/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/080807.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, August 7, 2008, Vol. 12, No. 187 Headlines AB MERGER SUB: Moody's Assigns B1 Probability of Default Rating ACCURIDE CORP: Moody's Lowers CF Ratings to B2; Outlook Negative ALTIERI HOMES: Cuts Staff, Cancels Projects to Avert Bankruptcy ARMSTRONG WORLD: Asks Court to Close Chapter 11 Case ARMSTRONG WORLD: Nitram, Desseaux Want Chapter 11 Cases Closed ASARCO LLC: Parties Balk at Intercompany Claim-Filing Extension BALTIMORE HOTEL: S&P Affirms 'BB' Rating on $53MM 2006B Bonds BICENT POWER: S&P Removes B, BB Ratings from CW Negative BLACK GAMING: Moody's Cuts Corporate Family Rating to Caa3 BONNETTE & PICARD: Case Summary & Three Largest Unsec. Creditors BOSCOV'S INC: DIP Funding Gets Initial OK, 1st-Day Motions Granted BRUCE PLASTICS: Various Assets to be Auctioned August 20 C19-1 SHOTWELL: Voluntary Chapter 11 Case Summary CABLEVISION SYSTEMS: Mulls Strategic Alternatives, to Spinoff Biz CABLEVISION SYSTEMS: S&P Says Strategic Initiative Won't Ratings CAPTEC FRANCHISE: Fitch Puts 'B/DR1' Rated Trust Under Neg. Watch CARIBBEAN RESTAURANTS: Moody's Confirms CF Rating at Caa1 CENTRAL ILLINOIS: Court Converts Case to Chapter 7 Liquidation CHARYS HOLDING: Files Reorganization Plan and Disclosure Statement CNL FUNDING: Fitch Puts 'CC/DR4' Note Rating Under Negative Watch CONSOLIDATED FINANCIAL: Case Summary & 20 Largest Unsec. Creditors CONTINENTAL AIRLINES: Reports July 2008 Aviation Performance COUNTRYWIDE FINANCIAL: S&P Gives "Above Average" Rating on Unit CREDIT SUISSE: S&P Cuts Ratings on Three Classes of Notes to CCC CSK AUTO: S&P Withdraws 'B-' Rating After O'Reilly Acquisition DELPHI CORP: GM Says Delphi-Related Charges Reach $11 Billion DELPHI CORP: Court Rejects Appaloosa Bid to Dismiss Lawsuit DELPHI CORP: Court Extends Plan-Filing Deadline to October 31 DLNJ HANCOCK: Voluntary Chapter 11 Case Summary DOW JONES: Moody's Cuts $500MM Trust Certificates Rating to B2 DUKE FUNDING: Fitch Junks Ratings on Six Note Classes EDUCATION RESOURCES: Court Approves Rasky Baerlein as PR Advisor EPICEPT CORP: Prices $2.65 Million Offering of Shares and Warrants FEDERAL MOGUL: T&N Asbestos Victims to Get GBP 2MM in Payments GENERAL MOTORS: Overall Truck Sales Decline 41.5% in July GENERAL MOTORS: Says Delphi-Related Charges Reach $11 Billion GENERAL MOTORS: Can Participate in Delphi Suit vs. Appaloosa GERARDO AGUERO: Case Summary & 20 Largest Unsecured Creditors HEALTH NET: Revised Earnings Forecast Won't Affect S&P Ratings HOLDINGS GAMING: Moody's Places Probability of Default at B3 HOVNANIAN ENTERPRISES: Board Approves Shareholder Rights Plan JAMES WILSON: Case Summary & 20 Largest Unsecured Creditors JETBLUE AIRWAYS: To Defer Delivery of 10 EMBRAER 190 Aircraft JHT HOLDINGS: May Hire Chilmark Partners as Financial Advisor JOE GIBSONS: Closes Business on Aug. 2, 2008 JONES APPAREL: S&P Lowers Ratings to 'BB'; Outlook Negative JONES APPAREL: Moody's Confirms Ba1 CF Ratings; Outlook Negative JOURNAL REGISTER: Deregisters Shares for Issuance Under Bonus Plan KNIGHT COMMERCE: Case Summary & 6 Largest Unsecured Creditors KOGER MANAGEMENT: Court Converts Case to Chapter 7 Liquidation LAKE LAS VEGAS: Auction of Assets Slated for August 22 LAKE LAS VEGAS: Has Until December 22 to Exclusively File Plan LAKE LAS VEGAS: Amends Schedules of Assets and Liabilities LAKE LAS VEGAS: Gets OK to Use Credit Suisse's $127 Mil. DIP Fund LANDSOURCE COMMUNITIES: May Hire Sitrick as PR Consultants LANDSOURCE COMMUNITIES: Taps Two HoganWebb Personnel as CROs LUBBOCK MEDICAL: Northstar Hospital Plans to Acquire Debtor ML-CFC COMMERCIAL: S&P Lowers Class P Securities Rating to CCC+ MORTGAGES LTD: Case Conversion Motion Still Up, Rightpath Says MORTGAGES LTD: Insists Need to Access $125 Million DIP Financing MORGAN STANLEY: Moody's Cuts $11MM Class IV-B Notes Rating to Ba2 MORGAN STANLEY: Moody's Trims Class V Floating Notes Rating to B3 MULTI SECURITY: S&P Cuts Rating on 3 Classes of Securities to CCC NEW CAP: NY Court to Consider Scheme of Arrangement on August 12 NEW CENTURY HOME: S&P Cuts Ratings on 3 Asset-Backed Notes to D NJ COM'L LAUNDRY: Organizational Meeting to Form Panel Set Aug. 14 PACIFIC LUMBER: Calif. S.C. Says Headwater Forest Permits Invalid PARMALAT SPA: High Cost, Low Demand Cut H1 EBITDA to EUR146.3MM PARMALAT SPA: NJ Court Denies Citigroup Bid to Dismiss Claims PARMALAT SPA: Appeals Court Denies Bid to Bar Class Action Suit PARMALAT SPA: Italian Court Starts Trial Against Tanzi, 53 Others PARMALAT SPA: UniCredit Group Settles for EUR271.7 Million PIERRE FOODS: Wants Kirkland & Ellis LLP as Attorneys PLASTECH ENGINEERED: To File Plan of Liquidation in Coming Weeks PORTER SQUARE: Collateral Decline Cues Fitch's Ratings Downgrade RELIANT ENERGY: Retail Unit's Performance Won't Affect S&P Rating REVE SPC: Moody's Lowers Segregated Portfolio S. 49 Rating to Ba1 SENDTEC INC: Completes Second Closing of Debentures Exchange SERACARE LIFE: Former Executives Settle SEC Civil Lawsuit SEMGROUP LP: May Draw $150 Million from BofA's DIP Financing SHARPER IMAGE: Withdraws Request for Aug. 18 Claims Bar Date SHARPER IMAGE: U.S. Trustee Opposes Letter Agreement with Hilco SHARPER IMAGE: Prohov Wants Cardholders' Claim Declared "Priority" SHERMAG INC: Court Transfers Wachovia Credit Facilities to Geosam SIRUS SATELLITE: Completes Merger with Vernon Merger Corp. SIRIUS SATELLITE: Has Share Lending Deals with Morgan Stanley, UBS SPHERICS INC: Turns Over Assets for October 10 Auction STANDARD PACIFIC: Amends and Restates Company Bylaws STANDARD PACIFIC: Appoints D. Matlin and K. Campbell to Board TCW SELECT: S&P Affirms 'BB-' Rating on 3 Classes of Securities TERWIN MORTGAGE: Moody's Cuts Ratings of 41 8 Alt-A Tranches TOWERS OF CHANNELSIDE: Files Amended Ch.11 Reorganizational Plan TOWERS OF CHANNELSIDE: Wants Plan Filing Period Extended to Sept. WACHOVIA BANK: S&P Cuts Rating on 6 Classes of Securities to CCC WCI COMMUNITIES: Gets Okay to Use Cash Collateral Until August 30 WCI COMMUNITIES: Wants White & Case as Lead Counsel WORLD HEART: Completes $30MM Private Placement ZIFF DAVIS: Enterprise Media Objects to Cure Amounts ZIFF DAVIS: Wants to Assign 63 Madison Lease; FOJP Objects ZIFF DAVIS: PC Magazine's Advertising Revenue Down 55.6% * Housing Slump Affecting Complex U.S. Banks' Earnings, S&P Says * S&P Says Discretionary Sectors Vulnerable to Market Turbulence * S&P Sees Downgrades to Continue as Market Gets More Volatile * S&P Says U.S. Housing Prices May Reach Bottom By 2010 * S&P Places Ratings of $1.89BB in CBOs and CLOs on Watch Neg * BAE Systems to Manage U.S. Courts' Bankruptcy Notice System * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ********* AB MERGER SUB: Moody's Assigns B1 Probability of Default Rating --------------------------------------------------------------- Moody's Investors Service assigned B1 Corporate Family and Probability of Default ratings to AB Merger Sub LLC, an acquisition vehicle intended to facilitate the purchase of Allied Security Holdings LLC. Concurrently, Moody's assigned Ba3 ratings to the proposed senior secured term loan and revolving credit facilities of Merger Sub. The outlook for the ratings is stable. The ratings were assigned in connection with the all-cash acquisition of Allied Security by The Blackstone Group from MacAndrews & Forbes Holdings Inc. and other investors for a total consideration of about $700 million, with up to an additional $50 million in potential earn-out payments based on 2009 EBITDA thresholds. The purchase price (excluding the earn-out) represents an enterprise value multiple of about 7.7 times pro forma EBITDA for the twelve months ended June 30, 2008. Proceeds from the proposed Ba3-rated $325 million term loan and the proposed (unrated) $175 million senior subordinated mezzanine loan, along with about $270 million in cash equity will be used to purchase the equity of the company, refinance existing debt and pay expenses associated with the transaction. At closing, the proposed Ba3-rated $55 million revolver is expected to be undrawn. The bank facilities provide for a $75 million accordion feature. Pro forma for the proposed transaction, the ratings are constrained by high financial leverage and low interest coverage which place the company at the low end of the rating category. Other important constraints include the highly competitive nature of the security services industry and resulting low operating margins, well as the potential for further price pressures associated with a slowing US economy. Moody's also notes that the company has a history of growth through acquisitions and believes that integration and financial policy risks associated with debt- financed acquisitions will persist in the medium term. The Corporate Family Rating of B1 also reflects Moody's expectation of pro forma adjusted free cash flow (defined as cash from operations less capital expenditures) to debt ratio of the order of 5% for 2008 and expectations of improvement thereafter, absent significant acquisitions. The B1 corporate family rating and stable outlook are supported by the company's scale and national platform, its diverse customer base across several industries and organic growth in recent quarters, associated primarily with significant improvement in customer retention rates over the past eighteen months. Moody's also notes the company's entry into diverse government-related clients which offers further opportunities for growth. The company continues to benefit from heightened emphasis on security across all sectors of the economy and recession resistant nature of security services. Moody's believes that the July 2007 Van Ella and June 2008 HR Plus acquisitions, though small to have near-term rating implications, could offer substantive top-line synergies in the long run as the company expands its service offering into employee background verification. Based on leverage and profitability considerations, Moody's views the company as being at the low end of the B1 rating category. Adjusted free cash flow to debt levels below 5%, adjusted EBITDA to interest coverage below 1.7 times, and adjusted financial leverage above 5.5 times (i.e., indications of a weakening credit profile post transaction) could put negative pressure on the company's ratings or outlook. Moody's assigned these ratings: AB Merger Sub LLC: -- B1 Corporate Family Rating; -- B1 Probability of Default Rating; -- Ba3 (LGD 3, 32%) to the proposed $55 million senior secured revolver due 2014; -- Ba3 (LGD 3, 32%) to the proposed $325 million senior secured term loan due 2015. The corporate and instrument ratings of AB Merger Sub will be transferred to the continuing entity, which will be Allied Security Holdings LLC. Existing Allied Security corporate and debt instrument ratings are affirmed as follows, subject to withdrawal upon completion of the transaction: Allied Security Holdings LLC: -- B2 Corporate Family Rating; -- B2 Probability of Default Rating; -- $50 million senior secured revolving credit facility due 2009, rated Ba3 (LGD 3, 31%); -- $270 million senior secured term loan due 2010, rated Ba3 (LGD 3, 31%); -- $179 million senior subordinated notes due 2011, rated Caa1 (LGD 5, 84%); -- The outlook for the ratings is stable. Allied Security Holdings LLC, headquartered in King of Prussia, Pennsylvania, is the second largest security services company in the US and provides security services to clients in a number of industry sectors, including commercial real estate, corporate complexes, higher education, healthcare, residential communities, manufacturing and distribution, financial institutions, shopping centers and malls, government, and manufacturing and distribution facilities. The company employs approximately 51,000 security officers, has 118 offices nationwide and serves a client base that includes about 200 Fortune 500 companies in 45 states and the District of Columbia. The company operates under the names "AlliedBarton Security Services" and "AlliedBarton" nationally and as "VanElla" and "HR Plus" in the conduct of its background verification business. For the twelve months ended June 30, 2008, Allied Security had pro forma revenues of about $1.6 billion. Mafco has had a substantial controlling interest in the company since February 2003. ACCURIDE CORP: Moody's Lowers CF Ratings to B2; Outlook Negative ---------------------------------------------------------------- Moody's Investors Service lowered Accuride Corporation's Corporate Family Rating to B2 from B1. The action follows the company's announcement of lowered earnings guidance for 2008, combined with Moody's expectation of more limited 2009 pre-buy activity in the North American heavy-duty truck market ahead of stricter 2010 emission control standards. After a sharp decline in 2007, heavy duty truck demand has been somewhat more stable in 2008, yet with production volumes still well below historic levels, Accuride's credit metrics are likely to remain under strain through year-end 2008. Although heavy duty truck orders are expected to increase somewhat in 2009 based on vehicle replacement demand and pre-buy activity, the rate of order growth is likely to be more modest than originally expected due to weak economic conditions in the U.S. The negative outlook considers that absent more robust commercial vehicle orders, Accuride's credit metrics will remain strained into 2009. The company has negotiated amended financial covenants under its bank credit facility that should provide adequate headroom through the balance of 2008. However, these covenants revert back to more stringent levels in 2009, and unless financial metrics improve, the degree of covenant cushion could narrow. Accuride currently maintains an adequate liquidity profile consisting of approximately $33 million of cash on hand as of June 2008 and an undrawn $125 million revolver. Approximately $17 million of letters of credit were outstanding at June 30, 2008. The revolver matures in January 2010. There are no material debt maturities over the near-term. The rating outlook could be stabilized if there is evidence of a material recovery in the commercial vehicle market which supports improved interest coverage being sustained at 1.5 times, or debt/EBITDA sustained below 5.5 times. The ratings could be downgraded if further delays in the timing of a meaningful sector recovery result in leverage continuing above 6 times, deteriorating interest coverage levels, sustained negative free cash flow, or a material deterioration in the company's liquidity profile. Ratings lowered: Accuride Corporation -- Corporate Family, B2 -- Probability of Default, B2 -- Senior Subordinated, Caa1 (LGD5, 81%) from B3 (LGD5, 82%) Ratings affirmed: Accuride Corporation -- Senior Secured bank credit facilities, Ba3 (LGD3, 29%) Accuride Canada Inc. -- Senior secured revolving credit facility, Ba3 (LGD3, 29%) The last rating action was on Nov. 5, 2007 at which time Accuride's ratings were affirmed and the outlook changed to negative. Accuride Corporation, headquartered in Evansville, Indiana, is a diversified North American manufacturer and supplier of commercial vehicle components. Principal products include wheels, wheel-end components and assemblies, truck body and chassis parts, and seating assemblies. Revenues in 2007 were approximately $1.0 billion. ALTIERI HOMES: Cuts Staff, Cancels Projects to Avert Bankruptcy --------------------------------------------------------------- Baltimore Business Journal's Daniel J. Sernovitz reports that Altieri Homes of Columbia is struggling to stay afloat according to its president, Daren Altieri. By taking the right steps, Mr. Altieri said the company will avoid filing for Chapter 11 bankruptcy protection, the report relates. Baltimore Business Journal says the company is facing nearly $2 million in debts to creditors across Maryland and liens on several of its homes across the mid-Atlantic region. Baltimore Business Journal also notes that since April, nearly a dozen creditors have filed claims against the company, including a $1.3 million confessed judgment taken out in April in the York County, Pa., Court of Common Pleas by John H. Myers & Son Inc. In a confessed judgment, a party to a contract agrees in advance that if it defaults, a judgment will be entered against it in court for the amount of money it owes, the report relates. The report adds that Altieri has been forced to: -- reduce its staff from 105 to seven employees, -- eliminate several communities from its pipeline, and -- turn over much of its construction and marketing work to outside firms. Baltimore Business Journal says even with those efforts, Mr. Altieri indicated that his company does not expect to reach firm financial footing for at least another year or more. "If you're in the development or the building industry, you're struggling," Baltimore Business Journal quotes Mr. Altieri as saying. "We've been through downturns; arguably this is the worst one we've been through." ARMSTRONG WORLD: Asks Court to Close Chapter 11 Case ---------------------------------------------------- Armstrong World Industries, Inc., asks the U.S. Bankruptcy Court for the District of Delaware to enter a final decree closing its Chapter 11 case pursuant to Section 350(a) of the Bankruptcy Code, Rule 3022 of the Federal Rules of Bankruptcy Procedure, and Rule 5009-1(a) of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware. AWI filed for bankruptcy protection on December 6, 2000. The Delaware Bankruptcy Court confirmed AWI's Fourth Amended Plan of Reorganization on February 21, 2006. AWI notes that as of Oct. 2, 2006, the Plan Effective Date, it commenced initial distributions to claims arising before the Effective Date. As AWI resolved the Disputed Claims, creditors holding Allowed Unsecured Claims received subsequent distributions as property held in reserve for the payment of Disputed Claims. As of July 29, no Disputed Claims remain in the AWI case and the company has distributed substantially all the Reserved Funds totaling $963,771, according to Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware. AWI adds that it has paid all expenses arising from the administration of its estate, including court fees, fees under 28 U.S.C. Section 1930(a)(6), professional fees, and expenses. "In sum, AWI's Chapter 11 case was successful as its business operations were rationalized and balance sheet was recapitalized," Mr. Madron tells Judge Judith K. Fitzgerald. More importantly, Mr. Madron asserts, AWI's Chapter 11 case has been "fully administered" within the language of Section 350. He avers that: * the Confirmation Order has become final and is non- appealable; * all payments required to be made under the Plan, other than the Reserved Funds, have been made to AWI's creditors; * all anticipated motions, contested matters and adversary proceedings have been resolved; * no further distributions will be made from AWI's estate; and * the Plan has been substantially consummated within the meaning of Section 1101(2). Mr. Madron points out that the distributions yet to be made to claimants who failed to file their addresses and tax identification numbers do not require the AWI Chapter 11 case to remain open until that time. In fact, he states, allowing AWI to close its Chapter 11 case will save the company significant expense. Mr. Madron cites that AWI continues to pay quarterly fees to the U.S. Trustee, which is an unnecessary burden on the company's estate. As its estate has been substantially administered, AWI further seeks the Court's authority to terminate the consulting agreement it entered with Wells Fargo Trumbull, formerly known as Trumbull Services, L.L.C., as its claims agent. Armstrong Submits Final Report Pursuant to Rule 5009-1(c) of the Local Rules of Bankruptcy Practice and Procedure of the United States for the District of Delaware, Armstrong delivered to the Court a final report in support of its request to close its Chapter 11 proceeding. Stephen J. McNamara, vice president and controller of Armstrong, reports that the payments made to bankruptcy professionals during the pendency of the company's Chapter 11 case aggregate $170.6 million: Type of Payment Amount --------------- ------ U.S. Trustee for Region 3 $240,000 Financial Services for the Debtors Deloitte & Touche 12,051,629 Klett Rooney Lieber & Schorling 974 Lazard Freres & Co. 14,290,572 KPMG LLP 24,639,334 Advisors to the Debtors Gibbons, Del Deo, Dolan, Griffinger & Vecchione, P.C. 721,487 Richards, Layton & Finger, P.A. 2,584,424 Weil Gotshal & Manges LLP 25,746,576 Advisors to the Official Committee of Unsecured Creditors Navigant Consulting, Inc. 1,816,690 Cozen O'Connor 351,463 Houlihan Lokey Howard & Zukin 8,885,602 Paul, Weiss, Rifkind, Wharton & Garrison LLP 6,658,015 Corporate Legal Services for the Debtors Buchanan Ingersoll & Rooney 427,729 McDermott Will & Emery 2,149,718 Morgan Lewis & Bockius 281,211 Reed Smith LLP 339,479 Womble Carlyle Sandbridge & Rice, PLLC 13,795,708 Future Representative and his Advisors Analysis Research Planning Corp. 1,285,790 Dean M. Trafelet 1,443,354 Kaye Scholer 5,905,297 Peter J. Solomon 5,069,360 Wolf, Block, Schorr & Solis-Cohen LLP 5,732 Young Conaway Stargatt & Taylor, LLP 762,220 Asbestos Claimants' Committee Members and their Advisors Ashby & Geddes, P.A. 80,858 Campbell & Levine, LLC 859,541 Caplin & Drysdale 3,431,025 Elizabeth Warren 675 L. Tersigni Consulting, P.C. 3,579,677 Legal Analysis Systems 1,129,051 Baron & Budd, P.C. 9,671 Cooney & Conway 5,038 Goldberg, Persky, Jennings and White PC 5,434 Kazan, McClain, Edises, Abrams, Fernandez 7,601 Ness, Motley, Loadholt, Richardson & Poole, PA 21,766 Peterson Consulting 502,313 Richard Glasser 1,939 Robert Jacobs 216 Weitz & Luxemborg 4,419 Advisors to Debtors on Asbestos-related issues Church Loker Radcliffe & Silver PA 155,151 Dr. Hughson 42,607 Dyanki Inc. 298,060 Feinberg Group, LLP 2,427,277 Fowler Associates 2,213 Kasowitz, Benson, Torres & Friedman LLP 1,511,627 Kirkland & Ellis LLP 1,757,674 NERA -- Dr. Dunbar 956,043 Price Associates, Inc. 130,703 Spriggs & Hollingsworth 2,600,889 Winston & Strawn LLP 100,503 Insurance Recovery Covington & Burling LLP 3,279,322 Dickstein Shapiro Morin & Oshinsky LLP 1,124,854 Gilbert Heintz & Randolph LLP 1,859,412 Noticing Programs Burson-Marsteller 212,682 Kinsella Communications Ltd. 2,831,956 Sitrick And Company 70,000 Claims Processing PricewaterhouseCoopers, Inc. 193,970 Trumbull Services LLC 2,770,500 Advisors to Property Damage Committee Klehr, Harrison, Harvey, Branzburg & Ellers LLP 2,707,993 Reich and Binstock 1,461 Advisors to Debtors on Tax and Compensation Benefits Arthur Andersen LLP 640,356 Dechert LLP 1,354,414 Asbestos Personal Injury Trust Anne Ferazzi, Asbestos PI Trustee 243,400 Harry Huge, Asbestos PI Trustee 399,410 Keating, Muething and Klekamp 497,641 Lewis Stifford, Asbestos PI Trustee 391,295 Paul Knuff, Asbestos PI Trustee 196,585 Thomas Tully, Asbestos PI Trustee 249,975 Court Administrative Fees Budd Larner Gross Rosenbaum Greenberg & Sade 31,078 C. Judson Hamlin 6,717 David Gross 16,494 Francis E. McGovern 17,471 John E. Keefe 9,888 Warren H. Smith and Associates, P.C. 975,488 William A. Dreier 8,064 Other American Appraisal 1,184,368 Expenses Paid on Nitram's Behalf 324,669 ------------ TOTAL $170,673,798 ------------ Mr. McNamara notes that the costs of administering Nitram Liquidators, Inc., and Dessaux Corporation of North America were subsumed by Armstrong. On behalf of Nitram and Desseaux, Armstrong paid the U.S. Trustee $110,316 in fees and $30,000 as prepayment of fees for third quarter of 2008. Claim Distributions Mr. McNamara updates the Court on the distributions made or to be made to claimants under Armstrong's Fourth Amended Plan of Reorganization: Class Type of Claim Distribution ----- ------------- ------------ 1 Priority Claims Paid in full. 2 Secured Claims Reinstated. 3 Convenience Claims Paid in cash equal to 75% of the allowed amount of the claim. 4 Asbestos Property Resolved under the Global Damage Claims Asbestos PD Settlement. 5 COLI Claims Reinstated. 6 Unsecured Claims other Pro Rata Share of (a)34.43% than Convenience Claims of the New Common Stock, (b) 34.43 of the first $1,500,000,000 of(x) up to $300,000,000 of Available Cash and (y) the principal amount of Plan Notes and 144A Offering Proceeds, (c) 60% of the next $50,000,000 of the remaining Available Cash, (d) 60% of the remaining amount of Plan Notes and 144A Offering Proceeds to the extent that Available Cash in (z) is less than $50,000,000, and (e) 34.43% of the remaining Available Cash and Plan Notes and 144A Offering Proceeds. 7 Asbestos Personal Injurys Channeled to the Asbestos Claims PI Trust. 8 Environment Claims Treated as an Allowed Secured Claim to the extent it becomes Allowed prior to the Distribution Date. 9 Affiliate Claims Reinstated 10 Subsidiary Debt Guarantee Reinstated 11 Employees Benefit Claims Reinstated 12 Equity Interests Interests cancelled; no distributions made. Reserved Funds Substantially all claims distributions required as of July 24, 2008, under the Plan have been made, the company maintains. Armstrong has been unable, however, to make distributions to claimholders who have failed to provide the company with a valid address and taxpayer identification number. Armstrong has thus reserved $963,761 for payment to these claimholder to the extent they provide the requisite information. All matters to be completed upon the Plan Effective Date have been fulfilled or completed, Mr. McNamara assures the Court. About Armstrong World Headquartered in Lancaster, Pennsylvania, Armstrong World Industries, Inc. (NYSE:AWI) -- http://www.armstrong.com/-- , designs, manufactures and sells flooring products and ceiling systems around the world. It also designs, manufactures and sells kitchen and bathroom cabinets. Its business segments include resilient flooring, wood flooring, building products and cabinets. On Dec. 6, 2000, it filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court. On Aug. 18, 2006, it emerged from Chapter 11. On April 3, 2006, Armstrong World acquired HomerWood Inc. On May 1, 2006 it acquired Capella Engineered Wood LLC, and its parent company, Capella Inc. On March 27, 2007, it entered into an agreement to sell the principal operating companies in its European textile and sports flooring business segment to Tapijtfabriek H. Desseaux N.V. and its subsidiaries. These businesses were classified as discontinued at Oct. 2, 2006. ARMSTRONG WORLD: Nitram, Desseaux Want Chapter 11 Cases Closed -------------------------------------------------------------- Nitram Liquidators, Inc., and Desseaux Corporation of North America ask the U.S. Bankruptcy Court for the District of Delaware to enter a final decree closing their Chapter 11 cases pursuant to Section 350(a) of the Bankruptcy Code, Rule 3022 of the Federal Rules of Bankruptcy Procedure, and Rule 5009-1(a) of the Local Rules of Bankruptcy Procedure of the United States Bankruptcy Court for the District of Delaware. Nitram and Desseaux filed their Chapter 11 cases on December 6, 2000. The Bankruptcy Court confirmed their First Amended Joint Plan of Liquidation on December 17, 2007. Nitram and Desseaux made an initial distribution to holders of unsecured claims on March 21, 2008. Nitram and Desseaux will commence a distribution, on a final basis, on September 21, 2008. As of July 29, 2008, there are no remaining disputed claims in the Chapter 11 cases of Nitram and Desseaux, Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, relates. "Nitram and Desseaux's Chapter 11 cases have been 'fully administered' as required under Section 350(a)," Mr. Madron tells the Court. He cites that with respect to Nitram and Desseaux: -- the Confirmation Order has become final and is non- appealable; -- all payments required to be made under the Plan, other than the payments to be made under the Final Distribution, have been made to the creditors of Nitram and Desseaux; -- all anticipated motions, contested matters and adversary proceedings have been resolved; and -- the Plan has been substantially consummated pursuant to Section 1102(2) of the Bankruptcy Code. Mr. Madron asserts that even if the Plan precludes Nitram and Desseaux from commencing a Final Distribution until September 21, it does not require their Chapter 11 cases to remain open until that Final Distribution is made. He contends that allowing Nitram and Desseaux to close their Chapter 11 cases will permit them to, after the Final Distribution is made, dissolve their business entities. Furthermore, distribution of the corporations is appropriate as Nitram and Desseaux are not conducting business, he says. The Court will convene a hearing on September 2, 2008 to consider the request. Objections are due August 18. Nitram, Desseaux Submit Final Report On behalf of Nitram and Desseaux, Stephen F. McNamara, vice- president and controller of Armstrong World Industries, Inc., delivered to the Court a final report detailing the distributions made by Nitram and Desseaux under their First Amended Joint Plan of Liquidation: Class and Type of Claim Distribution ----------------------- ------------ 1 Priority Non-Tax Claims Paid in full 2 Secured Claims Allowed Secured Claims holders are entitled to pursue any remedies under applicable law 3 Unsecured Claims Pro-rata share of available cash after the payment of Allowed Administrative Expenses, Allowed Priority Tax Claims, Allowed Priority Non-Tax Claims, and statutory fees pursuant to the Plan, and establishment of reserves for Disputed (a) Administrative Expenses, (b) Priority Tax Claims, and (c) Priority Non-Tax Claims. 4 Nitram PI Claims Entitled either to (a) remain in Class 4 and have limited recovery on account of an Allowed Nitram PI Claim, or (b) treat the Nitram PI Claim as a Class 3 unsecured claim under the Plan. 5 Affiliate Claims Pro Rata Share of available cash after the payment in full of all Allowed Claims. 6 Equity Interests No distributions made. Nitram and Desseaux have made an initial distribution, totaling $84,799, to unsecured claim holders. Pursuant to the Liquidation Plan, Nitram and Desseaux are precluded from distributing the remaining portion of the funds to unsecured claim holders until September 21, 2008, according to Mr. McNamara. No trustee or examiner was appointed in Nitram's and Desseaux's Chapter 11 cases. Thus, no fees were incurred in respect of a trustee or trustee's counsel. Moreover, Nitram and Desseaux emphasize that they have paid all required fees due under Section 1930 of the Judicial and Judiciary Procedures Code. All matters to be completed upon the Plan Effective Date have been fulfilled or completed, Mr. McNamara assures the Court. About Armstrong World Headquartered in Lancaster, Pennsylvania, Armstrong World Industries, Inc. (NYSE:AWI) -- http://www.armstrong.com/-- , designs, manufactures and sells flooring products and ceiling systems around the world. It also designs, manufactures and sells kitchen and bathroom cabinets. Its business segments include resilient flooring, wood flooring, building products and cabinets. On Dec. 6, 2000, it filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court. On Aug. 18, 2006, it emerged from Chapter 11. On April 3, 2006, Armstrong World acquired HomerWood Inc. On May 1, 2006 it acquired Capella Engineered Wood LLC, and its parent company, Capella Inc. On March 27, 2007, it entered into an agreement to sell the principal operating companies in its European textile and sports flooring business segment to Tapijtfabriek H. Desseaux N.V. and its subsidiaries. These businesses were classified as discontinued at Oct. 2, 2006. ASARCO LLC: Parties Balk at Intercompany Claim-Filing Extension --------------------------------------------------------------- Asarco Incorporated and Americas Mining Corporation object to the proposed extension of the deadline for filing intercompany claims to the extent the U.S. Bankruptcy Court for the Southern District of Texas extends the Intercompany Claims Bar Date between all ASARCO LLC debtors, including any Debtors' claims against the 2006 Debtors -- SP Holdings, LLC, AR Sacaton, LLC, and ASARCO Exploration Company, Inc. Asarco Inc. and AMC point out that the deadline to file intercompany claims against the 2006 Debtors expired on May 21, 2007. Because the 2006 Debtors' Bar Date has passed, the Debtors may not extend the 2006 Debtors' Bar Date by stipulation, Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, asserts. Accordingly, Asarco Inc. and AMC ask the Court to direct the Debtors to revise the proposed stipulation to exclude the 2006 Debtors' Bar Date from any extension. About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services And investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). The Debtors submitted to the Court a joint plan of reorganization and disclosure statement on July 31, 2008. (ASARCO Bankruptcy News, Issue No. 78; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). BALTIMORE HOTEL: S&P Affirms 'BB' Rating on $53MM 2006B Bonds ------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BBB-' underlying rating on the Baltimore Mayor and City Council, Md.'s $247.5 million convention center hotel senior revenue series 2006A bonds on CreditWatch with negative implications. The CreditWatch reflects the bonds' ties to the ratings on XL Capital Assurance Inc. (BBB-/Watch Neg/--), which provides the surety for the series 2006A bonds and the debt service reserve fund (SR DSRF). At the same time, S&P affirmed its 'BB' rating on the council's $53.44 million convention center hotel subordinate revenue series 2006B bonds, which have a stable outlook. The council issued both series of bonds for the Baltimore Hotel Corp. The '3' recovery rating assigned to the 2006 series A debt reflects expectations of meaningful recovery (50%-70%) if a payment default occurs, while the '6' recovery rating assigned to the 2006 B series debt indicates negligible recovery (0%-10%). The ratings on the bonds reflect the near- and long-term risks associated with a start-up hotel, which are slightly mitigated by the city's $7 million annual back-up pledge of city hotel taxes. Bond proceeds funded the hotel's construction, which is projected to meet its substantial completion date of Aug. 9, 2008 and open to the public in late August 2008. "We could downgrade the 2006A series bonds if liquidity goes lower than the current levels and if additional reserves are not available to replace the surety policy," said Standard & Poor's credit analyst Jodi Hecht. "The stable outlook on the 2006B series bonds is based on the hotel's ability to open on time and within budget and to attain its projected financial performance. We could lower the rating if coverage levels are lower than projections as a result of a prolonged economic slowdown, or other competitive factors that reduce net hotel revenues. Although we do not expect to do so at this time, we could raise the rating if the hotel's operating and financial performance significantly exceeds forecasts after stabilization is complete," S&P says. BICENT POWER: S&P Removes B, BB Ratings from CW Negative -------------------------------------------------------- Standard & Poor's Ratings Services removed its 'BB-' issue-level rating on Bicent Power LLC's first lien loans and its 'B-' rating on the company's second lien loans from CreditWatch with negative implications, where it was placed July 24, 2008. The outlook is stable. The first-lien term loan has a '2' recovery rating, indicating the expectation for substantial (70% to 90%) recovery of principal if a payment default occurs, and the second-lien term loan has a '6' recovery rating, indicating the expectation for negligible (0% to 10%) recovery. "The CreditWatch listing was largely a reflection of the operational issues at the Hardin coal burning facility, which is the source for more than 50% of the company's contracted cash flows available for servicing debt," said Standard & Poor's credit analyst Terrence Marshall. "Equipment failures led to a forced outage in December of 2007. A temporary repair allowed the plant to run, but with a sustained reduction in output. Normal plant operations were restored in late July of 2008." S&P expects the impact of the CreditWatch placement on second quarter financials to be small, assuming the successful receipt of reimbursement insurance claims to cover repairs and lost revenues. Bicent Power is a special-purpose, bankruptcy-remote operating company formed in 2007 to acquire independent power producer Centennial Power, LLC, including its 603 megawatt (MW) coal, gas, and wind generation portfolio, as well as its power plant operations and construction firm, Colorado Energy Management, LLC (CEM). Bicent Power is 100% indirectly owned by affiliates of power industry investment firm Beowulf Energy LLC (16.7%) and Natural Gas Partners VIII L.P. (83.3% of shares), which is one of eight private equity funds of oil and gas investment firm Natural Gas Partners LLC that together represent $2.9 billion in commitments. The members own their interests in Bicent Power through a holding company, Bicent RF LLC, and its wholly owned subsidiary, intermediate holding company Bicent Funding LLC. Bicent Power meets Standard & Poor's ring-fencing criteria for special-purpose entities, including the provision of an independent director and a nonconsolidation opinion. BLACK GAMING: Moody's Cuts Corporate Family Rating to Caa3 ---------------------------------------------------------- Moody's Investors Service downgraded Black Gaming LLC's corporate family rating and probability of default rating to Caa3 from Caa1. It also downgraded the rating of the 9% senior secured notes to Caa2 from B3 and the rating of the 12.75% senior subordinated notes to Ca from Caa3. The SGL-4 rating was affirmed and the rating outlook remains negative. The rating actions reflect Moody's view that Black Gaming's operating performance has deteriorated more sharply than anticipated earlier this year in persistently weak market conditions, creating liquidity pressures to such an extent that a default of payment or a distressed exchange transaction could materialize in the next twelve months. Moody's believes that the challenges that the gaming market in Mesquite, Nevada has faced over the last few months intensified in the second quarter of 2008. The significant slow down in consumer discretionary spending associated with the drop in home equity value and weakening real income is sharply impacting the company's revenues and EBITDA. Although the company renewed its revolving credit facility in June 2008, the rating agency believes that Black Gaming could find it challenging to remain in compliance with its minimum EBITDA covenant and continue to meet its debt service obligations in the next twelve months, also considering that the 12.75% senior subordinated notes will start paying a cash interest on July 15, 2009. Ratings Downgraded: -- Corporate family rating to Caa3 from Caa1 -- Probability of default rating to Caa3 from Caa1 -- 9% senior secured notes rating to Caa2 from B3 (LGD assessment changed to LGD3/37% from LGD3/39%) -- 12.75% senior subordinated notes rating to Ca from Caa3 (LGD assessment changed to LGD5/87% from LGD5/88%) Black Gaming owns and operates the CasaBlanca, the Oasis, and the Virgin River casino hotels in Mesquite, Nevada, located approximately 80 miles north of Las Vegas, Nevada. The company also owns the Virgin River Convention Center (formally known as the Mesquite Star Hotel and Casino), which is currently used as a special events center. Net revenues were approximately $156 million in the last twelve months ended March 31, 2008. BONNETTE & PICARD: Case Summary & Three Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: Bonnette & Picard, LLC 381 Main Street Nashua, NH 03060 Bankruptcy Case No.: 08-12233 Chapter 11 Petition Date: Aug. 5, 2008 Court: District of New Hampshire (Manchester) Debtors' Counsel: Steven M. Notinger, Esq. (nontrustee@donchessnotinger.com) Donchess & Notinger PC 547 Amherst Street, Ste. 100 Nashua, NH 03063 Tel: (603) 886-7266 Fax: (603) 886-7922 http://donchessnotinger.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/nhb08-12233.pdf BOSCOV'S INC: DIP Funding Gets Initial OK, 1st-Day Motions Granted ------------------------------------------------------------------ Boscov's Department Store LLC, Boscov's Inc.'s subsidiary, disclosed that the Debtors received approval of their first-day motions at a hearing on Tuesday, Aug. 5, 2008, before Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware. Judge Gross granted interim approval for the company to access its $250 million Debtor-in-Possession financing, pending a hearing on final approval later this month. The DIP facility will allow Boscov's to normalize vendor relationships, ensuring a healthy merchandise flow as the company prepares for the important back- to-school and holiday selling seasons. The DIP facility will provide Boscov's with adequate working capital to meet its ongoing financial obligations during the restructuring. The first-day orders granted by the Court will ensure the continued smooth operation of Boscov's business and store operations going forward. The Court entered numerous orders, which will facilitate the continuation of ongoing employee programs, including payment of active employee salaries, insurance and other healthcare benefits, workers' compensation programs, 401(k) contributions and other benefits. Customer programs were authorized by the Court to continue uninterrupted, as honoring gift cards, product warranties and bridal registries. The Court also granted certain relief for the payment of existing creditors, including utilities, taxing authorities, various logistics and transportation providers, well as payments for goods shipped by vendors prior to the bankruptcy filing, but not received by Boscov's until after the filing. "The approval of the first-day orders is an important step in the restructuring process as it will enable us to normalize our relationships with vendors and to continue to provide our customers with the wide selection, great prices and warm personalized service for which Boscov's is known," said Ken Lakin, chairman and CEO. "We have been heartened by the expressions of support Boscov's has received from our customers, vendors and the communities Boscov's serves and we will be working with our creditors and others to move forward quickly with the hope of filing a Plan of Reorganization by late October." Boscov's also received Court approval for auction procedures to select a liquidation firm to assist with store-closing sales. Judge Gross set an August 12 auction, succeeded by an August 14 sale hearing. Going-out-of-business sales at the 10 underperforming stores Boscov's has slated for closing are expected to begin on August 15. About Boscov's Inc. Headquartered in Reading, Pennsylvania, Boscov's Inc. -- http://www.boscovs.com-- is America's largest family-owned independent department store, with 49 stores in Pennsylvania, New York, New Jersey, Maryland, Delaware and Virginia. Boscov's Inc. and its debtor-affiliates filed for Chapter 11 protection on Aug. 4, 2008 (Bankr. D. Del. Case No.: 08-11637) Daniel J. DeFranceschi, Esq. at Richards Layton & Finger and L. Katherine Good, Esq. at Richards, Layton & Finger, P.A. represent the Debtors in their restructuring efforts. The Debtors' financial advisor is Capstone Advisory Group and their investment banker is Lehman Brothers Inc. The Debtors disclosed estimated assets of $500 million to $1 billion and estimated debts of $100 million to $500 million. BRUCE PLASTICS: Various Assets to be Auctioned August 20 -------------------------------------------------------- Bruce Plastics, Inc.'s assets will be auctioned on Aug. 20, 2008, at 8:00 a.m. to 10:00 a.m., at 103 Clemson Research Boulevard in Anderson, South Carolina. The assets for sale include injection molding machines ranging in size from 39 tons (1.6 oz) to 700 tons (110 oz). Bruce's equipment includes 66-ton (7.7 oz) vertical molding machines that are particularly suitable for insert molded components. Robots, Machines, Grinders, Cranes, Bridgeport and other tools are also available. Details of the auction include: Inspection: Tuesday, August 19, from 9:00 a.m. to 5:00 p.m. and 8:00 a.m. day of sale. Registration: Cash, cashier's check, or bank letter of credit guaranteeing full amount of purchase plus valid ID or driver's license required to register. Drivers licenses will be copied and copies destroyed or returned after purchases have been paid in full. Online bidders have additional registration requirements. Terms: All items must be paid for in full by end of auction with cash, cashier's check, or wire transfer with bank letter of credit accompanying and guaranteeing the maximum amount of your payment. Removal: No items may be removed during the auction. No items may be removed until payment in full in cash is received. Buyers are responsible for all aspects of removal. Most items must be removed following the auction and no later than August 26. Larger items that require AA Machinery can take place until Friday, September 12. Riggers: Due to time and safety constraints it is necessary to coordinate all machinery removal thru one rigging company. The company selected is A&A Machinery Moving -- http://www.aamachinery.com/. It is simply not possible to vacate the building in the time required if multiple companies are operating. Contact Steve Gola at (215) 783-0503 or e-mail him at sgola@aamachinery.com for a quote. Sales Tax: A 6% sales tax will be added to all items sold unless proper tax exempt forms are brought with you to the auction, no exceptions. Buyer's Premium Fee Added: All items sold onsite at this auction will be sold with a 10% buyer's premium fee added to the winning bid. Successful online bidders will be charged a 13% buyer's premium fee. See -- http://www.auctionEbid.com/-- or e-mail Scott Schwartz through scott@auctionEbid.com or call (404) 550-3490, or e-mail Rick Sammons through rick@auctionEbid.com or call (770) 490-0798. About Bruce Plastics Bruce Plastics, Inc. is a plastic injection molding company. Established in 1952, Bruce was supplier of both custom molded and standard components to leading OEM companies. C19-1 SHOTWELL: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: C19-1 Shotwell, LLC [no address provided] Bankruptcy Case No.: 08-14990 Chapter 11 Petition Date: August 5, 2008 Court: Western District of Washington (Seattle) Judge: Karen A. Overstreet Debtor's Counsel: Marc S. Stern, Esq. (marc@hutzbah.com) 1825 Northwest 65th Street Seattle, WA 98117 Tel: (206) 448-7996 Estimated Assets: $10,000,000 to $50,000,000 Estimated Debts: $10,000,000 to $50,000,000 The Debtor did not file a list of its 20 largest unsecured creditors. CABLEVISION SYSTEMS: Mulls Strategic Alternatives, to Spinoff Biz ----------------------------------------------------------------- The Wall Street Journal reports that Cablevision Systems Corporation is considering its strategic options, including spinning off one or more of its businesses. In a press statement, Cablevision Systems said that its board of directors has authorized the company's management to explore several strategies to bring the market value of the company's common stock closely in line with the underlying operating performance of the company. The board authorized the company to take all actions necessary or desirable to evaluate and establish a policy with respect to regular quarterly dividends or stock buybacks as promptly as practicable. As part of this strategic review, the board authorized the company to explore the spin-off of one or more businesses and other potential strategies. The move which resulted from failed attempts to go private, WSJ states, could result in such assets as Madison Square Garden, the New York Knicks basketball team and the Rainbow television network going on the block. According to WSJ, the step is a "sharp about-face for a company that is frequently criticized for not being friendly to shareholders". WSJ added that the action comes after president and chief executive James L. Dolan's indication that the company might be more vigilant about shareholder interests. "We are highly confident of the strength of our underlying businesses and our operating performance," Mr. said. "As we indicated last week we have a strong desire to close the value gap between our operating performance and the market value of our shares and, therefore, we will be actively looking at options to accomplish that." The company will retain investment banking firms and such other advisors as necessary to pursue the strategic options. WSJ indicated that investors welcomed Tuesday's news, sending shares 8.75% higher to $28.20 in 4 p.m. New York Stock Exchange composite trading. About Cablevision Systems Corp. Headquartered in Bethpage, New York, Cablevision Systems Corp. (NYSE: CVC) -- is a cable operator in the United States that operates cable programming networks, entertainment businesses and telecommunications companies. Through its wholly owned subsidiary, Rainbow Media Holdings LLC, Cablevision owns interests in and manages numerous national and regional programming networks, the Madison Square Garden sports and entertainment businesses, and cable television advertising sales companies. Through Cablevision Lightpath Inc., its wholly owned subsidiary, the company provides telephone services and Internet access to the business market. At March 31, 2008, the company's consolidated balance sheet showed $9.2 billion in total assets and $14.3 million in total liabilities, resulting in a $5.1 billion total stockholders' deficit. * * * As disclosed in the Troubled Company Reporter on June 6, 2008, Standard & Poor's Ratings Services affirmed all its ratings, including its 'BB' corporate credit rating, on based Cablevision Systems Corp., a major cable operator in the New York City metropolitan area, and its subsidiaries. The outlook is negative. Cablevision had about $11.6 billion of reported consolidated debt outstanding on March 31, 2008. On June 2, 2008, TCR said that Moody's Investors Service assigned a B1 rating to the proposed new $500 million of senior unsecured debt to be issued by Cablevision Systems Corporation's subsidiary CSC Holdings, Inc. Existing ratings for the company and CSC were also affirmed. The rating outlook remains stable. CABLEVISION SYSTEMS: S&P Says Strategic Initiative Won't Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services said that Cablevision Systems Corp.'s (BB/Negative/--) announcement that it will "explore several strategies for bringing the market value of the company's common stock more closely in line with the underlying operating performance of the company" does not have an immediate effect on the ratings or outlook on Cablevision or its subsidiaries. The Bethpage, N.Y.-based company's Board of Directors has authorized Cablevision to evaluate alternatives, including instituting a regular dividend, stock buybacks, or the spin-off of one or more business units. S&P notes that the company's history of various shareholder- friendly actions, both proposed and realized, has long been a limiting rating factor. Financial policy considerations constrain the rating despite the solid business position of the company's core cable TV business. Cablevision's more than 3 million metropolitan New York cable subscribers are particularly well clustered and post some of the best operating parameters in the industry. While the announcement of the company's strategic initiative does not immediately affect ratings, should Cablevision ultimately decide to undertake a major action as a result of this initiative, S&P will examine the specifics of that action to evaluate the potential impact on the company's ratings. CAPTEC FRANCHISE: Fitch Puts 'B/DR1' Rated Trust Under Neg. Watch ----------------------------------------------------------------- Fitch Ratings has placed these classes in Captec Franchise Loan Receivables Trust 1998-1 on Rating Watch Negative: -- Class A-3 rated 'BBB'; -- Class B rated 'B/DR1'. The Rating Watch Negative placements are due to a large obligor within the transaction recently filing for Chapter 7 bankruptcy. Currently, the defaulted obligor represents 20% of the 1998-1 pool. The bankruptcy proceedings are in their early stages, and limited information is available as to potential recoveries and the resulting impact on the transaction. As bankruptcy proceedings continue and the collateral sites are marketed and sold, Fitch expects to have a better expectation as to the severity of potential losses on the outstanding loan balances. This information will be instrumental in Fitch's review of the rating watch status on the affected classes. CARIBBEAN RESTAURANTS: Moody's Confirms CF Rating at Caa1 --------------------------------------------------------- Moody's Investors Service assigned B3 (LGD3, 39%) Rating to Caribbean Restaurants LLC's proposed $149 million senior secured 2nd lien notes due 2012, while affirming its Corporate Family Rating of Caa1, Probability of Default Rating of Caa1, and $210 million senior secured credit facilities of B2 (Rating on the bank debt will be withdrawn subsequently upon closing). The Rating outlook is stable. Moody's does not rate the new revolver. Moody's also notes that the Rating assignment is subject to a review of the final documentation. The proposed capital structure is the result of the company's intended refinancing of its existing bank credit facilities due 2009 ($30 million revolver and $180 million term loan, $140 million outstanding as of April 2008), with a $149 million senior secured 2nd lien notes to be issued as 144A private placement with no registration rights and a new $30 million 1st lien senior secured revolving credit facility due 2012. The affirmation of CFR to Caa1 recognizes the potential improvement in liquidity upon the transaction closing, in particular, the refinancing will extend the debt maturity into 2012 and the revolver is anticipated to be structured with one financial covenant on minimum EBITDA. However, these benefits would be offset by the incremental interest burden arising from higher coupon on the proposed notes which is expected to be sizable relative to the company's EBITDA generation (25-30% increase from its current level per Moody's estimate). The B3 Rating on the senior secured notes reflects the facilities' perfected second lien priority security interest in substantially all the assets of the company well as guarantee provided by its parent and subsidiaries. The B3 Rating on the facilities benefits from their priority position in the capital structure relative to its substantial junior debt obligation such as $73.5 million subordinated notes, lease obligation and trade payables. The Rating action is: Caribbean Restaurants LLC -- Rating assigned: $149 million senior secured second lien notes due 2012 -- B3 (LGD3, 39%) -- Rating affirmed: Corporate Family Rating at Caa1 Probability of Default Rating at Caa1 $210 million senior secured credit facilities due July 2009 at B2 (LGD3, 32%) -- Rating outlook: stable Caribbean Restaurants LLC, through an exclusive territorial development agreement with Burger King Corporation, is the sole franchisee of Burger King restaurants in Puerto Rico with approximately 172 units as of fiscal year-end April 30, 2008. CENTRAL ILLINOIS: Court Converts Case to Chapter 7 Liquidation -------------------------------------------------------------- The Hon. Thomas Perkins of the United States Bankruptcy Court for the Central District of California converted the Chapter 11 case of Central Illinois Energy LLC to a Chapter 7 liquidation proceeding, Erik Larson of Bloomberg News reports. According to Bloomberg, the move paves the way for the remaining assets of the Debtor to be sold and the proceeds to be distributed to creditors under a trustee's supervision. Judge Perkins ruled that Central Illinois must liquidate in court rather than restructure, the report says. On July 17, 2008, Nancy Gargula, the U.S. Trustee for Region 16, filed a motion seeking to convert the Debtor's Chapter 11 case, saying its reorganization was being delayed by litigation over conflict of interest among its board of directors, the report relates. "This debtor has neither the intention, nor the ability, to rehabilitate," Bloomberg quoted the U.S. Trustee as saying. The U.S. Trustee said in a court document that the legal disputes are causing a diminution of the estate assets to the detriment of creditors, the report adds. As reported in the Troubled Company Reporter on April 28, 2008, the Court approved the sale of substantially all of the Debtor's assets to New CIE Energy Opco LLC for $80,000,000 under an asset purchase agreement dated April 23, 2008. Under the agreement, New CIE Energy will assume all executory contracts for all mechanics liens of at least $25,000,000, Ethanol Producer Magazine reports. New CIE Energy will complete the unfinished ethanol plant in Canton, Illinois to cost at most $30,000,000, as part of the deal. A full-text copy of the Asset Purchase Agreement dated April 23, 2008, is available for free at: http://ResearchArchives.com/t/s?2b3c Based in Canton, Illinois, Central Illinois Energy LLC -- http://www.centralillinoisenergy.com/-- operates a 37-million gallons-per-year ethanol plant. The Debtor filed for Chapter 11 protection on Dec. 13, 2007 (Bankr. C.D. Ill. Case No 07-82817). Barry M. Barash, Esq., at Barash & Everett, LLC, represents the Debtor in its restructuring efforts. The U.S. Trustee for Region 10 has not appointed creditors to serve on an Official Committee of Unsecured Creditors in this case. When the Debtor filed for protection from its creditors, it listed assets between $1 million to $100 million, and more than $100 million in liabilities. CHARYS HOLDING: Files Reorganization Plan and Disclosure Statement ------------------------------------------------------------------ Charys Holding Co., Inc. and Crochet & Borel Services, Inc. submitted to the U.S. Bankruptcy Court for the District of Delaware its joint plan of reorganization and accompanying disclosure statement. The plan represents a compromise and settlement of various significant claims against Charys Holding and its affiliates that benefits all of its creditors. The plan settlement seeks to preserve value of the plan proponents for the creditors and recognize that an 8.75% senior convertible notes have direct guarantee claims against the Debtors that would significantly reduce, if not eliminate, any value for the creditors. In addition, the plan settlement addresses other significant claims, including the holders of certain Mirror Notes, Lori Mitchell, Matthew Mitchell, Carrol Castille and Cotton (Cotton Commercial USA, Inc.) Sellers. Treatment of Claims Against Charys Holding A. Administrative Expense Claims Each administrative expense claim will be paid in full, in cash, by the applicable liquidating trustee on the later of the effective date of the plan. Claims incurred in the ordinary course of business will be paid when due in the ordinary course of business. B. Professional Compensation and Reimbursement Claims Each professional compensation and reimbursement claim will be paid in full the applicable liquidating trustee, in cash. C. Indenture Trustee Fees The indenture trustee fees will be paid in full, in cash, by New Holdco (a new Delaware corporation to be formed) on the effective date. D. Priority Tax Priority tax claims will either be (i) paid in full, in cash by the liquidating trust, on the effective date or (ii) paid in full, in cash over a period not exceeding five years in equal annual cash payments with interest. E. Class 1 -- Other Priority Claims Ohter priority claims against Charys Holding will be paid in full, in cash by the Charys Liquidating Trust on the later of the effective date, the due the claim is allowed, or the date for payment provided by any agreement with the holder of the claim. F. Class 2 -- Secured Tax Claims Secured tax claims against Charys Holding will either (i) be paid in full, in cash, on the later of the effective date or the date the claim is allowed, (ii) receive equal annual cash payments commencing on the effective date in the aggregate amount equal to the allowed secured tax claim, or (iii) receive deferred cash payments upon the other terms determined by the bankruptcy court. All payments will be made by a Charys Liquidating Trust. G. Class 3 -- Secured Working Capital Facility Claims Each secured working capital facility claim against Charys Holding will either (i) be paid in full, in cash, (ii) receive proceeds from a sale of collateral securing the claim, (iii) receive collateral securing the claim, or (iv) receive other distributions as necessary to satisfy Section 1124 of the U.S. Bankruptcy Code. All payments will be made by the Charys Liquidating Trust. H. Class 4 -- Other Secured Debt Claims (about $8.2 million) Each other secured debt claim will either (i) be paid in full, in cash, (ii) receive the proceeds from a sale of collateral securing the claim, (iii) receive the collateral securing the claim, or (iv) receive other distribution. All payments will be made by the Charys Liquidating Trust. I. Class 5 -- Cotton Seller Note Claims (about $5.4 million) Each holder of a cotton seller note claim will receive a treatment provided for in a cotton settlement agreement. J. Class 6 -- CTSI/MSAI Seller Note Claims (about $10 million) and Mirror Note Claims (about $8 million) Each holder of a CTSI/MSAI (Complete Tower Sources, Inc./Mitchell Site Acq., Inc.) seller note claims will receive treatment provided for in the CTSI/MSAI settelement agreement. Each holder of a mirror note claim wll receive its (i) class 6/7 pro-rata share of new secured notes, (ii) its class 6/7 pro-rata share of 94% of new equity interests and (iii) its class B Charys Beneficial Interest in the Charys Liquidating Trust. K. Class 7 -- 8.75% Senior Convertible Note Claims (about $210 million) Each holder of an 8.75% senior convertible note claim will receive, in accordance with restructuring transactions, (i) its class 6/7 pro-rata share of new secured notes, (ii) its class 6/7 pro-rata share of 94% of new equity interests, and (iii) its class B Charys Beneficial Interest in the Charys Liquidating Trust. L. Class 8 -- General Unsecured Claims (about 55.6 million) Each holder of a general unsecured claim against Charys Holding will receive its Class B Charys Beneficial Interest in the Charys Liquidating Trust. M. Class 9 -- Subordinated Debt Claims (about $15 million) Holders of subordinated debt claims against Charys Holding will not receive any distribution. N. Class 10 -- Securities Claims Holders will not receive any distribution. O. Class 11 -- Equity Interests in Charys Holding Holders will not receive any distribution. Treatment of Claims Against Crochet & Borel A. Class 1 -- Other Priority Claims On the later of the effective date and the date the claim becomes allowed, each other priority claim against C&B will be pain in full, in cash by the C&B Liquidating Trust. B. Class 2 -- Secured Tax Each secured tax claim against C&B will either (i) be paid in full, in cash, on the later of the effective date or the date the claim is allowed, or (ii) be paid in full, in cash, over a period not exceeding five years. Payments will be made by the C&B Liquidating Trust. C. Class 3 -- Other Secured Claims On the later of the effective date or the date the claim becomes allowed, each other secured claim against C&B will receive the proceeds from a sale of collateral. Payments will be made by the C&B Liquidating Trust. D. Class 4 -- C&B 8.75% Senior Convertible Note Claims (about $210 million) No distribution. E. Class 5 -- C&B Securities Claims No distribution. F. C&B Equity Interests No distribution. Prepetition Debts A. 8.75% Senior Convertible Notes Due 2012 In February 2007, Charys Holding issued $201.2 million in original principal amount of 8.75% senior convertible notes due 2012, pursuant to a certain indenture dated as of Feb. 16, 2007. The Bank of New York Mellon Truts Company, NA, formerly The Bank of New York Trust Company, NA, serves as trustee to the notes. Proceeds of the notes were used toward certain payments due in respect of certain seller notes, to refinance other debts, complete acquisitions and for working capital and other general corporate purposes. The obligations under the notes are guaranteed by each of the Debtors. B. Mirror Notes In connection with the acquisitions of MSAI and CTSI, Charys Holding issued 8.75% senior convertible notes due 2012 to Lori Mitchell, Matthew Mitchell, and Carrol Castille, also known as mirror notes. The mirror notes containted terms similar to those contained in the 8.75% senior secured notes and in the indenture. C. Seller Notes Charys Holding is curently obligated on notes aggregating $80 million, issed in connection with certain acquisitions. In connection with an acquisition of C&B, Charys Holding issed a $77.8 million note to Troy Crochet. On April 13, 207, Charys paid $31.1 million on the C&B note. The remaining balance is $46.8 million. Mr. Crochet has asserted that the C&B note is secured by certain of the Debtors' assets. However, the Debtors believe that any security interests claimed by Mr. Crochet are either invalid, unenforceable, or avoidable. The Debtors also believe they have other claims against Mr. Crochet and with respect to the C&B note. The obligations of Charys in respect of the 8.75% notes are contractually subordinated to any allowed claim by Mr. Crochet. In connection with the acquisition of certain Cotton companies, Charys has outstanding secured promissory note of $5.2 million. In connection with the acquisitions of MSAI and CTSI, Charys has outstanding notes owed to Lori Mitchell and Matthew Mitchell totaling $14.2 million and $5.4 million. D. Other Secured Notes Charys also issed notes to Imperium Master Fund, Ltd., the JED Family Trust and John Michaelson, totaling $8.3 million. E. Unsecured Notes and Subordinated Notes Charys also has outstanding unsecured notes in the aggregate amount of $16.6 million. Of this amount, about $15 million are subordinated in right of payment to the 8.75% notes. F. Credit Agreements Charys was a guarantor of obligations owed under certain agreements aggregating $2.3 million. About Charys Holding Headquartered in Atlanta, Georgia, Charys Holding Co., Inc., fka Spiderboy International Inc. -- http://www.charys.com/-- provide remediation & reconstruction and wireless communications & data infrastructure. The company and its Crochet & Borel Services, Inc. subsidiary filed for Chapter 11 protection on Feb. 14, 2008 (Bankr. Del. Case No. 08-10289). Chun I. Jang, Esq., Mark D. Collins, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. The U.S. Trustee for Region 3 appointed five creditors to serve on an Official Committee of Unsecured Creditors. The Committee selected Morris Nichols Arsht & Tunnell LLP as Delaware co-counsel. When the Debtors filed for protection from their creditors, it listed total assets of $245,000,000 and total debts of $255,000,000. CNL FUNDING: Fitch Puts 'CC/DR4' Note Rating Under Negative Watch ----------------------------------------------------------------- Fitch Ratings has placed 7 Classes of CNL Funding 1998-1, LP on Rating Watch Negative, as: -- Class A-1b rated 'AAA'; -- Class B-1 rated 'AA'; -- Class C-1 rated 'A'; -- Class D-1 rated 'BBB+'; -- Class E-1 rated 'BB+'; -- Class F-1 rated 'B+'; -- Class G-1 rated 'CC/DR4'; The classes listed above are fixed rate notes which are supported by a sub pool of fixed rate loans within CNL Funding 1998-1, LP and perform independently from the variable rate notes which are supported by a sub pool of variable rate loans. The Rating Watch Negative assignments are due to the recent bankruptcy filing of a large casual dining restaurant obligor who accounts for approximately half of the fixed rate loan pool. The bankruptcy proceedings are still in the early stages and the size of potential future recoveries is unclear at this time. As the bankruptcy proceedings continue and the collateral sites are marketed and sold, Fitch expects to have a better expectation as to the severity of potential losses on the outstanding loan balances. This information will be instrumental in Fitch's review of the rating watch status on the affected classes. CONSOLIDATED FINANCIAL: Case Summary & 20 Largest Unsec. Creditors ------------------------------------------------------------------ Debtor: Consolidated Financial Resources, Inc. 5005 Live Oak Street Greenville, TX 75401 Bankruptcy Case No.: 08-33941 Chapter 11 Petition Date: Aug. 5, 2008 Court: Northern District of Texas (Dallas) Debtors' Counsel: Joel Douglas Froneberger, Esq. (easttexaslaw@verizon.net) Froneberger Law Offices 517 Main St. Sulphur Springs, TX 75482 Tel: (903) 885-5538 Fax: (903) 885-2214 Total Assets: unknown Total Debts: $1,498,565 A list of the Debtor's largest unsecured creditors is available for free at: http://bankrupt.com/misc/texnb08-33941.pdff CONTINENTAL AIRLINES: Reports July 2008 Aviation Performance ------------------------------------------------------------ Continental Airlines disclosed in a regulatory SEC filing Friday its performance for July 2008. The company reported a July consolidated (mainline plus regional) load factor of 84.2 percent, 2.2 points below the July 2007 consolidated load factor, and a mainline load factor of 85.3 percent, 1.7 points below the July 2007 mainline load factor. In addition, the carrier reported a domestic mainline July load factor of 85.5 percent, 2.5 points below the July 2007 domestic mainline load factor, and an international mainline load factor of 85.0 percent, 1.0 point below July 2007. During the month, Continental recorded a U.S. Department of Transportation on-time arrival rate of 76.1 percent and a mainline segment completion factor of 99.1 percent. In July 2008, Continental flew 9.2 billion consolidated revenue passenger miles (RPMs) and 10.9 billion consolidated available seat miles (ASMs), resulting in a consolidated traffic increase of 1.6 percent and a capacity increase of 4.3 percent as compared to July 2007. In July 2008, Continental flew 8.3 billion mainline RPMs and 9.7 billion mainline ASMs, resulting in a mainline traffic increase of 1.1 percent and a mainline capacity increase of 3.2 percent as compared to July 2007. Domestic mainline traffic was 4.2 billion RPMs in July 2008, down 1.7 percent from July 2007, and domestic mainline capacity was 4.9 billion ASMs, up 1.2 percent from July 2007. For July 2008 both consolidated and mainline passenger revenue per available seat mile (RASM) are estimated to have increased between 4.5 and 5.5 percent compared to July 2007. For June 2008, consolidated passenger RASM increased 4.1 percent compared to June 2007, while mainline passenger RASM increased 3.5 percent compared to June 2007. Continental's regional operations had a July load factor of 76.0 percent, 5.5 points below the July 2007 regional load factor. Regional RPMs were 935.8 million and regional ASMs were 1,231.6 million in July 2008, resulting in a traffic increase of 6.0 percent and a capacity increase of 13.7 percent versus July 2007. At June 30, 2008, the company's consolidated balance sheet showed $13.8 billion in total assets, $12.1 billion in total liabilities, and $1.7 billion in total stockholders' equity. About Continental Airlines Based in Houston, Texas, Continental Airlines Inc. (NYSE: CAL) -- http://continental.com/-- is the world's fifth largest airline. Continental, together with Continental Express and Continental Connection, has more than 3,000 daily departures throughout the Americas, Europe and Asia, serving 140 domestic and 139 international destinations. More than 550 additional points are served via SkyTeam alliance airlines. With more than 46,000 employees, Continental has hubs serving New York, Houston, Cleveland and Guam, and together with Continental Express, carries approximately 69 million passengers per year. * * * The Troubled Company Reporter said May 21, 2008, that Moody's Investors Service affirmed the B2 Corporate Family Rating of Continental Airlines Inc. as well as the ratings of its outstanding corporate debt instruments and selected classes of Continental's Enhanced Equipment Trust Certificates. The Speculative Grade Liquidity rating was lowered to SGL-3 from SGL- 2. The outlook has been changed to negative from stable. As reported by the Troubled Company Reporter on April 22, 2008, Standard & Poor's Ratings Services revised its rating outlook on Continental Airlines Inc. (B/Negative/B-3) to negative from stable. S&P also placed its ratings on selected enhanced equipment trust certificates that are secured by regional jets on CreditWatch with negative implications. As reported in the Troubled Company Reporter on Dec. 27, 2007, Fitch Ratings affirmed Continental Airlines 'B-' issuer default rating with a stable outlook. COUNTRYWIDE FINANCIAL: S&P Gives "Above Average" Rating on Unit --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rankings on Countrywide Home Loans Inc., a wholly owned subsidiary of Countrywide Financial Corp., to ABOVE AVERAGE from STRONG in these categories: residential mortgage servicer, residential subprime mortgage servicer, residential mortgage special servicer, and residential subordinate-lien servicer. Concurrently, S&P removed the rankings from CreditWatch negative and assigned a developing outlook. The downgrades primarily reflect S&P's view of various regulatory investigations and actions that Countrywide is facing regarding its bankruptcy practices. The developing outlook acknowledges uncertainties about the progression of Countrywide's recent acquisition by Bank of America, as S&P believes that the integration will require significant planning due to Countrywide's multiple sites and the different technology platforms in place at both companies. According to certain filings made public in connection with legal actions initiated by certain Chapter 13 bankruptcy trustees, allegations have surfaced that Countrywide assessed inappropriate fees with the courts on borrowers who filed for Chapter 13 bankruptcy protection. Countrywide is also subject to certain investigations by the Office of the U.S. Trustee, which is overseen by the U.S. Department of Justice. This includes an investigation by the Office of the U.S. Trustee into the mortgage servicing system of Countrywide to discern evidence of possible errors affecting items such as mishandled payments and assessment of improper charges. The company is currently attempting to resolve these discrepancies with the appropriate regulatory authorities. There are 15 actions on a corresponding number of loans involved in the ongoing investigations by the Office of the U.S. Trustee. Countrywide recently resolved one such action with the Chapter 13 trustee for the district of Western Pennsylvania (subject to pending court approval). This action alleged that Countrywide did not process Chapter 13 distribution payments in a timely manner. The company, although admitting to no wrongdoing, paid a monetary settlement and agreed to reconcile amounts due as claimed by the trustee with those outstanding according to Countrywide's records. Countrywide has also agreed to adopt bankruptcy best practices as set forth by the National Association of Chapter 13 Trustees (NACTT). Countrywide's management has indicated that the company is already in compliance with many of the proposed practices through its normal bankruptcy processes. Additionally, the attorneys general of several states, including California, Illinois, and Florida, have recently initiated actions against Countrywide over claims of unfair and deceptive lending practices. Together, S&P considers these actions to have affected the company's image in the market and created headline risk. In response to market developments over the past year, Countrywide has taken steps to revise and strengthen its internal controls and procedures related to subordinate-lien and adjustable-rate mortgage (ARM) processing. The changes include more stringent oversight of extension and suspension of credit lines for subordinate liens and supplementary proactive workout efforts for ARMs designed to prevent delinquencies resulting from large payment changes. The Servicer Evaluation Analytical Methodology (SEAM) metrics provided by Countrywide indicate to us that it is a good performer relative to its relevant industry peers in many areas. The company's call center metrics remain satisfactory in S&P's opinion, and the previously elevated turnover rate in its customer service area has improved. Delinquency levels are higher than reported averages. Internal auditing mechanisms remain solid, and the company's use of offshore operations allows it to reduce costs. Together with its domestic sites, S&P believes this arrangement enhances the company's existing disaster recovery plan and provides it with multiple locations to recruit experienced staff. Countrywide continues to maintain sound performance ratings from Fannie Mae, Freddie Mac, and the Department of Housing and Urban Development. Its technology remains very good, and the company implemented some supplementary initiatives to further enhance its system environment. After its acquisition by BofA closed on July 1, 2008, Countrywide and BofA now have opportunities to leverage the operational and marketing mechanisms of both companies to further enhance their servicing operations. Although the two companies will slowly merge their servicing entities, this transaction provides Countrywide with options for developing additional best practices throughout its servicing infrastructure. Outlook The outlook is developing. It remains uncertain how the eventual integration of Countrywide and BofA will progress, and the recent announcement that a BofA executive manager will oversee the combined mortgage division contrasted with previous plans, adding further uncertainty to the equation. Although Countrywide continues to evidence servicing efficiencies, Standard & Poor's is concerned about how the company's bankruptcy issues and the challenges involved with a large-scale integration will affect its operations. As such, Standard & Poor's will continue to closely monitor these developments over the next 12 months to determine whether S&P believes further ranking or outlook revisions are appropriate. CREDIT SUISSE: S&P Cuts Ratings on Three Classes of Notes to CCC ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on nine classes of commercial mortgage pass-through certificates from Credit Suisse Commercial Mortgage Trust's series 2007-C3. In addition, S&P affirmed its ratings on 17 classes from this series. The downgrades reflect credit concerns with 12 of the 29 loans in the pool that have reported debt service coverage (DSC) below 1.0x. The downgrades also reflect anticipated credit support erosion upon the eventual resolution of three of the five assets that are currently with the special servicer. The affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. Excluding the Fairfield Village Shopping loan, which is specially serviced, there are 29 loans in the pool totaling $409.1 million (15%) with reported DSCs that are lower than 1.0x. The loans are secured by a variety of property types with an average balance of $13.8 million. These loans have seen an average decline in DSC of 34% since issuance. Twelve of the loans totaling $125.3 million (5%) have experienced unexpected drops in DSC. The remaining loans are in various stages of renovation or lease-up, and the net cash flow available for debt service is expected to improve in the future. Five assets ($21.6 million, 0.8%) are with the special servicer, LNR Partners Inc. (LNR). Standard & Poor's used recent appraisals and available market information to determine the potential losses and recoveries on the specially serviced assets: -- The Hannaford Suites Hotel loan has a total exposure of $5.7 million (0.2%) and is secured by the fee interest in a 79- room lodging property in Cincinnati. The loan was transferred to LNR on Jan. 23, 2008, due to imminent default as a result of significant mold and water damage. The preliminary estimate for the remediation of the damage is between $2.0 million and $2.5 million. LNR is evaluating a variety of workout strategies. Standard & Poor's expects that the resolution of the asset could result in a moderate loss. -- The Oak Lawn Train Station Retail loan has a balance of $4.7 million (0.2%) and additional advances, including interest thereon, totaling $343,797. An 11,111-sq.-ft. retail property in Oak Lawn, Ill. secures this loan. The loan was transferred to LNR on Nov. 7, 2007, because of a monetary default and is currently in foreclosure. The property is currently 65% occupied. LNR has finalized an appraisal and Standard & Poor's expects the resolution of the asset to result in a minimal loss. -- The HRubin Deerfield Warehouse and HRubin Sarasota Warehouse loans have a balance of $4.4 million (0.2%) and $2.8 million (0.1%), respectively. The loans are secured by two industrial properties totaling 85,098 sq. ft. in the Sarasota, Fla. area. The assets were transferred to LNR on Dec. 5, 2007, due to imminent default and remain current. The properties are 100% occupied and leased to one tenant who filed for bankruptcy in November 2007. Standard & Poor's expects the resolution of the asset to result in a minimal loss. -- The Fairfield Village Shopping loan has a balance of $4.0 million (0.2%). A 77,041-sq.-ft. retail property in the Pensacola, Fla. secures this loan. The asset was transferred to LNR on Feb. 22, 2008, due to imminent default, and is 30-days delinquent. The borrower failed to get adequate windstorm insurance and the servicer force-placed insurance in October 2007. The borrower has made only partial debt service payments since December 2007 despite the property being 95% occupied. Standard & Poor's expects the resolution of the asset to result in a minimal loss. As of the July 17, 2008, remittance report, the collateral pool consisted of 238 loans with an aggregate trust balance of $2.681 billion, compared with the same number of loans totaling $2.685 billion at issuance. The master servicers, KeyBank Real Estate Capital Inc. (KeyBank) and Wachovia Bank N.A. (Wachovia), reported financial information for 94% of the pool. Eighty-three percent of the servicer-provided information was full-year 2007 data. Standard & Poor's calculated a weighted average DSC of 1.29x for the pool, down from 1.35x at issuance. There are three delinquent loans in the pool; two are 30-days delinquent ($21.3 million, 0.8%), and one is in foreclosure ($4.7 million, 0.2%). All of the delinquent loans are with LNR. The trust has not experienced any losses to date. The top 10 loans have an aggregate outstanding balance of $825.3 million (31%) and a weighted average DSC of 1.41x, up from 1.47x at issuance. Standard & Poor's reviewed property inspections provided by the master servicer for four of the assets underlying the top 10 exposures. All of the properties were characterized as "good." The credit characteristics of the Mandarin Oriental loan are consistent with those of investment-grade obligations. The loan is the second-largest in the pool and has a balance of $135.0 million (5%). The loan is secured by the fee interest in a 248-room full-service hotel in midtown Manhattan. For the year-ended Dec. 31, 2007, DSC was 2.19x, and the average daily room rate was $903. Standard & Poor's adjusted value for this loan is comparable to its level at issuance. KeyBank and Wachovia reported a watchlist of 39 loans ($551.3 million, 21%). The Westwood Complex loan ($95.0 million, 4%) is the largest loan on the watchlist and the third-largest exposure in the pool. Eight cross- collateralized and cross-defaulted properties of various property types secure this loan. The portfolio has a total net rentable area of 710,870 sq. ft. and all of the properties are located in Bethesda, Md. The loan appears on the watchlist because the portfolio reported a DSC of 1.07x for the year-ended Dec. 31, 2007. The portfolio is 100% occupied and the DSC is expected to improve as rent increases begin. Standard & Poor's stressed the loans on the watchlist and the other loans with credit issues as part of its analysis. The resultant credit enhancement levels support the lowered and affirmed ratings. RATINGS LOWERED Credit Suisse Commercial Mortgage Trust Series 2007-C3 Commercial mortgage pass-through certificates series 2007-C3 Rating Class To From Credit enhancement (%) J BBB- BBB 4.26 K BB BBB- 3.13 L BB- BB+ 2.75 M B+ BB 2.50 N B BB- 2.13 O B- B+ 1.88 P CCC+ B 1.63 Q CCC B- 1.25 S CCC- CCC 1.00 RATINGS AFFIRMED Credit Suisse Commercial Mortgage Trust Series 2007-C3 Commercial mortgage pass-through certificates series 2007-C3 Class Rating Credit enhancement (%) A-1 AAA 30.04 A-1-A1 AAA 30.04 A-1-A2 AAA 30.04 A-2 AAA 30.04 A-3 AAA 30.04 A-4 AAA 30.04 A-AB AAA 30.04 A-M AAA 20.03 A-J AAA 12.52 B AA+ 11.89 C AA 10.39 D AA- 9.39 E A+ 8.64 F A 7.76 G A- 6.63 H BBB+ 5.38 A-X AAA N/A N/A-Not applicable. CSK AUTO: S&P Withdraws 'B-' Rating After O'Reilly Acquisition -------------------------------------------------------------- Standard & Poor's Ratings Services said it withdrew its ratings on Phoenix-based CSK Auto Inc., including its 'B-' corporate credit rating. CSK was acquired by O'Reilly Automotive Inc. (unrated) on July 11, 2008. The rating withdrawals reflect the termination of CSK's bank credit facility and a lack of market interest in the company's $100 million 6.75% senior exchangeable notes due 2025. DELPHI CORP: GM Says Delphi-Related Charges Reach $11 Billion ------------------------------------------------------------- General Motors Corp. said charges related to Delphi Corp. has now reached approximately $11,000,000,000. In a presentation furnished to securities analysts, GM said made a $2,753,000,000 adjustment to its Delphi reserve, "primarily due to updated estimates related to Delphi's ongoing reorganization." The adjustment reflects higher expected obligations (e.g. net pension liabilities) and additional uncertainty around nature, value and timing of GM recoveries. GM's one-time losses due to Delphi have totaled $3,484,000,000 for the 1st half of 2008. GM, which contributes to over 30% of Delphi's revenues, reported a net loss of $15,471,000,000 or $27.33 per share for the second quarter of 2008. The quarterly loss, according to Bloomberg News, is the third biggest in its 100-year history. "Second quarter charges of $2.8 billion and year to date charges of $3.5 billion were recorded for increased liabilities under our Delphi Benefit Guarantee Agreements, primarily due to expectations of increased obligations and updated estimates reflecting the nature, value and timing of our recoveries upon Delphi's emergence from bankruptcy," GM said in its news release. A former unit of GM, Delphi was set to emerge from bankruptcy in mid-April but obtained problems with its $2,550,000,000 exit equity financing from Appaloosa Management, L.P. The plan of reorganization of Delphi, which has been confirmed by the U.S. Bankruptcy Court for the Southern District of New York, provides that GM will receive cash, notes and other securities in exchange for the consideration it provided to Delphi under their agreements. Appaloosa backed out from their investment agreement after Delphi sought $2,825,000,000 of its $6,100,000,000 exit debt financing from GM, its biggest customer. GM said that its second quarter results were primarily driven by several factors: -- significant losses in GM North America (GMNA) due to continuing U.S. industry volume declines and shifts in vehicle mix, the long strike at American Axle and large lease-related charges; -- a number of special charges associated with GM's ongoing restructuring actions; and -- continued losses at GMAC Financial Services (GMAC) and updated estimates regarding recoveries and expectations of assumed benefit obligations in the Delphi bankruptcy. Excluding expenses considered by GM to be one-time, including its adjustment to reserves for bankrupt Delphi Corp., the loss was $6,300,000,000, or $11.21 a share. Standard & Poor's has cut GM's credit rating to B-, six levels below investment grade, as falling U.S. sales have required the automaker to use more cash. GM says that its readily-available cash assets total $21,000,000,000 and it still has access to $5,000,000,000 under its undrawn U.S. credit facilities. About GM Based in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. At March 31, 2008, GM's balance sheet showed total assets of $145,741,000,000 and total debts of $186,784,000,000, resulting in a stockholders' deficit of $41,043,000,000. Deficit, at Dec. 31, 2007, and March 31, 2007, was $37,094,000,000 and $4,558,000,000, respectively. Standard & Poor's has cut GM's credit rating to B-, six levels below investment grade, as falling U.S. sales have required the automaker to use more cash. GM says that its readily-available cash assets total $21,000,000,000 and it still has access to $5,000,000,000 under its undrawn U.S. credit facilities. About Delphi Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for Chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed US$11,446,000,000 in total assets and US$23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. The Plan has not been consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide US$2,550,000,000 in equity financing to Delphi. (Delphi Bankruptcy News, Issue No. 139; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Court Rejects Appaloosa Bid to Dismiss Lawsuit ----------------------------------------------------------- As widely reported, Judge Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York declined to approve Appaloosa Management, L.P., et al.'s request for dismissal of Delphi Corp.'s $2,550,000,000 lawsuit against them. Delphi has accused Appaloosa and other investors of defrauding the Court by stating that they had every intention of performing under the Equity Purchase and Commitment Agreement. Appaloosa, however, argued that Delphi cannot seek specific performance because it is currently unable to perform under the conditions- precedent of the EPCA, including obtaining commitment to its $6,100,000,000 debt financing and the completion of the rights offering. The Wall Street Journal reported that Judge Drain dismissed a portion of Delphi's complaint, but he rejected most of the defendants' arguments. Judge Drain also allowed Delphi to pursue its fraud claim against the Appaloosa-led group. The ruling allows Delphi to continue its bid to force the Plan Investors to make good on the equity investment, WSJ's David McLaughlin said. The Plan Investors had also pointed to provision in the EPCA which provide that the aggregate liability of the the Plan Investors for any reason, including, for any willful breach, prior to December 10, 2007, will not exceed $100,000,000, and for any acts occurring thereafter, will not exceed $250,000,000. Judge Drain, however, declined to cap damages at the EPCA at $250,000,000. General Motors previously said that the terms and conditions of a new or modified plan, which it is negotiating with Delphi and the Official Committee of Unsecured Creditors, will depend in part on the amount of Delphi's recovery in the litigation. According to Bloomberg News, Judge Drain dismissed almost all claims Delphi made against Goldman Sachs Group Inc. and said any damages award against the parents of investors Harbinger Del-Auto Investment Co. Ltd. and Pardus DPH Holding LLC should be capped. Goldman Sachs & Co. previously stated that it had not obligation to close on the EPCA if other parties, including Appaloosa, failed to perform their obligations under the agreement. Bloomberg's Christopher Scinta added that the Court also turned aside Delphi's effort to subordinate in priority (or disallow) any claims the investors, other than Appaloosa, hold against Delphi. Judge Drain, according to the same report, also denied part of Delphi's fraud claim against Appaloosa, though he told Delphi attorneys they can revise their complaint by the end of the week to seek reinstatement of that claim. GM Allowed to Join As Party-In-Interest Judge Drain also overruled the Plan Investors' objection to General Motors Corporation's participation as party-in-interest in the Adversary Proceedings. According to Bloomberg News, Judge Drain said Delphi will not settle the adversary cases without "obtaining input" ahead of time from GM. Like A-D Acquisition Holdings, LLC, and Appaloosa Management L.P. and other defendants to Delphi's $2,550,000,000 complaint, UBS Securities LLC expressed opposition to General Motors' participation as party-in-interest. General Motors, in response, to the objections, clarified that it does not seek to intervene, but instead simply requests to be afforded admission to participate as a monitor in the Adversary Proceedings. Michael P. Kessler, Esq., at Weil, Gotshal & Manges LLP, in New York, notes that the role sought by GM is subsumed within the greater rights that would be afforded to GM were it to exercise its right to intervene as a party to the Adversary Proceedings. In no way, then, does GM's proposal circumscribe any party's rights or deprive them of any protectable interests, he asserts. GM also emphasized that it does not seek to propose settlement of the dispute or take ownership of the Debtors' claims, nor is GM asserting rights that are derivative of another party's rights in the Chapter 11 cases, Mr. Kessler stressed. GM, Delphi and the Official Committee of Unsecured Creditors have agreed to terms of GM's participation in the Adversary Proceedings. Their stipulation, which has been approved by Judge Drain, provides that: (1) Weil, Gothshal and Manges, counsel of GM, will be served with all pleadings and other papers in accordance with Rule 5 of the Federal Rules of Civil Procedure and Rule 7005 of the Federal Rule of Bankruptcy Procedure; (2) GM, through its counsel, may participate in the Adversary Proceedings in a monitoring role, and will be permitted to: (i) appear before the Court on any matter, including at hearings and, as appropriate, chambers conferences; (ii) attend mediation sessions and other formal settlement negotiations, subject to any restrictions by the mediator; and (iii) participate in the discovery process, including attendance at depositions, access to all documents produced and written discovery requests and responses, and deposition transcripts and exhibits. (3) GM will sign and comply with the confidentiality restrictions in the Stipulation and Agreed Protective Order Governing Production and Use of Confidential and Highly Confidential Information entered in the Adversary Proceedings; (4) GM will have access to all documents produced and written discovery requests and responses, and deposition transcripts and exhibits; (5) Weil Gotshal, on behalf of GM, will be authorized to evaluate the Adversary Proceedings. Neither Weil Gotshal nor GM will use materials provided pursuant to the Stipulation and Order for any other purpose; (6) The agreement is without prejudice to: (i) GM seeking further participation rights in the Adversary Proceedings; (ii) any party opposing the motion; (iii) any party seeking greater restrictions; and (iv) GM opposing restrictions; (7) The agreement is without prejudice to GM seeking to share discovery materials with GM personnel in connection with testimony by the personnel at depositions, hearings or trial, and if the parties cannot agree, the dispute may be presented to the Court; and (8) Delphi will not settle either of the Adversary Proceedings without obtaining input in advance from GM. Delphi lawyers will confer with GM's lawyers on a regular and timely basis concerning the Adversary Proceedings. The Stipulation will be effective for only so long as the Global Settlement Agreement and Master Restructuring Agreement entered into between General Motors and Delphi are not terminated. About GM Based in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. At March 31, 2008, GM's balance sheet showed total assets of $145,741,000,000 and total debts of $186,784,000,000, resulting in a stockholders' deficit of $41,043,000,000. Deficit, at Dec. 31, 2007, and March 31, 2007, was $37,094,000,000 and $4,558,000,000, respectively. Standard & Poor's has cut GM's credit rating to B-, six levels below investment grade, as falling U.S. sales have required the automaker to use more cash. GM says that its readily-available cash assets total $21,000,000,000 and it still has access to $5,000,000,000 under its undrawn U.S. credit facilities. About Delphi Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for Chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed US$11,446,000,000 in total assets and US$23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. The Plan has not been consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide US$2,550,000,000 in equity financing to Delphi. (Delphi Bankruptcy News, Issue No. 139; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Court Extends Plan-Filing Deadline to October 31 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York extended Delphi Corp. and its debtor-affiliates' exclusive periods to: (a) file a plan of reorganization through and including Oct. 31, 2008; and (b) solicit acceptances of that Plan through and including Dec. 31, 2008. As reported by the Troubled Company Reporter on July 29, 2008, John Wm. Butler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, recalled that on April 4, 2008, the Debtors announced that although they had met the conditions required to substantially consummate the Plan, including obtaining $6,100,000,000 of exit financing, Delphi's Plan Investors refused to participate in a closing. As disclosed in the Troubled Company Reporter on May 7, 2007, the Debtors obtained an extension, subject to certain exceptions, of their exclusive right under Section 1121 of the Bankruptcy Code to file one or more reorganization plans until 30 days after substantial consummation of the Plan and the exclusive right to solicit and obtain acceptances for those plans 90 days after substantial consummation of the plan by entry of the Order Under Section 1121(d) of the Bankruptcy Code. The Order, however, extended the Debtors' exclusive right to file a plan, as between the Debtors and the Statutory Committees, through and including Aug. 31, 2008, and the right to solicit a plan, as between the Debtors and the Statutory Committees, through and including Oct. 31, 2008, Mr. Butler said. On May 16, 2008, Delphi filed complaints for damages and specific performance against the Plan Investors who refused to participate in the closing that would have led to Delphi's successful emergence from Chapter 11. The Debtors nevertheless continue to work with their stakeholders to achieve their goal of emerging from Chapter 11 as soon as practicable, Mr. Butler said. Out of an abundance of caution and to ensure clarity with their stakeholders, including their customers and suppliers, the Debtors seek an extension of the Exclusive Periods to prevent any lapse in exclusivity between the Debtors and the Statutory Committees, Mr. Butler clarified. Mr. Butler explained that a further extension of the Exclusive Periods is justified by the significant progress the Debtors have made toward emerging from Chapter 11. After obtaining confirmation of the First Amended Plan, the Debtors secured exit financing and met all other conditions to the effectiveness of the Plan and Investment Agreement and were prepared to emerge from Chapter 11. Since April 30, 2008, Mr. Butler noted, the Debtors have continued to make progress toward emerging from Chapter 11 in three major areas: (i) The Debtors have engaged in a reaffirmation process with respect to the business plan contained in the Disclosure Statement. That process includes an analysis, among other things, of the impact of an unprecedented increase in global commodity costs and reduction of projected North American automobile industry production volumes; (ii) The Debtors have explored their exit financing possibilities in capital markets that remain turbulent; and (iii) The Debtors have entered into complex negotiations with the Statutory Committees and General Motors Corp. with respect to potential modifications of the Plan that will enable Delphi to emerge from chapter 11 as soon as reasonably practicable, thereby moving forward so that the Debtors can focus solely on their business operations and mitigate the damages caused by the Plan Investors. About Delphi Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for Chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed US$11,446,000,000 in total assets and US$23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. The Plan has not been consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide US$2,550,000,000 in equity financing to Delphi. (Delphi Bankruptcy News, Issue No. 139; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DLNJ HANCOCK: Voluntary Chapter 11 Case Summary ----------------------------------------------- Lead Debtor: D.L.N.J. Hancock Properties, LLC 2060 Chimney Pt. Sunrise Beach, MO 65079 Bankruptcy Case No.: 08-21380 Chapter 11 Petition Date: August 1, 2008 Court: Western District of Missouri (Jefferson City) Judge: Dennis R. Dow Debtor's Counsel: Richard C. Wallace, Esq. Email: richard@evans-mullinix.com Evans & Mullinix, P.A. 7225 Renner Rd., Ste. 200 Shawnee, KS 66217 Tel: (913) 962-8700 Fax: (913) 962-8701 http://www.evans-mullinix.com Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $1,000,000 to $10,000,000 The Debtor did not file a list of largest unsecured creditors. DOW JONES: Moody's Cuts $500MM Trust Certificates Rating to B2 -------------------------------------------------------------- Moody's Investors Service downgraded the ratings on these notes issued by Dow Jones CDX.NA.HY.3-2: -- Class Description: $500,000,000 Credit-Linked Trust Certificates due December 2009 -- Prior Rating: Ba3, on review for possible downgrade -- Current Rating: B2 According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists of corporate securities. DUKE FUNDING: Fitch Junks Ratings on Six Note Classes ----------------------------------------------------- Fitch downgraded and removed from Rating Watch Negative six classes of notes issued by Duke Funding IX, Ltd./Corp. These rating actions are effective immediately: -- $143,750,000 class A1 notes to 'CCC' from 'A-,; -- $8,000,000 class A2F notes to 'CC' from 'BBB-'; -- $292,000,000 class A2V notes to 'CC' from 'BBB-'; -- $10,158,750 class A3F notes to 'C' from 'BB'; -- $166,853,821 class A3V notes to 'C' from 'BB'; -- $85,091,027 class B notes to 'C' from 'B'. Duke Funding IX is a hybrid cash and synthetic structured finance collateralized debt obligation that closed on Nov. 9, 2005 and is managed by Duke Funding Management, LLC, a wholly owned subsidiary of Ellington Management Group, LLC. Currently 52.4% of the portfolio is comprised of 2005, 2006 and 2007 vintage U.S. subprime residential mortgage-backed securities, and 15.6% is comprised of 2005 and 2006 vintage U.S. Alternative-A RMBS. Fitch's rating actions reflect the significant collateral deterioration within the portfolio, specifically subprime RMBS and Alt-A RMBS. Since Fitch's last rating action on Nov. 21, 2007, approximately 64.7% of the portfolio has been downgraded, with 9.4% of the portfolio currently on Rating Watch Negative. 62.5% of the portfolio is now rated below investment grade, including 35.1% of the portfolio rated 'CCC+' or below. The negative credit migration experienced since Fitch's last rating action has resulted in the Weighted Average Rating Factor deteriorating to 19.5 ('BB-/B+') from 6.6 ('BBB/BBB-'), breaching its covenant of 7.0 ('BBB/BBB-'), as of the latest trustee report dated June 9, 2008. The collateral deterioration has caused each of the overcollateralization tests to fall below 100% and fail their respective triggers. As of the latest trustee report the class A2 OC ratio was 94.7%, the class A3 OC ratio was 86.6%, and the class B OC ratio was 83.2%. As a result of the coverage test failures, the transaction is currently diverting interest proceeds from the classes A3F, A3V, and B notes, instead using these proceeds to reduce the notional size of the unfunded super senior swap. Payment of interest to the classes A3F, A3V, and B notes has been made in kind by writing up the principal balance of each class by the amount of interest owed. Payments to the class A1 notes are subordinate to payments to an unfunded super senior swap in the transaction. The notional amount of the super senior swap is currently over $1.4 billion, and while it is unfunded, principal and interest proceeds are used to delever this exposure prior to payments to the class A1 notes. Given the magnitude of credit deterioration in the portfolio, combined with the subordination of payments to the super senior swap, Fitch believes that the class A1 notes will likely experience principal impairment in the future. The ratings on the classes A1, A2F, and A2V notes address the timely receipt of scheduled interest payments and the ultimate receipt of principal as per the transaction's governing documents. The ratings on the classes A3F, A3V, and B notes address the ultimate receipt of interest payments and ultimate receipt of principal as per the transaction's governing documents. EDUCATION RESOURCES: Court Approves Rasky Baerlein as PR Advisor ---------------------------------------------------------------- Judge Henry J. Boroff of the U.S. Bankruptcy Court for the District of Massachusetts approved the employment application of Rasky Baerlein Strategic Communications Inc., as The Education Resources Institute Inc.'s public relations advisor until Sept. 11, 2008, pursuant to a modified engagement agreement. The modified Engagement Agreement provided that: (a) Rasky Baerlein will maintain the remaining funds, paid to it in the form of a retainer prior to the bankruptcy filing, in a separate and segregated account; (b) the Debtor will indemnify and hold harmless Rasky Baerlein from all claims arising from the performance of its duties, including, without limitation, all reasonable attorney's fees and legal expenses incurred, unless the claim is determined by a court of competent jurisdiction to have resulted from the gross negligence of Rasky Baerlein; and (c) Rasky Baerlein will waive 3% Expense Charge. As reported in the Troubled Company Reporter on Jun 13, 2008, the Debtor will pay Rasky according to its standard hourly rates: Professional Hourly Rates ------------ ------------ Partner $550 Senior Vice-President $250 Vice President $200 Senior Account Executive $150 Account Coordinator $100 Judge Boroff ruled that for the Retention Period, Rasky's fees must not exceed $20,000 per month. The U.S. Trustee retains all rights to object to Rasky's fee applications. 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. 10; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) EPICEPT CORP: Prices $2.65 Million Offering of Shares and Warrants ------------------------------------------------------------------ EpiCept Corporation priced its public offering of approximately 5.53 million shares of its common stock at $.5425 per share and five-year warrants to purchase up to approximately 2.76 million shares of common stock at an exercise price of $.48 per share. EpiCept will receive approximately $2.65 million in net proceeds from the offering. EpiCept intends to use the net proceeds it receives to meet its working capital needs and for general corporate purposes into August 2008 and to repay a portion of its senior secured loan. Rodman & Renshaw LLC, a subsidiary of Rodman & Renshaw Capital Group Inc. acted as the exclusive placement agent for the offering. The proposed public offering is being made pursuant to an effective registration statement, and may be made only by means of a prospectus and prospectus supplement. A copy of the prospectus supplement relating to the common stock and warrants can be obtained from: Rodman & Renshaw LLC 1270 Avenue of the Americas New York, NY 10020 Tel (212) 356-0549. About EpiCept Corporation Based in Tarrytown, New York, EpiCept Corporation (NASDAQ:EPCT) -- http://www.epicept.com/-- is a specialty pharmaceutical company focused on the development of pharmaceutical products for the treatment of cancer and pain. The company has a portfolio of five product candidates in active stages of development. It includes an oncology product candidate submitted for European registration, two oncology compounds, a pain product candidate for the treatment of peripheral neuropathies and another pain product candidate for the treatment of acute back pain. The two wholly owned subsidiaries of the company are Maxim, based in San Diego, California, and EpiCept GmbH, based in Munich, Germany, which are engaged in research and development activities. EpiCept Corp.'s consolidated balance sheet at March 31, 2008, showed a stockholders' deficit of $15,570,000, compared to a deficit of $14.1 million at Dec. 31, 2007. Going Concern Doubt Deloitte & Touche LLP, in Parsippany, New Jersey, expressed substantial doubt about EpiCept 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 pointed to the company's recurring losses from operations and stockholders' deficit. The company disclosed in its Form 10-Q for the first quarter ended March 31, 2008, that to date it has not generated any meaningful revenues from the sale of products and may not generate any such revenues for a number of years, if at all. As a result, the company has an accumulated deficit of $176,926,000 as of March 31, 2008, and may incur operating losses for a number of years. FEDERAL MOGUL: T&N Asbestos Victims to Get GBP 2MM in Payments -------------------------------------------------------------- About 50 families who were exposed to asbestos mined by Turner and Newall can recover almost GBP2,000,000, or about $3,800,000 in compensation, Thompsons Solicitors said in a public statement. Thompson Solicitors represents the T&N asbestos victims. U.K.-based T&N formerly mined asbestos before filing administration proceedings under the United Kingdom Insolvency Act in 2001. T&N's mining operations resulted to workers being exposed to asbestos, which causes a kind of cancer in the lungs. Compensation claims filed by the asbestos victims were "stayed" or "frozen" as a result of T&N's administration proceedings. T&N was acquired by Federal-Mogul Corporation in 1999. Federal-Mogul and its U.S. affiliates also filed parallel bankruptcy proceedings in the United States in 2001 to separate their operating liabilities from their increasing asbestos liabilities. In September 2005, the administrators of the U.K. Debtors entered into an agreement outlining the terms of distributions to creditors of the U.K. Debtors. In October 2006, Federal-Mogul placed approximately $750,000,000 for, among other things, asbestos claims against T&N. According to Thompsons Solicitors, more than 100 former T&N employees have died of mesothelioma or other diseases relating to asbestos since 2001. Ian McFall at Thompsons Solicitors said the firm is still working to ensure that other families who have been victims of T&N's asbestos mining operations will receive appropriate compensation. About Federal-Mogul Federal-Mogul Corporation -- http://www.federal-mogul.com/-- (OTCBB: FDMLQ) is a global supplier, serving the world's foremost original equipment manufacturers of automotive, light commercial, heavy-duty, agricultural, marine, rail, off-road and industrial vehicles, as well as the worldwide aftermarket. Founded in Detroit in 1899, the company is headquartered in Southfield, Michigan, and employs 45,000 people in 35 countries. Aside from the U.S., Federal-Mogul also has operations in other locations which includes, among others, Mexico, Malaysia, Australia, China, India, Japan, Korea, and Thailand. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl & Jones, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. On March 7, 2003, the Debtors filed their Joint Chapter 11 Plan. They submitted a Disclosure Statement explaining that plan on April 21, 2003. They submitted several amendments and on June 6, 2004, the Bankruptcy Court approved the Third Amended Disclosure Statement for their Third Amended Plan. On July 28, 2004, the District Court approved the Disclosure Statement. The estimation hearing began on June 14, 2005. The Debtors submitted a Fourth Amended Plan and Disclosure Statement on Nov. 21, 2006, and the Bankruptcy Court approved that Disclosure Statement on Feb. 6, 2007. The Fourth Amended Plan was confirmed by the Bankruptcy Court on Nov. 8, 2007, and affirmed by the District Court on November 14. Federal-Mogul emerged from chapter 11 on Dec. 27, 2007. (Federal-Mogul Bankruptcy News, Issue No. 170; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Jan. 10, 2008, Moody's Investors Service confirmed the ratings of the reorganized Federal-Mogul Corporation -- Corporate Family Rating, Ba3; Probability of Default Rating, Ba3; and senior secured bank credit facilities, Ba2. The outlook is stable. The financing for the company's emergence from Chapter 11 bankruptcy protection has been funded in line with the structure originally rated by Moody's in a press release dated Nov. 28, 2007. As reported in the Troubled Company Reporter on Jan. 7, 2008, Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to Southfield, Michigan-based Federal-Mogul Corp. following the company's emergence from Chapter 11 on Dec. 27, 2007. The outlook is stable. GENERAL MOTORS: Overall Truck Sales Decline 41.5% in July --------------------------------------------------------- General Motors Corp. reported Friday its July sales results, highlighted by continued strong performance in small and midsize cars and crossovers. GM dealers in the United States delivered 235,184 vehicles in July, down 26.7 percent. Weak industry conditions caused by a challenging U.S. economic environment, higher fuel prices and inventory shortages in critical segments such as compact cars contributed to the overall sales decline for the month. "In July, we saw strong performance once again in our launch products, including the Cadillac CTS, Chevrolet Malibu, Saturn Astra, and Pontiac Vibe and G8. In addition, we continued to see strong retail demand for our fuel efficient Chevrolet Aveo and HHR, Saturn Vue and Buick Enclave. So, despite an overall weak market, there are pockets of strength," said Mark LaNeve, vice president, GM North America Vehicle Sales, Service and Marketing. "Obviously, the weakness in the truck market persisted in July, yet we continue to hold share due to our fuel economy leadership in many truck segments despite dramatic competitive incentive spending increases." Overall, GM truck sales in July declined 41.5 percent. Chevrolet cars continued to show strength in the marketplace with Malibu total sales up 79 Percent, Aveo up 17 percent and Cobalt up 4 percent compared with last July. Cadillac CTS dominated the mid-car luxury category with sales increasing 38 percent compared with the same month a year ago. Pontiac met consumers' needs for fuel efficient vehicles with a performance edge with G5 sales up 17 percent, Vibe up 7 percent and G6 up 6 percent compared with July 2007. Saturn's award-winning Aura midsize car saw a sales increase of 24 percent with the two-seat Sky selling 14 percent more vehicles than July last year. Astra monthly sales of more than 1,500 vehicles were the best to date, and show a 75 percent increase compared with June 2008 (Astra was not available last July). GM's popular midsized crossovers — Buick Enclave, GMC Acadia and Saturn Outlook — together accounted for more than 11,600 vehicle sales in the month. GM hybrid vehicles continue to gain in popularity in the marketplace with 228 hybrid Chevrolet Tahoe and 123 GMC Yukon 2- mode SUVs delivered. There were 349 Chevrolet Malibu, 29 Saturn Aura and 362 Vue hybrids sold in July. For the month, a total of 1,091 hybrid vehicles were delivered, with 5,467 hybrids sold so far this year. "We're working hard to change perceptions and gain awareness of GM as the leader in advanced propulsion technology and fuel efficiency," LaNeve added. "Customers can experience that each time they visit a dealer's showroom to see the full lineup – including five hybrid models — that provide industry-leading value, great fuel economy and the best warranty coverage of any full-line automaker. We don't just talk about technology, fuel efficiency and value – we have the cars and trucks available today to back it up." GM has aggressively managed inventories to low levels. In July, only about 747,000 vehicles were in stock – a three-year low – down about 201,000 vehicles (21 percent) compared with last July. There were about 236,000 cars and 511,000 trucks in inventory at the end of July. Certified Used Vehicles July 2008 sales for all certified GM brands, including GM Certified Used Vehicles, Cadillac Certified Pre-Owned Vehicles, Saturn Certified Pre-Owned Vehicles, Saab Certified Pre-Owned Vehicles, and HUMMER Certified Pre-Owned Vehicles, were 41,594 vehicles, down 2 percent from July 2007. Year-to-date sales are 298,137 vehicles, down nearly 6 percent from the same period last year. GM Certified Used Vehicles, the industry's top-selling certified brand, posted July sales of 35,799 vehicles, down 4 percent from a strong July 2007 sales performance. Cadillac Certified Pre-Owned Vehicles sold 3,700 vehicles, up 22 percent. Saturn Certified Pre-Owned Vehicles sold 1,164 vehicles, down 24 percent. Saab Certified Pre-Owned Vehicles sold 770 vehicles, up 21 percent, and HUMMER Certified Pre-Owned Vehicles sold 161 vehicles, up 89 percent. "Our luxury certified pre-owned programs – Cadillac, Saab and HUMMER Certified Pre-Owned Vehicles – each posted strong sales increases last month, and GM Certified Used Vehicles is again setting the pace to lead the segment in sales this year," said LaNeve. "We're confident more shoppers will seek the quality and value that manufacturer certification offers." GM North America Reports July, 2008 Production; Third-Quarter Production Forecast Remains at 900,000 Vehicles In July, GM North America produced 238,000 vehicles (116,000 cars and 122,000 trucks). This is down 16,000 vehicles or 6 percent compared with July 2007 when the region produced 254,000 vehicles (91,000 cars and 163,000 trucks). (Production totals include joint venture production of 14,200 vehicles in July 2008 and 13,000 vehicles in July 2007.) The GM North America third-quarter production forecast is unchanged from last month at 900,000 vehicles (456,000 cars and 444,000 trucks) which is down about 12 percent compared with a year ago, due to production adjustments in response to market changes that will reduce the number of trucks produced by about 209,000 and increase the number of cars by about 89,000. GM North America built 1.020 million vehicles (367,000 cars and 653,000 trucks) in the third-quarter of 2007. About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. At March 31, 2008, GM's balance sheet showed total assets of $145,741,000,000 and total debts of $186,784,000,000, resulting in a stockholders' deficit of $41,043,000,000. Deficit, at Dec. 31, 2007, and March 31, 2007, was $37,094,000,000 and $4,558,000,000, respectively. * * * As disclosed in the Troubled Company Reporter on Aug. 1, 2008, Standard & Poor's Ratings Services lowered the ratings on General Motors Corp., Ford Motor Co., and Chrysler LLC, all to 'B-' from 'B'. The ratings on GM and Ford were removed from CreditWatch with negative implications, where they had been placed on June 20, 2008. Chrysler will remain on CreditWatch pending the renewal of certain bank lines at DaimlerChrysler Financial Services Americas LLC, which S&P expects to be completed in the next few days. If the bank lines are renewed as expected, S&P would affirm the ratings on Chrysler and DCFS and remove them from CreditWatch. As reported in the Troubled Company Reporter on July 17, 2008, Moody's Investors Service is reviewing the ratings of General Motors Corporation for possible downgrade. Ratings under review include its B3 Corporate Family Rating, B3 Probability of Default Rating, Ba3 rating for secured debt, and Caa1 rating for senior unsecured debt. GENERAL MOTORS: Says Delphi-Related Charges Reach $11 Billion ------------------------------------------------------------- General Motors Corp. said charges related to Delphi Corp. has now reached approximately $11,000,000,000. In a presentation furnished to securities analysts, GM said made a $2,753,000,000 adjustment to its Delphi reserve, "primarily due to updated estimates related to Delphi's ongoing reorganization." The adjustment reflects higher expected obligations (e.g. net pension liabilities) and additional uncertainty around nature, value and timing of GM recoveries. GM's one-time losses due to Delphi have totaled $3,484,000,000 for the 1st half of 2008. GM, which contributes to over 30% of Delphi's revenues, reported a net loss of $15,471,000,000 or $27.33 per share for the second quarter of 2008. The quarterly loss, according to Bloomberg News, is the third biggest in its 100-year history. "Second quarter charges of $2.8 billion and year to date charges of $3.5 billion were recorded for increased liabilities under our Delphi Benefit Guarantee Agreements, primarily due to expectations of increased obligations and updated estimates reflecting the nature, value and timing of our recoveries upon Delphi's emergence from bankruptcy," GM said in its news release. A former unit of GM, Delphi was set to emerge from bankruptcy in mid-April but obtained problems with its $2,550,000,000 exit equity financing from Appaloosa Management, L.P. The plan of reorganization of Delphi, which has been confirmed by the U.S. Bankruptcy Court for the Southern District of New York, provides that GM will receive cash, notes and other securities in exchange for the consideration it provided to Delphi under their agreements. Appaloosa backed out from their investment agreement after Delphi sought $2,825,000,000 of its $6,100,000,000 exit debt financing from GM, its biggest customer. GM said that its second quarter results were primarily driven by several factors: -- significant losses in GM North America (GMNA) due to continuing U.S. industry volume declines and shifts in vehicle mix, the long strike at American Axle and large lease-related charges; -- a number of special charges associated with GM's ongoing restructuring actions; and -- continued losses at GMAC Financial Services (GMAC) and updated estimates regarding recoveries and expectations of assumed benefit obligations in the Delphi bankruptcy. Excluding expenses considered by GM to be one-time, including its adjustment to reserves for bankrupt Delphi Corp., the loss was $6,300,000,000, or $11.21 a share. About Delphi Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for Chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed US$11,446,000,000 in total assets and US$23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. The Plan has not been consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide US$2,550,000,000 in equity financing to Delphi. (Delphi Bankruptcy News, Issue No. 139; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) About GM Based in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. At March 31, 2008, GM's balance sheet showed total assets of $145,741,000,000 and total debts of $186,784,000,000, resulting in a stockholders' deficit of $41,043,000,000. Deficit, at Dec. 31, 2007, and March 31, 2007, was $37,094,000,000 and $4,558,000,000, respectively. Standard & Poor's has cut GM's credit rating to B-, six levels below investment grade, as falling U.S. sales have required the automaker to use more cash. GM says that its readily-available cash assets total $21,000,000,000 and it still has access to $5,000,000,000 under its undrawn U.S. credit facilities. GENERAL MOTORS: Can Participate in Delphi Suit vs. Appaloosa ------------------------------------------------------------ As widely reported, Judge Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York declined to approve Appaloosa Management, L.P., et al.'s request for dismissal of Delphi Corp.'s $2,550,000,000 lawsuit against them. Judge Drain also overruled the Plan Investors' objection to General Motors Corporation's participation as party-in-interest in the Adversary Proceedings. According to Bloomberg News, Judge Drain said Delphi will not settle the adversary cases without "obtaining input" ahead of time from GM. Delphi has accused Appaloosa and other investors of defrauding the Court by stating that they had every intention of performing under the Equity Purchase and Commitment Agreement. Appaloosa, however, argued that Delphi cannot seek specific performance because it is currently unable to perform under the conditions- precedent of the EPCA, including obtaining commitment to its $6,100,000,000 debt financing and the completion of the rights offering. The Wall Street Journal reported that Judge Drain dismissed a portion of Delphi's complaint, but he rejected most of the defendants' arguments. Judge Drain also allowed Delphi to pursue its fraud claim against the Appaloosa-led group. The ruling allows Delphi to continue its bid to force the Plan Investors to make good on the equity investment, WSJ's David McLaughlin said. The Plan Investors had also pointed to provision in the EPCA which provide that the aggregate liability of the the Plan Investors for any reason, including, for any willful breach, prior to December 10, 2007, will not exceed $100,000,000, and for any acts occurring thereafter, will not exceed $250,000,000. Judge Drain, however, declined to cap damages at the EPCA at $250,000,000. General Motors previously said that the terms and conditions of a new or modified plan, which it is negotiating with Delphi and the Official Committee of Unsecured Creditors, will depend in part on the amount of Delphi's recovery in the litigation. According to Bloomberg News, Judge Drain dismissed almost all claims Delphi made against Goldman Sachs Group Inc. and said any damages award against the parents of investors Harbinger Del-Auto Investment Co. Ltd. and Pardus DPH Holding LLC should be capped. Goldman Sachs & Co. previously stated that it had not obligation to close on the EPCA if other parties, including Appaloosa, failed to perform their obligations under the agreement. Bloomberg's Christopher Scinta added that the Court also turned aside Delphi's effort to subordinate in priority (or disallow) any claims the investors, other than Appaloosa, hold against Delphi. Judge Drain, according to the same report, also denied part of Delphi's fraud claim against Appaloosa, though he told Delphi attorneys they can revise their complaint by the end of the week to seek reinstatement of that claim. GM Allowed to Join As Party-In-Interest Like A-D Acquisition Holdings, LLC, and Appaloosa Management L.P. and other defendants to Delphi's $2,550,000,000 complaint, UBS Securities LLC expressed opposition to General Motors' participation as party-in-interest. General Motors, in response, to the objections, clarified that it does not seek to intervene, but instead simply requests to be afforded admission to participate as a monitor in the Adversary Proceedings. Michael P. Kessler, Esq., at Weil, Gotshal & Manges LLP, in New York, notes that the role sought by GM is subsumed within the greater rights that would be afforded to GM were it to exercise its right to intervene as a party to the Adversary Proceedings. In no way, then, does GM's proposal circumscribe any party's rights or deprive them of any protectable interests, he asserts. GM also emphasized that it does not seek to propose settlement of the dispute or take ownership of the Debtors' claims, nor is GM asserting rights that are derivative of another party's rights in the Chapter 11 cases, Mr. Kessler stressed. GM, Delphi and the Official Committee of Unsecured Creditors have agreed to terms of GM's participation in the Adversary Proceedings. Their stipulation, which has been approved by Judge Drain, provides that: (1) Weil, Gothshal and Manges, counsel of GM, will be served with all pleadings and other papers in accordance with Rule 5 of the Federal Rules of Civil Procedure and Rule 7005 of the Federal Rule of Bankruptcy Procedure; (2) GM, through its counsel, may participate in the Adversary Proceedings in a monitoring role, and will be permitted to: (i) appear before the Court on any matter, including at hearings and, as appropriate, chambers conferences; (ii) attend mediation sessions and other formal settlement negotiations, subject to any restrictions by the mediator; and (iii) participate in the discovery process, including attendance at depositions, access to all documents produced and written discovery requests and responses, and deposition transcripts and exhibits. (3) GM will sign and comply with the confidentiality restrictions in the Stipulation and Agreed Protective Order Governing Production and Use of Confidential and Highly Confidential Information entered in the Adversary Proceedings; (4) GM will have access to all documents produced and written discovery requests and responses, and deposition transcripts and exhibits; (5) Weil Gotshal, on behalf of GM, will be authorized to evaluate the Adversary Proceedings. Neither Weil Gotshal nor GM will use materials provided pursuant to the Stipulation and Order for any other purpose; (6) The agreement is without prejudice to: (i) GM seeking further participation rights in the Adversary Proceedings; (ii) any party opposing the motion; (iii) any party seeking greater restrictions; and (iv) GM opposing restrictions; (7) The agreement is without prejudice to GM seeking to share discovery materials with GM personnel in connection with testimony by the personnel at depositions, hearings or trial, and if the parties cannot agree, the dispute may be presented to the Court; and (8) Delphi will not settle either of the Adversary Proceedings without obtaining input in advance from GM. Delphi lawyers will confer with GM's lawyers on a regular and timely basis concerning the Adversary Proceedings. The Stipulation will be effective for only so long as the Global Settlement Agreement and Master Restructuring Agreement entered into between General Motors and Delphi are not terminated. About Delphi Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for Chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed US$11,446,000,000 in total assets and US$23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. The Plan has not been consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide US$2,550,000,000 in equity financing to Delphi. (Delphi Bankruptcy News, Issue No. 139; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) About GM Based in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. At March 31, 2008, GM's balance sheet showed total assets of $145,741,000,000 and total debts of $186,784,000,000, resulting in a stockholders' deficit of $41,043,000,000. Deficit, at Dec. 31, 2007, and March 31, 2007, was $37,094,000,000 and $4,558,000,000, respectively. Standard & Poor's has cut GM's credit rating to B-, six levels below investment grade, as falling U.S. sales have required the automaker to use more cash. GM says that its readily-available cash assets total $21,000,000,000 and it still has access to $5,000,000,000 under its undrawn U.S. credit facilities. GERARDO AGUERO: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Gerardo Eleazar Aguero Patricia Ann Aguero dba South Bay Capital Group 7933 Quill Drive Downey, CA 90242 Bankruptcy Case No.: 08-22046 Chapter 11 Petition Date: Aug. 4, 2008 Court: Central District Of California (Los Angeles) Judge: Barry Russell Debtors' Counsel: Allan D. Epstein, Esq. Law Office of Allan Dean Epstein 333 City Blvd. West, Ste. 1815 Orange, CA 92868 Tel: (714) 938-0477 Fax: (714) 978-8033 Estimated Assets: $500,000 to $1 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/califcb08-22046.pdf HEALTH NET: Revised Earnings Forecast Won't Affect S&P Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services said Health Net Inc.'s (NYSE:HNT; BB+/Negative/--) announcement that it is reducing its earnings forecast for year-end 2008 will not result in any rating action. Health Net has reduced its year-end 2008 operating earnings forecast for the second time by an additional $87 million - $92 million. This resulted from lower-than-expected commercial membership, anticipated increases in both commercial and Medicare claims costs, lower per-member Medicare reimbursement, higher- than-expected general and administrative costs, and lower-than- expected investment income. Prior to that, on April 30, 2008, Standard & Poor's revised its outlook on Health Net to negative following the company's first earnings reforecast. The negative outlook reflects S&P's concerns regarding possible further weakness in operating performance as well as the potential for a continuing pattern of earnings volatility resulting from material nonoperating charges. The current challenging operating environment the health insurance industry is facing exacerbates these concerns. If Health Net's 2008 pretax GAAP operating income (which excludes charges related primarily to the company's litigation expenses and expense repositioning initiatives) were to fall below the currently forecasted $500 million-$510 million or if there were any additional material nonoperating charges, S&P would likely lower the ratings by one notch. HOLDINGS GAMING: Moody's Places Probability of Default at B3 ------------------------------------------------------------ Moody's Investors Service assigned these ratings to Holdings Gaming Borrower LP: -- Corporate Family Rating at B3 -- Probability of Default Rating at B3 -- $10 million first lien revolver expiring in 4.5 years at B1 (LGD2, 25%) -- $305 million first lien first-out term loan maturing in 4.5 years at B1 (LGD2, 25%) -- $100 million first lien first-loss term loan maturing in 4.5 years at Caa1 (LGD4, 69%) -- Stable rating outlook Proceeds from the proposed first lien credit facilities, along with a $150 million second lien term loan maturing in five years (unrated) and a $200 million cash preferred equity contribution, will be used primarily to fund the construction of HGB's casino development in Pittsburgh, Pennsylvania and refinance an existing bridge loan. HGB's casino development will be located in downtown Pittsburgh. Construction began in December 2007. The B3 corporate family rating reflects the highly leveraged and start-up nature of the casino development project. Moody's expects that debt/EBITDA in the first full year following the completion of the project will be high, at between 5.5 times and 6.0 times (calculations incorporate Moody's standard analytical adjustments). Other key credit concerns include the existing competition within the proposed casino's primary market area along with the possibility that the weak economic environment will continue through June 2009, about the same time HGB's casino is expected to open. Positive rating consideration is given to the good long-term risk/reward profile and fully funded nature of the project. The ratings on the individual tranches of HGB's first lien credit facilities reflect the application of Moody's Loss Given Default methodology. The LGD methodology acknowledges the credit support provided to the revolver and first lien first-out term loan by the first lien first-loss term loan and the second lien term loan. The stable rating outlook anticipates that HGB's casino development will be constructed on time and on budget, and that favorable demographics of the Pittsburgh gaming market along with the location of the casino itself will provide enough customer traffic and demand for the project to ramp up to the point where it can cover its fixed charge obligations. The stable outlook also acknowledges that there are adequate construction contingencies and an interest reserve designed to cover debt service six months after construction is complete. In conjunction with the assignment of ratings to HGB, Moody's withdrew PITG Gaming HoldCo LLC's B3 CFR and PDR ratings, along with its Ba3 first lien and Caa1 second lien bank debt ratings. The ratings were withdrawn because this transaction did not occur. PITG, which was owned by Don Barden, was the original license holder and sponsor of the Pittsburgh gaming development. After receiving approval of the Pennsylvania Gaming Control Board, certain assets and liabilities of PITG Gaming, LLC will be contributed to HGB by PITG Gaming, LLC in exchange for 20% of the common equity in Pittsburgh Gaming Holdings, LP. Holdings Gaming Borrower, LP is a subsidiary of Pittsburgh Gaming Holdings LP. Pittsburgh Gaming Holdings, LP is a newly-formed entity of which an investor group consisting of Walton Street Capital LLC, High Pitt Gaming LLC, and certain other minority investors will own 75%. HOVNANIAN ENTERPRISES: Board Approves Shareholder Rights Plan ------------------------------------------------------------- Hovnanian Enterprises Inc. disclosed Monday that its Board of Directors has adopted a shareholder rights plan designed to preserve shareholder value and the value of certain tax assets primarily associated with net operating loss carryforwards (NOL) and built in losses under Section 382 of the Internal Revenue Code. The company's ability to use its NOLs and built in losses would be limited, if there was an "ownership change" under Section 382. This would occur if shareholders owning (or deemed under Section 382 to own) 5% or more of the company's stock increase their collective ownership of the aggregate amount of outstanding shares of Hovnanian Enterprises Inc. by more than 50 percentage points over a defined period of time. The Rights Plan was adopted to reduce the likelihood of an "ownership change' occurring as defined by Section 382. "A stockholder rights plan protects the interests of all stockholders from the possibility of losing the tax benefit of net operating loss carryforwards and built in losses under Section 382," said Ara K. Hovnanian, president and chief executive officer of the company. "The Rights Plan is not intended for defensive or anti-takeover purposes and is in the best interests of all stockholders of Hovnanian. To help ensure that we preserve the value of NOLs and built in losses under Section 382, the Board may take measures in addition to the Rights Plan. Once the tax benefits of the NOLs and built in losses have been utilized, the Board intends to terminate the Rights Plan." Under the Rights Plan, one right will be distributed for each share of Class A Common Stock and Class B Common Stock of Hovnanian outstanding as of the close of business on Aug. 15, 2008. Effective Aug. 15, 2008, if any person or group acquires 4.9% or more of the outstanding shares of Class A common stock of Hovnanian without the approval of the Board of Directors, there would be a triggering event causing significant dilution in the voting power of such person or group. However, existing stockholders who currently own 4.9% or more of the outstanding shares of Class A common stock will trigger a dilutive event only if they acquire additional shares. The Rights Plan may be terminated by the Board at any time, prior to the Rights being triggered. The Rights Plan will continue in effect until Aug. 15, 2018, unless it is terminated or redeemed earlier by the Board of Directors. The company plans to submit the continuation of the Rights Plan to a stockholder vote within the next 12 months, and the failure to obtain this approval will result in termination of the Rights Plan. On or prior to Aug. 15, 2008, the Rights Plan will be filed by Hovnanian with the Securities and Exchange Commission; this filing will contain additional information regarding the terms and conditions of the Rights Plan. In addition, stockholders of record of Hovnanian as of Aug. 15, 2008 will be mailed a detailed summary of the Rights Plan. About Hovnanian Enterprises Hovnanian Enterprises Inc. (NYSE: HOV) -- http://www.khov.com/-- founded in 1959 by Kevork S. Hovnanian, chairman, is headquartered in Red Bank, New Jersey. The company is one of the nation's largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Illinois, Kentucky, Maryland, Michigan, Minnesota, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia. Hovnanian Enterprises, Inc. is a member of the Public Home Builders Council of America (PHBCA) -- http://www.phbca.org/-- a nonprofit group devoted to improving understanding of the business practices of America's largest publicly-traded home building companies, the competitive advantages they bring to the home building market, and their commitment to creating value for their home buyers and stockholders. The PHBCA's 14 member companies build one out of every five homes in the United States. At April 30, 2008, the company's consolidated balance sheet showed $3.96 billion in total assets, $3.07 billion in total liabilities, $38.6 million in minority interest from inventory not owned, $1.4 million in minority interest from consolidated joint ventures, and $850.2 million in total stockholders' equity. * * * As reported in the Troubled Company Reporter on June 12, 2008, Fitch Ratings affirmed Hovnanian Enterprises Inc.'s 'B-' Issuer Default, 'CCC/RR6' Senior subordinated notes, and 'CCC-/RR6' Series A perpetual preferred stock ratings. HOV's Rating Outlook remains Negative. JAMES WILSON: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: James Nile Wilson, Jr. aka James N. Wilson, Jr. James N. Wilson Nile Wilson dba Performance Lawn & Irrigation Inc. 20-2170489 Cynthia Ivester Wilson 142 Reep Rd. Kings Mountain, NC 28086 Bankruptcy Case No.: 08-40509 Chapter 11 Petition Date: August 3, 2008 Court: Western District of North Carolina Judge: George R. Hodges Debtor's Counsel: William S. Gardner Gardner Law Offices P.O. Box 1000 Shelby, NC 28150 Tel (704) 487-0616 Fax 1-888-870-1644 Email bgardner@maxgardner.com Estimated Assets: $100,001 to $500,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Debtor's largest unsecured creditors is available for free at http://bankrupt.com/misc/ncwdb08-40509.pdf JETBLUE AIRWAYS: To Defer Delivery of 10 EMBRAER 190 Aircraft ------------------------------------------------------------- JetBlue Airways Corp. provides investor guidance for the third quarter ending September 30, 2008 and full year 2008. JetBlue announced service to these new city pairs: City Pair Frequency Start Date Long Beach, CA - Portland, OR 1x Oct. 9, 2008 Richmond, VA - Orlando, FL 1x Nov. 2, 2008 White Plains, NY - Tampa, FL 1x Nov. 2, 2008 Washington, DC (IAD) - West Palm Beach, FL 1x Dec. 18, 2008 Washington, DC (IAD) - Fort Myers, FL 1x Dec. 18, 2008 Washington, DC (IAD) - San Juan, Puerto Rico 1x Dec. 20, 2008 JetBlue also announced it will defer 10 EMBRAER 190 aircraft originally scheduled for delivery between 2009 through 2011 to 2016. Aircraft Delivery Schedule As of June 30, 2008, the company's fleet was comprised of 106 Airbus A320 aircraft and 36 EMBRAER 190 aircraft and it had on order 133 aircraft, which are scheduled for delivery through 2015 (on a relatively even basis during each year), with options to acquire 113 additional aircraft. A full copy of the investor update, including the 2008 delivery schedule and related financings for the remainder of the year is available at: http://ResearchArchives.com/t/s?3079 About JetBlue Airways Based in Forest Hills, New York, JetBlue Airways Corporation (Nasdaq: JBLU) -- http://www.jetblue.com/-- is a passenger airline that provides customer service primarily on point-to- point routes. As of June 30, 2008, the company operated a fleet of 106 Airbus A320 aircraft and 36 EMBRAER 190 aircraft, of which 83 were owned, 55 were leased under operating leases and four were leased under capital leases. JetBlue currently serves 53 cities with 600 daily flights. * * * As reported in the Troubled Company Reporter on July 24, 2008, Moody's Investors Service downgraded the Corporate Family and Probability of Default Ratings of JetBlue Airways Corp. to Caa2 from Caa1, as well as the ratings of its outstanding corporate debt instruments and certain Enhanced Equipment Trust Certificates. The outlook is negative. At June 30, 2008, the company's consolidated balance sheet showed $6.5 billion in total assets, $5.1 billion in total liabilities, and $1.4 billion in total stockholders' equity. The company's consolidated balance sheet at June 30, 2008, also showed strained liquidity with $1.3 billion in total current assets available to pay $1.4 billion in total current liabilities. JetBlue Airways reported a net loss of $7.0 million for the second quarter ended June 30, 2008, compared with net income of $21.0 million in the same period of 2007. JHT HOLDINGS: May Hire Chilmark Partners as Financial Advisor ------------------------------------------------------------- JHT Holdings, Inc., its parent, JHT Acquisition Corp., and certain of its direct and indirect subsidiaries obtained permission from the U.S. Bankruptcy Court for the District of Delaware to employ Chilmark Partners LLC as their financial advisor, effective nunc pro tunc to the Debtors' bankruptcy filing. The Debtors have determined that the size of their operations and expected complexity of their chapter 11 cases require them to employ financial advisors with knowledge and experience. Chilmark, according to the Debtors, has the experience and is well-qualified to provide the Debtors with the financial advice and services. Chilmark has received $240,000 retainer from the Debtors. This amounts to two month's worth of fees under a fixed monthly rate of $120,000. On March 5, 2008, Chilmark drew the fixed monthly fee against the retainer. On March 14 and 20, the Debtors funded the retainer $60,000 each time, replenishing the retainer balance to $240,000. Similar actions were made for the months of April through June 2008. As of June 23, 2008, the retainer has a balance of $240,000. In addition to the fixed monthly fee, Chilmark will get a completion fee upon consummation of (a) an additional $600,000 fee for an out-of-court restructuring, or (b) a $1,000,000 disposition or restructuring fee other than what was described, plus 100% reimbursement of fees. The Debtors have maintained that Chilmark does not hold or represent any interest materially adverse to the interest of the Debtors' estates. The firm can be reached at: Matthew R. Rosenberg Member Chilmark Partners, LLC 875 North Michigan, Suite 3460 Chicago, IL 60611 About JHT Holdings Headquartered in Kenosha, Wisconsin, JHT Holdings Inc. -- http://www.jhtholdings.com/-- and its affiliates provide over- the-road transportation of various types of motor vehicles, including commercial trucks and cars. The Debtors have non-debtor foreign affiliates in Canada and Mexico. Another Mexican affiliate, Mexicana Logistics, S.A. de C.V. is owned 50% by JHT Holdings and 50% by Gustavo Vildosola, a Mexican national with no connection to the Debtors. JHT Acquisition Corp. owns all of the outstanding stock of JHT Holdings. JHT Acquisition is a holding company owned by a group of investors, MTGLQ Investors, L.P., D.B. Zwirn Special Opportunities Fund, L.P., ZM Private Equity Fund I, Spectrum Investment Partners, L.P. and Stonehouse Investment Company LLC. The company and 16 of its affiliates filed for chapter 11 protection on June 24, 2008 (Bankr. D. Del. Lead Case No. 08- 11267). Michael B. Solow, Esq., D. Tyler Nurnberg, Esq., Heath D. Rosenblat, Esq., and Andrea Johnson Frost, Esq., at Kaye Scholer LLC serve as the Debtors' primary bankruptcy counsel. David B. Stratton, Esq., and Evelyn J. Meltzer, Esq., at Pepper Hamilton, LLP, serves as the Debtors' Delaware counsel. Reinhart Boerner Van Deuren s.c. serves as the Debtors' general outside corporate counsel, conflicts-of-interest counsel, and co-restructuring counsel. Administar Services Group LLC is the Debtors' claims, noticing, and balloting agent. The U.S. Trustee has appointed members to the Official Committee of Unsecured Creditors to serve in this case. Pachulski Stang Ziehl & Jones LLP represents the Creditors' Committee. When the Debtors filed for protection against their creditors, they listed assets and debts between $100 million to $500 million. The Debtors have amended their chapter 11 plan. A hearing to consider confirmation of that plan is set for Sept. 17, 2008. JOE GIBSONS: Closes Business on Aug. 2, 2008 -------------------------------------------- The U.S. Bankruptcy Court for the District of South Carolina will convene a hearing on Aug. 14, 2008, at 1:30 p.m. to consider whether to dismiss the chapter 11 cases of Joe Gibson's Auto World, Inc. and Joe Gibson Automotive, Inc. or convert their cases to chapter 7 liquidations. Craig Peters at Spartanburg Herald-Journal reports that the Debtors' businesses closed on Friday, Aug. 2, 2008. According to Mr. Peters, Pat Knie and David Alford said that the Debtors' attorney, William McCarthy, Esq., disclosed at a court hearing on Thursday that the dealerships had no choice but to close, because they have not taken in enough revenue since filing for Chapter 11 bankruptcy on July 16, 2008. Mr. Peters reports that Mr. Knie and Mr. Alford have each filed more than 30 suits alleging fraud by the Debtors. The suits stem from a series of commercials that said people could lease a Suzuki for monthly payments between $47 and $99. Customers have claimed, according to Mr. Peters, they were told they could then swap the vehicle for another one at the end of a year and continue with the low payments. However, the customers say they were not allowed to swap their vehicles and were blindsided by much higher payments, Mr. Peters says. About the Debtors Joe Gibson's Auto World, Inc., and its subsidiary, Joe Gibson Automotive, Inc., sell new & used automobiles in retail. Joe Gibson's Auto World, Inc., and Joe Gibson Automotive, Inc., filed separate voluntary petitions under Chapter 11 on July 16, 2008 (Bankr. S.D. N.Y. Lead Case No. 08-04215). G. William McCarthy, Jr., Esq., represent the Debtors in their restructuring efforts. When Joe Gibson's Auto World, Inc. filed for bankruptcy, it listed estimated assets of between $1,000,0000 and $10,000,000 and estimated debts of between $10,000,0000 and $50,000,000. JONES APPAREL: S&P Lowers Ratings to 'BB'; Outlook Negative ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on apparel marketer Jones Apparel Group Inc. to 'BB' from 'BB+'. The ratings were removed from CreditWatch, where they were placed with negative implications on May 1, 2008, following weak results for the quarter ended April 5, 2008. The recovery rating on the company's senior unsecured notes remains '4', indicating the expectation for average (30%-50%) recovery in the event of a payment default. The outlook is negative. Total debt outstanding at July 5, 2008, was about $750 million. "The ratings downgrade reflect the company's deteriorating financial measures and operating trends, including higher leverage [over 5x] and contracting margins," said Standard & Poor's credit analyst Susan Ding. Other factors that S&P has taken into consideration include the underlying negative operating trends and difficult retail environment. Jones' declining margins reflect its changing product mix and continued challenges in its footwear and accessories segments in recent periods. While its key brands are well recognized, the company still needs to rejuvenate and profitably grow these brands. Primarily as a result of product issues in its footwear division during 2007, the company closed out footwear inventory, which significantly depressed operating margins. As a result, its EBITDA margin contracted to about 7.4% for the last-12-months period ended July 5, 2008, compared with 10.1% a year ago and midteens in prior periods. S&P expects the company's credit protection measures to continue to be pressured. Furthermore, some of Jones' remaining core brands and businesses, especially the footwear and retail operations, remain soft. For the last 12 months ended July 5, 2008, EBITDA interest coverage was 4.6x, compared with 4.8x a year ago, while leverage increased to 5.4, versus 3.8x in the prior year. The ratings on the Bristol, Pa.-based apparel marketer and manufacturer reflect the company's weakening operating trends and credit measures. The ratings also reflect the highly competitive nature of the apparel and footwear businesses, and the company's concentration in the department store channel. These factors are somewhat offset by the company's scale and well-recognized brands in the women's apparel and footwear segments and its product portfolio diversity. The ratings also reflect the company's continued ability to generate fairly stable cash flows despite very difficult industry conditions. S&P expects that Jones will be challenged to improve its operating performance in the near term, in light of the soft retail environment and the weak economic conditions. S&P could lower the ratings if Jones is unable to rejuvenate its brands and improve its performance and credit measures as expected, or if leverage is not reduced to below 5x by fiscal year end. If the company can improve and sustain its operating margins and credit protection measures, especially sustaining leverage below 4.5x, S&P could change the outlook to stable. S&P's internal forecast indicate that even if 2008 full-year sales declined by 4% and the EBITDA margin declined by about 100 basis points, leverage would trend to the 5x area. JONES APPAREL: Moody's Confirms Ba1 CF Ratings; Outlook Negative ---------------------------------------------------------------- Moody's Investors Service confirmed Jones Apparel Group Inc.'s Corporate Family Rating and Probability of Default rating at Ba1. A negative rating outlook was assigned. At the same time, the company's Speculative Grade Liquidity rating was raised to SGL-2 from SGL- 3. Today's rating actions conclude the rating review which commenced on May 5, 2008 The confirmation anticipates that Jones will show improvement in credit metrics as a result of continued improvements in its owned retail business, which returned to profit in the latest quarter and expansion into the mass channel with the company's launch of the 'l.e.i' brand at Wal-Mart Stores. Expansion into the mass channel is expected to increase sales over the longer term and provide a greater level of earnings stability. The confirmation also takes into consideration the company's strong liquidity position and historically conservative financial policies. The negative rating outlook considers that Jones' credit metrics are still considered weak for the rating category along with Moody's expectation of continued economic weakness. Ratings could be lowered if the company is not able to demonstrate continued improvement in the latter half of 2008. Ratings could also be lowered if the company's is unable to maintain its good liquidity position which gives the company the ability to reduce leverage going forward. Currently, Jones has enough cash on hand ($322 million as at July 5, 2008) to satisfy its $250 million November 2009 principal debt maturity. The upgrade to SGL 2 acknowledges Jones' improved covenant flexibility following amendments to the company's existing committed revolving credit facilities. The SGL-2 also recognizes Jones' significant cash balance and available credit lines. The company has access to a $500 million revolving credit facility that matures in June 2009 and a $750 million revolving credit facility in May 2010. Additionally, the company's assets are not pledged to any of its credit agreements which provides the company with some additional flexibility. These ratings were confirmed, and LGD assessments amended: -- Corporate Family Rating at Ba1 -- Probability of Default rating at Ba1 -- $250 million senior unsecured notes due 2009 at Ba1 (LGD4, 55% from LGD4, 53%) -- $250 million senior unsecured notes due 2014 at Ba1 (LGD4, 55% from LGD4, 53%) -- $250 million senior unsecured notes due 2034 at Ba1 (LGD4, 55% from LGD4, 53%) These rating was upgraded: -- Speculative Grade Liquidity Rating to SGL-2 from SGL-3 Jones Apparel Group Inc., headquartered in Bristol, Pennsylvania, is a designer, marketer and wholesaler of branded apparel, footwear, and accessories. The company also markets directly to consumers through various mall based specialty retail stores and outlet stores. Jones owns a number of nationally recognized brands including Jones New York, Anne Klein, Nine West, Gloria Vanderbilt and l.e.i. Revenues for the latest 12-month period ended July 5, 2008, were approximately $3.7 billion. JOURNAL REGISTER: Deregisters Shares for Issuance Under Bonus Plan ------------------------------------------------------------------ Journal Register Company is terminating all offerings of its Common Stock, $0.01 par value per share, pursuant to its existing registration statements. This post-effective amendment filed by the Company deregisters all shares of the Common Stock that had been registered for issuance under the JOURNAL REGISTER COMPANY MANAGEMENT BONUS PLAN on the Company's Registration Statement on Form S-8, Registration No. 333-27557, that remain unsold upon the termination of the sales of shares covered by the Registration Statement. In accordance with an undertaking made by the Company in its Registration Statement to remove from registration, by means of a post-effective amendment, any shares of the Company's Common Stock which remain unsold at the termination of the offering, the Company hereby removes from registration all shares of its Common Stock under the Registration Statement which remained unsold as of the date hereof. * * * As reported by the Troubled Company Reporter on Aug 5, 2008, Standard & Poor's Ratings Services withdrew its ratings on Journal Register Co., including the 'D' corporate credit rating. S&P lowered the ratings on July 25, 2008, after the company announced that it had entered into a forbearance agreement with lenders, which included a provision whereby interest under the credit agreement will accrue and will not be paid for the period July 24, 2008 through Oct. 31, 2008. S&P viewed this event as a meaningful departure from the original terms of the credit agreement, resulting in a 'D' corporate credit and issue-level ratings under its criteria. As reported by the TCR on Aug. 4, 2008, Moody's Investors Service downgraded Journal Register Company's Probability of Default rating to D from Caa3 and its Corporate Family rating to Ca from Caa2. The rating outlook is stable. Moody's plans to withdraw all of Journal Register's ratings shortly. KNIGHT COMMERCE: Case Summary & 6 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Knight Commerce Centre Inc. 2nd Floor, 8081 Congress Avenue Boca Raton, FL 33487 Bankruptcy Case No.: 08-20923 Chapter 11 Petition Date: August 1, 2008 Court: Southern District of Florida (West Palm Beach) Judge: Paul G. Hyman, Jr. Debtor's Counsel: Thomas L. Abrams, Esq 1776 N Pine Island Rd No. 309 Plantation, FL 33322 Tel (954) 523-0900 Email tabrams@tabramslaw.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $10,000,001 to $50,000,000 Debtor's 6 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ DEI Food Service Vendor $150,000 3908 N. 29 Ave. Hollywood, FL 33020 Palm Beach County Tax Taxes $100,335 Collector P.O. Box 3715 West Palm Beach, FL 33402 Foreign Fairs Inc. Vendor $81,502 Shutts & Bowen LLP Vendor $10,936 Oracle Elevator Company Vendor $1,065 AT&T Vendor $255 KOGER MANAGEMENT: Court Converts Case to Chapter 7 Liquidation -------------------------------------------------------------- Nicholas M. Horrock at Connection Newspapers reports that the U.S. Bankruptcy Court for the Eastern District of Virginia granted the request by Koger Management Group Inc. to convert its chapter 11 case into a liquidation proceeding under Chapter 7 of the Bankruptcy Code. As reported by the Troubled Company Reporter on July 11, 2008, the Bankruptcy Court ordered the liquidation of Koger Management. The sale of the Debtor's was held in June 2008. The TCR, citing a report by Dan Telvock at The Free Lance-Star in Fredericksburg, Virginia, related that Gates, Hudson & Associates Condominium Management acquired the Debtor's assets for $275,000. The new owner took over 100 accounts from the Debtor, Free-Lance Star said. Owner Robert Koger gave his consent by signing the court sale order, which revoked his real estate license, Free-Lance Star said. Mr. Koger sought conversion of the chapter 11 case. Free-Lance Star noted that Lella Amiss E. Pape, Esq., counsel to dozens of homeowners associations managed by the Debtor, commented that a chapter 7 proceeding will result in "pennies on the dollar" for her clients; and that a chapter 11 increases probability of full payout to creditors. Based on the report, about 200 homeowners association asserted claims totaling $10.3 million against the Debtor. The Free-Lance Star also noted that in 2006, a state headed investigation found former chief financial officer, Jeffrey Koger, as the primary culprit in the embezzlement of hundreds of homeowners association's funds. The Free-Lance Star said Robert Koger reported the missing funds to the police. Investigation of the case is ongoing, and no charges have been filed, The Free-Lance Star wrote. Robert's son, Jeffrey, is presently in prison for attempted murder of a state police, The Free-Lance Star said. In June 2008, Jeffrey Koger's case was sent to a grand jury for possible indictment. Connection Newspapers says the Chapter 7 ruling brought to an end the strange saga of Robert S. Koger and his firm, which had been one of the largest management firms in the Washington area. Ms. Pope, according to Connection Newspapers' Mr. Horrock, doubted that Robert Koger, now 60, would be left with any significant wealth. Mr. Pope, Mr. Horrock relates, guessed that attorney's fees alone would be $200,000 eating up a lot of Koger's sales proceeds. Mr. Horrock says creditors have called a meeting for August to discuss the matter. Mr. Horrock also added that the U.S. attorney filed in the bankruptcy case as a representative of the Small Business Administration, which loaned Koger $1 million to buy the Fairfax offices. No public statements have been made concerning a federal investigation of Koger that began in 2007, Mr. Horrock says. About Koger Management Fairfax, Virginia-based Koger Management Group Inc., dba Tri-State Management, -- http://www.kogermanagement.com/-- managed homeowners associations in Virginia for decades. The Debtor filed its chapter 11 petition on July 26, 2007 (Bankr. E.D. Va. Case No. 07-11947). The company is owned by Robert Koger, whose son, Jeffrey Koger, was found as main culprit in the embezzlement of corporate funds. Judge Stephen S. Mitchell presides over the case. Thomas P. Gorman, Esq., at Tyler, Bartl, Gorman & Ramsdell, P.L.C., represents the Debtor in its restructuring efforts. The Debtor listed estimated assets of $1 million to $100 million and estimated debts of $1 million to $100 million when it filed for bankruptcy. LAKE LAS VEGAS: Auction of Assets Slated for August 22 ------------------------------------------------------ The U.S. Bankruptcy Court for the District of Nevada entered an order approving bidding procedures proposed by Lake Las Vegas Resort, aka Village Hotel Investors, LLC, and its debtor- affiliate. The assets for sale include a real property commonly known as The Ritz-Carlton, Lake Las Vegas located in Henderson, Nevada. Objections to the sale are due Aug. 15, 2008, at 5:00 p.m., Pacific time. An auction is slated for Aug. 22, 2008, at 9:30 a.m., in the bankruptcy court at Courtroom 1, 300 Las Vegas Boulevard South in Las Vegas, Nevada. The sale hearing is set for Aug. 22, 2008, at 1:30 p.m. before the Hon. Linda B. Riegle. The Debtors have not yet disclosed their stalking horse bidder. The Troubled Company Reporter said on April 4, 2008, that the Debtors intends to "aggressively" market a 14.7-acre property in Las Vegas during its chapter 11 case. To avoid a $103 million mortgage foreclosure by German American Capital Corp., a subsidiary of Deutsche Bank AG, Village Hotel Investors LLC, owner of a Ritz Carlton hotel resort in Lake Las Vegas, filed for Chapter 11 protection with the Court on April 1, 2008. Marriott International Capital Corp., which claims to have ownership interest in the hotel, has a $12 million claim on the Debtor. A contract to sell the project, which could have paid all creditors, didn't follow through because the buyer wasn't able to pay the deposit. About Lake Las Vegas Lake Las Vegas Resort, aka Village Hotel Investors, LLC, -- 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. 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. Lake Las Vegas and Village Hotel Holdings, LLC filed their chapter 11 petition on April 1, 2008 (Bankr. D. Nev. Case Nos. 08-13043 and 08-13044). Brett A. Axelrod, Esq., at Lewis and Roca, LLP, represents the Debtors in their restructuring efforts. The Debtors listed total asset of $190,774,283 and total liabilities of $98,728,038 in its schedules. LAKE LAS VEGAS: Has Until December 22 to Exclusively File Plan ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Nevada extended until Dec. 22, 2008, the exclusive period in which Lake Las Vegas Resort, aka Village Hotel Investors, LLC and its debtor-affiliate may file their chapter 11 plan. The Court also extended through Oct. 28, 2008, the Debtors' deadline to assume or reject unexpired leases of non-residential real property under which the Debtors are lessees. About Lake Las Vegas Lake Las Vegas Resort, aka Village Hotel Investors, LLC, -- 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. 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. Lake Las Vegas and Village Hotel Holdings, LLC filed their chapter 11 petition on April 1, 2008 (Bankr. D. Nev. Case Nos. 08-13043 and 08-13044). Brett A. Axelrod, Esq., at Lewis and Roca, LLP, represents the Debtors in their restructuring efforts. The Debtors listed total asset of $190,774,283 and total liabilities of $98,728,038 in its schedules. LAKE LAS VEGAS: Amends Schedules of Assets and Liabilities ---------------------------------------------------------- Lake Las Vegas Resort, aka Village Hotel Investors, LLC, and its debtor-affiliate, delivered to the U.S. Bankruptcy Court for the District of Nevada their amended schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ---------- ----------- A. Real Property $133,932,768 B. Personal Property 56,841,515 C. Property Claimed as Exempt D. Creditors Holding Secured $98,201,655 Claims E. Creditors Holding Unsecured Priority Claims F. Creditors Holding Unsecured 526,383 Nonpriority Claims ---------- ----------- TOTAL $190,774,283 $98,728,038 Lake Las Vegas Resort, aka Village Hotel Investors, LLC, -- 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. 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. Lake Las Vegas and Village Hotel Holdings, LLC filed their chapter 11 petition on April 1, 2008 (Bankr. D. Nev. Case Nos. 08-13043 and 08-13044). Brett A. Axelrod, Esq., at Lewis and Roca, LLP, represents the Debtors in their restructuring efforts. LAKE LAS VEGAS: Gets OK to Use Credit Suisse's $127 Mil. DIP Fund ----------------------------------------------------------------- Lake Las Vegas Resort, aka Village Hotel Investors, LLC, received approval from the U.S. Bankruptcy Court for the District of Nevada to enter into a $127 million debtor-in-possession financing agreement. The Debtor told the Hon. Linda B. Riegle that it had reached a consensual agreement with various creditors and the Official Committee of Unsecured Creditors on the terms of the $127 million facility from a group of lenders led by Credit Suisse as agent. "We are gratified by the Court's decision [] and particularly appreciative of the work of the Creditor Committee, individual creditors, lenders and their representatives in diligently working together to craft an agreement," said Frederick Chin, president and CEO of Lake Las Vegas. About Lake Las Vegas Lake Las Vegas Resort, aka Village Hotel Investors, LLC, -- 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. 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. Lake Las Vegas and Village Hotel Holdings, LLC filed their chapter 11 petition on April 1, 2008 (Bankr. D. Nev. Case Nos. 08-13043 and 08-13044). Brett A. Axelrod, Esq., at Lewis and Roca, LLP, represents the Debtors in their restructuring efforts. The Debtors listed total asset of $190,774,283 and total liabilities of $98,728,038 in its schedules. LANDSOURCE COMMUNITIES: May Hire Sitrick as PR Consultants ---------------------------------------------------------- The U.S. Bankruptcy Court Court authorizes LandSource Communities Development LLC and its debtor-affiliates to hire Sitrick and Company Inc. as their corporate communications consultants, nunc pro tunc to June 8, 2008. The Hon. Kevin J. Carey approved the Debtors' indemnification obligations under the Engagement Letter, subject to these terms: (a) Any request by Sitrick for indemnification will be subject to prior approval of the Court, in accordance with Sections 330 and 331 of the Bankruptcy Code; (b) All requests by Sitrick for payment of indemnity must be made through an application and will be subject to Court review, provided, however, that in no event will Sitrick be indemnified in he case of its own bad faith and negligence; (c) In no event will Sitrick be indemnified if the Debtors or the Official Committee of Unsecured Creditors asserts a claim for and a court determines by final order that the claim arose out of Sitrick's bad faith and negligence; and (d) In the event that Sitrick seeks reimbursement for attorneys' fees, the invoices and supporting time records from the attorneys will be included in Sitrick's own applications and will be subject to the Court's approval. Further, Judge Carey ordered that the obligation of the Debtors to pay interest at the rate of 10% per annum on all sums due under the Engagement Letter that are not paid within 45 days of when they are due is inoperative during the pendency of the Chapter 11 cases. As reported in the Troubled Company Reporter on June 17, 2008, Sitrick and Company Inc. will: (a) develop and implement communications programs and related strategies and initiatives for communications with the Debtors' key constituencies, including customers, employees, vendors, related key constituencies, and the media, regarding the Debtors' operations and progress through the chapter 11 process; (b) develop public relations initiatives for the Debtors to maintain public confidence and internal morale during the Chapter 11 process; (c) prepare press releases and other public statements for the Debtors, including statements relating to major Chapter 11 events; (d) prepare other forms of communication to the Debtors' key constituencies and the media; and (e) perform other communications consulting services as may be requested by the Debtors. Michael S. Sitrick, president, chairman, and chief executive officer of Sitrick, assured Judge Carey his 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. 8; http://bankrupt.com/newsstand/or 215/945-7000). LANDSOURCE COMMUNITIES: Taps Two HoganWebb Personnel as CROs ------------------------------------------------------------ Pursuant to Sections 105(a) and 363(b) of the Bankruptcy Code, LandSource Communities Development, LLC, and its affiliated debtors seek the U.S. Bankruptcy Court for the District of Delaware's permission to employ Timothy P. Hogan and H. Lawrence Webb of HoganWebb LLC as their co-chief restructuring officers, nunc pro tunc to July 1, 2008. The Debtors also ask the Court to approve their CRO agreement with HoganWeb LLC. Before the Petition Date, the steering committee for the First Lien Lenders proposed the retention of managers with experience in the real estate industry but who would be independent from the Debtors and their lenders. These managers will have the authorization to act on behalf of LandSource's executive committee in approving major decisions with respect to the Chapter 11 cases. Considering this input, the Debtors decided to retain advisors who will assist them in addressing their business and financial circumstances. Beginning in April 2008, the Debtors approached and conducted interviews with a number of financial advisory and turnaround firms. After a comprehensive search and interview process undertaken, in cooperation with the First Lien Lenders, the Debtors have determined to employ both Messrs. Hogan and Webb of HoganWebb LLC as co-CROs. Pursuant to the CRO Agreement, the CROs will perform services in two phases: (1) The First Phase commenced on July 1, 2008. (2) The Second Phase will commence: -- upon the Debtors' failure to perform these acts: * file with the Court a plan of reorganization on or prior to the later of (i) the date that is 120 days after the Petition Date and (ii) the date that the Debtors' exclusive period to file a plan of reorganization expires in accordance with the limitations provided in Section 8.19 of the $1,185,000,000 DIP Credit Agreement; * obtain the Court's order confirming the plan of reorganization by that date that is 90 days after the date the plan of reorganization is filed; and * consummate the plan within 30 days after the entry of the confirmation order; and -- immediately after any breach of Section 8.19 of the DIP Credit Agreement; provided, however, that Second Phase will not commence prior to the 120th day after the Petition Date, and if the Debtors satisfy the conditions in Section 8.19, 180th day after the Petition Date. During the First Phase, the CROs are expected to: (a) perform a financial review of the Debtors: (b) assist the Debtors in developing possible restructuring plans or strategic alternatives for maximizing the enterprise value of the Debtors' business; (c) serve as a principal contact with the Debtors' creditors with respect to the Debtors' financial and operational matters; (d) evaluate and supplement project-level cash flows prepared by the Debtors that will be used for the evaluation of strategic alternatives; (e) assist the Debtors in the development of strategic alternatives for the portfolio and its individual properties in the context of the current market environment; (f) assist in the implementation of strategic alternatives, as requested; and (g) perform other services that are consistent with the CRO's scope of duties. Upon the commencement of the Second Phase, the CROs will be deemed the sole members of the Executive Committee, and will have all of the powers and duties provided in a limited liability company agreement. The Executive Committee will remain in place during the Second Phase for the sole purpose of governing the affairs of the Valencia Water Company. The CROs will not participate in the management of Valencia Water Company and will not take any action that will result in Valencia Water Company refraining from any action. The salient terms of the CROs' retention are: (1) Fees. HoganWebb will receive $120,000 per month for during the First Phase, and $170,000 per month during the Second Phase. (2) Expenses. HoganWebb will be reimbursed for reasonable fees and expenses, including (i) the fees and expenses of outside local market consultants retained to assist the CROs, and (ii) up to $75,000 for HoganWebb to obtain third-party insurance to protect against any liability obligations the CROs may be exposed to as a result of their services to the Debtors; provided, however, those fees and expenses reimbursed to HoganWebb will not exceed $10,000 per month. (3) Incentive Compensation. If the Bankruptcy Court enters an order confirming reorganization plan by June 7, 2009, the Debtors will pay HoganWebb $1,000,000. The firm will also be entitled to a success fee in the aggregate amount of 20 basis points on each dollar of consideration distributed in the aggregate to holders of prepetition claims required to be distributed under any reorganization plan to the extent the consideration is in excess of $750,000,000. (4) Term. During the First Phase, the engagement of the CROs may only be terminated without cause by the consent of all parties. During the Second Phase, the engagement may only be terminated upon entry of an order of the Court. In the event of any termination, any fees and expenses due will be remitted promptly, including those that accrued prior to termination. In the event of any termination without cause, payment of the Incentive Compensation will be payable if a plan of reorganization is confirmed within the later of June 7, 2009 and three months following the termination. (5) Indemnity. The Debtors indemnify HoganWebb and the CROs against certain losses incurred in connection with their performance, with the exception of losses resulting from the CROs' gross negligence or misconduct. Because it will be employed as a crisis manager pursuant to Section 363 of the Bankruptcy Code, rather than as a professional under Section 327, HoganWebb will not be required to submit fee applications, and instead, will file quarterly invoices with the Court. Messrs. Hogan and Webb maintain their firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtors or their estates. A full-text copy of the CRO Agreement is available for free at: http://ResearchArchives.com/t/s?3063 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. 8; http://bankrupt.com/newsstand/or 215/945-7000). LUBBOCK MEDICAL: Northstar Hospital Plans to Acquire Debtor ----------------------------------------------------------- Chris Van Wagenen of The Lubbock Avalanche-Journal reports that Northstar Hospital LLC is reportedly expected to make an offer to acquire Lubbock Texas-Highland Medical Center, LP, subject to approval of the U.S. Bankruptcy Court approval. Mr. Van Wagenen says that Northstar Hospital, which has some investment ties to Northstar Surgical Center in Lubbock, Texas, is expected to loan Highland Medical $75,000 to make its payroll as part of its due diligence process. Highland Medical's attorney, Max Ralph Tarbox, Esq., at McWhorter, Cobb & Johnson, LLP, said the hospital is expected to file a motion within the next 10 to 12 days that will open the door to a formal Northstar offer, according to Mr. Van Wagenen. About Lubbock Texas-Highland Medical Center, LP Lubbock, Texas-Highland Medical Center, L.P., doing business as Highland Community Hospital and Highland Medical Center -- http://www.highlandcommunityhospital.com-- provides general medical and surgical care for inpatient, outpatient, and emergency room patients, and participates in the Medicare and Medicaid programs. Highland employs about 100 workers. The Debtor filed for chapter 11 bankruptcy protection on May 31, 2008, before the U.S. Bankruptcy Court for the Northern District of Texas (Case No. 08-50202). Max Ralph Tarbox, Esq., at McWhorter, Cobb & Johnson, LLP, in Lubbock, Texas, represents the Debtor. When it filed for bankruptcy, the Debtor disclosed $10 million to $50 million in estimated assets and debts. ML-CFC COMMERCIAL: S&P Lowers Class P Securities Rating to CCC+ --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on four classes of pooled commercial mortgage pass-through certificates from ML-CFC Commercial Mortgage Trust 2006-2. Concurrently, we affirmed our ratings on the 18 remaining classes from this series. The downgrades reflect the anticipated losses and credit support erosion upon the eventual resolution of the two assets with the special servicer, CWCapital Asset Management Inc. The lowered ratings also reflect the credit deterioration of eight loans in the pool totaling $65.8 million (3.6%); each of the eight loans was reported to have debt service coverage (DSC) below 1.0x. The affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. As of the July 14, 2008, remittance report, the collateral pool consisted of 191 loans with an aggregate trust balance of $1.820 billion, compared with 191 loans totaling $1.841 billion at issuance. The master servicers, Wachovia Bank N.A. (Wachovia) and KeyBank Real Estate Capital Markets Inc. (KeyBank), reported financial information for 98.5% of the pool. Seventy- eight percent of the servicer-provided information was full-year 2007 data. Based on this data, Standard & Poor's calculated a weighted average DSC of 1.65x, up from 1.40x at issuance. There are two loans with the special servicer totaling $13.7 million; one loan ($5.5 million) is 30-plus-days delinquent, and the other loan ($8.2 million) is 90-plus-days delinquent. An appraisal reduction amount (ARA) totaling $512,957 is in effect for the latter of the two loans. To date, the trust has not experienced any losses. Details for the specially serviced assets are: -- Roseland Shopping Center is a 94,020-sq.-ft. unanchored retail center located in Shelby Township, Mich. The loan has an unpaid principal balance of $8.2 million and a total exposure of $9.0 million, including advances and interest thereon. The loan was transferred to the special servicer due to payment default and is 90-plus-days delinquent. A receiver has been appointed, and the special servicer has received a summary judgment for foreclosure. Foreclosure has been scheduled for the end of September 2008. An ARA of $512,857 is in effect for this asset. Standard & Poor's expects a loss upon the resolution of this asset. -- The Carriage Hills Apartments loan is secured by a 125- unit garden-style multifamily complex located in Montgomery, Ala., and has a total exposure of $5.5 million. The loan was transferred to CWCapital on June 2, 2008, due to payment default. The special servicer conducted a property inspection on June 24, 2008, and the property was characterized as "fair." CW Capital ordered an appraisal. The special servicer is filing for a receivership and scheduling foreclosure. The transfer of the loan is recent and details are still forthcoming from the special servicer. Based on the exposure per unit of $44,156, there is a risk of a loss upon the resolution of this loan. There are eight loans in the pool, totaling $65.7 million (3.6%), that have reported DSCs lower than 1.0x. These loans are secured primarily by a variety of multifamily, retail, and office properties. The loans range in size from $30.3 million to $1.8 million and have experienced a weighted average decline in DSC of 28.5% since issuance. These eight loans include the BTR Capital Portfolio loan, which is on the watchlist. Wachovia and KeyBank reported a watchlist of 27 loans ($131.3 million, 7.2%). The BTR Capital Portfolio loan ($17.7 million, 0.97%) is the largest loan on the watchlist and the sixth-largest loan in the pool. The loan is secured by one retail, one office, and four industrial properties and one land parcel, which together comprise 1,871,624 sq. ft. in and around Baltimore, Md. The loan, which was previously with the special servicer, appears on the watchlist because the portfolio reported a year-end 2007 DSC of 0.88x and 73% occupancy. Subsequently, a new lease has been signed for the largest warehouse property, and we expect the DSC to increase to 1.01x. The remaining loans are on the watchlist primarily because of low occupancy or a decline in DSC since issuance. The top 10 loans have an aggregate outstanding balance of $589.0 million (32.4%) and a weighted average DSC of 1.85x, up from 1.51x at issuance. With the exception of the BTR Capital Portfolio, none of the top 10 loans appear on the watchlist. Standard & Poor's reviewed property inspections provided by the master servicer for all of the assets underlying the top 10 exposures, and nine of the properties were characterized as "good," while the remaining property was deemed to be in "excellent" condition. One loan in the pool had credit characteristics consistent with those of an investment-grade obligation at issuance. The loan continues to exhibit these credit characteristics. The 100 Summer Street loan is the largest exposure in the pool with a trust and whole-loan balance of $180.0 million (9.8%). The loan is collateralized by a 1,057,475-sq.-ft., 32-story, class A office building in Boston, Mass. For the year ended Dec. 31, 2007, DSC was 2.81x, and occupancy was 100%. The property's largest tenant, Fidelity Properties (217,876 sq. ft., 20.6% of net rentable area {NRA}), is a wholly owned subsidiary of Fidelity Investments ('AA'). Fidelity will vacate a majority of its space in December 2008 and will continue to occupy a total of 57,458 sq. ft. State Street Bank ('AA'), however, will lease a total of 112,764 sq. ft. (10.9% of property NRA) by Feb. 1, 2010. Standard & Poor's considered the Fidelity and State Street lease activity in arriving at an adjusted loan-to-value of 77%, which was comparable to its value at issuance. Standard & Poor's stressed the loans on the watchlist and the other loans with credit issues as part of its analysis. The resultant credit enhancement levels support the lowered and affirmed ratings. RATINGS LOWERED ML-CFC Commercial Mortgage Trust 2006-2 Commercial mortgage pass-through certificates Rating Class To From Credit enhancement (%) L B+ BB- 2.02 M B B+ 1.90 N B- B 1.64 P CCC+ B- 1.39 RATINGS AFFIRMED ML-CFC Commercial Mortgage Trust 2006-2 Commercial mortgage pass-through certificates Class Rating Credit enhancement (%) A-1 AAA 30.35 A-2 AAA 30.35 A-3 AAA 30.35 A-SB AAA 30.35 A-4 AAA 30.35 A-1A AAA 30.35 AM AAA 20.23 AJ AAA 12.65 B AA 10.62 C AA- 9.74 D A 7.97 E A- 6.95 F BBB+ 5.31 G BBB 4.30 H BBB- 3.16 J BB+ 2.66 K BB 2.40 X AAA N/A N/A-Not applicable. MORTGAGES LTD: Case Conversion Motion Still Up, Rightpath Says -------------------------------------------------------------- Chris Reeder, Esq., counsel to Rightpath Limited Development Group, alleged that Mortgages Ltd. intended to mislead the public through a Web site statement, Phoenix Business Journal's Jan Buchholz writes. Mortgages Ltd. had stated that Rightpath's motion to convert Mortgages Ltd.'s case to liquidation was denied by the U.S. Bankruptcy Court for the District of Arizona on Monday, Aug. 4, 2008, Business Journal says. Mortgages Ltd.'s site states: "Several of you may have heard or recently read that over the weekend attorneys for Rightpath filed an emergency motion for an order converting our case to a Chapter 7 bankruptcy or, alternatively, for an appointment of a Chapter 11 Trustee. We are pleased to report that on August 4 the court denied this motion." Debtor counsel, Carolyn Johnsen, Esq., at Jennings, Strouss & Salmon P.L.C., explained that Mortgages Ltd.'s post was merely a "glitch," Business Journal relates. No ruling was made by the Court on August 4, rather a status conference was held. What was denied by the Court on August 6 was Rightpath's motion to exceed the page limitation for its emergency motion for conversion or the appointment of a chapter 11 trustee, based on a court document. KML Development Group also pressed the Court to appoint a case trustee. Mr. Reeder said that Mortgages Ltd.'s "false statement" is reason enough to name a case trustee, Business Journal notes. According to him, the misconduct of Debtor's management is worsening, Business Journal adds. According to the report, Ms. Johnsen asserted that they do not intend to mislead people. She pointed that Mortgages Ltd. president, staff, and bankruptcy counsels have been in several talks with investors with the intention to pay investors. Ms. Johnsen did not disclose who made the online statement, Business Journal reports. About Mortgages Ltd. Phoenix, Arizona-based Mortgages Ltd. -- http://www.mtgltd.com/ -- originates, invests in, sells and services its own short-term real-estate secured loans on properties within the state of Arizona in the US. It underwrites loans for commercial, industrial and residential properties for acquisition, entitlement, development, construction and investment. Mortgages Ltd. was the subject of an involuntary chapter 7 petition dated June 20, 2008, filed by KGM Builders Inc. -- a contractor for Grace Communities, a borrower of the company -- before the U.S. Bankruptcy Court for the District of Arizona. Central & Monroe LLC and Osborn III Partners LLC, divisions of Grace Communities, sought the appointment of an interim trustee for Mortgages Ltd. in the chapter 7 proceeding. Mortgages Ltd. is also facing lawsuits filed by Grace Communities and Rightpath Limited Development Group for its alleged failure to fully fund loans. Mortgages Ltd. denied the charges. It has filed a motion to dismiss the Rightpath suit. The Debtor's case was converted to a chapter 11 proceeding on June 24, 2008 (Bankr. D. Ariz. Case No. 08-07465). Judge Sarah Sharer Curley presides over the case. Carolyn Johnsen, Esq., and Bradley Stevens, Esq., at Jennings, Strouss & Salmon P.L.C., replaced Todd A. Burgess, Esq., at Greenberg Traurig LLP, as counsel to the Debtor. As of Dec. 31, 2007, the Debtor had total assets of $358,416,681 and total debts of $350,169,423. MORTGAGES LTD: Insists Need to Access $125 Million DIP Financing ---------------------------------------------------------------- Mortgages Ltd. responded to objections filed by various parties to its motion to access debtor-in-possession financing. The Debtor told the U.S. Bankruptcy Court for the District of Arizona that many of the objections overlap and can be addressed in general categories. The Troubled Company Reporter related on July 15, 2008, that Mortgages Ltd. asked the Court for authority to obtain up to $125,000,000 in postpetition financing from Southwest Value Partners. The committed $125,000,000 financing is comprised of: i) a $5,000,000 revolving line of credit, which will be used to: fund working capital needs, pay off a $500,000 prepetition loan made by the lender to the Debtor, and pay down by $2,250,000 a debt owed by the Debtor to Artemis Realty Capital, LLC from the release of a lien held by Artemis on real property of the Debtor at Central and Highland avenues in Phoenix; and ii) a $120,000 construction line of credit to finance the completion of certain projects that are the subject of prepetition loans by the Debtor at present. Under the credit agreement, the $5,000,000 revolving line of credit bears interest rate at 11%, while the $120,000,000 construction line of credit incurs 12% interest rate, plus preferred return of up to 20% of funded amount based upon level of recovery by the Debtor's investors in the projects. Several parties have filed objections to the Debtor's DIP request, including Central & Monroe, LLC, and Osborn III Partners, LLC, who have significant claims against the estate, assert that the Debtor's proposed lender may have a pre-existing relationship with the Debtor that needs to be disclosed in detail. Central and Osborn filed an involuntary petition under Chapter 7 against the Debtor on June 20, 2008. The Debtor argues that the involuntary petition was improper and was filed in bad faith by Central and Osborn. The Debtor points out that Central and Osborn are not eligible creditors within the meaning of Section 303(b)(1). The Debtor told the Court that it has an urgent need to use up to $500,000 from the $5,000,000 revolving line of credit to fund operations, on the interim basis. In its response, the Debtor pointed: A. The Origination Fee The terms sheet with Stratera Portfolio Advisors, LLC, includes a $125,000 origination fee. Stratera has agreed that only $12,500 will be required from an initial $500,000 draw and the remainder may be paid upon Court approval of a final order approving the financing. B. Lock-out Provision The terms sheet with Stratera provides for a 30-day lock-out provision. Stratera has agreed to remove that provision. C. Carve-out for Professionals Clarification was made that the carve-out for professionals will include counsel for the Unsecured Creditors' Committee and the Investor Committee. D. Priming Clarification was made that the liens granted to Stratera are not intended to prime existing liens on the properties. These existing liens include those claimed by Southwest Value Partners, Artemis Realty Capital, Gold Creek, the fractional interests held by investors, the interest held by William C. Lewis in the Zacher loans, and Arizona Bank and Trust. E. Stratera Disclosure and Loan Documents It appears that Stratera retained counsel on Aug. 4, 2008, and the first contact with counsel was on Aug. 5, 2008. As a result, the proposed interim order was not lodged with the Court at the time of filing the motion. There are no loan documents with respect to this transaction. The sole principal of Stratera is Doug Smith, who signed the term sheet that was negotiated in good faith and at arm's length. F. Need for Financing Grace entities claim that the Debtor does not need the financing because it is escrowing borrower payments, a portion of which the Debtor is entitled as servicing fees and its interest in various fractional shares. That is true, but the Court has required the monies to be segregated. In its joint motion to pay investors filed with the committee of investors, the Debtor and the Committee attempted to have the money released but the motion was met with a rash of objections. One of the investors, Eva Sperber, has filed her own motion to release payments. That motion, too, has been met with a number of objections, including Grace entities. It is rather disingenuous to play both sides. Consequently, the Debtor is not currently able to use the money and it is in dire need of it to pay payroll and other expenses. G. Radical Bunny, LLC Radical Bunn, LLC has objected mainly on the ground that its purported security interest will be primed. Radical Bunny is not a secured creditor. The Debtor has researched the issue extensively; Radical Bunny's problem is that there is no security agreement between it and the Debtor. For purposed of the request for interim financing only, the Debtor can demonstrate that Radical Bunny is adequately protected. It is protected by the on-going operations which are preserving its collateral. It is protected by the fact that payments which are received from borrowers are currently being segregated. H. On-Going Business Two borrowers, Rightpath Limited Development Group and University & Ash, have objected mainly on the ground that the Debtor is not an on-going business and that financing should be postponed pending a current motion to appoint a case trustee or convert the case. This is but another effort by borrowers t attempt to derail the case in an effort to extract unreasonable and unwarranted discounts on their loans. The Debtor has been stymied by these borrowers in continuing its business, which it is doing irrespective of their unscrupulous efforts. With additional financing, the Debtor will surive, will continue business, and will file a plan of reorganization. About Mortgages Ltd. Phoenix, Arizona-based Mortgages Ltd. -- http://www.mtgltd.com/ -- originates, invests in, sells and services its own short-term real-estate secured loans on properties within the state of Arizona in the US. It underwrites loans for commercial, industrial and residential properties for acquisition, entitlement, development, construction and investment. Mortgages Ltd. was the subject of an involuntary chapter 7 petition dated June 20, 2008, filed by KGM Builders Inc. -- a contractor for Grace Communities, a borrower of the company -- before the U.S. Bankruptcy Court for the District of Arizona. Central & Monroe LLC and Osborn III Partners LLC, divisions of Grace Communities, sought the appointment of an interim trustee for Mortgages Ltd. in the chapter 7 proceeding. Mortgages Ltd. is also facing lawsuits filed by Grace Communities and Rightpath Limited Development Group for its alleged failure to fully fund loans. Mortgages Ltd. denied the charges. It has filed a motion to dismiss the Rightpath suit. The Debtor's case was converted to a chapter 11 proceeding on June 24, 2008 (Bankr. D. Ariz. Case No. 08-07465). Judge Sarah Sharer Curley presides over the case. Carolyn Johnsen, Esq., and Bradley Stevens, Esq., at Jennings, Strouss & Salmon P.L.C., replaced Todd A. Burgess, Esq., at Greenberg Traurig LLP, as counsel to the Debtor. As of Dec. 31, 2007, the Debtor had total assets of $358,416,681 and total debts of $350,169,423. MORGAN STANLEY: Moody's Cuts $11MM Class IV-B Notes Rating to Ba2 ----------------------------------------------------------------- Moody's Investors Service downgraded the ratings on these notes issued by Morgan Stanley Managed ACES SPC, Series 2005-1: -- Class Description: $100,000,000 Class I-A Secured Floating Rate Notes due 2013 -- Prior Rating: Aaa -- Current Rating: Aa1 -- Class Description: $96,000,000 Class II-A Secured Floating Rate Notes due 2013 -- Prior Rating: Aa2, on watch for possible downgrade -- Current Rating: A1 -- Class Description: EUR 38,000,000 Class II-B Secured Floating Rate Notes due 2013 -- Prior Rating: Aa2, on watch for possible downgrade -- Current Rating: A1 -- Class Description: $3,000,000 Class III-A Secured Fixed Rate Notes due 2013 -- Prior Rating: A2, on watch for possible downgrade -- Current Rating: Baa3 -- Class Description: GPY 500,000,000 Class III-B Secured Floating Rate Notes due 2013 -- Prior Rating: A2, on watch for possible downgrade -- Current Rating: Baa3 -- Class Description: EUR 20,000,000 Class III-C Secured Floating Rate Notes due 2013 -- Prior Rating: A2, on watch for possible downgrade -- Current Rating: Baa3 -- Class Description: $10,000,000 Class III-D Secured Floating Rate Notes due 2013 -- Prior Rating: A2, on watch for possible downgrade -- Current Rating: Baa3 -- Class Description: GPY 500,000,000 Class IV-A Secured Floating Rate Notes due 2013 -- Prior Rating: Baa2, on watch for possible downgrade -- Current Rating: Ba2 -- Class Description: $11,000,000 Class IV-B Secured Floating Rate Notes due 2013 -- Prior Rating: Baa2, on watch for possible downgrade -- Current Rating: Ba2 -- Class Description: GPY 200,000,000 Class V-B Secured Floating Rate Notes due 2013 -- Prior Rating: Ba2, on watch for possible downgrade -- Current Rating: B3 According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of corporate securities. MORGAN STANLEY: Moody's Trims Class V Floating Notes Rating to B3 ----------------------------------------------------------------- Moody's Investors Service downgraded the ratings on these notes issued by Morgan Stanley Managed ACES SPC, Series 2005-2: -- Class Description: $40,000,000 Class V Secured Floating Rate Notes due 2013 -- Prior Rating: Ba2, on watch for possible downgrade -- Current Rating: B3 According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of corporate securities. MULTI SECURITY: S&P Cuts Rating on 3 Classes of Securities to CCC ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 15 classes from Multi Security Asset Trust L.P.'s series 2005-RR4 and removed them from CreditWatch with negative implications, where they were placed on May 28, 2008. Concurrently, S&P affirmed its ratings on three other classes. The rating actions follow S&P's analysis of the transaction, including an examination of the current credit characteristics of the transaction's assets and liabilities. S&P's review incorporates Standard & Poor's revised recovery rate assumptions for commercial mortgage-backed securities (CMBS), which is a primary factor for the rating actions. According to the trustee report dated July 30, 2008, the transaction's current assets included 40 classes ($692.6 million, 100%) of CMBS pass-through certificates from 14 distinct transactions issued between 1998 and 2001. Only First Union-Lehman Brothers-Bank of America Commercial Mortgage Trust's series 1998-C2 ($213.6 million, 31%) represented an asset concentration of 10% or more of total assets. The aggregate principal balance of the assets and liabilities each totaled $692.6 million, down from $740.2 million at issuance. All of the $47.6 million reduction in both total assets and liabilities is due to principal paydown of the collateral, which has reduced the principal balance of class A-1 to $89.5 million. S&P considered the expected additional principal paydown of the collateral in S&P's affirmation of the 'AAA' rating on class A-1. The transaction has realized no principal losses to date, and none of the current assets are first-loss CMBS assets. S&P's analysis indicates that the current asset pool exhibits weighted average credit characteristics consistent with 'BB' rated obligations. Standard & Poor's rates $129.6 million (19%) of the assets. S&P reanalyzed S&P's outstanding credit estimates for the remaining assets. RATINGS LOWERED AND REMOVED FROM CREDITWATCH NEGATIVE Multi Security Asset Trust L.P. CMBS pass-through certificates series 2005-RR4 Rating Class To From A-2 AA- AAA/Watch Neg A-3 AA- AAA/Watch Neg B BBB+ AA/Watch Neg C BBB+ AA-/Watch Neg D BBB A/Watch Neg E BBB- A-/Watch Neg F BBB- BBB+/Watch Neg G BB+ BBB/Watch Neg H BB BBB-/Watch Neg J B+ BB+/Watch Neg K B BB/Watch Neg L B- BB-/Watch Neg M CCC+ B+/Watch Neg N CCC- B/Watch Neg O CCC- B-/Watch Neg RATINGS AFFIRMED Multi Security Asset Trust L.P. CMBS pass-through certificates series 2005-RR4 Class Rating A-1 AAA X-1 AAA X-2 AAA NEW CAP: NY Court to Consider Scheme of Arrangement on August 12 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York will consider on Aug. 12, 2008, 10:00 a.m., John Gibbons' request to give effect in the United States New Cap Reinsurance Corporation Limited' Scheme of Arrangement and Permanent Injunction pursuant to Section 304 of the Bankruptcy Code. The hearing will be held at Alexander Custom House, One Bowling Green, New York City. The Scheme of Arrangement was sanctioned by the Supreme court of New South Wales and was made effective on April 28, 2008. John Gibbons is the appointed liquidator and scheme administrator of the Debtor. Mr. Gibbons proposed that the Scheme: -- will be given full effect in the U.S. and be binding on and enforceable against all creditors in the U.S.; -- will permanently enjoin all persons and entities from: * taking any action in contravention of, or inconsistent with the Scheme; * seizing, repossessing, transferring. relinquishing or disposing of any property of the Debtor in the U.S., or the proceeds thereof, to any person or entity other than the Scheme administrators; * commencing or continuing any action or other legal proceedings against the Debtor or any of its property or any proceeds, except as provided in the Scheme; * enforcing any judicial, administrative or regulatory judgment, assessment or order or arbitration award and commencing or continuing any act for other legal proceeding, permitted in the Scheme; and * drawing down any letter of credit established by on behalf or at the request of the Debtor, in excess of amount expressly authorized by the terms of the contract or other agreement. New Cap Reinsurance Corp. (Bermuda) Ltd. and its New Cap Reinsurance Corp. Ltd. subsidiary filed chapter 11 petitions in the U.S. Bankruptcy Court in Manhattan on April 27, 1999, with the parent estimating both assets and liabilities at over $100 million. The parent company, based in Hamilton, Bermuda, is engaged in the business of insurance and reinsurance whereas the Sydney, Australia-based subsidiary, founded in 1997, writes worldwide casualty, catastrophe, marine, occupational, and personal insurance policies. The Supreme Court of Bermuda and the High Court of Justice of England and Wales sanctioned on Feb. 23, 2006, a Scheme of Arrangement between New Cap Reinsurance Corporation (Bermuda) Limited, and the scheme creditors of the company. Copies of the orders sanctioning the Scheme were delivered to the registrars of companies in Bermuda and England on the same day. The Scheme became effective in both Bermuda and England on that date. NEW CENTURY HOME: S&P Cuts Ratings on 3 Asset-Backed Notes to D --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on three classes of asset-backed notes issued by New Century Home Equity Loan Trust 2006-S1 to 'D' from 'CCC'. The downgrades reflect the erosion of the credit support for the affected classes during the July 25, 2008, distribution, as the collateral continues to incur monthly net losses at an unprecedented pace. The transaction realized a net loss of $15,852,679 during the July distribution, exceeding the available credit support by over $11 million, the amount by which the transaction is now undercollateralized. Due to the deteriorating performance of the collateral, S&P does not expect the transaction to become fully collateralized. As of the July 25, 2008, distribution, cumulative realized losses were 42.86% of the original pool balance, while total delinquencies were 26.69% of the current pool balance. During the past two months, the transaction incurred approximately $39.70 million in losses, representing roughly 30% of the $133,984,724 in cumulative realized losses. Furthermore, monthly net losses averaged just over $10 million per month during the last 12 months. The transaction is 29 months seasoned and has a pool factor of 30.59%. The transaction had an original pool balance of $312.641 million. The ratings on these three classes were originally 'AAA'. S&P first lowered the ratings to 'AA' on July 19, 2007, and, subsequently, lowered them to 'CCC' on Dec. 20, 2007. All of the subordinate classes have already defaulted. The collateral for this transaction consists of closed-end, fixed- rate subprime mortgage loans secured by second liens on residential real properties. All of the mortgage loans were originated by New Century Mortgage Corp. As of the cut-off date, the loans had an average original combined loan-to-value ratio of 99.84%, and the average credit score was 658. In addition, 42.64% of the mortgage loans were originated in California. RATINGS LOWERED New Century Home Equity Loan Trust 2006-S1 Asset backed notes series 2006-S1 Rating Class To From A-1 D CCC A-2a D CCC A-2b D CCC NJ COM'L LAUNDRY: Organizational Meeting to Form Panel Set Aug. 14 ------------------------------------------------------------------ The United States Trustee for Region 3 will hold an organizational meeting in the Chapter 11 case of The New Jersey Commercial Laundry Group, LLC, on August 14, 2008, at 1:00 p.m. at the Office of the United States Trustee, One Newark Center, 21st Floor, Room 2106, in Newark, New Jersey. The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' cases. The organizational meeting is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. A representative of the Debtor, however, may attend the Organizational Meeting, and provide background information regarding the bankruptcy filing. Clayton, New Jersey-based The New Jersey Commercial Laundry Group, LLC, sells commercial laundry equipment and provides related services. The Debtor filed for chapter 11 protection before the U.S. Bankruptcy Court for the District of New Jersey on June 27, 2008 (Case No. 08-21998). Phillip F. Drinkwater III, Esq., represents the Debtor. When it filed for bankruptcy, it disclosed less than $50,000 in estimated assets and between $50,000 to $100,000 in estimated debts. PACIFIC LUMBER: Calif. S.C. Says Headwater Forest Permits Invalid ----------------------------------------------------------------- The California Supreme Court held in mid-July 2008 that some of The Pacific Lumber Company's logging permits for the Headwaters Forest were improperly approved, rendering them invalid, Bloomberg News reports. The permits included a master logging plan and a license to capture and kill some endangered species at the area, Bloomberg says. The Supreme Court ruled that the California Department of Forestry "approved an inadequate 50-year timber management plan required as part of the 1999 Headwaters deal," Times-Standard notes in a separate report. The Environmental Protection Information Association and Sierra Club filed a lawsuit against PALCO and certain of its affiliates, the California Department of Forestry & Fire Protection, and the California Department of Fish and Game in the Superior Court in Humboldt County, California, in March 1999. EPIC alleged that the issuance of a Sustainable Yield Plan and California permits to PALCO violated the California Endangered Species Act and the California Environmental Quality Act. That same month, the United Steelworkers of America filed a similar action in Humboldt County Superior Court, challenging the validity and legality of PALCO's SYPs. Subsequently, the EPIC and the USWA Actions were consolidated. The California Court ruled in favor of EPIC and USWA in 2003. The Defendants, however, took an appeal of the 2003 Order and subsequently, the Court of Appeals reversed the California Court ruling in 2005, except for one issue in the EPIC case. The issue is with respect to the validity of the logging permits and licenses. The Supreme Court held that a plan allowing PALCO to harvest trees in 211,000 acres of ancient redwood trees had not been finalized when the state of California approved the project, Bloomberg discloses. As a result, there has been difficulty in determining whether PALCO had been compliant with the Headwaters Agreement or not, the news source notes. Bloomberg cites the Supreme Court ruling may have little to no effect to PALCO assets as those assets are being acquired for $850 million by Marathon Structured Finance Fund L.P. and Mendocino Redwood Company, LLC, under a recently approved Plan of Reorganization. "It doesn't matter because the sustained yield plan has been superseded by another process, so there's no impact," Edgar Washburn, an attorney for PALCO, told Bloomberg in an interview. About Pacific Lumber Based in Oakland, California, The Pacific Lumber Company -- http://www.palco.com/-- and its subsidiaries operate in several principal areas of the forest products industry, including the growing and harvesting of redwood and Douglas-fir timber, the milling of logs into lumber and the manufacture of lumber into a variety of finished products. Scotia Pacific Company LLC, Scotia Development LLC, Britt Lumber Co., Inc., Salmon Creek LLC and Scotia Inn Inc. are wholly owned subsidiaries of Pacific Lumber. Scotia Pacific, Pacific Lumber's largest operating subsidiary, was established in 1993, in conjunction with a securitization transaction pursuant to which the vast majority of Pacific Lumber's timberlands were transferred to Scotia Pacific, and Scotia Pacific issued Timber Collateralized Notes secured by substantially all of Scotia Pacific's assets, including the timberlands. Pacific Lumber, Scotia Pacific, and four other subsidiaries filed for chapter 11 protection on Jan. 18, 2007 (Bankr. S.D. Tex. Case Nos. 07-20027 through 07-20032). Jack L. Kinzie, Esq., at Baker Botts LLP, is Pacific Lumber's lead counsel. Nathaniel Peter Holzer, Esq., Harlin C. Womble, Jr., Esq., and Shelby A. Jordan, Esq., at Jordan Hyden Womble Culbreth & Holzer PC, is Pacific Lumber's co-counsel. Kathryn A. Coleman, Esq., and Eric J. Fromme, Esq., at Gibson, Dunn & Crutcher LLP, acts as Scotia Pacific's lead counsel. Kyung S. Lee, Esq., Esq., at Diamond McCarthy LLP is Scotia Pacific's co-counsel, replacing Porter & Hedges LLP. John D. Fiero, Esq., at Pachulski Stang Ziehl & Jones LLP, represents the Official Committee of Unsecured Creditors. When Pacific Lumber filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. Scotia Pacific listed total assets of $932,000,000 and total debts of $765,978,335. The Debtors filed their Joint Plan of Reorganization on Sept. 30, 2007, which was amended on Dec. 20, 2007. Four other parties-in- interest have filed competing plans for the Debtors -- The Bank of New York Trust Company, N.A., as Indenture Trustee for the Timber Notes; the Official Committee of Unsecured Creditors; Marathon Structured Finance Fund L.P, the Debtors' DIP Lender and Agent under the DIP Credit Facility; and the Heartlands Commission, which represents the tribal members of the Bear River Band of Rohnerville Rancheria and PALCO employees. On July 8, 2008, the Court confirmed the Modified First Amended Joint Plan of Reorganization With Technical Modifications for the Debtors proposed by Marathon Structured Finance Fund L.P., Mendocino Redwood Company, LLC, and the Official Committee of Unsecured Creditors. The Debtors emerged from bankruptcy protection on July 30, 2008. The Debtors' exclusive plan filing period expired on Feb. 29, 2008. (Scotia/Pacific Lumber Bankruptcy News, Issue No. 66; http://bankrupt.com/newsstand/or 215/945-7000). PARMALAT SPA: High Cost, Low Demand Cut H1 EBITDA to EUR146.3MM --------------------------------------------------------------- Parmalat S.p.A. released its preliminary results for the for half ended June 30, 2008. The Parmalat Group posted EUR146.3 million in EBITDA on EUR1.9 billion in net revenues for the first half 2008, compared with EUR163.2 million in EBITDA on EUR1.81 billion in net revenues for the same period in 2007. The company attributed the lower EBITDA compared with 2007 to: * increase in the cost of milk raw material; * the negative impact of lower unit sales caused by shrinking consumer demand and strong competitive pressure from private labels; * an increase in manufacturing overheads and marketing costs attributable almost exclusively to strong inflationary pressure in South Africa and Central and South America. At June 30, 2008, the Group's net financial position showed an improvement of EUR45.2 million, with net financial assets increasing from EUR855.8 million at Dec. 31, 2007 to EUR901 million at June 30, 2008. The main reasons for this positive change are: * cash flow from operating activities, which totaled about EUR15 million, net of changes in operating working capital and investments; * flows from non recurring activities, which amounted to EUR36.7 million principally reflecting the deconsolidation of EUR35.1 million in net borrowings of Newlat S.p.A., sold in May 2008; * inflows from litigation, which reflected proceeds of EUR437.9 million from settlement agreements executed during the first half of 2008 and expenses of EUR28.8 million to pursue legal actions; * tax-related flows, which totaled about EUR172.6 million, including EUR83 million for operating activities and EUR89.6 million for litigation settlements; * dividend payments of EUR262.1 million; * a change in net indebtedness for the period, with liquidity increasing by more than EUR45 million, due in part to a positive currency translation effect (appreciation of the euro versus the currencies of consolidated companies) of more than EUR27 million. Parmalat S.p.A. Meanwhile, Parmalat S.p.A. posted EUR24.9 million in EBITDA on EUR458.3 million on net revenues for first half 2008, compared with EUR34.9 million in EBITDA on EUR426.9 million in net revenues for the same period in 2007. Net profit of the period is inclusive of the settlements for a total amount of EUR437.9 million beyond the adjustment of the intangible assets due to the impairment test for an amount of about EUR60 million. Net financial assets grew from around EUR1.23 billion at Dec. 31, 2007, to around EUR1.32 billion at June 30, 2008. The improvement is the result of a positive cash flow from operations and reflects the contribution of the nonrecurring transactions. Business Outlook The worsening of the economic and financial crisis has affected the economic trend of Parmalat Australia and Parmalat South Africa. To this situation a major decline of the Italian market must be added. Damages suffered by the above mentioned markets have been only partially compensated by the positive trend of other subsidiaries and by the operational actions already implemented and in course of implementation. In consideration of the results and in absence of extraordinary events, it is confirmed the "guidance" for the Group that presents an increase in revenues of 3% respect to 2007, while it is expected that EBITDA of the Group, for this period, could be around EUR350 million. Parmalat expects between EUR445 million to EUR450 million in net profit for first half 2008, compared with EUR198.2 million in net profit for the same period in 2007. Parmalat Group expects between EUR425 million to EUR430 million in consolidated net profit for first half 2008, compared with EUR244.3 million in consolidated net profit for the same period in 2007. About Parmalat Headquartered in Milan, Italy, Parmalat S.p.A. -- http://www.parmalat.net/-- sells nameplate milk products that can be stored at room temperature for months. It also has about 40 brand product lines, which include yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices. The company's U.S. operations filed for chapter 11 protection on Feb. 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than US$200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. Parmalat S.p.A. and its Italian affiliates filed separate petitions for Extraordinary Administration before the Italian Ministry of Productive Activities and the Civil and Criminal District Court of the City of Parma, Italy on Dec. 24, 2003. Dr. Enrico Bondi was appointed Extraordinary Commissioner in each of the cases. The Parma Court has declared the units insolvent. On June 22, 2004, Dr. Bondi filed a Sec. 304 Petition, Case No. 04-14268, in the United States Bankruptcy Court for the Southern District of New York. Parmalat has three financing arms: Dairy Holdings Ltd., Parmalat Capital Finance Ltd., and Food Holdings Ltd. Dairy Holdings and Food Holdings are Cayman Island special-purpose vehicles established by Parmalat S.p.A. The Finance Companies are under separate winding up petitions before the Grand Court of the Cayman Islands. Gordon I. MacRae and James Cleaver of Kroll (Cayman) Ltd. serve as Joint Provisional Liquidators in the cases. On Jan. 20, 2004, the Liquidators filed Sec. 304 petition, Case No. 04-10362, in the United States Bankruptcy Court for the Southern District of New York. In May 2006, the Cayman Island Court appointed Messrs. MacRae and Cleaver as Joint Official Liquidators. Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, and Richard I. Janvey, Esq., at Janvey, Gordon, Herlands Randolph, represent the Finance Companies in the Sec. 304 case. The Honorable Robert D. Drain presides over the Parmalat Debtors' U.S. cases. On June 21, 2007, the U.S. Court granted Parmalat permanent injunction. PARMALAT SPA: NJ Court Denies Citigroup Bid to Dismiss Claims ------------------------------------------------------------- United States Judge Jonathan N. Harris at the Bergen County Superior Court in New Jersey denied a request by Citigroup Inc. for a directed verdict dismissing the claims asserted by Parmalat SpA. This means that the trial will proceed to a jury verdict, Parmalat said, in a news release. Citigroup had requested that the New Jersey Court rule on the case directly and absent a jury. Parmalat filed a US$2.2-billion suit against Citigroup for contributing to Parmalat's bankruptcy in 2003. Dr. Enrico Bondi, appointed "extraordinary commissioner" for Parmalat's cases, claimed that Citigroup aided and abetted a breach of fiduciary duties by Parmalat insiders and helped hide its off-balance-sheet debt. Citigroup asserted counterclaims against Parmalat, denying any wrongdoings and claimed that it was a victim of the fraud which led to the Italian dairy giant's collapse in 2003. "Citi is a victim of Parmalat's fraud and we are confident the merits of our position will be demonstrated at trial," a Citigroup spokesperson stated, according to Reuters. Reuters notes that motions filed by a defendant to ask a judge to dismiss the other side's claims when the plaintiff finishes presenting evidence before the defendant conveys its case is not unusual but often fails. "I believe, with no lack of confidence, that it would be an abuse of my discretion to grant the motion to dismiss the case at this time," Judge Harris said. Judge Harris added a "rational juror" could conclude, based on the evidence presented, that "misappropriation or looting" took place, warranting damages. Appellate Division Denies Appeal on Evidence Judge Jose L. Fuentes of the Appellate Division of the Superior Court in New Jersey, in early July, denied Citigroup Inc.'s request to appeal from an order that allows Parmalat SpA to introduce evidence supporting its lawsuit against the Citigroup, Chad Bray of Dow Jones Newswires reported. According to Mr. Bray, Citigroup had objected to the inclusion of a 2004 Italian financial police report listing all the alleged misappropriations from 1992 to 2003 by Calisto Tanzi, Parmalat's founder, his family, as well as the company's former managers. About Parmalat Headquartered in Milan, Italy, Parmalat S.p.A. -- http://www.parmalat.net/-- sells nameplate milk products that can be stored at room temperature for months. It also has about 40 brand product lines, which include yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices. The company's U.S. operations filed for chapter 11 protection on Feb. 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than US$200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. Parmalat S.p.A. and its Italian affiliates filed separate petitions for Extraordinary Administration before the Italian Ministry of Productive Activities and the Civil and Criminal District Court of the City of Parma, Italy on Dec. 24, 2003. Dr. Enrico Bondi was appointed Extraordinary Commissioner in each of the cases. The Parma Court has declared the units insolvent. On June 22, 2004, Dr. Bondi filed a Sec. 304 Petition, Case No. 04-14268, in the United States Bankruptcy Court for the Southern District of New York. Parmalat has three financing arms: Dairy Holdings Ltd., Parmalat Capital Finance Ltd., and Food Holdings Ltd. Dairy Holdings and Food Holdings are Cayman Island special-purpose vehicles established by Parmalat S.p.A. The Finance Companies are under separate winding up petitions before the Grand Court of the Cayman Islands. Gordon I. MacRae and James Cleaver of Kroll (Cayman) Ltd. serve as Joint Provisional Liquidators in the cases. On Jan. 20, 2004, the Liquidators filed Sec. 304 petition, Case No. 04-10362, in the United States Bankruptcy Court for the Southern District of New York. In May 2006, the Cayman Island Court appointed Messrs. MacRae and Cleaver as Joint Official Liquidators. Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, and Richard I. Janvey, Esq., at Janvey, Gordon, Herlands Randolph, represent the Finance Companies in the Sec. 304 case. The Honorable Robert D. Drain presides over the Parmalat Debtors' U.S. cases. On June 21, 2007, the U.S. Court granted Parmalat permanent injunction. PARMALAT SPA: Appeals Court Denies Bid to Bar Class Action Suit --------------------------------------------------------------- The United States Second Circuit Court of Appeals of New York denied Parmalat S.p.A.'s appeal from order by the U.S. District Court for the Southern District of New York denying the company's request for an injunction pursuant to Section 304 of the Bankruptcy Code, Parmalat said in a company statement. Parmalat's request had sought to preclude a purported class of investors from proceeding with a class action against Parmalat in the United States. While recognizing that the class action filed in the United States has been settled, the Second Circuit denied the appeal from the District Court's ruling that the action would have been permitted to proceed in the United States. The Second Circuit emphasized that any judgment obtained in the United States has to be presented in the Italian bankruptcy court for ultimate determination. About Parmalat Headquartered in Milan, Italy, Parmalat S.p.A. -- http://www.parmalat.net/-- sells nameplate milk products that can be stored at room temperature for months. It also has about 40 brand product lines, which include yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices. The company's U.S. operations filed for chapter 11 protection on Feb. 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than US$200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. Parmalat S.p.A. and its Italian affiliates filed separate petitions for Extraordinary Administration before the Italian Ministry of Productive Activities and the Civil and Criminal District Court of the City of Parma, Italy on Dec. 24, 2003. Dr. Enrico Bondi was appointed Extraordinary Commissioner in each of the cases. The Parma Court has declared the units insolvent. On June 22, 2004, Dr. Bondi filed a Sec. 304 Petition, Case No. 04-14268, in the United States Bankruptcy Court for the Southern District of New York. Parmalat has three financing arms: Dairy Holdings Ltd., Parmalat Capital Finance Ltd., and Food Holdings Ltd. Dairy Holdings and Food Holdings are Cayman Island special-purpose vehicles established by Parmalat S.p.A. The Finance Companies are under separate winding up petitions before the Grand Court of the Cayman Islands. Gordon I. MacRae and James Cleaver of Kroll (Cayman) Ltd. serve as Joint Provisional Liquidators in the cases. On Jan. 20, 2004, the Liquidators filed Sec. 304 petition, Case No. 04-10362, in the United States Bankruptcy Court for the Southern District of New York. In May 2006, the Cayman Island Court appointed Messrs. MacRae and Cleaver as Joint Official Liquidators. Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, and Richard I. Janvey, Esq., at Janvey, Gordon, Herlands Randolph, represent the Finance Companies in the Sec. 304 case. The Honorable Robert D. Drain presides over the Parmalat Debtors' U.S. cases. On June 21, 2007, the U.S. Court granted Parmalat permanent injunction. PARMALAT SPA: Italian Court Starts Trial Against Tanzi, 53 Others ----------------------------------------------------------------- Italian Judge Eleonora Fiengo in Parma, Italy, granted in July 2008 the request of Enrico Bondi, chief executive officer of Parmalat SpA, to seek cash for the company in a criminal trial against Calisto Tanzi, founder of Parmalat, and 53 individuals accused of fraud which led to Parmalat's 2003 bankruptcy, Sara Gay Forden of Bloomberg News reported. "The court upheld our request to receive damages from the defendants in the trial," Manuela Cigna, Mr. Bondi's lawyer, told Bloomberg. Fabio Belloni, Mr. Tanzi's lawyer, stated that his client and the other defendants did not oppose Mr. Bondi's request. Judge Fiengo also allowed 30,000 individual investors to seek redress, Bloomberg added. The decision is a victory for Mr. Bondi, Ms. Forden said, since in a Milan criminal trial he had lost the right to seek damages for market manipulation. Additionally, the U.S. District Court had also dismissed most of the claims against Citigroup Inc., Parmalat's bank, Bloomberg noted. Mr. Bondi is seeking compensation for the EUR14,000,000,000, or US$21,600,000,000, shortfall when Parmalat went bankrupt in 2003. According to Bloomberg, the amount of the award will be decided by the Parma Court at the end of the trial, along with a guilty verdict. In a subsequent ruling, Judge Fiengo transferred the case against Cesare Geronzi, chairman of Mediobanca SpA, to Rome for jurisdictional reasons, Bloomberg reported. Mr. Geronzi was charged with extortion and fraudulent bankruptcy, in connection with the 1999 sale of Eurolat to Parmalat. "Finally the court has upheld the request we made from the beginning to move the trial to the competent jurisdiction," Ennio Amodio, Mr. Geronzi's lawyer, was quoted as saying. "Now the trial will be transferred to Rome, where we expect to clarify that Cesare Geronzi had no responsibility for the charges he is accused of." About Parmalat Headquartered in Milan, Italy, Parmalat S.p.A. -- http://www.parmalat.net/-- sells nameplate milk products that can be stored at room temperature for months. It also has about 40 brand product lines, which include yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices. The company's U.S. operations filed for chapter 11 protection on Feb. 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than US$200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. Parmalat S.p.A. and its Italian affiliates filed separate petitions for Extraordinary Administration before the Italian Ministry of Productive Activities and the Civil and Criminal District Court of the City of Parma, Italy on Dec. 24, 2003. Dr. Enrico Bondi was appointed Extraordinary Commissioner in each of the cases. The Parma Court has declared the units insolvent. On June 22, 2004, Dr. Bondi filed a Sec. 304 Petition, Case No. 04-14268, in the United States Bankruptcy Court for the Southern District of New York. Parmalat has three financing arms: Dairy Holdings Ltd., Parmalat Capital Finance Ltd., and Food Holdings Ltd. Dairy Holdings and Food Holdings are Cayman Island special-purpose vehicles established by Parmalat S.p.A. The Finance Companies are under separate winding up petitions before the Grand Court of the Cayman Islands. Gordon I. MacRae and James Cleaver of Kroll (Cayman) Ltd. serve as Joint Provisional Liquidators in the cases. On Jan. 20, 2004, the Liquidators filed Sec. 304 petition, Case No. 04-10362, in the United States Bankruptcy Court for the Southern District of New York. In May 2006, the Cayman Island Court appointed Messrs. MacRae and Cleaver as Joint Official Liquidators. Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, and Richard I. Janvey, Esq., at Janvey, Gordon, Herlands Randolph, represent the Finance Companies in the Sec. 304 case. The Honorable Robert D. Drain presides over the Parmalat Debtors' U.S. cases. On June 21, 2007, the U.S. Court granted Parmalat permanent injunction. PARMALAT SPA: UniCredit Group Settles for EUR271.7 Million ---------------------------------------------------------- Parmalat S.p.A. has reached an agreement with the UniCredit Group settling all transactions and claims between the parties in any way related to the period prior to the date when the Parmalat Group was declared insolvent (December 2003). Consequently, Parmalat S.p.A. is ceasing all actions to void and actions for damages that it has filed or could possibly file in the future against the UniCredit Group. In consideration of this agreement, the UniCredit Group will pay Parmalat S.p.A. EUR229.7 million. Similar settlement agreements have been executed by the banks of the UniCredit Group, on the one hand, and the Extraordinary Administration Commissioner of the Parmatour Group, Parma Associazione Calcio and the other companies of the old Parmalat Group currently under extraordinary administration on the other hand. Pursuant to these agreements, the UniCredit Group will pay: * EUR37 million to the companies of the Parmatour Group; * EUR4 million to Parma Associazione Calcio; and * EUR1 million to the other companies under extraordinary administration (licensee companies, Streglio, Eliair, Parmalat Molkerei and Deutsche Parmalat), Unicredit also waived all verified claims it may hold against the companies. Moreover, the UniCredit Group waived all claims put forth in actions filed against companies under extraordinary administration challenging or demanding the verification of claims and, more in general, any and all claim for damages, thereby minimizing the impact of the remaining disputes. For his part, the Extraordinary Commissioner agreed to waive any further claims or actions to void or actions for damages filed against the UniCredit Group for aiding and abetting in bringing about and aggravating the financial collapse of various companies. The Extraordinary Commissioner further agreed to refrain from joining as plaintiff seeking damages in any of the pending criminal proceedings. Parmalat, UniCredit and the Extraordinary Commissioner express their satisfaction at the agreement reached. About Parmalat Headquartered in Milan, Italy, Parmalat S.p.A. -- http://www.parmalat.net/-- sells nameplate milk products that can be stored at room temperature for months. It also has about 40 brand product lines, which include yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices. The company's U.S. operations filed for chapter 11 protection on Feb. 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than US$200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. Parmalat S.p.A. and its Italian affiliates filed separate petitions for Extraordinary Administration before the Italian Ministry of Productive Activities and the Civil and Criminal District Court of the City of Parma, Italy on Dec. 24, 2003. Dr. Enrico Bondi was appointed Extraordinary Commissioner in each of the cases. The Parma Court has declared the units insolvent. On June 22, 2004, Dr. Bondi filed a Sec. 304 Petition, Case No. 04-14268, in the United States Bankruptcy Court for the Southern District of New York. Parmalat has three financing arms: Dairy Holdings Ltd., Parmalat Capital Finance Ltd., and Food Holdings Ltd. Dairy Holdings and Food Holdings are Cayman Island special-purpose vehicles established by Parmalat S.p.A. The Finance Companies are under separate winding up petitions before the Grand Court of the Cayman Islands. Gordon I. MacRae and James Cleaver of Kroll (Cayman) Ltd. serve as Joint Provisional Liquidators in the cases. On Jan. 20, 2004, the Liquidators filed Sec. 304 petition, Case No. 04-10362, in the United States Bankruptcy Court for the Southern District of New York. In May 2006, the Cayman Island Court appointed Messrs. MacRae and Cleaver as Joint Official Liquidators. Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, and Richard I. Janvey, Esq., at Janvey, Gordon, Herlands Randolph, represent the Finance Companies in the Sec. 304 case. The Honorable Robert D. Drain presides over the Parmalat Debtors' U.S. cases. On June 21, 2007, the U.S. Court granted Parmalat permanent injunction. PIERRE FOODS: Wants Kirkland & Ellis LLP as Attorneys ----------------------------------------------------- Pierre Foods Inc. and its debtor-affiliates ask permission from the United States Bankruptcy Court for the District of Delaware to employ Kirland & Ellis, LLP, as their attorneys. As attorneys, Kirkland & Ellis is expected to advise the Debtors on their debtors-in-possession powers and duties and on the conduct of their cases. The firm is also expected to attend meetings and negotiate with all parties involved in the Debtor's cases, prosecute actions on their behalf and defend them, prepare pleadings related to their cases, among other necessary legal services. Jonathan S. Henes, Esq., a partner at the Firm, told the Court that it will bill the Debtors these hourly rates: Partners $500-$975 Counsel $380-$870 Associates $275-$595 Paraprofessionals $120-$260 Mr. Henes assured the Court that the firm does not represent any interest adverse to the Debtors' estates. 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: To File Plan of Liquidation in Coming Weeks ---------------------------------------------------------------- Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Wilmington, Delaware, says that Plastech Engineered Products Inc. and its debtor-affiliates intend to file a plan of liquidation over the coming weeks, and intend to seek confirmation of the plan thereafter. Mr. Galardi made the disclosure in a document seeking the assumption of a license agreement. After settling disputes with its customers Ford Motor Company, Chrysler LLC, General Motors Corporation, Johnson Controls, Inc., Plastech obtained the approval of the U.S. Bankruptcy Court for the Eastern District of Michigan to sell its major units to various buyers, which included JCI. The Debtors' plan filing deadline expires September 2008. About Plastech Engineered Based in Dearborn, Michigan, Plastech Engineered Products, Inc. -- http://www.plastecheng.com/-- is full-service automotive supplier of interior, exterior and underhood components. It designs and manufactures blow-molded and injection-molded plastic products primarily for the automotive industry. Plastech's products include automotive interior trim, underhood components, bumper and other exterior components, and cockpit modules. Plastech's major customers are General Motors, Ford Motor Company, and Toyota, as well as Johnson Controls, Inc. Plastech is a privately held company and is the largest family- owned company in the state of Michigan. The company is certified as a Minority Business Enterprise by the state of Michigan. Plastech maintains more than 35 manufacturing facilities in the midwestern and southern United States. The company's products are sold through an in-house sales force. The company and eight of its affiliates filed for Chapter 11 protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C., represent the Debtors in their restructuring efforts. The Debtors chose Jones Day as their special corporate and litigation counsel. Lazard Freres & Co. LLC serves as the Debtors' investment bankers, while Conway, MacKenzie & Dunleavy provide financial advisory services. The Debtors also employed Donlin, Recano & Company as their claims and noticing agent. Joel D. Applebaum, Esq., at Clark Hill PLC, represents the Official Committee of Unsecured Creditors. As of Dec. 31, 2006, the company's books and records reflected assets totaling $729,000,000 and total liabilities of $695,000,000. (Plastech Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) PORTER SQUARE: Collateral Decline Cues Fitch's Ratings Downgrade ---------------------------------------------------------------- Fitch downgraded and removed from Rating Watch Negative five classes of notes issued by Porter Square CDO III, Ltd./Inc. These rating actions are effective immediately: -- $166,048,922 class A-1 notes to 'B' from 'A'; -- $56,000,000 class A-2 notes to 'CCC' from 'BBB'; -- $48,000,000 class B notes to 'CC' from 'BB'; -- $14,385,534 class C notes to 'C' from 'B'; -- $22,631,472 class D notes to 'C' from 'CCC'. Porter Square III is a cash flow structured finance collateralized debt obligation that closed on Oct. 25, 2005 and is managed by TCW Asset Management Company. Presently 71.5% of the portfolio is comprised of 2005 and 2006 vintage U.S. subprime residential mortgage-backed securities, and 4.1% consists of 2005, 2006 and 2007 vintage U.S. SF CDOs. Fitch's rating actions reflect the significant collateral deterioration within the portfolio, specifically subprime RMBS and SF CDOs with underlying exposure to subprime RMBS. Since Fitch's last rating action on Nov. 21, 2007, approximately 69.8% of the portfolio has been downgraded, with 10.5% of the portfolio currently on Rating Watch Negative. 76.8% of the portfolio is now rated below investment grade, including 46.2% of the portfolio rated 'CCC+' or below. The negative credit migration experienced since Fitch's last rating action has resulted in the Weighted Average Rating Factor deteriorating to 27.3 ('B+/B') from 8.6 ('BBB-/BB+'), breaching its covenant of 6.4 ('BBB/BBB-'), as of latest trustee report dated June 27, 2008. The collateral deterioration has caused each of the overcollateralization tests to fall below 100% and fail their respective triggers. As of the latest trustee report the class A/B OC ratio was 84.2%, the class C OC ratio was 80.0%, and the class D OC ratio was 74.3%. As a result of the coverage test failures, the transaction is currently diverting interest proceeds from the class C and class D notes, instead using these proceeds to redeem class A-1 principal. Payment of interest to the class C and class D notes has been made in kind by writing up the principal balance of each class by the amount of interest owed. The ratings on the classes A-1, A-2 and B notes address the timely receipt of scheduled interest payments and the ultimate receipt of principal as per the transaction's governing documents. The ratings on the classes C and D notes address the ultimate receipt of interest payments and ultimate receipt of principal as per the transaction's governing documents. RELIANT ENERGY: Retail Unit's Performance Won't Affect S&P Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services said the poor performance of Reliant Energy's retail services unit in Q2 2008 has no effect on the company's 'BB-' rating. The outlook remains stable. S&P's 'BB-' rating does not require Reliant to achieve its earnings forecasts. For instance, under Reliant's original forecast (that did not incorporate the Q2 losses), and assuming strong merchant market conditions continue (December 2007 prices), Reliant will accumulate almost $3 billion in cash by the end of 2010. However, S&P does not expect Reliant to achieve significantly higher debt paydown than the $400 million Orion maturity in 2010 already factored into the forecast (and the $3 billion cash balance). Reliant's management has indicated a "permanent debt" target of $2.5 billion, which implies an additional debt paydown of about $300 million. This leaves Reliant with a lot of financial flexibility for dividends, stock buybacks, additional debt paydown, or capital expenditures. The losses in Q2 merely imply that the level of surplus could be lower, but S&P still expects Reliant will be able to maintain ratios consistent with S&P's expectations for the rating. Fundamentally, however, these events once again highlight the importance of risk management, especially for a company like Reliant that does not own generation to support the retail business. While the risks of the merchant business are mainly related to the business cycle and longer-term commodity price trends, that of the retail business is related mostly to short- term price volatility and supply risk management. In this case, a large portion of Reliant's supply was located in the ERCOT-North zone while load is primarily in ERCOT-Houston. Hot weather and some plant outages resulted in congestion in the North-Houston transmission lines and Reliant was unable to rely on its supply from the North zone, having to purchase more expensive power in the Houston zone. The change in ERCOT's congestion management protocols in June has alleviated the issue somewhat. While Reliant fundamentally manages to a flat book for the retail business and tries to keep its market exposure to a minimum, such exposures are managed somewhat unconventionally, through a system consisting purely of volumetric limits. There is no value-at-risk (VaR) computation for risk management purposes. While unusual, Reliant believes that by focusing on volumes it can avoid the leeway that is sometimes available to traders to be long or short during periods of low volatility as long as they stay within their VaR limits. It is certainly unclear if a formal VaR approach and associated stress analyses would have included the type of congestion related price spikes observed in ERCOT in May and June. However, management has promised an internal reexamination of its risk management policies. REVE SPC: Moody's Lowers Segregated Portfolio S. 49 Rating to Ba1 ----------------------------------------------------------------- Moody's Investors Service downgraded the rating on these notes issued by REVE SPC Segregated Portfolio Series 49: -- Class Description: $4,000,000 ING Managed Synthetic 2007-2 Class D Notes, due 2014 -- Prior Rating: Baa2, on watch for possible downgrade -- Current Rating: Ba1 According to Moody's, the rating action is the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of corporate securities. SENDTEC INC: Completes Second Closing of Debentures Exchange ------------------------------------------------------------ SendTec, Inc. completed the second closing in connection with the recapitalization and restructuring of its Senior Secured Convertible Debentures pursuant to the Recapitalization Agreement dated March 25, 2008 among SendTec and the holders of its Senior Secured Convertible Debentures. At the first closing under the Agreement on March 26, 2008, all of the Senior Secured Convertible Debentures with an outstanding principal amount of $32,730,000 were exchanged for a combination of an aggregate of 10,801 shares of SendTec Series B Preferred Stock having an aggregate stated value of $18,361,700, and Amended and Restated Senior Secured Convertible Debentures in the aggregate amount of $14,368,300. At the second closing, such Amended and Restated Debentures were exchanged for a combination of 1,978 shares of SendTec Series B Preferred Stock having an aggregate stated value of $3,368,304, which includes a cash settlement for fractional shares in the aggregate amount of $5,704, and Residual Senior Secured Convertible Debentures due July 31, 2011, in the aggregate amount of $11 million with no interest either payable or to be accrued thereunder, no principal payments due prior to maturity, and no financial covenants. These new Residual Debentures will automatically convert into Series B Preferred Stock if SendTec raises minimum aggregate gross proceeds of $5 million from the sale of its common stock or Series B Preferred Stock by July 31, 2009. Paul Soltoff, chairman and CEO stated, "We continue to add new customers and explore new relationships and opportunities. The remainder of 2008 and 2009 should be a momentum building opportunity for our team of seasoned professionals." About SendTec Inc. Headquartered in St. Petersburg, Florida, SendTec Inc. (OTC BB: SNDN) -- http://www.sendtec.com/-- is a holding company organized for the purpose of acquiring, owning, and managing various marketing and advertising businesses, primarily involving the Internet. The direct response marketing services business of the company's wholly-owned subsidiary, SendTec Acquisition Corp., has been its sole line of business. At Dec. 31, 2007, the company's balance sheet showed total assets of $45,982,933, total liabilities of $45,964,385 and total stockholders' equity of $18,548. SERACARE LIFE: Former Executives Settle SEC Civil Lawsuit --------------------------------------------------------- SeraCare Life Sciences former CEO Michael Crowley Jr. and former board member Jerry Burdick settled a civil fraud lawsuit by paying penalties of $25,000 each, the Union-Tribune of San Diego reports. The U.S. Securities and Exchange Commission sued the company alleging violations of the U.S. Securities Act of 1933 and the U.S. Securities Exchange Act of 1934 by certain of SeraCare's current and former officers and directors, its former auditor, and its controlling shareholders and investment bankers, including the company due to the firm having been a co-manager of SeraCare's 2005 secondary offering of common stock. Mr. Crowley was accused by the SEC of not disclosing to investors an order cancellation by a major customer, which made up 11 percent of the company's net income, relates the Union-Tribune. On the other hand, the SEC alleged that Mr. Burdick manipulated reserves and inventory amounts in 2005, causing the company's income to rise up to 20 percent. Aside from the monetary penalties, Mr. Crowley and Mr. Burdick were prohibited from breaking provisions in securities law that guards against fraud in financial reports, the Union-Tribune says. Both did not plead guilty to the allegations. About SeraCare Life Based in Oceanside, California, SeraCare Life Sciences, Inc. -- http://www.seracare.com/-- develops and manufactures biological based materials and services for diagnostic tests, commercial bioproduction of therapeutic drugs, and medical research. The Company filed for chapter 11 protection on March 22, 2006 (Bankr. S.D. Calif. Case No. 06-00510). Garrick A. Hollander, Esq., Paul J. Couchot, Esq., Peter W. Lianides, Esq., and Sean A. O'Keefe, Esq., at Winthrop Couchot represent the Debtor. The Official Committee of Unsecured Creditors selected Henry C. Kevane, Esq., and Maxim B. Litvak, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, as its counsel. Thomas E. Patterson, Esq., and Martin R. Barash, Esq., at Klee, Tuchin, Bogdanoff & Stern LLP, Mark I. Bane, Esq., and D. Ross Martin, Esq., at Ropes & Gray LLP, represent the Ad Hoc Committee of Equityholders. When the Debtor filed for protection from its creditors, it listed $119.2 million in assets and $33.5 million in debts. SeraCare Life Sciences emerged from Chapter 11 protection in May 2007. SEMGROUP LP: May Draw $150 Million from BofA's DIP Financing ------------------------------------------------------------ SemGroup L.P. said that the U.S. Bankruptcy Court for the District of Delaware has approved a $150 million interim debtor-in- possession financing, which will be provided by a group of banks led by Bank of America. The interim funding will be used to fund letters of credit to ensure the return of terms with certain product and service suppliers. The company is working with the lenders to finalize the revised order and expect to present the final order to the Court in an expedited fashion. A final hearing to consider the balance of the $250 million DIP financing is scheduled for Aug. 18, 2008. "Obtaining this interim DIP financing is an important step forward in our Chapter 11 process," said Terry Ronan, SemGroup acting president and CEO. "The additional reassurance it provides to our creditors and employees will be essential in our ability to execute the plan we have created to maximize value for creditors." SemGroup believes the best alternative to maximize value for creditors is to undertake a sales process that will transition the company's businesses to well-established companies that can carry forward SemGroup's mission. "We have already received significant interest in our assets because of our talented and experienced employees, unique industry position, expansive customer base and premiere service capabilities," Mr. Ronan said. SemGroup and certain of its North American subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code on July 22, 2008. Parties Balk at DIP Financing The Troubled Company Reporter said on Aug. 5, 2008, that a total of 18 parties-in-interest object to the request of SemGroup L.P. and its debtor-affiliates to obtain $250,000,000 of senior secured superpriority postpetition financing from Bank of America. The parties-in-interest are: * Ad Hoc Committee of Unsecured Creditors w/ Senior Notes; * Alon USA, LP; * Cardinal Engineering, Inc.; * Central Crude Corporation and Redwing Gas Systems Inc.; * CHS, Inc.; * General Electric Capital Corporation; * JMA Energy Company, L.L.C.; * LCS Production Company, and the Texas operators; * Merrill Lynch Capital Corporation and ML Commodities, Inc.; * Murfin Drilling Company, Inc.; * New Dominion, L.L.C.; * Prima Exploration, Inc.; * RZB Finance LLC; * Samson Resources Company, and affiliates; * Sunoco, Inc.; * The SemCrude US Term Lender Group; * Veenker Resources, Inc.; and * Williams NGL Marketing, LLC, and affiliates. The Debtors filed with the Court a draft of the DIP Credit Agreement, a copy of which is available for free at: http://bankrupt.com/misc/semgroupfinaldippact.pdf About SemGroup L.P. SemGroup L.P. -- http://www.semgrouplp.com/-- is a midstream service company providing the energy industry means to move products from the wellhead to the wholesale marketplace. SemGroup provides diversified services for end users and consumers of crude oil, natural gas, natural gas liquids, refined products and asphalt. Services include purchasing, selling, processing, transporting, terminaling and storing energy. SemGroup serves customers in the United States, Canada, Mexico, Wales, Switzerland and Vietnam. SemGroup L.P. and its debtor-affiliates filed for Chapter 11 protection on July 22, 2008 (Bankr. D. Del. Lead Case No. 08- 11525). These represent the Debtors' restructuring efforts: John H. Knight, Esq., L. Katherine Good, Esq. and Mark D. Collins, Esq. at Richards Layton & Finger; Harvey R. Miller, Esq., Michael P. Kessler, Esq. and Sherri L. Toub, Esq. at Weil, Gotshal & Manges LLP; and Martin A. Sosland, Esq. and Sylvia A. Mayer, Esq. at Weil Gotshal & Manges LLP. Kurtzman Carson Consultants L.L.C. is the Debtors' claims agent. The Debtors' financial advisors are The Blackstone Group L.P. and A.P. Services LLC. Margot B. Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye Scholer LLP; and Laurie Selber Silverstein, Esq., at Potter Anderson & Corroon LLP, represent the Debtors' prepetition lenders. SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude Company, sought protection under the Companies' Creditors Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc. The CCAA stay expires on Aug. 20, 2008. SemGroup L.P.'s consolidated, unaudited financial conditions as of June 30, 2007, showed $5,429,038,000 in total assets and $5,033,214,000 in total debts. In their petition, they showed more than $1,000,000,000 in estimated total assets and more than $1,000,000,000 in total debts. (SemGoup Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SHARPER IMAGE: Withdraws Request for Aug. 18 Claims Bar Date ------------------------------------------------------------ The Sharper Image Corp., now known as TSIC, Inc., sought and obtained the authority of the U.S. Bankruptcy Court for the District of Delaware to withdraw without prejudice its request to establish August 18, 2008 as the Claims Bar Date pursuant to Rule 3003(c)(3) of the Federal Rules of Bankruptcy Procedure and Section 502(b)(9) of the Bankruptcy Code. According to Steven K. Kortanek, Esq., at Womble Carlyle Sandridge & Rice, PLLC, in Wilmington, Delaware, the Debtor's counsel had already advised parties-in-interest that it will withdraw the Bar Date Motion. He added that the Committee of Unsecured Creditors supported the Debtors' request to withdraw the Motion. About Sharper Image Based in San Francisco, California, Sharper Image Corp. -- http://www.sharperimage.com/-- is a multi-channel specialty retailer. It operates in three principal selling channels: the Sharper Image specialty stores throughout the U.S., the Sharper Image catalog and the Internet. The company has operations in Australia, Brazil and Mexico. In addition, through its Brand Licensing Division, it is also licensing the Sharper Image brand to select third parties to allow them to sell Sharper Image branded products in other channels of distribution. The company filed for Chapter 11 protection on Feb. 19, 2008 (Bankr. D.D., Case No. 08-10322). Steven K. Kortanek, Esq. at Womble, Carlyle, Sandridge & Rice, P.L.L.C. represents the Debtor in its restructuring efforts. An Official Committee of UnsecuredCreditors has been appointed in the case. Whiteford Taylor Preston LLC is the Committee's Delaware counsel When the Debtor filed for bankruptcy, it listed total assets of US$251,500,000 and total debts of US$199,000,000. The Court extended the exclusive period during which the Debtor may file a Plan through and including Sept. 16, 2008. Sharper Image sought and obtained the Court's approval to change its name to "TSIC, Inc." in relation to an an Asset Purchase Agreement by the Debtor with Gordon Brothers Retail Partners, LLC, GB Brands, LLC, Hilco Merchant Resources, LLC, and Hilco Consumer Capital, LLC. (Sharper Image Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SHARPER IMAGE: U.S. Trustee Opposes Letter Agreement with Hilco --------------------------------------------------------------- Roberta A. DeAngelis, Acting United States Trustee for Region 3, objects to the request for approval of the letter agreement between the Official Committee of Unsecured Creditors of The Sharper Image Corp. and the joint venture between Hilco Organization and Gordon Brothers Group, LLC. The U.S. Trustee states that neither Section 105(a) of the Bankruptcy Code, nor Rule 9019 of the Federal Rules of Bankruptcy Procedures, authorize the relief sought by the Committee. Rule 9019 authorizes the trustee to compromise estate claims consistent with its terms. Committee Agrees not to Impede Sale; Hilco/GB Funds Unsecured Creditors' Trust As reported by the Troubled Company Reporter on July 1, 20008, the Official Committee of Unsecured Creditors seeks the Court's approval of a letter agreement it entered into with the Joint Venture, which memorializes the Committee's agreement to: (a) refrain from taking action to impede the consummation of the sale transaction, including, without limitation, the filing or prosecution of its objection to the sale transaction and the filing or prosecution of an appeal or motion to reconsider the Sale Order; and (b) waive the right to challenge the Joint Venture's conduct during the auction process or the change of its bid. In exchange for the Committee's agreement not to impede the sale transaction, the Joint Venture agreed to fund a trust account for the Debtor's general unsecured creditors. The Joint Venture will transfer an amount equal to the lesser of $500,000, and 10% of the gross royalties paid for the period of January 1, 2009, through December 31, 2009, from the intellectual property acquired by Joint Venture. U.S. Trustee Opposes Letter Agreement The U.S. Trustee points out that the Debtor is not a party to the settlement. She adds that the Committee is not the trustee, and the Court has not vested it with standing to pursue claims against the Joint Venture on behalf of the Debtor's estate. The U.S. Trustee states that the Committee cannot sell its procedural right to challenge the sale for a cash payment to general unsecured creditors. The rights of the Committee and other parties-in-interest to object, on good faith grounds, to asset sales under Section 363, are designed to protect the estate's interest in the integrity of the sale process. Those rights were not intended for creditors to obtain cash payments from purchasers or debtors, in exchange for the withdrawal of sale objections. Moreover, the U.S. Trustee submits that if the Court finds that Rule 9019 governs the Motion, the proposed settlement should be rejected under Myers v. Martin (In re Martin), 91 F.3d 389 (3d Cir. 1996). Under Martin, a proposed Rule 9019 settlement which unfairly favors one creditor constituency over another should be denied, the U.S. Trustee asserts. According to the U.S. Trustee, the proposed settlement payment to the Committee under the Letter Agreement is a payment in lieu of an increase in the purchase price, payable by the Joint Venture to the Debtor's estate. Therefore, the Committee should not be permitted to move its constituency ahead of allowed administrative and unsecured priority creditors in priority of distribution. Chagrin Objects to Lease Assignment Chagrin Retail, LLC, continues to object to the Debtors' notice of the continuation of auction of its unexpired leases. Specifically, it opposes the assumption and assignment of a lease agreement for premises at Eton Chagrin Boulevard in Woodmere Village, Ohio. According to Chagrin, the Debtor failed to provide adequate assurance of future performance with respect to the assignee of the Lease Agreement, as well as an adequate cure amount to assume the Lease. Moreover, the Debtor has given insufficient time to conduct a meaningful assessment of the successful bidder and its adequate assurance information. About Sharper Image Based in San Francisco, California, Sharper Image Corp. -- http://www.sharperimage.com/-- is a multi-channel specialty retailer. It operates in three principal selling channels: the Sharper Image specialty stores throughout the U.S., the Sharper Image catalog and the Internet. The company has operations in Australia, Brazil and Mexico. In addition, through its Brand Licensing Division, it is also licensing the Sharper Image brand to select third parties to allow them to sell Sharper Image branded products in other channels of distribution. The company filed for Chapter 11 protection on Feb. 19, 2008 (Bankr. D.D., Case No. 08-10322). Steven K. Kortanek, Esq. at Womble, Carlyle, Sandridge & Rice, P.L.L.C. represents the Debtor in its restructuring efforts. An Official Committee of UnsecuredCreditors has been appointed in the case. Whiteford Taylor Preston LLC is the Committee's Delaware counsel When the Debtor filed for bankruptcy, it listed total assets of US$251,500,000 and total debts of US$199,000,000. The Court extended the exclusive period during which the Debtor may file a Plan through and including Sept. 16, 2008. Sharper Image sought and obtained the Court's approval to change its name to "TSIC, Inc." in relation to an an Asset Purchase Agreement by the Debtor with Gordon Brothers Retail Partners, LLC, GB Brands, LLC, Hilco Merchant Resources, LLC, and Hilco Consumer Capital, LLC. (Sharper Image Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SHARPER IMAGE: Prohov Wants Cardholders' Claim Declared "Priority" ------------------------------------------------------------------ Frederic B. Prohov asks the U.S. Bankruptcy Court for the District of Delaware to certify the class of all holders of Sharper Image Gift Cards to proceed "as class for priority treatment," and to receive full and immediate value of issued gift cards brought. According to Mr. Prohov, there are presumably thousands of Gift Card Claims. In the Debtor's operating report for the period April 1, 2008 through April 30, 2008, it was disclosed that the Debtor deferred a revenue of approximately $34,000,000 on gift cards and royalties. Mr. Prohov relates that most of the claims are for $500 less. Thus, it is likely there are thousands of people with outstanding gift cards that are not being honored at full price. Under these circumstances, says Mr. Prohov, individual claimants have neither the incentive nor the ability to prosecute their rights through the claims administration process. Counsel to Mr. Prohov, Christopher D. Loizides, Esq., at Loizides, P.A., in Wilmington, Delaware, tells the Court that in order to streamline that process and protect the rights of the Gift Card Holders, Mr. Prohov asks that the process for the Gift Card Claims be adjudicated in a single proceeding and be declared to have priority treatment. Mr. Loizides says that the priority given to the Gift Card Holders is a question that should be answered uniformly for one and all members of the class, and class certification should be granted. Mr. Loizides argues that Mr. Prohov's claims are identical to the rest of the class, seeking the same type of relief -- a declaration of priority and full value of the Gift Card without diminished value. Mr. Loizides relates that Mr. Prohov suffered a loss of the value of his Gift Card, and seeks relief consistent with, and not antagonistic to, the interest of the other class members. If the Gift Card Holders, says Mr. Loizides, are left to fend for themselves through the claims administration process, the Debtor will easily be able to defeat the claims not on their merits, but by virtue of the fact that the small claims cannot realistically be pursued without the assistance of counsel and no single claimant acting alone has the economic incentive or technical legal knowledge to pursue their claims. Debtor, Committee Object to Prohov's Requests The Debtor, joined by the Official Committee of Unsecured Creditors, opposes Mr. Prohov's motion for relief from the automatic stay in order to commence an adversary proceeding and pursue a class action, and objects to the request for class certification. According to the Debtor, if Mr. Prohov prevails in obtaining the relief requested in the Class Action Motion, the class action will go forward in the main case and an adversary proceeding will be unnecessary. On the other hand, if the Court denies the Class Action Motion, Mr. Prohov cannot be afforded a second opportunity to certify the proposed class in an adversary proceeding. Either way, the Class Action Motion has mooted Mr. Prohov's need to commence an adversary proceeding. Thus, by definition, no cause exists to lift the automatic stay. Moreover, the Debtors asserts that lifting the automatic stay will prejudice the Debtor and its estate, by requiring it to expend limited time and resources in an adversary proceeding that is duplicative of the claims reconciliation process. In contrast, Mr. Prohov would suffer no harm if the Court denies him relief from the automatic stay, the Debtor notes. The Debtor contends that Mr. Prohov cannot demonstrate a likelihood of success on the merits, or whether class action is necessary under Rule 7023 of the Federal Rules of Bankruptcy Procedure. The Debtor insists that the certificate claims can, and should be, adjudicated within the context of the bankruptcy claims reconciliation process. Accordingly, Mr. Prohov's requests should be denied. Prohov Reacts Mr. Prohov argues that his case is "ripe for class certification" and that the class should be certified. He tells the Court that his motions were filed promptly, and class certification is timely and efficient. According to Mr. Prohov, only class certification can achieve the benefits of global priority adjudication of the thousands of small consumer claims. The Debtor's cases, he says, presents a large number of small claims, weighing in favor of the application of Rule 7023 to a contested matter and class certification. Mr. Prohov further points out that since the Debtor is no longer in business and has no goodwill, a declaration of priority to the consumer class does not add cost or delay to the Chapter 11 cases. His requests were timely-filed, he states, thus class certification for a declaration of priority does not interfere with the administration of the estate. About Sharper Image Based in San Francisco, California, Sharper Image Corp. -- http://www.sharperimage.com/-- is a multi-channel specialty retailer. It operates in three principal selling channels: the Sharper Image specialty stores throughout the U.S., the Sharper Image catalog and the Internet. The company has operations in Australia, Brazil and Mexico. In addition, through its Brand Licensing Division, it is also licensing the Sharper Image brand to select third parties to allow them to sell Sharper Image branded products in other channels of distribution. The company filed for Chapter 11 protection on Feb. 19, 2008 (Bankr. D.D., Case No. 08-10322). Steven K. Kortanek, Esq. at Womble, Carlyle, Sandridge & Rice, P.L.L.C. represents the Debtor in its restructuring efforts. An Official Committee of UnsecuredCreditors has been appointed in the case. Whiteford Taylor Preston LLC is the Committee's Delaware counsel When the Debtor filed for bankruptcy, it listed total assets of US$251,500,000 and total debts of US$199,000,000. The Court extended the exclusive period during which the Debtor may file a Plan through and including Sept. 16, 2008. Sharper Image sought and obtained the Court's approval to change its name to "TSIC, Inc." in relation to an an Asset Purchase Agreement by the Debtor with Gordon Brothers Retail Partners, LLC, GB Brands, LLC, Hilco Merchant Resources, LLC, and Hilco Consumer Capital, LLC. (Sharper Image Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SHERMAG INC: Court Transfers Wachovia Credit Facilities to Geosam ----------------------------------------------------------------- The Superior Court of Quebec approved the assignment of Shermag Inc.'s credit facilities with Wachovia Finance Corporation (Canada) to Geosam Investments Limited. Geosam has agreed to replace Wachovia as Shermag's lender under essentially the same terms and conditions presently governing the existing credit facilities. The principal amendment to the credit facilities is the increase of the interest rate to 12% per annum. Geosam is an entity controlled by George Armoyan who is also the sole director thereof. George Armoyan is also the president and chief executive officer of Clarke Inc. which holds approximately 20% of the common shares of Shermag. Headquartered in Sherbrooke, Quebec, Shermag Inc. (TSX: SMG) designs, produces, markets and distributes high-quality residential furniture. The company employs approximately 729 people and is a manufacturer and importer with its own manufacturing operations and worldwide sourcing division. Shermag has been operating under the protection of the Companies' Creditors Arrangement Act (Canada) since May 5, 2008. SIRUS SATELLITE: Completes Merger with Vernon Merger Corp. ---------------------------------------------------------- XM Satellite Radio Holdings Inc. completed its merger on July 28, 2008, with and into Vernon Merger Corporation, Sirius Satellite Radio inc.'s wholly-owned subsidiary, as a result of which XM is now its wholly-owned subsidiary. The merger was effected pursuant to an Agreement and Plan of Merger, dated as of February 19, 2007, entered into by and among Sirius, XM and Merger Co. Pursuant to the Merger Agreement, Merger Co. merged with and into XM, with XM as the surviving corporation in the merger and continuing as Sirius' direct wholly owned subsidiary, each outstanding share of the common stock of XM was converted in the merger into the right to receive 4.6 fully paid and nonassessable shares of common stock, and each outstanding share of the series A convertible preferred stock of XM was converted in the merger into the right to receive 4.6 fully paid and nonassessable shares of a newly-designated series of preferred stock. About XM Satellite Headquartered in Washington, D.C., XM Satellite Radio Holdings Inc. (Nasdaq: XMSR) -- http://www.xmradio.com/-- is a satellite radio company. The company broadcasts live daily from studios in Washington, DC, New York City, Chicago, Nashville, Toronto and Montreal. The company also provides satellite-delivered entertainment and data services for the automobile market through partnerships with General Motors, Honda, Hyundai, Nissan, Porsche, Subaru, Suzuki and Toyota. About SIRIUS Satellite Headquartered in New York, SIRIUS Satellite Radio Inc. (Nasdaq: SIRI) http://www.sirius.com/-- provides satellite radio services in the United States. The company offers over 130 channels to its subscribers 69 channels of 100.0% commercial-free music and 65 channels of sports, news, talk, entertainment, data and weather. Subscribers receive the company's service through SIRIUS radios, which are sold by automakers, consumer electronics retailers, mobile audio dealers and through the company's website. As reported in the Troubled Company Reporter on May 14, 2008, the company's balance sheet at March 31, 2008, showed $1.5 billion in total assets and $2.3 billion in total liabilities, resulting in a $839.4 million total stockholders' deficit. SIRIUS SATELLITE: Has Share Lending Deals with Morgan Stanley, UBS ------------------------------------------------------------------ On July 28, 2008, SIRIUS Satellite Radio Inc. agreed to lend Morgan Stanley Capital Services Inc. an aggregate of 188,399,978 shares of the company's common stock, par value $0.001 per share and to lend UBS AG, London Branch an aggregate of 74,000,005 shares of its common stock. Each of the share lending agreements will terminate on or about the maturity date of the 7% Exchangeable Senior Subordinated Notes due 2014 issued by XM Satellite Radio Inc., or, if earlier, the date as of which the entire principal amount of the Notes ceases to be outstanding as a result of exchange, repayment, repurchase, or otherwise. The share lending agreement with Morgan Stanley Capital Services Inc. is guaranteed by Morgan Stanley. About SIRIUS Satellite Headquartered in New York, SIRIUS Satellite Radio Inc. (Nasdaq: SIRI) http://www.sirius.com/-- provides satellite radio services in the United States. The company offers over 130 channels to its subscribers 69 channels of 100.0% commercial-free music and 65 channels of sports, news, talk, entertainment, data and weather. Subscribers receive the company's service through SIRIUS radios, which are sold by automakers, consumer electronics retailers, mobile audio dealers and through the company's website. As disclosed in the Troubled Company Reporter on Aug. 1, 2008, SIRIUS Satellite Radio Inc. and XM Satellite Radio Inc. completed their merger, on July 29, 2008, resulting in the nation's premier radio company. The new company plans to change its corporate name to SIRIUS XM Radio Inc. The combined company's stock will continue to be traded on the Nasdaq Global Select Market under the symbol "SIRI." As reported in the Troubled Company Reporter on May 14, 2008, the company's consolidated balance sheet at March 31, 2008, showed $1.5 billion in total assets and $2.3 billion in total liabilities, resulting in a $839.4 million stockholders' deficit. SPHERICS INC: Turns Over Assets for October 10 Auction --------------------------------------------------------------- Joseph F. Finn Jr., C.P.A. disclosed that the assets of Spherics Inc. had been assigned to him on July 28, 2008, for the benefit of creditors. An Assignment for the Benefit of Creditors is a common law procedure, wherein Mr. Finn will liquidate the assets, which consist of pharmaceutical IP, by means of a sealed bid auction on Oct. 10, 2008. Persons interested in bidding must sign a Confidential Disclosure Agreement obtained from Mr. Finn's office. They will then receive a bid package and access to the Spherics electronic data room. Joseph F. Finn, Jr. is the founding partner of the firm Finn, Warnke & Gayton, Certified Public Accountants of Wellesley Hills, Massachusetts. He works in the area of management consulting for distressed enterprises, bankruptcy accounting and related matters, such as assignee for the benefit of creditors and liquidating agent for a corporation. Spherics Inc. has an intellectual property position around its drug delivery technologies and products. The company has a range of issued US and international patents through exclusive licenses from Brown University. These patents cover polyanhydride-based bioadhesive polymers and PIN. In addition to these issued patents, Spherics has filed numerous applications covering compositions of matters of its proprietary polymers (SPHEROMERS), novel oral delivery systems (including BIOGIT, BIOROD and PIN), manufacturing methods, methods of use, formulations and product compositions. STANDARD PACIFIC: Amends and Restates Company Bylaws ---------------------------------------------------- On July 29, 2008, the Board of Directors of Standard Pacific Corp. amended and restated the company's bylaws to, among other things, expand the company's authorized number of directors from 8 to 10 and update them in light of recent developments in Delaware statutory and case law. In addition, the revised bylaws permit the company to utilize electronic meeting procedures and contain a revised advance notice bylaw provision providing, among other things, specified time periods by which director nominations and other business must be submitted to the company, as well as requiring ownership and other information relating to hedging, short positions and other similar arrangements to be submitted by the stockholder seeking to present matters at a stockholder’s meeting. A full-text copy of the company's Amended and Restated Bylaws is available for free at http://researcharchives.com/t/s?3078 About Standard Pacific Corp. 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. At March 31, 2008, the company's consolidated balance sheet showed $2.95 billion in total assets, $2.14 billion in total liabilities, $36.5 million in minority interests, and $773.5 million in total stockholders' equity. 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. STANDARD PACIFIC: Appoints D. Matlin and K. Campbell to Board ------------------------------------------------------------- On July 29, 2008, the Board of Directors of Standard Pacific Corp. appointed David J. Matlin, chief executive officer and global portfolio manager and domestic portfolio manager of MatlinPatterson Global Advisers LLC, and Kenneth Campbell III, a partner in MatlinPatterson Global Advisers LLC, as members of the company's Board of Directors. Neither Mr. Matlin nor Mr. Campbell was appointed to serve as a member of any of the committees of the Board. Mr. Matlin and Mr. Campbell were nominated for appointment to the Board by MP CA Homes, LLC ("Investor"), an affiliate of MatlinPatterson Global Advisers LLC, in accordance with Section 2.2 of the Stockholders Agreement, dated as of June 27, 2008, between the company and Investor. The company entered into the Stockholder Agreement with Investor in connection with the first closing of the transactions contemplated by the Investment Agreement, dated as of May 26, 2008, between the company and Investor. At the first closing, which occurred on June 27, 2008, the company issued 381,250 shares of the company's senior preferred stock to Investor for $381,250,000 in cash and Investor exchanged outstanding notes of the company with an aggregate principal amount of $128,496,000 for a warrant to purchase 272,670 shares of senior preferred stock. In addition, in connection with a rights offering commenced on Aug. 4, 2008, to holders of the company's common stock to purchase an aggregate of 50,000,000 shares of the company's common stock, Investor has agreed to be a standby purchaser in this rights offering and will purchase the common stock equivalent of all shares not purchased through the exercise of subscription rights of the company's common stockholders, in the form of preferred stock. Pursuant to the terms of the Stockholder Agreement, upon the first closing, Investor was entitled to designate up to three directors to the Board. According to Mr. Matlin's Form 3 filing, Mr. Matlin has an indirect pecuniary interest in certain funds (the "Funds") that hold 100% of the membership interests in Investor. His exact pecuniary interest is not readily determinable because it is subject to several variables, including without limitation, the internal rates of return of the Funds overall and with respect to their indirect investment in the Ccmpany. According to Mr. Campbell's Form 3 filing, Mr. Campbell may be deemed to have an indirect pecuniary interest in the shares held by Investor through his indirect interest in a limited partner that holds an investment interest and carried interest in the Funds. His exact pecuniary interest is not readily determinable because it is subject to several variables, including without limitation, the internal rates of return of the Funds overall and with respect to their indirect investment in the company. About Standard Pacific Corp. 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. At March 31, 2008, the company's consolidated balance sheet showed $2.95 billion in total assets, $2.14 billion in total liabilities, $36.5 million in minority interests, and $773.5 million in total stockholders' equity. 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. TCW SELECT: S&P Affirms 'BB-' Rating on 3 Classes of Securities --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on the class B and C notes issued by TCW Select Loan Fund Ltd., an arbitrage high-yield collateralized loan obligation (CLO) transaction, on CreditWatch with positive implications. At the same time, S&P affirmed its ratings on the class A-1, A-2, D-1, D-2, and composite notes based on the level of credit enhancement available to support the notes. The positive CreditWatch placements reflect the significant paydown of the class A-1 notes and the resulting increase in the level of credit enhancement available to support the remaining balance of the notes. Since the transaction was issued in May 2001, the class A-1 notes have paid down approximately $313.267 million. According to the most recent trustee report, dated June 30, 2008, the class B and class C overcollateralization ratios were 137.11% and 124.26%, respectively, compared with the required minimum values of 104.9% and 104.2%. RATINGS PLACED ON CREDITWATCH POSITIVE TCW Select Loan Fund Ltd. Rating Class To From Balance (mil. $) B AA-/Watch Pos AA- 25.000 C BBB/Watch Pos BBB 15.000 RATINGS AFFIRMED TCW Select Loan Fund Ltd. Class Rating Balance (mil. $) A-1 AAA 42.373 A-2 AAA 62.000 D-1 BB- 11.000 D-2 BB- 5.000 Composite BB- 5.000 *Balances related to July 10, 2008, payment date. TRANSACTION INFORMATION Issuer: TCW Select Loan Fund Ltd. Co-issuer: TCW Select Loan Fund Inc. Collateral manager: TCW Group Inc. Transaction type: Cash flow arbitrage high-yield CLO Indenture trustee: JPMorgan Chase Bank N.A. TERWIN MORTGAGE: Moody's Cuts Ratings of 41 8 Alt-A Tranches ------------------------------------------------------------ Moody's Investors Service has downgraded the ratings of 41 tranches from 8 Alt-A transactions issued by Terwin Mortgage Trust. One tranche remains on review for further possible downgrade. Additionally, 9 senior tranches were confirmed at Aaa. The collateral backing these transactions consists primarily of first-lien, fixed and adjustable-rate, Alt-A mortgage loans. Ratings were downgraded, in general, based on higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to credit enhancement levels. Certain tranches were confirmed due to additional enhancement provided by structural features. The actions are a result of Moody's on-going review process. Complete rating actions are: Issuer: Terwin Mortgage Trust, Series TMTS 2005-18ALT -- Cl. A-1, Confirmed at Aaa -- Cl. A-2, Downgraded to A3 from Aaa -- Cl. A-3, Downgraded to Baa1 from Aaa Issuer: Terwin Mortgage Trust 2006-3 -- Cl. II-A-1, Confirmed at Aaa -- Cl. II-A-2, Confirmed at Aaa -- Cl. II-A-3, Downgraded to B1 from Aaa -- Cl. II-M-1, Downgraded to Ca from B3 -- Cl. II-M-2, Downgraded to Ca from Caa1 -- Cl. II-M-3, Downgraded to C from Ca -- Cl. II-M-4, Downgraded to C from Ca Issuer: Terwin Mortgage Trust 2006-5 -- Cl. II-A-1, Confirmed at Aaa -- Cl. II-A-2, Confirmed at Aaa -- Cl. II-A-3, Downgraded to A1 from Aaa -- Cl. II-M-1, Downgraded to B3 from B2; Placed Under Review for further Possible Downgrade -- Cl. II-M-3, Downgraded to C from Ca Issuer: Terwin Mortgage Trust 2006-7 -- Cl. II-A-1, Confirmed at Aaa -- Cl. II-A-2, Confirmed at Aaa -- Cl. II-A-3, Downgraded to Baa3 from Aaa -- Cl. II-M-1, Downgraded to Caa3 from B2 -- Cl. II-M-2, Downgraded to C from B3 -- Cl. II-M-3, Downgraded to C from Ca -- Cl. II-M-4, Downgraded to C from Ca Issuer: Terwin Mortgage Trust 2006-9HGA -- Cl. A-1, Confirmed at Aaa -- Cl. A-2, Confirmed at Aaa -- Cl. A-3, Downgraded to Ba3 from Aaa -- Cl. M-1, Downgraded to Ca from B3 -- Cl. M-2, Downgraded to C from Caa1 -- Cl. M-3, Downgraded to C from Ca -- Cl. M-4, Downgraded to C from Ca Issuer: Terwin Mortgage Trust 2006-17HE -- Cl. A-1, Downgraded to B1 from Aaa -- Cl. A-2A, Downgraded to Aa3 from Aaa -- Cl. A-2B1, Downgraded to Aa2 from Aaa -- Cl. A-2B2, Downgraded to B3 from Aaa -- Cl. A-2C, Downgraded to B3 from Aaa -- Cl. M-1, Downgraded to Ca from B3 -- Cl. M-2, Downgraded to Ca from Caa1 -- Cl. M-3, Downgraded to C from Ca -- Cl. M-4, Downgraded to C from Ca Issuer: Terwin Mortgage Trust 2007-2ALT -- Cl. A-2, Downgraded to Ba2 from Aaa -- Cl. A-3, Downgraded to Ba3 from Aaa -- Cl. A-1A, Downgraded to Aa2 from Aaa -- Cl. A-1B, Downgraded to Aa3 from Aaa -- Cl. M-1, Downgraded to Ca from B3 -- Cl. M-2, Downgraded to C from Ca -- Cl. M-3, Downgraded to C from Ca -- Cl. M-4, Downgraded to C from Ca Issuer: Terwin Mortgage Trust 2007-6ALT -- Cl. M-1, Downgraded to Ca from B2 -- Cl. M-2, Downgraded to C from Ca -- Cl. M-3, Downgraded to C from Ca -- Cl. M-4, Downgraded to C from Ca TOWERS OF CHANNELSIDE: Files Amended Ch.11 Reorganizational Plan ---------------------------------------------------------------- Towers of Channelside LLC delivered to the United States Bankruptcy Court for the Middle District of Florida a first amended Chapter 11 plan of reorganization and a supplement to a disclosure statement on June 20, 2008. As reported in the Troubled Company Reporter on May 6, 2008, the Court conditionally approved the disclosure statement explaining the earlier version of the Debtor's plan. The Court held that the disclosure statement contains adequate information within the meaning of Section 1125 of the Bankruptcy Code. Overview of the Amended Plan The amended plan creates a mechanism for the sale of units, the funding of ongoing operating expenses, and the payment of creditor claims. This is accomplished by creating a "waterfall" for the distribution of net sales proceeds between creditor constituencies after ensuring that post-confirmation operating expenses, including interest to Wachovia Bank, National Association, and certain secured and priority claims are adequately funded and paid. Under this approach, two secured creditors, Batson-Cook of Tampa Inc. and CIT Technology Financing Services Inc., will be paid deferred amounts in full settlement of their allowed secured claims. Wachovia's secured claims is projected to be paid from funds derived from the sale of units. After Wachovia has been paid in full, unsecured creditors will receive remaining funds until they are paid the allowed amount of their claims in full or until all units are sold. Management will receive fixed and incentive compensation to ensure their continued service and to motivate them to achieve the highest possible payment level to all creditors. The amended plan classifies interests against and claims in the Debtor in seven classes. The classification of interests and claims are: Treatment of Interests and Claims Class Type of Claims Treatment ----- -------------- --------- unclassified administrative claims 1 priority claims unimpaired 2 secured claim of Wachovia impaired Bank 3 secured claim of Batson-Cook impaired of Tampa Inc. 4 secured claim of CIT unimpaired Technology Financing services Inc. 5 secured claim of disputed unimpaired deposit claimants 6 general unsecured claims impaired 7 equity interests unimpaired All Administrative and Priority Claims will be paid in full. Each Holders of class 1 priority claims will be paid in cash on the plan's effective date in accordance with Section 1129(a)(9)(b) of the Bankruptcy Code. Class 2 secured claim of Wachovia will be paid the allowed amount of its secured claim plus monthly interest payments of 5% per annum on the principal balance remaining unpaid from time to time. Said interest payments will begin on the first day of the month following the effective date and will continue on the first day of each month until the Wachovia's claim will be paid in full. Wachovia's interest payments will be paid from the Debtor's operating account. After the amended plan's effective date, Class 3 secured Claim of Batson-Cook will be paid, among other things: -- $1,501,386 from the lender, which is an amount equal to the undisbursed construction balance; and -- $400,000 from the Debtor, which amount will be paid from the deposits held by the Debtor, free and clear of any liens. On amended plan's effective date, Class 4 secured Claim of CIT will be paid through 12 monthly payments of $200 plus monthly interest at 5% per annum, starting on the effective date and continuing on the same day of each succeeding month. The Debtor will provide a written request to the applicable escrow agent to pay (i) holders of Class 5 secured claim of disputed deposit claimants the amount of its allowed secured claim and (ii) the Debtor the remaining amount held in escrow attributable to the disputed deposit claim. After the payment of Class 2 and 3 in full, holders of Class 6 general unsecured claims will receive a cash distribution on account of their allowed unsecured claim and will continue on a periodic basis until the earlier of payment in full of all allowed unsecured claims. The distributions will be funded from the sale proceeds of condominium units. All Class 6 claims will be paid in full, the gross proceeds from the sale of units will be disbursed by the closing agent: a) to the Debtor in an amount not to exceed 25% of the proceeds, less any amounts used by the closing agent to pay closing costs; and b) the balance will be deposited in a trust account maintained by the distribution agent for the sole and exclusive benefit of the Class 6 holders. Furthermore, upon payment in full of Wachovia's allowed secured claims, if the amount of cash in the Debtor's operating account exceeds $3.5 million, the Debtor will transfer all amount in excess of $3.5 million to the trust account, which will bear interest, for distribution to Class 6 holders. Payments to Class 6 holders will be made on a pro rata basis. Class 7 Equity holders will remain in effect but holders will not receive any distributions on account of their interest after all allowed claims are paid under the Plan. A full-text copy of the Debtor's first amended chapter 11 plan of reorganization is available for free at: http://ResearchArchives.com/t/s?3077 A full-text copy of the Debtor's supplement to Disclosure Statement is available for free at: http://ResearchArchives.com/t/s?3076 A full-text copy of the Debtor's disclosure statement dated April 24, 2008, is available for free at http://ResearchArchives.com/t/s?3074 Based in Plant City, Florida, the Towers of Channelside, LLC -- http://www.towersatchannelside.com/-- operates a 29-story twin tower condominium overlooking the Tampa Bay area. The developer filed for Chapter 11 protection on Jan. 25, 2008 (Bankr. M.D. Fla. Case No. 08-00939). Edward J. Peterson, III, Esq. and Harley E. Riedel, Esq., at Stichter Riedel Blain & Prosser P.A., represents the Debtor in its restructuring efforts. The Official Committee of Unsecured Creditors appointed in this bankruptcy case has selected Forizs & Dogali, P.L. as its counsel. As reported in the Troubled Company Reporter on March 4, 2008, the Debtor's schedules showed total assets of $109,783,667 and total debts of $94,258,253. TOWERS OF CHANNELSIDE: Wants Plan Filing Period Extended to Sept. ----------------------------------------------------------------- Towers of Channelside LLC asks the United States Bankruptcy Court for the Middle District of Florida to further extend their exclusive periods to: a) file a Chapter 11 plan until Sept. 22, 2008, and b) solicit acceptances of that plan until Nov. 20, 2008. The Debtor is presently in talks with Wachovia Bank and the Official Committee of Unsecured Creditors to reach the terms of a consensual Chapter 11 plan. The Debtor assures the Court that the requested extension of time will not prejudice parties-in-interest and will permit the Debtor to attempt to formulate a consensual plan. On June 20, 2008, the Debtor filed its first amended Chapter 11 plan of reorganization and supplement to disclosure statement. The Court conditionally approved on April 28, 2008, the Debtor's disclosure statement. The Debtor tells the Court that it will file a second amended plan before Sept. 22, 2008. The Debtor's initial exclusive rights to file a plan will expire on Aug. 7, 2008. About Towers of Channelside Based in Plant City, Florida, the Towers of Channelside, LLC -- http://www.towersatchannelside.com/-- operates a 29-story twin tower condominium overlooking the Tampa Bay area. The developer filed for Chapter 11 protection on Jan. 25, 2008 (Bankr. M.D. Fla. Case No. 08-00939). Edward J. Peterson, III, Esq. and Harley E. Riedel, Esq., at Stichter Riedel Blain & Prosser P.A., represents the Debtor in its restructuring efforts. The Official Committee of Unsecured Creditors appointed in this bankruptcy case has selected Forizs & Dogali, P.L. as its counsel. As reported in the Troubled Company Reporter on March 4, 2008, the Debtor's schedules showed total assets of $109,783,667 and total debts of $94,258,253. WACHOVIA BANK: S&P Cuts Rating on 6 Classes of Securities to CCC ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 11 classes of commercial mortgage pass-through certificates from Wachovia Bank Commercial Mortgage Trustâ€™s series 2005-C20 and removed them from CreditWatch with negative implications. In addition, we affirmed our ratings on 15 classes from this series. The downgrades reflect anticipated credit support erosion upon the eventual resolution of the sole specially serviced asset. The lowered ratings also reflect concerns regarding two of the three loans that have reported debt service coverage (DSC) below 1.0x. The affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. The fifth-largest loan, the Macon and Burlington Mall Pool, with a balance of $138.2 million (4%), was transferred to the special servicer, CWCapital Asset Management Inc. (CWCapital), on Feb. 28, 2008, due to imminent default. The loan is secured by the fee and leasehold interests in two cross-collateralized and cross- defaulted regional malls. Additionally, the borrower's equity interest in the property secures a $17.4 million senior mezzanine loan and a $9.5 million junior mezzanine loan. The Burlington Mall is a 419,194-sq.-ft. mall in Burlington, N.C., with an allocated loan balance of $30.1 million, and the Macon Mall is a 762,398- sq.-ft. mall in Macon, Ga., with an allocated loan balance of $107.8 million. A third-party receiver was put in place at both properties in June 2008. There is approximately $8 million in total reserves, which includes reserves for tenant improvements, leasing commissions, deferred maintenance, and replacement reserves. An appraisal reduction amount (ARA) of $80.0 million is in effect related to this loan. The loan has been kept current using funds from the lockbox, but last month the master servicer made an advance to fund an operating shortfall at the properties. Currently there is not enough cash flow from the properties to fund debt service and operating expenses. Once the servicer stops advancing on the loan, the related appraisal subordinate entitlement reductions (ASERs) will cause most of the downgraded classes to experience interest shortfalls, which will likely result in further rating actions. Anchor and in-line tenants at both properties have continued to vacate in recent months, causing the occupancy and projected net cash flow to drop significantly from previously reported levels. As of May 31, 2008, the Macon Mall had an overall occupancy of 76%, with temporary tenants representing 5% of the occupied space, and the Burlington Mall had an overall occupancy of 56%, with temporary tenants representing 10% of the occupied space. As of July 2004, the Macon Mall was 89% occupied and the Burlington Mall was 92% occupied. Both properties are facing new competition, which has caused the occupancy at the properties to decline significantly, including some of the anchor tenants. Based on the most recent appraisals and available market information, Standard & Poor's estimates that losses upon the eventual resolution of this asset will be substantial, which is reflected in the current rating actions. Standard & Poor's will continue to closely monitor the workout process and the occupancy at both properties. Should occupancy at one or both properties decline precipitously from existing levels, additional rating actions may be warranted. Standard & Poor's will monitor the situation closely, particularly the status of the anchor tenants. As of the July 17, 2008, remittance report, the collateral pool consisted of 207 loans with an aggregate trust balance of $3.353 billion, compared with 209 loans totaling $3.664 billion at issuance. The master servicer, Wachovia Bank N.A., reported financial information for 96% of the pool. Eighty percent of the servicer-provided information was full-year 2007 data. Standard & Poor's calculated a weighted average DSC of 1.88x for the pool, up from 1.67x at issuance. There are three loans in the pool totaling $19.8 million (0.6%) with reported DSCs lower than 1.0x. The loans are secured by lodging, retail, and multifamily properties, respectively, with an average balance of $6.6 million. These loans have seen an average decline in DSC of 43% since issuance. There is one delinquent loan ($3.9 million, 0.1%) in the pool, and the Macon and Burlington Mall Pool loan is with the special servicer. The trust has experienced no losses to date. The top 10 loans have an aggregate outstanding balance of $1.315 billion (39%) and a weighted average DSC of 2.00x, up from 1.84x at issuance. Standard & Poor's reviewed property inspections provided by the master servicer for all of the assets underlying the top 10 exposures. All of the properties were characterized as "good." The credit characteristics of the AmericasMart, 60 Hudson Street, Westfield San Francisco Centre, 101 Avenue of the Americas, and the JC Studios loans are consistent with those of investment-grade obligations. Details of the two largest loans are: -- The AmericasMart loan is the largest loan in the pool, with a trust balance of $196.7 million (6%) and a whole-loan balance of $393.3 million. The whole loan consists of a $196.7 million pari passu participation that serves as trust collateral in this transaction and a $196.7 million participation that supports the pooled certificates in the Wachovia Bank Commercial Mortgage Trust series 2005-19 transaction. The loan is secured by the fee and leasehold interests in a 4,070,908-sq.-ft. wholesale market and exhibition hall in Atlanta, Ga. For the year ended Dec. 31, 2007, DSC was 2.40x. Standard & Poor's adjusted value for this loan is comparable to its level at issuance. -- 60 Hudson Street is the third-largest loan in the pool, with a balance of $160.0 million (5%). The interest-only loan is secured by the fee interest in a 1,051-158-sq.-ft. telecom office property in downtown Manhattan. For the year ended Dec. 31, 2007, DSC was 3.52x and occupancy was 78%. Standard & Poor's adjusted value for this loan is comparable to its level at issuance. Wachovia reported a watchlist of 20 loans ($108.0 million, 3%). The One Commercial Street loan ($12.1 million, 0.4%) is the largest loan on the watchlist and the 68th-largest exposure in the pool. The loan is secured by a 95,537-sq.-ft. industrial property in Sharon, Mass. The loan appears on the watchlist in error and will be removed next month. For the year ended Dec. 31, 2008, the property reported a DSC of 1.68x. Standard & Poor's stressed the loans on the watchlist and the other loans with credit issues as part of its analysis. The resultant credit enhancement levels support the lowered and affirmed ratings. RATINGS LOWERED AND REMOVED FROM CREDITWATCH NEGATIVE Wachovia Bank Commercial Mortgage Trust Commercial mortgage pass-through certificates series 2005-C20 Rating Class To From Credit enhancement (%) D A- A/Watch Neg 8.47 E BBB+ A-/Watch Neg 7.24 F BBB BBB+/Watch Neg 6.01 G BB+ BBB/Watch Neg 5.05 H B- BBB-/Watch Neg 3.83 J CCC BB+/Watch Neg 3.14 K CCC- BB/Watch Neg 2.73 L CCC- BB-/Watch Neg 2.32 M CCC- B+/Watch Neg 2.05 N CCC- B/Watch Neg 1.78 O CCC- B-/Watch Neg 1.50 RATINGS AFFIRMED Wachovia Bank Commercial Mortgage Trust Commercial mortgage pass-through certificates series 2005-C20 Class Rating Credit enhancement (%) A-1A AAA 32.79 A-3SF AAA 32.79 A-4 AAA 32.79 A-5 AAA 32.79 A-6A AAA 32.79 A-6B AAA 32.79 A-PB AAA 32.79 A-7 AAA 32.79 A-MFL AAA 21.86 A-MFX AAA 21.86 A-J AAA 13.66 B AA 11.34 C AA- 10.52 X-P AAA N/A X-C AAA N/A N/A-Not applicable. WCI COMMUNITIES: Gets Okay to Use Cash Collateral Until August 30 ----------------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware authorized WCI Communities Inc. and its debtor-affiliates to use, in an interim basis, the cash collateral of their prepetition lenders until Aug. 30, 2008. The Court will convene a hearing on Aug. 27, 2008, to consider the Debtors' request on a final basis. Any opposing party-in- interest has until August 20 to file a written objection to the Court. The Court holds that the use of the Cash Collateral may be automatically extended through Sept. 5, 2008, without the need for further Court order upon the execution by the Debtors of a DIP financing commitment with one or more of the Prepetition Loan Agents or upon written consent of the Prepetition Agents. The Debtors intend to use the Cash Collateral mainly to fund reduced day-to-day operations, to maintain and preserve the value of their assets, and to sell those assets for the benefit of their estates and creditors. The Debtors add that access to the Cash Collateral will afford them the opportunity to negotiate the terms of a postpetition financing. Prepetition Credit Facilities The Debtors' capital structure is fairly complex, consisting of various senior secured debt facilities, various subordinated unsecured facilities and various equity classes, Stephen R. Goldstein, director at Lazard Freres & Co. LLC, financial advisors to the Debtors, relates. He relates that prior to the Petition Date, the Debtors' operations were funded, in part, with the proceeds of these credit facilities: 1. Senior Term Loan Agreement dated Dec. 23, 2005, among the Debtors; Keybank N.A., as administrative agent and lender; KeyBank Capital Markets, as co-lead arranger and sole bank manager; Wachovia Capital, as co-lead arranger; and Wachovia Bank, as syndication agent; and certain other lenders. 2. Senior Unsecured Revolving Credit Agreement dated June 13, 2006 among the Debtors; Bank of America N.A., as administrative agent and lender; Wachovia Bank as syndication agent; Fifth Third Bank, KeyBank, and The Royal Bank of Scotland PLC, as co-documentation agents; Bank of America Securities LLC, Wachovia Capital, and RBS Securities Corporation, as joint lead arranges; and certain other lenders. 3. Revolving Construction Loan Agreement dated as of September 22, 2005 among the Debtors; Wachovia Bank N.A., as administrative agent; Wachovia Capital Markets LLC as co- lead arranger; and certain other lenders. The Prepetition Credit Facilities have been amended from time to time. The Tower Loan Obligations were originally secured by first priority liens on and interests in certain residential tower projects located in Florida and New Jersey and related collateral. The Term Loan and Revolving Credit Obligations were originally unsecured and were guaranteed by certain of the Debtors' subsidiaries. By August 2007, the Debtors granted to the Term Loan Lenders and Revolving Credit Lenders first priority liens on and security interests in substantially all of their assets other than the Tower Collateral -- the Shared Collateral. In January 2008, certain of the Debtors granted to the Term Loan Lenders and the Revolving Credit Lenders as security for the Prepetition Obligations second priority liens and security interests in the Tower Collateral. The Debtors also granted to the Tower Lenders, as security for the Tower Loan Obligations, a second priority lien on and security interest in the Shared Collateral. Also, on the same date, certain of the Debtors granted to the Tower Lenders repayment of the Tower Loan Obligations. Accordingly, all of the Prepetition Obligations are secured by the Prepetition Collateral. As of the Petition Date, the Prepetition Liens constitute valid, binding, enforceable and perfected liens on the Debtors' assets. As of the Petition Date, the principal amounts outstanding under the Prepetition Credit Facilities aggregate roughly $810,000,000: Term Loan Facility $224,830,000 Revolver Loan Facility $489,000,000 Letter of Credit Obligations $47,143,422 Tower Loan Facility $49,055,000 Cash Collateral Use As of Aug. 3, 2008, the Debtors had approximately $52,000,000 of cash on hand, all of which comprise Cash Collateral, Jeffrey M. Schlerf, Esq., at Bayard, P.A., in Wilmington, Delaware, the Debtors' proposed counsel, informs the Court. The Prepetition Lenders have consented to the use of the Cash Collateral by the Debtors, Mr. Schlerf avers. Accordingly, at the Debtors' behest, the Court allows them to use of Cash Collateral during the interim period pursuant to a prepared budget. To that end, the Debtors prepared a 13-week cash flow forecast commencing on the week ended Aug. 8, 2008, through the week ending Oct. 31, 2008, a full-text copy of which is available for free at: http://bankrupt.com/misc/WCI_13wkbdgetthruOct31.pdf The Budget provides for payment of postpetition operating expenses and expenses of the administration of the Debtors' bankruptcy cases, including day-to-day operation expenses and professional fees and expenses. The Debtors are also authorized to use Cash Collateral to pay the "Carve-Out" or costs fees and expenses, of up to $7,000,000, (i) due and payable to the Bankruptcy Court Clerk and the U.S. Trustee under Section 1930 of the Judicial and Judiciary Procedures Code, and (ii) incurred by professionals retained by the Debtors and any official statutory committee appointed in the Debtors' cases. As adequate protection for the Debtors' use of Cash Collateral, the Court rules that: * The Debtors will pay the Prepetition Lenders current interest at the non-default rate under the Prepetition Credit Facilities. * The Debtors will pay the reasonable costs and expenses of financial and legal advisors engaged by the Prepetition Agents. * The Debtors will continue to provide the Prepetition Agents with financial reporting in compliance with the Prepetition Credit Facilities. * The Prepetition Lenders are granted valid binding, enforceable and perfected replacement liens on and security interests in all Postpetition Collateral to secure an amount equal to the aggregate net diminution in the value of the Prepetition Lenders' interest in all Postpetition Collateral. The Postpetition Collateral comprise all of the Debtors' assets, excluding (i) avoidance actions under the Bankruptcy Code, (ii) customer deposits and other third party finds held by the Debtors in escrow; and (iii) equity interest owned by certain Debtors in certain joint ventures, among others. * The Prepetition Lenders are granted superpriority claims pursuant to Section 507(b) of the Bankruptcy Code, senior to all other administrative claims. The Adequate Protection Liens and superpriority claims will be junior and subject to (i) all valid and perfected liens on the Debtors' assets ad of the Petition Date and (ii) the Carve-Out. The Court clarifies that no Cash Collateral or other Prepetition Collateral may be used by any party to challenge the validity, perfection or priority of the Prepetition Credit Facilities. The advisors to any official creditors committee in the Debtors' cases may, however, review the Prepetition Loan Document at an expense not to exceed $75,000. About WCI Communities Headquartered in Bonita Springs, Florida, WCI Communities, Inc. -- http://www.wcicommunities.com/-- is a fully integrated homebuilding and real estate services company. It has operations in Florida, New York, New Jersey, Connecticut, Massachusetts, Virginia and Maryland. The company directly employs roughly 1,800 people, as well as roughly 1,800 sales representatives as independent contract employees. The company and 126 of its affiliates filed for Chapter 11 protection on Aug. 4, 2008 (Bankr. D. Del. Lead Case No.08-11643 through 08-11770). Eric Michael Sutty, Esq., and Jeffrey M. Schlerf, Esq., at Bayard, P.A, are the Debtors local bankruptcy counsels. Lazard Freres & Co. represents the Debtors as financial advisors. The Debtors selected Epiq Bankruptcy Solutions LLC as their claims & notice agent. When the Debtors filed for protection against their creditors, they listed total assets of $2,178,179,000 and total debts of $1,915,034,000. (WCI Communities Bankruptcy News, Issue No. 2, Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). WCI COMMUNITIES: Wants White & Case as Lead Counsel --------------------------------------------------- WCI Communities Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the District of Delaware for permission to employ White & Case LLP, as lead counsel in their Chapter 11 Cases. Ernest J. Scheidemann, treasurer and chief financial officer of WCI Communities, Inc., says that although White & Case does not have an office in Delaware, it will represent the Debtors in coordination with Delaware law firm Bayard, P.A. White & Case and Bayard have discussed the division of responsibilities in connection with representing the Debtors, according to Mr. Scheidemann. The Debtors believe that White & Case has the necessary background to deal effectively and efficiently with many of the potential legal issues and problems that may arise in their Chapter 11 cases because of the firm's prior and current representation of the Debtors in various matters. The firm is a recognized expert in the field of debtors' and creditors' rights and business reorganizations under Chapter 11, Mr. Scheidemann notes. As the Debtors' bankruptcy counsel, White & Case will: 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. provide legal advice with respect to the Debtors' powers and duties as debtors in possession in the continued operation of their businesses and the management of their properties; c. prepare, on the Debtors' behalf, all necessary motions, applications, answers, orders, reports, and papers in connection with the administration and prosecution of the Debtors' chapter 11 cases; d. assist the Debtors in connection with any disposition of their assets, by sale or otherwise; e. assist the Debtors in the negotiation, preparation and confirmation of a plan or plans of reorganization and all related transactions; f. appear in Court and to protect the interests of the Debtors before the Court; and g. perform all other necessary legal services in connection with the Debtors' Chapter 11 cases. The Debtors will pay White & Case for the contemplated services in accordance with the firm's customary hourly rates: Partners $675 to $1,100 Counsel $510 to $1,000 Associates $365 to $685 Paraprofessionals $145 to $295 The Debtors will also reimburse the firm for actual and necessary expenses it incurs or will incur in connection with the Debtors' Chapter 11 Cases. Craig H. Averch, Esq., a partner at White & Case LLP, in Miami, Florida, assures the Court that his firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Mr. Averch also disclosed his firm received from the Debtors, no later than August 2, 2008, payments totaling $700,000 for professional fees and expenses incurred with respect to restructuring, real estate, litigation and corporate matters. He adds the Debtors also paid White & Case, on July 24, 2008, a $500,0000 retainer for prepetition services the firm rendered. About WCI Communities Headquartered in Bonita Springs, Florida, WCI Communities, Inc. -- http://www.wcicommunities.com/-- is a fully integrated homebuilding and real estate services company. It has operations in Florida, New York, New Jersey, Connecticut, Massachusetts, Virginia and Maryland. The company directly employs roughly 1,800 people, as well as roughly 1,800 sales representatives as independent contract employees. The company and 126 of its affiliates filed for Chapter 11 protection on Aug. 4, 2008 (Bankr. D. Del. Lead Case No.08-11643 through 08-11770). Eric Michael Sutty, Esq., and Jeffrey M. Schlerf, Esq., at Bayard, P.A, are the Debtors local bankruptcy counsels. Lazard Freres & Co. represents the Debtors as financial advisors. The Debtors selected Epiq Bankruptcy Solutions LLC as their claims & notice agent. When the Debtors filed for protection against their creditors, they listed total assets of $2,178,179,000 and total debts of $1,915,034,000. (WCI Communities Bankruptcy News, Issue No. 2, Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). WORLD HEART: Completes $30MM Private Placement ---------------------------------------------- World Heart Corporation completed a $30 million private placement transaction and recapitalization under the terms of the Recapitalization Agreement dated June 20, 2008 and amended on July 31, 2008 to, among other things, include New Leaf Ventures II, L.P as an additional investor. WorldHeart will pay an aggregate cash commission of $750,000 and issue warrants to purchase an aggregate of 2,500,000 common shares to its advisors, Pacific Growth Equities, LLC and Stifel, Nicolaus and Company. The warrants are subject to shareholder approval and will have an exercise price of $0.11 per share. The Agreement entered into by WorldHeart includes its wholly owned subsidiary World Heart Inc., Abiomed, Inc., Venrock Partners V, L.P., Venrock Associates V, L.P. and Venrock Entrepreneurs Fund V, L.P., Special Situations Fund III QP, L.P., Special Situations Cayman Fund, L.P., Special Situations Private Equity Fund, L.P., Special Situations Life Sciences Fund, L.P. and Austin W. Marxe and New Leaf, pursuant to which: (i) WorldHeart issued 300,000,000 common shares for an aggregate purchase price of $30,000,000, of which Venrock invested $11,000,000, SSF invested $9,000,000 and New Leaf invested $10,000,000; (ii) simultaneously with the closing of the Issuance, Abiomed converted the full amount of principal and interest owed on the $5,000,000 8% Secured Convertible Promissory Note previously issued to Abiomed by WorldHeart and WHI into 86,000,000 common shares of WorldHeart, released the security interest in all of the assets of WorldHeart and WHI that secured the Note, terminated the warrant it held to purchase 3,400,000 common shares of WorldHeart, forgave other amounts owed to Abiomed by WorldHeart and terminated all previously existing agreements, arrangements and understandings with WorldHeart; and (iii) the purchase price delivered by Venrock and SSF at the closing was offset by the principal and interest owed on the bridge loan facility of $1,400,000 Venrock and SSF provided WorldHeart prior to closing. Reverse Stock Split The Agreement also provides that WorldHeart will call a special meeting of its shareholders to vote on, among other things, the approval of a reverse split of its common shares for the purpose of seeking to comply with the $1.00 minimum bid price requirement of the NASDAQ Capital Market. Investor Board Nominees The Agreement further provides that each of Abiomed, Venrock, SSF and New Leaf will have the right to designate one person for election to the Board of Directors of WorldHeart, so long as each remains the beneficial owner of at least 5% of the outstanding common shares of WorldHeart. Abiomed will also have the right to designate an observer to attend meetings of the Board of Directors at any time it does not have a designee on the Board of Directors. If Abiomed has not nominated a director on or prior to the second anniversary of the closing, the rights of Abiomed to nominate a director or to appoint an observer will terminate. All of Abiomed's rights with respect to the Board of Directors of WorldHeart will terminate on the fifth anniversary of the closing. WorldHeart currently has a Board of Directors consisting of four directors, subject to Canadian rules requiring 25% of the directors to be Canadian residents. WorldHeart will seek to elect a new slate of board members at the special meeting of shareholders. Abiomed Distribution Rights The Agreement provides that Abiomed's current distribution rights with WorldHeart be terminated and replaced with revised distribution rights. Under the revised terms, WorldHeart will still be required to negotiate in good faith with Abiomed about distribution arrangements before engaging any third-party distributors for its products. However, WorldHeart retains the right, without negotiating with Abiomed, to distribute its products directly. In addition, if Abiomed and WorldHeart are unable to agree to terms on a potential distribution arrangement, WorldHeart is free to negotiate with third-party distributors without giving revised terms to Abiomed. Abiomed's revised distribution rights will terminate upon a change of control of WorldHeart pursuant to the terms of the Agreement. Equity Incentive Plan The Agreement also provides that promptly following the closing, WorldHeart will establish an equity incentive program for the benefit of its independent directors, officers, employees and consultants covering, together with its existing plans, a maximum of 44,000,000 common shares of WorldHeart on such terms and conditions as shall be approved by WorldHeart's Board of Directors, including the designees, if any, of Abiomed, Venrock, SSF and New Leaf. WorldHeart will seek approval of the equity incentive plan at the special meeting of shareholders. Nasdaq Exception Nasdaq Marketplace Rule 4350 requires that WorldHeart obtain shareholder approval in certain circumstances, including for the issuance of shares other than in a public offering equal to 20% or more of the common shares outstanding before the issuance or to affiliates, in either case if for less than the greater of book value or market value of the common shares, or for the issuance of shares which will result in a change of control of the issuer. WorldHeart received from Nasdaq an exception from the Marketplace Rule 4350 in reliance on Nasdaq Marketplace Rule 4350(i)(2) which provides that Nasdaq may make an exception to the Marketplace Rules when: (i) the delay in securing shareholder approval would seriously jeopardize the financial viability of the enterprise and; (ii) reliance by the issuer is expressly approved by an audit committee of the issuer comprised solely of independent, disinterested directors. The audit committee of the Board of Directors of WorldHeart expressly approved such reliance. The Listings and Qualifications Department of Nasdaq granted the requested exception permitting WorldHeart to issue the 386,000,000 common shares contemplated in the Recapitalization Agreement, which is significantly in excess of the approximately 2,300,000 common shares which WorldHeart would have been permitted to issue under Nasdaq's Marketplace Rule 4350 without shareholder approval or this exception. Pursuant to this exception, WorldHeart mailed to its registered shareholders a letter alerting them that it would not seek the shareholder approval that would otherwise be required without receipt of the exception from Nasdaq and setting forth the terms of the Recapitalization Agreement and the fact of reliance on the financial viability exception. About World Heart Corporation Headquartered in Oakland, California, World Heart Corporation (TSX: WHT) -- http://www.worldheart.com/-- is a developer of mechanical circulatory support systems. The company has additional facilities in Salt Lake City, and Herkenbosch, Netherlands. WorldHeart's registered office is Ottawa, Ontario, Canada. At March 31, 2008, the company's balance sheet showed total assets of $3.3 million and total liabilities of $7.8 million, resulting in a total shareholders' deficit of $4.5 million. Going Concern Doubt Burr Pilger & Mayer LLP, in San Francisco, expressed substantial doubt about World Heart company's ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditor pointed to the company's recurring losses. The company said it expects to continue to generate operating losses at least through 2008 and 2009. ZIFF DAVIS: Enterprise Media Objects to Cure Amounts ---------------------------------------------------- Ziff Davis Media Inc. and its debtor-affiliates entered into certain contractual agreements with Enterprise Media Group, Inc., in June and July of 2007, including a purchase and sale agreement, an indemnity escrow agreement, an adjustment escrow agreement, a license agreement, a confidentiality agreement, and various other ancillary agreements. Pursuant to the Agreements, Enterprise Media purchased certain assets from the Debtors and assumed certain of the Debtors' liabilities. In addition, the Debtors agreed to indemnify Enterprise Media for breaches of the Agreements, and an an escrow containing $15,000,000 was created for the benefit of Enterprise Media. The Debtors provided notice of their intention to assume and cure certain of their Agreements with Enterprise Media. The Debtors listed proposed cure amounts of $0 for each of the Agreements. Shannon Lowry Nagle, Esq., at O'Melveny & Myers LLP, in New York, notes that in the Debtors' notice of intent to assume contracts and leases and proposed cure schedule, the Debtors listed proposed cure amounts of $0 for the Enterprise Media Agreements. Enterprise Media agrees with the Debtors' Notice to Assume, but believes that there are amounts due and owing under the Enterprise Media Agreements, as set forth in its Claim No. 186. The $15,000,000 Escrow account exists for the purpose of indemnifying Enterprise Media, Ms. Lowry asserts. Thus, Enterprise Media objects to the Debtors' proposed cure amount of $0 for the Enterprise Media Agreements, and reasserts its claim of $15,000,000 being held in Escrow. Enterprise Media has initiated a resolution of its Claims, but the process for resolving the Claims set forth in the Agreements has not yet been completed, and the Claims have not been paid, Ms. Lowry informs the U.S. Bankruptcy Court for the Southern District of New York. About Ziff Davis Media, Inc. Headquartered in New York city, New York, Ziff Davis Media, Inc. -- http://www.ziffdavis.com/-- and its affiliates are integrated media companies serving the technology and videogame markets. They are information services and marketing solutions providers of technology media, including publications, Websites, conferences, events, eSeminars, eNewsletters, custom publishing, list rentals, research and market intelligence. Their US-based media properties reach over 22 million people per month at work, home and play. They operate in three segments: the Consumer Tech Group, which includes PC Magazine and pcmag.com; the Enterprise Group, which includes eWEEK and eweek.com, and the Game Group, which includes Electronic Gaming Monthly and 1up.com. The company and six debtor-affiliates filed for bankruptcy protection on March 5, 2008 (Bankr. S.D.N.Y., Case No. 08-10768). Carey D. Schreiber, Esq. at Winston & Strawn, LLP represents the Debtors in their restructuring efforts. The Court confirmed the Debtors' Second Amended Plan of Reorganization on June 17, 2008. (Ziff Davis Bankruptcy News, Issue No. 17, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstandor 215/945-7000) ZIFF DAVIS: Wants to Assign 63 Madison Lease; FOJP Objects ---------------------------------------------------------- Ziff-Davis Inc., an entity unrelated to Ziff Davis Media, Inc., and 63 Madison Associates, L.P., entered into a lease agreement for floors 8 to 15 and the Concourse Level B-2 of a building known as 63 Madison Avenue in New York. The Lease obligates ZD Inc. to pay between $10,402,165 and $14,907,627 in base rent per year from the inception of the Lease until the year 2019, in addition to additional rent. Subsequently, ZD Inc. sold its publishing subsidiary Ziff Davis Publishing Inc. to Ziff Davis Media Inc. In connection with the sale, ZD Inc., as tenant, assigned the Lease to ZDP, subject to subleases in effect with respect to the 10th floor and the 15th floor. CNET Networks, Inc., acquired ZD Inc. in October 2000, and assumed, among other things, the obligations of ZD Inc. under the Lease. When Ziff Davis Media and its debtor-affiliates filed an amended schedule of rejected contracts and leases on June 17, 2008, CNET objected to their intention to reject the 63 Madison Lease. CNET told Judge Burton Lifland the rejection of the 63 Madison Lease has potentially serious consequences for CNET as subtenant, as guarantor, and as a primary obligor under the Lease. CNET noted that the Lease terminates in September 2019, and the total rent for which the Debtors may be obligated, and for which CNET may also be liable, is as high as $153,000,000. As a consequence of CNET's Objection, the Debtors, 63 Madison and CNET, for the past several weeks, have been negotiating a stipulation whereby 63 Madison would consent to the Debtors' assumption and assignment of the Lease to CNET, Mark K. Thomas, Esq., at Winston & Strawn LLP, in Chicago, Illinois, relates. Under the proposed assumption and assignment, the Debtors will be allowed to remain in their current offices for a period of time while they locate a more suitable and less expensive space and negotiate a new lease. Mr. Thomas discloses that the Debtors and CNET have reached an agreement with respect to the terms of the assignment and are hopeful that 63 Madison will be a party to the Stipulation. However, as of July 25, 2008, the parties remain in negotiations, he notes. Mr. Thomas contends that assigning the Lease to CNET will reduce the dollar amount of rejection damages that may be asserted against the Debtors' Chapter 11 estates which will result in a significant cost savings. Moreover, the Debtors will benefit from the goodwill generated by assuming the Lease, Mr. Thomas notes. "Although the Bankruptcy Code gives [the Debtors] the ability to reject the Lease as originally contemplated under the Plan, doing so would understandably cause inconvenience and hardship to the Landlord and the sublessees, who would find themselves in the awkward position of being holdover tenants without contractual privity to the Landlord," Mr. Thomas says. "Accordingly, assumption and assignment of the Lease is in the best interests of all affected parties." Mr. Thomas says the Debtors believe that all cure issues will be addressed and resolved consensually as a part of the Stipulation. To the extent the cure amount is disputed, the Debtors either will withdraw their request or will ask the U.S. Bankruptcy Court for the Southern District of New York to determine the cure amount due. Mr. Thomas also tells the Court that the Debtors and CNET have provided 63 Madison with adequate assurance of CNET's future performance. He notes that CNET clearly has the capability to perform under the Lease as CBS Corporation recently acquired it in a transaction reported to be valued more than $1.5 billion. In addition, all of the space is currently occupied by subtenants whose payment of rent to CNET will offset CNET's Lease costs. Against this backdrop, the Debtors seek the Court's authority to assign the 63 Madison Lease to CNET. FOJP Objects to Assignment of Madison Lease FOJP Service Corporation complains the Debtors' request to assume and assign the 63 Madison Lease fails to adequately address the treatment of subleases and of sublessees. FOJP is party to a sublease with Ziff Davis Publishing, Inc. demising to FOJP the 13th and 14th floors at 63 Madison Avenue. The Sublease is subject to a certain agreement of lease between 63 Madison Associates, as landlord, and Ziff-Davis, Inc., as tenant. "The status of the sublease, the subtenancy thereunder, the occupancy rights of FOJP, and the obligations of FOJP with respect to the assignee of the prime lease and the subleased premises, among other things, are left to conjecture and uncertainty," Dov Kleiner, Esq., at Vinson & Elkins LLP, in New York, relates. Mr. Kleiner contends that the Debtors' request leaves many other questions unanswered: -- Do the Debtors mean to assume and assign the FOJP Sublease and the other subleases to CNET? -- How will these parties treat a $968,000 letter of credit security deposit given by FOJP in connection with the rejected Sublease? -- What will be the effect of the proposed assignment of the Lease on a guaranty provided FOJP by Fulton Investment Trust? Pending the resolution of the questions, FOJP asks the Court to deny the Debtors' contemplated assignment of the 63 Madison Lease. Mr. Kleiner notes that nothing in the Debtors' proposed order indicates that any of the issues will be addressed at the hearing of the request. "It may very well be that the interests of FOJP, the Reorganized Debtors, and CNET are not in conflict, but without further explanation, that cannot be known," Mr. Kleiner says. "In any event, it is certainly in the best interests of the Reorganized Debtors, CNET, 63 Madison Associates, FOJP, and the other sublessees that these matters be addressed and the issues resolved by appropriate documentation, motions and court orders." Enterprise Media & BNY Reserve Rights With respect to the Debtors' request to assume and assign the 63 Madison Lease to CNET, Enterprise Media and The Bank of New York Mellon Trust Company, N.A., tell the Court that they are reserving their rights. According toe Enterprise Media, it has held initial discussions with CNET about (i) remaining on the premises pursuant to a sublease under which Enterprise Media occupies the 12th floor of 63 Madison, and (ii) pursuing Enterprise Media's rights pursuant to Section 365(h)(1) of the Bankruptcy Code. "CNET has expressed a desire to permit [Enterprise Media] to remain as a subtenant," Ms. Nagle says. "However, negotiations are still taking place, including negotiations between CNET and the landlord." Meanwhile, BNY objects to the Debtors' request to the extent that it fails to confirm that CNET will have no greater rights than the Debtors. "The Reorganized Debtors and CNET dispute whether [the Subleases have] been appropriately rejected or not," Mr. Pojednic notes. "Whether or not [the Subleases have] been rejected, CNET must take the [assignments of the Leases] subject to the terms and conditions of the [Subleases], BNY's rights under the Bankruptcy Code and applicable state law." Accordingly, BNY asks the Court to confirm that CNET will have no greater rights than the Debtors, under the assignment of the 63 Madison Lease. About Ziff Davis Media, Inc. Headquartered in New York city, New York, Ziff Davis Media, Inc. -- http://www.ziffdavis.com/-- and its affiliates are integrated media companies serving the technology and videogame markets. They are information services and marketing solutions providers of technology media, including publications, Websites, conferences, events, eSeminars, eNewsletters, custom publishing, list rentals, research and market intelligence. Their US-based media properties reach over 22 million people per month at work, home and play. They operate in three segments: the Consumer Tech Group, which includes PC Magazine and pcmag.com; the Enterprise Group, which includes eWEEK and eweek.com, and the Game Group, which includes Electronic Gaming Monthly and 1up.com. The company and six debtor-affiliates filed for bankruptcy protection on March 5, 2008 (Bankr. S.D.N.Y., Case No. 08-10768). Carey D. Schreiber, Esq. at Winston & Strawn, LLP represents the Debtors in their restructuring efforts. The Court confirmed the Debtors' Second Amended Plan of Reorganization on June 17, 2008. (Ziff Davis Bankruptcy News, Issue No. 17, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstandor 215/945-7000) ZIFF DAVIS: PC Magazine's Advertising Revenue Down 55.6% -------------------------------------------------------- Publishers Information Bureau reported that second quarter advertising revenues went down by 4.7% compared to the same period last year, the Folio reports. According to the paper, Ziff Davis Media Inc.'s PC Magazine had the greatest decline in revenue, with a decrease of $9,800,000 -- or 55.6%. The PIB disclosed that "sustained economic softness" caused the revenue declines, the Folio says. About Ziff Davis Media, Inc. Headquartered in New York city, New York, Ziff Davis Media, Inc. -- http://www.ziffdavis.com/-- and its affiliates are integrated media companies serving the technology and videogame markets. They are information services and marketing solutions providers of technology media, including publications, Websites, conferences, events, eSeminars, eNewsletters, custom publishing, list rentals, research and market intelligence. Their US-based media properties reach over 22 million people per month at work, home and play. They operate in three segments: the Consumer Tech Group, which includes PC Magazine and pcmag.com; the Enterprise Group, which includes eWEEK and eweek.com, and the Game Group, which includes Electronic Gaming Monthly and 1up.com. The company and six debtor-affiliates filed for bankruptcy protection on March 5, 2008 (Bankr. S.D.N.Y., Case No. 08-10768). Carey D. Schreiber, Esq. at Winston & Strawn, LLP represents the Debtors in their restructuring efforts. The Court confirmed the Debtors' Second Amended Plan of Reorganization on June 17, 2008. (Ziff Davis Bankruptcy News, Issue No. 17, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstandor 215/945-7000) * Housing Slump Affecting Complex U.S. Banks' Earnings, S&P Says ---------------------------------------------------------------- The deepening housing slump and increasing economic recessionary pressures are weighing down earnings at the large complex U.S. banks as they approach the one-year anniversary of the beginning of this historic weak mortgage credit cycle, according to a report released by Standard & Poor's Ratings Services titled, "Housing Slump And Consumer Credit Concerns Weigh Heavily On Large Complex U.S. Banks Second-Quarter Earnings." "Although reasons for hope are appearing in the housing market (California housing sales up for three consecutive months), these are heavily outweighed by negative news in housing, ever- increasing loss severities on residential mortgages, and broadening consumer credit concerns," said Standard & Poor's credit analyst Victoria Wagner. The positive signs in the quarter included improving net interest margins and steady, albeit much lower, core deposit growth. Commercial loan growth continues to be quite strong for most banks and credit performance is quite good. Underlying revenue growth trends, excluding the markdowns of loans and securities, were not bad. Although write-downs related to problematic trading exposures continue to affect reported investment banking revenues and earnings severely, results excluding write-downs-while generally weaker than in second-quarter 2007--are holding up better than S&P had expected. * S&P Says Discretionary Sectors Vulnerable to Market Turbulence ---------------------------------------------------------------- As of July 15, 2008, the consumer products, media and entertainment, and retail/restaurants sectors remain most susceptible to economic and credit-market turbulence, said an article published by Standard & Poor's. The article, which is titled "Stress In Corporate America: Consumer-Based Deterioration Continues (Premium)," says these sectors consistently lead risk in S&P's lists of distressed companies (defined as speculative-grade companies with securities trading in excess of 1,000 basis points above U.S. Treasuries), weakest links (companies rated 'B-' or lower with either a negative outlook or on CreditWatch with negative implications), and potential bond downgrades (investment- grade or speculative-grade companies that have either a negative outlook or on CreditWatch with negative implications). "Weakness in the consumer products, media and entertainment, and retail/restaurants sectors is a result of U.S. consumers' diminished economic prospects," explained Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "Consumer spending is critical to continued economic expansion, as it accounts for 70% of the U.S. GDP." These cyclical sectors rely heavily on consumer spending, which has recently declined after showing resilience in 2007. "We expect consumer spending to grow only 1.7% in 2008, a deceleration compared with 2.9% in 2007 and 3.1% in 2006. As a result of increased gasoline prices and falling home values, consumer confidence is at its lowest level in more than 25 years, opening the potential for even larger decreases in spending than are currently forecast," S&P says. * S&P Sees Downgrades to Continue as Market Gets More Volatile -------------------------------------------------------------- General market volatility was elevated in mid July, as oil, inflation, the fate of Freddie Mac and Fannie Mae, and earnings reports were at the top of investors' minds, said an article published by Standard & Poor's. The article, which is titled "U.S. High-Yield Prospects: High-Yield Market Gyrates Amid Market Volatility (Premium)," said the high-yield market followed suit, gyrating in July, with spreads widening to 763 basis points (bps) by mid-month from 698 bps at the end of June before tightening to 747 bps by July 29. Credit quality continued to slide, with 27 downgrades in June and 18 downgrades in the first half of July. "Downgrades are expected to continue to come at a steady clip over the coming months as economic conditions deteriorate further," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. New issuance remains tepid, with only $2.6 billion in bonds issued for the month (through July 29) and $35 billion on the year. "However, primary market conditions might not be as sour as the low issuance number indicates," Ms. Vazza noted. "The July deals had plenty of interest from investors, and issuance levels are usually slow in summer months." So far this year, 51% of issuance was rated 'BB', 44% rated 'B', and just under 5% rated 'CCC'. This is a departure from 2007, when 26% of issuance was rated 'CCC' and only 28% received a 'BB' rating. S&P expects that issuance will retain this stronger ratings mix over the coming quarters. * S&P Says U.S. Housing Prices May Reach Bottom By 2010 ------------------------------------------------------- A new report by Standard & Poor's Ratings Services discusses recent initiatives that may have an impact on the U.S. residential mortgage-backed securities (RMBS) and housing markets. According to the report, even with the flurry of major steps taken by the U.S. government and the financial markets to shore up the housing market, a chief concern for U.S. RMBS investors is whether housing prices have reached bottom. Standard & Poor's Chief Economist David Wyss says that bottom may not happen until 2010. As of now, an oversupply of houses and a steady number of new foreclosures are keeping home prices down. "These trends have led us to continue revising our surveillance assumptions on rated U.S. RMBS." "While U.S. RMBS investors wait for the bottom, the U.S. government continues to provide some assistance to borrowers who may face foreclosure, as well as provide certain lenders with capital relief. In addition to the new housing market law, the "Housing and Economic Recovery Act of 2008," which President George Bush signed into law July 30, two other notable measures are the Treasury Department's push to get U.S. markets to embrace securities known as covered bonds and the growing popularity of re-REMICs, the process of resecuritizing parts of previously issued RMBS. All of these initiatives may impact our estimate of loan performance in our rated transactions, as well as the U.S. RMBS and housing markets. We are therefore closely following these initiatives." The commentary article, "What Impact Will New Government And Market Measures Have On U.S. RMBS?" was published Aug. 5, 2008. * S&P Places Ratings of $1.89BB in CBOs and CLOs on Watch Neg ------------------------------------------------------------- Standard & Poor's Ratings Services placed 32 ratings from 19 U.S. cash flow collateralized bond obligation (CBO) and collateralized loan obligation (CLO) transactions on CreditWatch with positive implications. At the same time, S&P placed 10 ratings on five U.S. cash flow CBO and CLO transactions on CreditWatch with negative implications. The securities with ratings placed on CreditWatch positive represent an original issuance amount of approximately $6.54 billion, while the securities with ratings placed on CreditWatch negative represent an original issuance amount of approximately $1.89 billion. All of the transactions are older vintage (1998 through 2005) collateralized debt obligation (CDO) transactions collateralized by corporate investment-grade or high- yield bonds and leveraged loans. Seventeen of the 32 ratings placed on CreditWatch positive are from eight arbitrage corporate high-yield CLO transactions, 14 are from 10 arbitrage corporate high-yield CBO transactions, and the remaining rating placed on CreditWatch positive is from an arbitrage corporate investment-grade deal. Eight of the 10 ratings placed on CreditWatch negative are from four arbitrage corporate high-yield CBO transactions, and the remaining two ratings are from an arbitrage corporate high-yield CLO transaction. Vintage/Deal Type CF HY CBO CF HY CLO CF IG CBO Total 1998 2 0 0 2 1999 2 4 1 7 2000 5 1 0 6 2001 3 0 0 3 2002 2 4 0 6 2003 0 3 0 3 2004 0 5 0 5 Total 14 17 1 32 CF -- Cash flow HY -- High-yield CBO -- Collateralized bond obligation CLO -- Collateralized loan obligation IG -- Investment-grade Vintage/Deal Type CF HY CBO CF HY CLO Total 2000 3 0 3 2001 3 0 3 2002 0 2 2 2005 2 0 2 Total 8 2 10 CF -- Cash flow HY -- High-yield CBO -- Collateralized bond obligation CLO -- Collateralized loan obligation The CreditWatch positive placements reflect increased credit support for mezzanine classes of notes as the result of a partial paydown of the senior classes of notes, resulting in an increase in the overcollateralization (O/C) available to support the notes. The CreditWatch negative placements are mostly the result of deterioration in the credit quality of the underlying securities backing the transactions. This was either in the form of lowered credit ratings or defaults to assets within the portfolio. One high yield CLO transaction, Aurum CLO 2002-1 Ltd., experienced both a significant increase in paydowns and a high level of downward migration in credit quality. The downgrades caused the ratings on the lowest rated pari passu classes in the structure to be placed on CreditWatch negative, while S&P placed the ratings on the senior classes that benefited from the pay down on CreditWatch positive. S&P will review the results of cash flow runs generated for the transactions to determine the level of future defaults the rated classes can withstand under various stressed default timing and interest rate scenarios, while still paying all of the interest and principal due on the notes. The results of these cash flow runs will be compared with the projected default performance of the performing assets in the collateral pools of these deals to determine whether the ratings currently assigned to the notes remain consistent with the credit enhancement available. RATINGS PLACED ON CREDITWATCH POSITIVE Rating Transaction Class To From Archimedes Funding IV A-2 AA/Watch Pos AA (Cayman) Ltd. Aurum CLO 2002-1 Ltd. A-2 AA/Watch Pos AA Aurum CLO 2002-1 Ltd. B A-/Watch Pos A- Canyon Capital CDO 2001-1 Ltd. B-1L A/Watch Pos A Dilmun Capital II Ltd. Mezz A-/Watch Pos A- First Dominion Funding III B-1 AA+/Watch Pos AA+ First Dominion Funding III B-2 AA+/Watch Pos AA+ Highland Legacy Ltd. B Floating A-/Watch Pos A- Highland Legacy Ltd. B Fixed A-/Watch Pos A- Juniper CBO 2000-1 Ltd. A-3L AA+/Watch Pos AA+ Juniper CBO 2000-1 Ltd. A-3 AA+/Watch Pos AA+ Knight Funding Ltd. A-2 AA/Watch Pos AA Muzinich CBO II Ltd. A-1 AA+/Watch Pos AA+ Muzinich CBO II Ltd. A-2 AA+/Watch Pos AA+ Navigator CDO 2003 Ltd. A-3A AA/Watch Pos AA Navigator CDO 2003 Ltd. A-3B AA/Watch Pos AA Navigator CDO 2003 Ltd. B A/Watch Pos A Nova CDO 2001 Ltd. B BBB+/Watch Pos BBB+ Rosemont CLO Ltd. B-1 A/Watch Pos A Rosemont CLO Ltd. B-2 A/Watch Pos A Signature 7 L.P. B A/Watch Pos A Signature 7 L.P. C BBB/Watch Pos BBB South Street CBO 2000-1 Ltd. A-3L BBB+/Watch Pos BBB+ South Street CBO 2000-1 Ltd. A-3 BBB+/Watch Pos BBB+ Stone Tower CLO II Ltd. A-2 AA/Watch Pos AA Stone Tower CLO II Ltd. B A/Watch Pos A Stone Tower CLO II Ltd. C BBB/Watch Pos BBB Sutter CBO 1998-1 Ltd. A-3 A-/Watch Pos A- Sutter CBO 1998-1 Ltd. A-3L A-/Watch Pos A- Sutter CBO 2000-2 Ltd. A-3L AA+/Watch Pos AA+ Sycamore CBO (Cayman) Ltd. A-3 AA/Watch Pos AA Wilbraham CBO Ltd. A-2 BB+/Watch Pos BB+ RATINGS PLACED ON CREDITWATCH NEGATIVE Rating Transaction Class To From Aurum CLO 2002-1 Ltd. D-1 BB/Watch Neg BB Aurum CLO 2002-1 Ltd. D-2 BB/Watch Neg BB Chartwell CBO I B BBB+/Watch Neg BBB+ Nicholas Applegate CBO I Ltd. B-1 A-/Watch Neg A- Nicholas Applegate CBO I Ltd. B-2 A-/Watch Neg A- Nicholas-Applegate CBO II Ltd. B BBB/Watch Neg BBB Nicholas-Applegate CBO II Ltd. C BB/Watch Neg BB Nicholas-Applegate CBO II Ltd. D B/Watch Neg B Peritus I CDO Ltd. B A-/Watch Neg A- Peritus I CDO Ltd. C BB-/Watch Neg BB- * BAE Systems to Manage U.S. Courts' Bankruptcy Notice System ------------------------------------------------------------- BAE Systems Inc. has been selected by the Administrative Office of the U.S. Courts to manage the Bankruptcy Noticing Center. Under this contract, BAE Systems will manage the mailing and electronic distribution of bankruptcy notices that inform creditors nationwide when debtors file for bankruptcy. The contract is for a one-year base period with options for nine one- year periods to follow. "The BNC provides the critical link in the notification process," said Thomas Sechler, BAE Systems Information Technology general manager and vice president of Civilian Solutions. "This win further showcases BAE Systems ability to provide the right solutions and business processes, capabilities and partnerships, and the important work the company performs in today’s market place." BAE Systems has been supporting AOUSC and the 90 U.S. Bankruptcy Courts since 1994. The BNC has processed 118 million bankruptcy notices both electronically and via U.S. Mail during the past year -- an increase of 17 percent over the previous year. "This program is a critical function in the court system -- particularly given the volume of bankruptcy notices anticipated in the current economic environment," added Joe Speetjens, the company's manager for the program. "One of our primary tasks on the new contract will be to increase the number of notices sent electronically." Assisting BAE Systems with the mailing of bankruptcy notices are RR Donnelley and Double Envelope. Both companies have supported the effort since the program's inception. RR Donnelley is the world's premier full-service provider of print and related services, including document-based business process outsourcing. New to the team is Campbell-Ewald, one of the nation's leading marketing and advertising firms, to assist in getting recipients to convert from paper to electronic notices. BAE Systems Information Technology is a full-service solutions provider of information systems and services that offers network and managed IT operations to provide secure, reliable solutions in support of mission-critical customer needs. BAE Systems Information Technology supports advanced computing operations across the federal government and is directly involved with many of the government’s most sophisticated agencies in delivering new technologies. More information on electronic bankruptcy noticing can be found at http://www.EBNuscourts.com/ BAE Systems -- http://www.baesystems.com/-- is the premier global defense and aerospace company delivering a full range of products and services for air, land and naval forces, as well as advanced electronics, information technology solutions and customer support services. * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ------------------------------------------------------------- Recent Chapter 11 cases filed with assets and liabilities below $1,000,000: In Re Boulder Glen LLC Bankr. W. D. Wash. Case No. 08-14807 Chapter 11 Petition filed July 30, 2008 Filed as Pro Se In Re David A. Yarian Bankr. M. D. Tenn. Case No. 08-06601 Chapter 11 Petition filed July 30, 2008 Filed as Pro Se In Re Digital Vision, Inc. Bankr. W. D. Penn. Case No. 08-24965 Chapter 11 Petition filed July 30, 2008 See http://bankrupt.com/misc/pawb08-24965.pdf In Re HP Interiors, Inc. Bankr. M. D. Fla. Case No. 08-11422 Chapter 11 Petition filed July 30, 2008 See http://bankrupt.com/misc/flmb08-11422.pdf In Re Ink on Paper, Inc. Bankr. E. D. Penn. Case No. 08-11422 Chapter 11 Petition filed July 30, 2008 See http://bankrupt.com/misc/paeb08-14845.pdf In Re Robert Roy Bankr. S. D. N. Y. Case No. 08-11422 Chapter 11 Petition filed July 30, 2008 See http://bankrupt.com/misc/nysb08-23085.pdf In Re Alex Hejazi Bankr. Va. E.D. Case No. 08-14549 Chapter 11 Petition filed July 31, 2008 See http://bankrupt.com/misc/vaeb08-14549.pdf In Re C&R Trucking Inc. Bankr. Conn. D. Case No. 08-32508 Chapter 11 Petition filed July 31, 2008 See http://bankrupt.com/misc/ctb08-32508.pdf In Re Michael David Kolacz Bankr. Tex. E.D. Case No. 08-41988 Chapter 11 Petition filed July 31, 2008 See http://bankrupt.com/misc/txeb08-41988.pdf In Re The Mustang Cafe LLC Bankr. Tex. E.D. Tex. Case No. 08-42004 Chapter 11 Petition filed July 31, 2008 See http://bankrupt.com/misc/txeb08-42004.pdf In Re R&Y Enterprises, Inc. Bankr. Mass. D. Case No. 08-15645 Chapter 11 Petition filed July 31, 2008 See http://bankrupt.com/misc/mab08-15645.pdf In Re RDB Enterprises LLC Bankr. N.Y. S.D. Case No. 08-13026 Chapter 11 Petition filed July 31, 2008 See http://bankrupt.com/misc/nysb08-13026.pdf In Re RJM Farms, Inc. Bankr. Ga. S.D. Case No. 08-60479 Chapter 11 Petition filed July 31, 2008 See http://bankrupt.com/misc/gasb08-60479.pdf In Re Joshua Omar Sabree Bankr. N.D. Ga. Case No. 08-74371 Chapter 11 Petition filed July 31, 2008 Filed as Pro Se In Re Dora Lynn Nielsen dba Majestic Manor, LLC Bankr. D. Utah Case No. 08-24993 Chapter 11 Petition filed August 1, 200 Filed as Pro Se In Re Trifecta Investment Group dba Pleasure Spas Bankr. D. Ariz. Case No. 08-09808 Chapter 11 Petition filed August 1, 2008 See http://bankrupt.com/misc/azb08-09808.pdf In Re Dennis C. Payne Trucking, Inc. Bankr. S.D. Ohio Case No. 08-14267 Chapter 11 Petition filed August 1, 2008 See http://bankrupt.com/misc/ohsb08-14267.pdf In Re Wedafab, Inc. Bankr. E.D. Penn. Case No. 08-25079 Chapter 11 Petition filed August 1, 2008 See http://bankrupt.com/misc/pawb08-25079.pdf In Re Main Street Executives Offices, LLC Bankr. D. Arizona Case No. 08-09801 Chapter 11 Petition filed August 1, 2008 Filed as Pro Se In Re M&S Construction Co., LLC Bankr. D. S.C. Case No. 08-04610 Chapter 11 Petition filed August 1, 2008 See http://bankrupt.com/misc/scb08-04610.pdf In Re New 6, Inc. dba Mabel's Restaurant Bankr. W.D. Mich. Case No. 08-06786 Chapter 11 Petition filed July 31, 2008 See http://bankrupt.com/misc/miwb08-06786.pdf In Re R&Y Enterprises, Inc. dba Ying's Bankr. D. Mass. Case No. 08-15645 Chapter 11 Petition filed July 31, 2008 See http://bankrupt.com/misc/mab08-15645.pdf In Re Lagreta Pigatt Bankr. D. Md. Case No. 08-19839 Chapter 11 Petition filed July 31, 2008 See http://bankrupt.com/misc/mdb08-19839.pdf In Re Patricia E. McQuiston Bankr. W.D. Penn. Case No. 08-25042 Chapter 11 Petition filed July 31, 2008 See http://bankrupt.com/misc/pawb08-25042.pdf In Re Dennis C Payne Trucking Inc Bankr. S.D. Ohio Case No. 08-14267 Chapter 11 Petition filed Aug. 1, 2008 See http://bankrupt.com/misc/ohsb08-14267.pdf In Re DAB Enterprises, Inc. Bankr. N.D. Calif. Case No. 08-31435 Chapter 11 Petition filed Aug. 1, 2008 See http://bankrupt.com/misc/canb08-31435.pdf In Re Adirondack Timber Enterprise, Inc. dba Asplin Tree Farms Bankr. N.D. N.Y. Case No. 08-12553 Chapter 11 Petition filed Aug. 1, 2008 See http://bankrupt.com/misc/nynb08-12553.pdf In Re Katon, Inc. fka Klingler Electric Corporation Bankr. S.D. Miss. Case No. 08-02266 Chapter 11 Petition filed Aug. 1, 2008 See http://bankrupt.com/misc/msb08-02266.pdf In Re M&S Construction Co., LLC Bankr. D. S.C. Case No. 08-04610 Chapter 11 Petition filed Aug. 1, 2008 See http://bankrupt.com/misc/scb08-04610.pdf In Re World Harvest Dental, Inc. Bankr. S.D. Ind. Case No. 08-09368 Chapter 11 Petition filed Aug. 1, 2008 See http://bankrupt.com/misc/insb08-09368.pdf In Re Wedafab, Inc. Bankr. W.D. Pa. Case No. 08-25079 Chapter 11 Petition filed Aug. 1, 2008 See http://bankrupt.com/misc/pawb08-25079.pdf In Re Valentin Company, L.L.C. Bankr. E.D. Mich. Case No. 08-58645 Chapter 11 Petition filed Aug. 1, 2008 See http://bankrupt.com/misc/mieb08-58645.pdf In Re Pamela J. Wall Bankr. D. Conn. Case No. 08-50698 Chapter 11 Petition filed Aug. 1, 2008 Filed as Pro Se In Re NH Meateas Statutory Trust Bankr. D. Conn. Case No. 08-21490 Chapter 11 Petition filed Aug. 1, 2008 Filed as Pro Se In Re Ignacio Lewis Bankr. S.D. N.Y. Case No. 08-13058 Chapter 11 Petition filed Aug. 2, 2008 See http://bankrupt.com/misc/nysb08-13058.pdf In Re 3319 LLC Bankr. S.D. Tex. Case No. 08-34959 Chapter 11 Petition filed Aug. 3, 2008 See http://bankrupt.com/misc/txsb08-34959.pdf In Re Anthony Gray, Sr. Bankr. N.D. Ohio Case No. 08-16021 Chapter 11 Petition filed Aug. 3, 2008 See http://bankrupt.com/misc/ohnb08-16021.pdf In Re Joaquin Merlos Bankr. S.D. Calif. Case No. 08-07414 Chapter 11 Petition filed August 4, 2008 See http://bankrupt.com/misc/casb08-07414.pdf In Re Afford-A-Staff, Inc. Bankr. M.D. Fla. Case No. 08-11740 Chapter 11 Petition filed August 4, 2008 See http://bankrupt.com/misc/flmb08-11740.pdf In Re Calvary Bridal House, Inc. Bankr. D. N.J. Case No. 08-24645 Chapter 11 Petition filed August 4, 2008 See http://bankrupt.com/misc/njb08-24645.pdf In Re Little People Universe, Inc. Bankr. E.D. Penn. Case No. 08-14976 Chapter 11 Petition filed August 4, 2008 See http://bankrupt.com/misc/paeb08-14976.pdf In Re 536 Vasey, Inc. Bankr. N.D. Tex. Case No. 08-43549 Chapter 11 Petition filed August 4, 2008 See http://bankrupt.com/misc/txnb08-43549.pdf In Re Cinor, L.P. Bankr. E.D. Pa. Case No. 08-14989 Chapter 11 Petition filed August 4, 2008 Filed as Pro Se In Re Executive Brokers Real Estate Bankr. N.D. Ga. Case No. 08-75026 Chapter 11 Petition filed August 4, 2008 See http://bankrupt.com/misc/ganb08-75026.pdf In Re Greater Houston Publishers, Inc. Bankr. S.D. Tex. Case No. 08-35021 Chapter 11 Petition filed August 4, 2008 See http://bankrupt.com/misc/txsb08-35021.pdf In Re Greater Houston Publishing, Inc. Bankr. S.D. Tex. Case No. 08-35026 Chapter 11 Petition filed August 4, 2008 See http://bankrupt.com/misc/txsb08-35026.pdf In Re Grins & Giggles, LLC Bankr. S.D. Tex. Case No. 08-35120 Chapter 11 Petition filed August 4, 2008 See http://bankrupt.com/misc/txsb08-35120.pdf In Re First Atlanta, L.P. Bankr. N.D. Ga. Case No. 08-74896 Chapter 11 Petition filed August 4, 2008 See http://bankrupt.com/misc/ganb08-74896.pdf In Re Jere Richard Young Bankr. M.D. Tenn. Case No. 08-06772 Chapter 11 Petition filed August 4, 2008 Filed as Pro Se In Re Lippincott Properties Bankr. E.D. Pa. Case No. 08-14984 Chapter 11 Petition filed August 4, 2008 Filed as Pro Se In Re Mecca Development, Inc. Bankr. N.D. Ga. Case No. 08-74959 Chapter 11 Petition filed August 4, 2008 See http://bankrupt.com/misc/ganb08-74959.pdf In Re Reynard Dauphin Bankr. N.D. Ga. Case No. 08-75048 Chapter 11 Petition filed August 4, 2008 See http://bankrupt.com/misc/ganb08-75048.pdf In Re Ringold Group, L.L.C. Bankr. E.D. Tex. Case No. 08-42097 Chapter 11 Petition filed August 4, 2008 See http://bankrupt.com/misc/txeb08-42097.pdf In Re Sheridan Homes of Texas, Inc. Bankr. E.D. Tex. Case No. 08-42099 Chapter 11 Petition filed August 4, 2008 See http://bankrupt.com/misc/txeb08-42099.pdf In Re TEN Investment Inc. Bankr. S.D. Tex. Case No. 08-34990 Chapter 11 Petition filed August 4, 2008 Filed as Pro Se In Re Universal Rehabilitation Services, Inc. Bankr. S.D. Tex. Case No. 08-35091 Chapter 11 Petition filed August 4, 2008 See http://bankrupt.com/misc/txsb08-35091.pdf In Re W. Newton Passive Investments, L.L.C. Bankr. W.D. Tex. Case No. 08-52204 Chapter 11 Petition filed August 4, 2008 See http://bankrupt.com/misc/txwb08-52204.pdf In Re Westheimer Professional Building Trust Bankr. S.D. Tex. Case No. 08-35083 Chapter 11 Petition filed August 4, 2008 See http://bankrupt.com/misc/txsb08-35083.pdf In Re Gerard Restaurant Partners, LP dba Gerard's Place dba Gerard Restaurant Bankr. D.C. Case No. 08-00525 Chapter 11 Petition filed August 5, 2008 See http://bankrupt.com/misc/dcb08-00525.pdf In Re Reed Law Group, P.C. Bankr. E.D. Mich. Case No. 08-58903 Chapter 11 Petition filed August 5, 2008 See http://bankrupt.com/misc/mieb08-58903.pdf In Re Jesseco, Inc. dba KFC Bankr. D. N.J. Case No. 08-24713 Chapter 11 Petition filed August 5, 2008 See http://bankrupt.com/misc/njb08-24713.pdf In Re SH & JH Strawberry Associates, LLC Bankr. E.D. Pa. Case No. 08-15020 Chapter 11 Petition filed August 5, 2008 See http://bankrupt.com/misc/paeb08-15020.pdf In Re The Firm Bankr. M.D. Ga. Case No. 08-40814 Chapter 11 Petition filed August 5, 2008 Filed as Pro Se In Re Victory Tabernacle Church, Inc. Bankr. W.D. Tenn. Case No. 08-27820 Chapter 11 Petition filed August 5, 2008 See http://bankrupt.com/misc/tnwb08-27820.pdf In Re Surya Holdings, Ltd. Bankr. E.D. Tex. Case No. 08-42108 Chapter 11 Petition filed August 5, 2008 See http://bankrupt.com/misc/txeb08-42108.pdf In Re Star Auto Wash, LLC Bankr. N.D. Tex. Case No. 08-33922 Chapter 11 Petition filed August 5, 2008 See http://bankrupt.com/misc/txnb08-33922.pdf In Re Creeks Unlimited Bankr. S.D. Tex. Case No. 08-35170 Chapter 11 Petition filed August 5, 2008 See http://bankrupt.com/misc/txsb08-35170.pdf ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Raphael M. Palomino, Shimero R. Jainga, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Melanie C. Pador, Ludivino Q. Climaco, Jr., Loyda I. Nartatez, Tara Marie A. Martin, Joseph Medel C. Martirez, Ma. Cristina I. Canson, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2008. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***