/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/080828.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 28, 2008, Vol. 12, No. 205 Headlines AFFINITY TECHNOLOGY: Downplays Bankruptcy Filing, The Deal Reports AGCO CORP: S&P Holds 'BB+' on Better Operating Performance ALPHA FACTORS: Case Summary & Two Largest Unsecured Creditors A & M DEVELOPMENT: Voluntary Chapter 11 Case Summary AMERICAN HOME: Maturity of WL Ross Loan Facility Moved to November AMERICAN HOME: Inks Deal with BofA on Collateral-Related Matters AMERICAN HOME: Exclusive Plan Filing Period Extended to Sept. 2 AMERICAN HOME: AHM Servicing Amends $17MM Payment Request AMERICAN HOME: Indymac Bank Moves $30.9MM Claim to Federal Deposit AMERICAN IRONHORSE: To Auction Excess Parts on September 12 AMORTIZING RESIDENTIAL: Moody's Junks Five Class Certificates APARTMENT REALTY: Case Summary & Two Largest Unsecured Creditors ASARCO LLC: Americas Mining Files Reorganization Plan ASCENDIA BRANDS: U.S. Trustee Forms Five-Member Creditors Panel ATLANTIC WINE: Posts $294,690 Net Loss in 1st Qtr. Ended June 30 ATLAS LANDWORKS: Case Summary & 20 Largest Unsecured Creditors AXM PHARMA: Enable Capital and M. Levine Declare 5.3% Stake BAUGHER CHEVROLET: Case Summary & 20 Largest Unsecured Creditors BANKUNITED FINANCIAL: Needs to Raise $400MM to Keep OTS Status BELLISIO FOODS: Moody's Rates $160 Mi. Sr. Secured Notes at B1 BELLISIO FOODS: S&P Assigns 'B+' on $160,000,000 Credit Facility BHM TECHNOLOGIES: Court Allows Solicitation of Votes on Plan BHM TECHNOLOGIES: Committee Wants Letter Included Among Plan Docs BHM TECHNOLOGIES: Court Approves Chanin as Committee Advisor BILL ROHRBAUGH: Voluntary Chapter 11 Case Summary BILL ROHRBAUGH: Section 341(a) Meeting Slated for September 17 BON-TON STORES: Net Loss Rises to $65MM in Period Ended August 2 BOSCOV'S INC: Mothers Work Balk at Request for $250MM DIP Loan BOSCOV'S INC: Gets Court Approval to Close and Liquidate 10 Stores BRAINTECH INC: June 30 Balance Sheet Upside-Down by $1,099,808 BRANDON BARBER: Files $10MM Suit at Legacy National, Flake & Kelly CANYON CAPITAL: Class B-1L, B-2A, and B-2B Note Ratings Raised CARDIAC MANAGEMENT: Wants Trenwith Securities as Investment Banker CARDIAC MANAGEMENT: Files Schedules of Assets and Liabilities CENTRAL GARDEN: Late 10-Q Filing Cues Nasdaq's Delisting Notice CHESAPEAKE CORP: SCSF Equities, et al., Sell Outstanding Shares CJ READY: Case Summary & 20 Largest Unsecured Creditors CLAUDIA PHILLIPS: Case Summary & 20 Largest Unsecured Creditors CMT AMERICA: Delivers Schedules of Assets and Liabilities COMM 2004-LNB3: DBRS Puts Class K Through O Under Review Negative COMMISSARY OPERATIONS: To Close Georgia Plant, W. Virginia Center CONSPIRACY ENT: June 30 Balance Sheet Upside-Down by $11,345,481 COUNTERPATH CORP: BDO Dunwoody Expresses Going Concern Doubt CSCM TRUST: Fitch Affirms Ratings for 25 Classes of Certificates CSFB MORTGAGE: S&P Cuts 2005-C5 Class Q Notes to CCC+ CYBERONICS INC: July 25 Balance Sheet Upside-Down by $6.6 Million DEATH ROW: Buyer Global Music to be Acquired by Mediatechnics DEEPWATER DEVELOPMENT: Voluntary Chapter 11 Case Summary DEEPWATER DEVELOPMENT: Section 341(a) Meeting Set for October 1 DELPHI CORP: Appaloosa Wants Fraud Claims Dismissed DELTA AIR: Obtains $1 Billion Loan Prior to Northwest Merger DELTA AIR: NWA Cancels Worldwide Pact, Uses Delta Global Services DELTA AIR: Resolves $9 Mil. Hillsborough Aviation Authority Claim DELTA AIR: Abett & Co. Discloses 10.10% Stake DIGISCRIPT INC: Voluntary Chapter 11 Case Summary DIGISCRIPT INC: Section 341(a) Meeting Slated for October 3 DISTRIBUTED ENERGY: Completes $12.9MM NPS Assets Sale to CB Wind DISTRIBUTION EXPERTS: Case Summary & 20 Largest Unsec. Creditors DOWNEY REGIONAL: Weak Balance Sheet Cues S&P to Cut Rating to CCC DRINKS AMERICAS: Continuous Net Losses Raise Substantial Doubt EDUCATION RESOURCES: Wants to Set October 17 as Claims Bar Date EFOODSAFETY.COM INC: Losses Cues Gruber & Co. Going Concern Doubt ELK VALLEY: Case Summary & 20 Largest Unsecured Creditors ENERGY EXPLORATION: Earns C$806,619 in 2008 Second Quarter ESPRE SOLUTIONS: June 30 Balance Sheet Upside-Down by $872,209 EUROSOCKS NORTH: Voluntary Chapter 11 Case Summary EXECUTE SPORTS: June 30 Balance Sheet Upside-down by $6,685,847 FF&Y LLC: Chapter 11 Case Summary and Largest Unsecured Creditor FF&Y LLC: Section 341(a) Meeting Scheduled for September 22 FREMONT HOME: Moody's Junks Eight Class Certificates GENERAL SPRING: Case Summary & 20 Largest Unsecured Creditors GENESIS RESTAURANT: Case Summary & 3 Largest Unsecured Creditors GEOFFREY OSLER: Case Summary & 20 Largest Unsecured Creditors GERARD THEOPHIL: Case Summary & 19 Largest Unsecured Creditors GERDAU AMERISTEEL: Moody's Rates $405MM Sr. Unsec. Notes at Ba1 GERDAU SA: Moody's Revises Rating on $600 Million Bonds to Ba1 GINX INC: Voluntary Chapter 11 Case Summary GMAC COMMERCIAL: Fitch Keeps CC/DR3 Rating on $25.3MM Class L Loan GOODY'S FAMILY: Court Approves Amended Disclosure Statement GRASSO PROPERTIES: Case Summary & 3 Largest Unsecured Creditors GREGORY PERKINS: Case Summary & 20 Largest Unsecured Creditors GREY WOLF: S&P Keeps 'BB-' on Watch Positive on Merger Pact GSC ABS: Fitch Downgrades 9 Classes of Notes, Removes from RWN HEALTHMARKETS INC: S&P Affirms 'BB' Rating; Outlook Negative HECTOR JIMENEZ: Case Summary & 6 Largest Unsecured Creditors HINES HORTICULTURE: Organizational Meeting Set for September 2 HINES HORTICULTURE: Gets Initial OK to Use BofA's $53MM DIP Loan HOLLINGER INC: Toronto Stock Exchange Delists Common Shares HRA MEDICAL: Case Summary & 20 Largest Unsecured Creditors IDLEAIRE TECHNOLOGIES: New Owners Have Resources to Bring Success INDYMAC BANCORP: Proofs of Claim Due October 14 INNOVATIVE CARD: NASDAQ to Delist Shares from Non-Compliance INTERMET CORP: Hearing on Cash Collateral Motion Set Sept. 3 INTERMET CORP: U.S. Trustee Forms Five-Member Creditors' Panel IXI MOBILE: June 30 Balance Sheet Upside-Down by $11,352,000 JEFFERSON COUNTY: Replaces Advisors, Inches Closer to Bankruptcy JOHN ECKHARDT: Voluntary Chapter 11 Case Summary JP MORGAN: Fitch Affirms Ratings on 33 2006-LDP9 Mortgage Certs. KANDY LLC: Voluntary Chapter 11 Case Summary KINCAID TECH: Case Summary & 20 Largest Unsecured Creditors KING PHARMA: S&P Says BB Rtg Unchanged on $1.4BB Bid for Alpharma KING PHARMA: Proposed Buyout Prompts Moody's to Confirm Ratings LEHMAN BROTHERS: Shares Up 16% on Likely Korea Bank Buyout LEXICON UNITED: June 30 Balance Sheet Upside-Down by $623,504 LINENS N THINGS: Seeks Approval of $20MM Severance Plan LINENS N THINGS: Trustee Objects to Houlihan as Financial Advisor LINENS N THINGS: Committee Wants Traxi as Financial Advisor LINENS N THINGS: Wants Ernst & Young's Scope of Services Expanded LIN TELEVISION: Moody's Holds Low-B Ratings on 6.5% Sr. Sub. Notes LONE OAK: Voluntary Chapter 11 Case Summary LUMINENT MORTGAGE: Receives Demand Letter to Pay $41.2MM Notes MAGNA ENTERTAINMENT: Amends Financing Agreement with MID Lenders MERRILL LYNCH: Fitch Assigns DR Rating to 2006-C1 Certificates MGP AUBURN: Voluntary Chapter 11 Case Summary MINEOLA WATER: Case Summary & 20 Largest Unsecured Creditors ML-CFC COMMERCIAL: Fitch Confirms Ratings for 25 Mortgage Certs. ML CLO: Moody's Junk $26.5 Mil. Class C Senior Secured Notes MOHAMMED JAMEELUDDIN: Voluntary Chapter 11 Case Summary MONTOYA MEXICAN: Voluntary Chapter 11 Case Summary MORGAN STANLEY: Fitch Affirms BB- Rating for $7.7MM Class L Certs. MORGAN STANLEY: Fitch Affirms B- Rating on $15.9MM Class L Certs. MORGAN STANLEY: Fitch Affirms C/DR6 Rating on $851 Class N Certs. MORGAN STANLEY: Moody's Cuts Rating on $3 Mil. Class Notes to Ba2 MPM TECHNOLOGIES: June 30 Balance Sheet Upside-Down by $11.3MM MRS FIELDS: Moody's Junks $195 Mil. Senior Secured Notes MTR GAMING: Likely Covenant Breach Cues Moody's to Confirm Ratings MYRA SEAMAN: Voluntary Chapter 11 Case Summary NATURALLY ADVANCED: Dale Matheson Raises Going Concern Doubt NEENAH FOUNDRY: Moody's Junks $225 Million Senior Secured Notes NETWOLVES CORP: Plan Confirmation Hearing to Continue August 29 NEXCEN BRANDS: Completes Restructuring of Bank Credit Facility NORTHWEST AIRLINES: To Utilize Delta Global Services PENN OCTANE: Posts $1,436,000 Net Loss in 2008 Second Quarter PERFORMANCE TRANS: Files Amended Schedule of Postpetition Debts PHILIP STEINBERG: Voluntary Chapter 11 Case Summary PLASTECH ENGINEERED: Can Employ Groom Law as Benefits Counsel PLASTECH ENGINEERED: Leamington Workers' Severance Pay Slashed 75% PLASTECH ENGINEERED: Taps James Carroll as Liquidation Officer POSTAL LOGISTICS: Case Summary & 20 Largest Unsecured Creditors PRIVATE RESIDENTIAL: Moody's Rates $62.2MM Class D Notes at Ba3 PRODUCTION SYSTEMS: Case Summary & 20 Largest Unsecured Creditors PROTOMAC GROUP: Involuntary Chapter 11 Case Summary QUAPAW ASSOCIATES: Case Summary & 9 Largest Unsecured Creditors RELIABLE MEDICAL: Case Summary & 20 Largest Unsecured Creditors ROTHMANS INC: June 30 Balance Sheet Upside-Down by C$213 Million ROUGE INDUSTRIES: Panel Wants Deloitte FAS as Financial Advisor S & A RESTAURANT: Court Approves Rosen Systems as Auctioneer S & A RESTAURANT: Kane Russell is Ch. 7 Trustee's Lead Counsel SEMGROUP LP: Bominflot Insists Ownership of Fuel Oil SEMGROUP LP: Reserves $1,100,000 for 230 Laid-Off Employees SEMGROUP LP: Samson Asserts $39,740,100 in Unpaid Oil and Gas SEMGROUP LP: $2MM Eaglwing Funds Not Part of Estate, Vess Oil Says SIMON WORLDWIDE: June 30 Balance Sheet Upside-Down by $15,506,000 SKYBUS AIRLINES: Zenith Aviation To Liquidate Covered Assets SOLUTIA INC: Sells Shares to Repay $400,000,000 Bridge Credit SOLUTIA INC: Hearing on DuPont Settlement Deal Set for Sept. 11 SOLUTIA INC: Resolving Last Few Bankruptcy Claims, Counsel Says STANDARD PACIFIC: Stockholders Favor Conversion of $381MM Stock SYNTAX-BRILLIAN: Court Approves Appointment of Chapter 11 Examiner TRANSMERIDIAN EXPLORATION: Exchange Offer Deadline Moved to Sept. UAL CORP: Wants Prelim Injunction Declared Against ALPA, et al. UAL CORP: High Fuel Prices Prompt Closure of Airport Lounges UNIVERSAL ENERGY: June 30 Balance Sheet Upside-Down by $4,482,090 US ENERGY: Files Joint Chapter 11 Reorganization Plan VERMEER FUNDING: Fitch Ratings Junks $15.7 Million Class C Notes WELEND ASSOCIATED: Case Summary & 20 Largest Unsecured Creditors WENTWORTH ENERGY: Earns $5,574,208 in 2008 Second Quarter WERNER LADDER: Court Extends Deadline to Remove Actions to Oct. 30 WERNER LADDER: Complaint Improperly Filed in N.Y., says Investcorp ZIM CORP: Net Loss Narrows to $35,411 in Quarter Ended June 30 * S&P Downgrades 14 Ratings on Six 2004/2005 U.S. RMBS Deals * S&P Cuts 69 Ratings on Ten 2006, 2007 US Alt-A RMBS Deals * S&P Says July 2008 U.S. Alt-A RMBS Delinquency on the Rise * S&P Says July 2008 Closed-End 2nd-Lien RMBS Delinquencies Up * S&P Says July 2008 HELOC RMBS Delinquency Continues to Rise * S&P Says July 2008 Prime Jumbo RMBS Delinquency on the Rise * S&P Says July 2008 Subprime RMBS Delinquencies Continue to Rise * S&P Says U.S. Consumer ABS Market Tested By Struggling Economy * Spreads and CDX Widen As Defaults Continue, S&P Article Says * S&P Sees More Downgrades for U.S. Financial Institutions * S&P Says 1/4 of High-Yield Issues Trading at Distressed Levels * US Not-For-Profit Health Care Sector's Credit Quality Slipping * S&P Takes Ratings Action on Various U.S. Synthetic CDO Deals * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ********* AFFINITY TECHNOLOGY: Downplays Bankruptcy Filing, The Deal Reports ------------------------------------------------------------------ Ben Fidler of The Deal, LLC, observes that bankrupt Affinity Technology Group, Inc., did not post news of its Chapter 11 bankruptcy filing until the fourth paragraph in its press release. Mr. Fidler adds that after three paragraphs talking about the Debtor's second quarter net losses, the next paragraph of the statement begins with "In other news, Affinity announced that it has filed [for Chapter 11]." Despite the headline, which mentioned that the Debtor filed for Chapter 11 in South Carolina, a reader with a short attention span skimming the release might have simply thought Affinity suffered a rough second quarter, claims Mr. Fidler. Mr. Fidler recalls that a cardinal rule taught in Journalism 101 is to not bury the lead sentence. Mr. Fidler clarifies that this rule means that the most important part of a news story should not be placed in the middle or on the bottom of its body. The public relations world has a very different take, especially when it comes to negative news, Mr. Fidler points out. Mr. Fidler comments that the Debtor's tactic, while not revolutionary, is one of the most novel approaches he's encountered. Oftentimes when a company files for bankruptcy, a press release will come out with a headline that won't say that the company simply filed for Chapter 11, Mr. Fidler informs. It will typically say that the company will restructure debt by filing for Chapter 11, or that it has filed to facilitate a sale, seemingly as a way to soften the blow, according to Mr. Fidler. Through its subsidiary, decisioning.com, Inc., Columbia, South Carolina-based Affinity Technology Group, Inc. (OTCBB:AFFI) -- http://www.affi.net/-- owns a portfolio of patents that covers the automated processing and establishment of loans, financial accounts and credit accounts through an applicant-directed remote interface, such as a personal computer or terminal touch screen. Affinity's patent portfolio includes U.S. Patent No. 5,870,721C1, No. 5,940,811, and No. 6,105,007. Affinity filed for Chapter 11 bankruptcy protection on August 19, 2008 (Bankr. D. S.C. Case No.: 08-04979). G. William McCarthy, Jr., Esq., at McCarthy Law Firm, LLC, represents the Debtor in its restructuring efforts. When it filed for bankruptcy, it listed $9,455 in total assets and $4,975,278 in total debts. AGCO CORP: S&P Holds 'BB+' on Better Operating Performance ---------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on AGCO Corp. to positive from stable. "At the same time, we affirmed our 'BB+' corporate credit rating on the company. Duluth, Ga.-based AGCO is the world's third- largest agricultural equipment manufacturer and has sales approaching $8 billion," S&P says. "The outlook revision reflects AGCO's improved operating performance, favorable prospects for the agricultural equipment industry, and the company's less aggressive financial risk profile," said Standard & Poor's credit analyst Dan Picciotto. The company has improved its profitability and has reduced debt over the past several years. The ratings on AGCO reflect the company's satisfactory competitive business position and aggressive financial profile. The latter factor made AGCO vulnerable during the latest prolonged cyclical downturn, but amid the market recovery of the past several years, AGCO's credit measures have improved significantly, and its financial policy appears to have become less aggressive. Although agricultural equipment markets have traditionally been quite cyclical, geographic diversity and currently favorable industry trends provide support to AGCO's business. AGCO's operational performance should continue to improve as the company focuses on internal improvements and organic growth rather than acquisitions to generate growth. AGCO's revenues increased 27% year over year, net of currency translation, in the first half of 2008, reflecting good overall conditions in global agricultural equipment markets. In AGCO's largest market, Europe (which accounts for nearly two-thirds of total revenues), growth was 23%, and in South America, which accounts for 17% of AGCO revenue, growth was slightly stronger, at 27%, as strong demand in Brazil (where AGCO has very good market share) continues. Farm incomes are improving in Brazil partly because of high soybean prices. AGCO's presence in North America is moderate. The region contributed about 22% of consolidated sales in 2007, while the market accounts for about half of total worldwide demand. AGCO's participation in the U.S. market is challenged by the company's reliance on offshore Brazilian and European facilities for manufacturing, which, because of the weak U.S. dollar, has reduced competitiveness. Competition from leader Deere & Co. in the U.S. is intense. "AGCO has made some progress in reducing dealer inventories and improving working capital as a percentage of sales. Increased unit production and recent improvements in product and geographical mixes have helped improve adjusted operating margin before depreciation and amortization to nearly 9%.Although AGCO's credit measures are currently above our expectations for the rating, they vary considerably over the course of the operating cycle. Free cash flow has recently been strong, in tandem with improved operating performance," S&P says. "The outlook is positive. We could raise the ratings if AGCO demonstrates the ability to generate acceptable credit measures for a higher rating; for example, if it maintains FFO to debt above 40%, given strong cyclical market conditions. We could revise the outlook back to stable if the company's credit measures weaken meaningfully because of shareholder-friendly activity or aggressive growth plans," S&P says. ALPHA FACTORS: Case Summary & Two Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Alpha Factors 5504 Monterey Road San Jose, CA 95138 Bankruptcy Case No.: 08-54475 Chapter 11 Petition Date: August 15, 2008 Court: Northern District of California (San Jose) Judge: Roger L. Efremsky Debtor's Counsels: Heinz Binder, Esq. (heinz@bindermalter.com) Law Offices of Binder and Malter 2775 Park Avenue Santa Clara, CA 95050 Tel: (408) 295-1700 Julie H. Rome-Banks, Esq. (julie@bindermalter.com) Law Offices of Binder and Malter 2775 Park Avenue Santa Clara, CA 95050 Tel: (408) 295-1700 Roya Shakoori, Esq. (roya@bindermalter.com) Binder and Malter 2775 Park Avenue Santa Clara, CA 95050 Tel: 408-295-1700 Total Assets: $1,216,350 Total Debts: $4,896,654 A copy of the Debtor's petition is available for free at: http://bankrupt.com/misc/canb08-54475.pdf A & M DEVELOPMENT: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: A and M Development, Inc. 10556 Combie Road, Suite 6386 Auburn, CA 95602 Bankruptcy Case No.: 08-31696 Chapter 11 Petition Date: August 20, 2008 Court: Eastern District of California (Sacramento) Judge: Thomas Holman Debtor's Counsel: W. Steven Shumway, Esq. 2140 Professional Drive, Suite 250 Roseville, CA 95661 Tel: (916) 789-8821 Total Assets: $3,790,300 Total Debts: $2,297,000 The Debtor does not have any unsecured creditors who are not insiders. AMERICAN HOME: Maturity of WL Ross Loan Facility Moved to November ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware approved, on a final basis, a second amendment to the Debtor-in-Possession Loan and Security Agreement, dated August 6, 2007, between certain American Home Mortgage Investment Corp. debtors and WLR Recovery Fund III, L.P., as administrative agent, under the $50,000,000 DIP Facility. Judge Christopher Sontchi has also authorized the Debtor-Borrowers to use the Beltway Proceeds, and to pay an amendment fee of $525,000, which will have an administrative expense status pursuant to Section 503(b) of the Bankruptcy Code. A full-text copy of the Second DIP Facility Amendment is available for free at: http://ResearchArchives.com/t/s?315b The Borrowers asked the Court to authorize, on an interim basis: (a) an extension of the DIP Facility's maturity date through and including August 18, 2008. The current maturity date is August 6; (b) their retention of the proceeds from the sale of certain non-performing loans to Beltway Capital, LLC, and use of an aggregate amount of the proceeds not exceeding $9,000,000 for working capital and other corporate purposes; and (c) the payment to each Lender of a $225,000 amendment fee. The Borrowers sought the Court's final authority to: (a) increase the amount of funds available to the Borrowers under the DIP Facility up to a maximum of $30,000,000. The Second Amendment provides that the total available amount is reduced from $35,000,000 to $30,000,000. However, the availability is also amended to eliminate the reduction in availability by a lender purchased mortgage insurance reserve amount for $12,000,000. As a result, the Second Amendment provides the Debtors with an additional availability of $7,000,000; (b) amend the definition of "Applicable Margin", effective as of August 6, 2008, to mean 12% per annum; (c) extend the Maturity Date through and including November 5, 2008; (d) allow the Borrowers to retain the remaining Beltway Proceeds for up to $10,577,113, and use of the proceeds for working capital and other corporate purposes; and (e) allow them to pay each Lender an amendment fee aggregating $525,000, which together with the $225,000 amount paid pursuant to the Interim Order, represents a total amount of the amendment fee of $750,000. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as its counsel. The Creditors Committee also retained Hennigan, Bennett & Dorman LLP, as special conflicts counsel, nunc pro tunc to March 3, 2008. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. (American Home Bankruptcy News; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Inks Deal with BofA on Collateral-Related Matters ---------------------------------------------------------------- After several months of extensive negotiations, American Home Mortgage Investment Corp. and its debtor-affiliates, the Official Committee of Unsecured Creditors, and Bank of America, N.A., as administrative agent for certain prepetition secured parties, have achieved a consensual resolution of all known outstanding issues among them through a stipulation signed by Judge Christopher Sontchi of the U.S. Bankruptcy Court for the District of Delaware. BofA and the Debtors had several clashes over, among other things, disposition of the Prepetition Secured Parties' collateral. BofA wanted the disposal of 3,400 mortgage loans -- which are part of the collateral -- that had outstanding amounts aggregating $584,000,000. BofA volunteered to market and sell the rights to those loans by itself, asserting that their value has "declined precipitously" due to the Debtors' refusal to promptly take steps to sell the loans. The salient terms of the Stipulation are: (a) The Debtors and the Creditors Committee will confirm they have no claims under certain loan documents against the Prepetition Secured Parties, or with respect to the Collateral other than those being resolved pursuant to the Stipulation. They will reaffirm the prior releases, and agree not to assert further claims that were already released pursuant to the Prior Releases or the Stipulation; (b) BofA will receive complete dominion and control over, and discretion, with respect to the Mortgage Loans and all servicing rights related those loans; (c) If the Mortgage Loan transfer date does not occur within 30 days after the effective date of the Stipulation, the Debtors will be entitled to reimbursement from the Collateral for servicing advances and other required amounts; (d) The Debtors will release all rights and claims against the Prepetition Secured Parties with respect to a certain dispute regarding payments made by American Home Mortgage Corp. to Lender Purchased Mortgage Insurance. Pursuant the Parties' letter agreement, BofA will retain approximately $5,400,000 from funds that it currently holds; (e) The Prepetition Secured Parties assign the Debtors the lenders' rights, liens and claims with respect to funds amounting to $6,898,000 currently in the Designated Bank Accounts; (f) The Debtors will release all rights and claims against the Prepetition Secured Parties with respect to, among other things, amounts paid to obligations owing under the Loan Documents; (g) A new sharing agreement will replace the affected terms of a certain agreement, which was executed by the Creditors Committee and BofA regarding the sharing of Collateral and other cash receipts, to permit the Debtors to receive 50% of the proceeds of the Collateral after a "Benchmark Prepetition Claim" has been paid in full. The Parties have agreed that the outstanding amount of the Benchmark Claim as of July 2, 2008, is $468,128,691; and (h) The Debtors will provide BofA with a list of, and certain documents or information with respect to, certain BofA state bond loans and Calyon state bond loans. The Debtors believe that the Stipulation gives BofA the ability to control the Mortgage Loan sale process, and supports the Debtors' goal of maximizing value for the estates. A full-text copy of the Stipulation can be obtained for free at: http://ResearchArchives.com/t/s?315a * * * The Debtors and BofA sought and obtained the Court's permission to redact, and file under seal, certain confidential information from the Stipulation. The Debtors asserted that the Confidential Material could (i) affect the Debtors, their estates and creditors with respect to currently pending and potential litigation with certain third parties in their bankruptcy cases, and (ii) impact, among other things, potential litigation against BofA. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as its counsel. The Creditors Committee also retained Hennigan, Bennett & Dorman LLP, as special conflicts counsel, nunc pro tunc to March 3, 2008. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. (American Home Bankruptcy News; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Exclusive Plan Filing Period Extended to Sept. 2 --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware granted a request by American Home Mortgage Investment Corp. and its debtor- affiliates to extend (a) their exclusive period to file a Chapter 11 plan through September 2, 2008; and (b) their exclusive period to solicit and obtain acceptances for that Plan through October 29. Bank of America, N.A., administrative agent for the prepetition secured parties argued that the length of the Debtors' requested extension -- extending the exclusive plan filing period to Sept. 2 and the exclusive solicitation period to Oct. 29 -- was unwarranted. The Official Committee of Unsecured Creditors had also raised informal issues regarding the Debtors' request for extension. Consequently, on July 17, 2008, Judge Christopher Sontchi granted a narrower extension, with the plan filing deadline moved only to August 19, and the solicitation deadline to October 17. Judge Sontchi, however, entered a second order, which approved the time-frame proposed by the Debtors, after the Debtors filed their Chapter 11 plan of liquidation on August 15. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as its counsel. The Creditors Committee also retained Hennigan, Bennett & Dorman LLP, as special conflicts counsel, nunc pro tunc to March 3, 2008. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. (American Home Bankruptcy News; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: AHM Servicing Amends $17MM Payment Request --------------------------------------------------------- American Home Mortgage Servicing, Inc., formerly known as AH Mortgage Acquisition Co., Inc., and purchaser of the Debtors' loan servicing business, amended its request to ask Judge Christopher Sontchi of the U.S. Bankruptcy Court for the District of Delaware to (i) allow its administrative expense claim aggregating $17,238,989, and (ii) direct American Home Mortgage Investment Corp., American Home Mortgage Corp. and AHM SV, Inc., as sellers, to pay the Claim as soon as reasonably practicable. AHM Servicing previously listed the amount of its claim at more than $12,000,000 for certain damages arising from the Sellers' breaches of the Servicing Business asset purchase agreement. Victoria W. Counihan, Esq., at Greenberg Traurig, LLP, in Wilmington, Delaware, tells Judge Sontchi that ongoing review of AHM Servicing's books and records identified additional information affecting certain of its claims. She discloses that the Claim Amount includes: -- $4,592,887 in lender paid mortgage insurance premiums and prepayment penalties; -- $31,200 in respect of estimated costs to deliver certain business records to AHM Servicing; -- $1,496,586 in overpayment of advances; -- $2,976,298 in collections and payments related to paid in full loans that AHM SV failed to remit to third parties; -- $2,040,718 in liquidation proceeds; -- $738,384 in repurchases; -- $834,648 in guaranty fees; -- $2,423,759 in payment of clearing account deficiency; and -- $749,406 in expenses in connection with the foreclosure of certain loans that Wells Fargo Bank, N.A., the master servicer for the loans, did not agree AHM SV could pass onto the investors pursuant to the applicable servicing agreements. AHM Servicing expressly reserves the right to further amend the Claim to include additional claims, or to file an additional request for allowance and payment of those claims. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as its counsel. The Creditors Committee also retained Hennigan, Bennett & Dorman LLP, as special conflicts counsel, nunc pro tunc to March 3, 2008. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. (American Home Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Indymac Bank Moves $30.9MM Claim to Federal Deposit ------------------------------------------------------------------ IndyMac Bank, F.S.B., notifies the Court that it transferred Claim No. 8677 asserted against the Debtors for $30,933,097 to Federal Deposit Insurance Corporation, conservator of IndyMac Federal Bank, F.S.B., on August 13, 2008. FDIC is located at 1601 Bryan Street, in Dallas, Texas, while IndyMac can be found at 3465 Foothill Boulevard, in Pasadena, California. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as its counsel. The Creditors Committee also retained Hennigan, Bennett & Dorman LLP, as special conflicts counsel, nunc pro tunc to March 3, 2008. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. (American Home Bankruptcy News; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN IRONHORSE: To Auction Excess Parts on September 12 ----------------------------------------------------------- Liquid Asset Partners LLC will hold an auction on Sept. 12, 2008, at 9:00 a.m., at 4600 Blue Mound Road in Forth Worth in Texas, to sell custom motorcycle parts worth $10 million owned by American Ironhorse Motorcycle Company Inc. The company says the excess motorcycle parts are not needed for new production. "Our office sales staff is ready to help with all orders," says Liquid Asset Partners CEO Bill Melvin. "Dealers or bulk buyers willing to make a minimum purchase of $2000 can purchase through our office sales staff starting today and they can see the full inventory on our website!" says Melvin. "We've got everything needed to make a chopper: frames, wheels, gas tanks, fenders, starters, six speed transmissions, engine parts, tires, plus nuts, bolts, and hardware. We have to sell it all, regardless of cost or loss!" Liquid Asset is giving the industry from Sept. 12 to 14, 2008, to place orders before opening the sale to the public. "We have done this before and it was very effective; hundreds of buyers purchased the basics needed to create their own bike for pennies on the dollar," Melvin says. "Swap meet dealers and backyard garage mechanics will have a real treasure trove to pick from. Everything must go, so come on in and make offers." About American IronHorse Based in Fort Worth, Texas, American IronHorse Motorcycle Company, Inc., designs, manufactures, and markets custom v-twin motorcycles. AIH markets its motorcycles through a national network of more than 100 dealers and is actively pursuing international sales in Canada and the United Kingdom. On March 25, 2008, American IronHorse consented to the move by a group of creditors to place the company under chapter 11 bankruptcy protection before the United States Bankruptcy Court for the Northern District of Texas, Fort Worth Division. On the same day, the Bankruptcy Court entered an order for relief under Chapter 11 of the U.S. Bankruptcy Code. Three creditors -- AG Nichlos, Jr., William E. Buford and Jim Graham -- filed the involuntary petition against the company on Feb. 29, 2008. The petitioners are owed $120,000 by the company. The petitioner's counsel is Troy D. Philips, Esq., at Glast, Phillips & Murray, PC, in Dallas, Texas. Vincent P. Slusher, Esq., at Beirne Maynard & Parsons, LLP, represents the Debtor. AMORTIZING RESIDENTIAL: Moody's Junks Five Class Certificates ------------------------------------------------------------- Moody's downgraded 21 subordinate tranches from eight mortgage backed securitizations issued by Amortizing Residential Collateral Trust in 2001 and 2002. The pools are backed by subprime first lien adjustable-rate and fixed-rate loans. The complete rating actions are: Issuer: Amortizing Residential Collateral Trust Downgrades: -- Series 2001-BC6; Class M-1, downgraded to Ba2 from Baa2 -- Series 2001-BC6; Class M-2, downgraded to B3 from Ba1 -- Series 2002-BC1; Class M-1, downgraded to Baa1 from Aa2 -- Series 2002-BC1; Class M-2, downgraded to B1 from Baa1 -- Series 2002-BC1; Class B, downgraded to B2 from Baa3 -- Series 2002-BC2; Class M-1, downgraded to Baa3 from A3 -- Series 2002-BC3; Class M-1, downgraded to A2 from Aa2 -- Series 2002-BC3; Class M-2, downgraded to Ba1 from A3 -- Series 2002-BC3; Class B-1, downgraded to B3 from Baa3 -- Series 2002-BC6; Class M-1, downgraded to A1 from Aa2 -- Series 2002-BC7; Class B-1, downgraded to C from Ba2 -- Series 2002-BC7; Class B-2, downgraded to C from Ba3 -- Series 2002-BC7; Class B-3, downgraded to C from Ba3 -- Series 2002-BC8; Class M-1, downgraded to A1 from Aa2 -- Series 2002-BC8; Class M-2, downgraded to Baa2 from A2 -- Series 2002-BC8; Class M-3, downgraded to Ba2 from Baa2 -- Series 2002-BC8; Class M-4, downgraded to B3 from Ba1 -- Series 2002-BC9; Class M-1, downgraded to A1 from Aa2 -- Series 2002-BC9; Class M-2, downgraded to Ba2 from Baa1 -- Series 2002-BC9; Class M-3, downgraded to Ca from Ba2 -- Series 2002-BC9; Class M-4, downgraded to C from Caa2 The downgrade actions are based on the fact that the bonds' current credit enhancement levels, including excess spread where applicable, are low compared to the current projected loss numbers for the current rating levels. APARTMENT REALTY: Case Summary & Two Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Apartment Realty, LLC 197 North Merton Suite 1 Memphis, TN 38112 Bankruptcy Case No.: 08-27799 Type of Business: The Debtor has a single asset real estate as defined in Section 101(51B) of the U.S. Bankruptcy Code. Chapter 11 Petition Date: August 5, 2008 Court: Western District of Tennessee (Memphis) Judge: David S. Kennedy Debtor's Counsel: John E. Dunlap, Esq. (jdunlap00@gmail.com) 1433 Poplar Avenue Memphis, TN 38104 Tel: (901) 276-3334 Total Assets: $812,800 Total Debts: $1,346,000 A copy of Debtor's petition is available for free at: http://bankrupt.com/misc/tnwb08-27799.pdf ASARCO LLC: Americas Mining Files Reorganization Plan ----------------------------------------------------- Americas Mining Corporation, an affiliate of Grupo Mexico SAB de CV, submitted a reorganization plan to retain its equity interest in its wholly owned indirect subsidiary, ASARCO LLC, by offering full payment to ASARCO's creditors in connection with ASARCO's Chapter 11 case. The plan, which was submitted to the United States Bankruptcy Bankruptcy Court for the Southern District of Texas in connection with the full payment plan offered to ASARCO's independent Board of Directors at a court hearing in June, details the terms of its full payment plan offering creditors a 100% recovery on their allowed claims. Under the proposal, AMC would provide up to $2.7 billion in cash as well as a $440 million guarantee to assure payment of all allowed creditor claims, including payment of liabilities relating to asbestos and environmental claims. This contribution, together with the $1 billion in cash on hand at ASARCO and including the estimated value of ASARCO LLC, which would remain liable to creditors, provides a total consideration of approximately $6.74 billion, to be contrasted with approximately $2.6 billion being made available under ASARCO's competing plan, which is being sponsored by Sterlite. AMC's plan is premised on the estimation of the approximate allowed amount of the claims against ASARCO. AMC believes that its plan provides superior value and most certainty to ASARCO's creditors since it remains the only proposal offering creditors full value for their allowed claims. AMC has been seeking to reclaim full equity ownership of its indirect wholly owned subsidiary ASARCO LLC since it filed for Chapter 11 protection in August 2005. Since that time, ASARCO has instead pursued a process to sell its assets over AMC's objection and most recently filed a plan with the Bankruptcy Court pursuant to which ASARCO's assets would be sold to a competing bidder, Sterlite. AMC asked the Court to be allowed to file its own plan of reorganization and was granted permission to file such a competing reorganization plan. AMC believes ASARCO's plan, sponsored by Sterlite, should be rejected on the basis that it offers creditors far less value and is unreasonable for a number of reasons, including the payment of asbestos claims and environmental claims for more than 100 percent of the allowed amount of those claims. 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. ASCENDIA BRANDS: U.S. Trustee Forms Five-Member Creditors Panel --------------------------------------------------------------- Roberta A. DeAngelis, the U.S. Trustee for Region 3, appointed five creditors to serve on an Official Committee of Unsecured Creditors of Ascendia Brands Inc. and its debtor-affiliates. The Creditors Committee members are: 1. Coty, Inc. Attn: Steven Danatos 2 Park Avenue New York, New York 10016 Tel: (212) 479-4338 Fax: (212) 479-4328 2. Zotos International, Inc. Attn: Carl R. Stella 100 Tokeneke Road Darien, Ct. 06820 Tel: (203) 656-7825 Fax: (203) 656-7962 3. Rand Display, Inc. Attn: David Kauffman 3 Ethel Road, Ste. 310 Edison, N.J. 08817 Tel: (732) 787-2525 Fax: (732) 287-2511 4. Cognis Corporation Attn: John Schold 5051 Estecreek Drive Cincinnati, Ohio, 45232, Tel: (513) 482-3157 Fax: (513) 482-5574 5. DeWolf Chemical Company, Inc. Attn: Henry DeWolf III 400 Massasoit Avenue, East Providence, R.I. 02914 Tel: (401) 434-3515 Fax: (401) 434-5306 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtor is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. About Ascendia Brands Headquartered in Hamilton, New Jersey, Ascendia Brands, Inc. -- http://www.ascendiabrands.com/-- makes and sells branded consumer products primarily in North America and more than 80 countries as well. The company's customers include Walmart, Walgreens, Kmart, Meijer Stores, Target, and CVS. The company and six of its affiliates filed for Chapter 11 protection on Aug. 5, 2008 (Bankr. D. Del. Lead Case No.08-11787). M. Blake Cleary, Esq., at Young, Conaway, Stargatt & Taylor, represents the Debtors in their restructuring efforts. The Debtors selected Epiq Bankruptcy Solutions LLC as their claims agent. When the Debtors file for protection against their creditors, they listed total assets of $194,800,000 and total total debts of $279,000,000. ATLANTIC WINE: Posts $294,690 Net Loss in 1st Qtr. Ended June 30 ---------------------------------------------------------------- Atlantic Wine Agencies Inc. reported a net loss of $294,690 on net sales of $72,206 for the first quarter ended June 30, 2008, compared with a net loss of $165,822 on net sales of $46,020 in the same period ended June 30, 2007. Net operating loss increased $80,481 to $244,291 in the three- month period ended June 30, 2008, as compared to $163,810 for the three-month period ended June 30, 2007. This increase in net operating loss is primarily attributable to an increase in selling, general and administrative expenses to $266,950 for the three-month period ended June 30, 2008, from $157,328 for the three-month period ended June 30, 2007. Balance Sheet At June 30, 2008, the company's consolidated balance sheet showed $2,123,688 in total assets, $1,920,276 in total liabilities, and $203,412 in total stockholders' equity. The company's consolidated balance sheet also showed strained liquidity with $394,720 in total current assets available to pay $1,920,276 in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2008, are available for free at http://researcharchives.com/t/s?3151 Going Concern Doubt As reported in the Troubled Company Reporter on July 25, 2008, Meyler & Company, LLC, in Middletown, N.J., expressed substantial doubt about Atlantic Wine Agencies Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended March 31, 2008. The auditing firm disclosed that the company has incurred cumulative losses of $8,511,289 since inception, has negative working capital of $2,013,073, and has existing uncertain conditions the company faces relative to its ability to obtain capital and operate successfully. At June 30, 2008, the company has an accumulated deficit of $8,805,979 and a negative working capital of $1,525,556. About Atlantic Wine Based in Somerset West, South Africa, Atlantic Wine Agencies Inc. (OTC BB: AWNA.OB) -- http://www.atlanticwineagencies.com/-- was incorporated in the State of Florida as New England Acquisitions, Inc., on April 8, 2001. On Jan. 13, 2004, the company changed its name to Atlantic Wine Agencies. The company, through its two wholly owned subsidiaries, Mount Rozier Estates (Pty) Limited and Mount Rozier Properties (Pty) Limited, owns a vineyard in the Stellenbosch region of Western Cape, South Africa. The vineyard and surrounding properties consist of 80.9 hectares of arable land for viticultural as well as residential and commercial purposes. ATLAS LANDWORKS: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Atlas Landworks, Corp. fka Atlas Landworks, LLC 2130 Basin Street S.W., Ste. D Ephrata, WA 98823 Bankruptcy Case No.: 08-03220 Type of Business: The Debtor is an excavation contractor. Chapter 11 Petition Date: August 12, 2008 Court: Eastern District of Washington (Spokane/Yakima) Judge: Frank L. Kurtz Debtor's Counsel: Erik S. Bakke, Sr., Esq. (erikb@jgdwlaw.com) Johnson, Gaukroger, Drewelow & Woolett 139 South Worthen P.O. Box 19 Wenatchee, WA 98807-0019 Tel: 509-663-0031 Fax: 509-663-6003 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1,000,000to $10,000,000 A copy of the Debtor's petition is available for free at: http://bankrupt.com/misc/waeb08-03220.pdf AXM PHARMA: Enable Capital and M. Levine Declare 5.3% Stake ----------------------------------------------------------- Enable Capital Management LLC and Mitchell S. Levine declare owning 1,185,202 shares of AXM Pharma Inc.'s common stock, representing 5.3% of AXM's outstanding shares. Based in Diamond Bar, California, AXM Pharma Inc. (Other OTC: AXMP.PK) -- http://www.axmpharma.com/-- is a pharmaceutical company engaged in the production, marketing and distribution of pharmaceutical products in China. The company produces, markets and distributes medicines in various dosages and forms in most areas of medicinal treatment, as well as herbal remedies, vitamins and adjunctive therapies. As of March 31, 2006, the company's consolidated balance sheet showed $10,641,129 in total assets and $10,763,844 in total liabilities, resulting in a $122,715 total stockholders' deficit. * * * As disclosed in the Troubled Company Reporter on April 14, 2008, while in the process of responding to comments from the Securities and Exchange Commission with respect to its 2005 financial statements, AXM Pharma Inc.'s audit committee determined that its annual financial statements for the fiscal year ended Dec. 31, 2004, and all subsequent annual and quarterly financial statements contain errors and omissions. As a result, the audit committee concluded that these financial statements are no longer reliable. BAUGHER CHEVROLET: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Baugher Chevrolet Buick, Inc. 2551 W. Main St. Waynesboro, VA 22980 Bankruptcy Case No.: 08-50862 Type of Business: The Debtor is a dealer for new and used cars, trucks and SUVs. The Debtor also provides auto financing, services, and parts. See: http://www.baugherautos.com/ Chapter 11 Petition Date: August 22, 2008 Court: Western District of Virginia (Harrisonburg) Judge: Ross W. Krumm Debtor's Counsel: A. Carter Magee, Jr., Esq. (cmagee@mfgs.com) Magee Foster Goldstein & Sayers P O BOX 404 Roanoke, VA 24003 Tel: (540) 343-9800 Total Assets: $2,931,782 Total Liabilities: $4,432,601 A copy of the Debtor's petition, which includes a list of its 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/vawb08-50862.pdf BANKUNITED FINANCIAL: Needs to Raise $400MM to Keep OTS Status -------------------------------------------------------------- Bloomberg News' David Mildenberg says BankUnited Financial Corp., Florida's largest bank, may lose its "well-capitalized" status under federal rules for financial strength unless it attracts at least $400 million of new capital. BankUnited said in a regulatory filing with the Securities and Exchange Commission that it has been advised by the OTS of certain concerns that BankUnited has agreed to address. Several of the measures addressing these concerns were already in progress at the time the Company and its subsidiary, BankUnited, FSB, entered into agreements with the OTS to address the concerns. At this time, some of the measures have been completed and others are in progress, the Company said. BankUnited said the measures include efforts to seek to raise at least $400 million of capital and to submit an alternative capital plan that accounts for an inability to raise the $400 million. BankUnited has also agreed to maintain capital ratios substantially in excess of the minimum required ratios to be deemed well-capitalized upon raising the requisite capital. Bloomberg notes that the company has posted more than $200 million in losses in the last three quarters because of record foreclosures. In addition, Bloomberg says BankUnited's stock has fallen 91% in the past 12 months, closing at $1.59 August 25 in Nasdaq Stock Market trading. Its market value stood at $56.7 million, Bloomberg says. Based on a recent notification, the Bank believes that, if it does not raise significant capital, the OTS will reclassify the Bank to adequately capitalized primarily due to the deterioration in the Bank's non-traditional mortgage loan portfolio, the concentration of risk associated with that portfolio, and resultant need for significant additional capital. The Company is continuing its efforts to raise capital. Management believes that the Bank will maintain its well-capitalized status if the Company's capital raising efforts are successful. There can be no guarantee that any of the measures already taken or in progress by BankUnited will be successful or satisfy the concerns of the OTS, and additional restrictions may be imposed on BankUnited's activities in the future which could have a material adverse effect on BankUnited's financial position and operations. Bloomberg also notes that regulators told BankUnited it must notify the OTS before adding directors or senior executives, paying dividends or signing contracts out of its normal course of business. The Bank's regulatory capital levels as of June 30, 2008, are: Tier 1 Leverage Capital Amount $1,079,132,000 Actual Ratio 7.6% Well-Capitalized Minimum Ratio 5.0% Adequately Capitalized Minimum Ratio 4.0% Tier 1 Risk-Based Capital Amount $1,075,138,000 Actual Ratio 12.6% Well-Capitalized Minimum Ratio 6.0% Adequately Capitalized Minimum Ratio 4.0% Total Risk-Based Capital Amount $1,183,043,000 Actual Ratio 13.9% Well-Capitalized Minimum Ratio 10.0% Adequately Capitalized Minimum Ratio 8.0% Effective June 30, 2008, for regulatory capital purposes, BankUnited contributed $80 million in additional capital to its bank unit. BankUnited Financial Corp. (NASDAQ: BKUNA) is a full-service financial institution. BankUnited's primary business currently consists of the operations of BankUnited FSB, its principal subsidiary. With more than 80 full-service branches located in Florida, BankUnited offers various retail and business deposit products, as well as a variety of value-added, fee-based banking services to retail customers and businesses in its market. The bank also offers residential, consumer and commercial loans. At June 30, 2008, BankUnited had assets of $14.1 billion and deposits of $7.6 billion. BELLISIO FOODS: Moody's Rates $160 Mi. Sr. Secured Notes at B1 -------------------------------------------------------------- Moody's Investors Service rated at B1 Bellisio Foods, Inc.'s proposed $30 million asset based revolving credit and its proposed $130 million senior secured first lien term loan, subject to review of final documentation. The new facilities, along with a new unrated $35 million second lien term loan, will refinance Bellisio's existing $30 million senior secured revolving credit and its senior secured term loan. Upon refinancing, the ratings on the existing facilities will be withdrawn. Moody's affirmed at B1 Bellisio's corporate family rating and probability of default rating. The rating outlook remains stable. Ratings assigned: -- New $30 million 5 year senior secured first lien asset based revolving credit at B1 (LGD3, 43%) -- New $130 million 5 year senior secured first lien term loan at B1 (LGD3, 43%) Ratings affirmed -- Corporate family rating at B1 -- Probability of default rating at B1 -- Ratings affirmed, and to be withdrawn upon refinancing; lgd% adjusted -- $30 million senior secured revolving credit due April 2009 at B1 (LGD4). LGD % to 51% from 57% -- $148 million senior secured term loan due April 2011 at B1 (LGD4); LGD% to 51% from 57% A first lien on substantially all assets, with the exception of the physical assets that secure IRBs, will be granted to the first lien lenders. The second lien lenders will have a second lien on the same security. In addition, borrowings under the $30 million revolving credit will be subject to a borrowing base. Subsidiaries will guarantee both the first and second lien facilities. The affirmation of Bellisio's ratings was based on Moody's expectation that Bellisio's solid market share, established brands, and ability to pass along costs in terms of higher prices will allow the company to generate free cash flow over the intermediate term. Moody's notes that the company's existing revolving credit expires in April 2009. Should this revolving credit not be replaced in a timely manner, as currently contemplated, Moody's may need to reevaluate Bellisio's liquidity and long-term ratings. Headquartered in Minneapolis, Minnesota, Bellisio Foods, Inc. is the third largest producer of frozen entrees in the United States. Bellisio's brand portfolio includes Michelina's, BUNdinos, The Family Table, Fusion Culinary and, most recently, Joy of Cooking. The company also produces private label goods. Sales for the twelve months ended April 20, 2008 were approximately $364 million. BELLISIO FOODS: S&P Assigns 'B+' on $160,000,000 Credit Facility ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed all of its ratings on Duluth, Minn.-based Bellisio Foods Inc., including the 'B' corporate credit rating. At the same time, Standard & Poor's assigned its 'B+' issue-level rating and '2' recovery rating to Bellisio's proposed $160 million senior secured credit facility, indicating the expectation for substantial (70%-90%) recovery in the event of a payment default. The issue-level ratings on the proposed facility are based on preliminary documentation and are subject to revision on receipt and review of final documentation. The outlook is negative. "The company will use the proceeds of the proposed transaction to refinance existing bank debt and to pay fees and expenses," noted Standard & Poor's credit analyst Christopher Johnson. "We will withdraw the ratings on the existing $30 million senior secured revolving credit facility and $175 million senior secured term loan on successful completion of the refinancing," he continued. Bellisio Foods will have about $189 million in debt at the close of the transaction. The rating on Bellisio reflects its narrow product portfolio, the highly competitive nature of the frozen dinner category, risks associated with its planned new product launches, and moderately high debt levels. The company's generally stable market shares and history of relatively stable and moderate cash flow generation partially mitigate these factors. "The outlook on Bellisio is negative. We are concerned that the company will face challenges to limit margin compression and generate meaningful sales growth for the remainder of fiscal 2008 given current economic conditions, which could further diminish covenant cushion by fiscal year end. We could lower the ratings if liquidity becomes constrained. This could occur if the company does not generate sales growth in the second half of fiscal 2008 and EBITDA margins decline to about 13%. However, if the company can improve the cushion under its proposed leverage covenants in the coming quarters, we could consider an outlook revision to stable," S&P says. BHM TECHNOLOGIES: Court Allows Solicitation of Votes on Plan ------------------------------------------------------------ The United States Bankruptcy Court for the Western District of Michigan has allowed BHM Technologies Holdings, Inc., and its debtor-subsidiaries to begin soliciting votes for, and support of, their Joint Plan of Reorganization, as amended on August 5, 2008, after having held that the disclosure statement, as twice revised, adequately explains the terms of the Plan. Various parties filed objections to the "adequacy" of the information in the Disclosure Statement but addressed the objections by filing amended versions to the Plan and the Disclosure Statement. Accordingly, the Court ruled that the Disclosure Statement contains adequate information within the meaning of Section 1125 of the Bankruptcy Code. The Debtors will send solicitation packages to holders of claims in Classes S-3 (Holders of Prepetition First Lien Debt), U-2 (ongoing trade creditors who will continue to provide goods to the Debtors), and U-4 (other general unsecured claimants), who will be required to submit their ballots by September 19. The Debtors expect acceptances of the Plan by voting claimants as (i) it has signed plan support agreements with majority of the First Lien Lenders, (ii) ongoing trade creditors are being paid in full, and (iii) other general unsecured will receive shares of the reorganized Debtors' stock if they vote in favor of the Plan. The Court ruled that holders of Class U-1 -Convenience Claims were unimpaired and would be deemed to accept the Plan. Holders of administrative claims and priority tax claims were also deemed to support the Plan as they would receive full recovery. BHM notes that creditors will fare better under the Plan than in a Chapter 7 liquidation scenario. In a liquidation scenario, BHM expects that First Lien Lenders would not recover the full amount of their secured claims, and all other creditors would recover nothing. The solicitation process will culminate in a confirmation hearing, scheduled for September 29, 2008, when the Debtors will show to the Court that the Plan satisfies the requisites to confirmation under Section 1129 of the Bankruptcy Code. The Court has approved this schedule: Deadline to Submit Ballots to Kurtzman Carson Consultants Sept. 19, 2008 Deadline to File Confirmation Objections Sept. 19, 2008 Deadline to Submit Replies to Confirmation Objections Sept. 25, 2008 Confirmation Hearing on Plan Sept. 29, 2008 The Debtors, on August 8, submitted to the Court an amended version to their August 5 Plan and Disclosure Statement, which provide (i) "Any avoidance actions accruing to the Debtors and/or Debtors in Possession under Chapter 5 of the Bankruptcy Code shall be deemed waived as of the Effective Date", and (ii) some minor changes to the prior versions. A black-lined copy of the Disclosure Statement that will be included in the solicitation package is available for free at: http://bankrupt.com/misc/BHM_Aug8DiscStatement.pdf A black-text copy of the Plan is available at: http://bankrupt.com/misc/BHM_Aug8Plan.pdf Headquartered in Ionia, Michigan, BHM Technologies Holdings Inc. -- http://www.browncorp.com/-- manufactures and sells automobile parts including air bags and electrical systems. It has manufacturing facilites in Mexico and operates under Brown Corp. BHM Technologies Holdings, Inc. and 14 affiliates filed separate voluntary petitions under Chapter 11 on May 19, 2008 (Bankr. W.D. Mich. Lead Case No. 08-04413). Hannah Mufson McCollum, Esq., Kay Standridge Kress, Esq., Robert S. Hertzberg, Esq., and Leon R. Barson, Esq. of Pepper Hamilton LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, it listed estimated assets and debts to be both between US$100 million and US$500 million. The Debtors have until Sept. 16, 2008, to exclusively file their bankruptcy plan. (BHM Technologies Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) BHM TECHNOLOGIES: Committee Wants Letter Included Among Plan Docs ----------------------------------------------------------------- The Official Committee of Unsecured Creditors in the bankruptcy cases of BHM Technologies Holdings, Inc., and its debtor- affiliates asks the United States of Western District of Michigan to approve a letter that detailed its position with respect to the Joint Plan of Reorganization of the BHM Technologies Debtors as containing adequate information under Section 1125 of the Bankruptcy Code. The Committee also asks the Court to direct the Debtors to include the Letter with the Solicitation Packages or, alternatively, authorize the Committee itself to send out the Letter to the general unsecured creditors. The Debtors have refused to include the Committee's letter in the solicitation package that they will send to voting creditors, because it contains qualifications and does not fully and unconditionally supports the Plan, as amended. Judith Greenstone Miller, Esq., at Jaffe Raitt Heuer & Weiss, P.C., in Southfield, Michigan, relates that because of the cost involved with sending out the Letter, as well as potential confusion that might arise in connection with the Committee sending out the Letter, the Committee prefers that the Letter be included with the Solicitation Package. Ms. Miller avers that the Committee Letter (i) contains accurate and adequate information, (ii) will assist creditors in determining how to vote on the Amended Plan, and (iii) facilitates the Committee's compliance with its fiduciary duties delineated in Section 1103(b) of the Bankruptcy Code. In light of the Debtors' objection to the Letter, the Committee is concerned that, absent seeking and obtaining the Court's approval, it and its members will risk the imposition of claims or liability from the Debtors. Ms. Miller states it is important that the Committee be authorized to send out the Letter because: (a) sending the Letter to the creditors is consistent with and complies with the fiduciary duty of a committee to "advise those represented by the committee of the committee's determinations as to any plan formulated" under Section 1103(c)(3). (b) in a complex, large case of this type, creditors look to the committee regarding the plan, information about the plan, and the committee's assessment of the plan in determining and assisting them on how to vote on the plan. (c) it is unusual that a committee would not send a letter to creditors regarding its advice on a plan and failure to send a letter could negatively impact creditors with respect to how to vote on the plan. (d) sending a letter where the Amended Plan is complex, detailed, and confusing to a creditor, assists a creditor in determining how to vote on the Amended Plan. The Committee Letter Dear Creditors: The Debtors filed voluntarily Chapter 11 petitions on May 19, 2008. The U.S. Trustee appointed an Official Committee of Unsecured Creditors on June 5, 2008. In accord with its prescribed duties, the Committee and its professionals have been consulting with the Debtors and their professionals regarding administration of the estates, the assets, liabilities and financial condition of the Debtors, the formulation of a plan, and other pertinent matters. The Debtors recently filed a Disclosure Statement and Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code. The Court held a hearing on the adequacy of the information contained in the Disclosure Statement on August 7, 2008, at which time, the Court approved the Disclosure Statement, the Plan, and the exhibits thereto to be sent to creditors entitled to vote on the Plan. Therefore, you will be receiving a copy of the Plan and Disclosure Statement, along with a ballot, seeking your vote with respect to the Plan. The Plan is unusual in that it creates two separate classes of unsecured creditors. One, class (Class U-2 under the Plan), unsecured trade creditors that are continuing to do business with the Debtors, will be entitled to receive 100% cash payment on their Allowed Claims by means of six equal monthly payments once their claims are allowed. Unsecured creditors who do not fall into the definition of Class U-2 are separately classified into Class U-4, along with a group of other unsecured creditors. This class is to receive shares of stock in the reorganized Debtors. Class U-4 is dominated by the deficiency claims of the first and second lien holders who have voluntarily agreed to reduce their secured claims by tens of millions of dollars and who opted to have their unsecured claims treated as Class U-4 claims. Class U-4 also contains claims of those subject to rejection of their contracts, a noteholder, claimants in litigation and others. There is meaningful legal authority supporting the Debtor's creation of the two classes of unsecured creditors. Thus, even if the Committee elected to challenge that treatment, the outcome of that legal challenge is uncertain. Specific reference and attention should be given to the Class U-2 and Class U-4 definitions in the Plan and the treatment afforded to members of those classes. The Plan is also unusual in that the Debtors had already negotiated its terms with the first and second lien lenders and the stockholders before the bankruptcy was filed, based on term sheets and plan support agreements. Moreover, the Plan proposes two types of plans: a "New Money" Plan and a "No New Money" Plan. As part of the "New Money" Plan, Atlantic Equity Partners, the stockholder of the Debtors, placed $12,500,000 in escrow to be used to fund the Plan as part of its plan support agreement. Absent a "material adverse change" or failure to confirm the "New Money" Plan, the funds placed in escrow cannot be released and returned to AEP. The Debtors presented the Plan as a foregone conclusion, in contrast to a more typical situation where the Plan is developed jointly with the Committee and other parties-in-interest. Therefore, the Committee had an uphill battle in negotiating changes to the Plan against the already unified front of these significant parties. According to the Debtors, the "primary purpose of the Plan is to substantially de-leverage the Debtors' balance sheet and put into place a sustainable long-term capital structure under what is commonly referred to as a "leveraged buy-out." The Plan provides for releases of claims against the participants in the leveraged buy-out transactions, in exchange for the concessions made by the first and second lien lenders, as well as the equity holders under the Plan. The Committee has reviewed the general structure of the leveraged buy-out transactions and the realistic alternatives available to the unsecured creditors. While there is some possibility that the Committee could through litigation attack and unwind the leveraged buy-out transactions, that battle could threaten the profitability or size of the Debtors' business, or even its continued viability. In addition, success in this effort would not necessarily translate into a greater return to unsecured creditors than that offered in the Plan. The success of the Debtors' business so that it would have the ability to make any payments to unsecured creditors, and the relative return to unsecured creditors, as well as the likelihood of success in objecting to the Plan, were important factors in the Committee's deliberations. Despite the referenced difficulty in negotiating any changes to the Plan, the Committee was successful in extracting important concessions from the Debtors regarding the Plan. Specifically, the Committee was able to: (a) ensure a specific date for the commencement of payment and issuance of shares to Class U-2 and Class U-4 creditors, respectively; (b) clarify (and in the Committee's opinion significantly expand) the number and types of creditors falling into Class U-2; (c) obtain a waiver of the Debtors' ability to bring in excess of $60,000,000 of potential preference claims against unsecured creditors; and (d) limit certain setoff rights of the Debtors and preserve certain statutory lien rights. With these modifications of the Plan, the Committee believes: (a) that the Plan provides a far greater benefit to unsecured creditors generally than a liquidation of the Debtors; (b) that the Plan provides a significant return for the vast majority in number of the unsecured creditors, those in Class U-2); and (c) if the Plan structure dividing the unsecured creditors into two classes is found to be unconfirmable, the dividend to Class U-2 unsecured creditors would be significantly less, the stock issuance to Class U-4 may not occur and there would be a very substantial risk that the reorganization would fail, based on the Plan support agreements unwinding and the "New Money" provided by AEP would be lost. That would leave unsecured creditors with the prospect of having to pursue the leveraged buy-out claims and seek a litigated resolution of their unsecured claims. Considering all of the foregoing facts and circumstances, the Committee supports approval of the Plan. The Committee urges each unsecured creditor to carefully review and analyze the Plan and its terms. The Committee would be pleased to respond to any questions that you have regarding the Disclosure Statement, the Plan or this letter. If you have any questions, please contact Jay L. Welford or Judith Greenstone Miller, the Committee's counsel at (248) 351-3000 or email them at jwelford@jaffeelaw.com or jmiller@jaffelaw.com or via facsimile at (248) 351-3082. Very truly yours, The Official Committee of Unsecured Creditors of BHM Technologies Holdings, Inc., et al. cc: Jay L. Welford Judith Greenstone Miller The Members of the Committee Chanin Capital Partners Headquartered in Ionia, Michigan, BHM Technologies Holdings Inc. -- http://www.browncorp.com/-- manufactures and sells automobile parts including air bags and electrical systems. It has manufacturing facilites in Mexico and operates under Brown Corp. BHM Technologies Holdings, Inc. and 14 affiliates filed separate voluntary petitions under Chapter 11 on May 19, 2008 (Bankr. W.D. Mich. Lead Case No. 08-04413). Hannah Mufson McCollum, Esq., Kay Standridge Kress, Esq., Robert S. Hertzberg, Esq., and Leon R. Barson, Esq. of Pepper Hamilton LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, it listed estimated assets and debts to be both between US$100 million and US$500 million. The Debtors have until Sept. 16, 2008, to exclusively file their bankruptcy plan. (BHM Technologies Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) BHM TECHNOLOGIES: Court Approves Chanin as Committee Advisor ------------------------------------------------------------ The United States Bankruptcy Court for the Western District of Michigan approved the retention of Chanin Capital Partners as the financial advisor of the Official Committee of Unsecured Creditors of BHM Technologies Holdings, Inc., and its debtor-subsidiaries. The Court says that based upon the testimony and other evidence it received on August 7, 2008, it will not deny Chanin Capital Partners' financial expertise and independent advice on matters crucial to the Official Committee of Unsecured Creditors' statutory and fiduciary role. The Court adds that he understands and shares the concerns of the Debtors' First Lien Lenders, including the multiplier effect and need to minimize professional expenses but disagrees with the suggestion that the Committee can rely on information transmitted to it by the Debtors' financial advisors, without the independent advice to assist the Committee in digesting the information, is doubtful. The argument that the Committee can rely on AlixPartners, LLP, and Rothschild Inc., the Debtor's court- appointed advisors, confuses financial information with professional advice, the Court says. The Court says that: (a) Chanin's retention is necessary to permit the Committee to fulfill its statutory and fiduciary role; (b) Chanin is a fitting choice; and (c) the proposed compensation arrangement is reasonable, subject to the procedures and requirements of Section 330 of the Bankruptcy Code and related authorities. Headquartered in Ionia, Michigan, BHM Technologies Holdings Inc. -- http://www.browncorp.com/-- manufactures and sells automobile parts including air bags and electrical systems. It has manufacturing facilites in Mexico and operates under Brown Corp. BHM Technologies Holdings, Inc. and 14 affiliates filed separate voluntary petitions under Chapter 11 on May 19, 2008 (Bankr. W.D. Mich. Lead Case No. 08-04413). Hannah Mufson McCollum, Esq., Kay Standridge Kress, Esq., Robert S. Hertzberg, Esq., and Leon R. Barson, Esq. of Pepper Hamilton LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, it listed estimated assets and debts to be both between US$100 million and US$500 million. The Debtors have until Sept. 16, 2008, to exclusively file their bankruptcy plan. (BHM Technologies Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) BILL ROHRBAUGH: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Bill Rohrbaugh's Charter Service, Inc. 3395 Main Street, P.O. Box 690 Manchester, MD 21102 Bankruptcy Case No.: 08-20471 Related Information: William Lamar Rohrbaugh, president, filed the petition on the Debtor's behalf. Chapter 11 Petition Date: August 15, 2008 Court: District of Maryland (Baltimore) Judge: Nancy V. Alquist Debtor's Counsel: Ronald J Drescher, Esq. (ecf@drescherlaw.com) Drescher & Associates 4 Reservoir Circle, Suite 107 Baltimore, MD 21208 Tel: (410)484-9000 Estimated Assets: $1 million to $10 million Estimated Debts: $100,000 to $500,000 A copy of the Debtor's petition containing a list of its largest unsecured creditors is available for free at: http://bankrupt.com/misc/MDb08-20471.pdf BILL ROHRBAUGH: Section 341(a) Meeting Slated for September 17 -------------------------------------------------------------- The United States Trustee for Region 4 will convene a meeting of creditors of Bill Rohrbaugh's Charter Service, Inc. at 11:00 a.m., on Sept. 17, 2008, at 341 meeting room #2650, 101 West Lombard Street in Baltimore, Maryland. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. William Lamar Rohrbaugh, president of Manchester, Maryland-based Bill Rohrbaugh's Charter Service, Inc., filed a chapter 11 petition on behalf of the Bill Rohrbaugh's Charter Service on Aug. 15, 2008 (Bankr. D. Md. Case No. 08-20471). Judge Nancy V. Alquist presides over the case. Ronald J Drescher, Esq., at Drescher & Associates, represents the Debtor in its restructuring efforts. The Debtor estimated assets of $1 million to $10 million and debts of $100,000 to $500,000. BON-TON STORES: Net Loss Rises to $65MM in Period Ended August 2 ---------------------------------------------------------------- The Bon-Ton Stores Inc. reported results for the second quarter of fiscal 2008 ended Aug. 2, 2008. For the 13-week period ended Aug. 2, 2008, the company reported a net loss of $33.8 million, including a $17.8 million non-cash pre- tax goodwill impairment charge, compared with a net loss of $15.0 million for the thirteen-week period ended Aug. 4, 2007. For the twenty-six-week period ended Aug. 2, 2008, the company reported a net loss of $67.9 million compared with a net loss of $44.3 million for the comparable period last year. At Aug. 2, 2008, the company's balance sheet showed total assets of $2.0 billion, total liabilities of $ 1.7 billion and shareholders' equity of approximately $300 million. "Our second quarter financial results reflect the continuation of the difficult macro-economic environment," Bud Bergren, president and chief executive officer, commented. "Despite this, we successfully reduced our comparable store inventories by approximately 9%. In addition, we continue to review our expenses and are pleased that during the second quarter we realized a net reduction of $9.3 million in our selling, general and administrative expenses. Lastly, we reduced our debt levels and increased our excess borrowing capacity under our credit facility, which improved our balance sheet as compared with the second quarter of fiscal 2007." "We are taking the appropriate actions in this environment by controlling our inventories, expenses and capital expenditures and identifying sales opportunities," Mr. Bergren continued. "We have many opportunities that we expect to take advantage of during the important fall and holiday seasons, such as new merchandise offerings, expanded eCommerce, fresh marketing initiatives and a new proprietary credit card loyalty program. We remain confident these actions will benefit both the short- and long-term growth of our company." For the second quarter of fiscal 2008, comparable store sales decreased 5.7%. Total sales for the thirteen weeks ended Aug. 2, 2008 decreased 5.0% to $673.4 million compared with $708.6 million for the prior year period. Year-to-date comparable store sales decreased 5.1%. Year-to-date total sales decreased 5.0% to $1,373.6 million compared with $1,446.2 million for the same period last year. Other income in the second quarter of fiscal 2008 decreased to $21.5 million compared with $22.3 million in the second quarter of fiscal 2007. Year-to-date other income decreased to $44.3 million compared with $45.1 million in the prior year period. The decrease in the second quarter and year-to-date fiscal 2008 amounts reflects the reduced sales volume. Selling, general and administrative expenses in the second quarter of fiscal 2008 decreased $9.3 million to $246.4 million compared with $255.7 million in the second quarter of fiscal 2007. The SG&A expense rate for the second quarter of fiscal 2008 was 36.6% compared with 36.1% for the second quarter of fiscal 2007, reflecting the reduced sales volume in the second quarter of fiscal 2008. Year-to-date SG&A expenses decreased $13.8 million compared with the prior year period. The year-to-date SG&A expense rate increased by 0.9 percentage point to 36.6% compared with 35.7% in the prior year period, reflecting the reduced sales volume in fiscal 2008. Guidance "In light of the challenging retail climate which shows minimal signs of easing for the remainder of fiscal 2008, inventory, capital and expense management remain key focal points," Keith Plowman, executive vice president and chief financial officer, commented. "As previously stated in our July sales press release, our excess borrowing capacity under our credit facility at the end of the second quarter of fiscal 2008 was $238 million, an increase compared with $229 million at the end of the second quarter of fiscal 2007, reflecting the strength of our balance sheet and reductions in our debt." "Our revised guidance for full-year fiscal 2008 EBITDA is a range of $200 to $213 million and diluted earnings per share is a range of $(0.45) to $(0.95) without the write-off of goodwill and $(1.17) to $(1.67) including the write-off of goodwill, continued Mr. Plowman. Assumptions reflected in this guidance include: * Comparable store sales decrease in the range of 3.5% to 5.0%; * Gross margin rate of 35.6%; * SG&A expense dollars decrease from the prior year; * Capital expenditures of $70 million (net of landlord contributions); and * Estimated diluted weighted average shares outstanding of 16.8 to 17.0 million." "In a tough retail environment, we believe we need to indicate a range of potential outcomes, reflecting that the economy and retail environment may remain challenging for the balance of 2008. We expect to generate positive cash flow in fiscal 2008 and reduce our debt levels, despite the non-cash goodwill charge and the potential results for the year. Our current estimate for cash flow is a range of $40 million to $50 million for the year, permitting us to reduce our year-end debt levels by this amount as compared to the year-end fiscal 2007 balances. This cash flow estimate does not reflect the additional benefit of the working capital reductions the company has enacted in response to the continuing difficult retail environment. Our balance sheet is stronger than the comparable period in the prior year as evidenced by our reduced debt levels and strong excess borrowing availability. We remain confident that we are well-positioned to take advantage of opportunities when the economy shows signs of recovery." About The Bon-Ton Stores York, Pennsylvania-based The Bon Ton Stores Inc. (Nasdaq: BONT) -- http://www.bonton.com/-- operates 280 department stores, which includes 11 furniture galleries, in 23 states in the Northeast, Midwest and upper Great Plains under the Bon-Ton, Bergner's, Boston Store, Carson Pirie Scott, Elder-Beerman, Herberger's and Younkers nameplates and, under the Parisian nameplate, three stores in the Detroit, Michigan area. The stores offer a broad assortment of brand-name fashion apparel and accessories for women, men and children, as well as cosmetics and home furnishings. * * * Moody's Investors Service placed The Bon-Ton Stores Inc.'s senior unsecured debt rating at Caa1 in February 2008. The rating still holds to date with a stable outlook. BOSCOV'S INC: Mothers Work Balk at Request for $250MM DIP Loan -------------------------------------------------------------- Mothers Work Inc. objects to Boscov's Inc. and its affiliated debtors' request for DIP financing to the extent, if any, that the request seeks authorization to grant lines on merchandise owned by Mothers Work and sold in Motherhood Maternity(R) departments within the Debtors' stores pursuant to a license agreement. As reported in the Troubled Company Reporter on Aug. 11, 2008, the Debtors obtained authority from the U.S. Bankruptcy Court for the District of Delaware, on an interim basis, to obtain up to $250,000,000 of senior revolving loans, to be funded in conjunction with up to $25,000,000 "last out revolver advance," from Bank of America, N.A., as administrative agent for a group of lenders. The DIP Facility will be used, among other things, (i) to refinance on a rolling basis the obligations owing under the more than $300,000,000 Prepetition First Lien Credit Facility and pay related transaction fees and expenses; (ii) for working capital and general corporate purposes of the Debtors; and (iii) for the payment of postpetition expenses arising in connection with the Debtors' bankruptcy cases. James C. Carignan, Esq., at Pepper Hamilton LLP, in Wilmington, Delaware, contends that the License Agreement is not a consignment, a sale on approval or a sale or return, nor any other arrangement through which the Debtors could obtain any interest in the Merchandise sufficient for a security interest to attach. 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). Judge Kevin Gross presides over the cases. David G. Heiman, Esq., and Thomas A. Wilson, Esq., at Jones Day, serve as the Debtors' lead counsel. Daniel J. DeFranceschi, Esq., and L. Katherine Good, Esq. at Richards, Layton & Finger, P.A., serve as the Debtors' local Delaware counsel. The Debtors' financial advisor is Capstone Advisory Group and their investment banker is Lehman Brothers Inc. The Debtors' claims agent is Kurtzman Carson Consultants, L.L.C. Boscov's listed assets of $538 million and liabilities of $479 million in its bankruptcy filing. (Boscov's Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) BOSCOV'S INC: Gets Court Approval to Close and Liquidate 10 Stores ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware authorized Boscov's Inc. and its affiliated debtors to commence the sale and closings of their stores at 10 locations, on a final basis. During the Aug. 12, 2008, auction, the Debtors selected a joint venture between Gordon Brothers Retail Partners, LLC, and Hilco Merchant Resources LLC, as the highest bidder to act as agent for the Store Closing Sales. As reported in the Troubled Company Reporter on Aug. 11, 2008, the Debtors sought to close and liquidate the inventory and other assets of 10 of their stores located at: * Monroeville Mall, in Monroeville, Pennsylvania, * South Hills Village Mall, in Pittsburgh, Pennsylvania, * Oxford Valley Mall, in Langhorne, Pennsylvania, * Montgomery Mall, in North Wales, Pennsylvania, * Harrisburg East Mall, in Harrisburg, Pennsylvania, * Monmouth Mall, in Eatontown, New Jersey, * White Marsh Mall, in Baltimore, Maryland, * Marley Station Mall, in Glen Burnie, Maryland, * Owings Mills Mall, in Owings Mills, Maryland, and * Piedmont Mall, in Danville, Virginia. The Court then permitted the Debtors to enter into an agency agreement with the Sales Agent, a blacklined copy of which is available for free at http://ResearchArchives.com/t/s?311e The Debtors will deposit all proceeds from the Closing Store Sales to their bank accounts, and furnish the DIP Agent a written certificate of the deposits, on a daily basis. The Sales Agent will be granted a superpriority administrative status on their claims, with respect to the Agency Agreement. The Joint Venture's claims, however, will be junior to those of the DIP Agent, Prepetition First Lien Agent, the Prepetition Second Lien Agent under the DIP Financing. All sales of merchandise and owned furniture, fixtures and equipment from the Closing Sales will be free and clear of all encumbrances pursuant to Section 363(f) of the Bankruptcy Code, provided that any encumbrance will attach to the Guaranteed Amount, Recovery Amount, proceeds payable to the Debtors from the FF&E dispositions, and amounts reimbursed by the Sales Agent to the merchant with respect to expenses, and will have the same priority as the encumbrance on the merchandise and owned FF&E. The Agent is authorized to supplement the merchandise in the Closing Stores with augmented goods of like kind and quality as is customarily sold in the Closing Stores. Goods owned by sublessees, licensees, department lessees or concessionaires of the Debtors, including goods held in consignment, or as bailee, and Rugs America Corporation's licensed FF&E will not constitute merchandise under the Agency Agreement. The Sales Agent, however, may make arrangements with respect to (i) Licensee goods existing as the Closing Stores at the Sale Date provided that those arrangements are not less favorable to the Debtors, and (ii) any additional Licensee goods to be brought in to the Closing Stores by the sublessees, licensees, and concessionaires. The Taxing Authorities may file their objection before 30 days following the Sale Date. If the parties are unable to resolve their dispute within 15 days from receipt of objection notice, the parties may forward their dispute to the Court by filing a motion to enforce their rights. RBS Asset Finance Inc., the Debtors' lessor of certain FF&E at their Marley Station, Owings Mills, Oxford Valley and White Marsh locations, have consented to the sale of their FF&E. All net proceeds from the sale will be paid directly to RBS. Proceeds from the sale of any disputed FF&E will be deposited into an escrow account, and will not be subject to liens of the DIP Lenders, until the Court determines that the proceeds are not from RBS' FF&E. Objections Resolved CW Capital Asset Management LLC, as Special Servicer for Wells Fargo Bank N.A., as trustee for the Registered Holders of Banc of America Commercial Mortgage Pass-Through Certificates, does not consent to the sale of FF&E to the extent that the FF&E are Non-owned CWCAM FF&E. The Court ruled that all CWCAM FF&E that is sold by the Agent will be deemed to be Non-Owned CWCAM FF&E unless otherwise disputed in writing by the Debtors. The Disputed FF&E will be deemed owned FF&E unless also disputed in writing by CWCAM within 10 days of receipt of the Debtors' notice. All FF&E owned by landlords at Marley Station, Monroeville Mall, Montgomery Mall, Owings Mills, Oxford Valley Mall, South Hills Village, and White Marsh, that are sold by the Sales Agent will be deemed non-owned by the Landlords, unless the Debtors dispute, by written notice to Agent and Landlords that property is non- owned by these Landlords. The Disputed FF&E will be deemed owned unless the Landlords assert otherwise within 10 days of receipt of the Debtors' notice. Ritz Camera Center Inc., is authorized to enter the Closing Stores in which it conducts business, and may remove its inventory, equipment and fixtures. The Debtors and the Sales Agent are prohibited from selling Ritz Camera's inventory without Ritz written consent. Ritz, however, may enter into an agreement with the Agent for the disposition of its furniture, fixtures and equipment as part of the Store Closing Sales without further Court approval. No equipment leased by the Debtors, or that is otherwise not owed by the Debtors may be sold during the Store Closing Sales with out the written consent of the lessor or owner. Objections by CBL Associates Management, Inc.; Sacco of Monmouth, LLC; and General Growth Properties, Inc., were overruled. 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). Judge Kevin Gross presides over the cases. David G. Heiman, Esq., and Thomas A. Wilson, Esq., at Jones Day, serve as the Debtors' lead counsel. Daniel J. DeFranceschi, Esq., and L. Katherine Good, Esq. at Richards, Layton & Finger, P.A., serve as the Debtors' local Delaware counsel. The Debtors' financial advisor is Capstone Advisory Group and their investment banker is Lehman Brothers Inc. The Debtors' claims agent is Kurtzman Carson Consultants, L.L.C. Boscov's listed assets of $538 million and liabilities of $479 million in its bankruptcy filing. (Boscov's Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) BRAINTECH INC: June 30 Balance Sheet Upside-Down by $1,099,808 -------------------------------------------------------------- Braintech Inc.'s consolidated balance sheet at June 30, 2008, showed $2,510,776 in total assets and $3,610,584 in total liabilities, resulting in a $1,099,808 stockholders' deficit. At June 30, 2008, the company's consolidated balance sheet also showed strained liquidity with $2,461,736 in total current assets available to pay $3,610,584 in total current liabilities. The company reported a net loss of $1,312,382 on sales of $1,100,406 for the second quarter ended June 30, 2008, compared with a net loss of $1,234,035 on sales of $600,562 in the same period of 2007. The increase in sales year over year is attributable to the increase in the minimum purchase guarantee in accordance with the terms of the company's Exclusive Global Channel Partner Agreement with ABB Inc. Selling, general and administration (SG&A) expenses increased $1,444,252, or 204.6%, to $2,150,300 for the three month period ended June 30, 2008, from $706,048 for the three month period ended June 30, 2007. The increase was mainly due to the recognition of $1,290,000 in stock based compensation arising from the issuance of shares of common stock to the company's chief executive officer. Interest and financing expenses decreased $906,236, or 97.7%, to $21,649 for the three month period ended June 30, 2008, from $927,885 for the three month period ended June 30, 2007. The decrease was mainly due to certain financing expenses incurred in 2007 for which there was no corresponding expense in 2008. These 2007 expenses include $877,500 for the fair value of equity issued as compensation to the bank loan guarantors. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2008, are available for free at http://researcharchives.com/t/s?3157 Going Concern Doubt As reported in the Troubled Company Reporter on April 14, 2008, Smythe Ratcliffe LLP, in expressed substantial doubt about Braintech Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditor pointed to the company's recurring losses from operations. About Braintech Inc. Headquartered in North Vancouver, B.C., Canada, Braintech Inc. (OTC BB: BRHI) -- http://www.braintech.com/-- has four wholly- owned subsidiaries: Braintech Canada Inc., a British Columbia corporation, Braintech Government & Defense Inc., a Delaware corporation, Braintech Consumer & Service Inc., a Delaware corporation, and Braintech Industrial Inc., a Delaware corporation. Braintech Canada Inc. carries out the company's research and development activities, and employs a majority of the company's technical personnel. The company generates the majority of its revenues from the sale of robotic vision software that it has developed. The company's software sales have principally involved computerized vision systems used for the guidance of industrial robots performing automated assembly, material handling, and part identification and inspection functions. BRANDON BARBER: Files $10MM Suit at Legacy National, Flake & Kelly ------------------------------------------------------------------ Brandon Barber, who does business as Lynnkohn, LLC, with Seth Kaffka, filed a complaint on August 20, 2008, at the Washington County Circuit Court against lender Legacy National Bank of Springdale and Flake & Kelley Management, Inc., doing business as Flake & Kelley Commercial, seeking $10 million, according to Andrew Jensen of Arkansas Business. Mr. Barber accused Legacy National of conspiring to maximize his $18.7 million in liabilities on the project with the intention of repurchasing the building and profiting from the sale of its condos, Mr. Jensen reports. Mr. Jensen recalls that Flake & Kelly entered into an agreement in May 2008 with Wayne Swofford, the receiver appointed by the Circuit Court, to market the Legacy Building owned by Mr. Barber in Fayetteville, Arkansas. According to Mr. Jensen, Mr. Barber alleges that Legacy National blocked pending condo sales by improperly ordering Flake & Kelley to not accept any offers until after the foreclosure sale of the building, which was scheduled on August 21, 2008. The lawsuit, which was filed on the same day Lynnkohn filed for Chapter 11 bankruptcy protection with U.S. Bankruptcy Court for the Western District of Arkansas, postponed the sale of the building, Mr. Jensen points out. The lawsuit identifies Legacy National -- which signed a regulatory agreement with the Office of the Comptroller of the Currency (OCC) on April 24, 2004 -- as main culprit and describes Flake & Kelley as a complicit party, according to Mr. Jensen. "Flake Commercial is also at fault because it knew or should have known that Legacy Bank did not have authority to refuse to accept offers on the Property," Mr. Jensen quotes the lawsuit. "Flake knew or should have known it was to follow the orders of the Receiver and the Court," adds the lawsuit according to Mr. Jensen. In a statement, however, Legacy National's attorney, Marshall Ney, said the lawsuit by Mr. Barber -- which alleged tortuous interference, violations of the Deceptive Trade Practices Act, fraud, breach of contract and breach of fiduciary duty --is without merit, Mr. Jensen also reports. Based in Fayetteville, Arkansas, Brandon Barber and Seth Kaffka develops real estate in northwest Arkansas as Lynnkohn, LLC. The Debtors filed for Chapter 11 bankruptcy petition on August 20, 2008 (Bankr. W.D. Ark. Case No. 08-73301). K. Vaughn Knight, Esq., at Knight Law Firm, PLC, represents the Debtors in their restructuring efforts. When they filed for bankruptcy, they listed $35,365,102 in total assets and $31,618,598 in total debts. CANYON CAPITAL: Class B-1L, B-2A, and B-2B Note Ratings Raised -------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on the class B-1L, B-2A, and B-2B notes issued by Canyon Capital CDO 2001-1 Ltd., a high-yield arbitrage collateralized bond obligation (CBO) transaction managed by Canyon Capital Advisors LLC. Concurrently, we removed the rating on class B-1L from CreditWatch with positive implications, where it was placed Aug. 1, 2008. The raised ratings reflect factors that have positively affected the credit enhancement available to support the notes since the last upgrades in May 2007. These factors include the de-levering of the transaction through the paydown of approximately $63 million to the class A-2L notes since May 2007. According to the most recent trustee report (dated July 17, 2008), the class B-1L overcollateralization ratio was 153%. This compares with a reported ratio of 126% at the time of the last upgrade. The class B-2 overcollateralization ratio improved during that period as well, increasing to 129% from 115%. RATING RAISED AND REMOVED FROM CREDITWATCH POSITIVE Canyon Capital CDO 2001-1 Ltd. Rating Balance Class To From Current Previous ----- -- ---- ------- -------- B-1L AA+ A/Watch Pos 35.00 35.00 RATINGS RAISED Canyon Capital CDO 2001-1 Ltd. Rating Balance Class To From Current Previous ----- -- ---- ------- -------- B-2A BBB+ BB+ 6.00 6.00 B-2B BBB+ BB+ 10.00 10.00 OTHER OUTSTANDING RATINGS Canyon Capital CDO 2001-1 Ltd. Class Rating Balance ----- ------ ------- A-2L AAA 8.138 A-3L AAA 10.000 A-3 AAA 34.000 TRANSACTION INFORMATION Issuer: Canyon Capital CDO 2001-1 Ltd. Co-issuer: Canyon Capital CDO 2001-1 (Delaware) Corp. Current manager: Canyon Capital Advisors LLC Underwriter: Bear Stearns Cos. Trustee: Bank of New York, NY Transaction type: Arbitrage high-yield CBO TRANCHE PRIOR CURRENT INFORMATION ACTION ACTION Date (M/YYYY) 5/2007 8/2008 ------------- ------ ------- A-2L note bal. (mil. $) 71.66 8.13 A-3L note bal. (mil. $) 10.00 10.00 A-3 note bal. (mil. $) 34.00 34.38 Class A O/C ratio (%) 153.22 258.87 Class A O/C ratio min. (%) 120.0 120.0 B-1L note bal. (mil. $) 35.00 35.00 Class B-1L O/C ratio (%) 125.45 153.80 B-2A note bal. (mil. $) 6.00 6.00 B-2B note bal. (mil. $) 10.00 10.00 Class B-2 O/C ratio (%) 115.68 129.12 O/C -- Overcollateralization. CARDIAC MANAGEMENT: Wants Trenwith Securities as Investment Banker ------------------------------------------------------------------ Cardiac Management Systems, Inc. and its debtor-affiliates asked permission from the U.S. Bankruptcy Court for the Southern District of Florida to employ Jeffrey R. Manning at Trenwith Securities, LLC, as their investment banker. Mr. Manning will analyze the business, operations and financial position of the Debtors and prepare them for an expedited sale of their assets, among others. In an engagement letter, the Debtors will pay Trenwith $40,000 as retainer for three months and $10,000 for subsequent months of service. Trenwith is expected to earn $325,000, plus 3% of consideration in excess of $8 million, but reduced to $200,000 in the event that the Debtors' assets are sold to parties on a short list of potential buyers with whom the Debtors have already initiated discussions. The engagement is terminable upon 30 days' notice. About Cardiac Management Based in Miami, Florida, Cardiac Management Systems, Inc. and its affiliates provide management services and medical laboratory facilities. The company and 14 of its affiliates filed for Chapter 11 protection on June 30, 2008 (Bankr. S.D. Fla. Lead Case No. 08-19029). Patrick S. Scott & Associates P.A. represents the Debtors in their restructuring efforts. CARDIAC MANAGEMENT: Files Schedules of Assets and Liabilities ------------------------------------------------------------- Cardiac Management Systems, Inc. delivered to the U.S. Bankruptcy Court for the Southern District of Florida its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ---------- ----------- A. Real Property B. Personal Property $55,236 C. Property Claimed as Exempt D. Creditors Holding Secured Claims E. Creditors Holding Unsecured Priority Claims F. Creditors Holding Unsecured $15,405,113 Nonpriority Claims ---------- ----------- TOTAL $55,236 $15,405,113 About Cardiac Management Based in Miami, Florida, Cardiac Management Systems, Inc. and its affiliates provide management services and medical laboratory facilities. The company and 14 of its affiliates filed for Chapter 11 protection on June 30, 2008 (Bankr. S.D. Fla. Lead Case No. 08-19029). Patrick S. Scott & Associates P.A. represents the Debtors in their restructuring efforts. CENTRAL GARDEN: Late 10-Q Filing Cues Nasdaq's Delisting Notice --------------------------------------------------------------- Central Garden and Pet Company received a Nasdaq Staff Determination letter on August 13, 2008. The company has delayed the filing of its Form 10-Q for the quarter ended June 28, 2008, while its Audit Committee completes a review of issues raised in a letter from a company employee. The company expects to file the Quarterly Report as soon as practicable after the completion of the review. The Audit Committee's review is primarily related to whether a reserve should have been established for the end of fiscal 2005 relating to a customer dispute that was settled in early fiscal 2006. The filing of the Quarterly Report will enable the company to become current in its filing obligations. The Nasdaq Staff Determination letter indicated that the company is not in compliance with Nasdaq Marketplace Rule 4310(c)(14) because it did not timely file the Quarterly Report. As a result, unless the company requests a hearing in accordance with Nasdaq Marketplace Rules, the company's securities would be delisted from Nasdaq at the opening of business on August 22, 2008. The company intends to timely request a hearing before a Nasdaq Listing Qualifications Panel to appeal the Nasdaq's Staff determination, which will stay the delisting until the Panel has reached a decision. The decision is generally made in approximately 60 days from the request. However, there can be no assurance that the Panel will grant the company's request for continued listing of its Class A common or its common stock. If the company files its Quarterly Report before the hearing or the Panel's decision, it will once again be in compliance with the Nasdaq Marketplace Rules and the potential delisting will be moot. About Central Garden Based in Walnut Creek, Calif. Central Garden & Pet Company (Nasdaq: CENT/CENTA) -- http://www.central.com/-- markets and produces branded products for the lawn & garden and pet supplies markets. The company's products are sold to specialty independent and mass retailers. Central Garden & Pet Company has approximately 5,000 employees, primarily in North America and Europe. At June 30, 2008, the company's consolidated balance sheet showed $1.33 billion in total assets, $809.1 million in total liabilities, $2.7 million in minority interest, and $522.7 million in total shareholders' equity. Balance sheet information is preliminary. * * * As reported in the Troubled Company Reporter on Feb. 25, 2008, Standard & Poor's Ratings Service affirmed its 'CCC+' senior subordinated debt ratings on Central Garden & Pet Co. The outlook is negative. CHESAPEAKE CORP: SCSF Equities, et al., Sell Outstanding Shares --------------------------------------------------------------- SCSF Equities, LLC, Sun Capital Securities Offshore Fund, Ltd., Sun Capital Securities Fund, LP, Sun Capital Securities Advisors, LP, Sun Capital Securities, LLC, Marc J. Leder, and Rodger R. Krouse, sold all 1,198,879 shares of Chesapeake Corp.'s common stock at an average price per share of $0.83 on Aug. 1, 2008. As of Aug. 1, 2008, the companies do not beneficially own, or have power to vote or dispose of, any shares of Chesapeake Corp. common stock. A sale on July 31, 2008 of 40,394 shares of Chesapeake Corp. common stock at an average price per share of $1.80, decreasing the total number of shares of common stock owned by SCSF Equities at al. to 1,198,879 shares of common stock. On August 1, 2008, the ceased to be the beneficial owner of more than 5.0% of Chesapeake Corp.'s outstanding Common Stock. Headquartered in Richmond, Virginia, Chesapeake Corporation (NYSE: CSK) -- http://www.cskcorp.com/-- is a supplier of specialty paperboard packaging products in Europe and an international supplier of plastic packaging products to niche end-use markets. Chesapeake has 47 locations in France, Ireland, United Kingdom, North America, China, HongKong, among others and employs approximately 5,500 people. * * * As disclosed in the Troubled Company Reporter on Aug. 11, 2008, Moody's Investors Service downgraded Chesapeake Corporation's Corporate Family Rating to Caa2 from B2 and its Probability of Default Rating to Caa2 from B3. Concurrently, Moody's downgraded the company's senior unsecured revenue bonds to Caa3 from B3 and senior subordinated notes to Caa3 from Caa1. All credit ratings remain on review for possible downgrade. Standard & Poor's Ratings Services lowered its ratings on Chesapeake Corp. The corporate credit rating was lowered to 'CCC+' from 'B'. The ratings remain on CreditWatch, where they were placed on July 2, 2008, with negative implications. CJ READY: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------- Debtor: CJ Ready Mix, LLC P.O. Box 3048 London, KY 40743 Bankruptcy Case No.: 08-61029 Chapter 11 Petition Date: August 8, 2008 Court: Eastern District of Kentucky (London) Debtor's Counsels: Allison F. Arbuckle, Esq. 200 North Upper Street Lexington, KY 40507 Tel: (859) 231-5800 E-mail: aarbuckle@wisedel.com Dean A. Langdon, Esq. 200 North Upper Street Lexington, KY 40507 Tel: (859) 231-5800 E-mail: langdonbk@wisedel.com Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $1,000,000 to $10,000,000 A copy of the Debtor's petition is available for free at: http://bankrupt.com/misc/kyeb08-61029.pdf CLAUDIA PHILLIPS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Claudia Phillips 905 Alexandra Court Oak Park, CA 91377-5835 Bankruptcy Case No.: 08-15935 Chapter 11 Petition Date: August 14, 2008 Court: Central District Of California (San Fernando Valley) Judge: Maureen Tighe Debtor's Counsel: Claudia L Phillips, Esq. 5699 Kanan Rd Suite 425 Agoura Hills, CA 91301 Tel: 310-597-3534 Fax: 818-735-0139 E-mail: celpmgp@aol.com Estimated Assets: $500,000 to $1,000,000 Estimated Debts: $1,000,000 to $10,000,000 A copy of the Debtor's petition is available for free at: http://bankrupt.com/misc/cacb08-15935.pdf CMT AMERICA: Delivers Schedules of Assets and Liabilities --------------------------------------------------------- CMT America Corp., aka Fairvane Corp., submitted to the U.S. Bankruptcy Court for the District of Delaware its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ---------- ----------- A. Real Property B. Personal Property $9,651,473 C. Property Claimed as Exempt D. Creditors Holding Secured $12,566,887 Claims E. Creditors Holding Unsecured $118,322 Priority Claims F. Creditors Holding Unsecured $7,667,781 Nonpriority Claims ---------- ----------- TOTAL $9,651,473 $20,352,990 Headquartered in Farmington, Connecticut, CMT America Corp., aka Fairvane Corp., is a 70-store women's clothing retailer. The company filed for chapter 11 protection on July 13, 2008 (Bankr. D. Del. Case No.08-11434). Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor, LLP, represents the Debtor in its restructuring efforts. The Debtor selected Administar Services Group LL as its claims agent. The U.S. Trustee for Region 2 has yet to appoint an Official Committee of Unsecured Creditors. COMM 2004-LNB3: DBRS Puts Class K Through O Under Review Negative ----------------------------------------------------------------- DBRS placed Classes K through O of COMM 2004-LNB3's Commercial Mortgage Pass-Through Certificates, Series 2004-LNB3 Under Review with Negative Implications and discontinued the rating of Class A- 1. The decision to place Class K through O Under Review with Negative Implications is the primary result of a projected significant loss associated with the workout of The Tower loan (1.8% of the pool). In June 2008, the loan was transferred to special servicing after becoming 60 days delinquent. The borrower notified the master servicer that it would no longer be able to make monthly payments and a July 2008 inspection by the special servicer revealed numerous deferred maintenance issues and need for capital improvements. As of August 2008, the loan is 120 days delinquent and the special servicer is moving forward with foreclosure proceedings. The loan was added to the DBRS HotList in October 2007 because of increased vacancy and a low DSCR (1.02x, 76.2% occupied as of YE2006). Currently, CoStar reports the subject is 59.9% occupied, well below the Class B submarket vacancy rate of 17.1%. The property is located in Franklin Township, New Jersey (approximately 40 miles southwest of New York) and has a loan psf of $98. Given the decline occupancy, causing an inability to service the existing debt at a low 5.93% coupon, and the costs associated to cure the deferred maintenance, DBRS expects the value of the property has declined considerably. In addition, DBRS is monitoring the performance of three crossed multi-family properties in Florida, (Beyman (Crossed Rollup), combined 2.0% of the pool) which are watchlisted for low DSCRs. The three loans have been on the servicer's watchlist since July/August 2007 and have experienced a decline in the combined DSCR (0.83x as of YE2007) after switching to P&I debt service payments in January 2007. The properties last reported occupancies of 88% to 93% (YE2007) but may have suffered damage from Tropical Storm Fay; the county of two of the properties experienced an extraordinary amount of rainfall in a short period of time in the last week. In all, ten of the 14 loans on the watchlist are multi-family properties (5.3% of the transaction). The transaction has seasoned for approximately 50 months and has had collateral reduction of 6.0% since issuance. Positive credit events include the full defeasance of 12 loans (20.9% of the pool) and the partial defeasance (23.6% of the loans whole-loan balance) of the AFR/Bank of America Portfolio loan. Five loans (30.0% of the pool), Garden State Plaza (A), 731 Lexington Avenue Bloomberg Headquarters (AAA), DDR Macquarie Portfolio (A (low)), Tysons Corner (AAA) and AFR/Bank of America Portfolio (AA) are shadow- rated by DBRS. DBRS will continue to gather information on the aforementioned loans and will provide a full Performance Update in the next few months. Issuer: COMM 2004-LNB3 Debt Rated: Commercial Mortgage Pass-Through Certificates, Series 2004-LNB3, Class A-1 Rating Action: Discontinued - Repaid Rating: Discontinued Trend: -- Latest Event: Aug. 26, 2008 Issuer: COMM 2004-LNB3 Debt Rated: Commercial Mortgage Pass-Through Certificates, Series 2004-LNB3, Class K Rating Action: Under Review - Negative Rating: BB Trend: -- Latest Event: Aug. 26, 2008 Issuer: COMM 2004-LNB3 Debt Rated: Commercial Mortgage Pass-Through Certificates, Series 2004-LNB3, Class L Rating Action: Under Review - Negative Rating: BB (low) Trend: -- Latest Event: Aug. 26, 2008 Issuer: COMM 2004-LNB3 Debt Rated: Commercial Mortgage Pass-Through Certificates, Series 2004-LNB3, Class M Rating Action: Under Review - Negative Rating: B (high) Trend: -- Latest Event: Aug. 26, 2008 Issuer: COMM 2004-LNB3 Debt Rated: Commercial Mortgage Pass-Through Certificates, Series 2004-LNB3, Class N Rating Action: Under Review - Negative Rating: B Trend: -- Latest Event: Aug. 26, 2008 Issuer: COMM 2004-LNB3 Debt Rated: Commercial Mortgage Pass-Through Certificates, Series 2004-LNB3, Class O Rating Action: Under Review - Negative Rating: B (low) Trend: -- Latest Event: Aug. 26, 2008 COMMISSARY OPERATIONS: To Close Georgia Plant, W. Virginia Center ----------------------------------------------------------------- A facility of Commissary Operations Inc., dba COI Foodservice Distribution and Manufacturing in Tifton, Georgia, will be closing by October, Angie Thompson and Florence Rankin of The Tifton Gazette report. About 200 workers will be affected. In addition, 100 employees of the company's wholesale food Jackson County distribution center in Ripley, West Virginia, will be displaced when the center will close. As disclosed in the Troubled Company Reporter on July 24, 2008, the unit of COI Acquisition Co. filed a voluntary petition under Chapter 11 of the Bankruptcy Code before the U.S. Bankruptcy Court in Nashville, Tennessee, blaming declining demand and rising fuel costs. Papers filed with the Court says the company lost money in May when Roadhouse Grill Inc. started winding down in bankruptcy court. The company stated that six other distribution agreements also were terminated. Protection from creditors in bankruptcy was not enough to support the company, it had to pare off costs, The Tifton Gazette, citing Human Resource VP Randolph Wilkerson, notes. The paper adds that the Tifton-Tift County Chamber of Commerce's CEO, Brady Day, has created approaches to aid affected workers find jobs, to reconcile assistance plans with non-profit social services agencies, to seek a new tenant for the COI building, and to handle concerns from the Tift County Development Authority's financial involvement with the company. Headquartered in Nashville, Tennessee, Commissary Operations Inc. dba COI Foodservice Distribution and Manufacturing -- http://www.coifoodservice.com/-- is a multi-facility food service distribution operation and supplier which delivers to more than 1,200 restaurants in 29 U.S. states. For more than 40 years, the company's full-service operation has supplied products to well- known national restaurant chains such as Shoney's, Ryan's and Applebee's. It also provides food or agriculture organization services, common fund for commodities services, international fund for agricultural development services, food distribution services and food supply services. The company has two more centers in West Virginia, and Georgia, other than the one in Tennessee. The company filed for Chapter 11 protection on July 22, 2008 (Bankr. M.D. Tenn. Case No. 08-06279). Barbara Dale Holmes, Esq., David Phillip Canas, Esq., Glenn Benton Rose, Esq., Tracy M. Lujan, Esq., at Harwell Howard Hyne Gabbert & Manner, PC, in Nashville, Tennessee, represent the Debtor. When the Debtor filed for protection from its creditors, it listed both assets and debts between $50 million and $100 million. CONSPIRACY ENT: June 30 Balance Sheet Upside-Down by $11,345,481 ---------------------------------------------------------------- Conspiracy Entertainment Holdings Inc.'s consolidated balance sheet at June 30, 2008, showed $5,086,314 in total assets, $16,152,395 in total liabilities, and $279,400 in minority interest, resulting in a $11,345,481 stockholders' deficit. At June 30, 2008, the company's consolidated balance sheet also showed strained liquidity with $2,115,291 in total current assets available to pay $16,152,395 in total current liabilities. The company reported net income of $3,012,317 for the second quarter ended June 30, 2008, compared with a net loss of $418,023 in the corresponding period last year. Revenues for the three months ended June 30, 2008 were $1,518,992, compared to $819,330 for the three months ended June 30, 2007. This represents an increase of $699,662 or 85.4% from the previous year. The company had one flat fee release plus one new release in addition to large reorders of its Winter Sports (Wii) title for the quarter. Net operating income increased to $139,459 for the three months ended June 30, 2008, compared to net operating income of $87,479 for the three months ended June 30, 2007. The increase in profitability was primarily due to a gain on valuation of derivative liability of $2,846,864 during the three months ended June 30, 2008, as opposed to a a loss on valuation of derivative liability of $425,965 during the three months ended June 30, 2007. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2008, are available for free at http://researcharchives.com/t/s?3158 Going Concern Disclaimer Chisholm, Bierwolf & Nilson, LLC, in Bountiful, Utah, expressed substantial doubt about Conspiracy Entertainment Holdings Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's accumulated deficit, negative working capital, and net loss. About Conspiracy Entertainment Based in Santa Monica, Calif., Conspiracy Entertainment Holdings Inc. (OTC BB: CPYE) -- http://www.conspiracygames.com/-- is an independent publisher of interactive entertainment software focussing mainly on its home market the United States but partly licenses its products to international companies as well. The company publishes content for all viable gaming platforms including the Microsoft Xbox / Xbox 360(TM), Nintendo Wii(TM), handheld platforms such as Nintendo's DS(TM) and Game Boy(R) advance and personal computers. COUNTERPATH CORP: BDO Dunwoody Expresses Going Concern Doubt ------------------------------------------------------------ BDO Dunwoody LLP raised substantial doubt about CounterPath Corporation's ability to continue as a going concern after auditing the financial statements of the company, formerly known as CounterPath Solutions, Inc., for the year ended April 30, 2008. The auditing firm reported that the company had an accumulated deficit of $18,479,483 at April 30, 2008, and incurred a net loss for the year then ended of $12,534,919. Its net loss increased from $3,364,651 a year ago. The company's revenues for the year ended April 30, 2008, increased to $9,086,900 from $5,724,941 in the prior year. This represents an increase of $3,361,959 from the same period last year. The company generated $6,437,192 in software revenue for the year ended April 30, 2008, compared with $4,099,369 for the year ended April 30, 2007, representing an increase of $2,337,823. The increase in software revenue was driven by continued growth in sales of consumer-oriented softphone software as well as new sales of enterprise-oriented softphone and conferencing software as a result of the acquisition of NewHeights Software Corporation in August 2007. For the year ended April 30, 2008, service revenues were $2,649,708 compared with $1,625,572 for the year ended April 30, 2007. The increase of $1,024,136 in service revenue reflects the increase in software revenue as service revenue involves customizing and supporting deployed software. International revenue outside of North America grew by 24% during the year ended April 30, 2008, compared with the year ended April 30, 2007, driven by Latin American and European software sales. North American revenue increased 108%, compared with the year ended April 30, 2007, driven primarily by the North American oriented sales of products acquired in the NewHeights acquisition. Liquidity Problems Presently, cash flow generated from operations is not sufficient to meet operating and capital expenses. The company has incurred operating losses since inception, and management projects this to continue for the next nine to 12 months. At April 30, 2008, the company has cash of $6,223,613 and working capital of $7,645,909. Management, however, projects that under the current operating plan, the company will require about $22,000,000 to $24,000,000 to fund its ongoing operating expenses and working capital requirements through April 30, 2009. Management anticipates that this will be funded through cash flow generated from operations, working capital, potential rationalization and external financing. The company depends on a mix of revenues and outside capital to pay for the continued development of its technology and the marketing of its products. Such outside capital may include the sale of additional stock and commercial borrowing. There can be no assurance that capital will continue to be available if necessary to meet these continuing development costs or, if the capital is available, that it will be on terms acceptable to the company. The issuance of additional equity securities would result in a dilution, possibly a significant dilution, in the equity interests of the company's current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase the company's liabilities and future cash commitments. If the company will be unable to obtain financing in the amounts and on terms deemed acceptable, its business and future success may be adversely affected. Additionally, the continuation of the company as a going concern is dependent upon the continued financial support from its stockholders, the ability of the company to obtain necessary equity financing to continue operations, and to generate sustainable significant revenue. There is no guarantee that the company will be able to raise any equity financing or generate profitable operations. As at April 30, 2008, the company has not yet achieved profitable operations and had an accumulated deficit of $18,479,483 since incorporation. These factors raise substantial doubt regarding the company's ability to continue as a going concern. Management is implementing a plan to address these uncertainties to enable the company to continue as a going concern through the end of fiscal 2009 and beyond. This plan includes new equity financing in amounts sufficient to sustain operations. At April 30, 2008, the company's balance sheet showed $31,568,359 in total assets, $5,891,483 in total liabilities, and $25,676,876 in total stockholders' equity. A full-text copy of the company's 2008 annual report is available for free at http://ResearchArchives.com/t/s?3147 About CounterPath Corporation Based in Vancouver, British Columbia, Counterpath Corporation (OTCBB: CPAH) -- http://www.counterpath.com/-- designs and develops multimedia application software. Software applications are based on session initiation protocol, which is the recognized standard for interactive end points that involve multimedia elements such as voice, video, instant messaging, presence, online games and virtual reality. CSCM TRUST: Fitch Affirms Ratings for 25 Classes of Certificates ---------------------------------------------------------------- Fitch affirms Credit Suisse Commercial Mortgage Trust 2006-C1, commercial mortgage pass-through certificates as: -- $57,823,642 class A-1 'AAA'; -- $235,000,000 class A-2 'AAA'; -- $336,916,000 class A-3 'AAA'; -- $155,000,000 class A-AB 'AAA'; -- $698,000,000 class A-4 'AAA'; -- $576,577,000 class A-1-A 'AAA'; -- $300,356,000 class A-M 'AAA'; -- $236,531,000 class A-J 'AAA'; -- $3,003,562,222 class A-X 'AAA'; -- $125,306,365 class A-Y 'AAA'; -- $18,772,000 class B 'AA+'; -- $37,545,000 class C 'AA'; -- $33,790,000 class D 'AA-'; -- $22,526,000 class E 'A+'; -- $33,790,000 class F 'A'; -- $30,036,000 class G 'A-'; -- $33,790,000 class H 'BBB+'; -- $30,036,000 class J 'BBB'; -- $37,544,000 class K 'BBB-'; -- $15,018,000 class L 'BB+'; -- $11,263,000 class M 'BB'; -- $11,264,000 class N 'BB-'; -- $3,754,000 class O 'B+'; -- $3,755,000 class P 'B'; -- $7,509,000 class Q 'B-'; Classes S and CCA are not rated by Fitch. The affirmations are due to the pool's stable performance since issuance. As of the July 2008, distribution report, the transaction has paid down 1.9% to $2.95 billion from $3.00 billion at issuance. There are two specially serviced loans which comprise less than 0.2% of the pool. Expected losses are anticipated to be minimal and not impact the trust. Three loans maintain their investment grade shadow ratings: 230 Park Avenue (9.5%), Saint Louis Galleria (5.8%) and NEI Portfolio (2.4%). The 230 Park Avenue, also know as the Helmsley Building, is a 1.2 million square foot, 34-story office tower located in midtown Manhattan in New York City. Occupancy as of March 31, 2008 was 93%, up from issuance occupancy of 89%. Year-end 2007 servicer reported debt service coverage ratio on net operating income was 1.79 times compared to 1.45x at issuance. The second largest shadow rated loan is the Saint Louis Galleria, a 1.2 million sf regional mall located in St. Louis, MO. Current major anchors are Dillard's and Macy's; major tenants are Mark Shale, Galleria 6 Cinemas, Limited and Express. YE 2007 servicer reported DSCR on NOI was 2.07x compared to 1.91x at issuance. Additionally, June 30, 2008, occupancy was 96.25%, stable since issuance. The NEI Portfolio is comprised of 26 office, retail and multifamily properties located primarily in California with some properties in Connecticut, Florida, Virginia, Arizona, Texas and Oregon. The note is a $70 million 10-year interest only loan that matures on December 1, 2015. The YE 2007 servicer reported DSCR on NOI was 2.87x. CSFB MORTGAGE: S&P Cuts 2005-C5 Class Q Notes to CCC+ ----------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on four classes of commercial mortgage pass-through certificates from Credit Suisse First Boston (CSFB) Mortgage Securities Corp.'s series 2005-C5. Concurrently, S&P affirmed its ratings on the remaining classes from this transaction. The lowered ratings reflect the credit concerns with 12 of the 20 loans in the pool that reported debt service coverage (DSC) below 1.0x. In addition, the downgrades reflect anticipated credit support erosion upon the eventual resolution of one of the two assets with the special servicer. The affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. There are 20 loans in the pool, totaling $56.3 million (2.0%), that have reported a DSC lower than 1.0x. The loans are secured primarily by a variety of office, retail, and multifamily properties. The loans experienced an average decline in DSC of 53.8% since issuance. Of the 20 loans, Standard & Poor's has credit concerns with 12 loans (1.6%). Most of these loans have experienced a combination of declining occupancy and higher operating expenses. The other eight loans generally had reserves, which may be used pay debt service or relatively low amounts of debt per sq. ft./unit/room compared with other properties in the market. There are two delinquent loans in the pool totaling $6.0 million (0.2%) with the special servicer, CWCapital Asset Management LLC. Details of the specially serviced loans are: -- The Gator Crossing asset has a total exposure of $3.7 million and was transferred to the special servicer in June 2007 due to monetary default and is now classified as real estate owned (REO). The property is currently being marketed for sale and, as of the second-quarter of 2008, the property was 36% occupied. The most recent appraisal, from July 2008, valued the property at $2.6 million. Standard & Poor's expects a moderate loss upon the liquidation of this asset. -- The Sinking Spring Marketplace loan has a total exposure of $2.8 million and is 90-plus-days delinquent. The loan was transferred to the special servicer in June 2006 because the borrower had been arrested on allegations of fraud. The borrower's estate is currently being liquidated in bankruptcy court. A contract to buy the property and assume the loan has been submitted to the bankruptcy trustee. The loan is secured by an 18,260-sq.-ft. retail property built in 1998 in Sinking Spring, Pa. As of August 2008, occupancy was 95%. Once the assumption of the loan has been finalized, Standard & Poor's expects the loan to be returned to the master servicer, Capmark Finance Inc. (Capmark). As of the Aug. 15, 2008, remittance report, the collateral pool consisted of 278 loans with an aggregate balance of $2.88 billion, compared with 280 loans with a balance of $2.90 billion at issuance. Capmark reported financial information for 98% of the pool. Ninety percent of the servicer-provided information was full-year 2007 data. Based on this data, Standard & Poor's calculated a weighted average DSC of 1.84x for the pool, up from 1.74x at issuance. Loans secured by cooperative apartment properties secure 3.6% of the pool. To date, the trust has experienced two losses totaling $2.6 million. Capmark reported a watchlist of 46 loans with an aggregate outstanding balance of $258.7 million (9.0%). The largest loan on the watchlist and the 12th-largest loan in the pool is the Southwest Commons loan. The loan is secured by a 309,173-sq.-ft. retail property in Littleton, Colo. The loan appears on the watchlist because the servicer advanced $222,431 for real estate taxes. The borrower has agreed to pay for the advances in three monthly installments starting in October 2008. As of Dec. 31, 2007, the property reported a DSC of 1.47x. The top 10 loans have an aggregate outstanding pooled trust balance of $963.5 million (33.4%) and a weighted average DSC of 1.69x, up from 1.67x at issuance. Standard & Poor's reviewed property inspections provided by the master servicer for all of the assets underlying the top 10 exposures, and all of the properties were characterized as "good." The credit characteristics of the 375 Park Avenue, 120 Wall Street, and MK Plaza loans are consistent with those of investment-grade obligations. The credit characteristics of the Northland Center Mall are no longer consistent with those of an investment-grade obligation. Details of these loans are: -- The largest loan in the pool, the 375 Park Avenue loan, has a trust balance of $273.8 million (9.5%) and a whole-loan balance of $310.0 million. The whole loan consists of a $273.8 million senior participation and a $36.2 million junior participation that is securitized on a nonpooled basis. In addition, there is $252.5 million of mezzanine debt, which is secured by a pledge of partnership interests in the borrowing entity. The whole loan is secured by the "Seagram's Building", a 39-story office building totaling 791,993 sq. ft. located between 52nd and 53rd Streets on Park Avenue in New York City. The reported DSC was 2.54x as of year-end 2007, and occupancy was 95% as of March 2008, compared with a DSC of 2.14x and occupancy of 98% at issuance. Standard & Poor's adjusted net cash flow (NCF) has increased 22.2% since issuance. -- The fifth-largest loan in the pool, the 120 Wall Street loan, has a balance of $70.0 million (2.4%). The loan is secured by a 34-story, class B office building totaling 607,172 sq. ft. on Wall Street in the Financial District of New York City. The reported DSC was 2.94x as of year-end 2007, and occupancy was 100% as of June 2008, compared with a DSC of 2.45x and 99% occupancy at issuance. Standard & Poor's adjusted NCF has increased 11.0% since issuance. -- The 19th-largest exposure in the pool, The Northland Center Mall loan, has a balance of $30.1 million (1.0%). The loan is secured by 537,716 sq. ft. of a 1.4 million-sq.-ft. regional mall in Detroit, Mich. Occupancy was 77.2% as of Aug. 12, 2008, and the year-end 2007 DSC was 1.81x. Standard & Poor's adjusted net value for this loan is down 28.0% since issuance primarily due to lower reimbursements and higher expenses. -- The 27th-largest exposure in the pool, the MK Plaza loan, has a balance of $20.0 million (0.7%). The loan is secured by a 554,649-sq.-ft. suburban office building in Boise, Idaho. Occupancy was 94% as of Dec. 31, 2007, and the year-end 2007 DSC was 4.41x. Standard & Poor's adjusted NCF has increased 15.5% since issuance. Standard & Poor's stressed the loans on the watchlist, along with other loans with credit issues, as part of its pool analysis. The resultant credit enhancement levels support the lowered and affirmed ratings. RATINGS LOWERED Credit Suisse First Boston Mortgage Securities Corp. Commercial mortgage pass-through certificates series 2005-C5 Rating Class To From Credit enhancement (%) N B+ BB- 1.95 O B B+ 1.82 P B- B 1.56 Q CCC+ B- 1.18 RATINGS AFFIRMED Credit Suisse First Boston Mortgage Securities Corp. Commercial mortgage pass-through certificates series 2005-C5 Class Rating Credit enhancement (%) A-1 AAA 30.47 A-2 AAA 30.47 A-3 AAA 30.47 A-AB AAA 30.47 A-4 AAA 30.47 A-1A AAA 30.47 A-M AAA 20.28 A-J AAA 12.39 B AA+ 11.51 C AA 9.84 D AA- 9.08 E A+ 8.44 F A 7.42 G A- 6.15 H BBB+ 5.38 J BBB 4.24 K BBB- 3.09 L BB+ 2.84 M BB 2.33 A-X AAA N/A A-SP AAA N/A A-Y AAA N/A N/A -- Not applicable. CYBERONICS INC: July 25 Balance Sheet Upside-Down by $6.6 Million ----------------------------------------------------------------- Cyberonics Inc.'s balance sheet at July 25, 2008, showed total assets of $143.7 million and total liabilities of $150.3 million, resulting a stockholders' deficit of $6.6 million. The company reported net income of $2.1 million for the first quarter, compared with a net loss of $8.2 million in the first quarter of fiscal 2008. Cash increased by $10.1 million to $101.1 million in the completed quarter. This increase reflects positive operating cash flow of $6.6 million and an additional $4.1 million resulting from the exercise of stock options. Worldwide net sales for the first quarter of fiscal 2009 were $33.7 million compared to $29.1 million in the comparable period of fiscal 2008, representing an increase of 16%. Net product sales in the quarter attributable to the epilepsy indication were $32.6 million, an increase of $5.8 million, or 22%, over the first quarter of fiscal 2008, while net sales attributable to the depression indication declined to $0.7 million from $2.2 million in the same period in the prior year. U.S. net product sales attributable to the epilepsy indication increased to $25.8 million, compared with $20.9 million in the comparable period of fiscal 2008, an increase of $4.9 million, or 23%. International net sales increased by 19% in the first quarter of fiscal 2009 to $7.1 million, up from $6.0 million reported in the first quarter of the prior fiscal year, due primarily to pricing improvements, a higher proportion of sales through direct channels and the impact of foreign currency movements. Net sales for the quarter included $0.4 million related to the license fee of $9.5 million received during the third quarter of fiscal 2008. Liquidity and Capital Resources Net cash provided by operating activities during the thirteen weeks ended July 25, 2008, was $6.6 million as compared to net cash used in operating activities of $2.3 million during the same period of the previous fiscal year. The reasons for the increase in cash provided by operating activities was increased sales, higher gross-profit percentage and reduced overall expenses. Net cash used in investing activities during the thirteen weeks ended July 25, 2008, was $0.2 million compared to net cash used in investing activities of $0.3 million during the same period of the previous fiscal year. This amount represents investment in property and equipment. Net cash provided by financing activities during the thirteen weeks ended July 25, 2008 was approximately $4.0 million compared to net cash provided by financing activities of approximately $4.2 million during the same period of the previous fiscal year. The reason for the cash provided by financing activities for both periods is the proceeds from issuance of common stock pursuant to stock option exercises. About Cyberonics and VNS Therapy(TM) Cyberonics Inc. (NASDAQ: CYBX) -- http://www.cyberonics.com/-- is a medical technology company with core expertise in neuromodulation. The company developed and markets the Vagus Nerve Stimulation (VNS) Therapy(TM) System, -- http://www.vnstherapy.com/-- which is FDA-approved for the treatments of epilepsy and treatment-resistant depression. The VNS Therapy System uses a surgically implanted medical device that delivers electrical pulsed signals to the vagus nerve. Cyberonics markets the VNS Therapy System in selected markets worldwide. DEATH ROW: Buyer Global Music to be Acquired by Mediatechnics ------------------------------------------------------------- Mediatechnics Corporation has agreed to purchase Global Music Group - New York, the company that won the bid to acquire the assets of Death Row Records Inc. in June 2008 for $24 million. Mediatechnics intends to provide Global Music with the funds needed to complete the acquisition. The deal would give Mediatechnics Corp. ownership of Global Music Group, which will hold upon completion of the purchase -- free and clear of all liens, claims and encumbrances -- all of the assets that comprise Death Row Records, including Death Row's catalog of master recordings and published music, as well as all trademarks and other intellectual property, licenses, artist and writer agreements, works in progress, and options. An independent valuation of the bankruptcy estate completed last month placed the catalog value at $32 million. The Death Row catalog includes a significant amount of previously unreleased material by the late Tupac "2Pac" Shakur and other top artists, as well as almost all of the previously released music of Dr. Dre and 2Pac. The 2Pac music has spawned great interest with the media since the possibility of its imminent release became news. Founded in 1991 by Marion "Suge" Knight and Dr. Dre, Death Row Records established itself as one of the biggest labels at the forefront of the '90s gangsta rap music era, and, for all intents and purposes, defined the genre. The label was home to such artists as Dr. Dre, Snoop Dogg, Tha Dogg Pound as well as 2Pac. By the early 2000s, Death Row was besieged with several crippling lawsuits and criminal convictions for founder Suge Knight. In April of 2006, Knight sought bankruptcy protection for himself and the label. On June 24 of this year, the U.S. Bankruptcy Court for the Central District of California approved the sale of Death Row to Global Music Group - New York for $24 million, and Global Music placed a deposit with the court. Mediatechnics President Richard Wilson said, "The acquisition of Global Music and Death Row Records will represent a landmark turning point for our company. Together with our subsidiaries, the Live Network and CRD Technologies, the prospects of co- branding, licensing and new product development are astounding." He continued, "We're driving hard to lock in all of the complicated pieces of this puzzle necessary to successfully conclude this remarkable deal." Susan Berg, President of Global Music Group - NY, said, "We are delighted by the prospects that this imminent transaction could bring to our two companies and believe the outcome, both financially and creatively, can be an incredible force." Berg qualified Global Music Group as a bidder with the Federal Bankruptcy Court prior to the auction in June, putting up more than one million dollars on deposit. Mediatechnics' transaction remains contingent upon several factors, not the least of which is the closing of the financing and the subsequent payment to, and acceptance by, the Bankruptcy Court and its trustee. While many factors outside the control of Mediatechnics could yet affect whether or not the transaction is completed, the company is currently in possession of a Letter of Intent from a lender to fund the transaction, and has been informed by GMG-NY that it is likely that the purchase will be accepted when funds are proven and delivered. About Death Row Headquartered in Compton, California, Death Row Records Inc. -- http://www.deathrowrecords.net/-- is an independent record producer. The company and its owner, Marion Knight, Jr., filed for chapter 11 protection on April 4, 2006 (Bankr. C.D. Calif. Case No. 06-11205 and 06-11187). Daniel J. McCarthy, Esq., at Hill, Farrer & Burrill, LLP, and Robert S. Altagen, Esq., represent the Debtors in their restructuring efforts. R. Todd Neilson serves as chapter 11 Trustee for the Debtors' estate. The U.S. Trustee for Region 17 appointed creditors to serve on an Official Committee of Unsecured Creditors. The Committee selected Pachulski Stang Ziehl & Jones as its counsel. When the Debtors filed for protection from their creditors, they listed total assets of $1,500,000 and total debts of $119,794,000. DEEPWATER DEVELOPMENT: Voluntary Chapter 11 Case Summary -------------------------------------------------------- Debtor: Deepwater Development Company, LLC 4315 South Hesperides Drive Nags Head, NC 27959 Bankruptcy Case No.: 08-05747 Related Information: Michael Kin Lam, Sr., member and manager, filed the petition on the Debtor's behalf. Chapter 11 Petition Date: August 26, 2008 Court: Eastern District of North Carolina (Wilson) Judge: J. Rich Leonard Debtor's Counsel: Jason L. Hendren, Esq. (bwood@bradynordgren.com) Brady, Nordgren, Morton & Malone, PLLC 2301 Sugar Bush Road, Suite 450 Raleigh, NC 27612 Tel: (919) 782-3500 Fax: (919) 573-1430 Estimated Assets: $1 million to $10 million Estimated Debts: $100,000 to $500,000 A copy of the Debtor's petition containing a list of its largest unsecured creditors is available for free at: http://bankrupt.com/misc/NCeb08-05747.pdf DEEPWATER DEVELOPMENT: Section 341(a) Meeting Set for October 1 --------------------------------------------------------------- The Bankruptcy Administrator for the U.S. Bankruptcy Court in Eastern District of North Carolina (Wilson) will hold a meeting of creditors of Deepwater Development Company, LLC at 10:00 a.m., on Oct. 1, 2008, at USBA Creditors Meeting Room, 1760 B Parkwood Boulevard in Wilson, North Carolina. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Nags Head, North Carolina-based Deepwater Development Company, LLC was placed under chapter 11 bankruptcy by its member and manager, Michael Kin Lam, Sr., on Aug. 26, 2008 (Bankr. E.D.N.C. Case No. 08-05747). Judge J. Rich Leonard presides over the case. Jason L. Hendren, Esq., at Brady, Nordgren, Morton & Malone, PLLC, represents the Debtor in its restructuring efforts. The Debtor listed assets between $1 million and $10 million and debts between $100,000 and $500,000. DELPHI CORP: Appaloosa Wants Fraud Claims Dismissed --------------------------------------------------- BankruptcyLaw 360 reports that Appaloosa Management LP has asked a court to throw out claims and strike allegations brought by Delphi Corp. in relation to a $2.55 billion planned investment that didn't push through. As reported by the Troubled Company Reporter on August 15, 2008, the Hon. Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York issued a ruling granting in part and denying in part, each of the motions of Appaloosa, Harbinger Del- Auto Investment Company Ltd., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman Sachs & Co. and UBS Securities LLC for the dismissal of the complaints filed against them by the Debtors, pursuant to Rules 9(b), 12(b)(6) and (12)(f) of the Federal Rules of Civil Procedure, as incorporated by Rules 7009 and 7012(b) of the Federal Rules of Bankruptcy Procedure. As disclosed in the TCR on Aug. 7, 2008, Delphi 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. Delphi's exit from Chapter 11 has been derailed as a result. 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 June 30, 2008, the Debtors' balance sheet showed $9,162,000,000 in total assets and $23,742,000,000 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 $2,550,000,000 in equity financing to Delphi. DELTA AIR: Obtains $1 Billion Loan Prior to Northwest Merger ------------------------------------------------------------ Delta Air Lines Inc., disclosed that it obtained a $1,000,000,000 loan to give it greater financial flexibility as completion of its merger with Northwest Airlines nears. Delta's merger with Northwest is expected to close by the end of the year. BusinessWeek says Delta expects to spend $600,000,000 to integrate the two companies. Ed Bastian, Delta's president and chief financial officer, said in an interview that the draw is part of a credit line that was made available to the airline upon its exit from bankruptcy court protection last year, The Wall Street Journal reports. "It's not being done out of any financial duress or any operating needs for cash," The Atlanta Journal-Constitution quotes Mr. Bastian as saying. According to Mr. Bastian, with the company's $3.7 billion in cash at the end of July, including the $1 billion option exercised, Delta will have sufficient liquidity through the end of the year. "We believe we will have more than sufficient cash on hand at the closing to manage the integration process and run the day-to-day business," Mr. Bastian said in the memo to employees, reports BusinessWeek. Reports further note that Delta renegotiated its Visa/MasterCard credit card processing agreement to extend the contract period through Dec. 31, 2011. Mr. Bastian said there will continue to be no cash holdback requirement. The agreement also provides for all Visa/MasterCard processing for Northwest following the close of the consolidation. About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE: DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. (Delta Air Lines Bankruptcy News, Issue No. 106; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). DELTA AIR: NWA Cancels Worldwide Pact, Uses Delta Global Services ----------------------------------------------------------------- In light of its proposed merger with Delta Air Lines, Inc., Northwest Airlines Corp. ended its contract with French-owned Worldwide Flight Services for ground services at Bradley International Airport, and decided to use Delta Global Services, a Delta subsidiary, Courant.com reports. Delta spokeswoman Susan Elliott has stated that Delta Global won the Contract in competitive bidding. With Northwest's reduced schedule at Bradley Airport, Worldwide's services are no longer necessary, Northwest's Vice President for Communications Tammy Lee told Courant.com. As a result of the canceled Agreement, Worldwide told the Department of Labor that it plans to shut down operations at the Bradley Airport effective October 2, 2008, and contemplates 74 job cuts, says the report. Delta Global plans to employ 30 additional employees at Bradley Airport, and are considering Worldwide's workers who are represented by the Transport Workers Union of America, Ms. Elliott said. Worldwide employees have "hard-to-obtain" security clearances; hence the Union is "cautiously optimistic" that they would find work with Delta, Courant.com says, quoting Union spokesperson Jamie Horwitz. About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington, represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Scott L. Hazan, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C. as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed $14.4 billion in total assets and $17.9 billion in total debts. On Jan. 12, 2007, the Debtors filed with the Court their chapter 11 plan. On Feb. 15, 2007, the Debtors filed an amended plan and disclosure statement. The Court approved the adequacy of the Debtors' amended disclosure statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' amended plan. That amended plan took effect May 31, 2007. (Northwest Airlines Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on July 29, 2008, Standard & Poor's Ratings Services lowered its ratings on Northwest Airlines Corp. and subsidiary Northwest Airlines Inc. (both rated B/Negative/--), including lowering the long-term corporate credit ratings on both entities to 'B' from 'B+', and removed the ratings from CreditWatch, where they had been placed with negative implications April 15, 2008. The outlook is negative. The downgrade reflects expected losses and reduced or negative operating cash flow caused by high fuel prices. S&P also lowered our ratings on enhanced equipment trust certificates, in some cases by more than one notch. About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE: DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. (Delta Air Lines Bankruptcy News, Issue No. 106; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). DELTA AIR: Resolves $9 Mil. Hillsborough Aviation Authority Claim ----------------------------------------------------------------- Hillsborough County Aviation Authority issued bonds, in December 1982, to Delta Air Lines, Inc., with The Bank of New York Mellon, formerly the Bank of New York, as Indenture Trustee. Pursuant to the 1982 Indenture, Delta used the proceeds to construct a hanger, a maintenance facility and other improvements to a Tampa International Airport property in Florida. The bonds were refinanced in 1988 and 1993. HCAA and BNY filed a claim for $8,110,311 against Delta, asserting debt service payments when Delta discontinued its periodic rent payments upon rejection of the Lease. HCCA also has a separate $4,181,735 claim for periodic payments, which the Debtors also refuse to pay. In September 2007, Delta filed its counterclaim, seeking declaratory judgment that the Lease is a "true lease" and recovery of postpetition payments made to HCAA and BNY. To avoid the complexities, expenses and risks associated with litigating the obligations under the Lease, the Parties have reached a settlement, under which they essentially agree that: (a) BNY's Claim will be allowed for $8,000,000; (b) HCAA's Claim will be allowed for $846,584; and (c) BNY will pay Delta $202,000 to settle its Counterclaim. Delta has agreed to allow BNY and HCAA unsecured Class 4 Claims under the Reorganized Debtors' Plan. Additionally, HCCA will receive a distribution of new Delta common stock with respect to Delta's payment to HCAA. The Agreement also provides that BNY and the former, present and future holders of record and of beneficial interests in the Bonds will not have any other claim in Delta's cases or otherwise with regard to the Lease and the Indenture or the Bonds. Similarly, HCAA will not have any other claim against Delta or otherwise with regard to the Lease and the Indenture or the Bonds. Under the Agreement, BNY and HCAA fully and finally will discharge the Reorganized Debtors from the BNY and HCAA Claims. In the same manner, Delta will release the BNY and HCAA from any and all claims. The Agreement is deemed to settle and resolve all disputes with respect to any causes of action and claims resulting from, related to, or arising out of Delta's obligations under the Lease, the Indenture or the Bonds. The Parties asked Judge Adlai S. Hardin of the U.S. Bankruptcy Court for the Southern District of New York to approve their Settlement Agreement. A copy of the deal is available for free at: http://bankrupt.com/misc/Delta,BNY&HCAA_SettlementAgreement.pdf About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE: DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. (Delta Air Lines Bankruptcy News, Issue No. 106; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). DELTA AIR: Abett & Co. Discloses 10.10% Stake --------------------------------------------- In a Form 13G filed with the Securities and Exchange Commission, Lord, Abbett & Co. LLC disclosed that it beneficially owns 30,698,022 shares of Delta Air Lines, Inc., common stock. The Company has a sole voting power of 27,750,818, and has the option to dispose 30,598,273 shares. The shares constitute 10.10% of the 303,892,307 shares of Delta common stock that are outstanding as of June 30, 2008. About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE: DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. (Delta Air Lines Bankruptcy News, Issue No. 106; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). DIGISCRIPT INC: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: DigiScript, Inc. 1410 Donelson Pike, Suite B-5 Nashville, TN 37217 Tel: (615) 850-6924 Bankruptcy Case No.: 08-07584 Related Information: Marshall Graves filed the petition on the Debtor's behalf. Chapter 11 Petition Date: August 25, 2008 Court: Middle District of Tennessee (Nashville) Judge: Marian F. Harrison Debtor's Counsel: Elliott Warner Jones, Esq. (ejones@dsattorneys.com) Drescher & Sharp PC 1720 West End Avenue, Suite 300 Nashville, TN 37203 Tel: (615) 425-7121 Fax: (615) 425-7111 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 million to $10 million A copy of the Debtor's petition containing a list of its largest unsecured creditors is available for free at: http://bankrupt.com/misc/TNmb08-07584.pdf DIGISCRIPT INC: Section 341(a) Meeting Slated for October 3 ----------------------------------------------------------- The United States Trustee for Region 8 will convene a meeting of creditors of DigiScript, Inc. at 10:00 a.m., on Oct. 3, 2008, at Customs House, 701 Broadway, Room 100 in Nashville, Tennessee. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Marshall Graves filed a chapter 11 petition on behalf of Nashville, Tennessee-based DigiScript, Inc. on Aug. 25, 2008 (Bankr. M.D. Tenn. Case No. 08-07584). Judge Marian F. Harrison presides over the case. Elliott Warner Jones, Esq., at Drescher & Sharp PC, represents the Debtor in its restructuring efforts. The Debtor estimated assets of $100,000 to $500,000 and debts of $1 million to $10 million. DISTRIBUTED ENERGY: Completes $12.9MM NPS Assets Sale to CB Wind ---------------------------------------------------------------- Pursuant to an Asset Purchase Agreement among Distribution Energy Systems Corp., its Northern Power Systems, Inc. subsidiary, and CB Wind Acquisition Corp., dated as of July 17, 2008, Distribution Energy says it has completed the sale of substantially all of the assets of Northern Power to CB Wind. The aggregate purchase price for the Northern Power assets under the Asset Purchase Agreement was $12,900,000. The actual amount paid at the closing was $11,411,209, after deducting: (i) a holdback amount of $600,000 to cover potential obligations of the registrant and Northern Power as set forth in the Asset Purchase Agreement, (ii) $573,790.40 in escrows and (iii) the $315,000 breakup fee to NEA Acquisition Corp. The closing payment was paid directly to Perseus Partners VII, L.P., the company's secured creditor. Based in Wallingford, Connecticut, Distributed Energy Systems (Nasdaq: DESC) -- http://www.distributed-energy.com/-- through its subsidiaries, engages in the design, development, manufacture, and sale of on-site hydrogen gas delivery systems worldwide. Distributed Energy Systems Corp. and its wholly owned subsidiary, Northern Power systems Inc., filed for Chapter 11 bankruptcy protection on May 4, 2008 (Bankr. D. Del. Lead Case No. 08-11101). Robert S. Brady, Esq. and Robert F. Poppiti, Jr., at Young, Conaway, Stargatt & Taylor represent the Debtors in their restructuring efforts. The Debtors selected Epiq Bankruptcy Solutions LLC as their claims agent. The U.S. Trustee for Region 3 appointed three creditors to serve on an Official Committee of Unsecured Creditors. The Committee's Counsel is Arent Fox LLP. The Debtors disclosed in its schedules, assets of $19,593,387 and debts of $43,558,713. DISTRIBUTION EXPERTS: Case Summary & 20 Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: Distribution Experts, Inc. 2A Terminal Way Avenel, NJ 07001 Bankruptcy Case No.: 08-25244 Chapter 11 Petition Date: August 12, 2008 Court: District of New Jersey (Trenton) Debtor's Counsels: Stephen Ravin, Esq. Forman Holt Eliades & Ravin 80 Route 4 East Paramus, NJ 07652 Tel: (201) 845-1000 E-mail: sravin@formanlaw.com Wendy B. Green, Esq. Forman Holt Eliades & Ravin LLC 80 Route 4 East Suite 290 Paramus, NJ 07652 Tel: (201) 845-1000 Fax: 201-845-9112 E-mail: wgreen@formanlaw.com Estimated Assets: $100,000 to $500,000 Estimated Debts: $1,000,000 to $10,000,000 A copy of the Debtor's petition is available for free at: http://bankrupt.com/misc/njb08-25244.pdf DOWNEY REGIONAL: Weak Balance Sheet Cues S&P to Cut Rating to CCC ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating to 'CCC' from 'BB' on the California Health Facilities Finance Authority's outstanding $31.0 million series 1993 revenue bonds issued on behalf of Downey Community Hospital, currently doing business as Downey Regional Medical Center (the medical center). The outlook is negative. "The rating is based on a sizeable accounts receivable adjustment of prior-period revenues to be included in the audit for June 2007, which will result in a large operating loss and significant weakening of the balance sheet, as well as its severe cash constraints," said Standard & Poor's credit analyst Keith Dickinson. The accounting adjustments relate to incorrect booking of capitation revenues and patient revenues in 2005, 2006, and 2007. Management has indicated that the negative adjustment will be material to the financial statements, with an expected loss of more than $30 million in 2007. Interim results for the 10 months ended April 30, 2008, show a $9.7 million operating loss, or a negative operating margin of 6.6%. Of particular concern are the lack of liquidity and the interruption of Medi-Cal payments from the state of California, which is putting additional strain on the organization. Management estimates that as of August, the medical center has around $9 million of unrestricted cash available to pay its employees and vendors, which is about 18 days' cash on hand, with one month's payroll at approximately $6.9 million. This cash excludes moneys on deposit as collateral on a $7.2 million short- term line of credit. Debt to capitalization is currently at 54.7% (including the debt of Downey's property-holding subsidiary), as unrestricted net assets have dropped by almost $25 million to $34.8 million at the interim period, from $59.8 million as of June 30, 2007 (unaudited medical center only financials). A new management team that was formed in 2007, including an external consultant operating as interim chief financial officer, is attempting to resolve the major cause of the financial stress, which stems from losses on the medical center's five capitation contracts. The medical center operates a 199-staffed-bed acute-care hospital in the City of Downey in southeast Los Angeles County, and serves a population of about 1.4 million. DRINKS AMERICAS: Continuous Net Losses Raise Substantial Doubt -------------------------------------------------------------- New York City-based Bernstein & Pinchuk LLP expressed substantial doubt about Drinks Americas Holdings, Ltd.'s ability to continue as a going concern after auditing the company's financial statements for the year ended April 30, 2008. The auditor pointed to the company's significant losses from operations since its inception. The company posted a net loss of $6,310,948 on net sales of $4,509,070 for the year ended April 30, 2008, as compared with a net loss of $9,389,250 on net sales of $6,084,520 in the prior year. Although the company has shareholders' equity of $178,116 as of April 30, 2008, the company has incurred significant operating losses and negative cash flows since inception. The company sustained net losses for the years ended April 30, 2007, and 2006. For the year ended April 30, 2008, the company used $3,848,266 in operating activities compared with $8,901,392 for the year ended April 30, 2007. The company has increased its working capital as a result of its December 2007 private placement of its preferred stock. In addition the company has improved its liquidity by extinguishing a significant amount of debt by exchanging it for its common stock in previous periods. In June 2006, the company entered into a $10 million, three-year, working capital revolving finance facility with BACC, a division of Sovereign Bank. Interest on the line of credit is prime rate plus 1.5%, at April 30, 2008, 6.75%. The facility is secured by a first security interest in the company's assets. The facility has an outstanding balance of $307,940 at April 30, 2008. The company will need additional financing, which may take the form of equity or debt. The management anticipates that increased sales revenues will help to some extent. In the event that the company will not be able to increase its working capital, it will not be able to implement or may be required to delay all or part of its business plan, and the company's ability to attain profitable operations, generate positive cash flows from operating and investing activities and materially expand the business will be adversely affected. At April 30, 2008, the company's balance sheet showed $4,570,245 in total assets, $4,392,129 in total liabilities, and $178,116 in total stockholders' equity. The company's consolidated balance sheet at April 30, 2008, showed strained liquidity with $3,007,041 in total current assets available to pay $4,392,129 in total current liabilities. A full-text copy of the company's 2008 annual report is available for free at http://ResearchArchives.com/t/s?3146 About Drinks Americas Headquartered in Wilton, Conn. Drinks Americas Holdings Ltd. -- http://www.drinksamericas.com/-- develops, owns, markets, and nationally distributes alcoholic and non-alcoholic premium beverages that are often associated with renowned icon celebrities. Drinks' portfolio of premium alcoholic beverages includes Donald Trump's Trump Super Premium Vodka (Spring 2006), Willie Nelson's Old Whiskey River Bourbon and Bourbon Cream, and Roy Yamaguchi's Y Sake. Drinks non-alcoholic brands include the distribution of Paul Newman's Newman's Own Lightly Sparkling Fruit Juice Drinks. EDUCATION RESOURCES: Wants to Set October 17 as Claims Bar Date --------------------------------------------------------------- The Education Resources Institute Inc. asks the U.S. Bankruptcy Court for the District of Massachusetts to: (a) establish Oct. 17, 2008, as the deadline for filing of proofs of claim; and (b) approve the form of notice of the deadline and the mailing and publication procedures of the bar date. Gina Lynn Martin, Esq., at Goodwin Procter LLP, in Boston, Massachusetts, says that the Debtor proposes that any entity, other than an exempted entity: * whose claim is not listed in the Debtor's Schedules of Assets and Liabilities; * whose claim is listed in the Debtor's Schedules in an incorrect amount; or * whose claim is listed in the Debtor's Schedules as disputed, contingent or unliquidated, and who desires to be eligible to vote on a plan of reorganization and share in any distribution under a Plan, be required to file a proof of claim on or before the Bar Date. Entities will be notified that copies of the Debtor's schedules are available for review on its Web site http://www.teri.org/or on its claims agent, EPIQ Bankruptcy Solutions, LLC's Web site http://chapter11.epiqsystems.com/teri/or by contacting EPIQ at (800) 609-7049. The Debtor anticipates that certain creditors may assert claims in connection with the Debtor's rejection of executory contracts and unexpired leases pursuant to Section 365. The Debtor proposes that, for any claim arising from, or as a consequence of, the rejection of an executory contract or unexpired lease, the Bar Date for filing proofs of claim on account of that claim will be 5:00 p.m., EDT, on the later of (i) the Bar Date; or (ii) 30 days from the date of entry of the Order rejecting the executory contract or unexpired lease. These Entities need not file proofs of claim: -- any Entity who has already properly filed a proof of claim against the Debtor with the Clerk of the Bankruptcy Court for the District of Massachusetts or EPIQ; -- any Entity whose Claim is listed in the Debtor's Schedules in an amount and manner with which that person or entity agrees, and which claim is not listed in the Debtor's Schedules as disputed, contingent, or unliquidated; -- any Entity whose Claim against the Debtor has been previously allowed by order of the Court; or -- any Entity whose Claim is allowed under Section 507(a)(1) as an administrative expense. The Debtor reserves the right to (a) dispute, or assert offsets or defenses against, any filed Claim or any Claim listed or reflected in the Schedules as to nature, priority, amount, liability, classification or otherwise; or (b) subsequently designate any Claim as disputed, contingent or unliquidated. The Debtor proposes that if the Debtor amends the Schedules to reduce the undisputed, noncontingent and liquidated amount or to change the nature or classification of a Claim against the Debtor, then the affected claimant will have 30 days from the date that notice of the amendment is served on the claimant to file a proof of claim or to amend any previously filed proof of claim in respect of the amended scheduled Claim. Pursuant to Rule 3003(c)(2) of the Federal Rules of Bankruptcy Procedure, any Entity that is required to file a proof of claim with respect to a particular Claim against the Debtor, but fails to do so in a timely manner, will be barred and enjoined from: (i) asserting any Claim against the Debtor that that Entity has that (x) is in an amount that exceeds the amount, that is set forth in the Schedules as undisputed, noncontingent and liquidated; or (y) is of a different nature or in a different classification; and (ii) voting upon, or receiving distributions under, any plan of reorganization in this Chapter 11 case in respect of that Claim. The Debtor has prepared two forms of notice -- one for mailing and one for publication. The Debtor believes that both forms fully and fairly describe the Bar Date, its significance, and the necessary actions that creditors must take to file a proof of claim. The Debtor proposes to give notice to: * all known prepetition creditors, claimants, all current and former employees in the Debtor's employ at any time from January 1, 2008, through the notice date, and parties- in-interest listed on the Debtor's Schedules or that are otherwise known to the Debtor; * all parties who have filed a notice of appearance; * each of the Lenders or other financial institutions that funded "TERI-Guaranteed" student loans under various loan programs; * all parties entitled to notice pursuant to Rule 2002(j); * counsel for the Official Committee of Unsecured Creditors; and * the U.S. Trustee. The notice will be delivered by first-class mail, postage prepaid, no later than September 5, 2008, and the Debtor will include with the Bar Date Notice a proof of claim form, conforming to Official Bankruptcy Form 10. The mailing of the Notice no later than that date will ensure that creditors receive at least 40 days' notice of the Bar Date, which exceeds the minimum notice period established under Bankruptcy Rule 2002(a)(7). For any Proof of Claim Form to be validly and properly filed, a signed original of the completed Proof of Claim Form, together with accompanying documentation, must be delivered to EPIQ so as to be actually received no later than the Bar Date. The Debtor proposes that creditors be permitted to submit proofs of claim in person or by courier service, hand delivery or mail and facsimile submissions will not be accepted. Proofs of claim will be deemed filed when actually received by EPIQ and if a creditor wishes to receive acknowledgment of EPIQ's receipt of the creditor's proof of claim, the creditor must submit a copy of the proof of claim and a self-addressed, stamped envelope. The Debtor proposes to publish the Bar Date Notice within 15 days after the entry of the Bar Date Order in The Boston Globe and the national edition of The Wall Street Journal. 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. Grant Thornton LLP, acts as financial advisors, and Citigroup Global Markets Inc. acts as investment banker. Its Claims Agent is Epiq Bankruptcy Solutions LLC. 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. 11; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) EFOODSAFETY.COM INC: Losses Cues Gruber & Co. Going Concern Doubt ----------------------------------------------------------------- Gruber & Company, LLC, reported that eFoodSafety.com, Inc., has suffered recurring losses from operations, which raises substantial doubt about its ability to continue as a going concern, after auditing the company and its subsidiaries' financial statements for the year ended April 30, 2008, and 2007. The company posted a net loss of $3,791,966 on total revenues of $1,189,954 for the year ended April 30, 2008, as compared with a net loss of $3,614,279 on total revenues of $1,169,658 in the prior year. As of April 30, 2008, the company has operating losses of $3,749,244 for the year. The continuation of the company is dependent upon the continuing financial support of directors and stockholders as well as becoming profitable. As of April 30, 2008, the company has working capital of $3,564,771. As a result of its operating losses during the year ended April 30, 2008, the company generated a cash flow deficit of $1,191,073 from operating activities. The company utilized cash flows in connection with investing activities of $9,573 during the year ended April 30, 2008. The company was able to meet its cash requirements for the year ended April 30, 2008, with cash flows provided from financing activities mainly from sales of its stock for $1,605,078. During the year ended April 30, 2008, the company incurred sales and marketing expenses of $204,593, compared with sales and marketing expenses of $1,409,645 during the year ended April 30, 2007. The decrease in sales and marketing expenses is primarily due to the change from the company being solely a distributor to a manufacturer, as well as a change in how the product is marketed from ad campaigns and TV advertising to print. Management expects such expense to be level in 2009. At April 30, 2008, the company's balance sheet showed $7,616,214 in total assets, $180,558 in total liabilities, and $7,435,656 in total stockholders' equity. A full-text copy of the company's 2008 annual report is available for free at http://ResearchArchives.com/t/s?3145 About eFoodSafety.com Headquartered in Scottsdale, Ariz., eFoodSafety.com Inc. (OTC BB: EFSF) -- http://www.efoodsafety.com/-- researches, develops, and markets whole foods and nutraceutical products. The company's Knock-Out Technologies Ltd. subsidiary has developed an environmentally safe sporicidal product formulated entirely of food-grade components that eradicates anthrax and a germicidal product, Big 6 Plus that kills six major bacteria: E-coli, Listeria, Pseudomonas, Salmonella, Staphylococcus, and Streptococcus, Avian Influenza and Black Mold. The sporicidal product has completed its final efficacy laboratory study requisite for EPA registration. The company's MedElite Inc. subsidiary distributes clinically proven products to physicians who then prescribe the products for their patients. The company manufactures Cinnergen(TM), a nonprescription liquid whole food nutritional supplement that promotes healthy glucose metabolism and is the owner of PurEffect(TM), a 4-step anti-acne formula. ELK VALLEY: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Elk Valley Estates LLC P.O. Box 1578 Granby, CO 80446 Bankruptcy Case No.: 08-22286 Type of Business: The Debtor is a single asset real estate as defined in Section 101(51B) of the U.S. Bankruptcy Code. Chapter 11 Petition Date: August 14, 2008 Court: District of Colorado (Denver) Judge: A. Bruce Campbell Debtor's Counsel: Guy B. Humphries, Esq. 1801 Broadway, Ste. 1100 Denver, CO 80202 Tel: 303-832-0029 Fax: 303-382-4165 E-mail: guyhump@aol.com Total Assets: $8,875,600 Total Debts: $9,917,698 A copy of the Debtor's petition is available for free at: http://bankrupt.com/misc/cob08-22286.pdf ENERGY EXPLORATION: Earns C$806,619 in 2008 Second Quarter ---------------------------------------------------------- Energy Exploration Technologies Inc. reported net income of C$806,619 on revenue of C$1,749,076 for the second quarter ended June 30, 2008, compared with net income of C$1,665,080 on revenue of C$2,772,806 in the same period last year. The company recognized C$1,774,470 of SFD survey revenue related to one contract for a client during the second quarter ended June 30, 2008, as compared to survey revenue of C$2,763,620 for two SFD survey contracts during the corresponding period of 2007. Effective May 21, 2008, the company sold its 22.5% working interest in a well at Entice, Alberta for a net proceeds of C$47,400. Following the effective date the company ceased to hold working interests in any producing wells. The company's interests in oil and gas properties consists of undeveloped land and Royalty interests. Income from operations decreased to C$746,018 for the three months ended June 30, 2008, as compared to income from operations of C$1,655,452 for the same period in 2007, mainly as a result of the decline in revenue. At June 30, 2008, the company's consolidated balance sheet showed C$10,228,659 in total assets, C$2,484,577 in total liabilities, and C$7,744,082 in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2008, are available for free at http://researcharchives.com/t/s?315c Going Concern Doubt Energy Exploration Technologies Inc. is in the early stage of commercializing its SFD technology. Its ability to generate cash flow from operations will depend on its ability to service its existing clients and develop new clients for its SFD services. Management also recognizes that this early commercialization phase can last for several years. In addition, Energy Exploration said that consistent with this early stage of commercialization the company has a significant economic dependency on a few customers. Energy Exploration Technologies Inc. believes these conditions cast substantial doubt about its ability to continue as a going concern. About Energy Exploration Based in Calgary, Alberta, Canada, Energy Exploration Technologies Inc. (OTC BB: ENXTF; TSX-V: SFD) -- http://www.nxtenergy.com/-- is in the business of providing wide-area airborne exploration services to the oil and gas industry. The company utilizes its proprietary Stress Field Detection Survey System to offer its clients a unique service to rapidly identify sub-surface structures with reservoir potential in sedimentary basins with no environmental impact. The value of the service is providing clients with an efficient, cost effective method of surveying large tracts of land and delivering an inventory of SFD prospects with high potential. ESPRE SOLUTIONS: June 30 Balance Sheet Upside-Down by $872,209 -------------------------------------------------------------- Espre Solutions Inc.'s consolidated balance sheet at June 30, 2008, showed $1,416,113 in total assets, $1,328,988 in total liabilities, and $959,334 in minority interest, resulting in a $872,209 stockholders' deficit. At June 30, 2008, the company's consolidated balance sheet also showed strained liquidity with $806,156 in total current assets available to pay $1,328,988 in total current liabilities. The company reported a net loss of $2,047,934 on total revenue of $1,001,750 for the third quarter ended June 30, 2008, compared with a net loss of $4,571,179 on total revenue of $263,156 in the same period ended June 30, 2007. For the three months ended June 30, 2008, total operating expenses were $3,807,974, compared to $4,906,326 during the same period last year. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2008, are available for free at http://researcharchives.com/t/s?3159 Going Concern The company has incurred significant and recurring losses and negative cash flow from operations. In the period from inception to June 30, 2008, the company has transacted a substantial amount of its business with related parties. The company continues to be dependent on revenues from these related parties. The achievement of profitability and the ability to generate cash flows from operations is dependent upon, among other things, the acceptance of the company's products and services, competition from other products and the deployment of video applications by the company's customers. There is no assurance that management's plan will be successful. Accordingly, the company believes substantial doubt exists about its ability to continue as a going concern. About Espre Solutions Inc. Headquartered in Plano, Texas, ESPRE Solutions Inc. (OTC: EPRT.PK) -- http://www.espresolutions.com/-- is a video media services company and owner of VUELive, a new web-based video distribution platform that will deliver a suite of video applications to enable businesses to collaborate visually anytime, anywhere there is a broadband connection. EUROSOCKS NORTH: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Eurosocks North America, Inc. 300 Centerville Road Suite 215 South Building Warwick, RI 02886 Tel: (401) 739-6500 Bankruptcy Case No.: 08-12602 Related Information: Alan M. Jacober, chief executive officer and president, filed the petition on the Debtor's behalf. Chapter 11 Petition Date: August 25, 2008 Court: District of Rhode Island (Providence) Debtor's Counsel: Theodore Orson, Esq. (torson@orsonandbrusini.com) 325 Angell Street Providence, RI 02906 Tel: (401) 223-2100 Fax: (861) 3103 Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million A copy of the Debtor's petition containing a list of its largest unsecured creditors is available for free at: http://bankrupt.com/misc/RIb08-12602.pdf EXECUTE SPORTS: June 30 Balance Sheet Upside-down by $6,685,847 --------------------------------------------------------------- Execute Sports Inc.'s consolidated balance sheet at June 30, 2008, showed $1,174,024 in total assets and $7,859,871 in total liabilities, resulting in a $6,685,847 stockholders' deficit. At June 30, 2008, the company's consolidated balance sheet also showed strained liquidity with $746,547 in total current assets available to pay $3,368,759 in total current liabilities. The company reported a net loss of $5,063,712 on total net sales of $1,771,024 for the second quarter ended June 30, 2008, compared with a net loss of $527,017 on total net sales of $798,037 in the corresponding period last year. The increase in net sales is due primarily to an increase in watersports sales of $827,510 and $145,477 of sales related to Sugar Sand boats that were not part of the company's product portfolio during the same period in the previous year. Going forward the company expects Sugar Sand boat sales to end as a result of Challenger Powerboats Inc.'s chapter 7 bankruptcy filing. The increase in net loss is due primarily to the recognition of an impairment charge of $4,825,000 related to the company's Sugar Sand investment and higher costs for goods offset by lower amortization costs related to the company's convertible debentures and slightly lower overall operating costs. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2008, are available for free at http://researcharchives.com/t/s?315d Going Concern Doubt Bedinger & Company, in Concord, Calif., expressed substantial doubt about Execute Sports Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's recurring losses from operations. In addition, the company has yet to generate an internal cash flow from its business operations. About Execute Sports Headquartered in Torrance, Calif., Execute Sports Inc. (OTC BB: EXCS) -- http://www.executesports.com/-- engages in the design, manufacture, and distribution of water sports products in North America, Europe, Mexico, Australia, South Africa, the Middle East, and Asia. Its water sports products include wetsuits, life vests, rash guards, wakeskates, spray tops, dry tops, and an assortment of accessories primarily to the wakeboard, wake skate, water ski, and PWC markets. The company markets its Execute branded product line through a network of independent dealers in the United States; and through distributors internationally. It also sells its products through various online retailers, as well as through sporting goods stores and outlets, marine dealers, and independently owned pro shops. FF&Y LLC: Chapter 11 Case Summary and Largest Unsecured Creditor ---------------------------------------------------------------- Debtor: FF&Y, LLC 4607 Lander Road Jefferson, MD 21755 Bankruptcy Case No.: 08-20765 Related Information: Zafar Iqbal, managing member, filed the petition on the Debtor's behalf. Kushnood Iqbal and Zafar Iqbal each own 50% interest in the Debtor. Chapter 11 Petition Date: August 22, 2008 Court: District of Maryland (Greenbelt) Judge: Paul Mannes Debtor's Counsel: Daniel M. Press, Esq. (dpress@chung-press.com) Chung & Press, P.C. 6718 Whittier Ave., Ste. 200 McLean, VA 22101 Tel: (703) 734-3800 Fax: (703) 734-0590 Total Assets: $2,124,811 Total Debts: $2,281,477 List of Largest Unsecured Creditor: Creditor Nature of Claim Claim Amount -------- --------------- ------------ Advanced Environmental trade debt $18,054 Concepts, Inc. FF&Y LLC: Section 341(a) Meeting Scheduled for September 22 ----------------------------------------------------------- The United States Trustee for Region 4 will convene a meeting of creditors of FF&Y, LLC at 9:00 a.m., on Sept. 22, 2008, at 341 meeting rooms, Sixth Floor in Greenbelt, Maryland. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Jefferson, Maryland-based FF&Y, LLC was placed under chapter 11 bankruptcy by Zafar Iqbal, managing member, filed the petition on the Debtor's behalf. Kushnood Iqbal and Zafar Iqbal each own 50% interest in the Debtor. The petition was filed on Aug. 22, 2008 (Bankr. D. Md. Case No. 08-20765). Judge Paul Mannes presides over the case. Daniel M. Press, Esq., at Chung & Press, P.C., represents the Debtor in its restructuring efforts. The Debtor listed total assets of $2,124,811 and total debts of $2,281,477. FREMONT HOME: Moody's Junks Eight Class Certificates ---------------------------------------------------- Moody's Investors Service downgraded 43 tranches from 11 deals issued by Fremont Home Loan Trust. The transactions are backed by primarily first-lien, subprime fixed- and adjustable-rate mortgage loans that are originated by Fremont. The actions are based on the analysis of the credit enhancement provided by subordination, overcollateralization, and excess spread relative to expected losses. The certificates have been downgraded based upon recent and expected pool losses and the resulting erosion of credit support. Moreover, increasing delinquencies along with step-down, or the possibility thereof, are likely to cause further erosion of credit enhancement levels. Fremont Home Loan Trust 2002-1 -- Cl. M-2: Downgraded to Ba1, Previously A2; -- Cl. M-3: Downgraded to Ba3, Previously Baa3; -- Cl. M-4: Downgraded to B1, Previously Baa3; Fremont Home Loan Trust 2002-2 -- Cl. M-1: Downgraded to A3, Previously Aa2; -- Cl. M-2B: Downgraded to Baa2, Previously A2; -- Cl. M-2A: Downgraded to Baa2, Previously A2; Fremont Home Loan Trust 2003-1 -- Ser. 2003-1 Cl. M-3: Downgraded to Baa2, Previously A3; -- Ser. 2003-1 Cl. M-4: Downgraded to Ba1, Previously Baa1; -- Ser. 2003-1 Cl. M-5: Downgraded to Ba2, Previously Baa2; Fremont Home Loan Trust 2003-A -- Cl. M-5: Downgraded to Ba1, Previously Baa2; Fremont Home Loan Trust 2004-4 -- Cl. M-5: Downgraded to Baa2, Previously A2; -- Cl. M-6: Downgraded to Ba2, Previously Baa1; -- Cl. M-7: Downgraded to B1, Previously Baa3; -- Cl. M-8: Downgraded to Caa1, Previously Ba2; -- Cl. M-9: Downgraded to Caa3, Previously B3; -- Cl. M-10: Downgraded to C, Previously Ca; Fremont Home Loan Trust 2004-A -- Cl. B-2: Downgraded to Ba1, Previously Baa2; -- Cl. B-3: Downgraded to Ba2, Previously Ba1; Fremont Home Loan Trust 2004-C -- Cl. M-6: Downgraded to Ba1, Previously Baa2; -- Cl. M-7: Downgraded to Ba2, Previously Baa3; -- Cl. M-8: Downgraded to B3, Previously Ba2; Fremont Home Loan Trust 2004-D -- Cl. M3: Downgraded to A1, Previously Aa3; -- Cl. M4: Downgraded to Baa1, Previously A1; -- Cl. M5: Downgraded to Baa2, Previously A2; -- Cl. M6: Downgraded to Ba1, Previously Baa1; -- Cl. M7: Downgraded to Ba3, Previously Baa3; -- Cl. M8: Downgraded to B3, Previously Ba2; -- Cl. M9: Downgraded to Ca, Previously B1; -- Cl. M10: Downgraded to Ca, Previously Caa3; Fremont Home Loan Trust 2005-1 -- Cl. M-9: Downgraded to Ca, Previously Caa2; -- Cl. B-1: Downgraded to Ca, Previously Caa3; -- Cl. B-2: Downgraded to C, Previously Ca; Fremont Home Loan Trust 2005-A -- Cl. M3: Downgraded to A1, Previously Aa3; -- Cl. M5: Downgraded to Ba1, Previously Baa2; -- Cl. M6: Downgraded to Ba2, Previously Baa3; -- Cl. M7: Downgraded to B2, Previously Ba2; -- Cl. M8: Downgraded to Caa1, Previously B2; -- Cl. M9: Downgraded to Ca, Previously Caa2; -- Cl. M10: Downgraded to C, Previously Ca; Fremont Home Loan Trust 2005-B -- Cl. M8: Downgraded to Ba2, Previously Ba1; -- Cl. M9: Downgraded to B3, Previously Ba3; -- Cl. M10: Downgraded to Ca, Previously B3; -- Cl. M11: Downgraded to C, Previously Caa3. GENERAL SPRING: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: General Spring, LLC 245 Warehouse Lane Hartsville, TN 37074 Bankruptcy Case No.: 08-07445 Chapter 11 Petition Date: August 21, 2008 Court: Middle District of Tennessee (Nashville) Debtor's Counsel: Elliott Warner Jones, Esq. (ejones@dsattorneys.com) Drescher & Sharp PC 1720 West End Avenue Suite 300 Nashville, TN 37203 Tel: (615)-425-7121 Fax: (615)-425-7111 Estimated Assets: $1,000,0000 to $10,000,000 Estimated Debts: $1,000,0000 to $10,000,000 A copy of the Debtor's petition is available for free at: http://bankrupt.com/misc/tnmb08-07445.pdf GENESIS RESTAURANT: Case Summary & 3 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Genesis Restaurant Entity Group, Inc. 1029 Peachtree Parkway Box No. 372 Peachtree City, GA 30269 Bankruptcy Case No.: 08-12428 Chapter 11 Petition Date: August 25, 2008 Court: Northern District of Georgia (Newnan) Judge: W. Homer Drake Debtor's Counsel: Dorna Jenkins Taylor (dorna.taylor@taylorattorneys.com) Taylor & Associates, LLC, Suite 500 1401 Peachtree Street Atlanta, GA 30309 Tel: (404) 870-3560 Fax : (404) 745-0136 Total Assets: $1,463,400 Total Debts: $855,035 A list of the Debtor's three largest unsecured creditors is available for free at: http://bankrupt.com/misc/ganb08-12428.pdf GEOFFREY OSLER: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Geoffrey Douglas Osler 3828 49th Ave NE Seattle, WA 98105 Bankruptcy Case No.: 08-15406 Chapter 11 Petition Date: August 25, 2008 Court: Western District of Washington (Seattle) Judge: Thomas T. Glover Debtor's Counsel: Charles A Johnson, Jr. (charlie@johnsonlaw.com) 5413 Meridian Ave N Ste A Seattle, WA 98103-6138 Tel: 206-632-8980 Total Assets: $3,209,925 Total Debts: $1,740,002 A copy of Debtor's petition, which includes a list of its 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/wawb08-15406.pdf GERARD THEOPHIL: Case Summary & 19 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Gerard Theophil Roy Nancy Gail Roy fka Nancy Gail Walwyn 2832 South West 36th Terrace Cape Coral, FL 33914 Bankruptcy Case No.: 08-12892 Chapter 11 Petition Date: August 26, 2008 Court: Middle District of Florida (Ft. Myers) Debtor's Counsel: Holly Bower (hb@corporationcounsel.com) Phoenix Law PA 12800 University Drive, Suite 260 Fort Myers, FL 33907 Tel: (239) 333-3800 Total Assets: $1,228,881 Total Debts: $1,672,897 A list of the Debtor's 19 largest unsecured creditors is available for free at: http://bankrupt.com/misc/flmb08-12892.pdf GERDAU AMERISTEEL: Moody's Rates $405MM Sr. Unsec. Notes at Ba1 --------------------------------------------------------------- Moody's Investors Service changed to positive from stable the outlook of all ratings related to Gerdau S.A. and Gerdau Ameristeel Corporation. Simultaneously, Moody's withdrew the Ba1 corporate family rating of the Brazilian operations of Gerdau represented by Gerdau Acominas S.A., Gerdau Acos Longos S.A., Gerdau Acos Especiais S.A., and Comercial de Acos S.A., collectively referred to as "Gerdau Brazil". Ratings with outlook changed to positive from stable are: Issuer: Gerdau S.A. -- Ba1 Corporate Family Rating -- Ba1 $600 million guaranteed perpetual bonds Issuer: Gerdau Ameristeel Corporation -- Ba1 Probability of Default Rating -- Ba1 Corporate Family Rating -- Ba1 $405 million Senior Unsecured Guaranteed Notes due 2011 (LGD 4, 62%) Issuer: Jacksonville Economic Development Commission (FL) -- Ba1 $23 million Industrial Revenue Senior Unsecured Bonds due 2037 (LGD4, 62%) Rating withdrawn: -- Ba1 Corporate Family Rating of "Gerdau Brazil" The change in outlook reflects the maintenance of strong debt protection metrics and robust liquidity on a consolidated basis while successfully integrating Chaparral Steel, a 2.6 million ton per year structural steel and steel bar producer acquired in September 2007 for about $4.2 billion, and Macsteel, a 1.1 million ton per year specialty steel manufacturer acquired in April 2008 for some $1.46 billion. Gerdau's healthy liquidity is based on a cash balance of $3.4 billion at June 30, 2008 in addition to $1.35 billion in committed credit facilities, its good access to export- related financing and comfortable debt repayment schedule vis-�- vis its strong cash generation. Current global steel market conditions are very favorable and, along with recent acquisitions, are raising Ameristeel's and Gerdau's revenues and earnings to levels well above historical results. Moody's expects Gerdau to use free cash flow to reduce leverage as measured by Net Debt to EBITDA to around 1.0x by 2008 year-end. Gerdau's ratings continue to be supported by its solid cash generation, which reflects its strong market position in the several markets where it operates, its good operational and geographic diversity, and cost-driven management. The company's acquisitive growth strategy, exposure to commodity products, and the need for further improvement of operational efficiency in North America are constraining factors for its ratings. Moody's recognizes, however, that acquisitions made so far have contributed to Gerdau's improved business profile. At this time, Moody's believes the ratings of Gerdau and Ameristeel should be highly correlated. The factors behind this judgment include the strong parent support to Ameristeel, demonstrated by the recent equity infusion, which maintained the parent's 66.5% ownership, guarantees of Gerdau for approximately 80% of Ameristeel's debt, cross default provisions under existing loan agreements, and the centrally managed approach to sales and operations. However, there is no assurance that the two companies' ratings will move in tandem in the future. Upward pressure on the ratings of Gerdau could result from the decline in leverage as measured by Consolidated Net Debt to EBITDA below 1.8x on a sustained basis simultaneous with the maintenance of strong credit fundamentals that include efficient cost management and adequate liquidity levels. An upgrade of Ameristeel's ratings would also consider the secured nature of its $950 million committed credit facility, which is a limiting factor in achieving investment grade status. Conversely, Gerdau's ratings or outlook could come under downward pressure if Consolidated Net Debt to EBITDA remains above 2.2x for an extended time period or in case of a sharp deterioration in the group's liquidity position or financial performance. This scenario would probably result from a large acquisition preventing Gerdau from prospectively reducing its leverage. Gerdau Ameristeel, headquartered in Tampa, Florida, serves customers in the U.S. and Canada through a vertically integrated network of 19 minimills, 19 scrap recycling facilities and 68 downstream operations. The company's run-rate annual sales are approximately $10 billion. Gerdau S.A., headquartered in Porto Alegre, Brazil, is the largest long steel producer in Brazil and the second largest long steel manufacturer in North America, with consolidated net revenues of approximately $20 billion for the trailing twelve months ended June 30, 2008. GERDAU SA: Moody's Revises Rating on $600 Million Bonds to Ba1 -------------------------------------------------------------- Moody's Investors Service changed to positive from stable the outlook of all ratings related to Gerdau S.A. and Gerdau Ameristeel Corporation. Simultaneously, Moody's withdrew the Ba1 corporate family rating of the Brazilian operations of Gerdau represented by Gerdau Acominas S.A., Gerdau Acos Longos S.A., Gerdau Acos Especiais S.A., and Comercial de Acos S.A., collectively referred to as "Gerdau Brazil". Ratings with outlook changed to positive from stable are: Issuer: Gerdau S.A. -- Ba1 Corporate Family Rating -- Ba1 $600 million guaranteed perpetual bonds Issuer: Gerdau Ameristeel Corporation -- Ba1 Probability of Default Rating -- Ba1 Corporate Family Rating -- Ba1 $405 million Senior Unsecured Guaranteed Notes due 2011 (LGD 4, 62%) Issuer: Jacksonville Economic Development Commission (FL) -- Ba1 $23 million Industrial Revenue Senior Unsecured Bonds due 2037 (LGD4, 62%) Rating withdrawn: -- Ba1 Corporate Family Rating of "Gerdau Brazil" The change in outlook reflects the maintenance of strong debt protection metrics and robust liquidity on a consolidated basis while successfully integrating Chaparral Steel, a 2.6 million ton per year structural steel and steel bar producer acquired in September 2007 for about $4.2 billion, and Macsteel, a 1.1 million ton per year specialty steel manufacturer acquired in April 2008 for some $1.46 billion. Gerdau's healthy liquidity is based on a cash balance of $3.4 billion at June 30, 2008 in addition to $1.35 billion in committed credit facilities, its good access to export- related financing and comfortable debt repayment schedule vis-�- vis its strong cash generation. Current global steel market conditions are very favorable and, along with recent acquisitions, are raising Ameristeel's and Gerdau's revenues and earnings to levels well above historical results. Moody's expects Gerdau to use free cash flow to reduce leverage as measured by Net Debt to EBITDA to around 1.0x by 2008 year-end. Gerdau's ratings continue to be supported by its solid cash generation, which reflects its strong market position in the several markets where it operates, its good operational and geographic diversity, and cost-driven management. The company's acquisitive growth strategy, exposure to commodity products, and the need for further improvement of operational efficiency in North America are constraining factors for its ratings. Moody's recognizes, however, that acquisitions made so far have contributed to Gerdau's improved business profile. At this time, Moody's believes the ratings of Gerdau and Ameristeel should be highly correlated. The factors behind this judgment include the strong parent support to Ameristeel, demonstrated by the recent equity infusion, which maintained the parent's 66.5% ownership, guarantees of Gerdau for approximately 80% of Ameristeel's debt, cross default provisions under existing loan agreements, and the centrally managed approach to sales and operations. However, there is no assurance that the two companies' ratings will move in tandem in the future. Upward pressure on the ratings of Gerdau could result from the decline in leverage as measured by Consolidated Net Debt to EBITDA below 1.8x on a sustained basis simultaneous with the maintenance of strong credit fundamentals that include efficient cost management and adequate liquidity levels. An upgrade of Ameristeel's ratings would also consider the secured nature of its $950 million committed credit facility, which is a limiting factor in achieving investment grade status. Conversely, Gerdau's ratings or outlook could come under downward pressure if Consolidated Net Debt to EBITDA remains above 2.2x for an extended time period or in case of a sharp deterioration in the group's liquidity position or financial performance. This scenario would probably result from a large acquisition preventing Gerdau from prospectively reducing its leverage. Gerdau Ameristeel, headquartered in Tampa, Florida, serves customers in the U.S. and Canada through a vertically integrated network of 19 minimills, 19 scrap recycling facilities and 68 downstream operations. The company's run-rate annual sales are approximately $10 billion. Gerdau S.A., headquartered in Porto Alegre, Brazil, is the largest long steel producer in Brazil and the second largest long steel manufacturer in North America, with consolidated net revenues of approximately $20 billion for the trailing twelve months ended June 30, 2008. GINX INC: Voluntary Chapter 11 Case Summary ------------------------------------------- Debtor: Ginx, Inc. dba Lola 15 Watts Street New York, NY 10013 Tel: (212) 675-6700 Bankruptcy Case No.: 08-13283 Related Information: Gayle Patrick Odeen, president, filed the petition on the Debtor's behalf. Chapter 11 Petition Date: August 22, 2008 Court: Southern District of New York (Manhattan) Debtor's Counsel: David Carlebach, Esq. (david@carlebachlaw.com) Law Offices of David Carlebach 40 Exchange Place New York, NY 10005 Tel: (212) 785-3041 Fax: (212) 785-3618 Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million The Debtor did not file a list of its largest unsecured creditors. GMAC COMMERCIAL: Fitch Keeps CC/DR3 Rating on $25.3MM Class L Loan ------------------------------------------------------------------ Fitch upgrades two classes of GMAC Commercial Mortgage Securities, Inc., series 1998-C2 as: -- $44.3 million class G to 'AAA' from 'A'; -- $19.0 million class H to 'A' from 'BBB-'. Fitch also affirms these classes: -- Interest Only class X at 'AAA'; -- $107.6 million class D at 'AAA'; -- $38 million class E at 'AAA'; -- $88.6 million class F at 'AAA'; -- $19.0 million class J at 'BB+'; -- $19.0 million class K at 'BB-'. The $25.3 million class L remains at 'CC/DR3' and the $12.9 million class M remains at 'C/DR6'. Classes A-1, A-2, B and C have paid in full. The upgrades are the result of additional credit enhancement due to significant pay down since Fitch's last review (57.3%). The affirmations of the junior classes are due to an increase in specially serviced assets and loss expectations since Fitch's last rating action. As of the August 2008 distribution date, the transaction's principal balance decreased 85.2% to $373.6 million compared to $2.53 billion at issuance. Fourteen loans (23.7%) have defeased. Fitch has identified nineteen Loans of Concern (17.1%), which includes ten specially serviced assets (11.6%) with significant losses anticipated. The largest Fitch Loan of Concern (2.4%), is specially serviced, and is secured by a multifamily property in foreclosure located in Saline, Michigan. The property is currently for sale with losses expected upon liquidation. The second largest Loan of Concern is also specially serviced (1.5%) and is secured by a retail property located in Indianapolis, Indiana. The loan is past its scheduled May 2008 maturity and the borrower is working to secure refinancing. The largest remaining loan in the pool (6.8%) is collateralized by a multifamily property in Ft. Myers, Florida. Servicer reported year-end 2007 occupancy was 98.9% with a debt service coverage ratio of 2.72 times. The second largest loan (6.1%) is secured by a portfolio of industrial warehouse facilities located throughout Connecticut. Servicer reported YE 2007 occupancy was 91.3% with a DSCR of 1.37x. GOODY'S FAMILY: Court Approves Amended Disclosure Statement ----------------------------------------------------------- The Hon. Christopher S. Sontchi of the United States Bankruptcy Court for the District of Delaware approved on Aug. 24, 2008, an amended disclosure statement explaining the amended joint Chapter 11 plan of reorganization filed by Goody's Family Clothing Inc. and the Official Committee of Unsecured Creditors. He held that the amended disclosure statement contains adequate information within the meaning of Section 1125 of the Bankruptcy Code. A hearing is set for Oct. 6, 2008, at 1:00 p.m., to consider confirmation of the amended plan. Objections, if any, are due Sept. 29, 2008, at 4:00 p.m. Judge Sontchi also approved procedures the Debtors proposed for the solicitation and tabulation of plan votes. Deadline for voting is Sept. 26, 2008. Overview of the Plan The amended plan will implement a compromise and settlement among the Debtors, the prepetition lender, the prepetition junior lenders and the creditors committee pursuant to Bankruptcy Rule 9019 and Section 1123(b)(3) of the bankruptcy code. Under the plan, the Debtor will continue in operation achieving the objectives of Chapter 11 for the benefit of their creditors. On the Plan's effective date, the Debtors will waive all of their respective rights and interest in avoidance action that the Debtors may hold against any person other than the permitted avoidance actions commenced before the plan's confirmation date. The Plan will enable the Debtors to obtain an exit facility to satisfy the DIP facilities claims, support payments required to be paid under the plan, pay transaction cost, fund working capital and other general corporate purposes of the reorganized Debtors upon their emergence. As reported in the Troubled Company Reporter on July 18, 2008, the Court authorized the Debtors to obtain, on a final basis, up to $210,000,000 in postpetition financing from a consortium of financial institution including: -- General Electric Capital Corporation; -- Bank of America N.A.; -- 1903 Onshore SPV LLC; -- GB Merchant Partners LLC; and -- PGDYS Lending LLC. The committed $210,000,000 DIP financing is comprised of: a) a $175,000,000 senior revolving credit facility including (i) a $75,000,000 letter of credit sub-limit and (ii) a $20 million swingline loan sub-limit from General Electric and BoA, b) a $15,000,000 Term Loan B Credit Facility from 1903 onshore, and c) a $20 million DIP Tranche C Facility from PDGYS Lending consist of (i) $15 million term loan, and (ii) a $5 million revolving credit overadvance facility. The amended plan classifies interests against and claims in the Debtors in 12 classes. The classification of treatment of interests and claims are: Treatment of Interests and Claims Type Estimated Estimated Class of Claims Treatment Amount Recovery ----- --------- --------- --------- --------- 1 prepetition senior unimpaired $0 100% lender claims 2 secured tax unimpaired $300,000 100% claims 3 aviation finance unimpaired $1,325,000 100% group secured claims 4 miscellaneous unimpaired unknown 100% secured claims 5 non-tax priority unimpaired $350,000 100% claims 6 prentice term loan impaired $67,527,777 26%-93% agreement claim 7 trance B term loan impaired $31,795,260 0% agreement claims 8 general unsecured impaired $125,000,000- 5%-10% claims $160,000,000 9 convenience claims impaired 0% 10 intercompany claims impaired 0% 11 subordinated 510(c) impaired 0% claims 12 subordinated 510(b) impaired 0% claims 13 old equity interest impaired 0% Classes 6,7 and 8 are entitled to vote to accept or reject the plan. Under the plan, allowed administrative claims, 503(b)(9) claims, priority tax claims, and non-tax priority claims will be paid in full, unless otherwise agreed by the holders of the claims. Holders of Class 2 and 4 claims may be reinstated on original terms, satisfied on deferred payment terms, or paid in full on the plan's effective date, at the Debtors' option. The trance b term loan agreement claims held by GMM Capital LLC and PGDYS Lending LLC, an affiliates of Prentice Capital Management LP, will be treated as follows: i) GMM will receive new common stock if GMM makes the GMM equity election or treatment of its allowed tranche B loan agreement claim as a Class8 general unsecured claim; and ii) PGDYS Lending will receive new common stock. Moreover, PGDYS Lending has agreed to waive its rights to participate in the Class8 general unsecured claim distribution on account of the unsecured claim arising with respect to its allowed trance B loan agreement claims. Holders of Class 8 general unsecured claims will receive a pro rate share of (i) the general unsecured creditor cash, and (ii) the general unsecured creditor note. Class 9, 11 and 12 will not receive any distribution under the plan. Holders of Class 10 intercompany claims will be either: i) reinstated, in full or in party, or ii) canceled and discharge, in full or in part, in which case such discharged and satisfied portion will be eliminated and the holder of Class 10 claims will not receive any distribution under the plan. Class 13 equity interest will be canceled. A full-text copy of the Debtors' amended disclosure statement is available for free at: http://ResearchArchives.com/t/s?3152 A full-text copy of the Debtors' amended joint Chapter 11 plan of reorganization is available for free at: http://ResearchArchives.com/t/s?3153 A full-text copy of the Debtors' liquidation analysis is available for free at: http://ResearchArchives.com/t/s?3154 A full-text copy of the Debtors' pro forma financial projections is available for free at http://ResearchArchives.com/t/s?3155 A full-text copy of the Debtors' valuation of reorganized Debtors is available for free at: http://ResearchArchives.com/t/s?3156 About Goody's Family Headquartered in Knoxville, Tennessee, Goody's Family Clothing Inc. -- http://www.shopgoodys.com/-- operates chains of clothing stores. The company is owned by Goody's Holdings Inc., a non- debtor entity. As of May 31, 2008, the company operates 355 stores in several states with approximately 9,868 personnel of which 170 employees are covered under a collective bargaining agreement. The company and 19 of its affiliates filed for Chapter 11 protection on June 9, 2008 (Bankr. D. Del. Lead Case No.08- 11133). Gregg M. Galardi, Esq., and Marion M. Quirk, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Paul G. Jennings, Esq., at Bass, Berry & Sims PLC, represent the Debtors. The Debtors selected Logan and Company Inc. as their claims agent. The U.S. Trustee for Region 3 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. Frederick Brian Rosner, Esq., at Duane Morris LLP, and Lawrence C. Gottlieb, Esq., Cathy Herschopf, Esq., and Jeffrey L. Cohen, Esq., at Cooley Godward Kronish LLP, represent the Committee in these cases. When the Debtors filed for protection against their creditors, they listed assets and debts between $100 million and $500 million. As of May 3, 2008, the Debtors' records reflected total assets of $313,000,000 -- book value -- and total debts of $443,000,000. GRASSO PROPERTIES: Case Summary & 3 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Grasso Properties, Inc. 180 Boulder Industrial Drive Bridgeton, MO 63044 Bankruptcy Case No.: 08-46013 Type of Business: The Debtor is a single asset real estate as defined in Section 101(51B) of the U.S. Bankruptcy Code. Chapter 11 Petition Date: August 11, 2008 Court: Eastern District of Missouri (St. Louis) Judge: Charles E. Rendlen III Debtor's Counsel: David A. Sosne, Esq. Summers, Compton et al. 8909 Ladue Road St. Louis, MO 63124 Tel: (314) 991-4999 E-mail: dasattymo@scwh.com Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $1,000,000 to $10,000,000 A copy of the Debtor's petition is available for free at: http://bankrupt.com/misc/moeb08-46013.pdf GREGORY PERKINS: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtors: Gregory E. Perkins Laura M. Perkins 13723 Legend Trail Lane Orland Park, IL 60462 Bankruptcy Case No.: 08-21919 Chapter 11 Petition Date: August 20, 2008 Court: Northern District of Illinois (Chicago) Debtors' Counsel: Forrest L. Ingram, Esq. (fingram@fingramlaw.com) Forrest L. Ingram, P.C. 79 West Monroe Street, Suite 900 Chicago, IL 60603 Tel: (312) 759-2838 Fax: (312) 759-0298 Estimated Assets: $500,000 to $1,000,000 Estimated Debts: $10,000,000 to $50,000,000 A copy of the Debtors' petition is available for free at: http://bankrupt.com/misc/ilnb08-21919.pdf GREY WOLF: S&P Keeps 'BB-' on Watch Positive on Merger Pact ----------------------------------------------------------- Standard & Poor's Ratings Services said its 'BB-' corporate credit rating on land contract drilling firm, Grey Wolf Inc. remains on CreditWatch with positive implications following the announcement that rival contract driller, Precision Drilling Trust (not rated) has entered into a definitive merger agreement with Grey Wolf. At the same time, S&P revised the CreditWatch listing on Grey Wolf's senior unsecured issues to developing from negative. The ratings on Grey Wolf were originally placed on CreditWatch April 22, 2008. Under the terms of the agreement, Precision will acquire Grey Wolf for $2 billion and Grey Wolf shareholders will receive $5 cash and .188 Precision trust units for each share of Grey Wolf. The transaction follows Grey Wolf's announcement that it would be exploring strategic alternatives to enhance shareholder value after Grey Wolf's shareholders failed to approve a previous merger agreement with Basic Energy Services Inc. (BB-/Stable/--) in mid July. The announcement also follows Grey Wolf's rejection of several prior overtures from Precision in the June-July time period. GSC ABS: Fitch Downgrades 9 Classes of Notes, Removes from RWN -------------------------------------------------------------- Fitch Ratings has downgraded and removed from Rating Watch Negative nine classes of notes issued by GSC ABS CDO 2006-2m Ltd. These rating actions are effective immediately: -- $189,976,506 class A-1A notes downgraded to 'CCC' from 'BBB+' and removed from Rating Watch Negative; -- $125,000,000 class A-1B notes downgrade to 'CC' from 'B+' and removed from Rating Watch Negative; -- $13,500,000 class A-2 notes downgraded to 'CC' from 'B' and removed from Rating Watch Negative; -- $56,500,000 class B notes downgraded to 'CC' from 'CCC' and removed from Rating Watch Negative; -- $14,500,000 class C notes downgraded to 'CC' from 'CCC' and removed from Rating Watch Negative; -- $22,500,000 class D notes downgraded to 'C' from 'CC' and removed from Rating Watch Negative; -- $21,000,000 class E notes downgraded to 'C' from 'CC' and removed from Rating Watch Negative; -- $4,652,423 class F notes downgraded to 'C' from 'CC' and removed from Rating Watch Negative; -- $4,652,423 class G notes downgraded to 'C' from 'CC'. Fitch's rating actions reflect the collateral deterioration within the portfolio, specifically from subprime residential mortgage backed securities. GSC ABS CDO 2006-2m, Ltd. is a cashflow collateralized debt obligation with hybrid features which closed May 31, 2006, and is managed by GSC Group. The portfolio is composed primarily of subprime RMBS (80.0%) and Structured Finance (SF) CDOs with exposure to subprime RMBS (10.3%). Subprime RMBS of the pre-2005, 2005, 2006, and 2007 vintages account for approximately 7.6%, 38.2%, 33.1%, and 1.1% of the portfolio, respectively. SF CDOs of the 2005 and 2006 vintages account for approximately 1.1% and 9.2% of the portfolio. Since the last review conducted in November 2007, approximately 73.0% of the portfolio has been downgraded. The portion of the portfolio rated below investment grade is now 82.3% while 6.1% of the portfolio is currently on Rating Watch Negative. The collateral deterioration has caused each of the class A/B/C, D, E, and F OC tests to fall below 100% and fail their respective triggers. The failures of these tests are diverting interest proceeds that would otherwise be payable to the class D, E, F and G notes, to pay down the class A-1A notes. Consistent with the current ratings, Fitch expects the class D, E, F, and G notes to receive only capitalized interest payments in the future with no ultimate principal recovery. The ratings on the class A-1A, A-1B, A-2, B and C 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 class D, E, F and G notes address the ultimate receipt of interest payments and principal, as per the transaction's governing documents. Fitch is reviewing its SF CDO approach and will comment separately on any changes and potential rating impact at a later date. Fitch will continue to monitor and review this transaction for future rating adjustments. HEALTHMARKETS INC: S&P Affirms 'BB' Rating; Outlook Negative ------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on HealthMarkets Inc. (HealthMarkets) and its primary operating subsidiaries to negative from stable. Standard & Poor's also said that it affirmed its 'BB' counterparty credit rating on HealthMarkets and its various counterparty credit and financial strength ratings on HealthMarkets' subsidiaries. "The negative outlook reflects the potential for longer-term weakness in the company's earnings profile," explained Standard & Poor's credit analyst Neal Freedman. Specifically, lower-than- expected earnings in its core Self-Employed Agency Division (SEA) are the issue. (The company has announced plans to discontinue its life insurance and Medicare businesses by year-end 2008.) "Although we downgraded the group in June because of expectations of weaker earnings, SEA's operating earnings of $30.7 million through the first six months of 2008 were well below even our revised expectations," Mr. Freedman added. "Furthermore, we expect the company to fall short of our prior expectations regarding leverage and coverage." HealthMarkets' SEA division's difficulties stem from a higher- than-expected loss ratio as the division gradually migrates its product portfolio to new PPO-type products, which--by design--have a higher loss ratio than the company's previous products that were largely per-occurrence or scheduled-benefit products. If HealthMarkets' earnings profile continues to deteriorate, Standard & Poor's could lower the ratings on all of HealthMarkets' companies by one notch. HECTOR JIMENEZ: Case Summary & 6 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Hector Jimenez Ramos Calle 6 Numero 17 Extension Quintas De Monserrate Ponce, PR 00731 Bankruptcy Case No.: 08-05383-11 Chapter 11 Petition Date: August 20, 2008 Court: District of Puerto Rico (Old San Juan) Debtor's Counsel: Modesto Bigas Mendez, Esq. (modesto@coqui.net) Bigas & Bigas P.O. BOX 7462 Ponce, PR 00732 Tel: (787) 844-1444 Total Assets: $5,661,512 Total Debts: $888,593 A copy of the Debtor's petition is available for free at: http://bankrupt.com/misc/prb08-05383-11.pdf HINES HORTICULTURE: Organizational Meeting Set for September 2 -------------------------------------------------------------- Roberta A. DeAngelis, the acting United States Trustee for Region 3, will hold an organizational meeting in the Chapter 11 cases of Hines Horticulture Inc. and its affiliate on September 2, 2008, at 1:00 p.m. at J. Caleb Boggs Federal Building, 844 King Street, Room 5209 in Wilmington, Delaware. 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 cases. Headquartered in Irvine, California, Hines Horticulture, Inc. -- http://www.hineshorticulture.com/-- operates nursery facilities located in Arizona, California, Oregon and Texas. Through its affiliate, the company produces and distributes horticultural products. The company and its affiliate, Hines Nurseries, Inc., filed for Chapter 11 protection on Aug. 20, 2008 (Bankr. D. Del. Case No.08-11922). Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, represents the Debtors in their restructuring efforts. When the Debtors filed for protection against their creditors, they listed assets and debts between $100 million and $500 million each. HINES HORTICULTURE: Gets Initial OK to Use BofA's $53MM DIP Loan ---------------------------------------------------------------- The Hon. Kevin J. Carey of the United States Bankruptcy Court for the District of Delaware authorized Hines Horticulture Inc. and Hines Nurseries Inc. to obtain, on an interim basis, up to $53 million in postpetition financing under a revolving credit facility from a consortium of lenders including Bank of America N.A., as agent, PNC Bank National Association and GMAC Commercial Finance LLC, as lenders, under the loan agreement dated Aug. 20, 2008. The lenders agreed to provide at most $62 million in DIP financing on a final basis: Lender DIP Commitment ------ -------------- Bank of America N.A. $24,800,000 GMAC Commercial Finance LLC $21,700,000 PNC Bank, National Association $15,500,000 Judge Carey also authorized the Debtors to use their lenders' cash collateral. The Debtors say that they require overadvance loans of up to $31 million. The permitted overadvances are: Permitted Period Overadvance ------ ----------- Date of entry interim order $11 million to Aug. 31, 2008 Sept. 1 to 15, 2008 $19 million Sept. 16 to 30, 2008 $24 million Oct. 1 to 15, 2008 $28 million Oct. 16 to 15, 2008 $31 million A hearing is set for Sept. 10, 2008, at 11:00 a.m., to consider final approval of the Debtors' motion. Objections, if any, are due Sept. 8, 2008, at 12:00 noon. The proceeds of the loans will be used to fund (i) any key employee retention plan costs, management incentive plan costs or other employee bonuses, and (ii) any director and officer insurance premiums or costs. On Jan. 18, 2007, the Debtors entered into a loan and security agreement with the lenders to make certain loans and other financial accommodations to the Debtors. As of their bankruptcy filing, the Debtors owe $35,909,096 plus accrued and unpaid interest, fees and expenses to the lenders. Under the loan agreement, the DIP facility will bear interest at: i) LIBOR for the applicable interest period plus 4.25%, and ii) Base Rate in effect from time to time plus 3.25%. The DIP lien is subject to carve-outs for payments to professional advisors retained by the Debtors or the committee. There is a $250,000 carve-out for the Debtors' professionals and a $100,000 carve-out for the committee's professionals. To secure their DIP Obligations, the lenders will be granted valid and perfected first lien on all present and future assets of the Debtors including all cash contained in any account of the Debtors, among other things. The Debtors will pay a host of fees including a $620,000 closing fee for the ratable benefit of the lenders and a $15,000 servicing fee, payable each month in advance. The loan agreement contain customary and appropriate events of default. A full-text copy of the Debtors' loan agreement including the initial cash collateral budget is available for free at: http://ResearchArchives.com/t/s?3142 Headquartered in Irvine, Hines Horticulture Inc. -- http://www.hineshorticulture.com-- operates nursery facilities located in Arizona, California, Oregon and Texas. Through its affiliate, the company produces and distributes horticultural products. The company and its affiliate, Hines Nurseries Inc., filed for Chapter 11 protection on Aug. 20, 2008 (Bankr. D. Del. Case No. 08-11922). Kirkland & Ellis LLP represents the Debtors in their restructuring efforts. The Debtors selected Epiq Bankruptcy Services LLC as their claims agent. When the Debtors filed for protection against their creditors, they listed assets and debts between $100 million and $500 million each. HOLLINGER INC: Toronto Stock Exchange Delists Common Shares ----------------------------------------------------------- Hollinger Inc. said that its common shares and Series II preference shares were delisted from the Toronto Stock Exchange effective as of the close of business on Aug. 22, 2008. The cease trade order was issued from the company's determination, in the interests of reducing its costs for the benefit of its stakeholders, not to prepare and file annual audited financial statements and other annual disclosure documents in respect of the company's financial year ended March 31, 2008. The shares have been suspended from trading since the issuance of a cease trade order by the Ontario Securities Commission on July 23, 2008. After June 30, 2008, the company has been in default of its continuous disclosure filing requirements under Canadian securities laws. On July 21, 2008, the Ontario Superior Court of Justice authorized the company and Ernst & Young Inc., the company's court-appointed monitor, to consent to the issuance of the cease trade order and the delisting of the Shares. The company and the monitor have provided such consent. Pursuant to proceedings under the companies' Creditors Arrangement Act, the company is now conducting a claims process for the company and its subsidiaries, Sugra Ltd. and 4322525 Canada Inc., and will also do so for its non-Applicant subsidiaries as part of their winding-up. Retired justice John D. Ground was named Litigation Trustee to administer the company's litigation assets, assisted by an Advisory Committee and under the supervision of the Monitor and the Court. Preliminary estimates prepared by the company, in conjunction with the monitor, indicate that there is a significant risk that there will not be adequate recoveries from the company's assets for there to be any residual value for the Series II preference or common shareholders of the company. About Hollinger Based in Toronto, Ontario, Hollinger Inc. (TSX: HLG.C)(TSX: HLG.PR.B) -- http://www.hollingerinc.com/-- owns approximately 70.1% voting and 19.7% equity interest in Sun-Times Media Group Inc., formerly Hollinger International Inc., a media company with assets which include the Chicago Sun-Times newspaper and Suntimes.com and a number of community newspapers and websites serving communities in the Chicago area. The company, along with two affiliates, 4322525 Canada Inc. and Sugra Limited, filed separate Chapter 15 petitions on Aug. 1, 2007 (Bankr. D. Del. Case Nos. 07-11029 through 07-11031). Hollinger also initiated Court-supervised restructuring under the Companies' Creditors Arrangement Act (Canada) on the same day. Derek C. Abbott, Esq., and Kelly M. Dawson, Esq., at Morris, Nichols, Arsht & Tunnell LLP, represent the Debtors in their U.S. proceedings. As reported in the Troubled company Reporter on Feb. 22, 2008, Hollinger Inc.'s consolidated balance sheet at Dec. 31, 2007, showed C$79.8 million in total assets and C$219.3 million in total liabilities, resulting in a C$139.5 million total stockholders' deficit. HRA MEDICAL: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: HRA Medical Managment, Inc. 1455 Frazee Road, Suite 500 San Diego, CA 92108 Bankruptcy Case No.: 08-07569 Type of Business: The Debtor is a health care billing consultant and data management company. Chapter 11 Petition Date: August 8, 2008 Court: Southern District of California (San Diego) Judge: James W. Meyers Debtor's Counsel: Jack F. Fitzmaurice, Esq. Fitzmaurice Demergian & Palaganas 1061 Tierra del Rey, Suite 204 Chula Vista, CA 91910 Tel: (619) 591-1000 Fax: (619) 591-1010 Total Assets: $1,305,647 Total Debts: $5,498,355 A copy of the Debtor's petition is available for free at: http://bankrupt.com/misc/casb08-07569.pdf IDLEAIRE TECHNOLOGIES: New Owners Have Resources to Bring Success ----------------------------------------------------------------- IdleAire Technologies Corp.'s restructuring specialist John Calabrese of CRG Partners has assured reporters at the Great Trucking Show that IdleAire's new owners have the ability, experience, and funds to return the company to profitability, The Trucker.Com reports. As disclosed in the Troubled Company Reporter on July 17, 2008, the Hon. Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware approved the sale of IdleAire Technologies Corp. to noteholder group IdleAire Acquisition Company LLC for about $26 million. The noteholder group is composed of, among others, Airlie Opportunity Master Fund Ltd., Kenmont Special Opportunities Master Fund LP, Miesque Fund Limited, SV Special Situations Master Fund Ltd., Pierce Diversified Trading Strategy Fund LLC, Whitebox Hedged High Yield Partners LP, Wilfrid Aubrey Growth Fund LP and Wilfrid Aubrey International Limited. Mr. Calabrese added that no employees will be displaced except for certain management positions, Trucker.Com discloses. The company is seeking a new experienced chief executive officer. Mr. Calebrese also suggested that the company's headquarters will stay in Knoxville, Tennessee. The paper quoted Mr. Calabrese as saying, "The main thing we have to focus on right now is to continue to create a business that's financially sound." Headquartered in Knoxville, Tennessee, IdleAire Technologies Corp. -- http://www.idleaire.com/-- is a privately held corporation founded in June 2000 and has not been profitable since inception. It manufactures and services an advanced travel center electrification system providing heating, ventilation & air conditioning, Internet and other services to truck drivers parked at rest stops. The company delivers its services to long-haul drivers through its patented Advanced Travel Center Electrification(R) system, or ATE system, comprised of an in-cab service module connected to an external heating, ventilation and air conditioning unit, or HVAC unit, mounted on a truss structure above parking spaces. IdleAire has 131 locations in 34 states and employs about 1,200 people. The company filed chapter 11 petition on May 12, 2008 (Bankr. D. Del. Case No. 08-10960). Judge Kevin Gross presides over the case. Elihu Ezekiel Allinson, III, Esq., William A. Hazeltine, Esq., and William David Sullivan, Esq., at Sullivan Hazeltine Allinson, LLC represent the Debtor in its restructuring efforts. John Monaghan, Esq., at Holland & Knight LLP is co-counsel to the Debtor. The Debtor selected Kurtzman Carson Consultants LLC as claim, noticing and balloting agent. The U.S. Trustee for Region 3 appointed three creditors as members of the Official Committee of Unsecured Creditors. Saul Ewing LLP represents the Creditors' Committee. The Troubled Company Reporter disclosed on June 30, 2008 that the Debtor's summary of schedules showed total assets of $152,398,370 and total debts of $373,220,369. INDYMAC BANCORP: Proofs of Claim Due October 14 ----------------------------------------------- Creditors having claims against IndyMac Bank, FSB, a unit of IndyMac Bancorp, must submit their proofs of claim by Oct. 14, 2008, to the Federal Deposit Insurance Corporation, the appointed receiver in IndyMac's bankruptcy case. The FDIC 1601 Bryan Street Dallas, TX 75201 Attention: Dale Gentill About IndyMac Bancorp Based in Pasadena, California, IndyMac Bancorp Inc. (NYSE:IMB) -- http://www.indymacbank.com/-- is the holding company for IndyMac Bank, FSB, a hybrid thrift/mortgage bank that originated mortgages in all 50 states of the United States. Through its hybrid thrift- mortgage bank business model, IndyMac designed, manufactured, and distributing cost-efficient financing for the acquisition, development, and improvement of single-family homes. IndyMac also provided financing secured by single-family homes to facilitate consumers' personal financial goals and strategically invests in single-family mortgage-related assets. Indymac Bancorp filed for Chapter 7 bankruptcy protection on July 31, 2008 (Bankr. C.D. Calif., Case No. 08-21752). Representing the Debtor are Dean G. Rallis, Jr., Esq., and John C. Weitnauer, Esq. Bloomberg noted that Indymac had $32.01 billion in assets as of July 11, 2008. In court documents, IndyMac disclosed estimated assets of $50 million to $100 million and estimated debts of $100 million to $500 million. All of Indymac's business is conducted, and assets are held, within IndyMac Bank, F.S.B. On July 11, 2008, the Office of Thrift Supervision closed IndyMac Bank and appointed FDIC as the bank's receiver. Thacher Proffitt & Wood LLP was engaged as counsel to the FDIC. INNOVATIVE CARD: NASDAQ to Delist Shares from Non-Compliance ------------------------------------------------------------ Innovative Card Technologies, Inc. received a notice of non- compliance from the Listing Qualifications Staff of The NASDAQ Stock Market indicating that the Company did not regain compliance with the minimum $35 million market value of listed securities requirement set forth in Marketplace Rule 4310(c)(8)(B). As a result, the company's securities are subject to delisting from The NASDAQ Capital Market. This notice follows the company's previous announcement on July 22, 2008 that it had received notification from the Staff stating that the company's common stock had not maintained the required minimum $35 million market value of listed securities over the previous ten consecutive trading days, and, in accordance with NASDAQ rules, providing the Company with 30 calendar days, or through Aug. 15, 2008, to regain compliance. The company intends to request a hearing before a NASDAQ Listing Qualifications Panel to present its plan to regain compliance. The hearing request will stay the delisting of the company's common stock pending the Panel's decision. About Innovative Card Headquartered in Los Angeles, Innovative Card Technologies Inc. (Nasdaq: INVC) -- http://www.incardtech.com/-- develops and markets secure powered cards for payment, identification, physical and logical access applications. The company's main product, the ICT DisplayCard, integrates the security of a one-time password token directly into a card the size of a standard credit or debit card. INTERMET CORP: Hearing on Cash Collateral Motion Set Sept. 3 ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware will conduct a final hearing on Sept. 3, 2008, at 4:00 p.m., to consider approval of a request by Intermet Corp. and its debtor- affiliates to access the cash collateral securing debt obligations to their lenders. The prepetition lending syndicate include of CapitalSource Finance LLC, as administrative collateral agent on behalf of prepetition revolving lenders; Goldman Sachs Credit Partners L.P., as administrative and collateral agent on behalf of prepetition first lien term lenders; and LaSalle Bank Midwest, N.A., as administrative and collateral agent on behalf of prepetition second lien term lenders. As reported by the Troubled Company Reporter on Aug. 25, 2008, the Honorable Kevin Gross gave Intermet, which filed for chapter 11 protection for the second time on August 12, permission to access cash collateral from a group of prepetition lenders despite the lenders' objections. CapitalSource had related to the Court that the Debtors' proposed adequate protection package relating to the cash collateral is wholly inadequate. The Debtors allege a need for the use of the prepetition revolving lenders' cash collateral to maintain operations and fund their working capital needs. CapitalSource contended that simply needing the use of cash collateral for continued operations is not sufficient basis for giving the Debtors the authority they are seeking. According to CapitalSource, this is the Debtors' second bankruptcy filing within four years. Debtors have admitted that the downturn of the U.S. auto industry has caused a significant decline in demand for component parts. Hence, the decline outpaced the Debtors' efforts to remain profitable. It is clear then, CapitalSource asserted, that the Debtors will continue to operate at a loss and burn cash while they pursue restructuring efforts. CapitalSource said that since it is wholly uncertain and speculative whether the Debtors will be able to successfully restructure, prepetition revolving lenders should not be forced to fund these chapter 11 cases through the unfettered use of their cash collateral without being provided with adequate protection. Objections to the use of cash collateral on a final basis are due Aug. 28, 2008, at 4:00 p.m. About Intermet Corp. Based in Fort Worth, Texas, Intermet Corp. designs and manufactures machine precision iron and aluminum castings for the automotive and industrial markets. The company and its debtor- affiliates filed for chapter 11 protection on Aug. 12, 2008 (D. Del. Case Nos. 08-11859 to 08-11866 and 08-11868 to 08-11878). Dennis F. Dunne, Esq., Matthew S. Barr, Esq., and Michael E. Comerford, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as the Debtors' lead counsel. James E. O'Neill, Esq., Laura Davis Jones, Esq. and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. When the Debtors filed for protection from their creditors, they listed assets between $50 million and $100 million and total debts between $100 million and $500 million. INTERMET CORP: U.S. Trustee Forms Five-Member Creditors' Panel -------------------------------------------------------------- The United States Trustee for Region 3 appointed five creditors to the Official Committee of Unsecured Creditors in the bankruptcy case of Intermet Corp. and its debtor-affiliates. The members of the Committee are: 1. Spectro Alloys Corp., Attn: Don W oessner 13220 Doyle Path Rosemount, MN 55068 Tel: 651-480-6118 Fax: 651-438-3714 2. Behr Iron & Steel, Inc. Attn: Lee Foecking 1100 Seminary Street Rockford, IL 61104 Tel: 815-987-2610 Fax: 815-987-2606 3. United Steelworkers Attn: David R. Jury Five Gateway Center, Room 807 Pittsburgh, PA 15222 Tel: 412-562-2545 Fax: 412-562-2429 4. Omni Source Corporation Attn: Marlene Eckman Sloat 7575 W est Jefferson Boulevard Fort Wayne, IN 46804 Tel: 260-423-8542 Fax: 260-423-8675 5. Industrial Supply Corporation Attn: Thomas R. Torp 1 Waterside Crossing, Suite 400 Windsor, CT 06095 Tel: 860-687-5133 Fax: 860-687-5099 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtor is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. About Intermet Corp. Based in Fort Worth, Texas, Intermet Corp. designs and manufactures machine precision iron and aluminum castings for the automotive and industrial markets. The company and its debtor- affiliates filed for chapter 11 protection on Aug. 12, 2008 (D. Del. Case Nos. 08-11859 to 08-11866 and 08-11868 to 08-11878). Dennis F. Dunne, Esq., Matthew S. Barr, Esq., and Michael E. Comerford, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as the Debtors' lead counsel. James E. O'Neill, Esq., Laura Davis Jones, Esq. and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. When the Debtors filed for protection from their creditors, they listed assets between $50 million and $100 million and total debts between $100 million and $500 million. IXI MOBILE: June 30 Balance Sheet Upside-Down by $11,352,000 ------------------------------------------------------------ IXI Mobile Inc.'s consolidated balance sheet at June 30, 2008, showed $29,504,000 in total assets and $40,856,000 in total liabilities, resulting in a $11,352,000 stockholders' deficit. The company reported a net loss of $11,387,000 on total revenues of $2,221,000 for the second quarter ended June 30, 2008, compared with a net loss of $21,508,000 on total revenues of $3,171,000 in the same period ended June 30, 2007. The decrease in revenues primarily reflects a decrease in revenues from the sale of Ogo devices, due to lower activations of Ogo devices in the three months ended June 30, 2008. This decrease was partially offset by an increase in revenues from hosted services mainly due to an increase in the monthly service average selling price. Total cost of revenues for the three months ended June 30, 2008, increased by approximately 38% to $5,591,000, compared to $4,062,000 for the three months ended June 30, 2007. Cost of revenue for the three months ended June 30, 2008, continued to be high compared to revenues primarily due to salaries and related personnel expenses for employees engaged in the delivery and support of products and employees engaged in the support of the hosted services, as well as the allocation of fixed overhead and facility costs, which, as fixed costs, had a greater weighted impact on the cost of revenues due to the small number of units sold or with respect to which revenue was recognized. Research and development expenses increased by 1% to $4,166,000 for the three months ended June 30, 2008, from approximately $4,133,000 for the three months ended June 30, 2007. Selling and marketing expenses decreased by 11% to $1,229,000 for the three months ended June 30, 2008 compared to $1,388,000 for the three months ended June 30, 2007. General and administrative expenses decreased by approximately 47% to $1,996,000 for the three months ended June 30, 2008, compared to $3,756,000 for the three months ended June 30, 2007. Financial expenses, net, for the three months ended June 30, 2008, were $610,000 compared to financial expenses, net, of $11,313,000 for the three months ended June 30, 2007. Financial expenses for the three months ended June 30, 2007, were primarily attributable to interest on bridge loans and credit lines, and additional financial expenses recorded in connection with the consummation of the merger with IXI Mobile (USA) Inc. Liquidity and Capital Resources Since inception, operations have been funded through capital investments from the company's security holders, loans from venture lenders and banks, Israeli Office of the Chief Scientist (OCS) grants and cash flow from operations. The company has incurred operating losses since inception, including net losses of $11,387,000 for the three months ended June 30, 2008. As of June 30, 2008, the company had an accumulated deficit and stockholders' deficiency of $180,196,000 and $11,352,000, respectively. At June 30, 2008, the company had cash and cash equivalents available to fund operations of $8,118,000 and, in addition, the company has an unused credit line from Bank Leumi of approximately $90,000. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2008, are available for free at http://researcharchives.com/t/s?313f About IXI Mobile Headquartered in Belmont, California, IXI Mobile Inc. (OTC BB: IXMO.0B) -- http://www.ixi.com/-- provides devices and hosted services to mobile operators, mobile virtual network operators, and Internet service providers in a number of international markets. Research and development activities are conducted primarily in its facilities in Israel and Romania. JEFFERSON COUNTY: Replaces Advisors, Inches Closer to Bankruptcy ---------------------------------------------------------------- William Selway and Lisa Harris at Bloomberg News report that Jefferson County, Alabama, officials have told their lawyers on Tuesday to prepare a bankruptcy filing if the county can't reach an agreement with creditors regarding interest payments related to its $3 billion in bonds. Crystal Jarvis at Birmingham (Ala.) Business Journal says the Jefferson County Commission voted to terminate the services of Bill Slaughter of Haskell Slaughter Young & Rediker as the lead financial advisor, Morgan Keegan & Co., Sterne Agee & Leech Inc. and Citigroup Inc. Bloomberg says the Commission voted to re-hire law firm Bradley Arant Rose & White LLP, which, together with the county attorney, will take over negotiations with creditors led by JPMorgan Chase & Co. Bloomberg says the terminated bankers and advisers' proposals failed to win support. "The services of the current team are no longer needed and said team shall cease to perform services related to the sewer debt," Business Journal reports, citing the resolution. As reported by the Troubled Company Reporter on August 4, 2008, the plan to pay the $3.2 billion sewer debt has these main parts: -- an extension to an existing one-cent sales tax due to expire in the next five years that is expected to generate $663 million; -- an expansion of the occupational tax that is expected to generate $38 million; and -- the use of the sewer revenue, generating $1.9 billion, to pay down debt. In addition, should this proposed revenue generation plans fail, property taxes will be raised to generate more funds to cover the shortfall. A copy of the plan is available at: http://bankrupt.com/misc/sewer_restructuring_plan.pdf Majority of the Jefferson County Commission opposed the plan. According to Bloomberg, Commission President Bettye Fine Collins told reporters, "We are hoping for success but preparing for filing if necessary. . . . This has some likelihood to work. Wall Street may not want to take a chance at court." Jefferson County has $4.6 billion in overall debt, including $3.2 billion in sewer bonds. Bloomberg and Business Journal note that since early February, the Jefferson County sewer system has been distressed by $3.2 billion worth of debt after a $2.2 billion portion of its loans were refinanced to adjustable rates, which skyrocketed amid the nationwide credit crunch. Bloomberg says the county's rates were pushed to as high as 10%. According to Bloomberg, a Jefferson County sewer bond maturing in 2027 traded between securities dealers on August 26 yielded 7.9 percent, little changed from August 25 and selling for 75.6 cents on the dollar, according to Municipal Securities Rulemaking Board data. Bloomberg explains that the county's difficulties have been compounded by more than $5 billion of interest-rate swaps it purchased from banks led by JPMorgan, which were supposed to protect it from any jump in interest costs. The contracts, Bloomberg says, pushed the county deeper in debt and prevented the county from refinancing the bonds without paying $250 million in fees to break the deals. The five-member county commission has been divided over how to pay for the sewer systems' debts, which customers' fees were to cover, according to Bloomberg. Bloomberg relates that the agreement with creditors that provided the county time to work toward a solution expires August 29, 2008, because a special session of the Legislature won't be called to consider the most recent plan to end the crisis. According to Bloomberg, David Bronner, who heads the Retirement Systems of Alabama, has told the county he would be willing to buy the sewer system if the county filed for bankruptcy protection to wipe out some of its obligations. The prices Mr. Bronner proposed, Bloomberg notes, would still leave investors, including the banks holding unwanted bonds, with less than half of what they are owed. The Commission has set no timetable for a bankruptcy filing and said it is working to avoid that. Bloomberg says the August 29 deadline expiration will place the county in default of its agreement with creditors. Mr. Collins told reports that Governor Bob Riley has agreed to help negotiate with creditors on a deal to avert a court filing, according to Bloomberg. Bloomberg notes that should Jefferson County default on its bond obligations, it would be the largest municipal bond default in U.S. history, outstripping the Washington Public Power Supply System's $2.25 billion default in 1983 of revenue bonds sold for nuclear plants. Bloomberg says a default by Jefferson could also force hundreds of millions of dollars of losses on investors, insurers Syncora Guarantee Inc., formerly XL Capital Assurance Inc., and Financial Guaranty Insurance Co., and banks, including JPMorgan. Bloomberg tried -- but failed -- to get comments from JPMorgan spokesman Brian Marchiony, Financial Guaranty spokesman Brian Moore, and Michael Gormley, a spokesman for Syncora's bond insurer unit. Jefferson County has its seat in Birmingham. It has a population of 660,000. It ended its 2006 fiscal year with a $42.6 million general fund balance, according to Standard & Poor's. JOHN ECKHARDT: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: John Fredrick Eckhardt, III dba Creekside Camping and Development, LLC PO Box 251 Bat Cave, NC 28710 Bankruptcy Case No.: 08-10661 Chapter 11 Petition Date: August 22, 2008 Court: Western District of North Carolina (Asheville) Judge: George R. Hodges Debtor's Counsel: R. Kelly Calloway, Jr., Esq. (rkelly@callowaylawfirm.com) Calloway & Associates Law Firm 318 North Main Street, Suite 9 Hendersonville, NC 28792 Tel: (828) 696-8660 Fax: (828) 696-8683 Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million A copy of the Debtor's petition containing a list of its largest unsecured creditors is available for free at: http://bankrupt.com/misc/NCwb08-10661.pdf JP MORGAN: Fitch Affirms Ratings on 33 2006-LDP9 Mortgage Certs. ---------------------------------------------------------------- Fitch Ratings affirms J.P. Morgan Chase Commercial Mortgage Securities Trust 2006-LDP9 commercial mortgage pass-through certificates as: -- $44 million class A-1 at 'AAA'; -- $127.6 million class A-1S at 'AAA'; -- $139.8 million class A-2 at 'AAA'; -- $375 million class A-2S at 'AAA'; -- $200 million class A-2SFL at 'AAA'; -- $1,653 million class A-3 at 'AAA'; -- $145.3 million class A-3SFL at 'AAA'; -- $694 million class A-1A at 'AAA'; -- $364 million class A-M at 'AAA'; -- $121.4 million class A-MS at 'AAA'; -- $318.5 million class A-J at 'AAA'; -- $106.2 million class A-JS at 'AAA'; -- Interest-only class X at 'AAA'; -- $72.8 million class B at 'AA'; -- $24.3 million class B-S at 'AA -- $22.8 million class C at 'AA-'; -- $7.6 million class C-S at 'AA-'; -- $50.0 million class D at 'A'; -- $16.7 million class D-S at 'A'; -- $40.9 million class E at 'A-'; -- $13.7 million class E-S at 'A-'; -- $40.9 million class F at 'BBB+'; -- $13.7 million class F-S at 'BBB+'; -- $36.4 million class G at 'BBB'; -- $12.1 million class G-S at 'BBB'; -- $45.5 million class H at 'BBB-'; -- $15.2 million class H-S at 'BBB-'; -- $18.2 million class J at 'BB+'; -- $18.2 million class K at 'BB'; -- $12.1 million class L at 'BB-'; -- $12.1 million class M at 'B+'; -- $6.1 million class N at 'B'; -- $12.1 million class P at 'B-/DR1'. Fitch does not rate the $54.6 million class NR. The rating affirmations reflect minimal paydown since issuance and stable performance of the pool. As of the August 2008, distribution date, the transaction has paid down by 0.04% to $4.835 billion from $4.854 at issuance. In total, 18 loans are considered Fitch loans of concern (4.4%), including six specially serviced assets (1.8%). The largest specially serviced loan (0.5%) is secured by a multifamily property in Bradenton, Florida. The loan is current, but it was transferred to special servicing in June 2008 due to the borrower's failure to set up a lockbox. The special servicer is currently working with the master servicer and borrower to establish the lockbox. Two (0.4%) of the five specially serviced assets are multifamily properties located in Houston, Texas. The borrowing entities, controlled by MBS Cos., declared bankruptcy immediately prior to the special servicer filing for foreclosure. Vacant units were stripped of appliances and are in poor condition. The special servicer is determining the cost to bring all units to leasable condition. Losses are expected. Fitch considers the following loans to have investment grade shadow ratings: The Belnord, Merchandise Mart, Centro Heritage Portfolio III, Raytheon LAX, and Tysons Galleria. The Belnord (7.8%) is a mixed-use property consisting of 215 residential units and 60,514 square feet of retail space located on the Upper West Side neighborhood of Manhattan, New York. The borrower is currently renovating the property and is in the process of converting the rent controlled/stabilized residential units and below-market leases on the retail space to market rents. At issuance, there were 141 rent controlled/stabilized units. As of June 30, 2008, there were 130 rent controlled/stabilized units. The current rate of conversion is consistent with Fitch's expectation at issuance. The debt service reserve is approximately $36.8 million. Merchandise Mart (3.6%) is a 3.4 million sf trade mart and office property located in downtown Chicago, Illinois. Major tenants include MTS-MM LLC, Banker's Life and Casualty Company (rated 'BBB', with a Negative Outlook by Fitch) and CCC Information Services. The property benefits from the sponsorship of Vornado Realty Trust (rated 'BBB', Outlook Stable), a real estate investment trust. Occupancy as of February 2008 has increased to 98.7% from 95% at issuance. Centro Heritage Portfolio III (3.0%), the eighth largest loan in the pool, is collateralized by a portfolio consisting of 2.6 million sf in 14 retail properties located throughout Illinois, Wisconsin, Iowa, Indiana and Missouri. The sponsor is Centro Watt America REIT IGA, a partnership between Australian-based Centro Properties Group (rated 'CCC', and on Rating Watch Negative) and Watt Commercial Properties of Los Angeles. Occupancy as of year- end 2007 is 90% compared to 93.6% at issuance. KANDY LLC: Voluntary Chapter 11 Case Summary -------------------------------------------- Debtor: Kandy, LLC 1211 West Tharpe Street Tallahassee, FL 32303 Bankruptcy Case No.: 08-40573 Related Information: Andre Kandy, managing member, filed the petition on the Debtor's behalf. Chapter 11 Petition Date: August 26, 2008 Court: Northern District of Florida (Tallahassee) Debtor's Counsel: Thomas B. Woodward, Esq. (woodylaw@embarqmail.com) Thomas B. Woodward, Atty. P.O. Box 10058 Tallahassee, FL 32302 Tel: (850) 222-4818 Fax: (850) 561-3456 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 million to $10 million The Debtor did not file a list of its largest unsecured creditors. KINCAID TECH: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Kincaid Technologies, Inc. 2375 Telstar Drive, Suite 170 Colorado Springs, CO 80920 Bankruptcy Case No.: 08-22889 Chapter 11 Petition Date: August 25, 2008 Court: District of Colorado (Denver) Judge: A. Bruce Campbell Debtor's Counsel: Harvey Sender, Esq. 1660 Lincoln Street Suite 2200 Denver, CO 80264 Tel: (303) 296-1999 Fax: (303) 296-7600 Email: Sendertrustee@sendwass.com Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million A copy of Kincaid Technologies, Inc.'s list of 20 largest unsecured creditorsis available for free at: http://bankrupt.com/misc/cob08-22889.pdf KING PHARMA: S&P Says BB Rtg Unchanged on $1.4BB Bid for Alpharma ----------------------------------------------------------------- Standard & Poor's Ratings Services said its ratings and outlook on King Pharmaceuticals Inc. (BB/Negative/--) are not affected by the company's $1.4 billion unsolicited cash bid for Alpharma Inc. (B+/Stable/--). "While the acquisition reduces King's financial cushion over the near term, the combined entity's cash balance of approximately $1.5 billion and annual free cash flows in excess of $600 million provide adequate financial capacity at the current rating level. Moreover, increased product diversity would help alleviate our concerns with King's current product portfolio and pipeline, which has been plagued by generic competition, patent litigation, and uncertainties surrounding new product launches. Assuming the transaction is funded with on hand cash, pro forma debt to EBITDA is only about 2x. Despite the possibility that the acquisition price may increase and/or King Pharmaceuticals' EBITDA may be impacted by adverse developments surrounding its current portfolio, pro forma leverage should remain less than 4x, the point at which we would consider lowering the ratings. Still, King needs to execute on its pipeline and continue to pursue its relatively conservative financial policies," S&P explains. KING PHARMA: Proposed Buyout Prompts Moody's to Confirm Ratings --------------------------------------------------------------- Moody's Investors Service affirmed the Ba3 ratings of King Pharmaceuticals, Inc. including the Ba3 Corporate Family Rating and Ba3 senior secured credit facility rating. The outlook for King's ratings remains stable. This rating action follows King's announcement that it has submitted to the Board of Directors of Alpharma, Inc. a proposal to acquire Alpharma for approximately $1.4 billion in cash. The acquisition proposal is subject to shareholder approval and required regulatory approvals. Ratings affirmed: -- Ba3 Corporate Family Rating -- Speculative grade liquidity rating of SGL-1 -- Senior secured credit facility due 2012, Ba1 (LGD4, 52%) Moody's does not rate King's $400 million senior unsecured convertible notes due 2026. "The affirmation of King's Ba3 ratings reflects sound strategic rationale for acquiring Alpharma and significant cushion in King's credit metrics even following the recent launch of Altace generics," stated Michael Levesque, Moody's Senior Vice President. The affirmation of King's Ba3 Corporate Family rating reflects: 1) cushion within the rating category based on good CFO/Debt and FCF/Debt metrics; 2) the assumption that the acquisition will be funded primarily using existing cash and investments; and 3) sound strategic rationale for the transaction, which would significantly expand King's product offerings for chronic pain and also provide increased product diversification. In addition, Moody's expects the combined company to achieve annual cost synergies at between $50 million and $60 million in the second year following the close of the transaction. Moody's believes the acquisition should provide an improved growth platform, helping to mitigate negative rating pressure that could otherwise develop based on King's exposure to generic competition. King is already facing rapidly declining revenues resulting from the recent loss of exclusivity on Altace, one of its key products. Successful execution of King's late stage pipeline, with three potential FDA filings in 2008, will be a critical factor in the company's ratings. The stable rating outlook reflects Moody's assumption that King will comfortably maintain key credit ratios within Moody's "Ba" ranges, including adjusted CFO/Debt of 15% to 25% and FCF/Debt of 10% to 15%. Under a scenario with a higher purchase price, Moody's still anticipates that these key credit ratios are likely to remain within the "Ba" ranges. Moody's anticipates that liquidity will remain strong, based on good free cash flow, availability under the credit agreement, and ample cushion under financial covenants. King Pharmaceuticals, Inc., headquartered in Bristol, Tennessee, is a vertically integrated pharmaceutical company that develops, manufactures, markets and sells branded pharmaceutical products. The company targets specialty-driven pharmaceutical markets, with a focus on neuroscience, hospital and acute care medicines. King reported total revenues of approximately $829 million for the first six months of 2008. LEHMAN BROTHERS: Shares Up 16% on Likely Korea Bank Buyout ---------------------------------------------------------- Lehman Brother Holdings Inc. share rose more than 16% last week when Korea Development Bank expressed its plan in purchasing the firm, the Wall Street Journal reports. An official of the Financial Services Commission, however, warned Korea Development to take cautious steps in taking over the bank, pointing out that the deal would be better led by private lender, the Financial Times reports. Analyst told the Wall Street Journal that Lehman Brother may incur at least $2 billion in net loss and more than $3 billion in write- downs in the present quarter that would subject Richard Fuld Jr., chairman and chief executive officer of Lehman Brothers, under pressure to improve the firm's financial health by mid-September. According to person familiar with the transaction, Korea Development presented a two-step process, under which the Korean bank will take a 25% stake directly from Lehman Brothers and another 25% through a market tender, FT relates. Lehman Brother has not entered into an agreement with Korea Development, FT notes. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- an innovator in global finance, serves the financial needs of corporations, governments and municipalities, institutional clients, and high net worth individuals worldwide. Founded in 1850, Lehman Brothers maintains leadership positions in equity and fixed income sales, trading and research, investment banking, private investment management, asset management and private equity. The firm is headquartered in New York, with regional headquarters in London and Tokyo, and operates in a network of offices around the world. LEXICON UNITED: June 30 Balance Sheet Upside-Down by $623,504 ------------------------------------------------------------- Lexicon United Incorporated Inc.'s balance sheet at June 30, 2008, showed total assets of 4,185,307 and total liabilities of $4,808,811, resulting in a stockholders' deficit of $623,504. As of June 30, 2008, the company has total current assets of $1,157,273, as compared to $1,002,727 as of June 30, 2007. The company has total current liabilities of $4,425,608 as of June 30, 2008, as compared to $3,649,194 as of June 30, 2007. Lexicon United reported financial results for the second quarter and six months ended June 30, 2008. For three months ended June 30, 2008, the company incurred net loss of $120,815 compared to net loss of $295,650 for the same period in the previous year. For six months, the company's net loss decreased to $414,046 compared to net loss of $470,816 for the same period in the previous year. Net revenues for the quarter ended June 30, 2008 increased 92% to $1,211,244 as compared to $629,493 for the comparable period last year. Net loss for the quarter was $120,815, or $0.01 per share, as compared to a net loss of $295,650 for the second quarter of the prior year. Sequentially, revenues in the second quarter increased by 37% or $326,379. For the six months ended June 30, 2008, revenues increased 65% to $2,096,109 from $1,268,685 in the comparable period last year. Net loss for the first six months of fiscal 2008 was $414,046, compared to net loss of $470,816 or $0.06 per share for the comparable period last year. Liquidity and Capital Resources The company has cash and cash equivalents of approximately $449,825 as of June 30, 2008, and it has short-term liabilities in the amount of $4,425,608, well as long-term liabilities in the amount of $383,203 as of June 30, 2008. The company intends to use its cash to retire current debt as it comes due well as to pay operating expenses as necessary. During 2007, the company negotiated with Brazilian authorities to favorably settle recorded municipal service taxes of $730,000. In addition, the company further evaluated related payroll tax provisions and reduced same by approximately $200,000. "We are very pleased with our operating results during the second quarter, primarily the increased revenue from servicing collections on behalf of third party clients," Elie Saltoun, CEO & president, stated. "In our ongoing focus to improve operations, we have successfully lowered our operating expenses as a percentage of sales from the prior year. We have invested and built an infrastructure to handle additional projects and portfolios, all of which we believe will result in shareholder value. "In late June we acquired from Ativos S/A Securitizadora, a portfolio of distressed debt assets of Banco do Brasil SA with a face value of R$498,685,303.94 or approximately $305 million; this said, we did not expect to begin establishing a revenue stream from this portfolio until this current quarter," Mr. Saltoun added. "With the anticipated benefits associated with generating revenues from our own portfolio, we expect the remainder of this year to improve our top and bottom line results." About Lexicon United Inc. Lexicon United Inc. was incorporated on July 17, 2001, in the state of Delaware. The company, through its subsidiary, ATN Capital E Participacoes Ltda, is engaged in the business of managing and servicing accounts receivables for large financial institutions in Brazil. ATN derives its revenues primarily from collection of distressed debt by entering into non binding agreements with financial institutions to collect their debt. Going Concern Doubt Meyler & Company, LLC, in Middletown, New Jersey, expressed substantial doubt about Lexicon United Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm said that the company incurred net losses of $135,182 and $1,264,576 for the years ended Dec. 31, 2007, and 2006, and has an accumulated deficit of $2,025,245 and negative working capital of $2,579,733 at Dec. 31, 2007. LINENS N THINGS: Seeks Approval of $20MM Severance Plan ------------------------------------------------------- Linens 'n Things, Inc., and its debtor-affiliates ask the United States Bankruptcy Court for the District of Delaware to approve a severance plan for all of their hourly and salaried employees, up to and including the president level, pursuant to Sections 105(a), 363(b) and 503 of the Bankruptcy Code. The Debtors ask the Court to allow all payments under the Severance Plan as administrative expenses of the estates. On July 2, 2008, the Debtors obtained the Court's authority to implement a severance plan for store-level employees with respect to their initial 120 closing stores. The Debtors also obtained approval to implement the severance plan, and pay up to $2,500,000, for non-insider employees with respect to up to 100 additional stores. The projected closing of up to 200 of the Debtors' retail locations has understandably caused many of the employees to voice significant concerns over the status and stability of their employment, relates Mark D. Collins, Esq., at Richards Layton & Finger, P.A., in Wilmington, Delaware. He notes that the Debtors are also dealing with (i) loss of key personnel, who have been poached by competitors, and (ii) ongoing daily solicitation of additional key personnel by competitors. To reduce the likelihood of continued loss of key personnel and mitigate employee concerns, the Debtors have determined that it is necessary to implement a company-wide severance plan, in addition to the severance benefits previously authorized by the Court. The Debtors estimate that payouts under the Severance Plan will total $20,000,000 based on this distribution: Severance Severance Employee Level Period Amount -------------- --------- --------- President, executive Not available $75,000 vice president, senior vice president Corporate vice pres., 26 Weeks Weekly Base vice pres., merchandising Pay x 26 vice pres. divisional merchandise manager, regional vice pres.-field Executive dir., merchandise 13 Weeks Weekly Base manager, sr. buyer, buyer, Pay x 13 director, corporate manager, assoc. buyer, replenishment, district managers Assistant buyer, other 5 Weeks Weekly Base salaried employees Pay x 5 Salaried employees in dist'n 1 to 5 Weeks Weekly Base centers, and non-closing Pay x stores' store managers and 1 to 5 Weeks assistant store managers Home office hourly, regional 1 to 3 Weeks Weekly Base administrative assistants, Pay x hourly employees in non-closing 1 to 3 Weeks stores, hourly employees in distribution centers The Severance Plan is intended to cover 546 employees at the Debtors' home office, and an additional 9,300 store-level employees remaining at store locations other than the closing stores, Mr. Collins discloses. Participants under the Severance Plan will be eligible for severance payments up to 26 weeks, upon the occurrence of a "Qualifying Event", which includes: -- the employee being terminated by the Debtors for any reason other than "for cause"; -- the employee's voluntary termination within 30 days of a reduction by the Debtors in the employee's annual base salary or regular hourly rate of more than 10% from the employee's annual base salary or regular hourly rate as of August 1, 2008, or if greater, the employee's annual base salary or regular hourly rate at the time; or -- the employee's voluntary termination within 30 days of a reduction in the employee's annual base salary or regular hourly rate of more than 10% from the employee's annual base salary or regular hourly rate as of August 1, or if greater, the employee's annual base salary or regular hourly rate at the time by a purchaser or related entity that is the employee's employer following the sale of substantially all of the Debtors' assets. Employees that are either terminated "for cause" or on their own volition, except as provided, are not eligible for payments under the Severance Plans. As a condition to receiving any payments, employees must execute a general release of all claims against the Debtors and an agreement not to compete with, solicit employees or customers from, or use confidential information of the Debtors during the severance period. Mr. Collins avers that the proposed payments are necessary to reduce the risks of employee attrition, and to mitigate employees concerns over the status and stability of their employment, hence, improving the employees' morale and creating a meaningful level of stability and motivation in the workplace. Clifton, New Jersey-based Linens 'n Things, Inc. -- http://www.lnt.com/-- is the second largest specialty retailer of home textiles, housewares and home accessories in North America operating 589 stores in 47 U.S. states and seven Canadian provinces as of Dec. 29, 2007. The company is a destination retailer, offering one of the broadest and deepest selections of high quality brand-name as well as private label home furnishings merchandise in the industry. Linens 'n Things has some 585 superstores (33,000 sq. ft. and larger), emphasizing low-priced, brand-name merchandise, in more than 45 states and about seven Canadian provinces. Brands include Braun, Krups, Calphalon, Laura Ashley, Croscill, Waverly, and the company's own label. Linens 'n Things was acquired by private equity firm Apollo Management in 2006. On May 2, 2008, these Linens entities filed chapter 11 petition (Bankr. D. Del.): Linens Holding Co. (08-10832), Linens 'n Things, Inc. (08-10833), Linens 'n Things Center, Inc. (08-10834), Bloomington, MN., L.T., Inc. (08-10835), Vendor Finance, LLC (08- 10836), LNT, Inc. (08-10837), LNT Services, Inc. (08-10838), LNT Leasing II, LLC (08-10839), LNT West, Inc. (08-10840), LNT Virginia LLC (08-10841), LNT Merchandising Company LLC (08-10842), LNT Leasing III, LLC (08-10843), and Citadel LNT, LLC (08-10844). Judge Christopher S. Sontchi presides over the case. The Debtors' bankruptcy counsels are Mark D. Collins, Esq., John H. Knight, Esq., and Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., provide Linens 'n Things with bankruptcy counsel. The Debtors' special corporate counsel are Holland N. O'Neil, Esq., Ronald M. Gaswirth, Esq., Stephen A. McCaretin, Esq., Randall G. Ray, Esq., and Michael S. Haynes, Esq., at Morgan, Lewis & Bockius, LLP. The Debtors' restructuring management services provider is Conway Del Genio Gries & Co., LLC. The Debtors' CRO and Interim CEO is Michael F. Gries, co-founder of Conways Del Genio Gries & Co., LLC. The Debtors' claims agent is Kurtzman Carson Consultants, LLC. The Debtors' consultants are Asset Disposition Advisors, LLC, and Protivit, Inc. The Debtors' investment bankers are Financo, Inc., and Genuity Capital Markets. (Bankruptcy News About Linens 'n Things; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) LINENS N THINGS: Trustee Objects to Houlihan as Financial Advisor ----------------------------------------------------------------- Roberta A. DeAngelis, acting United States Trustee for Region 3, objects to the retention of Houlihan Lokey Howard & Zukin Capital, Inc., as the financial advisor of the ad hoc committee of holders of substantially all of the Senior Secured Floating Rate Notes due 2014 in the aggregate principal amount at maturity of $650,000,000 issued by Linens 'n Things, Inc., and its debtor- affiliates, to the extent it is granted indemnification from the Debtors, as provided in its letter agreement with the ad hoc committee. Ms. DeAngelis contends that the Noteholders Committee seeks to bind all of the Debtors' noteholders, and not just those it represents, to its agreement that any transaction fees or indemnity obligations due to Houlihan Lokey pursuant to the Letter Agreement will be deducted from the consideration that would otherwise be paid to the class of noteholders. Ms. DeAngelis adds that it is unclear whether the Noteholders Committee's proposal is permitted by the indenture governing the notes. Ms. DeAngelis avers it would be inappropriate for the Debtors to grant the same protections (indemnification) to a professional employed by a non-debtor third party as the professionals they employed. She notes that as Houlihan Lokey is employed by the Noteholders Committee, a third-party, the firm owes no duties to the Debtors or their estates. Houlihan Lokey will provide financial advisory and related services in connection with the Noteholders Committee's consideration of a financial restructuring transaction involving the Debtors, including the possible implementation of a plan of reorganization under the Bankruptcy Code. In addition, Houlihan Lokey will, if requested by the Noteholders Committee: -- evaluate the Debtors' assets and liabilities; -- analyze and review the Debtors' financial condition, operations, liquidity and related matters; -- analyze business plans, operational strategy and forecasts of the Debtors; -- evaluate all aspects of the Debtors' near-term liquidity, including various financing alternatives; -- provide specific valuation or other financial analysis in connection with the Debtors' financial restructuring; -- assess, formulate and implement options for restructuring, reorganization and other strategic alternatives for the Debtors; -- provide expert testimony relating to the Debtors' financial matters; and -- provide other financial services, including evaluating and advising on any DIP financing, cash collateral, and adequate protection arrangements. The bankruptcy estates will pay Houlihan Lokey a monthly fee of $175,000, and will also reimburse the firm's reasonable out-of- pocket expenses. The Debtors will also pay the firm a cash fee equal to: -- $800,000 as minimum transaction fee; plus -- incentive fees in an amount equal to these percentages of all consideration received by the Notes: * 1.5% of any amount in excess of $195,000,000, but less than $325,000,000; plus * 2.25% of any amount in excess of $325,000,000, but less than $487,500,000; plus * 3% of any amount in excess of $487,500,000. Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware notes that the Incentive Fee will be reduced by 50% of the Monthly Fees paid to, and received by, Houlihan Lokey after the sixth Monthly Fee, but in no event will the Incentive Fee be less than zero. The Noteholders Committee has agreed that any transaction fees or indemnity obligations due to Houlihan Lokey will be deducted from the consideration that would otherwise be paid in the bankruptcy cases by the Debtors to the class of Noteholders. Clifton, New Jersey-based Linens 'n Things, Inc. -- http://www.lnt.com/-- is the second largest specialty retailer of home textiles, housewares and home accessories in North America operating 589 stores in 47 U.S. states and seven Canadian provinces as of Dec. 29, 2007. The company is a destination retailer, offering one of the broadest and deepest selections of high quality brand-name as well as private label home furnishings merchandise in the industry. Linens 'n Things has some 585 superstores (33,000 sq. ft. and larger), emphasizing low-priced, brand-name merchandise, in more than 45 states and about seven Canadian provinces. Brands include Braun, Krups, Calphalon, Laura Ashley, Croscill, Waverly, and the company's own label. Linens 'n Things was acquired by private equity firm Apollo Management in 2006. On May 2, 2008, these Linens entities filed chapter 11 petition (Bankr. D. Del.): Linens Holding Co. (08-10832), Linens 'n Things, Inc. (08-10833), Linens 'n Things Center, Inc. (08-10834), Bloomington, MN., L.T., Inc. (08-10835), Vendor Finance, LLC (08- 10836), LNT, Inc. (08-10837), LNT Services, Inc. (08-10838), LNT Leasing II, LLC (08-10839), LNT West, Inc. (08-10840), LNT Virginia LLC (08-10841), LNT Merchandising Company LLC (08-10842), LNT Leasing III, LLC (08-10843), and Citadel LNT, LLC (08-10844). Judge Christopher S. Sontchi presides over the case. The Debtors' bankruptcy counsels are Mark D. Collins, Esq., John H. Knight, Esq., and Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., provide Linens 'n Things with bankruptcy counsel. The Debtors' special corporate counsel are Holland N. O'Neil, Esq., Ronald M. Gaswirth, Esq., Stephen A. McCaretin, Esq., Randall G. Ray, Esq., and Michael S. Haynes, Esq., at Morgan, Lewis & Bockius, LLP. The Debtors' restructuring management services provider is Conway Del Genio Gries & Co., LLC. The Debtors' CRO and Interim CEO is Michael F. Gries, co-founder of Conways Del Genio Gries & Co., LLC. The Debtors' claims agent is Kurtzman Carson Consultants, LLC. The Debtors' consultants are Asset Disposition Advisors, LLC, and Protivit, Inc. The Debtors' investment bankers are Financo, Inc., and Genuity Capital Markets. (Bankruptcy News About Linens 'n Things; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) LINENS N THINGS: Committee Wants Traxi as Financial Advisor ----------------------------------------------------------- The Official Committee of Unsecured Creditors of Linens 'n Things, Inc., and its debtor-affiliates seeks authority from the United States Bankruptcy Court for the District of Delaware to retain Traxi LLC, as special financial forensic advisors. As forensic advisors, Traxi will: (a) analyze the historical financial data of the Debtors, including performing a solvency analysis for various points in time prior to the Petition Date; (b) analyze the Debtors' business plans, cash flow projections, restructuring programs, and other reports or analyses for the years prior to the Petition Date; (c) analyze financial ramifications of certain transactions involving the Debtors in the years prior to the Petition Date; (d) perform or review valuations, as appropriate and necessary, of the Debtors' assets and liabilities in the years prior to the Petition Date; (e) evaluate potential fraudulent conveyances and preferences; and (f) prepare reports of its findings. Although Traxi will initially be retained as a non-testifying expert witness, its retention includes the possibility of providing expert testimony in the prosecution of claims arising out of the Creditors Committee's investigation, discloses Flavio R. Barbosa, a member of the executive committee of the Creditors Committee. Mr. Barbosa also informs the Court that Traxi will work in conjunction with other professionals retained by the Committee. Traxi will not provide any financial advisory services that are duplicative of services provided, or to be provided by Carl Marks Advisory Group LLC, the Committee's financial advisors. Traxi will be paid on an hourly basis for individuals providing services to the Debtors at hourly rates ranging from $175 to $575, plus reasonable expenses. The Creditors Committee asserts that Traxi will help it satisfy its fiduciary duties, and negotiate a consensual plan of reorganization. In the event there are derivative claims that can be pursued, those claims can be assigned to a litigation trust upon the effective date of the Plan, and the proceeds of the claims can be used as a form of currency for distribution to creditors, the Creditors Committee says. Perry M. Mandarino, senior managing director at Traxi, assures the Court that Traxi is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Clifton, New Jersey-based Linens 'n Things, Inc. -- http://www.lnt.com/-- is the second largest specialty retailer of home textiles, housewares and home accessories in North America operating 589 stores in 47 U.S. states and seven Canadian provinces as of Dec. 29, 2007. The company is a destination retailer, offering one of the broadest and deepest selections of high quality brand-name as well as private label home furnishings merchandise in the industry. Linens 'n Things has some 585 superstores (33,000 sq. ft. and larger), emphasizing low-priced, brand-name merchandise, in more than 45 states and about seven Canadian provinces. Brands include Braun, Krups, Calphalon, Laura Ashley, Croscill, Waverly, and the company's own label. Linens 'n Things was acquired by private equity firm Apollo Management in 2006. On May 2, 2008, these Linens entities filed chapter 11 petition (Bankr. D. Del.): Linens Holding Co. (08-10832), Linens 'n Things, Inc. (08-10833), Linens 'n Things Center, Inc. (08-10834), Bloomington, MN., L.T., Inc. (08-10835), Vendor Finance, LLC (08- 10836), LNT, Inc. (08-10837), LNT Services, Inc. (08-10838), LNT Leasing II, LLC (08-10839), LNT West, Inc. (08-10840), LNT Virginia LLC (08-10841), LNT Merchandising Company LLC (08-10842), LNT Leasing III, LLC (08-10843), and Citadel LNT, LLC (08-10844). Judge Christopher S. Sontchi presides over the case. The Debtors' bankruptcy counsels are Mark D. Collins, Esq., John H. Knight, Esq., and Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., provide Linens 'n Things with bankruptcy counsel. The Debtors' special corporate counsel are Holland N. O'Neil, Esq., Ronald M. Gaswirth, Esq., Stephen A. McCaretin, Esq., Randall G. Ray, Esq., and Michael S. Haynes, Esq., at Morgan, Lewis & Bockius, LLP. The Debtors' restructuring management services provider is Conway Del Genio Gries & Co., LLC. The Debtors' CRO and Interim CEO is Michael F. Gries, co-founder of Conways Del Genio Gries & Co., LLC. The Debtors' claims agent is Kurtzman Carson Consultants, LLC. The Debtors' consultants are Asset Disposition Advisors, LLC, and Protivit, Inc. The Debtors' investment bankers are Financo, Inc., and Genuity Capital Markets. (Bankruptcy News About Linens 'n Things; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) LINENS N THINGS: Wants Ernst & Young's Scope of Services Expanded ----------------------------------------------------------------- Linens 'n Things, Inc., and its debtor-affiliates ask the United States Bankruptcy Court for the District of Delaware to expand the scope of services to be provided by Ernst & Young, LLP, pursuant to Sections 327(a) and 328(a) of the Bankruptcy Code. Mark D. Collins, Esq., at Richards Layton & Finger, P.A., in Wilmington, Delaware, discloses that Ernst & Young will provide services pursuant to three statements of work: (1) Statement of Work #1 - Tax Consultation Re: Chapter 11 Filing dated as of June 13, 2008; (2) Statement of Work #2 - Tax Consultation Re: Chapter 11 Filing Restructuring Assistance dated as of June 13, 2008; and (3) Statement of Work #5 - Transfer Pricing Documentation Project dated as of June 13, 2008. Mr. Collins states that E&Y's familiarity and experience with the Debtors will enable it to provide valuable tax services necessary for their overall reorganization goals. He notes that without the firm's services, the Debtors would have to hire another firm, which would unnecessarily increase costs to the bankruptcy estates, and complicate the reorganization process. Ernst & Young will be paid at these discounted hourly rates: Exec. Dir./Principal/Partner $700 Senior Managers $645 Managers $545 Senior $360 Staff $245 The Debtors will also reimburse Ernst & Young for any direct expenses incurred in connection with its retention. Timothy Tracy, a partner at Ernst & Young, assures the Court that his firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code, and holds no interest materially adverse to the Debtors, their creditors, and shareholders for the matters for which Ernst & Young is to be employed. Clifton, New Jersey-based Linens 'n Things, Inc. -- http://www.lnt.com/-- is the second largest specialty retailer of home textiles, housewares and home accessories in North America operating 589 stores in 47 U.S. states and seven Canadian provinces as of Dec. 29, 2007. The company is a destination retailer, offering one of the broadest and deepest selections of high quality brand-name as well as private label home furnishings merchandise in the industry. Linens 'n Things has some 585 superstores (33,000 sq. ft. and larger), emphasizing low-priced, brand-name merchandise, in more than 45 states and about seven Canadian provinces. Brands include Braun, Krups, Calphalon, Laura Ashley, Croscill, Waverly, and the company's own label. Linens 'n Things was acquired by private equity firm Apollo Management in 2006. On May 2, 2008, these Linens entities filed chapter 11 petition (Bankr. D. Del.): Linens Holding Co. (08-10832), Linens 'n Things, Inc. (08-10833), Linens 'n Things Center, Inc. (08-10834), Bloomington, MN., L.T., Inc. (08-10835), Vendor Finance, LLC (08- 10836), LNT, Inc. (08-10837), LNT Services, Inc. (08-10838), LNT Leasing II, LLC (08-10839), LNT West, Inc. (08-10840), LNT Virginia LLC (08-10841), LNT Merchandising Company LLC (08-10842), LNT Leasing III, LLC (08-10843), and Citadel LNT, LLC (08-10844). Judge Christopher S. Sontchi presides over the case. The Debtors' bankruptcy counsels are Mark D. Collins, Esq., John H. Knight, Esq., and Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., provide Linens 'n Things with bankruptcy counsel. The Debtors' special corporate counsel are Holland N. O'Neil, Esq., Ronald M. Gaswirth, Esq., Stephen A. McCaretin, Esq., Randall G. Ray, Esq., and Michael S. Haynes, Esq., at Morgan, Lewis & Bockius, LLP. The Debtors' restructuring management services provider is Conway Del Genio Gries & Co., LLC. The Debtors' CRO and Interim CEO is Michael F. Gries, co-founder of Conways Del Genio Gries & Co., LLC. The Debtors' claims agent is Kurtzman Carson Consultants, LLC. The Debtors' consultants are Asset Disposition Advisors, LLC, and Protivit, Inc. The Debtors' investment bankers are Financo, Inc., and Genuity Capital Markets. (Bankruptcy News About Linens 'n Things; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) LIN TELEVISION: Moody's Holds Low-B Ratings on 6.5% Sr. Sub. Notes ------------------------------------------------------------------ Moody's Investors Service affirmed LIN Television Corporation's Corporate Family Rating and Probability of Default Rating of Ba3. In addition, Moody's affirmed the ratings on the company's senior secured credit facility and the senior subordinated notes. Moody's also affirmed the company's SGL-2 speculative grade liquidity rating. The outlook has been revised to negative from stable. These ratings have been affirmed: Issuer: LIN Television Corporation -- Corporate Family Rating at Ba3 -- Probability of Default Rating at Ba3 -- Secured Revolver at Baa3 (to LGD 2, 12% from LGD 1, 9%) -- Secured Term Loan at Baa3 (to LGD 2, 12% from LGD 1, 9%) -- 6.5% Senior Subordinated Notes due 2013 at B1 (to LGD 4, 68% from LGD 4, 66%) -- 6.5% Senior Subordinated Notes CL B due 2013 at B1 (to LGD 4, 68% from LGD 4, 66%) -- Speculative Grade Liquidity Rating at SGL-2 -- Outlook at Revised to Negative from Stable. The change in outlook reflects LIN's high debt-to-EBITDA leverage of 7x and Moody's belief that there is increased risk to LIN achieving average debt-to-EBITDA leverage of less than 6.25x given the weak economy and advertising environment which could continue into 2009. Moody's notes that LIN's core local and national advertising revenue performance was affected in the first half of 2008 by the downturn in the economy and especially the pull-back in auto advertising, a category that contributed 28% of the company's revenue in 2007. LIN's Ba3 corporate family rating reflects the company's high debt to EBITDA leverage, the inherent cyclicality of the advertising business and the increasing business risk associated with broadcast television given the increasing fragmentation of advertising spending over a growing number of media. LIN's rating is supported by its diverse network affiliations and geographic footprint, notable free cash flow generation and the company's continued local market focus. The rating also incorporates LIN's leading station ranks in local news in a majority of its markets and the benefits of duopoly in several markets which drives revenue share. LIN TV Corp., headquartered in Providence, Rhode Island, owns and operates and/or programs 29 television stations, including two stations pursuant to local marketing agreements, in 17 mid-sized markets in the United States. In addition, the company owns 20% of KXAS-TV in Dallas, Texas and KNSD-TV in San Diego, California, through a joint venture with NBC. LONE OAK: Voluntary Chapter 11 Case Summary ------------------------------------------- Debtor: Lone Oak Fabricators, Inc. 12043 South I-35 Valley View, TX 76272 Bankruptcy Case No.: 08-42232 Type of Business: The Debtor is a steel contractor. Chapter 11 Petition Date: August 22, 2008 Court: Eastern District of Texas (Sherman) Judge: Brenda T. Rhoades Debtor's Counsel: Howard Marc Spector (hspector@howardmarcspector.com) 12770 Coit Road, Ste. 1100 Dallas, TX 75251 Tel: (214) 365-5377 Fax: (214)237-3380 Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its largest unsecured creditors. LUMINENT MORTGAGE: Receives Demand Letter to Pay $41.2MM Notes -------------------------------------------------------------- Luminent Mortgage Capital Inc. on June 16, 2008, was obligated to make a quarterly interest payment of approximately $700,000, applicable to $41.2 million of Luminent's junior subordinated notes dated December 15, 2005. Luminent did not make this payment and a payment default under the indenture has occurred. Luminent was unable to meet the obligation before July 16, 2008, the expiration of the 30-day grace period to cure the payment default. On August 15, 2008, Luminent received a demand letter for payment from the junior subordinated notes indenture trustee declaring the notes to be immediately due and payable in an amount of approximately $41.2 million plus accrued interest of approximately $1.2 million. On July 11, 2008 a repurchase agreement lender that is an affiliate of Arco Capital Corporation Ltd., declared an event of default to have occurred in respect of alleged failures by Luminent and its affiliates to deliver additional purchased securities or cash necessary to fulfill its obligations under a master repurchase agreement. This event of default declared under the master repurchase agreement caused a default to occur under the indenture relating to $90 million of Luminent's 8.125% Convertible Senior Notes due 2027, in respect of which those notes may be declared to be immediately due and payable. Due to defaults on convertible notes, Luminent is contractually prohibited from making principal and interest payments on $92.8 million of outstanding junior subordinated notes. Had the cross default under the convertible notes not previously occurred, the demand letter for payment received would have caused a cross default under the convertible notes. Luminent LLC, an affiliate, filed a Form S-4 registration statement with the Securities and Exchange Commission on March 28, 2008, as amended by Amendment No. 1 filed on June 10, 2008, with respect to a proposed conversion to a publicly traded partnership. The company explains that Luminent LLC's Form S-4 registration statement contains a preliminary proxy statement/prospectus relating to its 2008 annual meeting of stockholders and other relevant documents in connection with the proposed restructuring. About Luminent Mortgage Headquartered in San Francisco, Luminent Mortgage Capital Inc. (OTC: LUMC) -- http://www.luminentcapital.com/-- is a real estate investment trust or REIT, which, together with its subsidiaries, has invested in two core mortgage investment strategies. Under its Residential Mortgage Credit strategy, the company invests in mortgage loans purchased from selected high-quality providers within certain established criteria as well as subordinated mortgage-backed securities and other asset-backed securities that have credit ratings below AAA. Under its Spread strategy, the company invests primarily in U.S. agency and other highly-rated single-family, adjustable-rate and hybrid adjustable-rate mortgage-backed securities. On March 28, 2008, the company disclosed its intention, subject to shareholder approval, to restructure the company from a REIT to a publicly-traded partnership or PTP. Going Concern Doubt Grant Thornton LLP, in Philadelphia, expressed substantial doubt about Luminent Mortgage Capital Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. Grant Thornton said Luminent Mortgage has lost $721.0 million for the year ended Dec. 31, 2007, which included $481.7 million in impairment losses on mortgage-backed securities. The company also recorded $21.3 million in corporate, state and U.S. federal income taxes due to its inability to meet the threshold for tax benefit recognition as it related to its qualification as a REIT. As reported in the Troubled Company Reporter on June 5, 2008, Luminent Mortgage's consolidated balance sheet at March 31, 2008, showed $3.8 billion in total assets, $4.0 billion in total liabilities, and $148,000 in minority interest, resulting in a $223.2 million stockholders' deficit. MAGNA ENTERTAINMENT: Amends Financing Agreement with MID Lenders ---------------------------------------------------------------- Magna Entertainment Corp. has amended certain of its financing agreements including: -- extending the maturity date of its $40 million senior secured revolving credit facility with a Canadian chartered bank from August 15, 2008, to September 15, 2008; -- extending the maturity date of its bridge loan facility with a subsidiary of MI Developments Inc., MEC's controlling shareholder, from August 31, 2008 to September 30, 2008; and -- extending the due date of its $100 million repayment requirement under the Gulfstream Park project financing with the MID Lender from August 31, 2008 to September 30, 2008 (during which time any repayments will not be subject to a make-whole payment). MEC incurred a $400,000 in connection with the extension of the Senior Bank Facility and a fee of $500,000 in connection with the extension of the Bridge Loan. Consideration of the amendments to the financing arrangements with the MID Lender was supervised by the Special Committee of MEC's board of directors consisting of Jerry D. Campbell (Chairman), Anthony J. Campbell and William J. Menear. The approval of MEC's board followed a favorable recommendation of the Special Committee. MEC will file a material change report as soon as practicable. The material change report will be filed less than 21 days prior to the closing of the loan amendments. The timing of the material change report is, in MEC's view, both necessary and reasonable because the terms of the amendments were settled and approved by MEC's board of directors on August 13, 2008 and MEC requires immediate funding to address its short-term liquidity needs. About Magna Entertainment Headquartered in Aurora, Ontario, Magna Entertainment Corp. (Nasdaq: MECA)(TSX: MEC.A) -- http://www.magnaentertainment.com/ -- acquires, develops, owns and operates horse racetracks and related pari-mutuel wagering operations, including off-track betting facilities. The company also develops, owns and operates casinos in conjunction with its racetracks where permitted by law. Going Concern Doubt As reported in the Troubled Company Reporter on March 20, 2008, Ernst & Young LLP in Toronto, Canada, expressed substantial doubt about Magna Entertainment Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years Dec. 31, 2007, and 2006. The auditing firm pointed to the company's recurring operating losses and working capital deficiency. The company has incurred net losses of $67.7 million for the six months ended June 30, 2008, and at June 30, 2008, had an accumulated deficit of $577.8 million and a working capital deficiency of $151.1 million. At June 30, 2008, the company had $229.8 million of debt that matures in the 12-month period ending June 30, 2009, including amounts owing under its $40.0 million senior secured revolving credit facility with a Canadian financial institution, which is scheduled to mature on Aug. 15, 2008, amounts owing under the amended Bridge Loan, which is scheduled to mature on Aug. 31, 2008, and its obligation to repay $100.0 million of indebtedness under the Gulfstream Park project financings with a subsidiary of MID by Aug. 31, 2008. MERRILL LYNCH: Fitch Assigns DR Rating to 2006-C1 Certificates -------------------------------------------------------------- Fitch has assigned a Distressed Recovery rating to Merrill Lynch Mortgage Trust, series 2006-C1 commercial mortgage pass-through certificates: -- $6.2 million class P to 'B-/DR1' from 'B-'. Fitch also affirms these classes: -- $57.9 million class A-1 at 'AAA'; -- $380.4 million class A-2 at 'AAA'; -- $134.0 million class A-3 at 'AAA'; -- $25.0 million class A-3B at 'AAA'; -- $113.9 million class A-SB at 'AAA'; -- $753.4 million class A-4 at 'AAA'; -- $240.8 million class A-1A at 'AAA'; -- $249.0 million class AM at 'AAA'; -- $217.9 million class AJ at 'AAA'; -- Interest only class X at 'AAA'; -- $56.0 million class B at 'AA'; -- $28.0 million class C at 'AA-'; -- $31.1 million class D at 'A'; -- $18.7 million class E at 'A-'; -- $28.0 million class F at 'BBB+'; -- $21.8 million class G at 'BBB'; -- $24.9 million class H at 'BBB-'; -- $6.2 million class J at 'BB+'; -- $9.3 million class K at 'BB'; -- $6.2 million class L at 'BB-'; -- $6.2 million class M at 'B+'; -- $6.2 million class N at 'B'. Fitch does not rate the $31.1 million class Q. The assignment of a DR rating is due to expected losses on three specially serviced loans (1.2%) in the transaction. Downgrades are possible if additional loans become specially serviced or if loss expectations increase. As of the August 2008 distribution date, the transaction has paid down by 1.51% to $2.452 billion from $2.490 billion at issuance. In total, 20 loans are considered Fitch loans of concern (6.9%), including four specially serviced assets (1.3%). The largest specially serviced loan (1.0%) is secured by an office property in Cincinnati, Ohio. The loan is current, but it was transferred to special servicing in June 2008 for imminent default. The borrower has accumulated nearly $1 million of accounts payable with third parties. Additionally, the property has deferred maintenance. Losses are expected. Ten loans, 13.8% of the pool, maintain their investment grade shadow ratings. The three largest credit assessed loans are: North Point Mall (6.4%), Mall of Louisiana (4.9%) and 633 17th Street (1.5%). North Point Mall is a retail property located in Alpharetta, Georgia, and reported a year-end 2007 total occupancy of 92%, compared to 85% at issuance. Mall of Louisiana is a retail property located in Baton Rouge, Louisiana, and reported a year-end 2007 total occupancy of 98%, an increase from issuance of 92%. The third largest credit assessed loan, 633 17th Street, is secured by an office tower and parking structure in Denver, Colorado. Occupancy as of year-end 2007 remained stable at 86% compared to 88% at issuance. MGP AUBURN: Voluntary Chapter 11 Case Summary --------------------------------------------- Lead Debtor: MGP Auburn Gresham II, LLC 2325 South Michigan Chicago, IL 60616 Bankruptcy Case No.: 08-22313 Related Information: Gregory Perkins, authentic managing member, filed the petition on the Debtor's behalf. Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- MGP Auburn Gresham I, LLC 08-22394 Chapter 11 Petition Date: August 25, 2008 Court: Northern District of Illinois (Chicago) Debtors' Counsel: Forrest L Ingram, Esq. (fingram@fingramlaw.com) Forrest L. Ingram, P.C. 79 West Monroe Street, Suite 900 Chicago, IL 60603 Tel: (312) 759-2838 Fax: (312) 759-0298 A. MGP Auburn Gresham II's Financial Condition: Estimated Assets: $0 to $50,000 Estimated Debts: $10 million to $50 million B. MGP Auburn Gresham I's Financial Condition: Estimated Assets: $0 to $50,000 Estimated Debts: $10 million to $50 million A copy of MGP Auburn Gresham II's petition containing a list of its largest unsecured creditors is available for free at: http://bankrupt.com/misc/ILnb08-22313.pdf A copy of MGP Auburn Gresham I's petition containing a list of its largest unsecured creditors is available for free at: http://bankrupt.com/misc/ILnb08-22394.pdf MINEOLA WATER: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Mineola Water Corporation P.O. Box 864 Foley, AL 36536 Bankruptcy Case No.: 08-13158 Chapter 11 Petition Date: August 26, 2008 Court: Southern District of Alabama (Mobile) Debtor's Counsel: Lawrence B. Voit (lvoit@silvervoit.com) 4317-A Midmost Drive Mobile, AL 36609-5507 Tel: (251) 343-0800 Total Assets: $2,217,014 Total Debts: 1,325,241 A list of the Debtor's 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/alsb08-13158.pdf ML-CFC COMMERCIAL: Fitch Confirms Ratings for 25 Mortgage Certs. ---------------------------------------------------------------- Fitch Ratings affirmed ML-CFC Commercial Mortgage Trust's 2006-1, commercial mortgage pass-through certificates, as: -- $36.6 million class A-1 at 'AAA'; -- $337.5 million class A-2 at 'AAA'; -- $66.1 million class A-3 at 'AAA'; -- $105.1 million class A-3FL at 'AAA'; -- $75 million class A-3B at 'AAA'; -- $121 million class A-SB at 'AAA'; -- $489.5 million class A-4 at 'AAA'; -- $240 million class A-1A at 'AAA'; -- $214.2 million class AM at 'AAA'; -- $82.1 million class AJ at 'AAA'; -- $100 million class AN-FL at 'AAA'; -- Interest-only class X at 'AAA'; -- $50.9 million class B at 'AA'; -- $21.4 million class C at 'AA-'; -- $29.4 million class D at 'A'; -- $16.1 million class E at 'A-'; -- $24.1 million class F at 'BBB+'; -- $16.1 million class G at 'BBB'; -- $26.8 million class H at 'BBB-'; -- $5.4 million class J at 'BB+'; -- $5.4 million class K at 'BB'; -- $8 million class L at 'BB-'; -- $2.7 million class M at 'B+'; -- $8 million class N at 'B'; -- $5.4 million class P at 'B-'. Fitch does not rate the $26.8 million class Q. The rating affirmations reflect stable performance and minimal scheduled amortization. As of the August 2008, remittance report the transaction has paid down 1.6% to $2.10 billion from $2.14 billion at issuance. Three loans (13.5%) are shadow rated by Fitch: Kenwood Towne Centre (6.7%), 60 State Street (6.2%) and Southern California Ground Leases (0.6%). Based on their stable performance since issuance the loans maintain their investment grade credit assessments. The Kenwood Towne Center loan is secured by 867,504 square feet (sf) of in-line space within a 1.13 million sf regional mall in Cincinnati, Ohio. As of year-end 2007, in-line occupancy at the property was 100% compared to 98.8% at issuance. The 60 State Street loan is secured by an 823,014 sf office building in Boston, Massachusetts. Major tenants include Wilmer Cutler Pickering Hale & Dorr and The Pioneering Group. Occupancy as of year-end 2007 has increased to 100% from 98% at issuance. The Southern California Ground Leases loan is secured by the ground leases of four industrial properties located in Los Angeles, Brea, and Culver City, California. Occupancy at the properties as of year-end 2007 has remained stable at 100% since issuance. ML CLO: Moody's Junk $26.5 Mil. Class C Senior Secured Notes ------------------------------------------------------------ Moody's Investors Service upgraded the ratings on these notes issued by ML CLO XVI Series 1998-Delano-1: Class Description: U.S. $31,500,000 Class B-l Floating Rate Third Senior Secured Notes due 2009 -- Prior Rating: Caa2 -- Current Rating: B3 Class Description: U.S. $47,000,000 Class B-2 Fixed Rate Third Senior Secured Notes due 2009 -- Prior Rating: Caa2 -- Current Rating: B3 According to Moody's, these rating actions are the result of improvement in the Class B Overcollateralization Ratio. The transaction's underlying collateral pool consists primarily of bonds. In addition, Moody's Investors Service downgraded the following notes: Class Description: U.S. $26,500,000 Class C Floating Rate Fourth Senior Secured Notes due 2009 -- Prior Rating: Ca -- Current Rating: C According to Moody's, this rating action is the result of the increased expectations for higher expected losses on the Class C Notes, whose deferred interest balance has continued to increase. MOHAMMED JAMEELUDDIN: Voluntary Chapter 11 Case Summary ------------------------------------------------------- Debtor: Mohammed Jameeluddin 3995 Hollyspring Drive Corona, CA 92881 Bankruptcy Case No.: 08-20199 Chapter 11 Petition Date: August 11, 2008 Court: Central District of California (Riverside) Debtor's Counsel: Robert J. Curtis, Esq. Curtis Law Group 19700 Fairchild Road Ste 380 Irvine, CA 92612 Tel: (949) 955-2211 Fax: (949) 955-2217 E-mail: rcurtis@curtislawgroup.com Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $1,000,000 to $10,000,000 The Debtor does not have any unsecured creditors who are not insiders. MONTOYA MEXICAN: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Montoya Mexican Restaurant #3, Inc. 650 North Sam Houton Parkway, Suite 510 Houston, TX 77060 Bankruptcy Case No.: 08-35390 Chapter 11 Petition Date: August 19, 2008 Court: Southern District of Texas (Houston) Judge: Karen K. Brown Debtor's Counsel: Julie Mitchell Koenig, Esq. (jkoenig@towkoenig.com) Tow and Koenig PLLC 26219 Oak Ridge Drive The Woodlands, TX 77380 Tel: (281)-681-9100 Fax: (281)-681-1441 Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $1,000,000 to $10,000,000 The Debtor does not have any unsecured creditors who are not insiders. MORGAN STANLEY: Fitch Affirms BB- Rating for $7.7MM Class L Certs. ------------------------------------------------------------------ Fitch affirms Morgan Stanley Capital 1 Trust series 2007-IQ15 commercial mortgage pass-through certificates as: -- $55.8 million class A-1 at 'AAA'; -- $278.6 million class A-1A at 'AAA'; -- $227.4 million class A-2 at 'AAA'; -- $72.8 million class A-3 at 'AAA'; -- $796.9 million class A-4 at 'AAA'; -- $205.4 million class A-M at 'AAA'; -- $177.1 million class A-J at 'AAA''; -- $2,047.5 million class X at 'AAA'; -- $33.4 million class B at 'AA'; -- $15.4 million class C at 'AA-' -- $28.2 million class D at 'A'; -- $15.4 million class E at 'A-'; -- $30.8 million class F at 'BBB+' -- $23.1 million class G at 'BBB'; -- $20.5 million class H at 'BBB-' -- $10.3 million class J at 'BB+' -- $5.1 million class K at 'BB'; -- $7.7 million class L at 'BB-'; Fitch does not rate classes M, N, O and P. The affirmations are the result of stable performance since issuance. As of the July 2008, distribution date, the transaction has paid down 0.3% to $2.048 billion. The collateral consists of 134 loans on multifamily and commercial real estate properties in 38 states, with no state concentration exceeding 12.3%. There are currently no delinquent or specially serviced loans. Fitch reviewed the transaction's three shadow rated loans and their underlying collateral: Market Pointe I(0.47%),724 Fifth Avenue (0.44%) and Hampton Inn (0.36%). Due to their stable performance, the loans maintain investment grade shadow ratings. In total, nine loans are considered Fitch loans of concern (10.41%). The seventh and eighth largest loans are considered Fitch loans of concern due to low year-end (YE) 2007 debt service coverage ratios. The seventh largest loan is a multifamily property (3.2%) located in Jackson, TN. As of YE 2007, the DSCR was 0.69 times (x) compared to a Fitch stressed DSCR at issuance of 1.14x. The borrower has, thus far, been willing to come out- of-pocket to cover debt service. New management was recently put in place in an effort to turn the property around. The eighth largest loan (2.3%) is a retail center located in San Diego, California. As of YE 2007, the DSCR was 0.98x compared to a Fitch stressed DSCR of 1.23x at issuance. The property's tenancy is heavily concentrated in furniture retailers, which have been adversely affected by the local housing downturn. With the exception of three retail properties, the remaining loans of concern are also due to low DSCRs, generally as a result of increased expenses. The three retail properties are located in CA, have common sponsorship and are loans of concern due to tax delinquencies. Although Fitch is closely monitoring its loans of concerns, affirmations are warranted at this time due to minimal near-term maturity risk as none of the loans mature prior to 2012 and 72.2% of the pool matures in 2017. Additionally all loans in the pool remain current. MORGAN STANLEY: Fitch Affirms B- Rating on $15.9MM Class L Certs. ----------------------------------------------------------------- Fitch Ratings upgraded three classes of commercial pass-through certificates from Morgan Stanley Capital I Inc., series 1998-WF2 as: -- $23.9 million class G to 'AAA' from 'AA-'; -- $10.6 million class H to 'AA' from 'A-'; -- $8 million class J to 'A' from 'BBB'. Additionally, Fitch has affirmed these classes: -- Interest only (IO) class X at 'AAA'; -- $19.3 million class D at 'AAA'; -- $21.2 million class E at 'AAA'; -- $21.2 million class F at 'AAA'; -- $8 million class K at 'BB+'; -- $15.9 million class L at 'B-'. The $5.3 million class M remains at 'CCC/DR2'. Fitch does not rate the $2.5 million class N certificates. Classes A-1, A-2, B and C have been paid in full. The upgrades reflect increased credit enhancement due to scheduled amortization and loan payoffs since Fitch's last review and reflect the stable performance of the outstanding loans. As of the August 2008 distribution date, the pool's aggregate balance has been reduced 87.2%, to $136 million from $1.06 billion at issuance. One loan has defeased (9.1%). Fitch has identified two Loans of Concern (2.8%), including one specially serviced asset (1.4%). The specially serviced asset is a real estate owned asset with losses expected. The loan is secured by a retail property located in Lansing, Michigan and remains 100% vacant since 2002. Recent valuations of the asset indicate losses upon liquidation. The largest Loan of Concern (1.4%) is secured by retail property in Indianapolis, Indiana. Occupancy as of year-end 2007 was 70%. The largest remaining loan (27.3%) is an office property located in Washington, D.C. The fully amortizing loan is scheduled to mature in 2023 and had a servicer reported YE 2007 debt service coverage ratio of 1.61 times (x). The second largest remaining loan (11.1%) is secured by a hotel property in San Diego, California. The loan is scheduled to mature in 2013 and had a servicer reported YE 2007 DSCR of 1.78x. MORGAN STANLEY: Fitch Affirms C/DR6 Rating on $851 Class N Certs. ----------------------------------------------------------------- Fitch Ratings has affirmed Morgan Stanley Capital I Inc.'s commercial mortgage pass-through certificates, series 1999-CAM1, as: -- $43.3 million class A-4 at 'AAA'; -- Interest only class X at 'AAA'; -- $26.2 million class B at 'AAA'; -- $26.2 million class C at 'AAA'; -- $12.1 million class D at 'AAA'; -- $20.2 million class E at 'AAA'; -- $8.1 million class F at 'AAA'; -- $14.1 million class G at 'AA+'; -- $14.1 million class H at 'A+'; -- $6 million class J at 'BBB+'; -- $8.1 million class K at 'BBB-'; -- $6 million class L at 'BB-'; -- $6 million class M at 'B-/DR1'; -- $851,574 class N remains at 'C/DR6'. Classes A-1, A-2 and A-3 have paid in full. The affirmation is the result of stable performance since Fitch's last rating action. As of the August 2008 distribution date, the transaction's aggregate principal balance has been reduced 76.3% to $191.4 million from $806.5 million at issuance. The largest remaining loan (7.1%) is secured by a retail property in Escondido, California. December 2007 servicer reported occupancy was 99% and a debt service coverage ratio of 2.44 times. The loan is scheduled to mature in June 2009. The second largest loan (6.7%) is collateralized by an office property in midtown Manhattan, New York. December 2007 servicer reported occupancy was 98% with a DSCR of 2.30x. The loan is scheduled to mature in January 2009. Seven loans (12.7%) have been identified as Fitch loans of concern due to declines in occupancy and performance, including one of the top five loans in the deal. There are currently no delinquent or specially serviced loans. The largest Fitch Loan of Concern (4.7%) is secured by a retail property in St. Peters, Missouri, suffering from a decline in occupancy. April 2008 servicer reported physical occupancy is 74% and the borrower is actively marketing the vacant space. The second largest Fitch Loan of Concern (2.6%) is secured by an office building in Norcross, Georgia. The borrower is currently marketing space in anticipation of current tenant leases expiring. The loan is scheduled to mature in February 2009. Fitch continues to monitor upcoming maturities, with 4.8% of the pool scheduled to mature in 2008 and 47.1% in 2009. These loans have a weighted average coupon of 7.18% and 7.20%, respectively. MORGAN STANLEY: Moody's Cuts Rating on $3 Mil. Class Notes to Ba2 ----------------------------------------------------------------- Moody's Investors Service downgraded the rating of these notes issued by Morgan Stanley Managed ACES 2006-13: Class Description: U.S. $3,000,000 Class II Floating Rate Notes due 2013 -- Prior Rating: A3, on review for possible downgrade -- Current Rating: Ba2 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. MPM TECHNOLOGIES: June 30 Balance Sheet Upside-Down by $11.3MM -------------------------------------------------------------- MPM Technologies Inc.'s consolidated balance sheet at June 30, 2008, showed $1,290,678 in total assets, and $12,572,004 in total labilities, resulting in a $11,281,326 stockholders' deficit. At June 30, 2008, the company's consolidated balance sheet also showed strained liquidity with $131,850 in total current assets available to pay $12,572,004 in total current liabilities. The company reported a net loss of $441,264 on total revenues of $120,122 for the second quarter ended June 30, 2008, compared with a net loss of $377,100 on total revenues of $767,997 in the same period of 2007. The decrease in revenues was due to the lack of project work in 2008. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2008, are available for free at http://researcharchives.com/t/s?3143 Going Concern Doubt Rosenberg Rich Baker Berman & Company, in Bridgewater, N.J., expressed substantial doubt about MPM Technologies Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's inability to generate any significant revenues and working capital deficiency. For the six months ended June 30, 2008, the company relied principally on cash from loans from related parties to fund its activities. Working capital deficit at June 30, 2008, was $12,440,154 compared to $11,630,782 at Dec. 31, 2007. About MPM Technologies Headquartered in Parsippany, N.J., MPM Technologies Inc. (OTC BB: MPML) -- http://www.mpmtech.com/ -- operates through its three wholly owned subsidiaries: AirPol Inc., Nupower Inc. and MPM Mining Inc. During the year ended Dec. 31, 2007, AirPol was the only revenue generating entity. AirPol operates in the air pollution control industry. It sells air pollution control systems to companies in the United States and worldwide. The company through its wholly owned subsidiary NuPower is engaged in the development and commercialization of a waste-to-energy process known as Skygas. These efforts are through NuPower's participation in Nupower Partnership, in which MPM has a 58.21% partnership interest. Nupower Partnership owns 85% of the Skygas Venture. In addition to its partnership interest through Nupower Inc., MPM also owns 15% of the Venture. MRS FIELDS: Moody's Junks $195 Mil. Senior Secured Notes -------------------------------------------------------- Moody's Investors Service downgraded the Probability of Default rating of Mrs. Fields Famous Brands to D from C. At the same time, the rating agency affirmed Mrs. Fields' Corporate Family Rating of Caa3 and Senior Secured Notes rating of Caa3. The downgrade of PDR to D was prompted by the recent announcement that the company and certain of its subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The affirmation of the CFR and senior secured notes rating reflects Moody's opinion on an higher than 50% recovery rate estimate based on the distressed exchange plan as proposed in a prepackaged Plan of Reorganization as part of the same filing. Subsequent to this rating action, Moody's will withdraw all of the company's ratings. These ratings were affected: -- Corporate family rating Caa3 - affirmed -- Probability of default rating to D from C -- The $115 million senior secured notes maturing in 2011 to Caa3 (LGD3, 40%) from Caa3 (LGD3, 34%) -- The $80.75 million senior secured notes maturing in 2011 to Caa3 (LGD3, 40%) from Caa3 (LGD3, 34%) Headquartered in Salt Lake City, Utah, Mrs. Fields franchised and licensed 1,278 baked goods and frozen yogurt retail locations under the brand names "Mrs. Fields" and "TCBY" at March 29, 2008. Total revenues for last twelve months ending March 2008 were approximately $99 million. MTR GAMING: Likely Covenant Breach Cues Moody's to Confirm Ratings ------------------------------------------------------------------ Moody's changed the rating outlook on MTR Gaming Group to negative from stable and affirmed the existing ratings. The rating action reflects the risk of financial covenant violation in the next few quarters, absent a material improvement in EBITDA, as step down clauses will come into effect. Ratings affirmed: -- B2 corporate family rating -- B2 probability of default rating -- B2 Senior Unsecured Notes (LGD assessment revised to 54% from 55%) -- Caa1 Senior Subordinated Notes (unchanged LGD assessment) "While financial covenant tightness was one of the drivers for the downgrade of the corporate family rating and probability of default rating on June 12, 2008, the escalating risk of covenant violation in the next twelve months negatively weighs on our liquidity assessment" stated Jacques Ouazana, Analyst. Although EBITDA improved in the second quarter of 2008 thanks to the increasing contribution of Presque Isle Downs & Casino, more significant growth will be needed in the second half of the year to avoid a covenant breach, requiring strong execution in a challenging macro-economic and competitive environment. More positively, the rating affirmation is based on the moderate senior secured leverage of less than 2.3 times and Moody's expectation that total debt/EBITDA will decline to below 6 times by the end of 2008. Additionally, it considers the potential for cost containment programs and disposals of non-core assets. MTR, through its subsidiaries, owns and operates Mountaineer Casino, Racetrack & Resort in Chester, West Virginia; Presque Isle Downs & Casino in Erie, Pennsylvania and Scioto Downs in Columbus, Ohio. The company also owns a 90% interest in Jackson Harness Raceway in Jackson, Michigan, and a 50% interest in the North Metro Harness Initiative LLC, which operates Running Aces Harness Park in Minneapolis, Minnesota. MTR reported net revenues of approximately $464 million in the last twelve months ended June 30, 2008. MYRA SEAMAN: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Myra S. Seaman fka Myra S. Lipsey 18625 Homer Road Marshall, MI 49068 Bankruptcy Case No.: 08-06829 Chapter 11 Petition Date: August 4, 2008 Court: Western District of Michigan (Grand Rapids) Debtor's Counsel: Perry G. Pastula, Esq. (bankruptcy@dunnsslaw.com) Dunn Schouten & Snoap PC 2745 DeHoop Avenue SW Wyoming, MI 49509 Tel: (616) 538-6380 Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $1,000,000 to $10,000,000 The Debtor does not have any unsecured creditors who are not insiders. NATURALLY ADVANCED: Dale Matheson Raises Going Concern Doubt ------------------------------------------------------------ Dale Matheson Carr-Hilton Labonte LLP raised substantial doubt about the ability of Naturally Advanced Technologies, Inc., to continue as a going concern after auditing the company's financial statements for the year ended Dec. 31, 2007. The auditor reported that the company has incurred losses in developing its business and further losses are anticipated and that the company requires additional funds to meet its obligations and the costs of its operations. The company posted a net loss of $1,937,171 on total sales of $2,490,885 for the year ended Dec. 31, 2007, as compared with a net loss of $1,374,899 on total sales of $1,266,781 in the prior year. The company has incurred losses since inception and further losses are anticipated in the development of its business and there can be no assurance that the company will be able to achieve or maintain profitability. Accordingly, these factors raise substantial doubt as to the company's ability to continue as a going concern. The continued operations of the company and the recoverability of the carrying value of assets is dependent upon the ability of the company to obtain necessary financing as required to fund ongoing losses, and upon future profitable operations. During 2007 the company raised $1,890,662 from equity funding for working capital requirements. The company plans to raise additional financing as needed in 2008 through equity placements. However, there can be no assurance that capital will continue to be available as necessary to meet the company's ongoing working capital requirements or, if the capital is available, that it will be on terms acceptable to the company. At Dec. 31, 2007, the company's balance sheet showed $2,309,827 in total assets, $1,544,291 in total liabilities, and $765,536 in total stockholders' equity. The company's consolidated balance sheet at Dec. 31, 2007, showed $2,165,367 in total current assets available to pay $1,333,349 in total current liabilities. A full-text copy of the company's 2007 annual report is available for free at http://ResearchArchives.com/t/s?3148 About Naturally Advanced Based in Vancouver, Canada, Naturally Advanced Technologies Inc. (OTC BB: NADVF) -- http://www.naturallyadvanced.com/-- is a Cleantech company focused on providing environmentally friendly textile, composite, biomass and pulping solutions through the cost effective processing of industrial hemp, and other bast fiber crops. This proprietary fiber-processing platform, called CRAILAR(R), has been developed in conjunction with the National Research Council of Canada and the Alberta Research Council, with the company owning the exclusive global licensing rights for this technology. The CRAILAR(R) process and resulting products and by- products are expected to have applications in textile, composite material, energy and pulp and paper markets. The company is also provides sustainable, environmentally friendly fibers and fabrics through its apparel division HTnaturals Apparel Corp. NEENAH FOUNDRY: Moody's Junks $225 Million Senior Secured Notes --------------------------------------------------------------- Moody's Investors Service downgraded Neenah Foundry Company's Corporate Family Rating to Caa1 from B2, Probability of Default rating to Caa1 from B2, and its $225 million senior secured notes due 2017 to Caa1(LGD4, 52%) from B2 (LGD3, 47%). The rating outlook is negative. The rating action is as follows: -- Corporate Family Rating to Caa1 from B2 -- Probability of Default to Caa1 from B2 -- $225 million of senior secured notes due 2017, to Caa1 (LGD4, 52%) from B2 (LGD3, 47%). The downgrades reflect Neenah's very weak operating performance in the past year which resulted in severely impaired credit metrics that no longer support a single B rating. Moody's expects these metrics will likely remain weak over the intermediate term as the economic pressures that have adversely affected the company's performance are likely to persist. Neenah's recent financial results have been negatively impacted by reduced production volume at its heavy-duty commercial vehicle and municipal segments, primarily due to the dwindling demand for the company's products. The company's weak financial performance was further exacerbated by margin pressures in part arising from its inability in fully passing on sharply-rising raw material costs such as scrap steel and negative operating leverage from a declined volume, at a time when its level of fixed charges remains elevated from inherently high debt balance. As of June 30, 2008, Neenah's EBIT/Interest was 0.6x, Debt/EBITDA was 8.2x and free cash flow was considerably negative. The negative outlook reflects that Neenah's current credit metrics are weakly positioned for a Caa1 rating category and Moody's expectation of continuing negative economic pressures affecting the company's core segments will not likely abate in the near to intermediate term. Neenah's municipal castings segment has suffered from lower demand in part due to decreased new housing starts as well as tightening municipal budget. While the production volume in the heavy duty commercial vehicle segment has seen signs of stabilization since its significant drop started in 2007, further recovery is subject to general economic conditions. The revenue increase in its construction and agriculture segment only partially offset the declines in other segments. The negative outlook also encompasses the company's weakening liquidity as Moody's expects free cash flow would continue to be negative in the next 12-18 months. The rating could be further downgraded if Neenah fails to improve its operating earnings, andr its liquidity deteriorates such as enlarged negative free cash flow and materially reduced borrowing availability under its revolving credit facility. Neenah's $110 million asset based senior secured revolving credit facility, and $75 million senior subordinated notes are not rated by Moody's. The last rating action was October 17, 2007 when the company's Corporate Family Rating was affirmed and outlook was changed to negative from stable. Neenah, headquartered in Neenah, Wisconsin, manufactures and markets a wide range of metal castings and forgings for the heavy municipal market plus a wide range of complex industrial castings, with concentrations in the medium- and heavy-duty truck and HVAC markets. Annual revenues approximate $500 million. NETWOLVES CORP: Plan Confirmation Hearing to Continue August 29 --------------------------------------------------------------- Due to Tropical Storm Fay's threat to Tampa, Florida, by Court Order, the hearing to consider confirmation of Netwolves Corporation's proposed Joint Plan of Reorganization, previously scheduled for August 20, 2008, has been continued and will now be heard before the U.S. Bankruptcy Court for the Middle District of Florida on August 29, 2008. The amended plan includes, among other things, the cancellation of all outstanding shares of the company's common stock and serial preferred stock. Overview of the Plan The plan contemplates the potential substantive consolidation of the Debtors' estates for purposes of voting and for distributions under the plan. NetWolves may seek prior to or at confirmation to substantively consolidate its Estate with those of its affiliated Debtors pursuant to Section 105 of the Bankruptcy Code and applicable law. The Debtors believe substantive consolidation will benefit all holders of claims and interests by: (i) essentially eliminating the myriad of intercompany claims (and administrative expense claims among the Debtors) that will otherwise be difficult, if not impossible, to accurately reconcile, and (ii) providing a more equitable distribution to all holders of claims and Interests under the plan. About NetWolves Based in Tampa, Florida, NetWolves Corporation (Pink Sheets: WOLV) -- http://www.netwolves.com/-- provides telecommunications and Internet-managed services to more than 1,000 customers through its neutral FCC-licensed carrier. Some of NetWolves' customers include General Electric, University of Florida, McLane Company, JoAnn Stores and Marchon Eyewear. The company and three of its affiliates filed for Chapter 11 protection on May 21, 2007 (Bankr. M.D. Fla. Case Nos. 07-04186 through 07-04196). David S. Jennis, Esq., at Jennis Bowen & Brundage, P.L., represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, it listed total assets of $8,847,572 and total liabilities of $7,637,029. NEXCEN BRANDS: Completes Restructuring of Bank Credit Facility -------------------------------------------------------------- NexCen Brands, Inc., and certain of its subsidiaries completed a restructuring of its bank credit facility by entering into amended and restated borrowing, security and related agreements with BTMU Capital Corporation. The amended and restated agreements replace all of the prior bank credit agreements and significantly revise the terms of the outstanding borrowings, which total approximately $175.7 million. In general, the amended and restated facility reduces the borrower subsidiaries' mandatory principal payment obligations, enhances the Company's operating liquidity by increasing management fees to cover certain operating expenses before paying debt service, increases the borrower subsidiaries' interest obligations, substantially tightens the covenants and events of default and adds economic incentives for the borrower subsidiaries to repay or refinance a significant portion of the debt prior to maturity. No additional borrowings are permitted and the facility remains secured by substantially all of the assets of the borrower subsidiaries. "We are very pleased to have completed the restructuring of this bank credit facility with BTMUCC and are gratified by the ongoing support of our lender," Kenneth J. Hall, executive vice president, chief financial officer and treasurer of NexCen Brands, stated. Key provisions of the amended and restated facility include: -- the October 2008 principal payment obligation related to the Great American Cookie financing completed in January 2008 has been eliminated. Other mandatory minimum principal payments have been eliminated for the remainder of 2008, and substantially reduced thereafter. -- the outstanding loans have been restructured into three separate tranches in the amount of $47.6 million maturing on January 1, 2010, $41.7 million maturing on July 31, 2011 and the remaining $86.3 million maturing on July 31, 2013. -- the initial blended annual interest rate spread on the indebtedness is approximately 5.76%, for a blended annual rate of 8.22% for the August 17, 2008 payment date based upon LIBOR of 2.46%. The interest rates on the notes are subject to increases after December 31, 2008. Substantial changes have been made to the covenants and the events of default in the facility. As part of the restructuring, BTMUCC provided the company and the borrower subsidiaries with a waiver of enumerated past defaults and alleged defaults. About NexCen Brands NexCen Brands Inc. (NASDAQ: NEXC) -- http://www.nexcenbrands.com/ -- acquires and manages global brands, generating revenue through licensing and franchising. We currently own and license the Bill Blass and Waverly brands, as well as seven franchised brands. Two franchised brands -- The Athlete's Foot and Shoebox New York -- sell retail footwear and accessories. Five are quick-service restaurants -- Marble Slab Creamery, MaggieMoo's, Pretzel Time, Pretzelmaker, and Great American Cookies. The company licenses and franchises its brands to a network of leading retailers, manufacturers and franchisees that generate $1.3 billion in retail sales in more than 50 countries around the world. The franchisees operate approximately 1,900 franchised stores. Franchisee support and training is provided at NexCen University, a state-of-the-art facility located in Atlanta. * * * A. Substantial Doubt As reported by the Troubled company Reporter on May 21, 2008, based on information that is now known, the company believes that there is substantial doubt about its ability to continue as a going concern, and pending completion of an independent review, that this substantial doubt also may have existed at the time the company filed its 2007 10-K. The audit committee of the company's Board of Directors has retained independent counsel to conduct an independent review of the situation. The company has concluded that its 2007 financial statements should no longer be relied upon and no reliance should be placed upon KPMG's audit report dated March 20, 2008, or its report dated March 20, 2008 on the effectiveness of internal control over financial reporting as of Dec. 31, 2007, as contained in the company's 2007 10-K. B. Strategic Alternative Review NexCen also announced that it is actively exploring all strategic alternatives to enhance its liquidity, including potential capital market transactions, the possible sale of one or more of its businesses, and discussions with the company's lender. In addition, the company will take immediate steps to reduce operating expenses. NORTHWEST AIRLINES: To Utilize Delta Global Services ---------------------------------------------------- In light of its proposed merger with Delta Air Lines, Inc., Northwest Airlines Corp. ended its contract with French-owned Worldwide Flight Services for ground services at Bradley International Airport, and decided to use Delta Global Services, a Delta subsidiary, Courant.com reports. Delta spokeswoman Susan Elliott has stated that Delta Global won the Contract in competitive bidding. With Northwest's reduced schedule at Bradley Airport, Worldwide's services are no longer necessary, Northwest's Vice President for Communications Tammy Lee told Courant.com. As a result of the canceled Agreement, Worldwide told the Department of Labor that it plans to shut down operations at the Bradley Airport effective October 2, 2008, and contemplates 74 job cuts, says the report. Delta Global plans to employ 30 additional employees at Bradley Airport, and are considering Worldwide's workers who are represented by the Transport Workers Union of America, Ms. Elliott said. Worldwide employees have "hard-to-obtain" security clearances; hence the Union is "cautiously optimistic" that they would find work with Delta, Courant.com says, quoting Union spokesperson Jamie Horwitz. About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE: DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. (Delta Air Lines Bankruptcy News, Issue No. 106; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington, represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Scott L. Hazan, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C. as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed $14.4 billion in total assets and $17.9 billion in total debts. On Jan. 12, 2007, the Debtors filed with the Court their chapter 11 plan. On Feb. 15, 2007, the Debtors filed an amended plan and disclosure statement. The Court approved the adequacy of the Debtors' amended disclosure statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' amended plan. That amended plan took effect May 31, 2007. (Northwest Airlines Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on July 29, 2008, Standard & Poor's Ratings Services lowered its ratings on Northwest Airlines Corp. and subsidiary Northwest Airlines Inc. (both rated B/Negative/--), including lowering the long-term corporate credit ratings on both entities to 'B' from 'B+', and removed the ratings from CreditWatch, where they had been placed with negative implications April 15, 2008. The outlook is negative. The downgrade reflects expected losses and reduced or negative operating cash flow caused by high fuel prices. S&P also lowered our ratings on enhanced equipment trust certificates, in some cases by more than one notch. PENN OCTANE: Posts $1,436,000 Net Loss in 2008 Second Quarter ------------------------------------------------------------- Penn Octane Corp. reported a net loss of $1,436,000 on revenues of $17,019,000 for the second quarter ended June 30, 2008, compared with a net loss of $289,000 on revenues of $32,981,000 in the same period last year. Results for the quarter ended June 30, 2008, included a loss of $343,000 from sale of discontinued operations of the company's Mexican subsidiaries. Revenues for the three months ended June 30,2008, consisted of fuel sales of $13,009,000, oil and gas revenues of $1,857,000 from the Oklahoma assets, which was acquired in November 2007, and revenues of $2,153,000 from Regional Enterprises Inc., which was acquired during July 2007. Regional Enterprises provides liquid bulk storage, railcar transloading and transportation services for the petroleum and chemical business sectors. In comparison, revenues for the three months ended June 30, 2007, consisted of fuel sales of $32,545,000 and revenues of $436,000 from the sold LPG transportation business. In December 2007, Rio Vista completed the disposition of its remaining LPG assets to TransMontaigne Products Services Inc. In May 2008, Penn Octane's board of directors approved a plan to sell its fuel sales inventory and to cease the fuel sales business. The purpose of this decision was to provide working capital for its other business segments. The assets of the fuel sales business consisted only of accounts receivable and inventories. As a result of the disposition of the LPG-related businesses in 2006 and 2007 and the cessation of the fuel sales business during May 2008 and the acquisition of Regional's business and the Oklahoma assets, the company's sources of operating cash flows are expected to be derived from the operations of Regional and from the revenues received from the Oklahoma assets. Balance Sheet At June 30, 2008, the company's consolidated balance sheet showed $54,832,000 in total assets, $42,942,000 in total liabilities, $7,884,000 in minority interest, and $4,006,000 in total stockholders' equity. The company's consolidated balance sheet at June 30, 2008, also showed strained liquidity with $7,283,000 in total current assets available to pay $39,664,000 in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2008, are available for free at http://researcharchives.com/t/s?3144 Going Concern Doubt Burton McCumber & Cortez, L.L.P. expressed substantial doubt Penn Octane Corp.'s ability to continue as a going concern after reviewing the company's consolidated financial statements for the three months and six months ended June 30, 2008. The auditing firm reported that the company had a loss from continuing operations for each of the two years ended Dec. 31, 2007, and the three months and six months ended June 30, 2008, and has a deficit in working capital. In addition, the Oklahoma assets and the Regional operations currently do not generate sufficient cash flow to pay general and administrative and other operating expenses of the company and all debt service requirements. About Penn Octane Headquartered in Palm Desert, Calif. Penn Octane Corporation (Nasdaq: POCC) -- http://www.pennoctane.com/-- owns 75% of Rio Vista GP LLC, the general partner of Rio Vista Energy Partners L.P. Rio Vista Energy Partners L.P. is engaged in the acquisition, development and production of oil and natural gas properties and related midstream assets, as well as bulk storage, railcar transloading and trasportation for the petroleum and chemical business sectors. PERFORMANCE TRANS: Files Amended Schedule of Postpetition Debts --------------------------------------------------------------- Performance Transportation Services, Inc., and its debtor- affiliates filed with the U.S. Bankruptcy Court for the Western District of New York a 170-page amended schedule of debts they incurred after their second bankruptcy filing: Debtor Total Debt ------ ---------- Leaseway Motorcar Transport Company LLC $5,389,096 Performance Transportation Services, Inc. 4,257,143 E. and L. Transport Company L.L.C. 1,632,174 Hadley Auto Transport LLC 790,063 Logistics Computer Services, Inc. 458,766 Transportation Releasing L.L.C. 43,551 ----------- Total $11,780,730 A full-text copy of the Amended Schedule of Postpetition Debts is available for free at: http://bankrupt.com/misc/PTSCh7AmendedPostpetitionDebts.pdf As reported in the Troubled Company Reporter on Aug. 11, 2008, Performance Transportation, Inc., et al., filed with the Court a 66-page schedule of debts they incurred after their second bankruptcy filing, aggregating $13.2 million: Debtor Total Debt ------ ---------- Leaseway Motorcar Transport Company LLC $5,879,203 Performance Transportation Services, Inc. 4,278,972 E. and L. Transport Company L.L.C. 1,621,995 Hadley Auto Transport LLC 933,454 Logistics Computer Services, Inc. 458,766 Transportation Releasing L.L.C. 43,575 ----------- Total $13,215,965 About Performance Transportation Performance Transportation Services Inc. is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America, and operates under three key transportation business lines including: E. and L. Transport, Hadley Auto Transport and Leaseway Motorcar Transport. The company and 13 of its affiliates previously filed for Chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Lead Case No. 06- 00107). The U.S. Bankruptcy Court for the Western District of New York confirmed the Debtors' plan on Dec. 21, 2006, and that plan became effective on Jan. 29, 2007. Garry M. Graber, Esq. of Hodgson, Russ LLP and Tobias S. Keller, Esq. of Jones Day represented the Debtors in their restructuring efforts. When the Debtor filed for protection from their creditors it reported more than $100,000,000 in total assets. It also disclosed owing more than $100,000,000 to at most 10,000 creditors, including $708,679 to Broadspire and $282,949 to General Motors of Canada Limited. The company and its debtor-affiliates filed their second Chapter 11 bankruptcy on Nov. 19, 2007 (Bankr. W.D.N.Y. Case Nos: 07-04746 thru 07-04760). Tobias S. Keller, Esq., at Jones Day, represents the Debtors. Garry M. Graber, Esq., at Hodgson, Russ LLP, serve as the Debtors' local counsel. The Debtors' claims and balloting agent is Kutzman Carson Consultants LLC. (Performance Bankruptcy News, Issue No. 53; Bankruptcy Creditors' Services Inc.; http://bankrupt.com/newsstand/or 215/945-7000). As reported in the Troubled Company Reporter on July 18, 2008, the Court converted the Debtors' Chapter 11 cases to cases under Chapter 7 of the Bankruptcy Code, effective as of July 14, 2008. Mark S. Wallach was appointed as the trustee for Performance Transportation, Inc., et al.'s, Chapter 7 case. PHILIP STEINBERG: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Philip B. Steinberg 7515 West Oakland Park Blvd Suite 100 Fort Lauderdale, FL 33319 Bankruptcy Case No.: 08-21136 Chapter 11 Petition Date: August 6, 2008 Court: Southern District of Florida (Fort Lauderdale) Judge: Raymond B. Ray Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $1,000,000 to $10,000,000 The Debtor does not have any unsecured creditors who are not insiders. PLASTECH ENGINEERED: Can Employ Groom Law as Benefits Counsel ------------------------------------------------------------- Plastech Engineered Products Inc. and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the Eastern District of Michigan to employ Groom Law Group, Chartered, as their employee benefits counsel, nunc pro tunc to June 27, 2008. According to the Debtors, Groom Law is particularly well-suited to serve as employee benefits counsel to address matters where expertise in employee benefits law is invaluable. "The firm is the largest employee benefits specialty firm in the country and possesses nationally recognized expertise on the intersection between employee benefits law and insolvency matters," the Debtors noted. Pursuant to its employment, Groom Law is expected to: (a) provide legal advice concerning the Debtors' employee benefits plans, including application of the Employee Retirement Income Security Act of 1974, as amended, and relevant provisions of the Internal Revenue Code; (b) represent the Debtors on information inquiries, investigations, or proceedings brought by the (i) Pension Benefit Guaranty Corporation, (ii) the Department of Labor, or the (iii) Internal Revenue Service -- the three federal agencies with regulatory authority over the Debtors' employee benefit plans; (c) attend meetings and negotiate with representatives of the employees in administering the employee benefits plans; (d) appear, on the Debtors' behalf, before the Bankruptcy Court, any appellate court, and the United States Trustee on matters relating to the Debtors' employee benefits plan; and The Debtors asserted that the firm's services are necessary to enable them to maximize the value of their estates. Groom Law, whose services are unique to the Debtors, will also coordinate its efforts with the other bankruptcy professionals employed in these cases to avoid duplication of work, the Debtors assured the Court. Groom Law's standard hourly rates range from $325 to $800, which will vary with the professional's years of experience, specialization, and level of professional attainment, Gary M. Ford, a partner at Groom Law said. Specifically, Mr. Ford's hourly rate is $800, and $675 per hour is billed for the services of fellow professional, Mr. Lonie Hassel. The Debtors agreed to reimburse the firm for necessary and actual expenses incurred in the conduct of its services. Mr. Ford related that his firm has received, or anticipates receipt of a $50,000 security retainer, which it intends to apply for professional services compensation in these Chapter 11 cases subject to the Court's approval. Mr. Ford further related, based on conflicts search conducted, that his firm is a "disinterested person" as the term is defined in Section 101(14) of the U.S. Bankruptcy Code. About Plastech Engineered Based in Dearborn, Michigan, Plastech Engineered Products, Inc. -- http://www.plastecheng.com/-- is a full-service automotive supplier of interior, exterior and underhood components. It designs and manufactures blow-molded and injection-molded plastic products primarily for the automotive industry. Plastech's products include automotive interior trim, underhood components, bumper and other exterior components, and cockpit modules. Plastech's major customers are General Motors, Ford Motor Company, and Toyota, as well as Johnson Controls, Inc. Plastech is a privately held company and is the largest family- owned company in the state of Michigan. The company is certified as a Minority Business Enterprise by the state of Michigan. Plastech maintains more than 35 manufacturing facilities in the midwestern and southern United States. The company's products are sold through an in-house sales force. The company and eight of its affiliates filed for Chapter 11 protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C., represent the Debtors in their restructuring efforts. The Debtors chose Jones Day as their special corporate and litigation counsel. Lazard Freres & Co. LLC serves as the Debtors' investment bankers, while Conway, MacKenzie & Dunleavy provide financial advisory services. The Debtors also employed Donlin, Recano & Company as their claims and noticing agent. Joel D. Applebaum, Esq., at Clark Hill PLC, represents the Official Committee of Unsecured Creditors. As of Dec. 31, 2006, the company's books and records reflected assets totaling $729,000,000 and total liabilities of $695,000,000. (Plastech Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Aug. 11, 2008, the Debtors have until Sept. 28, 2008, to file a Chapter 11 plan of reorganization. PLASTECH ENGINEERED: Leamington Workers' Severance Pay Slashed 75% ------------------------------------------------------------------ Former workers at LDM Technologies Company, a Plastech Engineered Product, Inc. unit in Leamington, Canada, reportedly receive $1,400 each, The Windsor Star said. The amount, however, is 75% less than what the 350 former workers are entitled in severance pay, Canadian Auto Workers Local 1769 Spokesperson Ken Lewenza told The Windsor Star. The $500,000 provided by Chrysler didn't come close to $2.3 million in total severance payable. Several workers believe the federal government should make up for the shortfall. But Dave Kesteren, Conservative member of the parliament for Chatham-Kent-Essex, in Ontario, Canada, said "public funds should not be part of this equation." The Leamington plant closed in May 2008, giving its workers only two weeks' notice, instead of the 12-week federal requirement, the report disclosed. About Plastech Engineered Based in Dearborn, Michigan, Plastech Engineered Products, Inc. -- http://www.plastecheng.com/-- is a full-service automotive supplier of interior, exterior and underhood components. It designs and manufactures blow-molded and injection-molded plastic products primarily for the automotive industry. Plastech's products include automotive interior trim, underhood components, bumper and other exterior components, and cockpit modules. Plastech's major customers are General Motors, Ford Motor Company, and Toyota, as well as Johnson Controls, Inc. Plastech is a privately held company and is the largest family- owned company in the state of Michigan. The company is certified as a Minority Business Enterprise by the state of Michigan. Plastech maintains more than 35 manufacturing facilities in the midwestern and southern United States. The company's products are sold through an in-house sales force. The company and eight of its affiliates filed for Chapter 11 protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C., represent the Debtors in their restructuring efforts. The Debtors chose Jones Day as their special corporate and litigation counsel. Lazard Freres & Co. LLC serves as the Debtors' investment bankers, while Conway, MacKenzie & Dunleavy provide financial advisory services. The Debtors also employed Donlin, Recano & Company as their claims and noticing agent. Joel D. Applebaum, Esq., at Clark Hill PLC, represents the Official Committee of Unsecured Creditors. As of Dec. 31, 2006, the company's books and records reflected assets totaling $729,000,000 and total liabilities of $695,000,000. (Plastech Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Aug. 11, 2008, the Debtors have until Sept. 28, 2008, to file a Chapter 11 plan of reorganization. PLASTECH ENGINEERED: Taps James Carroll as Liquidation Officer -------------------------------------------------------------- Plastech Engineered Products Inc. and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Eastern District of Michigan to: (i) employ Carroll Services LLC to assist with their ongoing liquidation and wind-down efforts; and (ii) permit James Patrick Carroll to serve as chief liquidation officer, nunc pro tunc to July 28, 2008. The Debtors relate that although they have closed the sales of their major businesses, they still have cash and rights to pursue certain causes of action. They also have yet to address numerous claims filed against their estates, pursue objections, and develop and confirm a liquidating plan of reorganization. The Debtors further relate that many of remaining employees who comprise their wind-down team, including Executive Vice President for Finance and Chief Financial Officer Peter Smidt, have indicated intent to resign by Aug. 31, 2008. While they must accomplish wind-down tasks to enable their post- sale management to analyze and process key financial data effectively to maximize the recoveries for all their estates' creditors and parties-in-interest, the Debtors acknowledge that they must work within the limited budget in the Wind-down Funding Agreement. Mr. Carroll, a principal at Carroll Services, is currently voluntary liquidator for SPhinx Investment Funds, LP; the plan administrator for Freedom Rings, LLC; liquidation trustee for the Art Store, and J.A. Jones, Inc., among others, as disclosed in an affidavit filed with the Court. "Mr. Carroll . . . has considerable experience operating debtors in wind-down situations," the Debtors tell the Court. Pursuant to their engagement letter, Carrol Services will: (a) analyze assets and potential causes of action remaining with the Debtors after the Sale; (b) analyze liabilities and potential liabilities of the Debtors, including claims filed against the Debtors and/or their estates; (c) assist the Debtors in developing, negotiating, and pursuing a liquidating plan of reorganization, if appropriate and in the best interests of the Debtors and their estates; (d) serve as a principal contact with the Company's senior secured creditors, the Official Committee of Unsecured Creditors, and other parties-in-interest in the Chapter 11 cases and the Company's financial and operational matters; and (e) assist the Debtors in all bankruptcy-related matters including the preparation and oversight of necessary federal, state and local tax or other statutory filings. The Debtors will pay for Mr. Carroll's services at $395 per hour. Services by additional officers will be paid at the firm's customary rates. The Debtors will also reimburse the firm for reasonable out-of-pocket expense. Moreover, the Debtors will indemnify Mr. Carroll and all the additional officers to the same extent that they indemnify their officers and directors. The firm's professionals will also be covered under the Company's liability insurance policy. Mr. Carroll relates that his firm has not received any payment from the Debtors prior to or after the Petition Date. He assures the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Plastech Engineered Based in Dearborn, Michigan, Plastech Engineered Products, Inc. -- http://www.plastecheng.com/-- is a full-service automotive supplier of interior, exterior and underhood components. It designs and manufactures blow-molded and injection-molded plastic products primarily for the automotive industry. Plastech's products include automotive interior trim, underhood components, bumper and other exterior components, and cockpit modules. Plastech's major customers are General Motors, Ford Motor Company, and Toyota, as well as Johnson Controls, Inc. Plastech is a privately held company and is the largest family- owned company in the state of Michigan. The company is certified as a Minority Business Enterprise by the state of Michigan. Plastech maintains more than 35 manufacturing facilities in the midwestern and southern United States. The company's products are sold through an in-house sales force. The company and eight of its affiliates filed for Chapter 11 protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C., represent the Debtors in their restructuring efforts. The Debtors chose Jones Day as their special corporate and litigation counsel. Lazard Freres & Co. LLC serves as the Debtors' investment bankers, while Conway, MacKenzie & Dunleavy provide financial advisory services. The Debtors also employed Donlin, Recano & Company as their claims and noticing agent. Joel D. Applebaum, Esq., at Clark Hill PLC, represents the Official Committee of Unsecured Creditors. As of Dec. 31, 2006, the company's books and records reflected assets totaling $729,000,000 and total liabilities of $695,000,000. (Plastech Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Aug. 11, 2008, the Debtors have until Sept. 28, 2008, to file a Chapter 11 plan of reorganization. POSTAL LOGISTICS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Postal Logistics Services LLC 2380 Diehl Road Aurora, IL 60504 Bankruptcy Case No.: 08-22006 Chapter 11 Petition Date: August 21, 2008 Court: Northern District of Illinois (Chicago) Judge: John H. Squires Debtor's Counsel: Michael L. Gesas, Esq. (mlgesas@arnstein.com) Arnstein & Lehr, LLP 120 South Riverside Plaza 1200 Chicago, IL 60606-3910 Tel: (312)876-7125 Fax: (312)876-6260 Estimated Assets: $1,000,000 to $100,000,000 Estimated Debts: $1,000,000 to $100,000,000 Debtor's list of its 20 largest unsecured creditors: Entity Claim Amount ------ ------------ Angelo Anagnostopoulos $37,030 422 South Lincoln Street Addison, IL 60101 Behnke Trucking $40,025 600 N. Helmer Road P.O. Box 763 Battle Creek, MI 49016-0763 BG Transport, Inc. $43,093 171 South Joliet Road Carol Stream, IL 60188 Burton Truck Lines, Inc. $54,600 D.M. Bowman, Inc. $40,143 Freight Masters Systems $39,525 Intermodal Sales Corporation $47,028 J.B. Hunt Transport, Inc. $68,839 Jevic Transportation Co. $87,532 JR Cartage, Inc. $150,186 National Freight, Inc. $324,517 Nationwide Magazine & Book, Inc. $37,919 Pacific Continental Shippers LLC $86,233 Quebecor World (USA) Inc. $1,104,412 Road Runner $52,967 Teachers Retirement System of IL $141,537 The Custom Companies $62,573 Thoroughbred Direct Intermodal Serv $177,794 United States Postal Service $108,472 UPS Supply Chain Solutions $40,322 PRIVATE RESIDENTIAL: Moody's Rates $62.2MM Class D Notes at Ba3 --------------------------------------------------------------- Moody's Investors Service assigned definitive long-term Local Currency Global Scale/National Scale credit ratings to the following classes of Notes issued by Private Residential Mortgages Limited -- Series 2: Tranche 2. -- Aaa/Aaa.za to ZAR 100,000,000 Class A2 C* Secured Floating Rate Notes due 15 December 2035 -- Aaa/Aaa.za to ZAR 50,000,000 Class A4 D* Secured Floating Rate Notes due 15 December 2035 -- Aa2/Aaa.za to ZAR 30,000,000 Class A5 C Secured Fixed Rate Notes due 15 December 2035 -- Aa2/Aaa.za to ZAR 497,800,000 Class A6 C Secured Floating Rate Notes due 15 December 2035 -- Aa2/Aaa.za to ZAR 125,000,000 Class A9 D Secured Floating Rate Notes due 15 December 2035 -- A2/Aa2.za to ZAR 100,000,000 Class B4 D Secured Floating Rate Notes due 15 December 2035 -- Baa3/A2.za to ZAR 35,000,000 Class C4 D Secured Floating Rate Notes due 15 December 2035 -- Ba3/Baa2.za to ZAR 62,200,000 Class D4 D Secured Floating Rate Notes due December 2035 The higher than expected margin on the notes had a negative impact on the Global Local Currency (GLC) ratings of the Class D4 D notes from the provisional to the definitive ratings. Furthermore, the target national scale rating on the Class D4 D note changed to Baa2.za from (P)Baa3.za at the request of the arrangers. To offset the above changes the Reserve Fund was increased from 2.1% to 2.3% of the combined notes outstanding. The ratings indicated above are Global Local Currency (GLC) ratings and National Scale Ratings (NSR) denoted by ".za" at the end of the rating, respectively. The assignment of both a GLC rating and a NSR to each note is consistent with Moody's revised NSR methodology, announced on 7 May 2007. Each note is assigned a GLC rating by applying a similar methodology and set of requirements to those used for other EMEA RMBS transactions rated on Moody's global scale. The resultant GLC rating is then used to determine the NSR of the instrument by using the published South African NSR conversion table. The transaction represents the securitisation of South African residential mortgage loans originated by Investec Bank Limited under the ZAR20 billion Segregated Series Medium Term Note Programme issued by Private Residential Mortgages. The assets supporting the Notes are prime mortgage loans secured on residential properties located in South Africa. The portfolio will be serviced by Investec Private Bank, a division of Investec Bank Limited. The ratings of the Notes are based upon the analysis of the characteristics of the mortgage pool backing the Notes, the protection the Notes receive from credit enhancement against defaults and arrears in the mortgage pool, the legal and structural integrity of the issue and the credit quality of the parties involved in the transaction. The additional ZAR 1 billion of Notes issued by PRM - Series 2, will be used to fund the purchase of the home loans from Investec Bank Limited and the Grayston Conduit 1 (Pty) Ltd -- Series 5. The revolving period is ongoing, subject to the refinance of the earliest scheduled maturity notes, performance related triggers and portfolio limits. A Liquidity Facility of 2.5% of the outstanding note balance, subject to a floor of 1.0% of the initial note amount, is available to fund interest shortfalls and an initial Redraw Facility of 44% of the outstanding note balance, to fund redraws. In addition to the note subordination and excess spread, the transaction benefits from a Reserve fund of 2.3% as a percentage of the combined pool funded from the issue of sub-ordinated loans provided by Investec. The definitive ratings address the expected loss posed to investors by the legal final maturity. In Moody's opinion, the structure allows for timely payment of interest and ultimate payment of principal at par on or before the legal final maturity date. Moody's ratings address only the credit risks associated with the transaction. Other non-credit risks have not been addressed but may have a significant effect on the yield to investors. Moody's initially analysed and monitors this transaction using the rating methodology for South African RMBS transactions as described in the Rating Methodology report "Moody's Approach to Rating South African RMBS", January 2005. Date of previous rating action : Moody's assigned provisional ratings to PRM --Series 2 on the 25 July 2008. PRODUCTION SYSTEMS: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Production Systems, Inc. 1610 W. 550 N. Columbus, IN 47201 Bankruptcy Case No.: 08-10282 Type of Business: The Debtor designs, builds and integrates automation equipment. See http://www.productionsystems-inc.com/ Chapter 11 Petition Date: August 22, 2008 Court: Southern District of Indiana (Indianapolis) Judge: Anthony J. Metz III Debtor's Counsel: David R. Krebs, Esq. Email: drk@hostetler-kowalik.com Hostetler & Kowalik P.C. 101 W. Ohio St., Ste. 2100 Indianapolis, IN 46204 Tel: (317) 262-1001 Fax: (317) 262-1010 http://www.hostetler-kowalik.com Estimated Assets: $100,000 to $500,000 Estimated Debts: $1,000,000 to $10,000,000 A copy of Production Systems, Inc's petition is available for free at: http://bankrupt.com/misc/insb08-10282.pdf PROTOMAC GROUP: Involuntary Chapter 11 Case Summary --------------------------------------------------- Alleged Debtor: Potomac Group West, Inc. c/o Steven Leisher 437 South Highway 101, Ste. 403 Solana Beach, CA 92075 Case Number: 08-08040-11 Involuntary Petition Date: August 22, 2008 Court: Southern District of California (San Diego) Petitioner's Counsel: John L. Smaha, Esq. (jsmaha@smaha.com) Smaha Law Group, APC 7860 Mission Center Court, Suite 100 San Diego, CA 92108 Tel: (619) 688-1557 Fax: (619) 688-1558 Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Scott Bresnick Commissions $55,500 Steve Scammell Commissions $100,000 Michael O'Riordan Loans $60,000 Preferred Life Solutions Loan $1,058,765 QUAPAW ASSOCIATES: Case Summary & 9 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Quapaw Associates, LLC P.O. Box 383 Alexander, AR 72002 Bankruptcy Case No.: 08-14924 Type of Business: The Debtor is a health care business. Chapter 11 Petition Date: August 13, 2008 Court: Eastern District of Arkansas (Little Rock) Debtor's Counsel: Kevin P. Keech, Esq. Keech Law Firm, PA 7600 JFK, Ste. B North Little Rock, AR 72120 Tel: (501)221-3200 Fax: (501)221-3201 E-mail: kkeech@keechlawfirm.com Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $1,000,000 to $10,000,000 A copy of the Debtor's petition is available for free at: http://bankrupt.com/misc/areb08-14924.pdf RELIABLE MEDICAL: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Reliable Medical Equipment Corp P.O. Box 195317 San Juan, PR 00919 Bankruptcy Case No.: 08-05353-11 Chapter 11 Petition Date: August 19, 2008 Court: District of Puerto Rico (Old San Juan) Debtor's Counsel: Juan A. Santos Berrios, Esq. (jsantosb@prtc.net) Law Offices of Juan A. Santos Berrios PSC P.O. Box 9102 Humacao, PR 00792-9102 Tel: 787-285-1001 Fax: 787-285-8358 Total Assets: $1,439,825 Total Debts: $1,694,910 A copy of the Debtor's petition is available for free at: http://bankrupt.com/misc/prb08-05353-11.pdf ROTHMANS INC: June 30 Balance Sheet Upside-Down by C$213 Million ---------------------------------------------------------------- Rothmans Inc.'s balance sheet at June 30, 2008, showed total assets of C$545.2 million and total liabilities of C$758.4 million, resulting in shareholders' deficit of C$213.2 million. Rothmans Inc. disclosed results for the first quarter of fiscal 2009, which ended June 30, 2008. Rothmans Inc. incurred a loss of C$354.4 million for the first quarter compared to earnings of C$33.8 million in the same quarter of fiscal 2008. The loss in the period results from the expenses incurred in connection with the resolution of the RCMP investigation, the make-whole premium associated with Rothmans Benson & Hedges Inc.'s C$150 million 5.552% senior unsecured bonds, series A and certain expenses associated with the offer by an indirect subsidiary of Philip Morris International Inc. Sales at the company's 60%-owned subsidiary, Rothmans Benson & Hedges Inc., net of excise duty and taxes, decreased to C$176.2 million in the recent quarter compared with C$177.4 million in the first quarter of fiscal 2008. Continued consumer movement into the cigarette price category and higher trade program spending were only partially offset by price increases implemented during the first quarter of fiscal 2009. Resolution of the RCMP Investigation On July 31, 2008, RBH and the company reached an agreement with the Government of Canada and the governments of all ten provinces that resolved the RCMP's investigation relating to sales of products exported from Canada by RBH in the period 1989 - 1996. Under the terms of the settlement reached with the governments, payments expected to total C$550 million are to be made commencing in 2008 and over the next ten years. The terms of the settlement are set out in the comprehensive agreement and in an order of the Ontario Court of Justice issued on July 31, 2008. The terms of the Settlement require these payments to be made: -- C$100 million fine payable by RBH by no later than Oct. 29, 2008; -- C$50 million towards a new government Contraband Tobacco Enforcement Strategy payable by RBH no later than Dec. 15, 2008; -- C$200 million payable by the company over 10 years at a rate of C$20 million per year with the first payment to be made by Dec. 31, 2009; -- an estimated C$200 million payable by RBH, with the first payment of C$50 million to be made no later than Dec. 31, 2008, and the remainder scheduled to be paid over a 10-year period based on a formula related to the revenue of RBH set out in the Comprehensive Agreement. As required under the terms of the Comprehensive Agreement, these payments are not deductible for income tax purposes. The Comprehensive Agreement also requires RBH to comply with and implement the terms of a Tobacco Compliance Measures Protocol which forms part of the Comprehensive Agreement. The company recorded an expense of C$415 million in the unaudited consolidated financial statements for the period ended June 30, 2008, to recognize the settlement. As a result of this settlement expense, the company's 60% owned subsidiary company, RBH, has a shareholder deficiency of C$209 million. As a consequence of the settlement, RBH expects to repay its currently outstanding 5.552% senior unsecured bonds, series A in the principal amount of C$150 million. Although the bonds have a scheduled maturity date of Dec. 21, 2011, the terms of the settlement may result in an event of default under the terms of the trust indentures pursuant to which the bonds were issued. As a result, RBH has recorded an expense in the quarter ended June 30, 2008 of C$9.7 million for the make-whole premium and accrued interest payments required under the terms of the trust indentures. RBH has entered into an agreement with JPMorgan Chase Bank N.A. to provide a C$200 million unsecured one-year revolving loan facility. The proceeds from this facility will be used to fund the principal repayment, the make-whole premium and accrued interest on the bonds and for RBH's working capital purposes. Cash Resources Cash, cash equivalents and short-term investments of C$204.7 million at June 30, 2008, represented the consolidated cash resources of the company versus C$234.9 million at March 31, 2008. The decrease in cash, cash equivalents and short- term investments is due to the first quarter dividend paid by the company, earnings from RBH's operations, reduction in accounts payable and normal quarterly fluctuations in RBH's working capital requirements. On a non-consolidated basis, Rothmans held cash, cash equivalents and short-term investments of C$129.9 million at June 30, 2008, a decrease from C$154.4 million at March 31, 2008, reflecting the suspension of the RBH dividend and dividends paid by the Company during the quarter. About Rothmans Inc. Rothmans Inc. (TSX:ROC) is publicly traded Canadian company that participates in the Canadian tobacco industry through 60%-owned Rothmans Benson & Hedges Inc. RBH employs approximately 750 people at its head office in Toronto, its sales offices across Canada and its manufacturing facilities in Brampton, Ontario and Qu�bec City, Quebec where it has been operating for over 100 years. Rothmans has interests exclusively in the tobacco industry. ROUGE INDUSTRIES: Panel Wants Deloitte FAS as Financial Advisor --------------------------------------------------------------- The Official Committee of Unsecured Creditors of Rouge Industries Inc. asked the U.S. Bankruptcy Court for the District of Delaware for permission to retain Deloitte Financial Advisory Services LLP as its financial advisors. The Court is set to hear the Committee' request on Sept. 15, 2008, at 2:00 p.m. Objections are due Sept. 8, 2008, at 4:00 p.m. The Committee has sought and obtained authority to employ Deloitte & Touche LLP as its accountants and financial advisors, nunc pro tunc to Nov. 6, 2003. An order approving that retention was issued on Jan. 21, 2004. The Committee related that although the personnel comprising the financial advisory services engagement team for the Committee in the case have remained largely unchanged since Jan. 21, 2004, the personnel became personnel of Deloitte FAS as of May 29, 2005. Deloitte FAS does not seek payment of fees and expenses, about $162,525, incurred between May 29, 2005, and the date of the Deloitte FAS application, which is Aug. 5, 2008. The billing rates of Deloitte FAS are: Partners/Principals/Directors $550 - $675 Senior Managers/Managers $390 - $550 Senior Consultants/Consultants/Associates $200 - $390 Para-professinals/Others $125 According to the Committee, Deloitte FAS does not hold ore represent any interest adverse to the Debtors or the Committee and is a "disinterested person" as defined in Section 101(14) of the U.S. Bankruptcy Code. About Rouge Industries Based in Dearborn, Michigan, Rouge Industries Inc. is an integrated producer of flat-rolled steel. Rouge Industries, together with Rouge Steel Company, QS Steel Inc., and Eveleth Taconite Company, filed for chapter 11 protection on Oct. 23, 2003 (Bankr. D. Del. Case No. 03-13272 through 03-13275). Adam G. Landis, Esq., at Landis, Rath & Cobb, LLP, and Alicia Beth Davis, Esq., at Morris, Nichols, Arsht & Tunnell, represent the Debtors. Kurt F. Gwynne, Esq., and Claudia Z. Springer, Esq., at Reed Smith LLP, serve as counsel to the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $558,131,000 in total assets and $558,131,000 in total debts. On Dec. 19, 2003, the Court approved the sale of substantially all of the Debtors' assets to SeverStal N.A. for $285.5 million. The asset sale closed on Jan. 30, 2005. The Debtors have until Aug. 29, 2008, to exclusively file a bankruptcy plan. S & A RESTAURANT: Court Approves Rosen Systems as Auctioneer ------------------------------------------------------------ The U.S. Bankruptcy Court for the Eastern District of Texas approved a request by Michelle H. Chow, the Chapter 7 bankruptcy trustee for S & A Restaurant Corp. and its debtor-affiliates, to retain Rosen Systems, Inc., as agent and auctioneer. The Trustee notes that the Debtors' restaurants have numerous items of equipment, furniture and fixtures as well as perishable food inventory. In order to administer these items, Rosen will (i) remove all of the items from the stores, and (ii) possibly sell certain assets at auction. The Trustee avers that Rosen will be billed at $300 per store for cleaning out all inventory, furniture and fixtures. For any items sold at auction, Rosen will get an additional 10% buyers' premium. Furthermore, the Trustee's report of sale will contain the full accounting of all items removed and sold from the Restaurants, as well as the sums collected as buyer's premium. Rosen, when filing for its final fee application, will also include the full accounting of the clearing out and auction of the inventory. Rosen's final compensation and reimbursement of expenses will be subject for Court approval. Kyle Rosen, director of auction services at Rosen, tells the Court, that his firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Furthermore, Rosen is not a: (a) a creditor, equity security holder, or insider of the Debtor or the Trustee; (b) an investment banker for any outstanding security of the Debtor or the Trustee; (c) attorney for an investment banker of the Debtor or the Trustee; or (d) a director, officer, or employee of the Debtor or the Trustee or of any investment banker of the Debtor or the Trustee. About S & A Restaurant Based in Plano, Tex., S & A Restaurant Corp. -- http://www.metrogroup.com,http://www.steakandale.com, http://www.steakandalerestaurants.com,http://www.bennigans.com/ -- and other affiliated entities operate the Bennigan's Grill & Tavern, and the Steak & Ale restaurant chains under the Metromedia Restaurant Group. Bennigan's Grill & Tavern is a chain of more than 310 pub-themed restaurants offering sandwiches and burgers, as well as ribs, steaks, and seafood. The Steak & Ale chain offers a broader menu set in the atmosphere of an 18th century English country inn. The Metromedia Restaurant Group, a unit of closely held conglomerate Metromedia Company, is one of the world's leading multi-concept table-service restaurant groups, with more than 800 Bennigan's(R), Bennigan's SPORT(TM), Steak and Ale(R), Ponderosa Steakhouse(R) and Bonanza(TM) Steakhouse restaurants in the United States and abroad. MRG's annual U.S. sales are estimated at $1,000,000,000. S & A Restaurant and 38 of its affiliates filed Chapter 7 petition under the U.S. Bankruptcy Code on July 29, 2008 (Bankr. E.D. Tex. Case No. 08-41898). J. Michael Sutherland, Esq., at Carrington Coleman Sloman & Blumenthal, is the Debtors counsel. Michelle H. Chow was appointed Chapter 7 bankruptcy trustee in the case. The Debtors disclosed total scheduled assets of $2,302,057 and total scheduled liabilities of $159,432,691. (Bennigan's and Steak & Ale Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). S & A RESTAURANT: Kane Russell is Ch. 7 Trustee's Lead Counsel -------------------------------------------------------------- Michelle H. Chow, the Chapter 7 bankruptcy trustee for S & A Restaurant Corp. and its debtor-affiliates, asks the U.S. Bankruptcy Court for the Eastern District of Texas to authorize the retention of Kane Russell Coleman & Logan PC as her lead counsel. The Trustee states that Kane Russell possesses considerable experience in matters related to the Debtors' Chapter 7 cases. As the Trustee's lead counsel, Kane Russell will: (a) advise and consult with the Trustee regarding (i) legal questions arising in administering the Debtors' estates, and (ii) the Trustee's rights and remedies related to the Debtors' estates' assets and creditors' claims; (b) attend meetings and negotiate with representatives of creditors and other parties-in-interest; (c) advise the Trustee in connection with any potential sale of assets; (d) appear before the Court, any appellate courts, and the United States Trustee and protect the interests of the Trustee before the Courts and the U.S. Trustee; (e) perform any and all other legal services that may be necessary of the Trustee in the proceedings and any actions commenced in the Debtors' Chapter 7 cases; (f) assist the Trustee in preserving and protecting the Debtors' estates; (g) investigate and potentially prosecute preference, fraudulent transfer and other causes of action under the Trustee's avoidance powers; (h) prepare any pleadings, applications, motions, answers, notices, responses, orders, reports and other legal documents that are required for the orderly administration of the Debtors' estates; and (i) perform other duties contingent to the administration of the Trustee's duties. Kane Russell's professionals are billed according to their customary rates: Title Rate per hour ----- ------------- Partners $300 to $500 Associates $195 to $400 Paraprofessionals $100 to $200 IT Professionals $125 to $185 Furthermore, Kane Russell's primary team and each professional's rate per hour, assigned in the Debtors' cases will be: Joseph Friedman $380 Robert Taylor $295 Gregory M. Zarin $210 The Trustee reports that Kane Russell has received no retainer for application to fees incurred in the Debtors' Chapter 7 cases. Kane Russell will seek Court approval of its fees and expenses on an interim and final basis pursuant to Sections 327 and 328 of the Bankruptcy Code. Furthermore, Kane Russell will keep track of its billings on a tenth of an hour basis with time charges according to the criteria set forth by the U.S. Trustee. Joseph A. Friedman, Esq., director at Kane Russell, avers that his firm has no connection of any kind or nature with the Debtors, the Debtors' creditors, any other party-in-interest, their counsel and accountants, the U.S. Trustee, or any person employed by the U.S. Trustee. Furthermore, Kane Russell is still undergoing its review of the matrix containing 95,000 names to assure that no actual conflict or other disqualifying circumstance exists. However, Mr. Friedman assures the Court that Kane Russell is a "disinterested person" as the term is defined under Section 101(14). About S & A Restaurant Based in Plano, Tex., S & A Restaurant Corp. -- http://www.metrogroup.com,http://www.steakandale.com, http://www.steakandalerestaurants.com,http://www.bennigans.com/ -- and other affiliated entities operate the Bennigan's Grill & Tavern, and the Steak & Ale restaurant chains under the Metromedia Restaurant Group. Bennigan's Grill & Tavern is a chain of more than 310 pub-themed restaurants offering sandwiches and burgers, as well as ribs, steaks, and seafood. The Steak & Ale chain offers a broader menu set in the atmosphere of an 18th century English country inn. The Metromedia Restaurant Group, a unit of closely held conglomerate Metromedia Company, is one of the world's leading multi-concept table-service restaurant groups, with more than 800 Bennigan's(R), Bennigan's SPORT(TM), Steak and Ale(R), Ponderosa Steakhouse(R) and Bonanza(TM) Steakhouse restaurants in the United States and abroad. MRG's annual U.S. sales are estimated at $1,000,000,000. S & A Restaurant and 38 of its affiliates filed Chapter 7 petition under the U.S. Bankruptcy Code on July 29, 2008 (Bankr. E.D. Tex. Case No. 08-41898). J. Michael Sutherland, Esq. at Carrington Coleman Sloman & Blumenthal, is the Debtors counsel. The Debtors disclosed total scheduled assets of $2,302,057 and total scheduled liabilities of $159,432,691. (Bennigan's and Steak & Ale Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SEMGROUP LP: Bominflot Insists Ownership of Fuel Oil ---------------------------------------------------- Debtor SemMaterials, L.P., ordered on July 8, 2008, 7,500 barrels of No. 6 Fuel Oil from Bominflot Atlantic, L.L.C., which markets bunker fuel to marine vessels. SemMaterials requested the transfer of the Fuel from Bominflot's tank to SemMaterials' tank on July 10. Bominflot asked Judge Brendan L. Shannon of the U.S. Bankruptcy Court for the District of Delaware to determine that Bominflot is the equitable owner of the Fuel, and require SemMaterials to return the Fuel. Representing Bominflot, Daniel K. Astin, Esq., at Ciardi Ciardi & Astin, P.C., in Wilmington, Delaware, told the Court that following the Transfer, SemMaterials may have removed a certain amount of Fuel, leaving a residuary amount in the SemMaterials tank. On July 16, 2008, Bominflot invoiced SemMaterials for the total amount of $837,015, consistent with the ordinary practice in transactions between the parties. Upon learning of the Debtors' liquidity troubles, Eugene Owen, Bominflot's vice-president, called SemMaterials to for assurance of payment of the Invoice. Kevin Clement, SemMaterials' vice- president of supply and marketing, informed Mr. Owen that the Invoice will be paid in full on July 18, in accordance with the contractual terms on the Invoice. Bominflot complained that on July 18, 2008, the Invoice remained unpaid. Bominflot demanded the return of the Fuel, but SemMaterials refused. SemMaterials falsely assured Bominflot of payment and misrepresented its solvency, Bominflot asserts. Bominflot commenced a proceeding in the Circuit Court for the City of Chesapeake, Virginia, seeking to enforce its reclamation rights and right to payment of $350,000 in punitive damages. A. Bominflot Wants Stay Lifted The Troubled Company Reporter said on July 31, 2008, that Bominflot entered into a sale contract with Debtor SemMaterials, L.P., on July 8, 2008, for the sale of 7,507 barrels of fuel oil, totaling $837,015. At SemMaterials' direction, the Fuel Oil was transferred from Bominflot's Shore Tank 603 to Shore Tank 701, located at a tank storage facility in Chesapeake, Virginia. The transfer took place from July 9 to July 10. B. SemMaterials, BofA Respond SemMaterials, L.P., argued that Bominflot Atlantic, L.L.C.'s motion to pursue its reclamation claim in a state court action violates Section 546(c) of the Bankruptcy Code, which provides for the exclusive remedy for a seller to reclaim goods from a debtor in bankruptcy. SemMaterials insisted that Bominflot has not alleged any fact that makes its situation different from any other creditor in the Debtors' Chapter 11 cases. SemMaterials further stated that the Debtor's estates will suffer substantial harm if the automatic stay is modified, since they will have to expend funds in defending against Bominflot's claim. Bank of America, N.A., as administrative agent for the Debtors' prepetition lenders, opposed Bominflot's request, stating that Bominflot's liens as a secured party are superior to Bominflot's reclamation claim. Since Bominflot's reclamation rights are subordinate, Bominflot cannot demonstrate a cause for relief from the automatic stay, BofA asserted. Moreover, BofA asserted that lifting the automatic stay to allow "piecemeal litigation" will severely prejudice the Debtors' estate and its creditors. SemMaterials and BofA asked the Court to deny Bominflot's motion for relief from the automatic stay. 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). 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, represent the Debtors in their restructuring efforts. 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). SEMGROUP LP: Reserves $1,100,000 for 230 Laid-Off Employees ----------------------------------------------------------- SemGroup, L.P., and its debtor-affiliates had sought the permission of Judge Brendan L. Shannon of the U.S. Bankruptcy Court for the District of Delaware to pay $1,100,000 in severance packages, averaging to two weeks' salary, to about 276 of their employees. On Aug. 11, 2008, SemGroup laid off more than 100 employees from its office in Tulsa, Oklahoma, and 120 employees from its other offices in the United States. According to The Tulsa World, the $1,100,000 severance packages, if approved, will be used to pay the laid off employees. In SemGroup's Chapter 11 Petition, Terrence Ronan, the company's senior vice president of finance, told Judge Shannon that the company anticipates to lay off 276 employees who do not have employment contracts with SemGroup or any of its affiliates. Officials have also indicated that all SemGroup LP employees likely will be laid off eventually, or will join asset purchasers, The Tulsa World said. Prior to August 11, SemGroup employed 400 people in Tulsa, and 2,000 nationwide. Mr. Ronan said in his affidavit supporting SemGroup's Chapter 11 Petition that the workforce reduction is part of the company's cost-saving measures to manage its liquidity crisis. SemGroup spokeswoman Brenda Adrian told The Tulsa Work that the layoffs were handled individually, and were "across the board" of the company's subsidiaries. It's a difficult decision every time you have to lay anybody off, Ms. Adrian told The Tulsa World. "This is a very challenging environment that SemGroup is dealing with." Dan Safranek, a Tulsa financial investment adviser, told The Tulsa World that the layoffs may give a hint into the short-term future. The $250,000,000 DIP loan sought by the company was intended to keep the company afloat, but the layoffs may mean that there are potential buyers of the company, the newspaper stated. 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). 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, represent the Debtors in their restructuring efforts. 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). SEMGROUP LP: Samson Asserts $39,740,100 in Unpaid Oil and Gas ------------------------------------------------------------- Samson Resources Company, together with Samson Lone Star, LLC, and Samson Contour Energy E&P, LLC, operates numerous wells in Colorado, Kansas, Louisiana, New Mexico, North Dakota, Oklahoma, Texas, and Wyoming. Samson sold oil and gas to SemGroup, L.P. and its debtor-affiliates, pursuant to six purchase agreements: Agreement Debtor Counterparty --------- ------------------- Domestic crude oil Seminole Transportation and Gathering Domestic crude oil SemCrude, L.P. Domestic crude oil Eaglwing Trading, Inc. Domestic crude oil Eaglwing, L.P. Purchase Agreement Samson Contour Gas purchase contract Warren NGL, Inc./Dynegy Midstream Services, L.P. Under the agreements, Samson agreed to sell oil and gas to the Debtors as first purchaser on a monthly basis, and the Debtors agreed to remit payment on the 20th day of the month following the purchase. Samson sold oil and gas to the Debtors until July 18, 2008, when Samson asserted its contractual rights for adequate assurance of payment and suspended the sales. Samson complained that the Debtors have not paid for the oil and gas sold from June 1 to July 18, 2008, which totals $39,740,100. Samson asserted that the Debtors had acquired limited amounts of the oil and gas, even after it notified the Debtors of the suspension. Samson asked the U.S. Bankruptcy Court for the District of Delaware to enter an injunction, requiring the Debtors, Bank of America, N.A., to segregate the proceeds in their possession from any sale of the oil and gas acquired from Samson. 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). 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, represent the Debtors in their restructuring efforts. 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). SEMGROUP LP: $2MM Eaglwing Funds Not Part of Estate, Vess Oil Says ------------------------------------------------------------------ Vess Oil Corporation and Debtor Eaglwing, L.P., agreed on an arrangement, under which Eaglwing, along with IMS, its independent contractor, provided the payor services related to the sale of Kurten Field Products. Vess Oil Corporation operates oil and gas wells in Texas, including producing properties in Kurten Field in Brazos County, Texas. Vess operates the Kurten Field and has an affiliated ownership under the name VOC Brazos Energy partners, L.P. As part of the Eaglwing Arrangement, SemGroup, L.P. and Eaglwing directed IMS to provide the division of interest calculations and the check preparation services, related to the sale of the Kurten Field Products. Payments from the gas and liquids purchaser were made directly to Vess. Vess paid the gas revenue to Eaglwing on a monthly basis, for disbursement to the royalty and working interest owners. In March 2005, Vess entered an agreement with Teppco Crude Oil LLC for the purchase of Kurten Field Products. Under the Eaglwing Arrangement, Teppco was directed to pay directly to Eaglwing, which will remit the net amount directly to the Vess Group. According to Karen Bifferato, Esq., at Connoly Bove Lodge & Hutz LLP in Wilmington, Delaware, during the 30-day hold period, Eaglwing collected interest on the funds received from Teppco and Vess. Michael Vess, president of Vess, had contacted the Debtors and asked to discontinue the monthly service fees, stating that as Eaglwing received payments from Teppco and Vess, it benefited from holding the cash funds for approximately 30 days. The Debtors had agreed to stop invoicing Vess for the monthly fee in lieu of returning the Eaglwing' interest on holding the Funds. Ms. Bifferato told the U.S. Bankruptcy Court for the District of Delaware that the Vess Group has not received the $2,860,583 distribution payment from Eaglwing for May 2008, which was due to be paid on July 20, 2008. She Bifferato maintained that Eaglwing held the Funds in trust for the benefit of the Vess Group, and was required to transfer the Funds on 20th day of each month. Ms. Bifferato emphasized that the Funds did not constitute a property of the Debtors. Eaglwing has refused to respond to Vess' demands to turn over the Funds. Accordingly, Vess asked the Court to: -- declare that the Funds are not part of the Debtors' estate; -- require an accounting from the Debtors; -- require the Debtors to turn over the Funds to Vess; and -- award the attorneys' fees and costs of Vess. 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). 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, represent the Debtors in their restructuring efforts. 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). SIMON WORLDWIDE: June 30 Balance Sheet Upside-Down by $15,506,000 ----------------------------------------------------------------- Simon worldwide Inc.'s consolidated balance sheet at June 30, 2008, showed $20,026,000 in total assets, $1,158,000 in total liabilities, and $34,374,000 in redeemable preferred stock, resulting in a $15,506,000 stockholders' deficit. The company reported net income of $1,560,000 for the second quarter ended June 30, 2008, compared with a net loss of $380,000 for the same period last year. The company generated no sales or gross profits during the three months ended June 30, 2008 and 2007. On July 10, 2008, the company received $1,750,000 from Yucaipa AEC Associates, LLC in connection with a December 2007 sale of one of its other holdings. The company's total gain related to the sale of this holding was $1,862,000 which was included in the company's consolidated statement of operations for the three and six months ended June 30, 2008. As reported in the Troubled Company Reporter on June 19, 2008, the company entered into an Exchange and Recapitalization Agreement with Overseas Toys, L. P., the holder of all the outstanding shares of preferred stock of Simon, pursuant to which all the outstanding Preferred Stock would be converted into shares of common stock representing 70% of the shares of common stock outstanding immediately following the conversion. The Agreement was negotiated on the company's behalf by the Special Committee of disinterested directors which, based in part upon the opinion of the Committee's financial advisor, determined that the transaction is fair to the holders of common stock from a financial point of view. Closing of the transaction is contingent upon stockholder approval of an amendment to the company's charter at a meeting expected to be held in the Fall. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2008, are available for free at http://researcharchives.com/t/s?3149 Going Concern Doubt As reported in the Troubled Company Reporter on April 8, 2008, BDO Seidman, LLP, in Los Angeles, espressed substantial doubt about Simon Worldwide Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. BDO Seidman pointed to the company's stockholders' deficit, significant losses from operations, and lack of any operating revenue. About Simon Worldwide Headquartered in Los Angeles, Calif., Simon Worldwide Inc. (OTC: SWWI) was prior to August 2001, a multi-national, full service promotional marketing company. In August 2001, McDonald's Corporation, the company's principal customer, terminated its 25- year relationship with the company as a result of the embezzlement by a former company employee of winning game pieces from McDonald's promotional games administered by the company. As a result of the loss of its customers, the company no longer has any operating business. Since August 2001, the company has concentrated its efforts on reducing its costs and settling numerous claims, contractual obligations, and pending litigation. As a result of these efforts, the company has been able to resolve a significant number of outstanding liabilities that existed at Dec. 31, 2001, or arose subsequent to that date. At June 30, 2008, the company had reduced its workforce to 4 employees from 136 employees at Dec. 31, 2001. The company is currently managed by the chief executive officer, together with a principal financial officer and an acting general counsel. SKYBUS AIRLINES: Zenith Aviation To Liquidate Covered Assets ------------------------------------------------------------ The Hon. Christopher Sontchi of the United States Bankruptcy Court for the District of Delaware approved liquidation procedures of the Skybus Airlines Inc.'s assets including spare parts, tools and ground system equipments, free and clear of liens and interests. The sale is expected to generate about $2.5 million. Judge Sontchi gave the Debtor permission to employ Zenith Aviation Inc., as auctioneer, to sell off the Debtor's assets. Zenith Aviation will be paid 15% commission, pegged at $200,000, on the sale price of each covered asset; however, if sale proceeds surpassed $3,000,000, Zenith Aviation will be entitled to a 5% commission on all sales proceeds. A full-text of the Debtor's covered asset list is available for free at http://bankrupt.com/misc/Skybus_Covered_Asset_List.pdf About Skybus Airlines Headquartered in Columbus, Ohio, Skybus Airlines, Inc. -- http://www.skybus.com/-- operates a domestic airline and had destinations in 15 cities in the United States. On April 4, 2008, it ceased its flights opeartions and grounded all of its acircrafts. The company filed for Chapter 11 protection on April 5, 2008 (Bankr. D. Del. Case No.08-10637). Adam G. Landis, Esq., and Matthew B. McGuire, Esq., at Landis Rath & Cobb LLP, represent the Debtor in its restructuring efforts. The U.S. Trustee for Region 3 appointed an Official Committee of Unsecured Creditors in this case. David B. Stratton, Esq., at Pepper Hamilton LLP, represents the Committee. SOLUTIA INC: Sells Shares to Repay $400,000,000 Bridge Credit ------------------------------------------------------------- Solutia, Inc. launched an underwritten public offering of 22,307,692 shares of its common stock at a price of $13 per share for gross proceeds of approximately $290,000,000. All of the approximately $277,000,000 of net proceeds from the offering will be used to partially repay Solutia's $400,000,000 15.50% bridge credit facility. Solutia, on the effective date of its Plan of Reorganization on Feb. 28, 2008, entered into credit facilities aggregating up to $2,050,000,000 with a syndicate of banks to finance its emergence from Chapter 11. The loans include a bridge loan facility in an aggregate principal amount of $400,000,000, with an initial maturity date of Feb. 28, 2009, and which may be extended by six years subject to conditions. Citibank, N.A., served as administrative agent; Goldman Sachs Credit Partners L.P., as syndication agent; Deutsche Bank AG New York Branch, as documentation agent; and Citigroup Global Markets Inc., Goldman Sachs Credit Partners L.P. and Deutsche Bank Securities Inc., as joint lead arrangers and bookrunners under the Bridge Facility. Solutia, in its news release, says it intends to fully repay the bridge credit facility prior to the end of February 2009 at which time the loans could be converted by the lenders into notes that mature in February 2015. Deutsche Bank Securities Inc. and Jefferies & Company, Inc., are the joint underwriters for the offering. A shelf registration on Form S-3 relating to these securities was filed with the Securities and Exchange Commission and became effective on July 25, 2008. A copy of the prospectus supplement and base prospectus relating to the offering may be obtained, when available, from Deutsche Bank Securities Inc., 100 Plaza One, Floor 2, Jersey City, New Jersey 07311-3901, by telephone at 1- 800-503-4611, or by email at prospectusrequest@list.db.com Stockholders Are Not Receiving Dividends Solutia, in a document submitted to the Securities and Exchange Commission on August 11, said that the 22,307,692 shares of its common stock that it will be selling has a public offering price of $13 per share, 15.80% cheaper than the last reported sale price of $15.44 per share at the New York Stock Exchange as of Aug. 8, 2008. Solutia noted that it has not paid any cash dividends on its common stock in its last two fiscal years or subsequent interim periods and does not expect to pay dividends for the foreseeable future. Solutia's senior secured facilities restrict the payment of dividends. Solutia said it expects to obtain proceeds, net of underwriting discounts, of $277,574,996. A full-text copy of Solutia's supplement to its July 25 can be accessed at http://ResearchArchives.com/t/s?3141 Solutia Mulls Options to Pay Remainder Solutia spokesperson Dan Jenkins said the company "is looking at different options" to repay unpaid portion of the $400,000,000 bridge facility, Bloomberg News reports. Bloomberg said that Solutia raised $277 million from the public offering to pay for a portion of the bridge loan. Solutia will repay the more than $120,000,000 due under the loan in February 2009. Sale Price 53% Below the $20 Under Ch. 11 Plan; Shares Return to $15-Level After Shares Sale After Solutia announced its proposed conversion of a portion of its $400,000,000 debt to equity at $13 per share, closing prices of its stock tumbled to 9% to $14.14 apiece on August 11, but has since recovered to $15.48 a share as of August 19: Date Closing Price ---- ------------- 19-Aug $15.48 per share 18-Aug 15.03 15-Aug 14.74 14-Aug 14.53 13-Aug 14.17 12-Aug 14.02 11-Aug 15.44 8-Aug 15.42 The August 19 closing price of Solutia shares is valued 8.63% higher than the $14.25 closing price of Solutia shares on March 25 when it first officially began trading at the NYSE since its emergence from Chapter 11. Pursuant to its Plan of Reorganization, Solutia distributed rights to subscribe for 28,906,562 shares of its new common stock to certain prepetition general unsecured creditors, noteholders and holders of pre-emergence common stock. Eligible creditors to participate in the creditor rights offering were offered new common stock at $13.33 per share under the rights offering. Eligible stockholders were offered new common stock at $17.23 per share. The $13.33 offering price to unsecured creditors represented a 33.33% discount to the implied $20 per share value of the new common stock, based on a reorganization equity value of Solutia of approximately $1,200,000,000. Solutia's total stock to be outstanding after the offering has increased to 83,677,688 shares, up 36% from the 61,369,996 shares of common stock outstanding as of June 30, 2008. This excludes: -- 2,906,167 shares of common stock issuable upon the exercise of outstanding stock options; and -- 4,481,250 shares of common stock issuable upon the exercise of outstanding warrants. Standard & Poor's Solutia Ratings Remain Unchanged Standard and Poor's Ratings Services announced that it will not change Solutia's B+/Stable/-- ratings as a result of the company's public offering announcement. According to S&P, it will review Solutia's ratings once its Nylon business results in a sell-off. "If that happens we will weigh the loss in earnings and cash flow as a result of a potential sale against a potential decline in debt. In addition, we will also consider management's commitment to maintaining or improving credit quality," S&P said. S&P, a division of McGraw-Hill, publishes financial research and analysis on stocks and bonds. According to Wikipedia, S&P is among the top three companies in that business, along with Moody's and Fitch Ratings. Wikipedia said that S&P is "well-known for its US-based S&P 500, the Australian S&P/ASX 200 stock market index, the Canadian S&P/TSX, the Italian S&P/MIB and India's S&P CNX Nifty." About Solutia Inc. Based in St. Louis, Missouri, Solutia Inc. (OTCBB: SOLUQ) (NYSE: SOA-WI) -- http://www.solutia.com/-- and its subsidiaries, manufactures and sells chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03- 17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP, in New York, as lead bankruptcy counsel, and David A. Warfield, Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St. Louis Missouri, as special counsel. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. The Official Committee of Retirees of Solutia, Inc., et al., is represented by Daniel D. Doyle, Esq., Nicholas A. Franke, Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne, LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E. Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, in Birmingham, Alabama. On Feb. 14, 2006, the Debtors filed their Reorganization Plan & Disclosure Statement. On May 15, 2007, they filed an Amended Reorganization Plan and on July 9, 2007, filed a 2nd Amended Reorganization Plan. The Bankruptcy Court approved the Debtors' amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007, the Debtor re-filed a Consensual Plan & Disclosure Statement and on Nov. 29, 2007, the Court confirmed the Debtors' Consensual Plan. Solutia emerged from chapter 11 protection Feb. 28, 2008. Solutia's $2.05 billion exit financing facility was funded by Citigroup Global Markets Inc., Goldman Sachs Credit Partners L.P., and Deutsche Bank Securities Inc. The exit financing is being used to pay certain creditors, and for ongoing operations. (Solutia Bankruptcy News, Issue No. 130; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * Standard & Poor's Ratings Services said its ratings on Solutia Inc. (B+/Stable/--) will not change as a result of the company's recent announcement of a public offering of common shares. SOLUTIA INC: Hearing on DuPont Settlement Deal Set for Sept. 11 --------------------------------------------------------------- Judge Prudence C. Beatty of the U.S. Bankruptcy for the Southern District of New York will convene a hearing September 11, 2008, to consider approval of a settlement between E.I. DuPont de Nemours and Company, Inc., and Solutia. DuPont had asked the Court to compel the Debtors to pay a $1,394,718 administrative claim, pursuant a contract dated January 1, 2002 and related agreements, under which DuPont sold products on an exclusive basis to Solutia. The parties' contract contained provisions that if Solutia received an offer for the same products from a third party at a lower price, Solutia could demand that DuPont either match the price of the new offer or release Solutia from further obligations to purchase products. By letter agreement dated March 31, 2006, Solutia and DuPont agreed to the terms under which a third party auditor would make the determination of whether Solutia properly invoked the "Meet or Release" provision. In August 2007, BDO Seidman, LLP, the third- party auditor, reported that Solutia did not meet the terms of the meet or release clause, resulting to DuPont's filings of $1,394,718 for payment of goods at prices provided for in their original contract. Solutia disputed the claim and argued that BDO's report was not final and binding, and was still subject to Court review. Representing DuPont, Alan L. Hill, Esq., at Phillips Lytle, LLP, in New York, told Judge Beatty at a July 2008 hearing that DuPont and Solutia, Inc., have reached an agreement. Mr. Hill said, and Solutia's counsel confirmed, at the hearing that the parties are in the process of executing certain documents setting forth an informal discovery process with BDO. "By this process, BDO is going to provide the parties with all the documents that were provided to it in contemplation of the arbitration, and it's going to provide a representative to discuss the rationale behind the arbitration decision with the two parties," Mr. Hill added. Those documents are subject to certain confidentiality provisions that have been agreed between DuPont and Solutia and BDO. The process was said to have been completed by the week of August 18th to 22nd. About Solutia Inc. Based in St. Louis, Missouri, Solutia Inc. (OTCBB: SOLUQ) (NYSE: SOA-WI) -- http://www.solutia.com/-- and its subsidiaries, manufactures and sells chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03- 17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP, in New York, as lead bankruptcy counsel, and David A. Warfield, Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St. Louis Missouri, as special counsel. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. The Official Committee of Retirees of Solutia, Inc., et al., is represented by Daniel D. Doyle, Esq., Nicholas A. Franke, Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne, LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E. Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, in Birmingham, Alabama. On Feb. 14, 2006, the Debtors filed their Reorganization Plan & Disclosure Statement. On May 15, 2007, they filed an Amended Reorganization Plan and on July 9, 2007, filed a 2nd Amended Reorganization Plan. The Bankruptcy Court approved the Debtors' amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007, the Debtor re-filed a Consensual Plan & Disclosure Statement and on Nov. 29, 2007, the Court confirmed the Debtors' Consensual Plan. Solutia emerged from chapter 11 protection Feb. 28, 2008. Solutia's $2.05 billion exit financing facility was funded by Citigroup Global Markets Inc., Goldman Sachs Credit Partners L.P., and Deutsche Bank Securities Inc. The exit financing is being used to pay certain creditors, and for ongoing operations. (Solutia Bankruptcy News, Issue No. 130; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * Standard & Poor's Ratings Services said its ratings on Solutia Inc. (B+/Stable/--) will not change as a result of the company's recent announcement of a public offering of common shares. SOLUTIA INC: Resolving Last Few Bankruptcy Claims, Counsel Says --------------------------------------------------------------- On behalf of Solutia, Inc., Michael A. Cohen, Esq., at Kirkland & Ellis LLP, told Judge Prudence C. Beatty of the U.S. Bankruptcy Court for the Southern District of New York at a July 2008 hearing that Solutia is working towards getting the "last few claims resolved" in order to seek a final decree closing its Chapter 11 cases. Mr. Cohen told the Court that aside from their agreement with E.I. DuPont de Nemours and Company, the Debtors have reached a settlement agreement with the Dickerson claim, and will present the settlement to Judge Beatty upon the district court's approval of the settlement. "And we do have a few claims that are left out there, but we are working to get those resolved in as efficient a manner as possible with regard to the estate, and we're working with our claim's monitor in that regard," Mr. Cohen stated. "And it really is a very small number of claims, especially for a case of Solutia's size." Judge Beatty said that she'd be extremely gratified if the entire case could be closed by December 31, 2008, about 13 months since the confirmation of Solutia's Reorganization Plan on November 29, 2008. Judge Beatty noted that NRG Energy, Inc., which were represented by Kirkland & Ellis, and Mr. Cohen in their bankruptcy cases, was able to quickly close its Chapter 11 cases. Mr. Cohen agreed to a Dec. 31 target for closing of Solutia's Chapter 11 case. Judge Beatty noted that Solutia won't continue paying fees to the U.S. Trustee once it closes its Chapter 11 cases. In a discussion with Mr. Cohen about how Solutia is doing post- emergence, Judge Beatty said at the hearing that she'd expect Solutia to continue to do well, notwithstanding the difficult economic times in the United States., noting that some of its products are not U.S. dependent, and the company could increase prices because its products are not easily produced by other firms. About Solutia Inc. Based in St. Louis, Missouri, Solutia Inc. (OTCBB: SOLUQ) (NYSE: SOA-WI) -- http://www.solutia.com/-- and its subsidiaries, manufactures and sells chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03- 17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP, in New York, as lead bankruptcy counsel, and David A. Warfield, Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St. Louis Missouri, as special counsel. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. The Official Committee of Retirees of Solutia, Inc., et al., is represented by Daniel D. Doyle, Esq., Nicholas A. Franke, Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne, LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E. Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, in Birmingham, Alabama. On Feb. 14, 2006, the Debtors filed their Reorganization Plan & Disclosure Statement. On May 15, 2007, they filed an Amended Reorganization Plan and on July 9, 2007, filed a 2nd Amended Reorganization Plan. The Bankruptcy Court approved the Debtors' amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007, the Debtor re-filed a Consensual Plan & Disclosure Statement and on Nov. 29, 2007, the Court confirmed the Debtors' Consensual Plan. Solutia emerged from chapter 11 protection Feb. 28, 2008. Solutia's $2.05 billion exit financing facility was funded by Citigroup Global Markets Inc., Goldman Sachs Credit Partners L.P., and Deutsche Bank Securities Inc. The exit financing is being used to pay certain creditors, and for ongoing operations. (Solutia Bankruptcy News, Issue No. 130; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * Standard & Poor's Ratings Services said its ratings on Solutia Inc. (B+/Stable/--) will not change as a result of the company's recent announcement of a public offering of common shares. STANDARD PACIFIC: Stockholders Favor Conversion of $381MM Stock --------------------------------------------------------------- Standard Pacific Corp. announced that, at the company's special meeting of stockholders held August 18, 2008, stockholders overwhelmingly voted in favor of each of the three proposals on the meeting agenda. Approval of the first proposal resulted in the conversion of $381 million in company Senior Preferred Stock previously issued to an affiliate of MatlinPatterson Global Advisers LLC into an equivalent amount of the company's Series B Junior Participating Convertible Preferred Stock. In addition, a warrant held by MatlinPatterson, originally exercisable for shares of Senior Preferred Stock, became exercisable for the company's Series B Junior Participating Convertible Preferred Stock. The Series B Junior Participating Convertible Preferred Stock is economically equivalent to the company's common stock, but contains a voting limitation. Under this proposal, the stockholders also approved the issuance of shares of the company's common stock upon conversion of the company's Series B Junior Participating Convertible Preferred Stock. Over 95% of the shares cast on proposal 1 were cast in favor. Approval of the second proposal resulted in the adoption of the company's Amended and Restated Certificate of Incorporation, which, among other things, increased the total number of shares of capital stock that the company is authorized to issue from 210,000,000 shares to 610,000,000 shares, declassified the company's Board of Directors, and removed certain supermajority voting requirements. Over 95% of the shares cast on proposal 2 were cast in favor. Approval of the third proposal resulted in the adoption of an amendment to the Standard Pacific Corp. 2008 Equity Incentive Plan which increased the number of shares available for issuance under the plan by 19,023,543 shares. Over 93% of the shares cast on proposal 3 were cast in favor. 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 and SPH Title. Below Investment Grade Ratings As reported in the Troubled Company Reporter on May 22, 2008, Fitch Ratings has downgraded Standard Pacific Corp.'s ratings as: (i) issuer default rating to 'B-' from 'B+'; (ii) senior unsecured to 'B-/RR4' from 'B+/RR4'; (iii) unsecured borrowings under its bank revolving credit facility to 'B-/RR4' from 'B+/RR4'; and (iv) senior subordinated debt to 'CCC/RR6' from 'B-/RR6'. As reported in the Troubled Company Reporter on May 20, 2008, Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on Standard Pacific Corp. to 'B-' from 'B+'. At the same time, S&P lowered the subordinated debt rating to 'CCC' from 'B-' and placed all ratings on the company on CreditWatch with negative implications. These actions affect approximately $1.3 billion of unsecured notes. As reported in the Troubled Company Reporter on May 15, 2008, Moody's lowered the ratings of Standard Pacific Corp., including its corporate family rating to B2 from B1, its senior unsecured notes to B2 from B1, and its senior subordinated notes to Caa1 from B3. The SGL-3 liquidity assessment was affirmed. The ratings outlook is negative. SYNTAX-BRILLIAN: Court Approves Appointment of Chapter 11 Examiner ------------------------------------------------------------------ The Hon. Brendan L. Shannon of the United States Bankruptcy Court for the District of Delaware directed the appointment of a Chapter 11 examiner in the bankruptcy cases of Syntax-Brillian Corporation and its debtor-affiliates. The Chapter 11 examiner will appear before the Court on Sept. 3, 2008, at 10:00 a.m., to discuss: -- the scope of the examination to be performed; -- the amount of time needed to perform the examination and issue a report; -- a budget for the examination; and -- professional whose assistance the examiner anticipates will be required in the performance of the examination. As reported in the Troubled Company Reporter on Aug. 1, 2008, the Chapter 11 examiner will investigate: -- the facts and circumstances surrounding the sudden decline in the Debtors' assets; -- the bona fides and necessity of the proposed sale of the substantially all of the Debtors' assets to TCV; -- the relationships among and between the Debtors, TCV Group, Kolin, DigiMedia Technology Co., Ltd., including former and present principals, officers and directors; and -- the ability and inclination of the Debtor's current management to probe and pursue potential claims and causes of action against the Debtors' former officers including directors who selected the Debtor's current chief executive officer and chief financial officer. The Debtors have argued that appointing an examiner, at this stage, is unnecessary because they -- together with the Securities and Exchange Commission -- are presently conducting an investigation what caused the unexpected decline in the value of their assets and would only duplicate their efforts. The U.S. Trustee argued that the appointment is appropriate on grounds that the Debtors' fixed, liquidated, unsecured debts, services, and taxes have exceeded $5 million. The appointment of a Chapter 11 examiner is in the best interest of creditors, equity holders and other interest of the Debtors' estates, the U.S. trustee contended. About Syntax-Brillian Headquartered in Tempe, Arizona, Syntax-Brillian Corporation (Nasdaq:BRLC) -- www.syntaxbrillian.com -- manufactures and markets LCD HDTVs, digital cameras, and consumer electronics products include Olevia(TM) brand high-definition widescreen LCD televisions and Vivitar brand digital still and video cameras. Syntax-Brillian is the sole shareholder of California-based Vivitar Corporation. The company and two of its affiliates -- Syntax-Brillian SPE, Inc., and Syntax Groups Corp. -- filed for Chapter 11 protection on July 8, 2008 (Bankr. D. Delaware Lead Case No.08-11409 through 08-11409. Dennis A. Meloro, Esq., and Victoria Watson Counihan, Esq., at Greenberg Traurig LLP, represent the Debtors in their restructuring efforts. The U.S. Trustee for Region 3 has appointed five creditors to serve on an Official Committee of Unsecured Creditors. When the Debtors filed for protection against their creditors, they listed total assets of $175,714,000 and total debts of $259,389,000. TRANSMERIDIAN EXPLORATION: Exchange Offer Deadline Moved to Sept. ----------------------------------------------------------------- Transmeridian Exploration Incorporated and its wholly owned subsidiary Transmeridian Exploration Inc. have extended the consent payment deadline and expiration time with respect to their exchange offer and concurrent solicitation of consents to amend the indenture governing TMEI's 12% Senior Secured Notes due 2010 and related security documents. The consent payment deadline, which was 5:00 p.m., New York City time, on August 15, 2008, was extended to 5:00 p.m., New York City time, on August 22, 2008. The expiration time for the exchange offer, which was 12:00 midnight, New York City time, on August 21, 2008, will be extended to 12:00 midnight, New York City time, on September 8, 2008, unless further extended. All other material terms of the consent solicitation and the related exchange offer remain unchanged. Holders who have already properly tendered their Existing Notes and delivered their consents do not need to retender or deliver new consents. Consents may only be revoked in the manner described in the Offering Memorandum and Consent Solicitation Statement, dated July 23, 2008. Transmeridian and TMEI also announced that as of 5:00 p.m. EDT, August 15, 2008, holders of an aggregate $34,917,000 principal amount of the Existing Notes have tendered their Existing Notes and delivered their consents to the proposed amendments to the indenture governing the Existing Notes. About Transmeridian Exploration Based in Houston, Transmeridian Exploration Inc. (AMEX: TMY) -- http://www.tmei.com/ -- is an independent energy company established to acquire and develop oil reserves in the Caspian Sea region of the former Soviet Union. The company's primary oil and gas property is the South Alibek Field in the Republic of Kazakhstan covered by License 1557 and the related exploration and production contracts with the government of Kazakhstan. Transmeridian Exploration's consolidated balance sheet at March 31, 2008, showed $402.2 million in total assets, $341.2 million in total liabilities, and $92.5 million in redeemable convertible preferred stock, resulting in a $31.5 million total stockholders' deficit. Going Concern Doubt UHY LLP in Houston raised substantial doubt on Transmeridian's ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm pointed to the company's negative working capital, stockholders' deficit, and operating losses since its inception. The company had a net working capital deficit of approximately $56.2 million and a stockholders' deficit of approximately $31.5 million at March 31, 2008. Approximately 89.0% of the company's accounts payable at March 31, 2008, have been outstanding more than 120 days. UAL CORP: Wants Prelim Injunction Declared Against ALPA, et al. --------------------------------------------------------------- United Air Lines, Inc., asked Judge Eugene R. Wedoff of the U.S. District Court for the Northern District of Illinois to issue declaratory judgment and preliminary injunction -- for an alleged violation of Section 2 of the First Railway Labor Act -- against: * the United Airlines Master Executive Council of the Air Line Pilots Association, International; * Steven M. Tamkin; * Robert J. Domaleski Jr.; * Xavier F. Fernandez; and * Anthony R. Freeman. Section 2 of the RLA obligates carriers, unions and employees "to exert every reasonable effort to make and maintain [collective bargaining] agreements . . . and resolve all disputes . . . in order to avoid any interruption to commerce or to the operation of any carrier." ALPA, as representative of the pilots at United, entered into a collective bargaining agreement with United during the company's bankruptcy, which became effective on August 24, 2005. The parties agreed that the duration of the United-ALPA CBA would extend until December 31, 2009. Neither party is to submit intended changes to the CBA, until 270 days prior to December 31, 2009. ALPA's Master Executive Council is a representative body that makes all decisions for ALPA on matters affecting United pilots. Mr. Tamkin is the chairman, and Messrs. Domaleski and Fernandez, are the members of the MEC's Industrial Relations Committee. According to a MEC policy manual, the IRC's duties include the formulation and implementation of labor actions which will accomplish the goals of the United pilots and the directives of the UAL-MEC. Gary S. Kaplan, Esq., at O'Melveny & Myers LLP, in Washington, D.C., contended that similar to what ALPA is doing, Mr. Freeman -- a United pilot first officer, who administers a Web site, http://www.ual2172.com/to communicate with other pilots --is engaged in activities directed at harming United in violation of the Railway Labor Act. According to Mr. Kaplan, ALPA has been engaged in a campaign for more than a year in which it has encouraged its members to adhere strictly to the CBA, and to refuse voluntary flight assignments allowed under the current contract, for the explicit purpose of exerting economic pressure on United to open the CBA for renegotiation. ALPA's campaign has forced United to cancel 329 flights from July 19 to 27, 2008, Mr. Kaplan informs Judge Wedoff. The campaign has (i) cost United millions of dollars in lost profit, (ii) damaged its reputation and customer good will, (iii) disrupted the travel plans of 36,000 customers, and (iv) adversely impacted United's other employees, Mr. Kaplan pointed out. Every MEC Update issued by ALPA on its Web site, http://crewroom.alpa.org/ualunity/is prefaced with ALPA's demand to re-open the contract, Mr. Kaplan notes. ALPA has issued recent communications to the pilots both explicitly and implicitly encouraging the sick-out, showing that even if ALPA did not directly plan the sick-out, ALPA ratified it, Mr. Kaplan said. United Seeks Injunction United asserted that an injunction is the appropriate remedy to compel the performance of its pilots' legal duty. Without a preliminary injunction, Mr. Kaplan contended, United will suffer immediate and irreparable damage in the form of increased costs for measures designed to avoid flight delays and cancellations, loss of revenue, and damage to its business reputation. However, the Defendants will suffer, if any, minimal injury, from an injunction against unlawful job actions and the injury will be adequately indemnified by bond. Specifically, United asked the Court to order the Defendants to: * instruct the ALPA-represented pilots at United to resume their normal working schedule and practices, and provide United a copy of the instructions; * notify all ALPA-represented pilots at United, of the issuance, contents and meaning of the preliminary injunction, and produce a copy of all messages to United; and * attach in the notice a directive from ALPA to those pilots who are engaging in the Slowdown Campaign to conduct pilot operations in the normal manner to cease and desist all the activity and exhortations or communications encouraging upon pain of fine, suspension, or other sanction by ALPA. Moreover, United asks the Court to prohibit the Defendants from including in the Notices any statements that pilots should continue to engage in the unlawful job actions, including: (a) any assertion that the Preliminary Injunction does not prohibit individual pilots from making voluntary decisions to engage in the actions; and (b) any explanation of circumstances in which it would be appropriate for pilots to decline to waive a contractual requirement that the pilot may waive or decline a request to undertake a voluntary flight assignment, refuse a flight assignment or refuse to fly an aircraft that meets legal requirements for flight. United asked the Court to compel the attendance of the Defendants immediately after the issuance of a preliminary injunction order. Moreover, United asks the Court to issue an injunction on the condition that a bond, in an amount to be determined by the Court, be filed by United. The Defendants will recover from United under the Bond all costs and damages, if any, suffered by them, in the event that United does not succeed in the Complaint. United has sought discovery from the Defendants, on an expedited basis. Accordingly, the parties stipulated that the Defendants will respond to United's discovery requests and appear for deposition on August 15, 2008. United and ALPA Reach Standstill Agreement At District Judge Joan H. Lefkow's directive, United and ALPA agreed to a temporary pact in order to prevent further flight disruptions, Bloomberg News reports. In a telephone interview with Bloomberg, Megan McCarthy, United spokesperson said, "We have an agreement." However, both camps would neither disclose the details, Reuters notes. The report has quoted James Linsey, Esq., ALPA's counsel, telling the Court that ALPA was trying to "tamp down" pilot unrest. United disputed Mr. Linsey's statement, according to Reuters. Flight Attendants Condemn UAL for Filing Complaint Greg Davidowitch, Association of Flight Attendants-CWA (AFA-CWA) United Airlines Master Executive Council president, issued a statement after United management filed a law suit against individual pilots and their union, the Air Line Pilots Association "[]United management launched a very serious attack on employees by issuing an inaccurate and misleading media statement concerning the pilots at United Airlines. "This latest union-busting tactic is condemned for what it is: a corrupt attempt to distract workers and travelers of United Airlines from the failures of current executives. Their actions add nothing to the debate over the future of our airline, but instead serve to further inflame an already poisonous labor relations atmosphere. "The notion that any frontline employee of United Airlines is responsible for the failures of United executives is laughable. Not content to destroy labor relations, and to destroy the passenger experience, the geniuses that run this airline have also destroyed shareholder value in the past year. With all the major metrics of corporate performance at an all- time low, current management has lost its reason to continue in charge of the airline. "An attack on one employee is an attack on all of us. We stand in solidarity with the Air Line Pilots Association and condemn United management for this new low in labor relations." More than 55,000 Flight Attendants, including the 17,000 Flight Attendants at United, join together to form AFA, the world's largest Flight Attendant union. AFA is part of the 700,000 member strong Communications Workers of America, AFL-CIO -- http://www.unitedafa.org/ * * * At the recommendation of Judge Lefkow, Chief Judge James F. Holderman of the Executive Committee of the United States District Court for the Northern District of Illinois, referred United's Complaint to Magistrate Judge Morton Denlow for discovery supervision. However, in a joint status report filed to the Court on Aug. 12, 2008, United and the Defendants stated that they do not consent to trial before a magistrate judge. Moreover, the Defendants reserve the right to file one or more counterclaims while United reiterates that it is not seeking damages. The parties have not engaged in any settlement negotiations. About UAL Corporation Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Eugene R. Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. * * * As reported in the Troubled Company Reporter on July 29, 2008, Standard & Poor's Ratings Services lowered its ratings on UAL Corp. and subsidiary United Air Lines Inc. (both rated B- /Negative/--), including lowering the long-term corporate credit ratings on both entities to 'B-' from 'B', and removed the ratings from CreditWatch, where they had been placed with negative implications May 22, 2008, as part of an industrywide review. The outlook is negative. UAL CORP: High Fuel Prices Prompt Closure of Airport Lounges ------------------------------------------------------------ United Airlines Inc. intends to shut down its airport lounges as skyrocketing fuel costs continue to plague the airline industry, Jane L. Levere of the New York Times report. United plans to enforce the closing of lounges in Hartsfield- Jackson Atlanta International Airport, the Baltimore airport, Dallas Fort Worth International Airport, and Minneapolis St. Paul International Airport, by October 10, Ms. Levere discloses. United has already closed lounges at airports in Cleveland, Sydney, and London's Heathrow for the last two years, according to Ms. Levere. Nevertheless, United members can avail of lounges run by its alliance, the Star Alliance, Ms. Levere notes. According to the report, airlines have to pay for rent, salaries and other expenses for the maintenance of the lounges, which may yield little income. As carriers are incrementally cutting capacity costs, the lounge shutdowns is just one of the drastic measures to keep up with high production expenses, Ms. Levere relates. The combined lounge closings are expected to affect lounge members who pay as much as $400 as membership fees per annum, Ms. Levere says. About UAL Corporation Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Eugene R. Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. * * * As reported in the Troubled Company Reporter on July 29, 2008, Standard & Poor's Ratings Services lowered its ratings on UAL Corp. and subsidiary United Air Lines Inc. (both rated B- /Negative/--), including lowering the long-term corporate credit ratings on both entities to 'B-' from 'B', and removed the ratings from CreditWatch, where they had been placed with negative implications May 22, 2008, as part of an industrywide review. The outlook is negative. UNIVERSAL ENERGY: June 30 Balance Sheet Upside-Down by $4,482,090 ----------------------------------------------------------------- Universal Energy Corp.'s consolidated balance sheet at June 30, 2008, showed $4,827,824 in total assets and $9,309,914 in total liabilities, resulting in a $4,482,090 stockholders' deficit. At June 30, 2008, the company's consolidated balance sheet also showed strained liquidity with $607,646 in total current assets available to pay $9,162,255 in total current liabilities. The company reported net income of $2,938,337 for the second quarter ended June 30, 2008, compared with a net loss of $2,031,225 for the same period of 2007. Revenue for the three months ended June 30, 2008, increased $328,476 to $328,476 from $0 for the same period in 2007. The increase was attributable to successful drilling and completion efforts at the company's Amberjack and Lake Campo prospects that began production in December 2007 and January 2008, respectively. Other income (expense) for the period ended June 30, 2008, increased $3,568,584 to $3,544,608 from other expense of $23,976 for the same period in 2007. The increase was attributable to change in fair value of embedded derivatives in the company's convertible debentures and warrants. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2008, are available for free at http://researcharchives.com/t/s?314b Going Concern Doubt Cross, Fernandez & Riley, LLP, in Orlando, Fla., expressed substantial doubt about Universal Energy 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 net losses and negative cash flows from operations since inception. The company has no proven reserves as of June 30, 2008, and has only recently begun generation of revenues from operations of its oil and gas activities. From inception to June 30, 2008, the company has accumulated losses of $11,885,273 and expects to incur further losses in the development of its business. About Universal Energy Headquartered in Lake Mary, Fla., Universal Energy Corp. (OTC BB: UVSE) is an independent energy company engaged in the acquisition and development of crude oil and natural gas leases in the United States and Canada. The company's minority working interests in drilling prospects currently consist of land in Alberta, Canada, Louisiana and Texas. US ENERGY: Files Joint Chapter 11 Reorganization Plan ----------------------------------------------------- U.S. Energy Systems Inc. filed with the U.S. Bankruptcy Court for the Southern District of New York a Chapter 11 joint reorganization plan with its subsidiary, U.S. Energy Overseas Investments, published reports say. As reported in the Troubled Company Reporter on July 24, 2008, the Hon. Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York extended the exclusive periods of U.S. Energy System and its debtor-affiliates to file a Chapter 11 plan until Aug. 22 and solicit acceptances of that plan until Oct. 21. BankruptcyData.com relates that a separate plan of reorganization was also filed with the Court for GBGH, LLC, also a U.S. Energy subsidiary. According to the report, no related Disclosure Statements were filed with the Court. About U.S. Energy Based in Avon, Connecticut, U.S. Energy Systems Inc. (Pink Sheets: USEY) -- http://www.usenergysystems.com/-- owns green power and clean energy and resources. USEY owns and operates energy projects in the United States and United Kingdom that generate electricity, thermal energy and gas production. The company filed for Chapter 11 protection on Jan. 9, 2008 (Bank. S.D.N.Y. Case No. 08-10054). There are 34 affiliates who filed for separate Chapter 11 petitions. Peter S. Partee, Esq., at Hunton & Williams LLP, represents the Debtor in its restructuring efforts. Jefferies & Company, Inc. serves as the company's financial advisor. The Debtor also selected Epiq Bankruptcy Solutions LLC as noticing, claims and balloting agent. The Official Committee of Unsecured Creditors has yet to be appointed in these cases by the U.S. Trustee for Region 2. When the Debtors filed for protection from their creditors, they listed total assets of $258,200,000 and total debts of $175,300,000. VERMEER FUNDING: Fitch Ratings Junks $15.7 Million Class C Notes ---------------------------------------------------------------- Fitch Ratings affirmed one class and downgraded three classes of notes issued by Vermeer Funding I, Ltd./Inc. Fitch has also removed classes A-2, B and C from Rating Watch Negative. These rating actions are effective immediately: -- $67,648,721 class A-1 affirmed at 'AAA'; -- $38,500,000 class A-2 downgraded to 'A' from 'AA'; -- $37,625,000 class B downgraded to 'BB' from 'BBB+'; -- $15,709,320 class C downgraded to 'CCC' from 'B'. Fitch's rating actions reflect the collateral deterioration within the portfolio, specifically subprime residential mortgage-backed securities. Vermeer Funding is a cash flow structured finance collateralized debt obligation that closed on April 13, 2004, and is managed by Rabobank International. The now static portfolio is composed of 67.1% RMBS, 10.4% CDOs, 11.5% asset-backed securities, 8.1% corporates, and 3% commercial mortgage-backed securities. Presently 8% of the portfolio is comprised of 2006 and 2007 vintage U.S. RMBS. Since November 2007, approximately 35.1% of the portfolio has been downgraded with 8.2% of the portfolio currently on Rating Watch Negative. Further, 28.6% of the portfolio is now rated below investment grade, with 12.9% of the portfolio rated 'CCC+' and below. Fitch notes that, overall, 9.4% of the assets in the portfolio now carry a rating below the rating it assumed in November 2007. The negative credit migration experienced since the last review in November 2007 has resulted in the Weighted Average Rating Factor to decline to 'BB+/BB' from 'BBB/BBB-', breaching its covenant of 'BBB/BBB-' as of the July 31, 2008, trustee report. The collateral quality decline has caused the class C overcollateralization test to fail. As of the trustee report dated July 31, 2008, the class C OC ratio was 99.4% compared to the 101% trigger level. As a result of the failed class C OC test, principal proceeds are diverted from the preference shares to pay the class A-1, A-2, B, and C notes sequentially until the test is cured. The class A-1 notes are affirmed due to the significant delevering of the class. Since last review 29.3% of the principal balance has paid down, and since closing 72.4% has paid down. Also, the class A/B OC ratio is currently 110.3%, passing its 104% trigger level. The ratings on the class 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 rating on the class C notes address the ultimate receipt of interest payments and ultimate receipt of principal as per the transaction's governing documents. The ratings are based upon the capital structure of the transaction, the quality of the collateral, and the protections incorporated within the structure. Fitch is reviewing its SF CDO approach and will comment separately on any changes and potential rating impact at a later date. Fitch will continue to monitor and review this transaction for future rating adjustments. WELEND ASSOCIATED: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Welend Associated Group, LLC P.O. Box 1313 Broomfield, CO 80038 Bankruptcy Case No.: 08-22907 Chapter 11 Petition Date: August 25, 2008 Court: District of Colorado (Denver) Debtor's Counsel: Harvey Sender, Esq. 1660 Lincoln Street Suite 2200 Denver, CO 80264 Tel: (303) 296-1999 Fax: (303) 296-7600 Email: Sendertrustee@sendwass.com Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million Debtor's list of its 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Ross B. Perkal $183,942 708 marquette NW Albuquerque, NM 87102 Martin, Leigh, Laws & Frizlen $82,261 900 Peck's Plaza 1044 Main Stree Kansas City, MO 64105 Fidelity National Title Inc. Co. $42,292 2390 East Camelback Road, Suite 140 Phoenix, AZ 85016 Shapiro & Kreisman $40,652 Security National $29,544 Eric H. Lindquist, P.C. $18,499 Brown, Berardini & Dunning, P.C. $15,922 Summerlin N. Community Association $13,591 Perry & Shapiro, LLP $10,204 Broker Price Opinion $3,928 CA-Aztec Foreclosure Corp. $2,497 Codilis & Stawrarski, P.C. $2,226 Robert A. Kummin, P.C. $2,159 Allen & Vellone, P.C. $2,052 Cooper Cirstiansen, Esq. $2,030 Dan E. Mille, P.C. $1,735 City of Tucson $1,352 FAHTCO $900 Metropolitan St Louis Sewer $842 Saguaro Canyon HOA $767 WENTWORTH ENERGY: Earns $5,574,208 in 2008 Second Quarter --------------------------------------------------------- Wentworth Energy Inc. reported net income of $5,574,208 on total revenue of $142,139 for the second quarter ended June 30, 2008, compared with net income $34,302,091 on total revenue of $416,643 in the same period last year. The decline in production revenue was primarily due to the shut-in of the two main producing wells namely Bracken #1 and Redlake #1R during December of 2007. Consequently, revenue for the three months ending June 30, 2008, was mainly derived from royalties of $68,000 and production from Shiloh #1 and #3 of $74,000. Resumption of gas production from Bracken #1 and Redlake 1R is unlikely in the near term until the company has sufficient resources to convert one of the non-producing wells into a water disposal well. Operating costs totaled $1,091,700 for the three months ended June 30, 2008, compared to $6,222,586 for the three months ended June 30, 2007. The decrease in expenses was primarily due to the decrease in general and administrative expenses. Finance and interest costs were $3,433,372 in the three months ended June 30, 2008, which was an increase of $1,511,883 from the three months ended June 30, 2007. Finance and interest costs relate primarily to interest accrued on the senior secured convertible notes and the convertible debentures and amortization of the debt discount related to the senior secured convertible notes. The company had $6,523,769 of other income for the three months ended June 30, 2008, versus $40,108,034 in other income for the three months ended June 30, 2007. The largest component of other income for the second quarter of 2008 was a $9,930,708 non-cash gain from derivative transactions related to the change in the fair value of the derivative contract liability, as compared to a $42,017,169 non-cash gain during the second quarter of 2007. The derivative contract liabilities relate to the fair value of the beneficial conversion feature of the company's convertible debentures and senior secured convertible notes issued in 2006 and the fair value of the related warrants. Balance Sheet At June 30, 2008, the company's consolidated balance sheet showed $38,458,292 in total assets, $30,664,378 in total liabilities, and $7,793,914 in stockholders' equity. The company's consolidated balance sheet at June 30, 2008, also showed strained liquidity with $829,594 in total current assets available to pay $8,204,271 in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2008, are available for free at http://researcharchives.com/t/s?314f Going Concern Doubt Hein & Associates LLP, in Dallas, expressed substantial doubt aobut Wentworth Energy Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's significant recurring losses from operations and working capital deficiency. About Wentworth Energy Headquartered in Palestine, Texas, Wentworth Energy Inc. (OTC BB: WNWG) -- http://www.wentworthenergy.com/-- is an independent exploration and production company focused on developing North American oil and natural gas reserves. The company owns a 27,557- acre mineral block in east central Freestone County and west central Anderson County in the active East Texas Basin, as well as an active oil and gas contract drilling company, Barnico Drilling Inc., which has serviced East Texas drilling demand since the late 1970s. WERNER LADDER: Court Extends Deadline to Remove Actions to Oct. 30 ------------------------------------------------------------------ At the request of Charles A. Stanziale, Jr., the Liquidating Trustee in the Chapter 11 cases of Old Ladder Co. (DE), Inc., formerly known as Werner Holding Co. (DE), Inc., the U.S. Bankruptcy Court for the District of Delaware further extended until Oct. 30, 2008, the period within which the Trustee may file notices of removal of proceedings that are pending in multiple state courts as of the Petition Date. Victoria W. Counihan, Esq., at Greenberg Traurig, LLP, in Wilmington, Delaware, told the Court that since the Second Amended Plan of Liquidation became effective, the Liquidating Trustee and his professionals have continued to focus their efforts to more immediate concerns in the Debtors' cases, including attending to various requests and asserted claims. Therefore, the Liquidating Trustee has not yet determined whether he should seek removal of any proceedings under Rule 9027(a) of the Federal Rules of Bankruptcy Procedure. Ms. Counihan said that the Liquidating Trustee anticipates making a determination about the removal of any proceedings in the next several months. About Werner Ladder Based in Greenville, Pennsylvania, Werner Holding Co. (DE) Inc. aka Werner Ladder Co. -- http://www.wernerladder.com/-- manufactures and distributes ladders, climbing equipment and ladder accessories. The company and three of its affiliates filed for chapter 11 protection on June 12, 2006 (Bankr. D. Del. Case No. 06-10578). The Debtors are represented by the firm of Willkie Farr & Gallagher LLP as lead counsel and the firm of Young, Conaway, Stargatt & Taylor LLP as co-counsel. Rothschild Inc. is the Debtors' financial advisor. The Official Committee of Unsecured Creditors is represented by the firm of Winston & Strawn LLP as lead counsel and the firm of Greenberg Traurig LLP as co-counsel. Jefferies & Company serves as the Creditor Committee's financial advisor. At March 31, 2006, the Debtors reported total assets of $201,042,000 and total debts of $473,447,000. Earlier, on June 19, 2007, the Creditors Committee submitted its Liquidating Plan and Disclosure Statement for Werner. On Sept. 10, 2007, the Committee filed an Amended Plan and Disclosure Statement. On Sept. 13, 2007, the Committee filed its 2nd Amended Plan and on September 14, the Court approved the adequacy of the Amended Disclosure Statement explaining the 2nd Amended Plan. The Court confirmed the 2nd Amended Plan on October 25. New Werner Holding Co. (DE), LLC, a newly formed corporation, purchased substantially all the Debtors' assets in 2007. New Werner is a separate operating company. (Werner Ladder Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). WERNER LADDER: Complaint Improperly Filed in N.Y., says Investcorp ------------------------------------------------------------------ Investcorp Bank, B.S.C., and other defendants named in a $1,000,000,000 damage lawsuit pending before the U.S. District Court for the Southern District of New York argue that Old Ladder Litigation Co., LLC, as Litigation Designee on behalf of the bankruptcy estates of Werner Holding Co. (DE) Inc., has never fully justified its reason for filing the lawsuit in the New York instead of filing it in the U.S. Bankruptcy Court for the District of Delaware. Old Ladder Litigation Co., LLC, is the Liquidation Trust's litigation designee appointed to investigate and prosecute causes of action against third parties, including those held by Werner Holding Co. (DE) Inc. aka Werner Ladder Co. and its debtor- affilates against former shareholders, officers, directors, managers and professionals, pursuant to the Second Amenmed Plan of Liquidation, as confirmed on Oct. 25, 2007, As reported in the Troubled Company Reporter on June 16, 2008, Investcorp Bank, B.S.C., and the other defendants named in the $1,000,000,000 damage lawsuit commenced by Old Ladder Litigation Co. sought the transfer of the litigation to the U.S. Bankruptcy Court for the District of Delaware where the Werner Ladder bankruptcy cases have been pending for two years. As reported in the TCR on July 23, 2008, Old Ladder Litigation Co. asked the Southern District of New York to overrule Investcorp Bank, B.S.C. and the other defendants' requests to transfer the litigation's venue to the Delaware Bankruptcy Court and to dismiss the case. The Litigation Designee has argued that filing the Complaint in New York is justified because of three financial transactions, which substantially took place in New York: (1) $330,000,000 paid out to shareholders in 1997; (2) $150,000,000 paid out to shareholders in 2003; and (3) a 2005 refinance of Old Werner's debt. The Litigation Designee has also asserted that legal and financial advisors based in New York were involved in the financial transactions. Investcorp's counsel, William P. Frank, Esq., at Skadden Arps Slate Meagher & Flom LLP, in New York, argues that the Complaint was improperly filed in the New York Court because the Delaware Court presided over the Debtors' bankruptcy cases for more than four years. Moreover, the Delaware Court is where the Litigation Designee chose to file more than 100 actions based on the Debtors' alleged insolvency and is where he conducted massive discovery on the claims asserted against the Defendants. Therefore, even the Litigation Designee cannot deny that the Delaware Court knows more about the Debtors' history and financial affairs than any other court, Mr. Frank points out. Mr. Frank also asserts that more than half of the Complaint has virtually nothing to do with the financial transactions alleged by the Litigation Designee. Instead, he notes, the Complaint focuses on an incredible fraudulent scheme by the Debtors' directors, management and shareholders to hide for more than 10 years the company's alleged insolvency to line the pockets of the equity holders at the expense of creditors. However, the alleged fraudulent scheme is based entirely on the conduct of the Debtors' legal business operations that occurred in locations in Delaware and Pennsylvania, not in New York, notes Mr. Frank. The Litigation Designee has asserted that the shareholder defendants "specifically waived the right to challenge a New York venue for the 2003 transaction because the recapitalization agreement specified a New York venue for litigation solely in respect of the interpretation and enforcement of the provisions of the agreement and the transactions contemplated." Mr. Frank avers that the argument about the shareholder defendants waiving the right to challenge a New York venue cannot apply to the Complaint because the Litigation Designee asserted tort claims to avoid the 2003 recapitalization; he did not contract claims to enforce or interpret the recapitalization agreement. The Complaint also asserted certain claims against Investcorp and other defendants, which could be dismissed under the settlement payment defense because many courts are divided in interpreting that defense under Section 546(e) of the Bankruptcy Code, Mr. Frank argues. Mr. Frank believes that the Litigation Designee filed the Complaint in New York because the New York Court holds that Section 546(e) applies to both publicly and privately traded securities, a ruling that is not practiced by the courts in Delaware or Pennsylvania, where the Debtors are incorporated and headquartered. About Werner Ladder Based in Greenville, Pennsylvania, Werner Holding Co. (DE) Inc. aka Werner Ladder Co. -- http://www.wernerladder.com/-- manufactures and distributes ladders, climbing equipment and ladder accessories. The company and three of its affiliates filed for chapter 11 protection on June 12, 2006 (Bankr. D. Del. Case No. 06-10578). The Debtors are represented by the firm of Willkie Farr & Gallagher LLP as lead counsel and the firm of Young, Conaway, Stargatt & Taylor LLP as co-counsel. Rothschild Inc. is the Debtors' financial advisor. The Official Committee of Unsecured Creditors is represented by the firm of Winston & Strawn LLP as lead counsel and the firm of Greenberg Traurig LLP as co-counsel. Jefferies & Company serves as the Creditor Committee's financial advisor. At March 31, 2006, the Debtors reported total assets of $201,042,000 and total debts of $473,447,000. Earlier, on June 19, 2007, the Creditors Committee submitted its Liquidating Plan and Disclosure Statement for Werner. On Sept. 10, 2007, the Committee filed an Amended Plan and Disclosure Statement. On Sept. 13, 2007, the Committee filed its 2nd Amended Plan and on September 14, the Court approved the adequacy of the Amended Disclosure Statement explaining the 2nd Amended Plan. The Court confirmed the 2nd Amended Plan on October 25. New Werner Holding Co. (DE), LLC, a newly formed corporation, purchased substantially all the Debtors' assets in 2007. New Werner is a separate operating company. (Werner Ladder Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). ZIM CORP: Net Loss Narrows to $35,411 in Quarter Ended June 30 -------------------------------------------------------------- ZIM Corporation reported net loss of $35,411 for the quarter ended June 30, 2008, compared to net loss of $97,397 for the same period last year. The decrease in net loss is a reflection of the company's reduction in selling and general administrative expenses, increased gross margins and an increase in revenue from maintenance and consulting services related to our database products. Revenue for the quarter ended June 30, 2008 was $439,330, a decrease from $538,027 for the same period last year. ZIM's decrease in revenue is attributable to the decline in revenue from its Mobile segment. ZIM had cash of $401,525 at June 30, 2008, as compared to cash of $299,943 as at March 31, 2008, with no other outstanding debt. "We are continuing to benefit from our operational improvements and expense reductions" Dr. Michael Cowpland, president and CEO of ZIM, said. "Our current cost structure continues to improve and supports our continuing efforts in pursuing opportunities related to our ZIM Integrated Development Environment software, Internet TV and Mobile Content and Applications platforms". At June 30, 2008, the company's balance sheet showed total assets of 1,106,527, total liabilities of $528,118 and shareholders' equity of $578,409. About ZIM Corp. Ottawa, Canada-based ZIM Corporation (OTC BB: ZIMCF) -- http://www.zim.biz/-- is a mobile content, Enterprise Database Software and Internet TV service provider. Through its global infrastructure, ZIM provides publishing and licensing services for market-leading mobile content and for Internet TV broadcasting. Going Concern Doubt As reported in the Troubled Company Reporter on July 3, 2008, Raymond Chabot Grant Thornton LLP raised substantial doubt on the ability of ZIM Corporation to continue as a going concern after it audited the company's financial statements for the year ended March 31, 2008. The auditor disclosed that the company has an accumulated deficit of $21,455,824 and generated negative cash flows from operations of $315,458 during the year ended March 31, 2008. The company also has generated negative cash flows from operations during four of the previous five years. * S&P Downgrades 14 Ratings on Six 2004/2005 U.S. RMBS Deals ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on 14 classes from six 2004 and 2005 vintage U.S. residential mortgage- backed securities (RMBS) transactions backed by seasoned loans. "Concurrently, we removed two of the lowered ratings from CreditWatch with negative implications. In addition, we affirmed our ratings on 53 classes from seven transactions, including the six series mentioned previously," S&P says. "We lowered our ratings on four classes to 'D' because the classes suffered principal write-downs due to the depletion of credit support provided by subordination, and thus we do not expect them to receive their full principal balances. "The remaining downgrades reflect our opinion that projected credit support for the affected classes is insufficient to maintain the previous ratings, given our current loss projections. The affirmations reflect actual and projected credit enhancement percentages that are sufficient to support the current ratings. The transactions included in this review have cumulative losses ranging from 0.17% to 8.54% of the original pool balances. Severe delinquencies (90-plus days, foreclosures, and REOs) for these transactions range between 0.79% and 9.04% of the current pool balances." Subordination provides credit support for the affected transactions. For GSAMP Trust 2004-SEA1, in addition to subordination, excess interest and overcollateralization provide credit support. The underlying collateral for these deals originally consisted of seasoned fixed- and adjustable-rate U.S. prime jumbo mortgage loans secured primarily by first liens on one- to four-family residential properties. Standard & Poor's will continue to monitor the RMBS transactions it rates and take rating actions, including CreditWatch placements, when appropriate. RATINGS LOWERED GSAMP Trust Rating Transaction Class CUSIP To From ----------- ----- ----- -- ---- 2004-SEA1 B-1 36228FL87 BB+ BBB+ 2004-SEA1 B-2 36228FL95 BB BBB 2004-SEA1 B-3 36228FM29 BB- BBB- Merrill Lynch Mortgage Investors Trust Rating Transaction Class CUSIP To From ----------- ----- ----- -- ---- 2004-SL1 B-3 59020UEQ4 D CCC RAMP Trust Rating Transaction Class CUSIP To From ----------- ----- ----- -- ---- 2004-SL2 B-2 7609856V8 D CCC 2004-SL3 M-2 76112BCA6 B A 2004-SL3 M-3 76112BCB4 CCC BBB 2004-SL4 M-2 76112BGV6 BBB A 2004-SL4 M-3 76112BGW4 CCC BBB 2004-SL4 B-1 76112BGX2 CC BB 2004-SL4 B-2 76112BGY0 D B 2005-SL2 B-2 76112BVJ6 CCC B RATINGS LOWERED AND REMOVED FROM CREDITWATCH NEGATIVE RAMP Trust Rating Transaction Class CUSIP To From ----------- ----- ----- -- ---- 2004-SL2 B-1 7609856U0 CCC BB+/Watch Neg 2004-SL3 B-1 76112BDL1 D B/Watch Neg RATINGS AFFIRMED GSAMP Trust Transaction Class CUSIP Rating ----------- ----- ----- ------ 2004-SEA1 A-1B 36228FL53 AAA 2004-SEA1 A-2 36228FP26 AAA 2004-SEA1 M-1 36228FL61 AA 2004-SEA1 M-2 36228FL79 A Merrill Lynch Mortgage Investors Trust Transaction Class CUSIP Rating ----------- ----- ----- ------ 2004-SL1 S 59020UEK7 AAA 2004-SL1 B-2 59020UEP6 BBB- RAMP Trust Transaction Class CUSIP Rating ----------- ----- ----- ------ 2004-SL2 A-I 7609856A4 AAA 2004-SL2 A-II 7609856B2 AAA 2004-SL2 A-III 7609856C0 AAA 2004-SL2 A-IV 7609856D8 AAA 2004-SL2 A-I-IO 7609856E6 AAA 2004-SL2 A-I-PO 7609856F3 AAA 2004-SL2 A-IO 7609856G1 AAA 2004-SL2 A-PO 7609856H9 AAA 2004-SL2 M-1 7609856L0 AA+ 2004-SL2 M-2 7609856M8 AA 2004-SL2 M-3 7609856N6 A+ 2004-SL3 A-I 76112BBP4 AAA 2004-SL3 A-II 76112BBQ2 AAA 2004-SL3 A-III 76112BBR0 AAA 2004-SL3 A-IV 76112BBS8 AAA 2004-SL3 A-I-IO 76112BBT6 AAA 2004-SL3 A-I-PO 76112BBU3 AAA 2004-SL3 A-IO 76112BBV1 AAA 2004-SL3 A-PO 76112BBW9 AAA 2004-SL3 M-1 76112BBZ2 AA+ 2004-SL4 A-I 76112BGK0 AAA 2004-SL4 A-II 76112BGL8 AAA 2004-SL4 A-III 76112BGM6 AAA 2004-SL4 A-IV 76112BGN4 AAA 2004-SL4 A-V 76112BGP9 AAA 2004-SL4 A-IO 76112BGQ7 AAA 2004-SL4 M-1 76112BGU8 AA 2005-SL1 A-I 76112BML1 AAA 2005-SL1 A-II 76112BMM9 AAA 2005-SL1 A-III 76112BMN7 AAA 2005-SL1 A-IV 76112BMP2 AAA 2005-SL1 A-V 76112BMQ0 AAA 2005-SL1 A-VI 76112BMR8 AAA 2005-SL1 A-VII 76112BMS6 AAA 2005-SL1 A-IO 76112BMT4 AAA 2005-SL1 A-PO 76112BMU1 AAA 2005-SL2 A-I 76112BUV0 AAA 2005-SL2 A-II 76112BUW8 AAA 2005-SL2 A-III 76112BUX6 AAA 2005-SL2 A-IV 76112BUY4 AAA 2005-SL2 A-V 76112BUZ1 AAA 2005-SL2 A-IO 76112BVA5 AAA 2005-SL2 A-PO 76112BVB3 AAA 2005-SL2 M-1 76112BVE7 AA 2005-SL2 M-2 76112BVF4 A 2005-SL2 M-3 76112BVG2 BBB 2005-SL2 B-1 76112BVH0 BB * S&P Cuts 69 Ratings on Ten 2006, 2007 US Alt-A RMBS Deals ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 69 classes from 10 residential mortgage-backed securities (RMBS) transactions backed by U.S. Alternative-A (Alt-A) mortgage loan collateral issued in 2006 and 2007. The downgraded classes have a current balance of approximately $2.38 billion. "We removed 25 of the lowered ratings from CreditWatch with negative implications. In addition, we affirmed our ratings on 53 classes and removed four of the affirmed ratings from CreditWatch negative," S&P says. The downgrades reflect our opinion that projected credit support for the affected classes is insufficient to maintain the previous ratings, given our current projected losses as stated in "S&P Publishes Revised Projected Losses For '06/'07 U.S. Alt-A Short- Reset Hybrid, Neg-Am RMBS," published Aug. 20, 2008, on RatingsDirect. S&P arrived at its estimated projected losses for the Alt-A RMBS deals using the analysis outlined in "Standard & Poor's Revised Default And Loss Curves For U.S. Alt-A RMBS Transactions," published Dec. 19, 2007, on RatingsDirect. The revised loss assumptions used in this review also include the new loss severity assumptions, which were outlined in "Criteria: Standard & Poor's Revises U.S. Subprime, Prime, And Alternative-A RMBS Loss Assumptions," published on July 30, 2008. "As part of our analysis, we considered the characteristics of the underlying mortgage collateral as well as macroeconomic influences. For example, the risk profile of the underlying mortgage pools influences our default projections, while our outlook for housing price declines and the health of the housing market influence our loss severity assumptions," S&P says. "To assess the creditworthiness of each class, we reviewed the individual delinquency and loss trends of each transaction for changes, if any, in risk characteristics, servicing, and the expected ability to withstand additional credit deterioration. In order to maintain a rating higher than 'B', a class had to absorb losses in excess of the base-case assumptions we assumed in our analysis. For example, a class may have to withstand approximately 115% of our base-case loss assumptions in order to maintain a 'BB' rating, while a different class may have to withstand approximately 125% of our base-case loss assumptions to maintain a 'BBB' rating. A class that has an affirmed 'AAA' rating can likely withstand approximately 150% of our base-case loss assumptions under our analysis, subject to individual caps and qualitative factors assumed on specific transactions. "We also took into account the pay structure of each transaction and only stressed each class with losses that would occur while it remained outstanding. Additionally, we only gave excess interest credit for the amount of time the class would be outstanding. For example, if we projected a class to pay down in 15 months, then we only applied 15 months of losses to that class. Additionally, in such a case we assumed 15 months of excess spread if the class was structured with excess spread as credit enhancement. "As of Aug. 1, 2008, there were 2,305 Alt-A ratings from 292 deals on CreditWatch negative. Currently, 2,119 ratings on classes from 269 Alt-A transactions remain on CreditWatch negative. In the coming weeks, Standard & Poor's will continue to analyze the remaining transactions affected by our revised loss expectations. We will analyze deals in order of performance, looking at worse- performing deals first," S&P adds. RATINGS LOWERED Deutsche Alt-A Securities Mortgage Loan Trust, Series 2007-OA1 Series 2007-OA1 Rating Class CUSIP To From ----- ----- -- ---- M-1 25151VAD7 BB BB+ M-2 25151VAE5 B+ BB M-3 25151VAF2 B BB- M-4 25151VAG0 B- B M-5 25151VAH8 B- B M-6 25151VAJ4 CCC B- GreenPoint Mortgage Funding Trust, Series 2006-AR7 Series 2006-AR7 Rating Class CUSIP To From ----- ----- -- ---- M1 39538CAK8 BBB+ AA+ M2 39538CAL6 BBB AA HarborView Mortgage Loan Trust 2007-1 Series 2007-1 Rating Class CUSIP To From ----- ----- -- ---- 2A-1C2 41164MAP2 A AAA B-2 41164MAG2 BB AA B-3 41164MAH0 B AA- B-4 41164MAJ6 B- A+ B-5 41164MAK3 CCC BB+ B-6 41164MAL1 CC B MASTR Adjustable Rate Mortgages Trust 2006-OA2 Series 2006-OA2 Rating Class CUSIP To From ----- ----- -- ---- 3-A-2 55275NAL5 BB A M-1 55275NAR2 B BBB M-2 55275NAS0 CCC B M-3 55275NBA8 CCC B M-4 55275NBB6 CC CCC M-5 55275NBC4 CC CCC M-6 55275NBD2 CC CCC Merrill Lynch Alternative Note Asset Trust Series 2007-A3 Series 2007-A3 Rating Class CUSIP To From ----- ----- -- ---- M-4 59024HAJ9 CC CCC M-5 59024HAK6 CC CCC Morgan Stanley Mortgage Loan Trust 2007-11AR Series 2007-11AR Rating Class CUSIP To From ----- ----- -- ---- 1-A-1 61754VAA9 AA AAA 2-A-1 61754VAC5 BB AAA 2-A-3 61754VAE1 AA AAA 2-A-5 61754VAG6 BB AAA 2-X 61754VAL5 B AAA Washington Mutual Mortgage Pass-Through Certificates WMALT Series 2007-OA1 Trust Series 2007-OA1 Rating Class CUSIP To From ----- ----- -- ---- B-1 93935NAG9 BB BBB B-2 93935NAH7 B+ BB B-3 93935NAJ3 B BB- B-4 93935NAK0 B- B Washington Mutual Mortgage Pass-Through Certificates WMALT Series 2007-OA4 Trust Series 2007-OA4 Rating Class CUSIP To From ----- ----- -- ---- A-1C 93936MAC9 A AAA B-1 93936MAF2 BB BBB B-2 93936MAG0 B BB B-3 93936MAH8 B- BB- B-4 93936MAJ4 CCC B Washington Mutual Mortgage Pass-Through Certificates, WMALT Series 2007-OA2 Trust Series 2007-OA2 Rating Class CUSIP To From ----- ----- -- ---- CA-1B 93935QAC1 A AAA B-1 93935QAG2 BB BB+ B-2 93935QAH0 B+ BB Washington Mutual Mortgage Pass-Through Certificates, WMALT Series 2007-OC1 Trust Series 2007-OC1 Rating Class CUSIP To From ----- ----- -- ---- M-1 93936FAE0 CCC BBB M-2 93936FAF7 CC B M-3 93936FAG5 CC CCC M-4 93936FAH3 CC CCC RATINGS LOWERED AND REMOVED FROM CREDITWATCH NEGATIVE Deutsche Alt-A Securities Mortgage Loan Trust, Series 2007-OA1 Series 2007-OA1 Rating Class CUSIP To From ----- ----- -- ---- A-3 25151VAC9 BBB AAA/Watch Neg Merrill Lynch Alternative Note Asset Trust Series 2007-A3 Series 2007-A3 Rating Class CUSIP To From ----- ----- -- ---- A-1 59024HAA8 B AAA/Watch Neg A-2A 59024HAB6 BBB AAA/Watch Neg A-2B 59024HAC4 BBB AAA/Watch Neg A-2C 59024HAD2 BBB AAA/Watch Neg A-2D 59024HAE0 B AAA/Watch Neg M-1 59024HAF7 CCC BB+/Watch Neg M-2 59024HAG5 CCC BB/Watch Neg M-3 59024HAH3 CCC B/Watch Neg Morgan Stanley Mortgage Loan Trust 2007-11AR Series 2007-11AR Rating Class CUSIP To From ----- ----- -- ---- 1-A-2 61754VAB7 B AAA/Watch Neg 2-A-2 61754VAD3 B AAA/Watch Neg 2-A-4 61754VAF8 B AAA/Watch Neg 2-A-6 61754VAH4 B AAA/Watch Neg 2-A-7 61754VAJ0 BB AAA/Watch Neg 2-A-8 61754VAK7 B AAA/Watch Neg B-1 61754VAM3 CCC BB+/Watch Neg Washington Mutual Mortgage Pass-Through Certificates WMALT Series 2007-OA1 Trust Series 2007-OA1 Rating Class CUSIP To From ----- ----- -- ---- CA-1B 93935NAC8 A AAA/Watch Neg CA-1C 93935NAD6 BBB AAA/Watch Neg Washington Mutual Mortgage Pass-Through Certificates WMALT Series 2007-OA4 Trust Series 2007-OA4 Rating Class CUSIP To From ----- ----- -- ---- A-1D 93936MAD7 BBB AAA/Watch Neg Washington Mutual Mortgage Pass-Through Certificates, WMALT Series 2007-OA2 Trust Series 2007-OA2 Rating Class CUSIP To From ----- ----- -- ---- CA-1C 93935QAD9 BBB AAA/Watch Neg Washington Mutual Mortgage Pass-Through Certificates, WMALT Series 2007-OC1 Trust Series 2007-OC1 Rating Class CUSIP To From ----- ----- -- ---- A-1 93936FAA8 BBB AAA/Watch Neg A-2 93936FAB6 BBB AAA/Watch Neg A-3 93936FAC4 BBB AAA/Watch Neg A-4 93936FAD2 BBB AAA/Watch Neg A-5 93936FAS9 B AAA/Watch Neg RATINGS AFFIRMED AND REMOVED FROM CREDITWATCH NEGATIVE Washington Mutual Mortgage Pass-Through Certificates WMALT Series 2007-OA1 Trust Series 2007-OA1 Rating Class CUSIP To From ----- ----- -- ---- CX-1 93935NAE4 AAA AAA/Watch Neg CX-2-PPP 93935NAF1 AAA AAA/Watch Neg Washington Mutual Mortgage Pass-Through Certificates, WMALT Series 2007-OA2 Trust Series 2007-OA2 Rating Class CUSIP To From ----- ----- -- ---- CX-1 93935QAE7 AAA AAA/Watch Neg CX-2-PPP 93935QAF4 AAA AAA/Watch Neg RATINGS AFFIRMED Deutsche Alt-A Securities Mortgage Loan Trust, Series 2007-OA1 Series 2007-OA1 Class CUSIP Rating ----- ----- ------ A-1 25151VAA3 AAA A-2 25151VAB1 AAA M-7 25151VAK1 CCC M-8 25151VAL9 CCC GreenPoint Mortgage Funding Trust, Series 2006-AR7 Series 2006-AR7 Class CUSIP Rating ----- ----- ------ 1-A1A 39538CAA0 AAA 1-A1B 39538CAB8 AAA 1-A2A1 39538CAC6 AAA 1-A2A2 39538CAD4 AAA 1-A3A1 39538CAE2 AAA 1-A3A2 39538CAF9 AAA 1-A3B 39538CAG7 AAA 2-A1 39538CAH5 AAA 2-A2 39538CAJ1 AAA HarborView Mortgage Loan Trust 2007-1 Series 2007-1 Class CUSIP Rating ----- ----- ------ 1A-1A 41164MAA5 AAA 1A-1B 41164MAB3 AAA 2A-1A 41164MAC1 AAA 2A-1B 41164MAD9 AAA 2A-1C1 41164MAE7 AAA MASTR Adjustable Rate Mortgages Trust 2006-OA2 Series 2006-OA2 Class CUSIP Rating ----- ----- ------ 1-A-1 55275NAA9 AAA 1-A-2 55275NAB7 AAA 1-A-3 55275NAC5 AAA X-1 55275NAD3 AAA 2-A-1 55275NAE1 AAA 2-A-2 55275NAF8 AAA 2-A-3 55275NAG6 AAA X-2 55275NAH4 AAA XW 55275NAJ0 AAA 3-A-1 55275NAK7 AAA 4-A-1A 55275NAM3 AAA 4-A-1B 55275NAN1 AAA 4-A-2 55275NAP6 AAA Morgan Stanley Mortgage Loan Trust 2007-11AR Series 2007-11AR Class CUSIP Rating ----- ----- ------ B-2 61754VAN1 CCC B-3 61754VAP6 CCC Washington Mutual Mortgage Pass-Through Certificates WMALT Series 2007-OA1 Trust Series 2007-OA1 Class CUSIP Rating ----- ----- ------ 1A 93935NAA2 AAA 2A 93935NAB0 AAA B-5 93935NAL8 CCC B-6 93935NAM6 CCC B-7 93935NAN4 CCC B-8 93935NAP9 CCC B-9 93935NAQ7 CCC Washington Mutual Mortgage Pass-Through Certificates WMALT Series 2007-OA4 Trust Series 2007-OA4 Class CUSIP Rating ----- ----- ------ A-1A 93936MAA3 AAA A-1B 93936MAB1 AAA B-5 93936MAK1 CCC Washington Mutual Mortgage Pass-Through Certificates, WMALT Series 2007-OA2 Trust Series 2007-OA2 Class CUSIP Rating ----- ----- ------ 1A 93935QAA5 AAA 2A 93935QAB3 AAA B-3 93935QAJ6 B B-4 93935QAK3 CCC B-5 93935QAL1 CCC B-6 93935QAM9 CCC * S&P Says July 2008 U.S. Alt-A RMBS Delinquency on the Rise ------------------------------------------------------------ Total delinquencies have continued to increase among U.S. Alternative-A residential mortgage-backed securities transactions originally rated in 2005, 2006, and 2007, according to a recent report published by Standard & Poor's Ratings Services. As of the July 2008 distribution date, total delinquencies were 15.65%, 21.45%, and 14.56% of the aggregate pool balances for the 2005, 2006, and 2007 vintages, respectively. These figures have increased approximately 4.48% for the 2005 vintage, 6.77% for 2006, and 9.12% for 2007 since the June 2008 distribution date. Serious delinquencies (90-plus days, foreclosures, and real estate owned {REO}) have also risen since the last distribution date. As of the most recent reporting period, serious delinquencies for the 2005, 2006, and 2007 vintages were approximately 10.87%, 15.09%, and 9.66% of the current aggregate pool balances, respectively. When compared with the prior distribution date, serious delinquencies were up approximately 6.08% for the 2005 vintage, 7.86% for 2006, and 10.25% for 2007. Transactions issued in 2007 have the highest amount of cumulative losses when compared with other vintages at the same seasoning levels. After 12 months of seasoning, cumulative losses for transactions issued in 2007 represent 0.03% of the aggregate original pool balance, which is three times the amount recorded for the 2006 vintage (0.01%) at the same level of seasoning. * S&P Says July 2008 Closed-End 2nd-Lien RMBS Delinquencies Up -------------------------------------------------------------- Total delinquencies for U.S. residential mortgage-backed securities backed by closed-end second-lien collateral increased as of the July 2008 distribution date for transactions originally rated in 2007 but decreased for the 2005 and 2006 vintage transactions, according to a recent report published by Standard & Poor's Ratings Services. Total delinquencies were 13.58%, 16.42%, and 14.22% of the aggregate pool balances for the 2005, 2006, and 2007 vintages, respectively. Compared with the June 2008 distribution date, these figures were down roughly 6% for the 2005 vintage and 1% for 2006, and up 1% for 2007. Serious delinquencies (90-plus days, foreclosures, and real estate owned {REO}) decreased for the 2005 and 2006 vintages and remained flat for 2007 deals. As of the most recent reporting period, serious delinquencies for the 2005, 2006, and 2007 vintages were approximately 7.57%, 10.28%, and 8.48%, respectively. Compared with the prior distribution date, serious delinquencies declined approximately 8% for the 2005 vintage and 1% for 2006 and were unchanged for 2007. Cumulative losses for the 2005, 2006, and 2007 vintages have been increasing at average rates of approximately 7%, 11%, and 21% per month, respectively, over the past six months. As of the July 2008 distribution date, cumulative losses for the 2005, 2006, and 2007 vintages were 12.40%, 15.21%, and 11.89% of the original aggregate pool balances, respectively. Compared with the previous distribution date, cumulative losses were up approximately 2% for 2005, 6% for 2006, and 13% for 2007. * S&P Says July 2008 HELOC RMBS Delinquency Continues to Rise ------------------------------------------------------------- Total delinquency rates for U.S. home equity line of credit residential mortgage-backed securities transactions originally rated in 2005 through 2007 continued to show mixed performance as of the July 2008 distribution date, according to a recent report published by Standard & Poor's Ratings Services. Delinquencies were 10.34%, 12.72%, and 8.34% of the current aggregate pool balances for the 2005, 2006, and 2007 vintages, respectively. When compared with the June 2008 distribution date, the figures increased approximately 3.09% and 0.87% for the 2005 and 2006 vintages, respectively, but fell by 7.02% for the 2007 vintage. Serious delinquencies (90-plus days, foreclosures, and real estate owned {REO}) exhibited similar trends for these vintages. As of the July 2008 reporting period, serious delinquencies for the 2005, 2006, and 2007 vintages were approximately 6.67%, 7.83%, and 4.38% of the current aggregate pool balances, respectively. Compared with the prior distribution date, serious delinquencies increased approximately 5.21% and 3.43% for the 2005 and 2006 vintages, respectively, and declined 11.87% for the 2007 transactions. The 2007 vintage is the worst-performing issuance year in terms of cumulative losses. After 12 months of seasoning, cumulative losses for transactions issued in 2007 represent 3.99% of the aggregate original pool balance, which is 343% higher than the 0.90% recorded for the 2006 vintage at the same level of seasoning. Transactions from the 2006 vintage, which have at least 24 months of seasoning, have performed more poorly overall than prior vintages. Cumulative losses for 2006 transactions average approximately 4.09%, compared with 1.21% for the 2005 vintage. * S&P Says July 2008 Prime Jumbo RMBS Delinquency on the Rise ------------------------------------------------------------- Delinquencies for U.S. prime jumbo residential mortgage-backed securities transactions originally rated in 2005, 2006, and 2007 continue to increase, according to a recent report published by Standard & Poor's Ratings Services. As of the July 2008 distribution date, total delinquencies were 3.38%, 4.47%, and 3.22% of the current aggregate pool balances for the 2005, 2006, and 2007 vintages, respectively. These figures were up roughly 5.6% for the 2005 vintage, 13.2% for 2006, and 7.3% for 2007 when compared with the June 2008 distribution date. Serious delinquencies (90-plus days, foreclosures, and real estate owned {REO}) have also increased since the last distribution date, although each at a slower rate than in the prior month. As of the most recent reporting period, serious delinquencies for the 2005, 2006, and 2007 vintages were approximately 1.95%, 2.48%, and 1.64%, respectively. Since the June 2008 distribution date, serious delinquencies were up 6.6% for the 2005 vintage, 11.7% for 2006, and 3.1% for 2007. For all vintages but 2007, cumulative realized losses of 0.01% or more of the original pool balances haven't started to appear before the 24th month of seasoning. The 2007 vintage has cumulative realized losses of 0.01% after only 12 months of seasoning (represented only by the deals issued in January through July, which have attained this seasoning level). Transactions issued in January through July of 2006 have now performed the worst, with 0.05% in cumulative realized losses at month 24, compared with 0.02% for 2001. * S&P Says July 2008 Subprime RMBS Delinquencies Continue to Rise ----------------------------------------------------------------- Delinquencies among U.S. subprime residential mortgage-backed securities transactions originally rated in 2005, 2006, and 2007 continue to increase, according to a recent report published by Standard & Poor's Ratings Services. As of the July 2008 distribution date, total delinquencies were 38.08%, 41.72%, and 31.25% of the current aggregate pool balances for the 2005, 2006, and 2007 vintages. Delinquencies were up approximately 2% for the 2005 vintage, 4% for 2006, and 7% for 2007 when compared with the June 2008 distribution date. Serious delinquencies (90-plus days, foreclosures, and real estate owned {REO}) have also risen since the last distribution date. As of the most recent reporting period, serious delinquencies for the 2005, 2006, and 2007 vintages were approximately 28.33%, 30.27%, and 22.01% of the current aggregate pool balances, respectively. When compared with the prior distribution date, serious delinquencies have increased by approximately 3% for the 2005 and 2006 vintages and 9% for 2007. The 2007 issuance year continues to be the worst-performing vintage in terms of cumulative losses. After 12 months of seasoning, cumulative losses for transactions issued in 2007 represent 0.46% of the original aggregate pool balance, which is 60% higher than the 0.29% recorded for the 2006 vintage at the same level of seasoning. * S&P Says U.S. Consumer ABS Market Tested By Struggling Economy ---------------------------------------------------------------- Just a few months ago, it appeared that U.S. consumer asset-backed securities (ABS) were out of the woods as credit spreads tightened and public issuance increased. But that momentum has begun to slip a bit in recent weeks because of a flurry of escalating problems, according to a new report published by Standard & Poor's Ratings Services. Those problems include additional write-downs at banks, the instability of bond insurers, the deteriorating domestic auto industry, high gasoline prices, falling home values, and continuing consumer credit concerns. "For now, though, credit ratings remain relatively stable across consumer ABS asset classes, even as collateral performance deteriorates from rising losses and delinquencies. In June, Standard & Poor's placed nine auto lease ABS transactions on CreditWatch negative, largely because of the dramatic decreases in resale values for trucks and SUVs. We also placed certain of the Washington Mutual credit card ABS transactions and two auto loan ABS transactions on CreditWatch negative in June and July, respectively," S&P says. "In our view, the weakening economy and higher unemployment levels will likely test the stability of the consumer ABS sectors in the coming months," said credit analyst Mike Binz, a managing director at Standard & Poor's, in the report, which is based on an Aug. 11, 2008, teleconference with market participants to discuss credit trends in consumer ABS as well as Standard & Poor's outlook on the sector. "However, we don't expect widespread ratings volatility at this time as the consumer ABS transactions make their way through this current recessionary environment." * Spreads and CDX Widen As Defaults Continue, S&P Article Says -------------------------------------------------------------- High-yield bond spreads and the CDX index have widened considerably in recent months, said an article published by Standard & Poor's. The article, which is titled "U.S. Credit Comment: High-Yield Spreads And CDX Index Signal Higher Default Rates (Premium)," says that this reflects the heightened volatility in the credit markets and the economic uncertainty in the U.S. and globally. The U.S. speculative-grade bond spread reached 780 basis points (bps) on Aug. 18, 2008, from 757 bps at the end of July, 561 bps at the end of 2007, and only 366 at the end of August last year. "This is not surprising," noted Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "Investors have become more risk averse and are demanding a much higher premium to hold speculative-grade securities in this environment of rising delinquencies and slowing economic activity." Downgrades among U.S. speculative-grade entities have become more commonplace. Through Aug. 18, the downgrade ratio -- the percentage of downgrades to total rating actions -- reached 82% compared with the monthly average of 64% in 2007 and 73% in the first seven months of this year. In other words, more than eight out of every 10 rating actions in August has been a downgrade. Relative to market perception -- as measured by the speculative- grade spread -- the current rate of downgrades is largely in line with prevailing market sentiment based on the established trend since 1999. * S&P Sees More Downgrades for U.S. Financial Institutions ---------------------------------------------------------- More downgrades are possible for U.S. banks, which perhaps are just halfway through the credit downturn, according to Standard & Poor's Ratings Services analysts who spoke at a financial institutions quarterly teleconference Aug. 13. However, the rating actions on banks and brokerages will continue to be selective rather than broad. The analysts also pointed to some positive trends, including revenue strength, asset divestitures, capital raising, and regulatory moves. "What we're really trying to answer in our own minds is which banks are going to have the financial flexibility to deal with some fairly serious problems over the next seven to eight quarters," said Standard & Poor's credit analyst Tanya Azarchs. "Obviously, these are very unprecedented times, and so financial flexibility--in the form of the ability to raise capital and/or in the form of the ability to sell assets--is going to be paramount." Among banks rated by Standard & Poor's, 19% have either a negative outlook or are on CreditWatch with negative implications, a percentage that is "very high for us by historical standards," Ms. Azarchs said. That's up from 9% in 2007. Also, S&P's outlooks on all four of the major broker-dealers are negative. In these difficult times, banks face extremely tight liquidity conditions in the credit markets, especially in the short-term debt market. "The wild card here is that investor confidence continues to be extremely skittish," Ms. Azarchs added. Loan portfolios of the universal and regional banks are deteriorating "extremely rapidly." Since the start of 2008, Standard & Poor's rating actions for financial institutions have been overwhelmingly downgrades, mainly because of mark-to-market losses and increasingly from higher- than-expected loan losses. Although Ms. Azarchs said Standard & Poor's is still "predominantly in downgrade mode," it has raised ratings on five institutions (Northern Trust Co., Countrywide Financial Corp., Bank of New York Mellon Corp., AgFirst Farm Credit Bank, and H&R Block Inc.) since April 1, one following a merger and the other four for fundamental improvements. Revenue has also been better than expected, and capital raising, which came early in the credit downturn, has helped not just the large banks but also some of the smaller, regional banks. However, S&P expects further market dislocation, and S&P is increasingly concerned about the market for Alt-A mortgage-backed securities (loans made to consumers rated between subprime and prime), in which prices are sliding. Other concerns include further monoline-related write-downs that banks could have to take, and business volumes, which Ms. Azarchs said have held up "extremely well" during the first half of 2008 but whose future "is not so clear." The slowing economy's effect on the credit downturn and continued stress in the consumer sector could also further worsen some of the credit losses banks will likely face, she said. Liquidity has continued to improve. For broker-dealers, one important development during the second quarter was the Federal Reserve's extension of the primary dealer credit facility through January 2008. Standard & Poor's credit analyst Victoria Wagner also noted that the 'AAA' ratings and stable outlooks on mortgage guarantors Fannie Mae and Freddie Mac reflect even stronger explicit U.S. government support, given new laws that create a liquidity backup plan, and expanded mortgage powers for the two government-sponsored enterprises. The legislation is "a positive for creditors in that it defines better the regulatory structure," Ms. Wagner said. "It also introduces the type of regulation we see for commercial banks-- receivership powers, where you can clearly have more subordination risk for investors in preferred stock and subordinated debt." However, the real issue through the first quarter of 2009 will be reserve building, Ms. Azarchs said. New accounting guidelines require that reserve levels rise as asset quality continues to deteriorate. The guidelines will exacerbate the provision requirements to cover higher charge-offs; Standard & Poor's expects these to increase. To be sure, the credit downturn has affected banks and brokerages' earnings unevenly. Brokers' underlying business activity has been "something of a positive surprise during the past two months," said Standard & Poor's credit analyst Scott Sprinzen. Excluding the effect of write-downs, investment banking and trading have been weak but not as bad as they could have been given the extent of market turmoil. Another positive is that the four major U.S. broker-dealers (Goldman Sachs Group Inc., Lehman Brothers Holdings Inc., Merrill Lynch & Co. Inc.,and Morgan Stanley) were also able to divest about $400 billion in assets collectively during the second quarter, even excluding Merrill Lynch's subsequent $30 billion transaction. One of the few bright spots for the banking sector has been the raising of capital roughly in line with the amount of net losses through both common stock and hybrid capital issuance. Although hybrid issuance has declined during the past month and spreads have widened, "there's still capacity in that market for additional capital-raising activity," Mr. Sprinzen said. However, regional banks' ability to continue raising capital remains in question. The analysts also mentioned some other areas of concern, including the continued deterioration of prime loans, among which charge- offs are now an unprecedented greater than 1% for some banks, and weakness in construction lending, which is extremely important for the smaller regional banks. Credit cards are also problematic, approaching the peak losses of 1997 and 2002. But Standard & Poor's doesn't expect levels to rise much higher than that because lending criteria for credit cards didn't get as loose as they did for mortgages. "What is disturbing is that the receivables are growing," said Ms. Azarchs. "What that says is that, with the home equity spigot having been turned off for consumers, their only recourse is credit card debt to keep themselves going. That perhaps spells trouble for the future and could serve to help keep charge-offs building." It's just another reason that no one is breathing much easier yet in the banking sector. * S&P Says 1/4 of High-Yield Issues Trading at Distressed Levels ---------------------------------------------------------------- Following on the heels of last month's 10% increase, the Standard & Poor's distress ratio has advanced again to 24.8%, said the ratings firm in an article. Distressed credits are speculative-grade rated issues that have option-adjusted spreads of more than 1,000 basis points relative to Treasuries. The article, which is titled "U.S. Distressed Debt Monitor: Distress Ratio Advances To Nearly 25% In August (Premium)," says that in the year to date, the distress ratio has expanded nearly 19% from December's level. The distress ratio is at its highest level since March 2003, and the 12-month moving average has hit 13.8%. This increase runs alongside the recent rise in speculative-grade spreads, which were at 780 bps on Aug. 15 from 763 bps a month earlier. By debt volume, the finance companies and media and entertainment sectors take the lead, each accounting for just under $100 billion (60.4%) of the total. "When looking at the distress ratio based on outstanding debt, the finance savings and loan sector is at a stratospheric high of 91.8%," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "This means that nearly 92% of the speculative-grade debt in this sector is attributable to companies trading at distressed levels." It should be noted that only five issues attributable to three firms within this sector possess speculative-grade ratings. Overall, the composition of this month's distress list is little changed from July. Most sectors have maintained their relative contribution to the overall count of distressed issues, with the largest increase (1.5% of the total) belonging to the finance company sector and the largest decrease (only 1%) in the automotive sector. * US Not-For-Profit Health Care Sector's Credit Quality Slipping ---------------------------------------------------------------- Credit quality in the U.S. not-for-profit health care sector has continued to deteriorate in the past six months, Standard & Poor's Ratings Services said in a report. Due to the sector's weakened financial metrics, there has been an increase in negative rating changes and outlooks in the first half of this year, especially for lower-rated credits, from a year earlier. "We expect the number of downgrades to exceed upgrades for the rest of 2008 and probably in 2009, as business and financial challenges squeeze operating margins and weaken balance sheets," said Standard & Poor's credit analyst Martin Arrick. "The excess of downgrades to upgrades will likely be concentrated among lower-rated credits, although strong credits are not fully immune from the downward draft," said Mr. Arrick in the report, "Tough Times Take A Toll On Credit Quality Of U.S. Not-For-Profit Health Care Sector." "We generally expect rating stability for the 'AA' and 'A' categories, given that many top providers, including the large health systems, are thriving," he said. Standard & Poor's rates 138 not-for-profit health-care systems and 470 stand-alone hospitals. * S&P Takes Ratings Action on Various U.S. Synthetic CDO Deals -------------------------------------------------------------- Standard & Poor's Ratings Services took these rating actions on various U.S. synthetic collateralized debt obligation (CDO) transactions: -- S&P lowered 23 ratings, nine of which remain on CreditWatch with negative implications, while S&P removed 14 from CreditWatch negative; and -- S&P raised four ratings and removed them from CreditWatch positive. "We reviewed the ratings that we had previously placed on CreditWatch to determine the appropriate rating action. If the synthetic rated overcollateralization (SROC) ratio was lower than 100% at the current date and at a 90-day-forward projected date, we lowered the rating on the tranche. If the SROC ratio was lower than 100% at the current date at the lower rating level and above 100% at a 90-day-forward projected date, we lowered the rating on the tranche and left it on CreditWatch negative. For the raised ratings, if the SROC ratio was above 100% at its current rating level and at or above 100% at the next highest rating level, we raised the rating to the next highest rating level," S&P says. RATINGS LIST Alta CDO SPC Series 2007-1 2007-1 Rating Class To From ----- -- ---- A BBB+ A-/Watch Neg Credit Default Swap Swap Risk Rating - Protection Buyer, CDS Reference # Torino II Rating Class To From ----- -- ---- Tranche BBB-srb BBB+srb/Watch Neg Infiniti SPC Limited 2007-4 Rating Class To From ----- -- ---- B A- AA/Watch Neg Lehman Brothers Treasury Co. B.V. US$4,000,000 Inflation-Linked and Credit-Linked Variable Interest Notes Rating Class To From ----- -- ---- Notes BBB/Watch Neg A/Watch Neg Mint 2005-1 Ltd. Rating Class To From ----- -- ---- D-1 A-/Watch Neg A/Watch Neg D-2 A-/Watch Neg A/Watch Neg Morgan Stanley ACES SPC 2007-17 Rating Class To From ----- -- ---- IA AA AAA/Watch Neg Morgan Stanley Managed ACES SPC Series 2007-1 Rating Class To From ----- -- ---- IIA AA AAA/Watch Neg IIIA A+ AAA/Watch Neg Morgan Stanley Managed ACES SPC Series 2007-5 Rating Class To From ----- -- ---- IIA AA/Watch Neg AAA/Watch Neg III SrB A+/Watch Neg AAA/Watch Neg IIIA A- BBB+/Watch Pos IIIF A- BBB+/Watch Pos IIIH A- BBB+/Watch Pos IIIJ A- BBB+/Watch Pos Morgan Stanley Managed ACES SPC 2007-8 Rating Class To From ----- -- ---- IIA AA/Watch Neg AAA/Watch Neg Morgan Stanley Managed ACES SPC 2007-6 Rating Class To From ----- -- ---- IIB Float AA AAA/Watch Neg IIISrDFloa A+ AAA/Watch Neg Morgan Stanley Managed ACES SPC 2007-9 Rating Class To From ----- -- ---- IIA AA/Watch Neg AAA/Watch Neg Morgan Stanley Managed ACES SPC 2007-4 Rating Class To From ----- -- ---- IIA A-/Watch Neg AA-/Watch Neg Morgan Stanley Managed ACES SPC 2007-10 Rating Class To From ----- -- ---- IIA AA AAA/Watch Neg IIIA A+ AA+/Watch Neg PARCS Master Trust 2006-9 Rating Class To From ----- -- ---- TrustUnits AA- AAA/Watch Neg PARCS Master Trust 2006-8 TRIPOLI Rating Class To From ----- -- ---- Trust Unit A- AAA/Watch Neg PARCS Master Trust 2007-3 CALVADOS Rating Class To From ----- -- ---- Trust Unit A-/Watch Neg A/Watch Neg PARCS Master Trust 2007-8 CALVADOS Rating Class To From ----- -- ---- Trust Unit A+ AA-/Watch Neg Seawall 2007-1 Ltd Rating Class To From ----- -- ---- E-2 B+ BB-/Watch Neg * 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 Morgan Brown Executive Center, Inc. aka Brown Investments, Inc. Bankr. D. Tenn. Case No. 08-28403 Chapter 11 Petition filed August 19, 2008 Filed as Pro Se In Re Building Loving Hands Inc Bankr. C.D. Ca. Case No. 08-20655 Chapter 11 Petition filed August 19, 2008 See http://bankrupt.com/misc/cacb08-20655.pdf In Re YUR Construction Co., Inc. aka UR Construction Co. Bankr. E.D. La. Case No. 08-12013 Chapter 11 Petition filed August 20, 2008 Filed as Pro Se In Re Olawunmi Hassan Bankr. N.D. Ca. Case No. 08-54568 Chapter 11 Petition filed August 20, 2008 Filed as Pro Se In Re Richard James Lipari Bankr. E.D. Ca. Case No. 08-31637 Chapter 11 Petition filed August 20, 2008 Filed as Pro Se In Re Sunbeam Realty Inc Bankr. E.D. N.Y. Case No. 08-45455 Chapter 11 Petition filed August 20, 2008 Filed as Pro Se In Re Masreld Investor Group LLC aka Phyllis Ann Bennett Hunt Bankr. M.D. Fla. Case No. 08-07262 Chapter 11 Petition filed August 20, 2008 Filed as Pro Se In Re A Gentlemen's Cut LLC Bankr. W.D. Ky Case No. 08-3365 Chapter 11 Petition filed August 20, 2008 See http://bankrupt.com/misc/kywb08-3365.pdf In Re Bayamon Shopping Center Inc. Bankr. D. P.R. Case No. 08-05387 Chapter 11 Petition filed August 20, 2008 See http://bankrupt.com/misc/prb08-05387.pdf In Re D and M Commercial Plumbing, Inc. Bankr. W.D. Wash. Case No. 08-44078 Chapter 11 Petition filed August 20, 2008 See http://bankrupt.com/misc/wawb08-44078.pdf In Re Falcon Shoe Mfg. Co. Bankr. D. Mass. Case No. 08-16200 Chapter 11 Petition filed August 20, 2008 See http://bankrupt.com/misc/mab08-16200.pdf In Re G&B Trucking Corporation Bankr. D. Mass. Case No. 08-16225 Chapter 11 Petition filed August 20, 2008 See http://bankrupt.com/misc/mab08-16225.pdf In Re James C. Hosale, Sr. and Janet M. Hosale dba Cliff's Plumbing Company Bankr. M.D. Tenn. Case No. 08-07393 Chapter 11 Petition filed August 20, 2008 See http://bankrupt.com/misc/tnmb08-07393.pdf In Re Nab Basu Inc dba Amadeus Cafe Bankr. D. P.R. Case No. 08-05380 Chapter 11 Petition filed August 20, 2008 See http://bankrupt.com/misc/prb08-05380.pdf In Re Red Oak Winery, LLC Bankr. D. Mass. Case No. 08-16222 Chapter 11 Petition filed August 20, 2008 See http://bankrupt.com/misc/mab08-16222.pdf In Re Advanced Chimney Inc. Bankr. E.D. N.Y. Case No. 08-74464 Chapter 11 Petition filed August 20, 2008 See http://bankrupt.com/misc/nyeb08-74464.pdf In Re Kelsep, Inc. Bankr. D. Ariz. Case No. 08-10825 Chapter 11 Petition filed August 20, 2008 See http://bankrupt.com/misc/azb08-10825.pdf In Re Mt. Zion Pentecostal Holiness Church Inc. Bankr. E.D. N.Y. Case No. 08-45449 Chapter 11 Petition filed August 20, 2008 See http://bankrupt.com/misc/nyeb08-45449.pdf In Re The Mattress Warehouse Plus, Inc. Bankr. E.D. Mich. Case No. 08-33370 Chapter 11 Petition filed August 20, 2008 See http://bankrupt.com/misc/mieb08-33370.pdf In Re Divine Will of God Ministries Bankr. E.D. Va. Case No. 08-34004 Chapter 11 Petition filed August 21, 2008 Filed as Pro Se In Re John M. MacLeod dba Village Crossing Realty Trust dba JMI Bankr. D. Mass. Case No. 08-16229 Chapter 11 Petition filed August 21, 2008 Filed as Pro Se In Re Marcus Powell Cake aka Marc. Cake Bankr. E.D. N.C. Case No. 08-05646 Chapter 11 Petition filed August 21, 2008 Filed as Pro Se In Re California Elite Realty aka Elit Realty of California Bankr. C.D. Ca. Case No. 08-23260 Chapter 11 Petition filed August 21, 2008 Filed as Pro Se In Re 8009 Lake Road Holdings, Ltd. Bankr. N.D. Ohio. Case No. 08-16432 Chapter 11 Petition filed August 21, 2008 See http://bankrupt.com/misc/ohnb08-16432.pdf In Re Alan Dale Miller and Paula Kay Miller Bankr. D. Idaho Case No. 08-01795 Chapter 11 Petition filed August 21, 2008 See http://bankrupt.com/misc/idb08-01795.pdf In Re ER Entertainment, LLC Bankr. D. Maine Case No. 08-20982 Chapter 11 Petition filed August 21, 2008 See http://bankrupt.com/misc/meb08-20982.pdf In Re Masjid Omar aka Omar Masjid Bankr. W.D. Mo. Case No. 08-43451 Chapter 11 Petition filed August 21, 2008 See http://bankrupt.com/misc/mowb08-43451.pdf In Re Oak Tree Learning Center, Inc Bankr. W.D. Okla. Case No. 08-13611 Chapter 11 Petition filed August 21, 2008 See http://bankrupt.com/misc/okwb08-13611.pdf In Re Pamela D Cowell dba Mt. Tahoma Gynecology and Obstetrics Bankr. W.D. Wash. Case No. 08-44115 Chapter 11 Petition filed August 21, 2008 See http://bankrupt.com/misc/wawb08-44115.pdf In Re United States Seamless of Western North Dakota, LLC Bankr. D. N.D. Case No. 08-30834 Chapter 11 Petition filed August 21, 2008 See http://bankrupt.com/misc/ndb08-30834.pdf In Re William Ralph Thompson and Jean Thompson Bankr. D. Ariz. Case No. 08-10981 Chapter 11 Petition filed August 22, 2008 Filed as Pro Se In Re Thomas P. Hutchinson Bankr. D. Md. Case No. 08-20703 Chapter 11 Petition filed August 22, 2008 Filed as Pro Se In Re Creekside Village LLC Bankr. C.D. Ca. Case No. 08-2331 Chapter 11 Petition filed August 22, 2008 See http://bankrupt.com/misc/cacb08-2331.pdf In Re Great Basin Internet Services, Inc. Bankr. D. Nev. Case No. 08-51489 Chapter 11 Petition filed August 22, 2008 See http://bankrupt.com/misc/nvb08-51489.pdf In Re Station 81 Holdings, LLC dba The Vault Ultra Lounge Bankr. N.D. Ca. Case No. 08-54647 Chapter 11 Petition filed August 22, 2008 See http://bankrupt.com/misc/canb08-54647.pdf In Re E'Delano Damone Craine aka CM Chartermark Financial Corporation Bankr. S.D. Tex. Case No. 08-35452 Chapter 11 Petition filed August 22, 2008 See http://bankrupt.com/misc/txsb08-35452.pdf In Re Inflatable Dome, LLC Bankr. W.D. N.C. Case No. 08-10662 Chapter 11 Petition filed August 22, 2008 See http://bankrupt.com/misc/ncwb08-10662.pdf In Re Sogda, LLC Bankr. D. Md. Case No. 08-20717 Chapter 11 Petition filed August 22, 2008 See http://bankrupt.com/misc/mdb08-20717.pdf In Re Aerobics Fitness Gallery, Inc. Bankr. D. P.R. Case No. 08-05451 Chapter 11 Petition filed August 22, 2008 See http://bankrupt.com/misc/prb08-05451.pdf In Re Robert Louis Xifaras aka Mr. X Bankr. D. Mass. Case No. 08-16324 Chapter 11 Petition filed August 25, 2008 Filed as Pro Se In Re Carl Everett Thompson, Jr. and Jeanie Voncille Thompson dba Thompson Engineering Group, LLC Bankr. E.D. Tenn. Case No. 08-14298 Chapter 11 Petition filed August 25, 2008 See http://bankrupt.com/misc/tneb08-14298.pdf In Re DPF Financial Holding, LLC Bankr. D. Conn. Case No. 08-21616 Chapter 11 Petition filed August 15, 2008 See http://bankrupt.com/misc/cnb08-21616.pdf In Re Gioni Brothers Inc. dba Italian Inn Bankr. D. Md. Case No. 08-20838 Chapter 11 Petition filed August 25, 2008 See http://bankrupt.com/misc/mdb08-20838.pdf In Re The Finish Crew, Inc. Bankr. W.D. Wash. Case No. 08-15424 Chapter 11 Petition filed August 25, 2008 See http://bankrupt.com/misc/wawb08-15424.pdf In Re Flora Fong Ng aka Flora N. Fong aka N. Flora Fong Bankr. N.D. Ca. Case No. 08-54744 Chapter 11 Petition filed August 26, 2008 Filed as Pro Se In Re Spa Island Enterprises, Inc. Bankr. D. R.I. Case No. 08-12615 Chapter 11 Petition filed August 26, 2008 Filed as Pro Se In Re Under Par Properties, LLC Bankr. D. Utah Case No. 08-25647 Chapter 11 Petition filed August 26, 2008 Filed as Pro Se In Re Baileyville 2 Incorporated Bankr. D. Ariz. Case No. 08-11128 Chapter 11 Petition filed August 26, 2008 See http://bankrupt.com/misc/azb08-11128.pdf In Re Baileyville Incorporated Bankr. D. Ariz. Case No. 08-11127 Chapter 11 Petition filed August 26, 2008 See http://bankrupt.com/misc/azb08-11127.pdf In Re Hurri of Jax, LLC dba Hurrycab dba Jaguar Cab dba Gecko Cab Bankr. M.D. Fla. Case No. 08-05048 Chapter 11 Petition filed August 26, 2008 See http://bankrupt.com/misc/flmb08-05048.pdf In Re Amopetrol Corporation Bankr. S.D. Fla. Case No. 08-22138 Chapter 11 Petition filed August 26, 2008 See http://bankrupt.com/misc/flsb08-22138.pdf In Re Villages of the Reserve Group, LLC Bankr. M.D. Tenn. Case No. 08-07616 Chapter 11 Petition filed August 26, 2008 See http://bankrupt.com/misc/tnmb08-07616.pdf In Re YGIAGAM, LLC Bankr. E.D. Va. Case No. 08-34108 Chapter 11 Petition filed August 26, 2008 See http://bankrupt.com/misc/vaeb08-34108 In Re Harvey Marine, Inc. dba Harbor Bay Marina Bankr. E.D. Mich. Case No. 08-22522 Chapter 11 Petition filed August 26, 2008 See http://bankrupt.com/misc/mieb08-22522.pdf In Re Odessa Group, LLC Bankr. D. S.C. Case No. 08-05166 Chapter 11 Petition filed August 26, 2008 See http://bankrupt.com/misc/csb08-05166.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. Sheryl Joy P. Olano, 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 ***