/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/080627.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 27, 2008, Vol. 12, No. 152 Headlines ADAM PORT: Case Summary & Eight Largest Unsecured Creditors AIRBORNE HEALTH: Loan Amendment Delay Cues CCC Rating from S&P ALLIANCE ONE: Moody's Affirms B2 Probability of Default Rating ALOHA AIRLINES: Yucaipa Buys Interest in Suit for $10 Million ALPHA INNOTECH: March 31 Balance Sheet Upside-Down by $1,115,984 AMERICAN HOME: BofA Says Plan Filing Extension May Not be Needed AMERICAN HOME: Court Okays Fund Transfer to Employee Bonus Account AMERICAN HOME: Microsoft Asserts $1.42 Million Cure Amount AMERICAN HOME: Asks Court to Expunge $6.78MM Shareholder Claims AMERICAN LAFRANCE: Settles Cummins Entities' Preference Claims AMERICAN MEDIA: 2009 Debt Obligations Cue S&P's Negative Watch AMERICAN MEDICAL: March 31 Balance Sheet Upside-Down by $461,163 ANTHRACITE 2004-HY1: S&P Junks Rating on Class F Certificates APPLICA PET: S&P Assigns 'B+' Corporate Credit Rating ASCALADE COMM: Plan of Compromise or Arrangement Obtains Court OK BEAR STEARNS: Moody's Junks Ratings of 28 of 52 Tranches BFC AJAX: Moody's to Review Rating of $275MM Notes for Likely Cut BIOJECT MEDICAL: Posts $653,015 Net Loss in 2008 First Quarter BLINK LOGIC: March 31 Balance Sheet Upside-Down by $5,346,725 BOSTON GLOBE: Management Seeks Wage Cuts from Labor Unions BOSTON HERALD: To Cut Jobs and Outsource Printing Operations BOSTON HILL: Involuntary Chapter 11 Case Summary BP METALS: S&P Withdraws Ratings At Company's Request CAELUS RE: S&P Rates $250M Series 2008-1 Class A Notes 'BB+' CALIFORNIA CONDOMINIUMS: Involuntary Chapter 11 Case Summary CANWEST MEDIA: Moody's Rates Affiliate's C$312MM Unsec. Notes B2 CAPITAL ONE: Fitch Assigns Low-B Ratings on Seven Note Trusts CARE LEVEL: Agrees to Merge Health Care Operations with Inspiris CASH SYSTEMS: Sells Assets to Global Cash for $33 Million CHASE FLEX: Fitch Junks Ratings on Seven Subordinate Bonds CHENIERE ENERGY: Board Approves Compensation of Directors CHRYSLER LLC: Denies Rumors of Possible Bankruptcy Filing CHRYSLER LLC: Steep Sales Decline Cues Fitch to Cut Rating to B- CITIGROUP MORTGAGE TRUST: Moody's Junks Ratings of Five Tranches CITIZEN SMITH: Involuntary Chapter 11 Case Summary COMM 2004-RS1: S&P Chips Rating to BB+ on Class G Certificates COMMODORE CDO: Moody's Junks Two 2038 Floating Rate Notes COMPUCOM SYSTEMS: Getronics Buyout Does Not Affect S&P's Rating CORINTHIAN CUSTOM: Lands Under Foreclosure COUNTRYWIDE FINANCIAL: BofA to Reduce 7,500 Jobs as Part of Merger CWABS TRUST: Moody's Junks Ratings of 15 Tranches Issued DAVID VOLKMAN: Case Summary & 20 Largest Unsecured Creditors DEATH ROW: Court OKs $24MM Sale of Music Assets to Global Music DELAWARE TIERS: Moody's Cuts Rating of $16.65MM Certs to B1 DELPHI CORP: Committees Can Intervene in Appaloosa $2.55BB Lawsuit DELTA FINANCIAL: Wants Plan Filing Period Extended to July 25 DUNMORE HOMES: Court Disallows $320,648 in Claims EASTMAN KODAK: S&P's Rtng Unmoved by $1BB Stock Repurchase Program EAT AT JOE'S: March 31 Balance Sheet Upside-Down by $3,111,267 EL PASO CHILE: Case Summary & 40 Largest Unsecured Creditors ENERLUME ENERGY: March 31 Balance Sheet Upside-Down by $4,424,443 EQUITY ONE: Moody's Gives Low B-Grade Underlying Ratings ESMARK INC: Accepts OAO Severstal's $775 Million Takeover Proposal EXPRESS LLC: Moody's Hikes Rating of Secured Term Loan to B1 EXPRESS LLC: S&P Lifts Rating to B from B- on Improved Performance FERRELLGAS: Moody's Assigns Ba3 Rating to Planned $250MM Notes FEDERAL-MOGUL: Court Denies Injunction Demand of Asbestos PI Trust FERRELLGAS LP: S&P Assigns 'B+' Rating to $250MM Unsecured Notes FIRST FRANKLIN: S&P Issues C & D Ratings to 17 Classes of Certs. FIRST MARBLEHEAD: Says Goldman Sachs' Cash Investment is Delayed FOOD BAZAAR: Voluntary Chapter 11 Case Summary FORD MOTOR: Fitch to Review Ratings Over Next Six Weeks FORT DENISON: Moody's Junks Rating of $225MM Floating Rate Notes GENERAL MOTORS: Investors See 75% Chance of Default in 5 Years GENERAL MOTORS: Fitch Trims ID Rating to B-; Puts Negative Watch GOODYEAR TIRE: To Invest $2BB in Plants' Expansion and Improvement GO WEST: U.S. Trustee Wants Chapter 11 Case Dismissed GPS INDUSTRIES: Names David Chessler as Chief Executive GPS INDUSTRIES: Issues $5.5MM Note to Tulip Under Recap Plan GRAFTECH INT'L: S&P Lifts Rating to BB; Changes Outlook to Pos. GREEKTOWN CASINO: MGCB OKs Continuation of Reorganization Efforts GREEKTOWN CASINO: To Lay Off 89 Employees to Save $7.8MM in Costs GREEKTOWN CASINO: Gaming Board, et al., Oppose DIP Loan Approval GREEKTOWN CASINO: Court Gives Final Approval on $150MM DIP Loan GROUP 1 AUTOMOTIVE: Moody's Cuts Corporate Family Rating to Ba3 GSRPM MORTGAGE: Moody's Cuts Ratings of 10 Tranches to Junk Level HIGHGATE LTC: July 9 Sale Hearing for Four Nursing Homes HILEX POLY: Prepackaged Chapter 11 Plan Confirmed HOLOGIC INC: Offer to Buy Third Wave Stake Obtains FTC's Go Signal IDENTIPHI INC: Posts $1,290,000 Net Loss in 2008 First Quarter INDYMAC BANCORP: Should Be Monitored, Senator Asks Regulators IVANHOE ENERGY: To Increase Private Placement to C$88 Million JOEY STEINFELDT: Case Summary & 20 Largest Unsecured Creditors JPMORGAN-CIBC: S&P Trims Ratings and Removes Negative CreditWatch JSG DEVELOPMENT: Lender Fifth Third to Sell Collateral on June 30 JULIO ROMERO: Case Summary & 11 Largest Unsecured Creditors KIMBALL HILL: Panel Gets Court Nod to Hire Akin Gump as Co-Counsel KIMBALL HILL: Committee Can Employ Shaw Gussis as Co-counsel KIMBALL HILL: Committee Hires FTI Consulting as Financial Advisors KIMBALL HILL: Court Establishes Procedures for Claims Settlement KIMBALL HILL: Court Establishes Contract Rejection Procedures KREE TECHNOLOGIES: Financial Troubles Prompt Bankruptcy Filing LANDSOURCE COMMUNITIES: Wants to Hire Bilzin as Special Counsel LPL HOLDINGS: Moody's Places CF Rating on Review for Possible Hike MAGNOLIA FINANCE: Moody's Cuts Series 2005-2 Notes' Rating to Ba2 MANCHESTER INC: Court Confirms Third Amended Chapter 11 Plan MARSHALL HOLDINGS: To Pay CAMOFI $1MM to Resolve Claims & Disputes MASSACHUSETTS HEALTH: S&P Cuts $84.5MM Bond Rating to BB- from BB+ MERIDIAN INVESTMENT: Case Summary & 23 Largest Unsecured Creditors MERIDIAN ON BAINBRIDGE: Mastro Can Foreclose Assets, Says Court MESA AIR: Gets Nasdaq Noncompliance Notice on Bid Price Protocol M FABRIKANT: Royal Asscher Distances Self Following Court Ruling MILESTONE SCIENTIFIC: Posts $615,885 Net Loss in 2008 1st Quarter MORGAN STANLEY: Fitch Affirms 'B-' Rating on $15.9MM Cl. L Certs. MSC - MEDICAL: S&P to Withdraw Ratings After $248MM Pharmacy Sale NAVISTAR INT'L: Board Promotes Terry Endsley to EVP and CFO NELLSON NUTRACEUTICAL: Offers 48.6% Recovery for Senior Lenders NETWURX INC: Case Summary & 60 Largest Unsecured Creditors NEWPAGE CORP: Taking Additional Downtime, Closing Paper Machines NEW YORK TIMES: Boston Globe Unit Seeks Wage Cuts from Unions MIDWEST AIR: Plans to Restructure in 30 Days to Avoid Bankruptcy OLUWADARE AKINWALE: Case Summary & 14 Largest Unsecured Creditors PLASTECH ENGINEERED: Wants to Sell Misc. Carpet Assets to BBI PLASTECH ENGINEERED: Wants Protocol Set for Tooling Sales PLASTECH ENGINEERED: Wants Ink-Logix Settlement Approved PRECISION OPTICS: Posts $129,160 Net Loss in Qtr. Ended March 31 PROSPECT MEDICAL: S&P Removes 'B-' Credit Rating from Neg. Watch PSEG ENERGY: Moody's Changes Outlook to Stable, Affirms Ba3 CFR RADIAN GROUP: Moody's Cuts Sr. Debt Rating to Ba1; Outlook is Neg. RANDALL MARTIN: Case Summary & 20 Largest Unsecured Creditors RESIDENTIAL ACCREDIT: Moody's Cuts Ratings of 206 Tranches RHODE ISLAND HEALTH: Fitch Lowers $18.6MM Bonds Rating to BB RHODE ISLAND HEALTH: S&P Cuts $19.6MM Bond Rating to BB from BB+ ROOM SOURCE: Voluntary Chapter 11 Case Summary SALONE HOLDINGS: Baseball Clubs Sue Operator to Recoup $100,000 SAN JUAN: Moody's Affirms CF Rating at B3, Outlook Stable SASCO 2007-BHC1: S&P Trims Ratings on 11 Classes of Certificates SEQUOIA COMMUNITY: Case Summary & 20 Largest Unsecured Creditors SEQUOIA COMMUNITY: Sec. 341 Creditors Meeting Slated for July 31 SHARPER IMAGE: Receives Go-Signal to Implement Severance Program SHARPER IMAGE: Court Terminates Order on Equity Trade Restriction SHARPER IMAGE: Stinson Morrison Discloses Representation of Garmin SHARPER IMAGE: Vice-Presidents Gary Chant, Drew Reich Resign SIMTROL INC: Amends 2002 Equity Incentive Plan to Increase Shares SIRVA INC: Withdraws Bid to Extend Removal Period After Plan Okay SIX FLAGS: Inks Indenture for Unit to Issue $400MM Senior Notes SOUTHERN PACIFIC: Moody's Junks Underlying Ratings on Two Notes SUNCREST LLC: Zions Bank Wins Auction with $25.3 Mil. Credit Bid TAHERA DIAMOND: Court Extends CCAA Protection Until September 30 TARRAGON CORP: Board Engages Travis Wolff as Accounting Firm TEEVEE TOONS: Court Approves $5 Million Sale to The Orchard TEEVEE TOONS: Sale of Music Publishing Unit to Bernard Hits Snag THORNBURG MORTGAGE: Moody's Keeps Junk Ratings on Sr. Debt, Stock TYSON FOODS: To Sell Alberta Beef Business to XL Foods for C$107MM USAM INC: Case Summary & 45 Largest Unsecured Creditors VELOCITY EXPRESS: Has Until December 16 to Cure Min. Bid Violation VERASUN ENERGY: Facility Start-Up Delay Cues S&P's Negative Watch VERSO TECHNOLOGIES: DietBrown Denies Liability on Entrata Claim VERSO TECHNOLOGIES: U.S. Trustee Forms Five-Member Committee VERSO TECHNOLOGIES: Panel May Engage Arnall Golden as Co-Counsel VERSO TECHNOLOGIES: Panel May Engage Olshan Grundman as Co-Counsel VU1 CORPORATION: Posts $2,094,975 Net Loss in 2008 First Quarter WADSWORTH CDO: Moody's Junks Rating of $72.5MM Floating Rate Notes WELLMAN INC: Amends Credit Agreement to Pursue Chapter 11 Plan WELLMAN INC: Court Extends Exclusivity Deadline Until July 31 WELLMAN INC: Court Establishes July 29 as Claims Bar Date WEST MICHIGAN: Case Summary & 20 Largest Unsecured Creditors WESTMORELAND COAL: Inks New Labor Pact with Montana Mine Workers * S&P Cuts Ratngs on 77 Classes from 19 Synthetic CDO Deals * S&P Says Rating Changes in High-Tech Sector Remains Positive * SEC Chair Proposes Reduced Reliance on Credit Ratings * Experts Say Corporate Debt Default Rates Rises Above 10% in 2009 * Oil-Price Woes in Airline Industry to Impact U.S. Economy * Troutman Sanders To Combine with Ross Dixon by January 2009 * Bankruptcy Bar Names Greenberg's Paul Keenan Jr. as President * Huron Consulting Adds Robert Pawlak and Peter Salt as Directors * Resilience Capital Adds Michael Lundin as Operating Partner * BOOK REVIEW: Learning Leadership ********* ADAM PORT: Case Summary & Eight Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Adam Charles Port 31062 Paseo Rachero San Juna Capistrano, CA 92675 Bankruptcy Case No.: 08-13473 Chapter 11 Petition Date: June 20, 2008 Court: Central District Of California (Santa Ana) Judge: Theodor Albert Debtor's Counsel: Robert J. Curtis, Esq. Curtis Law Group 19700 Fairchild Rd Ste 380 Irvine, CA 92612 Tel: (949) 955-2211 Fax: (949) 955-2217 rcurtis@curtislawgroup.com Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million Debtor's list of its Eight Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Ryan Biyajian Business Trade $135,000 6 Liberty Suite 100 Aliso Viejo, CA 92656 Bob Heimstra Business Debt $90,000 15375 Barranaca Parkway Suite A101 Irvine, CA 92618 Mike Gartland Business Debt $55,000 2 Hidden Crest Way Laguna Niguel, CA 92677 John Link Business Debt $55,000 Loyd Wright Business Debt $45,000 Bank of America Trade Debt $29,500 Wells Fargo Auto $15,500 HSBC Trade Debt $7,000 AIRBORNE HEALTH: Loan Amendment Delay Cues CCC Rating from S&P -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Bonita Springs, Florida-based Airborne Health Inc., including its corporate credit rating, to 'CCC' from 'CCC+'. The outlook is negative. As of April 30, 2008, the company had about $153 million (excluding $62.5 million preferred stock) of debt. The ratings downgrade reflects the company's ongoing delay in seeking an amendment to restore access to its revolver and continued weak operating performance. The ratings on Airborne reflect its highly leveraged financial profile, extremely narrow product focus, customer concentration, small size, aggressive financial policy, and the segment's vulnerability to adverse publicity. Airborne develops, markets, and distributes "Airborne"-branded effervescent health formula products for the over-the-counter consumer health care market. The primary products are effervescent tablets marketed as dietary supplements formulated from vitamin C, vitamin A, herbal extracts, antioxidants, electrolytes, and amino acids. With about $120 million of net sales for the fiscal year-ended April 30, 2008, Airborne is a very small participant in the $4.5 billion OTC category. S&P are concerned that the negative publicity associated with the recent settlement disclosure may further contract the already-small sales base. The outlook on Airborne is negative. "The negative outlook reflects our liquidity concerns, given Airborne's covenant violations, loss of access to its credit facility, and weak operating performance," said Standard & Poor's credit analyst Bea Chiem. Airborne's performance has not met our expectations to date, and the company may suffer from further sales declines as a result of negative publicity. "We could lower the ratings if the company does not obtain an amendment and resolve its covenant default situation, and/or if operating performance continues to decline," she continued. An outlook revision to stable is unlikely over the near term, given S&P's concerns about Airborne's operating performance. ALLIANCE ONE: Moody's Affirms B2 Probability of Default Rating -------------------------------------------------------------- Moody's Investors Service downgraded the liquidity ratings of Alliance One International, Inc. to SGL-4 to SGL-3. Moody's also affirmed AOI's long-term ratings, including the company's B2 corporate family rating. The downgrade to SGL-4 reflects concerns related to the company's future covenant compliance and its impact on the company's liquidity as a result of AOI's announcement that it is in the process of finalizing its accounting related to reserves and financial statement presentation concerning farmer rural credit accounting. Moody's also upgraded the ratings of the company's $250 million senior secured revolving credit to Ba3 as a result of the reduction of senior secured debt. The outlook is stable. The affirmation of the company's corporate family rating reflects Moody's expectation that AOI's operating performance will not deviate significantly from plan including modest leverage reduction and further operating margin improvement. Absent the potential need to modify covenants, the company's intrinsic liquidity position remains adequate supported by strong cash balances and sufficient cash flow from operations to cover the company's basic cash needs. Should the company have difficulty resolving any future covenant issues or should a possible material financial statement restatement be required, the long-term ratings and/or outlook may come under pressure. The one notch upgrade of the company's secured bank facilities reflects the impact of AOI's prepayment of its $145 million Term Loan B facility, which enhances the relative seniority position of the existing secured revolving credit in the capital structure. Ratings of AOI downgraded include: -- Speculative Grade Liquidity rating to SGL-4 from SGL-3 Ratings of AOI upgraded include: -- $250 million senior secured revolving credit facility due 2010 to Ba2 (LGD1, 5%) from B1 (LGD3, 35%) Ratings of AOI affirmed/assessments revised include: -- Corporate family rating of B2 -- Probability of default rating of B2 -- $150 million 8 ½% senior unsecured notes due 2012 at B2 (LGD4, 55%) -- $315 million 11% senior unsecured notes due 2012 at B2 (LGD4, 55%) -- $91.4 million 12 ¾% senior subordinated notes due 2012 at Caa1 (LGD6, 95%) Outlook is stable Alliance One International, Inc. and Intabex Netherlands, B.V. are co-borrowers under the senior secured revolving credit facility. Headquartered in Morrisville, North Carolina, Alliance One International, Inc. is one of the world's leading tobacco merchants and processors. Its principal products include flue- cured, burley and oriental tobaccos, which are major ingredient in American -- blend cigarettes. Total revenues for the last twelve months ending December 2007 were approximately $2.0 billion. ALOHA AIRLINES: Yucaipa Buys Interest in Suit for $10 Million ------------------------------------------------------------- The Hon. Lloyd King of the U.S. Bankruptcy Court for the District of Hawaii approved on June 26, 2008, a sale to Yucaipa Cos. LLC of Aloha Airlines Inc.'s interest in a suit against Mesa Air Group Inc. William Rochelle reports that the purchase price is $10 million. According to a court document, the Court found Yucaipa to be a good faith purchaser. An objection by the State of Hawaii has been overruled. James Wagner, an attorney for Aloha's chapter 7 trustee Dane Field, was directed to submit an order, the form of which should be approved by Mesa counsel. As reported by the Troubled Company Reporter on June 6, 2008, Mr. Wagner said the likeliest bidder for the legal claim in the company's 2006 lawsuit against go! parent Mesa would be Yucaipa. Yucaipa is Aloha's majority shareholder and second secured creditor behind Aloha's primary lender, GMAC Commercial Finance LLC. It is owed $106.7 million. On June 3, 2008, the TCR said that Mr. Wagner was planning to auction off the legal claim in Aloha's lawsuit against Mesa Air Group. Aloha filed a suit in a state Circuit Court alleging that Mesa Air Group received confidential information as a potential investor in the company and used it improperly to enter Hawaii's inter-island market with intent to drive the company out of business. About Mesa Air Mesa Air Group Inc. -- http://www.mesa-air.com-- operates 182 aircraft with over 1,000 daily system departures to 157 cities, 42 states, the District of Columbia, Canada, the Bahamas and Mexico. Mesa operates as Delta Connection, US Airways Express and United Express under contractual agreements with Delta Air Lines, US Airways and United Airlines, and independently as Mesa Airlines and go!. In June 2006 Mesa launched inter-island Hawaiian service as go! This operation links Honolulu to the neighbor island airports of Hilo, Kahului, Kona and Lihue. The Company, founded by Larry and Janie Risley in New Mexico in 1982, has approximately 5,000 employees and was awarded Regional Airline of the Year by Air Transport World magazine in 1992 and 2005. Mesa is a member of the Regional Airline Association and Regional Aviation Partners. Mesa has 5,000 employees overall. Freedom Airlines currently operates 34 50-seat ERJ-145 and 7 76- seat CRJ-900 aircraft for Delta Connection. On May 14, 2008, Air Midwest, Inc., a wholly owned subsidiary of Mesa Air, unveiled plans to discontinue all operations by June 30 including its current scheduled services, citing record-high fuel prices, insufficient demand and a difficult operating environment as the main factors in its decision. About Aloha Airgroup Based in Honolulu, Hawaii, Aloha Airgroup Inc., Aloha Airlines Inc. -- http://www.alohaairlines.com/-- and its affiliates are carriers that fly passengers and freight to Hawaii's five major airports, as well as to half a dozen destinations in the western U.S. They operate a fleet of about 20 aircraft, all Boeing 737s, including three configured as freighters. This is the airline's second bankruptcy filing. Aloha filed for Chapter 11 protection on Dec. 30, 2004 (Bankr. D. Hawaii Case No. 04-03063), and emerged from Chapter 11 bankruptcy protection in February 2006. The company and its affiliates filed again for Chapter 11 protection on March 18, 2008 (Bankr. D. Hawaii Lead Case No. 08- 00337). Brian G. Rich, Esq., Jordi Guso, Esq., and Paul Steven Singerman, Esq., at Berger Singerman P.A., and David C. Farmer, Esq., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of $100 million to $500 million. On April 29, 2008, the Bankruptcy Court converted the Debtors' cases into chapter 7 liquidation proceedings. The next day, the United States Trustee appointed Dane S. Field to serve as chapter 7 trustee for the cases. James Wagner, Esq., represents Mr. Field. ALPHA INNOTECH: March 31 Balance Sheet Upside-Down by $1,115,984 ---------------------------------------------------------------- Alpha Innotech Corp.'s consolidated balance sheet at March 31, 2008, showed $4,670,756 in total assets and $5,786,740 in total liabilities, resulting in a $1,115,984 total stockholders' deficit. At March 31, 2008, the company's consolidated balance sheet also showed strained liquidity with $3,726,880 in total current assets available to pay $5,474,084 in total current liabilities. The company reported a net loss of $2,057 on revenue of $3,668,143 for the first quarter ended March 31, 2008, compared with a net loss of $665 on revenue of $3,546,936 in the same period a year ago. The increase in sales is attributable primarily to increased shipments to Asia. Sales and marketing expenses for the three months ended March 31, 2008, increased $130,152, or 12.3%, to $1,184,721 from $1,054,569 for the three months ended March 31, 2007. Expenses increased primarily due to increased headcount and facilities allocation to an expanded technical support department and travel expenses and support costs in international sales. 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?2eb4 Going Concern Doubt Rowbotham and Company LLP, in San Francisco, expressed substantial doubt about Alpha Innotech Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm reported that the company has incurred losses from operations, negative cash flows from operations and has both a working capital and a capital deficit at Dec. 31, 2007. About Alpha Innotech Based in San Leandro, Calif., Alpha Innotech Corp. (OTC BB: APNO) -- http://www.alphainnotech.com/-- is a developer, manufacturer and marketer of digital imaging and analysis systems for the life science research and drug discovery markets. Alpha Innotech's customers include pharmaceutical and biotechnology companies as well as universities, medical centers, government research institutes and agencies worldwide. AMERICAN HOME: BofA Says Plan Filing Extension May Not be Needed ---------------------------------------------------------------- Bank of America, N.A., administrative agent for the prepetition secured parties, says that since the Chapter 11 cases of American Home Mortgage Investment Corp. and its debtor-affiliates have been pending for almost a year now, they should be well on their way toward filing a Plan of Reorganization. The Debtors, however, are seeking a third 90-day extension of their exclusive periods, which they argue is justified because they have been too busy with other activities to formulate a meaningful Plan, relates Laurie Selber Silverstein, Esq., at Potter Anderson & Corroon LLP, in Wilmington, Delaware. "Given that most of the activities referred to in the Motion were completed in April, [BofA] submits that the Debtors should not need until September 2 to file their plan, and therefore, the length of the Debtors' requested extension of their exclusive periods is unwarranted," Ms. Silverstein contends. Ms. Silverstein informs Judge Christopher Sontchi that the Debtors and BofA have engaged in productive and extensive negotiations to resolve outstanding disputes between them, including a resolution of certain Plan-related issues. She notes that the parties are working toward documentation of a formal settlement for approval of the U.S. Bankruptcy Court for the District of Delaware, to become effective by July 31, 2008. BofA believes that the settlement, if approved, will help to facilitate the Debtors' filing of a confirmable Plan that will be acceptable to BofA and the Prepetition Secured Parties. Based on this progress, BofA is not necessarily opposed to granting a reasonable extension of the exclusive periods, Ms. Silverstein says. However, if the parties are unable to obtain Court approval of their settlement by July 31, BofA asks Judge Sontchi to open the Plan process, and allow BofA to file a competing Plan. Under the circumstances, BofA submits that a conditional extension is eminently fair, and is more likely to advance the Plan process, than an unconditional 90-day extension. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. (American Home Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Court Okays Fund Transfer to Employee Bonus Account ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware approved a fourth stipulation among American Home Mortgage Acceptance, Inc., American Home Mortgage Corp., American Home Mortgage Investment Corp., American Home Mortgage Servicing, Inc., and ABN AMRO Bank N.V. regarding postpetition advances, servicing payments and mortgage loan refinancings. Judge Christopher Sontchi noted that pursuant to the Fourth Stipulation, the Debtors will transfer $225,000 from the Control Account to the Bonus Plan Account, in which funds will be used solely to make payments to the Construction Loan Employees under the Bonus Plan. On December 15, 2008, the Debtors will return all unused funds, if any, in the Bonus Plan Account to the Control Account, and provide ABN AMRO with a report, provided that the return of the funds to the Control Account will not change ABN AMRO's obligations under the Fourth Stipulation. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. (American Home Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Microsoft Asserts $1.42 Million Cure Amount ---------------------------------------------------------- Microsoft Corporation, Microsoft Licensing GP and CitiMortgage, Inc., object to the cure amounts proposed by American Home Mortgage Investment Corp. and its debtor-affiliates, and present to the U.S. Bankruptcy Court for the District of Delaware their asserted cure amounts: Proposed Asserted Counterparty Cure Amount Cure Amount ------------ ----------- ----------- Microsoft Corp. $0 $1,421,718 CitiMortgage, Inc. 0 111,582 Microsoft relates that the Debtors' licenses on Microsoft software and products are licenses of copyrighted materials, and therefore, may not be assumed or assigned without its consent. It discloses that there was a payment due on July 1, 2007, for $1,421,718, relating to an enterprise agreement, which the Debtors never paid. Microsoft tells Judge Christopher Sontchi that the Debtors should be obligated to state fully and accurately the cure amounts as shown on the Debtors' books and records, which should be the invoice amount. CitiMortgage is the counterparty to two servicing agreements that are assumed contracts. Pursuant to previous Court orders, including cash management and purchaser's cure amount orders, CitiMortgage is entitled to reasonable attorney fees and costs incurred from November 17, 2007, to April 11, 2008. During that period, CitiMortgage informs the Court that it incurred $102,113 in fees, and $9,469 in costs. Accordingly, Microsoft and CitiMortgage ask the Court to allow their asserted cure amounts. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. (American Home Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Asks Court to Expunge $6.78MM Shareholder Claims --------------------------------------------------------------- American Home Mortgage Investment Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to expunge and disallow 1,506 claims aggregating $6,784,942, because the Claims were each filed by a shareholder based solely on ownership of stock of the Debtors, and not on account of damages or claims against the Debtors. A list of the equity interest claims is available for free at: http://bankrupt.com/misc/AHM_EquityInterestClaims.pdf Responses Sixty-one Claimants ask the Court to overrule the Debtors' Objection. Richard C. Gilham says that he invested in the Debtors to earn income, because his "pension never goes up when everything else does and what social security goes up is taken away as Medi-care deductions." He contends that his Claim should not be expunged because "it was poor stewardship on [the Debtors] for making loans to people who could not afford them." "No reasonable reason was given for the debtors' request to the court to disallow and expunge each claim," Jo Ann Christman argues. "Mismanagement, making questionable loans, and using funds to pay themselves damaged the company and the Stockholders' interest," she continues. She also tells Judge Christopher Sontchi that she bought her interest in the Debtors with her teachers' hard earned retirement funds. Duane Helmer contends that his claim should not be disallowed because it stems from conditions imposed and implemented by the Debtors. He says that the Debtors acted irresponsibly, and has an obligation to satisfy all claims against them. The Barretts tells the Court that their claim should not be disallowed because the Debtors took their money. "What is the difference between equity interest and a claim against the Debtors?" Carla M. Margenau asks the Court. "If my money is lost and will not be refunded, then I think I have a claim," she notes. "I understand that $2,109 is not a lot of money, but in the current economic slowdown, it will buy food and pay my house payment," Ms. Margenau says. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. (American Home Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN LAFRANCE: Settles Cummins Entities' Preference Claims -------------------------------------------------------------- Pursuant to American LaFrance, LLC's Fourth Amended Disclosure Statement, Cummins Emission Engine Co. Inc. has been identified as having received preferences aggregating $2,036,498, Cummins Emission for $65,265, and Cummins PowerCare with no preference amount listed. The Cummins Entities dispute their liability with respect to the Preference Payments. Cummins, Inc., and the Debtor have agreed to certain payment terms pursuant to which Cummins, Inc., will continue to ship certain goods to the Debtor. Accordingly, the parties stipulate that: (a) the Debtor will waive all claims and causes of action against Cummins Inc., Cummins Emission, and Cummins PowerCare, including all claims for preference liability on account of the Preference Amounts; (b) Cummins, Inc. agrees to: -- provide the Debtor with a $500,000 credit limit; -- return the Debtor to net 30-day payment terms; and -- delay the transfer of the Debtor from OEM status to DOEM status for a period of 18 months from May 22, 2008; and (c) In the event the Debtor is late in paying any invoices sent to the Debtor by Cummins, Cummins may withhold shipments to the Debtor, change the Debtor's payment terms to reduce the exposure of Cummins to late payment, or transfer the Debtor from OEM to DOEM status. About American LaFrance Headquartered in Summerville, South Carolina, American LaFrance LLC -- http://www.americanlafrance.com/-- is one of the oldest fire apparatus manufacturers and one of the top six suppliers of emergency vehicles in North America. The company filed for Chapter 11 protection on Jan. 28, 2008 (Bankr. D. Del. Case No. 08-10178). Ian T. Peck, Esq., and Abigail W. Ottmers, Esq., at Haynes and Boone LLP, are the Debtor's proposed Lead Counsel. Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers LLP, are the Debtor's proposed local counsel. Pepper Hamilton, LLP is the proposed counsel of the Official Committee of Unsecured Creditors. In its schedules of assets and debts filed Feb. 4, 2008, the Debtor disclosed $188,990,680 in total assets and $89,065,038 in total debts. (American LaFrance Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN MEDIA: 2009 Debt Obligations Cue S&P's Negative Watch -------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Boca Raton, Florida-based American Media Operations Inc. to negative from developing. Ratings on the company, including the 'CCC+' corporate credit rating, were affirmed. Total debt outstanding was $1.08 billion as of Dec. 31, 2007. "The outlook revision reflects our concern over American Media's significant debt maturities coming due in 2009," explained Standard & Poor's credit analyst Tulip Lim. The company's $414.5 million 10.25% senior subordinated notes are due May 1, 2009. Moreover, if these notes are not refinanced prior to Feb. 1, 2009, the maturity date for American Media's $60 million revolving credit facility and $450 million term loan will be revised to Feb. 1, 2009, from 2012 and 2013, respectively. The 'CCC+' rating reflects American Media's approaching maturities, limited liquidity, high debt leverage, and difficult business fundamentals resulting from the secular trends of declining newsstand circulation of its tabloid publications. Debt to EBITDA declined to 8.3x for the 12 months ended Dec. 31, 2007, from 11.5x for the same period last year, as higher EBITDA offset slightly increased debt levels. EBITDA coverage of interest was thin at 1.3x for the 12 months ended Dec. 31, 2007. Interest expense has risen because of the higher borrowings and higher bank pricing as a result of an amendment. American Media's revolving credit facility is fully drawn. The company failed to meet the leverage ratio of 8x as of Sept. 30, 2007, as required under its bond indentures, and issued $20 million of additional notes to existing noteholders in December. It would also have to issue $36.2 million in additional notes or make cash payments to bondholders if the leverage ratio is greater than 7.25x as of Sept. 30, 2008. Standard & Poor's believes that the company may not be able to achieve this level by Sept. 30, 2008, exerting pressure on leverage. AMERICAN MEDICAL: March 31 Balance Sheet Upside-Down by $461,163 ---------------------------------------------------------------- American Medical Technologies Inc.'s consolidated balance sheet at March 31, 2008, showed $1,789,175 in total assets and $2,250,338 in total liabilities, resulting in a $461,163 total stockholders' deficit. At March 31, 2008, the company's consolidated balance sheet also showed strained liquidity with $900,955 in total current assets available to pay $1,769,536 in total current liabilities. The company reported net income of $4,586 on revenues of $636,295 for the first quarter ended March 31, 2008, compared with a net loss of $692,718 on revenues of $855,118 in the same period last year. The decrease in revenues is primarily attributable to a $130,000 decrease in sales of the Spectrum product line due to a major distributor placing a large order in the fourth quarter 2007 in anticipation of a January 2008 price increase and a $60,400 decrease in the sales of parts and repairs due to the historical decrease in sales of equipment. Additionally, the three month period ended March 31, 2007, included a $44,000 sale of inventory previously included in the company's inventory reserve. These decreases were partially offset by $33,400 in commission earned from the DirectCrown product line added in April 2007. Loss from operations decreased to $190,859 during the three months ended March 31, 2008, as compared to $227,536 in the same period last year, primarily due to a decrease in selling, general and administrative expenses. 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?2ebb Going Concern Doubt Hein & Associates LLP, in Houston, expressed substantial doubt about American Medical Technologies Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm reported that the company has suffered recurring losses from operations, and its total liabilities exceeds its total assets. About American Medical Technologies Based in Corpus Christi, Texas, American Medical Technologies Inc. (OTC BB: ADLI) -- http://www.americanmedicaltech.com/-- markets and sells unique dental and medical products to the dental and medical community through its established global federation of dealers and distributors. ANTHRACITE 2004-HY1: S&P Junks Rating on Class F Certificates ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on six classes of commercial mortgage-related securities from Anthracite 2004-HY1 Ltd. and removed them from CreditWatch with negative implications, where they were placed on May 28, 2008. The lowered ratings follow a full analysis of this transaction, including an examination of the current credit characteristics of the assets and the transaction's liabilities. The review incorporated Standard & Poor's revised recovery rate assumptions for commercial mortgage-backed securities. According to the May 21, 2008, trustee report, the transaction's current assets consisted of 32 classes of pass-through certificates from 14 distinct CMBS transactions issued between 1998 and 2004. Of the 14 deals, only Commercial Mortgage Acceptance Corp.'s series 1998 ($61.4 million, 19%) represents an asset concentration of 10% or more. The aggregate principal balance of the assets and liabilities each totaled $316.4 million, down from $346.1 million at issuance. The $29.7 million reduction was due to principal losses realized on first-loss CMBS assets, which currently represent $153.6 million (49%) of the asset pool. S&P's analysis indicates that the current asset pool exhibits average credit characteristics consistent with 'CCC' rated obligations. Excluding first-loss CMBS assets, the current asset pool exhibits credit characteristics consistent with 'B-' rated obligations. Standard & Poor's rates $48.7 million (15%) of the assets. S&P reanalyzed its outstanding credit estimates for the remaining assets. Standard & Poor's analysis of the transaction supports the lowered ratings. Ratings Lowered and Removed from Creditwatch Negative Anthracite 2004-HY1 Ltd. Commercial mortgage-related securities Rating ------ Class To From ----- -- ---- A AA- AAA/Watch Neg B BBB+ AA/Watch Neg C BBB- A+/Watch Neg D BB+ A-/Watch Neg E B BBB/Watch Neg F CCC- BBB-/Watch Neg APPLICA PET: S&P Assigns 'B+' Corporate Credit Rating ----------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Miami Lakes, Florida-based pet accessories manufacturer Applica Pet Products LLC. At the same time, S&P assigned bank debt and recovery ratings to Applica Pet's proposed $325 million senior secured credit facility, which will consist of a five-year, $25 million revolving credit facility and a $300 million term loan. The issue-level rating on this facility is 'BB' with a recovery rating of '1', indicating an expectation for very high (90%-100%) recovery of principal in the event of a payment default. Proceeds from the credit facility will partially finance parent Salton Inc.'s acquisition of United Pet Group, the global pet business of Spectrum Brands Inc. (CCC+/Watch Positive/--) for $915 million. Applica Pet is a subsidiary of UPG, which will become wholly owned by Salton. Salton will operate and manage the pet business as a separate business unit. Standard & Poor's used a consolidated approach in determining the 'B+' corporate credit rating (Applica Pet and UPG) with Salton, given Salton's ownership interest. The outlook on Applica Pet is stable. "The stable outlook reflects our expectation that the company will maintain its market positions and improve operations and credit measures," noted Standard & Poor's credit analyst Susan H. Ding. If the company encounters operating shortfalls in either its pet or small appliance businesses, or if credit measures deteriorate, S&P could revise the outlook to negative. S&P's forecasts indicate that even if consolidated EBITDA margins fall to 8.5% from about 9.5% currently, and if sales increased by only 3.5% versus the company's expectations for 5.5%, consolidated leverage would still be in the 5x area and adequate for the current rating. "Although this is unlikely in the near term, if the company can improve performance in its small appliance business while expanding its pet business and reducing leverage as expected, we may revise the outlook to positive," she continued. ASCALADE COMM: Plan of Compromise or Arrangement Obtains Court OK ----------------------------------------------------------------- Ascalade Communications Inc. obtained an order from the Supreme Court of British Columbia approving the plan of compromise or arrangement in connection with the on-going legal proceedings filed by Ascalade and Ascalade Technologies Inc. in Canada under the Companies' Creditors Arrangement Act. On June 17, 2008, at the Meeting of Creditors, the Plan received 100% approval of the creditors who voted to approve the Plan. A stay of proceedings with respect to any actions which have or might be brought against the companies will remain in effect until all of the assets of the companies are sold and the net proceeds distributed to the stakeholders of the companies. The Order authorizes Ascalade, at any time after July 25, 2008, to apply to the Toronto Stock Exchange to have the trading of the common shares of Ascalade suspended from trading and delisted. Any recovery in the CCAA for creditors and other stakeholders of the companies, including shareholders, is uncertain and is highly dependent upon a number of factors, including the recovery from the sale of the factory, equipment and inventory in the PRC and the outcome of the Scheme in Hong Kong. A copy of the Plan of Compromise or Arrangement is available for free at http://ResearchArchives.com/t/s?2ec7 About Ascalade Communications Inc. Based in Richmond, British Columbia, Ascalade Communications Inc. (TSE:ACG) -- http://www.ascalade.com/ -- is an innovative product company that designs, develops and manufactures digital wireless and communication products. The company deliver products by offering its partners and customers complete vertical integration, from product design and development to final production. The company's products include digital cordless phones, Voice over Internet Protocol phones, digital wireless baby monitors and digital wireless conference phones. Ascalade products have been distributed in more than 35 countries and under 80 regional brands. Ascalade also has facilities in Qingyuan, China, Hong Kong and a sales office in Hertfordshire, United Kingdom. On April 29, 2008, Jervis Rodrigues, senior vice-president of Deloitte & Touche Inc., filed separate petitions for protection under Chapter 15 of the U.S. Bankruptcy Code on behalf of Ascalade Communications Inc. and its debtor-affiliate (Bankr. N.D. Ill. Case Nos. 08-10612 and 08-10616). Jeffrey G. Close, Esq. at Chapman and Cutler LLP represents the Petitioner in the Chapter 15 case. Ascalade's financial condition as of September 2007 showed total assets of $99,630,000 and total debts of $40,410,000. BEAR STEARNS: Moody's Junks Ratings of 28 of 52 Tranches -------------------------------------------------------- Moody's Investors Service has downgraded the ratings of 52 tranches issued in nine transactions from the Bear Stearns Asset Backed Securities SD shelf and a number of Bear Stearns Asset Backed Securities transactions. The collateral backing each tranche consists primarily of first lien adjustable-rate and fixed-rate "scratch and dent" mortgage loans. The actions are part of an ongoing, wider review of all RMBS transactions, in light of the deteriorating housing market and rising delinquencies and foreclosures. Many "scratch and dent" pools originated since 2004 are exhibiting higher than expected rates of delinquency, foreclosure, and REO. The rating adjustments will vary based on level of credit enhancement, collateral characteristics, pool-specific historical performance, quarter of origination, and other qualitative factors. Complete rating actions are: Issuer: Bear Stearns Asset Backed Securities Trust 2007-SD2 -- Cl. II-A-2, downgraded from Aaa to A3 -- Cl. II-M-1, downgraded from Aa1 to Ba1 -- Cl. II-M-2, downgraded from Aa2 to Caa2 -- Cl. II-M-3, downgraded from A2 to Ca -- Cl. II-M-4, downgraded from Baa2 to C -- Cl. II-M-5, downgraded from Baa3 to C Issuer: Bear Stearns Asset Backed Securities Trust 2007-SD3 -- Cl. M-1, downgraded from Aa1 to A1 -- Cl. M-2, downgraded from Aa2 to A3 -- Cl. M-3, downgraded from Aa3 to Baa2 -- Cl. M-4, downgraded from A1 to Ba2 -- Cl. M-5, downgraded from A2 to B2 -- Cl. M-6, downgraded from A3 to Caa3 -- Cl. M-7, downgraded from Baa1 to Ca -- Cl. M-8, downgraded from Baa2 to C Issuer: Bear Stearns Asset Backed Securities Trust 2005-4 -- Cl. M-4, downgraded from Baa1 to Baa3 -- Cl. M-5, downgraded from Baa2 to B1 -- Cl. M-6, downgraded from Baa3 to B3, on review for possible downgrade -- Cl. M-7, downgraded from Ba1 to Caa2 Issuer: Bear Stearns Asset Backed Securities Trust 2006-1 -- Cl. M-3, downgraded from A2 to Baa1 -- Cl. M-4, downgraded from A3 to Baa3 -- Cl. M-5, downgraded from Baa1 to B2 -- Cl. M-6, downgraded from Baa2 to B3, on review for possible downgrade -- Cl. M-7, downgraded from Baa3 to Caa1 Issuer: Bear Stearns Asset Backed Securities Trust 2006-2 -- Cl. M-5, downgraded from Baa1 to Ba1 -- Cl. M-6, downgraded from Baa2 to B2, on review for possible downgrade -- Cl. M-7, downgraded from Baa3 to Caa1 Issuer: Bear Stearns Asset Backed Securities Trust 2006-3 -- Cl. M-1, downgraded from Aa2 to A1 -- Cl. M-2, downgraded from Aa3 to Baa1 -- Cl. M-3, downgraded from A2 to B3 -- Cl. M-4, downgraded from A3 to Caa1 -- Cl. M-5, downgraded from Baa1 to Caa2 -- Cl. M-6, downgraded from Baa2 to Caa3 -- Cl. M-7, downgraded from Baa3 to Ca Issuer: Bear Stearns Asset Backed Securities Trust 2006-4 -- Cl. M-1, downgraded from Aa2 to Ba3 -- Cl. M-2, downgraded from Aa3 to B3, on review for possible downgrade -- Cl. M-3, downgraded from A2 to Caa2 -- Cl. M-4, downgraded from A3 to Caa3 -- Cl. M-5, downgraded from Baa1 to Ca -- Cl. M-6, downgraded from Baa2 to C Issuer: Bear Stearns Asset Backed Securities Trust 2007-1 -- Cl. M-1, downgraded from Aa2 to Ba2 -- Cl. M-2, downgraded from Aa3 to Caa1 -- Cl. M-3, downgraded from A2 to Caa2 -- Cl. M-4, downgraded from A3 to Caa3 -- Cl. M-5, downgraded from Baa1 to Ca -- Cl. M-6, downgraded from Baa2 to C Issuer: Bear Stearns Asset Backed Securities Trust 2007-2 -- Cl. M-1, downgraded from Aa2 to A2 -- Cl. M-2, downgraded from Aa3 to Baa2 -- Cl. M-3, downgraded from A2 to Caa3 -- Cl. M-4, downgraded from A3 to Ca -- Cl. M-5, downgraded from Baa1 to Ca -- Cl. M-6, downgraded from Baa2 to C -- Cl. M-7, downgraded from Baa3 to C BFC AJAX: Moody's to Review Rating of $275MM Notes for Likely Cut ----------------------------------------------------------------- Moody's Investors Service published the underlying ratings assigned to Class A Notes issued by BFC Ajax CDO Ltd. and guaranteed by Financial Guaranty Insurance Company: Class Description: $275,000,000 Class A Senior Floating Rate Notes due 2046 -- Current Rating: Ba3, on review for possible downgrade -- Prior Rating: Baa3, on review for uncertain -- Underlying Rating: Ba3, on review for possible downgrade The rating action is based on the publication, at the issuer's request, of the Class A Notes' underlying rating of Ba3, on review for possible downgrade. The underlying ratings reflect the intrinsic credit quality of the Class A Notes in the absence of the guarantee from FGIC, which currently has an insurance financial strength rating of B1. As a result of the action, the Class A Notes are now rated Ba3, on review for possible downgrade, consistent with Moody's practice of rating insured securities at the higher of the guarantor's rating and any underlying rating that is public. In a process outlined by Moody's on 20 February 2008, Moody's will publish underlying ratings at the issuer's request. BIOJECT MEDICAL: Posts $653,015 Net Loss in 2008 First Quarter -------------------------------------------------------------- Bioject Medical Technologies Inc. reported a net loss of $653,015 on revenue of $1,812,789 for the first quarter ended March 31, 2008, compared with a net loss of $2,113,730 on revenue of $2,128,203 in the same period ended March 31, 2007. Product sales for the first Product sales for the first quarter of 2008 were $1,681,151 compared to $1,636,516 in the year-ago quarter. License and technology fees for the first quarter of 2008 were $131,638 compared to $491,687 in the comparable year ago period. The company reported an operating loss of $701,702 in the first quarter of 2008 compared to an operating loss of $1,737,220 in the comparable year-ago period. The decrease in operating loss was primarily due to cost reduction measures in 2007 and the first quarter of 2008. Cash, cash equivalents and marketable securities at March 31, 2008, totaled $1,401,280. At March 31, 2008, the company's consolidated balance sheet showed $7,382,198 in total assets, $4,767,587 in total liabilities, and $2,614,611 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?2eb1 Going Concern Doubt As reported in the Troubled Company Reporter on April 18, 2008, Moss Adams LLP expressed substantial doubt about Bioject Medical 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 auditor reported that the company has suffered recurring losses, has had significant recurring negative cash flows from operations, and has an accumulated deficit. About Bioject Medical Based in Portland, Ore., Bioject Medical Technologies Inc. (Nasdaq: BJCT) -- http://www.bioject.com/-- is a developer and manufacturer of needle-free injection therapy systems (NFITS). NFITS provide an empowering technology and work by forcing medication at high speed through a tiny orifice held against the skin. This creates a fine stream of high-pressure fluid penetrating the skin and depositing medication in the tissue beneath. The company is focused on developing mutually beneficial agreements with leading pharmaceutical, biotechnology, and veterinary companies. BLINK LOGIC: March 31 Balance Sheet Upside-Down by $5,346,725 ------------------------------------------------------------- Blink Logic Inc.'s consolidated balance sheet at March 31, 2008, showed $1,417,383 in total assets and $6,764,108 in total liabilities, resulting in a $5,346,725 total stockholders' deficit. At March 31, 2008, the company's consolidated balance sheet also showed strained liquidity with $1,231,566 in total current assets available to pay $6,661,235 in total current liabilities. The company reported a net loss of $6,230,228 on revenues of $26,546 for the first quarter ended March 31, 2008, compared with a net loss of $701,666 on revenues of $142,781 in the same period of 2007. Services revenue decreased from $112,223 in 2007 to $26,546 in 2008. Product revenue decreased from $30,558 in 2007 to $-0- in 2008. There were no product sales in 2008 due to a transition in the company's sales model from selling on-premises software licenses to selling a hosted on-demand web-based business intelligence service. Loss on embedded derivatives was $2,727,828 for the three months ended March 31, 2008, compared to $-0- for the three months ended March 31, 2007. Full-text copies of the company's consolidated financial statements for the quarter ended March 31, 2008, are available for free at http://researcharchives.com/t/s?2eb2 Going Concern Doubt KPMG LLP, in Ottawa, Canada, expressed substantial doubt about Blink Logic 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 negative working capital at Dec. 31, 2007, and has incurred recurring losses, as well as recurring negative cash flow from operating activities and has an accumulated deficit. The auditing firm added that the company's economic viability is dependent on its ability to generate additional sales and finance operational expenses. About Blink Logic Inc. Headquartered in Mill Valley, Calif., Blink Logic Inc. (OTC BB: BLLG) -- http://www.blinklogic.com/-- formerly DataJungle Software Inc., develops and markets a web-based front-end dashboard software product for leading business intelligence platforms. The product allows an end-user to create visual and interactive dashboard views on top of their existing databases and data cubes without significant involvement from specialized software programmers. BOSTON GLOBE: Management Seeks Wage Cuts from Labor Unions ---------------------------------------------------------- Management of Boston Globe is asking unions to take an across-the- board 10% pay cut to help trim costs, cross-town rival Boston Herald reported, citing union members. The report said Boston Globe is also considering consolidation of its printing plants. According to the Herald, Globe has just completed a round of buyouts that led to the departure of several high-profile staffers. A top union official, the Herald said, vowed to fight the proposed pay cut. According to Boston Business Journal, Boston Globe spokesman Al Larkin said, "We're taking a look at consolidation opportunities and we haven't made any final decisions yet." Business Journal said Boston Globe is hurting from declining advertising revenue and circulation. Boston Globe is owned by The New York Times Co. Business Journal said the Times reported that May ad sales for its New England Media Group, which include the Globe, fell 18% in May. BOSTON HERALD: To Cut Jobs and Outsource Printing Operations ------------------------------------------------------------ The Boston Herald announced on Tuesday plans to outsource its printing operations and lay off 130 to 160 press operators, electricians and other production-related workers, tentatively scheduled to start in late September or early October. In a news posted on its Web site, Patrick J. Purcell, Herald owner and publisher, said there are no plans to cut newsroom staff. Mr. Purcell reportedly told union leaders the job cuts and outsourcing were necessary because of the unreliable print quality of the newspaper's 50-year-old presses. Reuters says the Herald's circulation has shrunk as readers turn to the Internet for news. Reuters relates that the Herald's average daily circulation dropped 9.5% to 182,350 in the six-month period that ended in March, while its Sunday circulation fell 4.7% to 105,629, according to the Audit Bureau of Circulations. Boston Business Journal reports that the Herald's headquarters at Herald Square will be redeveloped in a joint venture between the Purcell family and Newton-based National Development. Business Journal says no plans have been filed with the Boston Redevelopment Authority, but a mix of uses including residential, retail and office is being considered for the six-acre parcel. Mr. Purcell said he has another five years left on his lease at Herald Square, the Journal says. Herald said Mr. Purcell is in talks with News Corp., which owns a plant in Chicopee, Massachusetts, to handle printing the Herald six days a week. The company is also in talks with Boston Offset, owner of a plant in Norwood, to print the Herald on Fridays. The Boston Globe, the Herald's bigger rival, said its executives talked about the possibility of printing the Herald but ultimately decided against it. Editions of the Wall Street Journal and the Barron's business publication are printed at the Chicopee plant. USA Today is printed at the plant in Norwood. The Herald is a privately held tabloid newspaper, owned by Herald Media Inc. BOSTON HILL: Involuntary Chapter 11 Case Summary ------------------------------------------------ Alleged Debtor: Boston Hill Realty Trust 93 Main Street Kingston, Massachusetts 02364 Case Number: 08-14641 Involuntary Petition Date: June 25, 2008 Court: District of Massachusetts (Boston) Judge: Joan N. Feeney Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Atlantic Blasting Co, Inc. test boring drilled $1,500 P.O. Box 274 Millbury, MA 01527 VGT Enterprises, Inc. snow plowing $7,489 366c Greenwood Street Millbury, MA 01527 Bernard J. Laverty, Jr. business loan $2,500 195 Highland Street Marshfield, MA 02050 Robert M. Bradley consulting $35,000 1287 Old Post Road Marston Mills, MA 02648 Northland Willette Inc. fix hydraulics $5832 12 High Street Plainville, MA 02762 BL Makepeace Inc. transit purchased $8410 125 Guest Street Brighton, MA 02135 BP METALS: S&P Withdraws Ratings At Company's Request ----------------------------------------------------- Standard & Poor's Ratings Services withdrew all ratings on Cleveland-based BP Metals LLC, including the 'B+' corporate credit rating, at the company's request. CAELUS RE: S&P Rates $250M Series 2008-1 Class A Notes 'BB+' ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'BB+' senior secured debt rating to the $250 million Series 2008-1 Class A variable-rate notes issued by Caelus Re Ltd. The notes are the initial offering under Caelus Re's variable-rate note program. Nationwide Mutual Insurance Co. (A+/Stable/--) and certain of its subsidiaries and affiliates (collectively referred to as the ceding insurer) have entered into a reinsurance agreement with Caelus Re. The purpose for issuing the notes and entering into the reinsurance agreement is to provide the ceding insurer with a source of indemnified multi-year reinsurance coverage against certain catastrophic risks. "The rating on the notes is based on the probability of attachment as modeled by AIR Worldwide Corp.," noted Standard & Poor's credit analyst Gary Martucci. "Based on the sensitivity analysis, the annualized probability of attachment for the notes is 1.36%." The notes are exposed to losses incurred by the ceding insurer resulting from first and subsequent U.S. hurricanes and earthquakes, including fire following, on a per occurrence basis. For the first year, the notes will cover losses between the initial trigger amount of $2.250 billion and the initial exhaustion amount of $2.528 billion. CALIFORNIA CONDOMINIUMS: Involuntary Chapter 11 Case Summary ------------------------------------------------------------ Alleged Debtor: California Condominiums, LLC 11041 E. Betony Dr. Scottsdale, AZ 85255 Case Number: 08-06652 Type of Business: The Debtor is engaged in real estate. Involuntary Petition Date: June 5, 2008 Court: District of Arizona (Phoenix) Petitioner's Counsel: Alicia Mykyta E-mail: alicia.mykyta@azbar.org 1599 E. Orangewood Ave., Ste. 125 Phoenix, AZ 85020-5159 Tel: (602) 256-0337 Fax: (602) 256-0432 http://azbar.org/ Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ GR8 Solutions, LLC Construction $94,500 110 W. Missouri, Ste. 1 management and Phoenix, AZ 85013 rezoning services CANWEST MEDIA: Moody's Rates Affiliate's C$312MM Unsec. Notes B2 ---------------------------------------------------------------- Moody's rated a new C$312 million non-cash pay unsecured note in the name of Canwest Media Inc.'s affiliated company, CW Media Holdings Inc., B2. Concurrently, all of the corporate family's other debts were reassessed. While Canwest's B1 corporate family rating was affirmed since the new note issue merely replaces a similarly sized and structured, unrated obligation and is therefore neutral to Canwest's credit profile, revisions to the company's consolidated debt structure and liability waterfall resulted in senior secured ratings being downgraded to Ba2 from Ba1. This also caused loss given default assessments to be adjusted for these and all other rated debts. Revising the outlook to negative from stable was prompted by two matters. Firstly, there is a lack of a clearly articulated strategy for dealing with matters related to last year's acquisition of the former Alliance Atlantis' specialty television operations. Preparations for addressing the obligation to transfer Canwest's conventional television assets to CW Media will likely have to be completed in 2010 in order to assure execution in 2011. Similarly, should Canwest opt to acquire the whole or part of Goldman Sachs Capital Partner's interest in CW Media, preparations will likely have to be completed well in advance of 2011. With these events being within the rating horizon, and as it appears that any feasible resolution will be contingent upon non- operational events involving third parties, the related execution risks contribute to the negative outlook. In addition, slowing economic growth may retard cash flow expansion and cause a prolonged period of elevated financial leverage even without the impact of the specialty television acquisition. This same matter, i.e. muted cash flow expansion as advertising revenues fall along with the level of general economic activity, in combination with ongoing capital expenditure requirements, may also erode the company's liquidity cushion, including availability under financial covenants. When combined with the fact that liquidity arrangements are compartmentalized for each of Canwest's four financing silos, liquidity arrangements are evaluated as being only adequate now, and cause Canwest's speculative grade liquidity rating to be downgraded to SGL-3 from SGL-2. Assignments: Issuer: CW Media Holdings Inc. -- Senior Unsecured Regular Bond/Debenture, Assigned B2 (LGD5, 70%) Outlook Actions: Issuer: Canwest Media Inc. (formerly Canwest MediaWorks Inc.) -- Outlook, Changed To Negative From Stable Downgrades: Issuer: Canwest Media Inc. (formerly Canwest MediaWorks Inc.) -- Speculative Grade Liquidity Rating, Downgraded to SGL-3 from SGL-2 -- Senior Subordinated Regular Bond/Debenture, Unchanged at B3; LGD assessment revised to (LGD6, 92%) from (LGD6, 91%) Issuer: CW Media Holdings Inc. -- Senior Secured Bank Credit Facility, Downgraded to Ba2 (LGD2, 20%) from Ba1 (LGD2, 16%) Issuer: Canwest Limited Partnership (formerly Canwest MediaWorks Limited Partnership) -- Senior Secured Bank Credit Facility, Downgraded to Ba2 (LGD2, 20%) from Ba1 (LGD2, 16%) -- Senior Subordinated Regular Bond/Debenture, Unchanged at B2; LGD assessment revised to (LGD5, 70%) from (LGD4, 62%) Canwest Media Inc. is wholly-owned by Winnipeg, Manitoba, Canada- based Canwest Global Communications Corp., a publicly traded international media company with interests in broadcast television, publications, radio, specialty television channels, out-of-home advertising and interactive operations in Canada, Australia, Malaysia, Singapore, Indonesia, Turkey, the United Kingdom and the United States. Substantially all of the publicly traded parent company's operations are held though Canwest. CAPITAL ONE: Fitch Assigns Low-B Ratings on Seven Note Trusts ------------------------------------------------------------- Fitch published these ratings: Capital One Master Trust -- $19,500,000 Series 2001-6 Class D 'BB'; -- $15,000,000 Series 2002-1 Class D 'BB'. Capital One Multi-Asset Execution Trust -- $375,349,185.38 2002 Collateral Certificate Class D 'BB' Capital One COBALT Master Note Trust -- $26,902,174 Series 2002-1 Class C 'BB'; -- $37,500,000 Series 2004-1 Class B 'BBB'; -- $29,464,285 Series 2004-1 Class C 'BB'. Capital One Mainstreet Master Note Trust -- $17,150,396 Series 2007-1 Class C-1 'BB'; -- $17,150,396 Series 2007-2 Class C-1 'BB'. The ratings above are based on the quality of the receivables pool, the available credit enhancement within each trust, each transaction's legal and cash flow structure and the overall underwriting and servicing capabilities of Capital One. Each of the master trusts are similar in structure, with credit enhancement in the form of subordinate notes for certain classes, as well as other credit features such as spread accounts. The significant difference between these trusts is the collateral that they finance. Capital One Master Trust finances mostly consumer and small business credit card receivables from selected MasterCard and VISA credit card accounts that meet eligibility criteria while the COBALT and Mainstreet trusts finance installment consumer loans and MasterCard and Visa credit card receivables to segmented borrowers, respectively. The Capital One Multi-Asset Execution Trust was created in October 2002 to allow for the sale of a single note series or a multiple note series. The notes issued by COMET Issuance Trust are primarily secured by the collateral certificate, series 2002-CC issued by the Capital One Master Trust. CARE LEVEL: Agrees to Merge Health Care Operations with Inspiris ---------------------------------------------------------------- Inspiris reached agreement to acquire Care Level Management Group LLC. "Inspiris has been in the process of expanding our service line offerings to include frail, medically complex patients living in an individual home based setting." Mike Tudeen, Inspiris' president and chief executive officer, said. "This acquisition accelerates our movement into this large, underserved market segment," Mr. Tudeen added. "This is an attractive move for Inspiris, not only because of the significant market presence and service offering expansions, but because the companies are almost identical in terms of delivery model, patient care philosophy and culture." During the bankruptcy proceedings, Inspiris worked with Care Level Management's executive team well as the United States Bankruptcy Court (Central District of California - San Fernando Valley Division), to ensure that services to a very vulnerable patient population were not disrupted. The Care Level Management acquisition will add 1,600 high risk patients, more than 50 experienced employees, three new geographic markets, expansion of three current markets, and several new health plan customers. The acquisition increases the number of patients under Inspiris' care by more than 35%. "This is both a strategic and a synergistic acquisition for Inspiris," Mr. Tudeen said. "We are delighted to move forward with the addition of Care Level Management's expertise and positive program outcomes. "Combined, the two companies offer a broad, very attractive set of services to health plans who are trying to improve quality and lower costs on a very expensive, underserved, subset of their membership," Mr. Tudeen concluded. "Most importantly, the services make a tremendous difference in the lives of the frail patients, and their families, that we serve." About Inspiris Headquartered in Brentwood, Tennessee, Inspiris -- http://www.Inspiris.com/-- is a health care management company focused on improving the quality of life for the frail elderly, chronically ill and those with disabilities, while reducing the cost to Medicare Advantage health plans. Inspiris partners with individual health plans to coordinate and provide care across the diverse settings where members need care, including post-acute, custodial, assisted living and hospice. Inspiris also offers hospice care services in a number of markets. About Care Level Management Group LLC Woodland Hills, California-based Care Level Management Group LLC fdba Care Level Management LLC and Care Level Associates LLC -- http://www.carelevel.com/-- and its affiliates provide 24-hour house calls by physicians to patients. The Debtors' business was founded in 2001 and are established in California, Texas, Pennsylvania, Arizona, Florida and New York. The Debtors' revenue are in the form of monthly membership fee. It earned $22 million in 2005 and $50 million in 2006 and 2007. The cancellation of a significant demonstration project with the Centers for Medicare Services caused its revenues to plummet. It filed its chapter 11 petition on May 7, 2008 (Bankr. C.D. Calif. Case No. 08-12913). Five affiliates filed separate Chapter 11 petitions on May 19, 2008, and another four affiliates filed separate chapter 11 petitions. Judge Maureen Tighe presides over the case. Juliet Y. Oh, Esq., and Ron Bender, Esq., at Levene, Neale, Bender, Rankin & Brill represent the Debtors in their restructuring efforts. Care Level Management Group LLC listed assets of $1 million to $10 million and debts of $10 million to $50 million when it filed for bankruptcy. The Debtors' primary debt is a $7 million loan from First Century Bank NA that matured in April 2008 and was personally guaranteed by a number of the Debtors' principals. First Century's claims and liens was transferred to Steve Goldman, one of the Debtors' principals, when he paid the bank loan in full from his personal property. CASH SYSTEMS: Sells Assets to Global Cash for $33 Million --------------------------------------------------------- Cash Systems, Inc., and Global Cash Access, Inc. disclosed the execution of a definitive agreement whereby GCA will acquire Cash Systems for $0.50 per share. The aggregate amount paid to Cash Systems' stockholders, note holders and warrant holders, together with Cash Systems' transaction expenses, is expected to be approximately $33 million. At the closing of the transaction, all of Cash Systems' issued and outstanding shares of common stock will be converted into the right to receive cash in the amount of $0.50 per share and all of Cash Systems' outstanding convertible promissory notes and warrants will be redeemed for the sum of $21 million plus accrued but unpaid interest. The transaction has been approved by the boards of directors of both companies. GCA will gain approximately 120 new customers as a result of the acquisition. The closing is presently anticipated to occur at the end of July 2008, subject to the required approval of Cash Systems' stockholders and customary and other closing conditions. GCA expects the transaction to have no material effect on GCA's 2008 operating income and to be modestly accretive in 2009. "We are excited about the opportunities the acquisition of Cash Systems provides for the continuation of our strategy of having the scale required to compete effectively in the highly competitive electronic payments market," GCA President and Chief Executive Officer Scott H. Betts said. "We believe this acquisition provides us with unique synergies within the gaming market and continues GCA's product innovation efforts, while providing the growth and cross-selling potential that our stockholders expect." "I believe that this acquisition is a great opportunity for Cash Systems and its customers. GCA will lend scale and resources to continue to drive innovative products in the market," Cash Systems Chairman and Chief Executive Officer Michael Rumbolz said. Goldman, Sachs & Co. acted as financial advisor to GCA and Morrison & Foerster LLP acted as legal advisor to GCA. Deutsche Bank Securities Inc. and Alpine Advisors LLC acted as financial advisors to Cash Systems and Manatt, Phelps & Phillips LLP acted as legal advisor to Cash Systems. About Global Cash Access Headquartered in Las Vegas, Nevada, Global Cash Access, Inc. -- http://www.globalcashaccess.com/-- a wholly owned subsidiary of Global Cash Access Holdings, Inc. (NYSE: GCA), provides cash access and related services to the global gaming industry. GCA serves approximately 1,100 casinos and other clients in the U.S., Canada, Europe, the Caribbean and Asia. GCA provides proprietary technology that helps responsible patrons access cash via ATM, debit card, check cashing and credit card cash advance transactions for their casino entertainment. GCA also provides services that enhance casino marketing initiatives and credit decision-making through its wholly owned subsidiary Central Credit LLC, a credit decision-making tool that uses proprietary credit bureau databases. About Cash Systems Based in Las Vegas, Cash Systems Inc. (Nasdaq: CKNN) -- http://www.cashsystemsinc.com/-- is a provider of cash-access and related services to the retail and gaming industries. Cash Systems' products include its proprietary cash advance systems, ATMs and check cashing solutions. Cash Systems Inc.'s consolidated balance sheet at March 31, 2008, showed $58.2 million in total assets and $60.1 million in total liabilities, resulting in a $1.9 million total stockholders' deficit. Going Concern Doubt As reported in the Troubled Company Reporter on April 29, 2008, Virchow, Krause & Company LLP, in Minneapolis, expressed substantial doubt about Cash Systems Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's recurring operating losses, negative cash flows from operations, negative working capital and accumulated deficit. In addition, the holders of the company's Second Amended and Restated Notes have the right to require the company to redeem a portion of such notes on Oc. 10, 2008, in an amount not to exceed $12.1 million in the aggregate, and will have the right to accelerate the maturity of the outstanding balance of the Second Amended and Restated Notes upon an event of default, including following a delisting of the company's common stock from The NASDAQ Global Market. The company anticipates that its existing capital resources will enable it to continue operations through approximately October 2008, unless prior to that date payments of certain other accrued expenses are accelerated, the company's common stock is delisted from The NASDAQ Global Market, and the company's note holders elect to accelerate the maturity of the outstanding balance of the Second and Amended and Restated Notes, or unforeseen events or circumstances arise that negatively affect the company's liquidity. Management will need to take immediate steps to reduce operating expenses, which may include seeking concessions from customers and vendors in the meantime. If it fails to raise additional capital prior to the earlier of October 2008 and the occurrence of any of these events, the company may be forced to cease operations. CHASE FLEX: Fitch Junks Ratings on Seven Subordinate Bonds ---------------------------------------------------------- Fitch Ratings has taken these rating actions on the mezzanine/subordinate bonds on the Chase Flex Trust transactions: Series 2007-1 -- Class M downgraded to 'B' from 'AA' and remains on Rating Watch Negative; -- Class B-1 downgraded to 'CCC/DR2' from 'A-'; -- Class B-2 downgraded to 'C/DR6' from 'BB+'; -- Class B-3 downgraded to 'C/DR6' from 'B'; -- Class B-4 revised to 'C/DR6' from 'C/DR5'. Series 2007-3 -- Class I-M downgraded to 'B' from 'AA' and remains on Rating Watch Negative; -- Class I-B1 downgraded to 'CCC/DR2' from 'A'; -- Class I-B2 downgraded to 'CC/DR3' from 'BBB'; -- Class I-B3 downgraded to 'C/DR6' from 'BB'; -- Class I-B4 downgraded to 'C/DR6' from 'B'. The rating actions taken reflect Fitch's analysis of expected default and loss from delinquent loans, in addition to projected losses from the currently performing pool. Fitch generates its expectations using its ResiLogic default and loss model. These expectations are adjusted based on actual performance to-date versus model projected performance. The model incorporates the impact of historical home price movements on mortgage performance, in addition to projecting further stress for many regions of the U.S. The model also reflects the demonstrated high default rates for loans that exhibit risk-layering. The details of the application of ResiLogic to seasoned mortgage pools will be described in research to be released shortly. Fitch is completing its review of the 2005-2007 Alt-A transactions in two separate phases. This first phase, currently nearing completion, has encompassed all mezzanine and subordinated bonds, which are more immediately exposed to delinquency losses. The second phase, which will begin shortly, will be a review of all the senior bonds that, in many instances, require additional cash flow analysis to evaluate the risk of the various individual classes within the senior tranche. Most notably, the use of super-senior structures will be considered in evaluating senior bonds. CHENIERE ENERGY: Board Approves Compensation of Directors --------------------------------------------------------- The Board of Directors of Cheniere Energy, Inc. approved the recommendation of the Governance and Nominating Committee to compensate each non-employee director of the company $160,000 for services for the period from the current year's Annual Meeting of Stockholders (June 13, 2008) until the next year's Annual Meeting of Stockholders. Additional compensation of $20,000 for the Annual Period was approved for the chairman of the Audit Committee, the chairman of the Compensation Committee and the Lead Director. Additional compensation of $10,000 for the Annual Period was approved for the chairman of the Governance and Nominating Committee. Compensation will be paid, at the election of the director, either 100% in shares of the company's restricted stock or 50% in cash and 50% in shares of restricted stock. If a director elects to receive 50% of his or her compensation in cash, such cash payments will be made quarterly as of the 15th day of August, November, February and May, beginning on Aug. 15, 2008. Payment in the form of restricted stock will be made June 16, 2008, and the number of shares granted will be determined by the closing price of the company's common stock as reported on the American Stock Exchange on the Date of Grant. Vesting of the restricted stock will occur in full on the first anniversary of the Date of Grant. Amendment No. 3 to the 2003 Stock Incentive Plan On Feb. 26, 2008, the Board unanimously approved Amendment No. 3 to the Cheniere Energy, Inc. Amended and Restated 2003 Stock Incentive Plan. Certain of the amendments effected by Amendment No. 3 required approval by the company's stockholders pursuant to Section 162(m) of the Internal Revenue Code. The Board presented Amendment No. 3 to the stockholders and recommended that the stockholders approve Amendment No. 3 at the company's 2008 Annual Meeting of Stockholders. Amendment No. 3 received an affirmative vote of the majority of the votes cast at the 2008 Annual Meeting and was approved by the stockholders effective as of June 13, 2008. Amendment No. 3 revises the company's 2003 Stock Incentive Plan to provide: * no one participant shall be granted awards under the company's 2003 Stock Incentive Plan during any calendar year covering or relating to more than 1,000,000 shares of common stock; * the maximum amount of cash that may be paid under an award to any one participant during a calendar year cannot exceed $10,000,000 in the aggregate; * expands the list of permissible business criteria pursuant to which Performance Awards (as defined in the 2003 Stock Incentive Plan) may be granted under the company's 2003 Stock Incentive Plan to include: earnings before taxes and depreciation; stock price measures (including growth measures and total stockholder return); and price per share of common stock; and * certain other technical amendments to the provisions of, and definitions used in, the company's 2003 Stock Incentive Plan. In addition, Charif Souki was elected President of the company in addition to his title of Chairman of the Board of Directors and Chief Executive Officer. About Cheniere Energy Based in Houston, Texas, Cheniere Energy Inc. (AMEX: LNG) -- http://www.cheniere.com/-- is developing a network of three LNG receiving terminals and related natural gas pipelines along the Gulf Coast of the United States. Cheniere is pursuing related business opportunities both upstream and downstream of the terminals. Cheniere is also the founder and holds a 30.0% limited partner interest in a fourth LNG receiving terminal. Cheniere Energy Inc.'s consolidated balance sheet at Dec. 31, 2007, showed $2.96 billion in total assets and $3.26 billion in total liabilities, resulting in a $302.1 million total stockholders' deficit. * * * As reported in the Troubled Company Reporter on May 13, 2008, Standard & Poor's Ratings Services lowered its corporate credit rating on liquefied natural gas project developer Cheniere Energy Inc. to 'CCC+' from 'B' and its senior secured rating on subsidiary Sabine Pass LNG L.P. to 'B+' from 'BB'. S&P also removed the ratings from CreditWatch with negative implications, where S&P placed them on April 17, 2008. At the same time, S&P revised its recovery rating on Sabine Pass to '4', indicating average (30% to 50%) recovery of principal in the event of a payment default. The outlook is negative. CHRYSLER LLC: Denies Rumors of Possible Bankruptcy Filing --------------------------------------------------------- The Deal's Maria Woehr reports that Chrysler LLC denied rumors that it may file for Chapter 11 protection. The Deal says a Chrysler spokesperson told Reuters that the rumors were "without merit" and that the third largest U.S. automaker had ample liquidity. According to Ms. Woehr, there have been rumors that Chrysler may not have enough liquidity due to the downturn in auto sales, the oil spike and the credit crunch. Daimler AG also has said there are no signs that Chrysler LLC will file for bankruptcy, Thomson Financial reports. Daimler owns roughly 19% stake in Chrysler. Cerberus Capital Management LP borrowed roughly $7,000,000,000 to acquire about 81% of Chrysler in August 2007. The Deal relates that Daimler has reported that Chrysler lost $2.9 billion from when Cerberus Capital Management bought an 81% stake in August 2007. "I can clearly say that there are no signs at all that Chrysler will file for Chapter 11," Thomson Financial quotes a Daimler spokesman as saying. Thomson Financial relates that shares in Daimler were lower in afternoon deals on Thursday, as traders pointed to speculation that Chrysler may face credit problems in the near future. Cerberus has said early this year that Chrysler was exceeding most of its financial targets. Executive officer Robert Nardelli has set cost-cutting initiatives to lessen the losses this year, which he expects will be lower than 2007's $1.6 billion, John Lippey and Mike Ramsey of Bloomberg News reports. Mr. Nardelli aims to cut purchasing costs by 25% in three years, insisting that Chrysler must buy the lowest global price for auto parts. He also intends to restrict new models, eyeing only 51% of new Chrysler models. As disclosed in the Troubled Company Reporter on June 12, 2008, Mr. Nardelli insisted the company is in good shape with $9 billion in cash at the end of 2007, Mike Ramsey of Bloomberg News, citing a CNBC interview, reports. Mr. Nardelli says he is leading to get the automaker through 2008 and make it better positioned to 2009. Bloomberg News say Chrysler had reported a $1.6 billion operating loss for 2007 and a $650 million net loss for 2006. As related in the Troubled Company Reporter in December 2007, the Wall Street Journal quoted Mr. Nardelli describing Chrysler LLC as "operationally" bankrupt. The only thing, Mr. Nardelli relates, that is keeping Chrysler from going into bankruptcy is the $10 billion investors entrusted the automaker with. Bloomberg reports that shareholder Cerberus Capital Management LP is not regretting its investment in Chrysler, stating that the company is hitting its financial targets. Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter June 24, 2008, Moody's Investors Service affirmed the B3 Corporate Family Rating and Probability of Default Rating of Chrysler LLC, but changed the outlook to negative from stable. The change in outlook reflects the increasingly challenging environment faced by Chrysler as the outlook for US vehicle demand falls, and as high fuel costs drive US consumers away from light trucks and SUVs, and toward more fuel efficient vehicles. Standard & Poor's Ratings Services is placing its corporate credit ratings on the three U.S. automakers, General Motors Corp., Ford Motor Co., and Chrysler LLC, on CreditWatch with negative implications, citing the need to evaluate the financial damage being inflicted by deteriorating U.S. industry conditions--largely as a result of high gasoline prices. Included in the CreditWatch placement are the finance units Ford Motor Credit Co. and DaimlerChrysler Financial Services Americas LLC, as well as GM's 49%-owned finance affiliate GMAC LLC. As reported in the Troubled Company Reporter on May 9, 2008, Fitch Ratings downgraded the Issuer Default Rating of Chrysler LLC to 'B' from 'B+', with a Negative Rating Outlook. Fitch has also downgraded the senior secured bank facilities, including senior secured first-lien bank loan to 'BB/RR1' from 'BB+/RR1'; and senior secured second-lien bank loan to 'CCC+/RR6' from 'BB+/RR1'. The recovery rating on the second lien was also downgraded from 'BB+/RR1' to 'CCC+/RR6' based on lower asset value assumptions and associated recoveries in the event of a stress scenario. CHRYSLER LLC: Steep Sales Decline Cues Fitch to Cut Rating to B- ---------------------------------------------------------------- Fitch Ratings has downgraded the Issuer Default Rating of Chrysler LLC to 'B-' from 'B'. The Rating Outlook is Negative. The downgrade reflects the steep decline in Chrysler's sales resulting from weak economic conditions, high fuel prices, and an accelerating shift to fuel-efficient vehicles. In the event that 2009 industry sales remain flat with depressed 2008 levels, negative cash flows could result in Chrysler's liquidity position reaching minimal required levels in late 2009. Cost reduction efforts have been aggressive, but have simply not been able to keep up with the pace of declining sales volumes. Despite weakening economic conditions in the U.S. market, Chrysler was expected to get a degree of unit volume and revenue support from a revamped minivan product, the new Dodge Journey crossover, and a refreshed Dodge Ram pickup. Minivan volumes, however, have been impacted by a continuing decline in the category, as well as a planned pruning of the product line and lower fleet sales. Recessionary conditions in the housing market, as well as fuel price concerns, will weaken the impact of the Dodge Ram reintroduction this fall. The decline in industry pickup sales is also affected by a secular market shift away from pickups, confirming that the timing and extent of a recovery in this key segment remain uncertain. International sales continue to grow at a healthy rate, benefiting unit sales and capacity utilization. Revenue pressures are compounded by the unrelenting rise in commodity prices, primarily steel. Current market conditions indicate that steel price contracts may continue to rise over the near term - costs that Chrysler is unlikely to recoup through pricing. Although Chrysler has been aggressive in reducing its fixed costs, margin pressures will result in continuing cash drains through 2009. Chrysler's product pipeline over the near term is relatively modest, indicating that the company's lineup may remain misaligned with the market. Limited cash resources and capital constraints remain a distinct competitive disadvantage in a period of rapid product migration and technological change. Alliances are likely to be a primary goal in order to offer a complete product array to the market, leverage Chrysler's tangible and intangible assets, and reduce capital investment requirements. Fitch is also concerned with the uncertainty in the capital markets, particularly that of the securitization market. Rising industry delinquencies and loss severities on auto loans are expected to continue through 2008, particularly related to SUV and pickup loans. Sustained lack of liquidity on an economic basis in this market could reduce the availability of retail financing and strike a further blow to industry volumes. In this scenario, the IDR of Chrysler could be reviewed with an expectation of a downgrade to 'CCC'. Chrysler's liquidity remains adequate for the short term, but could reach minimum required levels in late 2009 if the market remains flat with 2008 levels. Aggressive headcount cuts and other cost reduction efforts have meaningfully lowered Chrysler's fixed cost structure, although benefits will not be realized until market volumes stabilize. Liquidity has been boosted by drawing the company's $2 billion delayed-draw term loan, but asset sale and new financing opportunities are limited. In 2010, Chrysler will begin to realize benefits from the recent UAW healthcare agreement, and could benefit from any rebound in economic conditions. Fitch has downgraded these: -- IDR to 'B-' from 'B'; -- Senior secured first-lien bank loan to 'BB-/RR1' from 'BB/RR1'; -- Senior secured second-lien bank loan to 'CCC/RR6' from 'CCC+/RR6'. CITIGROUP MORTGAGE TRUST: Moody's Junks Ratings of Five Tranches ---------------------------------------------------------------- Moody's Investors Service has downgraded the ratings of seven tranches issued in two transactions from the Citigroup Mortgage Loan Trust SHL shelf and confirmed three ratings in one transaction. The collateral backing each tranche consists primarily of first lien adjustable-rate and fixed-rate "scratch and dent" mortgage loans. The actions are part of an ongoing, wider review of all RMBS transactions, in light of the deteriorating housing market and rising delinquencies and foreclosures. Many "scratch and dent" pools originated since 2004 are exhibiting higher than expected rates of delinquency, foreclosure, and REO. The rating adjustments will vary based on level of credit enhancement, collateral characteristics, pool-specific historical performance, quarter of origination, and other qualitative factors. Complete rating actions are: Issuer: Citigroup Mortgage Loan Trust 2006-SHL1 -- Cl. M-3, confirmed at A3 -- Cl. M-4, confirmed at Baa1 -- Cl. M-5, confirmed at Baa2 -- Cl. M-6, downgraded from Baa3 to B1 Issuer: Citigroup Mortgage Loan Trust 2007-SHL1 -- Cl. M-1, downgraded from Aa2 to Ba1 -- Cl. M-2, downgraded from A2 to Caa3 -- Cl. M-3, downgraded from A3 to Ca -- Cl. M-4, downgraded from Baa1 to Ca -- Cl. M-5, downgraded from Baa2 to C -- Cl. M-6, downgraded from Baa3 to C CITIZEN SMITH: Involuntary Chapter 11 Case Summary -------------------------------------------------- Alleged Debtor: Citizen Smith LLC 1600 and 1602 North Cahuenga Boulevard Hollywood, CA 90028 Case Number: 08-19197 Involuntary Petition Date: June 25, 2008 Court: Central District of California (Los Angeles) Judge: Samuel L. Bufford Petitioners' Counsel: Steven T. Gubner, Esq. (sgubner@ebg-law.com) Ezra Brutzkus & Gubner 21650 Oxnard Street, Suite 500 Woodland Hills, CA 91436 Tel: (818) 827-9000 Fax: (818) 827-9099 Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Thomas Schoos Design Inc. Goods and Services $120,000 8271 Santa Monica Boulevard Los Angeles, CA 90046-5956 Jennings, Steine & Co. Accounting Services $85,533 12100 Wilshire Blvd Ste 400 Los Angeles, CA 90025 Mike Brooks Services $59,900 4322 Cezanne Avenue Woodland Hills, CA 91364 VJ Glass, Mirror LLC Goods and Services $3,500 416 S Victory Boulevard Burbank, CA 91502 G & E Welding Inc. Goods and Services $3,400 7261 Hinds Avenue North Hollywood, CA 91605 COMM 2004-RS1: S&P Chips Rating to BB+ on Class G Certificates -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on eight classes of commercial mortgage-related securities from COMM 2004- RS1 and removed them from CreditWatch with negative implications, where they were placed on May 28, 2008. Concurrently, S&P affirmed its ratings on nine classes and removed six of these ratings from CreditWatch with negative implications. The lowered and affirmed ratings follow a full analysis of the transaction, including an examination of the current credit characteristics of the assets and the transaction's liabilities. The review incorporated Standard & Poor's revised recovery rate assumptions for commercial mortgage-backed securities. According to the June 4, 2008, trustee report, the transaction's current assets included 19 classes ($85 million, 25% of total assets) of pass-through certificates from 11 distinct CMBS transactions issued in either 2001 or 2004. None of the CMBS transactions represent an asset concentration of 10% or more. The current assets also included six classes ($260 million, 75% of total assets) of commercial real estate collateralized debt obligation bonds from Marquee 2004-1 Ltd., which is not rated by Standard & Poor's. The aggregate principal balance of the assets and liabilities each totaled $345 million, down slightly from $345.5 million at issuance. This reduction was due to principal paydown of the collateral. The transaction has realized no principal losses to date, and none of the current assets are first-loss CMBS assets. S&P's analysis indicates that the current asset pool exhibits average credit characteristics consistent with 'A-' rated obligations. Standard & Poor's rates $71 million (21%) of the assets. S&P reanalyzed its outstanding credit estimates for the remaining assets. Standard & Poor's analysis of the transaction supports the lowered and affirmed ratings. Ratings Lowered and Removed from Creditwatch Negative COMM 2004-RS1 Commercial mortgage related securities Rating ------ Class To From ----- -- ---- A AA AAA/Watch Neg B1 A- AA/Watch Neg B2 A- AA/Watch Neg C BBB+ AA-/Watch Neg D BBB A/Watch Neg E BBB- A-/Watch Neg F BBB- BBB+/Watch Neg G BB+ BBB-/Watch Neg Ratings Affirmed and Removed from Creditwatch Negative COMM 2004-RS1 Commercial mortgage-related securities Rating ------ Class To From ----- -- ---- H BB+ BB+/Watch Neg J BB BB/Watch Neg K BB- BB-/Watch Neg L B+ B+/Watch Neg M B B/Watch Neg N B- B-/Watch Neg Ratings Affirmed COMM 2004-RS1 Commercial mortgage related securities Class Rating ----- ------ IO1 AAA IO2 AAA XP AAAf COMMODORE CDO: Moody's Junks Two 2038 Floating Rate Notes --------------------------------------------------------- Moody's Investors Service has downgraded the ratings on these notes issued by Commodore CDO II Ltd. Class Description: $186,000,000 Class A-1MM Floating Rate Notes due December 2038 -- Prior Rating: Aaa -- Current Rating: A2 Class Description: $37,800,000 Class A-2(a) Floating Rate Notes due December 2038 -- Prior Rating: Aa3, on review for possible downgrade -- Current Rating: B1 Class Description: $1,200,000 Class A-2(b) 4.74% Fixed Rate Notes due December 2038 -- Prior Rating: A1, on review for possible downgrade -- Current Rating: B3 Class Description: $48,600,000 Class B Floating Rate Notes due December 2038 -- Prior Rating: Caa1, on review for possible downgrade -- Current Rating: Caa3 Class Description: $12,750,000 Class C Floating Rate Notes due December 2038 -- Prior Rating: Ca -- Current Rating: C Additionally, Moody's has withdrawn the rating on these notes: Class Description: $186,000,000 Class A-1MM Floating Rate Notes due December 2038 -- Prior Rating: P-1 -- Current Rating: WR According to Moody's, the downgrade 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. Also according to Moody's, the short term rating assigned to the CP Notes were based on the existence of a put agreement provided by a Prime-1 rated third party. The notes have been re-issued with the put provider as both the investor and the put counterparty. Where the put provider is also the holder of the notes, it is Moody's view that the put agreement ceases to be relevant. Accordingly, Moody's has withdrawn its short-term ratings on these notes. COMPUCOM SYSTEMS: Getronics Buyout Does Not Affect S&P's Rating --------------------------------------------------------------- Standard & Poor's Ratings Services said that it does not expect CompuCom Systems Inc.'s (B+/Stable/--) June 23, 2008, announcement that it will acquire the North American operations of Getronics N.V. to have an impact on its ratings or outlook. The acquisition is expected to improve CompuCom's market position as a provider of information technology outsourcing solutions by expanding the company's presence within Fortune 500 companies. Pro forma 2007 revenue for the combined entity would have amounted to about $2.1 billion compared to approximately $1.7 billion generated by CompuCom in fiscal 2007. S&P expect CompuCom to fund the acquisition with a combination of debt and equity financing. Pro forma operating lease-adjusted total debt to EBITDA is expected to improve modestly to the high- 4x area, down from the low-5x area, as a result of the acquisition. At March 31, 2008, CompuCom had a cash balance of about $10 million. CORINTHIAN CUSTOM: Lands Under Foreclosure ------------------------------------------ Jenny Burns of the Nashville Business Journal reports that Corinthian Custom Homes' land is in the process of foreclosure. Foreclosures started June 1 for Corinthian's land in five counties -- Davidson, Williamson, Maury, Wilson and Rutherford, according to the report. Corinthian owned at least 179 lots when it filed for bankruptcy. Based in Franklin, Tennessee, Corinthian Custom Homes, Inc. -- http://www.corinthiancustomhomes.com/-- is a home builder. It filed for Chapter 11 protection on Feb. 8, 2008 (Bankr. M.D.Tenn., Case No. 08-01010). Robert James Gonzales, Esq., Robert J. Mendes, Esq., and Robin Bicket White, Esq. at MgLaw, P.L.L.C. represent the Debtor in its restructuring efforts. When the company filed for bankruptcy it listed $1 million to $100 million assets and liabilities. The U.S. Trustee filed a motion on March 28 to convert the bankruptcy case to Chapter 7. COUNTRYWIDE FINANCIAL: BofA to Reduce 7,500 Jobs as Part of Merger ------------------------------------------------------------------ Bank of America Corporation anticipates eliminating about 7,500 positions as part of its combination with Countrywide Financial Corporation. The reductions will take place throughout the country within the next two years. The company will begin notifying affected associates in the third quarter. Most of the reductions will occur in instances where the two companies have significant overlap in staff support. Bank of America will continue to monitor market conditions and make adjustments as appropriate. Final decisions on all specific associate groups and locations have not been made. Eligible associates will be offered severance packages. Bank of America will work with state and local officials to support job placement, training and other means to assist in the transition process. BofA plans to complete the purchase of Countrywide Financial on July 1 subject to customary closing conditions. Countrywide shareholders' decision to approve the transaction on Wednesday marks the last significant approval necessary for the purchase to move forward. During the next several months, work will be under way to integrate the two companies. BofA expects substantial cost savings. About Bank of America Based in Charlotte, North Carolina, Bank of America Corp. (NYSE:BAC) -- http://www.bankofamerica.com-- is a bank holding company. Bank of America provides banking and non-banking financial services and products through three business segments: global consumer and small business banking, global corporate and investment banking, and global wealth and investment management. In December 2006, the company sold its retail and commercial business in Hong Kong and Macau to China Construction Bank. In October 2006, BentleyForbes, a commercial real estate investment and operations company, acquired Bank of America plaza in Atlanta from CSC Associates, a partnership of Cousins Properties Incorporated and the company. In June 2007, the company acquired the reverse mortgage business of Seattle Mortgage Company, an indirect subsidiary of Seattle Financial Group Inc. In October 2007, ABN AMRO Holding N.V. completed the sale of its United States subsidiary, LaSalle Bank Corporation, to Bank of America. About Countrywide Financial Based in Calabasas, California, Countrywide Financial Corporation (NYSE: CFC) -- http://www.countrywide.com/-- is a diversified financial services provider and a member of the S&P 500, Forbes 2000 and Fortune 500. Through its family of companies, Countrywide originates, purchases, securitizes, sells, and services residential and commercial loans; provides loan closing services such as credit reports, appraisals and flood determinations; offers banking services which include depository and home loan products; conducts fixed income securities underwriting and trading activities; provides property, life and casualty insurance; and manages a captive mortgage reinsurance company. * * * As reported in the Troubled Company Reporter on Jan. 15, 2008, Moody's placed the ratings of Countrywide Financial Corporation and its subsidiaries under review for upgrade. CFC and Countrywide Home Loans senior debt is rated Baa3 and short-term debt is rated Prime-3. Countrywide Bank FSB's bank financial strength rating is C-, deposits are rated Baa1 and short-term debt Prime-2. All long and short-term ratings are placed under review for possible upgrade. The company is continuing to face a barrage of lawsuits coming from disgruntled homeowners that filed for bankruptcy protection. Countrywide has been accused by these homeowners and various federal agencies of dubious and questionable lending practices, and for abusing the bankruptcy system. CWABS TRUST: Moody's Junks Ratings of 15 Tranches Issued -------------------------------------------------------- Moody's Investors Service has downgraded the ratings of 21 tranches issued in five transactions from the CWABS Asset-Backed Notes Trust QH, QX, SEA and SD shelves. The collateral backing each tranche consists primarily of first lien adjustable-rate and fixed-rate "hard money", seasoned and "scratch and dent" mortgage loans. The actions are part of an ongoing, wider review of all RMBS transactions, in light of the deteriorating housing market and rising delinquencies and foreclosures. Many deals originated since 2004 are exhibiting higher than expected rates of delinquency, foreclosure, and REO. The rating adjustments will vary based on level of credit enhancement, collateral characteristics, pool-specific historical performance, quarter of origination, and other qualitative factors. Complete rating actions are: Issuer: CWABS Asset-Backed Certificates Trust 2006-QH2 -- Cl. M-1, downgraded from Aa2 to Baa1 -- Cl. M-2, downgraded from A2 to Caa1 -- Cl. M-3, downgraded from Baa2 to Caa3 -- Cl. B-1, downgraded from Baa3 to Ca Issuer: CWABS Asset-Backed Certificates Trust 2007-QH1 -- Cl. M-3, downgraded from A2 to Ba3 -- Cl. M-4, downgraded from Baa2 to Caa3 -- Cl. B-1, downgraded from Baa3 to Ca Issuer: CWABS Asset-Backed Certificates Trust 2007-QH2 -- Cl. M-3, downgraded from A2 to Caa1 -- Cl. M-4, downgraded from Baa2 to Ca -- Cl. B-1, downgraded from Baa3 to C Issuer: CWABS Asset-Backed Certificates Trust 2007-QX1 -- Cl. M-3, downgraded from A1 to Baa3 -- Cl. M-4, downgraded from A2 to B2 -- Cl. M-5, downgraded from Baa1 to Caa1 -- Cl. M-6, downgraded from Baa2 to C -- Cl. M-7, downgraded from Baa3 to C -- Cl. B-1, downgraded from Ba2 to C Issuer: CWABS Asset-Backed Certificates Trust 2007-SEA1 -- Cl. 2-M-3, downgraded from A1 to Baa2 -- Cl. 2-M-4, downgraded from A2 to B2 -- Cl. 2-M-5, downgraded from Baa1 to Caa1 -- Cl. 2-M-6, downgraded from Baa2 to Ca -- Cl. 2-B-1, downgraded from Baa3 to C DAVID VOLKMAN: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtors: David O. Volkman Lois A. Volkman dba Volkman Reliance, LLC W14693 State Road 54 Galesville, WI 54630 Bankruptcy Case No.: 08-13223 Chapter 11 Petition Date: June 24, 2008 Court: Western District of Wisconsin (Eau Claire) Judge: Thomas S. Utschig Debtor's Counsel: Galen W. Pittman, Esq. Attorney at Law 300 N. 2nd Street Suite 210 P.O. Box 668 La Crosse, WI 54602-0668 Tel: 608-784-0841 galenpittman@centurytel.net Estimated Assets: $1 million to $10 million Estimated Debts: $500,000 to $1 million Debtors' list of their 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Citi Cards $23,240 P.O. Box 688903 Des Moines, IA 50368 CitiCorp Credit Services $23,188 P.O. Box 140516 Toledo, OH 43614 AMEX $22,814 P.O. Box 297812 Ft. Lauderdale, FL 33329 Associated Card Services $20,240 Discover Financial Services $19,126 Bank of America $18,524 Washington Mutual/Providian $14,545 HSBC/Menards $12,235 Chase $12,216 XCel Energy $10,837 HSBC Bank $10,740 NCO Financial Systems $10,561 GC Services $8,596 Corporate Receivables Inc. $7,648 Capital One $5,628 RBS Citizens, NA $5,430 CitiFinancial Retail Service $4,053 THD/CBSD $2,984 City of Winona $1,797 Kwik Trip $1,529 DEATH ROW: Court OKs $24MM Sale of Music Assets to Global Music --------------------------------------------------------------- The Hon. Vincent P. Zurzolo of the U.S. Bankruptcy Court for the Central District of California approved a sale of Death Row Records Inc.'s music assets to Global Music Group Inc. for $24 million cash, Jamie Mason of The Deal reports, citing Ashleigh Danker, Esq., at Kaye Scholer LLP, counsel to chapter 11 trustee R. Todd Neilson. The sale hearing was held on June 24, 2008, right after the auction, according to the report. During the auction, Global Music won over the $23 million offer of stalking-horse bidder, Entertainment One Ltd., The Deal says. Parties intend to close the sale as soon as possible, the report adds. Included in the assets sold are the Debtor's trademarks, copyrights, inventory and accounts receivable, videos, master recordings, compositions, digital and merchandise rights, artist agreements and certain liabilities, The Deal said. Rapper Tupac Shakur's $100,000 worth of unreleased music material is also part of the deal, The Deal notes. Kathleen March, Esq., at the Bankruptcy Law Firm PC is counsel to Global One. Sale to Warner Music Halted The Troubled Company Reporter said on March 27, 2008, that Mr. Neilson withdrew his request for approval of bidding procedures related to the auction of the Debtor's assets. Mr. Neilson, however, indicated he plans to re-file the request soon. On Feb. 8, 2008, the TCR related that although Mr. Neilson had received a $25 million cash offer from Warner Music Group Corp., which was declared lead bidder, to buy all of the record label's assets, including all recorded music and publishing rights, the chapter 11 trustee wanted to see if there were higher and better offers. So he set an auction for the Debtor's assets. Bid deadline was originally scheduled for April 11 and the auction for April 24. About Death Row Headquartered in Compton, California, Death Row Records Inc. -- http://www.deathrowrecords.net/-- is an independent record producer. The company and its owner, Marion Knight, Jr., filed for chapter 11 protection on April 4, 2006 (Bankr. C.D. Calif. Case No. 06-11205 and 06-11187). Daniel J. McCarthy, Esq., at Hill, Farrer & Burrill, LLP, and Robert S. Altagen, Esq., represent the Debtors in their restructuring efforts. R. Todd Neilson serves as chapter 11 Trustee for the Debtors' estate. When the Debtors filed for protection from their creditors, they listed total assets of $1,500,000 and total debts of $119,794,000. DELAWARE TIERS: Moody's Cuts Rating of $16.65MM Certs to B1 ------------------------------------------------------------ Moody's Investors Service has downgraded its rating of these certificates issued by Delaware TIERS Fixed Rate Credit-Backed Trust, Series 2004-34: Class Description: Trust Certificates Series 2004-34, U.S. $16,650,000 Certificates -- Prior Rating: Baa3, on review for possible downgrade -- Current Rating: B1 Moody's explained that the rating action reflects deterioration in the credit quality of the transaction's underlying reference portfolio, which consists primarily of corporate securities. DELPHI CORP: Committees Can Intervene in Appaloosa $2.55BB Lawsuit ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York has allowed the two statutory committees in Delphi Corp. and its debtor-affiliates' Chapter 11 cases to intervene in the $2,550,000,000 lawsuit against Appaloosa Management, LP, et al. Like the Official Committee of Unsecured Creditors, the Official Committee of Equity Shareholders sought the Court's authority to intervene in both of Delphi's adversary proceedings against UBS Securities, LLC, and Appaloosa Management and seven other parties. Unsecured creditors, whose interests are represented by the Creditors Committee, are expected to receive full recovery, in the form of shares of new common stock of reorganized Delphi, and equity holders will receive pro rata distribution of the new stock, pursuant to the terms of Delphi's plan of reorganization, which was already confirmed by the Court. Delphi, however, has been unable to implement the terms of the Plan after Appaloosa, et al., backed out from their commitment to invest $2,550,000,000 in Delphi. The Equity Committee sought the Court's approval to participate fully in the discovery process, the scheduled depositions, and in any settlement discussions related to the Adversary Proceedings. According to the Equity Committee's counsel, Peter R. Jerde, Esq., at Gregory P. Joseph Law Offices LLC, in New York, noted that the Equity Committee represents the interests of equity security holders and acts on their behalf. It is obliged to protect the interests of its constituency. Full participation of the Committee in all aspects of the Adversary Proceedings is necessary to protect its constituency's interests, Mr. Jerde said. In a stipulation approved by the Court, Delphi has agreed to the intervention of the Committees. The terms agreed by the parties include: -- The Committees will receive all pleadings and may participate in the discovery process; -- The Committees may file and respond to pleadings, motions, and memoranda or law, subject to consultation with, and advanced notice to Delphi; -- The Committee may be heard on any matter before the Court in hearings and trials, provided that Delphi will have the right to take lead on those matters; and -- The Committees may participate in any settlement discussions; Delphi will consult the the Committees in advance, making offers or counter-offers of settlement or accepting any offers of settlement. Plan Investors Want Dismissal of Adversary Proceedings A. UBS Securities James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton LLP, in New York, relates Delphi are blaming UBS and the other plan investors named for its inability to obtain exit financing commitments consistent with the terms of the Equity Purchase and Commitment Agreement dated August 3, 2007. According to Mr. Bromley, Delphi's failure to meet the conditions precedent of the EPCA was incontrovertibly established by the Court's finding that the financing proposal with General Motors Corporation, offered for approval by Delphi, was inconsistent with the terms of the EPCA because it was outside of Delphi's ordinary course of business and thus barred by Section 5(p)(ii) of the EPCA. Mr. Bromley asserts that pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, while a court "must accept as true all of the well-pleaded facts and consider those facts in the light most favorable to the plaintiff", a complaint should be dismissed when "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Mr. Bromley alleges that aside from Delphi's breach of the EPCA, several more factors constitute valid grounds why Delphi's complaints must be dismissed: (i) the EPCA unambiguously provides for monetary damages, giving Delphi an adequate remedy at law that negates its equitable claim as provided for by Section 11(b)(w)(x) of the EPCA, which provides that the aggregate liability of the the Investors for any reason, including, for any willful breach, for any act or omission occurring on or prior to December 10, 2007, will not exceed $100,000,000, and for any acts occurring thereafter, will not exceed $250,000,000, and that the liability will be on a joint and several basis, provided that the aggregate liability of UBS will not exceed $16,358,805; (ii) Delphi is judicially estopped from alleging that the EPCA permits specific performance provision to determine a Plan Investor's breach. Delphi has admitted in Court that specific performance under the EPCA is not available. If the Debtors succeed in the litigation against the Plan Investors, the EPCA expressly caps the Plan Investors' liability for breach at $100,000,000. Therefore, an attempt to enforce the EPCA against the wishes of the Plan Investors will yield a maximum recovery of $100,000,000 to the estates; (iii) Delphi fails to state a claim for specific performance, as Delphi does not allege that it is presently ready, willing and able to perform under the EPCA. Delphi in fact admits that it is not. Specific performance is only available under New York law if (1) there is a valid contract; (2) the moving party has substantially performed under the contract and is willing and able to perform its remaining obligations; (3) the opposing party is able to perform its obligations; and (4) the moving party has no adequate remedy at law. Accordingly, where a plaintiff is unable to perform its obligations under a contract, or cannot show that it is in a position to perform its obligations, specific performance is unavailable as a remedy; and (iv) Delphi's own actions prevent it from performing all of the conditions to the EPCA. It is simply not enough that a party seeking specific performance establishes that it was ready, willing, and able to perform at some date in the past. In order to receive of specific performance, the party seeking it must be able to demonstrate that it continues to be in a position to uphold its end of the bargain. B. Appaloosa Representing Appaloosa Management L.P. and A-D Acquisition Holdings LLC, J. Christopher Shore, Esq., at White & Case LLP, in New York, relates that Delphi's complaint is an attempt to evade the terms of its bargain in its bankruptcy case and divert attention from its strategies that failed. Appaloosa seeks the dismissal of the Adversary Proceeding, citing Delphi's failure to state a claim for relief. "If it is clear that Delphi has failed to provide grounds upon which its claim rests through factual allegations sufficient to raise a right to relief above the speculative level, the Court should dismiss the complaint", Mr. Shore argues. To recall, Delphi's adversary proceedings were lobbied as (i) a claim against all investors for the breach of the EPCA, (ii) a claim against all defendants under Section 1142 of the Bankruptcy Code, (iii) a claim against all defendants for equitable subordination and disallowance of their claims in Delphi's Chapter 11 case, (iv) a claim for relief against the commitment parties for breach of certain Commitment Letter Agreements effective December 10, 2007, and (v) a claim for relief against Appaloosa for fraud. Mr. Shore asserts the adversary proceeding against Appaloosa should be dismissed on these grounds: (i) Delphi has failed to plead that it is ready willing and able to close. Under New York law, a plaintiff must be ready, wiling and able perform the contract when the judgment is rendered. Delphi's request for the relief of specific performance is sufficient for this motion to dismiss to stand. (ii) Delphi has pleaded its failure to satisfy at least two conditions of the EPCA (1) The GM Agreement Condition One of Delphi's covenants in the EPCA is that it will not enter into any other agreement with GM that (a) is materially inconsistent with EPCA, (b) is outside the ordinary course of business, or (c) the terms of which will have a material impact on the investors' proposed investment in the company. The Court has found that a proposed transaction with GM involving the acceptance of up to $2,000,000,000 of new notes will be outside the ordinary course of business. (2) The Alternate Transaction Condition Section 9(a)(v) of the EPCA provides that an express condition to the Plan Investors' obligations to consummate the EPCA is that Delphi will not have "taken any action to seek any Bankruptcy Court approval relating to any Alternate Transaction." Alternate Transaction is defined as "any plan, proposal, offer or transaction that is inconsistent with the EPCA." Delphi failed to sufficiently plead waiver or estoppel of either of the 2 conditions. Delphi's assertion that the Plan Investors "waived" any conditions to the EPCA is directly contradicted by the parties' express agreement in Section 18 of the EPCA that the EPCA's terms and conditions may be waived only by a written instrument signed by all of the parties. Despite the fact that it is New York law that written waiver requirements are enforceable, Delphi has not plead the existence of any written waiver. (iii) The claims under the Commitment Letters fail when the claim under the EPCA fails. The AMLP Commitment Letter states, in relevant part: "Our commitment to fund the Investor's Purchase Obligation is subject to the satisfaction, or waiver in writing by AMLP and the Investor, of all of the conditions, if any, to the Investor's obligations at the time contained in the [EPCA]." Each of the Commitment Parties' commitments to fund under the Commitment Letters is expressly qualified by the requirement that all of the conditions to the EPCA either be satisfied or waived in writing. Because Delphi has pleaded the failure of conditions to the Plan Investors' obligations to consummate the EPCA, the Court must also dismiss the Second Claim for Relief for failure to state a claim for relief. (iv) The Court should not permit claims waived in the contracts. Even if the Court does not dismiss Delphi's two breach of contract claims in their entirety, it should strike any claims for damages which are precluded by the express terms of the EPCA and the Commitment Letters. As noted, the parties' contracts contain clauses expressly limiting the amount and type of damages available for breaches. Because these types of clauses are enforceable under New York law, the Court should strike any demands in the Complaint for damages which exceed the parties' agreed limitations on liability. (v) The Third Claim is duplicative. Delphi repeats and re- alleges that the First and Second Claims, adding only the request that the Court "exercise its authority under Section 1142 of the Bankruptcy Code, to order defendants to comply with their obligation under the Plan, the [EPCA] and the Commitment Letter Agreements." The Third Claim is an open plea for the Court to use its equity to craft a deal that Delphi was unable to obtain negotiations. Delphi alleged that Appaloosa Management repeatedly represented to Delphi that it was committed to providing the equity financing necessary for the consummation of the Plan, when in fact, AMLP allegedly had decided to avoid its commitments. According to Mr. Shore, to plead a cause of action for fraudulent inducement, Delphi must allege: (a) a misrepresentation or material omission of fact, (b) which was false and known to be false by the party making the misrepresentation, (c) made for the purpose of inducing Delphi to rely upon it, (d) reasonable or justifiable reliance by Delphi on the misrepresentation or material omission, and (e) resulting injury. Each of these statements, Mr. Shore asserts, must be pleaded with particularity in accordance with Rule 7009 of the Federal Rules of Bankruptcy Procedure, which incorporates Rule 9(b) of the Federal Rules of Civil Procedure. To satisfy Rule 9(b)'s pleading requirements for fraud, a complaint must (1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent. Delphi has failed to meet many, if not all of the relevant pleading requirements under the New York law and the Federal Rules, Mr. Shore contends.. C. Goldman Sachs Goldman Sachs, & Co. joins Appaloosa in seeking the dismissal of the adversary proceeding filed against them. It is apparent from the face of the documents submitted that Delphi never satisfied the conditions for closing under the investment Agreement, therefore, all of Delphi's claims against Goldman Sachs and the other investors should be dismissed, asserts Robinson B. Lacy, Esq., at Sullivan & Cromwell LLP, in New York. Mr. Lacy, however, clarifies that Goldman Sachs was not party to the other defendants' common interest agreement, and it stood ready to perform on condition that ADAH performed, as the EPCA expressly makes Goldman Sachs' obligation contingent upon the performance by Delphi and the other investors. Mr. Lacy notes that Delphi admits that ADAH -- not Goldman Sachs -- terminated the EPCA based on certain conditions that Delphi determined had not been fulfilled. Mr. Lacy contends that Goldman Sachs never breached the EPCA where conditions precedent to its performance were not satisfied. Goldman Sachs is not responsible for Delphi's subsequent termination of its debt financing commitment, which resulted in Delphi's difficulty to satisfy its own obligations for a closing under the investment agreement. There is no legal or contractual basis for Delphi's claims for specific performance or equitable subordination against Goldman Sachs, Mr. Lacy argues. Furthermore, the complaints hardly mention Goldman Sachs at all. Rather, virtually all of the allegations describe alleged conduct by Delphi, Mr. Lacy says. He adds that in its motion, Delphi clarified that the term "Plan Investors" will not include Goldman Sachs to describe positions of or actions of the other defendants. D. Harbinger and Pardus Harbinger Del-Auto Investment Company, Harbinger Capital Partners Master Fund I, Ltd., Pardus DPH Holding LLC and Pardus Special Opportunities Master Fund L.P., aver that contrary to Delphi's contentions that the Plan Investors' refusal to close on April 4, 2008 constituted breach, Delphi has failed to plead facts showing that the Plan Investors breached the EPCA willfully or otherwise. Terence K. McLaughlin, Esq., at Willkie Farr & Gallagher LLP in New York, asserts Delphi's claim for specific performance against Harbinger Del-Auto and Pardus DPH must be dismissed because: (1) the remedy of specific performance is not available where there is an adequate remedy at law, where the relief sought is the payment of money, (2) the EPCA's unambiguous language that the parties agreed to limit liability to a specific amount of damages, does not permit specific performance, (3) Harbinger Del-Auto and Pardus DPH, two of the Plan Investors who are parties to the EPCA, are shell entities which cannot perform under the EPCA, thus according to the terms of the EPCA, precluding order of specific performance against any of the defendants, and (4) Delphi does not, and cannot allege that it is ready, willing and able to perform its obligations under the EPCA. With respect to Delphi's premise that Harbinger and AMLP breached their obligations under their Commitment Letters, Mr. McLaughlin asserts Delphi's claim for specific performance under the Commitment Letters must be dismissed because: (a) the unambiguous language of the Commitment Letters limits Delphi remedies for a purported breach of the Commitment Letters to monetary damages only thus foreclosing the remedy of specific performance, and (b) the Court cannot pierce the corporate veil where Delphi knowingly contracted with asset-less corporations, and where its allegations are insufficient to state a claim for veil piercing under applicable New York law. Moreover, according to Mr. McLaughlin, Delphi has failed to plead facts showing that the equitable remedy of equitable subordination and disallowance is available under Harbinger Capital and Pardus Fund, the holders of the claims and interests in Delphi, or that their conduct was inequitable. Without a valid breach of contract claim against Harbinger Capital and Pardus Fund, there is no basis upon which Delphi can assert an equitable subordination and disallowance against them, Mr. McLaughlin contends. E. Merrill Lynch Merrill Lynch, Pierce, Fenner & Smith Incorporated, join in Appaloosa's request for dismissal of the Adversary Proceedings. Marc Falcone, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison LLP, in New York, reiterates Delphi's complaints should be dismissed because: (1) Delphi admits it did not comply the two express closing conditions in the EPCA. These were material components of the EPCA that had substantial economic significance to Merill and the other investors; (2) The EPCA prevents remedy of specific performance that Delphi seeks against any of the investors. This is because (i) of the damages cap in Section 11(b) of the EPCA, (ii) Delphi cannot compel at least three of the Investors to close because they were shell entities without funding except for the limited funds their affiliated entities were obliged to provide, (iii) specific performance is not available because money damages are an adequate recovery for the injuries alleged by Delphi, and (iv) specific performance is not available to a plaintiff who simply wants to use it to attempt an end run around a contractual damages cap; (3) Delphi does not permit the specific performance recovery that it seeks, and Delphi does not alter the rights and obligations of the parties of the EPCA; (4) Delphi alleges no facts warranting the equitable subordination or disallowance of Merrill's claims against the Delphi estate; Mr. Falcone argues that Delphi's claim for breach or contract should be dismissed because its intention to close based on $2,000,000,000 exit financing from General Motors Corporation would have been a clear breach of Section 5(p) of the EPCA. He asserts (i) Section 5(p) restricted transactions between Delphi and GM prior to the Closing Date, and (ii) the exit financing proposal sought by Delphi is inconsistent with Section 9(v) of the EPCA. Delphi's own admission in Court that it is not presently ready, willing and able to close on the EPCA also serves as a premise why its claim for specific performance of the EPCA should be dismissed, Mr. Falcone says. Delphi's claims does not warrant equitable subordination, Mr. Falcone avers. In order for Delphi to prevail against Merrill for equitable subordination, Delphi must show that Merrill engaged in inequitable conduct that resulted in injury to creditors or conferred an unfair advantage on Merrill. Delphi fails to allege any facts creating fiduciary relationship between Merrill and Delphi, but Delphi's allegation of a fiduciary relationship is directly contradicted by the EPCA, he asserts. 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. 134; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELTA FINANCIAL: Wants Plan Filing Period Extended to July 25 ------------------------------------------------------------- Delta Financial Corp. and its debtor-affiliates ask the U.S. Bakruptcy Court for the District of Delaware to further extend the periods during which they have the exclusive right to file a plan of reorganization, through July 25, 2008, and solicit and obtain acceptances of that plan, through September 26, 2008. David B. Stratton, Esq., at Pepper Hamilton LLP, in Wilmington, Delaware, relates that the Debtors, together with the Official Committee of Unsecured Creditors, began drafting and negotiating a plan of liquidation and reviewing the claims filed against the Debtors' estates. He says additional time is needed to finalize the Plan Documents. According to Mr. Stratton, a minimal extension would permit the Debtors to continue to facilitate consensual settlement discussions with parties-in-interest, including the Creditors Committee, which should lead to the formulation and confirmation of a viable plan of liquidation. A six-week extension is warranted because the Debtors, in good faith, have accomplished progress towards finalizing a confirmable plan, Mr. Stratton avers. He relates the Debtors focused their efforts on: i. winding down their businesses; ii. rejecting various leases and executory contracts; iii. minimizing claims against the estates; and iv. marketing and selling their assets. The Court will convene a hearing on the Debtors' request on July 17, 2008. By application of Rule 9006-2 of the Local Rules of Bankruptcy Practice and Procedures of the U.S. Bankruptcy Court for the District of Delaware, the Debtors' exclusive plan filing period is automatically extended through the conclusion of that hearing. Objections to the Debtors' extension request is due by July 3, 2008. Founded in 1982, Delta Financial Corporation (NASDAQ: DFC) -- http://www.deltafinancial.com/-- is a Woodbury, New York-based specialty consumer finance company that originates, securitizes and sells non-conforming mortgage loans. The company filed a chapter 11 petition on December 17, 2007 (Bankr. D. Del. Lead Case No. 07-11880). On the same day, three affiliates filed separate chapter 11 petitions -- Delta Funding Corp., Renaissance Mortgage Acceptance Corp., and Renaissance R.E.I.T. Investment Corp. -- (Bankr. D. Del. Case Nos. 07-11881 to 07-11883). The Debtors selected Morrison & Foerster LLP as their general bankruptcy counsel and David B. Stratton, Esq. and James C. Carignan, Esq. at Pepper Hamilton LLP as their counsel. The Debtors hired AlixPartners LLP as their claims agent. The Official Committee of Unsecured Creditors retained Landis Rath & Cobb LLP as its Delaware counsel. The Debtors' amended consolidated quarterly financial condition as of Sept. 30, 2007, showed $7,223,528,000 in total assets and $7,108,232,000 in total liabilities. The Debtors' petition listed D.B. Structured Products Inc. as their largest unsecured creditor holding a $19,500,000 claim. (Delta Financial Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). DUNMORE HOMES: Court Disallows $320,648 in Claims ------------------------------------------------- The Eastern District of California disallowed six claims against Dunmore Homes, Inc. on the basis that they were filed after the March 20, 2008 claims bar date: Claimant Claim No. Claim Amount -------- --------- ------------ Gibson & Skordal LLC 399 $3,627 Lewis Roca 406 6,644 Martin Munoz 411 12,799 Mary Ann Molles 409 1 Ryan Young Interiors 400 30,024 Sacramento Bee 408 267,553 The Debtor's objection with respect to Claim No. 410 filed by the Employment Development Department was withdrawn as moot. The objection with respect to Claim Nos. 403 and 404 filed by Simas Floor Company and LaVoie & Sons is continued at a later date. Based in Granite Bay, California, Dunmore Homes Inc. is a privately-owned homebuilder. The company filed for Chapter 11 protection on Nov. 8, 2007 (Bankr. S.D.N.Y. Case No. 07-13533). Maria A. Bove, Esq., and Debra I. Grassgreen, Esq., at Pachulski Stang Ziehl & Jones LLP, represent the Debtor in its restructuring efforts. The Official Committee of Unsecured Creditors has selected Morrison & Foerster LLP as its counsel in this bankruptcy proceeding. In January 2008, the U.S. Bankruptcy Court for the Southern District of New York ordered the transfer of Debtor's Chapter 11 case to the U.S. Bankruptcy Court for the Eastern District of California, Sacramento Division. The Debtor filed its plan of liquidation and an accompanying disclosure statement on March 21, 2008. The Debtor disclosed $20,743,147 in total assets and $250,252,312 in total debts in its schedules of assets and liabilities filed with the Court. (Dunmore Bankruptcy News; Bankruptcy Creditors'Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). EASTMAN KODAK: S&P's Rtng Unmoved by $1BB Stock Repurchase Program ------------------------------------------------------------------ Standard & Poor's Ratings Services said that Eastman Kodak Co.'s (B+/Stable /--) announcement that its board of directors has authorized a $1 billion stock repurchase program does not affect the ratings or outlook on the company at this time. Eastman Kodak's last share repurchase program was completed in 2001. The company received a $581 million federal tax refund, of which it expects to retain $575 million after state income taxes, and intends to use these proceeds to partially fund the share repurchases. The balance will be funded with cash on hand. Eastman Kodak had $2.2 billion of cash on hand at March 31, 2008. At March 31, 2008, the company had $1.6 billion in debt and $1.4 billion in debt-like obligations, including unfunded postretirement obligations (retiree health care), the present value of operating lease obligations, guarantees of third-party obligations, and asset retirement obligations. S&P expect Eastman Kodak's cash balance, even after the share repurchase program is complete, to remain substantial. The company also said it would provide investors with updated earnings guidance in its second quarter earnings call on July 31, 2008. If the new guidance is meaningfully below S&P's expectations, S&P could revise the outlook to negative. EAT AT JOE'S: March 31 Balance Sheet Upside-Down by $3,111,267 -------------------------------------------------------------- Eat at Joe's Ltd.'s consolidated balance sheet at March 31, 2008, showed $1,356,293 in total assets and $4,467,560 in total liabilities, resulting in a $3,111,267 total stockholders' deficit. At March 31, 2008, the company's consolidated balance sheet also showed strained liquidity with $1,342,033 in total current assets available to pay $4,467,560 in total current liabilities. The company reported a net loss of $495,022 on revenues of $353,627 for the first quarter ended March 31, 2008, compared with a net loss of $3,909 on revenues of $343,608 in the corresponding period in 2007. The net loss in the first quarter of 2008 includes a loss on sale of marketable securities of $262,707. 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?2eb3 Going Concern Doubt Robison, Hill & Co., CPAs, in Salt Lake City, expressed substantial doubt about Eat At Joe's Ltd.'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 net capital deficiency. About Eat at Joe's Based in Scarsdale, New Yor, Eat at Joe's Ltd. (OTC BB: JOES) -- http://www.eatatjoesltd.com/-- together with its subsidiaries, engages in the development, ownership, and operation of theme restaurants under the name, Eat at Joe's. As of Dec. 31, 2007, it owns and operates one theme restaurant in Philadelphia, Pennsylvania. EL PASO CHILE: Case Summary & 40 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: El Paso Chile Company, Inc. 909 Texas El Paso, TX 79901 Bankruptcy Case No.: 08-30949 Debtor-affiliate filing separate Chapter 11 petition: Entity Case No. ------ -------- Desert Pepper Trading Co. 08-30948 Type of Business: The Debtors pack and processes food spices, condiments, and drinks. See http://www.elpasochile.com/ Chapter 11 Petition Date: June 25, 2008 Court: Western District of Texas (El Paso) Judge: Leif M. Clark Debtors' Counsel: Bernard R. Given, II, Esq. (bernardgiven@beckgiven.com) Beck & Given, P.C. 5915 Silver Springs, Building 4 El Paso, TX 79912 Tel: (915) 544-5545 Fax: (915) 544-1620 Estimated Assets: $1,000,000 to $100,000,000 Estimated Debts: $1,000,000 to $100,000,000 A. A copy of El Paso Chile Company, Inc.'s list of its 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/txwb08-30949.pdf B. A copy of Desert Pepper Trading Co.'s list of its 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/txwb08-30948.pdf ENERLUME ENERGY: March 31 Balance Sheet Upside-Down by $4,424,443 ----------------------------------------------------------------- EnerLume Energy Management Corp.'s consolidated balance sheet at March 31, 2008, showed $2,546,707 in total assets and $6,971,150 in total liabilities, resulting in a $4,424,443 total stockholders' deficit. At March 31, 2008, the company's consolidated balance sheet also showed strained liquidity with $2,043,963 in total current assets available to pay $6,823,519 in total current liabilities. The company reported a net loss of $1,896,743 on net revenues of $993,461 for the third quarter ended March 31, 2008, compared with a net loss of $1,869,506 on net revenues of $1,312,545 in the same period ended March 31, 2007. The company noted that this fiscal quarter was negatively impacted by a decrease in revenue and a non-cash charge associated with stock compensation costs. 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?2eb0 Going Concern Doubt Mahoney Cohen & Company CPA P.C., in New York, expressed substantial doubt about Host America Corp., nka. EnerLume Energy Management Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended June 30, 2007, and 2006. The auditing firm reported that the company has suffered recurring losses from continuing operations, has negative cash flows from operations, and has a stockholders' deficiency at June 30, 2007. At March 31, 2008 the Company had a working capital deficiency and a stockholders' deficiency of $4,779,556 and $4,424,443 respectively, and a net loss of $4,983,247 for the nine months ended March 31, 2008. About EnerLume Energy Headquartered in Hamden, Conn., EnerLume Energy Management Corp. (OTC BB: ENLU) -- http://www.enerlume.com/-- through its subsidiaries, provides energy management conservation products and services in the United States. Its focus is energy conservation, which includes a proprietary digital microprocessor for reducing energy consumption on lighting systems, and the installation and design of electrical systems, energy management systems, telecommunication networks, control panels and lighting systems. EQUITY ONE: Moody's Gives Low B-Grade Underlying Ratings -------------------------------------------------------- Moody's Investors Service has published underlying ratings on these notes that are guaranteed by financial guarantors. The underlying ratings reflect the intrinsic credit quality of the notes in the absence of the guarantee. The current ratings on the following notes are consistent with Moody's practice of rating insured securities at the higher of the guarantor's insurance financial strength rating or any underlying rating that is public. Complete rating actions are: Issuer: Equity One ABS, Inc. 1998-1 Class Description: Class A-1 Notes -- Current Rating: Aa3 -- Financial Guarantor: Ambac Assurance Corporation (Aa3, outlook negative) -- Underlying Rating: Ba3 Class Description: Class A-2 Notes -- Current Rating: Aa3 -- Financial Guarantor: Ambac Assurance Corporation (Aa3, outlook negative) -- Underlying Rating: Baa3 Issuer: Equity One Mortgage Pass-Through Trust 1999-1 Class Description: Class A-1 Notes -- Current Rating: Aa3 -- Financial Guarantor: Ambac Assurance Corporation (Aa3, outlook negative) -- Underlying Rating: B3 Issuer: Equity One Mortgage Pass-Through Trust 2001-3 Class Description: Class AV-1 Notes -- Current Rating: Aa3 -- Financial Guarantor: Ambac Assurance Corporation (Aa3, outlook negative) -- Underlying Rating: B1 Class Description: Class AF-4 Notes -- Current Rating: Aa3 -- Financial Guarantor: Ambac Assurance Corporation (Aa3, outlook negative) -- Underlying Rating: B3 Issuer: Equity One Mortgage Pass-Through Trust 2002-2 Class Description: Class AV-1 Notes -- Current Rating: Aa3 -- Financial Guarantor: Ambac Assurance Corporation (Aa3, outlook negative) -- Underlying Rating: A1 Class Description: Class AF-4 Notes -- Current Rating: Aa3 -- Financial Guarantor: Ambac Assurance Corporation (Aa3, outlook negative) -- Underlying Rating: Baa1 Class Description: Class A-IO Notes -- Current Rating: Aa3 -- Financial Guarantor: Ambac Assurance Corporation (Aa3, outlook negative) -- Underlying Rating: Baa1 Issuer: Equity One Mortgage Pass-Through Trust 2002-4 Class Description: Class AV-1A Notes -- Current Rating: Aaa -- Financial Guarantor: Financial Security Assurance Inc. (Aaa) -- Underlying Rating: Aaa ESMARK INC: Accepts OAO Severstal's $775 Million Takeover Proposal ------------------------------------------------------------------ OAO Severstal boosted its takeover offer for Esmark Inc. by 13% to $775 million, Bloomberg News reported. In a press statement, OAO Severstal related that it entered into a definitive merger agreement to acquire Esmark Incorporated's common shares for $19.25 per share in cash. Bloomberg said that the offer tops a $19-a-share bid from India's Essar Steel Holdings Ltd. Bloomberg noted that Esmark stocks climbed 44 cents, or 2.2 %, to $20.47 a share in Nasdaq Stock Exchange composite trading on June 24. Bloomberg added that the shares fell 6.4% to $19.17 in electronic trading after the close of regular trading hours. According to the statement, Esmark's majority shareholder has entered into an agreement with Severstal to tender its shares in Severstal's tender offer. Severstal is also extending the expiration date of its tender offer for Esmark shares to July 18, 2008. The offer is expected to be accretive in 2009 based on current projections of costs and prices. In addition to the merger agreement, Severstal has entered into an agreement to purchase Esmark's aggregate $110 million term loan facilities from Essar Steel Holdings Ltd. Upon completion of the tender offer and the merger, Severstal will acquire all of Esmark's businesses, including: -- Wheeling-Pittsburgh Steel Corporation; -- Esmark Steel Services Group Inc. -- Remaining 50% ownership of the joint venture Mountain State Carbon, a blast furnace coking coal production facility in West Virginia. Severstal has entered into an agreement that satisfies the successorship clause of the United Steelworkers' collective bargaining agreement. Severstal's operating and restructuring plan, including its five year capital investment program, is designed to derive maximum value from Esmark through operational improvements, including: -- Maximization and optimization of Electric Arc Furnace production; -- Upgrades to enhance the quality and capacity of the Hot Strip Mill; -- Improvement of downstream operations, and; -- Leveraging synergies and geographical alignment between North American assets. Severstal expects the acquisition to play a critical role in its North American industrial strategy. The combined company will expands Severstal's product offerings to its customers. Severstal expects to realize substantial synergies with its U.S. operations in Dearborn, Michigan and Columbus, Mississippi. The addition of Esmark to Severstal's US portfolio will also offer significant operational and financial synergy potential with recently acquired Sparrows Point in Baltimore, Maryland and the Warren, Ohio based WCI Steel. In addition, full ownership of Mountain State Carbon will increase Severstal's vertical integration within the US market and solidify its raw material supply base. "We're pleased that Esmark's board of directors has recognized the value of our offer and has recommended our proposal to its shareholders," Alexei Mordashov, CEO of OAO Severstal, commented. "In addition to creating value for Esmark's shareholders, this acquisition positions Severstal as one of North America's leading integrated steel companies." "This deal is an extension of the progress that began with our acquisition of Rouge Industries in 2004 and that has continued through to our recent purchases of Sparrows Point and consistent with our agreement to purchase WCI Steel," Mr. Mordashov added. "With Esmark as part of our US portfolio, we're well positioned to provide domestic supply to a market that has a consistent demand for high quality steel." "Severstal has the skills and experience to achieve the industrial synergies from our North American plants," Gregory Mason, CEO of Severstal International and COO of OAO Severstal, commented. "This transaction benefits not only Severstal and Esmark, but all stakeholders and most importantly the people, the core of our company, and their communities." Under the terms of the merger agreement, Severstal will amend its tender offer to increase its offer price to $19.25 per share and Esmark will amend its Schedule 14D-9 to include the Esmark board of director's recommendation that Esmark shareholders tender their shares to Severstal pursuant to the amended tender offer. A revised offer to purchase will be distributed to Esmark shareholders, and the scheduled expiration date for the amended tender offer is 12:00 midnight, Eastern Daylight Time, on July 18, 2008, unless extended. The offer and related transactions contemplated by the merger agreement are subject to the satisfaction of customary closing conditions. Merrill Lynch is acting as lead financial advisor, Citi is acting as financial advisor, and Skadden Arps Slate Meagher & Flom LLP is acting as legal counsel, to Severstal. MacKenzie Partners Inc. is acting as Information Agent for the tender offer. About OAO Severstal OAO Severstal (LSE: SVST; RTS: CHMF) is an international metals and mining company with a listing on the Russian Trading System and the London Stock Exchange. Incorporated in 1993, the company focuses on high value added and unique niche products and has a successful track record of acquiring and integrating high-quality assets in North America and Europe. Severstal owns mining assets in Russia, thus securing its supplies of raw materials. About Esmark Inc. Based in Wheeling, West Virginia, Esmark Inc. (NASDAQ:ESMK) -- http://www.esmark.com-- formerly Wheeling-Pittsburgh Corporation, is a holding company that, together with its subsidiaries and joint ventures, produces steel and steel products using both integrated and electric arc furnace technology. The company's principal operating subsidiary is Wheeling-Pittsburgh Steel Corporation. The company produces flat rolled steel products for steel service centers, converters, processors, and the construction, container and agriculture industries. Its product offerings focus on higher value-added finished steel products, such as cold rolled products, fabricated products, and tin and zinc coated products. Higher value-added products comprised 60.8% of the company's shipments during the year ended Dec. 31, 2006. In addition, it produces hot rolled steel products, which represent the least processed of its finished goods. In March 2008, the company completed the sale of its minority equity interest in Wheeling-Nisshin Inc. to Nisshin Holding Inc. Going Concern Doubt On May 20, Deloitte & Touche LLP of Pittsburgh, Pennsylvania, wrote to the Board of Directors and stockholders of Esmark Incorporated that after auditing the company's financial statements for the year ended December 31, 2007, it has substantial doubt regarding the company's ability to continue as a going concern because the company has been unable to refinance its debt on a long-term basis. In its 2007 Annual Report, the company disclosed that its current revolving credit facilities are due and payable no later than September 30, 2008. The company's ability to refinance these obligations will be dependent on a number of factors including the company's ability to borrow funds from the same or alternative lenders in a difficult lending environment, the company's ability to forecast and generate cash flow from future operations and the company's ability to structure alternative capital transactions with third parties and, if necessary, obtain proceeds from the disposition of assets. On April 30, 2008, the company agreed to the material terms of a proposed tender offer and merger with Essar Steel Holdings Limited for the purchase of all of the outstanding common stock of the company for $17.00 per share. The company also entered into a binding commitment with Essar for a $110,000 term loan, the proceeds of which were used to repay the Company's outstanding term loan in the amount of $79 million and to provide additional liquidity to the Company. This proposed tender offer is subject to a 52-day "right to bid" period as set forth in the collective bargaining agreement with the USW which may or may not result in a competing bid or offer from another concern. If the proposed merger with Essar is terminated under certain circumstances, the company would be required to pay Essar a "breakage fee" of $20.5 million. On May 16, 2008, the USW publicly announced a demand that Esmark repudiate the Essar agreements and asserted that those agreements with Essar are in direct violation of the company's collective bargaining agreement with the USW. In a non-binding proposal dated May 20, 2008, OAO Severstal (Severstal) offered to acquire all of the outstanding common stock of the Company for $17.00 per share. Severstal also stated that they are prepared to enter into interim liquidity substitute financing arrangements upon entering into a mutually acceptable definitive merger agreement. Severstal represented that they have entered into an agreement that satisfies the successorship clause of the company's collective bargaining agreement and that the USW informed them that it will waive its right to bid provisions in the collective bargaining agreement with respect to the Severstal proposal. EXPRESS LLC: Moody's Hikes Rating of Secured Term Loan to B1 ------------------------------------------------------------ Moody's Investors Service affirmed Express, LLC's debt ratings to reflect the company's recent operating improvement, with comparable store sales results in the low teens for the thirty week period ended Feb. 2, 2008, strong EBITDA improvement and healthy operating cash flow generation relative to the amount of its funded debt. Concurrently, Moody's raised the rating on the company's $125 million senior, secured term loan to B1 from B2 based on improved loss given default, to (LGD3, 38%) from (LGD4, 56%). The rating outlook is stable. Express' B2 corporate family rating reflects the company's improved operating performance, as well as its national diversification and its well recognized brand name. Credit metrics are strong for the rating, as debt/EBITDA improved to below 4.2x for the pro forma twelve month period ending Feb. 2, 2008, and coverage (EBITA/IE) improved to nearly 3.0x. Liquidity also remains strong, and is supported by significant operating cash flow, full availability under a $200 million asset based revolving credit facility (unrated) and expectation for strong headroom under term loan financial covenants. The rating is constrained by the inherent volatility in the specialty apparel retail sub segment in which the company operates, the company's high seasonality, modest scale and profitability relative to other global retailers, and the ongoing expectation for shareholder friendly financial policies given the approximately 75% ownership by a financial sponsor. The stable outlook reflects Moody's expectation that the company will maintain healthy liquidity and credit metrics, and incorporates the expectation that operating margins will moderately improve, but remain well below industry peer group. Upward rating pressure would require consistent positive comparable store sales coupled with improving operating margins, as evidenced by unadjusted EBITA margins rising above 7.0% and Debt/EBITDA remaining comfortably below 5.0x on a sustainable basis. A downgrade would occur if operating performance weakens, liquidity erodes, or should the company finance sizeable returns to shareholders with debt, such that Debt/EBITDA increases above 6.5x, EBITA/IE falls below 1.0x, and free cash flow turns negative. These ratings were affirmed: Express, LLC -- Corporate family rating at B2 -- Probability-of-default rating at B2 The following ratings were upgraded: Express, LLC -- $125 million senior secured term loan to B1 (LGD3, 38%) from B2 (LGD4, 56%) -- The ratings outlook is stable Express LLC, headquartered in Columbus, Ohio, is a specialty apparel retailer. The company operates 587 mall based stores in the United States. Pro forma revenues for the fiscal year ended Feb. 2, 2008 were approximately $1.8 billion. EXPRESS LLC: S&P Lifts Rating to B from B- on Improved Performance ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its corporate credit and bank loan ratings on Columbus, Ohio-based specialty retailer Express LLC to 'B' from 'B-'. The bank loan recovery rating remains at '4', indicating the expectation for average (30%-50%) recovery in the event of a payment default. The outlook is stable. "The rating action reflects Express' progress in improving its operating performance," said Standard & Poor's credit analyst Diane Shand, "and our expectation that the company will at least maintain its credit metrics pro forma for a $293.5 million dividend it will be paying its investors." The company has reported 17 straight months of positive same-store sales and generated a 6% increase in 2007. In addition, it boosted its operating margin to 17.1% in 2007 from 13.4% in 2006 due to sales leverage, good cost controls, and store closings. FERRELLGAS: Moody's Assigns Ba3 Rating to Planned $250MM Notes -------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating (LGD 3, 43%) to Ferrellgas, LP's (OLP) proposed $250 million senior notes due 2014. The rating outlook is negative. OLP is the wholly owned operating partnership subsidiary of Ferrellgas Partners, LP. The proceeds from the offering will be used to refinance upcoming debt maturities and reduce borrowings outstanding on Ferrellgas' senior unsecured revolving credit facilities. "The bond offering will improve Ferrellgas' liquidity position by providing funds to refinance upcoming debt maturities and free up capacity under the partnership's revolving credit facility," Pete Speer, Moody's vice-president/senior analyst commented. "However, the outlook remains negative based on Ferrellgas' high leverage and increased business risk related to customer conservation trends and commodity price risk management." Ferrellgas' corporate family rating and probability of default rating are Ba3 and the partnership's $268 million senior notes due 2012 are rated B2 (LGD 6, 92% changed from 91%). The OLP's existing $250 million senior unsecured notes due 2014 are rated Ba3 (LGD 3, 43%). Moody's does not rate the OLP's senior unsecured bank facilities or the OLP's approximately $277 million of private placement senior unsecured notes. Ferrellgas' Ba3 CFR is supported by its leading market position and geographic diversification. The partnership is the second largest retail marketer of propane in the United States and services approximately one million propane customers from locations in all 50 states and Puerto Rico. Through its Blue Rhino brand, it is the largest retail distributor of propane cylinders for grills, with an estimated 50% market share. Ferrellgas has also invested heavily in system and process improvements over the past three years, which has yielded significant improvement in operational efficiency, pricing management and margins. The ratings are pressured by very high leverage and weak coverage ratios in comparison to the Ba3 rated propane and other midstream peers. Ferrellgas had reduced its adjusted debt/EBITDA from near 7x at the end of fiscal year 2004 following its Blue Rhino acquisition to 5x at July 31, 2007 through steady increases in EBITDA over the period. The large and rapid increase in propane prices during this past heating season has resulted in elevated customer conservation driven volume declines and losses related to the partnership's commodity price exposures related to its fixed and indexed priced sales agreements with customers. The trends are expected to reduce FY 2008 EBITDA somewhat from prior year and thereby increase debt/EBITDA to around 5.25x. The outlook was changed to negative in May 2008 to highlight Moody's concern that the headwinds of high propane prices and declining volumes have reduced the likelihood that the partnership will be able to reduce its leverage to levels more consistent with its Ba3 rating. In order to return to a stable outlook, Ferrellgas' leverage needs to be reduced to around 4.5x on a sustainable basis over the course of the next fiscal year. If the partnership's leverage remains elevated or if it increases further due to debt funded acquisitions then the ratings could be downgraded. Furthermore, if there are additional significant losses related to Ferrellgas' commodity risk management activities or further declines in operating performance then the ratings could be downgraded. Ferrellgas Partners, LP is a publicly traded master limited partnership based in Overland Park, Kansas. FEDERAL-MOGUL: Court Denies Injunction Demand of Asbestos PI Trust ------------------------------------------------------------------ The Hon. Judith K. Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware denies a request by the Federal-Mogul Asbestos Personal Injury Trust for preliminary injunction after finding that the Plan Documents are controlling on Cooper Industries, LLC's right to implement the Plan B Settlement, and correspondingly to terminate the Addendum of Additional Provisions incorporated into the Plan. Judge Fitzgerald holds that inasmuch as the Court has entered the order confirming the Debtors' Plan of Reorganization, it would be inappropriate to issue an order granting injunctive relief, which would have the effect of changing the Plan Documents and the Plan Settlement. Judge Fitzgerald directs Cooper or any other party who claims to have authority to either implement the Plan B Settlement or terminate the Plan A Settlement to, within 24 hours of the exercise any of authority, notify the Court of any action. Judge Fitzgerald also denies the Trust's request for leave to file an omnibus reply to the objections. SimmonsCooper Claimants Respond Certain asbestos-related personal injury claimants with claims against Pneumo Abex LLC, represented by SimmonsCooper LLC, tell the Court that they do not oppose the proposed Plan A Settlement. The SimmonsCooper Claimants believe, and support, the Plan A Settlement reflects the best compromise among the Pneumo Abex Claims, the beneficiaries of the Federal-Mogul Asbestos Personal Injury Trust, and the obligations of the Debtors and the Pneumo Parties. "[U]nless the Court is in a position to approve the Plan A Settlement promptly, the SimmonsCooper Claimants cannot agree to have their claims against the Pneumo Parties enjoined (albeit temporarily) in vain," Robert W. Phillips, Esq., at SimmonsCooper LLC, in East Alton, Illinois, tells the Court. Mr. Phillips asserts that a group of SimmonsCooper Claimants -- those who hold trial dates scheduled for the remainder of 2008 -- will be irreparably harmed by the issuance of a temporary injunction due to the de facto cancellation of their scheduled trials. He adds that another group of SimmonsCooper Claimants -- those who hold trial dates scheduled during the calendar year 2009 -- will also be irreparably harmed by the issuance of an injunction in that they will be unable to conduct discovery against or regarding Pneumo Abex during the pendency of the injunction, and will therefore be unable either to develop their case or to comply with various state court case management orders concerning the timing and completion of discovery and preparation for trial. In contrast, Mr. Phillips points out, the Pneumo Parties bargained for, accepted, and implemented an agreement that provides for either Plan A and Plan B, and further bargained for the mechanism of "Cooper Resolved Claims" whereby the Pneumo Parties will be reimbursed by the Asbestos PI Trust for any Pneumo Abex Claims paid by the Pneumo Parties between January 2006 and the date the Trust is created. Thus, he asserts, there is little economic justification for the Pneumo Parties to complain about the delay in implementation of the proposed Plan A Settlement. "The [Asbestos PI] Trust is essentially arguing that the Court should sacrifice the interests of the SimmonsCooper Claimants and other Pneumo Abex Claimants for the benefit of the remaining Trust claimants," Mr. Phillips contends. Trust Wants to File Omnibus Reply The PI Trust seeks leave to file an omnibus reply to address the objections raised by DaimlerChrysler Corporation, Volkswagen of America, Inc., Ford Motor Company, PepsiAmericas, Inc., the Insurance Companies, the Pneumo Asbestos Claimants, and the SimmonsCooper Claimants. According to the Trust, the issues raised by the objections relate to jurisdiction, standing, and other matters that were not fully addressed in the Preliminary Injunction Motion. About Federal-Mogul Federal-Mogul Corporation -- http://www.federal-mogul.com/-- (OTCBB: FDMLQ) is a global supplier, serving the world's foremost original equipment manufacturers of automotive, light commercial, heavy-duty, agricultural, marine, rail, off-road and industrial vehicles, as well as the worldwide aftermarket. Founded in Detroit in 1899, the company is headquartered in Southfield, Michigan, and employs 45,000 people in 35 countries. Aside from the U.S., Federal-Mogul also has operations in other locations which includes, among others, Mexico, Malaysia, Australia, China, India, Japan, Korea, and Thailand. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl & Jones, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. On March 7, 2003, the Debtors filed their Joint Chapter 11 Plan. They submitted a Disclosure Statement explaining that plan on April 21, 2003. They submitted several amendments and on June 6, 2004, the Bankruptcy Court approved the Third Amended Disclosure Statement for their Third Amended Plan. On July 28, 2004, the District Court approved the Disclosure Statement. The estimation hearing began on June 14, 2005. The Debtors submitted a Fourth Amended Plan and Disclosure Statement on Nov. 21, 2006, and the Bankruptcy Court approved that Disclosure Statement on Feb. 6, 2007. The Fourth Amended Plan was confirmed by the Bankruptcy Court on Nov. 8, 2007, and affirmed by the District Court on Nov. 14. Federal-Mogul emerged from Chapter 11 on Dec. 27, 2007. (Federal-Mogul Bankruptcy News, Issue No. 169; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Jan. 10, 2008, Moody's Investors Service confirmed the ratings of the reorganized Federal-Mogul Corporation -- Corporate Family Rating, Ba3; Probability of Default Rating, Ba3; and senior secured bank credit facilities, Ba2. The outlook is stable. The financing for the company's emergence from Chapter 11 bankruptcy protection has been funded in line with the structure originally rated by Moody's in a press release dated Nov. 28, 2007. As reported in the Troubled Company Reporter on Jan. 7, 2008, Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to Southfield, Michigan-based Federal-Mogul Corp. following the company's emergence from Chapter 11 on Dec. 27, 2007. The outlook is stable. FERRELLGAS LP: S&P Assigns 'B+' Rating to $250MM Unsecured Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' issue credit rating to Ferrellgas L.P.'s $250 million senior unsecured notes due 2014 and, at the same time, assigned its '3' recovery rating to this debt. The '3' recovery rating indicates that lenders can expect meaningful (50%-70%) recovery in the event of a payment default. Standard & Poor's also affirmed the 'B+' corporate credit rating on Ferrellgas Partners L.P. and Ferrellgas. The offering proceeds will refinance debt on Ferrellgas's revolving credit facility. The outlook remains stable. As of April 30, 2008, Overland Park, Kansas-based retail and wholesale propane distributor Ferrellgas Partners (Ferrellgas L.P.'s parent) had debt, adjusted for capitalized operating leases and accounts receivable securitization, of $1.26 billion. The ratings on retail propane distributor Ferrellgas are based on the consolidated credit profile of its parent, Ferrellgas Partners. The partnership's weak business risk profile and highly leveraged financial profile restrict the ratings on Ferrellgas Partners. Rating concerns include a challenging operating environment characterized by volume declines and margin pressure, high leverage, a weaker retail operating performance than its peers, and acquisition risk. The partnership's flexible cost structure, large, geographically diverse retail footprint, and portable propane tank exchange business, which offsets some of the seasonality involved in Ferrellgas Partners' retail operations, partially mitigate the rating concerns. The outlook on Ferrellgas Partners is stable. "The outlook is based on the expectation that the company will maintain its current financial metrics and operating performance in the near term," noted Standard & Poor's credit analyst Michael V. Grande. Sustained improvement in financial performance, which could come from deleveraging and sustainable margin improvement, would be necessary for a positive outlook or upgrade. Conversely, Standard & Poor's could lower the ratings or revise the outlook to negative if the financial profile deteriorates due to liquidity constraints, distribution coverage below 1.1x for several quarters, weaker margins resulting in significantly lower cash flow, increased leverage consistently above 6x, or weaker-than- expected results from acquisitions. FIRST FRANKLIN: S&P Issues C & D Ratings to 17 Classes of Certs. ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 36 classes of asset-backed certificates issued by six First Franklin Mortgage Loan Trust transactions. Concurrently, S&P affirmed its ratings on the remaining classes from these series. The downgrades reflect continued poor collateral performance that has allowed credit enhancement to decline to levels that are insufficient to maintain the previous ratings. Monthly losses have generally exceeded monthly excess interest cash flow, causing the complete erosion of overcollateralization to all six transactions. As of the May 2008 remittance report, cumulative realized losses were(series: percent, amount): -- 2003-FFH1: 4.46%, $25,994,389; -- 2003-FFH2: 3.91%, $41,032,785; -- 2004-FFH1: 4.14%, $32,828,971; -- 2004-FFH2: 4.10%, $49,200,122; -- 2004-FFH3: 4.13%, $62,014,032; and -- 2004-FFH4: 4.67%, $34,200,414. In addition, all six series have sizable loan amounts that are severely delinquent, which strongly suggests that the unfavorable performance trends are likely to continue and further compromise available credit support. The severe delinquencies are as follows (series: percent, amount): -- 2003-FFH1: 25.34%, $11,012,000; -- 2003-FFH2: 20.49%, $16,430,000; -- 2004-FFH1: 19.88%, $11,723,000; -- 2004-FFH2: 27.25%, $41,291,000; -- 2004-FFH3: 24.44%, $59,217,000; and -- 2004-FFH4: 28.87%, $42,386,000. The affirmations are based on credit support percentages that are sufficient to maintain the current ratings, despite the poor performance trend. The underlying collateral consists of fixed- and adjustable-rate, fully amortizing and balloon payment mortgage loans secured by first liens on one- to four-family residential properties. The weighted average loan-to-value ratios of the mortgage loans are generally greater than 90%. These mortgages were originated or purchased by First Franklin Financial Corp. in accordance with guidelines that target borrowers with less-than-perfect credit histories. The guidelines are intended to assess both the borrower's ability to repay the loan and the adequacy of the value of the property securing the mortgage. Ratings Lowered First Franklin Mortgage Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2003-FFH1 M-1 BB BBB 2003-FFH1 M-2 CCC B 2003-FFH1 M-4 D CCC 2003-FFH2 M-1A B BBB 2003-FFH2 M-1B B BBB 2003-FFH2 M-2 CCC B 2003-FFH2 M-3 CC CCC 2003-FFH2 M-4 D CCC 2004-FFH1 M-1 AA- AA+ 2004-FFH1 M-2 B BBB 2004-FFH1 M-3 B- BB 2004-FFH1 M-4 CCC B 2004-FFH1 M-5 CCC B- 2004-FFH1 M-6 CC CCC 2004-FFH1 M-7 D CCC 2004-FFH2 M-3 BBB AA- 2004-FFH2 M-4 B+ BBB 2004-FFH2 M-5 B BB 2004-FFH2 M-6 B- B+ 2004-FFH2 M-7 CCC B 2004-FFH2 M-8 CC CCC 2004-FFH2 M-9 D CCC 2004-FFH2 B-1 D CCC 2004-FFH3 M-2 A AA 2004-FFH3 M-3 BB+ AA- 2004-FFH3 M-4 B+ A+ 2004-FFH3 M-5 B A 2004-FFH3 M-6 B- BBB+ 2004-FFH3 M-7 CCC BB 2004-FFH3 M-8 CCC B 2004-FFH3 M-9 CC B- 2004-FFH3 B-1 D CCC 2004-FFH4 M-6 BBB+ A- 2004-FFH4 M-7 BBB- BBB+ 2004-FFH4 M-8 BB BBB- 2004-FFH4 M-9 B BB Ratings Affirmed First Franklin Mortgage Loan Trust Series Class Rating ------ ----- ------ 2003-FFH1 M-3 CCC 2004-FFH2 M-1 AA+ 2004-FFH2 M-2 AA 2004-FFH3 I-A2 AAA 2004-FFH3 II-A4 AAA 2004-FFH3 M-1 AA+ 2004-FFH4 M-1 AA+ 2004-FFH4 M-2 AA 2004-FFH4 M-3 AA- 2004-FFH4 M-4 A+ 2004-FFH4 M-5 A FIRST MARBLEHEAD: Says Goldman Sachs' Cash Investment is Delayed ---------------------------------------------------------------- First Marblehead Corporation, which packages student loans into asset-backed securities, said a cash infusion from Goldman Sachs Group Inc. would be delayed, The Wall Street Journal related. On Dec. 21, 2007, First Marblehead entered into an investment agreement with affiliates of GS Capital Partners under which GSCP invested $59.8 million to acquire shares of the company's convertible preferred stock, all of which were converted into 5.3 million shares of First Marblehead common stock. In a press statement, First Marblehead stated that it was informed by GS Capital Partners that GSCP has not yet received all applicable regulatory approvals and determinations necessary to complete the investment. These approvals and determinations are still pending, and GSCP is working to obtain approvals and determinations. The investment is expected to close in the company's fiscal quarter ending Sept. 30, 2008, after completion of the company's financial statements for the fiscal year ending June 30, 2008. The company and GSCP anticipated a second step of the investment would be completed by the end of the company's fiscal year, subject to receipt of applicable regulatory approvals and determinations and satisfaction of other conditions. WSJ stated that on Thursday, Marblehead's shares sold at $2.92, down 9.9%, in 4 p.m. composite trading on the New York Stock Exchange. About The First Marblehead First Marblehead Corporation -- http://www.firstmarblehead.com/-- provides financial solutions that help students achieve their dreams. The company helps meet the growing demand for private education loans by providing national and regional financial institutions and educational institutions, well as businesses and other enterprises, with an integrated suite of design, implementation and securitization services for student loan programs. First Marblehead supports responsible lending for borrowers and is a strong proponent of the smart borrowing principle, which encourages students to access scholarships, grants and federally guaranteed loans before considering private education loans. At Dec. 31, 2008, the company's balance sheet showed total assets of $1,584,564,000, total liabilities of $663,514,000 and total stockholders' equity of $921,050,000 * * * As reported by the Troubled Company Reporter on April 9, 2008, First Marblehead's stocks dropped 37% after The Education Resources Institute, guarantor of its loans, filed for Chapter 11 protection. According to Bloomberg News, First Marblehead declined $2.84 to $4.86 in New York Stock Exchange trading after TERI's bankruptcy filing. The descent is the biggest one-day drop in the securities' record and reduces First Marblehead below 89% for the past 12 months. First Marblehead is scheduled as TERI's largest unsecured creditor, holding claims of $11 million, according to papers TERI filed in bankruptcy court. First Marblehead said it is analyzing the implications of TERI's Chapter 11 filing on its lenders, investors, borrowers, well as the The National Collegiate Student Loan Trusts. FOOD BAZAAR: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Food Bazaar, Inc. 3600 N. Sharon Amity Road Charlotte, NC 28205 Bankruptcy Case No.: 08-31055 Type of Business: The Debtor provides distribution services. Chapter 11 Petition Date: May 22, 2008 Court: Western District of North Carolina (Charlotte) Judge: George R. Hodges Debtor's Counsel: A. Burton Shuford, Esq. Email: jmarshall@shufordhunterpllc.com 301 S. McDowell St., Ste. 1012 Charlotte, NC 28204 Tel: (704) 377-8764 Fax: (704) 377-0590 http://shufordhunterpllc.com/ Estimated Assets: Less than $50,000 Estimated Debts: $1 million to $10 million The Debtor did not file a list of its largest unsecured creditors. FORD MOTOR: Fitch to Review Ratings Over Next Six Weeks ------------------------------------------------------- Fitch has not taken a rating action on Ford Motor Company and Ford Motor Credit Co LLC, but will be reviewing the existing ratings over the next six weeks. Although Ford is viewed as having more than adequate liquidity and resources to weather current conditions through 2009, unrelenting industry and economic pressures make it increasingly likely that Ford will be unable to maintain its existing ratings. A key determinant in the review will be the performance of Ford Credit. Among the domestic manufacturers, Ford is the most reliant on the U.S. pickup truck market, which has seen steep declines due to weak economic conditions in the homebuilding market and soaring gas prices. Industry pickup sales have declined well outside a range that could be explained by cyclical fluctuations, confirming that a permanent market shift away from pickup trucks has taken place. Ford has been aggressive in addressing overcapacity in the pickup and SUV segments over the last several years, but has been unable to stay ahead of a rapidly deteriorating market. Fitch expects that there is some pent-up demand accruing in the pickup market, although a rebound is now expected to be more muted and more distant that expected, and may not occur until 2010. Ford's lineup at the lower end of the product spectrum, the Escape, Fusion and Focus, as well as the Edge crossover, have held up relatively well in the current environment, providing Ford with the best product balance among the domestic manufacturers over the intermediate term. The most recent surge in gas prices and the corresponding shift in consumer preferences has required an acceleration of restructuring efforts, and shortened the timeline over which the domestic manufacturers are required to transform their product lineups and manufacturing footprint in line with market demand. Commodity prices have continued to be a stronger headwind than anticipated, and higher steel costs will now be contracted in for the next several years. Recouping these cost increases through pricing will be required over the long-term, but will be unlikely in the current environment. Fitch's ongoing assessment of Ford and Ford Credit will focus on expected cash drains through 2009 and the performance of Ford Credit. Ford's current cash cushion is expected to leave the company with more than adequate liquidity through 2009, keeping the company above a minimum comfort level of approximately $10 - 11 billion. Incremental asset sales and financing are expected over the near term to supplement existing liquidity. Ford has been opportunistic in using equity-for-debt swaps in muting the growth in debt. It should also be noted that a portion of the cash drain in 2008 is associated with the cash funding of the recent UAW healthcare agreement, as opposed to issuing new short-term debt. In 2010, Ford will begin to realize the benefits of this VEBA agreement, and could also benefit from a rebound in economic conditions. A primary focus of the review will be on Ford Credit and continued access to cost-effective financing, either through the securitization market or other sources. To date, Ford Credit's underwriting standards have been consistent, and loss experience has been in line with expectations given the economic cycle. However, with the unsettled capital markets, the steep decline in pickup and SUV residuals, extended contract terms and a weakened consumer, underlying performance has weakened and may diminish investor appetite for auto loans at economically sustainable terms. In the event that the financing markets are expected to be less accommodative over the near-to-intermediate term, Fitch could potentially lower the IDR to 'CCC'. FORT DENISON: Moody's Junks Rating of $225MM Floating Rate Notes ---------------------------------------------------------------- Moody's Investors Service has downgraded the rating of one class of notes issued by Fort Denison Funding, Ltd. Class Description: $225,000,000 Class A-1 Floating Rate Notes Due 2047 -- Prior Rating: B1, on review for possible downgrade -- Current Rating: Ca Fort Denison Funding, Ltd. is a collateralized debt obligation backed primarily by a portfolio of structured finance securities. On Dec. 11, 2007 the transaction experienced an event of default caused by a failure of the Class A Overcollateralization Ratio to be greater than or equal to the required amount set forth in Section 5.1(d) of the Indenture dated Feb. 14, 2007. That event of default is continuing. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, certain parties to the transaction may direct the Trustee to take particular actions with respect to the Collateral and the Notes. In this regard, Moody's has received notice from the Trustee that it has been directed by a majority of the controlling class to declare the principal of and accrued and unpaid interest on the Notes and the Class C Loan to be immediately due and payable. The rating actions taken reflect continuing deterioration in the credit quality of the underlying portfolio and the increased expected loss associated with the transaction. Losses are attributed to diminished credit quality on the underlying portfolio. GENERAL MOTORS: Investors See 75% Chance of Default in 5 Years -------------------------------------------------------------- According to Anastasija Johnson at Reuters, credit investors see a 75% chance General Motors Corp. would default on its debt in the next five years despite GM's assurance on Thursday that it has sufficient liquidity. Various reports note that GM's shares sank to a 53-year low on Thursday on concerns about liquidity, equity dilution and a potential dividend cut, heightening speculation that GM doesn't have enough cash to finance its turnaround. The Wall Street Journal notes that GM stock fell $1.38, or 11%, to $11.43 in 4 p.m. composite trading on the New York Stock Exchange. GM's syndicated loans due Nov. 27, 2013 trade at 91.96 cents on the dollar as of June 20, 2008, according to loan pricing data compiled by the Journal. The instrument carries interest at LIBOR plus 275 basis points, and Ba3 loan rating from Moody's and BB- rating from S&P. John D. Stoll and Serena Ng at The Wall Street Journal relates that, in a research note Thursday, Goldman Sachs said it believes GM will try to raise more cash, which could lead to "significant shareholder dilution" and possibly a cut to the company's dividend. GM indicated there are no debt covenants tied to the market value of the company, WSJ notes. WSJ notes that, in an interview last month, George Fisher, GM's lead independent director, said a takeover offer isn't a concern given the large amount of debt GM carries on its books. WSJ relates that Kenneth A. Elias, a partner at Maryann Keller & Associates, an automotive-consulting firm, said any buyer would have to invest billions of dollars beyond the purchase price to restructure GM and pay off its liabilities. GM, according to WSJ, is expected to end the second quarter with about $20,000,000,000 in cash, the lowest balance it has reported in recent years. Analysts and ratings firms believe the company will go through at least $10 billion this year, WSJ relates. Buckingham Research analyst Joe Amaturo, according to WSJ, cut his target on the stock to $8 on Tuesday, saying, "We continue to believe GM has liquidity issues and will have to raise capital given the significant automotive cash burn that GM is likely to experience in 2009 and 2010." The cost to insure GM's debt with credit default swaps rose to 33.5% upfront, or $3,350,000 per year for five years to insure $10,000,000 in debt, plus annual payments of 500 basis points, Reuters says, citing Markit. "What's most concerning about GM is that no one has a good sense of how its (business) shift is going to affect its profitability," said Geoffrey Gwin, principal of Group G Capital Partners, a New York credit hedge fund, according to WSJ. Gwin, WSJ relates, added that a change in the mix of vehicles GM produces, toward more cars and fewer sport-utility vehicles and light trucks, coupled with absolute declines in its auto sales and rising oil prices are causing a lot of uncertainty among investors. Business Week says one GM executive, at a few recent meetings, floated the idea of a GM-Ford merger, but it was deemed a counter- productive distraction. 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 reported in the Troubled Company Reporter on June 24, 2008, DBRS has placed the ratings of General Motors Corporation and General Motors of Canada Limited Under Review with Negative Implications. The rating action reflects the structural deterioration of the company's operations in North America brought on by high oil prices and a slowing U.S. economy. Standard & Poor's Ratings Services is placing its corporate credit ratings on the three U.S. automakers, General Motors Corp., Ford Motor Co., and Chrysler LLC, on CreditWatch with negative implications, citing the need to evaluate the financial damage being inflicted by deteriorating U.S. industry conditions--largely as a result of high gasoline prices. Included in the CreditWatch placement are the finance units Ford Motor Credit Co. and DaimlerChrysler Financial Services Americas LLC, as well as GM's 49%-owned finance affiliate GMAC LLC. 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. GENERAL MOTORS: Fitch Trims ID Rating to B-; Puts Negative Watch ---------------------------------------------------------------- Fitch has downgraded the Issuer Default Rating of General Motors Corporation to 'B-' from 'B', and assigned a Rating Outlook Negative. The downgrade results from weak economic conditions, the dramatic shift to fuel efficient vehicles and the resulting cash drains at GM that are expected to persist at lest through 2009. Fitch expects that cash drains in 2008 will exceed $10 billion, and that new financing activity will be required over the next 18 months to keep GM's cash position above the minimum comfort level of $12 - $14 billion. GM's product portfolio remains misaligned with market demand, and the rapid shift to more fuel-efficient vehicles over the last several months has exacerbated GM's market position. As a result, ever-deeper restructuring will be required, and will need to be accomplished on an accelerated time frame. Recently announced production cuts will result in meaningful share and revenue declines in North America in 2008 and 2009, heightening the challenge and the urgency to drive down costs at a pace that exceeds revenue declines. International operations in China, Latin America and Eastern Europe continue to perform well, and to generate healthy excess cash flow, although persistently higher commodity costs will continue to impair margins globally through 2010. Factors that could trigger a downgrade: -- Projections that show GM would dip below $15 billion in cash. -- Inability to refinance s/t maturities over the next 18 months. -- Expectations that North American gross margins continue to shrink into 2009. -- Material reversal in GM's overseas operating results. -- Indications that GMAC's access to cost-effective financing have diminished or if GM is required to provide material financial support to GMAC. Macro-economic factors and the shift in consumer buying preferences have resulted in a severe drop in unit volumes among the domestic manufacturers, particularly in the more profitable segments. Although the weak construction market has produced a steep cyclical decline in pickup sales, industry unit volumes have moved outside of the range attributed solely to recessionary conditions in the housing market, confirming that a more permanent shift in market is taking place. A rebound in industry pickup sales would certainly benefit GM volumes and profitability at the time it occurs, but the impact is likely to be more muted and more distant than originally anticipated. The recent announcement that GM will close an additional four assembly plants was expected, but reflect the fact that lost volumes are permanent, limiting the potential cash flow capacity over the longer term. GM has made material improvements in its cost structure, progress that will continue with an additional hourly workforce reduction of 19,000 employees by July 1. In 2010, GM will benefit from savings associated with the recent UAW healthcare agreement, and an eventual rebound in economic conditions. Supplier and labor issues, such as the recent American Axle strike, the continuing Delphi situation, and disputes with the UAW on local operating agreements have drained resources and deferred efficiency and productivity savings. Of primary concern is continuing financial deterioration at GMAC due primarily to the turmoil in residential mortgage markets. This has necessitated additional financial support from GM in the form of capital injections and guarantees. While GMAC continues to work through issues in its residential mortgage business, Fitch believes that core automotive finance fundamentals are also showing weakness, and that these trends are expected to persist throughout 2008. While Fitch acknowledges GMAC's recent bank line restructuring, which should provide necessary near-term funding, Fitch is concerned that a sustained lack of liquidity, particularly in the securitization markets, may reduce GMAC's ability to provide financing for GM customers. In this scenario, the Issuer Default Rating of GM could be reviewed with an expectation of a downgrade to 'CCC'. Entering 2008, Fitch anticipated that the rate of increase in commodity costs would slow, thereby allowing more of the company's restructuring actions to be realized. Instead, commodity prices increases have continued to escalate in steel, other metals, and a wide variety of inputs that are expected to continue in the short term. Over the longer term, these costs will have to be recouped at least in part through higher pricing, which will remain a challenge. Fitch expects that cash drains in 2008 will exceed $10 billion prior to any capital raising, and negative cash flow will persist at least through 2009. Raising capital in excess of maturities over the next two years is probable, but to a very limited extent given the state of the capital markets, the company's financial position, limited availability of securitizable domestic assets and GM's market capitalization. GM also retains access to approximately $7 billion in revolving credit agreements. Fund- raising options include the likely extension of VEBA-related debt owed to the UAW, financing related to profitable and growing international operations, equity-related offerings and other modest asset-based financings. GM's balance sheet over the near term is likely to reflect more than $50 billion in consolidated debt (including VEBA-related debt). Interest expense will continue to rise, reflecting higher debt and higher pricing, and Fitch expects that interest expense will exceed $3.5 billion over the near term. Together with capital expenditure requirements, this represents an increasing financial hurdle given the continued shrinking of GM's domestic earnings capacity. International operations have become a solid contributor to the company's cash flow and credit profile, but free cash flow from these operations will not be sufficient to offset North American losses and the growth in financial obligations. European operations are also expected to be hurt by high oil prices and high commodity costs. Fitch has downgraded these ratings: General Motors -- IDR to 'B-' from 'B'; -- Senior unsecured debt to 'CCC+/RR5 from 'B-/RR5'; -- Senior Secured to 'BB-/RR1' from 'BB/RR1'. General Motors of Canada -- IDR to 'B-' from 'B'; -- Senior unsecured to 'CCC+/RR5' from 'B-/RR5'. GOODYEAR TIRE: To Invest $2BB in Plants' Expansion and Improvement ------------------------------------------------------------------ Goodyear Tire & Rubber Co. plans to invest over $2 billion in the next five years to expand and modernize its plants both in the U.S. and around the world as it looks to boost production of high- end products and output in low-cost countries, The Wall Street Journal reports. In a press statement, Robert J. Keegan, chairman and chief executive officer, said: "given the challenges that the macro- environment is presenting, particularly in North America, we are performing well in a difficult environment. We respect the magnitude of the market challenges we face. Our business model changes over the past five years have positioned us to manage through the current environment while continuing to drive our long-term strategies." "The company's strategy to drive profitable growth includes significant plans to capitalize on worldwide increases in demand for its innovative, high-value-added tires," Mr. Keegan said. "Goodyear will leverage its innovation capabilities to differentiate its products in the marketplace" The company also plans to build on strength in its profitable businesses in the emerging markets of Latin America, Eastern Europe and Asia. "Growth in markets such as China, Russia and Brazil and a transition to increasingly high-value-added tires in these markets represent significant opportunities," Mr. Keegan said. "Our leadership teams in these markets have proven capability to develop markets, build strong distribution networks, leverage our brands and deliver high returns. We see many opportunities for our businesses in emerging markets to continue to be a major growth engine for Goodyear." Goodyear leaders will also discuss the impact of higher fuel prices, changing driving habits and a shift in vehicle preferences in the U.S. in its investor presentation in New York slated to start at 9 a.m. EDT. Structural cost topics to be discussed in the meeting include: -- Goodyear's decision to increase its cost savings target to more than $2 billion by 2009 from its prior goal of between $1.8 billion and $2 billion through intensified focus on efficiency throughout the supply chain and in back office operations. -- The closure of Goodyear's tire manufacturing plant in Somerton, Australia, which completes the company's targeted reduction of approximately 25 million units of high-cost capacity as part of its 4-point cost savings plan. High-return growth opportunities to be discussed include: -- Investment of up to $500 million to increase Goodyear's presence in China through a relocation and expansion of its manufacturing plant in Dalian to facilitate increased production of high-value-added consumer and commercial tires for the Asia-Pacific region. -- Investments of $500 million to $700 million over five years to modernize four U.S. manufacturing plants to increase high-value-added tire production and improve cost efficiency. -- Investments of up to $600 million to expand production in Brazil and Chile. -- Investments of approximately $500 million to modernize and expand production in Germany and Poland. "Going forward, we anticipate capital investments totaling between $1 billion and $1.3 billion per year from 2008 to 2010," stated Mr. Keegan. "Our plans, however, are flexible so that we can adjust both the pace and amount to reflect the macro-environment and market trends while maintaining positive cash flow," he added. "We will continue to be extremely analytic and hard-nosed with respect to the allocation of capital and are focused on return on invested capital as a key financial metric." The company expects to increase high-value-added capacity by 50% from 2006 levels and to increase its low-cost capacity to 50% of its worldwide total by 2012. About Goodyear Tire Headquartered in Akron, Ohio, The Goodyear Tire & Rubber Company (NYSE: GT) -- http://www.goodyear.com/-- is the world's largest tire company. The company manufactures tires, engineered rubber products and chemicals in more than 60 facilities in 26 countries and employs 80,000 people worldwide. Goodyear has subsidiaries in New Zealand, Venezuela, Peru, Mexico, Luxembourg, Finland, Korea and Japan, among others. * * * As reported by the Troubled Company Reporter-Europe on March 6, 2008, Fitch Ratings upgraded The Goodyear Tire & Rubber Company's Issuer Default Rating to 'BB-' from 'B+' and senior unsecured debt rating to 'B+' from 'B-/RR6'. GO WEST: U.S. Trustee Wants Chapter 11 Case Dismissed ----------------------------------------------------- Tiffany Kary of Bloomberg News reports that Diana Adams, the U.S. Trustee for Region 2, asks the United States Bankruptcy Court for the District of New York to dismiss the Chapter 11 case of Go West Entertainment Inc. or, in the alternative, liquidate its assets. The Debtor did not object to the Trustee's request, Ms. Kary reports citing papers filed with the Court on Wednesday. The Trustee points out that the Debtor can no longer generate cash to pay fees and administrative expenses without a liquor license that enables it to operate business, she adds. About Go West Headquartered in Go West Entertainment Inc. owns and operates Scores, an adult entertainment nightclub in Manhattan, New York. The company filed for Chapter 11 protection on April 18, 2008. Scott K. Levine, Esq., Sherri D. Lydell, Esq., and Teresa Sadutto- Carley, Esq., and Platzer, Swergold, Karlin, Levine, Goldberg & Jaslow, LLP, represent the Debtor. When the Debtor filed for protection against its creditors, it listed assets and debts between $1 million to $10 million. GPS INDUSTRIES: Names David Chessler as Chief Executive ------------------------------------------------------- GPS Industries, Inc. appointed David Chessler as Chief Executive Officer effective June 16, 2008. Mr. Chessler, former CEO of Parview, is a key component of the company's restructuring plan. "David's experience in this industry, his success in asset based lending and his management skills identified him as the ideal choice for the company's CEO," Company Director Bart Collins said. Mr. Chessler has also been elected to the company's Board of Directors. David Chessler is a seasoned veteran in the GPS golf business with several years of experience in various management and executive capacities in the industry. He has taken companies from start-up to sale during the period 1991 to 2002, having been awarded the Florida Ernst & Young Entrepreneur of the year award in 2000. "Having been involved in the GPS golf industry for 14 years, I'm very excited to join the GPSI team," Mr. Chessler said. "I believe the company has the best products, patent portfolio and now the appropriate capital structure required to achieve its full potential. I look forward to working with the GPSI team to become the dominant player in this market." About GPS Industries Headquartered in Surrey, B.C. Canada, GPS Industries Inc. (OTC BB: GPSN.OB) -- http://www.gpsindustries.com/-- develops and markets GPS and Wi-Fi multimedia solutions to enable managers of golf facilities, resorts, and residential communities to improve operational efficiencies and generate significant new revenue streams. Going Concern Doubt Sherb & Co., LLP, in New York, expressed substantial doubt about GPS Industries Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm reported that the company has incurred significant losses and has a working capital deficiency. GPS INDUSTRIES: Issues $5.5MM Note to Tulip Under Recap Plan ------------------------------------------------------------ GPS Industries, Inc., improved its liquidity as part of its re-financing plan. GPSI closed the next phase of its recapitalization plan by issuing a $5.5 million convertible note to Tulip Group Investments, Ltd. The note is convertible into both newly authorized Series C Preferred Stock Shares at $10.00 per share and common stock shares at $0.031 per share yielding 177.4 million common stock shares. GPSI also issued warrants to Tulip to purchase up to 22.5 million common stock shares at $0.12 which expire in May of 2012. When combined with the $3.5 million recently infused into GPSI via an expanded bank line provided by Silicon Valley Bank and guaranteed by Great White Shark Enterprises, the total new financing available to GPSI is $9.0 million. As a follow up, GPSI, GWSE and the Estate of Douglas Wood have agreed in principal to convert approximately $3.4 million of short term liabilities due to both GWSE and the Estate of Douglas Wood into 3 year Notes accruing interest at 7% with interest and principal due on maturity. Additionally, both guarantors of the initial $3.0 million of the SVB credit line (Hansen Inc. and the Estate of Douglas Wood) have agreed to extend their guarantees for a period of 3 years. In connection with the transactions, the Board of Directors of GPSI has approved increasing the authorized number of common shares by 900 million to 2.5 billion and the creation of the Series C Preferred Shares all of which will be submitted to shareholders for approval as soon as possible. "The combination of the company's recapitalization and the appointment of David Chessler as CEO has positioned GPSI to realize its full potential" Mr. Collins added. About GPS Industries Headquartered in Surrey, B.C. Canada, GPS Industries Inc. (OTC BB: GPSN.OB) -- http://www.gpsindustries.com/-- develops and markets GPS and Wi-Fi multimedia solutions to enable managers of golf facilities, resorts, and residential communities to improve operational efficiencies and generate significant new revenue streams. Going Concern Doubt Sherb & Co., LLP, in New York, expressed substantial doubt about GPS Industries Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm reported that the company has incurred significant losses and has a working capital deficiency. GRAFTECH INT'L: S&P Lifts Rating to BB; Changes Outlook to Pos. --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on GrafTech International Ltd. to positive from stable. At the same time, S&P raised the rating on the company's senior unsecured notes to 'BB' from 'BB-'. In addition, S&P revised the recovery rating to '2' from '4'. The new ratings indicate the expectation of substantial (70% to 90%) recovery in the event of a payment default. All other ratings, including the company's 'BB-' corporate credit rating, were affirmed. The outlook revision reflects the company's strengthened financial profile due to the combination of the recent conversion into equity of its outstanding $225 million notes due 2024, good operational performance, and enhanced cash flow generation supported by currently favorable market conditions. Thus, the company's debt levels are expected to have decreased to about $100 million, resulting in credit measures that S&P would consider to be good for the current rating. The ratings on GrafTech reflect the company's significant exposure to the cyclical steel industry, limited supplier diversity, and continued raw-material cost pressure. Still, the company maintains a good market position in graphite electrodes, possesses healthy margins driven by current favorable industry conditions, and has a good liquidity position. The outlook is positive. S&P can upgrade GrafTech if it continues its good operating performance and maintains its improved credit metrics or diversifies its supplier base to reduce its operating risk. S&P may change the outlook to stable if the company increases its debt levels significantly to make a large acquisition. GREEKTOWN CASINO: MGCB OKs Continuation of Reorganization Efforts ----------------------------------------------------------------- Michigan gaming regulators allowed Greektown Casino LLC and its debtor-affiliates to continue executing a business reorganization plan aimed at improving the financial health of the casino during Chapter 11 bankruptcy protection. The Michigan Gaming Control Board voted not to force a sale of Greektown Casino at this time. Instead, the regulators voted to give the casino time to reorganize and improve operations during Chapter 11 or face the potential of having to sell the property at some point in the future. Casino representatives pledged their full cooperation with the MGCB, including providing more frequent and detailed financial and operational reports to the regulators and their staff. "During Chapter 11, we will continue to implement cost savings identified by casino managers and our financial consultants, we will complete construction of our permanent casino resort on time and on budget, and we will emerge a financially healthier company," said Greektown Casino Management Board Chairman Tom Miller, who is also an elected member of the Board of Directors of the Sault Ste. Marie Tribe of Chippewa Indians, majority owners of the casino. On May 29, Greektown Casino voluntarily asked the Honorable Walter Shapero of the U.S. Bankruptcy Court in Detroit for approval to reorganize its finances and maintain normal business operations under the protection of Chapter 11 of the U.S. Bankruptcy Code. Since the Chapter 11 filing, Judge Shapero and the MGCB have approved $51.3 million in interim financing that will enable Greektown Casino to continue construction of its permanent casino and hotel. In addition, the casino -- with approval from Judge Shapero and the MGCB -- will soon finalize about $150 million in total "debtor in possession (DIP)" financing for operations and to complete construction of its new 400-room hotel and 25,000- square-foot gaming floor expansion. A hearing before Judge Shapero for final approval of the $150 million from lenders led by Merrill Lynch has been scheduled for June 23. Many companies have sought to reorganize successfully under Chapter 11 including Delta Airlines, Macy's, Dow Corning, casino operator Tropicana Entertainment, Trump Hotels & Casino Resorts, Federal Mogul, and many more. In the coming weeks, an official committee of unsecured creditors will be formed to represent the interests of unsecured creditors in the case. Greektown has previously communicated that it expects creditors to be paid as part of its plan of reorganization. In November 2007, Greektown Casino opened its new attached parking structure, marking the completion of Phase 1 construction work on the new permanent Greektown Casino and hotel. Phase 2 -- construction of the casino's new 400-room hotel and expanded gaming floor -- is scheduled to be completed in phases in the coming months. The permanent casino and hotel will include a multi-purpose theater, buffet, three restaurants, and 25,000 square feet of additional gaming space. Total investment in the permanent Greektown Casino project will be about $500 million. About the MGCB The Michigan Gaming Control Board is an agency under the government of the State of Michigan and created under the Michigan Gaming Control & Revenue Act, as amended, to license and regulate commercial casinos in Detroit, their suppliers and employees; and to oversee Native American casinos in Michigan. About Greektown Casino Based in Detroit, Michigan, Greektown Holdings, LLC and its affiliates -- http://www.greektowncasino.com/-- operate world- class casino gaming facilities located in Detroit's historic Greektown district featuring over 75,000 square feet of casino gaming space with more than 2,400 slot machines, over 70 tables games, a 12,500-square foot salon dedicated to high limit gaming and the largest live poker room in the metropolitan Detroit gaming market. Greektown Casino employs approximately 1,971 employees, and estimates that it attracts over 15,800 patrons each day, many of whom make regular visits to its casino complex and related properties. In 2007, Greektown Casino achieved a 25.6% market share of the metropolitan Detroit gaming market. Greektown Casino has also been rated as the "Best Casino in Michigan" and "Best Casino in Detroit" numerous times in annual readers' polls in Detroit's two largest newspapers. The company and seven of its affiliates filed for Chapter 11 protection on May 29, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 53104). Daniel J. Weiner, Esq., Michael E. Baum, Esq., and Ryan D. Heilman, Esq., at Schafer and Weiner PLLC, represent the Debtors in their restructuring efforts. Judy B. Calton, Esq., at Honigman Miller Schwartz and Cohn LLP, represents the Debtors as their special counsel. The Debtors chose Conway MacKenzie & Dunleavy as their financial advisor, and Kurtzman Carson Consultants LLC serves as the Debtors' claims, noticing, and balloting agent. When the Debtor filed for protection from its creditors, it listed consolidated estimated assets and debts of $100 million to $500 million. (Greektown Casino Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). GREEKTOWN CASINO: To Lay Off 89 Employees to Save $7.8MM in Costs ----------------------------------------------------------------- Greektown Casino LLC and its debtor-affiliates related in a June 23, 2008 press release that 89 employees will be laid off as part of $7.8 million in annual cost savings identified by the casino's managers and financial consultants. Most of the furloughed employees work in table games, and 70 were part-time employees. "Greektown Casino managers, owners and financial consultants are examining every possible way to make the casino a more efficient and profitable business," said Greektown Casino CEO Craig Ghelfi. Under their contract with the casino, the employees will have first-in-line status to return to the casino when future job openings occur. Some may also have an opportunity for future employment in a different capacity, as Greektown Casino will soon add about 400 new employees to staff its 400-room hotel, which is scheduled to open early next year. About Greektown Casino Based in Detroit, Michigan, Greektown Holdings, LLC and its affiliates -- http://www.greektowncasino.com/-- operate world- class casino gaming facilities located in Detroit's historic Greektown district featuring over 75,000 square feet of casino gaming space with more than 2,400 slot machines, over 70 tables games, a 12,500-square foot salon dedicated to high limit gaming and the largest live poker room in the metropolitan Detroit gaming market. Greektown Casino employs approximately 1,971 employees, and estimates that it attracts over 15,800 patrons each day, many of whom make regular visits to its casino complex and related properties. In 2007, Greektown Casino achieved a 25.6% market share of the metropolitan Detroit gaming market. Greektown Casino has also been rated as the "Best Casino in Michigan" and "Best Casino in Detroit" numerous times in annual readers' polls in Detroit's two largest newspapers. The company and seven of its affiliates filed for Chapter 11 protection on May 29, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 53104). Daniel J. Weiner, Esq., Michael E. Baum, Esq., and Ryan D. Heilman, Esq., at Schafer and Weiner PLLC, represent the Debtors in their restructuring efforts. Judy B. Calton, Esq., at Honigman Miller Schwartz and Cohn LLP, represents the Debtors as their special counsel. The Debtors chose Conway MacKenzie & Dunleavy as their financial advisor, and Kurtzman Carson Consultants LLC serves as the Debtors' claims, noticing, and balloting agent. When the Debtor filed for protection from its creditors, it listed consolidated estimated assets and debts of $100 million to $500 million. (Greektown Casino Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). GREEKTOWN CASINO: Gaming Board, et al., Oppose DIP Loan Approval ---------------------------------------------------------------- The Michigan Gaming Control Board, Ted and Maria Gatzaros, and Dimitrios and Viola Papas oppose final approval of Greektown Casino LLC and its debtor-affiliates' proposed $150 million postpetition financing. Previously, the Honorable Walter Shapero of the U.S. Bankruptcy Court for the Eastern District of Michigan has allowed the Debtors to borrow up to $51,000,000 from the DIP Lenders, on an interim basis. On behalf of the Michigan Gaming Board, Donald S. McGehee, Esq., assistant attorney general for the State of Michigan, reiterate that the Debtors were required to obtain the Board's approval for the $150,000,000 in DIP financing from a group of lenders led by Merrill Lynch Capital Corporation, as agent. The Debtors obtained limited approval from the Board on June 5, 2008. If the Debtors draw any amount in excess of $51,300,000, they will require additional approval from the MGCB, Mr. McGehee avers. Accordingly, the Gaming Board asks the Court to reject the DIP Motion unless the continuing requirement for the Debtors to obtain Board approval is reflected in a final order granting the the Debtors' request. Ted and Maria Gatzaros and Dimitrios and Viola Papas entered into separate redemption agreements in July 2000, with Monroe Partners, LLC, whereby Monroe agreed to redeem the Gatzaros' and the Papas' interest in Monroe. Monroe owns a 50% interest in Greektown Holdings, LLC, while the remaining 50% is owned by Kewadin Greektown Casino, L.L.C. The Gatzaros assert that as of the Petition Date, the Debtors owe them $60,000,000 pursuant to the Redemption Agreement. The Papas assert that as of the Petition Date, the Debtors owe them $5,278,000, pursuant to the Redemption Agreement. The Gatzaros add that they each have a security interest in all of Kewadin's membership interests in Monroe, all distributions to Kewadin arising from its membership interest in Monroe; and all distributions entitled to Kewadin as a 50% member of Greektown Holdings. The Papas note that they are in a similar situation with the Gatzaros with respect to their security interests in the Debtors' properties. Therefore, the Papas contend that they are entitled to the same protection the Gatzaros obtained under any version of the DIP Financing Order. The Gatzaros and the Papas seek that clarifications on the Debtors' obligations to them on certain security interests be noted in any final DIP order. Accordingly, the Gatzaros and the Papas ask the Court to include this language in the Final DIP Order: "Notwithstanding anything to the contrary in the Final Order or in the Interim Order relative to the grant or replacement, superpriority or priming liens by the Final Order or by the Interim Order, the Final Order or the Interim Order will not affect the validity, extent, or priority of any pledges, security interests or liens in favor of Ted or Maria Gatzaros or in favor of Ted or Maria Gatzaros, or in favor of Dimitrios or Viola Papas in (a) the membership interests of Kewadin Greektown in Monroe Partners, or (b) the rights of Kewadin Greektown to distributions from Monroe Partners, or (c) the rights of Kewadin Greektown to distributions from Greektown Holdings." In addition, as a matter of clarity, the Gatzaros and the Papas also urge the Court to amend the Interim and Final DIP Financing Order to make it clear that the Postpetition Liens are subject to both the Carve-out and the security interest protection provided to them. About Greektown Casino Based in Detroit, Michigan, Greektown Holdings, LLC and its affiliates -- http://www.greektowncasino.com/-- operate world- class casino gaming facilities located in Detroit's historic Greektown district featuring over 75,000 square feet of casino gaming space with more than 2,400 slot machines, over 70 tables games, a 12,500-square foot salon dedicated to high limit gaming and the largest live poker room in the metropolitan Detroit gaming market. Greektown Casino employs approximately 1,971 employees, and estimates that it attracts over 15,800 patrons each day, many of whom make regular visits to its casino complex and related properties. In 2007, Greektown Casino achieved a 25.6% market share of the metropolitan Detroit gaming market. Greektown Casino has also been rated as the "Best Casino in Michigan" and "Best Casino in Detroit" numerous times in annual readers' polls in Detroit's two largest newspapers. The company and seven of its affiliates filed for Chapter 11 protection on May 29, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 53104). Daniel J. Weiner, Esq., Michael E. Baum, Esq., and Ryan D. Heilman, Esq., at Schafer and Weiner PLLC, represent the Debtors in their restructuring efforts. Judy B. Calton, Esq., at Honigman Miller Schwartz and Cohn LLP, represents the Debtors as their special counsel. The Debtors chose Conway MacKenzie & Dunleavy as their financial advisor, and Kurtzman Carson Consultants LLC serves as the Debtors' claims, noticing, and balloting agent. When the Debtor filed for protection from its creditors, it listed consolidated estimated assets and debts of $100 million to $500 million. (Greektown Casino Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). GREEKTOWN CASINO: Court Gives Final Approval on $150MM DIP Loan --------------------------------------------------------------- Greektown Casino's reorganization plan took another significant step forward as the U.S. Bankruptcy Court for the Eastern District of Michigan gave final approval on June 26, 2008, of $150 million in Debtor in Possession financing for the casino to complete construction of its 400-room hotel and 25,000-square- foot gaming floor expansion. The casino is open for business as usual — with no changes or interruptions in any games or services — during the Chapter 11 process. "This is another important milestone in the reorganization process," said Greektown Casino Management Board Chairman Tom Miller, who is also a member of the Board of Directors of the Sault Ste. Marie Tribe of Chippewa Indians, owners of the casino, in a press statement. "Completing the permanent casino and hotel is a critical component to emerging from reorganization a financially stronger, more profitable casino, and will greatly increase the value of the asset as we seek exit financing." The DIP financing package now goes before the Michigan Gaming Control Board (MGCB) for consideration. Both the federal court and MGCB have already granted interim approval for $51.3 million of the $150 million in DIP financing to pay outstanding construction costs through June. Greektown Casino's expanded gaming floor is scheduled to open in late August 2008 and the hotel is scheduled to open in January 2009. "Greektown Casino's management, contractors and financial consultants have done a great job keeping the permanent casino project moving forward during reorganization," Miller said. Greektown Casino remains open for business as usual during Chapter 11 reorganization. About Greektown Casino Based in Detroit, Michigan, Greektown Holdings, LLC and its affiliates -- http://www.greektowncasino.com/-- operate world- class casino gaming facilities located in Detroit's historic Greektown district featuring over 75,000 square feet of casino gaming space with more than 2,400 slot machines, over 70 tables games, a 12,500-square foot salon dedicated to high limit gaming and the largest live poker room in the metropolitan Detroit gaming market. Greektown Casino employs approximately 1,971 employees, and estimates that it attracts over 15,800 patrons each day, many of whom make regular visits to its casino complex and related properties. In 2007, Greektown Casino achieved a 25.6% market share of the metropolitan Detroit gaming market. Greektown Casino has also been rated as the "Best Casino in Michigan" and "Best Casino in Detroit" numerous times in annual readers' polls in Detroit's two largest newspapers. The company and seven of its affiliates filed for Chapter 11 protection on May 29, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 53104). Daniel J. Weiner, Esq., Michael E. Baum, Esq., and Ryan D. Heilman, Esq., at Schafer and Weiner PLLC, represent the Debtors in their restructuring efforts. Judy B. Calton, Esq., at Honigman Miller Schwartz and Cohn LLP, represents the Debtors as their special counsel. The Debtors chose Conway MacKenzie & Dunleavy as their financial advisor, and Kurtzman Carson Consultants LLC serves as the Debtors' claims, noticing, and balloting agent. When the Debtor filed for protection from its creditors, it listed consolidated estimated assets and debts of $100 million to $500 million. (Greektown Casino Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). GROUP 1 AUTOMOTIVE: Moody's Cuts Corporate Family Rating to Ba3 --------------------------------------------------------------- Moody's Investors Service downgraded Group 1 Automotive's corporate family rating and probability of default rating to Ba3 from Ba2. The outlook is negative. These actions conclude the review for possible downgrade initiated on April 2, 2008. The downgrade considers the increase in leverage resulting from a combination of significant debt financed acquisitions and share repurchases. Group 1's LTM March 2008 debt/EBITDA of over six times is weak even for the new Ba3 rating category. The negative outlook reflects Moody's concern that Group 1 may have difficulty materially reducing this leverage in the near term to levels more representative of the Ba3 rating. "Group 1's high leverage is the key rating issue at this point," Charlie O'Shea, Moody's senior analyst Charlie O'Shea stated. "In the event cash flows from 2007's acquisitions are sufficient to measurably reduce what could be a temporary spike in leverage, a stable outlook could result. However, if leverage is not materially reduced by the first quarter of 2009, Group 1's ratings could be downgraded further." The Ba3 rating acknowledges Group 1's weak credit metrics, as well as its strong market position in the still very fragmented auto retailing segment, and its favorable brand mix with 78% of new vehicle sales coming from luxury and import brands. The rating also recognizes Group 1's diverse business model with solid parts and service and finance and insurance segments, which reduces reliance on new car sales. Finally, Group 1 is moderately diverse geographically, with stores in more than a dozen U.S. states and the United Kingdom. The two-notch downgrade to B2 of the senior subordinated notes results from the combination of the new Ba3 corporate family rating and the presence of additional secured debt in the capital structure. This increased the potential loss to holders of these securities under a default scenario. Application of Moody's Loss Given Default Methodology to this structure results in the two- notch downgrade for these notes. Ratings downgraded include: -- Corporate family rating to Ba3 from Ba2; -- Probability of default rating to Ba3 from Ba2; -- Sr. Subordinated Notes to B2 (LGD5, 84%) from Ba3 (LGD5, 75%), and -- Senior Unsecured Shelf to (P)B1 (LGD5, 79%) from (P)Ba3 (LGD4, 69%) -- Senior Subordinated Shelf to (P)B2 (LGD5, 84%) from (P)Ba3 (LGD5, 75%) -- Preferred Shelf to (P)B2 (LGD6, 97%) from (P)B1 (LGD6, 97%). Group 1 Automotive, headquartered in Houston, TX, is an auto retailer with 145 franchises, and generated revenues of $6.4 billion for the LTM ended March 31, 2008. GSRPM MORTGAGE: Moody's Cuts Ratings of 10 Tranches to Junk Level ----------------------------------------------------------------- Moody's Investors Service has downgraded the ratings of 19 tranches issued in four transactions from the GSRPM Mortgage Loan Trust shelf. The collateral backing each tranche consists primarily of first lien adjustable-rate and fixed-rate "scratch and dent" mortgage loans. The actions are part of an ongoing, wider review of all RMBS transactions, in light of the deteriorating housing market and rising delinquencies and foreclosures. Many "scratch and dent" pools originated since 2004 are exhibiting higher than expected rates of delinquency, foreclosure, and REO. The rating adjustments will vary based on level of credit enhancement, collateral characteristics, pool-specific historical performance, quarter of origination, and other qualitative factors. Complete rating actions are: Issuer: GSRPM Mortgage Loan Trust 2003-2 -- Cl. B-1, downgraded from Baa1 to Baa3 -- Cl. B-2, downgraded from Baa2 to Ba2 -- Cl. B-3, downgraded from Baa3 to B2, on review for possible downgrade Issuer: GSRPM Mortgage Loan Trust 2006-1 -- Cl. B-1, downgraded from Baa1 to Baa2 -- Cl. B-2, downgraded from Baa2 to B2, on review for possible downgrade -- Cl. B-3, downgraded from Baa3 to Caa1 -- Cl. B-4, downgraded from Ba1 to Caa3 Issuer: GSRPM Mortgage Loan Trust 2006-2 -- Cl. M-1, downgraded from Aa2 to A1 -- Cl. M-2, downgraded from A2 to B2, on review for possible downgrade -- Cl. B-1, downgraded from Baa1 to Caa2 -- Cl. B-2, downgraded from Baa2 to Caa3 -- Cl. B-3, downgraded from Baa3 to Ca -- Cl. B-4, downgraded from Ba2 to C Issuer: GSRPM Mortgage Loan Trust 2007-1 -- Cl. M-1, downgraded from Aa2 to A3 -- Cl. M-2, downgraded from A2 to B3 -- Cl. B-1, downgraded from Baa1 to Caa1 -- Cl. B-2, downgraded from Baa2 to Caa2 -- Cl. B-3, downgraded from Baa3 to Caa3 -- Cl. B-4, downgraded from Ba1 to Ca HIGHGATE LTC: July 9 Sale Hearing for Four Nursing Homes -------------------------------------------------------- The Honorable Robert E. Littlefield, Jr. of the U.S. Bankruptcy Court for the Northern District of New York in Albany will convene a hearing on July 9, 2008, to consider the sale of four nursing homes -- under the Northwoods Rehabilitation and Extended Care Centers name -- owned by Highgate LTC Management LLC to Hyman Jacobs for $22,000,000, Alan Wechsler writes for The Times Union from Albany, New York. Mr. Jacobs owns seven nursing homes operating under the name Windsor Healthcare LLC of Norwood, New Jersey, Mr. Wechsler reports, citing court documents. Mr. Jacobs has already made a $1,000,000 deposit, according to the report. As part of the deal, Mr. Jacobs will retain nearly all the employees at the four homes, which are located in Niskayuna, Schaghticoke, East Greenbush and Cortland, the report says. As reported by the Troubled Company Reporter on May 21, 2007, the Bankruptcy Court ordered the sale of the four nursing homes at a June 28, 2007 auction. The Court also ruled that a trustee would be appointed to oversee the company and facilitate the sale. Bill Rochelle of Bloomberg News had reported at that time that Highgate estimated the facilities to be worth between $32,000,000 and $40,000,000. Mr. Wechsler says last year's attempt to sell the properties failed despite attracting 20 potential buyers because the state demanded about $8,000,000 in unpaid taxes and interest. Mr. Wechsler, citing Mark Fishman, the bankruptcy trustee in the case, reports that a settlement was later reached with the state, and four potential buyers made offers, with Mr. Jacobs having the best one. Mr. Jacob's offer remains subject to competitive bidding and auction. The report did not mention when the auction date would be. The deal is also subject to approval by the state Department of Health, the report adds. Mr. Jacobs is represented in the case by Richard Weisz, Esq., at Hodgson Russ LLP in Albany. Mr. Weisz, the report relates, said said it was too early to discuss what changes might occur at the facilities if the purchase goes through. Headquartered in Niskayuna, New York, Highgate LTC Management LLC operates nursing homes. The company filed a chapter 11 petition on April 16, 2007 (Bankr. N.D. N.Y. Case No. 07-11068). Highgate Manor Group LLC, a debtor-affiliate, filed a separate Chapter 11 petition on the same day (Bankr. N.D. N.Y. Case No. 07-11069). J. Ted Donovan, Esq., at Finkel Goldstein Rosenbloom & Nash, L.L.P., represents Highgate LTC Management in its restructuring efforts. When Highgate LTC Management sought protection from its creditors, it listed assets of less than $10,000 and debts between $1,000,000 and $100,000,000. HILEX POLY: Prepackaged Chapter 11 Plan Confirmed ------------------------------------------------- The Hon. Kevin J. Carey of the United States Bankruptcy Court for the District of Delaware confirmed a prepackaged Chapter 11 plan of reorganization of Hilex Poly Co. LLC and Hilex Poly Holding Co. LLC, filed on May 2, 2008. Judge Carey held that the disclosure statement met all of the necessary statutory requirements within the meaning of Section 1125 of the Bankruptcy Code. The plan will become effective -- and the Debtors will emerge from bankruptcy -- once all closing conditions to the plan have been met. With this action, the Debtors expect to emerge from Chapter 11 within a few weeks. The plan will significantly reduce the Debtors' debt, reduce annual interest expense and significantly improve cash flow. "We are extremely pleased that the Court has approved our Plan," said David Pastrich, president and chief executive officer of Hilex. "I would like to extend my gratitude to our employees, customers and vendors for their unwavering support during this process." Mr. Pastrich concluded, "As a result of this successful restructuring, Hilex will be able to better serve our customers, as we further strengthen our market leadership position in the plastic bag industry." As reported in the Troubled Company Reporter on May 14, 2008, a consortium of lenders headed by General Electric Capital Corporation agreed to provide up to $140 million in revolving loan and term loan under a debtor-in-possession credit agreement. The DIP facility is comprised of: i) a $90 million DIP revolving loan facility, and ii) a $50 million DIP term loan facility, including a swingline subfacility of at least $15 million. The proceeds of the loan will be used to pay, among other things (i) the first lien revolving loan claim, (ii) postpetition operating expenses of the Debtors incurred in the ordinary course of business, (iii) transaction fees and expenses, and (iv) certain other costs of administration of the Chapter 11 cases. The contemplated exit facility will feature a revolving credit subfacility to be negotiated and a new term loan for $50 million. Overview of the Plan The Plan is based primarily upon a prepetition compromise with the first lien agents, the second lien agents, the holders of the revolving first lien loan claims, the holders of a majority of the first lien term B loan claims, and the holders of a majority of the second lien claims. The Plan provides that: a) all existing equity interests in Hilex Opco will be cancelled and 100% of the new membership interests in Hilex Opco will be issued to New Holdco; b) 85% of the New Common Stock of New Holdco will be distributed to the Holders of Second Lien Claims in exchange for the cancellation of their prepetition indebtedness; c) 15% of the New Common Stock of New Holdco will be distributed to Holders of First Lien Term B Loan Claims in exchange for the cancellation of their term loans; d) the Holders of First Lien Term B Loan Claims will also receive New Holdco Notes, which are due 2013, in an aggregate face amount of $115.1 million with, at the option of New Holdco, cash interest accruing at a rate of 12.75% per annum or payment in kind interest accruing at a rate of 13.5% per annum; e) the Holders of First Lien Revolving Loan Claims will be paid in full in Cash, subject and pursuant to the terms of the Final DIP Order; f) the claims of trade and other general unsecured creditors against Hilex Opco will remain unimpaired; and g) all existing claims against and equity interests in Hilex Holding will be extinguished and cancelled and Hilex Holding will be dissolved. Treatment of Claims And Interests Types of Estimated Estimated Class Claims Treatment Amount Recovery ----- -------- --------- --------- --------- N/A Administrative unimpaired $17,900,000 100% Claims N/A DIP Claims unimpaired $93,300,000 100% N/A Priority Tax unimpaired $400,000 100% Claims 1 Priority Non-Tax unimpaired $1,300,000 100% Claims 2 Other secured unimpaired $1,100,000 100% Claims 3 First Lien impaired $50,100,000 100% Revolving Loan Claims 4 First Lien Term impaired $115,100,000 100% B Claims 5 Second Lien impaired $105,900,000 106.5% Claims 6 Hilex Opco unimpaired $46,400,000 40% General Unsecured Claims 7 Hilex Holdings impaired $28,000,000 0% General Unsecured Claims 8 Intercompany unimpaired $500,000 100% Claims 9 Hilex Holding impaired N/A 0% Interests 10 Hilex Opco impaired N/A 0% Interests A full-text copy of the Joint Prepackaged Plan of Reorganization is available for free at http://ResearchArchives.com/t/s?2ba8 A full-text copy of the Disclosure Statement is available for free at http://ResearchArchives.com/t/s?2ba9 About Hilex Poly Headquartered in Hartsville, South Carolina, Hilex Poly Co. LLC -- http://www.hilexpoly.com/-- manufactures plastic bag and film products. The company has approximately 1,324 personnel and has 10 manufacturing facilities located in the United States. The company and its affiliates Hilex Poly Holding Co. LLC filed for Chapter 11 protection on May 6, 2008 (Bankr. D. Del. Lead Case No.08-10890). Hilex Poly is a majority-owned subsidairy of Hilex Poly Holding Co. LLC. Edmon L. Morton, Esq., and Kenneth J. Enos, Esq., at Young, Conaway, Stargatt & Taylor in Wilmington, Delaware, represent the Debtors in their restructuring efforts. The Debtors selected Epiq Bankruptcy Solutions LLC as claims agent. The U.S. Trustee for Region 3 has not appointed creditors to serve on an Official Committee of Unsecured Creditors to date. When the Debtors filed for protection against their creditors, they listed assets and debts between $100 million and $500 million. HOLOGIC INC: Offer to Buy Third Wave Stake Obtains FTC's Go Signal ------------------------------------------------------------------ Hologic Inc. disclosed that the Federal Trade Commission granted early termination of the waiting period under the Hart-Scott- Rodino Antitrust Improvements Act of 1976, as amended, on June 24, 2008, in connection with Hologic's tender offer for all of the outstanding shares of the common stock of Third Wave Technologies Inc. As reported in the Troubled Company Reporter on June 12, 2008, Hologic Inc. signed a definitive agreement to acquire Third Wave Technologies Inc. for $11.25 per share, or approximately $580 million, representing an approximately 24% premium to Third Wave's average trading price over the last three months. The early termination of the waiting period under the HSR Act satisfies the conditions to the tender offer related to the expiration or termination of any applicable waiting periods under the HSR Act and other state and foreign regulatory laws relating to the restraint of trade or lessening of competition. The tender offer remains subject to certain other conditions described in the Offer to Purchase. Hologic commenced a Tender Offer on June 18, 2008, for all of the outstanding shares of Third Wave common stock for $11.25 per share in cash. The tender offer is scheduled to expire at 12:00 midnight, New York City time, on July 16, 2008. About Third Wave Technologies Inc. Third Wave Technologies Inc. (Nasdaq: TWTI) -- http://www.twt.com/ -- develops and markets molecular diagnostic reagents for a variety of DNA and RNA analysis applications based on its proprietary Invader(R) chemistry. The company's clinical diagnostic offerings consist of products for conditions such as Cystic Fibrosis, Hepatitis C, cardiovascular risk and other diseases. Third Wave has over 210 clinical testing customers. Third Wave has presence in the United States, Japan and Europe. The company's clinical diagnostic products are used by clinical laboratories to create tests for screening, prognosis, diagnosis, and monitoring by physicians of individual patients. About Hologic Inc. Headquartered in Bedford, Massachussetts, Hologic Inc. (NASDAQ:HOLX) - http://www.hologic.com/-- is a developer, manufacturer and supplier of premium diagnostics, medical imaging systems and surgical products dedicated to serving the healthcare needs of women. Hologic's core business units are focused on breast health, diagnostics, GYN surgical, and skeletal health. Hologic provides a comprehensive suite of technologies with products for mammography and breast biopsy, radiation treatment for early-stage breast cancer, cervical cancer screening, treatment for mennorrhagia, osteoporosis assessment, preterm birth risk assessment, and mini C-arm for extremity imaging. * * * As reported in the Troubled Company Reporter on June 12, 2008, Moody's Investors Service affirmed the Ba3 corporate family rating of Hologic Inc. and maintained a stable rating outlook after report on the company's plans to acquire Third Wave Technologies for about $580 million in debt. IDENTIPHI INC: Posts $1,290,000 Net Loss in 2008 First Quarter -------------------------------------------------------------- IdentiPHI Inc. reported a net loss of $1,290,000 on total revenue of $1,510,000 for the first quarter ended March 31, 2008, compared with a net loss of $310,000 on total revenue of $758,000 in the same period last year. Product revenue increased $792,000, or 119%, to $1,456,000 in the first quarter of 2008, compared to product revenue of $664,000 recorded in the first quarter of 2007. Gross profit for the first quarter of 2008 was $142,000, or 9%, while gross profit for the first quarter of 2007 was $205,000, or 27%. The gross profit percentage decrease in the first quarter of 2008 was primarily attributable to increased intangible asset amortization classified as cost of revenue related to the merger with Saflink in February 2008. Total operating expenses for the first quarter of 2008 increased approximately $956,000, or 205%, to $1.4 million from $466,000 for the first quarter of 2007. The overall increase was primarily due to the merger with Saflink on Feb. 8, 2008, which added headcount and public reporting company expenses that were not incurred during the first quarter of 2007. At March 31, 2008, the company's consolidated balance sheet showed $8,952,000 in total assets, $3,121,000 in total liabilities, and $5,831,000 in total stockholders' equity. The company's consolidated balance sheet at March 31, 2008, also showed strained liquidity with $1,960,000 in total current assets available to pay $3,121,000 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?2eb6 Going Concern Doubt PMB Helin Donovan, LLP, in Austin, Texas, expressed substantial doubt about IdentiPHI Inc.'s ability to continue as a going concern after auditing the company's financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm pointed to IdentiPHI Inc.'s recurring losses from operations and net capital deficiency. About IdentiPHI Inc. Based in Austin, Texas, IdentiPHI Inc. (OTC BB: IDPI) -- http://www.identiphi.net/-- is a technology company offering a suite of enterprise security solutions and consulting services direct to end-users and through partners, distributers and resellers. On Feb. 8, 2008, the company completed a merger with IdentiPHI Inc., a Delaware corporation. The merger was deemed a "reverse merger" with IdentiPHI being treated as the "acquiring" company for accounting and financial reporting purposes. As a result of the merger, IdentiPHI became the company's wholly-owned subsidiary. The company subsequently combined with IdentiPHI into a single entity and changed the combined company's name to "IdentiPHI Inc." INDYMAC BANCORP: Should Be Monitored, Senator Asks Regulators ------------------------------------------------------------- According to The Wall Street Journal, New York Democratic Sen. Charles Schumer is asking the Federal Deposit Insurance Corp., the Office of Thrift Supervision, and the Federal Housing Finance Board to monitor more closely the financial health of IndyMac Bancorp Inc. In letters sent Tuesday to the federal regulators, drafts of which were viewed by the Journal, Sen. Schumer said he is "concerned that IndyMac's financial deterioration poses significant risks to both taxpayers and borrowers and that the regulatory community may not be prepared to take measures that would help prevent the collapse of IndyMac or minimize the damage should such a failure occur." The Journal notes that the finance board regulates the 12 regional federal home loan banks, which are owned by banks and thrifts but chartered by Congress. Because of their congressional charter and role in providing funds for home loans, according to the Journal, investors assume that the government would stand behind the home loan banks in a crisis. The Journal's James R. Hagerty relates that IndyMac had $10.4 billion of loans, or "advances," from the Federal Home Loan Bank of San Francisco at the end of the first quarter. The loans, Mr. Hagerty writes, are backed by mortgage loans, among others, as collateral. In his letter, according to the Journal, Sen. Schumer asked the regulators to determine whether the credit and collateral terms for IndyMac "accurately reflect the associated risks," and whether the Federal Home Loan Bank of San Francisco plans "actions to mitigate the risks of its exposure to IndyMac." According to the Journal, a spokeswoman for IndyMac has said she hadn't seen the letters and had no immediate comment. The Journal notes that IndyMac's share price has collapsed, trading early Thursday afternoon at 90 cents, down from about $31 a year earlier. As reported by the Troubled Company Reporter on May 14, 2008, IndyMac reported a net loss of $184.2 million for the first quarter of 2008, compared with net earnings of $52.4 million. Michael W. Perry, Indymac's Chairman and CEO, said at that time, "[w]ith respect to profitability, we do not expect that Indymac will be able to return to overall profitability until the current decline in home prices decelerates. As it is uncertain that this will happen in 2008, we are not currently forecasting a return to profitability this year. With that said, we are forecasting continued improvement in our performance and declining quarterly losses for the remainder of 2008, with a $20 million loss projected for the fourth quarter, which would be a 96 percent reduction from Q4-07 and an 89 percent reduction from Q1-08." "With respect to our key business segments, we are forecasting that our mortgage banking business (including mortgage production and servicing) will be profitable in the second quarter and thereafter. We are forecasting that our thrift segment (including our MBS, SFR whole loan and consumer construction portfolios) will become profitable in the third quarter and that our overall business, excluding discontinued activities, will be close to breakeven by the third quarter and have a small profit for the second half of 2008. The net loss from discontinued business activities is projected to decline from $40 million in Q1-08 to roughly $23 million in Q4-08." About Indymac Bancorp Headquartered in Pasadena, California, IndyMac Bancorp Inc. (NYSE:IMB) -- http://www.indymacbank.com/-- is the holding company for IndyMac Bank FSB, a hybrid thrift/mortgage bank that originates mortgages in all 50 states of the United States. Indymac Bank provides financing for the acquisition, development, and improvement of single-family homes. Indymac also provides financing secured by single-family homes and other banking products to facilitate consumers' personal financial goals. The company facilitates the acquisition, development, and improvement of single-family homes through the electronic mortgage information and transaction system platform that automates underwriting, risk- based pricing and rate locking via the internet at the point of sale. Indymac Bank offers mortgage products and services that are tailored to meet the needs of both consumers and mortgage professionals. Indymac operates through two segments: mortgage banking and thrift. In the first quarter, IndyMac was the 11th-largest producer of U.S. home mortgages, the Wall Street Journal says, citing Inside Mortgage Finance, a trade publication. * * * As reported by the Troubled Company Reporter on May 15, 2008, Fitch Ratings downgraded the long-term Issuer Default Ratings of Indymac and its wholly owned bank subsidiary Indymac Bank FSB (bank), and placed those ratings on Rating Watch Negative: -- Long-term IDR to 'B-' from 'BB'; -- Short-term IDR to 'C' from 'B'; -- Individual to 'D/E' from 'C/D'. Fitch's action reflects the company's challenges in returning to profitability and decision to defer dividend payments on preferred stock issued by IMB and the bank. Approximately $19.9 billion of debt and deposits are involved in Fitch's rating action. The TCR also related on May 14, 2008, that Standard & Poor's Ratings Services lowered its rating on Indymac and its subsidiaries, including lowering the counterparty credit rating on Indymac to 'B/C' from 'BB+/B'. S&P also lowered its ratings on the rated preferred stock of both Indymac and IndyMac Bank FSB to 'D' in light of the bank's announcement that its board had voted to suspend dividend payments on these rated issues. The corporate credit ratings on both the bank and the holding company were placed on CreditWatch with negative implications. IVANHOE ENERGY: To Increase Private Placement to C$88 Million ------------------------------------------------------------- Ivanhoe Energy Inc. is increasing the private placement disclosed on June 6 to C$88 million due to significantly increased expressions of interest from institutional investors. The price for the offering has been set at C$3.00 per special warrant. Ivanhoe Energy announced on June 6 that it was intending to raise up to C$50 million. Private placement allocations based on expressions of interest received to date remain subject to completion of formal documentation. The proceeds will be used by Ivanhoe Energy to make the initial payment of C$30 million required under the company's agreement with Talisman Energy Canada to acquire Talisman's interests in three leases in the Athabasca oil sands region in the Province of Alberta, Canada, which was announced on May 29, 2008. Ivanhoe Energy plans to use the balance of the funds for general working capital purposes and for its planned development activities on the oil sand leases. Subject to regulatory approval and satisfaction of all conditions precedent, the private placement is expected to close contemporaneously with the closing of the acquisition of the oil sand leases. About Ivanhoe Energy Vancouver, British Columbia, Canada, Ivanhoe Energy Inc. (TSX: IE; Nasdaq: IVAN) -- http://www.ivanhoe-energy.com/-- is an independent international heavy oil development and production company focused on pursuing long-term growth in its reserve base and production. Ivanhoe Energy plans to utilize technologically innovative methods designed to significantly improve recovery of heavy oil resources, including the application of the patented rapid thermal processing process for heavy oil upgrading and enhanced oil recovery techniques. In addition, the company seeks to expand its reserve base and production through conventional exploration and production of oil and gas. Finally, the company is exploring an opportunity to monetize stranded gas reserves through the application of the conversion of natural gas-to-liquids using a technology licensed from Syntroleum Corporation. The company's core operations are in the United States and China. Going Concern Doubt Ivanhoe Energy Inc. believes that existing conditions cast substantial doubt about its ability to continue as a going concern. The company incurred a net loss of $8.5 million for the three-month period ended March 31, 2008, and as at March 31, 2008, had an accumulated deficit of $168.5 million and negative working capital of $8.8 million. In addition, the company currently anticipates incurring substantial expenditures to further its capital investment programs and the company's cash flows from operating activities will not be sufficient to both satisfy its current obligations and meet the requirements of these capital investment programs. Moreover, recovery of capitalized costs related to potential HTL(TM) and GTL projects is dependent upon finalizing definitive agreements for, and successful completion of, the various projects, the outcome of which is uncertain. JOEY STEINFELDT: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Joey B. Steinfeldt Kristi R. Steinfeldt 4760 SW Trail Rd. Tualatin, OR 97062 Bankruptcy Case No.: 08-32709 Type of Business: The Debtors own and operate the mortgage group, Accolade Technologies Mgt Corp; the construction holding company, ABR Construction Holdings NW Inc; and the data solutions, Alphatech Voice & Data Solutions and Williamette Valley Company. Chapter 11 Petition Date: June 5, 2008 Court: District of Oregon Judge: Elizabeth L. Perris Debtor's Counsel: Ted A. Troutman, Esq. Email: tedtroutman@sbcglobal.net 16100 NW Cornell Rd. 200 Beaverton, OR 97006 Tel: (503) 292-6788 Total Assets: $3,398,219 Total Debts: $2,689,183 A copy of Joey B. Steinfeldt and Kristi R. Steinfeldt's petition is available for free at: http://bankrupt.com/misc/orb08-32709.pdf JPMORGAN-CIBC: S&P Trims Ratings and Removes Negative CreditWatch ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on three classes from JPMorgan-CIBC Commercial Mortgage-Backed Securities Trust 2006-RR1 and removed them from CreditWatch with negative implications, where they were placed on May 28, 2008. Concurrently, S&P raised its rating on one class from this transaction and affirmed eight others, one of which S&P removed from CreditWatch with negative implications. The rating actions follow its full analysis of the transaction, including an examination of the current credit characteristics of the transaction's assets and liabilities. S&P's review incorporated Standard & Poor's revised recovery rate assumptions for commercial mortgage-backed securities. According to the trustee report dated June 20, 2008, the transaction's current assets included 83 classes of CMBS pass- through certificates from 53 distinct transactions issued between 2002 and 2006. None of the CMBS transactions represents an asset concentration of 10% or more. The aggregate principal balances of the assets and the liabilities each totaled $523.9 million, which is unchanged since issuance. The transaction has realized no principal losses to date, and none of the current assets are first-loss CMBS assets. S&P's analysis indicates that the current asset pool exhibits weighted average credit characteristics consistent with 'BBB' rated obligations. Standard & Poor's rates $452.6 million (86%) of the assets. S&P reanalyzed its outstanding credit estimates for the remaining assets. Standard & Poor's analysis of the transaction supports the lowered, raised, and affirmed ratings. Ratings Lowered and Removed from Creditwatch Negative JPMorgan-CIBC Commercial Mortgage-Backed Securities Trust 2006-RR1 CMBS pass-through certificates Rating ------ Class To From ----- -- ---- J BB- BB/Watch Neg K B- BB-/Watch Neg L CCC B-/Watch Neg Rating Raised JPMorgan-CIBC Commercial Mortgage-Backed Securities Trust 2006-RR1 CMBS pass-through certificates Rating ------ Class To From ----- -- ---- C A+ A Rating Affirmed and Removed from Creditwatch Negative JPMorgan-CIBC Commercial Mortgage-Backed Securities Trust 2006-RR1 CMBS pass-through certificates Rating ------ Class To From ----- -- ---- H BB+ BB+/Watch Neg Ratings Affirmed JPMorgan-CIBC Commercial Mortgage-Backed Securities Trust 2006-RR1 CMBS pass-through certificates Class Rating ----- ------ A1 AAA A2 AAA B AA D A- E BBB+ F BBB G BBB- JSG DEVELOPMENT: Lender Fifth Third to Sell Collateral on June 30 ----------------------------------------------------------------- Fifth Third Bank in Chicago, lender and secured party of JSG Development LLC, will sell all personal and fixture property of JSG on June 30, 2008, 9:00 a.m., at Wildman Harrold Allen LLP, 225 West Wacker Drive, 30th Floor, Chicago, Illinois. The properties being sold are collateral to the Security Agreement, the Construction Loan Agreement and the Non-Revolving Promissory Note entered by JSG with the lender on Sept. 27, 2005. Information on the sale and the properties up for sale may be obtained from: Wildman Harrold, Allen & Dixon LLP Attn: David P. Dallas Tel (312) 201-2192 The JSG Development LLC -- http://jsgdevelopment.com/-- is a designer, builder and developer of homes. JULIO ROMERO: Case Summary & 11 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Julio E. Romero dba Romero Apartments 31 Gates Street Apt. 1 Worcester, MA 01610 Bankruptcy Case No.: 08-41930 Type of Business: The Debtor owns and operates Romero Apartments, a residential and commercial real estate. Chapter 11 Petition Date: June 17, 2008 Court: District of Massachusetts (Worcester) Judge: Joel B. Rosenthal Debtor's Counsel: Nicholas Katsonis, Esq. Email: nkatsonis@yahoo.com de Verges & Katsonis 40 Southbridge St., Ste. 215 Worcester, MA 01608 Tel: (508) 754-2600 Fax: (508) 754-1818 http://www.worcester-legal.com/ Total Assets: $1,160,651 Total Debts: $1,556,121 A copy of Julio E. Romero's petition is available for free at: http://bankrupt.com/misc/mab08-41930.pdf KIMBALL HILL: Panel Gets Court Nod to Hire Akin Gump as Co-Counsel ------------------------------------------------------------------ The Official Committee of Unsecured Creditors in Kimball Hill Inc. and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the Northern District of Illinois to retain Akin Gump Strauss Hauer & Feld LLP as co-counsel, nunc pro tunc to April 30, 2008. As the Committee's co-counsel, Akin Gump is expected to: (a) advise the Committee with respect to its rights, duties and powers in the Debtors' Chapter 11 cases; (b) assist and advise the Committee in its consultations with the Debtors relative to the administration of the Debtors' Chapter 11 cases; (c) assist the Committee in analyzing the claims of the Debtors' creditors and the Debtors' capital structure and in negotiating with holders of claims and equity interests; (d) assist the Committee in its investigation of the acts, conduct, assets, and liabilities and financial condition of the Debtors and of the operation of the Debtors' businesses; (e) assist the Committee in its analysis of, and negotiations with, the Debtors or any third party concerning matters related to, among other things, the assumption or rejection of certain leases of non-residential real property and executory contracts, asset dispositions, financing or other transactions and the terms of one or more plans of reorganization for the Debtors and accompanying disclosure statements and related plan documents; (f) assist and advise the Committee as to its communications to the general creditor body regarding significant matters in the Debtors' Chapter 11 cases; (g) represent the Committee at all hearings and other proceedings; (h) review and analyze applications, orders, statements of operations and schedules filed with the Court and advise the Committee as to their propriety, and to the extent deemed appropriate by the Committee support, join or object to the Court filings; (i) advise and assist the Committee with respect to any legislative, regulatory or governmental activities; (j) assist the Committee in preparing pleadings and applications as may be necessary in furtherance of the Committee's interests and objectives; (k) assist the Committee in its review and analysis of all of the Debtors' various agreements; (l) prepare, on behalf of the Committee, any pleadings, including without limitation, motions, memoranda, complaints, adversary complaints, objections or comments in connection with any matter related to the Debtors or the Chapter 11 cases; (m) investigate and analyze any claims against the Debtors' non-debtor affiliates; and (n) perform other legal services as may be required or are otherwise to be in interests of the Committee in accordance with the Committee's powers and duties stated in the Bankruptcy Code, Bankruptcy Rules or other applicable law. The Court rules that all fees and related costs and expenses it incurred or will incur by on account of services rendered by Akin Gump will be paid as administrative expenses of the Debtors' estates. Akin Gump will bill for its services at its standard hourly rates: Partners $460 to $1,050 Special Counsel/Counsel $250 to $810 Associates $175 to $850 Paraprofessionals $75 to $250 The Akin Gump professionals that are contemplated to provide services for the Committee's benefit are: : Professional Title Hourly Rate ------------ ----- ----------- Daniel H. Golden Partner $950 Philip C. Dublin Partner $675 Meredith A. Lahaie Associate $420 Joshua Y. Sturm Associate $375 Philip C. Dublin, Esq., at Akin Gump Strauss Hauer & Feld, LLP, in New York, assured the Court at a June 18, 2008, hearing that his firm and Shaw Gussis Fishman Glantz Wolfson & Towbin, the Committee's co-counsel will coordinate their tasks to avoid duplication. A representative from the U.S. Trustee's office told Judge Sonderby at the same hearing that he shared the Court's concern on duplicative efforts, and thus, asked both firms to file their fee applications in the same format so that it would be easy to review them side-by-side. The Debtors' counsel, Ray Schrock, Esq., at Kirkland & Ellis, said his firm will also be reviewing the fee applications and he is confident they can work constructively together. The Court advised the firms that it will be carefully "scrutinizing" the fee applications they will be filing. Daniel H. Golden, Esq., a partner at Akin Gump, discloses that to the best of his knowledge, his firm does not represent and does not hold any interest adverse to the Debtors' estates or their creditors. Mr. Golden assures the Court that Akin Gump is a "disinterested person," as the term is defined pursuant to Section 101(14) of the U.S. Bankruptcy Code. About Kimball Hill Based in Rolling Meadow, Illinois, Kimball Hill Inc. -- http://www.kimballhillhomes.com/-- is one of the largest privately-owned homebuilders and one of the 30 largest homebuilders in the United States, as measured by home deliveries and revenues. The company designs, builds and markets single- family detached, single-family attached and multi-family homes. The company currently operate within 12 markets, including, among others, Chicago, Dallas, Ft. Worth, Houston, Las Vegas, Sacramento and Tampa, in five regions: Florida, the Midwest, Nevada, the Pacific Coast and Texas. Kimball Hill, Inc. and 29 of its affiliates filed for Chapter 11 protection on April 23, 2008 (Bankr. N.D. Ill. Lead Case No. 08- 10095). Ray C. Schrock, Esq., at Kirkland & Ellis LLP, represents the Debtors in their restructuring efforts. The Debtors' consolidated financial condition as of Dec. 31, 2007 reflected total assets of $795,473,000 and total debts $631,867,000. (Kimball Hill Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). KIMBALL HILL: Committee Can Employ Shaw Gussis as Co-counsel ------------------------------------------------------------ The Official Committee of Unsecured Creditors in Kimball Hill Inc. and its debtor-affiliates' Chapter 11 cases obtained permission from the U.S. Bankruptcy Court for the Northern District of Illinois to retain Steven B. Towbin, Esq., and the law firm Shaw Gussis Fishman Glantz Wolfson & Towbin LLC as its co-counsel. As co-counsel to the Committee, Shaw Gussi is expected to: a) advise the Committee with respect to its duties and powers in the Debtors' bankruptcy cases; b) consult with the Debtors and their counsel concerning the administration of these Chapter 11 cases; c) assist the Committee in its investigation of the acts, conduct, assets, liabilities and financial condition of the Debtors; d) advise the Committee in connection with the formulation of a plan and the plan process; e) assist the Committee with its obligation to provide reasonable access to information for all unsecured creditors with claims against the Debtors; f) assist the Committee in requesting the appointment of a trustee or examiner, should such action be necessary; and g) perform any and all other legal services on behalf of the Committee as may be required and in the interest of creditors. Shaw Gussis will be paid for its services according to the firm's hourly rates, which are: Professional Hourly Rate ------------ ----------- Member $350 to 580 Associates $230 to 325 The rates for specific Shaw Gussis professionals who will work with the Committee are: Professional Hourly Rate ------------ ----------- Steve Towbin $580 Mark Radtke $325 Shaw Gussis will also be reimbursed for necessary and reasonable expenses it incurred or will incur in connection with its representation of the Committee. The Committee has also selected Daniel H. Golden and the law firm of Akin Gump Strauss Hauer & Feld LLP to serve as its co-counsel in the Debtors' cases. Akin Gump does not, however, have any Chicago offices and the Committee understands the importance of qualified counsel with a local presence. The Committee does not believe that its proposed retention of Akin Gump and Shaw Gussis will result in any significant added cost or duplication of efforts. Steven B. Towbin, Esq., a partner at Shaw Gussis Fishman Glantz Wolfson & Townbin LLC, informed the Court that his firm has represented and continues to represent, in matters unrelated to the Debtors' cases, the Ad Hoc Group of Secured Trade Creditors of Neumann Homes, Inc., et al., of which Stock Building Supply Company, a creditor of the Debtors, is a member. Mr. Towbin assured the Court that his firm is a "disinterested person," as that term is defined in Section 101(14) of the U.S. Bankruptcy Code, as modified by Section 1107(b). About Kimball Hill Based in Rolling Meadow, Illinois, Kimball Hill Inc. -- http://www.kimballhillhomes.com/-- is one of the largest privately-owned homebuilders and one of the 30 largest homebuilders in the United States, as measured by home deliveries and revenues. The company designs, builds and markets single- family detached, single-family attached and multi-family homes. The company currently operate within 12 markets, including, among others, Chicago, Dallas, Ft. Worth, Houston, Las Vegas, Sacramento and Tampa, in five regions: Florida, the Midwest, Nevada, the Pacific Coast and Texas. Kimball Hill, Inc. and 29 of its affiliates filed for Chapter 11 protection on April 23, 2008 (Bankr. N.D. Ill. Lead Case No. 08- 10095). Ray C. Schrock, Esq., at Kirkland & Ellis LLP, represents the Debtors in their restructuring efforts. The Debtors' consolidated financial condition as of Dec. 31, 2007 reflected total assets of $795,473,000 and total debts $631,867,000. (Kimball Hill Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). KIMBALL HILL: Committee Hires FTI Consulting as Financial Advisors ------------------------------------------------------------------ The Official Committee of Unsecured Creditors in Kimball Hill Inc. and its debtor-affiliates' Chapter 11 cases obtained permission from the U.S. Bankruptcy Court for the Northern District of Illinois to retain FTI Consulting, Inc., as its financial advisors, nunc pro tunc to May 2, 2008. As the Committee's financial advisors, FTI Consulting is expected to: (a) assist the Committee in the reviewing the financial related disclosures required by the Court, including the schedules of assets and liabilities, the statement of financial affairs and monthly operating reports; (b) assist the Committee on information and analyses required pursuant to the Debtors' postpetition financing, including preparation for hearings regarding the use of cash collateral and DIP financing; (c) assist in reviewing the Debtors' short-term cash management procedures; (d) assist in reviewing the Debtors' proposed key employee incentive and other critical employee benefit programs; (e) assist and advice the Committee with respect to the Debtors' identification of core business assets and the disposition of assets or liquidation of unprofitable operations; (f) assist in reviewing the Debtors' performance of cost/benefit evaluations with respect to the affirmation or rejection of various executory contracts and leases; (g) assist the valuation of the present level of operations and identification of areas of potential cost savings, including overhead and operating expense reductions and efficiency improvements; (h) assist in reviewing the financial information distributed by the Debtors to creditors and others, including cash flow projections and budgets, cash receipts and disbursement analysis, analysis of various asset and liability accounts, and analyze proposed transactions for which Court approval is sought; (i) assist in reviewing and monitoring the plan sponsor/assets sale process, including assessing the adequacy of the marketing process, completeness of any buyer lists, review and quantifications of any bids and other services deemed necessary by the Committee; (j) attend at meetings and assist discussions with the Debtors, potential investors, banks, other secured lenders, the Committee, the U.S. Trustee, other parties in interest and professionals hired by the same, as requested; (k) assist in reviewing information and analysis necessary for the confirmation of a plan in the Chapter 11 proceedings; (l) assist in evaluating and analyzing avoidance actions, including fraudulent conveyances and preferential transfers; (m) provide litigation advisory services with respect to accounting and tax matters, along with expert witness testimony on case related issues as required by the Committee; and (n) render other general business consulting assistance as the Committee may deem necessary that are consistent with the role of a financial advisor and not duplicative of services provided by other professionals in the proceeding. FTI Consulting will be paid for the contemplated services in accordance with the firm's hourly rates: Professional Hourly Rate ------------ ----------- Senior Managing Directors $650 to $715 Directors/Managing Directors $475 to $620 Consultants/Senior Consultants $235 to $440 Administration/Paraprofessionals $100 to $190 These FTI professionals will the working primarily with the Committee: Professional Hourly Rate ------------ ----------- Mike Eisenband $715 Tim Dragelin $650 Matt Diaz $620 Mark Laber $505 Kate Schondelmeier $385 Michael Eisenband, senior managing director of FTI Consulting, Inc., assured the Court that his firm is a "disinterested person," as that term is defined in Section 101(14) of the U.S. Bankruptcy Code, as modified by Section 1107(b). About Kimball Hill Based in Rolling Meadow, Illinois, Kimball Hill Inc. -- http://www.kimballhillhomes.com/-- is one of the largest privately-owned homebuilders and one of the 30 largest homebuilders in the United States, as measured by home deliveries and revenues. The company designs, builds and markets single- family detached, single-family attached and multi-family homes. The company currently operate within 12 markets, including, among others, Chicago, Dallas, Ft. Worth, Houston, Las Vegas, Sacramento and Tampa, in five regions: Florida, the Midwest, Nevada, the Pacific Coast and Texas. Kimball Hill, Inc. and 29 of its affiliates filed for Chapter 11 protection on April 23, 2008 (Bankr. N.D. Ill. Lead Case No. 08- 10095). Ray C. Schrock, Esq., at Kirkland & Ellis LLP, represents the Debtors in their restructuring efforts. The Debtors' consolidated financial condition as of Dec. 31, 2007 reflected total assets of $795,473,000 and total debts $631,867,000. (Kimball Hill Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). KIMBALL HILL: Court Establishes Procedures for Claims Settlement ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois established uniform settlement procedures for certain threatened or actual claims and causes of action brought by or against Kimball Hill Inc. and its debtor-affiliates. In the ordinary course of business, disputes between the Debtors and other parties often arise, concerning, among other things, tort and contractual claims, claims of governmental agencies regarding environmental, health, safety, zoning and other regulations, and supplier/customer-related disputes. Consequently, numerous third parties hold various claims and causes of action against the Debtors that have been or will be asserted through litigation, administrative action, arbitration, or other types of action or proceeding. Similarly, the Debtors also hold claims and causes of action against third parties that they have asserted or will assert through litigation, or other types of proceedings. The Settlement Procedures will apply to De Minimis Claims asserted (i) by third parties that are not "insiders" as defined in Section 101(31) of the U.S. Bankruptcy Code against the Debtors, or (ii) by the Debtors against the settling parties. The Settlement Procedures are: (a) The Debtors will not agree to any settlement of a De Minimis Claim unless they determine these factors warrant settlement: -- the probability of success if the claim is litigated or arbitrated; -- the complexity, expense, and likely duration of any litigation or arbitration with respect to the claim; -- any other factors that weigh in favor of the settlement; -- the interests of the Debtors', their creditors, and shareholders. (b) No settlement will take effect unless it is executed by the Debtors' authorized representative. (c) Where the proposed settlement amount does not exceed $150,000, the Debtors may agree to settle the claim or cause of action on any reasonable terms, and may enter into, execute, and consummate a written settlement agreement binding on them and their estates without notice or further Court action after seven calendar days notice to counsel for the agent for their Senior Secured Prepetition Lenders and counsel to the Official Committee of Unsecured Creditors. (d) If the Prepetition Lenders Agent or the Committee files an objection to any proposed settlement below $150,000 and serves that objection on the Debtors so that it is received by the deadline, the matter will be heard at the next regularly scheduled omnibus hearing, subject to the Debtors' right to request a hearing on an expedited basis. If the Debtors resolve the objection, they may submit a proposed order to the Court with notice to the Creditors Committee and the Prepetition Agent. (e) Where the Settlement Amount is more than $150,000 but does not exceed $1,000,000, the Debtors may agree to settle the claim or cause of action, only if: -- the Debtors provide written notice of the settlement terms to the (i) Office of the United States Trustee for the Northern District of Illinois, (ii) counsel to the Prepetition Agent, and (iii) counsel to the Creditors' Committee; and -- none of the Notice Parties objects in writing to the settlement terms within 10 calendar days after service of written notice. In the absence of any objection, the Debtors may enter into a written settlement agreement without further Court order. (f) If any of the Notice Parties objects to any settlement by the Settlement Objection Deadline, the Debtors may only enter into the proposed settlement with the Settling Party: -- after the resolution of the objection raised; or -- upon Court approval. (g) The Debtors will seek Court approval of any settlement not authorized pursuant to these Settlement Procedures. (h) The Debtors may agree to the modification of the automatic stay so that a claimant may continue prosecuting litigation on which the Debtors have insurance coverage without further Court approval provided at a minimum, that each Claimant must: -- waive all related claims against the Debtors and their estates; and -- agree to enforce any claim, and judgment on account of the claim pertaining to applicable insurance proceeds, if any. If the Debtors and the Claimant negotiate an agreement to modify the automatic stay, the Debtors will file an executed stipulation on the agreement, which will take effect upon filing. The Settlement Procedures will reduce the burden on the Court's docket while complying with the requirements of the Bankruptcy Code, the Debtors asserted. Consequently, the interests of all the creditors will be protected through the notice and objection provisions of the Settlement Procedures, the Debtors averred. About Kimball Hill Based in Rolling Meadow, Illinois, Kimball Hill Inc. -- http://www.kimballhillhomes.com/-- is one of the largest privately-owned homebuilders and one of the 30 largest homebuilders in the United States, as measured by home deliveries and revenues. The company designs, builds and markets single- family detached, single-family attached and multi-family homes. The company currently operate within 12 markets, including, among others, Chicago, Dallas, Ft. Worth, Houston, Las Vegas, Sacramento and Tampa, in five regions: Florida, the Midwest, Nevada, the Pacific Coast and Texas. Kimball Hill, Inc. and 29 of its affiliates filed for Chapter 11 protection on April 23, 2008 (Bankr. N.D. Ill. Lead Case No. 08- 10095). Ray C. Schrock, Esq., at Kirkland & Ellis LLP, represents the Debtors in their restructuring efforts. The Debtors' consolidated financial condition as of Dec. 31, 2007 reflected total assets of $795,473,000 and total debts $631,867,000. (Kimball Hill Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). KIMBALL HILL: Court Establishes Contract Rejection Procedures ------------------------------------------------------------- At the behest of Kimball Hill Inc. and its debtor-affiliates, the U.S. Bankruptcy Court for the Northern District of Illinois established uniform procedures to expedite the process of rejecting executory contracts and unexpired leases in the Debtors' Chapter 11 cases pursuant to Section 365(a) of the U.S. Bankruptcy Code. The Debtors related that they continue to analyze various aspects of their operations in connection with their restructuring efforts, including evaluating the profitability of their prepetition executory contracts and unexpired leases. The Debtors informed the Court that they are focused on identifying and shedding unnecessary and burdensome Contracts. They estimated that they have more than 5,000 outstanding Contracts. The Contract Rejection Procedures are: 1) The Debtors will file a notice to reject contract or contracts, which will set forth: * the contract to be rejected; * names and addresses of counterparties to the contract; * the effective date of the rejection for each contract; and * the deadlines and procedures for filing objections to the Rejection Notice. 2) The Debtors will serve the Rejection Notice on the counterparties to the contract to be rejected by overnight delivery service or by email on: * counsel to the Official Committee of Unsecured Creditors; * counsel to the the Debtors' Prepetition Lenders' Agent; and * the Office of the United States Trustee. 3) Parties who oppose any contract rejection must file a written objection with the Court to be actually received within 10 calendar days after the date of the Rejection Notice by these objection service parties: * counsel to the Debtors; * counsel to the Official Committee of Unsecured Creditors; * counsel to the Prepetition Lenders Agent; and * the Office of the United States Trustee. 4) In the absence of any timely filed objection, the Debtors will file with the Court a certificate of no objection with a proposed rejection order. The Debtors, however, will file a notice of the hearing on the objection, should there be any, which are timely filed with the Court. 5) Pursuant to Section 501 of the Bankruptcy Code, any claim arising from the rejection of a contract with the Debtors must be filed by the Rejection Claim Bar Date in order to be considered by the Court. The Debtors maintain that the Rejection Procedures will minimize costs to their estates and reduce the burden on the Court's docket while protecting creditors with an interest in the Contracts. About Kimball Hill Based in Rolling Meadow, Illinois, Kimball Hill Inc. -- http://www.kimballhillhomes.com/-- is one of the largest privately-owned homebuilders and one of the 30 largest homebuilders in the United States, as measured by home deliveries and revenues. The company designs, builds and markets single- family detached, single-family attached and multi-family homes. The company currently operate within 12 markets, including, among others, Chicago, Dallas, Ft. Worth, Houston, Las Vegas, Sacramento and Tampa, in five regions: Florida, the Midwest, Nevada, the Pacific Coast and Texas. Kimball Hill, Inc. and 29 of its affiliates filed for Chapter 11 protection on April 23, 2008 (Bankr. N.D. Ill. Lead Case No. 08- 10095). Ray C. Schrock, Esq., at Kirkland & Ellis LLP, represents the Debtors in their restructuring efforts. The Debtors' consolidated financial condition as of Dec. 31, 2007 reflected total assets of $795,473,000 and total debts $631,867,000. (Kimball Hill Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). KREE TECHNOLOGIES: Financial Troubles Prompt Bankruptcy Filing -------------------------------------------------------------- Kree Technologies Inc., a subsidiary of Kree Tech International Corporation, has filed for bankruptcy. This action was taken due to the continuing decline in the company's financial position and its inability to generate sufficient revenues to cover its obligations. This happened over a month after Kree Technologies USA Inc., Kree Technologies Inc.'s subsidiary, closed its plant in Clearwater, Florida. "Our firm has worked strenuously to avoid this bankruptcy" stated Gregory Moffat, CEO. "However due to industry overseas competitors, intense market competition, loss of key customers, and increasing costs of raw materials we were unable to operate profitably." In addition Kree disclosed the resignation of Mr. Rob Hutchison from the board of directors. The board of directors of Kree is seeking new opportunities to protect Kree's shareholders best interests, including, but not limited to, the potential sale of the company. About Kree Technologies Inc. Located in Quebec, Canada, Kree Technologies Inc. is a developer of pressure-sensitive products for the health care industry. Kree has developed innovative and cost-efficient medical tape products including printed vinyl, coated plastic and fabric substrates, and bulk finished goods. Kree has also developed proprietary coating formulations giving its medical bandages greater effectiveness and versatility. The company's products are distributed in North America, Australia, Asia and Europe in both the retail and hospital markets. LANDSOURCE COMMUNITIES: Wants to Hire Bilzin as Special Counsel --------------------------------------------------------------- Pursuant to Sections 327(e) and 328(a) of the Bankruptcy Code and Rule 2014 of the Federal Rules of Bankruptcy Procedure, LandSource Communities Development LLC and its debtor-affiliates seek the authority of the U.S. Bankruptcy Court for the District of Delaware to employ Bilzin Sumberg Baena Price & Axelrod LLP as their special corporate counsel, nunc pro tunc to June 8, 2008. Since 2004, Bilzin Sumberg has represented the Debtors in general corporate, financing and real estate matters. Bilzin Sumberg has a prior experience and knowledge regarding the Debtors' corporate, real estate and capital structure, including the negotiation, structuring and documentation of the First Lien Credit Documents and the Second Lien Credit Documents. Bilzin Sumberg's current hourly rates are: Professional Hourly Rate ------------ ----------- Attorneys $225 - $700 Legal Assistants $165 - $295 Paralegals $165 - $295 As of the Petition Date, Bilzin Sumberg is owed approximately $200,000 for its prepetition services. Bilzin Sumberg intends to retain its claim against the Debtors for fees which were unpaid as of the Petition Date. Bilzin Sumberg has not been paid a retainer for services and costs incurred on behalf of the Debtors as of June 20, 2008. The Debtors have agreed to support Bilzin Sumberg's applications to be paid reasonable attorneys' fees on an hourly rate basis and to obtain reimbursement of all costs and expenses incurred in connection with the Debtors' Chapter 11 cases. Jay Sakala, a partner at Bilzin Sumberg, assures the Court that his firm does not hold or represent any interest adverse to the Debtors on any matters in which the firm is to be engaged and does not have any connections with the Debtors, their creditors, other parties in interest, and their respective attorneys and accountants. Mr. Sakala notes that Bilzin Sumberg will work closely with Weil Gotshal & Manges LLP and Richards, Layton & Finger, P.A., to ensure there is no duplication of effort, whenever possible, with respect to each firm's respective duties. 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, Issue No. 4; http://bankrupt.com/newsstand/or 215/945-7000). LPL HOLDINGS: Moody's Places CF Rating on Review for Possible Hike ------------------------------------------------------------------ Moody's Investors Service placed on review for a possible upgrade the B1 corporate family rating of LPL Holdings, Inc.. Moody's last rating action on LPL was on Feb. 8, 2007 when the CFR was upgraded to B1 from B2 and assigned a positive rating outlook. According to Moody's, today's rating action recognizes the steady progress LPL has made in building its business and increasing its cash generation, thus reducing cash flow leverage and improving interest coverage. LPL's cash flow leverage ratio improved to 4.5x in 2007 from 5.4x in 2006 and is now significantly better than the 7.7x leverage in 2005, at the time of LPL's leveraged buyout. The significant reduction in leverage is a key rating factor contributing to consideration of a possible upgrade to Ba3. "LPL has continued to demonstrate strong performance, growing its base of advisors and client assets both organically and through bolt-on acquisitions of underperforming introducing brokers," Alexander Yavorsky, Moody's assistant vice-president said. "Although pressuring margins in the near-term, the acquisition strategy is understandably aimed at capitalizing on LPL's operating leverage and superior technology. If expenses are successfully reduced, the strategy should pay off and, absent significant additional borrowing, result in further delevering." While the reduction in leverage has improved LPL's credit profile, Moody's noted as a result of its acquisition strategy, LPL's overall indebtedness has not been reduced since its LBO. During the review process, Moody's will explore management's financial policy going forward. An important factor to be considered by Moody's during the review will be how LPL will seek to balance the financial interests of its shareholders, the capital requirements of its growth strategy, and the need to reduce the risks posed by its significant level of indebtedness ($1.4 billion). Over the last two years, LPL's revenue mix has continued to shift toward a greater proportion of recurring revenue, which in 2007 comprised approximately 60% of total revenue. This trend is being driven by continued migration by clients to advisory accounts and the overall growth in fee-generating client assets. While positive from the standpoint of reducing reliance on potentially volatile transaction volumes and therefore supportive of LPL's credit profile, the shift to asset-based sources of revenue increases LPL's potential sensitivity to equity markets' performance. This is especially the case given the predominantly long-only investment style of its advisors and end-clients. Therefore, during the review process, Moody's will evaluate the sensitivity of LPL's results to a possible downturn in the equities markets, both in terms of top-line performance and management's ability to curtail expenses. On Review for Possible Upgrade: Issuer: LPL Holdings, Inc. -- Corporate Family Rating, Placed on Review for Possible Upgrade, currently B1 -- Senior Subordinated Regular Bond/Debenture Due 2015, Placed on Review for Possible Upgrade, currently B3 -- Senior Secured Bank Credit Facility, Placed on Review for Possible Upgrade, currently B1 -- Senior Secured Bank Credit Facility Due 2013, Placed on Review for Possible Upgrade, currently B1 Outlook Actions: Issuer: LPL Holdings, Inc. -- Outlook, Changed To Rating Under Review From Positive LPL is a leading provider of infrastructure and support services to independent financial advisors. In 2007, LPL generated $2.7 billion of revenue and ended the year with $232 billion in assets under administration. MAGNOLIA FINANCE: Moody's Cuts Series 2005-2 Notes' Rating to Ba2 ----------------------------------------------------------------- Moody's Investors Service has downgraded its rating of these notes issued by Magnolia Finance II plc Series 2005-2: Class Description: Magnolia Finance II plc Series 2005-2 due 2010 -- Prior Rating: Baa3, on review for possible downgrade -- Current Rating: Ba2 Moody's explained that the rating action reflects deterioration in the credit quality of the transaction's underlying reference portfolio, which consists primarily of corporate securities. MANCHESTER INC: Court Confirms Third Amended Chapter 11 Plan ------------------------------------------------------------ Judge Barbara J. Houser of the United States Bankruptcy Court for the Northern District of Texas confirmed a third amended Chapter 11 plan of reorganization filed by Manchester Inc. and its debtor- affiliates on June 17, 2008. On June 6, 2008, Judge Houser approved the Debtors' disclosure statement filed before the Court on April 16, 2008. She held that the disclosure statement contains adequate information within the meaning of Section 1125 of the Bankruptcy Code. According to papers filed with the Court, the Plan resolves the issue between lender Palm Beach Multi-Strategy Fund LP and the Debtors, wherein the Debtors sued the lender for improperly seeking to take control of the their assets. The lender and the unsecured creditors voted their claims in favor of the Debtors' plan, Bloomberg News reports. As part of the plan, Alex D. Moglia, president and lead restructuring professional of Moglia Advisors, will serve as litigation trustee, at the behest of the Official Committee of Unsecured Creditors of the Debtors. Mr. Moglia will be paid $410 per hour for his rendered services. Plan Overview Under the Plan, the Debtors and a trustee will complete a litigation trust agreement and set up a litigation trust on the effective date. On that date, the Debtor is expected to return any remaining cash to the litigation trust while the senior lender is also expected to remit the Plan cash and seed cash to the litigation trust. All causes of action -- other than causes of action arising in the ordinary course of the Debtors' business in regard to the enforcement and collection of automobile loans -- will be transferred to the litigation trust immediately. The proceeds of the litigation trust will be used to pay all allowed claims as provided in the Plan. On the effective date, all parent common stock interests will be terminated and canceled. The Debtor, then, will issue new common stock to holders of senior lender secured claims pursuant to the Plan. All property of the estates -- including any property acquired by the Debtors during the Chapter 11 cases -- will revest in the respective reorganized Debtors. Liquidation Analysis In a Chapter 7 liquidation, the Debtors estimate a $35,018,628 gross recovery with trustees and liquidation expenses of at least $1,300,000 and payment of priority sales tax claims from accounts receivable collections of $3,738,000, for a net recovery of only $29,978,557 to the estates. The net recovery is sufficient to satisfy even the senior lender secured claims. The amended plan classified claims against and liens in the Debtors in 10 classes. The Classification of treatment of claims and interests are: Treatment of Claims and Interests Type Estimated Estimated Class of Claims Treatment Amount Recovery ----- --------- --------- ----------- --------- unclassified administrative unimpaired $0 100% claims unclassified priority tax unimpaired $200,000 100% claims 1 Priority unimpaired $3,738,000 100% non-tax claims 2 M&I Secured unimpaired $423,000 100% Bank Claims 3 Other Secured unimpaired $0 100% Claims 4 senior lender impaired -- 100% secured claims 5 general impaired $23,383,984 5.4% unsecured claims 6 intercompany impaired $0 0% claims 7 senior lender impaired $0 0% unsecured claims 8 Lancelot impaired $2,841,000 12.6% claims 9 parent common impaired -- none stock interests 10 subsidiary impaired -- retain equity interests interests Holders of class 1 allowed priority non-tax claims will be paid in cash plus interest accruing after the Debtors' bankruptcy filing from the remaining cash, if any, on the Plan's effective date. Class 2 M&I Bank secured claim will be reinstated and paid by the reorganized Debtors when due pursuant to the terms and conditions of the bank's agreements. At the sole discretion of the Debtors, holders of class 3 other secured claims will receive, either (i) the collateral securing the claims, (ii) cash equal to the lesser of the allowed amount of the claim plus interests, (iii) treatment required under section 1124(2) of the Bankruptcy Code for allowed other secured claim to be impaired, or (vi) other treatment on other terms and conditions as may be agreed upon in writing by the holders and the Debtors. On the Plan's effective date, class 4 senior lender secured claims will be entitled to receive in proportion to the ratio of the allowed secured claims owed by the Debtors. Class 5 general unsecured and class 7 senior lender unsecured claims will receive a pro rata share from the remaining (i) Plan cash, (ii) litigation trust funds. As of the Plan's effective date, class 5 have not been paid. In the Debtors' earlier plan version, class 5 claims totaled $21,928,497. To the extent possible, any portion of class 8 Lancelot claim is deemed to constitute a secured claim such claim will treated as a class 3 other secured claim. But, any portion of class 8 claim is deemed to an unsecured claims such claim will treated as a class 5 general unsecured claim. Class 8 was expected to recover 5.4% under the Debtors' earlier plan version. Class 6, 9 and 10 will not receive any distribution under the Plan. About Manchester Based in Dallas, Texas, Manchester Inc. (OTCBB: MNCS) -- http://www.manchesterinc.net/-- is in the Buy-Here/Pay-Here auto business. Buy-Here/Pay-Here dealerships sell and finance used cars to individuals with limited credit histories or past credit problems, generally financing sales contacts ranging from 24 to 48 months. It operates six automotive sales lots, which focus on the Buy-Here/Pay-Here segment of the used car market. The company and its seven affiliates filed for chapter 11 protection on Feb. 7, 2008 (Bankr. N.D. Tex. Case No.08-30703). Winston & Strawn LLP represents the Debtors in their restructuring efforts. Eric A. Liepins, Esq., is the Debtors' local counsel. The U.S. Trustee for Region 6 appointed creditors to serve on an Official Committee of Unsecured Creditors in these cases. Powell Goldstein LLP represents the Committee as counsel. As of the Debtors' bankruptcy filing, it listed total assets of $131,582,157 and total debts of $123,881,668. MARSHALL HOLDINGS: To Pay CAMOFI $1MM to Resolve Claims & Disputes ------------------------------------------------------------------ Marshall Holdings International Inc. executed a Settlement Agreement and Mutual Release with CAMOFI Master LDC and CAMHZN Master LDC with respect to a Purchase Agreement, dated Oct. 31, 2007. Pursuant to the Purchase Agreement, there were executed and delivered those certain CAMOFI 12% Secured Promissory Notes due May 1, 2008, Letter Agreement, (Fuselier) Guarantee, Marshall Holdings Guarantee, Mortgage (Nevada), Mortgage (Utah), Security Agreement, Security Interest and Pledge Agreement, Common Stock Purchase Warrant to Purchase 424,936 Shares of Common Stock of Marshall Holdings International, Inc., and Common Stock Purchase Warrant to Purchase 1,200,063 Shares of Common Stock of Marshall Holdings International, Inc. To date, the company has been unable to satisfy certain of its obligations in the Transaction Documents. In that regard, the company and CAMOFI wished to settle all claims, disputes, and obligations arising out of or related to the Transaction Documents, including all claims asserted or that could have been asserted in the Transaction Documents: 1) Settlement In settlement of all of its obligations in the Transaction Documents, the company (a) agreed to pay to CAMOFI the sum of $1,000,000 on or before 90 days from June 17, 2008, and (b) until such time as CAMOFI will notified the company in writing that it has sold or otherwise disposed of all of the shares of Marshall Holdings common stock held by it, the company will cooperate fully with CAMOFI and its counsel and deliver, within a reasonable time, upon the request of CAMOFI or its counsel any and all opinions of counsel, certificates, agreements, instruments and documents reasonably requested by CAMOFI or its counsel to enable CAMOFI to sell or otherwise dispose of its Shares. 2) Consideration In addition to the Settlement Payment, as consideration for the execution of the Agreement, the company will, simultaneously with the execution of the Settlement Agreement pay to CAMOFI: (a) the sum of $20,000 and (b) the sum of $15,000 as reimbursement for legal fees and as a management fee, the payment of which grants to us the right to make the Settlement Payment on or before 30 days from June 17, 2008. If the Settlement Payment is not made within 30 days from June 17, 2008, the company will pay to CAMOFI an additional $20,000 before 31 days from June 17, 2008, the payment of which will grant to the company the right to make the Settlement Payment on or before 60 days from June 17, 2008. If the Settlement Payment is not made within 60 days from June 17, 2008, the company must pay to CAMOFI an additional $20,000 before 61 days from June 17, 2008, the payment of which will grant to the company the right to make the Settlement Payment on or before 90 days from June 17, 2008, which extension will be final. A full-text copy of the Settlement Agreement and Mutual Release is available for free at http://ResearchArchives.com/t/s?2eb7 About Marshall Holdings Headquartered in Las Vegas, Nevada, Marshall Holdings International Inc. fka Gateway Distributors Ltd. (OTC BB: MHII.OB) -- http://www.mhii.net/-- distributes vitamins, nutritional supplements, whole health foods and skin care products mainly in the United States of America and Canada, with some sales in Russia and Indonesia. Marshall Holdings International Inc.'s consolidated balance sheet at March 31, 2008, showed $11,769,411 in total assets and $14,188,058 in total liabilities, resulting in a $2,418,647 total stockholders' deficit. Going Concern Doubt As reported in the Troubled Company Reporter on May 14, 2008, Madsen & Associates CPA's Inc., in Salt Lake City, expressed substantial doubt about Marshall Holdings International Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm said that the company will need additional working capital for its planned activity and to service its debt. The company has significant debt that were due and payable on September and December 2007. MASSACHUSETTS HEALTH: S&P Cuts $84.5MM Bond Rating to BB- from BB+ ------------------------------------------------------------------ Standard & Poor's lowered its rating to 'BB-' from 'BB+' on $84.6 million series 1992B, 1998D, and 2003E bonds issued by the Massachusetts Health and Educational Facilities Authority for Jordan Hospital. At the same time, the outlook is revised to negative from stable. The downgrade reflects current concerns about Jordan Hospital's ability to support its recently completed major renovation and expansion project in light of a significant downturn in volume and flattening revenue. Recent financial results have not met expectations and are below budget year to date. In addition, Jordan's light liquidity cannot provide much cushion to the organization as it works through its current problems. Jordan Hospital's recent deterioration in finances and very short- term evidence of improved hospital operations warrant a negative outlook at this time. While the new CEO has taken several actions to strengthen the board, management, and physicians at the organization, the financial profile remains very thin with little room, especially on the balance sheet, to absorb further setbacks. If management is successful in meeting its 2009 targeted breakeven from operations for the system, it is possible that the outlook could be returned to stable next year, however, Jordan must improve liquidity before a rating upgrade can be considered. A lower rating is likely if liquidity diminishes below 30 days' cash on hand or if coverage moves below 1x maximum annual debt service. A lower rating is precluded at this time because the new CEO has taken steps to expand the service and physician depth and breadth, which may ultimately be sufficient to support the significant capital investment made in the plant, however, the results will not be known for a while. In addition, Jordan has a solid market position in Plymouth, Massachusetts, with a growing population and limited competition . Jordan Hospital operates a 161-bed acute-care hospital in Plymouth, Massachusetts. A mortgage on certain property and gross receipts secure the bonds. While Jordan Hospital is the only obligated entity, the hospital's parent company guarantees the bonds. MERIDIAN INVESTMENT: Case Summary & 23 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Meridian Investment Group LLC 1650 West La Veta Avenue Orange, CA 92868 Bankruptcy Case No.: 08-13415 Chapter 11 Petition Date: June 17, 2008 Court: Central District Of California (Santa Ana) Judge: Theodor Albert Debtor's Counsel: Georgeann H. Nicol 9454 Wilshire Blvd., 6th Flr Beverly Hills, CA 90212-2929 Tel (310) 271-6223 Fax (310) 271-9805 Email georgeannnicol@aol.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Debtor's list of largest unsecured creditors is available for free at http://bankrupt.com/misc/cacb08-13415.pdf MERIDIAN ON BAINBRIDGE: Mastro Can Foreclose Assets, Says Court --------------------------------------------------------------- The Hon. Karen A. Overstreet of the United States Bankruptcy Court for the Western District of Washington gave Michael R. Mastro authority to foreclose a four-story condominium building of Meridian on Bainbridge Island L.L.C. located in Seattle, Bloomberg News reports. Mr. Mastro contended that the Chapter 11 voluntary petition the Debtors filed on Feb. 28, 2008, was an attempt to block a foreclosure of three condominium units, in which he holds a deed of trust, Bloomberg relates. Accordingly, the Debtor asks the Court to convert its Chapter 11 case to a Chapter 11 liquidation proceeding, but the U.S. Trustee for Region 18 contends that it should be dismissed. About Meridian on Bainbridge Headquartered in Meridian on Bainbridge Island, Washington, The Meridian On Bainbridge Island, L.L.C., owns a four-story complex with sixteen single-level residential suites, as well as executive offices and guest accommodations. The Company filed for Chapter 11 protection on Feb. 28, 2008 (Bankr. W.D. Wash. Case No.08- 11142). Jeffrey B. Wells, Esq., represents the Debtors. As previously reported on the Troubled Company Reporter, the company filed a voluntary petition on July 25, 2007 (Bankr. W.D. Wash. Case No.07-13408). Thomas T. Glover as preceding bankruptcy judge dismissed the Debtor's case after he approved a foreclosure in 2007. When the Debtor filed for protection against it creditors, it listed assets and debts between $50 million and $100 million. MESA AIR: Gets Nasdaq Noncompliance Notice on Bid Price Protocol ---------------------------------------------------------------- Mesa Air Group, Inc. received a Nasdaq Staff Determination letter on June 18, 2008 indicating that Mesa fails to comply with the minimum bid price requirement for continued listing set forth in Marketplace Rule 4450(a)(5). Therefore, in accordance with Marketplace Rule 4450(e)(2), Mesa has been provided 180 calendar days, or until Dec. 15, 2008, to regain compliance. If, at anytime before Dec. 15, 2008, the bid price of Mesa's common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, Mesa will have regained compliance with the Rule. The Notice also states that if Mesa does not regain compliance with the Rule by Dec. 15, 2008, Nasdaq Staff will provide Mesa written notification that its securities will be delisted. In the event of such a notification, Mesa intends to request a hearing before a Nasdaq Listing Qualifications Panel to review the Staff Determination. There can be no assurance the Panel will grant the company's request for continued listing. The Notice arises as a result of the fact that for the last 30 consecutive business days, the bid price of Mesa's common stock has closed below the minimum $1.00 per share requirement for continued inclusion under the Rule. Mesa Air Group Inc. -- http://www.mesa-air.com-- operates 182 aircraft with over 1,000 daily system departures to 157 cities, 42 states, the District of Columbia, Canada, the Bahamas and Mexico. Mesa operates as Delta Connection, US Airways Express and United Express under contractual agreements with Delta Air Lines, US Airways and United Airlines, and independently as Mesa Airlines and go!. In June 2006 Mesa launched inter-island Hawaiian service as go! This operation links Honolulu to the neighbor island airports of Hilo, Kahului, Kona and Lihue. The Company, founded by Larry and Janie Risley in New Mexico in 1982, has approximately 5,000 employees and was awarded Regional Airline of the Year by Air Transport World magazine in 1992 and 2005. Mesa is a member of the Regional Airline Association and Regional Aviation Partners. Mesa has 5,000 employees overall. Freedom Airlines currently operates 34 50-seat ERJ-145 and 7 76- seat CRJ-900 aircraft for Delta Connection. On May 14, 2008, Air Midwest, Inc., a wholly owned subsidiary of Mesa Air, unveiled plans to discontinue all operations by June 30 including its current scheduled services, citing record-high fuel prices, insufficient demand and a difficult operating environment as the main factors in its decision. Bankruptcy Warning As disclosed in the Troubled Company Reporter on May 29, 2008, Mesa Air Group Inc. president and chief operating officer Michael Lotz warned the company could will file for bankruptcy protection by July 20 if Delta Air Lines, Inc. successfully terminated their Connection Agreement and Mesa can't redeploy unused aircraft, Harry R. Weber of Associated Press reports. As reported by the Troubled Company Reporter on May 23, 2008, Delta had notified the Company of its intent to terminate the Delta Connection Agreement among Delta, the Company, and its wholly-owned subsidiary, Freedom Airlines, Inc. In fiscal 2007, the Connection Agreement accounted for approximately 20% of the Company's 2007 total revenues. Delta seeks to terminate the Connection Agreement as a result of Freedom's alleged failure to maintain a specified completion rate with respect to its ERJ-145 Delta Connection flights during three months of the six-month period ended February 2008. On April 7, 2008, the Company filed a lawsuit against Delta alleging breach of the Connection Agreement and seeking specific performance by Delta of its obligations thereunder. On May 9, 2008, the Company filed a motion for a preliminary injunction in the U.S. District Court for the Northern District of Georgia against Delta to prevent its termination of the Delta Connection Agreement. The hearing started on May 27 and is set to end today May 29, 2008. The Company said in a regulatory filing it anticipates a ruling to be issued by the Court upon completion of such proceedings. Mesa Air Group warned in the filing it may have to seek protection if Delta Air successfully terminated their Connection Agreement. M FABRIKANT: Royal Asscher Distances Self Following Court Ruling ---------------------------------------------------------------- On June 18, 2008, a U.S. district court ruling document cited RA Cut LLC as a named affiliate company through which M. Fabrikant & Sons and the Fortgang family diverted finances to before M. Fabrikant filed for Chapter 11 bankruptcy protection. In the document the business was referred to as the hereafter term "Royal Asscher" without due consideration for the fact that another business is operating under a similar name. Lita Asscher, president Royal Asscher(R) of America Inc., states: "In 2001 Royal Asscher Diamond Company entered into a distributorship agreement with M. Fabrikant & Sons, whereby the company was responsible for the marketing and sale of our branded diamond cut the Royal Asscher(R) Cut. Thus Royal Asscher Cut LLC was established as a Fortgang entity, it was owned by Matthew and Susan Fortgang's private trusts and it was without the knowledge of Royal Asscher Diamond Company or my family in Amsterdam. On request of the lawyers of Royal Asscher Diamond Company the Fortgangs changed the name of that company to RA Cut LLC in 2007. "The dissolution of M. Fabrikant and Sons also dissolved the distributor agreement. In the event of an agreement termination M. Fabrikant and Sons were clearly precluded from using our good name, a name that has been built over 150 years, in the diamond industry. "The agreement did not grant any rights to M. Fabrikant and Sons in our entities or assets -- other than as a distributor. As per the terms of this agreement Royal Asscher(R) was not granted any rights in Fabrikant/Fortgang assets. The Fortgangs have no interest whatsoever in any of our entities. Nor are any of our entities in possession of any assets of Fabrikant or of the Fortgang family. "When M. Fabrikant & Sons filed for bankruptcy they did so to the financial detriment of our company. It has been legally asserted that the Fortgangs are responsible for a significant level of fraud and we welcome the legal moves that have been made to deal with this, it is just unfortunate that our name has been improperly associated with the scandal. Royal Asscher(R) is a company that prides itself on ethics and integrity; people who deal with us regularly are aware of this, but it is important that we make a statement to protect our brand and reputation. Royal Asscher(R) of America, Inc. is the only legal distributor of the Royal Asscher(R) Cut in the USA and Canada and the marketing and management of the Royal Asscher(R) brand. The company was created to give the Royal Asscher(R) Diamond Company a North American business following M. Fabrikant & Sons filing for bankruptcy. Royal Asscher(R) of America Inc. is wholly owned by Royal Asscher Diamond Company (Koninklijke Asscher Diamant Maatschappij B.V.), a Netherlands corporation. Neither Royal Asscher Diamond Company, Royal Asscher(R) of America, or for that matter any of the Asscher family have any affiliation with M. Fabrikant & Sons, the Fortgang family or Royal Asscher Cut, LLC. As reported by the Troubled Company Reporter on June 25, 2008, Judge Stuart Bernstein of the U.S. Bankruptcy Court for the Southern District of New York issued an order on June 18 authorizing U.S. marshals to take all necessary steps to seize the assets of the ex-owners of M. Fabrikant and Sons. The order, according to various reports, was issued in response to a complaint filed in the Court by the Shared Asset Trust, which currently operates the company. The Fortgang family, which owned and controlled Fabrikant, is accused of fraudulent and preferential transfers amounting to more than $100 million, the TCR report says. The trust seeks to recoup assets it claims the former owners of Fabrikant diverted to its affiliate companies in the 16 months preceding Fabrikant's chapter 11 filing, court papers said. According to a report by Teresa Novellino of The National Jeweler Network, these amounts will be taken from the named defendants: Charles Fortgang $87.6 million Matthew Fortgang $49.4 million Susan Fortgang $43.9 million Marjorie Fortgang $16.9 million Theresa Fortgang $3.7 million The order also names 12 of Fabrikant's affiliated companies. In a letter to Judge Bernstein, Hunter Carter, Esq. of Arent Fox LLP, an attorney for the defendants, requested a hearing. As reported by the Troubled Company Reporter on May 15, the Court confirmed the Modified Joint Chapter 11 Plan of Liquidation dated April 24, 2008, filed by M. Fabrikants & Sons and Fabrikant-Leer International Ltd., together with the Official Committee of Unsecured Creditors and other current lenders. A full-text copy of the Modified Joint Chapter 11 Plan of Liquidation is available for free at http://ResearchArchives.com/t/s?2beb Based in New York City, M. Fabrikant & Sons, Inc. -- http://www.fabrikant.com/-- sells diamonds and jewelries. The company and its affiliate, Fabrikant-Leer International Ltd., filed for chapter 11 protection on Nov. 17, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-12737). Mitchel H. Perkiel, Esq., Lee W. Stremba, Esq., and Paul H. Deutch, Esq., at Troutman Sanders LLP represent the Debtors in their restructuring efforts. Alan Kolod, Esq., Lawrence L. Ginsberg, Esq., and Christopher J. Caruso, Esq., at Moses & Singer LLP serve as counsel to the Official Committee of Unsecured Creditors. In schedules filed with the Court, M. Fabrikant disclosed total assets of $225,612,204 and total debts of $439,993,890. The Debtors filed their Plan of Liquidation and accompanying Disclosure Statement in October 2007. MILESTONE SCIENTIFIC: Posts $615,885 Net Loss in 2008 1st Quarter ----------------------------------------------------------------- Milestone Scientific Inc. reported a net loss of $615,885 on total revenue of $1,402,153 for the first quarter ended March 31, 2008, compared with a net loss of $535,117 on total revenue of $2,309,963 in the same period in 2007. Product sales decreased $874,037, or 38.6%, to $1,387,990 in 2008 over 2007 primarily as a result of the STA product launch in the first quarter of 2007 that did not continue into the 2008 first quarter. Royalty income for the three months ended March 31, 2008, and 2007, respectively, was $14,163 and $47,936. The $80,764 or 15% increase in net loss is primarily a result of the decreased sales and gross margin dollars, partially benefited by a reduction in selling, general and administrative expenses. At March 31, 2008, the company's balance sheet showed $4,284,129 in total assets, $2,722,736 in total liabilities, and $1,561,393 in total stockholders' equity. Full-text copies of the company's financial statements for the quarter ended March 31, 2008, are available for free at: http://researcharchives.com/t/s?2eb8 Going Concern Doubt Holtz Rubenstein Reminick LLP, in Melville, New York, expressed substantial doubt about Milestone Scientific Inc.'s ability to continue as a going concern after auditing the company's financial statements for the year ended Dec. 31, 2007. The auditing frim pointed to the company's recurring losses from operations and negative operating cash flows. About Milestone Scientific Headquartered in Livingston, N.J., Milestone Scientific Inc. (OCT BB: MLSS) -- http://www.milesci.com/-- is engaged in pioneering proprietary, highly innovative technological solutions for the medical and dental markets. Central to the company's IP platform and product development strategy is its patented CompuFlo(R) technology for the improved and painless delivery of local anesthetic. Specifically, CompuFlo is a computer- controlled, pressure sensitive infusion, perfusion, suffusion and aspiration technology, which provides real-time readouts of pressures, fluid densities and flow rates, enabling the advanced delivery and removal of a wide array of fluids. The STA(TM) (Single Tooth Anesthesia) System computer-controlled local anesthesia delivery system which uses this technology provides dentists with audible and visual signals as to in-tissue pressure. Milestone's existing painless injection systems are currently sold in 25 countries. MORGAN STANLEY: Fitch Affirms 'B-' Rating on $15.9MM Cl. L Certs. ----------------------------------------------------------------- Fitch Ratings upgraded Morgan Stanley Capital I Inc.'s commercial pass-through certificates, series 1998-WF2 as: -- $23.9 million class G to 'AA-'from 'A+'; -- $10.6 million class H to 'A-'from 'BBB+'. Additionally, Fitch affirmed these classes: -- Interest only class X at 'AAA'; -- $26.3 million class D at 'AAA'; -- $21.2 million class E at 'AAA'; -- $21.2 million class F at 'AAA'; -- $8 million class J at 'BBB'; -- $8 million class K at 'BB+'; -- $15.9 million class L at 'B-'. The $5.3 million class M remains at 'CCC'; Fitch lowers the distressed recovery rating to 'DR1' from 'DR2'. Fitch does not rate the $2.5 million class N. The class A-1, A-2, B and C certificates have been paid in full. The upgrades reflect increased credit enhancement due to scheduled amortization and loan payoffs since last review. Conversely, the lowered DR rating reflects an increase in Fitch's loss expectations on one of the specially serviced assets. As of the June 2008 distribution date, the pool's aggregate balance has been reduced 86.5%, to $143 million from $1.06 billion at issuance. One loan has defeased (8.2%). Fitch has identified four Loans of Concern (6.9%), including two specially serviced assets (3.3%). The largest specially serviced asset (2.1%) is an office property located in Holyoke, Massachusetts. The loan transferred to special servicing after its scheduled maturity in March 2008. This loan is expected to pay in full. The second specially serviced asset (1.2%) is a real estate owned asset with losses expected. The loan is secured by a retail property located in Lansing, Michigan and remains 100% vacant since 2002. Recent valuations of the asset indicate losses upon liquidation. The largest Loan of Concern (2.4%) is secured by a multifamily property located in Lancaster, Ohio. The property had suffered a decline in occupancy and resulting cash flow, however occupancy has increased to 90% as of March 2008. The second largest Loan of Concern (1.3%) is secured by retail property in Indianapolis, Indiana. Occupancy as of year-end 2007 was 70%. The largest remaining loan (27.3%) is an office property located in Washington, D.C. The fully amortizing loan is scheduled to mature in 2023 and had a servicer reported YE 2007 debt service coverage ratio of 1.61 times. The second largest remaining loan (11.1%) is secured by a hotel property in San Diego, CA. The loan is scheduled to mature in 2013 and had a servicer reported YE 2007 DSCR of 1.44x. MSC - MEDICAL: S&P to Withdraw Ratings After $248MM Pharmacy Sale ----------------------------------------------------------------- Standard & Poor's Ratings Services expects to withdraw its ratings on Jacksonville, Florida-based MSC - Medical Services Inc. (B-/Negative/--) following the sale of its Pharmacy Services Division to Express Scripts Inc. for $248 million. The company has announced its intention to use a portion of the proceeds to prepay all of its outstanding debt. The transaction is anticipated to close within two months. NAVISTAR INT'L: Board Promotes Terry Endsley to EVP and CFO ----------------------------------------------------------- The Board of Directors of Navistar International Corporation promoted Terry M. Endsley to the position of Executive Vice President and Chief Financial Officer to replace William A. Caton, who accepted a new executive position within the company as Chief Risk Officer. Mr. Endsley also assumed Mr. Caton's seat on the company's Board of Directors. Mr. Endsley, age 52, previously served as Senior Vice President and Treasurer of the company since 2006 and Vice President and Treasurer of the company since 2003. Mr. Endsley also served as Senior Vice President and Treasurer of Navistar, Inc., a wholly-owned subsidiary of the company, since 2006 and Vice President and Treasurer of Navistar, Inc. since 2003. Prior to that, Mr. Endsley served as Assistant Treasurer of the company from 1997 to 2003 and as Assistant Treasurer of Navistar, Inc. from 1997 to 2003. Mr. Endsley is not a party to any transaction with the company or any of its subsidiaries in which he had a direct or indirect material interest requiring disclosure under this Item. In connection with Mr. Endsley's appointment as Executive Vice President and Chief Financial Officer, the Board of Directors of the company, upon the recommendation of the Compensation Committee: (i) increased his annual base salary to $560,000, (ii) increased the long-term incentive grant made to him in April of 2008 to 15,900 restricted stock shares or restricted stock units (to be determined at management's discretion) and (iii) provided him with certain other benefits commensurate with his Chief Financial Officer position. In connection with Mr. Caton's appointment as Chief Risk Officer, the Board of Directors of the company approved the amendments to his Executive Severance Agreement: * The 10 day window to notify the company that his new appointment constitutes a “Good Reason” event or condition under his ESA is extended until June 17, 2010; * Any right to receive healthcare coverage under his ESA for a period of 1 year is extended to a period of 3 years; and * The company will make him whole for any losses incurred on the sale of his home in Illinois. In addition, on June 17, 2008, the Board of Directors of the company appointed Mr. Steve J. Klinger as a member of the company's (i) Compensation Committee, effective June 17, 2008, and (ii) Audit Committee, effective Aug. 15, 2008. Mr. Klinger was previously elected as a member of the company's Board of Directors on May 27, 2008. 2008 Annual Meeting The company announced last month that the Board of Directors of the company established Friday, Sept. 5, 2008 as the date of the company's 2008 Annual Meeting of Stockholders. On June 17, 2008, the Board of Directors of the company determined that: (i) the Annual Meeting will be held at the Hyatt Lisle Hotel, located at 1400 Corporetum Drive, Lisle, Illinois 60532 and (ii) the record date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting will be July 22, 2008. About Navistar International Based in Warrenville, Illinois, Navistar International Corp. (NYSE:NAV) -- http://www.nav-international.com/-- is the parent company of Navistar Financial Corp. and International Truck and Engine Corp. The company produces International brand commercial trucks, mid-range diesel engines and IC brand school buses, Workhorse brand chassis for motor homes and step vans, and is a private label designer and manufacturer of diesel engines for the pickup truck, van and SUV market. The company also provides truck and diesel engine parts and service sold under the International brand. A wholly owned subsidiary offers financing services. The company has operations in Brazil, Iceland and India. At Oct. 31, 2007, the company's balance sheet showed a $734,000,000 stockholders' deficit, compared with a $1,114,000,000 deficit at Oct. 31, 2006. * * * As disclosed in the Troubled Company Reporter on June 17, 2008, Standard & Poor's Ratings Services said that its ratings on Navistar International Corp. (BB-/Negative/--) are not affected by the company's announcement of a wide-ranging truck and engine development and distribution alliance with Caterpillar Inc. (A/Stable/A-1). As disclosed in the Troubled Company Reporter on June 2, 2008, Fitch has affirmed and simultaneously removed from Rating Watch Negative the ratings for Navistar International Corporation to reflect progress in filing audited financial statements. The ratings are Issuer Default Rating 'BB-'; and Senior unsecured bank facility 'BB-'. NELLSON NUTRACEUTICAL: Offers 48.6% Recovery for Senior Lenders --------------------------------------------------------------- Nellson Nutraceutical Inc. filed its chapter 11 plan of liquidation and accompanying disclosure statement with the U.S. Bankruptcy Court for the District of Delaware. Objections to the disclosure statement are due July 18, 2008, at 4:00 p.m. Hearing on the disclosure statement is set for July 25, 2008, at 2:00 p.m. Treatment of Claims The Debtors propose Sept. 15, 2008, as the effective date of the plan. Under the plan, the Debtors propose that administrative expenses of about $1,718,000, inclusive of accrued and unpaid professional fees, will get 100% recovery. The superpriority claims granted to lenders pursuant to a final cash collateral order are allowed in the amount of $100,000,000 with respect to first lien lenders. Any superpriority claims held by second lien lenders will be subordinated. Tax claims of $30,300 will be paid in full. Other secured claims will get 100% recovery under the plan. Estimated recovery for first lien lender claims is 48.6%, inclusive of prior distribution. First lien lenders previously received distributions in the form of either cash or credit in connection with a successful bid to acquire the Debtors' operating assets, equivalent to a distribution of about $41.6% on account of the $255,000,000 principal amount owed. Under the plan, the Debtors project that the first lien lenders will receive an additional 6.0% on account of their claims or about $17,800,000 in cash. Further recoveries are possible depending on the outcome of an Elan Litigation. Second lien lenders will receive $2,000,000 in cash under the plan, which is equivalent to about 2.7% of the $75,000,000 principal amount owed as of the bankruptcy filing. Holders of subordinated debt claims and interests in the Debtors will not receive anything under the plan. Holders of general unsecured claims are released of any potential avoidance clams but receive no other distributions under the plan. Funding for the Plan The current assets of the Debtors' estates consist primarily of: a. cash in the amount of $22,336,850 as of June 1, 2008; b. a patent infringement action styled Nellson Northern Operating Inc. and Nellson Nutraceutical Inc. v. Elan Nutrition LLC, et al., pending in the U.S. District Court for the District of Vermont; and c. potential litigation and settlement recoveries from avoidance claims against third parties that received payments from the Debtors during the 90-days prior to the bankruptcy filing. The Debtors' obligations under the plan and the fees and expenses of the liquidating Debtors will be funded out of existing cash in the estates. Specifically, the sum of $500,000 will be set aside out of the Debtors' existing cash to fund plan expenses and their wind-down efforts. Unused cash set aside to fund the plan and wind-down will be distributed to the first lien lenders as first lien distributable assets. Additional cash proceeds that may be realized by the liquidating Debtors after the effective date will be distributed to the first lien lenders as first lien distributable assets. The Elan Litigation The Elan Litigation was filed by a predecessor company on or about Nov. 13, 2002. The Nellson plaintiffs joined the suit after acquisition of the predecessor company. The case has been assigned to Chief Judge William Sessions and will be tried to a jury. The case is an infringement of two patents issued in 2001 and 2004 that cover high protein nutritional bars. The technical expert of the Nellson plaintiffs has identified more than 150 types of bars manufactured by Elan Nutrition Inc. of Grand Rapids, Michigan that infringe the patents-in-suit. The Nellson plaintiffs' damages expert has opined that they have lost profits of over $19,800,000 as a result of the infringement. The damages period extends from Oct. 9, 2001, to Oct. 3, 2007, when the patents-in-suit were assigned to a purchaser. Elan denies infringement and contends that the patents-in-suit are invalid. On Jan. 17, 2008, Elan filed a motion to dismiss or alternatively for summary judgment arguing that after the assignment of the patents-in-suit to the purchaser, the current Nellson plaintiffs lack standing to continue to prosecute the case without the purchaser joining the case. The motion has been fully briefed and is awaiting oral judgment. A full-text copy of the Debtor's plan of liquidation is available for free at http://www.alixpartners.com/CMSApp/ClaimSearch.aspx# A full-text copy of the Debtor's disclosure statement is available for free at http://www.alixpartners.com/CMSApp/ClaimSearch.aspx# About Nellson Nutraceutical Headquartered in Irwindale, California, Nellson Nutraceutical, Inc., formulate, make and sell bars and powders for the nutrition supplement industry. The Debtor and its affiliates filed for chapter 11 protection on Jan. 28, 2006 (Bankr. D. Del. Case No. 06-10072). Laura Davis Jones, Esq., Rachel Lowy Werkheiser, Esq., Richard M. Pachulski, Esq., Brad R. Godshall, Esq., and Maxim B. Litvak, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C. represent the Debtors in their restructuring efforts. AlixPartners LLC is the Debtors' noticing, claims and balloting agent. Reed Smith LLP is counsel to the Official Committee of Unsecured Creditors. The Debtors schedules show $312,334,898 in assets and $345,227,725 in debts. NETWURX INC: Case Summary & 60 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Netwurx, Inc. 35 E. Sumner St. P.O. Box 270020 Hartford, WI 53027 Tel: (800) 638-9879 Bankruptcy Case No.: 08-26131 Type of Business: The Debtor provides ISP, Internet access, contact center, and technical services to costumers. Chapter 11 Petition Date: June 5, 2008 Court: Eastern District of Wisconsin (Milwaukee) Judge: Susan V. Kelley Debtor's Counsel: Guy K. Fish, Esq. Email: gfish@charterinternet.com 533 Vernal Ave. Milton, WI 53563 Tel: (608) 868-3200 Fax: (608) 868-3208 Estimated Assets: $500,000 to $1 million Estimated Debts: $1 million to $10 million A copy of Netwurx, Inc.'s petition is available for free at: http://bankrupt.com/misc/wieb08-26131.pdf NEWPAGE CORP: Taking Additional Downtime, Closing Paper Machines ---------------------------------------------------------------- NewPage Corp. will take approximately 34,000 tons of coated paper downtime in July in addition to 25,000 tons previously announced on June 5. Additionally, three sheeters scheduled to shut down in third quarter of 2008 at the company's converting facility in Chillicothe, Ohio, will now cease production July 11. Of the 34,000 tons of downtime, approximately 18,000 tons will be taken at the Kimberly, Wisconsin mill and the balance by accelerating the previously-announced closure of the Niagara, Wisconsin mill to June 21. The affected Kimberly machines produce coated freesheet, and the Niagara mill produced lightweight coated groundwood papers. The Chillicothe converting facility will shut down three folio sheeters, while one remaining digital sheeter continues production until the facility's planned closure in the fourth quarter 2008. The balance of the Chillicothe converting machines were moved to the converting operations in Luke, Maryland at the end of May as scheduled. The Chillicothe sheet production volume will be transferred to converting operations in Luke, Maryland and Wisconsin Rapids, Wisconsin. "We have recently announced a number of downtime activities due to the very difficult, unpredictable environment in which we are operating," Rick Willett, president and chief operating officer, said. "Rising, volatile inflationary costs for energy, raw materials and transportation coupled with weak demand require us to regularly review our cost platform as well as the balance between our production and market demand. To be successful and viable long-term, we believe it is imperative to be flexible and responsive to these changing conditions. We are committed to continuing to keep our stakeholders apprised of any new significant decisions as we move forward." Headquartered in Miamisburg, Ohio, NewPage Corporation -- http://www.newpagecorp.com/-- a wholly owned subsidiary of NewPage Holding Corporation -- is a U.S. producer of coated papers in North America. The company produces coated papers in sheets and rolls with many finishes and weights to offer design flexibility for a wide array of end uses. With 4,300 employees, NewPage operates integrated pulp and paper manufacturing mills located in Escanaba, Michigan; Luke, Maryland; Rumford, Maine; and Wickliffe, Kentucky; and a converting and distribution center in Chillicothe, Ohio. The mills have a combined annual capacity of approximately 2.2 million tons of coated paper. * * * As reported in the Troubled Company Reporter on May 16, 2008, Standard & Poor's Ratings Services revised its outlook on NewPage Corp. to positive from stable. S&P affirmed the 'B' corporate credit rating and all other ratings on the coated-paper manufacturer. NEW YORK TIMES: Boston Globe Unit Seeks Wage Cuts from Unions ------------------------------------------------------------- Management of Boston Globe is asking unions to take an across-the- board 10% pay cut to help trim costs, cross-town rival Boston Herald reported, citing union members. The report said Boston Globe is also considering consolidation of its printing plants. According to the Herald, Globe has just completed a round of buyouts that led to the departure of several high-profile staffers. A top union official, the Herald said, vowed to fight the proposed pay cut. According to Boston Business Journal, Boston Globe spokesman Al Larkin said, "We're taking a look at consolidation opportunities and we haven't made any final decisions yet." Business Journal said Boston Globe is hurting from declining advertising revenue and circulation. Boston Globe is owned by The New York Times Co. Business Journal said the Times reported that May ad sales for its New England Media Group, which include the Globe, fell 18% in May. MIDWEST AIR: Plans to Restructure in 30 Days to Avoid Bankruptcy ---------------------------------------------------------------- Jay Schnedorf, chairman of the Air Line Pilots Association's Midwest chapter, said Wednesday that Midwest Air Group Inc. plans to reduce its fleet and workforce under a 30-day restructuring in order to prevent a bankruptcy filing, Milwaukee Journal Sentinel and The Wall Street Journal relate. Reports say that the airline is scrambling to raise funds as profits dwindle due to rising fuel prices. Midwest chairman and chief executive officer Timothy E. Hoeksema, informed workers in a memo that the airline's major shareholder, TPG Capital, will provide additional liquidity, the reports say. However, TPG requires other parties-in-interest like vendors, workers, and other investors to contribute and make sacrifices, the reports add. Midwest said a week ago that a dozen of its MD-80 jets for charter services and its West Coast leisure services will be phased out, WSJ and Sentinel relate. Mr. Schnedorf said he obtained news that the company will also phase out five Boeing 717 crafts, the reports say. Services at the Mitchell International Airport in Milwaukee will also be reduced, according to the reports. Sentinel estimates that 50% of the company's fleet will be cut considering the Boeing 717 and MD-80 reductions. Mr. Schnedorf said that about 200 of the 400 Midwest pilots will lose their jobs under the currently announced restructuring, Sentinel relates. About 35 pilots are due for retrenchment next month under a previously disclosed restructuring, Sentinel notes. Midwest will also slash half of its 400 flight attendants, Sentinel says, citing Dory Klein, head of of Midwest Association of Flight Attendants. Union Contests Restructuring Plan Mr. Schnedorf asserted that the estimated 45% to 65% salary reduction is not acceptable, Sentinel reports. He added that the union is asking for the company's financial records before they can draw decisions, Sentinel says. Vaughn Cordle of Airline Forecasts LLC stated that other workers will also be affected by the restructuring, including ground crew, Sentinel notes. Michael Brophy, spokesman for Midwest, is currently negotiating with the union saying chapter 11 bankruptcy isn't the most desirable option, Sentinel relates. Resignation of COO Midwest Air Group said on June 3, 2008, that Joseph C. Kolshak, its chief operating officer since February 2008, has resigned to pursue another opportunity. Mr. Hoeksema said a search for a new senior operations executive will begin immediately. "We thank [Mr. Kolshak] for his contributions in his brief time with us and wish him well in future endeavors." About Midwest Air Oak Creek, Wisconsin-based Midwest Air Group Inc. -- http://www.midwestairlines.com/-- is a holding company of Midwest Airlines, Inc. Midwest Airlines operates a passenger jet airline that serves destinations throughout the United States from Milwaukee, Wisconsin and Kansas City, Missouri. Skyway Airlines, Inc., dba Midwest Connect, is a wholly owned subsidiary of Midwest Airlines and serves as the regional airline for the company. Midwest Airlines and Midwest Connect constitute the company's segments. It has three principal product offerings: Midwest Airlines Signature Service, Midwest Airlines Saver Service and Midwest Connect regional service. As of Dec. 31, 2006, Midwest Airlines Signature Service operated in 20 cities in the United States, and Midwest Airlines Saver Service operated in 10 cities. Midwest Connect builds feeder traffic and provides regional scheduled passenger service to cities primarily in the Midwest. Its subsidiaries provide aircraft charter services, transport air freight and mail. The company has a total of more than 3,000 workers. On Jan 31, 2008, TPG Capital LP, fka Texas Pacific Group, -- http://www.texaspacificgroup.com/-- a global private investment firm with over $50 billion of managed assets, acquired 53% equity in Midwest Air Group. Northwest Airlines Corp. owns the remaining 47% Midwest equity. As of Sept. 30, 2007, Midwest Air Group listed total assets of $395,615,000, total liabilities of $331,810,000, and total stockholders' equity of $63,805,000. OLUWADARE AKINWALE: Case Summary & 14 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Oluwadare Akinwale 9207 Cruchfield Lane Bowie, MD 20720 Bankruptcy Case No.: 08-17170 Type of Business: The Debtor owns and operates a construction company, ST&K Construction Co. Inc. Chapter 11 Petition Date: May 5, 2008 Court: District of Maryland (Greenbelt) Judge: Paul Mannes Debtor's Counsel: L. Jeanette Rice, Esq. Email: riceesq@att.net Walsh, Becker, Moody & Rice 14300 Gallant Fox Lane Suite 218 Bowie, MD 20715 Tel: (301) 262-6000 Fax: (301) 262-4403 http://www.wbmrlaw.com/ Total Assets: $1,626,285 Total Debts: $1,796,353 A copy of Oluwadare Akinwale's petition is available for free at: http://bankrupt.com/misc/mdb08-17170.pdf PLASTECH ENGINEERED: Wants to Sell Misc. Carpet Assets to BBI ------------------------------------------------------------- Plastech Engineered Products Inc. and its debtor-affiliates obtained approval from the U.S. Bankruptcy Court for the Eastern District of Michigan to sell certain miscellaneous assets used in their carpet business to BBI Enterprises Group, Inc., pursuant to an Asset Purchase Agreement dated June 17, 2008. Pursuant to the APA, BBI Enterprises will acquire for $650,000 these assets: (1) One Meyer Automatic Carpet Molding Line PO No. CE15195/CE15196 (2) One Meyer Tool Change Table, Hydraulic Clamping Units, Unload Belt PO No. CE15507 (3) One Flow Water Jet Trim Cell PO No. CE15447 (4) One Conair 88T Chiller PO No. CE14534 (5) One GLA MGMT Water Softener Equipment (6) One Air Compressor System, excluding installation PO No. CE14525 (7) All parts, accessories, equipment, including installed equipment, related to the itemized equipment, or necessary for the operation of the carpet system located at the Kennesaw facility. A full-text copy of the Purchase Agreement is available at: http://researcharchives.com/t/s?2ebf About Plastech Engineered Based in Dearborn, Michigan, Plastech Engineered Products, Inc. -- http://www.plastecheng.com/-- is full-service automotive supplier of interior, exterior and underhood components. It designs and manufactures blow-molded and injection-molded plastic products primarily for the automotive industry. Plastech's products include automotive interior trim, underhood components, bumper and other exterior components, and cockpit modules. Plastech's major customers are General Motors, Ford Motor Company, and Toyota, as well as Johnson Controls, Inc. Plastech is a privately held company and is the largest family- owned company in the state of Michigan. The company is certified as a Minority Business Enterprise by the state of Michigan. Plastech maintains more than 35 manufacturing facilities in the midwestern and southern United States. The company's products are sold through an in-house sales force. The company and eight of its affiliates filed for Chapter 11 protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C., represent the Debtors in their restructuring efforts. The Debtors chose Jones Day as their special corporate and litigation counsel. Lazard Freres & Co. LLC serves as the Debtors' investment bankers, while Conway, MacKenzie & Dunleavy provide financial advisory services. The Debtors also employed Donlin, Recano & Company as their claims and noticing agent. Joel D. Applebaum, Esq., at Clark Hill PLC, represents the Official Committee of Unsecured Creditors. As of Dec. 31, 2006, the company's books and records reflected assets totaling $729,000,000 and total liabilities of $695,000,000. (Plastech Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000) PLASTECH ENGINEERED: Wants Protocol Set for Tooling Sales --------------------------------------------------------- Plastech Engineered Products Inc. and its debtor-affiliates ask permission from the U.S. Bankruptcy Court for the Eastern District of Michigan to establish a fair and economical procedure to: (i) assure their customers that when they pay for tooling, test fixtures, gauges, jigs, patterns, casting patterns, cavities, dies, molds and related items, they will obtain title to the tooling free and clear of liens; (ii) expedite the process of collecting accounts receivable and other rights to payment from customers arising out of purchase orders or other agreements for the tooling; (iii) transfer liens to proceeds so any liens held by the manufacturers and suppliers of the tooling can be preserved; (iv) evaluate and validate liens held by tool vendors; and (v) pay valid liens held by tool vendors as promptly as possible. Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Wilmington, Delaware, relates that the Debtors acquired tooling for their customers through these processes: (a) The customers issued purchase orders pursuant to which the Debtors were required to provide tooling to be used by the Debtors in manufacturing component parts; (b) Upon receipt of a Customer Tooling Purchase Order, the Debtors issued purchase orders to a number of Tool Vendors to manufacture the tooling called for by the Customer Tooling Purchase Orders; (c) Upon completion, the Tool Vendors would ship the tooling to the Debtors. After testing the Tooling, sometimes the Debtors would return the tooling to the Tool Vendor for modifications, and, after the modifications, the tooling would be returned to the Debtors for final try-out; (d) After receiving tooling from the applicable Tool Vendor, the Debtors would invoice the applicable Customer pursuant to the terms of the underlying Customer Tooling Purchase Order. However, under the terms of many Customer Tooling Purchase Orders, payment for the Tooling was not due until after the PPAP process (Production Parts Approval Process) was complete, whereby the Tooling is used in a production environment to produce sample component parts conforming to the Customer's specifications and requirements; and (e) Once the Tooling received PPAP approval, the Customer would pay the Tooling Invoice under the terms of the Customer Tooling Purchase Orders. A list of all known unpaid Tool Vendors, including all entities that have filed financing statements against the Debtors with the Michigan Secretary of State, is available for free at: http://researcharchives.com/t/s?2ebe Mr. Galardi relates that in the ordinary course of business, certain Tool Vendors took steps to assert or perfect liens on the Tooling supplied to the Debtors under so-called tooling or mold builder's lien statutes, such as the Michigan Mold Builders Lien Act, M.C.L.A. Section 445.661 et seq. or the Michigan Special Tool Lien Act, M.C.L.A. Section 570.542 et seq. The Customers have declined to make payment for unpaid Tooling and for Tooling Receivables unless (a) the Tooling receives PPAP approval, and (b) the Customers receive assurances that they are taking title to the Tooling free and clear of Tooling Liens. Some of the Tooling in question has not yet undergone, or is still undergoing, the PPAP process. According to Mr. Galardi, in connection with the Tooling Liens and Tool Vendors, there are a number of issues that must be addressed, including, whether the Tooling Liens have been validated (whether a U.C.C. financial statement perfecting the Tooling Lien was filed), the correct amount owing to a particular Tool Vendor with respect to an otherwise valid Tooling Lien, and, if the Michigan Tooling Lien Statutes apply, and whether the Tool Vendor properly affixed its complete name and address on the Tooling. In addition, the Debtors' major customers, in their capacity as DIP lenders, assert that they hold a first-priority security interest in all of Debtors' Tooling and Tooling Receivables. Finally, the Debtors' term lenders may claim a security interest in the Tooling and Tooling Receivables. Due to the legal and factual issues involved, the Debtors believe it is in the best interest of their estates, and other parties to collect Tooling Receivables by having liens transfer to proceeds, to hold the cash proceeds in a segregated escrow account, and to provide for distribution of the proceeds. The Debtors propose to establish these procedures: (a) Within 15 days after a determination concerning Paid Tooling against which a Tool Vendor asserts a Tooling Lien, the Customer will make payment to the applicable tool vendor in the amount necessary to fully satisfy the Tooling Lien in accordance with the Determination or cause the Tooling in question to be returned to the Tool Vendor for disposition in accordance with the applicable Tooling Liens statute and in full satisfaction of the Determination; (b) In respect of any Unfinished Tooling, upon a request of the applicable Customer on or before July 31, 2008, the Debtor will file with the Court a notice or motion indicating the rejection or assumption of the underlying Tooling Purchase Order; (c) In respect of any Unpaid Tooling that is not in the possession of the underlying Tool Vendor: -- The applicable Customer will make payment to the escrow agent in the amount required under the applicable Customer Tooling Purchase Orders; -- A Customer's full payment of any bona fide amount owing for Unpaid Tooling into the Escrow Account will satisfy any amounts owing from the Customer to the Debtors with respect to the particular items of Unpaid Tooling; -- Liens, security interests, and other claims and interests will attach to the cash proceeds of the Unpaid Tooling; -- As to the proceeds of Escrow Account, the escrow agent will distribute the agreed proceeds pursuant to the written agreement; and -- Any Tool Vendor claiming a Tooling Lien must submit a written summary containing: (i) Copies of all Debtor Tooling Purchase Orders with respect to the Tooling; (ii) The date(s) the Tooling was delivered to Debtors; (iii) Copies of any financing statements filed with respect to the Tooling; (iv) Copies of all invoices submitted to Debtors with respect to the Tooling; (v) A summary of all amounts owed by Debtors for the applicable Tooling, including the dates and amounts of any payments made by the Debtors with respect to the Tooling; and (vi) Copies of any documentation in Tool Vendor's control regarding PPAP approval of the Tooling in question; and (d) Any party-in-interest, including the Tool Vendors, the applicable Customer and the DIP Lenders may commence an adversary proceeding to determine the validity, enforceability, priority or extent of any party's asserted liens or security interests against or interest in any Tooling or Proceeds. Objections (1) Tri-Way Mftg. Before the date of bankruptcy, Tri-Way Mftg., Inc., doing business as Tri-Way Mold & Engineering, fabricated, repaired or otherwise modified and delivered to the Debtors certain molds for use in the Debtors' operations. Tri-Way claims a lien on the Tri-Way Molds pursuant to the Michigan Mold Lien Act, MCL 445.611 et seq., pursuant to which Triway claims to have perfected first priority statutory lien on the Molds. Triway argues that the motion is vague and ambitious in that: -- it fails to provide a mechanism for the Tooling Vendors to determine if the tooling they claim an interest is Paid Tooling or Unpaid Tooling; -- it fails to provide a mechanism for determining if there is a differential between a Tooling Vendor's claim and the amount owed by the Debtors' customer; -- it fails to provide a mechanism for reconciling any differences that may existed between the amount owed to the Tooling Vendor by the Debtors with respect to a particular tool or mold and the amount to the Debtor by its customer; and -- it fails to identify how the proceeds of the escrow account will be distributed or prioritized. Triway asks the Court deny the Debtors' request pending the Debtors' consideration of its concerns. Triway says it is a secured creditor in certain assets of the Interiors Plastics Group for $35,220. (2) Eagle Industries Eagle Industries, Inc., fabricated and delivered to the Debtors a trim upper foam block prototype tooling for the Debtors' use in the Ford S197 Program, pursuant to a contract with the Debtors. The purchase price of the Tool was $20,000, which the Debtors have not remitted to Eagle. Eagle claims to have a properly perfected first priority lien on the Tool pursuant to the Michigan Special Tools Lien Act. Eagle maintains that the Debtors, based on the motion, has not showed that the Tool will be consummated for more than the lien amount of $20,000, and that there is no procedure to prevent the Debtors from selling the Tool for less than the lien amount. Eagle asks the Court to deny the Debtors' request to sell the Tool free of lien and encumbrances. About Plastech Engineered Based in Dearborn, Michigan, Plastech Engineered Products, Inc. -- http://www.plastecheng.com/-- is full-service automotive supplier of interior, exterior and underhood components. It designs and manufactures blow-molded and injection-molded plastic products primarily for the automotive industry. Plastech's products include automotive interior trim, underhood components, bumper and other exterior components, and cockpit modules. Plastech's major customers are General Motors, Ford Motor Company, and Toyota, as well as Johnson Controls, Inc. Plastech is a privately held company and is the largest family- owned company in the state of Michigan. The company is certified as a Minority Business Enterprise by the state of Michigan. Plastech maintains more than 35 manufacturing facilities in the midwestern and southern United States. The company's products are sold through an in-house sales force. The company and eight of its affiliates filed for Chapter 11 protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C., represent the Debtors in their restructuring efforts. The Debtors chose Jones Day as their special corporate and litigation counsel. Lazard Freres & Co. LLC serves as the Debtors' investment bankers, while Conway, MacKenzie & Dunleavy provide financial advisory services. The Debtors also employed Donlin, Recano & Company as their claims and noticing agent. Joel D. Applebaum, Esq., at Clark Hill PLC, represents the Official Committee of Unsecured Creditors. As of Dec. 31, 2006, the company's books and records reflected assets totaling $729,000,000 and total liabilities of $695,000,000. (Plastech Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000) PLASTECH ENGINEERED: Wants Ink-Logix Settlement Approved -------------------------------------------------------- Plastech Engineered Products Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Michigan to approve the settlement agreement entered into with (i) Andrew Ferber, (ii) John Gentile, (iii) T-Ink, Inc., formerly T-Ink, LLC, (iv) Julie N. Brown, (v) Jeffrey R. Engel, and (vi) Ink- Logix, LLC, related to certain disputes. T-Ink, Ms. Brown, and Mr. Engel entered into the Limited Liability Company Agreement of P-Inc, pursuant to which Ms. Brown obtained certain interests in Ink-Logix and each of the two Series. Under the LLC Agreement, Ms. Brown, the sole member of Plastech Engineered Products, Inc., committed to make $2,000,000 as initial capital contribution, and subsequent contributions up to $2,000,000 if certain milestones are met. On July 23, 2007, T-Ink filed an arbitration against Ms. Brown, for which Ms. Brown filed counterclaims, and a motion to dismiss certain of T-Ink's claims. T-Ink and Ink-Logix filed an action in the Wayne County Circuit Court of Michigan against Plastech. Ms. Brown intervened and filed counterclaims and third party complaints against Messrs. Gentile, Ferber, and Engel. The Michigan State Action was stayed pending result of the Arbitration. Ms. Brown filed an action in the U.S. District Court for the Eastern District of Michigan on July 24, 2007, and another action in the Delaware Court of Chancery on August 29, 2008 against T- Ink, LLC, seeking to enjoin the Arbitration, where the Court of Chancery ruled in her favor enjoining the arbitration in part, and dismissing it in part. The Settlement Agreement The Settlement Agreement provides, among others, that: (a) The Parties agree to file stipulations of dismissal with prejudice in the Delaware Action, the Michigan State action, and the Arbitration. (b) Within three days of the dismissal of the Delaware Action, the Michigan State Action, or the Arbitration, whichever is latest: * T-Link will pay Ms. Brown $1,898,608; * all Ink-Logix member will authorize payment to Ms. Brown, amounts not exceeding $125,348 which are deposited at Ink-Logix's account; and * T-Ink will pay Plastech Engineered Products, Inc., $176,391. (c) In consideration of the payments, Ms. Brown will sell, transfer, and assign to T-Ink, which T-Ink will purchase from Ms. Brown, her entire interest in Ink-Logix, and her entire interest in each series of Ink-Logix. The Parties agree that Ms. Brown will cease being a member of Ink- Logix. (d) The Parties agree that T-Ink and its tax advisor will promptly file state and federal tax returns and schedules for Ink-Logix for calendar years 206 and 2007, subject to Ms. Brown's approval. (e) Ms. Brown will execute all documents to close the Ink- Logix bank account. (f) Plastech will execute the Assigment Agreement, a copy of which is available for free at: http://researcharchives.com/t/s?2ec0 to confirm Ink-Logix's rights and interest in Ink-Logix's Intellectual Property, as provided in the Assignment. (g) Ms. Brown will not have any interest in (i) the company assets, (ii) separate assets of any series, (iii) the company Intellectual Property, (iv) Ink-Logix, (v) any series or (vi) T-Ink. (h) With respect to matters in the T-Ink Settlement: * T-Link and Mr. Engel will each release Ms. Brown and Plastech; * Ms. Brown will release T-Ink, Ink-Logix, Mr. Engel, Mr. Ferber, Mr. Gentile and Plastech; * Plastech will release T-Ink, Ink-Logix, Messrs. Engel, Ferber, and Gentile, and Ms. Brown; * Ink-Logix will release T-Ink, Mr. Engel, Ms. Brown, and Plastech. A full-text copy of the Settlement Agreement is available at: http://researcharchives.com/t/s?2ec1 The Settlement Agreement and the related Court approval are expressly subject to certain other global resolutions with key parties-in-interest, which the Debtors sought approval in conjunction with the Sale Motion, Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher, & Flom LLP, in Wilmington, Delaware, relates. The Debtors believe that the compromises and settlements are fair, equitable and in the best interests of the Debtors and their estates, and other parties-in-interest, Mr. Galardi asserts. About Plastech Engineered Based in Dearborn, Michigan, Plastech Engineered Products, Inc. -- http://www.plastecheng.com/-- is full-service automotive supplier of interior, exterior and underhood components. It designs and manufactures blow-molded and injection-molded plastic products primarily for the automotive industry. Plastech's products include automotive interior trim, underhood components, bumper and other exterior components, and cockpit modules. Plastech's major customers are General Motors, Ford Motor Company, and Toyota, as well as Johnson Controls, Inc. Plastech is a privately held company and is the largest family- owned company in the state of Michigan. The company is certified as a Minority Business Enterprise by the state of Michigan. Plastech maintains more than 35 manufacturing facilities in the midwestern and southern United States. The company's products are sold through an in-house sales force. The company and eight of its affiliates filed for Chapter 11 protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C., represent the Debtors in their restructuring efforts. The Debtors chose Jones Day as their special corporate and litigation counsel. Lazard Freres & Co. LLC serves as the Debtors' investment bankers, while Conway, MacKenzie & Dunleavy provide financial advisory services. The Debtors also employed Donlin, Recano & Company as their claims and noticing agent. Joel D. Applebaum, Esq., at Clark Hill PLC, represents the Official Committee of Unsecured Creditors. As of Dec. 31, 2006, the company's books and records reflected assets totaling $729,000,000 and total liabilities of $695,000,000. (Plastech Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000) PRECISION OPTICS: Posts $129,160 Net Loss in Qtr. Ended March 31 ---------------------------------------------------------------- Precision Optics Corporation Inc. reported a net loss of $129,160 on revenues of $643,040 for the third quarter ended March 31, 2008, compared with a net loss of $843,911 on revenues of $467,199 in the same period ended March 31, 2007. The increase in revenues was due primarily to increased shipments of existing products to current customers along with the introduction of new products to current customers. On Jan. 18, 2008, the company entered into an Asset Purchase Agreement for the sale of its custom optical thin film product line and completed the sale on the same date. The assets sold include equipment, certain inventory, intellectual property, and a customer list. The purchase price was $250,000, and the company will also receive a royalty of 25% of revenues exceeding $300,000 annually from the purchased customer list for a three year period. The company recognized a gain of $210,549 from the sale of the product line, recorded in the quarter ended March 31, 2008. Operating loss, excluding the effect of the gain on sale of product line, reflected a favorable change of $516,140 compared to the three months ended March 31, 2007. At March 31, 2008, the company's consolidated balance sheet showed $1,725,242 in total assets, $612,621 in total liabilities, and $1,112,621 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?2eb9 Going Concern Doubt As reported in the Troubled Company Reporter on Oct. 4, 2007, Boston, Mass.-based Vitale, Caturano and Company Ltd. exressed substantial doubt about Precision Optics Corporation Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended June 30, 2007, and 2006. The auditing firm pointed to the company's recurring net losses and negative cash flows from operations. About Precision Optics Gardner, Mass.-based Precision Optics Corporation Inc. (OTC BB: POCI) -- http://www.poci.com/ -- designs and produces high-quality, micro-optics, medical instruments, and other advanced optical systems. The company's medical instrumentation line includes laparoscopes, arthroscopes and endocouplers and a world-class product line of 3-D endoscopes for use in minimally invasive surgical procedures. PROSPECT MEDICAL: S&P Removes 'B-' Credit Rating from Neg. Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services removed its 'B-' long-term counterparty credit rating on Prospect Medical Holdings Inc. from CreditWatch with negative implications, where it was placed Jan. 17, 2008, and affirmed the rating. The outlook is stable. In addition, the recovery rating assigned to the company's first- lien senior secured debt (consisting of a five-year, $10 million revolver due August 2012 and a seven-year, $95 million term loan due August 2014) was unchanged at '1' (indicating very high recovery in the event of default), and the debt ratings were affirmed at 'B+'. In addition, the recovery rating assigned to the company's second-lien senior secured debt (consisting of a 7.5-year $50 million term loan due February 2015) was unchanged at '6' (indicating negligible recovery in the event of default), and the debt issue rating was affirmed at 'CCC'. "The rating affirmation reflects Prospect's improved liquidity and financial flexibility and the emergence of a more stable debt service capacity. Furthermore, S&P believe that Prospect is adequately positioned to sustain its competitive position in the Southern California marketplace," said Standard & Poor's credit analyst Joseph Marinucci. Key offsetting factors include Prospect's marginal balance sheet quality and relatively concentrated earnings profile. The stable outlook reflects its expectation for sustained business and financial profile development, commensurate with progress achieved in the past few months. It also reflects its expectation for enhanced debt service capacity and the potential for moderately improved financial flexibility by fiscal year-end 2008. By fiscal year-end 2008, S&P expect revenue to be $345 million- $355 million, and for members served to be 220,000-230,000. S&P expect EBITDA and pretax income to be $25 million-$35 million (9% margin) and $0 million-$10 million (0%-2% ROR), respectively. In addition, S&P expect the debt-to-capital ratio to be 55%-65%, the debt-to-EBITDA ratio to be 4.0x-5.0x, and interest coverage to be 1.5x-2.5x, which would be adequate for the rating assignment. PSEG ENERGY: Moody's Changes Outlook to Stable, Affirms Ba3 CFR --------------------------------------------------------------- Moody's Investors Service changed the rating outlook for PSEG Energy Holdings LLC to stable from negative and affirmed its Ba3 Corporate Family Rating. Holdings basically comprises two businesses: Resources, which is essentially a leveraged lease portfolio, and Global, which is primarily a portfolio of merchant generation assets and small international utility investments. Holdings is a wholly owned subsidiary of Public Service Enterprise Group (PSEG Baa2 senior unsecured/negative outlook). The change in rating outlook to stable from negative primarily reflects a decline in over-all business and operating risks of the company, largely a result of the international divestitures made to date and a material reduction in outstanding debt. After incorporating the recently announced sale of SAESA, Holdings' business activities will primarily consist of its leveraged lease and investment portfolio at Resources and wholesale merchant generation assets in Texas, California and Hawaii, along with some small utility investments in Italy, Venezuela and India, which we continue to view as non-core and have a book value of approximately $120 million. Moody's acknowledges that the lower business and operating risk profile for Holdings has been mitigated, to some degree, by a slightly weaker financial profile, as evidenced by several of the key financial credit metrics, including the approximately 5% cash flow from operations before working capital adjustments to debt ratio and the 1.3x CFO pre-w/c interest coverage ratio as of the latest 12 months ended March 2008. We note that these metrics include a $100 million cash outflow related to an interest prepayment associated with an IRS tax liability dispute. While we view this deterioration as a credit negative, the divestitures, debt reduction and remaining business operations should produce cash flow related metrics, on a prospective basis, sufficient to warrant a stable rating outlook at this time. The stable rating outlook incorporates our views regarding the potential Internal Revenue Service deferred tax liability challenge associated with the leveraged leases at Resources, which could result in a total aggregate liability of approximately $1.1 billion that could have an impact at both Holdings, as well as its parent, PSEG. We believe that the most likely outcomes associated with resolving the IRS tax liability issue will not create a material degradation to the stand-alone credit quality of Holdings or adversely impact its parent, PSEG. In addition, Moody's incorporates a view that there are numerous sources of alternate liquidity at Holdings to assist any funding requirements. Holdings' Ba3 Corporate Family Rating reflects the stand-alone credit assessment of this diversified portfolio of investments. Although Holdings is a wholly-owned subsidiary of PSEG, Moody's does not provide any ratings lift to Holdings, given its ring- fenced type structure and our view that the company's business activities are non-core to the parent company's primary business activities and long-term growth strategies. Holdings, which is headquartered in Newark, New Jersey, reported approximately $1.0 billion in revenue for the year ended 2007, and $6.2 billion in assets. Outlook Actions: Issuer: PSEG Energy Holdings L.L.C. -- Outlook, Changed To Stable From Negative RADIAN GROUP: Moody's Cuts Sr. Debt Rating to Ba1; Outlook is Neg. ------------------------------------------------------------------ Moody's Investors Service has downgraded the insurance financial strength ratings of Radian Group's mortgage insurance subsidiaries, including Radian Guaranty and Amerin Guaranty which were downgraded to A2 from Aa3, and Radian Insurance which was downgraded to Baa1 from Aa3. In the same rating action, Moody's also downgraded to A3 from Aa3 the IFS ratings of Radian Asset Assurance and Radian Asset Assurance Limited, and the senior debt rating of the holding company, Radian Group to Ba1 from A2. The outlook for the ratings is negative. As a result of the rating action, the Moody's-rated securities that are guaranteed or "wrapped" by Radian Asset are also downgraded to A3, except those with higher public underlying ratings. The rating action concludes a review for possible downgrade that was initiated on Jan. 31, 2008, and reflects the deterioration in Radian's capital adequacy and medium term profitability prospects, as well as the firm's limited financial flexibility. The rating agency said that, while mortgage insurance demand and new business quality have both improved in recent months, performance of Radian's exposures originated prior to 2008 has eroded capitalization and those exposures remain vulnerable to further economic deterioration. The downgrade of Radian Asset reflects deterioration in the financial guaranty company's franchise value and the prospect that its capital adequacy may be negatively affected given management's announcement that the subsidiary will likely cease writing new business and will serve as a potential source of capital for Radian's mortgage insurance platform. Moody's said that franchise strength and the ability to withstand cyclical downturns are key factors in its analysis of a mortgage insurer's business and financial profile. Mortgage insurers derive a substantial portion of their franchise strength from the value that they provide to government-sponsored enterprises involved in residential mortgage finance by allowing them to participate in the high-loan-to-value portion of the mortgage market. Radian insures approximately 15% of the conforming loan market and is a significant counterparty to the GSEs. Moody's said that Radian and other mortgage insurers have benefited from the GSEs' increasing penetration of the mortgage origination market, resulting in higher new business volume, improving underwriting criteria and greater pricing power. Fannie Mae and Freddie Mac recently modified their minimum guideline requirements for mortgage insurers, including the elimination of rating triggers, and Freddie Mac confirmed Radian's designation as an approved "Type 1" insurer, allowing the firm to continue to write new GSE-eligible business. Moody's said that Radian's ability to retain its status as a Type 1 insurer will be an important rating consideration for the company going forward. In evaluating capital adequacy, Moody's has segmented the insured portfolio by vintage, delivery channel and borrower quality. Portfolio loss estimates were derived using a stochastic simulation model which applies estimates of expected and stress losses for each strata of risk. The model also incorporates the impact of projected premiums on the insured portfolio, as well as the benefit of reinsurance provided by mortgage lender captives and through other third-party reinsurance arrangements. Capital resources were then compared to the present value of projected net losses using a standard benchmark for capital adequacy at a range of rating levels. Moody's also considered the company's capital position relative to regulatory capital requirements. Moody's said that the performance of Radian's insured portfolio has deteriorated meaningfully, not only for its traditional primary mortgage insurance portfolio, but even more so for its higher-risk pool insurance policies, net interest margin securitizations, and second lien transactions which collectively account for over 40% of Moody's estimate of expected losses. For Radian's mortgage insurance portfolio overall, capital adequacy on a risk-adjusted basis is consistent with Moody's single-A metrics, and the company is currently well within regulatory limits. According to Moody's, the downgrade of Radian Insurance to Baa1 reflects the higher-risk nature of its insurance portfolio of second lien and NIM transactions, coupled with Moody's view that the subsidiary is no longer strategically important to Radian's overall mortgage insurance platform. Moody's noted that the rating of Radian Insurance continues to derive support from a net worth maintenance agreement from Radian Guaranty, although any claims under the agreement would rank junior to the policyholders of Radian Guaranty. Moody's said that the downgrade of Radian Asset's IFS rating to A3 reflects the likelihood that the guarantor will cease writing new business going forward, negatively impacting the company's franchise value. The rating agency added that Radian Asset's capital profile remains strong currently, but could well decline over time as capital resources are diverted from the company to support Radian's mortgage insurance platform. The downgrade of Radian Group's senior debt to Ba1 reflects its subordination to the policyholders of the insurance operating companies, as well as the group's reduced financial flexibility. Terms of Radian's secured bank credit facility were also a consideration in the positioning of the senior debt rating. Radian Group has suffered a sharp drop in its market capitalization, making it difficult to economically raise new capital in the current environment, according to Moody's. Furthermore, ordinary dividends are unavailable from Radian Guaranty, and Radian Asset's unrestricted available capital is likely to be used to enhance the capital of the mortgage insurance platform. The holding company does, however, maintain over $100 million in liquidity, and has operating agreements currently in place which allow for holding company debt to be serviced as an expense of the operating subsidiaries. The negative rating outlook reflects the potential for further adverse development within the group's insured risk portfolio and its ability to economically address potential capital shortfalls should markets continue to worsen. Moody's downgraded these ratings and changed the rating outlook to negative: -- Radian Group, Inc. -- senior debt to Ba1 from A2; prospective senior debt to (P)Ba1 from (P)A2; prospective subordinate debt to (P)Ba2 from (P)A3; prospective preferred stock to (P)Ba3 from (P)Baa1 -- Radian Group Capital Trust I -- prospective trust preferred to (P)Ba2 from (P)A3 -- Radian Group Capital Trust II -- prospective trust preferred to (P)Ba2 from (P)A3 -- Radian Guaranty Inc. -- insurance financial strength to A2 from Aa3 -- Radian Insurance Inc. -- insurance financial strength to Baa1 from Aa3 -- Amerin Guaranty Corporation -- insurance financial strength to A2 from Aa3 -- Enhance Financial Services Group Inc. -- prospective senior debt to (P)Ba1 from (P)A2; prospective subordinate debt to (P)Ba2 from (P)A3 -- Radian Asset Assurance Inc. -- insurance financial strength to A3 from Aa3 -- Radian Asset Assurance Limited -- insurance financial strength to A3 from Aa3 Radian Group is a US based holding company which owns a mortgage insurance platform comprised of Radian Guaranty, Radian Insurance and Amerin Guaranty, as well as a financial guaranty insurance company, Radian Asset. The group also has investments in other financial services entities. As of March 31, 2007, Radian Group had total assets of $8.3 billion and $2.9 billion in shareholder's equity. RANDALL MARTIN: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Randall Martin Home Dobson Park, LLC 20845 N. Pima Road, Suite C-253 Scottsdale, Arizona 85255 Bankruptcy Case No.: 08-07689 Type of Business: The Debtor build houses. Chapter 11 Petition Date: June 25, 2008 Court: District of Arizona (Phoenix) Judge: Redfield T. Baum Sr. Debtors' Counsel: Michael W. Carmel, Esq. (michael@mcarmellaw.com) Michael W. Carmel, Ltd. 80 E. Columbus Avenue Phoenix, Arizona 85012-4965 Tel: (602) 264-4965 Fax: (602) 277-0144 http://www.mcarmellaw.com/ Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million A copy of the Debtor's petition together with a list of largest unsecured creditors is available for free at: http://bankrupt.com/misc/arizb08-07689.pdf RESIDENTIAL ACCREDIT: Moody's Cuts Ratings of 206 Tranches ---------------------------------------------------------- Moody's Investors Service has downgraded the ratings of 206 tranches from 30 Option ARM transactions issued by Residential Accredit Loans Inc. under the QH and QO shelves. Seventy four tranches remain on review for possible further downgrade. Additionally, 48 tranches were placed on review for possible downgrade The collateral backing these transactions consists primarily of first-lien, hybrid and adjustable-rate, negatively amortizing Alt- A mortgage loans. The ratings were downgraded, in general, based on higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to credit enhancement levels. The actions described below are a result of Moody's on- going review process. Complete rating actions are: Issuer: RALI Series 2005-QO1 Trust -- Cl. X, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to Aa2 from Aa1 -- Cl. M-2, Downgraded to A2 from Aa2 -- Cl. M-3, Downgraded to A3 from Aa3 -- Cl. M-4, Downgraded to Baa3 from A1 -- Cl. M-5, Downgraded to Ba2 from A2 -- Cl. M-6, Downgraded to B1 from A3 -- Cl. M-7, Downgraded to B2 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. M-8, Downgraded to B2 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. M-9, Downgraded to B3 from Baa3; Placed Under Review for further Possible Downgrade -- Cl. B-1, Downgraded to Ca from Ba2 Issuer: RALI Series 2005-QO2 Trust -- Cl. X, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to A1 from Aa2 -- Cl. M-2, Downgraded to Ba2 from A2 -- Cl. M-3, Downgraded to B3 from Baa2 Issuer: RALI Series 2005-QO3 Trust -- Cl. A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. X, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to Baa3 from Aa2 -- Cl. M-2, Downgraded to B2 from A2 -- Cl. M-3, Downgraded to Ca from Ba2 Issuer: RALI Series 2005-QO4 Trust -- Cl. I-A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. II-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. X-PO, Placed on Review for Possible Downgrade, currently Aaa -- Cl. X-IO, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to Ba1 from Aa2 -- Cl. M-2, Downgraded to B3 from A2 -- Cl. M-3, Downgraded to Ca from Ba1 Issuer: RALI Series 2005-QO5 Trust -- Cl. A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. X, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to Baa3 from Aa1 -- Cl. M-2, Downgraded to Ba3 from Aa2 -- Cl. M-3, Downgraded to B2 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to B2 from A1; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to B3 from A2; Placed Under Review for further Possible Downgrade -- Cl. M-6, Downgraded to B3 from A3; Placed Under Review for further Possible Downgrade -- Cl. M-7, Downgraded to Caa1 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. M-8, Downgraded to Ca from Baa2 -- Cl. M-9, Downgraded to Ca from Baa3 Issuer: RALI Series 2006-QH1 Trust -- Cl. M-2, Downgraded to Baa3 from A2 -- Cl. M-3, Downgraded to Ba3 from Baa1 -- Cl. M-4, Downgraded to B1 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to B3 from Baa3 Issuer: RALI Series 2006-QO1 Trust -- Cl. 1-A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 3-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. X-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. X-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. X-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to Baa3 from Aa1 -- Cl. M-2, Downgraded to Ba2 from Aa2 -- Cl. M-3, Downgraded to B2 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to B3 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to Ca from Ba1 -- Cl. M-6, Downgraded to Ca from B2 -- Cl. B-1, Downgraded to Ca from Caa1 Issuer: RALI Series 2006-QO10 Trust -- Cl. M-1, Downgraded to Aa2 from Aaa -- Cl. M-2, Downgraded to Baa1 from Aa1 -- Cl. M-3, Downgraded to Baa3 from Aa2 -- Cl. M-4, Downgraded to Ba3 from Aa3 -- Cl. M-5, Downgraded to B1 from A1; Placed Under Review for further Possible Downgrade -- Cl. M-6, Downgraded to B2 from A2; Placed Under Review for further Possible Downgrade -- Cl. M-7, Downgraded to B3 from A3; Placed Under Review for further Possible Downgrade -- Cl. M-8, Downgraded to Caa1 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. M-9, Downgraded to Ca from Baa3 Issuer: RALI Series 2006-QO2 Trust -- Cl. M-2, Downgraded to A3 from Aa2 -- Cl. M-3, Downgraded to Baa3 from Aa3 -- Cl. M-4, Downgraded to Ba3 from A1 -- Cl. M-5, Downgraded to B2 from A2; Placed Under Review for further Possible Downgrade -- Cl. M-6, Downgraded to B2 from A3; Placed Under Review for further Possible Downgrade -- Cl. M-7, Downgraded to B3 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. M-8, Downgraded to Ca from Baa3 Issuer: RALI Series 2006-QO3 Trust -- Cl. M-1, Downgraded to Aa2 from Aa1 -- Cl. M-2, Downgraded to Baa2 from Aa2 -- Cl. M-3, Downgraded to Ba2 from Aa3 -- Cl. M-4, Downgraded to B2 from A1 -- Cl. M-5, Downgraded to B2 from A2; Placed Under Review for further Possible Downgrade -- Cl. M-6, Downgraded to B2 from A3; Placed Under Review for further Possible Downgrade -- Cl. M-7, Downgraded to B3 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. M-8, Downgraded to Ca from Baa3 Issuer: RALI Series 2006-QO4 Trust -- Cl. M-1, Downgraded to A2 from Aa1 -- Cl. M-2, Downgraded to Baa3 from Aa2 -- Cl. M-3, Downgraded to Ba3 from Aa2 -- Cl. M-4, Downgraded to B2 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to B2 from A1; Placed Under Review for further Possible Downgrade -- Cl. M-6, Downgraded to B3 from A2; Placed Under Review for further Possible Downgrade -- Cl. M-7, Downgraded to B3 from A3; Placed Under Review for further Possible Downgrade -- Cl. M-8, Downgraded to Caa1 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. M-9, Downgraded to Ca from Baa2 -- Cl. M-10, Downgraded to Ca from Ba1 Issuer: RALI Series 2006-QO5 Trust -- Cl. I-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. II-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. III-A-5, Placed on Review for Possible Downgrade, currently Aaa -- Cl. XC, Placed on Review for Possible Downgrade, currently Aaa -- Cl. XN, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to Baa1 from Aaa -- Cl. M-2, Downgraded to B1 from Aa1 -- Cl. M-3, Downgraded to B2 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to B3 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to Caa1 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. M-6, Downgraded to Ca from Ba2 -- Cl. M-7, Downgraded to Ca from B3 Issuer: RALI Series 2006-QO6 Trust -- Cl. M-1, Downgraded to A3 from Aa1 -- Cl. M-2, Downgraded to Baa3 from Aa2 -- Cl. M-3, Downgraded to Ba3 from Aa3 -- Cl. M-4, Downgraded to B2 from A1; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to B2 from A2; Placed Under Review for further Possible Downgrade -- Cl. M-6, Downgraded to B2 from A3; Placed Under Review for further Possible Downgrade -- Cl. M-7, Downgraded to B3 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. M-8, Downgraded to Caa1 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. M-9, Downgraded to Ca from Baa3 Issuer: RALI Series 2006-QO7 Trust -- Cl. I-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. II-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. III-A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. X1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. X2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. X3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to Baa3 from Aaa -- Cl. M-2, Downgraded to B1 from Aa1 -- Cl. M-3, Downgraded to B2 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to Caa1 from A2; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to Ca from Baa3 -- Cl. M-6, Downgraded to Ca from Ba3 -- Cl. M-7, Downgraded to Ca from B3 Issuer: RALI Series 2006-QO8 Trust -- Cl. I-A1B, Placed on Review for Possible Downgrade, currently Aaa -- Cl. II-A, Placed on Review for Possible Downgrade, currently Aaa -- Cl. I-A3B, Placed on Review for Possible Downgrade, currently Aaa -- Cl. I-A4B, Placed on Review for Possible Downgrade, currently Aaa -- Cl. I-AX, Placed on Review for Possible Downgrade, currently Aaa -- Cl. II-AX, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to A2 from Aaa -- Cl. M-2, Downgraded to Ba3 from Aa1 -- Cl. M-3, Downgraded to B2 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to B3 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to B3 from A1; Placed Under Review for further Possible Downgrade -- Cl. M-6, Downgraded to B3 from A2; Placed Under Review for further Possible Downgrade -- Cl. M-7, Downgraded to Caa1 from A3; Placed Under Review for further Possible Downgrade -- Cl. M-8, Downgraded to Ca from Baa2 -- Cl. M-9, Downgraded to Ca from Baa3 Issuer: RALI Series 2006-QO9 Trust -- Cl. II-A, Placed on Review for Possible Downgrade, currently Aaa -- Cl. I-A1B, Placed on Review for Possible Downgrade, currently Aaa -- Cl. I-A3B, Placed on Review for Possible Downgrade, currently Aaa -- Cl. AXP, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to A1 from Aa1 -- Cl. M-2, Downgraded to A3 from Aa1 -- Cl. M-3, Downgraded to Baa3 from Aa1 -- Cl. M-4, Downgraded to Ba3 from Aa2 -- Cl. M-5, Downgraded to B1 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-6, Downgraded to B2 from A1; Placed Under Review for further Possible Downgrade -- Cl. M-7, Downgraded to B2 from A3; Placed Under Review for further Possible Downgrade -- Cl. M-8, Downgraded to Caa1 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. M-9, Downgraded to Ca from Ba1 -- Cl. B, Downgraded to Ca from Ba2 Issuer: RALI Series 2007-QH1 Trust -- Cl. M-1, Downgraded to Aa2 from Aa1 -- Cl. M-2, Downgraded to A1 from Aa1 -- Cl. M-3, Downgraded to Baa1 from Aa2 -- Cl. M-4, Downgraded to Ba1 from A1 -- Cl. M-5, Downgraded to B1 from A3; Placed Under Review for further Possible Downgrade -- Cl. M-6, Downgraded to B2 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. M-7, Downgraded to Ca from Ba2 Issuer: RALI Series 2007-QH2 -- Cl. M-1, Downgraded to Aa3 from Aa1 -- Cl. M-2, Downgraded to A2 from Aa2 -- Cl. M-3, Downgraded to Baa1 from Aa2 -- Cl. M-4, Downgraded to Ba1 from Aa3 -- Cl. M-5, Downgraded to B1 from A2; Placed Under Review for further Possible Downgrade -- Cl. M-6, Downgraded to B1 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. M-7, Downgraded to Ca from Baa3 Issuer: RALI Series 2007-QH3 Trust -- Cl. A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to Aa3 from Aa1 -- Cl. M-2, Downgraded to A2 from Aa1 -- Cl. M-3, Downgraded to Baa2 from Aa2 -- Cl. M-4, Downgraded to Ba1 from Aa2 -- Cl. M-5, Downgraded to B1 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-6, Downgraded to B1 from A1; Placed Under Review for further Possible Downgrade -- Cl. M-7, Downgraded to B3 from A3; Placed Under Review for further Possible Downgrade -- Cl. M-8, Downgraded to Caa1 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. M-9, Downgraded to Ca from Ba1 Issuer: RALI Series 2007-QH4 Trust -- Cl. M-3, Downgraded to Aa3 from Aa2 -- Cl. M-4, Downgraded to A3 from Aa3 -- Cl. M-5, Downgraded to Baa3 from A1 -- Cl. M-6, Downgraded to B1 from A3 -- Cl. M-7, Downgraded to B1 from Baa3; Placed Under Review for further Possible Downgrade -- Cl. M-8, Downgraded to Ca from Ba1 -- Cl. B, Downgraded to Ca from Ba3 Issuer: RALI Series 2007-QH5 Trust -- Cl. A-I-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-II, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to A1 from Aa1 -- Cl. M-2, Downgraded to A3 from Aa1 -- Cl. M-3, Downgraded to Baa3 from Aa2 -- Cl. M-4, Downgraded to B1 from Aa3 -- Cl. M-5, Downgraded to B1 from A1; Placed Under Review for further Possible Downgrade -- Cl. M-6, Downgraded to B3 from A3; Placed Under Review for further Possible Downgrade -- Cl. M-7, Downgraded to Caa1 from Baa3; Placed Under Review for further Possible Downgrade -- Cl. M-8, Downgraded to Ca from Ba2 Issuer: RALI Series 2007-QH6 Trust -- Cl. M-1, Downgraded to Aa2 from Aaa -- Cl. M-2, Downgraded to A2 from Aa1 -- Cl. M-3, Downgraded to Baa1 from Aa1 -- Cl. M-4, Downgraded to Baa3 from Aa1 -- Cl. M-5, Downgraded to B1 from Aa3 -- Cl. M-6, Downgraded to B1 from A3; Placed Under Review for further Possible Downgrade -- Cl. M-7, Downgraded to B3 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. M-8, Downgraded to Ca from Ba3 -- Cl. B, Downgraded to Ca from B1 Issuer: RALI Series 2007-QH7 Trust -- Cl. M-7, Downgraded to Baa2 from A3 -- Cl. M-8, Downgraded to Ba1 from Baa1 -- Cl. M-9, Downgraded to B3 from Baa2; Placed Under Review for further Possible Downgrade Issuer: RALI Series 2007-QH8 Trust -- Cl. X, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to Baa1 from Aa2 -- Cl. M-2, Downgraded to B1 from A2 -- Cl. M-3, Downgraded to B2 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. B-1, Downgraded to Ca from Ba2 Issuer: RALI Series 2007-QH9 Trust -- Cl. X, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Placed on Review for Possible Downgrade, currently Aa2 -- Cl. M-2, Placed on Review for Possible Downgrade, currently A2 -- Cl. M-3, Placed on Review for Possible Downgrade, currently Baa2 -- Cl. B-1, Placed on Review for Possible Downgrade, currently Ba2 -- Cl. B-2, Placed on Review for Possible Downgrade, currently B2 Issuer: RALI Series 2007-QO1 Trust -- Cl. M-2, Downgraded to Aa2 from Aa1 -- Cl. M-3, Downgraded to A1 from Aa1 -- Cl. M-4, Downgraded to Baa1 from Aa2 -- Cl. M-5, Downgraded to Baa3 from Aa3 -- Cl. M-6, Downgraded to Ba3 from A1 -- Cl. M-7, Downgraded to B1 from A3; Placed Under Review for further Possible Downgrade -- Cl. M-8, Downgraded to B2 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. M-9, Downgraded to B3 from Baa3; Placed Under Review for further Possible Downgrade -- Cl. B, Downgraded to Ca from Ba3 Issuer: RALI Series 2007-QO2 Trust -- Cl. A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to A2 from Aaa -- Cl. M-2, Downgraded to Baa1 from Aa1 -- Cl. M-3, Downgraded to Ba2 from Aa1 -- Cl. M-4, Downgraded to B2 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to B2 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-6, Downgraded to B3 from A1; Placed Under Review for further Possible Downgrade -- Cl. M-7, Downgraded to B3 from A3; Placed Under Review for further Possible Downgrade -- Cl. M-8, Downgraded to Caa1 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. M-9, Downgraded to Ca from Baa3 -- Cl. B, Downgraded to Ca from Ba3 Issuer: RALI Series 2007-QO3 Trust -- Cl. M-6, Downgraded to Baa1 from A2 -- Cl. M-7, Downgraded to Baa3 from A3 -- Cl. M-8, Downgraded to Ba3 from Baa2 -- Cl. M-9, Downgraded to B3 from Ba1; Placed Under Review for further Possible Downgrade Issuer: RALI Series 2007-QO4 Trust -- Cl. M-1, Downgraded to Aa2 from Aaa -- Cl. M-2, Downgraded to A2 from Aa1 -- Cl. M-3, Downgraded to A2 from Aa1 -- Cl. M-4, Downgraded to Baa1 from Aa2 -- Cl. M-5, Downgraded to Baa3 from Aa3 -- Cl. M-6, Downgraded to Ba3 from A1 -- Cl. M-7, Downgraded to B1 from A2; Placed Under Review for further Possible Downgrade -- Cl. M-8, Downgraded to B2 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. M-9, Downgraded to B3 from Baa3; Placed Under Review for further Possible Downgrade Issuer: RALI Series 2007-QO5 Trust -- Cl. M-1, Downgraded to A2 from Aa2 -- Cl. M-2, Downgraded to Baa2 from A2 -- Cl. M-3, Downgraded to Ba1 from Baa1 -- Cl. M-4, Downgraded to Ba3 from Baa2 -- Cl. M-5, Downgraded to B1 from Baa3; Placed Under Review for further Possible Downgrade RHODE ISLAND HEALTH: Fitch Lowers $18.6MM Bonds Rating to BB ------------------------------------------------------------ Fitch Ratings has downgraded Rhode Island Health and Educational Building Corporation's $18.6 million series 1999 revenue bonds (St. Joseph Health Services of Rhode Island Issue; SJHS) to 'BB' from 'BBB-'. Fitch has also revised the Rating Outlook to Negative from Stable. The downgrade reflects SJHS' growing operating losses, a rapidly shrinking liquidity position, and poor debt service coverage. The financial deterioration is a result of the hospital's inability to respond effectively to a multi-year decline in inpatient and outpatient volumes. Since fiscal 2004, SJHS' operating performance has consistently worsened, with the hospital losing $3.4 million for the year ending Sep. 30, 2007 (negative 1.9% margin). Through six months ended March 31, 2008, SJHS recorded an operating loss of approximately $1.8 million, which equated to a negative 2.0% operating margin. Management projects the full year loss to be $3.6 million, despite having implemented a 40 FTE staff reduction in April 2008. Despite the losses, SJHS' debt load is moderate, with maximum annual debt service at just 1.6% of revenues, cash to debt at 94%, and debt to capitalization at 40%. SJHS' cash and unrestricted investments have steadily declined since 2005, and stood at 38 days of expenses as of March 31, 2008. At Sep. 30, 2007, SJHS had approximately $22.5 million in unrestricted cash and investments, which was down from FY06 and FY05's positions of $30.8 million and $34.0 million, respectively. Cash flow from operations turned sharply negative for fiscal 2007, while investment losses have further trimmed the hospital's liquidity position. Moderate but prolonged erosion in patient volumes is chiefly responsible for the financial decline, with admissions dropping over 2% per year since 2004. Outpatient activity has also dropped, with surgeries declining to 14,295 for fiscal 2007 from 18,645 in 2003. Management indicates that recent utilization declines are due to softening inpatient volumes throughout the state as well as growing outmigration and competition for surgical services. The Rating Outlook revision to Negative indicates that potential further negative rating action may be warranted if SJHS' cannot improve operating profitability and stabilize its liquidity position. Management expects to reduce expenses through two near term initiatives. First, SJHS eliminated 40 full time equivalent positions in April 2008, and management is reviewing additional expense savings measures as part of the FY2009 budget process. Second, the hospital has filed a certificate of need application to allow the consolidation of inpatient services at the newer of the hospital's two campuses in Providence. Approval and implementation is expected over the next several months. The projected benefit of the inpatient consolidation is $4.2 million. SJHS is also contemplating a merger with Roger Williams Medical Center, similarly sized and also located in Providence, which could strengthen SJHS' market presence and reduce expenses through streamlined business operations. Pursuant to a May 2008 memorandum of understanding, both organizations would consolidate under a parent organization. The combined entity would have approximately $340 million in revenues and a 15% market share. Details regarding the management team and obligated group structure have yet to be determined. For the year ended Sep. 30, 2007, RWMC broke even from operations on net revenues of $168 million. Located in Rhode Island, SJHS consists of 271-bed Our Lady of Fatima Hospital in North Providence, St. Joseph Hospital for Specialty Care (115 beds) and St. Joseph Living Center (62 assisted living units) in Providence. SJHS had $177.6 million in total revenue in 2007. SJHS has covenants to provide only annual disclosure to the NRMSIRs, which Fitch views as a weak legal covenant. SJHS has provided timely annual disclosure to the NRMSIRs and management intends to provide quarterly disclosure. RHODE ISLAND HEALTH: S&P Cuts $19.6MM Bond Rating to BB from BB+ ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating to 'BB' from 'BB+' on Rhode Island Health and Educational Building Corp.'s $19.6 million series 1999 bonds issued for St. Joseph Health Services. The lower rating reflects fiscal year 2007 losses, which were substantially below expectations and continue year to date at comparable levels. The outlook remains negative although the hospital is in the middle of exploring and implanting strategic initiatives that may stabilize the rating at its current level next year. The 'BB' rating reflects St. Joseph's sizeable operating losses; limited balance sheet with minimal liquidity and substantial funds due to third-party payors, which are slowly being repaid; and the competitive Rhode Island service area, which is dominated by 'A' rated Lifespan. "A lower rating is precluded at this time due to progress made by a new CEO to consolidate inpatient services on a single campus and by efforts to consummate a merger with a local competitor," said Standard & Poor's credit analyst Cynthia Keller Macdonald. "While these strategies have been discussed in the past with little action, a lot of progress has been made this year with new leadership," added Ms. Keller Macdonald. The negative outlook reflects concerns about the magnitude of losses posted in 2007 and 2008 year to date combined with a relatively weak balance sheet. The rating could be lowered if losses escalate or liquidity diminishes much below current levels. However, while the financial metrics might suggest a lower rating, the strategies pursued by management have potential to significantly effect the organization and potentially stabilize it at the current rating level, if successfully implemented. St. Joseph Health Services operates 295-staffed beds on two campuses; 201 acute-care beds at Our Lady of Fatima Hospital in North Providence and 94 beds at The St. Joseph Hospital for Specialty Care in Providence, which provides psychiatry, rehabilitation, and skilled nursing services. St. Joseph has no swaps outstanding. ROOM SOURCE: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Room Source LLC aka The RoomSource aka RoomSource 849 North 10th Street Sacramento, CA 95814 Bankruptcy Case No.: 08-28487 Type of Business: The Debtor retails home furniture. Chapter 11 Petition Date: June 25, 2008 Court: Eastern District of California (Sacramento) Judge: Michael S. McManus Debtor's Counsel: Sarah M. Stuppi, Esq. Law Offices of Stuppi & Stuppi 1630 North Main Street, Suite 332 Walnut Creek, CA 94596 Tel: (415) 786-4365 Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $10,000,000 to $50,000,000 The Debtor did not file a list of its 20 largest unsecured creditors. SALONE HOLDINGS: Baseball Clubs Sue Operator to Recoup $100,000 --------------------------------------------------------------- WRTA.com reports that the Altoona Curve and State College Spikes baseball organizations have filed lawsuits to recoup $100,000 from Larry Salone. The lawsuit, the report says, alleges that Mr. Salone, operator of the Altoona Railroaders Museum, owes the clubs for advertising and promotions for his Quaker Steak & Lube restaurant franchise in State College. WRTA.com says Mr. Salone included those debts in a chapter 11 bankruptcy petition. The teams, however, argue that the debts don't fall within the bankruptcy because Mr. Salone signed the ad contracts as an individual. Pennsylvania-based Salone Holdings LLC filed for voluntary Chapter 11 bankruptcy before the U.S. Bankruptcy Court for the Western District of Pennsylvania on March 19, 2008 (Case No.: 08-70278). Christopher A. Boyer, Esq., at Leech, Tishman, Fuscaldo & Lampl, LLC, in Pittsburgh, Pennsylvania, represents the Debtor. Salone Holdings reported $1 million to $10 million in estimated assets and debts when it filed for bankruptcy. SAN JUAN: Moody's Affirms CF Rating at B3, Outlook Stable --------------------------------------------------------- Moody's Investors Service affirmed the B3 corporate family and B3 probability of default ratings for San Juan Cable LLC. The ratings outlook remains stable, and Moody's affirmed ratings as: San Juan Cable, LLC -- Affirmed B3 Corporate Family Rating -- Affirmed B3 Probability of Default Rating -- Affirmed B1 rating on Senior Secured First Lien Bank Credit Facility, LGD2, 28% -- Affirmed Caa1 rating on Senior Secured Second Lien Bank Credit Facility, LGD5, 72% -- Outlook: Stable San Juan Cable's revenue and EBITDA both rose over 10% in 2007 compared to the prior year, and Moody's anticipates continued growth. However, accretion on the payment-in-kind loan at the holding company constrains the company's ability to reduce leverage. San Juan Cable's B3 corporate family rating reflects high leverage of approximately 8 times debt-to-EBITDA, low fixed charge coverage, and minimal free cash flow. Furthermore, San Juan remains a small, geographically concentrated operator. Attractive asset value, strong EBITDA margins, and reasonable growth prospects support the rating. San Juan Cable LLC, the leading provider of cable television services in Puerto Rico, serves approximately 133,000 basic video subscribers. Its annual revenue is approximately $150 million. San Juan Cable is owned by MidOcean Partners, Crestview Partners and the company's management. SASCO 2007-BHC1: S&P Trims Ratings on 11 Classes of Certificates ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 11 classes from SASCO 2007-BHC1 Trust and removed them from CreditWatch, where they were placed with negative implications on May 28, 2008. At the same time, S&P affirmed its ratings on five other classes and removed them from CreditWatch with negative implications, and affirmed its ratings on two other classes that were not previously on CreditWatch. The lowered and affirmed ratings follow a full analysis of the transaction, which included an examination of the current credit characteristics of the assets and the transaction's liabilities. The review incorporated Standard & Poor's revised recovery rating assumptions for commercial mortgage-backed securities. According to the trustee reported dated June 20, 2008, the transaction's current assets include 88 classes of pass-through certificates from 42 distinct CMBS transactions issued between 2004 and 2006. None of the CMBS transactions represent an asset concentration of 10% or more. The aggregate principal balance of the assets and liabilities each total $501.3 million, which is unchanged since issuance. The transaction has not realized any principal losses to date and none of the current assets are first- loss CMBS assets. S&P's analysis indicates that the current asset pool exhibits credit characteristics consistent with 'BBB' rated obligations. Standard & Poor's rates $417.9 million (83%) of the assets. S&P reanalyzed its outstanding credit estimates for the remaining assets. Standard & Poor's analysis of SASCO 2007-BHC1 Trust indicates that the classes are adequately supported at the lowered and affirmed rating levels. Ratings Lowered and off Creditwatch Negative SASCO 2007-BHC1 Trust CMBS pass-through certificates series 2007-NCM1 Rating ------ Class To From ----- -- ---- A-2 AA+ AAA/Watch Neg B AA AA+/Watch Neg C A+ AA/Watch Neg D A+ AA-/Watch Neg E A A+/Watch Neg F BBB+ A/Watch Neg G BBB A-/Watch Neg H BBB- BBB+/Watch Neg J BB+ BBB/Watch Neg K BB+ BBB-/Watch Neg L BB BB+/Watch Neg Ratings Affirmed and Off Creditwatch Negative SASCO 2007-BHC1 Trust CMBS pass-through certificates series 2007-NCM1 Rating ------ Class To From ----- -- ---- M BB BB/Watch Neg N BB- BB-/Watch Neg P B+ B+/Watch Neg Q B B/Watch Neg S B- B-/Watch Neg Ratings Affirmed SASCO 2007-BHC1 Trust CMBS pass-through certificates series 2007-NCM1 Class Rating ----- ------ A-1 AAA X AAA SEQUOIA COMMUNITY: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Sequoia Community Health Foundation, Inc. dba Sequoia Community Health Clinic 1945 N Fine #116 Fresno, CA 93727 Bankruptcy Case No.: 08-13653 Chapter 11 Petition Date: June 24, 2008 Court: Eastern District of California (Fresno) Judge: Hon. Whitney Rimel Debtors' Counsel: Riley C. Walter, Esq. Walter Wilhelm Law Group 7110 N Fresno St #400 Fresno, CA 93720 Tel: (559) 435-9800 Fax: (559) 435-9868 Sequoia Community Health Foundation, Inc.'s Financial Condition: Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $1,000,000 to $10,000,000 A copy of the Debtor's petition and a list of its 20 largest unsecured creditors are available at no charge at: http://bankrupt.com/misc/caeb08-13653.pdf SEQUOIA COMMUNITY: Sec. 341 Creditors Meeting Slated for July 31 ---------------------------------------------------------------- The United States Trustee for the Eastern District of California in Fresno will convene a meeting of creditors on July 31, 2008, at 1:30 p.m. at Fresno Meeting Room 1452. Proofs of claim against the Debtor are due by October 29, 2008. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. The U.S. Trustee may be reached at: Office of the U.S. Trustee United States Courthouse 2500 Tulare Street, Room 1401 Fresno, CA 93721 Sequoia Community Health Centers, Inc. is a non-profit Federally Qualified Health Center located in Fresno, California. The Debtor filed for chapter 11 protection on June 24, 2008, before the U.S. Bankruptcy Court for the Eastern District of California (Case No. 08-13653). Riley C. Walter, Esq., at Walter Wilhelm Law Group, in Fresno, represents the Debtor. When it filed for bankruptcy, Sequoia disclosed $1,000,000 to $10,000,000 in estimated assets and debts. SHARPER IMAGE: Receives Go-Signal to Implement Severance Program ---------------------------------------------------------------- Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware held that The Sharper Image Corp. may implement its severance program as amended upon record at the June 17, 2008 hearing. Judge Gross overruled objections not otherwise resolved, and authorized the Debtor to honor obligations under the Amended Severance Program as to its executives. Davis Street Land Company of Tennessee, L.L.C., and Gardens SPE II LLC tried to block approval of the Amended Severance Program, to the extent that their administrative claims against the Debtor are not paid. According to William A. Hazeltine, Esq., at Sullivan Hazeltine Allinson LLC, in Wilmington, Delaware, the Debtor had entered into separate non-residential property leases with Davis and Gardens prior to the Petition Date. The Debtor had not paid the Landlords the stub rent for its obligations on the Leases, nor indicated whether the Leases will be assumed, assumed and assigned, or rejected. The stub rent, which continue to accrue under the Leases, is an administrative expense of the Debtor's estate, Mr. Hazeltine maintained. Mr. Hazeltine asserted that the Landlords should not be required to wait for the payment of their administrative claims, while employees are paid currently. Additionally, he said that the Amended Severance Program should explicitly state that the employees are not entitled to duplicative bonuses. 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 US$251,500,000 and total debts of US$199,000,000. (Sharper Image Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SHARPER IMAGE: Court Terminates Order on Equity Trade Restriction ----------------------------------------------------------------- Upon the oral request of Sharper Image Corp. to withdraw the interim approval of its motion to restrict transfers of interest, the U.S. Bankruptcy Court for the District of Delaware terminated the interim order as of June 17, 2008. Judge Kevin Gross determined that the termination of the Interim Order is in the best interests of the Debtor, its creditors, and all parties-in-interest. As reported by the Troubled Company Reporter on May 12, 2008, the Debtor sought the authority of the U.S. District Court for the District of Delaware to (i) establish procedures to protect the potential value of its net operating tax loss carryforward amounts, and (ii) notify all holders of its stock and claims via a notice. The Debtor estimated that it has NOLs in excess of $200,000,000. In addition, the Debtor has substantial tax basis in its assets that exceeds the implied value of its assets based on its current market capitalization. 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 US$251,500,000 and total debts of US$199,000,000. (Sharper Image Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SHARPER IMAGE: Stinson Morrison Discloses Representation of Garmin ------------------------------------------------------------------ Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure, Darrell W. Clark, Esq., a partner at Stinson Morrison Hecker LLP, in Washington, D.C., says his firm represents three creditors in The Sharper Image Corp.'s Chapter 11 case: * Garmin International, Inc.; * Highwoods Realty, LP; and * Verizon Business Global, LLC, and its subsidiaries. Garmin holds a prepetition unsecured claim for $2,100,000, and an administrative claim for $600,000, arising from delivery of products to the Debtor. Highwoods is a landlord of the Debtor, and holds a $5,000 prepetition claim. Verizon holds a $50,000 prepetition unsecured claim, a $36,000 administrative claim, and a claim for a utility deposit. Mr. Clark tells the U.S. Bankruptcy Court for the District of Delaware that Stinson does not own any claim against the Debtor. 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 US$251,500,000 and total debts of US$199,000,000. (Sharper Image Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SHARPER IMAGE: Vice-Presidents Gary Chant, Drew Reich Resign ------------------------------------------------------------ In a regulatory filing with the United States Securities and Exchange Commission dated June 17, 2008, James Sander, senior vice-president and general counsel of Sharper Image Corp., disclosed that two vice-presidents of Sharper Image stepped down from their positions and left the company between June 11 and 13, 2008. On June 11, 2008, Gary Chant, Sharper Image's senior vice- president for human resources and administration, stepped down from that position. On June 13, 2008, Drew Reich, Sharper Image's executive vice-president for merchandising, also left the company. 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 US$251,500,000 and total debts of US$199,000,000. (Sharper Image Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SIMTROL INC: Amends 2002 Equity Incentive Plan to Increase Shares ----------------------------------------------------------------- The independent directors of Simtrol, Inc. approved an amendment to the company's 2002 Equity Incentive Plan. The purpose of the amendment is to increase the number of shares of authorized common stock available for issuance under the Plan to 8,000,000 shares from the previously authorized number of 6,000,000 shares. Compensation Agreement The company entered into a compensation agreement with Mr. Oliver Cooper, President and Chief Executive Officer. Mr. Cooper's annual base salary with the company is $156,000, payable in accordance with the company's current bi-weekly pay schedule and options to purchase common stock were granted: * Nonqualified stock options to purchase 750,000 shares of common stock of the company at an exercise price equal to $0.37; * Nonqualified stock options to purchase 750,000 shares of common stock of the company at an exercise price equal to $0.75 per share; and * Nonqualified stock options to purchase 500,000 shares of common stock of the company at an exercise price equal to $1.25 per share. All grants have three-year vesting periods, with monthly vesting ratably, and ten-year lives in accordance with the company's 2002 Equity Incentive Plan. Transition Agreement The company entered into a transition agreement with the company's former Chief Executive Officer, Mr. Richard Egan. The company paid Mr. Egan $4,200.00 in cash as payment of his accrued, unused vacation on June 6, 2008, and further agreed to pay separation payments totaling $48,400 in 14 equal bi-weekly cash installments. Mr. Egan agreed to release and discharge the company from any and all claims or liability, whether known or unknown, arising out of any event, act or omission occurring on or before the date of the Agreement. The Agreement also included hiring Mr. Egan as a consultant to the company through January 31, 2010. Mr. Egan agreed to forfeit the previously granted stock options as outlined: Grant Date Number of Shares Exercise Price ---------- ---------------- -------------- Jan. 4, 2000 7,500 $4.70 Aug. 25, 2000 7,500 $40.00 May 6, 2002 25,000 $4.80 July 25, 2002 1,000 $2.00 June 6, 2003 7,500 $2.40 June 21, 2004 50,000 $2.00 The stock option grants remain in effect and will continue to be governed by the company's 2002 Equity Incentive Plan and the relevant stock option grant notice: Grant Date Number of Shares Exercise Price ---------- ---------------- -------------- July 21, 2005 50,000 $0.90 Nov. 8, 2005 50,000 $0.55 Aug. 24, 2006 15,000 $0.48 Jan. 31, 2007 400,000 $0.38 Dec. 11, 2007 200,000 $0.80 April 11, 2008 37,500 $0.53 About Simtrol Inc. Headquartered in Norcross, Georgia, Simtrol Inc. (OTC BB: SMRL) -- http://www.simtrol.com/- is a developer of software that manages controllable devices such as display monitors, video cameras, and medical equipment for diverse markets such as digital signage, security and surveillance, and healthcare. Simtrol Inc.'s consolidated balance sheet at March 31, 2008, showed $1,380,095 in total assets and $1,546,657 in total liabilities, resulting in a $166,562 total stockholders' deficit. Going Concern Doubt Marcum & Kliegman LLP, in New York, expressed substantial doubt about Simtrol Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditng firm reported that the company has not achieved a sufficient level of revenues to support its business and has suffered recurring losses from operations. SIRVA INC: Withdraws Bid to Extend Removal Period After Plan Okay ----------------------------------------------------------------- Following their emergence from Chapter 11, the Reorganized Sirva Inc. and its debtor-affiliates withdrew their request to extend to September 5, 2008, the period within which they may remove actions pending on the Petition Date. As reported by the Troubled Company Reporter on May 14, 2008, SIRVA, Inc., and its debtor-subsidiaries' First Amended Prepackaged Joint Plan of Reorganization became effective on May 12, 2008. SIRVA's Plan of Reorganization is the result of an agreement the Company reached in February with its lenders, who overwhelmingly supported its Plan of Reorganization. SIRVA's exit financing consists of a $215,000,000 senior secured credit facility, which will be used to fund ongoing operations and borrowings. Effective immediately, SIRVA will become a private company, and its stock will no longer be publicly traded. A full-text copy of the Debtors' First Amended Prepackaged Joint Plan of Reorganization is available at no charge at: http://bankrupt.com/misc/SIRVA1stAmendedPlan.pdf About Sirva Inc. The company and 61 of its affiliates filed separate petitions for Chapter 11 protection on Feb. 5, 2008 (Bankr. S.D.N.Y. Case No. 08-10433). Marc Kieselstein, Esq. at Kirkland & Ellis, L.L.P. is representing the Debtor. When the Debtors filed for bankruptcy, it reported total assets of US$924,457,299 and total debts of US$1,232,566,813 for the quarter ended Sept. 30, 2007. The Court confirmed the Debtor's First Amended Prepackaged Plan on May 7, 2008. The Debtors' First Amended Prepackaged Joint Plan of Reorganization became effective on May 12, 2008. (Sirva Inc. Bankruptcy News; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). SIX FLAGS: Inks Indenture for Unit to Issue $400MM Senior Notes --------------------------------------------------------------- Six Flags, Inc., and its wholly-owned subsidiary, Six Flags Operations Inc., entered into an Indenture for the issuance by Operations of up to $400.0 million aggregate principal amount of its 12-1/4% Senior Notes due 2016, which are guaranteed by the company, in exchange for these notes of the company tendered by existing holders in a private exchange offer: (i) $149.2 million aggregate principal amount of the company's outstanding 8-7/8% Senior Notes due 2010; (ii) $231.6 million aggregate principal amount of the company's outstanding 9-3/4% Senior Notes due 2013 and (iii) $149.9 million aggregate principal amount of the company's outstanding 9-5/8% Senior Notes due 2014. After completion of the Private Exchange Transaction, $131.1 million, $142.4 million and $314.75 million aggregate principal amount of the 2010 Notes, 2013 Notes and 2014 Notes, respectively, remain outstanding under the global notes and indentures governing these notes. The New Notes bear interest at 12 ¼% per annum and mature on July 15, 2016. Interest is payable semi-annually, in arrears, on July 15 and January 15 of each year, with the first payment being due on January 15, 2009. At any time on or after July 15, 2013, Operations may redeem all or a part of the New Notes at the following redemption prices (expressed as percentages of principal amount) plus accrued and unpaid interest, if any, to the date of redemption: (i) 106.125% during year 2013; (ii) 103.063% during year 2014; and (iii) 100.00% during year 2015 and thereafter. At any time before July 15, 2011, Operations may redeem up to 35% of the New Notes with the net proceeds of certain equity offerings and strategic equity investments in the company or Operations, as long as at least 65% of the aggregate principal amount of the New Notes remains outstanding after the redemption. If there is a change in control, the holders of the New Notes have the right to require Operations to repurchase their notes at a price equal to 101% of the principal amount, plus accrued and unpaid interest. The Indenture contains covenants that restrict the ability of Operations and its subsidiaries, with exceptions, to take certain specified actions including those relating to the payment of dividends, incurrence of additional debt, consolidating, merging or transferring assets. About Six Flags Inc. Headquartered in New York City, Six Flags Inc. (NYSE: SIX) -- http://www.sixflags.com/-- is the world's largest regional theme park company with 21 parks across the United States, Mexico and Canada. Founded in 1961, Six Flags has provided world class entertainment for millions of families with cutting edge, record- shattering roller coasters and appointment programming with events like the popular Thursday and Sunday Night Concert Series. Now 47 years strong, Six Flags is recognized as the preeminent thrill innovator while reaching to all demographics -- families, teens, tweens and thrill seekers alike -- with themed attractions based on the Looney Tunes characters, the Justice League of America, skateboarding legend Tony Hawk, The Wiggles and Thomas the Tank Engine. At March 31, 2008, Six Flags' consolidated balance sheet showed $410.6 million stockholders' deficit, compared with $252 million deficit at Dec. 31, 2007. * * * As related in the Troubled Company Reporter on May 26, 2008, Fitch Ratings has downgraded these ratings: Issuer Default Rating to 'C' from 'B-'; Senior unsecured notes (including the 4.5% convertible notes) to 'C/RR5' from 'CCC/RR6'; and Preferred stock to 'C/RR6'from 'CCC-/RR6'. As disclosed Troubled Company Reporter on May 20, 2008, Standard & Poor's Ratings Services placed its 'CCC+' corporate credit rating and 'CCC-' senior unsecured rating on Six Flags Inc. on CreditWatch with negative implications. SOUTHERN PACIFIC: Moody's Junks Underlying Ratings on Two Notes --------------------------------------------------------------- Moody's Investors Service has published the underlying ratings on the following notes that are guaranteed by the financial guarantors listed. The underlying ratings reflect the intrinsic credit quality of the notes in the absence of the guarantee. The current ratings on the following notes are consistent with Moody's practice of rating insured securities at the higher of the guarantor's insurance financial strength rating or any underlying rating that is public. Complete rating actions are: Issuer: Southern Pacific Secured Assets Corp 1998-01 Class Description: Class A-1 Notes -- Current Rating: A2 -- Financial Guarantor: MBIA Insurance Corporation (A2, negative outlook) -- Underlying Rating: Caa1 Class Description: Class A-3 Notes -- Current Rating: A2 -- Financial Guarantor: MBIA Insurance Corporation (A2, negative outlook) -- Underlying Rating: Caa1 Class Description: Class A-6 Notes -- Current Rating: A2 -- Financial Guarantor: MBIA Insurance Corporation (A2, negative outlook) -- Underlying Rating: B3 Issuer: Southern Pacific Secured Assets Corp 1998-01 Class Description: Class A-7 Notes -- Current Rating: A2 -- Financial Guarantor: MBIA Insurance Corporation (A2, negative outlook) -- Underlying Rating: B3 Issuer: Southern Pacific Secured Assets Corp 1998-2 Class Description: A-1 Notes -- Current Rating: A2 -- Financial Guarantor: MBIA Insurance Corporation (A2, negative outlook) -- Underlying Rating: Ba1 Class Description: A-7 Notes -- Current Rating: A2 -- Financial Guarantor: MBIA Insurance Corporation (A2, negative outlook) -- Underlying Rating: Ba3 Class Description: A-8 Notes -- Current Rating: A2 -- Financial Guarantor: MBIA Insurance Corporation (A2, negative outlook) -- Underlying Rating: Ba3 Class Description: A-9 Notes -- Current Rating: A2 -- Financial Guarantor: MBIA Insurance Corporation (A2, negative outlook) -- Underlying Rating: Ba1 SUNCREST LLC: Zions Bank Wins Auction with $25.3 Mil. Credit Bid ---------------------------------------------------------------- Zions First National Bank won in an auction of SunCrest LLC's unfinished housing project in Utah on Monday, The Deal's Terry Brennan relates. The auction was held without a stalking-horse bidder, according to The Deal. Zions, which offered a credit bid of $25.3 million, outbid an undisclosed initial bidder, Debtor's counsel Bruce Raid, Esq., said, The Deal reported. The bank is owed $45 million, the report adds. The Debtor was in default of $43.7 million of the Zions loan, which prompted its chapter 11 filing, The Deal reports. The Troubled Company Reporter said on March 4, 2008, that Zions Bank had alleged that SunCrest violated terms under a loan agreement with the bank. According to court documents, SunCrest did not pay real estate taxes, and service, labor and materials expenses. The Hon. William Thurman of the U.S. Bankruptcy Court for the District of Utah was scheduled to conduct a sale hearing Wednesday, The Deal reports. On June 2, 2008, the TCR said that Court authorized SunCrest to obtain, on a final basis, up to $1,050,00 in postpetition financing -- including the use of cash collateral -- from WB Land Investments LP and Zion First National Bank, as lenders, pursuant to a restructuring and reorganization agreement dated March 27, 2008. The Debtor has until June 30, 2008, to use the lenders cash collateral, the TCR said. About SunCrest Headquartered in Draper, Utah, SunCrest LLC fdba Dae/Westbrook LLC -- http://www.suncrest.com-- develops mountaintop community in Draper. The company filed for Chapter 11 protection on April 11, 2008 (Bankr. D. Utah Case No.08-22302). Joel T. Marker, Esq., at McKay Burton & Thurman, represents the Debtor in its restructuring efforts. The U.S. Trustee for Region 19 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. David E. Leta, Esq., and Engels Tejeda, Esq., at Snell & Wilmer in Salt Lake City, Utah, represent the Committee in this case. The Debtor listed $46,442,365 in total assets and $96,587,367 in total debts. TAHERA DIAMOND: Court Extends CCAA Protection Until September 30 ---------------------------------------------------------------- Tahera Diamond Corporation received from the Ontario Superior Court of Justice an extension to its stay period entered under the Companies' Creditors Arrangement Act. The stay period is now in effect until Sept. 30, 2008, and is intended to provide sufficient time for the company to complete its sales process. The original CCAA filing occurred on Jan. 16, 2008, and the stay period was subsequently extended to June 30, 2008. In addition, the order also provides an extension for Tahera to conduct its annual meeting of shareholders to a date no later than six months after the date of implementation of a Plan of Arrangement or Compromise under the CCAA proceedings. A number of expressions of interest were received as part of the company's formal Marketing Process. Interested parties who have submitted acceptable expressions of interest are continuing due diligence assessment, which may or may not lead to a formal offer for the assets. The company and other stakeholders are working with potential buyers in order to facilitate a formal offer and will provide shareholders with updates in this regard as information is available. About Tahera Diamond Tahera Diamond Corporation (TSX: TAH) -- http://www.tahera.com/-- is a Canadian owned diamond mining company. Tahera's wholly-owned Jericho project, commencing commercial production in early 2006, represents Canada's third, and Nunavut's first, diamond mine. On Jan. 16, 2008, Tahera obtained an order from the Ontario Superior Court of Justice granting Tahera and its subsidiary protection pursuant to the provisions of the CCAA. Tahera sought protection under CCAA, as its current cash flows and cash on hand would not allow it to meet its current obligations and its obligations with respect to the 2008 winter road resupply. The Court extended until June 30, 2008, the stay it granted to Tahera under the Companies' Creditors Arrangement Act. TARRAGON CORP: Board Engages Travis Wolff as Accounting Firm -------------------------------------------------------------- The Audit Committee of the Board of Directors of Tarragon Corporation engaged Travis, Wolff & Company, LLP as the company's new independent registered public accounting firm. Grant Thornton LLP was dismissed as the company's independent registered public accounting firm. Grant Thornton Reports The report of Grant Thornton on the company's consolidated financial statements for the fiscal year ended Dec. 31, 2007 contained an explanatory paragraph concluding that there was substantial doubt as to the company's ability to continue as a going concern. During the fiscal years ended Dec. 31, 2007 and 2006, and through June 13, 2008, there were no disagreements between the company and Grant Thornton. During the years ended Dec. 31, 2007 and 2006, and through June 13, 2008, there were no reportable events requiring disclosure. In connection with the audits for the fiscal years ended Dec. 31, 2007 and 2006, Grant Thornton identified a material weakness in the company's internal controls over financial reporting because the company did not have sufficient accounting and finance resources with an appropriate level of accounting experience and training in the application of U.S. generally accepted accounting principles consistent with the level and complexity of the company's operations and financial reporting requirements. About Tarragon Corp. Headquartered in New York City, Tarragon Corporation (NasdaqGS: TARR) -- http://www.tarragoncorp.com/-- and its subsidiaries engage in the development, ownership, and management of real estate properties in the United States. It operates in two divisions, a Real Estate Development Division (Development Division) and an Investment Division. The Development Division focuses on developing, renovating, building, and marketing homes in high-density, urban locations and in master-planned communities. The Investment Division owns and operates a portfolio of stabilized rental apartment communities located in Alabama, Connecticut, Florida, New Jersey, Texas, Rhode Island, Tennessee, Maryland, Oklahoma, Michigan, and Georgia. The company was founded in 1973. At Dec. 31, 2007, the company's balance sheet showed $1.1 billion in total assets, $1.2 billion in total liabilities and $19.2 million in minority interest, resulting in $112.8 million stockholders' deficit. Going Concern Doubt As reported in the Troubled Company Reporter on April 14, 2008, Grant Thornton LLP raised substantial doubt about the ability of Tarragon Corporation 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 as of Dec. 31, 2007 the company had $1.1 billion in consolidated debt and had guaranteed additional debt of its unconsolidated joint ventures totaling $31.6 million. At Dec. 31, 2007, the company was not in compliance with certain of its debt covenants. Additionally, the company incurred a net loss during the year ended Dec. 31, 2007, and, as of that date, the company's total liabilities exceeded its total assets by $93.6 million. TEEVEE TOONS: Court Approves $5 Million Sale to The Orchard ----------------------------------------------------------- The Hon. Allan L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York on June 23, 2008, gave TEEVEE Toons Inc., dba T.V.T. Records, permission to sell its catalog, artists contacts and physical distribution business to The Orchard for at least $5 million, Jamie Mason of The Deal says. As reported by the Troubled Company Reporter on June 23, 2008, the Debtor has entered into an agreement to sell its recorded music arm and other assets to The Orchard, a New York-based distributor of digital music. About TEEVEE Toons 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: Sale of Music Publishing Unit to Bernard Hits Snag ---------------------------------------------------------------- Prepetition lender, Bernard National Loan Investors Ltd., won an auction by offering a credit bid of $250,000 for TVT Music Enterprises, the equity and music publishing unit of TEVEE Toons Inc., The Deal quotes Alec P. Ostrow, Esq., at Stevens & Lee PC, as saying. Bernard is owed $6.73 million in prepetition debt and $2 million postpetition debt, The Deal notes. The Official Committee of Unsecured Creditors has asserted that no competitive bidding occurred, The Deal notes. Carol Neville, Esq., at Sonnenschein Nath & Rosenthal LLP said that no stalking- horse bidder was designated during the auction held on June 19, 2008, The Deal says. No bidder competed against Bernard for the publication unit, but there were competing bidders for the music sheets, The Deal reports. The Committee asserted that Bernard's rights in the assets was obtained only on the event of bankruptcy, The Deal says. The Deal relates that several artists and motion picture companies also objected to the sale and parties. Objecting artists like Lil Jon, Kanye West, Pharrell Williams, Chad Hugo, Pitbull and Bobaflex demanded that the new owner give "adequate assurance of its future performance," The Deal adds. The Court is set to hear objections on the sale of the Debtor's TVT Music Enterprises on July 9, 2008, based on the report. About TEEVEE Toons 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. THORNBURG MORTGAGE: Moody's Keeps Junk Ratings on Sr. Debt, Stock ----------------------------------------------------------------- Moody's Investors Service affirmed Ca and C senior debt and preferred stock ratings, respectively of Thornburg Mortgage, Inc. Thornburg's Ca debt rating remains under review for possible downgrade. Moody's said that Thornburg's efforts to raise capital to avoid default under its repo agreements have resulted in the reconfiguration of its balance sheet with adverse impact on its debt and preferred equity holders. In late March 2008, the REIT issued $1.15 billion in senior subordinate debt. Under the terms of this transaction the REIT's preferred shareholders need to agree to a distressed exchange of their shares in a tender offer that would value preferred stock at 20 cents on the dollar, in order to terminate the principal participation agreement with the senior subordinate note holders. The Thornburg's Ca senior debt rating reflects heightened likelihood of default and the potential for above average loss severity in the event of default. Positively, the senior debt has a senior lien on the equity of certain subsidiaries, the MSR assets and a claim on the interest payments on the securities subject to the override agreement. Review for downgrade reflects the uncertainty of the impact of Thornburg's efforts to restructure its balance sheet on its ultimate capital structure and cash flows available to service interest on senior debt. An upgrade of Thornburg's senior debt is unlikely in the near term due to its highly levered balance sheet, uncertainty about the size and the quality of the REIT's unencumbered asset base going forward, as well as doubts about the REIT's ability to continue to be a going concern. A rating downgrade of Thornburg's senior debt to C in the near term would most likely occur should the REIT be unable to comply with its senior debt covenants. Thornburg Mortgage, Inc. (NYSE: TMA) based in Santa Fe, New Mexico, USA, is a single-family mortgage portfolio lender and originator organized as a REIT. As of March 31, 2008, Thornburg Mortgage reported assets of approximately $30.8 billion. TYSON FOODS: To Sell Alberta Beef Business to XL Foods for C$107MM ------------------------------------------------------------------ Tyson Foods, Inc., signed a letter of intent to sell the packing, feedyard and fertilizer assets of Lakeside Farm Industries Ltd. and its subsidiary Lakeside Packers, to XL Foods Inc., a Canadian- owned beef processing business. The C$107 million transaction includes C$57 million, which will be paid at closing. The remaining C$50 million, plus interest, will be paid over a five- year period following closing. Tyson would retain the finished product inventory, accounts receivables and accounts payables of the Lakeside operations as of the closing date. The transaction remains subject to government approvals, the receipt of commercially reasonable financing by XL and the execution of a definitive agreement by the parties. Both companies anticipate completing the sale by the end of September. "Lakeside is one of the premier beef processing operations in Canada and has operated successfully for many years," Richard L. Bond, president and CEO of Tyson Foods, said. "However, Lakeside no longer fits the long-term strategy of our company, as our current international strategy is focused primarily in Asia, Mexico and South America." Lakeside Farm Industries, based in Brooks, Alberta, is a diversified agribusiness involved in cattle feeding, slaughtering and processing, as well as retail fertilizer production and farming. Lakeside currently employs 2,300 Team Members and currently has the capacity to slaughter and process 4,700 cattle per day. The commodity boxed beef produced by the plant is primarily sold to customers in Canada and the U.S. XL Foods plans to continue operating the Lakeside facility after the sale is completed. "We believe the Lakeside plant and cattle feeding operation will complement our other beef operations in Alberta and Saskatchewan," Brian Nilsson, co-chief executive officer of XL Foods Inc. and Nilsson Bros. Inc., said. "In addition, it will help strengthen our ability to meet the needs of our North American customer base." "We intend to make the transition of ownership as smooth as possible," said Nilsson. "At the appropriate time, this will include informational meetings with members of the Lakeside staff." About XL Foods XL Foods Inc. is part of the Nilsson Bros. Group, a Canadian cattle feeding and marketing company. Nilsson Bros. entered in the meatpacking business in the late 1990's with the purchase of Edmonton Meat Packing and XL Foods. The business currently includes packing plants in Edmonton and Calgary, Alberta; Moose Jaw, Saskatchewan; Omaha, Nebraska and Nampa, Idaho. About Tyson Foods Headquartered in Springdale, Arkansas, Tyson Foods Inc. (NYSE:TSN) -- http://www.tysonfoods.com/-- is a processor and marketer of chicken, beef, and pork. The company makes a wide variety of protein-based and prepared food products at its 123 processing plants. Tyson has approximately 114,000 Team Members employed at more than 300 facilities and offices in 26 states and 80 countries. Tyson's U.S. beef plants are located in Amarillo, Texas; Dakota City, Nebraska; Denison, Iowa; Finney County, Kansas; Joslin, Illinois, Lexington, Nebraska and Pasco, Washington. The company also has a beef complex in Canada, and is involved in a vertically integrated beef operation in Argentina. * * * As reported in the Troubled Company Reporter on April 7, 2008, Moody's Investors Service confirmed Tyson Foods, Inc.'s corporate family rating and probability of default rating at Ba1. Moody's said the rating outlook remains negative. USAM INC: Case Summary & 45 Largest Unsecured Creditors ------------------------------------------------------- Lead Debtor: USAM, Inc. 641 Lincoln Wy. W. Massillon, OH 44647 Bankruptcy Case No.: 08-62135 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- USEMP, Inc. 08-62136 USMKT, Inc. 08-62137 United Studios of America Marketing 08-62138 Association, Inc. Nelson Family Enterprises, Inc. 08-62139 Type of Business: The Debtors own and operate photo portrait studios. See http://www.unitedstudiosofamerica.com Chapter 11 Petition Date: June 25, 2008 Court: Northern District of Ohio (Canton) Judge: Russ Kendig Debtors' Counsel: Anthony J. DeGirolamo, Esq. Email: ajdlaw@sbcglobal.net 116 Cleveland Ave., N.W., Ste. 625 Canton, OH 44702 Tel: (330) 588-9700 Fax: (330) 588-9713 USAM, Inc's Financial Condition: Estimated Assets: Less than $50,000 Estimated Debts: $1 million to $10 million A. A copy of USAM, Inc's petition is available for free at: http://bankrupt.com/misc/ B. A copy of USEMP, Inc's petition is available for free at: http://bankrupt.com/misc/ C. A copy of USMKT, Inc's petition is available for free at: http://bankrupt.com/misc/ D. A copy of United Studios of America Marketing Association, Inc's petition is available for free at: http://bankrupt.com/misc/ E. Nelson Family Enterprises, Inc. does not have any creditors who are not insiders. VELOCITY EXPRESS: Has Until December 16 to Cure Min. Bid Violation ------------------------------------------------------------------ Velocity Express Corporation was granted 180 calendar days or until Dec. 16, 2008, to regain compliance with the minimum bid requirement which will require that the bid price of the company's common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days. On June 19, 2008, the company received notice from the NASDAQ Stock Market that it is not in compliance with Marketplace Rule 4310(c)(4) regarding the minimum bid requirement for the continued listing of its common stock on the Nasdaq Capital Market. The company's common stock price closed below $1.00 for thirty consecutive business days. If the company is unable to demonstrate bid price compliance by Dec. 16, 2008, but is found to meet all other initial listing requirements for the NASDAQ Capital Market, it may receive an additional 180-day compliance period. If the company does not meet compliance requirements within the second 180-day period, NASDAQ will notify the company that its common stock will be delisted. At that time, the company may appeal the decision to a NASDAQ Listing Qualifications Panel. In the meantime, Velocity stock will continue to trade on the same NASDAQ Capital Market. Some websites and media that publish stock prices may add a suffix to the VEXP stock symbol but these designations have no effect on the trading of the stock. The company is evaluating and pursuing several options to enable it to maintain its listing with NASDAQ. "We are on track to meet our guidance for positive EBITDA in the June quarter and we are excited by the growth opportunities we see in our sales pipeline for retail store replenishment and healthcare products delivery," Vincent Wasik, Velocity Express Chairman and CEO, stated. "Likewise, the successful restructuring in May of our Senior Secured Notes Due 2010 shows the confidence of our lenders in the company's future success." About Velocity Express Corporation Headquartered in Westport, Connecticut, Velocity Express Corporation (NASDAQ:VEXP) -- http://www.velocityexp.com/-- gether with its subsidiaries, is engaged in the business of providing time definite ground package delivery services. The company operates in the United States with limited operations in Canada. Its customers comprised of multi-location, blue chip customers with operations in the healthcare, commercial and office products, financial, transportation and logistics, technology and energy sectors. Waiver The company and its subsidiaries failed to achieve the minimum EBITDA levels contained in its credit agreement for the periods ended July 28, 2007, Aug. 25, 2007, and Dec. 29, 2007. Wells Fargo Foothill Inc., as agent and lender under the credit agreement granted the company waivers and entered into amended agreements which provided for (1) revised monthly minimum EBITDA requirements; (2) minimum levels of driver pay and purchased transportation measured as percentages of revenue; (3) an increase in the interest rate; and (4), the requirement to have at all times between June 1, 2008, and June 30, 2008, at least $5.0 million of excess availability on the revolving credit facility. VERASUN ENERGY: Facility Start-Up Delay Cues S&P's Negative Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B+' corporate credit rating on ethanol producer VeraSun Energy Corp. on CreditWatch with negative implications, as well as the 'B+' rating on the company's $210 million senior secured notes due 2012 and the 'B-' rating on the $450 million senior unsecured notes due 2017. The action follows the company's announcement that it will delay the start-up of the Hankinson, North Dakota facility that is currently in construction and expected to be completed by the end of June. The start-up delay is the third announcement by VeraSun in the past month, as the recent 50% drop in ethanol crush spreads has reduced gross margins at ethanol plants that have exposure to corn price increases. Start-up has also been delayed at the facilities in Welcome, Minnesota and Hartley, Iowa. All facilities under construction are 110 million gallons per year of nameplate capacity, and construction has proceeded as expected. Midwest flooding has contributed to corn price increases of 30% over the past month, with the full effects of the flood on crop production yet to be determined. Start-up costs include inventory which--once processed--may not be marketable as spec-grade ethanol due to normal processing refinements. Therefore, as inventory costs rise, so do start-up costs. In addition, because of its current strategy for short-term corn positions, VeraSun has exposure to adverse price movements of durations that outlast the plants' corn inventories. Among the operational plants from the ASAlliances and US BioEnergy acquisitions, cash generated from the three ASAlliances facilities and the five US BioEnergy facilities is currently being swept to service project-level debt. With the announced delays in opening the Welcome and Hartley plants, VeraSun's remaining three operational plants could face a challenge to generate sufficient cash flow to meet the company's debt service at current crush spreads. Management anticipates the three delayed plants will begin operations in the third quarter of 2008. However, if crush spreads remain at current levels for a sustained period of time, the company will have to draw on some portion of its $125 million asset-backed revolving facility to help meet its fixed costs. In calculating dry mill crush spreads, S&P assume a 2.8 gallon yield per bushel of corn, and 30% corn cost recovery through co- product sales. Natural gas consumption is assumed at 34,000 Btu per gallon. Denaturant, utilities, and transportation are variable costs that are excluded from the calculation. Using these conversion assumptions, a four cent per bushel increase in corn prices can be offset by a one cent per gallon increase in ethanol. In other words, the ethanol price ($/gallon) has to increase only 25% that of the corn price increase ($/bushel) to preserve the crush spread. However, from May 28 to June 24, CBOT daily average spot prices for corn moved up $1.615/bushel while ethanol prices moved down $.1433/gallon. Though natural gas prices are a minor component of costs, increases in these prices have also contributed to the adverse movement. Based on average daily spot prices for CBOT corn, CBOT ethanol, and NYMEX natural gas, crush spreads have declined from roughly $1.13 per gallon to $.655 (42%) over the period May 28 to June 24. VeraSun had roughly $73.5 million of cash on hand as of first quarter 2008; in addition, the company has a $125 million revolving credit facility, of which 100% is currently available. By S&P's calculations, this liquidity would be sufficient to service debt and other fixed costs for VeraSun for one to two quarters if all facilities were earning negative margins. S&P assume VeraSun will not contribute corporate-level support to the acquired facilities. S&P will resolve the CreditWatch when the effects of the flood on corn prices can be better determined. "If the delay in the three plants' start-up appears that it will be extended past the third quarter, or if crush spreads fail to recover quickly from current levels, we could lower the ratings," said Standard & Poor's credit analyst Justin Martin. If market conditions for corn improve or ethanol prices increase sufficiently to offset the corn run-up, the ratings could be stabilized. VERSO TECHNOLOGIES: DietBrown Denies Liability on Entrata Claim --------------------------------------------------------------- DietBrown Plc., formerly known as Citel, said the estate of Entrata Communications Corp. should be seeking claims against Verso Technologies Inc.'s subsidiary, MCK Communications. DietBrown is the subject of a fraudulent conveyance lawsuit filed by the trustee of Entrata alleging that MCK's assets had been fraudulently conveyed to Citel, Thomson Financial reports. The Entrata trustee filed the complaint against Verso and Citel in February 2008. Thomson Financial relates that Entrata is seeking payment of an unpaid debt of $750,000 plus interest. Thomson Financial says Citel purchased assets from Verso and its subsidiary MCK on Jan. 21, 2005. Thomson Financial says Entrata filed suit against MCK, which was acquired by Verso in 2003, seeking damages following a dispute regarding licensing payments. Thomson Financial relates that, although the litigation was resolved through an out of court settlement, the Trustee rescinded the settlement with Verso after Verso filed for Chapter 11 bankruptcy protection and is now pursuing the action against DietBrown. DietBrown, the report adds, said Citel's asset purchase from Verso did not include the assumption of any liabilities and, as part of the asset purchase agreement, Verso indemnified Citel in matters of asset ownership. DietBrown Interim CEO Jose David, according to the report, said the company will vigorously defend the action "as our asset purchase from Verso was an arm's length transaction and we should not be a party to this matter. Based on that, the Trustee should seek relief from whom it had an agreement with, MCK Communications." About Verso Technologies Headquartered in Atlanta, Georgia, Verso Technologies Inc. -- http://www.verso.com/-- provides telecommunications service in the United States. The company and four of its affiliates filed for Chapter 11 protection on April 25, 2008 (Bankr. N.D. Ga Lead Case No.08-67659). J. Robert Williamson, Esq., at Scroggins and Williamson, represents the Debtors in their restructuring efforts. The Debtors selected Logan and Company Inc. as their claims agent. The U.S. Trustee for Region 21 appointed creditos serve on an Official Committee of Unsecured Creditors. Darryl S. Laddin, Esq., at Arnall Golden Gregory LLP, represents the Committee in these cases. When the Debtors filed for protection against their creditors, they listed total assets of $34,263,000 and total debts of $36,657,000. VERSO TECHNOLOGIES: U.S. Trustee Forms Five-Member Committee ------------------------------------------------------------ The United States Trustee for Region 21 appointed five creditors to the Official Committee of Unsecured Creditors to serve in the chapter 11 case of Verso Technologies Inc. The members of the Committee are: 1. Iroquis Master Fund, Ltd. ATTN: Mitchell R. Kulick, General Counsel 641 Lexington Ave., 26th Floor New York, NY 10022 Tel: 212.920.8172 Fax: 212.207.3452 E-mail: mkulick@icfund.com 2. Cranshire Capital, L.P. ATTN: Mitchell P. Kopin, President 3100 Dundee Road, Suite 703 Northbrook, IL 60082 Tel: 847.562.9030 Fax: 847.562.9030 E-mail: mkopin@cranshirecapital.com 3. CM Solutions, Inc. ATTN: Jack O\u2019Rear P.O. Box 670 Cornith, MS 38835 Tel: 256.259.6500 Fax: 256.259.1091 E-mail: jorear@scottsboro.org 4. Breconridge MFG. Solutions ATTN: Andy Millen, Director Enterprise Risk Management 500 Palladium Drive Ottawa, Canada K2V IC2 Tel: 613.886.6008 Fax: 613.886.6943 E-mail: andy_millen@breconridge.com 5. Falcon Capital Investors, L.P. ATTN: Joseph Merres, Managing Member 17111 Graves Court Cornelius, NC 28031 Tel: 704.892.2537 Fax: 704.892.2538 E-mail: joej@alexandertrading.com 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 Verso Technologies Headquartered in Atlanta, Georgia, Verso Technologies Inc. (OTC:VRSOQ) -- http://www.verso.com/-- provides telecommunications service in the United States. The company and its affiliates manufacture, deliver, and provide support for hardware, software and service solutions primarily to large wireline, cellular, wireless and satellite carriers. The company and four of its affiliates filed for Chapter 11 protection on April 25, 2008 (Bankr. N.D. Ga Lead Case No.08- 67659). J. Robert Williamson, Esq., at Scroggins and Williamson, represents the Debtors in their restructuring efforts. The Debtors selected Logan and Company Inc. as their claims agent. The Debtors proposed to hire John L. Palmer at NachmanHaysBrownstein Inc. as their chief administration officer. The U.S. Trustee for Region 21 appointed creditos serve on an Official Committee of Unsecured Creditors. Darryl S. Laddin, Esq., at Arnall Golden Gregory LLP, represents the Committee in these cases. When the Debtors filed for protection against their creditors, they listed total assets of $34,263,000 and total debts of $36,657,000. VERSO TECHNOLOGIES: Panel May Engage Arnall Golden as Co-Counsel ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Georgia permitted the Official Committee of Unsecured Creditors of Verso Technologies Inc. to engage Arnall Golden Gregory LLP as co- counsel to the Committee. The Committee also obtained approval from the Court to engage Olshan Grundman Frome Rosenzweig & Wolosky LLP as its co-counsel. The Committee related that the two firms will use their best efforts to avoid duplicating the services they provide to the Committee. The firm will, among others, advise the Committee with respect to its rights, powers and duties in the cases and represent the Committee at all hearings and other proceedings, and perform other legal services as may be required. The firm's standard hourly billing rates for its attorneys is $210 to $660 for attorneys and $120 to $235 for paralegals. The firm can be reached at: Darryl S. Laddin, Esq. Partner Arnall Golden Gregory LLP 171 17th Street, Northwest, Suite 2100 Atlanta, GA 30363 http://www.agg.com/ About Verso Technologies Headquartered in Atlanta, Georgia, Verso Technologies Inc. (OTC:VRSOQ) -- http://www.verso.com/-- provides telecommunications service in the United States. The company and its affiliates manufacture, deliver, and provide support for hardware, software and service solutions primarily to large wireline, cellular, wireless and satellite carriers. The company and four of its affiliates filed for Chapter 11 protection on April 25, 2008 (Bankr. N.D. Ga Lead Case No.08- 67659). J. Robert Williamson, Esq., at Scroggins and Williamson, represents the Debtors in their restructuring efforts. The Debtors selected Logan and Company Inc. as their claims agent. The Debtors proposed to hire John L. Palmer at NachmanHaysBrownstein Inc. as their chief administration officer. The U.S. Trustee for Region 21 appointed creditos serve on an Official Committee of Unsecured Creditors. Darryl S. Laddin, Esq., at Arnall Golden Gregory LLP, represents the Committee in these cases. When the Debtors filed for protection against their creditors, they listed total assets of $34,263,000 and total debts of $36,657,000. VERSO TECHNOLOGIES: Panel May Engage Olshan Grundman as Co-Counsel ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of Georgia permitted the Official Committee of Unsecured Creditors of Verso Technologies Inc. to engage Olshan Grundman Frome Rosenzweig & Wolosky LLP as co-counsel to the Committee. The Committee also obtained approval from the Court to engage Arnall Golden Gregory LLP as its co-counsel. The Committee related that the two firms will use their best efforts to avoid duplicating the services they provide to the Committee. The firm will, among others, advise the Committee with respect to its rights, powers and duties in the cases and represent the Committee at all hearings and other proceedings, and perform other legal services as may be required. Olshan's current standard hourly rates are $420 to $690 for partners, $270 to $390 for associates, and $140 to $280 for paraprofessionals. The firm can be reached at: Michael S. Fox, Esq. Olshan Grundman Frome Rosenzweig & Wolosky LLP Park Avenue Tower, 65 East 55th Street New York, NY 10022 Tel: (212) 451-2300 Fax: (212) 451-2222 http://www.olshanlaw.com/ About Verso Technologies Headquartered in Atlanta, Georgia, Verso Technologies Inc. (OTC:VRSOQ) -- http://www.verso.com/-- provides telecommunications service in the United States. The company and its affiliates manufacture, deliver, and provide support for hardware, software and service solutions primarily to large wireline, cellular, wireless and satellite carriers. The company and four of its affiliates filed for Chapter 11 protection on April 25, 2008 (Bankr. N.D. Ga Lead Case No.08- 67659). J. Robert Williamson, Esq., at Scroggins and Williamson, represents the Debtors in their restructuring efforts. The Debtors selected Logan and Company Inc. as their claims agent. The Debtors proposed to hire John L. Palmer at NachmanHaysBrownstein Inc. as their chief administration officer. The U.S. Trustee for Region 21 appointed creditos serve on an Official Committee of Unsecured Creditors. Darryl S. Laddin, Esq., at Arnall Golden Gregory LLP, represents the Committee in these cases. When the Debtors filed for protection against their creditors, they listed total assets of $34,263,000 and total debts of $36,657,000. VU1 CORPORATION: Posts $2,094,975 Net Loss in 2008 First Quarter ------------------------------------------------------------- Telegen Corp., renamed Vu1 Corporation on May 22, 2008, reported a net loss of $2,094,975 for the first quarter ended March 31, 2008, compared with a net loss of $168,035 in the same period last year. The company had no revenues for the three months ended March 31, 2008, and 2007. Research and development expenses increased approximately $1,475,000 to $1,556,000 for the three months ended March 31, 2008, compared to $81,000 for the three months ended March 31, 2007. General and administrative expenses increased by approximately $397,000 to $486,000 for the three months ended March 31, 2008, compared to $89,000 for the three months ended March 31, 2007. At March 31, 2008, the company's consolidated balance sheet showed $1,985,837 in total assets, $744,238 in total liabilities, and $1,241,599 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?2ec2 Going Concern Doubt As reported in the Troubled Company Reporter on April 14, 2008, Peterson Sullivan PLLC expressed substantial doubt about Telegen 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 auditor stated that the company incurred a net loss of $3,108,380, and it had negative cash flows from operations of $1,675,723 in 2007. In addition, the company had an accumulated deficit of $48,530,613 at Dec. 31, 2007. About Vu1 Corporation Vu1 Corporation (OTC BB: VUOC) is focused on developing, manufacturing and selling a line of mercury free, energy efficient light bulbs. The company, formerly known as Telegen Corporation, was founded in 1990 and is based in San Mateo, California. WADSWORTH CDO: Moody's Junks Rating of $72.5MM Floating Rate Notes ------------------------------------------------------------------ Moody's Investors Service has downgraded the ratings of three classes of notes issued by Wadsworth CDO, Ltd., and left on review for possible further downgrade the ratings of two of these classes of notes: Class description: $800,000,000 Class A-1A Senior Secured Floating Rate Notes due 2046 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Baa2, on review for possible downgrade Class description: $256,000,000 Class A-1B Senior Secured Floating Rate Notes due 2046 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Baa2, on review for possible downgrade Class description: $72,500,000 Class A-2 Senior Secured Floating Rate Notes due 2046 -- Prior Rating: Ba3, on review for possible downgrade -- Current Rating: Ca Wadsworth CDO, Ltd., is a collateralized debt obligation backed primarily by a portfolio of structured finance securities. On March 6, 2008, as reported by the Trustee, the transaction experienced an event of default caused by a failure of the Class AB Overcollateralization Ratio to be greater than or equal to the required amount set forth in Section 5.1(g) of the Indenture dated Sept. 28, 2006. That event of default is continuing. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, certain parties to the transaction may be entitled to direct the Trustee to take particular actions with respect to the Collateral and the Notes. In this regard, the Trustee has notified Moody's that the Trustee received notice from the Controlling Party declaring the principal of all of the Secured Notes to be immediately due and payable and terminating the Reinvestment Period. The rating actions taken reflect continuing deterioration in the credit quality of the underlying portfolio and the increased expected loss associated with the transaction. Losses are attributed to diminished credit quality on the underlying portfolio. The severity of losses may depend on the timing and choice of any further remedy to be pursued following the default event. Because of this uncertainty, the ratings of Class A-1A and Class A-1B Notes issued by Wadsworth CDO, Ltd., are on review for possible further action. WELLMAN INC: Amends Credit Agreement to Pursue Chapter 11 Plan -------------------------------------------------------------- In a bid to pursue a plan of reorganization, Wellman, Inc. and its debtor-affiliates, amended its Credit Agreement dated Feb. 26, 2008, requiring the company to follow this timetable to complete its reorganization plan: June 25 File a plan of reorganization, disclosure statement and a commitment of at least $70,000,000, to backstop a rights offering acceptable to the DIP lenders July 14 Obtain an indicative commitment for exit financing July 30 Obtain a fully underwritten commitment for exit financing August 4 Obtain court approval of the disclosure statement September 15 Obtain an order confirming the plan of reorganization September 25 Complete the plan of reorganization and exit bankruptcy In a press release dated June 18, 2008, Wellman said it has reached an understanding with the two largest holders of its second-lien debt to backstop an $80,000,000 rights offering. The commitment is expected to be finalized before June 25, 2008. "We look forward to working with the backstop parties and our other stakeholders to complete the plan of reorganization and emerge from bankruptcy with a strong financial position," Mark Ruday, chief executive officer of Wellman said. "This will allow us to capture more profitable growth opportunities in PET resins as well as in our other businesses." Mr. Ruday said Wellman has made significant progress on the other elements of the plan of reorganization, however, there is no assurance if the plan is going to be completed. 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. 15; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) WELLMAN INC: Court Extends Exclusivity Deadline Until July 31 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave Wellman Inc. and its debtor-affiliates until July 31, 2008, to file their Chapter 11 plan, and until Sept. 30, 2008, to solicit acceptances of the plan. As disclosed in the Troubled Company Reporter on June 12, 2008, the Debtors wanted an extension of the exclusive right to propose their plan stretched out to Sept. 30, 2008. However, Bank of New York, acting as administrative agent for the First Lien Term Loan Credit Agreement, urged the Court not to extend the exclusive period beyond July, saying that it would "prevent parties-in-interest from filing a confirmable plan even after an event of default under the Credit Agreement has occurred." Jonathan S. Henes, Esq., at Kirkland & Ellis LLP, in New York, said the proposed extension will give the Debtors more time to continue negotiating with their stakeholders to determine whether they would pursue a potential sale of their assets or a restructuring plan. 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. 15; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) WELLMAN INC: Court Establishes July 29 as Claims Bar Date --------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York fixed (i) July 29, 2008, as the deadline for creditors to file their prepetition claims; and (ii) August 21, 2008, as the last day for governmental units to file their prepetition claims. In connection with the rejection of the Debtors' executory contracts and unexpired leases, the Court established the later of (i) July 29, 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 issuance of the order or notice of rejection, for creditors to file their proofs of claim. In case the Debtors amend their schedules of liabilities, the creditors have 30 days after receiving a notice to file their claims in connection with the amendment. As disclosed on June 13, 2008, Jonathan Henes, Esq., at Kirkland & Ellis LLP, in New York, said 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. 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. 15; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) WEST MICHIGAN: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: West Michigan Flocking & Assembly, LLC aka West Michigan Flocking 200 Lovejoy Avenue South Haven, Michigan 49090 Bankruptcy Case No.: 08-05539 Type of Business: The Debtor provide automotive services. See: http://www.wmflocking.com/ Chapter 11 Petition Date: June 25, 2008 Court: Western District of Michigan (Grand Rapids) Judge: Jeffrey R. Hughes Debtors' Counsel: Martin L. Rogalski, Esq. (court@mrogalski.com) Martin L. Rogalski PC 1881 Georgetown Center Jenison, Michigan 49428 Tel: (616) 457-4410 http://www.mrogalski.com/ Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million A copy of the Debtor's petition together with a list of largest unsecured creditors is available for free at: http://bankrupt.com/misc/michwb08-05539.pdf WESTMORELAND COAL: Inks New Labor Pact with Montana Mine Workers ---------------------------------------------------------------- A new collective bargaining agreement has been reached with the Westmoreland Coal Company's represented employees at Westmoreland Resources Inc.'s Absaloka Mine in Montana. The new agreement with the International Union of Operating Engineers Local 400 is effective June 1, 2008, and will expire May 31, 2011. The represented employees had rejected a previously proposed agreement and imposed a work stoppage on June 7, 2008. The mine resumed full operation under the new agreement on June 17, 2008. "We have remained committed to providing fair wages and benefits to our employees and are pleased to have resolved issues and obtained approval of the new labor agreement by our workforce at Absaloka," D.L. Lobb, President and Chief Executive Officer of Westmoreland Coal Company, said. "This is directly attributable to the open communications among all of the parties involved and the assistance of a federal mediator who helped bring focus and closure to the issues. We are especially proud that our employees conducted themselves in an orderly, professional and courteous manner throughout the duration of the work stoppage. We also appreciate the cooperation we received from the mine's customers. We look forward to resuming operations at the mine tomorrow and continuing to meet the needs of our customers." Based in Colorado Springs, Colorado, Westmoreland Coal Company (AMEX: WLB) -- http://www.westmoreland.com/-- is the oldest independent coal company in the United States. The company mines coal, which is used to produce electric power, and the company owns power-generating plants. The company's coal operations include coal mining in the Powder River Basin in Montana and lignite mining operations in Montana, North Dakota and Texas. Its current power operations include ownership and operation of the two-unit ROVA coal-fired power plant in North Carolina. At March 31, 2008, the company's consolidated balance sheet showed $783.2 million in total assets and $961.0 million in total liabilities, resulting in a $177.8 million total stockholders' deficit. * S&P Cuts Ratngs on 77 Classes from 19 Synthetic CDO Deals ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 77 classes from 19 synthetic collateralized debt obligation transactions and removed them from CreditWatch negative. The classes have an aggregate notional amount of approximately $1.45 billion. The transactions with lowered ratings are primarily collateralized by commercial mortgage-backed securities that have ratings of 'BBB+' or lower. The lowered ratings follow a reassessment of the recovery rates assigned to these CMBS securities. S&P reassessed its rating assumptions for CMBS resecuritizations following its observations of the collateral losses sustained by several of the rated transactions, which have been worse than S&P initially expected. Standard & Poor's revised assumptions are detailed in "Criteria: Recovery Rates For CMBS Collateral In Resecuritization Transactions," published May 28, 2008. Standard & Poor's reviewed the synthetic CDO ratings placed on CreditWatch negative and lowered the ratings to where the synthetic rated overcollateralization ratios were above 100%. Ratings Lowered and Removed from Creditwatch Negative ABACUS 2006-13 Ltd. Rating ------ Class To From ----- -- ---- B AA AA+/Watch Neg C AA- AA/Watch Neg D A+ AA-/Watch Neg E A A+/Watch Neg F A- A/Watch Neg G BBB+ A-/Watch Neg H BBB BBB+/Watch Neg J BBB- BBB/Watch Neg ABACUS 2006-17 Ltd. Rating ------ Class To From ----- -- ---- A-2 AA+ AAA/Watch Neg B AA AA+/Watch Neg C AA- AA/Watch Neg D A+ AA-/Watch Neg E A- A+/Watch Neg F BBB+ A/Watch Neg G BBB+ A-/Watch Neg H BBB- BBB+/Watch Neg J BBB- BBB/Watch Neg K BB+ BBB-/Watch Neg L BB BB+/Watch Neg M BB- BB/Watch Neg ABACUS 2007-18 Ltd. Rating ------ Class To From ----- -- ---- A-3 AA+ AAA/Watch Neg Calculus SCRE Trust Series 2006-11 Rating ------ Class To From ----- -- ---- Trust Unit A A+/Watch Neg Magnolia Finance II PLC Series 2007-2 Rating ------ Class To From ----- -- ---- D BB BBB-/Watch Neg Magnolia Finance II PLC Series 2007-2A Rating ------ Class To From ----- -- ---- A AA+ AAA/Watch Neg Magnolia Finance II PLC Series 2007-5 Rating ------ Class To From ----- -- ---- 2007-5 AA+ AAA/Watch Neg Seawall 2006-4 Ltd. Rating ------ Class To From ----- -- ---- A AA+ AAA/Watch Neg B A+ AA-/Watch Neg C BBB+ A/Watch Neg D-1 BBB- BBB/Watch Neg E-1 BB BB+/Watch Neg Seawall 2006-4a Ltd. Rating ------ Class To From ----- -- ---- D-1 BBB- BBB/Watch Neg E-1 BB BB+/Watch Neg Seawall 2007-1 Ltd. Rating ------ Class To From ----- -- ---- A AA+ AAA/Watch Neg B AA- AA/Watch Neg C-1 A- A+/Watch Neg C-2 BBB+ A-/Watch Neg D-2 BB BBB-/Watch Neg E-1 BB- BB/Watch Neg SPGS SPC Series MSC 2006-SRR1-A2 Rating ------ Class To From ----- -- ---- A2 AA AAA/Watch Neg A2-S AA AA+/Watch Neg SPGS SPC Series MSC 2006-SRR1-B Rating ------ Class To From ----- -- ---- B A+ AA/Watch Neg B-S A+ AA-/Watch Neg SPGS SPC Series MSC 2006-SRR1-C Rating ------ Class To From ----- -- ---- C BBB+ A/Watch Neg C-S BBB+ A-/Watch Neg SPGS SPC Series MSC 2006-SRR1-D Rating ------ Class To From ----- -- ---- D BBB BBB+/Watch Neg SPGS SPC Series MSC 2006-SRR1-E Rating ------ Class To From ----- -- ---- E BBB- BBB/Watch Neg SPGS SPC Series MSC 2006-SRR1-F Rating ------ Class To From ----- -- ---- F BB+ BBB-/Watch Neg SPGS SPC Series MSC2007-SRR3 Rating ------ Class To From ----- -- ---- L BB+ BBB-/Watch Neg M BB BB+/Watch Neg N BB- BB/Watch Neg O B+ BB-/Watch Neg P B B+/Watch Neg SPGS SPC Series MSC 2007-SRR4 Rating ------ Class To From ----- -- ---- D A- A/Watch Neg E BBB+ A-/Watch Neg F BBB BBB+/Watch Neg G BBB- BBB/Watch Neg H BB+ BBB-/Watch Neg J BB BB+/Watch Neg K BB- BB/Watch Neg L B+ BB-/Watch Neg M B B+/Watch Neg N B- B/Watch Neg SPGS SPC, acting for the account of MSC 2006-SRR2 Segregated Portfolio Rating ------ Class To From ----- -- ---- B AA AA+/Watch Neg C AA- AA/Watch Neg D A+ AA-/Watch Neg E A A+/Watch Neg F A- A/Watch Neg G BBB+ A-/Watch Neg H BBB- BBB+/Watch Neg J BBB- BBB/Watch Neg K BB+ BBB-/Watch Neg L BB BB+/Watch Neg M B+ BB/Watch Neg N B+ BB-/Watch Neg O B B+/Watch Neg P B- B/Watch Neg Q CCC- B-/Watch Neg * S&P Says Rating Changes in High-Tech Sector Remains Positive -------------------------------------------------------------- Rating changes in the global high-technology sector during 2008 remain positive, despite the slowing economy and difficult credit market conditions, according to a report published by Standard & Poor's Ratings Services. "Given our expectations for continued moderate sector growth in 2008, we now expect the positive credit trends of 2007 to continue this year," said Standard & Poor's credit analyst William Wetreich. Additionally, given credit market conditions, leveraged buyouts and dividend recaps are unlikely to have a negative impact on technology ratings, as they did in 2006 and 2007. Instead, S&P expect covenant issues to be the key negative factor for sector credit quality. "Year-to-date rating changes are 1.8 to 1 favoring upgrades, compared with 1.3 to 1 for all of 2007," according to the report, titled "Industry Report Card: Positive Global High-Technology Credit Trends Are Bucking The Weak Economic Environment." By year-end, the trend likely will be somewhat less favorable, given our current outlook distribution, with negatives at twice the number of positives. S&P expect the relatively stable operating environment in the sector to continue, as should the mid-single-digit industry growth of the past few years. This growth rate is subject to downward revision if information technology purchasers get more cautious in their spending because of the slowing economy. On the positive side, U.S. technology companies with global exposure have benefited from the weak U.S. dollar and high growth in emerging markets. * SEC Chair Proposes Reduced Reliance on Credit Ratings ------------------------------------------------------- The U.S. Securities and Exchange Commission chairman, Christopher Cox, issued a statement proposing to increase investor protection by reducing reliance on credit ratings on June 25, 2008. The statement is a continuation of the SEC's consideration of several rules that would reform the regulation of credit rating agencies. The SEC has divided consideration of these several rules into three parts. On June 11, the Commission proposed the first two parts. Related speech by SEC Chairman, Christopher Cox, at an open meeting on rules for credit rating agencies on June 11, 2008, is available for free at: http://www.sec.gov/news/speech/2008/spch061108cc.htm The entire package of reforms is born of the subprime mortgage crisis, and the resulting credit crunch, Mr. Cox said. "These events of recent months have had a profound effect on our economy and our markets, and they have galvanized regulators and policymakers not only in this country but around the world to re- examine every aspect of the regulatory framework governing credit rating agencies." The first portion of the package of reforms contained a number of provisions addressed to conflicts of interest in the credit ratings industry. The proposed rules also include requirements for new disclosures designed to increase the transparency and accountability of credit ratings agencies. The second portion would require credit rating agencies to differentiate the ratings they issue on structured products from those they issue on bonds. This will be done either through the use of different symbols, such as attaching an identifier to the rating, or by issuing a report disclosing the differences between ratings of structured products and other securities. "This rule, if adopted, would help ensure that investors appreciate the different risk characteristics of structured products and the fact that structured product ratings rely on qualitatively different kinds of information and ratings methodologies than do ratings for bonds," Mr. Cox said. The third part of the rule-making is focused on the way the Commission's own rules refer to and rely upon credit ratings. "For some time before the recent sub-prime crisis, we had been re- evaluating the basis for the SEC's use of ratings as a surrogate for compliance with various regulatory conditions and requirements. The recent market turmoil, and the role that credit ratings played in it, has only further motivated our consideration of reform in this area," Mr. Cox asserted. Mr. Cox listed points of consideration: -- the SEC's own rules don't distinguish between ratings for corporate bonds and ratings for structured finance products. As a result, the SEC's own regulatory regime might be vulnerable to criticism on the same grounds as the ratings agencies' use of common symbology: namely, that it doesn't properly reflect the different risk characteristics of structured products, and the different kinds of information and ratings methodologies that go into ratings for structured products. -- several of SEC regulations implicitly assume that securities with high credit ratings are liquid and have lower price volatility. But since structured finance products can be very different from other rated instruments in these respects, there is good reason for the Commission to examine the precise way that credit ratings are used in its rules as a surrogate for measurements of liquidity and volatility. -- several observers, including the Financial Stability Forum, have leveled the criticism that the official recognition of credit ratings for a variety of securities regulatory purposes may have played a role in encouraging investors' over-reliance on ratings. "To the extent that the marketplace views the SEC's references to credit ratings in our rules as giving those ratings an implied official seal of approval, they have argued, the SEC rules may be contributing to an uncritical reliance on credit ratings as a substitute for independent evaluation. Of course, it should go without saying that it should be neither the purpose nor the effect of any SEC rule to discourage investors from paying close attention to what credit ratings actually mean." According to Mr. Cox, the recommendations are designed to ensure the the role of ratings in the Commission rules is consistent with the objective of having investors make an independent judgment of the risks associated with a particular security. Findings of Evaluations The Division of Trading and Markets, the Division of Corporation Finance, and the Division of Investment Management all have conducted thorough evaluations of the way credit ratings are used in the rules and forms within their areas of expertise. The findings of the evaluations include: -- in some rules and forms, the reference to credit ratings isn't really necessary at all. In those cases, the proposed new rules would simply eliminate the reference; -- there is value in the use of a credit rating, but that the current way ratings are incorporated in the particular rule or form should be changed. In these cases the proposed rules would clearly state the regulatory purpose we are seeking to achieve, and then permit reliance on a credit rating as one way to achieve that purpose; and -- in just a few cases, the staff has concluded that the reference to a credit rating continues to be appropriate exactly as it is. In these cases, because there is no hazard of inducing undue reliance on the ratings by investors, the Commission recommends to leave the rules as they are. Recommended Changes in Rules and Forms Mr. Cox said that three Divisions have examined the references to credit ratings in 44 of SEC rules and forms. The staff is recommending changes to 38 of them, specifically: -- complete elimination of any reference to credit ratings in 11 rules and forms; -- substitution of a standard based on a more clearly stated regulatory purpose or other concept in 27 rules and forms; -- leaving the reference unchanged in 6 rules and forms. A full-text copy of SEC chairman Christopher Cox's proposal is available for free at: http://www.sec.gov/news/speech/2008/spch062508cc_credit.htm Related speech by SEC Commissioner, Paul S. Atkins, at an open meeting to consider proposed rules under the Rating Agency Act on June 11, 2008, is available for free at: http://www.sec.gov/news/speech/2008/spch061108psa.htm * Experts Say Corporate Debt Default Rates Rises Above 10% in 2009 ------------------------------------------------------------------ Turnaround experts predict corporate debt default rates will rise above 10% in 2009 as the credit crunch continues to hobble companies that soaked up easy credit. "The credit crisis prompted and exacerbated by the subprime mortgage crisis will prove a day of reckoning for overleveraged companies and companies operating on the margin," Arthur Perkins, president of the Turnaround Management Association and co-head of the West Region Reorganization Services practice for Deloitte Financial Advisory Services LLP, said. Nearly 70% of respondents to TMA's annual Trend Watch credit poll anticipate a surge of defaults over the next three years. Half pinpointed 2009 as the critical year, while 8% thought it might happen sooner. Another 8% targeted 2010. "Default rates on high yield corporate bonds have spiked in double digits in previous recessions, climbing to 10.3% in 1991 and 12.8% in 2002," James Shein, the Kellogg School of Management professor who chairs the TMA Trend Watch Committee, said. "Even though the $1 trillion market is defaulting at about a 2% rate, the majority of respondents believe defaults will again spike to over 10%, most probably next year." Nearly all (94%) said credit is tighter this year than a year ago when only about one out of four respondents noted tighter credit. This year 80% said traditional lenders are less active and their loans have more restrictive covenants and conditions to be met than in the past. With less financing available and Bankruptcy Code constraints, TMA leaders note a trend toward more prepackaged bankruptcies, Section 363 sales and liquidations. Although four out of five respondents to both the 2007 and 2008 poll see hedge funds and private equity as part of a basic institutional shift in the economy's structure, the majority saw less funding for distressed companies from those sources and noted a jump in asset based lending in 2008. The Turnaround Management Association -- http://www.turnaround.org -- with 8,100 members in 43 chapters worldwide, is the only international nonprofit dedicated to corporate renewal. * Oil-Price Woes in Airline Industry to Impact U.S. Economy ----------------------------------------------------------- The skyrocketing price of aviation fuel will have devastating implications far beyond new surcharges for checked bags and in- flight beverage services according to a new study prepared by the Business Travel Coalition. Not only are U.S. airlines and their passengers facing their darkest future, but fast-approaching airline liquidations will cripple the U.S. economy that depends on affordable, frequent intercity air transportation. Massive job losses, supply chain disruption, declining business activity, shrinking tax revenues, weakened American competitiveness, devastated communities, and reduced tourism are just some of the predictable results from airline liquidations that could happen as early as the second half of 2008 as a direct result of unsustainable fuel prices. The paper, "Beyond the Airlines' $2 Can of Coke: Catastrophic Impact on the U.S. Economy from Oil-price Trauma in the Airline Industry," expands on the analysis released on June 13, 2008 by AirlineForecasts, LLC and BTC and points to the real news about the airlines' fuel problems: how multiple liquidations at legacy U.S. airlines -- now a serious possibility -- would have a wide- ranging impact on many facets of the U.S. economy. The report was presented and discussed during a U.S. House Small Business Committee hearing scheduled by Chairwoman Nydia M. Velazquez (D- NY) for Thursday, June 26. "The airline industry stimulates so much economic activity -- much more than many people currently understand," said BTC Chairman Kevin Mitchell. "Airline networks are an integral part of the transport grid that supports the U.S. economy, and without immediate action to bring down fuel costs, we face the economic equivalent of a major blackout later this year or early next. Unlike in a blackout, however, the cabin lights may never come back on for many U.S. airlines." "The runaway price of oil is seriously hurting working families at every level, and as the airline fuel crisis intensifies, the risk of major job losses in all travel and tourism sectors and in other airline-dependent industries increases as well," stated Jean McDonnell Covelli, BTC member and President of The Travel Team, Inc., a wholly owned subsidiary of Rich Products Corporation. "As a matter of highest priority, elected officials must focus on devising an energy policy that will keep Americans productively traveling and working." According to the paper, "Airlines move people, but also high- value, time-sensitive or perishable cargo. Failure of one large airline would disrupt the travel of 200,000 to 300,000 passengers per day and thousands of tons of goods. The almost-full planes of remaining airlines would not be able to absorb much of these volumes. Failure of multiple airlines would paralyze the country and our American way of life, leaving us less productive, more isolated, less happy and more vulnerable." The paper points to nine specific impacts of a collapse of the industry: * Direct Employment. Between 30,000 and 75,000 would lose work immediately with just one airline failure, with payroll losses of $2.3 billion to $6.7 billion. * Indirect Community Impact. Losses would ripple throughout communities given that each airline job creates large numbers of indirect local jobs, and other economic activity. * Reduced Purchases from Suppliers. Airline purchases would cease at any failed carrier impacting companies that rely on airlines to keep their businesses afloat as well as public entities such as airports. * Impact on Tourism. The world's largest industry would be devastated in the U.S., with locally severe effects in places like South Florida, Hawaii, Las Vegas or Colorado, depending on which airline(s) fail. * Effects on Logistics and Supply-Chain Management. Restaurants, pharmaceutical companies, manufacturers relying on just-in-time parts, florists, grocers and the fashion industry would be among those injured. * Decline in Business Activity. Business travel -- really the flow of human capital, which precedes or facilitates other flows -- would be severely disrupted, with acute disruption in airline hubs and major cities. * Declining Tax Revenues. Loss of income taxes paid by employees, coupled with the loss of excise, use and other airline-paid taxes would be bad news for governments already struggling with declining revenues. * Increasing Government Outlays. Impacted individuals would immediately place demands on governments in the form of unemployment compensation, retraining and the demand for other resources. * Weakened US Competitiveness. America competes with other countries for tourists, and with reduced air lift to the U.S., travelers would be less likely to visit the U.S. and more likely to use non-U.S. carriers. A full-text copy of the study is available at no charge at: http://ResearchArchives.com/t/s?2eb5 About BTC Founded in 1994, the mission of Business Travel Coalition is to bring transparency to industry and government policies and practices so that customers can influence issues of strategic importance to them. * Troutman Sanders To Combine with Ross Dixon by January 2009 ------------------------------------------------------------- The law firms of Troutman Sanders LLP and Ross, Dixon & Bell, LLP will merge, creating a 750-attorney firm with national and international reach and unparalleled depth. The merger, approved by the partnerships at both firms and effective Jan. 1, 2009, combines Troutman Sanders' multi-faceted corporate, finance, litigation, real estate and public policy practices with Ross, Dixon & Bell's exceptional insurance, professional liability and commercial litigation practices, among other synergies. The merger also joins two law firms with established reputations for excellence and attorneys who share a common culture and vision. The merged firm will be named Troutman Sanders LLP and will remain headquartered in Atlanta. It will have about 1,700 employees. When the merger is completed, Troutman Sanders will for the first time operate offices on the West Coast and in Chicago. At the same time, Ross, Dixon & Bell attorneys and clients will gain access to Troutman Sanders' established presence in Atlanta, New York, Raleigh, Virginia, London and Asia. The merger will also double the size of Troutman Sanders' presence in Washington, D.C., which is the current headquarters of Ross, Dixon & Bell. The combined firm will have more than 100 attorneys in the nation's capital. "The merger of these two great law firms continues Troutman Sanders' strategy of expanding into new markets where we are needed by existing clients and see the potential for considerable future growth," said Robert W. Webb Jr., who has been Troutman Sanders' managing partner since 1993 and will remain chairman and managing partner of the merged firm. "This deal is good not only for our two firms but also for our clients, who will benefit from greater depth, value and enhanced resources." David Gische, Ross, Dixon & Bell's managing partner, and Mike Whitton of the San Diego office will join Troutman Sanders' executive committee. The combined Washington, D.C., offices of Ross, Dixon & Bell and Troutman Sanders will be led by Kevin C. Fitzgerald, currently managing partner of Troutman Sanders' Washington office. "Over the years, we've been approached by a number of national and international firms. The merger with Troutman Sanders is an outstanding opportunity that allows us to provide our clients with greater depth in a wide variety of practice areas and significantly expands our geographic presence," said Mr. Gische. "We see tremendous opportunities for growth in our core insurance and commercial litigation practices and the potential for rapid expansion of our existing transactional work by combining with Troutman Sanders' strengths in those areas." About Ross, Dixon & Bell Ross, Dixon & Bell LLP -- http://www.rdblaw.com/-- started in 1983 when seven lawyers from a major Washington law firm decided to launch their own practice. The firm developed a national reputation for its work in directors and officers liability, led by partners Stu Ross and Gary Dixon, and quickly grew into a highly respected, broad-based civil litigation practice. A decade later, the firm opened a second office in Orange County, Calif., then merged with the San Diego firm Miller, Boyko & Bell in 1999, adding partner Roy Bell, long recognized as a top litigator and commercial lawyer on the West Coast. In 2000, Ross, Dixon & Bell expanded to Chicago. Ross, Dixon & Bell is ranked as a leading law firm in insurance nationally as well as in California, Washington, D.C., and Illinois. The firm also has been named for delivering superior client service on the BTI "Client Service A-Team 2008." About Troutman Sanders Troutman Sanders LLP -- http://www.troutmansanders.com/-- was founded in 1897 and has grown dramatically in the past 15 years, opening offices in New York, Washington, D.C., London, Hong Kong and Shanghai, as well as merging with the four offices of Virginia firm Mays & Valentine in 2000. With the merger of 650-lawyer Troutman Sanders and 100-lawyer Ross, Dixon & Bell, the firm will operate offices in 15 cities and on three continents. Already, Troutman Sanders is ranked 75th on the AmLaw100 list of the nation's largest law firms with $349 million in revenue in 2007 – which was record revenue for the firm and represented a 14 percent increase over the previous year. Troutman Sanders provides advice and counsel in over 40 legal practice areas, more than a dozen of which received No. 1 rankings in Chambers and Partners' 2008 edition of Chambers USA. Among those garnering a top ranking was the firm's internationally recognized energy practice, which has captured the highest ranking among U.S. law firms for service to the utility industry, according to a BTI survey of national clients. * Bankruptcy Bar Names Greenberg's Paul Keenan Jr. as President ---------------------------------------------------------------- Greenberg Traurig lawyer Paul J. Keenan Jr. has been elected as president-elect of the Bankruptcy Bar Association for the Southern District of Florida. His term as president will run from 2009 to 2010. Mr. Keenan is an associate in the business reorganization and bankruptcy practice in the firm's Miami office, where he represents banks and other lending institutions, debtors, creditors and asset purchasers in out-of-court restructurings, loan workouts and bankruptcy cases. The Bankruptcy Bar Association for the Southern District of Florida, a voluntary bar association, includes practicing lawyers and bankruptcy court judges and serves as a source of information for bankruptcy law practitioners and the public through continuing education legal classes and pro bono work. The association conducts an outreach program aimed at teaching middle school, high school and college students about financial literacy. The association also matches proposed pro bono clients in the South Florida area with qualified lawyers, and provides speakers at bankruptcy clinic programs at local university law schools. "We are delighted that [Mr. Keenan's] years of service to the Association have culminated in his election as its president- elect, and know that he will do a fine job as president," said Mark Bloom, co-chair of the firm's business reorganization and bankruptcy practice and co-managing shareholder of the Miami office. In attaining this position, Mr. Keenan joins Bloom and shareholder John Hutton as Greenberg Traurig lawyers who have served as president of the association. Mr. Keenan is also the chair of the Latin America Committee of INSOL International, well as on the Membership Committee, a worldwide federation of 40 member associations with more than 9,700 participating lawyers, accountants, financial institutions, and other professionals engaged in cross-border insolvencies around the world. Greenberg Traurig's business reorganization and bankruptcy practice brings together more than 70 lawyers located across the United States. About Greenberg Traurig Headquartered in Miami, Florida, Greenberg Traurig LLP -- http://www.gtlaw.com/-- is an international, full-service law firm with more than 1,750 lawyers and governmental affairs professionals in the United States, Europe and Asia. The firm was selected as the 2007 USA Law Firm of the Year by Chambers and Partners. Greenberg Traurig serves clients from offices in: Albany, New York; Amsterdam, The Netherlands; Atlanta, Georgia; Boca Raton, Florida; Boston, Massachusetts; Chicago, Illinois; Dallas, Texas; Denver, Colorado; Fort Lauderdale, Florida; Houston, Texas; Las Vegas, Nevada; Los Angeles, California; Miami, Florida; Morristown, New Jersey; New York City; Orange County, California; Orlando, Florida; Philadelphia, Pennsylvania; Phoenix, Arizona; Sacramento, California; Silicon Valley, California; Tallahassee, FL; Tampa Bay, Florida; Tokyo, Japan; Tysons Corner, Virginia; Washington, D.C.; West Palm Beach, Florida; Wilmington, Delaware; and Zurich, Switzerland. Additionally, the firm has strategic alliances with these independent law firms: Olswang, London and Brussels; Studio Santa Maria, Milan and Rome; and Hayabusa Kokusai Law Offices in Tokyo. * Huron Consulting Adds Robert Pawlak and Peter Salt as Directors ----------------------------------------------------------------- Huron Consulting Group disclosed that Robert J. Pawlak and Peter J. Salt have joined the company as managing directors. "We continue to add the industry's most accomplished professionals to address client and company needs," Gary E. Holdren, chairman and chief executive officer of Huron Consulting Group, said. "[Mr. Pawlak] will help spearhead business development strategies to increase Huron's marketplace presence. [Mr. Salt's] arbitration and loss adjusting expertise will be an asset to clients facing international business disputes issues." Mr. Pawlak has held high-level business development roles focused on maximizing sales productivity, market share growth and bottom- line profitability during his career. Prior to joining Huron, he served as a managing director of Business Development at PricewaterhouseCoopers fostering broad and deep client relationships. Based in Huron's New York office, he will continue to bolster the company's presence and build client relationships in the financial services sector. Mr. Salt has helped corporations settle insurance claims and contract disputes. He will represent Huron in Singapore, and will be using his arbitration, mediation and loss adjusting expertise to deliver positive outcomes for clients in that region. Mr. Salt has helped major loss adjustment firm, Thomas Howell Group, establish new European, Asian and U.S. operations and served as operations director for Echelon Claims Consultants opening offices in London, Hong Kong and Singapore. He also founded his own firm, Peter J. Salt & Associates, based in Singapore. About Huron Consulting Group Huron Consulting Group -- http://www.huronconsultinggroup.com/-- helps clients effectively address complex challenges that arise in litigation, disputes, investigations, regulatory compliance, procurement, financial distress, and other sources of significant conflict or change. The company also helps clients deliver superior customer and capital market performance through integrated strategic, operational, and organizational change. Huron provides services to a wide variety of both financially sound and distressed organizations, including Fortune 500 companies, medium-sized businesses, leading academic institutions, healthcare organizations, and the law firms that represent these various organizations. * Resilience Capital Adds Michael Lundin as Operating Partner ------------------------------------------------------------- Resilience Capital Partners has named Michael Lundin as an operating partner on July 1, 2008. Mr. Lundin will be responsible for analyzing and closing new investment opportunities and add-on acquisitions. He will also be assigned to work and oversee portfolio companies. He will be spearheading -- along-side the portfolio companies' Board of Directors and Management -- the strategic planning, business growth and corporate governance activities of selected portfolio companies. Mr. Lundin was most recently President and CEO of Oglebay Norton Company. Mr. Lundin led the reorganization of the company including a new capital structure consisting of new bank debt, a conversion of debt to equity, and a rights offering for both common and preferred stock. Prior to Oglebay, he was President and Partner of Michigan Limestone Operations LP, a limestone mining and distribution company for more than ten years. Mr. Lundin negotiated the sale of the partnership to Oglebay Norton in 2000. Mr. Lundin holds a Bachelor of Science from University of Wisconsin-Stout, and his Masters of Business Administration from Loyola Marymount University. He is a member of the Young Presidents Organization and currently serves on several boards. "We continue to place a tremendous amount of value on being a successful investor, and building our team for the future. We are especially focused on the recruitment of accomplished, dynamic executives like Michael Lundin," said Bassem Mansour, Co-CEO and Managing Partner. "With his track record of success in building businesses, Michael Lundin is a seasoned executive whose strategic insights and network of relationships will considerably strengthen our portfolio company operational capabilities. He is an outstanding addition to our firm, and I look forward to his contributions throughout the many facets of our investment activities," said Steven Rosen, Co-CEO and Managing Partner. "I am excited to join the Resilience Capital Partners team. I have come to admire the emphasis they place on operating partner expertise. Resilience Capital Partners already has high quality businesses in their portfolio, and I am greatly looking forward to helping the team source and manage many more,“ said Michael Lundin. Resilience Capital Partners -- http://www.resiliencecapital.com -- is a private equity firm based in Cleveland, Ohio focused on investing in underperforming and turnaround situations. Resilience's investment strategy is to acquire lower middle market companies that have solid fundamental business prospects, but have suffered from a cyclical industry downturn, are under-capitalized, or have less than adequate management resources. Resilience typically acquires companies with revenues of $25 million to $250 million. Since its inception in 2001, Resilience has acquired 16 companies with revenues in excess of $1 billion. * BOOK REVIEW: Learning Leadership ---------------------------------- Title: Learning Leadership -- The Abuse of Power in Organizations Author: Abraham Zaleznik Publisher: Beard Books Paperback: 552 pages List Price: US$34.95 Order your personal copy at http://www.amazon.com/exec/obidos/ASIN/158798282X/internetbankrupt The lesson in Learning Leadership -- The Abuse of Power in Organizations is to "use power so that substance leads process." This is done, says the author, by keeping the "content of work at the center of communication." The premise of this intriguing book is that many managers, executives, and other business leaders allow "forms of communication [to become] the center of work." As a result, misguided and counterproductive leadership and management practices have settled into many organizations. A culprit is the popular "how-to" leadership manuals that offer simple, superficial principles that only skim the surface of leadership. Zaleznik argues that the primary way to get work done is to put aside personal agendas and deal directly with those who are involved in the work. With this emphasis on substance over process, the concept of leadership lies not in techniques, but personal qualities. The essential personal qualities of leadership are captured by the "three C's" of competence, character, and compassion. The author then delves more deeply into each of these C's. We learn, for example, that the three C's are not learned skills. Competence entails "building one's power base on talent." Character and compassion are the two other qualities of a leader that must be present before there is any talk about methods of operation, lines of communication, definition of goals, structure of a team, and the like. There is more to character that the common definition of the "quality of the person." Character also embraces, says the author, the "code of ethics that prevents the corruption of power." Compassion is defined as a "commitment to use power for the benefit of others, where greed has no place." This concept of a good leader is not idealized or unrealistic. It takes into account human nature and the troubling behavior of many leaders. Of course, any position of leadership brings with it temptations and the potential to abuse power. Effective leaders are those who "take responsibility for [their] own neurotic proclivities," says the author. They do this out of a sense of the true purpose of leadership, which is communal benefit. The power holder will "avoid the treacheries of an unreasonable sense of guilt, while recognizing the omnipresence of unconscious motivation." Mr. Zaleznik's definition of the essentials of leadership comes from his study of notable (and sometime notorious) leaders. Some tales are cautionary. The Fashion Shoe Company illustrates the problems that can occur when a leader allows action to overcome thought. The Brandon Corporation illustrates the opposite leadership failing -- allowing thought to inhibit action. Taken together, the two examples suggest that balance is needed for good leadership. Andrew Carnegie exemplifies the struggle between charisma and guilt that affects some leaders. Frederick Winslow Taylor is seen by the author as an obsessed leader. From his behavior in the Sicilian campaign in World War II, General Patton is characterized as a leader who violated the code binding leaders and those they lead. With his training in psychoanalysis and his experience in the business field, Mr. Zaleznik's leadership dissections and discussions are instructive. The reader will find Learning Leadership -- The Abuse of Power in Organizations to be an engaging text on the human qualities and frailties of leaders. Abraham Zaleznik is emeritus Konosuke Matsushita Professor of Leadership at the Harvard Business School. He is also a certified psychoanalyst. ********* 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. Raphael M. Palomino, 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 ***