/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/081105.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, November 5, 2008, Vol. 12, No. 264 Headlines ADVANCE FOOD: Poor Credit Measures Cue S&P to Slash Rating to 'B' ADVANTA CORP: Fitch Keeps 'BB-' IDR; Revises Outlook to Negative ADVANTA CORP: S&P Lowers Ratings to 'B+' From 'BB-' AFC ACQUISITION: Case Summary & 20 Largest Unsecured Creditors AFC ACQUISITION: Files for Chapter 11 Bankruptcy in California ALITALIA-LINEE: Chapter 15 Case Summary ALL STATE PINAL IX: Case Summary & Six Largest Unsecured Creditors ALL STATE PINAL XIV: Case Summary & 7 Largest Unsecured Creditors AMERICAN INTERNATIONAL: 11% Owners Want $85B Fed Loan Restructured APRIA HEALTHCARE: S&P Cuts Rating to 'BB-' on Blackstone Sale ARACRUZ CELULOSE: Fitch Downgrades Credit Ratings to 'BB-' ASAT HOLDINGS: April 30 Balance Sheet Upside-Down by $105MM AXS-ONE INC: September 30 Balance Sheet Upside-Down by $13.4MM BALDOR ELECTRIC: S&P Affirms 'BB-' Rating; Outlook Negative BEAR STEARNS TRUST: S&P Affirms 'B' on Classes O, P & Q Certs. BOSCOV'S INC: Selling Most Assets to Boscov/Lakin Families BRADKEN INC: S&P CC Rating Raised to 'B+' From 'B' BROOKE CAPITAL: Holding Co. Buyer Backs Out; 70 Workers Fired BRUGNARA PROPERTIES: Files for Chapter 11 in San Francisco BTWW RETAIL: Case Summary & 20 Largest Unsecured Creditors BTWW RETAIL: Chapter 11 Filing Blames Financial Crisis CANYON CAPITAL: S&P Affirms 'BB' Rating of Class D Securities CAPCO ENERGY: Committee Protests $800K Sale of Mineral Assets CARBONE COS: Gets Court's Final Approval to Use Cash Collateral CD 2007-CD5: S&P Affirms 'B' Ratings on Classes O, P & Q Certs. CGCMT 2007-C6: Fitch Affirms B Ratings on Classes O, P & Q Certs. CHESAPEAKE CORP: Gets Forbearance for $250MM Loan Until Dec. 10 CHRYSLER LLC: Sales Drop 35% to 94,530 Vehicles in October CITIGROUP COMMERCIAL: S&P Keeps Mortgage Trust Rtngs on 28 Classes COBALT CMBS: Fitch Cuts Ratings on 3 Certs. Classes to 'B+' COMSTOCK HOMEBUILDING: Receives Notice of Nasdaq Non-Compliance CREDIT SUISSE TRUST: Fitch Junks Ratings on Two 2007-C1 Classes CSMC MORTGAGE: S&P Strikes 'B' Ratings on 58 Securities Classes DANKA BUSINES: DCML LLC Balks At Board for Snub of Nominees DELTA AIR: S&P Affirms 'B' Ratings Following Northwest Merger DLJ COMMERCIAL: Fitch Junks Rating on Class B-8 Certificates EMERGENCY MEDICAL: S&P Hikes Corp. Credit Rating to 'BB-' EMISPHERE TECH: Names Patrick Osinski as Acting General Counsel EVA-TONE INC: Case Summary & 20 Largest Unsecured Creditors EVA-TONE INC: Landlord Dispute Prompts Chapter 11 Filing FORD MOTOR: Car & Light-Truck Sales Drop 30% From 2007 FRONTIER AIRLINES: Court Scraps CBA with Teamsters Mechanics FRONTIER AIRLINES: Transportation Workers Union Ratifies New CBA GENERAL GROWTH: Inks Interim Deals with CEO and President GENERAL MOTORS: GMAC's Credit Tightening Affects Firm's Sales GS MORTGAGE: Fitch Cuts Ratings of Three 2007-GG10 Classes to 'B' HARBOURVIEW CDO III: S&P Cuts Class A Rating to 'CCC'; Watch Neg HOVNANIAN ENTERPRISES: Fitch Says Debt Exchange Offer Good Move HVHC INC: S&P Raises Sr. Secured Debt Rating A Notch to 'BB+' HYDROGEN LLC: Bankruptcy Filing Cues Nasdaq to Delist Stocks IDEARC INC: S&P Cuts Rating to 'B-' From 'B+'; on Watch Negative INTEREP NAT'L: Trustee Continues Operations Despite Chapter 7 JPMORGAN CHASE TRUST: S&P Holds 'B' on Classes P, Q & T Certs. LAND RESOURCE: Bankruptcy May Affect Roaring River Project LAS VEGAS SANDS: S&P Cuts Rating to 'B'; Stays at Watch Neg LBREP/L-SUNCAL: Court Denies Chapter 7 Conversion LEHMAN BROTHERS: Faces Suit from Protected Notes Investors LEHMAN BROTHERS: Wants Add'l Employees During Wind-Down LEVITZ FURNITURE: Court Coverts Cases to Chapter 7 Liquidation LINK RECREATIONAL: Files for Chapter 11 Protection in St. Paul MEDCOMSOFT INC: Board OKs Hiring of Trustee for Possible BIA MERGE HEALTHCARE: Sept. 30 Balance Sheet Upside-Down by $6.8MM METALDYNE CORP: Defaults on Interest Dues, Mulls Prepackaged Plan ML-CFC COMMERCIAL: Fitch Cuts Ratings on Classes L, M & N to 'B' ML-CFC COMMERCIAL: Fitch Cuts Ratings on Classes K, L & N to 'B' MORGAN STANLEY: Fitch Affirms 'BB' Ratings on Classes J, K & L MORGAN STANLEY: Fitch Holds B Ratings on Classes M, O & P Certs. NALCO COMPANY: Fitch Revises Outlook to Stable; Affirms 'B' IDR NATIONAL CITY: Peter Raskind to Leave Co. Upon Close of Merger NORTHWEST AIRLINES: S&P Affirms 'B' Rating Following Delta Merger PARMALAT SPA: UBS AG Agrees to Pay EUR500,000 Fine PHOENIX COS: S&P Lowers Counterparty Credit Rating to 'BB+' POLYPORE INTERNAT'L: S&P Keeps 'B' Ratings; Outlook Stable RIVERGREEN BANK: Weiss Ratings Assigns "Very Weak" E- Rating SEMGROUP ENERGY: Received Subpoena from SEC Over Parent's CH. 11 SEMGROUP LP: Gets Lenders' OK for White Cliffs Auction by Dec. 15 SOUTHEAST WAFFLES: Won't Have Examiner But to Get CRO STANDARD STEEL: S&P Affirms 'B+' Corp. Credit Rating; Outlook Neg STORM CAT: Defaults Qrtrly Payments; Picks Turnaround Firm A&M SUNCAL COS: Judge Prefers Liquidation for Suncal/Lehman Properties SUNBELT GRAIN: Court Awards Farmer Proceeds From Grain Sale SWANSEA PROPERTIES: Ct. Okays Wood Family Settlement with J. Rose TARRAGON CORP: Bankruptcy Looming; Inks Forbearance Agreement TOWERS OF CHANNELSIDE: Wachovia to Structure New Loan for Firm TRANSMERIDIAN EXPLORATION: Exchange of $290MM Sr. Notes Approved TREASURE ISLAND CLUB: Files for Chapter 11 In Tampa, Florida UNIFI INC: Posts $676,000 Net Loss in Quarter ended Sept. 28 US SHIPPING: S&P Affirms 'CCC' Ratings After Covenant Relief VALUE CITY: Tells Court of Plans to Close 66 More Stores VERASUN ENERGY: Can Use Cash Collateral on Interim Basis VERASUN ENERGY: Gets Initial OK to Access $40-Mil. DIP facility VERASUN ENERGY: Lack of Funding Delays Startup of Biorefinery VERTIS COMMS: Gets $250 Mil. Credit Facility From GE Commercial VONAGE HOLDINGS: Intends to Cure NYSE Listing Non-Compliance WASHINGTON MUTUAL: Restricts Equity Trades for NOLs; FDIC Opposes WHITEHALL JEWELERS: Selling Jewelry Inventory at 50%-70% Discount X-RITE INC: OEPX, Et Al, Disclose Ownership of 28.5MM Shares X-RITE INC: Secures $155 Million Financing from OEPX LLC X-RITE INC: Three Board Members Get Committee Appointments ZVUE CORP: 3 Directors Disclose Ownership of 50,000 Shares * Fitch Says Unemployment Stoking U.S. Auto ABS Losses * Fitch Says US Timeshare ABS Year-Over-Year Defaults Up * Fitch Says Loan Term Changes to Cushion Impact on Subprime ARMs * S&P Corrects 16 Ratings on Five U.S. Alt-A RMBS Transactions * S&P Corrects Ratings on 2006-28CB, 2006-5T2 Alt Loan Trust * Upcoming Meetings, Conferences and Seminars ********* ADVANCE FOOD: Poor Credit Measures Cue S&P to Slash Rating to 'B' ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Enid, Oklahoma-based Advance Food Co. to 'B' from 'B+'. At the same time, S&P lowered all of S&P's existing issue-level ratings on the company by one notch. The outlook is negative. As of Sept. 27, 2008, the company had about $238 million of total debt, excluding operating lease obligations. "The downgrade is based on weaker-than-anticipated credit measures hat are below previous expectations, as a weak economic environment, commodity cost inflation, and delays in recognizing expected cost savings from a new manufacturing facility have negatively affected profitability," noted Standard & Poor's credit analyst Rick Joy. "The company remains highly leveraged following the debt issuance in March 2007 to finance a new manufacturing facility and a shareholder dividend," he continued. The speculative-grade ratings on Advance Food reflect the company's highly leveraged capital structure and aggressive financial policy. Advance Food's high customer and supplier concentration, and narrow business focus contribute to the company's vulnerable business risk position, despite its leading position in its niche markets and existing long-term relationships with its distributors. The outlook is negative. S&P could lower the ratings if operating performance and credit measures weaken further, and/or if the company fails to maintain sufficient headroom on its financial covenants. Alternatively, S&P could revise the outlook to stable if Advance Food achieves desired cost savings from its new manufacturing facility and other cost-reduction efforts, and reduces leverage to 5.5x or below, while restoring at least 15% cushion on its financial covenant. S&P believes Advance Food could achieve this goal through a 3% increase in sales and a 150- basis-point improvement in EBITDA margins, via its cost-saving initiatives and by realizing expected cost savings from its new manufacturing facility. ADVANTA CORP: Fitch Keeps 'BB-' IDR; Revises Outlook to Negative ---------------------------------------------------------------- Fitch Ratings has affirmed the long-term Issuer Default Rating (IDR) and outstanding debt ratings of Advanta Corp. and Advanta Bank Corp.: Advanta Corp: --Long-term IDR at 'BB-'; --Short-term IDR at 'B'; --Senior unsecured at 'BB-' Advanta Bank Corp. --Long-term IDR at 'BB-'; --Short-term IDR at 'B'; --Long-term deposits at 'BB'. Advanta Capital Trust I --Trust preferred stock at 'B'. Fitch has also revised Advanta's Rating Outlook to Negative from Stable. Approximately $2.3 billion of debt and deposits is affected by this action. The rating affirmation reflects Advanta's market position in the small business credit card industry, adequate risk-adjusted capitalization for the rating category, and ample balance sheet liquidity in the form of cash, fed funds, and available for sale securities. Rating constraints include the highly competitive small business credit card sector and the risks associated with a lack of revenue diversity and a monoline business focus. The Negative Outlook reflects significant deterioration in portfolio credit quality and profitability resulting from weakening economic conditions and a general reduction in credit availability for cardholders. While a decline in managed receivables has reduced Advanta's funding needs in 2008, the shrinking portfolio has inflated loss metrics and contributed to reduced profitability. The cash flow generated from the shrinking portfolio, however, should allow the company to refinance maturing asset-backed securities (ABS) debt on-balance sheet, thereby reducing its need to access the capital markets over the intermediate-term. Balance sheet liquidity, defined as cash, fed funds sold, and available for sale securities, amounted to approximately $1.8 billion as of Sept. 30, 2008, or approximately 23% of managed assets. Fitch does not believe Advanta will pursue third-party capital injections or an acquisition, but expects Advanta to maintain its operating independence, given its family-owned, dual-class structure. Negative rating action could result from continued asset quality deterioration, a reduction in regulatory capital ratios, or a failure to return to sustained profitability within the outlook period. ADVANTA CORP: S&P Lowers Ratings to 'B+' From 'BB-' --------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term counterparty credit rating on Advanta Corp. (Advanta) to 'B+' from 'BB-' and its long-term counterparty credit rating on Advanta's operating subsidiary, Advanta Bank Corp. (ABC), to 'BB-' from 'BB'. The outlook remains negative. "The downgrades reflect material deterioration in Advanta's asset quality and profitability, and, to a lesser extent, concerns regarding its historical reliance on the asset-backed securities (ABS) market for funding," said Standard & Poor's credit analyst Rian Pressman. Advanta's asset quality has declined as worsening economic conditions pressure the company's small business clients. For the three months ended Sept. 30, 2008, annualized net charge-offs (NCOs), as a percentage of average managed receivables, equaled 10% -- up significantly from 8.4% in second-quarter 2008 and 3.87% in third-quarter 2007. This was worse than S&P had expected. Profitability has also been weakened by the deterioration in Advanta's asset quality. For the quarter ended Sept. 30, 2008, Advanta lost $17.6 million, driven in large part by a $19.6 million valuation charge against retained interests and a $6.2 million credit provision. Nonrecurring gains and losses were also significant factors: a $14 million charge to accrue for certain rewards programs was offset by a $5.4 million gain on the sale of MasterCard shares. Advanta's historical reliance on the ABS market for funding continues to be a concern. However, the company's liquidity and capital positions currently remain adequate. As a consequence of severe credit market dislocation, Advanta access to the ABS market has been limited, with only minimal issuance in 2008. (Advanta last issued ABS securities in June 2008; however, the entire issue was retained by the company.) In response, Advanta has curtailed managed receivables growth and bolstered other sources of liquidity. Managed receivables dropped 8% on a sequential quarter basis to $5.6 billion, reflecting tightening credit standards on current and prospective clients (less than 20,000 new accounts were originated in the quarter) and lower transaction activity. In addition to using cash from its shrinking managed receivables portfolio to fund operations, Advanta has successfully increased deposit-taking activities at ABC. Liquidity is also provided by Advanta's substantial cash and investment portfolio, which totaled more than $1.8 billion or about 30% of managed receivables as of Sept. 30, 2008. Lastly, Advanta has access to nearly $400 billion in off-balance-sheet conduit lines (of which only $25 million was drawn at quarter-end) and the Federal Reserve Discount Window. The negative outlook reflects deteriorating economic conditions and the effect this is having on Advanta's small business borrowers and profitability. It also reflects current credit market conditions, which have rendered the ABS markets cost prohibitive for certain issuers. S&P could lower the rating because of a combination of constraining factors beyond what S&P currently anticipate: further asset quality deterioration; funding capacity issues; cash-trapping in Advanta's revolving securitization trust; additional material net losses; and a significant deterioration in capital. S&P could revise the outlook back to stable if Advanta can successfully navigate difficult economic and credit market conditions, while maintaining adequate profitability, liquidity, and capital -- all supportive of its ratings. AFC ACQUISITION: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: AFC Acquisition Corp. 3535 Menaul Boulevard, NE Albuquerque, NM 87107-1817 Bankruptcy Case No.: 08-28517 Type of Business: Based in Albuquerque, New Mexico, the Debtor operates the American Home chain of furniture stores. See: http://www.americanhome.com/ Chapter 11 Petition Date: November 2, 2008 Court: Central District Of California (Los Angeles) Judge: Barry Russell Debtor's Counsel: David S. Kupetz, Esq. dkupetz@sulmeyerlaw.com Sulmeyer Kupetz 333 S. Hope St. 35th Fl. Los Angeles, CA 90071 Tel: (213) 626-2311 Estimated Assets: $10 million to $50 million Estimated Debts: $1 million to $10 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Simmons trade debt $659,258 Attn: Scott McKenna 17850 East 32nd Place Aurora, CO 80011 Tel: (303) 340-5796 Lane Furniture Industries Inc. trade debt $621,149 P.O. 536823 Atlanta, GA 30353 Tel: (662) 566-3189 Albuquerque Publishing trade debt $412,728 Company P.O. Box J-T Albuquerque, NM 87103 Tanager Company trade debt $334,096 Wal-Mart Stores East LP trade debt $228,379 Willis of Arizona Inc. trade debt $220,305 Aspen Furniture LLC trade debt $199,846 Obeetee Inc. trade debt $189,786 Hillcraft Furniture trade debt $183,945 Barcalounger - Import trade debt $178,355 Flexsteel Industries trade debt $159,210 BJI International trade debt $153,139 American Furniture Mfg. trade debt $141,605 Artextport trade debt $136,897 Thornwood Furniture trade debt $129,655 Wynwood trade debt $124,743 KOB-TV Inc. Subsidairy of trade debt $110,499 Hubbard Broadcast Inc. AFC ACQUISITION: Files for Chapter 11 Bankruptcy in California -------------------------------------------------------------- AFC Acquisition Corp., which owns and operates the American Home furniture stores, filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Central District of California after the company terminated its revolving credit facility and declined to make further advances under that facility. The termination of the facility created a liquidity crisis for the company, preventing it from funding its operations. Moreover, the company's operations suffered from certain burdensome leases for its Arizona operations including Mesa and Prescott stores and Tucson warehouse, which affected the company's operating results. Furthermore, the weakening economy and declining performance of the retail sector and furniture market also affected the sales at the company's stores. The company said that it wants to use cash collateral securing repayment of the secured loan to Wells Fargo Retail Finance LLC to pay ordinary and administrative expenses and fund the operation its business in accordance with the budget. The company owes about $4.9 million plus additional unmatured amounts asserted in connection with a standby letter of credit to Wells Fargo. The company says that Wells Fargo's interest is adequately protected by a substantial equity cushion. The company plans to shutdown eight of its retail stores in Arizona: Oracle Store; Southeast Tucson Store; Tucson Warehouse and Store; Sahuarita Store - American Home; Prescott Store -- American Home; Warehouse Store and New Mexico Distribution Centers -- American Home Warehouse Plus; and West Side Store - American Home Westside. The company retained Planned Furniture Provisions Inc. to conduct going-out-of-business sale at six of its stores. The sale is expected to maximize the value of the company's estate. The company listed assets between $10 million and $50 million, and debts between $1 million and $10 million. The company owes about $4.1 to it unsecured creditors including Simmons owing $659,258; Lane Furniture Industries Inc. owing $621,149; and Albuquerque Publishing owing $412,728. The company asked the Court to extend the period to files its schedules of assets and debts, and statement of financial affairs until Nov. 17, 2008. A hearing is set for Nov. 5, 2008, at 2:00 p.m., to consider the motion. The Debtor's shareholders are Hancock Park Capital III LP holds 67.5% equity in the company; Hancock Park Capital II LP, 22.5%; and Lee Blaugrund, 10%. The company selected Sulmeyer Kupetz as its counsel. Headquartered in Albuquerque, New Mexico, AFC Acquisition Corp. -- http://www.americanhome.com/-- operates furniture stores. The company has 674 employees, of whom 611 are full-time workers and the remaining are part-time employees. ALITALIA-LINEE: Chapter 15 Case Summary --------------------------------------- Debtor: Alitalia-Linee Aeree Italiane, S.p.A., 350 5th Avenue New York, NY 10118 Tel: (212) 903-3381 Bankruptcy Case No.: 08-14321 (Chapter 15) Chapter 15 Petition Date: October 31, 2008 Court: Southern District of New York (Manhattan) Judge: Burton R. Lifland Debtor's Counsel: Eugene F. Massamillo, Esq. emassamillo@kvolaw.com Kaplan, von Ohlen & Massamillo, LLC 555 5th Avenue, 15th Floor New York, NY 10017 Tel: (212) 922-0450 Fax: (212) 922-0530 Estimated Assets: $1,000,000 Estimated Debts: not stated The Debtor did not file a list of 20 largest unsecured creditors. ALL STATE PINAL IX: Case Summary & Six Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: All State Associates of Pinal IX, LLC c/o Van Hansen Odyssey Capital 2 North Central Ave., Suite 720 Phoenix, AZ 85004 Bankruptcy Case No.: 08-15262 Chapter 11 Petition Date: October 29, 2008 Court: District of Arizona (Phoenix) Judge: Sarah Sharer Curley Debtor's Counsel: Michael W. Carmel, Esq. michael@mcarmellaw.com Michael W. Carmel, Ltd. 80 E. Columbus Ave. Phoenix, AZ 85012-4965 Tel: (602) 264-4965 Fax: (602) 277-0144 Total Assets: $0 Total Debts: $18,772,197 The Debtor's largest unsecured creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Loomis Ewert Parsley Davis & - $39,787 Gotting 124 W. Allegan - #700 Lansing, MI 48933-1525 Pinal IX Accounting - $16,984 Subcommittee 21050 North Pima Road Suite 100 Scottsdale, AZ 85255 Lyons Valuation Group - $9,000 16631 N. 91st Street Scottsdale, AZ 85260-1525 All State Management - $6,342 Intelliquick Delivery - $43 Higmo & Associates - $40 ALL STATE PINAL XIV: Case Summary & 7 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: All State Associates of Pinal XIV, LLC c/o Van Hansen Odyssey Capital 2 North Central Avenue, Suite 720 Phoenix, AZ 85004 Bankruptcy Case No.: 08-15266 Chapter 11 Petition Date: October 29, 2008 Court: District of Arizona (Phoenix) Judge: Eileen W. Hollowell Debtor's Counsel: Michael W. Carmel, Esq. michael@mcarmellaw.com Michael W. Carmel, Ltd. 80 E. Columbus Ave Phoenix, AZ 85012-4965 Tel: (602) 264-4965 Fax: (602) 277-0144 Total Assets: $0 Total Debts: $16,417,912 The Debtor's largest unsecured creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Elianto, LLC - $20,914 21050 N. Pima Road, Suite 100 Scottsdale, AZ 85255-6699 Margrave Celmins PC - $9,570 8171 E. Indian Bend Road Scottsdale, AZ 85250-4830 Loomis Ewert Parsley - $6,216 Davis & Gotting PC 124 W. Allegan, Suite 700 Lansing, MI 48933-1784 Mohr Hackett Pederson - $3,048 Mahoney Group - $1,940 All State Management - $1,200 AMERICAN INTERNATIONAL: 11% Owners Want $85B Fed Loan Restructured ------------------------------------------------------------------ Maurice R. Greenberg, who, together with affiliated parties, owns substantial shares of stock of American International Group, Inc., asked AIG CEO Edward Liddy to promptly amend the firm's present loan structure with the Federal Government, citing that "time is clearly running out." In his Oct. 31 letter attached to a regulatory filing, Mr. Greenberg says that the current Federal loan to AIG is effectively nationalizing the company only for the benefit of unit AIG Financial Products Corp.'s credit default counterparties, leaving out hundreds of thousands of AIG employees and shareholders, and American taxpayers. "And the plan to sell off assets cannot be successfully accomplished to repay fully the Federal loan -- the crippling combination of declining asset values and extremely poor market conditions make it difficult to consummate any sale of assets at an acceptable price and on a timely basis," he says. Mr. Greenberg cites among other things, AIG's assets declining daily, and employees and brokers moving to AIG's competitors. "Unless there is immediate change to the structure of the Federal loan, the American taxpayer will likely suffer a significant financial loss," he added. Mr. Greenberg recounts that earlier this month, AIG's largest shareholders proposed that AIG be permitted to participate in a TARP-like program whereby the current Federal loan would be converted into a senior preferred security, thereby reducing the need to sell assets in a "rapid, fire-sale manner." He explains that under this plan, AIG stakeholders would be treated neither any better nor any worse than stakeholders in other companies receiving assistance from the government. AIG, he emphasizes, would be subject to the same conditions imposed by the government on those institutions receiving the capital. In other words, he says, there is no preferential treatment, but rather consistent treatment, from the Federal government across the wide number of beneficiaries of recent Federal assistance. "This so-called 'Plan B' would create a win-win rather than a lose-lose for everybody," Mr. Greenberg avers. Furthermore, "Plan B" could be modified or superseded by a Federal guaranty to meet AIGFP's counterparty collateral requirements. This would allow a large portion of the previously drawn capital from the Federal credit facility to be repaid and redeployed elsewhere in the financial system with no loss to the American taxpayer. This type of guaranty is being considered by the Federal government in connection with the monoline insurance industry and has been successfully employed recently for the money market industry. Mr. Greenberg accedes that the objectives of AIG and the Federal government are completely aligned. Each wants to see the repayment of the loan in full. However, he reiterates that the current loan structure offers little hope of that happening, and your prompt action is required to effect the necessary change. In an amended Schedule 13D filed with the Securities and Exchange Commission, Mr. Greenberg, together with affiliated persons and entities filed a joint statement declaring that they beneficially own 278,430,935 shares of common stock of AIG, representing approximately 10.36% of the stock outstanding. About American International Based in New York City, American International Group Inc. -- http://www.aig.com/-- (NYSE: AIG) is an international insurance and financial services organization, with operations in more than 130 countries and jurisdictions. The company is engaged through subsidiaries in General Insurance, Life Insurance & Retirement Services, Financial Services and Asset Management. The company's British headquarters are located on Fenchurch Street in London, continental Europe operations are based in La Defense, Paris, and its Asian HQ is in Hong Kong. AIG owns Ocean Finance, a United Kingdom based company providing home owner loans, mortgages and remortgages. AIG operates in the UK with the brands AIG UK, AIG Life and AIG Direct. It has about 3,000 employees, and sponsors the Manchester United football club. In response to redemption demands, AIG Life (UK) suspended redemptions of its AIG Premier Bond money market fund on Sept. 19, 2008, in order to provide an orderly withdrawal of assets. The Federal Reserve Bank of New York has extended to AIG a revolving credit facility up to $85 billion. AIG's borrowings under the revolving credit facility will bear interest, for each day, at a rate per annum equal to three-month Libor plus 8.50%. The revolving credit facility will have a 24-month term and will be secured by a pledge of assets of AIG and various subsidiaries. The revolving credit facility will contain affirmative and negative covenants, including a covenant to pay down the facility with the proceeds of asset sales. The summary of terms also provides for a 79.9% equity interest in AIG. The corporate approvals and formalities necessary to create this equity interest will depend upon its form. In a statement, the company said "AIG is a solid company with over $1 trillion in assets and substantial equity, but it has been recently experiencing serious liquidity issues." Standard & Poor's Ratings Services revised the CreditWatch status of most of its ratings on the AIG group of companies -- including its 'A-' long-term counterparty credit ratings on American International Group Inc. and the 'A+' counterparty credit and financial strength ratings on most of AIG's insurance operating subsidiaries -- to CreditWatch developing from CreditWatch negative. S&P raised its ratings on preferred stock of International Lease Finance Corp. (ILFC; A-/Watch Dev/A-1) to 'BBB' from 'B', and revised the CreditWatch implications to developing from negative. All other ILFC ratings remain on CreditWatch with developing implications. Fitch Ratings revised its Rating Watch on American International Group, Inc. to Evolving from Negative. Fitch viewed this transaction as a favorable development that alleviates significant near-term liquidity concerns. * * * In a U.S. Securities and Exchange Commission filing dated Aug. 6, 2008, AIG reported a net loss for the second quarter of 2008 of $5.36 billion compared to 2007 second quarter net income of $4.28 billion. Second quarter 2008 adjusted net loss was $1.32 billion, compared to adjusted net income of $4.63 billion for the second quarter of 2007. The continuation of the weak U.S. housing market and disruption in the credit markets, as well as global equity market volatility, had a substantial adverse effect on AIG's results in the second quarter. Net loss for the first six months of 2008 was $13.16 billion, compared to net income of $8.41 billion in the first six months of 2007. Adjusted net loss for the first six months of 2008 was $4.88 billion, compared to adjusted net income of $9.02 billion in the first six months of 2007. APRIA HEALTHCARE: S&P Cuts Rating to 'BB-' on Blackstone Sale -------------------------------------------------------------- Standard & Poor's Ratings Services removed its ratings on Apria Healthcare Inc. from CreditWatch negative, where they had been placed on June 19, 2008, after the company's announcement of its intention to be acquired by financial sponsor The Blackstone Group. At the same time, Standard & Poor's lowered its corporate credit rating on Apria to 'BB-' from 'BB+'. The outlook is stable. "Apria's acquisition was financed by a bridge credit facility, along with a significant amount of sponsor equity, in a transaction that values the company at about $1.6 billion, or about 5x pro forma EBITDA," said Standard & Poor's credit analyst Alain Pelanne. "We expect that the bridge financing will be replaced by a notes offering under more favorable conditions in the capital markets." The ratings reflect the company's aggressive leverage, its exposure to third-party reimbursement and pricing decisions, and the challenges of managing the integration of Coram Inc. and implementing a number of strategic initiatives. These risks are only partially outweighed by Apria's leading position in providing specialized home health care services and equipment that generates significant cash flows. Before the Coram acquisition, both commercial and Medicare respiratory revenues totaled two-thirds of the company's revenues. With the Medicare portion of this segment under pressure from a series of reimbursement cuts, the company made a couple of key decisions within the past year that significantly increased its use of financial leverage. Operationally, in late 2007, Apria acquired Coram for about $350 million. The debt-financed transaction reduced the role of respiratory therapy to about half of revenues, expanding the infusion business to about 40% of the company's total. While this also slightly reduced the company's Medicare and Medicaid contribution, government programs still account for about one-third of revenues. Accordingly, looming 2009 caps on oxygen rental fees and a 9.5% nationwide cut for durable medical equipment provided by Medicare remain concerns. Commercial third-party payor pricing, which provides two-thirds of Apria's revenues, has been fairly flat the last few years, and is expected to remain so. Although the company doesn't have significant concentration with any single commercial payor, and hasn't recently lost any major contracts, pricing and contract turnover will remain risks to the rating. Going forward, the company has identified a number of areas where efficiencies and savings should help support improved earnings, beyond organic revenue growth. These include purchasing initiatives, improved inventory management, and synergies at Coram. Despite its track record of implementing such initiatives in the past, a new permanent CEO, yet to be hired, will be challenged to execute this strategy. The outlook is stable. Apria's competitive advantage in bidding for large commercial contracts for services should be sustained by its national platform, and its well-established reputation. However, despite this position, the acquisition of the company by The Blackstone Group leaves it with a more aggressive financial risk profile, at a time when more Medicare reimbursement cuts loom ahead. Standard & Poor's expects that the company's heavy reliance on commercial payors will partially shield the company from the impact of these cuts, although continued cost containment and strategic initiatives will be required if the company is to meaningfully increase earnings. However, even if this leads to a reduction in leverage, prospects for credit improvement would be limited by sponsor-ownership considerations. On the other hand, if Medicare cuts and the inability to wring out more costs lead to an increase in SG&A expenses as a percentage of revenues of more than 750 basis points than Standard & Poor's currently expects, prospects for leverage to be sustained at more than 4.0x could lead to a negative outlook. ARACRUZ CELULOSE: Fitch Downgrades Credit Ratings to 'BB-' ---------------------------------------------------------- Fitch Ratings has downgraded these ratings of Aracruz Celulose S.A. (Aracruz): -- Local currency Issuer Default Rating (IDR) to 'BB-' from 'BB+'; -- Foreign currency IDR to 'BB-' from 'BB+'; -- National scale rating to 'A(bra)' from 'AA-(bra)'. All of these ratings remain on Rating Watch Negative. These rating actions reflect an expectation by Fitch that Aracruz will unwind its derivative positions and that realized losses may exceed US$1.5 billion. Further, Fitch expects Aracruz will fund a majority of these losses with debt provided by the counterparties to these transactions, resulting in a near doubling of the company's leverage. The Rating Watch Negative indicates that these ratings could be downgraded further if the actual losses and associated debt obligation are larger than anticipated. Aracruz's credit ratings could also be lowered if the terms and conditions of any agreement with the derivative counterparties are meaningfully lower than the present value of the mark-to-market losses on its derivative instruments, viewing this situation as similar to a distressed debt exchange. Aracruz ended Sept. 30, 2008 with US$594 million of cash and marketable securities and US$2.250 billion of total adjusted debt. For the latest-12-months (LTM) ended Sept. 30, 2008, Aracruz generated US$827 million of EBITDA, including its 50% stake in Veracel. The company had an LTM adjusted net debt-to-EBITDA ratio of 2.0 times (x) and funds from operations (FFO) adjusted leverage ratio of 2.9x. On a pro-forma basis, the addition of US$1.5 billion would increase Aracruz's net debt-to-EBITDA ratio to 3.8x. This ratio could weaken during the next 12 months due to declining pulp prices. To improve liquidity Aracruz has announced a number of steps that it plans to take. They include the reduction of dividends, the postponement of the Guaiba II project and a slowdown in land purchases and forest developments. Aracruz announced on Oct. 2, 2008, that the 'fair value' of its derivative position was a negative $1.02 billion as of Sept. 30, 2008. On that date the exchange rate 1.91 Brazilian reais per U.S. dollar. Since that date, the Brazilian real has continued to devalue versus the dollar, increasing the company's derivative liability. ASAT HOLDINGS: April 30 Balance Sheet Upside-Down by $105MM ----------------------------------------------------------- ASAT Holdings Limited's balance sheet at April 30, 2008, showed total assets of $118.6 million, and total liabilities of $224.3 million, resulting in a shareholders' deficit of $105.7 million. The company reported net loss of $25 million for fiscal year ended April 30, 2008, compared to net loss of $35 million for the same period in the previous year. Liquidity and Capital Resources Cash on hand and at bank, excluding restricted cash, as of April 30, 2006, 2007, and 2008, was $11.9 million, $7.3 million and $6.0 million. For the year ended April 30, 2008, the company's net cash provided by operating activities was $2.8 million, as compared to net cash provided by operating activities of $10.4 million for the year ended April 30, 2007. This decrease in net cash provided by operating activities was due to the repayment of $4 million under the advance payment agreement and payment of $0.8 million in connection with the tax dispute concerning fiscal year 2000 during the fiscal year 2008. A gradual improvement in business towards the end of fiscal year 2008 has resulted in additional operating cash outflow to increase inventory holding. Capital expenditures decreased to $9.1 million for the year ended April 30, 2008, from $17.7 million for the year ended April 30, 2007. This decrease was due to the completion of construction and relocation of Dongguan, China facilities in 2007. For the year ended April 30, 2008, the company incurred capital expenditures for the enhancement of our production equipment at our Dongguan, China facilities. For the year ended April 30, 2007, the company incurred capital expenditures to enhance its production capability in meeting the requirements of its customers' new package designs and on the facilitization of its new manufacturing plant. For the year ended April 30, 2006, the company incurred capital expenditures for additional machinery and equipment to meet the capacity requirements of its customers and development of the new ERP and MES well as the facilitization of its new manufacturing plant. A full-text-copy of the company's annual financial report is available for free at http://ResearchArchives.com/t/s?3489 About ASAT Holdings Limited Headquartered in Pleasanton, California, ASAT Holdings Limited (Nasdaq: ASTT) -- http://www.asat.com/-- provides semiconductor package design, assembly and test services. With 19 years of experience, the company offers a definitive selection of semiconductor packages and manufacturing lines. ASAT's advanced package portfolio includes standard and high thermal performance ball grid arrays, leadless plastic chip carriers, thin array plastic packages, system-in-package and flip chip. ASAT was the first company to develop moisture sensitive level one capability on standard leaded products. The company has operations in the United States, Hong Kong, China and Germany. AXS-ONE INC: September 30 Balance Sheet Upside-Down by $13.4MM -------------------------------------------------------------- AXS-One Inc.'s balance sheet at Sept. 30, 2008, showed total assets of $4.8 million, total liabilities of $18.2 million and shareholders' deficit of $13.4 million. Reported its financial results for the third quarter and nine months ended Sept. 30, 2008. The company reported a net loss of $2.0 million for the third quarter of 2008 compared to a net loss of $4.6 million in the third quarter of last year. Total revenues for the third quarter of 2008 were $3.7 million, an increase of $1.2 million or 47% from the third quarter 2007 revenues of $2.5 million. License revenue for the third quarter was $1.6 million, an increase of 186% compared to $0.5 million in the third quarter of 2007. Service revenue for the third quarter was $2.1 million, an increase of $0.2 million or 9% from the third quarter of 2007. Total operating expenses for the third quarter were $5.0 million, a decrease of 27% percent compared to $6.8 million in the third quarter of 2007. The operating loss for the third quarter of 2008 was $1.3 million, a $3.0 million or 70% improvement from the third quarter 2007 operating loss of $4.3 million. Additionally, the company disclosed that on Oct. 30, 2008, it completed a $1.1 million convertible note financing led by BlueLine Partners and William Jurika and including several AXS-One board and management team members. The notes, which are secured by substantially all the assets of the company, mature on May 29, 2009, bear interest at the rate of 6 percent per year and are convertible into AXS-One common stock at a $1.00 conversion price. The company also issued warrants to the investors to purchase an aggregate of 3,300,000 shares of common stock at an exercise price of $0.01. If all of the warrants are exercised and the entire principal amount of the notes is converted into shares of common stock, the average purchase price of such shares issued pursuant to this financing will be $0.26 per share. Proceeds of these notes will be used to strengthen the company's balance sheet and working capital position. The net loss for the first nine months of 2008 was $6.7 million, compared to a net loss of $10.9 million for the comparable prior- year period. For the first nine months of 2008, total revenues were $11.0 million, an increase of 26% compared with total revenues of $8.7 million for the first nine months of 2007. License revenue was $4.1 million, up 44% from the $2.8 million in license revenue for the first nine months last year. Total operating expenses were $16.1 million for the first nine months of 2008, a decrease of 17% from $19.4 million in the prior year. The operating loss narrowed to $5.2 million for the first nine months of 2008, down from an operating loss of $10.7 million in the first nine months of last year. On October 30, 2008, AXS-One entered into a Convertible Note and Warrant Purchase Agreement pursuant to which it sold and issued an aggregate of $1,100,000 of Series E 6% Secured Convertible Promissory Notes due May 29, 2009, together with warrants to purchase an aggregate of 3,300,000 shares of common stock of the company at an exercise price of $.01 per share. Net proceeds to the company after transaction expenses were approximately $1,050,000. A full-text copy of the company's third quarter financial report is available for free at http://ResearchArchives.com/t/s?348e About AXS-One Inc. Headquartered in Rutherford, N.J., AXS-One (OTC BB: AXSO) -- http://www.axsone.com/-- provides Records Compliance Management software solutions. The AXS-One Compliance Platform enables organizations to implement secure, scalable and enforceable policies that address records management for corporate governance, legal discovery and industry regulations such as SEC17a-4, NASD 3010, Sarbanes-Oxley, HIPAA, The Patriot Act and Gramm-Leach Bliley. AXS-One has offices worldwide including in the United States, Australia, Singapore, United Kingdom and South Africa. Going Concern Doubt As reported in the Troubled Company Reporter on April 25, 2008, Amper, Politziner, & Mattia, P.C., in Edison, N.J., expressed substantial doubt about AXS-One Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm pointed to the company's losses from operations and working capital deficiency. The company generated losses from operations of $1,752,000 for the three months ended March 31, 2008. Additionally, the company was not in compliance with its quarterly license revenue covenant as of March 31, 2008. The bank waived such violation and changed the covenants for future periods from a minimum license revenue covenant and minimum three month rolling net loss covenant to (a) a minimum three month rolling EBITDA covenant, (b) minimum cash and accounts receivable availability covenant and (c) a minimum equity infusion covenant of $500,000. BALDOR ELECTRIC: S&P Affirms 'BB-' Rating; Outlook Negative ----------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Baldor Electric Co. to negative from stable. At the same time, S&P affirmed its ratings on the company, including the 'BB-' long-term corporate credit rating. The company had total balance sheet debt of about $1.3 billion at Sept. 27, 2008. "The outlook revision reflects some concern over the reduced headroom under covenants and the potential for deteriorating credit measures due to a weakening operating environment," said Standard & Poor's credit analyst Dan Picciotto. Weaker economic conditions in 2009 may pressure financial covenant levels and relief could be expensive given the state of credit markets. Still, Baldor has generated free cash flow, is aggressively managing costs, and intends to pay down debt to maintain adequate headroom. The ratings on Baldor reflect the company's aggressive financial risk profile following the acquisition of Rockwell Automation's Power Systems business in early 2007 and the highly competitive and cyclical industry in which the company operates. This is somewhat offset by the company's leading share in the domestic industrial electric motors market, diversified end markets, and good operating margin. Baldor designs and manufactures motors (about 65% of sales), power transmission systems (nearly 30%), and drives and generators (less than 10%). Through the Baldor and Reliance brands, the company has a leading domestic share in the industrial electric motor market. The Baldor brand supports the company's good market position in lower horsepower motors (less than 20 horsepower), and Reliance focuses on higher-horsepower motors (more than 60 horsepower) serving heavy industry. The company offers mechanical power transmissions products through the Dodge brand. Baldor is exposed to cyclical demand for its products and competes with large and well-capitalized companies such as General Electric Co., Emerson Electric Co., and Siemens AG. However, the company benefits from its technical expertise and established distribution channels, which afford some barriers to entry. Baldor also has good customer and end-market diversity, as it sells to thousands of OEMs and distributors and into more than 160 different end markets. Geographic diversity is limited, with sales outside the U.S. at less than 20% of total sales, but growth in developing markets such as China and India presents an opportunity for improvement. S&P could lower the ratings if S&P considers a covenant violation to be likely. For instance, S&P could lower the ratings if headroom under the total leverage covenant declines to about 5% and operating performance fails to stabilize. If the company does negotiate relaxed covenant levels, S&P could still lower the ratings if credit measures deteriorate such that FFO to debt falls to below 10%. S&P could consider an outlook revision to stable if the company appears likely to maintain more than 10% headroom under covenants and its FFO to debt approaches 15%, the low end of S&P's expectation at the current rating. BEAR STEARNS TRUST: S&P Affirms 'B' on Classes O, P & Q Certs. -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on 27 classes of commercial mortgage pass-through certificates from Bear Stearns Commercial Mortgage Securities Trust 2007-PWR18. The affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. As of the Oct. 14, 2008, remittance report, the collateral pool consisted of 187 loans with an aggregate trust balance of $2.495 billion, compared with the same number of loans totaling $2.502 billion at issuance. The master servicers, Wells Fargo N.A. (Wells Fargo) and Prudential Asset Resources Inc. (Prudential), reported financial information for 85% of the pool, which was either full-year 2007 or interim 2008 data. Based on this information, Standard & Poor's calculated a weighted average debt service coverage (DSC) of 1.38x for the pool, compared with 1.36x at issuance. The only delinquent loan in the pool ($9 million, 60 days delinquent) is also the only loan with the special servicer. The trust has not experienced any losses to date. The top 10 loans have an aggregate outstanding balance of $982.8 million (39%) and a weighted average DSC of 1.43x, up from 1.34x at issuance. Both DSC figures exclude the third-largest loan, the Solo Cup Industrial Portfolio, due to nonreporting. The 10th-largest loan is on the servicers' watchlist, but is not a credit concern at this time. Standard & Poor's reviewed the property inspection report provided by Wells Fargo for the Norfolk Marriott, the sixth-largest loan, which was the only inspection report available for the top 10 loans. The property was characterized to be in "good" condition in the provided inspection report. Four loans had credit characteristics consistent with investment- grade rated obligations at issuance. The credit characteristics of the GGP Portfolio ($156 million, 6%), Westridge Square Shopping Center ($22 million), and Stor It Self Storage - Long Beach ($5 million) loans remain consistent with those of investment- grade rated obligations. The adjusted values for all the properties securing the loans are consistent with S&P's values at issuance. The credit characteristics of the Aviata Apartments loan ($27.5 million, 1%) are no longer consistent with those of investment-grade rated obligations. The Aviata Apartments loan has a trust balance of $27.5 million and a whole-loan balance of $28.0 million. The whole loan consists of a $27.5 million A note that is included in the trust and a $500,000 B note that is held outside of the trust. The loan is secured by the fee interest in a 456-unit garden-style apartment complex in Las Vegas. The property was built in 1998 and consists of 30 two-story buildings, a single-story rental office building, and a single-story fitness center. Amenities include two swimming pools, a sauna and spa, laundry facility, fitness center, and covered parking. As of June 2008, reported DSC was 1.67x (A-note only), and occupancy was 89.5%, compared with 2.12x and 95.0%, respectively, at issuance. The net cash flow (NCF) for the Aviata Apartments has declined significantly since issuance due to a decline in revenue and an increase in expenses. There are 13 loans ($159.4 million, 6.4%) in the pool that have reported low DSCs, none of which are credit concerns. The loans, which range in size from $1.8 million to $47.0 million, are secured by a variety of property types and have experienced a weighted average decline in DSC of 28% since issuance. These loans have significant debt service reserves or are secured by properties that are in various stages of lease-up. S&P expects the net NCF available for debt service to improve in the future, and these loans are not credit concerns at this time. Wells Fargo and Prudential reported a watchlist of 25 loans ($338.1 million, 13.5%). The largest loan on the watchlist and the 10th-largest loan in the trust is the Park Avenue Apartments loan ($47 million, 2%). The loan is secured by a mixed use retail/multifamily property located in Brooklyn, N.Y., which was built in 1926 and last renovated in 2001. The loan was placed on the watchlist because it reported a low DSC of 0.97x as of year- end 2007. However, Standard & Poor's received an updated August 2008 rent roll. Using this data, the loan should have an interest-only DSC in excess of 1.0x. As of Dec. 31, 2007, the occupancy was 91%. Based upon the expected increase in DSC, the loan is not a credit concern at this time. The remaining 24 loans on the watchlist, each of which has a balance of less than $30 million, have reported either low occupancy or low DSC. There is one loan with the special servicer, Centerline Inc. The Mix at Southbridge loan ($9.0 million, 60-days delinquent) is secured by the fee interest in a 20,942-square-feet condominium retail property located in Scottsdale, Ariz. As of June 2008, the loan reported a DSC of 1.17x, and occupancy was 75%, down from a reported year-end 2007 DSC of 1.53x and occupancy of 99%. The loan was transferred to Centerline on Oct. 21, 2008, due to payment default. At this time, Standard & Poor's expects a moderate loss upon the ultimate resolution of the asset. Standard & Poor's identified four collateral properties in areas affected by Hurricane Ike, none of which are on the servicers' watchlist. The master servicers notified S&P that three properties ($28 million loan balance, 1% of the pool) either did not sustain any damage or sustained minor damage that is already under repair. The Marriott Houston Westchase ($76.8 million, 3%), reported significant water and roof damage, and repairs are estimated at $1.8 million. All of the affected properties have casualty insurance that should offset repair costs. Standard & Poor's will review information for these loans as it becomes available. Standard & Poor's stressed the loans on the watchlist and the other loans with credit issues as part of its analysis. The resultant credit enhancement levels support the affirmed ratings. Ratings Affirmed Bear Stearns Commercial Mortgage Securities Trust 2007-PWR18 Commercial mortgage pass-through certificates series 2007-PWR18 Class Rating Credit enhancement (%) ----- ------ ---------------------- A-1 AAA 30.11 A-2 AAA 30.11 A-3 AAA 30.11 A-AB AAA 30.11 A-4 AAA 30.11 A-1 AAA 30.11 A-M AAA 20.07 AM-A AAA 20.07 A-J AAA 11.42 AJ-A AAA 11.42 B AA+ 10.41 C AA 9.41 D AA- 8.66 E A+ 7.65 F A 6.90 G A- 5.90 H BBB+ 5.02 J BBB 4.27 K BBB- 3.26 L BB+ 2.89 M BB 2.51 N BB- 2.13 O B+ 1.88 P B 1.76 Q B- 1.63 X-1 AAA N/A X-2 AAA N/A N/A -- Not applicable. BOSCOV'S INC: Selling Most Assets to Boscov/Lakin Families ---------------------------------------------------------- Boscov's Department Store LLC signed an Asset Purchase Agreement for the sale of substantially all of its assets to a family group led by Albert Boscov and Edwin Lakin. Boscov's also disclosed that the company has formally terminated the agreement with Versa Capital Management, Inc. "On behalf of the company, I am very pleased that we have been able to sign an APA that has the support of the Official Creditors Committee," Ken Lakin, chairman and CEO, said. "I believe that this agreement maximizes the value of our business and the return to our creditors. It also provides certainty about the future direction of our company. As we move toward the completion of our restructuring process, Boscov's will be well-capitalized and have the resources to build a stronger and more competitive business." The Boscov/Lakin families have had positive discussions regarding funding for the transaction and believe that they will soon be able to conclude a formal financing agreement. The company hopes to receive approval from the United States Bankruptcy Court for the District of Delaware and to close the transaction prior to the end of November. A hearing on the sale is scheduled for November 13 before Judge Kevin Gross. 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. 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; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) BRADKEN INC: S&P CC Rating Raised to 'B+' From 'B' -------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Kansas City, Mo.-based Bradken Inc. (Bradken; formerly AmeriCast Technologies Inc.), including the corporate credit rating to 'B+' from 'B', and removed them from CreditWatch. The ratings were originally placed on CreditWatch with positive implications on Aug. 22, 2008, after unrated Bradken Ltd., an Australia-based public company, acquired Bradken. "The upgrade reflects the acquisition by Bradken Ltd. and the benefit of inclusion in a larger consolidated entity," said Standard & Poor's credit analyst Sarah Wyeth. The ratings on Bradken reflect a highly leveraged financial profile stemming from last year's leveraged acquisition of Atlas Castings, and Bradken's participation in the fragmented and highly cyclical U.S. foundry industry. Bradken, which has about $340 million in revenue (pro forma for the recent acquisition of AG Anderson and the divestiture of Prospect Foundry), is an independent metal casting company that provides steel and iron castings to industrial manufacturing companies. About 90% of its mix consists of steel-based products. The company generates revenue primarily from the sale of large complex castings and, to a lesser extent, from small castings, which are more vulnerable to competition from imports. The company has seven manufacturing facilities in the U.S. and two in Canada, and one small logistics business in China that sources products from outside North America for its clients. Although most sales are to North American customers, a significant portion of the end products is exported. Bradken's primary end markets are energy (37% of revenue), mining and heavy construction (30%), and locomotive and transit (22%). Military, material handling equipment, and industrial equipment make up the remainder. The company's customer base is highly concentrated; the top five customers make up about half of total sales. However, Bradken has sole-source relationships with and sells multiple products to many of the large U.S.-based multinational manufacturers and municipal entities that make up its customer base. Bradken has long-standing relationships with its largest customers, and some have partnered with the company to develop products and secure production capacity. Good demand in several of Bradken's primary end markets and capacity constraints in the U.S. foundry industry have promoted revenue growth. The company has generated fair operating margins. Standard & Poor's Ratings Services expects Bradken to maintain its current margins as long as capacity is constrained. S&P expects the company to continue generating stable operating margins as long as its end markets remain favorable. S&P could raise the rating or revise the outlook to positive if Bradken increases FOCF as a percentage of debt to above 5% and sustains that level through a downturn. On the other hand, S&P would consider revising our outlook to negative or lowering our rating if financial leverage increases through debt-financed acquisitions or dividends. BROOKE CAPITAL: Holding Co. Buyer Backs Out; 70 Workers Fired ------------------------------------------------------------- The Kansas City Star reports that a prospective buyer for Brooke Capital Corp.'s financial services holding company, Brooke Corp., has withdrawn its offer to buy the firm. According to The Kansas City Star, Brooke Capital filed for Chapter 11 bankruptcy protection to prepare for a possible sale to Lysle Davidson -- an insurance agent from Johnson City -- and Terry Nelson, First State Bank's vice chairperson. The offer was contingent on 350 agencies remaining in the network, The Kansas City Star relates, citing Mr. Nelson. Messrs. Davidson and Nelson, says the report, abandoned plans of acquiring Brooke's insurance network, saying that there weren't enough agencies left. The report states that many of Brooke's agents have secured releases from their franchise agreements. As a result, Brooke Corp. laid off almost 70 employees, The Kansas City Star relates. Brooke Corp. kept a skeletal staff at its Overland Park headquarters and at its support operations in Phillipsburg. Headquartered in Kansas, Brooke Corp. (NASDAQ: BXXX) -- http://www.brookebanker.com-- is an insurance agency and finance company. The company owns 81% of Brooke Capital. The majority of the company's stock was owned by Brooke Holding Inc., which, in turn was owned by the Orr Family. A creditor of the family, First United Bank of Chicago, was foreclosed on the BHI stock. The company's revenues are generated from sales commissions on the sales of property and casualty insurance policies, consulting, lending and brokerage services. Brooke Corp. and its affiliate, Brooke Capital Corp. filed for Chapter 11 protection on Oct. 28, 2008 (Bankr. D. Kan. Case No. 08-22786). Angela R Markley, Esq., is the Debtors' in-house counsel. The Debtors listed assets of $512,855,000 and debts of $447,382,000. BRUGNARA PROPERTIES: Files for Chapter 11 in San Francisco ---------------------------------------------------------- According to Bloomberg News, Brugnara Properties I LP sought Chapter 11 protection from creditors on Oct. 31, before the U.S. Bankruptcy for the Northern District of California in San Francisco. Bloomberg's Bill Rochelle says the company's owner, Luke D. Brugnara, was indicted in April for filing tax returns that didn't disclose capital gains on the sales of properties. The case is In re Brugnara Properties I LP, 08-32073, U.S. Bankruptcy Court, Northern District of California (San Francisco). In its bankruptcy petition, it listed assets of $50.2 million and debt totaling $41.5 million, almost all of which is secured. About Brugnara Brugnara Properties owns a 150,000-square-foot building at 351 California Street near the Embarcadero Center in San Francisco. BTWW RETAIL: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: BTWW Retail, L.P. 1130 Dragon Street, Suite 100 Dallas, TX 75207 Bankruptcy Case No.: 08-35725 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- CWR Workwear Depot, LLC 08-35727 Corral West Ranchwear, LLC 08-35731 Corral West Ranchwear Catalog, LLC 08-35734 Type of Business: The Debtors own and operate more than 130 western, equine and workwear stores throughout the United States. See: http://btwwretail.com/ Chapter 11 Petition Date: November 3, 2008 Court: Northern District of Texas (Dallas) Judge: Barbara J. Houser Debtor's Counsel: Alexandra P. Olenczuk, Esq. aolenczuk@warnerstevens.com Michael D. Warner, Esq. bankruptcy@warnerstevens.com Warner Stevens LLP 301 Commerce St., Ste. 1700 Fort Worth, TX 76102 Tel: (817) 810-5261 (817) 810-5250 Fax: (817)810-5255 Financial Advisor: Clear Thinking Group LLC led by Alan Minker as chief restructuring officer Estimated Assets: $50 million to $100 million Estimated Debts: $50 million to $100 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wrangler/VF Jeanswear trade debt $2,970,305 Attn: Paul Dascoli 400 North Elm Street Greensboro, NC 27401 Arena Brands trade debt $1,343,120 Attn: Tom Hough, CFO 601 Marion Drive Garland, TX 75042 Ariat International Inc. trade debt $1,662,445 Attn: Ken La Honta, CFO 3747 Whipple Road Union City, CA Rocky Mountain Clothing trade debt $931,252 Attn: David Dean 8500 Zuni Street Denver, CO 80260 Justin Brands trade debt $891,059 Attn: Herbert A. Beckwith 610 West Dagget Street Forth Worth, TX 76104 Westmoor Manufacturing Co. trade debt $658,204 Attn: Tom McCollough, CFO P.O. Box 162749 Fort Worth, TX 76161 M&F Western Products Inc. trade debt $614,183 Attn: Paul Eddins, CFO 1203 Holiday Drive Sulphur Springs, TX 75483 CIT trade debt $592,421 P.O. Box 1036 Charlotte, NC 28201 Durango/DIV of Rocky Brands trade debt $298,453 Georgia Boot/DIV Rocky trade debt $314,482 Brands Montana Silversmiths trade debt $312,519 Leegin/Brighton Accessories trade debt $305,933 Levis Strauss Credit Corp. trade debt $298,139 Karman Inc. trade debt $284,522 Jama Corp. Overseas Inc. trade debt $288,952 Rocky Footwear trade debt $259,647 Milano Hat Company Inc. trade debt $193,181 Master Hatters of Texas Inc. trade debt $177,092 Kenco Fashion trade debt $154,445 Timberland Pro trade debt $160,867 BTWW RETAIL: Chapter 11 Filing Blames Financial Crisis ------------------------------------------------------ BTWW Retail Inc. along with three of its affiliates filed a voluntary petition under Chapter 11 in the U.S. Bankruptcy Court for the Northern District of Texas citing financial difficulties. The Chapter 11 filing came after Wells Fargo said on Oct. 23, 2008, that it had no further obligation to advance funds to the company under a credit agreement, but it would provide debtor-in- possession financing under certain terms and conditions. Before it filed for bankruptcy, RCS Real Estate Advisors was retained by the company as its real estate consultant to assist in the negotiation regarding the termination and assignment of leases of the company's underperforming stores. Wells Fargo Retail Finance LLC agreed to provide to the company as much as $27 million in postpetition financing under a revolving loan facility under the debtor-in-possession financing agreement dated Nov. 3, 2008. The company owes Wells Fargo approximately $22.6 million before it filed for bankruptcy. The proceeds of the loan will be used to fund working capital and other expenses of the company. However, the company will not be allowed to access the proceeds of the loans for repayment of prepetition debts if the company fails to receive an offer to purchase its assets on a going concern. The loan will incur interest rate at 3.5% per annum. The company listed assets and debts between $50 million and $100 million each in its filing. It owes about $12.5 million to its unsecured creditors including (i) Wrangler/VF Jeanswear owing $2,970,305 in trade debt; (ii) Arena Brands owing $1,343,120 in trade debt; (iii) Ariat International Inc. owing $1,662,445 in trade debt; and (iv) Rocky Mountain Clothing owing $931,252 in trade debt. The company can file its schedules of assets and debts, and statement of financial affairs by Nov. 18, 2008. The company selected Warner Stevens LLP as it counsel and Clear Thinking Group LLC led by Alan Minker as financial advisor. Larry Hager resigned as the company's chief executive officer on Oct. 21, 2008. About BTWW Retail Headquartered in Dallas, Texas, BTWW Retail Inc. -- http://btwwretail.com/-- owns and operates more than 130 western, equine and workwear stores throughout the United States. The company has about 1,000 employees. The company was originally formed as a corporation, Boot Town Inc., under the laws of the State of Texas in 1975. The capital stock of Boot Town was owned and operated by Harold Pink and members of its family. Boot Town filed for relief under Chapter 11 in the United States Bankruptcy Court for the Northern District of Texas (Case No. 03-81845) on Nov. 17, 2003. Boot Town closed six stores and leaving 16 operating stores. Boot Town delivered an amended joint Chapter 11 plan of reorganization dated June 16, 2004, wherein LKCM Capital Partners purchased 100% of the company's stock and all payments were made under the plan. Boot Town changed its name to BTWW Retal Inc. as a result. The Court entered a final decree and order closing the case on April 1, 2005. CANYON CAPITAL: S&P Affirms 'BB' Rating of Class D Securities ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on the class A-1-A, A-1-B, A-2-A, A-2-B, B, C, and D notes issued by Canyon Capital CLO 2004-1 Ltd., a cash flow arbitrage collateralized loan obligation (CLO) of high-yield loan transaction managed by Canyon Capital Advisors LLC. At the same time, S&P removed the rating on class D from CreditWatch, where it was placed with negative implications on Sept. 17, 2008. S&P previously placed the rating on class D on CreditWatch due to its potential exposure to Lehman Bros. Special Financing Inc., which acts as the class D coupon swap counterparty. The affirmation follows S&P's review and analysis of the current collateral portfolio and is based on S&P's view that the class D note has sufficient credit enhancement available to support the current rating without the benefit of the class D coupon swap. Rating Affirmed and Removed From CreditWatch Negative Canyon Capital CLO 2004-1 Ltd. Rating Class To From ----- -- ---- D BB BB/Watch Neg Ratings Affirmed Canyon Capital CLO 2004-1 Ltd. A-1-A AAA A-1-B AAA A-2-A AAA A-2-B AAA B A+ C BBB Transaction Information Issuer: Canyon Capital CLO 2004-1 Ltd. Collateral manager: Canyon Capital Advisors LLC. Underwriter: Lehman Bros. Inc. Trustee: Deutsche Bank Trust Co. Americas Transaction type: Cash flow arbitrage high-yield CLO CAPCO ENERGY: Committee Protests $800K Sale of Mineral Assets ------------------------------------------------------------- The Official Committee of Unsecured Creditors of Capco Energy Inc. objects to the sale of the company's remaining mineral interests, Bloomberg News reports. The Committee argues that the sale will generate between $570,000 and $800,000, which amount will not improve the unsecured creditors' recovery, according to Bloomberg. Headquartered in Houston, Texas, Capco Energy Inc. -- http://www.capcoenergy.net-- is a publicly traded oil & gas exploration and production company, which explores for, acquires, develops, and operates oil and gas producing properties in the Gulf of Mexico, Texas, and Mid-Continent areas of the United States. The company and six of its affiliates filed for Chapter 11 protection on April 7, 2008 (Bankr. S.D. Tex. Lead Case No. 08-32282). Craig Harwyn Cavalier, Esq., at Law Offices of Craig Cavalier, represents the Debtors in their restructuring efforts. The U.S. Trustee for Region 7 appointed creditors to serve on an Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed total assets and debts between $1 million to $10 million each. CARBONE COS: Gets Court's Final Approval to Use Cash Collateral --------------------------------------------------------------- Erik Larson of Bloomberg News reports that the Hon. Randolph Baxter of the United States Bankruptcy Court for the Northern District of Ohio authorized Carbone Companies Inc. to, on a final basis, cash collateral for its operations. According to Mr. Larson, the Debtor's largest lender Firth Third Bancorp opposed the request but the Court rejected the banks' argument that assets securing its $14.1 million claim will diminished by the Debtor's operation. Judge Baxter said the bank is adequately protected, Mr. Larson continued. To recall, the bank asked the Court to convert the Debtor's Chapter 11 reorganization case to a Chapter 7 liquidation proceeding, arguing that the Debtor was mismanaged and sought relief under Chapter 11 in order to evade a $15.2 million judgment. About Carbone Companies Cleveland, Ohio-based Carbone Companies, Inc., dba R.P. Carbone Company, provides construction management services. Carbone Companies, Inc. and Carbone Properties, LLC filed for Chapter 11 relief on Sept. 4, 2008 (Bankr. N.D. Oh. Lead Case No. 08-16786). Judge Randolph Baxter presides over the case. Harry W. Greenfield, Esq., at Buckley King, A Legal Professional Association, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, each listed assets of between $10 million and $50 million, and debts of between $10 million to $50 million. The Debtors disclosed in court documents that two other affiliates, Rancho Manana Ventures, LLC and Carbone Properties of Audubon, LLC have pending bankruptcy cases filed in other District Courts. Based in Cave Creek, Ariz., Rancho Manana Ventures, LLC filed for Chapter 11 relief of Aug. 13, 2008 (D. Ariz. Case No. 08-10441). Thomas E. Littler, Esq., at Warnicke & Littler, P.L.C., represents the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed assets of between $1 million and $10 million, and debts of between $10 million and $50 million. The U.S. Trustee told the Court that as there has not been a sufficient showing of creditor interest, a committee of unsecured creditors has not been appointed in the Debtor's bankruptcy case. Based in New Orleans, La., Carbone Properties of Audubon, LLC filed for Chapter 11 relief on Dec. 12, 2007 (Bankr. E.D. La. 07-12470). Douglas S. Draper, Esq., at Heller, Draper, Hayden, Patrick & Horn, L.L.C., represents the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed assets of between $1 million and $10 million, and debts of between $10 million and $50 million. CD 2007-CD5: S&P Affirms 'B' Ratings on Classes O, P & Q Certs. --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on 27 classes of commercial mortgage pass-through certificates from CD 2007-CD5 Mortgage Trust. The affirmed ratings on the pooled certificates reflect credit enhancement levels that provide adequate support through various stress scenarios. As of the Oct. 17, 2008, remittance report, the collateral pool consisted of 161 loans with an aggregate trust balance of $2.090 billion, compared with the same number of loans totaling $2.094 billion at issuance. The master servicers, Capmark Finance Inc. (Capmark) and KeyBank Real Estate Capital (KeyBank), reported financial information for 62% of the pool; 37% of the reported information was full-year 2007 data, and the remainder was interim-2008 data. Standard & Poor's calculated a weighted average debt service coverage (DSC) of 1.46x for the pool, compared with 1.35x at issuance. There is one delinquent loan ($3.5 million, 0.2%) in the pool, which is with the special servicer, LNR Partners Inc. (LNR). The trust has not experienced any losses to date. The top 10 loans have an aggregate outstanding balance of $827.9 million (40%) and a weighted average DSC of 1.51x, up from 1.37x at issuance. The master servicers did not provide recent inspection reports for any of the assets underlying the top 10 exposures. The credit characteristics of the Georgian Towers, Two Journal Square, Seattle Space Needle, Old National Town Center, 12144 Ventura Office Building, and Town Center Self Storage loans are consistent with those of investment-grade rated obligations. Details of the two largest loans are: -- Georgian Towers is the sixth-largest loan, with a trust balance of $58.0 million (3%) and a whole-loan balance of $185.0 million. The interest-only loan is split into two senior pari passu notes, one of which serves as trust collateral in the COMM 2007-C9 transaction. In addition, the borrower's equity interest is secured by $30.0 million of mezzanine debt. The loan is secured an 890-unit multifamily property in Silver Springs, Md. The property is undergoing a major renovation and repositioning. For the period ended June 30, 2008, the property was 94% leased, and the in-place rent was 11% higher than Standard & Poor's expectations at issuance. Standard & Poor's adjusted valuation is comparable with its level at issuance. -- Two Journal Square is the ninth-largest loan in the pool, with a trust balance of $39.5 million (2%). The loan is secured by the fee and leasehold interest in a 276,164- square-feet office building in Jersey City, N.J. For the period ended June 30, 2008, the property was 94% leased, and the DSC was 2.33x. Automatic Data Processing Inc. (AAA/Stable/A-1+) leases 91% of the net rentable area and subleases the space to Broadridge Financial Solutions Inc. (BB/Negative/B), but remains the guarantor under the lease. The Burchwood loan ($3.5 million, 0.2%) is the only loan with LNR and was transferred to the special servicer on Oct. 24, 2008, due to imminent default. The loan is currently 30-days delinquent and is secured by a 72-unit multifamily property in Hot Springs, Ark. The DSC was reported to be 0.90x for the year ended Dec. 31, 2007. Standard & Poor's has credit concerns with one ($3.8 million) of the eight loans ($98.3 million, 5%) in the pool that have reported low DSCs, excluding those with the special servicer. The loan that is a credit concern is secured by a mixed-use property and has experienced an increase in operating expenses. The eight loans with low DSCs are secured by a variety of property types with an average balance of $12.3 million and have experienced a weighted average decline in DSC of 28% since issuance. S&P used the DSC at issuance on an as-is basis to calculate the decline for loans with DSCs that S&P had expected to stabilize over a period of time. The seven loans that are not credit concerns have significant debt service reserves or are in various stages of lease-up, and S&P expects the net cash flow available for debt service to improve in the future. Standard & Poor's identified three loans ($167.3 million; 8%) backed by properties in areas affected by Hurricane Ike. The properties have suffered minimal damage. Capmark and KeyBank reported a watchlist of six loans ($98.5 million, 5%). Standard & Poor's stressed the loans on the watchlist and the other loans with credit issues as part of its analysis. The resultant credit enhancement levels support the affirmed ratings. Ratings Affirmed CD 2007-CD5 Mortgage Trust Commercial mortgage pass-through certificates Class Rating Credit enhancement (%) ----- ------ ---------------------- A-1 AAA 30.06 A-1A AAA 30.06 A-2 AAA 30.06 A-3 AAA 30.06 A-4 AAA 30.06 A-AB AAA 30.06 AM AAA 20.04 A-MA AAA 20.04 AJ AAA 13.40 A-JA AAA 13.40 B AA+ 12.40 C AA 11.40 D AA- 10.40 E A+ 9.52 F A 8.64 G A- 7.64 H BBB+ 6.51 J BBB 5.39 K BBB- 4.38 L BB+ 3.13 M BB 2.76 N BB- 2.51 O B+ 2.25 P B 2.00 Q B- 1.88 XS AAA N/A XP AAA N/A N/A -- Not applicable CGCMT 2007-C6: Fitch Affirms B Ratings on Classes O, P & Q Certs. ----------------------------------------------------------------- Fitch Ratings has affirmed and assigned Ratings Outlooks to CGCMT 2007-C6 Mortgage Trust, commercial mortgage pass-through certificates: -- $146.9 million class at A-1 'AAA'; Outlook Stable; -- $259 million class A-2 at 'AAA'; Outlook Stable; -- $387 million class A-3 at 'AAA'; Outlook Stable; -- $126.3 million class A-3B at 'AAA'; Outlook Stable; -- $140 million class A-SB at 'AAA'; Outlook Stable; -- $1.573 billion class A-4 at 'AAA'; Outlook Stable; -- $200 million class A-4FL at 'AAA'; Outlook Stable; -- $488.9 million class A-1A at 'AAA'; Outlook Stable; -- $425.6 million class A-M at 'AAA'; Outlook Stable; -- $50 million class A-MFL at 'AAA'; Outlook Stable; -- $248.3 billion class A-J at 'AAA'; Outlook Stable; -- $150 million class A-JFL at 'AAA'; Outlook Stable; -- Interest-only class X at 'AAA'; Outlook Stable; -- $23.8 million class B at 'AA+'; Outlook Stable; -- $71.3 million class C at 'AA'; Outlook Stable; -- $35.7 million class D at 'AA-'; Outlook Stable; -- $29.7 million class E at 'A+'; Outlook Stable; -- $35.7 million class F at 'A'; Outlook Stable; -- $47.6 million class G at 'A-'; Outlook Stable; -- $53.5 million class H at 'BBB+'; Outlook Stable; -- $65.4 million class J at 'BBB'; Outlook Stable; -- $53.5 million class K at 'BBB-'; Outlook Negative; -- $11.9 million class L at 'BB+'; Outlook Negative; -- $11.9 million class M at 'BB'; Outlook Negative; -- $17.8 million class N at 'BB-'; Outlook Negative; -- $11.9 million class O at 'B+'; Outlook Negative; -- $5.9 million class P at 'B'; Outlook Negative; -- $5.9 million class Q at 'B-'; Outlook Negative. Fitch does not rate the $71.3 million class S certificates. The affirmations reflect limited scheduled amortization and stable performance since issuance. The Rating Outlooks reflect the likely direction of ratings over the next one to two years. As of the September 2008 distribution date the transaction's outstanding principal balance has been reduced by 0.2% to $4.75 billion from $4.76 billion at issuance. Fitch has identified 15 loans of concern (5.25% of the pool), five of which are specially serviced loans (0.47%). The largest specially serviced loan (0.16%) is collateralized by an extended- stay hotel in Pensacola, FL. The property had been a major provider of off-base housing for the military until August 2007, when the U.S. Navy notified the borrower that it had sufficient on-base housing. The second largest specially serviced loan (0.16%) is collateralized by an 81,200 square foot (SF) retail property in Gilbert, AZ. The property is 100% leased by Mervyn's, which is in bankruptcy and recently announced that it would be closing all of its stores by early next year. Fitch expects losses to be absorbed by the non-rated class S. The largest loan of concern, the Hyde Park Apartment Portfolio (2.6%), is a 43 building multifamily portfolio with 951 units located in the Hyde Park neighborhood of Chicago, IL. The property is undergoing a three-phase renovation, which is not expected to be completed until spring 2010. Cash flow is insufficient to cover debt service given low occupancy levels while units are being renovated as well as high operating expenses. The servicer reported year-end (YE) 2007 debt service coverage ratio (DSCR) was 0.10 times (x). Interest reserves have been depleted, but the loan remains current. Fitch reviewed year-end (YE) 2007 operating statement analysis reports for the transaction's three shadow rated loans (3.9%): Ala Moana Portfolio (2.1%), IAC - California & Washington Industrial Portfolio (1%), and IAC - Oregon Industrial Portfolio (0.7%). The loans are performing as expected and maintain their investment grade shadow ratings. The largest shadow rated loan, Ala Moana Portfolio (2.1%), is secured by the fee interest in a 1.9 million SF retail and office development in Honolulu, HI. Ala Moana Center is one of the most productive retail assets in the nation, with sales for in-line tenants consistently exceeding $1,000 per square foot. The retail portion of the collateral is occupied by nearly 275 tenants, while the office portion is occupied by 184 tenants. The mall is sponsored and operated by General Growth Properties. Occupancy as of December 2007 was 94%, in-line with 93.5% at issuance. CHESAPEAKE CORP: Gets Forbearance for $250MM Loan Until Dec. 10 --------------------------------------------------------------- Chesapeake Corporation signed a forbearance agreement with certain lenders under its $250-million Senior Secured Credit Facility until Dec. 10, 2008. Under the agreement, certain "required lenders" have agreed that they will forbear from exercising their rights and remedies against the corporation and its subsidiaries in respect of existing financial condition covenant defaults under the Senior Secured Credit Facility. The period of the lenders' forbearance will continue until Dec. 10, 2008, subject to the borrowers' compliance with the terms and conditions of the forbearance agreement. "Despite adverse conditions in global financial markets, we continue to make progress on our financial restructuring," said Andrew J. Kohut, Chesapeake president and chief executive officer. "In addition to the previously announced negotiations with an ad hoc committee of holders of our subordinated debt, we are also engaged in discussions with others on possible alternative financial restructuring opportunities. The forbearance agreement provides us additional time to finalize arrangements for the short- and long- term financial liquidity and financial restructuring we need." The agreement of the lenders is subject to compliance by Chesapeake and its subsidiary borrowers under the Senior Credit Facility with the terms and conditions set fort in the forbearance agreement. The forbearance agreement requires that the corporation and the other borrowers deliver to the Senior Credit Facility Administrative Agent at various milestones during the forbearance period certain information with respect to the corporation's financial position, business operations and ongoing restructuring process, including details regarding the development of plans for interim financing to provide adequate liquidity for the corporation to continue operations. The corporation expects to be able to comply with the requirements of the forbearance agreement, but if it is not able to do so, or the forbearance agreement expires, the lenders under the Senior Secured Credit Facility could require immediate payment of all amounts outstanding under the Senior Secured Credit Facility, terminate their commitments to lend under the Senior Secured Credit Facility and, pursuant to cross-default provisions in many of the instruments that govern other outstanding indebtedness of the corporation, immediate payment of our other outstanding indebtedness could be required, all of which would have a material adverse effect on the business, results of operations and financial condition of the corporation and would raise substantial doubts about our ability to continue as a going concern. About Chesapeake Corporation 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. CHRYSLER LLC: Sales Drop 35% to 94,530 Vehicles in October ---------------------------------------------------------- Chrysler LLC said in a statement that its sales declined 35% to 94,530 vehicles in October 2008, from 145,316 in October 2007. According to Bill Koenig at Bloomberg News, sales of Chrysler's Ram large pickup dropped 29% this year, compared to 2007. Declines in U.S. Auto Sales According to Bloomberg, auto sales in the U.S. declined 32% in October to the lowest monthly total since January 1991, as reduced access to loans and a weaker economy discouraged consumers. Autodata, says Bloomberg, said that October 2008 total sales dropped to 838,156 from 1.23 million. Bloomberg reports that Ford Motor Co. said that its car and light- truck sales dropped 30% this year, from a year earlier. Ford Motor's cars and light truck sales dropped to 132,248, from 189,360, Bloomberg relates, citing Autodata Corp. Sales of Ford, Lincoln, and Mercury brands declined 30% for trucks and 27% for cars, according to the report. Ford's sales, says the report, included declines of 58% for the Edge wagon and 18% for the Focus small car. The report states that Focus sales had increased most of the year after U.S. gasoline prices peaked at more that $4 a gallon in July and averaged 26% higher than in 2007. Bloomberg states that sales of Ford's F-Series pickups dropped 16% in October 2008, compared to 2007. Bloomberg relates that Toyota reported that its sales dropped 23% to 152,101 this year, compared to 197,592 last year. Honda sold 85,864 cars and light trucks, dropping 25% from 114,799 in 2007, Bloomberg says, citing Honda spokesperson Kurt Antonius. Nissan's U.S. vice president of Nissan-brand sales, Al Castignetti, said that the company's sales declined 33% to 56,945 vehicles, Bloomberg states. As reported in the Troubled Company Reporter on Nov. 4, 2008, General Motors Corp. dealers in the U.S. delivered 170,585 vehicles in October, down 45% compared with a year ago. GM truck sales of 97,119 were down 51% and car sales of 73,466 were off 34%. According to Bloomberg, Ford Motor's worldwide marketing chief Jim Farley said on a conference call that industry sales in the first half of 2009 will be "sobering." Ford Motor's sales analyst George Pipas also said on the conference call that sales may fall to fewer than 14 million vehicles in 2008, from 16.1 million in 2007, the report states. Some automakers, according to Bloomberg, said that sales might improvement in November and December because of the U.S. presidential election and end-of-the-year promotions. Bloomberg relates that Mr. Farley said, "Most manufacturers will start year-end promotions in early November. The true test will come in the first quarter of next year, the first half of next year." About Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter on Aug. 11, 2008, Standard & Poor's Ratings Services lowered its ratings on Chrysler LLC, including the corporate credit rating, to 'CCC+' from 'B-'. On July 31, 2008, TCR said that Fitch Ratings downgraded the Issuer Default Rating of Chrysler LLC to 'CCC' from 'B-'. The Rating Outlook is Negative. The downgrade reflects Chrysler's restricted access to economic retail financing for its vehicles, which is expected to result in a further step-down in retail volumes. Lack of competitive financing is also expected to result in more costly subvention payments and other forms of sales incentives. Fitch is also concerned with the state of the securitization market and the ability of the automakers to access this market on an economic basis over the near term, given the steep drop in residual values, higher default rates, higher loss severity being experienced and jittery capital market. CITIGROUP COMMERCIAL: S&P Keeps Mortgage Trust Rtngs on 28 Classes ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its ratings on 28 classes of commercial mortgage pass-through certificates from Citigroup Commercial Mortgage Trust 2007-C6. The affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. As of the Oct. 10, 2008, remittance report, the collateral pool consisted of 318 loans with an aggregate trust balance of $4.747 billion, compared with the same number of loans totaling $4.756 billion at issuance. The master servicers, Midland Loan Services Inc. (Midland), Wachovia Bank N.A. (Wachovia), and Capmark Finance Inc. (Capmark), reported financial information for 94% of the pool. Eighty-seven percent of the servicer-provided information was full-year 2007 data. Based on this data, Standard & Poor's calculated a weighted average debt service coverage (DSC) of 1.39x for the pool, down from 1.41x at issuance. There are four delinquent loans ($14.9 million, 0.3%) with the special servicer, CW Capital Asset Management LLC (CW Capital). To date, the trust has not experienced any losses. The top 10 loans have an aggregate outstanding balance of $1.380 billion (29%) and a weighted average DSC of 1.29x, down from 1.49x at issuance. Standard & Poor's reviewed property inspections provided by the master servicer for five of the assets underlying the top 10 exposures. All were characterized as "good." Three loans had credit characteristics consistent with those of investment-grade rated obligations at issuance, including the IAC- CA & WA Industrial Portfolio, with a trust balance of $49.0 million (1%), the IAC-Oregon Industrial Portfolio, with a trust balance of $35.0 million (0.7%), and the Ala Moana Portfolio, with a trust balance of $100.0 million (2%). The adjusted valuations for the properties securing these loans are consistent with the valuations at issuance. Details of the sixth- largest loan in the pool, which had credit characteristics consistent with investment-grade rated obligations, are: -- The Ala Moana portfolio loan has a trust balance of $100.0 million (2%) and a whole-loan balance of $1.5 billion. The whole loan is secured by the fee and leasehold interest in four properties: a regional mall, two office buildings, and a retail property, all in Honolulu. The reported combined DSC for this loan was 1.59x as of year-end 2007, and occupancy was 97.1%, compared with a DSC of 1.81x and occupancy of 96.0% at issuance. The underwritten net cash flow (NCF) at issuance was based on the completion and full lease-up of 300,000 sq. ft. of expansion space. As of the Oct. 10, 2008 remittance report, there were four loans totaling $14.9 million (0.3%) with the special servicer. On Oct. 22, 2008, one additional loan was transferred to the special servicer. Details of all of the specially serviced loans are: -- The Suburban Extended Stay Hotel loan has a total exposure of $7.8 million (0.2%) and was transferred to the special servicer in April 2008 due to imminent default. The special servicer is in discussions with the borrower with respect to a workout strategy. The loan is secured by a 129-room hotel in Pensacola, Florida; the property was built in 1985 and was last renovated in 2003. A May 2008 appraisal valued the property at $9.1 million. -- The Arlington Strip Mall 1 loan has a total exposure of $2.7 million (1%) and was transferred to the special servicer in October 2008 after the borrower requested a reduction in monthly payments until the property is 100% leased. The property is currently 48% leased. The special servicer is working out a revised payment schedule with the borrower. The loan is secured by a 23,003-sq.- ft. retail center built in 2007 in Arlington, Texas. -- The Serino's Italian Foods loan has a total exposure of $2.6 million (0.5%) and was transferred to the special servicer in October 2008 due to monetary default. The loan is secured by a 22,000-sq.-ft. retail/warehouse property built in 2006 in Hyde Park, Mass. The special servicer is in the process of modifying the payment structure. -- The Arlington Strip Mall 2 loan has a total exposure of $1.9 million (0.4%) and was transferred to the special servicer in February 2008. The borrower has brought the loan current and is working with the special servicer to modify the monthly payments for a six-month period. Once the modification has been completed, the special servicer expects to return this loan to the master servicer. The loan is secured by a 21,351-sq.-ft. retail center built in 1996 in Arlington, Texas. A March 2008 appraisal valued the property at $1.88 million, and a $189,114 appraisal reduction amount (ARA) is in effect on this asset. -- The Mervyns at Crossroads Town Center loan has a total exposure of $7.6 million (0.1%) and was recently transferred to the special servicer (in October 2008) due to imminent default. The loan is secured by an 81,200- sq.-ft. retail center built in 2006 in Gilbert, Ariz. The borrower has formally requested a workout/forbearance because Mervyns, which recently announced its intention to liquidate all stores, is the sole tenant at the single- tenant property. There are 27 loans in the pool, totaling $452.1 million (10%), that have reported DSCs lower than 1.0x. The loans are secured primarily by a variety of office, multifamily, retail, manufactured housing, self-storage, lodging, and industrial properties. Of these 27 loans, two are specially serviced assets and 14 are on the watchlist. The loans have experienced an average decline in DSC of 57.3% since issuance. Standard & Poor's has credit concerns with six ($16.8 million, 0.4%) of the 27 loans. Most of the properties securing these loans have experienced a combination of declining occupancy and higher operating expenses. Twenty-one loans with DSCs below 1.0x are not credit concerns because of other mitigating factors. Many have posted improved operating performance based on interim financial data provided by the servicers. Midland, Wachovia, and Capmark reported a watchlist of 35 loans with an aggregate outstanding balance of $467.2 million (10%). The largest loan on the watchlist and the fourth-largest loan in the pool is the Hyde Park Apartment Portfolio loan ($123.2 million, 3%). The loan is secured by 43 walkup-style apartment buildings in Chicago with a total of 951 units. The loan appears on the watchlist because the portfolio is undergoing an extensive renovation and many units have been taken off line. As of Dec. 31, 2007, the property reported a DSC of 0.07x. When conducting our surveillance review, S&P had discussions with both the servicer and the borrower. The borrower is continuing to draw upon the initial escrowed replacement reserve account (the initial balance in this account was $26.5 million); the current balance in this account is $16.8 million. Because the initial $4.0 million debt service reserve has been drawn down to zero, the borrower has been funding the debt service. S&P expects that once the renovations are complete the property cash flows will be sufficient to support the breakeven debt service for the portfolio. Standard & Poor's identified four collateral properties ($40.7 million aggregate principal balance, 1%) in areas affected by Hurricane Ike. One property ($4.3 million, 0.09%) reported no damage from the storm. Two properties ($32.8 million, 0.7%) sustained minor damage and will not file insurance claims. Information is still pending for the one remaining property ($3.6 million, 0.07%) affected by Hurricane Ike; S&P will continue to evaluate information as it becomes available. All of the affected properties have casualty insurance that should offset repair costs. Standard & Poor's stressed the loans on the watchlist and the other loans with credit issues as part of its analysis. The resultant credit enhancement levels support the affirmed ratings. Ratings Affirmed Citigroup Commercial Mortgage Trust 2007-C6 Commercial mortgage pass-through certificates Class Rating Credit enhancement (%) ----- ------ ---------------------- A-1 AAA 30.06 A-2 AAA 30.06 A-3 AAA 30.06 A-3B AAA 30.06 A-SB AAA 30.06 A-4 AAA 30.06 A-4FL AAA 30.06 A-1A AAA 30.06 A-M AAA 20.04 A-MFL AAA 20.04 A-J AAA 11.65 A-JFL AAA 11.65 B AA+ 11.15 C AA 9.64 D AA- 8.89 E A+ 8.27 F A 7.51 G A- 6.51 H BBB+ 5.39 J BBB 4.01 K BBB- 2.88 L BB+ 2.63 M BB 2.38 N BB- 2.00 O B+ 1.75 P B 1.63 Q B- 1.50 X AAA N/A N/A -- Not applicable COBALT CMBS: Fitch Cuts Ratings on 3 Certs. Classes to 'B+' ----------------------------------------------------------- Fitch Ratings has downgraded and assigned Rating Outlooks for seven classes of Cobalt CMBS Commercial Mortgage Trust, Series 2007-C2, commercial mortgage pass-through certificates: -- $24.2 million class J to 'BBB-' from 'BBB'; Outlook Negative; -- $30.2 million class K to 'BB+' from 'BBB-'; Outlook Negative; -- $12.1 million class L to 'BB' from 'BB+'; Outlook Negative; -- $3 million class M to 'BB-' from 'BB'; Outlook Negative; -- $9.1 million class N to 'B+' from 'BB-'; Outlook Negative; -- $6 million class O to 'B' from 'B+'; Outlook Negative; -- $3 million class P to 'B-' from 'B'; Outlook Negative. In addition, Fitch has affirmed and assigned Rating Outlooks to these classes: -- $30.7 million class A-1 at 'AAA'; Outlook Stable; -- $241.1 million class A-2 at 'AAA'; Outlook Stable; -- $71.9 million class A-AB at 'AAA'; Outlook Stable; -- $857.5 million class A-3 at 'AAA'; Outlook Stable; -- $485.5 million class A-1A at 'AAA'; Outlook Stable; -- $221.9 million class A-MFX at 'AAA'; Outlook Stable; -- $20 million class A-MFL at 'AAA'; Outlook Stable; -- $102.6 million class A-JFX at 'AAA'; Outlook Stable; -- $100 million class A-JFL at 'AAA'; Outlook Stable; -- Interest-only class X at 'AAA'; Outlook Stable; -- $21.2 million class B at 'AA+'; Outlook Stable; -- $27.2 million class C at 'AA'; Outlook Stable; -- $21.2 million class D at 'AA-'; Outlook Stable; -- $15.1 million class E at 'A+'; Outlook Stable; -- $18.1 million class F at 'A'; Outlook Stable; -- $30.2 million class G at 'A-'; Outlook Stable; -- $24.2 million class H at 'BBB+'; Outlook Negative; -- $6 million class Q at 'B-'; Outlook Negative. Fitch does not rate the $30.2 million class S. The downgrades of classes J through P are the result of the lowering of shadow rating on the transaction's largest loan, Peter Cooper Village and Stuyvesant Town (10.4%) to below investment grade. The loan, which had a 'BBB-' shadow rating at issuance, is no longer considered investment grade. At issuance, the loan's proceeds were allocated to 'BBB-' and above, while they are now allocated to all classes in the capital structure. This results in higher credit enhancement requirements. While the current net cash flow is not sufficient to meet the debt service obligations, due to the sufficient amount of remaining interest reserves ($161.2 million) and the continued conversion of units to market rental rates from stabilized rental rates, Fitch does not expect a default of the loan in the near term. However, the pace of the unit conversions does not meet expectations at issuance and rental rates are less likely to increase given the current economic conditions. Fitch's estimates of future net cash flow, based on reduced conversion rates and reduced year-over-year increases to market rental rates, no longer support an investment grade rating. The borrower, Tishman Speyer Properties, LP and Blackrock Realty acquired the property with the intent to convert rent stabilized units to market rents as tenants vacated the property, resulting in increased rental revenue. As of June 2008 there are 3,543 market units and 7,210 rent stabilized units, with vacancy of 4.2%. There have been no specially serviced loans since issuance. Fitch has identified 13 loans (7%) as Loans of Concern. The largest Fitch Loan of Concern (1.7%) is secured by the Westin - Ft. Lauderdale, FL. The property is suffering from a weak market, especially among the transient segment. The borrower expects the year's revenue to be nearly $2.0 million lower than the amount budgeted. There are six shadow rated loans within the transaction (5.4%). The largest is Ala Moana center (4.1%). The Ala Moana Portfolio is secured by the fee interest in a 1.9 million sf retail and office development in Honolulu, HI. Ala Moana Center is one of the most productive retail assets in the nation, with sales for in-line tenants consistently exceeding $1,000 per square foot (psf). The retail portion of the collateral is occupied by nearly 275 tenants, while the office portion is occupied by 184 tenants. The mall is sponsored and operated by General Growth Properties (GGP). Occupancy as of June 2008 was 96%, in line with issuance. The loan is interest-only with a coupon of 5.52% and a maturity date in 2011. The fifth largest shadow rated loan, Highland Orchard Apartments Cove Apartments (0.2%), reported an 18% decrease in net cash flow for the first half of 2008 as compared to at issuance. The loan is secured by a multifamily property in Conyers, GA, and is being repositioned in order to increase rents over the loan term. Base rental income is consistent with issuance, but expense ratio has increased due to costs associated with the repositioning. All of the loans maintain investment grade shadow ratings. As of the September 2008 distribution date, the transaction has paid down by 0.29% to $2.413 billion from $2.419 billion at issuance. Rating Outlooks reflect the likely direction of any rating changes over the next one to two years. COMSTOCK HOMEBUILDING: Receives Notice of Nasdaq Non-Compliance --------------------------------------------------------------- Comstock Homebuilding Companies, Inc., received a notice from The Nasdaq Stock Market indicating that the NASDAQ Listing Qualifications Panel had granted the company's request for continued listing. The notice from NASDAQ indicated that continued listing was subject to 1) the company evidencing a closing bid price of $1.00 or more for a minimum of ten consecutive trading days on or before April 13, 2009, and 2) the company evidencing a minimum market value of publicly held shares of $5,000,000 on or before May 8, 2009. Based in Reston, Viginia, Comstock Homebuilding Companies, Inc. (NasdaqGM: CHCI) -- http://www.comstockhomebuilding.com-- develops, builds and markets single-family homes, townhouses and condominiums in the Washington D.C., Raleigh, North Carolina and Atlanta, Georgia metropolitan markets. The company also provides certain management and administrative support services to certain related parties. The Troubled Company Reporter reported on July 11, 2008, that Comstock retained FTI Consulting Inc. as advisor to the company with respect to strategic and financial alternatives in the face of a prolonged real estate downturn. Going Concern Doubt As reported in the Troubled Company Reporter on April 3, 2008, PricewaterhouseCoopers LLP raised substantial doubt about the ability of Comstock Homebuilding Companies, Inc., to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2007. The auditor pointed stated that the company has experienced declining market conditions and has significant debt maturing during 2008. Default Notice TCR reported on Sept. 18, 2008, that Comstock Homebuilding and Highland Avenue Properties, LLC, a wholly owned subsidiary of the company, received a notice of default and demand from Bank of America, N.A. under a Loan Agreement in the original principal amount of $4,851,235. The Highland Ave Note is secured by land at the company's Highland Avenue project in Atlanta, Georgia. According to the notice of default, the outstanding balance under the Highland Note at the time of the notice was $4,341,004.35. CREDIT SUISSE TRUST: Fitch Junks Ratings on Two 2007-C1 Classes --------------------------------------------------------------- Fitch Ratings downgrades nine classes of Credit Suisse Commercial Mortgage Trust, series 2007-C1 commercial mortgage pass-through certificates and assigns Rating Outlooks: -- $33.7 million class J to 'BBB-' from 'BBB'; Outlook Negative; -- $37.9 million class K to 'BB' from 'BBB-'; Outlook Negative; -- $8.4 million class L to 'BB-' from 'BB+'; Outlook Negative; -- $12.6 million class M to 'B+' from 'BB'; Outlook Negative; -- $8.4 million class N to 'B' from 'BB-'; Outlook Negative; -- $8.4 million class O to 'B-' from 'B+'; Outlook Negative; -- $8.4 million class P to 'B-' from 'B'; Outlook Negative; -- $8.4 million class Q to 'CCC/DR1' from 'B-'; -- $12.6 million class S to 'CC/DR2' from 'CCC'. In addition, Fitch has affirms and assigns Outlooks to these classes: -- $30.4 million class A-1 at 'AAA'; Outlook Stable; -- $139.0 million class A-2 at 'AAA'; Outlook Stable; -- $98.3 million class A-AB at 'AAA'; Outlook Stable; -- $758.0 million class A-3 at 'AAA'; Outlook Stable; -- $1.3 billion class A-1A at 'AAA'; Outlook Stable -- $3.0 billion interest-only class A-SP at 'AAA'; Outlook Stable; -- $3.4 billion interest-only class A-X at 'AAA'; Outlook Stable; -- $125.0 million class A-MFL at 'AAA'; Outlook Stable; -- $212.1 million class A-M at 'AAA'; Outlook Stable; -- $286.6 million class A-J at 'AAA'; Outlook Stable; -- $25.3 million class B at 'AA+'; Outlook Stable; -- $37.9 million class C at 'AA'; Outlook Stable; -- $33.7 million class D at 'AA-'; Outlook Stable; -- $21.1 million class E at 'A+'; Outlook Negative; -- $29.5 million class F at 'A'; Outlook Negative; -- $33.7 million class G at 'A-'; Outlook Negative; -- $37.9 million class H at 'BBB+'; Outlook Negative. Fitch does not rate class T. The downgrades are the result of expected losses on five (1.7%) of the seven (2.0%) specially serviced loans in the transaction. Classes E through P have been assigned Negative Outlooks due to the potential future decline in credit enhancement in connection with an increased number of Fitch loans of concern (15.4%). The Rating Outlooks reflect likely rating changes over the next one to two years. As of the October 2008 distribution date, the transaction has paid down 0.4%, to $3.36 billion from $3.37 billion at issuance. No principal losses have been recorded to date. There are seven specially serviced loans (2.0%). The largest specially serviced loan (0.8%) is secured by a 504-bed student housing property located in Fort Myers, FL. The loan transferred to the special servicer June 13, 2008 upon written request from the borrower for relief due to low occupancy. As of Sept. 4, 2008 the property was 70.4% leased, with deep concessions offered during the pre-leasing season for the 2008-2009 school year. This compares to occupancy of 99.0% at issuance. At year-end 2007, the servicer-reported debt service coverage ratio (DSCR) was 0.73 times (x). The special servicer is reportedly negotiating a forbearance agreement with the borrower to allow the borrower an opportunity to sell the property. A foreclosure complaint was also filed in July 2008. The second largest specially serviced asset (0.3%) is secured by a 276-unit multifamily property located in Dallas, TX. The loan transferred to the special servicer July 11, 2008. The property's reported occupancy is 51%, and the year-end 2007 servicer-reported DSCR was 0.43x. The special servicer is continuing to evaluate disposition strategies. Collateral for the third largest specially serviced loan (0.2%) is a 258 unit multifamily property located in Columbus, OH. The loan transferred to special servicing Oct. 5, 2007 due to monetary default. A foreclosure sale was scheduled for Oct. 17, 2008. Of the remaining four specially serviced loans (0.6%), Fitch expects losses on two (0.3%), both of which are in various stages of foreclosure. Fitch has identified 27 loans (15.4%) as Fitch loans of concern. The largest loan of concern (6.1%) is secured by Savoy Park, a 1,802 unit multifamily complex located in the Harlem submarket of New York, NY. At issuance, 90.7% of the units were rent stabilized, and the sponsor sought to improve property performance by bringing stabilized units to market rents, performing common area and unit-specific renovations, and sub-metering the property in order to pass through utility expenses to the tenants. The servicer-reported year-end DSCR was 0.36x, with occupancy of 95.5%. Based on a mid-year rent roll and operating statements, year two revenues generated by the property are in line with Fitch's expectations; however, expenses are significantly higher than expected. This is partly because the sub-metering project anticipated at issuance has not yet commenced. With an anticipated completion time of 12-18 months, any benefits from the project are unlikely to be seen prior to 2010 or 2011. As of the October remittance date, approximately $28.6 million of reserves remain available, including approximately $23.6 million for renovations and $5.0 million for debt service (five months). When the debt service reserve is drawn below $2.0 million, the borrower will be responsible for replenishing the reserve to $10.0 million, a requirement which will be in effect until the trailing-six month DSCR is at least 1.00x for three consecutive months. The second largest Fitch loan of concern (1.6%) is collateralized by a 241 room hotel located in Indianapolis, IN. The loan represents a construction take-out, and underwritten performance was based largely on the appraiser's determination of prevailing market revenues and expenses. To date, the property has underperformed expectations, with a servicer-reported year-end 2007 DSCR of 0.84x and occupancy of 60.3%. Fitch notes that approximately $1.3 million of reserves remain, and a cash equity contribution of approximately $36.5 million (39.9%) was made by the borrower at issuance. No other loan of concern represents more than 1.0% of the pool. Fitch loans of concern include the specially serviced loans (2.0%), loans with DSCRs below 1.0x, loans with Fitch stressed loan-to-value ratios of greater than 100%, and loans which have failed to meet budgeted performance underwritten at issuance. Approximately 54% of the pool consists of interest-only loans. An additional 30% of the pool consists of loans with an interest-only period prior to commencement of amortization. None of the loans mature in 2008, 2009, or 2010. CSMC MORTGAGE: S&P Strikes 'B' Ratings on 58 Securities Classes --------------------------------------------------------------- Standard & Poor's Ratings Services corrected its ratings on 58 classes from CSMC Mortgage Backed Trust 2007-5. S&P downgraded the classes in error on Oct. 27, 2008, as part of a review of U.S. Alternative-A RMBS transactions on Oct. 27, 2008. When S&P originally analyzed these classes, S&P stressed some of the classes at levels inconsistent with their actual performance due to an incorrect loan grouping within the structure. The revisions to the ratings are: Ratings Corrected CSMC Mortgage Backed Trust 2007-5 Rating Class CUSIP Current Oct. 27 Pre-Oct. 27 ----- ----- ------- ------- ----------- 2-A-1 22944BAN8 AAA B AAA 2-A-2 22944BAP3 AAA B AAA 2-A-3 22944BAQ1 AAA B AAA 2-A-4 22944BAR9 AAA B AAA 2-A-5 22944BAS7 AAA B AAA 2-A-6 22944BAT5 AAA B AAA 3-A-1 22944BAU2 AAA B AAA 3-A-2 22944BAV0 AAA B AAA 3-A-3 22944BAW8 AAA B AAA 3-A-4 22944BAX6 AAA B AAA 3-A-5 22944BAY4 AAA B AAA 3-A-6 22944BAZ1 AAA B AAA 3-A-7 22944BBA5 AAA B AAA 3-A-8 22944BBB3 AAA B AAA 3-A-9 22944BBC1 AAA B AAA 3-A-10 22944BBD9 AAA B AAA 3-A-11 22944BBE7 AAA B AAA 3-A-12 22944BBF4 AAA B AAA 3-A-13 22944BBG2 AAA B AAA 3-A-14 22944BBH0 AAA B AAA 3-A-15 22944BBJ6 AAA B AAA 3-A-16 22944BBK3 AAA B AAA 3-A-17 22944BBL1 AAA B AAA 3-A-18 22944BBM9 AAA B AAA 3-A-19 22944BBN7 AAA B AAA 4-A-1 22944BBP2 AAA B AAA 4-A-2 22944BBQ0 AAA B AAA 4-A-3 22944BBR8 AAA B AAA 4-A-4 22944BBS6 AAA B AAA 4-A-5 22944BBT4 AAA B AAA 4-A-6 22944BBU1 AAA B AAA 4-A-7 22944BBV9 AAA B AAA 4-A-8 22944BBW7 AAA B AAA 4-A-9 22944BBX5 AAA B AAA 4-A-10 22944BBY3 AAA B AAA 4-A-11 22944BBZ0 AAA B AAA 4-A-12 22944BCA4 AAA B AAA 4-A-13 22944BCB2 AAA B AAA 4-A-14 22944BCC0 AAA B AAA 4-A-15 22944BCD8 AAA B AAA 4-A-16 22944BCE6 AAA B AAA 4-A-17 22944BCF3 AAA B AAA 4-A-18 22944BCG1 AAA B AAA 4-A-19 22944BCH9 AAA B AAA 4-A-20 22944BCJ5 AAA B AAA 4-A-21 22944BCK2 AAA B AAA 4-A-22 22944BCL0 AAA B AAA 4-A-23 22944BCM8 AAA B AAA 4-A-24 22944BCN6 AAA B AAA 4-A-25 22944BCP1 AAA B AAA 4-A-26 22944BCQ9 AAA B AAA 4-A-27 22944BCR7 AAA B AAA 4-A-28 22944BCS5 AAA B AAA 4-A-29 22944BCT3 AAA B AAA 4-A-30 22944BCU0 AAA B AAA 4-A-31 22944BCV8 AAA B AAA 4-A-32 22944BCW6 AAA B AAA 4-A-33 22944BCX4 AAA B AAA DANKA BUSINES: DCML LLC Balks At Board for Snub of Nominees ----------------------------------------------------------- DCML LLC, beneficial owner of 22,000,000 or 8.48% shares of Danka Business Systems PLC's stock, sent a letter to the Danka Business' board of directors indicating its intent to vote against all resolutions proposed at the upcoming Annual General Meeting and request for existing directors up for re-election to relinquish their seats. In its letter, DCML said that during the last 4 months it has received an unsolicited outpouring of calls from disgruntled Danka shareholders whose holdings exceed, in total, 30 million shares. DCML said that shareholders have been unhappy with the manner in which the Board has favored Cypress and rewarded the management team, all to the detriment of majority shareholders and employees. In November 1999, The Cypress Group, LLC, a New York-based private equity firm, entered into a definitive agreement with Danka whereby equity investment funds managed by Cypress have agreed to invest $200 million in convertible participating preference shares of Danka. In return, Cypress received convertible preferred stock, two seats on Danka's board of directors, an annual dividend of 6.5%, and rights to additional seats to the Board in the event Danka missed six consecutive quarterly cash dividends. DCML added that on June 20, 2008, its London counsel submitted to Danka an alternative slate of directors to be included in the upcoming AGM. However, according to the stockholder, Danka chose to ignore its nominees. "We are presented, instead, with a slate of existing Board members for re-election - individuals who own less than 200,000 shares of stock and have displayed little interest in maximizing value for all stakeholders," DCML said in its letter. According to DCML, to date, the Board -- which draws $480,000 in total annual compensation -- has neither taken action to generate value by investing any portion of the company's $85-million cash balance, nor has it attempted to reasonably and equitably distribute the company's cash to shareholders. It has chosen only to re-submit its previous distribution proposal, which shareholders voted down months ago. While it says that the decline in the financial markets will materially affect renewed consideration of its original offer, DCML says the current economic environment only serves to highlight the value of cash and the returns that the cash can generate in distressed markets. "Ultimately, there is only one issue here - what constitutes an equitable distribution to all shareholders? Events in recent weeks have not changed what is right and fair, nor have they changed the duties owed by the Board to its common shareholders." As a result, DCML, which holds over 5.5 million shares in company stock, asks all nominees for Board re-election to relinquish their seats. DCML says its nominated directors will, if appointed, work for free ($0) and, in exercising their duties, will represent an ownership stake that is 85x greater than that owned by the current slate of nominated directors. DCML's says its proposed slate has the investment expertise necessary to maximize -- for ALL Danka stakeholders -- the value of the company's $85 million in cash and billions of dollars in NOLs. A full-text copy of the letter is available for free at http://ResearchArchives.com/t/s?348c DCML LLC stated that it reserves the right to further discuss and meet with management, the company's board, potential acquirers, financing sources and other shareholders and formulate plans or proposals regarding the company or its securities. Depending upon market conditions and other factors that it may deem material, DCML LLC may purchase additional Ordinary Shares and related securities or may dispose of all or a portion of the Ordinary Shares or related securities that it now beneficially owns or may hereafter. About Danka Business Systems Headquartered in St. Petersburg, Florida, Danka Business Systems PLC (LON: DNK) -- http://www.danka.com/-- offers document solutions including office imaging equipment: digital and color copiers, digital and color multifunction peripherals printers, facsimile machines, and software in the United States. It also provides a range of contract services, including professional and consulting services, maintenance, supplies, leasing arrangements, technical support and training, collectively referred to as Danka Document Services. The company's revenue is generated from two primary sources: new retail equipment, supplies and related sales, and service contracts. Danka sells Canon products, as well as Kodak, Toshiba and Hewlett-Packard. On Aug. 31, 2006, the company sold its subsidiary, Danka Australasia PTY Limited to Onesource Group Limited. In January 2007, the company disposed of its European businesses to Ricoh Europe B.V. Going Concern Doubt As reported in the Troubled Company Reporter on July 24, 2008, Ernst & Young LLP in Tampa, Fla., raised substantial doubt about Danka Business Systems PLC's ability to continue as a going concern after auditing the company's financial statements for the year ended March 31, 2008. The auditing firm stated that the company has incurred recurring operating losses, has a working capital deficit and has not complied with certain covenants of loan agreements with a bank. In addition, on June 27, 2008, the company sold its remaining operations to Konica Minolta Business Solutions U.S.A., Inc. The company posted a net loss of $35.7 million on total revenues of $418.2 million for the year ended March 31, 2008, as compared with a net loss of $29.2 million on total revenues of $450.2 million in the prior year. At March 31, 2008, the company's balance sheet showed $222.1 million in total assets, $229.2 million in total liabilities, and $368.9 in senior convertible participating shares, resulting in a $375.9 million stockholders' deficit. The company's consolidated balance sheet at March 31, 2008, also showed strained liquidity with $89.3 million in total current assets available to pay $218.1 million in total current liabilities. DELTA AIR: S&P Affirms 'B' Ratings Following Northwest Merger ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on Delta Air Lines Inc. (B/Negative/--), including the 'B' long-term corporate credit rating, following the airline's merger with Northwest Airlines Corp. (B/Negative/--). The U.S. Department of Justice has said it would not seek to block the all-stock merger. Northwest will operate as a subsidiary of Delta, with a single operating certificate and full operational combination expected within 18 months. "The 'B' corporate credit rating on Delta reflects risks associated with participation in the price-competitive, cyclical, and capital-intensive airline industry, its significant intermediate-term debt and capital spending commitments, and operational and customer service risks inherent in any airline merger," said Standard & Poor's credit analyst Philip Baggaley. S&P's rating also incorporates the reduced debt load and operating costs Delta achieved in Chapter 11, and an enhanced competitive position and synergy opportunities associated with the merger. Managements at Delta and Northwest have significantly increased their original forecast of cost and revenue synergies from the combination to $2 billion annually by 2012. They anticipate one- time cash integration costs of $600 million. These will be front- end loaded and could, in 2009, offset much of the synergy benefits. The merger creates a more comprehensive route network, with Delta's strength in the East, Southeast, and trans-Atlantic routes complemented by Northwest's strength in the upper-Midwest and on trans-Pacific routes. While this provides opportunities for revenue and cost synergies, it entails risks in integrating employee groups and information systems, and will result in higher labor costs as labor contracts are re-opened to secure employee support and capture the benefits of operating as a single airline. One of the potential benefits of the merger is that the combined airline (which is the world's largest, measured by traffic) should be able to capture some traffic from competitors by offering a more comprehensive route network, particularly as no other large U.S. airlines are currently seeking to merge in response. Secondly, the merged airline will be able reallocate aircraft throughout the enlarged route system so as to optimize aircraft size to passenger demand on each route. In addition, as in any merger, duplicate overhead and administrative costs will be cut. S&P sees the principal risks relating to the proposed merger arising from increased labor costs, potential problems relating to combining employee groups and information systems, and up-front integration costs. Although Delta currently has adequate liquidity and will likely report narrower losses than most other U.S. "legacy carriers," worse-than-expected fuel prices or economic weakness could erode the company's financial profile. S&P may lower its rating if unrestricted cash, short-term investments, and available committed bank borrowing capacity for the merged company fall below $5 billion and S&P does not expect that level to recover. If Delta is able to weather the downturn and industry conditions improve, and if it makes good progress in its merger integration, S&P could revise the outlook to stable. DLJ COMMERCIAL: Fitch Junks Rating on Class B-8 Certificates ------------------------------------------------------------ Fitch takes various actions and assigns Outlooks to DLJ Commercial Mortgage Corp.'s pass-through certificates, series 1999-CG2: Fitch downgrades and lowers the distressed recovery rating of these classes: -- $15.5 million class B-7 to 'B'; Outlook Negative from 'B+'; -- $10.9 million class B-8 to 'CC'/DR4' from 'CCC/DR3'. Fitch upgrades this class: -- $38.8 million class B-3 to 'AA'; Outlook Stable from 'AA-'. Fitch also affirms these classes: -- $718.8 million class A-1B at 'AAA'; Outlook Stable; -- Interest-only class S at 'AAA'; Outlook Stable; -- $69.8 million class A-2 at 'AAA'; Outlook Stable; -- $81.4 million class A-3 at 'AAA'; Outlook Stable; -- $19.4 million class A-4 at 'AAA'; Outlook Stable; -- $58.1 million class B-1 at 'AAA'; Outlook Stable; -- $23.3 million class B-2 at 'AAA'; Outlook Stable; -- $31 million class B-4 at 'A-'; Outlook Stable; -- $15.5 million class B-5 at 'BBB'; Outlook Stable; -- $19.4 million class B-6 at 'BB+'; Outlook Negative. Class A-1A has been paid in full. The balance of the non-rated class C has been reduced to zero due to realized losses on specially serviced assets. The downgrades of classes B-7 and B-8 are a result of increased loss expectations on specially serviced loans since Fitch' last rating action. Rating Outlooks reflect the likely direction of any rating changes over the next one to two years. The upgrade of class B-3 is due to an additional 9.7% paydown and 4% defeasance since Fitch's last rating action. As of the October 2008 distribution date, the pool's aggregate certificate balance has been reduced 29% to $1.10 billion from $1.55 billion at issuance. Ninety-six loans (42.3%) have defeased since issuance. There is 44% non-defeased loans scheduled to mature in 2009. The loans have a weighted average coupon of 7.75% and a weighted average debt service coverage ratio (DSCR) of 1.58 times (x). There is currently one loan (1%) in special servicing. The loan is secured by a multifamily property located in Houston, TX and is currently 60 days delinquent. The loan transferred to special servicing Sept. 19, 2008 due to imminent default. The property has been underperforming for several years and the borrower's cannot continue to fund the cashflow shortages following the interest rate adjustment date. The special servicer will follow a dual track of workout and foreclosure. EMERGENCY MEDICAL: S&P Hikes Corp. Credit Rating to 'BB-' --------------------------------------------------------- Standard & Poor's Rating Services raised its corporate credit rating on Emergency Medical Services Corp. (EMSC) to 'BB-' from 'B+'. At the same time, Standard & Poor's raised its issue-level ratings on EMSC's subsidiaries, AMR HoldCo and EmCare HoldCo. The outlook is stable. "This action reflects the company's improved liquidity and cash flow, stable operating performance, and demonstrated commitment to a financial policy appropriate for the rating," said Standard & Poor's credit analyst Rivka Gertzulin. The speculative-grade rating on Greenwood Village, Colo.-based EMSC, which has subsidiaries that operate in the fragmented ambulance transportation (American Medical Response (AMR); 57% of revenues) and physician staffing (EmCare; 43% of revenues) industries, reflects its exposure to reimbursement changes, relatively thin operating margins, exposure to increased bad debt, and aggressive financial risk profile. These concerns are only partly offset by its relatively diverse payor and contract mix, and its ability to somewhat offset a negative mix-shift in self- pay volume or reimbursement cuts with increased hospital subsidies. While AMR and EmCare are the leading providers in their respective businesses (ambulance transportation and emergency department physician staffing), they operate in highly fragmented industries where they each hold less than 10% market share and where government reimbursement rates for its services historically have been uncertain. EMSC receives approximately 30% of its total net revenue from Medicare, and to a lesser extent, Medicaid. Although the remainder of revenues is derived from commercial payors, managed care companies, hospital subsidies, and tight government reimbursement has contributed to thin operating margins. Moreover, the continuation of favorable commercial payor trends remains uncertain, notwithstanding EmCare's ability to request an increase in hospital subsidies when reimbursement is reduced. With the exception of 911 contracts (about 30% of revenue) EMSC's contracts are generally not very sticky because of low switching costs. The outlook is stable. Another upgrade is limited by S&P's concern that it may not be in the sponsor's (Onex Partners) interest to maintain an intermediate financial risk profile. Acquisitions or dividends would be a more likely prospect. S&P could revise the outlook to negative if credit measures decline (adjusted leverage of more than 3x) and S&P believes they will not quickly improve. This can occur if there are severe reimbursement cuts that cannot be offset, there is material contract loss, or in the case of shareholder-oriented financial events. EMISPHERE TECH: Names Patrick Osinski as Acting General Counsel --------------------------------------------------------------- Emisphere Technologies, Inc., disclosed that Paul Lubetkin, vice president, general counsel and corporate secretary, left the company effective Oct. 24, 2008, in order to pursue other interests. Patrick Osinski, former vice president, general counsel and vice president of business and government affairs at Organon, part of the Schering Plough Corporation, will fill the role of acting general counsel. "We thank [Mr. Lubetkin] for his service to Emisphere and wish him success in all his future endeavors," Michael V. Novinski, president and chief executive officer of Emisphere, said. Based in Cedar Knolls, New Jersey, Emisphere Technologies Inc., (NasdaqGM: EMIS) -- http://www.emisphere.com/-- is a biopharmaceutical company that focuses on a unique and improved delivery of therapeutic molecules using its eligen(R) technology. These molecules and compounds could be currently available or are under development. The molecules are usually delivered by injection; in many cases, their benefits are limited due to poor bioavailability, slow on-set of action or variable absorption. The eligen(R) technology can be applied to the oral route of administration as well other delivery pathways, like buccal, rectal, inhalation, intra-vaginal or transdermal. * * * PricewaterhouseCoopers LLP expressed substantial doubt about Emisphere 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 reported that the company has experienced sustained operating losses, has limited capital resources, and has significant future commitments. The company has limited capital resources and operations to date have been funded primarily with the proceeds from collaborative research agreements, public and private equity and debt financings and income earned on investments. Emisphere Technologies Inc.'s consolidated balance sheet at June 30, 2008, showed $20.2 million in total assets and $44.8 million in total liabilities, resulting in a $24.6 million in total stockholders' deficit. The company reported $7.6 million in net losses on $14,000 in revenues for the second quarter ended June 30, 2008, compared with $12.1 million in net losses on $398,000 in revenues for the same period in 2007. The company posted $11.6 million in net losses on $169,000 in revenues for the first half ended June 30, 2008, compared with $16 million in net losses on $3.2 million in revenues for the same period in 2007. EVA-TONE INC: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Eva-tone, Inc. 4801 Ulmerton Road Clearwater, FL 33762 Tel: (727) 572-7076 Bankruptcy Case No.: 08-17445 Type of Business: The Debtor offers audio duplication, compact disc and CD-ROM replication. See: http://www.evatone.com Chapter 11 Petition Date: Nov. 3, 2008 Court: Middle District of Florida (Tampa) Debtor's Counsel: Rod Anderson, Esq. rod.anderson@hklaw.com Holland & Knight LLP Post Office Box 1288 Tampa, FL 33601 Tel: (813) 227-6721 Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Mac Papers - Tampa raw material $369,596 1701 N. 50th St. P.O. Box 5657 Tampa, Fl 33675-5657 Tel: (813) 247-3461 Lenco Inc. raw material $354,308 10240 Deerpark Road P.O. Box 590 Waverly, NE 68462 Tel: (800) 872-1117 UPS Expedited Mail Ser. Inc. freight $311,883 UPS Mail Innovations P.O. Box 20684 Reno, NV 89515-0684 Tel: (800) 416-4644 Pitman Co. raw material $259,006 Progress Energy Florida Inc. lease $250,737 American Express supplies $237,950 Sabic Innovative Plastics raw materials $229,620 HBP/SPVEF Largo Florida LLC rent $224,165 US Phillips Cor. Rent $211,996 Blair Packaging raw materials $193,864 Toshiba DVD License Serv. Inc. royalties $175,167 MPEG-LA LLC royalties $155,796 EB&B LLC loan $150,775 Fisher Creek Associates Ltd. loan $150,000 Xpedx raw material $148,974 Hudson Corporate Ctr. III contract labor $119,149 Federal Express freight $98,638 Randstad contract labor $95,359 Microsoft Corporation licensing $74,296 EVA-TONE INC: Landlord Dispute Prompts Chapter 11 Filing -------------------------------------------------------- Eva-tone Inc. filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Middle District of Florida. The Chapter 11 filing came after the company received a notice of default from its landlord and warned to terminate its contract, Bloomberg News reports. The parties are presently in talks and are hopeful that they can work something out, the report says. According to St. Petersburg Times, the company reassures its 200 employees that its operations continue. However, layoff is possible, the report says. Eva-tone listed assets and debts between $10 million and $50 million in its filing. The company owes about $3.8 million to its unsecured creditors including Mac Papers - Tampa owing $369,596 in raw material; Lenco Inc. owing $354,308 in raw material; and UPS Expedited Mail Ser. Inc. owing $311,883 in freight services. "We are aware [the company was] struggling somewhat but felt [it] would recover," St. Petersburg Times quoted Tom Grove, branch credit manager of Mac Papers, as saying. Holland & Knight LLP of Tampa, Florida, represents the company in its restructuring efforts. Headquartered Clearwater, Florida, Eva-tone Inc. -- http://www.eva-tone.com/-- offers a range of services including audio, video, printing. FORD MOTOR: Car & Light-Truck Sales Drop 30% From 2007 ------------------------------------------------------ Bill Koenig at Bloomberg News reports that Ford Motor Co. said that its car and light-truck sales dropped 30% this year, from a year earlier. Ford Motor's cars and light truck sales dropped to 132,248, from 189,360, Bloomberg relates, citing Autodata Corp. Sales of Ford, Lincoln, and Mercury brands declined 30% for trucks and 27% for cars, according to the report. Ford's sales, says the report, included declines of 58% for the Edge wagon and 18% for the Focus small car. The report states that Focus sales had increased most of the year after U.S. gasoline prices peaked at more that $4 a gallon in July and averaged 26% higher than in 2007. Bloomberg states that sales of Ford's F-Series pickups dropped 16% in October 2008, compared to 2007. Declines in U.S. Auto Sales According to Bloomberg, auto sales in the U.S. declined 32% in October to the lowest monthly total since January 1991, as reduced access to loans and a weaker economy discouraged consumers. Autodata, says Bloomberg, said that October 2008 total sales dropped to 838,156 from 1.23 million. Chrysler LLC said in a statement that its sales declined 35% to 94,530 vehicles in October 2008, from 145,316 in October 2007. According to Bloomberg, sales of Chrysler's Ram large pickup dropped 29%. Bloomberg relates that Toyota reported that its sales dropped 23% to 152,101 this year, compared to 197,592 last year. Honda sold 85,864 cars and light trucks, dropping 25% from 114,799 in 2007, Bloomberg says, citing Honda spokesperson Kurt Antonius. Nissan's U.S. vice president of Nissan-brand sales, Al Castignetti, said that the company's sales declined 33% to 56,945 vehicles, Bloomberg states. As reported in the Troubled Company Reporter on Nov. 4, 2008, General Motors Corp. dealers in the U.S. delivered 170,585 vehicles in October, down 45% compared with a year ago. GM truck sales of 97,119 were down 51% and car sales of 73,466 were off 34%. According to Bloomberg, Ford Motor's worldwide marketing chief Jim Farley said on a conference call that industry sales in the first half of 2009 will be "sobering." Ford Motor's sales analyst George Pipas also said on the conference call that sales may fall to fewer than 14 million vehicles in 2008, from 16.1 million in 2007, the report states. Some automakers, according to Bloomberg, said that sales might improvement in November and December because of the U.S. presidential election and end-of-the-year promotions. Bloomberg relates that Mr. Farley said, "Most manufacturers will start year-end promotions in early November. The true test will come in the first quarter of next year, the first half of next year." About Ford Motor Co. Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company provides financial services through Ford Motor Credit Company. The company has operations in Japan in the Asia Pacific region. In Europe, the company maintains a presence in Sweden, and the United Kingdom. The company also distributes its brands in various Latin-American regions, including Argentina and Brazil. * * * As reported in the Troubled Company Reporter on Oct. 10, 2008, Fitch Ratings downgraded the Issuer Default Rating of Ford Motor Company and Ford Motor Credit Company by one notch to 'CCC' from 'B-'. FRONTIER AIRLINES: Court Scraps CBA with Teamsters Mechanics ------------------------------------------------------------ Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York granted Frontier Airlines Inc.'s motion to reject its contracts with the International Brotherhood of Teamsters covering mechanics and material specialists. The Teamsters, which represent Frontier's mechanics, have been struggling to stop Frontier from permanently outsourcing all of its maintenance work to El Salvador-based Aeroman. Though Frontier and the Teamsters earlier reached an agreement regarding wage cuts, their negotiations broke down after Frontier insisted on the unlimited right to permanently outsource its heavy-check aircraft maintenance. The Teamsters refused to agree to Frontier's outsourcing demand and Frontier sought to reject the Teamster contracts. The judge was then required by existing law to either reject the parties' collective bargaining agreement allowing Frontier to make changes as described in the decision or to deny Frontier's motion, leaving the Teamster agreements in place. In the end he sided with Frontier. Despite his ruling, however, the judge made clear in his decision that Frontier may outsource its aircraft maintenance only as a last resort - after it has exhausted all other options to perform the heavy check work at its Denver repair station. "While the Teamsters do not agree with Judge Drain's ruling, the ruling does at least anticipate that our mechanics will continue to work on heavy maintenance in Denver," Matthew Fazakas, president of Teamsters Local 961, which represents Frontier's mechanics in Denver, said. "The company also has to continue the full staffing of the heavy maintenance department," Mr. Fazakas said. "The economic concessions must be modeled after the Teamster concession proposals, and there must be a fair and transparent process to ensure the company works in good faith in its hiring practices so that it uses its outsourcing only as an absolute last resort." Teamsters Airline Division Director David Bourne commended Judge Drain for trying to get Frontier to negotiate in good faith. "However, we are bitterly disappointed with his ruling and anticipate appealing it," Mr. Bourne said. "The Teamsters are adamantly opposed to all aircraft maintenance outsourcing because it is unsafe, jeopardizes the flying public, costs more than in- house maintenance, and, especially in today's economy, further destabilizes the industry. This is no way to run a U.S. airline." Mr. Fazakas noted that Frontier is a low-cost carrier that has among the lowest labor costs in the industry. "Labor costs had nothing to do with Frontier filing for bankruptcy protection," Mr. Fazakas said. "But once it filed for bankruptcy, Frontier's top management and its high-priced lawyers decided to take advantage of the built-in flaws of the bankruptcy laws to slash our members' wages and to export 129 of our members' Denver- based jobs to El Salvador." "Why on earth does Congress allow laws to encourage the foreign outsourcing of good, skilled, middle-class and critically important jobs to foreign countries?" Mr. Fazakas said. "Frontier's use of the bankruptcy laws to export our jobs and cut our surviving members' wages is nothing short of a national scandal." "The bankruptcy laws are skewed in favor or debtors and against working people," Mr. Bourne said. About Frontier Airlines Inc. Headquartered in Denver, Colorado, Frontier Airlines Inc. -- http://www.frontierairlines.com/-- provides air transportation for passengers and freight. It operates jet service carriers linking Denver, Colorado hub to 46 cities coast-to-coast, 8 cities in Mexico, and 1 city in Canada, as well as provide service from other non-hub cities, including service from 10 non-hub cities to Mexico. The Debtor and its debtor-affiliates filed for Chapter 11 protection on April 10, 2008, (Bankr. S.D. N.Y. Case No.: 08-11297 thru 08-11299.) Benjamin S. Kaminetzky, Esq., and Hugh R. McCullough, Esq., at Davis Polk & Wardwell, represent the Debtors in their restructuring efforts. Togul, Segal & Segal LLP is the Debtors' Conflicts Counsel, Faegre & Benson LLP is the Debtors' Special Counsel, and Kekst and Company is the Debtors' Communications Advisors. (Frontier Airlines Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FRONTIER AIRLINES: Transportation Workers Union Ratifies New CBA ---------------------------------------------------------------- Members of the Transportation Workers Union of America (TWU) at Frontier Airlines on Oct. 31 ratified a long-term labor agreement with the airline. The agreement was negotiated to extend certain earlier agreed upon wage and benefit concessions. "I am gratified that the TWU membership continues to demonstrate, with this vote, their willingness to work hand in hand with Frontier's management to move our airline to sustainability and future growth," said Frontier President and Chief Executive Officer Sean Menke. "This agreement is very important in helping attract investors by contributing to our cost-reduction efforts." "The TWU appreciates the joint effort made in reaching this agreement," said TWU Local 540 President David Durkin. "We believe that this agreement shows our commitment to Frontier and our belief in the long-term success of the company." The TWU represents dispatchers at Frontier Airlines. About Frontier Airlines Inc. Headquartered in Denver, Colorado, Frontier Airlines Inc. -- http://www.frontierairlines.com/-- provides air transportation for passengers and freight. It operates jet service carriers linking Denver, Colorado hub to 46 cities coast-to-coast, 8 cities in Mexico, and 1 city in Canada, as well as provide service from other non-hub cities, including service from 10 non-hub cities to Mexico. The Debtor and its debtor-affiliates filed for Chapter 11 protection on April 10, 2008, (Bankr. S.D. N.Y. Case No.: 08-11297 thru 08-11299.) Benjamin S. Kaminetzky, Esq., and Hugh R. McCullough, Esq., at Davis Polk & Wardwell, represent the Debtors in their restructuring efforts. Togul, Segal & Segal LLP is the Debtors' Conflicts Counsel, Faegre & Benson LLP is the Debtors' Special Counsel, and Kekst and Company is the Debtors' Communications Advisors. (Frontier Airlines Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) GENERAL GROWTH: Inks Interim Deals with CEO and President --------------------------------------------------------- General Growth Properties, Inc., entered into one year employment agreements with each of Adam Metz, interim chief executive officer, and Thomas H. Nolan, Jr., interim president. The company has granted each of Messrs. Metz and Nolan an employment inducement award of options to acquire 1,000,000 and 800,000 shares of the company's common stock. These Option Grants were awarded in accordance with the New York Stock Exchange employment inducement grant exemption and were therefore not awarded under any of the company's stockholder approved equity plans. These stock options have an exercise price equal to the closing price of the company's common stock on Nov. 3, 2008, and vest in their entirety on Oct. 25, 2009, or earlier, in certain circumstances. General Growth is a U.S.-based publicly traded Real Estate Investment Trust (REIT). The company currently has ownership interest in, or management responsibility for, a portfolio of more than 200 regional shopping malls in 44 states, as well as ownership in master planned community developments and commercial office buildings. The company's portfolio totals approximately 200 million square feet and includes over 24,000 retail stores nationwide. The company is listed on the New York Stock Exchange under the symbol GGP. * * * As reported in the Troubled Company Reporter on Oct. 7, 2008, Moody's Investors Service has lowered the ratings on General Growth Properties, Inc., certain of its subsidiaries and The Rouse Company LP (to Ba3 from Ba2 senior secured bank debt; to Ba3 from Ba2 senior unsecured debt) and placed the ratings on review for possible downgrade. As reported in the Troubled Company Reporter on Oct. 8, 2008, Standard & Poor's Ratings Services lowered its corporate credit rating on General Growth Properties Inc. to 'B+' from 'BB'. At the same time, it lowered the rating on the company's unsecured debt to 'B' from 'BB-', affecting roughly $5 billion of securities. The recovery rating assigned to the company's unsecured debt remains unchanged at '5'. All of S&P's General Growth-related ratings remain on CreditWatch with negative implications. As reported in the Troubled Company Reporter on Oct. 16, 2008, Fitch Ratings has downgraded and placed on Rating Watch Negative the Issuer Default Ratings and outstanding debt ratings of General Growth Properties and its subsidiaries as: General Growth Properties, Inc. -- IDR to 'B+' from 'BB'. GGP Limited Partnership -- IDR to 'B+' from 'BB'; -- Revolving credit facility to 'B/RR5' from 'BB'; -- Term loan to 'B/RR5' from 'BB'; -- Exchangeable senior notes to 'B/RR5' from 'BB'; -- Perpetual preferred stock (indicative) to 'CCC+/RR6' from 'B+'. The Rouse Company LP -- IDR to 'B+' from 'BB'; -- Senior unsecured notes to 'B/RR5' from 'BB'. Fitch has also downgraded and withdrawn these ratings: Price Development Company, L.P.: -- IDR to 'B+' from 'BB+' -- Senior unsecured notes to 'B' from 'BB+'. Fitch's actions affect approximately $6.3 billion of outstanding indebtedness. GENERAL MOTORS: GMAC's Credit Tightening Affects Firm's Sales ------------------------------------------------------------- Sharon Terlep at Dow Jones Newswires reports that General Motors Corp. said that GMAC Financial Services' moves to crack down lending contributed to the decline in GM's auto sales in October 2008. As reported in the Troubled Company Reporter on Nov. 4, 2008, GM dealers in the U.S. delivered 170,585 vehicles in October, down 45% compared with a year ago. GM truck sales of 97,119 were down 51% and car sales of 73,466 were off 34%. Dow Jones relates that GM relies heavily on GMAC to sell vehicles. GM, according to Dow Jones, launched an advertising campaign to inform consumers that financing would be available from various sources, but failed to attract buyers. Dow Jones quoted Jerry Seiner -- an auto dealer who sells several brands of GM vehicles in Utah -- as saying, "If you don't think you're going to get financing, you're not going to come in to buy a car. Are we losing sales because of an inability to finance? Some. But showroom traffic is way off and that's affecting us more than anything." According to Dow Jones, GMAC is taking big losses on vehicle leases gone bad due to sinking resale values of big pickup trucks and sport-utility vehicles. Citing GM Sales Chief Mark LaNeve, Dow Jones relates that vehicle leasing was "nonexistent" last month, compared to 2007, when about 50,000, or 25%, of GM cars and trucks were purchased with leases. According to the report, Mr. LaNeve said that GM has been able to keep 60% of leasing clients through other financing options. GMAC's limiting of loans to customers with a 700 credit score disqualified almost three-fourths of potential GM buyers, the report states, citing Mr. LaNeve. "Our dealers were forced to access outside banks to a very high degree. And even worse than that was that the media reporting was in effect 'GMAC is not buying and GM credit can't be accessed through GM dealers'," the report quoted Mr. LaNeve as saying. Low consumer confidence is hurting business more than an actual inability to secure loans, Dow Jones states, citing Mr. Seiner. About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. At June 30, 2008, the company's balance sheet showed total assets of US$136.0 billion, total liabilities of US$191.6 billion, and total stockholders' deficit of US$56.9 billion. For the quarter ended June 30, 2008, the company reported a net loss of US$15.4 billion over net sales and revenue of US$38.1 billion, compared to a net income of US$891.0 million over net sales and revenue of US$46.6 billion for the same period last year. GS MORTGAGE: Fitch Cuts Ratings of Three 2007-GG10 Classes to 'B' ----------------------------------------------------------------- Fitch Ratings downgrades and assigns Outlooks to GS Mortgage Securities Corporation II, series 2007-GG10: -- $94.5 million class J to 'BBB-' from 'BBB'; Outlook Negative; -- $75.6 million class K to 'BB+' from 'BBB-'; Outlook Negative; -- $37.8 million class L to 'BB' from 'BB+'. Outlook Negative; -- $18.9 million class M to 'BB-' from 'BB'; Outlook Negative; -- $28.4 million class N to 'B+' from 'BB-'; Outlook Negative; -- $18.9 million class O to 'B' from 'B+'; Outlook Negative; -- $18.9 million class P to ''B-' from 'B'; Outlook Negative; In addition, Fitch affirms these classes: -- $72.4 million class A-1 at 'AAA'; Outlook Stable; -- $725.3 million class A-2 at 'AAA'; Outlook Stable; -- $246.6 million class A-3 at 'AAA'; Outlook Stable; -- $72.0 million class A-AB at 'AAA'; Outlook Stable; -- $3,661.0 million class A-4 at 'AAA'; Outlook Stable; -- $514.0 million class A-1A at 'AAA'; Outlook Stable; -- $756.3 million class A-M at 'AAA'; Outlook Stable; -- $519.9 million class A-J at 'AAA'; Outlook Stable; -- Interest-only class X at 'AAA'; Outlook Stable; -- $75.6 million class B at 'AA+'; Outlook Stable; -- $94.5 million class C at 'AA'; Outlook Stable; -- $56.7 million class D at 'AA-'; Outlook Negative; -- $56.7 million class E at 'A+'; Outlook Negative; -- $75.6 million class F at 'A'; Outlook Negative; -- $75.6 million class G at 'A-'; Outlook Negative; -- $104.0 million class H at 'BBB+'; Outlook Negative; -- $18.9 million class Q at 'B-'; Outlook Negative. Fitch does not rate the $141.8 million class S. The downgrades of classes J through P are due the significant concentration of Fitch loans of concern (29.2%). Rating Outlooks reflect the likely direction of any rating changes over the next one to two years. As of the September 2008 distribution date, the transaction has paid down by 0.03% to $7.560 billion from $7.563 at issuance. Two loans (1.2%) are in special servicing. The larger specially serviced loan (0.64%) is secured by a portfolio of 11 cross-collateralized, cross-defaulted limited and full service hotels totaling 2,187 rooms and located across seven states throughout the Midwest, East, and Southeast. The loan was transferred to special servicing in April 2008 due to imminent monetary default. The borrower continued to pay debt service through August 2008 but defaulted in September 2008.The borrower has been delinquent with its franchisors and has not provided adequate financial statements or business plans. The second specially serviced loan (0.57%) is a 561 unit multifamily property located in Georgia. The loan was transferred to special servicing on July 2, 2008 due to monetary default. The property is now posted for foreclosure. Fitch loans of concern (29.2%) include several loans back by transitional assets (12.5%) whose performance has declined since issuance as well as loans with debt service shortfalls and no remaining reserves. At issuance, the transitional assets, which are located in several markets, were expected to benefit from rental growth due to below market lease turnover which has yet to materialize. The third, ninth and 10th largest loans (10.5%) are considered Fitch loans of concern due to low servicer reported year-end 2007 (YE07) DSCRs. The third largest loan, Two California Plaza (6.2%), is collateralized by an office property located in Los Angeles, CA. The sponsor is Maguire Properties, Inc. As of year end (YE) 2007, the servicer reported debt service coverage ratio (DSCR) was 0.74 times (x) compared to a DSCR at issuance of 1.20x. At issuance, a $3.0 million debt service reserve was established, which has been depleted. The ninth largest loan, 550 South Hope Street (2.2%), is collateralized by an office building located in Los Angeles, CA, whose sponsor is also Maguire Properties, Inc. As of YE07, the DSCR was 0.45x compared to a DSCR of 1.23x at issuance. Increased rental income is expected at the property as the current tenants roll to market levels. However, lease expirations for 2008, 2009, 2010 are 9.0%, 11.4% and 10.1%, respectively and the current market vacancy is 12.5%. Occupancy at issuance was 89.3% compared to YE07 occupancy of 95.4%. At issuance, a $4.5 million debt service reserve was established, of which $1.4 million remains. Finally, the 10th largest loan, Harbor Point Apartments (2.1%), is collateralized by a multifamily property located in Boston, MA. Sponsorship includes CMJ, Keen Development Corp., and Cruz Columbia Point, Inc. As of YE07, the DSCR was 0.96x compared to a DSCR at issuance of 1.15x. The low DSCRs are primarily the result of tenants paying below-market rents. At issuance, the loans income was based on a stabilization plan of increasing rent and rental growth in future years which may not occur as expected due to current market conditions. In addition, the property includes 400 units of subsidized housing. At issuance, the loan was structured with a $2.9 million debt service reserve and the remaining balance is $2.7 million. The Shorenstein Portland Portfolio (9.2%) is the largest loan in the transaction. It is secured by 46 office buildings with a total of 3.8 million square feet (sf). The buildings are located throughout the greater Portland area. The loan has exhibited improved performance since issuance. The loan's DSCR and occupancy at issuance were 1.34x and 94.1%. As of YE 2007, the servicer- reported DSCR has increased to 1.37x and occupancy was 86.6%. The loan matures on April 6, 2017. The transaction has minimal near-term maturity risk as none of the loans mature prior to 2011 and 85.6% of the pool matures in 2017. Fitch will continue to closely monitor the loans of concern to determine whether planned rental growth will be realized. HARBOURVIEW CDO III: S&P Cuts Class A Rating to 'CCC'; Watch Neg ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the class A notes issued by HarbourView CDO III Ltd. to 'CCC' from 'B-'. The rating remains on CreditWatch, where it was placed with negative implications on Sept. 17, 2008. HarbourView CDO III Ltd. is a cash flow collateralized debt obligation of asset backed securities (CDO of ABS) transaction that was originated in April 2001. The lowered rating reflects the negative migration in the credit quality of the underlying collateral and the increase in defaults since S&P lowered S&P's rating on the class in July 2007. Based on the Sept. 30, 2008, trustee report, 35.97% of the assets in the portfolio ($33.304 million) are considered defaulted, up from 23.65% ($28.669 million) as of the June 5, 2007, trustee report. Over the same period, the percentage of speculative-grade assets in the portfolio has increased by 3.05%. On June 9, 2005, the majority of the class A noteholders for HarbourView CDO III Ltd. (the controlling class under the terms of the transaction's indenture) directed the trustee to accelerate the maturity of all of the notes in accordance with section 5.2(a) of the indenture. The deal previously triggered an event of default under section 5.1(i) of the indenture. Due to the acceleration, after meeting the requirements for specific expenses and class A interest, the remaining available cash is diverted to pay down the principal of the class A notes, which have paid down approximately $242.693 million since issuance. Rating Lowered and Remaining on CreditWatch Negative HarbourView CDO III Ltd. Rating Class To From Current bal. (mil. $) ----- -- ---- --------------------- A CCC/Watch Neg B-/Watch Neg 68.556 Transaction Information Issuer: HarbourView CDO III Ltd. Co-issuer: HarbourView CDO III Funding Corp. Collateral manager: HarbourView Asset Management Corp. Underwriter: Lehman Bros. Inc. Trustee: Deutsche Bank Trust Co. Americas HOVNANIAN ENTERPRISES: Fitch Says Debt Exchange Offer Good Move --------------------------------------------------------------- Hovnanian Enterprises, Inc. (NYSE:HOV) announced the commencement of a private offer to exchange senior unsecured notes in a private placement for new 18% senior secured notes due 2017. The secured notes will be secured on a third-priority basis by substantially all the assets owned by the company to the extent such assets secure obligations under the company's revolving credit agreement, second-priority secured notes and certain permitted debt. This transaction is not being prompted by short-term liquidity concerns, nor is it being triggered by covenants under the company's revolving credit facility or secured second-lien notes. Hovnanian currently has adequate liquidity, with $677 million of cash on the balance sheet as of July 31, 2008, with no debt maturities until 2010, when $100 million of senior subordinated notes come due. The company has also generated approximately $650 million of cash from operations for the latest 12 months ending July 31, 2008. The debt exchange offer is an opportunistic transaction for Hovnanian that would allow the company to lower its absolute debt levels by approximately $350 million and extend the maturity on $250 million of its current debt to 2017. While the interest rate on the new secured notes will be higher (at 18%) compared with the interest rates of its existing unsecured notes (between 6 1/4% and 8 5/8%), interest expense is not expected to increase significantly given the considerable discount at which the unsecured notes are being exchanged. Hovnanian is offering to exchange the new secured notes for 40%-47% of the original principal amount of the unsecured notes that are subject to the exchange offer. HVHC INC: S&P Raises Sr. Secured Debt Rating A Notch to 'BB+' ------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on HVHC Inc. to stable from negative. Standard & Poor's also said that it affirmed its 'BB' counterparty credit rating on HVHC. In addition, Standard & Poor's raised its senior secured debt rating on HVHC's credit facilities to 'BB+' (one notch above the counterparty credit rating on the company) from 'BB'. Standard & Poor's also revised its recovery rating on these loans to '2' from '3', indicating that lenders can expect substantial (90%-100%) recovery in the event of a payment default. HVHC is the holding company for a portfolio of eye care services and eyewear-related companies. "The ratings on HVHC are based on its competitive advantages related to its vertical integration, favorable long-term industry fundamentals and demographic trends, and good earnings profile that supports improving credit metrics," said Standard & Poor's credit analyst James Sung. "Offsetting these strengths are the highly competitive and fragmented competitive landscape, balance sheet quality that is constrained by a high level of goodwill and intangibles, and a moderate level of debt leverage." The outlook revision is based on HVHC's financial results through the first nine months of 2008, which suggest that the company will meet its full-year expectations. In addition, the company continues to pay down its debt prudently, and improve credit metrics (debt to capital, debt to EBITDA, and interest coverage). The revised recovery rating and notching reflect a significant decrease in senior secured debt outstanding than S&P took into account in its previous analysis. HVHC's senior secured credit facilities consist of a $155 million first-lien term loan B due 2013 and a $30 million revolver due 2011. In the third quarter of 2008, HVHC received a $50 million capital contribution from its parent company, Highmark Inc. (A/Stable/--), for the primary purpose of paying down debt. HVHC, a wholly owned subsidiary of Highmark, provides eye care service and eyewear-related products through its subsidiaries, which include Davis Vision Inc. (managed vision care services), Viva Optique Inc. (eyewear design/distribution), and ECCA Holdings Corp., a holding company for Eye Care Centers of America Inc. (optical retail stores). Standard & Poor's analyzes HVHC's financial profile exclusive of the financial results of the ECCA subsidiaries because HVHC and ECCA each has its own financing with no cross-guarantees and restrictions on dividends. HVHC and ECCA debt are also nonrecourse to the parent company, Highmark Inc. For 2008, S&P expects that HVHC's credit metrics will remain supportive of the rating. Sustained revenue and earnings growth, along with improved credit metrics, over the next 12 months could support a potential outlook revision to positive. However, S&P expects that developing recessionary pressures and increased competition could dampen HVHC's revenue and earnings growth in 2009. HYDROGEN LLC: Bankruptcy Filing Cues Nasdaq to Delist Stocks ------------------------------------------------------------ HydroGen Corporation received a Nasdaq Staff delisting letter on indicating that the company's securities will be delisted from The Nasdaq Stock Market in accordance with Marketplace Rules 4300, 4340(b) and IM 4300, due to the filing of a voluntary petition for relief under Chapter 11 of the Bankruptcy Code by the company's subsidiary, HydroGen, L.L.C. Accordingly, if the company does not appeal this decision, the trading of the company's common stock will be suspended at the opening of business on Nov. 7, 2008, and a Form 25-NSE will be filed with the Securities and Exchange Commission, which will remove the company's securities from registration and listing on The Nasdaq Stock Market. The company has determined not to appeal the Nasdaq Staff decision to delist the company's securities. The company has been advised that its securities are immediately eligible for quotation in the Pink Sheets, an electronic quotation service for securities traded over-the-counter, effective as of the open of business on Nov. 7, 2008. In addition, the company intends to request that one of its current market makers file the necessary application with the Financial Industry Regulatory Authority to quote the securities and, as a result, the company anticipates that its securities will be quoted on the Over-the- Counter Bulletin Board in the near future. Headquartered in New York City, HydroGen, L.L.C. -- http://www.hydrogenllc.net/-- manufactures fuel cell systems and air-cooled phosphoric acid fuel cell technology. HydroGen Corporation owns 100% of the membership interest of the Debtor. The Debtor filed for Chapter 11 protection on Oct. 22, 2008, (Bankr. S.D. N.Y. Case No. 08-14139) Law Offices of David C. McGrail represents the Debtor in its restructuring efforts. When it filed for protection from its creditors, it has estimated assets of $1 million to $10 million and estimated debts of $1 million to $10 million. The Debtor did not file a list of 20 largest unsecured creditors. IDEARC INC: S&P Cuts Rating to 'B-' From 'B+'; on Watch Negative ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Idearc Inc. to 'B-' from 'B+'. The rating, along with all issue-level ratings on the company, was placed on CreditWatch with negative implications. At the same time, S&P revised its recovery rating on the company's senior secured credit facility to '3', indicating the expectation for meaningful (50% to 70%) recovery in the event of a payment default, from '1'. The issue-level rating on this debt accordingly revised to 'B-' (at the same level as the 'B-' corporate credit rating on Idearc) from 'BB'. The recovery rating change reflects a lowering of the emergence EBITDA multiple to 5x from 6x, and a more significant decline in cash flow than S&P used in its previous analysis. The lower issue-level rating on the credit facility reflects the two-notch downgrade of the corporate credit rating, plus another two notches due to the revision of the recovery rating. In addition, S&P lowered its rating on the Idearc's senior unsecured debt to 'CCC' (two notches lower than the corporate credit rating) from 'B-', while the recovery rating on this debt remains at '6', indicating the expectation for negligible (0% to 10%) recovery in the event of a payment default. "The ratings downgrade and CreditWatch listing reflects Idearc's announcement that it has retained Merrill Lynch & Co. and Moelis & Company as financial advisors to review strategic alternatives related to the company's capital structure," explained Standard & Poor's credit analyst Emile Courtney. "Although Idearc has not disclosed the extent of the potential recapitalization and states that there are no assurances it will pursue one, we believe the probability has increased meaningfully that it may undertake significant transactions that we could deem as distressed exchanges." In addition, operating performance has deteriorated at Idearc. Reported EBITDA declined by 16% in the nine months ended September 2008, and by 24% in the September 2008 quarter. Idearc has announced that it expects $50 million in realized cost savings in 2008, and that it has completed one-half of a 20% reduction in headcount and the closing of multiple offices. Even so, S&P now expects that EBITDA could decline in the 20% area in 2008, versus S&P's previous expectation of about 10%, and lease-adjusted debt to EBITDA (net of opportunistic revolver drawings of $247 million) was 6.4x at September 2008. Even though operating performance has deteriorated significantly this year, Idearc generated $340 million in free cash flow in the nine months ended September 2008 and had $304 million in cash balances at that time. In addition, S&P estimate that the company's bank calculation of net leverage was at about 6.40x at September 2008, versus a covenant of 7.25x. S&P will resolve the CreditWatch listing once S&P has the opportunity to assess the company's recapitalization plans, if any, and after it conducts a review of expected operating performance over the intermediate term. INTEREP NAT'L: Trustee Continues Operations Despite Chapter 7 ------------------------------------------------------------- Following the conversion of Interep National Radio Sales Inc.'s Chapter 11 case to a liquidation under Chapter 7, trustee Kenneth Silverman said that the company remains in operation, Streaming Magazine (Florida) reported last week. In a court filing Monday, Mr. Silverman asked the Court for authority to operate Interep on a limited basis through Jan. 30, 2009, and to use available funds to "maintain and preserve [Interep's] business and assets." Interep's motion to the U.S. Bankruptcy Court in the Southern District of New York was granted last week to convert the filing from Chapter 11 reorganization to Chapter 7. The report says however that Interep -- whose clients include CBS Radio, Entercom, Buckley, Lincoln Financial, and others -- is still open, and no layoffs have so far been reported. As reported in the Troubled Company Reporter on Oct, 27, 2008, Interep National Radio Sales Inc. and its debtor-affiliates asked the Court to convert their Chapter 11 cases to a Chapter 7 liquidation proceeding, saying that: i) an event of default under the Debtors' postpetition financing facility will occur Oct. 24, 2008, wherein the Debtors may lose all access to liquidity; and ii) certain of the Debtors' key leases will be deemed rejected by operation of law under Section 365(d) of the Bankruptcy Code on Monday, Oct. 27, 200 Erica M. Ryland, Esq., at Jones Day, said the conversion of the Debtors' cases is in the best interest of their estates and their creditors. About Interep National Headquartered in New York, Interep National Radio Sales, Inc. -- http://www.interep.com/-- are independent sales and marketing companies that specialize in radio, the Internet, television and complementary media. With 16 offices across the U.S., they serve radio and television station clients and advertisers in all 50 states and beyond. The company and 14 of its affiliates filed for Chapter 11 protection on March 30, 2008 (Bankr. S.D.N.Y. Lead Case No.08-11079). Erica M. Ryland, Esq., at Jones Day, represents the Debtors in their restructuring efforts. No Official Committee has been appointed in the cases to date. The Debtors selected Kurztman Carson Consultants LLC as claims, noticing and balloting agent. When the Debtor filed for protection from their creditors, it listed between $50 million and $100 million in asset and between $100 million and $500 million in debts. JPMORGAN CHASE TRUST: S&P Holds 'B' on Classes P, Q & T Certs. -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on 25 commercial mortgage pass-through certificates from JPMorgan Chase Commercial Mortgage Securities Trust 2007-LDP11. The affirmations reflect credit enhancement levels that provide adequate support through various stress scenarios. As of the Oct. 15, 2008, remittance report, the trust collateral consisted of 265 loans with an aggregate principal balance of $5.401 billion, compared with the same number of loans totaling $5.414 billion at issuance. The master servicer, Wachovia Bank N.A. (Wachovia), reported financial information for 89% of the loans in the pool. Sixty-one percent of the servicer-reported information was year-end 2007 data, and the remainder was partial- year 2008 data. Based on this information, Standard & Poor's calculated a weighted average debt service coverage (DSC) of 1.24x, compared with 1.34x at issuance. To arrive at the current weighted average DSC, S&P factored in the amortization of loans accounting for 23% of the trust balance that originally had partial interest-only (IO) periods ranging from 12 to 72 months. All of the loans in the trust are current, and no loans are with the special servicer. The trust has incurred no losses to date. The top 10 loans have an aggregate principal balance of $1.78 billion (33%) and a weighted average DSC of 1.23x, compared with 1.30x at issuance. The fourth-largest loan in the pool is on the master servicer's watchlist. The sixth-largest loan, the Franklin Mills loan, is not on Wachovia's watchlist but reported a low DSC of 0.98x for the year ended Dec. 31, 2007. This loan, secured by 1.58 million sq. ft. of a 1.71 million-sq.-ft. super- regional mall in Philadelphia, has a trust balance of $174.0 million (3%) and a whole-loan balance of $290.0 million. Operating performance has improved in 2008. The DSC and occupancy for the six months ended June 30, 2008, were 1.18x and 87%, respectively. Standard & Poor's reviewed the property inspection reports provided by Wachovia for the assets underlying seven of the top 10 loans. With the exception of one of the properties securing the Save Mart Portfolio loan being characterized as "poor," the other assets were characterized as "good" or "excellent." Wachovia indicated that the inspection reports were not available for the remaining properties. The credit characteristics for the 175 West 72nd Street loan are no longer consistent with those of investment-grade rated obligations. The $62.5 million (1%) loan is secured by a 133-unit multifamily apartment complex, including 21,500 sq. ft. of commercial space, in Manhattan. Most of the residential units at the property are subject to New York City's rent-stabilization program. To date, the borrower has converted 46 rent-stabilized and rent-controlled units to market rent units. Wachovia reported a 1.05x DSC for the six months ended June 30, 2008, and 100% occupancy as of September 2008, compared with 2.28x and 100%, respectively, at issuance. Based on the borrower's operating statements for the period ended June 30, 2008, and a rent roll dated Sept. 29, 2008, Standard & Poor's analysis shows a valuation decline of 4% since issuance, reflecting higher-than-expected operating expenses and lower-than-expected market rental rates and lower-than-expected rent-stabilized and rent-controlled units being converted to market rent units. In addition, $615,686 of proceeds are no longer consistent with those of investment-grade rated obligations. Thirty-three loans in the pool, totaling $675.3 million (13%), have reported low DSCs. The loans are secured by a variety of retail, office, multifamily, self-storage, industrial, and mixed- use properties. These loans have an average balance of $20.5 million and have experienced a weighted average decline in DSC of 24% since issuance. Twenty-one of the 33 loans are still in their IO periods, with the partial-IO period net cash flow (NCF) DSC close to or above 1.0x. Additionally, five other loans are secured by properties that have low per-sq.-ft. debt exposure, in-place letters of credit for debt service, or have experienced improved occupancy. S&P have credit concerns with the remaining seven loans in the pool ($64.0 million, 1%). Most of the properties securing these loans have experienced a decline in NCF due to low occupancies or increased operating expenses. Wachovia reported a watchlist of 57 loans totaling $1.088 billion (20%), including the fourth-largest loan, the Save Mart Portfolio loan, which constitutes 19% of the watchlist balance. The Save Mart Portfolio loan ($204.3 million, 4%) is secured by 31 single- tenant grocery stores totaling 1.61 million sq. ft. in Northern California. This loan is on the watchlist because one of the 31 stores is currently 100% vacant. The mortgaged properties are subject to a triple-net master lease until 2027. Wachovia reported a 1.10x DSC for the three months ended March 31, 2008. The remaining loans are on the watchlist due to declines in DSC since issuance or low occupancy. Standard & Poor's identified eight loans totaling $74.3 million that are secured by properties in areas affected by Hurricane Ike. Wachovia indicated that the properties securing six of the eight loans incurred minimal or no damage. One property ($12.2 million) sustained significant damage, and the borrower is waiting for the insurance adjuster to assess an estimate of the damage costs. Standard & Poor's was able to confirm that all of the loans have business interruption insurance, six loans have flood insurance, and seven loans have windstorm insurance. Insurance coverage information was not available for one of the eight loans. Standard & Poor's stressed the loans on the watchlist and other loans with credit issues as part of its analysis. The resultant credit enhancement levels adequately support the affirmed ratings. Ratings Affirmed JPMorgan Chase Commercial Mortgage Securities Trust 2007-LDP11 Commercial mortgage pass-through certificates Class Rating Credit enhancement (%) ----- ------ ---------------------- A-1 AAA 30.07 A-2 AAA 30.07 A-2FL AAA 30.07 A-3 AAA 30.07 A-4 AAA 30.07 A-SB AAA 30.07 A-1A AAA 30.07 A-M AAA 20.05 A-J AAA 12.15 B AA+ 11.53 C AA 10.02 D AA- 9.02 E A+ 8.52 F A 7.64 G A- 6.64 H BBB+ 5.39 J BBB 4.51 K BBB- 3.13 L BB+ 2.76 M BB 2.51 N BB- 2.13 P B+ 2.00 Q B 1.75 T B- 1.38 X AAA N/A N/A -- Not applicable LAND RESOURCE: Bankruptcy May Affect Roaring River Project ---------------------------------------------------------- Land Resources LLC's bankruptcy filing could affect the Roaring River project and its lot owners, The Register-Herald reports, citing Fayette County Commissioner Matt Wender. The Register relates that in July 2008, Land Resources -- the parent company of Roaring River, a proposed 4,300-acre, master- planned community in Fayette County -- closed its Fayetteville office and laid off all of that office's workers. Last week, Land Resource said that it and 34 of its affiliates and subsidiaries filed for Chapter 11 protection. The Register quoted Land Resource Chairperson and CEO J. Robert Ward as saying, "We deeply regret the impact the Chapter 11 filing will have on property owners, vendors and employees. We remain mindful of our customers whose home sites and communities have not yet been completed." According to The Register, Mr. Ward said, "As part of this process, we will explore the sale of all the company's assets to a well capitalized and well positioned purchaser." The Register states that about 80 lots have been sold as part of the housing development. The report says that the launching of water and sewer services in July was canceled. "Without that infrastructure, the lot owners can't obtain building permits to build on their lots. Now, it appears that they can't get their money back, either. Those are the people I feel bad for in all of this," the report quoted Mr. Wender as saying. According to the report, Mr. Wender said that he was surprised that Land Resources had no escrow or bond funds to guarantee the water and sewer infrastructure being completed. The Register relates that Mr. Ward said, "Purchasers of Land Resource's assets may elect to fulfill the developer's obligations, including those related to funding homeowner associations. All transactions will be subject to bankruptcy court approval." About Land Resource Headquartered in Orlando, Florida, Land Resource LLC -- http://www.landresource.com-- creates residential communities, which includes coastal, lakefront and mountain locations in Georgia, North Carolina, West Virginia, Tennessee and Florida The company and its affiliates filed for Chapter 11 protection on Oct. 30, 2008 (Bankr. M. D. Fla. Case No. 08-10159). Jordi Guso, Esq., at Berger Singerman, P.A. The company listed assets of $100 million to $500 million and debts of $50 million to $100 million. Trustee Services Inc. is the Debtors' notice, claims and balloting agent. LAS VEGAS SANDS: S&P Cuts Rating to 'B'; Stays at Watch Neg ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and issue-level ratings on the Las Vegas Sands Corp. (LVSC) family of companies, including Las Vegas Sands LLC, its Venetian Casino Resort LLC subsidiary, and affiliate VML U.S. Finance LLC, by one notch. The corporate credit rating was lowered to 'B' from 'B+'. The corporate credit and issue-level ratings remain on CreditWatch with negative implications, where they were initially placed on July 16, 2008. "The downgrade reflects our continuing concerns regarding the weakening U.S. economy and its likely affect on gaming markets, such as Las Vegas," said Standard & Poor's credit analyst Ben Bubeck. S&P expects that LVSC's performance will continue to be pressured for at least the next few quarters, and that credit metrics will remain more in line with the new ratings until there is a substantial turnaround, which S&P is not anticipating until 2010. In addition, the lower ratings and continuing CreditWatch listing reflect S&P's ongoing concerns around LVSC's liquidity position. While a $475 million investment by Sheldon Adelson (the chairman, CEO, and majority owner) and his family on Sept. 30, 2008, allowed the company to remain in compliance with covenants under its U.S. senior secured credit facility and furniture, fixtures, and equipment credit facility, S&P expects this is only a temporary fix. The consolidated leverage ratio covenant under this senior secured credit facility tightens in the March 2009 quarter. While LVSC has the ability to make a contribution of $50 million to increase the EBITDA component of each covenant again in the December 2008 quarter, it is clear that Las Vegas Sands LLC (the borrower under this facility) will likely require an additional equity infusion to remain in compliance, especially as the ratio steps down. The form and extent of this infusion, as well as additional support to be provided by Sheldon Adelson and his family remains unclear at this point. In addition to S&P's concerns around the Las Vegas operations, LVSC continues to require a significant amount of capital to fund its development pipeline in Macau. The Chinese government has recently restricted visitation policies in Macau, and a slowing growth trajectory in revenues and visitation in the market has followed. S&P believes that modest revenue declines, similar to those preliminarily reported in the month of September, are likely in Macau until visa restrictions are eased, which may challenge the company's ability to raise capital. The company announced on Oct. 24, 2008, that it is working to develop a capital raising program and that Sheldon Adelson and his family intend to participate. If successful, S&P believes that this will alleviate its liquidity challenges. Resolution of the CreditWatch listing will consider several key factors, including: -- Better clarity on the company's capital raising program and the extent of additional support to be provided by Sheldon Adelson, as well as any other sources of capital, to ensure adequate liquidity to support funding needs throughout the portfolio and the ability to remain in compliance with the U.S. bank facility; -- A better understanding of the company's plans to finance ongoing expansion efforts in Macau within the context of the currently challenging capital market conditions, clarity around the flexibility and/or intention to amend or postpone portions of the project pipeline, and an assessment of the cash flow potential of existing and future assets in this market; -- An assessment of the cash flow potential of the company's Las Vegas Strip assets given weak trends observed and expected across this market and additional capacity scheduled to come online over the next several quarters; and -- An update on the progress and anticipated timing around additional projects in the pipeline (including the Las Vegas condominium tower, Sands Bethworks in Pennsylvania, and Marina Bay Sands in Singapore). LBREP/L-SUNCAL: Court Denies Chapter 7 Conversion ------------------------------------------------- Hon. Erithe Smith of the United States Bankruptcy Court for the Central District of California denied the request of LBREP/L- SunCal Master I LLC and three affiliates to convert their involuntary Chapter 11 reorganization cases to a voluntary Chapter 7 liquidation proceedings. The Court also directed the appointment of a Chapter 11 trustee. SunCal, et al., wanted a conversion of the Chapter 11 case filed by their second-lien lenders and cited that they have no equity in the collateral, no encumbered assets and no financing for a Chapter 11 proceeding. According to Bloomberg's Bill Rochelle, Lehman Commercial Paper Inc., the first-lien creditor whose foreclosure was stopped by the involuntary filing, sought permission to complete foreclosure and said the involuntary petition was filed in violation of an inter- creditor agreement. SunCal says it has $466 million in secured debt, including $235 million owing to Lehman and $85 million to the second-lien creditors, led by Gramercy Warehouse Funding LLC as agent. About LBREP/L-SUNCAL Gramercy Warehouse Funding LLC and several creditors filed involuntary petitions each against LBREP/L-SunCal Master I LLC, LBREP/L-SunCal McAllister Ranch LLC, LBREP/L-SunCal McSweeny Farms LLC, and LBREP/L-SunCal Summerwind Ranch LLC on Sept. 11, 2008 (Bankr. C.D. Calif Case No. 08-15588, 08-15637, 08-15639, and 08-15640). Daniel H. Reiss, Esq., at Levene, Neale, Bender, Rankin & Brill represents the petitioners. LEHMAN BROTHERS: Faces Suit from Protected Notes Investors ---------------------------------------------------------- The Securities Law Firm of Klayman & Toskes, P.A., is investigating claims on behalf of investors who purchased Lehman Brothers structured products including Lehman Brothers Principal Protected Notes from UBS. Also referred to as guaranteed linked notes, Lehman Principal Protected Notes were "structured products" that combined fixed income investments with derivatives. What resulted was a product that supposedly provided the protection of fixed income, with the upside of the stock market. UBS customers have complained that they were misled into believing that these Lehman Principal Protected Notes were safe and secure investments, and that their principal was fully protected. In reality, however, investors of Lehman Principal Protected Notes were subject to a significant amount of risk. Lehman was not investing the money received from the principal notes, but instead they were using it to fund their operations in the face of mounting losses stemming from the collapse of the subprime markets. Further, Lehman defaulted on many of these protected notes several months ago and they have not traded since. With the bankruptcy of Lehman Brothers, the protected notes are worthless. The lawyers at the Law Firm of Klayman & Toskes are pursuing claims on behalf of investors who have suffered significant losses. For a discussion on this report or information on investigation, contact Steven D. Toskes, Esquire or Jahan K. Manasseh, Esquire of Klayman & Toskes, P.A., at (888) 997-9956. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com-- is the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Through its team of more than 25,000 employees, Lehman Brothers offers a full array of financial services in equity and fixed income sales, trading and research, investment banking, asset management, private investment management and private equity. Its worldwide headquarters in New York and regional headquarters in London and Tokyo are complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. The firm, through predecessor entities, was founded in 1850. Lehman filed for chapter 11 bankruptcy September 15, 2008 (Bankr. S.D.N.Y. Case No.: 08-13555). Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. The September 15 Chapter 11 filing by Lehman Brothers Holdings, Inc., does not include any of its subsidiaries. Subsidiary LB 745 LLC, submitted a Chapter 11 petition on Sept. 16 (Case No. 08-13600). Several other affiliates followed thereafter. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Barclays Bank Plc has agreed, subject to U.S. Court and relevant regulatory approvals, to acquire Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. These are currently the only UK incorporated companies in administration. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. The two units of Lehman Brothers Holdings, Inc., which has filed for bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York, have combined liabilities of JPY4 trillion -- US$38 billion). Lehman Brothers Japan Inc. reported about JPY3.4 trillion ($33 billion) in liabilities in its petition. Akio Katsuragi, a former Morgan Stanley executive, runs Lehman's Japan units. Lehman Brothers Asia Limited, Lehman Brothers Securities Asia Limited and Lehman Brothers Futures Asia Limited have suspended its operations with immediate effect, including ceasing to trade on the Hong Kong Securities Exchange and Hong Kong Futures Exchange, until further notice. The Asian units' asset management company, Lehman Brothers Asset Management Limited, will continue to operate on a business as usual basis. A further notice concerning the retail structured products issued by or arranged by any Lehman Brothers group company will be issued as soon as possible, a press statement said. LEHMAN BROTHERS: Wants Add'l Employees During Wind-Down ------------------------------------------------------- Lehman Brothers Holdings, Inc., is set to implement what it called a retention and recruitment program to hire additional employees. LBHI disclosed to the U.S. Bankruptcy Court for the Southern District of New York about its plan to implement the program, under which it would hire about 480 additional employees and retain the 140 employees who are currently working with the company. As of October 24, Lehman Brothers Holdings' workforce is comprised of about 140 employees. A team of about 125 personnel from its restructuring manager, Alvarez and Marsal, is also assisting the company. "In order to be successful in its tasks, A&M needs support of these employees contemplated in the retention and recruitment program to administer and wind-down [Lehman Brothers Holdings'] principal investments, real estate, derivatives book, loan books as well as many other assets," Mr. Krasnow said. He said that most of the employees being targeted for recruitment are former employees of the company. The Official Committee of Unsecured Creditors expressed support for the program, saying it would "preserve and maximize asset recoveries in the most cost-effective and efficient manner." The Retention Program Under the proposed program, the employees would be divided into asset divestiture and operational teams. The asset divestiture team would be divided into smaller teams to oversee the administration and wind-down of Lehman Brothers Holdings' loan book, derivatives book, private equity or proprietary portfolios, international operations, domestic banks, real estate portfolios and other assets. Meanwhile, the operational team would be divided into smaller teams to oversee audits and claims, treasury, accounting, finance, wind-down and transition, data preservation, forensic analysis and review, and information technology. The recruitment of 480 additional employees under the program would increase the aggregate base salary of Lehman Brothers Holdings' employees payable during the wind-down period from about $15.5 million to about $96 million, according to Mr. Krasnow. A hearing to consider approval of the proposed retention and recruitment program is scheduled for Nov. 18, at 10:00 a.m. Creditors and other concerned parties have until Nov. 14, at 4:00 p.m., to file their objections. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com-- is the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Through its team of more than 25,000 employees, Lehman Brothers offers a full array of financial services in equity and fixed income sales, trading and research, investment banking, asset management, private investment management and private equity. Its worldwide headquarters in New York and regional headquarters in London and Tokyo are complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. The firm, through predecessor entities, was founded in 1850. Lehman filed for chapter 11 bankruptcy September 15, 2008 (Bankr. S.D.N.Y. Case No.: 08-13555). Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. The September 15 Chapter 11 filing by Lehman Brothers Holdings, Inc., does not include any of its subsidiaries. Subsidiary LB 745 LLC, submitted a Chapter 11 petition on Sept. 16 (Case No. 08-13600). Several other affiliates followed thereafter. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Barclays Bank Plc has agreed, subject to U.S. Court and relevant regulatory approvals, to acquire Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. These are currently the only UK incorporated companies in administration. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. The two units of Lehman Brothers Holdings, Inc., which has filed for bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York, have combined liabilities of JPY4 trillion -- US$38 billion). Lehman Brothers Japan Inc. reported about JPY3.4 trillion ($33 billion) in liabilities in its petition. Akio Katsuragi, a former Morgan Stanley executive, runs Lehman's Japan units. Lehman Brothers Asia Limited, Lehman Brothers Securities Asia Limited and Lehman Brothers Futures Asia Limited have suspended its operations with immediate effect, including ceasing to trade on the Hong Kong Securities Exchange and Hong Kong Futures Exchange, until further notice. The Asian units' asset management company, Lehman Brothers Asset Management Limited, will continue to operate on a business as usual basis. A further notice concerning the retail structured products issued by or arranged by any Lehman Brothers group company will be issued as soon as possible, a press statement said. LEVITZ FURNITURE: Court Coverts Cases to Chapter 7 Liquidation -------------------------------------------------------------- Judge Robert Gerber of the U.S. Bankruptcy Court for the Southern District of New York has ordered the conversion of Levitz Furniture Inc. and its debtor-affiliates' Chapter 11 cases to Chapter 7 liquidation, according to papers filed Monday with the Court, Bloomberg News reported on Thursday. A court-appointed trustee will oversee the sale of its remaining merchandise. Judge Gerber also ordered the company to file a schedule of unpaid debts incurred postpetiton within 15 days, and a final report on those debts within 30 days. Albert Togut will be the interim trustee for the case, according to court filings. According to the report, the U.S. Trustee asked the judge to convert the cases to Chapter 7 liquidation in August, saying that Levitz had a "razor thin margin of administrative solvency" and was unable to file a plan of reorganization. This is Levitz' third bankruptcy filing in 11 years. Levitz filed for bankruptcy protection in 1997 and emerged in 2001. The company filed a second Chapter 11 in October 2005, which was dismissed in March 2008. About Levitz Furniture/PVLTZ Based in New York City, Levitz Furniture Inc., -- http://www.levitz.com/-- is a specialty retailer of furniture, bedding and home furnishings in the United States. It has 76 locations in major metropolitan areas, principally in the Northeast and on the West Coast of the United States. Levitz Furniture Inc. and 11 affiliates filed for chapter 11 on Sept. 5, 1997. In December 2000, the Court confirmed the Debtors' Plan and Levitz emerged from chapter 11 on February 2001. Levitz Home Furnishings Inc. was created as the new holding company as a result of the emergence. Levitz Home Furnishings and 12 affiliates filed for chapter 11 protection on Oct. 11, 2005 (Bankr. S.D.N.Y. Lead Case No. 05- 45189). In their second filing, the Debtors disclosed about $245 million in total assets and $456 million in total debts. Nicholas M. Miller, Esq., and Richard H. Engman, Esq., at Jones Day represented the Debtors. Jeffrey L. Cohen, Esq., Jay R. Indyke, Esq., and Cathy Hershcopf, Esq., at Cooley Godward Kronish LLP served as counsel to the Official Committee of Unsecured Creditors. During this period, the Debtors closed around 35 stores in the Northeast, California, Minnesota and Arizona. On March 28, 2008, the Court dismissed the chapter 11 cases of Levitz II. In December 2005, the Levitz II debtors sold substantially all of their assets to PLVTZ, LLC, an affiliate of Prentice Capital Management LLP, and the Pride Capital Group, doing business as Great American Group. Initially, Prentice owned all of the equity interests in PLVTZ. On July 6, 2007, PLVTZ was converted into a Delaware corporation, and Harbinger Capital Partners Special Situations Fund, LP, Harbinger Capital Partners Master Fund I, Ltd., and their affiliates became minority shareholders. Great American's stake in the acquisition was in running the going-out- of-business sales for some 27 Levitz units. PLVTZ, dba Levitz Furniture, continued to face decline in financial performance since December 2005. Liquidity issues and the inability to obtain additional capital prompted PLVTZ to seek protection under chapter 11 on Nov. 8, 2007 (Bankr. S.D.N.Y. Lead Case No. 07-13532). Paul D. Leake, Esq., and Brad B. Erens, Esq., at Jones Day represents the Debtors in their restructuring efforts. Kurtzman Carson Consultants LLC serves as the Debtors' claims and noticing agent. The Debtor's schedules show total assets of $123,842,190 and total liabilities of $76,421,661. LINK RECREATIONAL: Files for Chapter 11 Protection in St. Paul -------------------------------------------------------------- Minong-based Link Recreational filed Chapter 11 bankruptcy in October 2008 in hopes to reorganize the company and remain in business, the Duluth News Tribune (Minnesota) reported Wednesday. According to the filing in U.S. Bankruptcy Court for the District of Minnesota, the company listed less that than $50,000 in assets, and between $1 million and $10 million in total debt owed to at least 200 companies. The company said in the filing that it should be able to pay off all the debts. The company reported $19.3 million in sales in fiscal year 2007 and had a payroll of 125 employees, according to business Web site Hoover's. Based in Minong, Wisconsin, Link Rec, Inc., also known as Link Recreational Inc., is a boat dealer. The company filed for Chapter 11 relief on Oct. 6, 2008 (Bankr. D. Minn. Case No. 08-35195). Steven B. Nosek, Esq. Represents the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed assets of less that $50,000 and debts of $1.0 million to $10 million. MEDCOMSOFT INC: Board OKs Hiring of Trustee for Possible BIA ------------------------------------------------------------ MedcomSoft Inc.'s board of directors has approved the hiring of a Trustee under a Notice of Intention to Make a Proposal to Creditors under the Bankruptcy and Insolvency Act (Canada). The board authorized this action to provide a well established forum to manage cash resources and liabilities, to provide a forum for interested investors or buyers to make an offer to restructure the current entity and to create a statutory driven time frame for management to deal with potential investors. An offer may be made by any existing or potential equity investor, creditor or purchaser. "Our most pressing concern at the current time is to make sure our customers have the support necessary to continue using our product and we will make every effort to retain crucial support personnel to discharge this obligation to the best of our ability", Rob Wilson, interim CEO, noted. On Sept. 8, 2008, the company had retained the Health Care Investment Banking Group of Raymond James Associates to explore funding and strategic alternatives to support the execution of a revised business plan that had been approved by the board. At that time management estimated that approximately $15 million of additional capital would be required by the company to implement all elements of the revised business plan. In addition, the company had identified a senior management team with extensive domain expertise and a track record of success in the U.S. Healthcare market. Subject to completion of the targeted financing and final negotiation of mutually satisfactory employment terms, this senior management team had agreed to join the company to drive the execution of the revised business plan. "We have been advised by Raymond James that, while several investors or buyers that they had contacted in the execution of their mandate had expressed an interest in the company's product, and specifically access to the high quality management team we had identified, there was not sufficient interest expressed in directly investing new capital in the current corporate structure as to make the prospect of raising the required $15 million in funding viable," Mr. Wilson stated. "Specifically, investors and potential buyers expressed concern about the current financial position of the company, its public structure and its difficulty in executing the business plan, including skepticism of the proposed direct sale channel approach." "I am very disappointed we could not achieve a better outcome for all our stakeholders including customers, employees, vendors, creditors and shareholders. Raymond James has done an outstanding job in providing a full canvas of very knowledgeable HIT investors and I have had an extremely qualified and experienced management team identified to take the Company to the next level and actively engaged in this process," Mr. Wilson continued. "We still have several interested parties that may want a portion or all of the assets of the company and Mr. James will remain engaged through the NOI process to advise us if an appropriate investor or buyer come forth in these proceedings," Mr. Wilson stated. The company completed MedcomSoft Record UE (Version 4.6) and has made preparation for beta testing of the product. However, due to constrained cash resources, further development and testing of the product will be restricted until additional financing can be secured. "MedcomSoft Record UE (Version 4.6) is one of our most tested and advanced products to date, and it is only through significant dedication of our employees in a very difficult operating environment that this project was completed", Mr. Wilson said. The Toronto Stock Exchange has notified the company of its failure to meet the listing requirements, and therefore the company's management cannot offer assurance that it will be able to continue to have its common shares listed on the TSX. MedcomSoft has received the resignations of each of its board members namely John Gillberry, Ray Simonson, John Radford and James Havemen. It is anticipated that Rob Wilson and Nick Clemenzi, the company's chief financial officer, will continue to be engaged during the NOI process. About MedcomSoft Headquartered in Toronto, Ontario, MedcomSoft Inc. (TSE:MSF) -- http://www.medcomsoft.com/-- develops and distributes software solutions to the healthcare industry in Canada and United States. The company develops, markets, licenses and supports healthcare software solutions to the office-based or ambulatory care market designed with improving the quality of patient care. MedcomSoft's products include MedcomSoft record UE and MedcomSoft clinical data repository. Its subsidiaries include MedcomSoft Corporation, MedcomSoft Australia Pty Ltd. and BNK Informatics Canada Inc. MERGE HEALTHCARE: Sept. 30 Balance Sheet Upside-Down by $6.8MM -------------------------------------------------------------- Merge Healthcare Incorporated's balance sheet at Sept. 30, 2008, showed total assets of $53,533,000, total liabilities of $46,674,000 and shareholders' deficit of $6,859,000. The company disclosed financial results for the third quarter and nine months ended Sept. 30, 2008. Net income for the third quarter of 2008 was $400,000 compared to a net loss of $141.6 million in the third quarter of 2007 and a net loss of $18.2 million in the second quarter of 2008. For the third quarter ended Sept. 30, 2008, net sales totaled $14.6 million, compared to $14.1 million in the third quarter ended Sept. 30, 2007, and $13.3 million in the second quarter ended June 30, 2008. Operating income for the third quarter ended Sept. 30, 2008, was $1.3 million, compared to operating losses of $141.9 million in the third quarter ended Sept. 30, 2007, and $18.3 million in the second quarter ended June 30, 2008. Contributing to the operating loss for the third quarter of 2007 was a goodwill impairment charge of $122.4 million. Contributing to the operating loss for the second quarter of 2008 were a restructuring charge of $7.5 million and a $3.0 million charge associated with the settlement of a class action lawsuit against the company. During the third quarter of 2008, the cash balance decreased by approximately $6.3 million to approximately $14.4 million at Sept. 30, 2008. The decreased cash balance was attributable to non-core activities consisting primarily of $4.0 million in restructuring-related payments and $3.3 million of lawsuit settlement payments. Net loss for the nine months ended Sept. 30, 2008, totaled $25.6 million compared to a loss of $162.0 million for the nine months ended Sept. 30, 2007. For the nine months ended Sept. 30, 2008, net sales totaled $41.7 million, compared to $44.0 million for the nine months ended Sept. 30, 2007. The operating loss for the nine months ended Sept. 30, 2008 was $25.4 million compared to an operating loss of $162.8 million for the nine months ended Sept. 30, 2007. A full-text copy of the company's third quarter financial results are available for free at http://ResearchArchives.com/t/s?3484 About Merge Healthcare Incorporated Based in Milwaukee, Wisconsin, Merge Healthcare Incorporated (Nasdaq: MRGE; TSX: MRG) -- http://www.mergehealthcare.com/-- is a developer of medical imaging and clinical software applications and developmental tools. The company develops medical imaging software solutions that support end-to-end business and clinical workflow for radiology department and specialty practices, imaging centers and hospitals. Possible Bankruptcy As reported in the Troubled Company Reporter on May 16, 2008, if adequate funds are not available or are not available on acceptable terms, the company will likely not be able to fund its new teleradiology business, take advantage of unanticipated opportunities, develop or enhance services or products, respond to competitive pressures, or continue as a going concern beyond June 30, 2008, and may have to seek bankruptcy protection. Going Concern Doubt As reported in the Troubled Company Reporter on April 29, 2008, KPMG LLP in Chicago expressed substantial doubt about Merge Healthcare Incorporated's ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's recurring losses from operations and negative cash flows. The company says it has generated losses from operations over the past nine consecutive quarters and the company currently has no credit facility. As a result, the company is currently completely dependent on available cash and operating cash flow to meet its capital needs. METALDYNE CORP: Defaults on Interest Dues, Mulls Prepackaged Plan ----------------------------------------------------------------- Metaldyne Corporation elected not to make the November 1 interest payment on its 10% Senior Notes due 2013. At the same time, the company is also soliciting ballots in favor of a pre-packaged plan of reorganization, which is an option that the company would consider only if the tender offer is not completed. The plan of reorganization proposes that general unsecured creditors, including suppliers to the debtors, would be paid in full and in cash as of the effective date of the plan or in the ordinary course of business. If the tender offer is successfully completed, Metaldyne would have significantly de-leveraged its balance sheet as compared to current levels. The consummation of the tender offer is subject to the satisfaction or waiver by Metaldyne of certain conditions, including that not less than 95% of the aggregate principal amount of the 2012 Bonds and the 2013 Bonds are tendered. Terry Iwasaki, Metaldyne VP and CFO, said, "We have elected not to pay the interest on the 2013 Bonds at this time because we have launched a tender offer to purchase all the 2013 Bonds as well as our outstanding Senior Subordinated Notes due 2012 at prices that include all accrued and unpaid interest through the purchase date. As we said in the Offer to Purchase, no additional payment of interest will be made in respect of bonds tendered and accepted for payment." The company launched a tender offer to purchase all of its outstanding 11% Senior Subordinated Notes due 2012 and all of its outstanding 2013 Bonds on Wednesday, Oct. 29, 2008. The company is offering to pay $106.30 per $1,000 principal amount of 2012 Bonds and $270.18 per $1,000 amount of 2013 Bonds for bonds tendered and accepted for payment on or prior to an early participation date, which is November 12, 2008 unless extended. The company is offering to pay $101.30 per $1,000 principal amount of 2012 Bonds and $265.18 per $1,000 principal amount of 2013 Bonds for Bonds tendered and accepted for payment after the early participation date but on or prior to the expiration date, which is Nov. 26, 2008 unless extended. According to Bill Rochelle at Bloomberg News, if fewer than 95 percent of the bonds are tendered by the Nov. 26 deadline, Metaldyne says it intends to complete the exchange through filing a prepackaged Chapter 11 petition. To that end, Metaldyne, the report says, is soliciting acceptances of a bankruptcy reorganization plan along with the tender offer. The combined outstanding aggregate principal amount of the 2012 Bonds and the 2013 Bonds is $392.2 million. Concurrently with the tender offer, the company is soliciting consents to amend the relevant indentures to eliminate substantially all of the restrictive covenants and certain events of default and release all collateral securing the bonds. Adoption of the proposed amendments requires the consents of holders of at least two-thirds of the outstanding principal amount of each of the 2012 Bonds and 2013 Bonds. The indenture governing the 2013 Bonds provides for a 30-day grace period in which interest payments may be made. The failure to pay interest on November 3, 2008, constitutes a default under the indenture. Default would become an event of default after the 30-day grace period, which expires on Dec. 2, 2008. Mr. Iwasaki added that "Because the early participation date is Nov. 12, and the expiration date is November 26, we expect to accept tendered bonds for payment on or prior to Dec. 2, 2008. If all bonds are not tendered, we will evaluate our options at that time." Cash Tender Offering The company launched on Oct. 29, 2008, a cash tender offer for 100% of its outstanding bonds, which have a combined aggregate principal amount of $392.2 million. Cash for the tender offer, along with cash for general funding purposes, will be provided by Asahi Tec, Metaldyne's parent company, after receiving funds from RHJ International, Asahi Tec's largest shareholder, and certain of Metaldyne's customers. "We have been working for several weeks with certain bondholders, RHJ International, our lender group, and certain customers, and we are pleased to be in a position to launch this tender offer," said Thomas A. Amato, Metaldyne chairman and CEO and co-CEO of Asahi Tec. "This framework is one of the more creative approaches to a transaction in the automotive supplier space. We believe it will benefit our customers, suppliers and employees and create value for Metaldyne's stakeholders." About Metaldyne Headquartered in Plymouth, Michigan, Metaldyne Corp. -- http://www.metaldyne.com-- is a wholly owned subsidiary of Asahi Tec, a Shizuoka, Japan-based chassis and powertrain component supplier in the passenger car/light truck and medium/heavy truck segments. Asahi Tec is listed on the Tokyo Stock Exchange. The company designs and supplies metal based components, assemblies and modules for transportation related powertrain and chassis applications including engine, transmission/transfer case, wheel end and suspension, axle and driveline, and noise and vibration control products to the motor vehicle industry. ML-CFC COMMERCIAL: Fitch Cuts Ratings on Classes L, M & N to 'B' ---------------------------------------------------------------- Fitch Ratings downgrades seven classes of ML-CFC Commercial Mortgage Trust's commercial mortgage pass-through certificates, series 2007-6 and assigns Rating Outlooks: -- $24.1 million class G to 'BBB-' from 'BBB'; Outlook Negative; -- $26.8 million class H to 'BB+' from 'BBB-'; Outlook Negative; -- $5.4 million class J to 'BB' from 'BB+'; Outlook Negative; -- $5.4 million class K to 'BB-' from 'BB'; Outlook Negative; -- $5.4 million class L to 'B+' from 'BB-'; Outlook Negative; -- $5.4 million class M to 'B' from 'B+'; Outlook Negative; -- $5.4 million class N to 'B-' from 'B'; Outlook Negative. In addition, Fitch affirms and assigns Rating Outlooks to these classes: -- $20.8 million class A-1 at 'AAA'; Outlook Stable; -- $170.4 million class A-2 at 'AAA'; Outlook Stable; -- $150 million class A-2FL at 'AAA'; Outlook Stable; -- $60.7 million class A-3 at 'AAA'; Outlook Stable; -- $730 million class A-4 at 'AAA'; Outlook Stable; -- $364.4 million class A-1A at 'AAA'; Outlook Stable; -- $214.6 million class AM at 'AAA'; Outlook Stable; -- $107.4 million class A-J at 'AAA'; Outlook Stable; -- $75 million class AJ-FL at 'AAA'; Outlook Stable; -- Interest Only class X at 'AAA'; Outlook Stable; -- $42.9 million class B at 'AA'; Outlook Stable; -- $16.1 million class C at 'AA-'; Outlook Stable; -- $34.9 million class D at 'A'; Outlook Stable; -- $18.8 million class E at 'A-'; Outlook Stable; -- $24.1 million class F at 'BBB+'; Outlook Negative; -- $5.4 million class P at 'B-'; Outlook Negative. Fitch does not rate the $26.8 million class Q. The downgrades of classes G through N are the result of the lowering of shadow rating on the transaction's second largest loan, Peter Cooper Village and Stuyvesant Town (9.5%) to below investment grade. The loan, which had a 'BBB-' shadow rating at issuance, is no longer considered investment grade. At issuance, the loan's proceeds were allocated to 'BBB-' and above, while they are now allocated to all classes in the capital structure. This results in higher credit enhancement requirements. While the current net cash flow is not sufficient to meet the debt service obligations, due to the sufficient amount of remaining interest reserves ($161.2 million) and the continued conversion of units to market rental rates from stabilized rental rates, Fitch does not expect a default of the loan in the near term. However, the pace of the unit conversions does not meet expectations at issuance and rental rates are less likely to increase given the current economic conditions. Fitch's estimates of future net cash flow, based on reduced conversion rates and reduced year-over-year increases to market rental rates, no longer support an investment grade rating. The borrower, Tishman Speyer Properties, LP and Blackrock Realty acquired the property with the intent to convert rent stabilized units to market rents as tenants vacated the property, resulting in increased rental revenue. As of June 2008 there are 3,543 market units and 7,210 rent stabilized units, with vacancy of 4.2%. The affirmations are the result of stable performance since issuance. The Rating Outlooks reflect the likely direction of the rating changes over the next one to two years. As of the October 2008 distribution date, the pool's certificate balance has decreased 0.34% to $2.139 billion from $2.146 billion at issuance. Eighty-two loans (83.4%) are interest-only or partial interest- only. There is currently one loan (0.5%) in special servicing. The loan is secured by a multifamily property in Petoskey, Michigan and is 90 days delinquent. Potential losses would be absorbed by the non- rated class Q. Fitch reviewed servicer provided operating statement analysis for the remaining shadow rated loan, Westfield Southpark (7.0%). The loan is secured by a 1,588,360 sf regional mall, located in Strongsville, OH. The mall is anchored by Dillards (210,992 sf), Macy's (178,173 sf), Sears (167,400 sf), and J.C. Penny (145,330 sf), which are not part of the collateral. As of December 2007, the in-line occupancy was 95.3% compared to 89.4% at issuance. Based on stable performance since issuance, the loan maintains an investment grade shadow rating. ML-CFC COMMERCIAL: Fitch Cuts Ratings on Classes K, L & N to 'B' ---------------------------------------------------------------- Fitch Ratings has downgraded seven classes of ML-CFC Commercial Mortgage Trust's commercial mortgage pass-through certificates, series 2007-5, and assigned Rating Outlooks: -- $55.2 million class F to 'BBB' from 'BBB+'; Outlook Negative; -- $49.7 million class G to 'BBB-' from 'BBB'; Outlook Negative; -- $49.7 million class H to 'BB' from 'BBB-'; Outlook Negative; -- $16.6 million class J to 'BB-' from 'BB+'; Outlook Negative; -- $11 million class K to 'B+' from 'BB'; Outlook Negative; -- $11 million class L to 'B' from 'BB-'; Outlook Negative; -- $5.5 million class N to 'B-' from 'B'; Outlook Negative. In addition, Fitch has affirmed and assigned Rating Outlooks to these classes: -- $66.5 million class A-1 'AAA'; Outlook Stable; -- $63.3 million class A-2 'AAA'; Outlook Stable; -- $60 million class A-2FL 'AAA'; Outlook Stable; -- $153.4 million class A-3 'AAA'; Outlook Stable; -- $187.1 million class A-SB 'AAA'; Outlook Stable; -- $1.090 billion class A-4 'AAA'; Outlook Stable; -- $245 million class A-4FL 'AAA'; Outlook Stable; -- $1.202 billion class A-1A 'AAA'; Outlook Stable; -- $341.7 million class AM 'AAA'; Outlook Stable; -- $100 million class AM-FL 'AAA'; Outlook Stable; -- $211.5 million class AJ 'AAA'; Outlook Stable; -- $175 million class AJ-FL 'AAA'; Outlook Stable; -- Interest-only class X 'AAA'; Outlook Stable; -- $77.3 million class B 'AA'; Outlook Stable; -- $33.1 million class C 'AA-'; Outlook Stable; -- $77.3 million class D 'A'; Outlook Stable; -- $38.6 million class E 'A-'; Outlook Negative. Fitch does not rate the $11 million class M, $11 million class P or $45.7 million class Q certificates. The downgrades of classes F through L, and N are the result of the lowering of shadow rating on the transaction's largest loan, Peter Cooper Village and Stuyvesant Town (18.2%) to below investment grade. The loan, which had a 'BBB-' shadow rating at issuance, is no longer considered investment grade. At issuance, the loan's proceeds were allocated to 'BBB-' and above, while they are now allocated to all classes in the capital structure. This results in higher credit enhancement requirements. While the current net cash flow is not sufficient to meet the debt service obligations, due to the sufficient amount of remaining interest reserves ($161.2 million) and the continued conversion of units to market rental rates from stabilized rental rates, Fitch does not expect a default of the loan in the near term. However, the pace of the unit conversions does not meet expectations at issuance and rental rates are less likely to increase given the current economic conditions. Fitch's estimates of future net cash flow, based on reduced conversion rates and reduced year-over-year increases to market rental rates, no longer support an investment grade rating. The borrower, Tishman Speyer Properties, LP and Blackrock Realty acquired the property with the intent to convert rent stabilized units to market rents as tenants vacated the property, resulting in increased rental revenue. As of June 2008 there are 3,543 market units and 7,210 rent stabilized units, with vacancy of 4.2%. The affirmations reflect stable performance and minimal pay down since issuance. As of the October 2008 distribution date, the pool's aggregate certificate balance has decreased 0.6% to $4.389 billion from $4.417 billion at issuance. One loan (0.1%) is currently in special servicing and is secured by a retail property in Sarasota, FL. The loan is 90 days delinquent and the special servicer is pursuing foreclosure. Fitch's expected losses will be absorbed by the non-rated class Q certificates. Fitch reviewed the most recent servicer provided operating statement analysis reports for the remaining two shadow rated loans: OMNI Portoflio (1.2%) and FRIS Chicken Portfolio (0.5%). Based on the stable performance since issuance the loans maintain their investment grade shadow ratings. OMNI Portfolio (1.2%) is secured by three cross-collateralized and cross-defaulted healthcare properties totaling 607 beds located in Irvington, Jersey City and Union City, NJ. The properties benefit from the experienced sponsorship of Avery Eisenreich, an owner, operator, and developer of health care facilities in New Jersey. As of Dec. 31, 2007, occupancy has remained stable at 96.7% compared to 97.7% at issuance. FRIS Chicken Portfolio (0.5%) is secured by 192 Church's Chicken quick service restaurants that are subject to one master lease and are located in various cities throughout 12 states. Of the 192 units, 169 are occupied and operated by the tenant (Cajun Operating Company), while the remaining 23 units are subleased by the tenant to various Church's Chicken franchisees that perform the restaurant operations at each of the units. As of Dec. 31, 2007, the properties remain 100% occupied since issuance. MORGAN STANLEY: Fitch Affirms 'BB' Ratings on Classes J, K & L -------------------------------------------------------------- Fitch Ratings affirms and assigns Outlooks to the Morgan Stanley Capital 1 Trust series 2007-IQ15 commercial mortgage pass-through certificates: -- $55.8 million class A-1 at 'AAA' Outlook Stable; -- $278.6 million class A-1A at 'AAA' Outlook Stable; -- $227.4 million class A-2 at 'AAA' Outlook Stable; -- $72.8 million class A-3 at 'AAA' Outlook Stable; -- $796.9 million class A-4 at 'AAA' Outlook Stable; -- $205.4 million class A-M at 'AAA' Outlook Stable; -- $177.1 million class A-J at 'AAA' Outlook Stable; -- $2,047.5 million class X at 'AAA' Outlook Stable; -- $33.4 million class B at 'AA' Outlook Stable; -- $15.4 million class C at 'AA-' Outlook Stable; -- $28.2 million class D at 'A' Outlook Stable; -- $15.4 million class E at 'A-' Outlook Negative; -- $30.8 million class F at 'BBB+' Outlook Negative; -- $23.1 million class G at 'BBB' Outlook Negative; -- $20.5 million class H at 'BBB-' Outlook Negative; -- $10.3 million class J at 'BB+' Outlook Negative; -- $5.1 million class K at 'BB' Outlook Negative; -- $7.7 million class L at 'BB-' Outlook Negative; Fitch does not rate classes M, N, O and P. The affirmations are the result of stable performance and limited paydown since issuance. As of the October 2008 distribution date, the transaction has paid down 0.38% to $2.046 billion from $2.054 billion at issuance. 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. The Outlooks reflect likely rating changes over the next one to two years. 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%). The occupancy of Market Pointe I remains stable since issuance at 100%. The occupancy of 724 Fifth Ave improved from 84.5% at issuance to 87.8% as of year- end 2007 (YE 2007). The occupancy of the Hampton Inn improved from 65.3% at issuance to 68.0% as of YE 2007. 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 YE 2007 debt service coverage ratios (DSCRs). 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. New management was recently put in place in an effort to turn the property around. The loan is currently 30 days delinquent. The eighth largest loan (2.3%) is a retail center located in San Diego, CA. 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. Fitch will continue to monitor these loans. 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 Holds B Ratings on Classes M, O & P Certs. ---------------------------------------------------------------- Fitch Ratings affirms and assigns Outlooks for Morgan Stanley Capital I Trust, series 2007-TOP27, commercial mortgage pass- through certificates: -- $82.8 million class A-1 at 'AAA'; Outlook Stable; -- $279.3 million class A-2 at 'AAA'; Outlook Stable; -- $137.4 million class A-3 at 'AAA'; Outlook Stable; -- $112.3 million class A-AB at 'AAA'; Outlook Stable; -- $1,077.1 million class A-4 at 'AAA'; Outlook Stable; -- $287.8 million class A-1A at 'AAA'; Outlook Stable; -- $172.3 million class A-M at 'AAA'; Outlook Stable; -- $100 million class A-MFL at 'AAA'; Outlook Stable; -- $190.6 million class A-J at 'AAA'; Outlook Stable; -- $50.2 million class AW34 at 'AAA'; Outlook Stable; -- Interest only class X at 'AAA'; Outlook Stable; -- $54.5 million class B at 'AA'; Outlook Stable; -- $30.6 million class C at 'AA-'; Outlook Stable; -- $30.6 million class D at 'A'; Outlook Stable; -- $23.8 million class E at 'A-'; Outlook Stable; -- $23.8 million class F at 'BBB+'; Outlook Stable; -- $30.6 million class G at 'BBB'; Outlook Stable; -- $23.8 million class H at 'BBB-'; Outlook Stable; -- $3.4 million class J at 'BB+'; Outlook Stable; -- $3.4 million class K at 'BB'; Outlook Stable; -- $6.8 million class L at 'BB-'; Outlook Stable; -- $6.8 million class M at 'B+'; Outlook Stable; -- $6.8 million class N at 'B'; Outlook Stable; -- $3.4 million class O at 'B-'; Outlook Stable. The $23.8 million class P is not rated by Fitch. Class AW34 is collateralized by the 330 34th Street asset and is a non-pooled loan. The ratings affirmations are the result of stable performance since issuance. The Rating Outlooks reflect the likely direction of any rating changes over the next one to two years. As of the October 2008 remittance, the transaction has paid down 0.4% to $2.762 billion from $2.773 billion at issuance. Fitch has identified five loans of concern (1.0%), two of which are specially serviced (0.4%). Potential losses would be absorbed by the non-rated class P. The largest specially serviced loan (0.4%) is secured by a 97,733 square foot office property in Jersey City, NJ. The loan was transferred to special servicing in June 2008 due to monetary default and is currently 90+ days delinquent. The second specially serviced asset (0.1%) is a retail property located in St. Cloud, FL. The property has suffered from an increase in vacancy. Fitch reviewed the most recent servicer provided operating statement analysis reports for the 14 shadow rated loans (10.3%). Based on their stable performance, the loans maintain their investment grade shadow ratings. The largest shadow rated loan (2.0%) is secured by the 75 room Mercer Hotel in New York, NY. As of year-end (YE) 2007, the average daily rate (ADR) and revenue per available room (RevPAR) have increased to $683 and $639, respectively, from $623 and $588, respectively, at issuance. The second largest shadow rated loan (1.6%) is secured by a 280,060 sf office building located in New York, NY. As of YE 2007, occupancy at the property has increased to 99.9% from 87.2% at issuance. The fifth largest shadow rated loan (0.7%) is secured by a 285- unit multifamily property in Bloomington, IN. Although the property's net cash flow (NCF) has declined since issuance, the occupancy as of YE 2007 of 95.0% is in line with the occupancy at issuance of 96.5%. Fitch will continue to monitor the NCF and occupancy. NALCO COMPANY: Fitch Revises Outlook to Stable; Affirms 'B' IDR --------------------------------------------------------------- Fitch Ratings affirms the Issuer Default Rating (IDR) and outstanding debt ratings on Nalco Company (Nalco): -- IDR at 'B'; -- Senior secured revolving credit facility at 'BB/RR1'; -- Senior secured term Loans at 'BB/RR1'; -- Senior unsecured notes at 'BB/RR1'; -- Senior subordinated notes 'BB-/RR2'. Fitch also affirms the ratings for Nalco Finance Holdings LLC and Nalco Finance Holdings Inc. (Nalco Finance Holdings): -- IDR at 'B'; -- Senior discount notes at 'B-/RR5'. Fitch has also revised the Rating Outlook for both Nalco Company and Nalco Finance Holdings to Stable from Positive. The ratings reflect Nalco's high financial leverage and the outlook for global economic weakening as well as strong near term liquidity and a track record of steady free cash flow generation. Nalco's operations benefit from its dominant market share, broad product offerings, geographic reach, and strong customer retention. Diversification across products, geography and customers and low capital spending requirements have resulted in stable free cash flow generation. Nalco evidences strong near term liquidity with preliminary last twelve months (LTM) free cash flow generation of $165.5 million (after a $30 million voluntary pension contribution in the third quarter), $101.7 million cash on hand and an estimated $229 million available under its $250 million revolving credit facility based on preliminary Sept. 30, 2008 figures. Near term maturities are modest with about $22.2 million due in the second half of 2008 and the EUR25 million term loan A maturing 2009. Nalco's $887 million term loan B due November 2010, $665 million senior notes due in November 2011 and EUR200 million senior notes due in November 2011 will require external financing. Total debt at Sept. 30, 2008 of $3.3 billion covers LTM EBITDA of $730 million by 4.5 times (x). Secured debt at an estimated $1.1 billion represents about 35% of total debt. Through Sept. 30, 2008, about $203 million in shares have been repurchased out of the $300 million share repurchase program authorized in July 2007 and Nalco has stated that they would not borrow to repurchase shares. The Stable Rating Outlook reflects Fitch's expectation that leverage will remain approximately 4.5x over the next 12-18 months. Nalco is a leading global provider of integrated water treatment and process improvement services, chemicals and equipment programs for industrial and institutional applications. Nalco's products and services are typically used in water treatment applications to prevent corrosion, contamination and the buildup of harmful deposits, or in production processes to enhance process efficiency and improve the customers' end products. The company generated Operating EBITDA of $730.3 million on $4.2 billion in sales for the LTM period ending Sept. 30, 2008. NATIONAL CITY: Peter Raskind to Leave Co. Upon Close of Merger -------------------------------------------------------------- National City Corp.'s Chairperson, President, and CEO Peter E. Raskind will leave the company upon the closing of the previously announced acquisition of the firm by The PNC Financial Services Group, Inc. The transaction is expected to close by Dec. 31, 2008, subject to customary closing conditions, including both PNC and National City shareholder and regulatory approvals. Mr. Raskind, who was elected to his current role in July 2007, said, "It has been an honor and a privilege to lead the 30,000 men and women of National City. As National City looks to the future with PNC, I am confident that our employees will continue to meet and exceed the needs of our customers as part of a financial services powerhouse." About National City National City Corporation (NYSE: NCC) -- http://www.nationalcity.com/-- headquartered in Cleveland, Ohio, is one of the nation's largest financial holding companies. The company operates through an extensive banking network primarily in Ohio, Florida, Illinois, Indiana, Kentucky, Michigan, Missouri, Pennsylvania, and Wisconsin and also serves customers in selected markets nationally. Its core businesses include commercial and retail banking, mortgage financing and servicing, consumer finance and asset management. As reported in the Troubled Company Reporter on Oct. 27, 2008, BusinessWeek's M.R. Kropko said that National City was on a two- year slide prior to the merger deal. According to Mr. Kropko, National City reported on Oct. 17, 2006, net income of $551 million for the 2006 third quarter. David A. Daberko, National City's then chairman and CEO, according to Mr. Kropko, said corporate and retail banking businesses were strong, while the mortgage-related business was "performing well in a cyclically tough mortgage environment." But early signs of trouble were indicted in its provision for credit losses, posted at $73 million, up from $60 million in the preceding quarter, according to Mr. Kropko. National City had tied its future largely to mortgages. On Nov. 9, 2006, National City revised its third-quarter 2006 earnings from 90 cents per share to 86 cents per share, in part to reflect a higher estimate of reserves for repurchased mortgage loans and a lower value of mortgage servicing rights, Mr. Kropko says. According to Mr. Kropko, in April National City secured a $7 billion capital infusion from equity investors. Mr. Kropko said that National City posted in October 2008 a loss of $729 million and unveiled plans to cut 4,000 jobs, or about 14% of its total work force, to reduce costs. NORTHWEST AIRLINES: S&P Affirms 'B' Rating Following Delta Merger ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on Northwest Airlines Corp. and its Northwest Airlines Inc. subsidiary (rated B/Negative/--), including affirming the 'B' long-term corporate credit rating on both entities following their merger with Delta Air Lines Inc. (B/Negative/--). The outlook remains negative. The U.S. Department of Justice has said it would not seek to block the all-stock merger. Northwest will operate as a subsidiary of Delta, with a single operating certificate and full operational combination expected within 18 months. "Our ratings and outlook on Northwest Airlines Corp. and Northwest Airlines Inc. reflect our view of the credit quality of the combined Northwest and Delta," said Standard & Poor's credit analyst Philip Baggaley. PARMALAT SPA: UBS AG Agrees to Pay EUR500,000 Fine -------------------------------------------------- Reuters reported that UBS AG agreed to pay a fine of EUR500,000 as well as have EUR1 million of so-called money made from criminal activity confiscated after a court ruled that the bank was among those responsible for Parmalat SpA's collapse in 2003. According to Reuters, around four years after Parmalat went into bankruptcy with debts of EUR14 billion, a Milan judge ordered banks Citigroup, UBS, Deutsche Bank, Bank of America and other individuals to stand trial for alleged market-rigging by some employees in connection to its collapse. Other than UBS itself, Reuters said two former UBS managers also entered plea-bargain agreements, as did a former Deutsche Bank manager. A court session for the trial has been scheduled for Nov. 5. Citigroup Case The UBS case reversed Citigroup Inc.'s. Last month, Parmalat lost a claim against Citigroup after the Superior Court of Bergen County in New Jersey awarded the bank approximately US$364 million in connection with counterclaims it had asserted against Parmalat. Parmalat sued Citigroup for allegedly aiding and abetting breach of fiduciary duty in connection with looting that occurred at Parmalat prior to December 2003. Bloomberg News reported October 21 that Parmalat also sued Bank of America and accounting company Grant Thornton LLP for US$10 billion each, alleging they contributed to the fraud that caused its 2003 collapse. The cases are in a New York federal court. A trial is expected to take place in next year's second half, Bloomberg cited Parmalat legal counsel Nicola Palmieri as saying. As to collection of the award, Bloomberg News disclosed Mr. Palmieri said Citigroup probably will be unable to collect damages because the award comes under the Italian bankruptcy court's jurisdiction. According to the news agency, the amount would be subject to recovery ratios already established by the court, which Mr. Palmieri estimated at around 7 percent. Any payout would be made in stock, under bankruptcy rules, the report noted. "Most likely they will get nothing," Mr. Palmieri said, noting that Parmalat has spent more than half of its EUR50 million annual budget for legal fees on the U.S. Lawsuits. About Parmalat Headquartered in Milan, Italy, Parmalat S.p.A. -- http://www.parmalat.net/-- sells nameplate milk products that can be stored at room temperature for months. It also has about 40 brand product lines, which include yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices. The company's U.S. operations filed for chapter 11 protection on Feb. 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than US$200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. Parmalat S.p.A. and its Italian affiliates filed separate petitions for Extraordinary Administration before the Italian Ministry of Productive Activities and the Civil and Criminal District Court of the City of Parma, Italy on Dec. 24, 2003. Dr. Enrico Bondi was appointed Extraordinary Commissioner in each of the cases. The Parma Court has declared the units insolvent. On June 22, 2004, Dr. Bondi filed a Sec. 304 Petition, Case No. 04-14268, in the United States Bankruptcy Court for the Southern District of New York. Parmalat has three financing arms: Dairy Holdings Ltd., Parmalat Capital Finance Ltd., and Food Holdings Ltd. Dairy Holdings and Food Holdings are Cayman Island special-purpose vehicles established by Parmalat S.p.A. The Finance Companies are under separate winding up petitions before the Grand Court of the Cayman Islands. Gordon I. MacRae and James Cleaver of Kroll (Cayman) Ltd. serve as Joint Provisional Liquidators in the cases. On Jan. 20, 2004, the Liquidators filed Sec. 304 petition, Case No. 04-10362, in the United States Bankruptcy Court for the Southern District of New York. In May 2006, the Cayman Island Court appointed Messrs. MacRae and Cleaver as Joint Official Liquidators. Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, and Richard I. Janvey, Esq., at Janvey, Gordon, Herlands Randolph, represent the Finance Companies in the Sec. 304 case. The Honorable Robert D. Drain presides over the Parmalat Debtors' U.S. cases. On June 21, 2007, the U.S. Court granted Parmalat permanent injunction. PHOENIX COS: S&P Lowers Counterparty Credit Rating to 'BB+' ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its counterparty credit rating on Phoenix Cos. Inc. (NYSE:PNX) to 'BB+' from 'BBB-'. Standard & Poor's also said that it lowered its counterparty credit and financial strength ratings on Phoenix Cos. Inc.'s operating subsidiaries -- Phoenix Life Insurance Co. (PLIC), PHL Variable Insurance Co., and AGL Life Assurance Co. (collectively referred to as Phoenix)--to 'BBB+' from 'A-'. The outlook on all these companies is negative. "We lowered the ratings to reflect the weaker statutory operating performance at the lead insurance company (PLIC), reduced financial flexibility, and reduced capital at PLIC," explained Standard & Poor's credit analyst Adrian Pask. Its statutory net gain from operations was lower in the first nine months of 2008 than in the past few years. In recent years, the company has shown stronger fourth-quarter performance, but this year, challenges in the general economy and in the financial markets could limit opportunities to achieve earnings in line with prior years. The negative outlook focuses on the need to improve statutory earnings to levels commensurate with recent years and the need to remediate the capital deficiency. If the company is unable to improve the quarterly trend in profitability and resolve the capital deficiency, S&P could lower the ratings, most likely by one notch. Alternately, if the company can resolve the capital deficiency without hurting longer-term statutory earnings and have sustained earnings improvements over the next 12-24 months, S&P could revise the outlook to stable. POLYPORE INTERNAT'L: S&P Keeps 'B' Ratings; Outlook Stable ---------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Polypore International Inc. to stable from positive. At the same time, S&P affirmed S&P's ratings on the company, including the 'B' long-term corporate credit rating. "The outlook revision reflects the diminished possibility for a rating upgrade following Polypore's disclosure that a large supply contract in its lead-acid business will not be renewed," said Standard & Poor's credit analyst Gregoire Buet. "While this event highlights the competitiveness of the industry, we expect that the company's credit measures and liquidity position will remain adequate for our expectations at the 'B' rating," Mr. Buet added. The ratings on Charlotte, N.C.-based Polypore continue to reflect the company's highly leveraged financial risk profile, characterized by high debt levels and weak credit metrics. Polypore's leading position in niche battery separator, health care, and industrial filtration markets, and its good profitability partially offset these factors. Polypore recently announced that it anticipates it will not maintain a material supply position for automotive lead-acid battery separators with Johnson Control Inc. in 2009. In addition, the company will implement a restructuring plan to align production capacity. Polypore derives about 57% of revenues from separators for lead-acid batteries used in transportation and industrial applications. Separators for disposable and rechargeable lithium batteries accounted for about 17% of revenues in the nine-months ended Sept. 30, 2008. The lead-acid market tends to be mature and stable, although growth opportunities exist in emerging markets. The company's lithium separator business has a favorable long-term growth outlook although demand can be volatile. Polypore's other businesses, accounting for about 26% of revenues, includes filtration membranes used by makers of health care, food and beverage, and industrial separations equipment. Credit metrics could weaken somewhat in 2009 but should nonetheless remain in line with S&P's expectations for the current rating. S&P believes Polypore should be able to maintain an adequate liquidity position. However, if the long-term competitive position of the company's business were to deteriorate amid additional customer losses, S&P could revise the outlook to negative or lower the rating. S&P could also take a negative rating action if the company's cash flow generation were to turn negative because of lower-than-expected earnings or higher-than- expected restructuring or litigation expenses, which could stretch credit measures or reduce headroom over financial covenants below 10%. Conversely, if the long-term competitiveness of Polypore's business remains healthy, and if this is supported by the company's credit measures, liquidity, and financial policies, S&P could revise the outlook back to positive. RIVERGREEN BANK: Weiss Ratings Assigns "Very Weak" E- Rating ------------------------------------------------------------ Weiss Ratings has assigned its E- rating to Rivergreen Bank. Weiss says that the institution currently demonstrates what it considers to be significant weaknesses and has also failed some of the basic tests Weiss uses to identify fiscal stability. "Even in a favorable economic environment," Weiss says, "it is our opinion that depositors or creditors could incur significant risks." Savings Bank of Maine, headquartered in Gardiner, Maine, acquired Rivergreen Bank, based in Kennebunk, Maine, in Sept. 2008. Rivergreen Bank, a Maine-chartered commercial bank, had total assets of $97.9 million at June 30, 2008. Established in 1834, Savings Bank of Maine is an independent community bank with 29 full-service branches throughout the Northern, Eastern, Central, and Mid-Coast regions of Maine. The Rivergreen acquisition adds three new full-service branch offices in the Southern Maine communities of Kennebunk, Saco, and York. Following the merger, Savings Bank of Maine's total assets increased to $970 million. SEMGROUP ENERGY: Received Subpoena from SEC Over Parent's CH. 11 ----------------------------------------------------------------- The U.S. Securities and Exchange Commission has issued a subpoena to SemGroup Energy Partners, L.P., pursuant to a formal order of investigation requesting certain documents relating to, among other things, its parent's, SemGroup LP's liquidity issues, the company disclosed in a regulatory filing with the SEC. The SEC, since July 24, 2008, has been conducting an inquiry of the Partnership relating to its disclosures representing the liquidity issues of its parent. Days before the Parent filed for bankruptcy on July 22, several shareholder actions on behalf of classes of investors were filed against the Partnership. The lawsuits allege that the Parent was in financial difficulty or at high risk for financial difficulty as a result of its investment in risky crude oil hedge transactions, but hid that situation from investors. The lawsuits further allege that, on or before February 20, 2008, the Partnership effected a secondary offering where it sold 6,000,000 units at $23.90 for proceeds of $137,000,000, and borrowed substantial funds and purchased the Parent's asphalt business for $387,000,000. The Partnership, which did not seek protection under Chapter 11, is the publicly trading arm of the Parent. Manchester Securities of New York and Alerian Capital Management, two of the Partnership's investors, took control over the company, after activating a clause in a loan agreement on which the Parent defaulted on. Aside from the SEC subpoena, on July 23, 2008, the Partnership and another non-debtor affiliate, SemGroup Energy Partners G.P., L.L.C., each received Grand Jury subpoenas from the United States Attorney's Office in Oklahoma City, Oklahoma, requiring, among other things, that the companies produce financial and other records related to the Partnership's July 17, 2008, press release informing the public that the Parent is experiencing liquidity issues and is exploring various alternatives, including raising additional equity, debt capital, or the filing of a voluntary petition under Chapter 11 of the Bankruptcy Code. An examiner was recently appointed by the U.S. Trustee for Region 3 to investigate the trading practices and prepetition transaction of the Debtors. Louis J. Freeh, who served as former Federal Bureau of Investigation, director is the Chapter 11 examiner. The Examiner is expected to propose a work plan and provide an estimated costs for his investigation on November 6, 2008. SEMGROUP LP: Gets Lenders' OK for White Cliffs Auction by Dec. 15 ----------------------------------------------------------------- Tulsa, Oklahoma-based SemGroup LP and its affiliates have begun the process of selling the pipeline under construction from Platteville, Colorado, to the SemCrude LP terminal in Cushing, Oklahoma. The pipeline is owned by non-debtor affiliate named White Cliffs Pipeline LLC, a company not in Chapter 11. Pursuant to the U.S. Bankruptcy Court for the District of Delaware's final order allowing them to access $250,000,000 from Bank of America, N.A., the Debtors are required, as adequate protection (i) by no later than October 15, 2008, to file a motion, in form and substance reasonably satisfactory to BofA, which is also the administrative agent of the prepetition lenders, with regard to the sale of the Debtors' equity interests in White Cliffs Pipeline, LLC; and (ii) by no later than November 21, 2008, to conduct an auction of White Cliffs. The Debtors have requested that the BofA agree to amend the Final DIP Order to provide for an extension of the date for filing the White Cliffs Motion and the date for conducting the White Cliffs Auction. The parties, in a Court-approved stipulation, agree that the Final DIP Order is amended and replaced in their entirety to reflect that by no later than October 30, 2008, the Loan Parties will file a motion with regard to each of: (a) a sale of either (i) all of the Debtors' equity in White Cliffs, or (ii) substantially all of the assets of White Cliffs, pursuant to a "stalking horse" bid; or (b) the establishment of bidding and related procedures to be employed in connection with an auction with respect to the sale of the Debtors' equity interests in or substantially all of the assets of White Cliffs. By no later than December 15, 2008, the White Cliffs Auction will have been conducted in accordance with the bidding and auction procedures. Bonnie Glantz Fattell, Esq., at Blank Rome LLP, in Wilmington, Delaware, in a certification of counsel, relates that the DIP Agent and the Creditors' Committee entered into a stipulation extending from October 30, 2008, to November 21, 2008, the deadline by which the Committee will file an adversary proceeding or contested matter: (x) challenging the amount, validity, enforceability, priority, or extent of the Prepetition Indebtedness or the Prepetition Secured Parties' security interests in and liens on the Prepetition Collateral; or (y) otherwise asserting any claims or causes of action against the Prepetition Secured Parties on behalf of the Debtors' estates. In papers filed Oct. 30, Semgroup seeks the Court's permission to conduct the sale, in accordance with a protocol, which provides for a Dec. 5 deadline for initial bids, followed by an auction on Dec. 15. The company reserves the right to cancel the auction if the bids aren't sufficient. A hearing to approve sale procedures is scheduled for Nov. 24. No buyer is yet under contract. SemGroup L.P. and its debtor-affiliates filed for Chapter 11 protection on July 22, 2008 (Bankr. D. Del. Lead Case No. 08-11525). These represent the Debtors' restructuring efforts: John H. Knight, Esq., L. Katherine Good, Esq. and Mark D. Collins, Esq. at Richards Layton & Finger; Harvey R. Miller, Esq., Michael P. Kessler, Esq. and Sherri L. Toub, Esq. at Weil, Gotshal & Manges LLP; and Martin A. Sosland, Esq. and Sylvia A. Mayer, Esq. at Weil Gotshal & Manges LLP. Kurtzman Carson Consultants L.L.C. is the Debtors' claims agent. The Debtors' financial advisors are The Blackstone Group L.P. and A.P. Services LLC. Margot B. Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye Scholer LLP; and Laurie Selber Silverstein, Esq., at Potter Anderson & Corroon LLP, represent the Debtors' prepetition lenders. SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude Company, sought protection under the Companies' Creditors Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc., is the appointed monitor of SemCanada Crude Company and its affiliates' reorganization proceedings before the Canadian Companies' Creditors Arrangement Act. The CCAA stay expires on Nov. 21, 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). SOUTHEAST WAFFLES: Won't Have Examiner But to Get CRO ----------------------------------------------------- According to Bloomberg News, Southeast Waffles LLC avoided the appointment of a trustee or examiner by agreeing to have a chief restructuring officer manage the franchisee of 113 Waffle House Inc. restaurants in the southern U.S. The appointment, however, according to the report, ends Southeast Waffles' exclusive right to propose a Chapter 11 plan in late December, removes the firm's CEO and Chairperson Jim Shaub from any authority, and cutting off Shaub's salary after he receives $80,000. As reported by the Troubled Company Reporter, current and middle managers at SouthEast Waffles want Mr. Shaub, for various allegations, including check-kiting schemes that ran through his franchised restaurants. Bloomberg says the franchiser Waffle House objected to paying Mr. Shaub anything and won in bankruptcy court. The agreement was modified to delete the provision paying him $20,000 a month for four months. About SouthEast Waffles Headquartered in Nashville, Tennessee, SouthEast Waffles, LLC dba Waffle House -- http://www.southeastwaffles.com-- operates restaurants. The company filed for Chapter 11 protection on Aug. 25, 2008 (Bankr. M.D. Tenn. Case No. 08-07552). Barbara Dale Holmes, Esq., David Phillip Canas, Esq., Glenn Benton Rose, Esq., and Tracy M. Lujan, Esq., at Harwell Howard Hyne Gabbert & Manner represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed assets and debt of between $10 million and $50 million each. STANDARD STEEL: S&P Affirms 'B+' Corp. Credit Rating; Outlook Neg ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on Standard Steel LLC, including the 'B+' long-term corporate credit rating, and removed them from CreditWatch where they were placed with negative implications on May 8, 2008. The outlook is negative. "The affirmation reflects our view that the company is less likely to violate its financial covenants in the near term," said Standard & Poor's credit analyst Robyn Shapiro. "Still, the outlook is negative, reflecting the company's thin margin of financial covenant compliance." Slowing orders for freight cars, volatile commodity costs, and the possibility of a more competitive operating environment are additional headwinds to the company's operating prospects. The ratings on Pittsburgh-based Standard Steel reflect the company's highly leveraged financial profile and weak business risk profile as an integrated manufacturer of steel wheels and axles. The company manufactures wheels and axles for railcar manufacturers, Class 1 railroads, and aftermarket maintenance providers. With annual sales of roughly $200 million at June 30, 2008, Standard Steel is a small participant in the cyclical railcar- equipment manufacturing industry. Cyclicality is tempered to a certain extent by the company's more stable aftermarket repair and maintenance business. Its key lines of business are marked by a high degree of supplier concentration. The company expects to derive roughly two-thirds of its revenue from the wheel segment, with the remainder coming from axle production. The company manufactures its products from forged steel instead of using a casting process, differentiating itself from its competitors with respect to wheel production. Because of this, Standard Steel has a strong position in the smaller passenger rail market and in certain locomotive markets, which require the use of forged steel wheels instead of cast wheels. Nevertheless, it expects the passenger and locomotive markets to account for only a combined 20% of company sales, with the remaining 80% coming from freight car-related sales. Although the company boasts strength within certain product niches, its market share positions trail those of its key competitors. Its main competitors in the wheel and axle businesses are Griffin Wheel, a subsidiary of Amsted Industries Inc., and Trinity Industries Inc. Standard Steel's market share in axles could be tested in the future, as competitor Amsted Industries formed a 50/50 joint venture with American Railcar Industries Inc. in 2007 to construct a facility to manufacture and sell axles. The company is subject to customer concentration, as roughly 50% of sales come from its top three customers. However, the company benefits from the ability to pass through price increases in raw materials, such as scrap steel, alloys, and natural gas. In addition, it has successfully engaged customers in take-or-pay contracts that specify price and volume for three to five years, providing some near-term visibility. Operating margins, before depreciation and amortization, in the midteen percentage area could be adversely affected by lower near-term demand for railcar wheels & axles. If the EBITDA cushion of compliance under the maximum total leverage ratio (as defined by the company's credit agreement) is below 10% in early-to-mid 2009, S&P could the lower the ratings. An outlook revision to stable, which S&P does not expect in the intermediate term, would require the company to make considerable progress in renewing customer contracts, which would significantly improve the outlook for earnings and leverage. STORM CAT: Defaults Qrtrly Payments; Picks Turnaround Firm A&M -------------------------------------------------------------- Storm Cat Energy Corporation failed to make its required quarterly interest payment when due on Sept. 30, 2008, and failure has continued for a period of 30 days, with respect to its Series A and Series B Subordinated Convertible Notes each due March 31, 2012. The company's failure to make the required quarterly interest payment prior to the expiration of such 30 day grace period constitutes an "Event of Default" under the terms of each of the respective Note Purchase Agreements. In connection with company's previously reported and continuing defaults under its credit agreement, its lenders notified the noteholders that pursuant to the terms of the note purchase agreements, and the subordination and intercreditor agreement previously entered into by the noteholders, that the Lenders were enforcing their rights to: -- prohibit Storm Cat from making any payments to the noteholders, and -- require that the noteholders standstill and not accelerate any amounts due under the notes upon an event of default or seek other enforcement or redemption actions otherwise permitted under the note purchase agreements. Additionally, as a result of the Event of Default, the rate of interest on the outstanding principal amount of the notes as well as any overdue interest will increase from 9 1/4% to 12.0% per annum. The company is now talks with its lenders since mid-August in order to seek a waiver or forbearance of the defaults under the credit agreement, to amend the agreement or otherwise restructure the company and seek a liquidity event. Furthermore, any restructuring plan ultimately agreed upon by the company and its Lenders may involve implementation through a bankruptcy filing. In the event both parties fail to agree on the terms of a consensual restructuring of the obligations under the credit agreement, the lenders may attempt to effect an acceleration of the obligations under the credit agreement. In line with the defaults under the credit agreement, an affiliate of one of the lenders recently exercised its right to declare a cross-default on the company's natural gas commodity swap agreements. The swap agreements were terminated and amounts in the aggregate of $9.4 million owing to Storm Cat upon termination of the swap agreements were paid to the Lenders to be set-off and reduce the amounts outstanding under the Company's revolving credit facility. Because the company remains in default under the credit agreement, it may not re-borrow any funds used to pay down the revolving credit facility without the consent of the Lenders in their sole discretion. As a result of the termination of the swap agreements, the company is now fully exposed to the impact of gas price fluctuations in the commodity markets. The company has been exploring since mid-May numerous alternatives to improve liquidity, including raising capital, refinancing outstanding debt or the potential sale of assets. unfortunately, as a result of falling commodity prices and the global financial crisis, the company has been unsuccessful to date. Nonetheless, in connection with on-going discussions with its lenders regarding potential restructuring initiatives, the company has engaged Parkman Whaling LLC to assist it in exploring strategic business alternatives as well as engaged Alvarez & Marsal, a turnaround and restructuring firm, for the purpose of assisting the company with its restructuring efforts. The company reported $4.6 net loss on natural gas revenue of $6.5 for the three months ended June 30, 2008, compared to $4.5 net loss for the same period a year ago. A full-text of the company's regulatory filing is available for free at http://ResearchArchives.com/t/s?348b About Storm Cat Energy Storm Cat Energy (AMEX:SCU,TSX:SME) -- http://www.stormcatenergy.com/-- operates an oil and gas company focused on the exploration, production and development of large unconventional gas reserves from fractured shales, coal beds and tight sand formations and, secondarily, from conventional formations. The company has producing properties in Wyoming's Powder River Basin and Arkansas' Arkoma Basin and exploration and development acreage in Canada. SUNCAL COS: Judge Prefers Liquidation for Suncal/Lehman Properties ------------------------------------------------------------------ Judge Erithe Smith of the U.S. Bankruptcy Court for the Central District of California wanted three large housing projects -- McAllister Ranch in Bakersfield, SummerWind near Yucaipa (formerly called Mountainside), and McSweeny Farms in Hemet, which are co- owned by SunCal Cos. and a subsidiary of bankrupt Lehman Brothers -- liquidated under Chapter 7 but attorneys for the junior creditors prevailed upon him to continue the case under Chapter 11 saying they would pay for all the costs for pursuing a Chapter 11 case for a least month or two, the OCRegister (California) reported Thursday. As reported in the Troubled Company Reporter on Sept. 19, 2008, creditors filed a bankruptcy petition against a partnership of SunCal Cos. and one of its biggest financiers, Lehman Brothers Holdings Inc. of New York, in the U.S. Bankruptcy Court for the Central District of California. Creditors also filed bankruptcy petitions against the three housing projects, which are slated for auction. The developers of the three large projects defaulted on more than $400 million in loans. According to the report, the agent for the first lien lender (another Lehman entity) wanted to foreclose on the properties which are presently valued at less than $200 million. The Lehman/SunCal partnership wants to liquidate. Lenders with junior liens, including unpaid building contractors, wants the properties to continue under Chapter 11, fearing that the first lien holder "will gobble up all the proceeds." The case continues on Nov. 20. About SunCal Companies SunCal Companies -- http://www.suncal.com/-- has more than 250,000 residential lots and 10 million square feet of commercial space in various stages of development throughout California, Arizona, Nevada and New Mexico. Some of SunCal's communities include Amerige Heights in Fullerton, Lincoln Crossing near Sacramento and Terra Lago and Fairway Canyon near Palm Springs. SunCal Companies recently added an active-adult, commercial, homebuilding, multifamily and urban divisions; and expanded to Florida, Texas and Washington, D.C. SUNBELT GRAIN: Court Awards Farmer Proceeds From Grain Sale ----------------------------------------------------------- Amy Bickel at The Hutchinson News reports that the U.S. Bankruptcy Court for the District of Kansas has awarded to farmer Gilbert Bishop some of the money from the sale of grain from Sunbelt Grain. According to Hutchinson News, court documents indicate that Mr. Bishop claimed ownership interest in wheat sold to Sunbelt Grain, valued at $18,000. The report says that two parties agreed to resolve the conflict through payment of $12,000 to the Gilbert Bishop Revocable Living Trust. Hutchinson News relates that court documents say that Bankruptcy Court Trustee Steven Speth questioned the validity of the claim. Security State Bank of Scott City, according to Hutchinson News, foreclosed on Sunbelt Grain in December 2007, claiming that the firm's owners -- Jim and Kathy Shafer -- were in default on a $4.9 million loan the couple used to buy facilities in 2006. Security State and two farmer creditors forced Sunbelt Grain into bankruptcy, the report says. Security State, states the report, filed a separate separate lawsuit against the Shafers and their Shafer Farms on Feb. 13, 2008, claiming that the defendants owed another $3.43 million that the couple borrowed between 2006 and 2007. Hutchinson News reports that Security State, took assets from the sale of machinery, Sunbelt Grain's elevators, and some of the land, to offset their liabilities. Security State, says Hutchinson News, claimed that it should get $3.2 million netted from the sale of the grain. The sale of the grain netted $3.785 million, according to the report. The Hon. Robert Nugent issued a ruling on August 28, 2008, awarding Security State about $1.1 million. Mr. Speth said in September that it could be months before it is decided who gets the remaining $2.7 million, The Hutchinson News relates. According to Hutchinson News, Security State and Mr. Bishop -- owners of Wichita County feedlot Whitham Farms -- seek $2.2 million for 524,000 bushels of grain paid for but never delivered. Sunbelt Grain also owes $2 million to 33 farmers who deferred payments of their wheat and fall crops until 2008, Hutchinson News says. About Sunbelt Grain Sunbelt Grain is owned by James and Kathy Shafer. It is a small limited-liability company with three elevators in Greeley County and one in Wallace County. SWANSEA PROPERTIES: Ct. Okays Wood Family Settlement with J. Rose ----------------------------------------------------------------- The Wood family members, who through the Wood Family Enterprises Limited Partnership, co-owned the 240-acre Wood Family Farm with the Debtors Swansea Properties, LLC, Eagletail Bighorn LLC, and the City of Goodyear, received U.S. Bankruptcy Court approval Wednesday on a settlement that severed ties with Jack Rose's Goodyear-based Civica entities. As reported in the Troubled Company Reporter in 2004, the Wood family members decided it was time to begin selling the farm and entered into contracts with the Civica real estate developers and contractors controlled by Jack Rose. Swansea Properties, LLC sought Chapter 11 bankruptcy protection in August to break contracts with Mr. Rose and his entities. According to the report, businesses controlled by the family also had defaulted on a $38-million development loan from M&I Bank, and the family needed to stop foreclosure. The family accused Mr. Rose and his companies of fraud, negligence, breaking agreements and acting as a real-estate broker without a license. Mr. Rose's lawyers countered that the siblings just wanted to avoid paying fees owed to Mr. Rose's companies. Jim Cross, an attorney for the family, said the settlement opens the door to build on roughly 80 to 100 acres of the 240-acre project south of Interstate 10 along Estrella Parkway. "We are now free to talk to other developers," Mr. Jim Cross, an attorney for the family, said. "What happens now all depends on who the developer is." Susan Freeman, an attorney for Civica, said her client was fine with the settlement, which last week also received approval from the Goodyear City Council. The city needed to endorse the settlement because it had signed contracts with entities controlled by Mr. Rose and the Woods, who sold a portion of their farm to the city to build the spring- training baseball facility. The settlement gives Mr. Rose about $225,000. Mr. Rose has released claims to infrastructure reimbursements and sales-tax rebates from the city, which will go to the Woods, but he retains his interest in developing the $108 million worth of baseball facilities, which will open next year when the Cleveland Indians begin spring training in Goodyear. In 2010, the Cincinnati Reds also will begin training in Goodyear. Litchfield Park, Arizona-based Swansea Properties LLC filed for Chapter 11 protection on Aug. 29, 2008 (Bankr. D.Ariz. Case No. 08-11486). James E. Cross, Esq., at Osborn Maledon P.A. represents the Debtor in its restructuring effort. The company listed assets between $10 million and $50 million and debts between $10 million and $50 million when it filed for bankruptcy. Its affiliates, Eagletail Bighorn LLC and MPK Enterprises Inc. filed separate Chapter 11 petitions. TARRAGON CORP: Bankruptcy Looming; Inks Forbearance Agreement ------------------------------------------------------------- Tarragon Corporation has entered into a restructuring support and forbearance agreement with the holders of its $125 million of corporate-level unsecured subordinated notes. The holders of the subordinated notes have agreed to support a financial restructuring of Tarragon and to refrain from exercising any of their rights and remedies under the terms of the subordinated notes through June 30, 2009, subject to the terms and conditions of the agreement. As part of the financial restructuring, the subordinated notes and approximately $38 million of indebtedness held by an affiliate of William S. Friedman, Tarragon's Chairman and Chief Executive Officer, and Robert P. Rothenberg, Tarragon's President, would be restructured and become obligations of a reorganized Tarragon or an affiliated issuer. The agreement also contemplates that Tarragon would enter into one or more definitive agreements with a sponsor of an overall financial restructuring plan. Under the overall plan, which may be implemented through a voluntary petition for Chapter 11 bankruptcy protection, the sponsor of the plan and certain Tarragon debtholders would receive shares of reorganized Tarragon's equity representing a controlling interest in the reorganized company in exchange for the assumption of indebtedness. The Tarragon board of directors is being advised by Lazard in connection with its evaluation of alternatives that would maximize stakeholder value. These alternatives may include, but are not limited to, a possible sale or other recapitalization or restructuring of the company, and all available forms and sources of financing, property sales or other strategic transactions, including the implementation of an overall financial restructuring plan. The company reported $39.4 million net loss on total revenues of $64.3 million for the three months ended June 30, 2008, compared to $181.0 million net loss on total revenues of $69.8 million for the same period a year ago. The company's balance sheet at June 30, 2008, showed $918.2 million in total assets and $1.0 billion in total liabilities resulting in a $155.1 million stockholders's deficit. According to the Troubled Company Reporter on Oct. 14, 2008 the company received a deficiency notice from The NASDAQ Stock Market stating that the Company is not in compliance with NASDAQ Marketplace Rule because the minimum bid price of its common stock has closed below $1.00 per share for 30 consecutive business days. The company has until March 25, 2009, to regain compliance. A full-text copy of the company's regulatory filing is available for free at http://ResearchArchives.com/t/s?283 About Tarragon Corp. Headquartered in New York City, Tarragon Corporation (NasdaqGS: TARR) -- http://www.tarragoncorp.com/-- and its subsidiaries engage in the development, ownership, and management of real estate properties in the United States. It operates in two divisions, a Real Estate Development Division (Development Division) and an Investment Division. The Development Division focuses on developing, renovating, building, and marketing homes in high-density, urban locations and in master-planned communities. The Investment Division owns and operates a portfolio of stabilized rental apartment communities located in Alabama, Connecticut, Florida, New Jersey, Texas, Rhode Island, Tennessee, Maryland, Oklahoma, Michigan, and Georgia. The company was founded in 1973. The company's balance sheet at June 30, 2008, showed $918.2 million in total assets, $1.1 billion in total liabilities and $19.2 million in minority interest, resulting in $155.1 million stockholders' deficit. As of June 30, 2008, the company had $972.6 million of consolidated debt, and had guaranteed additional debt of one unconsolidated joint venture of $30.2 million. Going Concern Doubt As reported in the Troubled Company Reporter on April 14, 2008, Grant Thornton LLP raised substantial doubt about the ability of Tarragon Corporation to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2007. The auditing firm stated that as of Dec. 31, 2007 the company had $1.1 billion in consolidated debt and had guaranteed additional debt of its unconsolidated joint ventures totaling $31.6 million. At Dec. 31, 2007, the company was not in compliance with certain of its debt covenants. Additionally, the company incurred a net loss during the year ended Dec. 31, 2007, and, as of that date, the company's total liabilities exceeded its total assets by $93.6 million. TOWERS OF CHANNELSIDE: Wachovia to Structure New Loan for Firm -------------------------------------------------------------- Shannon Behnken at Tampa Bay Online reports that Wachovia Bank has agreed to structure a new loan for the Towers of Channelside LLC. Tampa Bay Online relates that the new loan will allow the Towers of Channelside to finish the project and pay off creditors. According to Tampa Bay Online, Wachovia had forced developer Richard Sacchi's Towers of Channelside into bankruptcy by cutting off a credit line to the firm. The report says that the Chapter 11 filing was the Towers of Channelside's last resort to block the foreclosure on the Towers of Channelside. Buyers then dropped out and Wachovia refused to extend the repayment plan for the construction loan, Tampa Bay Online states. Mr. Sacchi, says Tampa Bay Online, has about 150 condos -- including a penthouse -- left to sell. Based in Plant City, Florida, the Towers of Channelside, LLC -- http://www.towersatchannelside.com/-- operates a 29-story twin tower condominium overlooking the Tampa Bay area. The developer filed for Chapter 11 protection on Jan. 25, 2008 (Bankr. M.D. Fla. Case No. 08-00939). Edward J. Peterson, III, Esq. and Harley E. Riedel, Esq., at Stichter Riedel Blain & Prosser P.A., represented the Debtor in its restructuring efforts. The Official Committee of Unsecured Creditors appointed in this bankruptcy case selected Forizs & Dogali, P.L. as its counsel. As reported in the Troubled Company Reporter on March 4, 2008, the Debtor's schedules showed total assets of $109,783,667 and total debts of $94,258,253. As reported in the Troubled Company Reporter on Oct. 8, 2008, the Towers of Channelside emerged from Chapter 11 bankruptcy protection, with a new plan to pay back creditors over a five-year period. TRANSMERIDIAN EXPLORATION: Exchange of $290MM Sr. Notes Approved ---------------------------------------------------------------- Transmeridian Exploration Incorporated and its subsidiary Transmeridian Exploration Inc. have executed a supplement to the indenture governing TMEI's 12% Senior Secured Notes due 2010 and related security documents. On October 8, 2008, the company received the requisite written consents from noteholders to amend the indenture governing the $290 million aggregate principal amount of outstanding Senior Secured Notes due 2010 of TMEI-BV and related security documents. The company and TMEI-BV are offering to exchange $200 in cash and $800 in principal amount of New Notes for each $1,000 principal amount of Existing Notes. In the event that greater than $222,157,000 principal amount of Existing Notes are validly tendered, not validly withdrawn and accepted for exchange in the Exchange Offer -- the principal amount being equal to 90% of the aggregate principal amount of Existing Notes outstanding, exclusive of the $43,159,000 principal amount of Existing Notes held by UEGL -- the company and TMEI-BV will increase the cash amount paid and reduce the principal amount of New Notes issued, for each $1,000 principal amount of Existing Notes. In that case, the aggregate cash amount payable will be equal to $44,431,400, plus an amount equal to 101% of the principal amount of Existing Notes validly tendered and not withdrawn in excess of $222,157,000, and this amount of cash will be allocated ratably to all holders of Existing Notes accepted for exchange; and the aggregate principal amount of New Notes issuable will be $177,726,000, regardless of the principal amount of Existing Notes tendered, and this principal amount of New Notes will be allocated ratably to all holders of Existing Notes accepted for exchange. As of October 24, 2008, holders of the Existing Notes have tendered a principal amount of Existing Notes in excess of the Requisite Tender Amount. The New Notes, which will mature on December 15, 2010, will bear interest at the rate of 12% per annum. Interest on the New Notes will be payable quarterly on March 15, June 15, September 15 and December 15 of each year, beginning on December 15, 2008 (assuming the New Notes are issued on or before December 1, 2008), and at maturity. As of 5:00 p.m., New York City time, on Oct. 23, 2008, holders of a majority in aggregate principal amount of the Existing Notes had delivered written consents with respect to the proposed amendments to the indenture governing the Existing Notes and related security documents, and the written consents were not subsequently validly withdrawn prior to the execution of the documents. Accordingly, as contemplated by the supplemented Offering Memorandum and Consent Solicitation Statement relating to the exchange offer and consent solicitation relating to the $290,000,000 aggregate principal amount of Existing Notes, TMEI, the guarantors of the Existing Notes and the trustee under the indenture governing the Existing Notes executed on Oct. 24, 2008, a supplemental indenture and amended and restated security documents implementing the proposed amendments to the indenture governing the Existing Notes and related security documents. In addition, TMEI, the guarantors of the new notes offered in exchange for the Existing Notes in the exchange offer and the trustee under the indenture governing the New Notes executed on Oct. 24, 2008, the indenture governing the New Notes. Therefore, the Execution Time as defined in the Offering Memorandum has occurred, and tendered Existing Notes may not be withdrawn and consents may not be revoked except as described in the limited circumstances set forth in the Offering Memorandum. All Existing Notes validly tendered prior to the exchange offer expiration time, which was 5:00 p.m., New York City time, on Oct. 28, 2008, unless extended, will be eligible to receive the amended total consideration payable in the exchange offer set forth in the Offering Memorandum. The New Notes will not be offered pursuant to an effective registration statement. Therefore, the New Notes may not be offered or sold in the United States absent an exemption from the registration requirements of the Securities Act of 1933, as amended, and any applicable state securities laws. A full-text copy of the company's Supplemental Indenture is available for free at http://ResearchArchives.com/t/s?3487 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. TREASURE ISLAND CLUB: Files for Chapter 11 In Tampa, Florida ------------------------------------------------------------ According to Bloomberg's Bill Rochelle, Treasure Island Tennis & Yacht Club Corp. filed a Chapter 11 petition on Oct. 31 in Tampa, Florida. Treasure Island is owned by its members and has 48 boat slips, 13 tennis courts, a pool, spa and fitness center. In its facility in Pinellas, Florida. It said it assets and debt are both less than $10 million, Bloomberg reports. The case is In re Treasure Island Tennis & Yacht Club Corp. of Pinellas, 08-17339, U.S. Bankruptcy Court, Middle District Florida (Tampa). UNIFI INC: Posts $676,000 Net Loss in Quarter ended Sept. 28 ------------------------------------------------------------ Unifi, Inc., released preliminary operating results for its first fiscal quarter ended Sept. 28, 2008. The company reported net loss of $676,000, compared to net loss of $9.2 million for the same period in the previous year. Income from continuing operations before taxes was $1.3 million compared to a loss from continuing operations before taxes of $16.1 million for the same period in the prior year. Net sales for the quarter were $169.0 million, which represents a decrease from net sales of $170.5 million for the same period in prior year. Net sales were positively impacted by volume gains in Brazil and strength in the company's nylon business, which continues to be driven by consumer and fashion preferences. Cash-on-hand at the end of September was $20.4 million, which increased from the $20.2 million cash-on-hand at the end of June. Total cash and cash equivalents at the end of September, including restricted cash, were $47.7 million compared to $55.6 million at the end of June. Going forward, restricted cash now includes deposits in Brazil, which secure VAT tax incentive loans, well as the domestic cash restricted for capital expenditures in accordance with the company's long-term borrowing agreements. At the end of September, long-term debt was reduced to $196.5 million from $201.8 million as the company repaid the remaining $3 million of outstanding borrowings under its revolver from the June quarter end. A full-text copy of the company's quarterly report is available for free at http://ResearchArchives.com/t/s?3483 About Unifi Headquartered in Greensboro, North Carolina, Unifi Inc. (NYSE: UFI) -- http://www.unifi.com/ -- is a diversified producer and processor of multi-filament polyester and nylon textured yarns and related raw materials. Key Unifi brands include, but are not limited to: aio(R) - all-in-one performance yarns, Sorbtek(R), A.M.Y.(R), Mynx(R) UV, Repreve(R), Reflexx(R), MicroVista(R), and Satura(R). Unifi's yarns and brands are readily found in home furnishings, apparel, legwear, and sewing thread, as well as industrial, automotive, military, and medical applications. * * * On July 3, 2008, the Troubled Company Reporter reported that Standard & Poor's Ratings Services revised its outlook on Unifi Inc. to positive from negative. At the same time, S&P affirmed the ratings, including the 'CCC+' corporate credit rating, on the company. Unifi had debt outstanding of $232.5 million at March 31, 2008. The company's 11-1/2% Senior Secured Notes due 2014 carry Moody's Investors Service's Caa2 rating and Standard & Poor's Rating Services' CCC+ rating. US SHIPPING: S&P Affirms 'CCC' Ratings After Covenant Relief ------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its ratings on U.S. Shipping Partners L.P. (U.S. Shipping), including the 'CCC' long- term corporate credit rating. The ratings have been removed them from CreditWatch, where they were placed with developing implications on Aug. 21, 2008. The outlook is negative. The Edison, N.J.-based shipping company has about $522 million of lease-adjusted debt. U.S. Shipping announced on Oct. 24, 2008, an amendment to its credit agreement, under which lenders waived potential financial covenant defaults from Sept. 30, 2008, to Jan. 31, 2009 (the waiver period), and added a new cumulative EBITDA requirement, which will be tested monthly beginning Oct. 31, 2008, through the waiver period. Although the waiver provides covenant relief, it increases pressure on liquidity, because of higher cash interest expense requirements and related fees, at a time when liquidity is tightly constrained. The new amendment also includes a 1.5% PIK (paid-in- kind) interest provision, which could increase to 4.5% on Jan. 31, 2009, that represents a call on cash at a later time. Despite the company's recent suspension of distributions to subordinated and common unit holders, resulting in combined estimated annual savings of $33.5 million, S&P expects liquidity to remain tightly constrained over the next year. The negative outlook reflects the tanker company's potential for a financial covenant breach despite the new covenant amendment; its tightly constrained liquidity; and its deteriorating financial profile. S&P's view is that the amendment period does not give the company sufficient time to materially improve its operating performance. The company has retained financial advisers to assist in exploring strategic alternatives, including the possible sale of the business or the sale of new equity, and other ways to increase liquidity and strengthen its financial resources. If at the time the waiver expires the company is unsuccessful in executing strategic alternatives, S&P expects an increased probability of a financial covenant breach. If the company is not in compliance with its covenants, the lenders have a number of remedies, including preventing the partnership from making additional borrowings under its revolving credit facility and barring distributions on its common units (which the company recently suspended) until the company is again in compliance. The negative outlook reflects the potential for a financial covenant breach despite the new covenant amendment; the company's tightly constrained liquidity; and its deteriorating financial profile. S&P could lower ratings if the company breaches its financial covenants, if liquidity constraints increase, or if operating performance further deteriorates. If the company announces an agreement to sell itself, S&P could place ratings on CreditWatch, with the implications to be determined by the nature of the transaction. S&P considers an outlook revision to stable unlikely in the near term. VALUE CITY: Tells Court of Plans to Close 66 More Stores -------------------------------------------------------- Value City Department Stores, LLC, will be closing 66 stores, company executives told the U.S. Bankruptcy Court for the District of Southern New York, The Daily Item (Pennsylvania) reported Thursday. Documents filed with the Court blamed the economic downturn, higher gasoline prices and increasing unemployment for the closings. According to the report, the company's suppliers have also tightened credit terms. As a result, the company is unable to replenish sold merchandise with new inventory. Based in Columbus, Ohio, Value City Department Stores LLC and its debtor-affiliates operate a chain of department stores. The company and eight of its debtor-affiliates filed separate petitions for Chapter 11 on Oct. 26, 2008 (Bankr. S.D. N.Y. Lead Case No. 08-14196). John Longmire, Esq., at Willkie Farr & Gallagher LLP, represent the Debtor as counsel. Epiq Bankruptcy Solutions LLC is the Debtor's claims and noticing agent. When Value City filed for protection from its creditors, it listed $138,986,604 in total assets, and $159,825,793 in debts. VERASUN ENERGY: Can Use Cash Collateral on Interim Basis -------------------------------------------------------- The Hon. Brendan L. Shannon of the U.S. Bankruptcy Court authorized VeraSun Energy Corporation and its affiliates to borrow, on an interim basis, to use the cash collateral securing their prepetition indebtedness. The Court entered cash collateral orders: * with respect to the cash collateral securing the $125,000,000 prepetition revolving credit facility with UBS Securities LLC and certain of its affiliates; * with respect to the cash collateral securing the $90,000,000 prepetition term loan facility extended by Dougherty Funding LLC, to Debtor US Bio Marion, LLC, for Marion Debtor's use; and * with respect to the cash collateral securing the $275,000,000 prepetition senior credit facility extended by several lenders agented by West LB AG, to fund the working needs of the ASA Debtors. The Debtors will provide adequate protection to Dougherty by (i) making postpetition payments in the amounts of contractual interest at the non-default rate, and (ii) for the amount of and to secure any diminution in value, grant superpriority claims and replacement liens on all Marion Debtor assets, including a priming lien on the assets securing the First National revolver as consented to by First National. The Debtors will provide adequate protection to West LB by (i) making postpetition cash payments to West LB in the amount of contractual interest at the non-default rate, and (ii) for the amount of and to secure any diminution in value, grant superpriority claims and replacement liens on all ASA Debtor assets. UBS has a lien on substantially all of the VeraSun Debtors' working capital assets. The Debtors intend to fund the postpetition operations of the VeraSun Debtors, in part, through the use of the UBS Cash Collateral, along with the Secured Noteholder DIP Facility. The Debtors will provide adequate protection to UBS by: -- making postpetition payments equal to interest at the contractual non-default rate; -- granting replacement liens on all of the UBS Collateral and postpetition inventory and receivables of the VeraSun Debtors, subject to the Carve-Out, to secure any diminution in value to the UBS Collateral; -- securing any diminution in the value of the UBS Collateral with perfected junior security interests in and liens on the assets of the VeraSun Debtors that are subject to valid, perfected, and non-avoidable liens (i) in existence as of the Petition Date or liens in existence on the Petition Date that are perfected subsequent to the Petition Date as permitted by Section 546(b) of the Bankruptcy Code, and (ii) granted to secure the VeraSun DIP Loan, subject to the Carve-Out. The Debtors will also grant to UBS a superpriority claim in the VeraSun Debtors' Chapter 11 cases with priority over all administrative expenses in the VeraSun Debtors' cases. About VeraSun Energy Headquartered in Sioux Falls, San Diego, VeraSun Energy Corporation -- http://www.verasun.com/-- produce and market ethanol and distillers grains. The Debtors have 16 production facilities in eight states, of which one is still under construction. The Debtors are scheduled to have an annual production capacity of approximately 1.64 billion gallons of ethanol and more than 5 million tons of distillers grains by the end of 2008. In addition, the Debtors also market E85, a blend of 85% ethanol and 15 percent gasoline for use in Flexible Fuel Vehicles (FFVs), directly to fuel retailers under the brand VE85(R). The company and 34 of its affiliates filed for Chapter 11 protection on Oct. 31, 2008 (Bankr. D. Del. Lead Case No. 08-12606). Mark S. Chehi, Esq., at Skadden,Arps,Slate,Meagher & Flom LLP, represents the Debtors in their restructuring efforts. The company selected AlixPartners LLP as restructuring advisor, Rothschild Inc. as investment banker, Sitrick & Company as communication agent, and Kurtzman Carson Consultants LLC as claims, noticing and balloting agent. As of June 30, 2008, the company listed $3,452,985,000 in total assets and $1,913,214,000 in total debts. VERASUN ENERGY: Gets Initial OK to Access $40-Mil. DIP facility --------------------------------------------------------------- The Hon. Brendan L. Shannon of the U.S. Bankruptcy Court authorized VeraSun Energy Corporation and its affiliates to borrow, on an interim basis, up to $40 million from their debtor- in-possession credit facilities. Judge Shannon granted the Debtors' emergency request to pay outstanding employee checks, to pay suppliers for postpetition goods and services and up to $20 million for goods delivered on or after Oct. 11, 2008, and for other emergency relief. The Court is expected to conduct a hearing tomorrow to rule on the remaining relief requested by the Debtors in its "first day" motions. The Debtors received commitments for up to $215 million in debtor- in-possession financing from certain holders of the company's 9 7/8% senior secured notes due 2012 and groups of lenders led by AgStar Financial Services. The Debtors are also in negotiations with its other lenders and expects to receive, when combined with commitments received from the 2012 noteholders and AgStar lenders, aggregate DIP financing commitments totaling $250 million. The AgStar Financing will consist of seven separate loan and security agreements and DIP Financing orders -- one for each Debtor, on a non-cross collateralized basis. Terms of the Secured Noteholder Facility The Secured Noteholders have prepetition liens on the assets of the VeraSun Debtors -- VeraSun Aurora Corporation; VeraSun BioDiesel, LLC; VeraSun Charles City, LLC; VeraSun Fort Dodge, LLC; VeraSun Granite City, LLC; VeraSun Hartley, LLC; VeraSun Litchfield, LLC; VeraSun Marketing, LLC; VeraSun Reynolds, LLC; VeraSun Tilton LLC; and VeraSun Welcome, LLC. The Secured Noteholders Financing will have priority, pursuant to Section 364(c)(1) of the Bankruptcy Code, over all administrative expenses of the VeraSun Debtors, subject to carve-outs for professional fees and expenses. The Financing will be secured, pursuant to Section 364(d), by perfected first priority senior priming security interests in and liens on the Collateral that secures the Senior Secured Notes. The Financing will be used, in part, to pay or "roll-up" the Senior Secured Notes held by the participating Secured Noteholders DIP Lenders. The Facility accrues interest at 16.5% per annum, payable monthly in arrears. At all times while a default exist, principal, interest and other amounts will bear interest at a rate per annum equal to 2.00% in excess of the interest rate. The Secured Noteholders DIP Lenders will be granted adequate protection through (i) regular cash payments equal in amount to their contractual interest at the non-default rate, like payments to begin after entry of the Secured Noteholders Final Order, and (ii) silent junior liens on the VeraSun Working Capital Collateral. Terms of the AgStar Facility AgStar is agent under seven separate credit facilities for seven of the US BioEnergy Debtors. Each facility is secured by liens on substantially all of the assets of each Debtor-borrower. The AgStar Facility will have priority over all administrative expenses of each of the seven US BioEnergy Debtors, subject to the Carve-Out. The Facility will be secured by perfected first priority senior priming security interests in and liens on all assets of the individual Debtor-borrower. The Interim Facility will mature on the earlier of the entry of the Final Order or December 10, 2008. The Postpetition Loan will mature on November 3, 2009. The outstanding principal amount of the Postpetition Loan will bear interest at the LIBOR Rate plus 700 basis points. AgStar will be granted adequate protection under each primed AgStar Facility by (i) regular cash payments in the amount of their contractual interest at the non-default rate, those payments to begin after entry of the AgStar Final Order, and by (ii) junior replacement liens and superpriority claims. Draft copies of the Secured Noteholders and the AgStar Facilities are available for free at http://ResearchArchives.com/t/s?3480 In a notice filed with the Court on the Petition Date, the Debtors said they were still engaged in discussions regarding the most favorable financing terms they are able to procure. The Debtors related that one of the key elements and terms of the contemplated DIP Financings that may be insisted on by the lenders are: (a) Total interim borrowings under the DIP Financings of up to $180 million; (b) Non-consensual use of the Prepetition Secured Lenders' cash collateral; and (c) Provisions binding the Debtors, the estate or all parties-in-interest with respect to the validity, perfection or amount of the Prepetition Secured Lenders' liens, or waiver of claims against one or more of the Prepetition Secured Lenders without affording parties-in-interest notice in accordance with the Local Bankruptcy Rules of Delaware; (d) Provisions granting priming liens without the consent of one or more of the Prepetition Secured Lenders; (e) Provisions seeking a waiver of the estate's rights under Section 506(c) of the Bankruptcy Code; (f) Provisions granting liens on the Debtors' avoidance actions, including any claims or causes of action arising under Sections 544, 545, 547, 548, and 549; (g) Provisions granting one or more of the Prepetition Secured Lenders a rollup of part or all of their prepetition indebtedness; (h) Provisions for professional fee carve-outs, which provide disparate treatment for the professionals retained by a creditors' committee from that provided for the Debtors' professionals; (i) Provisions granting adequate protection replacement liens to one or more of the Prepetition Secured Lenders; (j) Provisions granting one or more of the Prepetition Secured Lenders cross-collateralization protection, securing prepetition debt by postpetition assets on which the Prepetition Secured Lenders do not otherwise have a lien; and (k) Provisions granting one or more of the Prepetition Secured Lenders an adequate protection package which may include, among other things, replacement liens and regular cash interest payments. The Wall Street Journal reported on November 2, 2008, that the Debtors have secured $250,000,000 of DIP Financing from Ableco, at an interest rate of about 14% to 15%. "The financing package approved today allows VeraSun to maintain operations and continue supplying its customers. The relief granted by the Court today will allow us to focus on our operations and, at the same time, provide VeraSun with the liquidity and ability to continue operations, which means producing ethanol and distillers grains, paying suppliers, and satisfying customer needs for product," said Don Endres, VeraSun's Chief Executive Officer. About VeraSun Energy Headquartered in Sioux Falls, San Diego, VeraSun Energy Corporation -- http://www.verasun.com/-- produce and market ethanol and distillers grains. The Debtors have 16 production facilities in eight states, of which one is still under construction. The Debtors are scheduled to have an annual production capacity of approximately 1.64 billion gallons of ethanol and more than 5 million tons of distillers grains by the end of 2008. In addition, the Debtors also market E85, a blend of 85% ethanol and 15 percent gasoline for use in Flexible Fuel Vehicles (FFVs), directly to fuel retailers under the brand VE85(R). The company and 34 of its affiliates filed for Chapter 11 protection on Oct. 31, 2008 (Bankr. D. Del. Lead Case No. 08-12606). Mark S. Chehi, Esq., at Skadden,Arps,Slate,Meagher & Flom LLP, represents the Debtors in their restructuring efforts. The company selected AlixPartners LLP as restructuring advisor, Rothschild Inc. as investment banker, Sitrick & Company as communication agent, and Kurtzman Carson Consultants LLC as claims, noticing and balloting agent. As of June 30, 2008, the company listed $3,452,985,000 in total assets and $1,913,214,000 in total debts. VERASUN ENERGY: Lack of Funding Delays Startup of Biorefinery ------------------------------------------------------------- VeraSun Energy Corp. is indefinitely delaying the startup of its 110 million gallon per year ethanol biorefinery in Janesville, Minn. VeraSun will continue operations at its 14 facilities across an eight-state region. VeraSun filed voluntary petitions for relief under chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court on October 31 to enhance liquidity while it reorganizes. However, at this time, the secured lender of the plant has not provided the necessary financing to continue construction and startup activities. Efforts to secure financing for Janesville are underway. Construction on the Janesville facility is nearly completed and the plant was scheduled to begin operations prior to the end of the year. Construction began in January 2007 and ownership of the plant moved under VeraSun on April 1, 2008, after its merger with US BioEnergy. Most of the 53 employees will be furloughed immediately. Headquartered in Sioux Falls, South Dakota, VeraSun Energy Corp. - - http://www.verasun.comor http://www.VE85.com/-- is a producer and marketer of ethanol and distillers grains. Founded in 2001, the company has a fleet of 16 production facilities in eight states, with 14 in operation. The company and its debtor-affiliates filed for Chapter 11 protection on Oct. 31, 2008, (Bankr. D. Del. Case No.: 08-12606) Mark S. Chehi, Esq. at Skadden Arps Slate Meagher & Flom LLP represents the Debtors in their restructuring efforts. AlixPartners LLP serves as their restructuring advisor. Rothschild Inc. is their investment banker and Sitrick & Company is their communication agent. The Debtors' claims noticing and balloting agent is Kurtzman Carson Consultants LLC. The Debtors' total assets as of June 30, 2008, was $3,452,985,000 and their total debts as of June 30, 2008, was $1,913,214,000. VERTIS COMMS: Gets $250 Mil. Credit Facility From GE Commercial --------------------------------------------------------------- GE Commercial Finance said that it provided a $250 million senior secured plan of reorganization credit facility to Vertis Communications. The loan was used to refinance the company's debtor-in-possession financing upon the company's emergence from a pre-packaged Chapter 11 bankruptcy. In July, GE Commercial Finance also provided the company with a $380 million DIP credit facility. GE Capital Markets arranged both transactions. Vertis has successfully exited from Chapter 11 and has merged with American Color Graphics. The newly combined company, which will operate under the Vertis Communications brand, combines Vertis' proprietary customer research, database targeting technologies and media services with American Color Graphic's offerings such as asset management, photography and digital workflow solutions that improve the effectiveness of advertising. "We truly valued GE's ability to provide the funds to help support our restructuring in such a volatile market environment," said Mike DuBose, chairman and CEO of Vertis. "This exit financing allows Vertis to make significant improvements to our balance sheet, remain focused on customers, and leverage our unique expertise to help drive growth." "We're pleased to have provided financing to help support Vertis as they continue to strengthen their business through this restructuring and merger," said Alan Garson, vice president at GE Global Sponsor Finance. "In a very uncertain market, GE was able to reliably deliver a capital structure to meet their needs." "We specialize in working closely with clients to provide the necessary restructuring finance to help support their turnaround strategies," said Rob McMahon, managing director of Restructuring Finance at GE Corporate Lending. About Vertis Headquartered in Baltimore, Maryland, Vertis Holdings, Inc. -- http://www.vertisinc.com/-- is a provider of targeted print advertising and direct marketing solutions to America's retail and consumer services companies. The company and its six affiliates filed for Chapter 11 protection on July 15, 2008 (Bankr. D. Del. Case No. 08-11460). Gary T. Holtzer, Esq. and Stephen A. Youngman, Esq. at Weil, Gotshal & Manges LLP represent the Debtors as lead counsels. Mark D. Collins, Esq. and Michael Joseph Merchant, Esq. at Richards Layton & Finger, P.A. represent the Debtors as Delaware local counsels. Lazard Freres & Co. LLC is the company's financial advisor. When the Debtors filed for protection from their creditors they listed assets of between $500 million and $1 billion and debts of more than $1 billion. VONAGE HOLDINGS: Intends to Cure NYSE Listing Non-Compliance ------------------------------------------------------------ Vonage Holdings Corp. was notified by the New York Stock Exchange that the company had fallen below the NYSE's continued listing standard relating to minimum share price. Rule 802.01C of the NYSE's Listed Company Manual requires that the company's common stock have a minimum average closing price of not less than $1.00 during a consecutive 30 trading-day period. The company will notify the NYSE that it intends to cure the deficiency. The company must bring its share price and average share price back above $1.00 within six months from the receipt of the NYSE notice, subject to possible extension, to regain compliance with the NYSE's price condition, or it will be subject to suspension and delisting procedures. Under the NYSE rules, the company's common stock will continue to be listed on the NYSE during the cure period, subject to the company's compliance with other NYSE continued listing requirements. Headquartered in Holmdel, New Jersey, Vonage Holdings Corp. (NYSE:VG) -- http://www.vonage.com/-- provides broadband telephone services with nearly 2.6 million subscriber lines. The company's Residential Premium Unlimited and Small Business Unlimited calling plans offer consumers unlimited local and long distance calling, and features like call waiting, call forwarding and voicemail for a flat monthly rate. Vonage's service is sold on the web and through national retailers including Best Buy, Circuit City, Wal-Mart Stores Inc. and Target and is available to customers in the U.S., Canada and the United Kingdom. Going Concern Doubt BDO Seidman, LLP, in Woodbridge, New Jersey, raised substantial doubt as to Vonage Holdings 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. Vonage Holdings's balance sheet at June 30, 2008, showed $466.1 million in total assets and $551.9 million in total liabilities, resulting in an $85.8 million stockholders' deficit. WASHINGTON MUTUAL: Restricts Equity Trades for NOLs; FDIC Opposes ----------------------------------------------------------------- Washington Mutual Inc. and its debtor subsidiary seek authority from the U.S. Bankruptcy Court of Delaware, on an interim basis, to approve, effective nunc pro tunc to October 24, 2008, an amended set of restriction procedures to monitor and object to certain changes in the ownership of WaMu's stock and protect the potential value of WaMu's tax attributes. Pursuant to Section 382 of the U.S. Tax Code, an ownership change generally occurs when the percentage of a company's equity held by one or more persons or entities holding 5% or more of that company's stock - and certain groups of less-than-5% shareholders) increases by more than 50 percentage points above the lowest percentage of ownership owned by the shareholders during the relevant three-year testing period. Mark D. Collins, Esq., at Richards Layton &Finger, P.A., avers that in addition to certain other tax attributes, the Debtors have net operating tax loss carry forwards or built-in unrecognized losses in excess of $20 billion. The Tax Attributes may be valuable assets Title 26 of the U.S. Tax Code generally permits corporations to carry over their losses and tax credits to offset income, Mr. Collins says. Under the amended Trading restrictions and Notification Requirements with respect to the acquisition and disposition of WaMu Stock, persons or entities that beneficially own WaMu Stock in sufficient amount to qualify them as substantial equityholders will file with the Court -- within 10 days after the Court's approval of the Procedures, or 10 days after being qualified as substantial equityholders -- a notice of substantial stock ownership. At least 20 days to the proposed date of any transfer equity securities that would result in an increase in WaMu stock beneficially owned by any person or in the holder becoming a Substantial Equityholder, the equity holder must file a notice of intent to purchase, acquire or accumulate WaMu stock. In the same manner, the equity holder will also file a notice intent to sell, trade or otherwise transfer WaMu stock at least 20 days prior to the proposed date of an equity disposition transaction. The Debtors and the Official Committee of Unsecured Creditors will have 15 days after the filing of the Equity Acquisition Notice or the Equity Disposition Notice to object to the proposed transactions. In light of the Debtors' and the Commmittee's Objection, the proposed transaction will not be effective until it obtains Court approval. Absent the Debtors' objection to, or if the Debtors provide a written authorization with respect to the proposed transaction, the Transaction may proceed. Any acquisition, disposition, or transfer of WaMu stock in violation of the Proposed Procedures will be deemed null and void ab initio as an act in violation of the automatic stay imposed by Sections 362 and 105(a) of the Bankruptcy Code. According to Mr. Collins, the Debtors recognize that some trading in WaMu stock may not pose serious risk to the Tax Attributes, and thus, limits the Procedures to transactions implicating a holder of WaMu stock that is, or seeks to become, or ceases to be, a Substantial Equity Holder. Mr. Collins reiterates that a Substantial Equity Holder refers to any person or entity that owns at least: -- 80,700,000 shares of WaMu's common stock, representing approximately 4.75% of all issued and outstanding shares; -- 4.50% of the total number of outstanding shares of WaMu's 7.75% Series R Non-Cumulative Perpetual Convertible Preferred Stock, as of the date prior to the filing of the Equity Acquisition or Equity Disposition Notices; or -- 4.75% of the total number of outstanding share of any of these classes of WaMu preferred stock: * Series I Perpetual Non-Cumulative Fixed-to-Floating Rate; * Series K Perpetual Non-Cumulative Floating Rate; * Series J Perpetual Non-Cumulative Fixed Rate; * Series L Perpetual Non-Cumulative Fixed-to-Floating Rate; * Series M Perpetual Non-Cumulative Fixed-to-Floating Rate; and * Series N Perpetual Non-Cumulative Fixed-to-Floating Rate. Beneficial ownership of WaMu stock will be determined in accordance with Section 382 of the Tax Code, the regulations promulgated by U.S. Department of Treasury, and the rulings issued by the Internal Revenue Service, Mr. Collins maintains. FDIC and JPMorgan Objections The Federal Deposit Insurance Corporation maintains the NOLs "are not property of the Debtors' estates." Representing the FDIC, M. Blake Cleary, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, relates that as the Debtors acknowledge that the NOLs might be the result of operating losses at their non-debtor subsidiaries, most or all of the NOLs could be property of non-debtor members of WaMu's consolidated tax filing group. Even if WaMu filed joint federal income tax returns on behalf of itself and its subsidiaries and affiliates, Tax Attributes, including NOLs, inure to the benefit of the entity that actually incurred the loss, Mr. Cleary says, citing Capital Bancshares, Inc., v. United States, 957 F.2d 203 (5th Cir. 1992). The FDIC objects to the determination of whether NOLS or other tax Attributes are the property of the Debtors' estates, "as the issue should not be addressed at this time," Mr. Cleary clarifies. Moreover, the Determination does not need to be resolved for the Debtors to obtain approval of their Proposed Trading Restriction Procedures, he notes. Accordingly, the FDIC asks the Court to deny the Debtors' request to the extent that it would establish that any NOLs, other tax attributes or the resulting tax benefits or refunds attributable to the Debtors' non-debtors subsidiaries are property of the Debtors' estates. Similarly, JPMorgan Chase Bank maintains that the Court's interim and final approval of the Proposed Restriction Procedures should not have any effect on net NOLs or other tax attributes, with respect to the right to receive any tax refund that are not properly allocable to the Debtors, including the NOL carrybacks and tax attributes that are properly allocable to Washington Mutual Bank or any of the Bank's subsideairues, including WMB fsb. In a separate filing, Fir Tree Value Master Fund, L.P., and Fir Tree Capital Opportunity Master Fund, L.P., holder of shares in one or more series of WaMu Stock, reserves their right to object or respond to the Debtors' request at the final hearing. Key Parties Reach Terms For reasons stated in open Court during the hearing held October 30, 2008, the Debtors a revised order providing for a protocol approved by the United States Trustee, the Official Committee of Unsecured Creditors and counsel to certain noteholders. About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- is a holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. The company operates in four segments: the Retail Banking Group, which operates a retail bank network of 2,257 stores in California, Florida, Texas, New York, Washington, Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and Connecticut; the Card Services Group, which operates a nationwide credit card lending business; the Commercial Group, which conducts a multi-family and commercial real estate lending business in selected markets, and the Home Loans Group, which engages in nationwide single-family residential real estate lending, servicing and capital markets activities. Washington Mutual Bank was taken over Sept. 25 by U.S. government regulators. The next day, WaMu and its debtor-affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). WaMu owns 100% of the equity in WMI Investment. Weil Gotshal & Manges represents the Debtors as counsel. When WaMu filed for protection from its creditors, it listed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment listed assets of $500,000,000 to $1,000,000,000 with zero debts. WHITEHALL JEWELERS: Selling Jewelry Inventory at 50%-70% Discount ----------------------------------------------------------------- Whitehall Jewelers Holdings Inc. is selling its fine jewelry valued at an estimated $500 million at 50 to 70 percent off, according to the company's Web site, Angelique Soenarie of The Arizona Republic reported Thursday. Whitehall Jewelers Holdings filed for Chapter 11 bankruptcy in June and recently disclosed that the company's 373 jewelry stores will close. About Whitehall Jewelers Headquartered in Chicago, Illinois, Whitehall Jewelers Holdings Inc. -- http://www.whitehalljewellers.com/-- owns and operates 373 stores jewelry stores in 39 states. The company operates stores in regional and regional shopping malls under the brand names Whitehall Jewellers, Marks Bros. Jewellers and Lundstrom Jewellers. The Debtors' retail stores operate under the names Whitehall (271 locations), Lundstrom (24 locations), Friedman's (56 locations, and Crescent (22 locations). As of June 23, 2008, the Debtors have about 2,852 workers. The company and its affiliates, Whitehall Jewelers Inc., filed for Chapter 11 protection on June 23, 2008 (Bankr. D. Del. Lead Case No. 08-11261). James E. O'Neill, Esq., Kathleen P. Makowski, Esq., and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. Epiq Bankruptcy Solutions LLC is their claims, noticing and balloting agent. When the Debtors filed for protection against their creditors, they listed total assets of $207,100,000 and total debts of $185,400,000. X-RITE INC: OEPX, Et Al, Disclose Ownership of 28.5MM Shares ------------------------------------------------------------ Colin Michael Farmer, a director of X-Rite Inc., disclosed in a filing with the Securities and Exchange Commission that he may be deemed to beneficially own 28,571,429 shares X-Rite Inc.'s stock. David A. Eckert, a director of X-Rite Inc., did not disclose the number of shares that he may be deemed to beneficially own. David Michael Cohen, a director of X-Rite Inc., also disclosed that he may be deemed to beneficially own 28,571,429 shares X-Rite Inc.'s stock. Dan Friedberg, a director of X-Rite Inc., also disclosed that he may be deemed to beneficially own 11,807,544 shares X-Rite Inc.'s stock. OEPX, LLC also stated that it may be deemed to beneficially own 28,571,429 shares of X-Rite Inc.'s stock. X-Rite Inc. disclosed on its latest quarterly report that on Aug. 1, 2008, the number of outstanding shares of common stock, par value $.10 per share, was 29,605,684. About X-Rite X-Rite Incorporated (NASDAQ:XRIT) -- http://www.xrite.com/-- including unit Pantone Inc., develops, manufactures, markets and supports innovative color solutions through measurement systems, software, color standards and services. X-Rite serves a range of industries, including printing, packaging, photography, graphic design, video, automotive, paints, plastics, textiles, dental and medical. * * * As reported in the Troubled Company Reporter on Aug. 27, 2008, Standard & Poor's Ratings Services revised its CreditWatch on X- Rite Inc. to positive from developing. On Aug. 20, 2008, X-Rite Inc. (CCC+/Watch Pos/--) announced that it had signed a forbearance and new lender agreement and investor agreements that include a plan to substantially reduce debt, primarily through the issuance of $155 million in common equity to new and certain existing shareholders. The agreement also provides the company with access to up to $10 million on its revolving credit agreement. X-RITE INC: Secures $155 Million Financing from OEPX LLC -------------------------------------------------------- X-Rite, Incorporated, completed a $155 million capital raise led by OEPX LLC, a Delaware limited liability company managed by One Equity Partners, and with Sagard Capital Partners, L.P., and Tinicum Capital Partners II, L.P., Tinicum Capital Partners II Parallel Fund, L.P. and Tinicum Capital Partners II Executive Fund L.L.C. Proceeds from the capital raise will be used to repay indebtedness under its First and Second Lien Credit Agreements, settle amounts payable by the company pursuant to certain interest rate swap agreements, prepay certain amounts outstanding between the company and Fifth Third Bank, well as fund ongoing operations. "Having completed this financing initiative, the amendments to the First and Second Lien Credit Agreements have become effective and we now have the necessary resources to continue developing new and innovative products for our customers related to the business of color," Thomas J. Vacchiano Jr., chief executive officer for X- Rite, said. "This capital raise also provides the Company with greater financial flexibility during these times of increased economic uncertainty to improve shareholder value and fund on- going operations." Under the terms of the recapitalization, X-Rite will issue 28,571,429 shares of common stock to OEP, 9,076,667 shares of common stock to Sagard, and 9,256,667 shares of common stock to Tinicum. A full-text copy of the Investment Agreement and the Institutional Investment Agreement are available for free at http://ResearchArchives.com/t/s?3485 About X-Rite X-Rite Incorporated (NASDAQ:XRIT) -- http://www.xrite.com/-- including unit Pantone Inc., develops, manufactures, markets and supports innovative color solutions through measurement systems, software, color standards and services. X-Rite serves a range of industries, including printing, packaging, photography, graphic design, video, automotive, paints, plastics, textiles, dental and medical. * * * As reported in the Troubled Company Reporter on Aug. 27, 2008, Standard & Poor's Ratings Services revised its CreditWatch on X- Rite Inc. to positive from developing. On Aug. 20, 2008, X-Rite Inc. (CCC+/Watch Pos/--) announced that it had signed a forbearance and new lender agreement and investor agreements that include a plan to substantially reduce debt, primarily through the issuance of $155 million in common equity to new and certain existing shareholders. The agreement also provides the company with access to up to $10 million on its revolving credit agreement. X-RITE INC: Three Board Members Get Committee Appointments ---------------------------------------------------------- X-rite Incorporated disclosed that David M. Cohen, David A. Eckert, Colin M. Farmer, and Daniel M. Friedberg, each of whom was conditionally appointed to serve on the company's board of directors on Sept. 22, 2008, were given committee appointments on Oct. 28, 2008. Mr. Cohen has been appointed to serve on the Compensation Committee. Mr. Eckert has been appointed to serve on the Audit Committee. Mr. Farmer has been appointed to serve on the Nominating & Governance Committee. Mr. Friedberg has been appointed to serve on each of the Compensation Committee, the Audit Committee and the Nominating & Governance Committee. As of Oct. 28, 2008, the members of the committees of the company's board are: -- Members of the Audit Committee: 1) Mark D. Weishaar, Chairman 2) David A. Eckert 3) Daniel M. Friedberg 4) John E. Utley -- Members of the Compensation Committee: 1) Gideon Argov, Chairman 2) David M. Cohen 3) Daniel M. Friedberg 4) Mark D. Weishaar 5) John E. Utley, ex officio -- Members of the Nominating & Governance Committee: 1) L. Peter Frieder, Chairman 2) Colin M. Farmer 3) Daniel M. Friedberg 4) John E. Utley, ex officio About X-Rite X-Rite Incorporated (NASDAQ:XRIT) -- http://www.xrite.com/-- including unit Pantone Inc., develops, manufactures, markets and supports innovative color solutions through measurement systems, software, color standards and services. X-Rite serves a range of industries, including printing, packaging, photography, graphic design, video, automotive, paints, plastics, textiles, dental and medical. * * * As reported in the Troubled Company Reporter on Aug. 27, 2008, Standard & Poor's Ratings Services revised its CreditWatch on X- Rite Inc. to positive from developing. On Aug. 20, 2008, X-Rite Inc. (CCC+/Watch Pos/--) announced that it had signed a forbearance and new lender agreement and investor agreements that include a plan to substantially reduce debt, primarily through the issuance of $155 million in common equity to new and certain existing shareholders. The agreement also provides the company with access to up to $10 million on its revolving credit agreement. ZVUE CORP: 3 Directors Disclose Ownership of 50,000 Shares ---------------------------------------------------------- Bailey Mart, a director in ZVUE Corp., disclosed in a Securities and Exchange Commission filing that it may be deemed to beneficially own 50,000 shares of ZVUE Corp.'s common stock. Mark Mansfield, a director in ZVUE Corp., also disclosed that he may be deemed to beneficially own 50,000 shares of ZVUE Corp.'s common stock. Jason Lyons, a director in ZVUE Corp., also disclosed that he may be deemed to beneficially own 50,000 shares of ZVUE Corp.'s common stock. Based in San Francisco, ZVUE Corporation (Nasdaq: ZVUE) -- http://www.zvue.com/-- is a global digital entertainment company. ZVUE(TM) personal media players are mass-market priced and currently available for purchase online and in Wal-Mart stores throughout the U.S. Going Concern Doubt Salberg & company, P.A., in Boca Raton, Florida, expressed substantial doubt about ZVUE 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 loss of $18,188,833 and net cash used in operations of $12,156,127 for the year ended Dec. 31, 2007, and accumulated deficit of $41,218,007 at Dec. 31, 2007. The company has incurred losses and negative cash flows from operations and has an accumulated deficit at June 30, 2008, of $56,897,000. The company posted $8,120,000 in net losses on $1,737,00 for the quarter ended June 30, 2008. At June 30, 2008, the company's consolidated balance sheet also showed strained liquidity with $5,002,000 in total current assets available to pay $6,856,000 in total current liabilities. * Fitch Says Unemployment Stoking U.S. Auto ABS Losses ------------------------------------------------------ Losses in U.S. prime auto-loan asset-backed securities (ABS) have accelerated in 2008 driven by rising unemployment levels, according to Fitch Ratings. Despite unemployment being one of the main drivers of performance in auto ABS, ratings on prime auto ABS transactions have remained stable year-to-date, with minimal negative rating actions issued in 2008 as most transactions have been able to build or maintain enhancement even under stress. 'Auto loan default rates continue to rise and given Fitch's expectation of unemployment levels increasing well into 2009, this trend is likely to continue,' according to Managing Director John Bella. 'Most prime auto loan ABS transactions, however, have sufficient credit enhancement to offset the expected rise in defaults.' As the unemployment rate sped through the 6% level during the third quarter of 2008, Fitch's prime ANL hit 1.68% in September, just below the record high of 1.73% witnessed in August. A chart illustrating the direct effect unemployment has on annualized net losses (ANL) in auto ABS will be available at the end of October in Fitch's quarterly auto ABS newsletter 'In the Auto ABS Driver's Seat'. A 12-month moving average for the unemployment rate and ANL indexes further highlights their relationship. The deteriorating performance of auto ABS has coincided with rising job losses in 2008. Job losses have totaled just over 750,000 for the year through September, posting losses in every month this year (source: Bureau of Labor Statistics). The economy last posted job growth back in December 2007. Job cuts have thus driven the unemployment rate from 5% in December last year to 6.10% in September, a 22% hike. Despite the increase in unemployment, softer wholesale vehicle market, and a rise in ANL rates in auto ABS this year, structural features, credit enhancement levels and amortization, have contributed to limit negative ratings actions so far in 2008. In fact, Fitch has continued to issue upgrades on prime auto ABS in 2008, although at a slower pace than in 2007. In June this year, Fitch released a report titled 'Will Consumer ABS Crack Under Unemployment Pressure', in which Fitch analyzed the historical relationship between changes in the unemployment rate and changes in default rates of consumer ABS. The analysis confirmed that auto ABS loss rates are highly correlated with changes in the unemployment rate, especially during adverse conditions, as is the case currently. The analysis exhibited a number of results including that changes in unemployment are strongly correlated with changes in auto ABS loss rates; and auto ABS loss rates are expected to increase proportionately to increases in unemployment. Fitch correctly predicted in February that ANL rates in prime auto ABS would move through the 2% level, which appears likely given the current climate. * Fitch Says US Timeshare ABS Year-Over-Year Defaults Up -------------------------------------------------------- Total monthly delinquencies and defaults on U.S. timeshare ABS continued to rise through the third quarter of 2008, according to the latest timeshare ABS index from Fitch Ratings. After showing some initial resistance to the U.S. economic slowdown through 1Q'08, timeshare performance has declined notably over the past six months, with total delinquencies surging to 4.12% in September (up 34% from 3.07% for the same period in 2007), and monthly gross defaults reaching an all-time high of .67% in September (up 52% from .44% for the same month last year), according to Managing Director John Bella. 'Delinquencies and defaults will likely continue to trend upward as the winter performance deterioration typical of timeshare ABS takes hold and the unemployment level increases,' said Mr. Bella. 'Negative rating actions however, are expected to be limited due to the significant growth in credit enhancement that has occurred in most transactions.' As such, Fitch's Outlook for U.S. timeshare ABS asset performance remains declining, while the Rating Outlook remains Stable. Fitch's timeshare ABS index is an aggregation of performance statistics on pools of securitized timeshare loans originated by various developers. Expected cumulative gross defaults on underlying transactions can range from below 10% to above 20%. While delinquencies and defaults may vary on an absolute basis, most transactions supporting the index exhibit similar overall trends. Fitch continues to monitor all timeshare ABS in an effort to provide the market with timely analysis of performance trends. The Fitch timeshare performance index summarizes average monthly delinquency (over 30 days) and monthly gross default trends tracked in Fitch's database of timeshare asset backed securities (ABS) dating back to January 1997 and is available on a quarterly basis. * Fitch Says Loan Term Changes to Cushion Impact on Subprime ARMs ----------------------------------------------------------------- The dramatic increase of London Interbank Offering Rates from mid- September to mid-October has reignited concerns regarding payment shock for borrowers of U.S. hybrid adjustable-rate mortgage (ARM) collateral and particularly subprime RMBS, according to Fitch Ratings. However, Fitch anticipates that the ongoing efforts to work-out subprime loan terms, including modifications and repayment plans, will help to mitigate such impacts on subprime borrowers. The six-month LIBOR rate was the most widely used index for subprime hybrid adjustable-rate mortgages (ARMs) and hybrid interest only (IO) loans. 'As LIBOR rises, hybrid ARM borrowers become exposed to payment shock at their interest rate reset. For example, at the recent peak in mid-October, the rate adjustment could have caused subprime borrower payments to increase by 30- 50%, particularly for loans with deeply teased initial rates,' said Managing Director Roelof Slump. 'While LIBOR has been trending lower from its recent highs, it continues to be of concern, as it directly impacts borrower affordability, and ultimately collateral and bond performance,' Mr. Slump added. Of the outstanding $418 billion of subprime ARM loans, a total of 1.8 million loans, or $347 billion in outstanding principal balance, are on average approximately half a year away from either their initial or next rate reset date. A total of 0.4 million loans (totaling $102 billion) are two-year hybrid ARMs that provide for a two-year fixed-rate period and reset to six-month LIBOR thereafter and have not yet reached their initial rate reset. At the recent LIBOR peak, these borrowers would have seen increases from their rate reset of 8.27% to 10.27%, which would cause their monthly payments to increase by an average of $331, or 19.3%. Additionally, 1.4 million loans, totaling $245 billion of the total outstanding subprime ARMs, are past their initial rate reset. Based on recent peak LIBOR rates, these borrowers would have seen increases from their initial rate of 8.80% to 9.96%, which would cause their payments to increase further by an average of $153, or 10.7%. Fitch notes that these statistics reflect original loan terms, and that loan modifications have already reduced the amount of mortgages at risk of payment shock. The pace and number of work-out plans have picked up noticeably in 2008. To date, the majority of work-out plans have consisted of repayment plans and rate modifications. Repayment plans allow for missed principal and interest to be capitalized and repaid while concurrently making timely mortgage payments. Rate reductions provide for the borrower to pay a lower rate of interest for a specified period or permanently. Few loans have had principal forgiven. Fitch anticipates that the use of the modification plans will continue to rise, helping borrowers facing a rate reset avoid default. According to data provided by the Hope Now alliance, mortgage servicers provided loan workouts for approximately 212,000 borrowers in September 2008, with approximately 113,000 homeowners receiving repayment plans, and approximately 98,000 receiving loan modifications. September modifications were 22.5% higher than the 79,000 completed in August 2008. Total subprime modifications were approximately three-quarters of the total of all performed in the third quarter of 2008. If the loan workout level continues at the pace evidenced in 2008, then over 1 million of the 1.8 million subprime borrowers should find some relief over the next six months. Servicers which are not included in the Hope Now data may also be increasing their subprime workout activity, thus further contributing to reduce borrower stress. In particular, the Hope Now streamlined modification plan that provides for a rate freeze at the initial rate for five years may help borrowers who have been current with the initial payment avoid becoming delinquent due to payment shock. Prior to the credit crisis, borrowers facing initial rate resets and higher mortgage payments would have refinanced into a new lower cost mortgage. However, Senior Director Suzanne Mistretta said that the steep decline in home prices combined with tighter credit underwriting standards have rendered many borrowers unable to refinance. 'Modification programs have increasingly been made available to borrowers who can't afford the higher payments in order to help them stay in their home as it may be the only alternative to foreclosure,' said Ms. Mistretta. To the extent that the modification initiatives are successful in offering alternatives to borrowers that are encountering either first-time or repeat rate shocks due to an increase in LIBOR, the actual impact of these changes may be less extreme. Fitch will continue to monitor the potential credit implications of these rate movements, and their effect on the performance of loans contained in RMBS mortgage securitizations. * S&P Corrects 16 Ratings on Five U.S. Alt-A RMBS Transactions -------------------------------------------------------------- Standard & Poor's Ratings Services corrected its ratings on 16 classes from five residential mortgage-backed securities (RMBS) transactions backed by Alternative-A (Alt-A) mortgage loan collateral, which were incorrectly lowered on Oct. 30, 2008, and Oct. 27, 2008. S&P initially downgraded these classes in error as part of two larger reviews of U.S. Alt-A RMBS transactions on Oct. 30 2008, and on Oct. 27, 2008. S&P downgraded these classes based on the relationship between the credit enhancement for the classes and our loss projections for these transactions, which incorrectly did not take into account the insurance policies provided by Ambac Assurance Corp. ('AA' financial strength rating), MBIA Insurance Corp. ('AA' financial strength rating), and Syncora Guarantee Inc. ('BBB-' financial strength rating). Standard & Poor's has corrected these ratings to reflect the current ratings on the respective insurance providers. Ratings Corrected Impac Secured Assets Trust 2006-3 Rating Class CUSIP Current Oct. 30 Pre-Oct. 30 ----- ----- ------- ------- ----------- A-1 45255RAA5 AA CCC AA Lehman XS Trust 2007-6 Rating Class CUSIP Current Oct. 30 Pre-Oct. 30 ----- ----- ------- ------- ----------- 3-A1 52524PAG7 AA BBB AAA 3-A2 52524PAH5 AA BBB AAA 3-A3-1 52524PAY8 AA BBB AAA 3-A3-2 52524PAZ5 AA BBB AAA 3-A3-3 52524PBA9 AA BBB AAA 3-A4 52524PAK8 AA BBB AAA 3-A5 52524PAL6 AA BBB AAA 3-A7 52524PAN2 AA BBB AAA Deutsche Alt-A Securities Mortgage Loan Trust, Series 2007-1 Rating Class CUSIP Current Oct. 30 Pre-Oct. 30 ----- ----- ------- ------- ----------- 1-A-4A 25151YAF6 AA BBB AAA Nomura Asset Acceptance Corporation, Alternative Loan Trust, Series 2007-3 Rating Class CUSIP Current Oct. 30 Pre-Oct. 30 ----- ----- ------- ------- ----------- A-1 65537UAA6 AA B AAA A-2 65537UAB4 AA B AAA A-3 65537UAC2 AA B AAA A-4 65537UAD0 AA B AAA IndyMac INDX Mortgage Loan Trust 2006-AR6 Rating Class CUSIP Current Oct. 27 Pre-Oct. 27 ----- ----- ------- ------- ----------- 1-A-1B 456612AB6 BBB- B AAA 2-A-1C 456612AE0 BBB- B AAA * S&P Corrects Ratings on 2006-28CB, 2006-5T2 Alt Loan Trust ------------------------------------------------------------ Standard & Poor's Ratings Services corrected its ratings on eight classes from Alternative Loan Trust 2006-28CB and Alternative Loan Trust 2006-5T2, which were incorrectly lowered on Oct. 27, 2008. When S&P initially analyzed these classes, S&P used an inaccurate payment priority among the senior classes, which resulted in an incorrect allocation of projected cash flows among these classes. S&P subsequently corrected the payment priorities used in S&P's analysis and made the rating changes. The Oct. 27, 2008, rating actions were part of a larger review of U.S. Alternative-A residential mortgage-backed securities transactions issued in 2006 and 2007. Ratings Revised Alternative Loan Trust 2006-28CB Rating Class CUSIP Current Oct. 27 Original ----- ----- ------- ------- -------- A-1 02147TAA4 B AA AAA A-2(IO) 02147TAB2 B AA AAA A-10 02147TAK2 B AA AAA A-17 02147TAS5 A B AAA Alternative Loan Trust 2006-5T2 Rating Class CUSIP Current Oct. 27 Original ----- ----- ------- ------- -------- A-1 12668BMU4 B AA AAA A-2 12668BMV2 B AA AAA A-3 12668BMW0 AA B AAA A-9 12668BRB1 AA B AAA * Upcoming Meetings, Conferences and Seminars --------------------------------------------- Nov. 6, 2008 TURNAROUND MANAGEMENT ASSOCIATION Networking Breakfast Coach House Diner & Restaurant, Hackensack, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ Nov. 11, 2008 AMERICAN BANKRUPTCY INSTITUTE Detroit Consumer Bankruptcy Conference Marriott, Troy, Michigan Contact: 1-703-739-0800; http://www.abiworld.org/ Nov. 13, 2008 TURNAROUND MANAGEMENT ASSOCIATION Turnaround Case Study Summit Club, Birmingham, Alabama Contact: http://www.turnaround.org/ Nov. 13, 2008 TURNAROUND MANAGEMENT ASSOCIATION Effective Turnarounds:A View From Workout Consultants TBA, Buffalo, New York Contact: http://www.turnaround.org/ Nov. 13, 2008 TURNAROUND MANAGEMENT ASSOCIATION LI-TMA Social TBD, Melville, New York Contact: 631-251-6296 or http://www.turnaround.org/ Nov. 13, 2008 TURNAROUND MANAGEMENT ASSOCIATION Dinner Meeting TBD, Calgary, Alberta Contact: 503-768-4299 or http://www.turnaround.org/ Nov. 17-18, 2008 BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES Distressed Investing Contact: 800-726-2524; 903-595-3800; http://www.renaissanceamerican.com/ Nov. 19, 2008 TURNAROUND MANAGEMENT ASSOCIATION Special Program Tournament Players Club at Jasna Polana, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ Nov. 19, 2008 TURNAROUND MANAGEMENT ASSOCIATION Interaction Between Professionals in a Restructuring/Bankruptcy Bankers Club, Miami, Florida Contact: 312-578-6900; http://www.turnaround.org/ Nov. 20, 2008 TURNAROUND MANAGEMENT ASSOCIATION Senior Housing & Long Term Care Washington Athletic Club,Seattle, Washington Contact: http://www.turnaround.org/ Nov. 27, 2008 TURNAROUND MANAGEMENT ASSOCIATION TMA Arizona Chapter Meeting - Chris Kaup TBD, Phoenix, Arizona Contact: http://www.turnaround.org/ Dec. 3, 2008 TURNAROUND MANAGEMENT ASSOCIATION Holiday Party McCormick & Schmick's, Las Vegas, Nevada Contact: 702-952-2480 or http://www.turnaround.org/ Dec. 3, 2008 TURNAROUND MANAGEMENT ASSOCIATION Christmas Function Terminal City Club, Vancouver, British Columbia Contact: 503-768-4299 or http://www.turnaround.org/ Dec. 3-5, 2008 AMERICAN BANKRUPTCY INSTITUTE 20th Annual Winter Leadership Conference Westin La Paloma Resort & Spa Tucson, Arizona Contact: http://www.abiworld.org/ Dec. 8, 2008 TURNAROUND MANAGEMENT ASSOCIATION Holiday Gathering TBD, Long Island, New York Contact: 631-251-6296 or http://www.turnaround.org/ Dec. 9, 2008 TURNAROUND MANAGEMENT ASSOCIATION Holiday MIxer Washington Athletic Club, Seattle, Washington Contact: 503-768-4299 or http://www.turnaround.org/ Dec. 11, 2008 TURNAROUND MANAGEMENT ASSOCIATION Holiday MIxer University Club, Portland, Oregon Contact: 503-768-4299 or http://www.turnaround.org/ Dec. 18, 2008 TURNAROUND MANAGEMENT ASSOCIATION Holiday MIxer TBD, Phoenix, Arizona Contact: 623-581-3597 or http://www.turnaround.org/ Dec. 31, 2008 TURNAROUND MANAGEMENT ASSOCIATION Sponsorships - Annual Golf Outing, Various Events TBA, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ Jan. 21-22, 2009 TURNAROUND MANAGEMENT ASSOCIATION Corporate Governance Meetings Bellagio, Las Vegas, Nevada Contact: http://www.turnaround.org/ Jan. 22-23, 2009 TURNAROUND MANAGEMENT ASSOCIATION Distressed Investing Conference Bellagio, Las Vegas, Nevada Contact: http://www.turnaround.org/ Jan. 22-23, 2009 AMERICAN BANKRUPTCY INSTITUTE Rocky Mountain Bankruptcy Conference Westin Tabor Center, Denver, Colorado Contact: 1-703-739-0800; http://www.abiworld.org/ Feb. 5-7, 2009 AMERICAN BANKRUPTCY INSTITUTE Caribbean Insolvency Symposium Westin Casurina, Grand Cayman Island, AL Contact: 1-703-739-0800; http://www.abiworld.org/ Feb. 25-27, 2009 AMERICAN BANKRUPTCY INSTITUTE Valcon Four Seasons, Las Vegas, Nevada Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 13, 2009 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Battleground West Beverly Wilshire, Beverly Hills, California Contact: 1-703-739-0800; http://www.abiworld.org/ Apr. 17-18, 2009 NATIONAL ASSOCIATION OFBANKRUPTCY TRUSTEES NABT Spring Seminar The Peabody, Orlando, Florida Contact: http://www.nabt.com/ Apr. 20, 2009 AMERICAN BANKRUPTCY INSTITUTE Consumer Bankruptcy Conference John Adams Courthouse, Boston, Massachusetts Contact: 1-703-739-0800; http://www.abiworld.org/ Apr. 27-28, 2009 TURNAROUND MANAGEMENT ASSOCIATION Corporate Governance Meetings Intercontinental Hotel, Chicago, Illinois Contact: http://www.turnaround.org/ Apr. 28-30, 2009 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference Intercontinental Hotel, Chicago, Illinois Contact: http://www.turnaround.org/ May 7-10, 2009 AMERICAN BANKRUPTCY INSTITUTE 27th Annual Spring Meeting Gaylord National Resort & Convention Center National Harbor, Maryland Contact: http://www.abiworld.org/ May 14-16, 2009 ALI-ABA Chapter 11 Business Reorganizations Langham Hotel, Boston, Massachusetts Contact: http://www.ali-aba.org June 11-13, 2009 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa Traverse City, Michigan Contact: http://www.abiworld.org/ June 21-24, 2009 INTERNATIONAL ASSOCIATION OF RESTRUCTURING, INSOLVENCY & BANKRUPTCY PROFESSIONALS 8th International World Congress TBA Contact: http://www.insol.org/ July 16-19, 2009 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Mt. Washington Inn Bretton Woods, New Hampshire Contact: http://www.abiworld.org/ Sept. 10-12, 2009 AMERICAN BANKRUPTCY INSTITUTE 17th Annual Southwest Bankruptcy Conference Hyatt Regency Lake Tahoe, Incline Village, Nevada Contact: http://www.abiworld.org/ Oct. 5-9, 2009 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Desert Ridge, Phoenix, Arizona Contact: 312-578-6900; http://www.turnaround.org// Dec. 3-5, 2009 AMERICAN BANKRUPTCY INSTITUTE 21st Annual Winter Leadership Conference La Quinta Resort & Spa, La Quinta, California Contact: 1-703-739-0800; http://www.abiworld.org/ Apr. 15-18, 2010 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ June 17-20, 2010 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa, Traverse City, Michigan Contact: 1-703-739-0800; http://www.abiworld.org/ July 7-10, 2010 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Ocean Edge Resort, Brewster, Massachusetts Contact: 1-703-739-0800; http://www.abiworld.org/ Aug. 5-7, 2010 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hyatt Regency Chesapeake Bay, Cambridge, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 4-8, 2010 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention JW Marriott Grande Lakes, Orlando, Florida Contact: http://www.turnaround.org/ Dec. 2-4, 2010 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Camelback Inn, Scottsdale, Arizona Contact: 1-703-739-0800; http://www.abiworld.org/ BEARD AUDIO CONFERENCES 2006 BACPA Library Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES BAPCPA One Year On: Lessons Learned and Outlook Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Calpine's Chapter 11 Filing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Carve-Out Agreements for Unsecured Creditors Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Changes to Cross-Border Insolvencies Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Changing Roles & Responsibilities of Creditors' Committees Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Chinas New Enterprise Bankruptcy Law Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Clash of the Titans -- Bankruptcy vs. IP Rights Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Coming Changes in Small Business Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Corporate Bankruptcy Bootcamp: A Nuts & Bolts Primer for Navigating the Restructuring Process Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Dana's Chapter 11 Filing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Deepening Insolvency Widening Controversy: Current Risks, Latest Decisions Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Diagnosing Problems in Troubled Companies Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Distressed Claims Trading Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Distressed Market Opportunities Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Distressed Real Estate under BAPCPA Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Employee Benefits and Executive Compensation under the New Code Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Equitable Subordination and Recharacterization Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Examining the Examiners: Pros and Cons of Using Examiners in Chapter 11 Proceedings Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Fundamentals of Corporate Bankruptcy and Restructuring Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Handling Complex Chapter 11 Restructuring Issues Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Healthcare Bankruptcy Reforms Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES High-Yield Opportunities in Distressed Investing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Homestead Exemptions under BAPCPA Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Hospitals in Crisis: The Insolvency Crisis Plaguing Hospitals Across the U.S. Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES IP Rights In Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES KERPs and Bonuses under BAPCPA Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES New 'Red Flag' Identity Theft Rules Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Non-Traditional Lenders and the Impact of Loan-to-Own Strategies on the Restructuring Process Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Partnerships in Bankruptcy: Unwinding The Deal Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Privacy Rights, Protections & Pitfalls in Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Real Estate Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Reverse Mergersthe New IPO? Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Second Lien Financings and Intercreditor Agreements Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Surviving the Digital Deluge: Best Practices in E-Discovery and Records Management for Bankruptcy Practitioners and Litigators Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Technology as a Competitive Advantage For Todays Legal Processes Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES The Battle of Green & Red: Effect of Bankruptcy on Obligations to Clean Up Contaminated Property Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES The Subprime Sector Meltdown: Legal Developments and Latest Opportunities Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Twenty-Day Claims Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Using Virtual Data Rooms to Expedite Corporate Restructuring Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Using Virtual Data Rooms to Expedite M&A and Insolvency Proceedings Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Validating Distressed Security Portfolios: Year-End Price Validation and Risk Assessment Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES When Tenants File -- A Landlord's BAPCPA Survival Guide Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ * * * Featured Conferences Renaissance American Management and Beard Conferences presents Oct. 30-31, 2008 Physician Agreements & Ventures The Millennium Knickerbocker Hotel - Chicago Brochure will be available soon! Nov. 17-18, 2008 Distressed Investing The Helmsley Park Lane - New York Brochure will be available soon! * * * Beard Audio Conferences presents Bankruptcy and Restructuring Audio Conference CDs More information and list of available titles at: http://beardaudioconferences.com/bin/topics?category_id=BAR * * * The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* 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 Olano, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Luke Walter Ceballos, Carlo Fernandez, 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 ***