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/raid1/www/Hosts/bankrupt/TCR_Public/081107.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, November 7, 2008, Vol. 12, No. 266 Headlines ACCENT WINDOWS: Files for Chapter 11 Protection in Colorado ACE MORTGAGE: Files for Chapter 7 Liquidation AGRIPROCESSORS INC: Files for Chapter 11 Bankruptcy in New York AGRIPROCESSORS INC: Case Summary & 20 Largest Unsecured Creditors AMERICAN INTERNATIONAL: Property/Casualty Units on Watch Negative AMERICAN MORTGAGE: NYSE Alternext to Delist Preferred Shares BIRCH MOUNTAIN: Appoints PricewaterhouseCoopers as Receiver BOSCOV'S INC: Scraps Deal W/ Versa, Stays with Family Group CASTLE HILL I: Fitch Junks $29.7MM Residual Interest Sub. Notes CASTLE HILL II: Fitch Cuts $18.6MM Sub. Notes to BB+ CHEMTURA CORP: S&P Cuts Ratings to 'BB-'; Outlook Negative CHRYSLER LLC: Seeks Another $25BB Gov't Aid; Meets With Pelosi CONGOLEUM CORP: Court Approves Settlement on Asbestos Dispute CONSUMERS ENERGY: S&P Hikes Unsec. Debt Rating to 'BBB-' From BB+ COPPERFORD LLC: Case Summary & 19 Largest Unsecured Creditors DFC HEL TRUST: S&P Cuts Class B Rating to 'D' After Write-Down EL PASO: May Continue Using Cash Collateral Until November 30 EL PASO CHILE: U.S. Trustee Objects to Disclosure Statement ENCAP GOLF: Sued by New Jersey for Failed $1-Billion Project FORD MOTOR: Seeks Another $25BB Gov't Aid; Meets With Pelosi GAINEY CORP: Hires Carl Oosterhouse as Chief Operating Officer GAINEY CORP: May Employ AlixPartners as Restructuring Consultant GAINEY CORP: May Employ DW Associates as Limited Financial Advisor GAINEY CORP: Section 341(a) Creditors' Meeting Set for Nov. 24 GENERAL MOTORS: Seeks Another $25BB Gov't Aid; Meets With Pelosi GOODYEAR TIRE: S&P Revises Outlook to Stable; 'BB-' CCR Affirmed GAYLORD ENTERTAINMENT: S&P Puts 'B+' Rating on Watch Negative GOE LIMA: Creditors Committee Taps Frost Brown as Counsel GOE LIMA: Gets Interim Authority to Obtain $2.99MM DIP Loan GOE LIMA: Taps GlassRatner Advisory as Financial Advisor GOE LIMA: Section 341(a) Creditors' Meeting Set for November 20 GRANDE COMMUNICATIONS: Moody's Cuts PDR to Caa3; Outlook Negative GREATWIDE LOGISTICS: 363 Sale Cues Moody's to Withdraw Ratings HILLMAN GROUP: S&P Cuts Corp. Credit Rating to 'B-' from 'B' INNOVATIVE STRUCTURES: Voluntary Chapter 11 Case Summary INTERSTATE HOTELS: S&P Puts 'B' Rating on CreditWatch Negative JPMORGAN CHASE TRUST: S&P Junks Ratings on Classes N & P Certs. KANSAS GAS: S&P Hikes Unsec. Debt Rating to 'BBB-' From 'BB+' LAGUNA DEVELOPMENT: Fitch Affirms Issuer Rating at 'BB-' LAS VEGAS SANDS: Files Prospectus for Future Fund Raising Plans LAS VEGAS SANDS: Land Concession Deal in Macau Amended LAS VEGAS SANDS: Seeks to Raise Funds; May Default on Loans LB-UBS COMMERCIAL: Fitch Holds BB- Rating on $9.3MM Class N Certs. LEHMAN BROTHERS: Faces Probe on Securities Arbitration Claims LEHMAN BROTHERS: Seeks to Tap Simpson Thacher as Special Counsel LEVITT AND SONS: Classification and Treatment of Claims LEVITT AND SONS: Files Amended Joint Liquidating Chapter 11 Plan LEVITT AND SONS: Maple Grove Estates Balks Release Escrow Funds LEVITT AND SONS: Regency Hills Auctions Lake County, Fla. Assets LEVITT AND SONS: Wachovia, et al., Amend Purchase and Sale Deal LIVE NATION: Poised to Challenge Ticketmaster for Sales, S&P Says MONONGAHELA POWER: S&P Hikes Debt Rating to 'BBB-' From 'BB+' MORGAN STANLEY TRUST: S&P Junks Rating on Class Q Certificates NATIONAL RV: Judge Carroll Approves Plan Disclosure Statement NON-INVASIVE MONITORING: Eisner LLP Raises Going Concern Doubt NYMAGIC INC: Fitch Downgrades Sr. Debt to 'BB+'; Outlook Negative OSI RESTAURANT: Moody's Junks Corp. Family Rating; Outlook Stable PAUL REINHART: May Liquidate Under Chapter 11 Absent Financing RADNOR HOLDINGS: Wants to Modify First Amended Chapter 11 Plan RESOURCE REAL ESTATE: Fitch Holds B Rating on $28.7M Class M Loans SCO GROUP: Novell Inc. Wants $625,487 Payment For Linux/Unix SEA CONTAINERS: Bermuda OKs Voting on Scheme of Arrangement SEA CONTAINERS: To Enter into $150MM Exit Financing SPECTRUM BRANDS: Receives NYSE Listing Non-compliance Notice STEAKHOUSE PARTNERS: Abe & Mikel Alizadeh Acquires Roseville Unit TRICOM SA: Chapter 11 Plan Status Hearing Set for December 18 TICKETMASTER: S&P Sees Sales Challenge from Live Nation TUSA OFFICE: Voluntary Chapter 11 Case Summary VERASUN ENERGY: Gets Court Initial OK on $40MM DIP Financing WCI COMMUNITIES: Wants Lease Decision Period Extended to March 2 WELLMAN INC: 1st Lien Lenders Want Claim Treated Fully Secured WELLMAN INC: BNY Balks at First Amended Joint Chapter 11 Plan WELLMAN INC: Court Approves $17.9MM Sale of Operating Assets WESTAR ENERGY: S&P Hikes Unsec. Debt Rating to 'BBB-' From 'BB+' * Fitch: US RMBS and CDOs Lead SF Rating Actions Again in Q308 * Proskauer Rose Promotes Three Lawyers to Senior Counsel * Treasury Hires Hughes and Squire Sanders for Bailout Work * S&P Says Composite Credit Spreads Widen to New Five-Year Highs * Unsecured Debt Ratings Raised on 30 U.S. Electric Utilities * BOOK REVIEW: The Chief Executives ********* ACCENT WINDOWS: Files for Chapter 11 Protection in Colorado ----------------------------------------------------------- Accent Windows Inc. filed for Chapter 11 protection in the U.S. Bankruptcy Court for the District of Colorado on Tuesday, court documents say. Court documents indicate that Accent Windows listed the Internal Revenue Service as its largest creditor, with a $637,016.69 claim. According to the documents, Accent Windows has between 100 and 199 creditors. Denver Business relates that other large creditors in Denver include: -- Comcast Spotlight, -- U.S. Building Supply, and -- the accounting firm BKD LLP. Accent Windows, says Denver Business, listed debts of $1 million and $10 million, but didn't disclose the amount of its assets. About Accent Windows Westminster-based Accent Windows is a family-owned company that Tim Marcovich founded in 1982. It makes and installs windows and doors. It has operations in Colorado, Arizona, Montana, New Mexico, and Utah. ACE MORTGAGE: Files for Chapter 7 Liquidation --------------------------------------------- Ace Mortgage Funding LLC filed for Chapter 7 in the U.S. Bankruptcy Court for the District of Delaware on Wednesday, court documents say. The Indianapolis Star relates that Ace Mortgage and three affiliates, including parent Ace Holding Co, filed for protection from creditors. As reported in the Troubled Company Reporter on April 23, 2008, Rensselaer, New York-based Ace Holding LLC filed for Chapter 11 protection on April 11, 2008 (Bankr. N. D. N.Y. Case No. 08-11084). Michael D. Assaf, Esq., at Assaf & Mackenzie represents the company in its restructuring effort. The company listed assets of $1,000,001 to $100 million and debts of $100,001 to $1 million. The Indianapolis Star states that Ace Mortgage said it had $1 million to $10 million in both assets and liabilities, and that it had between 1,000 and 5,000 creditors. Jeff Swiatek and Tom Spalding at The Indianapolis Star relates that Ace Holding said in memos to workers that it closed its mortgage-lending business on Oct. 31, 2008, and that it would close Archer Land Title and Ace Imaging. According to the report, Ace Holding said that it failed to secure a new line of credit to develop a mortgage banking operation to try to raise revenue. Ace Holding said that less than 50 employees would be laid off as of Nov. 7, 2008, The Indianapolis Star states. About Ace Holding Ace Holding Company, LLC, is financial services holding company providing services to the subsidiary companies in the areas of Finance, Legal, Payroll, HR, Benefits, IT Support, and Management. Other than Ace Mortgage Funding, LLC, its subsidiaries include: Ace Mortgage Funding, LLC -- www.acerefi.com -- a national mortgage lender specializing in all types of residential mortgage loans; Archer Land Title, LLC -- www.archerlandtitle.com -- a national title company and closing agent; Ace Imaging, LLC -- a document imaging and hosting solution provider for small businesses with the goal of providing faster solutions on accessing needed data without changing how it's clients do business. About Ace Mortgage Ace Mortgage Funding, LLC, offers home purchase loans, mortgage refinance, home equity loan financing and debt consolidation mortgages. Ace Mortgage had offices in 15 U.S. states. AGRIPROCESSORS INC: Files for Chapter 11 Bankruptcy in New York --------------------------------------------------------------- Agriprocessors Inc. sought protection from its creditors under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy for the Eastern District of New York due to financial difficulties and implications of a pending litigation filed by First Bank Business Capital Inc. The bank alleged that certain receivables were misdeposited by the company into its operating account instead of a corresponding deposit account, although all fund at issue were used for the payment of legitimate business purposes. The company owes as much as $35,000,000 in secured debt to the bank. The company's financial crisis is caused by circumstances involving a raid executed by Immigration and Custom Enforcement Agency on May 12, 2008, where 389 of the company's employees at Potsville facility were arrested and charged for possession of forged documents. The company engaged new supervisory personnel to oversee plant operations in Iowa as a result of the labor probe. According to Kevin J. Nash, Esq., at Finkel Goldstein Rosenbloom & Nash LLP, the Chapter 11 filing will stay the bank's litigation and preserve the ongoing concern value of the Debtor's business while issued with lenders and other creditors are addressed. The company listed assets between $100 million and $500 million, and debts between $50 million and $100 million in its filing. The company owes $5,708,609 to its unsecured creditors including Jacobson Staffing owing $845,389; Weyerhauser Parer Company owing $806,970; and Baker & McKenzie LLP owing $640,911. The company's other secured creditors are Farm Credit Leasing owing $6,000,000 and MetLife Agricultural Investments owing $9,600,000. President Abraham Arron Rubashkin owns the company. Headquartered in Postville, Iowa, Agriprocessors Inc. -- http://www.agriprocessor.com/-- operates a kosher meat and poultry packing processors located at 220 North West Street. The company maintains an executive office with 50 employees at 5600 First Avenue in Brooklyn, New York. AGRIPROCESSORS INC: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Agriprocessors, Inc. 5600 First Avenue Brooklyn, NY 11220 Bankruptcy Case No.: 08-47472 Type of Business: The Debtor operates a kosher meat and poultry packing processors located at 220 North West Street. The company maintains an executive office with 50 employees at 5600 First Avenue in Brooklyn, New York. See: http://www.agriprocessor.com/ Chapter 11 Petition Date: November 4, 2008 Court: Eastern District of New York (Brooklyn) Judge: Carla E. Craig Debtor's Counsel: Kevin J. Nash, Esq. kjnash@finkgold.com Finkel Goldstein Rosenbloom & Nash 26 Broadway, Suite 711 New York, NY 10004 Tel: (212) 344-2929 Fax : (212) 422-6836 Estimated Assets: $100 million to $500 million Estimated Debts: $50 million to $100 million The Debtor's Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Jacobson Staffing Company $845,389 1821 Euclid Avenue Des Moines, IA 50316 Weyerhauser Parer Company $806,911 7591 Collections Center Drive Chicago, IL 60693 Baker & McKenzie LLP $640,911 615 Connecticut Avenue Washington, DC 2006 Mayore Management LLC $500,000 Cryivac Division Sealer Air Corp. $442,342 Best Value Trucking $419,590 Alliant Energy $318,235 Prairie Agri-Enterprises Inc. $271,975 Nyemaster Goode Voigts West, et al. $208,636 Marks Paneth & Shron & Co. LLP $195,175 Aquilla Inc. $120,121 Postville Farmers Co-Op $119,798 Dubois Chemical $115,147 Nordenia USA $105,082 Bunzi Chicago $96,235 Falk Paper Company $91,187 U.S.D.A Food Safety and $88,179 Inspection Tricok Inc. Tr Du Chien $81,572 Packaging Film Group $65,655 Thomas V. McQueen, Esq. $60,612 AMERICAN INTERNATIONAL: Property/Casualty Units on Watch Negative ----------------------------------------------------------------- Standard & Poor's Ratings Services revised the CreditWatch status of its ratings on a number of American International Group Inc.'s (NYSE:AIG) property/casualty subsidiaries and other units with ratings derived from guarantees from those subsidiaries to negative from developing. The ratings on AIG remain on CreditWatch negative, and the ratings on most of AIG's life insurance operations remain on CreditWatch developing. Standard & Poor's does not expect AIG to sell its core property/casualty operations under its restructuring plan. "The ratings on these companies are on CreditWatch negative to reflect our view of the likelihood of increased pressure on the performance of that business," explained Standard & Poor's credit analyst Rodney A. Clark. On Aug. 13, 2008, S&P revised its outlook on the entire U.S. commercial lines property/casualty sector to negative because of weakening pricing and adverse investment markets. "S&P expects AIG is particularly susceptible to these broader market trends, given its somewhat weakened position," Mr. Clark added. "Although at this point we have not seen clear evidence of long-term damage to AIG's franchise, there have been wide reports that competitors are actively pursuing AIG's accounts and key underwriting personnel, which could pressure operating performance over time given the current market conditions the industry is facing." S&P could resolve the CreditWatch status of the ratings on the property/casualty insurance companies in 2009, when S&P should get a better picture of the company's experience in pricing and retention. Standard & Poor's expects some loss of business and personnel. If those losses are significant and threaten future business prospects, S&P could lower the ratings by one or two notches. However, if any declines are modest, S&P could affirm the ratings. By contrast, S&P expects that AIG will sell its life insurance operations under its planned restructuring. Most of the likely buyers are rated 'AA-' or better, which could have a positive impact on the ratings on these AIG subsidiaries. S&P could raise these ratings once sales to higher-rated entities are completed. However, if the sale process is slow, the sale is to a lower-rated entity, or there is significant deterioration in the businesses, S&P could lower the ratings. All of the AIG ratings are based on stand-alone fundamentals as well as the significant liquidity support in the form of an $85 billion credit facility and a $37.8 billion securities lending back-stop facility provided by the Federal Reserve Bank of New York and, more recently, the Federal Reserve's Commercial Paper Funding Facility. S&P's ratings anticipate the continued use of these programs to provide interim funding while AIG restructures its operations. The support measures the Federal Reserve has provided, which are meant to meet the enterprise's liquidity and subsidiary capital needs, underpin AIG's creditworthiness. Without them, it is likely the holding company would be rated in the speculative-grade category. AMERICAN MORTGAGE: NYSE Alternext to Delist Preferred Shares ------------------------------------------------------------ American Mortgage Acceptance Company was notified by New York Stock Exchange Regulations, Inc. that NYSE Alternext US LLC intends to delist the company's common shares and 7.25% Series A Cumulative Convertible Preferred Shares from the Exchange. The notice from the Exchange indicated that the company no longer complies with the Exchange's continued listing standards. The letter noted the Forms 8-K AMAC filed with the Securities and Exchange Commission on October 16 and Oct. 28, 2008, which, among other things, disclosed that the company's liabilities exceeded the value of its remaining assets. The Exchange has determined that the disclosures made by AMAC in the Forms 8-K indicate the company is subject to delisting pursuant to Section 1003(a)(iv) of the NYSE Alternext US LLC Company Guide, which allows the Exchange to consider delisting a security if the company issuing the security has sustained losses which are so substantial in relation to its overall operations or its existing financial resources, or its financial condition has become so impaired, that it appears questionable, in the opinion of the Exchange, as to whether such company will be able to continue operations and meet its obligations as they come due. The Exchange has also determined the company has become subject to Section 1002(e) of the Company Guide, which states the Exchange will consider suspension of trading in or removal from listing of a security when, in the opinion of the Exchange, "an event shall occur or a condition shall exist which makes further dealings on the Exchange unwarranted." Given its financial condition, the company does not expect that it will be able to continue in operation and, if liquidated and wound up in a bankruptcy proceeding or otherwise, claims of common and preferred shareholders would be subordinate to the claims of creditors and other obligors. Therefore, the company does not believe there would be any recovery for shareholders and believes the Securities are worthless. The company does not intend to appeal the intention of the Exchange to delist AMAC's Securities from the Exchange. AMAC is scheduled to be delisted from the Exchange on Tuesday, Nov. 11, 2008. About American Mortgage Acceptance Company Based in New York City, American Mortgage Acceptance Company (NYSE Alternext:AMC) -- http://www.americanmortgageco.com/-- is a real estate investment trust (REIT). The company operates in one business segment, which focuses on investing in mortgage loans and other debt instruments secured by multifamily and commercial property throughout the United States. It has invested in commercial real estate loans, which may have fixed or variable interest rates: First mortgage loans; Subordinated B-notes and mezzanine loans; Bridge loans; Debt securities; Commercial Mortgage-Backed Securities (CMBS); Collateralized debt obligation (CDO) securities, and Other investments. The company invested in government insured or agency guaranteed first mortgages, insured mortgage pass-through certificates or insured mortgage backed securities, but has divested itself of many of these assets. BIRCH MOUNTAIN: Appoints PricewaterhouseCoopers as Receiver ----------------------------------------------------------- Birch Mountain Resources Ltd. discloses that pursuant to the Bankruptcy and Insolvency Act (Canada), PricewaterhouseCoopers Inc. is hereby appointed interim Receiver and Receiver and Manager, of all of the corporation's current and future assets, undertakings and properties of every nature and kind. Birch Mountain disclosed on Nov. 3, 2008, that it had received a demand for repayment of its loans from its principal secured creditor, Tricap Partners Ltd., together with a notice of intention to enforce security pursuant to the BIA. Birch Mountain is unable to repay its indebtedness to Tricap. Among other powers, the Receiver is authorized to take possession and control of the Property; to receive, preserve, protect and maintain control of the Property; to manage, operate and carry on the business of the corporation; to receive and collect all monies and accounts now owed or hereafter owing to the corporation and to exercise all remedies of the corporation in collecting such monies, including, without limitation, to enforce any security held by the corporation; and to sell, convey, transfer, lease or assign the Property or any part or parts thereof out of the ordinary course of business, subject to the approval of the court with respect to certain sales. No proceedings against or in respect of the corporation or the Property can be commenced or continued except with the written consent of the Receiver or with leave of the court and any and all proceedings currently under way against or in respect of the corporation or the Property are stayed and suspended pending further order of the court. With certain exceptions, all rights and remedies, including, without limitation, set-off rights against the corporation, the Receiver, or affecting the Property, are hereby stayed and suspended except with the written consent of the Receiver or leave of the court. Anyone having oral or written agreements with the corporation or other mandates for the supply of goods and services to the corporation are restrained from discontinuing, altering, interfering with or terminating the supply of such goods or services as may be required until further order of the Court. Under the Business corporations Act (Alberta), as a Receiver has been appointed, the powers of the directors of the corporation that the Receiver is authorized to exercise may not be exercised by the directors until the Receiver is discharged. Accordingly, all of the directors of the board of the corporation have resigned and all officers have been released of their duties effective immediately. Members of management intend to be available to assist the receiver in maximizing value for all stakeholders to the extent possible in the circumstances. At this time there appears to be little likelihood that there will be any recovery by the shareholders in the event of a liquidation or sale of the corporation's assets. About Birch Mountain Resources Ltd. Headquartered in Calgary, Canada, Birch Mountain Resources Ltd. (TSX and AMEX: BMD) -- http://www.birchmountain.com/-- operates the Muskeg Valley Quarry, an early production stage limestone quarry that produces limestone aggregate products for sale to customers in the Athabasca Oil Sands region of northeastern Alberta. The company is engaged in the regulatory approval process for the Hammerstone Project which will expand the Muskeg Valley Quarry and add an integrated limestone processing complex to provide manufactured limestone-based products such as quicklime, as well as related environmental services such as spent lime re-calcining. Going Concern Doubt Birch Mountain Resources Ltd. disclosed in its report on Form 6-K which was filed with the U.S. Securities and Exchange Commission on May 20, 2008, that the company currently has insufficient revenue to meet its yearly operating and capital requirements. The company has incurred operating losses since its inception in 1995, and as of March 31, 2008, has an accumulated deficit of C$48.2 million. Losses are from costs incurred in the early operation and development of the Muskeg Valley Quarry and the Hammerstone Project, exploration of mineral opportunities and mineral technology research. Future operating losses may occur as a result of the continued operation of the Muskeg Valley Quarry and development of the Hammerstone Project. The company has a working capital balance at March 31, 2008, of C$2.1 million, a decrease of approximately C$5.5 million from Dec. 31, 2007. The company has formally engaged RBC Capital Markets to assist in the evaluation of strategic alternatives, which includes discussing debt and equity strategies for its immediate and medium term capital needs. To the extent the company raises additional capital by issuing equity or convertible debt securities, ownership dilution to shareholders will result. The company believes these factors raise substantial doubt about the company's ability to continue as a going concern. BOSCOV'S INC: Scraps Deal W/ Versa, Stays with Family Group ----------------------------------------------------------- Boscov's Department Store LLC said Nov. 4 that it has signed an Asset Purchase Agreement (APA) for the sale of substantially all of its assets to a family group led by Albert Boscov and Edwin Lakin. Boscov's also announced that the Company has formally terminated the previously announced 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," said Ken Lakin, Chairman and CEO. "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 Bankruptcy Court approval 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. Boscov's filed to reorganize under Chapter 11 on August 4, 2008 in the United States Bankruptcy Court for the District of Delaware. 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) CASTLE HILL I: Fitch Junks $29.7MM Residual Interest Sub. Notes --------------------------------------------------------------- Fitch Ratings has affirmed three and downgraded one class of notes issued by Castle Hill I - INGOTS, Ltd/Corp. (Castle Hill I). These rating actions are effective immediately: -- $235,560,104 class A-1 first priority senior secured notes due 2014 affirmed at 'AAA'; -- $32,000,000 class A-2 second priority senior secured notes due 2014 affirmed at 'AAA'; -- $28,000,000 class B interest deferrable secured notes due 2014 affirmed at 'A'; -- $29,755,803 residual interest subordinated notes due 2014 downgraded to 'CCC' from 'BBB'. The rating action reflects Fitch's view on the credit risk of the rated notes following the release of its corporate CDO rating Criteria. Castle Hill I is a cash flow collateralized loan obligation (CLO) that closed in Dec. 2002 and is managed by Sankaty Adivsors, LLC. The five-year reinvestment period ended on Dec. 3, 2007. The portfolio is comprised of 93.8% senior secured loans and 5.1% second lien loans. The three largest industry concentrations in Castle Hill I are healthcare (10.5%), chemicals (9.9%), and gaming, leisure & entertainment (8.7%). The five largest obligors represent approximately 9% of the portfolio and the single largest obligor accounts for approximately 1.9% of the portfolio. The current average credit quality of the portfolio is 'B/B-'. The portfolio has experienced some credit migration since Fitch's last review in September 2006. Defaulted securities have increased to 6.4% of the portfolio from 0% at last review. Approximately 13% of the performing portfolio is considered rated 'CCC+' or lower. Additionally, 4% and 19.7% is on Rating Watch Negative or has a Negative Outlook, respectively, by at least one rating agency, which was factored into the analysis by making standard adjustments as described in Fitch's updated corporate CDO criteria. That said, these elements are mitigated by the fact that all the overcollateralization and interest coverage tests are still passing their test levels with cushion. The affirmations are the result of the increase in credit enhancement for the class A-1, A-2 and B notes. The increase in credit support reflects the deleveraging of the class A-1 notes through asset amortization and the application of excess spread via the subordinate principal replenishment amount (SPRA). The SPRA is equal to the excess of the aggregate outstanding notional of the notes over 99.1% of the adjusted collateral. After the reinvestment period, upon the occurrence of the SPRA, part or all of the excess spread that would otherwise be available to the residual interest subordinated notes is diverted to repay the notes sequentially starting with the class A-1 notes. Since closing, the class A-1 notes have received $54.4 million in principal, or approximately 18.8% of the original notional amount, from both the SPRA and asset amortization. The residual interest subordinated notes receive Basic Interest, Additional Interest, Supplemental Interest and Contingent Interest from the interest waterfall. All but Basic Interest receipts are used to reduce the rated principal balance. The downgrade to the residual interest subordinated notes reflects unpaid Additional Interest, Supplemental Interest and Contingent Interest over the past few periods. Since closing, the residual interest subordinated notes have received $20.2 million in distributions in excess of the Basic Interest amount, reducing the rated principal balance to $29.8 million, or 59.5% of the initial rated principal balance. Looking ahead, payments to the residual interest subordinated notes could be constrained by further occurrences of the SPRA, and an increasing average cost of liabilities as the relatively inexpensive senior notes continue to amortize. The ratings of the class A-1 and A-2 notes address the likelihood that investors will receive full and timely payments of interest per the transaction's governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the class B notes addresses the likelihood that investors will receive ultimate and compensating interest payments per the transaction's governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the residual interest subordinated notes addresses the ultimate payment of Basic Interest while the rated principal balance is outstanding and the ultimate repayment of principal by the stated maturity date. For avoidance of doubt, all distributions to the residual interest subordinated notes in excess of the Basic Interest are applied to reduce the rated principal balance. CASTLE HILL II: Fitch Cuts $18.6MM Sub. Notes to BB+ ---------------------------------------------------- Fitch Ratings has affirmed three and downgraded one class of notes issued by Castle Hill II-INGOTS, Ltd/Corp. (Castle Hill II). These rating actions are effective immediately: -- $275,063,494 class A first priority senior secured notes due 2014 affirmed at 'AAA'; -- $22,000,000 class B-1 second priority floating-rate interest deferrable secured notes due 2014 affirmed at 'A'; -- $6,000,000 class B-2 second priority fixed-rate interest deferrable secured notes due 2014 affirmed at 'A'; -- $18,646,579 residual interest subordinated notes due 2014 downgraded to 'BB+' from 'BBB'. The rating action reflects Fitch's view on the credit risk of the rated notes following the release of its corporate CDO rating Criteria. Castle Hill II is a collateralized loan obligation (CLO) that closed in September 2002 and is managed by Sankaty Advisors, Inc. The five-year reinvestment period ended on Oct. 15, 2007. The portfolio is comprised of 94.3% senior secured loans, 4.4% second lien loans, and 1.3% senior unsecured loans. The class B notes are comprised of the class B-1 and B-2 notes. The three largest industry concentrations in Castle Hill II are Health Care (13.4%), Gaming, Leisure & Entertainment (7.5%), and (6.5%) Automobiles. The five largest obligors represent approximately 10.8% of the portfolio and the single largest obligor accounts for approximately 2.3% of the portfolio. The current average credit quality of the portfolio is 'B/B-'. The portfolio has experienced some credit migration since Fitch's last review in September 2006. Defaulted securities have increased to 2.5% of the portfolio from 0% at last review. Approximately 16.5% of the performing portfolio is considered rated 'CCC+' or lower. Additionally, 4.9% and 20.7% is on Rating Watch Negative or has a Negative Outlook, respectively, by at least one rating agency, which was factored into the analysis by making standard adjustments as described in Fitch's updated corporate CDO criteria. That said, these elements are mitigated by the fact that all the overcollateralization and interest coverage tests are still passing their test levels with cushion. The affirmations are the result of the increase in credit enhancement for the class A, B-1 and B-2 notes. The increase in credit support reflects the deleveraging of the class A notes through asset amortization and the application of excess spread via the subordinate principal replenishment amount (SPRA). The SPRA is equal to the excess of the aggregate outstanding notional of the notes over 99.1% of the adjusted collateral. After the reinvestment period, upon the occurrence of the SPRA, part or all of the excess spread that would otherwise be available to the residual interest subordinated notes is diverted to repay the notes sequentially starting with the class A notes. Since closing, the class A notes have received $46.9 million in principal, or approximately 14.6% of the original notional amount, from both the SPRA and asset amortization. The residual interest subordinated notes receive Basic Interest, Additional Interest, Supplemental Interest and Contingent Interest from the interest waterfall. All but Basic Interest receipts are used to reduce the rated principal balance. The downgrade to the residual interest subordinated notes reflects Fitch's projections of decreased Additional Interest, Supplemental Interest and Contingent Interest available through excess spread on future payment dates. Since closing, the residual interest subordinated notes have received $31.4 million in distributions in excess of the Basic Interest amount, reducing the rated principal balance to $18.6 million, or 37.3% of the initial rated principal balance. Looking ahead, payments to the residual interest subordinated notes could be constrained by further occurrences of the SPRA, and an increasing average cost of liabilities as the relatively inexpensive senior notes continue to amortize. The rating of the class A notes addresses the full and timely payment of the Note Interest and the ultimate repayment of principal by the stated maturity date. The ratings for classes B-1 and B-2 address the ultimate payment of Note Interest and the ultimate repayment of principal by the stated maturity date. The rating of the residual interest subordinated notes addresses the ultimate payment of Basic Interest while the rated principal balance is outstanding and the ultimate repayment of principal by the stated maturity date. For avoidance of doubt, all distributions to the residual interest subordinated notes in excess of the Basic Interest are applied to reduce the rated principal balance. CHEMTURA CORP: S&P Cuts Ratings to 'BB-'; Outlook Negative ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on Chemtura Corp. to 'BB-' from 'BB'. The outlook is negative. The recovery rating on the company's senior unsecured notes is unchanged at '4', indicating expectations of average (30%-50%) recovery in the event of a payment default. "The rating actions reflect concerns regarding the company's upcoming maturity of its $370 million senior unsecured notes due in July 2009 and tight financial covenants, particularly given the backdrop of challenging credit market conditions," said Standard & Poor's credit analyst Liley Mehta. "In addition, the company's exposure to industrial and construction end markets coupled with a weaker outlook for the global economy will likely pressure operating results for the balance of 2008 and 2009." In efforts to shore up liquidity, management has implemented a five-point action plan that includes evaluating strategic options with a primary focus on a business divestiture, suspending its dividend, reducing inventories, lowering capital expenditures, and maintaining tight control on discretionary spending and rationalizing capacity if demand declines. The company has indicated that if market conditions permit, it will refinance the $370 million notes with new debt securities or redeem the notes with the proceeds from an asset sale, if one were to occur. However, if financial market conditions remain difficult, the company would refinance these notes under its revolving credit facility, until it completes a refinancing transaction. While the company had $107 million in cash and $580 million in availability under its $740 million revolving credit facility as of Sept. 30, 2008, such an action would significantly reduce liquidity in light of weaker operating results in 2009. The ratings on Chemtura incorporate some vulnerability of its operating results to competitive pricing pressures, raw-material costs, and cyclical markets. They also reflect weakening cash flow protection measures as a result of poor profitability and slowing demand in certain businesses. These factors are tempered by a diversified portfolio of specialty and industrial chemical businesses (generating annual revenues of roughly $3.7 billion). Credit quality has been supported by the benefits of restructuring actions, rationalization of the number of customers and products, and the divestiture of non-core operations in recent years. S&P could lower the ratings in the next few months in the absence of a potential business divestiture or debt issuance to refinance the $370 million notes maturing in July 2009. Covenant compliance is another key concern if weak economic conditions lead to a reduction in earnings, or cash flow, and the company does not reduce debt. Deterioration of the key funds from operations to adjusted debt ratio to below 15% would also result in a review for downgrade. CHRYSLER LLC: Seeks Another $25BB Gov't Aid; Meets With Pelosi -------------------------------------------------------------- John Hughes and Angela Greiling Keane at Bloomberg News reports that General Motors Corp., Ford Motor Co., and Chrysler LLC chief executive officers, met with House Speaker Nancy Pelosi about their request for another $25 billion in government-backed loans. According to Bloomberg, House Speaker Pelosi said that the meeting was "very positive." Bloomberg relates that United Auto Workers chief Ronald Gettelfinger and other House members, including John Dingell of Michigan and George Miller of California, also attended the meeting. Automakers, says Bloomberg, have sought $50 billion in loans from the government since August 2008, winning half with an Energy Department program to help retool plants to construct fuel- efficient models. President-elect Barack Obama, according to Bloomberg, has called for a $175 billion stimulus package to follow the $168 billion package signed into law in February 2008. Bloomberg states that a stimulus bill might be a chance to get the second $25 billion financial aid from the government. The bill, states the report, may be taken up before President George W. Bush steps down. Automakers could soon start applying for money under an existing $25 billion package of low-interest loans to help them meet fuel- efficiency requirements, John Crawley and Richard Cowan at Reuters relates, citing the Bush administration. Reuters states that the government said it would listen to other ideas as the Democratic- led Congress considers the request for further assistance. Citing people familiar with the source, Jeff Green at Bloomberg relates that GM is focused on winning government financial aid to make it through next year, not to help a merger with Chrysler. 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. CONGOLEUM CORP: Court Approves Settlement on Asbestos Dispute ------------------------------------------------------------- The Hon. Kathryn C. Ferguson of the United States Bankruptcy Court for the District of New Jersey approved a litigation settlement agreement among Congoleum Corporation, the Official Committee of Bondholders, Joseph Rice, Perry Weitz, Arthur J. Pergament, the Future Claimants' Representative, the Official Asbestos Claimants' Committee and certain holders of pre-petition settlements with respect to asbestos claims against Congoleum. The settlement agreement provides, among other things, that upon effectiveness of a plan of reorganization for Congoleum, the settling claimants will waive any and all rights with respect to any pre-petition settlement of their asbestos claims against Congoleum, and their claim will be restored to the status quo ante as it existed as of the time the Settling Claimant initially filed or submitted its asbestos claim against Congoleum. The settlement agreement also provides that congoleum is released from any and all obligations and duties imposed pursuant to any pre-petition asbestos settlement, the collateral trust Agreement, security agreement and any and all other agreements and amendments thereto with respect to the pre-packaged plan of reorganization filed by Congoleum on Dec. 31, 2003. A full-text copy of the Litigation Settlement Agreement is available for free at http://ResearchArchives.com/t/s?34b1 About Congoleum Based in Mercerville, New Jersey, Congoleum Corporation (AMEX:CGM) -- http://www.congoleum.com/-- manufactures and sells resilient sheet and tile floor covering products with a wide variety of product features, designs and colors. The company filed for chapter 11 protection on Dec. 31, 2003 (Bankr. N.J. Case No. 03-51524) as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago. Richard L. Epling, Esq., Robin L. Spear, Esq., and Kerry A. Brennan, Esq., at Pillsbury Winthrop Shaw Pittman LLP, and Paul S. Hollander, Esq., and James L. DeLuca, Esq., at Okin, Hollander & DeLuca, LLP, represent the Debtors. The Asbestos Claimants' Committee is represented by Peter Van N. Lockwood, Esq., and Ronald Reinsel, Esq., at Caplin & Drysdale, Chtd. The Bondholders' Committee is represented by Michael S. Stamer, Esq., and James R. Savin, Esq., at Akin Gump Strauss Hauer & Feld LLP. Nancy Isaacson, Esq., at Goldstein Isaacson, PC, represents the Official Committee of Unsecured Creditors. R. Scott Williams, Esq., of Haskell Slaughter Young & Rediker, LLC, the Court-appointed Futures Claimants Representative, is represented by Roger Frankel, Esq., Richard Wyron, Esq., and Jonathan P. Guy, Esq., at Orrick Herrington & Sutcliffe LLP, and Stephen B. Ravin, Esq., at Forman Holt Eliades & Ravin LLC. American Biltrite, Inc. (AMEX: ABL), which owns 55% of Congoleum, is represented by Matthew Ward, Esq., Mark S. Chehi, Esq., Christopher S. Chow, Esq., and Matthew P. Ward, Esq., at Skadden Arps Slate Meagher & Flom. Going Concern Doubt As reported in the Troubled Company Reporter on April 28, 2008, in Congoleum Corp.'s 2007 annual report filed with the U.S. Securities and Exchange Commission, the company's management said there is "substantial doubt about the company's ability to continue as a going concern unless it obtains relief from its substantial asbestos liabilities through a successful reorganization under Chapter 11 of the Bankruptcy Code." CONSUMERS ENERGY: S&P Hikes Unsec. Debt Rating to 'BBB-' From BB+ ----------------------------------------------------------------- Standard & Poor's Ratings Services' raised its senior unsecured debt ratings of 30 U.S. investment-grade investor-owned utility operating companies after reevaluating its application of notching criteria to better reflect the relatively strong recovery prospects of creditors in this sector. "As a result, the senior unsecured debt of most utilities will now be rated the same as the corporate credit rating (CCR) almost uniformly, even when a considerable amount of secured debt is outstanding," said Standard & Poor's credit analyst John Whitlock. This new approach does not affect unsecured debt ratings at unregulated affiliates, such as a holding company. Historically, S&P has approached notching issues from a "priority" perspective. That is, when a debt issue is junior to the company's other debt issues, and S&P therefore view it as having inferior recovery prospects, S&P notches that issue down from the CCR. S&P determines the number of notches by examining the relative amounts of secured and unsecured debt in an entity's capital structure. If sufficient secured debt existed to disadvantage the unsecured bondholders -- for investment-grade companies, the guideline is 20% of assets -- S&P adjusts the rating on the lower-ranked debt to below the CCR. The list shows those ratings that reflect the updated application of notching criteria to utility companies. For more information, see the commentary article "Notching Of U.S. Investment-Grade Investor-Owned Utility Unsecured Debt Now Better Reflects Anticipated Absolute Recovery," published on RatingsDirect. Senior Unsecured Debt Ratings Raised To From -- ---- ALLETE Inc. BBB+ BBB Atlantic City Electric Co. BBB BBB- Carolina Power & Light Co. d/b/a Progress Energy Carolinas Inc. BBB+ BBB Cleveland Electric Illuminating Co. BBB BBB- Connecticut Light & Power Co. BBB BBB- Consumers Energy Co. BBB- BB+ Delmarva Power & Light Co. BBB BBB- Detroit Edison Co. BBB BBB- Florida Power Corp. d/b/a Progress Energy Florida Inc. BBB+ BBB Idaho Power Co. BBB BBB- Kansas Gas & Electric Co. BBB- BB+ Monongahela Power Co. BBB- BB+ Niagara Mohawk Power Corp. A- BBB+ Northern States Power Co. BBB+ BBB Northern States Power Wisconsin A- BBB+ NorthWestern Corp. BBB BBB- Ohio Edison Co. BBB BBB- PacifiCorp A-/ BBB+/ Watch Watch Neg Neg Peoples Gas Light & Coke Co. A- BBB+ Pennsylvania Power Co. BBB BBB- Portland General Electric Co. BBB+ BBB Potomac Electric Power Co. BBB BBB- Public Service Co. of Colorado BBB+ BBB Rochester Gas & Electric Corp. BBB+ BBB San Diego Gas & Electric Co. A A- South Carolina Electric & Gas Co. A- BBB+ Southern California Edison Co. BBB+ BBB Southern California Gas Co. A A- Toledo Edison Co. BBB BBB- Westar Energy Inc. BBB- BB+ * Does not include affiliates affected. COPPERFORD LLC: Case Summary & 19 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Copperford, LLC dba Olde Lockeford Winery dba Vino Piazza dba VIP Wine Group dba Vino Piazza, the Winery Plaza dba Vina Piazza, the Winery Plaza 12470 Locke Rd #100 Lockeford, CA 95237 Bankruptcy Case No.: 08-36148 Type of Business: The Debtor offers renovation services. Chapter 11 Petition Date: November 4, 2008 Court: Eastern District of California (Sacramento) Judge: Michael S. McManus Debtor's Counsel: Carl W. Collins, Esq. Carl W. Collins Attorney At Law PO Box 3291 Modesto, CA 95353-3291 Tel: (209) 521-8100 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 ------ --------------- ------------ Jim & Susan Colafrancesco loan $1,500,000 9977 Kapalua Lane Elk Grove, CA 95624-5036 Tel: (916) 747-9316 Don & Dororthy Litchfield Sr. private loan $100,000 311 Aspen Avenue Bismarck, ND 58501 Tel: (701) 255-4005 Dwight Russi trade debt $100,000 1126 2nd Street Sacramento, CA 95817 Tel: (916) 442-3007 Sunflower Ranches trade debt $50,000 Richard Suess trade debt $42,250 Matteoni, Sax & O'Laughlin legal $39,194 San Joaquin County Tax $36,141 Collector Kroloff Law Firm legal $36,074 John H. Scott private loan $34,500 Gus Kapiniaris/Stama trade debt $30,000 Winery Douglas Litchfield loan $24,940 Greg P. Goehring legal $24,500 Brown Hall Shore & McKinley legal $12,169 LLP La Rocca Vineyards trade debt $10,511 D-Mor Concrete Sawing trade debt $10,385 Henderson Bros Co. Inc. trade debt $9,804 R&G Schatz Farms Inc. trade debt $9,543 Complete Welder Supply $8,275 Nadalie USA trade debt $8,124 Marge Black Graziano loan $8,113 DFC HEL TRUST: S&P Cuts Class B Rating to 'D' After Write-Down -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the class B mortgage-backed certificates issued by DFC HEL Trust 2001-1. At the same time, S&P placed its ratings on classes M-1 and M-2 on CreditWatch with negative implications. S&P downgraded class B to 'D' because it had experienced a $46,901 principal write-down as of the Oct. 15, 2008, distribution date. Since the April 2008 remittance, realized losses have reduced a large portion of the principal and interest collections available to the certificates. As a result, the transaction's spread account, which originally provided credit support, has been completely eroded. These losses may have also caused the class M-1 and M-2 notes to experience interest shortfalls over the past several months. S&P has therefore placed its ratings on these classes on CreditWatch negative. Interest on these classes due for the Oct. 15, 2008, remittance was paid; however, a shortfall remains from previous periods. S&P will determine over the next several weeks if these shortfalls will be remedied. If they cannot be promptly reimbursed, S&P may lower the ratings on these classes, possibly to 'D'. As of the October distribution, 8.03% of the transaction's original pool balance remained outstanding. Total delinquencies make up approximately 34.75% of the current pool balance, while severe delinquencies (90-plus days, foreclosures, and real estate owned {REO}) make up 19.69% of the current pool balance. Cumulative realized losses make up 8.45% of the original pool balance. Subordination, a spread account, and excess spread originally provided credit support for this transaction. Currently, subordination provides 50.42% credit enhancement to class M-1 and 11.43% credit enhancement to class M-2. The certificates represent ownership interest in a REMIC-elected trust fund consisting of fixed-rate and adjustable-rate mortgage loans secured primarily by one- to four-family residential properties. RATING LOWERED DFC HEL Trust 2001-1 Rating Class To From ----- -- ---- B D BBB RATINGS PLACED ON CREDITWATCH NEGATIVE DFC HEL Trust 2001-1 Rating Class To From ----- -- ---- M-1 AA+/Watch Neg AA+ M-2 A/Watch Neg A EL PASO: May Continue Using Cash Collateral Until November 30 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Texas granted El Paso Chile Company, Inc. and Desert Pepper Trading Co. interim approval to continue using cash collateral of their lenders through and including Nov. 30, 2008 (Fourth Interim Order), to meet payroll and pay for other expenses items in accordance with a budget, plus U.S. Trustee fees. The Debtors are also authorized to exceed, on a weekly basis, the amount of any line item by 5%, provided the aggregate monthly budgeted amount for all line items is not exceeded by more than 5% as a result of all increased expenditures. The Debtors assured the Court that the use of cash collateral will minimize the disruption of the Debtors' existing business, will preserve the value of the Debtors' assets and estate, and is in the best interests of the Debtors, their creditors, and other parties in interest. As adequate protection for the Debtors' use of cash collateral, certain of their lenders -- Sovereign Business Credit and CIT Small Business Lending Corp. -- are granted valid and perfected liens on, and security interests in property and all of the assets of the Debtors including those obtained after the Petition Date, with the liens against property of the Debtors having the same seniority and entitled to the same level of priority as among the respective Lenders as the priority of their liens against the Debtors' property existing on the Petition Date. Notwithstanding the foregoing, the Court grants Sovereign a postpetition lien on that certain Mettler-Toledo Metal Detector, Serial Number 3040, which was purchased by the Debtors post- petition from Sovereign's Cash Collateral, with such lien junior only to Mettler-Toledo, the seller of the equipment. Sovereign is likewise granted adequate protection payments which will not be less than the scheduled monthly interest payment and monthly servicing fee provided for in the Sovereign Loan Documents, except as ordered by the Court upon notice and hearing. The Debtors' indebtedness to Sovereign amounts to roughly $2,539,000, which excludes interest and other charges, as of the Petition Date. This is secured by first priority liens and security interests in substantially all of the Debtors' assets as well as junior liens against the Debtor's real estate and in Other Collateral. The Debtors are indebted to CIT for roughly $645,883, plus unpaid interest and other charges, as of the Petition Date. This indebtedness is secured by first priority liens and security interests in the Debtor's assets including all equipment and machinery, now owned of hereafter acquired, certain real properties, and rents as defined in the CIT Loan Agreements. A final hearing to consider the Debtors' request for the use of the Cash Collateral will be held on Nov. 14, 2008, before the Court. As reported in the Troubled Company Reporter on Oct. 7, 2008, the Debtors filed a Disclosure Statement explaining its Plan of Reorganization with the Court. Payments to creditors will be made from future earnings of the Debtors. Pursuant to the plan, general unsecured claims, totalling $1,483,875, will be paid in full over a period of 59 months from the effective date and a lump sum payment on the 60th month. Based in El Paso, Texas, El Paso Chile Company Inc. and its affiliate Desert Pepper Trading Co. -- http://www.elpasochile.com/ -- pack and process food spices, condiments, and drinks. El Paso Chile filed for Chapter 11 protection on June 25, 2008 (Bankr. W.D. Tex. Case Nos. 08-30948 and 08-30949). Bernard R. Given, II, Esq., at Beck & Given P.C., represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed assets of $1 million to $100 million, and debts of $1 million to $100 million. EL PASO CHILE: U.S. Trustee Objects to Disclosure Statement ----------------------------------------------------------- Charles F. McVay, the U.S. Trustee for Region 7, filed with the U.S. Bankruptcy Court for the Western District of Texas the objections to the disclosure statement to the plan of reorganization of El Paso Chile Company Inc. and Desert Pepper Trading Company. The Disclosure Statement explains the terms of the Plan, which offers full recovery to unsecured creditors. The U.S. Trustee, however, has conveyed these objections: 1. El Paso needs to explain its basis for its projection that it will operate at a positive cash flow in the future. Based on El Paso's August operating report, the company has a negative cash flow of $151,668 to date. 2. El Paso and Desert Pepper did not include the expected cost of counsel for the Official Committee of Unsecured Creditors. El Paso and Desert Pepper should include an estimate of the cost that will be borne by each. 3. El Paso states that it will pay general unsecured creditors, whose claims total $1,483,875, in full over 60 months without interest. Assuming that El Paso were to pay $20,000 per month for 60 months as it has said in the Plan, it would only pay $1,200,000 over five years. On the other hand, Desert Pepper states in the text of the Disclosure Statement that it will pay unsecured creditors claims totalling $1,565,269 in full over 60 months without interest. Desert Pepper adds that it will pay $15,000 per month with a balloon payment on the 60th month. Exhibit B, however, shows that Desert Pepper will fulfil its obligations by paying $1,100,000 over five years. The U.S. Trustee says this payout would not pay the creditors 100% of their claims based on the amounts listed in the text of the Disclosure Statement or in its exhibits. Also, Exhibit B shows the Debtor paying $20,000 per month in years three to five as opposed to the $15,000 set forth in the text of the Disclosure Statement. Desert Pepper should correct the inconsistencies in the Disclosure Statement. 4. El Paso needs to explain how it arrived at its projected cash flow of between $869,131 and $2,100,991 in the first five years following Plan confirmation, when the combined cash flow of the company and its debtor-affiliates, which includes Desert Pepper) was $467,426 (2005), $407,054 (2006) and $141,701 (2007). El Paso, the U.S. Trustee says, should explain why it believes it can reach that level of positive cash flow. In view of the foregoing, the U.S. Trustee asks the Court to deny approval of the Disclosure Statements of the Debtors until they have addressed each of the concerns raised in his objection. As reported in the Troubled Company Reporter on Oct. 7, 2008, the Debtors filed a Disclosure Statement explaining its Plan of Reorganization with the Court. Payments to creditors will be made from future earnings of the Debtors. Based in El Paso, Texas, El Paso Chile Company Inc. and its affiliate Desert Pepper Trading Co. -- http://www.elpasochile.com/ -- pack and process food spices, condiments, and drinks. El Paso Chile filed for Chapter 11 protection on June 25, 2008 (Bankr. W.D. Tex. Case Nos. 08-30948 and 08-30949). Bernard R. Given, II, Esq., at Beck & Given P.C., represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed assets of $1 million to $100 million, and debts of $1 million to $100 million. ENCAP GOLF: Sued by New Jersey for Failed $1-Billion Project ------------------------------------------------------------ According to Bankruptcy Law 360, The New Jersey Meadowlands Commission has sued EnCap Golf Holding LLC to regain hundreds of acres of land the commission previously transferred for a failed $1 billion development project. The Star-Ledger previously stated that New Jersey killed EnCap Golf's $1 billion project with Trump Organization to build a golf course and 2,600 housing units in the Meadowlands, which court documents say had become bogged down by delays, environmental violations, and cost overruns. As reported by the Troubled Company Reporter, EnCap Group and Trump Organization have filed competing plans in the U.S. Bankruptcy Court for the District of New Jersey, which has been hearing EnCap's Chapter 11 cases. According to The Star-Ledger, EnCap Golf's plan involves finishing landfill cleanup and prepping a 785-acre Meadowlands property for sale in hopes of keeping claim holders at bay. The Star-Ledger relates that EnCap Golf said the proposal would maximize investors' assets by remediating the contaminated site. EnCap Gold has warned that years of costly, taxpayer-financed litigation could follow if the Plan were rejected. Michael Sirota, an attorney for EnCap Golf, said that private stakeholders could also face tremendous risk, the report says. About The NJMC The New Jersey Meadowlands Commission is the zoning and planning agency for a 30.4-square-mile area along the Hackensack River covering parts of 14 municipalities in Bergen and Hudson Counties in New Jersey. The municipalities with portions in the Meadowlands District are Carlstadt, East Rutherford, Little Ferry, Lyndhurst, Moonachie, North Arlington, Ridgefield, Rutherford, South Hackensack and Teterboro in Bergen County, and Jersey City, Kearny, North Bergen and Secaucus in Hudson County. About EnCap Golf Headquartered in East Rutherford, New Jersey, EnCap Golf Holdings, LLC, a subsidiary of Cherokee Investment Partners of North Carolina, develops closed landfills and other brownfield properties into golf courses. The company and its affiliate, NJM Capital LLC, filed for Chapter 11 protection on May 8, 2008 (Bankr. D. N.J. Lead Case No. 08-18581). Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, P.A., in Hackensack, New Jersey, represents the Debtors. The U.S. Trustee for Region 3 appointed five creditors to serve on an Official Committee of Unsecured Creditors. Greenberg Traurig LLP represents the Committee in this case. The Debtors' schedules disclose total assets of $70,056,038 and total liabilities of $458,587,968. FORD MOTOR: Seeks Another $25BB Gov't Aid; Meets With Pelosi ------------------------------------------------------------ John Hughes and Angela Greiling Keane at Bloomberg News reports that General Motors Corp., Ford Motor Co., and Chrysler LLC chief executive officers, met with House Speaker Nancy Pelosi about their request for another $25 billion in government-backed loans. According to Bloomberg, House Speaker Pelosi said that the meeting was "very positive." Bloomberg relates that United Auto Workers chief Ronald Gettelfinger and other House members, including John Dingell of Michigan and George Miller of California, also attended the meeting. Automakers, says Bloomberg, have sought $50 billion in loans from the government since August 2008, winning half with an Energy Department program to help retool plants to construct fuel- efficient models. President-elect Barack Obama, according to Bloomberg, has called for a $175 billion stimulus package to follow the $168 billion package signed into law in February 2008. Bloomberg states that a stimulus bill might be a chance to get the second $25 billion financial aid from the government. The bill, states the report, may be taken up before President George W. Bush steps down. Automakers could soon start applying for money under an existing $25 billion package of low-interest loans to help them meet fuel- efficiency requirements, John Crawley and Richard Cowan at Reuters relates, citing the Bush administration. Reuters states that the government said it would listen to other ideas as the Democratic- led Congress considers the request for further assistance. Citing people familiar with the source, Jeff Green at Bloomberg relates that GM is focused on winning government financial aid to make it through next year, not to help a merger with Chrysler. 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-'. GAINEY CORP: Hires Carl Oosterhouse as Chief Operating Officer -------------------------------------------------------------- Chris Knape at The Grand Rapids Press reports that Gainey Corp. has hired Carl Oosterhouse as its chief operating officer. The Grand Rapids Press relates that Mr. Oosterhouse had been disbarred after admitting during a hearing with the Michigan Attorney Discipline Board in July to intentional dishonesty like forgery, and improper use of client funds, citing mental disabilities. Mr. Oosterhouse's appeal of the license revocation is pending, says The Grand Rapids Press. According to The Grand Rapids Press, Gainey said that Mr. Oosterhouse will supervise the firm and its subsidiaries as it works through Chapter 11 reorganization efforts. The report says that Mr. Oosterhouse has been the special assistant to Gainey's president for six months. The Grand Rapids Press states that Mr. Oosterhouse's newly created job at Gainey will take over some of the responsibilities that the firm's founder and CEO Harvey Gainey used to handle. The U.S. Bankruptcy Court for the Western District of Michigan prohibited Mr. Gainey from drawing a salary without further court action, according to The Grand Rapids. "Carl is the perfect person to be leading our reorganization based on his vast financial and operational experience, as well as his more than two decades of working with our team as a trusted advisor and friend," The Grand Rapids Press quoted Mr. Gainey's spokesperson as saying. Rehiring of Mark Babin as Chief Financial Officer Gainey, according to The Grand Rapids Press, said that it will also rehire Mark Babin as its chief financial officer. Citing Kathryn Cramer, the report states that Mr. Bain left Gainy after finance officers appointed by Wachovia Bank took over the firm's books after it defaulted on loan covenants. Mr. Babin had worked for PriceWaterhouseCoopers and Intelligent Decision Systems Inc., the reoprt says. Headquartered in Grand Rapids, Michigan, Gainey Corp. -- http://www.gaineycorp.com/-- provides trucking and freight- services in the U.S. and parts of Canada. It has 5,000 trucks and trailers, and employs more than 2,300 workers including 1,900 truck drivers. The company and its subsidiaries filed for Chapter 11 bankruptcy protection (Bankr. W.D. Mich. Lead Case No. 08-09092) on Oct. 14, 2008. The Lead Debtor listed between $50 million and $100 million in total assets and between $100 million and $500 million in total debts. GAINEY CORP: May Employ AlixPartners as Restructuring Consultant ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Michigan granted Gainey Corp. and its debtor-affiliates permission to employ AlixPartners, LLC as their restructuring and financial consultant, nunc pro tunc to the Petition Date. As the Debtors' restructuring and financial consultant, AlixPartners is expected to: a. assist management with the development of the company's revised business plan and forecast, and such other forecasts as may be required in connection with negotiations for covenant relief or by the company for other corporate purposes. b. assist the company and its management in updating and managing cash flow forecasting and related methodologies and to assist with planning for alternatives as requested by the company. c. assist management with the coordination of information flow between the company and its lenders, bondholders, and other stakeholders and their advisors. d. work with the senior management and other employees of the company and its advisors to provide financial consulting services and restructuring advice. e. assist with such other matters as may be requested that fall within AlixPartners' expertise and that are mutually agreeable. To the best of the Debtors' knowledge, AlixPartners does not hold or represent any interest materially adverse to the interest of the Debtors or their estates and that the firm is a "disinterested person" as that term is defined under Sec. 101(14) of the Bankruptcy Code. As compensation for their services, AlixPartners' professionals bill: Hourly Rates ------------ Managing Directors $575 Directors $475 Vice Presidents $375 Associates $275 Analysts $200 Headquartered in Grand Rapids, Michigan, Gainey Corp. -- http://www.gaineycorp.com/-- provides trucking and freight- services in the U.S. and parts of Canada. It has 5,000 trucks and trailers, and employs more than 2,300 workers including 1,900 truck drivers. The company and its subsidiaries filed for Chapter 11 bankruptcy protection (Bankr. W.D. Mich. Lead Case No. 08-09092) on Oct. 14, 2008. Daniel F. Gosch, Esq., Geoffrey A. Fields, Esq., and John T. Schuring, Esq. at Dickinson Wright PLLC represent the Debtor as counsel. The Lead Debtor listed between $50 million and $100 million in total assets and between $100 million and $500 million in total debts. GAINEY CORP: May Employ DW Associates as Limited Financial Advisor ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Western District of Michigan granted Gainey Corp. and its debtor-affiliates authority to employ DW Associates LLC as their limited financial advisor. The Debtors initially retained DWA on or about July 3, 2008, for financial assistance in connection with the Debtors' attempted restructuring of their businesses and financial affairs, and requires the ongoing services of DWA in connection with certain "First Day Motions", and the resolution of issues relating to the use of cash collateral, to facilitate the transition to AlixPartners, the Debtors' restructuring and financial consultant, and to provide limited additional financial support to the Debtors on an ongoing basis. As the Debtors' limited financial advisor, DWA is expected to: a. assist the Debtors with information and analyses required pursunat to the Debtors' postpetition use of cash collateral; b. assist with the identification and implementation of short- term cash management procedures; c. assist in the preparation of financial information for distribution to creditors and others, including, but not limited to, cash receipts and disbursement analyses, analysis of various asset and liability accounts, and analysis of proposed transactions for which this Court's approval is sought; d) assist in developing accounting and operating procedures to segregate prepetition and postpetition business transactions; e) assist the Debtors in the identification of executory contracts and unexpired leases and performing of cost/benefit evaluations with respect to the assumption or rejection of each' f) assist the Debtors in the preparation of financial related disclosures required by this Court, including the Schedules of Assets and Liabilities, the Statement of Financial Affairs, and Monthly Operating Reports; g) assist the Debtors in responding to and tracking reclamation claims; h) provide assistance with implementation of court orders; i) participate in meetings and provide support to the Debtors and their other professional advisors in negotiations with potential investors, banks and other secured lenders, any creditors' committee appointed in the case, the Office of the United States Trustee, other parties-in-interest, and professionals hired by the same, as requested; and j) render such other restructuring and general business consulting or such other assistance for the Debtors and their affiliates as the Debtors' management or counsel may request, that are not duplicative of services provided by other professionals retained in these cases. To the best of the Debtor's knowledge, DWA does not hold or represent any interest materially adverse to the Debtors or their estates, and that the firm is a "disinterested person" as that term is defined under Sec. 101(14) of the Bankruptcy Code. As compensation for their services, DWA's professionals current bill: Hourly Rate ----------- Managing Directors $275 Directors $200 Analysts $125 Headquartered in Grand Rapids, Michigan, Gainey Corp. -- http://www.gaineycorp.com/-- provides trucking and freight- services in the U.S. and parts of Canada. It has 5,000 trucks and trailers, and employs more than 2,300 workers including 1,900 truck drivers. The company and its subsidiaries filed for Chapter 11 bankruptcy protection (Bankr. W.D. Mich. Lead Case No. 08-09092) on Oct. 14, 2008. Daniel F. Gosch, Esq., Geoffrey A. Fields, Esq., and John T. Schuring, Esq. at Dickinson Wright PLLC represent the Debtor as counsel. The Lead Debtor listed between $50 million and $100 million in total assets and between $100 million and $500 million in total debts. GAINEY CORP: Section 341(a) Creditors' Meeting Set for Nov. 24 -------------------------------------------------------------- The United States Trustee for Region 9 will convene a meeting of Gainey Corporation's creditors at 1:00 p.m., on Nov. 24, 2008, at Ledyard Building, Second Floor, 125 Ottawa NW, Suite 202R, in Grand Rapids, Michigan. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Grand Rapids, Michigan, Gainey Corp. -- http://www.gaineycorp.com/-- provides trucking and freight- services in the U.S. and parts of Canada. It has 5,000 trucks and trailers, and employs more than 2,300 workers including 1,900 truck drivers. The company and its subsidiaries filed for Chapter 11 bankruptcy protection (Bankr. W.D. Mich. Lead Case No. 08-09092) on Oct. 14, 2008. Daniel F. Gosch, Esq., Geoffrey A. Fields, Esq., and John T. Schuring, Esq. at Dickinson Wright PLLC represent the Debtor as counsel. The Lead Debtor listed between $50 million and $100 million in total assets and between $100 million and $500 million in total debts. GENERAL MOTORS: Seeks Another $25BB Gov't Aid; Meets With Pelosi ---------------------------------------------------------------- John Hughes and Angela Greiling Keane at Bloomberg News reports that General Motors Corp., Ford Motor Co., and Chrysler LLC chief executive officers, met with House Speaker Nancy Pelosi about their request for another $25 billion in government-backed loans. According to Bloomberg, House Speaker Pelosi said that the meeting was "very positive." Bloomberg relates that United Auto Workers chief Ronald Gettelfinger and other House members, including John Dingell of Michigan and George Miller of California, also attended the meeting. Automakers, says Bloomberg, have sought $50 billion in loans from the government since August 2008, winning half with an Energy Department program to help retool plants to construct fuel- efficient models. President-elect Barack Obama, according to Bloomberg, has called for a $175 billion stimulus package to follow the $168 billion package signed into law in February 2008. Bloomberg states that a stimulus bill might be a chance to get the second $25 billion financial aid from the government. The bill, states the report, may be taken up before President George W. Bush steps down. Automakers could soon start applying for money under an existing $25 billion package of low-interest loans to help them meet fuel- efficiency requirements, John Crawley and Richard Cowan at Reuters relates, citing the Bush administration. Reuters states that the government said it would listen to other ideas as the Democratic- led Congress considers the request for further assistance. Citing people familiar with the source, Jeff Green at Bloomberg relates that GM is focused on winning government financial aid to make it through next year, not to help a merger with Chrysler. 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. GOODYEAR TIRE: S&P Revises Outlook to Stable; 'BB-' CCR Affirmed ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on The Goodyear Tire & Rubber Co. (BB-/Stable/--) to stable from positive. "The outlook revision reflects our view that we do not expect the company's credit measures to improve significantly enough during 2009 to support a higher rating," said Standard & Poor's credit analyst Lawrence Orlowski. "We are concerned about the effect of falling tire demand primarily in North America and Europe but also in Latin America as economic conditions deteriorate. Moreover, North American operations continue to generate weak segment operating margins and this is unlikely to change in light of lower demand, even though the company has been adapting to the economic downturn by cutting production, enhancing manufacturing efficiencies, and controlling spending," the analyst continued. The 'BB-' long-term corporate credit rating on Goodyear reflect its aggressive financial risk profile characterized by weak earnings in North America and a leveraged capital structure. Akron, Ohio-based Goodyear has a weak business profile, which reflects tough global tire industry conditions and the company's high fixed-cost structure. These factors more than offset the company's business strengths, including its position as one of the three largest global tire manufacturers, good geographic diversity, strong distribution, and a well-recognized brand name. The rating incorporates S&P's expectation that Goodyear's leverage will continue declining over the next year as the company reduces its cost structure by improving labor productivity, rationalizing its production, and sourcing raw materials in low-cost countries. However, such improvements are likely to be modest at best given the deteriorating economic environment over the next 12 to 18 months. For the current rating, S&P expects adjusted debt to EBITDA to be less than 4x and funds from operations (FFO) to debt to be greater than 15%. Based on the last 12 months ended Sept. 30, 2008, these measures were 3.9x and 18%, respectively. S&P could revise the outlook back to positive if demand and profitability in North America and demand in Europe begin to rebound and credit measures start to reflect this. S&P could ultimately raise the ratings if the company sustained FFO to debt at or above 25% and adjusted debt to EBITDA of less than 3.5x. This would require about a 12% increase in EBITDA when compared with the adjusted EBITDA for the last-12-months ended Sept. 30, 2008. Also, this would require a 39% increase in FFO when compared with number for the last-12-months ended Sept. 30, 2008. Conversely, S&P could revise the outlook to negative if adjusted EBITDA exceeds 4x and FFO to debt falls below 15%, most likely driven by volumes in most of Goodyear's markets that are lower than S&P currently anticipates. GAYLORD ENTERTAINMENT: S&P Puts 'B+' Rating on Watch Negative ------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Nashville, Tenn.-based Gaylord Entertainment Co., including the 'B+' corporate credit rating, on CreditWatch with negative implications. "The CreditWatch listing reflects our concern that, with the lodging environment continuing to weaken, Gaylord's credit measures will deteriorate to a level that is no longer aligned with the current rating," said Standard & Poor's credit analyst Liz Fairbanks. S&P believes that the company's small portfolio of hotels, increased reliance on transient business, and increased group attrition rates could pressure EBITDA generation in 2009 and result in S&P's measure of debt to EBITDA increasing meaningfully above its 6.0x threshold for the 'B+' rating. Attrition rates, which were 9.7% in third-quarter 2008, may continue to increase in 2009 as group bookings are delayed or canceled. Net definite room nights booked, which for all future periods in October was down 3% from October 2007, could also continue to weaken in 2009, further pressuring profitability. In resolving the CreditWatch listing, S&P's review will focus on the company's increased reliance on transient customers, increased group attrition rates, and the company's ability to adjust its cost structure to help offset expected revenue declines. S&P will also consider any liquidity implications to expected weaker operating performance, as well as the company's planned capital spending projects, which have been delayed. GOE LIMA: Creditors Committee Taps Frost Brown as Counsel --------------------------------------------------------- The committee of unsecured creditors appointed in GOE Lima, LLC's bankruptcy case asks the U.S. Bankruptcy Court for the Northern District of Ohio for authority to retain Frost Brown Todd as its counselm effective as of Oct. 24, 2008. As the Creditors Committee's counsel, Frost Brown will: a) advise the Committee with respect to its powers, duties and responsibilities in the case; b) provide assistance in the Committee's investigation of the acts, conduct, assets, liabilities and financial condition of the Debtor, the operation of the Debtor's business and desirability of the continuance of such business, and any other matters relevant to the case or to the negotiation and formulation of a plan; c) prepare on behalf of the Committee all necessary pleadings and other documentation; d) advise the Committee with respect to the Debtor's formulation of a plan, the Debtor's proposed plans with respect to the prosecution of claims against various third parties and any other matters relevant to the case or to the formulation of a plan in this case; e) provide assistance, advice and representation with respect to any legal decision involving interests represented by the Committee; f) represent the Committee in hearings and proceedings involving the Committee; and g) perform such other legal services as may be necessary and in the interest of the creditors and the Committee. Ronald E. Gold, Esq., a member of Frost Brown, assures the Court that the firm does not hold or represent any interest adverse to the Debtor or its estate, and that the firm is a "disinterested person" as that term is defined under Sec. 101(14) of the Bankruptcy Code. As compensation for their services, Frost Brown's professionals bill: Hourly Rate ----------- Members $295-$455 Associates $160-$240 Paralegals $105-$130 Headquartered in Lima, Ohio, GOE Lima LLC -- http://www.go- ethanol.com/ -- operates an ethanol production facility. The company filed for protection on Oct. 14, 2008 (Bankr. N.D. Ohio Case No. 08-35508). Taft Stettinius & Hollister LLP is the Debtor's proposed bankruptcy counsel. When the Debtor filed for protection from its creditors, it listed assets and debts between $100 million to $500 million each. GOE LIMA: Gets Interim Authority to Obtain $2.99MM DIP Loan ----------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Ohio has authorized GOE Lima, LLC, on an interim basis, to obtain postpetition financing not to exceed $2,900,000 pursuant to that certain Line of Credit Note, dated as of Oct. 17, 2008. As security for the payment of the post-petition financing, the Lenders are granted security interests, liens and mortgages in and upon all prepetition and post-petition real and personal, tangible and intangible property and assets of the Debtor, both existing or hereafter acquired. Pursuant to the order, the Debtor may only borrow funds under the DIP Note to the extent that Cash Collateral is insufficient, solely for the purpose of paying for those items reflected in the budget. Use of Cash Collateral The Court also authorized the Debtor to use their lenders' cash collateral to finance the ordinary costs of its operations, maintain business relationships with vendors, suppliers and customers, make payroll and make capital expenditures, pursuant to a 2-week budget. The Debtor told the Court that without access to Cash Collateral, the Debtor and its estate would suffer immediate and irreparable harm. The Debtor also told the Court that the DIP financing represents the best financing currently available to it. Superpriority Administrative Claim Status The DIP Lenders are granted an allowed superpriority administrative expense claim pursuant to Sec. 364(c) of the Bankruptcy Code, which shall have priority over all other costs and expenses of administration of any kind, subject only to a Carve-Out for the payment claims of professionals of the Debtor, the payment of claims of professionals for the Creditors' Committee, and the payment of unpaid fees payble to the U.S. trustee and Clerk of the Bankruptcy Court. Adequate Protection As adequate protection for the payment of the Pre-petition Senior Obligations, the Prepetition Senior Lenders are granted replacement liens and security interests in and all of the DIP Collateral, subordinate only to the Carve-Out, the DIP Liens and the Permitted Prior Liens, and shall be senior and superior to the Subordinate Liens and Related Rights. A final hearing on the Debtor's Motion is scheduled for Nov. 13, 2008. Objections are due no later than Nov. 10, 2008. Pre-Petition Debt As of the Petition Date, GOE Lima is indebted to SunTrust Bank, as administrative agent and collateral agent for itself and the Prepetition Senior Lenders and the other lenders in the aggregate principal amount of $90,000,000, plus accrued interest and other fees and and expenses, secured by substantially all of the Debtor's assets and property. The Debtor is also indebted to the pre-petition junior lenders in the aggregate principal amount of $25,000,000, plus all accruing interest, fees and expenses, secured by a second priority security interest in the Prepetition Senior Collateral. Headquartered in Lima, Ohio, GOE Lima LLC -- http://www.go- ethanol.com/ -- operates an ethanol production facility. The company filed for protection on Oct. 14, 2008 (Bankr. N.D. Ohio Case No. 08-35508). Taft Stettinius & Hollister LLP is the Debtor's proposed bankruptcy counsel. When the Debtor filed for protection from its creditors, its listed assets and debts between $100 million to $500 million each. GOE LIMA: Taps GlassRatner Advisory as Financial Advisor -------------------------------------------------------- GOE Lima LLC asks the U.S. Bankruptcy Court for the Northern District of Ohio for authority to employ GlassRatner Advisory & Capital Group, LLC as its financial advisor, nunc pro tunc to its bankruptcy petition date. As the Debtor's financial advisor, GlassRatner will: a) develop and maintain cash flow forecasting, flash reports, and other management reporting tools; b) support and augment the Debtor's accounting, finance, and treasury function; c) ensure that only bona fide and necessary expenses are paid; d) assist in developing information to be shared with outside users such as lenders and investors; e) review and ensure that funding requests are correctly documented; f) assist the Debtor with any and all restructuring activities; and g) perform other duties as may be requested. As compensation for their services, GlassRatner professionals bill $150 to $475 hourly for partners and additional support, with a previously agreed to 10% discount for professionals' rates and 1/2 time billed for travel. To the best of the Debtor's knowledge, GlassRatner's principals and employees do not hold or represent any interest adverse to the Debtor or its estate, and that the firm is a "disinterested person" as that termis defined in Sec. 101(14) of the Bankruptcy Code. Headquartered in Lima, Ohio, GOE Lima LLC -- http://www.go- ethanol.com/ -- operates an ethanol production facility. The company filed for protection on Oct. 14, 2008 (Bankr. N.D. Ohio Case No. 08-35508). Taft Stettinius & Hollister LLP is the Debtor's proposed bankruptcy counsel. When the Debtor filed for protection from its creditors, its listed assets and debts between $100 million to $500 million each. GOE LIMA: Section 341(a) Creditors' Meeting Set for November 20 --------------------------------------------------------------- The United States Trustee for Region 9 will convene a meeting of GOE Lima LLC's creditors at 1:30 P.M., on Nov. 20, 2008, at Ohio Building, 420 Madison Avenue, Room 680, in Toledo, Ohio. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Lima, Ohio, GOE Lima LLC -- http://www.go- ethanol.com/ -- operates an ethanol production facility. The company filed for protection on Oct. 14, 2008 (Bankr. N.D. Ohio Case No. 08-35508). Taft Stettinius & Hollister LLP is the Debtor's proposed bankruptcy counsel. When the Debtor filed for protection from its creditors, its listed assets and debts between $100 million to $500 million each. GRANDE COMMUNICATIONS: Moody's Cuts PDR to Caa3; Outlook Negative ----------------------------------------------------------------- Moody's Investors Service lowered its ratings for Grande Communications Holdings, Inc. (Grande). The downgrades reflect heightened default risk given weak liquidity and growing concerns about the sustainability of operations under the current capital structure. Grande derives its liquidity primarily from internal sources, mainly consisting of cash balances which are expected to erode to minimum requisite levels in accordance with the terms governing the company's senior secured bond indenture at some point during 2009. The negative rating outlook reflects Moody's expectation that a restructuring may be required over the next 12- to-18 months, under less than optimal market conditions, and that further rating pressure (particularly related to the probability of default rating) would subsequently ensue. Grande Communications Holdings, Inc. * Speculative Grade Liquidity Rating, Downgraded to SGL-4 from SGL-3 * Outlook, Changed To Negative From Stable * Downgraded Corporate Family Rating to Caa2 from Caa1 * Downgraded Probability of Default Rating to Caa3 from Caa1 * Downgraded Senior Secured Bond rating to Caa2 from Caa1, LGD3, 31% Grande has no revolving credit facility and relies on balance sheet cash (approximately $35 million as of June 30, 2008) and cash from operations to fund its capital expenditures (approximately $32 million over the twelve months ended June 30) and annual cash interest expense of approximately $28 million. Covenants in Grande's bond indentures prohibit capital expenditures if the cash balance falls below $20 million, and Moody's believes the company will face a significant challenge in maintaining this level over the next year. However, the company does have a 60-day period to cure such a breach. The rate of cash burn has abated somewhat to approximately $19 million for the trailing twelve months ended June 30, from over $20 million in prior years, but remains high, nonetheless. The bulk of Grande's capital expenditures support growth, and the company could subsequently reduce the rate of new customer acquisitions and thus minimize its capital expenditures. However, Moody's considers this scenario somewhat unrealistic given existing marketing plans to drive customer growth and management's strategic goal of demonstrating a growth trajectory as a means of enhancing long- term value creation and, presumably, the saleability of the business. Of note, Moody's has shifted to an above-average recovery (below-average loss-given-default) expectation predicated on the perceived value of the company's assets relative to a less- than-anticipated leveraged capital structure proforma for the current assumed restructuring scenario. Grande's Caa2 corporate family rating reflects its weak liquidity profile, including negative free cash flow and weak fixed charge coverage, high leverage, lack of scale, and highly competitive operating environment. Its upgraded network, high penetration of multiple services, and track record of margin improvement lend support to the rating. In July 2007, Moody's affirmed Grande's Caa1 corporate family rating and lowered the probability of default rating to Caa1 from B3. Grande Communications Holdings, Inc., headquartered in San Marcos, Texas, is a privately-owned retail provider of video, Internet and telephony services, primarily serving communities in six Texas markets. The company also serves enterprise customers and has a wholesale Internet and telephony business. Its annual revenue is approximately $200 million. GREATWIDE LOGISTICS: 363 Sale Cues Moody's to Withdraw Ratings -------------------------------------------------------------- Moody's Investors Service has withdrawn all ratings of Greatwide Logistics Services, Inc., including the probability of default rating of D, and corporate family rating of Ca. The ratings were withdrawn as the result of the announced sale of the company to an investor group under Section 363 of the United States Bankruptcy Code. Moody's last rating action on Greatwide took place July 11, 2008 when the corporate family rating was downgraded to Ca from Caa1. Greatwide Logistics Services, Inc., headquartered in Irving, Texas, is a leading non-asset based North American provider of dedicated "closed loop" transportation services to the grocery and consumer products sectors. The company also provides non-asset- based truckload management, truck brokerage and warehouse and distribution logistics services. Greatwide is a wholly-owned subsidiary of GWLS Holdings, Inc. (not rated). HILLMAN GROUP: S&P Cuts Corp. Credit Rating to 'B-' from 'B' ------------------------------------------------------------ Standard & Poor's Ratings Services said that it lowered its corporate credit rating on Cincinnati, Ohio-based The Hillman Group Inc. to 'B-' from 'B'. At the same time, S&P lowered its senior secured bank loan rating to 'B+' from 'BB-'. The outlook is negative. This action affects about $275 million of rated debt. As of June 30, 2008, the company had about $600 million of debt, which is adjusted for operating leases, preferred stock, accrued dividends on preferred stock, management purchased preferred options, and 50% equity credit on junior subordinated debentures. The downgrade is based on the company's very tight liquidity, high debt leverage, and a challenging operating environment. Given the weak U.S. economy and housing market, S&P believes the company will be challenged to materially improve leverage and gain greater flexibility under its covenants in the near term. S&P also expects the company will need to address the refinancing of its bank facility as its $40 million revolver matures in March 2010 and it faces significantly increased amortization under its term loan beginning in June 2010. The outlook is negative. Hillman maintains high leverage in the mid-7x area, which S&P does not expect will improve significantly in the near term, given the weak U.S. economy and housing market. "We also expect the company's liquidity to remain weak over the near term, as its faces a tight cushion under its financial covenants that have further step-downs," stated Standard & Poor's credit analyst Patrick Jeffrey. We could consider a lower rating if Hillman violates its bank covenants, which could result from an EBITDA decline of about 5%. "We could consider an outlook revision to stable if the company can materially improve the cushion under its financial covenants and address its revolver maturity and stepped-up amortization under its term loan that begins in 2010," he continued. INNOVATIVE STRUCTURES: Voluntary Chapter 11 Case Summary -------------------------------------------------------- Debtor: Innovative Structures, Inc. 5222 Pirrone Ct #301 Salida, CA 95368 Bankruptcy Case No.: 08-92385 Type of Business: The Debtor operates a construction company. Chapter 11 Petition Date: November 5, 2008 Court: Eastern District of California (Modesto) Judge: Robert S. Bardwil Debtor's Counsel: David C. Johnston 1014 16th St. P.O. Box 3212 Modesto, CA 95353 Tel: (209) 521-6260 Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million The Debtor did not file a list of 20 largest unsecured creditors. INTERSTATE HOTELS: S&P Puts 'B' Rating on CreditWatch Negative -------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Arlington, Va.-based Interstate Hotels & Resorts Inc., including the 'B' corporate credit rating, on CreditWatch with negative implications. "The CreditWatch listing reflects our concerns around the potential for Interstate to violate its financial maintenance covenants in 2009, given our expectation for continued weakness in the lodging sector," explained Standard & Poor's credit analyst Liz Fairbanks. S&P estimates that the bank's calculation of Interstate's leverage, as measured by total debt to EBITDA, was in the low-5x area at the end of September, versus a covenant level of 5.75x. Given S&P's expectation for sustained weakness in the lodging sector in 2009 and its impact on Interstate's profitability, S&P is concerned that the cushion relative to covenants could deteriorate over the near term. In resolving the CreditWatch listing, S&P will consider the impact of the declining lodging operating environment on Interstate's credit measures and assess whether a covenant default will occur and over what time horizon. S&P will also consider how amenable lenders would likely be to easing covenant levels. JPMORGAN CHASE TRUST: S&P Junks Ratings on Classes N & P Certs. --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on six classes of commercial mortgage pass-through certificates from JPMorgan Chase Commercial Mortgage Securities Trust 2006-LDP6. Concurrently, S&P affirmed its ratings on the remaining classes from this transaction. The lowered ratings reflect credit concerns with seven loans ($44.3 million, 2.1%) in the pool that have reported debt service coverage (DSC) levels that are less than 1.0x. The downgrades also reflect concerns with six assets that are currently with the special servicer. The affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. Fourteen loans in the pool ($126.2 million; 6.0%) have reported DSCs of less than 1.0x based on year-end 2007 financial data. The loans are secured by a variety of retail, multifamily, office, and industrial properties that have experienced an average decline in DSC of 49% since issuance. Standard & Poor's has credit concerns with seven of the 14 loans (2.1%). The properties collateralizing the remaining seven loans (3.9%) posted improved operating performance based on interim 2008 financial data provided by the servicer and, thus, these loans are not credit concerns at this time. There are six loans totaling $78.3 million (3.7%) that are with the special servicer, LNR Partners Inc. (LNR). Details of the specially serviced loans are: -- The Bigg's Place loan ($29.6 million, 1.4%) is secured by a 402,634-sq.-ft. anchored retail center in Cincinnati, Ohio, built in 1984 and renovated in 2000. The property's tenants include Bigg's Hypermarket (not rated {NR}; 47.4% of net rentable area {NRA}; the lease expires in 2011), Hobby Lobby (NR; 13.8% of NRA; the lease expires in 2012), and Gold's Gym (NR; 9.6% of NRA; the lease expires in 2012). The loan was transferred to the special servicer in June 2008 after the borrower requested an extension for the loan's interest-only period, which expired in October 2008. The request for extension was denied, but the loan remains current. The special servicer, however, will retain the loan for performance monitoring. As of year-end 2007, the property had a reported occupancy of 88.3% and DSC of 1.09x. -- The Richland Centre loan ($19.8 million, 0.9%) is secured by a 231,455-sq.-ft. anchored retail center in North Richland Hills, Texas, approximately 27.5 miles northwest of Dallas, that was built in 1993. The loan was transferred to the special servicer in August 2008 due to imminent default after four tenants vacated the property, resulting in a 49.7% physical occupancy and a 61.8% economic occupancy. The loan is past its grace period, but less than 30 days past due. The special servicer has retained legal counsel to initiate the foreclosure process and is awaiting third-party reports. Standard & Poor's expects a moderate loss upon the liquidation of this asset. -- The Harbor Grand Apartments loan ($18.5 million, 0.87%) is secured by a 192-unit multifamily complex in Lake Elsinore, Calif., in western Riverside County, that was built in 1988 and renovated in 2007. The loan is in imminent default due to cash flow problems. As of year-end 2007, the property had a reported occupancy of 91.7% and DSC of 0.86x. The loan is 30 days past due. -- The University Loft loan ($5.3 million, 0.25%) is secured by a 101-unit student housing complex in Tallahassee, Fla., that was built in 1966 and renovated in 2005. The loan was transferred to the special servicer in September 2008 due to a decline in occupancy at the property resulting from an economic slowdown in the state of Florida, reduced enrollment at Florida State University, and an oversupplied student housing market. The loan is 60 days past due. The lender has retained legal counsel to initiate the foreclosure process, and the special servicer is awaiting third-party reports. Standard & Poor's expects a moderate loss upon the liquidation of this asset. -- The Palm Courts Apartments loan ($1.4 million, 0.07%) is secured by a 50-unit garden apartment complex in Panama City, Fla., that was built in 1970 and renovated in 2005. The loan was transferred to the special servicer in July 2008 due to the borrower's request for debt relief. The loan is current and remains with the special servicer, who will continue to monitor the loan's performance. As of year-end 2007, the property had a reported occupancy of 66.0% and DSC of 0.08x. -- The Rockaway Avenue Retail loan ($3.7 million, 0.17%) is secured by a 20,000-sq.-ft. anchored retail complex in Brooklyn, N.Y., built in 1930 and renovated in 2005. The loan was transferred to the special servicer in June 2008 and is more than 90 days past due. All attempts to contact the borrower have failed, and a motion to foreclose was filed in August 2008. The special servicer filed a motion to appoint a receiver in September 2008 and is awaiting the court's decision. Based on an appraisal dated July 2008, Standard & Poor's expects a minor loss upon the liquidation of this asset. As of the Oct. 15, 2008 remittance report, the collateral pool consisted of 163 loans with an aggregate balance of $2.121 billion, compared with 163 loans with a balance of $2.143 billion at issuance. The master servicers, Capmark Finance Inc. (Capmark) and Midland Loan Services Inc. (Midland), reported financial information for 97% of the pool. Eighty-four percent of the servicer-provided information was full-year 2007 data, 14% was interim 2008 data, and the remaining was full year or interim 2006 data. Based on this data, Standard & Poor's calculated a weighted average DSC of 1.74x for the pool, up from 1.55x at issuance. The credit characteristics of the Smith Haven Mall (8.5%), Centerpoint II (3.2%), 215 Park Avenue South (1.8%), Gainey Suites Hotel (0.59%), and 10 Stanton Street (0.50%) loans were consistent with those of investment-grade rated obligations at issuance. Standard & Poor's adjusted valuations of the properties securing these loans are comparable to their valuations at issuance. Capmark and Midland reported a watchlist of 20 loans with an aggregate outstanding balance of $349 million (16.5%). The largest loan on the watchlist is also the largest loan in the pool. Details are: -- The Centro Portfolio loan (11.3%) is the largest loan in the pool with a trust and whole-loan balance of $240 million. The loan is secured by 12 cross-collateralized and cross-defaulted first mortgages encumbering 12 anchored retail centers containing a total of 2,558,521 million sq. ft. located in five states on the East Coast. The properties were built between 1966 and 1998 and range in size from 17,000 sq. ft. to 386,820 sq. ft. The loan appears on the watchlist because the sponsor, Centro Properties Inc., is in final phase negotiations with its public and private lenders to refinance various lines of credit. The real estate assets exhibit strong performance, reporting a weighted average portfolio occupancy of 96.6% and DSC of 1.39x, as of the trailing- 12-months ended June 30, 2008. The top 10 loans have an aggregate outstanding trust balance of $942.4 million (44%) and weighted average DSC of 1.87x, up from 1.77x at issuance. Standard & Poor's reviewed property inspections provided by the master servicer for all of the assets underlying the top 10 exposures and all of the properties were characterized as "good." Standard & Poor's identified three collateral properties ($14.7 million; 10.7%) in areas affected by Hurricane Ike. All of the reported damage was minimal and related to the properties' landscaping, signage, flashing, fencing, or parking lot light covers. All three properties have windstorm coverage, and one of the properties has flood insurance. In arriving at its adjusted ratings, Standard & Poor's stressed loans that were credit concerns, including the aforementioned low DSC loans and the specially serviced loans. RATINGS LOWERED JPMorgan Chase Commercial Mortgage Securities Trust 2006-LDP6 Commercial mortgage-pass through certificates Rating Class To From Credit enhancement (%) ----- -- ---- ---------------------- J BB BB+ 2.78 K BB- BB 2.27 L B+ BB- 2.02 M B- B+ 1.77 N CCC B 1.52 P CCC- B- 1.14 RATINGS AFFIRMED JPMorgan Chase Commercial Mortgage Securities Trust 2006-LDP6 Commercial mortgage-pass through certificates Class Rating Credit enhancement (%) ----- ------ ---------------------- A-1 AAA 30.30 A-2 AAA 30.30 A-3FL AAA 30.30 A-3B AAA 30.30 A-4 AAA 30.30 A-SB AAA 30.30 A-1A AAA 30.30 A-M AAA 20.20 A-J AAA 12.50 B AA 10.23 C AA- 9.34 D A 7.70 E A- 6.69 F BBB+ 5.30 G BBB 4.29 H BBB- 3.28 X-1 AAA N/A X-2 AAA N/A N/A -- Not applicable * 30 Ratings Lowered On 7 U.S. CDO of ABS Deals; $5.57 Billion Of Issuance Affected Standard & Poor's Ratings Services lowered its ratings on 30 tranches from seven U.S. cash flow and hybrid collateralized debt obligation (CDO) transactions. S&P removed 15 of the lowered ratings from CreditWatch with negative implications. The ratings on nine of the downgraded tranches are on CreditWatch with negative implications, indicating a significant likelihood of further downgrades. The CreditWatch placements primarily affect transactions for which a significant portion of the collateral assets currently have ratings on CreditWatch with negative implications or have significant exposure to assets rated in the 'CCC' category. The downgraded U.S. cash flow and hybrid tranches have a total issuance amount of $5.57 billion. Four of the seven affected transactions are mezzanine structured finance (SF) CDOs of asset- backed securities (ABS), which are collateralized in large part by mezzanine tranches of residential mortgage-backed securities (RMBS) and other SF securities. Two of the affected transactions are high-grade SF CDOs of ABS that were collateralized at origination primarily by 'AAA' through 'A' rated tranches of RMBS and other SF securities. The other transaction is a CUSIP commercial mortgage-backed securities (CMBS) CDO that was collateralized at origination primarily by CMBS. The CDO downgrades reflect a number of factors, including credit deterioration and recent negative rating actions on U.S. subprime RMBS. In addition, Standard & Poor's reviewed the ratings assigned to N- Start Real Estate CDO III Ltd. and has left the ratings at their current levels based on the current credit support available to the tranches. To date, S&P has lowered its ratings on 4,001 tranches from 891 U.S. cash flow, hybrid, and synthetic CDO transactions as a result of stress in the U.S. residential mortgage market and credit deterioration of U.S. RMBS. In addition, ratings from 444 transactions are currently on CreditWatch with negative implications for the same reasons. In all, S&P has downgraded $477.91 billion of CDO issuance. Standard & Poor's will continue to monitor the CDO transactions it rates and take rating actions, including CreditWatch placements, when appropriate. RATING ACTIONS Rating Transaction Class To From ----------- ----- -- ---- Barrington II CDO Ltd. A1-M CC BB/Watch Neg Barrington II CDO Ltd. A1-Q CC BB/Watch Neg Belle Haven ABS CDO 2005-1 A-1 B-/Watch Neg BBB+/Watch Neg Belle Haven ABS CDO 2005-1 A-2 CC BB-/Watch Neg Belle Haven ABS CDO 2005-1 B CC B-/Watch Neg Belle Haven ABS CDO 2005-1 C CC CCC-/Watch Neg Diversey Harbor ABS CDO Ltd. A-1M CCC-/Watch Neg A-/Watch Neg Diversey Harbor ABS CDO Ltd. A-1Q CCC-/Watch Neg A-/Watch Neg Diversey Harbor ABS CDO Ltd. A-2 CC BB-/Watch Neg Fortius I Funding Ltd. A-1 B/Watch Neg AA-/Watch Neg Fortius I Funding Ltd. A-2 B-/Watch Neg AA-/Watch Neg Fortius I Funding Ltd. B CC BBB/Watch Neg Fortius I Funding Ltd. C CC BB/Watch Neg Fortius I Funding Ltd. D CC CCC+/Watch Neg Fortius I Funding Ltd. E CC CCC-/Watch Neg Los Robles CDO Ltd. TRS Asrp/Watch Neg AAsrp/Watch Neg Los Robles CDO Ltd. A-1a A/Watch Neg AA/Watch Neg Los Robles CDO Ltd. A-1b BB+/Watch Neg AA/Watch Neg Los Robles CDO Ltd. A-2 CC CCC+/Watch Neg Newcastle CDO VI Ltd. II Def AA- AA Newcastle CDO VI Ltd. III-FL Def BBB+ A Newcastle CDO VI Ltd. III-FX Def BBB+ A Newcastle CDO VI Ltd. IV-FL Def BB+ BBB Newcastle CDO VI Ltd. IV-FX Def BB+ BBB Newcastle CDO VI Ltd. V-Def B- BB STAtic ResidenTial CDO 2005-C A-1 B/Watch Neg AA-/Watch Neg STAtic ResidenTial CDO 2005-C A-2 CC BBB/Watch Neg STAtic ResidenTial CDO 2005-C B CC BB/Watch Neg STAtic ResidenTial CDO 2005-C C CC B/Watch Neg STAtic ResidenTial CDO 2005-C D CC CCC-/Watch Neg OTHER RATINGS REVIEWED Barrington II CDO Ltd. A1-S AAA/Watch Neg Barrington II CDO Ltd. X AAA/Watch Neg Barrington II CDO Ltd. A1J-M CC Barrington II CDO Ltd. A1J-Q CC Barrington II CDO Ltd. A2 CC Barrington II CDO Ltd. A-3 CC Barrington II CDO Ltd. B CC Barrington II CDO Ltd. C CC Barrington II CDO Ltd. D CC Belle Haven ABS CDO 2005-1 D-1 CC Belle Haven ABS CDO 2005-1 D-2 CC Diversey Harbor ABS CDO Ltd. A-3 CC Diversey Harbor ABS CDO Ltd. A-4 CC Diversey Harbor ABS CDO Ltd. B CC Diversey Harbor ABS CDO Ltd. C CC Fortius I Funding Ltd. S AAA Los Robles CDO Ltd. A-3 CC Los Robles CDO Ltd. B CC Los Robles CDO Ltd. C CC Los Robles CDO Ltd. D CC Newcastle CDO VI Ltd. I-B AAA Newcastle CDO VI Ltd. I-MM AAA/A-1+ N-Star Real Estate CDO III A-1 AAA N-Star Real Estate CDO III A-2A AA N-Star Real Estate CDO III A-2B AA N-Star Real Estate CDO III B A- N-Star Real Estate CDO III C-1A BBB+ N-Star Real Estate CDO III C-1B BBB+ N-Star Real Estate CDO III C-2A BBB N-Star Real Estate CDO III C-2B BBB N-Star Real Estate CDO III D BB STAtic ResidenTial CDO 2005-C E CC KANSAS GAS: S&P Hikes Unsec. Debt Rating to 'BBB-' From 'BB+' ------------------------------------------------------------- Standard & Poor's Ratings Services' raised its senior unsecured debt ratings of 30 U.S. investment-grade investor-owned utility operating companies after reevaluating its application of notching criteria to better reflect the relatively strong recovery prospects of creditors in this sector. "As a result, the senior unsecured debt of most utilities will now be rated the same as the corporate credit rating (CCR) almost uniformly, even when a considerable amount of secured debt is outstanding," said Standard & Poor's credit analyst John Whitlock. This new approach does not affect unsecured debt ratings at unregulated affiliates, such as a holding company. Historically, S&P has approached notching issues from a "priority" perspective. That is, when a debt issue is junior to the company's other debt issues, and S&P therefore view it as having inferior recovery prospects, S&P notches that issue down from the CCR. S&P determines the number of notches by examining the relative amounts of secured and unsecured debt in an entity's capital structure. If sufficient secured debt existed to disadvantage the unsecured bondholders -- for investment-grade companies, the guideline is 20% of assets -- S&P adjusts the rating on the lower-ranked debt to below the CCR. The list shows those ratings that reflect the updated application of notching criteria to utility companies. For more information, see the commentary article "Notching Of U.S. Investment-Grade Investor-Owned Utility Unsecured Debt Now Better Reflects Anticipated Absolute Recovery," published on RatingsDirect. Senior Unsecured Debt Ratings Raised To From -- ---- ALLETE Inc. BBB+ BBB Atlantic City Electric Co. BBB BBB- Carolina Power & Light Co. d/b/a Progress Energy Carolinas Inc. BBB+ BBB Cleveland Electric Illuminating Co. BBB BBB- Connecticut Light & Power Co. BBB BBB- Consumers Energy Co. BBB- BB+ Delmarva Power & Light Co. BBB BBB- Detroit Edison Co. BBB BBB- Florida Power Corp. d/b/a Progress Energy Florida Inc. BBB+ BBB Idaho Power Co. BBB BBB- Kansas Gas & Electric Co. BBB- BB+ Monongahela Power Co. BBB- BB+ Niagara Mohawk Power Corp. A- BBB+ Northern States Power Co. BBB+ BBB Northern States Power Wisconsin A- BBB+ NorthWestern Corp. BBB BBB- Ohio Edison Co. BBB BBB- PacifiCorp A-/ BBB+/ Watch Watch Neg Neg Peoples Gas Light & Coke Co. A- BBB+ Pennsylvania Power Co. BBB BBB- Portland General Electric Co. BBB+ BBB Potomac Electric Power Co. BBB BBB- Public Service Co. of Colorado BBB+ BBB Rochester Gas & Electric Corp. BBB+ BBB San Diego Gas & Electric Co. A A- South Carolina Electric & Gas Co. A- BBB+ Southern California Edison Co. BBB+ BBB Southern California Gas Co. A A- Toledo Edison Co. BBB BBB- Westar Energy Inc. BBB- BB+ * Does not include affiliates affected. LAGUNA DEVELOPMENT: Fitch Affirms Issuer Rating at 'BB-' -------------------------------------------------------- Fitch Ratings has affirmed Laguna Development Corporation's (LDC) credit ratings as: -- Issuer rating at 'BB-'; -- $100 million enterprise revenue bonds, series 2006, at 'BB'. The Rating Outlook is Stable. LDC's 'BB-' issuer rating is primarily supported by the stable operating history of its casino gaming operations. LDC is owned by the Pueblo of Laguna (POL) and operates two primary casino locations as well as gas and convenience store retail outlets, all of which are located along the I-40 corridor, west of the Albuquerque, NM metro area. The primary economic drivers of LDC, and therefore its primary credit drivers, are its two larger casino gaming operations, Route 66 and Dancing Eagle. Proceeds of the 2006 enterprise bonds were used to construct a 150-room hotel property connected to the Route 66 casino. The project opened in September 2007 and operating results have benefited, with LDC posting strong year-over-year growth in revenue and EBITDA in the first three full quarters since the expansion opened. The main credit concern is the limited geographic diversity of the gaming operation. Although the operation of a second casino contributing 25% of consolidated EBITDA is meaningful relative to a single-site gaming operation, LDC's properties are reliant on a single gaming market in the Albuquerque metro area. However, it is notable that based on casino player's club information, the two primary casino properties appear to be drawing from different customer bases. The majority of Route 66 rated play comes from Albuquerque residents, while Dancing Eagle appears more heavily reliant on I-40 traffic as a segment of its customer base. The Albuquerque, NM gaming market is highly competitive, with five other Native American gaming entities operating six properties in the area. Most recently available data as of June 30, 2008, indicates that the Albuquerque gaming market has been performing well relative to other local gaming markets in the U.S. during the current economic downturn. However, Fitch expects that this market will show deterioration in the second half of 2008, with more operators exhibiting slower or negative growth. Notably, LDC has been outpacing the overall market growth rate by a wide margin since the opening of the Route 66 hotel property in September 2007, with LDC increasing its market share to 19.5% from 18.5% for the latest 12 months (LTM) ended June 30, 2008 versus the prior year period. Fitch notes that based on its recent market gain, LDC appears well positioned to weather the impact of the overall poor market trends that are likely to continue into 2009. LDC's credit metrics, including leverage and debt service coverage ratios, are slightly stronger relative to other Fitch 'BB-' rated corporate credits. However, the lower level of financial risk is offset by business risk inherit in the somewhat limited operating profile of the entity. For the fiscal year ended Dec. 31, 2007, Route 66 was the most significant contributor to the combined entity's EBITDA, with Dancing Eagle, Xpress Casino and the retail outlets combined providing a smaller contribution. While the other casino operations provide some diversification to the cash flow, it is anticipated that Route 66 will continue to be the primary revenue generator going forward. EBITDA for the combined enterprises for the LTM ended Sept. 30, 2008 increased from the prior year period. Operating margins, while remaining healthy, compressed slightly, primarily due to increased promotional and marketing costs as well as pre-opening expense of the Route 66 hotel property. LTM leverage and debt service coverage ratios were 2.1x times (x) and 4.5x, respectively. The 2006 enterprise revenue bonds are term bonds maturing in 2015 and 2021. The bonds are subject to mandatory monthly sinking fund payments of principal in an amount sufficient to fully amortize by maturity, resulting in a level debt service schedule through maturity. A 'BB' rating is assigned to the bonds, which are secured by a lien on the cash flows of LDC. The bonds are rated one notch above the issuer rating due to credit enhancement provided by security covenants included in the legal documents associated with the transactions. LAS VEGAS SANDS: Files Prospectus for Future Fund Raising Plans --------------------------------------------------------------- Las Vegas Sands Corp. delivered to the Securities and Exchange Commission a Form S-3 Registration Statement, dated Nov. 6, 2008, under the Securities Act of 1933, related to the future issuance of debt securities, common stock, depositary shares, warrants, purchase contracts, or units. The prospectus contains a general description of the securities that may be issued from time to time. According to the prospectus, the company will use the net proceeds it receives from the sale of the securities for general corporate purposes, unless it specifies otherwise in the applicable prospectus supplement. General corporate purposes may include the company's construction and development projects in Las Vegas, Macao, Singapore and Pennsylvania, additions to working capital, capital expenditures, repayment of debt, the financing of possible acquisitions and investments or stock repurchases. A full-text copy of the prospectus is available at no charge at: http://ResearchArchives.com/t/s?34b4 Based in Las Vegas, Nevada, Las Vegas Sands Corp. owns and operates The Venetian Resort Hotel Casino, The Palazzo Resort Hotel Casino, and an expo and convention center. The Company also owns and operates the Sands Macao, the first Las Vegas-style casino in Macao, China. Based on current estimates, the company expects it will not be in compliance with its maximum leverage ratio covenant under its U.S. Senior Secured Credit Facility and the U.S. FF&E Financings for the quarter ending December 31, 2008, and at subsequent quarterly measurement dates. Non-compliance would result in a default under these agreements and, due to cross-default provisions, would also result in defaults under the Airplane Financings, Convertible Senior Notes and Senior Notes. The occurrence of these defaults would allow all of the lenders to exercise their rights and remedies as defined under the respective agreements, including acceleration of the maturity of the related obligations, which raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters include a capital raising program. PricewaterhouseCoopers LLP has expressed a going concern doubt opinion on the company. As of June 30, 2008, the company had $13,282,222,000 in total assets, including $1,360,643,000 in total cash and equivalents, receivables and other current assets; $10,976,512,000 in total liabilities, including $1,668,728,000 in total payables and other current liabilities. LAS VEGAS SANDS: Land Concession Deal in Macau Amended ------------------------------------------------------ On October 29, 2008, the office of the Secretary for Transportation and Public Works for the Macau Special Administrative Region of The People's Republic of China published an amendment to the Land Concession by Lease between the Macau Government and Venetian Cotai, Limited, an indirect wholly-owned subsidiary of Las Vegas Sands Corp. in Macau's Official Gazette. The Land Concession Amendment separated the retail mall use from the hotel use for Lot II and authorized VCL to subdivide the Four Seasons Macao Hotel into four independent strata title units consisting of: (i) a five star hotel, including gaming areas, entertainment, leisure, restaurants and other supporting areas (112,167 square meters); (ii) a four star apartment-hotel, which corresponds to the most luxurious classification of apartment-hotel permitted in Macau (101,028 square meters); (iii) a retail shopping area (35,218 square meters); and (iv) a parking area (31,469 square meters). The change in the land uses, which included the separation of the retail mall area from the hotel area and the aggregation of the parking spaces that were previously allocated in the Land Concession for the different uses, justified the revision of the areas and resulted in an increase in the annual rent payable by VCL to the Macau Government associated with the Four Seasons Macao Hotel from MOP 4,328,735.00 to MOP 4,411,765.00 (approximately $542 thousand to $552 thousand at exchange rates in effect on October 30, 2008) with respect to the changes in the land uses. VCL will seek to subdivide the Four Seasons Macao Hotel into four separate components in the near future. Upon the subdivision of the four separate components of the Four Seasons Macao Hotel, VCL will promptly thereafter seek to transfer the component consisting of the apartment-hotel tower to a separate cooperative holding company and begin selling shares in the new holding company to third parties interested in acquiring apart-hotel vacation units at the Four Seasons Private Residences Macao. The subdivision of the Four Seasons Macao Hotel will also enable VCL to monetize the cash flow generated by The Shoppes at the Four Seasons at an appropriate time in the future. In addition, the Land Concession Amendment adjusted the total area of Lot I -- The Venetian Macao Resort Hotel -- and Lot II -- the Four Seasons Macao Hotel -- reducing Lot I by 836 square meters while making a corresponding increase in the area of Lot II by 836 square meters, in order to reflect the actual boundaries and build out of both lots. The adjustments did not cause any change in the gross construction areas of either The Venetian Macao Resort Hotel or the Four Seasons Macao Hotel. Pursuant to the Land Concession Amendment, VCL was obligated to pay an additional land premium in consideration of the changes to the Land Concession aggregating a total of MOP 142,295,946.00 (approximately $17.8 million at exchange rates in effect on October 30, 2008). VCL paid the additional land premium in full on October 23, 2008. The other material terms of the Land Concession were unchanged from the original Land Concession dated April 18, 2007. Upon its publication in the Official Gazette the Land Concession Amendment to the Land Concession became effective. About Las Vegas Sands Based in Las Vegas, Nevada, Las Vegas Sands Corp. owns and operates The Venetian Resort Hotel Casino, The Palazzo Resort Hotel Casino, and an expo and convention center. The Company also owns and operates the Sands Macao, the first Las Vegas-style casino in Macao, China. Based on current estimates, the company expects it will not be in compliance with its maximum leverage ratio covenant under its U.S. Senior Secured Credit Facility and the U.S. FF&E Financings for the quarter ending December 31, 2008, and at subsequent quarterly measurement dates. Non-compliance would result in a default under these agreements and, due to cross-default provisions, would also result in defaults under the Airplane Financings, Convertible Senior Notes and Senior Notes. The occurrence of these defaults would allow all of the lenders to exercise their rights and remedies as defined under the respective agreements, including acceleration of the maturity of the related obligations, which raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters include a capital raising program. PricewaterhouseCoopers LLP has expressed a going concern doubt opinion on the company. As of June 30, 2008, the company had $13,282,222,000 in total assets, including $1,360,643,000 in total cash and equivalents, receivables and other current assets; $10,976,512,000 in total liabilities, including $1,668,728,000 in total payables and other current liabilities. LAS VEGAS SANDS: Seeks to Raise Funds; May Default on Loans ----------------------------------------------------------- Commencing September 30, 2008, Las Vegas Sands Corp.'s U.S. senior secured credit facility and FF&E financings require its Las Vegas operations to comply with certain financial covenants, including to maintain a maximum leverage ratio of net debt, as defined, to trailing 12-month adjusted earnings before interest, income taxes, depreciation and amortization, as defined. To comply with the maximum leverage ratio as of December 31, 2008, and subsequent quarterly periods, Las Vegas Sands will need to: (i) achieve increased levels of Adjusted EBITDA at its Las Vegas properties; (ii) decrease the rate of spending on its development projects; (iii) obtain additional financing at its parent company level, the proceeds from which could be used to reduce its Las Vegas operations' net debt; (iv) elect to contribute up to $50.0 million of capital from cash on hand to its Las Vegas operations -- the contribution having the effect of increasing Adjusted EBITDA by up to $50.0 million per quarter for purposes of calculating maximum leverage -- the EBITDA true-up; or (v) a combination. As the company's Las Vegas properties did not achieve the levels of Adjusted EBITDA necessary to maintain compliance with the maximum leverage ratio for the quarterly period ending September 30, 2008, Las Vegas Sands completed a private placement of $475.0 million in convertible senior notes with its principal stockholder and his family and used a portion of the proceeds to exercise the EBITDA true-up provision. The convertible senior notes bear interest at 6.5% per annum, payable in quarterly installments, and mature on October 1, 2013, unless earlier converted or repurchased by Las Vegas Sands, with an initial conversion rate of 20.141 shares of common stock per $1,000 principal amount. Following any fundamental change, as defined in the agreement, that occurs prior to the maturity date, Las Vegas Sands will be required to make an offer to repurchase the convertible senior notes at 101% of the then outstanding principal amount. Las Vegas Sands' principal stockholder and his family were granted pre-emptive rights with respect to any future proposed issuance or sale by Las Vegas Sands of equity interests -- including convertible or exchangeable securities -- pursuant to which they will be able to purchase a portion of the offered equity interests based on their fully diluted common stock ownership in the Company. The EBITDA true-up, by itself, would not have been sufficient to maintain compliance with the maximum leverage ratio as of September 30, 2008. Accordingly, the entire proceeds from the offering were immediately contributed to LVSLLC to reduce the net debt of the parties to the domestic credit facilities to maintain compliance with the maximum leverage ratio for the quarterly period ending September 30, 2008. Based on current Las Vegas operating estimates for the quarter ending December 31, 2008, and quarterly periods during 2009 -- as well as the fact that Las Vegas Sands has continued to fund its development projects outside of Las Vegas, in whole or in part, with borrowings under the U.S. senior secured credit facility -- the company expects the amount of its material domestic subsidiaries' indebtedness will be beyond the level allowed under the maximum leverage ratio. If its Las Vegas Adjusted EBITDA levels do not increase sufficiently, Las Vegas Sands does not adjust spending on its global development projects, which it is currently evaluating, and the EBITDA true-up is not sufficient or available to enable the company to maintain compliance under the maximum leverage ratio, Las Vegas Sands will need to obtain significant additional capital at the parent level. Las Vegas Sands is working with its financial advisor to develop and implement a capital raising program that would be sufficient to address its current and anticipated funding needs; however, no assurances can be given that the program will be successful. If none of these occur, Las Vegas Sands would need to obtain waivers or amendments under its domestic credit facilities, and no assurances can be given that it will be able to obtain these waivers or amendments. In its Form 10-Q filing with the Securities and Exchange Commission for the period ended June 30, 2008, Las Vegas Sands disclosed $117,454,000 in aggregate indebtedness and other known contractual obligations due in less than a year: New senior secured credit $5,978,000 facility-delayed draw I FF&E financings $14,306,000 Variable interest payments $40,740,000 Ferries purchase commitment $56,430,000 ------------ Total $117,454,000 Las Vegas Sands borrowed an additional $150.0 million, net of repayments, during 2008 under the Revolving Facility of its New Senior Secured Credit Facility. The Revolving Facility matures on May 23, 2012, and has no interim amortization. Las Vegas Sands also borrowed $600.0 million during 2008 under the Delayed Draw I Facility of its New Senior Secured Credit Facility. The Delayed Draw I Facility matures on May 23, 2014, and is subject to quarterly principal payments beginning on September 30, 2008, in an amount equal to 0.25% of the aggregate principal amount outstanding, with a balloon payment of the remaining balance due on May 23, 2014. The company also borrowed an additional $100.3 million, net of repayments, under its FF&E Financings. The FF&E Financings mature in June 2011, and are subject to quarterly principal payments in an amount equal to 5.0% of the aggregate principal outstanding, with the remaining amount due in four equal quarterly installments ending on the maturity date. In January 2008, the company entered into agreements to purchase an additional four ferries at an aggregate cost of approximately $72.0 million to be built for its Macao operations. As of June 30, 2008, the company had a $20.6 million liability related to unrecognized tax benefits and related interest expense. If Las Vegas Sands is unable to obtain waivers or amendments if and when necessary, it would be in default under its domestic credit facilities, which would trigger cross-defaults under its airplane financings and convertible senior notes. If the defaults or cross-defaults were to occur and the respective lenders chose to accelerate the indebtedness outstanding under these agreements, it would result in a default under its senior notes. Any defaults or cross-defaults under these agreements would allow the lenders, in each case, to exercise their rights and remedies as defined under their agreements. If the lenders were to exercise their right to accelerate the indebtedness outstanding, Las Vegas Sands says there can be no assurance that it would be able to refinance any amounts that may become accelerated under such agreements. Under the terms of the U.S. senior secured credit facility, if a default or a material adverse change, as defined in the agreement, were to occur, it would preclude its domestic subsidiaries from accessing any available borrowings (including the $400.0 million under the Delayed Draw II Facility, which expires November 23, 2008, and $201.1 million under the Revolving Facility, which includes approximately $7.7 million committed to be funded by Lehman Brothers Commercial Paper Inc.). Las Vegas Sands also notes that if the capital raising program is unsuccessful and the company does not have access to the available borrowings under the U.S. senior secured credit facility, it would need to immediately suspend portions, if not all, of its ongoing global development projects and consider other alternatives. These factors raise a substantial doubt about its ability to continue as a going concern. PricewaterhouseCoopers LLP has expressed a going concern doubt opinion on the company. About Las Vegas Sands Based in Las Vegas, Nevada, Las Vegas Sands Corp. owns and operates The Venetian Resort Hotel Casino, The Palazzo Resort Hotel Casino, and an expo and convention center. The Company also owns and operates the Sands Macao, the first Las Vegas-style casino in Macao, China. As of June 30, 2008, the company had $13,282,222,000 in total assets, including $1,360,643,000 in total cash and equivalents, receivables and other current assets; $10,976,512,000 in total liabilities, including $1,668,728,000 in total payables and other current liabilities. LB-UBS COMMERCIAL: Fitch Holds BB- Rating on $9.3MM Class N Certs. ------------------------------------------------------------------ Fitch Ratings has affirmed and assigned Outlooks to LB-UBS Commercial Mortgage Trust 2007-C1, commercial mortgage pass- through certificates: -- $46.7 million class A-1 at 'AAA'; Outlook Stable; -- $211 million class A-2 'AAA'; Outlook Stable; -- $225 million class A-3 'AAA'; Outlook Stable; -- $95 million class A-AB 'AAA'; Outlook Stable; -- $1.16 billion class A-4 'AAA'; Outlook Stable; -- $849.7 million class A-1A 'AAA'; Outlook Stable; -- $371.3 million class A-M 'AAA'; Outlook Stable; -- $315.6 million class A-J 'AAA'; Outlook Stable; -- Interest-only class X-CP 'AAA'; Outlook Stable; -- Interest-only class X-W 'AAA'; Outlook Stable; -- Interest-only class X-CL 'AAA'; Outlook Stable; -- $27.8 million class B 'AA+'; Outlook Stable; -- $55.7 million class C 'AA'; Outlook Stable; -- $37.1 million class D 'AA-'; Outlook Stable; -- $18.6 million class E 'A+'; Outlook Stable; -- $32.5 million class F 'A'; Outlook Stable; -- $32.5 million class G 'A-'; Outlook Stable; -- $41.8 million class H 'BBB+'; Outlook Stable; -- $41.8 million class J 'BBB'; Outlook Stable; -- $51.1 million class K 'BBB-'; Outlook Stable; -- $9.3 million class L 'BB+'; Outlook Stable; -- $9.3 million class M 'BB'; Outlook Stable; -- $9.3 million class N 'BB-'; Outlook Stable. Fitch does not rate the $4.6 million class P, $9.3 million class Q, $9.3 million class S, $37.1 million class T or the non- pooled $35.6 million class BMP. The rating affirmations are a result of stable performance since issuance. The Rating Outlooks reflect the likely direction of rating changes over the next one to two years. As of the September 2008 distribution date, the transaction has paid down 0.3% to $3.73 billion from $3.75 billion at issuance. Fitch has identified 14 Loans of Concern (6.35%), including one specially serviced (0.12%). The specially serviced asset is a 124- unit, multifamily property located in Lubbock, TX. The loan transferred to the special servicer following a monetary default and is currently 90+ days delinquent. Fitch expects that losses from the specially serviced loan will be absorbed by the non-rated classes. Fitch reviewed the most recent servicer provided operating statement analysis reports for the six shadow rated loans (31.1%): Westfield San Francisco Emporium (11.6%), International Square (7.2%), Tishman Speyer DC Portfolio I (5.8%), Extendicare Portfolio (3.3%), Four Times Square (2.1%) and Kentucky Oaks Mall (0.8%). Based on their stable performance since issuance, five of the six loans maintain investment grade shadow ratings. Westfield San Francisco Emporium is a 966,442 square foot (sf) regional mall located in the Union Square district of San Francisco, CA, of which 363,101 sf of retail space and 246,099 sf of office space are collateral. Anchor tenants include Bloomingdale's and Century Theatres. Major retail tenants include Bristol Farms and Borders. Office tenants include San Francisco State University and Microsoft. The property benefits from the experienced sponsorship of Westfield America Limited Partnership and Forest City Enterprises, Inc. The whole loan consists of a $300 million A-note and a $135 million B-note. Occupancy as of June 30, 2008, is 90.7% compared to 98.1% at issuance. International Square is a one million-sf office property in Washington, DC Major tenants include Dickstein Shapiro Morin & Oshi; Merril Lynch, Pierce, Fenner; and Smith Group Midatlantic, Inc. The sponsor is a partnership between Tishman Speyer and an affiliate of Lehman Brothers. As of June 30, 2008, occupancy has improved to 94.8% from 86.3% at issuance. However, overall expenses at the property have increased due to an increase in utilities, payroll, real estate taxes and insurance. The property no longer generates sufficient cash flow to maintain an investment grade rating. Tishman Speyer DC Portfolio I consists of four properties totaling 940,000 sf located throughout the Washington, DC metropolitan area. The largest tenants include American Chemistry Council; Skadden Arps; Effinity Financial Corporation; and CRA International. The sponsor is a partnership between Tishman Speyer and an affiliate of Lehman Brothers. As of June 30, 2008, occupancy has improved to 91.5% from 84.1% at issuance. The Extendicare Portfolio consists of 80 skilled nursing facilities and two skilled nursing/assisted living facilities totaling 8,492 beds and located across 10 states. The sponsor is Extendicare Health Services, Inc. whose corporate management team average 26 years of experience in the health care industry, specifically in the operation of skilled nursing facilities. As of June 30, 2008 the portfolio had an occupancy of 91.2%, down slightly from 93.2% at issuance. The Four Times Square loan is collateralized by a long-term leasehold interest in Four Times Square, a 48-story Class A office building located on Broadway between 42nd and 43rd streets in Manhattan's Times Square submarket. The sponsor is The Durst Organization (Durst) which owns and manages interests in multiple Class A buildings comprising more than 7.9 million sf in Midtown Manhattan. As of June 30, 2008, occupancy is stable at 99.8%. The Kentucky Oaks Mall is a regional mall complex containing 827,204 sf of collateral GLA, in addition to four ground lease parcels and several owned free-standing units. The overall project floor area is 1,135,379 sf. The sponsor is a partnership between Cafaro Company, a privately owned real estate developer, and CBL & Associates Properties, Inc., a real estate investment trust (REIT). As of June 30, 2008, the occupancy was 94.1%, up from 93.2% at issuance. At issuance, there was one loan in the top 10, Bethany Houston Portfolio, which was in the process of stabilizing. While the loan continues to have a servicer reported year-end (YE) 2007 debt- service coverage ratio (DSCR) less than 1.0 times (x), Fitch has reviewed the updated occupancy, reserve expenditure and cash flow information and has determined that it is in-line with the stabilization schedule set forth at issuance. Fitch will continue to monitor this loan. The largest Fitch loan of concern (0.80%) is secured by a 272-unit multifamily property in Las Vegas, NV. The servicer reported YE 2007 DSCR was 0.99x, compared to 1.17x at issuance. Per servicer, the decrease in DSCR was primarily due to an increase the payroll expense. The occupancy as of June 2008 was 95.0% compared to 91.5% at issuance. The second-largest Fitch loan of concern (0.5%) is secured by a 196-unit multifamily property in West Covina, CA. The servicer reported YE 2007 DSCR was 0.86x compared to 1.16x at issuance. Per servicer, the DSCR has been affected by an overall increase in expenses including payroll and general & administrative, as well as increased competition in the market. The occupancy as of June 2008 was 90% compared to 72% at issuance. LEHMAN BROTHERS: Faces Probe on Securities Arbitration Claims ------------------------------------------------------------- The securities law firm of Sonn & Erez PLC is investigating Financial Industry Regulatory Authority securities arbitration claims to recover investment losses sustained in Lehman Brothers structured products, namely so-called "principal protected notes." Principal protected notes are believed to have been marketed to conservative, risk-averse investors who were seeking to preserve their capital and generate income as well as share in the growth of the general market. Contrary to a Lehman Brothers brochure that essentially represented that principal protected note investors would enjoy both "100% principal protection" and "uncapped appreciation potential," Sonn & Erez believes the notes actually subjected investors to far more risk than they were led to believe. Holders of the Lehman principal protected notes will have to wait in line in Lehman's bankruptcy with other unsecured creditors to recover what is left of their money, unless they choose to bring claims against those who sold the notes. Specifically, Sonn & Erez believes that many brokerage firms, including UBS, Merrill Lynch, JP Morgan, Fidelity, and Wachovia, marketed and sold the Lehman Brothers principal protected notes to their own clients. Lehman's structured products included Suns (Stock Upside Note Securities) and Prudents (Prudential Research Universe Diversified Equity Notes). Other brokerage firms also sold their own structured products and principal protected notes, such as Mitts (Merrill's Market Index Target-Term Securities), Sequins (Citigroup's Select Equity Indexed Notes), and Propels (Morgan Stanley's Protected Performance Equity Linked Securities). In total, nearly $70 billion in structured notes were sold to investors last year alone. Sonn & Erez is an AV-Rated law firm that represents investors nationwide in stockbroker misconduct and investment fraud cases. The firm has represented investors against most major Wall Street brokerage firms in claims involving stocks, bonds, options, auction rate securities, mutual funds, hedge funds, and other structured products. Sonn & Erez is advising those who lost money in a Lehman Brothers structured note or principal protected note or structured products issued by another brokerage firm, to contact Jeffrey Sonn, Esq. or Jeff Erez at 1-866-372-8311 for a free evaluation. 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: Seeks to Tap Simpson Thacher as Special Counsel ---------------------------------------------------------------- Lehman Brothers Holdings seek approval from the U.S. Bankruptcy Court for the Southern District of New York to employ Simpson, Thacher & Bartlett as its special counsel effective Sept. 15. In its employment application filed with the Court, the bankrupt company said it selected Simpson Thacher because of its experience in providing coordinated legal advice on complex corporate transactions and litigation matters in various industries. Lehman Brothers Holdings said the firm is also familiar with its business operations in light of its prior employment with the company. Simpson Thacher's duties as special counsel include: (1) assisting Lehman Brothers Holdings with reporting obligations under the Securities and Exchange Act of 1934; (2) assisting the company with respect to negotiations related to, and the closing of the sale of, the investment banking and capital markets business of Lehman Brothers Inc. to Barclays Capital; (3) assisting the company in connection with the sale of its investment management division to Bain Capital and Hellman & Friedman; (4) representing the company in connection with the testimony of its chief executive officer before the Congress; and (5) representing LBA Y.K., an indirect subsidiary of Lehman Brothers Holdings, in its case pending in the United States and in Japan. In return for its services, Lehman Brothers Holdings proposed to pay the firm at these hourly rates: Personnel Hourly Rates --------- ------------ Partners $785 - $1000 Counsel/Senior counsel $740 - $765 Associates $385 - $690 Paralegals $130 - $285 In her affidavit filed with the Court, Mary Elizabeth McGarry, a member of Simpson Thacher, said that her firm does not have any connection with Lehman Brothers Holdings, its units that have filed for bankruptcy, and their creditors. She assured the Court that the firm will not represent any party whose interest is adverse to Lehman Brothers Holdings or its estates. 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. LEVITT AND SONS: Classification and Treatment of Claims ------------------------------------------------------- Under the First Amended Joint Liquidating Chapter 11 Plan of Levitt and Sons LLC and its debtor affiliates and the Official Committee of Unsecured Creditors dated Oct. 31, 2008, claims and equity interests are designated: (A) for the LAS Consolidated Debtor into 11 classes: Class Description ----- ----------- 1 Allowed Priority Claims 2 Allowed Secured Claims of Woodbridge 3 Allowed Secured Claims of Bank of America, N.A. 4 Allowed Secured Claims of KeyBank, N.A. 5 Allowed Secured Claim of AmTrust Bank 6 Allowed Secured Claims of Wachovia Bank, N.A. 7 Allowed DIP Financing Secured Claim of Wachovia Bank, N.A. 8 Allowed Other Secured Claims 9A Allowed General Unsecured Claims 9B Allowed Deposit Holder Claims 10 Allowed Equity Interests (B) for the Tennessee Consolidated Debtor into eight classes: Class Description ----- ----------- 1 Allowed Priority Claims 2 Allowed Secured Claims of Regions Bank, N.A. 3 Allowed Secured Claim of Wachovia Bank, N.A. 4 Allowed Secured Claim of Financial Federal Savings Bank 5 Allowed Other Secured Claims 6A Allowed General Unsecured Claims 6B Allowed Deposit Holder Claims 7 Allowed Equity Interests Claims or Equity Interests in Classes LAS-2, LAS-3, LAS-4, LAS-5, LAS-6, LAS-7, LAS-8, LAS-9A, LAS-9B, LAS-10, TENN-2, TENN-3, TENN-4, TENN-5, TENN-6A, TENN-6B, and TENN-7 are or may be impaired under the Amended Plan. The Plan Proponents are soliciting acceptances from members of Classes LAS-2, LAS-3, LAS-4, LAS-5, LAS-6, LAS-7, LAS-8, LAS-9A, LAS-9B, TENN-2, TENN-3, TENN-4, TENN-5, TENN-6A, and TENN-6B. Classes LAS-10 and TENN-7 are expected to receive no Distributions under the Amended Plan and are presumed to have rejected the Plan. Levitt and Sons executive vice president John A. Dischner ummarizes the estimated recoveries for claims against the LAS Consolidated Debtors and the Tennessee Consolidated Debtors: (A) LAS Consolidated Debtor Class Estimated Recovery ----- ------------------ LAS 1 100% recovery, Between $1,519,154 and $1,690,645 LAS 2 Woodbridge Settlement LAS 3 Based on Collateral LAS 4 Based on Collateral LAS 5 The AmTrust Secured Claim has been paid in full, as of October 31, 2008, subject to resolution of AmTrust Bank's attorneys' fees estimated as not more than $25,000 LAS 6 Accepts Plan: Pursuant to DIP Agreement Rejects Plan: Collateral or collateral proceeds; and Plan provisions regarding the Wachovia Collateral, the Wachovia DIP Agreement, the Asset Management Agreement, and the Wachovia Collateral Administrator will be deemed void and be of no force and effect, subject to Wachovia's obligation to fund the Admin Cap and the Guaranteed Amount LAS 7 Accepts Plan: Pursuant to DIP Agreement and Asset Management Agreement Rejects Plan: Collateral, collateral proceeds, or as authorized by the Bankruptcy Code or as agreed to by the claim holder and Plan Administrator; and Plan provisions relating to the Wachovia Collateral, the Wachovia DIP Agreement, and the Wachovia Collateral Administrator will be deemed void and be of no force and effect, subject to Wachovia's obligation to fund the Admin Cap and the Guaranteed Amount LAS 8 Based on Collateral LAS 9A Pro rata Total Allowed General Unsecured Claims will range from $68,914,944 to $311,112,522 LAS 9B Pro rata Total Allowed Deposit Holder Claims will range from $7,945,985 to $9,865,578 LAS 10 None (B) Tennessee Consolidated Debtor Class Estimated Recovery ----- ------------------ TENN 1 100% recovery, Between $135,230 and $380,517 TENN 2 Regions Bank Sale Order TENN 3 Regions Bank Sale Order TENN 4 Regions Bank Sale Order TENN 5 Based on Collateral TENN 6A Pro rata Total Allowed General Unsecured Claims will range from $5,030,000 to $5,821,185 TENN 6B Pro rata TENN 8 None About Levitt and Sons Headquartered in Fort Lauderdale, Florida, Levitt and Sons LLC -- http://www.levittandsons.com/-- is the homebuilding subsidiary of Levitt Corporation (NYSE:LEV). Levitt Corp. -- http://www.levittcorporation.com/-- together with its subsidiaries, operates as a homebuilding and real estate development company in the southeastern United States. The company operates in two divisions, homebuilding and land. The homebuilding division primarily develops single and multi-family homes for adults and families in Florida, Georgia, Tennessee, and South Carolina. The land division engages in the development of master-planned communities in Florida and South Carolina. Levitt and Sons LLC and 38 of its homebuilding affiliates filed for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at Berger Singerman, P.A., represent the Debtors in their restructuring efforts. The Debtors chose AP Services, LLC as their crisis managers, and Kurtzman Carson Consultants, LLC as their claims and noticing agent. Levitt Corp., the parent company, is not included in the bankruptcy filing. The Debtors have filed a Chapter 11 joint plan of liquidation. (Levitt and Sons Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). LEVITT AND SONS: Files Amended Joint Liquidating Chapter 11 Plan ---------------------------------------------------------------- Levitt and Sons LLC and its debtor affiliates, together with the Official Committee of Unsecured Creditors, delivered to the United States Bankruptcy Court for the Southern District of Florida their First Amended Joint Liquidating Chapter 11 Plan and Disclosure Statement dated Oct. 31, 2008. Levitt and Sons Executive vice president John A. Dischner relates that the Amended Plan provides that the net proceeds of the sale or other disposition of assets of Levitt and Sons, the settlement and compromise of certain Causes of Action, including the Woodbridge Settlement and certain contingent recoveries through Causes of Action, will be collected and distributed to creditors: (a) First, to the Holders of Secured Claims, if any, who hold valid, duly-perfected and non-avoidable security interests in and Liens on assets and proceeds, provided that Distributions to those Holders will come only from those assets or proceeds; (b) Second, to the Holders of Allowed Administrative Expense Claims, Allowed Professional Claims, Allowed Priority Tax Claims, and Allowed Priority Claims in accordance with the scheme of priorities set forth in the Bankruptcy Code; and (c) Third, to the Holders of Allowed General Unsecured Claims and the Holders of Allowed Deposit Holder Claims on a pro rata basis. A single, additional Distribution will be made to the Holders of Allowed Deposit Holder Claims from the Deposit Holders' Fund in connection with the Woodbridge Settlement. Mr. Dischner notes that subject to the settlement and compromise between the Tennessee Consolidated Debtors and the LAS Consolidated Debtors, no Distribution will be made on account of any Intercompany Claims. Holders of Equity Interests in each of the Debtors will not receive any Distribution. As a result of the limited substantive consolidation, the Amended Plan will treat Claims and Interests separately in respect of each of the LAS Consolidated Debtors and the Tennessee Consolidated Debtors, Mr. Dischner says. Levitt and Sons estimated the Administrative Expense Claim of Woodbridge Holdings Corporation to total more than $14,000,000. Pursuant to and subject to consummation of the Woodbridge Settlement, however, Woodbridge's Administrative Expense Claim will be allowed in the reduced amount of $650,000, with the balance being waived by Woodbridge. Funding of the Plan The principal means of implementing and funding of the Amended Plan is the Woodbridge Settlement, according to Mr. Dischner. On the Plan Effective Date, the Debtors will consummate the Woodbridge Settlement in accordance with its terms. Among other things: (a) Woodbridge will make a settlement payment of $8,000,000 to the Plan Administrator for Distribution to the holders of all Allowed claims against the LAS Consolidated Debtors; (b) Woodbridge and the "Woodbridge Direct Parties" will receive a full and general release from the Debtors and their Estates of any and all Settlement Causes of Action; (c) On the Effective Date, Woodbridge will make available to the Plan Administrator a $4,500,000 Release Fund, of which $4,000,000 will be funded to the Plan Administrator and held in a segregated account and $500,000, a "Settlement Holdback", to be an obligation of Woodbridge to fund in accordance with the provisions of the Woodbridge Settlement. The Release Fund will be distributed on a pro rata basis to Holders of Allowed Claims against the LAS Consolidated Debtors and the Tennessee Consolidated Debtors, who are deemed to agree to the Third Party Release and Injunction in favor of Woodbridge and the Woodbridge Parties. To the extent any Holder of an Allowed Claim elects to opt out of, and not be bound by, the Third Party Release and Injunction, then the pro rata Distribution that would otherwise have been made to the Holder from the Release Fund will be returned to Woodbridge; and (d) Woodbridge will: * transfer, carve out, and gift $450,000 to the Deposit Holders' Fund and $200,000 to the Deposit Holders' Fee Reserve from the Distribution to be received by Woodbridge in respect of its $650,000 Allowed Administrative Claim under the Amended Plan; and * fund an additional $300,000 to the Deposit Holders' Fund on the Effective Date. The Release Fund will also be funded with: (1) cash on hand on the Effective Date in the Post- Confirmation Debtors; (2) the Admin Cap; the Guaranteed Amount; the Tennessee Carve Out; proceeds, if any, from the Wachovia DIP Loan Agreement in excess of the Guaranteed Amount; and the Deposit Holders' Fund and the Deposit Holders' Fee Reserve; and (3) funds added to Cash after the Effective Date from, among other things, the liquidation of the Post-Confirmation Debtor Assets, the liquidation of the Wachovia Collateral, and the prosecution of the Causes of Action. Claim Objections Each of the Debtors has filed at least one omnibus objection to various claims filed against the applicable Debtor's estate. Mr. Dischner relates that majority of the claims objections filed have been resolved. The Debtors are working closely with the Creditors Committee and anticipate filing several additional omnibus objections before the Plan Confirmation hearing. Given the large number of claims filed against the Debtors' estates, the Debtors anticipate that the Plan Administrator will need to file additional objections to claims after the Effective Date. Pending/Potential Litigation and Causes of Action The Amended Plan includes updates on Levitt and Sons' Chapter 11 proceedings: (1) The Debtors recently reached a settlement with Sunshine Kitchens, Inc., resolving all of the claims filed by Sunshine Kitchens against the Debtors' estates, as well as court litigation pending as of the Petition Date. The Debtors anticipate the settlement motion to be approved soon. (2) The Bankruptcy Court dismissed the Second Amended Complaint filed by Wachovia Bank, N.A., against certain Debtors on August 22, 2008. Wachovia has filed an appeal of the Dismissal Order. It remains pending. Under the Amended Plan, the Debtors' Causes of Action, if any, will be pursued by the Debtors or the Creditors Committee before the Effective Date, and by the Plan Administrator after the Effective Date. The Wachovia Debtors Causes of Action, if any, will be pursued by their Chief Administrator Soneet R. Kapila before the Effective Date, and by the Wachovia Collateral Administrator after the Effective Date. The Debtors may have, under state and other federal laws and pursuant to Section 541 of the Bankruptcy Code, certain causes of action for the recovery of transfers made before the Petition Date. Pursuant to a list of significant transfers made 90 days before the Petition Date, the Debtors made prepetition payments aggregating more than $50,456,867. However, since the advisors of the Debtors and the Creditors Committee have yet to complete their analysis of the potential for recovery of all those payments, the Plan Proponents cannot estimate the amount of any potential recovery from litigation surrounding those payments, according to Mr. Dischner. The Debtors, the Creditors Committee, or the Plan Administrator will continue to review transfers and Causes of Action, including those against Bank of America, N.A., and KeyBank, N.A., Mr. Dischner relates. Liquidation Analysis and Plan Alternatives As of Oct. 23, 2008, the Debtors possess cash of roughly $3,336,362. This amount is expected to be reduced based on the payment of Allowed Administrative Expense Claims through the Effective Date. Mr. Dischner reiterates that the Amended Plan is superior to a liquidation under Chapter 7 of the Bankruptcy Code; dismissal of the bankruptcy cases; or the filing of an alternate plan of reorganization or liquidation. The Debtors and the Creditors Committee believe the Amended Plan results in a fair balancing of all parties' rights. A redlined copy of the Levitt and Sons Amended Plan is available for free at: http://ResearchArchives.com/t/s?3499 A redlined copy of the Levitt and Sons Amended Disclosure Statement is available for free at: http://ResearchArchives.com/t/s?349a Copies of the Amended Disclosure Statement exhibits, including the Liquidation Analysis, litigation schedule, and schedule of potential preference payments, are available for free at: http://ResearchArchives.com/t/s?349b http://ResearchArchives.com/t/s?349c About Levitt and Sons Headquartered in Fort Lauderdale, Florida, Levitt and Sons LLC -- http://www.levittandsons.com/-- is the homebuilding subsidiary of Levitt Corporation (NYSE:LEV). Levitt Corp. -- http://www.levittcorporation.com/-- together with its subsidiaries, operates as a homebuilding and real estate development company in the southeastern United States. The company operates in two divisions, homebuilding and land. The homebuilding division primarily develops single and multi-family homes for adults and families in Florida, Georgia, Tennessee, and South Carolina. The land division engages in the development of master-planned communities in Florida and South Carolina. Levitt and Sons LLC and 38 of its homebuilding affiliates filed for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at Berger Singerman, P.A., represent the Debtors in their restructuring efforts. The Debtors chose AP Services, LLC as their crisis managers, and Kurtzman Carson Consultants, LLC as their claims and noticing agent. Levitt Corp., the parent company, is not included in the bankruptcy filing. The Debtors have filed a Chapter 11 joint plan of liquidation. (Levitt and Sons Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). LEVITT AND SONS: Maple Grove Estates Balks Release Escrow Funds --------------------------------------------------------------- Levitt and Sons of Shelby County, LLC, owes Maple Grove more than $460,000 for materials and unpaid labor or construction costs associated with Maple Grove's work on a real property owned by the Debtor in Shelby County, Tennessee, the Chapel Park Property, Adrian C. Delancy, Esq., at Markowitz, Davis, Ringel & Trusty, P.A., in Miami, Florida, asserts. The United States Bankruptcy Court for the Southern District of Florida approved on Dec. 19, 2007, the sale of the Chapel Park Property, subject to certain conditions, including the attachment of Maple Grove's lien to the sale proceeds for subsequent adjudication by the Court, Mr. Delancy notes. On June 30, 2008, the Court entered an agreed order preserving Maple Grove's lien rights as against the $487,873 in escrow, he continues. Since the entry of the Agreed Order, Maple Grove and LAS Shelby County had been negotiating for an amicable resolution of Maple Grove's mechanic's lien claim, Mr. Delancy relates. Regions Bank's Escrow Motion should be denied in its entirety, and the $487,873 in escrow funds held by Regions Bank should be released to Maple Grove in satisfaction of its mechanic's lien against the Chapel Park Property, Mr. Delancy maintains. Judge Ray has set an evidentiary hearing on the Escrow Motion for Jan. 27, 2009. Any necessary discovery must be completed three business days before the scheduled hearing. About Levitt and Sons Headquartered in Fort Lauderdale, Florida, Levitt and Sons LLC -- http://www.levittandsons.com/-- is the homebuilding subsidiary of Levitt Corporation (NYSE:LEV). Levitt Corp. -- http://www.levittcorporation.com/-- together with its subsidiaries, operates as a homebuilding and real estate development company in the southeastern United States. The company operates in two divisions, homebuilding and land. The homebuilding division primarily develops single and multi-family homes for adults and families in Florida, Georgia, Tennessee, and South Carolina. The land division engages in the development of master-planned communities in Florida and South Carolina. Levitt and Sons LLC and 38 of its homebuilding affiliates filed for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at Berger Singerman, P.A., represent the Debtors in their restructuring efforts. The Debtors chose AP Services, LLC as their crisis managers, and Kurtzman Carson Consultants, LLC as their claims and noticing agent. Levitt Corp., the parent company, is not included in the bankruptcy filing. The Debtors have filed a Chapter 11 joint plan of liquidation. (Levitt and Sons Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). LEVITT AND SONS: Regency Hills Auctions Lake County, Fla. Assets ---------------------------------------------------------------- Regency Hills by Levitt and Sons, LLC, an affiliate of Levitt and Sons LLC, holds title to certain real property located in Lake County, Florida. On Oct. 20, 2008, Regency Hills, as seller, and Harvest Holdings, LLC, as buyer entered into an agreement for the sale of certain real property, which includes: (1) Hartwood Reserve Phase 1 Lot Nos. 121, 154, 155, 156, 161, and 162, according to the map or plat recorded in Plat Book 54, pages 88 through 98, of the Public Records of Lake County, Florida; and (2) Hartwood Reserve Phase 2 Lot Nos. 73, 74, 189, 190, 296, 299, 301, 306, 307, 308, 309, 311, 313, 314, 315, 316, 321, 322, 323, 324 and 325, according to the map or plat recorded in Plat Book 27, pages 25 through 32, of the Public Records of Lake County, Florida. Pursuant to Sections 363 and 365 of the Bankruptcy Code, Regency Hills asks the United States Bankruptcy Court for the Southern District of Florida to authorize the sale of the Hartwood Properties to Harvest Holdings, subject to higher and better bids. The salient terms of the Hartwood Properties Purchase Agreement are: (a) Harvest Holdings will pay $721,500 for the Property; (b) The assets to be purchased includes the Property, documents, personal property, and contracts; (c) Harvest Holdings will post a $90,000 deposit in the account of the escrow agent; and (d) Regency Hills has reserved the right to accept higher and better offers for the Property. Harvest Holdings' offer is currently the highest and best offer for the Property, According to Jordi Guso, Esq., at Berger Singerman, P.A., at Miami, Florida. All liens will attach to the proceeds of the sale, he adds. Proposed Bidding Procedures To obtain the maximum value for the Property, Regency Hills proposes these bidding procedures: (a) Any bidder for the Property must deliver, no later than December 1, 2008, (1) a copy of the initial written purchase offer and (2) an additional red-lined copy to show the changes made to the Purchase Agreement by the prospective purchaser to the Debtor, the Debtor's counsel, the counsel for the Official Committee of Unsecured Creditors, and Harvest Holdings' counsel. (b) Each bidder must place a deposit in escrow in the trust account of the Debtor's counsel, in an amount equal to 10% of the proposed purchase price. The Initial Deposit will be refundable if the bid is not deemed the highest and best bid. The Initial Deposit will be conditionally non- refundable as to the second-highest bidder. (c) Each bidder must provide evidence of its financial ability to close and to consummate an acquisition of the Property, including evidence of the its ability to provide adequate assurance of future performance under any unexpired leases and executory contracts to be assumed and assigned. (d) Each bidder must disclose any connections or agreements with the Debtors, Harvest Holdings, any other potential bidder or Qualified Bidder, or any officer, director or equity security holder of the Debtors or Proposed Purchaser. (e) The initial qualified competing bid must exceed the Purchase Price by at least $50,000. A competitive bid submitted in accordance with the proposed Bidding Procedures will be deemed a "Qualified Competing Bid." (f) Any successive overbids will be made in increments of not less than $50,000 of cash consideration in excess of the last submitted, highest qualified bid for the Property. (g) The successful bidder will be required to close no later than when the sale order has become final and non- appealable, or an earlier date as the successful bidder elects to close. The Debtor will be authorized to accept the second highest bid as a back-up bid to the Successful Bidder's bid. The Debtor will be permitted to close on the Back-Up Bid if the Successful Bidder does not timely close. (h) If Harvest Holdings is the second highest bidder, it will act as the Back-Up Bidder if the Successful Bidder does not close for any reason. The Initial Deposit will be held until the closing and consummation of the Successful Bidder's acquisition of the Property, but only if the Closing Date is not extended, or is extended with the Successful Bidder's written consent. (i) If Harvest Holdings is not the first or second highest bidder, it will, at its election, have the right to stand as an additional back-up buyer, if the Successful Bidder or the Back-Up Bidder does not close for any reason. If Harvest Holdings elects to serve as the Additional Back-Up Buyer, its Deposit will be held until the closing and consummation of the Successful Bidder's acquisition of the Property. If Harvest Holdings closes, then the Deposit will be applied to the purchase of the Property. If Harvest Holdings chooses not to serve as the Additional Back-Up Bidder and does not enter the highest or next highest bid at the Auction, then its Deposit, plus interest, will be returned. (j) Harvest Holdings' bid will be the initial bid at the Auction to be held at the office of the Debtors' counsel, Berger Singerman, P.A., on December 3, 2008. Only persons or entities submitting Qualified Competing Bids will be eligible to bid at the Auction. (k) The closing of the Sale is expected to occur 11 days after the entry of a sale order. Break-Up Fee and Reimbursable Expenses Regency Hills proposes a maximum amount of $27,000 to reimburse Harvest Holdings for the amount of its reasonable, actual, and fully documented expenses and to serve as Break-Up Fee, in the event it is not selected as the Successful Bidder. Provided Harvest Holdings is not in default, the Break-Up Fee will be granted an administrative expense priority in the Debtor's estate and will be paid from the Closing proceeds. Regency Hills asks the Court to approve the bidding procedures and the proposed auction. It also seeks a sale hearing no later than Dec. 5, 2008. About Levitt and Sons Headquartered in Fort Lauderdale, Florida, Levitt and Sons LLC -- http://www.levittandsons.com/-- is the homebuilding subsidiary of Levitt Corporation (NYSE:LEV). Levitt Corp. -- http://www.levittcorporation.com/-- together with its subsidiaries, operates as a homebuilding and real estate development company in the southeastern United States. The company operates in two divisions, homebuilding and land. The homebuilding division primarily develops single and multi-family homes for adults and families in Florida, Georgia, Tennessee, and South Carolina. The land division engages in the development of master-planned communities in Florida and South Carolina. Levitt and Sons LLC and 38 of its homebuilding affiliates filed for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at Berger Singerman, P.A., represent the Debtors in their restructuring efforts. The Debtors chose AP Services, LLC as their crisis managers, and Kurtzman Carson Consultants, LLC as their claims and noticing agent. Levitt Corp., the parent company, is not included in the bankruptcy filing. The Debtors have filed a Chapter 11 joint plan of liquidation. (Levitt and Sons Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). LEVITT AND SONS: Wachovia, et al., Amend Purchase and Sale Deal --------------------------------------------------------------- The Wachovia Debtors and their chief administrator, Soneet R. Kapila, notified the United States Bankruptcy Court for the Southern District of Florida of the filing of the Third Amended and Restated Agreement of Purchase and Sale between Levitt and Sons of Hall County, LLC, and Easlan Capital of Atlanta, Inc. The Third Amended Purchase Agreement replaces the Second Amended and Restated Agreement of Purchase and Sale filed on Oct. 15, 2008. Among other things, the Third Amended Purchase Agreement provides that: (a) Easlan acknowledges and agrees to waive any and all rights to any break-up fee; (b) The first overbid will have a value of at least $50,000 more than the $1,100,000 Purchase Price; (c) If the sales procedures order is not obtained by Nov. 9, 2008, either LAS Hall County or Easlan may terminate the Third Amended Purchase Agreement, in which event the $50,000 Deposit will be refunded to Easlan; (d) A final sales order should be obtained no later than Nov. 24, 2008. Upon failure of timely obtaining the final sales order, Easlan may elect to terminate the Third Amended Purchase Agreement and be refunded its $50,000 Deposit; (e) Easlan is obligated to close the sale within five business days of the entry of a final sales order. If an appeal or motion for rehearing is pending, Easlan may waive the closing requirement and proceed with Closing, provided there is no stay of the final sales order; and (f) The Escrow Agent is Smith Hulsey & Busey. A full-text copy of the LAS Hall County/Easlan Third Amended and Restated Purchase & Sale Agreement is available at no charge at: http://ResearchArchives.com/t/s?349d About Levitt and Sons Headquartered in Fort Lauderdale, Florida, Levitt and Sons LLC -- http://www.levittandsons.com/-- is the homebuilding subsidiary of Levitt Corporation (NYSE:LEV). Levitt Corp. -- http://www.levittcorporation.com/-- together with its subsidiaries, operates as a homebuilding and real estate development company in the southeastern United States. The company operates in two divisions, homebuilding and land. The homebuilding division primarily develops single and multi-family homes for adults and families in Florida, Georgia, Tennessee, and South Carolina. The land division engages in the development of master-planned communities in Florida and South Carolina. Levitt and Sons LLC and 38 of its homebuilding affiliates filed for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at Berger Singerman, P.A., represent the Debtors in their restructuring efforts. The Debtors chose AP Services, LLC as their crisis managers, and Kurtzman Carson Consultants, LLC as their claims and noticing agent. Levitt Corp., the parent company, is not included in the bankruptcy filing. The Debtors have filed a Chapter 11 joint plan of liquidation. (Levitt and Sons Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). LIVE NATION: Poised to Challenge Ticketmaster for Sales, S&P Says ----------------------------------------------------------------- The world's largest ticketing services company, Ticketmaster, and the world's largest concert promoter, Live Nation Inc., are waging a battle on two fronts-on each other's turf, according to a new Credit FAQ by Standard & Poor's Ratings Services titled "Live Nation Breaks Up With Ticketmaster To Go Solo," published on RatingsDirect. On the ticketing services front, Live Nation Inc. (B/Stable/--) is currently Ticketmaster's (BB+/Stable/--) largest customer, but this won't last much longer. Live Nation is ending its agreement with Ticketmaster in January 2009 to launch an in- house ticketing service for its facilities and is currently trying to persuade third-party venues to switch ticketing service providers once their contacts with Ticketmaster expire. "For Ticketmaster, this represents not only the loss of its largest client, but also the formation of a sizable competitor," explained Standard & Poor's credit analyst Hal F. Diamond. If Live Nation is successful in launching its ticketing service, Ticketmaster could face a formidable competitor with scale and, just as importantly, artist relationships. MONONGAHELA POWER: S&P Hikes Debt Rating to 'BBB-' From 'BB+' ------------------------------------------------------------- Standard & Poor's Ratings Services' raised its senior unsecured debt ratings of 30 U.S. investment-grade investor-owned utility operating companies after reevaluating its application of notching criteria to better reflect the relatively strong recovery prospects of creditors in this sector. "As a result, the senior unsecured debt of most utilities will now be rated the same as the corporate credit rating (CCR) almost uniformly, even when a considerable amount of secured debt is outstanding," said Standard & Poor's credit analyst John Whitlock. This new approach does not affect unsecured debt ratings at unregulated affiliates, such as a holding company. Historically, S&P has approached notching issues from a "priority" perspective. That is, when a debt issue is junior to the company's other debt issues, and S&P therefore view it as having inferior recovery prospects, S&P notches that issue down from the CCR. S&P determines the number of notches by examining the relative amounts of secured and unsecured debt in an entity's capital structure. If sufficient secured debt existed to disadvantage the unsecured bondholders -- for investment-grade companies, the guideline is 20% of assets -- S&P adjusts the rating on the lower-ranked debt to below the CCR. The list shows those ratings that reflect the updated application of notching criteria to utility companies. For more information, see the commentary article "Notching Of U.S. Investment-Grade Investor-Owned Utility Unsecured Debt Now Better Reflects Anticipated Absolute Recovery," published on RatingsDirect. Senior Unsecured Debt Ratings Raised To From -- ---- ALLETE Inc. BBB+ BBB Atlantic City Electric Co. BBB BBB- Carolina Power & Light Co. d/b/a Progress Energy Carolinas Inc. BBB+ BBB Cleveland Electric Illuminating Co. BBB BBB- Connecticut Light & Power Co. BBB BBB- Consumers Energy Co. BBB- BB+ Delmarva Power & Light Co. BBB BBB- Detroit Edison Co. BBB BBB- Florida Power Corp. d/b/a Progress Energy Florida Inc. BBB+ BBB Idaho Power Co. BBB BBB- Kansas Gas & Electric Co. BBB- BB+ Monongahela Power Co. BBB- BB+ Niagara Mohawk Power Corp. A- BBB+ Northern States Power Co. BBB+ BBB Northern States Power Wisconsin A- BBB+ NorthWestern Corp. BBB BBB- Ohio Edison Co. BBB BBB- PacifiCorp A-/ BBB+/ Watch Watch Neg Neg Peoples Gas Light & Coke Co. A- BBB+ Pennsylvania Power Co. BBB BBB- Portland General Electric Co. BBB+ BBB Potomac Electric Power Co. BBB BBB- Public Service Co. of Colorado BBB+ BBB Rochester Gas & Electric Corp. BBB+ BBB San Diego Gas & Electric Co. A A- South Carolina Electric & Gas Co. A- BBB+ Southern California Edison Co. BBB+ BBB Southern California Gas Co. A A- Toledo Edison Co. BBB BBB- Westar Energy Inc. BBB- BB+ * Does not include affiliates affected. MORGAN STANLEY TRUST: S&P Junks Rating on Class Q Certificates -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on four classes of commercial mortgage pass-through certificates from Morgan Stanley Capital I Trust 2007-HQ11. Concurrently, S&P affirmed its ratings on 23 other classes from this transaction. The downgrades reflect credit concerns with five loans on the servicer's watchlist with low reported debt service coverage (DSC) and the anticipated credit support erosion upon the eventual resolution of two of the four assets in the pool that are currently with the special servicer. The affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. To date, the trust has experienced one loss associated with the Central Park I loan. Four loans ($27.2 million) are with the special servicer, J.E. Robert Co. Inc. The loans are: -- The Central Park I loan ($5.7 million) is secured by a 21,000-sq.-ft. unanchored retail center in Hilliard, Ohio, 12 miles east of the Columbus central business district. The loan was transferred to JER on June 27, 2008, due to imminent default. Performance at the property has deteriorated due to a decline in occupancy to 67%, down from 100% at issuance. JER negotiated a loan modification in September 2008, resulting in a $632,500 principal write-down to the trust. As part of the modification agreement, the borrower will post a $230,000 letter of credit or cash reserve that will be used to fund future tenant improvement and leasing commission costs at the property and cover debt service for the next two years. Additional losses are not expected at this time. -- The 525 Metro Place North loan ($3.5 million) is secured by a 75,067-sq.-ft. suburban office property in Dublin, Ohio. The loan was transferred to the special servicer on Sept. 4, 2008, due to payment default. The property was built in 1980 and recently received a $2.6 million renovation. The most recent occupancy was 82%, up from 77% at issuance. Standard & Poor's expects a moderate loss upon the completion of the workout. -- The 110 Beard Street loan ($8.8 million) is secured by a 92,117-sq.-ft industrial warehouse property in Brooklyn, N.Y. The loan is 30-days delinquent and was transferred to JER on Sept. 4, 2008, because a judgment lien was placed against the property due to the nonpayment of a separate working capital loan owed by the sponsor The property was built in 1900 and is 100% occupied. The property has received multiple renovations since 1900, the most recent of which occurred in 1982. Standard & Poor's expects a minimal loss upon the completion of the workout. -- The 9053-9057 Sutphin Boulevard loan ($9.1 million) is secured by a 10,000-sq.-ft. unanchored retail property in Jamaica, Queens, N.Y. The loan was transferred to JER on April 9, 2008, due to payment default. The property is currently 100% occupied. JER has initiated a cash trap and expects to collect sufficient funds to make the monthly payments. Standard & Poor's does not consider the loan to be a credit concern at this time. Five ($35.3 million, 1.5%) of the 14 loans ($365.9 million, 15.2%) in the pool that have a reported low DSC are credit concerns. The five loans are secured by hotel, retail, and office properties that have experienced a combination of declining occupancy and higher operating expenses. The loans have an average balance of $7.0 million and have experienced a weighted average decline in DSC of 42% since issuance. The nine loans with low DSC that are not considered credit concerns at this time have demonstrated improved performance based on interim financial reports, or have relatively low leverage. As of the Oct. 15, 2008, remittance report, the collateral pool consisted of 171 loans with an aggregate balance of $2.40 billion, compared with the same number of loans with an aggregate balance of $2.42 billion at issuance. The master servicer reported financial information for 97% of the pool, 94% of which was full- year 2007 data. Standard & Poor's calculated a weighted average DSC of 1.44x for the pool, down from 1.45x at issuance. All of the loans in the pool are current except for the loans with the special servicer. The top 10 loans have an aggregate outstanding balance of $1.1 billion (47.5%) and a weighted average DSC of 1.46x, down slightly from 1.47x at issuance. Two of the top 10 loans have credit characteristics that are consistent with those of investment-grade rated obligations. The largest loan in the pool, the One Seaport Plaza loan, has a trust balance of $225.0 million (9.35% of the pool balance) and a whole-loan balance of $240 million. The whole loan includes the $225.0 million A note in the trust and a $15 million subordinate B note that is held outside of the trust. The loan is secured by a first mortgage encumbering the fee interest in a 35-story class A office building with a total of 1.025 million net rentable sq. ft. located in New York City's financial district. The building occupies the entire city block bordered by Water Street, Front Street, John Street, and Fulton Street. Wachovia N.A. leases 46% of the net rentable area (NRA) at the property and subleases most of the space. On Oct. 3, 2008, Wells Fargo announced its acquisition plans for Wachovia. The acquisition is planned to close by year end and Wells Fargo is expected to assume the lease obligation. Standard & Poor's will continue to monitor the situation. The Deptford Mall loan is the seventh-largest loan in the pool and has a trust balance of $80 million and whole loan balance of $172.5 million. The whole loan includes a $80 million pari passu note included in the trust, a $60 million pari passu note included in the Morgan Stanley Capital I Trust 2007-HQ12 transaction, and a $32.5 million subordinate B note that is held outside of the trust. The loan is secured by a first mortgage encumbering 346,626 sq. ft. of a 1,043,068-sq.-ft. regional mall in Deptford, N.J., 13 miles south of Philadelphia. For the year ended Dec. 31, 2007, DSC was 2.21x and occupancy was 99.6%. Standard & Poor's adjusted valuation for this loan is comparable with its level at issuance. The servicers provided property inspections for all of the assets that underlie the top 10 loan exposures. All of the properties were characterized as "good." Capmark reported a watchlist of 34 loans ($429.3 million, 17.8%). While two of the top 10 largest loans ($136.2 million, 5.6%) in the pool are on the servicer's watchlist for low DSC, they are performing within S&P's expectations and are not credit concerns at this time. Standard & Poor's identified three loans ($18.7 million; 0.8%) backed by properties in areas affected by Hurricane Ike. Capmark reported no significant damage at these properties. Standard & Poor's stressed the loans on the watchlist, along with other loans with credit issues, as part of its pool analysis. The resultant credit enhancement levels support the lowered and affirmed ratings. RATINGS LOWERED Morgan Stanley Capital I Trust 2007-HQ11 Rating Class To From Credit enhancement (%) ----- -- ---- ---------------------- N B+ BB- 1.98 O B B+ 1.86 P B- B 1.48 Q CCC+ B- 1.10 RATINGS AFFIRMED Morgan Stanley Capital I Trust 2007-HQ11 Class Rating Credit enhancement (%) ----- ------ ---------------------- A-1 AAA 30.11 A-1A AAA 30.11 A-2 AAA 30.11 A-3-1 AAA 30.11 A-3-2 AAA 30.11 A-AB AAA 30.11 A-4 AAA 30.11 A-4FL AAA 30.11 A-MFL AAA 20.07 A-M AAA 20.07 A-J AAA 12.16 B AA+ 11.40 C AA 9.90 D AA- 8.89 E A+ 8.39 F A 7.51 G A- 6.50 H BBB+ 5.37 J BBB 4.37 K BBB- 2.99 L BB+ 2.61 M BB 2.36 X AAA N/A N/A -- not applicable NATIONAL RV: Judge Carroll Approves Plan Disclosure Statement ------------------------------------------------------------- The Hon. Peter Carroll of the United States Bankruptcy Court for the Central District of California approved a disclosure statement explaining a plan of liquidation dated Aug. 26, 2008, Jamie Mason of The Deal reports. Minor objections to the disclosure statement were resolved, he says. A hearing is set for Dec. 16, 2008, to consider confirmation of the company's plan, the report says. There were some modifications made to the company's disclosure statement, which will be outlined in an amended disclosure statement to be filed with the Court, the report says. XRoads Solutions Group LLC's Michael Schwarzmann will serve as liquidating trustee, the report notes. The plan will be funded with $7 million in cash that the company hopes to generate from liquidating its assets and proceeds from litigation, the report relates. According to the Deal, administrative, priority tax claims and priority not-tax claims will be paid in full in cash on the plan's effective date. Prepetition administrative goods claims, totaling $2.5 million, will be paid in full in cash while holders of filing tax claims are expected to get a full recovery in cash, the report says. Secured creditor Wells Fargo Bank, NA, was paid during the company's bankruptcy; However, other secured creditors, totaling $100,000, will be paid in full in cash, the report says. The report relates unsecured creditors will recover 100% of its $479,000 in claims but unsecured creditors of the company's affiliate, National RV Inc., will receive between 10% and 49% under the plan. Convenience claims, totaling $1.6 million, will get a 65% recovery in cash, and subordinated will receive a 50% recovery under a settlement through a $75,000 payment, the report says. About National R.V. Headquartered in Perris, California, National R.V. Holdings Inc. (Pink Sheets: NRVH) -- http://www.nrvh.com/-- through its wholly owned subsidiary, National RV Inc., produces motorized recreational vehicles. National RV designs, manufactures and markets Class A gas and diesel motorhomes under model names Surf Side, Sea Breeze, Dolphin, Tropi-Cal, Pacifica and Tradewinds. The Companies filed for Chapter 11 protection on Nov. 30, 2007 (Bankr. C.D. Calif. Lead Case No. 07-17937). David Guess, Esq., at Klee Tuchin Bogdanoff & Stern LLP, represents the Debtors in their restructuring efforts. The Debtors selected OMNI Management Group LLC as their claim, notice and balloting agent. The U.S. Trustee of Region 16 appointed seven creditors to serve on an Official Committee of Unsecured Creditors in this case. Pachulski Stang Ziehl & Jones LLP represents the Committee. When the Debtors filed for protection against their creditors, it listed total assets of $54,442,000 and total debts of $30,128,000. NON-INVASIVE MONITORING: Eisner LLP Raises Going Concern Doubt -------------------------------------------------------------- Eisner LLP, in New York, expressed substantial doubt about Non- Invasive Monitoring Systems Inc.'s ability to continue as a going concern after auditing the company's financial statements for the year ended July 31, 2008 and 2007. The auditing firm pointed to the company's recurring net losses, cash outflows from operating activities and accumulated deficit and substantial purchase commitments. The company reported net loss of $1,848,000 for fiscal year ended July 31, 2008, compared to net loss of $1,372,000 for the same period in the previous year. Liquidity and Capital Resources At July 31, 2008, the company has cash of $86,000 and working capital of $494,000. These funds will not be sufficient for its operating needs, and the company will need to obtain additional debt or equity financing to continue its business activities during fiscal 2009. No assurance can be given that such additional financing will be available on acceptable terms or at all. Net cash used in operating activities increased to $2,232,000 for the year ended July 31, 2008, from $948,000 for the year ended July 31, 2007. This increase of $1,284,000 was principally due to an increase in inventory and advances to Sing Lin as the company prepares to commence sales of the full line of Exer-Rest(R) platforms, and the increase in operating expenses. Net cash provided by investing activities was $86,000 for the year ended July 31, 2008, due to the redemption of $400,000 in certificates of deposit held as collateral for bank notes, offset by cash payments of $300,000 for Exer-Rest(R) tooling and the $25,000 purchase of five Exer-Rest(R) AT units to be used for demonstration purposes. Investing activities in 2007 used $419,000, due to the initial purchase of the $400,000 of certificates of deposit. Net cash provided by financing activities decreased to $1,076,000 for the year ended July 31, 2008, from $2,119,000 for the year ended July 31, 2007. The decrease of $1,043,000 was due to the difference between the $1.5 million raised by the April 2008 Series D Preferred Stock Offering and the $2.2 million raised by the October 2006 Equity Financing. Cash flows from financing activities were also lower in 2008 due to the repayment of the $500,000 of bank notes secured by the certificates of deposit. Non-Invasive Monitoring's balance sheet at July 31, 2008, showed total assets of $1, 459,000, total liabilities of $495,000 and shareholders' equity $964,000. A full text copy of the company's annual financial report is available for free at http://ResearchArchives.com/t/s?3496 About Non-Invasive Monitoring Based in Miami, Florida, Non-Invasive Monitoring Systems Inc. (OTC BB: NIMU) -- http://www.nims-inc.com/-- is engaged in the development of innovative medical products utilizing new and unique technologies to address a wide variety of medical conditions. The company specializes in products that use a natural approach to assist subjects without the use of drugs or any invasive procedures. The company's flagship product is the Acceleration Therapeutics AT-101. NYMAGIC INC: Fitch Downgrades Sr. Debt to 'BB+'; Outlook Negative ----------------------------------------------------------------- Fitch Ratings has downgraded these ratings: NYMAGIC, INC. -- Issuer Default Rating (IDR) to 'BBB-' from 'BBB'; -- $100 million senior debt 6.5% due March 15, 2014 to 'BB+' from 'BBB-'. The Outlook is Negative. The rating action follows NYMAGIC's announcement that the company posted a third-quarter year-to-date net loss of $85 million, including $30 million of after-tax realized investment losses, net investment losses of $48 million, and after-tax catastrophe losses of $5 million. In addition, the results include an after-tax charge of $8 million as a result of a settlement of certain disputed reinsurance receivables taken in the second quarter. The combination of these issues has negatively affected the organization's capital position and financial flexibility. NYMAGIC's debt-to-total capital ratio was roughly 35% at Sept. 30, 2008, up from 26% at Dec. 31, 2007, due to a 34% drop in shareholders' equity through the first nine months of 2008. The Negative Rating Outlook reflects the significant unrealized market value losses that have impacted almost all insurers due to unprecedented market volatility. The Negative Outlook also reflects uncertainty as to the timing and extent of any recovery in market values and concerns related to ongoing market volatility that has the potential for significant further reductions in capital if market values decline further, and additional impairments are recognized. Fitch expects NYMAGIC's GAAP earnings-based interest coverage to be negative in 2008. Fitch notes that NYMAGIC held almost $36 million of cash and $46 million of investments at the holding company at Sept. 30, 2008 (down from $120 million at year-end 2007) that can be used to service debt. However, Fitch expects NYMAGIC's ability to upstream statutory dividends from the operating subsidiaries to the holding company will be reduced in 2009 by regulatory restrictions that limit the amount of dividends that can be paid without prior approval to the lesser of statutory net income or 10% of policyholders' surplus (PHS). Additionally, the company infused $20 million in capital to the operating subsidiaries earlier this year and Fitch believes the company may downstream an additional amount if PHS continues to decline. Fitch believes NYMAGIC's results in 2008 demonstrate a higher level of financial volatility than what was anticipated at the prior rating level. NYMAGIC employs a non-traditional investment strategy with 45% of the portfolio in hedge funds, residential mortgage backed securities (RMBS) and preferred stock. These securities were the primary drivers of the large investment losses. Fitch believes NYMAGIC's exposure to additional investment losses during the remainder of 2008 and into 2009 is greater than many of its property-casualty peers whose portfolios are weighted more heavily to U.S. treasuries and municipal bonds. NYMAGIC's investment portfolio includes seven Alt-A, super senior RMBS with a fair value of $62.3 million on a GAAP basis, or 11.2% of its total cash and investment portfolio at Sept. 30, 2008. As a result of the housing market turmoil and uncertainty regarding the asset valuations of these securities given market illiquidity, the company recorded other-than-temporary impairment (OTTI) charges of $7 million in 2007 and $40 million thus far in 2008. On a statutory basis, these securities are carried at an amortized cost of $100 million, or 55% of PHS. Should these securities experience economic losses or suffer a ratings downgrade to below investment grade (they are currently rated 'AAA'), PHS would be negatively impacted. OSI RESTAURANT: Moody's Junks Corp. Family Rating; Outlook Stable ----------------------------------------------------------------- Moody's Investors Service downgraded the probability of default rating (PDR) and corporate family rating (CFR) of OSI Restaurant Partners, LLC (OSI) to Caa1 from B2. In addition, Moody's lowered the senior unsecured ratings of OSI to Caa3 (LGD5, 86%) from Caa1 (LGD5, 85%) and senior secured ratings to B3 (LGD3, 33%) from B1 (LGD3, 33%). The outlook is stable. The downgrades reflect the company's weaker than expected operating performance and debt protection measures as a deteriorating macroeconomic environment, cost inflation, and competitive pressures continue to weigh heavily on consumer spending and this issuer's margins, earnings, and cash flow. The affirmation of the SGL-3 speculative grade liquidity rating reflects Moody's view that OSI's liquidity should remain adequate over the upcoming twelve months, although the cushion under the company's covenants is modest and could limit availability under its revolver. Ratings downgraded are: * Corporate family rating lowered to Caa1 from B2, * Probability of default rating lowered to Caa1 from B2, * $150 million working capital revolver maturing in 2013 lowered to B3 (LDG 3, 33%) from B1 (LGD 3, 33%) * $100 million pre-funded revolver maturing in 2013 lowered to B3 (LGD 3, 33%) from B1 (LGD 3, 33%) * $1.310 billion term loan B maturing in 2014 lowered to B3 (LGD 3, 33%) from B1 (LGD3, 33%) * $550 million senior unsecured notes maturing in 2015 lowered to Caa3 (LGD 5, 86%) from Caa1 (LGD 5, 85%) Rating affirmed: * SGL-3 speculative grade liquidity rating The outlook is stable. The Caa1 corporate family rating reflects OSI's relatively weak operating performance, high leverage, and weak interest coverage. The ratings also reflect Moody's view that increasing consumer weakness and economic uncertainties will continue to negatively impact operating performance and make it difficult for OSI to materially improve earning over the intermediate term. However, the ratings also incorporate OSI's meaningful scale, the significant brand awareness of Outback Steakhouse, and geographic diversity. The stable outlook reflects Moody's view that OSI will maintain a level of operating performance and debt protection measures that are appropriate for its ratings and that the company's liquidity will remain adequate. The most recent rating action on OSI was the downgrade of its speculative grade liquidity rating to SGL-3 from SGL-2 and the change in outlook to negative from stable in March 2008. OSI Restaurant Partners, Inc., (OSI) headquartered in Tampa, Florida, is one of the largest casual dining restaurant companies in the world with eight concepts located throughout the United States and in 20 countries. Core concepts include Outback Steakhouse, Carrabba's Italian Grill, and Bonefish Grill. For the LTM period ended June 30, 2008, total revenues were approximately PAUL REINHART: May Liquidate Under Chapter 11 Absent Financing -------------------------------------------------------------- Paul Reinhart is planning to push a plan to liquidate its assets under Chapter 11 of the U.S. Bankruptcy Code if the company could not locate a purchaser or obtain financing to reorganize, Bloomberg News reports. The company's counsel said in a telephone interview that it may ask a 363 sale if the company receives bids for large portion of its assets; otherwise the sale will be made in the ordinary course of business, the report says. Based in Richardson, Texas, Paul Reinhart Inc. is a cotton merchant serving organic and traditional growers and textile mills. The company filed for Chapter 11 relief on Oct. 15, 2008 (Bankr. N.D. Tex. 08-35283). Deborah M. Perry, Esq., and E. Lee Morris, Esq., at Munsch Hardt Kopf & Harr, P.C., represent the Debtor as counsel. The U.S. Trustee for Region 6 appointed creditors to serve on an Official Committee of Unsecured Creditors in this cases. Michael R. Rochelle, Esq., at Rochelle McCullough L.L.P., represents the Committee. When the Debtor filed for protection from its creditors, it listed assets of between $100 million and $500 million, and the same range of debts. RADNOR HOLDINGS: Wants to Modify First Amended Chapter 11 Plan -------------------------------------------------------------- Radnor Holdings Corporation and its debtor-affiliates ask the United States Bankruptcy Court for the District of Delaware for authority to modify their first amended joint Chapter 11 plan of liquidation dated March 20, 2008. A hearing is set for Dec. 1, 2008, at 9:30 a.m., to consider approval of the motion. Objections, if any, are due Nov. 24, 2008, by 4:00 p.m. In addition, the Debtors delivered to the Court a second amended joint Chapter 11 plan of liquidation dated Oct. 31, 2008, which contemplates, among other things: i) no substantive consolidation; ii) no cram down of secured lender Wells Fargo Bank, N.A.; and iii) certain distributions to secured lenders will be channeled to creditors holding allowed administrative, priority and non-tax priority claims. The Debtors may move to dismiss certain of their Chapter 11 cases if the second amended plan is rejected or, in the alternative, convert certain of their cases to Chapter 7 liquidations. Overview of the Second Amended Plan The plan contemplates the liquidation of the Debtors' assets and the resolution of the outstanding claims against and interest in the Debtors. The plan provides for the distribution of certain proceeds from any sale and the creation of a liquidating trust that will administer and liquidate all remaining property of the Debtors including causes of action. The plan further provides for (i) the distribution to certain holders of administrative expense and priority claims, and the funding of the plan trust, and (ii) the termination of all interests in the Debtors and liquidation of their affairs. Moreover, the plan provides for he issuance of new common stock to the plan trust. The Debtors have insufficient assets in the estate to pay all administrative, priority tax and non-tax priority claims. Several of the Debtors have no assets and are obliged on large priority tax claims. The secured lenders hold a superpriority administrative expense adequate protection claim of $27.6 million against the Debtors, which is senior in right of payment to other administrative claims and priority tax claims. The secured lenders also assert other administrative claims of $12 million. Secured lenders may not receive any distribution if the plan is rejected. In addition, the secured lender agreed that (a) allowed professional advisors fee claims of the Debtors will be paid before to any payments on account of the secured lenders' allowed claims; and 5% of all distributions to the secured lenders on account of their claims will be distributed on a pro rata basis to holders of allowed administrative, priority tax and non-tax priority claims until the claims are paid in full. The Plan classifies interests against and liens in the Debtors in nine classes. The classification of treatment claims are: Treatment of Claims Class Type of Claims Treatment ----- -------------- --------- unclassified administrative impaired unclassified priority tax impaired 1 assumed unimpaired liabilities 2 other secured unimpaired 3 non-tax priority impaired 4A secured lender impaired 4B midland impaired 5 general unsecured impaired 6 intercompany impaired 7 subordinated 510(c) impaired 8 subordinated 510(b) impaired 9 old equity interest Under the plan, these claims will be paid in full in cash, including: -- Administrative claims; -- Priority Tax Claims; -- Assumed Liabilities Claims; -- Other Secured Claims; and -- Non-Tax Priority Claims. On the distribution date, holders of secured lender claims, totaling approximately $28 million, will also receive in full from the liquidating trustee. The holders and their agent have the right to prove that claims exceed $28 million. Payment of these claims will be secured by all of the assets and property of the estate. Each holders of Midland claims will be entitled to the rights provided in the Midland Loan documents. However, certain of the covenants and other terms of that documents will be modified, as of the effective date of the Plan. Holders of General Unsecured claims will receive in full a pro rata share of the initial distribution amount, after secured lender's claims are paid in full. On the effective date of the plan, these claims will be canceled and each holders of these claim will not receive any property: -- Intercompany claims; -- Subordinated 510(c) claims; -- Subordinated 510(b) claims; and -- Old Equity Interests. A full-text copy of Radnor's Disclosure Statement dated March 20, 2008, is available for free at: http://ResearchArchives.com/t/s?2986 A full-text copy of Radnor's First Amended Joint Chapter 11 Plan of Liquidation is available for free at: http://ResearchArchives.com/t/s?286f A full-text copy of Radnor's Second Amended Joint Chapter 11 Plan of Liquidation is available for free at: http://ResearchArchives.com/t/s?34b3 Based in Radnor, Pennsylvania, Radnor Holdings Corporation -- http://www.radnorholdings.com/-- manufactured and distributed a broad line of disposable food service products in the United States, and specialty chemicals worldwide. The Debtor and its affiliates filed for chapter 11 protection on Aug. 21, 2006 (Bankr. D. Del. Lead Case No. 06-10894). Gregg M. Galardi, Esq., Mark L. Desgrosseilliers, Esq., Sarah E. Pierce, Esq., Timothy R. Pohl, Esq., Patrick J. Nash, Jr., Esq., and Rena M. Samole, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represent the Debtors. The U.S. Trustee recently disbanded the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed total assets of $361,454,000 and total debts of $325,300,000. RESOURCE REAL ESTATE: Fitch Holds B Rating on $28.7M Class M Loans ------------------------------------------------------------------ Fitch Ratings affirms and assigns Rating Outlooks to Resource Real Estate Funding CDO 2007-1 Ltd./LLC (RRE 2007-1) as: -- $180,000,000 class A-1 at 'AAA'; Outlook Stable; -- $50,000,000 class A-1R at 'AAA'; Outlook Stable; -- $57,500,000 class A-2 at 'AAA'; Outlook Stable; -- $22,500,000 class B at 'AA+'; Outlook Stable; -- $7,000,000 class C at 'AA'; Outlook Stable; -- $26,750,000 class D at 'AA-'; Outlook Stable; -- $11,875,000 class E at 'A+'; Outlook Stable; -- $11,875,000 class F at 'A'; Outlook Stable; -- $11,250,000 class G at 'A-'; Outlook Stable; -- $11,250,000 class H at 'BBB+'; Outlook Stable; -- $11,250,000 class J at 'BBB'; Outlook Stable; -- $10,000,000 class K at 'BBB-'; Outlook Stable; -- $18,750,00,000 class L at 'BB'; Outlook Stable; -- $28,750,000 class M at 'B'; Outlook Stable. Fitch has affirmed and assigned a Stable Outlook to all classes due to the stable performance of the portfolio and adequate cushion in the Poolwide Expected Loss (PEL). The credit characteristics of the loans have improved since the last review as more loans within the pool progressed in the realization of their business plan. This improvement was dampened by the addition of two assets (2.9% of the collateral) contributed to the pool with a higher expected loss than the three loans that paid off or were sold at par and the downgrade of five CMBS bonds (3.9% of the pool) since last review. The PEL was further impacted by the application of the interim surveillance methodology for CMBS assets. The as-is PEL is 27.875% compared to a PEL covenant of 36%, which results in 8.125% of PEL reinvestment cushion. This transaction remains Under Analysis reflecting the potential for ratings to be impacted by the proposed change to Fitch's rating methodology for CDOs with exposure to all types of structured finance assets, as announced on Oct. 14, 2008. Transaction Summary: RRE 2007-1 is a revolving commercial real estate (CRE) cash flow collateralized debt obligation (CDO) that closed on June 26, 2007. It was incorporated to issue $500,000,000 of floating and fixed rate notes and preferred shares. As of the Oct. 21, 2008 trustee report and based on Fitch categorizations, the CDO is substantially invested as follows: commercial mortgage whole loans and A-notes (63.4%), B-notes (11.2%), commercial real estate mezzanine loans (10.5%), commercial mortgage-backed securities (9.3%), and uninvested proceeds (5.5%). The CDO is also permitted to invest in real estate bank loans and REIT debt. As of Oct. 21, 2008, $35.4 million had been advanced from the A-1R class with $14.6 million remaining compared to $9.6 million in future funding commitments remaining on the loans within the transaction. The portfolio is selected and monitored by Resource Real Estate, Inc. (RRE). RRE 2007-1 has a five-year reinvestment period during which, if all reinvestment criteria are satisfied, principal proceeds may be used to invest in substitute collateral. The reinvestment period ends in August 2012. Performance Summary: The CDO's PEL covenant varies depending on the in-place weighted average spread (WAS). The transaction has an 8.125% cushion to its maximum PEL covenant of 36%, based on the current WAS of 2.5%. Since Fitch's last review in March 2008, the as-is PEL decreased to 27.875%. The improvement is attributed to the realization of sponsor business plans. However, this improvement was dampened by the addition of two assets with a higher weighted average expected loss than those repaid or removed and the application of the interim surveillance model for commercial real estate structured securities. One new loan (1.9%) and one rated security (1%) were added which have a higher weighted average expected loss than the three loans (6.1%) that were repaid or sold. The newly added CRE loan is a mezzanine position secured by an interest in a portfolio of twelve luxury hotels located in resort locales including San Juan, Jamaica and the Florida Keys. The class K tranche of the JPMCC 2006-FL2 (rated 'BBB-' by Fitch) was also added. Two rated securities, WBCMT 2007-C30 Class K (1%) and MLCFC 2007-6 Class H (1%) were both recently downgraded due to their exposure to a loan secured by Stuyvesant Town - Peter Cooper Village. This loan accounts for 19% of the WBCMT transaction and 9.5% of the MLCFC transaction. The loan, which had a 'BBB-' shadow rating at issuance, is no longer considered investment grade. As of the October 2008 trustee report, the CDO was in compliance with all but two of its reinvestment covenants. The CDO has exceeded the maximum Fitch Loan Diversity Index (LDI) covenant with a current LDI of 350 as compared to the covenanted maximum of 345. Additionally, the CDO has a maximum of 0% below investment grade securities. Currently, the pool has 2.9%. Both the concentration of the assets and the credit quality of the securities are factored into the determination of the pool's as-is PEL. The WAS has remained consistent at 2.5% as compared to 2.51% at last review, maintaining a slight cushion to its covenant of 2.45%. The weighted average coupon has also remained consistent at 7.27% as compared to 7.28% at last review, also above its covenant of 6.5%. The overcollateralization (OC) and interest coverage (IC) ratios of all classes have remained above their covenants, as of the October 2008 trustee report. Collateral Analysis: The majority of the collateral continues to be whole loans and A- notes loans at 63.4%. As of the October 2008 trustee report, the CDO is within all its property type covenants. Based upon Fitch categorizations, loans on multifamily and office properties, representing 23.7% and 18.7% of the portfolio respectively, remain as the largest property type categories. There is one loan representing 2% of the pool that is backed by a condominium conversion. The CDO is also within all of its geographic location covenants with the highest percentage of assets located in California at 28.6% and New York at 14% of the portfolio. The Fitch Loan Diversity Index (LDI) increased to 350 from 343 at last review, which represents average diversity as compared to other CRE CDOs. The LDI covenant is 345 and no single obligor or group of affiliated obligors may represent more than 8% of the portfolio. Based upon the trustee report, the largest obligor currently represents 6.2% of the transaction. Collateral Asset Manager: Resource Real Estate Inc. (RRE and affiliates) originates, acquires, invests in, and manages a diversified portfolio of commercial real estate loans (CRELs) and securities, including whole loans, B notes, mezzanine loans, and commercial mortgage- backed securities (CMBS) investments on behalf of Resource Capital Corp. (RCC; NYSE: RSO), an externally managed real estate investment trust. RRE has $1.8 billion of assets under management. RRE's business lines also include the resolution of a portfolio of one-off restructured commercial mortgages acquired between 1991 and 1998, the sponsorships of private equity funds that invest in stable multifamily properties on a nationwide basis, and the structuring and management of tenant-in-common investment interests in real property. RRE is a wholly owned subsidiary of Resource America, Inc. (RAI). RAI is a publicly traded specialized asset management company managing $18.8 billion as of June 30, 2008; this includes 38 collateralized debt obligations (CDOs) within its core competency sectors: financial institutions, real estate, asset-backed securities, syndicated loans, and leasing. Ongoing Surveillance: Upgrades during the reinvestment period are unlikely given the pool could still migrate to the PEL covenant. Fitch will consider assigning Negative Outlooks or placing classes on Rating Watch Negative should the reinvestment cushion fall to 2% or below. Additionally, Fitch performs underlying property value decline stress testing on the CDO's liabilities. To the extent investment grade rated bonds could be impaired by a 25% property value decline, classes could also be assigned Negative Outlooks, placed on Rating Watch Negative or downgraded. The Fitch PEL is a measure of the hypothetical loss inherent in the pool at the 'AA' stress environment before taking into account the structural features of the CDO liabilities. Fitch PEL encompasses all loan, property, and pool-wide characteristics modeled by Fitch. Fitch will continue to monitor and review this transaction and will issue an updated Snapshot report after each committeed review. The surveillance team will conduct a review whenever there is approximately 15% change in the collateral composition, quarterly, or semi-annually. The ratings of the class A-1, A-1R, A-2, B, C, and D notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. The ratings of the class E, F, G, H, J, K, L, and M notes address the likelihood that investors will receive ultimate interest and deferred interest payments, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. Fitch introduced Rating Outlooks for U.S. structured finance in September 2008 to provide investors with forward-looking analysis for a structured finance tranche's credit performance. Fitch's Rating Outlook indicates the likely direction of any rating change over a one- to two-year period and may be Positive, Negative, Stable or, occasionally, Evolving. More information is available in Fitch's Sept. 11, 2008 report 'Introducing Rating Outlooks for U.S. Structured Finance Bonds'. For CREL CDOs, a Negative Outlook may be assigned to any class that fails Fitch's stress testing. Fitch's stress testing assumes various property value declines for each rating stress. Based on these results, any loan whose loan-to-value ratio is greater than 100% is assumed to default with the recovery calculated based on the property value in that rating stress. SCO GROUP: Novell Inc. Wants $625,487 Payment For Linux/Unix ------------------------------------------------------------ Heise Online reports that Novell Inc. is demanding a $625,486.90 payment from SCO Group. Heise Online relates that SCO and Novell are in a legal battle over SCO's claims concerning ideas and concepts in Linux and Unix. According to its financial statements, SCO has $1.6 million in cash available. Heise Online relates that before any possible insolvency of SCO occurs, Novell wants to see the money it is entitled to in accordance with the court ruling. SCO, says Heise Online, has appealed against that ruling, but has accepted the sum in question as an outstanding debt. According to Heise Online, Novell said that it doesn't believe the plan for reorganization that SCOPDF at the SCO Forum presented in Las Vegas. Heise Online says that under the plan, an investor will join SCO and that the company will transfer vested rights with retained value to a new company, SCO Operations. The report states that the ongoing actions against IBM, Novell, Red Hat, and others would remain with the old SCO. About Novell Inc. Headquartered in Waltham, Massachusetts, Novell Inc. (Nasdaq: NOVL) -- http://www.novell.com/-- delivers infrastructure software for the Open Enterprise. Novell provides desktop to data center operating systems based on Linux and the software required to secure and manage mixed IT environments. About The SCO Group Headquartered in Lindon, Utah, The SCO Group Inc. (Nasdaq:SCOX) fka Caldera International Inc. -- http://www.sco.com/-- provides software technology for distributed, embedded and network-based systems, offering SCO OpenServer for small to medium business and UnixWare for enterprise applications and digital network services. The company has office locations in Australia, Austria, Argentina, Brazil, China, Japan, Poland, Russia, the United Kingdom, among others. The company and its affiliate, SCO Operations Inc., filed for Chapter 11 protection on Sept. 14, 2007, (Bankr. D. Del. Lead Case No. 07-11337). Paul Steven Singerman, Esq., and Arthur Spector, Esq., at Berger Singerman P.A., represent the Debtors in their restructuring efforts. James O'Neill, Esq., and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, are the Debtors' Delaware and conflicts counsels. Epiq Bankruptcy Solutions LLC, acts as the Debtors' claims and noticing agent. The United States Trustee failed to form an Official Committee of Unsecured Creditors in these cases due to insufficient response from creditors. The Debtors' schedules showed total assets of $9,549,519 and total liabilities of $3,018,489. SEA CONTAINERS: Bermuda OKs Voting on Scheme of Arrangement ----------------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission dated October 15, 2008, Sea Containers Limited disclosed that on October 8, 2008, the Supreme Court of Bermuda authorized SCL to (i) begin soliciting votes on its Scheme of Arrangement, pursuant to Section 99 of the Companies Act 1981 of Bermuda between SCL and its scheme creditors, and (ii) distribute to its creditors a related explanatory statement. The deadline for SCL's creditors to accept or reject the Scheme of Arrangement is on November 10, 2008. In connection with the Debtors' Second Amended Joint Plan of Reorganization and Disclosure Statement, five directly or indirectly owned subsidiaries of SCL filed with the High Court of Justice of England & Wales proposed schemes of arrangement pursuant to Part 26 of the Companies Act 2006 of Great Britain, and a related explanatory statement with respect to each scheme. The five subsidiaries are: (1) 0438490 Travel Limited; (2) 1882420 Limited; (3) SC Maritime Limited; (4) Sea Containers Services Limited; and (5) Yorkshire Marine Containers Limited Copies of the proposals are available at SEC: http://sec.gov/Archives/edgar/data/88095/000110465908064195/a08- 24803_38k.htm Based in Hamilton, Bermuda, Sea Containers Ltd. -- http://www.seacontainers.com/-- provides passenger and freight transport and marine container leasing. Registered in Bermuda, the company has regional operating offices in London, Genoa, New York, Rio de Janeiro, Sydney, and Singapore. The company is owned almost entirely by United States shareholders and its primary listing is on the New York Stock Exchange (SCRA and SCRB) since 1974. On Oct. 3, the company's common shares and senior notes were suspended from trading on the NYSE and NYSE Arca after the company's failure to file its 2005 annual report on Form 10-K and its quarterly reports on Form 10-Q during 2006 with the U.S. Securities and Exchange Commission. Through its GNER subsidiary, Sea Containers Passenger Transport operates Britain's fastest railway, the Great North Eastern Railway, linking England and Scotland. It also conducts ferry operations, serving Finland and Estonia as well as a commuter service between New York and New Jersey in the U.S. Sea Containers Ltd. and two subsidiaries filed for Chapter 11 protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156). Edmon L. Morton, Esq., Edwin J. Harron, Esq., Robert S. Brady, Esq., Sean Matthew Beach, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors and the Financial Members Sub-Committee of the Official Committee of Unsecured Creditors of Sea Containers Ltd. is represented by William H. Sudell, Jr., Esq., and Thomas F. Driscoll, Esq., at Morris, Nichols, Arsht & Tunnell LLP. Sea Containers Services, Ltd.'s Official Committee of Unsecured Creditors is represented by attorneys at Willkie Farr & Gallagher LLP. In its schedules filed with the Court, Sea Containers disclosed total assets of $62,400,718 and total liabilities of $1,545,384,083. (Sea Containers Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SEA CONTAINERS: To Enter into $150MM Exit Financing --------------------------------------------------- To successfully emerge from bankruptcy and consummate the transactions contemplated under their Second Amended Joint Plan of Reorganization, Sea Containers Ltd. and two subsidiaries need to secure exit financing, relates Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware. For this reason, the Debtors seek the authority from the U.S. Bankrutpcy Court for the District of Delaware to enter into a $150,000,000 exit financing with Fortis Bank (Nederland) N.V. and DVB Bank S.E. pursuant to a commitment letter. In addition to repaying the DIP loan, the Plan provides that the Debtors use Exit Financing proceeds to fund certain payments under the Plan, and provide working capital for SeaCo Finance Ltd., the entity to which Sea Containers Ltd.'s container interests will be transferred. A copy of the Commitment Letter is available for free at: http://bankrupt.com/misc/SeaCon_Commitment_Letter.pdf The Exit Facility Under the Commitment Letter, the Exit Lenders will provide SCL with exit financing consisting of a term loan facility of up to $150,000,000. Borrower SeaCo Finance Ltd. Guarantors Sea Containers SPC Ltd, Quota Holdings Ltd. and Newco America Administrative Fortis Bank Agent Term Loan Aggregate principal amount of up to Facility $150,000,000 will be available pursuant to a five-year term loan facility. Maturity The fifth anniversary after the Funding Date. The Funding Date is expected to occur on or prior to January 31, 2009. Fees * Upfront fee of 1.75% of the initial principal amount under the Term Loan Facility; * Administrative Agent fee of $75,000 fixed annual fee; * Commitment fee of 3% per annum of the facility amount; * Work fee of $250,000; and * Termination fee equal to (i) 75% of the Upfront Fee, minus (ii) the Work Fee. Events of The usual and customary events in transaction Default of this type, including nonpayment of principal, interest and fees, and failure to perform covenants, and subject to carveout, materiality and knowledge qualifiers, and cure provisions. Remedies upon an Upon an Event of Default, the Exit Lenders Event of Default will be entitled to (i) accelerate the payment of all obligations owing under the Facility, and (ii) instruct the Borrower to sell or liquidate the owned containers, any finance leases, and repatriation note with any proceeds received being applied first to satisfy the obligations owing under the Facility. Mr. Brady declares that a limited purpose entity, currently named Topco, may be formed on or prior to the loan's funding date to acquire the shares of the Borrower. Topco will be an additional guarantor, and will pledge its shares in the Borrower. To secure the Loan, the Borrower and Sea Containers SPC Ltd. will grant the Administrative Agent valid and perfected first priority liens and security interests in all of their present and future property and assets, subject to customary and negotiated exceptions. The terms of the Facility are reasonable, and the best one available to the Debtors, Mr. Brady tells the Court. He adds that terms were finalized after lengthy negotiations and thorough consideration of numerous financing arrangements. Absent the Court's approval, the Debtors will be hard-pressed to maintain their exit timetable, he continues. The Court will commence a hearing on November 6, at 3:00 p.m., to consider the request. To recall, the Debtors' voting and plan objection deadline is on November 10, 2008. The plan confirmation hearing will commence on November 24. Based in Hamilton, Bermuda, Sea Containers Ltd. -- http://www.seacontainers.com/-- provides passenger and freight transport and marine container leasing. Registered in Bermuda, the company has regional operating offices in London, Genoa, New York, Rio de Janeiro, Sydney, and Singapore. The company is owned almost entirely by United States shareholders and its primary listing is on the New York Stock Exchange (SCRA and SCRB) since 1974. On Oct. 3, the company's common shares and senior notes were suspended from trading on the NYSE and NYSE Arca after the company's failure to file its 2005 annual report on Form 10-K and its quarterly reports on Form 10-Q during 2006 with the U.S. Securities and Exchange Commission. Through its GNER subsidiary, Sea Containers Passenger Transport operates Britain's fastest railway, the Great North Eastern Railway, linking England and Scotland. It also conducts ferry operations, serving Finland and Estonia as well as a commuter service between New York and New Jersey in the U.S. Sea Containers Ltd. and two subsidiaries filed for Chapter 11 protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156). Edmon L. Morton, Esq., Edwin J. Harron, Esq., Robert S. Brady, Esq., Sean Matthew Beach, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors and the Financial Members Sub-Committee of the Official Committee of Unsecured Creditors of Sea Containers Ltd. is represented by William H. Sudell, Jr., Esq., and Thomas F. Driscoll, Esq., at Morris, Nichols, Arsht & Tunnell LLP. Sea Containers Services, Ltd.'s Official Committee of Unsecured Creditors is represented by attorneys at Willkie Farr & Gallagher LLP. In its schedules filed with the Court, Sea Containers disclosed total assets of $62,400,718 and total liabilities of $1,545,384,083. (Sea Containers Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SPECTRUM BRANDS: Receives NYSE Listing Non-compliance Notice ------------------------------------------------------------ Spectrum Brands, Inc. received written notice from the New York Stock Exchange that the company did not satisfy one of the NYSE's standards for continued listing applicable to the company's common stock. The NYSE noted specifically that the company was "below criteria" for the NYSE's continued listing standards because both its average total market capitalization was less than $75 million over a 30 trading-day period and, at the same time, its stockholders' equity was less than $75 million. As of Oct. 31, 2008, the company's 30 trading-day average market capitalization was approximately $72.4 million. Under the applicable NYSE rules, the company has 45 calendar days from receipt of the notice to submit a plan that demonstrates its ability to achieve compliance with the continued listing standards within 18 months of receipt of the notice. Upon receipt of the company's plan, the NYSE has 45 calendar days to review and determine whether the company has made a reasonable demonstration of its ability to come into conformity with the relevant standards within the 18 month period. The NYSE will either accept the plan, at which time the company will be subject to ongoing monitoring for compliance with this plan, or the NYSE will not accept the plan and the company will be subject to suspension and delisting proceedings. As required by the NYSE's rules, the company plans to notify the NYSE within 10 business days of receipt of the non- compliance notice of the company's intent to submit a plan to remedy its non-compliance. "While we are extremely disappointed in the recent performance of our stock, which was pressured during the last few months by an extremely volatile market as well as by the distribution of over 12 million shares held by our largest shareholder, Thomas H. Lee Partners, a private equity firm, in conjunction with the winding down of one of its investment funds, we do not believe that this notification reflects the performance of our businesses," said Kent Hussey, CEO of Spectrum Brands. "Although we are still in the process of finalizing our full year fiscal 2008 financial results and plan to report these results on Nov. 11, 2008, I am pleased with the market share gains and expanded distribution that we've been able to achieve in our Global Batteries & Personal Care and Global Pet Supplies Business Segments this past quarter. In addition, we ended the fiscal year with approximately $105 million in cash and $108 million of availability on our $225 million ABL and in compliance with the requirements under our senior and subordinated debt agreements." If the average closing price of the company's common stock is less than $1.00 over a consecutive 30 trading-day period, the company is subject to receive a formal written notice from the NYSE regarding its non-compliance with an additional NYSE continued listing standard. As of Oct. 31, 2008, the 30 trading-day average closing share price of the company's common stock was $1.37, and the closing price of the company's common stock on Nov. 4, 2008 was $0.67. The company believes that it will become out of compliance with this continued listing standard unless the market price of its common stock increases significantly in the near term. In order to remain in compliance with the Closing Price Rule, the share price and the consecutive 30 trading-day closing price of the company's common stock must be above $1.00 within six months from the date the company receives formal notice of non- compliance from the NYSE. If the company fail to meet these standards at the expiration of the six month period, the NYSE will commence suspension and delisting procedures. The company's common stock remains listed on the NYSE under the symbol "SPC," but will be assigned a ".BC" indicator by the NYSE to signify that the company is not currently in compliance with the NYSE's continued listing standards. About Spectrum Brands Headquartered in Atlanta, Georgia, Spectrum Brands Inc. (NYSE: SPC) -- http://www.spectrumbrands.com/-- is a supplier of consumer batteries, lawn and garden care products, specialty pet supplies, shaving and grooming products, household insect control products, personal care products and portable lighting. * * * Spectrum Brands Inc. continues to carry Moody's Investor Services' Caa2 probability of default rating and Caa1 long-term corporate family rating which were placed on July 2008. STEAKHOUSE PARTNERS: Abe & Mikel Alizadeh Acquires Roseville Unit ----------------------------------------------------------------- Bob Shallit at The Sacramento Bee reports that Abe and Mitra Allizadeh have acquired Steakhouse Partners Inc.'s unit in Roseville. The Sacramento Bee relates that Mitra Allizade hired former Buca di Beppo executive David Chambers as general manager for the Roseville steakhouse. According to the report, Mitra Allizade and Mr. Chambers will make cosmetic upgrades on the steakhouse with more significant changes in customer service and food quality. Based in San Diego, California, Steakhouse Partners Inc. and its affiliates -- http://www.paragonsteak.com/-- own and operate steakhouse restaurants in the U.S. Their restaurants specialize in complete steak and prime rib meals and also offer fresh fish and other lunch and dinner dishes. They operate under the brand names of Hungry Hunter's, Hunter Steakhouse, Mountain Jack's and Carvers. Their menu also include fresh fish, seafood, pasta, chicken, prime rib, steaks, appetizers and desserts. As of Dec. 31, 2006, they operate 25 full-service steakhouse restaurants located in eight states. They operates solely in domestic market. The company and its affiliates filed for Chapter 11 protection on May 15, 2008 (Bankr. S.D. Calif. Lead Case No. 08-04147). Enid M. Colson, Esq., at Liner Yankelevitz Sunshine & Regenstreif LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed consolidated total assets of $16,395,000 and total debts of $26,010,000. TRICOM SA: Chapter 11 Plan Status Hearing Set for December 18 ------------------------------------------------------------- Judge Stuart Bernstein of the United States Bankruptcy Court for the Southern District of New York held a status conference on Plan-related issues on Tricom, S.A., and its debtor-affiliates' bankruptcy cases on Oct. 16, 2008. During the conference, the Debtors' counsel, Larren Nashelsky, Esq., at Morrison & Foerster, in New York, told the Court that the Debtors intend to file a modified Plan of Reorganization and the Disclosure Statement explaining the Plan by mid-November. The Court scheduled Dec. 18, 2008, for hearing on the approval of the Disclosure Statement. Mr. Nashelsky said the Debtors intend to re-solicit votes to have the Debtors' modified Plan confirmed. Mr. Nashelsky related that after the Sept. 11, 2008, status conference, the Debtors had numerous discussions with the Ad Hoc Committee of Creditors, the Affiliated Creditors, Bank Credit Cayman, Bancredito Panama, and Banco Leon. Mr. Nashelsky said there were settlement discussions with Bank Credit Cayman and Bank Credit Panama, and preliminary discussions with Banco Leon. Banco Leon, according to Mr. Nashelsky, is the successor to Bank Credit of P.R., which was the bank that the Pellerano family controls in the Dominican Republic. Mr. Nashelsky told Judge Bernstein that despite the numerous efforts, the Debtors did not reach settlements with any of the creditors, but that they are continuing the discussions. He said the Debtors need to move forward with confirmation in a way that allows them to come out of bankruptcy as quickly as possible and preserves the disputed claims for resolution post confirmation. According to Mr. Nashelsky, the Debtors spent a lot of time talking to the Affiliated Creditors and the Ad Hoc Committee about allowing for a disputed claims reserve. However, he told Judge Bernstein that the Debtors have no ability to put disputed claims reserve in place from Class 7, which would be in cash. The Debtors will have to put a disputed claims reserve in Class 6, which, under the Plan of Reorganization, would pay notes and the stock under the organized company. The Debtors told the Court that there will be one unsecured class that's going to be treated the same. There will still be the unimpaired trade creditors' class, which claims have all been paid through earlier Court orders. The Debtors said that to resolve the Class 7 Bank Claims, they will bring three new disputed claims reserves related to the $70,000,000 transaction. Mr. Nashelsky said that, in a way, the reserve has the effect of the Debtors' starting an inter-pleader motion and putting their money in Court. According to Mr. Nashelsky, the Debtors are still trying to talk to the parties to come up with reasonable reserves and the interests on their claims. He said the Plan will be modified that the disputed claims will be adjudicated post confirmation by appropriate jurisdiction to be determined at a post confirmation date. Creditors Raise Concerns on Claims Treatment Richard Smolev, Esq., at Kaye Scholer, LLP, representing the liquidators and Bancredito Panama, raised the issue on (i) the inherent good faith of the Plan and (ii) what Arturo Pellerano is getting out from the Plan. Mr. Smolev pointed out that a significant enterprise value -- about 18-19% -- is going to the Affiliated Creditors, which are affiliated to Mr. Pellerano. Mr. Smolev asked whether the Debtors' proposed treatment of the Affiliated Creditors is appropriate and whether there should be equitable subordination. John Howard Drucker, Esq., Cole, Schotz, Meisel, Forman & Leonard, for Banco Leon, told the Court that the Bank disputes the characterizations of the overlap of its claims with the claims of the other banks. Ad Hoc Committee Agrees with Debtors The Ad Hoc Committee said they agree with the Debtors on "moving things forward as quickly as possible." The Committee's counsel, Alan Feld, Esq., at Manatt, Phelps & Phillips, LLP, said it is important that the parties have fall-back position through the reserve strategy. About Tricom S.A. Tricom, S.A., was incorporated in the Dominican Republic on January 25, 1988, as a Sociedad Anonima. Tricom is one of the pre-eminent full service communications services providers in the Dominican Republic. Headquartered in Santo Domingo, Tricom offers local, long distance, and mobile telephone services, cable television and broadband data transmission and Internet services, which are provided to more than 729,000 customers. Tricom's wireless network covers about 90% of the Dominican Republic's population. Tricom's local service network is 100% digital. The company also owns interests in undersea fiber-optic cable networks that connect and transmit telecommunications signals between Central America, the Caribbean, the United States and Europe. Tricom USA, Inc., a wholly owned subsidiary of Tricom, was incorporated in Delaware in 1992, and at that time was known as Domtel Communications. A name change was effected in 1997 and Domtel Communications formally became Tricom USA, Inc. Tricom USA originates, transports and terminates international long-distance traffic using switching stations and other telecommunications equipment located in New York and Florida. Tricom S.A. and its U.S. affiliates filed for Chapter 11 protection on Feb. 29, 2008 (Bankr. S.D. N.Y. Case No. 08- 10720). Larren M. Nashelsky, Esq., at Morrison & Foerster LLP, in New York City, represent the Debtors. When the Debtors' filed for protection from their creditors, they listed total assets of $327,600,000 and total debts of $764,600,000. As of June 30, 2008, Tricom had $316,325,466 in assets and $771,970,349 in liabilities. (Tricom Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Services Inc.; http://bankrupt.com/newsstand/or 215/945-7000) TICKETMASTER: S&P Sees Sales Challenge from Live Nation ------------------------------------------------------- The world's largest ticketing services company, Ticketmaster, and the world's largest concert promoter, Live Nation Inc., are waging a battle on two fronts-on each other's turf, according to a new Credit FAQ by Standard & Poor's Ratings Services titled "Live Nation Breaks Up With Ticketmaster To Go Solo," published on RatingsDirect. On the ticketing services front, Live Nation Inc. (B/Stable/--) is currently Ticketmaster's (BB+/Stable/--) largest customer, but this won't last much longer. Live Nation is ending its agreement with Ticketmaster in January 2009 to launch an in- house ticketing service for its facilities and is currently trying to persuade third-party venues to switch ticketing service providers once their contacts with Ticketmaster expire. "For Ticketmaster, this represents not only the loss of its largest client, but also the formation of a sizable competitor," explained Standard & Poor's credit analyst Hal F. Diamond. If Live Nation is successful in launching its ticketing service, Ticketmaster could face a formidable competitor with scale and, just as importantly, artist relationships. TUSA OFFICE: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Tusa Office Solutions, Inc. fdba Polson-Tusa Corporate Relocation 4201 International Parkway Carrollton, TX 75007 Bankruptcy Case No.: 08-45275 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Tusa-Expo Holdings Inc. 08-45057 Office Expo, Inc. 08,45056 Type of Business: The Debtors are a full service furniture dealer. See: http://www.tusaoffice.com/ Chapter 11 Petition Date: November 5, 2008 Court: Northern District of Texas (Ft. Worth) Judge: Russell F. Nelms Debtor's Counsel: Jeff P. Prostok, Esq. jpp@forsheyprostok.com Lynda L. Lankford, Esq. llankford@forsheyprostok.com Forshey & Prostok, LLP 777 Main St., Suite 1290 Ft. Worth, TX 76102 Tel: (817) 877-8855 (817) 878-2022 Fax: (817) 877-4151 Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million The Debtor did not file a list of 20 largest unsecured creditors. VERASUN ENERGY: Gets Court Initial OK on $40MM DIP Financing ------------------------------------------------------------ Judge Brendan Linehan Shannon of the United States Bankruptcy Court for the District of Delaware authorized VeraSun Energy Corporation and its debtor-affiliates to obtain up to $40,000,000 of interim debtor-in-possession financing. VeraSun Energy Corporation is authorized to borrow up to $15,000,000 of DIP Financing from prepetition noteholders who purchased the Debtors' senior secured notes due 2012. The VSE Borrower is also authorized to borrow an additional $10,000,000 upon entry into a definitive VSE DIP Loan Documentation on or before Nov. 17, 2008. A full-text copy of the Interim VSE DIP Order is available for free at http://ResearchArchives.com/t/s?349e Judge Shannon also authorized six VeraSun Debtors to borrow a total of $30,000,000 in interim DIP Financing from AgStar Financial Services, PCA: Financing ------------------------ VeraSun Debtor Interim Total -------------- ----------- ---------- VeraSun Hankinson, LLC $3,000,000 $5,000,000 VeraSun Dyersville, LLC 3,000,000 5,000,000 VeraSun Ord, LLC 1,500,000 2,500,000 VeraSun Albert City, LLC 3,000,000 5,000,000 VeraSun Woodbury, LLC 1,500,000 2,500,000 VeraSun Central City, LLC 3,000,000 5,000,000 The Court also authorized the six VeraSun Debtors to access the cash collateral securing the prepetition loan extended by AgStar until the occurrence of a "Termination Event," which will mean the earliest to occur of, among other things, December 3, 2008, after the entry of the Interim Order if the Final Order has not been entered by that date, or the occurrence of the Maturity Date. Full-text copies of the Interim AgStar DIP Order are available for free at: * http://ResearchArchives.com/t/s?349f * http://ResearchArchives.com/t/s?34a0 * http://ResearchArchives.com/t/s?34a1 * http://ResearchArchives.com/t/s?34a2 * http://ResearchArchives.com/t/s?34a3 * http://ResearchArchives.com/t/s?34a4 The Wall Street Journal, citing Tim Pohl, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, said the balance of the DIP Facility is expected in 20 to 25 days. Skadden Arps represents the Debtors in their bankruptcy cases. VSE DIP Loan Terms The Secured Noteholders committed to extend up to $135,650,000 of DIP Financing to VSE upon entry of a final DIP Order, of which $76,500,000 is new commitment, and $84,150,000 is applied to roll-up of the 2012 Senior Secured Notes. The VSE Lenders are: Closing Date Total Amount for Lender Commitment Commitment Roll-Up ------ ------------ ---------- ---------- Wayzata Opportunities $2,400,000 $26,050,000 $13,650,000 Fund II, L.P., and Wayzata Opportunities Fund Offshore II, L.P. Trilogy Portfolio 7,650,000 82,100,000 43,000,000 Company, LLC, and Trilogy Special Situations Fund LLC AIG Global 4,950,000 52,500,000 27,500,000 Investments Corp. The VSE DIP Loan bears interest at 16.5% per annum, payable monthly in arrears. At all times while a default exists, principal, interest and other amounts will bear interest at a rate per annum equal to 2.00% in excess of the 16.5% interest rate. The VSE Borrower is required to comply with a budget to be delivered to the Court on or before November 17, 2008, and deliver financial statements and weekly updated 13-week cash flow projections. The VSE DIP Lenders must have received final financial projections of the VSE Borrower and its subsidiaries through December 31, 2009. Under the VSE Loan Documentation, an event of default occurs when the VSE Borrower and the VSE DIP Lenders fail to enter into a definitive documentation on or before November 17, and the exclusive period for the VSE Obligors to file a plan of reorganization expires or is terminated. The Loan Documentation also requires the VSE Borrower to retain a chief restructuring officer on or before November 17. All VSE DIP Obligations will, at all times: (a) be entitled to joint and several superpriority claim status in each of the VSE Obligors' Chapter 11 cases with priority over all claims against the VSE Obligors, including all administrative expenses or other claims, subject only to the Carve-Out; (b) be secured by a perfected first priority lien on all VSE DIP Collateral and all of its products and proceeds that is not subject to valid, perfected and non-avoidable liens as of the Petition Date; (c) be secured by a silent perfected second priority lien in and on all VSE DIP Collateral that is subject to the Prepetition Collateral Agent Liens, the Collateral Agent Adequate Protection Liens, and senior to all other liens existing or hereinafter granted on the VSE DIP Collateral; and (d) be secured by a perfected first priority, senior priming lien on all of the VSE DIP Collateral, which VSE Priming DIP Lien will also prime any liens granted after the Petition Date to provide adequate protection in respect of any of the 2012 Senior Secured Notes Liens and Collateral Agent Liens, but will not prime the Prepetition Collateral Agent Liens or Collateral Agent Adequate Protection Liens, if any in the collateral securing the VSE Debtors' prepetition indebtedness to UBS Securities LLC, UBS AG, Stamford Branch, and UBS Loan Finance LLC. The claims, liens and adequate protection granted to the VSE DIP Lenders are subject only to the Carve-Out, which refers to: * permitted exceptions, which will include as excluded from the granted claims and liens any avoidance actions under Chapter 5 of the Bankruptcy Code; and * in the event of the occurrence and during the continuance of an Event of Default, the payment of allowed and unpaid professional fees and disbursements incurred by the VSE Obligors and any appointed statutory committee in an aggregate amount not exceeding $1,000,000, plus all unpaid professional fees and disbursements incurred prior to the occurrence of an Event of Default. Until all VSE DIP Obligations have been indefeasibly paid in full in cash and the commitments under the VSE DIP Loan Documentation have terminated, the 2012 Senior Secured Notes Parties will (i) take no action to foreclose on or recover in connection with the 2012 Senior Secured Notes Liens; (ii) be deemed to have consented to any release of VSE DIP Collateral; and (iii) may not file any further financing statements, trademark filings, copyright filings, mortgages, notices of liens, unless required by applicable state law to continue the perfection of valid and unenforceable liens or security interest in effect as of the Petition Date. The automatic stay provisions is vacated and modified to the extent necessary to permit the VSE DIP Administrative Agent and the VSE DIP Lenders to exercise (i) immediately upon the occurrence of an Event of Default or the Maturity Date, all rights and remedies under the VSE DIP Loan Documentation without further order of or application to the Bankruptcy Court. As adequate protection of their interests in the VSE Noteholder Collateral, the 2012 Senior Secured Notes Parties are entitled to (i) payment of accrued prepetition and postpetition interest a the non-default rate on the 2012 Senior Secured Notes; (ii) a silent lien on all VSE DIP Collateral, which will have a priority junior to the VSE Priming DIP Liens and the Second Priority VSE DIP Liens; and (iii) a superpriority claim in the VSE Obligors' Chapter 11 cases, that is (x) junior to the Carve-Out and the VSE Superpriority Claims, (y) on parity with any superpriority claim given to the Prepetition Collateral Agent as adequate protection for its interests in the UBS Prepetition Collateral, and (z) senior to all administrative expenses in the VSE Obligors' Chapter 11 cases of any kind payable or allowed pursuant to any provision of the Bankruptcy Code. Parties will have until 60 days after an official committee of unsecured creditors is formed to file a complaint challenging the 2012 Senior Secured Notes Liens or the 2012 Senior Secured Notes Obligations. The VSE DIP Lenders are represented by Cadwalader, Wickersham & Taft, LLP. AgStar Facility Terms The AgStar DIP Facility provides that all postpetition obligations, subject only to the Carve-Out, constitute allowed superpriority administrative expense claims against the Borrower having priority over all administrative expenses. As security for the postpetition obligations, the Postpetition Lender is granted valid, binding, enforceable, first priority and perfected Liens in the Postpetition and Prepetition Collateral. Subject to the Carve-Out, the Postpetition Liens (a) will constitute first priority liens in and to all Postpetition and Prepetition Collateral; (b) will be senior to and prime all Adequate Protection Liens; and (c) will be immediately junior in priority to all valid, perfected, enforceable and non-avoidable Liens on assets of the Borrower in existence as of the Petition Date. Carve-Out, under each of the Interim AgStar Facility Order, refers to the sum of (i) fees required to be paid to the Clerk of the Bankruptcy Court and to the Office of the U.S. Trustee, plus (ii) $167,000, plus, (iii) the aggregate amount of any budgeted, accrued, but unpaid fees and expenses of the professionals existing as of the Carve-Out Date to the extent allowed by the Court. The Interim AgStar Facility will mature on the earlier of the entry of the Final Order and Dec. 10, 2008. The maturity date of the DIP Financing will be the earliest of (i) Nov. 3, 2009, (ii) the date on which the Postpetition Obligations are accelerated and become due and payable following an Event of Default, (iii) the date on which the Borrower sells substantially all of its assets, and (iv) the effective date of any Chapter 11 plan of the Borrower. The AgStar Facility is to be used to meet the Debtors' immediate liquidity needs pursuant to separate four-week budget for each of the Debtors. Full-text copies of the Budgets are available for free at: * http://ResearchArchives.com/t/s?34a6 * http://ResearchArchives.com/t/s?34a7 * http://ResearchArchives.com/t/s?34a8 * http://ResearchArchives.com/t/s?34a9 * http://ResearchArchives.com/t/s?34aa * http://ResearchArchives.com/t/s?34ab AgStar is represented by Phillip Kunkel, Esq., at Gray, Plant, Mooty, Mooty & Bennett, P.A., in St. Cloud, Minnesota, and David P. Stratton, Esq., at Pepper Hamilton LLP, in Wilmington, Delaware. Company's Statement VeraSun Energy Corporation, one of the nation's largest ethanol producers, announced that it had received commitments for up to $215 million in debtor in possession financing from certain holders of VeraSun's 9-7/8% senior secured notes due 2012 and groups of lenders led by AgStar Financial Services. At the "first day" hearing, the U.S. Bankruptcy Court entered an interim order allowing VeraSun and its affiliates to borrow up to $40 million from these DIP facilities and authorized the use of cash collateral to enable VeraSun to operate its business. VeraSun is 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. Judge Brendan L. Shannon of the U.S. Bankruptcy Court, District of Delaware in Wilmington also granted VeraSun's 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 Bankruptcy Court is expected to conduct a hearing tomorrow to rule on the remaining relief requested by VeraSun in its "first day" motions. "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 Corporation 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. WCI COMMUNITIES: Wants Lease Decision Period Extended to March 2 ---------------------------------------------------------------- WCI Communities Inc. and its debtor-affiliates are parties as lessee to approximately 28 unexpired non-residential property leases related to corporate and sales offices, design centers, model homes, submerged property, and a ground lease for a sewage treatment plant, Jeffrey M. Schlerf, Esq., at Bayard P.A., in Wilmington, Delaware, said. A 7-page list of the WCI Unexpired Leases is available for free at http://ResearchArchives.com/t/s?34b0 The Debtors reserve the right to add additional lease counterparties. The Debtors relate that they have been focusing on numerous issues relating to the stabilization of their business operations, they have not yet determined whether to assume or reject the Unexpired Leases. Mr. Schlerf contends that given the nature of the Debtors' business, the Unexpired Leases may be important to the Debtors' daily operations. "As such, it is critical to the success of the Debtors' reorganization efforts that they have sufficient time to analyze the value of the Unexpired Leases and make prudent business decisions regarding assumption or rejection," he explains. Section 365(d)(4) of the Bankruptcy Code provides that a debtor's unexpired lease of nonresidential real property will be deemed rejected if the trustee does not assume or reject the unexpired lease by the earlier of (i) the date that is 120 days after the order for the relief, or (ii) the date of entry of an order confirming a plan. Section 365(d)(4) provides, however, that the court may extend the period prior to the expiration of the 120- day period for 90 days on the debtor's motion for cause. The Debtors' Lease Decision Period currently expires on Dec. 2, 2008. By this motion, the Debtors ask the United States Bankruptcy Court for the District of Delaware to extend the deadline by which they must decide to assume or reject their Unexpired Leases, through and including March 2, 2009. About WCI Communities Headquartered in Bonita Springs, Florida, WCI Communities, Inc. -- http://www.wcicommunities.com/-- is a fully integrated homebuilding and real estate services company. It has operations in Florida, New York, New Jersey, Connecticut, Massachusetts, Virginia and Maryland. The company directly employs roughly 1,800 people, as well as roughly 1,800 sales representatives as independent contract employees. The company and 126 of its affiliates filed for Chapter 11 protection on Aug. 4, 2008 (Bankr. D. Del. Lead Case No. 08-11643 through 08-11770). Thomas E. Lauria, Esq., Frank L. Eaton, Esq., Linda M. Leali, Esq., at White & Case LLP, in Miami, Florida. Eric Michael Sutty, Esq., and Jeffrey M. Schlerf, Esq., at Bayard, P.A, are the Debtors' local bankruptcy counsel. Lazard Freres & Co. represents the Debtors as financial advisors. The Debtors selected Epiq Bankruptcy Solutions LLC as their claims & notice agent. The U.S. Trustee for Region 3 appointed five creditors to serve on an Official Committee of Unsecured Creditors. Daniel H. Golden, Esq., Lisa Beckerman, Esq., and Philip C. Dublin, Esq., at Akin Gump Strauss Hauer & Feld LLP, and Laura Davis Jones, Esq., Michael R. Seidl, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP, represent the Committee in these cases. When the Debtors filed for protection from their creditors, they listed total assets of $2,178,179,000 and total debts of $1,915,034,000. (WCI Communities Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). WELLMAN INC: 1st Lien Lenders Want Claim Treated Fully Secured -------------------------------------------------------------- The Bank of New York, as successor administrative and collateral agent for the First Lien Lenders, tells the U.S. Bankruptcy Court for the Southern District of New York that the First Lien Lenders elect to have their secured claim treated as fully secured pursuant to Section 1111 of the Bankruptcy Code, but only with respect to Wellman Inc. and its affiliates' First Amended Joint Plan of Reorganization. BNY and the First Lien Lenders expressly reserve and preserve their rights to, among other things, withdraw the Election if any new plan provisions affecting the treatment of BNY or the First Lien Lenders and their underlying claims are amended or modified in any respect. The Bankruptcy Court previously issued a ruling finding that the replacement value of Bank of New York's collateral is $140,000,000. This is $69,000,000 more than the amount that Wellman proposed to the Court as the replacement value of the collateral. The company previously urged the Court to rule that the replacement value is only $70,827,000 based on the appraisal conducted by its valuation consultant on the collateral. The collateral consists of property, plant and equipment (PP&E), which include machineries and real estate located in Wellman's plants in St. Louis, Mississippi, and in Darlington and Johnsonville, South Carolina. Wellman offered the PP&E as collateral for the $185,000,000 that it loaned from its lenders under the first lien credit agreement dated Feb. 10, 2004, with BNY serving as administrative agent. The latest version of Wellman's Plan provides that if the First Lien Lenders vote in its favor of the Plan, they will receive a $75 million promissory note on account of their security interest in the Debtors' Pearl River plant, and the Debtors will sell the Palmetto and Johnsonville plants, properties and equipment and will give them the sales proceeds as well as proceeds attributable to the plants' intellectual property. Alternatively, if the First Lien Lenders vote to reject the Amended Plan, they will receive a $70.1 million promissory note and Wellman will transfer to BNY bare title to the Palmetto and Johnsonville PP&E. Headquartered in Fort Mill, South Carolina, Wellman Inc. ([OTC]: WMANQ.OB) -- http://www.wellmaninc.com/-- manufactures and markets packaging and engineering resins used in food and beverage packaging, apparel, home furnishings and automobiles. They manufacture resins and polyester staple fiber a three major production facilities. The company and its debtor-affiliates filed for Chapter 11 protection on Feb. 22, 2008 (Bankr. S.D. N.Y. Case No. 08-10595). Jonathan S. Henes, Esq., at Kirkland & Ellis, LLP, in New York City, represents the Debtors. Lazard Freres & Co., LLC, acts as the Debtors' financial advisors and investment bankers. Conway, Del Genio, Gries & Co., LLC, was also retained as the Debtors' chief restructuring advisor. The United States Trustee for Region 2 has appointed seven members to the Official Committee of Unsecured Creditors. Mark R. Somerstein, Esq., at Ropes & Gray LLP, serves as the Committee's bankruptcy counsel. FTI Consulting, Inc., acts as the panel's financial advisors. Wellman Inc., in its bankruptcy petition, listed total assets of $124,277,177 and total liabilities of $600,084,885, as of Dec. 31, 2007, on a stand-alone basis. Debtor-affiliate ALG, Inc., listed assets between $500 million and $1 billion on a stand-alone basis at the time of the bankruptcy filing. Debtor-affiliates Fiber Industries Inc., Prince Inc., and Wellman of Mississippi Inc., listed assets between $100 million and $500 million at the time of their bankruptcy filings. On a consolidated basis, Wellman Inc., and its debtor-affiliates listed $512,400,000 in total assets and $730,500,000 in liabilities as of June 30, 2008. Wellman filed a restructuring plan before the Bankruptcy Court on June 25, 2008. (Wellman Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). WELLMAN INC: BNY Balks at First Amended Joint Chapter 11 Plan ------------------------------------------------------------- The Bank of New York, as successor administrative and collateral agent, asserts that Wellman Inc. and its affiliates' First Amended Disclosure Statement describing the First Amended Joint Plan of Reorganization must not be approved because it describes a patently unconfirmable plan that seeks to improperly cram down a $185 million secured debt owed to BNY on behalf of the First Lien Lenders for the exclusive benefit of the Debtors' second lien lenders. The Amended Plan provides that if the First Lien Lenders vote in its favor, they will receive a $75 million promissory note on account of their security interest in the Debtors' Pearl River plant, and the Debtors will sell the Palmetto and Johnsonville plants, properties and equipment and will give them the sales proceeds as well as proceeds attributable to the plants' intellectual property. Alternatively, if the First Lien Lenders vote to reject the Amended Plan, they will receive a $70.1 million promissory note and Wellman will transfer to BNY bare title to the Palmetto and Johnsonville PP&E. On BNY's behalf, Lenard M. Perkins, Esq., at Haynes and Boone LLP, in New York, argues that the Amended Plan's treatment of the First Lien Lenders' claims is unfair on its face for these reasons: 1. The Amended Plan's proposed note reflects a value for the bottlenecked, low-performing Pearl River PP&E described in and projected for in the Initial Plan, instead of the replacement value of the streamlined, high performing Pearl River PP&E described and projected to exist in the New Plan. The replacement value of the Pearl River PP&E under the Amended Plan is at least $80 million, Mr. Perkins notes. 2. The Amended Plan contains a "death trap" provision designed to coerce the First Lien Lenders to vote for the Amended Plan. Mr. Perkins notes that the Amended Plan conditions the Debtors' agreement to sell Palmetto and give BNY the proceeds on whether the First Lien Lenders vote to accept the Amended Plan. Bankruptcy courts, he points out, generally reject the use of "death-trap" provisions to coerce plan acceptance. "The death trap provision in the New Plan is even more offensive than a garden-variety coercive mechanism - instead of merely seeking to compel plan acceptance by prohibited means, the Debtors propose to condition the exercise of their fiduciary duty to maximize and preserve the value of the Palmetto PP&E, and potentially save 550 jobs, upon the First Lien Lenders' acceptance of the New Plan," Mr. Perkins contends. Mr. Perkins also submits that the proposed sale "incentive" is illusory, because the Debtors are already in the process of liquidating the DIP Lenders' working capital collateral at Palmetto in furtherance of abandoning the facility. In addition, the New Disclosure Statement fails to disclose the substantial value increase of Pearl River in the New Plan versus the Initial Plan and the corresponding value increase of the Pearl River PP&E since the Debtors are moving all of their PET business and production to Pearl River, Mr. Perkins contends. "Pearl River is projected to be an enhanced version of its old profile, providing the capacity and production of what both plants produced before," Mr. Perkins relates. The circumstances, according to Mr. Perkins, reasonably justify the conclusion that Pearl River, including its PP&E, has a substantially higher value than under the Initial Plan. Specifically, the increased value results from Wellman divesting itself of its Palmetto and Johnsonville plants and reorganizing around a retooled, cutting-edge Pearl River that will operate at 40% increased capacity and will produce nearly 300 million additional pounds of product annually by 2012. Mr. Perkins submits that the Enhancement reflects more than a 40% increase over the projected output in the Initial Plan and dictates that the replacement value of the Pearl River PP&E is higher than the old $70 million value, and should increase to at least $80 million. He notes that the New Disclosure Statement only provides projections up to 2012 while giving the First Lien Lenders a below-value, non-market note, due to mature in 2020. "This term is almost three times longer than the First Lien Credit Agreement's four-year term, and nearly four times longer than the predecessor to the First Lien Credit Agreement, yet the New Plan Note has no remedies or covenants available to the First Lien Lenders if the Debtors' circumstances change again," Mr. Perkins argues. Because the New Plan proposes to give BNY only a $70.1 million or $75 million note, and the note's value is purportedly driven by the Pearl River PP&E value, the New Plan violates Sections 1111(b) and 1129(b) of the Bankruptcy Code, Mr. Perkins contends. Furthermore, Mr. Perkins asserts that the New Plan improperly shifts the risk of failure of the Debtors' reorganization to the First Lien Lenders because under the New Plan, the equity holders will be free to do as they please after confirmation, and the First Lien Lenders will be stuck no matter what happens because there are no proposed covenants, rights, or remedies provided for in the New Plan Note. Moreover, the Disclosure Statement contains inadequate and misleading information, Mr. Perkins further argues. The New Disclosure Statement is missing these critical information, he points out: -- A description of the cost and all of the risks associated with transferring 100% of the Debtors' PET production to Pearl River; -- An explanation of why EBITDA and operating income projections begin decreasing in 2012 and what effect those projections have on the reorganization's feasibility and the New Plan Note; -- An explanation of how the Divested PP&E Value was calculated; -- An explanation of why Wellman (i) plans to exit the engineering resin and fiber businesses, and divest itself of Palmetto and Johnsonville, (ii) proposed the Initial Plan without disclosing its plan to shut down its engineering resin and fiber businesses post-confirmation, and (iii) is justified being able to shutter Palmetto to the detriment of the First Lien Lenders; -- A description of the risk of depreciation of the Palmetto PP&E prior to plan confirmation; -- An explanation of why the Debtors have refused, despite repeated requests from BNY, to market and sell Palmetto; -- A disclosure that the Debtors' failure to market and sell Palmetto as a going concern will cause the termination of 550 Wellman employees with a resultant cost of up to $15 million which could otherwise be avoided; -- An explanation of how it is fair and equitable to give the First Lien Lenders the New Plan Note (a) that under current market conditions, will be worth substantially less than the $70 million face amount; (b) without market terms, covenants and remedies comparable, at a minimum, to those provided for in the First Lien Credit Documents; (c) with a term almost triple the term of the First Lien Credit Agreement and quadruple the term of the predecessor to the First Lien Credit Agreement; (d) with declining EBITDA and profit projections, which total two-third's of the projections in the Initial Plan; and (e) without projections that support Wellman's reorganization spanning the entire proposed term of the New Plan Note; -- A description of the likely sale scenario at Palmetto, the effect of the Non-Compete on the PET business at Palmetto, and the resultant marginal, if any, incremental benefit that might be realized by the First Lien Lenders if they walk into the "death trap;" -- A disclosure of the fact that the Non-Compete increases the value of Pearl River and its PP&E; -- A disclosure of the risk that the Court will find the New Plan Note, upon which the New Plan is premised, constitutes a non-market note or otherwise does not comply with Sections 1111(b) and 1129 of the Bankruptcy Code and that confirmation will fail; -- A disclosure that Section 1111(b) of the Bankruptcy Code guarantees that the First Lien Lenders will have a fully secured and recorded lien and security interest in the Pearl River PP&E up to the full dollar amount of their claims and will realize any and all appreciation in the value of the PP&E after confirmation until the full amount of its claim is satisfied, prior to equity holders realizing the benefit of any appreciation in value; -- A disclosure of whether the Debtors have secured a signed, fully committed exit facility as of October 16, 2008, and if so, the terms of that facility; -- A disclosure of whether the $70 million of equity cash to be funded, and backstopped by the Second Lien Lenders is still fully committed as of October 16, 2008; -- A statement that the Reorganized Debtors may not be able to carry debt comprised of the Exit Financing, the New Plan Note, and other debt; and -- A description of the estimated recovery from avoidance actions and the Eastman litigation described in the New Disclosure Statement. BNY asserts that the absence of those Critical Information makes it impossible for the Debtors' creditors to make an informed judgment regarding the New Plan and thus, the Disclosure Statement must not be approved. About Wellman Inc. Headquartered in Fort Mill, South Carolina, Wellman Inc. ([OTC]: WMANQ.OB) -- http://www.wellmaninc.com/-- manufactures and markets packaging and engineering resins used in food and beverage packaging, apparel, home furnishings and automobiles. They manufacture resins and polyester staple fiber a three major production facilities. The company and its debtor-affiliates filed for Chapter 11 protection on Feb. 22, 2008 (Bankr. S.D. N.Y. Case No. 08-10595). Jonathan S. Henes, Esq., at Kirkland & Ellis, LLP, in New York City, represents the Debtors. Lazard Freres & Co., LLC, acts as the Debtors' financial advisors and investment bankers. Conway, Del Genio, Gries & Co., LLC, was also retained as the Debtors' chief restructuring advisor. The United States Trustee for Region 2 has appointed seven members to the Official Committee of Unsecured Creditors. Mark R. Somerstein, Esq., at Ropes & Gray LLP, serves as the Committee's bankruptcy counsel. FTI Consulting, Inc., acts as the panel's financial advisors. Wellman Inc., in its bankruptcy petition, listed total assets of $124,277,177 and total liabilities of $600,084,885, as of Dec. 31, 2007, on a stand-alone basis. Debtor-affiliate ALG, Inc., listed assets between $500 million and $1 billion on a stand-alone basis at the time of the bankruptcy filing. Debtor-affiliates Fiber Industries Inc., Prince Inc., and Wellman of Mississippi Inc., listed assets between $100 million and $500 million at the time of their bankruptcy filings. On a consolidated basis, Wellman Inc., and its debtor-affiliates listed $512,400,000 in total assets and $730,500,000 in liabilities as of June 30, 2008. Wellman filed a restructuring plan before the Bankruptcy Court on June 25, 2008. (Wellman Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). WELLMAN INC: Court Approves $17.9MM Sale of Operating Assets ------------------------------------------------------------ Wellman Inc. and its affiliates seek permission from the U.S. Bankruptcy Court for the Southern District of New York to sell assets exclusively related to the operations and business of their facility in Johnsonville, South Carolina, to New Horizons Plastics Recycling LLC for $17,900,000. The Johnsonville Facility is the Debtors' oldest facility and was opened in 1954. It is a gated industrial complex consisting of 16 buildings on more than 813 acres. The Facility converts recycled post-consumer carpet into nylon engineered resins and has the capacity to produce 70 million pounds of the resin annually. There are three operating plants at the Facility as well as number of shuttered buildings. Currently, there are approximately 160 employees at the Facility. The Debtors were contacted by New Horizons who was interested in purchasing the Johnsonville Facility Assets with the intent to continue operating the Facility going forward as a going concern, according to Jonathan S. Henes, Esq., at Kirkland & Ellis LLP, in New York. "Because the value Wellman will realize from the sale of the assets of the Johnsonville Facility to New Horizons is significantly higher than the liquidation value of the [Facility], and because of how important the [Facility] and the jobs it provides are to the surrounding community, [the Debtors are] seeking approval of this private sale with alacrity," Mr. Henes explains. The salient terms of the proposed Johnsonville Facility sale are: * New Horizons will pay the Debtors $17,900,000 for the Johnsonville Facility Assets. * The assets to be sold will include: -- real estate assets; -- accounts receivable and inventory; -- scheduled executory contracts and unexpired leases as designated by the Debtors to be assumed; -- equipment, furniture, and other tangible personal property on the balance sheet; -- scheduled intellectual property and trademarks; -- scheduled licenses, permits and other authorizations; and -- all books and records related to the operation of the Johnsonville Assets. * The assets excluded from the Sale are: -- accounts receivable, contracts, leases, agreement and equipment that have been paid, discharged, or transferred by the Debtors; -- unscheduled executory contracts and unexpired leases not designated by Bidders for assumption and assignment; and -- assets that New Horizons designate to Debtors in writing as excluded assets. * Other than the Assumed Liabilities, New Horizons will not assume any liability obligation of any of the Debtors. * The closing of the Sale is conditioned upon these requirements: -- Before execution of the APA, satisfactory completion in all material respects of due diligence, including discussions with senior management and examination of historical and projected financial statements and records. -- Reasonable access to the Facility's books, records and management during the due diligence period. -- Negotiation and execution of definitive agreements, satisfactory in all respects to New Horizon and the Debtors. -- The sale of the Assets to New Horizon be pursuant to a private sale under Section 363 of the Bankruptcy Code that is not subject to higher and better bids. -- New Horizons is able to hire substantially all of the Debtors' former employees necessary for the Facility's operations, and achieve a binding collective bargaining agreement with the employees' collective bargaining representative satisfactory to New Horizons. * New Horizons is requiring the Debtors to assume and assign certain executory contracts and unexpired leases. The assumption and assignment of the Assumed Contracts to New Horizon may require the curing of any defaults as required by Section 365 of the Bankruptcy Code. Pursuant to the terms of the Sale Agreement for the Johnsonville Assets, New Horizons is responsible for the payment of any Cure Costs. * The proceeds from the Sale will be allocated as: (1) $5,400,000 for accounts receivable; (2) $6,000,000 for inventory; and (3) $6,500,000 for fixed and other assets. New Horizons will further allocate the Fixed and Other Asset Proceeds in an asset purchase agreement between intellectual property and intangibles and PP&E. As a result, upon the closing of the Sale and the Debtors' receipt of the Sale Proceeds, the Debtors will transfer the net amount allocated to accounts receivable, inventory, intellectual property and intangibles to the DIP Lenders, and the net portion allocated to the PP&E to the First Lien Lenders. South Carolina Public Service Responds South Carolina Public Service Authority, doing business as Santee Cooper, relates that before the Petition Date, it was a party to various agreements with the Debtors whereby it agreed to sell and deliver to the Debtors electric power and energy for the Johnsonville Facility. The Electric Agreement was for an initial term of four years starting on January 2002, with subsequent two-year renewal terms on the amounts and rates set in the Electric Agreement. Santee Cooper says after the Petition Date, it entered into a stipulated order resolving its objection to the Debtors' request for interim and final orders determining adequate assurance of payment for future utility services. Santee Cooper says it timely filed two claims, one for $245,267 and the other for $2,820, against the Debtors for amounts owed before the Petition Date. Santee Cooper asserts that the Cure Claim, together with any unpaid postpetition amounts due under the Electric Agreement, must be paid in order to assume and assign the Electric Agreement. In this light, Santee Cooper says it opposes the Debtors' proposed sale order of the Johnsonville Facility to the extent: -- it can be deemed to relieve the Debtors from all responsibility to pay any amounts owed to Santee Cooper in connection with the Electric Agreement during the post- closing evaluation period in the event that the Buyer fails to make payments; -- it can be deemed to modify or otherwise adversely impact the Stipulation and rights and protections afforded to Santee Cooper; -- it can be construed to apply to executory contracts, like the Electric Agreement, which have not yet been identified as an executory contract to be assumed by the Debtors and assigned to the Buyer. Santee Cooper reserves its right to raise further and additional concerns with respect to the Sale Motion or the Sale Order at the hearing. Santee Cooper also reserves all rights with respect to its Cure Claim as well as with respect to the provision of "adequate assurance." Against this backdrop, Santee Cooper asks that the Sale Order: (a) be modified to protect Santee Cooper's rights pursuant to the Stipulation; (b) provide that the Debtors are not relieved from all responsibility to pay any amounts owed to Santee Cooper in connection with the provision of utility services to the Johnsonville Facility in accordance with the Electric Agreement during the Post-Closing Evaluation Period in the event the Buyer fails to pay same; and (c) be clarified to only pertain to executory contracts and unexpired leases already identified and to be assumed and assigned as of the date of the Sale Hearing. * * * The Court authorizes the Debtors to sell the Johnsonville Facility Assets by private sale to New Horizons, free and clear of all liens and encumbrances. The Debtors are also permitted to assume and assign to New Horizons the Assumed Contracts, with all interests attaching to the sale proceeds with the same validity and priority as they had in the Johnsonville Facility Assets. Judge Bernstein allows the parties to modify, amend or supplement the Purchase Agreement without further Court order, provided that any modification or amendment does not have a material adverse effect on the Debtors' estates. The Court overrules the objection of Santee Cooper. About Wellman Inc. Headquartered in Fort Mill, South Carolina, Wellman Inc. ([OTC]: WMANQ.OB) -- http://www.wellmaninc.com/-- manufactures and markets packaging and engineering resins used in food and beverage packaging, apparel, home furnishings and automobiles. They manufacture resins and polyester staple fiber a three major production facilities. The company and its debtor-affiliates filed for Chapter 11 protection on Feb. 22, 2008 (Bankr. S.D. N.Y. Case No. 08-10595). Jonathan S. Henes, Esq., at Kirkland & Ellis, LLP, in New York City, represents the Debtors. Lazard Freres & Co., LLC, acts as the Debtors' financial advisors and investment bankers. Conway, Del Genio, Gries & Co., LLC, was also retained as the Debtors' chief restructuring advisor. The United States Trustee for Region 2 has appointed seven members to the Official Committee of Unsecured Creditors. Mark R. Somerstein, Esq., at Ropes & Gray LLP, serves as the Committee's bankruptcy counsel. FTI Consulting, Inc., acts as the panel's financial advisors. Wellman Inc., in its bankruptcy petition, listed total assets of $124,277,177 and total liabilities of $600,084,885, as of Dec. 31, 2007, on a stand-alone basis. Debtor-affiliate ALG, Inc., listed assets between $500 million and $1 billion on a stand-alone basis at the time of the bankruptcy filing. Debtor-affiliates Fiber Industries Inc., Prince Inc., and Wellman of Mississippi Inc., listed assets between $100 million and $500 million at the time of their bankruptcy filings. On a consolidated basis, Wellman Inc., and its debtor-affiliates listed $512,400,000 in total assets and $730,500,000 in liabilities as of June 30, 2008. Wellman filed a restructuring plan before the Bankruptcy Court on June 25, 2008. (Wellman Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). WESTAR ENERGY: S&P Hikes Unsec. Debt Rating to 'BBB-' From 'BB+' ---------------------------------------------------------------- Standard & Poor's Ratings Services' raised its senior unsecured debt ratings of 30 U.S. investment-grade investor-owned utility operating companies after reevaluating its application of notching criteria to better reflect the relatively strong recovery prospects of creditors in this sector. "As a result, the senior unsecured debt of most utilities will now be rated the same as the corporate credit rating (CCR) almost uniformly, even when a considerable amount of secured debt is outstanding," said Standard & Poor's credit analyst John Whitlock. This new approach does not affect unsecured debt ratings at unregulated affiliates, such as a holding company. Historically, S&P has approached notching issues from a "priority" perspective. That is, when a debt issue is junior to the company's other debt issues, and S&P therefore view it as having inferior recovery prospects, S&P notches that issue down from the CCR. S&P determines the number of notches by examining the relative amounts of secured and unsecured debt in an entity's capital structure. If sufficient secured debt existed to disadvantage the unsecured bondholders -- for investment-grade companies, the guideline is 20% of assets -- S&P adjusts the rating on the lower-ranked debt to below the CCR. The list shows those ratings that reflect the updated application of notching criteria to utility companies. For more information, see the commentary article "Notching Of U.S. Investment-Grade Investor-Owned Utility Unsecured Debt Now Better Reflects Anticipated Absolute Recovery," published on RatingsDirect. Senior Unsecured Debt Ratings Raised To From -- ---- ALLETE Inc. BBB+ BBB Atlantic City Electric Co. BBB BBB- Carolina Power & Light Co. d/b/a Progress Energy Carolinas Inc. BBB+ BBB Cleveland Electric Illuminating Co. BBB BBB- Connecticut Light & Power Co. BBB BBB- Consumers Energy Co. BBB- BB+ Delmarva Power & Light Co. BBB BBB- Detroit Edison Co. BBB BBB- Florida Power Corp. d/b/a Progress Energy Florida Inc. BBB+ BBB Idaho Power Co. BBB BBB- Kansas Gas & Electric Co. BBB- BB+ Monongahela Power Co. BBB- BB+ Niagara Mohawk Power Corp. A- BBB+ Northern States Power Co. BBB+ BBB Northern States Power Wisconsin A- BBB+ NorthWestern Corp. BBB BBB- Ohio Edison Co. BBB BBB- PacifiCorp A-/ BBB+/ Watch Watch Neg Neg Peoples Gas Light & Coke Co. A- BBB+ Pennsylvania Power Co. BBB BBB- Portland General Electric Co. BBB+ BBB Potomac Electric Power Co. BBB BBB- Public Service Co. of Colorado BBB+ BBB Rochester Gas & Electric Corp. BBB+ BBB San Diego Gas & Electric Co. A A- South Carolina Electric & Gas Co. A- BBB+ Southern California Edison Co. BBB+ BBB Southern California Gas Co. A A- Toledo Edison Co. BBB BBB- Westar Energy Inc. BBB- BB+ * Does not include affiliates affected. * Fitch: US RMBS and CDOs Lead SF Rating Actions Again in Q308 -------------------------------------------------------------- Fitch Ratings says that rating actions by the agency for global structured finance (SF) transactions during Q308 continued to be concentrated in downgrades amongst US residential mortgage-backed securities (RMBS), as well as US collateralised debt obligations (CDOs). In its quarterly rating review of global SF deals, the agency also noted that newly-rated issuance declined further globally in Q308 compared to the previous quarter. "Continuing house price declines in the US have seen performance issues that started in sub-prime move onto impact the Alt-A sector and ultimately prime," says Glenn Costello, Managing Director and US SF Risk Officer at Fitch." Alt-A and prime RMBS transactions therefore represented a large proportion of downgrades in the quarter, with a revised surveillance rating process being adopted for prime. Weak RMBS performance again fed through to CDO downgrades being dominated by Structured Finance CDOs". Q308 saw a number of high profile credit events occurring, including conservatorship of Fannie Mae and Freddie Mac and the bankruptcy filing of Lehman Brothers and the closures of Washington Mutual Bank and IndyMac Bank. The combination of these events brought further downgrades to investment grade corporate CDOs. "The Lehman default, in particular, has had a wide-ranging impact, causing counterparty issues in structured finance across all regions," says Stuart Jennings, Managing Director and EMEA SF Risk Officer at Fitch. "For example, Lehman was swap counterparty for a number of transactions in the EMEA region, many of which were placed on Rating Watch Negative during the quarter and which are likely to drive further negative rating action next quarter when the situation becomes clearer and the rating watches are resolved." Fitch-rated US structured finance issuance increased 12.3% in Q208 to USD58.6bn from its Q108 low, but remained at historical lows due to the ongoing credit crisis. The increase was driven exclusively by core non-mortgage US ABS, with other asset classes remaining largely unchanged on the previous quarter. There was an apparent bounce-back in EMEA SF issuance in Q208 to pre-crisis levels, as volume rose 269.9% from Q108 to USD209bn. However, Stuart Jennings, Managing Director and EMEA SF Risk Officer at Fitch cautions, "This issuance surge did not mark a sudden return of investor confidence to the market, but almost exclusively consisted of bank issuer-retained RMBS transactions for potential use as collateral for repo funding with the European Central Bank, as well as the Bank of England's Special Liquidity Scheme." In the APAC region, deteriorating performance saw some non- conforming RMBS transactions downgraded in both Australia and New Zealand. The deteriorating credit profile of mortgage insurers also had an impact upon the Australian RMBS sector in particular. Mortgage insurance dominates in Australian RMBS and the continuing Rating Watch Negative position of Genworth and MGIC saw a number of tranches on Rating Watch Negative at the end of the quarter. The report entitled "Global Structured Finance Quarterly Rating Review - Q3 2008" is available on the agency's public Web site at http://www.fitchratings.com/ * Proskauer Rose Promotes Three Lawyers to Senior Counsel --------------------------------------------------------- Proskauer Rose LLP elected five lawyers to partner and promoted three to senior counsel. "We are very proud to announce our new partners and senior counsel, all of whom are top-notch practitioners and exceptionally dedicated to their work and clients," Allen I. Fagin, chairman of Proskauer Rose, said. "They are an important part of the future of the firm and we look forward to continuing to grow with them." The new partners and senior counsel are: -- Corporate Department: Philippa M. Bond - Partner, Los Angeles Gary J. Creem - Partner, Boston Reid E. Arstark - Senior Counsel, New York) -- Labor Department Steven D. Hurd - Partner, New York) Amy Covert - Senior Counsel, Newark) -- Litigation Jeremy P. Oczek - Partner, Boston) Jennifer R. Scullion - Partner, New York) David G. Miranda - Senior Counsel, Boston) About Proskauer Rose Proskauer Rose LLP, -- http://www.proskauer.com/-- founded in 1875, is an international law firm providing a wide variety of legal services to clients worldwide from offices in Boca Raton, Boston, Chicago, London, Los Angeles, New Orleans, New York, Newark, Paris, Sao Paulo, and Washington, D.C. The firm has wide experience in all areas of practice important to businesses and individuals including corporate finance, mergers and acquisitions, general commercial litigation, corporate governance matters, conducting internal corporate investigations, white collar criminal defense, private equity and fund formation, patent and intellectual property litigation and prosecution, labor and employment law, real estate transactions, bankruptcy and reorganizations, trusts and estates, and taxation. Its clients span industries including chemicals, entertainment, financial services, health care, information technology, insurance, Internet, lodging and gaming, manufacturing, media and communications, pharmaceuticals, real estate investment, sports, and transportation. The firm has approximately 800 lawyers worldwide. * Treasury Hires Hughes and Squire Sanders for Bailout Work ----------------------------------------------------------- The U.S. Treasury Department said Nov. 3 that Hughes Hubbard & Reed, LLP and Squire Sanders & Dempsey, LLP, will assist the Department in the implementation of the Capital Purchase Program authorized under the Emergency Economic Stabilization Act. Treasury procured the services of the law firms on Wednesday. The firms will help the Department with executing transactions under the program, which includes reviewing executed investment agreements, working directly with accepted financial institutions to identify and resolve any legal issues before closing, and conducting the closing of transactions. The agreements with the firms are effective until April 28, 2009. Treasury issued a request for quotes from five firms on the General Services Administration's Federal Supply Schedules on October 24. The Department received four quotes in response. Based on the estimated transactions under the program, total costs for each firm is not expected to exceed approximately $5.5 million. More information on these contracts will be posted at https://www.fpds.gov (Federal Procurement Data System). * S&P Says Composite Credit Spreads Widen to New Five-Year Highs ---------------------------------------------------------------- Both the Standard & Poor's investment-grade and speculative-grade spreads widened to new five-year highs November 4, 2008, at 514 basis points (bps) and 1,407 bps, respectively, roughly 2% wider than the previous day. By rating category, the 'AA' spread widened to 425 bps, 'A' to 480 bps, 'BBB' to 608 bps, 'BB' to 941 bps, 'B' to 1,553 bps, and 'CCC' to 2,444 bps--all five-year record highs. Spreads by industry also widened across the board, leaving financial institutions at 665 bps, banks at 611 bps, industrials at 842 bps, utilities at 519 bps, and telecommunications at 755 bps. New five-year highs were seen in financial institutions, industrials, and utilities, whereas banks is 44 bps tighter than the five-year record reached on Oct. 13, 2008, and telecommunications is 18 bps tighter than its five-year record reached on Oct. 29, 2008. With speculative-grade defaults on the rise, a higher preponderance of credit downgrades, and a general malaise about the future of the economy, S&P expects spreads to remain at their elevated levels for some time until confidence is restored to the market. * Unsecured Debt Ratings Raised on 30 U.S. Electric Utilities ------------------------------------------------------------- Standard & Poor's Ratings Services' raised its senior unsecured debt ratings of 30 U.S. investment-grade investor-owned utility operating companies after reevaluating its application of notching criteria to better reflect the relatively strong recovery prospects of creditors in this sector. "As a result, the senior unsecured debt of most utilities will now be rated the same as the corporate credit rating (CCR) almost uniformly, even when a considerable amount of secured debt is outstanding," said Standard & Poor's credit analyst John Whitlock. This new approach does not affect unsecured debt ratings at unregulated affiliates, such as a holding company. Historically, S&P has approached notching issues from a "priority" perspective. That is, when a debt issue is junior to the company's other debt issues, and S&P therefore view it as having inferior recovery prospects, S&P notches that issue down from the CCR. S&P determines the number of notches by examining the relative amounts of secured and unsecured debt in an entity's capital structure. If sufficient secured debt existed to disadvantage the unsecured bondholders -- for investment-grade companies, the guideline is 20% of assets -- S&P adjusts the rating on the lower-ranked debt to below the CCR. The list shows those ratings that reflect the updated application of notching criteria to utility companies. For more information, see the commentary article "Notching Of U.S. Investment-Grade Investor-Owned Utility Unsecured Debt Now Better Reflects Anticipated Absolute Recovery," published on RatingsDirect. Senior Unsecured Debt Ratings Raised To From -- ---- ALLETE Inc. BBB+ BBB Atlantic City Electric Co. BBB BBB- Carolina Power & Light Co. d/b/a Progress Energy Carolinas Inc. BBB+ BBB Cleveland Electric Illuminating Co. BBB BBB- Connecticut Light & Power Co. BBB BBB- Consumers Energy Co. BBB- BB+ Delmarva Power & Light Co. BBB BBB- Detroit Edison Co. BBB BBB- Florida Power Corp. d/b/a Progress Energy Florida Inc. BBB+ BBB Idaho Power Co. BBB BBB- Kansas Gas & Electric Co. BBB- BB+ Monongahela Power Co. BBB- BB+ Niagara Mohawk Power Corp. A- BBB+ Northern States Power Co. BBB+ BBB Northern States Power Wisconsin A- BBB+ NorthWestern Corp. BBB BBB- Ohio Edison Co. BBB BBB- PacifiCorp A-/ BBB+/ Watch Watch Neg Neg Peoples Gas Light & Coke Co. A- BBB+ Pennsylvania Power Co. BBB BBB- Portland General Electric Co. BBB+ BBB Potomac Electric Power Co. BBB BBB- Public Service Co. of Colorado BBB+ BBB Rochester Gas & Electric Corp. BBB+ BBB San Diego Gas & Electric Co. A A- South Carolina Electric & Gas Co. A- BBB+ Southern California Edison Co. BBB+ BBB Southern California Gas Co. A A- Toledo Edison Co. BBB BBB- Westar Energy Inc. BBB- BB+ * Does not include affiliates affected. * BOOK REVIEW: The Chief Executives ----------------------------------- Author: Isadore Barmash Publisher: Beard Books Paperback: 260 pages List Price: US$34.95 Order your personal copy at http://www.amazon.com/exec/obidos/ASIN/1587982285/internetbankrupt The Chief Executives by Isadore Barmash is a provocative book dealing with the chief executive cult in America. This should be read by anyone interested in the American corporate system and those who run it. Isadore Barmash, one of the country's most respected business writers, takes a penetrating look into the minds, hearts, consciences, attitudes, and life styles of the CEOs of the 1970s. This surprisingly candid book is based upon extensive research and interviews with influential corporate chiefs, management consultants, and economists. Among others, Reginald Jones of GE, Irving Shapiro of Du Pont, and John de Butts of AT&T offer new insights into management's modus operandi, problems, and their own special public and private worlds. ********* 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. Shimero R. Jainga, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Melanie C. Pador, Ludivino Q. Climaco, Jr., Loyda I. Nartatez, Tara Marie A. Martin, Joseph Medel C. Martirez, 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 ***