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/raid1/www/Hosts/bankrupt/TCR_Public/080611.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, June 11, 2008, Vol. 12, No. 138 Headlines ACA FINANCIAL: S&P Affirms 'CCC' Financial Strength Rating AXS-ONE INC: March 31 Balance Sheet Upside-Down by $10,622,000 BELDEN INC: Augments Biz with $133MM Trapeze Networks Cash Buyout BELDEN INC: Planned Trapeze Acquisition Won't Affect S&P's Rating BHM TECHNOLOGIES: Section 341(a) Meeting Scheduled for June 26 BKF CAPITAL: Posts $456,000 Net loss in 2008 First Quarter CALUMET SPECIALTY: S&P Revises Outlook to Negative from Positive CANARGO ENERGY: Defers Annual Stockholders' Meeting to July 18 CATHOLIC CHURCH: Fairbanks Protests CIC's Lift Stay Motion CATHOLIC CHURCH: Fairbanks' Creditors Must File Claims by Dec. 2 CATHOLIC CHURCH: Court to Appoint Claims Rep in Fairbanks' Case CATHOLIC CHURCH: Plan Trustee Wants Spokane's Case Reopened CENTEX CORP: Low Cash Flow Cues Moody's to Cut Ratings to Ba2 CHARTER COMMS: Launches Exchange Offer for $500MM of CCH II Notes COLON BAZOR: Voluntary Chapter 11 Case Summary CONTIMORTGAGE CORP: Fitch Retains CCC/DR2 Ratings on Four Classes CRUM & FORSTER: S&P Lifts Ratings to BB+ from BB; Stable Outlook CSFB HEAT: Fitch Downgrades Ratings on Six Certificate Classes DARRELL KINER: Case Summary & 16 Largest Unsecured Creditors DEL MAR VILLAS: Voluntary Chapter 11 Case Summary DIAGNOSTIC IMAGING: Moody's Holds B3 Probability of Default Rating DLJ COMMERCIAL: Fitch Holds 'B-' Rating on $13.8MM Cl. B-6 Certs. D.R. HORTON: Moody's Lowers Subordinated Notes' Rating to B1 ECHO THERAPEUTICS: Posts $3,981,101 Net Loss in 2008 First Quarter ENKU GELAYE: Voluntary Chapter 11 Case Summary FELLOWSHIP ACADEMY: Case Summary & 20 Largest Unsecured Creditors FOUNTAINS MOBILE: Case Summary & 5 Largest Unsecured Creditors FRESH DEL MONTE: S&P's 'BB-' Rating Unmoved by Caribana Buyout FRONTIER AIRLINES: Wants Period to Remove Pending Actions Extended FRONTIER AIRLINES: Court Approves WilmerHale as Panel's Counsel GETTY IMAGES: Hellman Buyout Cues Moody's to Assign Ba2 Rating GETTY IMAGES: S&P Affirms 'BB-' Rating on New Credit Profile GOLDMAN SACHS: Fitch Places Low-B Ratings Under Negative Watch HEALTHMARKETS INC: Low Levels of EBITDA Cue S&P to Cut Rating HOLLINGER INC: Creditors Have Until July 1 to File Proofs of Claim IMMUNICON CORP: March 31 Balance Sheet Upside-Down by $12,737,000 INFOGROUP INC: S&P Keeps Low-B Rating Under Negative CreditWatch INTERNATIONAL HOME: Case Summary & 20 Largest Unsecured Creditors IRIDEX CORP: Posts $892,000 Net Loss in 2008 First Quarter JOHN HETZEL: Case Summary & 20 Largest Unsecured Creditors KB HOME: Moody's Cuts Rating on Sr. Subordinated Notes to B1 KGB: S&P Lifts Corp. Credit Rating to B+ from B on Strong EBITDA KRISPY KREME: Reports $4 Million Net Income in Quarter Ended May 4 LENNAR CORP: Moody's Cuts Corp. Family Rating to Ba3 LONG DRIVE: Case Summary & 2 Largest Unsecured Creditors LONG BEACH: Fitch Retains Junk Ratings on 18 Certificate Classes MDRECOVERY INC: Files Voluntary Chapter 11 Case Summary MICHAEL ANGELO: Case Summary & 9 Largest Unsecured Creditors NORTHWEST AIRLINES: Wants Nine Claims Worth $2.4 Mil. Expunged NORTHWEST AIRLINES: Wants R. Foster's $930,000 Claim Expunged OPTION ONE: Fitch Takes Rating Actions on 39 Classes of Certs. ORAGENICS INC: Inks Term Sheet for $2.6 Mil. in Equity Financing OVALE GROUP: March 31 Balance Sheet Upside-Down by $5,209,363 PROTECTION ONE: Stockholders Okay 2008 Long-Term Incentive Plan PULTE HOMES: Moody's Sees Challenges Ahead; Lowers Ratings to Ba2 RYLAND GROUP: Moody's Sees Continuing Decline & Cuts Rating to Ba2 SALANDER-O'REILLY: Auction of Furniture Brings in $1.6 Million SOTHEBY'S: Moody's Rates New Senior Unsecured Notes Ba3 SOTHEBY: S&P Lifts Credit Rating to BBB- from BB+; Removes Watch SOURCE INTERLINK: Moody's Junks Proposed $465MM Senior Notes STEPHEN SMITH: Voluntary Chapter 11 Case Summary STUART EDWARDS: Case Summary & 20 Largest Unsecured Creditors SW DALLAS: Voluntary Chapter 11 Case Summary TANEJA CENTER: Case Summary & 50 Largest Unsecured Creditors TARGA RESOURCES: Mulls Offering of $250MM Senior Unsecured Notes TARGA RESOURCES: Moody's Rates Proposed $250MM Sr. Notes B2 TARGA RESOURCES: S&P Rates $250 Million Note Issuance 'B' TARGA RESOURCES: S&P Holds B Rating on Unit's $250MM Note Issuance TELKONET INC: Posts $5,121,031 Net Loss in 2008 First Quarter THEATER XTREME: March 31 Balance Sheet Upside-Down by $4,131,946 TOUSA INC: Allowed to Settle JPMorgan Facility Default TOUSA INC: Court Approves Jasmine Ranch Settlement TRANSDERM LABS: June 30 Balance Sheet Upside-Down by $37,844,000 TROPICANA ENT: Court Approves Lazard Freres as Investment Banker UNIPROP MANUFACTURED: March 31 Balance Sheet Upside-Down by $21 MM VALASSIS COMMS: Moody's Affirms B1 Ratings; Outlook Positive WAMU MORTGAGE: S&P Junks Ratings on Four Certificate Classes WEST CONTRA: S&P Puts 'C' Cert. Rating Under Developing Watch * US CMBS Loan Defaults Remain Low, According to Fitch * S&P's Cuts on MBIA & Ambac Have Broad Result for Global Markets ********* ACA FINANCIAL: S&P Affirms 'CCC' Financial Strength Rating ---------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'CCC' financial strength rating on ACA Financial Guaranty Corp. The rating remains on CreditWatch with developing implications. In December 2007, S&P lowered ACA's financial strength rating to 'CCC', which triggered a requirement that the company post significant amounts of collateral for the benefit of its credit default swap counterparties. Since then, ACA has been negotiating with the counterparties to modify its obligations to permanently solve the company's capital and liquidity issues. With the negotiations in progress, the counterparties have signed a series of forbearance agreements that allowed ACA to avoid posting collateral. The most recent forbearance agreement, signed on May 30, 2008, extended the forbearance period until June 20, 2008. ACA's rating remains on CreditWatch with developing implications, reflecting the dual possibilities that a favorable result of the negotiations could improve the company's credit and liquidity standing, while a negative outcome could leave the company with significant liquidity and capital shortfalls. AXS-ONE INC: March 31 Balance Sheet Upside-Down by $10,622,000 -------------------------------------------------------------- AXS-One Inc.'s consolidated balance sheet at March 31, 2008, showed $5,529,000 in total assets and $16,151,000 in total liabilities, resulting in a $10,622,000 total stockholders' deficit. At March 31, 2008, the company's consolidated balance sheet also showed strained liquidity with $5,025,000 in total current assets available to pay $8,341,000 in total current liabilities. The company reported a net loss of $2,205,000, on total revenues of $3,894,000, for the first quarter ended March 31, 2008, compared with a net loss of $2,661,000, on total revenues of $3,694,000, in the same period last year. Revenues increased $200,000 or 5.4% for the three months ended March 31, 2008, as compared to the corresponding prior year period due to a $500,000 increase in service revenue offset somewhat by a $300,000 decrease in license fees. Operating loss decreased to $1,752,000 for the three months ended March 31, 2008, as compared to $2,776,000 in the corresponding prior year period as a result of the reductions in operating expenses of $824,000 and higher sales revenue. Other expense, net, was $453,000 for the three months ended March 31, 2008, as compared to other income of $115,000 in the same period in 2007. Full-text copies of the company's consolidated financial statements for the quarter ended March 31, 2008, are available for free at http://researcharchives.com/t/s?2d93 Going Concern Doubt As reported in the Troubled Company Reporter on April 25, 2008, Amper, Politziner, & Mattia, P.C., in Edison, N.J., expressed substantial doubt about AXS-One 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 losses from operations and working capital deficiency. The company has generated losses from operations of $1,752,000 for the three months ended March 31, 2008. Additionally, the company was not in compliance with its quarterly license revenue covenant as of March 31, 2008. The bank waived such violation and changed the covenants for future periods from a minimum license revenue covenant and minimum three month rolling net loss covenant to (a) a minimum three month rolling EBITDA covenant, (b) minimum cash and accounts receivable availability covenant and (c) a minimum equity infusion covenant of $500,000. The company also had a working capital deficiency of $3,316,000 as of March 31, 2008. About AXS-One Inc. Headquartered in Rutherford, N.J., AXS-One (OTC BB: AXSO) -- http://www.axsone.com/-- provides Records Compliance Management software solutions. The AXS-One Compliance Platform enables organizations to implement secure, scalable and enforceable policies that address records management for corporate governance, legal discovery and industry regulations such as SEC17a-4, NASD 3010, Sarbanes-Oxley, HIPAA, The Patriot Act and Gramm-Leach Bliley. AXS-One has offices worldwide including in the United States, Australia, Singapore, United Kingdom and South Africa. BELDEN INC: Augments Biz with $133MM Trapeze Networks Cash Buyout ----------------------------------------------------------------- Belden Inc. entered into a definitive agreement to acquire Trapeze Networks for $133 million in cash. The acquisition builds on Belden's position as a complete signal transmission solutions provider by adding a recognized company in the wireless LAN market. Belden stated that Wireless extends the reach of Belden's physical-layer cable and connectivity products and enables the company to address the growing mobility needs of customers. "Belden's strategic vision is to provide the best signal transmission solutions to our customers regardless of technology," John Stroup, president and chief executive officer of Belden, said. "We believe the acquisition of Trapeze Networks uniquely positions Belden to offer our enterprise customers tailored connectivity solutions that benefit from blending the strengths of copper, fiber and wireless technologies." Trapeze Networks Smart Mobile wireless LAN solutions deliver superior performance, security, reliability and management capabilities, making this a highly attractive wireless investment for Belden's future," Mr. Stroup added. "The acquisition will make Belden the world's largest unified wired and wireless solutions provider and will provide expanded market access for Trapeze Networks' Smart Mobile solutions." "We believe we are at an inflection point in enterprise wireless LAN expansion, a market that is already growing nearly 25 percent per year, and that wireless connectivity is no longer considered a luxury but is a customer expectation," Mr. Stroup related. "During the past six years, enterprise customers around the world have invested in Trapeze Networks Smart Mobile because they can depend on it for constant connectivity and reliable mobility," Jim Vogt, president and chief executive officer of Trapeze, said. "The superior performance and cost benefits of our highly acclaimed wireless LAN products have fueled our global growth through distribution and through our OEM relationships with 3Com, Enterasys, Nortel and other large networking companies. Our customers can now be assured of continued product innovation and new capabilities from the combined resources of Belden and Trapeze." Impact on Belden's Outlook Because Trapeze Networks sells software well as hardware and services, the company is required under accounting principles generally accepted in the United States to defer and amortize certain revenues over the lives of contracts until it can establish vendor-specific objective evidence of the fair market value of each separate deliverable. The majority of Trapeze Networks' revenue is deferred and is typically amortized over periods of a year or more. This accounting treatment makes the acquisition more dilutive to Belden's expected earnings in 2008 and 2009 than would otherwise be the case. "The acquisition of Trapeze Networks furthers our strategy, and we expect that it will provide a return on invested capital for Belden consistent with or better than that of our successful 2007 acquisitions," Mr. Stroup said. "We expect that the total dilutive impact of revenue deferral and amortization for 6 months in 2008 to be $0.15 to $0.20 and in 2009 $0.25 to $0.30. Despite this impact, we expect the transaction to be neutral in operating cash flow in 2008 and a positive contributor to operating cash flow in 2009 and beyond. "The expected dilution from the Trapeze acquisition, including the impact of revenue deferral and the recurring amortization of intangible assets resulting from the purchase, but excluding short-term, nonrecurring amortization, will be in the range of $0.27 to $0.32 in 2008 and $0.25 to $0.30 in 2009," Mr. Stroup said. "We expect that the acquisition will be accretive on a GAAP basis in 2010 and beyond. "Our outlook for 2008 remains unchanged except for the expected effects of the planned acquisition,Mr. Stroup said. Because of the mid-year timing of the closing of this transaction and the deferral of Trapeze Networks' revenue, our expectations for consolidated revenue remain in the range of $2.2 to $2.3 billion. We expect our operating margin to be in the range of 11% to 12%, and we are adjusting our expectation for 2008 earnings per diluted share to the range of $3.15 to $3.35." About Trapeze Networks Based in Pleasanton, California, Trapeze Networks is a privately held company that sells its products into healthcare, education, manufacturing, retail, government and other enterprise verticals through OEMs and distribution channels. The Trapeze product portfolio is an end-to-end WLAN system built on a highly scalable and secure wireless operating system running on Trapeze Networks access points and controllers and features the industry's most robust management software capabilities. More than 4,000 organizations around the world have deployed Trapeze wireless platforms. About Belden Inc. Headquartered in St. Louis, Missouri, Belden Inc. (NYSE:BDC) -- http://www.belden.com/-- fka Belden CDT Inc., designs, manufactures, and markets signal transmission solutions for data networking and specialty electronics markets including entertainment, industrial, security and aerospace applications. BELDEN INC: Planned Trapeze Acquisition Won't Affect S&P's Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services said that its ratings and outlook on St. Louis-based Belden Inc. (BB+/Stable/--) are not affected by the company's recently announced plan to acquire Trapeze Networks Inc. for $133 million. Following this transaction, the company's financial leverage statistics will still be moderate for the rating. BHM TECHNOLOGIES: Section 341(a) Meeting Scheduled for June 26 -------------------------------------------------------------- Habbo G. Fokkena, the United States Trustee for Region 9, called for a meeting of the creditors and equity shareholders of BHM Technologies Holdings, Inc., and its debtor-subsidiaries pursuant to Section 341 of the Bankruptcy Code on June 26, 2008, at 12:00 p.m., Eastern Daylight Time. The meeting will be held in the Jury Assembly Room, Room 201, Gerald R. Ford Federal Building, 110 Michigan Avenue NW, Grand Rapids, Michigan 49503. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtors under oath. Headquartered in Ionia, Michigan, BHM Technologies Holdings Inc.-- http://www.browncorp.com/--manufactures and sells automobile parts including air bags and electrical systems. It has manufacturing facilites in Mexico and operates under Brown Corp. BHM Technologies Holdings, Inc. and 14 affiliates filed separate voluntary petitions under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Western District of Michigan on May 19, 2008 (Lead Case No. 08- 04413). Hannah Mufson McCollum, Esq., Kay Standridge Kress, Esq., Robert S. Hertzberg, Esq., and Leon R. Barson, Esq. of Pepper Hamilton, LLP represent the Debtors in their restructuring efforts. When the Company filed for bankruptcy, it listed estimated assets and debts to be both between US$100 million and US$500 million. (BHM Technologies Bankruptcy News, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) BKF CAPITAL: Posts $456,000 Net loss in 2008 First Quarter ---------------------------------------------------------- BKF Capital Group Inc. reported a net loss of $456,000, on total revenues of $769,000, in the first quarter ended March 31, 2008, compared with a net loss of $2,113,000, on total revenues of $827,000, in the same period last year. The decrease in total revenues is attributable to lowering interest rates and thus less interest revenue. At March 31, 2008, BKF had cash, cash equivalents and U.S. Treasury bills of $24,062,000, compared to $24,115,000 at Dec. 31, 2007. At March 31, 2008, the company's consolidated balance sheet showed $26,790,000 in total assets, $6,450,000 in total liabilities, and $20,340,000 in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended March 31, 2008, are available for free at http://researcharchives.com/t/s?2d9e Going Concern Doubt As reported in the Troubled Company Reporter on March 18, 2008, Holtz Rubenstein Reminick LLP, in New York, expressed substantial doubt about BKF Capital Group 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 stated that the company experienced a total loss of assets under management and as a result the company has had a significant decline in revenues in 2007 and no longer has an operating business. The company continues to evaluate strategic alternatives: either commence a new business or liquidate. Historically, the company has funded its cash and liquidity needs through cash generated from operations; however, in light of the above, the company expects that cash generated from current operations will not be sufficient to fund operations and that the company will use its existing working capital to fund operations. About BKF Capital New York City-based BKF Capital Group Inc. (OTHER OTC: BKFG.PK) does not have significant operations. Previously, the company was engaged in the provision of investment advisory and asset management services in the United States. CALUMET SPECIALTY: S&P Revises Outlook to Negative from Positive ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on refining and marketing company Calumet Specialty Products Partners L.P. to negative from positive, and affirmed its 'B' corporate credit rating on the company. At the same time, S&P lowered its rating on Calumet's $435 million senior secured first-lien term loan facility to 'B' from 'BB-' and revised the recovery rating to '3', indicating our expectation for meaningful (50% to 70%) recovery in the event of a payment default, from '1'. "Poor first-quarter margins, combined with cost overruns for the Shreveport refinery expansion project, resulted in a significant draw on Calumet's credit," said Standard & Poor's credit analyst Paul Harvey. "As a consequence, Calumet's debt leverage will be elevated at a time of weaker margins, challenging the debt covenants on its term loan and credit facility." Although S&P expect the company to remain in compliance with its covenants, helped by improving margins and cost reductions, its financial measures will remain weaker than S&P previously expected. CANARGO ENERGY: Defers Annual Stockholders' Meeting to July 18 -------------------------------------------------------------- As a result of delays encountered in the review of its proxy materials by the U.S. Securities and Exchange Commission, CanArgo Energy Corporation has re-scheduled its Annual Meeting of Stockholders from June 26, 2008 to July 18, 2008 in order to provide the company with sufficient time to solicit proxies. The Meeting will be held at 10.30 a.m. Eastern Time at the American Stock Exchange, 86 Trinity Place, New York, New York. Only stockholders of record at the close of business on June 9, 2008 will be entitled to notice of, and to vote at, such meeting or any adjournments or postponements. CanArgo Energy Corporation (AMEX: CNR) -- http://www.canargo.com/ -- is an independent oil and gas exploration and production company with its oil and gas operations currently located in Georgia. Going Concern Doubt As reported in the Troubled Company Reporter on March 18, 2008, L J Soldinger Associates LLC exressed substantial about CanArgo Energy Corporation's ability to continue as a going concern after it audited the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditor reported that the company has incurred net losses since inception and does not have sufficient funds to execute its business plan or fund operations through the end of 2008. In the three month period ended March 31, 2008, and years ended Dec. 31, 2007, and 2006, the company's revenues from operations did not cover the costs of its operations. The company said that its ability to continue as a going concern is dependent upon raising capital through debt or equity financing on terms acceptable to the company in the immediate short-term. If the company is unable to obtain additional funds when these are required or if the funds cannot be obtained on terms favourable to the company, it may be required to delay, scale back or eliminate its exploration, development and completion program or enter into contractual arran gements with third parties to develop or market products that thecompany would otherwise seek to develop or market itself, or even be required to relinquish its interest in its properties or in the extreme situation, cease operations altogether. CATHOLIC CHURCH: Fairbanks Protests CIC's Lift Stay Motion ---------------------------------------------------------- The Catholic Bishop of Northern Alaska told the U.S. Bankruptcy Court for the District of Alaska that Continental Insurance Company's request is not warranted because Continental's coverage action concerns both one of the most significant assets and potentially one of the most significant claims in the Diocese's reorganization case, and is premature at best. Insurance contributions are a necessary component of any plan of reorganization, asserted Susan G. Boswell, Esq., at Quarles & Brady Streich Lang, LLP, in Tucson, Arizona. She noted that the Court has begun the process of ordering mediation involving the Diocese, the Official Committee of Unsecured Creditors, the parishes and other Catholic entities, and insurance companies. Ms. Boswell contended that Continental clearly recognizes the importance of the administrative proceedings in the Chapter 11 case, as evidenced by it having obtained pro hac vice admission in the Bankruptcy Court for four attorneys even before the Diocese asked the U.S. District Court for the District of Alaska to refer the Coverage Action to the Bankruptcy Court, and before its appearance at the May 16, 2008 status hearing. Continental transparently filed the lift stay request to attempt to gain leverage with respect to its objection to the Request to Refer, and negotiations regarding a plan of reorganization, Ms. Boswell told Judge Donald MacDonald, IV. She contended that the lift stay request is based on Continental's "myopic view" that cause exists to lift the automatic stay merely because motions for summary judgment in the Coverage Action had been filed and fully briefed. She pointed out that to the contrary, "no cause exists . . .." At a minimum, Ms. Boswell continued, the Bankruptcy Court should defer deciding the lift stay request until the Request to Refer is decided or the bar date has passed to see if Continental files a proof of claim to promote judicial economy by reducing duplicative litigation. She also pointed out that by allowing the stay to remain in effect pending the determination of the universe of claims through the claims bar date process, the Court will maintain the status quo with respect to the Diocese's assets, and will keep a level playing field for the Diocese, the Creditors Committee, Continental, and other parties-in-interest to negotiate a consensual plan of reorganization. The Official Committee of Unsecured Creditors agrees with, and joins in the Diocese's opposition to Continental's lift stay request. The Creditors Committee noted that neither the Committee nor any of the survivors of child sex abuse have participated in the Coverage Action. Yet, the Committee said, Continental's request could materially and adversely impact (i) the creditors, who suffered abuse, and (ii) efforts to reach a consensual resolution of the reorganization case. Accordingly, the Creditors Committee believes the lift stay request is inappropriate and premature. Continental's Motion Since January 2006, Continental Insurance Company and the Catholic Bishop of Northern Alaska have been involved in a litigation seeking a judicial declaration concerning any duty Continental may have to defend or indemnify the Diocese for liability arising from claims asserted in Alaska courts by individuals alleging abuse by priests affiliated with the Diocese. Discovery in the Coverage Action has been completed by Feb. 1, 2007, and cross-motions for summary judgment were filed on Oct. 1, 2007. On Feb. 26, 2008, the U.S. District Court for the District of Alaska ordered that oral argument on the cross-motions be held on April 10, 2008. After the Diocese filed its petition for bankruptcy protection, however, the District Court stayed all proceedings in the Coverage Action because of the imposition of the automatic stay. By this motion, Continental asks the U.S. Bankruptcy Court for the District of Alaska to lift the automatic stay for the limited purpose of allowing oral argument in the Coverage Action to be heard on the cross-motions for summary judgment, and to allow the District Court to issue its ruling. Brad E. Ambarian, Esq., at Lane Powell PC, in Anchorage, Alaska, contended that with all briefing complete on the cross-motions for summary judgment, there is no compelling reason to continue the automatic stay with respect the Coverage Action. He adds that the Coverage Action has progressed to a point, where all that remains are two actions -- oral argument and decision by the District Court -- that will not burden the estate. Mr. Ambarian related that the Diocese has made various pronouncements about the importance of its alleged insurance policies in achieving a successful reorganization. Hence, preventing the District Court from hearing the oral arguments and ruling on the cross-motions simply impedes the Diocese's reorganization, he said. The automatic stay in the Coverage Action is creating a "log-jam" that is preventing the successful negotiation of a consensual plan of reorganization, Mr. Ambarian argued. For this reason, the automatic stay should be lifted to allow arguments to proceed, and a ruling to be made, Mr. Ambarian added. 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. 126; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Fairbanks' Creditors Must File Claims by Dec. 2 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Alaska fixed Dec. 2, 2008, as the deadline for parties to file claims against the Catholic Bishop of Northern Alaska. For claims resulting from the rejection of an executory contract or unexpired lease, the Court set the bar date as the earlier of: (i) 30 days from the date of an order rejecting the executory contract or unexpired lease; or (ii) 30 days from the date a plan of reorganization is confirmed. Judge Donald McDonald, IV, also approved the Tort Claim Form, the Other Claims Form, the Bar Date Notices, the Publication Notice, and the publication program and schedule. To continue to protect the identity of the holders of the sexual abuse claims, the Diocese's counsel will not provide copies of the Tort Claim Forms to any other parties, except pursuant to confidentiality protocols approved by the Court. Prior to the approval of the Diocese's request, the Official Committee of Unsecured Creditors filed a conditional objection asking for certain changes and additions to the relief requested by the Diocese, including: -- paid radio announcements on Alaska Public Radio, and Channel 2 TV; -- additional postings in villages' health clinics, and tribal and city offices; -- certain revisions on the sexual abuse claim form and bar date notices, including the indication of the Creditors Committee's toll free number of 1-888-570-6269; and -- portions of the announcements, notices and claim forms should be repeated and communicated in native Alaskan language, Yu'pik. To address the objections, Judge MacDonald held that if the Diocese and the Creditors Committee are unable to agree on the Committee's additional requests, the Court will hold a hearing to consider those additional program on June 11, 2008, at 10:00 a.m. 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. 126; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Court to Appoint Claims Rep in Fairbanks' Case --------------------------------------------------------------- Judge Donald MacDonald, IV, of the U.S. Bankruptcy Court for the District of Alaska, approved the request of the Roman Catholic Diocese of Fairbanks in Alaska, aka Catholic Bishop of Northern Alaska, to appoint a futures claims representative. He noted that the FCR will represent the holder of any claim that meets these criteria: -- a claim for injury or damages to an individual; -- a claim arising from sexual abuse; -- a claim neither timely filed nor deemed to be timely filed, like due to excusable neglect; and -- a claim either: * held by a claimant, who turns 18 after Nov. 2, 2008, which is the date 30 days prior to Claims Bar Date; or * held by a claimant for whom the applicable Alaska tort claim statute of limitations, for any reason, has not expired, or has been tolled as of November 2, as determined under applicable Alaska or federal law, but without regard to federal bankruptcy law. The person to act as the FCR will be appointed by the Court upon request of the Diocese, the Creditors Committee, or both. As reported in the Troubled Company Reporter on May 20, 2008, Fairbanks asked the Court to: -- find that future tort claimants are parties-in-interest in the reorganization case; and -- appoint a future claims representative to represent the Future Tort Claimants, who will make appearances; file pleadings; file a proof of claim on behalf of the Future Tort Claimants; participate in negotiating a plan of reorganization; participate in any claims estimation process; and take other actions, or perform other duties as the Court may authorize upon request of the Diocese or other party-in-interest. Committee Objects The request of the Catholic Bishop of Northern Alaska is unclear as to which claims it seeks to have the future claims representative authorized to represent, the Official Committee of Unsecured Creditors complained. The Creditors Committee told the Court that it would not object to the request, provided that these claims arising from sexual abuse would be covered by the FCR: (1) claims of persons not over 18 years of age as of Oct. 19, 2008, which is 45 days prior to the claims bar date of Dec. 2, 2008; and (2) claims of other persons for whom applicable Alaska tort claim statute of limitations had not expired, or had been tolled, as of October 19. 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. 126; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Plan Trustee Wants Spokane's Case Reopened ----------------------------------------------------------- The Diocese of Spokane's Plan Trustee, Gloria Z. Nagler, Esq., asked the U.S. Bankruptcy Court for the Eastern District of Washington to reopen the Diocese's bankruptcy case, which was closed pursuant to a final decree entered by Judge Patricia C. Williams on May 12, 2008. Ms. Nagler said she is aware of at least four late claimants, who have consulted with the Tort Claims Reviewer regarding evaluation and allowance of their possible claims against the Diocese. The Plan Trustee told the Court that she intends to pay all remaining funds in the Plant Trust, subject to reserves for administrative fees and expenses, to the existing allowed claimants pursuant to the terms of the confirmed Plan of Reorganization. The distribution, however, would leave no funds for payment of late claims, even if those claims are subsequently allowed, she said. Ms. Nagler wants the Court to approve her proposed distribution. The Reorganized Debtor, however, objected to Ms. Nagler's request saying that the reopening of the case would trigger payment by the Reorganized Debtor of additional quarterly fees to the United States Trustee. "The recent emergence of at least four known, potential late claimants, places the Plan Trustee in a difficult situation, the resolution to which requires guidance from this Court," Ms. Nagler countered. By reopening the case, Ms. Nagler explained, she intends to seek the Court's approval for a distribution which, by its terms, will reserve nothing to pay late claims; and a Court ruling that the late claims, whether or not allowed, will not be paid because the funds available for distribution will have been distributed to all timely-filed claims. The Court approval of the final distribution and establishment of administrative reserves, which are immune from late claims, necessarily requires a motion brought on sufficient notice, which itself necessarily requires an open case in which to file the motion, Ms. Nagler contended. Thus, she wants to have the case reopened because she has no other recourse to solve the problem created by late claims. Ms. Nagler said she appreciates the Reorganized Debtor's desire to avoid payment of additional quarterly U.S. Trustee fees. However, neither the confirmed Plan nor the Plan Trust Agreement vest her with the authority to pay the fees from assets of the Plan Trust Fund, unless the Court says so, she added. "Since each of the late claims asserted are based in part upon the rejection of [those] claims at the request of the Reorganized Debtor, this reopening of the case should be considered an adjunct to the Reorganized Debtor's own administrative responsibilities," Ms. Nagler further asserted. About The Diocese of Spokane The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. The Diocese of Spokane, the Tort Claimants Committee, the Future Claims Representative, and the Executive Committee of the Association of Parishes delivered an Amended Plan of Reorganization, and a Disclosure Statement describing that Plan to the Court on Feb. 1, 2007. The Honorable Patricia C. Williams approved the disclosure statement on March 8, 2007. On April 24, 2007, the Court confirmed Spokane's 2nd Amended Joint Plan. That plan is effective May 31, 2007. (Catholic Church Bankruptcy News, Issue No. 125; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CENTEX CORP: Low Cash Flow Cues Moody's to Cut Ratings to Ba2 ------------------------------------------------------------- Moody's Investors Service lowered all of the ratings of Centex Corporation, including its corporate family rating to Ba2 from Ba1 and the ratings on its various issues of senior unsecured notes to Ba2 from Ba1. At the same time, Moody's assigned a speculative grade liquidity rating of SGL-2. The outlook remains negative. The downgrades reflect that homebuilding cash flow, which had been slow to develop, is still running behind expectations, despite the company's success in reducing inventories in its fiscal year that ended March 31, 2008. Future cash flow performance will depend on continuing strong inventory reduction, which may be difficult to accomplish in an environment of declining prices, slow sales, and intense competition. In addition, Centex has been generating quarterly losses even before charges and materially larger losses when charges are included. As a result, tangible net worth has been substantially eroded, making future covenant compliance challenging and leaving the company with uncharacteristically elevated debt leverage (an adjusted 61.6% at March 31, 2008). Centex's current ratings are supported by its strong inventory performance (in the top quartile of the industry), sharply reduced land supply (four years on a go-forward basis), growing cash position, and a recent new order performance that is relatively stronger than its former Ba1 peers. The SGL-2 rating assignment reflects the good year-ahead projected cash flow and growing cash position, offset in part by covenant compliance challenges and somewhat limited opportunities to quickly monetize assets. The negative outlook reflects Moody's expectation that Centex's credit metrics will continue eroding as homebuilding industry conditions remain challenging into next year, with any recovery likely to be sluggish at first, thus prolonging underperformance until early in the next decade. Going forward, the outlook could stabilize if the company were to grow its homebuilding cash flow substantially and use the cash to build additional liquidity and pay down debt; reduce costs sufficiently to restore homebuilding profitability before charges; and make it through the coming year without substantial additional impairment charges, which could enable the company to reduce debt leverage to more normal levels and remain in compliance with its covenants. The ratings could be lowered again if the company continues generating quarterly losses before impairments, continues impairing its assets at the same or near-same rate as it has done to date, violates covenants in its bank credit agreement, continues to increase its debt leverage, or begins experiencing sharp reductions in its trailing twelve-month cash flow generation. These rating actions were taken: * Corporate family rating lowered to Ba2 from Ba1 * Probability of default rating lowered to Ba2 from Ba1 * Senior unsecured notes lowered to Ba2 (LGD4, 53%) from Ba1 (LGD4, 54%) * SGL-2 rating assigned Founded in 1950 and headquartered in Dallas, Texas, Centex Corporation is one of the country's largest homebuilders, with fiscal 2008 revenues and net income of $8.3 billion and ($2.7) billion, respectively. CHARTER COMMS: Launches Exchange Offer for $500MM of CCH II Notes ----------------------------------------------------------------- Charter Communications, Inc.'s indirect subsidiaries, CCH II, LLC and CCH II Capital Corp. are commencing a private exchange offer to exchange up to $500 million principal amount of CCH II�s existing 10.25% Senior Notes due 2010 (CUSIP Nos. 12502CAD3, 12502CAE1 and 12502CAM3) for additional 10.25% Senior Notes due 2013 of CCH II. The purpose of the Offer is to improve Charter�s financial flexibility by extending debt maturities. The Offer is being conducted as a modified "dutch auction," pursuant to which holders of the Old Notes will have the opportunity to specify an exchange ratio at which they would be willing to exchange Old Notes for New Notes. Holders must submit tenders in the range of $1,047.50 to $1,077.50 principal amount of New Notes per $1,000 principal amount of Old Notes with amounts in the range specified in increments of $2.50 principal amount of New Notes per $1,000 principal amount of Old Notes. Charter will accept Old Notes tendered beginning with the minimum exchange ratio and continuing in order of increasing increments of $2.50 in New Notes per $1,000 principal amount of Old Notes, until the aggregate principal amount of accepted Old Notes tendered equals the Maximum Amount (including an increase in such amount, if any). The highest exchange ratio specified with respect to Old Notes accepted for exchange in this process will be the "Clearing Exchange Ratio." If the aggregate principal amount of Old Notes tendered in the Offer exceeds the Maximum Amount, all Old Notes tendered at or below the Clearing Exchange Ratio will be accepted on a pro rata basis and Old Notes tendered above the Clearing Exchange Ratio will be rejected. All Old Notes tendered which are accepted will be paid in New Notes based on the same Clearing Exchange Ratio. Charter reserves the right, but is not obligated, to increase the Maximum Amount. The Clearing Exchange Ratio will include an early participation payment of $30.00 in principal amount of New Notes per $1,000 principal amount of Old Notes. In order to receive the Early Participation Payment, investors must tender their Old Notes on or prior to 5:00 p.m. ET on June 11, 2008, unless extended. Eligible investors who validly tender their Old Notes after that time will receive, for their Old Notes tendered and accepted for exchange, a principal amount of New Notes equal to the Clearing Exchange Ratio for such Old Notes less the Early Participation Payment for such Old Notes. Tendered notes may be validly withdrawn until 5:00 PM ET, on June 11, 2008, unless extended. The Offer will expire at 11:59 PM ET, on June 27, 2008, unless extended. The Offer is not subject to any minimum amount of Old Notes being tendered. The New Notes will be unconditionally guaranteed by Charter Communications Holdings, LLC and will accrue interest from and including the settlement date. Holders who exchange Old Notes for New Notes will receive accrued and unpaid interest to, but not including, the settlement date. The New Notes are being issued as part of the same series of notes as CCH II�s $250 million aggregate principal amount of 10.25% Senior Notes due 2013 which were issued in September 2006 and will be treated as a single class under the governing indenture. The New Notes initially will be subject to certain restrictions on transfer, are expected to be issued with original issue discount and will have a separate CUSIP number from the Existing CCH II 2013 Notes. Noteholders who desire a copy of the eligibility letter may contact Global Bondholder Service Corporation, the information agent for the Offer, at (866) 470-3700 (U.S. Toll-free) or (212) 430-3774. About Charter Communications Headquartered in St. Louis, Missouri, Charter Communications Inc. (Nasdaq: CHTR) -- http://www.charter.com/-- is a broadband communications company and the third-largest publicly traded cable operator in the United States. Charter provides a full range of advanced broadband services, including advanced Charter Digital Cable(R) video entertainment programming, Charter High-Speed(R) Internet access, and Charter Telephone(R). Charter Business(TM) similarly provides broadband communications solutions to business organizations, such as business-to-business Internet access, data networking, video and music entertainment services, and business telephone. Charter's advertising sales and production services are sold under the Charter Media(R) brand. Possible Bankruptcy As reported in the Troubled Company Reporter on May 14, 2008, the company said that if, at any time, additional capital or borrowing capacity is required beyond amounts internally generated or available under the company's credit facilities, it would consider issuing equity, issuing convertible debt or some other securities, further reducing the company's expenses and capital expenditures, selling assets, or requesting waivers or amendments with respect to the company's credit facilities. If the above strategies were not successful, the company says it could be forced to restructure its obligations or seek protection under the bankruptcy laws. As reported in the Troubled Company Reporter on March 14, 2008, Moody's Investors Service affirmed these ratings for Charter Communications Inc.: (i) corporate family rating: Caa1; (ii) probability-of-default rating: Caa2; and (iii) senior unsecured notes: Ca (LGD5 -- 87%). COLON BAZOR: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Colon F. Bazor, Jr. 165 Big Creek Road Waynesboro, MS 39367-9549 Bankruptcy Case No.: 08-50962 Chapter 11 Petition Date: June 5, 2008 Court: Southern District of Mississippi (Gulfport Divisional Office) Judge: Hon. Neil P. Olack Debtor's Counsel: Craig M. Geno, Esq. (cmgeno@harrisgeno.com) Harris Jernigan & Geno, PLLC 587 Highland Colony Pkwy. P O Box 3380 Ridgeland, MS 39157 Telephone (601) 427-0048 Fax (601) 427-0050 Estimated Assets: $1,000,001 to $10 million Estimated Debts: $1,000,001 to $10 million The Debtor did not file a list of its largest unsecured creditors. CONTIMORTGAGE CORP: Fitch Retains CCC/DR2 Ratings on Four Classes ----------------------------------------------------------------- Fitch Ratings has taken rating actions on seven ContiMortgage Corporation Home Equity Loan Transactions. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are now removed. ContiMortgage Home Equity Loan Trust, series 1996-4 Group 1: -- A-11IO affirmed at 'AAA'; -- A-12IO affirmed at 'AAA'; -- A-8 affirmed at 'AA'; -- A-9 affirmed at 'AA'; Deal Summary -- 60+ day Delinquency: 14.96% -- Realized Losses to date (% of Original Balance): 8.92% ContiMortgage Home Equity Loan Trust, series 1996-4 Group 2: -- A-10 affirmed at 'AA'; Deal Summary -- 60+ day Delinquency: 30.36% -- Realized Losses to date (% of Original Balance): 4.71% ContiMortgage Home Equity Loan Trust, series 1997-1: -- A-10IO affirmed at 'AAA'; -- A-8 affirmed at 'AAA'; -- A-9 affirmed at 'AAA'; -- M-1 affirmed at 'A'; -- M-2 revised to 'C/DR3' from 'C/DR2'; Deal Summary -- 60+ day Delinquency: 17.91% -- Realized Losses to date (% of Original Balance): 8.91% ContiMortgage Home Equity Loan Trust, series 1997-2 Group 1: -- A-11IO affirmed at 'AAA'; -- A-8 affirmed at 'AAA'; -- A-9 affirmed at 'AAA'; -- M-1F affirmed at 'AA-'; -- M-2F remains at 'CC/DR1'; Deal Summary -- 60+ day Delinquency: 19.61% -- Realized Losses to date (% of Original Balance): 8.29% ContiMortgage Home Equity Loan Trust, series 1997-2 Group 2: -- M1-A affirmed at 'AAA'; Deal Summary -- 60+ day Delinquency: 12.50% -- Realized Losses to date (% of Original Balance): 4.97% ContiMortgage Home Equity Loan Trust, series 1997-4: -- B remains at 'CCC/DR2'; Deal Summary -- 60+ day Delinquency: 16.10% -- Realized Losses to date (% of Original Balance): 7.93% ContiMortgage Home Equity Loan Trust, series 1998-4: -- AF affirmed at 'AAA'; -- B remains at 'CCC/DR2'; Deal Summary -- 60+ day Delinquency: 13.75% -- Realized Losses to date (% of Original Balance): 10.11% ContiMortgage Home Equity Loan Trust, series 1999-1: -- A-6 affirmed at 'AA'; -- A-7 affirmed at 'AA'; -- A-8 affirmed at 'AA'; -- B remains at 'CCC/DR2'; Deal Summary -- 60+ day Delinquency: 15.21% -- Realized Losses to date (% of Original Balance): 8.58% ContiMortgage Home Equity Loan Trust, series 1999-3: -- B remains at 'CCC/DR2'; Deal Summary -- 60+ day Delinquency: 19.70% -- Realized Losses to date (% of Original Balance): 8.25% CRUM & FORSTER: S&P Lifts Ratings to BB+ from BB; Stable Outlook ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its counterparty credit and financial strength ratings on Fairfax Financial Holdings Ltd.'s operating insurance companies to 'BBB+' from 'BBB', and also raised its ratings on FFH and Crum & Forster Holdings Corp. to 'BB+' from 'BB'. The outlook is stable. "The upgrade is based on strong earnings in 2007 and in 2008 relative to peers," said Standard & Poor's credit analyst Damien Magarelli. "Previously restrictive negative ratings factors are still viewed negatively, but no longer limit the rating to the same degree: governance has improved, ERM remains adequate, and reserves and reinsurance recoverables are not as great a concern." The ratings are based on a good competitive position that is diversified geographically and by sector, as well as reduced debt leverage. Fairfax historically had very high debt leverage, but this has been steadily declining the last few years and at first quarter 2008 was 24%--now a strength to the rating. Negative factors to the rating are the lack of a strong earnings track record in a softening price market, high reinsurance recoverables, though declining, and the historical use of finite reinsurance, though many of these contracts have been commuted. The stable outlook is based on the view that FFH's earnings in 2008 will be unusually strong based on investment earnings within the CDS portfolio as well as strong underwriting performance with a combined ratio near 100% from continuing operations. The stable outlook is further supported by a good competitive position, decreasing financial leverage (to be maintained at less than 30%) with interest coverage at 3x excluding realized capital gains, and strong liquidity to be measured in part by the maintenance of $350 million in cash and short-term investments at the holding company level. A negative outlook may result if Fairfax changes its investments strategy to a less conservative one, increases its holdings of common stock to more than 30%, increases its reinsurance recoverables, accounts significant reserve charges, or reduces its cash and short-term investment holdings to less than $350 million. A positive outlook is possible if Fairfax shows disciplined underwriting in a softening market, does not have significant reserve charges, does not have accounting restatements, and reduces its reinsurance recoverables, while earnings remain strong on a consolidated basis. CSFB HEAT: Fitch Downgrades Ratings on Six Certificate Classes -------------------------------------------------------------- Fitch Ratings has taken rating actions on CSFB HEAT mortgage pass- through certificates. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are now removed. CSFB HEAT 2002-5 TOTAL -- M-1 affirmed at 'AA'; -- M-2 downgraded to 'BB+' from 'BBB'; -- B-1 downgraded to 'CC/DR4' from 'CCC/DR1'; Deal Summary -- 60+ day Delinquency: 22.82% -- Realized Losses to date (% of Original Balance): 2.39% CSFB HEAT 2002-1 TOTAL -- B-1 downgraded to 'C/DR6' from 'CCC/DR2'; Deal Summary -- 60+ day Delinquency: 32.37% -- Realized Losses to date (% of Original Balance): 2.79% CSFB HEAT 2002-3 TOTAL -- B-1 downgraded to 'C/DR5' from 'B'; Deal Summary -- 60+ day Delinquency: 32.82% -- Realized Losses to date (% of Original Balance): 2.78% CSFB HEAT 2002-4 TOTAL -- M-1 downgraded to 'A' from 'AA'; -- M-2 affirmed at 'B'; -- B-1 downgraded to 'C/DR6' from 'B-/DR1'; Deal Summary -- 60+ day Delinquency: 31.62% -- Realized Losses to date (% of Original Balance): 2.23% DARRELL KINER: Case Summary & 16 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Darrell Kiner 786 Conley Street Atlanta, GA 30315 Bankruptcy Case No.: 08-70526 Chapter 11 Petition Date: June 2, 2008 Court: Northern District of Georgia (Atlanta) Judge: Hon. Robert Brizendine Debtor's Counsel: Dorna Jenkins Taylor (dorna.taylor@taylorattorneys.com) Taylor & Associates, LLC 1401 Peachtree Street, Suite 500 Atlanta, GA 30309 Telephone (404) 870-3560 Fax (404) 745-0136 Estimated Assets: $1,000,001 to $10 million Estimated Debts: $1,000,001 to $10 million A copy of the debtor's petition and a list of its 16 largest unsecured creditors is available for free at: http://bankrupt.com/misc/ganb08-70526.pdf DEL MAR VILLAS: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Del Mar Villas aka Spectrum LLC 214 West Beltline, Suite C Cedar Hill, TX 75104 Bankruptcy Case No.: 08-32736 Chapter 11 Petition Date: June 3, 2008 Court: Northern District of Texas (Dallas) Petitioner's Counsel: Nathan Matthew Johnson, Esq. (nathanmj@sbcglobal.net) Howard Marc Spector, P.C. 12770 Coit Road, Suite 1100 Dallas, TX 75251 Tel: (214)365-5379 Fax: (214)237-3380 Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Brasha Builders, Inc. accounts payable $94,982 c/o Richard Shaw 17103 Preston Road Suite 250 Dallas, TX 75248 Provident Management accrued management $35,807 c/o Richard Shaw fee 17103 Preston Road Suite 250 Dallas, TX 75248 TOGP Development loans $65,000 c/o Richard Shaw 17103 Preston Road Suite 250 Dallas, TX 75248 PMI Employees, Inc. loans $1,656 c/o Richard Shaw 17103 Preston Road Suite 250 Dallas, TX 75248 DIAGNOSTIC IMAGING: Moody's Holds B3 Probability of Default Rating ------------------------------------------------------------------ Moody's Investors Service affirmed the ratings of Diagnostic Imaging Group, LLC, including the B2 Corporate Family Rating. The rating outlook remains negative. The affirmation of the negative rating outlook reflects DIG's current liquidity position which Moody's views as relatively weak. If the company does not demonstrate improvement in its liquidity position through improvement in cash flow and restoration of availability under the revolver, there could be downward pressure on the ratings. On the other hand, if the company is able to improve its cash collections and pay down debt thus increasing the availability under the revolver, Moody's could change the ratings outlook to stable. Moody's had changed DIG's rating outlook to negative from stable in July 2006, reflecting the significantly higher capital expenditures than Moody's had expected at the time of the original assignment of the ratings. As a result of the company's aggressive acquisition and capital equipment investments DIG had not reduced debt as Moody's expected. However, Moody's believes that the company's capital expenditures will begin to taper off and be considerably lower in 2008 than 2007. DIG's ratings are constrained by the company's limited scale and diversity, limited free cash flow generation and the risk of future declines in reimbursement for diagnostic imaging services. The ratings are supported by the company's solid competitive position in the diagnostic imaging market, moderate financial leverage and strong profitability margins. Ratings affirmed/LGD estimates revised: * $25 million, senior secured revolver due 2010: to B1 (LGD2, 23%) from B1 (LGD2, 25%) * $110 million, senior secured term loan B due 2012: to B1 (LGD2, 23%) from B1 (LGD2, 25%) * Corporate Family Rating, B2 * Probability of Default Rating, B3 The ratings outlook is negative. Headquartered in Bethpage, New York, DIG is principally engaged in establishing and operating fixed-site diagnostic imaging and radiology facilities providing all types of outpatient radiological services, including x-rays, CT scans, mammography and MRIs. The company operates 36 multi-modality centers in the New York metropolitan area, Florida and New Jersey. For the twelve months ended March 31, 2008 DIG generated revenue of approximately $178 million. DLJ COMMERCIAL: Fitch Holds 'B-' Rating on $13.8MM Cl. B-6 Certs. ----------------------------------------------------------------- Fitch Ratings has affirmed DLJ Commercial Mortgage Corp.'s commercial mortgage pass-through certificates, series 1998-CF2, as: -- $175.4 million class A-1B at 'AAA'; -- Interest-only class S at 'AAA'; -- $55.4 million class A-2 at 'AAA'; -- $60.9 million class A-3 at 'AAA'; -- $13.8 million class A-4 at 'AAA'; -- $41.5 million class B-1 at 'AAA'; -- $16.6 million class B-2 at 'AAA'; -- $52.6 million class B-3 at 'A+'; -- $11.1 million class B-4 at 'A-'; -- $22.2 million class B-5 at 'BB+'; -- $13.8 million class B-6 at 'B-'. Fitch does not rate the $14.6 million class C certificates. Class A-1A has paid in full. Although credit enhancement has increased since Fitch's last rating action, concentrations of upcoming maturities and a high percentage of Fitch loans of concern warrant affirmations. Currently, 31 loans have defeased (29.6%), including four of the top 10 loans (13.9%). As of the May 2008 distribution date, the pool has paid down 56.9% to $447.9 million from $1.11 billion at issuance and an additional 36.8% since the last Fitch rating action. Approximately 75% of the pool (126 loans) matures in the remainder of 2008, including 102 non-defeased loans (48.7% of the pool) which have a weighted note rate of 7.03%. There are currently three loans (2.9 %) in special servicing, two of which are current and one of which is 90 days delinquent (1.2%). In addition, Fitch has identified 26 loans (13.8%) as Fitch Loans of Concern. These include specially serviced loans, loans with debt service coverage ratios below 1.0 times and loans with other performance issues. The largest Fitch LOC (3.1%) is secured by a hotel property in Louisville, Kentucky and is current. The largest specially serviced loan (1.2%) is secured by a hotel property located in Youngstown, Ohio. Losses on this specially serviced loans are anticipated to be fully absorbed by the unrated class C certificate. As of the May 2008 remittance report, classes up to B-3 experienced interest shortfalls due to special servicing fees from corrected loans that paid off at maturity. The shortfalls are expected to be refunded to B-3 through B-5 in the near future. Additional shortfalls are expected given concentrations of corrected loans maturing in July 2008; however, these shortfalls are expected to be repaid the month after they are incurred. D.R. HORTON: Moody's Lowers Subordinated Notes' Rating to B1 ------------------------------------------------------------ Moody's Investors Service lowered all of the ratings of D.R. Horton, Inc., including its corporate family rating to Ba2 from Ba1, the ratings on its various issues of senior unsecured notes to Ba2 from Ba1, and the rating on its subordinated notes to B1 from Ba2. At the same time, a speculative grade liquidity rating of SGL-2 was assigned. The outlook remains negative. The downgrades reflect that the company has begun to generate quarterly losses before impairments and other charges, and Moody's expects this trend to continue into next year, as the rate of expected revenue decline exceeds the pace at which the company can continue to pare costs. When large and continuing impairment charges are folded in, the company's debt leverage will continue to edge up while covenant compliance will become, and remain, very challenging. In addition, the company still retains a long land position (a Moody's-projected greater than seven year supply on a go-forward basis) while large mandatory debt payments for the next few years may hold down the growth in its cash position. Horton's current ratings are supported by its exceptionally strong cash flow performance, sound liquidity, and transparent balance sheet (e.g., no joint venture exposure). The SGL-2 rating assignment reflects the strong year-ahead projected cash flow and good cash position, offset in part by covenant compliance challenges and somewhat limited opportunities to quickly monetize assets. The negative outlook reflects Moody's expectation that Horton's credit metrics will continue eroding as homebuilding industry conditions remain challenging into next year, with any recovery likely to be sluggish at first, thus prolonging underperformance until early in the next decade. Going forward, the outlook could stabilize if the company were to continue with its industry-leading cash flow performance; reduce costs sufficiently to restore homebuilding profitability before charges; and make it through subsequent quarters without substantial additional charges to net worth, thereby maintaining a debt leverage ratio consistent with its ratings. The ratings could be lowered again if quarterly losses before impairments begin to widen substantially; impairments were to continue at the same or near-same rate as they have to date, thereby imperiling covenant performance and/or causing debt leverage to rise above Ba levels for more than a brief period; or if the company begins experiencing sharp reductions in its trailing twelve-month cash flow generation. These rating actions were taken: * Corporate family rating lowered to Ba2 from Ba1 * Probability of default rating lowered to Ba2 from Ba1 * Senior unsecured notes lowered to Ba2 (LGD4, 53%) from Ba1 (LGD4, 55%) * Senior subordinated notes lowered to B1 (LGD6, 96%) from Ba2 (LGD6, 96%) * SGL-2 rating assigned Headquartered in Ft. Worth, Texas, D.R. Horton, Inc. is one of the country's largest homebuilders, with revenues and net income for the trailing twelve-month period ended March 31, 2008 of $9 billion and ($2.3) billion, respectively. ECHO THERAPEUTICS: Posts $3,981,101 Net Loss in 2008 First Quarter ------------------------------------------------------------------ Echo Therapeutics Inc. reported a net loss of $3,981,101, on zero revenue, for the first quarter ended March 31, 2008, compared with a net loss of $586,966, on total revenue of $22,267, in the same period last year. Licensing revenue for the three months ended March 31, 2008, was zero compared to $12,500 for the three months ended March 31, 2007 through an agreement with HortResearch. As a result of the company's decision not to pursue sales and marketing of the SonoPrep System, the company had no product revenue in the three months ended March 31, 2008. For the same period in 2007, the company had nominal revenues of $9,767. At March 31, 2008, the company's consoliated balance sheet showed $11,885,173 in total assets, $4,032,680 in total liabilities, and $7,852,493 in total stockholders' equity. The company's consolidated balance sheet at March 31, 2008, also showed strained liquidity with $1,273,972 in total current assets available to pay $2,280,054 in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended March 31, 2008, are available for free at http://researcharchives.com/t/s?2d9a Going Concern Doubt Wolf & Company, P.C., in Boston, expressed substantial doubt about Echo Therapeutics 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 the company has suffered recurring losses from operations, has a significant accumulated deficit and has been unable to raise sufficient capital to fund its operations. As of March 31, 2008, the company had cash of approximately $1.2 million and an accumulated deficit of approximately $51.7 million. Through March 31, 2008, the Company had no sales or revenues to cover its costs and operating expenses. Although the Company has been able to issue securities through senior promissory notes, secured promissory notes and a series of private placements to raise capital in order to fund its operations, it is not known whether the Company will be able to continue this practice, or be able to obtain other types of financing to meet its cash operating expenses. This, in turn, raises substantial doubt about the Company�s ability to continue as a going concern. Subsequent to March 31, 2008, the Company received gross proceeds from the 2008 Senior Secured Note and Warrant Financing of $500,000 and has the right to issue additional Secured Notes in 2008 for additional gross proceeds of $1,000,000 (see Note 5). Management is currently pursuing additional private equity financing, and such financing is expected to be completed during 2008. However, no assurances can be given as to the success of these plans. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. ENKU GELAYE: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Enku Gelaye Holdings LLC 269 S Beverly Dr No. 612 Beverly Hills, CA 90212 Bankruptcy Case No.: 08-17804 Type of Business: The Debtor is a single asset real estate company. Chapter 11 Petition Date: June 2, 2008 Court: Central District Of California (Los Angeles) Judge: Ellen Carroll Debtor's Counsel: Owen T.Mascott 210 N Salinas St Santa Barbara, CA 93103 Tel (805) 845-4065 Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million The Debtor did not file a list of its largest unsecured creditors. FELLOWSHIP ACADEMY: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Fellowship Academy 495 Cambridge Street San Francisco, CA 94134 Bankruptcy Case No.: 08-30984 Chapter 11 Petition Date: June 4, 2008 Court: Northern District of California (San Francisco) Judge: Dennis Montali Debtor's Counsel: Marianne Dickson Email mdickson@ml-sf.com Scott H. McNutt Email: SMcNutt@ml-sf.com McNutt Law Group 188 The Embarcadero No. 800 San Francisco, CA 94105 Tel (415) 995-8475 Total Assets: $6,559,908 Total Debts: $5,063,735 A copy of the Debtor's petition is available for free at http://bankrupt.com/misc/canb08-30984.pdf FOUNTAINS MOBILE: Case Summary & 5 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: The Fountains Mobile Home Community LLC No. 98, 7350 S. Tamiami Trail Sarasota, FL 34231 Bankruptcy Case No.: 08-08159 Chapter 11 Petition Date: June 5, 2008 Court: Middle District of Florida (Tampa) Judge: K. Rodney May Debtor's Counsel: Perry G Gruman 3400 West Kennedy Boulevard Tampa, FL 33609 Tel (813) 870-1614 Email linda@grumanlaw.com Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million A copy of the Debtor's petition is available for free at http://bankrupt.com/misc/flmb08-08159.pdf FRESH DEL MONTE: S&P's 'BB-' Rating Unmoved by Caribana Buyout -------------------------------------------------------------- Standard & Poor's Ratings Services said that its ratings and outlook on Fresh Del Monte Produce Inc. (BB-/Positive/--) were unchanged following the company's announcement that it had acquired the shares of Desarollo Agroindustrial de Frutales S.A., a producer of high quality bananas in Costa Rica; the shares of Frutas de Exportacion S.A., a major provider of gold pineapples in Costa Rica; and the shares of an affiliated sales and marketing company, collectively known as "Caribana." The purchase price was $403 million, which we believe was financed in a manner consistent with the company's rating. S&P assume Fresh Del Monte will maintain credit measures that are stronger than its rating to compensate for inherent volatility in the produce industry. The acquisitions have the potential to generate operating efficiencies and synergies, through optimization of logistics and warehouse platforms, consolidation of administrative functions, and procurement cost savings. FRONTIER AIRLINES: Wants Period to Remove Pending Actions Extended ------------------------------------------------------------------ Frontier Airlines Holdings Inc. and its subsidiaries ask the U.S. Bankruptcy Court for the Southern District of New York to extend the period during which they may remove pending actions as of the bankruptcy filing date, through and including the effective date of any plan of reorganization in their Chapter 11 cases. Rule 9027 of the Federal Rules of Bankruptcy Procedure sets forth the time periods for filing notices to remove claims or causes of action. Specifically, Rule 9027(a)(2) provides that if the claim or cause of action in a civil action is pending when a case under the Bankruptcy Code is commenced, a notice of removal may be filed only within the longest of: (a) 90 days after the order for relief in the case under the Bankruptcy Code, (b) 30 days after entry of an order terminating a stay, if the claim or cause of action in a civil action has been stayed under Section 362 of the Bankruptcy Code, or (c) 30 days after a trustee qualifies in a Chapter 11 reorganization case but not later than 180 days after the order for relief. Marshall S. Huebner, Esq., at Davis Polk & Wardwell, in New York, relates that as of the bankruptcy filing, the Debtors' professionals and employees have attended, and will continue to attend, to these significant business and legal issues, including, inter alia: (i) stabilizing the Debtors' business operations to maximize the value of their estates; (ii) analyzing executory contracts and nonresidential real property leases to be assumed or rejected; (iii) negotiating new agreements with certain goods and services providers; (iv) evaluating numerous aircraft financing arrangements in light of Section 1110 of the Bankruptcy Code; and (v) compiling information from books, records and documents relating to large numbers of claims, assets and contracts to prepare their financial and lease or contract schedules. The Debtors are also parties to various judicial and administrative proceedings, which the Debtors have had to devote enormous amount of time and effort to resolve, Mr. Huebner adds. Consequently, the Debtors have not been able to analyze and make a determination regarding the removal of each of the Prepetition Actions, Mr. Huebner tells the Court. Mr. Huebner maintains that the requested Extension will permit the Debtors to make a full assessment of the possible removal of Prepetition Actions, thereby maximizing the potential recovery for creditors. The Extension will also protect the Debtors' rights under Section 1452 of the Judicial and Judiciary Procedures Code, he notes. Mr. Huebner says the Debtors' adversaries will not be prejudiced by the requested Extension because the adversaries may not prosecute a Prepetition Action absent relief from the automatic stay. Any party whose proceeding is removed may seek to have it remanded under Section 1452(b) of the Judicial and Judiciary Procedures Code. About Frontier Airlines Inc. Headquartered in Denver, Colorado, Frontier Airlines Inc. -- http://www.frontierairlines.com/-- provide air transportation for passengers and freight. They operate jet service carriers linking their Denver, Colorado hub to 46 cities coast-to-coast, 8 cities in Mexico, and 1 city in Canada, well as provide service from other non-hub cities, including service from 10 non-hub cities to Mexico. As of May 18, 2007 they operated 59 jets, including 49 Airbus A319s and 10 Airbus A318s. The Debtor and its debtor-affiliates filed for Chapter 11 protection on April 10, 2008, (Bankr. S.D. N.Y. Case No.: 08-11297 thru 08-11299.) Hugh R. McCullough, Esq. at Davis Polk & Wardwell represent the Debtors in their restructuring efforts. Togul, Segal & Segal LLP is Debtors' Conflicts Counsel, Faegre & Benson LLP is the Debtors' Special Counsel, and Kekst and Company is the Debtors' Communications Advisors. At Dec. 31, 2007, Frontier Airlines Holdings Inc. and its subsidiaries' total assets was $1,126,748,000 and total debts was $933,176,000. (Frontier Airlines Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FRONTIER AIRLINES: Court Approves WilmerHale as Panel's Counsel --------------------------------------------------------------- The Official Committee of Unsecured Creditors of Frontier Airlines Holdings Inc. and its subsidiaries obtained authority from the U.S. Bankruptcy Court for the Southern District of New York to retain Wilmer Cutler Pickering Hale and Dorr LLP as its counsel, nunc pro tunc to April 24, 2008. As the Committee's counsel, WilmerHale is expected to: (a) advise the Committee with respect to its rights, duties and powers in the Debtors' Chapter 11 cases; (b) assist and advise the Committee in its consultations with the Debtors; (c) assist the Committee in analyzing the Debtors' capital structure, the claims of the Debtors' creditors, and in negotiating with holders of claims and equity interests; (d) investigate the acts, conduct, assets, liabilities and financial condition of the Debtors and of the operation of the Debtors' businesses; (e) analyze, and negotiate with, the Debtors or any third party concerning matters related to, among other things, (i) the assumption or rejection of certain leases of non- residential real property and executory contracts, asset dispositions, financing of other transactions, and (ii) the terms of one or more plans of reorganization for the Debtors and accompanying disclosure statements and related Plan of Reorganization documents; (f) assist and advise the Committee as to its communications to the general creditor body regarding significant matters in the Debtors' Chapter 11 cases; (g) participate in all hearings and other proceedings; (h) review and analyze all motions, applications, orders, statements of operations and schedules filed with the Court; (i) assist and advise the Committee with respect to any legislative or governmental activities; (j) prepare pleadings and applications as may be necessary to uphold the Committee's interests and objectives; (k) investigate and analyze any claims against the Debtors' non-debtor affiliates; (l) prepare, on behalf of the Committee, any pleadings, including without limitation, motions, memoranda, complaints, adversary complaints, objections or comments; and (m) perform other legal services as may be required or are otherwise deemed to be in the interests of the Committee in accordance with the Committee's powers and duties. The professionals in WilmerHale will be paid according to their customary hourly rates of: Professional Hourly Rate ------------ ----------- Partners $550 - $765 Counsel $515 - $595 Associates $345 - $515 Paralegals $210 - $250 Andrew N. Goldman, Esq., a partner at WilmerHale, asserted that the firm does not represent any interest adverse to the Debtors, their estates or creditors. WilmerHale is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code, Mr. Goldman assured the Court. About Frontier Airlines Inc. Headquartered in Denver, Colorado, Frontier Airlines Inc. -- http://www.frontierairlines.com/-- provide air transportation for passengers and freight. They operate jet service carriers linking their Denver, Colorado hub to 46 cities coast-to-coast, 8 cities in Mexico, and 1 city in Canada, well as provide service from other non-hub cities, including service from 10 non-hub cities to Mexico. As of May 18, 2007 they operated 59 jets, including 49 Airbus A319s and 10 Airbus A318s. The Debtor and its debtor-affiliates filed for Chapter 11 protection on April 10, 2008, (Bankr. S.D. N.Y. Case No.: 08-11297 thru 08-11299.) Hugh R. McCullough, Esq. at Davis Polk & Wardwell represent the Debtors in their restructuring efforts. Togul, Segal & Segal LLP is Debtors' Conflicts Counsel, Faegre & Benson LLP is the Debtors' Special Counsel, and Kekst and Company is the Debtors' Communications Advisors. At Dec. 31, 2007, Frontier Airlines Holdings Inc. and its subsidiaries' total assets was $1,126,748,000 and total debts was $933,176,000. (Frontier Airlines Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) GETTY IMAGES: Hellman Buyout Cues Moody's to Assign Ba2 Rating -------------------------------------------------------------- Moody's Investors Service assigned a Ba2 corporate family rating for Getty Images, Inc., and Ba2 ratings to its senior secured loan facilities pending its acquisition by Hellman & Friedman LLC. The $2.4 billion acquisition will be financed with a $970 million senior secured term loan, an undrawn $75 million secured revolving credit facility and approximately $1.1 billion of equity, with the remainder from cash on hand. All existing debt of Getty Images, Inc. will be repaid concurrent with the acquisition. The acquisition is expected to close in July 2008. The outlook is stable. These ratings were assigned: * Corporate Family Rating: Ba2 * Probability of Default Rating: Ba3 * $970 million senior secured term loan: Ba2, LGD3 (31%) * $75 million senior secured revolver: Ba2, LDG3 (31%) Upon repayment at the close of the transaction, this rating will be withdrawn: * $265 million series B convertible subordinated notes due 2023: Ba2 The Ba2 corporate family rating is driven by Getty Images's leading market position in the stock imagery market, broad geographic diversification of its customer base, and the strong cash generating capabilities of the business. The ratings are limited by the pro forma closing leverage of 3.2x (using Moody's standard adjustments), which is reflective of Ba3- and Ba2-rated business service and technology firms. The ratings are also constrained by declining trends in the company's traditional creative stills business, the increasing supply of lower priced digital imagery and potential threats from new competitors or technologies. Getty Images's iStock business has been offsetting declines in their traditional business and will likely continue to do so. The iStock business is only a few years old, however, and the niche it operates in is still evolving. The stable outlook reflects the expectation that growth in the iStock business will continue to offset declines in Getty Images's traditional imagery business, resulting in modest overall growth. The ratings could face downward pressure if overall performance was to deteriorate or the company was to make a large debt- financed acquisition or distribution. Ratings could experience upward pressure if the traditional imagery business stabilizes and the company materially reduces leverage. Getty Images Inc. is a leading global provider of stock imagery for the business community. Revenues and adjusted EBITDA for FY 2007 were $858 million and $321 million, respectively. The company is headquartered in Seattle, Washington. GETTY IMAGES: S&P Affirms 'BB-' Rating on New Credit Profile ------------------------------------------------------------ Standard & Poor's Ratings Services affirmed and removed from Credit Watch its 'BB-' corporate credit rating on Seattle-based visual imagery and digital content company Getty Images Inc. The rating action is based on Getty Images' new credit profile as a result of private-equity firm Hellman & Friedman's pending acquisition of the company. In addition, S&P assigned a rating of 'BB' to the company's proposed $1.045 billion senior secured bank financing, one notch higher than the corporate credit rating on Getty Images, and a '2' recovery rating, indicating its expectation of substantial recovery (70%-90%) of principal and prepetition interest in the event of payment default. Proceeds of the facilities will be used to complete the acquisition and to repay existing indebtedness. The outlook is negative. "The negative outlook incorporates our concern over unfavorable secular trends," said Standard & Poor's credit analyst Tulip Lim," and its impact on the company's compliance with financial covenants." GOLDMAN SACHS: Fitch Places Low-B Ratings Under Negative Watch -------------------------------------------------------------- Fitch Ratings has taken rating actions on the Goldman Sachs mortgage pass-through certificates listed below. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are removed. GSR Mortgage Loan Trust 2002-3F -- Class 1A-A affirmed at 'AAA'; -- Class 1A-B affirmed at 'AAA'; -- Class 1A-C affirmed at 'AAA'; -- Class 1B-1 affirmed at 'AAA'; -- Class 1B-2 affirmed at 'AA+'; -- Class 1B-3 affirmed at 'BBB'; -- Class 1B-4 rated 'BB', placed on Rating Watch Negative; -- Class 1B-5 rated 'B', placed on Rating Watch Negative. HEALTHMARKETS INC: Low Levels of EBITDA Cue S&P to Cut Rating ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its counterparty credit rating on HealthMarkets Inc. to 'BB' from 'BB+'. At the same time, the counterparty credit and financial strength ratings on HealthMarkets' operating companies were also lowered by one notch. The outlook on all of the companies is stable. "The downgrade follows a trend in lower absolute levels of operating EBITDA and our view that current plans to revamp the product line and improve earnings prospectively are not likely to demonstrate significant results for the next couple of years," said Standard & Poor's credit analyst Neal Freedman. "The company is transforming its health insurance product portfolio to include benefit designs more similar to conventional, network-based, health insurance than its older scheduled benefit products, and which have a higher expected medical loss ratio." The product line rebalancing has furthermore created challenges for the company's agency force as demonstrated by a decrease in the average number of writing agents in 2007 to 1,874 from 2,143 in 2006 as well as a 6% decrease in agent productivity in 2007 based on the average number of weekly applications submitted per writing agent. In 2008, Standard & Poor's expects HealthMarkets' premium revenue, excluding Medicare and dental insurance, to decrease about 3%, reflecting the realignment of the company's health insurance product portfolio. This realignment coupled with the introduction of Medicare and dental insurance products is expected to increase the medical loss ratio in 2008 resulting in an operating EBITDA decline. Capitalization is expected to remain adequate on a double-leverage adjusted basis, while debt plus preferred leverage is expected to decrease to 40%-45% and operating EBITDA fixed- charge coverage is expected to decline to 4.5x-5.0x. If the company does not meet 2008 expectations, the outlook could be revised to negative and/or the ratings lowered an additional notch. HOLLINGER INC: Creditors Have Until July 1 to File Proofs of Claim ------------------------------------------------------------------ The Ontario Superior Court of Justice set 5:00 p.m, Eastern Standard Time, on July 11, 2008, as the deadline wherein creditors of Hollinger Inc. and its debtor-affiliates may file proofs of claims. Creditor with claims prior to Aug. 1, 2007, must file a separate proof of claim for each Debtor against which it asserts a claim. For more information on proof of claim filing, contact Ernst & Young LLP at 1-888-788-9099. Based in Toronto, Ontario, Hollinger Inc. (TSX: HLG.C)(TSX: HLG.PR.B) -- http://www.hollingerinc.com/-- owns approximately 70.1% voting and 19.7% equity interest in Sun-Times Media Group Inc. (formerly Hollinger International Inc.), a media company with assets which include the Chicago Sun-Times newspaper and Suntimes.com and a number of community newspapers and websites serving communities in the Chicago area. The company, 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. Derek C. Abbott, Esq., and Kelly M. Dawson, Esq., at Morris, Nichols, Arsht & Tunnell LLP, represents the Debtors in their U.S. proceedings. As reported in the Troubled Company Reporter on Feb. 22, 2008, Hollinger Inc.'s consolidated balance sheet at Dec. 31, 2007, showed C$79.8 million in total assets and C$219.3 million in total liabilities, resulting in a C$139.5 million total stockholders' deficit. IMMUNICON CORP: March 31 Balance Sheet Upside-Down by $12,737,000 ----------------------------------------------------------------- Immunicon Corp.'s consolidated balance sheet at March 31, 2008, showed $22,477,000 in total assets and $35,214,000 in total liabilities, resulting in a $12,737,000 total stockholders' deficit. At March 31, 2008, the company's consolidated balance sheet also showed strained liquidity with $16,869,000 in total current assets available to pay $33,230,000 in total current liabilities. The company reported a net loss of $15,524,000, on total product and service revenue of $3,732,000 for the first quarter ended March 31, 2008, compared with a net loss of $4,116,000, on total product and service revenue of $2,554,000, in the same period last year. The company has generated limited revenues from product sales and has incurred substantial losses since the company's inception. The company anticipates anticipates incurring additional losses over the foreseeable future. The company has incurred significant negative cashflow for several years due to a lower than expected revenue, significant legal costs due to the Veridex arbitration and continuing efforts in research and development programs to improve its products products and develop new products. The company will need additional funds to continue to fund its business beyond the third quarter of 2008. Veridex Arbitration On May 31, 2007, the company announced that it had filed a Demand for Arbitration against Veridex, LLC, a Johnson & Johnson Company, or Veridex, pursuant to which it was seeking termination of the 20-year exclusive worldwide agreement to market, sell and distribute its cancer diagnostic products and rescission of all licenses currently held by Veridex under the Development, License and Supply Agreement, or the DLS Agreement, based on "repudiation and fundamental breaches by Veridex of its contractual, agency and other fiduciary obligations to market, sell and distribute our cancer diagnostic products." The comapny also sought monetary damages including compensatory damages of $220.2 to $254.2 million and punitive damages of $480 million. On March 3, 2008, the arbitrator in the arbitration proceedings issued its Decision. In the Decision, the arbitrator determined that Veridex was not in breach of its "best efforts" marketing obligation and dismissed the company's claims. The arbitrator awarded Veridex approximately $304,000 in contract damages, pursuant to Veridex's counterclaim in which Veridex had challenged the company's use of circulating tumor cell, or CTC reagents and analyzers as part of the company's "Service" business. The company paid the award in full in April 2008. The company has been in negotiations with Veridex in regards to this business and in May 2008, the company signed an agreement that allows the company to continue to perform these services and pay Veridex a royalty for the ability to perform these tests. This agreement is temporary and the company expects to transfer these contracts to other laboratories in the near future, therefore the company will only have revenue from these services until they have been transferred. The company is not certain how long the transition will take, but anticipate that it is likely to occur by the end of the third quarter of 2008. Full-text copies of the company's consolidated financial statements for the quarter ended March 31, 2008, are available for free at http://researcharchives.com/t/s?2da1 Going Concern Doubt Deloitte & Touche LLP, in Philadelphia, expressed substantial doubt about Immunicon Corp.'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 recurring losses from operations, accumulated deficit and negative cash flows from operations. About Immunicon Corp. Headquartered in Huntingdon Valley, Pa., Immunicon Corp. (OTC BB: IMMC) -- http://www.immunicon.com/-- is developing and commercializing proprietary cell- and molecular-based human diagnostic and life science research products, and is providing certain analytical services to pharmaceutical and biotechnology companies to assist them in developing new therapeutic agents, with an initial focus on cancer disease management. INFOGROUP INC: S&P Keeps Low-B Rating Under Negative CreditWatch ---------------------------------------------------------------- Standard & Poor's Ratings Services kept its ratings on infoGROUP Inc. on CreditWatch with negative implications, where they were placed on March 11, 2008. The company announced that it intends to file its 10-K for the fiscal year ended Dec. 31, 2007, and its 10-Q for the quarter ended March 31, 2008, on or before July 31, 2008. S&P note that this date is after the June 30, 2008, date required in its recently amended credit agreement. S&P believe the company is addressing these issues with lenders and will successfully negotiate a waiver. S&P initially placed the ratings on infoGROUP on CreditWatch after the company announced it would delay its filings, which would result in a default under its credit facilities. The company stated that it was unable to file its 10-K and 10-Q reports on time because of the ongoing investigation by the Denver regional office of the SEC. Lenders subsequently provided a temporary waiver of this default through June 30, 2008. S&P's concerns regarding the informal investigation by the SEC and the formation of a special litigation committee by infoGROUP's board of directors were heightened given that these developments had led to a filing delay. "We expect to resolve the CreditWatch listing in conjunction with the receipt and review of the report by the special litigation committee," said Standard & Poor's credit analyst Liz Fairbanks. The company expects that this committee will complete its interview and document work by mid-June. INTERNATIONAL HOME: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: International Home Fashions, Inc. 507 West State Street Black Mountain, NC 28711 Bankruptcy Case No.: 08-10434 Type of Business: The debtor is a textile holding company. Chapter 11 Petition Date: June 4, 2008 Court: Western District of North Carolina (Asheville) Judge: Hon. George R. Hodges Debtor's Counsel: David G. Gray (judyhj@bellsouth.net) 81 Central Avenue Asheville, NC 28801 Telephone (828) 254-6315 Total Assets: $2,438,964 Total Debts: $7,507,221 A copy of the debtor's petition and a list of 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/ncwb08-10434.pdf IRIDEX CORP: Posts $892,000 Net Loss in 2008 First Quarter ---------------------------------------------------------- IRIDEX Corporation reported a net loss of $892,000, on revenues of $11,474,000, for the first quarter ended March 29, 2008, compared with a net loss of $4,920,000, on revenues of $12,566,000, in the same period ended March 31, 2007. The decline in revenues primarily reflects a 26.8% decrease in the company's aesthetics revenues due to the difficulties incurred in the US distribution channel during 2007 that are still being experienced coupled with the overall softening of the US aesthetics market, partly offset by a 4.8% increase in opthalmology revenues. Research and development expenses decreased by 40.7% to $1,025,000 from $1,729,000 for the three months ended March 29, 2008, compared to the three months ended March 31, 2007. The primary reason for this was reduced salary and related costs resulting from the reduction in headcount from period to period and reduced material costs incurred on product development. Sales, general and administrative expense decreased in the three months ended March 29, 2008, by 45.4% to $4,518,000 from $8,274,000 for the three months ended March 31, 2007. At March 29, 2008, the company's consolidated balance sheet showed $39,921,000 in total assets, $22,011,000 in total liabilities, and $17,910,000 in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended March 29, 2008, are available for free at http://researcharchives.com/t/s?2d99 Going Concern Doubt Burr, Pilger & Mayer LLP, in San Francisco, expressed substantial doubt about IRIDEX Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 29, 2007. The auditing firm pointed to the company's losses from operations. In addition, as of Dec. 29, 2007, the company was out of compliance with its debt covenants on its existing credit facilities with Mid-Peninsula Bank and the Export-Import Bank. However, the company obtained a waiver for the default and in March 2008 the company terminated the credit facilities and entered into a new credit facility with Wells Fargo Bank which provides the company with the ability to borrow up to $8 million under an asset-based revolving credit facility. Management believes that the new facility with Wells Fargo Bank provides sufficient liquidity to operate for the next 12 months and that the covenants are reasonable and management expects to be able to meet those covenants based on its operating plan for 2008. However, recent operating results indicate that there is significant risk in achieving the operating plan, particularly for the remaining period where the company is obligated to make payments to American Medical Systems Inc. If the company is not able to perform in accordance with its operating plan for 2008 and fails to maintain compliance with its debt covenants, Wells Fargo Bank would be entitled to exercise its remedies under this facility which include declaring all outstanding obligations due and payable, and disposing of the collateral if obligations are not paid. About IRIDEX Corp. Headquartered in Mountain View, California, Iridex Corp. (Nasdaq: IRIX) -- http://www.iridex.com/-- is a lworldwide provider of therapeutic based laser systems, disposable laser probes and delivery devices to treat eye diseases in ophthalmology and skin disorders in the aesthetics market. IRIDEX products are sold in the United States through a direct sales force and internationally through a combination of a direct sales force and a network of approximately 100 independent distributors into 107 countries. JOHN HETZEL: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: John R Hetzel 70 Kostenbader Rd Blairstown, NJ 07825 Bankruptcy Case No.: 08-20487 Chapter 11 Petition Date: June 5, 2008 Court: District of New Jersey (Trenton) Debtor's Counsel: Andre L. Kydala, Esq. (kydalalaw@aim.com) 12 Lower Center Street PO Box 5537 Clinton, NJ 08809 Telephone (908) 735-2616 Fax (908) 735-0765 Total Assets: 1,116,700 Total Debts: 1,800,600 A copy of the debtor's petition and a list of its 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/njb08-20487.pdf KB HOME: Moody's Cuts Rating on Sr. Subordinated Notes to B1 ------------------------------------------------------------ Moody's Investors Service lowered all of the ratings of KB Home., including its corporate family rating to Ba2 from Ba1, the ratings on its various issues of senior unsecured notes to Ba2 from Ba1, and the rating on its subordinated notes to B1 from Ba2. At the same time, a speculative grade liquidity rating of SGL-2 was assigned. The outlook remains negative. The downgrades reflect that the company has begun to generate quarterly losses before impairments and other charges, and Moody's projection that these quarterly pre-impairment losses will continue into 2009, as the rate of expected revenue decline exceeds the pace at which the company can continue to pare its expenses. When large and ongoing impairment charges are folded in, the continuing erosion of KB Home's net worth will drive up the company's already high lease-adjusted debt leverage of 59.2% and make covenant compliance challenging. In addition, the company's joint venture exposure could lead to additional capital calls as the year progresses. At the same time, KB Home's current ratings are supported by its very strong inventory performance and cash flow generation, robust liquidity, relatively short land position (4.6 years on a go- forward basis), and the lowest net debt leverage (incorporating cash balances) among its peer group. The SGL-2 rating assignment reflects the strong year-ahead projected cash flow and healthy cash position, offset in part by covenant compliance challenges and somewhat limited opportunities to quickly monetize assets. The negative outlook reflects Moody's expectation that many of the company's credit metrics will continue eroding as homebuilding industry conditions remain challenging into next year, with any recovery likely to be sluggish at first, thus prolonging underperformance until early in the next decade. Going forward, the outlook could stabilize if the company were to continue with its industry-leading inventory and cash flow performance; reduce costs sufficiently to restore homebuilding profitability before charges; and make it through subsequent quarters without substantial additional charges to net worth, thereby beginning to restore debt leverage to more normal levels. The ratings could be lowered again if quarterly losses before impairments begin to widen substantially; impairments were to continue at the same or near-same rate as they have to date, thereby imperiling covenant performance and/or causing debt leverage to remain above Ba levels; or the company begins experiencing sharp reductions in its trailing twelve-month cash flow generation. These rating actions were taken: * Corporate family rating lowered to Ba2 from Ba1 * Probability of default rating lowered to Ba2 from Ba1 * Senior unsecured notes lowered to Ba2 (LGD4, 51%) from Ba1 (LGD3, 49%) * Senior subordinated notes lowered to B1 (LGD6, 93%) from Ba2 (LGD6, 92%) * SGL-2 rating assigned Headquartered in Ft. Worth, Texas, KB Home. is one of the country's largest homebuilders, with revenues and net income for the trailing twelve-month period ended February 29, 2008 of $5.8 billion and ($1.2) billion, respectively. KGB: S&P Lifts Corp. Credit Rating to B+ from B on Strong EBITDA ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on New York City-based kgb (formerly known as INFONXX Inc.). S&P raised the corporate credit rating to 'B+' from 'B'. Debt outstanding at March 31, 2008, totaled about $452 million. The outlook is positive. "The upgrade reflects the company's strong EBITDA and cash flow growth over the past year," said Standard & Poor's credit analyst Susan Madison, "driven by pricing and volume increases for its European retail directory assistance business." Another factor is a material reduction in advertising expense following the successful launch of its French DA brand in mid-2006. "The positive outlook reflects the potential for further rating upside if kgb's financial profile continues to strengthen," added Ms. Madison. KRISPY KREME: Reports $4 Million Net Income in Quarter Ended May 4 ------------------------------------------------------------------ Krispy Kreme Doughnuts Inc., in a press statement, reported net income of $4.0 million, for the first quarter ended May 4, 2008, compared to a net loss of $7.4 million in the first quarter last year. According to the Birmingham Business Journal, this is Krispy Kreme's first quarterly gain in three years. Dow Jones says that shares of Krispy Kreme shot up 7.6% in early trading Monday as the company disclosed its fiscal first-quarter earnings of 6 cents a share, up from a loss of 12 cents a share at the same time last year. The company stated in a statement that it was able to report a profit, in part, because the loss in 2008's first quarter was largely due to a $9.6 million charge related to the refinancing of long-term debt. In the 2009 quarter, the company did not report any refinancing charge. "We are pleased to report improved bottom line results in the first quarter of fiscal 2009 compared to the first quarter of last year," Jim Morgan, chairman, president and chief executive officer, said. "Much work remains to be done to achieve the consistent profitability and sustainable growth we envision. "While we continue to face many challenges, I believe more than ever there also are many opportunities ahead of us," Mr. Morgan added. "Although our near term results may be uneven, our employees are working hard to implement the further improvements necessary for us to be successful for the long term." Among the other factors that affected the company's results for the first quarter of fiscal 2009 were a $930,000 non-cash gain on the disposal of equity interests in two franchisees and the related release of the company's guarantees of certain debt and leases; well as a net credit in impairment and lease termination costs of $645,000 resulting from changes in estimated sublease rentals on a closed store and the realization of proceeds on the assignment of another closed store lease. As of May 4, 2008, the company's consolidated balance sheet reflects cash of approximately $29.2 million and debt of approximately $75.7 million. During the first quarter of fiscal 2009, 28 new Krispy Kreme stores, comprised of four factory stores and 24 satellites, were opened systemwide, and seven stores, comprised of six factory stores and one satellite, were closed systemwide. This brings the total number of stores systemwide at quarter end to 470, consisting of 289 factory stores and 181 satellites. The net increase of 21 stores in the quarter reflects a net increase of 27 international stores and a net decrease of six domestic stores. Approximately 75% of total stores are operated by franchisees, and half are located outside the United States. About Krispy Kreme Headquartered in Winston-Salem, North Carolina, Krispy Kreme Doughnuts Inc. (NYSE: KKD) -- http://www.KrispyKreme.com/-- is a retailer and wholesaler of doughnuts. The company's principal business, which began in 1937, is owning and franchising Krispy Kreme doughnut stores where over 20 varieties of doughnuts are made, sold and distributed and where a broad array of coffees and other beverages are offered. As of Feb. 3, 2008, there were 449 Krispy Kreme stores operated systemwide in 37 U.S. states and in the District of Columbia, Australia, Canada, Hong Kong, Indonesia, Japan, Kuwait, Mexico, the Philippines, Qatar, Saudi Arabia, South Korea, the United Arab Emirates and the United Kingdom, of which 105 were owned by the company and 344 were owned by franchisees. Of the 449 total stores, there were 295 factory stores and 154 satellites. Of the Krispy Kreme factory stores and satellites in operation at Feb. 3, 2008, 210 and 35, respectively, were located in the United States. * * * 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. LENNAR CORP: Moody's Cuts Corp. Family Rating to Ba3 ---------------------------------------------------- Moody's Investors Service lowered all of the ratings of Lennar Corporation, including its corporate family rating to Ba3 from Ba1 and the ratings on its various issues of senior unsecured notes to Ba3 from Ba1. At the same time, a speculative grade liquidity rating of SGL-2 was assigned. The ratings outlook remains negative. The downgrades reflect these considerations: 1) The company has been generating losses before impairments, and a return to consistent pre-impairment profitability will be difficult, given Moody's expectations of declining deliveries, revenues, and prices in 2008. 2) Covenant compliance will be challenging if impairments and other charges continue apace. 3) Joint venture exposure, while being curtailed, remains significant--and the industry's largest--and could represent a sizable drain on cash flow in 2008 and 2009. 4) Although the company expects to generate significant cash flow in fiscal 2008, it is largely as a result of the sizable first quarter tax refund. 5) Debt leverage at February 29, 2008, adjusted for operating leases, contractual joint venture debt, and financial letters of credit, stood at a relatively high 52.5%. 6) The company's current borrowing base restrictions require it to use available cash balances in excess of $500 million before it draws on its revolver. Borrowing base availability is calculated at that time. 7) Lennar's inventory performance, before taking into account the Morgan Stanley transaction, is only in the middle of industry performance. 8) The company's owned and controlled lot inventory, while reduced, remains high, at a Moody's-projected greater than nine-year supply on a go-forward basis. At the same time, Lennar's ratings are supported by the company's ability to generate positive cash flow, in good times and in bad; its strong recent pre-impairment gross margin performance relative to its former Ba1 peers; its willingness and ability to structure large tax loss recapturing land sales; and its aggressiveness to date in booking impairments. The SGL-2 rating assignment reflects the satisfactory year-ahead projected cash flow and strong cash position, offset in part by covenant compliance challenges and somewhat limited opportunities to quickly monetize assets. The negative ratings outlook reflects Moody's expectation that many of the company's credit metrics will continue eroding as homebuilding industry conditions remain challenging into next year, with any recovery likely to be sluggish at first, thus prolonging underperformance until early in the next decade. Going forward, the outlook could stabilize if the company were to continue growing its free cash flow; reduce costs sufficiently to restore homebuilding profitability before charges; make it through upcoming quarters without substantial additional charges to net worth, thereby restoring adjusted debt leverage to acceptable levels; remain comfortably in compliance with its financial covenants; improve its inventory performance and materially reduce its lot supply; and substantially reduce its joint venture exposure. The ratings could be lowered again if quarterly losses before impairments begin to widen substantially; impairments were to continue at the same or near-same rate as they have to date, thereby imperiling covenant performance and/or causing debt leverage to rise to unacceptable levels; or if the company were to experience sharp reductions in its trailing twelve-month cash flow generation. These rating actions were taken: * Corporate family rating changed to Ba3 from Ba1 * Probability of default rating lowered to Ba3 from Ba1 * Senior unsecured notes changed to Ba3 (LGD4, 59%) from Ba1 (LGD4, 61%) * SGL-2 rating assigned Founded in 1954 and headquartered in Miami, FL, Lennar is one of the country's largest homebuilders. Revenues and net income for the trailing twelve month period ended February 29, 2008 were $8.5 billion and ($2.1) Billion, respectively. LONG DRIVE: Case Summary & 2 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Long Drive LLC 1111 SE 201st Avenue Camas, WA 98607 Bankruptcy Case No.: 08-42634 Chapter 11 Petition Date: June 5, 2008 Court: Western District of Washington (Tacoma) Debtor's Counsel: Timothy J. Dack 1201 Main St P.O. Box 61645 Vancouver, WA 98666-1645 Tel (360) 694-4227 Email bkfile@dackoffice.com Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million A copy of the Debtor's petition is available for free at http://bankrupt.com/misc/wawb08-42634.pdf LONG BEACH: Fitch Retains Junk Ratings on 18 Certificate Classes ---------------------------------------------------------------- Fitch Ratings has taken rating actions on the 36 Long Beach mortgage pass-through certificates listed below. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are removed. Series 2000-1 -- AF-3 affirmed at 'AAA'; -- AF-4 affirmed at 'AAA'; -- AV-1 affirmed at 'AAA'; -- M-1 affirmed at 'BBB'; -- M-2 downgraded to 'CC/DR4' from 'CCC/DR2'; -- M-3 remains at 'C/DR6'. Deal Summary -- Originators: Long Beach Mortgage -- 60+ day Delinquency: 30.11% -- Realized Losses to date (% of Original Balance): 6.59% Series 2000-LB1 Group 1 -- AF-5 affirmed at 'AAA'; -- AF-6 affirmed at 'AAA'; -- M1F affirmed at 'BBB+'; -- M2F remains at 'CC/DR3'. Deal Summary -- Originators: Long Beach Mortgage -- 60+ day Delinquency: 21.70% -- Realized Losses to date (% of Original Balance): 9.68% Series 2000-LB1 Group 2 -- M2V affirmed at 'B'; -- BV remains at 'C/DR5'. Deal Summary -- Originators: Long Beach Mortgage -- 60+ day Delinquency: 29.10% -- Realized Losses to date (% of Original Balance): 7.83% Series 2001-1 -- A-1 affirmed at 'AAA'; -- M-1 affirmed at 'A-'; -- M-2 affirmed at 'B+'; -- M-3 remains at 'C/DR6'. Deal Summary -- Originators: Long Beach Mortgage -- 60+ day Delinquency: 30.95% -- Realized Losses to date (% of Original Balance): 6.69% Series 2001-2 -- A-1V affirmed at 'AAA'; -- M-1 affirmed at 'A'; -- M-2 affirmed at 'BB'; -- M-3 remains at 'C/DR6'. Deal Summary -- Originators: Long Beach Mortgage -- 60+ day Delinquency: 35.83% -- Realized Losses to date (% of Original Balance): 7.81% Series 2001-3 -- A1 affirmed at 'AAA'; -- M1 affirmed at 'A+'; -- M2 affirmed at 'B'; -- M3 remains at 'C/DR6'. Deal Summary -- Originators: Long Beach Mortgage -- 60+ day Delinquency: 28.17% -- Realized Losses to date (% of Original Balance): 6.77% Series 2001-4 Group 1 -- I-A affirmed at 'AAA'; -- M-2 remains at 'C/DR2'; -- M-3 remains at 'C/DR6'. Deal Summary -- Originators: Long Beach Mortgage -- 60+ day Delinquency: 29.73% -- Realized Losses to date (% of Original Balance): 7.59% Series 2001-4 Group 2 -- II-A1 affirmed at 'AAA'; -- II-A3 affirmed at 'AAA'; -- II-M1 affirmed at 'A-'; -- II-M2 remains at 'C/DR2'; -- II-M3 remains at 'C/DR6'. Deal Summary -- Originators: Long Beach Mortgage -- 60+ day Delinquency: 32.83% -- Realized Losses to date (% of Original Balance): 3.71% Series 2002-1 Group 1 -- I-A affirmed at 'AAA'; -- I-M2 affirmed at 'B'; -- I-M3 remains at 'C/DR4'. Deal Summary -- Originators: Long Beach Mortgage -- 60+ day Delinquency: 27.02% -- Realized Losses to date (% of Original Balance): 5.29% Series 2002-1 Group 2 -- II-M1 affirmed at 'BBB+'; -- II-M2 affirmed at 'B'; -- II-M3 remains at 'C/DR4'. Deal Summary -- Originators: Long Beach Mortgage -- 60+ day Delinquency: 25.93% -- Realized Losses to date (% of Original Balance): 2.22% Series 2002-2 Group 1 -- I-A affirmed at 'AAA'; -- I-M2 affirmed at 'BB'; -- I-M3 remains at 'C/DR3'; -- I-M4 remains at 'C/DR6'. Deal Summary -- Originators: Long Beach Mortgage -- 60+ day Delinquency: 24.13% -- Realized Losses to date (% of Original Balance): 5.08% Series 2002-2 Group 2 -- II-M2 affirmed at 'BB'; -- II-M3 remains at 'C/DR3'; -- II-M4 remains at 'C/DR6'. Deal Summary -- Originators: Long Beach Mortgage -- 60+ day Delinquency: 24.13% -- Realized Losses to date (% of Original Balance): 5.08% Series 2002-5 -- M-1 affirmed at 'AA'; -- M-2 affirmed at 'A-'; -- M-3 revised to 'C/DR3' from C/DR2'; -- M-4A remains at 'C/DR6'; -- M-4B remains at 'C/DR6'. Deal Summary -- Originators: Long Beach Mortgage -- 60+ day Delinquency: 20.70% -- Realized Losses to date (% of Original Balance): 3.40% MDRECOVERY INC: Files Voluntary Chapter 11 Case Summary ------------------------------------------------------- Debtor: MDRecovery Inc. 103 Union Wharf Boston, Massachusetts 02109 Bankruptcy Case No.: 08-14214 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Schuyler Labs, Inc. 08-14216 Chapter 11 Petition Date: June 9, 2008 Court: District of Massachusetts (Boston) Judge: Henry Boroff Debtors' Counsel: Harold B. Murphy, Esq. (bankruptcy@hanify.com) Natalie B. Sawyer, Esq. (nbs@hanify.com) Hanify & King, P. C. One Beacon Street, 21st Floor Boston, Massachusetts 02108 Tel: (617) 423-0400 Fax: (617)556-8985 Total/ Total/ Estimated Assets Estimated Debts ---------------- --------------- MDRecovery Inc $1 million to $1 million to $10 million $10 million Schuyler Labs Less than $500,000 to Inc. $50,000 $1 million A copy of the Debtor's petition is available for free at: http://bankrupt.com/misc/massb08-14214.pdf MICHAEL ANGELO: Case Summary & 9 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Michael J. Angelo 139 Ryder Avenue Dix Hills, NY 11746 Bankruptcy Case No.: 08-72936 Chapter 11 Petition Date: June 5, 2008 Court: Eastern District of New York (Central Islip) Judge: Dorothy Eisenberg Debtor's Counsel: Salvatore LaMonica, Esq. (sl@lhmlawfirm.com) LaMonica Herbst and Maniscalco 3305 Jerusalem Avenue Wantagh, NY 11793 Telephone (516) 826-6500 Fax (516) 826-0222 Estimated Assets: $1,000,001 to $10 million Estimated Debts: $500,001 to $1 million A copy of the debtor's list of 9 largest unsecured creditors is available for free at: http://bankrupt.com/misc/nyeb08-72936.pdf NORTHWEST AIRLINES: Wants Nine Claims Worth $2.4 Mil. Expunged -------------------------------------------------------------- Northwest Airlines Corp. and its debtor-affiliates asked the U.S. Bankruptcy Court for the Southern District of New York to expunge in its entirety Claim No. 12392 filed by the Hawaii Department of Taxation for $604, on the grounds that it seeks payment of a prepetition claim. Previously Satisfied Claims The Debtors asked the Court to disallow in their entirety eight claims totaling $2,460,152, because the Claims have been satisfied in the ordinary course of business: Claimant Claim No. Claim Amount -------- --------- ------------ Tennessee Revenue Dept. 12446 $1,187,615 Denver Treasury 12490 747,823 Grapevine-Colleyville 12423 471,697 San Diego County Treasurer 12518 21,182 Tennessee Revenue Dept. 12496 12,243 County of Loudoun, Virginia 12440 10,799 Aldine Independent School 12380 7,623 Minnesota Revenue Dept. 12322 1,170 Claims To be Resolved The Debtors asked the Court to permit six claimants to resolve -- outside of the bankruptcy process -- their claims totaling $40,698, because the Claims are subject to ongoing negotiations between the Debtors and the Claimants: Claimant Claim No. Claim Amount -------- --------- ------------ Illinois Revenue Dept. 11900 $29,227 Florida Revenue Dept. 11570 9,432 North Carolina Employment Security 12516 1,894 New York Dept. of Taxation 12267 114 Illinois Revenue Dept. 12382 24 Boone County Collector 800 7 About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed $14.4 billion in total assets and $17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. (Northwest Airlines Bankruptcy News, Issue No. 94; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on June 6, 2008, Moody's Investors Service downgraded the Corporate Family Rating of Northwest Airlines Corp. to B2 from B1, as well as the ratings of its outstanding corporate debt instruments and selected classes of Northwest's Enhanced Equipment Trust Certificates. The Speculative Grade Liquidity rating was lowered to SGL-3 from SGL-2. The ratings remain on review for possible downgrade.f NORTHWEST AIRLINES: Wants R. Foster's $930,000 Claim Expunged ------------------------------------------------------------- Northwest Airlines Corp. and its debtor-affiliates asked the U.S. Bankruptcy Court for the Southern District of New York to expunge in its entirety the claim of Robert Foster worth $930,000. Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, told the Court that Mr. Foster appeared to have misunderstood whether he was purchasing shares of the Old Stock that was immediately canceled, or shares of the new common stock that was to be issued by the Debtors, which at the time Mr. Foster purchased the Old Stock, was trading on a "when issued" basis. Mr. Petrick also pointed out that the Debtors' intention to cancel the Old Stock was known publicly since January 12, 2007, when the Debtors first filed their Plan of Reorganization. According to Mr. Petrick, the cancellation of the Old Stock was also explained in the Disclosure Statement accompanying the Plan, was reported by the general media, and was fully disclosed with the U.S. Securities and Exchange Commission. The Debtors also issued a press release announcing its intention to cancel the Old Stock for no consideration. "Contrary to Mr. Foster's assertion, Northwest had no duty to prevent the trading of the Old Stock on the over-the-counter market prior to the Effective Date of the Plan," Mr. Petrick asserted. The Plan effectuates Section 510(b) of the Bankruptcy Code, which provides that all claims for damages arising from the sale of Old Stock are subordinated and are not entitled to a distribution. Under the Plan, Mr. Petrick clarified, the Old Stock was canceled as of May 31, 2007, and holders of Old Stock will neither receive nor retain any property or interest in property on account of the Old Stock. Claims asserting the return of the amount that the claimant paid for stock in a debtor, like Claim No. 12505, are subject to disallowance, Mr. Petrick maintained. About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed $14.4 billion in total assets and $17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. (Northwest Airlines Bankruptcy News, Issue No. 94; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on June 6, 2008, Moody's Investors Service downgraded the Corporate Family Rating of Northwest Airlines Corp. to B2 from B1, as well as the ratings of its outstanding corporate debt instruments and selected classes of Northwest's Enhanced Equipment Trust Certificates. The Speculative Grade Liquidity rating was lowered to SGL-3 from SGL-2. The ratings remain on review for possible downgrade. OPTION ONE: Fitch Takes Rating Actions on 39 Classes of Certs. -------------------------------------------------------------- Fitch Ratings has taken rating actions on 39 mortgage pass-through certificates. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are now removed. Option One 2002-6 TOTAL -- Class A-1 affirmed at 'AAA'; -- Class A-2 affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'BB'; -- Class M-3 affirmed at 'B'; Deal Summary -- Originators: Option One -- 60+ day Delinquency: 22.01% -- Realized Losses to date (% of Original Balance): 1.15% Option One 2000-D -- Class A-5 affirmed at 'AAA'; -- Class A-6 affirmed at 'AAA'; -- Class A7 affirmed at 'AAA'; Deal Summary -- Originators: Option One -- 60+ day Delinquency: 29.26% -- Realized Losses to date (% of Original Balance): 4.20% Option One 2001-A -- Class A-5 affirmed at 'AAA'; -- Class A-6 affirmed at 'AAA'; -- Class A-7 affirmed at 'AAA'; Deal Summary -- Originators: Option One -- 60+ day Delinquency: 7.73% -- Realized Losses to date (% of Original Balance): 3.78% Option One 2001-B -- Class A1 affirmed at 'AAA'; -- Class A3 affirmed at 'AAA'; Deal Summary -- Originators: Option One -- 60+ day Delinquency: 33.47% -- Realized Losses to date (% of Original Balance): 3.11% Option One 2001-C -- Class A affirmed at 'AAA'; -- Class S affirmed at 'AAA'; Deal Summary -- Originators: Option One -- 60+ day Delinquency: 33.88% -- Realized Losses to date (% of Original Balance): 1.82% Option One 2001-D -- Class A affirmed at 'AAA'; -- Class P affirmed at 'AAA'; Deal Summary -- Originators: Option One -- 60+ day Delinquency: 30.72% -- Realized Losses to date (% of Original Balance): 2.04% Option One 2002-A -- Class A affirmed at 'AAA'; Deal Summary -- Originators: Option One -- 60+ day Delinquency: 28.52% -- Realized Losses to date (% of Original Balance): 1.66% Option One 2000-5 -- Class A affirmed at 'AAA'; Deal Summary -- Originators: Option One -- 60+ day Delinquency: 36.61% -- Realized Losses to date (% of Original Balance): 4.63% Option One 1999-A GROUP 1 -- Class A-5 affirmed at 'AAA'; Deal Summary -- Originators: Option One -- 60+ day Delinquency: 17.86% -- Realized Losses to date (% of Original Balance): 4.19% Option One 1999-A GROUP 2 -- Class A-6 affirmed at 'AAA'; Deal Summary -- Originators: Option One -- 60+ day Delinquency: 30.25% -- Realized Losses to date (% of Original Balance): 4.86% Option One 1999-B -- Class A affirmed at 'AAA'; Deal Summary -- Originators: Option One -- 60+ day Delinquency: 24.77% -- Realized Losses to date (% of Original Balance): 4.75% Option One 1999-C Group 1 -- Class A-5 affirmed at 'AAA'; -- Class A-6 affirmed at 'AAA'; Deal Summary -- Originators: Option One -- 60+ day Delinquency: 20.12% -- Realized Losses to date (% of Original Balance): 7.08% Option One 1999-C Group 2 -- Class A-7 affirmed at 'AAA'; Deal Summary -- Originators: Option One -- 60+ day Delinquency: 32.70% -- Realized Losses to date (% of Original Balance): 5.86% Option One 2002-1 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'BB'; -- Class M-3 affirmed at 'B'; Deal Summary -- Originators: Option One -- 60+ day Delinquency: 29.53% -- Realized Losses to date (% of Original Balance): 1.30% Option One 2002-3 TOTAL -- Class A1 affirmed at 'AAA'; -- Class A2 affirmed at 'AAA'; -- Class M1 downgraded to 'A-' from 'AA'; -- Class M2 downgraded to 'BBB-' from 'A'; -- Class M3 downgraded to 'BB' from 'BBB'; Deal Summary -- Originators: Option One -- 60+ day Delinquency: 31.69% -- Realized Losses to date (% of Original Balance): 1.70% Option One 2002-5 TOTAL -- Class M-1 affirmed at 'AA'; -- Class M-2 downgraded to 'BBB' from 'A'; -- Class M-3 downgraded to 'BB' from 'BBB'; -- Class M-4 downgraded to 'BB-' from 'BBB-'; -- Class B downgraded to 'BB-' from 'BB+'; Deal Summary -- Originators: Option One -- 60+ day Delinquency: 28.82% -- Realized Losses to date (% of Original Balance): 2.22% ORAGENICS INC: Inks Term Sheet for $2.6 Mil. in Equity Financing ---------------------------------------------------------------- Oragenics Inc. entered into a definitive financing agreement providing for equity financing of $2,600,000 consisting of common stock at $0.45 per share and warrants with an exercise price of $1.30 per share. Funding is expected to finalize by June 12, 2008. "This capital will help the Company to begin generating revenue from our Probiora3 oral health product, to accelerate our efforts to develop and commercialize our proprietary DPOLT antibiotic platform, to test our SMaRT Replacement Therapy product for the elimination of tooth decay, to market our LPT3-04 weight loss product, and continue the development of our unique diagnostic platforms, IVIAT and CMAT, as well as other uses," Stanley B. Stein, the company�s President and CEO stated. Headquartered in Alachua, Florida, Oragenics Inc. (AMEX: ONI) -- www.oragenics.com/ -- operates as an early-stage biotechnology company in the United States. Founded in 1996, it primarily focuses on developing technologies associated with oral health, broad spectrum antibiotics, and other general health benefits. Going Concern Doubt As reported in the Troubled Company Reporter on April 3, 2008, Kirkland Russ Murphy & Tapp, PA, exressed substantial doubt about the Oragenics Inc.'s ability to continue as a going concern after auditing the company's financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's recurring operating losses, negative operating cash flows and accumulated deficit. The company's operating activities used cash of $531,881 for the three months ended March 31, 2008. OVALE GROUP: March 31 Balance Sheet Upside-Down by $5,209,363 ------------------------------------------------------------- Ovale Group Inc.'s consolidated balance sheet at March 31, 2008, showed $3,779,863 in total assets and $8,989,226 in total liabilities, resulting in a $5,209,363 total shareholders' deficit. At March 31, 2008, the company's consolidated balance sheet also showed strained liquidity with $1,498,904 in total current assets available to pay $8,989,226 in total current liabilities. The company reported a net loss of $290,242, on sales of $486,261, for the first quarter ended March 31, 2008, compared with a net loss of $311,492, on sales of $324,925 in the same period last year. The increase in sales can be attributed to the store opened in London in December 2007, and increased sales in Switzerland and France. Full-text copies of the company's consolidated financial statements for the quarter ended March 31, 2008, are available for free at http://researcharchives.com/t/s?2d96 Going Concern Doubt As reported in the Troubled Company Reporter on May 29, 2008, Tabriztchi & Co., CPA, P.C., in Garden City, N.Y. expressed substantial doubt about Ovale Group 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 incurred net losses, had negative cash flows from operations, and needs to raise additional capital. In addition, the company has limited operations, no substantial continuing source of revenues, and working capital and stockholders' deficits. About Ovale Group Based in Hempstead, New York, Ovale Group Inc., formerly Orion Diversified Technologies, Inc. (0VLG.PK) is engaged in the retail sale of luxury gifts and apparel for infants. PROTECTION ONE: Stockholders Okay 2008 Long-Term Incentive Plan --------------------------------------------------------------- The stockholders of Protection One, Inc. approved the Protection One, Inc. 2008 Long-Term Incentive Plan at the 2008 Annual Meeting of Stockholders. The 2008 LTIP was adopted by the company's Board of Directors, subject to stockholder approval. The 2008 LTIP became effective on June 4, 2008 as a result of its approval by the company's stockholders. A total of 1,500,000 shares of the company's common stock have been reserved for issuance pursuant to awards under the 2008 LTIP, subject to its anti-dilution provisions. All awards under the 2008 LTIP are granted at the discretion of the Compensation Committee or the Board. A full-text copy of the 2008 LTIP is available at http://ResearchArchives.com/t/s?2da2 Headquartered in Lawrence, Kan., Protection One Inc. (Nasdaq: PONE) -- http://www.ProtectionOne.com/-- is a vertically integrated national provider of sales, installation, monitoring, and maintenance of electronic security systems to homes and businesses. Network Multifamily, Protection One's wholly owned subsidiary, is the largest security provider to the multifamily housing market. The company also owns the nation's largest provider of wholesale monitoring services, the combined operations of CMS and Criticom International. At March 31, 2008, the company's consolidated balance sheet showed $655.0 million in total assets and $700.2 million in total liabilities, resulting in a $45.2 million total stockholders' deficit. PULTE HOMES: Moody's Sees Challenges Ahead; Lowers Ratings to Ba2 ----------------------------------------------------------------- Moody's Investors Service lowered all of the ratings of Pulte Homes, Inc., including its corporate family rating to Ba2 from Ba1 and the ratings on its various issues of senior unsecured notes to Ba2 from Ba1. At the same time, a speculative grade liquidity rating of SGL-2 was assigned. The outlook remains negative. The downgrades reflect these considerations: 1) Covenant compliance in 2008 and 2009 will be challenging, in large part because of continuing erosion of the company's net worth from ongoing impairments and other charges; 2) The company has been generating small quarterly losses before impairments, and given Moody's expectations for a decline in deliveries and weak pricing in 2008, the company will be hard pressed to turn this performance around; 3) Debt leverage has crept up to levels inconsistent with its former rating, to a lease-adjusted rate of 51.4% at March 31, 2008. While debt levels will be reduced going forward (e.g., as a result of the tender for the notes due 2009), net worth is likely to decrease faster (from impairments), thus keeping debt leverage high for the rating. 3) Pulte's inventory performance, i.e., reduction of actual inventory levels (as opposed to reported inventories), is in the bottom half of industry performance; and 4) The company's lot supply, at 5.9 years on a go-forward basis, is high compared to many of its peers. Pulte's current ratings are supported by its strong cash flow generation, growing cash position and robust liquidity, underpinning its SGL-2 rating assignment; declining net debt leverage (which incorporates cash into the ratio); and modest joint venture exposure. The negative outlook reflects Moody's expectation that many of Pulte's credit metrics will continue eroding as homebuilding industry conditions remain challenging into next year, with any recovery likely to be sluggish at first, thus prolonging underperformance until early in the next decade. Going forward, the outlook could stabilize if the company were to continue with its exceptional cash flow performance; reduce costs sufficiently to restore homebuilding profitability before charges; and make it through subsequent quarters without substantial additional charges to net worth, thereby remaining in compliance with its covenants and restoring a debt leverage ratio consistent with its ratings. The ratings could be lowered again if quarterly losses before impairments begin to widen substantially; impairments were to continue at the same or near-same rate as they have to date, thereby imperiling covenant performance and/or causing debt leverage to rise above Ba levels for more than a brief period; or if the company begins experiencing sharp reductions in its trailing twelve-month cash flow generation. These rating actions were taken: * Corporate family rating lowered to Ba2 from Ba1 * Probability of default rating lowered to Ba2 from Ba1 * Senior unsecured notes lowered to Ba2 (LGD4, 54%) from Ba1 (LGD4, 56%) * SGL-2 rating assigned Founded in 1950 and headquartered in Bloomfield Hills, Michigan, Pulte Homes, Inc. is one of the country's largest homebuilders, with revenues and net income for the trailing twelve months ended March 31, 2008, of $8.7 billion and ($2.9) billion, respectively. RYLAND GROUP: Moody's Sees Continuing Decline & Cuts Rating to Ba2 ----------------------------------------------------------------- Moody's Investors Service lowered the ratings of The Ryland Group, Inc., including its corporate family rating to Ba2 from Ba1 and the rating on its four issues of senior unsecured notes to Ba2 from Ba1. At the same time, a speculative grade liquidity rating of SGL-3 was assigned. The outlook remains negative. The downgrades consider that the company has begun to generate quarterly losses before impairments, and given Moody's expectations for continuing declines in deliveries, revenues, and pricing, it maybe difficult for Ryland to reduce expenses sufficiently to turn this performance around in the near term. In addition, the company faces a challenging covenant compliance environment, reflecting the continuing erosion of its net worth from impairments and other charges, which deplete the relatively narrow cushions in its minimum tangible net worth and debt leverage covenants. Liquidity, while satisfactory for its current working capital requirements, is somewhat limited due to the low availability on its currently undrawn $750 million revolver and modest cash position, which support the SGL-3 rating assignment. At the same time, Ryland's ratings are supported by its consistently positive cash flow generation (six consecutive quarters on a trailing twelve-month basis), reasonably strong inventory performance (in the top quartile of the industry), and minimal off-balance sheet risk. The negative outlook reflects Moody's expectation that Ryland's credit metrics will continue eroding as homebuilding industry conditions remain challenging into next year, with any recovery likely to be sluggish at first, thus prolonging underperformance until early in the next decade. Going forward, the outlook could stabilize if the company were to continue with its strong inventory performance, grow its free cash flow, return to profitability on a pre-impairment basis while continuing to experience declining charges, maintain satisfactory debt leverage, and remain comfortably in compliance with its financial covenants. The ratings could come under pressure if the company began to consistently generate quarterly losses before charges; impairments were to continue at the same or near-same rate as they have to date, thereby imperiling covenant performance and/or causing debt leverage to rise; or Ryland begins experiencing sharp reductions in its trailing twelve-month cash flow generation. These rating actions were taken: * Corporate family rating lowered to Ba2 from Ba1 * Probability of default rating lowered to Ba2 from Ba1 * Senior unsecured notes lowered to Ba2 (LGD4, 58%) from Ba1 (LGD4, 60%) * SGL-3 rating assigned Founded in 1967 and headquartered in Calabasas, CA, The Ryland Group, Inc. is a mid-sized homebuilder with revenues and net income for the trailing twelve month period ended March 31, 2008 of $2.7 billion and ($338 million), respectively. SALANDER-O'REILLY: Auction of Furniture Brings in $1.6 Million -------------------------------------------------------------- Philip Boroff of Bloomberg News reports that an auction of European and American furniture and garden decorations from Salander-O'Reilly Galleries LLC on Saturday brought in $1.6 million. The auction went ahead on June 7 after an objection to the sale by Lawrence Salander's father-in-law Donald S. Dowden was rejected by Judge Cecelia Morris of the U.S. Bankruptcy Court for the Southern District of New York on June 3. According to the report, the auction at Stair Galleries in Hudson, New York, is the biggest to date from the remains of Salander-O'Reilly. Mr. Dowden asked the court to stop the auction saying its estimated prices were too low. Mr. Dowden said he owns a 20 percent interest in the lots for auction. The sale "will unfairly transfer profit to alerted dealers," Mr. Dowden wrote in a May 30 letter, the report said. Buyers will get "inventory for much less than its fair market value." Judge Morris ruled the claim was unfounded speculation as a bigger auction house would attract more competitive bidders. About Salander-O'Reilly Established in 1976, New York-based Salander-O'Reilly Galleries LLC -- http://www.salander.com/-- exhibits and manages fine art from renaissance to contemporary. On Nov. 1, 2007, three creditors filed an involuntary chapter 7 petition against the gallery (Bankr. S.D.N.Y. Case Number 07-13476). The petitioners, Carol F. Cohen of Two Swans Farm, Cavallon Family LP, and Richard Ellenberg, disclosed total claims of more than $5 million. Amos Alter, Esq., at Troutman Sanders LLP and John Koegel, Esq., at The Koegel Group LLP represent the petitioners. On Nov. 9, 2007, the Debtor's case was converted to a chapter 11 proceeding (Bankr. S.D.N.Y. Case No. 07-30005). Alan D. Halperin, Esq., at Halperin Battaglia Raicht, LLP, represents the gallery. Salander-O'Reilly Galleries is owned by Lawrence B. Salander and his wife, Julie D. Salander, of Millbrook, New York. The couple also has membership interests in galleries including non-debtor entities, Renaissance Art Investors and Salander Decorative Arts LLC. The couple filed for chapter 11 protection on Nov. 2, 2007 (Bankr. S.D.N.Y. Case No. 07-36735). The case was converted to chapter 7 liquidation. Douglas E. Spelfogel, Esq. and Richard J. Bernard, Esq. at Baker & Hostetler LLP and Susan P. Persichilli, Esq. at Buchanan Ingersoll PC represent the Debtors in their restructuring efforts. When they filed for bankruptcy, Mr. and Mrs. Salander listed assets and debts between $50 million and $100 million. Prior to bankruptcy, Mr. Salander resigned as Salander-O'Reilly Galleries' manager and turned over the control to Triax Capital Advisors LLC, an independent turnaround firm. SOTHEBY'S: Moody's Rates New Senior Unsecured Notes Ba3 ------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to Sotheby's new senior unsecured notes and affirmed all existing ratings with a stable outlook. The new senior notes are being issued in order to refinance the existing $100 million senior unsecured notes maturing in 2009, to finance a portion of the purchase price of the York Avenue building, and for general corporate purposes. These ratings are assigned: * $150 million senior unsecured notes due 2015 at Ba3 (LGD 5, 84%); * $150 million senior convertible notes due 2013 at Ba3 (LGD 5, 84%). The ratings on the new senior unsecured notes are conditioned upon review of final documentation. These ratings are affirmed: * Corporate family rating at Ba2; * Probability of default rating at Ba2; * Senior unsecured notes due 2009 at Ba3 (LGD 5, 84%). The rating on the $100 million senior unsecured notes due 2009 will be withdrawn upon completion of their redemption. The Ba2 corporate family rating recognizes Sotheby's strong brand name and its recognized expertise in an industry that has high barriers to entry and is dominated by two players against. These strengths are balanced against Moody's expectation that there is a high likelihood that credit metrics may be uneven over the intermediate term given the significant cyclicality of the international auction market. Sotheby's operating performance has been very strong since the middle of 2003 as a result of robust conditions in the auction market. This has led to the industry growing to a historical high of $11.2 billion in aggregate sales for the fiscal year 2007 from $3.4 billion for fiscal year 2003. This has also allowed the company to build up healthy cash balances and to notably improve its credit metrics to solidly investment grade levels. The corporate family rating also reflects the company's good liquidity, which provides it with the flexibility to weather a cyclical downturn in the auction market and the potential for operating performance volatility given the potential for industry cyclicality. The rating continues to be constrained by the very high seasonality of the company's cash flow and the high level of fixed costs that make it difficult for it to adjust to cyclical downturns. The rating on the senior unsecured notes reflects both the overall probability of default of the company, at Ba2, and a loss given default of LGD5. The new senior unsecured notes are rated one rating level below the corporate family rating reflecting their junior position to the $300 million senior secured revolving credit facility and $235 million in secured mortgage financing, as well as their size and scale in the capital structure. Sotheby's, headquartered in New York NY, is one of the two largest auction houses in the world. Total revenues for the fiscal year ended 12/31/2007 were nearly $918 million. SOTHEBY: S&P Lifts Credit Rating to BBB- from BB+; Removes Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on New York City-based Sotheby's to 'BBB-' from 'BB+'. S&P also removed the ratings from CreditWatch with positive implications, where they were placed on March 28, 2008. At the same time, S&P assigned a 'BBB-' issue-level rating to the company's $150 million senior unsecured notes and $150 million senior convertible notes. Proceeds will be used to finance the purchase of the York Avenue Property, prepay the $100 million secured notes due February 2009, and support working capital needs. The outlook is stable. "The upgrade, which returns the rating to investment grade after an approximate seven-year gap," said Standard & Poor's credit analyst David Kuntz, "reflects the continued good performance of Sotheby's due to a strong worldwide auction market and the company's successful implementation of its strategic initiatives." The company's credit protection profile remains above average for the rating, and the repayment of the $100 million secured notes due February 2009 improves the company's liquidity position as it eliminates a near-term maturity. SOURCE INTERLINK: Moody's Junks Proposed $465MM Senior Notes ------------------------------------------------------------ Moody's Investors Service has assigned a Caa2 rating to Source Interlink Companies Inc.'s proposed $465 million senior unsecured notes while downgrading the company's Corporate Family and Probability of Default ratings to B3 from B2 and its Speculative Grade Liquidity rating to SGL-3 from SGL-2. The downgrade of the CFR largely reflects Moody's concern regarding the company's financial performance which has fallen below expectations, combined with weakening asset protection metrics. Details of the rating action are as follows: Ratings assigned: * $465 million senior unsecured facility due 2017 -- Caa2, LGD5, 89% Ratings downgraded: * $300 million senior secured asset based revolving credit facility due 2013 -- to B1, LGD2, 27% from Ba3, LGD2, 27% * $873 million senior secured term loan B due 2014 -- to B2, LGD3, 36% from B1, LGD3, 35% * Corporate Family rating -- to B3 from B2 * Probability of Default rating -- to B3 from B2 * Speculative Grade Liquidity rating -- to SGL-3 from SGL-2 Rating affirmed, subject to withdrawal at closing * $465 million senior subordinated facility due 2017 The rating outlook is stable. The downgrade of the CFR largely incorporates financial performance which has fallen short of the estimates forecast by Moody's at the time that ratings were initiated in April 2007. Accordingly, Moody's now considers it unlikely that Source Interlink will be able to reduce total debt below a 6.5 multiple of EBITDA in the near term. In addition, the ratings downgrade incorporates Moody's view that Source Interlink's enterprise value may now be insufficient to completely cover debtholder claims in a distress scenario and that the company's equity value will likely provide de-minimus cushion to debtholders, especially to senior unsecured creditors. The downgrade of the speculative grade liquidity rating to SGL-3 from SGL-2 largely reflects the overhang that the minority owner of automotive.com may exercise a put to sell its approximately 20% interest in automotive.com to Source Interlink during 2009 at a price estimated at around $30 million as early as the end of December 2008. The potential payment of this put, if exercised, is likely to place considerable strain on Source Interlink's liquid resources. The B3 CFR reflects the heavy debt burden, high leverage (which is expected to remain above 7.0 times adjusted debt to EBITDA in the intermediate term), the integration risk which Source Interlink assumed in connection with its August 2007 acquisition of Source Interlink Media (formerly Primedia Enthusiast Media, Inc.), as well as the thin margins, customer concentration and weak growth prospects of Source Interlink's core product offerings. Ratings are supported by Source Interlink's leading market position in the magazine, CD and DVD distribution and fulfillment market segments, the cost efficiencies which the merged entity can expect through the realization of synergies, and the company's development of a more integrated vertical media platform, following the acquisition. The stable rating outlook continues to incorporate the good reputation of Source Interlink's product range (including the magazine titles recently acquired from PRIMEDIA), its long standing customer relationships and its modestly positive free cash flow generation (assuming the automotive.com put is not exercised in 2009). Source Interlink plans to use the proceeds of the proposed senior unsecured notes issuance to retire and refinance all indebtedness outstanding under its existing senior subordinated bridge loan facility. Source Interlink Companies is one of the largest providers of integrated marketing, merchandising, publishing and fulfillment of media-related products in the US. Headquartered in Bonita Springs Florida, the company reported pro-forma sales of approximately $2.5 billion for the LTM period ended April 30, 2008. STEPHEN SMITH: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Stephen G. Smith Elizabeth H. Smith P.O. Box 281 Old Fields, WV 26845 Bankruptcy Case No.: 08-00889 Chapter 11 Petition Date: June 6, 2008 Court: Northern District of West Virginia (Elkins) Judge: Patrick M. Flatley Debtor's Counsel: Lawrence E. Sherman, Jr. Sherman Law Firm 255 West Main Street Post Office Box 1810 Romney, WV 26757 Tel (304) 822-4740 Fax (304) 822-7922 Email lesherman@leshermanlaw.com Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million The Debtor did not file a list of its largest unsecured creditors. STUART EDWARDS: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Stuart D. Edwards aka Stuart Denzil Edwards 75 Corral De Tierra Rd. Salinas, CA 93908 Bankruptcy Case No.: 08-52920 Chapter 11 Petition Date: June 3, 2008 Court: Northern District of California (San Jose) Judge: Arthur S. Weissbrodt Debtor's Counsel: Charles B. Greene (cbgattyecf@aol.com) Law Offices of Charles B. Greene 84 W Santa Clara St. #770 San Jose, CA 95113 Telephone (408) 279-3518 Estimated Assets: $10,000,001 to $50 million Estimated Debts: $1,000,001 to $10 million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ David Bennett $125,000 P.O. Box 115 Hakalau, HI 96710 Blackthorne Pools & Spas, Inc. $33,308 875 A West Market St. Salinas, CA 93901 Bank of America $23,000 P.O. Box 15716 Wilmington, DE 19886 Mercedes Benz Financial $18,500 Advanced Construction & Design $14,600 GMAC $12,861 Internal Revenue Service $6,477 Patane & Gumberg $6,097 HSBC $5,056 Franchise Tax Board $3,939 PG&E $3,052 $1,700 Pets & Ponds $2,767 Sentry Alarm Systems $2,740 Community Hospital of Monterey $1,654 Fireman's Fund $1,500 CSAA $1,197 Monterey County Health Dept. $1,187 Hawaii Electric Light Co. $800 Washington Mutual $545 SW DALLAS: Voluntary Chapter 11 Case Summary -------------------------------------------- Debtor: SW Dallas L.P. Suite 411, 2911 E. Division St. Arlington, TX 76011 Bankruptcy Case No.: 08-32706 Chapter 11 Petition Date: June 2, 2008 Court: Northern District of Texas (Dallas) Judge: Stacey G. Jernigan Debtor's Counsel: Joyce W. Lindauer 8140 Walnut Hill Lane, Suite 301 Dallas, TX 75231 Tel (972)503-4033 Fax (972)503-4034 Email courts@joycelindauer.com Estimated Assets: $10 million to $50 million Estimated Debts: $1 million to $10 million The Debtor did not file a list of its largest unsecured creditors. TANEJA CENTER: Case Summary & 50 Largest Unsecured Creditors ------------------------------------------------------------ Lead Debtor: Taneja Center, Inc. 11211 Waples Mill Road, Ste. 200 Fairfax, VA 22030 Bankruptcy Case No.: 08-13292 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Elite Entertainment Inc. 08-13286 Financial Mortgage Inc. 08-13287 NRM Investments Inc. 08-13290 Vijay K. Taneja 08-13293 Chapter 11 Petition Date: June 9, 2008 Court: Eastern District of Virginia (Alexandria) Judge: Robert G. Mayer Debtors' Counsel: Bruce W. Henry, Esq. Email: ksp@henrylaw.com Henry & O'Donnell, P.C. 4103 Chain Bridge Rd. Ste. 100 Fairfax, VA 22030 Tel: (703) 273-1900 Fax: (703) 273-6884 Taneja Center, Inc's Financial Condition: Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million A. Taneja Center, Inc's Eight Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ First Tennessee Bank Goose Creek, Beltmont $5,300,000 Attn: Richard R. Spore, II, Rd., Ashburn, VA; Esq. value of security: 100 Peabody Pl., Ste. 900 $5,500,000; value of Memphis, TN 38103-3672 senior lien: $2,762,659 SGA Architects Architect $1,088,622 7508 Wisconsin Ave., 4th Fl. Bethesda, MD 20814 Treasurer of Loudoun County Arcola-Route 50 $139,101 Attn: H. Roger Zurn, Jr. P.O. Box 1000 Leesburg, VA 20177 Khanjee Holdings (US), Inc. Alleged services $30,000 Pan American Fin., Resources, Alleged services $25,000 LLC Urban, Ltd. Engineer $17,824 Reed Smith Legal services $2,925 Culbert & Schmitt, PLLC Legal services Unknown B. Elite Entertainment, Inc's Four Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ SunTrust 2007-S600 Mercedes $111,000 P.O. Box 791144 value of security: Baltimore, MD 21279-1144 $90,000 Bank of America Credit card $54,625 Business Card and VISA P.O. Box 15710 Wilmington, DE 19886-1570 Discover Card Credit card $3,010 P.O. Box 15735 Wilmington, DE 19886-5735 Northern Leasing Systems, Inc. Credit card Unknown equipment lease and equipment returned C. Financial Mortgage, Inc's 17 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ First Tennessee Bank Various notes $5,708,000 Attn: Richard R. Spore, III, Esq. 100 Peabody Place, Ste. 900 Memphis, TN 38103-3672 8012 Quill Street $5,300,000 Bowie, MD; value of security: $349,900 First Deed of Trust $5,300,000 8012 Quill St. Bowie, MD; value of security: $349,900 Franklin Bank & Access Lending Notes; value of $9,000,000 9800 Richmond Ave., Ste. 680 security: $1,000,000 Houston, TX 77042 Wells Fargo Bank Attachment lien $3,367,000 Attn: August J. Matteis, Jr. April 11, 2008; value 1100 New York Ave., N.W. of security: $74,000 Ste. 1100 Washington, DC 20005 Wells Fargo Funding, Inc. Repurchase demands on $3,367,000 2701 Wells Fargo Way mortgages MAC X9902-12 Minneapolis, MN 55467 EMC Payment Processing Property: 11141 $1,024,000 P.O. Box 660753 Willowbrook Dr. Dallas, TX 75266-0755 Potomac, MD 20854 EMC Payment Processing Property: 9605 $1,000,000 P.O. Box 660753 McWhorter Farm Dallas, TX 75366-0754 Court Damascus, MD 20872 Property: 11141 $889,744 Willowbrook Dr. Potomac, MD 20854 EMC Payment Processing Property: 13720 $752,828 P.O. Box 660753 Highland Road Dallas, TX 75266-0772 Clarksville, MD 21029 American Home Mortage Property: 9036 $3,540,799 Servicing, Inc. Bronson Dr. P.O. Box 660029 Potomac, MD 20854 Dallas, TX 75266-0029 Ali Gharai Property: 8146 $1,985,891 8146 Dominion Dr. Dominion Dr. McLean, VA 22102 McLean, VA 22102 EMC Payment Processing Property: 8146 $1,985,891 P.O. Box 660753 Dominion Dr. Dallas, TX 75266-0767 McLean, VA 22102] EMC Mortgage Corp. Repurchases $1,447,252 Attn: Bobbi Bingham 2780 Lake Vista Dr. Lewisville, TX 75067 Ali Rassoulpour Property: 11141 $1,024,000 11141 Willowbrook Dr. Willowbrook Dr. Potomac, MD 20854 Potomac, MD 20854 Satish Sood Property: 9605 $1,000,000 9065 McWhorter Farm Ct. McWhorter Farm Ct. Damascus, TX 20872-0005 Damascus, MD 20872 Nayrreh Rassoul Property: 11141 $889,744 11141 Willowbrook Dr. Willowbrook Dr. Potomac, MD 20854 Potomac, MD 20854 Neeraj Verma Property: 13720 $752,828 13720 Highland Rd. Highland Road Sterling, VA 20129 Clarksville, MD 21029 GMAC Mortgage Property: 20311 $616,736 P.O. Box 9001719 Rosemeadow Court Louisville, KY 40290-1719 Gaithersburg, MD 20882 Satish Sood Property: 20311 $616,736 9085 McWhorter Farm Ct. Rosemeadow Ct. Damascus, MD 20872 Gaithersburg, MD 20882 D. NRM Investments, Inc's Nine Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Virginia Commerce Bank Loan Guaranty $3,109,000 5350 Lee Highway 9034 Bronson Rd. Arlington, VA 22207 Guaranty of Holly $2,510,000 Ave. loans Construction loan $774,820 guaranty Construction loan $742,000 guaranty 4620 Holly Ave. Two lots-Stone $378,000 Road - Guaranty Guaranty of letter $361,000 Overdraft on $29,258 operating account GHA Contractor General contractor $275,000 8146 Old Dominion Dr. Mc Lean, VA 22102 American Express Credit card $90,347 P.O. Box 1270 Newark, NJ 07101-1270 Ferguson Enterprises Jobs under $41,300 construction Bank of America & Platinum Credit card $14,819 Visa Business Card CitiBank Credit card $7,038 CitiBusiness Credit card $6,669 Fagelson, Schonberger, Payne Legal services $3,357 & Deichmeister, PC City Of Fairfax Site cleanup $769 Judicial Drive E. Vijay K. Taneja's 13 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ First Tennessee Bank Various notes $5,708,000 Attn: Richard R. Spore, II, 100 Peabody Place, Ste. 900 Memphis, TN 38103-3672 9034 Bronson Road $5,300,000 Potomac, MD; value of security: $7,200,000; value of senior lien: $3,109,000 Rental 12515 $5,300,000 Chronicle Dr., Fairfax, VA; value of security: $1,500,000; value of senior lien: $919,544 Rental: $5,300,000 1005 N. VA Dare Trail Kill Devil Hills, NC; value of security: $3,200,000; value of senior lien: $2,355,002 Rental: $5,300,000 9036 Bronson Rd., Potomac, MD 20854; value of security: $5,000,000; value of senior lien: $3,541,000 Virginia Commerce Bank Guarantys for: $9,285,000 5350 Lee Highway $1,300,000-10611 Arlington, VA 22207 Judicial Dr.; $407,000-4633 Holly Ave.; $378,000-Stone Road; $7,200,000- Route 50 EMC Payment Processing Property: 8146 $1,985,891 P.O. Box 660753 Dominion Dr. Dallas, TX 75266-0767 McLean, VA 22102 Property: 11141 $1,024,000 Willowbrook Dr. Potomac, MD 20854 Property: 9605 $1,000,000 McWhorter Farm Court Damascus, MD 20872 Property: 11141 $889,744 Willowbrook Dr. Potomac, MD 20854 Mutual Bank, IL Guaranty: $2,625,000 16540 S. Halsted St. GooseCreek, Belmont Harvey, IL 60426 Road, Ashburn, VA American Home Mortage Property: 9036 $3,540,799 Servicing, Inc. Bronson Dr. P.O. Box 660029 P.O. Box 660029 Dallas, TX 75266-0029 Potomac, MD 20854 Homecoming Financial Residence: $2,949,000 P.O. Box 205 5335 Summit Dr. Waterloo, IA 50704-0205 Fairfax, VA 22030 Midland Mortgage Residence: $2,947,000 P.O. Box 26648 5335 Summit Dr. Oklahoma City, OK 73126-0648 Fairfax, VA 22030 Chevy Chase Federal Savings Residence: $2,927,000 6151 Chevy Chase Dr. 5335 Summit Dr. Laurel, MD 20707-2918 Fairfax, VA 22030 EMC Mortgage Residence: $2,898,000 P.O. Box 660753 5335 Summit Dr. Dallas, TX 75266-0753 Fairfax, VA 22030 Wells Fargo Home Residence: $2,824,000 Mortgage 5335 Summit Dr. P.O. Box 11701 Fairfax, VA 22030 Newark, NJ 07101-4701 Ali Gharai Property: 8146 $1,985,891 8146 Dominion Dr. Dominion Dr. McLean, VA 22102 McLean, VA 22102 Ali Rassoulpour Property: 11141 $1,024,000 11141 Willowbrook Dr. Willowbrook Dr. Potomac, MD 20854 Potomac, MD 20854 Satish Sood Property: 9605 $1,000,000 9065 McWhorter Farm Ct. McWhorter Farm Damascus, TX 20872-0005 Court Damascus, MD 20872 TARGA RESOURCES: Mulls Offering of $250MM Senior Unsecured Notes ---------------------------------------------------------------- Targa Resources Partners LP and its subsidiary Targa Resources Partners Finance Corporation intend to sell $250 million in aggregate principal amount of senior unsecured notes due 2016. The Partnership intends to use the net proceeds from the offering to repay borrowings under its senior secured credit facility. Headquartered in Houston, Texas, Targa Resources Partners LP (NASDAQ:NGLS) -- http://www.targaresources.com/-- was formed by Targa Resources Inc. to engage in the business of gathering, compressing, treating, processing and selling natural gas and fractionating and selling natural gas liquids and natural gas liquids products. The Partnership operates in the Fort Worth Basin in north Texas. A subsidiary of Targa Resources Inc. is the general partner of the Partnership. Targa Resources Partners owns a network of integrated gathering pipelines, two natural gas processing plants and a fractionator. TARGA RESOURCES: Moody's Rates Proposed $250MM Sr. Notes B2 ----------------------------------------------------------- Moody's Investors Service assigned first-time ratings to Targa Resources Partners LP (NGLS) including a Ba3 Corporate Family Rating (CFR), a Ba3 Probability of Default rating, and a B2 rating (LGD-5, 87%) to its proposed $250 million of senior unsecured notes due 2016. Moody's also assigned a Speculative Grade Liquidity (SGL) rating of SGL-3 to NGLS. The rating outlook is stable. NGLS' Ba3 CFR reflects its growing scale of operations, modest financial leverage, expectations of a more balanced financial policy than its parent and general partner, Targa Resources, Inc. (TRI, B1 CFR), and the benefits associated with being a primarily drop-down entity including greater visibility for future growth and a generally lower level of growth capital expenditures. With total assets of approximately $1.5 billion and LTM EBITDA of approximately $199 million as of March 31, 2008, NGLS is currently similar in terms of size and scale to its Ba3/B1-rated peers, including Atlas Pipeline Partners, Copano Energy, MarkWest Energy Partners, and Regency Energy Partners. NGLS' leverage currently is lower than most its peers with debt/LTM EBITDA of approximately 3x as of March 31, 2008. Depending on potential transactions including foreseeable drop-downs from TRI or acquisitions of assets from third parties, Moody's expects that NGLS' leverage will be maintained at less than 4x. NGLS' natural gas gathering and processing operations are located in three geographic regions: the North Texas System in the Fort Forth Basin, the San Angelo Operating Unit (SAOU) System in the Permian Basin, and the Louisiana Operating Unit (LOU) System in Southwest Louisiana. Its assets are in modestly active areas and volumes have been roughly flat across the different systems. NGLS' contract profile is approximately 79% percent-of-proceeds (POP), 19% wellhead purchase/keep-whole, and 2% fee-based and other. NGLS has commodity hedges that protect margins under its POP contracts for up to 80% of near-term equity volumes. For the wellhead purchase/keep-whole exposure (nearly all of which is in the LOU System), NGLS has flexibility to avoid negative frac spreads including the ability to bypass processing and deliver rich gas to the Lake Charles industrial market. NGLS is controlled by TRI, which is rated one notch lower primarily due to higher leverage. Factors that Moody's considered in assigned a higher rating to NGLS included: (i) a strategy to use NGLS as a monetization and growth vehicle and therefore a motivation to maintain a higher degree of financial flexibility at NGLS; (ii) TRI has its own assets/operations and is not dependent on distributions from NGLS to service its debt; (iii) the high public ownership (73.5%) of NGLS' outstanding units; (iv) a separate board of directors at NGLS; and (v) no common ownership of assets with TRI. That said, there is linkage between the two credits and higher leverage at TRI (caused by, for instance, not sufficiently reducing debt in connection with drop-downs to NGLS, undertaking separate growth projects or acquisitions with debt, and/or paying distributions to shareholders) could have negative rating implications for both entities. Specifically, Moody's will look for TRI to maintain consolidated (including Holdco loan) debt/EBITDA of less than 5x. Targa Resources Partners LP is headquartered in Houston, Texas. TARGA RESOURCES: S&P Rates $250 Million Note Issuance 'B' --------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to midstream energy company Targa Resources Partners L.P. and its 'B' issue credit rating to TRP's $250 million senior unsecured notes due 2016. At the same time, S&P assigned a '6' recovery rating to this debt. The '6' recovery rating indicates that lenders can expect negligible (0% to 10%) recovery in the event of a payment default. The offering proceeds will refinance debt on TRP's revolving credit facility. The outlook is stable. Master limited partnership TRP engages in natural gas gathering and processing in the Fort Worth Basin, Permian Basin, and onshore Louisiana Gulf Coast. The company had adjusted debt of about $579 million as of March 31, 2008. The rating on TRP reflects a weak business risk profile and aggressive financial profile. TRP's business profile reflects its limited customer diversity, with about 60% of revenue coming from affiliates of its lower-rated general partner Targa Resources Inc. (TRI; B/Stable/--). Furthermore, cash flow volatility from exposure to unhedged commodity prices, a relatively undiversified business mix, and the MLP structure that requires the distribution of virtually all distributable cash flow pressure ratings. The company's geographic diversity, asset quality, conservative hedging policy, high distribution coverage, and favorable commodity price environment partially mitigate these risks. The outlook on TRP is stable. Upward movement in the rating is limited in the near term. An increase in cash flow metrics leading to sustained FFO to debt in the high 20% range, continued strong distribution coverage, and financial discipline with acquisitions and growth plans could result in a positive outlook or a higher rating. "We could change the outlook to negative or lower the ratings if significantly lower commodity prices result in FFO-to-debt metrics below 20% for sustained periods, if debt-to-EBITDA exceeds 4.5x for several quarters, if distribution coverage is consistently below at least 1.3x, or more aggressive financial policies of its parent and general partner exerts pressure on the business and financial profiles," said Standard & Poor's credit analyst Michael Grande. TARGA RESOURCES: S&P Holds B Rating on Unit's $250MM Note Issuance ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on midstream energy company Targa Resources Inc., following the announcement by Targa Resources Partners L.P. that it will issue $250 million of senior unsecured notes due 2016. At the same time, S&P affirmed its 'B+' rating and '2' recovery rating on TRI's $1.25 billion senior secured term loan, $300 million synthetic letter of credit facility, and $250 million revolving credit facility. S&P also affirmed the 'CCC+' rating and '6' recovery rating on TRI's $250 million senior unsecured notes. The '2' recovery rating on the senior secured term loan indicates that lenders can expect substantial (70% to 90%) recovery if a payment default occurs. The '6' recovery rating indicates that lenders can expect negligible (0% to 10%) recovery in the event of a payment default. The offering proceeds of the TRP debt issuance will refinance debt on TRP's revolving credit facility. The outlook is stable. TRI engages in natural gas gathering and processing, and natural gas liquids logistics and marketing. Operations are primarily concentrated in the Permian Basin in Texas, and on Louisiana's Gulf Coast. TRI is the parent company to the general partner of TRP, a natural gas gathering and processing master limited partnership that operates in the Fort Worth Basin, Permian Basin, and onshore Louisiana Gulf Coast. Consolidated debt was about $1.4 billion as of March 31, 2008. The rating on TRI reflects a vulnerable business risk profile and aggressive financial profile. TRI's business profile reflects financial policies of majority owner Warburg Pincus LLC that have resulted in high leverage and debt-financed dividends. "The business profile also acknowledges potential cash flow volatility from exposure to unhedged commodity prices, and TRI's participation in the highly competitive midstream industry," said Standard & Poor's credit analyst Michael Grande. The company's conservative hedging policy, favorable commodity price environment, and asset diversity partially mitigates these risks. The outlook on TRI is stable. Strong commodity conditions support near-term ratings. Debt reduction that is greater than expected and leads to improved credit metrics (specifically FFO to debt of about 18% to 20%), coupled with a consistent demonstration of commitment to credit quality from the TRI's owners, could result in a positive outlook or a higher rating. S&P could change the outlook to negative or lower the rating if there are significantly lower commodity prices that result in lower cash flow expectations, consolidated debt-to-EBITDA above 5x for more than 15 months, or further aggressive financial policies exert pressure on the business and financial profiles. TELKONET INC: Posts $5,121,031 Net Loss in 2008 First Quarter ------------------------------------------------------------- Telkonet Inc. reported a net loss of $5,121,031, on total revenue of $4,959,021, in the first quarter ended March 31, 2008, compared with a net loss of $5,401,476, on total revenue of $1,246,269, in the same period last year. At March 31, 2008, the company's consolidated balance sheet showed $36,133,160 in total assets, $13,049,437 in total liabilities, $3,855,877 in minority interest, and $19,227,846 in total stockholders' equity. The company's consolidated balance sheet at March 31, 2008, also showed strained liquidity with $4,715,470 in total current assets available to pay $8,960,987 in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended March 31, 2008, are available for free at http://researcharchives.com/t/s?2da3 Going Concern Doubt As reported in the Troubled Company Reporter on April 22, 2008, RBSM LLP, in McLean, Va., expressed substantial doubt about Telkonet 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 significant operating losses in the current year and also in the past. The company believes that anticipated revenues from operations will be insufficient to satisfy its ongoing capital requirements for at least the next 12 months. About Telkonet Based in Germantown, Md., Telkonet Inc. (AMEX: TKO) -- http://www.telkonet.com/-- provides centrally managed solutions for integrated energy management, networking, building automation, and proactive support services in the United States and Canada. THEATER XTREME: March 31 Balance Sheet Upside-Down by $4,131,946 ---------------------------------------------------------------- Theater Xtreme Entertainment Group Inc.'s balance sheet at March 31, 2008, showed $2,524,609 in total assets and $6,656,555 in total liabilities, resulting in a $4,131,946 total stockholders' deficit. At March 31, 2008, the company's balance sheet also showed strained liquidity with $1,584,992 in total current assets available to pay $3,877,753 in total current liabilities. The company reported a net loss of $957,255, on revenues of $825,187 for the third quarter ended March 31, 2008, compared with a net loss of $828,700, on revenues of $1,821,275, in the same period ended March 31, 2007. For the three months ended March 31, 2008, retail sales decreased by $671,002, or 48%, when compared to the three months ended March 31, 2007. For the three months ended March 31, 2008, the company recognized wholesale sales, principally sales to franchisees, of $21,015 compared to $341,723 for the three months ended March 31, 2007, reflecting a decrease of $320,708 or 94%. For the three months ended March 31, 2008, the company recognized franchise royalties of $67,443 compared to $46,821 in royalties recognized for the three months ended March 31, 2007. Full-text copies of the company's financial statements are available for free at: http://researcharchives.com/t/s?2d94 Going Concern Doubt As reported in Troubled Company Reporter on Oct. 19, 2007, Morison Cogen LLP, in Bala Cynwyd, Pa., expressed substantial doubt about Theater Xtreme Entertainment Group Inc.'s ability to continue as a going concern after auditing the company's financial statements for the fiscal year ended June 30, 2007. The auditing firm reported that the company incurred significant losses from operations, has negative working capital and an accumulated deficit. The company expects to incur significant expenditures to further the development and commercialization of its products. To achieve this, the company has requested and received deferral of interest payments due to its principal debtor (Kinzer Technology LLC) through July 1, 2008, and the deferral of principal payments due to its non-convertible debenture holders through June 30, 2008. The company is also currently negotiating with both its principal lender and its short term debenture and promissory note creditors for modification of the terms of all of its debt instruments and is diligently pursuing the raising of additional funds. About Theater Xtreme Headquartered in Newark, Delaware, Theater Xtreme Entertainment Group Inc. (TXEG.OB) -- http://www.theaterxtreme.com/-- is a specialty retailer of real movie theaters for the home. The company's 80" to 120" front projection systems deliver an authentic movie theater experience, as an increasingly popular alternative to flat panel televisions. It operates 3 company owned stores and 11 franchises in 12 states. TOUSA INC: Allowed to Settle JPMorgan Facility Default ------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of Florida allowed certain Debtors in the bankruptcy case of TOUSA Inc. and its debtor-affiliates to settle an event of default in a credit facility used to fund the Engle/Sunbelt Holdings, LLC operations. In December 2004, TOUSA Homes, Inc., and Suntous Investors, LLC, entered a joint venture agreement to form Engle/Sunbelt Holdings, LLC. Sunbelt was formed to develop homesites and deliver homes in the Phoenix, Arizona market, according to Paul Steven Singerman, Esq., at Berger Singerman, P.A., in Miami, Florida. The Debtors were appointed as day-to-day manager of Sunbelt and received management fees for its service. Sunbelt Existing Credit Facilities TOUSA Homes and Suntous made capital contributions to finance Sunbelt's business operations, but additional funding was required. Thus, Sunbelt entered into a (i) credit agreement dated December 16, 2004, with JPMorgan Chase Bank, N.A., as agent, and J.P. Morgan Securities, Inc., as lead arranger and sole book runner, for a $150,000,000 term loan; and (ii) a loan agreement dated December 17, 2008, with CapitalSource Finance, LLC, for a $30,000,000 revolving mezzanine financing loan. In July 2005, Sunbelt received an additional capital contribution from TOUSA, Inc. The parties' second amendment of the JPM Credit Facility modified the aggregate commitment of the lenders to $200,000,000, and extended the maturity date to March 17, 2008. As of May 7, 2008, the outstanding obligations under the Existing Facility total approximately $90,500,000, according to Mr. Singerman. Although the Existing Facility is non-recourse to the Debtors, (i) TOUSA agreed to complete any property development commitments in the event Sunbelt defaults under the JPM Credit Agreement, and (ii) TOUSA and Suntous agreed to indemnify the Existing Lenders for potential losses resulting from fraud, misappropriation and similar acts by Sunbelt. TOUSA's Chapter 11 filing, however, resulted in an immediate and unambiguous event of default under the Existing Facility. Moreover, a potential investor to the sale of the Joint Venture's equity interests withdrew citing a further deterioration in the Phoenix real estate market. On March 17, 2008, the JPM Credit Facility matured and Sunbelt was unable to repay all outstanding amounts. JPMorgan thus served a notice of the default and demanded payment of all outstanding obligations. Faced with the events of default under the JPM Credit Agreement and the inability to provide adequate funding for the Joint Venture, the Debtors focused their efforts on minimizing claims that could be asserted in connection with their Chapter 11 cases and any foreclosure action instituted by JPMorgan, Mr. Singerman relates. In an effort to minimize Joint Venture-related claims against the Joint Venture Partners, Sunbelt, TOUSA, TOUSA Homes, Suntous and JPMorgan engaged in settlement discussions to develop an agreed process for addressing the defaults and JPMorgan's remedial rights under the JPM Credit Agreement. Having explored and exhausted all other potential options, and in light of the obligations under the Construction Agreement and Indemnity Agreement, the Debtors and Suntous determined that it would be advantageous to permit JPMorgan to exercise remedies against the Joint Venture assets on an uncontested basis, if appropriate terms and accommodations could be reached, Mr. Singerman tells the Court. Settlement Agreement After lengthy arm's-length negotiations concerning the Joint Venture and their rights and obligations, the Parties entered into a settlement agreement. The salient terms of the Settlement Agreement are: (a) JPMorgan will file an action in Maricopa County Superior Court, requesting the appointment of Morrie C. Aaron of MCA Financial Group, Ltd. as receiver with respect to all the Collateral. JPMorgan has already taken this action and on April 25, 2008, the Superior Court appointed the Receiver. (b) JPMorgan has commenced, or intends to commence, a non- judicial foreclosure of the Collateral, including a trustee's sale and UCC sale with respect to personal property constituting part of the Collateral. The Loan Parties agree not to institute any court action, arbitration or similar action that would challenge or delay the trustee's and UCC sales or the exercise of other rights or remedies under the Loan Documents. The Loan Parties include Debtors TOUSA Inc., TOUSA Homes, Engle Homes Residential Construction, LLC, and TOUSA Associates Services Company; Engle/Sunbelt, LLC; Sunbelt; Suntous; and Sunbelt Holdings Operating Limited Partnership. (c) The Loan Parties will provide the Lenders with a deed in lieu of foreclosure, which will fully terminate, transfer and release all right, title and interest of each Loan Party in and to all Collateral. (d) Absent the consent of Suntous or TOUSA Homes, as applicable, JPMorgan and Lenders will not solicit for employment any Arizona-based employee of Suntous and its affiliates, and TOUSA Homes and its affiliates before the later of (i) the final foreclosure date or the completion of a Deed in Lieu and (ii) the date six months after the Settlement Agreement. By entering into the Settlement Agreement and in exchange for agreeing to cooperate with JPMorgan by, among other things, (i) consenting to the appointment of a receiver and the granting of a deed in lieu of foreclosure and (ii) providing certain services to the Receiver in exchange for full payment, TOUSA Inc. and TOUSA Homes will free themselves of potentially significant indemnification and completion obligations that may otherwise diminish recoveries for creditors in the Debtors' Chapter 11 cases, Mr. Singerman asserted. 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. The Official Committee of Unsecured Creditors hired Patricia A. Redmond, Esq., and the law firm Stearns Weaver Weissler Alhadeff & Sitterson, P.A., as its local counsel. The Debtors' financial condition as of April 30, 2008, showed total assets of $1,826,724,633 and total debts of $2,265,568,841. The Debtors can exclusively file their chapter 11 plan until Oct. 25, 2008. (Sharper Image Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). TOUSA INC: Court Approves Jasmine Ranch Settlement -------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Florida allowed TOUSA Homes, Inc., to enter into a settlement agreement with Jasmine Valley, LLC, Bramble Development Group, Inc., and the Jasmine Homeowners' Association. Judge John K. Olson modifies the automatic stay for the sole purpose of allowing the Settlement Agreement to be considered and approved in the action filed by the Jasmine Homeowners' Association in the Eighth Judicial District Court, in Clark County, Nevada, Case No. A523205 captioned "Jasmine Homeowners Association v. Jasmine Valley, L.L.C., et al." and allowing an amended complaint to be filed in that action consistent with the terms of the Settlement Agreement. Jasmine Ranch Project Jasmine Valley originally commenced the Jasmine Ranch Condominiums project in Las Vegas, Nevada. The Project consists of 296 condominium units and certain related common elements, covenants and other related rights. Jasmine Valley hired Bramble Development to act as the Project's general contractor, Paul Steven Singerman, Esq., at Berger Singerman, P.A., in Miami, Florida, relates. As part of its obligations, Bramble Development obtained a project-specific Owner Controlled Insurance Program policy issued by Clarendon America Insurance Company with a completed operations limit of $3,000,000. Nearly all of Bramble Development's subcontractors were enrolled in the OCIP Policy, according to Mr. Singerman. Jasmine Valley sold the Project when it was partially completed to TOUSA Homes. At the time of the sale, Jasmine Valley sold and delivered 33 Project units to customers. After the sale, TOUSA Homes contracted with Bramble Development to complete the construction of an additional 63 units and sold those units to customers as well, Mr. Singerman informs the Court. Thus, Bramble Development constructed a total of 96 units. In addition to the Released Units, Bramble Development also constructed various appurtenances, common elements and limited common elements for the Project, including a clubhouse, pool and portions of the streets, sidewalks, curbs and gutters, landscaping, site walls and fencing -- Released Common Property. After completion of the Released Property, TOUSA Homes went on to construct an additional 200 units at the Project, along with certain appurtenances, common elements and limited common elements -- TOUSA Homes Property. The TOUSA Homes Property is not addressed in the Settlement Agreement, Mr. Singerman says. As part of the purchase agreement for the Project between Jasmine Valley and TOUSA Homes, all relevant parties agreed that TOUSA Homes would be added as an additional name insured on the OCIP Property. According to Mr. Singerman, TOUSA Homes maintained separate wrap insurance beyond the OCIP Policy for the TOUSA Homes Property and the Released Property. Jasmine Complaint On June 12, 2006, the Jasmine HOA and "Doe Homeowners 1 through 100" filed a complaint in the Eighth Judicial District Court, Clark County, Nevada, Case No. A523205, captioned Jasmine Homeowners Association v. Jasmine Valley, L.L.C., at al. The Complaint names both Bramble Development and TOUSA Homes as defendants and seeks damages for alleged construction defects related to the Project, Mr. Singerman relates. Before the Petition Date, the parties to the Complaint stipulated to stay the action to allow them time to conduct an investigation of the project with neutral experts, he says. On December 3, 2007, after conclusion of the investigation, the Jasmine HOA issued an N.R.S. Section 40.645 Notice of Constructional Defects to Bramble Development and TOUSA Homes for construction defects at the Project. The Jasmine HOA Action was stayed by operation of Section 362 of the Bankruptcy Code. Proposed Settlement After engaging in extensive negotiations and following the investigatory period, the parties to the Jasmine HOA Action have reached a settlement of the claims in the Complaint and Chapter 40 Notices, with respect solely to the Released Property. The salient terms of the Settlement Agreement are: (a) Clarendon will pay to Jasmine HOA $2,437,432 in full and complete settlement of all clams against TOUSA Homes, Bramble Development and other third parties, with respect to the Released Property; (b) Upon receipt of the Settlement Amount, Jasmine HOA will dismiss the Complaint with prejudice as to Bramble Development. An amended complaint will be filed against TOUSA Homes, clarifying the scope of the remaining claims and explicitly limiting its claims to the TOUSA Homes Property. Litigation would continue to be subject to the automatic stay in the Chapter 11 cases of TOUSA Inc. and its debtor-affiliates; (c) In further consideration for the Settlement, TOUSA Homes, Bramble Development and Jasmine HOA will fully and finally release one another from any liability arising out of or connected with the Complaint as to the Released Property; and (d) TOUSA Homes and Bramble Development are indemnified against any and all claims or liability arising out of, or in connection with, any subrogation action involving the Released Property by any insurer of Jasmine HOA that relates to any claims the association made before the execution of the Settlement Agreement. 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. The Official Committee of Unsecured Creditors hired Patricia A. Redmond, Esq., and the law firm Stearns Weaver Weissler Alhadeff & Sitterson, P.A., as its local counsel. The Debtors' financial condition as of April 30, 2008, showed total assets of $1,826,724,633 and total debts of $2,265,568,841. The Debtors can exclusively file their chapter 11 plan until Oct. 25, 2008. (Sharper Image Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). TRANSDERM LABS: June 30 Balance Sheet Upside-Down by $37,844,000 ---------------------------------------------------------------- Transderm Laboratories Corp.'s consolidated balance sheet at June 30, 2007, showed $3,664,000 in total assets and $41,508,000 in total liabilities, resulting in a $37,844,000 total stockholders' deficit. At June 30, 2007, the company's consolidated balance sheet also showed strained liquidity with $2,187,000 in total current assets available to pay $29,497,000 in total current liabilities. The company reported a net loss of $1,321,000 on total revenues of $1,164,000, for the second quarter ended June 30, 2007, compared with a net loss of $435,000, on total revenues of $1,387,000 in the same period ended June 30, 2006. The increase in net loss was attributable primarily to a decline in product sales and to additional selling, general and administrative expenses. Key License/Settlement Agreement As of June 30, 2007, the company�s sole product and continuing source of revenues were transdermal nitroglycerin patches used for transdermal relief of the vascular and cardiovascular symptoms related to angina pectoris which it has manufactured and sold pursuant to the terms of a license agreement between Key Pharmaceuticals Inc. and Hercon entered into in March 2000. On April 26, 2007, Key terminated the Key License for failure to pay royalties and sued the company for accrued royalties owed. In May 2007, the company and Key entered into a Final Judgment On Consent which, among other things, granted the company a limited right to manufacture and sell the Hercon Products through August 16, 2007, and outlined a financial settlement between Key and Hercon as to royalties owed under the License Agreement and that contemplated that the company would discontinue manufacturing and selling the Hercon Products after August 16, 2007. Over the ensuing months, Key periodically extended the time during which the company could manufacture and sell the Hercon Products under the Key License. On April 21, 2008, the company and Key entered into a Settlement Agreement that entitles the company to manufacture and sell transdermal products under the Key License indefinitely, subject to the company's continued satisfaction of the terms of such agreement, which consists principally of the payment of an aggregate of $425,000 in seven equal installments of $60,714.29, the first of which is due and owing on or before July 21, 2008, and the remaining installments to be due and owing on or before Oct. 21, 2008, Jan. 21, 2009, April 21, 2009, July 21, 2009, Oct. 21, 2009, and Dec. 21, 2009. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2007, are available for free at http://researcharchives.com/t/s?2d98 Going Concern Doubt/Possible Bankruptcy Filing As reported in the Troubled Company Reporter on April 24, 2007, Demetrius & Company LLC, in Wayne, N.J., expressed substantial doubt about Transderm Laboratories Corporation's ability to continue as a going concern after auditing the company's financial statements for the year ended Dec. 31, 2006. The auditing firm pointed to the company's having defaulted on payments to its bondholders and licensors, and working capital deficiencies. At June 30, 2007, the company had aggregate debts and liabilities of $41,508,000 and had a working capital deficiency of $27,310,000. These debts and liabilities include $7,072,000 of royalties due under the Key Pharmaceuticals Inc. License and $31,473,000 to Health-Chem. The company has sustained operating losses in each of the last three years. In addition, at June 30, 2007, Health-Chem owes $11,779,000 under outstanding debentures which became due in 1999 and under which it currently is in default, which exerts pressure on the financial condition of the Group as a whole. The company's financial condition has prevented it from securing financing or obtaining loans from which it could repay all or a portion of its liabilities. If the company does not abide by the terms of the Settlement Agreement, including its obligations to make quarterly cash payments going forward, the company could lose its right to manufacture and sell transdermal products under the Key License, and will have no other source of revenue. In light of the uncertainty relating to the company's ability to continue operating without the benefit of a license to utilize Key's technology in its transdermal patch products, Transderm or Hercon may have to seek protection under federal bankruptcy laws in which case it would not be able to continue as a going concern. About Transderm Laboratories Headquartered in Emigsville, Pa., Transderm Laboratories Corporation (Other OTC: TLCC.PK) engages in the development, manufacture and marketing of transdermal drug delivery systems. Transderm operates principally through its 98.5% owned subsidiary, Hercon Laboratories Corporation. Transderm is 90% owned by Health-Chem Corporation. TROPICANA ENT: Court Approves Lazard Freres as Investment Banker ---------------------------------------------------------------- Judge Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware authorized Tropicana Entertainment LLC and its debtor- affiliates to employ Lazard Freres & Co. LLC, as their investment banker, nunc pro tunc to May 5, 2008. Lazard is expected to: a. review and analyze the Debtors' business, operations, and financial projections; b. evaluate the Debtors' potential debt capacity light of its projected cash flows; c. assist in determining a capital structure for the Debtors; d. assist in determining a range of estimated values for the Debtors on a going concern basis; e. advise the Debtors on tactics and strategies for negotiating with the stakeholders; f. render financial advice to the Debtors and participate in meetings or negotiations with the Stakeholders, rating agencies or other appropriate parties in connection with any Restructuring; g. advise the Debtors on the timing, nature, and terms of new securities, other consideration or other inducements to be offered pursuant to the Restructuring; h. advise and assist the Debtors in evaluating potential financing transactions by the Debtors, and, subject to Lazard's agreement so to act, and, if requested by Lazard, to execution of appropriate agreements, on behalf of the Debtors, contacting potential sources of capital as the Debtors may designate and assist the Debtors in implementing the Financing; i. assist the Debtors in preparing documentation within Lazard's area of expertise that is required in connection with the Restructuring; j. subject to the mutual agreement of the Debtors and Lazard, assist the Debtors in identifying and evaluating candidates for a potential sale transaction, advise the Debtors in connection with negotiations and aid in the consummation of a Sale Transaction; k. attend meetings of the Debtors' Board of Directors and its committees with respect to matters on which Lazard has been engaged to advise the Debtors; and l. provide testimony, as necessary, with respect to matters on which Lazard has been engaged to advise the Debtors in any proceeding before any bankruptcy court. In addition, Lazard will provide any additional investment banking and financial advisory services in connection with the engagement as the Debtors may reasonably request from time to time. Judge Carey also approved the engagement letter, dated Feb. 7, 2008, between the Debtors and Lazard, as modified. The Modified Engagement Letter provides that Lazard is entitled to these fees: (a) A monthly fee of $150,000 payable on the first day of each month until the earlier of the effective date of any plan of reorganization or liquidation confirmed in the Debtors' Chapter 11 cases or the termination of Lazard's engagement. About 50% of all Monthly Fees paid with respect to any month after six months from the Petition Date will be credited against any other fees payable under the terms of the Engagement Letter. (b) A completion fee payable upon the effective date of a confirmed plan in the Debtors' Chapter 11 cases, equal to 1% of the aggregate face value of the Existing Institutional Obligations involved in any restructuring. The Completion Fee will not exceed $12,000,000. Existing Institutional Obligations will mean the debt obligations under two credit agreements and the 9.625% Senior Subordinated Notes due 2014 of Tropicana Entertainment, LLC, and Tropicana Finance, LLC, and certain guarantors. (c) A fee payable upon closing of a Financing, equal to these amounts: Type of Fund Raised Fee ------------------- --- Senior Secured Debt 1.00% Senior Unsecured Debt 1.75% Subordinated Debt 2.25% Convertible Debt 2.50% Preferred Stock 3.75% Common Stock 4.25% About 50% of any Financing Fee payable to Lazard will be credited against any Completion or Sale Transaction Fee payable to the firm under the Engagement Letter. A full-text copy of the Lazard Retention Order is available for free at http://bankrupt.com/misc/Tropicana_OrderLazardApp.pdf About Tropicana Entertainment Based in Crestview Hills, Kentucky, 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. Tropicana Entertainment LLC filed for Chapter 11 protection on May 5, 2008, (Bankr. D. Del. Case No. 08-10856) Its debtor- affiliates filed for separate Chapter 11 petitions but with no case numbers assigned yet. Kirkland & Ellis LLP represents the Debtors in their restructuring efforts. Their financial advisor is Lazard Ltd. Their notice, claims, and balloting agent is Kurtzman Carson Consultants LLC. The Debtors' consolidated financial condition as of Feb. 29, 2008, showed $2,845,847,596 in total assets and $2,429,890,642 in total debts. (Tropicana Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) UNIPROP MANUFACTURED: March 31 Balance Sheet Upside-Down by $21 MM ------------------------------------------------------------------ Uniprop Manufactured Housing Communities Income Fund's balance sheet at March 31, 2008, showed $17,071,974 in total assets and $38,058,157 in total liabilities, resulting in a $20,986,183 total partners' deficit. The company reported a net loss of $523,906, on total income of $155,417, for the first quarter ended March 31, 2008, compared with a net loss of $991,483, on total income of $173,157, in the same period last year. Results for the current quarter included a net loss from discontinued operations of $470,587, compared to a net loss of $891,112 for the same quarter in 2007. The decrease in gross revenues was mainly due to decrease in occupancy at the Old Dutch Farms property due to economic conditions in southeastern Michigan. Full-text copies of the company's consolidated financial statements for the quarter ended March 31, 2008, are available for free at http://researcharchives.com/t/s?2d9d Going Concern Doubt As reported in the Troubled Company Reporter on April 14, 2008, BDO Seidman, LLP, in Troy, Mich., expressed substantial doubt about Uniprop Manufactured Housing Communities Income Fund's ability to continue as a going concern after auditing the company's financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm reported that the partnership has suffered losses from operations and has a substantial accumulated deficit. For the quarter ended March 31, 2008, the partnership incurred a net loss of $523,906. As of March 31, 2008, the partnership had an accumulated deficit of $20,986,183 and insufficient cash on hand to meet its expected liquidity requirements after the next five to eight months. About Uniprop Headquartered in Birmingham, Michigan, Uniprop Manufactured Housing Communities Income Fund -- http://www.uniprop.com/-- a Michigan Limited Partnership, was originally formed to acquire, maintain, operate and ultimately dispose of income producing residential real properties consisting of four manufactured housing communities. The general partner of the partnership is P. I. Associates Limited Partnership. VALASSIS COMMS: Moody's Affirms B1 Ratings; Outlook Positive ------------------------------------------------------------ Moody's Investors Service affirmed Valassis Communications, Inc.'s B1 Corporate Family rating, B1 Probability of Default rating and associated debt ratings and changed the company's rating outlook to positive from stable. The positive outlook reflects Moody's expectation that Valassis will continue to make good progress in integrating and improving ADVO's shared mail operations, as the company has done already since the $1.2 billion acquisition in March 2007, and will continue to allocate free cash flow to debt reduction. Moody's believes this will sustain further improvement in Valassis' credit metrics since the ADVO acquisition and could position the company for an upgrade in 2009, although the company will need to manage ongoing pricing pressure in its free-standing insert business and through a difficult economic and advertising environment. Outlook Actions: Issuer: Valassis Communications, Inc. * Outlook, Changed To Positive From Stable Valassis has made good progress integrating and improving ADVO's performance since the acquisition, including reducing excess shared mail package supply, and reducing printing and duplicate overhead costs. This shared mail optimization strategy is negatively affecting revenue but increasing profitability through reductions in excess inventory and higher package utilization (pieces per package). Moody's believes the company's target for a more moderate leverage profile will continue to guide the use of free cash flow to reduce debt. Valassis has repaid more than $100 million of debt since the acquisition, driving a reduction in debt-to-EBITDA leverage to 4.9x (LTM 3/31/08 incorporating Moody's standard adjustments) from approximately 6.2x over that span. Valassis is conservatively managing the sizable cash needs to cover debt maturities in 2008 and 2009. The company borrowed its $160 million delayed draw term loan a month in advance of the May 22nd bondholder put date on the 2033 convertible notes (which were successfully refinanced) to provide time to manage any funding difficulties in the current credit environment. Moody's anticipates the company will fund the January 2009 $100 million note maturity with excess cash on hand, projected free cash flow through the maturity date, and a modest revolver draw. The maturity profile improves considerably thereafter with term loan amortization of less than $8 million per year representing the only meaningful repayment obligation (aside from an excess cash flow sweep) until the revolver expires in 2012. Valassis Communications, Inc., headquartered in Livonia, MI, offers a wide range of promotional and advertising products including shared mail, newspaper advertising and inserts, targeted marketing, sampling, coupon clearing and consulting and analytic services. Annual revenue approximates $2.5 billion. WAMU MORTGAGE: S&P Junks Ratings on Four Certificate Classes ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on six classes of prime jumbo mortgage pass-through certificates from WaMu Mortgage Pass-Through Certificates Series 2007-HY1 Trust. In addition, S&P placed its ratings on two additional classes on CreditWatch with negative implications. S&P took rating actions on three of the five loan groups in this transaction. Cumulative losses for classes 1-A2, 2-A4, and L-B-1 through L-B-5 from the combined loan groups 1 and 2 totaled $1.043 million of the original principal pool balance as of the May 27, 2008, distribution date. In addition, the dollar amount of loans in foreclosure totaled $19.267 million of the current principal balance, and $8.807 million of the loans from these two loan groups are real estate owned. As a result, S&P downgraded classes L-B-1 through L-B-5 to reflect its projected lifetime losses for the combined loan groups 1 and 2. Similarly, S&P's downgrade of class 3-B-5 reflects the current remaining credit support compared with its projected lifetime losses for loan group 3. There was $0.56 million in foreclosures for loan group 3, with no loans in REO and no cumulative realized losses to date. The negative CreditWatch placements reflect S&P's belief that the affected classes may no longer have sufficient credit support to warrant the current 'AAA' ratings based on its projected lifetime losses. Classes 1-A2 and 2-A4 are from loan groups 1 and 2, respectively, which have the combined credit support provided by classes L-B-1 through L-B-6 (not rated) and have the same combined performance information. Subordination provides credit enhancement for this transaction. The underlying collateral for this deal consists primarily of first-lien single-family U.S. residential prime jumbo mortgage loans with interest rates (after an initial fixed-rate period) that adjust annually. The mortgage loans provide for a fixed interest rate during an initial period of approximately five years in the case of loan group 1, approximately seven years in the case of loan group 2, and approximately 10 years in the case of loan group 3, from the date of origination of each mortgage loan. Ratings Lowered WaMu Mortgage Pass-Through Certificates Series 2007-HY1 Trust Mortgage pass-through certificates Rating ------ Class To From ----- -- ---- L-B-1 BB AA L-B-2 B A L-B-3 CCC BBB L-B-4 CC BB L-B-5 CC B 3-B-5 CCC B Ratings Placed on Creditwatch Negative WaMu Mortgage Pass-Through Certificates Series 2007-HY1 Trust Mortgage pass-through certificates Rating ------ Class To From ----- -- ---- 1-A2 AAA/Watch Neg AAA 2-A4 AAA/Watch Neg AAA WEST CONTRA: S&P Puts 'C' Cert. Rating Under Developing Watch ------------------------------------------------------------- Standard & Poor's Rating Services placed its 'C' underlying rating on the West Contra Costa Healthcare District, California's series 2004 certificates of participation, on CreditWatch with developing implications. The rating action reflects a court order approving the district's disclosure statement and fixing the time for objecting to the district's plan for the adjustment of debt. The district filed for Chapter 9 bankruptcy protection on Oct. 1, 2006. The plan includes the district's funding and proposed treatment of creditors, which was originally filed in the U.S. Bankruptcy Court on April 17, 2008, and was revised on May 28 and June 2, 2008. According to the June 2, 2008, plan, the COPs, paid from parcel tax revenues, are not impaired and are unaffected by both the Chapter 9 case and the plan. The resolution of the CreditWatch with developing implications will depend on the outcome of the confirmation hearing, scheduled for Aug. 14, 2008. * US CMBS Loan Defaults Remain Low, According to Fitch ------------------------------------------------------ U.S CMBS loan defaults remain low, with defaults totaled only $1.2 billion, or 22 basis points, of $535 billion of loans outstanding in 2007, according to Fitch's annual default study of commercial mortgages underlying its rated CMBS transactions. The 10-year cumulative default rate totaled 7.37% down from previous studies. Fitch expects future results to worsen as solid real estate fundamentals are impacted by a slowing economy and limited capital availability. Multifamily properties represented the highest of all property type defaults in 2007, with $763 million defaulting or 63% of all newly defaulted loans. The multifamily cumulative default rate ranks third at 4.16%, behind only health care and hotels. The 2005 vintage had the largest dollar amount of defaults in 2007 with $237.8 million added; however, the 2000 vintage had the highest default rate (0.52%) when comparing defaulted loan balances to the vintage year's issuance. * S&P's Cuts on MBIA & Ambac Have Broad Result for Global Markets ----------------------------------------------------------------- Standard & Poor's Ratings Services' downgrades of monoline bond insurers MBIA Insurance Corp. and Ambac Assurance Corp. on June 5, 2008, have broad ramifications for diverse sectors of the global financial markets, said a report titled, "Who Will Feel The Downgrades Of MBIA And Ambac, And By How Much." "After taking a close look, our analysts expect the effects to vary from sector to sector, as well as within each sector. And while we expect some areas to feel the impact immediately, others will more likely have delayed effect," said Standard & Poor's Chief Credit Officer Mark Adelson. ********* 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, 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 ***