/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/080613.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, June 13, 2008, Vol. 12, No. 140 Headlines ACA FINANCIAL: S&P Retains 'CCC' FS Rating Under Developing Watch AEGIS MORTGAGE: ZAIC Wants Stay Lifted to Cancel Surety Bonds AIRTRAN HOLDINGS: Names Geoffrey T. Crowley to Board of Directors AIRTRAN HOLDINGS: Promotes Arne Haak to Chief Financial Officer AMAZON.COM: S&P Lifts Rtng. to BB+ on Strong Operating Performance AMERICAN COLOR: Solicits Noteholders' Votes for Ch. 11 Plan ANTARES FUNDING: Fitch Junks Ratings on Three Note Classes ASARCO LLC: Wachovia Agrees to Reduce Remaining Claim to $2.1 Mil. ASARCO LLC: Affiliates' Section 341 Meeting Set for June 18 ASARCO LLC: Can Expand Scope of Lehman Bro.'s Valuation Services ATHOS FUNDING: Moody's Cuts Ca Ratings to C on Two Note Classes BCBG MAX: Heightened Risk of Default Cues Moody's to Junk Ratings BDB MANAGEMENT: Case Summary & 44 Largest Unsecured Creditors BELMONT COUNTY: Fitch Assigns 'B+' Rating on $17.3MM Revenue Bonds BERRY PETROLEUM: S&P's Rtng. Unmoved by $620MM Gas Reserves Buyout BERTHEL GROWTH I: March 31 Balance Sheet Upside-Down by $5,597,511 BUILDERS FIRSTSOURCE: S&P Lowers Corp. Credit Rating to B from B+ CARDTRONICS INC: S&P Revises Outlook to Pos. on Leverage Reduction CHARTER COMMS: Extends Private Offer Deadline to June 27 COMPLIANCE SYSTEMS: Posts $387,325 Net Loss in 2008 First Quarter CONTINENTAL AIRLINES: Provides Details of Capacity Reductions CORONA BASIN: Files Voluntary Chapter 11 Case Summary COUDERT BROS: Five Ex-Partners Oppose Amended Disclosure Statement CRAIG STEWART: Voluntary Chapter 11 Case Summary DANKA BUSINESS: Stake Holders Spurn Voluntary Liquidation Proposal DELPHI CORP: Trial on $2.55 Billion Lawsuit to Begin in April 2009 DELPHI CORP: Gets New Bid for Power Biz; 54 Pacts Part of Sale DELPHI CORP: Amends $4.1BB Facility to Raise Available Amount DEN-MARK CONSTRUCTION: Taps Mitchell & Nemitz as Accountant DEN-MARK CONSTRUCTION: Final Sale Procedure Hearing Set June 26 DEN-MARK CONSTRUCTION: Court OKs Sale of Residential Properties DIAMOND RANCH: Gruber & Company Expresses Going Concern Doubt EARTH BIOFUELS: Montgomery Coscia Expresses Going Concern Doubt EARTH BIOFUELS: Sells LNG Unit to PNG Ventures for $125 Million EDUCATION RESOURCES: Wants to Abolish JPMorgan Student Loan Pacts EDUCATION RESOURCES: Wants to Get Rasky Baerlein as Public Advisor FREESCALE SEMICONDUCTOR: Board OKs Executive Employment Agreement GAINESVILLE HOUSING: Moody's Cuts $2,765,000 Bond Rating to Ba3 GENERAL MOTORS: New Appointments Build GM Brand Channel Alignment GOODY'S FAMILY: Gets Initial OK to Obtain $210 Mil. DIP Facility H&H TRANSPORTATION: Voluntary Chapter 11 Case Summary HANOVER INSURANCE: S&P Lifts B+ Ratings to BB- on Three Classes HELIOS FINANCE: Weaker Performance Cues Fitch's Negative Watch HOLYOKE MEDICAL: Moody's Holds Ba1 Rating; Changes Outlook to Neg. HORIZON TRAVEL: Files for Creditor Protection, To Close Stores HOVNANIAN ENT: Posts $340.7MM Net Loss in 2nd Qtr. Ended April 30 HI-LINE CONSTRUCTION: Case Summary & Seven Unsec. Creditors IMMUNICON CORP: Case Summary & 35 Largest Unsecured Creditors INNOVATIVE CARD: Posts $1,962,441 Net Loss in 2008 First Quarter IXIS ABS: S&P Puts Default Ratings on Eight Classes of Notes JAMES FALL: Voluntary Chapter 11 Case Summary JONATHAN MATIAS: Case Summary & 20 Largest Unsecured Creditors JHCI ACQUISITIONS: Moody's Cuts Corp. Family Rating to B3 from B2 LANDSOURCE COMMUNITIES: CalPERS Downplays Exposure, Stake Small LEHMAN BROTHERS: Names Mr. McDade, President; Mr. Lowitt CFO LPATH INC: Posts $5,078,181 Net Loss in 2008 First Quarter MICHELLE SIDRIAN: Voluntary Chapter 11 Case Summary MICRO COMPONENT: March 31 Balance Sheet Upside-Down by $6,603,000 MIDON RESTAURANT: Files for Chapter 11 Bankruptcy in Albany MORGAN STANLEY: Moody's Reviews Ba2 Rating for Possible Downgrade MORGAN STANLEY: Moody's Puts Ba2 Rating Under Review MORGAN STANLEY: S&P Upgrades Rating on $3MM Notes to BB- from B MUNOZ PRINTING: Voluntary Chapter 11 Case Summary OCCULOGIX INC: Posts $2,943,500 Net Loss in 2008 First Quarter PACIFIC LUMBER: Scopac Seeking DIP Financing from Lehman PETROL OIL: Weaver & Martin Expresses Going Concern Doubt PLANGRAPHICS INC: March 31 Balance Sheet Upside-Down by $2,998,713 PROTOCALL TECH: Marcum & Kliegman Expresses Going Concern Doubt REFCO INC: Ch. 7 Trustee Wants GE Capital Claims Cut by $700,000 SANDY CREEK: S&P Says Dynergy & LS Power Sale is Favorable SHARPER IMAGE: Seeks to Extend Plan Filing Date to Sept. 16 SHARPER IMAGE: Proposes to Set Aug. 18 as Claims Bar Date SHUMATE INDUSTRIES: Malone & Bailey Raises Going Concern Doubt SIRIUS COMPUTER: S&P Revises Outlook to Neg. on Weaker Revenue SMART & FINAL: Higher Leverage Prompts Moody's to Chip Ratings STRATUS SERVICES: March 31 Balance Sheet Upside-Down by $8,123,044 SUPERCONDUCTOR TECH: Posts $2,308,000 Net Loss in 2008 1st Quarter SUPERIOR ESSEX: Korean LS Cable Deal Cues S&P's Developing Watch SUPERIOR OFFSHORE: Has Until June 16 to File Schedules & SOFA TALBOTS INC: Secures $50 Million Funding from Shareholder Aeon Co. TEEVEE TOONS: Three Companies Seek to Block Record Contracts Sale TELAVA NETWORKS: Posts $175,840 Net Loss in 2008 First Quarter TELAVA NETWORKS: De Joya Expresses Going Concern Doubt TENASKA OKLAHOMA: S&P Affirms 'BB-' Rating on $55.2MM Unsec. Bonds TORRENT ENERGY: Subsidiary Needed $4.5MM at Bankruptcy Filing UNI-MARTS LLC: U.S. Trustee Forms Seven-Member Creditors Committee US AIRWAYS: To Cut Fourth Quarter Domestic Capacity by 8% US INVESTIGATIONS: HireRight Acquisition Won't Affect S&P's Rtngs. VERTIS COMMS: Seeking Creditors' Vote on Prepackaged Ch. 11 Plan VYTERIS INC: March 31 Balance Sheet Upside-Down by $25,298,725 WAVE SYSTEMS: Posts $6,010,048 Net Loss in 2008 First Quarter WELLMAN INC: Wants Court to Establish July 25 as Claims Bar Date X-RITE INC: S&P Junks Rating as Firm Continues Talks with Lenders * Moody's Says Casino Resorts Operators Can Avoid Rating Cuts * S&P Downgrades Ratings on 47 Classes on Nine RMBS Transactions * BOOK REVIEW: Crafting Solutions for Troubled Businesses ********* ACA FINANCIAL: S&P Retains 'CCC' FS Rating Under Developing Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services said its 'CCC' financial strength rating on ACA Financial Guaranty Corp. remains on CreditWatch with developing implications. In December 2007, S&P lowered ACA's financial strength rating to 'CCC', which triggered a requirement under the credit default swaps it had written that the company post significant amounts of collateral for the benefit of its credit default swap counterparties. Since then, ACA has been negotiating with its counterparties to modify its obligations in a manner that would, in S&P's view, substantially resolve the capital and liquidity issues that have arisen as a result of the collateral posting requirement. 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. AEGIS MORTGAGE: ZAIC Wants Stay Lifted to Cancel Surety Bonds ------------------------------------------------------------- Zurich American Insurance Company and its affiliates ask the U.S. Bankruptcy Court for the District of Delaware to lift the automatic stay to permit them to cancel five surety bonds it issued for the benefit of Aegis Mortgage Corporation, Aegis Wholesale Corporation and Aegis Lending Corporation. The surety bonds were issued to the States of California, West Virginia and Vermont to guarantee the obligations they imposed upon the Debtors for the $625,000 that financed the Debtors' mortgage lending business. Ronald Gellert, Esq., at Eckert Seamans Cherin & Mellott LLC, in Wilmington, Delaware, says the Debtors no longer need the surety bonds for their operations in light of the cessation of their loan origination business. The surety bonds are also executory contracts and are in the nature of a financial accommodation that cannot be assumed by the Debtors, he adds. Mr. Gellert notes that since the surety bonds continue to secure the Debtors' obligations up to the effective date of the bonds' cancellation, the Debtors are in effect continuing to use the bonds as postpetition credit without Zurich's consent. "Should the Debtors contest Zurich's request to withdraw and cancel the surety bonds, Zurich is entitled to adequate protection through the posting of collateral, the granting of a lien, or other form of assurance of postpetition performance by the Debtors," Mr. Gellert further asserts. Headquartered in Houston, Texas, Aegis Mortgage Corporation -- http://www.aegismtg.com/-- offers a variety of mortgage loan products to brokers through its subsidiaries. The company together with 10 affiliates filed for chapter 11 protection on Aug. 13, 2007 (Bankr. D. Del. Case No. 07-11119). Curtis A. Hehn, Esq., James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski, Stang, Ziehl, & Jones, L.L.P., serve as counsel to the Debtors. The Official Committee of Unsecured Creditors is represented by Landis Rath & Cobb LLP. In schedules filed with the Court, Aegis disclosed total assets of $138,265,342 and total debts of $4,125,470. (Aegis Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AIRTRAN HOLDINGS: Names Geoffrey T. Crowley to Board of Directors ----------------------------------------------------------------- AirTran Holdings, Inc., the parent company of AirTran Airways, Inc., disclosed that Geoffrey T. Crowley has been elected to the company's Board of Directors. His term commences immediately. "[Mr. Crowley's] extensive background in the aviation industry will serve our Board and shareholders well as we address the challenges of the current high fuel costs environment," Bob Fornaro, chairman, president and CEO for AirTran Airways, said. "We welcome him to AirTran and have confidence that he will be an asset in helping us uphold our commitment to provide outstanding service and shareholder value." Mr. Crowley is president of Northshore Leasing of Appleton, Wisconsin, and was a founder of Air Wisconsin Airlines Corporation. Prior to his current position, Mr. Crowley served as chairman, president and CEO of AWAC, leading the company during its growth from 12 aircraft and revenues of $100 million to more than 80 aircraft and over $700 million in revenue at its peak. In addition, Mr. Crowley served as vice president of marketing alliances at Northwest Airlines. Mr. Crowley has a B.S. in Engineering from Purdue University in West Lafayette, Indiana, with a focus on Transportation. He received his M.B.A. from Xavier University in Cincinnati, Ohio. Mr. Crowley was appointed by President Clinton and confirmed by the Senate to serve on the FAA's first Management Advisory Council. He was also appointed by the Governor of Wisconsin to serve on a committee to examine the state's transportation infrastructure. Headquartered in Orlando Florida, AirTran Holdings Inc. (NYSE: AAI) -- http://www.airtran.com/-- a Fortune 1000 company, is the parent company of AirTran Airways Inc., which offers more than 700 daily flights to 56 U.S. destinations. * * * To date, AirTran Holdings Inc. carries Moody's Investors Service 'B3' long-term corporate family and 'Caa2' senior unsecured debt ratings. The outlook is stable. AIRTRAN HOLDINGS: Promotes Arne Haak to Chief Financial Officer --------------------------------------------------------------- The Board of Directors of AirTran Holdings, Inc., the parent company of AirTran Airways, Inc., has appointed Arne G. Haak, current vice president of finance and treasurer, to the position of senior vice president of finance, treasurer and chief financial officer. In his new role as CFO, Mr. Haak will also continue to oversee financial planning and analysis, treasury, purchasing, and investor relations. Prior to his career at AirTran Airways, Mr. Haak worked for US Airways. Since joining AirTran Airways in 1999, he has worked in a variety of roles from financial planning and analysis to investor relations. He became vice president of finance and treasurer in January 2006. Mr. Haak received a Bachelor of Science degree in economics from Pennsylvania State University, and he also earned a Masters of Business Administration from the University of Maryland. Mr. Haak is a member of the Association for Financial Professionals, and he has earned the designation of Certified Treasury Professional and AFP Honors in 2007. A graduate of Leadership Orlando, Mr. Haak is a resident of Winter Springs, Florida, where he lives with his wife, Denise, and three children. Mr. Haak is fluent in both English and Swedish. "[Mr. Haak] possesses an impressive knowledge of the airline business as well as finance, and has made significant contributions over the last nine years which have aided in the success of AirTran Airways," Bob Fornaro, AirTran Airways' chairman, president and CEO, said. "[Mr. Haak] brings a thorough understanding of our business and has a proven set of leadership skills which is critical in this time of record high fuel costs." "I am honored to lead a strong team of financial and accounting professionals at AirTran Airways," Mr. Haak commented. "The airline has established a solid competitive position based on low costs, high quality, and the youngest all-Boeing fleet in the United States. I look forward to both the challenges and the opportunities that will arise from the impact of record high fuel on our industry." Headquartered in Orlando Florida, AirTran Holdings Inc. (NYSE: AAI) -- http://www.airtran.com/-- a Fortune 1000 company, is the parent company of AirTran Airways Inc., which offers more than 700 daily flights to 56 U.S. destinations. * * * To date, AirTran Holdings Inc. carries Moody's Investors Service 'B3' long-term corporate family and 'Caa2' senior unsecured debt ratings. The outlook is stable. AMAZON.COM: S&P Lifts Rtng. to BB+ on Strong Operating Performance ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its corporate credit rating on Seattle-based Amazon.com to 'BB+' from 'BB'. S&P removed the ratings from CreditWatch with positive implications, where they were placed on Feb 13, 2008. At the same time, S&P raised the rating on the company's 4.75% convertible subordinated notes due February 2009 and its 6.875% premium adjustable convertible securities to 'BB+' from 'B+' and assigned both issues a recovery rating of '3', indicating its expectation of meaningful (50%-70%) recovery in the event of default. The outlook is positive. "The upgrade reflects the company's strong operating performance," said Standard & Poor's credit analyst David Kuntz. He pointed to its trailing 12-month growth rate of 39.4% as of March 31, 2008. Additional factors include the ability to manage sustained growth and the beneficial impact on credit measures from the recent redemption of the $500 million 4.75% convertible subordinated notes. AMERICAN COLOR: Solicits Noteholders' Votes for Ch. 11 Plan ----------------------------------------------------------- American Color Graphics commenced a solicitation of votes for its prepackaged plan of reorganization from its 10% Noteholders. American Color submitted to the Securities and Exchange Commission on June 11, 2008, a proposed joint prepackaged Chapter 11 plan of reorganization and a disclosure statement explaining that plan. "We are pleased with the progress both American Color and Vertis Communications are making toward our announced merger plans and by the support our noteholders have already shown for this transaction. Combining the services, talent, and expertise of the two companies will offer new opportunities for our customers, employees and suppliers," said Steve Dyott, chairman and CEO of American Color. "We look forward to the flexibility and strength we expect from the combination of the two companies' service offerings and resources." Mr. Dyott also emphasized that it will be "business as usual" during the solicitation process, that American Color's Plan calls for suppliers and employees to continue to receive amounts owed to them in the ordinary course of business, and that American Color's commitment to providing its customers superior products and uncompromising service will continue through all phases of the process. On May 22, 2008, and as updated on May 30, 2008, American Color said it had the support of its 10% Note holders to merge with Vertis Communications and complete its comprehensive restructuring Plan. Since then, American Color has received additional support. At this time, American Color has agreements with the holders of approximately 74% of the outstanding principal amount of its 10% Senior Second Secured Notes due 2010 to vote to accept the Plan, subject to certain conditions. Vertis has agreements with approximately 79% of the outstanding principal amount of its 9.75% Senior Secured Second Lien Notes due 2009, 84% of the outstanding principal amount of its 10.875% Senior Notes due 2009, and 79% of the outstanding principal amount of its 13.5% Senior Subordinated Notes due 2009 to support its reorganization plan. Under the plans, holders of 10% Notes and Vertis notes will be exchanging their notes for an aggregate of $550 million in new Vertis notes and substantially all the new equity in the combined company. The transaction is also supported by Vertis' principal stockholders and the holders of over 95% of the outstanding principal amount of Vertis Holdings' Mezzanine Notes. The consensual financial restructurings will reduce the combined companies' debt obligations -- including off-balance sheet accounts receivable facilities and approximately $248 million of Vertis Holdings Mezzanine Notes -- by approximately $1 billion before transaction fees and expenses. American Color and Vertis intend to commence their prepackaged Chapter 11 cases at the conclusion of the solicitation period to implement the restructuring. The restructuring transactions, including the merger, are expected to close this summer. Votes on the Plan must be received by Financial Balloting Group LLC, Vertis' voting agent, before the applicable deadline. Solicitation materials are being provided to noteholders of record. A full-text copy of the prepackaged joint Chapter 11 plan of reorganization and disclosure statement is available for free at http://ResearchArchives.com/t/s?2dda About Vertis Inc. Headquartered in Baltimore, Vertis Inc. dba Vertis Communications -- http://www.vertisinc.com/-- is a provider of print advertising and direct marketing solutions to America's retail and consumer services companies. About American Color American Color Graphics Inc. -- http://www.americancolor.com/-- is one of North America's largest and most experienced full service premedia and print companies, with eight print locations across the continent, six regional premedia centers, photography studios nationwide and a growing roster of customer managed service sites. The company provides solutions and services such as asset management, photography, and digital workflow solutions that improve the effectiveness of advertising and drive revenues for their customers. * * * Vertis' consolidated balance sheets show total assets of $499,562,000 and total debts of $1,415,569,000 resulting in a $916,007,000 stockholders' deficit. American Color's consolidated balance sheets reveal total assets of $224,080,000 and total debts of $493,973,000 resulting in a $269,893,000 stockholders' deficit. ANTARES FUNDING: Fitch Junks Ratings on Three Note Classes ---------------------------------------------------------- Fitch has affirmed two classes and downgraded three classes of notes issued by Antares Funding, LP. All classes of notes were also removed from Rating Watch Negative. These rating actions are effective immediately: -- $28,500,000 class C-1 notes affirmed at 'BBB', removed from Rating Watch Negative; -- $15,000,000 class C-2 notes affirmed at 'BBB', removed from Rating Watch Negative; -- $23,911,911 class D-1 notes downgraded to 'CC/DR3' from 'BB', removed from Rating Watch Negative; -- $14,065,830 class D-2 notes downgraded to 'CC/DR3' from 'BB', removed from Rating Watch Negative; -- $42,000,000 class E notes downgraded to 'C/DR6' from 'B-', removed from Rating Watch Negative. Antares Funding is a collateralized debt obligation which closed Dec. 14, 1999, with Antares Capital Corporation as collateral manager. Subsequent to a merger in October 2005, GE Asset Management, Inc. assumed collateral management responsibilities on Aug. 31, 2007. Antares Funding was established to issue approximately $600 million in debt and equity tranches. The proceeds were invested in a portfolio of predominantly high-yield bank loans, middle market loans and bonds. As of the April 18, 2008 trustee report, approximately 62.5% of the collateral was comprised of senior secured loans, 19.0% in senior unsecured debt, 13.2% in other senior secured debt, and the remaining balance in subordinated debt. Approximately 39.1% of the performing assets were middle market loans that were shadow rated by Fitch. Fitch released its updated criteria on April 30, 2008 for Corporate CDO's. The affirmations of the class C notes are the result of substantial delevering of the class A notes. The reinvestment period ended in March 2006, and over $410 million of the class A notes have been repaid since then (3.6% of the original class A note balance remain). As a result, credit enhancement levels have improved for the class C notes, mitigating the risk of reduced cushion from the deteriorated collateral. The original issuance amount of $48 million in class B notes remains outstanding. Fitch does not rate the class A and B notes. The downgrades on the class D and E notes are the result of deteriorated collateral pool quality, exposure to long-dated assets, limited excess spread, and structural features of the deal that limit the amount of principal proceeds available for repayments. Although the trustee-reported weighted average rating factor remained in compliance at 'B', relative to the trigger of 'B', approximately 10.0% of the collateral was on Rating Watch Negative and another 10.7% of the collateral carried a Rating Outlook Negative according to Fitch's methodology. In addition, $10.1 million of the collateral pool totaling $146.9 million was considered defaulted (6.9% of portfolio). The collateral pool also had considerable exposure to long-dated assets, with $10.6 million (7.2% of portfolio) maturing after the deal's stated maturity date of Dec. 14, 2011. Moreover, approximately $7.3 million of the long-dated assets are scheduled to mature in 2013 and 2014. According to the April trustee report, while the weighted average spread was 3.24%, relative to a trigger of 2.90%, the weighted average coupon on fixed securities was reported at 7.89%, below the trigger of 10%. While there may be enough excess spread to support the payment of class C interest, the limited interest proceeds may not be enough to pay future interest expenses on the class D notes. As a result, principal proceeds may be used to make such payments, impairing the collateral pool's ability to repay the class D note principal in full. Furthermore, the first-loss class E notes, which behave like the equity portion of the capital structure, stopped receiving distributions since the September 2007 payment date. Since close, the class E notes have received over $35 million in distributions, but it is projected that the tranche will receive little or no payments going forward. The ratings on the class C and D notes address the likelihood that investors will receive ultimate payment of interest and repayment of principal, as per the governing documents, by the legal final maturity date. The rating on the class E notes addresses the likelihood that investors will receive ultimate repayment of principal only by the legal final maturity date. Fitch released updated criteria on April 30, 2008 for Corporate CDOs and, at that time, noted it would be reviewing its ratings accordingly to establish consistency for existing and new transactions. As part of this review, Fitch makes standard adjustments for any names on Rating Watch Negative or with a Negative Outlook, reducing such ratings for default analysis purposes by two and one notch, respectively. Fitch has noted its review will be focused first on ratings most exposed to risks it has highlighted in its updated criteria. Committees are also reviewing transactions that are least impacted by the new criteria and/or portfolio migration. ASARCO LLC: Wachovia Agrees to Reduce Remaining Claim to $2.1 Mil. ------------------------------------------------------------------ Wachovia Financial Services, Inc., filed Claim No. 10333 against ASARCO LLC, asserting amounts relating to certain executory contracts and a term note related to an equipment purchase. The part of Claim No. 10333, which relates to certain executory contracts was resolved by a prior agreement and Court order, but the term note portion was not addressed. Wachovia subsequently filed Claim No. 18205 reasserting the balance of Claim No. 10333. ASARCO and Wachovia entered into a stipulation, which provides that Wachovia has agreed to reduce its remaining claim from $2,340,169 to $2,091,156. About ASARCO Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/ -- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services And investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). ASARCO and its debtor affiliates are scheduled to file a plan of reorganization on June 10, 2008. (ASARCO Bankruptcy News, Issue No. 73; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ASARCO LLC: Affiliates' Section 341 Meeting Set for June 18 ----------------------------------------------------------- Charles F. McVay, United States Trustee for Region 7, will convene a meeting of creditors in the Chapter 11 cases of Wyoming Mining and Milling Company, Alta Mining and Development Company, Tulipan Company, Inc., Blackhawk Mining and Development Company, Peru Mining Exploration and Development Company, and Green Hill Cleveland Mining Company, on June 18, 2008, at 9:00 a.m., at 606 North Carancahua, Suite 1107, in Corpus Christi, Texas. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in the Debtors' cases. The Section 341(a) Meeting has been scheduled within the time required by Rule 2003 of the Federal Rules of the Bankruptcy Procedure. All creditors are invited, but not required, to attend. The Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtors under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. As reported in the Troubled Company Reporter on Apr. 22, 2008, these six debtor-affiliates of ASARCO LLC filed for separate voluntary Chapter 11 petitions with the U.S. Bankruptcy Court for the Southern District of Texas on April 21, 2008. These affiliates have asked the Court to jointly administer their bankruptcy cases with ASARCO LLC's Chapter 11 case. About ASARCO Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/ -- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services And investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). ASARCO and its debtor affiliates are scheduled to file a plan of reorganization on June 10, 2008. (ASARCO Bankruptcy News, Issue No. 73; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ASARCO LLC: Can Expand Scope of Lehman Bro.'s Valuation Services ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas authorizes ASARCO LLC and its debtor-affiliates to expand the scope of Lehman Brothers Inc.'s employment to include valuation services in relation to pending avoidance actions ASARCO commenced against several entities. ASARCO is permitted to pay $800,000 to Lehman for valuation services related to the proceedings against Americas Mining Corporation and Montana Resources, Inc., and $100,000 each for valuation services related to the proceedings involving the Sacaton and Rosemont mining properties. About ASARCO Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/ -- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services And investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). ASARCO and its debtor affiliates are scheduled to file a plan of reorganization on June 10, 2008. (ASARCO Bankruptcy News, Issue No. 73; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ATHOS FUNDING: Moody's Cuts Ca Ratings to C on Two Note Classes --------------------------------------------------------------- Moody's Investors Service has withdrawn the rating on these notes issued by Athos Funding, Ltd.: Class Description: The Maximum CP Principal Component Amount of CP Notes -- Prior Rating: P-1 -- Current Rating: WR According to Moody's, the rating action is due to the exercise of the put option that resulted in all the CP Notes being converted to the Funding Notes. In addition, Moody's has also downgraded and left on review for possible further downgrade these notes: Class Description: $40,000,000 Class A-1 Floating Rate Notes Due 2043 -- Prior Rating: Aa3, on review for possible downgrade -- Current Rating: B3, on review for possible downgrade Finally, Moody's has downgraded these notes: Class Description: $28,000,000 Class A-2 Floating Rate Notes Due 2043 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: Ca Class Description: $20,000,000 Class B Floating Rate Subordinate Notes Due 2043 -- Prior Rating: Ca -- Current Rating: C Class Description: $5,000,000 Class Q Combination Notes Due 2043 -- Prior Rating: Ca -- Current Rating: C According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. BCBG MAX: Heightened Risk of Default Cues Moody's to Junk Ratings ----------------------------------------------------------------- Moody's Investors Service downgraded BCBG Max Azria Group, Inc.'s corporate family and probability of default ratings to Caa2 from B3. The company's senior secured bank loan rating was lowered to Caa2 from B3. All ratings were placed on review for further possible downgrade. The LGD point estimate on the senior secured term loan of LGD4, 55% is subject to change. This rating action reflects BCBG's heightened risk of default stemming from substantial operating losses by the company's Max Rave division, a significant deterioration in liquidity, the delay in the completion of its fiscal 2007 audited financial statements due to a change in fiscal year end, and expectation the company will not meet certain financial covenants. The review for possible further downgrade considers that given the unfavorable outlook for the company's near-term operating performance, BCBG may find it difficult to obtain the waivers and/or amendments necessary from its bank lenders to avoid a potential default. The company is currently negotiating with its lending group. The Caa2 probability of default rating reflects the company's precarious liquidity situation and the challenges it faces to stem the significant operating losses at its Max Rave division quickly in order to avoid a potential default. While the company has been successful in entering into a new business arrangement which places Max Rave in a major retailer, the initial size of this business is still very small and will take time to ramp up to such a size and scale to offset the current level of losses at Max Rave. Moody's notes that the BCBG core division, continues to perform well but that the losses at Max Rave have reached such a level that it places the whole company at risk for a potential default. BCBG Max Azria Group, Inc., headquartered in Vernon, California is an apparel retailer and wholesaler. Revenues for the fiscal year 2007 are estimated to be approximately $829 million. BDB MANAGEMENT: Case Summary & 44 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: BDB Management LLC 3000 Sand Hill Road Building 1, Suite 240 Menlo Park, CA 94025 Bankruptcy Case No.: 08-31001 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- BDB Management III, LLC 08-31002 William J. Del Biaggio, III 08-30991 Type of Business: The Debtors have an affiliate, Sand Hill Capital Partners III LLC, which filed for Chapter 11 protection on June 5, 2008 (Bankr. N.D. Calif. Case No. 08-30989). Chapter 11 Petition Date: June 7, 2008 Court: Northern District of California (San Francisco) Judge: Dennis Montali Debtors' Counsel: Judith Whitman, Esq. (jwhitman@diemerwhitman.com) Diemer, Whitman and Cardosi LLP 75 East Santa Clara Street San Jose, CA 95113 Tel: (408) 971-6270 Estimated Assets Estimated Debts ---------------- --------------- BDB Management LLC $1,310,768 $9,745,685 BDB Management $1,359,000 $2,956,000 III LLC William J. Del $50 million to $50 million to Biaggio, III $100 million $100 million A. BDB Management LLC's list of its 20 largest unsecured creditors: Entity Claim Amount ------ ------------ 1999 Del Biaggio Family Trust $2,990,685 3000 Sand Hill Road Building 1, Suite 240 Menlo Park, CA 94025 Chuck Peterson $950,000 12755 Folson Boulevard Folsom, CA 95630 Staedler 1992 Revocable Trust $600,000 Rudy and Beverly Ann Staedler 938 Hook Court Incline Village, NV 89451 David Connor $500,000 3450 Quail Walk Court Danville, CA 94506 Eric Brandenburg Sep Propety Trust $450,000 Eric Brandenburg, Trustee 1122 Willow Street, Suite 200 San Jose, CA 95125 Karen Brandenburg $250,000 Attn: Joseph Di Leo 1122 Willow Street, Suite 200 San Jose, CA 95125 Brandenburg Rev Trust $250,000 Lee and Diane Brandenburg 1122 Willow Street, Suite 200 San Jose, CA 95125 William Brandenburg $200,000 Brandenburg Revocable Trust $200,000 John K. Goyak $200,000 Richard E. Spanholtz $200,000 Irving Bronstein $200,000 Cesar M. Roth Mayo IRA $200,000 Gary T. Cook $200,000 Baron Family Rev Trust $200,000 Marisigan, Rene and Ramona $175,000 Gary Brandenburg Revoc. Trust $150,000 Aymer 1991 Family Trust $150,000 Barbara Perkins $150,000 K Fab Inc. $150,000 B. BDB Management III LLC's list of its seven largest unsecured creditors: Entity Claim Amount ------ ------------ 1999 Del Biaggio Family Trust $1,000,000 3000 Sand Hill Road Building 1, Suite 240 Menlo Park, CA 94025 Peters RW & CH 1992 Trust $1,000,000 Robert W. Peters, TTE 1282 St. Mark Court Los Altos, CA 94024 Staedler Rudy and Beverly $506,000 1992 Revocable Trust 1122 Willow Street, Suite 200 San Jose, CA 95125 Irving Bronstein $200,000 Brandenburg Eric Sep Prop. Trust $100,000 Brandenburg William Rev. Trust $100,000 Ronald Zraick Jr. $50,000 C. William J. Del Biaggio, III's list of its 17 largest unsecured creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Craig Leipold $10,000,000 555 Main Street, Suite 500 Racine, WI 53403 Modern Bank $10,000,000 667 Madison Avenue New York, NY 10021 AEG Facilities Business Debt $7,000,000 1100 South Flower Street Suite 300 Los Angeles, CA 90015 Heritage Bank of Commerce Business Debt $5,000,000 150 Almaden Boulevard San Jose, CA 95113 Security Pacific Bank $5,000,000 12121 Wilshire Boulevard Suite 1350 Los Angeles, CA 90025 Valley Community Bank $4,218,582 5000 Pleasanton Avenue Pleasanton, CA 94566 Paul D. Showerman $3,450,000 540 White Pelican Drive Vero Beach, FL 32963 DGB Investments $3,000,000 40 Foxhill Road Redwood City, CA 94062 Martha E. San $3,000,000 Filippo Foundation Attn: Bill Snyder 650 North Winchester Boulevard San Jose, CA 95128 South Valley National Bank Business Debt $2,000,000 517 South Main Street Salinas, CA 93901 United American Bank $1,737,238 101 South Ellsworth Avenue San Mateo, CA 94401 Brenton Lee Brandenburg Business Debt $1,500,000 Irrevocable Trust dtd 1122 Willow Street, No. 200 San Jose, CA 95125 The Private Bank $900,000 505 Hamilton Avenue, Suite 110 Palo Alto, CA 94301 Citicorp Credit Services Credit Card $44,445 Centralized Bankruptcy Business Debt AMEX Credit Card $85 Andrew Arata Business Debt Unknown Daniel Arata Business Debt Unknown BELMONT COUNTY: Fitch Assigns 'B+' Rating on $17.3MM Revenue Bonds ------------------------------------------------------------------ Fitch Ratings assigned a rating of 'B+' to approximately $17.3 million Belmont County, Ohio Health System Refunding and Improvement Revenue Bonds, (East Ohio Regional Hospital) issued on behalf of Ohio Valley Health Services and Education Corporation Obligated Group. Fitch also affirmed OVHSEC's outstanding Series 1998 bonds at 'B+'. The Rating Outlook is revised to Negative from Stable. The series 2008 will be issued as fixed-rate, tax-exempt bonds maturing by January 2038. The bond proceeds will be used to partially refund the series 1998 bonds (approximately $11.9 million) and retire a $5 million construction bank loan. The bonds are expected to price the week of June 23, 2008. In addition to the series 2008 bonds, OVHSEC is taking out two new bank loans. The first loan, in amount of $9.0 million, will reimburse OVHSEC for prior capital expenditures. The second loan in an amount equal to approximately $10.2 million will refund the remainder of the series 1998 bonds and retire approximately $1.2 million of the amount drawn on a line of credit by OVHSEC, the outstanding balance of which was $3.6 million as of April 30, 2008. The bank loans will be on parity with the series 2008. The Rating Outlook revision to Negative from Positive reflects continued decline in liquidity. As of April 30, 2008, OVHSEC had $3.2 million of unrestricted cash and investments (net of $3.6 million draw on a line of credit) equating to 7.3 days cash on hand. This is a decline from 15.4 days as of Dec. 31, 2006 and 11.4 days as of Dec. 31, 2007. The Outlook reflects that a negative rating action may be warranted if liquidity growth from operations is not demonstrated over the near to medium term. OVHSEC is addressing their low liquidity position with the planned restructuring which should increase liquidity substantially with days cash on hand increasing to approximately 30 days. If OVHSEC is successful in securing the loan and can grow its unrestricted cash and investment levels from operating cash flow, the Rating Outlook is likely to be revised back to Stable. Other concerns include OVHSEC's high average age of plant and a highly competitive service area with unfavorable demographics. While OVHSEC's age of plant of 20.5 years remains one of the highest in Fitch's portfolio, Fitch has toured the facilities and found the areas of patient care, in large, satisfactory. OVHSEC's service area's socioeconomic indicators are well below national averages resulting in a poor payor mix with high Medicaid and self-pay concentrations. Wheeling Hospital is the leading provider of acute services in Wheeling, WV followed by OVHSEC. Mitigating some of the concerns is OVHSEC's recent trend of improved operations with the obligated group generating operating margins of negative 0.5% and positive 1.7% (net of one-time adjustments) in fiscal years 2006 and 2007, respectively, after multiple years of significant losses in the 1990s and the earlier part of 2000s. Additionally, volume trends have been positive in last two fiscal years (2006 and 2007) with admissions and outpatient surgeries growing 8.1% and 5.3%, respectively. Through the first four months of fiscal 2008 (April 30), admission remained flat while outpatient surgeries grew by 10.0% over prior period. OVHSEC is a two-hospital system consisted of OVMC, located in Wheeling, West Virginia, and EORH, located in Martins Ferry, Ohio. The system had a combined total of 253 acute-care beds and 94 long-term care beds with total revenues of $175 million in 2007. Covenants pertaining to the series 2008 issuance are likely to require OVHSEC to post annual and quarterly financial disclosure on the nationally recognized municipal securities information repositories. BERRY PETROLEUM: S&P's Rtng. Unmoved by $620MM Gas Reserves Buyout ------------------------------------------------------------------ Standard & Poor's Ratings Services said that its 'BB' corporate credit rating on oil and gas exploration and production company Berry Petroleum Co. was unaffected by the company's announcement that it will acquire approximately 335 billion cubic feet equivalent of natural gas reserves, 29% proved developed, in the Limestone and Harrison Counties of East Texas for approximately $620 million. The acquisition is expected to improve Berry's geographic diversity and increase the company's growth prospects. On the other hand, Berry's adjusted debt will increase to more than $1 billion as a result of the transaction; however, its credit measures remain at acceptable levels for the current rating with debt to barrel of oil equivalent below $5. BERTHEL GROWTH I: March 31 Balance Sheet Upside-Down by $5,597,511 ------------------------------------------------------------------ Berthel Growth & Income Trust I's consolidated statement of assets and liabilities at March 31, 2008, showed $6,025,614 in total assets and $11,623,125 in total liabilities, resulting in net asset deficiency of $5,597,511. The company reported net income of $530,512 on total revenues of $24,060 for the first quarter ended March 31, 2008, compared with net income of $76,578 on total revenues of $25,242 in the same period last year. 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?2ddb Going Concern Doubt As reported in the Troubled Company Reporter on April 4, 2008, McGladrey & Pullen, LLP, in Cedar Rapids, Iowa, expressed substantial doubt about Berthel Growth & Income Trust I'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 deficiency in net assets and net investment losses during the years ended Dec. 31, 2006 and 2005. In addition, Berthel SBIC, LLC, a wholly owned subsidiary of the company, is in violation of the maximum capital impairment percentage permitted by the United States Small Business Administration. Berthel SBIC has agreed to liquidate its portfolio assets in order to pay its indebtedness to the United States Small Business Administration. About Berthel Growth Based in Marion, Iowa, Berthel Growth & Income Trust I is a Delaware business trust that has elected to be treated as a business development company under the Investment Company Act of 1940. The trust's Registration Statement was declared effective June 21, 1995, at which time the trust began offering Shares of Beneficial Interest. The underwriting period was completed on June 21, 1997, with a total of $10,541,000 raised. The trust is a closed-end management investment company intended as a long-term investment and not as a trading vehicle. BUILDERS FIRSTSOURCE: S&P Lowers Corp. Credit Rating to B from B+ ----------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its corporate credit rating on Dallas-based Builders FirstSource Inc. to 'B' from 'B+'. S&P also lowered the issue-level rating on the company's senior secured debt to 'B' from 'B+'. The ratings remain on CreditWatch with negative implications, where they were placed on April 2, 2008. The ratings downgrade and continued CreditWatch listing reflect S&P's assessment that BLDR's operating performance will continue to be hurt by challenging market conditions due to ongoing weakness in the U.S. residential construction market. "As a result, we expect that earnings will be pressured as long as these conditions persist, which will lead to a material weakening of credit measures and tighter liquidity," said Standard & Poor's credit analyst Andy Sookram. In resolving its CreditWatch listing, S&P will discuss with management its near-term business and financial outlook in light of the continued operating difficulties. CARDTRONICS INC: S&P Revises Outlook to Pos. on Leverage Reduction ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on Houston- based Cardtronics Inc. to positive from stable. At the same time, S&P affirmed the ratings on the company, including the 'B+' corporate credit rating. "The outlook revision reflects Cardtronics' further leverage reduction and the completion of its acquisition of 7-Eleven's ATMs business," said Standard & Poor's credit analyst David Tsui. The rating reflects the company's high leverage and aggressive capital spending in a mature and consolidating industry. These factors are offset partially by Cardtronics' leading position in the U.S. as an independent ATM provider, as well as its recurring revenue streams. Cardtronics owns more than 65% of its network of about 32,600 ATMs and provides services for the balance. The company's ATMs are located in nonbanking sites such as convenience stores, grocery stores, drugstores, and retailers. CHARTER COMMS: Extends Private Offer Deadline to June 27 -------------------------------------------------------- Charter Communications Inc. has extended the early participation deadline for the pending private offer by its indirect subsidiaries, CCH II, LLC and CCH II Capital Corp., until 11:59 pm., ET, on June 27, 2008. The exchange ratio range will remain as previously announced. The Offer, announced on May 29, provided for the exchange of 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 Offer is being conducted as a "modified Dutch auction," pursuant to which holders of the Old Notes 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. Holders who validly tender their Old Notes will receive the highest exchange ratio specified with respect to Old Notes accepted for exchange in the auction process described in the Confidential Offering Memorandum dated May 29, 2008. The Clearing Exchange Ratio includes an Early Participation Payment of $30.00 in New Notes per $1,000 principal amount of Old Notes. Holders who exchange Old Notes for New Notes will also receive accrued and unpaid interest to, but not including, the settlement date. The Offer will expire at 11:59 PM ET on June 27, 2008. Old Notes tendered pursuant to the Offer may no longer be withdrawn. The New Notes have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The offer is being made only to qualified institutional buyers and to certain non-U.S. investors located outside the United States. The complete terms and conditions of the Offer are set forth in the informational documents relating to the Offer. Documents relating to the Offer will only be distributed to noteholders who complete and return a letter of eligibility confirming that they are within the category of eligible investors for this private offer. 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. As reported by the Troubled Company Reporter on June 11, 2008, Charter Communications'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. 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%). COMPLIANCE SYSTEMS: Posts $387,325 Net Loss in 2008 First Quarter ----------------------------------------------------------------- Compliance Systems Corp. reported a net loss of $387,325 on revenues of $467,008 for the first quarter ended March 31, 2008, compared with a net loss of $388,318 on revenues of $362,408 in the same period last year. The company's consolidated balance sheet at March 31, 2008, showed $1,044,965 in total assets, $823,232 in total liabilities, and $221,733 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?2dd4 Going Concern Doubt As reported in the Troubled Company Reporter on April 14, 2008, Holtz Rubenstein Reminick LLP, in Melville, New York, expressed substantial doubt about Compliance System Corporation'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 pointed to the company's losses from operations in its last two fiscal years of $1,190,153 and $1,242,531, respectively. About Compliance Systems Based in Glen Cove, N.Y., Compliance Systems Corp. (OTC BB: COPI) -- http://www.callcompliance.com/-- is a developer of technology- based compliance solutions for the teleservices industry. The company's primary proprietary product, TeleBlock(R) Call Blocking System, automatically screens and blocks outbound calls against federal, state, and in-house Do-Not-Call lists. Compliance Systems also offers a Regulatory Guide, an up-to-date, online compilation of state and federal telemarketing laws, as well as ongoing compliance auditing services. CONTINENTAL AIRLINES: Provides Details of Capacity Reductions ------------------------------------------------------------- Continental Airlines Inc. released to its more than 45,000 employees bulletin no. 10, detailing reductions in flying capacity that were announced last week. These actions are among the many difficult steps Continental Airlines is taking to respond to record-high fuel prices that are creating unprecedented challenges for the airline industry, according to the company. Starting in September, at the conclusion of the peak summer season, the company will reduce capacity from its hubs, resulting in an 11% decline of domestic mainline capacity (available seat miles, or ASMs) in the fourth quarter, compared to the same period last year. The changes will result in a 6.4% decline in consolidated (mainline plus regional) capacity in the fourth quarter, compared to the same period last year. The table shows the estimated capacity reductions by hub, including certain capacity changes effective prior to Sept. 3: 4th Quarter Total and Year-Over-Year ASM Comparison by Hub (millions) 4Q - 08 ASM Hub Est. ASMs Decrease % Decrease --- --------- -------- ---------- Houston 11,208 (960) (7.9%) Newark Liberty 13,251 (433) (3.2%) Cleveland 1,462 (220) (13.1%) Guam 799 (219) (21.5%) Total 26,720 (1,832) (6.4%) As of Sept. 3, 2008, the company will be reducing frequencies in certain markets and will also discontinue service between its hubs and this cities or airports: * Houston George Bush Intercontinental: Cali, Colombia, Chatanooga, Tennessee, Guayaquil, Ecuador, Hartford, Connecticut, Monclova, Mexico, Montgomery, Alabama, Oakland, California, Palm Springs, California, Reno, Nevada, Sarasota, Florida, Tallahassee, Florida, and Washington - Dulles. * Newark Liberty: Albuquerque, New Mexico, Cologne, Germany, Santiago, Dominican Republic, Sarasota, Florida, Salt Lake City, Utah, San Jose, California, and Tucson, Arizona. * Cleveland Hopkins: Austin, Texas, Birmingham, Alabama, Charleston, South Carolina, Charleston, West Virginia, Cincinnati, Ohio, Des Moines, Iowa, Detroit, Michigan, Green Bay, Wisconsin, Greensboro, North Carolina, Lexington, Kentucky, Little Rock, Arkansas, Memphis, Tennessee, Nashville, Tennessee, Norfolk, Virginia; Oklahoma City, Oklahoma, Omaha, Nebraska, Ottawa, Canada, San Antonio, Texas, San Diego, California, Sarasota, Florida, Savannah, Georgia, Toledo, Ohio, Tulsa, Oklahoma, Washington - Dulles. * Guam A.B. Won Pat: Denpasar, Bali, Indonesia. As a result of the discontinued service, this stations will close: Denpasar, Bali, Indonesia Oakland, California Cali, Colombia Palm Springs, California Chattanooga, Tennessee Reno, Nevada Cologne, Germany Santiago, Dominican Republic Green Bay, Wisconsin Sarasota, Florida Guayaquil, Ecuador Tallahassee, Florida Monclova, Mexico Toledo, Ohio Montgomery, Alabama As disclosed in the Troubled Company Reporter on June 6, 2008, the company will eliminate 3,000 positions across all work groups, including management positions, through voluntary and involuntary separations, with the majority of them expected to be through voluntary programs. The specific number of involuntary furloughs will not be determined until August, after the company knows how many co-workers elect to take advantage of voluntary programs. The company will work with furloughed/terminated co-workers to provide information on benefits and other employment opportunities available to them. In the case where suppliers and vendors are affected by capacity reductions, the company will work with them to determine if there are other job opportunities for their affected employees. Customers who are currently booked on flights previously scheduled to operate on or after September 3 that are affected by the capacity reductions, will be contacted by Continental Airlines to make alternate arrangements. About Continental Airlines Continental Airlines Inc. (NYSE: CAL) -- http://continental.com/ -- is the world's fifth largest airline. Continental, together with Continental Express and Continental Connection, has more than 2,900 daily departures throughout the Americas, Europe and Asia, serving 144 domestic and 139 international destinations. More than 500 additional points are served via SkyTeam alliance airlines. With more than 45,000 employees, Continental has hubs serving New York, Houston, Cleveland and Guam, and together with Continental Express, carries approximately 69 million passengers per year. * * * The Troubled Company Reporter said May 21, 2008, that Moody's Investors Service affirmed the B2 Corporate Family Rating of Continental Airlines, Inc. as well as the ratings of its outstanding corporate debt instruments and selected classes of Continental's Enhanced Equipment Trust Certificates. The Speculative Grade Liquidity rating was lowered to SGL-3 from SGL- 2. The outlook has been changed to negative from stable. As reported by the Troubled Company Reporter on April 22, 2008, Standard & Poor's Ratings Services revised its rating outlook on Continental Airlines Inc. (B/Negative/B-3) to negative from stable. S&P also placed its ratings on selected enhanced equipment trust certificates that are secured by regional jets on CreditWatch with negative implications. As reported in the Troubled Company Reporter on Dec. 27, 2007, Fitch Ratings affirmed Continental Airlines 'B-' issuer default rating with a stable outlook. CORONA BASIN: Files Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Corona Basin Land & Cattle Co. Inc. 1400 Quail, Suite 275 Newport Beach, California 92660 Bankruptcy Case No.: 08-13256 Chapter 11 Petition Date: June 11, 2008 Court: Central District Of California (Santa Ana) Judge: Erithe A. Smith Debtors' Counsel: Noelle R. Minto, Esq. 2901 W. Coast Highway, Suite 200 Newport Beach, California 92660 Tel: (949) 258-4324 Total Assets: $8,290,400 Total Debts: $14,065,782 The Debtor does not have creditors who are not insiders. COUDERT BROS: Five Ex-Partners Oppose Amended Disclosure Statement ------------------------------------------------------------------ The first amended disclosure statement describing Coudert Brothers LLP's bankruptcy plan faced objection from five of the firm's former partners, Bankruptcy Law 360 reports. The former partners asserted that the changes in the disclosure statement do not agree with what was discussed at a hearing, Bankruptcy Law says. The objecting party presented to the U.S. Bankruptcy Court for the Southern District of New York on Wednesday their proposed amendments to the Debtor's disclosure statement, Bankruptcy Law adds. A copy of the Debtor's first amended disclosure statement is available for free at http://www.kccllc.net/impDateDocs.asp?D=2315 A copy of the Debtor's first amended plan is available for free at http://www.kccllc.net/impDateDocs.asp?D=2316 As reported in the Troubled Company Reporter on June 9, 2008, the Court indicated that the Debtor's disclosures statement describing its amended chapter 11 plan of liquidation needed further revision before it can be approved. The Hon. Robert D. Drain said he is already inclined to give a thumbs up to the Debtor's disclosure statement at a hearing expected to take place in the second week of June 2008. Judge Drain, added that the Debtor's disclosure statement already contains adequate information relating to changes that he had suggested. About Coudert Brothers Coudert Brothers LLP was an international law firm specializing in complex cross border transactions and dispute resolution. The firm had operations in Australia and China. The Debtor filed for Chapter 11 protection on Sept. 22, 2006 (Bankr. S.D.N.Y. Case No. 06-12226). John E. Jureller, Jr., Esq., and Tracy L. Klestadt, Esq., at Klestadt & Winters, LLP, represent the Debtor in its restructuring efforts. Kurtzman Carson Consultants LLC is the Debtor's claims and notice agent. Brian F. Moore, Esq., and David J. Adler, Esq., at McCarter & English, LLP, represent the Official Committee Of Unsecured Creditors. In its schedules of assets and debts, Coudert listed total assets of $29,968,033 and total debts of $18,261,380. The Debtor's exclusive period to file a plan expired on May 20, 2007. The Debtor proposed a plan confirmation hearing to be held on Aug. 15, 2008, at 10:00 a.m. CRAIG STEWART: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Craig Charles Stewart 11628 S. Warcloud Court Phoenix, AZ 85044 Bankruptcy Case No.: 08-06820 Description: The Debtor's wholly owned company, Warehouse Equipment Depot Corporation sought protection under chapter 11 on May 2, 2007 (Case No. 07-01989). Chapter 11 Petition Date: June 9, 2008 Court: District of Arizona (Phoenix) Judge: Randolph J. Haines Debtor's Counsel: Donald W. Powell, Esq. Carmichael & Powell PC 7301 North 16th Street, #103 Phoenix, AZ 85020 Tel: (602) 861-0777 Fax: 602-870-0296 (d.powell@cplawfirm.com) Total Assets: $1,456,250 Total Debts: $1,857,000 A copy of the Debtor's petition with a list of unsecured creditors is available for free at http://bankrupt.com/misc/az08-06820.pdf DANKA BUSINESS: Stake Holders Spurn Voluntary Liquidation Proposal ------------------------------------------------------------------ DCML LLC, in a letter to the Danka Business Services PLC's board of directors, stated that it will not support the voluntary liquidation of Danka, and intended to vote against it. Robert Andrade has sent the letter on behalf of DCML LLC, and certain related entities that own, in the aggregate, approximately 6% of the common stock of Danka Business Systems PLC. He related that even if he supports the board's decision to recommend shareholder approval of the sale of Danka Office Imaging Company to Konica Minolta, Mr. Andrade related that the Independent Committee erred in: 1) recommending that the company enter liquidation subsequent to the sale; 2) conditioning sale of DOIC upon shareholder approval of liquidation; and 3) negotiating a distribution of sale proceeds in liquidation that would leave ordinary shareholders with a pittance -- $6.5 million, while holders of participating shares would receive substantially in excess of $100 million. Mr. Andrade said that the proposed distribution to ordinary shareholders is unfair, and he believe that the company could have pursued alternative options for executing the sale of DOIC to KOM while ensuring that the value derived from the sale is shared more equitably among all of the company's shareholders. The Committee's failure raises serious questions about the exercise of its fiduciary duties and the board has failed its majority shareholders in negotiating the Cypress transaction. DCML LLC filed a Schedule 13D with the Securities and Exchange Commission, indicating its acquisition of a more than a 5% interest in the outstanding Ordinary Shares of Danka Business Services PLC. About Danka Business Systems PLC Danka Business Systems PLC (LON: DNK) -- http://www.danka.com/ -- offers document solutions, including office imaging equipment, software, support, and related services and supplies in the United States. It offers office imaging products, services, supplies and solutions, including digital and color copiers, digital and color multifunction peripherals printers, facsimile machines and software. It also provides a range of contract services, including professional and consulting services, maintenance, supplies, leasing arrangements, technical support and training, collectively referred to as Danka Document Services. The company's revenue is generated from two primary sources: new retail equipment, supplies and related sales, and service contracts. Danka sells Canon products, as well as Kodak, Toshiba and Hewlett-Packard. On Aug. 31, 2006, the company sold its subsidiary, Danka Australasia, PTY Limited, to Onesource Group Limited. In January 2007, the company disposed of its European businesses to Ricoh Europe B.V. The company's Dec. 31, 2007 balance sheet showed total assets of $233.5 million, total liabilities of $225.0 million, 6.5% senior convertible participating shares of $362.6 million, and total stockholders' deficit of $354.1 million. DELPHI CORP: Trial on $2.55 Billion Lawsuit to Begin in April 2009 ------------------------------------------------------------------ The Hon. Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York approved on June 10, 2008, the trial and discovery schedule for Delphi Corporation's $2,550,000,000 lawsuit against Appaloosa Management, LP, et al. After negotiations, a mutually acceptable schedule was reached by the parties, which include Delphi Corp., and other defendants, the Official Committee of Equity Security Holders, and the Official Committee of Unsecured Creditors. The parties met on June 3, 2008, and thereafter, to discuss an appropriate schedule for the progress of the adversary proceedings. Edward Friedman, Esq., at Friedman, Kaplan, Seiler and Adelman, in New York, informed the Court the Plan Investors rejected Delphi's contention of its right to seek specific performance of all or portions of the contractual obligations under the Equity Purchase and Commitment Agreement, and Delphi insisted that the actions should proceed in an expedited manner to preserve its claimed right to obtain that remedy. The parties have acknowledged that in setting an expedited schedule, each will be seeking a significant volume of pre-trial documentary and testimonial discovery necessary for the adjudication of the claims, counterclaims, if any, and defenses in the Actions. As a result of the agreed schedule, Delphi is withdrawing its prior request for an expedited discovery and trial. The parties have agreed and stipulated: (1) Each party to the Actions may take discovery on all relevant matters. The Official Committees may participate in the discovery; (2) Discovery and related matters will be governed by this schedule: (i) Each party will serve its initial disclosures required by Rule 26(a)(1) of the Federal Rules of Civil Procedure not later than June 11, 2008; (ii) The Plan Investors will each either answer or file a motion in response to the complaints in the Actions by June 20, 2008, and will coordinate with respect to any motions they file to avoid duplicative papers; (iii) The parties will serve initial sets of document requests not later than June 13, 2008. Each party will serve written document responses and objections on all parties within 21 days of the service of the document requests; (iv) Document production will begin on July 1, 2008, and must be complete by August 12, 2008. The parties are not prohibited from making further request for additional documents beyond the Initial Requests, provided that responses to the requests will not be due before August 12, 2008; (v) Notices of deposition may be served at any time. A party or third-party deposition may commence on or after September 3, 2008. If any party fails to complete its document production by August 12, 2008, the other parties reserve the right to move to modify the commencement date for depositions and subsequent deadlines set forth, and for other appropriate relief; (a) Delphi may take up to 30 depositions of fact witnesses; (b) The Plan Investors may take up to 50 depositions of fact witnesses; and (c) The parties agree to attempt in good faith to schedule all depositions as expeditiously as possible, at the rate of three days of depositions a week; (vi) Delphi and the Plan Investors may as a group, each take the deposition of up to two natural persons on dates to be agreed upon between August 12, 2008, and August 22, 2008; (vii) Each party may serve interrogatories not earlier than June 13, 2008, and not later than 30 days before the fact discovery deadline; (vi) Each party may serve any requests to admit not earlier than June 13, 2008, and not later than 30 days before the fact discovery deadline; (viii) With respect to the Court's order authorizing the Debtors to issue subpoenas directing expedited oral examinations of and production of documents by certain investors dated March 17, 2008, the parties agree that any further discovery taken pursuant to the order under Rule 2004 of the Federal Rules of Bankruptcy Procedure will be subject to the limits, procedures and schedules; (ix) All discovery will be completed by Dec. 31, 2008; (x) Any expert report will be served within 30 days of the fact discovery deadline, and rebuttal expert reports will be filed within 30 days after service of initial reports. Depositions of expert witnesses will be completed within 30 days following the service of the last rebuttal expert report; (xi) Any party may move subject to Local Bankruptcy Rule 7056-1, for summary judgment or partial summary judgment at any time; (xii) Each party reserves the right to move for injunctive relief and each party reserves its rights to oppose or object to any motion; and (xiii) Except as otherwise ordered by the Court, the Actions will be trial ready by 90 days following the fact discovery deadline. Trial to Begin April 2009 As previously reported, Delphi targeted an August 9 trial to its lawsuit seeking specific performance by the Plan Investors on the EPCA, which is needed for the consummation of Delphi's Court- confirmed reorganization plan. Counsel pointed out that Delphi has proposed a longer schedule than was the case in other recent litigations also involving multibillion dollar disputes such as the Solutia Inc. case in this district and the Clear Channel Communications case in the New York State Court. Judge Drain, however, affirmed the Plan Investors' contentions and ruled that the schedule was "too ambitious," despite Delphi counsel's claims that two years of tremendous efforts to achieve a confirmed plan will be wasted if the the adversary proceedings against the Plan Investors are not immediately resolved. Mr. Friedman, special litigation counsel to Delphi, noted that by virtue of waivers previously granted by the Pension Benefit Guaranty Corp. and the Internal Revenue Service, Delphi has a window of opportunity to emerge from Chapter 11 between June 15 and Sept. 30, 2008, without the need to go back to those agencies and obtain new waivers. In that light, Delphi is pursuing an August 1 trial to be able to emerge on September 30 at the very very latest. At the May 29 conference, attorneys already debated on the merits of the lawsuit, as to whether Delphi is currently entitled to specific performance by Plan Investors. Mr. Friedman noted that on April 4, when the EPCA was scheduled for closing, Delphi satisfied the prerequisites for funding by Appaloosa, et al. -- General Motors Corp., the exit lenders, all other parties necessary for the consummation of the plan were ready and able to close, and Delphi was able to raise funds from the rights offering. The Plan Investors, however, argued that Delphi is not entitled to specific performance because they no longer satisfy the terms of the EPCA -- funds received from investors in the rights offering have been returned, the $6,000,000,000 exit debt financing agreements have been terminated, and it has lost its debt ratings. Mr. Friedman, however, explained that Delphi is currently not in full compliance because of the Plan Investors' wrongful conduct and contractual breaches. He cited, among other things, Delphi made the decision to return funds received from the rights offering in accordance with its fiduciary duties when the Plan Investors' conduct made the closing impossible. He avers that Delphi will be in compliance with all conditions if the Court agrees that the remedy of specific performance is warranted. He said Delphi, among other things, would re-initiate the rights offering, and would redevelop the commitments for the exit financing, which it expects to be completed within 30 to 40 days after judgment. Delphi's theory -- after an order on specific performance, it could restart its rights offering, raise public debt, and try to put the whole plan back together -- is fundamentally flawed and violates New York law, argued counsel for Appaloosa, Christopher Shore, Esq., at White & Case LLP, in New York. Counsel for UBS Securities, LLC, Jeffrey Rosenthal, Esq., at Cleary Gottlieb Steen & Hamilton LLP, in New York, added, "[Delphi] hasn't cited a single case that says that being ready, willing, and able in the past allows them to get specific performance in the future." "Granted the debtors have not cited cases on this point, but it seems to me that if a contract party's breach is preventing the debtors from being ready, willing, and able they don't necessarily have to do more than show that they could be able to perform if that impediment, that breach were resolved," Judge Drain said. But he admitted the Debtors have not provided any evidence showing that the exit loan lenders would be able to advance in the future. Mr. Friedman acknowledged at the conference that in an effort to mitigate damages, Delphi is pursuing alternative steps to try to develop a modified plan, which will require re-solicitation and will be materially adverse to the stakeholders. "The goal is to emerge from Chapter 11 by the end of the third quarter if that's humanly possible either by means of consummation of the plan that has already been confirmed, or if the Court rejects Delphi's claims, then Delphi and the stakeholders will be in the unfortunate position of pursuing a modified plan," Mr. Friedman said. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for Chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. (Delphi Bankruptcy News, Issue No. 133; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Gets New Bid for Power Biz; 54 Pacts Part of Sale -------------------------------------------------------------- Delphi Corp. and certain of its subsidiaries and affiliates obtained a competing bid for their power products business. Delphi, however, did not identify the bidder in documents submitted to the U.S. Bankruptcy Court for the Southern District of New York. In connection with their continuous evaluation of their product portfolio, the Debtors have determined that the power products business no longer fit within their future product portfolio. Following extensive marketing efforts, on May 27, 2008, Delphi and certain non-debtor affiliates entered into a master sale and purchase agreement with Strattec Security Corporation, Witte- Velbert GmbH & Co. Kg, Vehicle Access Systems Technology LLC, and certain of their affiliates for the sale of certain assets related to the Power Products Business. Under the Agreement, the Strattec Buyers would purchase the Power Products Business for $7,800,000, subject to certain adjustments. Because the Purchase Price does not exceed $10,000,000, the Debtors did not file with the Court a motion for approval of the asset sale, and were allowed, pursuant to the Court-approved procedures for selling de minimis assets, to sell those types of assets, after notice with the Court and parties interested in those assets, among other parties. The Debtors served notice of the Power Products Sale on May 27, which notice provides that the sale of would be consummated with the Strattec Buyers unless written objections, bids, or requests for additional time were received by the Debtors by June 3, 2008. The Debtors received the competing bid from the unidentified bidder on June 3. The Debtors are currently in the process of evaluating the bid, says John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois. He adds that if the Debtors, in their sole discretion, determine that this bid, or subsequent bid, constitutes the highest value bid, then Delphi will seek relief from the Court to assume and assign contracts related to the Power Products Business to the competing bidder, instead of the Strattec Buyers. Assumption and Assignment of U.S. Contracts Under Section 6.3 of the Strattec Agreement, as soon as practicable after the Agreement was signed, Delphi was obligated to seek the Court's authority to assume and assign to the Strattec Buyers certain contracts identified by the parties. Accordingly, by this motion, the Debtors ask the Court to enter an order authorizing and approving the assumption and assignment of 54 executory contracts in connection with the sale of their Power Products Business to the Strattec Buyers, or the competing bidder. Mr. Butler notes the Assumed U.S. Contracts are important to the operation of the Power Products Business, and the Strattec Buyers would not purchase the Power Products Business unless the Assumed U.S. Contracts are transferred to them. Thus, the Debtors' assumption of the Assumed U.S. Contracts and assignment of the contracts to the Strattec Buyers is necessary to enable the Sellers to consummate the sale of the Power Products Business to the Strattec Buyers. The approximate cost to cure the Assumed U.S. Contracts related to the Power Products Business is $347,010. Pursuant to the order establishing procedures for solicitation of votes and support on Delphi's Joint Plan of Reorganization, each non-Debtor party to the 54 Assumed U.S. Contracts that are material supply agreements already has received a cure notice. The Plan Cure Notice stated, with respect to each Assumed U.S. Contract, the cure amount that the Debtors believe is necessary to assume the contract pursuant to Section 365 of the Bankruptcy Code. The Plan Cure Notice provided parties to these Assumed U.S. Contracts with an opportunity to object to the Cure Amount, and notified each party that such party's contract was to be assumed under the Plan. Of the 54 parties to the Assumed U.S. Contracts for which the Debtors served a Plan Cure Notice, only four parties objected to the Debtors' proposed Cure Amount. Unless the Selling Debtor Entities and the non-Debtor party to an Assumed U.S. Contract agree otherwise to the Cure Amount or the Cure Amount is otherwise resolved in accordance with Solicitation Procedures Order or other order of the Court, the Cure listed on the Plan Cure Notices control the amounts required to cure all defaults under the Assumed U.S. Contracts that are material supply contracts. The Assumed U.S. Contracts would be assumed at the earlier of the closing of the sale of the Power Products Business or the Debtors' emergence date from the Chapter 11 cases. Nonetheless, prior to the Closing Date or the Emergence Date, the Selling Debtor Entities may revise their decision with respect to the assumption and assignment of any Assumed U.S. Contract and provide notice amending the information provided, Mr. Butler notes. The Assumed U.S. Contracts are: Contract To Be Assumed & Assigned Non-Debtor Contract Party ------------------ ------------------------- D0550076639 AMTECH INDUSTRIES LLC (JV Amtech & Intec) D0550064001 AMTEK MEXICO SA DE CV EFT D0550022116 AUTOLIV ASP INC D0550022243 AUTOLIV ASP INC EFT D0550076293 AVON AUTOMOTIVE INC D0550022971 CAMCAR DIV OF TEXTRON INC D0550037665 CAPSTAN ATLANTIC D0550059940 CAPSTAN ATLANTIC D0550022122 CASCADE DIE CASTING D0550022830 CHERRY ELECTRICAL PRODUCTS D0550052192 COLLINS & AIKMAN PRODS CO D0550074455 FOAMEX D0550074456 FOAMEX D0550074457 FOAMEX D0550074563 FOAMEX D0550074564 FOAMEX D0550079225 FOAMEX D0550080330 FUJIKURA AMERICA INC PO#OR3V0002 between General GENERAL MOTORS CORP. Motors Corporation and Delphi S&I - Mount Sterling; Dated 8/25/2005; Amendment #002; Valid 3/28/2004 - 8/1/2008; Part #10376548. D0550052145 GKN SINTER METALS EFT D0550076310 HANGZHOU TRANSAILING EFT D0550022536 HYLAND MACHINE CO EFT D0550022842 IN2CONNECT INC D0550023223 IN2CONNECT INC D0550024506 INTASCO USA INC D0550087191 INT'L RESISTIVE CO D0550022592 INTIER AUTOMOTIVE INTERIORS Grant of Security Int. in Patent JP MORGAN CHASE BANK Rights between Delphi Technologies, Inc and JPMorgan Chase Bank, N.A. dated 06-14-05 D0550035472 KOSTAL MEXICANA SA DE CV D0550026051 L & W ENGINEERING CO INC D0550061252 L & W ENGINEERING CO INC D0550024156 LDI INCORPORATED D0550025201 LDI INCORPORATED D0550022596 MAC ARTHUR CORP D0550079811 MAC ARTHUR CORP D0550023568 MULTEX FLEXIBLE CIRCUITS D0550056439 MULTIBASE INC D0550076391 PRECISION RESOURCE CONNECTICUT D0550057079 RED SPOT PAINT & VARNISH EFT CO INC D0550057092 RED SPOT PAINT & VARNISH D0550078829 ROBIN INDUSTRIES INC D0550056677 SOLVAY ENGINEERED POLYMERS EFT D0550077738 SPARTECH POLYCOM D0550056314 TEKNOR APEX CO D0550056383 TEKNOR APEX CO D0550056423 TEKNOR APEX CO EFT D0550074858 TESSY PLASTICS CORP D0550074860 TESSY PLASTICS CORP Letter of Intent bet. Tjing Ling TJING LING RESEARCH AND Research & Development Center Co., DEVELOPMENT CENTER CO. Ltd. and Delphi Thermal & Interior LTD Division of Delphi Autom. Systems LLC dated 5/18/2005. D0550053417 TRW VEHICLE SAFETY SYSTS D0550070364 TRW VEHICLE SAFETY SYSTS D0550023217 TYCO ELECTRONICS CORP D0550074552 WOORY INDUSTRIAL CO LTD D0550074553 WOORY INDUSTRIAL CO LTD D0550074554 WOORY INDUSTRIAL CO LTD D0550080042 WOORY INDUSTRIAL CO LTD D0550074776 ZOHAR JACOBS ACQUISITION LLC About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for Chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. (Delphi Bankruptcy News, Issue No. 132; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Amends $4.1BB Facility to Raise Available Amount ------------------------------------------------------------- The Honorable Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York has entered a written order approving Delphi Corp.'s $4,350,000,000 DIP facility. Due to the oversubscription during the syndication of the loans, Delphi sought to amend its $4,100,000,000 loan package by: (i) increasing the amount of availability under the Tranche A revolving credit facility to $1,100,000,000 and decreasing the amount of the Tranche B term loan to $500,000,000; and (ii) increasing the principal amount of the Tranche C Loan by approximately $254,000,000. The DIP Facility matures Dec. 31, 2008. According to the Amended and Restated Revolving Credit, Term Loan and Guaranty Agreement dated May 9, 2008, these financial institutions took part in arranging the loan: -- JPMORGAN CHASE BANK, N.A., as Administrative Agent, -- CITICORP USA, INC., as Syndication Agent, -- BANK OF AMERICA, N.A., GENERAL ELECTRIC CAPITAL CORPORATION and WACHOVIA CAPITAL FINANCE CORPORATION as Co- Documentation Agents for Tranche A and Tranche B, -- J.P. MORGAN SECURITIES INC., CITIGROUP GLOBAL MARKETS INC. and GE CAPITAL MARKETS, INC. as Joint Lead Arrangers for Tranche A and Tranche B, -- JPMORGAN SECURITIES INC., CITIGROUP GLOBAL MARKETS INC., GE CAPITAL MARKETS, INC. and BANK OF AMERICA, N.A., as Joint Bookrunners for Tranche A and Tranche B, -- DEUTSCHE BANK SECURITIES INC., as Documentation Agent for Tranche C, -- J.P. MORGAN SECURITIES INC., CITIGROUP GLOBAL MARKETS INC. and DEUTSCHE BANK SECURITIES INC. as Joint Lead Arrangers for Tranche C, and -- J.P. MORGAN SECURITIES INC., CITIGROUP GLOBAL MARKETS INC. and DEUTSCHE BANK SECURITIES INC. as Joint Bookrunners for Tranche C. The Amended Credit Agreement also provides for these changes: -- Lenders will fund the $254,179,760 addition Tranche C Loan on June 9. -- The Debtors will pay for the additional Tranche C loan a commitment fee computed (on the basis of the actual number of days elapsed over a year of 360 days) at the rate of 2.625% per annum on the additional loan. -- Conditions precedent to the additional Tranche C Loan, include, JPMorgan, as administrative agent, will have received an amendment fee for the account of each Tranche C Lender in an amount equal to 200 basis points of the additional Tranche C commitments of each lender. -- Any Lender may assign to one or more special purpose funding vehicles all or any portion of its funded Tranche A Loans and may grant any SPV the option to fund all or any part of any Tranche A Loans that the Lender would otherwise be obligated to fund pursuant to the Credit Agreement. A full-text copy of the Amended Credit Agreement is available for free at http://bankrupt.com/misc/Delphi_May2008_DIP_Accord.pdf About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for Chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. (Delphi Bankruptcy News, Issue No. 132; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DEN-MARK CONSTRUCTION: Taps Mitchell & Nemitz as Accountant ----------------------------------------------------------- Den-Mark Construction Inc. and its three debtor-affiliates sought permission from the U.S. Bankruptcy Court for the Eastern District of North Carolina to employ Howard Mitchell, Esq., at Mitchell & Nemitz PA as their accountant. The Debtors told the Court that the firm and Mr. Mitchell do not currently hold an interest adverse to the estate and that they are disinterested persons. The Debtors said they did not owe any fees to the firm or Mr. Mitchell as of April 24, 2008. The document filed with the Court did not disclose the firm's compensation rates. The firm can be reached at: Mitchell & Nemitz PA 12324 Hampton Way Drive, Suite 201 Wake Forest, NC 27587 About Den-Mark Construction Youngsville, North Carolina-based Den-Mark Construction Inc. constructs single-family houses. It filed its chapter 11 petition on April 24, 2008 (Bankr. E.D.N.C. Case No. 08-02764) together with three debtor-affiliates, Den-Mark Homes SC, Inc. (08-02766); Marcus Edwards Development, LLC (08-02768); and M&D Development, LLC (08-02769). Judge Randy D. Doub presides over the case. Trawick H. Stubbs, Jr., Esq., at Stubbs & Perdue, P.A. represents the Debtors in their restructuring efforts. The Debtors' schedules showed total assets of $44,810,901 and total liabilities of $34,537,937. DEN-MARK CONSTRUCTION: Final Sale Procedure Hearing Set June 26 --------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of North Carolina will convene a hearing on June 26, 2008, at 10:00 a.m. to consider final approval of a sale procedure proposed by Den-Mark Construction Inc. and its three debtor-affiliates. The Debtors disclosed that they have some residential properties listed for sale with Century 21 Weaver & Associates, Keller Williams Preferred Realty Inc., Fonville Morisey & Barefoot, and Coldwell Banker Advantage. The Debtors told the Court that they wish to sell some or all of the properties in the ordinary course of business, in an effort to obtain the highest price for the properties. The Debtors said they believe they can continue to sell homes in the ordinary course of business without the need for court order. However, as a caution and in order to provide clarity to the Debtors' customers and creditors, the Debtors propose these sales procedures: a. the Debtors' counsel will serve within 24 hours of execution via electronic mail all contracts to purchase any unit or lot that the Debtors wish to accept. The approval and sale of the homes or lots will be deemed approved unless an objection is submitted in writing to the Debtors' counsel within seven days of receipt of the notice. If the closing is set to occur prior to the expiration of the seven-day objection period, the sale will be approved unless an objection is submitted in writing to the Debtors' counsel within 72 hours of receipt. If a notice party timely objects in writing, the Debtors will immediately advise the Court of the objection and obtain an expedited hearing with respect to the proposed sale. b. after the expiration of the objection period, any creditor holding a claim against the property for sale will be notified by the Debtors of the scheduled closing date. Lienholders will provide the Debtors' counsel an itemized payoff in a form satisfactory to the Debtors no later than 48 business hours prior to the set closing. The itemized payoff statement will include an itemization of all principle, prepetition and postpetition interest and costs. When the payoff statement is not timely received by the Debtors, the Debtors may elect to escrow all or a portion of the sale proceeds owed to the lienholder until the Court approves a motin for distribution. c. the Debtors may sell the properties pursuant to the proposed terms until the Debtors' plan is confirmed, the case is converted to chapter 7 of the Bankruptcy Code, a trustee is appointed, or the Court modifies or vacates any order approving the sale procedures motion. The Debtors have proposed these distribution scheme to be allowed from the sale proceeds at closing without the need for further court orders: 1. reasonable closing costs; 2. fees and costs of the closing attorney; 3. payment of any real estate commission previously approved by separate Court order; 4. any ad valorem property taxes for 2007, 2008, and subsequent years; and 5. recording fees or charges. Remaining proceeds will be distributed by the Court in accordance with the cash collateral orders. In the event of a dispute, the sale will be allowed to close and the disputed portion of the sales proceeds will be escrowed until the Court determines the manner of their distribution. Wachovia Opposes Engagements of Brokers As reported by the Troubled Company Reporter on June 5, 2008, Wachovia Bank NA filed with the Court an objection to the request of the Debtors to employ various brokers, Weichert Realtors Southern Cost, Coldwell Banker Chicora Real Estate, and Coldwell Banker Howard Perry & Walston Builder Services. Wachovia contests, among others, the commission rates of the brokers. About Den-Mark Construction Youngsville, North Carolina-based Den-Mark Construction Inc. constructs single-family houses. It filed its chapter 11 petition on April 24, 2008 (Bankr. E.D.N.C. Case No. 08-02764) together with three debtor-affiliates, Den-Mark Homes SC, Inc. (08-02766); Marcus Edwards Development, LLC (08-02768); and M&D Development, LLC (08-02769). Judge Randy D. Doub presides over the case. Trawick H. Stubbs, Jr., Esq., at Stubbs & Perdue, P.A. represents the Debtors in their restructuring efforts. The Debtors' schedules showed total assets of $44,810,901 and total liabilities of $34,537,937. DEN-MARK CONSTRUCTION: Court OKs Sale of Residential Properties --------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of North Carolina gave Den-Mark Construction Inc. approval to sell its property free and clear of liens and other interests. The Court permitted the Debtor to pay real estate commission associated with the sale from the gross sale proceeds. When the Court finds that the realtor is not disinterested, the commission may be subject to disgorgement. The Debtor disclosed that these creditors assert a lien on its property and proceeds: 1. Deed of trust recorded in book 2899, page 852, Johnston County, North Carolina Registry, as amended and recorded in book 3156, page 286. 2. Deed of trust recorded in book 2532, page 505, Wake County, North Carolina Registry. 3. Deed of trust recorded in book 1144, page 215, Vance County, North Carolina Registry. 4. Deed of trust recorded in book 9256, page 1335, Wake County, North Carolina Registry. 5. Deed of trust recorded in book 10914, page 225, Wake County, North Carolina Registry. 6. Claims of lien in file numbers 08 M 307 and 08 M 378 Alamance County, North Carolina, office of the Clerk of Superior County. 7. Claims of lien in file numbers 08 M 430-433, Johnston County, North Carolina, office of the Clerk of Superior County. The Debtors had related in its sale motion that the sale proceeds of any unencumbered or under-encumbered property will be subject to payment of all reasonable administrative costs of the case, as the Court may allow. Wachovia Opposes Engagements of Brokers As reported by the Troubled Company Reporter on June 5, 2008, Wachovia Bank NA filed with the Court an objection to the request of the Debtors to employ various brokers, Weichert Realtors Southern Cost, Coldwell Banker Chicora Real Estate, and Coldwell Banker Howard Perry & Walston Builder Services. Wachovia contests, among others, the commission rates of the brokers. About Den-Mark Construction Youngsville, North Carolina-based Den-Mark Construction Inc. constructs single-family houses. It filed its chapter 11 petition on April 24, 2008 (Bankr. E.D.N.C. Case No. 08-02764) together with three debtor-affiliates, Den-Mark Homes SC, Inc. (08-02766); Marcus Edwards Development, LLC (08-02768); and M&D Development, LLC (08-02769). Judge Randy D. Doub presides over the case. Trawick H. Stubbs, Jr., Esq., at Stubbs & Perdue, P.A. represents the Debtors in their restructuring efforts. The Debtors' schedules showed total assets of $44,810,901 and total liabilities of $34,537,937. DIAMOND RANCH: Gruber & Company Expresses Going Concern Doubt ------------------------------------------------------------- Gruber & Company, LLC, raised substantial doubt on the ability of Diamond Ranch Foods, Ltd., to continue as a going concern after it audited the company's financial statements for the year ended March 31, 2008. The auditor pointed to the company�s recurring losses from operations. The company posted a net loss of $1,894,010 on total revenues of $11,265,457 for the year ended March 31, 2008, as compared with a net loss of $979,168 on total revenues of $12,750,457 in the prior year. The company reported a net loss from operations of $374,258 for March 31, 2008, compared with a net loss from operations of $872,113 in 2007. At March 31, 2008, the company's balance sheet showed $1,213,182 in total assets and $4,246,327 in total liabilities, resulting in $3,033,145 stockholders' deficit. The company's consolidated balance sheet at March 31, 2008, also showed strained liquidity with $1,060,714 in total current assets available to pay $2,044,395 in total current liabilities. A full-text copy of the company's 2007 annual report is available for free at http://ResearchArchives.com/t/s?2d8c About Diamond Ranch Diamond Ranch Foods, Ltd., -- www.diamondranchfoods.com/ -- processes and distributes meats and fresh cut portion controlled poultry, and is located in the historic Gansevoort meatpacking district in lower Manhattan, NY. Operations include packing, processing, labeling and distribution of products. The company also provides portion controlled meats, custom meat cutting, and private labeling. The company's diversified customer base includes in-home food service businesses, retailers, hotels, restaurants, and institutions, deli and catering operators and industry suppliers. EARTH BIOFUELS: Montgomery Coscia Expresses Going Concern Doubt --------------------------------------------------------------- Houston-based Montgomery Coscia Greilich LLP raised substantial doubt on the ability of Earth Biofuels, Inc., to continue as a going concern after it audited the accompanying company's financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's recurring operating losses and working capital deficit. Earth Biofuels has incurred significant losses from operations and as of Dec. 31, 2007, and has limited financial resources. The company also has an accumulated deficit of $204,277, negative current ratios and negative tangible net worth at Dec. 31, 2007. Chapter 7 Liquidation and Settlement Agreement In addition, investors holding $52.5 million in senior unsecured notes filed with the bankruptcy courts a chapter 7 -- Involuntary Liquidation against EBOF during the second quarter of 2007. However, on Nov. 14, 2007, EBOF negotiated and executed a settlement agreement with the above note holders. The Agreement required the creditors to dismiss their petition of bankruptcy. Under the terms of the Agreement, EBOF and subsidiaries granted certain security interests to the creditors and will execute a restructuring plan within 180 days. In addition, one of the accredited investors of the original eight accredited investors purchased four of the original investors interest, whereby reducing the number of credit holders to three. The company is currently in negotiations with the remaining investors to settle the outstanding debts. The company intends to sell certain operating assets and liabilities of the Liquid Natural Gas business through a reverse merger and public offering of the LNG Business, and raise $35 million in the newly formed public company. Management expects that the LNG Business will be released as a guarantor of the EBOF notes totaling $52.5M by providing the note holders with a security interest in the newly formed public company. The Restructuring will allow the company to build new fueling stations, expand geographically and improve its sales and marketing efforts. Management believes that the LNG Business has substantial market value that is not necessarily reflected by the accompanying financial statements. The LNG company acquisitions have produced revenues over the past two years in excess of $50 million, and this market has been the focus of Earth LNG's underlying company efforts for over ten years. While cash flows from operations were flat year over the current year, the second half of 2007 demonstrated positive trends due to renewed and new customer contracts, significant cost restructurings and management improvements. The company is also in the process of refinancing the term debt related to the Durant, Oklahoma biodiesel plant, and retrofitting the plant to allow for usage of other types of raw materials besides soybean oil. Due to the significant increase in feedstock prices during the year this plant was idle for most of 2007, resulting in reduced profit margins. Earth believes the LNG business will be a major part of establishing future financial stability of the company. The company also believes the above measures will significantly enhance the liquidity position, profitability and allow for repayment to the $52.5 million notes holders. Earth's management is attempting to seek strategic alternatives, including the pursuit of additional financing for strategic acquisitions or a merger with other businesses. Management intends to raise capital through other offerings, secure collateralized debt financing and use these sources of capital to grow and enhance its alternative fuel production and distribution operations. If additional funds are raised by issuing debt, the company may be subject to restrictive covenants that could limit its operating flexibility. Earth's performance will also be affected by prevailing economic conditions. Many of these factors are beyond Earth's control. There can be no assurance that adequate funds will be available when needed and on acceptable terms, or that a strategic alternative can be arranged. Subsequent Events On Feb. 20, 2008, WN Truck Stop, LLC., a Texas limited liability company, a subsidiary of Earth Biofuels, Inc., in which the company has a fifty percent member interest (with Trucker's Corner, LP as the other member of the Borrower) entered into a $4,750,000 secured promissory note with SBL Capital Funding, LLC, a New Jersey limited liability company. Pursuant to the terms of the Note, Lender provided Borrower with a one-year term loan facility. The proceeds from the financing provided pursuant to the Loan will be used to complete the construction of "Willie's Place at Carl's Corner." Earth maintains one operating segment whose business is conducted through a separate legal entity that is wholly owned by Earth. This segment is Earth LNG, Inc. LNG is managed separately, as this business has a distinct customer base and requires different strategic and marketing efforts. The accounting policies of the segment are the same as those described in the summary of significant accounting policies. The segment company contains liquefied natural gas production, distribution and marketing operations. The subsidiary revenues are in excess of 10% of consolidated revenues. There are no inter-segment revenues or expenses. Financials The company posted a net loss of $122,480,000 on total revenues of $27, 086,000 for the year ended Dec. 31, 2007, as compared with net loss of $67,969,000 on total revenues of $39,737,000 in the prior year. At Dec. 31, 2007, the company's balance sheet showed $79,845,000 in total assets and $133,989,000 in total liabilities, resulting in $54,144,000 stockholders' deficit. The company's consolidated balance sheet at Dec. 31, 2007, also showed strained liquidity with $5,236,000 in total current assets available to pay $133,989,000 in total current liabilities. A full-text copy of the company's 2007 annual report is available for free at http://ResearchArchives.com/t/s?2d61 About Earth Biofuels Headquartered in Dallas, Texas, Earth Biofuels Inc. -- http://www.earthbiofuels.com/-- (OTC BB: EBOF) engages in the production, distribution, and sale of renewable fuels, with a focus on biodiesel fuel, in the United States. The company produces pure biodiesel fuel (B100) through the utilization of vegetable oils, such as soy and canola oil as raw material. The company distributes petroleum/biodiesel blended fuel, such as B20 through wholesale distributors, truck stops, and fueling stations. Earth Biofuels also produces and markets liquefied natural gas. On July 11, 2007, five creditors with claims of around $33 million filed an involuntary chapter 7 petition against the company (Bankr. D. Del. Case. No. 07-10928). Adam G. Landis, Esq., and Kerri K. Mumford, Esq., at Landis Rath & Cobb LLP, represent the petitioners. A hearing to consider approval of an interim settlement agreement entered into by the company and its creditors is set for Dec. 10, 2007. The agreement provides for the dismissal of the involuntary chapter 7 petition in exchange for the Debtor admitting its liability under a $52 million loan. In December 2007, the Court dismissed the chapter 7 petition. EARTH BIOFUELS: Sells LNG Unit to PNG Ventures for $125 Million --------------------------------------------------------------- Earth Biofuels Inc. executed a binding letter of intent with PNG Ventures Inc. whereby PNG Ventures has agreed to purchase a 100% ownership interest in Earth Biofuels' wholly owned subsidiary, Earth LNG Inc. The company said that PNG Ventures is to acquire 100% ownership of Earth LNG and all of its subsidiaries, including ALT LNG and its production facility located in Topock, Arizona. Earth Biofuels is to receive stock ownership in PNG Ventures as consideration for the transaction. PNG Ventures and Earth Biofuels have agreed to use best efforts to close the transaction on or before June 30, 2008, and have agreed to a break up fee to be paid to PNG Ventures in the event the transaction does not close. Earth Biofuels is actively engaged in the transition and the establishment of the changes in PNG Ventures' management in order to re-direct its business focus to liquefied natural gas production and distribution. Earth Biofuels CEO, Dennis McLaughlin, stated, "This pending transaction accomplishes several goals for our company. First, it will unlock the value of the LNG business by virtue of its existence in a new public company dedicated to growing the LNG operations. Second, as Earth Biofuels will initially own a controlling interest in PNG Ventures, we believe that it will allow our shareholders to participate in the increased valuation and future growth of the LNG business. Based on the proposed structure (which is yet to be finalized), the imputed value of the transaction would be, in management's estimation, approximately $125 million. Third, it will be part of an overall settlement with prior Earth Biofuels creditors pursuant to the interim restructuring agreement described in our SEC report on Form 8-K filed on November 21 of last year." "Earth Biofuels will now be able to focus on its business plan of developing biodiesel production from diverse feedstocks, retail distribution of alternative fuels through fueling stations and truck stops such as 'Willie's Place at Carl's Corner', and the development of cellulosic ethanol production facilities," Mr. McLaughlin concluded. About Earth Biofuels Headquartered in Dallas, Texas, Earth Biofuels Inc. -- http://www.earthbiofuels.com/-- (OTC BB: EBOF) engages in the production, distribution, and sale of renewable fuels, with a focus on biodiesel fuel, in the United States. The company produces pure biodiesel fuel (B100) through the utilization of vegetable oils, such as soy and canola oil as raw material. The company distributes petroleum/biodiesel blended fuel, such as B20 through wholesale distributors, truck stops, and fueling stations. Earth Biofuels also produces and markets liquefied natural gas. On July 11, 2007, five creditors with claims of around $33 million filed an involuntary chapter 7 petition against the company (Bankr. D. Del. Case. No. 07-10928). Adam G. Landis, Esq., and Kerri K. Mumford, Esq., at Landis Rath & Cobb LLP, represent the petitioners. A hearing to consider approval of an interim settlement agreement entered into by the company and its creditors is set for Dec. 10, 2007. The agreement provides for the dismissal of the involuntary chapter 7 petition in exchange for the Debtor admitting its liability under a $52 million loan. In December 2007, the Court dismissed the chapter 7 petition. At Dec. 31, 2007, the company's balance sheet showed $79,845,000 in total assets and $133,989,000 in total liabilities, resulting in $54,144,000 stockholders' deficit. EDUCATION RESOURCES: Wants to Abolish JPMorgan Student Loan Pacts ----------------------------------------------------------------- The Education Resources Institute Inc. seeks authority from the U.S. Bankruptcy Court for the District of Massachusetts to approve a stipulation terminating its relationship with JP Morgan Chase Bank, N.A., successor by merger to Bank One N.A., relating to several student loan programs. The Stipulation provides that: (a) those program documents to which Chase and the Debtor are parties will be terminated; (b) the Debtor will transfer to Chase the full amount of funds in the Pledged Account and the automatic stay will be lifted to permit Chase to receive and retain these funds; (c) Chase will waive any claims and administrative expenses based on a Guaranty Event and will waive the Interest Claim up to the sum of $20,000; (d) the Debtor will waive any existing or future claim to guaranty fees; (e) Chase and the Debtor do not waive other claims, defenses and obligations; and (f) Chase and the Debtor will perform certain transitional activities. Gina Lynn Martin, Esq., at Goodwin Procter LLP, in Boston, Massachusetts, relates that Chase participated in several loan programs guaranteed by the Debtor. Beginning in September 2007 and continuing through February 2007, Chase made loans under the Loan Programs in the aggregate principal amount of $626,000,000. Chase has funded additional loans since February 29, 2008, and the initial disbursements of Pipeline Loans is expected to continue until August 2008. Pursuant to a Deposit and Security Agreement, the Debtor funded a Pledged Account with a portion of the guaranty fees that it received upon the funding of loans by Chase. Chase holds a security interest in the Pledged Account, perfected by control pursuant to the Uniform Commercial Code. The balance of the Pledged Account as of April 31, 2008, was approximately $40,200,000. Chase and the Debtor had agreed to suspend loan funding activities under the Loan Programs, and the Debtor ceased accepting applications for Program Loans as of April 23, 2008. Chase did fund and will continue to fund Program Loans that were approved under the Program Documents based on applications received before April 23, 2008. Chase wishes to terminate the Loan Programs, and the Debtor has agreed to the termination in respect of those Program Documents to which it is a party, subject to certain terms and conditions. Pursuant to the Guaranty Agreement, the Debtor has guaranteed the obligations of the borrowers in respect of the loans made pursuant to the Loan Programs. The Pledged Account provides collateral to secure the performance of the Debtor's guarantee obligations. Depending on assumptions about default rates, Ms. Martin says it is possible either that funds will remain in the Pledged Account after realization of all of the Program Loans obligations or that Chase will have a significant unsecured claim against the Debtor. However, she says it is virtually certain that for a period of time, the sums in the Pledged Account will be insufficient to fund the Debtor's guaranty. Chase may also assert that loans funded subsequent to the bankruptcy filing, including the Pipeline Loans, are entitled, under the Guaranty Agreement, to be treated as if guaranteed by the Debtor subsequent to the Petition Date so that the Debtor's liability, if any, in respect of the loans would be an expense of administration of its Chapter 11 proceeding. Ms. Martin says the Debtor would dispute that assertion based on its right to reject the Program Documents as executory contracts and based on its transfer to the Pledged Account of 100% of guaranty fees paid in respect of Pipeline Loans. Chase asserts that the Debtor owes it, as an administrative expense, approximately $17,000 in interest on loans to student borrowers as a consequence of the delay in their receipt of good funds due to an interruption in the Debtor's cash management systems caused by the Chapter 11 filing. Accordingly, Chase and the Debtor have agreed to terminate their relationship and resolve their controversies. Ms. Martin says the Stipulation represents a reasonable exercise of the Debtor's business judgment and the settlement is fair, equitable and in the best interests of the estate. She relates that the Debtor's obligations under the Program Documents constitute a potential burden to its estate, and in some circumstances, could give rise to administrative claims. Objections (1) PNC Bank N.A., PNC Bank N.A., tells the Court that it does not object to the Debtor's request to reject and terminate the Chase Agreements. PNC, however, objects to the Debtor remitting any amounts held in Restricted Accounts prior to an accounting and reconciliation of all money held in those accounts. Claudia Z. Springer, Esq., at Reed Smith LLP, in Philadelphia, Pennsylvania, relates that the amounts held in the Restricted Accounts were pledged by the Debtor to the Lender Parties, including PNC, to secure the Debtor's obligations under the various guaranty agreements. The amounts contained in those accounts are subject to the interest of PNC and the other Lender Parties and, thus, are deemed cash collateral under Section 363(a) of the Bankruptcy Code. Ms. Springer points out that the Debtor fails to provide any information as to how it determined which of the funds in the Restricted Accounts are subject to Chase's interest. Accordingly, PNC asks the Court to require the Debtor to perform an accounting and reconciliation of all money held in Restricted Accounts prior to any distributions from the Restricted Accounts. (2) Creditors Committee The Official Committee of Unsecured Creditors says the gravaman of the Rejection Motion appears to: (i) rescind the Debtor's liability under its guaranty agreements on the so-called "Pipeline Loans" without affecting the parties' respective rights under existing security agreements for loans already funded; (ii) terminate the Debtor's obligations to underwrite, and the obligations of Citizens' and its affiliates to fund new loans; and (iii) to wind down the Debtor's relationship with Citizens at Citizen's cost and with very limited recourse to the Debtor or the assets of this estate. The Committee also points out that the Debtor's rejection of the various Citizens contracts operates as a breach on the date immediately before the date of the Petition Date, and that the TSA between the Debtor and Citizens provides for the retention by all parties of various rights and obligations. The Committee asks the Court to sustain its objection and deny the Debtor's motion. About The Education Resources Institute Inc. Headquartered in Boston, Massachussetts, The Education Resources Institute Inc. -- http://www.teri.org/-- aka Boston Systems Resources Inc., Brockton Education Opportunity Center, TERI, TERI College Access, TERI College Access Centers and TERI Marketing Services Inc., is a nonprofit organization that promotes educational opportunities for all through its college access and loan guarantee activities. Founded in 1985, TERI is a guarantor of private or non-government student loans with more than $17 billion in outstanding guarantees. The Debtor filed for Chapter 11 petition on April 7, 2008 (Bankr. D. Mass. Case No.: 08-12540.) Daniel Glosband, Esq., Gina L. Martin, Esq. at Goodwin Procter LLP represent the Debtor in its restructuring efforts. The Debtor's Conflicts Counsel is Craig and Macauley PC, its financial advisor is Grant Thornton LLP, its Claims Agent is Epiq Bankruptcy Solutions LLC, its investment Banker is Citigroup Global Markets Inc., and its Public Relations & Public Affairs Advisor is Rasky Baerlein Strategic Communications Inc. When the Debtor filed for protection from its creditors, it listed estimated assets of more that $1 billion and estimated debts of $500,000 to $1 billion. (TERI Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) EDUCATION RESOURCES: Wants to Get Rasky Baerlein as Public Advisor ----------------------------------------------------------------- The Education Resources Institute Inc. seeks authority from the U.S. Bankruptcy Court for the District of Massachusetts to employ Rasky Baerlein Strategic Communications Inc., as its public advisor, nunc pro tunc to bankruptcy filing. Willis J. Hulings III, president and chief executive officer of The Education Resources Institute Inc., relates that Rasky is one of the premier firms specializing in public relations and crisis management support, which specializes in developing and executing integrated communication programs and has extensive experience in crisis management. He says, in the first few weeks of the Debtor's Chapter 11 case, Rasky has been instrumental in fielding calls and providing a consistent message to the Debtor's constituencies. As public advisor, Rasky will: (a) coordinate and execute a comprehensive media plan regarding the Debtor's reorganization; (b) review and catalog press coverage of the Debtor's restructuring to enable the Debtor to best respond to media requests and inaccuracies; (c) oversee communications with local and national political leaders that have supported the Debtor; (d) ensure that the public message surrounding the restructuring protects the Debtor's image and reputation; (e) create scripts to be given to vendors, employees, borrowers and other key constituents regarding the reorganization; (f) provide valuable advice regarding all aspects of public relations and media relations to the Debtor, its board of directors and its principals and advisors; and (g) provide other tasks relating to public relations as may be necessitated by the filing of the Debtor's Chapter 11 case. The Debtor will pay Rasky according to its standard hourly rates: Professional Hourly Rates ------------ ------------ Partner $550 Senior Vice-President $250 Vice President $200 Senior Account Executive $150 Account Coordinator $100 The Debtor will also pay Rasky a 3% flat fee for expenses like phone calls, non-bulk mail, and photocopying charges, and other reasonable expenses. The Debtor will pay additional, allocable, expenses that are not included in the Expense Fee. Pursuant to an engagement agreement, dated April 3, 2008, the Debtor agree to indemnify Rasky and certain related persons under certain circumstances, other than claims resulting from the gross negligence or willful misconduct of Rasky. The Debtor believes that the fee arrangement is reasonable in light of industry practice, market rates both in and out of Chapter 11 proceedings, Rasky's experience in public relations and crisis management, and the scope of work to be performed pursuant to its retention. Lawrence Rasky, chairman of Rasky Baerlein Strategic Communications Inc., assures the Court that his firm is a "disinterested person" within the meaning of Section 101(4) of the Bankruptcy Code, holds no interest adverse to the Debtor and its estate, and has no connection to the Debtor, its creditors or other parties-in-interest. Mr. Rasky, discloses that the Debtor provided Rasky with a $50,000 retainer on April 3, 2008, which retainer will applied against the firm's fees and expenses. The Debtor and Rasky have agreed that any portion of the Retainer not used to compensate Rasky for its fees and expenses will be held and applied to its final bill for professional fees and expenses with any excess amounts refunded to the Debtor. Rasky will not place the retainer on a separate account. Objections (1) U.S. Trustee The U.S. Trustee objects to the Debtor's motion to employ Rasky Baerlein as its public relations advisor because the employment application: (a) suggests, absent supplemental disclosure, that Rasky is not disinterested; (b) seeks authority to employ Rasky nunc pro tunc to the bankruptcy filing but fails to demonstrate the extraordinary circumstances necessary for the Court to approve post facto retention; and (c) seeks authority to reimburse Rasky for expenses as a percentage of its fees for services, rather than for the firm's actual expenses Accordingly, the U.S. Trustee asks the Court to deny the Debtor's application. 2. Creditors Committee The Official Committee of Unsecured Creditors asserts the Debtor's application does not provide sufficient information to allow the Committee, the Debtor's creditors, or the Court to determine whether the employment of Rasky is reasonably necessary during the administration of the Debtor's Chapter 11 case. The Committee's proposed counsel, Jeffrey D. Sternklar, Esq., at the Duane Morris LLP in Boston, Massachusetts, notes that the Application does not explain why the Debtor requires the services of a sophisticated public relations consultant or why it is in the best interests of creditors and the estate for the Debtor to employ Rasky. The Committee objects to the broad indemnification contained in the proposed Rasky engagement agreement. Mr. Sternklar points out that the Debtor does not explain why it is in the best interests of its creditors that the Debtor incur a potentially significant liability. The potentially significant costs and liabilities the Debtor seeks to incur for Rasky's services are particularly troubling in light of the Debtor's operations. The Committee asks the Court to sustain its objection and deny the Debtor's Application. About The Education Resources Institute Inc. Headquartered in Boston, Massachussetts, The Education Resources Institute Inc. -- http://www.teri.org/-- aka Boston Systems Resources Inc., Brockton Education Opportunity Center, TERI, TERI College Access, TERI College Access Centers and TERI Marketing Services Inc., is a nonprofit organization that promotes educational opportunities for all through its college access and loan guarantee activities. Founded in 1985, TERI is a guarantor of private or non-government student loans with more than $17 billion in outstanding guarantees. The Debtor filed for Chapter 11 petition on April 7, 2008 (Bankr. D. Mass. Case No.: 08-12540.) Daniel Glosband, Esq., Gina L. Martin, Esq. at Goodwin Procter LLP represent the Debtor in its restructuring efforts. The Debtor's Conflicts Counsel is Craig and Macauley PC, its financial advisor is Grant Thornton LLP, its Claims Agent is Epiq Bankruptcy Solutions LLC, its investment Banker is Citigroup Global Markets Inc., and its Public Relations & Public Affairs Advisor is Rasky Baerlein Strategic Communications Inc. When the Debtor filed for protection from its creditors, it listed estimated assets of more that $1 billion and estimated debts of $500,000 to $1 billion. (TERI Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FREESCALE SEMICONDUCTOR: Board OKs Executive Employment Agreement ----------------------------------------------------------------- The Compensation and Leadership Committee of the Board of Directors of the Freescale Semiconductor Inc. authorized and approved a form of Employment Agreement to be entered into with certain senior executives, including certain named executive officers. The Form Employment Agreement provides for the annual base salary and initial target bonus for the executive on the date the Employment Agreement is executed. The Form Employment Agreement also provides that the executive will be eligible to participate in any long-term incentive plans or programs and welfare and other benefit plans established by the Company for its senior officers generally. The executive is also entitled to severance upon a qualifying termination of employment. The severance prior to a change in control is equal to the executive�s pro-rated bonus plus two times the executive�s annual base salary if the executive is terminated on or prior to Dec. 31, 2009; and one and a half times the executive�s annual base salary if the executive is terminated on or after Jan. 1, 2010. Upon a qualifying termination in connection with a change in control, the executive is entitled to severance equal to the executive's pro-rated bonus plus two times the executive�s annual base salary and target bonus. In addition, the company will provide a gross-up payment to the executive under certain circumstances with respect to excise taxes resulting from parachute payments received by the executive upon a qualifying termination following a change in control. The Form Employment Agreement also includes a release of claims and non-competition and non-solicitation covenants by the executive for a two-year period following termination of employment with the company. A full-text copy of the Form Employment Agreement is available for free at http://ResearchArchives.com/t/s?2dc8 Headquartered in Austin, Texas, Freescale Semiconductor Inc. (NYSE:FSL) -- http://www.freescale.com/-- designs and manufactures embedded semiconductors for the automotive, consumer, industrial, networking and wireless markets. It offers families of embedded processors that include microcontrollers, digital signal and communications processors. It also offers a portfolio of complementary devices that facilitate connectivity between products, across networks and to real-world signals, such as sound, vibration and pressure. Its complementary products include sensors, radio frequency semiconductors, power management and other analog and mixed-signal integrated circuits. It has three business groups: transportation and standard products group, networking and computing systems group, and wireless and mobile solutions group. In December 2006, the company completed its merger with an entity controlled by a consortium of private equity funds led by The Blackstone Group, including The Carlyle Group, funds advised by Permira Advisers LLC and Texas Pacific Group. * * * As reported in the Troubled Company Reporter on Feb. 15, 2008, Fitch Ratings revised the rating outlook on Freescale Semiconductor Inc. to negative from stable and affirmed these ratings: (i) issuer default rating at 'B+'; (ii) senior secured bank revolving credit facility at 'BB+/RR1'; (iii) senior secured term loan at 'BB+/RR1'; (iv) senior unsecured notes at 'B/RR5'; and (v) senior subordinated notes at 'CCC+/RR6'. GAINESVILLE HOUSING: Moody's Cuts $2,765,000 Bond Rating to Ba3 --------------------------------------------------------------- Moody's Investors Service has downgraded the rating on $2,765,000 of outstanding Gainesville (TX) Housing Authority Multifamily Mortgage Revenue Refunding Bonds, Series 1992A to Ba3 from Ba2. The outlook remains negative. The downgrade is based on low debt service coverage levels, resulting from increasing property expenses and a lack of rental rate increases. The bonds are supported by an apartment pool consisting of 196 units located among Pecan Creek Village, Turner Apartments, Washington Court and Walnut Lane apartments. The properties are located in the City of Gainesville in Cook County, Texas. Rental income from each of the properties is pledged to Series 1992A bondholders for the life of the HAP Contract; after the HAP Contract expires, bondholders no longer have a lien on rental income. The HAP Contract for Pecan Creek Village expires in 2009, the HAP Contract for Turner Apartments expires in 2011, and the HAP Contract for Washington Court and Walnut Lane expires in 2020. Rental rate increases at the properties are limited by the annual adjustment factor and subject to approval by HUD. Strengths * Fully funded debt service reserve fund * Well-funded trustee-held funds, including a Replacement Reserve Fund and a Contingency Reserve Fund. The Contingency Reserve is available to provide funds for the optional redemption of the bonds after certain conditions are met, including rating agency approval. The Trustee is directed to draw upon the Contingency Reserve before tapping the Debt Service Reserve Fund. The Contingency Reserve is approximately the size of the Debt Service Reserve Fund. * 97% occupancy rate among each property as of March, 2008 * Rental rates are below Fair Market Rent, making future increases in rental rates possible. * High REAC score at Washington Court and Walnut Lane (91c) Challenges * Debt service coverage levels have declined. Audited financial statements show debt service coverage levels have declined from 0.87x (FY2004) to 0.76x (FY2006) to 0.58x (FY2007). The FY2007 debt service coverage level is in line with other Moody's-rated Section 8 properties at this rating level. * Increased property expenses. Property expenses have increased by 33% over the past three fiscal years. Even as management has taken steps to reduce controllable expenses, non- controllable operating expenses have continued to increase. * Low REAC scores at Pecan Creek Village (60b) and Turner Apartments (61c) indicate maintenance - related expenses may rise at these properties. Outlook The outlook on the bonds remains negative. The HAP Contract for Pecan Creek Village expires in 2009, and the impact on debt service coverage levels is uncertain. Pecan Creek currently accounts for 35% of potential rental income, whereas the debt service requirement will decline by 27% after the HAP Contract expires. The negative outlook reflects this uncertainty, as well as the downward trend in debt service coverage levels. Current Occupancy: 97% Bond Maturity: 12/1/2020 HAP Expiration: Pecan Creek Village (12/1/2009); Turner Apartments (12/1/2011); Washington Court/Walnut Lane (12/1/2020) Debt Service Coverage (FY2007): 0.58x Average Rent as % of FMR: 85% GENERAL MOTORS: New Appointments Build GM Brand Channel Alignment ----------------------------------------------------------------- General Motors Corp. disclosed personnel moves in support of its four retail channels: Chevrolet; Premium (Cadillac, Hummer, Saab); Buick-Pontiac-GMC; and Saturn. The moves streamline the organization by combining or eliminating job functions. This will help the brands better deliver world-class products to customers, and build value for GM and its dealers. These appointments are effective July 1, 2008; however, these individuals will begin to transition into their new roles immediately. Reporting to Ed Peper, North America vice president, Chevrolet Channel will be: * Kim Kosak, general director, advertising and promotions. This is essentially a continuation of Kosak's current responsibilities. * Rick Scheidt, executive director, product marketing. Mr. Scheidt was previously executive director, Chevrolet product development. * Kurt McNeil, general sales manager. Mr. McNeil was previously regional general manager - South Central Region. Reporting to Mark McNabb, North American vice president, Premium Channel will be: * Steve Hill, general sales manager. Mr. Hill was previously regional general manager - North Central Region. * Steve Shannon, Jim Taylor, and Martin Walsh will continue to report to Mr. McNabb as general managers of Saab, Cadillac and Hummer respectively. Reporting to Susan Docherty, North America vice president, BPG Channel will be: * Cheryl Catton, general director, advertising and promotions. Ms. Catton was previously general director, Chevrolet car marketing. * Russ Clark, executive director, product marketing. Mr. Clark was previously executive director, BPG product development. * Brian Sweeney, general sales manager. Mr. Sweeney was previously general director, BPG retail development. Reporting to Jill Lajdziak, Saturn General Manager will be: * Sterling Wesley, general sales manager. Mr. Wesley was previously executive director, Motors Holding Division. * Dan Keller, director of advertising and promotions. Mr. Keller was previously director of marketing, Saturn. * Stuart Pierce, director of product marketing. Mr. Pierce was previously director of brand and product development, Saturn. "This is a natural follow-up to our recent announcement to more strongly align marketing and field operations into four retail channels," Mark LaNeve, GM North American vice president, said. "These new assignments will help each channel meet targeted customer needs, align closely with our dealer partners, and make each of our brands stronger with more focused models." About GM Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. At March 31, 2008, GM's balance sheet showed total assets of $145,741,000,000 and total debts of $186,784,000,000, resulting in a stockholders' deficit of $41,043,000,000. Deficit, at Dec. 31, 2007, and March 31, 2007, was $37,094,000,000 and $4,558,000,000, respectively. * * * As related in the Troubled Company Reporter on June 5, 2008, Standard & Poor's Ratings Services said that its ratings on General Motors Corp. (B/Negative/B-3) are not immediately affected by the company's announcement that it will cease production at four North American truck plants over the next two years. These closures are in response to the re-energized shift in consumer demand away from light trucks. GM previously said only one shift was being eliminated at each of the four truck plants. Production is being increased at plants producing small and midsize cars, but the cash contribution margin from these smaller vehicles is far less than that of light trucks. GOODY'S FAMILY: Gets Initial OK to Obtain $210 Mil. DIP Facility ---------------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware authorized Goody's Family Clothing Inc. and its debtor-affiliates to obtain, on an interim basis, in the aggregate amount up to $210,000,000 in debtor-in-possession financing from several financial institutions, Bloomberg News reports. A hearing is set for July 15, 2008, to consider final approval of the Debtors' DIP request, Bloomberg relates. According to papers filed with the Court, the lenders comprised of; (i) General Electric Capital Corporation and Bank of America N.A., (ii) 1903 Onshore SPV LLC and GB Merchant Partners LLC, and (iii) PGDYS Lending LLC. The committed $210,000,000 DIP financing is comprised of: a) a $175,000,000 senior revolving credit facility including (i) a $75,000,000 letter of credit sub-limit and (ii) a $20 million swingline loan sub-limit from General Electric and BoA, b) a $15,000,000 Term Loan B Credit Facility from 1903 onshore, and c) a $20 million DIP Tranche C Facility from PDGYS Lending consist of (i) $15 million term loan, and (ii) a $5 million revolving credit overadvance facility. The proceeds of the loans will be used to provide working capital and general corporate demands and refinance prepetiton debt obligations. The DIP facility is subject to a $1,500,000 carve-out for payment of expenses incurred by professional advisors retained by the Debtors. The Debtors will pay a host of fees including a $600,000 non- refundable closing fee in the aggregate. To secure their DIP obligations, the lender will be granted a superpriority administrative expense claim status over any and all administrative expense claims against the Debtors' estate. Furthermore, the DIP liens will be secured by substantially all assets of the Debtors and junior the carve-out. The DIP agreement contain appropriate and customary events of default. Specifically, failure to comply these requirements constitute an event of default, among them: i) failure to file a Chapter 11 plan and disclosure statement by Oct. 10, 2008, and obtain court approval of a disclosure statement by Nov. 25, 2008, and ii) failure to obtain confirmation of a plan by Jan. 12, 2008, and become effective by Feb. 10, 2009. The Debtors also asked the Court to use the lenders' cash collateral for payments to operating expenses. Before they filed for bankruptcy, the Debtors entered into a senior secured credit agreement that provided for: i) a $210,000,000 revolving credit facility and a $15,000 Term A Loan from several lenders led by The CIT Group/Business Credit Inc. and ii) a $10,000,000 Term B Loan from 1903 Onshore. In addition, the Debtor reached another credit agreement that provided a $40,000,000 loan and subsequent loan of $15,000,000 from GMM Capital LLC and PGDYS Lending. At present, GMM Capital owns 15% of the equity interests in Goody's Holdings Inc., a non-debtor entity. As of the Debtors' bankruptcy filing, about $139,000,000 in loans in the aggregate remain outstanding under the agreements. On Jan. 16. 2008, PGDYS Lending provided an additional $65,000,000 financing under the term loan agreement. Approximately $67,000,000 in loans remain outstanding as of June 9, 2008. A full-text copy of the debtor-in-possession motion is available for free at http://ResearchArchives.com/t/s?2dce About Goody's Family Headquartered in Knoxville, Tennessee, Goody's Family Clothing Inc. -- http://www.shopgoodys.com/-- operates chains of clothing stores. The company is owned by Goody's Holdings Inc., a non- debtor entity. As of May 31, 2008, the company operates 355 stores in several states with approximately 9,868 personnel of which 170 employees are covered under a collective bargaining agreement. The company and 19 of its affiliates filed for Chapter 11 protection on June 9, 2008 (Bankr. D. Del. Lead Case No.08-11133). Gregg M. Galardi, Esq., and Marion M. Quirk, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors. When the Debtors filed for protection against their creditors, they listed assets and debts between $100 million and $500 million. As of May 3, 2008, the Debtors' records reflected total assets of $313,000,000 -- book value -- and total debts of $443,000,000. H&H TRANSPORTATION: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: H&H Transportation Inc. 645 Gerdau Ameristeel Road Jackson, TN 38305 Bankruptcy Case No.: 08-12051 Description: Jeff Harbin, president, filed the petition on the Debtor's behalf. Chapter 11 Petition Date: June 10, 2008 Court: Western District of Tennessee (Jackson) Judge: G. Harvey Boswell Debtor's Counsel: Timothy B. Latimer, Esq. (ul@utleylatimer.com) 425 E. Baltimore Jackson, TN 38301 Tel: (731) 424-3315 Total Assets: $1,814,100 Total Debts: $1,298,077 A copy of the Debtor's petition with a list of unsecured creditors is available for free at http://bankrupt.com/misc/tnwb08-12051.pdf HANOVER INSURANCE: S&P Lifts B+ Ratings to BB- on Three Classes --------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on two synthetic asset-backed securities transactions related to The Hanover Insurance Group Inc. (formerly Allmerica Financial Corp.). The rating actions reflect the May 30, 2008, raising of the rating on the underlying securities, the preferred stock issued by AFC Capital Trust I (a wholly owned subsidiary of The Hanover Insurance Group Inc.). Both deals are pass-through transactions, and the ratings on the deals are based solely on the rating assigned to the underlying collateral, the preferred stock issued by AFC Capital Trust I. Ratings Raised PreferredPLUS Trust Series ALL-1 $48 million trust certificates series ALL-1 Rating ------ Class To From ----- -- ---- A BB- B+ B BB- B+ CorTS Trust For AFC Capital Trust I $36 million Allmerica Corporate-backed trust securities (CorTS) certificates series 2001-19 Rating ------ Class To From ----- -- ---- A BB- B+ HELIOS FINANCE: Weaker Performance Cues Fitch's Negative Watch -------------------------------------------------------------- Fitch Ratings has placed these classes of notes of the HELIOS Finance Limited Partnership 2007-S1 (2007-S1) on Rating Watch Negative: -- Class B-3 'B'; -- Class B-4 'B-'. Fitch has also affirmed these classes: -- Class A-1 at 'AAA'; -- Class A-2 at 'AA'; -- Class A-3 at 'A'; -- Class B-1 at 'BBB'; -- Class B-2 at 'BB'. All classes of notes are still outstanding. The rating actions reflect the weaker than expected performance of the 2007-S1 transaction above Fitch's original base case expectations for both delinquencies and cumulative net losses. The transaction was placed 'Under Analysis' by Fitch in early May for review according to Fitch's surveillance-screener logic, SMARTView. Through month 13 (the April collection period), total delinquencies stood at 3.36% and CNL were at 2.31%. Fitch has noted that the performance in both delinquency and CNL have exhibited weaker trends in recent months. Furthermore, a CNL performance-based trigger was breached earlier in the year preventing the transaction's payment waterfall from switching from a sequential payment structure to a pro-rata payment structure. Had the trigger not been breached, the switch would have occurred only after month 12, which at the time had not occurred. Despite current performance, credit enhancement continues to build in the transaction for certain classes of notes. Fitch's analysis of the transaction incorporated stresses of the revised base case CNL assumptions, the timing of the remaining losses and various prepayment assumptions. Even though current loss performance is worse than originally expected, the stressed coverage of expected loss for the classes A-1, A-2, A-3, B-1, B-2 and B-3 is within the recommended loss coverage range for their current rating categories of 'AAA' for the class A-1; 'AA' for the class A-2 notes; 'A' for the class A-3 notes; 'BBB' for the class B-1 notes and 'BB' for the class B-2 notes. While the stressed coverage of expected losses for the class B-3 and B-4 notes has weakened, it is currently within the recommended loss coverage range. However, the continued negative trends in both delinquency and CNL may negatively impact the ratings of these classes of notes. Wachovia Bank, N.A., the master servicer of 2007-S1, indicated that the reasons for the weaker-than-expected performance of 2007- S1 are due to several factors including weaker macro-economic conditions along with escalating losses in certain geographical areas, and recent softness in the wholesale vehicle market, particularly in the truck and SUV segments contributing to higher loss severity. Fitch will continue to closely monitor the performance of this transaction over the next three to six months, and expects to take rating action within that time period to resolve the Rating Watch Negative status. HOLYOKE MEDICAL: Moody's Holds Ba1 Rating; Changes Outlook to Neg. ------------------------------------------------------------------ Moody's Investors Service has affirmed the Ba1 rating assigned to Holyoke Medical Center's bonds. The bonds are issued by the Massachusetts Health and Educational Facilities Authority. The outlook has been revised to negative from stable and is attributable to a decline in financial performance through five months fiscal year 2008 and uncertainty regarding the financial impact of Massachusetts healthcare reform on the hospital's financial performance. Legal Security: The bonds are secured by a revenue pledge. There is no mortgage. Interest Rate Derivatives: None Strengths * Success recruiting additional surgeons to replace retired surgeon * Sustained success at reducing days in accounts receivable over the past several years, which has contributed to increase in cash * Maintenance of higher cash balance in the last two years after several years of lower liquidity; through five months FY 2008, Holyoke reports 94% cash-to-debt and 45 days cash on hand, which compares favorably to FYE 2005 when the hospital had only 60% cash-to-debt and 45 days cash on hand (financial numbers reflect the consolidated reporting entity, Valley Health Systems, Inc. and Affiliates) Challenges * Deterioration of financial performance through five months FY 2008 resulting in very low operating cash flow and weakened leverage measures * High reliance on supplemental government funds. The amount and process for receiving the funds has been impacted by healthcare reform in Massachusetts and the net effect on Holyoke, while difficult to determine at this point, is likely negative. * Weak demographics in service area; government payers account for high 66% of gross revenues (this percentage is approximately 70% after including veterans, Tri-care and other government payers) * Underinvestment in physical plant resulting in high 15 year average age of plant * Uncertainty surrounding recent entry of recovery audit contractors on the hospital's Medicare reimbursement Recent Developments/Results Financial performance at Holyoke declined in FY 2007 as the hospital suffered a decline in volumes due to physician departures, including the loss of a surgeon in the emergency department. Although inpatient admissions only declined 0.8%, surgeries declined 5.4%, continuing a multi-year trend of declining surgical volumes. Management reports success in recruiting several replacement surgeons, although the new surgeons only started in January 2008 and it remains too early to tell how volumes will increase due to their arrival. The volume decline in FY 2007 operating performance resulted in a $0.9 million decline in operating cash flow to $5.7 million (4.3% operating cash flow margin) from a stronger $6.6 million (5.4% operating cash flow margin) in FY 2006. Leverage measures at FYE 2007 were adequate, owing largely to the relatively small amount of debt outstanding; debt-to-cash flow was a manageable 3.3 times and maximum annual debt service coverage moderate at 1.8 times. Interim results through five months FY 2008 reflect the hospital's heavy reliance on supplemental government funding and the uncertain impact of healthcare reform in Massachusetts. Holyoke relies on government payers for a high 66% of gross revenues of which Medicaid accounts for a very high 21%. Over the past three years, Holyoke has received increasing amounts of various government payments including Uncompensated Care Pool funds and Distressed Provider and Essential Community Provider Trust funds (Essential Community Provider funds replaced the Distressed Provider funds in FY 2007). UCC funds rose to $3.9 million in FY 2007 from $3.0 million in both FY 2005 and 2006 and the Essential Community Provider funds totaled $3.3 million in FY 2007, up from $2.5 million in FY 2005. In FY 2008, payments from both of these sources will be significantly reduced. Holyoke's share of the Essential Community Provider funds will decrease by $1 million and changes to the UCC reimbursement methodology are expected to lower payments by up to 50%. The shortfall from UCC funds is expected to be made up by increased enrollment in new insurance products introduced under the rubric of Commonwealth Care, but actual reimbursement will be subject to the number and timing of enrollees. This has been coupled with a significant boost in Medicaid inpatient rates, although Medicaid reimbursement is still below cost and many providers continue to report a financial loss from serving Medicaid patients. The net effect of changes to supplemental funds programs and payment methodologies will be difficult to asses until the end of the fiscal year, but under current rules, Holyoke expects to receive significantly less money in FY 2008 than in FY 2007. As a result, through five months of FY 2008, operating cash flow is down significantly to $0.5 million from $3.0 million a year ago. At the current rate, Holyoke may violate its rate covenant of 1.1 times coverage. MADS coverage is currently 0.77 times. If the rate covenant is violated, Holyoke must employ a consultant. Holyoke operates an acute care hospital in Holyoke, Massachusetts. Located in western Massachusetts, Holyoke operates in an economically depressed part of the state with wealth levels below state averages. The hospital faces significant competition from Baystate Medical Center (A1/Stable) and Mercy Medical Center (owned by Catholic Health East, rated A1/Stable), both located approximately fifteen miles south in Springfield. Outlook The negative outlook reflects Holyoke's high reliance on supplemental funds and government payers and the uncertain nature regarding the level and timing of reimbursement tied to Massachusetts healthcare reform. Moody's believe the hospital's cash flow is more variable today than in the past due to changes and uncertainties in healthcare reimbursement methodologies and funding in Massachusetts. What could change the rating--UP Clarity regarding the timing and size of supplemental funds and an increase in those funds; material strengthening of operating profitability and liquidity measures; strengthening of leverage measures including MADS coverage; increase in volumes and hospital utilization What could change the rating--DOWN Absence of financial improvement during second half of FY 2008; additional reductions in supplemental funds or negative changes to government sponsored reimbursement funds; additional debt Key Indicators Assumptions & Adjustments: -- Based on financial statements for Valley Health Systems, Inc. and Affiliates -- First number reflects audit year ended September 30, 2006 -- Second number reflects audit year ended September 30, 2007 -- Investment returns normalized at 6% unless otherwise noted * Inpatient admissions: 7,161; 7,103 * Total operating revenues: $122.3 million; $130.7 million * Moody's-adjusted net revenue available for debt service: $8.8 million; $6.9 million * Total debt outstanding: $21.8 million; $18.7 million * Maximum annual debt service (MADS): $3.8 million; $3.8 million * MADS Coverage with reported investment income: 2.0 times; 1.7 times * Moody's-adjusted MADS Coverage with normalized investment income: 2.3 times; 1.8 times * Debt-to-cash flow: 2.9 times; 3.3 times * Days cash on hand: 57 days; 54 days * Cash-to-debt: 83%; 100% * Operating margin: 0.1%; (0.7%) * Operating cash flow margin: 5.4%; 4.3% Rated Debt (Debt outstanding as of September 30, 2007) -- Series 1993B; fixed rate; $10.4 million outstanding; rated Ba1 HORIZON TRAVEL: Files for Creditor Protection, To Close Stores -------------------------------------------------------------- Convenience store chain Horizon Travel Plazas LLC has filed a petition for Chapter 11 protection with the U.S. Bankruptcy Court for the Middle District of Tennessee, reports say. Wendy Lee of The Tennessean reports that the bankruptcy of the company was due to soaring gas prices and rising credit card transaction fees. According to CSNews Online (N.Y.), the Franklin-based company closed two of its Jackson-based stores, as well as other locations across the Southeast last week. The Tennessean reports that Horizon Travel Plazas plans to shut down 11 stores and keep 14 locations open in four Southeastern states, including some stores in Tennessee, in order to pay creditors, said the company's attorney, Elliott Warner Jones. The company owes Coca-Cola Enterprises Inc., in Florida $230,080 and wholesale distributor H.T. Hackney Co. in Lenoir City, Tenn., $731,006, Ms. Lee reports ciging bankruptcy records. Horizon Travel Plazas was founded in 2003 by James Alligood, former Mapco president and CEO, and Steve Ramer. It also does business as Horizon Stores, Horizon Travel Plazas, Ms. Horizon's assets are valued at $5 million to $10 million and the company has about $5 million to $7 million in liabilities, the company's attorney said, according to the report by Ms. Lee. The chain also operates in Mississippi, Alabama and Arkansas. HOVNANIAN ENT: Posts $340.7MM Net Loss in 2nd Qtr. Ended April 30 ----------------------------------------------------------------- Hovnanian Enterprises Inc. reported a net loss of $340.7 million for the second quarter ended April 30, 2008, compared with a net loss of $30.7 million in the second quarter of fiscal 2007. For the six month period, the company reported a net loss of $471.7 million, compared to an $88.0 million net loss in the same period a year ago. Total revenues were $776.4 million for the second quarter of fiscal 2008 compared with total revenues of $1.1 billion in the same quarter a year ago. For the first half of fiscal 2008, total revenues were $1.9 billion compared to $2.3 billion for the same period last year. Excluding unconsolidated joint ventures, the company delivered 2,494 homes in the second quarter of fiscal 2008, a decrease of 21% from 3,150 home deliveries in the fiscal 2007 second quarter. For the first six months of fiscal 2008, the company delivered 6,098 homes, excluding unconsolidated joint ventures, a 5% decline from 6,416 home deliveries in the first half of last year. The number of net contracts for the second quarter of fiscal 2008, excluding unconsolidated joint ventures, declined 29% to 2,226 homes compared with last year's second quarter. For the first half of fiscal 2008, the number of net contracts, excluding unconsolidated joint ventures, decreased 34% to 3,737 homes compared with the same period in the prior year. The company's contract cancellation rate, excluding unconsolidated joint ventures, for the second quarter of fiscal 2008 was 29%, compared with the rate of 38% reported for the first quarter of fiscal 2008 and 32% in the second quarter of fiscal 2007. During the second quarter of fiscal 2008, the company incurred a total of $251.0 million of pre-tax land-related charges including land impairments of $226.4 million and write-offs of predevelopment costs and land deposits of $19.5 million, as well as $5.1 million representing its equity portion of write-offs and impairment charges in unconsolidated joint ventures. Excluding land-related charges, the company reported a pre-tax loss of $92.4 million and $167.1 million, respectively, for the three month and six month periods ended April 30, 2008. Including all land-related charges, the company reported a pre-tax loss of $343.4 million for the second quarter of fiscal 2008 and $512.2 million for the first six months of fiscal 2008. The company recorded a $120.6 million FAS 109 deferred tax valuation allowance charge during the second quarter and a $141.8 million charge year to date. Balance Sheet as of April 30, 2008 The company generated $56.1 million of positive cash flow during the second quarter of fiscal 2008. At April 30, 2008, the company had $119.9 million of homebuilding cash and the balance on the company's revolving credit facility was $325.0 million. Hovnanian's total land position decreased by 6,646 lots compared to Jan. 31, 2008, reflecting owned and optioned position decreases of 2,108 lots and 4,538 lots, respectively. As of April 30, 2008, the company had 27,191 lots controlled under option contracts and owned 25,264 lots. The total land position of 52,455 lots represents a 57% decline from the peak total land position at April 30, 2006. The company realized a 19% decline in started unsold homes and models, from 2,321 at Jan. 31, 2008, to 1,885 at April 30, 2008. Excluding model homes, the company had 1,503 started unsold homes as of the end of the second quarter of fiscal 2008. Other Key Operating Data Homebuilding gross margin, before interest expense included in cost of sales, was 6.8% in the 2008 second quarter, compared with 16.3% in the second quarter of 2007 and 6.7% in the first quarter of 2008. Pretax income from Financial Services in the second quarter of fiscal 2008 was $4.1 million and $7.2 million for the first six months of fiscal 2008. The company had 379 active selling communities on April 30, 2008, excluding unconsolidated joint ventures, a decline of 25 active communities, or 6%, from Jan. 31, 2008. The company had 437 active selling communities on April 30, 2007, excluding unconsolidated joint ventures. During the second quarter of fiscal 2008, the company delivered 196 homes through unconsolidated joint ventures, compared with 275 homes in last year's second quarter. The company delivered 351 homes through unconsolidated joint ventures during the first half of 2008 compared with 564 homes during the same period in 2007. Contract backlog, as of April 30, 2008, excluding unconsolidated joint ventures, was 3,577 homes with a sales value of $1.2 billion, a decrease of 54% from the same period a year ago. Excluding backlog from the company's Fort Myers-Cape Coral operations in both periods, backlog decreased 41%. Recent Capital Markets Activity During May 2008 During May 2008, subsequent to the end of the second fiscal quarter, the company completed the following transactions: -- Raised $126 million from issuing 14.0 million shares of Class A Common Stock offering at $9.50 per share; and -- Issued $600 million aggregate principal amount of 11 �% Senior Secured Notes due May 1, 2013. Net proceeds from these offerings of approximately $705 million were used to pay off outstandings under the corporate credit facility and the excess will be used for general corporate purposes. After giving effect to these transactions, the company would have had approximately $500 million in homebuilding cash and no borrowings on its revolving credit agreement as of April 30, 2008. In addition, during May 2008, the company amended its revolving credit agreement to substantially eliminate financial maintenance covenants and reduced total commitments to $300 million from $900 million, leaving the facility in place largely for the issuance of letters of credit, which at April 30, 2008, were $219.3 million. The maturity of the credit facility remains unchanged at May 2011. Comments from Management "Despite a persistently challenging market environment, we successfully achieved positive cash flow one quarter earlier than we originally expected at the outset of the year," commented Ara K. Hovnanian, president and chief executive officer of the company. "Through diligent focus and effort, we reduced our prospective land-purchase and land-development expenditures, which gave us the confidence to project homebuilding cash in excess of $800 million dollars at Oct. 31, 2008. Through the combination of our recent capital market activity and increased cash flow expectations, we now believe that we have ample liquidity to weather the current downturn. In each of the downturns we have been through during the past 49 years, we emerged as a better and stronger company. We expect to persevere through the current downturn and we will be in position to thrive again once the housing markets begin to recover," concluded Mr. Hovnanian. At April 30, 2008, the company's consolidated balance sheet showed $4.0 billion in total assets, $3.1 billion in total liabilities, $38.6 million in minority interest from inventory not owned, $1.4 million in minority interest from consolidated joint ventures, and $850.2 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended April 30, 2008, are available for free at http://researcharchives.com/t/s?2dde About Hovnanian Enterprises Hovnanian Enterprises Inc. (NYSE: HOV) -- http://www.khov.com/-- founded in 1959 by Kevork S. Hovnanian, chairman, is headquartered in Red Bank, New Jersey. The company is one of the nation's largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Illinois, Kentucky, Maryland, Michigan, Minnesota, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia. Hovnanian Enterprises, Inc. is a member of the Public Home Builders Council of America (PHBCA) -- http://www.phbca.org/-- a nonprofit group devoted to improving understanding of the business practices of America's largest publicly-traded home building companies, the competitive advantages they bring to the home building market, and their commitment to creating value for their home buyers and stockholders. The PHBCA's 14 member companies build one out of every five homes in the United States. * * * As reported in the Troubled Company Reporter on June 12, 2008, Jun Fitch Ratings affirmed Hovnanian Enterprises Inc.'s 'B-' Issuer Default, 'CCC/RR6' Senior subordinated notes, and 'CCC-/RR6' Series A perpetual preferred stock ratings. HOV's Rating Outlook remains Negative. HI-LINE CONSTRUCTION: Case Summary & Seven Unsec. Creditors ----------------------------------------------------------- Debtor: Hi-Line Construction, Inc. 1200 Nevada St., Ste. 202 Redlands, CA 92374 Bankruptcy Case No.: 08-16753 Type of Business: The Debtor provides construction services. Chapter 11 Petition Date: June 6, 2008 Court: Central District Of California (Riverside) Judge: Peter Carroll Debtor's Counsel: Stephen R. Wade, Esq. Email: dp@srwadelaw.com 400 N. Mountain Ave. Ste. 214B Upland, CA 91786 Tel: (909) 985-6500 Fax: (909) 985-2865 http://srwadelaw.com/ Estimated Assets: Less than $50,000 Estimated Debts: $1 million to $10 million A copy of Hi-Line Construction, Inc's petition is available for free at: http://bankrupt.com/misc/cacb08-16753.pdf IMMUNICON CORP: Case Summary & 35 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Immunicon Corporation 3401 Masons Mill Road Suite 100 Huntingdon Valley, PA 19006 Bankruptcy Case No.: 08-11178 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Immunicon Europe, Inc. 08-11179 IMMC Holdings, Inc. 08-11180 Immunivest Corporation 08-11181 Type of Business: The Debtors offer products and services for cell analysis and molecular research. They also offer clinical trial testing services to incorporate rare cell molecular analysis and FISH testing into clinical research. See http://www.immunicon.com/ Chapter 11 Petition Date: June 11, 2008 Court: District of Delaware (Delaware) Judge: Kevin J. Carey Debtors' Counsel: Sheldon K. Rennie, Esq. (srennie@foxrothschild.com) Fox Rothschild LLP 919 North Market Street Suite 1300 Wilmington, DE 19801 Tel: (302) 654-7444 Fax: (302) 656-8920 Estimated Assets Estimated Debts ---------------- --------------- Immunivest Corporation $9,231,264 $24,309,838 Immunicon Europe, Inc. $100,000 to $100,000 to $500,000 $500,000 IMMC Holdings, Inc. $1 million to Less than $10 million $50,000 Immunivest Corporation Less than Less than $50,000 $50,000 A. Immunivest Corporation's list of its 20 largest unsecured creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ SF Capital Partners Noteholder $8,812,803 c/o Stark Offshore Management 3600 Lakeshore Drive St. Francis, WI 53235-3716 Portside Growth and Noteholder $7,050,243 Opportunity Fund c/o Ramius Capital Group LLC 666 Third Avenue 26th Floor New York, NY 10017 Veridex LLC Vendor $2,129,967 A Johnson & Johnson Company 1001 U.S. Route 202 Raritan, NJ 08869-0606 JGB Capital LP Noteholder $1,621,555 660 Madison Avenue 21st Floor New York, NY 10021 Scoggin Capital Noteholder $1,586,304 Management, LP II 660 Madison Avenue 20th Floor New York, NY 10021 Scoggin International Fund Ltd. Noteholder $1,586,304 c/o Scoggin LLP 660 Madison Avenue 20th Floor New York, NY 10021 SASM&F LLP Vendor $1,582,852 P.O. Box 1764 White Plains, NY 10602 JGB Offshore Noteholder $493,517 660 Madison Avenue 21st Floor New York, NY 10021 Sparton/Astro Vendor $250,937 22740 Lunn Road Strongsville, OH 44149 Jonathan Cool Board of Director $88,602 Innovative Mold Solutions Inc. Vendor $48,192 Covidien/Kendall $47,700 Kreatech Biotechnology Vendor $37,394 Protiviti Vendor $34,167 Brian Geiger Board of Director $18,785 J. William Freytag Board of Director $18,435 Interpublic Group of Co., Inc. Vendor $17,621 Fisher Scientific Vendor $15,420 Erie Scientific Company Vendor $14,726 Invitrogen Life Technologies Vendor $9,595 B. Immunicon Europe, Inc.'s list of its 10 largest unsecured creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Tristar Technology Group LLC Vendor $7,975 9700 Great Seneca Highway Unit 258 Rockville, MD 20850 DHL International BV Vendor $6,976 Inbound Postbus 2717 Teminalweg 36 Amersfoort 3800 GG Netherlands BTC Vendor $2,906 Postbus 545 Hengelosestraat 705 Enschede 7500 AM Netherlands Essent Retail Vendor $969 DHL International BV Vendor $823 Aces Direct BV Vendor $577 Quinto Groep Vendor $510 DHL Hengelo Vendor $197 Leferink Vendor $88 Tempo Team Vendor $58 C. IMMC Holdings, Inc. does not have any unsecured creditors who are not insiders. D. Immunivest Corporation's list of its five largest unsecured creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bromhead Johnson Vendor $5,695 Kingsbourne House 229-231 High Holborn London WC1V7DP Mewburn Ellis Vendor $3,639 York House 23 Kinsway London WC2B6HPP Bereskin & Parr Vendor $1,563 P.O. Box 401 40 King Street West Toronto Ontario, Canada M5H 3Y2 Towa International $406 Aoyama & Partners Vendor $401 INNOVATIVE CARD: Posts $1,962,441 Net Loss in 2008 First Quarter ---------------------------------------------------------------- Innovative Card Technologies Inc. reported a net loss of $1,962,441 on revenues of $217,216 for the first quarter ended March 31, 2008, compared with a net loss of $2,206,807 on revenues of $1,420 in the same period last year. The increase in revenue is attributable to sales of the ICT DisplayCard in the current period. For the three months ended March 31, 2007, revenue was from LensCard royalties. At March 31, 2008, the company's consolidated balance sheet showed $6,229,136 in total assets, $5,565,924 in total liabilities, and $663,212 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?2dd7 Going Concern Doubt As reported in the Troubled Company Reporter on April 29, 2008, Singer Lewak Greenbaum & Goldstein LLP, in Los Angeles, expressed substantial doubt about Innovative Card Technologies Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm pointed to the company's recurring losses and negative cash flows from operations. About Innovative Card Headquartered in Los Angeles, Innovative Card Technologies Inc. (Nasdaq: INVC) -- http://www.incardtech.com/-- develops and markets secure powered cards for payment, identification, physical and logical access applications. The company's main product, the ICT DisplayCard, integrates the security of a one-time password token directly into a card the size of a standard credit or debit card. IXIS ABS: S&P Puts Default Ratings on Eight Classes of Notes ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings to 'D' on eight classes of notes from IXIS ABS CDO 2 Ltd., following the liquidation of the portfolio collateral. Five of the lowered ratings were previously on CreditWatch with negative implications. IXIS ABS CDO 2 Ltd. is a hybrid collateralized debt obligation of asset-backed securities transaction collateralized mostly by mezzanine classes of residential mortgage-backed securities. The deal experienced an event of default and the controlling noteholders subsequently voted to liquidate the collateral in the transaction. The current rating actions follow notice from the trustee that the liquidation of the portfolio assets is complete and that the available proceeds have been distributed to the noteholders. The trustee has indicated that the proceeds of the liquidation were insufficient to pay down the balances of any of the notes in full. Rating Actions Rating ------ Transaction Class To From ----------- ----- -- ---- IXIS ABS CDO 2 Ltd. A-1 Funded D BB/Watch Neg IXIS ABS CDO 2 Ltd. A-1 Unfunded D BB/Watch Neg IXIS ABS CDO 2 Ltd. A-X D BB/Watch Neg IXIS ABS CDO 2 Ltd. A-2 D CCC-/Watch Neg IXIS ABS CDO 2 Ltd. B D CCC-/Watch Neg IXIS ABS CDO 2 Ltd. C D CC IXIS ABS CDO 2 Ltd. D D CC IXIS ABS CDO 2 Ltd. E D CC JAMES FALL: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: James Edward Fall Rose R. Fall dba Harold Fall & Sons 1961 South Holland Sylvania Road Maumee, OH 43537 Bankruptcy Case No.: 08-33018 Chapter 11 Petition Date: June 10, 2008 Court: Northern District of Ohio (Toledo) Judge: Richard L. Speer Debtor's Counsel: Deborah K. Spychalski, Esq. (dk_spychalski@yahoo.com) P.O. Box 711 Toledo, OH 43697-0711 Tel: (419) 243-9424 Fax: 419-244-0454 Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million A copy of the Debtors's petition is available for free at http://bankrupt.com/misc/ohnb08-33018-pet.pdf A copy of the Debtor's list of unsecured creditors is available for free at http://bankrupt.com/misc/ohnb08-33018-cred.pdf JONATHAN MATIAS: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Jonathan Allan Matias aka Sharon Lorenzo Bacani-Matias Sharon Lorenzo Bacani 1671 Observation Way Antioch, CA 94531 Bankruptcy Case No.: 08-42925 Type of Business: The Debtors own and operate Bastard and Friends, Inc., which is engaged in retailing. Chapter 11 Petition Date: June 8, 2008 Court: Northern District of California (Oakland) Judge: Edward D. Jellen Debtor's Counsel: Marc Voisenat, Esq. Email: voisenat@msn.com 1330 Broadway, Ste. 1035 Oakland, CA 94612 Tel: (510) 272-9710 Total Assets: $1,457,790 Total Debts: $2,322,019 A copy of 's petition is available for free at: http://bankrupt.com/misc/canb08-42925.pdf JHCI ACQUISITIONS: Moody's Cuts Corp. Family Rating to B3 from B2 ----------------------------------------------------------------- Moody's Investors Service has lowered the ratings of JHCI Acquisitions, Inc., Corporate Family Rating to B3 from B2. The rating outlook has been changed to negative from stable. The ratings were lowered in recognition of weaker than expected operating results that have occurred since the June 2007 acquisition of The Jacobson Companies by Oak Hill Capital Partners. As a result, the company's credit metrics and liquidity profile have deteriorated below levels anticipated when Moody's assigned the original rating to JHCI in May of 2007. Moody's expects that the weaker operating environment will persist through 2008 and into 2009, as the domestic economy impacts the company's operational performance. According to David Berge, Vice President of Moody's, "Jacobson, like many companies in the industry, will continue to face significant headwind from what is expected to be a deep and possibly prolonged recession in the transportation sector." As such, key credit metrics such as EBIT to Interest and Debt to EBITDA will likely remain at levels more appropriate for the B3 rating category over the near term. Of particular concern to Moody's are financial covenant restrictions imposed by terms of the company's senior secured credit facilities. As of March 31, 2008, JHCI's leverage ratio exceeded the maximum level permitted under the agreement. JHCI is not currently drawn on this facility, and Moody's does not expect that the company will need to draw on it in the near term. Since the leverage covenant is only applicable if the facility is drawn, this breach does not constitute a default under the covenants. However, because the excess leverage will prevent JHCI from using the facility, Moody's believes that the removal of an important external source of liquidity for any length of time is a material impairment of the company's liquidity profile. Moody's assesses JHCI's overall liquidity profile to be adequate, as moderate to strong cash balances and expected operating cash flows will likely cover all but unexpected capital expenditure needs, which the company has reduced in line with the weaker operating environment. JHCI faces no material debt maturities until 2014, and only modest amortization of debt over the near term. Still, the lack of access to a credit facility that would otherwise provide important flexibility to weather any further deterioration in overall market conditions amplifies the company's risk profile over the near term. The negative outlook reflects concern over the near term about the company's liquidity condition, particularly to the extent that the company lacks access to its credit facility due to covenant restrictions. The outlook also anticipates on-going difficulties in the company's transportation businesses that will coincide with soft economic conditions in the U.S. over the near term. The ratings could be downgraded if free cash flow were to become negative before access to the revolver could be restored, leaving the company constrained on sources of liquidity at its disposal to cover its operating cash needs. Also, ratings could also be lowered if metrics were to deteriorate further, such that Debt to EBITDA were to exceed 7.0 times or funds from operations plus interest to interest were to fall below 1.5 times. The ratings could be stabilized if the credit facilities' leverage covenant cushion were restored to levels allowing full access to the revolver, while the company demonstrates sustained levels of positive free cash flows. Downgrades: Issuer: JHCI Acquisition, Inc. -- Probability of Default Rating, Downgraded to B3 from B2 -- Corporate Family Rating, Downgraded to B3 from B2 -- Senior Secured First Lien Bank Credit Facility, Downgraded to B1 (LGD3, 32%) from Ba3 -- Senior Secured Second Lien Term Loan Facility, Downgraded to Caa2 (LGD5, 79%) from Caa1 Outlook Actions: Issuer: JHCI Acquisition, Inc. -- Outlook, Changed To Negative From Stable JHCI Acquisition is a wholly-owned subsidiary of JHCI Holdings, Inc., the vehicle majority owned by Oak Hill Capital Partners, created to effect the acquisition of Jacobson Holding Co. and the 2007 merger of Arnold Logistics, LLC Jacobson Companies, headquartered in Des Moines, Iowa, are logistics providers, offering warehousing, contract packaging and freight management services. LANDSOURCE COMMUNITIES: CalPERS Downplays Exposure, Stake Small --------------------------------------------------------------- The California Public Employees' Retirement System said it has expected the announced Chapter 11 bankruptcy protection filing by LandSource Communities Development LLC, in which CalPERS had well over a $900 million investment through its investment partner MacFarlane Partners. CalPERS will represent the interests of the CalPERS fund in the bankruptcy process. LandSource is one of thousands of investments of CalPERS, and it does not represent a large portion of the overall fund. The investment by CalPERS went to MacFarlane Partners, who along with Weyerhaeuser took a 68% interest in the venture known as LandSource. Other partners of LandSource are Lennar and LNR, each with a 16% stake. The bankruptcy protection process allows LandSource to restructure its debts and obligations and the company is expected to continue to operate. LandSource, with heavy investments in Southern California land, fell victim to the housing industry downturn. CalPERS investment represents less than a half of 1% of its overall investment portfolio. The CalPERS fund, which includes stocks, bonds, real estate, private equity and inflation-linked assets, remains strong, with a market value of assets of approximately $245.4 billion. Bloomberg News says CalPERS may sell part of its $2,000,000,000 in residential land holdings after the investments lost 31% last year amid falling home prices and forecasts of further declines. CalPERS, Bloomberg says, hired investment bank Morgan Stanley to review seven land deals that it made with joint-venture partners and real estate advisors, fund spokeswoman Pat Macht said. The fund may sell some of the land, purchased to develop new homes, or renegotiate the partnerships, according to the report. About LandSource Communities LandSource Communities Development LLC, which operates in Arizona, California, Florida, New Jersey, Nevada and Texas, is involved in the planning and development of master planned communities and transforming undeveloped land into ready-to-build home sites and commercial properties. With the exception of one development project in Marina del Rey, California, LandSource does not build homes or commercial properties. LandSource and 20 of its affiliates filed for chapter 11 bankruptcy protection before the U.S. Bankruptcy Court for the District of Delaware on June 8, 2008 (Lead Case No. 08-11111). The Debtors are represented by Marcia Goldstein, Esq., at Weil Gotshal & Manges in New York, and Mark D. Collins, Esq., at Richards Layton & Finger in Wilmington, Delaware. Lazard Freres & Co. acts as the Debtors' financial advisors, and Kurtzmann Carson Consultants serves as the Debtors' notice and claims agent. According to the Troubled Company Reporter on May 22, 2008, LandSource sought help from its lender consortium to restructure $1.24 billion of its debt. LandSource engaged a 100-bank lender group led by Barclays Capital Inc., which syndicates LandSource's debt. LandSource had received a default notice on that debt from the lender group after it was not able to timely meet its payments during mid-April. However, LandSource failed to reach an agreement with its lenders on a plan to modify and restructure its debt, forcing it to seek protection from creditors. The Debtors' exclusive plan filing period expires on Oct. 6, 2008. (LandSource Bankruptcy News; http://bankrupt.com/newsstand/or 215/945-7000). LEHMAN BROTHERS: Names Mr. McDade, President; Mr. Lowitt CFO ------------------------------------------------------------ Lehman Brothers Holdings Inc. disclosed that Herbert (Bart) H. McDade III will succeed Joseph Gregory as president and chief operating officer of the Firm, and Ian Lowitt will succeed Erin Callan as the firm's chief financial officer. Mr. Lowitt will join the firm's Executive Committee. These management changes are effective immediately. "[Mr. McDade], who has been my partner for 25 years and has proven himself to be the firm's best operator, is the right individual to take on this responsibility and lead the Firm to the next level. His experience in both Fixed Income and Equities Capital Markets will benefit the firm, especially during these challenging times," Richard S. Fuld, Jr., Lehman Brothers� chairman and chief executive officer, said. "[Mr. Gregory] has been my partner for over 30 years and has been a driving force behind who we are today and what we have achieved as a Firm. This has been one of the most difficult decisions either of us has ever had to make," Mr. Fuld continued. Ms. Callan, who has served as the firm's chief financial officer since December 2007, will be rejoining the Investment Banking Division in a senior capacity. Prior to his appointment as president and chief operating officer, Mr. McDade, 48, was the global head of the firm's Equities Division, a position he has held since June 2005. He served as global head of the Fixed Income Division from 2002 to 2005 and as co-head of the Fixed Income Division from 2000 to 2002. He is a member of Lehman Brothers' Executive Committee. Mr. McDade joined the Firm in 1983 in Corporate Bond Trading. He was named head of the Firm's Corporate Bond Department in 1991. In 1998, he was named global head of Debt Capital Markets in the Investment Banking Division. Mr. McDade received a B.A. from Duke University and an M.B.A. from the University of Michigan. Since October 2006, Mr. Lowitt, 44, has been the firm's Co-CAO. In this role, he was responsible for the global oversight of Corporate Real Estate, Expense and Sourcing Services, Finance, Operations, Productivity and Process Improvement, Risk Management, and Technology. Prior to his Co-CAO position, Mr. Lowitt was the CAO of Lehman Brothers Europe. He has also served as global treasurer and global head of Tax. Before becoming global treasurer, he was the firm's head of Strategy and Corporate Development. Mr. Lowitt joined Lehman Brothers in 1994 from McKinsey & Company. Mr. Lowitt has a B.Sc. and an M.Sc. from the University of the Witwatersrand. He also has a B.A. and an M.Sc. from the University of Oxford, which he attended as a Rhodes Scholar. Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- an innovator in global finance, serves the financial needs of corporations, governments and municipalities, institutional clients, and high net worth individuals worldwide. Founded in 1850, Lehman Brothers maintains leadership positions in equity and fixed income sales, trading and research, investment banking, private investment management, asset management and private equity. The firm is headquartered in New York, with regional headquarters in London and Tokyo, and operates in a network of offices around the world. As reported by the Troubled Company Reporter on June 10, Lehman Brothers Holdings Inc. disclosed that continued challenging market conditions will result in an expected net loss of approximately $2.8 billion for the second quarter ended May 31, 2008, compared to net income of $489.0 million for the first quarter of fiscal 2008 and $1.3 billion for the second quarter of fiscal 2007. According to the Wall Street Journal, this expected net loss far exceeded the $300 million net loss predicted by analysts. LPATH INC: Posts $5,078,181 Net Loss in 2008 First Quarter ---------------------------------------------------------- Lpath Inc. reported a net loss of $5,078,181 on revenue of $13,126 for the first quarter ended March 31, 2008, compared with a net loss of $2,722,598 on revenue of $196,981 in the same period last year. The decrease in revenue reflects the completion of work on certain grants in 2007. Revenue in the first quarter of 2008 was comprised entirely of royalties. At March 31, 2008, the company's consolidated balance sheet showed $6,550,375 in total assets, $3,699,472 in total liabilities, and $2,850,903 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?2dd5 Going Concern Doubt As reported in the Troubled Company Reporter on April 22, 2008, San Diego, Calif.-based LevitZacks expressed substantial doubt about Lpath 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 incurred significant cash losses from operations since inception and expects to continue to incur cash losses from operations in 2008 and beyond. About Lpath Inc. Headquartered in San Diego, California, Lpath Inc. (OTC BB: LPTN) -- http://www.Lpath.com/-- is the category leader in bioactive- lipid-targeted therapeutics, an emerging field of medical science whereby bioactive signaling lipids are targeted for treating important human diseases. MICHELLE SIDRIAN: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Michelle Patrice Sidrian 4160 South Royal Links Cir. Antioch, CA 94509 Bankruptcy Case No.: 08-42959 Chapter 11 Petition Date: June 10, 2008 Court: Northern District of California (Oakland) Judge: Leslie J. Tchaikovsky Debtor's Counsel: Mark A. McLaughlin, Esq. (nmclaug226@sbcglobal.net) Law Offices of McLaughlin and Wildman 3012 Lone Tree Way #300 Antioch, CA 94509 Tel: (925) 754-2622 Total Assets: $7,099,856 Total Debts: $7,251,954 A copy of the Debtor's petition with a list of unsecured creditors is available for free at http://bankrupt.com/misc/canb08-42959.pdf MICRO COMPONENT: March 31 Balance Sheet Upside-Down by $6,603,000 ----------------------------------------------------------------- Micro Component Technology Inc.'s consolidated balance sheet at March 31, 2008, showed $5,079,000 in total assets and $11,682,000 in total liabilities, resulting in a $6,603,000 total stockholders' deficit. The company reported a net loss of $1,116,000 on net sales of $2,198,000 for the first quarter ended March 31, 2008, compared with a net loss of $159,000 on net sales of $3,377,000 in the same period last year. 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?2dc7 Going Concern Doubt As reported in the Troubled Company Reporter on April 18, 2008, Olsen, Thielen & Co. Ltd., in St. Paul, Minnesota, expressed substantial doubt about Micro Component Technology 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 frim reported that the company has suffered recurring losses from operations and has a stockholders' deficit. About Micro Component Based in St. Paul, Minnesota, Micro Component Technology Inc. (OTC BB: MCTI) -- http://www.mct.com/-- is a smanufacturer of test handling and automation solutions satisfying the complete range of handling requirements of the global semiconductor industry. MIDON RESTAURANT: Files for Chapter 11 Bankruptcy in Albany ----------------------------------------------------------- Midon Restaurant Corp. filed for Chapter 11 bankruptcy protection before U.S. Bankruptcy Court in Albany, New York, on Monday. The Albany, N.Y., Times-Union reports that the filing was made nine months after Midon opened an Old Chicago pizza restaurant and video arcade. Midon formerly operated Boston Chicken and Burger King franchises in the Capital Region, the report says. Times-Union, citing court documents, relates that Midon cited lower than expected sales and business performance, higher food and beverage costs, high management turnover, poor kitchen management and excessive payroll spending as a result of overstaffing as reasons for its demise. Donald M. Cepiel Sr., principal of Midon, said in papers filed in court that he started the business at a time when customers were cutting back on going out to eat due to the soft economy, according to Times-Union. Mr. Cepiel said his cash flow was impacted by the cost of building the restaurant, and that he needs to meet a weekly payroll of $22,000, the report says. A typical Old Chicago restaurant costs $1.2 million to $2 million to open, Times-Union notes, citing the company's Web site. Midon reported $41,631 in assets and $1.4 million in liabilities in the bankruptcy petition, Times-Union says. The Debtor is seeking permission to allocate funds for payroll dating to late May, as well as for rent, cleaning, insurance, and food and beverage purchases, the report adds. Given the breathing room afforded by the debtor's filing, Mr. Cepiel said Midon will be able to pay its ongoing operating expenses -- while it attempts to reorganize its business, the report continues. MORGAN STANLEY: Moody's Reviews Ba2 Rating for Possible Downgrade ----------------------------------------------------------------- Moody's Investors Service has placed on review for possible downgrade the ratings on these notes issued by Morgan Stanley Managed ACES SPC Series 2005-2: Class Description: $40,000,000 Class V Secured Floating Rate Notes due 2013 -- Prior Rating: Ba2 -- Current Rating: Ba2, on review for possible downgrade According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's reference obligation pool, which consists primarily of corporate securities. MORGAN STANLEY: Moody's Puts Ba2 Rating Under Review ---------------------------------------------------- Moody's Investors Service has placed on review for possible downgrade the ratings on these notes issued by Morgan Stanley ACES SPC, Series 2006-37: Class Description: $19,000,000 Class IA Secured Floating Rate Notes due 2016 -- Prior Rating: A2 -- Current Rating: A2, on review for possible downgrade Class Description: JPYen1,000,000,000 Class IB Secured Floating Rate Notes due 2016 -- Prior Rating: A2 -- Current Rating: A2, on review for possible downgrade Class Description: $5,000,000 Class II Secured Floating Rate Notes due 2016 -- Prior Rating: A2 -- Current Rating: A2, on review for possible downgrade Class Description: $5,700,000 Class IIIA Secured Floating Rate Notes due 2016 -- Prior Rating: Baa2 -- Current Rating: Baa2, on review for possible downgrade Class Description: $1,500,000 Class IV Secured Floating Rate Notes due 2016 -- Prior Rating: Ba2 -- Current Rating: Ba2, on review for possible downgrade According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's reference obligation pool, which consists primarily of corporate securities. MORGAN STANLEY: S&P Upgrades Rating on $3MM Notes to BB- from B --------------------------------------------------------------- Standard & Poor's Ratings Services raised its rating on the $3.0 million class A-1 secured fixed-rate notes from Morgan Stanley ACES SPC's series 2006-8 to 'BB-' from 'B'. At the same time, S&P lowered its rating on the $3.5 million class A-14 secured fixed-rate notes from the same series to 'BB-' from 'BB' and removed it from CreditWatch, where it was placed with negative implications on March 18, 2008. The upgrade reflects the June 3, 2008, raising of the senior unsecured debt rating on Reliant Energy Inc. and the downgrade reflects the May 29, 2008, lowering of the senior unsecured debt rating on American Axle & Manufacturing Holdings Inc. Morgan Stanley ACES SPC's series 2006-8 is a credit-linked note transaction. The rating on each class of notes is based on the lowest of (i) the rating on the respective reference obligations for each class (with respect to class A-1, the senior unsecured notes issued by Reliant Energy Inc. {'BB-'}; with respect to class A-14, the senior unsecured notes issued by American Axle & Manufacturing Holdings Inc. {'BB-'}); (ii) the rating on the guarantor of the counterparty to the credit default swap, the interest rate swap, and the contingent forward agreement (in each instance, Morgan Stanley {A+/Negative/A-1}); and (iii) the rating on the underlying securities, the class A certificates issued by BA Master Credit Card Trust II's series 2001-B due 2013 ('AAA'). MUNOZ PRINTING: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Munoz Printing Co., Inc. 2655 Freewood Dallas, TX 75220 Bankruptcy Case No.: 08-32866 Type of Business: The Debtor provides printing services. See http://www.munozprinting.com Chapter 11 Petition Date: June 11, 2008 Court: Northern District of Texas (Dallas) Debtor's Counsel: Hanh H. Duong, Esq. Email: duonglawfirm@yahoo.com 1204 N. Josey Lane, Ste. 106 Carrollton, TX 75006 Tel: (214) 390-0999 Fax: (214) 390-0998 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. OCCULOGIX INC: Posts $2,943,500 Net Loss in 2008 First Quarter -------------------------------------------------------------- OccuLogix Inc. reported a net loss of $2,943,500 on revenue of $7,200 for the first quarter ended March 31, 2008, compared with a net loss of $4,272,744 on revenue of $90,000 in the same period last year. At March 31, 2008, the company's consolidated balance sheet showed $9,832,552 in total assets, $6,518,600 in total liabilities, $274,288, in minority interest, and $3,039,664 in total stockholders' equity. The company's consolidated balance sheet at March 31, 2008, also showed strained liquidity with $3,130,655 in total current assets available to pay $6,518,600 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?2dd6 Going Concern Doubt As reported in the Troubled Company Reporter on Mar 24, 2008, Ernst & Young LLP, in Toronto, Canada, expressed substantial doubt about OccuLogix 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 recurring operating losses and working capital deficiency. About OccuLogix Inc. Headquartered in Mississauga, Ontario, Canada, OccuLogix Inc. (Nasdaq: OCCX; TSX: OC) -- http://www.occulogix.com/-- is a healthcare company focused on ophthalmic devices for the diagnosis and treatment of age-related eye diseases. PACIFIC LUMBER: Scopac Seeking DIP Financing from Lehman -------------------------------------------------------- Bank of America NT&SA, as agent for itself and certain other banks, and The Bank of New York, as Indenture Trustee for the Timber Notes, have consented to Scotia Pacific Company's use of cash collateral through June 27, 2008, pursuant to a stipulation among the parties. The Cash Collateral for Scopac's use includes cash collateral in a BoNY account, which the parties refer to as the Scheduled Amortization Reserve Account. Scopac cannot access the full amount available to it under the Cash Collateral Stipulation because only some $2,500,000 of the SAR account is presently liquid, Kathryn A. Coleman, Esq., at Gibson, Dunn & Crutcher LLP, in New York, Scopac's counsel, stated. The remainder of the balance of the SAR Account is invested in auction rate securities and is not presently liquid, she noted. To alleviate its inability to access the full amount of the Cash Collateral, Scopac suggested to BoNY on May 14, 2008, of its intent to repurchase the auction rate securities at par held in the SAR Account, according to Ms. Coleman. BoNY, however, refused to give its consent, Ms. Coleman told the Hon. Richard Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas. Under the circumstances, Scopac said it cannot be assured that it will have enough funds to make certain payments, going forward. Ms. Coleman averred that in this light, Lehman Commercial Paper offered to extend DIP financing to Scopac on terms provided for in a term sheet. Lehman informed Scopac that it will not be able to extend credit until documentation was finalized. Accordingly, at Scopac's behest, the Court authorizes the Debtor to reimburse Lehman $150,000 for out-of-pocket and other expenses the firm incurred or will incur in connection with document preparations and negotiations for the DIP Financing. The $150,000 payment represents a portion of a total work fee of $500,000. Scopac intends to seek approval of the Lehman DIP Financing at a later date, Ms. Coleman tells Judge Schmidt. About Pacific Lumber Based in Oakland, California, The Pacific Lumber Company -- http://www.palco.com/-- and its subsidiaries operate in several principal areas of the forest products industry, including the growing and harvesting of redwood and Douglas-fir timber, the milling of logs into lumber and the manufacture of lumber into a variety of finished products. Scotia Pacific Company LLC, Scotia Development LLC, Britt Lumber Co., Inc., Salmon Creek LLC and Scotia Inn Inc. are wholly owned subsidiaries of Pacific Lumber. Scotia Pacific, Pacific Lumber's largest operating subsidiary, was established in 1993, in conjunction with a securitization transaction pursuant to which the vast majority of Pacific Lumber's timberlands were transferred to Scotia Pacific, and Scotia Pacific issued Timber Collateralized Notes secured by substantially all of Scotia Pacific's assets, including the timberlands. Pacific Lumber, Scotia Pacific, and four other subsidiaries filed for chapter 11 protection on Jan. 18, 2007 (Bankr. S.D. Tex. Case Nos. 07-20027 through 07-20032). Jack L. Kinzie, Esq., at Baker Botts LLP, is Pacific Lumber's lead counsel. Nathaniel Peter Holzer, Esq., Harlin C. Womble, Jr., Esq., and Shelby A. Jordan, Esq., at Jordan Hyden Womble Culbreth & Holzer PC, is Pacific Lumber's co-counsel. Kathryn A. Coleman, Esq., and Eric J. Fromme, Esq., at Gibson, Dunn & Crutcher LLP, acts as Scotia Pacific's lead counsel. Kyung S. Lee, Esq., Esq., at Diamond McCarthy LLP is Scotia Pacific's co-counsel, replacing Porter & Hedges LLP. John D. Fiero, Esq., at Pachulski Stang Ziehl & Jones LLP, represents the Official Committee of Unsecured Creditors. When Pacific Lumber filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. Scotia Pacific listed total assets of $932,000,000 and total debts of $765,978,335. The Debtors filed their Joint Plan of Reorganization on Sept. 30, 2007, which was amended on Dec. 20, 2007. Four other parties-in- interest have filed competing plans for the Debtors -- The Bank of New York Trust Company, N.A., as Indenture Trustee for the Timber Notes; the Official Committee of Unsecured Creditors; Marathon Structured Finance Fund L.P, the Debtors' DIP Lender and Agent under the DIP Credit Facility; and the Heartlands Commission, which represents the tribal members of the Bear River Band of Rohnerville Rancheria and PALCO employees. The Debtors' exclusive plan filing period expired on Feb. 29, 2008. (Scotia/Pacific Lumber Bankruptcy News, Issue No. 61; http://bankrupt.com/newsstand/or 215/945-7000). PETROL OIL: Weaver & Martin Expresses Going Concern Doubt --------------------------------------------------------- Weaver & Martin LLC raised substantial doubt on the ability of Petrol Oil & Gas Inc., to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2007. The auditor pointed to the company's recurring losses and negative cash flows from operations. Subsequent Events In January 2008, the company entered into a fixed price contract covering approximately 45,000 DTH per month at a weighted average price of $7.10 for a one-year period beginning April 1, 2008. On April 30, 2008, Petrol Oil and Gas, Inc., Neodesha Pipeline, Inc., and Coal Creek Pipeline, Inc., entered into a Foreclosure- Related Agreement with LV Administrative Services, Inc., administrative and collateral agent for Laurus Master Fund, Ltd., Valens Offshore SPV I, Ltd., Valens U.S. SPV I, LLC, Calliope Capital Corporation and Pallas Production Corp. Petrol is in default of certain obligations to its Holders under its Secured Convertible Term Note, dated Oct. 28, 2004, in the principle amount of $8,000,000; its Secured Term Note, dated Oct. 31, 2005, in the principle amount of $10,000,000; its Secured Term Note, dated March 31, 2006, in the principle amount of $5,000,000; and its Secured Term Note, dated May 26, 2006, in the principle amount of $10,000,000, and has received from LV and the Holders a default and acceleration notice with respect to the Outstanding Obligations. The aggregate amount due and owing to the Holders as of April 30, 2008 is approximately $35,700,000. The Outstanding Obligations are secured by various mortgages and other fixed and mixed assets and real and personal property pursuant to security and other agreements covering assets or other rights to which Petrol has rights, a portion of which are assets and rights referred to as the "Petrol-Neodesha Project," located in Neosho and Wilson Counties, Kansas, consisting of, among other Collateral, mortgages, and real, personal property and fixed and mixed assets used in connection with the Petrol-Neodesha Project. The Agreement allows the Holders to foreclose on the Neodesha Collateral and governs the terms and conditions of the foreclosure. The Agreement provides that Petrol will not contest the sale of the Neodesha Collateral, which will be conducted as a public foreclosure sale in accordance with Kansas law. Petrol has agreed to reasonably assist LV and the Holders in the completion of the foreclosure sale. After the sale of the Neodesha Collateral becomes final, LV and the Holders will release Petrol of all remaining amounts owed or claims they may have, and the Holders will reassign to Petrol their overriding royalty interests in the mineral leases located at Petrol's Coal Creek Project. As part of the Agreement, Petrol will cancel all outstanding warrants for purchases of securities issued to Holders in connection with the Outstanding Obligations and replace them with warrants to purchase 1,000,000 shares of common stock at an initial exercise price of $0.20 per share. Various Loan Defaults Convertible Note On October 2004 the company issued an $8,000,000 secured convertible term note to Laurus Master Fund, Ltd. The note is convertible into shares of our common stock at an initial conversion price of $1.50 per share. The convertible note has a term of three years and accrues interest at the prime rate plus 3% per year. It is secured by substantially all our assets. This note is in default at Dec. 31, 2007. Secured Term Notes In October 2005, the company borrowed $10,000,000 from Laurus on a secured term note. The interest on the note is prime plus 3.25%. Principal payments are based on an amount that approximated 80% of net revenues as defined in the note agreement. This principally consists of net revenue on new producing wells. The loan will mature on Oct. 31, 2008. The loan is in default as of Dec. 31, 2007. On March 31, 2006, the company borrowed $5,000,000 from Laurus under the credit facility provided in October 2005. Under the terms of the agreement the company issued a Secured Term Note in the aggregate principal amount of $5,000,000. The note has a three-year term and bears an interest rate equivalent to the "prime rate" published by the Wall Street Journal from time to time plus 3.25%, subject to a floor of 10% and a ceiling of 14% per annum. Concurrently with the agreements, the company amended and restated its previous $10,000,000 Secured Term Note dated Oct. 31, 2005, with Laurus Funds. The loan will mature on March 31, 2009, but is in default as of Dec. 31, 2007. On May 31, 2006, the company borrowed $10,000,000 from Laurus under the credit facility provided in October 2005. Under the terms of the agreement the company issued a Secured Term Note in the aggregate principal amount of $5,000,000. The note has a three-year term and bears an interest rate equivalent to the "prime rate" published by the Wall Street Journal from time to time plus 3.25%, subject to a floor of 10% and a ceiling of 14% per annum. Concurrently with the agreements, the company amended and restated its previous $10,000,000 Secured Term Note dated Oct. 31, 2005 with Laurus Funds. The loan will mature on May 31, 2009 but is in default as of Dec. 31, 2007. The master security agreement establishes substantially all of the company�s assets as collateral for the convertible note as well as for this note. Financials The company posted a net loss of $22,935,390 on total revenues of $5,488,673 for the year ended Dec. 31, 2007, as compared with a net loss of $7,795,208 on total revenues of $6,532,798 in the prior year. At Dec. 31, 2007, the company's balance sheet showed $11,502,462 in total assets and $27,325,491 in total liabilities, resulting in $16,334,029 stockholders' deficit. The company's consolidated balance sheet at Dec. 31, 2007, also showed strained liquidity with $1,156,560 in total current assets available to pay $27,325,491 in total current liabilities. A full-text copy of the company's 2007 annual report is available for free at http://ResearchArchives.com/t/s?2d8c About Petrol Oil Petrol Oil and Gas Inc. in Overland Park, Kansas (OTC BB: POIG) -- http://www.petroloilandgas.com/-- develops and acquires gas and oil assets. Its properties are located in the Cherokee and Forrest City Basins along the Kansas and Missouri border. Its current focus is Coal Bed Methane reservoirs in the central U.S., which produce both Coal Bed Methane and at times conventional gas. PLANGRAPHICS INC: March 31 Balance Sheet Upside-Down by $2,998,713 ------------------------------------------------------------------ PlanGraphics Inc.'s consolidated balance sheet at March 31, 2008, showed $1,376,838 in total assets and $4,375,551 in total liabilities, resulting in a $2,998,713 total stockholders' deficit. At March 31, 2008, the company's consolidated balance sheet also showed strained liquidity with $1,130,032 in total current assets available to pay $4,375,551 in total current liabilities. The company reported a net loss of $207,954 on revenues of $1,036,423 for the second quarter ended March 31, 2008, compared with a net loss of $134,760 on revenues of $869,751 in the same period ended March 31, 2007. On a consolidated basis,operating loss for the quarter ended March 31, 2008, was $172,945, an increase of $67,961 over the prior year operating loss of $104,984. This change is attributable to the increase in total cost and expenses during the current quarter well exceeding the increase in revenue. 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?2dd8 Going Concern Doubt Sherb & Co., LLP, in Boca Raton, Florida, expressed substantial doubt about PlanGraphics Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Sept. 30, 2007, and 2006. The auditing firm reported that the company has suffered recurring losses and has a negative working capital position and a stockholders' deficit. About PlanGraphics Inc. Headquartered in Frankfort, Ky., PlanGraphics Inc. (PK: PGRA) -- http://www.plangraphics.com/-- is a full life-cycle systems integration and implementation firm providing a broad range of services in the design and implementation of information technology in the public and commercial sectors. PROTOCALL TECH: Marcum & Kliegman Expresses Going Concern Doubt --------------------------------------------------------------- Marcum & Kliegman LLP raised substantial doubt on the ability of Protocall Technologies Inc., to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's recurring losses from operations, accumulated deficit of $58,731,513, stockholders' deficiency of $20,351,898 and a working capital deficit of $20,106,026 at Dec. 31, 2007. The company also experienced severe cash short falls and has been unable to pay some of its operating expenses as they became due. The company posted a net loss of $14,625,936 on net sales of $954,792 for the year ended Dec. 31, 2007, as compared with a net loss of $5,988,672 on net sales of $1,071,081 in the prior year. At Dec. 31, 2007, the company's balance sheet showed $965,369 in total assets and $21,317,267 in total liabilities, resulting in $20,351,898 stockholders' deficit. The company's consolidated balance sheet at Dec. 31, 2007, also showed strained liquidity with $248,554 in total current assets available to pay $20,354,580 in total current liabilities. A full-text copy of the company's 2007 annual report is available for free at http://ResearchArchives.com/t/s?2d62 About Protocall Based in Commack, New York, Protocall Technologies Incorporated (OTCBB: PCLI.OB) -- http://www.protocall.com/-- provides retailers and software publishers with specialized systems programming, digital rights management and electronic merchandising services for front and back-end fulfillment operations. REFCO INC: Ch. 7 Trustee Wants GE Capital Claims Cut by $700,000 ---------------------------------------------------------------- Pursuant to Section 502 of the Bankruptcy Code and Rule 3007 of the Federal Rules of Bankruptcy Procedure, Albert Togut, the Chapter 7 Trustee for Refco, LLC, asks the U.S. Bankruptcy Court for the Southern District of New York to reduce and allow, in a reduced amount, the claims of GE Capital in connection with certain leased equipment. On July 31, 2006, GE filed 17 proofs of claim, Claim Nos. 431 through 447, asserting an aggregate of $767,413, comprising: * arrears of $57,089; * late charges of $2,736; * sales tax of $6,921; * discounted stream of payments of $604,342; and * asserted residual value of equipment of $96,325. The Chapter 7 Trustee tells the Court that GE Capital included a "residual" value claim for the return of the leased equipment, despite the fact that the Equipment was returned, as well as a sales tax charge for periods after the Refco LLC rejected the leases and returned the Equipment. Moreover, GE Capital did not deduct postpetition payments, and has not satisfied its burden of mitigating its damages following the return of the Equipment. The Chapter 7 Trustee states that the GE Claims should be reduced, since GE Capital improperly included additional charges, and did not reduce its claim to reflect a $15,868 postpetition payment. The Chapter 7 Trustee submits that the GE Claims should be allowed for $41,221. The proposed amount reflects the asserted arrears of $57,089 less $15,868 of postpetition payments. Headquartered in New York, Refco Inc. -- http://www.refco.com/ -- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The company has operations in Bermuda. The company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported US$16.5 billion in assets and US$16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. The Court confirmed the Modified Joint Chapter 11 Plan of Refco Inc. and certain of its Direct and Indirect Subsidiaries, including Refco Capital Markets, Ltd., and Refco F/X Associates, LLC, on Dec. 15, 2006. That Plan became effective on Dec. 26, 2006. (Refco Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) SANDY CREEK: S&P Says Dynergy & LS Power Sale is Favorable ---------------------------------------------------------- Standard & Poor's Ratings Services said that the announcement by Dynegy Inc. and LS Power Funding Corp. to sell 100 MW of their indirect interest in the Sandy Creek Power facility to Lower Colorado River Authority is favorable for the credit profile of Sandy Creek Energy Associates L.P. (BB/Stable). Dynegy and LS Power have agreed to sell a 100 MW interest of their 675 MW stake in the unit to LCRA. LCRA will also enter into a 30- year power purchase contract for another 100 MW. With this agreement, 325 MW of ownership interest in the original 900 MW capacity has been sold and a further 250 MW has been contracted in long-term power purchase agreements. Proceeds from the sale are being proportionately used to pay down debt and for distributions to the sponsors. Sandy Creek's strategy is to continue to sign up customers to long-term contracts or sell down its interest. To the extent that Sandy Creek can do the former, and thus increase the proportion of its capacity under contract, the rating could improve. SHARPER IMAGE: Seeks to Extend Plan Filing Date to Sept. 16 ----------------------------------------------------------- Since the Petition Date, The Sharper Image Corp. has worked diligently on a number of time-consuming tasks necessary to the administration of its Chapter 11 case, including: * obtaining debtor-in-possession financing; * commencing and continuing going-out-of-business or store closing sales at nearly all of its 184 store locations; * rejecting burdensome leases; * preparing schedules of assets and liabilities and statements of financial affairs; * implementing an amended severance program for the benefit of the Debtor's non-management employees; * addressing demands from employees, vendors, taxing authorities, utility companies, gift card holders and other customers, landlords, and other parties-in-interest; * working with the office of the United States Trustee to provide requested financial information and comply with reporting requirements under the Bankruptcy Code; * marketing the business and negotiating with various parties-in-interest through an arduous auction and sale process; and * consummating a sale of substantially all of its assets. Steven K. Kortanek, Esq., at Womble Carlyle Sandridge & Rice, PLLC, in Wilmington, Delaware, relates that although the Debtor has made substantial progress advancing the Chapter 11 case and maximizing value for the benefit of its estate and creditors, it needs additional time to, among other things, liquidate its remaining assets in a manner that will maximize value of the assets for the benefit of the estate and creditors. Mr. Kortanek notes that since the Petition Date, the Debtor has attempted to quantify the amount of existing administrative, priority, and unsecured claims against the estate, and the Debtor will require additional time to review and analyze the validity, amount, and priority of those claims. In light of these ongoing efforts, Mr. Kortanek continues, additional time is needed to develop and negotiate a plan of liquidation and a disclosure statement that contains adequate information under Section 1125 of the Bankruptcy Code. "The Debtor only recently obtained approval of the Sale [of its Assets] and has worked expeditiously towards closing, Mr. Kortanek maintains. "The extension [of the exclusive plan filing period] . . . will provide Sharper Image and its advisors with the opportunity to analyze Sharper Image's post-Sale financial circumstances and develop a plan that provides for the expeditious conclusion of the chapter 11 case." Section 1121(b) of the Bankruptcy Code provides for an initial period of 120 days after the commencement of a chapter 11 case during which a debtor has the exclusive right to propose and file a chapter 11 plan. Section 1121(c)(3) provides that, if a debtor files a plan within the 120-day Plan Period, it has a period of 180 days after the commencement of the case to obtain acceptance of that plan, during which time competing plans may not be filed. Mr. Kortanek reminds the Court that pursuant to Section 1121(d), the Court may extend a debtor's Exclusive Periods for cause, if the initial 120-day and 180-day Exclusive Periods provided for prove to be an unrealistic time frame for proposal and solicitation of a plan. By this motion, the Debtor asks the Court to extend the exclusive period during which it may file a Plan through and including Sept. 16, 2008, and the period during which it may solicit acceptances of the plan through and including November 15. "Sharper Image is not seeking an extension of the Exclusive Periods to delay creditors or force them to accede to its demands," Mr. Kortanek explains. "Sharper Image and its professionals have consistently conferred with and involved the Statutory Creditors' Committee, the DIP Lender, the United States Trustee and other parties in interest in all major substantive and administrative matters in this case." Extension of the Exclusive Periods will also increase the likelihood of a greater distribution to the Debtor's stakeholders by facilitating an orderly, efficient and cost-effective plan process for the benefit of all creditors, Mr. Kortanek contends. Termination of the Exclusive Periods, on the other hand, could give rise to the threat of multiple plans and a contentious confirmation process resulting in increased administrative expenses and consequently diminishing returns to creditors, he says. About Sharper Image Based in San Francisco, California, Sharper Image Corp. -- http://www.sharperimage.com/-- is a multi-channel specialty retailer. It operates in three principal selling channels: the Sharper Image specialty stores throughout the U.S., the Sharper Image catalog and the Internet. The company has operations in Australia, Brazil and Mexico. In addition, through its Brand Licensing Division, it is also licensing the Sharper Image brand to select third parties to allow them to sell Sharper Image branded products in other channels of distribution. The company filed for Chapter 11 protection on Feb. 19, 2008 (Bankr. D.D., Case No. 08-10322). Steven K. Kortanek, Esq. at Womble, Carlyle, Sandridge & Rice, P.L.L.C. represents the Debtor in its restructuring efforts. An Official Committee of UnsecuredCreditors has been appointed in the case. Whiteford Taylor Preston LLC is the Committee's Delaware counsel When the Debtor filed for bankruptcy, it listed total assets of $251,500,000 and total debts of $199,000,000. The Debtors' exclusive period to file a plan expires on June 18, 2008. (Sharper Image Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SHARPER IMAGE: Proposes to Set Aug. 18 as Claims Bar Date --------------------------------------------------------- Pursuant to Rule 3003(c)(3) of the Federal Rules of Bankruptcy Procedure and Section 502(b)(9) of the Bankruptcy Code, The Sharper Image Corp. asks the U.S. Bankruptcy Court for the District of Delaware to establish August 18, 2008, 5:00 p.m., prevailing Pacific Time, as: (i) the deadline for each person or entity to file proofs of claim against the Debtor based on prepetition claims, including claims asserted by holders of gift cards, gift certificates, merchandise certificates, and reward cards issued by Sharper Image Corporation; and (ii) the last date and time for governmental units to file proofs of claim against the Debtor. Moreover, the Debtor asks the Court to approve its (a) proposed Gift Certificate Proof of Claim Form, a specialized form of proof of claim for claimants asserting Certificate Claims, (b) proposed Bar Date notice, and (c) proposed notice and publication procedure. The Debtor asserts that each person or entity that asserts a claim that arose prior to the Petition Date must file an original, written proof of claim that substantially conforms to Official Bankruptcy Form B10 or to the Gift Certificate Proof of Claim Form, so as to be received on or before the Bar Date by the Debtor's court-approved claims agent, Kurtzman Carson Consultants LLC. KCC will not accept proofs of claim sent by facsimile, telecopy, or electronic mail transmission. The Debtor proposes that these individuals or entities will not be required to file a claim on or before the Claims Bar Date: * any person or entity whose claim is listed on the Debtor's schedules of assets and liabilities and (i) whose claim is not described as disputed, contingent, or unliquidated, and (ii) who does not dispute the amount or nature of the claim as set forth in the Schedules; * any person or entity having a claim under Sections 503(b) or 507(a) of the Bankruptcy Code as an administrative expense; * any person or entity whose claim has been paid in full; * any person or entity that holds an interest in the Debtor, provided, however, that interest holders who wish to assert claims that arise out of or relate to the ownership or purchase of an interest, must file proofs of claim on or before the applicable Bar Date, unless another exception applies; * any person or entity that holds a claim that has been allowed by an order of the Court entered on or before the applicable Bar Date; * any holder of a claim for which a separate deadline is fixed by the Court; and * any holder of a claim that has properly filed, with the Clerk of the Court or with KCC, a proof of claim utilizing a claim form which substantially conforms to the General Proof of Claim Form. Any person or entity that holds a claim that arises from the rejection of an executory contract or unexpired lease must file a proof of claim based on the rejection by the later of (i) the applicable Bar Date, and (ii) the date that is 30 days after the effective date of the rejection, to have any right to participate in the Debtor's estate. Any holder of a claim who is required, but fails, to file a proof of claim in accordance with the Bar Date Order on or before the applicable Bar Date will be forever barred, estopped and enjoined from asserting the claim, and the Debtor and its property will be forever discharged from any and all indebtedness or liability with respect to the claim. Moreover, the holder will not be permitted to vote to accept or reject any plan of liquidation filed in the Chapter 11 case, participate in any distribution in the Chapter 11 case on account of the claim, or receive further notices regarding the claim. The Debtor proposes to mail a bar date notice, and a General Proof of Claim Form to: (a) the U.S. Trustee; (b) attorneys for the Creditors' Committee; (c) all known holders of claims listed on the Schedules at their stated addresses; (d) all parties known to the Debtor as having potential claims against its estate; (e) all counterparties to the Debtor's executory contracts and unexpired leases listed on the Schedules; (f) all parties to litigation with the Debtor; and (g) all parties who have requested notice. The Debtor will mail a Bar Date Notice and a Gift Certificate Proof of Claim Form to each person or entity asserting Certificate Claims and for which KCC has been provided an address. However, KCC will not mail a Bar Date Notice and Gift Certificate Proof of Claim Form to those persons or entities asserting Certificate Claims who have already properly filed a proof of claim substantially in the form of Official Bankruptcy Form B1O. Those persons or entities are not required to re-file a proof of claim. To the extent the Gift Certificate Proof of Claim Form is approved by the Court, KCC will prominently display the Gift Certificate Proof of Claim Form on KCC's Web site. Those asserting Certificate Claims may also obtain Gift Certificate Proof of Claim Forms from the Debtor. Additionally, the Debtor proposes to publish the Bar Date Notice once in The New York Times, and The Wall Street Journal at least 25 days prior to the Bar Date. A full-text copy of the proposed Gift Certificate Proof of Claim is available for free at: http://bankrupt.com/misc/SI_GiftCertificateClaim.pdf A full-text copy of the proposed Bar Date notice is available for free at: http://bankrupt.com/misc/SI_BarDateNotice.pdf About Sharper Image Based in San Francisco, California, Sharper Image Corp. -- http://www.sharperimage.com/-- is a multi-channel specialty retailer. It operates in three principal selling channels: the Sharper Image specialty stores throughout the U.S., the Sharper Image catalog and the Internet. The company has operations in Australia, Brazil and Mexico. In addition, through its Brand Licensing Division, it is also licensing the Sharper Image brand to select third parties to allow them to sell Sharper Image branded products in other channels of distribution. The company filed for Chapter 11 protection on Feb. 19, 2008 (Bankr. D.D., Case No. 08-10322). Steven K. Kortanek, Esq. at Womble, Carlyle, Sandridge & Rice, P.L.L.C. represents the Debtor in its restructuring efforts. An Official Committee of UnsecuredCreditors has been appointed in the case. Whiteford Taylor Preston LLC is the Committee's Delaware counsel When the Debtor filed for bankruptcy, it listed total assets of $251,500,000 and total debts of $199,000,000. The Debtors' exclusive period to file a plan expires on June 18, 2008. (Sharper Image Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SHUMATE INDUSTRIES: Malone & Bailey Raises Going Concern Doubt -------------------------------------------------------------- Houston-based Malone & Bailey, PC, raised substantial doubt on the ability of Shumate Industries, Inc., to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2007 . The auditing firm stated that Shumate requires significant amount of cash in its operations and does not have sufficient cash to fund its operations for the next twelve months. Management related that Shumate incurred recurring losses from operations of $5,711,806 and $2,553,836 in 2007 and 2006, respectively, and has an accumulated deficit of $27,087,780. These conditions raise substantial doubt as to Shumate's ability to continue as a going concern. "To address these concerns, Shumate has raised proceeds of approximately $3,050,000 through a convertible note private offering in 2007. Additionally, Shumate has sought recapitalization in debt or equity during 2008, however there can be no assurance that it will successfully recapitalize," management said. The company said it is trying to continue to increase Shumate's revenues and improve its results of operations to a level of profitability including revenues and cash flow from the Hemiwedge Valve Corporation subsidiary. "New sales representative agreements have been executed during 2008 to assist in the sales and marketing efforts to improve our results of operations. We believe that the company will not be able to fund its operations, working capital requirements, and debt service requirements through fiscal year 2008 through cash flows generated by operations and may seek to raise additional capital in the future if the company's results of operations do not continue to improve," the management added. The company posted a net loss of $7,210,784 on total revenues of $9,033,614 for the year ended Dec. 31, 2007, as compared with a net loss of $1,309,131 on total revenues of $7,719,882 in the prior year. At Dec. 31, 2007, the company's balance sheet showed $5,143,132 in total assets and $9,628,740 in total liabilities, resulting in $4,485,608 stockholders' deficit. The company's consolidated balance sheet at Dec. 31, 2007, also showed strained liquidity with $2,342,385 in total current assets available to pay $6,989,982 in total current liabilities. A full-text copy of the company's 2007 annual report is available for free at http://ResearchArchives.com/t/s?2d8b About Shumate Industries Headquartered in Conroe, Texas, Shumate Industries Inc. (OTCBB: SHMT) -- http://www.shumateinc.com/-- is a Texas-based, energy field services company that incorporates new technologies to bring products to market leveraging its existing infrastructure, expertise and customer channels. The company operates through two wholly owned subsidiaries, Shumate Machine Works, a contract machining and manufacturing division, and Hemiwedge Valve Corporation, a division formed to launch a proprietary new technology in a valve product line targeting flow control, sub-sea, down-hole and tar sands applications. SIRIUS COMPUTER: S&P Revises Outlook to Neg. on Weaker Revenue -------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on San Antonio, Texas-based Sirius Computer Solutions Inc. to negative from stable. At the same time, S&P affirmed the 'B+' corporate credit rating on the company. "The outlook revision reflects weaker-than-expected revenue and EBITDA growth, and limited financial flexibility resulting from existing bank agreement requirements," said Standard & Poor's credit analyst Molly Toll-Reed. The rating on Sirius reflects the company's narrow business profile, relatively small earnings base, and significant supplier concentration. These factors are offset partially by Sirius' good position in the highly fragmented computer systems value-added reseller market, diversified customer base, and consistent profitability. Sirius provides its customers hardware, software, and services that enable the use of mission-critical applications, including data storage, network security, network access, application development, and web hosting. SMART & FINAL: Higher Leverage Prompts Moody's to Chip Ratings -------------------------------------------------------------- Moody's Investors Service downgraded Smart & Final Holdings Corp.'s ratings, including the corporate family rating to B2 from B1 and left these ratings under review for possible further downgrade. This action was prompted by the higher than expected leverage, lower margins, and weak interest coverage due to the delay in executing its business plan, principally as a result of the delayed acquisition of the Henry's and Sun Harvest markets from Whole Foods Market Inc. in late 2007. This has led to a credit profile that is inconsistent with its prior ratings. Ratings downgraded and under review for possible further downgrade: -- Corporate family rating to B2 from B1 -- Probability of default rating to B2 from B1 -- $150 million asset based revolving credit facility due 2013 to Ba3 from Ba1 -- $167 million first lien term loan due 2014 to B2 from B1 -- $140 million second lien term loan due 2014 to Caa1 from B3 Moody's review will focus on the company's operating performance and cash flow generation, as well as its ability to reduce leverage and improve interest coverage. Moody's will also follow the progress of the company in implementing its delayed strategic and tactical plans to determine the likelihood of Smart & Final improving its operating performance from present levels. Headquartered in Commerce, California, Smart & Final Inc. is a leading non-membership warehouse and wholesale grocery store chain specializing in food and foodservice products, as well as daily household products like paper and packaging and janitorial equipment/supplies. For FYE 2007, the company generated $2.3 billion in net sales. STRATUS SERVICES: March 31 Balance Sheet Upside-Down by $8,123,044 ------------------------------------------------------------------ Stratus Services Group Inc.'s consolidated balance sheet at March 31, 2008, showed $3,950,726 in total assets, $11,671,518 in total liabilities, and $402,252 in minority interest, resulting in a $8,123,044 total stockholders' deficit. At March 31, 2008, the company's consolidated balance sheet also showed strained liquidity with $1,861,780 in total current assets available to pay $10,503,349 in total current liabilities. The company reported a net loss of $213,167 on revenues of $2,977,914 for the second quarter ended March 31, 2008, compared with a net loss of $85,982 on revenues of $1,810,705 in the same period last year. 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?2dd0 Going Concern Doubt As reported in the Troubled Company Reporter on Jan. 17, 2008, Gruber & Company LLC, in Lake Saint Louis, Mississippi, expressed substantial doubt about Stratus Services Group Inc.'s ability of to continue as a going concern after auditing the company's consolidated financial statements for the year ended Sept. 30, 2007. The auditing firm pointed to the company's recurring losses from operations and net capital deficit. About Stratus Services Headquartered in Shrewsbury, N.J., Stratus Services Group Inc. (OTC BB: SSVG.OB) -- http://www.stratusservices.com/-- offers all the traditional staffing services. Stratus has developed a one- of-a-kind labor management program which focuses on the performance parameters defined by the client's productivity goals. This program, which is the backbone of the company's services, is known as "Smart Solutions(TM)". SUPERCONDUCTOR TECH: Posts $2,308,000 Net Loss in 2008 1st Quarter ------------------------------------------------------------------ Superconductor Technologies Inc. reported a net loss of $2,308,000 on total net revenues of $3,472,000 for the first quarter ended March 29, 2008, compared with a net loss of $2,937,000 on total net revenues of $4,183,000 in the same period ended March 31, 2007. Net revenues consist primarily of commercial product revenues and government contract revenues. Net commercial product revenues decreased to $1,993,000 in the first quarter of 2008 from $3,534,000 in the first quarter of 2007, a decrease of $1,541,000, or 44%. The decrease is primarily the result of lower sales volume for the company's SuperLink product due to customer program delays. Government contract revenues increased by $830,000, or 128% to $1,479,000 in the first quarter of 2008 from $649,000 in the first quarter of 2007. This increase is primarily attributable to an increased number of government contracts. At March 29, 2008, the company's consolidated balance sheet showed $25,553,000 in total assets, $3,617,000 in total liabilities, and $21,936,000 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?2dcd Going Concern Doubt Stonefield Josephson Inc., in Los Angeles, expressed substantial doubt about Superconductor Technologies Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm pointed to the company's significant net losses since its inception, accumulated deficit. In addition, the auditing firm said that the company expects to incur substantial additional losses and costs. For the quarter ended March 29, 2008, the company incurred a net loss of $2,308,000 and negative cash flows from operations of $3,080,000. About Superconductor Technologies Headquartered in Santa Barbara, California,, Superconductor Technologies Inc. (Nasdaq: SCON) -- http://www.suptech.com/-- is a provider of high performance infrastructure products for wireless voice and data applications. STI's SuperLink(R) solution increases capacity utilization, lowers dropped and blocked calls, extends coverage, and enables faster wireless data rates. Its AmpLink(TM) solution enhances the performance of wireless base stations by improving receiver sensitivity and geographic coverage. SUPERIOR ESSEX: Korean LS Cable Deal Cues S&P's Developing Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB' corporate credit rating, 'BBB-' senior secured rating, and 'BB-' senior unsecured rating on Superior Essex Inc. on CreditWatch with developing implications. The CreditWatch listing follows the company's announcement that it has signed a definitive agreement to be acquired by Korea-based LS Cable Ltd. (unrated) for $900 million, or $45 per share, in a cash tender offer. Developing implications means that S&P could raise, lower, or affirm the ratings following the completion of its review. The combined entity would be the world's third-largest wire and cable manufacturing company in the world, with pro forma consolidated 2007 revenues of $12.8 billion. LS Cable indicated that it has fully committed financing to complete the transaction. The transaction is subject to customary closing conditions and regulatory approvals, including the tender of a majority of the outstanding shares of Superior Essex. LS Cable expects the tender offer to commence on July 1, 2008, at the same time it completes the previously announced internal corporate reorganization and name change to LS Corp. Standard & Poor's currently lacks sufficient information regarding the credit quality of the combined entity or the structure of the transaction or financing to make a preliminary ratings assessment. "We hope to meet with management to assess the combined company's financial profile, the impact of the corporate reorganization, and strategy and financial policy," said Standard & Poor's credit analyst David Tsui. SUPERIOR OFFSHORE: Has Until June 16 to File Schedules & SOFA ------------------------------------------------------------- The United States Bankruptcy Court fort the Southern District of Texas extended, until June 16, 2008, the period within which Superior Offshore Inc. may file schedules of assets and liabilities, and statements of financial affairs. The Debtor tells the Court that it was unable to complete the schedules and statements by May 9, 2008, the initial filing deadline, due to its limited staff. Thus, the Debtor needs additional time to complete the requirements pursuant to Rule 1007(c) of the Federal Rules of the Bankruptcy Procedure. The Debtor reminds the Court that it terminated approximately 200 personnel before it filed for bankruptcy in April 2008. The Debtor employed H. Malcolm Lovett, Jr., as chief restructuring officer, and Strategic Capital Corporation, as financial advisor. Mr. Lovett is the remaining executive officer of the Debtor. Mr. Lovett and Strategic Capital have devoted their efforts on assessing the Debtor's financial needs and evaluating alternatives for an orderly wind-down of the Debtor's assets. Headquartered in Houston Texas, Superior Offshore (Nasdaq: DEEP) -- http://www.superioroffshore.com/-- provides subsea construction and commercial diving services to the offshore oil and gas industry. The company's construction services include installation, upgrading and decommissioning of pipelines and production infrastructure. The company operates a fleet of seven service vessels and provides remotely operated vehicles (ROVs) and saturation diving systems for deepwater and harsh environment operations. Superior Offshore International, Inc., filed for bankruptcy protection on April 24, 2008 (Bankr. S.D. Tex. Case No. 08-32590). The Company continues to operate its business as "debtor in possession" under the jurisdiction of the Court in accordance with the applicable provisions of the Bankruptcy Code and orders of the Court. David Ronald Jones, Esq., and Joshua Walton Wolfshohl, Esq., at Porter & Hedges LLP, represent the Debtor. The U.S. Trustee for Region 7 appointed five creditors to serve on an Official Committee of Unsecured Creditors. Douglas S. Draper, Esq., at Heller Draper Hayden Patrick & Horn LLC, represent the Committee in this case. The company's consolidated balance sheets showed total assets of $300,532,000 and total debts of $141,139,000 for the quarterly period ended Sept. 30, 2007. The company incurred $1,038,000 in net loss in nine months ended Sept. 30, 2007, compared with $37,000,000 in net income the previous year. TALBOTS INC: Secures $50 Million Funding from Shareholder Aeon Co. ------------------------------------------------------------------ The Talbots Inc. disclosed that Aeon Co. Ltd., which through its subsidiary, is the majority shareholder of The Talbots Inc., has agreed to provide to the company $50 million unsecured subordinated working capital term loan credit facility to support its turnaround plan, maturing Jan. 28, 2012. This proposed new $50 million credit facility would supplement the company's existing working capital lines of credit of $165 million. This new credit facility would increase the company's total working capital borrowing capacity to $215 million. "Talbots delivered a solid first quarter performance, despite the broader macroeconomic issues facing retailers," Trudy F. Sullivan, Talbots president and chief executive officer, said. "We are also experiencing improving sales trends at both our brands and remain on track to achieve our outlook for earnings per share from ongoing core operations for fiscal 2008." "While we believe we had in place sufficient liquidity to fund the turnaround of our business, this new credit facility will provide us with an additional level of assurance and even greater flexibility to weather the current uncertainty in the credit markets," Mr. Sullivan added. "We appreciate Aeon's demonstration of confidence in our strategic plan and in our ability to successfully execute it." "This commitment of a new credit facility underscores our confidence in Talbots management team and the company's turnaround plan previously approved by the Board of Directors, which is already showing positive signs of success," Tsutomu Kajita, senior vice president, international operations for Aeon Co., Ltd. and a member of the Talbots board of directors, commented, Under the proposed new credit facility with Aeon, interest on outstanding principal will be LIBOR plus 500 basis points. The company will pay a fee of 50 basis points per annum on the undrawn portion of the commitment. Proceeds of the borrowings under the new credit facility will be used for general working capital and other appropriate corporate purposes in connection with the company's turnaround plan. The proposed new working capital facility with Aeon is subject to various conditions including completion of satisfactory confirmatory due diligence by Aeon, the preparation and execution of definitive loan documentation mutually satisfactory to Aeon and Talbots and generally consistent with the summary of terms agreed upon between the companies, and mutual agreement on all other terms, conditions, covenants and provisions of the definitive loan documentation. The principal terms of Aeon's proposed financing were reviewed and considered along with other proposals from unrelated financial institutions. The Aeon proposal was approved by The Talbots Inc. independent audit committee. Letter of Credit Reductions As reported in the Troubled company Reporter on April 17, 2008, the company disclosed in a regulatory filing with the Securities and Exchange Commission filing, that on April 9, 2008, The Talbots Inc., and The Talbots Group Limited Partnership received notification from The Hongkong and Shanghai Banking Corporation Limited that HSBC was no longer prepared to continue making letter of credit facilities available to Talbots. Prior to the notification, Talbots had available from HSBC a letter of credit facility, used to finance the import of merchandise, with a limit of $135 million. Pursuant to its notification, effective as of April 8, 2008, HSBC reduced the company's prior letter of credit facility limit of $135 million to $60 million. HSBC also advised that it will further reduce the company's letter of credit facility limit to $45 million on May 8, 2008, to $30 million on June 9, 2008, to $15 million on July 8, 2008, and the facility will be cancelled on Aug. 8, 2008. Any further letters of credit would be at the bank's discretion and considered on a case by case basis. The Talbots Inc., clarified that its recent arrangements with major vendors, along with currently available working capital lines, are expected to be sufficient to fund Talbots' working capital needs under its 2008 operating plan. About Talbots Headquartered in Hingham, Massachusetts, The Talbots Inc. (NYSE:TLB) -- http://www.talbots.com/-- is a specialty retailer and direct marketer of women's apparel, shoes and accessories. The company operates stores in 869 locations in 47 states, the District of Columbia, and Canada, with 595 locations under the Talbots brand name and 274 locations under the J. Jill brand name. Both brands target the age 35 plus customer population. Talbots brand on-line shopping site is located at http://www.talbots.com/ and the J. Jill brand on-line shopping site is located at http://www.jjill.com/ TEEVEE TOONS: Three Companies Seek to Block Record Contracts Sale ----------------------------------------------------------------- NME.com, UK reports that The Polyphonic Spree, Ambulance Ltd. and Universal Music Group want to block TVT from selling record contracts with bands that signed to the label before it went bankrupt. The three companies filed court papers stating their objection on June 6. As reported by the Troubled Company Reporter on Feb. 20, 2008, TEEVEE Toons Inc. dba as T.V.T. Records filed a Chapter 11 bankruptcy petition with the U.S. Bankruptcy Court for the Southern District of New York on Feb. 19, 2008. TEEVEE was supposed to receive $132 million settlement from a litigation involving the distribution of a Ja Rule album, however, an appeal chipped off the figure. In addition, TEEVEE was directed to pay more than $9 million in damages to a Miami label over album rights. According to NME.com, "as a result of the filing, Ambulance Ltd. are currently prevented from releasing any new music but are continuing to perform and work on new material for the follow up to their debut LP, released in 2004." Headquartered in New York City, TEEVEE Toons Inc. dba T.V.T. Records -- http://www.tvtrecords.com/-- is an American record label. The Debtor filed for Chapter 11 petition on Feb. 19, 2008 (Bankr. S. D. N.Y. Case No.: 08-10562.) The Official Committee of Unsecured Creditors has selected Sonnenschein Nath & Rosenthal LLP as its counsel. Alec P. Ostrow, Esq. and Constantine Pourakis, Esq, at Stevens & Lee, P.C. represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of between $10 million and $50 million. TEEVEE Toons is also seeking to sell its back catalogues. TELAVA NETWORKS: Posts $175,840 Net Loss in 2008 First Quarter -------------------------------------------------------------- Telava Networks Inc. reported a net loss of $175,840 on net sales of $1,438,851 for the first quarter ended March 31, 2008, compared with net income of $8,400 on net sales of $1,277,519 in the same period ended March 31, 2007. The increase in sales was primarily derived from purchase of the intangible asset from the Korean business, Ttoore Company, which the company acquired on Jan. 3, 2007. At the time of acquisition, TToore's business was not significant in comparison with the company. At March 31, 2008, the company's consolidated balance sheet showed $5,926,142 in total assets, $4,236,839 in total liabilities, $323,185 in minority interest, and $1,366,118 in total stockholders' equity. The company's consolidated balance sheet at March 31, 2008, also showed strained liquidity with $1,995,215 in total current assets available to pay $4,236,839 in total current liabilities. Full-text copies of the company's consolidated financial statements for the year ended March 31, 2008, are available for free at http://researcharchives.com/t/s?2ddc Going Concern Doubt De Joya Griffith & Company, LLC, in Henderson, Nev., expressed substantial doubt about Telava Networks 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 for the year ended Dec. 31, 2007. The companyhas incurred a net loss of $175,840 for the three months ended March 31, 2008, and has a working capital deficit of $2,241,624 at March 31, 2008. About Telava Networks Based in San Francisco, Telava Networks Inc. (OTC: TLVA) provides advertising and directory listings for small and medium sized businesses on its Internet Website in a Yellow Pages format. The company provides those services to its subscribers for a monthly fee. These services are provided primarily to small and medium sized businesses throughout the United States. TELAVA NETWORKS: De Joya Expresses Going Concern Doubt ------------------------------------------------------ Henderson, Nev.-based De Joya Griffith & Company, LLC, raised substantial doubt on the ability of Telava Networks, Inc., to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2007. The auditor pointed to the company's losses from operations for the year ended Dec. 31, 2007. The company has incurred a net loss for the 12 months ended Dec. 31, 2007, and has a working capital deficit of $346,374 at Dec. 31, 2007, all of which raises substantial doubt about its ability to continue as a going concern. The company has funded its operations and marketing efforts through the issuance of debt and equity securities. In order to continue execution of the business plan, increase marketing efforts and achieve profitable operations, management anticipates a need for additional financing. Management's plans for funding future operations primarily include the sale of debt and equity securities. The company posted net loss of $572,190 on net sales of $2,380,869 for the year ended Dec. 31, 2007, as compared with a net income of $230,032 on net sales of $3,099,342 in the prior year. At Dec. 31, 2007, the company's balance sheet showed $4,288,370 in total assets, $2,380,869 in total liabilities, $344,930 in minority interest, and $1,562,571 in total stockholders' equity. The company's consolidated balance sheet at Dec. 31, 2007, showed strained liquidity with $2,034,495 in total current assets available to pay $2,380,869 in total current liabilities. A full-text copy of the company's 2007 annual report is available for free at http://ResearchArchives.com/t/s?2dc2 About Telava Networks Telava Networks, Inc., (Other OTC: TLVA.PK) -- http://www.telava.com-- provides fixed and mobile WiMAX broadband solutions to residence customers, small and medium businesses, public safety organizations, schools, and local and state governments in the United States. It operates in four divisions: Telava Wireless, Telava Towers, Telava Marketing, and Telava Spectrum. In addition, the company offers advertising and directory listings to small and medium sized businesses on its Web site in a Yellow Pages' format. As of Dec. 17, 2007, it owned a wireless broadband network covering approximately 45 cities and towns in 22 states. Telava Networks, Inc., was founded in 2003 and is headquartered in San Francisco, Calif. TENASKA OKLAHOMA: S&P Affirms 'BB-' Rating on $55.2MM Unsec. Bonds ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'BB-' rating on Tenaska Oklahoma I L.P.'s $55.2 million (as of March 31, 2008) unsecured bonds due in 2014. At the same time, S&P assigned a '6' recovery rating, indicating its expectation for negligible recovery (0% to 10%) in the event of a payment default. At the same time, S&P affirmed the 'BBB-' rating on Kiowa Power Partners LLC's $536.1 million (as of March 31, 2008) senior secured bonds due in 2013 and 2021. S&P also assigned a '2' recovery rating to KPP's debt, indicating its expectation for a substantial recovery (70% to 90%) if a payment default occurs. The outlook is stable. Tenaska Oklahoma is KPP's holding company. KPP sells capacity and energy under an 18-year electricity manufacturing agreement with Shell Energy North America (US) L.P. (SENA: A-/Stable/--), a subsidiary of Shell Oil Co. (AA/Positive/A-1+). The project's previous offtaker, Coral Power, was merged into SENA in June 2008 with no effect on Tenaska Oklahoma's ratings. The rating on Tenaska Oklahoma reflects the following risks: Tenaska Oklahoma's ability to service debt is directly related to KPP's operational performance, which must meet minimum availability and capacity performance requirements under the EMA. The bondholders fully bear the project's operating risks. Tenaska Oklahoma's notes, which are structurally subordinated to KPP's senior secured bonds, have a higher sensitivity to default than KPP's bonds. Tenaska Oklahoma's senior secured notes are serviced only if KPP can meet a 1.2x debt service coverage test. Standard & Poor's expects that Tenaska Oklahoma's lenders would have negligible recovery of principal after a default because these notes are secured only by the holding company's equity and any cash that may be held in its accounts. Minimum consolidated debt service coverage (including KPP's debt and Tenaska Oklahoma's debt) is a relatively low 1.3x. Standard & Poor's expects KPP's minimum coverage to be 1.48x for the senior debt's term. Payments under the EMA could, in limited circumstances, be disputed and thus delay the timeliness of payments. To the extent that there is a disagreement under the EMA, the obligations of Shell under the guarantee are no broader than those of SENA under the EMA. Standard & Poor's believes that delay risk is manageable given SENA's commitment to the project and the strong creditworthiness of the counterparties. The project's majority ownership by Tenaska Inc. affiliates implies a degree of exposure to Tenaska's creditworthiness because the project does not meet Standard & Poor's criteria for being bankruptcy remote from Tenaska. Tenaska is a privately owned project developer not rated by Standard & Poor's. The 30% ownership stake of Diamond largely mitigates this risk. The following strengths partially temper the project's risks: The EMA has a strong contractual framework with a reputable and creditworthy off-taker. Due to capacity payments that fully cover fixed costs and debt service, debt service coverage ratios resist deterioration under several stress-case scenarios, including a zero-dispatch case. The facility uses proven General Electric 7FA turbine-generator technology, with limited technical risks. The long-term service agreement with General Electric (AAA/Stable/A-1+) is structured to allow for recovery of nonavailability payments if the project fails to maintain the availabilities mandated under the EMA with SENA. Performance guarantees from investment-grade counterparties, e.g., Shell Oil guarantees SENA's obligations. A six-month debt service reserve fund provides project liquidity. Standard & Poor's post-default valuation is based on a liquidation scenario, with the expectation that, post-default, the assets would be sold rather than Kiowa emerging as a going concern. The most likely default scenario would be high operating and maintenance costs beginning in 2009, combined with a significant deterioration in plant heat rate, capacity, and availability. Under this scenario, any unrestricted cash would be exhausted and all liquidity facilities would be fully drawn by 2011, leading to a default. With conservative recovery assumptions including a 12% discount rate, holders of KPP's bonds can expect to receive 70% to 90% of their remaining principal in a post-default asset sale. Tenaska Oklahoma's bondholders, however, would not expect to recover any remaining principal post default. The stable outlook on Tenaska Oklahoma reflects Standard & Poor's view that the project will be able to meet availability and capacity requirements under the EMA, which in turn we expect will provide a predictable and stable revenue stream. "We could lower the ratings or revise the outlook to negative if the facility develops further operational problems. Because Tenaska Oklahoma receives its cash flow from a single asset, there is limited potential for a ratings upgrade," said Standard & Poor's credit analyst Mark Habib. TORRENT ENERGY: Subsidiary Needed $4.5MM at Bankruptcy Filing ------------------------------------------------------------- Loran Wiese of Methane Energy Corp., a subsidiary of Torrent Energy Corp., says the company filed for Chapter 11, since it needs approximately $4.5 million to complete a current phase of a project in the South Coast, Azenith Smith of the KCBY.com (Ore.) reports. Since 2005, the company has been exploring and developing natural gas from coal in the Coos Bay Basin region, including several wells on West Port Hill, south of Coos Bay, according to the report. Headquartered in Portland, Oregon, Torrent Energy Corporation fka iRV Inc. -- http://www.torrentenergy.com/-- engages in natural gas exploration. The company and two of its affiliates, Methane Energy Corp. and Cascadia Energy Corp., filed for Chapter 11 protection on June 2, 2008 (Bankr. D. Ore Led Case No.08-32638-08-32640). Jeanette L. Thomas, Esq., at Perkins Coie LLP, represents the Debtors in their restructuring efforts. The Debtors' consolidated balance sheets listed total assets of $35,955,866 and total debts of $23,073,091 for the quarterly period ended Dec. 31, 2007. As reported by the Troubled Company Reporter on June 12, 2008, the Hon. Elizabeth Perris of the U.S. Bankruptcy Court for the District of Oregon authorized Torrent Energy Corp. and its debtor- affiliates to obtain, on an interim basis, up to $1.34 million in debtor-in-possession financing from YA Global Investment LP, as lender. A hearing is set for July 9, 2008, to consider final approval of the Debtors' DIP request. UNI-MARTS LLC: U.S. Trustee Forms Seven-Member Creditors Committee ------------------------------------------------------------------ Roberta A. DeAngelis, the U.S. Trustee for Region 3, appointed seven creditors to serve on an Official Committee of Unsecured Creditors for the Chapter 11 cases of Uni-Marts LLC and its debtor-affiliates. The creditors committee members are: 1) BP Products North America Inc. Attn: Robert R. Ross Central Park Lisle 3333 Warrenville Road, Suite 8079 Lisle, Illinois 60532 Tel: (630) 245-3433 Fax: (630) 245-3513 2) McLane Company, Inc. Attn: Neal A. Mayes 4747 McLane Parkway Temple, Texas 76504 Tel: (254) 771-7490 Fax: (254) 771-7582 3) Bottling Group LLC dba Pepsi Bottling Group Attn: Michael T. Bevilacqua 1100 Reynolds Boulevard Winston-Salem, North Carolina 27102 Tel: (336) 896-5577 Fax: (336) 896-6002 4) Petroleum Products Corp. Attn: Dennis M. Shaw, CFO P.O. Box 2621 Harrisburg, Pennsylvania 17105 Tel: (717) 939-0466 Fax: (717) 939-0294 5) Farm & Home Oil Co., LLC Attn: 3115 State Road Telford, Pennsylvania 18969 Tel: (215) 258-2100 Fax: (215) 257-8508 6) National Retail Properties Trust Attn: Christopher Tessitore, 450 S. Orange Avenue, Suite 900, Orlando, Florida 32801 Tel: (407) 650-1115 Fax: (321) 206-2138 7) Exxon Mobil Oil Corporation Attn: James Michael Mulhern P.O. Box 937 McMurray, Pennsylvania 15317, Tel: (724) 942-4427 Fax: (724) 942-4428 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtor is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. About Uni-Marts Headquartered in State College, Pennsylvania, Uni-Marts LLC sells consumer goods. The company and six of its affiliates filed for Chapter 11 protection on May 29, 2008 (Bankr. D. Del. Lead Case No.08-11037). Michael Gregory Wilson, Esq., at Hunton & Williams LLP represents the Debtors in their restructuring efforts. The Debtor selected Epiq Bankruptcy Solutions LLC as their claims, noticing and balloting agent. When the Debtors filed for protection, they listed assets and debts between $50 million and $100 million. US AIRWAYS: To Cut Fourth Quarter Domestic Capacity by 8% --------------------------------------------------------- US Airways Group Inc. said it is making additional domestic capacity reductions, reducing headcount and implementing several new revenue and cost-cutting initiatives in response to rising fuel costs. At current fuel prices, the company estimates that it will spend an average of $299 in fuel costs alone to carry one mainline passenger on a round trip journey, which is an increase from an average of $151 in 2007 and $70 in 2000. Capacity Reduction The company announced it will reduce its fourth quarter domestic mainline capacity by 6% to 8% on a year-over-year basis as opposed to the previously announced 2% to 4% decrease. The company also announced that domestic mainline capacity for 2009 is planned to be reduced seven to 9% from 2008 levels. The company intends to reduce the size of the fleet by returning six Boeing 737-300 aircraft by the end of 2008, four Airbus A320 aircraft in the first half of 2009, and the cancellation of leases of two A330-200 wide-body aircraft that had been scheduled for delivery in the second quarter of 2009. The airline is also planning to reduce additional aircraft in 2009 and 2010. The company also announced that effective Sept. 3, 2008, it will close most of its Las Vegas night operation, which will reduce daily departures from Las Vegas to 81 flights as of the September 3 schedule change with additional reductions by the end of 2008. The company also announced that in connection with its reduction in the number of flights and the size of the fleet, it would require about 1,700 fewer positions across the system including about 300 pilots, 400 flight attendants, 800 airport employees and 200 staff and management. Additional Savings The company announced plans to close (i) the US Airways Clubs in the Baltimore/Washington International Airport and the Raleigh- Durham International Airport, (ii) arrivals lounges in Munich, Rome, and Zurich, and (iii) cargo stations in Burbank, Colorado Springs and Reno. The company also intends to revise its wholesale programs for cruise lines, tour operators and consolidators, including reducing the number of agency partners, decreasing discounts, adding tighter restrictions on travel rules, and reducing commissions. Revenue and Fee Initiatives The company also announced these revenue and fee initiatives: * First-Checked-Bag Fee: The company plans to implement a first-checked-bag service fee of $15. The new fee goes into effect for tickets booked on or after July 9, 2008, and will apply to most customers on flights within the U.S. and to or from Canada, Latin America, and the Caribbean. * In-Flight Beverage Purchase Program: Effective Aug. 1, 2008, the company plans to begin selling all non-alcoholic beverages (including sodas, juices, bottled water and coffee) in its domestic coach cabins and increasing the cost of alcoholic beverages. Complimentary beverages will continue to be served to domestic First Class, US Airways Shuttle, trans-Atlantic Envoy and trans-Atlantic economy class passengers and to unaccompanied minors. * Call Center Ticket Fees: US Airways has instituted a $25 service fee for domestic tickets and a $35 service fee for international tickets purchased through its call center reservations line, and tickets purchased at airport/city ticket offices will be assessed a $35 (domestic) or $45 (international) service fee. * Dividend Miles Changes: The company intends to increase the award redemption processing fee on all Dividend Miles award tickets issued on or after Aug. 6, 2008, and eliminate its special bonus miles program for Preferred status Dividend Miles members. * Employee Guest Pass Price Increase: While the company's employees and their eligible dependents will continue to enjoy free travel throughout the airline's domestic and international network, the company intends to increase fees paid by employees' guests and parents, who travel on a standby basis. The company believes that the preceding revenue and fee initiatives combined with the previously announced Choice Seats and second-checked-bag carry programs will generate between $300 million and $400 million annually. Results of Annual Meeting of Stockholders US Airways diclosed the results of its annual meeting of stockholders held on June 12, 2008, at its corporate headquarters in Tempe, Ariz. Stockholders voted to re-elect W. Douglas Parker and Bruce R. Lakefield to three-year terms on the Board of Directors, expiring at the annual meeting of stockholders in 2011. In addition, stockholders voted to ratify the appointment of KPMG LLP as the company's independent registered accounting firm. Stockholders also voted in favor of the US Airways Group, Inc. 2008 Equity Incentive Plan, and against two shareholder proposals, one relating to disclosure of political contributions and one relating to the preparation of a corporate sustainability report. About US Airways Based in Tempe, Arizona, US Airways Group Inc.'s (NYSE: LCC) - http://www.usairways.com/-- primary business activity is the ownership of the common stock of US Airways, Inc., Allegheny Airlines, Inc., Piedmont Airlines, Inc., PSA Airlines, Inc., MidAtlantic Airways, Inc., US Airways Leasing and Sales, Inc., Material Services Company, Inc., and Airways Assurance Limited, LLC. Under a Chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on Sept. 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. The Debtors' Chapter 11 plan for its second bankruptcy filing became effective on Sept. 27, 2005. The Debtors completed their merger with America West on the same date. (US Airways Bankruptcy News, Issue No. 158; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on June 2, 2008, Fitch Ratings has downgraded the debt ratings of US Airways Group, Inc. as: Issuer Default Rating to 'CCC' from 'B-'; Secured term loan rating to 'B/RR1' From 'BB-/RR1'; and Senior unsecured rating to 'CC/RR6' from 'CCC/RR6'. Fitch's ratings apply to approximately $1.7 billion in outstanding debt. The Rating Outlook is Negative. US INVESTIGATIONS: HireRight Acquisition Won't Affect S&P's Rtngs. ------------------------------------------------------------------ Standard & Poor's Ratings Services said that its ratings and outlook on U.S. Investigations Services Inc. (B/Negative/--) are currently unaffected by the company's announcement that it will acquire HireRight Inc. (unrated) for approximately $195 million, less cash on hand at closing. S&P assume the partially debt-financed acquisition will result in adjusted leverage remaining close to current levels. U.S. Investigations Services' adjusted leverage as of the 12 months ended March 31, 2008, was approximately 7.4x, and its expect leverage to improve to the 7x area by fiscal year end Sept. 30, 2008. S&P will continue to monitor the company's progress in reducing leverage; if leverage does not improve as expected, it could lower the ratings. Falls Church, Virginia-based U.S. Investigations Services provides preemployment screening, professional security, and background investigation services to government and corporate clients. VERTIS COMMS: Seeking Creditors' Vote on Prepackaged Ch. 11 Plan ---------------------------------------------------------------- Vertis Communications commenced a solicitation of votes for its prepackaged plan of reorganization from its creditors, including holders of Vertis' 9.75 percent Senior Secured Second Lien Notes due 2009, 10.875 percent Senior Notes due 2009 and 13.5 percent Senior Subordinated Notes due 2009. Vertis Communications delivered with the Securities and Exchange Commission on June 11, 2008, a proposed prepackaged joint Chapter 11 plan of reorganization and a disclosure statement explaining that plan. "We have made great progress with our plan to merge with American Color Graphics and our restructuring initiatives are on track. These actions will make Vertis a much stronger marketing partner for our valued clients, a superior business partner for our suppliers and an even better place to work for our employees," said Mike DuBose, chairman and CEO of Vertis. "As always, we remain completely focused on providing our customers with quality products and on-time delivery, as well as maintaining our relationships with our suppliers and vendor partners." Mr. DuBose also stated that throughout the solicitation process, trade creditors, suppliers and employees will continue to receive amounts owed to them in the ordinary course of business. In addition, the Plan provides that the allowed claims of trade creditors, suppliers and employees will be paid in full. On May 22, 2008, as updated on May 30, 2008, Vertis announced it had support of its noteholders to merge with American Color Graphics and complete its comprehensive restructuring plans. Since then, Vertis has received additional support. At this time, Vertis has agreements with an aggregate of approximately 79 percent of the outstanding principal amount of its 9.75 percent Senior Secured Second Lien Notes due 2009, 84 percent of the outstanding principal amount of its 10.875 percent Senior Notes due 2009, and 79 percent of the outstanding principal amount of its 13.5 percent Senior Subordinated Notes due 2009, along with the holders of an aggregate of approximately 74 percent of the outstanding principal amount of the 10 percent Secured Second Lien Notes due 2010 of ACG, to vote to accept the Plan, subject to certain conditions. Under the Plan, holders of Vertis Notes and American Color Graphic Inc. Notes will be exchanging their notes for an aggregate of $550 million in new notes and substantially all of the new equity in the combined company. The transaction is also supported by Vertis" principal stockholders and the holders of over 95 percent of the outstanding principal amount of Vertis Holdings Mezzanine Notes. The consensual financial restructurings will reduce the combined company"s debt obligations -- including the off-balance sheet accounts receivable facility and approximately $248 million of Vertis Holdings Mezzanine Notes -- by approximately $1 billion before transaction fees and expenses. Vertis and ACG intend to commence prepackaged Chapter 11 cases at the conclusion of the solicitation period to implement the restructuring. The restructuring transactions, including the merger, are expected to close this summer. Votes on the Plan must be received by Financial Balloting Group LLC, the company's voting agent, before the applicable deadline. Solicitation materials are being provided to creditors of record. A full-text copy of the prepackaged joint Chapter 11 plan of reorganization and disclosure statement is available for free at http://ResearchArchives.com/t/s?2dda About American Color American Color Graphics Inc. -- http://www.americancolor.com/-- is one of North America's largest and most experienced full service premedia and print companies, with eight print locations across the continent, six regional premedia centers, photography studios nationwide and a growing roster of customer managed service sites. The company provides solutions and services such as asset management, photography, and digital workflow solutions that improve the effectiveness of advertising and drive revenues for their customers. About Vertis Inc. Headquartered in Baltimore, Vertis Inc. dba Vertis Communications -- http://www.vertisinc.com/-- is a provider of print advertising and direct marketing solutions to America's retail and consumer services companies. Going Concern Doubt Deloitte & Touche LLP, in Baltimore, Maryland, expressed substantial doubt about Vertis 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 said that the company has incurred recurring net losses and is experiencing difficulty in generating sufficient cash flow to meet its obligations and sustain its operations. * * * Vertis' consolidated balance sheets show total assets of $499,562,000 and total debts of $1,415,569,000 resulting in a $916,007,000 stockholders' deficit. American Color's consolidated balance sheets reveal total assets of $224,080,000 and total debts of $493,973,000 resulting in a $269,893,000 stockholders' deficit. VYTERIS INC: March 31 Balance Sheet Upside-Down by $25,298,725 -------------------------------------------------------------- Vyteris Inc.'s consolidated balance sheet at March 31, 2008, showed $3,370,253 in total assets and $28,668,978 in total liabilities, resulting in a $25,298,725 total stockholders' deficit. At March 31, 2008, the company's consolidated balance sheet also showed strained liquidity with $2,331,944 in total current assets available to pay $13,630,676 in total current liabilities. The company reported a net loss of $1,764,296 on total revenues of $719,751 for the first quarter ended March 31, 2008, compared with a net loss of $9,789,006 on total revenues of $950,301 in the same period last year. 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?2dd2 Going Concern Doubt Amper, Politziner & Mattia, P.C., in Edison, N.J., expressed substantial doubt about Vyteris 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 incurred recurring losses and is dependent upon obtaining sufficient additional financing to fund operations. About Vyteris Inc. Headquartered in Fair Lawn, N.J., Vyteris Inc. (OTC BB: VYHN) -- http://www.vyteris.com/-- fka. Vyteris Holdings (Nevada) Inc., is the maker of the first active drug delivery patch to receive marketing clearance from the U.S. Food and Drug Administration (FDA). Vyteris' proprietary active transdermal drug delivery (iontophoresis) technology delivers drugs comfortably through the skin using low-level electrical energy. WAVE SYSTEMS: Posts $6,010,048 Net Loss in 2008 First Quarter ------------------------------------------------------------- Wave Systems Corp. reported a net loss of $6,010,048 on total net revenues of $1,699,079 for the first quarter ended March 31, 2008, compared with a net loss of $5,045,560 on total net revenues of $1,287,040 in the same period last year. The increase in total net revenues was due primarily to licensing revenues, which increased by $438,014 during the quarter. This increase was due to a higher volume of shipments of Wave's OEM customer products, primarily as a result of its OEM relationship with Dell Inc., for which Wave receives royalty income. Selling, general and administrative (�SG&A�) expenses for the three months ended March 31, 2008, were $4,297,090, as compared to $3,665,592 for the comparable period of 2007, an increase of approximately 17%. Research and development expenses for the three months ended March 31, 2008 were $3,253,479, as compared to $2,542,860 for the comparable period of 2007, an increase of 28%. At March 31, 2008, the company's consolidated balance sheet showed $4,139,175 in total assets, $3,817,032 in total liabilities, and $322,143 in total stockholders' equity. The company's consolidated balance sheet at March 31, 2008, also showed strained liquidity with $3,312,935 in total current assets available to pay $3,817,032 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?2dd9 Going Concern Doubt As reported in the Troubled Company Reporter on March 28, 2008, KPMG LLP, in Boston, expressed substantial doubt about Wave Systems 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 and accumulated deficit. About Wave Systems Headquartered in Lee, Mass., Wave Systems Corp. (Nasdaq : WAVX) -- http://www.wave.com/-- provides software to help solve critical enterprise PC security challenges such as strong authentication, data protection, network access control and the management of these enterprise functions. WELLMAN INC: Wants Court to Establish July 25 as Claims Bar Date ---------------------------------------------------------------- Wellman Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to: (a) establish July 25, 2008, as the deadline for creditors to file their proofs of claim that arose before the bankruptcy filing; and (b) establish Aug. 21, 2008, as the deadline for governmental units to file their prepetition claims; and (c) give creditors 30 days after receiving a notice of amendment of the Debtors' schedules of liabilities, to file their proofs of claim in connection with the amendment. In connection with the rejection of their executory contracts and unexpired leases, the Debtors request the Court to fix the later of (i) July 25, 2008; (ii) the date provided in the order authorizing the rejection of contract or lease; or (iii) if no such date is provided, 30 days after the date that order or rejection notice is issued, for creditors to file their proofs of claim. Jonathan Henes, Esq., at Kirkland & Ellis LLP, in New York, says the purpose of the Bar Dates is to allow the Debtors and creditors to expeditiously evaluate the liabilities of the estate, and to ensure that the interests of the creditors are protected. Creditors holding these claims need not file a proof of claim by the Bar Dates: (1) claims already filed against the Debtors with the Clerk of the Bankruptcy Court for the Southern District of New York; (2) claims listed in the Debtors' schedules of liabilities, provided that (i) the claims are not scheduled as disputed, contingent or unliquidated; (ii) the creditors do not disagree with the amount, nature and priority of their claims; and (iii) the creditors do not dispute that their claims are an obligation of the specific Debtors; (3) claims allowed by the Court prior to the approval of the proposed deadline for filing proofs of claim; (4) claims that had been paid in full by the Debtors or any other party; (5) claims held by the Debtors in their Chapter 11 cases; (6) claims of the Debtors' current employees, if an order of the Court authorized the Debtors to honor those claims in the ordinary course as a wage or benefit; (7) claims limited exclusively to the repayment of principal, interest or other charges owed under any bond or note issued by the Debtors pursuant to an indenture; (8) claims based on interest in the Debtors' equity security, provided that any holder asserting a claim against the Debtors for damages or rescission based on the purchase or sale of an equity security must file its claim on or before July 25, 2008; and (9) claims allowable under Sections 503(b) and 507(a)(I) as administrative expenses of the Debtors' bankruptcy cases. The Debtors propose that any creditor that fails to file a proof of claim on or before the Bar Dates be barred from asserting its claims, will not be permitted to vote for or against their plan of reorganization, and will not receive any distribution on account of its claim. The Debtors intend to mail the notice of the Bar Date as well as the proof of claim form to all creditors no later than three days after the Court approves the proposed deadline. The Debtors also intend to publish the notice in the Wall Street Journal on or before June 30, 2008. Headquartered in Fort Mill, South Carolina, Wellman Inc. ([OTC]: WMANQ.OB) -- http://www.wellmaninc.com/-- manufactures and markets packaging and engineering resins used in food and beverage packaging, apparel, home furnishings and automobiles. They manufacture resins and polyester staple fiber a three major production facilities. The company and its debtor-affiliates filed for Chapter 11 protection on Feb. 22, 2008 (Bankr. S.D. N.Y. Case No. 08-10595). Jonathan S. Henes, Esq., at Kirkland & Ellis, LLP, in New York City, represents the Debtors. Wellman Inc., in its bankruptcy petition, listed total assets of $124,277,177 and total liabilities of $600,084,885, as of Dec. 31, 2007, on a stand-alone basis. Debtor-affiliate ALG, Inc., listed assets between $500 million and $1 billion on a stand-alone basis at the time of the bankruptcy filing. Debtor-affiliates Fiber Industries Inc., Prince Inc., and Wellman of Mississippi Inc., listed assets between $100 million and $500 million at the time of their bankruptcy filings. On a consolidated basis, Wellman Inc., and its debtor-affiliates listed $498,867,323 in assets and $684,221,655 in liabilities as of Jan. 31, 2008. (Wellman Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) X-RITE INC: S&P Junks Rating as Firm Continues Talks with Lenders ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on X-Rite Inc. to 'CCC+' from 'B+'. Ratings remain on CreditWatch, where they were placed on April 3, 2008, following the company's announcement that it was not in compliance with certain covenants in its secured credit facilities. The CreditWatch implications have been revised to developing from negative, which means that the ratings could be raised, lowered, or affirmed following the completion of its review. At the same time, S&P lowered the ratings on the company's first- and second-lien term loans. The first-lien term loan rating was lowered to 'B-' from 'BB-', and the second-lien term loan rating was lowered to 'CCC' from 'B'. The recovery ratings for the term loans remain unchanged. "The rating action reflects the company's ongoing negotiations over covenant violations with its lenders, lack of further access to its revolver, ongoing negative free cash flows, Standard & Poor's further assessment of weakening market conditions, and the challenges of completing two acquisitions," said Standard & Poor's credit analyst Bruce Hyman. X-Rite is in negotiations with its lenders to address its covenant defaults and believes that it has sufficient cash to meet interest payments and operate its business. The company had cash balances of $13 million on May 27, 2008, pro forma for approximately $9 million in interest payments due in June and the cash costs of the company's April restructuring action. The company believes that it has sufficient cash for operational requirements, although it does not currently have access to the approximately $15 million undrawn balance in its revolving credit agreement. X-Rite generated $5.7 million in negative free operating cash flow in the March 2008 quarter, although cost reduction actions announced in April have been targeted to improve profitability and reduce cash operating costs by about $18 million annually. Still, economic conditions are weaker than initially expected, and S&P expect June quarter revenues to decline sequentially, while we expect sales for the full year to be flat to down compared with 2007 sales. The company's projected covenant-defined EBITDA for 2008, $60 million to $68 million, is lower than the current senior debt covenant requirement for the year of $72.5 million. Adjusted leverage, as computed by Standard & Poor's, was about 8x EBITDA for the 12 months ended March 30, 2008. Standard & Poor's will monitor discussions between X-Rite and its lenders. S&P could raise the rating if the company is able to renegotiate its credit agreements on favorable terms and restore its free cash flows to sustainable levels, or if the company is able to access other sources of capital. However, S&P could lower the ratings if negotiations were protracted while market conditions continued to weaken, or if discussions do not result in meaningful relief. An acceleration of the debt could result in a default. * Moody's Says Casino Resorts Operators Can Avoid Rating Cuts ------------------------------------------------------------- Las Vegas Strip casino resort operators should be able to avoid ratings downgrades due strictly to the current economic downturn, but will be vulnerable to negative rating actions if the slowdown is prolonged or takes a turn for the worse, says Moody's Investors Service. "The Las Vegas resorts are not as recession-resistant as they used to be," says Moody's VP/Senior Credit Officer Margaret Holloway. "Most operators have some room within their respective rating categories to withstand negative trends, but if the downturn is more prolonged or deeper than we currently anticipate, the ratings could come under pressure." Key risks to ratings are the duration and depth of the economic downturn, companies' position within their respective rating categories, and financial policies, says Moody's. The city is receiving fewer visitors, and tight corporate travel budgets are taking a toll on the Las Vegas convention business. High fuel prices as well as the reduction of Las Vegas flights have also contributed to the negative financial results of Las Vegas Strip operators. While it remains to be seen whether the current US downturn will become an official recession, the fallout for Las Vegas casino operators is likely to be worse than they experienced in previous downturns, including post 9/11, says Moody's. Today, Las Vegas is decidedly more vulnerable to macroeconomic weakness than it was during the last consumer-led recession in 1990-1991. The successful positioning of the city as a desirable destination for middle-class family vacations has shifted more of its profitability to non-gaming sources which are heavily reliant on discretionary spending, such as hotel rooms, food and beverage, entertainment and retail operations, says Moody's. Nevertheless, the current macroeconomic challenges have had no effect on Las Vegas as a desirable travel destination over the long term. "Despite the near-term negative outlook, Las Vegas has long-term staying power," says Holloway. According to the analyst, the city's new amenities, the size and flexibility of its convention meeting space, as well as its room inventory spanning all budgets make it a particularly attractive destination for leisure and business travelers. More broadly, population and leisure-travel spending trends support an optimistic view of Vegas' gaming future. "Las Vegas will rebound; the question is when," says Holloway. * S&P Downgrades Ratings on 47 Classes on Nine RMBS Transactions ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 47 classes from nine residential mortgage-backed securities transactions backed by U.S. subprime mortgage loan collateral issued in 2006 and 2007. At the same time, S&P removed all of the lowered ratings from CreditWatch with negative implications. In addition, S&P affirmed its ratings on 62 classes from nine RMBS transactions backed by U.S. subprime loans and removed them from CreditWatch negative. The downgrades reflect S&P's opinion that projected credit support for the affected classes is insufficient to maintain the previous ratings, given its current projected losses. As announced in "Projected Losses For U.S. Subprime RMBS Issued In 2006 And First- Half 2007 As Of April 24, 2008," published April 24, 2008, on RatingsDirect, S&P calculated its projected deal-specific losses by reviewing the individual loan-level characteristics and most recent performance data, as described in "S&P Revises Projected Losses For U.S. Subprime RMBS Transactions Issued In First-Half 2007," which S&P published April 24, 2008, on RatingsDirect. Due to current market conditions, S&P are assuming that it will take approximately 15 months to liquidate loans in foreclosure and approximately eight months to liquidate loans categorized as real estate owned. In addition, S&P are assuming a loss severity of approximately 45% for U.S. subprime RMBS transactions issued in 2007. The lowered ratings reflect our assessment of credit support under three constant prepayment rate scenarios. The first scenario utilizes the lower of the lifetime or 12-month CPR, while the second utilizes a 6% CPR, which is very slow by historical standards. The third scenario uses a prepayment rate that is equal to two times the lower of the lifetime or 12-month CPR. S&P incorporated a third CPR scenario into our cash flow analysis to account for potential increases in prepayments, which may occur from normal increases typically found in the seasoning of pools combined with a chance that governmental proposals, if adopted, may lead to increased CPRs. S&P assumed a constant default rate for each pool. Because the analysis focused on each individual class with varying maturities, prepayment scenarios may cause an individual class or the transaction itself to prepay in full before it incurs the entire loss projection. Slower prepayment assumptions lengthen the average life of the mortgage pool, which increases the likelihood that total projected losses will be realized. The longer a class remains outstanding, however, the more excess spread it generates. Standard & Poor's has updated its projected excess spread to account for the recent cuts in U.S. interest rates. Standard & Poor's recently announced that it will discount a portion of excess spread to account for potential interest rate modifications in an upwardly sloping mortgage rate environment. An interest rate modification may extend the initial fixed-rate period of a mortgage loan to five years from two and three years. The reduction in interest rates has effectively extended the initial interest rates beyond the interest rate reset period. As a result of the reduction in excess spread, many loan modifications may no longer be needed. Standard & Poor's has updated its assumptions on excess spread to reflect the current environment. To assess the creditworthiness of each class, S&P reviewed the individual delinquency and loss trends of each transaction for changes, if any, in risk characteristics, servicing, and the ability to withstand additional credit deterioration. For mortgage pools that are continuing to show increasing delinquencies, S&P increased its cash flow stresses to account for potential increases in monthly losses. In order to maintain a rating higher than 'B', a class had to absorb losses in excess of the base case assumption S&P assumed in its analysis. For example, a class may have to withstand 115% of our base case loss assumption in order to maintain a 'BB' rating, while a different class may have to withstand 125% of its base case loss assumption to maintain a 'BBB' rating. Each class that has an affirmed 'AAA' rating can withstand approximately 150% of its base case loss assumptions under its analysis, subject to individual caps assumed on specific transactions. S&P determined the caps by limiting the amount of remaining defaults to 90% of the current pool balances. A combination of subordination, excess spread, and overcollateralization provide credit support for the affected transactions. The underlying collateral for these deals consists of fixed- and adjustable-rate U.S. subprime mortgage loans that are secured by first and second liens on one- to four-family residential properties. To date, including the classes listed below and actions on both publicly and confidentially rated classes, S&P have resolved the CreditWatch placements of the ratings on 2,945 classes from 485 U.S. RMBS subprime transactions from the 2006 and 2007 vintages. Currently, S&P's ratings on 194 classes from 36 U.S. RMBS subprime transactions from the 2006 and 2007 vintages are on CreditWatch negative. Ratings Lowered and Removed from Creditwatch Negative Bear Stearns Asset Backed Securities I Trust 2007-HE4 Series 2007-HE4 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 07386RAF6 BBB AA+/Watch Neg M-2 07386RAG4 B AA/Watch Neg Morgan Stanley ABS Capital I Inc. Trust 2007-HE6 Series 2007-HE6 Rating ------ Class CUSIP To From ----- ----- -- ---- M-2 61755CAF9 BBB AA/Watch Neg M-3 61755CAG7 BB AA/Watch Neg Renaissance Home Equity Loan Trust 2006-1 Series 2006-1 Rating ------ Class CUSIP To From ----- ----- -- ---- M-5 759950HD3 BBB A/Watch Neg M-6 759950HE1 BB A-/Watch Neg M-7 759950HF8 B+ BBB+/Watch Neg M-8 759950HG6 B BBB/Watch Neg M-9 759950HH4 B- BBB-/Watch Neg M-10 759950HJ0 CCC BBB-/Watch Neg Renaissance Home Equity Loan Trust 2006-2 Series 2006-2 Rating ------ Class CUSIP To From ----- ----- -- ---- M-2 759676AL3 AA AA+/Watch Neg M-3 759676AM1 A AA/Watch Neg M-4 759676AN9 BBB AA/Watch Neg M-5 759676AP4 BB A+/Watch Neg M-6 759676AQ2 B A/Watch Neg M-7 759676AR0 B- A-/Watch Neg M-8 759676AS8 CCC BBB/Watch Neg M-9 759676AT6 CCC BBB-/Watch Neg M-10 759676AU3 CCC BBB-/Watch Neg Renaissance Home Equity Loan Trust 2006-3 Series 2006-3 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 75971EAK2 A AA+/Watch Neg M-2 75971EAL0 BBB AA/Watch Neg M-3 75971EAM8 BB AA-/Watch Neg M-4 75971EAN6 B+ A+/Watch Neg M-5 75971EAP1 B A/Watch Neg M-6 75971EAQ9 B- A-/Watch Neg M-7 75971EAR7 CCC BBB+/Watch Neg M-8 75971EAS5 CCC BBB/Watch Neg M-9 75971EAT3 CCC BBB-/Watch Neg Renaissance Home Equity Loan Trust 2006-4 Series 2006-4 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 75970HAK6 A AA+/Watch Neg M-2 75970HAL4 BBB AA/Watch Neg M-3 75970HAM2 BB AA/Watch Neg M-4 75970HAN0 B+ A+/Watch Neg M-5 75970HAP5 B A/Watch Neg M-6 75970HAQ3 B- BBB+/Watch Neg M-7 75970HAR1 CCC BB/Watch Neg M-8 75970HAS9 CCC BB/Watch Neg M-9 75970HAT7 CCC B/Watch Neg Renaissance Home Equity Loan Trust 2007-1 Series 2007-1 Rating ------ Class CUSIP To From ----- ----- -- ---- AV-3 75970JAC0 AA AAA/Watch Neg AF-5 75970JAH9 AA AAA/Watch Neg AF-6 75970JAJ5 AA AAA/Watch Neg M-1 75970JAK2 BBB AA+/Watch Neg M-2 75970JAL0 BB AA/Watch Neg Renaissance Home Equity Loan Trust 2007-2 Series 2007-2 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 75970QAK6 A AA+/Watch Neg M-2 75970QAL4 BBB AA/Watch Neg M-3 75970QAM2 BB AA/Watch Neg Structured Asset Securities Corporation Mortgage Loan Trust 2007-OSI Series 2007-OSI Rating ------ Class CUSIP To From ----- ----- -- ---- M1 863619AF9 A AA+/Watch Neg M2 863619AG7 BB AA/Watch Neg Ratings Affirmed and Removed from Creditwatch Negative Bear Stearns Asset Backed Securities I Trust 2007-HE4 Series 2007-HE4 Rating ------ Class CUSIP To From ----- ----- -- ---- I-A-1 07386RAA7 AAA AAA/Watch Neg I-A-2 07386RAB5 AAA AAA/Watch Neg I-A-3 07386RAC3 AAA AAA/Watch Neg I-A-4 07386RAD1 AAA AAA/Watch Neg II-A 07386RAE9 AAA AAA/Watch Neg CWABS Asset-Backed Certificates Trust 2007-4 Series 2007-4 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 12668WAR8 AA+ AA+/Watch Neg M-2 12668WAS6 AA AA/Watch Neg M-3 12668WAG2 AA- AA-/Watch Neg M-4 12668WAH0 A+ A+/Watch Neg M-5 12668WAJ6 A A/Watch Neg M-6 12668WAK3 A- A-/Watch Neg M-7 12668WAL1 BBB+ BBB+/Watch Neg M-8 12668WAM9 BBB BBB/Watch Neg Morgan Stanley ABS Capital I Inc. Trust 2007-HE6 Series 2007-HE6 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 61755CAA0 AAA AAA/Watch Neg A-2 61755CAB8 AAA AAA/Watch Neg A-3 61755CAC6 AAA AAA/Watch Neg A-4 61755CAD4 AAA AAA/Watch Neg M-1 61755CAE2 AA+ AA+/Watch Neg Renaissance Home Equity Loan Trust 2006-1 Series 2006-1 Rating ------ Class CUSIP To From ----- ----- -- ---- M-3 759950HB7 AA- AA-/Watch Neg M-4 759950HC5 A+ A+/Watch Neg Renaissance Home Equity Loan Trust 2006-3 Series 2006-3 Rating ------ Class CUSIP To From ----- ----- -- ---- AV1 75971EAA4 AAA AAA/Watch Neg AV2 75971EAB2 AAA AAA/Watch Neg AV3 75971EAC0 AAA AAA/Watch Neg AF1 75971EAD8 AAA AAA/Watch Neg AF2 75971EAE6 AAA AAA/Watch Neg AF3 75971EAF3 AAA AAA/Watch Neg AF4 75971EAG1 AAA AAA/Watch Neg AF5 75971EAH9 AAA AAA/Watch Neg AF6 75971EAJ5 AAA AAA/Watch Neg Renaissance Home Equity Loan Trust 2006-4 Series 2006-4 Rating ------ Class CUSIP To From ----- ----- -- ---- AV-1 75970HAA8 AAA AAA/Watch Neg AV-2 75970HAB6 AAA AAA/Watch Neg AV-3 75970HAC4 AAA AAA/Watch Neg AF-1 75970HAD2 AAA AAA/Watch Neg AF-2 75970HAE0 AAA AAA/Watch Neg AF-3 75970HAF7 AAA AAA/Watch Neg AF-4 75970HAG5 AAA AAA/Watch Neg AF-5 75970HAH3 AAA AAA/Watch Neg AF-6 75970HAJ9 AAA AAA/Watch Neg Renaissance Home Equity Loan Trust 2007-1 Series 2007-1 Rating ------ Class CUSIP To From ----- ----- -- ---- AV-1 75970JAA4 AAA AAA/Watch Neg AV-2 75970JAB2 AAA AAA/Watch Neg AF-1 75970JAD8 AAA AAA/Watch Neg AF-1A 75970JAW6 AAA AAA/Watch Neg AF-1B 75970JAX4 AAA AAA/Watch Neg AF-1Z 75970JAY2 AAA AAA/Watch Neg AF-2 75970JAE6 AAA AAA/Watch Neg AF-3 75970JAF3 AAA AAA/Watch Neg AF-4 75970JAG1 AAA AAA/Watch Neg M-3 75970JAM8 B B/Watch Neg Renaissance Home Equity Loan Trust 2007-2 Series 2007-2 Rating ------ Class CUSIP To From ----- ----- -- ---- AV-1 75970QAA8 AAA AAA/Watch Neg AV-2 75970QAB6 AAA AAA/Watch Neg AV-3 75970QAC4 AAA AAA/Watch Neg AF-1 75970QAD2 AAA AAA/Watch Neg AF-2 75970QAE0 AAA AAA/Watch Neg AF-3 75970QAF7 AAA AAA/Watch Neg AF-4 75970QAG5 AAA AAA/Watch Neg AF-5 75970QAH3 AAA AAA/Watch Neg AF-6 75970QAJ9 AAA AAA/Watch Neg Structured Asset Securities Corporation Mortgage Loan Trust 2007-OSI Series 2007-OSI Rating ------ Class CUSIP To From ----- ----- -- ---- A1 863619AA0 AAA AAA/Watch Neg A2 863619AB8 AAA AAA/Watch Neg A3 863619AC6 AAA AAA/Watch Neg A4 863619AD4 AAA AAA/Watch Neg A5 863619AE2 AAA AAA/Watch Neg * BOOK REVIEW: Crafting Solutions for Troubled Businesses --------------------------------------------------------- Full Title: Crafting Solutions for Troubled Businesses: A Disciplined Approach to Diagnosing and Confronting Management Challenges Author: Stephen J. Hopkins and S. Douglas Hopkins Publisher: Beard Books Hardcover: 316 pages List Price: US$74.95 Order your personal copy at http://www.amazon.com/exec/obidos/ASIN/1587982870/internetbankrupt So the first thing to do when dealing with a troubled business is to find the guilty and lop someone's head off! Don't be so quick to react, advise co-authors Stephen J. Hopkins and S. Douglas Hopkins in their thoughtful, well-researched book, Crafting Solutions for Troubled Businesses. The father-son team of Steve and Doug Hopkins are principals of Kestrel Consulting LLC, a firm they founded in March 2004. Each has more than 25 years of experience working with troubled businesses and providing turnaround advisory and interim management services. Steve got his first taste of a troubled business when, as chief financial officer of an 80-year-old chemical company, Bill Nightingale of Nightingale & Associates assisted him in taking the company through a Chapter 11 filing. The company subsequently emerged from bankruptcy with payment in full to all creditors. Steve then joined Nightingale, staying for 23 years and serving initially as a principal and eventually as president from 1994 to 2000. Doug began working at Nightingale in 1978 as a part- time resource for special projects. After working in this capacity for 10 years, Steve joined Nightingale full time in the 1980s and became a principal in 1994. Both Steve and Doug have served in various C-level roles in troubled companies, including CEO, CFO, COO, and CRO. To write this book, the Hopkinses drew upon their vast experience in dealing with troubled companies. They took 100 of the largest projects they have been involved in and applied a "disciplined analysis" to diagnose problem situations and produce successful outcomes. The projects -- helpfully set apart by shaded boxes -- demonstrate the authors' theories and methods in dealing with troubled businesses. The authors also analyze some well-known cases like Enron, WorldCom, and Sunbeam to help the reader connect the dots in a very real sense and use the book for actionable advice. The book is divided into five parts: 1) Conceptual Approach and Key Issues, 2) Managing the Crisis, 3) The Diagnosis Process, 4) Alternatives and Action Plans, and 5) Lessons Learned in 100 Completed Assignments. Each part has multiple chapters expanding on these themes, and each chapter concludes with a recap of what was discussed. For speed readers and the time crunched, these recaps are an excellent way of extracting from the book the essence of what the authors are advocating. So what about lopping off that head? The authors contend that management's role is much less pivotal than is commonly believed. The real issue when working with a troubled business is determining the viability of the business. To do that, the underlying causes must be identified at different stages of the corporate lifecycle. The authors categorize troubled businesses as Undisciplined Racehorses, Overburdened Workhorses, and Aging Mules. Only through a step-by-step diagnosis can the core problems be dealt with. Pursuing a turnaround may not always be a viable and, in fact, in only one-third of the 100 cases the authors worked on did the company achieve a true operational turnaround. Crafting Solutions to Troubled Businesses should be on the must- read list of anyone involved in dealing with, consulting for, or operating a troubled business. ********* 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 ***