan intends to apply to the NASDAQ by May 2008 for admission to its exchange. "This strategic plan will enable each separate business to present its individual financials to suppliers and customers alike in a manner that will provide greater financial transparency, clarity and confidence," said David Marks, Chairman. About Titan Global Headquartered in Salt Lake City, Titan Global Holdings Inc. (OTCBB: TTGL) -- http://www.titanglobalholdings.com/-- is a high- growth diversified holding company with a dynamic portfolio of companies engaged in emerging telecommunications markets and advanced technologies. Titan's telecommunications subsidiary Oblio Telecom Inc. is a market leader in prepaid telecommunications products and the second largest publicly-owned international telecommunications company focused on the prepaid space. Titan Wireless Inc. is Titan's wireless subsidiary and is a mobile virtual network operator. Titan Wireless sells its MVNO prepaid wireless products and wireless services through Oblio's established distribution channels. Titan's Electronics and Homeland Security division specializes in advanced manufacturing processes to provide commercial production runs and quick-turn delivery of printed circuit board prototypes for high-margin markets including Homeland Security and high-tech clients. At Nov. 30, 2007, the company's balance sheet showed total assets of $101.3 million and total liabilities of $147 million resulting to a total shareholders' deficit of $45.7 million. TYSON FOODS: Expects Business Success Despite Costs Challenges -------------------------------------------------------------- Despite the impact of escalating grain prices and other market- related challenges, Tyson Foods, Inc. is strategically positioned for future success, according to a statement by company president and chief executive officer Richard L. Bond at an annual Consumer Analyst Group of New York Conference. "We've accomplished a great deal in our efforts to make Tyson a stronger, more agile company and believe we have the right strategies in place to win," Mr. Bond said. "We're confident about our future because of our efforts to optimize our commodity businesses, create new products, expand our international presence and increase the value of our by-products." Tyson experienced increased sales of $1.5 billion in fiscal 2007 and generated operating income of $700 million while incurring $300 million in additional grain costs. The company also reduced debt by $1.2 billion. Corn-based ethanol is putting pressure on input costs for the food industry and companies like Tyson. Approximately 25% of the U.S. corn crop is expected to be used in 2008 to produce ethanol, compared to only 8% in 2002. "We currently believe we'll experience almost $800 million in increased grain and related input costs in fiscal 2008," Mr. Bond said. Grain is a major expense in chicken production, representing almost half the cost of raising a live chicken. Higher grain prices also affect the cost of cooking oil, flour and other ingredients used to produce further processed and pre-cooked chicken products. Tyson is working to offset the higher costs through its risk management activities and by increasing finished product prices. The company also continues to push for changes in the government mandate on corn-based ethanol and the removal of tariffs on sugar- based ethanol imports. He added, "According to a recent report, even if the entire U.S. corn crop were turned into ethanol, it would displace only 3.5% of gasoline use." Mr. Bond went on to describe Tyson's efforts to collaborate with retail and foodservice customers to meet consumer needs with innovative food solutions. He noted the success of the Tyson Discovery Center, the company's new food research and development facility, which includes an R&D team of 120 professionals, 19 research kitchens and a USDA-inspected pilot plant. Product development and innovation also have been key to the success of Tyson Food Service. Tyson continues efforts to maximize margins in its commodity businesses, according to Mr. Bond, by reducing non-value added costs, improving yields and pricing and optimizing product mix and services. This has included such measures as consolidating some of the company's beef operations, changes in bird weight and optimizing the number of value-added breast portions from each chicken. Mr. Bond projects Tyson's international business will grow from $3 billion in annual sales to at least $5 billion by 2010. Driving this increase will be the expansion of the Tyson operations in other countries. Tyson has completed joint ventures in Argentina and China, hopes to expand operations in Mexico and is working on a potential acquisition in Brazil. Tyson continues exploring ways to increase the value of its by- products, including the conversion of fat into fuel. In December 2007, Tyson and ConocoPhillips started turning beef tallow into renewable diesel fuel. Tyson's alternative fuel joint venture, Dynamic Fuels, will convert low cost fat, grease and other feedstock into renewable synthetic jet fuel. A production facility is being constructed in Louisiana and is expected to begin production in 2010. About Tyson Foods Based in Springdale, Arkansas, Tyson Foods, Inc. (NYSE:TSN) -- http://www.tysonfoods.com/-- is a processor and marketer of chicken, beef, and pork. Tyson's U.S. beef plants are located in Amarillo, Texas; Dakota City, Nebraska; Denison, Iowa; Finney County, Kansas; Joslin, Illinois, Lexington, Nebraska and Pasco, Washington. The company also has a beef complex in Canada, and is involved in a vertically integrated beef operation in Argentina. * * * Tyson Foods Inc. continues to carry Moody's Ba1 corporate family rating and Ba2 probability of default rating. The outlook is negative. UAL CORPORATION: Various Entities Disclose Stake Ownership ---------------------------------------------------------- Several entities made separate filings with the United States Securities and Exchange Commission disclosing their interest ownership in UAL Corporation. 1. Bank of America In a regulatory filing with the SEC, dated Feb. 7, 2008, Bank of America Corporation disclosed that it beneficially owns 10,594,889 shares of UAL Corp. Common Stock, representing 9.10% of UAL's total outstanding shares. BofA reported that it has shared voting power of 10,593,768 shares, as well as shared dispositive power of 10,593,768 shares. BofA is the parent holding company of eight other entities, which also disclosed its individual ownership of UAL stock. BofA, N.A., has the sole power to vote for 1,707,082 shares and it also shares the power to direct the vote of 89,831 shares. Moreover, BofA, N.A. has sole power to dispose of 1,707,082 shares and it also shares the power to direct the disposition of 89,402 shares. U.S. Trust has the sole power to vote for 13,801 shares, and shares the power to direct the vote of 7,710,629 shares. U.S. Trust has sole dispositive power of 15,351 shares and it also shares the power to direct the disposition of 7,710,639 shares. BofASHC and Columbia Management Group have shared voting and dispositive power of all its shares, while BofAS and Columbia Management Advisors have sole voting and dispositive power of all its shares. BofA Investment has share voting power for all its shares. 2. Capital World Investors Capital World Investors disclosed in a regulatory filing with the SEC, dated Feb. 11, 2008, that it is the beneficial owner of 10,180,490 shares of UAL Corp. Common Stock, as of Dec. 31, 2007. The Capital World holding represents 8.6% of the 116,279,000 UAL shares which is believed to be outstanding, as a result of Capital Research and Management Company acting as investment adviser to various investment companies registered under Section 8 of the Investment Company Act of 1940, Donald H. Rolfe, attorney-in-fact of Capital World, reported. The shares reported by Capital World, include 2,083,880 shares resulting from the assumed conversion of $72,600 principal amount of the 4.5% Senior Convertible Notes due June 30, 2021. Mr. Rolfe also stated that one or more clients of Capital World Investors have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Common Stock of UAL Corp. 3. Vanguard Windsor Funds In a regulatory filing with the SEC, dated Feb. 12, 2007, Vanguard Windsor Funds - Vanguard Windsor Fund 51-0082711, disclosed that it beneficially owns 9,661,500 shares of UAL Corp. common stock, which represents 3.36% of UAL's total outstanding shares. Vanguard Windsor has sole voting power for all its shares. 4. Wellington Management Company, LLP Wellington Management Company, LLP, in its capacity as investment adviser, disclosed in a regulatory filing with the SEC, dated Feb. 14, 2008, that it beneficially owns 4,635,237 shares of UAL Corp. common stock, at Dec. 31, 2007. The shares held by Wellington Management represents 3.99% of UAL's total outstanding shares. Wellington Management has shared power to direct the vote of 629,000 shares, and also has shared power to direct the disposition of 4,626,237 shares. 5. Impala Asset Management LLC In a regulatory filing with the SEC, dated Feb. 14, 2008, Impala Asset Management LLC reported that, at Dec. 31, 2007, it beneficially owns 12,284,199 shares of UAL Corp. common stock, which represents 10.56% of UAL's total outstanding shares. Impala shares the voting power and dispositive power of all its shares. 6. Legg Mason In a regulatory filing with the SEC dated Feb. 14, 2008, LMM LLC disclosed that it beneficially owns 8,900,000 shares of UAL Corp. common stock, which represents 7.65% of UAL's total outstanding shares. LMM also reported that it has shared voting power and shared dispositive power of all its shares. In the same filing, two more Legg Mason entities disclosed their beneficial ownership of UAL stock. Legg Mason Opportunity Trust -- 8,900,000 shares, or 7.65% -- and Legg Mason Capital Management Inc. -- 1,276,434 shares, or 1.10% -- have shared voting power and shared dispositive power of all its shares. 7. FMR LLC In a regulatory filing with the SEC, dated Feb. 14, 2008, FMR LLC disclosed that it beneficially owns 12,092,088 shares of UAL Corp. common stock, as of Dec. 31, 2007. The stocks held by FMR represents 10.246% of UAL's total outstanding shares. According to the SEC filing, FMR has shared voting power of 216,266 shares, and shared power to dispose of or to direct the disposition of all the shares. The current SEC filing is an amendment of a previous report dated September 10, 2007. Fidelity Management & Research Company, a wholly-owned subsidiary of FMR LLC and an investment adviser, is the beneficial owner of 11,834,222 shares or 10.027% of the Common Stock outstanding of UAL Corp. as a result of acting as investment adviser to various investment companies. About UAL Corp. Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. (United Airlines Bankruptcy News, Issue No. 153 Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). * * * Fitch Ratings, on May 2007, affirmed the Issuer Default Ratings of UAL Corp. and its principal operating subsidiary United Airlines Inc. at B-. UNITED ENERGY: Posts $594T Net Loss in 3rd Qtr. Ended Dec. 31 ------------------------------------------------------------- United Energy Corp. reported a net loss of $594,901 on net revenues of $103,691 for the third quarter ended Dec. 31, 2007, compared with a net loss of $650,395 on net revenues of $112,843 in the same period ended Dec. 31, 2006. Revenues for the nine months ended Dec. 31, 2007 were $493,708, a 22.0% decrease from revenues of $636,684 in the comparable nine months ended Dec. 31, 2006. The nine months ended Dec. 31, 2007, resulted in a net loss of $1,660,211 as compared to a net loss of $1,770,052 for the nine months ended Dec. 31, 2006. Balance Sheet At Dec. 31, 2007, the company's consolidated balance sheet showed $2,191,906 in total assets, $502,764 in total liabilities, and $1,689,906 in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?2839 Going Concern During the past two fiscal years ended March 31, 2007, and 2006, the company has recorded aggregate losses from continuing operations of $6,343,952 and has incurred total negative cash flow from continuing operations of $3,838,682 for the same two-year period. These matters raise substantial doubt about the company's ability to continue as a going concern. About United Energy Headquartered in Secaucus, New Jersey, United Energy Corp. develops and distributes environmentally friendly specialty chemical products with applications in several industries and markets. The company's current line of products includes the K- Line of Chemical Products for the oil industry and related products. Through its wholly owned subsidiary, Green Globe Industries Inc., the company provides the U.S. military with a variety of solvents, paint strippers and cleaners under the trade name "Qualchem." UNITED SUBCONTRACTORS: Moody's Cuts Corporate Family Rating to B3 ----------------------------------------------------------------- Moody's Investors Service downgraded the debt ratings of United Subcontractors, Inc. and left them on review for possible downgrade, including the company's B2 corporate family rating, B1 rated first lien revolver and term loan, as well as its Caa1 rated second lien term loan. The review is prompted by the company's operating performance relative to its covenants and relative to Moody's expectations. Moody's has downgraded these ratings for United Subcontractors, Inc. and left them on review for possible downgrade (LGD assessments are also subject to change): -- Corporate family rating, downgraded to B3 from B2; -- Probability of default rating, downgraded to B3 from B2; -- $295 million first lien term loan, due 2012, downgraded to B2 (LGD3, 42%) from B1 (LGD3, 43%); -- $40 million revolving credit facility, due 2011, downgraded to B2 (LGD3, 42%) from B1 (LGD3, 43%); -- $65 million second lien term loan, due 2013, downgraded to Caa2 (LGD6, 92%) from Caa1 (LGD6, 92%). The review and ratings downgrade is prompted by the anticipated impact from a continued homebuilding contraction on the company's financial performance. Moody's anticipates that United Subcontractor's financial and operating performance will remain under significant pressure for at least the next year. USI has aggressively reduced its cost structure, however the pace and depth of the contraction remains greater than the company's ability to reduce costs. Additionally, the company's covenants were set during better times that did not anticipate the current environment. The company has also strived to diversify beyond Florida and has expanded from insulation to framing and windows. USI is expected to continue to address its cost structure aggressively. While these factors should help the company's performance when the market strengthens, Moody's does not anticipate an improvement in new home construction until 2009, at the earliest. The review will focus on the impact of depressed new home construction on the company's anticipated operating performance, its ability to control costs, its ability to comply with its covenants, sponsor support, and ability to secure adequate financing for the current environment. The anticipated level of commitment from its equity sponsor, Wind Point Partners, will also be considered in the review. United Subcontractors Inc., headquartered in Minneapolis, Minnesota, is a subcontractor of insulation and framing services. The company primarily provides home insulation services for new construction and additions as well as framing services to homebuilders. USI's revenue for 2006 was approximately $643 million. UPSNAP INC: Posts $80T Net Loss in 1st Quarter Ended Dec. 31 ------------------------------------------------------------ UpSNAP Inc. reported a net loss of $80,273 on total sales of $212,205 for the first quarter ended Dec. 31, 2007, compared with a net loss of $416,021 on total sales of $250,603 in the same period ended Dec. 31, 2006. Advertising revenues increased $22,000. Wireless data services decreased $61,000 as the company's largest carrier customer continues to lose customers due to a merger. General and administrative expenses for the quarter ended Dec. 31, 2007, decreased $83,000, or 33.1%, compared with the same period in 2006, primarily due to the elimination of headcount and reduced spending for audit fees and travel. For the quarter ended Dec. 31, 2007 the company recognized $114,000 in income related to the extinguishment of debt. Balance Sheet At Dec. 31, 2007, the company's consolidated balance sheet showed $5,933,889 in total assets, $284,704 in total liabilities, and $5,649,185 in total stockholders' equity. The company's consolidated balance sheet at Dec. 31, 2007, also showed strained liquidity with $201,671 in total current assets available to pay $284,704 in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?283f Going Concern Doubt As reported in the Troubled Company Reporter on Jan. 31, 2008, Traci J. Anderson, in Huntersville, N.C., expressed substantial doubt about UpSNAP Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Sept. 30, 2007. The auditor pointed to UpSNAP's recurring losses from operations. About UpSNAP UpSNAP Inc. (NASDAQ: UPSN.OB) -- http://www.upsnap.com/-- provides mobile search and live mobile audio entertainment. UpSNAP services include text and audio content from major entertainment companies in sports, news, music, and information. URSTADT BIDDLE: Secures $50 Mil. Unsec. Revolving Credit Facility ----------------------------------------------------------------- Urstadt Biddle Properties Inc. entered into a new $50 Million Unsecured Revolving Credit Agreement with The Bank of New York Mellon and Wells Fargo Bank N.A. The agreement, gives UBP the option under certain conditions, to increase the facility's borrowing capacity up to $100 million. The maturity date of the facility is Feb. 11, 2011, with two one year extensions at the company's option. Borrowings under the facility can be used for, among other things, acquisitions, working capital, capital expenditures, repayment of other indebtedness and the issuance of letters of credit, up to $10 million. Borrowings will bear interest at UBP's option of LIBOR plus 0.85% or The Bank of New York Mellon's prime lending rate plus 0.50%. UBP will pay an annual fee on the unused commitment amount of up to 0.175% based on outstanding borrowings during the year. The facility contains certain representations, financial and other covenants typical for this type of facility. UBP's ability to borrow under the facility is subject to its compliance with the covenants and other restrictions on an ongoing basis. The principal financial covenants limit the company's level of secured and unsecured indebtedness and additionally require the company to maintain certain debt coverage ratios. "We are pleased to announce this new unsecured revolving credit facility," Willing Biddle, UBP's president and chief operating officer said. "In the currently challenging credit environment it is important that we have immediate access to funds at favorable terms and rates in order to help us capitalize on what we believe will be an improving real estate acquisitions market in the near term. We are proud to continue our over twenty year banking relationship with Bank of New York Mellon and are excited about our expanded relationship with Wells Fargo, one of the nation's leading financial institutions, which has a particular expertise in real estate." UBP also has an existing $30 million secured revolving line of credit with The Bank of New York Mellon which matures in April 2008. UBP is in the process of evaluating its options with regard to the secured facility. About Urstadt Biddle Properties Inc. Headquartered in Greenwich, Connecticut, Urstadt Biddle Properties Inc. (NYSE:UBA) -- http://www.ubproperties.com/-- is a real estate investment trust engaged in the acquisition, ownership and management of commercial real estate. The company's sole business is the ownership of real estate investments, which consist principally of investments in income-producing properties, with emphasis on properties in the northeastern part of the United States with a concentration in Fairfield County, Connecticut, Westchester and Putnam Counties, New York and Bergen County, New Jersey. Its core properties consist principally of neighborhood and community shopping centers and five office buildings. * * * Fitch placed Urstadt Biddle Properties Inc.'s long term issuer default rating at 'BB+' in October 2004. The rating still hold to date with a stablke outlook. VICTOR PLASTICS: Committee Taps Kalina Wills as Bankruptcy Counsel ------------------------------------------------------------------ The Official Committee of Unsecured Creditors of Victor Plastics Inc.' cases asks the United States Bankruptcy Court for the District of Minnesota for authority to retain Kalina, Wills, Gisvold & Clark, PLLP as its bankruptcy counsel. Kalina Wills will represent the Committee in connection with all matters relating to the Chapter 11 cases. The firm's professionals and their compensation rates are: Professional Hourly Rates ------------ ------------ Gordon B. Conn, Jr., Esq. $350 Carole Clark Isakson, Esq. $280 Jason E. Engkjer, Esq. $190 Jenna T. Burfeind, Esq. $190 Gordon B. Conn, Jr., Esq., an attorney of the firm, assures the Court that the firm does not hold any interest adverse to the debtor or the estate and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Mr. Conn can be reached at: Gordon B. Conn, Jr., Esq. Kalina Wills Gisvold & Clark, PLLP 6160 Summit Drive Suite 560 Minneapolis, MN 55430 Tel: (612) 789-9000 Fax: (763) 503-7070 http://www.kwgc-law.com/ Based in North Liberty, Iowa, Victor Plastics, Inc. -- http://www.victorplastics.com/-- is a custom molder of thermoplastics and engineering resins. The Debtor and its affiliate, VPI Acquisition Company, filed for Chapter 11 protection on Jan. 15, 2008 (Bankr. D. Minn. Case Nos. 08-40171 and 08-40167). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman P.A., represents the Debtors in their restructuring efforts. As of the debtors' bankruptcy filing, it listed total assets of $44,658,000 and total debts of $41,366,000. VICTOR PLASTICS: U.S. Trustee Appoints 5-Member Creditors Panel --------------------------------------------------------------- Habbo Fokkena, the U.S. Trustee for Region 12, appointed five creditors to serve on an Official Committee of Unsecured Creditors in the Chapter 11 cases of Victor Plastics Inc. The Creditors Committee members are: 1. Packaging Distribution Service Attn: Bob Buising 2308 Sunset Road Des Moines, IA 50321 Tel: (515) 243-3156 2. PolySource LLC Attn: Grant John 1965 Southbrook Drive Ely, IA 52227 Tel: (816) 320-2625 or (816) 540-5300 3. Tooling Technologies Inc. Attn: Joseph Kraft 10179 S. 56th Street Franklin, WI 53132 Tel: (414) 421-2333 4. Nova Tool & Mold Inc. Attn: Mario Pennesi 5100 Halford Drive RR#1 Windsor, Ontario N9A 6J3 Tel: (519) 737-7137 5. Mega Mold International Inc. Attn: (519) 979-5111 ext. 225 8025 Anchor Drive Windsor, Ontario N8N 5B7 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtor is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Based in North Liberty, Iowa, Victor Plastics, Inc. -- http://www.victorplastics.com/-- is a custom molder of thermoplastics and engineering resins. The Debtor and its affiliate, VPI Acquisition Company, filed for Chapter 11 protection on Jan. 15, 2008 (Bankr. D. Minn. Case Nos. 08-40171 and 08-40167). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman P.A., represents the Debtors in their restructuring efforts. As of the debtors' bankruptcy filing, it listed total assets of $44,658,000 and total debts of $41,366,000. WALTER INDUSTRIES: To Close 36 Jim Walter Homes Sales Centers ------------------------------------------------------------- Walter Industries Inc. disclosed the restructuring of JWH Holding Company LLC -- the company's financing and homebuilding business. Walter Industries said it has or will immediately close 36 underperforming Jim Walter Homes sales centers as part of the restructuring. The closure of these sales centers is expected to significantly enhance the company's operational and financial outlook. As a result of the restructuring, the company expects to offset the impact of lower sales volumes with annualized reductions in operating expenses in the range of $26 to $28 million, with a significant portion recognized in 2008. The company said it is reducing its financing and homebuilding workforce by approximately 25%. "This action reflects our commitment to the business and our strategy of separating it from the company," Michael T. Tokarz, chairman of Walter Industries, said. "We are taking this important action to preserve and enhance the long-term value of the business and to increase our future separation options." "After careful consideration of the performance of each branch in our system and the challenging operating environment facing the entire homebuilding industry, we came to the difficult decision to close nearly half of our branches," Mark J. O'Brien, chairman and CEO of JWH Holding Company, LLC said. "While these decisions are never easy, we have an obligation to our shareholders to position this company for the future." "Our remaining 47 branches are our best-performing locations and provide a significantly higher proportion of overall sales and unit deliveries," Mr. O'Brien said. "By closing underperforming branches, we are making our organization stronger and more efficient as a whole." Mr. O'Brien added that while the number of branch locations has diminished significantly, Jim Walter Homes continues to explore and evaluate new markets where it believes a significant market opportunity exists for its affordably priced homes. "We believe we have a time-tested and unique business model," said Mr. O'Brien. "For buyers with challenging credit histories seeking a well-built, traditionally constructed home for about $100,000, we remain one of the best choices around." The Jim Walter Homes sales centers affected by the restructuring are: Cullman, Alabama Bowling Green, Kentucky Greenville, South Carolina Dothan, Alabama Lafayette, Louisiana Chattanooga, Tennessee Huntsville, Alabama Monroe, Louisiana Jackson, Tennessee Jonesboro, Arkansas Slidell, Louisiana Knoxville, Tennessee Little Rock, Arkansas Grenada, Mississippi Austin, Texas Pine Bluff, Arkansas Asheboro, North Carolina Decatur, Texas Ft. Myers, Florida Elizabeth City, North Carolina Sherman, Texas Ocala, Florida Monroe, North Carolina Texarkana, Texas Orlando, Florida Rocky Mount, North Carolina Waco, Texas Sebring, Florida Winston-Salem, North Carolina Richmond, Virginia Tampa, Florida Tulsa, Oklahoma Roanoke, Virginia Augusta, Georgia Cayce, South Carolina (modular) Princeton, West Viginia As a result of this restructuring, Walter Industries expects to record a restructuring charge in the range of $6 million to $8 million, with the majority of this amount expected to be recognized in the first quarter 2008. Jim Walter Homes said customers with existing contracts would have those contracts honored and their homes completed. Customers with questions regarding how this restructuring affects them are urged to contact the customer service department at: 1-800-925-8374, ext. 4444 Management Change The company also disclosed management changes intended to accelerate the implementation of the strategy to separate the financing and homebuilding business from the company's core natural resources and energy business. The board of directors has asked Joseph J. Troy to focus exclusively on achieving the separation. "Joe has served as Walter Industries chief financial officer during a period of transformational changes that have unlocked enormous value for our shareholders," Michael T. Tokarz, the chairman of the board. "We now need Joe to focus exclusively on completing the separation strategy. The homebuilding and financing industries are currently experiencing extraordinary headwinds, which calls for extraordinary actions. We are committed to achieving the separation of our Financing and Homebuilding business from Walter Industries this year, and Joe is charged with the implementation of this crucial step in making Walter a pure natural resources and energy business." As a result of Joe's new assignment, the board of directors has elected Victor P. Patrick, vice chairman and general counsel, to the additional role of chief financial officer. Mr. Patrick, who has been a leader in the company's value creation and transformation strategy, has been with the company since 2002, first serving as senior vice president and general counsel. He was named vice chairman in August 2006 and was appointed to the board of directors in December 2006. Prior to joining Walter Industries, Mr. Patrick served as deputy general counsel and secretary with Honeywell International Inc., where he was also lead attorney for finance and M&A transactions. Prior to joining Honeywell, Patrick worked at the Cleary Gottlieb law firm, focusing on corporate finance, securities, capital markets, corporate governance and M&A. "Vic brings extensive industry and Company experience to the CFO role, and he will continue to lead a corporate management team focused on further enhancing value for our shareholders," said Mr. Tokarz. About Walter Industries Based in Tampa, Florida, Walter Industries Inc. -- http://www.walterind.com/-- is a producer and exporter of metallurgical coal for the steel industry and also produces steam coal, coal bed methane gas, furnace and foundry coke and other related products. The company also operates a mortgage financing and affordable homebuilding business. The company employs approximately 2,500 people. Jim Walter Homes has built, since its inception, more than 357,000 single-family "build on your lot" homes. Jim Walter Homes' product line features more than 20 home models marketed through our Sales Centers located in 16 Southern states. Jim Walter Homes also makes mortgage financing available for both the land and home through its affiliate, Walter Mortgage Company. * * * As reported in the Troubled Company Reporter on Dec. 3, 2007, Moody's Investors Service lowered its ratings for Walter Industries Inc., lowering the corporate family rating to B1 from Ba3 and the senior secured bank credit facilities to B1 from Ba2. The rating outlook is negative. WESTSHORE GLASS: Files Schedules of Assets and Liabilities ---------------------------------------------------------- Westshore Glass Corp. delivered to the United States Bankruptcy Court for the Middle District of Florida its schedules of assets and liabilities disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property B. Personal Property $10,169,034 C. Property Claimed as Exempt D. Creditors Holding $5,525,920 Secured Claims E. Creditors Holding 161,781 Unsecured Priority Claims F. Creditors Holding 9,223,640 Unsecured Nonpriority Claims ----------- ----------- TOTAL $10,169,034 $14,911,342 Headquartered in Tampa, Florida, Westshore Glass Corp. -- http://www.westshoreglass.com/-- is a full-line distributor of all types of glass and related materials. The company filed for chapter 11 protection on Jan. 30, 2008 (Bank. M.D. Fla. Case No. 08-01194). Stephenie Biernacki Anthony, Esq., at GrayRobinson, P.A. represents the Debtor in its restructuring efforts. WESTMORELAND COAL: Inks Deal to Refinance Roanoke Valley Project ---------------------------------------------------------------- Westmoreland Coal Company has finalized and signed an agreement to refinance its Roanoke Valley Energy Project, Units 1& II. The new financing arrangement with Prudential Capital Group optimizes the debt structure of the project, consolidates the 2006 acquisition debt into the ROVA project debt, eliminates the need for ROVA to renew approximately $37 million in letters of credit and significantly reduces associated cash collateral requirements. The transaction is expected to close in approximately 30 days. The ROVA project was co-developed by Westmoreland and was put into commercial operation in the mid-1990's. It became solely owned by Westmoreland in June 2006. The project consists of two coal-fired units which employ state-of-the-art pollution control equipment. Both units sell electricity to Dominion North Carolina Power under long-term power purchase agreements. "This transaction was a challenging and complex restructuring," Ric Abel, managing director, Electric Finance Group, Prudential Capital Group, said. "Our experience in structuring project finance transactions enabled us to assist the Company in meeting the project's goals of lessening cash collateral requirements, providing liquidity and greatly streamlining administrative burdens." The company also has engaged a financial advisor and placement agent to assist with the refinancing of the existing debt of Westmoreland Mining LLC. The company will be seeking to better match WML's debt amortization payments with cash flows and permit WML to make the capital investments necessary to meet customer requirements. The company is also negotiating with an investor to set up a credit facility to provide adequate liquidity to the company until such time as the refinancing can be completed. The company is in the process of restating its financial statements and related financial information for the years ended Dec. 31, 2006, 2005 and 2004 contained in its 2006 Annual Report on Form 10-K well as the quarters ended March 31, 2007, and June 30, 2007 reported on the company's Quarterly Reports on Form 10-Q. The company has not yet reported its financial results for the quarter ended Sept. 30, 2007, due to the pending restatements. The restatements are to correct an error in the computation of post-retirement medical benefit liabilities. The company now believes that it has substantially completed its review and restatement process and expects to file its restated financial results and the Form 10-Q for the quarter ended Sept. 30, 2007, by mid-March. The company is applying to the AMEX for an appropriate extension to the deadline for filing its third quarter Form 10-Q. "The restatement process has taken longer than we originally anticipated due to the necessity to review, in excruciating detail, literally hundreds of employee files," Keith E. Alessi, Westmoreland's president and chief executive officer, stated. "The review required involvement of actuaries, lawyers and auditors, further lengthening the process." "The population of retirees omitted from census data used to calculate the liability grew from the 131 identified in September 2007 to 156 at the time of our Form 12b-25 filing reported in November 2007," Mr. Alessi added. "At that time we estimated the range of the understatement to be $50 to $55 million. We ultimately identified 181 total retirees and currently estimate the understatement of liability to be approximately $59 million." "The restatement of our retiree medical liability delayed the finalization of our third quarter financial results and the proposed rights offering which our shareholders approved in August 2007," Mr. Alessi continued. "Since that time there have been some significant changes in our business. We have refined our strategic plan to concentrate on our core competency, coal mining. Towards that end we acquired 100% ownership of the Absaloka mine, divested our power operations and maintenance workforce and have instituted significant overhead reduction measures." "Because the restatement took significant time to complete, we were able to continue to evaluate our liquidity needs in light of changes in our business," he said. "It made sense for us to review our entire capital structure rather than to focus just on equity." With the ROVA refinancing, the company was looking to redeploy the significant cash reserves of the project to more productive uses, and reduce its lender group, which was accomplished. Refinancing the company's existing mining operation debt, if successful, will accomplish several other important goals. First of all, the company is seeking to better match debt amortization with its projected cash flows. The company's existing debt facilities, which were structured at the time at which the company acquired its mines, require significant principal payments over the next several years. This comes at a time when it needs to make substantial capital investments at the mines in order to satisfy customer needs. Over the last year the company has renegotiated several of its long- term coal sales contracts, particularly at the Jewett and Rosebud mines. Over 78% of its coal tons are now, or will be sold under cost-plus terms or other provisions to cover inflation in diesel, electricity and other commodity costs. This provides for predictability of earnings and cash flow, now and in the future. Due to this predictability the company relate that it will be able to obtain amortization terms more consistent with its cash flows. Secondly, the company is seeking additional flexibility and liquidity to satisfy its business needs. The company relate that its financial projections for WML, which are based upon its contractual arrangements with customers, will enable WML to carry debt facilities of a size necessary to accomplish this goal. Depending upon the ultimate size and terms of the proposed refinancing the company will evaluate the need for a rights offering or an equity investment. While the company cannot guarantee any of the outcomes, the company relate that these comprehensive financial initiatives well as its strategic focus better serve both its immediate and long-term business needs. "If we decide that we need to proceed with either a rights offering or an equity investment, I would anticipate that it would be on terms more in line with current market conditions versus what was contemplated in August 2007," he said. "I am proud of the work that our team has accomplished over the past months under difficult circumstances," Mr. Alessi said. "We have successfully refocused the business, acquired the 100% interest in the Absaloka mine, renegotiated several long-term supply contracts, divested our power service and maintenance operation, standardized operational and financial reporting systems, and greatly reduced corporate headcount and overhead. While doing this we have maintained an excellent safety record, something that we are most proud of." About Westmoreland Coal Company Based in Colorado Springs, Colorado, Westmoreland Coal Company (AMEX: WLB) -- http://www.westmoreland.com/-- is an independent coal company in the United States and a developer of independent power projects. The company's coal operations include coal mining in the Powder River Basin in Montana and lignite mining operations in Montana, North Dakota and Texas. Its current power operations include ownership and operation of the two-unit ROVA coal-fired power plant in North Carolina, an interest in a natural gas-fired power plant in Colorado, and the operation of four power plants in Virginia. At June 30, 2007, the company's balance sheet showed total assets of $764 million, and total liabilities of $885.2 million, resulting to a total shareholders' deficit of $121.2 million. WHOLE FOODS: Earns $39.1 Million in Quarter Ended January 20 ------------------------------------------------------------ Whole Foods Market Inc. reported results for the 16-week first quarter ended Jan. 20, 2008. Net income was approximately $39.1 million. The company estimates the negative impact on net income from Wild Oats was approximately $11.9 million in the quarter. Pre-opening and relocation costs were approximately $20.2 million, and interest expense, net of investment and other income, was approximately $8.8 million. "We realize there are a lot of questions out there about how a slowing economy might impact our sales," John Mackey, chairman, chief executive officer, and co-founder of Whole Foods Market, said. "Historically, our sales have been highly resilient during economic downturns. We attribute our strong sales to many factors, including our loyal core customers and their dedication to a natural and organic lifestyle, our high percentage of perishable product sales, and our extensive selection of high- quality prepared foods that attracts customers trading down from restaurants." "In addition, we sell a high percentage of relatively small-ticket items, and we are better positioned today than we ever have been from a value perspective," Mr. Mackey added. "Given our prior experience, strong year-to-date comps, easier year-over-year comparisons, and the increased number of new stores entering the comp base, we are confident in reaffirming our comp guidance of 7.5% to 9.5% for the fiscal year." The company produced approximately $70 million in cash flow from operations and received approximately $7 million in proceeds from the exercise of stock options. Capital expenditures were approximately $162 million of which $102 million related to new stores and approximately $6 million related to Wild Oats. In addition, the company paid approximately $25 million in cash dividends to shareholders. At the end of the quarter, the company had total debt of approximately $773 million, including $30 million drawn on its $250 million credit line. Currently, the company has $50 million drawn on its line, leaving approximately $114 million available net of outstanding letters of credit. In addition, the credit agreement contains an accordion feature under which the company can increase its credit line up to $350 million. At Jan. 20, 2008, the company's balance sheet showed total assets of $3.21 billion, total liabilities of $1.75 billion and total shareholders' equity of $1.46 billion. Growth Goals for Fiscal Year 2008 and Beyond The company is reaffirming its guidance for fiscal year 2008. On a 52-week to 52-week basis, the company expects total sales growth of 25% to 30% and comparable store sales growth of 7.5% to 9.5%. Excluding Wild Oats, the company expects sales growth of 15% to 20%. For the first four weeks ended Feb. 17, 2008, of the second quarter, comparable store sales growth was 8.9% on top of a 4.7% increase in the prior year, and identical store sales growth was 6.9% on top of a 4.1% increase in the prior year. Sales at the 62 continuing Wild Oats stores increased 6.2% on top of a 0.1% decrease in the prior year. Acquired stores will enter the comparable store sales base in the fifty-third full week following the date of the merger. The company has opened six stores year to date. Of the company's 26 tendered stores representing approximately 1.2 million square feet, two stores are expected to open in the second quarter and up to 13 stores are expected to open in the second half of the fiscal year. The company does not expect to produce operating leverage in fiscal year 2008 due to a decrease in store contribution as a percentage of sales driven by a higher percentage of sales from new and acquired stores, which have a lower contribution than existing stores; investments in labor and benefits at the acquired Wild Oats stores; and continued, though more moderate, increases in health care costs as a percentage of sales. In addition, the company expects G&A as a percentage of sales to be in line with the 3.3% reported in fiscal year 2007 due mainly to the temporary costs associated with integrating the Wild Oats acquisition, along with the cost of fully staffing the company's three smallest regions which gained the greatest number of stores in the merger as a percentage of their existing store base, and an increase in legal and professional fees. The company expects G&A as a percentage of sales to improve sequentially from the first half to the second half of the year. The company expects total pre-opening and relocation costs for fiscal year 2008 to be in the range of $80 million to $90 million. Approximately $40 million to $45 million relates to stores expected to open in fiscal year 2008. These ranges are based on estimated tender dates which are subject to change. The company expects average pre-opening and relocation expense for stores opening in fiscal year 2008 to be in line with the average for stores that opened in fiscal year 2007, excluding the Kensington store in London. On an average weekly basis, the company expects quarterly pre-opening and relocation expense to ramp up throughout each quarter of the year. The company expects interest expense, net of investment and other income, in the range of $35 million to $40 million in fiscal year 2008. The company expects share-based payments expense of approximately $2 million to $3 million per quarter in the first half of the year and $4 million to $5 million per quarter in the second half of the year following the company's annual grant date early in the third quarter, when the majority of options are granted. The company has entered into a support agreement to provide certain products and services for the divested Henry's and Sun Harvest stores for up to two years. The company anticipates the revenue associated with this agreement will be approximately equal to its incremental cost of providing the support. Capital expenditures for the fiscal year are expected to be in the range of $575 million to $625 million. Of this amount, approximately 65% to 70% relates to new stores opening in fiscal year 2008 and beyond, and approximately 7% to 8% relates to remodels of acquired Wild Oats stores. The company currently operates 270 stores totaling 9.4 million square feet and has 89 stores in development totaling 4.6 million square feet. Longer term, the Company's goal is to reach $12 billion in sales in fiscal year 2010. About Whole Foods Market Founded in 1980 in Austin, Texas, Whole Foods Market Inc. (NASDAQ: WFMI) -- http://www.wholefoodsmarket.com/-- is a natural and organic foods supermarket. Whole Foods Market employs more than 50,000 Team Members. * * * As reported in the Troubled Company Reporter on Feb. 12, 2008, Moody's Investors Service assigned 'Ba1' on Whole Foods Market Inc.'s corporate family rating; 'Ba1' on its probability of default rating; and 'Ba1' (LGD3,47%) on its $700 million secured term loan due 2012 to $700 million secured bank term loan. WICKES FURNITURE: U.S. Trustee Appoints 7-Member Creditors Panel ---------------------------------------------------------------- Kelly Beaudin Stapleton, the United States Trustee for Region 3, appointed seven members to the Official Committee of Unsecured Creditors in Wickes Furniture Company and its debtor-affiliates' bankruptcy cases. The Creditors Committee members are: 1. The Inland Realty Estage Group of Companies Inc. Attn: D. Scott Carr Vice President 2901 Butterfield Road Oak Brook IL 60523 Tel. No.: (630) 954-5683 2. Valassis Inc. Attn: Gabriel Grijalva 19975 Victor Parkway Livonia MI 48152 Tel. No.: (734) 591-7330 Fax. No.: (734) 632-6101 3. W.E. O'Nell Construction Company of California Attn: James E. Surdyk 909 N. Sepulveda Blvd. Suite 400 El Segundo CA 90245 Tel. No.: (310) 643-7900 Fax. No.: (310) 643-6541 4. Decors USA Ltd. Attn: Heath Corso 1403 Eastchester Drive Suite 104 High Point NC 27265 Tel. No.: (336) 885-9440 Fax. No.: (336) 885-2024 5. Caye Home Furnishings LLC Attn: Roy Wayne Stewart 1201 West Bankhead Street New Albany MS 38652 Tel. No.: (662) 534-1522 Fax. No.: (662) 534-1412 6. Legacy Classic Furniture Inc. Attn: Douglas MacFarland Jermyn 2575 Penny Road High Point NC 27265 Tel. No.: (336) 449-4600 ext. 282 Fax. No.: (336) 899-2152 7. Lane Furniture Industries Inc. Attn: Robert D. Mete P.O. Box 1627 Tupelo MS 38802 Tel. No. (314) 862-7133 Fax. No. (828) 432-8517 About Wickes Furniture Based in Wheeling, Illinois, Wickes Furniture Company, Inc. -- http://www.wickesfurniture.com/-- is one of the leading furniture retailers in the U.S. with 43 retail stores serving greater Chicago, Los Angeles, Las Vegas, and Portland. Founded in 1971, Wickes offers attractive room packages featuring complete living rooms, dining rooms, bedrooms as well as bedding, home entertainment, accessories and accent furniture. Wickes employs over 1,700 employees and offers products from leading furniture and bedding manufacturers. The company and two of its debtor-affiliates filed for Chapter 11 protection on Feb. 3, 2008 (Bankr. D. Del. Lead Case No. 08- 10213). Donald J. Detweiler, Esq., at Greenberg Traurig LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed consolidated estimated assets of $10 million to $50 million, and estimated debts of $50 million to $100 million. WICKES FURNITURE: Taps Greenberg Traurig as Bankruptcy Counsel -------------------------------------------------------------- Wickes Furniture Company and Wickes Holdings LLC ask the U.S. Bankruptcy Court for the District of Delaware for authority to employ Greenberg Traurig LLP as their counsel, nunc pro tunc to Feb. 3, 2008. Greenberg Traurig will: a) provide legal advice with respect to the Debtors' powers and duties as debtors-in-possession in the continued operation of their businesses and management of their property; b) negotiate, draft and pursue confirmation of any plan of reorganization and approval of any accompanying disclosure statement; c) prepare on behalf of the Debtors all applications, motions, answers, orders, reports and other legal papers necessary to the administration of the Debtors' estates; d) appear in Court and protect the interests of the Debtors before the Court; e) assist with any disposition of the Debtors' assets, by sale or otherwise; f) attend all meetings and negotiate with representatives of creditors, the United States Trustee, and other parties-in- interest; and g) perform all other legal services for, and provide all other necessary legal advice to the Debtors which may be necessary and proper in these cases. Donald J. Detweiler, Esq., a shareholder at Greenbeg Traurig, tells the Court that the firm's professionals bill are: Professional Hourly Rate ------------ ----------- Nancy A. Peterman, Esq. $615 Donald J. Detweiler, Esq. $535 Sandra G. M. Selzer, Esq. $415 Paul J. Keenan, Esq. $365 Ethan F. Ostrow, Esq. $290 Kerry Carlson $215 Elizabeth C. Thomas $195 On Jan. 14, 2008, Greenberg Traurig received a retainer in the amount of $250,000, and received an additional retainer on Feb. 1, 2008, in the amount of $150,000, for a total of $400,000. This $400,000 constitutes an advanced security retainer to be applied against Greenberg Traurig's allowed fees and expenses, as permitted by the Court. In the one year prior to the bankruptcy filing, Greenberg Traurig received a total of $436,756.28 in reimbursement for the legal services and expenses incurred in connection with the preparation, planning and filing of these bankruptcy cases. Mr. Detweiler assures the Court that the firm does not hold or represent any interest adverse to the Debtors or their estates, and that the firm is a "disinterested person" as that term is defined in Sec. 101(14) of the Bankruptcy Code. Mr. Detweiler can be contacted at: Donald J. Detweiler, Esq. The Nemours Building 1007 North Orange Street Suite 1200, Wilmington, DE 19801 Tel: (302) 661-7000 Fax: (302) 661-7360 http://www.gtlaw.com/ About Wickes Furniture Based in Wheeling, Illinois, Wickes Furniture Company, Inc. -- http://www.wickesfurniture.com/-- is one of the leading furniture retailers in the U.S. with 43 retail stores serving greater Chicago, Los Angeles, Las Vegas, and Portland. Founded in 1971, Wickes offers attractive room packages featuring complete living rooms, dining rooms, bedrooms as well as bedding, home entertainment, accessories and accent furniture. Wickes employs over 1,700 employees and offers products from leading furniture and bedding manufacturers. The company and two of its debtor-affiliates filed for Chapter 11 protection on Feb. 3, 2008 (Bankr. D. Del. Lead Case No. 08- 10213). When the Debtors filed for protection from their creditors, they listed consolidated estimated assets of $10 million to $50 million, and estimated debts of $50 million to $100 million. WILLOW CREEK FUELS: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Lead Debtor: Willow Creek Fuels, Inc. dba B.&J. Energy dba D.&D. Fuels 556 Blandon Road Fleetwood, PA 19522 Tel: (610) 944-5499 Bankruptcy Case No.: 08-20337 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- L.F.B.P., Inc. 08-20338 Willow Creek Leasing, Inc. 08-20339 A.A.A. C.O.D. Oil Co., Inc. 08-20340 Willow Creek Plumbing, Inc. 08-20341 Type of Business: With eight fuel delivery trucks, one trailer transport, three service vans, two auxiliary vehicles, an onsite propane storage facility and a 24-hour credit card diesel station for on road diesel sales, the Debtor is a full-service fuel and energy company. It also has a fully-stocked warehouse of parts to service customer's service requirements. See http://www.willowcreekfuels.com/ Chapter 11 Petition Date: February 19, 2008 Court: Eastern District of Pennsylvania (Reading) Debtors' Counsel: Doron A. Henkin, Esq. (dhenkin@marvinhenkin.com) Marvin & Henkin 8327 Germantown Avenue Philadelphia, PA 19118 Tel: (215) 248-5200 Fax: (215) 248-5202 http://www.marvinhenkin.com/ Total Assets: $1 Million to $10 Million Total Debts: $1 Million to $10 Million The Debtors did not file a list of its largest unsecured creditors. WORNICK COMPANY: Asks Court to Approve $35MM DIP Credit Facility ---------------------------------------------------------------- The Wornick Company and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of Ohio in Cincinnati for authority to obtain cash advances and other extensions of credit on a senior secured, revolving basis, in an aggregate principal amount not to exceed $35,000,000 pursuant to a postpetition credit agreement with DDJ Capital Management, LLC, on behalf of certain funds or accounts managed or advised by DDJ. DDJ will serve as administrative agent for the DIP loan. On Feb. 12, 2008, the Debtors, DDJ Total Return Loan Fund, L.P., and DDJ Capital Management entered into a restructuring support agreement. Under the RSA, the Debtors arranged up to $35 million in post-petition secured financing. In addition, the Debtors entered into a purchase agreement to sell the company's assets to Viren Acquisition Corp., an entity controlled by the DDJ Entities and an ad-hoc group of noteholders who collectively hold more than 50% of the principal amount of $125,000,000 in 10-7/8% Senior Secured Notes due 2011 issued by Wornick. Proceeds of the DIP Loan will be used for the full prepayment in cash of the financing facility the Debtors obtained before it filed for Chapter 11 protection; to pay certain fees and expenses of the Borrower incurred in connection with the DIP Loan; to fund working capital of the Borrower; and to pay amounts otherwise approved by Court orders. Prior to the Debtors' bankruptcy filing, the Debtors' prepetition financing arrangements and working capital requirements were met primarily by: (i) a $25,000,000 Senior Secured Credit Facility with Texas State Bank, which later assigned its rights and obligations under the loan to DDJ Total Return Loan Fund, L.P.; (ii) a $27.5 million increase in the Senior Secured Credit Facility; (iii) the issuance of Senior Secured Notes; and (iv) an issuance of 13.875% Senior PIK Notes due 2011 by TWC Holding LLC and TWC Holding Corp. U.S. Bank National Association serves as indenture trustee with respect to the Senior Secured Notes and Senior PIK Notes. To secure their DIP obligations, the Debtors ask the Court to grant the Lenders: (1) a super-priority administrative expense claim subject only, upon the occurrence and during the continuance of an Event of Default, to a carve-out for bankruptcy court clerk fees, United States Trustee fees, and fees payable to bankruptcy professionals retained in the Debtors' cases; (2) valid and fully-perfect first priority priming liens on and senior security interests in all of the property, assets or interests in property or assets of each Debtor, and all "property of the estate" of each Debtor, subject only to (i) certain permitted priority liens and (ii) the Carve-Out Expenses. The Debtors also seek the Court's permission to use the cash collateral of their prepetition lenders. As adequate protection for the Debtors' use of the Cash Collateral including to the extent of the aggregate diminution in the value or amount of the Collateral pledged by the Debtors as security for their Prepetition Facility as well as the Secured Notes, the Debtors propose to grant DDJ Total Return Loan Fund and the Indenture Trustee, for the benefit of the Noteholders, replacement liens. The Debtors will also pay interest in respect of the Prepetition Facility at the prepetition non-default contract rate. The Debtors note that DDJ Total Return Loan Fund and the Majority Secured Noteholder Group consent to the proposed adequate protection and priming of their liens and interests. Headquartered in Cincinnati, The Wornick Company -- http://www.wornick.com/-- is a leading supplier of individual and group military field rations to the Department of Defense. In addition the company continues to extend its core capabilities to commercial markets where its customers include, but are not limited to, Kraft Foods, Inc., Gerber Products Company, as well as retail and grocery outlets including Walgreens Co., 7-Eleven, The Kroger Co., Publix Super Markets and Meijer. Wornick specializes in the production, packaging, and distribution of shelf-life, shelf-stable, and frozen foods in flexible pouches and semirigid products. The firm's two main lines of business are military rations (approximately 70% of revenues) and co- manufacturing for leading food brands (30%). The company produces both individual (including MRE) and group rations (including Unitized Group Rations-A or UGR-A) for the U.S. military. MREs comprise about 65% of military revenues. The company and and five of its affiliates filed for Chapter 11 protection on Feb. 14, 2008 (Bankr. S.D.O., Case No. 08-10654). Donald W. Mallory, Esq., Kim Martin Lewis , Esq., and Patrick Burns, Esq. at Dinsmore & Shohl LLP represent the Debtors in their restructuring efforts. No trustee, examiner or creditors' committee has been appointed in these chapter 11 cases. The company listed between $100 million and $500 million assets and between $100 million and $500 million in debts in its bankruptcy filing. WORNICK COMPANY: Asks Court to Approve Asset Sale to Viren ---------------------------------------------------------- The Wornick Company and its debtor-affiliates seek permission from the U.S. Bankruptcy Court for the Southern District of Ohio in Cincinnati to sell substantially all of their assets to Viren Acquisition Corp., subject to higher and better offers. The Debtors have entered into a purchase agreement with Viren Acquisition, an entity controlled by DDJ Capital Management, LLC, and DDJ Total Return Loan Fund, L.P., and an ad-hoc group of noteholders who collectively hold more than 50% of the principal amount of $125,000,000 in 10-7/8% Senior Secured Notes due 2011 issued by Wornick. The Debtors also ask the Court to: (a) approve procedures for consideration of alternative investment or sale proposals to effect the Debtors' financial restructuring; (b) approve a proposed break-up fee and expense reimbursement; (c) schedule an auction and hearing to approve the sale; and (d) establish procedures relating to the assumption or assignment of executory contracts and unexpired leases and the form and manner of the proposed notice of cure amounts. On Feb. 12, 2008, the Debtors and the DDJ Entities entered into a Restructuring Support Agreement under which the Debtors' financial restructuring will be implemented through the sale of all the equity of the reorganized Wornick pursuant to a chapter 11 plan of reorganization. In connection with the RSA, the Debtors have arranged up to $35 million in post-petition secured financing. The Debtors signed the Purchase Agreement with Viren Acquisition on the same day. Papers filed in court did not disclose the actual purchase price offered by Viren. The Debtors relate that the sale agreement provides for a break-up fee of no greater than $2,250,000, an amount equal to approximately 2.5% of the proposed purchase price, excluding the amount of the Assumed Liabilities and the Excluded Portion. It also includes an Expense Reimbursement of up $1,000,000. According to the Debtors, competing offers must be more than the aggregate of the value of the sum of: -- $50,000,000, plus the amount the Debtors actually owe under their $35 million DIP Facility, plus the amount owed under their prepetition secured loan agreement still with the DDJ Entities, excluding a Make-Whole Premium and Redemption Fee payable under the Prepetition Facility; -- $4,000,000, the amount of the Excluded Portion payable under the Prepetition Facility; -- the aggregate amount of assumed liabilities; plus -- $2,250,000, the amount of the Break-Up Fee; plus -- $1,000,000, the maximum amount of the Expense Reimbursement; plus -- a $2,000,000 the Initial Overbid. The first phase of the proposed sale would require the solicitation of bids from Qualifying Bidders for either: (i) 100% of the equity of the reorganized Debtors to be acquired under a plan of reorganization, or (ii) all or substantially all of the property and assets of the Debtors' businesses. Assuming the Debtors receive at least one Qualifying Bid, in addition to the Purchase Agreement from the Purchaser, the second phase would require a formal auction of the Debtors' businesses. Bids are due on or before May 17, 2008. The Auction Date is on or before May 23, 2008. The hearing to approve the Prevailing Bid will take place, in the event of an Asset Sale, no later than two business days following the Auction Date and, in the event of the Equity Sale, will take place in conjunction with the Plan confirmation hearing, which will not be later than June 16, 2008. Headquartered in Cincinnati, The Wornick Company -- http://www.wornick.com/-- is a leading supplier of individual and group military field rations to the Department of Defense. In addition the company continues to extend its core capabilities to commercial markets where its customers include, but are not limited to, Kraft Foods, Inc., Gerber Products Company, as well as retail and grocery outlets including Walgreens Co., 7-Eleven, The Kroger Co., Publix Super Markets and Meijer. Wornick specializes in the production, packaging, and distribution of shelf-life, shelf-stable, and frozen foods in flexible pouches and semirigid products. The firm's two main lines of business are military rations (approximately 70% of revenues) and co- manufacturing for leading food brands (30%). The company produces both individual (including MRE) and group rations (including Unitized Group Rations-A or UGR-A) for the U.S. military. MREs comprise about 65% of military revenues. The company and and five of its affiliates filed for Chapter 11 protection on Feb. 14, 2008 (Bankr. S.D.O., Case No. 08-10654). Donald W. Mallory, Esq., Kim Martin Lewis , Esq., and Patrick Burns, Esq. at Dinsmore & Shohl LLP represent the Debtors in their restructuring efforts. The company listed between $100 million and $500 million assets and between $100 million and $500 million in debts in its bankruptcy filing. ZIM CORPORATION: Earns $156T in Third Quarter Ended Dec. 31 ----------------------------------------------------------- Zim Corporation reported net income of $155,758 on total revenue of $698,862 for the third quarter ended Dec. 31, 2007, compared with a net loss of $507,117 on total revenue of $517,969 in the corresponding period ended Dec. 31, 2006. At Dec. 31, 2007, ZIM had cash of $273,507 and working capital of $307,051, as compared to cash of $441,637 and working capital of $93,085 at March 31, 2007. This change of financial position principally reflects the one-time recognition of revenue in the premium SMS segment of $197,948 that resulted from a review of outstanding payables and receivables and subsequent settlement of outstanding amounts with vendors and customers. At Dec. 31, 2007, the company's consolidated balance sheet showed $1,054,936 in total assets, $601,108 in total liabilities, and $453,828 in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?283b Going Concern Doubt Raymond Chabot Grant Thornton LLP, in Ottawa, Canada, expressed substantial doubt about ZIM Corporation's ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended March 31, 2007, and 2006. The auditing firm reported the company has incurred a net loss of $1,936,187 and provided $198,143 of cash from operations, during the year ended March 31, 2007. The company also has generated negative cash flows from operations during each of the previous five years. About ZIM Corp. Ottawa, Canada-based ZIM Corporation (OTC BB: ZIMCF) -- http://www.zim.biz/-- is a mobile content, Enterprise Database Software and Internet TV service provider. Through its global infrastructure, ZIM provides publishing and licensing services for market-leading mobile content and for Internet TV broadcasting. * Fitch Says Equipment Lease Delinquencies Rise Slightly in 2007 ---------------------------------------------------------------- Following historical trends, U.S. equipment lease delinquency rates increased slightly during the second half of 2007. Total delinquencies increased slightly across both the small/mid-ticket and large ticket portfolios, according to Fitch Ratings in the latest edition of 'The ABS Equipment Expo'. As of the Dec. 31, 2007 reporting period, 60+ day delinquencies for Fitch's Equipment ABS Delinquency Index increased to 0.79% with an annual average of 0.68% versus 0.58% at year-end 2006 and 0.50% annual average. The slight increase in 60+ day delinquencies follows similar seasonal patterns witnessed in prior years, whereby first quarter delinquencies reach a peak, but subsequently decline during the second and early third quarters and increases during the remainder of the year. Fitch expects 60+ day delinquencies to deviate from prior seasonal trends, due to concerns related to the current US economy. As a result, Fitch expects both portfolios to experience slight portfolio deterioration, resulting in increases in delinquencies and losses during the first half of 2008. However, the transactions rated by Fitch continue to perform within expected ranges, resulting in sufficient credit enhancement to cover current ratings. Both the small/mid-ticket and large ticket portfolios experienced increasing delinquency trends. The small/mid-ticket portfolio 60+ day delinquencies totaled 1.03% at year-end 2007 versus 0.78% in June 2007 and 0.95% at year-end 2006. Similar performance was seen on the large ticket portfolio, with 0.65% 60+ day delinquencies at year-end 2007 compared to 0.52% in June 2007 and 0.37% at year end 2006. * Real Estate Prices Drop to 1.5% in Dec., Moody's Report Shows --------------------------------------------------------------- Commercial real estate prices as measured by Moody's/REAL Commercial Property Price Indices dropped 1.5% in December, the second consecutive monthly decline and the third in last four months. "The last few months of the index have represented a bit of a plateau, but one with more 'down months' than 'up months," said Moody's Senior Vice President Sally Gordon, coauthor of the report. "The asymmetry of the number of months when prices increased or decreased is striking and clearly indicative of where we are in the real estate cycle -- the beginnings of a downturn after a long run-up in prices." The 1.5% decline in December represented an acceleration over the 0.2% slip in November. It was the fourth largest monthly drop in the 84-month history of the Moody's/REAL CPPI. One surprise in December was that the volume of the repeat sales transactions that the Moody's/REAL CPPI measures remained robust during the month, usually a sign of market strength. In December the Moody's/REAL CPPI captured 352 transactions totaling $7.1 billion. "Although December is often a more active month for transactions as some borrowers and/or lenders are eager to close before the year-end for one or another financial reason, the jump in volume in December might turn out to be atypical before a softer pace sets in," says Gordon. Moody's/REAL Commercial Property Prices Indices are based on the repeat sales of the same properties across the US at different points in time. Analyzing price changes measured in this way provides maximum transparency and methodological rigor. This approach also circumvents the distortions that can occur with other commercial property value measurements such as appraisals or average prices, says Moody's. The report also presents price changes based on different property types and geographical regions, including the ten MSAs with the most transactions. * Moody's Sees Neg. Outlook for U.S. Gaming and Lodging Sectors --------------------------------------------------------------- Moody's has lowered its outlooks for the U.S. Gaming and U.S. Lodging and Cruise sectors to negative from stable, reflecting the U.S. economic downturn and potential for recession. "A decline in consumers' disposable income, combined with an increase in the cost of travel, will likely result in lower overall visitation and spending trends for consumer-based leisure industries," said gaming analyst Keith Foley, VP/Senior Credit Officer at Moody's. Pressure on revenues will force casino operators to increase promotional spending, which could negatively impact profitability in the sector over the next 18-24 months, Foley said. The US lodging and cruise industries are facing similar pressures, according to Moody's analyst Peggy Holloway. "Lodging and cruise companies continue to project positive earnings growth in 2008, but Moody's expects the pace of growth to slow as the year progresses, resulting in flat to modest earnings growth," Holloway said. Moody's expects to publish an industry update on the lodging and cruise sectors in early March. Many gaming markets, including Atlantic City and Connecticut -- two of the largest gaming markets with a long history of positive growth trends -- are already experiencing declining growth rates as a result of weak economic trends and heightened competition arising from new and soon-to-be-opened expansions of casinos and hotels. "While most gaming markets performed well during the period of economic weakness that followed the events of 9/11, the amount and type of competition, along with the amount of investment needed to compete effectively, have increased substantially since that period. As a result, the gaming sector is more vulnerable to periods of economic weakness than it has been in the past," Foley said. Moody's also noted that the casino industry's geographic diversification, often viewed as a hedge against regional and local economic weakness, may not be as beneficial to gaming issuers during a nationwide recession. Further, most gaming companies must continue to meet significant debt-service requirements as the economic environment becomes more challenging. Despite the negative outlook, Foley and Holloway noted that Moody's is not expecting a "gloom and doom scenario" for the US gaming, lodging and cruise sectors, and still believes the longer- term popularity and demographic trends remain favorable. * Moody's Says Fin'l Guarantors' Credit Risks Might Affect Banks ---------------------------------------------------------------- Moody's Investors Service commented that the deterioration in the credit risk profiles of financial guarantors may have significant implications for a relatively small number of banks and securities firms. In its new report, Moody's has updated its ongoing analysis on guarantor exposures at global banks and securities firms. The report reviews the key information sets that Moody's analysts are seeking from banks and securities firms regarding their financial guarantor exposures, and how the rating agency is analyzing that information for each type of exposure. David Fanger, Moody's Chief Credit Officer for Financial Institutions, emphasizes that banks' public disclosure about their financial guarantor exposures is limited and Moody's analysis is still underway. "Moody's has not yet reached any definitive conclusions about whether or not specific rating actions may be required on banks or securities firms as a result of their guarantor exposures," he states. Analyzing the Risk of Loss Moody's report divides the guarantor exposure at global banks and securities firm into four broad categories: a) credit default swaps (CDS) and derivatives; b) wrapped and direct exposures; c), liquidity facilities and d) reputational exposure. Moody's then points out that an important factor in its analysis is the quality of the underlying assets on which financial guarantors have provided a guarantee. Nearly all of the underlying assets were of investment-grade quality when they were guaranteed. In addition, the rating agency states that even if a Moody's-rated financial guarantor is no longer rated Aaa, Moody's expects that the firm would be able to perform on its guarantee and CDS obligations, albeit with a lower level of confidence than that implied by a Aaa rating. Thus, Mr. Fanger adds, "the analysis of the risks for banks and securities firms involves an assessment not only of the risk of loss due to declines in the value of the guaranteed assets, but also of the likelihood that a financial guarantor might still be able to perform on its obligations -- even though it may no longer be rated Aaa." Source of Largest Potential Losses Moody's believes that the largest potential losses which banks and securities firms may face in the event of further deterioration or downgrades of financial guarantors involve their holdings of CDS on ABS CDOs purchased from financial guarantors as hedges. "Our initial assessment has identified CDS hedges with financial guarantors on ABS CDOs totaling approximately $120 billion," Mr. Fanger said. "These exposures are spread across approximately 20 different banks and securities firms." "Downgrades of financial guarantors could certainly lead these firms to increase counterparty reserves on such exposures, perhaps by $7 to $10 billion in aggregate," the analyst concludes. "But should both the market value of the hedged securities and banks' internal risk ratings for guarantors fall significantly lower than they are today," he notes, "this could rise to as much as $20 or $30 billion." "We are currently evaluating the individual exposures at each institution," Mr. Fanger said, "in order to assess how these firms can absorb the additional counterparty reserves that might be required." According to Moody's, those banks holding securities backed by Subprime, Alt-A, and 2nd Lien mortgage or home equity loans and wrapped by financial guarantors may also face impairment. But the rating agency does not believe the impairment on those instruments will be as severe. "Nevertheless," Mr. Fanger notes, "since the size of these holdings at individual banks is less clear, the extent of these charges remains more uncertain." * Moody's Says Failures in Auction Rate Markets May Press Ratings ----------------------------------------------------------------- Moody's Investor's Service reports that while a prolonged disruption in the auction rate securities market could have negative ratings implications for some securities, the underlying credit quality of most securities in the ARS market remains strong in the short term. Recent failures in the auction rate market have produced negative intermediate-term ratings implications for student loan-backed securitizations and negative long-term ratings implications for certain public finance issuers. Moody's also expects various issuers to explore a wide range of alternatives to the ARS market as a result of the changed conditions. "The auction rate market has been severely disrupted in recent days by the decisions of several broker-dealers to curtail and, in some cases, withdraw their voluntary support in the form of liquidity for auction rate securities," said Moody's Vice President Henry Shilling, a co-author of the report. "This has been happening in spite of the fact that the underlying credit quality of issuers remains strong in the short-term even as interest expenses have spiked up." Auction rate securities typically have a long-term nominal maturity that can extend to 25 or 30 years but have interest rates that are reset periodically. According to the Moody's report, roughly half of the estimated $328 billion market is made up of tax-exempt (and some taxable) issues of state and local governments, not-for-profit hospitals, colleges and universities. "Many issuers can manage the higher interest rates they may have to pay on their auction rate securities because interest expense is not a high percentage of their operating costs," says William Fitzpatrick, a Moody's vice president, and a co-author of the report. "But there may be some issuers with more narrow debt service coverage that will experience rising budgetary stress if the high rates persist for the medium or long term." The auction rate market also includes an estimated $86 million of securities backed by Federal Family Education Loan Program and private student loans. "If the Student Loan Auction Rate Securities interest rates remain at the failed auction rate for a sustained period of time, the ratings of student loan-backed securitizations could be adversely affected," says report co- author and Moody's Vice President Barbara Lambotte. "Other note holders, such as the holders of Libor notes issued out of a trust that includes SLARS, are also exposed to this risk, as they typically share one flow of funds with the SLARS." The market also includes approximately $80 billion of preferred stock and notes issued by closed-end funds. "The credit quality of securities issued by closed-end funds is not likely be impaired," says Shilling. "While market conditions remain unsettled, the organization of closed-end funds and structural protections established for preferred stock holders are expected, in Moody's view, to continue to insulate investors against credit deterioration in the preferred shares and other similar debt obligations." * S&P Lowers Ratings on 125 Tranches from 18 U.S. Hybrid CDOs ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 125 tranches from 18 U.S. cash flow and hybrid collateralized debt obligation transactions. Of the lowered ratings, 116 were removed from CreditWatch with negative implications. Additionally, S&P affirmed one rating at 'AAA' and removed it from CreditWatch negative. The downgraded tranches have a total issuance amount of $13.774 billion. Seventeen of the affected transactions are mezzanine structured finance CDOs of asset-backed securities, which are CDOs of ABS collateralized in large part by mezzanine tranches of residential mortgage-backed securities and other SF securities. One transaction is a high-grade CDO of ABS. The CDO downgrades reflect a number of factors, including credit deterioration and recent negative rating actions on subprime U.S. RMBS securities, as well as changes Standard & Poor's has made to the recovery rate and correlation assumptions it uses to assess U.S. RMBS held within CDO collateral pools. To date, including the CDO tranches listed below and including actions on both publicly and confidentially rated tranches, S&P have lowered its ratings on 1,680 tranches from 441 U.S. cash flow, hybrid, and synthetic CDO transactions as a result of stress in the U.S. residential mortgage market and credit deterioration of U.S. RMBS. In addition, 2,202 ratings from 603 transactions are currently on CreditWatch negative for the same reasons. In all, the affected CDO tranches represent an issuance amount of $343.625 billion. Standard & Poor's will continue to monitor the CDO transactions it rates and take rating actions, including CreditWatch placements, when appropriate. Rating and Creditwatch Actions Rating ------ Transaction Class To From ----------- ----- -- ----- ACA ABS 2003-1 Ltd. A-M BB- AAA/Watch Neg ACA ABS 2003-1 Ltd. A-R BBB+ AAA/Watch Neg ACA ABS 2003-1 Ltd. A-T BBB+ AAA/Watch Neg ACA ABS 2003-1 Ltd. B CCC+ AA-/Watch Neg ACA ABS 2003-1 Ltd. C CC BBB-/Watch Neg ACA ABS 2003-1 Ltd. D CC B-/Watch Neg Ballyrock ABS CDO 2007-1 Ltd. A-1a AAA AAA/Watch Neg Ballyrock ABS CDO 2007-1 Ltd. A-1b BBB AAA/Watch Neg Ballyrock ABS CDO 2007-1 Ltd. A-2 BB- AAA/Watch Neg Ballyrock ABS CDO 2007-1 Ltd. B B- AA/Watch Neg Ballyrock ABS CDO 2007-1 Ltd. C CCC A/Watch Neg Ballyrock ABS CDO 2007-1 Ltd. D CC BBB/Watch Neg Ballyrock ABS CDO 2007-1 Ltd. S AA AAA/Watch Neg C-BASS CBO XVI Ltd A BB+ AAA/Watch Neg C-BASS CBO XVI Ltd B BB AA/Watch Neg C-BASS CBO XVI Ltd C CCC+ A/Watch Neg C-BASS CBO XVI Ltd D CCC- BBB/Watch Neg Cetus ABS CDO 2006-3 Ltd. A-1A BB- AAA/Watch Neg Cetus ABS CDO 2006-3 Ltd. A-1B CCC AA+/Watch Neg Cetus ABS CDO 2006-3 Ltd. A-2 CCC- A+/Watch Neg Cetus ABS CDO 2006-3 Ltd. B CC A-/Watch Neg Cetus ABS CDO 2006-3 Ltd. C-1 CC BB+/Watch Neg Cetus ABS CDO 2006-3 Ltd. C-2 CC BB-/Watch Neg Cetus ABS CDO 2006-3 Ltd. D-1 CC CCC+/Watch Neg Cetus ABS CDO 2006-3 Ltd. D-2 CC CCC/Watch Neg Cetus ABS CDO 2006-3 Ltd. E CC CCC-/Watch Neg Cetus ABS CDO 2006-3 Ltd. S BBB AAA/Watch Neg Cetus ABS CDO 2006-3 Ltd. X CC BB-/Watch Neg Corona Borealis CDO Ltd A-1A A AAA/Watch Neg Corona Borealis CDO Ltd A-1B BB+ AAA/Watch Neg Corona Borealis CDO Ltd A-1C BB- AAA/Watch Neg Corona Borealis CDO Ltd A-2 B AAA/Watch Neg Corona Borealis CDO Ltd B CCC+ AA/Watch Neg Corona Borealis CDO Ltd C CCC- BBB+/Watch Neg Corona Borealis CDO Ltd D CC BBB-/Watch Neg Corona Borealis CDO Ltd S B AAA/Watch Neg Euler ABS CDO I Ltd. A-1 A- AAA/Watch Neg Euler ABS CDO I Ltd. A-2 BB+ AAA/Watch Neg Euler ABS CDO I Ltd. A-3 B AAA/Watch Neg Euler ABS CDO I Ltd. B B- AA/Watch Neg Euler ABS CDO I Ltd. C CCC+ AA-/Watch Neg Euler ABS CDO I Ltd. D CCC A/Watch Neg Euler ABS CDO I Ltd. E CCC A-/Watch Neg Euler ABS CDO I Ltd. F CCC- BBB/Watch Neg Euler ABS CDO I Ltd. G CC BBB-/Watch Neg Euler ABS CDO I Ltd. H CC BB/Watch Neg Fort Denison Funding Ltd. A-1 BB- A+/Watch Neg Fort Denison Funding Ltd. A-2a CCC A+/Watch Neg Fort Denison Funding Ltd. A-2b CCC A+/Watch Neg Fort Denison Funding Ltd. B CC BB/Watch Neg Fort Denison Funding Ltd. S AA AAA/Watch Neg Gulf Stream-Atlantic CDO 2007-1 Ltd A1-VF B AAA/Watch Neg Gulf Stream-Atlantic CDO 2007-1 Ltd A-2 CCC AA+/Watch Neg Gulf Stream-Atlantic CDO 2007-1 Ltd B CC A-/Watch Neg Gulf Stream-Atlantic CDO 2007-1 Ltd C CC BBB-/Watch Neg Gulf Stream-Atlantic CDO 2007-1 Ltd D CC BB-/Watch Neg Gulf Stream-Atlantic CDO 2007-1 Ltd E CC B-/Watch Neg Gulf Stream-Atlantic CDO 2007-1 Ltd F CC CCC+/Watch Neg Gulf Stream-Atlantic CDO 2007-1 Ltd G CC CCC/Watch Neg Gulf Stream-Atlantic CDO 2007-1 Ltd Sub Notes CC CCC-/Watch Neg Hudson Mezzanine Funding 2006-2 Ltd A-1 BB- AAA/Watch Neg Hudson Mezzanine Funding 2006-2 Ltd A-2 B- AAA/Watch Neg Hudson Mezzanine Funding 2006-2 Ltd B CCC+ AA-/Watch Neg Hudson Mezzanine Funding 2006-2 Ltd C CCC- BBB+/Watch Neg Hudson Mezzanine Funding 2006-2 Ltd D CC B+/Watch Neg Hudson Mezzanine Funding 2006-2 Ltd E CC CCC/Watch Neg Hudson Mezzanine Funding 2006-2 Ltd S AA AAA/Watch Neg Independence V CDO Ltd. A-1 AA AAA/Watch Neg Independence V CDO Ltd. A-2A BB- AA+/Watch Neg Independence V CDO Ltd. A-2B BB- AA+/Watch Neg Independence V CDO Ltd. B CCC- A/Watch Neg Independence V CDO Ltd. C CC BB-/Watch Neg Independence V CDO Ltd. Pref Shrs 1 CC CCC+/Watch Neg Independence V CDO Ltd. Pref Shrs 2 CC CCC+/Watch Neg Ivy Lane CDO Ltd. A-1 BBB- AAA/Watch Neg Ivy Lane CDO Ltd. A-2 BB- AAA/Watch Neg Ivy Lane CDO Ltd. A-3 CCC+ AA/Watch Neg Ivy Lane CDO Ltd. B CC BBB/Watch Neg Ivy Lane CDO Ltd. C CC B-/Watch Neg Ivy Lane CDO Ltd. S BBB+ AAA/Watch Neg Kleros Real Estate CDO II Ltd A-1A BB AAA/Watch Neg Kleros Real Estate CDO II Ltd A-1B CCC+ AA+/Watch Neg Kleros Real Estate CDO II Ltd A-2 CCC A/Watch Neg Kleros Real Estate CDO II Ltd B CCC- BBB/Watch Neg Kleros Real Estate CDO II Ltd C CC BB+/Watch Neg Kleros Real Estate CDO II Ltd D CC B-/Watch Neg Kleros Real Estate CDO II Ltd E CC CCC/Watch Neg Longridge ABS CDO I Ltd A-1 B- AAA/Watch Neg Longridge ABS CDO I Ltd A-2 CCC AA-/Watch Neg Longridge ABS CDO I Ltd B CC BBB+/Watch Neg Longridge ABS CDO I Ltd C CC BB+/Watch Neg Longridge ABS CDO I Ltd D CC B+/Watch Neg Longridge ABS CDO I Ltd E CC B/Watch Neg Longridge ABS CDO I Ltd F CC CCC+/Watch Neg Longridge ABS CDO I Ltd UnfunSupSr B- AAA/Watch Neg Orion 2006-2 Ltd. A-1A B+ AAA/Watch Neg Orion 2006-2 Ltd. A-1B B AAA/Watch Neg Orion 2006-2 Ltd. A-2 CCC- A-/Watch Neg Orion 2006-2 Ltd. B-1 CC BB/Watch Neg Orion 2006-2 Ltd. B-2 CC CCC+/Watch Neg Orion 2006-2 Ltd. C-1 CC CCC-/Watch Neg Orion 2006-2 Ltd. S B- AAA/Watch Neg Palmer Square 3 Ltd. A1-M AA+ AAA Palmer Square 3 Ltd. A1-Q AA+ AAA Palmer Square 3 Ltd. A2 A AAA Palmer Square 3 Ltd. A3 BB+ AAA Palmer Square 3 Ltd. A4 B- AAA Palmer Square 3 Ltd. B CCC AA Palmer Square 3 Ltd. C CCC- A Palmer Square 3 Ltd. D CC BBB Palmer Square 3 Ltd. X AA+ AAA South Coast Funding IX Ltd A1A AA AAA/Watch Neg South Coast Funding IX Ltd A1B B- AA/Watch Neg South Coast Funding IX Ltd A2 CCC+ BBB+/Watch Neg South Coast Funding IX Ltd B CCC- CCC+/Watch Neg Springdale CDO 2006-1 Ltd. A-2 B- AA/Watch Neg Springdale CDO 2006-1 Ltd. B CCC- BBB+/Watch Neg Springdale CDO 2006-1 Ltd. C CC BB+/Watch Neg Springdale CDO 2006-1 Ltd. D CC CCC/Watch Neg Tallships Funding Ltd A-1 BB AAA/Watch Neg Tallships Funding Ltd A-2 B+ AA/Watch Neg Tallships Funding Ltd B B- A/Watch Neg Tallships Funding Ltd C CCC BBB/Watch Neg Tallships Funding Ltd D CC BB+/Watch Neg Tallships Funding Ltd Revolver A- AAA/Watch Neg Tallships Funding Ltd UnfundedSS AA-srs AAAsrs/WatchNeg Other Outstanding Ratings Transaction Class Rating ----------- ----- ------ Orion 2006-2 Ltd. C-2 CC Orion 2006-2 Ltd. D-1 CC Orion 2006-2 Ltd. D-2 CC Orion 2006-2 Ltd. E CC Orion 2006-2 Ltd. X CC South Coast Funding IX Ltd C CC South Coast Funding IX Ltd D CC South Coast Funding IX Ltd E CC South Coast Funding IX Ltd F CC Springdale CDO 2006-1 Ltd. E CC *Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ------------------------------------------------------------ Recent Chapter 11 cases filed with assets and liabilities below $1,000,000: In Re The Video Game, Inc. Bankr. D. N.J. Case No. 08-12486 Chapter 11 Petition filed February 12, 2008 See http://bankrupt.com/misc/njb08-12486.pdf In Re Palladium Arena, Inc. Bankr. N.D. Ga. Case No. 08-62696 Chapter 11 Petition filed February 13, 2008 See http://bankrupt.com/misc/ganb08-62696.pdf In Re Mark S. Fremd Bankr. W.D. Penn. Case No. 08-20870 Chapter 11 Petition filed February 13, 2008 See http://bankrupt.com/misc/pawb08-20870.pdf In Re Edward L. Young Bankr. W.D. Penn. Case No. 08-20875 Chapter 11 Petition filed February 13, 2008 See http://bankrupt.com/misc/pawb08-20875.pdf In Re Ralac Corp., d.b.a. Quiznos Sub. Bankr. D. P.R. Case No. 08-00801 Chapter 11 Petition filed February 13, 2008 See http://bankrupt.com/misc/prb08-00801.pdf In Re Paul R. Platner & Leslie A. Platner Bankr. E.D. Calif. Case No. 08-21665 Chapter 11 Petition filed February 13, 2008 Filed as Pro Se In Re All Framing, L.L.C. Bankr. W.D. Wash. Case No. 08-10767 Chapter 11 Petition filed February 13, 2008 Filed as Pro Se In Re Phoenix Development East Corp. Bankr. E.D. Wash. Case No. 08-00511 Chapter 11 Petition filed February 13, 2008 See http://bankrupt.com/misc/waeb08-00511.pdf In Re Lilly & Johnson Enterprises, Inc., d.b.a. Creative Headlines Bankr. S.D. W.V. Case No. 08-50045 Chapter 11 Petition filed February 13, 2008 See http://bankrupt.com/misc/wvsb08-50045.pdf In Re Daniel R. Hansen Bankr. C.D. Calif. Case No. 08-11950 Chapter 11 Petition filed February 14, 2008 See http://bankrupt.com/misc/cacb08-11950.pdf In Re Design Associates, Inc. Bankr. E.D. La. Case No. 08-10281 Chapter 11 Petition filed February 14, 2008 See http://bankrupt.com/misc/laeb08-10281.pdf In Re Cellular and Paging Plus, Inc. Bankr. E.D. Mich. Case No. 08-30542 Chapter 11 Petition filed February 14, 2008 See http://bankrupt.com/misc/mieb08-30542.pdf In Re Northern Lights, Inc. Bankr. N.D. N.Y. Case No. 08-10380 Chapter 11 Petition filed February 14, 2008 See http://bankrupt.com/misc/nynb08-10380.pdf In Re M.C.C. Proceeds, Inc. Bankr. S.D. N.Y. Case No. 08-10517 Chapter 11 Petition filed February 14, 2008 See http://bankrupt.com/misc/nysb08-10517.pdf In Re Shartlesville Star, Inc. Bankr. E.D. Penn. Case No. 08-20305 Chapter 11 Petition filed February 14, 2008 See http://bankrupt.com/misc/paeb08-20305.pdf In Re Robert M. Bradley Bankr. D. Mass. Case No. 08-11017 Chapter 11 Petition filed February 14, 2008 Filed as Pro Se In Re Royalox International, Inc. Bankr. D. N.J. Case No. 08-12604 Chapter 11 Petition filed February 14, 2008 Filed as Pro Se In Re Experimental Group Young People's Theater Bankr. N.D. Calif. Case No. 08-40701 Chapter 11 Petition filed February 14, 2008 Filed as Pro Se In Re Rene Minneboo & Laura Jennifer Kainik Bankr. N.D. Calif. Case No. 08-40692 Chapter 11 Petition filed February 14, 2008 Filed as Pro Se In Re 1040 Heights Boulevard, Inc. Bankr. S.D. Tex. Case No. 08-30986 Chapter 11 Petition filed February 14, 2008 See http://bankrupt.com/misc/txsb08-30986.pdf In Re Michel T. Wehby, d.b.a. Wehby Brothers Construction Bankr. N.D. Ala. Case No. 08-00719 Chapter 11 Petition filed February 15, 2008 See http://bankrupt.com/misc/alnb08-00719.pdf In Re Sang K. Chon & Kay Yeoun Chon, d.b.a. Village Music Bankr. N.D. Ga. Case No. 08-62806 Chapter 11 Petition filed February 15, 2008 See http://bankrupt.com/misc/ganb08-62806.pdf In Re Longbranch Saloon Enterprises, Inc. Bankr. E.D. N.C. Case No. 08-01008 Chapter 11 Petition filed February 15, 2008 See http://bankrupt.com/misc/nceb08-01008.pdf In Re Mario Mediana Bankr. D. Nev. Case No. 08-11328 Chapter 11 Petition filed February 15, 2008 See http://bankrupt.com/misc/nvb08-11328.pdf In Re Jose Paloma Bankr. D. Nev. Case No. 08-11330 Chapter 11 Petition filed February 15, 2008 See http://bankrupt.com/misc/nvb08-11330.pdf In Re 1337 Dixwell Financial, L.L.C. Bankr. D. Conn. Case No. 08-30458 Chapter 11 Petition filed February 15, 2008 Filed as Pro Se In Re Green Acres Child Care Center, Inc. Bankr. M.D. Ga. Case No. 08-10224 Chapter 11 Petition filed February 15, 2008 Filed as Pro Se In Re Three Real Estate Holding Co. Bankr. S.D. N.Y. Case No. 08-22214 Chapter 11 Petition filed February 15, 2008 Filed as Pro Se In Re Woodlands International Real Estate, Inc. Bankr. D. N.J. Case No. 08-12764 Chapter 11 Petition filed February 15, 2008 Filed as Pro Se In Re Donald M. Allan & Lori J. Allan Bankr. D. Del. Case No. 08-10301 Chapter 11 Petition filed February 15, 2008 Filed as Pro Se In Re Brent W. Boatwright, d.b.a. B.&B. Construction, L.L.C. Bankr. D. S.C. Case No. 08-00925 Chapter 11 Petition filed February 15, 2008 See http://bankrupt.com/misc/scb08-00925.pdf In Re Santus Healthcare Services, Inc. Bankr. S.D. Tex. Case No. 08-30985 Chapter 11 Petition filed February 15, 2008 See http://bankrupt.com/misc/txsb08-30985.pdf In Re Joyce Suzanne Cayli, a.k.a. Joyce Suzanne Licurgo Bankr. E.D. Va. Case No. 08-10707 Chapter 11 Petition filed February 15, 2008 See http://bankrupt.com/misc/vaeb08-10707.pdf In Re John MacGregor Elder Bankr. E.D. Va. Case No. 08-10713 Chapter 11 Petition filed February 15, 2008 See http://bankrupt.com/misc/vaeb08-10713.pdf In Re Teil Fabricating & Machine Tool, L.L.C. Bankr. W.D. La. Case No. 08-10448 Chapter 11 Petition filed February 18, 2008 See http://bankrupt.com/misc/lawb08-10448.pdf In Re Walker-Russell Farm, L.L.C. Bankr. D. Maine Case No. 08-20130 Chapter 11 Petition filed February 18, 2008 See http://bankrupt.com/misc/meb08-20130.pdf In Re Premium Padding, L.L.C. Bankr. N.D. Miss. Case No. 08-10609 Chapter 11 Petition filed February 18, 2008 See http://bankrupt.com/misc/msnb08-10609.pdf In Re Benjamin Eric Pittman Bankr. S.D. Miss. Case No. 08-00542 Chapter 11 Petition filed February 18, 2008 See http://bankrupt.com/misc/mssb08-00542.pdf In Re Parmatic Filter Corp. Bankr. D. N.J. Case No. 08-12748 Chapter 11 Petition filed February 18, 2008 See http://bankrupt.com/misc/njb08-12748.pdf In Re Tiberias, Inc. Bankr. C.D. Calif. Case No. 08-11674 Chapter 11 Petition filed February 19, 2008 See http://bankrupt.com/misc/cacb08-11674.pdf In Re Digital Printing, Inc. d.b.a. American Color Labs Bankr. D. Colo. Case No. 08-11855 Chapter 11 Petition filed February 19, 2008 See http://bankrupt.com/misc/cob08-11855.pdf In Re Integrated Structural Systems, Inc. Bankr. D. Md. Case No. 08-12231 Chapter 11 Petition filed February 19, 2008 See http://bankrupt.com/misc/mdb08-12231.pdf In Re YancyJazz, L.L.P. Bankr. E.D. N.C. Case No. 08-01071 Chapter 11 Petition filed February 19, 2008 See http://bankrupt.com/misc/nceb08-01071.pdf In Re Danny Pizzeria and Deli Restorante, Inc., a.k.a. Kola N. Dushaj, a.k.a. Kola Dushaj, a.k.a. Nick Dushaj Bankr. S.D. N.Y. Case No. 08-35282 Chapter 11 Petition filed February 19, 2008 Filed as Pro Se ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Joseph Medel C. Martirez, Shimero R. Jainga, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Melanie C. Pador, Ludivino Q. Climaco, Jr., Loyda I. Nartatez, Tara Marie A. Martin, Philline P. Reluya, Ma. Cristina I. Canson, Christopher G. Patalinghug, Frauline S. Abangan, and Peter A. Chapman, Editors. Copyright 2008. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***