/raid1/www/Hosts/bankrupt/TCR_Public/080718.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, July 18, 2008, Vol. 12, No. 170
Headlines
17TH & G: Case Summary & Seven Largest Unsecured Creditors
2900 FULTON: Voluntary Chapter 11 Case Summary
ABROCK LLC: U.S. Trustee Sets Section 341(a) Meeting for August 14
ACIH: Moody's Assigns Caa2/LD Probability of Default Rating
ADT CONSTRUCTION: U.S. Trustee Appoints 5-Member Creditors Panel
ADT CONSTRUCTION: Section 341(a) Meeting Slated for July 31
ADVANCED MICRO: Board Elects President and COO Dirk Meyer as CEO
AEGIS MORTGAGE: Court Extends Plan Filing Deadline to August 7
AEGIS MORTGAGE: Removal Period Extended by Court to August 11
AEGIS MORTGAGE: Settles Equity Title Case; Wells Fargo Disagrees
AEP INDUSTRIES: S&P Revises Outlook to Negative from Stable
AHAVA OF CALIFORNIA: Voluntary Chapter 11 Case Summary
ALPHA NATURAL: $10BB Acquisition Plan Cues Moody's B1 Rating
ALPHA NATURAL: $10BB Cleveland-Cliffs Deal Cues S&P's Pos. Watch
AMERICAN ACHIEVEMENT: May 31 Balance Sheet Upside-Down by $154MM
AMERICAN ACHIEVEMENT: Consent Solicitation Set to Expire Aug. 8
ANTELOPE VALLEY: S&P Cuts Underlying Rating on $57MM Notes to BB
APEX-PETROLEUM: Case Summary & 20 Largest Unsecured Creditors
ASTRATA GROUP: Won't be Able to File 10-QSB for First Quarter
BAG'N BAGGAGE: LaSalle Bank to Receive $8 Million Under Settlement
BHM TECHNOLOGIES: Wants to Tap Gaiatech as Environ. Consultant
BHM TECHNOLOGIES: Court Approves Alixpartners as Advisors
BHM TECHNOLOGIES: Wants to Employ Gordon Brothers as Appraisers
BHM TECHNOLOGIES: Wants to Employ Ernst & Young as Auditors
BHM TECHNOLOGIES: Court Approves Kurtzman as Claims Agent
BSC BANDIT: Involuntary Chapter 11 Case Summary
BYSYNERGY LLC: Can Employ Michael Carmel as Counsel
CARUSO HOMES: Section 341(a) Meeting Set for July 30
CARUSO HOMES: U.S. Trustee Names 7-Member Creditors Panel
CASA DE CAMBIO: May Use Cash Collateral Amid Wachovia's Protest
CASA DE CAMBIO: Disclosure Statement Hearing Set for September 10
CAT COMMUNICATIONS: Mulls Sale of Assets in 30 Days
CHRYSLER LLC: Study Shows Bankruptcy Filing Disastrous for Sales
CREDIT SUISSE: Moody's Junks Ratings on 2 Classes of Certificates
CRESCENT RESOURCES: Moody's Cuts Corporate Family and Debt Ratings
DELTA AIR: Inks Transaction Framework Deal with NWA and ALPA
DELTA AIR: Stockholders to Vote on Issuance of Stock to Northwest
DELTA AIR: District Court Dismisses Suits Over 5191 Plane Crash
DELTA AIR: Comair Unit Expects to Terminate 520 Employees
DELTA AIR: Parties Withdraw More than $1.2 Million in Claims
DEREK TAYLOR: Voluntary Chapter 11 Case Summary
DORADO BECKVILLE: Jason Searcy Approved as Committee's Counsel
DRI CORP: Expects Demand for Transit Security Products to Increase
EDUCATE INC: S&P Cuts Corporate Credit Rating to 'B-' from 'B'
EDUCATION RESOURCES: Wants Plan Filing Period Extended to Dec. 3
EDUCATION RESOURCES: U.S. Trustee Says Rasky Employment No Merit
EDUCATION RESOURCES: Wants Removal Period Extended to September 6
EDUCATION RESOURCES: Creditors Oppose JP Morgan Pacts Cancellation
EDWARD GEORGE ENOS: Case Summary & 12 Largest Unsecured Creditors
ENERGY PARTNERS: Dina Riviere to Resign as Accounting Officer
ENERLUME ENERGY: Inks Note Extension Agreement with N. Troiano
FIRST MERCURY: Moody's Hikes Long-term Issuer Rating to Ba2
FORTUNOFF: Refutes Validity of $11.4 Million Reclamation Claims
FORTUNOFF: Court Denies Westwood's $472,367 Administrative Claim
FORTUNOFF: Four Creditors Demand Payment of Delivered Goods
FREMONT GENERAL: Court Okays Sale of Bank Assets to CapitalSource
FREMONT GENERAL: U.S. Trustee Appoints 9-Member Equity Panel
FTS GROUP: Rescinds $3.5MM Asset Purchase Agreement with Metro One
GANNETT CO: Profit Drops 36% to $232MM in Quarter Ended June 29
GLOBAL GEAR: Voluntary Chapter 11 Case Summary
GOODY'S FAMILY: Gets Final OK to Use GECC et al.'s $210 Mil. Loan
HAMILTON SILVA: Voluntary Chapter 11 Case Summary
HARTFORD LEVERAGED: Fitch Withdraws 'C/DR6' Rating on $125MM Notes
HOLLINGER INC: Directors Stanley Beck and David Rattee Resign
INTERSTATE BAKERIES: June 30 Deadline Passed, But No Plan Filed
INTERSTATE BAKERIES: Strikes Deals With 16 Local UFCW Units
INTERSTATE BAKERIES: Wants to Reject CBA with UFCW Local 1360
I/OMAGIC CORP: Replacing Swenson with New Independent Accountant
JOE GIBSON: Case Summary & 40 Largest Unsecured Creditors
JOHN MAIN: Case Summary & 20 Largest Unsecured Creditors
KB HOME: Stockholder Okay Needed for Certain Severance Payments
KEANE INTERNATIONAL: S&P Lowers Corp. Credit Rating to B from BB-
KORITZ WAY: Case Summary & Six Largest Unsecured Creditors
L-1 IDENTITY: Moody's Assigns B2 Initial Corporate Family Rating
LAKE LAS VEGAS: Files for Chapter 11, Has $127MM DIP Loan
LAKE LAS VEGAS: Case Summary & 40 Largest Unsecured Creditors
LANDSOURCE COMMUNITIES: Panel Wants Changes in Lazard's Engagement
LANDSOURCE COMMUNITIES: Can Employ Weil Gotshal as Attorneys
LANDSOURCE COMMUNITIES: Can Hire Downey Brand as Newhall Counsel
LANDSOURCE COMMUNITIES: May Employ GDB as Newhall/Valencia Counsel
LAS VEGAS SANDS: At S&P's Negative Watch on Underperformance
LEHIGH COAL: Involuntary Chapter 11 Case Summary
LEHMAN BROTHERS: Liquidate Troubled Assets, Merge, Analysts Advice
LEINER HEALTH: Wants to File Chapter 11 Plan Until September 30
LOUIS PEARLMAN: Investors Defrauded of $300MM, Authorities Say
LOUIS TATUM: Case Summary & Four Largest Unsecured Creditors
MASHANTUCKET PEQUOT TRIBE: S&P Puts BB+ Rating on CreditWatch
MECACHROME INT'L: Moody's to Review Low B Ratings for Likely Cut
MODERN CONTINENTAL: Can Use Bonded Receivables as Cash Collateral
MODERN CONTINENTAL: Section 341(a) Meeting Scheduled for July 30
MODERN CONTINENTAL: Trustee Appoints 7 Members to Creditors Panel
NEW CENTURY FINANCIAL: Court Confirms Joint Liquidation Plan
NEW CENTURY FINANCIAL: Exclusivity Period Extended to August 20
NORTHWEST AIRLINES: Inks Framework Pact with Delta and ALPA
NORTHWEST AIRLINES: Shareholders to Vote on Merger by Sept. 25
NORTHWEST AIRLINES: Wants Approval on IRS Settlement Deal
NORTHWEST AIRLINES: Insists ALG's $15 Mil. Claim is Unenforceable
NORWALK INVESTMENT: Case Summary & Two Largest Unsecured Creditors
OAKRIDGE HOMES: Taps Levene Neale as Bankruptcy Counsel
OTC INTERNATIONAL: Court Moves Sale Closing Date to July 31
PERFORMANCE TRANS: Ch. 7 Trustee Wants to Employ Self as Attorney
PERFORMANCE TRANS: Court Converts PTS II Cases to Chapter 7
PERFORMANCE TRANS: May Use Cash Collateral Through July 23
PIERRE FOODS: Gets Initial OK to Use OCM's $29 Million DIP Loan
PLASTECH ENGINEERED: Inks Pact Extending Term Bar Date to July 31
PRB ENERGY: Wants to File Chapter 11 Plan Until October 2
PROTECTED VEHICLES: Wants Proposed Bid Sale Procedures Approved
QUAKER FABRIC: Files Amended Disclosure Statement and Ch. 11 Plan
R&R EXCAVATING: Case Summary & 20 Largest Unsecured Creditors
RADIANT ENERGY: Settles $803K Debt with Cash, Shares and Warrants
REZNICEK INVESTMENTS: Case Summary & 20 Unsecured Creditors
RIVER ELKS: Asks Court's Approval to Employ Joel Newell as Counsel
RUTLAND RATED: Fitch Cuts Ratings on Two Note Classes to 'CCC+'
RUTTER INC: Defaults on Revised EBITDA Covenant, Obtains No Waiver
SAINT VINCENT: Paying $200,000 to Resolve Team Healtcare's Claim
SAINT VINCENT: Judge Hardin Expunges $2.6 Million Claims
SCOTTISH ANNUITY: Poor Fin'l Flexibility Cues S&P to Junk Ratings
SCOTT MORRIS: Voluntary Chapter 11 Case Summary
SEMGROUP LP: Experiencing Liquidity Issues, Could Go Belly Up
SHOE PAVILION: Case Summary & 40 Largest Unsecured Creditors
SINO-FOREST CORP: Moody's Rates Planned $300MM Notes (P)Ba2
SPECTRUM BRANDS: S&P Holds 'CCC+' Rating; Removes Positive Watch
STANDARD PACIFIC: Consolidates Operations in California
STEPHEN ALLEN WEST: Case Summary & 20 Largest Unsecured Creditors
STEVE & BARRY'S: Wants Conway as Financial Advisors
STEVE & BARRY'S: Wants Weil Gotshal as Attorneys
STEVE & BARRY'S: Obtains Approval to Pay Employee Wages & Benefits
STEVEN SARTIN: Voluntary Chapter 11 Case Summary
STRATUS GROUP: Case Summary & 30 Largest Unsecured Creditors
SUMMIT CAPITAL: Case Summary & Eight Largest Unsecured Creditors
TEXAS INDUSTRIES: S&P Affirms 'BB-' Rating with Stable Outlook
THOMAS GIANCRISTIANO: Voluntary Chapter 11 Case Summary
TIMBER TOM'S: Case Summary & 20 Largest Unsecured Creditors
TMS HOME: Moody's Assigns A1, Ba1 & B3 Underlying Ratings on Notes
TOP BRANCH: Case Summary & 20 Largest Unsecured Creditors
VALLEY BOAT: To Dispose of Inventory; Mulls Closure of Stores
WARNACO GROUP: Improved Revenue Trend Cues S&P to Lift Ratings
WASHINGTON MUTUAL TRUST: At Fitch's Watch on Higher Delinquencies
YAZMIN ENTERPRISES: Case Summary & 40 Largest Unsecured Creditors
WHITEBLOX INC: Voluntary Chapter 11 Case Summary
ZOLITE SCOTT: Voluntary Chapter 11 Case Summary
* S&P Places 378 Tranches Ratings from 96 CDO Under Neg. Watch
* S&P Puts Default Ratings on 81 Classes from 59 US RMBS
* S&P Chips Ratings on Seven Classes from Three CDO Transactions
* Fitch Says Mortgage Insurance Industry's Woes Could Get Worse
* Moody's Says Credit Quality Trends Stay Negative in 2nd Quarter
* Moody's Says Investor-Owned Electric Utility Sector is Stable
* Moody's: U.S. Municipal Credit Conditions Stay Positive in Q2
* Inflation's Comeback is Contributing to Market Woes, S&P Says
* S&P: Risk in Rating Mix Sets the Stage for Escalating Defaults
* S&P Says US Health Care is Fighting Off Some Economic Weakness
* Allegiance Capital Expands Scope, Forms Special Situations Div.
* BOOK REVIEW: Leveraged Management Buyouts:
*********
17TH & G: Case Summary & Seven Largest Unsecured Creditors
----------------------------------------------------------
Debtor: 17th & G, LLC
701 Island Avenue, Suite 2A
San Diego, CA 92101
Bankruptcy Case No.: 08-06551
Chapter 11 Petition Date: July 16, 2008
Court: Southern District of California (San Diego)
Judge: Laura S. Taylor
Debtors' Counsel: Judith A. Descalso, Esq.
(descalso@pacbell.net)
960 Canterbury Pl., Suite 340
Escondido, CA 92025
Tel: (760) 745-8380
Fax: (760) 860-9800
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/califsb08-06551.pdf
2900 FULTON: Voluntary Chapter 11 Case Summary
----------------------------------------------
Debtor: 2900 Fulton LP
1452 Broadway
San Francisco, CA 94109
Related Information: Terry D. Brown, authorized agent, filed the
petition on the Debtor's behalf.
Bankruptcy Case No.: 08-31269
Chapter 11 Petition Date: July 15, 2008
Court: Northern District of California (San Francisco)
Debtor's Counsel: Darya Sara Druch, Esq.
(darya@daryalaw.com)
Law Offices of Darya Sara Druch
1 Kaiser Plaza #480
Oakland, CA 94612
Tel: (510) 465-1788
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
A list of the Debtor's largest unsecured creditors is available
for free at: http://bankrupt.com/misc/canb08-31269.pdf
ABROCK LLC: U.S. Trustee Sets Section 341(a) Meeting for August 14
------------------------------------------------------------------
The U.S. Trustee for Region 14, will convene a meeting of
creditors in Abrock LLC's Chapter 11 case, on Aug. 14, 2008, at
12:30 p.m., at James A. Walsh Courthouse, 38 S. Scott Avenue,
Suite 140, Tucson, Arizona.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in the Debtors' case. The Section
341(a) Meeting has been scheduled within the time required by
Rule 2003 of the Federal Rules of the Bankruptcy Procedure.
All creditors are invited, but not required, to attend. The
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible officer of the
Debtors under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Tucson, Arizona, Abrock LLC is doing site
developments. The company and three of its affiliates filed for
separate Chapter 11 protection on June 23, 2008, (Bankr. D. Ariz.
Lead Case No.: 08-07519) Eric Slocum Sparks AZBAR at Eric Slocum
Sparks PC represents the Debtors in their restructuring efforts.
Abrock LLC's financial condition at bankruptcy filing showed
total assets of $25,000,400 and total debts of $12,530,088.
ACIH: Moody's Assigns Caa2/LD Probability of Default Rating
-----------------------------------------------------------
Moody's Investors Service changed ACIH's Probability of Default
Rating to Caa2/LD from Caa1, downgraded the company's corporate
family rating to Caa2 from Caa1, and its discount notes to Ca from
Caa3.
ACIH is an intermediate holding company that is structurally below
Atrium Corporation, the ultimate parent company, but resides above
Atrium Companies, Inc., the primary operating company. Moody's
also downgraded the rating on Atrium Companies' senior secured
revolver and term loan B facilities to Caa1 from B3. Moody's
affirmed the company's speculative grade liquidity rating at SGL-4
thereby reflecting the company's weak liquidity position. The
ratings outlook remains negative.
These ratings/assessments for ACIH, Inc. have been affected:
-- Corporate Family Rating, downgraded to Caa2 from Caa1;
-- Probability of Default Rating, downgraded to Caa2/LD from
Caa1;
-- $174 million senior discount notes due 2012, downgraded to Ca
(LGD5, 89%) from Caa3 (LGD6, 90%);
-- Speculative Grade Liquidity Rating, affirmed at SGL-4.
These ratings/assessments for Atrium Companies, Inc. have been
affected:
-- $378.5 million senior secured term loan B, due 2012,
downgraded to Caa1 (LGD3, 33%) from B3 (LGD3, 34%);
-- $50 million senior secured revolving credit facility, due
2011, downgraded to Caa1 (LGD3, 33%) from B3 (LGD3, 34%);
Atrium did not make the June 15, 2008 cash interest payment on its
Senior Discount Notes. The cure period on the missed interest
payment ended on July 15, 2008. The company has a proposal that
it believes will result in a cure. Moody's considers the missed
interest payment on the Senior Discount Notes to be a "limited
default" and has changed the PDR to Caa2/LD.
Given the uncertainty surrounding the housing industry and
building product industries, Moody's has downgraded the company's
corporate family rating and probability of default rating. ACIH
downgrade also reflects the company's high leverage, low free cash
flow generation. The company's sales and margins have been
particularly impacted as a result of weakness in Florida and
various other "previously hot" markets.
Headquartered in Dallas, Texas, Atrium Companies, Inc. is one of
the largest window manufacturers in North America. Revenues for
the trailing 12 months ended March 31, 2008 were $725 million.
ADT CONSTRUCTION: U.S. Trustee Appoints 5-Member Creditors Panel
----------------------------------------------------------------
U.S. Trustee for Region 17, appointed five members to the Official
Committee of Unsecured Creditors in ADT Construction Group Inc.'s
Chapter 11 case.
The panel consists of:
1. Alexander Services
6440 S. Polaris, Ste. B
Las Vegas, NV 89118
2. Freeman's Carpet Service
3150 Ponderosa Way
Las Vegas, NV 89118
3. Helix Electric
3078 E. Sunset Road, No. 9
Las Vegas, NV 89120
4. Southern Nevada Paving
4040 Frehner Road
North Las Vegas, NV 89030
5. Universal Brass Inc.
4145 W. Dewey Drive
Las Vegas, NV 89118
Headquartered in Las Vegas, Nevada, ADT Construction Group Inc. --
http://www.adtconstruction.com/-- aka Advanced Demolition
Technologies offers full-service contracting services. The Debtor
filed for Chapter 11 protection on June 24, 2008, (Bankr. D. Nev.
Case No.: 08-16841) Lenard E. Schwartzer, Esq. at
Schwartzer & McPherson Law Firm represents the Debtor in its
restructuring efforts. The Debtor has total assets of $11,202,109
and total debts of $7,411,364.
ADT CONSTRUCTION: Section 341(a) Meeting Slated for July 31
-----------------------------------------------------------
The U.S. Trustee for Region 17, will convene a meeting of
creditors in ADT Construction Group Inc.'s Chapter 11 case, on
July 31, 2008, at 3:00 p.m., at 300 Las Vegas Blvd., South, Room
1500, Las Vegas, Nevada.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in the Debtors' case. The Section
341(a) Meeting has been scheduled within the time required by
Rule 2003 of the Federal Rules of the Bankruptcy Procedure.
All creditors are invited, but not required, to attend. The
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible officer of the
Debtors under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Las Vegas, Nevada, ADT Construction Group Inc. --
http://www.adtconstruction.com/-- aka Advanced Demolition
Technologies offers full-service contracting services. The Debtor
filed for Chapter 11 protection on June 24, 2008, (Bankr. D. Nev.
Case No.: 08-16841) Lenard E. Schwartzer, Esq. at
Schwartzer & McPherson Law Firm represents the Debtor in its
restructuring efforts. The Debtor has total assets of $11,202,109
and total debts of $7,411,364.
ADVANCED MICRO: Board Elects President and COO Dirk Meyer as CEO
----------------------------------------------------------------
Advanced Micro Devices Inc. is reshuffling its top management
after a period marked by big losses, a major product miscue and a
sharp decline in its share price, The Wall Street Journal relates.
In a press release, AMD disclosed that its board of directors
elected president and COO Dirk Meyer as the company's chief
executive officer. Mr. Meyer succeeds Hector Ruiz, who will
become executive chairman of AMD and chair of the board of
directors. As executive chairman, Mr. Ruiz will ensure a smooth
executive leadership transition, focus on driving the company's
asset smart strategy to completion, and assist with high-level
government and strategic partner relations.
"[Mr. Meyer's] election to CEO is the final phase of a two-year
succession plan developed and implemented jointly by AMD's board
of directors and executive team," Robert Palmer, lead independent
director, said. "Under Hector's strong leadership, AMD drove the
industry adoption of pervasive 64-bit and multicore computing,
became a trusted enterprise-class partner to leading technology
suppliers and significantly expanded its global footprint in high-
growth markets like China.
"[Mr. Meyer's] extensive experience as a business leader and his
notable engineering accomplishments before and during his 12 years
at AMD make him ideally suited to build upon the foundation Hector
created and lead AMD."
"AMD has fundamentally altered the industry landscape, leading the
innovation agenda while delivering greater choice and better
experiences for our customers and users," Mr. Ruiz, executive
chairman, AMD, said. "[Mr. Meyer] is a gifted leader who
possesses the right skills and experience to continue driving AMD
and the industry forward in new, compelling directions. I am
placing the company in excellent hands."
Mr. Meyer joined AMD in 1995 and made his mark as part of the
design team responsible for the original AMD Athlon(TM) processor,
a breakthrough product for AMD and the industry's first processor
to break the 1GHz barrier. From 2001 to 2006, Mr. Meyer led the
company's microprocessor business, overseeing related R&D,
manufacturing, operations, and marketing. His leadership skills
during these five years resulted in a doubling of revenue for the
microprocessor business and a substantial expansion of AMD's
global profile. In 2006, Mr. Meyer was appointed president and
COO, and in 2007, he was elected to AMD's board of directors.
"I'm tremendously excited by the opportunities ahead for AMD,"
Mr. Meyer, president and chief executive officer, AMD, said. "As
the only company that possesses expertise and leadership in both
x86 microprocessor and graphics technology, AMD has a unique
capability to drive the next wave of innovation through the
integration of computing and graphics processors to deliver a
better computing experience. We are in the midst of re-shaping
AMD's business model with the goal of delivering sustained
profitability through a focus on the core technologies that
differentiate AMD. My immediate priority is to work with the
leadership team to accelerate this transformation. I appreciate
the trust that the Board and Hector have placed in me. During the
years that I've worked under Hector, he has been an excellent
leader, mentor and friend."
Mr. Ruiz joined AMD as president and chief operating officer in
January 2000 and became AMD's chief executive officer on April 25,
2002. He has served on AMD's board of directors since 2000 and
was appointed chairman of the board of directors in 2004.
According to WSJ, AMD also reported a loss of nearly $1.2 billion,
including $920 million from its discontinued ATI Technologies
operations that sell chips for handheld devices and digital
televisions.
The Journal added that AMD's stock price has plunged from more
than $16 in July 2007 to less than $5, though it rebounded
Thursday to $5.30, up 24 cents, or 4.7%, in 4 p.m. New York Stock
Exchange composite trading. WSJ indicated that its current market
value is about $3.2 billion.
About Advanced Micro Devices
Headquartered in Sunnyvale, California, Advanced Micro Devices
Inc. (NYSE: AMD) -- http://www.amd.com/-- provides innovative
processing solutions in the computing, graphics and consumer
electronics markets.
At Dec. 29, 2007, the company's consolidated balance sheet showed
$11.550 billion in total assets, $8.295 billion in total
liabilities, $265.0 million in minority interest in consolidated
subsidiaries, and $2.990 billion in total stockholders' equity.
* * *
As reported in the Troubled Company Reporter on Jan. 28, 2008,
Fitch downgraded these ratings on Advanced Micro Devices Inc.,
including its Issuer Default Rating to 'B-' from 'B'; and its
Senior unsecured debt to 'CCC'/RR6 from 'CCC+/RR6'. The Rating
Outlook remains Negative.
AEGIS MORTGAGE: Court Extends Plan Filing Deadline to August 7
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware, at the
request of Aegis Mortgage Corporation and its affiliates, extended
the period within which the Debtors have the exclusive right to
file a Chapter 11 plan of reorganization for their estates to
August 7, 2008, and the period to solicit acceptances of that plan
to October 6, 2008.
The brief extension, the Debtors said, will give them opportunity
to further negotiate with their creditors and facilitate an
efficient and cost-effective plan process.
Headquartered in Houston, Texas, Aegis Mortgage Corporation --
http://www.aegismtg.com/-- offers a variety of mortgage loan
products to brokers through its subsidiaries. The company
together with 10 affiliates filed for chapter 11 protection on
Aug. 13, 2007 (Bankr. D. Del. Case No. 07-11119). Curtis A. Hehn,
Esq., James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy
P. Cairns, Esq., at Pachulski, Stang, Ziehl, & Jones, L.L.P.,
serve as counsel to the Debtors. The Official Committee of
Unsecured Creditors is represented by Landis Rath & Cobb LLP. In
schedules filed with the Court, Aegis disclosed total assets of
$138,265,342 and total debts of $4,125,470. (Aegis Bankruptcy
News, Issue No. 23; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
AEGIS MORTGAGE: Removal Period Extended by Court to August 11
-------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware gave Aegis
Mortgage Corporation and its affiliates until August 11, 2008, to
file notices of removal of their pending civil actions.
As reported by the Troubled Company Reporter on June 9, 2008, the
Debtors believe an extension of the removal period is prudent to
protect their right to remove the Actions. Laura Jones, Esq., at
Pachulski Stang Ziehl & Jones LLP, said the Debtors currently are
occupied with the development and negotiation of a plan in their
Chapter 11 cases. She said the Debtors have not had an
opportunity to fully review Actions to determine whether there are
any that may need to be removed.
Headquartered in Houston, Texas, Aegis Mortgage Corporation --
http://www.aegismtg.com/-- offers a variety of mortgage loan
products to brokers through its subsidiaries. The company
together with 10 affiliates filed for chapter 11 protection on
Aug. 13, 2007 (Bankr. D. Del. Case No. 07-11119). Curtis A. Hehn,
Esq., James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy
P. Cairns, Esq., at Pachulski, Stang, Ziehl, & Jones, L.L.P.,
serve as counsel to the Debtors. The Official Committee of
Unsecured Creditors is represented by Landis Rath & Cobb LLP. In
schedules filed with the Court, Aegis disclosed total assets of
$138,265,342 and total debts of $4,125,470. (Aegis Bankruptcy
News, Issue No. 23; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
AEGIS MORTGAGE: Settles Equity Title Case; Wells Fargo Disagrees
----------------------------------------------------------------
Aegis Mortgage Corporation and its debtor-affiliates and Equity
Title, LLC, ask the U.S. Bankruptcy Court for the District of
Delaware to approve a stipulation resolving the lawsuit filed by
Equity Title.
Equity Title brought the lawsuit against Aegis Wholesale
Corporation and six others after it failed to fund the transaction
for the sale of a real property in Las Vegas, Nevada. Equity
Title served as the settlement and escrow agent for the sale
transaction.
Pursuant to their stipulation, Aegis Wholesale and its affiliates
agreed to assign to Equity Title their rights under the note and
deed of trust, to the extent those documents vest them with
rights against the other defendants in the complaint. The
Debtors will also turn over to Equity Title the original
documents evidencing the sale transaction.
In return, Equity Title will pay the Debtors $25,000, for the
assignment of their rights within 10 days after the stipulation
is approved. The parties also agreed to release each other from
all claims, and promptly work for the dismissal of the adversary
case.
In separate statements filed with the Bankruptcy Court, Wells
Fargo Bank, N.A., and Joseph and Evelyn Reyes complain that they
were not given the opportunity to review the stipulation, saying
they only learned about the agreement three days after it was
filed.
Wells Fargo and the Reyeses say the stipulation and the
certification of counsel submitted to the Bankruptcy Court do not
clarify if the settlement would fully resolve the lawsuit or if
Equity Title also intends to dismiss them as defendants of the
lawsuit.
Defendant Community One Federal Credit Union supports the
arguments of Wells Fargo.
Other Adversary Actions
The Bankruptcy Court dismissed an adversary complaint filed by
Aegis Mortgage Corporation against D. Richard Thompson for lack of
prosecution. The Bankruptcy Court had advised Aegis Mortgage to
file a document to prosecute the case or make a request to convene
a status hearing on or before May 28, 2008, to avoid possible
dismissal of the case. Aegis Mortgage, however, failed to take
any legal actions and did not respond to the Court's notice.
The Bankruptcy Court separately has directed Ticor Title Insurance
Company to file a motion or take other legal actions to prosecute
a lawsuit it filed against Aegis Wholesale Corporation until
August 7, 2008, to avoid possible dismissal of the case.
The Bankruptcy Court also dismissed a complaint filed by Michael
Scott against U.S. Bank, N.A. and Samuel I. White, P.C., for lack
of jurisdiction. The Bankruptcy Court said that it lacks
jurisdiction to grant injunctive relief with respect to Mr.
Scott's mortgage since it does not constitute property of the
Debtors' estates. The Court further said that it does not have
jurisdiction to award Mr. Scott, a non-debtor, money damages
against the defendants which are also non-debtors.
Headquartered in Houston, Texas, Aegis Mortgage Corporation --
http://www.aegismtg.com/-- offers a variety of mortgage loan
products to brokers through its subsidiaries. The company
together with 10 affiliates filed for chapter 11 protection on
Aug. 13, 2007 (Bankr. D. Del. Case No. 07-11119). Curtis A. Hehn,
Esq., James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy
P. Cairns, Esq., at Pachulski, Stang, Ziehl, & Jones, L.L.P.,
serve as counsel to the Debtors. The Official Committee of
Unsecured Creditors is represented by Landis Rath & Cobb LLP. In
schedules filed with the Court, Aegis disclosed total assets of
$138,265,342 and total debts of $4,125,470. (Aegis Bankruptcy
News, Issue No. 23; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
AEP INDUSTRIES: S&P Revises Outlook to Negative from Stable
-----------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on AEP
Industries Inc. to negative from stable. At the same time,
Standard & Poor's affirmed its 'B+' corporate credit rating and
other ratings on AEP.
"The outlook revision reflects our expectation for a weaker
operating environment for AEP, with potential negative
implications for credit measures," said Standard & Poor's credit
analyst Paul Kurias.
Sharply higher resin prices and increased competitive pressures
have already affected earnings in the second quarter ended
April 30, 2008, with adjusted quarterly EBITDA declining
significantly from the previous quarter. Although management has
since undertaken steps to improve earnings, including increasing
product prices, input resin costs continue to rise in the third
quarter, diminishing prospects for a meaningful improvement in
earnings to levels achieved in previous years. As a result, it is
unlikely that the company's credit metrics will be sustained at
current levels.
At April 30, 2008, total adjusted debt was about $194 million.
The ratings on AEP reflect the company's vulnerability to raw
material price volatility, the commodity nature of its products,
and a highly leveraged financial profile, which more than offset
its competitive positions in a number of flexible packaging
niches.
South Hackensack, New Jersey-based AEP produces various flexible
packaging films. AEP is a large producer of polyvinyl chloride
food wrap, industrial films, and polyethylene pallet-wrap stretch
films.
AHAVA OF CALIFORNIA: Voluntary Chapter 11 Case Summary
------------------------------------------------------
Debtor: Ahava of California, LLC
dba Ahava National Food Distributor
dba North Country Manufacturing
908 Rose Avenue
Venice, CA 90291
Related Information: Fairborz Banayan, aka Aaron Banayan,
president and chief executive officer, filed
the petition on the Debtor's behalf.
Bankruptcy Case No.: 08-20524
Chapter 11 Petition Date: July 15, 2008
Court: Central District Of California (Los Angeles)
Debtor's Counsel: Josefina F. McEvoy, Esq.
(josefina.mcevoy@klgates.com)
10100 Santa Monica Boulevard 7th Floor
Los Angeles, CA 90067
Tel: (310) 552-5000
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
A list of the Debtor's largest unsecured creditors is available
for free at: http://bankrupt.com/misc/cacb08-20524.pdf
ALPHA NATURAL: $10BB Acquisition Plan Cues Moody's B1 Rating
------------------------------------------------------------
Moody's Investors Service affirmed Alpha Natural Resources, Inc.'s
B1 Corporate Family rating and Ba3 senior secured ratings in
response to Alpha's statement that it has signed a definitive
agreement to be to be acquired by Cleveland-Cliffs Inc. for
approximately $10 billion in cash and stock.
Alpha is well positioned within its rating category and the
proposed transaction does not contemplate additional debt at the
Alpha level. In fact, the rated senior secured bank debt is
repayable upon an acquisition of Alpha and it is likely that it
will be repaid and the ratings withdrawn in the event that the
proposed transaction is completed.
In the event that the structure of the proposed transaction
changes or another bidder emerges, Moody's will consider
appropriate rating action at that time.
The Boards of both companies have approved the deal under which
Alpha's shareholders will receive $128.12 per share (0.95 of
Cleveland-Cliffs common shares and $22.23 in cash), based on
Alpha's closing stock price on July 15, 2008. Cleveland-Cliffs
will pay an aggregate of $1.7 billion in cash and issue 71 million
new shares of common stock.
JPMorgan Chase Bank is providing an underwriting commitment for up
to $1.9 billion in financing the transaction. After the deal
closes, Alpha stockholders will own about 40 percent of the
combined company, and Cleveland-Cliffs shareholders will own 60
percent. The transaction will have to be approved by the
shareholders of both companies and is subject to customary
regulatory approvals.
Alpha's B1 corporate family rating reflects its production of
high-quality thermal and metallurgical coal, its solid earnings
and free cash flow, and its relatively low level of workers'
compensation, black lung, and OPEB obligations.
The rating is also supported by currently very strong thermal and
metallurgical coal prices, which will benefit Alpha at least in
2008 and 2009. The rating is negatively impacted by Alpha's
relatively small size, high cost structure, and concentration of
operations in Central Appalachia.
Moody's last rating action on Alpha was to upgrade its corporate
family rating to B1 from B2 in July 2006.
Headquartered in Abingdon, Virginia, Alpha Natural Resources, LLC
is engaged in the mining and marketing of thermal and
metallurgical coal and had revenues in the year ended Dec. 31,
2007 of $1.9 billion.
ALPHA NATURAL: $10BB Cleveland-Cliffs Deal Cues S&P's Pos. Watch
----------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on U.S. coal
producer Alpha Natural Resources Inc., including its 'B+'
corporate credit rating, on CreditWatch with positive
implications.
The CreditWatch listing follows the announcement that Cleveland-
Cliffs Inc. (unrated entity) will acquire Alpha in a cash and
stock transaction valued at approximately $10 billion. The
transaction is subject to approval by Cleveland-Cliffs and Alpha
shareholders, as well as the satisfaction of customary closing
conditions and regulatory approvals, and is expected to close by
the end of 2008.
"The combined company, which will be renamed Cliffs Natural
Resources, will become one of the largest U.S. mining companies
and be positioned as a leading diversified mining and natural
resources company," said Standard & Poor's credit analyst Maurice
Austin.
Cliffs Natural Resources' mine portfolio will include nine iron
ore facilities and more than 60 coal mines located across North
America, South America, and Australia. The company's significant
position in both iron ore and metallurgical coal will make it a
major supplier to the global steel industry, as well as provide a
platform for further diversification geographically and in terms
of the mineral and resource products it sells.
In resolving the CreditWatch, S&P will continue to monitor
developments associated with the acquisition. Upon completion of
the sale, from which a portion of the proceeds is expected to be
used to repay all debt outstanding, S&P would withdraw our ratings
on Alpha.
AMERICAN ACHIEVEMENT: May 31 Balance Sheet Upside-Down by $154MM
----------------------------------------------------------------
American Achievement Group Holding Corp.'s consolidated balance
sheet at May 31, 2008, showed $489.8 million in total assets and
$643.8 million in total liabilities, resulting in a $154.0 million
stockholders' deficit.
The company reported net income of $18.6 million on net sales of
$157.1 million for the third quarter ended May 31, 2008, compared
with net income of $15.2 million on net sales of $143.8 million in
the same period ended May 26, 2007.
Net sales increased $13.3 million, or 9.2%, to $157.1 million for
the three months ended May 31, 2008, from $143.8 million for the
three months ended May 26, 2007.
Net sales of Class Rings decreased $100,000 to $40.3 million for
the three months ended May 31, 2008, from $40.4 million for the
three months ended May 26, 2007. Net sales was impacted by the
continued decline in retail class ring sales due to softness in
the retail market partially offset by higher on-campus average
sales price.
Net sales of Yearbooks increased $12.5 million to $80.7 million
for the three months ended May 31, 2008, from $68.2 million for
the three months ended May 26, 2007. The increase in net sales
was primarily the result of higher shipments in the third quarter
of 2008 compared to 2007 resulting from timing of yearbook
shipments between the third and fourth quarters of 2008.
Graduation Products. Net sales of Graduation Products increased
$600,000 to $25.6 million for the three months ended May 31, 2008,
from $25.0 million for the three months ended May 26, 2007. The
increase is primarily due to an increase in high school graduation
products and diplomas, partially offset by a decrease due to
higher shipments in the third quarter of 2007 resulting from
timing between the second and third quarters of 2007.
Net sales Other increased $300,000 to $10.5 million for the three
months ended May 31, 2008, from $10.2 million for the three months
ended May 26, 2007. The increase in net sales was primarily
related to the acquisition of Powers Embroidery Inc. in April
2007, an increase in the sale of commercial and fine books and an
increase in military affinity rings, partially offset by a
decrease in sales of other recognition and affinity rings and
licensing revenue.
Gross margin was 60.3% for the three months ended May 31, 2008, a
0.1 percentage point decrease from 60.4% for the three months
ended May 26, 2007. Overall, gross profit increased $7.9 million.
The increase in gross profit was a result of an increase in
yearbook sales, higher sales of commercial and fine books, and the
Powers acquisition, partially offset by lower sales in retail
class rings and recognition and affinity rings, the unfavorable
exchange impact on Euro denominated stone purchases and an
increase in labor and other manufacturing costs in the jewelry
plant mainly related to productivity projects.
Operating income was $43.0 million, or 28.4% of net sales for the
three months ended May 31, 2008, as compared with operating income
of $40.7 million, or 28.3% of net sales, for the three months
ended May 26, 2007.
Net interest expense was $17.0 million for the three months ended
May 31, 2008, and $15.6 million for the three months ended May 26,
2007.
For the three months ended May 31, 2008 and the three months ended
May 26, 2007, the company recorded an income tax provision of
$7.4 million and $9.4 million, respectively, which represents an
effective tax rate of 28% and 38%, respectively. The effective
tax rates vary from the statutory federal rate due to the impact
of state income taxes and the non-deductibility of a portion of
interest on high-yield debt.
Loss from discontinued operations before income taxes during the
three months ended May 31, 2008 and May 26, 2007, was $72,000 and
$797,000.
Capital Resources
At May 31, 2008, the company had total indebtedness of
$556.5 million, of which $196.1 million was senior PIK notes,
$127.2 million was 10.25% senior discount notes, $150.0 million
was 8.25% senior subordinated notes, $75.7 million was
indebtedness under the existing senior secured credit facility and
$7.5 million was the company's mandatory redeemable series A
preferred stock. The company also has up to $38.2 million in
available revolving loan borrowings under its senior secured
credit facility.
Full-text copies of the company's consolidated financial
statements for the quarter ended May 31, 2008, are available for
free at http://researcharchives.com/t/s?2f86
About American Achievement
Based in Austin, Texas, American Achievement Group Holding Corp.
together with its wholly-owned subsidiary, AAC Group Holding Corp.
and its indirect wholly-owned subsidiary, American Achievement
Corporation, manufacture and supply class rings, yearbooks and
other graduation-related scholastic products for the high school
and college markets and of recognition products, such as letter
jackets, and affinity jewelry designed to commemorate significant
events, achievements and affiliations. Products are and services
are marketed primarily in the United States and operates in four
reporting segments; class rings, yearbooks, graduation products
and other.
* * *
As reported in the Troubled Company Reporter on May 22, 2008,
Moody's Investors Service affirmed American Achievement Group
Holding Corp.'s Corporate family rating at B3; Probability-of-
default rating at B3; and $189 million (current value) senior PIK
notes due 2012 at Caa2 (LGD5, 87%).
Moody's also affirmed AAC Group Holding Corp.'s $124 million
(current value) senior discount notes due 2012 at Caa1 (LGD4,
63%), American Achievement Corporation's $150 million senior
subordinated notes due 2012 at B2 (LGD3, 34%); $40 million senior
secured revolving credit facility due 2010 at Ba3 (LGD1, 7%); and
$87 million senior secured term loan due 2011 at Ba3 (LGD1, 7%).
The outlook is changed to developing from stable.
AMERICAN ACHIEVEMENT: Consent Solicitation Set to Expire Aug. 8
---------------------------------------------------------------
American Achievement Group Holding Corp. disclosed Friday that it
has commenced a consent solicitation with respect to proposed
amendments to an indenture, dated June 12, 2006, pursuant to which
the company's outstanding 12.75% Senior PIK Notes due 2012 (CUSIP
No. 02369BAB2 and 02369BAA4) were issued.
The Consent Solicitation is scheduled to expire at 5:00 P.M., New
York City time, on Aug. 8, 2008, unless extended.
Pursuant to a previously announced Stock Purchase Agreement, dated
May 15, 2008, among Herff Jones Inc., the company and the holders
of all of the company's equity securities, such equity holders
have agreed to sell all of the equity in the company to Herff
Jones Inc. The transaction is subject to regulatory approvals and
customary and other closing conditions, and no assurances are
given that it will be consummated.
The amendments consist of:
(1) a requirement that upon consummation of the Transaction the
company shall redeem all of its outstanding Notes for which
valid consents have been delivered at a redemption price in
cash equal to 101% of the aggregate principal amount of such
Notes plus accrued and unpaid interest, if any, to but not
including the date of the consummation of the transaction
(the Redemption Amendment), and
(2) the removal of substantially all of the restrictive and
reporting covenants under the Indenture, as well as certain
events of default and related provisions, including without
limitation, the covenant that would otherwise require the
company to make an offer to purchase the Notes upon
consummation of the Transaction as currently provided in the
Indenture (the Covenant Amendment). The Covenant Amendment
will only bind all Notes for which valid consents have not
been delivered (the Non-Consenting Notes).
In connection with the transaction, the company has entered into
arrangements with holders of a majority in principal amount of the
Notes, pursuant to which, the majority holders have already agreed
to consent to the amendments, providing sufficient consents to
approve the Covenant Amendment.
The obligation of the company to accept validly delivered (and not
validly revoked) consents is conditioned on (a) the absence of any
law or regulation that would, and the absence of any injunction or
action or other proceeding (pending or threatened) that could,
make unlawful or invalid or enjoin the implementation of the
Amendments or which would question the legality or validity
thereof and (b) the absence of any other event or circumstance
that, in the reasonable judgment of the company, has a material
adverse effect on the Consent Solicitation or the anticipated
benefits thereof.
The amendments will become effective upon execution of a
supplemental indenture embodying the amendments to the Indenture,
which is expected to be executed promptly following the expiration
date on Aug. 8, 2008. The Supplemental Indenture will provide
that the Redemption Amendment will become operative if, and only
if, the transaction is consummated on or prior to May 30, 2009.
The Covenant Amendment will remain effective for Non-Consenting
Notes whether or not the Transaction is consummated.
The Consent Solicitation is being made solely pursuant to the
Consent Solicitation Statement and related materials to be
distributed to the holders of the Notes.
About American Achievement
Based in Austin, Texas, American Achievement Group Holding Corp.
together with its wholly-owned subsidiary, AAC Group Holding Corp.
and its indirect wholly-owned subsidiary, American Achievement
Corporation, manufacture and supply class rings, yearbooks and
other graduation-related scholastic products for the high school
and college markets and of recognition products, such as letter
jackets, and affinity jewelry designed to commemorate significant
events, achievements and affiliations. Products are and services
are marketed primarily in the United States and operates in four
reporting segments; class rings, yearbooks, graduation products
and other.
* * *
As reported in the Troubled Company Reporter on May 22, 2008,
Moody's Investors Service affirmed American Achievement Group
Holding Corp.'s Corporate family rating at B3; Probability-of-
default rating at B3; and $189 million (current value) senior PIK
notes due 2012 at Caa2 (LGD5, 87%).
Moody's also affirmed AAC Group Holding Corp.'s $124 million
(current value) senior discount notes due 2012 at Caa1 (LGD4,
63%), American Achievement Corporation's $150 million senior
subordinated notes due 2012 at B2 (LGD3, 34%); $40 million senior
secured revolving credit facility due 2010 at Ba3 (LGD1, 7%); and
$87 million senior secured term loan due 2011 at Ba3 (LGD1, 7%).
The outlook is changed to developing from stable.
ANTELOPE VALLEY: S&P Cuts Underlying Rating on $57MM Notes to BB
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its underlying rating
to 'BB' from 'BBB-' on Antelope Valley Healthcare District,
California's $57.24 million revenue bonds, series 1997 A and B.
The outlook is negative.
"Operating performance in fiscal 2007 (year ended June 30) was
very weak, resulting in weak coverage of maximum annual debt
service of less than 1.0x," said Standard & Poor's credit analyst
Keith Dickinson. "AVHD's liquidity position has declined due to
several years of operating losses and the use of cash to purchase
a medical office building. Moreover, AVHD has been required to
post collateral with its swap counterparty."
Unrestricted cash and investments have declined the past two
fiscal years, dropping to $93.1 million at the interim period from
a high of $127.8 million at the end of fiscal 2005. Days' cash,
which were at 164 days at fiscal 2006, now stand at 116 days at
the interim period. Consequently, cash to debt has fallen to
81.3% at the interim period from 94.4% at fiscal 2006. While
AVHD's cash is adequate for the rating level, plans for continued
capital spending will strain the balance sheet, although
management has indicated that it will adjust its spending plans in
light of operational performance. Due to the poor results of
fiscal 2007, key leadership positions have changed, including the
CEO, CFO, general counsel, and the vice president of nursing.
The new management team recognizes the necessity to stem the
losses and has put in place a turnaround plan that has reduced the
operating losses to less than half of 2007, and is currently
forecasting to end fiscal 2008 at about a $3 million to $4 million
bottom-line loss. Management has budgeted a slightly positive
bottom line for fiscal 2009.
AVHD is a 393-staffed-bed district hospital located in the high-
desert community of Lancaster, roughly 60 miles northeast of Los
Angeles.
APEX-PETROLEUM: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Apex-Petroleum Corporation
9701 Apollo Drive, Suite 495
Largo, MD 20774
Bankruptcy Case No.: 08-19212
Type of Business: The Debtor sells motor fuel and automotive
lubricants.
See: http://www.apexpetroleum.com/
Chapter 11 Petition Date: July 16, 2008
Court: District of Maryland (Greenbelt)
Judge: Thomas J. Catliota
Debtors' Counsel: Marc Robert Kivitz, Esq.
(mkivitz@aol.com)
201 N. Charles Street, Suite 1330
Baltimore, MD 21201
Tel: (410) 625-2300
Fax: (410) 576-0140
Total Assets: $6,747,887
Total Debts: $6,656,120
A list of the Debtor's largest unsecured creditors is available
for free at
http://bankrupt.com/misc/mdb08-19212.pdf
ASTRATA GROUP: Won't be Able to File 10-QSB for First Quarter
-------------------------------------------------------------
Astrata Group Incorporated disclosed in a regulatory filing with
the Securities and Exchange Commission on Monday that it will not
be able to file its report on Form 10-QSB for the first quarter
ended May 31, 2008, within the prescribed time period because
management requires additional time to complete the reporting
requirements for the financing transaction filed on Form 8-K, Item
3.03 Material modification to rights of security holders on May
29, 2008. It is anticipated that the Form 10-QSB for the
quarterly period ended May 31, 2008 will be filed within the
extension period.
About Astrata Group
Headquartered in Costa Mesa, Calif., Astrata Group Inc. (OTC BB:
ATTG.OB) -- http://www.astratagroup.com/-- is engaged in the
telematics and Global Positioning System industry, focused on
advanced location-based IT products and services that combine
positioning, wireless communications, and information
technologies. The company provides advanced positioning products,
as well as monitoring and airtime services to industrial,
commercial, governmental entities, academic/research institutions,
and professional customers in a number of markets including
surveying, utility, construction, homeland security, military,
intelligence, mining, agriculture, marine, public safety, and
transportation.
At Feb. 29, 2008, the company's balance sheet showed $7,529,675 in
total assets and $16,111,323 in total liabilities, resulting in
$8,581,648 stockholders' deficit.
* * *
As reported in the Troubled Company Reporter on June 19, 2008
Windes & McClaughry Accountancy Corporation in Irvine, Calif.,
raised substantial doubt about Astrata Group Inc.'s ability to
continue as a going concern after auditing the company's
financial statements for the year ended Feb. 29, 2008.
The auditing firm pointed to the company's negative working
capital, accumulated deficit, and stockholders' deficit of
about $10,000,000, $46,500,000, and $8,600,000, respectively, as
of Feb. 29, 2008, and the company's net loss and negative
operating cash flow of about $9,500,000 and $2,500,000,
respectively, for the year then ended.
BAG'N BAGGAGE: LaSalle Bank to Receive $8 Million Under Settlement
------------------------------------------------------------------
The Official Committee of Unsecured Creditors of Bag'n Baggage
agreed to settle with LaSalle Bank Midwest NA, a subsidiary of
LaSalle Bank Corp., Bloomberg News reports.
The Committee opted to settle rather than litigate in relation to
the bank's loan agreement, the report says.
A hearing is set for Aug. 12, 2008, to consider approval of the
settlement. If approved, the bank will recoup at least $8 million
in secured claims and, in turn, a trust account will be created by
the bank for the benefit of the secured creditors, according to
Bloomberg.
About Bag'n Baggage
Bag'n Baggage -- http://www.bagnbaggage.com/-- is a retailer of
travel and business gear for more than 35 years. The company and
its stores offer luggage and travel goods including Tumi,
Hartmann, Victorinox, Rimowa. The company operates 34 stores in
upscale malls and lifestyle centers located in 11 states --
including Texas, Florida, California, Arizona, Washington,
Massachusetts, North Carolina, Virginia, Pennsylvania, Nevada and
Hawaii -- trading under the names Bagn Baggage, Malm Luggage,
Niccolo & Mafeo and Houston Trunk Factory.
Bag'n Baggage and related entity, 900 Corp., filed for Chapter 11
Bankruptcy protection on May 4, 2008, in the U.S. Bankruptcy Court
for the Northern District of Texas, Dallas Division (Case Nos. 08-
32096 and 08-32097). The Debtors are represented by Carol E.
Jendrzey, Esq., Lindsey Doherty Graham, Esq., and Mark Edward
Andrews, Esq., at Cox Smith Matthews, Inc., in San Antonio, Texas.
The U.S. Trustee for Region 6 has appointed seven creditors to
serve on an Official Committee of Unsecured Creditors. Michael
Klein, Esq., at Cooley Godward Kronish, LLP, represents the
Committee in these cases.
The Debtor disclosed $13,281,246 in total assets, and $19,760,470
in total debts in schedules filed with the Court.
BHM TECHNOLOGIES: Wants to Tap Gaiatech as Environ. Consultant
--------------------------------------------------------------
BHM Technologies Holdings, Inc. and its debtor-subsidiaries seek
the authority of the United States Bankruptcy Court for the
Western District of Michigan to employ GaiaTech, Inc. as
environmental consultant in their Chapter 11 cases, pursuant to
Section 327(a) of Chapter 11 of the Bankruptcy Code.
Donald Dees, president and chief executive officer of BHM
Technologies Holdings, Inc., says that GaiaTech is being retained
to conduct Phase I Environmental Site Assessments of certain
property at the following locations: Morton, Illinois; Moberly,
Missouri; Dyersburg, Tennessee; Greenville, Mississippi; Sumter,
South Carolina; Waverly, Ohio; Edgerton, Ohio; Ionia, Michigan
(314 and 401 S. Steele St.), using the ASTM 1527-05 Standard
requirements.
The Debtors are familiar with the professional standing and
reputation of GaiaTech. The Debtors understand that GaiaTech has
been a recognized international environmental due negligence
advisor to financial and strategic buyers and sellers, lenders,
and attorneys since 1993. GaiaTech conducts Phase I
Environmental Site Assessments using customary and industry
practices, including "All Appropriate Inquiry" and the ASTM 1527-
05 Standards. The Debtors believe that GaiaTech is well
qualified to act as their appraiser in these cases.
Mr. Dees adds that GaiaTech will:
a. conduct interviews with the property owner, key site
manager and user, BHM Technologies Holdings, Inc.,
regarding the availability of pertinent environmental
documentation and knowledge of environmental-related
regulatory agency proceedings or litigation;
b. conduct site inspections, interview site representatives,
review available historical information, conduct agency
interviews or file reviews as appropriate, and review
environmental database search reports;
c. review public health records and records of institutional
and engineering controls associated with the Property, as
available through state listings provided by Environmental
Data Resources, Inc., recorded on the current deeds, or
readily available in land title records. GaiaTech will
review materials provided by the User and EDR and conduct a
review of courthouse records where reasonably available;
d. environmental lien records;
e. appraise Property owned by the Debtors' foreign affiliates
in Mexico at the Hermosillo and Saltillo locations;
f. Provide a written report for each Property, as required by
ASTM E1527-05; and
g. upon the Debtors' written request, perform an evaluation of
the Debtors' compliance with environmental regulations
regarding:
(i) chemical use and management, including chemical
reporting, underground and above ground storage tanks,
spill prevention and control, and hazard communication,
including health and safety practices as they relate to
chemical use and storage;
(ii) waste generation, including hazardous waste, non-
hazardous and other industrial waste;
(iii) wastewater and storm water discharges;
(iv) air emissions; and
(v) facility and equipment hazardous materials including
PCBs and ACM.
Mr. Dees adds that GaiaTech's services are necessary to ensure
that the Debtors have an accurate picture of their compliance
with environmental regulations and their potential environmental
liabilities associated with the Property for consideration by
prospective exit financing lenders in the context of the credit
decision making process and which is critical to the Debtors'
ability to obtain the most beneficial exit financing available.
GaiaTech will be compensated on these terms:
a. The project will be completed for a base price of $3,800
per location, for a total base project price of $30,400,
plus reasonable expenses in accordance with GaiaTech
Standard Terms and Conditions;
b. Should GaiaTech be requested to obtain a third-party lien
search, additional fees of approximately $100 per parcel of
property will apply;
c. GaiaTech will document expenses chargeable to the project,
including reasonable travel and living expenses, shipping
costs, reproduction and photographic costs, agency fees,
map costs, equipment rental costs, telephone charges,
expendable materials and supplies purchased specifically
for the project, any state or local taxes or fees, and any
professional, analytical or technical subcontractor and
advisor fees that may be incurred in connection with the
project. An additional charge of 5% of GaiaTech personnel
expense charges will be included to cover miscellaneous,
non-itemized project related expenses;
d. GaiaTech will be paid $15,200 upon commencement of the
project. The balance due to GaiaTech, including payment of
expenses, shall be paid upon completion of its appraisal
work and prior to the release by GaiaTech of the appraisal
reports to the Debtors; and
e. To the extent that GaiaTech is required to provide
testimony regarding its environmental consulting services,
the Debtors have agreed to compensate GaiaTech on a time
and material basis in accordance with GaiaTech's standard
billing rates for such matters.
To the best of the Debtors' knowledge:
(i) GaiaTech does not have any connection with any of the
Debtors, their creditors or any other party-in-interest,
or their respective attorneys and professionals;
(ii) is a "disinterested person" as that term is defined in
Section 101(14) of the Bankruptcy Code; and
(iii) does not hold or represent any interest adverse to the
Debtors or their estates.
Headquartered in Ionia, Michigan, BHM Technologies Holdings
Inc. -- http://www.browncorp.com/-- manufactures and sells
automobile parts including air bags and electrical systems. It
has manufacturing facilites in Mexico and operates under Brown
Corp.
BHM Technologies Holdings, Inc. and 14 affiliates filed separate
voluntary petitions under Chapter 11 on May 19, 2008 (Bankr.
W.D. Mich. Lead Case No. 08-04413). Hannah Mufson McCollum,
Esq., Kay Standridge Kress, Esq., Robert S. Hertzberg, Esq., and
Leon R. Barson, Esq. of Pepper Hamilton LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for bankruptcy, it listed estimated assets and debts to be both
between US$100 million and US$500 million.
The Debtors have until Sept. 16, 2008, to exclusively file their
bankruptcy plan. (BHM Technologies Bankruptcy News, Issue
No. 7; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
BHM TECHNOLOGIES: Court Approves Alixpartners as Advisors
---------------------------------------------------------
The United States Bankruptcy Court for the Western District of
Michigan authorized BHM Technologies Holdings, Inc. and its
debtor-subsidiaries to employ AlixPartners LLP as their financial
advisors.
AlixPartners LLP negotiated with the United States Trustee to
resolve the U.S. Trustee's objection to AlixPartners' retention in
this cases. The U.S. Trustee's objection involved a request for
additional disclosures.
The firm believed that after providing the disclosures, the U.S.
Trustee would concur that it was "disinterested" in the Debtors'
cases and and its retention was in the best interest of the
Debtors' estates.
The firm also noted that its billing rates were the market rates
charged in the industry and in the community for work performed
on behalf of the clients, regardless of whether they were in
bankruptcy.
Edward J. Stenger, managing director of AlixPartners, in a
supplemental disclosure submitted at the behest of the U.S.
Trustee, named the three parties-in-interest previously
identified as "confidential clients":
(i) Magna International, a customer of the Debtors;
(ii) International Truck and Engine, a customer of the Debtors;
and
(iii) S.A.C. Capital, a lender of the Debtors.
Mr. Stenger related that his firm provided services to the Magna,
et al., in matters unrelated to the Debtors.
Habbo Fokkena, United States Trustee for the Michigan & Ohio
Region 9, objected, pursuant to Section 307 of the Bankruptcy Code
and Section 586(a)(3) of the Judiciary and Judicial Procedure, to
the Debtors' application to hire AlixPartners LLP as financial
advisors for these reasons:
(1) The Debtors have filed applications to retain both
AlixPartners as financial advisors and Rothschild, Inc. as
an investment banker. The applications do not delineate
the duties of each firm, nor do the applications explain
why both firms are needed to render financial advice to
the Debtors.
(2) AlixPartners did run a conflicts search of all parties-in-
interest.
(3) There are 58 connections between Alix, its clients and
the Debtors, including three unnamed "confidential"
clients of Alix Partners are customers and lenders of the
Debtors. Presumably, these are secured lenders, although
that is unclear. No further disclosure is made as to
these three creditors. Also, Amsouth is both a lender to
the Debtors and to another Alix client, and adverse to
other Alix clients, as is Bank of New York which is a
lender to the Debtors, to other Alix clients and an Alix
client itself. Varnum, Riddering, Schmidt & Howlett, LLP
and White & Case are also current clients of Alix in
unrelated matters. The U.S. Trustee wishes to review
these relationships with the Debtors and AlixPartners, to
determine whether they create conflicts of interest,
either actual or potential.
(4) The proposed fees range from $650 to $850 for managing
directors, $485 to $650 for directors, $335 to $480 for
vice presidents, $250 to $340 for associates, $225 to
$250 for analysts, and $170 to $200 for paraprofessionals.
These rates are far above the rates that are customary in
bankruptcy cases in the Western District of Michigan.
There is no commitment to charge less than full rates for
travel time, which has been done in other large cases.
The U.S. Trustee desires additional time to discuss this
with the Debtors and their counsel, as well as the
counsel to the Official Committee of Unsecured Creditors.
(5) During the 90 days prior to the Chapter 11 filing,
AlixPartners received $2,885,450 from the Debtors.
AlixPartners also received a $50,000 retainer from the
Debtors in June 2007. The U.S. Trustee has not yet been
able to review the statements that support the billings in
order to determine whether any of these payments were made
on antecedent debts and wants more time to review the
statements.
(6) AlixPartners reserves the right to seek a success fee in
an unstated amount. The application does not state the
formula by which a success fee may be determined. The
U.S. Trustee objects to any success fee before the amount
and rationale are known, and does not want any order to be
entered that appoints AlixPartners to be construed as a
consent to any success fee.
Headquartered in Ionia, Michigan, BHM Technologies Holdings
Inc. -- http://www.browncorp.com/-- manufactures and sells
automobile parts including air bags and electrical systems. It
has manufacturing facilites in Mexico and operates under Brown
Corp.
BHM Technologies Holdings, Inc. and 14 affiliates filed separate
voluntary petitions under Chapter 11 on May 19, 2008 (Bankr.
W.D. Mich. Lead Case No. 08-04413). Hannah Mufson McCollum,
Esq., Kay Standridge Kress, Esq., Robert S. Hertzberg, Esq., and
Leon R. Barson, Esq. of Pepper Hamilton LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for bankruptcy, it listed estimated assets and debts to be both
between US$100 million and US$500 million.
The Debtors have until Sept. 16, 2008, to exclusively file their
bankruptcy plan. (BHM Technologies Bankruptcy News, Issue
No. 7; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
BHM TECHNOLOGIES: Wants to Employ Gordon Brothers as Appraisers
---------------------------------------------------------------
BHM Technologies Holdings, Inc. and its debtor-subsidiaries seek
the authority of the United States Bankruptcy Court for the
Western District of Michigan to employ Gordon Brothers Asset
Advisors, LLC, as appraisers in their Chapter 11 cases.
Gordon Brothers will provide the Debtors with an appraisal of the
net orderly liquidation value of their inventory, machinery and
equipment -- the Assets, at the following locations: Morton,
Illinois; Moberly, Missouri; Dyersburg, Tennessee; Greenville,
Mississippi; Sumter, South Carolina; Waverly, Ohio; Edgerton,
Ohio; and Ionia, Michigan (314 Steele St.)
The Debtors are in the process of locating one or more prospective
lenders that may be interested in providing an exit facility upon
their emergence from bankruptcy and as contemplated by their Joint
Plan of Reorganization The Debtors need to provide prospective
lenders with, inter alia, appraisals of their tangible assets as
part of their due diligence and lending criteria.
Gordon Brothers, according to Don Dees, president of BHM
Technologies Holdings, Inc., is an approved appraiser for major
asset-based lenders worlwide and the firm appraises and
liquidates billions of dollars of assets annually. Gordon
Brothers has agreed to:
a. review asset history and financial information provided by
the Debtors;
b. conduct field visits and visits to the Debtors' facilities;
c. evaluate third-party research relating to the Assets;
d. interview management; and
e. appraise all assets owned by the Debtors at Morton,
Illinois; Moberly, Missouri; Dyersburg, Tennessee;
Greenville, Mississippi; Sumter, South Carolina; Waverly,
Ohio; Edgerton, Ohio; and Ionia, Michigan.
At the Debtors' option, the firm will appraise all inventory,
machinery owned by the Debtors' foreign affiliates located in
Mexico at the Hermosillo and Saltillo locations.
The Debtors will compensate the firm at these terms:
a. The total fee that will be paid to GBAA, assuming that an
appraisal of the Mexico Assets is not necessary, will be
$67,000, plus out-of-pocket expenses;
b. Of the Total Fee, $33,500 will be paid to GBAA upon Court
approval of GBAA's retention and employment;
c. An expense retainer of $10,000 will also be paid to GBAA
upon Court approval of GBAA's retention and employment.
Any portion of the expense retainer that is not used by
GBAA will be promptly returned to the Debtors upon
completion of GBAA's work;
d. The balance of the Total Fee, $33,500, will be paid to GBAA
upon completion of its appraisal work and prior to the
release by GBAA of the appraisal report to the Debtors;
e. To the extent that an appraisal of the Mexico Assets
becomes necessary, GBAA will provide an appraisal thereof
for the additional sum of $11,000;
f. To the extent that GBAA is required to provide testimony
regarding its appraisal service, the Debtors have agreed to
compensate GBAA at a rate of $3,500 per day for preparation
and testimony, plus out-of-pocket expenses; and
g. The Debtors have agreed that, if GBAA is found to have
breached any of the terms of its engagement, GBAA's maximum
liability will be limited to the total fees actually
received by GBAA for this engagement.
Given the transactional nature of GBAA's engagement and the time
frame within which GBAA will be completing its services, GBAA
will not be billing the Debtors by the hour.
To the best of the Debtors' knowledge:
(i) GBAA does not have any connection with any of the Debtors,
their creditors or any other party-in-interest, or their
respective attorneys and professionals;
(ii) is a "disinterested person" as that term is defined in
Section 101(14) of the Bankruptcy Code; and
(iii) does not hold or represent any interest adverse to the
Debtors or their estates, except as set forth in the
Scotti Declaration in support if this Application. The
Scotti Declaration is attached hereto as Exhibit B.
Prior to filing this Application, the Debtors consulted with
Lehman Commercial Paper, Inc., an administrative agent for
certain of the Debtors' lenders under the $270,000,000 First Lien
Credit Agreement, regarding the retention of Gordon Brothers.
Lehman has informed the Debtors that it does not oppose the
firm's retention.
Headquartered in Ionia, Michigan, BHM Technologies Holdings
Inc. -- http://www.browncorp.com/-- manufactures and sells
automobile parts including air bags and electrical systems. It
has manufacturing facilites in Mexico and operates under Brown
Corp.
BHM Technologies Holdings, Inc. and 14 affiliates filed separate
voluntary petitions under Chapter 11 on May 19, 2008 (Bankr.
W.D. Mich. Lead Case No. 08-04413). Hannah Mufson McCollum,
Esq., Kay Standridge Kress, Esq., Robert S. Hertzberg, Esq., and
Leon R. Barson, Esq. of Pepper Hamilton LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for bankruptcy, it listed estimated assets and debts to be both
between US$100 million and US$500 million.
The Debtors have until Sept. 16, 2008, to exclusively file their
bankruptcy plan. (BHM Technologies Bankruptcy News, Issue
No. 7; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
BHM TECHNOLOGIES: Wants to Employ Ernst & Young as Auditors
-----------------------------------------------------------
BHM Technologies Holdings, Inc. and its debtor-subsidiaries ask
authority from the United States Bankruptcy Court for the Western
District of Michigan to employ Ernst & Young, LLP as accountants
and auditors.
Ray VanderKooi, chief financial officer of the Debtors, says E&Y
LLP's professionals have assisted, advised and provided accounting
advice to debtors in numerous Chapter 11 cases of similar size and
complexity to the Debtors.
All of the services that E&Y will provide to the Debtors will be
appropriately directed by the Debtors so as to avoid duplicative
efforts among the professionals retained in these cases.
E&Y LLP intends to apply for compensation for professional
services rendered and reimbursement of expenses incurred in
connection with the Debtors' Chapter 11 cases.
E&Y LLP's fees will be based on actual time incurred at hourly
rates. Its hourly rates are:
Professional Rate
------------ ----
Partners and Principals $350
Senior Manager 275
Manager 295
Senior 195
Staff 175
The firm will also seek reimbursement for reasonable and
necessary out-of-pocket expenses incurred in connection with
these Chapter 11 cases, including transportation costs, lodging,
food, copying and messenger services.
Mark Yost, Esq., a partner of Ernst & Young LLP, says that E&Y
LLP does not hold nor represent any interest materially adverse
to the Debtors in the matters for which it is proposed to be
retained.
Headquartered in Ionia, Michigan, BHM Technologies Holdings
Inc. -- http://www.browncorp.com/-- manufactures and sells
automobile parts including air bags and electrical systems. It
has manufacturing facilites in Mexico and operates under Brown
Corp.
BHM Technologies Holdings, Inc. and 14 affiliates filed separate
voluntary petitions under Chapter 11 on May 19, 2008 (Bankr.
W.D. Mich. Lead Case No. 08-04413). Hannah Mufson McCollum,
Esq., Kay Standridge Kress, Esq., Robert S. Hertzberg, Esq., and
Leon R. Barson, Esq. of Pepper Hamilton LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for bankruptcy, it listed estimated assets and debts to be both
between US$100 million and US$500 million.
The Debtors have until Sept. 16, 2008, to exclusively file their
bankruptcy plan. (BHM Technologies Bankruptcy News, Issue
No. 7; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
BHM TECHNOLOGIES: Court Approves Kurtzman as Claims Agent
---------------------------------------------------------
The United States Bankruptcy Court for the Western District of
Michigan authorized BHM Technologies Holdings, Inc. and its
debtor-subsidiaries to employ Kurtzman Carson Consultants LLC,
subject to the supervision of, and at the direction of, the
Bankruptcy Clerk.
Kurtzman is appointed as agent for the Bankruptcy Clerk and
custodian of court records and will be supervised by the Clerk
and is designated as the authorized repository for all proofs of
claims filed in the Chapter 11 cases and is authorized and
directed to maintain official claims registers for each of the
Debtors.
Headquartered in Ionia, Michigan, BHM Technologies Holdings
Inc. -- http://www.browncorp.com/-- manufactures and sells
automobile parts including air bags and electrical systems. It
has manufacturing facilites in Mexico and operates under Brown
Corp.
BHM Technologies Holdings, Inc. and 14 affiliates filed separate
voluntary petitions under Chapter 11 on May 19, 2008 (Bankr.
W.D. Mich. Lead Case No. 08-04413). Hannah Mufson McCollum,
Esq., Kay Standridge Kress, Esq., Robert S. Hertzberg, Esq., and
Leon R. Barson, Esq. of Pepper Hamilton LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for bankruptcy, it listed estimated assets and debts to be both
between US$100 million and US$500 million.
The Debtors have until Sept. 16, 2008, to exclusively file their
bankruptcy plan. (BHM Technologies Bankruptcy News, Issue
No. 7; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
BSC BANDIT: Involuntary Chapter 11 Case Summary
-----------------------------------------------
Alleged Debtor: BSC Bandit Inc.
dba Milano's Italian Kitchen
110 E. 9th Street A905
Los Angeles, CA 90078
Case Number: 08-20241
Type of Business: The Debtor sells food.
Involuntary Petition Date: July 10, 2008
Court: Central District Of California (Los Angeles)
Judge: Samuel L. Bufford
Petitioners Nature of Claim Claim Amount
----------- --------------- ------------
Morgan Palos business debt $20,000
1824 First St.
San Fernando, CA 91340
Cinthia Haaz business debt $15,000
101 N Victory Blvd. L88
Burbank, CA 91508
Cherryl Gundry business debt $25,000
11922 Louise Ave.
Granada Hills, CA 91344
BYSYNERGY LLC: Can Employ Michael Carmel as Counsel
---------------------------------------------------
The U.S. Bankruptcy Court for the District of Arizona granted
Bysynergy, LLC permission to employ Michael W. Carmel, Esq., as
its attorney.
Mr. Carmel will mainly advise the Debtor with respect to its
powers and duties and Debtor-in-Possession in the continued
operation of its business and management of its property.
As compensation for his legal services, Mr. Carmel bills $450 per
hour.
Bysynergy, LLC tells the Court that Mr. Carmel represents no
interest adverse to the Debtor or its estate.
Based in Sedona, Ariz., Bysynergy, LLC provides management
services. The Debtor filed for Chapter 11 protection on June 25,
2008 (D. Ariz. Case No. 08-07680). When Bysynergy, LLC filed for
protection from its creditors, it listed estimated assets of
between $10 million and $50 million, and estimated debts of
between $10 million and $50 million.
CARUSO HOMES: Section 341(a) Meeting Set for July 30
----------------------------------------------------
The United States Trustee for Region 4 will convene a meeting of
Caruso Homes Inc.'s creditors at 12:00 p.m., on July 30, 2008, at
101 West Lombard Street, Garmatz Courthouse, 2nd Floor, Suite
2650, in Baltimore, Md. 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 officer of the
Debtor under oath about his financial affairs and operations that
would be of interest to the general body of creditors.
Based in Crofton, Md., Caruso Homes Inc. --
http://www.carusohomes.com/-- is a custom home builder. The
company and 24 of its debtor-affiliates filed for Chapter 11
protection on June 23, 2008 (D. Md. Lead Case No. 08-18254). Joel
I. Sher, Esq., at Shapiro Sher Guinot & Sandler, represents the
Debtors as counsel. When the Debtors filed for protection from
their creditors, thesy listed estimated assets of between $1
million to $100 million, and estimated debts of more than $100
million.
CARUSO HOMES: U.S. Trustee Names 7-Member Creditors Panel
--------------------------------------------------------
Pursuant to Section 1102(a)(1) of the Bankruptcy Code, the United
States Trustee for Region 4 appointed seven members to the
Official Committee of Unsecured Creditors in Caruso Homes Inc.'s
Chapter 11 case.
The Creditors Committee consists of:
(1) Bowman Consulting Group, Ltd.
Attn: Robert A. Hickey
3863 Centerview Drive
Suite 300
Chantilly, VA 20151
Tel: (703) 464-1026
Fax: (703) 481-8410
(rhickey@bowmancg.com)
(2) 84 Lumber Company
Attn: Mike Kalin, Regional Vice President
84 Lumber Co. Legal Dept. Bldg. 1
1019 Route 519
Eighty Four, PA 15330
Tel: (724) 228-8820
Fax: (877) 332-0024
(bosil@84lumber.com)
(3) L&L Carpet Discount Centers Inc.
Attn: Brian Ransom, Controller
8500 Phoenix Drive
Tel: (703) 881-7147
Fax: (703) 365-2465
(bransom@llco.biz)
(4) Merrick Towle Communications
Attn: Glenn Towle, COO
5801-F Ammendale Road
Beltsville, MD 20705
Tel: (301) 974-6000
Fax: (240) 264-1292
(gtowle@merricktowle.com)
(5) Henry's Construction Services
Attn: Jose V. Menendez
9913 Farm Pond Road
Laurel, MD 20708
Tel: (240) 882-9757
Fax: (240) 882-5039
(henryshcp9@comcast.net)
(6) Vintage Security, LLC
Attn: Richard Goodman, CFO/Business Manager
8220-A Stayton Drive
Jessup, MD 21771
Tel: (410) 290-1800 ext. 1100
Fax: (410) 290-0220
(rgoodman@vintagesecurity.com)
(7) United National Construction Co. Inc.
Attn: Danny Kim, President
7410 Coca-Cola Drive #212
Elkridge, MD 21075
Tel: (410) 712-0900
(410) 712-0909
(dannykim777usa@yahoo.com)
Based in Crofton, Md., Caruso Homes Inc. --
http://www.carusohomes.com/-- is a custom home builder. The
company and 24 of its debtor-affiliates filed for Chapter 11
protection on June 23, 2008 (D. Md. Lead Case No. 08-18254). Joel
I. Sher, Esq., at Shapiro Sher Guinot & Sandler, represents the
Debtors as counsel. When the Debtors filed for protection from
their creditors, they listed estimated assets of between $1
million to $100 million, and estimated debts of more than $100
million.
CASA DE CAMBIO: May Use Cash Collateral Amid Wachovia's Protest
---------------------------------------------------------------
The Hon. Bruce W. Black of the U.S. Bankruptcy Court for the
Northern District of Illinois in Chicago gave Casa de Cambio
Majapara S.A. de C.V., aka Majapara Casa de Cambio, final approval
to use lenders' cash collateral. Judge Black trashed Wachovia
Bank NA's objection to the Debtor's cash collateral motion.
Wachovia had asserted claim in Harris Funds, which consists of
cash proceeds from bill payment orders, checks and other
transactions cleared through Harris Bank NA, The Deal's Terry
Brennan writes.
In its motion, Casa de Cambio told the Court that using the Harris
Funds "is the only way to preserve the value of its assets," The
Deal notes. If disallowed to use the Harris Funds, the Debtor had
said that it can not defend the estate from "Wachovia's aggressive
[tactics]." The Debtor had asserted that Wachovia is taking steps
to harm creditors, The Deal adds.
Casa maintains that Wachovia doesn't have an interest in the
Harris Funds, The Deal says.
Judge Black directed Wachovia to demand reimbursement of any money
drawn from the Harris Funds, The Deal reports. Judge Black also
ordered Wachovia to return to Court if parties can't reach a
settlement or if Wachovia has determined a secured claim against
the Harris Funds atop its unsecured claims, The Deal says. The
Debtor's named Wachovia as its largest unsecured creditor with a
disputed claim of $24,197,000.
Wachovia Relationship Turns Sour
According to The Deal, Casa de Cambio filed for bankruptcy after
Wachovia terminated its relationship with the Debtor as its U.S.
clearing agent and suffered liquidity crisis.
The Deal reports that Harris Bank's clearing functions were ended
on Feb. 7, 2007, and the Debtor moved its clearing business to
Wachovia. Wachovia had intended to bar the Debtor from using the
Harris Funds saying that it's part of the cash collateral, The
Deal relates. Wachovia serviced the Debtor until Dec. 5, 2007,
barely 10 months after the Debtor moved its clearing business to
Wachovia from Harris Bank.
A week later, Wachovia filed a case against the Debtor with the
U.S. District Court for the Southern District of New York in
Manhattan and Cook County Circuit Court in Chicago state court,
The Deal relates, citing court documents. Wachovia, The Deal
notes, had seized about $1.68 million on the Harris Funds and was
allowed a claim against Casa's New York property.
Reed Smith LLP represents Wachovia.
Zions Breach Case and DOJ Probe
The Debtor's bankruptcy case stayed Zions First Natinal Bank's
breach-of-contract suit filed against the Debtor on Feb. 13, 2008,
with the U.S. District Court for the Northern District of
Illinois, The Deal notes.
The Deal notes that in 2008, the U.S. Justice Department initiated
a probe on Casa de Cambio and Wachovia regarding issues of money
laundering through Mexican and Columbian transfers reportedly used
to fund drug dealers.
About Casa de Cambio
Headquartered in Mexico City, Casa de Cambio Majapara S.A. de C.V.
aka Majapara Casa de Cambio -- http://www.majapara.com.mx-- is
engaged in financial transactions processing, reserve, and
clearing house activities. The company filed for Chapter 11
protection on March 5, 2008 (Bankr. N.D. Illinois Case No. 08-
05230). Casa also filed for bankruptcy in Mexico under the Ley de
Concursos Mercantiles (Law of Commercial Insolvency).
Brian L. Shaw, Esq., at Shaw Gussis Fishman Glantz Wolfson &
Towbin LLC, and Andrew L. Wool, Esq., at Katten Muchin Rosenman
LLP represent the Debtor. Luis V. Echeverria serves as consultant
and foreign representative in the Debtor's insolvency and
bankruptcy proceedings in the United States and in Mexico. When
the Debtor filed for protection from its creditors, it listed
assets of between $10 million to $50 million and debts of between
$10 million to $50 million.
CASA DE CAMBIO: Disclosure Statement Hearing Set for September 10
-----------------------------------------------------------------
The Hon. Bruce W. Black of the U.S. Bankruptcy Court for the
Northern District of Illinois in Chicago gave Casa de Cambio
Majapara S.A. de C.V., aka Majapara Casa de Cambio until Sept. 5,
2008, to file a disclosure statement describing its bankruptcy
plan. Judge Black set a disclosure statement hearing for Sept.
10, 2008, at 10:30 a.m.
At the September 10 hearing, Judge Black will also hear Wachovia
Bank NA's objection to the Debtor's fee application for its
litigation counsel, Sperling & Slater PC.
Reed Smith LLP represents Wachovia.
The Deal notes that in 2008, the U.S. Justice Department initiated
a probe on Casa de Cambio and Wachovia regarding issues of money
laundering through Mexican and Columbian transfers reportedly used
to fund drug dealers.
About Casa de Cambio
Headquartered in Mexico City, Casa de Cambio Majapara S.A. de C.V.
aka Majapara Casa de Cambio -- http://www.majapara.com.mx-- is
engaged in financial transactions processing, reserve, and
clearing house activities. The company filed for Chapter 11
protection on March 5, 2008 (Bankr. N.D. Illinois Case No. 08-
05230). Casa also filed for bankruptcy in Mexico under the Ley de
Concursos Mercantiles (Law of Commercial Insolvency).
Brian L. Shaw, Esq., at Shaw Gussis Fishman Glantz Wolfson &
Towbin LLC, and Andrew L. Wool, Esq., at Katten Muchin Rosenman
LLP represent the Debtor. Luis V. Echeverria serves as consultant
and foreign representative in the Debtor's insolvency and
bankruptcy proceedings in the United States and in Mexico. When
the Debtor filed for protection from its creditors, it listed
assets of between $10 million to $50 million and debts of between
$10 million to $50 million.
CAT COMMUNICATIONS: Mulls Sale of Assets in 30 Days
---------------------------------------------------
CAT Communications International Inc. intends to ask the Hon.
William F. Stone, Jr., of the U.S. Bankruptcy Court for the
Western District of Virginia in Roanoke for permission to sell
assets in the next 30 days, The Deal's Carolyn Okomo writes,
citing counsel for CAT, Carter Magee, Jr., Esq., at Magee Foster
Goldstein & Sayers PC.
CAT was forced to file chapter 11 petition due to fierce
competition and a $12.4 million judgment in favor of Verizon New
Jersey Inc., The Deal notes.
According to The Deal, two undisclosed entities have expressed
interests in buying the assets. The Debtor said it's "hard to
tell if there will be a stalking horse bidder," The Deal says.
The Debtor won't ask for authority to tap debtor-in-possession
financing, The Deal quotes Mr. Magee as stating.
Verizon Legal Dispute
The New Jersey Board of Public Utilities found CAT liable to
Verizon for $12.4 million in outstanding service charges, plus
interest, The Deal reports.
Verizon then filed a civil litigation with the U.S. District Court
in Newark, New Jersey on Dec. 7, 2005, The Deal relates. That
civil suit, which is stayed by the bankruptcy case, also involved
CAT's debtor-affiliate, Nationsline New Jersey Inc. According to
The Deal, Verizon referred the suit as "the largest 'slam'" in New
Jersey history.
Verizon alleged that CAT fraudulently transferred its New Jersey
customers to Nationsline in April 2005 without properly informing
the New Jersey Board of Public Utilities, the Federal
Communications Commission or its customers, The Deal says. Based
on the report, Verizon estimates the transfer at $50,000,
involving 10,000 customers at $50 per customer, Mr. Magee said.
Verizon is owed $17.5 million, according to court documents.
Frederick K. Becker, Esq., at at Wilentz, Goldman & Spitzer PA, is
counsel to Verizon.
About CAT Communications
Roanoke, Virginia-based CAT Communications International Inc. is
one of the competitive local exchange carriers or CLECs that
became prominent after the passage of the Telecommunications Act
of 1996. The Telecom Act was intended to raise competition for
service against larger and more established incumbent local
exchange carriers or ILECs such as SBC Communications Inc. and
Bellsouth Corp.
CAT buys local and long distance land line telephone services from
Verizon New Jersey Inc. and resells it to customers.
CAT and NationsLine New Jersey, Inc. filed their chapter 11
petitions on June 3, 2008 (Bankr. W.D. Va. Case No. 08-71013 and
08-71014). Judge William F. Stone, Jr., presides over the case.
A. Carter Magee, Jr., Esq., at Magee Foster Goldstein & Sayers,
represents the Debtors in their restructuring efforts. CAT listed
$2,246,504 in assets and $18,532,010 in debts. NationsLine listed
$500,000 in assets and $1,532,370 in debts.
CHRYSLER LLC: Study Shows Bankruptcy Filing Disastrous for Sales
----------------------------------------------------------------
A study released by research firm CNW Research reveals that around
91 percent of potential car buyers would shy away from buying a
Chrysler car brand if ever the automaker files for bankruptcy,
Reuters reports.
The study, which covers 6,000 respondents who planned to purchase
new vehicles, indicate that among industries, U.S. automakers
would post the highest sales losses if it sought bankruptcy
protection, says Reuters. The study also shows that more than 80
percent of the future buyers will forego buying a brand from
General Motors Corp. or Ford Motor Co. if either company files for
Chapter 11 protection.
Rumors of possible bankruptcy filings currently dog the three
automakers as they continue to experience a slump in auto sales.
According to MotorTrend, Chrysler CEO Bob Nardelli admits that the
company recently experienced its "lowest sales level in 16 years",
making market constituents fret. Following General Motors, the
company has already sent letters to dealers reassuring them that
suggestions of reorganization are "without merit".
As reported in the Troubled Company Reporter on July 11, 2008, GM
CEO Rick Wagoner, in a speech to the Dallas Chamber of Commerce,
said the company has "no thoughts whatsoever" of bankruptcy. Mr.
Wagoner claimed that GM's cash will remain "robust" in 2008, and
the company would be able to secure additional funds as needed.
The bankruptcy scare was, in part, precipitated by comments from
Merrill Lynch analyst John Murphy. He said that a bankruptcy
filing for GM is not impossible "if the market continues to
deteriorate and significant incremental capital is not raised."
Mr. Murphy, in a research note, said GM will need to raise
$15,000,000,000 in capital to fund its operations for the next two
years. Mr. Murphy, according to the reports, warned GM is burning
through cash faster than investors realize.
"Admitting defeat, as bankruptcy would do in the minds of
consumers, sends shoppers other places," Reuters cites CNW
Research in its report.
About Chrysler LLC
Based in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- a unit of Cerberus Capital
Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R)
brand vehicles and products. The company has dealers worldwide,
including Canada, Mexico, U.S., Germany, France, U.K.,
Argentina, Brazil, Venezuela, China, Japan and Australia.
* * *
As reported in the Troubled Company Reporter 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.
CREDIT SUISSE: Moody's Junks Ratings on 2 Classes of Certificates
-----------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of seven
tranches issued in three transactions from the Credit Suisse
Mortgage Series CF 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: Credit Suisse Mortgage Capital Trust 2006-CF1
-- Cl. B-3, downgraded from Baa3 to Ba2
Issuer: CS Mortgage-Backed Pass-Through Certificates, Series 2006-
CF2
-- Cl. B-3, downgraded from Baa3 to B3, on review for possible
downgrade
Issuer: CS Mortgage-Backed Pass-Through Certificates, Series 2006-
CF3
-- Cl. M-3, downgraded from A2 to Baa1
-- Cl. M-4, downgraded from Baa1 to B2, on review for possible
downgrade
-- Cl. M-5, downgraded from Baa2 to B3, on review for possible
downgrade
-- Cl. M-6, downgraded from Baa3 to Caa2
-- Cl. B-1, downgraded from Ba2 to Caa2
CRESCENT RESOURCES: Moody's Cuts Corporate Family and Debt Ratings
------------------------------------------------------------------
Moody's Investors Service lowered the ratings to B1 from Ba3 on
Crescent Resources, LLC's amended senior bank facility and
corporate family rating as a result of weakening financial metrics
impacted by poor development operations.
Moody's also retained Crescent Resources' ratings outlook at
negative, reflecting a weak economic environment which has
eliminated most financing alternatives for many borrowers and
which is likely to persist for at least the next 12 to 18 months.
According to Moody's, the weak economic environment stemming from
the collapse in the housing market has dramatically reduced demand
for Crescent Resources' developments, especially in its
residential platform. The company has refocused its efforts,
whereby it will consider selling non-strategic land parcels in an
environment which may favor buyers to generate liquidity and
reduce leverage.
Moreover, Crescent Resources negotiated an amendment to its credit
agreement, which provided greater financial flexibility in
exchange for more favorable pricing and enhanced security for the
lenders.
Specifically, the required fixed charge coverage was lowered to 1x
from 2x, and the maximum leverage ratio was raised to 80% from
63.5% in 2008 and 62% in 2009. The lenders will benefit from
collateral existing of a first lien in essentially all of the
company's properties, and an increased spread over LIBOR which
varies based on the leverage ratio.
Moody's would expect to stabilize the rating should Crescent
Resources achieve fixed charge coverage of 1.75x or better, and
leverage of 75% or lower.
Conversely, should the fixed charge coverage fall below 1.25x or
leverage remain above 75%, we would expect to lower the rating.
Additionally, the need for an equity infusion from its owners
would be further cause for a downgrade.
These ratings were downgraded with a negative outlook:
-- Crescent Resources, LLC -- B1 senior debt from Ba3; B1
corporate family rating from Ba3.
Headquartered in Charlotte, North Carolina, Crescent Resources,
LLC is a private land and commercial property development company.
The firm is jointly owned by Duke Energy and Morgan Stanley Real
Estate.
DELTA AIR: Inks Transaction Framework Deal with NWA and ALPA
------------------------------------------------------------
Edward H. Bastian, president and chief financial officer of Delta
Air Lines, Inc., disclosed in a regulatory filing with the U.S.
Securities and Exchange Commission dated July 2, 2008, that
on June 27, 2008, Delta entered into a Transaction Framework
Agreement with the Delta Master Executive Council and the
Northwest Airlines, Inc. Master Executive Council, and the Air
Line Pilots Association, International.
The MEC is the governing body of the Delta and Northwest units of
ALPA, the SEC filing said.
According to Mr. Bastian, the Framework Agreement addresses a new
joint collective bargaining agreement that Delta had previously
announced. Subject to ratification by the Delta and Northwest
pilots, the Framework Agreement will become effective upon
consummation of the Delta-Northwest merger and will govern the
terms and conditions of employment of the Merged Company Pilots,
he said.
Furthermore, the Framework Agreement also provides that the Delta
MEC, the Northwest MEC and ALPA will adopt and be bound by a
Process Agreement relating to the determination of an integrated
seniority list for the Merged Company Pilots. The parties to the
Process Agreement may not revise, waive any material right under,
or terminate the Process Agreement without the consent of Delta,
Mr. Bastian noted.
Until the closing of the Merger, the Delta pilots and the
Northwest pilots will remain separate and, in the case of the
Delta pilots, be covered by the existing collective bargaining
agreement applicable to the Delta pilots. The Northwest pilots
will be covered by the existing collective bargaining agreement
applicable to the Northwest pilots, Mr. Bastian explained.
Pursuant to the terms and conditions of the Framework Agreement,
the Delta MEC and the Northwest MEC have each agreed to:
-- recommend that the Delta and Northwest pilots ratify the
new PWA; and
-- use their reasonable best efforts to cause a ratification
vote by their pilots groups within 60 days of the date of
the Framework Agreement.
Pursuant to the terms of the Framework Agreement, Delta has
agreed to issue shares of its common stock equal to (i) 3.5% of
the fully-diluted shares outstanding of Delta to Delta pilots;
and (ii) 2.38% of the fully-diluted shares outstanding of Delta
to Northwest pilots, effective on the closing date of the Merger.
The Framework Agreement is subject to, among other things, the
ratification by each of the Delta pilots and Northwest pilots of
the new PWA, and approval by the stockholders of Delta of an
amendment to the Delta 2007 Performance Compensation Plan to
increase the number of shares of Delta common stock issuable
under that plan.
If Delta stockholders do not approve the amendment to the Delta
2007 Performance Compensation Plan, either of the Delta MEC or
the Northwest MEC may terminate the Framework Agreement. The
Framework Agreement provides for customary registration rights
with respect to the Delta and the Northwest Pilot shares, Mr.
Bastian informed the SEC.
The Transaction Framework Agreement, dated as of April 14, 2008,
among Delta, the Delta MEC and ALPA is superseded in all respects
by the Framework Agreement, unless and until the time that the
Framework Agreement is terminated in accordance with its terms.
About Delta Air
Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) --
http://www.delta.com/-- is the world's second-largest airline
in terms of passengers carried and the leading U.S. carrier
across the Atlantic, offering daily flights to 328 destinations
in 56 countries on Delta, Song, Delta Shuttle, the Delta
Connection carriers and its worldwide partners. Delta flies to
Argentina, Australia and the United Kingdom, among others.
The company and 18 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923).
Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents
the Debtors in their restructuring efforts. Timothy R. Coleman
at The Blackstone Group L.P. provides the Debtors with financial
advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at
Akin Gump Strauss Hauer & Feld LLP, provide the Official
Committee of Unsecured Creditors with legal advice. John
McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James
S. Feltman at Mesirow Financial Consulting, LLC, serve as the
Committee's financial advisors.
The Debtors filed a chapter 11 plan of reorganization and
disclosure statement explaining that plan on Dec. 19, 2007. On
Jan. 19, 2007, they filed revisions to the plan and disclosure
statement, and submitted further revisions to the plan on
Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors'
disclosure statement. In April 25, 2007, the Court confirmed the
Debtors' plan. That plan became effective on April 30, 2007. The
Court entered a final decree closing 17 cases on Sept. 26, 2007.
(Delta Air Lines Bankruptcy News, Issue No. 103; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
DELTA AIR: Stockholders to Vote on Issuance of Stock to Northwest
-----------------------------------------------------------------
Delta Air Lines Inc. will hold a special meeting of stockholders
on Sept. 25, 2008, in Atlanta for stockholders to vote on the
issuance of Delta common stock to Northwest Airlines Corp.
stockholders in the merger of the airlines and on an amendment to
the Delta 2007 Performance Compensation Plan, a broad-based
employee compensation program.
The meeting will be held at 2 p.m. EDT at the Georgia
International Convention Center located at 2000 Convention Center
Concourse, in College Park, Georgia.
The record date for determining stockholders entitled to notice
of, and to vote at, the special meeting will be the close of
business on July 29, 2008.
Delta in April announced that it is combining with Northwest in
an all-stock transaction to create America's premier global
airline. The new company will be called Delta and will be
headquartered in Atlanta. Combined, the company and its regional
partners will provide customers access to more than 390
destinations in 67 countries. Together, Delta and Northwest will
have more than $35 billion in aggregate annual revenues, operate
a mainline fleet of nearly 800 aircraft, employ approximately
75,000 people worldwide, and have one of the strongest balance
sheets in the industry. The merger is subject to the approval of
Delta and Northwest stockholders and regulatory approvals, which
are expected to be completed later this year.
Northwest Shareowners Meeting
Northwest will hold its annual shareowners meeting in New York, on
Sept. 25, 2008, to vote on the proposed merger between Northwest
and Delta.
The meeting will be held at the Equitable Life Building in New
York, 787 Seventh Ave. New York, NY in the Equitable Auditorium.
The meeting time is yet to be determined.
"Looking back on the announcement of our merger with Delta, we
are more confident than ever that this was the right deal at the
right time," said Doug Steenland, president and CEO of Northwest
Airlines. "Moving forward, the combined carrier will be in the
best position to compete globally -- validating that this was the
right transaction for our employees, customers, shareholders and
the communities we serve,."
"The merger-related synergies will improve the financial ability
of Northwest and Delta to meet the challenge presented by the
fuel crisis and better position the combined carrier for long-
term strength and profitability," Mr. Steenland continued.
About Northwest Airlines
Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/--
is the world's fourth largest airline with hubs at Detroit,
Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about
1,400 daily departures. Northwest is a member of SkyTeam, an
airline alliance that offers customers one of the world's most
extensive global networks. Northwest and its travel partners
serve more than 1000 cities in excess of 160 countries on six
continents. Northwest and its travel partners serve more than
1000 cities in excess of 160 countries on six continents,
including Italy, Spain, Japan, China, Venezuela and Argentina.
The company and 12 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce
R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader,
Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq.,
at Cadwalader, Wickersham & Taft LLP in Washington represent the
Debtors in their restructuring efforts. The Official Committee
of Unsecured Creditors has retained Scott L. Hazan, Esq., at
Otterbourg, Steindler, Houston & Rosen, P.C. as its bankruptcy
counsel in the Debtors' chapter 11 cases.
When the Debtors filed for bankruptcy, they listed $14.4 billion
in total assets and $17.9 billion in total debts. On Jan. 12,
2007 the Debtors filed with the Court their Chapter 11 Plan. On
Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure
Statement. The Court approved the adequacy of the Debtors'
Disclosure Statement on March 26, 2007. On May 21, 2007, the
Court confirmed the Debtors' Plan. The Plan took effect May 31,
2007. (Northwest Airlines Bankruptcy News, Issue No. 96;
Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
About Delta Air
Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) --
http://www.delta.com/-- is the world's second-largest airline
in terms of passengers carried and the leading U.S. carrier
across the Atlantic, offering daily flights to 328 destinations
in 56 countries on Delta, Song, Delta Shuttle, the Delta
Connection carriers and its worldwide partners. Delta flies to
Argentina, Australia and the United Kingdom, among others.
The company and 18 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923).
Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents
the Debtors in their restructuring efforts. Timothy R. Coleman
at The Blackstone Group L.P. provides the Debtors with financial
advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at
Akin Gump Strauss Hauer & Feld LLP, provide the Official
Committee of Unsecured Creditors with legal advice. John
McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James
S. Feltman at Mesirow Financial Consulting, LLC, serve as the
Committee's financial advisors.
The Debtors filed a chapter 11 plan of reorganization and
disclosure statement explaining that plan on Dec. 19, 2007. On
Jan. 19, 2007, they filed revisions to the plan and disclosure
statement, and submitted further revisions to the plan on
Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors'
disclosure statement. In April 25, 2007, the Court confirmed the
Debtors' plan. That plan became effective on April 30, 2007. The
Court entered a final decree closing 17 cases on Sept. 26, 2007.
(Delta Air Lines Bankruptcy News, Issue No. 103; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
DELTA AIR: District Court Dismisses Suits Over 5191 Plane Crash
---------------------------------------------------------------
The U.S. District Judge Karl Forester dismissed Delta Air Lines,
Inc., from more than 19 pending wrongful death lawsuits relating
to Delta's regional partner Comair's Flight 5191 plane that
crashed on August 27, 2006, in Lexington, Kentucky.
Some plaintiffs included Delta -- Comair's parent company -- as
an additional defendant, arguing that Delta's and Comair's
operations were intertwined, where Delta "exerted control over
where Comair could fly, what the ticket price would be and how
much money Comair would receive to operate," Kentucky.com says.
According to the report, Delta's motion to be dismissed from the
lawsuits held that Comair was Delta's wholly-owned subsidiary but
each has separate management, different sets of policies and
procedures and employs its own pilots; therefore, Delta could not
be held liable in a court of law for the conduct of Comair's
employees.
"There is no allegation that any Delta employee failed to
exercise reasonable care in the performance of his or her duty in
any manner in respect to Flight No. 5191, " Judge Forester wrote
in his 13-page opinion.
Delta could not control any of the operational aspects of Flight
5191; hence, no Delta employee could be held liable for the
crash, Judge Forester added.
Delta's dismissal from the lawsuits will have no effect on the
trial that the Court slated on August 4, 2008, wherein families
of 49 people killed in the Flight 5191 crash will seek punitive
damages, according to various reports.
During the trial, the Court will allow presentation of evidence
that Comair was grossly negligent in the crash.
"Comair has demonstrated on multiple occasions before and after
the accident that it is a reasonable and responsible company.
The National Transportation Safety Board found this to be true
and we intend to present the same evidence to the jury," Kate
Marx, a spokeswoman for Comair told Kentucky.com.
About Delta Air
Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) --
http://www.delta.com/-- is the world's second-largest airline
in terms of passengers carried and the leading U.S. carrier
across the Atlantic, offering daily flights to 328 destinations
in 56 countries on Delta, Song, Delta Shuttle, the Delta
Connection carriers and its worldwide partners. Delta flies to
Argentina, Australia and the United Kingdom, among others.
The company and 18 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923).
Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents
the Debtors in their restructuring efforts. Timothy R. Coleman
at The Blackstone Group L.P. provides the Debtors with financial
advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at
Akin Gump Strauss Hauer & Feld LLP, provide the Official
Committee of Unsecured Creditors with legal advice. John
McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James
S. Feltman at Mesirow Financial Consulting, LLC, serve as the
Committee's financial advisors.
The Debtors filed a chapter 11 plan of reorganization and
disclosure statement explaining that plan on Dec. 19, 2007. On
Jan. 19, 2007, they filed revisions to the plan and disclosure
statement, and submitted further revisions to the plan on
Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors'
disclosure statement. In April 25, 2007, the Court confirmed the
Debtors' plan. That plan became effective on April 30, 2007. The
Court entered a final decree closing 17 cases on Sept. 26, 2007.
(Delta Air Lines Bankruptcy News, Issue No. 103; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
DELTA AIR: Comair Unit Expects to Terminate 520 Employees
---------------------------------------------------------
Delta Air Lines Inc.'s regional unit, Comair, expects to cut 300
pilot and 220 flight attendant jobs to shrink operations and deal
with record fuel costs, Bloomberg News reports.
According to Comair spokesman Jeff Pugh, the job cuts will take
effect in September 2008, in time for Comair's pull-out of 14
aircraft and reduction of flight hours by 15%, particularly to
airports in the northeastern U.S., including John F. Kennedy in
New York.
Comair employs approximately 6,400 persons in total, with the 520
job cuts representing 8% of its workforce, Mr. Pugh told
Bloomberg.
Mr. Pugh noted that Comair will offer severance packages, which
details are yet to be completed, says Bloomberg.
In an e-mail to the Business Courier of Cincinnati, Comair
spokeswoman Kate Marx said Comair management has steadily reduced
non-crew staff since the beginning of 2008.
"Because our pilot and flight attendant staffing is directly
related to our flying, we need to adjust our crew complement for
the fall," Ms. Marx said, the newspaper reports.
In a memo dated July 7, 2008, Comair President John Selvaggio
told employees that while a decrease in post-summer season
flights is typical, "this fall's reduction is magnified."
"We have continued to support Delta's efforts to address sky-high
fuel costs by becoming more efficient and reducing our overall
cost structure. We have demonstrated that our strength lies in
the people of Comair, and in the coming months, we must remain
flexible to keep ourselves poised to take advantages of future
opportunities," the memo stated, according to the newspaper.
About Delta Air
Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) --
http://www.delta.com/-- is the world's second-largest airline
in terms of passengers carried and the leading U.S. carrier
across the Atlantic, offering daily flights to 328 destinations
in 56 countries on Delta, Song, Delta Shuttle, the Delta
Connection carriers and its worldwide partners. Delta flies to
Argentina, Australia and the United Kingdom, among others.
The company and 18 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923).
Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents
the Debtors in their restructuring efforts. Timothy R. Coleman
at The Blackstone Group L.P. provides the Debtors with financial
advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at
Akin Gump Strauss Hauer & Feld LLP, provide the Official
Committee of Unsecured Creditors with legal advice. John
McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James
S. Feltman at Mesirow Financial Consulting, LLC, serve as the
Committee's financial advisors.
The Debtors filed a chapter 11 plan of reorganization and
disclosure statement explaining that plan on Dec. 19, 2007. On
Jan. 19, 2007, they filed revisions to the plan and disclosure
statement, and submitted further revisions to the plan on
Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors'
disclosure statement. In April 25, 2007, the Court confirmed the
Debtors' plan. That plan became effective on April 30, 2007. The
Court entered a final decree closing 17 cases on Sept. 26, 2007.
(Delta Air Lines Bankruptcy News, Issue No. 103; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
DELTA AIR: Parties Withdraw More than $1.2 Million in Claims
------------------------------------------------------------
Various parties informed the U.S. Bankruptcy Court for the
Southern District of New York and parties-in-interest that they
have withdrawn their claims against Delta Air Lines Inc. and its
debtor-affiliates.
A. Lydia Locke
Lydia J. Locke that she has withdrawn Claim Nos. 5447 and 8466,
each asserting $816,000, with respect to prepetition workers'
compensation and disability plans.
In an agreement with the Debtors, Ms. Locke admitted that, among
other things, she is receiving pension benefits under the Delta
Retirement Plan; hence, there is no need to file the claims.
B. Grapevine-Colleyville
The Grapevine-Colleyville Independent School District has
withdrawn its administrative Claim No. 8283 for $334,580, and
Claim No. 8282 for $77,040 against the Debtors, asserting unpaid
postpetition taxes for 2007.
The City of Grapevine has withdrawn its Claim Nos. 8625 and 8626
against Debtor-affiliate, ASA Holdings, Inc. The City did not
indicate a reason for the withdrawal of its Claims.
C. Kansas City Airport
On behalf of Kansas City Airport Marriott, Vincent J. Roldan
informs the Court and parties-in-interest that Kansas City
Airport has withdrawn Claim No. 6954, for $5,251. The Airport
did not state a reason for the Claim withdrawal.
About Delta Air
Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) --
http://www.delta.com/-- is the world's second-largest airline
in terms of passengers carried and the leading U.S. carrier
across the Atlantic, offering daily flights to 328 destinations
in 56 countries on Delta, Song, Delta Shuttle, the Delta
Connection carriers and its worldwide partners. Delta flies to
Argentina, Australia and the United Kingdom, among others.
The company and 18 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923).
Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents
the Debtors in their restructuring efforts. Timothy R. Coleman
at The Blackstone Group L.P. provides the Debtors with financial
advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at
Akin Gump Strauss Hauer & Feld LLP, provide the Official
Committee of Unsecured Creditors with legal advice. John
McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James
S. Feltman at Mesirow Financial Consulting, LLC, serve as the
Committee's financial advisors.
The Debtors filed a chapter 11 plan of reorganization and
disclosure statement explaining that plan on Dec. 19, 2007. On
Jan. 19, 2007, they filed revisions to the plan and disclosure
statement, and submitted further revisions to the plan on
Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors'
disclosure statement. In April 25, 2007, the Court confirmed the
Debtors' plan. That plan became effective on April 30, 2007. The
Court entered a final decree closing 17 cases on Sept. 26, 2007.
(Delta Air Lines Bankruptcy News, Issue No. 103; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
DEREK TAYLOR: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: Derek A. Taylor
Therese M. Taylor
905 Greentree Drive
Winter Park, FL 32789
Bankruptcy Case No.: 08-05818
Chapter 11 Petition Date: July 10, 2008
Court: Middle District of Florida (Orlando)
Judge: Arthur B. Briskman
Debtor's Counsel: Holly Bower, Esq.
Phoenix Law PA
12800 University Drive, Suite 260
Fort Myers, FL 33907
Tel: (239) 333-3800
(hb@corporationcounsel.com)
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
A list of the Debtor's largest unsecured creditors is available
for free at: http://bankrupt.com/misc/flmb08-05818.pdf
DORADO BECKVILLE: Jason Searcy Approved as Committee's Counsel
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas gave
the Official Committee of Unsecured Creditors of Dorado Beckville
Partners I LP and Dorado Operating Inc. permission to retain
Jason R. Searcy & Associates PC as its counsel.
As reported in the Troubled Company Reporter on May 23, 2008,
the Committee related that the firm has extensive experience in
bankruptcy, corporate reorganization and general debtor or
creditor matters needed to to perform legal services required by
the Committee.
The firm's professionals and their compensation rates are:
Professionals Designations Hourly Rates
------------- ------------ ------------
Jason R. Searcy, Esq. Senior Attorney $400
Amy Bates Ames, Esq. Junior Attorney $200
Joshua P. Searcy, Esq. Junior Attorney $200
Legal Assistants $90
The firm can be reached at:
Jason R. Searcy & Associates PC
P. O. Box 3929
Longview, Texas 75606
Tel: (903) 757-3399
Fax: (903) 757-9559
Dallas, Texas-based Dorado Beckville Partners I LP and Dorado
Operating Inc. -- http://www.doradoexploration.com/-- are
diversified oil and gas exploration and production companies
active in the East Texas Basin, the inland waters of South
Louisiana, and Western Alabama.
Beckville owns 64% to 75% of the working interest in each owned
gas unit. The properties owned by Beckville are operated by
Dorado Operating, a 99% limited partner of Beckville and a wholly
owned unit of Dorado Exploration Inc.
Beckville and Dorado Operating sought chapter 11 protection on
April 15, 2008 (Bankr. N.D. Texas Case Nos. 08-31796 and 08-
31800). Judge Barbara J. Houser presides the case. Marcus Alan
Helt, Esq., and Richard McCoy Roberson, Esq., at Gardere Wynne
Sewell LLP is counsel to Dorado Beckville. Cox Smith Matthews
Incorporated is counsel to Dorado Operating.
Dorado Beckville's schedules showed total assets of $32,289,155
and total liabilities of $31,419,576 and Dorado Operating's
schedules show total assets of $831,387 and total liabilities of
$13,122,417.
DRI CORP: Expects Demand for Transit Security Products to Increase
------------------------------------------------------------------
DRI disclosed on Monday that more Americans are riding the
nation's buses and trains as a way to offset high gas prices.
David L. Turney, the company's chairman, president, and chief
executive officer, said: "The American Public Transportation
Association recently announced that Americans took 2.6 billion
trips on public transportation during first quarter 2008 - almost
85 million more trips than the same period last year. Light rail
posted ridership increases in the double digits, whereas other
modes of transit had increases from 2 percent to 7.8 percent."
The company added that Mr. Turney, past chairman of the APTA
Business Members' Board of Governors and currently active on
several APTA working committees including the Legislative
Committee, attributes the increase in public transit ridership in
substantial part to the high cost of gasoline and recognition
that, for a growing number of people, public transit is a viable
means of coping with escalating gas prices.
"As gas prices continue to rise, riding public transit to save
money at the pump simply makes good sense. According to the U.S.
Department of Energy and the Energy Information Administration,
the U.S. average regular-grade gasoline price, which was
approximately $4.10 per gallon on June 30, 2008, is projected to
remain over $4 per gallon until fourth quarter 2009," Mr. Turney
said.
The company also reported that recent articles in the Wall Street
Journal, USA Today, The Boston Globe, and The Dallas Morning News
indicate that more Americans are relying upon public
transportation as a way to combat high fuel prices.
"On Sunday, July 13, 2008, an article in The Dallas Morning News
said there are so many commuters transitioning to public transit
that 'park-and-ride' parking lots throughout the Dallas-Fort Worth
area are 'filling to the bursting point.' With increased
ridership comes the potential of an increase in demand for DRI's
transit and transit security products as transit authorities move
to enhance and increase their transit fleets to meet ridership
demands," Mr. Turney said.
About DRI Corp.
Headquartered in Dallas, Texas, DRI Corporation (Nasdaq: TBUS) --
http://www.digrec.com/-- through its business units and wholly
owned subsidiaries, designs, manufactures, sells, and services
information technology products either directly or through
manufacturers' representatives or distributors. DRI produces
passenger information communication products under the Talking
Bus(R), TwinVision(R), VacTell(TM) and Mobitec(R) brand names,
which are sold to transportation vehicle equipment customers
worldwide.
DRI's customers generally fall into one of two broad categories:
end-user customers or original equipment manufacturers. DRI's
end-user customers include municipalities, regional transportation
districts, state and local departments of transportation, transit
agencies, public, private, or commercial operators of bus and van
vehicles, and rental car agencies. DRI's OEM customers are the
manufacturers of transportation rail, bus and van vehicles.
Going Concern Doubt
PricewaterhouseCoopers LLP, in Raleigh, North Carolina, expressed
substantial doubt about DRI 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 insufficient cash resources to
satisfy its debt obligations.
As reported in the Troubled Company Reporter on July 16, 2008,
DRI Corp. entered into a revolving credit agreement with PNC Bank,
National Association on June 30, 2008. The three-year
agreement -- a revolving credit line of up to $8 million subject
to formula-derived availability based on inventory and accounts
receivable -- replaces the company's present $6 million U.S.
senior lender relationship with Laurus Master Fund, Ltd., which
expired June 30, 2008. This credit facility includes performance
covenants and other provisions related to payment and pre-payment,
generally considered by management to be usual and customary for
this type of financing.
EDUCATE INC: S&P Cuts Corporate Credit Rating to 'B-' from 'B'
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered the corporate credit
rating on Baltimore-based Educate Inc. to 'B-' from 'B'. S&P also
lowered the rating on the company's second-lien term loan to 'CCC'
from 'CCC+'. The recovery rating on the second-lien term loan
remains at '6', indicating the expectation of negligible (0%-10%)
recovery in the event of a payment default.
At the same time, S&P affirmed 'B+' bank loan on Educate's first-
lien term loan B and revised the recovery rating to '1' from '2'.
The revision in the recovery rating reflects improved recovery
prospects following a reduction in first-lien bank debt by roughly
one-half, with $86 million from the March 2008 sale of Catapult
Learning and proceeds of $13 million from the refranchising of
formerly company-owned Sylvan Learning Centers. The '1' first-
lien recovery rating indicates S&P's expectation of very high
(90%-100%) recovery in the event of a payment default.
S&P have removed all ratings from CreditWatch with negative
implications, where they were placed on Dec. 11, 2007. The
outlook is stable.
"The downgrade of the corporate credit rating," said Standard &
Poor's credit analyst Hal F. Diamond, "reflects the company's weak
operating performance, its trend of declining same-store sales,
reduced business diversification, and our concern about the
collectibility of the funds that Educate lent to National Learning
Centers."
EDUCATION RESOURCES: Wants Plan Filing Period Extended to Dec. 3
----------------------------------------------------------------
The Education Resources Institute Inc. asks the U.S. Bankruptcy
Court for the District of Massachusetts to extend the exclusive
period during which it may file a plan of reorganization until
Dec. 3, 2008, and the period during which it may solicit
acceptances of that plan until Feb. 3, 2009.
Section 1121(b) provides for an initial period of 120 days after
the bankruptcy filing during which a debtor has the exclusive
right to file a plan. Section 1121(c) also provides that if the
debtor files a plan within the 120-day exclusive period, it has
180 days after the bankruptcy filing to solicit and obtain
acceptances of that plan. Section 1129(d) allows the debtor to
seek further extension of the exclusive periods for cause.
Gina Lynn Martin, Esq., at Goodwin Procter LLP, in Boston,
Massachusetts, relates that the Debtor has expended much of the
first three months of its Chapter 11 case dealing with the
effects of loans that were in an essentially unstoppable process
of being approved and funded to minimize harm to borrowers,
attempt to avoid inadvertent postpetition guaranty liability to
the estate, and enable lenders to taper and end their TERI-
related lending activity without incurring liability or
reputational damage of their own.
Simultaneously, Ms. Martin says the Debtor addressed an
unsupportable cost structure that was geared to an ongoing
securitization model. Negotiations with The First Marblehead
Corporation and its affiliates succeeded in reducing those costs
and enabling a transition to taking the FMC services in-house at
reduced expenses. With the FMC transition pricing in effect, the
Debtor is now able to operate at or very near break even,
affording it the ability to address remaining issues on which its
reorganization will depend without suffering significant erosion
of its remaining liquid assets.
In addition, the Debtor has been occupied preparing voluminous
schedules of assets and liabilities and statement of financial
affairs; preparing materials for and conducting several meetings
with the Official Committee of Unsecured Creditors; and dealing
with dozens of lenders to provide information, explain the
implications of the Chapter 11 filing, discuss transitional
issues, and negotiate terms of contract rejection and transition.
The Debtor, according to Ms. Martin, needs the additional time
to:
(a) continue evaluation of its relationship with lenders, like
JP Morgan Chase, N.A., that ostensibly have security
interests in liquid and intangible assets to determine if
the lenders are over-secured or under-secured, with a view
to arriving at a resolution that minimizes or eliminates
guaranty claims by those lenders;
(b) complete its analysis of the scope, validity, and
perfection of the lenders' security interests;
(c) evaluate both the collateral held by securitization trusts
and the Debtor's rights to a residual interest in those
trusts, with a view to arriving at a resolution that
minimizes or eliminates guaranty claims by those lenders
and that captures the value, if any, of the residual
interests;
(d) apply the Debtor's extensive experience and expertise with
student loan defaults and recoveries to evaluate its
potential liability to those lenders that are secured and
those that have unsecured guaranty claims; and
(e) determine the value of its tangible and intangible assets
and the most effective way to deploy those assets for the
benefit of its creditors, leading to the development of
its long-term business plan and exit strategy.
Ms. Martin relates that a recent filing by FMC with the U.S.
Securities and Exchange Commission suggested that the Debtor's
portion of the "residual interest" may exceed $67,000,000. She
says the Debtor will need to independently verify the value of
the Residual Interests. She adds that the Debtor has about
$175,000,000 in liquid assets pledged to lenders and about
$488,000,000 pledged to trusts.
"The Debtor's request for an extension of the exclusive periods
is not a negotiation tactic, but instead, a reflection of the
fact that its Chapter 11 case still is not yet ripe for the
formulation and confirmation of a plan," Ms. Martin assures the
Court. "The Debtor has made it a priority to reach-out to all
parties-in-interest in its bankruptcy case and has met with most
of the lenders and all of the members of the Official Committee
of Unsecured Creditors on a continuous basis, she relates. At
every stage, the Debtor has encouraged an open and frank dialog
with its constituencies."
Ms. Martin also assures the Court that the Debtor's cash is
remaining relatively stable. On the bankruptcy filing date, the
Debtor listed approximately $79,000,000 in cash that had not been
pledged to a lender or a trust. As of July 10, 2008, the
Debtor's unpledged cash is approximately $73,000,000.
About The Education Resources Institute Inc.
Headquartered in Boston, Massachussetts, The Education Resources
Institute Inc. -- http://www.teri.org/-- aka Boston Systems
Resources Inc., Brockton Education Opportunity Center, TERI, TERI
College Access, TERI College Access Centers and TERI Marketing
Services Inc., is a nonprofit organization that promotes
educational opportunities for all through its college access and
loan guarantee activities. Founded in 1985, TERI is a guarantor
of private or non-government student loans with more than $17
billion in outstanding guarantees.
The Debtor filed for Chapter 11 petition on April 7, 2008 (Bankr.
D. Mass. Case No.: 08-12540.) Daniel Glosband, Esq., Gina L.
Martin, Esq. at Goodwin Procter LLP represent the Debtor in its
restructuring efforts. The Debtor's Conflicts Counsel is Craig
and Macauley PC, its financial advisor is Grant Thornton LLP, its
Claims Agent is Epiq Bankruptcy Solutions LLC, its investment
Banker is Citigroup Global Markets Inc., and its Public Relations
& Public Affairs Advisor is Rasky Baerlein Strategic
Communications Inc. When the Debtor filed for protection from its
creditors, it listed estimated assets of more that $1 billion and
estimated debts of $500,000 to $1 billion.
(TERI Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
EDUCATION RESOURCES: U.S. Trustee Says Rasky Employment No Merit
----------------------------------------------------------------
Lawrence Rasky, Rasky Baerlein Strategic Communications Inc.'s
chairman, filed a supplementary declaration with the U.S.
Bankruptcy Court for the District of Massachusetts in support of
The Education Resources Institute Inc.'s application to employ
Rasky as its public relations advisor, nunc pro tunc to the
bankruptcy filing.
Mr. Rasky told the Court that his firm was engaged by the Debtor
only days before the bankruptcy filing. He said the Communication
Plan that he and his team developed was comprehensive and
extensive to implement an effective communication strategy with
the Debtor's employees, lender and political constituencies.
"There was a national focus on the Debtor and its Chapter 11
case," Mr. Rasky said. "Without Rasky's efforts, the Debtor's
image, reputation, and ability to carry on its business may have
been severely damaged, possibly beyond repair. His firm, he
added, fielded calls relating to the Debtor's Chapter 11 filing
from The Boston Globe, Bloomberg News, The Wall Street Journal,
Law360.com, CNN NY, The New York Times, The Washington Post, and
others news agencies.
Mr. Rasky further related that in the weeks after the bankrutcy
filing, Rasky took proactive steps to ensure the preservation of
the Debtor's public image making calls to numerous U.S. House
Representatives, Senators, and other members of various state and
federal, legislative and executive offices. He added that Rasky
served as the primary call center for the Debtor in the early
days of the Chapter 11 case, fielding calls from student loan
borrowers whose checks had bounced and from the various persons
and entities listed on the Debtor's creditor matrix who were
inquiring why they had received notice of TERI's bankruptcy case.
Once the media frenzy subsided, Rasky began the process of
compiling the necessary information to make its employment
application, and did so as soon after as was possible, Mr. Rasky
told the Court. Although Rasky is a prominent public relations
firm with extensive experience, it does not represent many
Chapter 11 debtors, he said. As a result, its system to
determine whether any conflict or connection exists is a labor
intensive process. Thus, the filing of the employment
application took longer than the counsel and financial advisors
that have also been engaged in this Chapter 11 case, he
contended.
U.S. Trustee & Committee Further Objects
Phoebe Morse, United States Trustee for Region 1, and the
Official Committee of Unsecured Creditors object to the Debtor's
amended employment application for Rasky.
The U.S. Trustee complains that the Debtor seeks authorization to
employ Rasky nunc pro tunc to the bankruptcy filing without
demonstrating the extraordinary circumstances necessary for the
Court to approve post facto retention. Neither the Debtor nor
Rasky has established "extraordinary circumstances" meriting nunc
pro tunc employment to the bankruptcy filing, argues the U.S.
Trustee,
"Rasky's lack of punctuality can reasonably be attributed to
nothing greater than oversight, neglect or inadvertence, and its
Second Application should be approved retroactive to May 15,
2008, assuming that it otherwise meets the requirements of
Section 327(a) of the Bankruptcy Code," the U.S. Trustee asserts.
The Committee objects to the employment application for two
reasons:
(1) The Debtor has not demonstrated nor provided sufficient
information to allow the Committee, the creditors, or the
Court to determine whether the employment of Rasky is a
reasonable necessity for the Debtor's Chapter 11 case.
(2) The employment application contains broad indemnification
provision and does not explain why it is in the best
interests of the Debtor's creditors that it incurs a
potentially significant, open-ended liability.
The potentially significant costs and liabilities the Debtor
seeks to incur for Rasky's services are particularly troubling in
light of the Debtor's operations, Jeffrey D. Sternklar, Esq., at
Duane Morris LLP, in Boston Massachusetts, tells the Court, on
behalf of the Committee.
The Debtor's operating revenues will be marginal and while the
Debtor contends it has reduced its operating costs significantly
due to its restructuring of its relationship with The First
Marblehead Corporation, the Committee believes that the Debtor's
operations through at least the third quarter of 2008 will
continue to be unprofitable, Mr. Sternklar says. In light of the
uncertainty regarding the need for Rasky's services and the
Debtor's uncertain, and at least in the near term unprofitable
future, the Committee believes the Debtor should be wary of
incurring administrative costs for services that may be a
desirable luxury but that are not critically necessary to
maintain the Debtor as a going concern while the Debtor considers
its options to emerge from bankruptcy.
About The Education Resources Institute Inc.
Headquartered in Boston, Massachussetts, The Education Resources
Institute Inc. -- http://www.teri.org/-- aka Boston Systems
Resources Inc., Brockton Education Opportunity Center, TERI, TERI
College Access, TERI College Access Centers and TERI Marketing
Services Inc., is a nonprofit organization that promotes
educational opportunities for all through its college access and
loan guarantee activities. Founded in 1985, TERI is a guarantor
of private or non-government student loans with more than $17
billion in outstanding guarantees.
The Debtor filed for Chapter 11 petition on April 7, 2008 (Bankr.
D. Mass. Case No.: 08-12540.) Daniel Glosband, Esq., Gina L.
Martin, Esq. at Goodwin Procter LLP represent the Debtor in its
restructuring efforts. The Debtor's Conflicts Counsel is Craig
and Macauley PC, its financial advisor is Grant Thornton LLP, its
Claims Agent is Epiq Bankruptcy Solutions LLC, its investment
Banker is Citigroup Global Markets Inc., and its Public Relations
& Public Affairs Advisor is Rasky Baerlein Strategic
Communications Inc. When the Debtor filed for protection from its
creditors, it listed estimated assets of more that $1 billion and
estimated debts of $500,000 to $1 billion.
(TERI Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
EDUCATION RESOURCES: Wants Removal Period Extended to September 6
-----------------------------------------------------------------
The Education Resources Institute Inc. asks the U.S. Bankruptcy
Court for the District of Massachusetts to extend the removal
period deadline until Sept. 6, 2008.
The Debtor is party to approximately 2,000 litigations pending in
various jurisdictions across the country. For the most part,
those Litigations are handled by attorneys, who have been
retained by the many collection agencies engaged by the Debtor to
pursue collection of defaulted loans, Gina Lynn Martin, Esq., at
Goodwin Procter LLP, in Boston, Massachusetts, relates.
In connection with the preparation of its Schedules of Assets and
Liabilities and Statement of Financial Affairs, the Debtor
believes that it has identified all of the pending Litigations.
However, the Debtor still needs to evaluate the Litigations to
determine whether removal under Rule 9027 is appropriate, Ms.
Martin tells the Court.
The Debtor's right under Rule 9027(a)(2)(A) of the Federal Rules
of Bankruptcy Procedure to remove any claim or cause of action to
the Court expired on July 7, 2008.
Ms. Martin asserts that extension of the removal period will give
the Debtors enough time to evaluate the Litigations and make an
educated decision regarding whether any one of these Litigations
warrant removal.
About The Education Resources Institute Inc.
Headquartered in Boston, Massachussetts, The Education Resources
Institute Inc. -- http://www.teri.org/-- aka Boston Systems
Resources Inc., Brockton Education Opportunity Center, TERI, TERI
College Access, TERI College Access Centers and TERI Marketing
Services Inc., is a nonprofit organization that promotes
educational opportunities for all through its college access and
loan guarantee activities. Founded in 1985, TERI is a guarantor
of private or non-government student loans with more than $17
billion in outstanding guarantees.
The Debtor filed for Chapter 11 petition on April 7, 2008 (Bankr.
D. Mass. Case No.: 08-12540.) Daniel Glosband, Esq., Gina L.
Martin, Esq. at Goodwin Procter LLP represent the Debtor in its
restructuring efforts. The Debtor's Conflicts Counsel is Craig
and Macauley PC, its financial advisor is Grant Thornton LLP, its
Claims Agent is Epiq Bankruptcy Solutions LLC, its investment
Banker is Citigroup Global Markets Inc., and its Public Relations
& Public Affairs Advisor is Rasky Baerlein Strategic
Communications Inc. When the Debtor filed for protection from its
creditors, it listed estimated assets of more that $1 billion and
estimated debts of $500,000 to $1 billion.
(TERI Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
EDUCATION RESOURCES: Creditors Oppose JP Morgan Pacts Cancellation
------------------------------------------------------------------
Eileen Morris, The Education Resources Institute Inc.'s
controller and director of financial management, filed an
affidavit with the U.S. Bankruptcy Court for the District of
Massachusetts in support of the Debtor's request to terminate its
loan agreements with JP Morgan Chase N.A.
As reported in the Troubled Company Reporter on June 13, 2008, the
Debtor asked the Court to approve a stipulation terminating its
relationship with JP Morgan Chase, relating to several student
loan programs
Ms. Morris stated that, as of the bankruptcy filing, Chase/Bank
One, Bank of America, Sun Trust Bank, HSBC Bank, First National
Bank Northeast, GMAC, National City Bank, Manufacturers & Traders
Bank, and Huntington Bank, each had its own Pool Account at JP
Morgan. Comerica Bank, N.A., Insurbanc, Keybank, M&T Bank, PNC
Bank, Sovereign Bank, TCF Bank, and U.S. Bank shared in the Joint
Pool Account.
As of March 31, 2008, the Segregated Fees for student loans
funded by RBS Citizens Bank/Charter One and Union Federal Savings
Bank were transferred from the Joint Pool Account to a Pool
Account for the benefit of each applicable lender held at its
respective institution.
As of Feb. 29, 2008, the balances in the associated pool
accounts, Joint Pool Account and legacy pool accounts totaled
$81,988,989:
Joint Pool Account $81,706,151
Legacy Pool Accounts 282,838
As of May 31, 2008, the Pool Accounts totaled $172,888,234.
Committee Reacts
The Official Committee of Unsecured Creditors complains that the
Debtor fails to substantiate the legal or financial premises on
which the agreement terminating the Chase loan pacts is based.
The principal outstanding issue is whether Chase's claim is
oversecured or undersecured, David J. Reier, Esq., at Posternak
Blankstein & Lund LLP, in Boston, Massachusetts, notes.
Mr. Reier relates that, as a result of the Committee's analysis
of the Chase agreement and the documents, the Committee concludes
that Chase has a perfected security interest in the Pledged
Account -- having a cash value of approximately $41,000,000 -- to
secure certain alleged guaranty obligations of the Debtor with
respect to a nearly $700,000,000 loan portfolio. The Committee
says it will not contest that Chase has a perfected security
interest by control in the Pledged Account to secure the Debtor's
guaranty obligations. However, the Committee's analysis raised
serious questions concerning Chase's purported security interest
in the so-called "Recoveries," and related collateral, which must
be perfected, not by control, but by financing statements in
accordance with the Uniform Commercial Code, Mr. Reier tells the
Court.
The Committee also concludes that the so-called "gross cumulative
default rate" -- the aggregate percentage of loans in the
portfolio that will default during the life of the loan portfolio
-- and the shape of the default curve that determines the rate at
which defaults will occur over time.
According to Mr. Reier, the Committee will withdraw its objection
upon the filing by the Debtor and Chase of an acceptable
certification of facts that will require proof at any evidentiary
hearing and will confirm certain financial benefits to be
received by the estate under the terms of the Chase Stipulation,
and an acceptable form of order approving the Chase Stipulation.
About The Education Resources Institute Inc.
Headquartered in Boston, Massachussetts, The Education Resources
Institute Inc. -- http://www.teri.org/-- aka Boston Systems
Resources Inc., Brockton Education Opportunity Center, TERI, TERI
College Access, TERI College Access Centers and TERI Marketing
Services Inc., is a nonprofit organization that promotes
educational opportunities for all through its college access and
loan guarantee activities. Founded in 1985, TERI is a guarantor
of private or non-government student loans with more than $17
billion in outstanding guarantees.
The Debtor filed for Chapter 11 petition on April 7, 2008 (Bankr.
D. Mass. Case No.: 08-12540.) Daniel Glosband, Esq., Gina L.
Martin, Esq. at Goodwin Procter LLP represent the Debtor in its
restructuring efforts. The Debtor's Conflicts Counsel is Craig
and Macauley PC, its financial advisor is Grant Thornton LLP, its
Claims Agent is Epiq Bankruptcy Solutions LLC, its investment
Banker is Citigroup Global Markets Inc., and its Public Relations
& Public Affairs Advisor is Rasky Baerlein Strategic
Communications Inc. When the Debtor filed for protection from its
creditors, it listed estimated assets of more that $1 billion and
estimated debts of $500,000 to $1 billion.
(TERI Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
EDWARD GEORGE ENOS: Case Summary & 12 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Edward George Enos
Diane McKelvey Enos
1000 N. Beeline Highway
Payson, AZ 85541
Bankruptcy Case No.: 08-08706
Type of Business: The Debtors operate the postnet store, Forest
View, Inc., dba Postnet; and run a real estate
company, Enos Enterprises, LLC.
Chapter 11 Petition Date: July 15, 2008
Court: District of Arizona (Phoenix)
Judge: James M. Marlar
Debtors' Counsel: Donald W. Powell, Esq.
Email: d.powell@cplawfirm.com
Carmichael & Powell, P.C.
7301 N. 16TH Street., Suite 103
Phoenix, AZ 85020
Tel: (602) 861-0777
Fax: (602) 870-0296
http://www.cplawfirm.com/
Total Assets: $1,520,050
Total Debts: $1,604,195
A list of the Debtor's 12 largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/azb08-08706.pdf
ENERGY PARTNERS: Dina Riviere to Resign as Accounting Officer
-------------------------------------------------------------
Energy Partners Ltd. disclosed in a regulatory SEC filing last
week that Dina Bracci Riviere, principal accounting officer, will
resign effective July 31, 2008.
About Energy Partners
Founded in 1998, Energy Partners Ltd. (NYSE: EPL) --
http://www.eplweb.com/-- is an independent oil and natural gas
exploration and production company based in New Orleans,
Louisiana. The company's operations are focused along the U.S.
Gulf Coast, both onshore in south Louisiana and offshore in the
Gulf of Mexico.
At March 31, 2008, the company's consolidated balance sheet showed
$815.7 million in total assets, $709.5 million in total
liabilities, and $106.2 million in total stockholders' equity.
* * *
As reported in the Troubled Company Reporter on March 4, 2008,
Standard & Poor's Ratings Services said that ratings on Energy
Partners Ltd. (B/Negative/--) would not be immediately affected by
several recent developments. The company announced $100.0 million
in noncash, pretax impairment charges, largely related to
mechanical failures, early depletion, and production difficulties
in fields located in its Western offshore area. Its leverage
metrics have weakened year-over-year, with debt per proved barrel
currently above $11 on an adjusted basis. And it has seen feeble
drilling and reserve replacement results in 2007.
As reported in the Troubled Company Reporter on March 3, 2008,
Moody's Investors Service downgraded Energy Partners Ltd.'s
Corporate Family Rating to Caa1 from B3, its Probability of
Default to Caa1 from B3, and the ratings on its $300.0 million
senior unsecured fixed rate notes and $150.0 million senior
unsecured floating rate notes to Caa2 (LGD 4, 67%) from Caa1
(LGD 4, 65%). The downgrade reflects EPL's continued weak capital
productivity, especially as evidenced by its 2007 results,
negative sequential quarterly production trends, and continued
high financial leverage. The rating outlook remains negative.
ENERLUME ENERGY: Inks Note Extension Agreement with N. Troiano
--------------------------------------------------------------
EnerLume Energy Management Corp. disclosed in a regulatory 8-K
filing Friday that on July 8, 2008, the company entered into a
promissory note extension agreement with Nicholas Troiano to amend
the terms of a secured convertible promissory note issued on
July 23, 2007. The secured note was originally issued for the
principal amount of $100,000, accrued interest at the rate of 12%
per annum, and was originally due on June 30, 2008.
Pursuant to the promissory note extension agreement, the maturity
date for the secured note shall be extended to June 30, 2010, and
shall continue to accrue interest at the rate of 12% per annum in
accordance with the original terms of the secured note. In
addition, Mr. Troiano will receive warrants to purchase 56,000
shares of the company's common stock exercisable until June 30,
2013 at $0.75 per share.
The company has also made the identical offer to all other holders
of the secured notes on the same terms and conditions as Mr.
Troiano.
Mr. Troiano is a member of the company's Board of Directors and
did not participate in the Board's decision to extend the notes or
the revised terms thereof.
A full-text copy of the Promissory Note Extension Agreement is
available for free at http://researcharchives.com/t/s?2f85
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.
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.
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.
FIRST MERCURY: Moody's Hikes Long-term Issuer Rating to Ba2
-----------------------------------------------------------
Moody's Investors Service upgraded the insurance financial
strength rating of First Mercury Insurance Company to Baa2 from
Baa3, and the long-term issuer rating of its parent company, First
Mercury Financial Corporation (NYSE: FMR), to Ba2 from Ba3. The
outlook for the ratings is stable. The rating action concludes a
review for possible upgrade that was initiated on Dec. 19, 2007.
Moody's noted that the company's achievement of Section 404
compliance was an important factor in the upgrade of the ratings,
as was its ability to maintain solid profit margins in its core
business.
Moreover, the acquisition of American Management Corporation
(AMC), principally a managing general agency, is expected be
accretive to earnings in the medium term and provide a source of
fee income. This fee income will partially offset the loss of fee
income associated with the recent sale of ARPCO.
First Mercury's ratings reflect the company's established position
in providing general and professional liability insurance for the
security industry, its modest catastrophe exposure, strong profit
margins in its core business, and fee income from certain
subsidiaries.
These strengths are partly offset by its modest scale, challenges
associated with being a new publicly-traded company, risks
associated with recent growth, and the company's focus on medium-
tail casualty business--which results in uncertainty with respect
to the adequacy of loss reserves.
These factors could lead to an upgrade of the group's ratings:
consistently strong financial profile given the company's modest
scale, an enduring commitment to a financial leverage profile
below 30%, together with ROEs above 10%, EBIT coverage
consistently above 7x, and absence of rating triggers and material
adverse change clauses in its credit facility.
Conversely, these factors could lead to a downgrade of the
ratings: combined ratio greater than 105%, adverse reserve
development in excess of 6% of carried reserves, adjusted
financial leverage above 40%, meaningful increase in property
catastrophe exposures, and operating leverage above 1.3 times.
The last rating action on First Mercury occurred on Dec. 19, 2007
when Moody's placed the ratings of FMIC and the parent company on
review for possible upgrade.
These ratings have been upgraded with a stable outlook:
-- First Mercury Financial Corporation -- long-term issuer
rating at Ba2.
-- First Mercury Insurance Company -- insurance financial
strength at Baa2.
Headquartered in Southfield, Michigan, First Mercury Financial
Corporation (NYSE: FMR) is the holding company for two insurance
operating companies, a wholesale insurance broker (CoverX
Corporation), and a managing general agency (American Management
Corporation).
Its insurance subsidiaries provide specialty insurance products
and services to the excess and surplus lines market in the United
States, with particular expertise in the security industry. In
2007, First Mercury reported GAAP net income of $41.7 million, a
combined ratio of 72.5%, and shareholders' equity of $229.4
million as of year end.
Moody's insurance financial strength ratings are opinions of the
ability of insurance companies to repay punctually senior
policyholder claims and obligations.
FORTUNOFF: Refutes Validity of $11.4 Million Reclamation Claims
---------------------------------------------------------------
According to Frank A. Oswald, Esq., at Togut Segal & Segal LLP,
in New York, more than 125 Reclamation Claimants have sent demand
letters to Fortunoff Fine Jewelry and Silverware LLC and its
debtor-affiliates for the return of their merchandise, seeking
roughly $11,450,000 of goods. After receiving the Demand
Letters, the Debtors reviewed the Reclamation Claims' legal
validity and subsequently determined that the Reclamation
Claimants do not have valid reclamation rights because of the
existence of prior liens on the property subject to the Demand
Letters.
The U.S. Bankruptcy Court for the Southern District of New York
entered a final order pursuant to Sections 105(a), 362, 503(b),
507(a), 546(c), and 546(h) of the Bankruptcy Code, granting
administrative expense status to obligations arising from
postpetition delivery of goods and establishing procedures for
addressing Reclamation Demands
Pursuant to the Reclamation Procedures, the Debtors are required
on or before the 90th day after the bankruptcy filing, to file a
notice listing the Reclamation Claims and the amount, if any,
that the Debtors determine to be valid for each Reclamation
Claim.
The Debtors delivered to the Court a list of Reclamation Claims
asserted against them, a full-text copy of which is available for
free at http://bankrupt.com/misc/ReclamationClaims.pdf
Mr. Oswald contended the Reclamation Claims are invalid to the
extent that they do not establish the prima facie elements of a
valid reclamation claim, hence, are subject to a valid legal
defense. However, Mr. Oswald told Judge James M. Peck that the
Debtors have not yet conducted a full-review as to which goods may
have been on hand as of the date each Demand Letter was received,
because doing so would have constituted an unnecessary -- as well
as time-consuming and costly undertaking -- when as a legal
matter, they have determined that the Reclamation Claims are not
valid.
"Many of the Reclamation Demands did not satisfy the prima facie
elements of a valid reclamation demand," Mr. Oswald said.
"Nevertheless, even if the Reclamation Demands satisfied the
prima facie elements and even if goods were in the Debtors'
possession at the time of the Demand, courts in this district
have ruled, consistent with the provisions of the Bankruptcy
Code, that reclamation claims may be invalid where such claims
are subject to the superior rights of a holder of a security
interest in the reclaimed goods."
The prima facie elements of a valid reclamation claim under
Section 546(c) are:
(a) the reclaimed goods were shipped in the ordinary course of
the seller's business;
(b) the buyer of the reclaimed goods was insolvent at the time
it received the goods;
(c) the buyer received the reclaimed goods within the 45-day
period to the commencement of the bankruptcy case; and
(d) the seller made an adequate written reclamation demand
within 45 days of the buyer's receipt of the reclaimed
goods.
Claimants Object
About 16 of the Reclamation Claimants reacted to the Debtors'
stand regarding their reclamation claims. The Objecting
Reclamation Claimants are:
* Mr. Bar-B-Q, Inc.;
* Eagle Box Co., Inc.;
* Bulbtronics, Inc., and Elk Lighting, Inc.;
* Eloquence Corporation;
* Leo Schachter Diamonds LLC, Kama Jewellery India Pvt. Ltd,
and Rama International LLC;
* Stein World LLC;
* Halsey themper Company;
* Rene Corriveau & Fils, Inc.;
* Elrene Home Fashions;
* Agio International Co., Ltd.;
* William Friedman Diamonds, Ltd.;
* BB&T Commercial Finance;
* Marlin Art, Inc.;
* Treasure Garden, Inc.; and
* Shade Trends, Ltd.
The Objecting Reclamation Claimants told the Court that when the
Debtors served the Reclamation Notice, they failed to address,
with any specificity, the reclamation demands. Rather, in
omnibus fashion, the Debtors summarily rejected all reclamation
demands based on unsubstantiated reference to prior perfected
floating liens on the Debtors' inventory and the Sale.
The Objecting Reclamation Claimants contended that the Debtors did
not disclose whether their goods were included in the Debtors'
property that was subject to credit agreements and a perfected
floating lien.
In addition, the Objecting Reclamation Claimants argued that:
-- the reclaimed goods are not subject to the floating lien
claimed by the Debtors;
-- to the extent that the claimed goods were sold, the
Reclamation Claimants are entitled to an administrative
claim, including a Section 503(b)(9) claim; and
-- the Debtors have failed to sufficiently and timely dispute
the Reclamation Claims.
Contrary to the Debtors' assertions, the Objecting Reclamation
Claimants also contend that their reclamation demands have both
met the prima facie elements of a valid reclamation claim
pursuant to Section 546(c).
Furthermore, the Objecting Reclamation Claimants objected to the
Debtors' reference of their claims as "unspecified." The
Claimants said that their demand clearly identifies all related
invoices concerning their claims. Mr. B-B-Q asserted that its
Claim's value is $75,524, and Bulbtronics asserted $33,138.
Accordingly, the Reclamation Claimants asked the Court to disallow
the Debtors' objection to their Reclamation Demands.
About Fortunoff
New York-based Fortunoff Fine Jewelry and Silverware LLC --
http://www.fortunoff.com/-- is a family owned business since
1922 founded by by Max and Clara Fortunoff. Fortunoff offers
customers fine jewelry and watches, antique jewelry and silver,
everything for the table, fine gifts, home furnishings including
bedroom and bath, fireplace furnishings, housewares, and seasonal
shops including outdoor furniture shop in summer and enchanting
Christmas Store in the winter. It opened some 20 satellite
stores in the New Jersey, Long Island, Connecticut and
Pennsylvania markets featuring outdoor furniture and grills
during the Spring/Summer season and indoor furniture (and in some
locations Christmas trees and decor) in the Fall/Winter season.
Fortunoff and two affiliates, M. Fortunoff of Westbury LLC and
Source Financing Corp., filed for chapter 11 petition on Feb. 4,
2008 (Bankr. S.D.N.Y. Case Nos. 08-10353 through 08-10355) in
order to effectuate a sale to NRDC Equity Partners LLC, --
http://www.nrdcequity.com/-- a private equity firm that
bought Lord & Taylor from Federated Department Stores.
Due to the U.S. Trustee's objection, Fortunoff is backing out of
its request to employ Skadden Arps Meagher & Flom LLC, as
bankruptcy counsel. Fortunoff is hiring Togut Segal & Segal LLP,
as their general bankruptcy counsel, but Skadden Arps will
continue to serve the Debtors as special counsel in connection
with the sale the Debtors' assets. Logan & Company, Inc., serves
as the Debtors' claims, noticing, and balloting agent. FTI
Consulting Inc. are the Debtors' proposed crisis manager.
An Official Committee of Unsecured Creditors has been appointed in
this case. Effective March 6, 2008, Morrison & Foerster LLP is
counsel to the Creditors Committee in substitution of Otterbourg
Steidler Houston & Rosen PC. Mahoney Cohen & Company, CPA, P.C.,
serves as financial advisor to the Creditors' Committee.
In their schedules, Fortunoff Fine Jewelry listed $5,052,315 total
assets and $136,626,948 total liabilities; Source Financing Corp.
listed $154,680,100 total assets and $176,961,631 total
liabilities; and M. Fortunoff of Westbury LLC listed $6,300,955
total assets and $119,985,788 total liabilities. The Debtors'
exclusive period to file a plan of reorganization ended June 3,
2008. (Fortunoff Bankruptcy News, Issue No. 13; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
FORTUNOFF: Court Denies Westwood's $472,367 Administrative Claim
----------------------------------------------------------------
Judge James M. Peck of the U.S. Bankruptcy Court for the Southern
District of New York, at the behest of Fortunoff Fine Jewelry and
Silverware LLC and its debtor-affiliates, denied Westwood LLC's
request for allowance and payment of the administrative expense it
asserts against the Debtors.
Representing the Debtors, Frank A. Oswald, Esq., at Togut Segal &
Segal LLP, in New York, had argued that Westwood's request is
procedurally deficient because it was filed unilaterally on two
days' notice, pursuant to the unambiguous terms of the Sale
Order.
Mr. Oswald noted that in accordance with the Sale Order, NRDC is
liable for the Agreed Cure Amount, while the Debtors do not have
any obligation to pay, or any liability for, any Cure Amounts.
Mr. Oswald had also told the Court that Westwood and NRDC reached
an agreement before the conclusion of the Sale Hearing -- and
NRDC's counsel once stated on the record of the hearing -- that
"there are no remaining issues" with respect to Westwood's cure
amount.
"The Debtors were not a party to the discussions between Westwood
and the Purchaser that led to the Agreed Cure Amount," Mr. Oswald
informed the Court.
As for the Cure Amount, Mr. Oswald noted that the $350,000
scheduled for Westwood appears to be an estimate of the "year end
true up" portion of Westwood's "unliquidated" cure claim.
Furthermore, Mr. Oswald argued that Westwood's request is premised
upon a misguided assertions that it will "suffer irreparable harm"
if its alleged cure claim is not paid. He asserted that even if
the Claim were valid, there are simply no unencumbered funds
available to pay Westwood's alleged Additional Cure Claim.
Westwood's Motion for Payment
Pursuant to Section 503(a) of the Bankruptcy Code, Westwood,
as landlord, had sought allowance and payment of an administrative
expense claim it asserts against the Debtors, as tenants, for
$472,367. Westwood had stated that the Claim is for unpaid cure
amounts in connection with the assumption and assignment of the
Debtors' lease of a Westbury store in Westbury, New York.
Andrew Dash, Esq., at Brown Rudnick LLP, in New York, had
contended that Westwood will suffer irreparable harm if the assets
of the Debtors' estate are dissipated, or action is taken to close
their bankruptcy cases, before Westwood is provided with an
opportunity to be heard.
Mr. Dash had related that the Westbury location was originally
opened by Fortunoff as its flagship store in 1964, and was
Fortunoff's most valued and important location. Thus, the
Westbury store was essential for any restructuring of the Debtors,
and key to the sale of the Debtors' assets to H Acquisition LLC,
an affiliate of NRDC Equity Partners LLC, he had
said.
Westwood had filed a limited response to the Debtors' Sale Motion
and had asked the Court to delay any order until the Debtors
provided more information regarding the lease assignments.
Westwood had also filed a limited objection and reservation of
rights to the Debtors' cure schedule, and disagreed with the
Debtors' proposed cure amounts, which only described Westwood's
cure amount as "unliquidated."
Mr. Dash had revealed that despite its numerous communications to
the Debtors up through Feb. 27, 2008, Westwood never received any
information from them regarding the cure amounts for the Westbury
Lease.
"On the same evening, Westwood was contacted by NRDC regarding
cure amounts for the Westbury Lease," Mr. Dash had told the Court.
"As a result of its discussions, Westwood agreed to forgo
attorney fees and indemnification rights to which it was
otherwise entitled as part of the Debtors' cure obligations.
However, Westwood never agreed to relinquish the Debtors' cure
obligation to pay year-end adjustments due under the Westbury
Lease."
Since the entry of the Sale Order, Westwood has been paid the
liquidated fixed amounts due under the Westbury Lease, Mr. Dash
said. However, Westwood has not been paid, and the Debtors
remain responsible, for the payment of $472,367, in year-end
adjustments under the Westbury Lease, Mr. Dash insists.
The Debtors received a bill from Simon Property Group, Inc. on
Feb. 8, 2008, for (i) a real estate tax adjustment for $245,757,
and (ii) additional unpaid common area maintenance and electricity
charges for $21,658. The Debtors are responsible for the payments
pursuant to the Westbury Lease, Mr. Dash had asserted, by virtue
of their obligation to make payments due under an operating
agreement between Westwood and Simon Property.
Mr. Dash had told the Court that the Debtors have been aware of
their responsibility for significant year-end adjustments as part
of their lease cure analysis, since at least as early as Feb. 3,
2008. As part of the Debtors' analysis related to the Westbury
Lease, the Debtors listed fixed amounts and an accrual of $350,000
for common area maintenance and real estate tax adjustments owed
to Westwood under the Westbury Lease.
"Thus, in early February 2008, the Debtors knew the fixed amounts
owed to Westwood under the Westbury Lease, knew about the
$245,757 real estate tax and $21,658 common area maintenance
adjustments, and knew they were responsible for common area
maintenance and real estate tax adjustments accrued for a total
amount of $350,000 under the Westbury Lease," Mr. Dash had argued.
NRDC notified Westwood about the $245,757 and $21,658 outstanding
year-end adjustment amounts owed under the Westwood Lease on
March 13, 2008. Subsequently, on June 9, NRDC notified Westwood
that the Debtors failed to pay an additional $204,952 they owed
as a cure amount under the Westbury Lease, for the portion of
School Taxes for the year beginning July 1, 2007, and ending
June 30, 2008, that the Debtors have accrued and are responsible
for paying as a cure.
"Thus, the Debtors currently owe cure amounts totaling $472,367
under the Westbury Lease for a real estate tax adjustment of
$245,757, a common area maintenance adjustment of $21,658, and
school taxes of $204,952," Mr. Dash had reasoned.
About Fortunoff
New York-based Fortunoff Fine Jewelry and Silverware LLC --
http://www.fortunoff.com/-- is a family owned business since
1922 founded by by Max and Clara Fortunoff. Fortunoff offers
customers fine jewelry and watches, antique jewelry and silver,
everything for the table, fine gifts, home furnishings including
bedroom and bath, fireplace furnishings, housewares, and seasonal
shops including outdoor furniture shop in summer and enchanting
Christmas Store in the winter. It opened some 20 satellite
stores in the New Jersey, Long Island, Connecticut and
Pennsylvania markets featuring outdoor furniture and grills
during the Spring/Summer season and indoor furniture (and in some
locations Christmas trees and decor) in the Fall/Winter season.
Fortunoff and two affiliates, M. Fortunoff of Westbury LLC and
Source Financing Corp., filed for chapter 11 petition on Feb. 4,
2008 (Bankr. S.D.N.Y. Case Nos. 08-10353 through 08-10355) in
order to effectuate a sale to NRDC Equity Partners LLC, --
http://www.nrdcequity.com/-- a private equity firm that
bought Lord & Taylor from Federated Department Stores.
Due to the U.S. Trustee's objection, Fortunoff is backing out of
its request to employ Skadden Arps Meagher & Flom LLC, as
bankruptcy counsel. Fortunoff is hiring Togut Segal & Segal LLP,
as their general bankruptcy counsel, but Skadden Arps will
continue to serve the Debtors as special counsel in connection
with the sale the Debtors' assets. Logan & Company, Inc., serves
as the Debtors' claims, noticing, and balloting agent. FTI
Consulting Inc. are the Debtors' proposed crisis manager.
An Official Committee of Unsecured Creditors has been appointed in
this case. Effective March 6, 2008, Morrison & Foerster LLP is
counsel to the Creditors Committee in substitution of Otterbourg
Steidler Houston & Rosen PC. Mahoney Cohen & Company, CPA, P.C.,
serves as financial advisor to the Creditors' Committee.
In their schedules, Fortunoff Fine Jewelry listed $5,052,315 total
assets and $136,626,948 total liabilities; Source Financing Corp.
listed $154,680,100 total assets and $176,961,631 total
liabilities; and M. Fortunoff of Westbury LLC listed $6,300,955
total assets and $119,985,788 total liabilities. The Debtors'
exclusive period to file a plan of reorganization ended June 3,
2008. (Fortunoff Bankruptcy News, Issue No. 13; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
FORTUNOFF: Four Creditors Demand Payment of Delivered Goods
-----------------------------------------------------------
Four creditors that delivered goods to Fortunoff Fine Jewelry and
Silverware LLC and its debtor-affiliates within 20 days before the
bankruptcy filing sought payment of their administrative
expense claims Pursuant to Section 503(b)(9) of the Bankruptcy
Code. The Creditors are:
Creditors Amount Asserted
--------- ---------------
Elk Lighting $5,835
Bulbtronics, Inc. 20,419
Direct Response Holdings LLC 186,790
dba Marke Communications
Stein World LLC 287,589
The Creditors informed the U.S. Bankruptcy Court for the Southern
District of New York that they have separately sent reclamation
demands to the Debtors. Moreover, the Creditors related that the
Debtors have neither responded to the demands, nor returned the
goods.
The Creditors contended that they are entitled to administrative
expense claims for the value of their goods pursuant to Section
503(b)(9) of the Bankruptcy Code.
Stein World told the Court that it has complied with an order of
the Court setting certain procedures for addressing reclamation
demands, and establishing mechanisms and procedures for creditors
to make their claims.
Diane P. Furr, Esq., at Poyner & Spruill LLP, in Charlotte, North
Carolina, stated that not only has Stein World filed a
reclamation claim, it has also carved out its claim and reserved
its right to file a separate request for recognition and payment.
Accordingly, Stein World asked the Court to allow its
administrative expense claim for $287,589, and compel the Debtors
to immediately pay the Claim pursuant to Section 503(b)(9).
About Fortunoff
New York-based Fortunoff Fine Jewelry and Silverware LLC --
http://www.fortunoff.com/-- is a family owned business since
1922 founded by by Max and Clara Fortunoff. Fortunoff offers
customers fine jewelry and watches, antique jewelry and silver,
everything for the table, fine gifts, home furnishings including
bedroom and bath, fireplace furnishings, housewares, and seasonal
shops including outdoor furniture shop in summer and enchanting
Christmas Store in the winter. It opened some 20 satellite
stores in the New Jersey, Long Island, Connecticut and
Pennsylvania markets featuring outdoor furniture and grills
during the Spring/Summer season and indoor furniture (and in some
locations Christmas trees and decor) in the Fall/Winter season.
Fortunoff and two affiliates, M. Fortunoff of Westbury LLC and
Source Financing Corp., filed for chapter 11 petition on Feb. 4,
2008 (Bankr. S.D.N.Y. Case Nos. 08-10353 through 08-10355) in
order to effectuate a sale to NRDC Equity Partners LLC, --
http://www.nrdcequity.com/-- a private equity firm that
bought Lord & Taylor from Federated Department Stores.
Due to the U.S. Trustee's objection, Fortunoff is backing out of
its request to employ Skadden Arps Meagher & Flom LLC, as
bankruptcy counsel. Fortunoff is hiring Togut Segal & Segal LLP,
as their general bankruptcy counsel, but Skadden Arps will
continue to serve the Debtors as special counsel in connection
with the sale the Debtors' assets. Logan & Company, Inc., serves
as the Debtors' claims, noticing, and balloting agent. FTI
Consulting Inc. are the Debtors' proposed crisis manager.
An Official Committee of Unsecured Creditors has been appointed in
this case. Effective March 6, 2008, Morrison & Foerster LLP is
counsel to the Creditors Committee in substitution of Otterbourg
Steidler Houston & Rosen PC. Mahoney Cohen & Company, CPA, P.C.,
serves as financial advisor to the Creditors' Committee.
In their schedules, Fortunoff Fine Jewelry listed $5,052,315 total
assets and $136,626,948 total liabilities; Source Financing Corp.
listed $154,680,100 total assets and $176,961,631 total
liabilities; and M. Fortunoff of Westbury LLC listed $6,300,955
total assets and $119,985,788 total liabilities. The Debtors'
exclusive period to file a plan of reorganization ended June 3,
2008. (Fortunoff Bankruptcy News, Issue No. 13; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
FREMONT GENERAL: Court Okays Sale of Bank Assets to CapitalSource
-----------------------------------------------------------------
Fremont General Corporation, doing business primarily through its
wholly-owned bank subsidiary, Fremont Investment & Loan, said the
United States Bankruptcy Court for the Central District of
California, Santa Ana Division issued a court order granting the
motion filed by the Company on June 23, 2008, which sought
approval to consummate the acquisition by CapitalSource Inc.,
through its newly formed wholly-owned California industrial bank
subsidiary, CapitalSource Bank (in organization), of a substantial
portion of FIL's assets, including all of FIL's branches, and the
assumption of all of FIL's deposits pursuant to the terms of the
Purchase and Assumption Agreement, dated April 13, 2008.
The Order accomplishes this by authorizing the Company, as the
sole shareholder of Fremont General Credit Corporation, a
California corporation and the direct parent company of FIL, to
direct FGCC to vote its shares of FIL, which represent 100% of FIL
shares, to consummate the transactions contemplated by the
Purchase Agreement.
CapitalSource Deal
As reported by the Troubled Company Reporter on June 19, 2008,
Fremont General obtained approval from the California Department
of Financial Institutions and the Federal Deposit Insurance
Corporation to sell a substantial portion of FIL's assets,
including all of FIL's branches, to CapitalSource. As part of the
deal, CapitalSource will also assume all of FIL's deposits
pursuant to the terms of a Purchase and Assumption Agreement,
dated April 13, 2008.
CapitalSource agreed to pay $58 million in cash, a 2% premium on
all FIL's deposits (which totaled $7.9 billion as of September 30,
2007) and the net book value of FIL's participation interests at a
3% discount.
The participation interests related to a July 2007 deal wherein
Fremont General sold its commercial real estate lending business
and the related $6.27 billion commercial real estate loan
portfolio to iStar Financial, Inc. Fremont General received $1.89
billion in cash and a $4.2 billion participation interest in the
total loan portfolio, representing 70% of the unpaid principal
balance of the loan portfolio.
FIL was entitled to receive 70% of all principal payments on the
loans sold to iStar.
CapitalSource also agreed to loan FIL up to $200 millin to
facilitate the consummation of the transaction. The loan is
secured by FIL's servicing advance receivables.
Deal to Close Before Month's End
Entry of the Order by the Bankruptcy Court satisfies a significant
closing condition pursuant to the Purchase Agreement. It is
expected that the transaction will close prior to July 31, 2008,
subject to the parties satisfying the remaining closing
conditions.
The Company clarifies that FIL has not filed for bankruptcy and
was not included as part of the Company's bankruptcy filing. FIL
continues to operate its business in the normal course. The
bankruptcy filing by the Company does not impact the banking
operations of FIL or affect its Federal Deposit Insurance
Corporation insurance of deposit accounts, which continue to the
fullest extent provided by law.
About Fremont General
Fremont General (OTC: FMNTQ) -- http://www.fremontgeneral.com/--
is a financial services holding company with $8.8 billion in total
assets, at September 30, 2007. The Company is engaged in deposit
gathering through a retail branch network located in the coastal
and Central Valley regions of Southern California through Fremont
Investment & Loan. Fremont Investment & Loan funds its operations
primarily through deposit accounts sourced through its 22 retail
banking branches which are insured up to the maximum legal limit
by the FDIC.
The Retail Banking Division of the Bank continues to offer a
variety of savings and money market products as well as
certificates of deposits across its 22 branch network. Customer
deposits remain fully insured by the FDIC up to at least $100,000
and retirement accounts remain insured separately up to an
additional $250,000.
Fremont General Corp. filed for Chapter 11 protection on June 18,
2008, (Bankr. C.D. Calif. Case No.: 08-13421). Robert W. Jones,
Esq., and J. Maxwell Tucker, Esq., at Patton Boggs LLP, represent
the Debtor in its restructuring efforts. The Debtor selected
Kurtzman Carson Consultants LLC as its claims agent.
Peter C. Anderson, the U.S. Trustee for Region 16, has appointed
five creditors to serve on an Official Committee of Unsecured
Creditors in the case.
In its schedules, Fremont General reported $362,227,537 in total
assets and $326,529,372 in total debts. When the Debtor filed for
protection from its creditors, it listed total assets of
$643,197,000 and total debts of $320,630,000.
Tiffany Kary of Bloomberg News reported that the Debtor's co-
counsel, Scott H. Yun, Esq., at Stutman Treister & Glat, said the
assets and debts in the initial court filing were for the period
Sept. 30, 2007. The estimates exclude potential recoveries from
lawsuits, Ms. Kary said.
FREMONT GENERAL: U.S. Trustee Appoints 9-Member Equity Panel
------------------------------------------------------------
The United States Trustee for the Central District of California
appointed nine members to the Official Committee of Equity Holders
in Fremont General Corp.'s bankruptcy case, at the diretion of the
U.S. Bankruptcy Court for the Central District of California.
Adequate Representation
An ad hoc group of equity holders appeared before the Bankruptcy
Court seeking appointment of an equity committee. Evan D. Smiley,
Esq., at Weiland Golden Smiley Wang Ekvall & Strok, LLP, in Costa
Mesa, California, on the group's behalf, argued that Fremont
General is not "hopelessly insolvent," and that shareholders have
a substantial and real economic state in the case and could
receive a significant distribution.
Absent appointment of an equity panel, the interests of
shareholders will not be adequately represented in the Fremont
General case, Mr. Smiley argued.
The ad hoc group represents 24% of the outstanding stock in the
Debtor.
Mr. Smiley pointed to the Debtor's sale of substantially all of
Fremont Investment & Loan's assets to CapitalSource Inc. Under
the deal, CapitalSource agreed to pay $58 million in cash, a 2%
premium on all FIL's deposits (which totaled $7.9 billion as of
September 30, 2007) and the net book value of FIL's participation
interests at a 3% discount.
The participation interests related to a July 2007 deal wherein
Fremont General sold its commercial real estate lending business
and the related $6.27 billion commercial real estate loan
portfolio to iStar Financial, Inc. Fremont General received $1.89
billion in cash and a $4.2 billion participation interest in the
total loan portfolio, representing 70% of the unpaid principal
balance of the loan portfolio. FIL was entitled to receive 70% of
all principal payments on the loans sold to iStar.
The ad hoc group, according to Mr. Smiley, understands that FIL
will probably receive between $90 million to $109 million from the
CapitalSource sale. The ad hoc group also understands that FIL's
cash exceeds liabilities, Mr. Smiley says.
Mr. Smiley also pointed out that the Debtor has failed to release
financial information to its shareholders since the third quarter
of 2007.
The U.S. Trustee tried to block the request, citing that
appointment of an equity panel is -- at this time -- premature.
The U.S. Trustee also pointed out that the ad hoc group has failed
to meet its burden of proof to show that there is equity and that
there is no adequate representation.
Judge Erithe Smith directed the appointment of an equity committee
at a hearing June 24, 2008.
9-Member Panel
The members of the equity committee are:
1. John M. Koral
5322 Odin Drive
Boulder, CO 80301
2. William M. Stern
8000 Maryland Avenue, Suite 800
St. Louis, MO 63105-3911
3. Paul Dagostino
5642 Scripps St.
San Diego, CA 92122
4. William Holmes
2467 Cheyenne Drive
Gambrills, MD 21054
5. Frank E. Williams, Jr.
P.O. Box 4004
Merrifield, VA 22116
6. Jeffrey Michael Pies
4280 Galt Ocean Dr. #6K
Fort Lauderdale, FL 33308
7. Lynn Ehlers
4725 - 27th Avenue So.
Minneapolis, MN 55406-3721
8. John M. Mlynick
23 Mechanic St.
Shelburne Falls, MA 01370
9. Jonathan Siegel
6701 Blvd. Est., Apt. 52
West New York, NJ 07093
About Fremont General
Fremont General (OTC: FMNTQ) -- http://www.fremontgeneral.com/--
is a financial services holding company with $8.8 billion in total
assets, at September 30, 2007. The Company is engaged in deposit
gathering through a retail branch network located in the coastal
and Central Valley regions of Southern California through Fremont
Investment & Loan. Fremont Investment & Loan funds its operations
primarily through deposit accounts sourced through its 22 retail
banking branches which are insured up to the maximum legal limit
by the FDIC.
The Retail Banking Division of the Bank continues to offer a
variety of savings and money market products as well as
certificates of deposits across its 22 branch network. Customer
deposits remain fully insured by the FDIC up to at least $100,000
and retirement accounts remain insured separately up to an
additional $250,000.
Fremont General Corp. filed for Chapter 11 protection on June 18,
2008, (Bankr. C.D. Calif. Case No.: 08-13421). Robert W. Jones,
Esq., and J. Maxwell Tucker, Esq., at Patton Boggs LLP, represent
the Debtor in its restructuring efforts. The Debtor selected
Kurtzman Carson Consultants LLC as its claims agent.
Peter C. Anderson, the U.S. Trustee for Region 16, has appointed
five creditors to serve on an Official Committee of Unsecured
Creditors in the case.
In its schedules, Fremont General reported $362,227,537 in total
assets and $326,529,372 in total debts. When the Debtor filed for
protection from its creditors, it listed total assets of
$643,197,000 and total debts of $320,630,000.
Tiffany Kary of Bloomberg News reported that the Debtor's co-
counsel, Scott H. Yun, Esq., at Stutman Treister & Glat, said the
assets and debts in the initial court filing were for the period
Sept. 30, 2007. The estimates exclude potential recoveries from
lawsuits, Ms. Kary said.
FTS GROUP: Rescinds $3.5MM Asset Purchase Agreement with Metro One
------------------------------------------------------------------
FTS Group Inc. disclosed that on July 14, 2008, the company
together with its wholly-owned subsidiary, OTG Technologies Group
Inc., rescinded the asset purchase agreement with Metro One
Development Inc. intended to transfer the business of On The Go
HealthCare Inc. to the company. The company said that it has
notified Metro One Development Inc. of the rescission and
termination of the transaction.
As disclosed in the Troubled Company Reporter on March 31, 2008,
FTS Group, together with its wholly owned subsidiary OTG
Technologies Group agreed to purchase certain assets of
Metro One's value-added reseller business unit, dba On The Go
Technologies Group, for $4 million.
As reported in the TCR on June 25, 2008, the company agreed to
amend certain terms of the binding letter of intent entered with
Metro One Development Inc., reducing the aggregate purchase price
paid to Metro One from $4 million to approximately $3,511,864.
Headquartered in Tampa, Florida, FTS Group Inc. (OTC BB: FLIP) --
http://www.ftsgroup.com/-- is a publicly traded acquisition and
development company focused on acquiring, developing and investing
in cash flow positive businesses and viable business ventures
those in the Technology, Wireless and Internet space. The company
generates revenue through its three wholly owned subsidiaries; See
World Satellites, Inc., FTS Wireless, Inc. and Elysium Internet
Inc.
Going Concern Doubt
As reported in the Troubled Company Reporter on May 9, 2008,
Houston-based R.E. Bassie & Co. expressed substantial doubt about
FTS Group Inc.'s ability to continue as a going concern after
auditing the company's consolidated financial statements for the
year ended Dec. 31, 2007. The auditing firm pointed to the
company's recurring losses from operations.
GANNETT CO: Profit Drops 36% to $232MM in Quarter Ended June 29
---------------------------------------------------------------
Gannett Co. Inc. reported a 36% plunge in second-quarter profit as
the slowing U.S. economy accelerated a falloff in newspaper
advertising revenue, The Wall Street Journal said.
In a regulatory filing for 13 weeks ended June 29, 2008, the
company stated that its net income was $232.7 million compared to
$365.6 million for the same period in the previous year.
The year-earlier profit was boosted by gains on the sale of
several newspapers, WSJ pointed out. Excluding those gains, the
decline in earnings was 18%, WSJ added.
The quarterly results of the company highlighted the increasingly
parlous state of the newspaper industry, WSJ added. The Journal
indicated that Gannet's publishing ad revenue fell 14% to
$1.11 billion in the quarter, with USA Today seeing a 17% drop.
Circulation revenue in publishing was down 2%, WSJ stated.
WSJ related that revenue at broadcasting, the smaller of Gannett's
businesses, fell 6% and the overall Gannett's revenue fell 10% to
$1.72 billion.
The publishing industry revenue has declined in the recent months
as more readers resort to the Internet as source of news.
About Gannett Co. Inc.
Headquartered in McLean, Virginia, Gannett Co. Inc. (NYSE:GCI) --
http://www.gannett.com/-- is an international news and
information company. In the United States, the company publishes
85 daily newspapers, including USA TODAY, and nearly 900 non-daily
publications. Along with each of its daily newspapers, the
company operates Websites offering news, information and
advertising that is customized for the market served and
integrated with its publishing operations. Newspaper publishing
operations in the United Kingdom, operating as Newsquest, include
17 paid-for daily newspapers, almost 300 non-daily publications,
locally integrated Websites and classified business Websites with
national reach. The company has two segments: newspaper
publishing and broadcasting.
GLOBAL GEAR: Voluntary Chapter 11 Case Summary
----------------------------------------------
Debtor: Global Gear & Machine Company, Inc.
3725 Carolina Street
Paducah, KY 42003
Related Information: Russell P. Bottoms, Jr., president, filed
the petition on the Debtor's behalf.
Bankruptcy Case No.: 08-50645
Chapter 11 Petition Date: July 14, 2008
Court: Western District of Kentucky (Paducah)
Judge: Thomas H. Fulton
Debtor's Counsel: Mark C. Whitlow, Esq.
Whitlow, Roberts, Houston & Straub, PLLC
P.O. Box 995, 300 Broadway
Paducah, KY 42002-0995
Tel: (270) 443-4516
Fax: (270) 443-4571
(lhuff@whitlow-law.com)
Total Assets: $0
Total Debts: $3,123,885
A list of the Debtor's largest unsecured creditors is available
for free at: http://bankrupt.com/misc/kywb08-50645.pdf
GOODY'S FAMILY: Gets Final OK to Use GECC et al.'s $210 Mil. Loan
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware authorized
Goody's Family Clothing Inc. and its debtor-affiliates to obtain,
on a final basis, up to $210,000,000 in debtor-in-possession
financing from a consortium of financial institutions including
(i) General Electric Capital Corporation, (ii) Bank of America
N.A., (iii) 1903 Onshore SPV LLC, (iv) GB Merchant Partners LLC,
and (v) PGDYS Lending LLC.
As reported in the Troubled Company Reporter on June 13, 2008, the
committed $210,000,000 DIP financing is comprised of:
a) a $175,000,000 senior revolving credit facility including
(i) a $75,000,000 letter of credit sub-limit and (ii) a $20
million swingline loan sub-limit from General Electric and
BoA,
b) a $15,000,000 Term Loan B Credit Facility from 1903 onshore,
and
c) a $20 million DIP Tranche C Facility from PDGYS Lending
consist of (i) $15 million term loan, and (ii) a $5 million
revolving credit overadvance facility.
The proceeds of the loans will be used to provide working capital
and general corporate demands and refinance prepetiton debt
obligations.
The DIP facility is subject to a $1,500,000 carve-out for payment
of expenses incurred by professional advisors retained by the
Debtors.
The Debtors will pay a host of fees including a $600,000 non-
refundable closing fee in the aggregate.
To secure their DIP obligations, the lender will be granted a
superpriority administrative expense claim status over any and
all administrative expense claims against the Debtors' estate.
Furthermore, the DIP liens will be secured by substantially all
assets of the Debtors and junior the carve-out.
The DIP agreement contain appropriate and customary events of
default. Specifically, failure to comply these requirements
constitute an event of default, among them:
i) failure to file a Chapter 11 plan and disclosure statement
by Oct. 10, 2008, and obtain court approval of a disclosure
statement by Nov. 25, 2008, and
ii) failure to obtain confirmation of a plan by Jan. 12, 2009,
and become effective by Feb. 10, 2009.
The Debtors also asked the Court to use the lenders' cash
collateral for payments to operating expenses.
Before they filed for bankruptcy, the Debtors entered into a
senior secured credit agreement that provided for:
i) a $210,000,000 revolving credit facility and a $15,000 Term
A Loan from several lenders led by The CIT Group/Business
Credit Inc. and
ii) a $10,000,000 Term B Loan from 1903 Onshore.
In addition, the Debtor reached another credit agreement that
provided a $40,000,000 loan and subsequent loan of $15,000,000
from GMM Capital LLC and PGDYS Lending. At present, GMM Capital
owns 15% of the equity interests in Goody's Holdings Inc., a non-
debtor entity.
As of the Debtors' bankruptcy filing, about $139,000,000 in loans
in the aggregate remain outstanding under the agreements.
On Jan. 16. 2008, PGDYS Lending provided an additional $65,000,000
financing under the term loan agreement. Approximately
$67,000,000 in loans remain outstanding as of June 9, 2008.
A full-text copy of the debtor-in-possession motion is available
for free at http://ResearchArchives.com/t/s?2dce
About Goody's Family
Headquartered in Knoxville, Tennessee, Goody's Family Clothing
Inc. -- http://www.shopgoodys.com/-- operates chains of clothing
stores. The company is owned by Goody's Holdings Inc., a non-
debtor entity. As of May 31, 2008, the company operates 355
stores in several states with approximately 9,868 personnel of
which 170 employees are covered under a collective bargaining
agreement.
The company and 19 of its affiliates filed for Chapter 11
protection on June 9, 2008 (Bankr. D. Del. Lead Case No.08-11133).
Gregg M. Galardi, Esq., and Marion M. Quirk, Esq., at Skadden Arps
Slate Meagher & Flom LLP, represent the Debtors. When the Debtors
filed for protection against their creditors, they listed assets
and debts between $100 million and $500 million.
As of May 3, 2008, the Debtors' records reflected total assets of
$313,000,000 -- book value -- and total debts of $443,000,000.
HAMILTON SILVA: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Hamilton R. Silva
Junia L. Silva
178 Ridge Road
Rutherford, NJ 0707
Bankruptcy Case No.: 08-22979
Chapter 11 Petition Date: July 10, 2008
Court: District of New Jersey (Newark)
Debtor's Counsel: James H. Cleary, Esq.
(clearylaw@verizon.net)
71 Kip Avenue, PO Box 127
Rutherford, NJ 07070
Tel: (201) 939-3444
Fax: (201) 939-7666
Total Assets: $5,923,419
Total Debts: $5,576,776
A list of the Debtor's largest unsecured creditors is available
for free at: http://bankrupt.com/misc/nj08-22979.pdf
HARTFORD LEVERAGED: Fitch Withdraws 'C/DR6' Rating on $125MM Notes
------------------------------------------------------------------
Fitch Ratings withdraws its rating on Hartford Leveraged Loan
Fund, Ltd effective immediately:
-- $125,000,000 income notes and shares rated 'C/DR6'.
These actions are the result of Hartford's portfolio liquidation
which occurred at the direction of the swap counterparty (after
the transaction breached its termination trigger on Feb. 7, 2008).
The income notes and shares have received approximately
$15,000,000 in initial distributions and are awaiting the
settlement of approximately $150,000 of additional sales.
HOLLINGER INC: Directors Stanley Beck and David Rattee Resign
-------------------------------------------------------------
Hollinger Inc. disclosed that its remaining directors, Stanley
Beck and David Rattee, have resigned from the company's board of
directors.
The company and its subsidiaries, Sugra Ltd. and 4322525 Canada
Inc., are subject to proceedings in Canada under the Companies'
Creditors Arrangement Act and in the United States under
Chapter 15 of the U.S. Bankruptcy Code.
Under the terms of an order issued pursuant to proceedings under
the CCAA on May 21, 2008, and amended July 3, 2008, William E.
Aziz was appointed chief restructuring officer of the company
pursuant to an agreement between the company and BlueTree Advisors
Inc., a company affiliated with Mr. Aziz.
Mr. Aziz will in that capacity assume the responsibilities that
would otherwise be carried out by the company's board of
directors, subject to the oversight of Ernst & Young Inc., the
court-appointed Monitor, and the CCAA court.
The Order also provided for the company to conduct a claims
process for the applicants, which the company will also do for its
non-Applicant subsidiaries as part of their winding-up.
Also, under the Order, retired justice John D. Ground has been
appointed as Litigation Trustee to administer the company's
litigation assets, assisted by an Advisory Committee, and under
the supervision of the Monitor and the CCAA court.
About Hollinger Inc.
Based in Toronto, Ontario, Hollinger Inc. (TSX: HLG.C)(TSX:
HLG.PR.B) -- http://www.hollingerinc.com/-- owns approximately
70.1% voting and 19.7% equity interest in Sun-Times Media Group
Inc., formerly Hollinger International Inc., a media company with
assets which include the Chicago Sun-Times newspaper and
Suntimes.com and a number of community newspapers and websites
serving communities in the Chicago area.
The company, along with two affiliates, 4322525 Canada Inc. and
Sugra Limited, filed separate Chapter 15 petitions on Aug. 1, 2007
(Bankr. D. Del. Case Nos. 07-11029 through 07-11031). Hollinger
also initiated Court-supervised restructuring under the Companies'
Creditors Arrangement Act (Canada) on the same day.
Derek C. Abbott, Esq., and Kelly M. Dawson, Esq., at Morris,
Nichols, Arsht & Tunnell LLP, represents the Debtors in their U.S.
proceedings.
As reported in the Troubled company Reporter on Feb. 22, 2008,
Hollinger Inc.'s consolidated balance sheet at Dec. 31, 2007,
showed C$79.8 million in total assets and C$219.3 million in
total liabilities, resulting in a C$139.5 million total
stockholders' deficit.
INTERSTATE BAKERIES: June 30 Deadline Passed, But No Plan Filed
---------------------------------------------------------------
Interstate Bakeries Corporation's deadline to file a new plan of
reorganization expired on June 30, 2008. No new plan was filed
with the U.S. Bankruptcy Court for the Western District of
Missouri as of that date.
IBC was required, pursuant to the Second Amended and Restated
Credit Agreement, to deliver a new a plan that:
(i) is supported by the Bakery, Confectionery, Tobacco
Workers and Grain Millers International Union and the
International Brotherhood of Teamsters, which comprise
its primary unions, and
(ii) provide for the refinancing of the Second Amended and
Restated Revolving Credit Agreement in full.
Under the Second Amended and Restated Credit Agreement, if IBC
fails to file a new plan by the June 30 deadline, it must deliver
to JPMorgan Chase Bank, N.A., as administrative agent and
collateral agent for the lenders, a schedule of proposed asset
sales pursuant to Section 363 of the Bankruptcy Code.
On July 11, 2008, IBC notified the Court of auction results for
the sale of certain of its properties in California pursuant to
Section 363.
IBC filed a Plan of Reorganization in November 2007, which was
amended in January 2008, but failed to move forward due to the
Teamsters' refusal to support the Plan.
As widely reported, Silver Point Financing LLC, Ripplewood
Holdings, Yucaipa Cos. and Grupo Bimbo expressed interest in IBC,
but Yucaipa and Grupo Bimbo have dropped out of the talks. IBC
and the Teamsters have not resumed talks since October 2007,
according to reports.
Auction Results
Pursuant to Section 363 of the Bankruptcy Code, the Debtors
conducted on July 11, 2008, auctions with respect to the sale of
real properties located in Los Angeles, Long Beach and Gardena in
the state of California, as set forth in the court-approved
bidding procedures.
The highest or otherwise best bidders for the Gardena and Long
Beach Properties are:
Property Location Successful Bidder Purchase Price
----------------- ----------------- --------------
17201 South Figueroa St. 18010 Figueroa LLC $2,450,000
Gardena, California
2605 East 67th Street S. K. Jasaitis 1,100,000
Long Beach, California and Ed Whittemore
The Court was slated to hold a hearing on July 16, 2008, to
approve the sale of the Properties to the Successful Bidders.
About Interstate Bakeries
Headquartered in Kansas City, Missouri, Interstate Bakeries
Corporation is a wholesale baker and distributor of fresh-baked
bread and sweet goods, under various national brand names,
including Wonder(R), Baker's Inn(R), Merita(R), Hostess(R) and
Drake's(R). Currently, IBC employs more than 25,000 people and
operates 45 bakeries, as well as approximately 800 distribution
centers and approximately 800 bakery outlets throughout the
country.
The company and eight of its subsidiaries and affiliates filed for
chapter 11 protection on Sept. 22, 2004 (Bankr. W.D. Mo. Case No.
04 45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors
in their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $1,626,425,000 in
total assets and $1,321,713,000 (excluding the $100,000,000 issue
of 6% senior subordinated convertible notes due Aug. 15, 2014) in
total debts. The Debtors' filed their Chapter 11 Plan and
Disclosure Statement on Nov. 5, 2007. Their exclusive period to
file a chapter 11 plan expired on November 8. On Jan. 25, 2008,
the Debtors filed their First Amended Plan and Disclosure
Statement. On Jan. 30, 2008, the Debtors received Court approval
of the First Amended Disclosure Statement.
IBC confirmed that it has not received any qualifying alternative
proposals for funding its plan of reorganization in accordance
with the Court-approved alternative proposal procedures. As a
result, no auction was held on Jan. 22, 2008, as would have been
required under those procedures. The deadline for submission of
alternative proposals was Jan. 15, 2008.
(Interstate Bakeries Bankruptcy News, Issue No. 102; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000).
INTERSTATE BAKERIES: Strikes Deals With 16 Local UFCW Units
-----------------------------------------------------------
In a supplemental brief filed with the U.S. Bankruptcy Court for
the Western District of Missouri dated July 9, 2008, Interstate
Bakeries Corporation and its affiliates reported that they have
reached ratified modification agreements with 16 local affiliates
of the United Food and Commercial Workers that cover 17 collective
bargaining agreements.
The Debtors had sent a formal proposal to UFCW International
regarding the CBA modifications, pursuant to the First Amended
Joint Plan of Reorganization. The salient provisions of the
Modified Agreement include:
(i) a five-year extension of the existing Local Agreements
through April 6, 2013,
(ii) additional wage increases,
(iii) modified health and welfare coverage,
(iv) retained amounts of pension contributions, and
(v) a profit sharing program for the benefit of all
IBC-union-represented, hourly or non-exempt employees.
In light of the ratification of the Modified Agreements, the
Debtors withdraw their request to reject the CBAs as to UFCW
Local 2, Local 21, Local 44, Local 23, Local 101, Local 367,
Local 373, Local 431, Local 555, Local 655, Local 700, Local 870,
Local 881, Local 1059, Local 1099, Local 1179, Local 1473 and
Local 1546, as well as Locals 5 and 8 which represent employees
formerly covered by Local 588.
Headquartered in Kansas City, Missouri, Interstate Bakeries
Corporation is a wholesale baker and distributor of fresh-baked
bread and sweet goods, under various national brand names,
including Wonder(R), Baker's Inn(R), Merita(R), Hostess(R) and
Drake's(R). Currently, IBC employs more than 25,000 people and
operates 45 bakeries, as well as approximately 800 distribution
centers and approximately 800 bakery outlets throughout the
country.
The company and eight of its subsidiaries and affiliates filed for
chapter 11 protection on Sept. 22, 2004 (Bankr. W.D. Mo. Case No.
04 45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors
in their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $1,626,425,000 in
total assets and $1,321,713,000 (excluding the $100,000,000 issue
of 6% senior subordinated convertible notes due Aug. 15, 2014) in
total debts. The Debtors' filed their Chapter 11 Plan and
Disclosure Statement on Nov. 5, 2007. Their exclusive period to
file a chapter 11 plan expired on November 8. On Jan. 25, 2008,
the Debtors filed their First Amended Plan and Disclosure
Statement. On Jan. 30, 2008, the Debtors received Court approval
of the First Amended Disclosure Statement.
IBC confirmed that it has not received any qualifying alternative
proposals for funding its plan of reorganization in accordance
with the Court-approved alternative proposal procedures. As a
result, no auction was held on Jan. 22, 2008, as would have been
required under those procedures. The deadline for submission of
alternative proposals was Jan. 15, 2008.
(Interstate Bakeries Bankruptcy News, Issue No. 102; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000).
INTERSTATE BAKERIES: Wants to Reject CBA with UFCW Local 1360
-------------------------------------------------------------
Interstate Bakeries Corporation and its affiliates seek permission
from the U.S. Bankruptcy Court for the Western District of
Missouri to reject their collective bargaining agreement with the
United Food and Commercial Workers Local No. 1360.
Tom A. Jerman, Esq., at O'Melveny & Myers LLP, in Washington,
D.C., says Interstate Bakeries must continue to pursue its request
to reject with respect to UFCW Local No. 1360, which represents
approximately six sales clerks at IBC's Black Horse Pike,
Bellmawr, New Jersey, and Gateway Blvd., Route 45, Westville, New
Jersey Thrift Stores.
Mr. Jerman relates that the Debtors held a meeting with
representatives from UFCW International and UFCW local unions to
negotiate modification agreements, during which no Local 1360
representative, among others, was in attendance.
Interstate Bakeries has reached ratified modification agreements
with 16 local UFCW affiliates that cover 17 collective bargaining
agreements.
Following discussions with the UFCW International over the terms
of the various local agreement templates, IBC and a
representative of Local 1360 discussed, on April 23, 2008, the
proposed agreement applicable to Local 1360. The Debtors also
provided Local 1360 with a Defined Benefit Plan summary, an
original and revised costing of the proposed modification
agreement, and a deflation analysis, Mr. Jerman says.
On May 8, 2008, IBC provided Local 1360 with a revised proposal,
along with an explanation of the company contribution for health
and welfare benefits. The revised Modification Agreement was
accepted by the representative of Local 1360 on May 12, and was
presented to the membership of Local 1360 for ratification.
However, the membership of Local 1360 voted against the proposed
agreement, Mr. Jerman notes.
The Debtors communicated with Local 1360's representative to (i)
remind the Local 1360 membership that it was not being asked to
provide greater concessions than other groups; (ii) provide a
chart comparing various concessions made by IBC's other union-
represented employees, including other UFCW locals; and (iii)
offer that IBC was open to suggestions as to how to achieve
ratification while still attaining concessions necessary for IBC
to exit its bankruptcy.
Mr. Jerman says that Local 1360's representative did not suggest
any modifications to the Revised Modification Agreement and set
it out for another ratification vote on May 22, 2008, which the
Local 1360 membership, again, failed to ratify.
According to its representative, Local 1360 intended to provide
IBC with modifications to the health and welfare plan aspect of
the Agreement. IBC found that their proposed revisions "which
did not increase IBC's costs, was acceptable" and was
incorporated in the second Revised Modification Agreement.
The Local indicated it would put the Second Revised Modification
Agreement to a ratification vote on July 14, 2008, Mr. Jerman
says.
A full-text copy of the Second Revised Modification Agreement is
available at no charge at:
http://bankrupt.com/misc/Local1360_Second_Revised_Modification_Agr
eement.pdf
Mr. Jerman maintains that since IBC's first proposal to Local
1360 in February 2008, the Debtors have undertaken a
comprehensive program of good-faith negotiations with the Local
on similar terms with other UFCW local unions.
Accordingly, the Debtors engaged in a continuing dialogue with
the Local, and provided it with relevant information necessary to
evaluate the proposals to reach mutually-satisfactory
modifications, Mr. Jerman notes.
Mr. Jerman avers that out of the 17 local unions, only Local 1360
has neither ratified the agreements nor entered into modification
agreements with the Debtors, indicating its membership's "lack of
good cause".
If Local 1360 fails to ratify the Second Revised Modification
Agreement, and the union does not "address any way for the Debtor
to perform under any agreement, or a modified agreement," good
cause is absent, he adds, pointing the Court to In re Smith Mech.
Contractors, Inc., 1995 WL 864676 (Bankr. W.D. Mo. 1995).
About Interstate Bakeries
Headquartered in Kansas City, Missouri, Interstate Bakeries
Corporation is a wholesale baker and distributor of fresh-baked
bread and sweet goods, under various national brand names,
including Wonder(R), Baker's Inn(R), Merita(R), Hostess(R) and
Drake's(R). Currently, IBC employs more than 25,000 people and
operates 45 bakeries, as well as approximately 800 distribution
centers and approximately 800 bakery outlets throughout the
country.
The company and eight of its subsidiaries and affiliates filed for
chapter 11 protection on Sept. 22, 2004 (Bankr. W.D. Mo. Case No.
04 45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors
in their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $1,626,425,000 in
total assets and $1,321,713,000 (excluding the $100,000,000 issue
of 6% senior subordinated convertible notes due Aug. 15, 2014) in
total debts. The Debtors' filed their Chapter 11 Plan and
Disclosure Statement on Nov. 5, 2007. Their exclusive period to
file a chapter 11 plan expired on November 8. On Jan. 25, 2008,
the Debtors filed their First Amended Plan and Disclosure
Statement. On Jan. 30, 2008, the Debtors received Court approval
of the First Amended Disclosure Statement.
IBC confirmed that it has not received any qualifying alternative
proposals for funding its plan of reorganization in accordance
with the Court-approved alternative proposal procedures. As a
result, no auction was held on Jan. 22, 2008, as would have been
required under those procedures. The deadline for submission of
alternative proposals was Jan. 15, 2008.
(Interstate Bakeries Bankruptcy News, Issue No. 102; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000).
I/OMAGIC CORP: Replacing Swenson with New Independent Accountant
----------------------------------------------------------------
I/O Magic Corp. disclosed in a regulatory SEC filing Friday that
the company notified Swenson Advisors, LLP, its independent
registered public accounting firm that it was engaging a new
independent registered public accounting firm and therefore was
immediately terminating its relationship with Swenson.
The decision to change accountants was approved by the company's
audit committee. The reason for the change was to allow the
company to engage an alternative firm that it believes has
adequate resources to provide it with the auditing and tax
services it requires on a more cost-effective basis.
Except as to going concern qualifications, the audit reports of
Swenson on the company's consolidated financial statements and
consolidated financial statement schedules as of and for the years
ended Dec. 31, 2006, and 2007 did not contain any adverse opinion
or disclaimer of opinion, nor were they qualified as to
uncertainty, audit scope or accounting principles.
During the years ended Dec. 31, 2006, and 2007, and the subsequent
interim period through July 7, 2008, there were no disagreements
with Swenson on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedures
which disagreements, if not resolved to Swenson's satisfaction,
would have caused Swenson to make reference to the subject matter
of the disagreement in connection with its opinion.
About I/OMagic Corp.
Headquartered in Irvine, California, I/OMagic Corp. (OTC BB: IOMG)
-- http://www.iomagic.com/-- sells data storage products,
televisions, most of which are high-definition televisions, or
HDTVs, utilizing liquid crystal display, or LCD, technology, and
other consumer electronics products.
At March 31, 2008, the company's consolidated balance sheet showed
$10,091,467 in total assets, $9,002,777 in total liabilities, and
$1,088,690 in total stockholders' equity.
Going Concern Doubt
As reported in the Troubled Company Reporter on April 23, 2008,
Swenson Advisors, LLP, in San Diego, Calif., expressed substantial
doubt about I/OMagic Corp.'s ability to continue as a going
concern after auditing the company's consolidated financial
statements for the years ended Dec. 31, 2007, and 2006. The
auditing firm said that the company has incurred significant
operating losses, has serious liquidity concerns, and may require
additional financing in the foreseeable future.
At March 31, 2008, the company had cash and cash equivalents of
$357,042 and as of May 16, 2008, the company had only $827,524 of
cash on hand. Accordingly, the company is presently experiencing
a lack of liquidity and may have insufficient liquidity to fund
its operations for the next twelve months.
If the company's net losses continue or increase, the company said
it could experience significant additional shortages of liquidity
and its ability to purchase inventory and to operate its business
may be significantly impaired, which could lead to further
declines in its results of operations and financial condition.
JOE GIBSON: Case Summary & 40 Largest Unsecured Creditors
---------------------------------------------------------
Lead Debtor: Joe Gibson's Auto World, Inc.
aka Joe Gibson's Suzuki
489 W. Main St.
Spartanburg, SC 29301
Bankruptcy Case No.: 08-04215
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Joe Gibson Automotive, Inc. 08-04216
aka Joe Gibson's Mitsubishi
Type of Business: The Debtors sell new & used automobiles in
retail.
Chapter 11 Petition Date: July 16, 2008
Court: District of South Carolina (Spartanburg)
Judge: Helen E. Burris
Debtors' Counsel: G. William McCarthy, Jr., Esq.
Email: bmccarthy@mccarthy-lawfirm.com
1715 Pickens St. (29201)
P.O. Box 11332
Columbia, SC 29211-1332
Tel: (803) 771-8836
http://www.mccarthy-lawfirm.com
Joe Gibson's Auto World, Inc's Financial Condition:
Estimated Assets: $1,000,000 to $10,000,000
Estimated Debts: $10,000,000 to $50,000,000
A. A copy of Joe Gibson's Auto World, Inc's petition is available
for free at:
http://bankrupt.com/misc/scb08-04215.pdf
B. A copy of Joe Gibson Automotive, Inc's petition is available
for free at:
http://bankrupt.com/misc/scb08-04216.pdf
JOHN MAIN: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: John L. Main
dba
Main Concrete
1113 S. 95th Street
Omaha, NE 68124
Bankruptcy Case No.: 08-81762
Chapter 11 Petition Date: July 15, 2008
Court: District of Nebraska (Omaha Office)
Debtor's Counsel: Richard M. Dwornik, Esq.
Email: rdwornik@aol.com
Dwornik Law, PC LLO
P.O. Box 540675
Omaha, NE 68154
Tel: (402) 578-6480
Fax: (402) 333-9189
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/neb08-81762.pdf
KB HOME: Stockholder Okay Needed for Certain Severance Payments
---------------------------------------------------------------
On July 10, 2008, the Management Development and Compensation
Committee of the Board of Directors of KB Home adopted a Policy
Regarding Stockholder Approval of Certain Severance Payments.
The Policy provides that KB Home will obtain stockholder approval
before paying severance benefits to an executive officer under a
future severance arrangement in excess of 2.99 times the executive
officer's then-current base salary and target bonus.
KB Home's stockholders had previously approved an advisory
proposal asking KB Home's Board of Directors to seek stockholder
approval of future severance arrangements with senior executives
that provide benefits in amounts exceeding 2.99 times the
executives' salary and bonus. KB Home's existing Executive
Severance Plan and Change in Control Severance Plan already
provide designated officers with severance payments below the
advisory proposal's 2.99 times limit, in each case ranging from
1.0 to 2.0 times salary and bonus depending on the officer's
seniority. By adopting this Policy, the Committee is underscoring
KB Home's intent to continue to remain below the 2.99 times limit
in its future severance arrangements.
The Policy applies only to future severance arrangements. Future
severance arrangements do not include existing severance
arrangements or any severance arrangement KB Home assumes or
acquires unless, in each case, the severance arrangement is
changed in a manner that materially increases its severance
benefits.
The Committee retains the right to amend the Policy and will
promptly disclose any amendment.
A full-text copy of the Policy is available for free at:
http://researcharchives.com/t/s?2f90
About KB Home
Based in Los Angeles, California, KB Home (NYSE: KBH) --
http://www.kbhome.com/-- is one of the largest homebuilders in
the United States. The company has operating divisions in 13
states.
At May 31, 2008, the company's consolidated balance sheet showed
$4.8 billion in total assets, $3.5 billion in total liabilities,
and $1.3 million in total stockholders' equity.
For the six-months ended May 31, 2008, the company reported a
consolidated net loss of $524.1 million on total revenues of
$1.4 billion, compared with a net loss of $121.1 million on total
revenues of $2.8 billion in the comparable six-month period ended
May 31, 2007.
* * *
The Troubled Company Reporter said on May 21, 2008, that Standard
& Poor's Ratings Services lowered its corporate credit and senior
note ratings on KB Home to 'BB' from 'BB+'. S&P also lowered its
rating on the company's senior subordinated notes to 'B+' from
'BB-'. The outlook remains negative. The rating actions affect
$2.15 billion of rated notes.
The TCR on June 11, 2008, said that Moody's Investors Service
lowered all of the ratings of KB Home, including its corporate
family rating to Ba2 from Ba1, the ratings on its various issues
of senior unsecured notes to Ba2 from Ba1, and the rating on its
subordinated notes to B1 from Ba2. At the same time, a
speculative grade liquidity rating of SGL-2 was assigned. The
outlook remains negative.
On June 12, 2008, the TCR said that Fitch Ratings has affirmed KB
Home's Issuer Default Rating and other outstanding debt ratings as
IDR 'BB+'; Senior unsecured 'BB+'; Unsecured bank credit facility
'BB+'; and Senior subordinated debt 'BB-'. The Rating Outlook
remains Negative.
KEANE INTERNATIONAL: S&P Lowers Corp. Credit Rating to B from BB-
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on San
Ramon, California-based Keane International Inc., including its
corporate credit rating, to 'B' from 'BB-'. The outlook is
negative.
"The ratings downgrade reflects Standard & Poor's expectation that
Keane's near-term performance will be notably weaker than
anticipated due to ongoing integration issues, exacerbated by
currently challenging industry conditions," said Standard & Poor's
credit analyst Clay Ching. "As a result, leverage is much higher
than previously expected, and we foresee Keane having limited
ability to deleverage over the near term."
The rating reflects Keane's second-tier presence in a highly
competitive and consolidating industry, ongoing integration risk,
and high debt leverage. These factors are only partially offset
by a solid presence within its mid-market niche.
Keane International Inc. is a second-tier provider of information
technology and business process outsourcing services, offering
both offshore and onshore capabilities. Core services include
applications development, applications management, and integration
solutions.
KORITZ WAY: Case Summary & Six Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Koritz Way Properties, LLC
aka Spring Valley Apartments
14 Municipal Plaza
Spring Valley, NY 10977
Bankruptcy Case No.: 08-22996
Chapter 11 Petition Date: July 16, 2008
Court: Southern District of New York (White Plains)
Judge: Adlai S. Hardin Jr.
Debtors' Counsel: Elizabeth A. Haas, Esq.
(info@thehaaslawfirm.com)
254 S. Main Street, Suite 210
New City, NY 10956
Tel: (845) 215-0555
Fax: (866) 944-9993
http://thehaaslawfirm.com/
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
A list of the Debtor's largest unsecured creditors is available
for free at
http://bankrupt.com/misc/nysb08-22996.pdf
L-1 IDENTITY: Moody's Assigns B2 Initial Corporate Family Rating
----------------------------------------------------------------
Moody's Investors Service assigned initial ratings to L-1 Identity
Solutions, Inc.; Corporate Family and Probability Default Ratings
at B2, the senior secured bank credit facilities at Ba3, LGD-2,
28% and the Speculative Grade Liquidity Assessment at SGL-3. The
outlook is stable.
The B2 Corporate Family recognizes high debt/EBITDA leverage of
about 5.7x in the initial capital structure, and weak starting
EBIT coverage of interest of just under 1x (EBITA coverage would
be closer to 2 x), both pro-forma for L-1's recent acquisitions as
well as the proposed acquisition of Digimarc Corporation.
Further, L-1 has only been profitable for a limited time period.
While revenue is concentrated among customers within the U.S.
Government, it is spread among multiple contracts and programs and
long-term growth is tied to outlays for government sponsored
programs. L-1's revenue has grown rapidly since its inception in
2005 largely through acquisitions, the largest of which is the
proposed acquisition of Digimarc Corporation.
The scale of the company, however, remains comparatively moderate
in size when compared to other government contractors. However,
the rating also acknowledges that the combined organization going
forward will offer a wider range of solutions than many
competitors, and could generate a material amount of free cash
flow in time.
Furthermore, L-1's backlog of orders and strong positioning within
its field when combined with certain government identity mandates
and funding programs provide favorable revenue visibility and
growth prospects. Nonetheless, divisions of substantially larger
company's and certain systems integrators are active within the
company's largest segment, government services, and could commit
significant resources at some point which could challenge L-1's
prospects in a technology sensitive industry.
Despite the level of current margins, multiples paid for acquired
businesses have to date produced low return on assets and capital.
The SGL-3 indicates adequate liquidity, driven largely by an
expectation of sizeable free cash over the near term and a modest
degree of availability under the bank revolver.
The stable outlook considers L-1's current backlog of business
awards, many of which provide recurring revenue streams, leading
position within the state issued driver's license segment and
other identity markets. It is further supported by expectations
of positive free cash flow and an adequate liquidity profile.
The Ba3 (LGD-2, 28%) rating on the secured bank facilities, a two
notch uplift from the underlying B2 Corporate Family Rating,
recognizes the benefits of liens over substantially all of the
borrower's and guaranteeing subsidiaries domestic assets and
shareholdings (limited to 65% in the case of first tier
international subsidiaries) as well as the structural
subordination of $175 million of convertible notes at the L-1
holding company level.
L-1 reports a modest amount of hard assets that can be pledged as
security, and much of the value lies in L-1's intellectual
property and contracts.
Borrowings of $299 million under the new bank credit facilities
combined with $120 million of additional equity investments from
two significant L-1 shareholders will fund a $310 million tender
offer for Digimarc Corporation, refinance roughly $94 million of
L-1's existing bank debt, and cover related fees and expenses.
Since its inception in 2005, the company has made a series of
acquisitions to build-out its portfolio of services and solutions
which enable its clients to enhance security, minimize identify
theft, provide document and identity authentication, and protect
privacy.
The proposed purchase of Digimarc Corporation will supplement L-
1's secured credential service offerings. L-1's tender offer is
conditioned, among other factors, on receipt of at least 51% of
Digimarc Corporation's shares. The tender offer commenced on July
3, 2008. The new bank debt will only be entered into if L-1
obtains at least 51% of Digimarc Corporation's shares in the
tender offer.
Ratings assigned:
-- Corporate Family Rating, B2
-- Probability of Default Rating, B2
-- Speculative Grade Liquidity Rating, SGL-3
-- $250 million term loan, Ba3, LGD-2, 28%
-- $100 million revolving credit facility, Ba3, LGD-2, 28%
Headquartered in Stamford, Connecticut, L-1 Identity Solutions,
Inc. is a leading provider of multi-modal services which address
identity risk, secure credentialing, biometric identity,
fingerprinting and related engineering & analytical solutions.
According to the company, on a pro forma basis assuming
acquisition of a majority stake in Digimarc Corporation, 2008
revenues are expected to be approximately $670 million.
LAKE LAS VEGAS: Files for Chapter 11, Has $127MM DIP Loan
---------------------------------------------------------
Citing a combination of poor liquidity, substantial debt service,
extremely challenging real estate market conditions and other
legal and financial issues, Lake at Las Vegas Joint Venture, LLC,
the master developer of the Lake Las Vegas Resort, and several of
its interdependent subsidiaries filed on July 17, 2008, to
reorganize under Chapter 11 of the Bankruptcy Code.
In conjunction with the Chapter 11 filing, the company has
received commitments for up to $127 million in debtor-in-
possession (DIP) financing from a group of lenders led by Credit
Suisse as agent.
Debtors LAKE AT LAS VEGAS JOINT VENTURE, LLC, LLV-1, LLC and their
affiliates serve as co-borrowers, under the DIP CREDIT AGREEMENT
DATED JULY___, 2008. CREDIT SUISSE, CAYMAN ISLANDS BRANCH, serves
as Administrative Agent and Collateral Agent, and CREDIT SUISSE
SECURITIES (USA) LLC, serves as Syndication Agent, Sole Arranger
and Sole Bookrunner.
Pursuant to the DIP loan, up to $11,452,717 will be advanced on an
interim basis.
The scheduled maturity date of the DIP Facility is the earlier of:
(a) one year after the bankruptcy filing date;
(b) the date of acceleration of the Loan;
(c) the effective date of a plan of reorganization in any of
the
Debtors' chapter 11 cases.
The company said that, subject to Court approval, the new
financing would be used in part to fund ongoing operations and
assessments related to certain pre-petition obligations, including
critical repairs to the Las Vegas Wash bypass conduit underlying
the 320-acre man-made lake at the center of the approximately
3,600 acre master-planned community. Additionally, pending Court
approval, the company said it would work to satisfy certain of its
financial and infrastructure-related obligations.
The Debtor is also seeking permission to use the cash collateral
and all other prepetition collateral of its existing lenders, and
to grant the existing lenders adequate protection liens for the
use of the collateral. The Debtors intend to repay roughly
$48,870,000 in protective advances made by various of the existing
lenders pursuant to amendments to existing credit agreement in the
10 months preceding the Petition Date.
The existing facility was syndicated, arranged and administered by
Credit Suisse Cayman Islands Branch together with Credit Suisse
Securities (USA) LLC. The loan is owned by a variety of
institutional investment funds, investors and financial
institutions.
The DIP Facility requires the Debtors to meet these milestones:
12/14/08 Filing of plan of reorganization and disclosure
statement (150 days after the Petition Date)
03/14/09 Hearing on confirmation of Plan (240 days after
the Petition Date)
04/13/09 Entry of confirmation order (no later than 30
days after the confirmation hearing)
If any of the milestones are not met, the Debtor will be assessed
additional fees. This will also constitute an event of default
under the DIP Agreement.
A full-text copy of the Debtors' emergency motion to borrow under
the Credit Suisse DIP facility as well as a copy of the DIP
Credit Agreement is available at no charge at
http://ResearchArchives.com/t/s?2f95
According to Frederick Chin, president of the company, "The
decision to reorganize under Chapter 11 in large part reflects our
belief that we can reinvigorate Lake Las Vegas as a premier
master-planned community. Our commitment to Lake Las Vegas is
second only to our belief in the long-term viability of the Las
Vegas real estate market. We believe that with a realistic capital
structure and business plan, Lake Las Vegas will provide enormous
opportunities for those associated with it, including residents,
visitors, employees, builders, developers and vendors.
"Our goal is to work with builders, as well as state and local
officials to create a viable, sustainable community of which we
can all be proud," Mr. Chin said.
LLV Holdco LLC, a subsidiary of Las Vegas-based Atalon Group,
assumed ownership and management control of the master-planned
community in early January 2008 after the former ownership group
defaulted on approximately $540 million in loans in 2007.
The company said that the DIP facility assures that there will be
no interruption in day-to-day operations, adding that, subject to
Court approval, employees will continue to receive their wages and
be entitled to benefits as if there had been no filing. Vendors,
contractors and consultants will be paid for goods and services
provided after the July 17 filing date.
Lake Las Vegas Resort -- http://www.lakelasvegas.com/-- is a
3,592-acre master-planned residential and resort community
adjacent to Lake Mead National Recreational Area and 20 miles east
of the center of Las Vegas. It includes a 320-acre man-made lake,
three signature golf course, two luxury hotels, a casino and
retail shops and more than 1,600 completed residential units. LLV
and it subsidiaries employ approximately 260 people, most
associated with its golf course operations.
The filing occurred in U.S. Bankruptcy Court for the District of
Nevada in Las Vegas.
Debtor LLV VHI, L.L.C. is the managing member, and owns a 46.43%
membership interest, in Village Hotel Holdings, LLC which, in
turn, is the sole member of Village Hotel Investors, LLC -- the
owner of the Lake Las Vegas Ritz Carlton Hotel. Village Hotel
Holdings, LLC and Village Hotel Investors, LLC are debtors and
debtors-in-possession in separate chapter 11 cases pending before
the Nevada Bankruptcy Court.
LAKE LAS VEGAS: Case Summary & 40 Largest Unsecured Creditors
-------------------------------------------------------------
Lead Debtor: Lake at Las Vegas Joint Venture, LLC
dba Las Vegas Development Co.
dba Lake Las Vegas Operating Co.
dba Lake Las Vegas Joint Venture
dba The Club at Lake Las Vegas
1605 Lake Las Vegas Pkwy.
Henderson, NV 89011
Bankruptcy Case No.: 08-17814
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
LLV-1, LLC 08-17815
LLV Holdco, LLC 08-17817
Lake Las Vegas Properties, L.L.C. 08-17820
LLV Four Corners, LLC 08-17822
NorthShore Golf Club, LLC 08-17825
P-3 at MonteLago Village, LLC 08-17827
The Golf Club at Lake Las Vegas, LLC 08-17830
Marina Investors, LLC 08-17832
The Vineyard at Lake Las Vegas, LLC 08-17835
LLV VHI, LLC 08-17837
TCH Development, LLC 08-17841
TC Technologies, LLC 08-17842
SouthShore Golf Club, LLC 08-17844
Neva Holdings, LLC 08-17845
Type of Business: The Debtors are owners and developers of 3,592-
acre residential and resort destination Lake Las
Vegas Resort in Las Vegas, Nevada in the US.
Centered around a 320-acre man-made lake, Lake
Las Vegas contains over 9,000 residential units,
and also includes two luxury resort hotels (a
Loews and a Ritz-Carlton), a casino, a specialty
retail village shopping area, marinas, three
signature golf courses and related clubhouses,
and other real property.
See http://www.lakelasvegas.com
Chapter 11 Petition Date: July 17, 2008
Court: District of Nevada (Las Vegas)
Judge: Linda B. Riegle
Debtors' Counsel: Courtney E. Pozmantier, Esq.
Email: cpozmantier@ktbslaw.com
Klee, Tuchin, Bogdanoff & Stern, LLP
1999 Avenue of the Stars, 39th Fl.
Los Angeles, CA 90067-6049
Tel: (310) 407-4000
Fax: (310) 407-9090
http://www.ktbslaw.com/
DIP Agent's Counsel: Paul R. Walker, Esq.
Sidley Austin, LLP
555 West Fifth St., Ste. 4000
Los Angeles, CA 90013
Fax: (213) 896-6600
-- and --
Gerald M. Gordon, Esq.
Gordon & Silver, Ltd.
3960 Howard Hughes Pkwy., Ste. 900
Las Vegas, NV 89169
Fax: (702) 369-2666
Lake at Las Vegas Joint Venture, LLC's Financial Condition:
Estimated Assets: $100,000,000 to $500,000,000
Estimated Debts: $500,000,000 to $1,000,000,000
Debtors' Consolidated List of 40 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Las Vegas Paving Litigatin Claim $8,518,435
4420 S. Decatur Blvd.
Las Vegas, NV 89103
Attn: Christine Washburn, Esq.
Barker Washburn
3110 S. Rainbow Blvd.,
Ste. 105
Las Vegas, NV 89146
Tel: (702) 383-0110
Fax: (702) 383-7087
TOUSA, Inc. Litigatin Claim $7,558,603
4000 Hollywood Blvd.,
Ste. 500N
Hollywood, FL 33021
Randolf Howard, Esq.
Kolesar & Leatham, Chtd.
3320 W. Sahara Ave., Ste. 380
Las Vegas, NV 89102
Tel: (702) 362-7800
Fax: (702) 362-9472
Woodside Homes, Inc. Litigatin Claim $2,184,765
5888 W. Sunset Rd.
Ste. 200
Las Vegas, NV 89118
Attn: James Berchtold, Esq.
Lewis & Roca, LLP
3993 Howard Hughes Pkwy.,
Ste. 600
Las Vegas, NV 89169
Tel: (702) 949-8200
Fax: (702) 949-8398
John F. O'Reilly, APC Trade Claim $1,415,867
325 S. Maryland Pkwy.
Las Vegas, NV 89101
Tel: (702) 382-2660
Fax: (702) 382-3521
Contri Construction Co. Trade Claim $1,267,428
Attn: Don Davis
P.O. Box 97739
Las Vegas, NV 89193
Tel: (702) 458-6004
Fax: (702) 458-7746
Caddie Services, Inc. Litigatin Claim $700,000
P.O. Box 36
Pinehurst, NC 28370
Attn: Phillip Aurbach, Esq.
Marquis & Aurbach
10001 Park Run Dr.
Las Vegas, NV 89145
Tel: (702) 382-0711
Fax: (702) 382-5816
Engineered Fluid Trade Claim $627,086
Attn: Bill Godspeed
P.O. Box 723
Centralia, IL 62801
Tel: (618) 533-1351
Fax: (618) 533-1459
Brown & Partners, Inc. Litigatin Claim $582,937
7900 W. Sahara Ave., Ste. 100
Las Vegas, NV 89117
Attn: Gus Flangas, Esq.
Flangas McMillan Law Group
3275 South Jones Blvd.,
Ste. 105
Las Vegas, NV 89146
Tel: (702) 307-9500
Fax: (702) 382-9452
Stanley Consultants, Inc. Trade Claim $411,048
Attn: Mary Brewer
5820 S. Eastern Ave., Ste. 200
Las Vegas, NV 89119
Tel: (702) 369-9396
Fax: (702) 369-9793
PBS&J Trade Claim $320,800
Attn: Kiyomi Molina
2270 Corporate Circle,
Ste. 100
Henderson, NV 89074
Tel: (702) 263-7275
Fax: (702) 263-7200
Cummins Rocky Mountain Trade Claim $291,486
Attn: Ron McCulla
651 N. 101st Ave.
Avondale, AZ 85323
Tel: (632) 474-2701
Fax: (632) 474-2733
KPMG, LLP Trade Claim $272,216
Attn: Dan Kotnik
Dept. 0966
P.O. Box 120001
Dallas, TX 75312-0906
Tel: (619) 525-3275
Fax: (619) 393-0239
Lockton Insurance Brokers Trade Claim $254,138
Attn: Barbara Schilling
P.O. Box 92643
Los Angeles, CA 90009-2643
Tel: (213) 689-0065
Fax: (213) 689-0550
Tracy & Ryder Litigatin Claim $230,727
Standard & Poor's Trade Claim $210,500
Signal Butte Investors, LLC Litigatin Claim $210,000
T.J.F. Golf, Inc. Trade Claim $208,264
WRG Design, Inc. Trade Claim $196,296
Kelly, Hart & Hallman Trade Claim $153,999
R&R Partners, Inc. Trade Claim $125,000
Gensler Litigatin Claim $111,999
Hart Howerton, Ltd. Trade Claim $101,132
DMB Realty Trade Claim $85,871
DPFG, Inc. Trade Claim $84,274
Vegas Magazine Partner, LLC Trade Claim $73,500
Peridian International, Inc. Trade Claim $68,475
Prime Time Communications Trade Claim $60,978
Lochsa Surveying Trade Claim $59,289
The Wiles Group Trade Claim $57,000
Office Depot, Inc. Trade Claim $52,449
Lionel Sawyer & Collins, Ltd. Trade Claim $49,467
Apple One Employment Trade Claim $47,263
MICE North America Trade Claim $46,635
Floral 2000, Inc. Trade Claim $39,114
Thomas Consultants, Inc. Trade Claim $38,164
CDW Direct Trade Claim $37,396
Advantage Civil Design Group Trade Claim $35,000
Moody's Investors Service Trade Claim $26,000
The Fountainhead Partners Litigatin Claim Unknown
Toll Brothers Litigatin Claim Unknown
LANDSOURCE COMMUNITIES: Panel Wants Changes in Lazard's Engagement
------------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in
LandSource Communities Development LLC and its debtor-affiliates'
bankruptcy cases asks the U.S Bankruptcy Court for the District of
Delaware to include provisions and conditions it provided upon
approval of Lazard Freres & Co. LLC's employment.
As reported in the Troubled Company Reporter on June 17, 2008, the
Debtors asked the Court for authority to employ Lazard Freres &
Co. LLC as their financial advisor nunc pro tunc to June 8, 2008.
The parties have entered into a letter of engagement dated
April 25, 2008.
Committee Conveys Concerns
"The Engagement Letter does not contain any provisions to limit
the scope of the payment triggering conditions where a payment
would be unreasonable or otherwise patently inappropriate," Laura
Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in
Wilmington, Delaware, asserts
According to Ms. Jones, the Engagement Letter awards Lazard
Freres & Co. LLC, with its maximum fee where the non-Debtor party
to a given transaction is not first identified by Lazard. The
Engagement Letter should carve out (a) parties previously
identified by the Debtors as potential transaction parties and
parties identified as potential transaction parties by the
Debtors independent of Lazard's input; (b) parties identified as
potential transaction parties by the Committee independent of
Lazard's input; and (c) potential transaction parties that
initiate contact with the estates or their representatives.
The Official Committee of Unsecured Creditors raised four other
issues, and has been informed that the Debtors will adopt each of
its suggestions:
(a) Lazard will submit any fee calculations to the Committee
in advance of submission to Court;
(b) Lazard's professionals will track their time in half-hour
increments as it does in other bankruptcy cases pending in
this District;
(c) The Order will state that nothing in the Application,
Order, or any other document precludes exercise of the
Court's power to order disgorgement of fees; and
(d) Paragraph (b) in the proposed order regarding the
indemnification carve-out will be modified as:
"(b) notwithstanding any provisions of the Engagement
Letter or Indemnification Letter to the contrary, the
Debtors will have no obligation to indemnify Lazard or
provide contribution or reimbursement to Lazard (i) for
any claim or expense that is judicially determined (the
determination having become final) to have arisen from
Lazard's bad faith, self-dealing, breach of fiduciary duty
(if any), gross negligence or willful misconduct, (ii) for
a contractual dispute in which the Debtors allege the
breach of Lazard's contractual obligations unless the
Court determines that indemnification, contribution or
reimbursement would be permissible pursuant to In re
United Artists Theatre Company, et al., 315 F.3d 217 (3d
Cir. 2003), or (iii) for any claim or expense that is
settled prior to a judicial determination as to the
exclusions set forth in clauses (i) and (ii) above, but
determined by the Court, after notice and a hearing
pursuant to subparagraph (d), infra, to be a claim or
expense for which Lazard should not receive indemnity,
contribution or reimbursement under the terms of the
Engagement Letter or Indemnification Letter, as modified
by this Order."
Debtors React
Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., says
the Creditors Committee's objection is unfounded. The exception
the Committee proposes would be one that is not only arbitrary
and impossible to enforce, but also designed to have other
financial advisers competing against, instead of working with,
the Debtors' financial advisers -- thereby creating a
misalignment of incentives between the Debtors and Lazard that
currently does not exist, he asserts.
Mr. Collins contends that Lazard, as the Debtors' financial
advisor, should be able to undertake a vigorous representation of
the Debtors through clear financial incentives that are not
subject to modification in hindsight. Lazard's fee structure
creates financial incentives in line with the Debtors' interests
of creating a plan or sale transactions that meet the approval of
the various parties in interest and the Court.
The Committee's assertion that it will not have an opportunity to
object to Lazard's fees and expenses on reasonableness grounds is
unconvincing, Mr. Collins avers. He notes Lazard has agreed to
allow the U.S. Trustee to review its fees for reasonableness
under Section 330 of the Bankruptcy Code.
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. 6;
http://bankrupt.com/newsstand/or 215/945-7000).
LANDSOURCE COMMUNITIES: Can Employ Weil Gotshal as Attorneys
------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware granted
LandSource Communities Development LLC and its debtor-affiliates
permission to employ Weil, Gotshal & Manges LLP, as their
attorneys nunc pro tunc to June 8, 2008.
As reported in the Troubled Company Reporter on June 26, 2008,
Weil Gotshal is expected to:
(a) take all necessary actions to protect and preserve the
estates of the Debtors, including the prosecution of
actions on the Debtors' behalf, the defense of any actions
commenced against the Debtors, the negotiation of disputes
in which the Debtors are involved, and the preparation of
objections to claims filed against the Debtors' estates;
(b) prepare on behalf of the Debtors, as debtors-in-
possession, all necessary motions, applications, answers,
orders, reports, and other papers in connection with the
administration of the Debtors' estates;
(c) take all necessary or appropriate actions in connection
with a plan or plans of reorganization and related
disclosure statement(s) and all related documents, as well
as further actions as may be required in connection with
the administration of the Debtors' estates; and
(d) perform all other necessary legal services in connection
with the prosecution of the Debtors' Chapter 11 cases.
Weil Gotshal will charge the Debtors in accordance with its
customary rates. Weil Gotshal's hourly rates are:
Professional Hourly Rate
------------ -----------
Members $650 - $950
Counsel $350 - $595
Paraprofessionals $155 - $290
Debra A. Dandeneau, member of the firm, assured the Court that
her firm is a "disinterested person," as that term is defined in
Section 101(14) of the Bankruptcy Code, as modified by
Section 1107(b).
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. 6;
http://bankrupt.com/newsstand/or 215/945-7000).
LANDSOURCE COMMUNITIES: Can Hire Downey Brand as Newhall Counsel
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware granted
LandSource Communities Development LLC and its debtor-affiliates
authority to employ Downey Brand LLP as special counsel for
Newhall Land and Farming Company, under a general retainer, nunc
pro tunc to June 8, 2008.
As reported by the Troubled Company Reporter on June 26, 2008,
Downey Brand's work will pertain to land use entitlements and
permits to a project located in Los Angeles County, California.
As special counsel to Newhall Land Farming Company, Downey Brand
is expected to:
a. review and provide revisions to the administrative draft
environmental impact statement/environmental impact
report;
b. review and provide revisions to numerous technical
appendices to the EIS/EIR;
c. meet and negotiate with the U.S. Army Corp of Engineers for
a Section 404 Federal Clean Water Act permit;
d. deal with the California Department of Fish and Game
regarding stream alterations and Endangered Species Act
permits;
e. work with the California Regional Water Quality Control
Board to obtain waste water discharge permits.
Downey Brand told the Court that it anticipates that in busy
months its fees will be between $50,000 and $120,000. Because the
Project is entering the public hearing entitlement process with
Los Angeles County, California and other public agencies, Downey
Brand expects the July through October 2008 period to be very
active with fees in excess of $25,000 per month.
Five of Downey Brand's professionals will provide major services
to Newhall:
Professional Hourly Rate
------------ -----------
Patrick Mitchell $380
Meghan Habersack $245
Braiden Chadwick $260
Nicholaas Pullin $230
Ryan Seeley $230
Patrick Mitchell, a partner at Downey Brand, assured 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.
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. 6;
http://bankrupt.com/newsstand/or 215/945-7000).
LANDSOURCE COMMUNITIES: May Employ GDB as Newhall/Valencia Counsel
------------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware granted
LandSource Communities Development LLC and its debtor-affiliates
authority to employ and retain Gatzke Dillon & Ballance LLP as
attorneys for The Newhall Land and Farming, a California Limited
Partnership; The Newhall Land and Farming Company; and Valencia
Corporation, under a general retainer, nunc pro tunc to June 8,
2008.
As reported in the Troubled Company Reporter on June 26, 2008,
Gatzke Dillon's employment as as special counsel is in
connection with the Newhall Ranch project and its associated
federal, state, and local land use permit and entitlement
applications, environmental documentation, and related agreements.
Gatzke Dillon's legal services will include representing the
Newhall/Valencia Entities in CEQA/land use litigation arising
from Los Angeles County's approval of Newhall Ranch and the final
program environmental documentation.
As special counsel to Newhall/Valencia Entities, Gatzke Dillon is
expected to:
(a) analyze, review, and revise for legal adequacy the draft
environmental impact statement/environmental impact
report, the Newhall Ranch Resource Management and
Development Plan, the Spineflower Conservation Plan, and
other associated planning and environmental documents;
(b) analyze, review, and revise for legal adequacy the draft
EIR and related technical studies, reports, and other
documents for the Landmark Village development, which is
the first tentative tract map implementing the Newhall
Ranch planned community;
(c) consult with the environmental consulting firms,
engineering firms, and other professionals, which assist
the Newhall/Valencia Entities in completing the necessary
federal, state, and local permits and other land use
entitlements for the Project;
(d) consult with numerous federal, state, regional, and local
regulatory agencies with respect to the federal, state,
and local permits needed to entitle the Project;
(e) consult with the County of Los Angeles and the City of
Santa Clarita, as necessary, with respect to the permits
and other local land use entitlements needed for the
Project; and
(f) confer with representatives of the Newhall/Valencia
Entities concerning all appropriate legal strategies for
implementing the Project.
The hourly rates of Gatzke Dillon's professionals who will render
major services to the Debtors are:
Professional Hourly Rates
------------ ------------
Mark J. Dillon $325
David P. Hubbard $300
Michael H. Haberkorn $300
Rachel C. Cook $265
Jamie Baldwin $265
Danielle K. Morone $265
Michael Masterson $265
Terri Kido/Kelly Ulrich $145
As of the Petition Date, the Debtors owed Gatzke Dillon $80,535
for prepetition legal services it rendered through March 2008.
Mark J. Dillon, a partner at Gatzke Dillon, assured the Court
that his firm does not have any connection with or any interest
adverse to the Debtors, their creditors, or any other party in
interest, or their respective attorneys and accountants, with
regard to the matter for which it is being employed.
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. 6;
http://bankrupt.com/newsstand/or 215/945-7000).
LAS VEGAS SANDS: At S&P's Negative Watch on Underperformance
------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on the Las
Vegas Sands Corp. family of companies, including Las Vegas Sands
LLC, its Venetian Casino Resort LLC subsidiary, and affiliate VML
U.S. Finance LLC, on CreditWatch with negative implications. The
long-term corporate credit rating is 'BB-'.
"The CreditWatch listing reflects significant underperformance of
both the company's Las Vegas assets and Macau assets relative to
our expectations," said Standard & Poor's credit analyst Ben
Bubeck. "In addition, LVSC faces a near-term need for substantial
financing to fund significant ongoing expansion activity in
Macau."
In resolving the CreditWatch listing, S&P will discuss with
management its intermediate-term strategic and financial
objectives. S&P's review will consider several key factors,
including:
An assessment of (1) the cash flow potential of the company's Las
Vegas assets given recent weak trends observed across the Las
Vegas market and (2) the impact of additional capacity scheduled
to come online on the Strip over the next several quarters;
A review of the proposed financing package to fund ongoing
expansion efforts in Macau within the context of the currently
challenging capital market conditions, as well as an assessment of
the cash flow potential of existing and future assets in this
market;
An analysis of the company's overall liquidity position,
considering additional projects in the pipeline, including the Las
Vegas condominium tower and Sands Bethworks, as well as other
potential development projects in the U.S. and abroad.
A rating downgrade is not a foregone conclusion. However, if a
downgrade is the ultimate conclusion of our review, it will likely
be limited to one notch.
LEHIGH COAL: Involuntary Chapter 11 Case Summary
------------------------------------------------
Alleged Debtor: Lehigh Coal & Navigation Company
Sean Curran, President
101 North Centre Street
Pottsville, PA 17901
Case Number: 08-51957
Type of Business: The Debtor has been mining anthracite coal since
the late 1700's. See http://www.lcncoal.com/
Involuntary Petition Date: July 15, 2008
Court: Middle District of Pennsylvania (Wilkes-Barre)
Petitioners' Counsel: Jeffrey Kurtzman, Esq.
Klehr, Harrison, Harvey,
Branzburg and Ellers LLP1
260 South Broad Street
Philadelphia, PA 19102
Tel: (215) 568-6060
Fax: (215) 568-6603
Petitioners Nature of Claim Claim Amount
----------- --------------- ------------
The Bruce and Robbi Amount due under $2,610,393
Toll Foundation Presale Agreements
250 Gibraltar Road
Horsham, PA 19044
Primerock Capital LLC Amount due under $1,957,957
One Oxford Center, 43rd Floor Purchase and Sale
Pittsburgh, PA 15219 Agreement
Bruce Toll Bridge Notes $1,574,042
250 Gibraltar Road
Horsham, PA 19044
Douglas Topkis Amount due under $1,282,904
43 West 64th Street, Apt. 8A Presale Agreements
New York, NY 10023
LEHMAN BROTHERS: Liquidate Troubled Assets, Merge, Analysts Advice
------------------------------------------------------------------
Analysts suggested ways on how to put Lehman Brothers Holdings
Inc. on solid financial footing and bolster a stock price battered
by the mortgage-market meltdown, The Wall Street Journal relates.
As reported in the Troubled Company Reporter on July 11, 2008,
Lehman Brothers reported a net loss of $2,774,000,000, on total
revenues of $6,240,000,000 for the quarter ended May 31, 2008.
TCR said that the company originated approximately $0.5 billion
and $2 billion of residential mortgage loans for the three and six
months ended May 31, 2008, compared to the $17 billion and
$32 billion for the three and six months ended May 31, 2007. The
company originated approximately $2 billion and $4 billion of
commercial mortgage loans for the three and six months ended
May 31, 2008, compared to the $19 billion and $32 billion for the
three and six months ended May 31, 2007.
According to WSJ, most of the options, from raising more money to
taking the firm private, are fraught with risks, and come as
Lehman's stock trades around its lowest point in several years.
Analysts and Wall Street insiders say the company needs to take
two bold steps: sell a massive package of troubled assets, as
Citigroup Inc. did earlier this year, and strike a strategic
alliance with a bigger, more credible partner, WSJ points out.
WSJ indicates that Richard Fuld Jr., the chairman and chief
executive of Lehman Brothers has long vowed he won't sell Lehman
and lately looked to countries such as Korea for a partner who
could buy a minority stake. But so far, nothing has come of it,
WSJ says.
Analysts and Wall Street insiders have suggested a private-equity
firm or a consortium of firms could invest in the broker, WSJ
says.
WSJ relates that David Trone, an analyst at Fox-Pitt Kelton
Cochran Caronia Waller, suggested in a report this week that the
best course of action may be for Lehman to go private.
The Journal points out that while that would help Lehman escape
the rumors that have helped push down the stock, it would be
difficult for the firm to raise the money needed to do so.
Lenders and traders may be reluctant to deal with a private
company in troubled times because of the lack of transparency, WSJ
adds.
Others on Wall Street are speculating Lehman may raise cash by a
sale or spinoff in its asset-management unit, which includes
Neuberger Berman, which the firm bought in 2003, WSJ says.
WSJ, citing Mr. Trone, the Fox-Pitt Kelton analyst, said that the
unit is estimated to worth $8 billion.
According to the Journal, Neuberger has been on a roll of late.
One of the biggest funds, the $12.4 billion Neuberger Berman
Genesis fund, is up 4% in the past year, beating the Standard &
Poor's 500-stock index total return by 23 percentage points, WSJ
says. Assets have doubled to $130 billion since Lehman bought it,
WSJ adds.
But Lehman's stock, WSJ states, drop is creating tension among
Neuberger staff.
Lehman shares have plunged 79% so far this year and 30% this month
alone, WSJ indicates. Its stock-market value has shrunk to
$9.2 billion, or about the amount of capital it has raised this
year, says WSJ.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- an
innovator in global finance, serves the financial needs of
corporations, governments and municipalities, institutional
clients, and high net worth individuals worldwide. Founded in
1850, Lehman Brothers maintains leadership positions in equity and
fixed income sales, trading and research, investment banking,
private investment management, asset management and private
equity. The firm is headquartered in New York, with regional
headquarters in London and Tokyo, and operates in a network of
offices around the world.
LEINER HEALTH: Wants to File Chapter 11 Plan Until September 30
---------------------------------------------------------------
Leiner Health Products Inc. and its debtor-affiliates ask the
United States Bankruptcy Court for the District of Delaware to
further extend their exclusive periods to:
a) file a Chapter 11 plan until Sept. 30, 2008, and
b) solicit acceptances of that plan until Nov. 30, 2008.
A hearing is set for July 30, 2008, at 1:30 p.m. (EDT) to consider
the Debtors' request. Objections, if any, are due July 23, 2008,
by 4:00 p.m. (EDT).
The Debtors' exclusive period to file a Chapter 11 plan is set to
expire on July 31, 2008, as reported in the Troubled Company
Reporter on July 4, 2008.
The requested extension of time will enable the Debtors to
negotiate and formulate a Chapter 11 plan of liquidation as they
continue to resolve creditors' claims and any litigation with
respect to the claims.
Separately, the Debtors entered into an agreement with the
Official Committee of Unsecured Creditors and certain financial
institution to resolve, among other things:
-- the amount of the claims of the Debtors' prepetition secured
lenders;
-- the payment of a portion of the (i) claims of the
prepetition secured lenders' claim and (ii) sale bonuses to
the Debtors' management under the asset sale incentive
program before confirmation of a Chapter 11 plan; and
-- the reserve of $8 million of the sale bonuses provided for
under the asset sale incentive program for the unsecured
creditors' recoveries.
About Leiner Health
Based in Carson, California, Leiner Health Products Inc. --
http://www.leiner.com/-- manufactures and supplies store brand
vitamins, minerals and nutritional supplements products, and over-
the-counter pharmaceuticals in the US food, drug and mass merchant
and warehouse club retail market. In addition to its primary
VMS and OTC products, they provide contract manufacturing
services. During the fiscal year ended March 31, 2007, the VMS
business comprised approximately 61% of net sales. On March 20,
2007, they voluntarily suspended the production and distribution
of all OTC products manufactured, packaged or tested at its
facilities in the US.
The company filed for Chapter 11 protection on March 10, 2008
(Bankr. D. Del. Lead Case No.08-10446). Jason M. Madron, Esq.,
and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A.,
represent the Debtors. The Debtors selected Garden City Group
Inc. as noticing, claims and balloting agent. The U.S. Trustee
for Region 3 appointed creditors to serve on an Official Committee
of Unsecured Creditors in these cases. The Committee selects Saul
Ewing LLP as its counsel.
As reported in the Troubled Company Reporter on April 10, 2008,
the Debtors' schedules of assets and liabilities showed total
assets of $133,412,547 and total debts of $477,961,526.
LOUIS PEARLMAN: Investors Defrauded of $300MM, Authorities Say
--------------------------------------------------------------
U.S. District Judge G. Kendall Sharpe ordered Louis Pearlman to
pay around $300 million to individual investors and banks, Travis
Reed of the Associated Press reports.
As reported in the Troubled Company Reporter on July 8, 2008, the
U.S. Bankruptcy Court for the Middle District of Florida was to
determine on July 16, 2008, the creditors and the amount they are
owed and will be paid in the bankruptcy case of Louis Pearlman,
owner of Trans Continental Records. District Judge Sharpe told
attorneys on both sides to reflect the agreed amount on court
documents.
According to the AP, the U.S. Federal Bureau of Investigation, the
Federal Deposit Insurance Corporation, and both prosecution and
defense counsel concluded that:
-- Pearlman swindled $195 million from 1,000 individual
investors in a bogus savings program that yielded
6-10 percent in returns;
-- he borrowed $126.7 million from banks;
-- investors bought $70 million worth of shares on asset-devoid
entities that Pearlman founded; and
-- Pearlman returned $95 million to investors.
Mr. Pearlman acquiesced and formally pled guilty before a federal
court in Florida, the Troubled Company Reporter said on March 12,
2008. The former boy band manager of pop icons Backstreet Boys,
N'Sync, and Take 5 faces a sentence of 25 years in prison and a
fine of $1 million. Mr. Pearlman was arrested in Indonesia and
sent to jail after being indicted on three counts of bank fraud
and single counts of mail and wire fraud.
Banks that loaned amounts to Mr. Pearlman included, among others,
First International Bank & Trust, MB Financial Bank N.A., HSBC
Bank, Integra Bank N.A., and Bank of America.
Judge Sharpe wanted investors to be repaid first before banks,
adding that they had to be punished for "poorly judging" Mr.
Pearlman. He didn't want Mr. Pearlman charged of his high rates
to investors, since it would reward the investors of their "poor
decisions", relates the AP.
"Since the time of the sentencing all you've gotten from the
defendant is the smirk on his face...[S]o let's try to get some
money first," the AP quotes Judge Sharpe, who addressed
prosecutors.
Judge Sharpe said that for every $1 million that Mr. Pearlman
repaid to investors, he would shorten his sentence by one month.
No substantial amount of money has been recovered since.
About Louis Pearlman
Louis J. Pearlman started Trans Continental Records which managed
boy bands such as the Backstreet Boys, 'N Sync, O-Town, Lyte Funky
Ones (LFO), Take 5, Natural and US5. Other artists on the Trans
Continental's label included Aaron Carter, Jordan Knight, C Note,
and Smilez & Southstar.
On March 1, 2007, creditors Tatonka Capital Corporation, First
National Bank & Trust Co. of Williston, and American Bank of St.
Paul, and Integra Bank filed an involuntary chapter 11 petition
against Mr. Pearlman and his company, Trans Continental Airlines,
Inc. (Bankr. M.D. Fla. Case Nos. 07-00761 and 07-00762). The
creditors disclosed an aggregate of more than $40 million in
claims.
Fletcher Peacock, Esq., is Mr. Pearlman's legal counsel.
Tatonka Capital is represented by Derek F. Meek, Esq., and Robert
B. Rubin, Esq., at Burr & Forman LLP, and Richard B Webber, II,
Esq., Zimmerman Kiser & Sutcliffe PA. First national Bank is
represented by Raymond V. Miller, Esq., at Gunster Yoakley &
Stewart PA, and Richard P. Olson, Esq., at Olson & Burns PC.
American Bank of St. Paul is represented by William P. Wassweiler,
Esq., at Rider Bennett LLP. Integra bank is represented by
Lawrence E. Rifken, Esq., at McGuire Woods LLP.
Soneet R. Kapila, the Chapter 11 trustee appointed to oversee Mr.
Pearlman's estate, is represented by Denise D. Dell-Powell, Esq.,
and Jill E. Kelso, Esq., at Akerman Senterfitt, and Gregory M.
Garno, Esq., and Paul J. Battista, Esq., at Genovese Joblove &
Battista PA.
The Official Committee of Unsecured Creditors of Trans Continental
is represented by Robert J. Feinstein, at Pachulski Stang Ziehl &
Jones LLP.
LOUIS TATUM: Case Summary & Four Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Louis H. Tatum, Jr.
6130 Shiloh Road
Alpharetta, GA 30005
Bankruptcy Case No.: 08-21861
Chapter 11 Petition Date: July 14, 2008
Court: Northern District of Georgia (Gainesville)
Judge: Robert Brizendine
Debtor's Counsel: Eric E. Thorstenberg, Esq.
6065 Roswell Road, North East, Suite 621
Atlanta, GA 30328
Tel: (404) 843-8491
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/ganb08-21861.pdf
MASHANTUCKET PEQUOT TRIBE: S&P Puts BB+ Rating on CreditWatch
-------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on the
Mashantucket Western Pequot Tribe, including the 'BB+' issuer
credit rating, on CreditWatch with negative implications.
"The CreditWatch listing stems from the recent report detailing
slot revenue for the month of June 2008, in which Foxwoods' slot
win fell by roughly 9%, despite a 13% increase in the number of
slot machines," said Standard & Poor's credit analyst Melissa
Long. (June represents the first full month of results for the
newly opened MGM Grand at Foxwoods.)
Despite improvement in slot revenues in May 2008 following the
grand opening of the MGM Grand tower, slot win for the nine months
ended June 2008 is down about 7% year over year--worse than the
overall Connecticut market decline. S&P had previously said that
there was little cushion in the rating for operating challenges or
market weakness beyond our expectations, and this level of decline
suggests this possibility.
In resolving the CreditWatch listing, S&P will assess the recent
operating performance at Foxwoods and reassess its expectations
relative to operating performance at the MGM Grand given the weak
economy and its effect on consumer discretionary spending.
MECACHROME INT'L: Moody's to Review Low B Ratings for Likely Cut
----------------------------------------------------------------
Moody's Investors Service placed all long term ratings of
Mecachrome International Inc under review for possible downgrade,
including the company's B2 corporate family, Ba2 senior secured
and B3 senior subordinate ratings. At the same time, Moody's
affirmed Mecachrome International's SGL-4 liquidity rating,
indicating weak liquidity.
The ratings review follows Mecachrome International's statement
that continued delays in certain of its aerospace programs would
contribute to a shortfall in fiscal 2008 revenues and earnings at
levels meaningfully below Moody's prior expectations.
While the company believes the challenges are temporary, and
amendments from its lenders over potential covenant violations
have been obtained through 2008, the earnings warning follows
Moody's pre-existing concerns over Mecachrome International's
liquidity position and its ability to stem its cash
consumptiveness.
The ratings review will focus on:
1) the adequacy of Mecachrome International's liquidity
profile, including an assessment of the company's recently
obtained covenant amendments,
2) to what extent the various key aerospace and engine programs
have each contributed to the shortfall in results,
3) the potential for the company's revenues and earnings to
rebound into 2009,
4) the company's plans to achieve targeted costs savings and to
what degree any reduction in discretionary capex amounts may
help the company to reach its goal of breakeven free cash
flow in fiscal 2009, and 5) the company's plans to
permanently replace its CEO, who resigned in conjunction
with the earnings pre-announcement.
On Review for Possible Downgrade:
Issuer: Mecachrome International Inc.
-- Probability of Default Rating, Placed on Review for Possible
Downgrade, currently B2
-- Corporate Family Rating, Placed on Review for Possible
Downgrade, currently B2
-- Senior Subordinated Regular Bond/Debenture, Placed on Review
for Possible Downgrade, currently B3, 64 - LGD4
-- Senior Secured Bank Credit Facility, Placed on Review for
Possible Downgrade, currently Ba2, 09 - LGD1
Outlook Actions:
Issuer: Mecachrome International Inc.
-- Outlook, Changed To Rating Under Review From Negative
Headquartered in Montreal Canada, Mecachrome International Inc. is
a leading designer, manufacturer and assembler of precision-
engineered industrial components and systems, including aircraft
engine components and structural components, and motor racing
engines.
MODERN CONTINENTAL: Can Use Bonded Receivables as Cash Collateral
-----------------------------------------------------------------
Modern Continental Construction Co. obtained permission from the
U.S. Bankruptcy Court for the District of Massachusetts to borrow
and use its bonded receivables as cash collateral.
The Debtor is a general contractor on large public works projects,
including the "Big Dig" Central Artery/Tunnel, a landfill capping
project at Fountain Avenue, Brooklyn, New York, and the widening
and reconstruction of Route 3 in Massachusetts. The Debtor has
and will receive cash, accounts receivable collections, retainage,
contract balances, and other cash and cash equivalents for work
performed on the bonded projects.
Prior to the bankruptcy filing date, Seaboard Surety Company, St.
Paul Fire and Marine Insurance Company and its affiliates, and the
U.S. Fidelity and Guaranty group of companies held first priority
security interests in the bonded receivables. The Debtor owes the
lenders an aggregate amount of $634,565,786 in principal under
certain surety credit agreements. This amount does not include
approximately $261,000,000 in accrued and unpaid interest.
The Court acknowledges that the Debtor requires the immediate use
of the bonded receivables to fund its operations, and is necessary
to complete the Debtor's ongoing contracts and to preserve the
value of the Debtor's assets. The Debtor told the Court that it
intends to complete its open contracts and conduct an orderly wind
down of its affairs.
The Court directs the Debtor to provide adequate protection to the
lenders in the form of first priority post-petition liens on any
cash, retainage, contract rights, accounts receivable and any
proceeds from the Debtor's projects as to which the lenders issued
bonds.
About Modern Continental
Modern Continental Construction Co. --
http://www.moderncontinental.com/-- of Cambridge, Massachusetts
was established in 1967 when its founders, Lelio "Les" Marino and
Kenneth Anderson, earned a small contract for the construction of
a sidewalk in the town of Peabody. Since then, the company has
blossomed into a multi-faceted organization which is highly
respected throughout the construction industry, and is ranked
among the top contractors in the country.
The company filed for Chapter protection on June 23, 2008 (Bankr.
D. Mass. Case No. 08-14558). Harold B. Murphy, Esq., at Hanify &
King P.C., represents the Debtor in its restructuring efforts.
When the debtor filed for protection from its creditors, it listed
total assets of $100 million to $500, and debts of $500 million to
$1 billion.
MODERN CONTINENTAL: Section 341(a) Meeting Scheduled for July 30
----------------------------------------------------------------
The U.S. Trustee for Region 1 will convene a meeting of Modern
Continental Construction Co.'s creditors on July 30, 2008, at 1:00
p.m., at the U.S. Trustee Office, Room 1190, 10 Causeway Street,
in Boston, Massachusetts.
This is the first meeting of creditors required under Section
341(a) of the U.S. 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.
About Modern Continental
Modern Continental Construction Co. --
http://www.moderncontinental.com/-- of Cambridge, Massachusetts
was established in 1967 when its founders, Lelio "Les" Marino and
Kenneth Anderson, earned a small contract for the construction of
a sidewalk in the town of Peabody. Since then, the company has
blossomed into a multi-faceted organization which is highly
respected throughout the construction industry, and is ranked
among the top contractors in the country.
The company filed for Chapter protection on June 23, 2008 (Bankr.
D. Mass. Case No. 08-14558). Harold B. Murphy, Esq., at Hanify &
King P.C., represents the Debtor in its restructuring efforts.
When the debtor filed for protection from its creditors, it listed
total assets of $100 million to $500, and $500 million to $1
billion.
MODERN CONTINENTAL: Trustee Appoints 7 Members to Creditors Panel
-----------------------------------------------------------------
Phoebe Morse, the U.S. Trustee for Region 1, appoints seven
members to the Official Committee of Unsecured Creditors in Modern
Continental Construction Co.'s Chapter 11 cases.
The Committee members include:
1) URS Corporation
38 Chauncy Street
Boston, MA 02111
c/o Andrew P. Botti, Esq.
Donovan Hatem LLP
Two Seaport Lane
Boston, MA 02210
Tel: (617) 406-4527
2) Architectural Paving & Stone, Inc.
402 Libbey Parkway
Weymouth, MA 02186
c/o Charles A. Roberts, Esq.
254 Main Street
P.O. Box 280009
Charlestown, MA 02129
Tel: (617) 241-5544
3) Lockton, Inc.
c/o Ann Abercrombie
444 West 47th Street
Kansas City, MO 64112
Tel: (816) 960-9477
4) BATG Environmental, Inc.
c/o Michael J. Donato
125 Orleans Street
East Boston, MA 02128
Tel: (617) 567-2001
5) Testa Corp.
c/o Abdi Behjat
360 Audubon Road
Wakefield, MA 01880
Tel: (781) 245-8700
6) The Aulson Company, Inc.
Shaunna Jammal
49 Danton Drive
Methuen, MA 01844
Tel: (978) 975-4500
7) New England Foundation Co., Inc.
Deirdre O’Neill
One Westinghouse Plaza
Building D
Boston, MA 02136
Tel: (617) 361-9750
About Modern Continental
Modern Continental Construction Co. --
http://www.moderncontinental.com/-- of Cambridge, Massachusetts
was established in 1967 when its founders, Lelio "Les" Marino and
Kenneth Anderson, earned a small contract for the construction of
a sidewalk in the town of Peabody. Since then, the company has
blossomed into a multi-faceted organization which is highly
respected throughout the construction industry, and is ranked
among the top contractors in the country.
The company filed for Chapter protection on June 23, 2008 (Bankr.
D. Mass. Case No. 08-14558). Harold B. Murphy, Esq., at Hanify &
King P.C., represents the Debtor in its restructuring efforts.
When the debtor filed for protection from its creditors, it listed
total assets of $100 million to $500, and $500 million to $1
billion.
NEW CENTURY FINANCIAL: Court Confirms Joint Liquidation Plan
------------------------------------------------------------
Judge Kevin J. Carey of the U.S. Bankruptcy Court for the
District of Delaware, confirmed on July 15, 2008, the 2nd Amended
Joint Chapter 11 Plan of Liquidation dated as of April 23, 2008,
co-proposed by New Century Financial Corporation and its debtor-
affiliates and the Official Committee of Unsecured Creditors.
The Bankruptcy Court found that the Plan is compliant in all
respects with the statutory requirements under Section 1129 of
the Bankruptcy Code. The Bankruptcy Court approved the
settlements and compromises provided for in the Plan, including:
(a) the Multi-Debtor Claim Protocol, which provided for a
compromise on inter-Debtor related issues with respect to
claims certain of the Debtors are jointly liable;
(b) the EPD/Breach Claim Protocol, which set a protocol for
distribution amounts for claims arising under an agreement
between one or more of the Debtors and a loan buyer or
securitization trust;
(c) the Intercompany Claim Protocol, which provided for the
cancellation or reduction of intercompany claims between
the Debtors;
(d) the distribution of the Litigation Proceeds among the
various creditor groups;
(e) the establishment of the Joint Administrative Share; and
(f) the formation and composition of the Debtor Groups and
the establishment and application of the Determined
Distribution Amount to calculate the distributions to
creditors.
Court Resolves Plan Objections
Judge Carey overruled all outstanding objections to the Plan's
confirmation. The withdrawal of a portion of the New York State
Teachers Retirement System's objection -- relating to the pursuit
of claims solely to the extent of available insurance proceeds --
is without prejudice to the Securities Plaintiffs in the
shareholder securities fraud class action, in In re New Century,
Case No. 2:07-cv-00931, pending in the U.S. District Court for
the Central District of California, to move for relief from the
automatic stay to pursue their claims.
On the Effective Date, all claims and causes of action that the
Debtors may have or could have asserted against Goldman Sachs
Mortgage Company or its affiliates related to Access Lending will
be discharged.
Under the Plan, the Internal Revenue Service may exercise its
right to set-off unpaid Allowed Claims against refunds of taxes
due and payable from the IRS to the Debtors, including the income
tax refund claimed by the Debtors for the 2004 taxable year, for
$66,016,311. The IRS may continue its audit of the Tax Years of
the Debtors until the expiration of the statute of limitation for
the years in dispute, 2003, 2004, 2005 and 2006.
In order to pay IRS' Allowed Priority Tax Claims, the Liquidating
Trustee will establish a reserve in the amount of $1,500,000 as
soon as practicable after the Effective Date. No later than
Sept. 15, 2008, the IRS will issue the Debtors a statutory notice
of deficiency for the Tax Years. By no later than 5:00 p.m. on
August 20, 2008, the IRS will provide to the Debtors the IRS'
best estimate of the net amount of additional tax owed by the
Debtors for the Tax Years.
With respect to the Texas Comptroller of Public Accounts, its
set-off rights are not impaired or altered in any way by the Plan
or the Confirmation Order.
Dissolution of Committee and
Formation of Liquidating Trust
On the Effective Date, the Official Committee of Unsecured
Creditors will dissolve automatically, and its members,
professionals, and agents will be released from further duties
and responsibilities in the Debtors' Chapter 11 cases and under
the Bankruptcy Code, or in connection with the Plan and its
implementation.
Furthermore, on the Effective Date, the Plan Advisory Committee
will be deemed appointed, and will adopt by-laws to govern its
actions. The Plan Advisory Committee will consist of five
members of the Creditors Committee:
* Credit Suisse First Boston Mortgage Capital LLC;
* Deutsche Bank National Trust Co.;
* Fidelity National Information Services, Inc.;
* Kodiak Funding, LP; and
* Residential Funding Company, LLC.
The Liquidating Trust Agreement, as amended, has been approved.
On or prior to the Effective Date, the Liquidating Trust will be
formed. Alan M. Jacobs is appointed Liquidating Trustee and will
commence service on the Effective Date.
The Liquidating Trustee is permitted to act in accordance with
the terms of the Liquidating Trust Agreement from the
Confirmation Date through the Effective Date. He will be deemed
the Estates' representative, except with respect to Reorganized
Access Lending, in accordance with the provisions of the
Bankruptcy Code. The Liquidating Trustee is also appointed as
the sole officer and director of each of the Debtors as of the
Effective Date.
The Liquidating Trustee, in its reasonable business judgment, and
in an expeditious but orderly manner, will liquidate and convert
the Liquidating Trust Assets to cash, make timely distributions,
and not unduly prolong the duration of the Liquidating Trust.
The Holders of Holding Company Debtor Unsecured Claims and the
Holders of Operating Debtor Unsecured Claims will be the sole
beneficiaries of the Liquidating Trust. Holders of Unsecured
Claims against Access Lending will not be beneficiaries of the
Liquidating Trust. Allowed A/P/S Claims, other than against
Access Lending, will be paid out of the Liquidating Trust Assets,
but will not be beneficiaries of the Liquidating Trust.
A full-text copy of the New Century Plan Confirmation Order is
available for free at:
http://bankrupt.com/misc/NewCentConfirmationOrder.pdf
Debtors Met Statutory Requirements
Judge Carey ruled that the Debtors and the Plan complied with all
applicable requirements under Section 1129 of the Bankruptcy
Code:
(1) The Plan complies with Section 1129(a)(1) since the
various Classes of Claims and Interests are classified
based on valid business, factual and legal reasons, and
those Classes do not unfairly discriminate between
holders of Claims and Interests.
(2) The Plan complies with Section 1129(a)(2) because the
Debtors have complied with all of the provisions of the
Bankruptcy Code and the Bankruptcy Rules governing notice
and related matters in connection with the Plan, the
Disclosure Statement, and all other matters considered by
the Bankruptcy Court in their cases.
(3) The Plan complies with Section 1129(a)(3) because the Plan
was proposed with legitimate and honest purposes, in good
faith and not by any means forbidden by law.
(4) The Plan complies with Section 1129(a)(4) because payments
made or to be made by the Debtor to Professionals for
services or costs and expenses incurred have been approved
by, or are subject to the approval of, the Bankruptcy
Court.
(5) The Plan complies with Section 1129(a)(5) with respect to
Directors, Officers or Insiders going forward.
(6) Section 1129(a)(6) is inapplicable because the Debtors'
businesses will not involve rates established or approved
by, or otherwise subject to, any governmental regulatory
commission.
(7) The Plan complies with the requirements of Section
1129(a)(7).
(8) The Plan complies with the requirements of Section
1129(a)(8).
(9) The treatment of Administrative Claims, Priority Tax
Claims and Non-Tax Priority Claims pursuant the Plan
satisfies the requirements of Sections 1129(a)(9).
(10) The Plan satisfies the requirements of Section
1129(a)(10).
(11) To the extent applicable to a plan of liquidation, Section
1129(a)(11) is not applicable to the Plan.
(12) The Plan complies with the requirements of Section
1129(a)(12) because all the fees payable under Section
1930 of the Judiciary Code have been paid or will be paid
on the Effective Date of the Plan.
(13) Section 1129(a)(13) is satisfied since all retiree
benefits will be treated as executory contracts subject to
rejection in accordance with the Plan.
(14) Section 1129(a)(14), which addresses domestic support
obligations, does not apply to the Debtor.
(15) Section 1129(a)(15), which concerns individual debtors,
does not apply to the Debtor.
(16) The Plan complies with Section 1129(a)(16).
Judge Carey also concluded that the Plan Proponents have met
their burden of proving the elements of Sections 1129(a) and (b)
by a preponderance of evidence, and under the clear and
convincing standard of proof. Further, the Plan satisfies the
requirements of Section 1129(d), as its purpose is not the
avoidance of taxes or the avoidance of the requirements of
Section 5 of The Securities Act of 1933.
About New Century Financial
Founded in 1995, Irvine, Calif.-based New Century Financial
Corporation (NYSE: NEW) -- http://www.ncen.com/-- is a real
estate investment trust, providing mortgage products to borrowers
nationwide through its operating subsidiaries, New Century
Mortgage Corporation and Home123 Corporation. The company offers
a broad range of mortgage products designed to meet the needs of
all borrowers.
The company and its debtor-affiliates filed for Chapter 11
protection on April 2, 2007 (Bankr. D. Del. Lead Case No.
07-10416). Suzzanne Uhland, Esq., Austin K. Barron, Esq., and
Ana Acevedo, Esq., at O'Melveny & Myers LLP, and Mark D. Collins,
Esq., Michael J. Merchant, Esq., and Jason M. Madron, Esq., at
Richards, Layton & Finger, P.A., represent the Debtors. The
Official Committee of Unsecured Creditors selected Hahn & Hessen
as its bankruptcy counsel and Blank Rome LLP as its co-counsel.
When the Debtors filed for bankruptcy, they listed total assets
of $36,276,815 and total debts of $102,503,950. The Debtors'
exclusive period to file a plan expired on Jan. 28, 2008. The
confirmatin hearing on the Debtor's plan began April 24, 2008.
(New Century Bankruptcy News, Issue No. 44; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
NEW CENTURY FINANCIAL: Exclusivity Period Extended to August 20
---------------------------------------------------------------
Judge Kevin J. Carey of the U.S. Bankruptcy Court for the District
of Delaware extended the period during which New Century Financial
Corporation and its debtor-affiliates have the exclusive right to
solicit acceptances of their Chapter 11 Plan, pursuant to Section
1121(d) of the Bankruptcy Code, through and including August 20,
2008. Judge Carey had previously extended the Exclusive
Solicitation Period to June 24.
The extension may be unnecessary as the Debtors have recently
obtained confirmation of their Second Amended Joint Chapter 11
Plan of Liquidation dated as of April 23, 2008.
About New Century Financial
Founded in 1995, Irvine, Calif.-based New Century Financial
Corporation (NYSE: NEW) -- http://www.ncen.com/-- is a real
estate investment trust, providing mortgage products to borrowers
nationwide through its operating subsidiaries, New Century
Mortgage Corporation and Home123 Corporation. The company offers
a broad range of mortgage products designed to meet the needs of
all borrowers.
The company and its debtor-affiliates filed for Chapter 11
protection on April 2, 2007 (Bankr. D. Del. Lead Case No.
07-10416). Suzzanne Uhland, Esq., Austin K. Barron, Esq., and
Ana Acevedo, Esq., at O'Melveny & Myers LLP, and Mark D. Collins,
Esq., Michael J. Merchant, Esq., and Jason M. Madron, Esq., at
Richards, Layton & Finger, P.A., represent the Debtors. The
Official Committee of Unsecured Creditors selected Hahn & Hessen
as its bankruptcy counsel and Blank Rome LLP as its co-counsel.
When the Debtors filed for bankruptcy, they listed total assets
of $36,276,815 and total debts of $102,503,950. The Debtors'
exclusive period to file a plan expired on Jan. 28, 2008. The
confirmatin hearing on the Debtor's plan began April 24, 2008.
(New Century Bankruptcy News, Issue No. 44; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
NORTHWEST AIRLINES: Inks Framework Pact with Delta and ALPA
-----------------------------------------------------------
Edward H. Bastian, president and chief financial officer of Delta
Air Lines, Inc., disclosed, in a regulatory filing with the U.S.
Securities and Exchange Commission dated July 2, 2008, that on
June 27, Delta entered into a transaction framework agreement
with the Delta Master Executive Council, the Northwest Master
Executive Council, and the Air Line Pilots Association,
International.
The MEC is the governing body of the Delta and Northwest units of
ALPA, the SEC filing said.
The Framework Agreement addresses, among other things, a new
joint collective bargaining agreement -- the new PWA -- that
Delta had previously announced and that, subject to ratification
by the airline pilots in the service of Delta, will become
effective upon consummation of the Delta-Northwest merger, and
will govern the terms and conditions of employment of the Merged
Company Pilots.
The Framework Agreement also provides that the Northwest MEC, the
Delta MEC and ALPA will adopt and be bound by a process agreement
relating to the determination of an integrated seniority list for
the Merged Company Pilots. The parties to the Process Agreement
may not revise, waive any material right under, or terminate the
Process Agreement without the consent of Delta.
Until the closing of the Merger, the Northwest and Delta pilots
will remain separate. Moreover, the Northwest and Delta pilots
will be covered with each company's existing collective
bargaining agreements.
Subject to the terms and conditions of the Framework Agreement,
the Northwest MEC and the Delta MEC have each agreed to:
(a) recommend that the Northwest and Delta pilots ratify the
new PWA; and
(b) use their efforts to cause a ratification vote by their
corresponding pilots groups by August 26, 2008.
Pursuant to the terms of the Framework Agreement, Delta has
agreed to issue shares of its common stock equal to (i) 3.5% of
the fully-diluted shares outstanding of Delta to Delta
pilots and (ii) 2.38% of the fully-diluted shares outstanding of
Delta to Northwest pilots, effective on the closing date of the
Merger. Delta's issuance of common stock is subject to the
ratification by each of the Northwest and Delta pilots of the new
PWA, and approval by the stockholders of Delta of an amendment to
the Delta 2007 Performance Compensation Plan to increase the
number of shares of Delta common stock issuable under that plan.
If Delta stockholders do not approve the amendment to the Delta
2007 Performance Compensation Plan, either of the Delta MEC or
the Northwest MEC may terminate the Framework Agreement.
The Framework Agreement supersedes in all respects, a Transaction
Framework Agreement, dated as of April 14, 2008, among Delta, the
Delta MEC and ALPA, unless and until the time that the
Framework Agreement is terminated in accordance with its terms.
About Delta Air
Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) --
http://www.delta.com/-- is the world's second-largest airline
in terms of passengers carried and the leading U.S. carrier
across the Atlantic, offering daily flights to 328 destinations
in 56 countries on Delta, Song, Delta Shuttle, the Delta
Connection carriers and its worldwide partners. Delta flies to
Argentina, Australia and the United Kingdom, among others.
The company and 18 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923).
Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents
the Debtors in their restructuring efforts. Timothy R. Coleman
at The Blackstone Group L.P. provides the Debtors with financial
advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at
Akin Gump Strauss Hauer & Feld LLP, provide the Official
Committee of Unsecured Creditors with legal advice. John
McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James
S. Feltman at Mesirow Financial Consulting, LLC, serve as the
Committee's financial advisors.
The Debtors filed a chapter 11 plan of reorganization and
disclosure statement explaining that plan on Dec. 19, 2007. On
Jan. 19, 2007, they filed revisions to the plan and disclosure
statement, and submitted further revisions to the plan on
Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors'
disclosure statement. In April 25, 2007, the Court confirmed the
Debtors' plan. That plan became effective on April 30, 2007. The
Court entered a final decree closing 17 cases on Sept. 26, 2007.
(Delta Air Lines Bankruptcy News, Issue No. 103; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
About Northwest Airlines
Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/--
is the world's fourth largest airline with hubs at Detroit,
Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about
1,400 daily departures. Northwest is a member of SkyTeam, an
airline alliance that offers customers one of the world's most
extensive global networks. Northwest and its travel partners
serve more than 1000 cities in excess of 160 countries on six
continents. Northwest and its travel partners serve more than
1000 cities in excess of 160 countries on six continents,
including Italy, Spain, Japan, China, Venezuela and Argentina.
The company and 12 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce
R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader,
Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq.,
at Cadwalader, Wickersham & Taft LLP in Washington represent the
Debtors in their restructuring efforts. The Official Committee
of Unsecured Creditors has retained Scott L. Hazan, Esq., at
Otterbourg, Steindler, Houston & Rosen, P.C. as its bankruptcy
counsel in the Debtors' chapter 11 cases.
When the Debtors filed for bankruptcy, they listed $14.4 billion
in total assets and $17.9 billion in total debts. On Jan. 12,
2007 the Debtors filed with the Court their Chapter 11 Plan. On
Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure
Statement. The Court approved the adequacy of the Debtors'
Disclosure Statement on March 26, 2007. On May 21, 2007, the
Court confirmed the Debtors' Plan. The Plan took effect May 31,
2007. (Northwest Airlines Bankruptcy News, Issue No. 96;
Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
NORTHWEST AIRLINES: Shareholders to Vote on Merger by Sept. 25
--------------------------------------------------------------
Northwest Airlines Corp. will hold its annual shareholders meeting
in New York, on Sept. 25, 2008, to vote on the proposed merger
between Northwest Airlines and Delta Air Lines Inc., creating
America's premier global airline.
The meeting will be held at the Equitable Life Building in New
York, 787 Seventh Ave. New York, NY in the Equitable Auditorium.
The meeting time is yet to be determined.
"Looking back on the announcement of our merger with Delta, we
are more confident than ever that this was the right deal at the
right time," said Doug Steenland, president and CEO of Northwest
Airlines. "Moving forward, the combined carrier will be in the
best position to compete globally -- validating that this was the
right transaction for our employees, customers, shareholders and
the communities we serve,"
"The merger-related synergies will improve the financial ability
of Northwest and Delta to meet the challenge presented by the
fuel crisis and better position the combined carrier for long-
term strength and profitability," Mr. Steenland continued.
Delta Stockholders to Vote on
Issuance of Stock to Northwest
Similarly, Delta Air Lines will hold a special meeting of
stockholders on Sept. 25, 2008, in Atlanta for stockholders to
vote on the issuance of Delta common stock to Northwest
stockholders in the merger of the airlines and on an amendment to
the Delta 2007 Performance Compensation Plan, a broad-based
employee compensation program.
The meeting will be held at 2 p.m. EDT at the Georgia
International Convention Center located at 2000 Convention Center
Concourse, in College Park, Georgia.
The record date for determining stockholders entitled to notice
of, and to vote at, the special meeting will be the close of
business on July 29, 2008.
Delta in April announced that it is combining with Northwest in
an all-stock transaction to create America's premier global
airline. The new company will be called Delta and will be
headquartered in Atlanta. Combined, the company and its regional
partners will provide customers access to more than 390
destinations in 67 countries. Together, Delta and Northwest will
have more than $35 billion in aggregate annual revenues, operate
a mainline fleet of nearly 800 aircraft, employ approximately
75,000 people worldwide, and have one of the strongest balance
sheets in the industry. The merger is subject to the approval of
Delta and Northwest stockholders and regulatory approvals, which
are expected to be completed later this year.
About Delta Air
Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) --
http://www.delta.com/-- is the world's second-largest airline
in terms of passengers carried and the leading U.S. carrier
across the Atlantic, offering daily flights to 328 destinations
in 56 countries on Delta, Song, Delta Shuttle, the Delta
Connection carriers and its worldwide partners. Delta flies to
Argentina, Australia and the United Kingdom, among others.
The company and 18 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923).
Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents
the Debtors in their restructuring efforts. Timothy R. Coleman
at The Blackstone Group L.P. provides the Debtors with financial
advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at
Akin Gump Strauss Hauer & Feld LLP, provide the Official
Committee of Unsecured Creditors with legal advice. John
McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James
S. Feltman at Mesirow Financial Consulting, LLC, serve as the
Committee's financial advisors.
The Debtors filed a chapter 11 plan of reorganization and
disclosure statement explaining that plan on Dec. 19, 2007. On
Jan. 19, 2007, they filed revisions to the plan and disclosure
statement, and submitted further revisions to the plan on
Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors'
disclosure statement. In April 25, 2007, the Court confirmed the
Debtors' plan. That plan became effective on April 30, 2007. The
Court entered a final decree closing 17 cases on Sept. 26, 2007.
(Delta Air Lines Bankruptcy News, Issue No. 103; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
About Northwest Airlines
Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/--
is the world's fourth largest airline with hubs at Detroit,
Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about
1,400 daily departures. Northwest is a member of SkyTeam, an
airline alliance that offers customers one of the world's most
extensive global networks. Northwest and its travel partners
serve more than 1000 cities in excess of 160 countries on six
continents. Northwest and its travel partners serve more than
1000 cities in excess of 160 countries on six continents,
including Italy, Spain, Japan, China, Venezuela and Argentina.
The company and 12 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce
R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader,
Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq.,
at Cadwalader, Wickersham & Taft LLP in Washington represent the
Debtors in their restructuring efforts. The Official Committee
of Unsecured Creditors has retained Scott L. Hazan, Esq., at
Otterbourg, Steindler, Houston & Rosen, P.C. as its bankruptcy
counsel in the Debtors' chapter 11 cases.
When the Debtors filed for bankruptcy, they listed $14.4 billion
in total assets and $17.9 billion in total debts. On Jan. 12,
2007 the Debtors filed with the Court their Chapter 11 Plan. On
Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure
Statement. The Court approved the adequacy of the Debtors'
Disclosure Statement on March 26, 2007. On May 21, 2007, the
Court confirmed the Debtors' Plan. The Plan took effect May 31,
2007. (Northwest Airlines Bankruptcy News, Issue No. 96;
Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
NORTHWEST AIRLINES: Wants Approval on IRS Settlement Deal
---------------------------------------------------------
Northwest Airlines Corp. and its debtor-affiliates sought the
approval of the U.S. Bankruptcy Court for the Southern District of
New York on a settlement agreement they entered into with the
Internal Revenue Service resolving disputes pertaining to the
Debtors' income tax and employment tax obligations.
The Parties agreed (i) to make certain adjustments to the IRS'
prepetition interest calculations, and (ii) that IRS would file an
amended claim with respect to the Debtors' Income Tax and
Employment Tax Obligations.
The Debtors asked the Court to approve the Amended Settlement
Agreement, the terms of which, include:
(1) the allowance of IRS' Amended Claim for $12,315,747, to
be satisfied by distributions under the Plan, comprised
of (i) a general unsecured claim for $750,000, (ii) an
unsecured priority claim for $750,000, and (iii) an
unsecured priority claim for $10,815,747;
(2) IRS' Claim Nos. 8048 to 8059 and 9273 to 9284 will be
deemed withdrawn and expunged as having been amended and
superseded by the Amended Claim; and
(3) Claim Nos. 12413 and 12411 will be allowed, with
prejudice, as an administrative claim for $7,624.
About Northwest Airlines
Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/--
is the world's fourth largest airline with hubs at Detroit,
Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about
1,400 daily departures. Northwest is a member of SkyTeam, an
airline alliance that offers customers one of the world's most
extensive global networks. Northwest and its travel partners
serve more than 1000 cities in excess of 160 countries on six
continents. Northwest and its travel partners serve more than
1000 cities in excess of 160 countries on six continents,
including Italy, Spain, Japan, China, Venezuela and Argentina.
The company and 12 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce
R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader,
Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq.,
at Cadwalader, Wickersham & Taft LLP in Washington represent the
Debtors in their restructuring efforts. The Official Committee
of Unsecured Creditors has retained Scott L. Hazan, Esq., at
Otterbourg, Steindler, Houston & Rosen, P.C. as its bankruptcy
counsel in the Debtors' chapter 11 cases.
When the Debtors filed for bankruptcy, they listed $14.4 billion
in total assets and $17.9 billion in total debts. On Jan. 12,
2007 the Debtors filed with the Court their Chapter 11 Plan. On
Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure
Statement. The Court approved the adequacy of the Debtors'
Disclosure Statement on March 26, 2007. On May 21, 2007, the
Court confirmed the Debtors' Plan. The Plan took effect May 31,
2007. (Northwest Airlines Bankruptcy News, Issue No. 96;
Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
NORTHWEST AIRLINES: Insists ALG's $15 Mil. Claim is Unenforceable
-----------------------------------------------------------------
ALG DC-9 L.L.C. is only entitled to distributions under the
reorganization plan of Northwest Airlines Corp. and its debtor-
affiliates] for the portions of its claims that represent
compensation for actual pecuniary loss, Mark C. Ellenberg, Esq.,
at Cadwalader, Wickersham & Taft LLP, in New York, told the U.S.
Bankruptcy Court for the Southern District of New York.
According to Mr. Ellenberg, ALG does not and cannot dispute that
its actual pecuniary loss as a result of the Debtors' rejection
of ALG leases does not exceed $1,360,000. The Debtors' Plan is
binding on ALG, and it cannot mount a collateral attack on the
Plan provisions at this point, said Mr. Ellenberg. Accordingly,
ALG is not entitled to a distribution under the Plan for any
amount in excess of $1,360,000.
Moreover, a $15,000,000 in rejection damages demanded by ALG
constitutes an unenforceable penalty under Minnesota law because
it bears no reasonable relation to ALG's actual pecuniary damages
resulting from the rejection and termination of the subject
Leases, said Mr. Ellenberg. It is undisputed that the liquidated
damages sought by the Claims are not actual pecuniary losses to
the extent they exceed $1,360,000, he added.
Mr. Ellenberg disputed ALG's assertion that "the parties
negotiated liquidated damages as a substitution for actual
damages" is irrelevant to application of the Plan provisions to
ALG's claim. ALG's attempt to distinguish its claim from non-
compensatory damages that the Plan expressly subordinates fails,
Mr. Ellenberg contended.
"Liquidated damages exceeding ALG's actual pecuniary loss are
subordinated under the Plan, and ALG's claim should be reduced
accordingly," Mr. Ellenberg maintained.
About Northwest Airlines
Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/--
is the world's fourth largest airline with hubs at Detroit,
Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about
1,400 daily departures. Northwest is a member of SkyTeam, an
airline alliance that offers customers one of the world's most
extensive global networks. Northwest and its travel partners
serve more than 1000 cities in excess of 160 countries on six
continents. Northwest and its travel partners serve more than
1000 cities in excess of 160 countries on six continents,
including Italy, Spain, Japan, China, Venezuela and Argentina.
The company and 12 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce
R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader,
Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq.,
at Cadwalader, Wickersham & Taft LLP in Washington represent the
Debtors in their restructuring efforts. The Official Committee
of Unsecured Creditors has retained Scott L. Hazan, Esq., at
Otterbourg, Steindler, Houston & Rosen, P.C. as its bankruptcy
counsel in the Debtors' chapter 11 cases.
When the Debtors filed for bankruptcy, they listed $14.4 billion
in total assets and $17.9 billion in total debts. On Jan. 12,
2007 the Debtors filed with the Court their Chapter 11 Plan. On
Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure
Statement. The Court approved the adequacy of the Debtors'
Disclosure Statement on March 26, 2007. On May 21, 2007, the
Court confirmed the Debtors' Plan. The Plan took effect May 31,
2007. (Northwest Airlines Bankruptcy News, Issue No. 96;
Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
NORWALK INVESTMENT: Case Summary & Two Largest Unsecured Creditors
------------------------------------------------------------------
Debtor: Norwalk Investment Company, Ltd.
3822 Autumn Drive
Huron, OH 44839
Bankruptcy Case No.: 08-33664
Type of Business: The Debtor is engaged in real estate business.
Chapter 11 Petition Date: July 14, 2008
Court: Northern District of Ohio (Toledo)
Judge: Richard L. Speer
Debtor's Counsel: Jonathan P. Blakely, Esq.
Email: jblakely@b-wlaw.com
Bernlohr Wertz, L.L.P.
The Nantucket Building
23 S. Main Street, Third Floor
Akron, OH 44308
Tel: (330) 434-1000
Fax: (330) 434-1001
http://www.b-wlaw.com/
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/ohnb08-33664.pdf
OAKRIDGE HOMES: Taps Levene Neale as Bankruptcy Counsel
-------------------------------------------------------
Oakridge Homes LLC asks the U.S. Bankruptcy Court for the Central
District of California for authority to employ Levene, Neale,
Bender, Rankin & Brill L.L.P. as bankruptcy counsel, effective as
of the bankruptcy filing date.
Levene Neale will mainly advise the Debtor with regard to its
rights and duties under the Bankruptcy Code, assist the Debtor in
the preparation and confirmation of a plan of reorganization and
approval of a disclosure statement in respect of the plan, as well
as represent the Debtor in any proceeding involving the Debtor's
estate before the Bankruptcy Court.
During the one-year period prior to the Debtor's bankruptcy
filing, Levene Neale received the total sum of $75,000 from the
Debtor as retainer in contemplation of or in connection with the
Debtor's Chapter 11 case, inclusive of the $1,039 bankruptcy
filing fee. The Debtor disclosed that the source of the retainer
was a pre-bankruptcy undecured loan from an entity owned or
controlled by Nasir Eftekhari, the managing member of the Debtor.
Ron Bender, Esq., a partner at Levene Neale, assures the Court
that the firm does not hold or represent any interest materially
adverse to the Debtor or its estate, and that the firm is a
"disinterested person" as that term is defined in Sec. 101(14) of
the Bankruptcy Code.
As compensation for their services, Levene Neale's professionals
bill:
Attorneys Hourly Rates
--------- ------------
David W. Levene, Esq. $575
Martin J. Brill, Esq. $575
David L. Neale, Esq. $550
Ron Bender, Esq. $550
Craid M. Rankin, Esq. $550
Daniel H. Reiss, Esq. $495
Monica Y. Kim, Esq. $495
David B. Golubchik, Esq. $495
Beth Ann R. Young, Esq. $495
Jacqueline L. Rodrigue, Esq. $425
Juliet Y. Oh, Esq. $405
Michelle S. Grimberg, Esq. $385
Gil Hopenstand, Esq. $375
Ovsanna Takvoryan, Esq. $350
Holly Roark, Esq. $295
Paraprofessionals $195
Based in Valencia, Calif., Oakridge Homes, LLC is a homebuilder.
The company filed for Chapter 11 on June 13, 2008 (C.D. Calif.
Case No. 08-13977). Ron Bender, Esq., represents the Debtor as
counsel. When the Debtor filed for bankruptcy protection, it
listed estimated assets of between $10 million and $50 million,
and estimated debts of between $10 million and $50 million.
OTC INTERNATIONAL: Court Moves Sale Closing Date to July 31
-----------------------------------------------------------
The Hon. Arthur J. Gonzalez of the United States Bankruptcy
Court for the Southern District of New York deferred the closing
date of the sale of the assets of OTC International Ltd. to July
31, 2008, Tiffany Kary of Bloomberg News reports.
The sale was delayed as the company tallies up the inventory that
will not be sold -- a lot of jewelry worth an estimated $10
million, Ms. Kary quoted a person with knowledge of the matter.
As reported in the Troubled Company Reporter on June 30, 2008, the
Court approved the sale of substantially all of the assets of the
Debtor to Dialuck Corporation for $23,000,000, free and clear of
liens and interests, pursuant to an asset purchase agreement dated
May 1, 2008.
After due deliberation, Judge Gonzalez held that the sale is in
the best interests of the Debtor and its creditors as well as
other parties-in-interest.
The assets is comprised of the Debtor's (i) business operations,
active inventory and memo goods, (ii) all jewelry inventory
including any related intellectual property specific to certain
branded inventory, (iii) loose diamond inventory, (iv) business
operations of Netaya Corporation, an affiliate of the Debtor, (v)
all general accounts receivable, (vi) all leases and executory
contracts.
The sale was expected to close by July 15, 2008.
A full-text copy of the asset purchase agreement is available for
free at http://ResearchArchives.com/t/s?2ecf
About OTC International
Long Island City, New York, OTC International, Ltd. --
http://www.otcinternational.com/-- manufactures jewelry and
precious metal, specializing in diamonds, gold, silver, gemstones,
cameos, and watches. The company filed for Chapter 11 protection
on April 3, 2008 (Bankr. S.D.N.Y. Case No. 08-11181).
Ian R. Winters, Esq., and Patrick J. Orr, Esq., at Klestadt &
Winters LLP, represent the Debtor in its restructuring efforts.
The Debtor selected The Garden City Group Inc. as claims and
noticing agent. The U.S. Trustee for Region 2 appointed creditors
to serve on an Official Committee of Unsecured Creditors.
Silverman Perlstein & Acampora LLP represents the Committee as
its counsel in this case. Howard Fielstein, CPA, a member of
Margolin Winer & Evens LLP, will serve as Chapter 11 examiner of
the Debtor's case.
The Debtor's summary of schedules listed total assets of
$16,362,907 and total debts of $74,024,680. All assets are listed
at net book value excluding metal inventory on consignment of
$29,261,970.
PERFORMANCE TRANS: Ch. 7 Trustee Wants to Employ Self as Attorney
-----------------------------------------------------------------
Mark S. Wallach, as the trustee appointed under Performance
Transportation, Inc., et al.'s Chapter 7 case, seeks the U.S.
Bankruptcy Court for the Western District of New York's
authority to employ himself as attorney to render legal services.
Mr. Wallach tells the Court that he needs legal services in
connection with:
i. liquidating PTS II's estate;
ii. recovering property of the estate;
iii. instituting avoidance proceedings, if necessary; and
iv. obtaining general legal advice on matters affecting the
administration of their estate.
Mr. Wallach further tells the Court that he is qualified to
perform the duties as an attorney to the trustee because of his
experience.
The trustee's compensation is subject to Court approval.
Mark S. Wallach, Esq., holds legal office at 169 Delaware Avenue,
in Buffalo, New York.
About Performance Transportation
Performance Transportation Services Inc. is the second largest
transporter of new automobiles, sport-utility vehicles and light
trucks in North America, and operates under three key
transportation business lines including: E. and L. Transport,
Hadley Auto Transport and Leaseway Motorcar Transport.
The company and 13 of its affiliates previously filed for Chapter
11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Lead Case No. 06-
00107). The U.S. Bankruptcy Court for the Western District of New
York confirmed the Debtors' plan on Dec. 21, 2006, and that plan
became effective on Jan. 29, 2007. Garry M. Graber, Esq. of
Hodgson, Russ LLP and Tobias S. Keller, Esq. of Jones Day
represented the Debtors in their restructuring efforts. When the
Debtor filed for protection from their creditors it reported more
than $100,000,000 in total assets. It also disclosed owing more
than $100,000,000 to at most 10,000 creditors, including $708,679
to Broadspire and $282,949 to General Motors of Canada Limited.
The company and its debtor-affiliates filed their second Chapter
11 bankruptcy on Nov. 19, 2007 (Bankr. W.D.N.Y. Case Nos: 07-04746
thru 07-04760). Tobias S. Keller, Esq., at Jones Day, represents
the Debtors. Garry M. Graber, Esq., at Hodgson, Russ LLP, serve
as the Debtors' local counsel. The Debtors' claims and balloting
agent is Kutzman Carson Consultants LLC.
The Court converted the Debtors' cases to Chapter 7 liquidation,
effective as of July 14, 2008.
(Performance Bankruptcy News, Issue No. 51; Bankruptcy Creditors'
Services Inc.; http://bankrupt.com/newsstand/or 215/945-7000).
PERFORMANCE TRANS: Court Converts PTS II Cases to Chapter 7
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of New York
converted the Debtors' Chapter 11 cases to cases under Chapter 7
of the Bankruptcy Code, effective as of July 14, 2008. Mark S.
Wallach was appointed as the trustee for Performance
Transportation, Inc., et al.'s, Chapter 7 case.
Aside from the U.S. Trustee appointing a Chapter 7 trustee, the
debtor-in-possession is required to promptly turnover all
property of the estate to the Chapter 7 Trustee. The Chapter 7
Trustee displaces the company's Board of Directors and senior
management.
The U.S. Trustee will convene another Section 341 meeting of
creditors in the Chapter 7 case. At that meeting, creditors may
choose to elect a new Chapter 7 Trustee.
The Chapter 7 trustee will ask the court at some point to set a
Chapter 11 Claims Bar Date -- a deadline by which all creditors
with claims arising between the date the company filed its second
chapter 11 petition and the date the case was converted must file
their claims or be forever barred from asserting those claims.
Claims arising after the conversion take priority over claims
arising during the course of the Chapter 11 proceeding. Claims
arising during the course of the Chapter 11 proceeding take
priority over prepetition claims arising between the date the
first plan was substantially consummated and the date the second
Chapter 11 petition was filed. Claims arising prior to
substantial consummation of the first Chapter 11 plan are treated
in accordance with the terms of the first chapter 11 plan.
The conversion of the Chapter 11 cases was sought by (i) Black
Diamond Commercial Finance, L.L.C., in its capacity as agent for
the Debtors' postpetition secured lenders, (ii) the U.S. Trustee
and (iii) CIT Group/Business Credit, Inc. and Bayerische Hypo-und
Vereinsbank AG, New York, the revolving lenders under the First
Lien Credit Agreement.
The Court directs PTS II to file and transmit to the U.S. Trustee
a final report and account not later than August 13, 2008, and:
a. turn over to the Chapter 7 Trustee all records and property
of the estate under its custody and control as required by
the Federal Rules of Bankruptcy Procedure; and
b. file, not later than August 13, 2008, an accounting of all
receipts and distributions made.
The Court directs the Debtors to file, not later than
July 29, 2008, a schedule of unpaid debts the Debtors incurred
after the commencement of the Chapter 11 case.
The Court further directs the Debtors to file the statements and
schedules required by Rules 1019(1)(A) and 1007(b) of the Federal
Rules of Bankruptcy Procedure not later than July 29, 2008, if
the documents have not already been filed.
About Performance Transportation
Performance Transportation Services Inc. is the second largest
transporter of new automobiles, sport-utility vehicles and light
trucks in North America, and operates under three key
transportation business lines including: E. and L. Transport,
Hadley Auto Transport and Leaseway Motorcar Transport.
The company and 13 of its affiliates previously filed for Chapter
11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Lead Case No. 06-
00107). The U.S. Bankruptcy Court for the Western District of New
York confirmed the Debtors' plan on Dec. 21, 2006, and that plan
became effective on Jan. 29, 2007. Garry M. Graber, Esq. of
Hodgson, Russ LLP and Tobias S. Keller, Esq. of Jones Day
represented the Debtors in their restructuring efforts. When the
Debtor filed for protection from their creditors it reported more
than $100,000,000 in total assets. It also disclosed owing more
than $100,000,000 to at most 10,000 creditors, including $708,679
to Broadspire and $282,949 to General Motors of Canada Limited.
The company and its debtor-affiliates filed their second Chapter
11 bankruptcy on Nov. 19, 2007 (Bankr. W.D.N.Y. Case Nos: 07-04746
thru 07-04760). Tobias S. Keller, Esq., at Jones Day, represents
the Debtors. Garry M. Graber, Esq., at Hodgson, Russ LLP, serve
as the Debtors' local counsel. The Debtors' claims and balloting
agent is Kutzman Carson Consultants LLC. (Performance
Bankruptcy News, Issue No. 51; Bankruptcy Creditors' Services
Inc.; http://bankrupt.com/newsstand/or 215/945-7000).
PERFORMANCE TRANS: May Use Cash Collateral Through July 23
----------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of New York
authorized Performance Transportation Services Inc. and its
debtor-affiliates to use all cash collateral of the prepetition
secured lenders through July 23, 2008, subject to this budget:
Chapter 7 - Liquidation Budget
Expenditure Budget
For Seven Days July 10 to July 16, 2008
Salaries and other administrative costs $53,772
-------
Total $53,772
For Seven Days July 17 to July 23, 2008
Salaries and other administrative costs $64,741
Contingency 507,974
-------
$572,715
About Performance Transportation
Performance Transportation Services Inc. is the second largest
transporter of new automobiles, sport-utility vehicles and light
trucks in North America, and operates under three key
transportation business lines including: E. and L. Transport,
Hadley Auto Transport and Leaseway Motorcar Transport.
The company and 13 of its affiliates previously filed for Chapter
11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Lead Case No. 06-
00107). The U.S. Bankruptcy Court for the Western District of New
York confirmed the Debtors' plan on Dec. 21, 2006, and that plan
became effective on Jan. 29, 2007. Garry M. Graber, Esq. of
Hodgson, Russ LLP and Tobias S. Keller, Esq. of Jones Day
represented the Debtors in their restructuring efforts. When the
Debtor filed for protection from their creditors it reported more
than $100,000,000 in total assets. It also disclosed owing more
than $100,000,000 to at most 10,000 creditors, including $708,679
to Broadspire and $282,949 to General Motors of Canada Limited.
The company and its debtor-affiliates filed their second Chapter
11 bankruptcy on Nov. 19, 2007 (Bankr. W.D.N.Y. Case Nos: 07-04746
thru 07-04760). Tobias S. Keller, Esq., at Jones Day, represents
the Debtors. Garry M. Graber, Esq., at Hodgson, Russ LLP, serve
as the Debtors' local counsel. The Debtors' claims and balloting
agent is Kutzman Carson Consultants LLC.
The Court converted the Debtors' cases to Chapter 7 liquidation,
effective as of July 14, 2008.
(Performance Bankruptcy News, Issue No. 51; Bankruptcy Creditors'
Services Inc.; http://bankrupt.com/newsstand/or 215/945-7000).
PIERRE FOODS: Gets Initial OK to Use OCM's $29 Million DIP Loan
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware authorized
Pierre Foods Inc. and its debtor-affiliates to obtain, on an
interim basis, up to $29,000,000 in debtor-in-possession financing
under a revolving credit facility from a consortium of financial
institutions led by OCM POF IV PF Ltd., as administrative and
collateral agent, and lead arranger.
OCM POF committed to provide, on a final basis, up to $35,000,000
in revolving credit facility, with a $25,000,000 sublimit for
letters of credit.
A hearing is set for Aug. 13, 2008, at 11:00 a.m., (prevailing
Eastern Time) to consider final approval of the Debtors' request.
Objections, if any, are due Aug. 8, 2008, by 4:00 p.m. (prevailing
Eastern Time).
The proceeds of the DIP facility will be sued to:
-- pay interest, fees, and expenses under the DIP facility;
-- support the Debtors' working capital needs and for general
corporate purposes;
-- satisfy certain of the adequate protection obligations
required by the DIP orders; and
-- make any other payments permitted to be made by the
Bankruptcy Code.
The Court allowed the Debtors to use the lenders' cash collateral
under a proposed budget. A full-text copy of the proposed budget
is available for free at:
http://ResearchArchives.com/t/s?2f91
On July 15, 2008, several prepetition lenders, which comprised of
Antares Capital Corporation, General Electric Capital Corporation,
Morgan Stanley Investment Management, Van Kampen Asset Management,
and Z Capital Finance LLC, opposed request to obtain DIP financing
and use of cash, saying that there is substantial risk that their
interest will not be adequately protected. The prepetition
lenders requested that their reasonable fees and expenses be
reimbursed by the Debtors.
Under the DIP agreement, advances under the DIP facility will bear
interest at a per annum rate equal to LIBOR Rate plus 550 basis
points.
The DIP liens are subject to a carve-out for payments of (i)
unpaid fees of the clerk of the bankruptcy court and the U.S.
Trustee, and (ii) fees and expenses of professionals retained by
the Debtors or the committee. There is a $2,500,000 carve-out for
payments of professional advisors employed by the Debtors or the
committee.
The Debtors will pay fees including a $10,000 administrative agent
fee and $150,000 work fee.
To secure the Debtors' DIP obligations, OCM POF will be granted,
among other things:
i) a superprioprity administrative claim status;
ii) a perfected, valid enforceable (a) first-priority liens upon
and security interests in all unencumbered assets of the
Debtors, and (b) senior priming liens upon and security
interest in the prepetition collateral; and
iii) junior liens on all assets of the Debtors that are subject
to valid and perfected permitted liens.
The DIP agreement contains appropriate and customary events of
default.
Indebtedness
As of May 31, 2008, the Debtors have a $367,000,000 in outstanding
debt in the aggregate, which consists of:
-- a $240,000,000 of borrowings under the Debtors' prepetition
credit facility,
-- a $125,000,000 in unsecured notes, and
-- a $2,000,000 of other debt obligations, including capital
leases and outstanding performance bonds.
In June 2004, the Debtors borrowed $266,000,000 in loan to finance
the acquisition of Pierre Foods Inc. by Madison Dearborn Partners,
and to pay certain existing indebtedness. The $266,000,000 loan
comprised of:
i) a $40 million revolving line of credit, including a $10
million letter of credit subfacility, and
ii) a $226,000,000 term loan.
The loans incur interest rate at 9%.
As of the Debtors' bankruptcy filing, about $223 million remained
outstanding under the term loan, and $14 million has been drawn on
the revolving loan.
In addition, the Debtors have approximately $6.4 million in
outstanding letters of credit issued under to their senior secured
credit facility. Under the prepetition credit facility, the fund
are available for working capital requirements and other general
corporate purposes.
The indebtedness is secured by the prepetition collateral,
including cash collateral.
A full-text copy of the superpriority priming debtor-in-possession
credit agreement is available for free at:
http://ResearchArchives.com/t/s?2f92
Headquartered in Cincinnati, Ohio, Pierre Foods Inc. --
http://www.pierrefoods.com-- manufactures and sells ready-to-cook
and pre-cook products. The company and and 13 of its affiliates
filed for Chapter 11 protection on July 15, 2008 (Bankr. D. Del.
Lead Case No.08-11469). Paul Noble Heath, Esq., at Richards,
Layton & Finger P.A., represents the Debtors in their restucturing
efforts. The Debtors selected Kurtzman Carson Consultants LLC as
their claims agent. When the Debtors filed for protection against
their creditors, they listed estimated assets between $500 million
and $1 billion, and estimated debts between $100 million and $500
million.
PLASTECH ENGINEERED: Inks Pact Extending Term Bar Date to July 31
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Michigan
previously set June 30, 2008 as the deadline for claimholders to
file payment requests of prepetition unsecured claims and
administrative expense claims.
In view of this, (i) Plastech Engineered Products Inc. and its
debtor-affiliates; (ii) the Official Committee of Unsecured
Creditors; (iii) Goldman Sachs Credit Partners L.P., on behalf of
First Lien Term Lenders with respect to the First Lien Term Loan
Credit and Guaranty Agreement; and (iv) The Bank of New York, on
behalf of the Second Lien Term Term Loan Lenders pertaining to the
Second Lien Term Loan Credit and Guaranty Agreement, stipulate
that:
(a) the Debtors, upon request by the respective Agents to
First Lien Term Loan Lenders, and Second Lien Term Loan
Lenders, extend the Initial Bar Date to July 31, 2008, at
5:00 p.m. on claims by or on behalf of all of the Term
Lenders.
(b) The Debtors, the Committee, the First Lien Agent and the
Second Lien Agent hereby agree that the Term Lender Bar
Date is extended to July 31, 2008 at 5:00 p.m. with
respect to the filing of any claims by or on behalf of any
or all of the First Lien Term Loan Parties and the Second
Lien Term Loan Parties.
(c) The First Lien Agent may file consolidated proofs of claim
on behalf of all First Lien Term Loan Lenders for, among
other claims, (i) all secured claims (including any
unsecured deficiency claims) and (ii) all administrative
expense claims. The individual First Lien Term Loan
Lenders will not be required to file individual or
additional proofs of claim for the claims.
(d) The Second Lien Term Agent may file consolidated proofs of
claim on behalf of all Second Lien Term Loan Lenders for,
among other claims, (i) all secured claims, including any
unsecured deficiency claims, and (ii) all administrative
expense claims. The individual Second Lien Term Loan
Lenders will not be required to file individual or
additional proofs of claim for the claims.
About Plastech Engineered
Based in Dearborn, Michigan, Plastech Engineered Products, Inc. --
http://www.plastecheng.com/-- is a 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. 27; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
PRB ENERGY: Wants to File Chapter 11 Plan Until October 2
---------------------------------------------------------
PRB Energy Inc. and its debtor-affiliates ask the United States
Bankruptcy Court for the District of Colorado to extend their
exclusive periods to:
a) file a Chapter 11 plan until Oct. 2, 2008, and
b) solicit acceptances of that plan until Dec. 1, 2008.
The Debtors' initial exclusive period to file a plan expired on
July 3, 2008.
The Debtors entered into a sale agreement dated May 7, 2008, with
Wytex Ventures LLC and Northeast Energy Inc. for the purchase of
the Debtors' assets for $700,000, plus release of a $1,000,000
certificate deposit and assumption of all liability for plugging
and abandoning wells. On June 26, 2008, the Court approved the
sale of the Debtors' assets to Wytex Ventures, free and clear of
all liens and interests.
The Debtors tell the Court that they need additional time
to prepare and negotiate an acceptable Chapter 11 plan. A
substantial amount of time was used due to the Wyoming asset sale
process.
About PRB Energy
Headquartered in Denver, PRB Energy Inc. fka PRB Gas
Transportation Inc. -- http://www.prbenergy.com/-- operates as
independent energy companies engaged in the acquisition,
exploitation, development and production of natural gas and
oil. In addition, the company and its affiliates provide gas
gathering, processing and compression services for properties it
operates and for third-party producers. They conduct business
activities in Wyoming, Colorado and Nebraska.
The Debtor filed for chapter 11 protection on March 5, 2008
(Bankr. D. Co. Case No. 08-12658) together with two affiliates,
PRB Oil & Gas Inc. (Case No. 08-12661) and PRB Gathering Inc. (08-
12663). James T. Markus, Esq., at Block, Markus & Williams LLC
represents the Debtors in their restructuring efforts. The U.S.
Trustee for Region 19 has appointed creditors to serve on an
Official Committee of Unsecured Creditors. Daniel J. Garfield,
Esq., at Brownstein Hyatt Farber Schreck, P.C., represents the
Committee in these cases.
Debtors listed assets between $50 million and $100 million and
liabilities between $10 million and $50 million.
PROTECTED VEHICLES: Wants Proposed Bid Sale Procedures Approved
---------------------------------------------------------------
Protected Vehicles Inc. is asking the U.S. Bankruptcy Court in
Charleston, South Carolina, to approve proposed bidding procedures
for the sale of all assets, Bloomberg News reports.
Patriarch Partners LLC, the reports says, is the designated lead
bidder. It agreed to buy all of Protected's assets for
$5 million, it notes.
Bloomberg citing papers filed with the Court, says Patriarch can
modify the purchase price in the event Protected does not resolve
a lawsuit filed by Force Protection Inc.
The reports relate that no date for the auction was set.
Briefly Noted
As reported in the Troubled Company Reporter on June 12, 2008, the
Official Committee of Unsecured Creditors of Protected Vehicles
Inc. asked the Court to reconsider converting the Debtor's Chapter
11 case to one under Chapter 7.
The Committee argued that the Debtor has and will likely continue
to suffer substantial or continuing losses.
About Protected Vehicles
North Charleston, South Carolina-based Protected Vehicles Inc.
aka PVI -- http://www.protectedvehicles.com/-- founded in 2005,
designs and manufactures ballistic and blast protected vehicles
using technology derived from Rhodesian and South African vehicle
development programs. The Debtor filed for chapter 11 protection
on Feb. 5, 2008 (Bankr. D.S.C. Case No. 08-00783). G. William
McCarthy, Jr., Esq., at McCarthy Law Firm LLC represents the
Debtor in its restructuring efforts. Its largest unsecured
creditor is the United States Marine Corps with a claim for
$15,801,765.
In February 2008, the Debtor listed assets of $24 million and
debts of $54.1 million.
QUAKER FABRIC: Files Amended Disclosure Statement and Ch. 11 Plan
-----------------------------------------------------------------
Quaker Fabric Corporation and its debtor-affiliates, and the
Official Committee of Unsecured Creditors delivered to the United
States Bankruptcy Court for the District of Delaware a second
amended joint Chapter 11 plan of liquidation and an amended
disclosure statement explaining that amended plan on July 15,
2008.
The amended Plan contemplates the liquidation of assets of the
Debtors for the benefit of their creditors and the appointment of
a liquidating agent.
The Debtors remind the Court that they have sold some or all
assets to certain purchasers including:
-- Gordon Brother Group LLC acquired substantially all of the
Debtors' assets for $27 million;
-- Atlantis Charter School bought 66 acres of undeveloped land
(Bleachery Pond Property)located in Fall River,
Massachusetts for $2.6 million; and
-- E & E Co. Ltd. got the Tupelo Lee Industrial Park in Verona,
Mississippi for at $175,000.
The proceeds of the sale were used to pay indebtedness owed to
lenders headed by Bank of America N.A. under a revolving credit
agreement entered into by the Debtors and bank in 2006.
Liquidation of Assets
The Debtors estimate they will have at least $400,000 in cash and
a book value of $4.3 million in uncollected accounts receivable by
the plan's effective date.
A liquidating agent will reduce non-cash assets of the Debtors
to cash to make distributions and consummate the plan. The
liquidating trustee is expected to sell, assign, transfer and, to
the possible extent, dispose of the Debtors' respective assets at
public auction after the plan's effective date.
RAS Management Advisors LLC will serve as liquidating agent for
the Debtors.
Equity of Non-Debtor Subsidiaries
The Debtors conducted certain foreign operations through their
non-debtor subsidiaries comprised of (i) Quaker Fabric Mexico S.A.
de C.V., (ii) Quaker Textil do Brasil Ltda., and Quaker Textile
Corporation. As of the Debtors' bankruptcy filing, the operations
and affairs of each of the non-debtor subsidiaries have been
liquidated. The Debtors have received at least $1.1 million as
dividend from one of their non-debtor subsidiaries.
Initial Distribution
On the plan's effective date, the liquidating agent, on behalf
of the Debtors, will pay in cash in full all (i) administrative
expense claims, (ii) priority tax claims, and (iii) secured
claims. Holders of unsecured claims will receive their pro rata
share of available cash, if any.
The amended plan classifies interests against and liens in the
Debtors in five classes. The classification of interests and
claims are:
Treatment of Claims and Interests
Types of Estimated Estimated
Class Claims Treatment Amount Recovery
----- -------- --------- ---------- ---------
unclassified administrative $1,600,000 100%
claims
unclassified priority tax $200,000 100%
claims
1 priority unimpaired $155,386 100%
claims
2 secured unimpaired $0 N/A
claims
3 WARN Act impaired $6,000,000 5%-15%
claims
4 unsecured impaired $25,000,000 16%
claims
5 equity impaired Not Estimated 0%
interest
Holders of Class 1 allowed priority claims will receive in full
satisfaction of and exchange for their claim (i) the amount of the
allowed priority claim, without interest, in cash after the Plan's
effective date, or (ii) other treatment as may be agreed upon in
writing by the holder, the Debtors and the Committee.
After the Plan's effective date, each holder of Class 2 allowed
secured claims will also receive in full satisfaction of and in
exchange for the claims, either (i) cash equal to the amount of
the allowed secured claims, or (ii) a return of the collateral
that secures the allowed secured claims.
Holders of Class 3 WARN Act claims will receive (i) an allowed
administrative expense claim of $100,000, (ii) an additional
distribution of $200,000 to be paid from available cash, and
(iii) 33% share of all distributions to Class 3.
Holders of Class 4 allowed unsecured claims will get their pro
rata share of nay cash distribution from the estate assets to
Class 4. Class 4 was expected to recover 10% under the earlier
version of the proponent's plans.
All equity interest of the Debtors will be canceled, and holder
will not receive any distribution under the Plan.
A full-text copy of the amended disclosure statement is available
for free at:
http://ResearchArchives.com/t/s?2f93
A full-text copy of the second amended joint Chapter 11 plan of
liquidation is available for free at:
http://ResearchArchives.com/t/s?2f94
About Quaker Fabric
Based in Fall River, Mass., Quaker Fabric Corp. (NASDAQ: QFAB)
-- http://www.quakerfabric.com/-- designs, manufactures, and
markets woven upholstery fabrics primarily for residential
furniture manufacturers and jobbers. It also develops and
manufactures specialty yarns, including chenille, taslan, and spun
products for use in the production of its fabrics, as well as for
sale to distributors of craft yarns, and manufacturers of
homefurnishings and other products. The company is one of the
largest producers of Jacquard upholstery fabrics.
Quaker Fabric sells its products through sales representatives
andindependent commissioned sales agents in the United States,
Canada, Mexico, and internationally.
The company and its affiliate, Quaker Fabric Corporation of Fall
River, filed for chapter 11 protection on Aug. 16, 2007 (Bankr. D.
Del. Case No. 07-11146). John D. Sigel, Esq. at Wilmer Cutler
Pickering Hale and Dorr LLP and Joel A. Waite, Esq. at Young
Conaway Stargatt & Taylor LLP are co-counsels to the Debtors.
Epiq Bankruptcy Solutions is the Debtors' claims agent. The
Official Committee of Unsecured Creditors has selected Shumaker,
Loop & Kendrick, LLP, as its bankruptcy counsel and Benesch,
Friedlander, Coplan & Aronoff, LLP, as co-counsel.
The Debtors' schedules reflect total assets of $41,375,191 and
total liabilities of $54,435,354.
R&R EXCAVATING: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: R&R Excavating Co., LLC
903 Old Roane St.
Harriman, TN 37748
Tel: (865) 882-6968
Bankruptcy Case No.: 08-33093
Chapter 11 Petition Date: July 16, 2008
Court: Eastern District of Tennessee (Knoxville)
Judge: Richard Stair, Jr.
Debtor's Counsel: Billy P. Sams, Esq.
Email: beckyjcox@aol.com
122-A Jefferson Ct.
Oak Ridge, TN 37830
Tel: (865) 482-7112
Fax: (865) 482-4242
Estimated Assets: $1,000,000 to $10,000,000
Estimated Debts: $1,000,000 to $10,000,000
A copy of R&R Excavating Co., LLC's petition is available for free
at:
http://bankrupt.com/misc/tneb08-33093.pdf
RADIANT ENERGY: Settles $803K Debt with Cash, Shares and Warrants
-----------------------------------------------------------------
Radiant Energy Corporation agreed with the main lender of its
Series A convertible debentures to settle the outstanding
principal and interest, totaling $803,842, by a payment of
$250,000, the issuance of 4,140,279 common shares of the company,
and issuing 2,070,140 warrants to the lender, with each warrant
entitling the holder to purchase one common share of Radiant for
C$0.20 until June 30, 2010. The completion of this settlement is
conditional on acceptance by the TSX Venture Exchange. It is
anticipated that the transaction will close before the end of
July 2008.
In company's financial statement for the six months ended
March 31, 2008, the company stated that it was in default on
Series A unsecured convertible debentures, with 7.75% interest,
due April 5, 2006, for not making interest and principal payments.
"The settlement of this debt is a key element in further reducing
the company's debt and restructuring the balance sheet to allow
for future growth", Larrie Shepherd, president chief executive
officer, commented.
Based in Port Colborne, Ontario, Radiant Energy Corp. (TSX: RDT) -
- http://www.radiantenergycorp.com/-- through its wholly owned
subsidiary Radiant Aviation Services developed and sells the only
infrared alternative to traditional glycol-based aircraft deicing.
Its fully patented InfraTek(R) systems are approved for use by the
FAA. Before the introduction of InfraTek, spraying with glycol
was the only feasible method to satisfy FAA safety guidelines for
ensuring that aircraft are properly deiced before take-off.
At April 30, 2008, the company's balance sheet showed total assets
of $3.5 million and total liabilities of $6.0 million resulting in
a total shareholders' deficit of approximately $2.5 million.
Default
Subsequent to the end of April 30, 2008, the company did not make
a scheduled principal and interest payment of $363,732 as
required, and the lender has filed a notice of default.
REZNICEK INVESTMENTS: Case Summary & 20 Unsecured Creditors
-----------------------------------------------------------
Debtor: Reznicek Investments, Inc.
dba
Family Fun Center
7052 Dodge Street
Omaha, NE 68132
Bankruptcy Case No.: 08-81767
Type of Business: The Debtor provides amusement and recreation
services.
Chapter 11 Petition Date: July 15, 2008
Court: District of Nebraska (Omaha Office)
Debtor's Counsel: David Grant Hicks, Esq.
Email: dhickslaw@aol.com
Pollak & Hicks PC
6910 Pacific Street, Suite 216
Omaha, NE 68106
Tel: (402) 345-1717
http://www.pollakandhicks.com/
Estimated Assets: Less than $50,000
Estimated Debts: $1 million to $10 million
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/neb08-81767.pdf
RIVER ELKS: Asks Court's Approval to Employ Joel Newell as Counsel
------------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Arizona granted
River Elks, LLC permission to employ Joel Newell, Esq., at
Carmichael & Powell, P.C. as its attorney.
Mr. Newell will mainly advise the Debtor with respect to its
powers, duties and responsibilities concerning its business,
continued operations, and management of applicable property, as
well as assist the Debtor in the preparation of all necessary and
required applications, orders, answers, reports and other needed
legal documents.
Mr. Newell assures the Court that that he has no interest adverse
to the Debtor or its estate.
The employment application did not include information on the
hourly compensation rates to be paid to Mr. Newell.
Based in Scottsdale, Ariz., River Elks, LLC is a real estate
developer. The company filed a petition for Chapter 11 on
June 18, 2008 (D. Ariz. Case No. 08-07340). Joel F. Newell, Esq.,
at Carmichael & Powell, P.C., represents the Debtor as counsel.
When the Debtor filed for protection from its creditors, it listed
total assets of $12,580,050, and total debts of $9,053,589.
RUTLAND RATED: Fitch Cuts Ratings on Two Note Classes to 'CCC+'
---------------------------------------------------------------
Fitch Ratings has downgraded 3 classes of Rutland Rated
Investments Sedona II and removed the ratings from Negative Rating
Watch. The actions reflect Fitch's view on the credit risk of the
rated notes following the release of its new Corporate CDO rating
criteria.
Rutland Rated Investments Sedona 2005-II (Sedona 2005-II).
-- $4,000,000 class A6 notes due 2012 to 'B-' from 'A';
-- $23,500,000 class A7 notes due 2012 to 'CCC+' from 'A-';
-- $10,000,000 class B3 notes due 2010 to 'CCC+' from 'BBB-'.
The key drivers of the downgrade include Fitch's updated corporate
CDO rating criteria as well as the deterioration of the average
portfolio quality from 'BBB/BBB-' on the last review date
(February 2007) to 'BBB-/BB+' on July 14, 2008, representing an
average downgrade of 3 notches across 48.75% of the portfolio.
Currently, 28.8% of the portfolio carries a below investment grade
rating. In addition to the deterioration, the corporate portfolio
is under stress with approximately 8.8% of the portfolio currently
on Rating Watch Negative and approximately 11.3% with a Negative
Outlook by Fitch. Moreover, the portfolio is highly concentrated
with industry concentration of 48.8% in the largest 3 industries,
made up of 33.8% in the banking & finance sector which is
currently under stress.
In addition, the rating action for class B3 considered its shorter
remaining tenor (approximately 2.4 years) relative to the
remaining tenor of classes A6 and A7 (approximately 4.4 years) as
a partial offset to the lower level of credit enhancement
available to class B3.
Given Fitch's view of concentration and the current credit quality
of the portfolio, the credit enhancement levels of 4.37%, 3.83%
and 2.43% for the classes A6, A7 and B3, respectively, are not
sufficient to justify their current ratings.
Sedona 2005-II is a static synthetic collateralized swap
obligation that closed in November 2005. The transaction gives
investors leveraged access to the credit risk of a diverse
portfolio comprising 80 corporate reference entities. Sedona
2005-II gains access to the credit risk of the portfolio via a
credit default swap between Sedona 2005-II and Bear Stearns Credit
Products (guaranteed by JPMorgan Chase Bank, N.A. rated 'F1+/AA-',
Outlook Stable). The transaction has a scheduled maturity date of
Dec. 20, 2010 for the class B3 notes and Dec. 20, 2012 for the
classes A6 and A7 notes. The ratings of the notes address the
likelihood that investors will receive full and timely payments of
interest and ultimate receipt of principal by the scheduled
maturity date.
Fitch released updated criteria on April 30, 2008 for Corporate
CDOs and, at that time, noted it would be reviewing its ratings
accordingly to establish consistency for existing and new
transactions. As part of this review, Fitch makes standard
adjustments for any names on Rating Watch Negative or with a
Negative Outlook, reducing such ratings for default analysis
purposes by two and one notch, respectively. Fitch has previously
noted that its review will be focused first on ratings most
exposed to risks it has highlighted in its updated criteria. As
such, the transaction was placed on Rating Watch Negative on
May 13, 2008. As previously indicated, resolution of the Rating
Watch status depends on any plans managers/arrangers may choose to
modify either the structure or the portfolio. In this case, the
arranger has confirmed that it does not intend to make any
modifications.
RUTTER INC: Defaults on Revised EBITDA Covenant, Obtains No Waiver
------------------------------------------------------------------
Rutter Inc. stated in a regulatory filing for the quarter ended
May 31, 2008, that it is in breach of the revised EBITDA covenant
and has not received waiver of the covenants.
On March 20, 2008, Rutter Inc. reached an agreement with its
senior lender to amend the terms of Rutter's long term debentures.
Rutter has a debenture in the principal amount of $15 million at
12% interest maturing in December 2008, and a debenture in the
principal amount of $25 million at interest rates varying up to
16% which matures December 2012.
To reach profitability, the company related that it must address
its debt levels and borrowing costs. It also stated that the
company must reach a level of EBITDA that will enable the company
to meet its original financial covenants with its lenders. The
EBITDA in the continuing operations will assist ongoing efforts to
address the long term debt structure.
The company also stated that several adverse conditions exist
which raise doubt on the ability of the company to continue as a
going concern. The company has significant continuing operating
losses, high borrowing costs, a working capital deficiency, an
accumulated deficit of C$34,871,000, and a scheduled debt
repayment of C$20,000,000 payable at Nov. 30, 2008. The company
has negotiated alternative covenants for the period Dec. 1, 2007,
to Feb. 28, 2009, after which the covenants under the original
borrowing agreements will apply.
About Rutter Inc.
Headquartered Newfoundland, Canada, Rutter Inc. (TSX: RUT) --
http://www.rutter.ca/-- is an enterprise delivering automation
and control systems solutions, technologies and manufacturing
services. It operates through two segments: Controls and
Automation, and Technologies. Led by Rutter Hinz Inc., the
Controls and Automation segment is a vendor independent automation
and controls systems engineering enterprise with offices in
Canada, the United States and Brazil. Rutter Technologies Inc. is
a enterprise providing voyage data recorders, enhanced radar
solutions, marine certified interfaces, safety lights and other
custom integrated electronics systems.
SAINT VINCENT: Paying $200,000 to Resolve Team Healtcare's Claim
----------------------------------------------------------------
Saint Vincent's Catholic Medical Centers of New York and its
debtor-affiliates and Team Healthcare Staffing, Inc., have agreed,
to avoid the expense and risk of litigation, to resolve Team
Healthcare's claim. Accordingly, in a stipulation approved by the
U.S. Bankruptcy Court for the Southern District of New York, the
parties agree that:
(a) SVCMC will immediately pay $200,000 to Team Healthcare;
(b) they waive and discharge each other from all Claims;
(c) Team Healthcare's Claim is deemed disallowed and it will
not file any other claim in the Debtors' cases; and
(d) Team Healthcare's request for payment of the
Administrative Claim is withdrawn, with prejudice.
Team Healthcare had filed a $1,247,580 administrative claim
against the Debtors for services it rendered to the Debtors for
the period from July 2005 to July 2007. Team Healthcare
subsequently reduced its claim amount to $591,156 following a
review showing that a portion of the Claim is for services
rendered after Dec. 31, 2006, when some of the Debtors' facilities
were sold to Caritas Healthcare, Inc.
Team Healthcare provided the Debtors with pre- and postpetition
temporary medical staffing personnel. In August 2007, Team
Healthcare filed an administrative claim for $1,247,580, against
the Debtors, which includes services rendered from July 2005 to
July 2007.
About Saint Vincent's
Based in New York City, Saint Vincent's Catholic Medical Centers
of New York -- http://www.svcmc.org/-- the healthcare provider in
New York State, operates hospitals, health centers, nursing homes
and a home health agency. The hospital group consists of seven
hospitals located throughout Brooklyn, Queens, Manhattan, and
Staten Island, along with four nursing homes and a home health
care agency.
The company and six of its affiliates filed for chapter 11
protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945
through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst,
Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter
11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil,
Gotshal & Manges LLP took over representing the Debtors in their
restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid &
Priest LLP, represents the Official Committee of Unsecured
Creditors. As of Apr. 30, 2005, the Debtors listed $972 million
in total assets and $1 billion in total debts. The Debtors filed
their Chapter 11 Plan of Reorganization accompanying a disclosure
statement explaining that Plan on Feb. 9, 2007. On June 1, 2007,
the Debtors filed an Amended Plan & Disclosure Statement. The
Court confirmed the Debtors' Amended Plan on July 27, 2007.
(Saint Vincent Bankruptcy News, Issue No. 72; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000).
SAINT VINCENT: Judge Hardin Expunges $2.6 Million Claims
--------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
disallowed and expunged 98 claims totaling $399,772, which Saint
Vincent's Catholic Medical Centers of New York and its debtor-
affiliates said they have previously paid in full. A list
of these expunged claims is available at no charge at:
http://bankrupt.com/misc/14tOO_ExpungedClaims.pdf
Judge Adlai S. Hardin disallowed and expunged 99 claims
aggregating $207,459, which, according to the Debtors, have been
paid in full. A list of these Expunged Claims is available for
free at http://bankrupt.com/misc/15thOO_ExpungedClaims.pdf
At the Debtors' behest, Judge Hardin disallowed and expunged 98
claims totaling $211,842, a list of which is available for free
at http://bankrupt.com/misc/16thOO_ExpungedClaims.pdf
Judge Hardin disallowed and expunged 81 claims, totaling
$1,868,566, a list of which is available for free at:
http://bankrupt.com/misc/17thOO_ExpungedClaims.pdf
Judge Hardin also disallowed Claim No. 1322 for $400 filed by
Blue-Fan.com. The Debtors withdrew their objection to Nuclear
Diagnostic I's Claim No. 1985.
About Saint Vincent's
Based in New York City, Saint Vincent's Catholic Medical Centers
of New York -- http://www.svcmc.org/-- the healthcare provider in
New York State, operates hospitals, health centers, nursing homes
and a home health agency. The hospital group consists of seven
hospitals located throughout Brooklyn, Queens, Manhattan, and
Staten Island, along with four nursing homes and a home health
care agency.
The company and six of its affiliates filed for chapter 11
protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945
through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst,
Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter
11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil,
Gotshal & Manges LLP took over representing the Debtors in their
restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid &
Priest LLP, represents the Official Committee of Unsecured
Creditors. As of Apr. 30, 2005, the Debtors listed $972 million
in total assets and $1 billion in total debts. The Debtors filed
their Chapter 11 Plan of Reorganization accompanying a disclosure
statement explaining that Plan on Feb. 9, 2007. On June 1, 2007,
the Debtors filed an Amended Plan & Disclosure Statement. The
Court confirmed the Debtors' Amended Plan on July 27, 2007.
(Saint Vincent Bankruptcy News, Issue No. 72; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000).
SCOTTISH ANNUITY: Poor Fin'l Flexibility Cues S&P to Junk Ratings
-----------------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered its
counterparty credit and financial strength ratings on Scottish
Annuity & Life Insurance Co. (Cayman) Ltd. and affiliated
operating companies to 'CCC+' from 'B-'.
Standard & Poor's also lowered its ratings on all these companies'
dependent unwrapped securitized deals by one notch. The ratings on
the parent holding company, Scottish Re Group Ltd. (CCC-/Watch
Neg/--), are unchanged.
All of these ratings remain on CreditWatch with negative
implications.
"The downgrade reflects the greater-than-expected deterioration in
the group's already severely limited financial flexibility and
liquidity," said Standard & Poor's credit analyst Robert A.
Hafner. "This has resulted primarily from the higher-than-
expected asset impairments leading to additional collateral
posting requirements, as disclosed in the company's recent 10-K
filing." The $971.7 million of investment impairments taken in
2007 and $751.7 million of additional impairments expected to be
recognized in first-quarter 2008 GAAP financials substantially
reflect a mark-to-market write-down necessitated by the inability
to assert the intent and ability to hold these securities to
recovery of amortized value rather than projected losses.
Nonetheless, the uncertain economic value of these investments and
associated impairments increase the stress on Scottish Re's
financial condition and degrades its liquidity, capitalization,
and financial flexibility.
The group's liquidity decreased to about $65 million as of
June 30, 2008, from nearly $400 million at year-end 2007.
According to company management, the pending sale of its
international and wealth-management operations is expected to
provide additional liquidity in excess of $70 million during the
third quarter. Although this might provide sufficient resources
to meet liquidity needs for the next several months, unexpected
developments--including further declines in the market value of
investments--could exhaust liquidity resources sooner. Scottish
Re is taking multiple concurrent actions to maintain its
liquidity, ensure statutory reserve credits are not lost, and
preserve its solvency.
It is Standard & Poor's opinion that the only strong option
available to the company for preserving longer-term solvency is
the sale of its North American segment, which constitutes the bulk
of its remaining operations. Given its weak liquidity position,
management indicates that if the group does not quickly find a
buyer, it could be forced to seek bankruptcy protection relatively
soon. Substantial incentives exist for the interested parties to
reach a definitive agreement, which increases the likelihood the
group will be successful in securing the sale of these operations
before exhausting its liquidity.
The ratings will remain on CreditWatch negative at least until
Scottish Re secures the sale of its North American segment and its
liquidity demands are better balanced by its liquidity resources.
S&P will lower the ratings again if the sale of its international,
wealth-management, or North American segment do not materially
progress as expected and alternative capital, liquidity, and XXX
reserve funding is not secured.
SCOTT MORRIS: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: Scott J. Morris
Debra J. Morris
2211 Northeast 161st Street
Snohomish, WA 98290
Bankruptcy Case No.: 08-14342
Chapter 11 Petition Date: July 10, 2008
Court: Western District of Washington (Seattle)
Debtor's Counsel: Danial D. Pharris, Esq.
(pharris@lasher.com)
Lasher Holzapfel Sperry & Ebberson PLLC
601 Union St Ste 2600
Seattle, WA 98101-4000
Tel: (206) 624-1230
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
A list of the Debtor's largest unsecured creditors is available
for free at: http://bankrupt.com/misc/wawb08-14342.pdf
SEMGROUP LP: Experiencing Liquidity Issues, Could Go Belly Up
-------------------------------------------------------------
SemGroup Energy Partners, L.P., has been informed by SemGroup,
L.P., SGLP's parent, that SemGroup, L.P. is experiencing liquidity
issues and is exploring various alternatives, including raising
additional equity, debt capital or the filing of a voluntary
petition for reorganization under Chapter 11 of the Bankruptcy
Code.
Kevin Foxx, SemGroup Energy Partners' President and Chief
Executive Officer stated that, "While SGLP's parent is
experiencing liquidity challenges, SGLP's assets provide important
terminalling and storage services to the energy industry. We own
valuable assets in strategic locations and remain positioned to
provide midstream services. Until our parent advises us of their
course of action, we cannot fully evaluate and are not yet
prepared to comment on how any such action taken by our parent
might affect SGLP."
SGLP derives a substantial majority of its revenues pursuant to a
Throughput Agreement and a Terminalling and Storage Agreement with
SemGroup, L.P. and its subsidiaries. In addition, SGLP has
entered into an Amended and Restated Omnibus Agreement and other
agreements with SemGroup, L.P. that address, among other things,
the provision of general and administrative and operating services
to SGLP.
Tulsa, Oklahoma-based SemGroup Energy Partners, L.P. (NASDAQ:
SGLP) -- http://www.SGLP.com/-- owns and operates a diversified
portfolio of complementary midstream energy assets. SemGroup
Energy Partners provides crude oil and liquid asphalt cement
terminalling and storage services and crude oil gathering and
transportation services. As a publicly traded master limited
partnership, SemGroup Energy Partners' common units are traded on
the NASDAQ Global Market under the symbol SGLP. The general
partner of SemGroup Energy Partners is a subsidiary of SemGroup,
L.P.
For the period ended March 31, 2008, SemGroup Energy has
$261,991,000 in total assets and $316,580,000 in total debts,
resulting in a $54,589,000 partners' deficit.
SHOE PAVILION: Case Summary & 40 Largest Unsecured Creditors
------------------------------------------------------------
Lead Debtor: Shoe Pavilion, Inc.
13245 Riverside Drive, Suite 450
Sherman Oaks, CA 91423
Bankruptcy Case No.: 08-14939
Debtor-affiliate filing separate Chapter 11 petition:
Entity Case No.
------ --------
Shoe Pavilion Corporation 08-14941
Type of Business: The Debtors operate independent off-price
footwear retail stores that offer a broad
selection of women's and men's designer label
and name brand merchandise.
Chapter 11 Petition Date: July 15, 2008
Court: Central District Of California (San Fernando Valley)
Judge: Maureen Tighe
Debtors' Counsel: Ron Bender, Esq.
Email: rb@lnbrb.com
10250 Constellation Blvd., Suite 1700
Los Angeles, CA 90067
Tel: (310) 229-1234
Shoe Pavilion, Inc.'s Financial Condition:
Total Assets: $60,994,000
Total Debts: $27,000,000
A. Shoe Pavilion, Inc.'s 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Gilbert West, Inc. $456,001
P.O. Box 89-4417
Los Angeles, CA 90189
Tel: (909) 393-7575
New Balance Athletic $324,302
P.O. Box 31978
Hartford, CT 06150-1978
Tel: (800) 343-4648
Ext. 2294
Attn: Linda Corbin
Bordon Shoe Company $309,562
4335 E. Valley Blvd.
Los Angeles, CA 90032
Tel: (323) 227-5100
Attn: Joe Corpus
Ad Marketing, Inc. $253,045
1801 Century Park East
Suite 20th Floor
Los Angeles, CA 90067
Tel: (310) 203-8400
Attn: Tim Beltzer
Asics American Corpo $196,166
P.O. Box 31001-1665
Pasadena, CA 91110-1665
Tel: (949) 453-8888
Bozzolo, Inc. $193,216
1015 S. Crocker Street
Suite Q-5
Los Angeles, CA 90021
Tel: (213) 765-8112
Grant Thorton LLP $161,306
1000 Wilshire Blvd., Suite 300
Los Angeles, CA 90017
Tel: (213) 627-1717
Meynard Trading Comp $161,040
235 Second Ave.
Waltham, MA 03451
Tel: (877) 746-3364
Attn: Lisa Threhane
Arthur J. Gallagher $142,732
505 N. Brand Blvd., Suite 600
Glendale, CA 91203
Tel: (818) 539-2300
Ad Art, Inc. $131,889
5 Thomas Mellon Circle
Suite 260
San Francisco, CA 94134
Tel: (415) 869-6461
Adidas Sales, Inc. $128,513
P.O. Box 100384
Atlanta, GA 30384-0384
121 Retail Ventures $127,372
121 Beverly Drive
Beverly Hills, CA 90212
Attn: Jay Furrow
Ellis Contracting $125,063
4141 Jutland Drive, Suite 110
San Diego, CA 92117
Tel: (858) 581-4311
Clarks of England $120,700
P.O. Box 32660
Hartford, CT 06150-2660
Tel: (800) 842-9305, Ext. 4252
Attn: Paul Castellana
Carrini, Inc. $120,360
145 Talmadge Road
Edison, NJ 08817
Tel: (732) 650-1775
Attn: Wendy Saltzman
Reebok International $117,583
P.O. Box 21626
Chicago, IL 60673
Tel: (800) 228-7867
Diesel USA $111,212
220 W. 19th Street, 3rd Floor
New York, NY 10011
Tel: (212) 755-9200
Attn: Linda Torian
Keds Corporation $100,165
Drawer 100789
Atlanta, GA 30384-0789
Tel: (800) 734-6575
Attn: Kristen Smalley
Blue Cross of California $97,726
Dept. 5812
Los Angeles, CA 90074-5812
Tel: (818) 234-6558
Attn: Bora Sir
Naturalizer (Brown Shoe) $95,310
P.O. Box 14581
St. Louis, MO 63150
Tel: (800) 234-8450
B. Shoe Pavilion Corporation's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Gilbert West, Inc. $456,001
P.O. Box 89-4417
Los Angeles, CA 90189
Tel: (909) 393-7575
New Balance Athletic $324,302
P.O. Box 31978
Hartford, CT 06150-1978
Tel: (800) 343-4648
Ext. 2294
Attn: Linda Corbin
Bordon Shoe Company $309,562
4335 E. Valley Blvd.
Los Angeles, CA 90032
Tel: (323) 227-5100
Attn: Joe Corpus
Ad Marketing, Inc. $253,045
1801 Century Park East
Suite 20th Floor
Los Angeles, CA 90067
Tel: (310) 203-8400
Attn: Tim Beltzer
Asics American Corpo $196,166
P.O. Box 31001-1665
Pasadena, CA 91110-1665
Tel: (949) 453-8888
Bozzolo, Inc. $193,216
1015 S. Crocker Street
Suite Q-5
Los Angeles, CA 90021
Tel: (213) 765-8112
Grant Thorton LLP $161,306
1000 Wilshire Blvd., Suite 300
Los Angeles, CA 90017
Tel: (213) 627-1717
Meynard Trading Comp $161,040
235 Second Ave.
Waltham, MA 03451
Tel: (877) 746-3364
Attn: Lisa Threhane
Arthur J. Gallagher $142,732
505 N. Brand Blvd., Suite 600
Glendale, CA 91203
Tel: (818) 539-2300
Ad Art, Inc. $131,889
5 Thomas Mellon Circle
Suite 260
San Francisco, CA 94134
Tel: (415) 869-6461
Adidas Sales, Inc. $128,513
P.O. Box 100384
Atlanta, GA 30384-0384
121 Retail Ventures $127,372
121 Beverly Drive
Beverly Hills, CA 90212
Attn: Jay Furrow
Ellis Contracting $125,063
4141 Jutland Drive, Suite 110
San Diego, CA 92117
Tel: (858) 581-4311
Clarks of England $120,700
P.O. Box 32660
Hartford, CT 06150-2660
Tel: (800) 842-9305, Ext. 4252
Attn: Paul Castellana
Carrini, Inc. $120,360
145 Talmadge Road
Edison, NJ 08817
Tel: (732) 650-1775
Attn: Wendy Saltzman
Reebok International $117,583
P.O. Box 21626
Chicago, IL 60673
Tel: (800) 228-7867
Diesel USA $111,212
220 W. 19th Street, 3rd Floor
New York, NY 10011
Tel: (212) 755-9200
Attn: Linda Torian
Keds Corporation $100,165
Drawer 100789
Atlanta, GA 30384-0789
Tel: (800) 734-6575
Attn: Kristen Smalley
Blue Cross of California $97,726
Dept. 5812
Los Angeles, CA 90074-5812
Tel: (818) 234-6558
Attn: Bora Sir
Naturalizer (Brown Shoe) $95,310
P.O. Box 14581
St. Louis, MO 63150
Tel: (800) 234-8450
SINO-FOREST CORP: Moody's Rates Planned $300MM Notes (P)Ba2
-----------------------------------------------------------
Moody's Investors Service has assigned a provisional (P)Ba2 senior
unsecured rating to Sino-Forest Corporation's proposed issuance of
$300 million in convertible notes. At the same time, Moody's has
affirmed the company's Ba2 corporate family rating. The outlook
for the ratings is stable.
Moody's expects to affirm the convertible note rating and remove
it from its provisional status upon a review of the final offering
documents and completion of the issuance. The proceeds will
predominately be used to fund acquisitions of timber plantations
in China.
"The Ba2 rating reflects Sino Forest's continuing strong balance
sheet position, including pro forma Total Debt/EBITDA of 1.6x and
Total Debt/Capitalization of 40%, and which provides a sufficient
buffer for the additional debt," Ken Chan, Moody's vice president
and senior analyst, said.
"At the same time, it reflects Sino-Forest's aggressive growth
strategy, which needs to be supported with heavy capex; as such,
the company is projected to continue generating negative free cash
flow over the next few years," says Mr. Chan.
The proposed convertible notes will have different terms and
conditions to the existing $300 million senior notes due 2011.
Notably, the convertible notes 1) do not carry upstream guarantees
from certain subsidiary guarantors of the 2011 notes; 2) do not
have a share pledge by the subsidiary guarantors; 3) do not
incorporate a negative pledge by restricted subsidiaries.
Moody's understands the majority of Sino-Forest's assets are
vested in the subsidiary guarantors of the proposed convertible
notes. The rating on the proposed convertible notes assumes this
situation will continue.
Comfort is also drawn from the proposed indenture provision which
restricts cash holdings at any non-subsidiary guarantor at 10% or
below of consolidated total cash balances. However, any material
growth in asset holdings in non-subsidiary guarantors could
potentially pressure the convertible note rating.
Moody's also considers that with upstream guarantees from a
majority of the subsidiary guarantors of the 2011 notes, absence
of a share pledge or negative pledge is not expected to
meaningfully differentiate recovery values between the proposed
convertible notes and the 2011 notes.
Sino-Forest is a holding company listed in Toronto, Canada. It is
engaged in forestry ownership and plantation management in China
as well as the sale of timber, wood logs and other wood products
in that country.
SPECTRUM BRANDS: S&P Holds 'CCC+' Rating; Removes Positive Watch
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed all its ratings on
Spectrum Brands Inc., including its 'CCC+' corporate credit
rating. The ratings have been removed from CreditWatch with
positive implications, where they had been placed on May 21, 2008,
following the company's announcement that it had signed a
definitive agreement to sell its global pet business for
$915 million.
The outlook is developing. Approximately $2.6 billion of debt was
outstanding as of March 30, 2008.
The removal of the CreditWatch listing follows the announcement
that Spectrum Brands and Salton Inc. and Salton's wholly owned
subsidiary, Applica Pet Products LLC, have mutually agreed to
terminate the definitive agreement for the sale of Spectrum
Brands' global pet supply business. The CreditWatch listing had
reflected S&P's expectations that Spectrum Brands' debt leverage
and liquidity would improve if the transaction had been completed.
While the company's debt leverage remains very high at about 8.7x
and it continues to generate negative free cash flow, Spectrum
Brands has improved its liquidity through more stable operating
performance in recent quarters.
"The ratings on Spectrum Brands reflect the company's poor
operating performance in prior years, very high leverage, and
improved, yet still marginal, liquidity," said Standard & Poor's
credit analyst Patrick Jeffrey.
Spectrum Brands' expected near-term liquidity has improved through
more stable operating performance in recent quarters. S&P believe
the company will continue to pursue initiatives, such as asset
sales, to help materially improve its capital structure in the
near term. As a result of improved cushion under its senior
secured leverage covenant and expected cash inflows from its home
and garden business in the second half of fiscal 2008, we expect
Spectrum Brands to remain in compliance with its covenant through
the end of the fiscal year 2008. However, on a medium-term basis,
we remain concerned about the company's liquidity in the face of
further operating challenges and a failure to reduce leverage, as
it has further step-downs in its financial covenants in fiscal
2009.
S&P would consider a positive outlook or higher rating if the
company can reduce leverage to the low-8x area and maintain
adequate liquidity. However, if its leverage increases
materially, resulting in significant tightening of or inability to
meet its financial covenants, S&P would consider a negative
outlook or lower rating.
STANDARD PACIFIC: Consolidates Operations in California
-------------------------------------------------------
As part of its ongoing cost reduction initiatives, Standard
Pacific Corp. decided to consolidate its Northern California and
Southern California regions into one region, to be known as the
California Region. In connection with this consolidation and
effective July 15, 2008, the company eliminated the Northern
California Regional President position, which was held by Douglas
C. Krah, one of its named executive officers.
About Standard Pacific
Headquartered in Irvine, California, Standard Pacific Corp.
(NYSE:SPF) -- http://www.standardpacifichomes.com/-- operates
in
many of the largest housing markets in the country with operations
in major metropolitan areas in California, Florida, Arizona, the
Carolinas, Texas, Colorado and Nevada. The company also provides
mortgage financing and title services to its homebuyers through
its subsidiaries and joint ventures, Standard Pacific Mortgage
Inc., SPH Home Mortgage, Universal Land Title of South Florida and
SPH Title.
Below Investment Grade Ratings
As reported in the Troubled Company Reporter on May 22, 2008,
Fitch Ratings has downgraded Standard Pacific Corp.'s ratings as:
(i) issuer default rating to 'B-' from 'B+'; (ii) senior unsecured
to 'B-/RR4' from 'B+/RR4'; (iii) unsecured borrowings under its
bank revolving credit facility to 'B-/RR4' from 'B+/RR4'; and (iv)
senior subordinated debt to 'CCC/RR6' from 'B-/RR6'.
As reported in the Troubled Company Reporter on May 20, 2008,
Standard & Poor's Ratings Services lowered its corporate credit
and senior unsecured debt ratings on Standard Pacific Corp. to
'B-' from 'B+'. At the same time, S&P lowered the subordinated
debt rating to 'CCC' from 'B-' and placed all ratings on the
company on CreditWatch with negative implications. These actions
affect approximately $1.3 billion of unsecured notes.
As reported in the Troubled Company Reporter on May 15, 2008,
Moody's lowered the ratings of Standard Pacific Corp., including
its corporate family rating to B2 from B1, its senior unsecured
notes to B2 from B1, and its senior subordinated notes to Caa1
from B3. The SGL-3 liquidity assessment was affirmed. The
ratings outlook is negative.
STEPHEN ALLEN WEST: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Stephen Allen West, Jr.
8700 Trumpet Court
King George, VA 22485
Bankruptcy Case No.: 08-19180
Chapter 11 Petition Date: July 15, 2008
Court: District of Maryland (Greenbelt)
Debtor's Counsel: Mary J. Dowd, Esq.
Email: dowd.mary@arentfox.com
Arent Fox PLLC
1050 Connecticut Ave., North West
Washington, DC 20036
http://www.arentfox.com/
Estimated Assets: $10 million to $50 million
Estimated Debts: $50 million to $100 million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
PNC Financial Services Group Guarantor on Real $14,000,000
Attn: T. J. Bogdewic, VP Estate Loans and
249 Fifth Ave. MaxiMulch Loan
Pittsburgh, PA 15222
Citizens Bank Guarantor on $12,000,000
Attn: Mr. Green Dim Development Loans
2001 Market Street
Philadelphia, PA 19103
BB&T Guarantor on Real $10,655,000
Attn: Warren Sandberg, VP Estate Loans
16410 Heritage Blvd.
Third Floor
Bowie, MD 20716
Bank of America Guarantor on Real $5,700,000
Attn: Ruth Rodriguez-Wilson Estate Loans
VP
750 Walnut Ave.
Cranford, NJ 07016
Union Bank and Trust Guarantor on Real $3,800,000
9665 Sliding Hill Road Estate Loans
Ashland, VA 23005
Amtrust Bank Guarantor on Real $3,500,000
Attn: Patrick Bollinger Estate Loans
100 West Road, Suite 300
Towson, MD 21204
Tel: (410) 832-7522
Maryland Bank & Trust Guarantor on Real $3,000,000
Attn: Robert Swartz Estate Loans
P.O. Box 248
Waldorf, MD 20604
First Market Bank Guarantor $2,410,000
727 Jackson Street, Suite 209
Fredericksurg, VA 22401
Second Bank & Trust Guarantor on Loans $2,164,000
P.O. Box 7267
Fredericksburg, VA 22404
Meridian Construction Guarantor on Somerset $2,000,000
Capital, LLC Development Loans
Attn: John Gulatsi, COO
1211 Central Park Blvd.
Fredericksburg, VA 22401
Jarell Financial Guarantor on Loans $500,000
9064 Courthouse Road
P.O. Box 127
Spotsylvania, VA 22553-0127
Severn Savings Bank Guarantor on Real $368,000
200 Westgate Circle, Suite 200 Estate Loan
Annapolis, MD 21401
Timothy Lessner Guarantor on Real $150,000
Estate Loan
David Posey Guarantor on Real $150,000
Estate Loan
California First Leasing Guarantor on $130,000
Corporation Equipment Lease
MSI Inc. Trade $41,407
HUB International Scheer's Bonding Company $31,700
Lexon Insurance Company Premiums
Bond Safeguard Ins. Co.
Dunn's Floor Covering Trade $28,676
Hostetler Management Co., LLC Professional Services $23,250
Reznick Group, P.C. Professional Auditing $20,859
& Accounting Services
STEVE & BARRY'S: Wants Conway as Financial Advisors
---------------------------------------------------
Steve & Barry's, LLC, and its debtor-affiliates seek the authority
of the United States Bankruptcy Court for the Southern District
of New York to employ Conway, Del Genio, Gries & Co., LLC as their
financial advisors.
Conway Del Genio has a longstanding reputation in assisting
companies through complex financial restructurings, including
Chapter 11 cases, Barry Prevor, chairman and secretary of Steve &
Barry's, tells the Court. Moreover, Conway Del Genio has
rendered services to the Debtors since 2007.
Specifically, in June 10, 2008, the Debtors sought the firm's
services in: (i) advising and assisting the management in
reviewing and developing the Debtors' cash-flow forecast, (ii)
advising and assisting the management in developing the Debtors'
business plan, and (iii) providing other services requested by
the Debtors.
As financial advisors, Conway Del Genio will:
(a) review the Debtors' current liquidity forecast and
assist management in modifying and updating the forecast
based upon current information, the firm's observations
and other information as it becomes available;
(b) gather and analyze data, interview appropriate
management and evaluate the Debtors' existing financial
forecasts and budgets to determine the extent of the
Debtors' financial challenges;
(c) assist the Debtors in developing and evaluating various
restructuring scenarios;
(d) assist the Debtors in the preparation, design, and
execution of the restructuring plan;
(e) assist the Debtors in the development of a business
plan;
(f) evaluate and analyze various parts of the Debtors'
business; and
(g) assess inventory position and management strategies and
other key working capital drivers.
The Debtors, in turn, will:
(i) pay Conway Del Genio $250,000 per month, which will be
due and paid by the Debtors, beginning on the date of
the engagement and thereafter in advance on the 10th of
each month. The Debtors will also pay the firm a
retainer of $250,000 which will be applied against their
final invoice and, to the extent unused, will be
returned to the Debtors;
(ii) reimburse Conway Del Genio for reasonable out-of pocket
expenses;
(iii) reimburse Conway Del Genio for fees and expenses
incurred for the services requested or authorized by the
Debtors or requested by government regulation, in
producing legal documents.
Before the Petition Date, the firm performed certain professional
services for the Debtors beginning June 10, 2008, and has
invoiced for $500,000 in fees and as part of their retainer
through the period ending July 9, 2008, and $2,185 in expenses
incurred and processed to date. Also, the firm has received
payments totaling $500,000 for fees invoiced and a $2,185 expense
advance to be first applied against prepetition expenses --
incurred and processed and incurred but not yet processed.
Additionally, it received $25,000 for fees related to the 2007
engagement.
The Debtors agree to indemnify Conway Del Genio from and against
any losses in connection with the firm's engagement with the
Debtors. However, the indemnification excludes claims resulting
from gross negligence or willful misconduct.
Robert P. Conway, founder and principal of Conway Del Genio
assures the Court that his firm is a "disinterested
person" as the term is defined in Section 101(14) of the
Bankruptcy Code and as required under Section 327(a) of the
Bankruptcy Code, and does not have an interest materially adverse
to the Debtors' estate.
Headquartered in Port Washington, New York, Steve and Barry LLC
-- http://www.steveandbarrys.com/-- is a national casual
apparel retailer that offers high quality merchandise at
low prices for men, women and children. Founded in 1985, the
company operates 276 anchor and junior anchor shopping center
and mall-based locations throughout the U.S. At STEVE & BARRY'S
(R) stores, shoppers will find brands they can't find anywhere
else, including the BITTEN(TM) collection, the first-ever
apparel line created by actress and global fashion icon Sarah
Jessica Parker, and the STARBURY(TM) collection of athletic and
lifestyle apparel and sneakers created with NBA (R) star Stephon
Marbury.
Steve & Barry's, LLC, and 63 affiliates filed separate voluntary
petitions under Chapter 11 on July 9, 2008 (Bankr. S.D. N.Y. Lead
Case No. 08-12579). Lori R. Fife, Esq., and Shai Waisman, Esq., at
Weil, Gotshal & Manges, LLP, represent the Debtors in their
restructuring efforts. When the Debtors filed for bankruptcy, it
listed $693,492,000 in total assets and $638,086,000 in total
debts.
(Steve & Barry's Bankruptcy News, Issue No. 1; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
STEVE & BARRY'S: Wants Weil Gotshal as Attorneys
------------------------------------------------
Steve & Barry's, LLC, and its debtor-affiliates seek the authority
of the United States Bankruptcy Court for the Southern District
of New York to employ Weil, Gotshal & Manges LLP, as their
attorneys.
Barry Prevor, chairman and secretary of Steve & Barry's, relates
that Weil Gotshal's attorneys who will be employed in the Chapter
11 cases, are members in good standing of, among others, the Bar
of the State of New York and the United States District Court for
the Southern District of New York. The firm is also an expert in
the field of debtors' protection, creditors' rights, and business
reorganization under the Bankruptcy Code, he asserts.
Prior to the Petition Date, Weil Gotshal has represented the
Debtors regarding their financial restructuring efforts. This
representation has resulted to the firm's familiarity with the
Debtors' businesses, financial affairs, and capital structure.
As the Debtors' attorneys, Weil Gotshal will:
(a) take all necessary action to protect and preserve the
estates of the Debtors, including the prosecution of
actions on the Debtors' behalf, the defense of any
actions commenced against the Debtors, the negotiation
of disputes in which the Debtors are involved, and the
preparation of objections to claims filed against the
Debtors' estates;
(b) prepare on behalf of the Debtors, all necessary motions,
applications, answers, orders, reports, and other papers
in connection with the administration of the Debtors'
estates, including the motion to sell substantially all
of the Debtors' estates;
(c) take all necessary actions in connection with a plan of
reorganization and related disclosure statements and all
related documents, and any other actions as may be
required in connection with the administration of the
Debtors' estates; and
(d) perform all other necessary legal services in connection
with the prosecution of the Debtors' Chapter 11 cases.
Weil Gotshal will be paid based on its current customary hourly
rates:
members and counsel $650 to $950
associates $355 to $595
paraprofessionals $155 to $290
The firm will also be reimbursed for its reasonable, out-of-
pocket expenses.
Before the Petition Date, Weil Gotshal received advances in the
aggregate amount of $1,300,000 from the Debtors on account of
services performed and to be performed, including the
commencement and prosecution of the Chapter 11 cases, and related
expenses incurred and to be incurred. As of the Petition Date,
the fees and expenses incurred by the firm during the same one
year period and debited against the amounts advanced to it by the
Debtors were $1,250,796. The precise amount will be determined
upon the final recording of all time and expense charges.
As of the Petition Date, Weil Gotshal has a remaining credit
balance in favor of the Debtors for $49,203 for additional
professional services performed and to be performed and expenses
incurred and to be incurred in connection with the Chapter 11
cases. After application of amounts for any additional
prepetition professional services and related expenses, the
excess advance amounts will be held by the firm as a retainer.
Lori R. Fife, a member of Weil Gotshal, assures the Court that
her firm is a "disinterested person", as the term is defined in
Section 101(14) of the Bankruptcy Code, as modified by Section
1107(b).
STEVE & BARRY'S: Obtains Approval to Pay Employee Wages & Benefits
------------------------------------------------------------------
The United States Bankruptcy Court for the Southern District
of New York, pursuant to Sections 105(a) and 363(b) of the
Bankruptcy Code and Rules 6003 and 6004 of the Federal Rules of
Bankruptcy Procedure, authorized Steve & Barry's, LLC, and its
debtor-affiliates to pay their current employees for work
performed prepetition and to honor certain other prepetition
employee-related obligations.
The Debtors want to minimize the personal hardship that the
Employees would suffer if they are not paid when due, and to
maintain the morale of their essential workforce during this
critical time, Lori R. Fife, Esq., at Weil, Gotshal & Manges LLP,
in New York, the Debtors' proposed counsel, says.
The Employee Obligations the Debtors seek to pay include wages,
salaries, reimbursement obligations, federal and state
withholding taxes and other amounts withheld, Employee health
benefits, insurance benefits, paid time off, severance benefits,
short- and long-term disability coverage and all other Employee
benefits that the Debtors have historically provided in the
ordinary course of business.
In addition, the Debtors obtained the Court's authority for
applicable banks and other financial institutions to receive,
process and pay any and all checks, electronic fund transfers,
and automatic payroll transfers drawn on the Debtors' payroll or
general disbursement accounts, to the extent that those checks or
transfers relate to any of the prepetition Employee Obligations.
The applicable Banks are:
Bank Account Type
---- ------------
Cathay Bank Master operation account,
payroll accounts, transit
check account, lockbox
accounts, money market
accounts
Bank of China, Shanghai Branch Operating account
PICIC Commercial Bank Ltd. Operating account
Jordan National Bank Operating account
In connection with their Domestic Operations, the Debtors
currently employ 8,619 employees, of which 1,279 are full-time
salaried employees and 7,340 are part-time hourly employees. The
Domestic Employees are further classified into three groups --
(i) hourly or salaried store employees, (ii) hourly or salaried
distribution center employees, and (iii) employees who work in
the company's office headquarters in New York.
In connection with their International Operations, there are
1,076 full-time employees overseas, of which 950 work in Mumbai,
India; 97 in Shanghai, China; and 26 in Pakistan. The remaining
international offices are staffed by no more than a few employees
at any given time, according to Ms. Fife. Their non-debtor
affiliate Universal Worldwide Private Limited is the primary
employer of employees located in the international offices.
Roughly 126 employees, however, are employed by the Debtors.
The employees operating out of the office in China are employed
by Steve & Barry's GLC LLC, and 29 employees operating out of the
offices in Jordan and Pakistan are employed by Pro Air LLC.
Employee Obligations
Maintaining the Debtors' workforce with minimal interruption is
critical to servicing the Debtors' retail customers, Ms. Fife
asserts. The Debtors believe that the aggregate amount of all
Employee Obligations, as of the Petition Date, does not exceed
$5,600,000.
According to Ms. Fife, as of the Petition Date, the Debtors'
accrued and unpaid, or unremitted, prepetition obligations are:
Obligation Amount
---------- ------
Payroll and Related Obligations:
Domestic Employees Compensation Obligations $3,200,000
(for services rendered until July 8, 2008)
Garnishments Obligation 18,800
International Employee Compensation Obligations 44,690
Reimbursement Obligations 142,000
Payroll Administration Obligation (ADP) 450,000
Employer Payroll Tax Obligations 260,000
Employee Benefit Plan Obligations:
Employee Benefit Obligations 1,470,000
1) Compensation Obligations
The Debtors' average monthly gross payroll for all Domestic
Employees is roughly $12,120,000. These employees are paid on a
bi-weekly basis, four days in arrears for those Employees with
direct deposit, and five days in arrears for all others.
The Debtors withhold, on average, $31,500 per pay period on
account of various garnishments, including tax levies, child
support and other court-ordered garnishments.
All International Employees are salaried employees paid at the
end of each month. The Debtors' average monthly gross payroll
for them is roughly $167,587.
The Employee Compensation Obligations with respect to each
Employee for the prepetition period do not exceed the $10,950 cap
under Section 507(a)(4) of the Bankruptcy Code.
2) Reimbursement Obligations
The Debtors customarily reimburse their Employees for a variety
of business expenses incurred in the ordinary course of
employment. There is no way to determine the precise amount of
Reimbursement Obligations at any moment in time.
3) Payroll Administration
The Debtors employ ADP as their payroll administrator to process
on a bi-weekly basis the Domestic Employee Compensation
Obligations and coordinate the payment of certain Employer
Payroll Tax Obligations. ADP is paid $115,000 per payroll period
for these services.
4) Employer Payroll Tax Obligations
In connection with the salaries and wages paid to Employees, the
Debtors are required to pay matching amounts from their own funds
for, among other things, social security and Medicare taxes, as
well as additional amounts for state and federal unemployment
insurance, based on a percentage of gross payroll, employment
training taxes and state disability insurance contributions.
5) Employee Benefit Plan Obligations
In the ordinary course of business, the Debtors have established
various benefit plans and policies for their Domestic Employees,
which can be divided into these categories:
(a) medical insurance, dental insurance, vision care, life and
accidental death and dismemberment insurance, and long-
and short-term disability insurance;
(b) paid time off plans, including vacation, comp time,
personal days and holidays;
(c) a 401(k) plan;
(d) a commuter benefit program;
(e) a tax-advantaged education savings plan;
(f) an employee assistance program; and
(g) a severance plan.
The Debtors believe that their annual expenditures under the
Employee Benefit Plans aggregate $9,000,000.
The Debtors also believe that most of the Employee Obligations
relating to the period before the Petition Date constitute
priority claims under Sections 507(a)(4) and (5) of the
Bankruptcy Code. As priority claims, the Employee Obligations
must be paid in full before any general unsecured obligations of
the Debtors may be satisfied, Ms. Fife asserts.
Headquartered in Port Washington, New York, Steve and Barry LLC
-- http://www.steveandbarrys.com/-- is a national casual
apparel retailer that offers high quality merchandise at
low prices for men, women and children. Founded in 1985, the
company operates 276 anchor and junior anchor shopping center
and mall-based locations throughout the U.S. At STEVE & BARRY'S
(R) stores, shoppers will find brands they can't find anywhere
else, including the BITTEN(TM) collection, the first-ever
apparel line created by actress and global fashion icon Sarah
Jessica Parker, and the STARBURY(TM) collection of athletic and
lifestyle apparel and sneakers created with NBA (R) star Stephon
Marbury.
Steve & Barry's, LLC, and 63 affiliates filed separate voluntary
petitions under Chapter 11 on July 9, 2008 (Bankr. S.D. N.Y. Lead
Case No. 08-12579). Lori R. Fife, Esq., and Shai Waisman, Esq., at
Weil, Gotshal & Manges, LLP, represent the Debtors in their
restructuring efforts. When the Debtors filed for bankruptcy, it
listed $693,492,000 in total assets and $638,086,000 in total
debts.
(Steve & Barry's Bankruptcy News, Issue No. 1; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
STEVEN SARTIN: Voluntary Chapter 11 Case Summary
------------------------------------------------
Debtor: Steven Jay Sartin
3195 Cooper Meadows
Lake Cormorant, MS 38641
Bankruptcy Case No.: 08-12726
Chapter 11 Petition Date: July 14, 2008
Court: Northern District of Mississippi (Aberdeen)
Debtor's Counsel: J. Walter Newman, IV, Esq.
Email: stacyplee@mac.com
248 E. Capitol Street, Suite 539
539 Trustmark Bldg.
Jackson, MS 39201
Tel: (601) 948-0586
Fax: 601-948-0588
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
The Debtor did not file a list of its largest unsecured creditors.
STRATUS GROUP: Case Summary & 30 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Stratus Group, Inc.
1504 US Highway 19 South
Leesburg, GA 31763
Bankruptcy Case No.: 08-11096
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Stratus Holdings Group of Florida, LLC 08-11097
Freeway Auto Credit, LLC 08-11098
Chapter 11 Petition Date: July 15, 2008
Court: Middle District of Georgia (Albany)
Judge: James D. Walker Jr.
Debtors' Counsel: Paul K. Ferdinands, Esq.
(pferdinands@kslaw.com)
King and Spalding, LLP
1180 Peachtree Street, Northeast
Atlanta, GA 30309-3521
Tel: (404) 572-3450
Fax: (404) 572-5149
Estimated Assets: $10,000,000 to $50,000,000
Estimated Debts: $10,000,000 to $50,000,000
Debtor's list of its 30 largest unsecured creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
American Express Trade Debt $616,110
P.O. 650448
Dallas, TX 75265
William Bithel Wall III Note $516,542
205 Patton Drive
Americus, GA 31709
Ameris Bank Note $400,000
2627 Dawson Road
Albany, GA 31708-1748
Genuine Parts Nashville Trade Debt $356,923
P.O. Box 409043
Atlanta, GA 303384-9043
James C. Gatewood Note $350,000
Virginia C. Gatewood
Francis M. Gatewood
P.O. Box 488
Americus, GA 31709
Brooks Auto Parts Trade Debt $268,988
P.O. Box 650
Douglas, GA 3153
Genuine Parts Augusta GA Trade Debt $184,855
Genuine Parts Ocala FL Trade Debt $127,874
Kacz's Auto Supplies Trade Debt $48,463
Carroll Tire Co. Trade Debt $36,858
Prime Rate Premium Finance Trade Debt $26,966
Onmedia Trade Debt $14,553
Renfroe Construction Company Trade Debt $11,906
WZTV Fox 17 Trade Debt $11,730
Wachovia Loan Services Trade Debt $10,168
Drawdy Roofing Inc. Trade Debt $9,925
Georgia Power Co. Trade Debt $9,401
David Carney Trade Debt $9,200
WFXL-TV Trade Debt $9,065
Deltacom Trade Debt $8,940
Select Tel Systems Inc. Trade Debt $8,235
Divine, Finney & Dorough, P.C. Trade Debt $8,081
Manpower Trade Debt $8,020
WALB Trade Debt $7,930
WGXA-TV 24 Trade Debt $7,470
Clear Channel Broadcasting Inc. Trade Debt $6,558
Ikon Financial Services Trade Debt $6,304
WTLF-Fox 49/WTLH Fox 49 Trade Debt $6,241
Want Ads of Tallahassee Trade Debt $6,200
Ortale Kelly Hebert Crawford Trade Debt $5,845
SUMMIT CAPITAL: Case Summary & Eight Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Summit Capital Investors, LLC
25401 Cabot Road, Suite 212
Laguna Hills, CA 92673-5515
Bankruptcy Case No.: 08-14046
Type of Business: The Debtor is engaged in real estate business.
Chapter 11 Petition Date: July 14, 2008
Court: Central District Of California (Santa Ana)
Judge: Erithe A. Smith
Debtor's Counsel: Stephen R Wade, Esq.
Email: dp@srwadelaw.com
400 N. Mountain Ave., Suite 214B
Upland, CA 91786
Tel: (909) 985-6500
Fax: (909) 985-2865
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/cacb08-14046.pdf
TEXAS INDUSTRIES: S&P Affirms 'BB-' Rating with Stable Outlook
--------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on cement
producer Texas Industries Inc. to stable from positive. All
ratings, including the 'BB-' corporate credit rating, were
affirmed.
"The outlook revision reflects our assessment that because of the
combination of weakening commercial construction and high energy
costs, the company's operating performance over the next several
quarters will be weaker than previously expected," said Standard &
Poor's credit analyst Michael Scerbo. "As a result, credit
measures are likely to be more in-line with the current rating
preventing an upgrade within our outlook time horizon."
Previously, a higher rating was predicated on the company
improving its overall financial profile following the completion
of its ongoing capital expansion plans, which is not likely to
occur given the challenging market conditions.
The ratings on Dallas-based TXI reflect its much smaller scale of
operations than global competitors', the cement industry's
cyclicality and seasonality, high capital and energy intensity,
and market and asset concentration in Texas and California.
Supporting the ratings are the high long-term demand for cement in
the U.S. relative to total production capacity, good operating
margins, adequate liquidity, and credit measures that are in-line
with the rating.
With 85% of U.S. cement capacity owned by large global producers--
such as Cemex Mexico S.A. de C.V., Lafarge S.A., and Holcim Ltd.--
the U.S. cement market is fairly consolidated and has historically
enjoyed healthy price levels. Good market dynamics, as well as
the industry's high environmental and transport barriers to entry,
substantially offset the commoditized nature of cement.
THOMAS GIANCRISTIANO: Voluntary Chapter 11 Case Summary
-------------------------------------------------------
Debtor: Thomas F. Giancristiano
Mary E. Watson
19 Atlantic Avenue, Unit No. 5
Hampton, NH 03842
Bankruptcy Case No.: 08-11984
Type of Business: The Debtors are engaged in real estate business.
Chapter 11 Petition Date: July 14, 2008
Court: District of New Hampshire Live Database (Manchester)
Debtor's Counsel: George J. Nader, Esq.
Email: nader@rileydever.com
Riley & Dever, PC
210 Broadway, Suite 101
Lynnfield, MA 01940
Tel: (781) 581-9880
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
The Debtor did not file a list of its largest unsecured creditors.
TIMBER TOM'S: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Timber Tom's Wonderland, LLC
2196 110th Street
Chippewa Falls, WI 54729
Bankruptcy Case No.: 08-13631
Chapter 11 Petition Date: July 15, 2008
Court: Western District of Wisconsin (Eau Claire)
Judge: Thomas S. Utschig
Debtor's Counsel: Daniel R. Freund, Esq.
Email: freundlaw@fastmail.fm
920 S. Farwell Street, Suite 1800
P.O. Box 222
Eau Claire, WI 54702-0222
Tel: (715) 832-5151
Fax: (715) 832-5491
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/wiwb08-13631.pdf
TMS HOME: Moody's Assigns A1, Ba1 & B3 Underlying Ratings on Notes
------------------------------------------------------------------
Moody's Investors Service published the underlying ratings on
these 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
these 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: TMS Home Equity Loan Trust 1998-B
Class Description: Class A-F7 Notes
-- Current Rating: A1
-- Financial Guarantor: MBIA Insurance Corporation (A2, negative
outlook)
-- Underlying Rating: A1
Class Description: Class A-F9 Notes
-- Current Rating: A1
-- Financial Guarantor: MBIA Insurance Corporation (A2, negative
outlook)
-- Underlying Rating: A1
Class Description: Class AV Notes
-- Current Rating: A1
-- Financial Guarantor: MBIA Insurance Corporation (A2, negative
outlook)
-- Underlying Rating: A1
Issuer: TMS Home Equity Loan Trust 1998-C
Class Description: Class A-F1Notes
-- Current Rating: A2
-- Financial Guarantor: MBIA Insurance Corporation (A2, negative
outlook)
-- Underlying Rating: Ba1
Class Description: Class A-F2Notes
-- Current Rating: A2
-- Financial Guarantor: MBIA Insurance Corporation (A2, negative
outlook)
-- Underlying Rating: Ba1
Class Description: Class A-V Notes
-- Current Rating: A2
-- Financial Guarantor: MBIA Insurance Corporation (A2, negative
outlook)
-- Underlying Rating: B3
TOP BRANCH: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Top Branch Environmental Services, Inc.
9437 State Road 7
Boynton Beach, FL 33437
Bankruptcy Case No.: 08-19794
Type of Business: The Debtor is engaged in the landscaping
business.
Chapter 11 Petition Date: July 15, 2008
Court: Southern District of Florida (West Palm Beach)
Judge: Erik P. Kimball
Debtor's Counsel: Susan D. Lasky, Esq.
Email: slaskylbrpa@bellsouth.net
2101 N. Andrews Ave., Suite 405
Wilton Manors, FL 33311
Tel: (954) 565-5854
Fax: (954) 462-8411
Total Assets: $428,570
Total Debts: $2,608,573
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/flsb08-19794.pdf
VALLEY BOAT: To Dispose of Inventory; Mulls Closure of Stores
-------------------------------------------------------------
The economic slump has hit the California boating industry hard,
forcing one of Fresno's largest boat dealers to announce plans to
liquidate his inventory and possibly close his store after 32
years in business if the market doesn't turn around.
Ron Montverde, owner of Valley Boat Emporium on Shaw Avenue, will
begin liquidating his inventory through a unique arrangement with
Fresno RV dealer Dan Gamel.
Mr. Monteverde, a dealer in the U.S. for the Tracker line of
fishing and pontoon boats for 26 years, reported that his second
quarter sales were down 30% to 35% from 2007, which closely
mirrors the average decline that other California boat dealers
have reported for the year.
"Boat sales for the first half of the year have been miserable,"
said Mr. Monteverde. "When I made the decision to liquidate, I
consulted with Dan Gamel for advice on selling off my inventory.
I've watched his liquidation process which has moved rapidly over
the past few weeks and I wanted to know how to sell mine off as
fast. Manufacturers don't take unsold boats back, so the burden
is on the dealer to get rid of the inventory. [Dan] Gamel is
obviously doing it right, so I went to the source and asked for
help."
Dan Gamel, owner of Fresno based Dan Gamel's RV Centers, recently
announced the liquidation and impending closure of his six RV
sales and service centers in California. Since July 1st, Mr.
Gamel has sold off nearly $30 million in inventory which has
generated much needed working capital for the company.
"[Mr. Montverde] explained that he needs to liquidate about 35
boats and he hasn't had a lot of success doing so in this
perceived market. It's sad, because the fact is that people who
own boats are still boating and enjoying their leisure family
time, but those who might otherwise be buying their first boat are
holding off because of the media's gloomy portrayal of our
economic condition," said Mr. Gamel.
"In the last two weeks we've sold over 250 recreational vehicles.
Sure, the prices are deeply discounted, but these sales show that
smart families aren't buying into the dramatic press. Instead
they're doing their own research and making buying decisions based
upon opportunity and fact, not what the talking heads report to
get news ratings. [Mr. Montverde] is a good man and his business
has employed many people and been good for the community for over
32 years. It's a rough time for many of us, and I'm happy to help
him," said Mr. Gamel.
Over the past year, Mr. Monteverde has slashed overhead and
operating expenses, and he's reduced his staff from 27 to just
nine employees. But, lackluster sales and continued decline in
consumer confidence led Monteverde to his decision to liquidate.
Valley Boat Emporium is moving inventory to Mr. Gamel's Camp
America store in Fresno and the liquidation sale will begin on
July 19th.
Mr. Monteverde's sales and service departments will remain open at
his Shaw Avenue location at least until all boats are sold and
delivered to customers.
About Dan Gamel's RV Centers
Dan Gamel's RV Centers -- http://www.gamel.com/-- is a California
Fleetwood RV dealer with six locations selling and servicing new
and used RVs, motor homes, travel trailers, diesels, fifth wheels,
and other vehicles.
About Valley Boat
Valley Boat Emporium -- http://www.valleyboat.com/-- is privately
owned by Ron Monteverde. The dealership is located at 4170 West
Shaw Avenue in Fresno, California, telephone (559) 224-5801.
WARNACO GROUP: Improved Revenue Trend Cues S&P to Lift Ratings
--------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on New York City-based apparel company Warnaco Group Inc.
to 'BB+' from 'BB'. S&P raised the rating on wholly owned
subsidiary Warnaco Inc.'s secured bank loan to 'BBB' from 'BBB-',
while keeping the recovery rating on this debt at '1', indicating
expectations of very high (90%-100%) recovery in the event of a
payment default. S&P also raised the issue-level rating on the
company's $210 million of 8.875% senior notes due June 15, 2013,
to 'BB+ from 'BB'.
The recovery rating on this debt was revised to '3' from '4',
indicating expectations of meaningful recovery (50%-70%). The
outlook is stable. The ratings are removed from CreditWatch,
where they were placed with positive implications, on May 13,
2008, after the company reported strong first-quarter results.
Warnaco Group Inc. had about $364 million in debt outstanding at
April 5, 2008.
The upgrade reflects the improving trend in Warnaco's revenues,
margins, and credit protection measures, and S&P's expectation
that the company will be able to sustain these improvements.
Warnaco has continued to reduce leverage by paying down debt and
expanding its EBITDA base. The company has paid down its debt
ahead of schedule, following its debt-financed acquisition of the
Calvin Klein jeanswear and related businesses in Asia and Europe
in 2006. Total debt to EBITDA was 1.9x for the 12 months ended
April 5, 2008, compared with 2.5x a year ago. The company has
continued to successfully expand its Calvin Klein underwear and
jeanswear businesses, while improving the operating performance of
all three business divisions.
The ratings on Warnaco reflect its participation in a highly
competitive and promotional retail environment, and its exposure
to fashion risk in some of its business segments. The ratings
also incorporate the company's well-recognized brand names,
positive operating momentum, its success at expanding its Calvin
Klein jeans and underwear franchises, as well as its product and
distribution channel diversity.
Warnaco manufactures and markets men's and women's intimate
apparel, underwear, and sportswear. Products are sold under owned
and licensed names, including Calvin Klein, Speedo, Chaps, Olga,
and Warner's.
S&P expect Warnaco to sustain its good operating momentum and
improved credit measures. S&P could revise the outlook to
positive if the company can improve and sustain financial results
in the intermediate term, including expanding its overall EBITDA
margins and enhancing growth in its international businesses.
However, S&P could revise the outlook to negative if the company
is unable to sustain its operating momentum and engages in debt-
financed share repurchases. According to S&P's internal
forecasts, even if the company reports no revenue growth in 2008
and its margins decline by 200 basis points from current levels,
credit metrics would still be satisfactory for the revised
ratings.
WASHINGTON MUTUAL TRUST: At Fitch's Watch on Higher Delinquencies
-----------------------------------------------------------------
Fitch Ratings has placed two certificates from the Washington
Mutual Master Trust and two notes from Washington Mutual Master
Note Trust on Rating Watch Negative, as:
-- Washington Mutual Master Trust, series 2004-C class E
certificates rated 'BB-';
-- Washington Mutual Master Trust, series 2004-G class E
certificates rated 'BB-';
-- Washington Mutual Master Note Trust, class 2005-D2 notes
rated 'BB-';
-- Washington Mutual Master Note Trust, class 2005-D2-2 notes
rated 'BB-'.
The rating actions are a result of a significant increase in
delinquencies and charge-offs in the trusts, along with slowing
monthly payment rates and declining gross yield during the first
half 2008. In particular, the four most recent servicing reports
show a rapid increase in charge-offs. On a net basis, charge-offs
have risen from 10.47% at the beginning of the year to 12.96% for
the most recent reporting period. The percentage of accounts that
are 60 or more days delinquent have also risen during this period
indicating that an elevated level of chargeoffs will persist in
the near future.
MPR, a measure of how quickly consumers are paying their debt, was
at 9.44% in June compared to 10.78% for the same period a year
ago. Given that payment rates are generally inversely correlated
to delinquency rates, a rise in delinquencies could further slow
the payment rate in the trusts.
Gross yield, a measure of a trust's ability to generate revenue is
used to cover trust expenses such as chargeoffs, servicing fees
and funding costs, has also experienced downward pressure in 2008.
Gross yield has averaged 23.52% for the entire year, a 200 basis
point decline compared to the same period a year ago.
Fitch's analysis included a comparison of observed performance
trends over the past few months to Fitch's base case expectations
for each outstanding rating category. As part of its on-going
surveillance efforts, Fitch will continue to monitor the
performance of these trusts.
The resolution of the Negative Watch status will incorporate
future direction of trust performance. Additionally, Fitch is in
the process of gathering additional information from the issuer to
further explore performance trends. Fitch expects to complete its
review within the next 90 days.
YAZMIN ENTERPRISES: Case Summary & 40 Largest Unsecured Creditors
-----------------------------------------------------------------
Lead Debtor: Yazmin Enterprises, Inc.
P.O. Box 1346
Toa Alta, PR 00953-1346
Bankruptcy Case No.: 08-04614
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Uno, Dos Y Tres Corp. 08-04616
Chapter 11 Petition Date: July 16, 2008
Court: District of Puerto Rico (Old San Juan)
Debtors' Counsel: Ruben Gonzalez Marrero, Esq.
Email: rgm@microjuris.com
P.M. Box 403, Calle 39 UU-1
Urb Sta. Juanita
Bayamon, PR 00956
Tel: (787) 798-8600
http://www.microjuris.com/
Yazmin Enterprises, Inc.'s Financial Condition:
Estimated Assets: $10,000,000 to $50,000,000
Estimated Debts: $10,000,000 to $50,000,000
A. Yazmin Enterprises, Inc.'s 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Banco Santander $7,149,515
P.O. Box 362589
San Juan, PR 00936-2589
Smart King Enterprises, Inc. $1,035,415
Centre 5-21 Pak Tin
Rm. 6 10th Fl. Block A Hi
Par St.
Tech Ind.
T Suen Wan NT, Hong Kong
LM Import & Export, Inc. $784,968
4805 N.W. 165th St.
Miami, FL 33014
Better Home Plastics Corp. $606,971
Paladise Park 439
Commercial Ave.
New Jersey, NJ 07650
Productos Familia de Puerto $439,085
Rico, Inc.
P.O. Box 362743
San Juan, PR 00936-2743
Ampoules & Vials Manufacturing $410,140
Attn: Luis J. Acevedo
Bengoechea
359 de Diego Ave., Ste. 601
San Juan, PR 00909-1711
Rising Toys Manufacture $394,157
4805 N.W. 65 St., Ste. A-2
Miami, FL 33014
Muñoz Metro Office SE $386,962
P.O. Box 363148
San Juan, PR 00936-3148
Ark International, Inc. $372,855
480 Fishtail Terr
Weston, FL 33327
AEE $322,547
P.O. Box 363508
San Juan, PR 00936-3508
Yazmin Paleo $249,366
Max Delivery $239,263
Beatrice Home $199,793
Eleven Eleven Corp. $184,534
Carmelo Delgado $184,261
United Corp. $179,663
In-Mar Trading $175,809
Export Belmar SL $172,006
B. Uno, Dos Y Tres Corp's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Banco Santander Puerto Rico $1,250,000
Banco Santander PR 573,887
DDR Atlantico, LLC $633,664
S.E. 3300 Enterprise Pkwy.
Beachwood, Ohio 44122
Ampoules & Vials Manufacturing $410,140
Attn: Luis J. Acevedo
Bengoechea
359 de Diego Ave., Ste. 601
San Juan, PR 00909-1711
Yazmin Paleo Rodriguez $249,366
Carmelo Delgado $184,261
In Mar Trading $177,449
Edwin Miranda Vega $100,000
AEE $94,636
DD Rio Hondo, LLC $70,000
Plaza Guayama SE $60,000
FW Caguas Ground $51,119
CCVA, Inc. $49,437
DDR Isabela LLC, SE $39,983
New Port Sales, Inc. $37,505
Pride Product Corp. $34,358
Vornado Caguas, LP $33,995
H Vidal, Inc. $29,700
MJS Ponce, LP $28,859
PDCM Associates $28,559
WHITEBLOX INC: Voluntary Chapter 11 Case Summary
------------------------------------------------
Debtor: WhiteBlox, Inc.
395 Sawdust Rd., Suite 2046
Spring, TX 77380
Bankruptcy Case No.: 08-34553
Type of Business: The Debtor provides video broadcasting services.
See: http://www.whiteblox.com/
Chapter 11 Petition Date: July 16, 2008
Court: Southern District of Texas (Houston)
Judge: Marvin Isgur
Debtors' Counsel: Julie Mitchell Koenig, Esq.
(jkoenig@towkoenig.com)
Tow and Koenig PLLC
26219 Oak Ridge Drive
The Woodlands, TX 77380
Tel: (281) 681-9100
Fax: (281) 681-1441
http://www.yourbankruptcylaw.com/
Estimated Assets: $1 million to $10 million
Estimated Debts: $500,000 to $1 million
The Debtor did not file a list of its largest unsecured creditors.
ZOLITE SCOTT: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: Zolite A. Scott
aka Zolita A Scott
629 Alta Vista Way
Laguna Beach, CA 92651
Tel: (949) 499-1600
Bankruptcy Case No.: 08-13960
Chapter 11 Petition Date: July 9, 2008
Court: Central District Of California (Santa Ana)
Judge: Erithe A. Smith
Debtor's Counsel: Alan G. Tippie, Esq.
333 South Hope Street 35th Floor
Los Angeles, CA 90071
Tel: (213) 626-2311
Fax: (213) 629-4520
(atippie@sulmeyerlaw.com)
Estimated Assets: $100 million to $500 million
Estimated Debts: $10 million to $50 million
A list of the Debtor's largest unsecured creditors is available
for free at: http://bankrupt.com/misc/cacb08-13960.pdf
* S&P Places 378 Tranches Ratings from 96 CDO Under Neg. Watch
--------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on 378
tranches from 96 U.S. trust preferred collateralized debt
obligation transactions on CreditWatch with negative implications.
The affected CDO tranches have a combined issuance amount of
$37.471 billion. The CreditWatch placements reflect changes
Standard & Poor's is making to the assumptions S&P use for rating
trust preferred CDOs, as well as its concerns that current
economic conditions in the U.S. have increased the likelihood that
institutions issuing hybrid securities via the trust-preferred CDO
sector may defer payments on their trust preferred securities.
Hybrid, or trust preferred, securities can generally be grouped
into three categories: bank trust preferred securities, issued by
small to midsize bank holding companies; insurance trust preferred
securities, issued by small to midsize insurance companies; and
REIT trust preferred securities, issued by equity or mortgage
REITs. The CreditWatch placements affect all outstanding U.S.
trust preferred CDO transactions that Standard & Poor's rates.
Standard & Poor's believes that the current economic conditions in
the U.S. have heightened the risk that institutions which have
issued hybrid securities via the trust preferred CDO sector may
defer payments on their trust preferred securities. In S&P's
view, the economic factors contributing to this potential scenario
are both diverse and industry-specific, and include:
-- The liquidity squeeze affecting the general economy;
-- The increased likelihood that institutions that have
issued trust preferred securities may use the deferral
feature embedded in hybrid trust preferred securities to
retain capital and/or to improve financial ratios in a
protracted economic slowdown, either at their own option
or as directed by regulators; and
-- The deteriorating real estate and construction markets.
S&P believe these factors diminish the ability of banks, insurance
companies, and REITs to refinance or issue new hybrid trust
preferred debt. This is especially true for smaller institutions,
which typically have less financial flexibility to raise capital
from other sources. This scenario may result in a higher level of
deferral in the underlying collateral pools of trust preferred
CDOs and may increase the correlation of deferral and default risk
across the institutions that have issued trust preferred
securities. S&P are already seeing an increase in deferrals on
trust preferred and hybrid securities.
As such, S&P are reviewing the assumptions we use when rating such
transactions. These assumptions include the methodology and
parameters used to derive the probability of default/deferral, the
timing of defaults, expected recovery levels, the timing of
recoveries, and correlation risks. S&P expect to publish its
revised criteria for rating trust preferred CDOs within the next
month. S&P expect to resolve the CreditWatch placements within a
few months of publishing the revised criteria.
Rating Placed on Creditwatch Negative
Rating
Transaction Class To From
Alesco Pfd Fdg XII Ltd. A-1 AAA/Watch Neg AAA
Alesco Pfd Fdg XII Ltd. X AAA/Watch Neg AAA
Alesco Pfd Fdg XII Ltd. A-2 AAA/Watch Neg AAA
Alesco Preferred Funding I Ltd. A-1 AAA/Watch Neg AAA
Alesco Preferred Funding I Ltd. A-2 AAA/Watch Neg AAA
ALESCO Preferred Funding II Ltd. A-1 AAA/Watch Neg AAA
ALESCO Preferred Funding II Ltd. A-2 AAA/Watch Neg AAA
ALESCO Preferred Funding III Ltd. A-1 AAA/Watch Neg AAA
ALESCO Preferred Funding III Ltd. A-2 AAA/Watch Neg AAA
ALESCO Preferred Funding IV Ltd. A-1 AAA/Watch Neg AAA
ALESCO Preferred Funding IV Ltd. A-2 AAA/Watch Neg AAA
ALESCO Preferred Funding IV Ltd. A-3 AAA/Watch Neg AAA
Alesco Preferred Funding IX Ltd. A-1 AAA/Watch Neg AAA
Alesco Preferred Funding IX Ltd. A-2A AA+/Watch Neg AA+
Alesco Preferred Funding IX Ltd. A-2B AA+/Watch Neg AA+
Alesco Preferred Funding IX Ltd. B-1 A+/Watch Neg A+
Alesco Preferred Funding IX Ltd. B-2 A+/Watch Neg A+
ALESCO Preferred Funding V Ltd. A-1 AAA/Watch Neg AAA
ALESCO Preferred Funding V Ltd. A-2 AAA/Watch Neg AAA
ALESCO Preferred Funding V Ltd. B AA/Watch Neg AA
ALESCO Preferred Funding VI Ltd. A-1 AAA/Watch Neg AAA
ALESCO Preferred Funding VI Ltd. A-2 AAA/Watch Neg AAA
ALESCO Preferred Funding VI Ltd. A-3 AAA/Watch Neg AAA
ALESCO Preferred Funding VI Ltd. B-1 AA/Watch Neg AA
ALESCO Preferred Funding VI Ltd. B-2 AA/Watch Neg AA
ALESCO Preferred Funding VII Ltd. A-1A AAA/Watch Neg AAA
ALESCO Preferred Funding VII Ltd. A-1B AAA/Watch Neg AAA
ALESCO Preferred Funding VII Ltd. A-2 AAA/Watch Neg AAA
ALESCO Preferred Funding VII Ltd. B AA/Watch Neg AA
ALESCO Preferred Funding VIII Ltd A-1A AAA/Watch Neg AAA
ALESCO Preferred Funding VIII Ltd A-1B AAA/Watch Neg AAA
ALESCO Preferred Funding X Ltd. A-1 AAA/Watch Neg AAA
Alesco Preferred Funding XI Ltd. A-1A AAA/Watch Neg AAA
Alesco Preferred Funding XI Ltd. A-1B AAA/Watch Neg AAA
Alesco Preferred Funding XIII Ltd A-1 AAA/Watch Neg AAA
Alesco Preferred Funding XIII Ltd X AAA/Watch Neg AAA
Alesco Preferred Funding XIV Ltd. X AAA/Watch Neg AAA
Alesco Preferred Funding XIV Ltd. A-1 AAA/Watch Neg AAA
ALESCO Preferred Funding XV Ltd. A-1 AAA/Watch Neg AAA
ALESCO Preferred Funding XVI Ltd. A AAA/Watch Neg AAA
Alesco Preferred Funding XVII Ltd A-1 AAA/Watch Neg AAA
Alesco Preferred Funding XVII Ltd A-2 AAA/Watch Neg AAA
Attentus CDO I Ltd. A1 AAA/Watch Neg AAA
Attentus CDO I Ltd. A2 AAA/Watch Neg AAA
Attentus CDO I Ltd. B A+/Watch Neg A+
Attentus CDO I Ltd. C1 BBB+/Watch Neg BBB+
Attentus CDO I Ltd. C2A B/Watch Neg B
Attentus CDO I Ltd. C2B B/Watch Neg B
Attentus CDO I Ltd. D CCC/Watch Neg CCC
Attentus CDO I Ltd. E CCC-/Watch Neg CCC-
Attentus CDO II Ltd. A-1 AAA/Watch Neg AAA
Attentus CDO II Ltd. A-2 AAA/Watch Neg AAA
Attentus CDO II Ltd. A-3A AA/Watch Neg AA
Attentus CDO II Ltd. A-3B AA/Watch Neg AA
Attentus CDO II Ltd. B A+/Watch Neg A+
Attentus CDO II Ltd. C BBB-/Watch Neg BBB-
Attentus CDO II Ltd. D BB-/Watch Neg BB-
Attentus CDO II Ltd. E-1 CCC/Watch Neg CCC
Attentus CDO II Ltd. E-2 CCC/Watch Neg CCC
Attentus CDO II Ltd. F-1 CCC-/Watch Neg CCC-
Attentus CDO II Ltd. F-2 CCC-/Watch Neg CCC-
Attentus CDO III Ltd. A-1A AAA/Watch Neg AAA
Attentus CDO III Ltd. A-1B AAA/Watch Neg AAA
Attentus CDO III Ltd. A-2 AAA/Watch Neg AAA
Attentus CDO III Ltd. B AA/Watch Neg AA
Attentus CDO III Ltd. -1 A/Watch Neg A
Attentus CDO III Ltd. C-2 A/Watch Neg A
Attentus CDO III Ltd. D BBB+/Watch Neg BBB+
Attentus CDO III Ltd. E-1 BB+/Watch Neg BB+
Attentus CDO III Ltd. E-2 BB+/Watch Neg BB+
Attentus CDO III Ltd. F CCC/Watch Neg CCC
Dekania CDO I Ltd. A-1 AAA/Watch Neg AAA
Dekania CDO I Ltd. A-2 AAA/Watch Neg AAA
Dekania CDO I Ltd. B AA/Watch Neg AA
Dekania CDO I Ltd. C-1 A-/Watch Neg A-
Dekania CDO I Ltd. C-2 A-/Watch Neg A-
Dekania CDO I Ltd. D BBB/Watch Neg BBB
Dekania CDO II Ltd. A-1 AAA/Watch Neg AAA
Dekania CDO II Ltd. A-2 AAA/Watch Neg AAA
Dekania CDO II Ltd. B AA/Watch Neg AA
Dekania CDO II Ltd. C-1 A-/Watch Neg A-
Dekania CDO II Ltd. C-2 A-/Watch Neg A-
Dekania CDO II Ltd. D-1 BBB/Watch Neg BBB
Dekania CDO II Ltd. D-2 BBB/Watch Neg BBB
Dekania CDO II Ltd. Combo Nts BBB/Watch Neg BBB
ICONS Ltd. A AAA/Watch Neg AAA
ICONS Ltd. B AA/Watch Neg AA
ICONS Ltd. C-1 A/Watch Neg A
ICONS Ltd. C-2 A/Watch Neg A
ICONS Ltd. C-3 A/Watch Neg A
ICONS Ltd. D BBB/Watch Neg BBB
InCapS Funding I Ltd. A AAA/Watch Neg AAA
InCapS Funding I Ltd. -1 A-/Watch Neg A-
InCapS Funding I Ltd. B-2 A-/Watch Neg A-
InCapS Funding I Ltd. C BBB/Watch Neg BBB
InCapS Funding II Ltd. A-1 AAA/Watch Neg AAA
InCapS Funding II Ltd. A-2 AAA/Watch Neg AAA
InCapS Funding II Ltd. B-1 A-/Watch Neg A-
InCapS Funding II Ltd. B-2 A-/Watch Neg A-
InCapS Funding II Ltd. C BBB/Watch Neg BBB
I-Pre TSL II Combination Ltd. Def Comb A-/Watch Neg A-
I-Preferred Term Securities I Ltd A-1 AAA/Watch Neg AAA
I-Preferred Term Securities I Ltd A-2 AAA/Watch Neg AAA
I-Preferred Term Securities I Ltd A-3 AAA/Watch Neg AAA
I-Preferred Term Securities I Ltd B-1 A-/Watch Neg A-
I-Preferred Term Securities I Ltd B-2 A-/Watch Neg A-
I-Preferred Term Securities I Ltd B-3 A-/Watch Neg A-
I-Preferred Term Securities I Ltd C BBB/Watch Neg BBB
I-Preferred Term Securities II A-1 AAA/Watch Neg AAA
I-Preferred Term Securities II A-1-A AAA/Watch Neg AAA
I-Preferred Term Securities II A-2 AAA/Watch Neg AAA
I-Preferred Term Securities II A-3 AAA/Watch Neg AAA
I-Preferred Term Securities II B-1 A-/Watch Neg A-
I-Preferred Term Securities II B-2 A-/Watch Neg A-
I-Preferred Term Securities II B-3 A-/Watch Neg A-
I-Preferred Term Securities II C BBB/Watch Neg BBB
I-Preferred Term Securities III A-1 AAA/Watch Neg AAA
I-Preferred Term Securities III A-2 AAA/Watch Neg AAA
I-Preferred Term Securities III A-3 AAA/Watch Neg AAA
I-Preferred Term Securities III A-4 AAA/Watch Neg AAA
I-Preferred Term Securities III B-1 A-/Watch Neg A-
I-Preferred Term Securities III B-2 A-/Watch Neg A-
I-Preferred Term Securities III B-3 A-/Watch Neg A-
I-Preferred Term Securities III C BBB/Watch Neg BBB
I-Preferred Term Securities IV A-1 AAA/Watch Neg AAA
I-Preferred Term Securities IV A-2 AAA/Watch Neg AAA
I-Preferred Term Securities IV A-3 AAA/Watch Neg AAA
I-Preferred Term Securities IV B-M-1 A-/Watch Neg A-
I-Preferred Term Securities IV B-M-2 A-/Watch Neg A-
I-Preferred Term Securities IV C BBB/Watch Neg BBB
I-Preferred Term Securities IV D BB/Watch Neg BB
Kodiak CDO I Ltd. A-1 AAA/Watch Neg AAA
Kodiak CDO I Ltd. A-2 AAA/Watch Neg AAA
Kodiak CDO I Ltd. B AA/Watch Neg AA
Kodiak CDO I Ltd. C AA/Watch Neg AA
Kodiak CDO II Ltd. A-1 AAA/Watch Neg AAA
Kodiak CDO II Ltd. A-2 AAA/Watch Neg AAA
Kodiak CDO II Ltd. A-3 AAA/Watch Neg AAA
Kodiak CDO II Ltd. -1 AA+/Watch Neg AA+
Kodiak CDO II Ltd. B-2 AA+/Watch Neg AA+
Kodiak CDO II Ltd. C-1 AA-/Watch Neg AA-
Kodiak CDO II Ltd. C-2 AA-/Watch Neg AA-
MM Community Funding IX Ltd. A-1 AAA/Watch Neg AAA
MM Community Funding IX Ltd. A-2 AAA/Watch Neg AAA
MMCapS Funding XIX Ltd. A-1 AAA/Watch Neg AAA
MMCapS Funding XIX Ltd. A-2 AAA/Watch Neg AAA
MMCapS Funding XVII Ltd. A-1 AAA/Watch Neg AAA
MMCapS Funding XVII Ltd. A-2 AAA/Watch Neg AAA
MMCapS Funding XVII Ltd. B AA/Watch Neg AA
MMCaps Funding XVIII Ltd. A-1 AAA/Watch Neg AAA
MMCaps Funding XVIII Ltd. A-2 AAA/Watch Neg AAA
Preferred Term Securities IX Ltd. A-1 AAA/Watch Neg AAA
Preferred Term Securities IX Ltd. A-2 AAA/Watch Neg AAA
Preferred Term Securities IX Ltd. A-3 AAA/Watch Neg AAA
Preferred Term Securities VII Ltd A-2 AAA/Watch Neg AAA
Preferred Term Securities VIII A-1 AAA/Watch Neg AAA
Preferred Term Securities VIII A-2 AAA/Watch Neg AAA
Preferred Term Securities X Ltd. A-1 AAA/Watch Neg AAA
Preferred Term Securities X Ltd. A-2 AAA/Watch Neg AAA
Preferred Term Securities X Ltd. A-3 AAA/Watch Neg AAA
Preferred Term Securities XI Ltd. A-1 AAA/Watch Neg AAA
Preferred Term Securities XI Ltd. A-2 AAA/Watch Neg AAA
Preferred Term Securities XII Ltd A-1 AAA/Watch Neg AAA
Preferred Term Securities XII Ltd A-2 AAA/Watch Neg AAA
Preferred Term Securities XII Ltd A-3 AAA/Watch Neg AAA
Preferred Term Securities XII Ltd A-4 AAA/Watch Neg AAA
Preferred Term Securities XIII A-1 AAA/Watch Neg AAA
Preferred Term Securities XIII A-2 AAA/Watch Neg AAA
Preferred Term Securities XIII A-3 AAA/Watch Neg AAA
Preferred Term Securities XIII A-4 AAA/Watch Neg AAA
Preferred Term Securities XIV Ltd A-1 AAA/Watch Neg AAA
Preferred Term Securities XIV Ltd A-2 AAA/Watch Neg AAA
Preferred Term Securities XIX Ltd A-1 AAA/Watch Neg AAA
Preferred Term Securities XIX Ltd A-2 AAA/Watch Neg AAA
Preferred Term Securities XV Ltd. A-1 AAA/Watch Neg AAA
Preferred Term Securities XV Ltd. A-2 AAA/Watch Neg AAA
Preferred Term Securities XV Ltd. A-3 AAA/Watch Neg AAA
Preferred Term Securities XVI Ltd A-1 AAA/Watch Neg AAA
Preferred Term Securities XVI Ltd A-2 AAA/Watch Neg AAA
Preferred Term Securities XVI Ltd A-3 AAA/Watch Neg AAA
Preferred Term Securities XVII A-1 AAA/Watch Neg AAA
Preferred Term Securities XVII A-2 AAA/Watch Neg AAA
Preferred Term Securities XVIII A-1 AAA/Watch Neg AAA
Preferred Term Securities XVIII A-2 AAA/Watch Neg AAA
Preferred Term Securities XX Ltd. A-1 AAA/Watch Neg AAA
Preferred Term Securities XX Ltd. A-2 AAA/Watch Neg AAA
Preferred Term Securities XXI Ltd A-1 AAA/Watch Neg AAA
Preferred Term Securities XXI Ltd A-2 AAA/Watch Neg AAA
Preferred Term Securities XXII A-1 AAA/Watch Neg AAA
Preferred Term Securities XXII A-2 AAA/Watch Neg AAA
Preferred Term Securities XXIII A-1 AAA/Watch Neg AAA
Preferred Term Securities XXIII A-2 AAA/Watch Neg AAA
Preferred Term Securities XXIII A-FP AAA/Watch Neg AAA
Preferred Term Securities XXIV A-1 AAA/Watch Neg AAA
Preferred Term Securities XXIV A-2 AAA/Watch Neg AAA
Preferred Term Securities XXV Ltd A-1 AAA/Watch Neg AAA
Preferred Term Securities XXV Ltd A-2 AAA/Watch Neg AAA
Preferred Term Securities XXVI A-1 AAA/Watch Neg AAA
Preferred Term Securities XXVI A-2 AAA/Watch Neg AAA
Preferred Term Securities XXVII A-1 AAA/Watch Neg AAA
Preferred Term Securities XXVII A-2 AAA/Watch Neg AAA
Preferred Term Securities XXVIII A-1 AAA/Watch Neg AAA
Preferred Term Securities XXVIII A-2 AAA/Watch Neg AAA
Regional Diversified Fndng 2004-1 A-1 AAA/Watch Neg AAA
Ltd.
Regional Diversified Fndng 2004-1 A-2 AAA/Watch Neg AAA
Ltd.
Soloso CDO 2005-1 Ltd. A-1L AAA/Watch Neg AAA
Soloso CDO 2005-1 Ltd. A-1LA AAA/Watch Neg AAA
Soloso CDO 2005-1 Ltd. A-1LB AAA/Watch Neg AAA
Soloso CDO 2005-1 Ltd. A-2L AA-/Watch Neg AA-
Soloso CDO 2007-1 Ltd. A-1LA AAA/Watch Neg AAA
Soloso CDO 2007-1 Ltd. A-1LB AAA/Watch Neg AAA
Taberna Preferred Fdg VII Ltd. A-1LA AAA/Watch Neg AAA
Taberna Preferred Fdg VII Ltd. A-1LB AAA/Watch Neg AAA
Taberna Preferred Fdg VII Ltd. A-2LA AA/Watch Neg AA
Taberna Preferred Fdg VII Ltd. A-2LB AA/Watch Neg AA
Taberna Preferred Fdg VII Ltd. A-3L BBB+/Watch Neg BBB+
Taberna Preferred Fdg VII Ltd. B-1L BB/Watch Neg BB
Taberna Preferred Fdg VII Ltd. B-2L CCC/Watch Neg CCC
Taberna Preferred Fdg VII Ltd. C-1(combo) BB/Watch Neg BB
Taberna Preferred Fdg VII Ltd. C-2(combo) A/Watch Neg A
TABERNA Preferred Funding I Ltd. A-1A AAA/Watch Neg AAA
TABERNA Preferred Funding I Ltd. A-1B AAA/Watch Neg AAA
TABERNA Preferred Funding I Ltd. A-2 AAA/Watch Neg AAA
TABERNA Preferred Funding I Ltd. B-1 AA/Watch Neg AA
TABERNA Preferred Funding I Ltd. B-2 AA/Watch Neg AA
TABERNA Preferred Funding I Ltd. C-1 BBB+/Watch Neg BBB+
TABERNA Preferred Funding I Ltd. C-2 BBB+/Watch Neg BBB+
TABERNA Preferred Funding I Ltd. C-3 BBB+/Watch Neg BBB+
TABERNA Preferred Funding I Ltd. D BBB-/Watch Neg BBB-
TABERNA Preferred Funding I Ltd. E BB+/Watch Neg BB+
TABERNA Preferred Funding I Ltd. Series I BBB+/Watch Neg BBB+
TABERNA Preferred Funding I Ltd. Series II BBB+/Watch Neg BBB+
TABERNA Preferred Funding I Ltd. Series III BB+/Watch Neg BB+
TABERNA Preferred Funding I Ltd. Series IV BBB-/Watch Neg BBB-
TABERNA Preferred Funding I Ltd. Series V AAA/Watch Neg AAA
TABERNA Preferred Funding I Ltd. Series VI AAA/Watch Neg AAA
TABERNA Preferred Funding II Ltd. A-1A AAA/Watch Neg AAA
TABERNA Preferred Funding II Ltd. A-1B AAA/Watch Neg AAA
TABERNA Preferred Funding II Ltd. A-1C AAA/Watch Neg AAA
TABERNA Preferred Funding II Ltd. A-2 AA/Watch Neg AA
TABERNA Preferred Funding II Ltd. B A+/Watch Neg A+
TABERNA Preferred Funding II Ltd. C-1 BB+/Watch Neg BB+
TABERNA Preferred Funding II Ltd. C-2 BB+/Watch Neg BB+
TABERNA Preferred Funding II Ltd. C-3 BB+/Watch Neg BB+
TABERNA Preferred Funding II Ltd. D B+/Watch Neg B+
TABERNA Preferred Funding II Ltd. E-1 CCC/Watch Neg CCC
TABERNA Preferred Funding II Ltd. E-2 CCC/Watch Neg CCC
TABERNA Preferred Funding II Ltd. F CCC-/Watch Neg CCC-
TABERNA Preferred Funding II Ltd. I Comb CCC/Watch Neg CCC
TABERNA Preferred Funding II Ltd. II Comb BB+/Watch Neg BB+
TABERNA Preferred Funding II Ltd. III Comb A+/Watch Neg A+
TABERNA Preferred Funding III Ltd A-1A AAA/Watch Neg AAA
TABERNA Preferred Funding III Ltd A-1B AAA/Watch Neg AAA
TABERNA Preferred Funding III Ltd A-1C AAA/Watch Neg AAA
TABERNA Preferred Funding III Ltd A-2A AAA/Watch Neg AAA
TABERNA Preferred Funding III Ltd A-2B AAA/Watch Neg AAA
TABERNA Preferred Funding III Ltd B-1 AA-/Watch Neg AA-
TABERNA Preferred Funding III Ltd B-2 AA-/Watch Neg AA-
TABERNA Preferred Funding III Ltd C-1 BB+/Watch Neg BB+
TABERNA Preferred Funding III Ltd C-2 BB+/Watch Neg BB+
TABERNA Preferred Funding III Ltd D CCC+/Watch Neg CCC+
TABERNA Preferred Funding III Ltd E CCC-/Watch Neg CCC-
TABERNA Preferred Funding IV Ltd. A-1 AAA/Watch Neg AAA
TABERNA Preferred Funding IV Ltd. A-2 AAA/Watch Neg AAA
TABERNA Preferred Funding IV Ltd. A-3 AAA/Watch Neg AAA
TABERNA Preferred Funding IV Ltd. B-1 AA/Watch Neg AA
TABERNA Preferred Funding IV Ltd. B-2 AA/Watch Neg AA
TABERNA Preferred Funding IV Ltd. C-1 BB+/Watch Neg BB+
TABERNA Preferred Funding IV Ltd. C-2 BB+/Watch Neg BB+
TABERNA Preferred Funding IV Ltd. C-3 BB+/Watch Neg BB+
TABERNA Preferred Funding IV Ltd. D-1 CCC+/Watch Neg CCC+
TABERNA Preferred Funding IV Ltd. D-2 CCC+/Watch Neg CCC+
TABERNA Preferred Funding IV Ltd. E CCC-/Watch Neg CCC-
Taberna Preferred Funding IX Ltd. A-1LA AAA/Watch Neg AAA
Taberna Preferred Funding IX Ltd. A-1LAD AAA/Watch Neg AAA
Taberna Preferred Funding IX Ltd. A-1LB AAA/Watch Neg AAA
Taberna Preferred Funding IX Ltd. A-2LA AA+/Watch Neg AA+
Taberna Preferred Funding IX Ltd. A-2LB AA/Watch Neg AA
Taberna Preferred Funding IX Ltd. A-3LA A/Watch Neg A
Taberna Preferred Funding IX Ltd. A-3LB A-/Watch Neg A-
Taberna Preferred Funding IX Ltd. B-1L BBB/Watch Neg BBB
Taberna Preferred Funding IX Ltd. B-2L BB/Watch Neg BB
Taberna Preferred Funding V Ltd. A-1LA AAA/Watch Neg AAA
Taberna Preferred Funding V Ltd. A-1LAD AAA/Watch Neg AAA
Taberna Preferred Funding V Ltd. A-1LB AAA/Watch Neg AAA
Taberna Preferred Funding V Ltd. A-2L AA/Watch Neg AA
Taberna Preferred Funding V Ltd. A-3L B+/Watch Neg B+
Taberna Preferred Funding V Ltd. A-3FV B+/Watch Neg B+
Taberna Preferred Funding V Ltd. A-3FX B+/Watch Neg B+
Taberna Preferred Funding V Ltd. B-1L CCC-/Watch Neg CCC-
Taberna Preferred Funding VI Ltd. A-1A AAA/Watch Neg AAA
Taberna Preferred Funding VI Ltd. A-1B AAA/Watch Neg AAA
Taberna Preferred Funding VI Ltd. A-2 AAA/Watch Neg AAA
Taberna Preferred Funding VI Ltd. B AA/Watch Neg AA
Taberna Preferred Funding VI Ltd. C A/Watch Neg A
Taberna Preferred Funding VI Ltd. D-1 BB/Watch Neg BB
Taberna Preferred Funding VI Ltd. D-2 BB/Watch Neg BB
Taberna Preferred Funding VI Ltd. E-1 CCC/Watch Neg CCC
Taberna Preferred Funding VI Ltd. E-2 CCC/Watch Neg CCC
Taberna Preferred Funding VI Ltd. F-1 CCC-/Watch Neg CCC-
Taberna Preferred Funding VI Ltd. F-2 CCC-/Watch Neg CCC-
Taberna Preferred Funding VI Ltd. Comb Notes CCC-/Watch Neg CCC-
TABERNA Preferred Funding VIII A-1A AAA/Watch Neg AAA
TABERNA Preferred Funding VIII A-1B AAA/Watch Neg AAA
TABERNA Preferred Funding VIII A-2 AAA/Watch Neg AAA
TABERNA Preferred Funding VIII B AA/Watch Neg AA
TABERNA Preferred Funding VIII C A/Watch Neg A
TABERNA Preferred Funding VIII D BBB+/Watch Neg BBB+
TABERNA Preferred Funding VIII E BBB-/Watch Neg BBB-
TABERNA Preferred Funding VIII F B+/Watch Neg B+
Tpref Funding II Ltd. A-1 AAA/Watch Neg AAA
Tpref Funding II Ltd. A-2 AAA/Watch Neg AAA
Tpref Funding III Ltd. A-1 AAA/Watch Neg AAA
Tpref Funding III Ltd. A-2 AAA/Watch Neg AAA
Trapeza CDO I LLC A-1 AAA/Watch Neg AAA
Trapeza CDO I LLC A-2 AAA/Watch Neg AAA
Trapeza CDO II LLC A1A AAA/Watch Neg AAA
Trapeza CDO II LLC A1B AAA/Watch Neg AAA
Trapeza CDO III LLC A1A AAA/Watch Neg AAA
Trapeza CDO III LLC A1B AAA/Watch Neg AAA
Trapeza CDO IV LLC A1A AAA/Watch Neg AAA
Trapeza CDO IV LLC A1B AAA/Watch Neg AAA
Trapeza CDO IX Ltd. A-1 AAA/Watch Neg AAA
Trapeza CDO V Ltd. A1A AAA/Watch Neg AAA
Trapeza CDO V Ltd. A1B AAA/Watch Neg AAA
Trapeza CDO VI Ltd. A-1A AAA/Watch Neg AAA
Trapeza CDO VI Ltd. A-1B AAA/Watch Neg AAA
Trapeza CDO VII Ltd. A-1 AAA/Watch Neg AAA
Trapeza CDO VII Ltd. A-2 AAA/Watch Neg AAA
Trapeza CDO X Ltd. A-1 AAA/Watch Neg AAA
Trapeza CDO X Ltd. A-2 AAA/Watch Neg AAA
Trapeza CDO X Ltd. B A+/Watch Neg A+
Trapeza CDO XI Ltd. A-1 AAA/Watch Neg AAA
Trapeza CDO XI Ltd. A-2 AAA/Watch Neg AAA
Trapeza CDO XI Ltd. A-3 AAA/Watch Neg AAA
Trapeza CDO XI Ltd. B AA/Watch Neg AA
Trapeza CDO XI Ltd. C A-/Watch Neg A-
Trapeza CDO XII Ltd. A-1 AAA/Watch Neg AAA
Trapeza CDO XII Ltd. A-2 AAA/Watch Neg AAA
Trapeza CDO XII Ltd. R AA/Watch Neg AA
Trapeza CDO XIII Ltd. A-1 AAA/Watch Neg AAA
Trapeza CDO XIII Ltd. A-2a AAA/Watch Neg AAA
Trapeza CDO XIII Ltd. A-2b AAA/Watch Neg AAA
Trapeza Edge CDO Ltd. A-1 AAA/Watch Neg AAA
Trapeza Edge CDO Ltd. A-3 AA-/Watch Neg AA-
Tropic CDO I Ltd. A-1L AAA/Watch Neg AAA
Tropic CDO I Ltd. A-2L AAA/Watch Neg AAA
Tropic CDO II Ltd. A-1L AAA/Watch Neg AAA
Tropic CDO II Ltd. A-2L AAA/Watch Neg AAA
Tropic CDO III Ltd. A-1L AAA/Watch Neg AAA
Tropic CDO III Ltd. A-2L AAA/Watch Neg AAA
Tropic CDO IV Ltd. A-1L AAA/Watch Neg AAA
Tropic CDO IV Ltd. A-2L AAA/Watch Neg AAA
Tropic CDO IV Ltd. A-3L AA-/Watch Neg AA-
Tropic CDO V Corp. A-1La1 AAA/Watch Neg AAA
Tropic CDO V Corp. A-1La2 AAA/Watch Neg AAA
Tropic CDO V Corp. A-1Lb AAA/Watch Neg AAA
Tropic CDO V Corp. A-2L AA-/Watch Neg AA-
U.S. Capital Funding IV Ltd. A-1 AAA/Watch Neg AAA
U.S. Capital Funding IV Ltd. A-2 AAA/Watch Neg AAA
U.S. Capital Funding V Ltd. A-1 AAA/Watch Neg AAA
U.S. Capital Funding V Ltd. A-2 AAA/Watch Neg AAA
U.S. Capital Funding V Ltd. A-3 AA/Watch Neg AA
U.S. Capital Funding I Ltd. A-1 AAA/Watch Neg AAA
U.S. Capital Funding I Ltd. A-2 AAA/Watch Neg AAA
U.S. Capital Funding II Ltd. A-1 AAA/Watch Neg AAA
U.S. Capital Funding II Ltd. A-2 AAA/Watch Neg AAA
U.S. Capital Funding III Ltd. A-1 AAA/Watch Neg AAA
U.S. Capital Funding III Ltd. A-2 AAA/Watch Neg AAA
U.S. Capital Funding VI Ltd. A-1 AAA/Watch Neg AAA
U.S. Capital Funding VI Ltd. A-2 AA/Watch Neg AA
Ratings Remaining on Creditwatch Negative
Transaction Class Rating
----------- ----- ------
Kodiak CDO I Ltd. D-1 AA-/Watch Neg
Kodiak CDO I Ltd. D-2 AA-/Watch Neg
Kodiak CDO I Ltd. D-3 AA-/Watch Neg
Kodiak CDO I Ltd. E-1 A-/Watch Neg
Kodiak CDO I Ltd. E-2 A-/Watch Neg
Kodiak CDO I Ltd. F BBB/Watch Neg
Kodiak CDO I Ltd. G B+/Watch Neg
Kodiak CDO I Ltd. H CCC/Watch Neg
Kodiak CDO II Ltd. D A/Watch Neg
Kodiak CDO II Ltd. E BBB/Watch Neg
Kodiak CDO II Ltd. F BB/Watch Neg
Other Outstanding Ratings
Transaction Class Rating
----------- ----- ------
Alesco Pfd Fdg XII Ltd. P-1 Combo AAA
Alesco Pfd Fdg XII Ltd. P-2 Combo AAA
ALESCO Preferred Funding II Principal Certs AAA
Protected Trust I
ALESCO Preferred Funding III Principal A
AAA
Protected Trust I
ALESCO Preferred Funding III Principal B
AAA
Protected Trust I
ALESCO Preferred Funding III Principal C
AAA
Protected Trust I
ALESCO Preferred Funding III Principal D
AAA
Protected Trust I
ALESCO Preferred Funding III Principal E
AAA
Protected Trust I
ALESCO Preferred Funding III Principal F
AAA
Protected Trust I
ALESCO Preferred Funding III Principal G
AAA
Protected Trust I
ALESCO Preferred Funding III Principal H
AAA
Protected Trust I
ALESCO Preferred Funding III Principal J
AAA
Protected Trust I
Alesco Preferred Funding V Principal Pass Cert
AAA
Protected Trust I
ALESCO Preferred Funding VI Principal Series A
AAA
Protected Trust I
ALESCO Preferred Funding VI Principal Series B
AAA
Protected Trust I
ALESCO Preferred Funding VI Principal Series C
AAA
Protected Trust I
ALESCO Preferred Funding VI Principal Series D
AAA
Protected Trust I
ALESCO Preferred Funding VI Principal Series E
AAA
Protected Trust I
ALESCO Preferred Funding VI Principal Series F
AAA
Protected Trust I
ALESCO Preferred Funding VI Principal Series G
AAA
Protected Trust I
ALESCO Preferred Funding VI Principal Series H
AAA
Protected Trust I
ALESCO Preferred Funding VI Principal Series I
AAA
Protected Trust I
ALESCO Preferred Funding VI Principal Series J
AAA
Protected Trust I
ALESCO Preferred Funding VII Principal Series A
AAA
Protected Trust I
ALESCO Preferred Funding VII Principal Series B
AAA
Protected Trust I
ALESCO Preferred Funding VII Principal Series C
AAA
Protected Trust I
ALESCO Preferred Funding VII Principal Series D
AAA
Protected Trust I
ALESCO Preferred Funding VII Principal Series E
AAA
Protected Trust I
InCapS Funding I - Series Trust I Princ Prot
AAA
InCapS Funding I - Series Trust I Princ Prot
AAA
InCapS Funding I - Series Trust I Princ Prot
AAA
InCapS Funding I - Series Trust I Princ Prot
AAA
InCapS Funding I - Series Trust I Princ Prot
AAA
Principal Protected I-Pre TSL I Ltd. Princ Prot
AAA
Principal Protected I-Pre TSL II 12 Prin Prot
AAA
Ltd.
Principal Protected I-Pre TSL II Ltd. Prin Prot
AAA
Principal Protected I-Pre TSL III Prin Prote
AAA
Principal Protected I-Pre TSL III Prin Prote
AAA
Principal Protected I-Pre TSL III Prin Prote
AAA
Principal Protected I-Pre TSL III-A Princ Prot
AAA
Trust
Soloso CDO 2007-1 Ltd. P-1 Combo
AAA
Soloso CDO 2007-1 Ltd. P-2 Combo
AAA
TABERNA Preferred Funding II Ltd. P-1 Comb S
AAA
TABERNA Preferred Funding II Ltd. P-2 Comb S
AAA
TABERNA Preferred Funding II Ltd. P-3 Comb S
AAA
Taberna Preferred Funding V Ltd. B-2L
CC
Taberna Preferred Funding V Ltd. B-2FX
CC
Tropic CDO V Corp. P-1 Combo
AAA
Tropic CDO V Corp. P-2 Combo
AAA
U.S. Capital Funding II - Series A
AAA
Trust I (674807)
U.S. Capital Funding II - Series A
AAA
Trust I (675650)
* S&P Puts Default Ratings on 81 Classes from 59 US RMBS
--------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings to 'D' on
81 classes from 59 U.S. residential mortgage-backed securities
transactions backed by closed-end second-lien mortgage collateral.
Specifically, S&P lowered its ratings on 23 classes to 'D' from
'CC' and 57 classes to 'D' from 'CCC'. In addition, S&P lowered
its rating on class M-1 from Structured Asset Securities Corp.
Mortgage Loan Trust Series 2006-ARS1 to 'D' from 'B-'.
The downgrades reflect the deteriorating performance of the
collateral pools as monthly net losses continue to significantly
outpace monthly excess interest cash flows, resulting in the
complete write-down of the overcollateralization for these deals.
Some of these transactions have already experienced a complete
write-down to the principal balance of other subordinate classes
over the past few months. The affected classes experienced
principal write-downs during the June 2008 remittance period.
As of the June 2008 distribution period, cumulative realized
losses ranged from 3.21% (Terwin Mortgage Trust Series 2004-6SL)
to 30.06% (Structured Asset Securities Corp. Mortgage Loan Trust
Series 2006-ARS1) of the original principal balances, and total
delinquencies ranged from 5.79% (Terwin Mortgage Trust Series
2004-6SL) to 31.77% (ACE Securities Corp. Home Equity Loan Trust
Series 2006-SL1) of the current principal balances. Seasoning for
these transactions ranged from 10 months (Nomura Asset Acceptance
Corp. Alternative Loan Trust Series 2007-S2) to 43 months
(Structured Asset Securities Corp. Series 2004 S-4), and these
transactions have outstanding pool factors ranging from
approximately 7.55% (Terwin Mortgage Trust Series 2004-6SL) to
78.60% (ACE Securities Corp. Home Equity Loan Trust Series 2007-
ASL1).
If delinquencies continue to translate into realized losses, S&P
will likely take further negative rating actions on the
outstanding classes from these transactions.
Subordination, O/C, and excess interest cash flow provide credit
support for these deals. The collateral originally consisted of
30-year fixed-rate, closed-end second-lien mortgage loans secured
by one- to four-family residential properties.
Ratings Lowered
Ace Securities Corp. Home Equity Loan Trust, Series 2006-ASL1
Series 2006-ASL1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-8 00442AAJ2 D CCC
ACE Securities Corp. Home Equity Loan Trust, Series 2006-SL1
Series 2006-SL1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-5 004421VL4 D CCC
Ace Securities Corp. Home Equity Loan Trust, Series 2006-SL2
Series 2006-SL2
Rating
------
Class CUSIP To From
----- ----- -- ----
M-3 004421YF4 D CCC
M-4 004421YG2 D CCC
ACE Securities Corp. Home Equity Loan Trust, Series 2006-SL3
Series 2006-SL3
Rating
------
Class CUSIP To From
----- ----- -- ----
M-3 004423AE9 D CCC
ACE Securities Corp. Home Equity Loan Trust, Series 2007-ASL1
Series 2007-ASL1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-6 00443MAH9 D CC
ACE Securities Corp. Home Equity Loan Trust, Series 2007-SL1
Series 2007-SL1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-4 00442FAF9 D CC
American Home Mortgage Investment Trust 2006-3
Series 2006-3
Rating
------
Class CUSIP To From
----- ----- -- ----
IV-M-5 026929BE8 D CC
Bear Stearns Mortgage Funding Trust 2006-SL1
Series 2006-SL1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-1 07400WAB6 D CCC
Bear Stearns Mortgage Funding Trust 2006-SL2
Series 2006-SL2
Rating
------
Class CUSIP To From
----- ----- -- ----
M-1 07400YAB2 D CCC
Bear Stearns Mortgage Funding Trust 2006-SL3
Series 2006-SL3
Rating
------
Class CUSIP To From
----- ----- -- ----
M-1 07400VAB8 D CCC
Bear Stearns Mortgage Funding Trust 2006-SL4
Series 2006-SL4
Rating
------
Class CUSIP To From
----- ----- -- ----
M-1 07401GAB0 D CCC
Bear Stearns Mortgage Funding Trust 2006-SL6
Series 2006-SL6
Rating
------
Class CUSIP To From
----- ----- -- ----
M-2 07400LAC8 D CCC
M-3 07400LAD6 D CCC
Bear Stearns Mortgage Funding Trust 2007-SL1
Series 2007-SL1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-3 07401PAE4 D CCC
M-4 07401PAF1 D CC
M-5 07401PAG9 D CC
Bear Stearns Mortgage Funding Trust 2007-SL2
Series 2007-SL2
Rating
------
Class CUSIP To From
----- ----- -- ----
M-3 07401RAE0 D CC
M-4 07401RAF7 D CC
Bear Stearns Second Lien Trust 2007-1
Series 2007-1
Rating
------
Class CUSIP To From
----- ----- -- ----
II-M-3 07401WAS8 D CC
II-M-4 07401WAT6 D CC
II-M-5 07401WAU3 D CC
II-M-6 07401WAV1 D CC
III-M-4 07401WBE8 D CC
III-M-5 07401WBF5 D CC
III-M-6 07401WBG3 D CC
C-BASS 2006-SL1
Series 2006-SL1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-6 14983AAJ8 D CCC
CWABS Asset-Backed Certificates Trust 2006-SPS2
Series 2006-SPS2
Rating
------
Class CUSIP To From
----- ----- -- ----
M-4 12667BAE4 D CCC
First Franklin Mortgage Loan Trust 2006-FFA
Series 2006-FFA
Rating
------
Class CUSIP To From
----- ----- -- ----
M5 318340AK2 D CCC
M6 318340AL0 D CCC
First Franklin Mortgage Loan Trust, Series 2007-FFA
Series 2007-FFA
Rating
------
Class CUSIP To From
----- ----- -- ----
M-3 32027AAD1 D CC
First Franklin Mortgage Loan Trust, Series 2007-FFC
Series 2007-FFC
Rating
------
Class CUSIP To From
----- ----- -- ----
M-4 32029HAG7 D CC
B-1 32029HAH5 D CC
B-2 32029HAJ1 D CC
GSAA Home Equity Trust 2006-S1
Series 2006-S1
Rating
------
Class CUSIP To From
----- ----- -- ----
I-M-3 40051CAE7 D CCC
GSAMP Trust 2006-S2
Series 2006-S2
Rating
------
Class CUSIP To From
----- ----- -- ----
M-1 362334HM9 D CCC
GSAMP Trust 2006-S4
Series 2006-S4
Rating
------
Class CUSIP To From
----- ----- -- ----
M-3 36244MAF8 D CCC
MASTR Second Lien Trust 2005-1
Series 2005-1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-4 57644DAE3 D CCC
Morgan Stanley Mortgage Loan Trust 2006-14SL
Series 2006-14SL
Rating
------
Class CUSIP To From
----- ----- -- ----
B-3 61749SAK2 D CCC
Morgan Stanley Mortgage Loan Trust 2007-4SL
Series 2007-4SL
Rating
------
Class CUSIP To From
----- ----- -- ----
B-4 61751PAK3 D CCC
Nomura Asset Acceptance Corporation, Alternative Loan
Trust,
Series 2005-S3
Series 2005-S3
Rating
------
Class CUSIP To From
----- ----- -- ----
B-1 65535VNU8 D CCC
B-2 65535VNV6 D CCC
B-3 65535VPA0 D CCC
Nomura Asset Acceptance Corporation, Alternative Loan Trust,
Series 2005-S4
Series 2005-S4
Rating
------
Class CUSIP To From
----- ----- -- ----
M-5 65535VQV3 D CCC
Nomura Asset Acceptance Corporation, Alternative Loan Trust,
Series 2006-S1
Series 2006-S1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-6 65535VTX6 D CCC
M-5 65535VTW8 D CCC
Nomura Asset Acceptance Corporation, Alternative Loan Trust,
Series 2006-S2
Series 2006-S2
Rating
------
Class CUSIP To From
----- ----- -- ----
M-3 65535YAG7 D CCC
Nomura Asset Acceptance Corporation, Alternative Loan Trust,
Series 2006-S3
Series 2006-S3
Rating
------
Class CUSIP To From
----- ----- -- ----
M-2 65536WAF2 D CCC
Nomura Asset Acceptance Corporation, Alternative Loan Trust,
Series 2006-S5
Series 2006-S5
Rating
------
Class CUSIP To From
----- ----- -- ----
M-1 65538AAC5 D CCC
Nomura Asset Acceptance Corporation, Alternative Loan Trust,
Series 2007-S1
Series 2007-S1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-2 655374AC0 D CC
Nomura Asset Acceptance Corporation, Alternative Loan Trust,
Series 2007-S2
Series 2007-S2
Rating
Class CUSIP To From
----- ----- -- ----
M-3 65538BAD1 D CC
M-4 65538BAE9 D CC
Ownit Mortgage Trust 2006-OT1
Series 2006-OT1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-2 88156AAC8 D CCC
SACO I Trust 2005-5
Series 2005-5
Rating
------
Class CUSIP To From
----- ----- -- ----
I-B-1 785778GE5 D CCC
SACO I Trust 2005-8
Series 2005-8
Rating
------
Class CUSIP To From
----- ----- -- ----
B-1 785778LJ8 D CCC
SACO I Trust 2005-9
Series 2005-9
Rating
------
Class CUSIP To From
----- ----- -- ----
M-6 785778MT5 D CCC
SACO I Trust 2006-10
Series 2006-10
Rating
------
Class CUSIP To From
----- ----- -- ----
M-2 785812AC2 D CCC
M-3 785812AD0 D CCC
SACO I Trust 2006-4
Series 2006-4
Rating
Class CUSIP To From
M-3 785778RG8 D CCC
SACO I Trust 2006-5
Series 2006-5
Rating
------
Class CUSIP To From
----- ----- -- ----
I-M-4 785811AH3 D CCC
II-M-2 785811AM2 D CCC
SACO I Trust 2006-7
Series 2006-7
Rating
------
Class CUSIP To From
----- ----- -- ----
M-1 78577PAB9 D CCC
SACO I Trust 2007-1
Series 2007-1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-4 785814AF1 D CC
SACO I Trust 2007-2
Series 2007-2
Rating
------
Class CUSIP To From
----- ----- -- ----
M-4 78581NAF9 D CCC
SACO I Trust, 2005-WM2
Series 2005-WM2
Rating
------
Class CUSIP To From
----- ----- -- ----
M-5 785778KC4 D CCC
SACO I Trust, 2005-WM3
Series 2005-WM3
Rating
------
Class CUSIP To From
----- ----- -- ----
M-3 785778LX7 D CCC
Structured Asset Securities Corporation
Series 2004-S4
Rating
------
Class CUSIP To From
----- ----- -- ----
B1 86359BM81 D CCC
Structured Asset Securities Corp. Mortgage Loan Trust 2005-S5
Series 2005-S5
Rating
------
Class CUSIP To From
----- ----- -- ----
M6 86359DPU5 D CCC
Structured Asset Securities Corp. Mortgage Loan Trust 2005-S7
Series 2005-S7
Rating
------
Class CUSIP To From
----- ----- -- ----
M9 863576EC4 D CCC
Structured Asset Securities Corp. Mortgage Loan Trust 2006-ARS1
Series 2006-ARS1
Rating
------
Class CUSIP To From
----- ----- -- ----
M1 86358LAB6 D B-
M2 86358LAC4 D CCC
Structured Asset Securities Corporation Mortgage Loan Trust
2006-S3 Trust
Series 2006-S3
Rating
------
Class CUSIP To From
----- ----- -- ----
M5 86359WAG0 D CCC
Structured Asset Securities Corp. Mortgage Loan Trust 2006-S4
Series 2006-S4
Rating
------
Class CUSIP To From
----- ----- -- ----
M8 86363AAJ6 D CCC
Terwin Mortgage Trust 2004-6SL
Series 2004-6SL
Rating
------
Class CUSIP To From
----- ----- -- ----
B-3 881561HG2 D CCC
Terwin Mortgage Trust 2005-11
Series 2005-11
Rating
------
Class CUSIP To From
----- ----- -- ----
I-B-2a 881561YJ7 D CCC
I-B-2b 881561C28 D CCC
Terwin Mortgage Trust 2005-5SL
Series 2005-5SL
Rating
------
Class CUSIP To From
----- ----- -- ----
B-3 881561RU0 D CCC
Terwin Mortgage Trust 2006-1
Series 2006-1
Rating
------
Class CUSIP To From
----- ----- -- ----
II-M-2 881561J54 D CC
Terwin Mortgage Trust 2006-4SL
Series 2006-4SL
Rating
------
Class CUSIP To From
----- ----- -- ----
M-2 881561X41 D CCC
Terwin Mortgage Trust 2006-6
Series 2006-6
Rating
------
Class CUSIP To From
----- ----- -- ----
I-M-2 8815612X1 D CCC
Terwin Mortgage Trust 2006-8
Series 2006-8
Rating
------
Class CUSIP To From
----- ----- -- ----
I-M-1 88156UAD2 D CCC
* S&P Chips Ratings on Seven Classes from Three CDO Transactions
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on nine
classes from three collateralized debt obligation transactions:
Furlong Synthetic ABS CDO 2006-1 Ltd., Octans II CDO Ltd., and
Stack 2007-1 Ltd. Seven of the lowered ratings remain on
CreditWatch negative and two of the lowered ratings were removed
from CreditWatch negative.
The three affected CDO transactions are collateralized in large
part by mezzanine tranches of residential mortgage-backed
securities and other structured finance transactions. S&P
downgraded the affected classes previously, and the rating actions
reflect continued deterioration in the credit quality of the RMBS
securities backing the transactions.
Ratings Lowered and Remaining on Creditwatch Negative
Rating
------
Transaction Class To From
----------- ----- -- ----
Stack 2007-1 Ltd. A-1A CCC/Watch Neg BB/Watch Neg
Stack 2007-1 Ltd. A-1B CCC-/Watch Neg CCC/WatchNeg
Furlong Synthetic
ABSCDO 2006-1 SrSec CCC+/Watch Neg BB/Watch Neg
Octans II CDO Ltd. A-1Swap CCC+srp/WatchNeg BBsrp/WatchNeg
Octans II CDO Ltd. A-2 CCC-/Watch Neg B-/Watch Neg
Octans II CDO Ltd. A-3A CCC-/Watch Neg B-/Watch Neg
Octans II CDO Ltd. A-3B CCC-/Watch Neg B-/Watch Neg
Ratings Lowered and Removed from Creditwatch Negative
Rating
------
Transaction Class To From
----------- ----- -- ----
Octans II CDO Ltd. B CC CCC/Watch Neg
Octans II CDO Ltd. C-1 CC CCC-/Watch Neg
* Fitch Says Mortgage Insurance Industry's Woes Could Get Worse
---------------------------------------------------------------
Fitch Ratings said that the mortgage insurance industry's troubles
are not over and may, in fact, get worse before they improve.
Fitch, as part of a special report released that updates the
agency's June 2007 special report on mortgage insurer
delinquencies, uses data and analysis that extends mortgage
insurance origination and performance trends with the benefit of a
further year of loan-level data. For a number of key mortgage
insurers last year was a year of rapid growth, and this 2007
vintage will increasingly account for losses in 2008 and 2009 that
will stress the mortgage insurers' balance sheets over the
intermediate term.
'The mortgage insurance industry underestimated both the scope and
severity of the decline in residential mortgage markets that
became increasingly acute in 2007,' Fitch said.
'Initial industry optimism over increased demand and better
premiums in early 2007 reversed over the second half of the year,
and by the early fourth quarter the industry was significantly
tightening underwriting guidelines to limit damage from ongoing
poor mortgage origination standards and the prospect of
substantial and widespread housing price declines.'
* Moody's Says Credit Quality Trends Stay Negative in 2nd Quarter
-----------------------------------------------------------------
Credit quality trends remained fairly negative in the second
quarter with an upgrade-downgrade ratio of only 0.33, Moody's
Investors Service reported.
Although the upgrade-downgrade ratio increased slightly in the
second quarter as compared to the previous quarter, there was an
increase in both the absolute number of issuers downgraded and
issuers holding negative outlooks, Moody's said.
"Despite the recent decline in credit quality and increase in
negative outlooks, the distribution of rating reviews and outlooks
has been fairly stable over the previous two years," Jennifer
Tennant, Moody's analyst, says.
Looking ahead, Ms. Tennant said the environment continues to be
cautious, with a greater percentage of debt issuers on review for
downgrade than upgrade, as well as more issuers holding negative
outlooks than positive ones.
In all, watch for downgrades have hovered around 4% of all issuers
while watch for upgrades have consistently been in the range of
1%-2.5% of issuers. About 6%-7% of issuers currently hold
positive outlooks.
Specifically, for the second quarter, Moody's reported that 4.2%
of rated issuers were on review for downgrade, compared with 1.9%
on review for upgrade. Similarly, 13.9% of rated issuers were
given negative outlooks, compared with 5.6% with positive
outlooks.
Continuing the trend from the previous quarter, the credit outlook
for investment-grade issuers was slightly more positive than for
speculative-grade issuers. Both categories, however, had more
issuers on review for downgrade than for upgrade.
"Investment-grade issuers show more stability, while speculative-
grade issuers were more likely than investment-grade issuers to
experience downgrades and upgrades in the second quarter of 2008.
Speculative-grade issuers were also much more likely to hold
negative outlooks," Ms. Tennant added.
Regardless of the region, there are more issuers on review for
downgrade than for upgrade, although the U.S. and Canada have the
largest disparity, Moody's said. The U.S. and Canada also have
the largest percentage of issuers with negative outlooks.
On a positive note, Europe, Asia-Pacific and Middle East and
Africa have the largest percentages of issuers with positive
outlooks and the Asia-Pacific and Latin American regions had
approximately the same number of upgrades and downgrades in the
second quarter of 2008.
The quality of ratings actions and outlooks differed by industry
and underscore the economic impact of recent events that include
rising gas prices, downgrades of financial guarantors, and
continued problems in residential real estate markets.
During the second quarter Airlines, Non-Life Insurance, Real
Estate & Construction and Media and Entertainment had the largest
percentages of issuers experiencing downgrades. The Airline and
Building Materials industries have substantially more issuers with
negative outlooks than positive ones.
* Moody's Says Investor-Owned Electric Utility Sector is Stable
---------------------------------------------------------------
The U.S. investor-owned electric utility sector's rating outlook
remains stable, but credit quality could deteriorate if companies
don't strengthen their balance sheets to withstand rising business
and operating risks, Moody's Investors Service said in a new
industry outlook report.
"The fundamentals underlying the U.S. investor-owned utility
sector remain intact," Jim Hempstead, Moody's vice president and
author of the report, said. "The most important of these is the
relative supportiveness of the regulatory environment, and state
regulators continue to authorize timely financial relief for
prudently incurred costs and investments, a primary driver behind
our stable outlook."
Managing these regulatory relationships and financing
significantly large capital expenditure plans with a balance of
both debt and equity will be crucial for credit ratings over the
longer-term horizon, the Moody's report mentioned. Pressures are
building with rising operating costs, especially for fuel
commodities, and a significant need to invest capital into an
aging infrastructure.
The pace of utilities' requests for rate relief is increasing,
raising the possibility of a consumer, legislative or regulatory
backlash in the future. In addition, the rating agency reports
that new legislative proposals regarding carbon emissions
represent a material long-term credit risk for the sector due to
the uncertainty over the framework, implementation and effect on
costs to consumers.
"The prospect for new environmental emission legislation
represents the single biggest emerging issue on the horizon," Mr.
Hempstead said, "due to the sheer volume of the sector's carbon
dioxide emissions."
He said Moody's remains indifferent as to which carbon dioxide
emission reduction method is ultimately adopted, whether it be a
straight tax regime or a cap-and-trade system, although, from a
credit perspective, Moody's views the cap-and-trade system as
being more complex and less transparent than a straight tax.
"Although we incorporate a view that the costs associated with any
potential legislation will be borne by consumers, our concern is
that the potential size of the costs could result in residual
pressure on other base-rate relief needs," Mr. Hempstead said.
Much uncertainty exists and it may be many years before any new
legislation is actually implemented, so the credit risks are
longer-term in Moody's view and are not expected to impact
existing ratings or rating outlooks.
"We incorporate a view that utility management teams will
proactively adjust their corporate finance policies and strengthen
their balance sheets to address this potential risk on the front
end of the implementation cycle," Mr. Hempstead said, "which
leaves them plenty of time to advocate their positions with
legislators."
Moody's reports that the sector's key financial credit metrics
remain relatively steady, evidence of the regulatory rate relief
occurring in a reasonably timely manner. Utilities also continue
to enjoy relatively consistent access to capital and available
liquidity remains adequate over the near term, both of which are
viewed as a credit positive given recent market turmoil.
* Moody's: U.S. Municipal Credit Conditions Stay Positive in Q2
---------------------------------------------------------------
U.S. municipal credit conditions remained positive during the
second quarter of 2008, while still showing the effects of
weakened economic growth and credit market difficulties that
characterized the first quarter's rating changes, according to a
new report by Moody's Investors Service.
"Reflecting a decidedly weaker economic environment, municipal
issuers have had to address shortfalls that emerged during fiscal
2008, as well as budget gaps for fiscal year 2009," Ted Hampton,
Moody's vice president and author of the report, said. "Sales and
corporate tax revenues are coming in below forecasts as taxpayers
cut back on spending, and income tax performance has also been
affected."
The ratio of upgrades to downgrades in the second quarter rose to
3.8-to-1 from the prior quarter's 3.1-to-1. The ratio was as high
as 6-to-1 in the third quarter of last year. The ratio of par
value upgraded to the amount downgraded fell to 2.6-to-1 from the
prior quarter's 3.6-to-1.
"The ratio, the lowest since the second quarter of 2007, was
substantially below the 9.8-to-1 average for the prior six
quarters," Mr. Hampton said. "There was no single upgrade during
the quarter that affected as much as $5 billion of debt, and total
par amount upgraded, at $27.5 billion, was little changed from the
prior quarter while the amount downgraded rose 41% to
$10.7 billion."
He said downgrades of Detroit and its water and sewer systems
"were the quarter's most significant actions" based on the
approximately $7.3 billion of debt affected. Ratings on the
city's debt fell to Baa3 from Baa2 (for the general obligation
unlimited tax pledge securities and pension funding certificates
of participation) and to Ba1 from Baa3 (for the general obligation
limited tax pledge securities).
The upgrade of Florida's Citizens Property Insurance Corporation
High-Risk Account debt to A2 from A3 constituted the quarter's
largest positive rating change, affecting $4.8 billion of bonds.
The second-largest was the upgrade of $4.78 billion of Combined
Utility System water and sewer revenue obligations of the City of
Houston, Texas. Ratings were raised to Aa3 from A1 on the system's
"junior-lien" prior bonds and to A1 from A2 on its first-lien
bonds.
The quarter's third-largest action was the upgrade of the North
Carolina Municipal Power Agency Number 1's Catawba Electric
Revenue Bonds to A2 from A3, affected $1.78 billion of debt.
Within the tax-backed sector, which includes state and local
government issuers, the ratio of upgrades to downgrades improved
to 7.9-to-1 from a low of 4.1-to-1 the prior quarter. In the
revenue enterprise sector, which includes debt issued for
hospitals, housing, universities and infrastructure, the ratio
fell to 0.96-to-1, the lowest level since the third quarter of
2005.
"In both sectors combined, there were a total of 201 rating
revisions in the quarter, a figure slightly below the 210 average
for the previous six quarters," said Mr. Hampton.
The report, "U.S. Public Finance Second-Quarter 2008 Rating
Revisions," includes figures and appendices that present and
illustrate Moody's quarterly public finance group rating
revisions.
* Inflation's Comeback is Contributing to Market Woes, S&P Says
---------------------------------------------------------------
Inflation vigilance is on the rise, following a benign period when
central banks did an excellent job of managing inflation
expectations since 2002, said an article published by Standard &
Poor's. The article, which is titled "Global Credit Comment:
Inflation Bares Its Fangs, Adding To Credit Snarl (Premium)," says
this risk is of particular concern to fixed-income investors,
where sensitivity to inflation runs high.
"Among borrowers, rising price pressure is adding to the squeeze
for both households and corporations," noted Diane Vazza, head of
Standard & Poor's Global Fixed Income Research Group. "Slowing
growth in disposable income, rising layoff pressures, and greater
outlays for items ranging from food to utilities are crimping
household spending--a mainstay and principal macroeconomic driver
of demand."
For businesses in particular, the downside of higher inflation is
likely to result in compressed corporate margins, as inflation
raises input prices without the ability to pass the increase on
fully to the end-user amid an economic slowdown. Furthermore,
rising inflation is likely to apply upward pressure on yields and
spreads while lowering nominal returns for holders of corporate
bonds vis-à-vis other securities that offer a hedge against
inflation.
* S&P: Risk in Rating Mix Sets the Stage for Escalating Defaults
----------------------------------------------------------------
The U.S. nonfinancial ratings mix has deteriorated fairly steadily
over the last 20 years, with high-yield's share of nonfinancial
issuers rising to 64% from 43% between 1988 and 2007, said an
article published by Standard & Poor's. The article, which is
titled "U.S. Credit Comment: Toxic Nonfinancial Ratings Mix
Pressures Default Risk," says that this has left the bond market
in unprecedented territory at a time when the economic growth and
earning prospects are dampening, lending conditions are
tightening, and default pressure is rising.
"The situation, though somewhat reminiscent of last cycles, has
some distinguishing traits," said Diane Vazza, head of Standard &
Poor's Global Fixed Income Research Group. "For one, credit
markets in general have lead the downturn, with significant price
shock and extreme spread widening starting in July of last year in
both the high-yield bond market and leveraged loan market and
securitized markets locking down." The extent of risk in the
ratings mix is also more pronounced, with 11% of nonfinancial
firms in the U.S. rated 'B-' or lower.
"This does not bode well for defaults based on the historical
experience," Ms. Vazza added. The one-year average transition to
default for nonfinancials between 1981 and 2007 was 10% for 'B-'
rated firms and 26% for 'CCC' and below rated firms. Moreover,
downward transition rates tend to increase above the
aforementioned averages for the 'CCC' category prior to and
during recessions as credit quality becomes less stable.
* S&P Says US Health Care is Fighting Off Some Economic Weakness
----------------------------------------------------------------
The U.S. corporate health care sector is on track to fulfill
favorable start-of-the-year expectations in 2008, according to the
article "Industry Report Card: Prognosis For North American Health
Care Companies Is More Guarded," published by Standard &
Poor's Ratings Services.
"There have been 86% more upgrades than downgrades," said Standard
& Poor's credit analyst Michael Kaplan. "Industry resistance to
general economic weakness and more measured debt use have helped a
broad spectrum of health care companies to largely sidestep
economic volatility and turmoil in credit markets."
The essential nature of most health care demand makes industry
players less sensitive to the business cycle and sharp increases
in energy and commodity prices than many other sectors. Still,
credit prospects are becoming more clouded by looming liquidity
issues as the general credit storm persists. This is evidenced by
negative outlooks and CreditWatch listings that now outnumber
positive outlooks two to one.
* Allegiance Capital Expands Scope, Forms Special Situations Div.
-----------------------------------------------------------------
Allegiance Capital Corporation created a new division to handle
financial restructuring, distressed mergers and acquisitions, and
special situations for the company's middle market client base.
Pamela L. Ragon, vice president, will lead Allegiance Capital's
new Special Situations Division.
"Since the economic downturn, more than a few business owners are
facing difficult challenges that Allegiance Capital is skilled at
resolving," David Lonsdale, president and managing director, said.
"Our track record of selling companies at premium prices combined
with the ability to attract interest from a global investor pool
makes Allegiance Capital the ideal investment bank for owners of
distressed companies looking for fast, knowledgeable solutions in
a tough business climate."
As a former chief financial officer, Ms. Ragon has guided
distressed companies through recapitalization and restructuring
initiatives - both in and out of bankruptcy. Her background in
business valuation provides the expertise needed to determine what
makes a company valuable to prospective buyers.
"When facing a financial crisis, middle market companies want the
same experienced leadership that is available to Fortune 100
corporations," Ms. Ragon noted. "Allegiance Capital's depth and
breadth of financial expertise helps clients refinance debt,
divest assets, source new investment capital or find a buyer for
the business. We strive for a total solution that will exceed the
expectations of business owners and other stakeholders."
With a team of investment bankers, Allegiance Capital offers a
variety of creative resolutions for sensitive business issues.
"We recognize value that others may well overlook," Ms. Ragon
pointed out. "Our experience with hundreds of middle market
companies means that we can quickly spot hidden value and
recognize opportunities for synergies with strategic buyers."
"There is never a one-size fits all solution," Mr. Lonsdale
cautions. "By utilizing a multi-faceted problem solving approach,
we will come up with a variety of possible solutions and help
clients select the best alternative. Often, immediate action is
needed to provide some financial breathing room. Once the
business is financially stable, time can be spent strategically
marketing the company, taking advantage of Allegiance Capital's
vast network of middle market business contacts."
"At Allegiance Capital, the goals of our clients always come
first," Lonsdale said. "Our Special Situations Division is
another step toward providing top level service and Wall Street
expertise to our clients."
About Allegiance Capital
Allegiance Capital Corporation -- http://www.allcapcorp.com/-- is
a full-service investment banking firm specializing in the middle
market or companies with revenue from $20 million to $500 million,
with offices in Dallas, New York, Minneapolis/St. Paul, Vancouver,
British Columbia, Shanghai and Tel Aviv. Through its worldwide
network, Allegiance Capital assists companies in every aspect of
selling and financing a business, including debt restructuring,
mezzanine financing, management buyouts, strategic partnering,
consulting and other related services.
* BOOK REVIEW: Leveraged Management Buyouts:
Causes and Consequences
--------------------------------------------
Author: Yakov Ahihud, editor
Publisher: Beard Books
Softcover: 284 pages
List Price: US$34.95
Order your personal copy at
http://amazon.com/exec/obidos/ASIN/1587981386/internetbankrupt
This book is the outcome of a 1988 conference organized by the
Salomon Brothers Center for the Study of Financial Institutions
at the Stern School of Business of New York University. It
consists of 12 papers presented at that conference, papers that
represented the first ever in-depth study of leveraged
management buyouts (MBO).
MBOs were a hot topic in the late 1980s, as a rapidly growing
reorganization phenomenon closely tied to junk bonds. Debate
over MBOs centered around two uncertainties: fairness to
shareholders and possible conflicts of interest between
management/acquirer and shareholders, and doubts about the
future performance of companies acquired through MBOs.
The authors' objective was to expand the understanding of
academics, practitioners, and policymakers of the causes and
consequences of MBOs and to contribute to data on appropriate
policies for legislation and regulation regarding them.
The first of three sections reviews characteristics and
consequences of MBOs. The first chapter, by the editor, Yakov
Ahihud, surveys the empirical evidence on the effects of MBO
announcements on stock and bond prices.
He considers arguments for and against mandating an auction of
the MBO target firm and analyzes points of view about and
evidence on conflicts of interest between management and
shareholders. He evaluates motivations for MBOs, such as tax
benefits and improved incentives.
The second chapter compares and contrasts the characteristics of
corporations subject to MBOs with other corporations. Two
authors then look into performance of target firms before and
after buyouts.
One interviewed CEOs of corporations acquired by MBO about their
motivations for and changes in managerial strategy after the
MBO. Both authors found that buyouts were followed by
significant improvements in firms' performance.
The focal points of the second section were legal and tax
issues. The first chapter discusses the role of management in
MBOs, potential conflict with shareholder interests, and the
matter of fairness. They analyzed court decisions and the
proposed remedies, and evaluated the legal consequences of
various business practices applied in MBOs.
The second chapter discusses the sources of tax benefits and
various financing methods, with a focus on employee stock option
plans.
The final chapter concluded that other reorganization strategies
could yield the same tax benefits as MBOs.
The final section presents a lively debate on policy and
legislative options to resolve issues that arise from MBOs.
Authors include a U.S. congressman, an SEC commissioner and
professors from Harvard Law School and the School of Law at
Stanford University. Their viewpoints are discussed
compellingly and are often in opposition. One author avowed
that MBOs were already over-regulated while another argued for
the need of an auction for the corporation once an MBO proposal
was announced.
Opinion on the two main questions addressed by the book was
varied. With regard to fairness, while shareholders received an
average of 30-40 percent over market price for their shares,
some were prevented from reaping the benefits of shrewd post-
buyout strategies.
With regard to future performance clouded by heavy debt, some
MBOs failed, those that "may well have encountered difficulties
as a result of the financial pressures imposed by leveraged
transactions." More were successful, however, becoming
"reinvigorated companies that have regained a sharp competitive
edge as a result of an MBO."
Anecdotal evidence suggested the successes were due to
management's desisting from "managing so they can get to the
country club by 3:00 p.m."
Yakov Amihud is the Ira Leon Rennert Professor of
Entrepreneurial Finance at the Stern School of Business, New
York University.
*********
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
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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
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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.
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at 240/629-3300.
*** End of Transmission ***