/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/080403.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, April 3, 2008, Vol. 12, No. 79 Headlines ABITIBIBOWATER: Fitch to Put 'CCC/RR1' Rating on Unit's $400M Loan ACCELLENT INC: Posts $275MM Net Loss in Year Ended December 31 ACE SECURITIES: 53 Classes of Certs. Get Moody's Rating Downgrades ACE SECURITIES: 53 Classes of Certs. Get Moody's Rating Downgrades ADVANCED CELL: Issues $130,000 in Unsecured Convertible Notes ADVANCED CELL: Receives Default Notice from RHP MasterFund ADVANCED CELL: To Restate Financial Statements Due to Errors ADVANCED CELL: VP Ivan Wolkind Resigns as Chief Accounting Officer AEARO TECHNOLOGIES: Completes $1.2 Billion Merger Deal With 3M Co. AEARO TECHNOLOGIES: Moody's Withdraws Ratings on 3M Company Deal ALOHA AIRLINES: Court Rejects Governor's Plea to Stave Off Closure AMERICAN AXLE: UAW Wants Fair & Equitable Settlement, UAW VP Says AMERICAN HOME: Hearing on BofA's Bid to Lift Stay Set April 16 AMERICAN HOME: Beltway, Lehman Capital Buy Non-Performing Loans AMERICAN HOME: Court Approves Employment of PwC as Tax Advisors AMERICAN HOME: Wells Fargo Wants to Recoup Erroneous Payment AMERICAN LAFRANCE: New Order Approving Disclosure Statement Issued AMERICAN LAFRANCE: Court Resets Asset Sale Motion Hearing to May 1 AMERICAN LAFRANCE: Committee Withdraws Request for Ch. 11 Trustee AMERICAN LAFRANCE: To Dispose of 1,100 Executory Contracts ANALYTICAL SURVEYS: Completes Buyout of Axion's Common Stock ASARCO LLC: Judge Schmidt Okays Bidding Procedures for Assets Sale ASPEN TECHNOLOGY: Appoints KPMG as New Independent Accounting Firm BARRINGTON II: Seven Classes of Notes Get Moody's Rating Reviews BEAR STEARNS: Bank Sale to JPMorgan Gets Okay from Federal Reserve BEAR STEARNS: S&P Downgrades Ratings on 77 Classes From 21 Deals BFWEST LLC: WestLB Wants Chapter 11 Case Dismissed BGF INDUSTRIES: S&P Withdraws Ratings on Company's Request BLACKHAWK AUTOMOTIVE: Can File Chapter 11 Plan Until May 19 BLUE WATER: Gets Final Approval to Borrow $35MM from Citizens BLUE WATER: CIT Entities Balk at Miller Buckfire's Compensation BLUE WATER: Ford Balks at CIT Adequate Protection Payment Demands BRENDA CHAVEZ: Case Summary & Five Largest Unsecured Creditors BURDETTE FAMILY: Case Summary & 10 Largest Unsecured Creditors CAMULOS LOAN: S&P Attaches 'BB' Initial Ratings on Class E Notes CATHOLIC CHURCH: Davenport Submits Amended Disclosure Statement CATHOLIC CHURCH: Fairbanks Wants to Use Funds for Construction CELSIA TECH: David Clarke Resigns as Director Effective March 27 CHRYSLER LLC: Disputes Roush Claim on Plastic Molds at Plastech CHURCH & DWIGHT: Moody's Designates 'BB' Rating on Positive Watch CITIGROUP MORTGAGE: Fitch Chips Ratings on $721.6MM Certificates CLEAR CHANNEL: Judge Remands Merger Deal to Texas State Court COLONIAL PROPERTIES: Fitch Holds 'BB+' Rating on Preferred Stock COMFORCE CORP: December 30 Balance Sheet Upside-Down by $9 Million COMSTOCK HOMEBUILDING: PwC Expresses Going Concern Doubt COMUNIDAD KENSINGTON: Case Summary & 20 Largest Unsec. Creditors COSINE COMMUNICATIONS: Burr Pilger Raises Substantial Doubt COUNTRYWIDE FINANCIAL: Mozilo, Sambol to Get $19MM in Stock Payout CREATIVE GROUP: Seeks Okay to Sell Assets to Scorpion for $17MM CRISLAN BASSENGER: Case Summary & 15 Largest Unsecured Creditors CRYOCOR INC: Ernst & Young Raises Substantial Doubt CSFB HOME: 44 Certificate Classes Get Moody's Rating Downgrades CSK AUTO: Moody's Reviews Rating for Likely Lift on O'Reilly Deal CSK AUTO: $1BB O'Reilly Deal Cues S&P's B- Rating's Positive Watch CYBER DEFENSE: Michael Lawson Resigns from Board of Deirctors DANA CORP: Fitch Affirms 'BBB-' Rating on $90MM Revenue Bonds DANA CORP: Steelworkers Union Seeks $2,500,000 Success Fee Payment DANA CORP: Professionals Seek $186 Million Final Fee Payments DEERFIELD CAPITAL: Posts $96.2 Million Net Loss in 2007 DELTA PETROLEUM: Moody's Lifts Liquidity Rating; Holds Caa1 Rating DILLARD'S INC: Lagging Operating Results Cue Fitch to Hold Ratings DISTRIBUTED ENERGY: Issues $1.5 Million Investment Note to Perseus DORAL FINANCIAL: S&P Lifts Long-term Counterparty Rating to 'B+' ELDORADO RESORTS: Inks $245MM Sale of Casino Aztar from Tropicana ELDORADO RESORTS: Tropicana Deal Won't Affect S&P's 'B' Rating EMISPHERE TECH: Dr. Michael Goldberg Resigns as Board Director ENER1 INC: To Retire Convertible Debentures Due March 2009 ENTERPRISE PRODUCTS: Fitch Rates Junior Subordinated Notes at BB+ ENERGY PARTNERS: Inks Deal with Carlson on Naming of 3 Directors FIRST DARTMOUTH: Exclusive Plan Filing Period Extended to April 11 FORD MOTOR: Auto Finance Arm Completes Retail Securitization Deal FRENCH LICK: S&P Assigns 'CCC' Corporate Rating on Negative Watch GAYLORD ENTERTAINMENT: Moody's Junks Senior Note Ratings From 'B3' GETTY IMAGES: SEC Ends Inquiry on Company's Stock Option Practices GT LC: Case Summary & 19 Largest Unsecured Creditors HANCOCK FABRICS: Court Approves Changes to CRG Employment HANCOCK FABRICS: Files Lawsuit Over Unlawful Sham Foreclosure HEXION SPECIALTY: December 31 Balance Sheet Upside-Down by $1BB INTERSTATE BAKERIES: Wants to Employ C&W as Valuation Experts INTEREP NATIONAL: S&P Ratings Tumble to 'D' on Chapter 11 Filing IXIS REAL: Fitch Junks Ratings on 19 Certificate Classes JAMES RIVER: Completes $3 Million Public Offering of Common Stocks KKR PACIFIC: S&P Ratings Tumble to 'D' on Extendible CP Notes KRATON POLYMERS: S&P Junks Rating From 'B' on Weak Quarter Results KRISPY KREME: Asks Lenders to Relax Certain Financial Covenants LATIN AMERICA MEDIA: Case Summary & 20 Largest Unsecured Creditors LEVITZ FURNITURE: Court Dismisses Six Levitz Home Bankruptcy Cases LEXINGTON CAPITAL: Moody's Reviews Ratings on Seven Note Classes LEXINGTON PRECISION: Files for Ch. 11 Protection After Deal Fails LEXINGTON PRECISION: Files for Chapter 11 Protection in New York LUIS RIOS: Case Summary & 11 Largest Unsecured Creditors MACROVISION SOLUTIONS: Moody's Puts Ba3 Rating Pending $2.8BB Deal MACROVISION SOLUTIONS: S&P Puts 'B+' Rating on High Debt Leverage MADAKET FUNDING: Moody's Downgrades Ratings on Five Note Classes MADILL EQUIPMENT: Chapter 15 Petition Summary MAGNA ENTERTAINMENT: Extends $40 Mil. Credit Facility to April 30 MANTOLOKING CDO: Moody's Cuts Ratings on Declining Credit Quality MCCLATCHY CO: Debt Reduction Doubts Cues Moody's Rating Downgrades MEGA BRANDS: Posts $97 Million Net Loss in Year Ended December 31 METRO ONE: To Close Four Call Centers and Eliminate 600 Positions MICROMET INC: E&Y Gave an Adverse Opinion on Internal Control MORTGAGE LENDERS: Disclosure Statement Hearing Set April 23 MORTGAGE LENDERS: Sues Merrill Lynch for Preferential Payments MORTGAGE LENDERS: Court Extends Plan Filing Period to May 15 MORGAN STANLEY: S&P Junks Ratings on Four Classes From Low-Bs MORGAN STANLEY: Moody's Downgrades Ratings on 13 Classes of Certs. MORGAN STANLEY: Fitch Lowers Ratings on 27 Certificate Classes MULTICELL TECH: Hansen Barnett Expresses Going Concern Doubt NATIONAL FOUNDATION: A.M. Best Chips IC Rating to bb from bb+ NEXTMEDIA OPERATING: Moody's Reviews 'B2' Rating for Possible Cut NORTH OAKLAND: Failure to Pay on Time Prompts Moody's Junk Rating NOVASTAR MORTGAGE: Fitch Slashes Ratings to CCC on Seven Classes ORAGENICS INC: Kirkland Russ Murphy Expresses Going Concern Doubt PEOPLES CHOICE: Files Amended Ch. 11 Plan and Disclosure Statement PHOENIX COLOR: S&P Withdraws Ratings on Visant Corp. Acquisition PHOENIX COLOR: Completes Merger Agreement With Visant for $219MM PLASTECH ENGINEERED: Wants to Borrow $80MM from Lender Consortium PLASTECH ENGINEERED: Chrysler Disputes Roush Claim on Molds PLASTECH ENGINEERED: Goldman Opposes Claim Waivers in DIP Loan PORTER SQUARE II: Moody's Junks Rating on $9 Mil. Notes From 'Ba3' PORTER SQUARE III: Moody's Downgrades Ratings on Five Note Classes PRC LLC: Files Disclosure Statement Supporting Chapter 11 Plan PRC LLC: Court Okays Regis McElhatton as Chief Executive Officer PRC LLC: U.S. Trustee Amends Creditors Committee Composition PROTECTED VEHICLES: Court Denies Creditors' Dismissal Request QUEBECOR WORLD: Obtains Final Nod on $1 Billion DIP Facility QUEBECOR WORLD: Inks $285 Million Printing Deal With Mcgraw-Hill QUEBECOR WORLD: Court Allows Assumption of BofA's P-Card Pact QUEBECOR WORLD: Payment of $3,175,111 Sales Commissions Approved QUEBECOR WORLD: Has Until June 4 to File Schedules & Statements QUIKSILVER INC: S&P Assigns 'BB-' Rating on Negative CreditWatch QUIGLEY COMPANY: Court Approves Amended Disclosure Statement QUIGLEY COMPANY: Plan Confirmation Hearing Set on September 4 REALOGY CORP: S&P Retains 'B' Issue-level Rating on Senior Notes RECYCLED PAPER: Moody's Further Slashes Rating to 'Caa2' From Caa1 SEITEL INC: Posts $93 Million Net Loss in Year ended December 31 SENTINEL MANAGEMENT: Ex-CEO Wants Time to Resolve to Fraud Charges SHARPER IMAGE: Securities to be Delisted from NASDAQ Stock Market SHARPS CDO: Moody's Slashes Ratings on Six Classes of 2046 Notes SILVER ELMS II: Moody's Junks Rating on Class E Notes From 'B2' SILVER ELMS: Declining Credit Quality Spurs Moody's Rating Cuts SKILLED HEALTHCARE: Moody's Gives Stable Outlook; Holds B2 Rating SOLO CUP: Earns $99 Million in Fourth Quarter Ended December 30 SOLOMON DWEK: Case Summary & 253 Largest Unsecured Creditors SOUTH COAST: Eroding Credit Quality Cues Moody's Rating Downgrades SPECTRUM BRANDS: Fitch Holds 'CCC' ID Rating with Negative Outlook STARVOX COMMS: Files for Ch. 7 Liquidation in Northern California STARVOX COMMUNICATIONS: Voluntary Chapter 7 Case Summary STILLWATER ABS: Poor Credit Quality Cues Moody's Five Rating Cuts STONERIDGE INC: Moody's Changes Outlook to Stable; Holds B1 Rating STRUCTURED FINANCE: Moody's Junks Rating on $15 Mil. Notes From B2 SUN-TIMES MEDIA: December 31 Balance Sheet Upside-Down by $75MM SUPERIOR OFFSHORE: Board Appoints Thomas E. Daman as CFO and EVP TEKNI-PLEX INC: Reaches Agreement in Principle with Noteholders THOMPSON METALS: Case Summary & 16 Largest Unsecured Creditors THORNBURG MORTGAGE: To Resume Lending After $1.35BB Notes Offering TIMBERWOLF I: Seven Classes of Notes Acquire Moody's Junk Ratings TOPANGA CDO: Eroding Credit Quality Cues Moody's Rating Reviews TORO ABS: Moody's Downgrades Ratings on Seven Classes of Notes TOUSA INC: Court Approves KZC Standard Services Agreement TROPICANA ENTERTAINMENT: Sells Casino Aztar to Eldorado for $245MM UBS MASTR: Fitch Downgrades Ratings on $729.1 Million Certificates VERTIS INC: Hiring of Financial Advisor Cues S&P's Negative Watch VPG INVESTMENTS: Court Okays Hiring of Cosho Humphrey as Counsel WESTMORELAND COAL: Restates 2005 and 2006 Financial Reports WESTWAYS FUNDING: Fitch Slashes Ratings to 'C' on Seven Classes WORNICK CO: Plan Show Prejudice Among Creditors, Noteholders Say XL CAPITAL: Fitch Cuts Ratings to BB and Removes Negative Watch ZAIS INVESTMENT: Moody's Downgrades Ratings on Four Note Classes * Fitch Says Increased Crude Oil Prices Have Cracked NA Refiners * Moody's Gives Neg. Outlook on Paper and Forest Products Industry * Moody's Opines on Interest Rate Asset Specific Hedges in CDOs * S&P Downgrades 86 Tranches' Ratings From 20 Cash Flows and CDOs * S&P Downgrades Ratings on 44 Classes From 14 RMBS Transactions * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ********* ABITIBIBOWATER: Fitch to Put 'CCC/RR1' Rating on Unit's $400M Loan ------------------------------------------------------------------ Fitch Ratings expects to assign a 'CCC/RR1' rating to Abitibi- Consolidated Inc.'s new $400 million 364-day senior secured term loan and new $413 million senior secured 13.75% notes due 2011. ACI's new 15.5% senior unsecured notes due 2010 being issued as partial consideration for the tender of upcoming maturing bonds have been assigned an expected rating of 'CC/RR4'. In addition, Fitch has affirmed all of ACI's ratings and removed them from Rating Watch Negative, where they were placed on March 11, 2008. The Rating Outlook is Negative. The rating assignments are contingent on the probable completion of ACI's $1.4 billion refinancing package which also includes a $350 million 8% convertible notes offering. A portion of the net proceeds from the refinancing will be used to repay ACI's secured bank revolver maturing later this year, whose ratings will be withdrawn. The ratings on the term loan and the secured notes reflect a superior collateral coverage securing that indebtedness. The term loan is secured by accounts receivable not sold, inventory and ultimately by ACI's interest in the Alabama River and Augusta GA pulp and paper mills. Fitch estimates that a distressed value of these assets is worth more than 2 times the principal amount of the term loan. The secured notes are collateralized by ACI's ownership interests in 13 pulp and paper mills, 15 sawmills, four other lumber re-manufacturing facilities and the company's ownership interests in eight hydroelectric facilities plus other tangible and intangible assets. Fitch believes that at distressed values the secured notes are covered close to 3x. The unsecured indebtedness of ACI is estimated to have a 30% or so potential recovery factor, behind ACI's secured obligations. ACI's Issuer Default Rating and unsecured ratings reflect the still considerable challenges facing the company's predominantly Canadian newsprint and lumber businesses. These include shrinking demand from newsprint publishers in the case of the former and a poor U.S. residential construction market in the case of the latter. Both businesses are also being squeezed by inflationary cost factors, principally the cost and economic availability of wood, wood chips and the price of energy. Margins have also been pressured by the declining value of the U.S. dollar in which ACI's products are sold. Fitch believes that if these trends remain unchanged, the liquidity issues that ACI has just avoided could reappear within a year. These debt ratings and IDR of Bowater, Inc., ACI's sister company, Bowater Canadian Forest Products Inc., and the IDR of AbitibiBowater Inc., ACI's parent, are affirmed and removed from Rating Watch Negative; the Rating Outlook is Negative. Abitibi-Consolidated Inc. -- IDR 'CC'; -- Long-term unsecured 'CC/RR4'; -- Long-term secured 'CCC/RR1'. AbitibiBowater Inc. -- IDR 'CCC'. Bowater Incorporated -- IDR 'CCC'; -- Senior unsecured debt 'CCC/RR4'; -- Secured revolver 'B/RR1'. Bowater Canadian Forest Products Inc. -- IDR 'CCC'; -- Senior unsecured debt 'B-/RR2'; -- Secured revolver 'B/RR1'. ACI is the largest Canadian newsprint producer in North America with 15 paper mills and a major producer of supercalendered, high- bright and directory papers in addition to lumber for residential and commercial construction. ACI is a wholly owned subsidiary of ABH, which was formed by the combination of ACI and BOW on Oct. 29, 2007. ACCELLENT INC: Posts $275MM Net Loss in Year Ended December 31 -------------------------------------------------------------- Accellent Inc., a subsidiary of Accellent Holdings Corp., reported results for the fourth quarter and full year ended Dec. 31, 2007. Fourth quarter and full fiscal year 2007 results are preliminary and remain subject to completion of the audit being conducted by the company's independent public accountants. Net loss of $176.9 million was recorded in the fourth quarter of 2007 compared with a net loss of $7.7 million in the corresponding period of 2006. During the fourth quarter of 2007 the company completed its annual goodwill impairment test and recorded an additional goodwill impairment charge of $168.9 million, which amount is reflected in the net loss for that quarter. Net loss of $274.9 million was recorded in 2007 compared to a net loss of $18.6 million in the corresponding period of 2006. The 2007 net loss includes non-cash charges for impairment of goodwill and other intangibles of $251.3 million. During the first and second quarter of 2007 the company recorded impairment charges aggregating $82.4 million related to goodwill and intangible assets as a result of reduced growth expectations in the orthopaedic business. During the fourth quarter of 2007 the company completed its annual goodwill impairment test and recorded an additional goodwill impairment charge of approximately $168.9 million. "2007 was a transition year," Robert Kirby, president and CEO of Accellent, said. "We achieved four consecutive quarters of revenue growth, gained company wide alignment to key initiatives to drive improvements in revenue, cost reduction and cash flow while increasing our commitment to work collaboratively with our customers to drive value." At Dec. 31, 2007, the company's balance sheet showed total assets of $1,122.365 million, total liabilities of $810.370 million and total stockholder's equity of $311.995 million. About Accellent Inc. Headquartered in Wilmington, Massachussetts, Accellent Inc., -- http://www.accellent.com/-- provides fully integrated outsourced manufacturing and engineering services to the medical device industry in the cardiology, endoscopy, drug delivery, neurology and orthopaedic markets. Accellent has capabilities in design and engineering services, precision component fabrication, finished device assembly and complete supply chain management. These capabilities enhance customers' speed to market and return on investment by allowing them to refocus internal resources more efficiently. * * * As reported in the Troubled Company Reporter on Dec. 12, 2007, Moody's Investors Service downgraded Accellent Inc.'s corporate family rating to Caa1 from B3 and assigned a negative outlook. At the same time, Moody's downgraded these ratings: (i) secured revolver to B2 (LGD2, 29%) from B1 (LGD2, 29%); (ii) secured term loan to B2 (LGD2, 29%) from B1 (LGD2, 29%); (iii) sr. subordinated notes to Caa3 (LGD5, 83%) from Caa2 (LGD5, 83%); (iv) PDR to Caa1 from B3; and speculative grade liquidity rating to SGL-4 from SGL-3. ACE SECURITIES: 53 Classes of Certs. Get Moody's Rating Downgrades ------------------------------------------------------------------ Moody's Investors Service downgraded 53 certificates and placed on review for possible downgrade 15 classes of certificates, from six transactions issued by ACE Securities Corp. Home Equity Loan Trust. The transactions are backed by second lien loans. The certificates were downgraded because the bonds' credit enhancement levels, including excess spread and subordination were low compared to the current projected loss numbers at the previous rating levels. The actions take into account the continued and worsening performance of transactions backed by closed-end-second collateral. Substantial pool losses of over the last few months have eroded credit enhancement available to the mezzanine and senior certificates. Despite the large amount of write-offs due to losses, delinquency pipelines have remained high as borrowers continue to default. Complete rating actions are: Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2006- ASL1 -- Cl. A, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to A2 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. M-2, Downgraded to Baa2 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to Ba1 from Aa3 -- Cl. M-4, Downgraded to B1 from Baa1 -- Cl. M-5, Downgraded to Caa2 from Baa2 -- Cl. M-6, Downgraded to Caa3 from Ba1 -- Cl. M-7, Downgraded to Ca from Ba3 -- Cl. M-8, Downgraded to C from B3 -- Cl. M-9, Downgraded to C from Caa2 -- Cl. M-10, Downgraded to C from Ca Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2006- SL1 -- Cl. A, Downgraded to Aa2 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. M-1A, Downgraded to Baa2 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. M-1B, Downgraded to Baa2 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. M-2, Downgraded to Caa1 from Aa2 -- Cl. M-3, Downgraded to Caa3 from Baa3 -- Cl. M-4, Downgraded to Ca from Ba3 -- Cl. M-5, Downgraded to C from Caa1 -- Cl. M-6, Downgraded to C from Ca Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2006- SL3 -- Cl. A-1, Downgraded to Ba3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. A-2, Downgraded to Ba3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. M-1, Downgraded to Caa2 from Aa1 -- Cl. M-2, Downgraded to Ca from Baa3 -- Cl. M-3, Downgraded to C from Ba3 -- Cl. M-4, Downgraded to C from B2 -- Cl. M-5, Downgraded to C from Ca Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2006- SL4 -- Cl. A-1, Downgraded to A3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. A-2, Downgraded to A3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. A-3, Downgraded to A3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. M-1, Downgraded to Ba3 from Aa1 -- Cl. M-2, Downgraded to Caa2 from Aa2 -- Cl. M-3, Downgraded to Caa3 from Aa3 -- Cl. M-4, Downgraded to Ca from Baa3 -- Cl. M-5, Downgraded to C from Ba2 -- Cl. M-6, Downgraded to C from B2 -- Cl. M-7, Downgraded to C from Caa2 -- Cl. M-8, Downgraded to C from Ca Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2007- ASL1 -- Cl. A-1, Downgraded to Ba3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. A-2, Downgraded to Ba3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. M-1, Downgraded to Caa1 from Aa1 -- Cl. M-2, Downgraded to Caa2 from Aa2 -- Cl. M-3, Downgraded to Caa3 from Aa3 -- Cl. M-4, Downgraded to Ca from Ba2 -- Cl. M-5, Downgraded to C from B1 -- Cl. M-6, Downgraded to C from B3 Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2007- SL1 -- Cl. A-1, Downgraded to Baa1 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. A-2, Downgraded to Baa1 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. M-1, Downgraded to Caa1 from Aa1 -- Cl. M-2, Downgraded to Caa3 from Aa2 -- Cl. M-3, Downgraded to Ca from Aa3 -- Cl. M-4, Downgraded to C from Baa1 -- Cl. M-5, Downgraded to C from Baa2 -- Cl. M-6, Downgraded to C from Ba3 -- Cl. M-7, Downgraded to C from Ca ACE SECURITIES: 53 Classes of Certs. Get Moody's Rating Downgrades ------------------------------------------------------------------ Moody's Investors Service downgraded 53 certificates and placed on review for possible downgrade 15 classes of certificates, from six transactions issued by ACE Securities Corp. Home Equity Loan Trust. The transactions are backed by second lien loans. The certificates were downgraded because the bonds' credit enhancement levels, including excess spread and subordination were low compared to the current projected loss numbers at the previous rating levels. The actions take into account the continued and worsening performance of transactions backed by closed-end-second collateral. Substantial pool losses of over the last few months have eroded credit enhancement available to the mezzanine and senior certificates. Despite the large amount of write-offs due to losses, delinquency pipelines have remained high as borrowers continue to default. Complete rating actions are: Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2006- ASL1 -- Cl. A, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to A2 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. M-2, Downgraded to Baa2 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to Ba1 from Aa3 -- Cl. M-4, Downgraded to B1 from Baa1 -- Cl. M-5, Downgraded to Caa2 from Baa2 -- Cl. M-6, Downgraded to Caa3 from Ba1 -- Cl. M-7, Downgraded to Ca from Ba3 -- Cl. M-8, Downgraded to C from B3 -- Cl. M-9, Downgraded to C from Caa2 -- Cl. M-10, Downgraded to C from Ca Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2006- SL1 -- Cl. A, Downgraded to Aa2 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. M-1A, Downgraded to Baa2 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. M-1B, Downgraded to Baa2 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. M-2, Downgraded to Caa1 from Aa2 -- Cl. M-3, Downgraded to Caa3 from Baa3 -- Cl. M-4, Downgraded to Ca from Ba3 -- Cl. M-5, Downgraded to C from Caa1 -- Cl. M-6, Downgraded to C from Ca Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2006- SL3 -- Cl. A-1, Downgraded to Ba3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. A-2, Downgraded to Ba3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. M-1, Downgraded to Caa2 from Aa1 -- Cl. M-2, Downgraded to Ca from Baa3 -- Cl. M-3, Downgraded to C from Ba3 -- Cl. M-4, Downgraded to C from B2 -- Cl. M-5, Downgraded to C from Ca Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2006- SL4 -- Cl. A-1, Downgraded to A3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. A-2, Downgraded to A3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. A-3, Downgraded to A3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. M-1, Downgraded to Ba3 from Aa1 -- Cl. M-2, Downgraded to Caa2 from Aa2 -- Cl. M-3, Downgraded to Caa3 from Aa3 -- Cl. M-4, Downgraded to Ca from Baa3 -- Cl. M-5, Downgraded to C from Ba2 -- Cl. M-6, Downgraded to C from B2 -- Cl. M-7, Downgraded to C from Caa2 -- Cl. M-8, Downgraded to C from Ca Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2007- ASL1 -- Cl. A-1, Downgraded to Ba3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. A-2, Downgraded to Ba3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. M-1, Downgraded to Caa1 from Aa1 -- Cl. M-2, Downgraded to Caa2 from Aa2 -- Cl. M-3, Downgraded to Caa3 from Aa3 -- Cl. M-4, Downgraded to Ca from Ba2 -- Cl. M-5, Downgraded to C from B1 -- Cl. M-6, Downgraded to C from B3 Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2007- SL1 -- Cl. A-1, Downgraded to Baa1 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. A-2, Downgraded to Baa1 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. M-1, Downgraded to Caa1 from Aa1 -- Cl. M-2, Downgraded to Caa3 from Aa2 -- Cl. M-3, Downgraded to Ca from Aa3 -- Cl. M-4, Downgraded to C from Baa1 -- Cl. M-5, Downgraded to C from Baa2 -- Cl. M-6, Downgraded to C from Ba3 -- Cl. M-7, Downgraded to C from Ca ADVANCED CELL: Issues $130,000 in Unsecured Convertible Notes ------------------------------------------------------------- On March 21, 2008, Advanced Cell Technology Inc. issued and sold an aggregate of $130,000 in unsecured convertible notes to PDPI LLC and The Shapiro Family Trust. Dr. Shapiro, one of the company's directors, may be deemed the beneficial owner of the securities owned by The Shapiro Family Trust. The notes may not be prepaid without the written consent from the holder of the notes. The notes bear interest at the rate of 9% per annum, and mature April 11, 2008. The net outstanding amount of principal plus interest of the notes is convertible into the next round of debt or equity financing raised by the company on a dollar-for-dollar basis under such terms and conditions as may be applicable to the next round of financing. About Advanced Cell Technology Inc. Headquartered in Alameda, California, Advanced Cell Technology Inc. (OTCBB:ACTC) -- http://www.advancedcell.com/-- is a biotechnology company focused on developing and commercializing human stem cell technology in the emerging field of regenerative medicine. It has developed and maintained a portfolio of patents and patent applications that form the proprietary base for its embryonic stem cell research and development. The company operates facilities in Alameda, California and Worcester, Massachusetts. At Sept. 30, 2007, the company's consolidated balance sheet showed $15.6 million in total assets and $42.1 million in total liabilities, resulting in a $26.5 million total stockholders' deficit. * * * As reported in the Troubled Company Reporter on March 26, 2007, Stonefield Josephson Inc. in Los Angeles, California, expressed substantial doubt about Advanced Cell Technology Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2006. The auditing firm pointed to the company's minimal sources of revenue, substantial losses, substantial monetary liabilities in excess of monetary assets and accumulated deficits as of Dec. 31, 2006. The company expects that it will not be able to continue as a going concern and fund cash requirements for operations through June 30, 2008, with current cash reserves. ADVANCED CELL: Receives Default Notice from RHP MasterFund ---------------------------------------------------------- On March 18, 2008, Advanced Cell Technology Inc. received a notice of default under the company's Senior Secured Convertible Debenture issued Aug. 31, 2007, to RHP Master Fund Ltd. restating its notice to the company, accelerating and declaring immediately due and payable an aggregate amount equal to $397,725.22, which purported to include the principal outstanding amount of the Convertible Debenture, unpaid interest and liquidated damages through March 18, 2008. The notice references the following additional defaults alleged under the Convertible Debenture and Warrant: -- Failure to pay mandatory redemption amounts pursuant to RHP's default notices dated Feb. 15, 2008, and March 10, 2008; -- Failure to provide timely notification of reduction in conversion price of debentures associated with the company's $600,000 bridge financing closed in February 2008; -- Violation of debt incurrence restrictions; -- Violation of variable rate transaction restrictions; and -- Failure to cause the registration statement to be declared effective within the time frame required in the Convertible Debenture financing. The company has not received any default notices from any of its other Debenture holders and is continuing to negotiate with RHP to reach an amicable resolution of this matter. The company disputes the defaults identified in RHP's correspondence. About Advanced Cell Technology Inc. Headquartered in Alameda, California, Advanced Cell Technology Inc. (OTCBB:ACTC) -- http://www.advancedcell.com/-- is a biotechnology company focused on developing and commercializing human stem cell technology in the emerging field of regenerative medicine. It has developed and maintained a portfolio of patents and patent applications that form the proprietary base for its embryonic stem cell research and development. The company operates facilities in Alameda, California and Worcester, Massachusetts. At Sept. 30, 2007, the company's consolidated balance sheet showed $15.6 million in total assets and $42.1 million in total liabilities, resulting in a $26.5 million total stockholders' deficit. * * * As reported in the Troubled Company Reporter on March 26, 2007, Stonefield Josephson Inc. in Los Angeles, California, expressed substantial doubt about Advanced Cell Technology Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2006. The auditing firm pointed to the company's minimal sources of revenue, substantial losses, substantial monetary liabilities in excess of monetary assets and accumulated deficits as of Dec. 31, 2006. The company expects that it will not be able to continue as a going concern and fund cash requirements for operations through June 30, 2008, with current cash reserves. ADVANCED CELL: To Restate Financial Statements Due to Errors ------------------------------------------------------------ Advanced Cell Technology Inc. disclosed Thursday that the management of Advanced Cell Technology Inc. and the Audit Committee of its Board of Directors have determined that the consolidated financial statements and information contained in the company's Form 10-QSB filed with the Securities and Exchange Commission on Nov. 20, 2006, for the quarter and nine months ended Sept. 30, 2006, did not properly account for the debentures and warrants issued in September, 2006. The company said that said consolidated financial statements should no longer be relied upon. In particular, the valuation of the debentures and warrants conducted by a third-party engaged by the company in accordance with FAS 155 was incorrect as the wrong number of warrants was used in this calculation. The error resulted in the Black Scholes valuation being recorded as $3,572,545 instead of the correct valuation of $14,996,545. The warrants were undervalued at Sept. 6, 2006, by $11,423,565 and as a result changes in fair value of the Warrant Liability for the initial period ended Sept. 30, 2006, and all subsequent periods have been understated, and amortization of the Warrant Discount has been understated in all subsequent accounting periods. The company believes that the net effect of the changes to the Financial Statements resulting from this adjustment will be a net positive to both the Balance Sheet and Income Statement of approximately $2,500,000. The company said its auditors concur with their conclusions. About Advanced Cell Technology Inc. Headquartered in Alameda, California, Advanced Cell Technology Inc. (OTCBB:ACTC) -- http://www.advancedcell.com/-- is a biotechnology company focused on developing and commercializing human stem cell technology in the emerging field of regenerative medicine. It has developed and maintained a portfolio of patents and patent applications that form the proprietary base for its embryonic stem cell research and development. The company operates facilities in Alameda, California and Worcester, Massachusetts. At Sept. 30, 2007, the company's consolidated balance sheet showed $15.6 million in total assets and $42.1 million in total liabilities, resulting in a $26.5 million total stockholders' deficit. * * * As reported in the Troubled Company Reporter on March 26, 2007, Stonefield Josephson Inc. in Los Angeles, California, expressed substantial doubt about Advanced Cell Technology Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2006. The auditing firm pointed to the company's minimal sources of revenue, substantial losses, substantial monetary liabilities in excess of monetary assets and accumulated deficits as of Dec. 31, 2006. The company expects that it will not be able to continue as a going concern and fund cash requirements for operations through June 30, 2008, with current cash reserves. ADVANCED CELL: VP Ivan Wolkind Resigns as Chief Accounting Officer ------------------------------------------------------------------ Ivan Wolkind, Advanced Cell Technology Inc.'s senior vice president for finance and administration & chief accounting officer, resigned for personal reasons from all positions with the company and voluntarily terminated his employment arrangement with the company, effective March 17, 2008. Mr. Wolkind has agreed to serve as a consultant to the company, managing regulatory, accounting and securities compliance matters for a period of six months. The terms of Mr. Wolkind's consulting agreement have not been finalized. About Advanced Cell Technology Inc. Headquartered in Alameda, California, Advanced Cell Technology Inc. (OTCBB:ACTC) -- http://www.advancedcell.com/-- is a biotechnology company focused on developing and commercializing human stem cell technology in the emerging field of regenerative medicine. It has developed and maintained a portfolio of patents and patent applications that form the proprietary base for its embryonic stem cell research and development. The company operates facilities in Alameda, California and Worcester, Massachusetts. At Sept. 30, 2007, the company's consolidated balance sheet showed $15.6 million in total assets and $42.1 million in total liabilities, resulting in a $26.5 million total stockholders' deficit. * * * As reported in the Troubled Company Reporter on March 26, 2007, Stonefield Josephson Inc. in Los Angeles, California, expressed substantial doubt about Advanced Cell Technology Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2006. The auditing firm pointed to the company's minimal sources of revenue, substantial losses, substantial monetary liabilities in excess of monetary assets and accumulated deficits as of Dec. 31, 2006. The company expects that it will not be able to continue as a going concern and fund cash requirements for operations through June 30, 2008, with current cash reserves. AEARO TECHNOLOGIES: Completes $1.2 Billion Merger Deal With 3M Co. ------------------------------------------------------------------ 3M completed its acquisition of Aearo Technologies Inc. 3M said Aearo provides a broad platform for accelerated growth. 3M expressed that it will significantly expand 3M's occupational health and environmental safety platform by adding hearing protection as well as eyewear and fall protection product lines to 3M's existing full-line of respiratory products. 3M further states that this acquisition enables them to provide industrial, military and construction customers as well as consumers with a more complete personal protection product offering. On Nov. 15, 2007, the company 3M and Aearo Technologies Inc. reported that they have entered into a definitive agreement for 3M's acquisition of Aearo for a total purchase price of $1.2 billion, to be financed through a combination of cash and other borrowings. About 3M Headquartered in St. Paul, Minnesota, 3M Company (NYSE:MMM) -- http://www.3M.com-- is a technology company with presence in industrial and transportation businesses, healthcare, display and graphics, consumer and office, safety, security and protection services, and electro and communications. The company manufactures and markets a variety of products. 3M manages its operations in six business segments: industrial and transportation; health care; display and graphics; consumer and office; safety, security and protection services, and electro and communications. The company's products are sold through numerous distribution channels, including directly to users and through numerous wholesalers, retailers, jobbers, distributors and dealers in a variety of trades in many countries worldwide. About Aearo Technologies Headquartered in Indianapolis, Indiana, Aearo Technologies Inc. -- http://www.aearo.com/-- through its subsidiary, Aearo Company, designs and manufactures eye, face, head, respiratory, hearing, and fall protection products and communication systems. Aearo Company manufactures and sells products under the brand names AOSafety, E-A-R, Peltor and SafeWaze. These products are sold through three segments. The safety products segment manufactures and sells hearing protection devices, communication headsets, non- prescription safety eyewear, face shields, reusable and disposable respirators, hard hats, fall protection and first aid kits. The safety prescription eyewear segment manufactures and sells prescription eyewear products that are designed to protect the eyes from the typical hazards encountered in the industrial work environment. The specialty composites segment manufactures an array of energy-absorbing materials that are incorporated into other manufacturers' products to control noise, vibration and shock. AEARO TECHNOLOGIES: Moody's Withdraws Ratings on 3M Company Deal ---------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings, including the 'B' corporate credit rating, on Aearo Technologies Inc., and removed them from CreditWatch, where they were placed with positive implications on Nov. 16, 2007. The ratings were withdrawn as a result of the company's acquisition by 3M Co. (AA/Stable/A-1+) for $1.2 billion. ALOHA AIRLINES: Court Rejects Governor's Plea to Stave Off Closure ------------------------------------------------------------------ The Honorable Samuel King of the U.S. Bankruptcy Court for the District of Hawaii rejected Governor Linda Lingle's request to delay Aloha Airline Inc.'s planned shutdown of its passenger operations, various reports say. In a court filing, Gov. Lingle had urged the Debtor to continue operating for a month unless it has exhausted all possible options in continuing business, the HonoluluAdvertiser.com reported. This includes, among others, finding a buyer for the division, determining if the Debtor has cash to last it for another month, and finding out if the bankruptcy filing was filed in good faith, related HonoluluAdvertiser.com. Gov. Lingle also mentioned that the state already has provisions in place to rescue nearly 3,500 workers in case Aloha proceeds to close its doors. The governor was saddened by the company's decision to shut down its passenger business, KITV.com related. Employees were angry at CEO David Banmiller for the weekend decision to close, supporting the governor's contention that it should continue exploring more alternatives, stated KHON News. However, Judge King felt differently about the issue. "I will leave it up to the debtor. . . [I]t is really not the court's business as long as it's a good faith decision based on the best interest of the estate," KHON News cited Judge King in a comment. About Aloha Airlines Based in Honolulu, Hawaii, Aloha Airgroup Inc., Aloha Airlines Inc. -- http://www.alohaairlines.com/-- and its affiliates are carriers that fly passengers and freight to Hawaii's five major airports, as well as to half a dozen destinations in the western U.S. They operate a fleet of about 20 aircraft, all Boeing 737s, including three configured as freighters. This is the airline's second bankruptcy filing. Aloha filed for Chapter 11 protection on Dec. 30, 2004 (Bankr. D. Hawaii Case No. 04-03063), and emerged from Chapter 11 bankruptcy protection in February 2006. The company and its affiliates filed again for Chapter 11 protection on March 18, 2008 (Bankr. D. Hawaii Lead Case No. 08- 00337). Brian G. Rich, Esq., Jordi Guso, Esq., and Paul Steven Singerman, Esq., at Berger Singerman P.A., and David C. Farmer, Esq., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of $100 million to $500 million. AMERICAN AXLE: UAW Wants Fair & Equitable Settlement, UAW VP Says ----------------------------------------------------------------- United Auto Workers union Vice President James Settles Jr., who is director of the union's American Axle & Manufacturing Holdings Inc. department said in a statement released on April 1, 2008: "Our union is committed to doing everything possible to reach a fair and equitable settlement at American Axle. But it takes two parties to negotiate an agreement. "Last Dec. 7, the UAW negotiating team requested detailed information from American Axle so that we could evaluate the company's contract proposals and prepare for bargaining. "As part of that request -- as is our standard practice when requesting sensitive financial data -- our union offered, in writing, to keep the information supplied by the company confidential. American Axle did not respond. "Two months later, on Feb. 26, 2008, the company had still refused to supply the complete information we needed to make important decisions regarding proposals which will affect pensions, health care, profit-sharing and other vital issues for UAW members at American Axle and their families. Failure to provide such information is a violation of federal law. "This unfair labor practice is one of the reasons UAW members are on strike at American Axle. In addition, the strike has been prolonged because the company has illegally terminated disability payments and health care for injured workers, as well as compensation -- including health care -- for laid off workers. "Five weeks into the strike, on March 27, the company finally provided a partial response to our request. During a meeting with union negotiators, on April 1, American Axle provided additional information to our bargaining team. "We are in the process of reviewing the information provided by the company to determine if it is fully responsive to our requests. We hope the company will do what is required to meet its legal obligation to provide data necessary for bargaining -- and reinstate benefits to injured and laid-off workers -- so that we can settle this dispute and bring our members back to work as soon as possible." As reported in the Troubled Company Reporter on March 31, 2008, Axle's Chief Executive Officer Richard Dauch berated United Auto Workers union representatives for the work stoppage that has caused a chain reaction in the U.S. auto industry. The CEO added that the auto parts manufacturer may end up outsourcing its manufacturing division if talks with the UAW negotiations fail. Mr. Dauch said that the company has the right to outsource its work since they have facilities all over the globe -- Mexico, South America, Europe, and Asia. Mr. Dauch added that Axle will not be forced into bankruptcy. About American Axle Headquartered in Detroit, Michigan, American Axle & Manufacturing Holdings Inc. (NYSE:AXL) -- http://www.aam.com/-- and its wholly owned subsidiary, American Axle & Manufacturing, Inc., manufactures, engineers, designs and validates driveline and drivetrain systems and related components and modules, chassis systems and metal-formed products for light trucks, sport utility vehicles and passenger cars. In addition to locations in the United States (in Michigan, New York and Ohio), the company also has offices or facilities in Brazil, China, Germany, India, Japan, Luxembourg, Mexico, Poland, South Korea and the United Kingdom. * * * As reported in the Troubled Company Reporter on Nov. 27, 2007, Moody's Investors Service affirmed American Axle & Manufacturing Holdings, Inc.'s Corporate Family rating of Ba3 as well its senior unsecured rating of Ba3 to American Axle & Manufacturing Inc.'s notes and term loan. At the same time, the rating agency revised the rating outlook to stable from negative and renewed the Speculative Grade Liquidity rating of SGL-1. AMERICAN HOME: Hearing on BofA's Bid to Lift Stay Set April 16 -------------------------------------------------------------- American Home Mortgage Investment Corp., its debtor-affiliates and Bank of America, N.A., agent for the lenders under American Home Mortgage Investment Corp.'s Second Amended and Restated Credit Agreement dated August 10, 2006, agree in a Court-approved stipulation on this schedule with respect to BofA's request for relief from automatic stay to sell certain mortgage loans, and the Debtors' objection on the request: Date of Deadline Agreed Activities ---------------- ----------------- March 27, 2008 Exchange of responses to discovery requests April 2, 2008 Exchange of expert reports April 4, 2008 Exchange of witness lists April 7, 2008 Deposition of expert witnesses April 11, 2008 Filing of pre-trial briefs and exchange of exhibits April 16, 2008 Hearing on BofA's request and the Debtors' objection In a separate stipulation, the Debtors and BofA agree: -- to limit expert-related document discovery to final version of expert reports and to materials considered by the expert in formulating opinions; -- that questioning of expert witnesses during deposition or hearing will not extend to the oral examination or other inquiry concerning draft reports or notes, and communications for the party expecting to call the expert, unless the expert relies upon the communication in support of his or her testimony; and -- that deposition will not exceed seven hours, exclusive of breaks. As reported by the Troubled Company Reporter on March 12, 2008, Bank of America, as agent of lenders that were owed about $1,104,550,000 as of the Debtors' bankruptcy filing -- intended to sell the rights to 3,400 mortgage loans with outstanding $584,000,000 that were pledged by the Debtors as collateral for their prepetition loan. Accordingly, Bank of America asked the U.S. Bankruptcy Court for the District of Delaware to lift the automatic stay under Section 362(d)(1) of the Bankruptcy Code to allow it to market and sell the loans and the servicing rights to those loans to protect the Secured Lenders from further erosion of their collateral. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors 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 U.S. Bankruptcy Court for the District of Delaware extends the exclusive periods for American Home Mortgage Investors Corp. and its debtor-affiliates to file a plan of reorganization through June 2, 2008; and solicit and obtain acceptances for that plan through July 31, 2008. (American Home Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Beltway, Lehman Capital Buy Non-Performing Loans --------------------------------------------------------------- American Home Mortgage Investment Corp. disclosed the successful bidders for non-performing loans subject to security interests held by Bank of America, N.A., and J.P. Morgan Chase Bank, N.A. The winning bidders -- Beltway Capital LLC and Lehman Capital -- have agreed to pay more than 40% of the unpaid principal balance of those loans: Purchase Price Non-Performing Loans Successful Bidder (UPB Percentage) -------------------- ----------------- -------------- BofA Non-Performing Beltway Capital 44.37% Loans LLC JPMorgan Non- Lehman Capital 41.25% Performing Loans The BofA Non-Performing Loans refer to 3,400 mortgage loans with outstanding $584,000,000, which were among the assets pledged by American Home and its debtor-affiliates as collateral to BofA for their prepetition loan. JPMorgan Non-Performing Loans refer to approximately 327 mortgage loans with an aggregate unpaid principal balance of $127,000,000, subject to security interests by JPMorgan pursuant to the JPMorgan Credit Agreement. The Debtors withdrew their request to auction off 84 unencumbered mortgage loans, with an aggregate unpaid balance of approximately $24,000,000, which non-performing loans are subject to liens by AH Mortgage Acquisition Co., Inc. The Debtors previously obtained the approval of the U.S. Bankruptcy Court for the District of Delaware to seal the purchase prices of the BofA and the JPM Loans. The Debtors previously proposed not to publicly disclose the information until the earlier the earlier of the date the Court approves the sale of the AH Mortgage Loans or April 14, 2008. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors 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 Court extended the exclusive periods for the Debtors to file a plan of reorganization through June 2, 2008, and solicit and obtain acceptances for that plan through July 31, 2008. (American Home Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Court Approves Employment of PwC as Tax Advisors ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved the employment of PricewaterhouseCoopers LLP as tax advisors to American Home Mortgage Investment Corp. and its debtor-affiliates after parties resolved an objection by the Office of the U.S. Trustee for Region 3. The U.S. Trustee had contacted the Debtors and expressed an informal objection to the application to employ PwC concerning certain indemnification provisions and the scope of PwC's services. Following discussions among the Debtors, the U.S. Trustee and PwC, they agreed to a consensual resolution to the objection. Accordingly, the Court approves the Debtors' employment of PwC. At the parties' behest, the Court order that: -- PwC will not render other tax advice or perform other related duties to further assist in the administration of the bankruptcy estates without prior authorization from the Court. -- PwC will not be entitled to indemnification, contribution or reimbursement for services other than those described in the Engagement Letter and unless approved by the Court. -- The Debtors will have no obligation to indemnify or reimburse PwC for any claim or expense that is either (i) judicially determined to have arisen from PwC's gross negligence or willful misconduct, or a contractual dispute, in which the Debtors allege breach of PwC's contractual obligations. Judge Christopher Sontchi also rules that the Debtors are not authorized to indemnify PwC for tax preparation services rendered by the firm, including preparation or review of: -- Federal and State Partnership income tax returns for Bayliss Trust; and -- Form 1120 REIT, Form 1120 and state income tax returns for the year ending December 31, 2007, and subsequent year ending in 2008 for American Home Mortgage Investment Corp., American Home Mortgage Holdings, Inc., and their subsidiaries. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors 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 U.S. Bankruptcy Court for the District of Delaware extends the exclusive periods for American Home Mortgage Investors Corp. and its debtor-affiliates to file a plan of reorganization through June 2, 2008; and solicit and obtain acceptances for that plan through July 31, 2008. (American Home Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Wells Fargo Wants to Recoup Erroneous Payment ------------------------------------------------------------ Wells Fargo Bank, N.A., asks the U.S. Bankruptcy Court for the District of Delaware to lift the automatic stay to the extent necessary to recover a payment made in error to, and unjustly retained by, American Home Mortgage Investment Corp. through recoupment, the imposition of a constructive trust, and the imposition of an equitable lien against certain securities owned by AHM Investment. Wells Fargo is the securities administrator, to a certain indenture dated as of March 13, 2007, along with American Home Mortgage Assets Trust 2007-A & SD1, as issuing entity, and Deutsche Bank National Trust Company, as indenture trustee. On March 26, 2007, Wells Fargo paid in error to AHM Investment $462,049 on account of the Class IV-M-4 Note held by the Debtor. Wells Fargo promptly notified the Debtor of the error and requested the immediate return of the Payment to the Trust. The Debtor, however, has refused to return the Payment. Todd C. Schiltz, Esq., at WolfBlock LLP, in Wilmington, Delaware, contends that because of the Debtor's refusal and the unjust enrichment of the bankruptcy estates at the expense of the Trust, Wells Fargo, on behalf of the Trust, should be granted relief from automatic stay, and authorized to: -- recoup the Payment from future distributions that become due to the Debtor on account of its securities in the Trust; -- assert, enforce, and realize upon a constructive trust imposed upon the Debtor's accounts, in which the Payment or its proceeds, were deposited; and -- assert, enforce, and realize upon an equitable lien on the Debtor's 25 securities in AHM Investment Trust 2005-SD1, AHM Investment Trust 2006-2, AHM Investment Trust 2007-A SD1, American Home Mortgage Assets LLC Trust 2007-3, and AHM Assets LLC Trust 2007-SD2, until Wells Fargo, on behalf of the Trust, may be fully reimbursed for the full amount of the Payment. Mr. Schiltz tells Judge Christopher Sontchi that the Payment should never have been made because no distributions were owing to any holders of Class IV-M-4 Notes at that time. He notes that the Debtor knew, or should have known, that it was very unlikely that any payments would be distributed to the Debtor on its Class IV-M- 4 Note. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors 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 U.S. Bankruptcy Court for the District of Delaware extends the exclusive periods for American Home Mortgage Investors Corp. and its debtor-affiliates to file a plan of reorganization through June 2, 2008; and solicit and obtain acceptances for that plan through July 31, 2008. (American Home Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN LAFRANCE: New Order Approving Disclosure Statement Issued ------------------------------------------------------------------ Judge Mary F. Walrath, chief judge of the U.S. Bankruptcy Court for the District of Delaware, issued an amended order on March 28, 2008, approving American LaFrance, LLC's Fourth Amended Disclosure Statement for delivery to creditors. The Fourth Amended Disclosure Statement was filed by the Debtor in support of its Third Amended Plan of Reorganization dated March 27, 2008. The Court finds that the Fourth Amended Disclosure Statement complies with due process, the requirements of the Bankruptcy Code and Bankruptcy Rules and contains "adequate information" as the term is defined in Section 1125 of the Bankruptcy Code. The Court directs the Debtor, through its balloting agent, Kurtzman Carson Consultants LLC, to transmit by first-class mail copies of the Disclosure Statement, the Plan, the notice of confirmation hearing, the Ballots, and the voting instructions to holders of Class 1 Prepetition Lenders Secured Claims, Class 4 General Unsecured Claims, and Class 5 Convenience Claims. For the unimpaired Classes of Claims, the Debtor will send by first class mail to the subject claim holders a notice (i) stating a summary of the treatment provided under the Plan to each class, (ii) advising that the Disclosure Statement and Plan can be obtained by the Bankruptcy Court's Web site, the Balloting Agent's Website or on written request to the Debtor's counsel or Committee's counsel, (iii) stating the date of the Confirmation Hearing, and (iv) stating the date fixed to file objections to confirmation of the Plan. All ballots accepting or rejecting the Plan must be received by the Balloting Agent by 4:30 p.m., Prevailing Pacific Time, on April 18, 2008. The Court will convene a hearing on April 29, 2008, at 2:00 p.m., to consider the confirmation of the Plan. Objections to the Plan confirmation must be filed with the Court by April 18. The Debtor will also publish the Confirmation Hearing Notice once in the national edition of The Wall Street Journal, The New York Times, or the The USA Today, no later than 15 days before the Confirmation Hearing. The Official Committee of Unsecured Creditors has asserted its support of the Fourth Amended Disclosure Statement and Third Amended Plan. The Debtor is also directed to mail a copy of the Committee's support letter to general unsecured creditors. Judge Walrath presided over American LaFrance's Chapter 11 case pursuant to Judge Brendan Linehan Shannon's temporary absence. A full-text copy of the Amended Disclosure Statement Order is available for free at: http://bankrupt.com/misc/ALF_DisclosureStatORDdatedMarch28.pdf About American LaFrance Headquartered in Summerville, South Carolina, American LaFrance LLC -- http://www.americanlafrance.com/-- is one of the oldest fire apparatus manufacturers and one of the top six suppliers of emergency vehicles in North America. The company filed for Chapter 11 protection on Jan. 28, 2008 (Bankr. D. Del. Case No. 08-10178). Ian T. Peck, Esq., and Abigail W. Ottmers, Esq., at Haynes and Boone LLP, are the Debtor's proposed Lead Counsel. Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers LLP, are the Debtor's proposed local counsel. In its schedules of assets and debts filed Feb. 4, 2008, the Debtor disclosed $188,990,680 in total assets and $89,065,038 in total debts. The Debtor's exclusive period to file a plan expires on May 27, 2008. The Debtor filed its plan of reorganization on Feb. 3. (American LaFrance Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN LAFRANCE: Court Resets Asset Sale Motion Hearing to May 1 ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware rescheduled the hearing of the Asset Sale Motion of American LaFrance LLC to May 1, 2008 at 10:00 a.m. Any response to the Sale Motion must be filed with the Court no later than April 24. As reported by the Troubled Company Reporter on Feb. 6, 2008, American LaFrance acknowledged that it has operated at a loss and experienced a severe contraction in trade terms by its vendors. The Debtor believed that the most viable solution to its liquidity crisis that will also preserve the value of its assets and business is an asset sale pursuant to Section 363 of the Bankruptcy Code. Accordingly, the Debtor asked the Court for permission to sell substantially all of its assets to Patriarch Partners Agency Services LLC, free and clear of liens, claims, encumbrances and subject to higher and better bids. Patriarch Partners Agency Services LLC, is the current secured DIP Lender and agent for the other DIP Lenders who has committed to extend a $50,000,000 DIP credit facility to the Debtor. From the Petition Date through the close of the proposed sale, Patriarch has agreed to fund the Debtor's day-to-day obligations. This is expected to end on May 1, 2008. The Sale Agreement Christopher Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers, LLP, in Wilmington, Delaware, related that the Debtor seeks to enter into a asset purchase agreement with Patriarch. Under the APA, the Debtor will sell all of its assets to Patriarch for $150,000,000. The assets to be sold includes all of the Debtor's title and interest in and to all of its assets, properties, rights, claims and contracts owned, leased or licensed. The Debtor also intends to assume and assign certain contracts to Patriarch in connection with the proposed sale. Among the assets to be excluded from the proposed sale are all minute books, stock records and corporate seals; all records that the Debtor is required by law to retain in its possession; and the Debtor' equity interests. Pursuant to the APA, Patriarch will assume liabilities to cure costs associated certain contracts to be assigned by the Debtor to Patriarch; for trade payables arising postpetition that directly relates to the operation of the Debtor's business in the ordinary course; and all obligations under the Debtor's customer programs. The APA also provides that the Debtor will release Patriarch, as buyer, of all claims, counterclaim, set-off or causes of action. A full-text copy of the Patriarch Partners APA is available for free at http://researcharchives.com/t/s?27c3 About American LaFrance Headquartered in Summerville, South Carolina, American LaFrance LLC -- http://www.americanlafrance.com/-- is one of the oldest fire apparatus manufacturers and one of the top six suppliers of emergency vehicles in North America. The company filed for Chapter 11 protection on Jan. 28, 2008 (Bankr. D. Del. Case No. 08-10178). Ian T. Peck, Esq., and Abigail W. Ottmers, Esq., at Haynes and Boone LLP, are the Debtor's proposed Lead Counsel. Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers LLP, are the Debtor's proposed local counsel. In its schedules of assets and debts filed Feb. 4, 2008, the Debtor disclosed $188,990,680 in total assets and $89,065,038 in total debts. The Debtor's exclusive period to file a plan expires on May 27, 2008. The Debtor filed its plan of reorganization on Feb. 3. (American LaFrance Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN LAFRANCE: Committee Withdraws Request for Ch. 11 Trustee ----------------------------------------------------------------- The Official Committee of Unsecured Creditors of American LaFrance, LLC withdraws, without prejudice, its request for the appointment of a Chapter 11 Trustee in the Debtor's Chapter 11 case. As reported by the Troubled Company Reporter on March 26, 2008, the Committee asked the U.S. Bankruptcy Court for the District of Delaware to appoint a Chapter 11 trustee in the bankruptcy case of American LaFrance, LLC, pursuant to Section 1104(a) of the Bankruptcy Code. On behalf of the Committee, David M. Fournier, Esq., at Pepper Hamilton LLP, in Wilmington, Delaware, told the Court that Patriarch Partners Agency Services, LLC's and Lynn Tilton's multiple and conflicting insider roles in the Debtor preclude the Debtor's management and professionals from discharging their fiduciary duties owed to the estate and non-insider creditors in the Chapter 11 case. Accordingly, he asserted, "cause" exists for mandating the appointment of a Chapter 11 Trustee. The Debtor, its allegedly secured lenders, and its equity holders all are under the common control of one person -- Lynn Tilton, Mr. Fournier asserted. He pointed out that: -- Ms. Tilton is the sole member of the Debtor's Board of Managers; -- Patriarch Partners Agency Services, which is managed by Ms. Tilton, is the agent for the Debtor's lenders; -- The alleged secured lenders of the Debtor are investment funds that are controlled by limited liability companies for which Ms. Tilton is the manager; and -- The lenders hold all or substantially all of the Debtor's equity. The Committee did not explain the cause of the withdrawal. About American LaFrance Headquartered in Summerville, South Carolina, American LaFrance LLC -- http://www.americanlafrance.com/-- is one of the oldest fire apparatus manufacturers and one of the top six suppliers of emergency vehicles in North America. The company filed for Chapter 11 protection on Jan. 28, 2008 (Bankr. D. Del. Case No. 08-10178). Ian T. Peck, Esq., and Abigail W. Ottmers, Esq., at Haynes and Boone LLP, are the Debtor's proposed Lead Counsel. Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers LLP, are the Debtor's proposed local counsel. In its schedules of assets and debts filed Feb. 4, 2008, the Debtor disclosed $188,990,680 in total assets and $89,065,038 in total debts. The Debtor's exclusive period to file a plan expires on May 27, 2008. The Debtor filed its plan of reorganization on Feb. 3. (American LaFrance Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN LAFRANCE: To Dispose of 1,100 Executory Contracts ---------------------------------------------------------- Pursuant to its request to sell substantially all of its assets, American LaFrance, LLC, notified the Court on March 10, 2008, of its intent to assume, sell, and assign certain of more than 1,000 executory contracts and unexpired leases and settle amounts to cure those contracts. The Contracts to be assumed, sold or assigned include (a) 450+ Condor Trucks Contracts, (b) 300+ Fire Contracts, (c) 200+ Condor Dealer Contracts, (d) 30+ Fire Dealer Contracts, (e) 30+ Ambulance Contracts, and (f) 120+ Miscellaneous Contracts. Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers, LLP, in Wilmington, Delaware, clarifies that the inclusion of any contract in the Assumption Notice will not constitute an admission of the Debtor that a contract is in fact an executory contract or unexpired lease or that contract will be needed to be assumed and assigned in connection with the Debtor's Asset Sale Motion. Any objection to the assumption, sale and assignment of the designated contracts and their corresponding cure costs were due March 31, 2008 at 4:00 p.m. A list of the 1000+ Contracts is available for free at: http://bankrupt.com/misc/ALF_ContractsforAssumption.pdf Responses A. Vogelpohl Fire Equipment Vogelpohl Fire Equipment, Inc., objects to the cure amounts set in the Debtor's Assumption Notice and asks the Court to direct the Debtor to pay these individual cure amounts as part of the $1,009,853 cure amount, the Debtor owes Vogelpohl: Party Contract Cure Amount ----- -------- ----------- City of Columbus Fire Truck A $326,208 City of Columbus Fire Truck B 326,208 City of Winchester Fire Truck 61,884 USEC Fire Truck 39,209 Village of Pomeroy Fire Truck 36,302 Southwest Council of Gov't. Fire Truck 32,164 City of West Carrollton Fire Truck 23,981 Harrison County Fire District Fire Truck 23,825 Tri-Community Joint Fire District Fire Truck 16,269 City of Strongville Ambulance 26,013 Children's Hospital of Akron Ambulance 11,700 B. RT Jedburg RT Jedburg Commerce Park, LLC, objects to the assumption, sale and assignment of its lease with the Debtor for real properties located at 1090, 1116 and 1124 Newton Way, in Summerville, South Carolina. Bonnie Glantz Fatell, Esq., at Blank Rome LLP, in Wilmington, Delaware, relates that Jedburg Industrial Properties, LLC, entered into a Lease Agreement on August 4, 2006, as amended on January 26, 2007, with the Debtor as lessee of the Summerville Property. The Debtor hired contractors in 2007 to make modifications and improvements to the Summerville Property but failed to pay those contractors $5,400,000 for the lessee work. As a result of non-payment by the Debtor, the contractors filed mechanic liens against the Summerville Property totaling $3,402,320. The Debtor also owes an additional $2,000,000 to 22 contractors, with the potential of claiming lien against the Summerville Property. Ms. Fatell notes that the Debtor's Assumption Notice seeks to assume the Summerville Property Lease but only proposes to pay RT Jedburg $111,000 as a cure amount. Ms. Fatell argues that the proposed cure amount fails to pay (i) all rent currently due; (ii) the defaults caused by the Debtor's non-payment of the contractors that performed the lessee's work; and (iii) RT Jedburg's $131,091 prepetition early occupancy rent. Accordingly, RT Jedburg asks the Court to direct the Debtor to: (a) remove the existing liens of the Summerville Property; (b) provide releases or an escrow fund for the potential liens so that none can become liens against the Summerville Property in the future; (c) pay RT Jedburg the full amount of the rent currently due of the Summerville Property; (d) pay RT Jedburg its monetary losses caused by the Debtor's non-payment of rent and failure to remove the existing liens of the Summerville Property; and (e) provide sufficient evidence to RT Jedburg that whoever the Debtor assigns to the Summerville Property Lease can comply with future performance, before the Debtor can assume, sell and assign the Lease. C. Apple Rock Advertising Apple Rock Advertising & Promotion, Inc., disputes the $0 cure amount indicated in the Debtor's Assumption Notice for its Services Agreement with the Debtor. Lisa Cresci McLaughlin, Esq., at Phillips, Goldman & Spence, P.A., in Wilmington, Delaware, relates that under an executory contract dated March 8, 2007, Apple Rock agreed to store, transport or arrange transportation, maintain, and display the Debtor's trade show exhibit pieces. She argues that as of March 18, 2008, the Debtor owed Apple Rock $94,662, comprised of (i) $81,658 for 2007 past due payments, (ii)$1,506 for 2008 storage fees, (iii) $4,298 for late fees, and (iv)$7,199 for attorney fees. Accordingly, Apple Rock asks the Court to: (i) determine that the cure amount owed to it under the Agreement is $94,662; and (ii) deny the Debtor's assumption request unless the Debtor pays the correct full cure amount. D. Truck Centers Truck Centers, Inc., asks the Court to remove the Truck Centers Demo contract and the St. Louis Children's Hospital ambulance contract it entered into with the Debtor from the Contracts list the Debtor seeks to assume, sell, or assign. Daniel K Hogan, Esq., at The Hogan Firm, in Wilmington, Delaware, relates that TCI does not wish to accept delivery of the Truck Centers Demo, a fire truck that it no longer wishes to purchase under all of the existing circumstances. "The Debtor should not be allowed to resurrect a contract, it previously rejected pursuant to its Court-approved Rejection Motion," Mr. Hogan stresses. Mr. Hogan adds that the Assumption Notice included the St. Louis' Children's Hospital ambulance contract placed with TCI. He notes that shortly before the Petition Date, representatives of the Debtor had a conference phone call with dealers including TCI, announcing the closure of the ambulance manufacturing plant and the production schedules for fire and ambulance equipment absent the St. Louis Children's Hospital ambulance. With the subsequent cancellation of the order by St. Louis Children's Hospital, TCI cannot take delivery of an ambulance for which it has no customer, Mr. Hogan maintains. "It would be inequitable for the Debtor to sell or assign its St. Louis Children's Hospital ambulance contract when, because of its own actions, the Debtor has caused the contract between St. Louis Children's Hospital and TCI to be cancelled," Mr. Hogan contends. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors 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 Court has extended the exclusive periods for the Debtors to file a plan of reorganization through June 2, 2008, and solicit and obtain acceptances for that plan through July 31, 2008. (American Home Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ANALYTICAL SURVEYS: Completes Buyout of Axion's Common Stock ------------------------------------------------------------ Analytical Surveys Inc. completed the acquisition of 100% of the common stock of Axion International Inc., through a merger of Analytical's newly formed subsidiary into Axion. Pursuant to the merger, the former shareholders of Axion received 36.8 million shares of Common Stock of Analytical, constituting approximately 90.7% of the issued and outstanding Common Stock of Analytical. On Nov. 20, 2007, Analytical Surveys and Axion Acquisition Corp., a subsidiary of the company, entered into an Agreement and Plan of Merger with Axion International Inc. Pursuant to the Merger Agreement, Merger Sub will merge with Axion, with Axion as the surviving corporation and a subsidiary of the company. In connection with the merger, James Kerstein, the chief executive officer of Axion, and Marc Green, president of Axion, were appointed as members of Analytical's board of directors. In additon, Mr. Kerstein was appointed chief executive officer, and Mr. Green was appointed president. Axion expects to commence production and sales by the third quarter 2008. "The commencement of our operations utilizing these groundbreaking technologies coincides with our country's need to rebuild much of its transportation related infrastructure and the growing awareness of our need to expand the production and use of environmentally friendly products," Jim Kerstein, CEO of Axion stated. "For example, North American freight and transit line railroads, which installed more than 200,000 crossties produced with the Rutgers' technology, replace more than 18 million railroad crossties each year." "Railroad crossties which we will produce from recycled plastics will last approximately 50 years," Mr. Kerstein added. "We are seeking to make substantial inroads in that market and to build bridges for both public and private projects. Our merger with Analytical Surveys puts us in a position to raise the additional capital we will need to effectively implement our planned production." About Axion International Inc. Axion International Inc. is the exclusive licensee of revolutionary patented technologies developed for the production of structural plastic products such as railroad crossties, bridge infrastructure, utility poles, marine pilings and bulk heading. These technologies which were developed by scientists at Rutgers University, a principal shareholder of Axion, transform recycled consumer and industrial plastics into structural products which are more durable and have a substantially greater useful life than traditional products made from wood, steel and concrete. In addition, Axion's recycled composite products will result in substantial reduction in greenhouse gases and also offer flexible design features not available in standard wood, steel or concrete products. About Analytical Surveys Based in San Antonio, Tex., Analytical Surveys Inc. (Nasdaq: ANLT) -- http://www.asienergy.com/-- provides utility-industry data collection, creation, and management services for the geographic information systems markets. The company has recently transitioned its focus toward the development of oil and gas exploration and production opportunities. ASI's Energy Division is focused on high-quality exploratory and developmental drilling opportunities, as well as purchase of proven reserves with upside potential attributable to behind-pipe reserves, infill drilling, deeper reservoirs, and field extension opportunities. Going Concern Doubt As reported in the Troubled Company Reporter on Jan. 17, 2008, Houston-based Malone & Bailey PC expressed substantial doubt about the ability of Analytical Surveys 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 reported that the company has suffered significant operating losses in 2007 and prior years and does not currently have external financing in place to fund working capital requirements The company posted a net loss of $4,534,000 on total revenues of $586,000 for the year ended Sept. 30, 2007, as compared with a net loss of $335,000 on total revenues of $4,320,000 in the prior year. At Sept. 30, 2007, the company's balance sheet showed $1,176,000 in total assets and $2,274,000 in total liabilities, and $1,098,000 stockholders' deficit. ASARCO LLC: Judge Schmidt Okays Bidding Procedures for Assets Sale ------------------------------------------------------------------ The Honorable Richard S. Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas approved the proposed bidding procedures for the sale of substantially all of ASARCO LLC's assets, on an interim basis, after ASARCO LLC submitted a modified proposed order. On March 18, Judge Schmidt conducted a hearing on the bidding procedures and objections against it, and -- in the open court -- granted preliminary approval of the bidding procedures but directed ASARCO LLC to submit a modified proposed order. During the March 18 Hearing, Judge Schmidt also directed ASARCO and other parties-in-interest to come up with an agreement as to the duties of a Chapter 11 examiner. Pursuant to the Interim Bidding Procedures Order, ASARCO will conduct the Plan Sponsor Selection Meeting at a time and place as determined by ASARCO and to take all actions necessary, in the discretion of ASARCO, to conduct and implement the auction. Initial plan sponsor proposals are due April 21 and a plan sponsor selection meeting will be held two weeks later. ASARCO will distribute a Draft Agreement to bidders provided that the Draft Agreement will not include any disclosure schedules until 10 days before the deadline to submit written proposals. The disclosure schedules and any updates will be available to bidders in the virtual data room. To the extent the Final Agreement contains a break-up fee, the break-up fee will be the sole remedy of the Successful Bidder if a definitive agreement is terminated under circumstances where the break-up fee is payable. The Successful Bidder will have no other remedy against ASARCO, the company's Board of Directors and their advisors, other than, with respect to ASARCO only, any willful or intentional breach by ASARCO of the definitive agreement. Unless otherwise directed by the Court, (i) bidders will be required to submit non-public information about themselves only to ASARCO, its legal and financial advisors, the Creditor Constituents, their legal and financial advisors, and (ii) those parties will not disclose the non-public information. Lehman Brothers, Inc., will maintain confidentiality in accordance with the ethical wall established pursuant to the firm's internal procedures. Judge Schmidt will convene a hearing to consider final approval of the bidding procedures after the plan sponsor selection meeting. During the final hearing, Judge Schmidt will also consider approval of the No-Shop Requirement, the Fiduciary Out and the Superior Proposal Threshold. Objections to the entry of a final order approving the Bidding Procedures Motion must be filed no later than 48 hours before the Final Hearing. ASARCO will provide the executed Final Agreement to all parties having filed an objection at least five business days before the Final Hearing. ASARCO will bear the burden to prove that the decision of the ASARCO Board to approve the Bid Procedures is a reasonable exercise of its business judgment. Objections filed by Century Indemnity Company, Mt. McKinley Insurance Company, Everest Reinsurance Company, American Home Assurance Company, Lexington Insurance Company, Mitsui & Co. (U.S.A.), Inc., Mitsui & Co., Ltd., Ginrei, Inc. and MSB Copper Corp., to the proposed bidding procedures are reserved for the hearing on confirmation of ASARCO's plan of reorganization. Harbinger Capital Partners Master Fund I, Ltd., Harbinger Capital Partners Special Situations Fund, L.P., and Citigroup Global Markets, Inc., withdrew their objections to the proposed bidding procedures. Harbinger, et al., told the Court during the March 18 Hearing that they intend to support the sale process initiated by ASARCO LLC. Previous Objections "Although ASARCO [LLC] claims to have submitted a purely procedural motion to identify a 'plan sponsor' through the Bid Procedures, the truth is that the Motion are carefully constructed steps designed to insulate the actions of ASARCO and the so-called Creditor Constituents from proper scrutiny," Asarco Incorporated argued. Asarco Inc. pointed out that (a) no "plan sponsor" has actually been selected; (b) ASARCO LLC has spent the last 10 months soliciting bidders without Court approval; (c) ASARCO LLC and the Creditor Constituents have not even finalized their agreement on the terms of a Chapter 11 plan of reorganization; and (d) no specific break-up fee is ready to be proposed, and it is not even clear at what stage ASARCO expects to seek approval of its winning bidder. Charles A. Beckham, Esq., at Haynes and Boone, LLP, in Houston, Texas, noted that ASARCO LLC commits itself to no particular course of action and reserves the right to modify its proposed bid procedures or to abandon them entirely as it sees fit. Mr. Beckham contended that the Sale Motion seeks to further certain objectionable purposes, including: * the continued involvement of certain conflicted parties in the plan sponsor selection process; * the continued unfettered discretion of ASARCO LLC to market its assets with little or no oversight or review; * the continued discrimination by ASARCO LLC against Asarco Inc.; and * the approval of an unnecessary break-up fee with no rational relationship to the Successful Bidder's actual costs. Asarco Inc. also refuted the No-Shop Requirement and the Superior Proposal Threshold proposed by ASARCO LLC. The No-Shop Requirement provides that ASARCO LLC will refrain from soliciting other proposals after the plan sponsor is selected at a meeting. Asarco Inc. submitted a proposed bidding procedures order to provide that the Court should not sub silentio foreclose its rights. Asarco Inc. maintained that it is not acquiring ASARCO LLC's assets but is rather proposing to retain its equity interest in the mining company while paying creditors in full or unimpairing those creditors. In a separate filing, Asarco Inc. asked Judge Schmidt to reconsider the Court ruling approving a protective order and striking some items in the discovery request Asarco Inc. sent to ASARCO LLC, the Official Committee of Unsecured Creditors and the United Steelworkers. ASARCO LLC's Response ASARCO LLC argued that the proposed bidding procedures submitted by Asarco Inc. would "chill" bidding during the plan sponsor selection process. In a letter sent to Judge Schmidt, ASARCO LLC reminded the Court that it has presented extensive evidence and testimony on its business judgment and reasonableness of the plan sponsor selection procedures. The Debtor noted that Asarco Inc. did not present any witnesses. Asarco Inc.'s argument, according to ASARCO LLC, is nothing more than a misguided and inadequate attempt to suggest a conspiracy among ASARCO LLC and creditor constituents to prevent Asarco Inc. from participating in the plan sponsor selection process, when in fact that participation is exactly what the Bidding Procedures Motion is trying to achieve. Jack L. Kinzie, Esq., at Baker Botts L.L.P., in Dallas, Texas, argued that the no-shop covenant will not prevent ASARCO LLC's Board of Directors from considering a proposal sufficiently higher than the consideration provided in a final agreement. Mr. Kinzie clarified that the Superior Proposal Threshold is intended to compensate ASARCO LLC's bankruptcy estate for the risk and cost associated with terminating a final agreement and delaying confirmation of a reorganization plan. It also provides qualified bidders with incentive to submit higher and better proposals because of the protection given to the successful plan sponsor against termination of a final agreement. At the same time, the Superior Proposal Threshold will deter bidders from waiting until after the plan sponsor selection meeting to submit their highest and best bid because of the increase in purchase price that the Superior Proposal Threshold would require. Mr. Kinzie maintained that Lehman Brothers, Inc., is a disinterested party, qualified to design and implement the Plan Sponsors Procedures. He said Lehman Brothers has disclosed that its parent, Lehman Brothers Holdings, Inc., indirectly acquired a 20% interest in the top-level investment management entities of the D.E. Shaw Group, who is a potential plan sponsor participant. Mr. Kinzie said LBHI is not involved in the day-to-day investment decisions made by D.E. Shaw and does not have any directors or management serving in any capacity for D.E. Shaw. ASARCO LLC said it has filed under seal a confidential information memorandum to familiarize the Court with its asset marketing program. About ASARCO Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/ -- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services And investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). The Debtors are currently asking the Court to extend their exclusive plan-filing period to June 10, 2008. (ASARCO Bankruptcy News, Issue No. 69; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ASPEN TECHNOLOGY: Appoints KPMG as New Independent Accounting Firm ------------------------------------------------------------------ The Audit Committee of Aspen Technology Inc.'s Board of Directors has appointed KPMG LLP as its independent registered public accounting firm for the fiscal year ending June 30, 2008. As disclosed on Jan. 16, 2008, Deloitte & Touche LLP declined to stand for re-appointment for the fiscal 2008 audit. There was no disagreement between the company and Deloitte on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. About Aspen Technology Based in Cambridge, Massachusetts, Aspen Technology Inc. (Nasdaq:AZPN) -- http://www.aspentech.com/-- provides software and professional services that help process companies improve efficiency and profitability by enabling them to model, manage and control their operations. The company has locations in Brazil, Malaysia and France. At March 31, 2007, the company's consolidated balance sheet showed $273.0 million in total assets, $154.5 million in total liabilities, and $118.5 million in total stockholders' equity. * * * Moody's Investor Service placed the company's long-term corporate family rating at B2 and its equity-linked rating at Caa1 in October 2001. These ratings still hold to date with a stable outlook. BARRINGTON II: Seven Classes of Notes Get Moody's Rating Reviews ---------------------------------------------------------------- Moody's Investors Service placed on review for possible downgrade the ratings on these notes issued by Barrington II CDO Ltd.: Class Description: $79,600,000 Class A1J-Q Floating Rate Notes Due 2052 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $270,400,000 Class A1J-M Floating Rate Notes Due 2052 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Moody's also downgraded and left on review for possible further downgrade the ratings on these notes: Class Description: $189,000,000 Class A-2 Floating Rate Notes Due 2052 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: A1, on review for possible downgrade Class Description: $78,750,000 Class A-3 Floating Rate Notes Due 2052 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: A3, on review for possible downgrade Class Description: $43,750,000 Class B Floating Rate Notes Due 2052 -- Prior Rating: Aa2, on review for possible downgrade -- Current Rating: Baa2, on review for possible downgrade Class Description: $15,750,000 Class C Deferrable Floating Rate Notes Due 2052 -- Prior Rating: A2, on review for possible downgrade -- Current Rating: Ba2, on review for possible downgrade Class Description: $12,250,000 Class D Deferrable Floating Rate Notes Due 2052 -- Prior Rating: Ba3, on review for possible downgrade -- Current Rating: Caa2, on review for possible downgrade According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. BEAR STEARNS: Bank Sale to JPMorgan Gets Okay from Federal Reserve ------------------------------------------------------------------ The Federal Reserve Board on Tuesday approved a proposal by JP Morgan Chase & Co. to acquire The Bear Stearns Cos. Inc.'s bank holdings, Bear Stearns Bank & Trust, of Princeton, New Jersey. JP Morgan Chase & Co. is not required to obtain the Board's prior approval under the Bank Holding Company Act to acquire The Bear Stearns Cos. Inc. As reported in the Troubled Company Reporter on March 26, 2008, the Federal Reserve Bank of New York will provide term financing to facilitate JPMorgan's acquisition of The Bear Stearns Cos. Inc. This action is being taken by the Federal Reserve, with the support of the Treasury Department, to bolster market liquidity and promote orderly market functioning. The New York Fed will take, through a limited liability company formed for this purpose, control of a portfolio of assets valued at $30 billion as of March 14, 2008. The assets will be pledged as security for $29 billion in term financing from the New York Fed at its primary credit rate. JPMorgan Chase will bear the first $1 billion of any losses associated with the portfolio and any realized gains will accrue to the New York Fed. BlackRock Financial Management, Inc. will manage the portfolio under guidelines established by the New York Fed designed to minimize disruption to financial markets and maximize recovery value. Last month, JPMorgan and Bear Stearns Companies Inc. disclosed an amended merger agreement regarding JPMorgan Chase's acquisition of Bear Stearns, raising JPMorgan's bid from $2 per share to $10 per share. In addition, JPMorgan Chase will purchase 95 million newly issued shares of Bear Stearns common stock, or 39.5% of the outstanding Bear Stearns common stock after giving effect to the issuance, at the same price as provided in the amended merger agreement. The purchase of the 95 million shares is expected to be completed on or about April 8, 2008. About JPMorgan JPMorgan Chase & Co. (NYSE: JPM) -- http://www.jpmorganchase.com/ -- is a global financial services firm with operations in more than 60 countries. The firm does investment banking, financial services for consumers, small business and commercial banking, financial transaction processing, asset management, and private equity. A component of the Dow Jones Industrial Average, JPMorgan Chase serves millions of consumers in the United States and many of the world's most prominent corporate, institutional and government clients under its JPMorgan and Chase brands. About Bear Stearn Companies New York City-based The Bear Stearns Companies Inc. (NYSE: BSC) -- http://www.bearstearns.com/-- is a leading financial services firm serving governments, corporations, institutions and individuals worldwide. The company's core business lines include institutional equities, fixed income, investment banking, global clearing services, asset management, and private client services. The company has approximately 14,000 employees worldwide. * * * As reported in the Troubled Company Reporter on Dec. 28, 2007, Fitch Ratings' affirmed its Negative Outlook for The Bear Stearns Companies Inc. following the announcement of the company's fiscal year earnings for 2007. On Nov. 14, 2007, Fitch affirmed Bear Stearns' long-term credit ratings, along with its subsidiaries. Fitch also downgraded the short-term rating to 'F1' from 'F1+', and Individual rating to 'B/C' from 'B'. BEAR STEARNS: S&P Downgrades Ratings on 77 Classes From 21 Deals ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 77 classes of asset-backed certificates issued by 21 Bear Stearns Asset Backed Securities deals. Concurrently, S&P affirmed its ratings on the remaining 107 classes from these and 10 other transactions. The downgrades reflect a reduction in credit enhancement as a result of monthly realized losses and the high amount of severe delinquencies (90-plus days, foreclosures, and REOs). As of the March 25, 2008, remittance date, cumulative realized losses for the downgraded transactions, as a percentage of the original pool balances, ranged from 0.94% (series 2005-CL1) to 3.78% (series 1998-1). Excluding series 1998-1, severe delinquencies, as a percentage of the current pool balances, ranged from 11.17% (series 2005-CL1) to 47.31% (series 2005-AQ2). The dollar amounts of severe delinquencies for the majority of the 2005 deals S&P reviewed have risen since the March 2007 remittance period, with increases ranging from 3% (series 2005-CL1) to 218% (series 2005-AQ2). Series 2005-HE1 and 2005-HE3 are the only two series from the 2005 vintage that experienced drops in severe delinquencies. The 2004 vintage transactions that S&P reviewed did not experience a rise in severe delinquencies, but losses have been outpacing excess spread continuously over the past six months, ranging from 1.8x (series 2004-HE10) to 3.9x (series 2004-HE6). Overcollateralization is below its target for most of the downgraded transactions; series 2005-HE11 had the largest deficiency, at 142 basis points below target. Change in severe del. since Transaction Cum. loss Severe del. March 2007 ----------- --------- ----------- ---------------- 1998-1 3.78% 3.33% (91)% 2004-HE10 1.54% 15.05% (24)% 2004-HE11 2.08% 21.29% (5)% 2005-HE10 1.92% 37.62% 118% 2005-HE11 3.43% 26.32% 56% 2005-HE12 2.03% 31.97% 97% 2000-2 8.03% 9.35% (24)% 2003-ABF1 2.38% 12.76% (9)% 2004-BO1 6.51% 11.45% (7)% 2004-FR2 1.15% 13.30% (27)% 2004-FR3 1.11% 17.28% (28)% 2004-HE1 1.33% 12.68% (34)% 2004-HE2 1.55% 11.79% (40)% 2004-HE5 1.20% 14.11% (27)% 2004-HE6 1.77% 15.80% (25)% 2004-HE7 1.63% 15.48% (21)% 2004-HE9 1.78% 19.24% (22)% 2005-4 2.72% 34.07% 48% 2005-CL1 0.94% 11.17% 3% 2005-EC1 1.38% 24.77% 85% 2005-FR1 2.33% 36.96% 56% 2005-HE1 1.59% 19.72% (16)% 2005-HE2 1.33% 24.60% 17% 2005-HE3 2.16% 27.72% (8)% 2005-HE4 2.16% 28.06% 17% 2005-HE5 2.00% 31.61% 37% 2005-HE6 2.45% 28.35% 20% 2005-HE7 1.74% 24.16% 59% 2005-HE8 2.16% 22.77% 39% 2005-AQ2 1.71% 47.31% 218% The affirmations reflect sufficient credit enhancement available to support the current ratings. The classes with affirmed ratings have actual and projected credit support percentages that are in line with their original levels. Subordination, overcollateralization, and excess spread provide credit support for these transactions. The collateral for these transactions originally consisted primarily of fixed- and adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties. Ratings Lowered Bear Stearns Asset Backed Securities Trust Bear Stearns Asset Backed Securities I Trust Rating ------ Transaction Class CUSIP To From ----------- ----- ----- -- ---- 2004-HE2 M-4 07384YRB4 BBB BBB+ 2004-HE2 M-5 07384YRC2 BB BBB 2004-HE2 M-6 07384YRD0 B BBB- 2004-HE5 M-7 073879CJ5 B BB 2004-HE6 M-6 073879CZ9 B+ BBB 2004-HE6 M-7A 073879DA3 CCC B 2004-HE6 M-7B 073879DZ8 CCC B 2004-HE7 M-6 073879EZ7 BBB BBB+ 2004-HE7 M-7A 073879FA1 B BB- 2004-HE7 M-7B 073879FB9 B BB- 2004-HE10 M-7 073879MX3 B BB+ 2004-HE11 M-6 073879PD4 BB BBB- 2005-AQ2 M-4 0738792Y3 BB A 2005-AQ2 M-5 0738792Z0 B+ A- 2005-AQ2 M-6 0738793A4 B BBB+ 2005-AQ2 M-7 0738793B2 B- BBB 2005-AQ2 M-8 0738793C0 B- BBB- 2005-AQ2 M-9 0738792Q0 CCC BB 2005-AQ2 M-10 0738792R8 CCC B 2005-CL1 M-5 073879V88 BBB A 2005-CL1 M-6 073879V96 BBB- A- 2005-CL1 M-7 073879W20 BB BBB+ 2005-CL1 M-8 073879W38 BB- BBB 2005-CL1 M-9 073879W46 B BB 2005-CL1 M-10 073879W53 CCC B 2005-EC1 M-4 0738795F1 A- A 2005-EC1 M-5 0738795G9 BBB A- 2005-EC1 M-6 0738795H7 BB BBB+ 2005-EC1 M-7 0738795J3 B+ BBB 2005-EC1 M-8 0738795K0 B BBB- 2005-FR1 M-2 073879G69 A- A 2005-FR1 M-3 073879G77 BBB A- 2005-FR1 M-4 073879G85 BB BBB+ 2005-FR1 M-5 073879G93 BB- BBB 2005-FR1 M-6 073879H27 B BBB- 2005-FR1 M-7 073879H35 B- BB 2005-FR1 M-8 073879H43 CCC B 2005-HE1 M-7 073879PX0 CCC BB 2005-HE2 M-8 073879RG5 B BB 2005-HE3 M-7 073879SC3 BB BB+ 2005-HE3 M-8 073879SD1 CCC BB 2005-HE4 M-7 073879TZ1 BB- BB+ 2005-HE4 M-8 073879UA4 CCC BB 2005-HE5 M-5 073879WE4 BBB BBB+ 2005-HE5 M-6 073879WF1 BB BBB 2005-HE5 M-7 073879WG9 B BBB- 2005-HE5 M-8 073879WH7 CCC BB+ 2005-HE6 M-5 073879YC6 BB BBB+ 2005-HE6 M-6 073879YD4 B BBB- 2005-HE6 M-7 073879YE2 B- BBB- 2005-HE6 M-8A 073879YF9 CCC BB+ 2005-HE6 M-8B 073879ZV3 CCC BB+ 2005-HE7 M-4 073879ZK7 BBB+ A- 2005-HE7 M-5 073879ZL5 BB BBB+ 2005-HE7 M-6 073879ZM3 B BBB 2005-HE7 M-7 073879ZN1 B- BBB- 2005-HE8 M-3 073879J82 A- A 2005-HE8 M-4 073879J90 BBB A- 2005-HE8 M-5 073879K23 BB BBB+ 2005-HE8 M-6 073879K31 B BBB 2005-HE8 M-7 073879K49 B- BBB- 2005-HE10 M-3 073879X52 BB+ A 2005-HE10 M-4 073879X60 BB- A- 2005-HE10 M-6 073879X86 B- BBB 2005-HE10 M-5 073879X78 B BB 2005-HE10 M-7 073879X94 CCC B 2005-HE11 M-5 0738793S5 BBB A- 2005-HE11 M-6 0738793T3 BB+ BBB+ 2005-HE11 M-7 0738793U0 BB- BBB 2005-HE11 M-8 0738793V8 B BBB- 2005-HE11 M-9 0738793W6 CCC BB+ 2005-HE11 M-10 0738793X4 CCC BB 2005-HE12 M-4 0738795T1 BBB A 2005-HE12 M-5 0738795U8 BB+ A- 2005-HE12 M-6 0738795V6 BB BBB+ 2005-HE12 M-7 0738795W4 BB- BBB 2005-HE12 M-8 0738795X2 B BBB- Ratings Affirmed Bear Stearns Asset Backed Securities Inc. Bear Stearns Asset Backed Securities Trust Bear Stearns Asset Backed Securities I Trust Transaction Class CUSIP Rating ----------- ----- ----- ------ 1998-1 M-1 02926WAB2 AA 1998-1 M-2 02926WAC0 A- 2000-2 M-1 07383GBM7 AAA 2000-2 M-2 07383GBN5 A+ 2000-2 B 07383GBP0 BBB 2003-ABF1 A 07384YLE4 AAA 2003-ABF1 M 07384YLG9 AA 2004-BO1 I-A-1 073879JF6 AAA 2004-BO1 I-A-2 073879JG4 AAA 2004-BO1 I-A-3 073879JH2 AAA 2004-BO1 II-A-1 073879JJ8 AAA 2004-BO1 II-A-2 073879JK5 AAA 2004-BO1 M-1 073879JL3 AAA 2004-BO1 M-2 073879JM1 AAA 2004-BO1 M-3 073879JN9 AAA 2004-BO1 M-4 073879JP4 A 2004-BO1 M-5 073879JQ2 BBB 2004-BO1 M-6 073879JR0 BB 2004-BO1 M-7 073879JS8 B 2004-BO1 M-8 073879JT6 B- 2004-BO1 M-9A 073879JU3 CCC 2004-BO1 M-9B 073879JV1 CCC 2004-FR2 M-1 073879FF0 AA+ 2004-FR2 M-2 073879FG8 AA 2004-FR2 M-3 073879FH6 AA- 2004-FR2 M-4 073879FJ2 A+ 2004-FR2 M-5 073879FK9 A 2004-FR2 M-6 073879FL7 BBB+ 2004-FR2 M-7 073879FM5 BBB 2004-FR2 M-8A 073879FN3 B 2004-FR2 M-8B 073879FP8 B 2004-FR3 M-2 073879KR8 AA 2004-FR3 M-3 073879KS6 AA- 2004-FR3 M-4 073879KT4 A+ 2004-FR3 M-5 073879KU1 A 2004-FR3 M-6 073879KV9 A- 2004-FR3 M-7 073879KW7 B 2004-HE1 M-1 07384YPX8 AA 2004-HE1 M-2 07384YPY6 A 2004-HE1 M-3 07384YPZ3 A- 2004-HE1 M-4 07384YQA7 BBB+ 2004-HE1 M-5 07384YQB5 BB 2004-HE1 M-6 07384YQC3 B 2004-HE2 M-1 07384YQY5 AA 2004-HE2 M-2 07384YQZ2 A 2004-HE2 M-3 07384YRA6 A- 2004-HE5 M-1 073879CC0 AA+ 2004-HE5 M-2 073879CD8 AA- 2004-HE5 M-3 073879CE6 A 2004-HE5 M-4 073879CF3 A- 2004-HE5 M-5 073879CG1 BBB+ 2004-HE5 M-6 073879CH9 BBB 2004-HE6 M-1 073879CU0 AA+ 2004-HE6 M-2 073879CV8 AA- 2004-HE6 M-3 073879CW6 A 2004-HE6 M-4 073879CX4 A- 2004-HE6 M-5 073879CY2 BBB+ 2004-HE7 M-1 073879EU8 AA+ 2004-HE7 M-2 073879EV6 AA- 2004-HE7 M-3 073879EW4 A+ 2004-HE7 M-4 073879EX2 A 2004-HE7 M-5 073879EY0 A- 2004-HE9 M-1 073879KC1 AA+ 2004-HE9 M-2 073879KD9 AA 2004-HE9 M-3 073879KE7 A+ 2004-HE9 M-4 073879KF4 A 2004-HE9 M-5 073879KG2 A- 2004-HE9 M-6 073879KH0 BBB+ 2004-HE9 M-7A 073879KJ6 B 2004-HE9 M-7B 073879LM8 B 2004-HE10 M-1 073879MR6 AA 2004-HE10 M-2 073879MS4 A 2004-HE10 M-3 073879MT2 A- 2004-HE10 M-4 073879MU9 BBB+ 2004-HE10 M-5 073879MV7 BBB 2004-HE10 M-6 073879MW5 BBB- 2004-HE11 M-1 073879NY0 AA 2004-HE11 M-2 073879NZ7 A 2004-HE11 M-3 073879PA0 A- 2004-HE11 M-4 073879PB8 BBB+ 2004-HE11 M-5 073879PC6 BBB 2004-HE11 M-7 073879PE2 B 2005-HE6 A-3 073879XX1 AAA 2005-HE6 M-1 073879XY9 AA 2005-HE6 M-2 073879XZ6 A+ 2005-HE6 M-3 073879YA0 A 2005-HE6 M-4 073879YB8 A- 2005-TC1 A-2 073879VD7 AAA 2005-TC1 A-3 073879VE5 AAA 2005-TC1 M-1 073879VF2 AA 2005-TC1 M-2 073879VG0 A+ 2005-TC1 M-3 073879VH8 A 2005-TC1 M-4 073879VJ4 A- 2005-TC1 M-5 073879VK1 BBB+ 2005-TC1 M-6 073879VL9 BBB 2005-TC1 M-7 073879VM7 BBB- 2005-TC1 M-8 073879VN5 BB+ 2005-TC2 A-2 073879D88 AAA 2005-TC2 A-3 073879D96 AAA 2005-TC2 M-1 073879E20 AA 2005-TC2 M-2 073879E38 A 2005-TC2 M-3 073879E46 A- 2005-TC2 M-4 073879E53 BBB+ 2005-TC2 M-5 073879E61 BBB 2005-TC2 M-6 073879E79 BBB- 2005-TC2 M-7 073879E87 BB+ 2005-TC2 M-8 073879E95 BB BFWEST LLC: WestLB Wants Chapter 11 Case Dismissed -------------------------------------------------- WestLB AG asks the United States Bankruptcy for the Southern District of Florida to dismiss BFWest LLC's Chapter 11 case, Dawn McCarty of Bloomberg News reports. WestLB says reorganization is impossible, relates Mrs. McCarty. In its motion, WestLB argues that it can't be forced to accept a plan that doesn't pay it in full in cash. As reported in the Troubled Company Reporter on March 27, 2008, BFWest is an affiliate of mezzanine lender Builder Financial Corp. BFWest's sister companies Builder Funding and BFSPE LLC make the loans, while the Debtor keeps track of acquisition and development loans. BFWest owed Builder Funding $58.1 million of unsecured debt, and BFSPE LLC $32.5 million. BFWest owed $114.9 million to WestLB, which is secured by certain loans and mortgages, says Mrs. McCarty. A hearing is scheduled on April 23, 2008, to consider the request. About BFWest Headquartered in Fort Lauderdale, Florida, BFWest, LLC -- http://www.builderfinancial.com/-- a privately-held specialty finance company that facilitates the financing of residential real estate transactions by providing mezzanine financing to builders. It holds a portfolio of acquisition, development and construction loans. The company filed for Chapter 11 protection on March 26, 2008 (Bankr. S.D. Fla. Case No.08-13528). Eyal Berger, Esq., and Michael D. Seese, Esq., at Kluger, Peretz, Kaplan & Berlin, PL, represent the Debtor. No Official Committee of Unsecured Creditors has been appointed in this case to date. When the Debtor filed for protection against its creditors, it listed assets and debts between $100 million to $500 million. BGF INDUSTRIES: S&P Withdraws Ratings on Company's Request ---------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings, including the 'B-' corporate credit rating, on BGF Industries Inc., at the company's request. BLACKHAWK AUTOMOTIVE: Can File Chapter 11 Plan Until May 19 ----------------------------------------------------------- The Hon. Kay Woods of the United States Bankruptcy Court for the Northern District of Ohio further extended Blackhawk Automotive Plastics Inc. and its debtor-affiliates' exclusive periods to: a) file a plan of reorganization until May 19, 2008; and b) solicit acceptances of that plan until July 18, 2008. As reported in the Troubled Company Reporter on Feb. 21, 2008, William E. Schonberg, Esq., at Benesch, Friedlander, Coplan & Aronoff LLP in Cleveland, Ohio, said 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, said Mr. Schonberg. 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. BLUE WATER: Gets Final Approval to Borrow $35MM from Citizens ------------------------------------------------------------- The Honorable Marci B. McIvor of the U.S. Bankruptcy Court for the Eastern District of Michigan granted final approval to Blue Water Automotive Systems, Inc., and its debtor affiliates' request to enter into a $35,000,000 revolving credit facility provided by Citizens Bank. The Court authorized Blue Water Automotive Systems to utilize proceeds from the DIP Loans to make intercompany loans not exceeding $3,000,000 to the other Debtors. Judge McIvor also authorized the Debtors to perform their obligations under certain accommodation agreements and a credit enhancement agreement with their major customers Form Motor Corporation, General Motors Corporation and Chrysler, LLC. Citizens Bank will extend the DIP loans based on this borrowing base formula: -- up to 90% of Accommodating Customer Eligible Accounts; plus -- up to 85% of Eligible Accounts other than the Accommodating Customer Eligible Accounts; plus -- up to 75% of the cost of Accommodating Customer Inventory; plus -- up to 35% of the cost of Eligible Inventory other than Accommodating Customer Eligible Inventory; minus -- the reserves imposed from time-to-time by Citizens Bank, including reserves for Carve-Out in an amount not to exceed $1,000,000, plus the then current monthly, unpaid budgeted amount for professionals fees in the DIP Budget, reserves for Permitted Liens on accounts or inventory that are senior to the liens of Citizens Bank, and reserves in respect of any adequate protection payments to the Agent. In addition to the In-Formula Loans, if any, Citizens Bank will lend up to an amount equal to the difference between $35,000,000 and the outstanding amount of In-Formula Loans made according to the Borrowing Base, not to exceed $24,000,000 of Overformula Advances. Citizens Bank may also make Overformula Advances in the form of advances under credit cards or purchase cards issued to BWASI, which BWASI may use to pay ordinary course expenses. The total amount of Card Advances outstanding from time to time, when added to the other Overformula Advances outstanding from time to time, shall not exceed $24,000,000. Overformula Advances will only be made if they are fully guaranteed by Ford Motors Corporation and other Accommodating Customers. Citizens Bank will have the right to impose reasonable Borrowing Base reserves to address any inventory reporting or quality deficiencies; provided that Citizens Bank will confer with the Debtors before imposing those reserves. The DIP Loans will bear interest at the these rates: Loans Interest Rate ----- ------------- Postpetition Loans that Prime Rate, plus are not Overformula Advances 1.25% per annum on the outstanding day-to-day principal balance Overformula Advances Prime Rate per annum, plus 0.50% per annum on the outstanding day-to-day principal balance DIP Loans 2.0% per annum on top of the other applicable interest rates from and after an Event of Default Interest on the DIP Loans will be due and payable on the first business day of each month in arrears and all interest will be calculated based on a 360-day year. Concerns on Proposed Final DIP Order Last week, the Debtors delivered to the Court a proposed final DIP order. The Debtors notified the Court that since the entry of the Interim DIP Financing Order, they have finalized and executed an accommodation agreement with General Motors Corporation and Chrysler LLC. Ford Motor Corporation, GM and Chrysler have also executed a credit enhancement agreement in favor of Citizens Bank and have made certain other revisions in connection with the final DIP Financing Order. John A. Simon, Esq., at Foley & Lardner LLP, in Detroit, Michigan, explained that, among others, the GM/Chrysler Accommodation Agreement contains the Debtors' grant to GM and Chrysler of an option to purchase equipment dedicated to their production of their parts, exercisable after the expiration of the Non-Resource Period. The purchase price would be the average between the orderly liquidation value and the fair market value, each as determined by Accuval Appraisers. Mr. Simon said GM and Chrysler would not execute the GM/Chrysler Accommodation Agreement and the Credit Enhancement Agreement without the Dedicated Equipment Purchase Option. Because the Debtors require the GM/Chrysler Accommodation Agreement and the Credit Enhancement Agreement to ensure adequate financing and continue their restructuring efforts in their Chapter 11 cases to permit the Debtors to engage in a meaningful sale process, the Debtors determined, in their business judgment, to grant the Dedicated Equipment Purchase Option. According to Mr. Simon, the Debtors believe that the Dedicated Equipment Purchase Option will not be exercised because the Debtors expect to consummate a sale prior to the exercise of the option. Nonetheless, if the Dedicated Equipment Purchase Option were exercised, the Debtors believe the price that would be obtained in connection with that exercise will be fair and reasonable under the terms of the required appraisal. Mr. Simon said the Debtors may enter into similar agreements with Ford. The Proposed Final DIP Order contains a 13-week budget commencing on the week ended March 7, 2008, and continuing until the week ended May 30, 2008. A full-text copy of the 13-Week Budget is available for free at: http://bankrupt.com/misc/bluewater_13WeekDIPBudget.pdf Various parties commented on the proposed Final DIP Order and the slew of agreements the Debtors entered into with their major customers: A. Creditors Committee "The Debtors are placing their own survival above all considerations and the price that the Debtors would pay through the Final DIP Order nullifies possible benefits thus driving the Debtors envitably towards administrative insolvency," Ryan D. Heilman, Esq., at Schafer and Weiner, PLLC, in Bloomfield Hills, Michigan, counsel to the Official Committee of Unsecured Creditors, said. Mr. Heilman said the approval of the Final DIP Order would grant a secured and superpriority status to Ford Motors Corporation for the out-of-formula lending, which will compel the Debtors to continue to produce parts for Ford at prepetition contract prices when in fact the Debtors have demanded and received from General Motors Corporation and Chrysler LLC price increases. The continued production by the Debtors at prepetition price levels results to substantial losses for the Debtors, and while GM and Chrysler directly compensate this with price increases, Ford is indirectly funding its own losses through a guaranty of out-of-formula borrowing, Mr. Heilman asserted. Mr. Heilman said the Committee is also concerned on non-payment of Section 503(b)(9) Claims by the Debtors. "If these claims are not paid in full through the proposed budget in the Final DIP Order, unsecured creditors will be placed in the inequitable position of not only losing the full value of their prepetition claims, but also being forced to disgorge money in preference actions for the benefit of administrative claimants," he argued. The Committee also complained that the Proposed Final Order provides priority to Citizens Bank and Ford Claims over any subsequent Chapter 7 Trustee's expenses. The Committee maintained that by giving these Chapter 11 expenses priority over Chapter 7 expenses as the Committee believes the Debtors' cases will turn out to be, the Debtors violated Section 726(b) of the Bankruptcy Code that automatically prioritizes Chapter 7 expense claims above Chapter 11 administrative expense claims. Mr. Heilman also noted that under the proposed Final DIP Order, the prepetition agent, the Lenders and LaSalle are released from all claims in any way related to the Revolving Credit Agreement or the Revolving First Lien Collateral. The release is proposed to be granted without any investigation by the Debtors or the Committee in whether there are viable causes of action. As claims filed by CIT Group/Equipment Financing, Inc. and CIT Capital USA, Inc., and LaSalle Bank Midwest, NA, under those agreements are being paid in full, it is questionable whether these releases actually provide any value to the Debtors' estates. The Committee wanted the proposed Final DIP Order junked unless: (a) Ford agrees to directly compensate the Debtors for the full cost of its production through price increases, in the same manner as GM and Chrysler; (b) the Debtors provide for payment for all Section 503(b)(9) Claims; (c) the clause providing for Citizens' Bank and Ford's administrative expense claims priority over Chapter 7 Trustee's administrative expense claims be canceled; and (d) the releases to CIT and LaSalle are taken out of the Proposed Final DIP Order. B. Chrysler Chrysler noted that the Debtors' Proposed Final DIP Order has allowed the Debtors to unilaterally amend or modify the DIP Budget without consent of the Major Customers. According to Kristi A. Katsma, Esq., at Dickinson Wright PLLC,in Detroit, Michigan, the Proposed Final DIP Order is the Debtors' attempt to obfuscate their agreement with Chrysler,evidenced by the Debtors refusal to clarify the Proposed Order upon General Motors and Chrysler's request to provide that the Debtors may only amend the DIP budget upon agreement of the Major Customers. Chrysler asserted that the Debtors' action constitutes a direct violation of the explicit terms and spirit of the Accommodation Agreement, and the proposed modification should not be allowed by the Court. Chrysler pointed out that the Proposed Order states that it agrees that all payments made under the Accommodation Agreement on or before the date of the Order are final, undisputed and no longer made on a provisional basis. Ms. Katsma clarified that Chrysler does not agree with that statement, which directly contradicts the agreement, which provides for a true-up procedure assuring Chrysler that it has not over-funded its obligation to pay the actual Cash Burn incurred by the Debtors during the time that production is ongoing for Chrysler. Chrysler also objected to the Proposed Final DIP Order because it implies that Chrysler has released any claims against the Debtors related to the Accommodation Agreement when in reality, the release has not been granted. GM supported Chrysler's objections. C. CIT Entities The CIT Entities objected on the basis that several of the proposed changes blatantly contradict both the agreement made between the Debtors and the CIT Entities. Among others, the CIT Entities dispute the Debtors' finding that the Prepetition Lenders are adequately protected, and the characterization of the $2,500,000, deposited in escrow, which was the monetization of the second lien in the Revolving Loan First Lien Collateral which the CIT Entities released. The CIT Entities also objected to the deletion of the language, which provided for payments to the CIT Entities during the Interim Period as adequate protection for the use of machinery, equipment, and real property, and the failure to provide the CIT Entities with adequate protection despite the Debtors continuing use of the CIT Entities' collateral both in its usual business and under the expanded performance obligations under the Accommodation Agreements. The CIT Entities reserve their rights to object and asked the Court to deny the entry of the Final DIP Order unless the Debtors correct the deficiencies. E. Vendors These vendors wanted the Debtors to insert a specific clause in the Final DIP Order securing their ownership of tooling lest the Major Customers will assume their property pursuant to the Accommodation Agreements: (a) Radiance Mold & Engineering, Inc., (b) PME Companies Inc., and (c) HS Die & Engineering, Inc. Gates Canada Inc., preserve its interests and ownership to its tooling. Gates Canada asked the Court to direct the Debtors to modify the Proposed Final DIP Order to accommodate the priority of its set-off rights. PolyOne noted that the DIP Financing Motion, which provides for the payment of various claims of a lesser priority including prepetition critical vendor payments, utility deposits, taxes 401k catch-up, and expense reimbursements, did not provide for the payment of claims pursuant to Section 503(b)(9) of the Bankruptcy Code. Debtors Address DIP Objections To address several DIP objections and to include the finalized second amendment to the Ford Accommodation Agreement, the Debtors filed with the Court a modified proposed Final DIP Order. A full-text copy of the Proposed Final DIP Order is available for free at: http://bankrupt.com/misc/Blue_water_ProposedFinalDIPOrder.pdf A full-text copy of the blacklined version of the amended Proposed Final DIP Order is available for free at: http://bankrupt.com/misc/bluewater_March30ProposedOrder.pdf Mr. Simon argued that notwithstanding the possible shutdown of production, with attendant catastrophic damage claims against the Debtors' estates and a meltdown in the Debtors' business and value, the Official Committee of Unsecured Creditors mischaracterizes the Debtors' actions and intent as somehow ceding their business judgment and the result of the Chapter 11 cases away to the Major Customers to the detriment of the Debtors' estates. Mr. Simon explained that to the contrary, the Debtors' exercise of their sound business judgment led them to determine that the DIP Financing and Accommodation Agreements were required to preserve their businesses and provide them with an opportunity to sell their assets to maximize value for their estates. Mr. Simon stressed that the Debtors did not cower and cater to unreasonable demands of the Major Customers. Indeed, the Debtors prepared and were ready to file a motion to reject their supply contracts with General Motors Corporation and Chrysler LLC. The proposed DIP Financing is the result of extremely hard bargaining by the Debtors. "The Committee's objection is essentially an attempt to throw the proverbial "kitchen sink" at the Debtors to force them to provide a carve-out or other guaranteed recovery of some kind to the Committee," he asserted. Mr. Simon maintained that: (1) The Debtors propose to obtain financing by granting security interests and liens and superpriority claims. The Debtors are unable to obtain financing by granting an administrative claim only, without offering terms substantially similar to the terms under the current DIP Financing. (2) The DIP Financing preserves the value of the Debtors' estates. Absent DIP Financing, the Debtors would not be able to continue their operations, would face tremendous breach claims for shutting down their customers' production and employees would leave the Debtors at an extremely accelerated pace. Thus, harming all constituents, primarily the unsecured creditors. (3) The terms and conditions of the DIP Financing are fair and reasonable. Nothing in the Bankruptcy Code requires that the proceeds of avoidance actions be carved out of Citizen's Bank's superpriority claims. Mr. Simon argued that the claimants asserting Section 503(b)(9) Claims against the Debtors are attempting to use the Court to hold the Debtors' DIP Financing hostage to compel the Debtors to payment of claims. He said the Debtors have filed a proposed Reclamation Claims Procedures Motion to reconcile and determine the value of the goods provided by the Section 503(b)(9) Claimants. Mr. Simon disclosed that the Debtors do not have funds available to pay the Section 503(b)(9) Claims at this time, as their DIP Financing is not budgeted to provide for inclusion of these claims. Rather, the Debtors anticipate to pay those claims once a Chapter 11 Plan of Reorganization is confirmed. With respect to the tooling vendors who sought clarification as to whether their liens granted to Citizens Bank in connection with the DIP Financing are primed valid tooling liens incurred in the ordinary course of business, Mr. Simon said the liens granted to Citizens Bank under the DIP Financing do not prime the tooling liens. The Debtors said they will continue to attempt to negotiate consensual resolutions with the Creditors Committee, Polyone, Solvay Engineered Polymers, Inc., St. Clair Packaging, Inc., Tri-Way Manufacturing Inc., and H.S. Die & Engineering, Inc. Debtors' Payments to Citizens Pursuant to the DIP Agreement, the Debtors have paid Citizens Bank a non-refundable facility fee of $250,000. The Debtors will also pay Citizens Bank: -- a monthly collateral monitoring fee of $5,000, beginning with the month of March 2008; -- a fee of 0.25% times the average daily unused portion of the DIP Credit Facility for periods on and after March 3; -- all reasonable fees and out-of-pocket costs and expenses incurred in relation to the DIP Facility. Citizens Bank has applied the $50,000 expense deposit received from certain affiliates of KPS Funds on February 12, 2008, toward payment of the Lender Expenses. Carve-Out refers to proceeds from the DIP Loans reserved for payment of professional fees, including $100,000 to be paid to each to Foley & Lardner LLP and Huron Consulting Group. In addition, the amount of $800,000, held in a client trust account by Foley & Lardner, 2/3 of which will be paid for the Debtors' professionals and 1/3 to the Official Committee of Unsecured Creditors. The DIP Agreement also provides for an Additional Carve-Out of $850,000 for the benefit of Debtors' Court-appointed professionals and $150,000 for the Committee's Court-appointed professionals after the occurrence of an Event of Default. The DIP Facility will be due and payable on the earliest of (a) September 30, 2008; (b) the occurrence of an Event of Default; (c) the closing of a sale pursuant to an order authorizing a sale of all or substantially all of the Debtorsâ€™ assets; or (d) the effective date of any confirmed plan of reorganization. As security to the Debtors' obligations on account of the DIP Loans, including principal, interest, the Loan Fees and Lender Expenses, Citizens Bank is granted: (i) a lien and security interest in the Prepetition Collateral junior in priority only to the Existing Liens; (ii) a first priority lien and security interest in the Postpetition Collateral; and (iii) a first priority lien and security interest in any of the Collateral that is not otherwise subject to a lien under Section 364(c)(2) of the Bankruptcy Code. After all In-formula Loans are paid in full, Citizens Bank will create an escrow and will deposit therein all proceeds of the Collateral in which Citizens Bank enjoys a first priority lien up to $1,720,000, which the aggregate amount of the financial accommodations provided by General Motors Corporation and Chrysler LLC to the Debtors. Citizens Bank will not create or take a reserve of any kind against availability under the DIP loan in connection with the Citizens Bank Escrow. The amounts deposited in the Citizens Bank Escrow will be subject to a first priority lien in favor of Citizens Bank. GM and Chrysler will maintain a second priority lien in the Citizens Bank Escrow only behind Citizens Bank. The obligations of Ford under the Ford Guaranty will not be reduced by the amount in the Citizens Bank Escrow. The Ford Guaranty will be due and payable by Ford in accordance with the terms of the Guaranty. Upon demand for payment on the Ford Guaranty by Citizens Bank, any open issues with regard to the Ford Guaranty will be resolved within 60 days after demand. If, within that 60-day period, the Ford Guaranty is not paid in full by Ford and the amount in the Citizens Bank Escrow is not released to GM and Chrysler, GM and Chrysler will have the right and standing to file pleadings with the Court to compel performance of the Ford Guaranty by Ford and payment of the Citizens Bank Escrow to GM and Chrysler. The Court will retain jurisdiction to hear on those matters. Judge McIvor clarifies that the Final DIP Order is (i) without prejudice to the rights of The CIT Group/Equipment Financing, Inc., as lessor, or CIT Capital USA, Inc., as the real estate lender, to pursue their pending motion to lift stay; (ii) will not be deemed to establish the value of any collateral asserted to be held by either of them; and (iii) will not be deemed a waiver of the rights of either of them to demand any payments due under the Lease Agreement or the CIT Capital Loan. A full-text copy of the Final DIP Order, signed April 1, 2008, is available for free at: http://bankrupt.com/misc/Blue_water_FinalOrder.pdf Cash Collateral-Related Payments The Debtors advised the Court that they have paid $2,500,000, into an escrow account and transferred all of the liens of the CIT Group Lenders in the prepetition Revolving Loan First Lien Collateral to the escrowed funds. The Debtors and certain Prepetition Lenders granted limited releases to each other. Judge McIvor clarified that the Final DIP Order is not intended to validate or invalidate (i) any liens or security interests granted to any CIT Group Lender, the Term Loan Lenders, the PMSI Creditors, or any Tool Vendors; or (ii) any setoffs, recoupments, or other deductions taken or to be taken by any party, including the Debtors' customers. About Blue Water Automotive Blue Water Automotive Systems, Inc. designs and manufactures engineered thermoplastic components and assemblies for the automotive industry. The company's product categories include airflow management, full interior trim/sub-systems, functional plastic components, and value-added assemblies. They are supported by full-service design, program management, manufacturing and tooling capabilities. With more than 1,400 employees, Blue Water operates eight manufacturing and product development facilities and has annual revenues of approximately US$200 million. The company's headquarters and technology center is located in Marysville, Mich. The company has operation in Mexico. In 2005, KPS Special Situations Fund II, L.P., and KPS Special Situations Fund II(A), L.P., acquired Blue Water Automotive through a stock purchase transaction. In 2006, the company acquired the automotive assets and operations of Injectronics, Inc., a manufacturer of thermoplastic injection molded components and assemblies. KPS then set about reorganizing the company. The company implemented a program to improve operating performance and address its liquidity issues. During 2007, the company replaced senior management, closed two facilities, and reduced overhead spending by one third. Blue Water Automotive and four affiliates filed for chapter 11 bankruptcy protection Feb. 12, 2008, before the United States Bankruptcy Court Eastern District of Michigan (Detroit) (Case No. 08-43196). Judy O'Neill, Esq., and Frank DiCastri, Esq., at Foley & Lardner, LLP, serves as the Debtors' bankruptcy counsel. Administar Services Group LLC acts as the Debtors' claims, noticing, and balloting agent. Blue Water's bankruptcy petition lists assets and liabilities each in the range of US$100 million to US$500 million. (Blue Water Automotive Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000) BLUE WATER: CIT Entities Balk at Miller Buckfire's Compensation --------------------------------------------------------------- CIT Group/Equipment Financing, Inc., and CIT Capital USA, Inc., object to the proposed sale of Blue Water Automotive System Inc.'s assets and the employment of Miller Buckfire & Co., LLC, as the Debtors' investment bankers, to the extent the CIT Entities are not paid the full amount of their claims and Miller Buckfire's compensation were paid from the CIT Entities' recoveries in the Debtors' Chapter 11 cases. The CIT Entities tell the United States Bankruptcy Court for the Eastern District of Michigan that in the event of a credit bid, Miller Buckfire will be entitled to receive a 2.5% commission that would include any liabilities assumed by a potential purchaser. "In that situation, it is clear that Miller Buckfire would confer no benefit onto the CIT Entities with respect to any unsecured claim assumed by the purchaser and if the sale process ended up CIT Entities being obliged to credit bid on its own collateral," Theodore B. Sylwestrzak, Esq., at Dickinson Wright PLLC, in Detroit, Michigan, points out. As reported by the Troubled Company Reporter on March 24, 2008, the Debtors sought permission to employ Miller Buckfire to: (a) provide the Debtors financial advisory and investment banking services; (b) familiarize itself with the business, operations, properties, financial condition and prospect of the company; (c) provide financial advice and assistance to the Debtors in connection with a Sale, identify potential acquirors and, at the Debtors' request, contact these potential acquirors; (d) assist the Debtors in preparing a memorandum to be used in soliciting potential acquirors; (e) participate in negotiations with potential acquirors; and (f) advise and assist the Debtors in structuring and effecting the financial aspects of a Sale transaction. The Debtors proposed to pay Miller Buckfire according to these payment terms: (a) an initial financial advisory fee of $75,000; (b) a monthly advisory fee of $75,000; and (c) a sale transaction fee, in the event the Debtors consummate a sale transaction, of 2.5% of the aggregate consideration of any such sale, provided that the minimum sale transaction fee in connection with the sale is $1,000,000. The Debtors would reimburse Miller Buckfire for all of its reasonable out-of-pocket expenses. Durc A. Savini, managing director at Miller Buckfire, assured the Court that the firm does not hold any interest adverse to all parties-in-interest, and is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About Blue Water Automotive Blue Water Automotive Systems, Inc. designs and manufactures engineered thermoplastic components and assemblies for the automotive industry. The company's product categories include airflow management, full interior trim/sub-systems, functional plastic components, and value-added assemblies. They are supported by full-service design, program management, manufacturing and tooling capabilities. With more than 1,400 employees, Blue Water operates eight manufacturing and product development facilities and has annual revenues of approximately US$200 million. The company's headquarters and technology center is located in Marysville, Mich. The company has operation in Mexico. In 2005, KPS Special Situations Fund II, L.P., and KPS Special Situations Fund II(A), L.P., acquired Blue Water Automotive through a stock purchase transaction. In 2006, the company acquired the automotive assets and operations of Injectronics, Inc., a manufacturer of thermoplastic injection molded components and assemblies. KPS then set about reorganizing the company. The company implemented a program to improve operating performance and address its liquidity issues. During 2007, the company replaced senior management, closed two facilities, and reduced overhead spending by one third. Blue Water Automotive and four affiliates filed for chapter 11 bankruptcy protection Feb. 12, 2008, before the United States Bankruptcy Court Eastern District of Michigan (Detroit) (Case No. 08-43196). Judy O'Neill, Esq., and Frank DiCastri, Esq., at Foley & Lardner, LLP, serves as the Debtors' bankruptcy counsel. Administar Services Group LLC acts as the Debtors' claims, noticing, and balloting agent. Blue Water's bankruptcy petition lists assets and liabilities each in the range of US$100 million to US$500 million. (Blue Water Automotive Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000) BLUE WATER: Ford Balks at CIT Adequate Protection Payment Demands ----------------------------------------------------------------- Ford Motor Company tells the U.S. Bankruptcy Court for the Eastern District of Michigan that it concurs with Blue Water Automotive System Inc.'s objection to CIT Group/Equipment Financing, Inc., and CIT Capital USA, Inc.'s request to lift the bankruptcy stay as the CIT Entities have failed to present any evidence regarding the value of their collateral on the Debtors' bankruptcy filing date. Given the current conditions in the automotive industry, it is likely that the collateral is worth less than the debt secured by the Collateral, Ford asserts. On Ford's behalf, Timothy A. Fusco, Esq., at Miller, Canfield, Paddock and Stone, PLC, in Detroit, Michigan, says no credible evidence has been proferred by the CIT Entities that the collateral is depreciating. "Even if the CIT Entities had produced evidence of depreciation, they cannot prove that the adequate protection payments are not sufficient to cover the alleged rate of depreciation," Mr. Fusco explains. Ford further states that there is a reasonable likelihood that the Debtors' side will prevail as the collateral is necessary for their reorganization and there is no credible evidence proferred by the CIT Entities that they are not adequately protected. As reported by the Troubled Company Reporter on March 31, 2008, the Debtors argued that the CIT Entities failed to substantiate their claim of $797,000 per month depreciation rate of their collateral. The Debtors noted that CIT Entities cannot show evidence that the diminution of their collateral's value is attributable during the collateral's stay in the Debtors' custody on the bankruptcy filing date. As reported by the Troubled Company Reporter on March 7, 2008, CIT sought the lifting of the automatic stay to enforce the prepetition agreements with the Debtors. In the alternative, CIT demanded adequate protection from the Debtors' continued use of property securing the Debtors' obligations under the parties' prepetition agreements. The Debtors and CIT Capital are parties to a Promissory Note, which is secured by certain mortgages encumbering the Debtors' properties in Tuscola, Sanilac, and St. Clair Counties, Michigan; certain Assignments of Rents and Leases; and an Indemnity and Guaranty Agreement, dated May 17, 2006. In addition, the Debtors and CIT Equipment Financing, Inc., are parties to a prepetition Master Lease Agreement under which CIT Equipment Financing provided financing or financing leases for the Debtors' benefit. CIT alleged that as of the Petition Date, the Debtors owed it $14,831,875 under the Loan Documents, and $14,314,584 under the Master Lease Agreement. CIT argued that it is necessary to lift the automatic stay for the CIT Entities to enforce the Prepetition Agreements against the Debtors because the Debtors have been using CIT's Collateral since the Petition Date without providing adequate assurance payments to CIT. In their objection, the Debtors further noted that the CIT Entities fell short in proving that the Debtors have failed to provide adequate protection to the collateral at issue. Judy A. O'Neill, Esq., at Foley & Lardner LLP, in Detroit, Michigan, asserted on the Debtors' behalf, that the Court, in its interim order authorizing the Debtors to incur postpetition financing, explicitly found that the Adequate Protection Payments provided in the Interim Order constitute adequate protection under the Bankruptcy Code. CIT Entities Talk Back The CIT Entities tell the Court that they intend to move forward with their Lift Stay Motion and ask the Court to overrule the Debtors' objection. Theodore B. Sylwestrzak, Esq., at Dickinson Wright PLLC, in Detroit, Michigan, notes the Debtors admit that the CIT Entities were undersecured as of the Petition Date thus the Debtors could not assert that the CIT Entities are adequately protected by an equity cushion. Mr. Sylwestrzak also contends that the Debtors' failure to make their contractually required payments to the CIT Entities' real estate and equipment lease violates Section 365(d)(3) and (d)(5), of the Bankruptcy Code, and constitute diminution of the collateral in the value of $223,000 per month -- which would mandate relief from the automatic stay. The Debtors have no justification for refusing to make payments as a matter of adequate protection, he points out. Mr. Sylwestrzak further asserts that the Debtors' rhetoric should not "cloud common sense". He notes that the Debtors' proposition that there is no further prospect of decline in value from continued use of the collateral, and the dark clouds on the economic horizon, does not accord with experience. "The CIT Entities should not be forced to be an unwilling participant in the Debtors' exploration of their options and the Customers' desires to obtain their parts, unless the CIT Entities are protected from the losses which the Entities will incur by accommodating that process," he concludes. About Blue Water Automotive Blue Water Automotive Systems, Inc. designs and manufactures engineered thermoplastic components and assemblies for the automotive industry. The company's product categories include airflow management, full interior trim/sub-systems, functional plastic components, and value-added assemblies. They are supported by full-service design, program management, manufacturing and tooling capabilities. With more than 1,400 employees, Blue Water operates eight manufacturing and product development facilities and has annual revenues of approximately US$200 million. The company's headquarters and technology center is located in Marysville, Mich. The company has operation in Mexico. In 2005, KPS Special Situations Fund II, L.P., and KPS Special Situations Fund II(A), L.P., acquired Blue Water Automotive through a stock purchase transaction. In 2006, the company acquired the automotive assets and operations of Injectronics, Inc., a manufacturer of thermoplastic injection molded components and assemblies. KPS then set about reorganizing the company. The company implemented a program to improve operating performance and address its liquidity issues. During 2007, the company replaced senior management, closed two facilities, and reduced overhead spending by one third. Blue Water Automotive and four affiliates filed for chapter 11 bankruptcy protection Feb. 12, 2008, before the United States Bankruptcy Court Eastern District of Michigan (Detroit) (Case No. 08-43196). Judy O'Neill, Esq., and Frank DiCastri, Esq., at Foley & Lardner, LLP, serves as the Debtors' bankruptcy counsel. Administar Services Group LLC acts as the Debtors' claims, noticing, and balloting agent. Blue Water's bankruptcy petition lists assets and liabilities each in the range of US$100 million to US$500 million. (Blue Water Automotive Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). BRENDA CHAVEZ: Case Summary & Five Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Brenda G. Chavez aka Brenda T. McNeely aka Brenda Chavez McNeely aka Brenda Gaye Chavez aka Brenda Todd McNeely aka Brenda T. McNeely-Chavez 11215 Marseilles Lane Houston, TX 77082 Bankruptcy Case No.: 08-31869 Chapter 11 Petition Date: March 27, 2008 Court: Southern District of Texas (Houston) Judge: Marvin Isgur Debtor's Counsel: Ronald J. Sommers, Esq. Nathan Sommers Jacobs 2800 Post Oak Boulevard 61st Floor Houston, TX 77056-6102 Tel: (713) 892-4801 Fax: (713) 892-4800 efilers@nathansommers.com Total Assets: $3,123,846 Total Debts: $1,988,266 Debtor's list of its Five Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ McNeeley, Joe D. Judgment $1,118,530 33174 FM 1736 Hempstead, TX 77445 Chase Bank $96,945 P.O. Box 2558 Houston, TX 77262 Fulbright & Jaworski $35,138 c/o Stewart Gagnon 1301 McKinney, Suite 5100 Houston, TX 77010-3095 Lexus Financial Services $31,182 Pavias, John $19,828 BURDETTE FAMILY: Case Summary & 10 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Burdette Family LP aka Burdette Family Limited Partnership 5455 S. Old Mill Road Goodnight, MO 65725 Bankruptcy Case No.: 08-60481 Chapter 11 Petition Date: March 27, 2008 Court: Western District of Missouri (Springfield) Debtor's Counsel: David E. Schroeder, Esq. David Schroeder Law Offices, PC 1524 East Primrose Street, Suite A Springfield, MO 65804-7915 Tel: (417) 890-1000 Fax: (417) 886-8563 bk1@dschroederlaw.com Estimated Assets: $1 million to $10 million Estimated Debts: $500,000 to $1 million Debtor's list of its Ten Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bob Burdette Construction Work $130,000 Route 1 Pleasant Hope, MO 65725 T&M Farm Balance Owed-cattle $100,000 c/o Maurice Grant 5446 South 192nd Phillipsburg, MO 65722 Wheeler Auctions & Real Estate Auction Contract $50,800 13101 Highway 24 Paris, MO 65275 Shuler and Associates Mechanics lien $16,300 Robert Stokes Mechanics lien claim $16,300 Tammy Bass Monies owed $15,000 Lathrop and Gage Attorney Fees $7,855 Anthony and Rebecca Hutchinson Breach Contract Unknown Drexel and Esther Swanson Contract Claim Unknown Southwest Community Bank Real Estate Action Unknown CAMULOS LOAN: S&P Attaches 'BB' Initial Ratings on Class E Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Camulos Loan Vehicle I Ltd. and Camulos Loan Vehicle I Inc.'s $678.25 million floating-rate notes due 2018. The preliminary ratings are based on information as of April 1, 2008. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect: -- The expected commensurate level of credit support in the form of subordination provided by the rated and subordinated notes junior to the respective classes; -- The cash flow structure, which was subjected to various stresses requested by Standard & Poor's; and -- The transaction's legal structure, including the issuer's bankruptcy remoteness. Preliminary Ratings Assigned Camulos Loan Vehicle I Ltd. and Camulos Loan Vehicle I Inc. Class Rating Amount (million) ----- ------ ---------------- A AAA 555.00 B AA 46.75 C A 31.50 D BBB 20.50 E BB 24.50 Subordinated notes NR 53.05 NR — Not rated. CATHOLIC CHURCH: Davenport Submits Amended Disclosure Statement --------------------------------------------------------------- The Diocese of Davenport and its Official Committee of Unsecured Creditors delivered a First Amended Joint Plan of Reorganization and accompanying Disclosure Statement to the U.S. Bankruptcy Court for the Southern District of Iowa on March 28, 2008. The Diocese also submitted to the Court a memorandum of law in support of the approval of the Disclosure Statement and confirmation of the Plan. At the directive of Judge Lee Jackwig of the United States Bankruptcy Court for the Southern District of Iowa , the Diocese included in its Amended Plan and Disclosure Statement, provisions demonstrating that the Bankruptcy Court: (i) has subject matter jurisdiction over tort claims against the Diocese and its affiliated parishes, schools and other Catholic organizations located within the territory of the Diocese; and (ii) the authority to issue the injunctions as set forth in the Plan. The Amended Plan proposes that the Court take jurisdiction over and approve the settlement of the Tort Claims. The Diocese explained that the Court's subject matter jurisdiction over the Tort Claims against the non-debtor Catholic Entities stems from Section 1334(b) of the Judiciary and Judicial Procedures Code, which Section provides that the Bankruptcy Court will have original but not exclusive jurisdiction over all civil proceedings arising under the Bankruptcy Code. The Amended Plan, citing In re Farmland Industries, 296 B.R. 793, 806 (8 1h Cir. B.A.P. 2003), notes that the U.S. Court of Appeals for the Eighth Circuit has interpreted this statute and adopted the "conceivable effect" test to determine when the Bankruptcy Court may exercise its "related to" jurisdiction. According the Plan, because the Catholic Entities and the Diocese hold potential claims against each other, the resolution of the Tort Claims and the contribution claims between the Diocese and the Catholic Entities falls within the "related to" jurisdiction of the Bankruptcy Court. The Bankruptcy Court will exercise its jurisdiction over the Tort Claims against the Catholic Entities and the Settling Insurers. The Bankruptcy Court will also be asked to approve the global settlement by and among the Diocese, the Catholic Entities, and the Settling Insurers, on one hand, and the Tort Claimants, the Committee, and the Unknown Tort Claim Representative, on the other hand. Injunction As part of the settlement in the bankruptcy case, the Amended Plan provides for the Court to issue injunctions enjoining prosecution of Tort Claims against non-debtors as part of the global settlement. The Bankruptcy Court's authority to enjoin third party claims against non-debtors is well established under Section 105(a) of the Bankruptcy Code. Under the global settlement, the Settling Insurers have agreed to pay $19.5 million to the Diocese, and the Catholic Entities have agreed to pay an additional $5.9 million to the Diocese and sell their Travelers Insurance Policies back to Travelers as consideration for the injunctions. Diocese and Parishes' Income The Amended Disclosure Statement reveals that the Diocese has various restricted assets amounting to $2,540,814. It also discloses that after making the necessary payments required under the Plan, the Diocese will be left without any significant investment income, and will be entirely dependent on its parishes for contributions raised and collected as the Annual Appeal. After the Plan's confirmation, it is estimated that 72% of the Diocese's income will come from the Annual Appeal. If the Parish income was not available to the Diocese, the Diocese could not continue its operations and Catholic ministry. Hence, entry of permanent injunction against prosecution of channeled claims is an integral provision to the Plan. Without the injunction, the Diocese's primary source of income would be vulnerable to Tort Claims. Assets of Non-Debtor Catholic Entities A provision for the Catholic Entities' assets is added to the Amended Disclosure Statement. The Diocese believes that under Iowa and Canon law, Parish assets are not part of the bankruptcy estate. However, the Diocese concedes that the legal issue is still unresolved and open to interpretation by the courts. The Diocese notes that in the bankruptcy cases of the Archdiocese of Portland in Oregon and the Diocese of Spokane, large legal fees were paid by the bankruptcy estates relating to litigation over the estate assets. While the Diocese believes that the assets of the non-debtor Catholic Entities are not Estate property, there is no assurance that litigation involving those questions would not consume the Estate assets, which would otherwise be available for distribution to the Tort Claimants. Diocese's Connection to Non-Debtor Catholic Entities Each Parish and most school corporations within the territory of the Diocese have the Bishop as one of its directors and its president. Under Canon and civil law, the Bishop's authority includes the power to remove and replace the board of directors and to appoint clergy. The Diocese contends that it has no legal relationship with any Catholic Entity, however, the Iowa District Court found that the Diocese had a legal duty to supervise clergy assigned by it under agency law theory. Under Iowa law, the role of civil courts in resolving church property ownership is subject to decisions construing the impact of the free exercise and establishment clauses of the First Amendment of the United States Constitution, the Diocese notes, citing Fonken v. Community Church of Kamrar, 339 N.W.2d 810, 812 (Iowa 1983). The Diocese believes that the Catholic Entities' assets do not constitute Estate property within the meaning of Section 541 of the Bankruptcy Code. Contribution Claims On the effective date of the Plan, the order confirming the Plan will effectuate the settlement and compromise of all Tort Claims against all Catholic Entities. In exchange for this consideration, which includes payments to the Settlement Trust and the sale and release of Travelers Insurance Policies back to Travelers, the Catholic Entities will be deemed Settling Parties entitled to all of the benefits and protections under the Amended Plan, including permanent injunction against prosecution of channeled claims. The Amended Plan notes that there is a risk that Tort Claims filed in connection with any Catholic Entity, including Sacred Heart Cathedral, may be invalid or ineffective under state law because the proofs of claim do not state whether the claim is against the Diocese, a Catholic Entity, the perpetrator or other Non-Debtor Entity, and because proof of claim forms have been tendered by the Diocese's counsel. The Diocese, however, says that the risk is solely upon the Reorganized Debtor and will not effect the Settlement Trust or the distributions intended under the trust. Payment of Class 7 Tort Claims The Amended Disclosure Statement redefines Channeled Claims as all Tort Claims against the Diocese, Catholic Entities and Settling Insurers channeled to the Settlement Trust, and exclusively treated and administered pursuant to the provisions and protocols of the Amended Plan and Settlement Trust. Any Tort Claim, which is disallowed under any procedure or process set forth in the Amended Plan will have no further rights against the Diocese, the Reorganized Debtor, Catholic Entities, Settling Insurers, the Settlement Trust, or any Fund, and those claims will be deemed to have been discharged under the Amended Plan. While the obligations of the Settlement Trust to pay holders of Class 7 Tort Claims will be determined pursuant to the Amended Plan, to the extent that Tort Claim is asserted against a Non- Debtor and insurance coverage is sought, the claim must be validly and effectively tendered to the applicable insurance company. The Insurance Company (i) may respond to the Tort Claim as between itself and the Tort Claimant just as it would have outside bankruptcy and (ii) will be entitled to all rights as provided under the terms of the Insurance Policy and applicable state law. Estimated Distributions to Creditors and Funding on Plan Payments Certain changes to the estimated distributions to creditors are reflected in the Amended Disclosure Statement: Total Estimated Estimated Class Treatment Allowed Claim Distribution ----- --------- ------------- ------------ Class 1 Unimpaired $160,888 To be satisfied by Reorganized Debtor Class 2 Unimpaired None None Class 3 Unimpaired None None Class 4 Impaired 5,000 $500 per Claim Class 5 Impaired $9,013 $9,013 Class 6 Impaired None known None Class 7 Impaired Unknown $33,000,000 The Diocese also disclosed estimated amounts on the funding of the payments under the Amended Plan, which includes payment from the cash on hand, transfer of the Chancery real estate, and contributions or settlements with Catholic Entities and Settling Insurers: Contributor Type of Funds Est. Amount ----------- -------------- ----------- Diocese Cash on hand $33,100,000 Settling Insurers Contribution 19,500,000 Diocese To be loaned 2,000,000 St. Vincent Home Contribution 3,000,000 St. Anthony's Parish Contribution 1,000,000 Sacred Heart Cathedral Contribution 1,000,000 St. Mary's Parish Contribution 650,000 Our Lady of Lourdes Parish Contribution 250,000 ---------- Total $60,500,000 Insurance Neutrality Provisions In the Amended Plan, the preservation of contribution actions and insurance claims against Non-Settling Insurers is replaced is by the insurance neutrality provisions, which provides that nothing in the Amended Plan or confirmation documents, which consists of the confirmed Plan, the confirmation order and approved Disclosure Statement, will be construed to resolve the Reorganized Debtor's claims or rights against the Non-Settling Insurers, including all Insurance Claims and Contribution Actions. No provision of the Amended Plan will be construed to release or impair the Non-Settling Insurers' legal, equitable, or contractual rights relating to the Insurance Policies issued by any Non-Settling Insurers. The settlement provided for in the Plan with the Tort Claimants will inure to, and for the benefit of the Settling Parties and not for the Non-Settling Insurers. None of the Confirmation Documents or any Court order, will be binding or an adjudication against any Non-Settling Insurer that, among other things: -- the Confirmation Documents constitute a judgment, settlement or resolution of any Tort Claim; -- any Non-Settling Insurer participated in the negotiation of the Amended Plan, and is liable for, or obligated to pay, with respect to any Tort Claim; -- the procedures and values established by the Plan, including the Matrix Protocol, are appropriate or reasonable and consistent with any procedures to evaluate and settle Tort Claims before the Petition Date; and -- that any Non-Debtor, including Sacred Heart Cathedral, Reorganized Debtor or the Settlement Trust have: * satisfied any condition for payment from any Insurance Company, or whether any obligation of any Non-Settling Insurer has been triggered; and * suffered an insured loss or that the amount paid by the Non-Debtor to the Diocese, Reorganized Debtor or the Settlement Trust in connection with any settlement or resolution of Tort Claims is reasonable or appropriate; Insurer Contribution Claim Reduction The Amended Plan provides that a Non-Settling Insurer may assert an insurer contribution claim as a defense or counterclaim against the Reorganized Debtor, or other person or entity seeking coverage or insurance recoveries in any Contribution Action or Insurance Claim, and the Reorganized Debtor may assert the legal or equitable rights, if any, of the Settling Insurer in that claim or action. In the event that a Non-Settling Insurer obtains a judicial determination or binding arbitration award that the Insurer Contribution Claims are valid, the liability of the Non-Settling Insurer to the Reorganized Debtor or other entity will be reduced by the amount of the Insurer Contribution Claims, and no Settling Insurer will be liable for any of those Insurer Contribution Claims. The Court will convene a hearing on April 2, 2008, to consider the adequacy of the Disclosure Statement. A full-text copy of the Amended Disclosure Statement is available for free at: http://bankrupt.com/misc/Davenport_Amended_DisclosureStatement.pdf A full-text copy of the Amended Plan is available for free at: http://bankrupt.com/misc/Davenport_Amended_JointPlan.pdf A full-text copy of the Memorandum is available for free at: http://bankrupt.com/misc/Davenport_Memorandum_forAmendedPlan.pdf About Diocese of Davenport The Diocese of Davenport in Iowa filed for chapter 11 protection (Bankr. S.D. Ia. Case No. 06-02229) on Oct. 10, 2006. Richard A. Davidson, Esq., at Lane & Waterman LLP, represents the Davenport Diocese in its restructuring efforts. Hamid R. Rafatjoo, Esq., and Gillian M. Brown, Esq., at Pachulski Stang Zhiel Young Jones & Weintraub LLP represent the Official Committee of Unsecured Creditors. In its schedules of assets and liabilities, the Davenport Diocese reported $4,492,809 in assets and $1,650,439 in liabilities. The hearing on the adequacy of Davenport's disclosure statement explaining its reorganization plan commenced on March 5, 2008. The confirmation hearing of the Debtor's plan will start on April 30, 2008. (Catholic Church Bankruptcy News, Issue No. 120; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Fairbanks Wants to Use Funds for Construction -------------------------------------------------------------- The Roman Catholic Diocese of Fairbanks in Alaska, aka Catholic Bishop of Northern Alaska, seeks authority from the U.S. Bankruptcy Court for the District of Alaska to use insurance proceeds, funds donated for restricted purposes and, to a relatively small degree, unrestricted funds on certain construction projects in the villages at parishes located in Yukon-Kuskokwim Delta Region and in the interior region along the Kuskokwim river. The Diocese also seeks the Court's permission to purchase four custom engineered self-contained toilets, sink and shower units to replace unsafe and unsanitary honey bucket situations in parishes in the Y-K Region at a total cost of $32,000 to $36,000. Susan G. Boswell, Esq., at Quarles & Brady LLP, in Tucson, Arizona, informs the Court that some type of construction or demolition with respect to each of the projects was commenced prepetition. Hence, the projects are currently in various progress stages, and the estimated amounts needed to complete them are: Project Location Amount ------- -------- ------ New Church Blessed Sacrament Parish, $465,000 in Scammon Bay Repair Fire St. Michael Parish, 239,100 Damage in McGrath Facilities St. Joseph Parish, 45,500 Improvement in Kotlik Water improvements Immaculate Conception 11,000 Parish, in Kalskag The Diocese proposes to take funds from (i) restricted donations or grants for the water improvements and the new church, (ii) insurance proceeds for damage repairs, and (iii) unrestricted funds for facilities improvement. Counsel for a prepetition ad hoc committee of plaintiffs asserting sexual abuse tort claims against the Diocese have stated that the proposed expenditures are outside the ordinary course of the Diocese's charitable religious operations. After negotiations to agree to a protocol to resolve the dispute, the Unofficial Committee asserted that it was willing, on certain conditions, to stipulate with the Diocese undertaking the insurance-funded project in McGrath, but was unwilling to consent to expenditures for any of the other projects. Ms. Boswell tells Judge Donald MacDonald, IV, that as evidenced by declarations filed by Bishop Donald J. Kettler, Rev. George W. Bowder and Sister Kathy Radich, part and parcel of the Diocese's ordinary course of business are: -- fund-raising for construction projects at subsidized rural parishes; -- facilitating and managing construction projects at subsidized missionary parishes from design phase through completion; -- expending funds from donations restricted to specific construction bush parish projects; and -- to a lesser extent, expending unrestricted funds on smaller bush parish projects. The functions are core to the Diocese's and the missionary Diocese's mission, and charitable religious operations, Ms. Boswell says. She adds that even if the transactions associated with the projects are deemed to be outside the ordinary course of the Diocese's business operations, substantial business justifications exist for continuing the projects under Section 363(b) of the Bankruptcy Code. The restricted donations are trust funds that are being administered and held by the Diocese to be used for the sole purpose for which the funds were donated, Ms. Boswell points out. She notes that the Unofficial Committee disagrees even as to critical projects affecting the health and safety needs of local people, among other reasons. The projects will also preserve assets of the bankruptcy estate, Ms. Boswell argues. The Diocese has purchased and paid, before the Petition Date, for substantial construction material to be delivered to Kotlik and Scammon Bay. She asserts that a delay means the materials will be at risk of theft, vandalism or degradation under the elements. She notes that the estate will unnecessarily incur costs securing and protecting the materials because the construction season is so short in these parts of Alaska, and any delay means that materials delivered later in the season may need to be stored securely for the winter. Accordingly, the Diocese asks the Court to: -- rule that the construction projects are part of the Diocese's ordinary course of business and, therefore, not subject to Court approval; or alternatively, -- authorize the Diocese to undertake all transactions necessary for the projects. At the Diocese's behest, the Court will consider the request on an expedited basis. Judge MacDonald will commence a hearing on April 9, 2008, at 2:00 p.m. Objection deadline is April 8. About Diocese of Fairbanks The Roman Catholic Diocese of Fairbanks in Alaska, aka Catholic Bishop of Northern Alaska, aka Catholic Diocese of Fairbanks, aka The Diocese of Fairbanks, aka CBNA filed for chapter 11 bankruptcy on March 1, 2008 (Bankr. D. Alaska Case No. 08-00110). Susan G. Boswell, Esq., at Quarles & Brady LLP represents the Debtor in its restructuring efforts. Michael R. Mills, Esq., of Dorsey & Whitney LLP serves as the Debtor's local counsel and Cook, Schuhmann & Groseclose Inc. as its special counsel. Judge Donald MacDonald, IV, of the United States Bankruptcy Court for the District of Alaska presides over Fairbanks' Chapter 11 case. The Debtor's schedules show total assets of $13,316,864 and total liabilities of $1,838,719. The church's exclusive plan filing period expires on June 29, 2008. (Catholic Church Bankruptcy News, Issue No. 120; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CELSIA TECH: David Clarke Resigns as Director Effective March 27 ---------------------------------------------------------------- David H. Clarke, a member of the Board of Directors of Celsia Technologies Inc. since July 2005, has resigned from the Board. Mr. Clarke informed the company that his professional commitments have reached a level where he believes he can no longer give the company the necessary attention. Mr. Clarke serves on the Audit Committee and Compensation Committee of the Board. The company is currently considering potential candidates to replace Mr. Clarke. About Celsia Technologies Headquartered in Miami, Florida, Celsia Technologies Inc. (OTC BB: CSAT) -- http://www.celsiatechnologies.com/-- is a full solution provider and licensor of thermal management products and technology for the PC, consumer electronics, lighting and display industries. The company develops anc commercializes next- generation cooling solutions built on patented micro thermofluidic technology. Celsia Technologies' intellectual property portfolio includes patents registered in Korea, the U.S., Japan and Taiwan, with patents pending in the EU, Russia, India and China. At Dec. 31, 2007, the company's consolidated balance sheet showed $6,124,404 in total assets and $6,348,495 in total liabilities, resulting in a $224,091 total stockholders' deficit. Going Concern Disclaimer PKF, in New York, expressed substantial doubt about Celsia Technologies Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm reported that at Dec. 31, 2007, the company and its subsidiaries have commenced limited revenue producing operations and have an accumulated deficit of $40,292,494. CHRYSLER LLC: Disputes Roush Claim on Plastic Molds at Plastech --------------------------------------------------------------- As reported in the Troubled Company Reporter on March 19, 2008, Roush Manufacturing asked the U.S. Bankruptcy Court for the Eastern District of Michigan to lift the automatic stay to allow it to recover molds that Plastech Engineered Products Inc. and its debtor-affiliates use in the production of parts for particular vehicles manufactured by Chrysler LLC. Chrysler Motors Company, LLC and Chrysler Canada, Inc., through their counsel, Michael C. Hammer, Esq., at Dickinson Wright PLLC, in Ann Arbor, Michigan, asserts that Roush Manufacturing, Inc., has not and cannot establish "cause" for relief from the stay under Section 362(d)(1) of the U.S. Bankruptcy Code. Mr. Hammer asserts that Roush, with respect to its claims as to depreciating value, should be required to produce appropriate proof that the value of the Molds is in fact diminishing, and that it is not adequately protected. He further asserts that Roush's unsupported allegation -- Chrysler is "more likely" to replace the Molds than it is to pay for the Molds -- is inaccurate. Mr. Hammer tells the Court that Chrysler has maintained it would escrow the amount necessary to satisfy any mold builders' claims to unpaid tooling, including that of Roush, saying that "it will immediately pay the $13,400,000 into an escrow account so that it may also take possession of the unpaid tooling as well as the paid tooling". If Chrysler desired to simply replace the Molds, it would have made no proposal, Mr. Hammer states. He also avers that Roush's request should be denied because Chrysler -- not Roush -- has the superior right to possess the Molds. The Court has already found that Chrysler has an immediate right to possess the tooling, stating in its Opinion that, "[T]here is nothing about their arguments that would in any way diminish the right of Chrysler to fully expect that the possessory rights conferred upon it in the tooling acknowledges to be enforced... The Court concludes that Chrysler has met its burden to demonstrate a strong or substantial likelihood or probability that it will be successful on the merits with respect to its right to demand possession of the tooling that it has paid for and any unpaid tooling with respect to which there is a dispute." Goldman Sachs Says Roush Not Entitled to Lien Goldman Sachs Credit Partners L.P., as agent to the lenders under the $265,000,000 first lien term loan facility, entered into on February 12, 2007, says Roush's request to lift the automatic stay is not supported by the Bankruptcy Code and should be denied. Louis P. Rochkind, Esq., at Jaffe Raitt Heuer & Weiss, in Southfield, Michigan, asserts Roush does not possess a lien on the Molds. Mr. Rochkind asserts Roush failed to properly file a financing statement under the Michigan Uniform Commercial Code as required under the Michigan Mold Lien Act. Roush's financing statement lists the debtor name as the trade name "Plastech" rather than the correct legal name "Plastech Engineered Products, Inc." This error, Mr. Rochkind says, renders the financing statement ineffective under U.C.C. Section 9502 because (i) a trade name is insufficient to provide the name of the debtor under U.C.C. Section 9503(3); and (ii) the name "Plastech" is seriously misleading because Roush's financing statement did not show up on a recent Online UCC lien search conducted using Michigan's standard search logic of searching debtor names "exactly as requested, with no variations." Mr. Rochkind also asserts the molds against which Roush seeks to exercise rights and remedies are currently encumbered by properly perfected senior liens of the Prepetition First Lien Term Lenders, as well as the Prepetition Revolving Lenders and DIP Lenders. Granting Roush's request would potentially permit Roush, an unsecured creditor, to repossess a secured creditor's collateral, Mr. Rochkind avers. Debtors Object The Debtors ask the Court to deny Roush' request, citing that: (a) the Molds are necessary to an effective reorganization; (b) Roush has failed to demonstrate that cause exists to modify the automatic stay under section 362(d)(1); (c) Roush's assersions are based upon a disputed premise -- that Roush has a valid perfected security interest in the Molds, and; (d) Roush's request is procedurally improper and seeks relief properly sought only through the commencement of an adversary proceeding. Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Wilmington, Delaware says the Debtors' continued right to use the Molds is necessary to the Debtors' reorganization efforts in that the molds are used in the RT Program to manufacture parts for various Chrysler vehicles. The Debtors' revenue from this program amounts to approximately $15,000,000 annually. At this stage of the reorganization process, Mr. Galardi relates, the Debtors continue to produce parts for Chrysler using the Molds, and have been negotiating with Chrysler for continued production of component parts for a period of time. Mr. Galardi states that, conversely, Roush cannot demonstrate it will suffer any legally cognizable harm if the motion is denied as any harm would be monetary harm at best. He notes that monetary damages, even if significant, do not constitute irreparable harm. Additionally, pursuant to Michigan Law, Roush's U.C.C. financing statement is seriously misleading and, therefore, ineffective, Mr. Galardi avers. The Financing Statement identifies "Plastech" as the organization name, instead of "Plastech Engineered Products, Inc.", he reiterates. 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 Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) About Chrysler LLC Based in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter on Nov. 12, 2007, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Chrysler LLC and DaimlerChrysler Financial Services Americas LLC and removed it from CreditWatch with positive implications, where it was placed Sept. 26, 2007. S&P said the outlook is negative. CHURCH & DWIGHT: Moody's Designates 'BB' Rating on Positive Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB' corporate credit and other ratings on Princeton, New Jersey-based Church & Dwight Co. Inc. on CreditWatch with positive implications. Approximately $855 million of funded debt was outstanding as of Dec. 31, 2007. The CreditWatch listing reflects improved credit measures and consistent cash generating ability that has allowed the company to reduce debt. "Despite an expected moderate increase in debt as a result of the planned $380 million Orajel and other over-the- counter brands acquisition from Coty Inc.," said Standard & Poor's credit analyst Patrick Jeffrey, "the company continues to demonstrate stable operating performance and has reduced leverage below 3x, consistent with levels we would consider for a higher rating." The Orajel transaction is expected to be funded with a combination of bank debt and cash on hand. As of Dec. 31, 2007, Church & Dwight had about $250 million of cash and generated about $200 million of free cash flow in fiscal 2007. Additionally, debt leverage improved in fiscal 2007 to 2.5x from 3.0x in fiscal 2006. "We do not expect existing credit measures to change materially following the Orajel acquisition given the combination of debt and cash financing," said Mr. Jeffrey Standard & Poor's will meet with management to discuss the planned Orajel acquisition, and the company's overall operations and future financial policy. It is unlikely that the existing ratings would be raised more than one notch as part of this review. CITIGROUP MORTGAGE: Fitch Chips Ratings on $721.6MM Certificates ---------------------------------------------------------------- Fitch Ratings has taken rating actions on Citigroup Mortgage Loan Trust 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 $747.2 million and downgrades total $721.6 million. Additionally, $236.6 million was placed on Rating Watch Negative. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: Citigroup Mortgage Loan Trust 2005-HE1 -- $10.2 million class A-1A affirmed at 'AAA', (BL: 97.52, LCR: 2.42); -- $1.1 million class A-1B affirmed at 'AAA', (BL: 97.53, LCR: 2.42); -- $5.4 million class A-2A affirmed at 'AAA', (BL: 97.70, LCR: 2.43); -- $6.4 million class A-3D affirmed at 'AAA', (BL: 98.58, LCR: 2.45); -- $42.6 million class M1 rated 'AA+', placed on Rating Watch Negative (BL: 79.65, LCR: 1.98); -- $22.9 million class M2 downgraded to 'A' from 'AA' (BL: 68.22, LCR: 1.69); -- $45.1 million class M3 downgraded to 'B' from 'A' (BL: 45.19, LCR: 1.12); -- $12.7 million class M4 downgraded to 'CCC/DR3' from 'A-' (BL: 38.64, LCR: 0.96); -- $11.9 million class M5 downgraded to 'CCC/DR5' from 'BBB+' (BL: 32.34, LCR: 0.8); -- $9.4 million class M6 downgraded to 'CC/DR5' from 'BBB-' (BL: 27.37, LCR: 0.68); -- $7.8 million class M7 downgraded to 'CC/DR6' from 'BB' (BL: 23.19, LCR: 0.58); -- $7.4 million class M8 downgraded to 'C/DR6' from 'B' (BL: 19.32, LCR: 0.48); -- $8.6 million class M9 downgraded to 'C/DR6' from 'CCC' (BL: 15.44, LCR: 0.38); Deal Summary -- Originators: WMC (69.05%), Argent/Olympus (20.82%), MortgageIT (10.02%) -- 60+ day Delinquency: 57.02% -- Realized Losses to date (% of Original Balance): 2.19% -- Expected Remaining Losses (% of Current balance): 40.28% -- Cumulative Expected Losses (% of Original Balance): 11.98% Citigroup Mortgage Loan Trust 2005-HE3 -- $69.4 million class A-1 affirmed at 'AAA', (BL: 72.90, LCR: 2.2); -- $54.4 million class A-2C affirmed at 'AAA', (BL: 89.31, LCR: 2.69); -- $88.1 million class A-2D affirmed at 'AAA', (BL: 72.68, LCR: 2.19); -- $55.7 million class M-1 rated 'AA+', placed on Rating Watch Negative (BL: 61.45, LCR: 1.85); -- $52.0 million class M-2 downgraded to 'A' from 'AA' (BL: 52.33, LCR: 1.58); -- $34.9 million class M-3 downgraded to 'BB' from 'AA' (BL: 45.80, LCR: 1.38); -- $25.2 million class M-4 downgraded to 'BB' from 'AA-' (BL: 41.03, LCR: 1.24); -- $24.5 million class M-5 downgraded to 'B' from 'BBB+' (BL: 36.39, LCR: 1.1); -- $22.3 million class M-6 downgraded to 'CCC/DR5' from 'BBB' (BL: 32.08, LCR: 0.97); -- $22.3 million class M-7 downgraded to 'CCC/DR5' from 'BB' (BL: 27.63, LCR: 0.83); -- $17.8 million class M-8 downgraded to 'CC/DR5' from 'B' (BL: 24.05, LCR: 0.73); -- $14.1 million class M-9 downgraded to 'CC/DR5' from 'B' (BL: 21.08, LCR: 0.64); -- $14.1 million class M-10 revised to 'C/DR6' from 'C/DR5' (BL: 18.06, LCR: 0.54); -- $12.6 million class M-11 revised to 'C/DR6' from 'C/DR5' (BL: 15.55, LCR: 0.47); -- $20.0 million class M-12 revised to 'C/DR6' from 'C/DR5' (BL: 11.97, LCR: 0.36); Deal Summary -- Originators: WMC (GI/GII = 82.97%/77.24%), MortgageIT (GI/GII = 4.70%/8.62%), First Horizon (GI/GII = 6.09%/5.21%), Accredited (GI/GII = 3.89%/5.19%) and IMPAC (GI/GII = 2.35%/3.74%) -- 60+ day Delinquency: 40.72% -- Realized Losses to date (% of Original Balance): 2.47% -- Expected Remaining Losses (% of Current balance): 33.15% -- Cumulative Expected Losses (% of Original Balance): 14.47% Citigroup Mortgage Loan Trust 2005-HE4 -- $92.8 million class A-1 rated 'AAA', placed on Rating Watch Negative (BL: 60.68, LCR: 1.98); -- $16.0 million class A-2B affirmed at 'AAA', (BL: 96.55, LCR: 3.15); -- $63.3 million class A-2C affirmed at 'AAA', (BL: 66.68, LCR: 2.18); -- $45.5 million class A-2D rated 'AAA', placed on Rating Watch Negative (BL: 58.64, LCR: 1.91); -- $33.7 million class M-1 downgraded to 'BBB' from 'AA+' (BL: 50.95, LCR: 1.66); -- $31.0 million class M-2 downgraded to 'BB' from 'AA' (BL: 43.59, LCR: 1.42); -- $21.7 million class M-3 downgraded to 'BB' from 'AA' (BL: 38.28, LCR: 1.25); -- $14.3 million class M-4 downgraded to 'B' from 'AA-' (BL: 34.71, LCR: 1.13); -- $14.8 million class M-5 downgraded to 'B' from 'A+' (BL: 31.00, LCR: 1.01); -- $12.5 million class M-6 downgraded to 'CCC/DR5' from 'A-' (BL: 27.77, LCR: 0.91); -- $11.1 million class M-7 downgraded to 'CCC/DR5' from 'BBB+' (BL: 24.71, LCR: 0.81); -- $11.1 million class M-8 downgraded to 'CC/DR5' from 'BBB-' (BL: 21.66, LCR: 0.71); -- $11.1 million class M-9 downgraded to 'CC/DR5' from 'BB' (BL: 18.59, LCR: 0.61); -- $6.0 million class M-10 downgraded to 'CC/DR6' from 'B+' (BL: 17.02, LCR: 0.56); -- $4.6 million class M-11 downgraded to 'CC/DR6' from 'B+' (BL: 15.80, LCR: 0.52); -- $12.0 million class M-12 downgraded to 'C/DR6' from 'CCC' (BL: 12.46, LCR: 0.41); Deal Summary -- Originators: Argent Mortgage Company, LLC (GI/GII = 86.32%/80.76%), MortgageIT, Inc. (GI/GII = 13.68%/19.24%) -- 60+ day Delinquency: 34.55% -- Realized Losses to date (% of Original Balance): 1.56% -- Expected Remaining Losses (% of Current balance): 30.65% -- Cumulative Expected Losses (% of Original Balance): 15.23% Citigroup Mortgage Loan Trust 2005-OPT1 -- $26.9 million class M1 affirmed at 'AA+', (BL: 89.18, LCR: 5.21); -- $24.0 million class M2 affirmed at 'AA', (BL: 72.04, LCR: 4.21); -- $15.5 million class M3 affirmed at 'AA-', (BL: 32.31, LCR: 1.89); -- $13.4 million class M4 downgraded to 'BBB' from 'A+' (BL: 28.17, LCR: 1.65); -- $13.0 million class M5 downgraded to 'BB' from 'A' (BL: 24.37, LCR: 1.43); -- $11.8 million class M6 downgraded to 'B' from 'A-' (BL: 20.51, LCR: 1.2); -- $10.2 million class M7 downgraded to 'B' from 'BBB+' (BL: 17.94, LCR: 1.05); -- $6.5 million class M8 downgraded to 'CCC/DR2' from 'BBB' (BL: 16.17, LCR: 0.95); -- $8.1 million class M9 downgraded to 'CCC/DR2' from 'BBB-' (BL: 14.06, LCR: 0.82); -- $9.0 million class M10 downgraded to 'CC/DR3' from 'BB+' (BL: 12.36, LCR: 0.72); Deal Summary -- Originators: Option One 100% -- 60+ day Delinquency: 29.51% -- Realized Losses to date (% of Original Balance): 0.77% -- Expected Remaining Losses (% of Current balance): 17.10% -- Cumulative Expected Losses (% of Original Balance): 4.14% Citigroup Mortgage Loan Trust 2005-OPT3 -- $47.5 million class A-1D affirmed at 'AAA', (BL: 91.09, LCR: 4.1); -- $41.3 million class M1 affirmed at 'AA+', (BL: 75.75, LCR: 3.41); -- $29.7 million class M2 affirmed at 'AA', (BL: 64.17, LCR: 2.89); -- $17.6 million class M3 affirmed at 'AA', (BL: 57.06, LCR: 2.57); -- $16.7 million class M4 affirmed at 'A+', (BL: 48.67, LCR: 2.19); -- $15.3 million class M5 affirmed at 'A', (BL: 43.29, LCR: 1.95); -- $13.9 million class M6 downgraded to 'BBB' from 'A' (BL: 37.99, LCR: 1.71); -- $13.0 million class M7 downgraded to 'BB' from 'A-' (BL: 32.70, LCR: 1.47); -- $11.1 million class M8 downgraded to 'BB' from 'BBB+' (BL: 28.09, LCR: 1.26); -- $7.4 million class M9 downgraded to 'B' from 'BBB' (BL: 24.98, LCR: 1.12); -- $6.0 million class M10 downgraded to 'B' from 'BB' (BL: 22.54, LCR: 1.01); -- $9.3 million class M11 remains at 'C/DR4' (BL: 19.44, LCR: 0.88); Deal Summary -- Originators: Option One Mortgage Corp. 100 -- 60+ day Delinquency: 32.44% -- Realized Losses to date (% of Original Balance): 0.63% -- Expected Remaining Losses (% of Current balance): 22.21% -- Cumulative Expected Losses (% of Original Balance): 6.69% Citigroup Mortgage Loan Trust 2005-OPT4 -- $28.8 million class A-1 affirmed at 'AAA', (BL: 84.86, LCR: 3.81); -- $4.2 million class A-2C affirmed at 'AAA', (BL: 99.33, LCR: 4.46); -- $49.7 million class A-2D affirmed at 'AAA', (BL: 81.61, LCR: 3.66); -- $35.0 million class M-1 affirmed at 'AA+', (BL: 70.13, LCR: 3.15); -- $31.1 million class M-2 affirmed at 'AA+', (BL: 59.59, LCR: 2.67); -- $18.5 million class M-3 affirmed at 'AA', (BL: 51.77, LCR: 2.32); -- $16.5 million class M-4 affirmed at 'AA-', (BL: 46.77, LCR: 2.1); -- $14.6 million class M-5 affirmed at 'A+', (BL: 42.06, LCR: 1.89); -- $14.6 million class M-6 downgraded to 'BBB' from 'A' (BL: 37.06, LCR: 1.66); -- $12.1 million class M-7 downgraded to 'BB' from 'A-' (BL: 32.64, LCR: 1.46); -- $10.7 million class M-8 downgraded to 'BB' from 'BBB+' (BL: 28.71, LCR: 1.29); -- $7.8 million class M-9 downgraded to 'B' from 'BBB' (BL: 25.74, LCR: 1.16); -- $7.3 million class M-10 downgraded to 'B' from 'BBB' (BL: 22.94, LCR: 1.03); -- $9.7 million class M-11 downgraded to 'CCC/DR4' from 'BBB-' (BL: 19.30, LCR: 0.87); -- $13.1 million class M-12 downgraded to 'CC/DR5' from 'B' (BL: 14.44, LCR: 0.65); -- $9.7 million class M-13 remains at 'C/DR5' (BL: 11.18, LCR: 0.5); Deal Summary -- Originators: Option One Mortgage Corporation 100% -- 60+ day Delinquency: 31.98% -- Realized Losses to date (% of Original Balance): 0.95% -- Expected Remaining Losses (% of Current balance): 22.28% -- Cumulative Expected Losses (% of Original Balance): 7.72% 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 2005 with regard to continued poor loan performance and home price weakness. CLEAR CHANNEL: Judge Remands Merger Deal to Texas State Court ------------------------------------------------------------- The Honorable Orlando L. Garcia of the U.S. District Court for the Western District of Texas ruled in favor of Clear Channel Communications, Inc. and its proposed buyer CC Media Holdings Inc., denying the request of a consortium of banks led by Citigroup Inc. to transfer a case related to the sale from the Texas state court to a federal court, according to various news reports. As reported in the Troubled Company Reporter on March 27, 2008, CC Media Holdings Inc., a corporation formed by private-equity funds co-sponsored by Thomas H. Lee Partners LP and Bain Capital LLC, sued a group of banks that promised to finance the $19 billion Clear Channel acquisition to compel them to honor the agreement. CC Media filed complaints in New York state court in Manhattan and in Bexar County, Texas. The firms alleged the backers breached a contract entered in May to fund the deal. Clear Channel joined the suit in Texas. The New York case wants a judge to order the banks to provide the promised loans. In Texas, Clear Channel asked for an order banning the banks from interfering with the merger agreement and sought more than $26 billion in damages. The main New York case on the Clear Channel buyout is BT Triple Crown Merger Co. v. Citigroup, 08-600899, New York State Supreme Court, County of New York (Manhattan). The Texas case is Clear Channel Communications Inc. and CC Media Holdings Inc. v. Citigroup, 2008-CI-04864, Texas District Court, Bexar County, Texas. As previously reported in the TCR, the privatization of Clear Channel appeared in danger of collapsing after the backers reportedly failed to reach agreement on the final financing of the transaction. Clear Channel had anticipated closing the merger agreement by March 31, 2008. The company's shareholders approved the adoption of the merger agreement, as amended. The deal includes $19.4 billion of equity and $7.7 billion of debt. Talks between the buyout firms and their banks reportedly became mired over details of the credit agreement. The banks that agreed to finance the deal include Citigroup Inc., Morgan Stanley, Deutsche Bank AG, Credit Suisse Group, Royal Bank of Scotland PLC and Wachovia Corp. The main dispute centers on the syndicate's demand that the private-equity firms replace a long-term financing package of at least six years in the original agreement with a short-term, three-year bridge-financing agreement; and a condition that the buyers not use a revolving credit facility or Clear Channel's cash flow to pay down about $3.8 billion in short-term debt securities. A full-text copy of the Judge Garcia's ruling is available for free at http://ResearchArchives.com/t/s?29ec Based in San Antonio, Texas, Clear Channel Communications Inc. (NYSE:CCU) -- http://www.clearchannel.com/-- is a media and entertainment company specializing in "gone from home" entertainment and information services for local communities and premiere opportunities for advertisers. The company's businesses include radio, television and outdoor displays. Outside U.S., the company operates in 11 countries -- Norway, Denmark, the United Kingdom, Singapore, China, the Czech Republic, Switzerland, the Netherlands, Australia, Mexico and New Zealand. As of Dec. 31, 2007, it owned 717 core radio stations, 288 non-core radio stations which are being marketed for sale and a leading national radio network operating in the United States. * * * As reported in the Troubled Company Reporter on March 28, 2008, Standard & Poor's Ratings Services said its ratings on Clear Channel Communications Inc., including the 'B+' corporate credit rating, remain on CreditWatch with negative implications. Fitch Ratings stated that in line with previous guidance, Clear Channel Communications' 'BB-' Issuer Default Rating and Senior Unsecured Ratings would remain in place if the going-private transaction is not completed. Moody's stated that assuming the transaction is completed as currently contemplated, Clear Channel will likely be assigned a Corporate Family Rating of B2 and the rating on the existing senior notes is likely to be notched down to Caa1 based on their expected subordination to the new senior secured debt facilities and the new senior notes. COLONIAL PROPERTIES: Fitch Holds 'BB+' Rating on Preferred Stock ---------------------------------------------------------------- Fitch Ratings has affirmed these ratings of Colonial Properties Trust and its operating partnership, Colonial Realty Limited Partnership as: Colonial Properties Trust -- Issuer Default Rating at 'BBB-'; -- $125.0 million of preferred stock at 'BB+'; Colonial Realty Limited Partnership -- IDR at 'BBB-'; -- $675.0 million unsecured credit facility at 'BBB-'; -- $1.5 billion of senior unsecured notes at 'BBB-'; -- $45.0 million of unsecured medium term notes at 'BBB-' -- $100.0 million of preferred stock at 'BB+'. The Rating Outlook is Stable. The rating affirmations center on the company's successful transition towards primarily owning multifamily properties throughout the Sunbelt region of the United States. Of the company's 108 stabilized and consolidated multifamily, office and retail properties, 104 were unencumbered from mortgages as of Dec. 31, 2007, a credit strength incorporated into CLP's bond ratings. However, the company has an interest in a total of 200 properties, and the unconsolidated property portfolio was entirely encumbered as of Dec. 31, 2007. However, CLP's consolidated unencumbered asset coverage of unsecured debt level of 2.1 times as of Dec. 31, 2007, is appropriate for the 'BBB-' rating level. The ratings further reflect CLP's balance sheet and liquidity position. The company's capital level on a risk-adjusted basis remains adequate for the rating category, while CLP's 2007 debt- to-EBITDA ratio of 8.1x is also good when compared to that of other multifamily-focused REITs. Additionally, in January 2008, CLP increased its borrowing capacity under its line of credit to $675.0 million from $500.0 million, a prudent shift strengthening CLP's liquidity given that during the past several months, the real estate debt capital markets have remained inhospitable to virtually all issuers. The affirmations recognize certain credit concerns, including declining fixed-charge coverage ratios, a high Funds From Operations payout ratio, and material impairments incurred in 2007 associated with CLP's residential-for-sale business. Fitch notes that CLP's same-property NOI in the company's multifamily portfolio grew 5.2% in 2007 and that occupancy levels in the 95%-96% range in the multifamily segment are solid. However, Fitch calculates CLP's fixed charge coverage ratio at 1.3x in 2007, 1.3x in 2006 and 1.4x in 2005, and notes that a ratio of 1.5x would be more consistent with the 'BBB-' IDR. A decline in FFO payout ratios to below 100.0% would also serve to benefit CLP's credit ratings, as Fitch calculates the 2007 FFO payout ratio as 167.7%. In addition, any further impairments associated with CLP's existing residential-for-sale business would decrease the company's earnings power, but would not affect the company's ratings. The Stable Rating Outlook reflects Fitch's view that CLP's development pipeline is modest considering the overall size of the Company's balance sheet. Furthermore, Colonial's unencumbered asset coverage, unencumbered net operating income to total net operating income, and overall leverage ratios are expected to remain appropriate for the 'BBB-' rating level during 2008 and 2009, despite the current uncertainty and inactivity within the real estate capital markets. Colonial is a self-administered equity REIT headquartered in Birmingham, Alabama. As of Dec. 31, 2007, the company had $3.5 billion in undepreciated book assets and $1.5 billion in undepreciated book equity. As of Dec. 31, 2007, CLP's activities include full or partial ownership of a portfolio of 200 properties, located in Alabama, Arizona, California, Florida, Georgia, Maryland, North Carolina, South Carolina, Tennessee, Texas, and Virginia, development of new properties, acquisition of existing properties, build-to-suit development, and the provision of management, leasing, and brokerage services for commercial real estate. COMFORCE CORP: December 30 Balance Sheet Upside-Down by $9 Million ------------------------------------------------------------------ COMFORCE Corporation's balance sheet at Dec. 30, 2007, showed total assets of $183.384 million and total liabilities of $192.887 million, resulting to total stockholders' deficit of $9.503 million. The company reported results for the fourth quarter and year ended Dec. 30, 2007. The company recorded net income of $2.2 million, including $1 million from discontinued operations, which represents a settlement payment received in November of 2007 from the buyer of the company's niche telecom operations which was sold in 2004, compared to net income of $1.9 million for the same quarter last year. COMFORCE reported net income of $6 million for the fiscal year ended Dec. 30, 2007, including $1 million from discontinued operations, which represents a settlement payment received in November of 2007 from the buyer of its niche telecom operations which was sold in 2004 compared to net income of $4.1 million for fiscal 2006. "We are pleased with our . . . net income," John Fanning, chairman and chief executive office of COMFORCE commented. "For the quarter PRO's gross profit increased to $12.1 million, up from $11.6 million for the same period last year. This segment of our business continues to expand upon its full range of vendor neutral human capital management services offerings to leading Fortune 1000 companies, and we anticipate further growth in 2008. We are also pleased that our interest expense for the year was down by $1.7 million and our public debt is now $11.7 million. "We remain optimistic about COMFORCE's prospects, especially as it relates to PRO for 2008," Mr. Fanning concluded. About COMFORCE Corp. Headquartered in Woodbury, New York, COMFORCE Corporation (Amex: CFS) -- http://www.comforce.com/-- provides utsourced staffing management services that enable Fortune 1000 companies and other large employers to consolidate, automate and manage staffing, compliance and oversight processes for their contingent workforces. The company also provides specialty staffing, consulting and other outsourcing services to Fortune 1000 companies and other large employers for their healthcare support services, technical and engineering, information technology, telecommunications and other staffing needs. The company operates in three segments -- Human Capital Management Services, Staff Augmentation and Financial Outsourcing Services. COMSTOCK HOMEBUILDING: PwC Expresses Going Concern Doubt -------------------------------------------------------- PricewaterhouseCoopers LLP raised substantial doubt about the ability of Comstock Homebuilding Companies, Inc., to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2007. The auditor pointed stated that the company has experienced declining market conditions and has significant debt maturing during 2008. Results of Operations For the year ended Dec. 31, 2007, the company generated $266.1 million in total revenues and incurred $87.5 million net loss, as compared with $245.9 million total revenues and $39.8 million net loss for the year ended Dec. 31, 2006. Gross new order revenue for the year ended Dec. 31, 2007 decreased $50.0 million, or 20.2%, to $197.9 million on 827 homes as compared to $247.9 million on 965 homes for the year ended Dec. 31, 2006. Net new orders for the year ended Dec. 31, 2007, decreased $82.9 million, or 42.6%, to $111.8 million on 613 homes as compared to $194.7 million on 794 homes for the year ended Dec. 31, 2006. In addition, the company's average cancellation rate for the year ended Dec. 31, 2007, was around 25.9% on 827 gross new orders compared to cancellation rate of 17.7% on 965 gross new orders for the comparable period in 2006. Cancellations were most prevalent in the greater Washington, DC market where it experienced 162 cancellations on 559 gross new orders or 29.0%. Management enumerated that cost of sales for the year ended Dec. 31, 2007 decreased $300,000, or 0.1%, to $211.1 million, or 90.7% of homebuilding revenue, as compared to $211.4 million, or 88.1% of revenue, for the year ended Dec. 31, 2006. The 2.6 percentage point increase in cost of sales as a percentage of homebuilding revenue for the year ended Dec. 31, 2007 is attributable to several factors. "Due to weakening market conditions, we have extended the sales cycle of many of our projects, which has in turn increased direct costs per unit by increasing the amount of real estate tax, interest and overhead capitalized to the project. In many cases, since we relieve our capitalized costs pro-rata to the individual lots, fewer remaining lots must absorb the increased costs. As a result, per unit costs go up. In addition, we have experienced pricing concessions and increases in seller closing cost contributions. This percentage point increase in cost of sales was partially offset by the classification of a portion of the cost of sales as impairments and write-offs during the first three quarters of 2007," management explained. Cost of sales other for the year ended Dec. 31, 2007 increased by $29.0 million, or 557.7% to $34.2 million, as compared to $5.2 million for the year ended Dec. 31, 2006. The company, for the year ended Dec. 31, 2007 and 2006, recorded impairment charges of $68.8 and $51.2 million, respectively. For the year ended Dec. 31, 2007 the company wrote-off $9.5 million related to deposits on forfeited option contacts, value assigned to forfeited option contracts and related feasibility costs as compared to $6.2 million for the year ended Dec. 31 2006. Based on management's assessment of current market conditions and estimates for the future, the company believes there are no additional impairments warranted at this time. However, if market conditions continue to deteriorate or actual costs are higher than budgeted, the company would be required to re-evaluate the recoverability of its real estate held for development and sale and may incur additional impairment charges. Total impairments and write-offs were taken in all of the company's geographic regions, with nearly $35.0 million, $10.2 million and $33.1 million in the Washington metro area, North Carolina and Georgia, respectively. The majority of the company's impairments, $61.4 million, were recorded at Sept. 30, 2007, based on the continuing need for price concession the weakening of pricing power and increasing inventory costs resulting from the capitalization of interest, overheads and real estate taxes. At Dec. 31, 2007, the company had approximately $200,000 related to non-refundable option deposits to purchase real estate. The company is in the process of re-negotiating its remaining option contracts for both price concessions and deferral of scheduled lot purchases. The company could incur additional write downs in the event the company is not successful in renegotiating terms of existing option contracts and chooses to cancel its option and not close on the underlying land. Balance Sheet Data The company posted a net loss of $87,510,000 on total revenues of $266,159,000 for the year ended Dec. 31, 2007, as compared with a net loss of $39,845,000 on total revenues of $245,881,000 in the prior year. At Dec. 31, 2007, the company's balance sheet showed $258,976,000 in total assets, $212,226,000 in total liabilities, and $46,519,000 stockholders' equity. At Dec. 31, 2007, the company has incurred accumulated deficit of $107,219,000. A full-text copy of the company's 2007 annual report is available for free at: http://ResearchArchives.com/t/s?29be About Comstock Homebuilding Comstock Homebuilding Companies, Inc., (NasdaqGM: CHCI) -- http://www.comstockhomebuilding.com-- develops, builds and markets single-family homes, townhouses and condominiums in the Washington D.C., Raleigh, North Carolina and Atlanta, Georgia metropolitan markets. The Company also provides certain management and administrative support services to certain related parties. COMUNIDAD KENSINGTON: Case Summary & 20 Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: Comunidad Kensington Club I, LLC 11451 Katy Freeway Suite 501 Houston, TX 77079 Bankruptcy Case No.: 08-32127 Type of Business: The Debtor is a real estate corporation. Chapter 11 Petition Date: March 31, 2008 Court: Southern District of Texas (Houston) Judge: Karen K. Brown Debtor's Counsel: H. Miles Cohn, Esq. Sheiness Scott et al 1001 McKinney Suite 1400 Houston, TX 77002 Tel: (713) 374-7020 Fax: (713) 374-7049 mcohn@hou-law.com Estimated Assets: $1 million to 10 million Estimated Debts: $1 million to 10 million Debtor's list of its 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Kensington Club Apartments Ltd. $3,535,121 11451 Katy Freeway, Suite 501 Houston, TX 77079 202 Management Company, Inc. $102,500 3100 Monticello, Suite 300 Dallas, TX 75205 St. Johns Holding inc. $102,500 12143 Leuders Lane Dallas, TX 75230 Michael Neary $102,500 Mikob Properties, Inc. $96,776 International Realty Concepts $69,240 Thomas R. Hendricks $41,544 LGC Legacy Commercial Group $27,696 Texas Best Painting $19,217 Castro Landscaping $9,000 Hoover Slovacek LLP $4,796 Rencon LLC $4,668 J.C. Painting $3,925 Andrea Herndon $3,500 Office Depot $1,161 Century AC Supply Inc. $2,348 Mueller Water $2,112 Kensington Club Partners $1,908 Move For Free.Com, Inc. $729 Apartment for Rent $651 COSINE COMMUNICATIONS: Burr Pilger Raises Substantial Doubt ----------------------------------------------------------- Burr, Pilger & Mayer LLP in Palo Alto, Calif., raised substantial doubt about CoSine Communications, Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm pointed to the company's actions in September 2004 in connection with its ongoing evaluation of strategic alternatives, to terminate most of its employees and discontinue production activities in an effort to conserve cash. Financials For the year ended Dec. 31, 2007, the company reported net income of $416,000. This was mainly from the interest income it received totaling $1,180,000 since the company has no revenue for the year. For the whole year of 2006, the company reported net income of $449,000. The company had $1,361,000 of total revenues and received $1,101,000 of interest income for that year. At Dec. 31, 2007, the company's balance sheet showed $23,231,000 in total assets, $301,000 in total liabilities, and $22,930,000 in total stockholders' equity. A full-text copy of the company's 2007 annual report is available for free at http://ResearchArchives.com/t/s?29a7 About CoSine Communications Based in San Jose, Calif., CoSine Communications, Inc. (OTC: COSN.PK) -- http://www.cosinecom.com/-- used to be a provider of carrier network equipment products and services, until the fourth quarter of 2004 when it decided to discontinue these product lines. In 2006, the company completed the wrap-up of its carrier services business. The company also sold the remaining assets of its carrier network products business with the sale of its patent portfolio in March 2006 and the sale of the rights to the related intellectual property in November 2006. COUNTRYWIDE FINANCIAL: Mozilo, Sambol to Get $19MM in Stock Payout ------------------------------------------------------------------ Executives at Countrywide Financial Corp. are slated to get a combined $19 million in stock as part of their executive compensation agreements with the company, as disclosed in an S-4/A filing by Bank of America N.A. with the U.S. Securities and Exchange Commission. Pursuant to an employment agreement, in the ordinary course, CEO Angelo Mozilo is entitled to an annual equity award with a grant- date value of approximately $10 million. This award will consist of performance-based restricted stock units and stock appreciation rights and will have terms consistent with Mr. Mozilo's employment agreement, including full vesting upon a change in control of Countrywide. Mr. Mozilo's employment agreement subjects him to an ongoing confidentiality obligation and a 24-month post-employment -- or, if later, post-directorship -- non-solicitation and non- interference covenant with respect to Countrywide's employees, customers and material business relationships. President David Sambol is also entitled to an annual equity award with a grant-date value of approximately $9 million. The company has conditioned the payment of termination amounts and benefits to Mr. Sambol upon his delivery of a full release of claims in form and substance satisfactory to the board of directors of Countrywide. Additionally, pursuant to his employment agreement, Mr. Sambol is subject to an ongoing confidentiality obligation, a 12-month post-employment non- competition covenant and a 12-month post-employment non- solicitation covenant with respect to Countrywide's employees and customers. Upon completion of the merger, Mr. Sambol's employment agreement will be superseded by a new retention agreement with the merger pact. The retention agreement will provide Mr. Sambol with a retention account that becomes vested and payable over two years in lieu of cash severance payments Mr. Sambol would have been entitled to receive under his employment agreement in the event of certain qualifying terminations following a change in control of Countrywide. The retention agreement will also provide certain other benefits in the event of certain qualifying terminations consistent with those provided under his current employment agreement. As a result, Mr. Sambol will not receive any payments or benefits under his current employment agreement following completion of the merger. About Countrywide Financial Based in Calabasas, California, Countrywide Financial Corporation (NYSE: CFC) -- http://www.countrywide.com/-- is a diversified financial services provider and a member of the S&P 500, Forbes 2000 and Fortune 500. Through its family of companies, Countrywide originates, purchases, securitizes, sells, and services residential and commercial loans; provides loan closing services such as credit reports, appraisals and flood determinations; offers banking services which include depository and home loan products; conducts fixed income securities underwriting and trading activities; provides property, life and casualty insurance; and manages a captive mortgage reinsurance company. * * * As reported in the Troubled Company Reporter on Jan. 15, 2008, Moody's placed the ratings of Countrywide Financial Corporation and its subsidiaries under review for upgrade. CFC and Countrywide Home Loans senior debt is rated Baa3 and short-term debt is rated Prime-3. Countrywide Bank FSB's bank financial strength rating is C-, deposits are rated Baa1 and short-term debt Prime-2. All long and short-term ratings are placed under review for possible upgrade. CREATIVE GROUP: Seeks Okay to Sell Assets to Scorpion for $17MM --------------------------------------------------------------- Creative Group Inc. is seeking approval from the U.S. Bankruptcy Court for the Southern District of New York to sell its asset to Scorpion Capital Partners for $17 million, Christopher Scinta of Bloomberg News reports. Creative requires interested bidders to submit their offers by June 13, 2008, followed by a sale hearing on June 19, 2008, Mr. Scinta says. Creative, Mr. Scinta notes, will pay a 3% break-up fee to Scorpion Capital, if outbid. Creative intends to pay loans from Signature Bank and Allied Capital, according to Bloomberg. Creative owed $16.6 million to Signature and $15 million in 12% subordinated notes to Allied. A Scorpion affiliate expresses its willingness to pay the monies owed to Signature. It also agrees to pay costs to cure any disputed contracts and, to the extent possible, if any, assume some debts. About Creative Group Headquartered in New York, Creative Group Inc. and eight of its affiliates filed for Chapter 11 protection on March 21, 2008 (Bankr. S.D.N.Y. Lead Case No.08-10975). Kenneth A. Rosen, Esq., at Lowenstein Sandler PC, represents the Debtors. When the Debtors filed for protection against their creditors, they listed assets between $1,000,001 to $10 million. CRISLAN BASSENGER: Case Summary & 15 Largest Unsecured Creditors ---------------------------------------------------------------- Debtors: Crislan Rudolph Joseph Bassenger aka Cris Bassenger Billie Sue Bassenger 3911 Audobon Drive East Mobile, AL 36619 Bankruptcy Case No.: 08-11043 Chapter 11 Petition Date: March 27, 2008 Court: Southern District of Alabama (Mobile) Debtors' Counsel: C. Michael Smith, Esq. 150 South Dearborn Street Mobile, AL 36602-1606 Tel: (251) 433-0588 paulandsmithpc@earthlink.net Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million Debtors' list of their 15 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bank of America Revolving charge $78,722 P.O. Box 15026 for business Wilmington, DE 19850-5026 expenses Discover Financial Services Revolving charge $21,962 P.O. Box 15255 for business Wilmington, DE 19886-5255 expenses Citi Platinum Select Services Revolving charge $11,835 P.O. Box 6500 for business Sioux Falls, SD 57117-6500 expenses Discover Card Revolving charge $9,580 for business expenses Sears Cards / Citi Cards Revolving charge $9,395 for miscellaneous expenses Mobile County Revenue Property taxes due $8,638 for Columbus Avenue Dawes Extension Alabama Telco Credit Union - $8,500 Quick Line American Express Revolving charge $6,131 for business expenses Lowes Revolving charge $5,607 for business expenses Alabama Power Company Utility Services $5,239 Alabama Telco Visa Revolving charge $5,060 for miscellaneous purchases Melissa Donia Personal loan for $5,000 Miscellaneous purchases Alabama Central Credit Union 2005 California Ultra $24,588 Chopper Mac Daddy ($20,000 300 secured) Capital One Revolving charge $3,797 for miscellaneous purchases MAWSS Water bills $3,331 CRYOCOR INC: Ernst & Young Raises Substantial Doubt --------------------------------------------------- Ernst & Young LLP in San Diego raised substantial doubt CryoCor, Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm pointed to the company's accumulated deficit of $100.8 million and working capital of $5.2 million. For the year ended Dec. 31, 2007, the company reported a $15,756,000 net loss on $591,000 of total revenues as compared with a $15,052,000 net loss on $540,000 of total revenues for the same period in 2006. At Dec. 31, 2007, the company's balance sheet showed $15,046,000 in total assets, $8,700,000 in total liabilities, and $6,346,000 in total stockholders' equity. A full-text copy of the company's 2007 annual report is available for free at http://ResearchArchives.com/t/s?29a8 Based in San Diego, CryoCor, Inc. (NASDAQ:CRYO) -- http://www.cryocor.com/-- is a medical technology company that has developed and manufactures a minimally invasive, disposable catheter system based on proprietary cryoablation technology for the treatment of cardiac arrhythmias. In 2001, the company established a wholly owned German subsidiary, CryoCor GmbH, in order to market and support its products in the European community. In 2002, the company received European regulatory approval for the commercial sale of its products. In November 2005, the company announced its intention to close CryoCor GmbH and sell its products in Europe solely through European distributors. CSFB HOME: 44 Certificate Classes Get Moody's Rating Downgrades --------------------------------------------------------------- Moody's Investors Service downgraded 44 certificates and maintained on review for possible further downgrade 16 of those classes of certificates from five transactions issued by CSFB Home Equity Mortgage Trust. The transactions are backed by second lien loans. The certificates were downgraded because the bonds' credit enhancement levels, including excess spread and subordination were low compared to the current projected loss numbers at the previous rating levels. The actions take into account the continued and worsening performance of transactions backed by closed-end-second collateral. Substantial pool losses of over the last few months have eroded credit enhancement available to the mezzanine and senior certificates. Despite the large amount of write-offs due to losses, delinquency pipelines have remained high as borrowers continue to default. Complete rating actions are: Issuer: CSFB Home Equity Mortgage Trust 2006-3 -- Cl. A-1, Downgraded to Ba1 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. A-2, Downgraded to Ba3 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. A-3, Downgraded to B3 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-1, Downgraded to Caa2 from Baa2 -- Cl. M-2, Downgraded to Ca from Ba3 -- Cl. M-3, Downgraded to C from Caa2 -- Cl. M-4, Downgraded to C from Ca Issuer: CSFB Home Equity Mortgage Trust 2006-4 -- Cl. A-1, Downgraded to Ba1 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. A-2, Downgraded to Ba3 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. A-3, Downgraded to B3 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-1, Downgraded to Caa2 from Baa2 -- Cl. M-2, Downgraded to C from B2 -- Cl. M-3, Downgraded to C from Caa2 -- Cl. M-4, Downgraded to C from Ca Issuer: CSFB Home Equity Mortgage Trust 2006-6 -- Cl. 1A-1, Downgraded to B1 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. 2A-1, Downgraded to B1 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. 2A-2, Downgraded to B1 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. 2A-3, Downgraded to B1 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. M-1, Downgraded to Caa2 from Aa3 -- Cl. M-2, Downgraded to Ca from Ba2 -- Cl. M-3, Downgraded to C from B1 -- Cl. M-4, Downgraded to C from Caa2 -- Cl. M-5, Downgraded to C from Ca Issuer: Home Equity Mortgage Trust 2006-2 -- Cl. 1A-1, Downgraded to Aa3 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. 1A-2, Downgraded to A3 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. 1A-3, Downgraded to Ba1 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. 1M-1, Downgraded to Caa1 from Aa2 -- Cl. 1M-2, Downgraded to Caa3 from A2 -- Cl. 1M-3, Downgraded to Ca from Baa1 -- Cl. 1M-4, Downgraded to C from Baa3 -- Cl. 1M-5, Downgraded to C from Ba1 -- Cl. 1M-6, Downgraded to C from B1 -- Cl. 1M-7, Downgraded to C from Ca -- Cl. 2M-1, Downgraded to C from Baa2 -- Cl. 2M-2, Downgraded to C from Baa3 Issuer: Home Equity Mortgage Trust 2006-5 -- Cl. A-1, Downgraded to Ba1 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. A-2, Downgraded to Ba3 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. A-3, Downgraded to B3 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-1, Downgraded to Caa3 from Ba1 -- Cl. M-2, Downgraded to C from B2 -- Cl. M-3, Downgraded to C from Caa1 -- Cl. M-4, Downgraded to C from Caa3 -- Cl. M-5, Downgraded to C from Ca CSK AUTO: Moody's Reviews Rating for Likely Lift on O'Reilly Deal ----------------------------------------------------------------- Moody's Investors Service placed the ratings of CSK Auto Inc. on review for possible upgrade and affirmed the SGL-3 speculative grade liquidity rating. The review follows the announcement by CSK and O'Reilly Automotive, Inc. that the two companies have signed a definitive merger agreement under which O'Reilly will acquire all of the outstanding shares of CSK common stock. The value of the transaction is approximately $1 billion, including approximately $500 million of debt. O'Reilly has entered into a $1.2 billion asset based revolving credit facility which will be used to refinance any or all of CSK's debt, fund the cash portion of the consideration and transaction related fees and expenses, and provide liquidity for the combined company going forward. It is Moody's expectation that the combined company will have lower leverage and better credit metrics than CSK does on a stand- alone basis. Moody's review will focus on the strategic fit of the two companies, the integration challenges they may face, as well as the post-transaction capital structure and credit metrics. Ratings affirmed are: -- Speculative grade liquidity rating of SGL-3 Ratings placed on review for possible upgrade include: -- Probability of default rating at B1 -- Corporate family rating at B1 -- $350 million senior secured bank term loan at Ba3 -- $100 million senior unsecured convertible notes at B3 CSK Auto, Inc., headquartered in Phoenix, Arizona, is a leading dedicated retailer of automotive parts, with over 1300 stores in the U.S. CSK AUTO: $1BB O'Reilly Deal Cues S&P's B- Rating's Positive Watch ------------------------------------------------------------------ Standard & Poor's Ratings Services said that its ratings on Phoenix, Arizona-based CSK Auto Inc., including the 'B-' corporate credit rating, remain on CreditWatch with positive implications. CSK Auto was originally placed on CreditWatch with positive implications on Feb. 1, 2008. This action follows the announcement that O'Reilly Automotive Inc. will acquire parent company CSK Auto Corp. for approximately $1 billion, including the assumption of approximately $500 million of debt. This compares with a previous bid by O'Reilly for a total of $845 million, including the assumption of about $490 million of debt. "Completion of the transaction will result in the third-largest national auto parts retailer," said Standard & Poor's credit analyst Jerry Phelan. CYBER DEFENSE: Michael Lawson Resigns from Board of Deirctors ------------------------------------------------------------- On March 9, 2008, Mr. Michael Lawson resigned from the Board of Cyber Defense Systems Inc.. He however remains on the Board of Techsphere Systems International Inc., the wholly owned subsidiary of the company. Mr. Lawson had no issues with the Board and or the company, but felt he must focus on the efforts of TSI and its plan to move forward with the dividend spin out of TSI. About Cyber Defense Based in St. Petersburg, Florida, Cyber Defense Systems Inc. -- (OTC BB: CYDFE) -- http://www.cyberdefensesystems.com/-- designs and develops unmanned air vehicles. It develops CyberScout, a series of planned vehicles that employ vertical take-off and landing technique, and CyberBug, a scalable UAV that provides monitor routine surveillance and communication in crowded or remote locations. The airships and UAV's are used to provide surveillance 24/7 and include tracking devices for troop and weapon movement. It markets its airships and UAVs to various branches of the U.S. government and U.S. allies as multi-use platform vehicles capable of deployment in surveillance and communication operations, as well as for homeland defense and intelligence agencies. As reported in the Troubled Company Reporter on Dec. 4, 2007, Cyber Defense Systems Inc.'s consolidated balance sheet at Sept. 30, 2007, showed $5.7 million in total assets, $43.4 million in total liabilities, and $447,746 in minority interest in net assets of subsidiary, resulting in a $38.1 million total stockholders' deficit. Going Concern Disclaimer As reported in the Troubled Company Reporter on May 24, 2007, Hansen, Barnett & Maxwell P.C., in Salt Lake City, Utah, expressed substantial doubt about Cyber Defense Systems Inc.'s ability to continue as a going concern after auditing the company's financial statements as of the years ended Dec. 31, 2006, and 2005. The auditing firm pointed to the company's losses and working capital deficits for the two-year period ended Dec. 31, 2006. DANA CORP: Fitch Affirms 'BBB-' Rating on $90MM Revenue Bonds ------------------------------------------------------------- Fitch Ratings affirms and removes from rating watch negative its 'BBB+' rating on the bond fund's outstanding $90.2 million development revenue bonds. The rating outlook is stable. The removal from rating watch negative reflects the emergence from bankruptcy of Dana Holdings Inc. and its continued timely payments on its lease obligation. The bond fund was placed on rating watch negative on Mar. 15, 2006, due to the Chapter 11 bankruptcy filings by two of the pool's participants, Dana and Engineered Plastic Products Inc. Both participants are auto parts manufacturers. The Port Authority used EPP's dedicated reserves and liquidated assets to fully repay the series 2005B outstanding bonds in December 2006. The bond fund bonds issued on behalf of Dana, which account for 7.1% of the portfolio or $6.4 million, are secured by lease payments that are backed by a first mortgage lien and first security interest on Dana's research and development facility and equipment, located in Lucas County. In connection with the bankruptcy court approved settlement agreement and the order confirming Dana's reorganization plan, the company has amended its lease agreement to reflect quarterly lease payments to the authority instead of monthly lease payments. The amended lease payments are sufficient to pay the debt service on the related series 2002B bonds issued by the authority through maturity. The authority established the bond fund in 1988 to advance economic development efforts in the region. Currently, the bond fund has 26 participants, with outstanding bonds totaling $90.2 million. The authority remains the program's largest obligor representing 11.2% of the total portfolio. In addition to lease or loan payments by the pool participants, all of the bond fund bonds are equally and ratably secured by funds held in reserves, which equal $28.6 million or 32% of the principal of all outstanding bonds. The bond fund reserves comprise: primary reserves funded by each borrower equal to approximately 10% of bond principal; program reserves, which include a $6.5 million cash contribution from the authority and a $10 million irrevocable letter of credit from Fifth Third Bank that expires Nov. 15, 2016, subject to extension; and additional reserves specific to certain series of bonds. Shortfalls in bond payments due to loan or lease defaults must be made up first from the defaulting borrowers' primary reserves, then from program reserves, and finally from any remaining primary reserves. DANA CORP: Steelworkers Union Seeks $2,500,000 Success Fee Payment ------------------------------------------------------------------ The United Steel, Paper, and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union asks the U.S. Bankruptcy Court for the Southern District of New York to compel payment of $2,500,000 as investment management fee for the professional services rendered by its financial advisor, Potok and Co., Inc., for: (1) the firm's role in the successful resolution of the labor, financial and restructuring issues involving the USW and the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America; and (2) the negotiation of the global settlement with Dana Corp and its debtor-affiliates and Centerbridge Capital Partners. Suzanne Hepner, Esq., at Levy Ratner, P.C., in New York, says the Global Settlement provided the cornerstone for the Debtors' Plan of Reorganization, which was overwhelmingly approved by voting creditors and confirmed by the Court less than five months after the Global Settlement was decisively approved by the Court. Ms. Hepner adds that Potok's role as financial advisor to the Unions throughout the bankruptcy cases and in working with the Debtors and Centerbridge in the Global Settlement process demonstrates that payment of a $2,500,000, success fee for substantial contribution to the Debtors' bankruptcy cases is appropriate under Sections 503(b)(3) and 4. "Potok's services demonstrably fostered and enhanced the process of Dana's reorganization and benefited Dana's estate and creditors", she asserts. Based in Toledo, Ohio, Dana Corporation -- http://www.dana.com/ -- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. Dana has facilities in China in the Asia-Pacific, Argentina in the Latin-American regions and Italy in Europe. The company and its affiliates filed for chapter 11 protection on March 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Nov. 30, 2007, the Debtors listed $7,131,000,000 in total assets and $7,665,000,000 in total debts resulting in a total shareholders' deficit of $534,000,000. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represented the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, served as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners served as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represented the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP served as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC served as counsel to the Official Committee of Non-Union Retirees. The Debtors filed their Joint Plan of Reorganization on Aug. 31, 2007. On Oct. 23, 2007, the Court approved the adequacy of the Disclosure Statement explaining their Plan. Judge Burton Lifland of the U.S. Bankruptcy Court for the Southern District of New York entered an order confirming the Third Amended Joint Plan of Reorganization of the Debtors on Dec. 26, 2007. The Debtors' Third Amended Joint Plan of Reorganization was deemed effective as of Jan. 31, 2008. Dana Corp., starting on the Plan Effective Date, operated as Dana Holding Corporation. (Dana Corporation Bankruptcy News, Issue No. 73; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Feb. 12, 2008, Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to Toledo, Ohio-based Dana Holding Corp. following the company's emergence from Chapter 11 on Feb. 1, 2008. The outlook is negative. At the same time, Standard & Poor's assigned Dana's $650 million asset-based loan revolving credit facility due 2013 a 'BB+' rating (two notches higher than the corporate credit rating) with a recovery rating of '1', indicating an expectation of very high recovery in the event of a payment default. In addition, S&P assigned a 'BB' bank loan rating to Dana's $1.43 billion senior secured term loan with a recovery rating of '2', indicating an expectation of average recovery. DANA CORP: Professionals Seek $186 Million Final Fee Payments ------------------------------------------------------------- Various law firms, accountants, and other professionals employed in the Chapter 11 cases of Dana Corporation and its debtor- affiliates asked the Hon. Burton Lifland of the U.S. Bankruptcy Court for the Southern District of New York for the final allowance of about $121,771,458, for their services: Professional Fee Period Fees Expenses ------------ ---------- ---- -------- Jones Day 03/03/06-01/31/08 $57,026,501 $2,598,005 Ernst & Young LLP 03/03/06-01/01/08 34,114,418 1,612,174 Miller Buckfire & Co. 03/03/06-01/31/08 27,750,000 658,781 PricewaterhouseCoopers 03/03/06-01/31/08 14,721,262 655,849 Kramer Levin Naftalis & Frankel LLP 03/10/06-01/31/08 10,878,509 670,267 FTI Consulting, Inc. 03/14/06-01/31/08 5,592,311 65,641 Hunton & Williams LLP 03/03/06-01/31/08 4,914,951 116,149 UBS Securities LLC 03/14/06-01/31/08 4,225,806 94,724 AP Services, LLC 03/03/06-01/31/08 4,000,000 - Katten Muchin Rosenman 03/03/06-01/31/08 2,883,621 111,509 Stahl Cowen Crowley 09/05/06-02/29/08 2,306,379 267,372 Pachulski Stang Ziehl Young Jones & Weintraub 03/03/06-01/31/08 2,082,594 114,203 White & Case LLP 06/14/07-11/30/07 1,963,713 89,927 Fried, Frank, Harris, Shriver & Jacobson LLP 06/30/06-03/15/08 1,819,870 59,484 Development Specialists 09/12/06-01/31/08 1,236,579 68,578 Halperin Battaglia Raicht, LLP 03/31/06-01/31/08 1,197,170 32,000 Analysis, Research, and Planning Corp. 07/28/06-12/31/07 671,988 5,363 Hilco Appraisal Services, LLC 08/08/07-01/31/08 597,500 106,296 The Segal Company 10/01/06-01/31/08 551,331 6,056 Jefferies & Company 07/11/06-02/09/07 540,000 24,033 Blackstone Advisory Services, L.P. 06/14/07-11/30/07 450,000 4,017 Cushman & Wakefield of Oregon, Inc. 09/01/07-12/31/07 300,000 0 Berwin Leighton Paisner 11/01/06-02/25/07 126,777 5,517 Based in Toledo, Ohio, Dana Corporation -- http://www.dana.com/ -- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. Dana has facilities in China in the Asia-Pacific, Argentina in the Latin-American regions and Italy in Europe. The company and its affiliates filed for chapter 11 protection on March 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Nov. 30, 2007, the Debtors listed $7,131,000,000 in total assets and $7,665,000,000 in total debts resulting in a total shareholders' deficit of $534,000,000. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represented the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, served as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners served as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represented the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP served as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC served as counsel to the Official Committee of Non-Union Retirees. The Debtors filed their Joint Plan of Reorganization on Aug. 31, 2007. On Oct. 23, 2007, the Court approved the adequacy of the Disclosure Statement explaining their Plan. Judge Burton Lifland of the U.S. Bankruptcy Court for the Southern District of New York entered an order confirming the Third Amended Joint Plan of Reorganization of the Debtors on Dec. 26, 2007. The Debtors' Third Amended Joint Plan of Reorganization was deemed effective as of Jan. 31, 2008. Dana Corp., starting on the Plan Effective Date, operated as Dana Holding Corporation. (Dana Corporation Bankruptcy News, Issue No. 73; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Feb. 12, 2008, Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to Toledo, Ohio-based Dana Holding Corp. following the company's emergence from Chapter 11 on Feb. 1, 2008. The outlook is negative. At the same time, Standard & Poor's assigned Dana's $650 million asset-based loan revolving credit facility due 2013 a 'BB+' rating (two notches higher than the corporate credit rating) with a recovery rating of '1', indicating an expectation of very high recovery in the event of a payment default. In addition, S&P assigned a 'BB' bank loan rating to Dana's $1.43 billion senior secured term loan with a recovery rating of '2', indicating an expectation of average recovery. DEERFIELD CAPITAL: Posts $96.2 Million Net Loss in 2007 ------------------------------------------------------- Deerfield Capital Corp. reported a net loss of $96.2 million on total net revenues of $92.5 million for the year ended Dec. 31, 2007, compared with net income of $71.6 million on total net revenues of $84.7 for the year ended Dec. 31, 2006. The 2007 fiscal year loss was primarily due to other-than- temporary impairment charges on securities recognized in 2007 totaling $109.6 million. Estimated REIT taxable income, a non-GAAP financial measure, was $88.4 million, compared with $86.4 million in 2006. Subsequent Events The company said that subsequent to Dec. 31, 2007, it was adversely impacted by the continuing deterioration of global credit markets. The most pronounced impact was on the AAA-rated non-Agency RMBS portfolio. This portfolio experienced an unprecedented decrease in valuation during the first two months of 2008 fueled by the ongoing liquidity decline in credit markets. This negative environment had several impacts on the company's ability to successfully finance and hedge these assets. First, as valuations on these AAA-rated non-Agency RMBS assets declined, the company sold a significant portion of its AAA-rated non-Agency RMBS and Agency RMBS to improve liquidity. Second, repurchase agreement counterparties in some cases ceased financing non-Agency collateral (including non-subprime collateral such as the company's) and, in other cases, significantly increased the equity, or "haircut" required to finance such collateral. The average haircut on AAA-rated non-Agency RMBS positions increased from approximately 4.9% in mid-2007 to approximately 8.8% at the end of January 2008. The more limited number of available counterparties further restricted the company's ability to obtain financing on favorable terms. Finally, the company has a longstanding practice of hedging a substantial portion of the interest rate risk in financing the RMBS portfolio. This hedging is generally accomplished using interest rate swaps under which the company agrees to pay a fixed interest rate in return for receiving a floating rate. As the credit environment worsened in early 2008, creating a flight to U.S. Treasury securities and prompting further Federal Reserve rate cuts, interest rates decreased sharply. This, in turn, required the company to post additional collateral to support declines in the interest rate swap portfolio. While Agency-issued RMBS demonstrated offsetting gains providing releases of certain margin, AAA-rated non-Agency RMBS experienced significant price declines which coupled with losses on the interest rate swap portfolio exacerbated the strain on liquidity. Balance Sheet At Dec. 31, 2007, the company's consolidated balance sheet showed $7.788 billion in total assets, $7.203 billion in total liabilities, $116.2 million in Series A cumulative convertible preferred stock, and $468.6 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the year ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?29df About Deerfield Capital Headquartered in Rosemont, Illinois, Deerfield Capital Corp. (NYSE:DFR) -- http://www.deerfieldcapital.com/-- fka Deerfield Triarc Capital Corp., is a REIT with a portfolio comprised primarily of fixed income investments, including RMBS and corporate debt. In addition, through its subsidiary Deerfield Capital Management LLC, the company manages assets for third party clients, including government securities, corporate debt, RMBS and asset-backed securities. * * * Moody's Investor Service placed Deerfield Capital Corp.'s long term corporate family rating at 'Ba3' in November 2007. The rating still holds to date with a negative outlook. DELTA PETROLEUM: Moody's Lifts Liquidity Rating; Holds Caa1 Rating ------------------------------------------------------------------ Moody's is raising Delta's Speculative Grade Liquidity Rating from SGL-4 to SGL-3 and is also changing the rating outlook to positive from stable. With this action, Moody's also affirms Delta Petroleum Corporation's Caa1 Corporate Family Rating and Delta's current 7% senior unsecured notes Caa2 rating. However, under Moody's Loss Given Default methodology, the LGD assessment and point estimate for the notes is changing to LGD 4, 69% from LGD 5, 75%. The positive outlook reflects Delta's annual results ended Dec. 31, 2007 which have shown positive capital productivity trends over the past year as reflected by a declining all-sources finding and development cost, positive sequential quarterly production trends; and Delta's continuing increase in proven developed reserve base year over- year. The positive outlook is also supported by Tracinda Corporation's $684 million equity investment which provided Delta with more opportunities to try and grow reserves and production. An upgrade would require continued improvement in Delta's capital productivity evidenced by organic reserve growth with a balance of PD and PUD reserves at reasonable costs, while also demonstrating sustained sequential quarterly production growth. This would signal the company is actually converting its PUDs to production and not simply seeing its cost structure benefit from PUD reserve bookings. Moody's notes that while the company reported substantial reserve replacement through the drillbit during in 2007, (approximately 14x of production during the period), this growth was mainly with proven undeveloped reserve which grew by 28% compared to the PD reserves which only grew 16% year-over-year. Consequently, there is an implied increased drillbit and funding risk to convert these reserves to production. An upgrade would also require continued improvement cash-on-cash returns indicated by a sustainable leveraged full-cycle ratio above 100% which indicates the company can internally replace its reserves. Acquisitions amply funded with equity will be considered on a case by case basis, however, additional acquisitions of undeveloped acreage (even if entirely equity funded) would not be viewed as a credit positive since no immediate production and cash flow would be added but future funding risk would be elevated. In addition, before any potential ratings upgrade, Moody's would need to have a clear understanding that Tracinda's future plans regarding its investment in Delta would not cause the bonds to be negatively impacted. Under the terms of the investment deal, Tracinda is prohibited from acquiring a stake more than 49% and nominating further board representatives (currently has appointed 2 of the 12 board members) until Feb. 20, 2009, at which time it can gain control of the company and would be in a position to initiate shareholder friendly initiatives if desired. The affirmation of the Caa1 CFR reflects Delta's still high leverage on its PD reserves (approximately $17.56/boe) despite the significant equity investment by Tracinda (providing $674 million of net proceeds to Delta). While a portion of the proceeds were used to repay outstandings under the revolving credit facility, Delta subsequently closed a $410.5 million deal with Canadian producer EnCana to jointly develop a portion of EnCana's leasehold in the Vega area of the Piceance Basin in western Colorado. Delta provided EnCana with $110.5 million at closing with three $100 million installment payments due over the next four years. Currently, the remaining $300 million obligation to Encana is not included in debt as $300 million of cash (from the Tracinda proceeds) are collateralizing Letters of Credit for the remaining payment to Encana. However, in the event that any part of the deal is restructured, Moody's may add that to debt and thus raise the leverage on the PD reserves to among the highest in the peer group. The Caa1 also reflects the still high and unsustainable (though improving) leveraged full cycle costs of approximately $55.91/boe based on Q4'07 (pro forma for asset sales) production and costs; the still high concentration risk of Delta's property base; and the company's continued reliance on an aggressive drilling program for growth that includes some very expensive and higher risk or higher reward wells which may continue to drive inconsistent results, even if successful. The upgrade of the speculative grade liquidity rating to SGL-3 reflects the company's significantly improved liquidity position as a result of the Tracinda investment. Moody's expects Delta's EBITDAX to range between $140 million and $160 million for 2008, which when combined with the unrestricted cash balances, and the availability under the company's secured revolving credit facility (current borrowing base of $140 million), liquidity should be sufficient to cover interest expense of about $8.5 to $9.0 million, working capital needs of $15 million to $20 million, and planned drilling capex of about $360 million. At the high end of these EBITDAX estimates, the company may still rely on debt funding through its revolver in order to fully fund the 2008 program (assuming no asset sales) since $300 million of its cash is restricted due to it securing the L/C facility for the Encana obligation. However, if the company restructures that facility, it could free up liquidity if it is not directly offset by any revolver availability. The company currently has no outstanding balance under the revolver's $140 million borrowing base, however, Moody's recognizes that the company may have additional asset values that could push the borrowing base higher and could provide the company with more availability, barring a major commodity price correction. Delta Petroleum Corporation, headquartered in Denver, Colorado, is engaged in the exploration, development and production of oil and natural gas. DILLARD'S INC: Lagging Operating Results Cue Fitch to Hold Ratings ------------------------------------------------------------------ Fitch Ratings has affirmed its ratings on Dillard's, Inc., as: -- Issuer Default Rating at 'BB'; -- Senior Notes at 'BB'; -- Capital Securities at 'B'. In addition, Fitch has affirmed its rating on Dillard's $1.2 billion secured credit facility at 'BB+', which is backed by a pledge of inventory. The Rating Outlook has been revised to Negative from Stable. Approximately $1.4 billion of debt outstanding as of Feb. 2, 2008 is affected by these actions. The ratings affirmation considers Dillard's lagging operating results balanced by reasonable credit protection measures and adequate liquidity as well as its extensive real estate holdings. The change in Rating Outlook reflects a deterioration in the company's operating and credit metrics in 2007 with further downside potential in the near to intermediate term given an anticipated challenging operating environment in 2008. Dillard's has posted negative comparable store sales growth for the last seven years. Comparable store sales deteriorated significantly in 2007 at -5% on top of a 1% decline in 2006, exacerbated by weak consumer spending and poor weather conditions, with particular weakness in home, juniors and men's apparel categories. While Dillard's has been employing a strategy of attracting younger and more affluent customers with upscale and contemporary fashions, this strategy has not evolved to the point that it is driving meaningful incremental floor traffic. The deterioration in comparable store sales has eroded operating margins, with operating EBIT margin declining to 2.1% in 2007 from 4.3% in 2006, including income from its credit card program. While Dillard's has dedicated the bulk of its free cash flow to debt reduction in recent years - paying down $2.7 billion between 1998-2006 - the significant deterioration in cash flow in 2007 reversed this trend, resulting in a net debt increase of $91 million. As a result, adjusted debt/EBITDAR increased to 3.3 times in 2007 from 2.3x in the prior year and operating EBITDAR/interest + rents declined to 3.4x from 4.1x, over the same period. Dillard's has $197 million in debt maturities in 2008 which Fitch anticipates will be partially paid down using internally generated cash flow. Overall, Dillard's liquidity position remains strong with approximately $750 million of availability on its $1.2 billion credit facility. DISTRIBUTED ENERGY: Issues $1.5 Million Investment Note to Perseus ------------------------------------------------------------------ Distributed Energy Systems Corp. and its subsidiaries, Northern Power Systems Inc., Proton Energy Systems Inc., and Technology Drive L.L.C., entered into a first amendment to its purchase agreement, company security and pledge agreement, subsidiary security and pledge agreement and registration rights Agreement, with Perseus Partners VII L.P. Pursuant to the amendment, the company agreed to issue to Perseus, an additional investment note of $1.5 million. The note bears interest at 12.5% per annum, compounded quarterly, and is due in full on Nov. 30, 2008. The company may choose to pay the interest in cash or in kind by the issuance of additional senior secured convertible promissory notes. At Perseus' election, the principal and any unpaid interest under the additional note are convertible into shares of the company's common stock at a conversion price of $0.33 per share. The loan is secured by a security interest on all of the company's assets and those of its material subsidiaries. The additional note contains customary affirmative and negative covenants. The additional note also specifies events of default that would cause the additional note to become immediately due and payable. Any event of default under the additional note will also constitute an event of default under the previous notes issued to Perseus. In addition, in the event of an investment by an investor approved by Perseus in a project, joint venture, partnership or other transaction for the purpose of developing the company's wind turbine products, the company agreed to: -- if the project uses an entity other than the company, issue to Perseus, for no additional consideration, a 5% fully- diluted interest in such entity; or -- if the investor makes an investment directly in the company, issue to Perseus, for no additional consideration, a warrant to purchase, at an exercise price of $0.33 per share, up to 909,090 shares of the company's common stock. Further, in the event of a sale of assets by the company or any of its affiliates, the company agreed to: -- use all or part of the net proceeds to repay some or all of its obligations to Perseus; -- deliver an irrevocable letter of credit to Perseus in the amount of the net proceeds less any repayment of obligations owed to Perseus; -- place the net proceeds less any repayment of obligations owed to Perseus in a restricted cash account; or -- otherwise secure the obligations owed to Perseus or make such other arrangements with respect to the net proceeds as requested by Perseus, in each case as directed by Perseus. Under the Securities Purchase Agreement, the company had undertaken to use commercially reasonable efforts to sell its Proton subsidiary. The Amendment permits the registrant to suspend active efforts to sell Proton, but Perseus retains the right to reinstate the requirement at any time. The amendment also amends the security and pledge agreement, the subsidiary security and pledge agreement and the registration rights agreement to provide for the additional note on the same terms as the other notes issued pursuant to the securities purchase agreement. A full-text copy of the amendment dated March 13, 2008, is available for free at http://researcharchives.com/t/s?29e5 About Distributed Energy Based in Wallingford, Connecticut, Distributed Energy Systems Corp. (NasdaqCM: DESC) -- http://www.distributed-energy.com/-- provides products and services for distributed, or on-site, power generation and storage. At Dec. 31, 2007, the company's consolidated balance sheet showed $41,750,604 in total assets, $18,827,203 in total liabilities, and $22,923,401 in total stockholders' equity. Going Concern Disclaimer As reported in the Troubled Company Reporter on April 1, 2008, Pricewaterhousecoopers LLP expressed substantial doubt about Distributed Energy Systems Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm reported that the company has incurred significant recurring operating losses and cash outflows from operations. DORAL FINANCIAL: S&P Lifts Long-term Counterparty Rating to 'B+' ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its long-term counterparty credit rating on Doral Financial Corp. to 'B+' from 'B' and removed it from CreditWatch Positive, where it had been placed July 20, 2007. The outlook is stable. "The rating action follows a review of Doral's credit quality, including its capital, liquidity, operating performance, business strategy, and various accounting and regulatory issues," said Standard & Poor's credit analyst Robert Hansen. The CreditWatch placement follod Doral's sale of its common stock to Doral Holdings Delaware LLC and repayment in full of $625 million in senior notes. S&P thinks the company's liquidity and capital position have improved due to the completion of its recapitalization in 2007. Furthermore, S&P expects the recapitalization to have a positive effect on the company's reputation among depositors and borrowers, which S&P believes had been tarnished by previous accounting and liquidity issues. However, S&P remains very concerned by the significant spike in nonperforming assets within the company's loan portfolio, notably within its construction portfolio. S&P is also concerned about Doral's weaknesses in internal financial reporting controls, as mentioned in its 2007 10-K, which S&P views negatively in its rating assessment. The counterparty credit rating on Doral Financial reflects its strengthened capital ratios, adequate liquidity, and experienced management team. However, the ratings also incorporate significant credit quality deterioration, low profitability, formidable competition, deficiencies in enterprise risk management, and a challenging economic environment. Specifically, Doral reported a net loss of nearly $171 million in 2007 versus a loss of nearly $224 million in 2006. Financial results were hurt by a significant increase in its NPAs and an increase in loan-loss provisions. S&P thinks Doral is being relatively conservative with its nonperforming loans, which include a significant amount of loans classified as substandard, but not more than 90 days in arrears. While net credit losses to date have been low and manageable, there remains a high degree of uncertainty regarding future loss severities of the NPAs given the weakened local economy. S&P expects operating performance to remain challenged in the near term. Doral maintains a weak competitive position in Puerto Rico, despite its long history on the island. The company has a small footprint of branches and has only experienced modest deposit growth in recent years. The business mix is not well diversified, with business lines that focus on commercial and retail banking. In addition, intense competition in Puerto Rico among several formidable competitors has negatively affected margins. Doral has adequate liquidity and is not facing any near-term funding obligations. Specifically, the banks' ratio of loans to deposits declined significantly in recent years as did the bank's reliance on repurchase agreements as a funding source. However, Doral remains heavily dependent on brokered deposits. Doral has several accounting deficiencies, which S&P views negatively in its rating assessment. Specifically, the company has noted several material weaknesses, including not maintaining effective controls over the reporting process. However, S&P thinks Doral is working hard to remediate these deficiencies and expect substantial progress to be made during the next several quarters. The stable outlook includes S&P's expectation that credit quality will deteriorate further given credit deterioration in its loan portfolio and the weak economic environment. However, S&P thinks the bank has sufficient shareholders' capital to absorb a significant increase in loan losses, which S&P expects given the precipitous rise in NPLs. The ratings or outlook could be revised downward if credit quality deteriorates beyond S&P's expectations, a significant amount of loans are purchased, or capital is returned to equity shareholders. Conversely, the ratings or outlook could be revised upward if loan losses prove manageable and if the company is successful in curing accounting deficiencies. ELDORADO RESORTS: Inks $245MM Sale of Casino Aztar from Tropicana ----------------------------------------------------------------- Tropicana Entertainment LLC, an indirect subsidiary of Tropicana Casinos and Resorts, entered into a definitive agreement to sell its Casino Aztar riverboat gaming and hotel property in Evansville, Indiana, to Eldorado Resorts LLC for up to $245 million consisting of $190 million of cash consideration, a $30 million note, and $25 million in potential earnings incentives linked to the operating performance of the property. Tropicana intends to use the proceeds of the sale to reduce debt. The sale is subject to customary conditions including financing and approval by the Indiana Gaming Commission, which must license Eldorado before the transaction can close. At any time prior to Eldorado receiving a financing commitment, Tropicana may accept a superior proposal to acquire Casino Aztar, subject to the payment of a breakup fee. Separately, Tropicana also voluntarily agreed to have an Indiana Gaming Commission-appointed trustee act as manager of Casino Aztar until any pending sale is completed. Tom Dingman, a former Harrah's executive, was appointed trustee by the Indiana Gaming Commission and will manage the day-to-day operations subject to Tropicana's approval of significant decisions such as entering into material agreements, incurring debt and settling lawsuits. Mr. Dingman also will be required to consult with Tropicana before setting an annual budget, making executive compensation decisions and settling administrative actions. Mr. Dingman is a casino hotel manager who has held management positions at Harrah's properties in the San Diego, New Orleans, and Vicksburg. He retired from Harrah's in 2003 and currently acts as a consultant to companies in the gaming industry. Credit Suisse acted as exclusive financial advisor to Tropicana for the sale of Casino Aztar and Innovation Capital LLC rendered an opinion that the agreed-upon sale price was at least equal to fair market value. About Tropicana Entertainment Tropicana Entertainment LLC -- http://www.tropicanacasinos.com/-- is an indirect subsidiary of Tropicana Casinos and Resorts. The company is one of the largest privately-held gaming entertainment providers in the United States. Tropicana Entertainment owns eleven casino properties in eight distinct gaming markets with premier properties in Las Vegas, Nevada and Atlantic City, New Jersey. About Eldorado Resorts Headquartered in Reno, Nevada, Eldorado Resorts LLC -- http://www.eldoradoreno.com-- is a licensed owner and operator of casinos in Nevada and Louisiana. ELDORADO RESORTS: Tropicana Deal Won't Affect S&P's 'B' Rating -------------------------------------------------------------- Standard & Poor's Ratings Services said that its rating and outlook on Eldorado Resorts LLC (B/Stable/--) are unaffected by the company's announcement that it has entered into a definitive agreement with Tropicana Entertainment LLC (CCC/Watch Dev/--) to acquire Casino Aztar in Evansville, Ind. Eldorado will acquire Casino Aztar for up to $245 million, including $190 million in cash, a $30 million note, and $25 million in potential earnings incentives linked to the property's operating performance. S&P expects the company to secure additional debt financing to complete the acquisition, as cash on hand and availability under the revolving credit facility will not be sufficient to fund the purchase. The transaction is subject to certain customary conditions, including financing and regulatory approval from the Indiana Gaming Commission. EMISPHERE TECH: Dr. Michael Goldberg Resigns as Board Director -------------------------------------------------------------- Michael M. Goldberg, M.D., has resigned from the Board of Directors of Emisphere Technologies Inc. Dr. Goldberg's term as a Director was due to expire on May 8, 2008, the date of the company's 2008 annual meeting of stockholders. Dr. Goldberg was not a member of any committee of the company's Board of Directors. Dr. Goldberg previously served as chairman and chief executive officer of the company. His employment was terminated on Jan. 16, 2007. On April 26, 2007, the Board of Directors held a special hearing at which it was determined that Dr. Goldberg's termination was for cause. On March 22, 2007, Dr. Goldberg, through counsel, filed a demand for arbitration asserting that his termination was without cause. That arbitration is pending. About Emisphere Technologies Emisphere Technologies, Inc., (NasdaqGM: EMIS) -- http://www.emisphere.com/-- is a biopharmaceutical company that focuses on a unique and improved delivery of therapeutic molecules and pharmaceutical compounds using its eligen(R) Technology. These molecules and compounds could be currently available or are in preclinical or clinical development. At Dec. 31, 2007, the company's consolidated balance sheet showed $19,481,000 in total assets and $33,155,000 in total liabilities, resulting in a $13,674,000 stockholders' deficit. * * * As reported in the Troubled Company Reporter on March 28, 2008, PricewaterhouseCoopers LLP expressed substantial doubt about the Emisphere Technologies Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm reported that the company has experienced sustained operating losses, has limited capital resources, and has significant future commitments. ENER1 INC: To Retire Convertible Debentures Due March 2009 ---------------------------------------------------------- Ener1 Inc. sent a notice to the remaining holders of the company's 2005 Senior Secured Convertible Debentures due March 2009 of its intent to call the debentures on April 9, 2008. Any debentures that are not converted into common stock by that date will be called at 103% of the face value plus interest. The company previously called the 2004 Senior Secured Convertible Debentures due January 2009 on Feb. 22, 2008. As of March 12, 2008, the remaining principal amount of the 2004 Convertible Debentures and 2005 Convertible Debentures was $2,834,048 and $725,000, respectively. Upon completion of the call periods and the retirement of the convertible debentures either through prepayment of the debentures or conversion of the debentures to common stock, the debentures will be paid in full and all security interests in the property of the company including pledges of the company's ownership in EnerDel Inc. common stock securing the company's obligations under the debentures will be terminated. About Ener1 Inc. Ener1 Inc. (OTCBB: ENEI) -- http://www.ener1.com/-- has three business lines, which the company conducts through three operating subsidiaries. EnerDel, an 80.5% owned subsidiary, which is 19.5% owned by Delphi, develops Li-ion batteries, battery packs and components such as Li-ion battery electrodes and lithium electronic controllers for lithium battery packs. EnerFuel develops fuel cell products and services. NanoEner develops technologies, materials and equipment for nanomanufacturing. * * * At Dec. 31, 2007, the company's consolidated balance sheet showed $31.3 million in total assets, $29.7 million in total liabilities, and $8.6 million in redeemable convertible stock, resulting in a $7.0 million total stockholders' deficit. ENTERPRISE PRODUCTS: Fitch Rates Junior Subordinated Notes at BB+ ----------------------------------------------------------------- Fitch has assigned a 'BBB-' rating to $1.1 billion of senior notes issued by Enterprise Products Operating LLC's. The sale was split into two tranches with $400 million 5.65% senior notes due 2013 and $700 million 6.50% senior notes due 2019. The notes are unconditionally guaranteed by Enterprise Products Partners, L.P. The proceeds will be used to repay a portion of the company's multi-year revolving credit facility. Fitch rated the debt of EPO as: -- Issuer Default Rating 'BBB-'; -- Senior unsecured debt 'BBB-'; -- Junior subordinate notes (hybrids) 'BB+'. The Rating Outlook is Stable. The ratings of EPO continue to be supported by the size, diversity and integration of the company's energy operations as well as the stable and predictable nature of operating cash flows from primarily fee-based contracts. 2008 is a transition year for EPO as it begins to recognize cash flow from over $2.5 billion in capital programs placed in service in 2007 and the first quarter of 2008. As the company continues to complete approximately $1 billion of the capital programs announced in 2006 and 2007, Fitch expects EPO's credit metrics to recover from the impact of its aggressive capital spending and remain in-line with its 'BBB-' credit rating. The ratings also recognize management's proven track record of supporting the company's credit ratings and its focus on organic growth projects which generally provide greater return and less risk over the long-term than acquisitions. Offsetting concerns include the structural and functional ties with Enterprise GP Holdings L.P. (EPE, IDR 'BB-'), owners of EPO's 2% general partner interests, and EPCO Holdings, Inc., which have weaker credit profiles than EPO, from which they generate a sizeable percentage of their respective cash flows. This concern is partially mitigated by the additional access to capital afforded by EPE and EPCO and their track record of making equity investments into EPO. ENERGY PARTNERS: Inks Deal with Carlson on Naming of 3 Directors ---------------------------------------------------------------- Energy Partners, Ltd. entered into an agreement with Carlson Capital, L.P., pursuant to which three new directors -- James R. Latimer III, Bryant H. Patton, and Steven J. Pully -- have been appointed to the Board, effective immediately. These new directors were recommended by Carlson Capital, which together with its affiliates owns approximately 9.4% of the company's outstanding shares. Additionally the EPL Board nominated to stand for re-election at the company's 2008 Annual Meeting of Stockholders on May 29, 2008, a slate of 11 members of the Board, including the three new members and Richard A. Bachmann, John C. Bumgarner, Jr., Jerry D. Carlisle, Harold D. Carter, Enoch L. Dawkins, Dr. Norman C. Francis, Robert D. Gershen, and William R. Herrin, Jr. Carlson Capital and its affiliates have agreed to vote their shares in favor of all of the company's nominees at the Annual Meeting. "Adding three more highly-qualified and experienced Board members is consistent with our commitment both to good corporate governance and to building shareholder value," Richard A. Bachmann, EPL's Chairman and CEO, commented. "With its substantial investment in Energy Partners, Carlson Capital has demonstrated confidence in the Company and its prospects for future success. We look forward to working closely with the new directors as we implement our strategic plan, and are grateful for the service and many contributions to EPL of our three directors who are not standing for re-election. One of those directors, John Phillips, will be named a director emeritus upon the completion of his current term." "We are pleased to be working constructively with EPL," Clint D. Carlson, President of Carlson Capital, said. "We are confident that the new directors will represent the interests of all EPL shareholders and we look forward to working with EPL's Board and management to increase shareholder value." a) James R. Latimer, III Mr. Latimer is head of The Latimer Companies, a private oil and gas exploration and development company. He is also a founder and partner of Blackhill Partners/Blackhill Advisors, a financial advisory and merchant banking firm, primarily in energy and technology industries. Mr. Latimer currently serves as a director of Enron Creditors Recovery Corporation (formerly Enron Corp.) and NGP Capital Resources Company, and is formerly a director of Magnum Hunter Resources, Inc., Prize Energy Corp., and Falcon Drilling, Inc. Mr. Latimer's prior business experience includes work as a management consultant with McKinsey & Company and serving as co-head of the Dallas regional office of Prudential Capital. b) Bryant H. Patton Mr. Patton is the President of BRYCAP Investments, Inc., a merchant banking firm specializing in energy related companies that he founded in 1989. In 2000, he also co-founded Camden Resources, Inc., a private oil and gas exploration and production company, and served as executive vice president until the company was acquired at the end of 2007. Prior to founding Camden Resources, Inc. and BRYCAP Investments, Inc., Mr. Patton served as senior vice president of Associated Energy Managers, an investment fund manager of institutional investments in independent oil and gas companies. Mr. Patton also is a director of Abraxas Energy Partners, L.P. and has served as a director of a number of private oil and gas companies. Mr. Patton has almost thirty years of experience in the energy industry, having started his career in the energy industry in 1977 with his family oil and gas company, TTE, Inc. c) Steven J. Pully Mr. Pully is a consultant in the asset management industry and acts as a consultant to Carlson Capital, L.P. From December 2001 to October 2007, Mr. Pully worked for Newcastle Capital Management, L.P., an investment partnership, where he served as President from January 2003 through October 2007. He served as Chief Executive Officer of New Century Equity Holdings Corp. from June 2004 through October 2007 and is a director of that company. Mr. Pully is also a director of Peerless Systems Corp. Prior to joining Newcastle Capital Management, he served as a managing director in the investment banking department of Banc of America Securities, Inc. and was a senior managing director in the investment banking department of Bear Stearns & Co. Inc. Mr. Pully's primary focus as an investment banker was on the energy sector. Mr. Pully is licensed as an attorney and CPA in the state of Texas and is also a CFA charterholder. Headquartered in New Orleans, Louisiana, Energy Partners Ltd. (NYSE:EPL) -- http://www.eplweb.com-- is an oil and natural gas exploration and production company. The company's operations are concentrated in the gulf of Mexico Shelf, the deepwater gulf of Mexico, as well as the gulf coast onshore region. * * * As reported in the Troubled Company Reporter on March 4, 2008, Standard & Poor's Ratings Services said that ratings on Energy Partners Ltd. (B/Negative/--) would not be immediately affected by several recent developments. The company announced $100 million in noncash, pretax impairment charges, largely related to mechanical failures, early depletion, and production difficulties in fields located in its Western offshore area. Its leverage metrics have weakened year-over-year, with debt per proved barrel currently above $11 on an adjusted basis. And it has seen feeble drilling and reserve replacement results in 2007. As reported in the Troubled Company Reporter on March 3, 2008, Moody's Investors Service downgraded Energy Partners, Ltd.'s Corporate Family Rating to Caa1 from B3, its Probability of Default to Caa1 from B3, and the ratings on its $300 million senior unsecured fixed rate notes and $150 million senior unsecured floating rate notes to Caa2 (LGD 4, 67%) from Caa1 (LGD 4, 65%). The downgrade reflects EPL's continued weak capital productivity, especially as evidenced by its 2007 results, negative sequential quarterly production trends, and continued high financial leverage. The rating outlook remains negative. FIRST DARTMOUTH: Exclusive Plan Filing Period Extended to April 11 ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Middle District of Florida extended First Dartmouth Homes' exclusive right to file a plan of reorganization until April 11, 2008, Bloomberg News reports. As reported in the Troubled Company Reporter on March 14, 2008, the Debtor asked for more time to process creditor claims so that a plan approval will be easy. First Dartmouth has the urgent need to arrive into a settlement agreement with creditors, relates Bloomberg. About First Dartmouth Headquartered in St. Petersburg, Florida, First Dartmouth Homes is a homebuilder that focuses on developing luxury residential and mixed-use communities and yacht clubs. The company filed for Chapter 11 protection on Dec. 28, 2007 (Bankr. M.D. Fla. Case No. 07-12927). John D. Emmanuel, Esq., at Fowler, White, Boggs, Banker, P.A., in Tampa, Florida, represent the Debtor. According to Bill Rochelle of Bloomberg News, the Debtor's Chapter 11 petition listed assets of $1.5 million and debt of $55.3 million. FORD MOTOR: Auto Finance Arm Completes Retail Securitization Deal ----------------------------------------------------------------- Ford Credit Canada Limited completed a securitization of a pool of retail conditional sale contracts, receiving immediately available proceeds of approximately CN$1 billion. Under the securitization transaction, a newly established trust sponsored by Ford Credit Canada purchased a pool of retail conditional sale contracts from Ford Credit Canada. The trust financed the purchase by issuing asset-backed notes to third parties. The trust will be consolidated with Ford Credit Canada for accounting purposes. As a result of such consolidation, both the pool of retail contracts and the indebtedness incurred by the trust with respect to the asset-backed notes will be reflected on the consolidated financial statements of Ford Credit Canada. Ford Credit Canada will use most of the immediately available proceeds to repay indebtedness owing to Ford Motor Credit Company. Ford Credit Canada is an indirect, wholly owned subsidiary of Ford Motor Credit Company. About Ford Motor Credit Company LLC Ford Motor Credit Company LLC -- http://www.fordcredit.com/-- an indirect, wholly owned subsidiary of Ford Motor Company, is an automotive finance company. It provides automotive financing for Ford, Lincoln, Mercury, Jaguar, Land Rover, Mazda and Volvo dealers and customers. About Ford Motor Company Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company provides financial services through Ford Motor Credit Company. The company has operations in Japan in the Asia Pacific region. In Europe, the company maintains a presence in Sweden, and the United Kingdom. The company also distributes its brands in various Latin American regions, including Argentina and Brazil. * * * As reported in the Troubled Company Reporter on March 28, 2008, Standard & Poor's Ratings Services said that the ratings and outlook on Ford Motor Co. and Ford Motor Credit Co. (both rated B/Stable/B-3) were not affected by Ford's announcement of an agreement to sell its Jaguar and Land Rover units to Tata Motors Ltd. (BB+/Watch Neg/--) for $2.3 billion (before $600 million of pension contributions by Ford for Jaguar-Land Rover). As reported in the Troubled Company Reporter on Feb. 15, 2008, Fitch Ratings affirmed the Issuer Default Ratings of Ford Motor Company and Ford Motor Credit Company at 'B', and maintained the Rating Outlook at Negative. As reported in the Troubled Company Reporter on Nov. 19, 2007, Moody's Investors Service affirmed the long-term ratings of Ford Motor Company (B3 Corporate Family Rating, Ba3 senior secured, Caa1 senior unsecured, and B3 probability of default), but changed the rating outlook to Stable from Negative and raised the company's Speculative Grade Liquidity rating to SGL-1 from SGL-3. Moody's also affirmed Ford Motor Credit Company's B1 senior unsecured rating, and changed the outlook to Stable from Negative. These rating actions follow Ford's announcement of the details of the newly ratified four-year labor agreement with the United Auto Workers. FRENCH LICK: S&P Assigns 'CCC' Corporate Rating on Negative Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on French Lick Resorts & Casino LLC, including the 'CCC' corporate credit rating, on CreditWatch with negative implications. "The CreditWatch listing follows the company's announcement that it has offered to purchase up to $150 million principal amount, or 56%, of its $270 million mortgage notes outstanding at a discount to the par value of the notes," said Standard & Poor's credit analyst Ariel Silverberg. FLRC is offering to purchase the notes via a modified Dutch auction process whereby they are offering a range of prices from $730 to $780 to repurchase each $1,000 principal amount, as well as a tender premium. The offer expires April 25, 2008, and, if accepted, will be funded by the company's owners. Should the tender transaction be completed, the corporate credit rating on FLRC will be lowered to 'SD', and the issue-level rating on the senior notes will be lowered to 'D'. While a payment default will not have occurred relative to the legal provision of the notes, Standard & Poor's considers a default to have occurred when a payment related to an obligation is not made in accordance with the original terms (even with investor agreement) and when the nonpayment is a function of the borrower being under financial stress. S&P will monitor the progress of the tender offer in order to resolve the CreditWatch listing. GAYLORD ENTERTAINMENT: Moody's Junks Senior Note Ratings From 'B3' ------------------------------------------------------------------ Moody's Investors Service affirmed the B2 corporate family rating of Gaylord Entertainment Company. In addition, Moody's lowered the senior unsecured note ratings to Caa1 from B3. The outlook is stable. The ratings affirmed are: -- Corporate family rating of B2 -- Probability of default rating of B2 The ratings lowered are -- $225 million 6.75% senior global notes due November 15, 2014, lowered to Caa1 (LGD 5, 81%) from B3 (LGD 5, 77%) -- $350 million 8.00% senior global notes due November 15, 2013, lowered to Caa1 (LGD 5, 81%) from B3 (LGD 5, 77%) -- The outlook is stable. The affirmation of Gaylord's B2 corporate family rating reflects the company's continuing business and financial profile which continue to support its low non-investment grade rating. The downgrade of the senior unsecured notes reflects the increased risk borne by these unsecured creditors, as per Moody's loss given default assessment, as the percentage of secured debt which has a superior claim in the company's liability structure continues to increase. The downgrade of these notes is hence not a reflection of any broad fundamental deterioration in Gaylord's overall business or credit profile, but rather reflects a change in the risk profile of this specific unsecured creditor class. The B2 corporate family rating reflects Gaylord's debt protection metrics, which are weak for the current rating, as well as the limited scope and modest scale of its operations compared to others in the industry and the risk associated with its growth and acquisition strategy. The ratings also consider the challenges the company will likely encounter with the expansion of the Gaylord Opryland and Texan and the opening of the Gaylord National in Maryland. The ratings also incorporate Moody's view that operating performance and liquidity should strengthen considerably as existing properties continue to perform well and new properties come on line and begin to generate revenue and cash flow. The ratings are also supported by Gaylord's customer base which provides a relatively high degree of certainty in regards to contracted bookings over the short term and relatively good view of potential business over the medium term. The ratings also consider Gaylord's somewhat steady RevPAR performance, the sizeable contribution from food and beverage to total RevPAR, its solid brand recognition, and reasonably good asset value. In addition, management has also done an adequate job in re-focusing the company on its core operations and has sold most of what it considered non-core assets. Gaylord Entertainment Company, headquartered in Nashville, Tennessee, is a diversified hospitality and entertainment company. Gaylord owns and operates several convention centers and resorts that include the Gaylord Opryland, Gaylord Palms, and Gaylord Texan. The company's newest resort, the Gaylord National Resort and Convention Center in Maryland, is presently under construction with a completion date of April, 2008. For the year ended Dec. 31, 2007, Gaylord generated revenue of approximately $748 million. GETTY IMAGES: SEC Ends Inquiry on Company's Stock Option Practices ------------------------------------------------------------------ The Division of Enforcement of the Securities and Exchange Commission has notified Getty Images Inc. that it has completed its informal inquiry into the company's stock option grant practices, and that it has recommended that the inquiry be closed without recommending any enforcement action by the SEC against the company, or any individuals associated with the company, in connection with this matter. The company previously reported on Nov. 9, 2006, that the SEC had earlier notified the company that it was conducting an informal inquiry into the company's stock option grant practices. About Getty Images Headquartered in Seattle, Washington, Getty Images Inc. (NYSE:GYI) -- http://www.gettyimages.com/-- is a creator and distributor of visual content. The company provides relevant imagery to professionals at advertising agencies, graphic design firms, corporations, and film and broadcasting companies; editorial customers involved in newspaper, magazine, book, compact disc and online publishing, and corporate marketing departments and other business customers. Getty Images offers its imagery and related services through the company's website and a global network of company-owned offices and delegates. It serves customers in more than 100 countries. At Dec. 31, 2007, the company's consolidated balance sheet showed $2.01 billion in total assets, $584.2 million in total liabilities, and $1.43 billion in total stockholders' equity. * * * As reported in the Troubled Company Reporter on Feb. 27, 2008, Standard & Poor's Ratings Services lowered its corporate credit rating on Seattle, Washington-based visual imagery company Getty Images Inc. to 'BB-' from 'BB' and placed it on CreditWatch with negative implications. At the same time, S&P affirmed the 'B+' rating on the company's subordinated debt. GT LC: Case Summary & 19 Largest Unsecured Creditors ---------------------------------------------------- Debtor: GT LC 974 Campbell Road, Suite 204 Houston, TX 77024 Tel: (713) 467-5858 Bankruptcy Case No.: 08-32110 Type of Business: The Debtor is a real estate corporation. Chapter 11 Petition Date: March 31, 2008 Court: Southern District of Texas (Houston) Debtor's Counsel: Adrian Stanley Baer, Esq. Cordray Tomlin PC 3606 Sul Ross Houston, TX 77098 Tel: (713) 630-0600 Fax: (713) 630-0017 abaer@clegal.com Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million Debtor's list of its 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Haas & Wilkerson Insurance Insurance premium $3,669 4300 Shawnee Mission Parkway Mission, KS 66205 James Wesley Legal Services $1,500 187 Lake View Circle Montgomery, TX 77356 Maintenance Supply Headquarters Appliances $1,219 12315 Parc Crest Drive Suite 100 Stafford, TX 77477 Super Carpet Steamers Carpet Cleaning $1,193 Nolan Real Estate Services Inc. Real Estate management $791 services HD Supply Plumbing supplies $758 AAA Plumbers Inc. Plumbing Services $703 Findit Apartment Locators Commissions $820 Rencon $390 Oscar Fiallos Painting Services $290 forrent.com Advertising $252 Quill Corporation Office Supplies $166 Meyer Smith, Inc. Construction services $126 Ellis Partners in Mystery Consumer research $95 Shopping Sherwin-Williams Inc. Construction supplies $47 Centerpoint Energy Gas Utility Service Unknown City of Houston Water utility service Unknown TXU Energy Electric service Unknown WC Services Unknown HANCOCK FABRICS: Court Approves Changes to CRG Employment --------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware gave Hancock Fabrics, Inc., and its debtor-affiliates authority to modify the employment arrangement of CRG Partners Group, LLC, to re-designate Jeff Nerland as executive vice- president, effective February 25, to facilitate the transition to a new chief financial officer and the Debtors' reorganization processes. As reported in the Troubled Company Reporter on March 24, 2008, the Debtors designated Mr. Nerland as interim executive vice president and chief financial officer pursuant to a court-approved agreement with Corporate Revitalization Partners, LLC, for the provision of temporary staff to the Debtors. CRP merged with The Recovery Group, Inc., to form CRG. Derek C. Abbott, Esq., at Morris, Nichols, Arsht & Tunnell LLP, in Wilmington, Delaware, related that Mr. Nerland has executed his duties as CFO and has been integral to the Debtors' progress towards reorganization. The Debtors, anticipating eventual emergence from their Chapter 11 cases as reorganized entities, searched for personnel to permanently fill vacancies and eventually determined to employ Robert Driskell. Mr. Abbott said Mr. Nerland's continued services are critical to the Debtors, particularly in light of the pending Chapter 11 Cases. In addition to the importance of Mr. Nerland's historical and institutional knowledge of the Debtors to the CFO transition process, Mr. Nerland's bankruptcy and restructuring expertise and experience will be invaluable to meeting the Debtors' remaining objectives in their Chapter 11 Cases including: a. administration of claims asserted against the Debtors; b. supporting the presentations, negotiations, due diligence, documentation related to and closing of exit financing on terms acceptable to the Debtors; c. disposition of executory contracts; and d. confirmation of a plan of reorganization. About Hancock Fabrics Headquartered in Baldwyn, Mississippi, Hancock Fabrics Inc. (OTC: HKFIQ) -- http://www.hancockfabrics.com/-- is a specialty retailer of a wide selection of fashion and home decorating textiles, sewing accessories, needlecraft supplies and sewing machines. Hancock Fabrics is one of the largest fabric retailers in the United States, currently operating approximately 400 retail stores in approximately 40 states. The company employs approximately 7,500 people on a full-time and part-time basis. Most of the company's employees work in its retail stores, or in field management to support its retail stores. The company and six of its debtor-affiliates filed for chapter 11 protection on March 21, 2007 (Bankr. D. Del. Lead Case No. 07-10353). Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnell, represent the Debtors. As of Sept. 1, 2007, Hancock Fabrics disclosed total assets of $159,673,000 and total liabilities of 122,316,000. The Debtors' exclusive period to file a Chapter 11 Plan expires on May 30, 2008. (Hancock Fabric Bankruptcy News, Issue No. 28, Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). HANCOCK FABRICS: Files Lawsuit Over Unlawful Sham Foreclosure ------------------------------------------------------------- Hancock Fabrics, Inc., commenced an adversary proceeding against SC Diamond, et al., to prevent an unlawful sham foreclosure contrived by SC Diamond Associates, L.P, with the participation of its compliant creditor, Ruthven Associates, L.P., to force a termination of Hancock's lease and thereby injure its business. Eric D. Schwartz, Esq., at Morris, Nichols, Arsht & Tunnell LLP, in Wilmington, Delaware, says SC Diamond's controlling person, Robert Copeland, admitted to the sham in his deposition. According to Mr. Schwartz, Mr. Copeland's purpose was to "unencumber" the property -- located at 4815 Virginia Beach Boulevard, in Virginia Beach, Virginia -- so as to effectuate a ground lease with Wal-Mart, which could be achieved only if Ruthven furthered and facilitated it. Ruthven did so by exercising the only option available to it that could terminate Hancock's lease -- foreclosure under an allegedly valid 1984 Deed of Trust, Mr. Schwartz added. Mr. Schwartz says SC Diamond, et al.'s conduct violates Virginia's business conspiracy law because they acted intentionally to extinguish Hancock's Lease. Moreover, Ruthven's cooperation was, and remains, essential to the success of the scheme. Mr. Schwartz relates that Ruthven and SC Diamond are connected by familial and business ties; Ruthven was entitled to receive the rents from the Property under the assignment of rents in the 1995 Deed of Trust, yet failed to do so. Ruthven subordinated its Deed of Trust on the Property to a debt funding Mr. Copeland's other businesses. SC Diamond has violated the Virginia Code by attempting to procure the assistance of Ruthven in the unlawful sham foreclosure, Mr. Schwartz asserts. He notes that SC Diamond sought to induce Ruthven to foreclose upon the property by withholding payments and advising Ruthven that it was doing so. Mr. Schwartz tells the Court that SC Diamond, et al.'s actions have, and continue to injure Hancock. Before the Petition Date, Hancock spent not less than $100,000 in legal fees and expenses in its efforts to prevent the foreclosure. Mr. Schwartz contends that SC Diamond is violating its obligation under the lease to provide quiet enjoyment of the leased premises to Hancock and the Court should direct specific performance of the obligation. If foreclosure under the 1984 Deed of Trust occurs and Hancock's Lease is extinguished, Hancock will be forced to forfeit its business at the Property and all of the goodwill, customers, employees and business opportunities it has developed since 1984 when it originally took possession. The harm is precisely the type of harm that constitutes irreparable harm warranting injunctive relief, Mr. Schwartz says. In contrast, Ruthven will not suffer any harm by the imposition of a permanent injunction against foreclosure, Mr. Schwartz adds. Hancock Pursues Virginia Litigation Before filing for bankruptcy, Hancock commenced an action against Ruthven in the United States District Court for the Eastern District of Virginia, Norfolk Division. Mr. Schwartz says Hancock's count for common law equitable subordination is the only issue remaining to be decided in the Virginia Action. The requests for orders granting summary judgment have been fully briefed. In connection with its Bankruptcy Case, Hancock filed an adversary proceeding against Ruthven, SC Diamond, Mr. Copeland and Arlene Strelitz. The Virginia and the Delaware Action each relate to the defendants' efforts to oust Hancock from a property on which it conducts business. The Virginia District Court transfered the Virginia Action to the Bankruptcy Court for the District of Delaware. The Bankruptcy Court stayed the Virginia Action. Mr. Schwartz asserts that, as all of the requests for orders granting summary judgment in the Virginia Action and the Delaware Action are now ripe for consideration, and the requests relate to the same foreclosure, Hancock asks the Court to lift the stay with respect the Virginia Action so that the only remaining issue in the action can be decided at the same time as the issues in the Delaware Action. About Hancock Fabrics Headquartered in Baldwyn, Mississippi, Hancock Fabrics Inc. (OTC: HKFIQ) -- http://www.hancockfabrics.com/-- is a specialty retailer of a wide selection of fashion and home decorating textiles, sewing accessories, needlecraft supplies and sewing machines. Hancock Fabrics is one of the largest fabric retailers in the United States, currently operating approximately 400 retail stores in approximately 40 states. The company employs approximately 7,500 people on a full-time and part-time basis. Most of the company's employees work in its retail stores, or in field management to support its retail stores. The company and six of its debtor-affiliates filed for chapter 11 protection on March 21, 2007 (Bankr. D. Del. Lead Case No. 07-10353). Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnell, represent the Debtors. As of Sept. 1, 2007, Hancock Fabrics disclosed total assets of $159,673,000 and total liabilities of 122,316,000. The Debtors' exclusive period to file a Chapter 11 Plan expires on May 30, 2008. (Hancock Fabric Bankruptcy News, Issue No. 2, Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). HEXION SPECIALTY: December 31 Balance Sheet Upside-Down by $1BB --------------------------------------------------------------- Hexion Specialty Chemicals Inc.'s balance sheet at Dec. 31, 2007, showed total assets of $4.006 billion and total liabilities of $5.392 billion, resulting to total shareholder's deficit of $1.386 billion. The company incurred $63 million net loss for the fourth quarter ended Dec. 31, 2007, versus $55 million net loss in the fourth quarter of 2006. The company posted net loss of $65 million in 2007 compared to a net loss of $109 million in fiscal year 2006. Fiscal year 2007 results included $98 million in higher interest and tax expenses compared to the prior year period. Fiscal year 2006 results included a $121 million loss on the extinguishment of debt and a $39 million net gain from the sale of businesses. Liquidity and Capital Resources At Dec. 31, 2007, the company has $3.720 billion debt, including $85 of short-term debt and capital lease maturities. In addition, it has $199 million cash and cash equivalents. At Dec. 31, 2007, the company has additional borrowing capacity under its senior secured revolving credit facilities of $215 million. The company has additional credit facilities at certain domestic and international subsidiaries with various expiration dates through 2008. As of Dec. 31, 2007, it has $71 available for borrowing under these facilities. Transaction Update Hexion and Huntsman Corporation have agreed to allow additional time for the Federal Trade Commission to review the proposed merger of the two companies. As a result, the merger is not expected to be completed before May 3. To accommodate the extension, Hexion has also given notice to Huntsman that on April 5, it will exercise its option to extend the Termination Date under the Merger Agreement for 90 days, and thus, if the conditions to Hexion's extension right are met on April 5, the termination date under the Merger Agreement will be extended until July 4, 2008. "We are fully cooperating with regulatory agencies and will continue to work closely with Huntsman and the agencies in order to obtain the regulatory approvals required to complete the merger," Mr. Morrison said. Hexion disclosed on July 12, 2007, that it had entered into a definitive agreement to acquire Huntsman Corporation in an all- cash transaction valued at approximately $10.6 billion, including the assumption of debt. Under the terms of the Merger Agreement, the cash price per share to be paid by Hexion will increase each day beginning on April 5, 2008, through consummation of the merger at the equivalent of approximately 8% per annum, less any dividends or distributions declared or made. The transaction was approved by Huntsman shareholders on Oct. 16, 2007, and is subject to customary closing conditions, including regulatory approval in the U.S. and several other countries. About Hexion Specialty Based in Columbus, Ohio, Hexion Specialty Chemicals Inc. -- http://www.hexionchem.com/-- makes thermosetting resins, formaldehyde and other forest product resins, epoxy resins, and raw materials for coatings and inks. * * * Moody's Investor Service placed Hexion Specialty Chemicals Inc.'s senior secured debt rating at 'B3', long term corporate family and probability of default ratings at 'B2' in July 2007. The ratings still hold to date. INTERSTATE BAKERIES: Wants to Employ C&W as Valuation Experts ------------------------------------------------------------- Interstate Bakeries Corp. and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Western District of Missouri to employ Cushman & Wakefield, Inc., to provide them with fresh start valuation services, nunc pro tunc to January 28, 2008. J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom LLP, in Chicago, Illinois, relates that in September 2006, the Debtors were authorized by the Court to use estate funds to pay for the fees and expenses of C&W in connection with its engagement by UMB Bank, N.A., to provide appraisal services to be utilized by lenders that may have been interested in providing exit financing to the Debtors. Mr. Ivester adds that C&W was engaged directly in July 2007 by the Debtors to value 30 properties from within the portfolio appraised pursuant to the 2006 Engagement. In October 2007, C&W performed subsequent valuation work related to liquidation value of a portion of the Debtors' owned real property portfolio. The Debtors propose that C&W will provide valuation services to ensure that the Debtors are able to comply with the requirements of fresh-start reporting in compliance with SOP 90-7, as issued by the Accounting Standards Board of the American Institute of Certified Public Accountants, Mr. Ivester says. Specifically, C&W will estimate the fair value of 154 properties which it previously appraised in connection with its engagement by UMB Bank in 2007. Pursuant to its Engagement Letter with the Debtors, the 2007 Properties will be re-evaluated on the basis of fair value in-use as opposed to the market value produced in 2007, Mr. Ivester notes. In addition to the previously-appraised assets, Mr. Ivester continues, C&W will evaluate and conduct inspections of 138 additional owned properties which were not appraised in connection with the Previous Engagements. Mr. Ivester relates that C&W, being an internationally recognized industry leader that completed more than 21,000 valuation assignments, is well-qualified to render fresh start valuation services to the Debtors including valuation services for fresh start accounting purposes on behalf of other bankruptcy estates. C&W's scope of work with respect to fresh-start reporting will not be duplicative of the services provided by the Debtors' other retained professionals, including Huron Consulting Services LLC and American Appraisal Associates, Inc., Mr. Ivester tells the Court. In consideration for the contemplated services to be rendered, the Debtors will pay C&W on a per property basis: Per Asset Fee ------------- No. of Value Value in Property Category Assets in Use Exchange ----------------- ------ ------- --------- "New" - with inspection 138 $2,000 $2,500 "New" - desktop TBD 1,500 N/A "2007" - desktop 154 500 750 "Leaseholds" - desktop TBD 750 N/A The Debtors will also pay C&W for services falling outside the scope of per property appraisal. Appraisers with "Member, American Institute Real Estate Appraisers" designations will bill at $300 per hour and Appraisers and Associates without MAI designation will bill at $200 per hour. C&W will also be reimbursed for reasonable expenses, at actual cost without mark- up. According to Mr. Ivester, the Debtors will pay C&W a retainer equal to 50% of the estimated fee upon the Court's approval of their Application. David McArdle, senior director of C&W, assures the Court that his firm does not hold or represent any interest materially adverse to the Debtors or to their estates, and is a "disinterested person" as that term is defined under Section 101(14) of the Bankruptcy Code. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh-baked bread and sweet goods, under various national brand names, including Wonder(R), Baker's Inn(R), Merita(R), Hostess(R) and Drake's(R). Currently, IBC employs more than 25,000 people and operates 45 bakeries, as well as approximately 800 distribution centers and approximately 800 bakery outlets throughout the country. The company and eight of its subsidiaries and affiliates filed for chapter 11 protection on Sept. 22, 2004 (Bankr. W.D. Mo. Case No. 04 45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6% senior subordinated convertible notes due Aug. 15, 2014) in total debts. The Debtors' filed their Chapter 11 Plan and Disclosure Statement on Nov. 5, 2007. Their exclusive period to file a chapter 11 plan expired on November 8. On Jan. 25, 2008, the Debtors filed their First Amended Plan and Disclosure Statement. On Jan. 30, 2008, the Debtors received Court approval of the First Amended Disclosure Statement. IBC confirmed that it has not received any qualifying alternative proposals for funding its plan of reorganization in accordance with the Court-approved alternative proposal procedures. As a result, no auction was held on Jan. 22, 2008, as would have been required under those procedures. The deadline for submission of alternative proposals was Jan. 15, 2008. (Interstate Bakeries Bankruptcy News, Issue No. 93; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). INTEREP NATIONAL: S&P Ratings Tumble to 'D' on Chapter 11 Filing ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Interep National Radio Sales Inc. to 'D' from 'CCC'. The subordinated debt rating was also lowered to 'D' from 'CCC'. "The action reflects the company's announcement of its Chapter 11 filing and related prearranged restructuring," explained Standard & Poor's credit analyst Tulip Lim. The plan of reorganization also calls for bondholders to provide the company with a $25 million senior secured debtor-in-possession credit facility. Interep's operating results remain severely depressed as a result of minimal business wins, continuing loss of customers, and weak national radio advertising demand. Although revenues increased about 20% for the 12 months ended Sept. 30, 2007 from the year- earlier level, the majority o the increase was because of contract termination revenues from the loss of Interep's contract with Emmis Communications Corp. Interep's commission revenues declined 5% over the same period. EBITDA, excluding contract termination revenues, was negative again for the 12 months ended Sept. 30, 2007 after reporting a loss for the 12 months ended Sept. 30, 2006, but improved slightly due to lower compensation costs. IXIS REAL: Fitch Junks Ratings on 19 Certificate Classes -------------------------------------------------------- Fitch Ratings has taken rating actions on IXIS Real Estate Capital Trust 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 $277.2 million and downgrades total $373.9 million. Additionally, $236.0 million was placed on Rating Watch Negative. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: IXIS Real Estate Capital Trust 2005-HE1 -- $21.4 million class M-1 affirmed at 'AA+', (BL: 90.10, LCR: 2.6); -- $22.6 million class M-2 rated 'AA-', placed on Rating Watch Negative (BL: 67.21, LCR: 1.94); -- $13.8 million class M-3 rated 'A+', placed on Rating Watch Negative (BL: 52.91, LCR: 1.53); -- $13.1 million class M-4 downgraded to 'B' from 'A-' (BL: 39.58, LCR: 1.14); -- $11.7 million class M-5 downgraded to 'CCC/DR4' from 'BBB' (BL: 27.72, LCR: 0.8); -- $5.9 million class M-6 downgraded to 'CC/DR6' from 'BB+' (BL: 21.66, LCR: 0.63); -- $3.5 million class B-1 downgraded to 'CC/DR6' from 'BB-' (BL: 17.91, LCR: 0.52); -- $2.7 million class B-2 downgraded to 'C/DR6' from 'B+' (BL: 15.00, LCR: 0.43); -- $1.7 million class B-3 downgraded to 'C/DR6' from 'B' (BL: 12.91, LCR: 0.37); -- $1.6 million class B-4 downgraded to 'C/DR6' from 'B' (BL: 11.22, LCR: 0.32); Deal Summary -- Originators: 28.82% Chapel, 16.41% Encore, 10.52% Fremont, 10.23% Homeowners, 8.07% Novell, 7.78% First Bank -- 60+ day Delinquency: 42.82% -- Realized Losses to date (% of Original Balance): 1.39% -- Expected Remaining Losses (% of Current balance): 34.65% -- Cumulative Expected Losses (% of Original Balance): 6.21% IXIS Real Estate Capital Trust 2005-HE2 -- $20.5 million class A-4 affirmed at 'AAA', (BL: 97.94, LCR: 2.67); -- $3.2 million class A-MZ affirmed at 'AAA', (BL: 97.21, LCR: 2.65); -- $28.9 million class M-1 affirmed at 'AA+', (BL: 83.25, LCR: 2.27); -- $16.0 million class M-2 affirmed at 'AA', (BL: 74.41, LCR: 2.03); -- $13.0 million class M-3 rated 'AA-', placed on Rating Watch Negative (BL: 63.73, LCR: 1.74); -- $22.9 million class M-4 rated 'A', placed on Rating Watch Negative (BL: 53.86, LCR: 1.47); -- $13.0 million class M-5 downgraded to 'BB' from 'BBB+' (BL: 46.63, LCR: 1.27); -- $11.2 million class M-6 downgraded to 'B' from 'BBB' (BL: 40.18, LCR: 1.09); -- $13.4 million class B-1 downgraded to 'CCC/DR4' from 'BB+' (BL: 32.34, LCR: 0.88); -- $8.6 million class B-2 downgraded to 'CC/DR6' from 'BB-' (BL: 27.27, LCR: 0.74); -- $9.5 million class B-3 downgraded to 'CC/DR6' from 'B' (BL: 21.50, LCR: 0.59); -- $8.6 million class B-4 downgraded to 'C/DR6' from 'CC/DR2' (BL: 16.80, LCR: 0.46); Deal Summary -- Originators: 16.27% Chapel, 12.10% ResMae, 11.70% Home Owner, 10.36% NC Capital, 10.34% Accredit -- 60+ day Delinquency: 44.39% -- Realized Losses to date (% of Original Balance): 1.65% -- Expected Remaining Losses (% of Current balance): 36.73% -- Cumulative Expected Losses (% of Original Balance): 9.25% IXIS Real Estate Capital Trust 2005-HE3 -- $21.6 million class A-1 affirmed at 'AAA', (BL: 99.72, LCR: 2.72); -- $61.9 million class A-4 affirmed at 'AAA', (BL: 78.71, LCR: 2.15); -- $29.6 million class M-1 affirmed at 'AA+', (BL: 64.95, LCR: 1.77); -- $26.5 million class M-2 downgraded to 'A' from 'AA+', placed on Rating Watch Negative (BL: 55.56, LCR: 1.51); -- $15.4 million class M-3 downgraded to 'BB' from 'AA' (BL: 49.56, LCR: 1.35); -- $14.6 million class M-4 downgraded to 'B' from 'AA-' (BL: 43.60, LCR: 1.19); -- $13.1 million class M-5 downgraded to 'B' from 'A+' (BL: 38.23, LCR: 1.04); -- $12.3 million class M-6 downgraded to 'CCC/DR4' from 'BBB' (BL: 33.11, LCR: 0.9); -- $10.7 million class B-1 downgraded to 'CCC/DR5' from 'BB+' (BL: 28.50, LCR: 0.78); -- $10.0 million class B-2 downgraded to 'CC/DR6' from 'BB-' (BL: 24.24, LCR: 0.66); -- $5.8 million class B-3 downgraded to 'CC/DR6' from 'B+' (BL: 21.68, LCR: 0.59); -- $7.7 million class B-4 downgraded to 'CC/DR6' from 'B' (BL: 18.79, LCR: 0.51); Deal Summary -- Originators: Various -- 60+ day Delinquency: 40.87% -- Realized Losses to date (% of Original Balance): 1.39% -- Expected Remaining Losses (% of Current balance): 36.68% -- Cumulative Expected Losses (% of Original Balance): 13.09% Ixis Real Estate Capital Trust 2005-HE4 -- $74.2 million class A-2 affirmed at 'AAA', (BL: 81.68, LCR: 2.16); -- $105.0 million class A-3 rated 'AAA', placed on Rating Watch Negative (BL: 61.06, LCR: 1.61); -- $32.2 million class M1 downgraded to 'A' from 'AA+', placed on Rating Watch Negative (BL: 52.32, LCR: 1.38); -- $29.3 million class M2 downgraded to 'BB' from 'AA' (BL: 44.23, LCR: 1.17); -- $19.1 million class M3 downgraded to 'B' from 'AA' (BL: 38.92, LCR: 1.03); -- $14.4 million class M4 downgraded to 'B' from 'AA-' (BL: 34.88, LCR: 0.92); -- $14.0 million class M5 downgraded to 'CCC/DR4' from 'A' (BL: 30.95, LCR: 0.82); -- $13.1 million class M6 downgraded to 'CC/DR5' from 'BBB+' (BL: 27.22, LCR: 0.72); -- $12.7 million class B1 downgraded to 'CC/DR5' from 'BBB' (BL: 23.50, LCR: 0.62); -- $11.0 million class B2 downgraded to 'CC/DR6' from 'BB+' (BL: 20.26, LCR: 0.54); -- $7.6 million class B3 downgraded to 'C/DR6' from 'B' (BL: 17.97, LCR: 0.47); -- $8.5 million class B4 revised to 'C/DR6' from C/DR4' (BL: 15.88, LCR: 0.42); Deal Summary -- Originators: First Horizon 23.99%, Fremont 21.67% -- 60+ day Delinquency: 39.05% -- Realized Losses to date (% of Original Balance): 2.06% -- Expected Remaining Losses (% of Current balance): 37.85% -- Cumulative Expected Losses (% of Original Balance): 18.15% 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 2005 with regard to continued poor loan performance and home price weakness. JAMES RIVER: Completes $3 Million Public Offering of Common Stocks ------------------------------------------------------------------ James River Coal Company completed the public offering of its common stock. As reported in the Troubled Company Reporter on March 24, 2008, James River Coal Company agreed to sell 3 million shares, with an over-allotment option to sell up to an additional 450,000 shares, of its common stock in a public offering through UBS Investment Bank. The company also disclosed that UBS Investment Bank exercised, in part, the over-allotment option granted by the company in connection with the offering and, as a result, purchased an additional 413,432 shares of the company's common stock. Including the over-allotment shares, the offering totaled 3,413,432 shares of the company's common stock, resulting in net proceeds to the company of approximately $50.2 million, after payment of the underwriting discount, but excluding estimated offering expenses. A written prospectus may be obtained from sales representatives of: UBS Securities LLC Attn: Prospectus Department 299 Park Avenue New York, NY 10171 Tel (212)-821-3884 After this offering there are approximately 25,324,897 shares of the company's common stock outstanding. Headquartered in Richmond, Virginia, James River Coal Company (NasdaqGM: JRCC) -- http://www.jamesrivercoal.com/-- mines, processes and sells bituminous steam and industrial-grade coal primarily to electric utility companies and industrial customers. The company's mining operations are managed through six operating subsidiaries located throughout eastern Kentucky and in southern Indiana. * * * James River Coal Co. continues to carry Standard & Poor's "CCC" long term foreign and local issuer credit rating, which were placed in May 2007. KKR PACIFIC: S&P Ratings Tumble to 'D' on Extendible CP Notes ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the extendible asset-backed commercial paper (CP) notes issued by KKR Atlantic Funding Trust and KKR Pacific Funding Trust to 'D' from 'C'. The downgrades reflect the conduits' failure to pay the outstanding CP in full on March 31, 2008, which was the final maturity date for all of the outstanding CP from both programs. The programs were amended on Oct. 15, 2007 such that the maturity dates of all of the outstanding CP notes were extended. According to the Oct. 15, 2007, amendment, half of the amount was to mature on Feb. 15, 2008, and the other half was to mature on March 13, 2008. Subsequent amendments further extended the final maturity dates for all of the CP from both programs to March 31, 2008. As of the March 31, 2008, maturity date, the $3.44 billion in outstanding CP had not been repaid, and the maturity date of the CP had not been extended. Such nonpayment without an agreement by the parties to extend the maturity dates constituted a default on the CP. Ratings Lowered KKR Atlantic Funding Trust Rating ------ To From -- ---- Extendible CP notes D C KKR Pacific Funding Trust Rating ------ To From -- ---- Extendible CP notes D C KRATON POLYMERS: S&P Junks Rating From 'B' on Weak Quarter Results ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on Kraton Polymers LLC to 'CCC+' from 'B' and placed the rating on CreditWatch with negative implications. S&P also lowered the bank loan and subordinated debt ratings and placed them on CreditWatch. The downgrade follows the company's announcement of a weak operating result in its fourth quarter (ended Dec. 31), 2007, and reflects the increased possibility that Kraton will have to seek covenant relief from its lenders within the next several quarters. The downgrade also reflects ongoing concerns related to the company's financial performance in an uncertain operating environment. "Given ongoing operating challenges and difficult credit market conditions, the tight financial covenants could result in constrained liquidity throughout 2008, or if amended, meaningfully higher credit margins on the company's borrowings," said Standard & Poor's credit analyst Henry Fukuchi. "These issues, when considered together with Kraton's already aggressive financial profile, heighten credit concerns." The company's profitability declined materially in the fourth quarter of 2007 due to weak business conditions and elevated raw material costs, which have weakened the operating performance beyond S&P's expectations at the previous ratings. The CreditWatch listing indicates another downgrade is possible if operating performance does not improve in the next two quarters, or if the company is unable to comply with its financial covenants. Kraton's liquidity is supported by a modest cash balance and credit facility availability, but the probability of a financial covenant violation remains a significant concern. S&P notes that financial covenants are of particular concern in 2008 and 2009 as compliance requirements in the company's credit agreements step down to a more restrictive level. If operating results do not strengthen soon, S&P expects the company to take the necessary steps to remedy any potential covenant issues while maintaining liquidity at reasonable levels to support the current ratings. Kraton's new leadership has implemented a number of steps that could support improvement in operating results in 2008 and beyond. These include cost cutting, price increases, and reevaluation of the profitability from existing clients. The success of these initiatives could help to begin to restore the financial profile and to add comfort around the compliance with, or renegotiation of, the financial covenants in the credit facilities. S&P will resolve the CreditWatch listing this year after the company has addressed the risk of a covenant violation in 2008 and 2009, and S&P has evidence that operating performance has been stabilized or is likely to improve. Houston, Texas-based Kraton is a leading producer of styrenic block copolymers, with about $1.1 billion in annual sales and approximately $590 million of debt outstanding, including a modest amount of capitalized operating leases and unfunded postretirement obligations. KRISPY KREME: Asks Lenders to Relax Certain Financial Covenants --------------------------------------------------------------- Krispy Kreme Doughnuts Inc. requested that its lenders approve certain amendments to the company's secured credit facilities which, among other things, would relax certain financial covenants contained therein. Those covenants are scheduled to become more stringent during fiscal 2009. Based on unaudited results, the company was in compliance with the financial covenants in its credit facilities as of Feb. 3, 2008, the end of the company's 2008 fiscal year. While the company believes it will be able to obtain the requested amendments, there can be no assurance that the lenders will agree to them. In connection with any amendment, the cost of credit extended to the company under the facilities will increase. As of Feb. 3, 2008, the outstanding balance of the term loan under the facilities was $76.1 million and outstanding letters of credit under the facilities were $20.3 million. The term loan balance reflects a prepayment of $10.9 million made on February 1 in connection with the completion of the previously announced sale of the company's mix manufacturing and distribution facility in Effingham, Illinois. The company anticipates filing its fiscal 2008 Annual Report on Form 10-K containing audited financial statements on or about April 17, 2008. $160,000,000 Credit Facility Krispy Kreme Doughnut Corporation, a wholly owned subsidiary of Krispy Kreme Doughnuts, Inc., entered into a $160 million credit agreement, dated as of February 16, 2007, with Credit Suisse, Cayman Islands Branch, as administrative agent, collateral agent, issuing lender and swingline lender, and the lenders party. The credit facility comprises a $110 million term loan and a $50 million revolving loan. The term loan amortizes in quarterly installments of $275,000 beginning in April 2007 with a final payment of the remaining term loan balance due in February 2014. The revolving facility has a six year term ending in February 2013. The revolving credit facility provides that up to $30 million of the facility may be used by KKDC to obtain letters of credit. The new facility may be retired without penalty at any time. Proceeds of the term loan were used to repay the approximately $107 million outstanding balance under KKDC's prior credit facility -- which had been arranged by Credit Suisse, Cayman Island Branch -- and to pay fees and expenses related to the new financing and the retirement of the prior facility. Loans under the new credit agreement bear interest at LIBOR plus 3.00% -- subject to a stepdown based on credit ratings. Upon the occurrence of customary events of default set forth in the credit agreement, including payment defaults, breaches of covenants, a change of control and insolvency/bankruptcy events, the administrative agent may and, upon the request of a majority of the lenders, shall, accelerate repayment of the loans. In connection with the credit agreement, Krispy Kreme and its affiliates and subsidiaries that guaranteed the loan obligations, entered into a security agreement with Credit Suisse, Cayman Islands Branch, dated as of February 16, 2007. Under the credit facility, Krispy Kreme Doughnuts Inc. covenants with its lenders not to permit its Consolidated Leverage Ratio to exceed these ratios for any Test Period: Period Ratio ------ ----- 1st Fiscal Quarter of 2008 Fiscal Year 4.50 to 1.00 2nd and 3rd Fiscal Quarters of 2008 Fiscal Year 4.25 to 1.00 4th Fiscal Quarter of 2008 Fiscal Year 4.00 to 1.00 1st First Fiscal Quarter of 2009 Fiscal Year 3.75 to 1.00 2nd, 3rd and 4th Fiscal Quarters of 2009 Fiscal Year 3.50 to 1.00 2010 Fiscal Year 3.25 to 1.00 2011 and 2012 Fiscal Years 3.00 to 1.00 2013 Fiscal Year and Thereafter 2.75 to 1.00 Krispy Kreme Doughnuts Inc. also covenants with its lenders not to permit its Consolidated Interest Coverage Ratio to be less than these ratios for any Test Period: Period Ratio ------ ----- 1st Fiscal Quarter of 2008 Fiscal Year 2.75 to 1.00 2nd and 3rd Fiscal Quarters of 2008 Fiscal Year 3.00 to 1.00 4th Fiscal Quarter of 2008 Fiscal Year 3.25 to 1.00 1st Fiscal Quarter of 2009 Fiscal Year 3.50 to 1.00 2nd and 3rd Fiscal Quarters of 2009 Fiscal Year 3.75 to 1.00 4th Fiscal Quarter of 2009 Fiscal Year 4.00 to 1.00 2010 Fiscal Year 4.25 to 1.00 2011 Fiscal Year and Thereafter 4.50 to 1.00 Krispy Kreme Doughnuts Inc. also covenants with its lenders not to permit the aggregate amount of Capital Expenditures to exceed specific amounts at these periods: Period Amount ------ ------ 2008 Fiscal Year $15,000,000 2009 Fiscal Year $17,500,000 2010 Fiscal Year and each Fiscal Year thereafter $20,000,000 If the aggregate amount of Capital Expenditures for any Fiscal Year would be less than the amount permitted to be made in that Fiscal Year, then 50% of the shortfall will be added to the amount of Capital Expenditures permitted for the immediately succeeding -- but not any other -- Fiscal Year and the amount of Capital Expenditures made during any Fiscal Year will be deemed to have been made first from the amount permitted to be made in that Fiscal Year and last from carryover from the preceding Fiscal Year. A full-text copy of the $160,000,000 CREDIT AGREEMENT dated as of February 16, 2007, among KRISPY KREME DOUGHNUT CORPORATION, KRISPY KREME DOUGHNUTS, INC., The SUBSIDIARY GUARANTORS, on the one hand; and CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as Administrative Agent, Collateral Agent, Issuing Lender and Swingline Lender; CREDIT SUISSE SECURITIES (USA) LLC, as Sole Bookrunner and Sole Lead Arranger; WELLS FARGO FOOTHILL, INC. and WACHOVIA BANK, NATIONAL ASSOCIATION as Co-Syndication Agents; and CAROLINA FIRST BANK, as Documentation Agent, is available at no charge at: http://ResearchArchives.com/t/s?29f1 About Krispy Kreme Headquartered in Winston-Salem, North Carolina, Krispy Kreme Doughnuts Inc. (NYSE: KKD) -- http://www.krispykreme.com/-- retails doughnuts. There are about 411 Krispy Kreme stores including satellites operating system-wide in 41 U.S. states, Australia, Canada, Hong Kong, Indonesia, Japan, Kuwait, Mexico, the Philippines, the Republic of South Korea, the United Arab Emirates and the United Kingdom. * * * Standard & Poor's placed Krispy Kreme Doughnuts Inc.'s long term foreign and local issuer credit ratings at 'B-' in September 2007. The ratings still hold to date with a negative outlook. LATIN AMERICA MEDIA: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Latin America Media Management, LLC 95 Merrick Way, Suite 600 Coral Gables, FL 33134 Bankruptcy Case No.: 08-13990 Type of Business: The Debtor publishes the Latin Trade business magazine that is is distributed throughout Latin America. See http://www.freedom.com Chapter 11 Petition Date: April 1, 2008 Court: Southern District of Florida (Miami) Judge: Laurel M. Isicoff Debtor's Counsel: Thomas L. Abrams, Esq. (tabrams@tabramslaw.com) 1776 North Pine Island Road, Suite 309 Plantation, FL 33322 Tel: (954) 523-0900 http://www.tabramslaw.com/ Estimated Assets: $500,000 to $1 million Estimated Debts: More than $1 billion Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Representaciones Editoriales trade debt $164,822 Calle 29, Suite 579 A Mexico Quebecor World trade debt $113,592 570 Lexington Avenue, Sixth Floor New York, NY 10022 Freedom Communications, I trade debt $50,000 17666 Fitch Irvine, CA 92614 DHL Latin America trade debt $36,000 VISA trade debt $30,000 Ricoh Americas Corp. trade debt $24,375 Amcham SAO Paulo trade debt $24,100 Bracewell & Giuliane LLP trade debt $24,000 Citicorp Vendor Finance, Inc. trade debt $17,024 Sky Postal trade debt $16,897 General S. of the OAS trade debt $15,000 G3 Worldwide (US), Inc. trade debt $13,764 American Express trade debt $9,364 DHL Express (USA) trade debt $8,990 Bank of America trade debt $6,112 Basham Ringe Y Correa S.C. trade debt $6,145 Sprint 1 trade debt $9,511 Texterity trade debt $8,833 Lampada Solucoes Consultor trade debt $8,000 Landov, LLC trade debt $7,200 LEVITZ FURNITURE: Court Dismisses Six Levitz Home Bankruptcy Cases ------------------------------------------------------------------ Following the filing of a Notice of Distribution and Proposed Dismissal on March 21, 2008, by the Official Committee of Unsecured Creditors, the U.S. Bankruptcy Court for the Southern District of New York dismissed the Chapter 11 cases of Levitz Home Furnishings Inc., nka PVLTZ Inc., and its six affiliates: (1) Levitz Furniture Company of the Midwest, (2) Levitz Furniture Company of Washington, Inc., (3) Levitz Furniture Corporation, (4) Levitz Furniture, LLC, (5) Seaman Furniture Company, Inc., and (6) Seaman Furniture Company of Pennsylvania, Inc. Judge Burton R. Lifland relieved the Debtors, their estates, and officers, among others, from any further obligations in connection with the cases. Distribution of Trust Funds Completed The Creditors Committee, through the Notice of Distribution and Proposed Dismissal, informed parties-in-interest that Walker Truesdell & Associates completed the distribution of funds from the GUC Trust to allowed unsecured claimants on Feb. 25, 2008. The funds were held in trust, with Walker Truesdell as the Trustee, for the payment of outstanding unsecured claims against the Debtors. The funds consisted of $681,238 in cash, including all interest that accrued after payment of wind-down costs. The Debtors paid a total of $70,000 to (i) Kurtzman Carson Consultants, (ii) Walker Truesdell, (iii) Cooley Godward Kronish Lieb, (iv) Epiq Systems and (v) U.S. Trustee, for the services they provided in connection with the distribution of funds and the dismissal of the cases. Cooley Godward, which served as the Creditors Committee's counsel, re-contributed its fees to the pool for the benefit of unsecured creditors. As of March 21, 2008, all U.S. Trustee quarterly fees had been paid in full, and all leases had been assumed, assumed and assigned, or rejected, according to the Creditors Committee. A list of the Allowed Unsecured Claimants is available without charge at: http://bankrupt.com/misc/LevitzAllowedUnsecuredClaimants About Levitz Furniture/PVLTZ Based in New York City, Levitz Furniture Inc., nka PVLTZ Inc. -- http://www.levitz.com/-- is a specialty retailer of furniture, bedding and home furnishings in the United States. It has 76 locations in major metropolitan areas, principally in the Northeast and on the West Coast of the United States. Levitz Furniture Inc. and 11 affiliates filed for chapter 11 on Sept. 5, 1997. In December 2000, the Court confirmed the Debtors' Plan and Levitz emerged from chapter 11 on February 2001. Levitz Home Furnishings Inc. was created as the new holding company as a result of the emergence. Levitz Home Furnishings and 12 affiliates filed for chapter 11 protection on Oct. 11, 2005 (Bankr. S.D.N.Y. Lead Case No. 05- 45189). In their second filing, the Debtors disclosed about $245 million in total assets and $456 million in total debts. Nicholas M. Miller, Esq., and Richard H. Engman, Esq., at Jones Day represented the Debtors. Jeffrey L. Cohen, Esq., Jay R. Indyke, Esq., and Cathy Hershcopf, Esq., at Cooley Godward Kronish LLP served as counsel to the Official Committee of Unsecured Creditors. During this period, the Debtors closed around 35 stores in the Northeast, California, Minnesota and Arizona. PLVTZ Inc., a company created by Prentice Capital Management LP, and Great American Group purchased substantially all the assets of Levitz Home Furnishings in December 2005. Initially, Prentice owned all of the equity interests in PLVTZ. On July 6, 2007, PLVTZ was converted into a Delaware corporation, and Harbinger Capital Partners Special Situations Fund, LP, Harbinger Capital Partners Master Fund I, Ltd., and their affiliates became minority shareholders. Great American's stake in the acquisition was in running the going-out-of-business sales for some 27 Levitz units. PLVTZ, dba Levitz Furniture, continued to face decline in financial performance since December 2005. Liquidity issues and the inability to obtain additional capital prompted PLVTZ to seek protection under chapter 11 on Nov. 8, 2007 (Bankr. S.D.N.Y. Lead Case No. 07-13532). Paul D. Leake, Esq., and Brad B. Erens, Esq., at Jones Day represents the Debtors in their restructuring efforts. Kurtzman Carson Consultants LLC serves as the Debtors' claims and noticing agent. The Debtor's schedules show total assets of $123,842,190 and total liabilities of $76,421,661. The Debtors' exclusive period to file a chapter 11 plan expired on March 7, 2008. (Levitz Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). LEXINGTON CAPITAL: Moody's Reviews Ratings on Seven Note Classes ---------------------------------------------------------------- Moody's Investors Service placed on review for possible downgrade the ratings on these notes issued by Lexington Capital Funding II, Ltd.: Class Description: $385,000,000 Class A-1 First Priority Senior Secured Floating Rate Delayed Draw Notes Due October 2046 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Moody's also downgraded and left on review for possible further downgrade the ratings on these notes: Class Description: $17,050,000 Class A-2 Second Priority Senior Secured Floating Rate Notes Due October 2046 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: A1, on review for possible downgrade Class Description: $64,625,000 Class B Third Priority Senior Secured Floating Rate Notes Due October 2046 -- Prior Rating: Aa2, on review for possible downgrade -- Current Rating: Baa1, on review for possible downgrade Class Description: $19,800,000 Class C Fourth Priority Senior Secured Floating Rate Notes Due October 2046 -- Prior Rating: Aa3, on review for possible downgrade -- Current Rating: Baa3, on review for possible downgrade Class Description: $24,200,000 Class D Fifth Priority Mezzanine Secured Deferrable Floating Rate Notes Due October 2046 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: B1, on review for possible downgrade Class Description: $13,750,000 Class E Sixth Priority Mezzanine Secured Deferrable Floating Rate Notes Due October 2046 -- Prior Rating: Ba2, on review for possible downgrade -- Current Rating: Caa1, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $5,500,000 Class F Seventh Priority Mezzanine Secured Deferrable Floating Rate Notes October 2046 -- Prior Rating: B1, on review for possible downgrade -- Current Rating: Ca According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. LEXINGTON PRECISION: Files for Ch. 11 Protection After Deal Fails ----------------------------------------------------------------- Lexington Precision Corp. and its debtor-affiliate filed for Chapter 11 protection with the U.S. Bankruptcy Court for the Southern District of New York after a deal with its investors fell through, Bloomberg News reports. The company's senior noteholders balked at a proposal to sell the company's plant located in Rock Hill, South Carolina, for $32 million, Bloomberg cites the company's CEO, Dennis Welhouse. In addition, Mr. Welhouse told Bloomberg that the company's poor sales to the industry impacted its cash flow. Based in New York City, Lexington Precision Corp. and Lexington Rubber Group, Inc. -- http://www.lexingtonprecision.com/-- manufacture tight-tolerance rubber and metal components for use in medical, automotive, and industrial applications. The company and its affiliate filed for Chapter 11 protection on April 1, 2008 (Bankr. S.D.N.Y. Lead Case No. 08-11153). Richard P. Krasnow, Esq., at Weil, Gotshal & Manges, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $52,730,000, and total debts of $88,705,000. LEXINGTON PRECISION: Files for Chapter 11 Protection in New York ---------------------------------------------------------------- Lexington Precision Corp. and its debtor-affiliate Lexington Rubber Group Inc. filed for Chapter 11 protection, on April 1, 2008, with the U.S. Bankruptcy Court for the Southern District of New York following unsuccessful talks with an ad hoc committee of holders of $34.2 million in 12% senior subordinated notes due 2009, Bloomberg News reports. According to Bloomberg News, the senior noteholders rejected a sale of a medical rubber plant in Rock Hill, California, for $32 million. The noteholders would have partly received the proceeds of the sale. Lexington chief financial officer Dennis Welhouse also blames the drop in sales to the automotive sector affecting the Debtors' cash flow, Bloomberg News writes citing papers filed with the Court. The Troubled Company Reporter disclosed that the Debtors failed to pay quarterly interest payments that were due on its senior subordinated notes on Nov. 1, 2006, and Feb. 1, 2007, resulting in substantially all of the Debtors' debt to be in default as of Dec. 31, 2006. As of Feb. 28, 2007, the Debtors failed to comply with a fixed charge coverage ratio covenant that is contained in its secured borrowing arrangements. On April 5, 2007, the Debtors was notified that the its ability to borrow under its revolving line of credit will be terminated after May 7, 2007. The Debtors has been unwilling to agree to the terms proposed by the secured lenders. On April 6, 2007, the Debtors received a notice of acceleration demanding immediate payment in full of a portion of the obligations due under its real estate term loan from an entity that holds $4,000,000 of the loan. A copy of the Debtors' case summary was published in yesterday's Troubled Company Reporter. Headquartered in New York City, Lexington Precision Corp. -- http://www.lexingtonprecision.com/-- and affiliate Lexington Rubber Group, Inc. manufacture tight-tolerance rubber and metal components for use in medical, automotive, and industrial applications. Lexington makes rubber components, such as connector seals for wire harnesses, as well as aluminum, brass and steel parts. LUIS RIOS: Case Summary & 11 Largest Unsecured Creditors -------------------------------------------------------- Debtors: Luis A Soto Rios Brenda Tosado Arbelo dba Ferrerteros Soto dba Ferreterros Soto Inc dba Ferrerteria Soto Inc 6128 Carr #2 PMB 143 Quebradillas, PR 00678 Bankruptcy Case No.: 08-01890 Chapter 11 Petition Date: March 29, 2008 Court: District of Puerto Rico (Old San Juan) Judge: Enrique S. Lamoutte Inclan Debtor's Counsel: Andres Garcia Arregui, Esq. Garcia Arregui & Fullana P.O. Box 11579 FDEZ Juncos Station San Juan, PR 001910 Tel: (787) 766-2530 garciaare@prtc.net Total Assets: $2,929,650 Total Debts: $2,894,962 Debtor's list of its 11 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Banco Popular Bank Loan $2,047,620 P.O. Box 364527 San Juan, PR 00936-4527 First Bank Bank Loan $253,211 Commercial Credit Department P.O. Box 9146 Santurce, PR 00980 Westernbank Bank Loan $77,117 P.O. Box Mayanguez, PR 00681-1181 Lanco Trade Debt $42,392 Citi Advantage Card Bank Loan $34,051 Cemex Trade Debt $30,862 Iber Lumber Inc Trade Debt $28,610 Harris Paint Trade Debt $28,310 Chorus Trade Debt $21,158 Bank of America Bank Loan $19,090 Pollan Trade Inc Trade Debt $18,475 MACROVISION SOLUTIONS: Moody's Puts Ba3 Rating Pending $2.8BB Deal ------------------------------------------------------------------ Moody's Investors Service assigned a Ba3 corporate family rating to Macrovision Solutions Corporation pending its acquisition of Gemstar-TV Guide International, Inc. The $2.8 billion acquisition is being financed with stock, a senior secured $500 million term loan, $150 million in senior unsecured notes as well as cash on hand at both companies. The transaction is expected to close in May 2008. The assignment of this rating incorporates the announced sale of Macrovision's software business to Thoma Cressey Bravo and games business to Real Networks, both of which are expected to close prior to the Gemstar acquisition. The ratings outlook is stable. The Ba3 rating is driven by the combined companies' portfolio of intellectual property and patents spanning copy protection and interactive program guides. The licenses generate strong cash flows which have exhibited double digit growth in recent years. Leverage (based on pro forma 2007 results) is expected to be approximately 4.3x (under 3.1x net of cash). While the leverage level and integration challenges place the company in the range more commonly associated with a B1 rating, the company is expected to pay down debt quickly through a combination of additional asset sales and cash flow generated from operations. The ratings recognize that reliance on asset sales is questionable in today's environment, but also note that two of the assets planned to be divested, TV Guide Network and TVG are themselves strong cash generators and should contribute to reducing debt even if they are not sold. Integration of the businesses and reducing Gemstar's cost base (including from the cash draining publishing business which the company hopes to divest) presents challenges so proper execution will be critical in realizing cash flow targets. The rating also incorporates the concern that both the copy protection and the interactive program guide sectors are evolving fairly rapidly, particularly as web based viewing becomes more and more prevalent, and the current patent portfolio may become less relevant over the next five years. These ratings were assigned: -- Corporate family rating: Ba3 -- Probability of default rating: Ba3 -- Speculative grade liquidity rating: SGL-2 -- $500 million senior secured term loan, Ba1, LGD2 (25%) -- $150 million senior unsecured notes, B1 LGD5 (80%) The individual debt instrument ratings were determined using Moody's Loss Given Default Methodology. The stable ratings outlook reflects the expectation that leverage levels will come down steadily over the next twelve months and that the core copy protection and interactive program guide businesses will continue to grow. The ratings could face downward pressure if asset sales are delayed and the integration does not go as planned. Upward movement is unlikely in the near to medium term given the complexity of the merger and evolving media delivery environment. Macrovision Solutions Corporation is a leading global provider of copy protection technology for the movie and video industries and had 2007 revenues of $155 million. Pro forma for the acquisition, 2007 revenues were approximately $607 million. The company is headquartered in Santa Clara, California. MACROVISION SOLUTIONS: S&P Puts 'B+' Rating on High Debt Leverage ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Santa Clara, California-based Macrovision Solutions Inc. The outlook is positive. "The rating reflects Macrovision's high debt leverage, some technology risk, and exposure to product life cycles," explained Standard & Poor's credit analyst Andy Liu. Increased barriers to entry from the company's patent portfolio, the strong market position in its niche markets, and a good EBITDA margin partially offset these factors. At the same time, Standard & Poor's assigned bank loan and recovery ratings to Macrovision Solutions Corp.'s $500 million secured term loan B due 2013. The loan is rated 'BB-' (one notch higher than the corporate credit rating on Macrovision), with a recovery rating of '2', indicating S&P's expectation of substantial (70%-90%) recovery in the event of a payment default. S&P also assigned ratings to Macrovision's $390 million of unsecured debt, consisting of $240 million in 2.625% convertible senior unsecured notes due 2011 and $150 million senior unsecured notes due 2015. The notes are rated 'B-' (two notches below the corporate credit rating), with a recovery rating of '6', indicating S&P's expectation of negligible (0%-10%) recovery in the event of a payment default. Proceeds from the proposed financing will be used to fund Macrovision's acquisition of Gemstar-TV Guide International Inc. Pro forma for the proposed transaction, total debt outstanding as of Dec. 31, 2007 was $904 million. MADAKET FUNDING: Moody's Downgrades Ratings on Five Note Classes ---------------------------------------------------------------- Moody's Investors Service placed on review for possible downgrade the ratings on these notes issued by Madaket Funding I, Ltd.: Class Description: $80,000,000 Class A3 Floating Rate Notes Due 2046 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Additionally, Moody's downgraded and left on review for possible further downgrade the ratings on these notes: Class Description: $28,000,000 Class A4 Floating Rate Notes Due 2046 -- Prior Rating: Aa2, on review for possible downgrade -- Current Rating: A2, on review for possible downgrade Class Description: $19,000,000 Class B Deferrable Floating Rate Notes Due 2046 -- Prior Rating: A2, on review for possible downgrade -- Current Rating: Baa2, on review for possible downgrade Class Description: $10,000,000 Class C Deferrable Floating Rate Notes Due 2046 -- Prior Rating: A3, on review for possible downgrade -- Current Rating: Ba1, on review for possible downgrade Class Description: $8,000,000 Class D Deferrable Floating Rate Notes Due 2046 -- Prior Rating: Baa3, on review for possible downgrade -- Current Rating: B3, on review for possible downgrade According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. MADILL EQUIPMENT: Chapter 15 Petition Summary --------------------------------------------- Petitioner: RSM Richter, Inc. (cgyinfo@rsmrichter.com) Suite #910, 736-8th Avenue Southwest Calgary, Alberta T2P 1H4 Tel: (403) 206-0840 Fax: (403) 206-0841 http://www.rsmrichter.com/ Lead Debtor: Madill Equipment Canada 2560 Bowen Road Nanaimo, BC V9R 5M6 Canada Case No.: 08-41426 Debtor-affiliates filing separate Chapter 15 petitions: Entity Case No. ------ -------- Madill, Inc. 08-41428 Madill Holdings (Ontario), LP 08-41429 Madill GP, Inc. 08-41430 Madill, LP 08-41431 Madill Corp. 08-41433 Madill Finance (US), LLC 08-41434 Madill Holdings (US), Inc. 08-41435 Type of Business: The Debtors manufacture, distribute and supply forestry equipment products primarily for the forestry and logging industry on the west coast of North America. Their product lines include log loaders, mechanical harvesting equipment and yarders for a variety of forestry applications. They also sell new and used equipment and products through a network of leased facilities, each one offering a range of services, including new and used equipment sales, equipment rentals, and sales of parts and equipment servicing. Outside of the west coast of North America, they sell products through authorized dealers, and even have a distribution arrangement for the Russian Federation. RSM Richter, Inc. was appointed as the receiver and was duly authorized as the foreign representative for the Debtors on April 1, 2008. See http://www.madillequipment.com/ Chapter 15 Petition Date: April 1, 2008 Court: Western District of Washington (Tacoma) Petitioners' Counsel: Ragan L. Powers, Esq. (raganpowers@dwt.com) Davis Wright Tremaine, LLP 1201 3rd Avenue, Suite 2200 Seattle, WA 98101 Tel: (206) 757-8123 http://www.dwt.com/ Madill Equipment Canada's Financial Condition: Estimated Assets: $10 million to $50 million Estimated Debts: $100 million to $500 million MAGNA ENTERTAINMENT: Extends $40 Mil. Credit Facility to April 30 ----------------------------------------------------------------- Magna Entertainment Corp. extended the maturity date of its $40 million senior secured revolving credit facility with a Canadian chartered bank to April 30, 2008. As reported in the Troubled Company Reporter on March 20, 2008, the company's senior secured revolving credit facility with a Canadian financial institution was amended and extended to Feb. 29, 2008, and on Feb. 28, 2008, the facility was further extended to March 31, 2008. Pursuant to the terms of the company's bridge loan facility with a subsidiary of MID Islandi SF, advances after Jan. 15, 2008, are subject to MID being satisfied that the company's senior secured revolving credit facility will be further extended to at least April 30, 2008, or that satisfactory refinancing of that facility has been arranged. As the senior secured revolving credit facility was extended to March 31, 2008, MID waived this condition for advances between Jan. 15, 2008, and March 31, 2008. Headquartered in Aurora, Ontario, Magna Entertainment Corp. (TSE:MEC.A) -- http://www.magnaent.com/-- owns and operates horse racetracks in California, Florida, Maryland, Texas, Oklahoma, Ohio, Michigan, Oregon and Ebreichsdorf, Austria. It operates a Pennsylvania racetrack previously owned by the company. In addition, it operates off-track betting facilities, a United States national account wagering business known as XpressBet, which permits customers to place wagers by telephone and over the internet on horse races at over 100 North American racetracks and internationally on races in Australia, South Africa and Dubai, and a European account wagering service known as MagnaBet. Pursuant to a joint venture with Churchill Downs Incorporated, it also owns a 50% interest in HorseRacing TV, a television network focused on horse racing. To support certain of its thoroughbred racetracks, it owns and operates thoroughbred training centers situated near San Diego, California, in Palm Beach County, Florida and in the Baltimore, Maryland area. Going Concern Doubt Ernst & Young LLP in Toronto, Canada, raised substantial doubt about Magna Entertainment Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years Dec. 31, 2007, and 2006. The auditing firm pointed to the company's recurring operating losses and working capital deficiency. MANTOLOKING CDO: Moody's Cuts Ratings on Declining Credit Quality ----------------------------------------------------------------- Moody's Investors Service downgraded and placed on review for possible further downgrade the ratings on these notes issued by Mantoloking CDO 2006-1, Ltd.: Class Description: $375,000,000 Class A-1 First Priority Senior Secured Floating Rate Notes due 2046 -- Prior Rating: Aaa -- Current Rating: Aa3, on review for possible downgrade Class Description: $166,250,000 Class A-2 Second Priority Senior Secured Floating Rate Notes due 2046 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: A3, on review for possible downgrade Class Description: $40,000,000 Class A-3 Third Priority Senior Secured Floating Rate Notes due 2046 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Baa1, on review for possible downgrade Class Description: $71,750,000 Class B Fourth Priority Senior Secured Floating Rate Notes due 2046 -- Prior Rating: A1, on review for possible downgrade -- Current Rating: Baa3, on review for possible downgrade Class Description: $26,000,000 Class C Fifth Priority Mezzanine Secured Deferrable Floating Rate Notes due 2046 -- Prior Rating: Baa1, on review for possible downgrade -- Current Rating: Ba1, on review for possible downgrade Class Description: $10,000,000 Class D Sixth Priority Mezzanine Secured Deferrable Floating Rate Notes due 2046 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: Ba2, on review for possible downgrade Class Description: $23,500,000 Class E Seventh Priority Mezzanine Secured Deferrable Floating Rate Notes due 2046 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: B1, on review for possible downgrade According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. MCCLATCHY CO: Debt Reduction Doubts Cues Moody's Rating Downgrades ------------------------------------------------------------------ Moody's Investors Service downgraded The McClatchy Company's Corporate Family rating and Probability of Default Rating to Ba3 from Ba2, and the rating on the senior unsecured notes to B1 from Ba3, concluding the review for downgrade initiated on Feb. 29, 2008. The downgrade reflects Moody's expectation that ongoing significant pressure on advertising revenue will limit McClatchy's ability to reduce leverage notwithstanding continued aggressive cost management and debt reduction. Moody's believes a continued worsening of McClatchy's revenue trend in early 2008 indicates the downturn is likely to be steeper and more prolonged than anticipated at the time of Moody's rating action earlier this year. The rating outlook is negative. Downgrades: Issuer: McClatchy Company (The) -- Corporate Family Rating, Downgraded to Ba3 from Ba2 -- Probability of Default Rating, Downgraded to Ba3 from Ba2 -- Senior Unsecured Regular Bond/Debenture, Downgraded to B1, LGD5-78% from Ba3, LGD5-80% Confirmations: Issuer: McClatchy Company (The) -- Senior Unsecured Bank Credit Facility, Confirmed at Ba1, LGD2-23% (prior Ba1, LGD2-25%) Outlook Actions: Issuer: McClatchy Company (The) -- Outlook, Changed To Negative From Rating Under Review Moody's confirmed the Ba1 rating on the guaranteed senior unsecured bank facility as the expected loss given default at the lower PDR rating remains within the current rating range. The LGD point estimates also changed slightly due to reductions in the revolver commtiment (to $750 million from $1 billion) and underfunded pension liability. Moody's also commented that McClatchy's March 28, 2008 credit facility amendment has improved its liquidity position and financial flexibility. However, the liquidity rating remains at SGL-4 due to the potential effect that continued significant revenue pressure could have on the company's ability to maintain compliance with the 5.0x debt-to-EBITDA bank covenant, the level of uncertainty that a tight credit environment creates for closing on signed asset sale agreements, and the funding necessary to meet the $200 million April 2009 note maturity. Moody's would consider upgrading the liquidity rating to SGL-3 if McClatchy were to maintain sufficient cash and free cash flow to cover the note maturity and revenue pressure eases. Closing signed asset sales would diminish liquidity pressure and could also lead to an SGL upgrade. Moody's believes McClatchy's continued free cash flow generation and debt reduction would likely allow the company to obtain additional covenant amendments if necessary, although future amendments are not incorporated into the liquidity rating in accordance with Moody's SGL rating methodology. McClatchy's Ba3 CFR reflects good cash flow generated from the portfolio of newspapers and online properties. Good reader demographics and the depth and quality of reporting in local markets drive demand from advertisers, which along with the company's strong cost management deliver above average industry margins that support the cash flow. Leverage remains high as a result of the debt used to fund the Knight Ridder acquisition and reductions in EBITDA due to revenue pressure, positioning McClatchy in the Ba rating category. Debt-to-EBITDA (4.8x FY 2007 incorporating Moody's standard adjustment) is currently within Moody's 4.5-5.5x expectation for the Ba3 CFR. The negative rating outlook reflects the uncertainty over the extent and duration of the current cyclical slowdown and ultimate recovery in McClatchy's local markets and the resulting effect on the company's ability to maintain a comfortable covenant and liquidity cushion. The McClatchy Company, headquartered in Sacramento, California, is the third largest newspaper company in the U.S., with 31 daily newspapers and approximately 50 non-dailies. McClatchy also owns McClatchy Interactive, Real Cities and equity investments in CareerBuilder, Classified Ventures, and other newspaper and online properties. Annual revenue approximates $2.3 billion. MEGA BRANDS: Posts $97 Million Net Loss in Year Ended December 31 ----------------------------------------------------------------- MEGA Brands Inc. reported its fourth quarter and full-year 2007 financial results. Full-year net loss was $97.1 million compared to net earnings of $25.3 million in 2006. Net loss was $66.2 million in fourth quarter 2007, compared to net earnings of $2.8 million in the fourth quarter of 2006. "2007 was a difficult year for MEGA Brands, for our employees and shareholders, and for our many loyal fans," Marc Bertrand, president and CEO, stated. "We are disappointed with our overall performance and we promise that no effort is being spared to achieve a meaningful turnaround as quickly as possible." "We are solidly on track to achieve the $12 million in annualized savings targeted under the Value Enhancement Plan announced at the end of the third quarter. We have exciting new products in the pipeline in all of our product categories and we are pleased to be working with Intertek, a leading provider of quality and safety solutions, as we roll out MAGNEXT(R: 60.91, +0.08, +0.13%), the new generation of magnetic construction toys," added Bertrand. "Although 2007 was a challenging year, there were several positive results in the company's performance, including record sales of preschool construction toys and continued solid growth in international sales," Mr. Bertrand added. "In Stationery and Activities, sales matched 2006 levels, with improved margins. "We are very focused on executing the many operational and new product initiatives under way. With the recent amendment to our credit agreement, we now have the financial flexibility to implement current initiatives that will strengthen our core toy business while exploring a sale of our Stationery and Activities business through an orderly process," concluded Bertrand. Financial results were impacted by these factors in 2007: -- $65.9 million of Specified Items resulting mainly from voluntary product recall, inventory provisions, sales below cost and termination of licensing agreements; -- lower gross profit generated by the Magnetix product line of $21 million due to lower unit sales and prices; -- lower manufacturing efficiencies resulting from the inventory reduction plan initiated by the corporation and the downsizing of the Woodridge, New Jersey facility which was fully closed in December 2007. The impact of lower manufacturing efficiencies on gross profit amounted to approximately $6 million. -- $5.7 million of Other Charges. Marketing and advertising expenses were slightly lower at $26.2 million compared to $26.8 million in 2006. Liquidity Cash flows used in operating activities before changes in non-cash operating working capital amounted to $26.3 million compared to cash flows generated of $1.8 million in the fourth quarter of 2006. This change resulted from the higher net loss in the 2007 period. After favorable changes in non-cash operating working capital in both periods, cash flows from operating activities were $64.6 million in the fourth quarter of 2007 compared to $28 million in the corresponding 2006 period. At Dec. 31, the company's balance sheet showed total assets of $709.714 million, total liabilities $487.320 million and total shareholders' equity $222.394 million. About Mega Brands Inc. MEGA Brands Inc. (TSE: MB) -- http://www.megabrands.com/-- designs, manufactures and markets high quality toys and stationery products. Headquartered in Montreal, the company has approximately 4,500 employees with offices, manufacturing facilities or distribution centers in 14 countries. The corporation's products are sold in over 100 countries. * * * As reported in the Troubled company Reporter on Jan. 25, 2008, Standard & Poor's Ratings Services lowered its corporate credit and bank loan ratings on Mega Brands Inc. to 'B' from 'B+'. The ratings remain on CreditWatch with negative implications, where they were placed Nov. 9, 2007. The '3' recovery rating on the bank loan is unchanged. METRO ONE: To Close Four Call Centers and Eliminate 600 Positions ----------------------------------------------------------------- Metro One Telecommunications Inc. will close or sell call centers in Minneapolis, Charlotte, Orlando, and Honolulu in addition to its closed call centers in Long Island and Portland and will reduce corporate staff at its Portland headquarters. About 600 call center and related positions will be eliminated. This measure is part of the company's planned exit in the wholesale directory assistance business by May 5, where it handled incoming information calls for telecommunications companies. Dismissed staff will be provided severance packages based upon length of service. The company anticipates that costs to be incurred in connection with the closure of call centers and reductions in staff will approximate $3.6 million of which future cash expenditures associated with these actions will approximate $2.3 million. The company expects to help its telecommunications customers find alternative solutions. This significant restructuring was designed to improve cash flow and pursue its nascent data and contact services business. After the transition, Metro One expects to employ about 70 at the company's headquarters in Beaverton, Oregon, where it will provide inbound and outbound contact services and leverage its extensive databases and proprietary information systems to provide services to consumer and business marketers. The company will also work to monetize its intellectual property portfolio by licensing more than 40 search and directory assistance patents. "After a concerted effort over the last two years, the company was unable to attract enough customers who would pay for the costs to provide our services and provide a return for shareholders," said James Hensel, president and chief executive officer. "By exiting our call centers and significantly reducing our expense structure, we will have a more reasonable opportunity to build our contact services and data business into a profitable company for the future," Mr. Hensel added. "We regret the impact to our employees and their families, but must change our business model to pursue segments in information services where we can compete effectively going forward." About Metro One Based in Portland, Oregon, Metro One Telecommunications Inc. (Nasdaq: INFO) -- http://www.metro1.com/-- is an information services provider, offering inbound and outbound contact services, data and analytics, and related services. Going Concern Doubt As reported in the Troubled Company Reporter on March 25, 2008, Metro One said that it experienced net losses in each of the quarterly and annual periods beginning with the second quarter of 2003. Excluding non-recurring events described above, its operations consumed approximately $11,500,000 of cash in the first nine months of 2007 primarily from net operating losses and restructuring costs. The company's independent registered public accounting firm, BDO Seidman LLP, in Seattle, included a going concern explanatory paragraph in its report on its consolidated financial statements as of and for the year ended Dec. 31, 2006. The high ratio of cash used in operations compared to Metro One's current cash resources will likely result in a similar going concern explanatory paragraph from its auditors in its report on its consolidated financial statements as of and for the year ended Dec. 31, 2007. MICROMET INC: E&Y Gave an Adverse Opinion on Internal Control ------------------------------------------------------------- Ernst & Young AG WPG in Munich, Germany, gave an unqualified opinion on the consolidated financial statements of Micromet, Inc., for the years ended Dec. 31, 2007, and 2006. The auditing firm, however, expressed an adverse opinion on Micromet's internal control over financial reporting as of Dec. 31, 2007. Material Weakness in Internal Control Micromet's management has completed the evaluation and testing of its internal control over financial reporting. Management has concluded that, as of Dec. 31, 2007, the company's internal control over financial reporting was not effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Management has identified a material weakness: -- in transaction level controls over the company's process for determining accruals for research and development expenses; and -- due to insufficient accounting and finance personnel with the knowledge and experience required to properly apply and evaluate the accounting for new, significant and/or infrequent transactions and to ensure an appropriate level of review of financial statement accounts, increasing the risk of a financial statement misstatement. Going Concern "Failure to obtain adequate financing may adversely affect our operating results or our ability to operate as a going concern," the company's management said. "As of Dec. 31, 2007, we had an accumulated deficit of $164.9 million, and we expect to continue to incur substantial, and possibly increasing, operating losses for the next several years. These conditions create substantial doubt about our ability to continue as a going concern," the company's management related. "Since our inception, we have financed our operations through private placements of preferred stock, government grants for research, research-contribution revenues from our collaborations with pharmaceutical companies, debt financing, licensing revenues and milestone achievements and, more recently, by accessing the capital resources of CancerVax through the merger and a subsequent private placement of common stock and associated warrants. "We intend to continue to seek funding through public or private financings in the future. If we are successful in raising additional funds through the issuance of equity securities, stockholders may experience substantial dilution, or the equity securities may have rights, preferences or privileges senior to existing stockholders. If we are successful in raising additional funds through debt financings, these financings may involve significant cash payment obligations and covenants that restrict our ability to operate our business. There can be no assurance that we will be successful in raising additional capital on acceptable terms, or at all. Financials For the year ended Dec. 31, 2007, the company reported a $20,126,000 net loss on $18,384,000 of total revenues as compared with a $33,992,000 net loss on $27,583,000 of total revenues in 2006. At Dec. 31, 2007, the company's balance sheet showed $56,252,000 in total assets, $31,274,000 in total liabilities, and $24,978,000 in total stockholders' equity. A full-text copy of the company's 2007 annual report is available for free at http://ResearchArchives.com/t/s?29a4 Based in Bethesda, Md., Micromet, Inc. (NASDAQGM:MITI) (CVXA) -- http://www.micromet.de/-- is biopharmaceutical company developing novel, proprietary antibodies for the treatment of cancer, inflammation and autoimmune diseases. Micromet develops drugs for the treatment of breast and prostate cancer and for the treatment of non-Hodgkin's lymphoma. The company was formed from the 2006 merger of CancerVax and Micromet AG. MORTGAGE LENDERS: Disclosure Statement Hearing Set April 23 ----------------------------------------------------------- Mortgage Lenders Network USA, Inc. notifies all parties-in- interest that the hearing on the approval of the disclosure statement accompanying its plan of liquidation will be on April 23, 2008, at 11:00 a.m. Deadline for filing objections to the Disclosure Statement is on April 16. Debtor's Liquidation Plan Mortgage Lenders Network delivered a plan of liquidation and accompanying disclosure statement to the U.S. Bankruptcy Court for the District of Delaware on March 12, 2008. The Plan provides for the distribution of proceeds from MLN's asset sales to various creditors after confirmation of the Plan, with holders of priority claims and secured claims, if any, obtaining a 100% return of their claims, and holders of unsecured claims receiving a 1% to 15% recovery. MLN, which will be designated as Liquidating Debtor after the Plan's effective date, will be managed by Daniel Scouler, its current chief restructuring officer, upon the effective date. MLN was previously a full service residential company licensed to do business in 50 states and the District of Columbia, and was the 15th largest sub-prime lender in the U.S. as of the third quarter of 2006, with $3,300,000,000 in loan originations. However, the significant increase in the number of early payment defaults that occurred in the sub-prime market in the end of 2006 led to, among other things, its warehouse lenders' decision to stop providing funding for MLN's loan origination business, and Freddie Mac's termination of MLN as servicer of its loans. Subsequent to the Petition Date, MLN directed its efforts and its professionals' towards streamlining and reducing operations, reducing costs and the liquidation of its hard assets and remaining servicing operations. The Debtor estimates that, as of a projected Effective Date of May 31, 2008, it will have cash on hand from the liquidation of estate assets of at least $8,000,000, which the Debtor must pay $3,800,000 in estimated priority claims and $800,000 in administrative and professional fee claims. Any augmentation to the remaining fund of $3,200,000 for distribution on general unsecured claims would only be derived from successful litigation. As reported by the Troubled Company Reporter on March 17, the Debtor's Plan of Liquidation provides for these classification and treatment of claims against and interests: Estimated Estimated Class Description Amount Recovery Treatment ----- ------------ ------ -------- --------- N/A Administrative $100,000 100% Paid in full, Claims when allowed N/A Priority Tax 300,000 100% Paid in full, Claims when allowed N/A Professional Fee 700,000 100% Allowed fees Claims and expenses to be paid in full 1 Priority Claims 3,800,000 100% Paid in full, when allowed 2 Secured Claims, -- 100% Paid from sale If any proceeds of the collateral securing claim 3 Unsecured 600,000,000 1-15% Paid w/ a pro Claims rata share of the net Plan Proceeds 4 Subordinated -- 0% No distribution Claims 5 Equity Interests -- 0% No distribution The holders of Allowed Claims in Classes 1, 2 and 3, which are impaired, are entitled to vote to accept or reject the Plan. The value of the Plan Assets are not expected to be sufficient to satisfy the Allowed Claims of Classes 1, 2, and 3 in full. Consequently, there will be no distribution on account of Classes 4 and 5. Holders of claims under Classes 4 and 5 are, therefore, deemed to have rejected the Plan. The Debtor assures the Court that holders of claims in an impaired class will receive amount that is not less than the amount that the holder would receive if the Debtor were liquidated under Chapter 7 of the Bankruptcy Code. A copy of the Debtor's Plan of Liquidation is available for free at http://bankrupt.com/misc/MLNUSA_Plan_of_Liquidation.pdf Liquidation of Assets Following its bankruptcy filing, the Debtor obtained the Bankruptcy Court's authority to sell certain remaining loans in its possession that have closed and been funded prior to the shut down of its wholesale and retail origination operations. The Debtor consolidated its operations from multiple locations down to one location at corporate headquarters. The Debtor has rejected burdensome real estate leases and executory contracts, and reduced its workforce. Most of the Debtor's significant assets were liquidated, including the sale of $400,000,000 of mortgage loans, transfer of $12,500,000,000 of mortgage servicing assets, sale of its interest in an airplane resulting in $896,000 in proceeds, and sale of its mortgage loan servicing platform, various real estate portfolio, and certain excess office equipment and furniture. The Debtor continues to gather and liquidate its remaining assets. The Debtor has retained certain professionals to assist with analysis, marketing and possible sale of a certain option to purchase real estate and the marketing and sale of certain loans from Freddie Mac. Retention of Key Professionals During the course of the bankruptcy case, the Debtor and its Official Committee of Unsecured Creditors employed and retained bankruptcy professionals, who have been paid $8,000,000 in fees and costs. Professional Period Ending Fees Paid Fees Unpaid ------------ ------------- --------- ----------- Scouler & Company Jan. 2008 $2,999,919 $10,000 Responsible Officer Pachulski Stang Dec. 2007 2,288,576 233,347 Debtor's Counsel Blank Rome LLP Sep. 2007 1,589,602 55,574 Committee Counsel Thelen Reid Brown Aug. 2007 576,486 63,751 Regulatory Counsel FTI Consulting Aug. 2007 482,852 -- Committee Advisors The Trumbull Group Feb. 2008 154,736 -- Claims Agent O'Connor Davies Feb. 2008 108,620 22,926 Tax Accountants The Debtor estimate $700,000 of the professional fees' will remain outstanding as of the Plan's effective date. Litigation The Debtor engaged in negotiations with the Connecticut Development Authority that resulted in the payment of $1,292,181 to the bankruptcy estate. The Debtor has engaged in litigation with Sovereign Bank that has resulted to $787,500 in proceeds for the estate. The Debtor has also negotiated a complex, multi- party settlement over its interest in certain rights to service certain single-family mortgages for the Federal Home Loan Mortgage Corporation, which resulted in the estate receiving $9,185,365. The Debtor has also engaged in numerous contested matters and adversary proceedings to protect its rights as debtor-in- possession. Among the Debtor's potential or existing litigations are: Potential Party/Parties Amount Sought Theory/Argument ------------- ------------- --------------- Merrill Lynch, et al. $25,507,000 Breach of Contract, Avoidance Theories EMAX Financial Group LLC 9,100,000 Tax and insurance advances Greenwich Capital 5,661,500 Breach of Contract, Financial Products Avoidance Theories Lehman Bothers Inc. 2,143,000 Breach of Contract, Avoidance Theories Wells Fargo 2,300,000 Unreimbursed advances on loan servicing rights Goldman Sachs & Co Inc. 2,102,500 Breach of Contract, Avoidance Theories Salesforce.com, Inc. 491,318 Preference Countrywide Home Loans 414,000 Holdbacks on loan sales and servicing rights Residential Funding Corp. Undetermined Breach of Contract, Avoidance Theories The Plan of Liquidation The Plan provides for the distribution of the proceeds from the Debtor's liquidation of its estate's remaining assets. After the Plan's effective date, the Liquidating Debtor will issue new common stock to the Mr. Scouler, in his role as Responsible Officer, who will hold the stock on behalf of and as the representative of all holders of allowed claims. The Plan Assets -- the New Common Stock and all real or personal property assets, rights or interests of the Debtor and any liquidation proceeds, including all cash and litigation recovery -- will be distributed to holders of allowed claims in accordance with the Plan. The Liquidating Debtor or any appointed disbursing agent will establish an interest-bearing bank account or money market account that will hold the Plan Proceeds. The Liquidating Debtor will conduct no business after the Effective Date other than winding up its affairs in accordance with applicable law and the provisions of the Plan. Handling of Plan Assets and Distribution On the Effective Date, the Plan Assets and any other property of the estate will revest in the Liquidating Debtor free and clear of all claims and liens other than those liens recognized by the Plan. After the Effective Date, the Liquidating Debtor will retain and pursue litigation, sell or liquidate Plan Assets, and collect the accounts receivable, if any, of the Debtor. Proceeds from litigation will be promptly delivered to the Disbursing Agent for deposit into the Claims Reserve Account and will be held in trust as Plan Proceeds. To the extent required to make distributions or to pay certain Plan expenses, all Plan Proceeds will be held in trust by the Disbursing Agent and will be distributed to creditors in accordance with Section 1123 of the Bankruptcy Code. Distributions to holders of allowed claims will be allocated first to the principal amount of the claim, as determined for federal income tax purposes, and then, to the extent the consideration exceeds the amount, to the remainder of the claim comprising to the allowed interest. Cash respecting to disputed claims will not be distributed, but will be withheld by the Disbursing Agent in an amount equal to the amount of the distributions that would otherwise be made to the holders of the disputed claims, if those claims had been allowed claims. Mr. Scouler as Responsible Officer Daniel Scouler has been selected as the initial Responsible Officer, who may use lower priced employees of his firm as he deems appropriate. Mr. Scouler's, and his employees' fees and expenses will be considered Plan Expenses. Mr. Scouler is a founding member of Scouler Andrews, LLC. Prior to establishing his firm, he was a senior managing director of FTI Corporate Recovery, and the leader of FTI's interim management practice. With 30 years of experience assisting companies experiencing financial difficulty, Mr. Scouler specializes in bankruptcy reorganization, out of court restructuring, and interim management. Unresolved Unsecured Claims The Debtor's wholesale and retail loan origination business was primarily financed through warehouse credit facilities provided by Residential Funding Company, Merrill Lynch Mortgage Lending, Greenwich Capital Finance and Goldman Sachs Mortgage Co. Prepetition, the Debtor obtained "wet" financing from RFC, pursuant to a $529,000,000 line, and Merrill Lynch, pursuant to a $1,700,000,000 line. As the Debtor approached its maximum lending capacities on its RFC and Merrill Lynch lines, it would sweep certain of the loans on those lines to Greenwich and Goldman in order to increase its wet funding availability. The Debtor believes that as of the Petition Date it owed estimated deficiency amounts of $1,300,000 to Greenwich, $344,000 to Goldman, and $17,800,000 to Merrill Lynch. Under a certain secured financing, the Debtor also owed $25,000,000 to IXIS Real Estate, Inc., and $9,400,000 to Merrill Lynch. It also owed $26,400,000 to RFC for certain other lines of credit. The warehouse lenders, however, have filed proofs of claim asserting unsecured claims aggregating more than $600,000,000. MLN says that it has not yet undertaken an analysis of the merits of the unsecured claims asserted by its warehouse lenders: Lender Claim Amount ------ ------------ Residential Funding Company $495,766,953 Merrill Lynch Mortgage Lending 56,690,132 Greenwich Capital Finance 25,661,624 Merrill Lynch Mortgage Capital 24,595,325 Goldman Sachs Mortgage Co. 4,710,454 The Debtor believes that claims filed by employees -- in the aggregate of $10,700,000, including $6,900,000 asserted as priority status -- materially overstate the portion of the claims entitled to priority status under the law. The Debtor believes that its employee obligations aggregate $10,200,000, of which $3,800,000 is only entitled to priority status. The Debtor also estimates trade obligations of $33,100,000. The Debtor estimates that holders of unsecured claims aggregating up to $600,000,000 will receive 1% to 15% recovery on their claims. About Mortgage Lenders Network Middletown, Connecticut-based Mortgage Lenders Network USA Inc. -- http://www.mlnusa.com/-- is a privately held company offering a full range of Alt-A/Non-Conforming and Conforming loan products through its retail and wholesale channels. The company filed for chapter 11 protection on Feb. 5, 2007 (Bankr. D. Del. Case No. 07- 10146). Pachulski Stang Ziehl & Jones LLP represents the Debtor. Blank Rome LLP represents the Official Committee of Unsecured Creditors. In the Debtor's schedules of assets and liabilities filed with the Court, it disclosed total assets of $464,847,213 and total debts of $556,459,464. The Debtor has sought extension of its exclusive period to file a plan of reorganization through and including April 22, 2008. A hearing on the request has been scheduled for March 25. (Mortgage Lenders Bankruptcy News; Bankruptcy Creditors' Service Inc. http://bankrupt.com/newsstand/or 215/945-7000). MORTGAGE LENDERS: Sues Merrill Lynch for Preferential Payments -------------------------------------------------------------- Prior to its bankruptcy filing date, Mortgage Lenders Network USA, Inc., and Merrill Lynch Bank USA, Merril Lynch Mortgage Lending, Inc., and Merrill Lynch Mortgage Capital, Inc., conducted business related to wholesale loan originations pursuant to certain agreements between the parties. As the Debtor's business deteriorated in the period before it sought bankruptcy protection, Merrill Lynch engaged in certain activities and unilaterally decided to retain funds or sell assets belonging to the Debtor, Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, tells the U.S. Bankruptcy Court for the District of Delaware. She adds that Merrill Lynch also obtained payments or received property before the Petition Date that should be returned to the bankruptcy estate as preferential or fraudulent transfer under the bankruptcy Code. She contends that the activities were unsupported by the parties' agreements and, in certain cases, counter to state law and federal bankruptcy law. The Debtor, through this adversary proceeding, seeks (i) to avoid certain prepetition preferential and fraudulent transfers made to Merrill Lynch, (ii) to recover damages related to the breach of the Agreements, and (iii) for turnover of any surplus remaining from the Debtor's property that was improperly obtained prior to the Petition Date. The Warehouse Lenders Prior to the Petition Date, the Debtor obtained the funds needed for its loan origination business from several warehouse lines of credit with various lenders provided by, among others, Merrill Lynch Bank and Merrill Lynch Capital. The actual financing mechanism used by Merrill Lynch and certain other lenders under warehouse credit facilities was to purchase loans from the Debtor pursuant to certain master repurchase agreements. Prepetition, the Debtor executed a Repurchase Agreement with each of Merrill Lynch Bank and Merrill Lynch Capital. Under a Repurchase Agreement, the Debtor, among other thing, would seek out a resale of a Warehouse Loan for the Warehouse Lender and had the obligation to "repurchase" the Warehouse Loan if the Debtor cannot find investor for the loan within a specific time. While marketing the Warehouse Loans, the Debtor serviced them, thus, generating servicing income. The Debtor was also entitled to compensation upon the resale of the Warehouse Loan, depending on the price received. The Investor Loans The Debtor also sold portfolio loans that it owned to investors. Pursuant to those sales, the Debtor was required to repurchase the Investor Loans, or reimburse a purchaser in accordance with the terms and conditions of the sale agreements. From time to time, Merril Lynch Lending acquired Investor Loans from the Debtor. Between June and December 2006, Merrill Lynch Lending acquired $2,200,000,000 in Investor Loans. Independent of its Repurchase Agreement with Merril Lynch Bank, the Debtor obtained secured financing from the bank pursuant to a Loan and Security Agreement. As of the Petition Date, the Debtor's obligations under the Loan Agreement were $9,408,434, which were secured by the Debtor's Fannie Mae servicing rights. Ms. Jones tells Judge Peter J. Walsh that at all relevant times, the value of the Servicing Rights Collateral far exceeded the amount of the Loan Agreement Obligations. Problematic Transactions On December 27, 2006, Merrill Lynch owed the Debtor $18,352,701 as the Debtor's portion of a certain Resale Compensation. Rather than paying the entirety of of the compensation, Merrill Lynch advised that it was: -- applying $3,403,900 against amounts allegedly owed by the Debtor to Merrill Lynch Lending concerning a long-purchased portfolio of Investor Loans that had nothing to do with the Merrill Lynch Repurchase Agreements; -- applying an additional $1,518,982 against amounts allegedly owed by the Debtor to Merrill Lynch Lending concerning another long-purchased portfolio of Investor Loans that had nothing to do with the Merrill Lynch Repurchase Agreements; and -- used $7,867,526, as Diligence Kick Retention, to repay itself for alleged defects in respect of other Warehouse Loans it purchased from the Debtor. Ms. Jones informs the Court that after the Petition Date, Merrill Lynch Bank sold the Servicing Rights Collateral directly to a third party, without notifying the Debtor, or obtaining relief from automatic stay. The Debtor has no information regarding the terms of the sale. In December 2006, Merrill Lynch also retained, without explanation to the Debtor, additional amounts of $394,467, $184,976 and $973,200, which was owed to the Debtor under the Merrill Repurchase Agreement. Immediately prior to the Petition Date, Merrill Lynch advised the Debtor it was selling, through a fire sale, its entire portfolio of Warehouse Loans to itself or to an affiliate at a price of 98.2% of par. Ms. Jones contends that the portfolio has a fair market value of no less than face value. The Debtor asked to market the Warehouse Loans to obtain fair market price, but, Merrill Lynch refused. As a result, the Debtor lost value of at least $2,800,000. Moreover, on December 21, 2006, Merrill Lynch also required the Debtor to repurchase Warehouse Loans aggregating $63,000,000, and in which Merrill Lynch unilaterally eliminated an outstanding obligation it had to the Debtor in the amount of $24,900,000. As a result to the transaction, the Debtor was denied $4,063,945 of net available cash to which the Debtor was entitled. Debtor Seeks Damages Within 90 days prior to the Petition Date, the Debtor transferred $4,922,882 in assets to Merrill Lynch Lending on account of the Debtor's obligations with respect to certain Investor Loans, Ms. Jones relates. She asserts that the transaction was made when the Debtor was insolvent, hence, the transfer could be avoided under Section 547 of the Bankruptcy Code. Ms. Jones also argues that the Debtor is entitled to any surplus proceeds of the disposition of the Servicing Rights Collateral because of the collateral's substantial value. She adds that Merrill Lynch improperly retained $18,400,000 of Diligence Kick Retention, and conducted sale of Warehouse Loans at unfair value. Accordingly, the Debtor asks the Court for: -- a turnover of all surplus relating to Merrill Lynch Bank's disposition of the Servicing Rights Collateral; -- damages against Merrill Lynch Bank resulting from the commercially unreasonable disposition of the Servicing Rights Collateral; -- the avoidance of the transfer of the Merrill Lynch Investor Loan to Merrill Lynch Lending, and the value of the avoided transfer pursuant to Section 550 of the Bankruptcy Code; -- damages against Merrill Lynch Bank and Merrill Lynch Capital in the amount of $18,400,000 in Improper Retentions; -- a determination and judgment that the Warehouse Loan Fire Sale is avoided pursuant to Section 548 of the Bankruptcy Code, and the recovery of the avoided transfer from Merrill Lynch Bank and Merrill Lynch Capital pursuant to Section 550; and -- costs of suit incurred in the action, including reasonable attorneys' fees. About Mortgage Lenders Network Middletown, Connecticut-based Mortgage Lenders Network USA Inc. -- http://www.mlnusa.com/-- is a privately held company offering a full range of Alt-A/Non-Conforming and Conforming loan products through its retail and wholesale channels. The company filed for chapter 11 protection on Feb. 5, 2007 (Bankr. D. Del. Case No. 07- 10146). Pachulski Stang Ziehl & Jones LLP represents the Debtor. Blank Rome LLP represents the Official Committee of Unsecured Creditors. In the Debtor's schedules of assets and liabilities filed with the Court, it disclosed total assets of $464,847,213 and total debts of $556,459,464. The Debtor has sought extension of its exclusive period to file a plan of reorganization through and including April 22, 2008. A hearing on the request has been scheduled for March 25. (Mortgage Lenders Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service Inc. http://bankrupt.com/newsstand/or 215/945- 7000). MORTGAGE LENDERS: Court Extends Plan Filing Period to May 15 ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware extends Mortgage Lenders Network USA, Inc.'s exclusive period to file a plan of reorganization through and including May 15, 2008; and exclusive period to solicit and obtain acceptances for the plan through and including June 30, 2008. The Official Committee of Unsecured Creditors tried to block approval of the Debtor's request, asserting that the Debtor filed its plan of liquidation without addressing the Creditors Committee's concerns. On behalf of the Committee, Jason W. Staib, Esq., at Blank Rome LLP, in Wilmington, Delaware, told Judge Peter J. Walsh that the Plan lacks the Creditors Committee's support and is not a meaningful step towards confirmation. He noted that the Plan will serve only to delay the plan process and increase administrative expenses to the detriment of the Debtor's creditors. To avoid delay and costs, the Creditors Committee argued that it should be permitted the opportunity to negotiate and propose its own liquidating plan, he continued. Allowing the Creditors Committee to share co-exclusivity with the Debtor will accelerate the plan process and bring the bankruptcy case to a more efficient and expeditious conclusion, Mr. Staib pointed out. He added that the primary remaining assets in the bankruptcy estate are various potential claims and causes of action against third parties, including Residential Funding Company, LLC, and Emax Financial Group, LLC. "Given the insider relationship between the Debtor and Emax, and the Debtor's release of RFC, the Committee is best situated to propose a plan in this case," the Creditors Committee said. About Mortgage Lenders Network Middletown, Connecticut-based Mortgage Lenders Network USA Inc. -- http://www.mlnusa.com/-- is a privately held company offering a full range of Alt-A/Non-Conforming and Conforming loan products through its retail and wholesale channels. The company filed for chapter 11 protection on Feb. 5, 2007 (Bankr. D. Del. Case No. 07- 10146). Pachulski Stang Ziehl & Jones LLP represents the Debtor. Blank Rome LLP represents the Official Committee of Unsecured Creditors. In the Debtor's schedules of assets and liabilities filed with the Court, it disclosed total assets of $464,847,213 and total debts of $556,459,464. The Debtor has sought extension of its exclusive period to file a plan of reorganization through and including April 22, 2008. A hearing on the request has been scheduled for March 25. (Mortgage Lenders Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service Inc. http://bankrupt.com/newsstand/or 215/945- 7000). MORGAN STANLEY: S&P Junks Ratings on Four Classes From Low-Bs ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 10 classes of commercial mortgage pass-through certificates from Morgan Stanley Capital I Trust 2006-IQ12. Concurrently, S&P affirmed its ratings on 18 other classes from the same transaction. The lowered ratings follow Standard & Poor's analysis of two loans that are currently with the special servicer. The analysis resulted in reduced values for the properties securing the loans. Based on the valuation declines, Standard & Poor's expects credit support erosion upon resolution of the assets, which prompted S&P's downgrades. The affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. There are currently three loans ($49.8 million, 2%) with the special servicer, Centerline Capital Group. Two of the loans ($36.2 million, 1%), the New Horizon Apartments and Kimball Cabana Apartments, were transferred to the special servicer in December 2007 due to payment defaults and are now 90-plus days delinquent. The two loans have related borrowers and are both secured by garden-style apartment complexes in Memphis, Tennessee. The properties include 1,164 aggregate units. For the six months ended June 30, 2007, the master servicer reported debt service coverage of 0.83x for New Horizon Apartments and a DSC of 0.00x for Kimball Apartments. As of March 2008, occupancy was approximately 58% for New Horizon Apartments and 49% for Kimball Apartments. The special servicer is currently reviewing a forbearance request from the borrower. Standard & Poor's used the 2008 budgeted operating statements for the two properties for its analysis, and considered market occupancy and operating expense data to arrive at its valuation. The remaining specially serviced loan, Chatam II ($13.6 million, 1%), is secured by a 240-unit garden-style apartment complex in Chicago, Illinois. The loan, which is currently 60-plus days delinquent, was transferred to Centerline in May 2007 due to a payment default. The borrower indicated that it intends to refinance the loan. However, Centerline plans to proceed with foreclosure proceedings if the loan is not paid off this week. The borrower has not provided current property operating data. Standard & Poor's expects a minimal loss on the loan upon resolution. The master servicer reported a watchlist of 48 loans totaling $253.1 million (9%). The largest loan on the watchlist, Columbus Park Apartments ($24.0 million, 1%), is secured by a 622-unit mid- rise apartment complex in Bedford Heights, Ohio. The loan was placed on the watchlist because the borrower obtained mezzanine financing without the lender's consent. The master servicer reported a DSC of 1.26x as of Nov. 30, 2007. No updated occupancy has been provided. At issuance, the property was 96% occupied. The remaining loans are on the watchlist due to low DSCs and low occupancies. As of the March 17, 2008, remittance report, the trust collateral consisted of 268 mortgage loans with an aggregate outstanding principal balance of $2.71 billion, compared with 269 loans totaling $2.73 billion at issuance. The master servicer, Capmark Finance Inc., reported financial information for 88% of the loans in the pool. Seventy-one percent of the servicer-reported information was partial- or full-year 2007 data. Based on this information, Standard & Poor's calculated a weighted average DSC of 1.53x, down from 1.55x at issuance. With the exception of the three loans ($49.8 million, 2%) with the special servicer, all of the loans in the pool are current. To date, the trust has not experienced a loss. The top 10 loans have an aggregate principal balance of $1.06 billion (39%) and a weighted average DSC of 1.68x, compared with 1.75x at issuance. Standard & Poor's reviewed the property inspection reports provided by the master servicer for the assets underlying the top 10 loans, and all were reported to be in "good" condition. Two of the top 10 loans exhibited credit characteristics consistent with those of investment-grade obligations at issuance and continue to do so. Details of these loans are: -- The second-largest loan in the pool, Natick Mall, has a whole-loan balance of $350.0 million that is split into three pieces: a $225.0 million A note that makes up 8% of the trust balance, a $60.0 million B note, and a $65.0 million C note. The B and C notes are both held outside of the trust. The loan is secured by 613,600 sq. ft. of a 1.1 million-sq.-ft. two-level regional mall in Natick, Massachusetts, which is approximately 15 miles west of Boston. For the nine months ended Sept. 30, 2007, the master servicer reported a DSC of 1.73x and occupancy of 94%. Standard & Poor's adjusted net cash flow is comparable to its level at issuance. -- The fifth-largest loan in the pool ($85.0 million, 3%), 75 Park Place, is secured by a 573,700-sq.-ft. class A office building in downtown Manhattan. The master servicer reported a DSC of 2.17x for the nine months ended Sept. 30, 2007 and 100% occupancy as of December 2007. Standard & Poor's adjusted NCF is comparable to its level at issuance. Standard & Poor's stressed various assets in the mortgage pool as part of its analysis, including those with the special servicer, those on the watchlist, and those that were otherwise considered credit impaired. The resultant credit enhancement levels adequately support the lowered and affirmed ratings. Ratings Lowered Morgan Stanley Capital I Trust 2006-IQ12 Commercial mortgage pass-through certificates Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ G BBB+ A- 5.67% H BBB BBB+ 4.66% J BBB- BBB 3.65% K BB BBB- 2.39% L BB- BB+ 2.27% M B+ BB 2.02% N CCC+ BB- 1.51% O CCC+ B+ 1.39% P CCC B 1.13% Q CCC- B- 0.76% Ratings Affirmed Morgan Stanley Capital I Trust 2006-IQ12 Commercial mortgage pass-through certificates Class Rating Credit enhancement ----- ------ ------------------ A-1 AAA 30.24% A-1A AAA 30.24% A-2 AAA 30.24% A-NM AAA 30.24% A-3 AAA 30.24% A-AB AAA 30.24% A-4 AAA 30.24% A-M AAA 20.16% A-MFL AAA 20.16% A-J AAA 11.21% B AA+ 10.58% C AA 8.95% D AA- 7.94% E A+ 7.43% F A 6.55% X-1 AAA N/A X-2 AAA N/A X-W AAA N/A N/A -- Not applicable. MORGAN STANLEY: Moody's Downgrades Ratings on 13 Classes of Certs. ------------------------------------------------------------------ Moody's Investors Service downgraded 13 certificates and maintained on review for possible further downgrade two of those classes of certificates from two transactions issued by Morgan Stanley Mortgage Loan Trust. The transactions are backed by second lien loans. The certificates were downgraded because the bonds' credit enhancement levels, including excess spread and subordination were low compared to the current projected loss numbers at the previous rating levels. The actions take into account the continued and worsening performance of transactions backed by closed-end-second collateral. Substantial pool losses of over the last few months have eroded credit enhancement available to the mezzanine and senior certificates. Despite the large amount of write-offs due to losses, delinquency pipelines have remained high as borrowers continue to default. Complete rating actions are: Issuer: Morgan Stanley Mortgage Loan Trust 2006-4SL -- Cl. A-1, Downgraded to A3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. M-1, Downgraded to B2 from Aa2 -- Cl. M-2, Downgraded to Caa3 from Ba1 -- Cl. M-3, Downgraded to Ca from B2 -- Cl. B-1, Downgraded to C from Caa2 -- Cl. B-2, Downgraded to C from Ca Issuer: Morgan Stanley Mortgage Loan Trust 2006-10SL -- Cl. A-1, Downgraded to Baa3 from Aa1; Placed under Review for further Possible Downgrade -- Cl. M-1, Downgraded to Caa1 from Aa3 -- Cl. M-2, Downgraded to Ca from Baa3 -- Cl. M-3, Downgraded to C from Ba2 -- Cl. B-1, Downgraded to C from B3 -- Cl. B-2, Downgraded to C from Caa2 -- Cl. B-3, Downgraded to C from Ca MORGAN STANLEY: Fitch Lowers Ratings on 27 Certificate Classes -------------------------------------------------------------- Fitch Ratings has rating actions on Morgan Stanley mortgage pass- through certificates. Affirmations total $839.9 million and downgrades total $396.7 million. Additionally, $92.8 million was placed on Rating Watch Negative and $58.0 million was removed from Rating Watch. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: Morgan Stanley ABS Capital I Inc. Trust 2005-WMC1 TOTAL -- $38.5 million class M-1 affirmed at 'AA+', (BL: 85.24, LCR: 3.63); -- $35.0 million class M-2 affirmed at 'AA', (BL: 62.07, LCR: 2.64); -- $22.4 million class M-3 affirmed at 'AA-', (BL: 45.81, LCR: 1.95); -- $20.1 million class M-4 downgraded to 'BB' from 'A+' (BL: 32.71, LCR: 1.39); -- $18.4 million class M-5 downgraded to 'B' from 'A' (BL: 25.34, LCR: 1.08); -- $13.3 million class M-6 downgraded to 'B' from 'A-' (BL: 22.32, LCR: 0.95); -- $5.9 million class B-1 downgraded to 'CCC' from 'BBB+' (BL: 19.43, LCR: 0.83); -- $4.0 million class B-2 downgraded to 'CC/DR5' from 'BBB' (BL: 17.14, LCR: 0.73); -- $4.7 million class B-3 downgraded to 'CC/DR6' from 'BBB-' (BL: 14.64, LCR: 0.62). Deal Summary -- Originators: WMC -- 60+ day Delinquency: 37.03% -- Realized Losses to date (% of Original Balance): 1.80% -- Expected Remaining Losses (% of Current balance): 23.49% -- Cumulative Expected Losses (% of Original Balance): 5.28% Morgan Stanley ABS Capital I Inc. Trust 2005-WMC2 Total -- $37.6 million class M1 affirmed at 'AA+', (BL: 89.68, LCR: 4.18); -- $40.5 million class M2 affirmed at 'AA', (BL: 44.39, LCR: 2.07); -- $24.4 million class M3 affirmed at 'AA-', (BL: 38.48, LCR: 1.8); -- $21.2 million class M4 downgraded to 'BBB' from 'A+' (BL: 32.23, LCR: 1.5); -- $21.8 million class M5 downgraded to 'BB' from 'A' (BL: 27.72, LCR: 1.29); -- $19.3 million class M6 downgraded to 'B' from 'A-' (BL: 24.47, LCR: 1.14); -- $17.3 million class B1 downgraded to 'B' from 'BBB+' (BL: 21.75, LCR: 1.01); -- $7.6 million class B2 downgraded to 'CCC' from 'BBB', removed from Rating Watch Negative (BL: 19.53, LCR: 0.91); -- $4.6 million class B3 downgraded to 'CCC' from 'BBB-', removed from Rating Watch Negative (BL: 17.72, LCR: 0.83). Deal Summary -- Originators: WMC -- 60+ day Delinquency: 32.09% -- Realized Losses to date (% of Original Balance): 1.15% -- Expected Remaining Losses (% of Current balance): 21.43% -- Cumulative Expected Losses (% of Original Balance): 4.62% Morgan Stanley ABS Capital I Inc. Trust 2005-WMC3 Total -- $29.2 million class M1 affirmed at 'AA+', (BL: 91.84, LCR: 3.8); -- $30.1 million class M2 affirmed at 'AA', (BL: 74.67, LCR: 3.09); -- $18.7 million class M3 affirmed at 'AA-', (BL: 63.74, LCR: 2.64); -- $17.3 million class M4 affirmed at 'A+', (BL: 53.62, LCR: 2.22); -- $15.8 million class M5 affirmed at 'A', (BL: 43.92, LCR: 1.82); -- $15.3 million class M6 downgraded to 'BBB' from 'BBB+' (BL: 34.96, LCR: 1.45); -- $12.8 million class B1 downgraded to 'B' from 'BBB' (BL: 27.30, LCR: 1.13); -- $11.8 million class B2 downgraded to 'CCC' from 'BB' (BL: 20.41, LCR: 0.84); -- $11.3 million class B3 downgraded to 'CC/DR5' from 'BB' (BL: 16.08, LCR: 0.67). Deal Summary -- Originators: WMC -- 60+ day Delinquency: 37.96% -- Realized Losses to date (% of Original Balance): 1.53% -- Expected Remaining Losses (% of Current balance): 24.17% -- Cumulative Expected Losses (% of Original Balance): 5.88% Morgan Stanley ABS Capital I Inc. Trust 2005-WMC4 TOTAL -- $37.3 million class M-1 affirmed at 'AA+', (BL: 94.16, LCR: 3.58); -- $38.3 million class M-2 affirmed at 'AA', (BL: 78.96, LCR: 3); -- $24.5 million class M-3 affirmed at 'AA-', (BL: 68.80, LCR: 2.62); -- $20.7 million class M-4 affirmed at 'A+', (BL: 60.19, LCR: 2.29); -- $21.4 million class M-5 rated 'A', placed on Rating Watch Negative (BL: 50.49, LCR: 1.92); -- $18.8 million class M-6 rated 'BBB+', placed on Rating Watch Negative (BL: 43.20, LCR: 1.64); -- $17.0 million class B-1 downgraded to 'BB' from 'BBB-', placed on Rating Watch Negative (BL: 36.08, LCR: 1.37); -- $15.7 million class B-2 downgraded to 'B' from 'BB', placed on Rating Watch Negative (BL: 29.71, LCR: 1.13); -- $14.4 million class B-3 downgraded to 'CCC' from 'B' (BL: 24.60, LCR: 0.94). Deal Summary -- Originators: WMC -- 60+ day Delinquency: 40.44% -- Realized Losses to date (% of Original Balance): 1.70% -- Expected Remaining Losses (% of Current balance): 26.28% -- Cumulative Expected Losses (% of Original Balance): 6.77% Morgan Stanley ABS Capital I Inc. Trust 2005-WMC5 TOTAL -- $20.5 million class A2c affirmed at 'AAA', (BL: 98.88, LCR: 3.59); -- $55.5 million class M1 affirmed at 'AA+', (BL: 88.45, LCR: 3.21); -- $47.2 million class M2 affirmed at 'AA', (BL: 75.12, LCR: 2.72); -- $29.2 million class M3 affirmed at 'AA-', (BL: 66.40, LCR: 2.41); -- $27.7 million class M4 affirmed at 'A+', (BL: 58.02, LCR: 2.1); -- $24.7 million class M5 affirmed at 'A', (BL: 49.21, LCR: 1.78); -- $23.2 million class M6 affirmed at 'A-', (BL: 43.04, LCR: 1.56); -- $21.0 million class B1 downgraded to 'BB' from 'BBB+' (BL: 36.83, LCR: 1.34); -- $21.0 million class B2 downgraded to 'B' from 'BBB' (BL: 30.64, LCR: 1.11); -- $16.5 million class B3 downgraded to 'CCC' from 'BBB-' (BL: 26.45, LCR: 0.96). Deal Summary -- Originators: WMC -- 60+ day Delinquency: 42.37% -- Realized Losses to date (% of Original Balance): 1.72% -- Expected Remaining Losses (% of Current balance): 27.58% -- Cumulative Expected Losses (% of Original Balance): 7.84% Morgan Stanley ABS Capital I Inc. Trust, Series 2005-WMC6 TOTAL -- $4.8 million class A1mz affirmed at 'AAA', (BL: 98.19, LCR: 3.9); -- $7.5 million class A1ss affirmed at 'AAA', (BL: 98.99, LCR: 3.93); -- $62.8 million class A2c affirmed at 'AAA', (BL: 87.11, LCR: 3.46); -- $42.9 million class M1 affirmed at 'AA+', (BL: 74.25, LCR: 2.95); -- $37.6 million class M2 affirmed at 'AA', (BL: 62.45, LCR: 2.48); -- $25.9 million class M3 affirmed at 'AA-', (BL: 52.34, LCR: 2.08); -- $20.0 million class M4 rated 'A+', placed on Rating Watch Negative (BL: 47.11, LCR: 1.87); -- $19.4 million class M5 downgraded to 'BBB' from 'A' (BL: 41.46, LCR: 1.64); -- $16.5 million class M6 downgraded to 'BB' from 'A-', removed from Rating Watch Negative (BL: 36.25, LCR: 1.44); -- $17.6 million class B1 downgraded to 'B' from 'BBB+', removed from Rating Watch Negative (BL: 30.51, LCR: 1.21); -- $16.5 million class B2 downgraded to 'B' from 'BBB', removed from Rating Watch Negative (BL: 25.34, LCR: 1.01); -- $11.8 million class B3 downgraded to 'CCC' from 'BB', removed from Rating Watch Negative (BL: 22.17, LCR: 0.88). Deal Summary -- Originators: WMC -- 60+ day Delinquency: 36.77% -- Realized Losses to date (% of Original Balance): 1.94% -- Expected Remaining Losses (% of Current balance): 25.21% -- Cumulative Expected Losses (% of Original Balance): 8.72% 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. MULTICELL TECH: Hansen Barnett Expresses Going Concern Doubt ------------------------------------------------------------ Hansen, Barnett & Maxwell, P.C., raised substantial doubt about the ability of MultiCell Technologies, Inc., to continue as a going concern after it audited the company's financial statements for the year ended Nov. 30, 2007. The auditing firm reported that the company suffered losses from operations and had negative cash flows from operating activities during the years ended Nov. 30, 2007 and 2006, and as of Nov. 30, 2007, the company had a working capital deficit and a stockholders' deficit. The company posted a net loss of $3,172,638 on net revenues of $251,797 for the year ended Nov. 30, 2007, as compared with a net loss of $5,418,252 on net revenues of $679,881 in the prior year. At Nov. 30, 2007, the company's balance sheet showed $1,691,665 in total assets and $2,485,198 in total liabilities, resulting in $2,531,281 stockholders' deficit. The company's consolidated balance sheet at Nov. 30, 2007, also showed strained liquidity with $502,704 in total current assets available to pay $1,724,869 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?29bc About MultiCell Technologies Headquartered in Lincoln, Rhode Island, MultiCell Technologies, Inc., (OTC BB: MCET.OB) -- http://www.MultiCelltech.com-- is a developer of therapeutic products, and a supplier of immortalized human cell lines for drug discovery applications. With its majority-owned subsidiary MultiCell Immunotherapeutics, Inc., MultiCell is working to commercialize new therapeutics for the treatment of degenerative neurological diseases, metabolic and endocrinological disorders, and infectious diseases. MultiCell Immunotherapeutics is located in San Diego, California. NATIONAL FOUNDATION: A.M. Best Chips IC Rating to bb from bb+ ------------------------------------------------------------- A.M. Best Co. has downgraded the issuer credit ratings to "bb" from "bb+" and affirmed the financial strength rating of B(Fair) of National Foundation Life Insurance Company and Freedom Life Insurance Company of America, both members of the USHEALTH Group. All companies are domiciled in Fort Worth, Texas. The outlook for all ratings is stable. The downgrading of the ICRs reflects the larger than expected 2007 operating loss reported by NFL, which was due to a non-recurring contingency charge related to outstanding litigation in a non core line of business. A.M. Best acknowledges that the group has taken steps to ensure the risk-based capital position is adequate for its current ratings. The group received capital contributions in the form of a surplus note to NFL from its parent, an extension of the maturity of the organization's bank line of credit and the sale of its non-core Medicare supplement and life insurance product lines. Additionally, NFL and FLICA operate in the increasingly competitive individual major medical market. Both companies are competing against larger competitors that have the advantage of deeper network discounts, better economies of scale and greater financial resources. A.M. Best also views cautiously the group's considerable growth plans over the next few years, particularly since a good portion of it is tied to fixed rate individual major medical products, which do not have credible experience. NEXTMEDIA OPERATING: Moody's Reviews 'B2' Rating for Possible Cut ----------------------------------------------------------------- Moody's Investors Service downgraded the probability of default rating for NextMedia Operating, Inc. to B3 from B2 and placed the B2 corporate family rating and all other ratings on review for downgrade. The lower PDR reflects a heightened probability of default. The company has not delivered its 2007 audited financials statements to lenders, placing the company in technical default. Furthermore, management continues to negotiate an amendment for its bank financial covenants, which it anticipates breaching for the first quarter of 2008. The agreement provides a 30 day cure period for delivery of financial statements, which Moody's anticipates NextMedia will satisfy based on its representation that the amendment process is the only issue delaying the audits. Moody's also believes the company will secure an amendment that incorporates a waiver of the first quarter non-compliance and better cushion for the future. However, the uncertainty, intensified by the protracted lender negotiations and difficult credit environment, suggest a rising cost to the amendment (both upfront fees and increased interest expense). As such, Moody's considers a negative rating action more likely, though does not expect the downgrade of the B2 corporate family rating would exceed one notch. Resolving the review is contingent on NextMedia's ability to deliver audited financial statements and secure an amendment, and Moody's will also evaluate its credit profile pro forma for the likely increase in interest cost. Since the proposed amendment will likely require NextMedia to raise proceeds from asset sales, Moody's does not expect to assign a stable outlook prior to execution of this obligation. In conjunction with the lower PDR, Moody's shifted to an above average recovery assumption for the consolidated enterprise in an event of default, based on NextMedia's reasonably sound business profile and the value of its outdoor advertising assets and FCC licenses, which create better perceived loan-to-value, notwithstanding near-term liquidity concerns. As a result, point estimates for loss on the first lien bank debt improved. Additionally, Moody's lowered the second lien bank rating to Caa2 from Caa1. The downgrade incorporates Moody's view that these lenders will bear the incremental expected credit loss associated with the heightened probability of default. A summary of rating actions: NextMedia Operating, Inc. Downgrades -- Probability of Default Rating, Downgraded to B3 from B2 -- Senior Secured Bank Credit Facility, Downgraded to Caa2, LGD5, 75% from Caa1 On Review for Possible Downgrade -- Corporate Family Rating, currently B2 -- Probability of Default Rating, currently B3 -- Senior Secured First Lien Bank Credit Facility, currently B1, LGD2, 23% -- Senior Secured Second Lien Bank Credit Facility, currently Caa2, LGD 5, 75% -- Outlook, Changed To Rating Under Review From Negative NextMedia's B2 corporate family rating continues to reflect high leverage, minimal free cash flow, and lack of scale, as well as the maturity and inherent cyclicality of the radio industry. Furthermore, NextMedia has experienced below industry revenue growth in both radio and outdoor, due in part to internal operating challenges. The company's geographic diversification, high margins, and outdoor advertising assets, which Moody's believes have better growth prospects than radio, support the rating. NextMedia Operating, Inc., headquartered in Greenwood Village, Colorado, operates 42 radio stations in eleven mid-sized and suburban markets and over 8,150 outdoor displays in nine markets. NORTH OAKLAND: Failure to Pay on Time Prompts Moody's Junk Rating ----------------------------------------------------------------- Moody's Investors Service downgraded North Oakland Medical Center's long-term rating to C from B3. This action affects approximately $38 million of Series 1993 bonds outstanding. The downgrade action follows NOMC's failure to make its regularly scheduled debt service payment on Feb. 1, 2008. The total amount due to bondholders on Feb. 1, 2008 was $1,142,700 (representing an interest only payment). Payments to bondholders are due on February 1 and August 1 each year. The next payment to bondholders is due Aug. 1, 2008. The total payment due on Aug. 1, 2008 is $2,627,700 ($1,142,700 interest due, $1,485,000 principal due). The failure to make the bond payment followed NOMC's failure to make its Jan. 15, 2008 Base Rent payment due under the Going Concern Lease agreement between NOMC and the Pontiac Hospital Financial Authority. The Base Rent payment due on Jan. 15, 2008 was $942,600 ($571,350 interest and $371,250 principal). Base Rent payments from NOMC are due every quarter. The next payment is due April 15, 2008; Moody's does not believe that NOMC will meet the Base Rent payment due on April 15, 2008. NOMC has a debt service reserve fund in place. The DSRF has not been accessed to pay bondholders. Moody's believes that expected recovery value to bondholders is minimal. NOVASTAR MORTGAGE: Fitch Slashes Ratings to CCC on Seven Classes ---------------------------------------------------------------- Fitch Ratings has taken rating actions on Novastar mortgage pass- through certificates. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are removed. Affirmations total $1.9 billion and downgrades total $534.1 million. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: Novastar Mortgage Funding Trust, Series 2005-1 -- $27.3 million class A-1A affirmed at 'AAA', (BL: 96.47, LCR: 7.4); -- $6.8 million class A-1B affirmed at 'AAA', (BL: 95.33, LCR: 7.32); -- $17.7 million class A-2C affirmed at 'AAA', (BL: 96.93, LCR: 7.44); -- $103.9 million class M1 affirmed at 'AA+', (BL: 71.71, LCR: 5.5); -- $39.9 million class M2 affirmed at 'AA', (BL: 61.80, LCR: 4.74); -- $31.5 million class M3 affirmed at 'AA-', (BL: 53.91, LCR: 4.14); -- $32.5 million class M4 affirmed at 'A+', (BL: 45.71, LCR: 3.51); -- $29.4 million class M5 affirmed at 'A+', (BL: 36.70, LCR: 2.82); -- $21.0 million class M6 affirmed at 'A', (BL: 32.33, LCR: 2.48); -- $20.0 million class B1 affirmed at 'A-', (BL: 27.38, LCR: 2.1); -- $18.9 million class B2 affirmed at 'BBB+', (BL: 22.41, LCR: 1.72); -- $21.0 million class B3 affirmed at 'BB', (BL: 16.77, LCR: 1.29); -- $18.9 million class B4 downgraded to 'CCC' from 'BB' (BL: 12.40, LCR: 0.95). Deal Summary -- Originators: Novastar; -- 60+ day Delinquency: 24.90%; -- Realized Losses to date (% of Original Balance): 1.76%; -- Expected Remaining Losses (% of Current balance): 13.03%; -- Cumulative Expected Losses (% of Original Balance): 4.27%. NovaStar Mortgage Funding Trust, Series 2005-2 -- $94.4 million class A-1A affirmed at 'AAA', (BL: 80.85, LCR: 5.37); -- $23.6 million class A-1B affirmed at 'AAA', (BL: 73.21, LCR: 4.86); -- $7.5 million class A-2C affirmed at 'AAA', (BL: 98.50, LCR: 6.54); -- $59.0 million class A-2D affirmed at 'AAA', (BL: 72.79, LCR: 4.83); -- $89.1 million class M-1 affirmed at 'AA+', (BL: 54.53, LCR: 3.62); -- $34.2 million class M-2 affirmed at 'AA+', (BL: 47.42, LCR: 3.15); -- $27.0 million class M-3 affirmed at 'AA+', (BL: 39.42, LCR: 2.62); -- $33.3 million class M-4 affirmed at 'AA', (BL: 33.86, LCR: 2.25); -- $24.3 million class M-5 downgraded to 'A' from 'AA-' (BL: 26.32, LCR: 1.75); -- $13.5 million class M-6 downgraded to 'BB' from 'A+' (BL: 19.20, LCR: 1.27); -- $13.5 million class M-7 downgraded to 'B' from 'A' (BL: 17.54, LCR: 1.16); -- $13.5 million class M-8 downgraded to 'B' from 'BBB+' (BL: 15.86, LCR: 1.05); -- $13.5 million class M-9 downgraded to 'CCC' from 'BBB-' (BL: 14.06, LCR: 0.93); -- $18.0 million class M-10 downgraded to 'CCC' from 'BB' (BL: 11.64, LCR: 0.77); -- $18.0 million class M-11 downgraded to 'C/DR4' from 'CC/DR3' (BL: 10.95, LCR: 0.73). Deal Summary -- Originators: Novastar; -- 60+ day Delinquency: 26.07%; -- Realized Losses to date (% of Original Balance): 1.53%; -- Expected Remaining Losses (% of Current balance): 15.06%; -- Cumulative Expected Losses (% of Original Balance): 5.58%. NovaStar Mortgage Funding Trust Series, 2005-3 -- $260.9 million class A-1A affirmed at 'AAA', (BL: 54.81, LCR: 3.01); -- $188.9 million class A-2C affirmed at 'AAA', (BL: 57.55, LCR: 3.16); -- $78.2 million class A-2D affirmed at 'AAA', (BL: 51.40, LCR: 2.83); -- $70.0 million class M-1 affirmed at 'AA+', (BL: 41.87, LCR: 2.3); -- $60.0 million class M-2 affirmed at 'AA+', (BL: 36.82, LCR: 2.02); -- $47.5 million class M-3 downgraded to 'A' from 'AA' (BL: 31.61, LCR: 1.74); -- $30.0 million class M-4 downgraded to 'BBB' from 'AA' (BL: 28.28, LCR: 1.56); -- $30.0 million class M-5 downgraded to 'BB' from 'AA-' (BL: 24.93, LCR: 1.37); -- $18.8 million class M-6 downgraded to 'BB' from 'AA-' (BL: 22.79, LCR: 1.25); -- $18.8 million class M-7 downgraded to 'B' from 'A+' (BL: 20.56, LCR: 1.13); -- $18.8 million class M-8 downgraded to 'B' from 'A' (BL: 18.31, LCR: 1.01); -- $17.5 million class M-9 downgraded to 'CCC' from 'A' (BL: 16.12, LCR: 0.89); -- $16.2 million class M-10 downgraded to 'CCC' from 'BB' (BL: 14.06, LCR: 0.77); -- $25.0 million class M-11 downgraded to 'CC/DR5' from 'B' (BL: 11.02, LCR: 0.61). Deal Summary -- Originators: Novastar; -- 60+ day Delinquency: 29.10%; -- Realized Losses to date (% of Original Balance): 1.02%; -- Expected Remaining Losses (% of Current balance): 18.19%; -- Cumulative Expected Losses (% of Original Balance): 7.69%. NovaStar Mortgage Funding Trust 2005-4 -- $262.5 million class A-1A affirmed at 'AAA', (BL: 45.72, LCR: 2.51); -- $22.8 million class A-2B affirmed at 'AAA', (BL: 92.60, LCR: 5.08); -- $110.9 million class A-2C affirmed at 'AAA', (BL: 50.20, LCR: 2.75); -- $38.0 million class A-2D affirmed at 'AAA', (BL: 44.20, LCR: 2.42); -- $47.2 million class M-1 affirmed at 'AA+', (BL: 36.79, LCR: 2.02); -- $43.2 million class M-2 downgraded to 'A' from 'AA+' (BL: 30.83, LCR: 1.69); -- $28.8 million class M-3 downgraded to 'BBB' from 'AA' (BL: 26.65, LCR: 1.46); -- $21.6 million class M-4 downgraded to 'BB' from 'AA-' (BL: 23.47, LCR: 1.29); -- $19.2 million class M-5 downgraded to 'B' from 'A+' (BL: 20.62, LCR: 1.13); -- $16.0 million class M-6 downgraded to 'B' from 'A' (BL: 18.15, LCR: 0.99); -- $14.4 million class M-7 downgraded to 'CCC' from 'A-' (BL: 15.75, LCR: 0.86); -- $12.8 million class M-8 downgraded to 'CCC' from 'BBB' (BL: 13.63, LCR: 0.75); -- $11.2 million class M-9 downgraded to 'CC/DR5' from 'BB' (BL: 11.85, LCR: 0.65); -- $11.2 million class M-10 downgraded to 'CC/DR5' from 'BB' (BL: 10.11, LCR: 0.55); -- $12.0 million class M-11 revised to 'C/DR6' from 'C/DR4' (BL: 8.29, LCR: 0.45). Deal Summary -- Originators: Novastar; -- 60+ day Delinquency: 26.85%; -- Realized Losses to date (% of Original Balance): 1.24%; -- Expected Remaining Losses (% of Current balance): 18.24%; -- Cumulative Expected Losses (% of Original Balance): 9.18%. 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 2005 with regard to continued poor loan performance and home price weakness. ORAGENICS INC: Kirkland Russ Murphy Expresses Going Concern Doubt ----------------------------------------------------------------- Kirkland Russ Murphy & Tapp, PA, raised substantial doubt about the ability of Oragenics, Inc., to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2007. The auditor pointed to the company's recurring operating losses, negative operating cash flows and accumulated deficit. The company posted a net loss of $2,311,712 on total sales of $133,088 for the year ended Dec. 31, 2007, as compared with a net loss of $2,935,719 on total sales of $66,176 in the prior year. At Dec. 31, 2007, the company's balance sheet showed $1,151,377 in total assets, $331,494 in total liabilities and $819,883 stockholders' equity. At Dec. 31, 2007, the company has an accumulated deficit of $13,970,793. A full-text copy of the company's 2007 annual report is available for free at: http://ResearchArchives.com/t/s?29bd About Oragenics Inc. Oragenics, Inc., (AMEX: ONI) -- www.oragenics.com/ -- operates as an early-stage biotechnology company in the United States. It primarily focuses on developing technologies associated with oral health, broad spectrum antibiotics, and other general health benefits. The company develops SMaRT Replacement Therapy, which is a painless topical treatment for protection against tooth decay; and Mutacin 1140, an antibiotic with antimicrobial activity against gram-positive bacteria, including methicillin-resistant Staphylococcus aureus. It also develops Probiora3, an oral rinse probiotics' technology that employs three natural strains of beneficial bacteria, which promote oral health and inhibit the growth of harmful bacteria that cause periodontal disease and tooth decay; and IVIAT and CMAT technologies that enable the identification of novel and potentially important gene targets associated with the natural onset and progression of infections, cancers, and other diseases in humans and other living organisms, including plants. In addition, Oragenics develops DPOLT, or differentially protected orthogonal lantionine technology, which is a solid phase peptide synthesis platform technology that has various applications for the manufacture of commercially important bioactive peptides. The company was founded in 1996 and is based in Alachua, Florida. PEOPLES CHOICE: Files Amended Ch. 11 Plan and Disclosure Statement ------------------------------------------------------------------ People's Choice Financial Corp. and its debtor-affiliates filed with the United States Bankruptcy Court for the Central District of California their First Amended Joint Liquidating Plan of Reorganization and First Amended Disclosure Statement for the Amended Plan. The Amended Plan generally reduces the projected recovery of unsecured creditors: -- holders of general unsecured claims against People's Choice Home Loan, Inc., will have a 9% to 13% recovery, instead of 10% to 16%; -- holders of general unsecured claims against People's Choice Funding, Inc., will receive 11% to 15%, instead of 14 to 18 cents on the dollar; and -- holders of general unsecured claims against People's Choice Financial Corporation will obtain a 0% to 1% recovery. Holders of interests in the Debtors will retain no value under the Amended Plan. Holders of secured, priority and administrative claims will receive full recovery on their claims. As previously reported, a liquidating trustee will take over the Debtors' assets on the effective date of the Plan and will distribute proceeds to holders of allowed claims. PCHLI and Funding will be dissolved but PCFC will remain, as a holding company with no operations, on the effective date of the Plan. The Amended Plan provides that the employment of Matthew E. Kvarda, as the Debtors' chief restructuring officer, and Sven Johnson, the assistant chief restructuring officer will be deemed to terminate as of the effective date of the Plan. Mr. Kvarda, however, will serve as the chief executive officer of Reorganized PCFC until it is dissolved. The Debtors also inform parties-in-interest that issues have arisen after the consummation of the sale of the Debtors' loan origination and servicing rights to UBS AG for $2,500,000. The parties are attempting to resolve the issue with regards to UBS' preservation of estate data and its allowing the estates to access that data. If a resolution cannot be reached, litigation may become necessary and the estates' rights and causes of action with respect to those matters will be reserved and transferred to the Liquidating Trustee, according to Jeffrey W. Dulberg, Esq., at Pachulski Stang Ziehl & Jones LLP, in Los Angeles, California. Notwithstanding any provision providing for the rejection of executory contracts and unexpired leases that exist between the Debtors and any other person, any insurance policy or coverage that is determined to be executory will not be automatically rejected, and will be the subject of a specific motion to assume or reject, which power the Liquidating Trustee will retain following the Effective Date. Mr. Dulberg adds that subsequent to the issuance of the New Common Stock, which will be the sole class of securities, the Reorganized PCFC charter will be amended to prohibit the issuance of non-voting equity securities. The securities will be held by the Liquidating Trustee. Injunction At all times on or after the Effective Date, all Persons who have been, are, or may be holders of claims against or interests in any of the Debtors arising before the Effective Date, will be permanently enjoined from taking certain actions on account of any of those claims or interests against any of the Debtors, their estates, Reorganized PCFC, the Liquidating Trusts or their property, Mr. Dulberg tells the Court. All persons are enjoined from asserting against any property that is to be distributed under the Plan any Claims, rights, causes of action, liabilities, or Interests based upon any act, omission, transaction or other activity except as expressly provided in the Plan or order confirming the Plan, Mr. Dulberg continues. Set Off and Recoupment The Liquidating Trustee may set off, recoup or withhold against the distributions to be made on account of any Allowed Claim or Cause of Action any Claims or Causes of Action that the Debtors or the estates may have against the entity holding the Allowed Claim or Cause of Action. Mr. Dulberg says that the Debtors, the estates and the Liquidating Trusts will not waive or release any Claim or Cause of Action against those entities by failing to effect a set-off or recoupment; by failing to assert any matter before confirmation or the Effective Date; by allowing any Claim or Cause of Action against the Debtors or the estates; or by making a distribution on account of an Allowed Claim or Cause of Action. Treatment of Claims Under the Amended Disclosure Statement, Intercompany Non- Administrative Claims will be treated in accordance with the Intercompany Settlement. People's Choice Home Loan, Inc., will hold a claim against People's Choice Funding, Inc., of $18,844,704. The claim will be treated the same as a Class 4B Claim. All other Intercompany Non-Administrative Claims will receive no distribution. Unsecured creditors will be paid on these terms: -- holders of general unsecured claims against People's Choice Home Loan, Inc., will have a 9% to 13% recovery, instead of 10% to 16%; -- holders of general unsecured claims against People's Choice Funding, Inc., will receive 11% to 15%, instead of 14 to 18 cents on the dollar; and -- holders of general unsecured claims against People's Choice Financial Corporation will obtain a 0% to 1% recovery. Description Estimated Class [Range of Claims] Treatment Recovery ----- ----------- --------- -------- n/a Administrative Claims Unimpaired 100% [$2,883,142 to $3,493,535] n/a Priority Tax Claims Unimpaired 100% [$1,326,233 to $1,767,310] 1A Secured Claims against PCHLI Unimpaired 100% [$4,108,733 to $4,693,418] 1B Secured Claims against Funding Unimpaired 100% [$0] 1C Secured Claims against PCFC Unimpaired 100% [$0] 2A Priority Non-Tax Claims against Unimpaired 100% PCHLI [$273,679 to $779,509] 2B Priority Non-Tax Claims against Unimpaired 100% Funding [$6,938 to $8,920] 2C Priority Non-Tax Claims against Unimpaired 100% PCFC [$2,895 to $3,723] 3A WARN Act Claims against PCHLI Impaired [TBD] [To Be Determined] 3B WARN Act Claims against Funding Impaired [TBD] [To Be Determined] 3C WARN Act Claims against PCFC Impaired [TBD] [To Be Determined] 4A General Unsecured Claims against Impaired 9% to 13% PCHLI [$184,818,510 to $293,333,534] 4B General Unsecured Claims against Impaired 11% to 15% Funding [$84,036,084 to $88,842,343] 4C General Unsecured Claims against Impaired 0% to 1% PCFC [$82,865,782 to $87,745,778] 5A Intercompany Non-Administrative Impaired 0% Claims against PCHLI 5B Intercompany Non-Administrative Impaired 14% to 18% Claims against Funding [$18,844,704] 5C Intercompany Non-Administrative Impaired 0% Claims against PCFC 6A Interests in PCHLI Impaired 0% 6B Interests in Funding Impaired 0% 6C Interests in PCFC Impaired 0% A copy of the redlined Amended Disclosure Statement is available for free at http://bankrupt.com/misc/PC_RedlineDS.pdf A copy of the redlined Amended Plan is available for free at http://bankrupt.com/misc/PC_RedlinePlan.pdf Liquidation Analysis Supporting Chapter 11 Plan According to Jeffrey W. Dulberg, Esq., at Pachulski Stang Ziehl & Jones LLP, in Los Angeles, California, among other reasons, holders of allowed claims will receive more under the Chapter 11 Plan than they would receive if the cases were converted to Chapter 7: -- Chapter 7 comes with attendant expenses that Chapter 11 will not; -- The Plan eliminates intercompany litigation and the associated cost through the Intercompany Settlement; -- The Debtors will be able to preserve their REIT status in Chapter 11, which they will lose in Chapter 7, potentially avoiding significant claims against the estates; and -- Chapter 7 would likely result in significant delays in payments made to creditors. A copy of the Debtors' Liquidation Analysis is available for free at http://bankrupt.com/misc/PC_LiquidationAnalysis.pdf About People's Choice Headquartered in Irvine, California, People's Choice Financial Corp. -- http://www.pchl.com/-- is a residential mortgage banking company, through its subsidiaries, originates, sells, securitizes and services primarily single-family, non-prime, residential mortgage loans. The company and two of its affiliates, People's Choice Home Loan, Inc., and People's Choice Funding, Inc., filed for chapter 11 protection on March 20, 2007 (Bankr. C.D. Calif. Case No. 07-10772). J. Rudy Freeman, Esq., at Pachulski, Stang, Ziehl & Jones, L.L.P., represents the Debtors. Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. In its schedules filed with the Court, People's Choice disclosed total assets of $806,776,901 and total liabilities of $105,772,386. (People's Choice Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). The U.S. Bankruptcy Court for the Southern District of Florida granted a request by TOUSA Inc. and its debtor-affiliates to establish May 19, 2008, at 5:00 p.m., as the last date and time parties-in-interest can file proofs of claim against them. PHOENIX COLOR: S&P Withdraws Ratings on Visant Corp. Acquisition ---------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings on Phoenix Color Corp., including the 'B' corporate credit rating. The withdrawal follows the redemption of the company's $105 million subordinated notes, concurrent with the closing of the acquisition of the company by Visant Corp. Ratings List Ratings Withdrawn To From -- ---- Phoenix Color Corp. Corporate Credit Rating NR B/Watch Pos/-- Subordinated NR CCC+/Watch Pos PHOENIX COLOR: Completes Merger Agreement With Visant for $219MM ---------------------------------------------------------------- Visant Corporation reported that Visant's previously disclosed merger transaction with Phoenix Color Corp. is complete. Phoenix Color will operate as a wholly owned subsidiary of Visant. The Troubled Company Reporter reported on Feb. 14, 2008 that Phoenix Color Corp. and Visant Corporation signed a definitive agreement and plan of merger. The total purchase consideration is $219.0 million, subject to certain post-closing adjustments. About Visant Holding Headquartered in Armonk, New York, Visant Holding Corp. -- http://www.visant.net/-- is a marketing and publishing services enterprise servicing the school affinity, direct marketing, fragrance and cosmetics sampling, and educational publishing markets. The company operates through three segments: jostens scholastic, which provides services related to the marketing, sale and production of class rings, graduation products and other scholastic products; jostens yearbook, which provides services related to the publication, marketing, sale and production of school yearbooks, and marketing and publishing services, which produces advertising sampling systems, primarily for the fragrance, cosmetics and personal care market segments, and provides products and services to the direct marketing sector. The company also produces book covers and other components for educational publishers. About Phoenix Color Headquartered in Hagerstone, Maryland, Phoenix Color -- http://www.phoenixcolor.com-- is a book component printer. The company's book components division produces a variety of products, such as book jackets, paperback covers, endpapers, and inserts for publishers. Its rockaway division teams up with printers in Asia to offer domestic and international illustrated and multicolor book printing options. Phoenix Color's clients consist of such leading global publishing companies as HarperCollins, Pearson Publishing, Simon & Schuster, Random House, Holtzbrinck Publishers, and McGraw-Hill among others. PLASTECH ENGINEERED: Wants to Borrow $80MM from Lender Consortium ----------------------------------------------------------------- Plastech Engineered Products, Inc., and its debtor affiliates seek permission from the U.S. Bankruptcy Court for the Eastern District of Michigan to enter into series of transactions under which, subject to various conditions, an entity to be formed by their major customers General Motors Corporation, Ford Motor Company, Johnson Controls Inc., and Chrysler LLC, will fund up to $80,000,000 of financing that will provide: (a) additional liquidity to the Debtors that will enable them to finance their operations until August 31, 2008; and (a) the New DIP Lender's purchase of, among other things, (i) the existing Court-approved interim revolving facility provided by a group of lenders, led by Bank of America, N.A., and (ii) a 100% participation in the remaining debts of the Debtors under a prepetition revolving loan provided by the BofA lenders. The Debtors also seek the Court's approval for continued access, until the earlier of April 30 or the closing of the debt acquisition transactions, to the interim DIP financing provided by BofA, which was previously capped to $49,151,000. The lenders under the Interim DIP Facility comprise the same parties who funded the Debtors' $200,000,000 Revolving Credit Facility entered into on Feb. 12, 2007. The New DIP Lender's purchase of Debtors' prepetition and postpetition revolving debts is contingent on a ruling by the Court that the Revolving Lenders have perfected on their liens on the Debtors, and that potential claims against the Revolving Lenders are waived. In addition to the DIP financing, the Debtors also ask the Court to allow them to access cash collateral subject to a first lien of the Prepetition Revolving Lenders and a second lien of the First Lien Term Lenders, i.e., lenders under a $265,000,000 first lien term loan facility, entered into on February 12, 2007. The Debtors will provide adequate protection to these parties for any diminution in value of their collateral. In light of their immediate need for access to cash to offset their liquidity problems, the Debtors ask the Court to hold an expedited hearing on April 2, 2008, to consider interim approval of the (i) Major Customers Financing, (ii) the extension of the Interim DIP Facility, and (iii) continued use of cash collateral. The Debtors will seek final approval of the DIP Facility at a hearing scheduled for April 30, 2008. Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Wilmington, Delaware, explains, the DIP financing proposal provided by the Majors Customers is the most favorable under the circumstances. The Debtors considered that: (i) The Major Customers are the parties most invested in the continuation of the Debtors' businesses and the most willing to provide financing to the Debtors to ensure an ultimate reorganization of the Debtors' businesses; (ii) The Major Customers' preexisting knowledge of the Debtors' business provided significant benefits, including the speed with which the Major Customers are able to close; (iii) The Debtors did not believe that any lender would have been willing to loan new money to the Debtors other than on similar terms to those contained in the Second DIP Credit Agreement, in light of the Debtors' difficulty in obtaining alternative postpetition financing proposals from other lenders, including the Revolving DIP Lenders or the Term Loan Lenders, through: -- credit allowable as an administrative expense under Section 503(b)(1) of the Bankruptcy Code; -- unsecured credit allowable under Sections 364(a) and 364(b), or; -- credit secured by liens on the Debtors' assets junior to the liens of the Debtors' prepetition secured financing lenders, as is contemplated by Section 364(c)(3). Mr. Galardi asserts the entry into the Second DIP Credit Agreement will afford the Debtors valuable additional time to pursue their restructuring options while maintaining the going concern value of the Debtors' business. 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 Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) PLASTECH ENGINEERED: Chrysler Disputes Roush Claim on Molds ----------------------------------------------------------- As reported in the Troubled Company Reporter on March 19, 2008, Roush Manufacturing asked the U.S. Bankruptcy Court for the Eastern District of Michigan to lift the automatic stay to allow it to recover molds that Plastech Engineered Products Inc. and its debtor-affiliates use in the production of parts for particular vehicles manufactured by Chrysler LLC. Chrysler Motors Company, LLC and Chrysler Canada, Inc., through their counsel, Michael C. Hammer, Esq., at Dickinson Wright PLLC, in Ann Arbor, Michigan, asserts that Roush Manufacturing has not and cannot establish "cause" for relief from the stay under Section 362(d)(1) of the U.S. Bankruptcy Code. Mr. Hammer asserts that Roush, with respect to its claims as to depreciating value, should be required to produce appropriate proof that the value of the Molds is in fact diminishing, and that it is not adequately protected. He further asserts that Roush's unsupported allegation -- Chrysler is "more likely" to replace the Molds than it is to pay for the Molds -- is inaccurate. Mr. Hammer tells the Court that Chrysler has maintained it would escrow the amount necessary to satisfy any mold builders' claims to unpaid tooling, including that of Roush, saying that "it will immediately pay the $13,400,000 into an escrow account so that it may also take possession of the unpaid tooling as well as the paid tooling". If Chrysler desired to simply replace the Molds, it would have made no proposal, Mr. Hammer states. He also avers that Roush's request should be denied because Chrysler -- not Roush -- has the superior right to possess the Molds. The Court has already found that Chrysler has an immediate right to possess the tooling, stating in its Opinion that, "[T]here is nothing about their arguments that would in any way diminish the right of Chrysler to fully expect that the possessory rights conferred upon it in the tooling acknowledges to be enforced... The Court concludes that Chrysler has met its burden to demonstrate a strong or substantial likelihood or probability that it will be successful on the merits with respect to its right to demand possession of the tooling that it has paid for and any unpaid tooling with respect to which there is a dispute." Goldman Sachs Says Roush Not Entitled to Lien Goldman Sachs Credit Partners L.P., as agent to the lenders under the $265,000,000 first lien term loan facility, entered into on February 12, 2007, says Roush's request to lift the automatic stay is not supported by the Bankruptcy Code and should be denied. Louis P. Rochkind, Esq., at Jaffe Raitt Heuer & Weiss, in Southfield, Michigan, asserts Roush does not possess a lien on the Molds. Mr. Rochkind asserts Roush failed to properly file a financing statement under the Michigan Uniform Commercial Code as required under the Michigan Mold Lien Act. Roush's financing statement lists the debtor name as the trade name "Plastech" rather than the correct legal name "Plastech Engineered Products, Inc." This error, Mr. Rochkind says, renders the financing statement ineffective under U.C.C. Section 9502 because (i) a trade name is insufficient to provide the name of the debtor under U.C.C. Section 9503(3); and (ii) the name "Plastech" is seriously misleading because Roush's financing statement did not show up on a recent Online UCC lien search conducted using Michigan's standard search logic of searching debtor names "exactly as requested, with no variations." Mr. Rochkind also asserts the molds against which Roush seeks to exercise rights and remedies are currently encumbered by properly perfected senior liens of the Prepetition First Lien Term Lenders, as well as the Prepetition Revolving Lenders and DIP Lenders. Granting Roush's request would potentially permit Roush, an unsecured creditor, to repossess a secured creditor's collateral, Mr. Rochkind avers. Debtors Object The Debtors ask the Court to deny Roush' request, citing that: (a) the Molds are necessary to an effective reorganization; (b) Roush has failed to demonstrate that cause exists to modify the automatic stay under section 362(d)(1); (c) Roush's assersions are based upon a disputed premise -- that Roush has a valid perfected security interest in the Molds, and; (d) Roush's request is procedurally improper and seeks relief properly sought only through the commencement of an adversary proceeding. Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Wilmington, Delaware says the Debtors' continued right to use the Molds is necessary to the Debtors' reorganization efforts in that the molds are used in the RT Program to manufacture parts for various Chrysler vehicles. The Debtors' revenue from this program amounts to approximately $15,000,000 annually. At this stage of the reorganization process, Mr. Galardi relates, the Debtors continue to produce parts for Chrysler using the Molds, and have been negotiating with Chrysler for continued production of component parts for a period of time. Mr. Galardi states that, conversely, Roush cannot demonstrate it will suffer any legally cognizable harm if the motion is denied as any harm would be monetary harm at best. He notes that monetary damages, even if significant, do not constitute irreparable harm. Additionally, pursuant to Michigan Law, Roush's U.C.C. financing statement is seriously misleading and, therefore, ineffective, Mr. Galardi avers. The Financing Statement identifies "Plastech" as the organization name, instead of "Plastech Engineered Products, Inc.", he reiterates. About Chrysler LLC Based in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter on Nov. 12, 2007, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Chrysler LLC and DaimlerChrysler Financial Services Americas LLC and removed it from CreditWatch with positive implications, where it was placed Sept. 26, 2007. S&P said the outlook is negative. 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 Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) PLASTECH ENGINEERED: Goldman Opposes Claim Waivers in DIP Loan -------------------------------------------------------------- Plastech Engineered Products Inc. and its debtor-affiliates had sought a ruling from the U.S. Bankruptcy Court for the Eastern District of Michigan that: -- the liens in the Debtors' assets of: (i) the lenders to the postpetition interim revolving loan, which initially provided for $38,000,000, and (ii) the lenders under the $200,000,000 Revolving Credit Facility, entered into prepetition, on Feb. 12, 2007, are legal, valid, binding, enforceable perfected and non- avoidable liens; and -- potential claims against the Revolving Lenders will be waived. Goldman Sachs Credit Partners L.P., as agent to the lenders under the Debtors' $265,000,000 First Lien Term Loan Facility, does not contest any of the perfection, priority, validity or enforceability of any lien on any of the collateral held by or on behalf of the prepetition revolving lenders. Goldman Sachs, however, objects to the Debtors' request to the extent it seeks to: (a) waive all claims under Section 506(c) of the Bankruptcy Code against the "liquid collateral", which would result in the economic risk of all the claims being shifted entirely to the Prepetition First Lien Term Lenders and Second Lien Term Lenders, i.e., the lenders under the $100,000,000 second lien term loan facility provided to the Debtors prepetition; (b) release claims that may exist or arise in the future against any of the Major Customers by virtue of them being participants or assignees in respect of the indebtedness owed to the Pre-Petition Revolving Lenders; and (c) grant the Major Customers first priority liens or super- priority administrative claims in respect of any unencumbered assets of the Debtors to secure repayment of any debtor-in-possession financing they are providing to the Debtors. According to Louis P. Rochkind, Esq., at Jaffe Raitt Heuer & Weiss, in Southfield, Michigan, the Debtors' proposal goes well beyond their stated goal of confirming the validity, enforceability and non-avoidability of the Prepetition Revolving Lenders' liens and claims, and thus, is inappropriate or at the very least premature. Mr. Rochkind avers that granting the Major Customers those liens or claims -- by virtue of their participation interests in the prepetition debt -- would provide them substantial benefits and protections prior to the Court approving, or the participating customers providing, the extended DIP Financing, he says. Goldman Sachs also seeks clarification that any order approving the Debtors' request would not constitute a finding or determination regarding: (i) whether any or all hedging termination liabilities are secured, and if so, by which collateral; and (ii) whether tooling constitutes Liquid Collateral or Fixed Collateral. First Lien Lenders Group Wants Waivers Limited The Steering Committee of First Lien Term Loan Lenders does not oppose a finding affirming the validity and priority of the liens on the Liquid Collateral or a release and waiver of claims against the Debtors' prepetition lenders relating to the Revolving Facilities to the extent that the claims have arisen prior to the Petition Date. However, the Steering Committee opposes any prospective waiver and release of claims, particularly to the extent the claims may arise from the postpetition conduct of the Revolving Lenders, the Revolving DIP Lenders or the Participating Customers. Louis P. Rochkind, Esq., at Jaffe Raitt Heuer & Weiss, P.C., in Southfield, Michigan, asserts there is no basis in law or equity for a waiver of defenses, counterclaims, or subordination claims that may arise from conduct that has not yet been investigated or may occur in the future. He says the proposed Major Customers Financing appears to create opportunities for self-dealing, and it is inappropriate to release the Participating Customers from any claims that might ultimately result from this dual position. Therefore, the Court should limit the releases and waivers to prepetition claims, provide for protections against potential participating customer self-dealing, and should further clarify that any lien affirmation, waiver or release does not apply to the Debtors' claims against Chrysler LLC, any claims under interest rate swaps or other hedging obligations or with respect to any claims that the participating customers may have to set off under Section 553 of the Bankruptcy Code, Mr. Rochkind avers. Two Parties Want Equipment Excluded from Collateral A. Roush Manufacturing Roush Manufacturing, Inc., objects to the granting of any liens on the molds it owns that are in the Debtors' possession. Roush asserts it is entitled to a first priority lien on molds it supplied to the Debtors, which still owe $245,305 for the molds, under the Michigan Mold Lien Act, MCL 445.611 et seq. Roush is wary that the Molds are part of the inventory pledged by the Debtors as collateral to the Lenders, and would therefore be subject to the priming lien to secure their DIP Loans, and as replacement liens to the Prepetition Revolving Lenders as adequate protection. Judy B. Calton, Esq., at Honigman Miller Schwartz and Cohn LLP, in Detroit, Michigan, asserts granting liens on the Molds to the Lenders will deprive Roush adequate protection on its interest on the Molds. She notes Roush will not benefit from any additional financing the Debtors may obtain using the lien on the molds. B. U.S. Bancorp U.S. Bancorp Equipment Finance, Inc., is a party to several personal property equipment lease agreements entered into between Plastech, as lessee, and U.S. Bancorp's predecessors-in-interest, as lessors, which leases were later assigned to U.S. Bancorp by the original or subsequent lessors under each of the leases. U.S. Bancorp objects to the Debtors' request to the extent the Debtors: (a) intend the Equipment to be included under the definition of Fixed Collateral under the Revolving Credit Facility, the First Lien Term Loan or the Second Lien Term Loan, or (b) seek to secure their obligations under the loans, the DIP Facility or the Customer Financing by granting any lien or encumbrance on the Equipment. Richard M. Meth, Esq., at Day Pitney LLP, in Florham Park, New Jersey, asserts that since the Debtors are not the owners of the Equipment under Lease from U.S. Bancorp, they are not authorized to grant a security interest in and to the Equipment. 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 Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) PORTER SQUARE II: Moody's Junks Rating on $9 Mil. Notes From 'Ba3' ------------------------------------------------------------------ Moody's Investors Service placed on review for possible downgrade the ratings on these notes issued by Porter Square CDO II, Ltd.: Class Description: $23,500,000 Class B Senior Secured Floating Rate Notes due 2040 -- Prior Rating: Aa2 -- Current Rating: Aa2, on review for possible downgrade Moody's also downgraded and left on review for possible further downgrade the ratings on these notes: Class Description: $10,000,000 Class C Mezzanine Secured Deferrable Floating Rate Notes due 2040 -- Prior Rating: Baa3, on review for possible downgrade -- Current Rating: Caa1, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $9,000,000 Class D Mezzanine Secured Deferrable Floating Rate Notes due 2040 -- Prior Rating: Ba3, on review for possible downgrade -- Current Rating: Ca According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. PORTER SQUARE III: Moody's Downgrades Ratings on Five Note Classes ------------------------------------------------------------------ Moody's Investors Service placed on review for possible downgrade the ratings on these notes issued by Porter Square CDO III, Ltd.: Class Description: $240,000,000 Class A-1 Senior Secured Floating Rate Notes Due April, 2041 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Additionally, Moody's downgraded and left on review for possible further downgrade the ratings on these notes: Class Description: $56,000,000 Class A-2 Senior Secured Floating Rate Notes Due April, 2041 -- Prior Rating: Aaa -- Current Rating: Aa3, on review for possible downgrade Class Description: $48,000,000 Class B Senior Secured Floating Rate Notes Due April, 2041 -- Prior Rating: Aa2, on review for possible downgrade -- Current Rating: Baa1, on review for possible downgrade Class Description: $14,000,000 Class C Mezzanine Secured Deferrable Floating Rate Notes Due April, 2041 -- Prior Rating: A2, on review for possible downgrade -- Current Rating: Ba1, on review for possible downgrade Class Description: $22,000,000 Class D Mezzanine Secured Deferrable Floating Rate Notes Due April, 2041 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: B3, on review for possible downgrade According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. PRC LLC: Files Disclosure Statement Supporting Chapter 11 Plan -------------------------------------------------------------- PRC, LLC; Panther/DCP Intermediate Holdings, LLC; PRC B2b, LLC; Access Direct Telemarketing, Inc.; and Precision Response of Pennsylvania, LLC delivered to the U.S. Bankruptcy Court for the Southern District of New York on April 1, 2008, a Disclosure Statement in support of their Joint Plan of Reorganization. The Debtors filed their proposed Plan on Feb. 12, 2008, and simultaneously, asked the Court for permission to file an accompanying Disclosure Statement at a later date. PRC LLC Chief Restructuring Officer Stephen R. Dube relates that the Disclosure Statement provides a summary of the Plan; contain important information concerning the classification of Claims and Pre-confirmation Equity Interests for voting purposes and the tabulation of votes; and narrates the events that led to the Debtors' bankruptcy filing. The Disclosure Statement describes the distributions contemplated for each of the Debtors and their creditors under the Plan, including the approximate allowed amount for each Class of Claims: Class Designation Approximate Allowed Amt. ----- ----------- ------------------------ N/A Administrative Expense $145,000, plus any Claims amounts incurred and payable in the ordinary course of business. N/A Postpetition Financing Undetermined Claims N/A Professional Compensation $3,120,000 & Reimbursement Claims N/A Priority Tax Claims Undetermined Class 1 Other Priority Claims $82,200 Class 2 Secured Tax Claims $2,123,000 Class 3 Other Secured Claims $0 Class 4 Prepetition First Lien $121,670,000 Claims Class 5 Prepetition Second Lien $67,000,000 Claims Class 6 General Unsecured Claims $17,000,000 to $32,000,000 Class 7 Pre-confirmation $0 Equity Interests The Disclosure Statement also sets forth the procedures and instructions for voting on the Plan and for filing objections to confirmation of the Plan. In light of these, the Debtors also presented to the Court a Plan of Reorganization dated April 1, 2008, to include the additional information noted in the Disclosure Statement. The Plan contemplates, among others, (i) the issuance to the Prepetition First Lien and Second Lien Agents of new membership interests in Post-confirmation Intermediate HoldCo on behalf of allowed First and Second Lien Claims; (ii) the cancellation of Pre-confirmation Equity interests; and (iii) the Reorganized Debtors' entry into an exit financing facility of up to $40 to $45 million. The Debtors maintain that the Disclosure Statement contains adequate information pursuant to Section 1125 of the Bankruptcy Code to enable a hypothetical investor of to make an informed judgment whether to accept or reject the Plan. Thus, they urge holders of impaired claims in Classes 4, 5 and 6 to vote to accept the Plan. The Debtors ask the Court to set June 19, 2008, as the hearing to consider confirmation of the Plan. The Debtors have yet to file plan supplements, including financial projections and liquidation analysis. A full-text copy of the PRC Disclosure Statement is available for free at: http://researcharchives.com/t/s?29ed A full-text copy of the PRC Plan of Reorganization dated April 1, 2008, is available for free at: http://researcharchives.com/t/s?29ee About PRC LLC Founded in 1982 and based in Fort Lauderdale, Florida, PRC, LLC -- http://www.prcnet.com/-- is a leading provider of customer management solutions. PRC markets its services to brand-focused, Fortune 500 U.S. corporations and delivers these services through a global network of call centers in the U.S., Philippines, India, and the Dominican Republic. PRC is the sole member of each of PRC B2B, LLC, and Precision Response of Pennsylvania, LLC, and the sole shareholder of Access Direct Telemarketing, Inc., each of which is a debtor and debtor- in-possession in PRC's joint Chapter 11 cases. Panther/DCP Intermediate Holdings, LLC, is the sole member of PRC. PRC, together with its operating subsidiaries PRC B2B, Access Direct, and PRC PA, is a leading provider of complex, consultative, outsourced services in the Customer Care and Sales & Marketing segments of the business process outsourcing industry. Since 1982, the company has acquired and grown customer relationships for some of the world's largest and most brand-focused corporations in the financial services, media, telecommunications, transportation, and retail industries. The company and four of its affiliates filed for Chapter 11 protection on Jan. 23, 2008 (Bankr. S.D.N.Y. Lead Case No. 08- 10239). Alfredo R. Perez, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. The Debtors chose Stephen Dube, at CXO LLC, as their restructuring and turnaround advisor. Additionally, Evercore Group LLC provides investment and financial counsel to the Debtors. The Debtors' consolidated financial condition as of Dec. 31, 2007 showed total assets of $354,000,000 and total debts of $261,000,000. The Debtors submitted to the Court a Chapter 11 Plan of Reorganization on Feb. 12, 2008. (PRC LLC Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) PRC LLC: Court Okays Regis McElhatton as Chief Executive Officer ---------------------------------------------------------------- PRC LLC and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the Southern District of New York to employ Regis McElhatton as their chief executive officer effective as of the date of bankruptcy. The Debtors asserted that Mr. McElhatton's employment is critical to their efforts to effectively reorganize and emerge from bankruptcy. As reported in the Troubled Company Reporter on March 18, 2008, the Debtors told the Court that Mr. McElhatton brings a 40-year background in banking and financial services to the Debtors. The Debtors and Mr. McElhatton entered into an employment agreement on Jan. 23, 2008. The Employment Agreement provides, among other things, that: (1) Mr. McElhatton will serve as chief executive officer of PRC from Jan. 23, 2008, through Jan. 23, 2009; (2) Mr. McElhatton is entitled to avail of the benefits provided under PRC's employee benefit plans or programs for its senior executives; (3) Mr. McElhatton is not entitled to any fee for serving in Panther/DCP Holdings' Board of Managers; (4) PRC has the right to terminate the employment upon 30 days' notice; and (5) Mr. McElhatton may terminate his employment for good reason within 30 days after the occurrence of a change of control, consummation of a Chapter 11 plan, a material breach of the employment agreement by PRC, among others. In exchange for his services, Mr. McElhatton will be entitled for receive a $75,000 monthly salary and will be reimbursed for the expenses he may incur in discharging his duties. Mr. McElhatton will also be entitled to a bonus of between: (i) 0% to 125% of a target Client Retention Incentive Bonus of $100,000; (ii) 0% to 110% of a target Exit Incentive Bonus of $100,000; and (iii) 0% to 100% of a target Restructuring Incentive Bonus of $100,000. Moreover, PRC agrees to indemnify Mr. McElhatton under the terms of the company's operating agreement and directors and senior officers' liability insurance. A full-text copy of the McElhatton Employment Agreement is available for free at: http://researcharchives.com/t/s?2934 About PRC LLC Founded in 1982 and based in Fort Lauderdale, Florida, PRC, LLC -- http://www.prcnet.com/-- is a leading provider of customer management solutions. PRC markets its services to brand-focused, Fortune 500 U.S. corporations and delivers these services through a global network of call centers in the U.S., Philippines, India, and the Dominican Republic. PRC is the sole member of each of PRC B2B, LLC, and Precision Response of Pennsylvania, LLC, and the sole shareholder of Access Direct Telemarketing, Inc., each of which is a debtor and debtor- in-possession in PRC's joint Chapter 11 cases. Panther/DCP Intermediate Holdings, LLC, is the sole member of PRC. PRC, together with its operating subsidiaries PRC B2B, Access Direct, and PRC PA, is a leading provider of complex, consultative, outsourced services in the Customer Care and Sales & Marketing segments of the business process outsourcing industry. Since 1982, the company has acquired and grown customer relationships for some of the world's largest and most brand-focused corporations in the financial services, media, telecommunications, transportation, and retail industries. The company and four of its affiliates filed for Chapter 11 protection on Jan. 23, 2008 (Bankr. S.D.N.Y. Lead Case No. 08- 10239). Alfredo R. Perez, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. The Debtors chose Stephen Dube, at CXO LLC, as their restructuring and turnaround advisor. Additionally, Evercore Group LLC provides investment and financial counsel to the Debtors. The Debtors' consolidated financial condition as of Dec. 31, 2007 showed total assets of $354,000,000 and total debts of $261,000,000. The Debtors submitted to the Court a Chapter 11 Plan of Reorganization on Feb. 12, 2008. (PRC LLC Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) PRC LLC: U.S. Trustee Amends Creditors Committee Composition ------------------------------------------------------------ Diana G. Adams, the U.S. Trustee for Region 2, amended the membership of the Official Committee of Unsecured Creditors of the Chapter 11 cases of PRC LLC, and its debtor-affiliates. The Creditors Committee comprises: 1. Verizon Communications Inc. Attention: William Vermette Asst. General Counsel 1133 19th Street, N.W. Washington, DC 20026 Tel No. :(703) 886-3301 2. IAC/InterActiveCorp. Attention: Gregg Winarski Associate General Counsel 555 West 18th Street New York, New York 10011 Tel No.: (212) 314-7376 3. SER Solutions, Inc. Attention: Jamie Oliver 45925 Horseshoe Drive, No. 150 Dulles, VA 20147 Tel No.: (703) 948-5645 4. TMP Worldwide Advertising & Communications, LLC Attention: Emerson Moore General Counsel 205 Hudson Street, 5th Floor New York, New York 10013 Tel No.: (646) 613-2060 5. NICE Systems Inc. Attention: David Ottensoser General Counsel 301 Route 17 North, 10th Floor Rutherford, NJ 07070 Tel No.: (201) 964-2772 Excel Marketing Solutions, Inc., and iEnergizer (USA) Inc., are no longer part of the Committee. About PRC LLC Founded in 1982 and based in Fort Lauderdale, Florida, PRC, LLC -- http://www.prcnet.com/-- is a leading provider of customer management solutions. PRC markets its services to brand-focused, Fortune 500 U.S. corporations and delivers these services through a global network of call centers in the U.S., Philippines, India, and the Dominican Republic. PRC is the sole member of each of PRC B2B, LLC, and Precision Response of Pennsylvania, LLC, and the sole shareholder of Access Direct Telemarketing, Inc., each of which is a debtor and debtor- in-possession in PRC's joint Chapter 11 cases. Panther/DCP Intermediate Holdings, LLC, is the sole member of PRC. PRC, together with its operating subsidiaries PRC B2B, Access Direct, and PRC PA, is a leading provider of complex, consultative, outsourced services in the Customer Care and Sales & Marketing segments of the business process outsourcing industry. Since 1982, the company has acquired and grown customer relationships for some of the world's largest and most brand-focused corporations in the financial services, media, telecommunications, transportation, and retail industries. The company and four of its affiliates filed for Chapter 11 protection on Jan. 23, 2008 (Bankr. S.D.N.Y. Lead Case No. 08- 10239). Alfredo R. Perez, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. The Debtors chose Stephen Dube, at CXO LLC, as their restructuring and turnaround advisor. Additionally, Evercore Group LLC provides investment and financial counsel to the Debtors. The Debtors' consolidated financial condition as of Dec. 31, 2007 showed total assets of $354,000,000 and total debts of $261,000,000. The Debtors submitted to the Court a Chapter 11 Plan of Reorganization on Feb. 12, 2008. (PRC LLC Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) PROTECTED VEHICLES: Court Denies Creditors' Dismissal Request ------------------------------------------------------------- The Hon. David R. Duncan of the U.S. Bankruptcy Court for the District of South Carolina denied the request of creditors Four Rivers Peterbilt, Inc., Peterbilt of Savannah, Inc., Three-D Metal Works, Inc., and Charleston Aluminum, LLC, to convert the Protected Vehicles Inc.'s Chapter 11 case to a Chapter 7 proceeding or as an alternative, to dismiss its Chapter 11 case. As reported in the Troubled Company Reporter on March 17, 2008, the creditors argued that the Debtor's schedules of assets and liabilities, and statements of financial affairs filed together with the Chapter 11 petition, showed that the Debtor did not have any income in 2005, made $40,904 from operations in 2006, and lost more than $26 million in 2007. They insisted that it is unlikely that the benefits to be derived from a Chapter 11 will be realized due to the absence of a reasonable likelihood of rehabilitation, and within a reasonable amount of time or at an acceptable cost. The Debtor, however, told the Court that it has sustained neither continuing nor substantial losses post-petition. The Debtor is currently operating on a limited basis under the terms of a Court approved interim cash collateral budget. Pursuant to this cash collateral budget, the Debtor anticipates the ability to fund its post-petition operational activities on a positive cash flow basis. In his ruling, Judge Duncan said the Court must carefully balance the Congressional policy that favors reorganization of businesses and ultimate viability of efforts to resuscitate a business. He added that especially early in a case, and in the absence of bad faith, a debtor needs some leeway to explore its options and move forward with a proposal to continue its business or otherwise provide for creditors. Yet, even early in the case, the hope to survive must be more than a pipedream. Judge Duncan decreed that the issue then is whether the debtor has "a reasonable likelihood of rehabilitation." By a narrow margin, at this early juncture in the case, the showing of an absence of the chance to recover has not been made, he said. The Court noted that the Debtor has engaged an investment banker and circulated a package of material to potential buyers and investors. It has receive one very contingent expression of interest and the testimony of the investment banker was that he anticipated other interest if the Debtor was afforded time. The testimony indicated that the Debtor continues to engage in negotiation for contracts to supply its product. Judge Duncan concluded that while the Debtor is not currently operating, except as noted, and has no contracts to sell its product, the efforts it is making may succeed -- if given time. A status conference will be held June 19, 2008 at 10:30 a.m. at the United States Bankruptcy Court, in Charleston, South Carolina. About Protected Vehicles North Charleston, South Carolina-based Protected Vehicles Inc. aka PVI -- http://www.protectedvehicles.com/-- founded in 2005, designs and manufactures ballistic and blast protected vehicles using technology derived from Rhodesian and South African vehicle development programs. The Debtor filed for chapter 11 protection on Feb. 5, 2008 (Bankr. D.S.C. Case No. 08-00783). G. William McCarthy, Jr., Esq., at McCarthy Law Firm LLC represents the Debtor in its restructuring efforts. Its largest unsecured creditor is the United States Marine Corps with $15,801,765 of claim. In February 2008, the Debtor listed assets of $24 million and debts of $54.1 million. QUEBECOR WORLD: Obtains Final Nod on $1 Billion DIP Facility ------------------------------------------------------------ Quebecor World Inc. received final approval for its $1 billion debtor-in-possession financing. Judge James M. Peck of the Southern District of New York approved and entered the order on April 1, 2008. The $1 billion DIP financing is comprised of a term loan of $600 million and a revolving loan facility of $400 million. The final order serves to confirm the $750 million of interim financing that was made available since the January 23rd interim court order and increases the availability by a further $250 million effective today. Combined with unrestricted cash on hand of $110 million and undrawn availability under the $400 million revolver, the Company now has liquidity of about $500 million. In addition, the company has exceeded by about $160 million its cash flow projections as filed by the court- appointed Monitor on Feb. 14, 2008. This level of liquidity and favorable cash flow performance reflects the Company's clear direction towards emerging from creditor protection as a strong and stable enterprise. The company believes that this financing and its ability to generate significant cash flow from operations will allow it to pursue its operations serving all its global customers with superior products and enhanced value-added services while working with its stakeholders to emerge from creditor protection as a strong company in its industry. $1-Bil. Loan Needed to Continue Business In his order authorizing Quebecor World (USA), Inc., and its debtor-affiliates to borrow $1,000,000,000 from a syndicate of lenders led by Credit Suisse Securities (USA), LLC, and Morgan Stanley Senior Funding, Inc., Judge James M. Peck of the U.S. Bankruptcy Court for the Southern District of New York held, "The ability of the Debtors to finance their operations and have available sufficient working capital through the incurrence of indebtedness for borrowed money and other financial accommodations is vital to the Debtors' ability to preserve and maintain their going concern value." The DIP Loan will be used solely: (a) to repurchase their existing North American accounts receivable securitization facility of approximately $418,000,000 plus certain expenses, from ABN AMRO Bank N.V.; (b) to provide financing for working capital, letters of credit, capital expenditures and other general corporate purposes of the Debtors; and (c) for the payment of fees and expenses incurred in connection with the DIP transactions. The Debtors are also authorized to make transfers to non-debtor affiliates, subject to limitations: * up to EUR25,000,000 for non-debtor affiliates' European operations; * up to $5,000,000 for Latin American operations; and * up to $5,000,000 for non-European operations. To secure the Debtors' obligations under the $1,000,000,000 Loan, the DIP Lenders are granted, among other things: -- a fully-perfected first priority senior security interest in and lien upon all unencumbered property of the Debtors, with the exception of avoidance actions or claims and causes of actions under Section 502(d),544, 545, 548, 549, 550 or 551 of the Bankruptcy Code; -- fully perfected liens junior to the Prepetition Secured Lenders' adequate protection liens; and -- an allowed administrative expense claim with priority under Section 364(c)(1) of the Bankruptcy Code, subject only to the Carve-Out for, among other things, payment of professional fees and expenses of up to $20,000,000. The Court has permitted the Debtors to enter into secured hedge agreements -- certain interest rate swap, car or collar agreements, interest rate future or option contracts, currency swap agreements and other hedging agreements -- in connection with the DIP Loan. The DIP Loan, according to the January 21 DIP Agreement, will have a maturity date on the earliest of (a) 18 months following the earlier of the Petition Date or the CCAA filing date, (b) substantial consummation of a reorganization plan of Quebecor World, and (c) the acceleration of the loans under the DIP Facility. Credit Suisse Securities (USA) LLC, Credit Suisse, Cayman Islands Branch, Credit Suisse, Toronto Branch and Morgan Stanley Senior Funding, Inc., are the arrangers of the DIP Loan. Credit Suisse acts as administrative agent, collateral agent, initial issuing bank, and initial swing line lender, and Morgan Stanley acts as syndication agent under the DIP Facility. The Court has authorized the Debtors to promptly pay to the Agents and the Arrangers costs, fees and out-of-pocket expenses, in accordance with the Fee Letters. The Debtors will send the Official Committee of Unsecured Creditors monthly invoices of the Agents and Arrangers' attorneys and financial advisors. Amendments to DIP Facility The Senior Secured Superpriority Debtor-in-Possession Credit Agreement dated as of January 21, 2008, was amended on March 27, 2008, to, among other things, permit Quebecor World to provide the DIP Lenders its audited consolidated financial statements for full-year 2007 by April 29, 2008. On March 18, 2008, Quebecor World said that, in view of its filing for creditor protection in Canada and the United States, it will delay the release and filing of its financial statements for the year ended Dec. 31, 2007. Judge Peck has required the Debtors to provide advance notice upon no less than three business days to counsel to Royal Bank of Canada, Societe Generale (Canada), the ad hoc group of holders of notes issued by Debtors, and the Creditors Committee on all amendments, or the final material terms, of the DIP Facility. The Debtors are required to obtain Court approval or consent from RBC, Soc Gen, the Ad Hoc Group of Noteholders and the Creditors Committee with respect to amendments to the DIP Credit Agreement that: (i) shorten the maturity of the extension of credit thereunder, (ii) increase the commitments, the rate of interest payable, or letter of credit fees payable thereunder, or (iii) amend the "events of default" under the DIP Agreement. Any fees charged in connection with any amendment, however, will only be disclosed to the Creditors Committee. Adequate Protection to Prepetition Lenders Various prepetition lenders asserted security interests in certain assets of the Debtors pursuant to: (x) the Amended and Restated Credit Agreement, dated as of Dec. 15, 2005, among Quebecor World, Inc., QWUSA, certain financial institutions acting as lenders, and Royal Bank of Canada, as administrative agent for the lenders, and the Guaranty, dated as of Oct. 26, 2007; (y) the Credit Agreement, dated as of January 13, 2006, among QWI, as borrower, QWUSA, as guarantor, and Societe Generale (Canada), as lender; and (z) security agreements, pledge agreements, hypothec, mortgages, deeds of trust and other collateral documents, each dated Oct. 26, 2007, by QWI and certain subsidiaries of QWI for the benefit of the lenders, and Computershare Trust Company of Canada, as collateral agent. The Prepetition Secured Lenders are provided adequate protection, solely for any diminution in the value of their interests in the Debtors' assets: (1) The Prepetition Secured Lenders will retain their prepetition security interests in and liens upon: (a) the inventory of Quebecor World Memphis LLC that existed as of the Petition Date, and (b) all proceeds of the QW Memphis Petition Date Inventory. (2) The Debtors will deposit into an interest-bearing cash collateral account any and all proceeds of QW Memphis Inventory Collateral pending further order of the Court. (3) The Prepetition Secured Lenders will not be required to file financing statements, mortgages, deeds of trust, security deeds, notices of lien, or similar instruments in any jurisdiction or effect any other action to attach or perfect the Prepetition Secured Lenders' Adequate Protection Liens. (4) In the event that the Adequate Protection Liens are insufficient to cover any diminution in value, the respective Prepetition Secured Lenders are granted administrative claims pursuant to Section 507(b) of the Bankruptcy Code which will have priority over all administrative expense claims, unsecured claims and all other claims against the Debtors, but junior to the Superpriority Claim, the DIP Liens, the Carve-Out and the Adequately Protected Debtor Reimbursement Claim. (5) The Debtors will provide each of the Prepetition Agent, Soc Gen, the Creditors Committee and the Ad Hoc Group of Noteholders access to information. The Creditors Committee will have 120 days to file an adversary proceeding or contest the Debtors' admissions and stipulations in connection with the transactions in connection with the DIP Facility. The Committee will also have the right to: (i) examine and challenge the validity, extent, priority, avoidability, or enforceability of any of the Prepetition Secured Lenders' liens and security interest, and (ii) assert or prosecute any action for preferences, fraudulent conveyances, other avoidance power claims or any other claims, counterclaims or causes of action, objections, contests or defenses against the Prepetition Secured Lenders. Flint Group, et al., Balk at $1 Bil. DIP Facility As reported in the Troubled Company Reporter on March 6, 2008, Flint Group North America Corporation, Abitibi Consolidated Sales Corp., Abitibi-Consolidated US Funding Corp., Bowater America Inc., and Bowater Inc., and Corporate Property Associates 9 LP, object to the request of the Debtors to obtain $1,000,000,000 of DIP financing. 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. 11; 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: Inks $285 Million Printing Deal With Mcgraw-Hill ---------------------------------------------------------------- Quebecor World Inc. was awarded a new contract with The McGraw- Hill Companies extending into 2014. The McGraw-Hill Companies is a leading global information services provider. The new agreement is valued at approximately $285 million over its term and covers a wide range of educational textbooks, ancillary products, professional learning products and catalogs. H. Bruce Ryno, Sr. VP Global Procurement & Manufacturing Services for The McGraw-Hill Companies stated, "This contract with Quebecor World extends a successful, long term relationship and delivers significant cost savings to The McGraw-Hill Companies over the life of the contract." "We are pleased to renew and expand our partnership with The McGraw-Hill Companies," said Jacques Mallette, President and CEO Quebecor World Inc. "We are committed to serving their needs for many years to come by providing an on-time, quality product and expanded value-added solutions to help them grow their business." Kevin J. Clarke, President of the Quebecor World Book and Directory Group commented, "This agreement is a further testament to our focus on creating premier solutions that maximize our customer's success in their targeted markets. The dedication of our employees to meet the high standards of The McGraw-Hill Companies is a great source of pride". 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; 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: Court Allows Assumption of BofA's P-Card Pact ------------------------------------------------------------- Pursuant to Section 363 of the Bankruptcy Code, Quebecor World Inc. and its debtor-affiliates are authorized to use property of their bankruptcy estates to pay Bank of America on account of prepetition amounts due and owing under the existing purchasing card agreement. Pursuant to Section 364(a), the Debtors are authorized to obtain unsecured postpetition financing from Bank of America under an employee purchasing card program. As reported in the Troubled Company Reporter on March 24, 2008 the Debtors sought permission from the U.S. Bankruptcy Court for the Southern District of New York to assume their Purchasing Card Agreement with Bank of America and cure an existing monetary default. In the alternative, the Debtors seek the Court's authority to re-establish a purchasing card agreement with Bank of America. Michael Canning, Esq., at Arnold & Porter LLP, in New York, related that prior to the bankruptcy filing, the Debtors had a purchasing card agreement with Bank of America in which Bank of America issued credit cards to certain of the Debtors' employees to be used in a manner similar to consumer credit cards and constitute unsecured debt obligations to the Debtors. The Debtors have historically used P-Cards for transactions with small vendors or ad hoc purchases in large part to minimize administrative costs for smaller purchasing transactions. The P-Cards serve as substitutes for petty cash, thus reducing the need for the Debtors to keep cash on hand at each of their facilities and permitting the Debtors to make certain payments more efficiently than would be possible using checks or wire transfers. Through 2007, the Debtors had approximately 400 individual card users and processed approximately $2,000,000 per month in purchases on the P-Cards. The provision of purchasing card services was withdrawn by Bank of America in mid-December 2007, in conjunction with actions taken by Bank of America to reduce credit exposure to the Debtors. As of the bankruptcy filing, the Debtors had an outstanding balance of $460,000 owing to Bank of America for prepetition charges. 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. 10; 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: Payment of $3,175,111 Sales Commissions Approved ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized Quebecor World Inc. and its debtor-affiliates to pay: (i) 107 sales representatives who are owed accrued prepetition commissions, (ii) one employee $15,000 for meeting specific sales and budget attainment goals in 2007. The Court also authorized the Debtors to pay additional accrued prepetition commissions to sales employees that become due and payable without further need for Court approval, provided that the payments are agreeable to the Official Committee of Unsecured Creditors and the Office of the United States Trustee. As reported in the Troubled Company Reporter on March 28, 2008, the Debtors sought the Court's authority to pay prepetition sales commissions currently owing to 108 sales representatives. Of these 108 sales representatives, 107 are owed accrued prepetition commissions by no later than March 31, 2008. The other employee is owed $15,000 for meeting specific sales and budget attainment goals in 2007. This payment was due at the end of January 2007, and the Debtors seek authority to pay this employee for successfully achieving the target sales goal. The total amount of the sales commissions due to these 108 individuals is $3,175,111. Of this amount, $2,224,373 reflects amounts in excess of $10,950 per employee, with the proposed prepetition payments per employee ranging from $142 to $251,441. 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. 10; 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: Has Until June 4 to File Schedules & Statements --------------------------------------------------------------- The Hon. James M. Peck of the U.S. Bankruptcy Court for the Southern District of New York extended Quebecor World Inc. and its debtor-affiliates' deadline to file their schedules of assets and liabilities and statements of financial affairs, until June 4, 2008. 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. 10; 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. QUIKSILVER INC: S&P Assigns 'BB-' Rating on Negative CreditWatch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Quiksilver Inc., including its 'BB-' corporate credit rating, on CreditWatch with negative implications. The Huntington Beach, California-based apparel company had about $996 million in debt outstanding at Jan. 31, 2008. The CreditWatch placement reflects the much weaker-than-expected credit measures reported for the first quarter ended January 2008. "While we expected that results would be lower due to the company's current difficulties with its Rossignol hard-good equipment business," said Standard & Poor's credit analyst Susan Ding, "financial measures for the last 12 months came in well below our expectations, despite the $100 million debt reduction from the sale of its Cleveland Golf business in December 2007." Standard & Poor's originally expected that leverage would be about 4.7x at year end (adjusted for the sale of Cleveland Golf). However, due to losses at the Rossignol business that depressed the EBITDA base significantly, leverage climbed to close to 6x for the 12 months ended January 2008 versus about 5.7x for the 12 months ended October 2007. Total debt also increased as a result of increased capitalized operating leases, due to the new retail stores opened during the year. Although the company announced it will explore selling the Rossignol business, it is uncertain when and if the company would be able to effect a transaction, in light of the current economic environment, and what the magnitude would be of any potential debt reduction from the application of sale proceeds and ensuing improvement in credit measures. "We will meet with management to further discuss Quiksilver's operating trends and forecasts in order to resolve the CreditWatch," said Ms. Ding. QUIGLEY COMPANY: Court Approves Amended Disclosure Statement ------------------------------------------------------------ The Hon. Stuart M. Bernstein of the United States Bankruptcy Court for the Southern District of New York approved for distribution Quigley Company Inc.'s Fifth Amended and Restated Disclosure Statement dated March 28, 2008, explaining its Fourth Amended and Restated Chapter 11 Plan of Reorganization. Judge Bernstein found that the Debtor's Disclosure Statement contains adequate information within the meaning of Section 1125 of the Bankruptcy Code. Overview of the Plan Under the plan, all current and future asbestos personal injury claims that have been or could be asserted against Quigley will be "channeled" to a trust fund that will be created for the purpose of evaluating and paying such claims. In addition, all current and future asbestos personal injury claims that have been or could be asserted against certain companies other than Quigley, including Pfizer Inc., Quigley's parent company, also will be "channeled" to the trust, but only to the extent such claims are based on Quigley's conduct or products. The effect of "channeling" claims to the trust is that such claims may be pursued only through, and paid only from, the trust; they may not be asserted against Quigley, Pfizer and certain other companies as described fully elsewhere in the disclosure statement. The trust will be funded with assets of Pfizer and Quigley, including cash, insurance, stock, two annuities and dividends from Quigley's post-Effective Date business operations. In order to conserve Quigley's earnings for the benefit of the trust, Quigley will be prohibited from declaring or paying dividends while Pfizer continues to own Quigley's stock. The assets in the trust will be used to pay current and future asbestos personal injury claimants in accordance with the terms of trust distribution procedures established under Quigley's plan of reorganization. The trust's assets are limited, and will be managed by trustees to ensure that funds are available to pay expected future claimants as well as current claimants. The trust's limited assets are insufficient to pay more than a small percentage of each claimant's claim amount. Nevertheless, Quigley believes for all the reasons detailed in this disclosure statement that there will be substantially more money available to pay claimants under the plan than would be the case if there were no plan and Quigley were forced to pay claims solely from its own assets. Specifically, Quigley estimates that only approximately $259 million would be available for distribution in a liquidation, while, under Quigley's plan of reorganization, approximately $757 million will be available. That is because, among other reasons, Pfizer is contributing substantial assets to the trust as part of the plan that would not be contributed if the plan were not confirmed and consummated. Moreover, without the settlements and distribution procedures in the plan of reorganization, there likely would be years of costly and time-consuming litigation involving insurance companies, creditors and others that could be avoided through the plan's orderly administrative process. Absent a plan, the distributions of money to creditors would be delayed and, due to the costs of litigation, the amount of cash actually available for creditors would be reduced substantially. For this reason and others explained in detail herein, Quigley believes that each of its creditors who is entitled to vote should vote to accept this plan of reorganization. As of the date of this Disclosure Statement, there are pending: (i) a motion by the U.S. Trustee to convert or dismiss the Chapter 11 Case; and (ii) a motion by an ad hoc committee of tort claimants to appoint a trustee in the Chapter 11 Case. Quigley believes the motions are without merit, has filed written oppositions to each and intends to vigorously defend itself against the allegations made by the U.S. Trustee and the ad hoc committee. Trust Contributions Quigley and Pfizer will make these contributions to the trust to fund the processing and payment of asbestos personal injury claims: -- a $50 million cash payment; -- $101.9 million of insurance that contains no restrictions on the payment of asbestos personal injury claims; -- $191 million of insurance that contains restrictions on the payment of certain asbestos personal injury claims; -- receivables owed by insurance companies to Quigley, as of the date that Quigley's plan becomes effective, for amounts that Quigley billed the insurance companies before it filed for chapter 11 relief (as of March 1, 2008, these receivables total $23.8 million); -- $24 million in cash as of March 1, 2008, which is currently in an insurance trust account jointly held by Quigley and Pfizer; -- $4.6 million in excess cash that Quigley is expected to have in its accounts when the trust begins operating; -- $405 million, paid in accordance with the terms of an annuity that Pfizer will contribute to the Asbestos PI Trust on the Effective Date of Quigley's Plan, payable in equal installments over a period of 40 years, with the first installment payment payable on the date the trust begins operating; -- $45.1 million, paid in accordance with the terms of an annuity that Pfizer will contribute to the Asbestos PI Trust on the Effective Date of Quigley's Plan, payable in equal installments over a period of 41 years, with the first installment payment payable on the fifth anniversary of the Effective Date; -- additional payments or distributions from the estates of insolvent insurers; and -- Quigley's common stock, upon satisfaction of certain conditions described in Quigley's plan of reorganization. Treatment of Claims and Interests Under the plan, these claims will be paid in full: -- allowed administrative claims; -- professional compensation and reimbursement claims; -- priority tax claims; -- priority claims; and -- DIP claim. Pfizer, as a secured claimant, will receive in full in exchange for cash equal to 100% of the allowed amount of the allowed Pfizer Secured claim minus $30 million, which amount Pfizer forgive as part of the Pfizer contribution. Pfizer is expected to get a 54% recovery under the plan. The Secured Claimants -- Reaud Claimants, Hatchett, Sherry, Ytuarte and other secured bond claimants -- will be entitled to proceed with the pending appeal to final judgment. If the trial court will affirm judgment in their favor, they will be entitled to seek payment of the final judgment from the their corresponding Bond. If there is a deficiency claim, they will have to proceed against the Asbestos PI Trust in accordance with the Asbestos PI Trust Distribution Procedures. If the trial court judgment will be reversed on appeal, any Asbestos PI Claim that they may have will be automatically channeled to and assumed by the Asbestos PI Trust. Holders of unsecured claims, totaling approximately $33.4 million, will recover 7.5% of their claims. Asbestos PI Claims will be channeled and assumed by the Asbestos PI Trust, which will be funded by contributions from Quigley and Pfizer. Pfizer, as the sole holder of the Equity Interests, will transfer the common stock of Reorganized Quigley to the Asbestos PI Trust on the Stock Transfer Date. A full-text copy of the 5th Amended Disclosure Statement is available for free at http://ResearchArchives.com/t/s?29e1 A full-text copy of the 4th Amended Plan of Reorganization is available for free at http://ResearchArchives.com/t/s?29e0 About Quigley Company Quigley Company Inc., a division of Pfizer Inc., sold asbestos- containing insulation products until the early 1970s. Quigley filed for protection under chapter 11 of the United States Bankruptcy Code on Sept. 3, 2004 (Case No. 04-15739-SMB) in order to implement a proposed global resolution of all pending and future asbestos-related personal injury liabilities. Asbestos victims and Pfizer have been negotiating a settlement deal which calls for Pfizer to pay $430 million to 80% of existing plaintiffs. It will also place an additional $535 million into an asbestos settlement trust that will compensate future plaintiffs as well as the remaining 20% of current plaintiffs with claims against Pfizer and Quigley. The compensation deal is worth $965 million all up. Of that $535 million, $405 million is in a 40-year note from Pfizer, while $100 million will come from insurance policies. Lawrence V. Gelber, Esq., and Michael L. Cook, Esq., at Schulte Roth & Zabel LLP, represent the Debtor in its restructuring efforts. Elihu Inselbuchm Esq., at Caplin & Drysdale, Chartered, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed $155,187,000 in total assets and $141,933,000 in total debts. QUIGLEY COMPANY: Plan Confirmation Hearing Set on September 4 ------------------------------------------------------------- The Hon. Stuart M. Bernstein of the United States Bankruptcy Court for the Southern District of New York set Sept. 4, 2008, at 10:00 a.m., to consider confirmation of Quigley Company Inc.'s Fourth Amended and Restated Chapter 11 Plan of Reorganization dated March 28, 2008. Objections, if any, are due Aug. 4, 2008, New York City Time. About Quigley Company Quigley Company Inc., a division of Pfizer Inc., sold asbestos- containing insulation products until the early 1970s. Quigley filed for protection under chapter 11 of the United States Bankruptcy Code on Sept. 3, 2004 (Case No. 04-15739-SMB) in order to implement a proposed global resolution of all pending and future asbestos-related personal injury liabilities. Asbestos victims and Pfizer have been negotiating a settlement deal which calls for Pfizer to pay $430 million to 80% of existing plaintiffs. It will also place an additional $535 million into an asbestos settlement trust that will compensate future plaintiffs as well as the remaining 20% of current plaintiffs with claims against Pfizer and Quigley. The compensation deal is worth $965 million all up. Of that $535 million, $405 million is in a 40-year note from Pfizer, while $100 million will come from insurance policies. Lawrence V. Gelber, Esq., and Michael L. Cook, Esq., at Schulte Roth & Zabel LLP, represent the Debtor in its restructuring efforts. Elihu Inselbuchm Esq., at Caplin & Drysdale, Chartered, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed $155,187,000 in total assets and $141,933,000 in total debts. REALOGY CORP: S&P Retains 'B' Issue-level Rating on Senior Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its recovery rating on Realogy Corp.'s senior unsecured debt to '4', indicating that lenders can expect average (30% to 50%) recovery in the event of a payment default, from '3'. The issue-level rating on these securities remains unchanged at 'B' (at the same level as the 'B' corporate credit rating on the company). The recovery rating revision reflects Standard & Poor's reduced cash flow expectations for Realogy, which also resulted in S&P's outlook change on the company to negative from stable. Ratings List Realogy Corp. Corporate Credit Rating B/Negative/-- Rating Revised To From -- ---- Realogy Corp. Senior Unsecured B B Recovery Rating 4 3 RECYCLED PAPER: Moody's Further Slashes Rating to 'Caa2' From Caa1 ------------------------------------------------------------------ Moody's Investors Service downgraded Recycled Paper Greetings, Inc.'s corporate family and probability-of-default rating to Caa2 from Caa1 and the ratings of the company's first lien senior secured credit facilities to B3 from B2. The rating for RPG's second lien senior secured term loan Caa3, is also placed on review for possible downgrade. In addition, all of RPG's ratings were placed under review for possible downgrade given the company's lack of financial flexibility under its existing credit agreement. RPG's cushion under its financial covenants, which were relaxed after a previous covenant violation during the prior year, has since eroded due to continued weak operating performance resulting from softer sales and higher than anticipated expenses. Conclusion to the review will be based on possible covenants amendments in the company's credit agreement as well as any additional equity contributed by RPG's equity sponsor, Monitor Clipper. The company has already received a waiver in regard to its financial covenants from its lender group through April 28, 2008 with an additional extension based on an equity contribution from the sponsor. Modestly offsetting Moody's concerns regarding recovery values for the company's debt, Moody's notes that despite RPG's weak operating performance a year ago, Monitor Clipper contributed an additional $15 million of equity after an initial investment of about $130 million in 2005 (40% of the initial capital structure). Ratings lowered and placed on review for further downgrade: -- Corporate family rating, to Caa2 from Caa1; -- Probability-of-default rating, to Caa2 from Caa1; -- $20 million first lien senior secured revolving credit facility due 2010, to B3 (LGD2, 29%) from B2 (LGD2, 29%); -- $109 million first lien senior secured term loan due 2011, to B3 (LGD2, 29%) from B2 (LGD2, 29%) Ratings placed on review for possible downgrade: -- $80 million second lien senior secured term loan due 2012, to Caa3 (LGD5, 83%) from Caa3 (LGD5, 84%); Recycled Paper Greetings, Inc., based in Chicago, Illinois, designs, manufactures, and distributes greetings cards and social expression products throughout the U.S. and Canada. RPG is the third largest greeting card company in North America, focusing on contemporary and humorous greeting cards. The company started as a supplier to independent card stores, but now also supplies the mass merchandising channel. SEITEL INC: Posts $93 Million Net Loss in Year ended December 31 ---------------------------------------------------------------- Seitel Inc. reported results for the fourth quarter ended Dec. 31, 2007. Because the company was acquired by ValueAct Capital on Feb. 14, 2007, the fourth quarter financial statements include purchase accounting adjustments that resulted in significantly higher non-cash expenses. For the fourth quarter of 2007, the company reported a net loss of $14.8 million that included $28.1 million from purchase accounting adjustments to the value of assets and liabilities, well as $0.6 million of merger related expenses. Excluding these items, net income for the fourth quarter was $13.9 million, compared to net income of $13.9 million for the 2006 quarter. The additional margin on the $7.7 million adjusted revenue increase was offset by a $5.1 million increase in net interest expense. The net loss for the year was $93.4 million that included $88.8 million from purchase accounting adjustments and $24.1 million of merger related expenses. Part of merger expenses was a $4 million fee for bridge financing reported as interest expense. Excluding these items, 2007 net income was $19.5 million compared to net income of $47.2 million in 2006. The $27.7 million adjusted net income reduction was the result of lower revenue and a $17.6 million increase in net interest expense excluding bridge financing fees. "2007 closed with a quarterly record for cash resales," commented Rob Monson, president and chief executive officer. "Our onshore data licensing was strong during the full year. Both the U.S. and Canada grew year on year partially offsetting lagging sales from our marine library. Despite lower drilling activity in Canada and some concerns about the royalty situation in Alberta, our Canadian library continued to perform, with robust resales in the fourth quarter and full year growth." "In 2007, we continued to add significant amounts of data to our onshore library," Mr. Monson said. "One of our key objectives is to grow our onshore library by 10% per year and we were close to our target. Our onshore 3D square miles grew by 9% during 2007 at a lower cost per square mile than we had anticipated. As a result, our cash capex spend on seismic data was lower than we had forecast." "2008 has started with some uncertainty in the macro environment, but the oil and gas industry continues to benefit from strong demand for hydrocarbons and a favorable price environment for both commodities," Mr. Monson added. "Natural gas storage remains at reasonable levels with falling imports of Canadian natural gas and LNG. I believe most of the ingredients are in place for another solid year for the seismic industry in North America." Liquidity and Capital Resources Cash generated during the third quarter was $10.1 million with net cash capital expenditures at $16.8 million. The company's cash balances at the end of the quarter increased to $43.4 million. Gross capital expenditures for 2007 were $85.1 million, as compared to $98.4 million for the prior year. Non-monetary exchanges were $9.4 million lower than in 2006. Acquisition capital expenditures were $2.3 million lower reflecting its decision to reduce the size of its Canadian program. On a net cash basis, capital expenditures for the year were $36.7 million as compared to $39.5 million in 2006. The company's forecasted net cash capital expenditures for the year 2008 are $54 million. For the full year 2007, it added approximately 2,400 square miles of seismic data to its library. During the full year 2008, the company expects to increase the size of its onshore 3D library by approximately 10% or 3,000 square miles, as compared to the 9% increment in 2007. At Dec. 31, 2007, the company's balance sheet showed total assets of $742.387 million, total liabilities of $521.398 million and total stockholder's equity of $220.989 million. About Seitel Inc. Headquartered in Houston, Texas, Seitel Inc. -- http://www.seitel- inc.com/ -- is a provider of seismic data and related geophysical services to the oil and gas industry in North America. The company has ownership in a library of onshore and offshore seismic data that it offers for license to oil and gas companies. The main geographic regions of the Company's focus include the onshore, offshore and transition zone of the United States Gulf Coast extending from Texas to Florida, western Canada, Mississippi, eastern Texas, the Rocky Mountain region and northern Louisiana. To support its seismic data licensing business and its clients, Seitel maintains warehouse and electronic storage facilities in Houston, Texas and Calgary, Alberta, Canada. * * * Moody's Investors Service placed Seitel Inc.'s probability od default rating at B3 in January 2007. The rating still hold to date with a stable outlook. SENTINEL MANAGEMENT: Ex-CEO Wants Time to Resolve to Fraud Charges ------------------------------------------------------------------ Frederick Grede, the Chapter 11 Trustee appointed to oversee the estate of Sentinel Management Group Inc., and Philip Bloom, the Debtor's former chief executive officer, seek authority from the U.S. Bankruptcy Court for the Northern District of Illinois to further extend the time within which the Debtor may answer the charge filed by Mr. Grede since both parties have almost reached a settlement payment for a litigation dispute, Bill Rochelle of Bloomberg News reports. The amount was not declared. As reported in the Troubled Company Reporter on Oct. 16, 2007, Mr. Grede filed a $350 million lawsuit against founders and executives of Sentinel, including Mr. Bloom and son Eric, as well as former trader Charles Mosley. Among the charges raised by the Trustee are breach of fiduciary duty, knowing participation in breach of fiduciary duty, and unjust enrichment. According to the Trustee's complaint, the report discloses, Sentinel's insiders perpetrated a long-term and massive fraud against the Debtor and its customers through a pattern of criminal conduct. The defendants, among other things, improperly transferred at least $20 million through "bogus" fees, bonuses, dividends, account withdrawals, salaries and false payments. In February 2008, the Honorable John H. Squires gave Mr. Bloom more time to settle allegations of fraud against him. Mr. Bloom had earlier requested the Court to dismiss a lawsuit against him for alleged preferential and fraudulent transfers and damages. In an effort to avoid unnecessarily expending time and resources, Mr. Bloom and the Chapter 11 Trustee that filed the lawsuit both agreed to temporarily suspend further litigation and instead focus efforts on potential settlement. About Sentinel Management Based in Northbrook, Illinois, Sentinel Management Group Inc. -- http://www.sentinelmgi.com/-- is a full service firm offering a variety of security solutions. The company filed a voluntary chapter 11 petition on Aug. 17, 2007 (Bankr. N.D. Ill. Case No. 07-14987). Ronald Barliant, Esq., Randall Klein, Esq., and Kathryn A. Pamenter, Esq., at Goldberg, Kohn, Bell & Black Rosenbloom & Moritz, Ltd. represent the Debtor. Quinn, Emanuel Urquhart Oliver & Hedges, LLP, represent the Official Committee of Unsecured Creditors. DLA Piper US LLP represents as the Committee's co-counsel. When the Debtor sought bankruptcy protection, it listed assets and debts of more than $100 million. On Aug. 28, 2007, the Court approved Frederick Grede as the Debtor's Chapter 11 Trustee. Mr. Grede selected Catherine L. Steege, Esq., Christine L. Childers, Esq., and Vincent E. Lazar, Esq., at Jenner & Block LLP as his counsels. As reported in the Troubled Company Reporter on Dec. 19, 2007, the Court extended, until June 13, 2008, the Debtor's exclusive periods to file a Chapter 11 plan of reorganization and disclosure statement. SHARPER IMAGE: Securities to be Delisted from NASDAQ Stock Market ----------------------------------------------------------------- The NASDAQ Stock Market announced on April 1 that it will delist the common stock of Sharper Image Corporation. Sharper Image Corporation's stock was suspended on February 29, 2008 and has not traded on NASDAQ since that time. NASDAQ will file a Form 25 with the Securities and Exchange Commission to complete the delisting. The delisting becomes effective 10 days after the Form 25 is filed. Based in San Francisco, California, Sharper Image Corp. -- http://www.sharperimage.com/-- 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. The company has operations in Australia, Brazil and Mexico. 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. The company filed for Chapter 11 protection on Feb. 19, 2008 (Bankr. D.D., Case No. 08-10322). Steven K. Kortanek, Esq. at Womble, Carlyle, Sandridge & Rice, P.L.L.C. represents the Debtor in its restructuring efforts. An Official Committee of Unsecured Creditors has been appointed in the case. When the Debtor filed for bankruptcy, it listed total assets of US$251,500,000 and total debts of US$199,000,000. SHARPS CDO: Moody's Slashes Ratings on Six Classes of 2046 Notes ---------------------------------------------------------------- Moody's Investors Service downgraded and left on review for possible further downgrade the ratings on these notes issued by Sharps CDO II Ltd.: Class Description: $100,000,000 Class A-2 Senior Secured Floating Rate Notes due 2046 -- Prior Rating: Aaa -- Current Rating: Aa2, on review for possible downgrade Class Description: $60,000,000 Class A-3 Senior Secured Floating Rate Notes due 2046 -- Prior Rating: Aaa -- Current Rating: Aa3, on review for possible downgrade Class Description: $82,000,000 Class B Senior Secured Floating Rate Notes due 2046 -- Prior Rating: Aa2, on review for possible downgrade -- Current Rating: A1, on review for possible downgrade Class Description: $52,000,000 Class C Senior Secured Deferrable Interest Floating Rate Notes due 2046 -- Prior Rating: A2, on review for possible downgrade -- Current Rating: Baa2, on review for possible downgrade Class Description: $34,000,000 Class D-1 Senior Secured Deferrable Interest Floating Rate Notes due 2046 -- Prior Rating: Baa1, on review for possible downgrade -- Current Rating: Ba1, on review for possible downgrade Class Description: $27,000,000 Class D-2 Senior Secured Deferrable Interest Floating Rate Notes due 2046 -- Prior Rating: Baa3, on review for possible downgrade -- Current Rating: B1, on review for possible downgrade According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. SILVER ELMS II: Moody's Junks Rating on Class E Notes From 'B2' --------------------------------------------------------------- Moody's Investors Service placed on review for possible downgrade the ratings on these notes issued by Silver Elms CDO II Limited: Class Description: $873,600,000 Class A-1M Floating Rate Senior Secured Notes due 2051 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $151,400,000 Class A-1Q Floating Rate Senior Secured Notes due 2051 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Moody's also downgraded and left on review for possible further downgrade the ratings on these notes: Class Description: $87,500,000 Class A-2 Floating Rate Senior Secured Notes due 2051 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: A1, on review for possible downgrade Class Description: $74,000,000 Class A-3 Floating Rate Senior Secured Notes due 2051 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Baa1, on review for possible downgrade Class Description: $28,000,000 Class B Floating Rate Subordinate Secured Notes due 2051 -- Prior Rating: Aa2, on review for possible downgrade -- Current Rating: Baa3, on review for possible downgrade Class Description: $13,500,000 Class C Floating Rate Junior Subordinate Secured Deferrable Notes due 2051 -- Prior Rating: Baa3, on review for possible downgrade -- Current Rating: B1, on review for possible downgrade Class Description: $12,000,000 Class D Floating Rate Junior Subordinate Secured Deferrable Notes due 2051 -- Prior Rating: Ba3, on review for possible downgrade -- Current Rating: Caa1, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $8,000,000 Class E Notes due 2051 -- Prior Rating: B2, on review for possible downgrade -- Current Rating: Ca According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. SILVER ELMS: Declining Credit Quality Spurs Moody's Rating Cuts --------------------------------------------------------------- Moody's Investors Service placed on review for possible downgrade the ratings on these notes issued by Silver Elms CDO plc: Class Description: $490,000,000 Class A-1a Floating Rate Notes, Due 2051 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $133,000,000 Class A-1b Delayed Draw Floating Rate Notes, Due 2051 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Additionally, Moody's downgraded and left on review for possible further downgrade the ratings on these notes: Class Description: $42,500,000 Class A-2 Floating Rate Notes, Due 2051 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: A2, on review for possible downgrade Class Description: $40,000,000 Class A-3 Floating Rate Notes, Due 2051 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Baa1, on review for possible downgrade Class Description: $16,500,000 Class B Floating Rate Notes, Due 2051 -- Prior Rating: A2, on review for possible downgrade -- Current Rating: Baa3, on review for possible downgrade Class Description: $12,800,000 Class C Deferrable Floating Rate Notes, Due 2051 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: Ba2, on review for possible downgrade Class Description: $8,250,000 Class D-1 Deferrable Floating Rate Notes, Due 2051 -- Prior Rating: Ba2, on review for possible downgrade -- Current Rating: B2, on review for possible downgrade Class Description: $7,450,000 Class E Notes Due 2051 -- Prior Rating: B1, on review for possible downgrade -- Current Rating: Caa2, on review for possible downgrade Class Description: EUR15,000,000 Combination Notes Due 2051 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: Ba2, on review for possible downgrade According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. SKILLED HEALTHCARE: Moody's Gives Stable Outlook; Holds B2 Rating ----------------------------------------------------------------- Moody's Investors Service revised the Speculative Grade Liquidity of Skilled Healthcare Group, Inc. to SGL-3 from SGL-2. Moody's also changed the outlook to stable from positive and affirmed all other ratings including the B2 Corporate Family Rating and the B1 rating on the company's senior secured credit facility. The change in ratings outlook to stable from positive reflects a more aggressive acquisition and capital expenditure policy than Moody's had anticipated when the ratings outlook was changed to positive in June 2007 in conjunction with the company's initial public offering. As a result, leverage and adjusted cash flow to debt metrics have not improved as anticipated following the company's May 2007 equity offering. The B2 Corporate Family Rating continues to reflect Skilled Healthcare's considerable financial leverage, limited free cash flow, relatively small size and lack of geographic diversification. The ratings are supported by the company's good interest coverage and ability to attract more profitable patients, resulting in an attractive quality mix (defined as non-Medicaid revenue as a percentage of total revenue) and strong EBITDAR margins. The SGL-3 rating reflects Moody's belief that the company should have adequate liquidity over the next twelve months. In general, the company generates sufficient cash flow from operations to fund working capital and maintenance capital expenditures, though Moody's expects some quarter to quarter volatility in operating cash flow in 2008. The company is not expected to have sufficient internal liquidity to fund its de novo development and is expected to rely heavily on external sources of liquidity for growth capital expenditures and acquisitions. Summary of Moody's actions. Ratings affirmed: -- Corporate Family Rating, B2 -- $135 million senior secured revolving credit facility due 2010, B1 (LGD3, 36%) -- $260 million senior secured first lien term loan due 2012, B1 (LGD3, 36%) -- $130 million senior subordinated notes due 2014, Caa1 (LGD5, 87%) -- Probability of Default Rating, B2 Ratings changed: -- Speculative Grade Liquidity Rating, to SGL-3 from SGL-2 The ratings outlook was changed to stable from positive. Headquartered in Foothill Ranch, California, Skilled Healthcare operates long-term care facilities and provides a variety of post- acute care services, with a strategic emphasis on sub-acute specialty healthcare. The company operates skilled nursing facilities, assisted living facilities, and hospice locations. Further, the company provides ancillary services such as physical, occupational and speech therapy in its facilities and unaffiliated facilities and is a member of a joint venture providing institutional pharmacy services in Texas. Skilled Healthcare recognized revenue of approximately $635 million for the twelve months ended Dec. 31, 2007. SOLO CUP: Earns $99 Million in Fourth Quarter Ended December 30 --------------------------------------------------------------- Solo Cup Company reported its fiscal year 2007 financial results. The results of the company's Hoffmaster(R) and Japanese businesses have been classified as discontinued operations for all periods presented in the company's consolidated financial statements. These businesses were fully divested in the fourth quarter of 2007. For the 13 weeks ended Dec. 30, 2007, the company reported net income of $99 million for the quarter, which included a gain on the sale of discontinued operations of $77 million, compared to a net loss of $34 million in the comparable period in 2006. "Our solid results in the fourth quarter reflect the significant progress made throughout 2007 in focusing the company on its core business and improving profitability," Robert M. Korzenski, president and chief executive officer, Solo Cup Company, said. "We have integrated the Performance Improvement Program into our company culture, successfully transitioning it from a formal, stand-alone project into an ongoing and sustainable process." For the fiscal year ended Dec. 30, 2007, the company reported net income in fiscal year 2007 of $68 million, compared to a net loss of $375 million in fiscal year 2006. Liquidity and Capital Resources Total shareholders' equity at Dec. 30, 2007, was $86.1 million compared to $9.6 million in 2006. As of Dec. 30, 2007, the company had in excess of $136 million of liquidity under its revolving credit facilities and cash on hand. Net cash provided by operating activities during the fiscal year 2007 was $96 million compared to net cash used in operating activities of $52 million during 2006, a $148 million improvement. During 2007, the company reduced its net debt by approximately $400 million. Capital expenditures for 2007 totaled $49 million versus $61 million during 2006. The company's Performance Improvement Program, disclosed in December 2006, was designed to reduce costs and build profitability. Initiatives in Supply Chain and Operations, SG&A and Commercial Optimization focused on maximizing cash flow, reducing costs, improving margin, increasing value and building a performance culture. As of its formal conclusion in December 2007, the program generated approximately $75 million in annualized run-rate EBITDA improvements, exceeding its original targets. "With cash flow from operations now helping to fund the business and gross margins trending in the right direction, the company is back on track," Mr. Korzenski said. "However, there is still more work to be done to bring our performance to industry levels. As our full-year results show, we have the right leadership team in place to manage and now grow our business." "Solo Cup company is in a far better position than it was one year ago," Mr. Korzenski continued. "The company has regained the financial flexibility necessary for focused investments in the business. We are now better equipped to service and grow with our customers, and to compete in an increasingly competitive marketplace." Company Divests Dairy Packaging Assets On March 7, 2008, the company completed the sale of its dairy packaging assets. Terms of the transaction were not disclosed. A portion of the proceeds will be reinvested in the company's core business with the remainder to be applied to the company's term loan. "Dairy packaging requires a different business model and a significant investment to remain competitive," Mr. Korzenski said. "This transaction is part of Solo's larger effort to improve performance by divesting non-core, non-strategic assets in order to focus resources on more strategic growth opportunities." About Solo Cup Company Solo Cup company -- http://www.solocup.com/-- manufactures disposable foodservice products for the consumer/retail, foodservice, packaging, and international markets. Solo Cup has broad expertise in paper, plastic, and foam disposables and creates brand name products under the Solo, Sweetheart, Fonda, and Hoffmaster names. The company was established in 1936 and has a global presence with facilities in Asia, Canada, Europe, Mexico, Panama and the United States. * * * Solo Cup company continues to carry Moody's Investor Service's 'Caa2' senior subordinate rating, which was placed in March 2007. SOLOMON DWEK: Case Summary & 253 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Solomon Dwek 311 Crosby Avenue Deal, NJ 07723 Bankruptcy Case No.: 07-11757 Debtor-affiliate filing separate Chapter 11 petition on April 1, 2008: Entity Case No. ------ -------- Winston Circle, LLC 08-15790 Debtor-affiliate filing separate Chapter 11 petition on November 26, 2007: Entity Case No. ------ -------- Monmouth Road Brokers, L.L.C. 07-27357 Debtor-affiliate filing separate Chapter 11 petition on October 31, 2007: Entity Case No. ------ -------- Monmouth Consulting Services, L.L.C. 07-25913 Debtor-affiliate filing separate Chapter 11 petition on October 22, 2007: Entity Case No. ------ -------- Dwek Land, L.L.C. 07-25349 Dwek Motors, L.L.C. 07-25350 Debtor-affiliate filing separate Chapter 11 petition on October 15, 2007: Entity Case No. ------ -------- 170 Broad, L.L.C. 07-24922 Debtor-affiliate filing separate Chapter 11 petition on October 12, 2007: Entity Case No. ------ -------- Copper Gables, L.L.C. 07-24829 Dwek Homes, L.L.C. 07-24832 Myrtle Avenue Land, L.L.C. 07-24835 Dwek Wall Gas, L.L.C. 07-24836 Grant Avenue Estates, L.L.C. 07-24837 Neptune City Stores, L.L.C. 07-24839 Debtor-affiliate filing separate Chapter 11 petition on September 27, 2007: Entity Case No. ------ -------- Tinton Falls Land, LLC 07-23872 Debtor-affiliates filing separate Chapter 11 petitions on September 4, 2007: Entity Case No. ------ -------- WLB Center, LLC 07-22630 Asbury Gas, LLC 07-22632 Jemar Enterprises, LLC 07-22633 Melville Dwek, LLC 07-22634 Newport WLB, LLC 07-22635 Red Bank Gas, LLC 07-22636 WLB Highway, LLC 07-22638 Debtor-affiliates that filed separate Chapter 11 petitions before August 24, 2007: Entity Case No. ------ -------- Dwek Branches, L.L.C. 07-22035 Dwek Assets, L.L.C. 07-22036 WLB Center, LLC 07-21752 Dwek Properties, LLC 07-20939 Neptune Medical, LLC 07-18766 Dwek Raleigh, L.L.C. 07-18316 Greenwood Plaza Acquisitions, L.L.C. 07-18317 Sinking Springs II, L.L.C. 07-18318 Sinking Springs, L.P. 07-18320 1631 Highway 35, L.L.C. 07-16041 167 Monmouth Road, L.L.C. 07-16045 2100 Highway 35, L.L.C. 07-16048 230 Broadway, L.L.C. 07-16049 264 Highway 35, L.L.C. 07-16052 374 Monmouth Road, L.L.C. 07-16053 55 North Gilbert, L.L.C. 07-16054 601 Main Street, L.L.C. 07-16055 6201 Route 9, L.L.C. 07-16057 Aberdeen Gas, L.L.C. 07-16058 Bath Avenue Holdings, L.L.C. 07-16060 Belmar Gas, L.L.C. 07-16061 Berkeley Heights Gas, L.L.C. 07-16062 Brick Gas, L.L.C. 07-16064 Dover Estates, L.L.C. 07-16065 Dwek Gas, L.L.C. 07-16066 Dwek Hopatchung, L.L.C. 07-16067 Dwek Income, L.L.C. 07-16068 Dwek Ohio, L.L.C. 07-16069 Dwek Pennsylvania, L.P. 07-16071 Dwek Wall, L.L.C. 07-16072 Dwek Woodbridge, L.L.C. 07-16073 Kadosh, L.L.C. 07-16074 Lacey Land, L.L.C. 07-16075 Monmouth Plaza, L.L.C. 07-16076 P&Y Holdings, L.L.C. 07-16077 Sugar Maple Estates, L.L.C. 07-16078 West Bangs Avenue, L.L.C. 07-16079 Beach Mart, L.L.C. 07-16104 Dwek Trenton Gas, LLC 07-12794 Neptune Gas, LLC 07-12796 Route 33 Medical, LLC 07-12798 1111 Eleventh Avenue 07-12799 Dwek North Olden, LLC 07-12800 Dwek State College, LLC 07-12802 Creditors who filed involuntary chapter 7 petitions against Solomon Dwek: Entity Nature of Claim Claim Amount ------ --------------- ------------ PNC Bank, N.A. Loans $22,993,731 5th Avenue and Wood Street Pittsburgh, PA 15222 Washington Mutual Bank Loans $22,660,558 1301 2nd Avenue WMC 3501 Seattle, WA 98101 Four Star Builders Indemnification of $58,387 1301 Route 33, Suite 3E Claim on Home Neptune, NJ 07753 Buyer's Warranty Type of Business: The Debtors are properties of real estate developer Solomon Dwek. Mr. Dwek was accused of defrauding P.N.C. Bank by depositing a bad $25-million check on April 24, 2006 and then transferring out most of the money the next day. An involuntary chapter 7 petition was filed against Mr. Dwek on Feb. 9, 2007 with the U.S. Bankruptcy Court for the District of New Jersey. On Feb. 22, 2007, the Court converted the case to a chapter 11 reorganization under supervision of a trustee. Chapter 11 Petition Date: May 5, 2007 Court: District of New Jersey (Trenton) Debtors' Counsel: Timothy P. Neumann, Esq. Broege, Neumann, Fischer & Shaver, LLC 25 Abe Voorhees Drive Manasquan, NJ 08736 Tel: (732) 223-8484 Fax: (732) 223-2416 Financial condition of debtor-affiliate that filed on April 1, 2008: Estimated Assets Estimated Debts ---------------- --------------- Winston Circle, LLC $1 million to $1 million to $10 million $10 million Financial condition of debtor-affiliate that filed on November 26, 2007: Total Assets Total Debts ------------ ----------- Monmouth Road Brokers, L.L.C. $650,000 $0 Financial condition of debtor-affiliate that filed on October 31, 2007: Total Assets Total Debts ------------ ----------- Monmouth Consulting Services, L.L.C. $1,100,198 $0 Financial condition of debtor-affiliate that filed on October 22, 2007: Total Assets Total Debts ------------ ----------- Dwek Land, L.L.C. $4,415,000 $619,085 Dwek Motors, L.L.C. $1,290,000 $7,044 Financial condition of debtor-affiliate that filed on October 15, 2007: Total Assets Total Debts ------------ ----------- 170 Broad, L.L.C. $2,900,000 $1,400,518 Financial condition of debtor-affiliates that filed on October 12, 2007: Total Assets Total Debts ------------ ----------- Copper Gables, L.L.C. $1,100,000 $5,393,910 Dwek Homes, L.L.C. $11,508,847 $6,623,529 Myrtle Avenue Land, L.L.C. $1,251,362 $73,744 Dwek Wall Gas, L.L.C. $375,000 $0 Grant Avenue Estates, L.L.C. $6,200,100 $31,896,093 Neptune City Stores, L.L.C. $1,100,000 $5,393,910 Financial condition of debtor-affiliates that filed on September 27, 2007: Total Assets Total Debts ------------ ----------- Tinton Falls Land, LLC $800,000 $10,266,876 Financial condition of debtor-affiliates that filed on September 4, 2007: Total Assets Total Debts ------------ ----------- WLB Center, LLC $6,012,081 $3,652,480 Asbury Gas, LLC $500,000 $132,298 Jemar Enterprises, LLC $2,200,000 $924,538 Melville Dwek, LLC $425,000 $7,224 Newport WLB, LLC $5,500,297 $4,903,989 Red Bank Gas, LLC $1,030,000 $46,008 WLB Highway, LLC $1,411,615 $7,000,000 Financial condition of debtor-affiliates that filed before August 24, 2007: Total Assets Total Debts ------------ ----------- Dwek Branches, LLC $14,638,167 $18,125,863 Dwek Assets, LLC $21,096,393 $16,510,850 WLB Center, LLC $6,012,081 $3,652,480 Dwek Properties, LLC $17,809,448 $23,403,588 Neptune Medical, LLC $3,206,961 $2,865,749 Dwek Raleigh, L.L.C. $6,250,291 $5,120,286 Greenwood Plaza $7,384,944 $5,332,924 Acquisitions LLC Sinking Springs II, L.L.C. $4,317,585 $2,676,477 Sinking Springs, L.P. $3,958,181 $3,919,222 1631 Highway 35, L.L.C. $969,824 $235,379 167 Monmouth Road, L.L.C. $2,010,780 $782,872 2100 Highway 35, L.L.C. $3,364,561 $20,126,806 230 Broadway, L.L.C. $1,024,775 $5,411,444 264 Highway 35, L.L.C. $804,745 $422,973 374 Monmouth Road, L.L.C. $756,984 $5,115,620 55 North Gilbert, L.L.C. $5,100,907 $3,618,102 601 Main Street, L.L.C. $2,486,713 $5,000,000 6201 Route 9, L.L.C. $1,500,048 $1,136,975 Aberdeen Gas, L.L.C. $300,100 $75 Bath Avenue Holdings, L.L.C. $427,386 $5,002,253 Belmar Gas, L.L.C. $902,777 $7,000,000 Berkeley Heights Gas, L.L.C. $3,765,774 $9,590,389 Brick Gas, L.L.C. $569,110 $0 Dover Estates, L.L.C. $5,000,000 $2,078,935 Dwek Gas, L.L.C. $3,909,148 $3,000,000 Dwek Hopatchung, L.L.C. $901,509 $645,506 Dwek Income, L.L.C. $8,491,631 $12,071,262 Dwek Ohio, L.L.C. $630,065 $504,185 Dwek Pennsylvania, L.P. $1,505,779 $1,142,160 Dwek Wall, L.L.C. $4,283,804 $2,213,029 Dwek Woodbridge, L.L.C. $4,995,979 $2,863,687 Kadosh, L.L.C. $900,121 $750,395 Lacey Land, L.L.C. $850,027 $290,075 Monmouth Plaza, L.L.C. $752,829 $399,380 P&Y Holdings, L.L.C. $637,630 $338,640 Sugar Maple Estates, L.L.C. $7,520,388 $5,472,159 West Bangs Avenue, L.L.C. $500,536 $248,343 Beach Mart, L.L.C. $855,318 $5,468,135 A list of 180 largest unsecured creditors for the debtor- affiliates that filed before August 24, 2007, is available for free at http://researcharchives.com/t/s?232f A. WLB Center, LLC's List of its Four Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Capital Property Property $1,310 Management, LLC Management 167 Monmouth Road Oakhurst, NJ 07755 JCP&L Unknown P.O. Box 3687 Akron, OH 44309-3687 NJ American Water Co. Unknown P.O. Box 371331 Pittsburgh, PA 15250-7331 NJNG Unknown P.O. Box 1378 Belmar, NJ 07715-0001 B. Asbury Gas, LLC's List of its Seven Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Brinkerhoof Environmental Environmental $122,415 Services Services at former 1913 Atlantic Avenue Gulf Service Suite R5 Station Manasquan, NJ 08736 Capital Property Property Management $4,000 Management, LLC 167 Monmouth Road Oakhurst, NJ 07755 Dickstein Associates Agency Insurance $2,844 4001 Asbury Avenue Neptune, NJ 07753 JCP&L Utilities $129 NJ DEP Unknown Township of Neptune $785 Sewer Authority Rent-A-Fence, Inc. $196 C. Jemar Enterprises, LLC's List of its Three Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Coastal Property Property $120 Maintenance, LLC Maintenance 167 Monmouth Road Oakhurst, NJ 07755 Cutting Edge Lawn Service, LLC $350 17 Tall Oaks Drive Hazlet, NJ 07730 NJ DEP Unknown 401 East State Street Trenton, NJ 08625 D. Melville Dwek, LLC's List of its Two Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Capital Property Property $4,000 Management, LLC Management 167 Monmouth Road Oakhurst, NJ 07755 NJ DEP Unknown 401 East State Street Trenton, NJ 08625 E. Newport WLB, LLC's List of its 12 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Penn Federal Savings Bank $45,074 [unknown address] Key Equipment Finance Co. $4,824 P.O. Box 203901 Houston, TX 77216-3901 NJ American Water Co. $2,011 P.O. Box 371331 Pittsburgh, PA 15250-7331 Cutting Edge Lawn $1,696 Service, LLC Kleen Rite $1,353 Morris County Elevator $198 NJ Natural Gas Co. $171 JRG Termite & Pest Control Tenant $128 Dew Drop Lawn Sprinklers, LLC $53 Meridian Health Realty Corp. Tenant Unknown Dr. Christian Pierson Tenant Unknown Sovereign Bank Tenant Unknown F. Red Bank Gas, LLC's List of its Four Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Capital Property Property $4,000 Management, LLC Management 167 Monmouth Road Oakhurst, NJ 07755 DMR Lawns & Landscapes, Inc. Landscaping $1,160 28 Broad Street Eatontown, NJ 07724 Coastal Property Property $883 Maintenance, LLC Management 167 Monmouth Road Oakhurst, NJ 07755 NJ DEP Unknown 401 East State Street Trenton, NJ 08625 G. WLB Highway, LLC and Tinton Falls Land, LLC do not have any creditors who are not insiders. D. Copper Gables, LLC's List of its Five Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Shore Mechanical Services $1,541 407 N. Riverside Drive Neptune, NJ 07753 N.J. American Water Co. Utilities $1,072 Box 371331 Pittsburgh, PA 15250-7331 J.C.P.&L. Utilities $1,070 P.O. Box 3687 Akron, OH 44309-3687 Cutting Edge Lawn Service, Landscaping $1,070 L.L.C. Coastal Property Maintenance, Property $389 L.L.C. Maintenance E. Dwek Homes, LLC's List of its 15 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Township of Lakewood 1745 Ridge Unknown 212 Fourth Street Avenue, Lakewood, NJ 08701 Lakewood, NJ Property held by Joseph Dwek and Yeshua, L.L.C., transferred pursuant to Interim Settlement Agreement; value of security: $345,000 178 Williamsburg Unknown Lane, Lakewood, NJ Property held by Joseph Dwek and Yeshua, L.L.C., transferred pursuant to Interim Settlement Agreement; value of security: $165,000 335 Woodlake Unknown Manor Drive, Lakewood, NJ Property held by Joseph Dwek and Yeshua, L.L.C., transferred pursuant to Interim Settlement Agreement; value of security: $155,000 627 River Avenue, Unknown Lakewood, NJ Property held by Joseph Dwek and Yeshua, L.L.C., transferred pursuant to Interim Settlement Agreement; value of security: $275,000 Coventry Square Condominium $1,085 Association 445 East Kennedy Boulevard Lakewood, NJ 08701 Coastal Property Maintenance, $963 L.L.C. 167 Monmouth Road Oakhurst, NJ 07755 N.J. Natural Gas Co. $28 David Shoenfeld Lease Unknown Oscar Rugama Lease Unknown Pablo Ortega Lease Unknown Raul Gonzalez Lease Unknown Rosalina Vega Lease Unknown Senaia Rosonicic Lease Unknown Tia Askew Lease Unknown Tiffany Strand Lease Unknown Tisha Covington Lease Unknown Capital Property Management, Property Unknown L.L.C. Management Dickstein Associates Agency insurance Unknown F. Myrtle Avenue Land, LLC does not have any creditors who are insiders. G. Dwek Wall Gas, LLC's List of its Two Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Capital Property Management, Property Unknown L.L.C. Management 167 Monmouth Road Oakhurst, NJ 07755 Dickstein Associates Agency insurance Unknown 4001 Asbury Avenue Neptune, NJ 07753 H. Grant Avenue Estates, LLC's List of its Five Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Capital Property Management, Property $4,000 L.L.C. Management 167 Monmouth Road Oakhurst, NJ 07755 Franey Muha Alliant $3,939 Hochberg, Addeo & Associates, $670 L.L.C. Coastal Property Maintenance, Property $264 L.L.C. Maintenance Dickstein Associates Agency $250 I. Neptune City Stores, LLC's largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ Capital Property Management, Property $6,200 L.L.C. Management 167 Monmouth Road Oakhurst, NJ 07755 J. 170 Broad, LLC's largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ Tax Collector Commercial unknown Township of Red Bank Building located 90 Monmouth Street at 170 Broad Red Bank, NJ 07701 Street, Red Bank, NJ Property held by Joseph Dwek and Yeshua, L.L.C., transferred pursuant to Interim Settlement; value of security: $2,900,000; value of senior lien: $1,394,810 J.C.P.&L. Utilities $4,923 P.O. Box 3687 Akron, OH 44309-3687 Fly by Night Cleaning Service Trade debt $786 K. Dwek Land, LLC's Eight largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Capital Property Management, Property $4,000 L.L.C. Management 167 Monmouth Road Oakhurst, NJ 07755 The Hartford $1,931 P.O. Box 580 Hartford, CT 06104-2907 Miller Lawn Care Service, $481 L.L.C. 200 Court Place Brick, NJ 08723 Dickstein Associates Agency $100 Brick Township Municipal Utilities $91 Authorities New Jersey American Water Co. $8 New Jersey Natural Gas Co. $5 J.C.P.&L. $2 L. Dwek Motors, LLC's Five largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Coastal Property Maintenance, Property $749 L.L.C. Maintenance - J. 167 Monmouth Road Dwek Oakhurst, NJ 07755 Capital Property Management, Property $500 L.L.C. Management 167 Monmouth Road Oakhurst, NJ 07755 Cutting Edge Lawn Service, Landscaping,- J. $428 L.L.C. Dwek 17 tall Oaks Drive Hazlet, NJ 07730 The Cumberland Insurance Group Property insurance $352 - J. Dwek Atlantic Lock & Safe J. Dwek $80 M. Monmouth Consulting Services, LLC's Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ Township of Neptune 1335 -10th Avenue Unknown 25 Neptune Boulevard Neptune, NJ; Neptune, NJ 07753 value of security: $600,000 N. Monmouth Road Brokers, LLC's Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ Unknown real estate; unknown value of security: $650,000 Unknown unknown O. Winston Circle, LLC did not file a list of largest unsecured creditors. SOUTH COAST: Eroding Credit Quality Cues Moody's Rating Downgrades ------------------------------------------------------------------ Moody's Investors Service downgraded and left on review for possible further downgrade the ratings on these notes issued by South Coast Funding II, Ltd.: Class Description: $360,450,000 Class A-1 Floating Rate Senior Notes due 2037 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Aa3, on review for possible downgrade Class Description: $40,050,000 Class A-2 Floating Rate Senior Notes due 2037 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: A3, on review for possible downgrade Class Description: $42,500,000 Class A-3 Floating Rate Senior Notes due 2037 -- Prior Rating: A2, on review for possible downgrade -- Current Rating: Baa3, on review for possible downgrade Class Description: $32,500,000 Class B Floating Rate Senior Subordinate Notes due 2037 -- Prior Rating: B3, on review for possible downgrade -- Current Rating: Caa2, on review for possible downgrade According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. SPECTRUM BRANDS: Fitch Holds 'CCC' ID Rating with Negative Outlook ------------------------------------------------------------------ Fitch Ratings has affirmed Spectrum Brands, Inc.'s ratings as: -- Issuer default rating 'CCC'; -- $1 billion term loan B maturing March 30, 2013 'B/RR1'; -- $225 million ABL maturing Sept. 28, 2011 'B/RR1'; -- Eur262 million term loan maturing March 30, 2013 'B/RR1'; -- $700 million 7.375% senior sub note maturing Feb. 1, 2015 'CCC-/RR5'; -- $2.9 million 8.5% senior sub note, maturing Oct. 1, 2013 'CCC-/RR5'; -- $347 million 11.25% variable-rate toggle senior sub note, maturing Oct. 2, 2013 'CCC-/RR5'. The Rating Outlook remains Negative. The ratings reflect SPC's high leverage and relatively low liquidity. On a pro-forma basis for the last 12 months ended Dec. 30, 2007, total debt/EBITDA was 9 times and EBITDA/Cash Interest 1.3x. The metrics are on a pro-forma basis to include the EBITDA and interest allocation of the Lawn & Garden operation which is accounted for as a discontinued operation. The rating also reflects stability and some improvement in operations as exemplified by three straight quarters of EBITDA improvement. At Dec. 30, 2007 SPC had $166.4 million in cash and availability under the ABL. With this level of liquidity, Fitch expects that the company should be able to finance peak working capital requirements during its second quarter. The Negative Outlook encompasses the deterioration in financial and credit protection measures since 2005 as well an uncertain business profile given that parts of the company are up for sale. However, if SPC can continue to demonstrate continued improvement in its operations over the next two to three quarters, the Outlook may be reviewed with a view toward stabilization. Any change in the company due to a material sale of a business segment will prompt a review of the Outlook and rating at that time. Spectrum is a global branded consumer products company with operations in seven product categories: consumer batteries; lawn and garden; pet supplies; electric shaving and grooming; household insect control; electric personal care products; and portable lighting. STARVOX COMMS: Files for Ch. 7 Liquidation in Northern California ----------------------------------------------------------------- Starvox Communications Inc. and its debtor-affiliates filed for Chapter 7 liquidation with the U.S. Bankruptcy Court for the Northern District of California. The Debtors indicated in court documents that the group is in serious financial condition and is unable to continue its operations. All of Starvox's officers have also resigned as of Feb. 29, 2008. Based in San Jose, California, StarVox Communications, Inc. and its debtor-affiliates -- http://www.starvox.com/-- were facilities-based next generation infrastructure and applications service provider. StarVox served the voice, data, and internet needs of consumers, businesses, and carriers. The group offered wholesale and retail traditional voice services and enhanced VoIP services over its domestic VoIP network and its international wholesale network. The Debtors filed for Chapter 11 protection on March 26, 2004 (Bankr. S.D.N.Y. Case No. 04-12075), grouped together under a previous business name U.S. Wireless Data Inc. At the time of that filing, it had total assets of $2,719,000 and total liabilities of $5,709,000. STARVOX COMMUNICATIONS: Voluntary Chapter 7 Case Summary -------------------------------------------------------- Lead Debtor: StarVox Communications, Inc., (DE) fka U.S. Wireless Data, Inc. 2728 Orchard Parkway San Jose, CA 95134 Bankruptcy Case No.: 08-51450 Debtor-affiliates filing separate Chapter 7 petitions: Entity Case No. ------ -------- StarVox Communications, Inc., (CA) 08-51447 Capital Telecommunications, Inc. 08-51451 Eastern Telephone Systems, Inc. 08-51452 Capital Telecommunications of Erie, Inc. 08-51453 Star Tel of Victoria, Inc. 08-51454 Star Tel Transmission Co., Inc. 08-51455 Type of Business: The Debtors are facilities-based next generation infrastructure and applications service providers. See http://www.starvox.com/ Chapter 11 Petition Date: March 26, 2008 Court: Northern District of California (San Jose) Judge: Roger L. Efremsky Debtors' Counsel: John Walshe Murray, Esq. 19400 Stevens Creek Boulevard, Suite 200 Cupertino, CA 95014-2548 Tel: (650) 852-9000 (jwmurray@murraylaw.com) http://www.murraylaw.com/ Estimated Assets Estimated Debts ---------------- --------------- StarVox Communications, Inc. Less than Less than (DE) $10,000 $10,000 StarVox Communications, Inc. $10 million to $10 million to (CA) $50 million $50 million Capital Telecommunications, Less than Less than Inc. $10,000 $10,000 Eastern Telephone Systems, Less than Less than Inc. $10,000 $10,000 Capital Telecommunications Less than Less than of Erie, Inc. $10,000 $10,000 Star Tel of Victoria, Inc. Less than Less than $10,000 $10,000 Star Tel Transmission Co., Less than Less than Inc. $10,000 $10,000 The Debtors did not file lists of their largest unsecured creditors. STILLWATER ABS: Poor Credit Quality Cues Moody's Five Rating Cuts ----------------------------------------------------------------- Moody's Investors Service downgraded and put on review for possible further downgrade the ratings on these notes issued by Stillwater ABS CDO 2006-1, Ltd.: Class Description: $72,475,000 Class A-2 Second Priority Senior Secured Floating Rate Term Notes, Due 2046 -- Prior Rating: Aaa -- Current Rating: Aa2, on review for possible downgrade Class Description: $26,000,000 Class A-3 Third Priority Senior Secured Floating Rate Term Notes, Due 2046 -- Prior Rating: Aaa -- Current Rating: Aa3, on review for possible downgrade Class Description: $11,050,000 Class B Fourth Priority Senior Secured Floating Rate Term Notes, Due 2046 -- Prior Rating: Aa2 -- Current Rating: A1, on review for possible downgrade Class Description: $8,125,000 Class C Fifth Priority Secured Floating Rate Deferrable Interest Term Notes, Due 2046 -- Prior Rating: A3, on review for possible downgrade -- Current Rating: Baa3, on review for possible downgrade Class Description: $4,550,000 Class D Sixth Priority Secured Floating Rate Deferrable Interest Term Notes, Due 2046 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: Ba3, on review for possible downgrade According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. STONERIDGE INC: Moody's Changes Outlook to Stable; Holds B1 Rating ------------------------------------------------------------------ Moody's Investors Service revised Stoneridge, Inc.'s ratings outlook to stable from negative. Concurrently, Moody's affirmed the company's B1 Corporate Family Rating, B1 Probability of Default Rating and B2 rating on the $200 million senior unsecured notes due 2012. The revision of the ratings outlook to stable from negative reflects the company's improved credit metrics resulting from the cumulative effects of Stoneridge's operating improvement efforts despite the slowdown experienced in both the North American automotive and heavy duty truck end markets. Over the intermediate term, Moody's expects the company's operating performance to continue to improve as Stoneridge recognizes new customer wins on long-term contracts as well as gain traction from its current restructuring efforts. Additionally, the company's good liquidity position is evidenced by its balance sheet with over $90 million in cash as of Dec. 31, 2007 (approximately half outside of the US) coupled with expected availability in excess of $70 million under its asset based revolver on average throughout the near term. Moody's does have some concern that Stoneridge could experience some negative effect from the American Axle strike although it should be limited in nature. For the twelve months ended Dec. 31, 2007, the company had approximately 6% concentration with General Motors which is American Axle's biggest customer. The affirmation of the B1 Corporate Family Rating considers Stoneridge's relatively small size within the auto supplier industry, continued weakness within both the North American auto and heavy truck industry over the intermediate term, significant concentration with its largest customer (approximately 20% of revenues with Navistar International) as well as with the Big Three U.S. automakers (approximately 19% of revenues), and adequate coverage of interest expense. Additionally, the Corporate Family Rating reflects the moderate leverage position with adjusted debt to EBITDA at approximately 3.4 times for the twelve months ended Dec. 31, 2007, stable free cash flow generation and a good liquidity profile. Sidney Matti, Analyst, stated that, "Although both the North American automotive and heavy duty truck markets continue to experience weak sales, Stoneridge has been able to improve its operating performance through new program wins in North America and Europe coupled with successful cost control measures." The ratings outlook was revised to stable from negative. These ratings were affirmed: -- B1 Corporate Family Rating; -- B1 Probability of Default Rating; and -- B2 (LGD4/64%) rating on the $200 million Senior Unsecured Notes due 2012. Headquartered in Warren, Ohio, Stoneridge, Inc. is a designer and manufacturer of highly engineered electrical and electronic components, modules and systems for automotive, medium and heavy- duty truck, agricultural and off-highway vehicle markets. For the twelve months ended Dec. 31, 2007, the company reported revenues of $727 million. STRUCTURED FINANCE: Moody's Junks Rating on $15 Mil. Notes From B2 ------------------------------------------------------------------ Moody's Investors Service placed on review for possible downgrade the ratings on these notes issued by Structured Finance Advisors ABS CDO III, Ltd.: Class Description: $198,000,000 Class A Senior Secured Floating Rate Notes Due 2032 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Moody's also downgraded and left on review for possible further downgrade the ratings on these notes: Class Description: $50,000,000 Class B Senior Secured Floating Rate Notes Due 2037 -- Prior Rating: Aa3, on review for possible downgrade -- Current Rating: Baa3, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $15,000,000 Class C Secured Floating Rate Notes Due 2037 -- Prior Rating: B2, on review for possible downgrade -- Current Rating: Ca According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. SUN-TIMES MEDIA: December 31 Balance Sheet Upside-Down by $75MM --------------------------------------------------------------- Sun-Times Media Group Inc.'s balance sheet at Dec. 31, 2007, showed total assets of $791.586 million and total liabilities of $866.595 million, resulting to total stockholders' deficit of $75.009 million. The company reported a net loss of $59.1 million, for the fourth quarter ended Dec. 31, 2007, compared with a loss of $34.6 million in the fourth quarter of 2006. For the year ended Dec. 31, 2007, the company reported net income of $271.6 million compared with a loss of $56.7 million for the year ended Dec. 31, 2006. The full-year 2007 net income figure reflects the settlement of certain tax issues with the Canada Revenue Agency, resulting in a benefit largely reflecting the reversal of certain tax accruals, totaling $586.7 million, partially offset by an increase in the valuation allowance against deferred tax assets of $193.5 million. The company noted that 2007 results reflect significant costs associated with the criminal trial involving past management, the writedown of a loan to a subsidiary of Hollinger Inc., and, on the positive side, the resolution of its Canadian tax obligation. All comparisons to the company's 2006 results were impacted by an extra week in 2006. "The company has moved vigorously to address its financial challenges, including starting an aggressive cost-reduction plan," Cyrus F. Freidheim, Jr., Sun-Times Media Group president and chief executive officer, said. "The cost reduction plan, disclosed in the fourth quarter of 2007, is designed to reduce operating costs by $50 million on an annualized basis by June 30, 2008. "We have taken the bold steps we believe we need to take to remain a viable competitor," Mr. Freidheim said. "At the same time, we have continued to invest in prospective high growth areas, including our increasingly successful online presence." "Additionally, we will diligently continue to explore all alternatives to restore profitable operations and ensure the company's future success," Mr. Freidheim added. "Despite corporate legacy issues and powerful change forces redefining the newspaper business, the Sun-Times News Group still delivers the best and most widely read coverage in and around Chicago." About Sun-Times Media Group Headquartered in Chicago, Sun-Times Media Group Inc. (NYSE: SVN) - - http://www.thesuntimesgroup.com/-- is dedicated to being the premier source of local news and information for the greater Chicago area. Its media properties include the Chicago Sun-Times and Suntimes.com as well as newspapers and Web sites serving more than 200 communities throughout the Chicago area. Hollinger Inc. (TSX: HLG.C)(TSX: HLG.PR.B) -- http://www.hollingerinc.com/-- which owns approximately 70.1% voting and 19.7% equity interest in Sun-Times Media Group Inc., along with two affiliates, 4322525 Canada Inc. and Sugra Limited, filed separate Chapter 15 petitions on Aug. 1, 2007 (Bankr. D. Del. Case Nos. 07-11029 through 07-11031). Hollinger also initiated Court-supervised restructuring under the Companies' Creditors Arrangement Act (Canada) on the same day. SUPERIOR OFFSHORE: Board Appoints Thomas E. Daman as CFO and EVP ---------------------------------------------------------------- Superior Offshore International Inc.'s board of directors appointed Thomas E. Daman to serve as the company's executive vice president and chief financial officer effective as of April 1, 2008. The company also disclosed that on Jan. 27, 2008, James J. Mermis resigned as chief executive officer and director effective that day, and on Feb. 8, 2008; Roger D. Burks resigned as chief financial officer and director, effective March 31, 2008. Also on Jan. 27, 2008, the board of directors appointed E. Donald Terry, previously an independent director of the company, to serve as interim president and chief executive officer of the company until a successor is named. Based in Lafayette, Louisiana, Superior Offshore International Inc. (NASDAQ:DEEP) -- http://www.superioroffshore.com/-- is a provider of subsea construction and commercial diving services to the crude oil and natural gas exploration, and production, gathering and transmission industries on the outer continental shelf of the Gulf of Mexico. The company's subsea construction services include installation, upgrading and decommissioning of pipelines and production infrastructure. Its commercial diving services include recurring inspection, maintenance and repair services, well as support services for subsea construction and salvage operations. Superior performs its services in both surface and saturation diving modes in water depths of up to 1,000 feet. Superior Offshore International Inc. is in default under its senior secured credit facility with JPMorgan Chase Bank N.A. The company disclosed that as of March 31, 2008, the company had less than approximately $1.8 million outstanding under this credit facility. TEKNI-PLEX INC: Reaches Agreement in Principle with Noteholders --------------------------------------------------------------- Tekni-Plex Inc. has reached an agreement in principle among the holders of a majority of its 12.75% Senior Subordinated Notes Due 2010 and the holders of a majority of its preferred stock regarding the terms of a consensual out-of-court restructuring transaction, according to the company's regulatory filing with the Securities and Exchange Commission. The company also has entered into an extension, through May 13, 2008, of its Forbearance Agreement, dated as of Jan. 16, 2008, with entities that purportedly hold more than 91% of the Subordinated Notes and more than 64% of its 8.75% Senior Secured Notes due 2013. The agreement in principle contemplates the equitization of all or substantially all of the Subordinated Notes and the exchange of the company's preferred stock for warrants. Additionally, the company's existing outstanding common stock will be purchased or retired with a limited amount of cash to be provided in connection with the restructuring. The company will disclose further details on the agreement in principle in a Form 8-K, which will be filed shortly with the Securities and Exchange Commission. Under the terms of the forbearance extension, the Forbearance Agreement will terminate on April 2, 2008, if a term sheet memorializing the agreement in principle is not agreed upon on or before April 1, 2008, and on April 15, 2008 if any required tender offer for the Subordinated Notes is not launched by such date. The company intends to implement the restructuring transactions by May 13, 2008, at which point, if the transactions are satisfactory to each of the lenders under the company's revolving credit facility, the maximum availability under such credit facility will be increased from $95 million to $110 million. There can be no assurance that the parties will be able to reach an agreement on the term sheet or consummate the contemplated transactions. "The consummation of the restructuring transaction would result in a significant deleveraging of Tekni-Plex's balance sheet, and would put the company in a strong financial position to operate and grow its businesses, many of which remain leaders in the markets they serve," Dr. F. Patrick Smith, Chairman, Chief Executive Officer and President of Tekni-Plex, said. "I applaud the efforts of those stakeholders who have demonstrated unwavering confidence in Tekni-Plex, and have worked tirelessly to reach this critical point." A full-text copy of the Forbearance Agreement dated March 27, 2008, is available for free at http://ResearchArchives.com/t/s?29db About Tekni-Plex Headquartered in Coppell, Texas, Tekni-Plex Inc. -- http://www.tekni-plex.com/-- manufactures packaging, packaging products and materials as well as tubing products. * * * As reported in the Troubled Company Reporter on Dec. 27, 2007, Moody's Investors Service downgraded the Corporate Family Ratings of Tekni-Plex, Inc. to Caa3 from Caa1. THOMPSON METALS: Case Summary & 16 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Thomson Metals, Inc. 405 Railroad Street Thomson, GA 30824 Bankruptcy Case No.: 08-10624 Type of Business: The Debtor manufactures fabricated structural metal and precious metal roll formed components. See http://www.thomsonmetal.com Chapter 11 Petition Date: March 31, 2008 Court: Southern District of Georgia (Augusta) Debtor's Counsel: James C. Overstreet, Jr., Esq. Klosinski Overstreet, LLP #7 George C. Wilson Ct. Augusta, GA 30909 Tel: (706) 863-2255 Fax: (706) 863-5885 jco@klosinski.com Estimated Assets: Less than $50,000 Estimated Debts: $1 million to $10 million Debtor's list of its 16 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Legacy Investments of Brandon $352,224 613 Royal Crest Way Brandon, FL 33511 Mac Metal Sales $323,244 1650 West Highway 80 Somerset, KY 42053 Bradley Tubin $300,000 7500 West Lake Mead Boulevard Las Vegas, NV 89128 Farmers & Merchants Bank $227,724 Don Cheeks Mortgage $200,000 Farmers State Bank Vehicles $196,156 First Citizens 1st Mortgage $144,379 City of Thompson 2nd Mortgage $129,075 US Bancorp Equipment Equipment $83,033 Galva $72,037 CSRA Rural Lending Authority Equipment $57,191 Kenwood Painted Metals Inc. $56,272 Baird & Co. $20,490 Wells Fargo Equipment Equipment $19,698 Rental Service Corp $13,389 James T. Jones Jr., P.C. $6,500 THORNBURG MORTGAGE: To Resume Lending After $1.35BB Notes Offering ------------------------------------------------------------------ Thornburg Mortgage Inc. expects to resume funding new mortgages after completing a $1.35 billion bond offering, Lingling Wei of The Wall Street Journal reports. The company suspended its business of making loans after a sharp drop in the value of its mortgage securities triggered margin calls from its lenders and left it with inadequate cash. On Monday, the company said it has has completed its previously announced offering to raise $1.35 billion from the sale of senior subordinated secured notes, warrants to purchase common stock and a participation in certain mortgage-related assets. The company has received $1.15 billion of the proceeds from the offering. "The company has adequate cash flow and adequate liquidity, and will be able to begin lending again within weeks, if not days," Chief Executive Larry Goldstone said in an interview, according to the report. The Wall Street report notes that while Thornburg is a relatively tiny lender based on loan-origination volumes, it is being closely watched because it caters to borrowers with good credit. Further, the bigger part of Thornburg's business is investing in mortgage asset, whose failure could led to a fire-sale of the assets and depress the mortgages market further. The report stated the company originated $5.3 billion of adjustable-rate mortgages last year, down from $5.6 billion in 2006. At the end of the year, it had a $35 billion portfolio of adjustable-rate mortgages and mostly highly rated mortgage securities. $1.35 Billion Secured Notes Offering As reported by the Troubled Company Reporter on April 1, Thornburg Mortgage completed its $1.35 billion offering after receiving an extension through March 31, 2008, for the Override Agreement that the company had announced on March 19, 2008. The proceeds of the proposed offering are intended to satisfy a key contingency of the Override Agreement. As reported by the TCR on March 31, pursuant to the agreement, Thornburg agreed to raise a minimum of net proceeds of $948 million in new capital as part of the 364-day agreement the company entered into with five of its remaining reverse repurchase agreement counterparties and their affiliates to provide approximately $5.8 billion of reverse repurchase agreement financing. The TCR also reported that the company has suspended dividend payments on all outstanding series of preferred stock. According to the WSJ report analysts believe Thornburg will be able to service its debt partly because of the suspension of the dividend payments. Bose George, an analyst at Keefe, Bruyette & Woods Inc., estimated that the company would have had to pay roughly $100 million in preferred dividends alone this year, the report said. About Thornburg Mortgage Based in Santa Fe, New Mexico, Thornburg Mortgage Inc. (NYSE: TMA) -- http://www.thornburgmortgage.com/-- is a single-family residential mortgage lender focused principally on prime and super-prime borrowers seeking jumbo and super-jumbo adjustable- rate mortgages. It originates, acquires, and retains investments in adjustable and variable rate mortgage assets. Its ARM assets comprise of purchased ARM assets and ARM loans, including traditional ARM assets and hybrid ARM assets. * * * As reported in the Troubled Company Reporter on March 10, 2008, Moody's Investors Service downgraded to Ca from Caa2 the senior unsecured debt, and to C from Ca the preferred stock ratings of Thornburg Mortgage, Inc. Thornburg's Ca unsecured debt rating remains under review for possible downgrade. The downgrades were in response to Thornburg's announcement that cross-defaults have been triggered under all of the REIT's repurchase agreements and secured loan agreements. Reverse repurchase agreements represent a key source of funding for the company. The TCR said on March 10 that Standard & Poor's Ratings Services lowered its issue ratings on Thornburg Mortgage Inc.'s senior unsecured debt to 'CC' from 'CCC+' and preferred stock to 'C' from 'CCC-'. Both issue ratings will remain on CreditWatch negative, where they were placed on March 3, 2008. The counterparty credit rating remains on selective default. Given Thornburg's limited financial resources, S&P believes the risk of default has increased further. The TCR also said on March 10 that, given Thornburg Mortgage, Inc.'s weakening credit profile stemming from defaults under the company's reverse repurchase agreements, Fitch has downgraded the Debtors' four ratings -- Issuer Default Rating to 'RD' from 'CCC'; -- Senior unsecured notes to 'C/RR6' from 'CCC-/RR5'; -- Unsecured subordinate notes to 'C/RR6' from 'CC/RR6'; and -- Preferred stock to 'C/RR6' from 'CC/RR6'. TIMBERWOLF I: Seven Classes of Notes Acquire Moody's Junk Ratings ----------------------------------------------------------------- Moody's Investors Service downgraded ratings of ten classes of notes issued by Timberwolf I, Ltd. and left on review for possible further downgrade the ratings of five of these classes. The notes affected by this rating action are: (1) Class Description: $9,000,000 Class S-1 Floating Rate Notes Due 2011 -- Prior Rating: Aaa -- Current Rating: Aa2, on review for possible downgrade (2) Class Description: $100,000,000 Class A-1a Floating Rate Notes Due 2039 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: A2, on review for possible downgrade (3) Class Description: $200,000,000 Class A-1b Floating Rate Notes Due 2039 -- Prior Rating: Aa3, on review for possible downgrade -- Current Rating: Ba3, on review for possible downgrade (4) Class Description: $100,000,000 Class A-1c Floating Rate Notes Due 2044 -- Prior Rating: A3, on review for possible downgrade -- Current Rating: Caa1, on review for possible downgrade (5) Class Description: $100,000,000 Class A-1d Floating Rate Notes Due 2044 -- Prior Rating: Baa1, on review for possible downgrade -- Current Rating: Caa3, on review for possible downgrade (6) Class Description: $8,300,000 Class S-2 Floating Rate Notes Due 2011 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: C (7) Class Description: $305,000,000 Class A-2 Floating Rate Notes Due 2047 -- Prior Rating: Baa3, on review for possible downgrade -- Current Rating: C (8) Class Description: $107,000,000 Class B Floating Rate Notes Due 2047 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: C (9) Class Description: $36,000,000 Class C Deferrable Floating Rate Notes Due 2047 -- Prior Rating: Caa1, on review for possible downgrade -- Current Rating: C (10) Class Description: $30,000,000 Class D Deferrable Floating Rate Notes Due 2047 -- Prior Rating: Caa3, on review for possible downgrade -- Current Rating: C The rating actions reflect deterioration in the credit quality of the underlying portfolio, as well as the occurrence as reported by the Trustee on March 10, 2008, of an event of default caused by a default in the payment, when due and payable, of interest on the Class S-2 Notes, Class A Notes and Class B Notes, which default has continued for a period of seven days, as described in Section 5.1(a) of the Indenture dated March 27, 2007. As provided in Article 5 of the Indenture during the occurrence and continuance of an Event of Default, holders of certain Notes may be entitled to direct the Trustee to take particular actions with respect to the Collateral and the Notes. The rating actions 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 further remedies to be pursued by the Controlling Class. Because of this uncertainty, the ratings assigned to the Class S-1 Notes, Class A-1a Notes, Class A-1b Notes, Class A-1c Notes, and Class A-1d Notes remain on review for possible further action. Timberwolf I, Ltd. is a collateralized debt obligation backed by a portfolio of ABS CDO securities. TOPANGA CDO: Eroding Credit Quality Cues Moody's Rating Reviews --------------------------------------------------------------- Moody's Investors Service placed on review for possible downgrade the ratings on these notes issued by Topanga CDO, Ltd.: Class Description: $49,000,000 Class A-1 Floating Rate Senior Secured Notes Due January 2045 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Additionally, Moody's downgraded and left on review for possible further downgrade the ratings on these notes: Class Description: $37,000,000 Class A-2 Floating Rate Senior Secured Notes Due January 2045 -- Prior Rating: Aa2, on review for possible downgrade -- Current Rating: A2, on review for possible downgrade Class Description: $26,000,000 Class B Floating Rate Deferrable Subordinate Secured Notes Due January 2045 -- Prior Rating: A3, on review for possible downgrade -- Current Rating: Baa2, on review for possible downgrade Class Description: $20,000,000 Class C Floating Rate Deferrable Junior Subordinate Secured Notes Due January 2045 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: Ba2, on review for possible downgrade According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. TORO ABS: Moody's Downgrades Ratings on Seven Classes of Notes -------------------------------------------------------------- Moody's Investors Service placed on review for possible downgrade the ratings on these notes issued by Toro ABS CDO II, Ltd.: Class Description: $885,000,000 Class A-1 First Priority Senior Secured Floating Rate Delayed Draw Notes Due June 2043 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Moody's also downgraded and left on review for possible further downgrade the ratings on these notes: Class Description: $56,000,000 Class A-2 Second Priority Senior Secured Floating Rate Notes Due June 2043 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: A1, on review for possible downgrade Class Description: $24,000,000 Class B Third Priority Senior Secured Floating Rate Notes Due June 2043 -- Prior Rating: Aa2, on review for possible downgrade -- Current Rating: A2, on review for possible downgrade Class Description: $7,000,000 Class C Fourth Priority Senior Secured Floating Rate Notes Due June 2043 -- Prior Rating: Aa3, on review for possible downgrade -- Current Rating: A3, on review for possible downgrade Class Description: $9,000,000 Class D Fifth Priority Mezzanine Secured Deferrable Floating Rate Notes Due 2043 -- Prior Rating: A2, on review for possible downgrade -- Current Rating: Ba1, on review for possible downgrade Class Description: $10,500,000 Class E Sixth Priority Mezzanine Secured Deferrable Floating Rate Notes Due June 2043 -- Prior Rating: Ba2, on review for possible downgrade -- Current Rating: B3, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $4,000,000 Class F Seventh Priority Mezzanine Deferrable Floating Rate Notes Due June 2043 -- Prior Rating: B1, on review for possible downgrade -- Current Rating: Ca According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. TOUSA INC: Court Approves KZC Standard Services Agreement --------------------------------------------------------- Judge John K. Olson granted the request of TOUSA Inc. and its debtor-affiliates to employ KZC Services, LLC, and John R. Boken, to provide management services to the Debtors, on a final basis, nunc pro tunc to January 29, 2008. Judge Olson also approved the indemnification provisions in the Standard Services Agreement entered by the Debtors with KZC Services and Mr. Boken. KZC Services is a financial advisory, interim management, litigation support and forensic accounting firm specializing in advising debtors, creditors, investors and court-appointed officials in bankruptcy proceedings and out-of-court workouts. TOUSA Inc. executive vice president and chief financial officer Tommy L. McAden related that the Debtors have entered into a standard services agreement dated Jan. 28, 2008, with KCZ Services and Mr. Boken. The Agreement will govern the terms and conditions of the services to be provided by KCZ to the Debtors and the appointment of Mr. Boken as chief restructuring officer to the Debtors. Under the Services Agreement, KZC and Mr. Boken will be authorized to make decisions with respect to all aspects of the management and operation of the Debtors' businesses, including organization and human resources, marketing and sales, logistics, finance and administration, and other areas that Mr. Boken may identify as applicable. KZC will assign Mr. Boken to serve as the Debtors' chief restructuring officer and the firm will assign an Associate Directors of Restructuring to perform other related services. Among other things, Judge Olson ruled that: -- KZC and its affiliates will not act in any other capacity in connection with the Debtors' Chapter 11 cases; -- a motion to modify the retention will be filed in the event the Debtors seek to modify functions of certain Executive Officers, adding new Executive Officers, or altering or expanding the scope of the Agreement; -- KZC will file with the Court with copies to the United States Trustee and all official committee a report of staffing on the engagement for the previous month. Staffing will be subject to Court review in the event an objection is filed; and -- no principal, employee or independent contractor of KZC and its affiliates will serve as a director of any of the Debtors during the pendency of their Chapter 11 cases. As reported by the Troubled Company Reporter on Feb. 13, the Debtors will pay KZC's professionals according to these hourly rates: Professional Hourly Rates ------------ ------------ Managing Directors $695 to $775 Professional Staff $200 to $665 Support Personnel $45 to $225 In addition, if the Debtors succeed in obtaining a consensual restructuring, compromise or extinguishment of a substantial amount of their existing indebtedness, or a final order approving a plan of reorganization, or a sale of substantially all of the Debtors' assets that is completed, KZC will be entitled to a $3,500,000 Consummation Fee. KZC Services has received a $500,000 prepetition retainer and a $250,000 initial advance payment from the Debtors, plus biweekly advances in which certain prepetition amounts have been applied. >From time to time, KZC and Mr. Boken will utilize employees of KZC's parent, Kroll Inc., and its other subsidiaries. The Debtors will indemnify KZC, Mr. Boken and other KZC employees serving as officers of the Debtors. About TOUSA Inc. Headquartered in Hollywood, Florida, TOUSA Inc. (Pink Sheets: TOUS) -- http://www.tousa.com/-- fka Technical Olympic U.S.A. Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark Homes L.P., TOUSA Homes Inc. and Newmark Homes Corp. is a leading homebuilder in the United States, operating in various metropolitan markets in 10 states located in four major geographic regions: Florida, the Mid-Atlantic, Texas, and the West. TOUSA designs, builds, and markets high-quality detached single-family residences, town homes, and condominiums to a diverse group of homebuyers, such as "first-time" homebuyers, "move-up" homebuyers, homebuyers who are relocating to a new city or state, buyers of second or vacation homes, active-adult homebuyers, and homebuyers with grown children who want a smaller home. It also provides financial services to its homebuyers and to others through its subsidiaries, Preferred Home Mortgage Company and Universal Land Title Inc. The Debtor and its debtor-affiliates filed for separate Chapter 11 protection on Jan. 29, 2008. (Bankr. S.D. Fla. Case No.: 08-10928). The Debtors have selected M. Natasha Labovitz, Esq., Brian S. Lennon, Esq., Richard M. Cieri, Esq. and Paul M. Basta, Esq., at Kirkland & Ellis LLP and Paul Steven Singerman, Esq., at Berger Singerman to represent them in their restructuring efforts. Lazard Freres & Co. LLC is the Debtors' investment banker and financial advisor. Ernst & Young LLP is selected as the Debtors' independent auditor and tax services provider. Kurtzman Carson Consultants LLC acts as the Debtors' Notice, Claims & Balloting Agent. TOUSA Inc.'s financial condition as of Sept. 30, 2007, showed total assets of $2,276,567,000 and total debts of $1,767,589,000. Its consolidated detailed balance sheet as of Feb. 29, 2008 showed total assets of $1,961,669,000 and total liabilities of $2,278,106,000. The Debtors' exclusive period to file a plan expires on May 28, 2008. (TOUSA Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). TROPICANA ENTERTAINMENT: Sells Casino Aztar to Eldorado for $245MM ------------------------------------------------------------------ Tropicana Entertainment LLC, an indirect subsidiary of Tropicana Casinos and Resorts, entered into a definitive agreement to sell its Casino Aztar riverboat gaming and hotel property in Evansville, Indiana, to Eldorado Resorts LLC for up to $245 million consisting of $190 million of cash consideration, a $30 million note, and $25 million in potential earnings incentives linked to the operating performance of the property. Tropicana intends to use the proceeds of the sale to reduce debt. The sale is subject to customary conditions including financing and approval by the Indiana Gaming Commission, which must license Eldorado before the transaction can close. At any time prior to Eldorado receiving a financing commitment, Tropicana may accept a superior proposal to acquire Casino Aztar, subject to the payment of a breakup fee. Separately, Tropicana also voluntarily agreed to have an Indiana Gaming Commission-appointed trustee act as manager of Casino Aztar until any pending sale is completed. Tom Dingman, a former Harrah's executive, was appointed trustee by the Indiana Gaming Commission and will manage the day-to-day operations subject to Tropicana's approval of significant decisions such as entering into material agreements, incurring debt and settling lawsuits. Mr. Dingman also will be required to consult with Tropicana before setting an annual budget, making executive compensation decisions and settling administrative actions. Mr. Dingman is a casino hotel manager who has held management positions at Harrah's properties in the San Diego, New Orleans, and Vicksburg. He retired from Harrah's in 2003 and currently acts as a consultant to companies in the gaming industry. Credit Suisse acted as exclusive financial advisor to Tropicana for the sale of Casino Aztar and Innovation Capital LLC rendered an opinion that the agreed-upon sale price was at least equal to fair market value. The Troubled Company Reporter on Dec. 21, 2007 reported that Tropicana Entertainment LLC attempted to reach an agreement with its lenders that allows for an orderly sale of the Tropicana Resort and Casino in Atlantic City and Casino Aztar in Evansville, Indiana. The report mentioned that the proceeds from the sales of the two properties, along with those from the sale of the company's casino in Vicksburg, Mississippi, which is under contract with Nevada Gold & Casinos Inc., are expected to be sufficient to pay Tropicana's outstanding senior debt. Any remaining proceeds will be reinvested in the company's business. About Eldorado Resorts Headquartered in Reno, Nevada, Eldorado Resorts LLC -- http://www.eldoradoreno.com-- is a licensed owner and operator of casinos in Nevada and Louisiana. About Tropicana Entertainment Tropicana Entertainment LLC -- http://www.tropicanacasinos.com/-- is an indirect subsidiary of Tropicana Casinos and Resorts. The company is one of the largest privately-held gaming entertainment providers in the United States. Tropicana Entertainment owns eleven casino properties in eight distinct gaming markets with premier properties in Las Vegas, Nevada and Atlantic City, New Jersey. * * * As reported in the Troubled Company Reporter on Mar. 7, 2008, Moody's Investors Service downgraded Tropicana Entertainment LLC's corporate family rating to Caa3 from Caa1. The downgrade reflects the Delaware Court of Chancery's ruling that Tropicana did breach section 4.06 of the senior subordinate note indenture as it relates to the transfer of title of Adamar - the entity that holds the Atlantic City property. UBS MASTR: Fitch Downgrades Ratings on $729.1 Million Certificates ------------------------------------------------------------------ Fitch Ratings has taken rating actions on UBS MASTR Asset Backed Securities mortgage pass-through certificates. Affirmations total $792.5 million and downgrades total $729.1 million. Additionally, $44.3 million was placed on Rating Watch Negative. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: MASTR Asset Backed Securities Trust 2005-FRE1 -- $87.4 million class A-1 affirmed at 'AAA', (BL: 71.64, LCR: 2.37); -- $43.3 million class A-3 affirmed at 'AAA', (BL: 89.10, LCR: 2.95); -- $105 million class A-4 affirmed at 'AAA', (BL: 67.40, LCR: 2.23); -- $22.1 million class A-5 affirmed at 'AAA', (BL: 65.79, LCR: 2.18); -- $110.3 million class M-1 downgraded to 'BBB' from 'AA+' (BL: 45.14, LCR: 1.49); -- $41.6 million class M-2 downgraded to 'BB' from 'AA' (BL: 37.56, LCR: 1.24); -- $21.7 million class M-3 downgraded to 'B' from 'AA-' (BL: 33.54, LCR: 1.11); -- $21.7 million class M-4 downgraded to 'B' from 'A-' (BL: 29.44, LCR: 0.97); -- $14.5 million class M-6 downgraded to 'CCC' from 'BB+' (BL: 22.63, LCR: 0.75); -- $19.9 million class M-5 downgraded to 'CCC' from 'BBB' (BL: 25.53, LCR: 0.84); -- $13.9 million class M-7 downgraded to 'CC/DR5' from 'BB' (BL: 19.72, LCR: 0.65); -- $13.9 million class M-8 downgraded to 'CC/DR6' from 'B+' (BL: 17.01, LCR: 0.56); -- $10.2 million class M-9 downgraded to 'CC/DR6' from 'CCC' (BL: 15.18, LCR: 0.5); -- $8.4 million class M-10 downgraded to 'C/DR6' from 'CCC' (BL: 13.99, LCR: 0.46). Deal Summary -- Originators: Fremont (100%) -- 60+ day Delinquency: 38.89% -- Realized Losses to date (% of Original Balance): 2.22% -- Expected Remaining Losses (% of Current balance): 30.21% -- Cumulative Expected Losses (% of Original Balance): 15.94% MASTR Asset Backed Securities Trust 2005-WF1 -- $75.5 million class A-1A affirmed at 'AAA' (BL: 49.37, LCR: 3.26); -- $85.2 million class A-2C affirmed at 'AAA' (BL: 56.90, LCR: 3.75); -- $53.5 million class A-2D affirmed at 'AAA' (BL: 47.46, LCR: 3.13); -- $23.9 million class M-1 affirmed at 'AA+' (BL: 40.14, LCR: 2.65); -- $21.1 million class M-2 affirmed at 'AA' (BL: 33.95, LCR: 2.24); -- $14.2 million class M-3 affirmed at 'AA-' (BL: 29.71, LCR: 1.96); -- $10.6 million class M-4 downgraded to 'A' from 'A+' (BL: 26.53, LCR: 1.75); -- $10.6 million class M-5 downgraded to 'BBB' from 'A' (BL: 23.35, LCR: 1.54); -- $9.7 million class M-6 downgraded to 'BB' from 'A-' (BL: 20.44, LCR: 1.35); -- $7.8 million class M-7 downgraded to 'B' from 'BBB+' (BL: 18.20, LCR: 1.2); -- $6.4 million class M-8 downgraded to 'B' from 'BBB' (BL: 16.30, LCR: 1.07); -- $9.2 million class M-9 downgraded to 'CC/DR4' from 'BBB-' (BL: 8.02, LCR: 0.53); -- $5.5 million class M-10 downgraded to 'CC/DR6' from 'BB' (BL: 7.70, LCR: 0.51). Deal Summary -- Originators: Wells Fargo -- 60+ day Delinquency: 20.29% -- Realized Losses to date (% of Original Balance): 0.58% -- Expected Remaining Losses (% of Current balance): 15.17% -- Cumulative Expected Losses (% of Original Balance): 6.15% MASTR Asset Backed Securities Trust 2005-NC1 -- $33.5 million class M-1 affirmed at 'AA+' (BL: 90.26, LCR: 4.48); -- $41.2 million class M-2 affirmed at 'AA' (BL: 68.48, LCR: 3.4); -- $16.7 million class M-3 affirmed at 'AA-' (BL: 59.42, LCR: 2.95); -- $16.7 million class M-4 affirmed at 'A+' (BL: 48.51, LCR: 2.41); -- $17.2 million class M-5 affirmed at 'A' (BL: 40.69, LCR: 2.02); -- $13.7 million class M-6 affirmed at 'A-' (BL: 33.12, LCR: 1.64); -- $11.3 million class M-7 downgraded to 'BB' from 'BBB+' (BL: 26.71, LCR: 1.33); -- $9.8 million class M-8 downgraded to 'B' from 'BBB' (BL: 21.18, LCR: 1.05); -- $11.3 million class M-9 downgraded to 'CCC' from 'BBB-' and removed from Rating Watch Negative (BL: 15.10, LCR: 0.75); -- $3.4 million class M-10 downgraded to 'CC/DR5' from 'BB' (BL: 13.74, LCR: 0.68). Deal Summary -- Originators: New Century -- 60+ day Delinquency: 33.62% -- Realized Losses to date (% of Original Balance): 1.05% -- Expected Remaining Losses (% of Current balance): 20.15% -- Cumulative Expected Losses (% of Original Balance): 4.88% MASTR Asset Backed Securities Trust 2005-NC2 -- $122.4 million class A-2 affirmed at 'AAA' (BL: 65.35, LCR: 2.02); -- $153.1 million class A-3 downgraded to 'AA' from 'AAA' (BL: 50.56, LCR: 1.56); -- $44.3 million class A-4 downgraded to 'AA' from 'AAA' and placed on Rating Watch Negative (BL: 48.31, LCR: 1.49); -- $31.1 million class M-1 downgraded to 'BB' from 'AA+' (BL: 41.71, LCR: 1.29); -- $28 million class M-2 downgraded to 'B' from 'AA+' (BL: 36.20, LCR: 1.12); -- $19.4 million class M-3 downgraded to 'B' from 'AA+' (BL: 32.28, LCR: 1); -- $14 million class M-4 downgraded to 'CCC' from 'AA' (BL: 29.42, LCR: 0.91); -- $13.1 million class M-5 downgraded to 'CCC' from 'AA-' (BL: 26.74, LCR: 0.83); -- $12.2 million class M-6 downgraded to 'CCC' from 'A+' (BL: 24.16, LCR: 0.75); -- $11.7 million class M-7 downgraded to 'CC/DR5' from 'A-' (BL: 21.54, LCR: 0.67); -- $8.6 million class M-8 downgraded to 'CC/DR6' from 'BBB+' (BL: 19.61, LCR: 0.61); -- $9 million class M-9 downgraded to 'CC/DR6' from 'BBB' (BL: 17.58, LCR: 0.54); -- $6.3 million class M-10 downgraded to 'CC/DR6' from 'BBB' and removed from Rating Watch Negative (BL: 16.26, LCR: 0.5); -- $6.8 million class M-11 downgraded to 'C/DR6' from 'BBB-' and removed from Rating Watch Negative (BL: 14.87, LCR: 0.46). Deal Summary -- Originators: New Century -- 60+ day Delinquency: 42.80% -- Realized Losses to date (% of Original Balance): 0.74% -- Expected Remaining Losses (% of Current balance): 32.38% -- Cumulative Expected Losses (% of Original Balance): 18.65% 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 2005 with regard to continued poor loan performance and home price weakness. VERTIS INC: Hiring of Financial Advisor Cues S&P's Negative Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its CreditWatch implications for its 'CC' corporate credit rating on Vertis Inc. to negative from developing following the company's announcement that it had engaged a financial advisor to assist in a possible debt exchange offering. At the same time, Standard & Poor's lowered its ratings on Vertis's $350 million senior secured second-lien notes and $350 million senior unsecured notes to 'C' from 'CCC'. The notes remain on CreditWatch with negative implications, where they were originally placed on April 4, 2007. In July 2007, Standard & Poor's lowered Vertis's corporate credit rating to 'CC' from 'B-' following Vertis's announcement it would enter into an exchange offer for its notes for a value less than par. The exchange offer expired in September 2007 with no exchanges. "The revised CreditWatch implications and the downgrade of the notes reflect Vertis' intention to evaluate its existing capital structure and the increased potential for a debt exchange offer," said Standard & Poor's credit analyst Liz Fairbanks. "In the event Vertis enters into an exchange offer that provides for less than full and timely payment, the ratings will be lowered." Standard & Poor's had previously indicated that there could be potential ratings upside in the event of a combination with American Color Graphics if, in the absence of a distressed exchange offer, a combination and restructuring plan would positively affect the Vertis rating. After yesterday's announcement, S&P no longer believes that this is the most likely outcome. VPG INVESTMENTS: Court Okays Hiring of Cosho Humphrey as Counsel ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Idaho granted an application filed by VPG Investments, Inc. to employ Joseph M. Meier, Esq., at Cosho Humphrey, LLP as attorney in the Debtor's bankruptcy case. The Debtor has engaged the services of Mr. Meier as attorney and will further need his services as attorney for the debtor-in- possession: (a) to give Debtor legal advice with respect to its powers and duties as Debtor and debtor-in-possession in the preparation and presentation of continuing Chapter 11 matters; (b) to advise Debtor in matters concerning creditors, claims, property rights and the operation of its business during the Chapter 11 proceeding; (c) to prepare on behalf of Debtor necessary applications, answers, orders, reports and other legal papers as may be required; and (d) to perform all other legal services for Debtor and/or Debtor-in-Possession. Cosho Humphrey agreed to represent the Debtor based on an hourly rate of $225.00 per hour for Joseph M. Meier. The firm may from time to time be required to provide services to the Debtor using attorneys -- other than Mr. Meier -- whose hourly rates exceed $225.00 per hour but shall be no more than $275.00 per hour. Mr. Meier may also use associates and paralegals who bill at less than $225.00 per hour. The Debtor shall also pay all costs incurred in this proceeding. The Debtor first consulted with Cosho Humphrey in January of 2008 prior to the bankruptcy petition of the Debtor. At the time of the filing Cosho Humphrey paid all fees and costs including the filing fees incurred prior to the filing from the $25,000 retainer. The filing fee was $1,039.00 and $9,093.54 was incurred in fees and other costs that were paid. This leaves a balance of $15,906.46 in the retainer at the time the bankruptcy petition was filed. The firm does not represent any of the creditors disclosed by the Debtor and is not representing any of the shareholders or officers of the corporation. The Debtor has disclosed that it holds a membership interest in an entity entitled Tamarack Resort, LLC, of which VPG Investment is a major investor. Mr. Meier and Cosho Humphrey have in the past represented parties that were adverse to Tamarack Resort, LLC. This includes claims made in a chapter 11 bankruptcy proceeding of Smitty Investment Group, LLC, Idaho bankruptcy case no. 07-00020, against Tamarack Resort, LLC wherein Cosho Humphrey represented the Debtor. This issue was resolved before the Debtor's case was filed. Cosho Humphrey has also represented individuals that hold minority interests in Tamarack Resort in domestic relations matters. Further, Cosho Humphrey represented individuals and entities that have made claims against Tamarack Resort for unpaid obligations. Some of these claims, which were not made against the Debtor, may still be pending. To the best of Debtor's knowledge, Mr. Meier and Cosho Humphrey have no connection with the creditors, or any other party-in- interest, or their respective attorneys except the representation disclosed. Mr. Meier said that other than as disclosed, he represents no interest adverse to the Debtor. About VPG Investments Beverly Hills, California-based VPG Investments Inc. owns 27% of Tamarach Resorts LLC. It filed for chapter 11 protection on Feb. 15, 2008 (Bankr. D. Idaho Case No. 08-00253). Joseph M. Meier, Esq., at Cosho Humphrey LLP serves as the Debtor's counsel. It listed assets of $29,214,653 and debts of $301,407,518 when it filed for bankruptcy. Alfredo Miguel Afif, a Mexican businessman, owns VP Investments. VPG Investments holds a 27% stake and Cross Atlantic Real Estate LLC has a 48% stake in the Tamarack Resort. As reported by the Troubled Company Reporter on Feb. 25, 2008, the bankruptcy filings of the companies will not interfere with the daily operations of Tamarack Resort, Tamarack CEO Jean-Pierre Boespflug as saying. WESTMORELAND COAL: Restates 2005 and 2006 Financial Reports ----------------------------------------------------------- Westmoreland Coal Company filed on Form 10-K/A its second amendment to its annual report for the year ended Dec. 31, 2006, with the Securities and Exchange Commission on March 17, 2008. The company restated its consolidated financial statements as of Dec. 31, 2006, and 2005 and for the years ended Dec. 31, 2006, 2005, and 2004, and selected financial information for the years 2002 to 2006. The consolidated balance sheets and statements of operations have been restated to correct errors in the amounts recorded for the company's post-retirement medical benefit obligations and related expenses, accounting for stock based compensation, and accounting for income taxes. The restatement adjustments had no effect on the company's cash flows for any of the periods presented. Restated Financials For the year ended Dec. 31, 2006, the company reported a restated net loss of $12,698,000 as compared with Westmoreland's restated balance sheet at Dec. 31, 2006, showed $761,382,000 in total assets, $941,813,000 in total liabilities, and $5,502,000 in minority interest, resulting in a $185,933,000 stockholders' deficit. The company's restated balance sheet at Dec. 31, 2006, showed strained liquidity with $128,020,000 in total current assets available to pay $194,793,000 in total current liabilities. Going Concern KPMG LLP in Denver raised substantial doubt about Westmoreland Coal Company's ability to continue as a going concern after it audited the company's consolidated financial statements for the year ended Dec. 31, 2006, and 2005. KPMG pointed to the company's recurring losses from operations, working capital deficit, and a net capital deficiency. KPMG also reported that the company changed its method for accounting and reporting for share-based payments effective Jan. 1, 2006, its method of accounting for deferred overburden removal costs effective Jan. 1, 2006, its method of accounting for pension and other postretirement benefits effective Dec. 31, 2006, and its method of quantifying misstatements effective Jan. 1, 2006. Also, the company changed its method of accounting for workers compensation benefits effective Jan. 1, 2005. Liquidity Westmoreland's management said that the major factors impacting the company's liquidity are: -- payments due on the term loan it entered into to acquire various operations and assets from Montana Power and Knife River in May 2001; -- payments due on the acquisition debt associated with its purchase of the ROVA interest; -- payments due for the buyout of the Washington Group International mining contract at Westmoreland Resources, Inc., and additional capital expenditures it plans to make when it takes responsibility for operating the Absaloka mine; -- cash collateral requirements for additional reclamation bonds in new mining areas; and -- payments for its heritage health benefit costs. "Unforeseen changes in our ongoing business requirements could also impact our liquidity. Our principal sources of cash flow at Westmoreland Coal Company are dividends from WRI, distributions from ROVA and from Westmoreland Mining subject to the provisions in their respective debt agreements and dividends from the subsidiaries that operate power plants," the company's management said. A full-text copy of the company's restated 2006 annual report is available for free at http://ResearchArchives.com/t/s?29a2 About Westmoreland Coal Based in Colorado Springs, Colo., 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 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. WESTWAYS FUNDING: Fitch Slashes Ratings to 'C' on Seven Classes --------------------------------------------------------------- Fitch Ratings has downgraded these classes of notes from Westways Funding XI, Ltd. as: -- $63,000,000 class A-2 notes to 'C/DR4' from 'AA'; -- $10,000,000 class B notes to 'C/DR6' from 'A'; -- $21,500,000 class LB loan interests to 'C/DR6' from 'A'; -- $23,000,000 class C notes to 'C/DR6' from 'BB'; -- $8,500,000 class LC loan interests to 'C/DR6' from 'BB'; -- $31,500,000 class D notes rated to 'C/DR6' from 'CCC/DR5'; -- $82,200,000 class E Income notes to'C/DR6' from 'CCC/DR6'. The ratings for each of the class A-2, B, LB, C, LC, or D notes reflects the likelihood that investors will receive periodic interest payments through the redemption date as well as their respective stated principal balances. The rating of the income notes reflects the likelihood that investors will receive aggregate payments in an amount equal to the principal amount on or prior to the redemption date. The transaction is a mortgage market value collateralized debt obligation managed by TCW Asset Management Co. The CDO had overcollateralization tests designed to protect the notes from declines in the market value of the portfolio. The program has liquidated and is currently awaiting the settlement of remaining cash flows. The downgrades are due to the preliminary payment calculations that give a good indication of final payment levels. The senior notes ratings will be updated when final payment information is received on Apr. 15, 2008. WORNICK CO: Plan Show Prejudice Among Creditors, Noteholders Say ---------------------------------------------------------------- The holders of $11.3 million of senior secured notes issued by Wornick Co. and its debtor-affiliates want the U.S. Bankruptcy Court for the Southern District of Ohio to reject the disclosure statement explaining the Debtors' Chapter 11 plan of reorganization, since the plan doesn't treat same-level creditors fairly, Bill Rochelle of Bloomberg News reports. Mr. Rochelle relates that the noteholders oppose the provision under the plan that gives ownership of military rations producer "Meals Ready-to-Eat" to a consortium led by DDJ Capital Management LLC, arguing that they should also be allowed to buy shares in the reorganized company. According to Mr. Rochelle, the noteholders complain that the plan is defective since it doesn't divide their claims into two categories -- the secured claim and the unsecured deficiency claim -- exerting their right to vote their claims in both classes. As reported in the Troubled Company Reporter on April 1, 2008, the Ad Hoc Committee of Certain Senior Secured Noteholders objects to the Debtors' disclosure statement and plan, saying that the plan provides different treatment for the Ad Hoc Committee and other excluded creditors. Gus Kallergis, Esq., at Jones Day in Cleveland, Ohio, relates that the plan violated the requirement of Section 1123(a)(4) of the Bankruptcy Code that claims in the same class receive the same treatment As previously reported, the Hon. J. Vincent Aug Jr. overruled all objections of the Ad Hoc Committee of Certain Senior Secured Noteholders and Sopakco Inc. with regards to the Debtors' proposed bidding procedures, stating that the Debtors have articulated good and sufficient reasons for the speed at which the Chapter 11 case is proceeding. According to the objections, the bidding procedures will either curb the number of interested bidders to participate in the public sale or frustrate them. The Ad Hoc Committee pointed out that the proposed bid procedures required any bidders to make an opening bid of $9.25 million more than the intended purchase price offered under the purchase asset agreement, thus, discouraging any bidders to submit their offers. Ad Hoc Committee said the bid procedures "are not tailored to maximize value for the benefit of the debtors' estates. Furthermore, Sopakco asserted that the bid procedures contain restrictive requirements to other interested parties. The bid procedures is unfair, Sopakco said. Since 2006, Sopakco, a primary supplier of meal, ready to eat products to the Department of Defense, has expressed its interest in considering an acquisition of the Debtors' asset but denied. About Wornick Company 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 semi-rigid 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 Debtor selected Kurtzman Carson Consultants LLC as claims, noticing and balloting agent. An official committee of unsecured creditors has not been appointed in these cases. The company listed between $100 million and $500 million assets and between $100 million and $500 million in debts in its bankruptcy filing. XL CAPITAL: Fitch Cuts Ratings to BB and Removes Negative Watch --------------------------------------------------------------- Fitch Ratings has downgraded and removed from Rating Watch Negative the following classes of subprime second lien residential mortgage-backed securities insured by XLCA. C-BASS, series 2007-SL1 -- Class A1 to 'BB' from 'A'; -- Class A2 to 'BB' from 'A'. Fitch's policy is to maintain ratings on insured transactions at the higher of the underlying rating of the insured transaction if rated by Fitch or the rating of the insurer. Last week, Fitch downgraded XLCA's Insurer Financial strength rating to 'BB' and removed the IFS from Rating Watch Negative. ZAIS INVESTMENT: Moody's Downgrades Ratings on Four Note Classes ---------------------------------------------------------------- Moody's Investors Service downgraded and left on review for possible further downgrade the ratings on these notes issued by ZAIS Investment Grade Limited VIII: Class Description: $90,000,000 Class A-2 Senior Secured Floating Rate Notes, due 2046 -- Prior Rating: Aaa -- Current Rating: Aa2, on review for possible downgrade Class Description: $33,800,000 Class B Senior Secured Floating Rate Notes, due 2046 -- Prior Rating: Aa2, on review for possible downgrade -- Current Rating: A1, on review for possible downgrade Class Description: $21,000,000 Class C Senior Secured Deferrable Interest Floating Rate Notes, due 2046 -- Prior Rating: A2, on review for possible downgrade -- Current Rating: Baa1, on review for possible downgrade Class Description: $22,500,000 Class D Senior Secured Deferrable Interest Floating Rate Notes, due 2046 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: Ba1, on review for possible downgrade According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. * Fitch Says Increased Crude Oil Prices Have Cracked NA Refiners ---------------------------------------------------------------- Recent sustained increases in benchmark crude oil prices have placed pressure on North American refiners in the form of lower crack spreads, softening end-user demand and higher liquidity requirements, according to Fitch Ratings. In the first quarter of 2008, benchmark West Texas Intermediate prices averaged approximately $98/barrel, a 67% increase over prices seen during the 1Q07. At the same time, benchmark crack spreads have contracted as increases in refined product prices failed to keep pace with fast-rising crude. Year-over-year, Gulf Coast 3-2-1 crack spreads fell by 22% to $8.00/barrel in the first quarter. Mid-continent crack spreads fell approximately 26% to $10.85/barrel, while West Coast crack spreads fell more dramatically, dropping 46% to just $15.47/barrel from last year. While these declines are partly explainable by seasonal impacts, high retail fuel prices and a softening U.S. economy have also begun to erode end-user demand. According to Energy Information Agency data, implied gasoline demand fell approximately -2.4% in the first quarter, from 9.85 million barrels per day to 9.61 million bpd. While 2008 results are weaker than last year, it is important to note that crack spreads remain above their long-run averages at this point. If margin weakness persists, Fitch expects refiners will respond by continuing to throttle back refinery runs to help restore balance and improve profitability. Across the industry, refinery utilization levels dropped to just 82% as of March, with Valero Energy Corp. recently indicating that its FCC units were running at just 73% of capacity. In addition to weaker gross margins, credit concerns for the downstream sector center on the potential for additional shareholder-friendly activity, higher capital expenditures, and higher liquidity needs prompted by record crude and feedstock prices. Slumping stock prices across the refining sector may create additional pressure for shareholder-friendly activity, especially share buybacks. Fitch notes that several refiners have announced the potential sale of non-core refineries, including Valero (the 275,000-bpd Aruba, 85,000-bpd Krotz Springs, and 195,000-bpd Memphis refineries); as well as Sunoco Inc. (the 85,000-bpd Tulsa refinery). The use of proceeds from these sales remains an issue, especially if cash were redirected exclusively to share buybacks without proportionate decreases in debt. The high cost of adding downstream capacity in today's environment also raises concerns for those firms looking to expand organically. Examples of recent investments include Marathon Oil Corp.'s $3.2 billion, 180,000-bpd expansion of its Garyville, Louisiana, refinery; and Motiva Enterprises LLC's $7 billion, 325,000-bpd expansion of its Port Arthur, Texas, refinery. Finally, higher crude oil prices have increased liquidity needs across the sector, although the impact on individual companies is firm-specific and depends on several variables, including the trade credit extended by crude sellers, the geographic source and distance of crude supplies, and the timing of cargo liftings. * Moody's Gives Neg. Outlook on Paper and Forest Products Industry ------------------------------------------------------------------ The credit conditions of the paper and forest products industry are expected to worsen as demand for most paper and forest products will continue to decline amid rising costs and general economic weakness, says Moody's Investors Service in its new report. The rating agency's report examined the credit implications of trends and developments in the key segments of the paper and forest products industry globally. The overall global credit outlook is negative, based primarily on the sector's twin problems of declining demand and increasing costs. "These problems are most pronounced in the mature markets of North America and Europe where the appetite for most paper and forest products is lessening and companies face increasing energy, chemical, transportation and fiber costs," says Moody's lead paper and forest products analyst Ed Sustar, co-author of the report. While most global market pulp producers should perform reasonably well over the next 12 to 18 months, many companies in the printing and writing paper, paper packaging and wood-based building products sectors are expected to experience negative rating pressure, says Moody's. According to Moody's, reduced sawmill activity will continue to pressure fiber availability and cost as US housing markets remain depressed, further dampening the need for building products. "To offset weak demand and escalating costs, supply will need to be significantly curtailed to improve product pricing," says Sustar. Longer term, the increasing cost of fiber will continue to shift production capacity to regions that can supply and process it at the lowest cost. "In addition to declining demand and escalating input costs, liquidity concerns, foreign exchange impact and mergers & acquisitions will continue to fuel negative rating actions," says Sustar. The ongoing credit-market turmoil is expected to increase refinancing risk, especially for companies with near-term debt maturities or minimal financial covenant flexibility, says Moody's. The strong Canadian dollar, Brazilian real and Chilean peso create negative rating pressure for regional producers based in those countries. While the consolidation trend in the paper and forest products sector is expected to continue, the pace of corporate transformations through both private-equity transactions and merger and acquisition activity may moderate as financing costs escalate. Despite the changing dynamics in the paper and forest products sector, the most important determinants of a company's profitability and credit worthiness are demand, pricing and cost position. Over the past year, approximately 75% of rating actions in the paper and forest products industry have been negative, constituting either outright downgrades or negative outlook changes. * Moody's Opines on Interest Rate Asset Specific Hedges in CDOs --------------------------------------------------------------- In a new report, Moody's Investors Service says asset specific interest rate hedges for collateralized debt obligation transaction may provide a more dynamic control of interest rate risk than having a single macro interest rate swap for the entire CDO pool. However, asset specific hedges also carry unique risks that need to be considered. "Traditionally, to protect themselves against interest rate mismatches between assets and liabilities in CDO transactions, collateral managers have entered into macro interest rate swaps that are generally in place when the transaction closes and seldom modified even if portfolios change over time," say Moody's analysts David Burger and Yasmine Mahdavi. "Managers may prefer interest rate asset specific hedges, as their granular nature may provide a more efficient approach to maintaining interest rate risk neutrality." Since Moody's does not know in advance how interest rate asset specific hedges will be used throughout the life of the transaction, there need to be established guidelines around their use. Moody's says there are several specific criteria that can mitigate their risks. These include having each hedge associated with only one asset, the initial notional amount of the asset specific hedge equal to the principal amount of the hedged asset, and the maturity date of the hedge matching that of the hedged asset. * S&P Downgrades 86 Tranches' Ratings From 20 Cash Flows and CDOs ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 86 tranches from 20 U.S. cash flow and hybrid collateralized debt obligation transactions. S&P removed 61 of the lowered ratings from CreditWatch with negative implications. The downgraded tranches have a total issuance amount of $9.107 billion. All 20 transactions are high-grade structured finance CDOs of asset- backed securities, which are CDOs collateralized at origination primarily by 'AAA' through 'A' rated tranches of RMBS and other SF securities. This CDO downgrades reflect a number of factors, including credit deterioration and recent negative rating actions on U.S. subprime RMBS securities. To date, including the CDO tranches listed below and including actions on both publicly and confidentially rated tranches, S&P has lowered its ratings on 3,068 tranches from 705 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, 443 ratings from 119 transactions are currently on CreditWatch negative for the same reasons. In all, S&P has downgraded $321.895 billion of CDO issuance. Additionally, S&P's ratings on $33.785 billion in securities have not been lowered but are currently on CreditWatch negative, indicating a high likelihood of downgrades. 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 Athos Fndg Ltd. ABCP A+/A-1+ AAA/A-1+/Watch Neg Athos Fndg Ltd. A-1 A+ AAA/Watch Neg Athos Fndg Ltd. A-2 BB+ AA/Watch Neg Athos Fndg Ltd. B B- BBB/Watch Neg Bernoulli High Grade CDO I Ltd. A-1A AA- AAA Bernoulli High Grade CDO I Ltd. A-1B AA- AAA/Watch Neg Bernoulli High Grade CDO I Ltd. A-2 BBB+ AAA/Watch Neg Bernoulli High Grade CDO I Ltd. B BB+ AA/Watch Neg Bernoulli High Grade CDO I Ltd. C BB A/Watch Neg Bernoulli High Grade CDO I Ltd. D CCC BBB/Watch Neg Blue Edge ABS CDO Ltd. A-1 A+ AAA/Watch Neg Blue Edge ABS CDO Ltd. A-2 B+ AAA/Watch Neg Blue Edge ABS CDO Ltd. A-3 B AAA/Watch Neg Blue Edge ABS CDO Ltd. B-1 CCC+ AA/Watch Neg Blue Edge ABS CDO Ltd. B-2 CCC+ AA/Watch Neg Blue Edge ABS CDO Ltd. C CCC- A/Watch Neg Blue Edge ABS CDO Ltd. D-1 CC BBB/Watch Neg Blue Edge ABS CDO Ltd. D-2 CC BBB/Watch Neg Blue Edge ABS CDO Ltd. E CC BBB-/Watch Neg Buckingham CDO II Ltd. B AA AAA Buckingham CDO II Ltd. C AA- AA Buckingham CDO II Ltd. D A- A/Watch Neg Buckingham CDO II Ltd. E BBB- BBB/Watch Neg Citius II Fndg Ltd. A B AAA/Watch Neg Citius II Fndg Ltd. B CCC+ AA/Watch Neg Citius II Fndg Ltd. C CCC- A/Watch Neg Citius II Fndg Ltd. D CC BBB/Watch Neg Citius II Fndg Ltd. ST A AAA Davis Square Fndg I Ltd. A-1LT-a AAA AAA/Watch Neg Davis Square Fndg I Ltd. A-1LT-b AAA AAA/Watch Neg Davis Square Fndg I Ltd. A-1LT-c AAA AAA/Watch Neg Davis Square Fndg I Ltd. A-1LT-c AAA AAA/Watch Neg Davis Square Fndg I Ltd. A-1LT-d AAA AAA/Watch Neg Davis Square Fndg I Ltd. A-1LT-e AAA AAA/Watch Neg Davis Square Fndg I Ltd. A-1MM-a AAA/A-1+ AAA/A-1+/Watch Neg Davis Square Fndg I Ltd. A-1MM-b AAA/A-1+ AAA/A-1+/Watch Neg Davis Square Fndg I Ltd. A-1MM-c AAA/A-1+ AAA/A-1+/Watch Neg Davis Square Fndg I Ltd. A-1MM-d AAA/A-1+ AAA/A-1+/Watch Neg Davis Square Fndg I Ltd. A-1MM-e AAA/A-1+ AAA/A-1+/Watch Neg Davis Square Fndg I Ltd. A-1MM-s AAA/A-1+ AAA/A-1+/Watch Neg Davis Square Fndg I Ltd. A-1MM-t AAA/A-1+ AAA/A-1+/Watch Neg Davis Square Fndg I Ltd. A-1MT-a AAA AAA/Watch Neg Davis Square Fndg I Ltd. A-1MT-b AAA AAA/Watch Neg Davis Square Fndg I Ltd. A-1MT-c AAA AAA/Watch Neg Davis Square Fndg I Ltd. A-1MT-d AAA AAA/Watch Neg Davis Square Fndg I Ltd. A-1MT-e AAA AAA/Watch Neg Davis Square Fndg I Ltd. A-2 AA+ AAA/Watch Neg Duke Fndg High Grade I Ltd. A-1 CP A-1+ A-1+/Watch Neg Duke Fndg High Grade I Ltd. A-1 LTa AAA AAA/Watch Neg Duke Fndg High Grade I Ltd. A-1 LTb1 AAA AAA/Watch Neg Duke Fndg High Grade I Ltd. A-1LT b2 AAA AAA/Watch Neg Duke Fndg High Grade I Ltd. A-2 AA- AAA/Watch Neg Duke Fndg High Grade I Ltd. B BBB AA/Watch Neg Duke Fndg High Grade I Ltd. C-1 BB- A/Watch Neg Duke Fndg High Grade I Ltd. C-2 BB- A/Watch Neg Duke Fndg High Grade I Ltd. D B- BBB/Watch Neg Duke Fndg High Grade IV Ltd. C-1 A A+ Duke Fndg High Grade IV Ltd. C-2 BB A- Duke Fndg High Grade IV Ltd. D B- BBB Duke Fndg High Grade VI Ltd. A-1LA AA AAA/Watch Neg Duke Fndg High Grade VI Ltd. A-1LB AA- AAA/Watch Neg Duke Fndg High Grade VI Ltd. A-2L BB AA/Watch Neg Duke Fndg High Grade VI Ltd. A-3L B A/Watch Neg Duke Fndg High Grade VI Ltd. B-1L CC BBB/Watch Neg Duke Fndg High Grade VI Ltd. X AAA AAA/Watch Neg Fox Trot CDO Ltd. A B AAA/Watch Neg Fox Trot CDO Ltd. B CCC AA/Watch Neg Fox Trot CDO Ltd. C CC A/Watch Neg Fox Trot CDO Ltd. D CC BBB/Watch Neg Kent Fndg II Ltd. A-1A AA- AAA Kent Fndg II Ltd. A-1B AA- AAA Kent Fndg II Ltd. A-2 BBB- AAA Kent Fndg II Ltd. B BB AA- Kent Fndg II Ltd. C CCC- A/Watch Neg Kent Fndg II Ltd. D CC BBB/Watch Neg Kent Fndg II Ltd. E CC BB+/Watch Neg Laguna ABS CDO Ltd. A3 BBB- A-/Watch Neg Laguna ABS CDO Ltd. Class 1Co BBB- A/Watch Neg Laguna ABS CDO Ltd. Pref Share CCC BB/Watch Neg Lancer Fndg Ltd. A1J A+ AA/Watch Neg Lancer Fndg Ltd. A1S2 AA AAA/Watch Neg Lancer Fndg Ltd. A2 BBB A+/Watch Neg Lancer Fndg Ltd. A3 B BB+/Watch Neg Liberty Harbour CDO Ltd. 2005-1 B BBB- AAA Liberty Harbour CDO Ltd. 2005-1 C CCC+ AA Liberty Harbour CDO Ltd. 2005-1 Combo Nts CC BBB+/Watch Neg Liberty Harbour CDO Ltd. 2005-1 D CCC- A-/Watch Neg Margate Fndg I Ltd. A1S AAA AAA/Watch Neg Margate Fndg I Ltd. A1J AA+ AAA/Watch Neg Margate Fndg I Ltd. A2 A- AA/Watch Neg Margate Fndg I Ltd. A3 BB+ A-/Watch Neg Margate Fndg I Ltd. Combo Nts AAA AAA/Watch Neg Margate Fndg I Ltd. Income Nts CCC BB/Watch Neg Mercury CDO II Ltd. A-2 AA+ AAA Mercury CDO II Ltd. B BBB A+ Mercury CDO II Ltd. C CCC+ BBB Mercury CDO II Ltd. D CC CCC- Monroe Harbor CDO 2005-1 Ltd. A-2 AA- AAA Monroe Harbor CDO 2005-1 Ltd. B A+ AA Monterey CDO Ltd. A-2 AA AAA Monterey CDO Ltd. A-3 A+ AAA Monterey CDO Ltd. B BB+ AA/Watch Neg Monterey CDO Ltd. C BB AA-/Watch Neg Monterey CDO Ltd. D B A/Watch Neg Monterey CDO Ltd. E CCC BBB/Watch Neg Pascal CDO Ltd. A AA AAA Pascal CDO Ltd. B BB- AA/Watch Neg Pascal CDO Ltd. C CCC+ BBB-/Watch Neg Witherspoon CDO Fndg Ltd. B A AA Witherspoon CDO Fndg Ltd. C BBB- A Witherspoon CDO Fndg Ltd. D B+ BBB * S&P Downgrades Ratings on 44 Classes From 14 RMBS Transactions ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 44 classes from 14 residential mortgage-backed securities transactions backed by U.S. subprime mortgage loan collateral issued in 2006. At the same time, S&P removed all of the lowered ratings from CreditWatch with negative implications. In addition, S&P affirmed its ratings on 51 classes from 14 RMBS transactions backed by U.S. subprime loans and removed them from CreditWatch negative. All of the revised ratings were placed on CreditWatch negative on Jan. 30, 2008. The downgrades reflect S&P's opinion that projected credit support for the affected classes is insufficient to maintain the previous ratings, given its current projected losses. S&P calculated its projected deal-specific losses utilizing 2006 subprime default curves. Due to current market conditions, S&P is assuming that it will take approximately 15 months to liquidate loans in foreclosure and approximately eight months to liquidate loans categorized as real estate owned. In addition, S&P is assuming a loss severity of approximately 45% for U.S. subprime RMBS transactions issued in 2006. The lowered ratings reflect S&P's assessment of credit support under two constant prepayment rate scenarios. The first scenario utilizes the lower of the lifetime or 12-month CPR, while the second utilizes a six-month CPR, which is very slow by historical standards. S&P assumed a constant default rate for each pool. Because the analysis focused on each individual class with varying maturities, prepayment scenarios may cause an individual class or the transaction itself to prepay in full before it incurs the entire loss projection. Slower prepayment assumptions lengthen the average life of the mortgage pool, which increases the likelihood that total projected losses will be realized. The longer a class remains outstanding, however, the more excess spread it generates. Standard & Poor's has updated its projected excess spread to account for the recent cuts in U.S. interest rates. In an upwardly sloping mortgage rate environment, Standard & Poor's announced that it would be discounting a portion of excess spread to account for potential interest rate modifications. An interest rate modification may extend the initial fixed-rate period of a mortgage loan to five years from two and three years. The reduction in interest rates has effectively extended the initial interest rates beyond the interest rate reset period. As a result of the reduction in excess spread, many loan modifications may no longer be needed. Standard & Poor's has updated its assumptions on excess spread to reflect the current environment. In assessing the creditworthiness of each class, S&P reviewed the individual delinquency and loss trends of each transaction for changes, if any, in risk characteristics, servicing, and the ability to withstand additional credit deterioration. For pools that are continuing to show increasing delinquencies, S&P increased its cash flow stresses to account for potential increases in monthly losses. In order to maintain a rating higher than 'B', a class had to absorb losses in excess of the base case assumption S&P assumed in its analysis. For example, a class may have to withstand 115% of S&P's base case loss assumption in order to maintain a 'BB' rating, while a different class may have to withstand 125% of S&P's base case loss assumption to maintain a 'BBB' rating. Each class that has an affirmed 'AAA' rating can withstand approximately 150% of our base case loss assumptions under our analysis, subject to individual caps assumed on specific transactions. S&P determined the caps by limiting the amount of remaining defaults to 90% of the current pool balances. A combination of subordination, excess spread, and overcollateralization provide credit support for the affected transactions. The underlying collateral for these deals consists of fixed- and adjustable-rate U.S. subprime mortgage loans that are secured by first and second liens on one- to four-family residential properties. To date, including the classes listed below and actions on both publicly and confidentially rated classes, S&P has resolved the CreditWatch placements of the ratings on 1,114 classes from 212 U.S. RMBS subprime transactions from the 2006 and 2007 vintages. Currently, S&P's ratings on 1,490 classes from 303 U.S. RMBS subprime transactions from the 2006 and 2007 vintages are on CreditWatch negative. Standard & Poor's will continue to monitor the RMBS transactions it rates and take rating actions, including CreditWatch placements, when appropriate. Ratings Lowered and Removed From CreditWatch Negative ACE Securities Corp. Home Equity Loan Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-ASAP6 A-1A A AAA/Watch Neg 2006-ASAP6 A-1B A AAA/Watch Neg 2006-ASAP6 A-2D A AAA/Watch Neg 2006-ASAP6 M-1 BBB AA+/Watch Neg 2006-ASAP6 M-2 BB AA+/Watch Neg 2006-ASAP6 M-3 B AA+/Watch Neg 2006-ASAP6 M-4 CCC AA/Watch Neg 2006-ASAP6 M-5 CCC AA/Watch Neg Argent Securities Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-W2 M-3 BB AA-/Watch Neg GSAMP Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-HE7 M-3 A AA-/Watch Neg 2006-NC2 M-1 A AA+/Watch Neg 2006-NC2 M-2 BB AA/Watch Neg 2006-NC2 M-3 B AA-/Watch Neg IXIS Real Estate Capital Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-HE1 M-3 BB AA/Watch Neg 2006-HE1 M-4 B AA-/Watch Neg MASTR Asset Backed Securities Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-HE2 A-4 BBB AAA/Watch Neg 2006-HE2 M-1 B AA+/Watch Neg 2006-HE5 A-4 AA AAA/Watch Neg 2006-HE5 M-1 BB AA+/Watch Neg 2006-HE5 M-2 B AA/Watch Neg 2006-HE5 M-3 CCC AA-/Watch Neg Merrill Lynch Mortgage Investors Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-RM3 A-1A AA AAA/Watch Neg 2006-RM3 A-1B AA AAA/Watch Neg 2006-RM3 A-2D AA AAA/Watch Neg 2006-RM3 M-1 BBB AA+/Watch Neg 2006-RM3 M-2 BB AA+/Watch Neg 2006-RM3 M-3 B AA/Watch Neg 2006-RM3 M-4 CCC AA-/Watch Neg New Century Home Equity Loan Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-1 M-2 BBB AA/Watch Neg 2006-1 M-3 BB AA-/Watch Neg 2006-2 M-2 BBB AA/Watch Neg 2006-2 M-3 BB AA-/Watch Neg NovaStar Mortgage Funding Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-1 M-6 BB A/Watch Neg 2006-1 M-7 B A-/Watch Neg 2006-1 M-8 B BBB+/Watch Neg 2006-1 M-9 CCC BBB/Watch Neg 2006-1 M-10 CCC BBB-/Watch Neg 2006-1 M-11 CCC BB+/Watch Neg Specialty Underwriting and Residential Finance Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-BC5 M-2 BBB AA/Watch Neg 2006-BC5 M-3 BB AA-/Watch Neg Structured Asset Investment Loan Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-BNC1 M1 BB AA/Watch Neg 2006-BNC1 M2 B AA-/Watch Neg 2006-BNC3 M1 B AA/Watch Neg 2006-BNC3 M2 B AA-/Watch Neg Ratings Affirmed and Removed From CreditWatch Negative ACE Securities Corp. Home Equity Loan Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-ASAP6 A-2A AAA AAA/Watch Neg 2006-ASAP6 A-2B AAA AAA/Watch Neg 2006-ASAP6 A-2C AAA AAA/Watch Neg Argent Securities Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-W2 M-1 AA+ AA+/Watch Neg 2006-W2 M-2 AA AA/Watch Neg GSAMP Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-HE7 M-2 AA AA/Watch Neg 2006-NC2 A-1 AAA AAA/Watch Neg 2006-NC2 A-2A AAA AAA/Watch Neg 2006-NC2 A-2B AAA AAA/Watch Neg 2006-NC2 A-2C AAA AAA/Watch Neg 2006-NC2 A-2D AAA AAA/Watch Neg IXIS Real Estate Capital Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-HE1 A-2 AAA AAA/Watch Neg 2006-HE1 A-3 AAA AAA/Watch Neg 2006-HE1 M-1 AA+ AA+/Watch Neg 2006-HE1 M-2 AA AA/Watch Neg MASTR Asset Backed Securities Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-HE2 A-1 AAA AAA/Watch Neg 2006-HE2 A-2 AAA AAA/Watch Neg 2006-HE2 A-3 AAA AAA/Watch Neg 2006-HE5 A-1 AAA AAA/Watch Neg 2006-HE5 A-2 AAA AAA/Watch Neg 2006-HE5 A-3 AAA AAA/Watch Neg Merrill Lynch Mortgage Investors Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-RM3 A-2A AAA AAA/Watch Neg 2006-RM3 A-2B AAA AAA/Watch Neg 2006-RM3 A-2C AAA AAA/Watch Neg New Century Home Equity Loan Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-1 A-1 AAA AAA/Watch Neg 2006-1 A-2a AAA AAA/Watch Neg 2006-1 A-2b AAA AAA/Watch Neg 2006-1 A-2c AAA AAA/Watch Neg 2006-1 M-1 AA+ AA+/Watch Neg 2006-2 M-1 AA+ AA+/Watch Neg NovaStar Mortgage Funding Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-1 M-1 AA AA/Watch Neg 2006-1 M-2 AA AA/Watch Neg 2006-1 M-3 AA AA/Watch Neg 2006-1 M-4 AA- AA-/Watch Neg 2006-1 M-5 A+ A+/Watch Neg Specialty Underwriting and Residential Finance Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-BC5 A-1 AAA AAA/Watch Neg 2006-BC5 A-2A AAA AAA/Watch Neg 2006-BC5 A-2B AAA AAA/Watch Neg 2006-BC5 A-2C AAA AAA/Watch Neg 2006-BC5 A-2D AAA AAA/Watch Neg 2006-BC5 A-2E AAA AAA/Watch Neg 2006-BC5 M-1 AA+ AA+/Watch Neg Structured Asset Investment Loan Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-BNC1 A1 AAA AAA/Watch Neg 2006-BNC1 A2 AAA AAA/Watch Neg 2006-BNC1 A3 AAA AAA/Watch Neg 2006-BNC1 A4 AAA AAA/Watch Neg 2006-BNC1 A5 AAA AAA/Watch Neg 2006-BNC3 A1 AAA AAA/Watch Neg 2006-BNC3 A2 AAA AAA/Watch Neg 2006-BNC3 A3 AAA AAA/Watch Neg 2006-BNC3 A4 AAA AAA/Watch Neg * 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 Joseph W. Crawford dba C&M Concrete & Landscaping Bankr. W.D. Penn. Case No. 08-21919 Chapter 11 Petition filed March 26, 2008 See http://bankrupt.com/misc/pawb08-21919.pdf In Re Blue Water Bay Development Bankr. D. S.C. Case No. 08-01745 Chapter 11 Petition filed March 26, 2008 Filed as Pro Se In Re Brian R. Hanson Bankr. D. Minn. Case No. 08-50243 Chapter 11 Petition filed March 26, 2008 Filed as Pro Se In Re Jack Gregory Murrin Bankr. D. S.C. Case No. 08-01759 Chapter 11 Petition filed March 26, 2008 See http://bankrupt.com/misc/scb08-01759.pdf In Re Pacific Societies, Inc. Bankr. E.D. Va. Case No. 08-11505 Chapter 11 Petition filed March 26, 2008 See http://bankrupt.com/misc/vaeb08-11505.pdf In Re Dependable Staffing Agency, Ltd. dba Dependable Nursing Services Bankr. W.D. Wash. Case No. 08-11749 Chapter 11 Petition filed March 26, 2008 See http://bankrupt.com/misc/wawb08-11749.pdf In Re Mortgage West, LLC Bankr. M.D. Ala. Case No. 08-30511 Chapter 11 Petition filed March 27, 2008 See http://bankrupt.com/misc/almb08-30511.pdf In Re Landon and Hall, Inc. Bankr. D. Conn. Case No. 08-30936 Chapter 11 Petition filed March 27, 2008 See http://bankrupt.com/misc/ctb08-30936.pdf In Re La Alpha Learning and Development Center, Inc. Bankr. M.D. Fla. Case No. 08-01663 Chapter 11 Petition filed March 27, 2008 See http://bankrupt.com/misc/flmb08-01663.pdf In Re RJM'S LLC dba The Greenery Pub Bankr. M.D. Fla. Case No. 08-04065 Chapter 11 Petition filed March 27, 2008 See http://bankrupt.com/misc/flmb08-04065.pdf In Re Melissa A. Hines aka Melissa Hines Wachsmuth, aka Melissa Ann Hines, aka Melissa Hines Bankr. N.D. Fla. Case No. 08-50136 Chapter 11 Petition filed March 27, 2008 See http://bankrupt.com/misc/flnb08-50136.pdf In Re Forest Hills Petroleum, LLC Bankr. S.D. Fla. Case No. 08-13658 Chapter 11 Petition filed March 27, 2008 See http://bankrupt.com/misc/flsb08-13658.pdf In Re SRG 457, Inc. Bankr. D. N.J. Case No. 08-15408 Chapter 11 Petition filed March 27, 2008 See http://bankrupt.com/misc/njb08-15408.pdf In Re Executive Personnel Services, Inc. Bankr. D.C. Case No. 08-00210 Chapter 11 Petition filed March 27, 2008 Filed as Pro Se In Re Themis Zambryzcki Glatman dba Gotham Design and Construction Bankr. C.D. Calif. Case No. 08-11861 Chapter 11 Petition filed March 28, 2008 See http://bankrupt.com/misc/cacb08-11861.pdf In Re GDR InterTech Bankr. D. Colo. Case No. 08-13977 Chapter 11 Petition filed March 28, 2008 See http://bankrupt.com/misc/cob08-13977.pdf In Re Walkers Chapel Excavating, Inc. Bankr. W.D. Ky. Case No. 08-10477 Chapter 11 Petition filed March 28, 2008 See http://bankrupt.com/misc/kywb08-10477.pdf In Re David J. Ring dba Ring Services Landscaping Bankr. D. Mass. Case No. 08-12192 Chapter 11 Petition filed March 28, 2008 See http://bankrupt.com/misc/mab08-12192.pdf In Re J.T. Lunch Corp. Bankr. S.D. N.Y. Case No. 08-11055 Chapter 11 Petition filed March 28, 2008 See http://bankrupt.com/misc/nysb08-11055.pdf In Re Joshua David Sams Bankr. M.D. Fla. Case No. 08-04180 Chapter 11 Petition filed March 28, 2008 Filed as Pro Se In Re George Van Wagner Bankr. N.D. W.V. Case No. 08-00435 Chapter 11 Petition filed March 28, 2008 Filed as Pro Se In Re Heritage Point Apartments, Inc. Bankr. N.D. Ga. Case No. 08-65697 Chapter 11 Petition filed March 28, 2008 Filed as Pro Se In Re S&S International, Inc. Bankr. S.D. N.Y. Case No. 08-11060 Chapter 11 Petition filed March 28, 2008 Filed as Pro Se In Re Empire State Business, L.L.C. Bankr. S.D. Ga. Case No. 08-20288 Chapter 11 Petition filed March 28, 2008 Filed as Pro Se In Re Ben Davis, Jr. Bankr. N.D. Calif. Case No. 08-41473 Chapter 11 Petition filed March 29, 2008 See http://bankrupt.com/misc/canb08-41473.pdf In Re David Foster dba Dadds Construction Bankr. N.D. Ala. Case No. 08-80941 Chapter 11 Petition filed March 31, 2008 See http://bankrupt.com/misc/alnb08-80941.pdf In Re JAC Even Resources, Inc. Bankr. C.D. Calif. Case No. 08-11551 Chapter 11 Petition filed March 31, 2008 See http://bankrupt.com/misc/cacb08-11551.pdf In Re Intrepid General Contracting, Inc. dba Javier Sanchez Lath and Plaster Bankr. E.D. Calif. Case No. 08-11766 Chapter 11 Petition filed March 31, 2008 See http://bankrupt.com/misc/caeb08-11766.pdf In Re Julius Rommel Dumantay aka Julius Rommel Perezdetagle Dumantay, fdba Pleasant Hill Residential Care Bankr. N.D. Calif. Case No. 08-51581 Chapter 11 Petition filed March 31, 2008 See http://bankrupt.com/misc/canb08-51581.pdf In Re Yellow Coyote Food Co., L.P. Bankr. S.D. Calif. Case No. 08-02617 Chapter 11 Petition filed March 31, 2008 See http://bankrupt.com/misc/casb08-02617.pdf In Re E&B's Futures, LLC Bankr. N.D. Fla. Case No. 08-30465 Chapter 11 Petition filed March 31, 2008 See http://bankrupt.com/misc/flnb08-30465.pdf In Re Timothy A. Brown Bankr. S.D. Ga. Case No. 08-10628 Chapter 11 Petition filed March 31, 2008 See http://bankrupt.com/misc/gasb08-10628.pdf In Re National Electrical Testing & Service, Inc. Bankr. D. Mass. Case No. 08-12284 Chapter 11 Petition filed March 31, 2008 See http://bankrupt.com/misc/mab08-12284.pdf In Re Scharn Electric Corp. Bankr. D. Mass. Case No. 08-12295 Chapter 11 Petition filed March 31, 2008 See http://bankrupt.com/misc/mab08-12295.pdf In Re Yin Yankee Bethesda, Inc. dba Yin Yankee Cafe Bankr. D. Md. Case No. 08-14436 Chapter 11 Petition filed March 31, 2008 See http://bankrupt.com/misc/mdb08-14436.pdf In Re J.D. Levin & Associates, Inc. Bankr. D. N.J. Case No. 08-15612 Chapter 11 Petition filed March 31, 2008 See http://bankrupt.com/misc/njb08-15612.pdf In Re New Ventures at Union, LLC Bankr. D. N.J. Case No. 08-15680 Chapter 11 Petition filed March 31, 2008 See http://bankrupt.com/misc/njb08-15680.pdf In Re Cliff Skoglund Bankr. D. N.M. Case No. 08-10956 Chapter 11 Petition filed March 31, 2008 See http://bankrupt.com/misc/nmb08-10956.pdf In Re Barbara I. Suri, LLC Bankr. E.D. Penn. Case No. 08-12150 Chapter 11 Petition filed March 31, 2008 See http://bankrupt.com/misc/paeb08-12150.pdf In Re Yoshiko Saito Haines Bankr. W.D. Wash. Case No. 08-41390 Chapter 11 Petition filed March 31, 2008 Filed as Pro Se In Re Black Diamond Real Estate Solutions, LLC Bankr. D. Mass. Case No. 08-12298 Chapter 11 Petition filed March 31, 2008 Filed as Pro Se In Re Douglas Milton Matthews Bankr. C.D. Calif. Case No. 08-14135 Chapter 11 Petition filed March 31, 2008 Filed as Pro Se In Re Kush Investment, LLC Bankr. S.D. Tex. Case No. 08-32028 Chapter 11 Petition filed March 31, 2008 Filed as Pro Se In Re Jerry D. Cope Bankr. S.D. Tex. Case No. 08-32014 Chapter 11 Petition filed March 31, 2008 See http://bankrupt.com/misc/txsb08-32014.pdf In Re Amerisea Corp. Bankr. E.D. Va. Case No. 08-31452 Chapter 11 Petition filed March 31, 2008 See http://bankrupt.com/misc/vaeb08-31452.pdf In Re Anthony K. Pollard Bankr. N.D. Ala. Case No. 08-80954 Chapter 11 Petition filed April 1, 2008 See http://bankrupt.com/misc/alnb08-80954.pdf In Re Thomas Marchant, PC Bankr. D. Ariz. Case No. 08-03475 Chapter 11 Petition filed April 1, 2008 See http://bankrupt.com/misc/azb08-03475.pdf In Re Christian V. Pierce Bankr. C.D. Calif. Case No. 08-11946 Chapter 11 Petition filed April 1, 2008 See http://bankrupt.com/misc/cacb08-11946.pdf In Re Rick Vargas Performance, Inc. dba Lift Kit Warehouse Bankr. N.D. Calif. Case No. 08-41536 Chapter 11 Petition filed April 1, 2008 See http://bankrupt.com/misc/canb08-41536.pdf In Re David J. Brown aka Savvy Bankr. D.C. Case No. 08-00218 Chapter 11 Petition filed April 1, 2008 See http://bankrupt.com/misc/dcb08-00218.pdf In Re Rodrigo & Washington, Inc. Bankr. N.D. Ga. Case No. 08-66217 Chapter 11 Petition filed April 1, 2008 See http://bankrupt.com/misc/ganb08-66217.pdf In Re Custom Architectural Designs, Inc. Bankr. N.D. Ga. Case No. 08-66307 Chapter 11 Petition filed April 1, 2008 See http://bankrupt.com/misc/ganb08-66307.pdf In Re H&H Furniture, LLC dba Sunrise Home Furnishings & Mattresses Bankr. S.D. Ind. Case No. 08-03593 Chapter 11 Petition filed April 1, 2008 See http://bankrupt.com/misc/insb08-03593.pdf In Re Cap'n Simeon's Galley, Inc. Bankr. D. Maine Case No. 08-20312 Chapter 11 Petition filed April 1, 2008 See http://bankrupt.com/misc/meb08-20312.pdf In Re Corporate Duplication Solution, Inc. aka CDS Digital Media Services Bankr. D. N.J. Case No. 08-15838 Chapter 11 Petition filed April 1, 2008 See http://bankrupt.com/misc/njb08-15838.pdf In Re LBC Building Corp., Inc. aka LBC Building Corp. Bankr. E.D. N.Y. Case No. 08-41946 Chapter 11 Petition filed April 1, 2008 See http://bankrupt.com/misc/nyeb08-41946.pdf In Re Heat Security & Detective Agency, Inc. Bankr. D. P.R. Case No. 08-02003 Chapter 11 Petition filed April 1, 2008 See http://bankrupt.com/misc/prb08-02003.pdf ********* 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. 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, Joseph Medel C. Martirez, Ma. Cristina I. Canson, Christopher G. Patalinghug, 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 ***