/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/081212.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, December 12, 2008, Vol. 12, No. 296 Headlines 26-01 ASTORIA: Court Declines to Approve Disclosure Statement ACE AVIATION: Plans to Distribute Air Canada to Investors ACE AVIATION: Investors Want All Directors Removed from Board ADVANCED MICRO: Moody's Cuts Corporate Family Rating to 'B3' AESOP FUNDING: S&P Downgrades Rating on Class A-3 Notes to 'B+' ALLRIDES INC: Voluntary Chapter 11 Case Summary AMERICAN ACHIEVEMENT: Terminated Deal Cues Moody's Junk Rating ANTARCTICA CFO: Moody's Downgrades Ratings on Four Note Classes BANK OF AMERICA: Fitch Junks Series 2006-3 $410.3 Million Notes BCIF GROUP: Case Summary & 12 Largest Unsecured Creditors BEAR STEARNS: Ambac Assurance Sues EMC For Fraudulent Loans BEAR STEARNS: Asks Court to Dismiss Funds' Liquidator Suit BEAR STEARNS: BofA Sues BSAM for Fraud, Breach of Contract BEAR STEARNS: ERISA Plaintiffs Oppose Consolidation of Suits BIRMINGHAM-JEFFERSON: S&P's Outlook on Tax Bonds B Rating Is Pos. BLOCK COMMUNICATIONS: Weakening Business Cues S&P's Neg. Outlook BREAKWATER RESOURCES: Posts $34.9 Mil Net Loss 9-Mo. 2008 BTWW RETAIL: Boot Barn Completes Acquisition of $14 Retail Stores BUILDING MATERIALS: S&P Withdraws 'CCC' Ratings at Co. Request CBA COMMERCIAL: S&P Cuts Rating on Class M-6 Certificates to 'D' CHRYSLER LLC: Auto Parts Suppliers Ask Co. for Advance Payments CHRYSLER LLC: Credit Unions to Extend $10 Billion in Loans CIRCUIT CITY: Keeps Insurance Policies, Pays $410,000 COW CREEK: Fitch Junks Rating; Concurrently Withdraws Ratings CULLIGAN INTERNATIONAL: Moody's Holds 'B3' CFR; Outlook Negative CUSTOMER ASSET: S&P Cuts Counterparty Credit Rating to 'BB' DALTON CORP: Files for Chapter 11 Protection in Indiana DAW LOS ANGELES: Voluntary Chapter 11 Case Summary DBSI INC: Wachovia Plaza Owners Want to Terminate Master Lease DELTA AIR LINES: Expands Marketing Alliance With Alaska Air DELTA AIR LINES: Issues Investor Update for December 2008 DT EQUIPMENT: Case Summary & 20 Largest Unsecured Creditors DT EQUIPMENT: Case Summary & 20 Largest Unsecured Creditors EDUCATION LOAN: Moody's Cuts Rating on 2004B Loan Notes to 'B3' EMPIRE LAND: Court Converts Case to Chapter 7 Liquidation EQUITY MEDIA: Silver Point Asks Court for Co.'s Liquidation EXIDE TECH: Wants Claims Objection Deadline Moved to Jan. 30 FEDERAL-MOGUL: Carl Icahn Increases Stake to 75.69% FEDERAL-MOGUL: Claims Objection Deadline Moved to June 27 FEDERAL-MOGUL: Inks Deal with Tersigni Consulting on Overbilling FEDERAL-MOGUL: Asks for Court Approval for Carfel Deal FORD MOTOR: Credit Unions to Extend $10 Billion in Loans FPL ENERGY: S&P Downgrades Ratings on $125 Mil. Bonds to 'BB-' GARRETT INVESTMENT: Case Summary & Largest Unsecured Creditor GARRETT INVESTMENT: Case Summary & Largest Unsecured Creditor GATEWAY ETHANOL: May Employ ICM Inc. to Evaluate Ethanol Plant GATEWAY ETHANOL: Gets Go-Ahead to Sell Corn, Milo and Mill Dust GENERAL MOTORS: Hires Lawyers & Bankers to Mull Chapter 11 Filing GENERAL MOTORS: Ind. Fiduciary Extends Share Trading Blackout GLOBAL GENERAL: Files for Chapter 15 Bankruptcy in New York GLOBAL GENERAL: Voluntary Chapter 15 Case Summary GENERAL MOTORS: Suppliers Seek Advance Payments GENERAL MOTORS: Credit Unions to Extend $10 Billion in Loans GMACM MORTGAGE: Moody's Downgrades Ratings on Five Cert. Classes GRF MEDSPA: Case Summary & Four Largest Unsecured Creditors GROWERS DIRECT: CFO K. Muhuri Owns 570,000 Shares GROWERS DIRECT: Board Appoints Sean Tan as CEO and President GROWERS DIRECT: September 30 Balance Sheet Upside-Down by $2.9MM GUIDED THERAPEUTICS: To Issue $2.3 Million 15% Sub. Secured Notes HARTFORD/NORTHWEST: Voluntary Chapter 11 Case Summary HERFF JONES: Terminated Deal Cues Moody's to Withdraws Ratings HINES HORTICULTURE: Court Approves Sale Bidding Procedures HORIZON LINES: S&P Cuts Rating on Senior Unsecured Notes to 'B-' IFLOOR INC: Gets Initial Approval to Use Square 1 Cash Collateral IFLOOR INC: Blames Bankruptcy on Weakening Economy INVESTMENT EQUITY: Files First Plan of Reorganization ISATIS INTERNATIONAL: Case Summary & 4 Largest Creditors KB TOYS: Case Summary & 40 Largest Unsecured Creditors KB TOYS: Files for 2nd Chapter 11 Protection; To Start GOB Sales KEANE INTERNATIONAL: Moody's Cuts Corporate Family Rating to 'B2' LA REINA: Case Summary & 20 Largest Unsecured Creditors LEHMAN BROTHERS: Neuberger Sale Valued at $1.2 Billion LENDINGCLUB CORP: Sept. 30 Balance Sheet Upside Down by $11.5 Mil. LIBERTY MEDIA: S&P Keeps 'BB+' Corp. Credit Rating; Outlook Neg. LOANCARE'S RESI: Fitch Downgrades Residential Servicer Ratings LOUISIANA PACIFIC: Moody's Cuts Corporate Family Rating to 'Ba3' MDWERKS INC: Stockholders OK Amendment to COI, Elect Directors MDWERKS INC: Inks Loan and Securities Purchase Deal with Lender MDWERKS INC: Posts $9MM Net Loss Nine Month ended September 30 MERRILL LYNCH: Fitch Junks Ratings on $39.8 Mil. Class G Notes MERRILL LYNCH: Moody's Cuts Ratings on 14 Certificate Classes MHP SA: Moody's Assigns Corporate Family Rating of 'B3' MICHAEL VICK: Creditors Balk at Disclosure Statement MICHAELANGELO GONZALEZ: Case Summary & 20 Largest Creditors NETVERSANT SOLUTIONS: Section 341(a) Meeting Set for December 29 NETVERSANT SOLUTIONS: U.S. Trustee Forms 3-Member Creditor Panel NETVERSANT SOLUTIONS: Court Approves Sale Bidding Procedures NEUMANN HOMES: Antioch Village Wants FDCM to Comply With Deal NEUMANN HOMES: Court Lets BofA Foreclose on Sky Ranch Property NEW YORK TIMES: In Talks With Lenders Over Coming Debt Payments EDGE METAL: Ch. 7 Trustee Has $16,500 Bid for Personal Property OEM/ERIE: Plan Administrator Settles Jamestown Container's Claim OFFICE DEPOT: Will Close 112 Underperforming Stores ONE COMMUNICATIONS: S&P Keeps 'B-' Corporate Credit Rating PJC SANITATION: Case Summary & 12 Largest Unsecured Creditors PLATINUM STUDIOS: Sept. 30 Balance Sheet Upside Down by $6.1 Mil. PRIME MORTGAGE: Moody's Downgrades Ratings on Two Cert. Classes PROVIDENCE SERVICE: S&P Cuts Corporate Credit Rating to 'B-' REDBEND PARTNERS: Case Summary & 40 Largest Unsecured Creditors REFCO INC: Court Expunges $600 Mil. Claim by Former President REFCO INC: Pacific Inks Preliminary Settlement w/ Sandler REFCO INC: RCM Administrator Proposes to Pay Stilton Claims REFCO INC: Tone Grant Serves Sentence In Minnesota Prison REICHHOLD INDUSTRIES: Moody's Reviews B1 CFR for Likely Downgrade REHRIG INTERNATIONAL: Auction Sale of Battle Creek Facility Okayed REHRIG INTERNATIONAL: Wants Plan Filing Period Extended to May 1 ROCKETINFO INC: Sept. 30 Balance Sheet Upside Down by $310,060 ROL-LAND FARMS: Ontario Court Grants Protection Under CCAA ROYAL CARIBBEAN: S&P Downgrades Rating on $45 Mil. Certs. to 'BB' SCIENS CFO: Moody's Downgrades Ratings on Four Security Classes SHAFFER & SON: Taking Bids for Seven Homes in Various Stages SINOFRESH HEALTHCARE: Sept. 30 Balance Sheet Upside Down by $2.8MM SOLUTIA INC: Challenges Morgan County, Alabama Tax Law SOLUTIA INC: Seeks Court OK for $600,000 Settlement With DuPont SPRINT NEXTEL: Moody's Downgrades Senior Debt Rating to 'Ba2' SPROTT MOLYBDENUM: Exploring Possible Liquidation; Shares Up SYNTAX-BRILLIAN: Court Suspends Chapter 11 Examiner Services TELETOUCH COMMUNICATIONS: Auditor Raises Going Concern Doubt TEREX CORPORATION: Moody's Affirms Corp. Family Rating at 'Ba2' TEXAS NATIONAL BANK: Weiss Ratings Assigns "Very Weak" E- Rating TRIBUNE CO: Chapter 11 Filing Exposes Risks of ESOPs TRIBUNE CO: S&P's Ratings on Class A & B Certs. Tumble to 'D' TRIBUNE CO: SATURNS to Wind-down Bonds on Chapter 11 Bankruptcy TRIBUNE CO: Scripps Cuts Offer for 31% Stake in Food Network UMPQUA INDIANS: Fitch Withdraws Junk Issuer Rating & Tax Bonds UNITED SITE: Weak Market Cues S&P to Junk Corp. Credit Rating UNIVISION COMMS: Moody's Lowers Corporate Family Rating to 'B3' VIEW SYSTEMS: Directors Acquire 10 Million Shares of Stock VIEW SYSTEMS: Discloses 16,247,163 Shares Issued and Outstanding VIEW SYSTEMS: Issues 10MM Shares, Discloses New Majority Ownership VIEW SYSTEMS: September 30 Balance Sheet Upside-Down by $743,077 W.R. Grace: Confirmation Hearings Set for April & June 2009 W.R. GRACE: Insurers Want Documents Declared Confidential W.R. GRACE: FMR Entities Disclose 10.55% Equity Stake in Grace W.R. GRACE: Settlement With Tersigni Consulting Approved WASTEQUIP INC: High Leverage Cue Moody's to Downgrade Ratings WCI COMMUNITIES: Appoints Russell Devendorf as CFO WCI COMMUNITIES: Delays Filing Of 2008 3rd Quarter Results WCI COMMUNITIES: Kraft Wants to Serve Subpoenas on Gateway WCI COMMUNITIES: Gateway, et al., File Schedules & Statements WEST VALLEY FINANCIAL: Voluntary Chapter 11 Case Summary WINSTAR COMMUNICATIONS: Blackstone to Receive Payment for Claims WINSTAR COMMUNICATIONS: Lucent Appeals $188MM Preference Order WINSTAR COMMUNICATIONS: Trustee Taps C&W as Consultants WINSTAR COMMUNICATIONS: Trustee Taps Walker Nell as Accountants WHITE MARLIN: Moody's Downgrades US$24 Mil. Original Swap to 'B1' * Fitch Puts Ratings Seven U.S. Auto Suppliers on Negative Watch * Fitch Rates Stock under Treasury's Capital Purchase Program * Fitch Revises Outlook for U.S. Equity REITs to Negative for 2009 * Fitch Says Healthcare Outlook Negative Due to Economic Pressure * Moody's Reports Modeled Weighted Average Rating for TRUP CDOs * Moody's Says Outlook for Infrastructure Issuers is Stable * S&P Cuts Rating on Class B-4 From Alt. Loan Trust 2005-85CB to D * S&P Junks Ratings on Four Classes From Four RMBS Deals * S&P's Investment-Grade & Spec.-Grade Composite Spreads Widen * BOOK REVIEW: Voluntary Assignments for the Benefit of Creditors ********* 26-01 ASTORIA: Court Declines to Approve Disclosure Statement ------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of New York, in a hearing held on Dec. 9, 2009, denied the approval of 26-01 Astoria Development LLC's Disclosure Statement "without prejudice on grounds of prematurity". The Court has yet to issue a written order. As reported in the Troubled Company Reporter on Oct. 6, 2008, 26-01 Astoria Development LLC delivered to the Court a Disclosure Statement explaining its Plan of Reorganization. Funding of the Plan The plan contemplates the sale of the property and funding of distributions from the sale proceeds. Under the plan, distributions will be funded from either: a) cash assets of the Debtor, b) non-cash assets of the Debtor, c) sale of the Debtor's property, and d) other assets that may be identified by the Debtor prior to confirmation. Treatment of Claims All administrative claims, including claims for professional compensation and reimbursement, postpetition ordinary course liabilities and postpetition tax claims, will be paid in cash and in full. Class 1 priority claims will receive payment in full. Class 2 New York City Secured Tax Claim will be paid in full. Class 3 Stillwater Secured Claim, totaling $7,279,439, will receive cash in the full amount of the secured claim. Class 4 unsecured claims, totaling $2,700,000, will receive full payment. All Class 5 allowed interest holders will retain their interests to the same extent as they existed prior to the bankruptcy filing. A full-text copy of the Debtor's Disclosure Statement is available for free at http://researcharchives.com/t/s?3359 Based in Astoria, New York, 26-01 Astoria Development LLC is involved in real estate development. The company filed for Chapter 11 protection on June 19, 2008 (Bankr. E.D. N.Y. Case No. 08-43900). Robert R. Leinwand, Esq., and Arnold Mitchell Greene, Esq., at Robinson Brog Leinward Greene Genovese & Gluck PC, represent the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed total assets of $15,250,000 and total debts of $9,979,439. ACE AVIATION: Plans to Distribute Air Canada to Investors --------------------------------------------------------- ACE Aviation Holdings Inc. (ACE) said Dec. 10 it's offering to purchase all of its outstanding 4.25% convertible senior notes and preferred shares and seeking court and shareholder approvals to liquidate and distribute assets to shareholders. According to Bloomberg News, Robert Milton, CEO of ACE, has been looking for ways to wind up the company for at least a year after selling off most assets other than Air Canada, including regional carrier Jazz and the Aeroplan frequent-flier program. ACE expects to hold a shareholder meeting on the plan in February. Distribution of Assets to Shareholders ACE intends to seek court and shareholder approvals for a plan of arrangement pursuant to which a court appointed liquidator will proceed with the distribution of ACE's net assets, including its shares in Air Canada, in an orderly fashion, after providing for outstanding liabilities and costs of the transaction, and thereafter to voluntarily dissolve. As at December 10, 2008, ACE's principal assets consisted of its cash and cash equivalents in the aggregate amount of approximately Cdn$811 million, its 75% interest in Air Canada and its 27.8% interest in Aero Technical Support & Services Holdings sarl. As at December 10, 2008, ACE's principal obligations consisted of its outstanding Notes with an aggregate principal amount of Cdn$322.7 million and estimated wind-up and other obligations of approximately Cdn$26 million. In addition, as at December 10, 2008, the aggregate fully accreted value of the Preferred Shares was Cdn$307.6 million. The transaction, if approved, will proceed by way of a court approved plan of arrangement pursuant to the Canada Business Corporations Act. The plan of arrangement will be subject to customary conditions for approval of a plan of arrangement, including regulatory approvals and the favorable vote of ACE's shareholders (on a basis to be determined by the court) represented at a special meeting of ACE's shareholders called to consider the transaction. In accordance with applicable corporate and securities regulatory requirements, the terms and conditions of the plan of arrangement will be disclosed in an information circular to be mailed to shareholders of ACE. Subject to court and regulatory approvals, it is expected that the information circular will be mailed to shareholders of ACE in January 2009 and that the special meeting of shareholders of ACE will be held in February 2009. Purchase for Cancellation of Notes ACE Aviation's Board of Directors has authorized a substantial issuer bid to purchase for cancellation all of its outstanding 4.25% Convertible Senior Notes due 2035 at a purchase price of Cdn$900 in cash for each Cdn$1,000 principal amount of Notes. No accrued interest will be paid by ACE in respect of Notes tendered under the Note Offer. The Note Offer will expire at 5:00 p.m. (Montreal time) on January 19, 2009, unless withdrawn or extended by ACE. The Notes trade on the Toronto Stock Exchange under the symbol ACE.NT.A. On December 10, 2008, there were outstanding Notes in the aggregate principal amount of Cdn$322,746,000. The Note Offer is not conditional upon any minimum number of Notes being deposited, however, the Note Offer is subject to certain other conditions, including regulatory approval. Full particulars of the terms and conditions of the Note Offer will be contained in the Offer to Purchase and Issuer Bid Circular and related documents which will be filed with applicable securities regulatory authorities in Canada and the United States and mailed to holders of Notes on or about December 12, 2008. The Note Offer includes the independent formal valuation of Ernst & Young LLP, which based on the scope of their review and subject to the assumptions, restrictions and limitations provided therein, concludes that the fair market value of the Notes, per Cdn$1,000 principal amount, at December 9, 2008 ranges from approximately Cdn$825 to Cdn$875, or a mid-point of Cdn$850. Offer to Purchase Preferred Shares ACE's Board of Directors has also authorized a substantial issuer to indirectly purchase for cancellation all of its outstanding Preferred Shares at a purchase price of Cdn$20.00 in cash per Preferred Share. ACE has obtained an advance income tax ruling from the Canada Revenue Agency dated December 8, 2008 which provides that the purchase structure to be used under the Preferred Share Offer does not result in "taxable preferred shares" or "short-term preferred shares" being purchased, which could have resulted in Part VI.1 tax being payable by ACE upon the purchase or redemption of its Preferred Shares at a tax rate of 50% of the purchase or redemption price. The tax ruling is binding in respect of transactions completed by May 31, 2009. The Preferred Share Offer will expire at 5:00 p.m. (Montreal time) on January 19, 2009, unless withdrawn or extended by ACE. On December 10, 2008, there were 12,500,000 Preferred Shares issued and outstanding. The Preferred Shares are not listed for trading on the Toronto Stock Exchange or any other exchange. The Preferred Share Offer is not conditional upon any minimum number of Preferred Shares being deposited, however, the Preferred Share Offer is subject to certain other conditions, including regulatory approval. Full particulars of the terms and conditions of the Preferred Share Offer will be contained in the Offer to Purchase and Issuer Bid Circular and related documents which will be filed with applicable securities regulatory authorities in Canada and mailed to holders of Preferred Shares on or about December 12, 2008. The Preferred Share Offer includes the independent formal valuation of Ernst & Young LLP, which based on the scope of their review and subject to the assumptions, restrictions and limitations provided therein, concludes that the fair market value of the Preferred Shares at December 9, 2008 ranges from approximately Cdn$19.75 to Cdn$20.75, or a mid-point of Cdn$20.25. About ACE Aviation Headquartered in Montreal, Canada, ACE Aviation Holdings Inc. (Toronto: ACE-A.TO) -- http://www.aceaviation.com/-- is the parent holding company of Air Canada, Aeroplan, Jazz, Air Canada Technical Services, Air Canada Vacations, Air Canada Cargo, and Air Canada Ground Handling Services. ACE AVIATION: Investors Want All Directors Removed from Board ------------------------------------------------------------- ACE Aviation Holdings Inc. said its Board of Directors has received from West Face Long Term Opportunities Limited Partnership, West Face Long Term Opportunities (USA) Limited Partnership and West Face Long Term Opportunities Master Fund L.P. a formal requisition for a special meeting of the shareholders of ACE to be called for these purposes: (i) to consider an ordinary resolution to remove from office all of the current directors of ACE; (ii) to set the size of the board of directors of ACE at such number as the shareholders may determine at the meeting; (iii) to elect directors to hold office until the next annual meeting of the shareholders of ACE; and (iv) to conduct such other business as may properly come before the meeting, including matters necessary or desirable to implement the foregoing. As at November 30, 2008, WFCI is deemed to exercise, control or direction over 3,915,325 Class A Shares of ACE Aviation. This represents approximately 15.68% of the issued and outstanding Class A Shares of ACE, based on 24,966,000 Class A Shares currently outstanding as at November 28, 2008 as reported by the Toronto Stock Exchange. The Board of Directors said it will consider the requisition and provide a response to the market in due course. According to Bloomberg News, ACE's Class A shares rose 7.5% earlier Dec. 10 after West Face sought to replace the carrier's board and elect new directors at a special shareholder meeting. ACE, Bloomberg says, has dropped 88% this year amid doubts about when and how the company would dissolve itself. About ACE Aviation Headquartered in Montreal, Canada, ACE Aviation Holdings Inc. (Toronto: ACE-A.TO) -- http://www.aceaviation.com/-- is the parent holding company of Air Canada, Aeroplan, Jazz, Air Canada Technical Services, Air Canada Vacations, Air Canada Cargo, and Air Canada Ground Handling Services. ADVANCED MICRO: Moody's Cuts Corporate Family Rating to 'B3' ------------------------------------------------------------ Moody's Investors Service downgraded Advanced Micro Devices' corporate family rating to B3 from B2. At the same time, the rating on the $390 million senior note due 2012 was revised to Caa1 (LGD4, 59%) from B3. The outlook is negative. The downgrade was prompted by the company's announcement that fourth quarter 2008 results will be significantly weaker than anticipated. Combined with Moody's expectation that revenue will remain depressed through 2009, Moody's believes that AMD's profitability and cash flow will remain negative, placing incremental stress on the company's liquidity. In a press release dated October 7, 2008, Moody's stated that "the ratings could be reviewed for possible downgrade to the extent that operational progress fails to materialize and/or if the transaction is not consummated". While Moody's expects that the company's "asset smart" strategy is still on track to close early in the first quarter of 2009, two negative elements have developed that prompted the downgrade. First, following improved results in the company's third quarter, the sudden and sharp downturn in end demand for personal computers, servers, and consumer electronics has contributed to AMD's significant downward revision to revenue in the fourth quarter. AMD now expects revenue to decline sequentially by 25% to approximately $1.2 billion. (AMD's chief competitor, Intel, currently expects an approximate 12% sequential revenue decline in the December quarter). Given the high fixed cost nature of the microprocessor business, Moody's expects that a significant portion of the revenue shortfall will fall to the bottom line, resulting in an operating loss of approximately $350 million to $400 million in the fourth quarter, excluding any potential restructuring charges. Given Moody's expectation of continued weak demand for AMD's end markets, along with the sector's "normal" seasonal decline in the first quarter of 2009 (typically mid single digit sales declines), Moody's expects that AMD will suffer a similar operating loss in the first quarter. This represents a sharp reversal from the company's recent trend toward break even operating profit. Second, the company's "asset smart" agreement has been renegotiated such that AMD would receive approximately $182 million less cash at closing, based on AMD's current stock price. The "asset smart" agreement calls for AMD to receive $700 million in cash at closing by forming a manufacturing joint venture with the Advanced Technology Investment Company of Abu Dhabi. At the same time, the Mubadala Development Company is expected to buy an additional 58 million shares of AMD common stock. This latter investment is currently valued at approximately $182 million less than when the agreement was announced on October 7, 2008. Mubadala currently owns approximately 8% of AMD following an initial equity investment in October 2007. The joint venture will also assume approximately $1.1 billion of AMD's debt. For the quarter ended September 2008, AMD had $1.34 billion of cash and marketable securities. Of this amount, $180 million consisted of auction rate securities, which Moody's views as illiquid. Moody's expects that AMD will have about $1.1 billion of cash and marketable securities at the end of December 2008, which includes proceeds from the sale of its digital television business. Pro forma the completion of the "asset smart" agreement, Moody's anticipates that AMD would have approximately $1.9 billion of cash and marketable securities. Notwithstanding the positive aspects of the joint venture plan (a meaningful boost to AMD's liquidity, some debt reduction, and importantly, a significant reduction in AMD's capital expenditure requirements post closing), the rapidly deteriorating macro demand environment is likely to extend through 2009 in Moody's view. As a result, Moody's believes it is likely that AMD will continue to lose money and remain free cash flow negative during 2009. The rating could come under further pressure to extent that the joint venture agreement is delayed or cancelled, or if AMD receives less cash as a result of additional renegotiations. If the transaction is completed as planned, and subject to a review of final operating and financial terms, the negative rating outlook could be stabilized over time if AMD demonstrates a sustained return to profitability and positive free cash flow. Ratings downgraded are: -- Corporate family rating -- to B3 from B2; -- Probability-of-default rating -- to B3 from B2; -- $390 million senior unsecured notes due August 2012 -- to Caa1 from B3 (LGD4, 59%). The last rating action for AMD was on October 7, 2008 when Moody's affirmed the company's B2 corporate family rating and negative outlook. The affirmation followed the announcement of a manufacturing joint venture between AMD and Mubadala Development Corporation. AMD's ratings were assigned by evaluating factors Moody's believe are relevant to the credit profile of the issuer, such as i) the business risk and competitive position of the company versus others within its industry, ii) the capital structure and financial risk of the company, iii) the projected performance of the company over the near to intermediate term, and iv) management's track record and tolerance for risk. These attributes were compared against other issuers both within and outside of AMD's core industry and AMD's ratings are believed to be comparable to those of other issuers of similar credit risk. Advanced Micro Devices, Inc., headquartered in Sunnyvale, California, is the world's second largest designer and manufacturer of microprocessors. With an approximate 20% unit share of the microprocessor market, AMD generated $6.5 billion of revenues for the twelve months ended September 2008. AESOP FUNDING: S&P Downgrades Rating on Class A-3 Notes to 'B+' --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the class A-3 rental car asset-backed notes from AESOP Funding II LLC's series 2004-2 to 'B+' from 'BB'. The rating remains on CreditWatch with negative implications. The rating on the class A-3 notes is weak-linked to the rating on Avis Budget Car Rental LLC (Avis; B+/Watch Neg/--) because the current credit enhancement is only sufficient to cover S&P's stress-case assumption on the market-value risk of the rental vehicles of the fleet. The current credit support is not sufficient to cover the potential loss of lease cash flow if Avis and its subsidiaries, which sublease the vehicles from Avis, declare bankruptcy. The lowered rating on the notes reflects the downgrade of Avis to B+/Watch Neg/-- on Oct. 24, 2008. The notes are insured by Financial Guaranty Insurance Co. (FGIC; CCC/Negative/-- financial strength rating), which was downgraded on Nov. 24, 2008. Any future rating changes on the AESOP Funding II LLC notes will reflect the higher of the ratings assigned to Avis and FGIC, as S&P noted in the AESOP-related press release published Sept. 15, 2008. Rating Lowered and Remaining on Creditwatch Negative AESOP Funding II LLC Rental car asset-backed notes series 2004-2 Rating ------ Class To From ----- -- ---- A-3 B+/Watch Neg BB/Watch Neg ALLRIDES INC: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: AllRides, Inc., Debtor 563 Auto Center Drive #204 Watsonville, CA 95076 Bankruptcy Case No.: 08-57130 Type of Business: The Debtor sells motorcycle parts Motorcycles, Scooters, Mopeds, and Motorized cycles. Chapter 11 Petition Date: December 9, 2008 Court: Northern District of California (San Jose) Judge: Arthur S. Weissbrodt Debtor's Counsel: Scott L. Goodsell, Eesq. sgoodsell@campeaulaw.com Campeau, Goodsell Smith 440 N. 1st St. #100 San Jose, CA 95112 Tel: (408) 295-9555 Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $100 million The Debtor did not file a list of 20 largest unsecured creditors. The petition was signed by president Edward Dodd. AMERICAN ACHIEVEMENT: Terminated Deal Cues Moody's Junk Rating -------------------------------------------------------------- Moody's Investors Service lowered American Achievement Group Holding Corp.'s corporate family and probability of default rating to Caa2 from B3 and changed the rating outlook to stable. Moody's also lowered the company's senior secured debt to B1 from Ba3, the senior subordinated notes due 2012 to B3 from B2, the senior discount notes due 2012 to Caa2 from Caa1 and the senior PIK notes due 2012 to Caa3 from Caa2. The change in ratings and outlook is driven by the termination of the merger between American Achievement and Herff Jones Inc. which would have been significantly de-levering as well as Moody's ongoing concerns regarding the company's unsustainable leverage burden, particularly in the current economic environment. Although American Achievement may generate modest free cash flow, in Moody's view, it will not be sufficient to meaningfully reduce its approximately 10 times debt-to-EBITDA leverage. Moreover, a portion of American Achievement's debt continues to accrete which further exacerbates the company's leverage challenge. Liquidity is a concern given the need for improvement in the company's EBITDA in order to remain comfortably within covenant compliance during 2009 and the revolving credit facility is due in March of 2010. Moody's lowered these ratings: American Achievement Group Holding Corp. -- Corporate family rating to Caa2 from B3; -- Probability-of-default rating at to Caa2 from B3; -- $203 million(current value) Senior PIK notes due 2012 to Caa3 (LGD5, 86%) from Caa2 (LGD5, 87%). AAC Group Holding Corp. -- $130 million(current value) Senior discount notes due 2012 to Caa2 (LGD-4, 59%) from Caa1 (LGD4, 63%). American Achievement Corporation -- $40 million senior secured revolving credit facility due 2010 to B1 (LGD-1, 6%) from Ba3 (LGD1, 7%); -- $75 million senior secured term loan due 2011 to B1 (LGD1, 6%) from Ba3 (LGD1, 7%). -- $150 million senior subordinated notes due 2012 to B3 (LGD3, 30%) from B2 (LGD3, 34%) The outlook is changed to stable from developing. Moody's last rating action was on May 20, 2008 when the outlook was changed from stable to developing. Headquartered in Austin, Texas, American Achievement Corporation is a leading provider of school-related affinity products and services. The company holds strong market shares in each of its product segments -- yearbooks, class rings, and graduation products. ANTARCTICA CFO: Moody's Downgrades Ratings on Four Note Classes --------------------------------------------------------------- Moody's Investors Service announced that it has downgraded these debt securities of Antarctica CFO I Limited: EUR 175,500,000 Class A Floating Rate Notes due 2014 -- Current Rating: Aa3, on review for downgrade -- Prior Rating: Aa3, on review for downgrade EUR 29,250,000 Class B Deferrable Floating Rate Notes due 2014 -- Current Rating: Ba1, on review for downgrade -- Prior Rating: Baa2, on review for downgrade EUR 29,250,000 Class C Deferrable Floating Rate Notes due 2014 -- Current Rating: B3, on review for downgrade -- Prior Rating: B1, on review for downgrade EUR 26,000,000 Class D Deferrable Floating Rate Notes due 2014 -- Current Rating: Ca, on review for downgrade -- Prior Rating: Caa3, on review for downgrade EUR 4,420,000 Class E Deferrable Floating Rate Notes due 2014 -- Current Rating: Ca, on review for downgrade -- Prior Rating: Ca, on review for downgrade Originally rated on 30 July 2007, Antarctica CFO I Limited is a collateralized fund obligation backed by equity interests in a diversified fund of hedge funds. The fund is managed by Antarctica Asset Management Ltd. The last rating action on the affected securities was on Oct. 30, 2008 when several debt tranches were downgraded and all debt tranches were maintained on review for further possible downgrade. The rating action reflects continued deterioration of the net asset values of the underlying hedge funds within the structure. The ratings also reflect concern over the vehicle's ability to liquidate portfolio assets within the covenanted timeframe. BANK OF AMERICA: Fitch Junks Series 2006-3 $410.3 Million Notes --------------------------------------------------------------- Fitch Ratings downgrades and removes from Rating Watch Negative four classes of Bank of America Commercial Mortgage Inc., series 2006-3, as follows: -- $196.5 million class J to 'CC/DR4' from 'BB+'; -- $152.3 million class K to 'C/DR6' from 'BB'; -- $41.8 million class L to 'C/DR6' from 'BB-'; -- $19.7 million class M to 'C/DR6' from 'B+'. In addition, Fitch downgrades and revises the Rating Outlooks on the following classes: -- $19.7 million class C to 'A+' from 'AA-'; Outlook Negative; -- $31.9 million class D to 'BBB+' from 'A'; Outlook Negative; -- $17.2 million class E to 'BBB from 'A-'; Outlook Negative; -- $22.1 million class F to 'BB' from 'BBB+'; Outlook Negative; -- $17.2 million class G to 'B' from 'BBB'; Outlook Negative; -- $22.1 million class H to 'CCC/DR3' from 'BBB-'. Additionally, Fitch affirms the following with a Stable Outlook: -- $24 million class A-1 at 'AAA'; -- $43.5 million class A-2 at 'AAA'; -- $60 million class A-3 at 'AAA'; -- $1.01 billion class A-4 at 'AAA'; -- $219.1 million class A-A1 at 'AAA'; -- $196.5 million class A-M at 'AAA'; -- $152.3 million class A-J at 'AAA'; -- $41.8 million class B at 'AA'; -- Interest only class XW at 'AAA'. Fitch does not rate the $7.4 million class N, the $4.9 million class O, and the $27 million class P. The classes have been downgraded due to significant expected losses on seven of eight single-tenant retail loans, of which Boscov's Inc. is the borrower and tenant. Fitch placed four classes on Rating Watch Negative after Boscov's filed Chapter 11 bankruptcy on Aug. 4, 2008 and has closed these stores. There are eight Boscov's loans in this transaction with total principal balance of $133.1 million (6.8% of the pool) only the seven loans with total exposure of $117.4 million (6%) are secured by stores which have closed. The stores are attached to shopping centers, four of which are owned by Simon Properties Group, Inc., two by GeneralGrowth Properties and one by CBL & Associates Properties, Inc. The malls are not part of the collateral to the loans. When Boscov's acquired these stores from Federated Department Stores in 2006, the company pledged each individual asset as collateral to finance the purchases. The properties are located throughout Pennsylvania and Maryland. Preliminary Fitch value projections indicate significant losses when applying estimates of dark values per square foot and the overall negative outlook for the retail sector. Fitch will continue to monitor the status of these loans as additional information becomes available. As of the November 2008 distribution date, the pool's aggregate certificate balance has decreased 1.0% to $1.945 billion from $1.965 billion at issuance. At issuance there were two shadow rated loans in the transaction: One Stamford Forum (5%) and FBI Regional Headquarters (4.5%). The FBI Regional Headquarters is a 430,000 square foot (sf) office building located in Chicago and is 100% occupied by the Federal Bureau of Investigation. It retains its investment grade shadow rating based on stable performance and occupancy levels since issuance. One Stamford Forum is a 500,000 sf office building located in Stamford Connecticut. It no longer retains its investment grade shadow rating due to a decline in cash flow. While the property remains 100% occupied, rental rates have decreased due to the largest tenant absorbing additional square footage at a reduced rental rate. Fitch's updated stressed debt service coverage ratio based on the Sept. 30, 2008 rent roll is 1.29 times. Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site. BCIF GROUP: Case Summary & 12 Largest Unsecured Creditors --------------------------------------------------------- Debtor: BCIF Group, L.L.C. 6262 N. Swan Road, Suite 125 Tucson, AZ 85718 Bankruptcy Case No.: 08-17461 Type of Business: The Debtor operates a construction company. Chapter 11 Petition Date: December 3, 2008 Court: District of Arizona (Tucson) Judge: James M. Marlar Debtor's Counsel: Scott D. Gibson, Esq. SGibson@gnglaw.com Gibson, Nakamura & Green PLLC 2329 N. Tucson Blvd. Tucson, AZ 85716 Tel: (520) 722-2600 Fax: (520) 722-0400 Estimated Assets: $1 million to $100 million Estimated Debts: $1 million to $100 million The Debtor's Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Beth Ford, Pima City $32,252 Treasurer PO Box 98765 Phoenix, AZ 85038-0765 PSOMAS $15,298 800 E. Wetmore Road, Ste. 110 Tucson, AZ 85719 San Lucas Hoa $8,121 c/o Lewis Management Service 180 West Magee, Ste. 134 Tucson, AZ 85704 Tierra Land Services $6,952 McEvoy, Daniels & Darcy PC $3,275 Statistical Research Inc. $2,990 Beach, Fleischman & Co. $1,930 Thomas Pace $498 The Print Room $290 Lewis & Rocca $288 Title Security Trust Dept. $150 Pamela Gillson $60 The petition was signed by manager Robert P. Zammit. BEAR STEARNS: Ambac Assurance Sues EMC For Fraudulent Loans ----------------------------------------------------------- Ambac Assurance Corp. filed a lawsuit in the U.S. District Court for the Southern District of New York against EMC Mortgage Corp., a mortgage unit of Bear Stearns Cos., the Associated Press reported. Ambac claims that Bear Stearns leveraged its reputation and dominance in mortgage finance to entice companies to insure fraudulent loans. Ambac seeks unspecified damages believed to be hundreds of millions of dollars in losses, the report said. New York City-based The Bear Stearns Companies Inc. (NYSE: BSC) -- http://www.bearstearns.com/-- is a leading financial services firm serving governments, corporations, institutions and individuals worldwide. The company's core business lines include institutional equities, fixed income, investment banking, global clearing services, asset management, and private client services. The company has approximately 14,000 employees worldwide. * * * As reported in the Troubled Company Reporter on Dec. 28, 2007, Fitch Ratings' affirmed its Negative Outlook for The Bear Stearns Companies Inc. following the announcement of the company's fiscal year earnings for 2007. On Nov. 14, 2007, Fitch affirmed Bear Stearns' long-term credit ratings, along with its subsidiaries. Fitch also downgraded the short-term rating to 'F1' from 'F1+', and Individual rating to 'B/C' from 'B'. BEAR STEARNS: Asks Court to Dismiss Funds' Liquidator Suit ---------------------------------------------------------- Ralph Cioffi, Raymond McGarrigal, Scott Lennon, Michelle Wilson- Clarke, Walkers FS, Deloitte & Touche Cayman Islands, and Bear Stearns Cos., ask the U.S. District Court for the Southern District to dismiss the complaint filed by Geoffrey Varga, voluntary liquidator of Bear Stearns High-Grade Structured Credit Strategies (Overseas) Ltd., and Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage (Overseas) Ltd. Mr. Cioffi complains that the core accusation of Mr. Varga's complaint, which is that the Defendants set up the funds planning from the outset to fail, is improbable because he cared about his reputation and would never design a fund to fail. Mr. Cioffi adds that the Varga complaint is rife with unacceptable language choices, like "name calling" and other non-substantive insult slinging. Mr. McGarrigal asserts that, with respect to Mr. Varga's first claim, which alleges breach of contract, should be dismissed because he was not a party to the contract in question. Messrs. Lennon and Wilson-Clarke and Walkers FS argue that the Court lacks personal jurisdiction because they are all located in the Cayman Islands and that they do not have enough contacts with New York to sustain general or specific jurisdiction. Deloitte & Touche asserts that its role in the audit of the Bear Stearns hedge fund was limited. Deloitte explains that Deloitte Cayman only issued audit opinions on the financial statements of the Overseas Funds and that. Deloitte complains that Mr. Varga's complaint fails to allege any particular facts regarding what Deloitte Cayman did in connection with its audits of the Overseas Funds that would tie Deloitte Cayman to the Domestic Funds or the Master Funds. On behalf of Bear Stearns Cos., Barry H. Berke, Esq., at Kramer Levin Naftalis & Frankel LLP, in New York, contends that the Plaintiffs seek to blame Bear Stearns and others for losses that the four hedge funds suffered as a result of the unforeseen and unforeseeable dislocation in the credit markets that began during the spring of 2007 and is still evolving to this day. Mr. Berke says Bear Stearns all itself in offering materials as "speculative," and warned investors of "a substantial risk of loss, including the possibility of the total loss of an investment therein." In addition, Mr. Berke relates that the impact of the credit market contraction was not limited to the hedge funds because many sophisticated institutions, including competing hedge funds and investment banks, suffered and continue to suffer, as a result of the unforeseen market phenomenon. Against that backdrop, the opportunistic nature of the litigation now before the Court is clear, Mr. Berke says. He explains that although the amended complaints in the cases are lengthy, the basic theory is simple: the Funds' demise, and the attendant losses, resulted from supposed mismanagement, self-dealing and fraud, rather than from an unprecedented market dislocation. Mr. Berke submits that the Navigator, FIC and Varga amended complaints suffer from defects that compel dismissal as to the Bear Stearns Defendants. He points out that with regard to defendants named in Navigator and Varga, the plaintiffs do little more than identify those individuals as employees of BSAM or BS&Co. Apart from the paucity of particularized, relevant factual allegations as to the individual Bear Stearns Defendants, the claims asserted in the cases cannot proceed for a host of other reasons, including failure to adequately plead demand futility, lack of standing, exculpation pursuant to the funds' governing documents and absence of sufficient "scienter" allegations. Accordingly, Bear Stearns submits that the various pleading defects in FIC and Varga compel dismissal of the actions in their entirety as against the Bear Stearns Defendants. Similarly, the Court should dismiss all of the claims asserted in the Navigator amended complaint, with the exception of two limited claims against BSAM only. Tannin Joins Bear Stearns Defendants' Request Matthew Tannin joins in the arguments made by the Bear Stearns Defendants that FIC's class claim for breach of contract should be dismissed because it fails to identify the contracts or specific provisions that were breached. Mr. Tannin argues that he was not a party to the agreements alleged in the complaint and, as a result, cannot be liable for any breach of the terms. He notes that the Navigator amended complaint's class claim for breach of contract suffers from the same deficiency and should be dismissed. About Bear Stearns Cos. New York City-based The Bear Stearns Companies Inc. (NYSE: BSC) -- http://www.bearstearns.com/-- is a leading financial services firm serving governments, corporations, institutions and individuals worldwide. The company's core business lines include institutional equities, fixed income, investment banking, global clearing services, asset management, and private client services. The company has approximately 14,000 employees worldwide. * * * As reported in the Troubled Company Reporter on Dec. 28, 2007, Fitch Ratings' affirmed its Negative Outlook for The Bear Stearns Companies Inc. following the announcement of the company's fiscal year earnings for 2007. On Nov. 14, 2007, Fitch affirmed Bear Stearns' long-term credit ratings, along with its subsidiaries. Fitch also downgraded the short-term rating to 'F1' from 'F1+', and Individual rating to 'B/C' from 'B'. About Bear Stearns Funds Grand Cayman, Cayman Islands-based Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage Master Fund Ltd. and Bear Stearns High-Grade Structured Credit Strategies Master Fund Ltd. are open-ended investment companies, which sought high income and capital appreciation relative to the London Interbank Offered Rate, and designed for long-term investors. On July 30, 2007, the Funds filed winding up petitions under the Companies Law (2007 Revision) of the Cayman Islands. Simon Lovell Clayton Whicker and Kristen Beighton at KPMG were appointed joint provisional liquidators. The joint liquidators filed for Chapter 15 petitions before the U.S. Bankruptcy Court for the Southern District of New York the next day. On August 30, 2007, the Honorable Burton R. Lifland denied the Funds protection under Chapter 15 of the Bankruptcy Code. Fred S. Hodara, Esq., Lisa G. Beckerman, Esq., and David F. Staber, Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the liquidators in the United States. The Funds' assets and debts are estimated to be more than US$100,000,000 each. (Bear Stearns Funds Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) BEAR STEARNS: BofA Sues BSAM for Fraud, Breach of Contract ---------------------------------------------------------- Bank of America, National Association, and Banc of America Securities, LLC, filed a complaint against Bear Stearns Asset Management, Inc., and three of its former fund managers and directors, Ralph Cioffi, Matthew Tannin, and Raymond McGarrigal, before the United States District Court for the Southern District of New York. Lawrence S. Robbins, Esq., at Robbins Russel Englebert Orseck Untereiner & Sauber LLP, relates in a Court filing that the lawsuit is an action for breach of contract, fraud, and related causes of action arising from BSAM and the managers' misconduct in connection with a securitization transaction structured and marketed by Bank of America, as well as certain financing transactions with the Bank in the spring of 2007. In May 2007, at the request of BSAM, BANA structured and marketed a $4,000,000,000 securitization, known as a "collateralized debt obligation-squared" transaction, in which mortgage-backed assets, primarily ones owned by two hedge funds managed by BSAM, were pooled and structured to support the sale of certain securities. BANA and each of Bear Stearns High-Grade Structured Credit Strategies Master Fund, Ltd., and Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage Master Fund, Ltd., entered into various derivative transactions, including without limitation interest rate, total return, credit spread, credit default and credit index swap transactions, pursuant to International Swaps and Derivatives Association, Inc., Master Agreements, dated November 4, 2003, and July 31, 2006. BofA Securities and each of the Bear Stearns Funds also entered into repurchase and reverse repurchase transactions pursuant to Master Repurchase Agreements, dated December 5, 2003, and July 28, 2006. In June 2007, BSAM and BANA entered into a termination and purchase agreement, which, among others, provides that the Bear Stearns Funds will sell BofA Securities subject to the Repurchase Transactions and transfer to BANA all voting consent under the Transactions. In October 2007, BANA appeared in the Chapter 15 cases of the Bear Stearns Funds asking the court overseeing the Chapter 15 cases to determine that the injunction order it entered does not bar BANA from exercising its voting rights. BANA alleges in the District Court action that, over the course of many months, BSAM and its officers and employees concealed from BANA that the hedge funds were suffering substantial withdrawal requests from investors and were in imminent danger of collapse. The Fund did collapse in July 2007 and filed liquidation proceedings before the Grand Court of Cayman Islands. BANA further alleges that BSAM and the managers breached their contractual and other duties to BANA because they were desperate to secure liquidity to prop up the failing hedge funds. Mr. Robbins further relates that in May 2007, the Defendants caused the hedge funds to enter into a series of short-term financing transactions to obtain nearly $1,000,000,000 from BANA without appraising it of the funds' precarious financial condition. "When the hedge funds were unable to meet their obligations to repay the Bank for the short-term financing, the Bank suffered significant losses," Mr. Robbins contends. Against this backdrop, BANA and BofA Securities ask the District Court for compensatory damages and punitive damages in an amount to be proven at a trial, as well as compensation of attorneys' fees and costs. The lawsuit will be heard before Southern New York District Judge Crotty. * * * In a Court-approved stipulation, BANA, BofA Securities, BSAM and the managers agreed that: * BSAM will serve and file a motion to dismiss or answer to the complaint no later than January 16, 2009; * Messrs. Cioffi, Tannin, and McGarrigal will serve and file motions to dismiss or answers no later than January 23, 2009; * the Bank will serve and file opposing papers to the motions to dismiss no later than March 24, 2009; * BSAM will serve and file replies on its dismissal motion no later than April 28, 2009; * Messrs. Cioffi, Tannin, and McGarrigal will serve and file papers no later than May 5, 2009; and * oral arguments on the motions to dismiss will be heard at a later date. About Bear Stearns Funds Grand Cayman, Cayman Islands-based Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage Master Fund Ltd. and Bear Stearns High-Grade Structured Credit Strategies Master Fund Ltd. are open-ended investment companies, which sought high income and capital appreciation relative to the London Interbank Offered Rate, and designed for long-term investors. On July 30, 2007, the Funds filed winding up petitions under the Companies Law (2007 Revision) of the Cayman Islands. Simon Lovell Clayton Whicker and Kristen Beighton at KPMG were appointed joint provisional liquidators. The joint liquidators filed for Chapter 15 petitions before the U.S. Bankruptcy Court for the Southern District of New York the next day. On August 30, 2007, the Honorable Burton R. Lifland denied the Funds protection under Chapter 15 of the Bankruptcy Code. Fred S. Hodara, Esq., Lisa G. Beckerman, Esq., and David F. Staber, Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the liquidators in the United States. The Funds' assets and debts are estimated to be more than US$100,000,000 each. (Bear Stearns Funds Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) BEAR STEARNS: ERISA Plaintiffs Oppose Consolidation of Suits ------------------------------------------------------------ The U.S. District Court for the Southern District of New York ordered all parties who filed separate securities, derivative, and Employee Retirement Income Security Act lawsuits against Bear Stearns Companies, Inc., and its former officers, to show cause why the lawsuits should not be consolidated with the ERISA Cases. In response, the State of Michigan Retirement Systems, represented by Thomas A. Dubbs, Esq., at Labaton Sucharow LLP, in New York, tells the Court that it supports the coordination, for pre-trial purposes only, of the securities, derivative and ERISA cases pending against Bear Stearns, including those transferred to the District Court by the U.S. Judicial Panel on Multidistrict Litigation. Mr. Dubbs says SMRS lost $62,500,000 in Bear Stearns' collapse. SMRS believes that pretrial coordination provides the best platform for the litigation, including convenience for parties and witnesses, elimination of duplicative discovery, prevention of inconsistent pretrial rulings, and conservation of resources. The potential deponents in the actions, including both defendants and third parties, will likely overlap, so coordination would be more convenient for them, Mr. Dubbs says. In terms of document requests, given the likelihood of production of a large volume of material, it appears that much of the material produced would overlap between the different types of cases, even if a small portion of the material would be more relevant to certain types of cases than others. In addition, should discovery disputes arise involving multiple parties, coordination would promote efficiency in resolving those disputes, SMRS states. However, SMRS asserts that the different types of actions should not be consolidated. The legal and procedural issues arising in the securities cases are substantially different from the issues arising in the ERISA and derivative cases, Mr. Dubbs argues. Mr. Dubbs contends that each action: -- needs to have its own lead plaintiff and lead counsel; and -- will have to file its own motion for class certification to have each class certified and each action may require its own separate trial. In addition, Mr. Dubbs notes that separate plaintiffs in each type of action have already expressed support for proceeding with coordinated pretrial proceedings while maintaining separate derivative, ERISA, and securities actions, while no plaintiffs have expressed support for complete consolidation. In a separate filing, Estelle Weber, Anthony Pisano, Ira Gewirtz, Rita Rusin, and Lawrence Fink argue that the ERISA claims are pursued under different statutes and legal theories, on behalf of different plaintiffs who are not typical of the plaintiffs in the securities cases, and seek different relief than in the securities cases, against different types of defendants. The Weber Plaintiffs assert that the ERISA cases are not subject to the automatic stay of discovery or the heightened pleading standards required under the Private Securities Litigation Reform Act of 1995. Samuel Cohen and Jerome Birn, separately points out that their Class Action does not plead a single cause of action on behalf of class members in another action for violations of securities law. Specifically, Messrs. Cohen and Birn assert only a breach of fiduciary duties against certain individual defendants for injuries initially caused to Bear Stearns. In another separate filing, Aaron Howard and Shelden Greenberg, plaintiffs of the first ERISA Case against Bear Stearns, notes that consolidation of the ERISA Cases is clearly appropriate because the Cases contain similar allegations and seek the same relief. However, because of significant differences between the ERISA Cases and the Securities Cases, the Howard ERISA Plaintiffs submit that the ERISA Cases should not be consolidated with the Securities Cases, but rather should be coordinated for the limited purpose of certain common discovery. As a whole, the Plaintiffs ask the Court to consolidate the ERISA plaintiffs separately from the Securities Cases, albeit in a coordinated fashion, to achieve efficiency without causing prejudice or confusion. Bear Stearns Responds Representing Bear Stearns, Brad S. Karp, Esq., at Paul Weiss Rifkind Wharton & Garrison LLP, in New York, asserts that the Court should exercise its discretion to consolidate the Securities Actions and the ERISA Actions to promote efficiency and reduce the potential for confusion and delay. Mr. Karp contends that it is undeniable that the Securities and ERISA Actions involve the same facts, and various plaintiffs concede as much in their responses to the Court's order to show cause. "Given the substantial factual overlap in these actions, consolidation is the most appropriate means of avoiding duplicative discovery and motion practice," Mr. Karp says. With regard to "coordination," Mr. Karp contends that consolidation is more appropriate than coordination because maintaining and coordinating separate actions would likely foster battles between separate lead counsel regarding scheduling, discovery and other pretrial issues. In addition, Mr. Karp argues that the different parties, facts, and distinct legal standards and procedures do not preclude the Court from exercising its discretion to consolidate the Securities and ERISA Actions. Previously, the Greek Orthodox Archdiocese Foundation; the Commonwealth of Massachusetts Pension Reserves Investment Fund; the SICAV Inversiones Del Montiel and San Antonio Fire & Police Pension Fund; and the SMRS filed requests to consolidate each of their shareholder actions and appoint a lead plaintiff and lead counsel in the actions arising out of Bear Stearns' collapse. Messrs. Cohen and Birn has also asked the Court to appoint Brower Piven, APC, as lead counsel, and Robbins Umeda & Fink LLP, as co- lead counsel, for the shareholders' derivative action against Bear Stearns. About Bear Stearns Cos. New York City-based The Bear Stearns Companies Inc. (NYSE: BSC) -- http://www.bearstearns.com/-- is a leading financial services firm serving governments, corporations, institutions and individuals worldwide. The company's core business lines include institutional equities, fixed income, investment banking, global clearing services, asset management, and private client services. The company has approximately 14,000 employees worldwide. * * * As reported in the Troubled Company Reporter on Dec. 28, 2007, Fitch Ratings' affirmed its Negative Outlook for The Bear Stearns Companies Inc. following the announcement of the company's fiscal year earnings for 2007. On Nov. 14, 2007, Fitch affirmed Bear Stearns' long-term credit ratings, along with its subsidiaries. Fitch also downgraded the short-term rating to 'F1' from 'F1+', and Individual rating to 'B/C' from 'B'. BIRMINGHAM-JEFFERSON: S&P's Outlook on Tax Bonds B Rating Is Pos. ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its CreditWatch implications on its 'B' underlying rating on Birmingham-Jefferson Civic Center Authority, Alabama's special tax bonds series 2002-A special tax bonds to positive from negative. The rating had been placed on CreditWatch with negative implications on Aug. 26, 2008. S&P also affirmed its 'B' SPUR on the authority's series 2002-A special tax bonds. Jefferson County has only one $5 million payment remaining to make to the authority for its obligation pertaining to these series of bonds, which S&P understands the county intends to make later in December 2008. The next principal and interest payment is due on Jan. 1, 2009. Once that payment has been made, S&P will change the rating to reflect S&P's assessment of the tax payment stream due solely from the city of Birmingham. The rating was lowered earlier this year from 'AA-' to 'A', then lowered further to 'B' and placed on CreditWatch with negative implications. The bonds are currently secured by two separate streams of occupational taxes levied by the city of Birmingham and Jefferson County, respectively. Both the city and county have separately pledged fixed dollar amounts of their respective annual collections of said taxes pursuant to pledge and appropriation agreements with the authority. The county has pledged $10 million annually in support of the authority's bonds through fiscal 2009. A payment of $5 million was made earlier this calendar year. Birmingham separately levies a 1% tax on the gross receipts of persons employed in the county. The city's tax is levied pursuant to Ordinance No 70-75, adopted in 1970 by the city council, and is further authorized by Section 11-51-90 of the Code of Alabama. The city has pledged $3 million annually in support of the authority's bonds through 2012. The bonds' debt service schedule takes into account the disparate terms of the county's and city's pledge agreements. BLOCK COMMUNICATIONS: Weakening Business Cues S&P's Neg. Outlook ---------------------------------------------------------------- Standard & Poor's Rating Services said it revised its outlook on Sylvania, Ohio-based media and cable TV operator Block Communications Inc. to negative from stable. S&P also affirmed all ratings, including the 'BB-' corporate credit rating, on Block. Total debt, adjusted for operating leases and unfunded pensions and other post-employment benefits as of Sept. 30, 2008, was approximately $346 million. "The change in outlook reflects the deteriorating position of the company's newspaper business," explained S&P's credit analyst Naveen Sarma. While overall financial performance is still supported by its healthy core cable TV business, the cable segment contribution may not be sufficient to offset the newspaper business' continued secular decline, hurting the company's overall credit profile. BREAKWATER RESOURCES: Posts $34.9 Mil Net Loss 9-Mo. 2008 --------------------------------------------------------- Dundee Corporation disclosed in a regulatory filing containing its third quarter results that in the nine months ended September 30, 2008, Breakwater Resources Ltd. reported a net loss of $34.9 million on revenues of $201.9 million compared with earnings of $61.7 million on revenues of $201.6 million in the same period of the prior year. Dundee Corp. holds a 25% stake in Breakwater. Breakwater's gross sales revenue from the sales of zinc, copper, lead, silver and gold concentrates increased by $29.1 million or 11% to $298.0 million from the same period in 2007, despite an increase in concentrate sold of 71%, reflecting higher prices for gold and silver, offset by a 43% reduction in the realized zinc price. Direct operating costs increased by $65.9 million to $153.6 million, primarily due to increased concentrate sales and higher costs of fuel, labour and supplies. At Sept. 30, 2008, Breakwater had working capital of $48.8 million compared with $82.6 million at December 31, 2007. Earnings in Breakwater are sensitive to operating performance, metal prices, smelter treatment charges and the U.S. foreign exchange rate. During the third quarter of 2008, Dundee purchased 1 million shares of Breakwater in the open market for $0.3 million. "We currently own approximately 113 million shares of Breakwater, representing a 25% interest. Included in our equity earnings for the nine months ended September 30, 2008, is a loss of $8.3 million representing our share of losses in Breakwater for this period. Offsetting the loss is a dilution gain of $3.0 million which we recognized following issuances of common shares by Breakwater," Dundee said. "At September 30, 2008, the market value of our interest in Breakwater was $24.2 million, substantially below our carrying value of $79.5 million. While Breakwater continues to report its financial results based on accounting principles applicable to a going concern, certain market conditions, including falling metal prices and higher operating costs, cast substantial doubt about Breakwater's ability to continue its operations in the normal course of business and its ability to achieve and sustain profitable operations. Adjustments to the financial operating results of Breakwater could be material should Breakwater be unable to continue as a going concern," Dundee related. According to Dundee, subsequent to September 30, 2008, Breakwater said that it would temporarily suspend operations at both the Langlois mine in Quebec and the Myra Falls mine in British Columbia. "This decision was precipitated by the decline in commodity prices and the general deterioration of the short-term economic outlook globally, which have mitigated the overall operational improvements in Breakwater's production and costs at both mines. This action enables Breakwater to retain zinc assets that will be mined in the future when the zinc market returns to levels that more accurately reflect underlying supply and demand fundamentals," Dundee said. About Breakwater Resources Breakwater Resources Ltd. is a mineral resource company engaged in the acquisition, exploration, development and mining of base metal and precious metal deposits in the Americas. Breakwater has three producing zinc mines: the Myra Falls mine in British Columbia, Canada; the El Mochito mine in Honduras; and the El Toqui mine in Chile. The Langlois mine in north western Quebec, Canada has temporarily suspended operations. Breakwater is listed on the Toronto Stock Exchange under the ticker BWR. BTWW RETAIL: Boot Barn Completes Acquisition of $14 Retail Stores ----------------------------------------------------------------- Marwit Capital Partners II L.P. said that retailer Boot Barn Holding Corp. has completed the purchase of 14 retail stores in Wyoming and Nevada from BTWW Retail L.P. The transaction was completed pursuant to BTWW's sale of assets under Section 363 of the U.S. Bankruptcy Code and closed effective November 26, 2008. The Troubled Company Reporter on Nov. 28, 2008, said the Deal's Jamie Mason reports that the Hon. Barbara J. Houser of the United States Bankruptcy Court for the Northern District of Texas approved the sale of BTWW Retail LP's assets for $32 million. The assets purchased include 12 stores located in Wyoming, two stores in northern Nevada and certain trademarks and other intellectual property of BTWW. In addition to adding the very attractive Wyoming market to Boot Barn's geographic footprint, this acquisition firms Boot Barn's leadership position as the largest western themed retailer in the U.S. Boot Barn now operates 81 retail stores in five states, including 38 located in California, 14 in Arizona, 12 in Wyoming, 9 in New Mexico and 8 in Nevada. Some recently acquired stores will continue for a time to operate under the Corral West name, although the Company anticipates rebranding them as Boot Barns in the near to medium term. Boot Barn has completed three separate store acquisitions from BTWW for a combined total of 45 stores in 2008. Chris Britt, Managing Partner of Marwit Capital, said, "We are excited to have the opportunity to acquire these well-established and strongly performing stores in the highly desirable Wyoming market. Wyoming is one of the strongest western retail markets in the country and these stores represent an unprecedented opportunity to acquire a broad presence in this market." "Our vision for Boot Barn has always been to selectively pursue add-on acquisitions to expand our store footprint in strong markets. In 2008, we've been presented with terrific opportunities to enhance Boot Barn's asset base with high quality stores and locations," said David Browne, Principal of Marwit Capital. He continued, "Pat Meany, CEO, John Turnbull, President, and the entire Boot Barn management team are expertly managing the significant expansion of Boot Barn's business and new store integration." Pat Meany said, "The Boot Barn team is looking forward to the opportunity to offer customers in these new markets the products, selection, service and high quality for which Boot Barn is known. We will work hard to minimize disruptions for customers, suppliers and employees. It has been a very busy and productive year for Boot Barn and we are progressing well ahead of plan in integrating our newly acquired stores and preparing for the busy holiday season." About BTWW Headquartered in Dallas, Texas, BTWW Retail, L.P. fka Boot Town, Inc. -- http://btwwretail.com/-- owns and operates more than 130 western, equine and workwear stores throughout the United States. The Debtor and its debtor-affiliates filed for Chapter 11 protection on Nov. 3, 2008, (Bankr. N.D. Tex. Lead Case No.: 08- 35725) Alexandra P. Olenczuk, Esq. and Michael D. Warner, Esq. at Warner Stevens LLP represent the Debtors in their restructuring efforts. Their financial advisor is Clear Thinking Group LLC led by Alan Minker as chief restructuring officer. The Debtors' assets range between $50 million to $100 million and their debts range between debts of $50 million to $100 million. BUILDING MATERIALS: S&P Withdraws 'CCC' Ratings at Co. Request -------------------------------------------------------------- Standard & Poor's Ratings Services said that it withdrew its 'CCC' corporate credit rating on building products distributor and construction services provider Building Materials Holding Corp. S&P also withdrew its 'CCC' issue-level ratings and '4' recovery ratings on the company's $200 million revolving credit facility due 2011 and $350 million term loan B due 2011. S&P withdrew the ratings at the company's request. CBA COMMERCIAL: S&P Cuts Rating on Class M-6 Certificates to 'D' ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the class M-6 commercial mortgage pass-through certificates from CBA Commercial Assets LLC's series 2004-1 to 'D' from 'CCC-'. Concurrently, S&P placed its ratings on 31 other classes of certificates from CBA Commercial Assets' series 2004-1, 2005-1, 2006-1, 2006-2, and 2007-1 on CreditWatch with negative implications. The downgrade reflects a $100,585 principal loss to the outstanding principal balance of the security following the liquidation of one asset that was previously with the special servicer, Midland Loan Services Inc. The loan was liquidated at a 62.0% loss severity. The negative CreditWatch placements reflect S&P's preliminary analysis of the specially serviced loans and other credit-impaired loans in the transactions. S&P's preliminary analysis of the specially serviced assets considered recent appraisal and broker opinion of value information as well estimates for hold time. In addition, the CreditWatch placements reflect the unfavorable performance of each of the collateral pools, which have an average delinquency rate of 19.5%. S&P last reviewed the transactions in April 2008, at which time S&P downgraded 21 classes due to anticipated credit support erosion upon the eventual resolution of the specially serviced assets. However, the severity of realized losses on several of the assets was significantly higher than S&P anticipated. S&P will resolve the CreditWatch negative placements when it completes its review of the specially serviced assets and review the credit characteristics of the remaining loans in the pools. Ratings Lowered CBA Commercial Assets LLC Commercial mortgage pass-through certificates series 2004-1 Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ M-6 D CCC- 0.0% Ratings Placed on Creditwatch Negative CBA Commercial Assets LLC Commercial mortgage pass-through certificates series 2004-1 Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ M-3 A/Watch Neg A 12.32% M-4 BBB+/Watch Neg BBB+ 6.27% M-5 BBB/Watch Neg BBB 4.81% CBA Commercial Assets LLC Commercial mortgage pass-through certificates series 2005-1 Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ M-1 AA+/Watch Neg AA+ 19.39% M-2 AA/Watch Neg AA 14.56% M-3 AA-/Watch Neg AA- 12.25% M-4 A-/Watch Neg A- 9.03% M-5 BB+/Watch Neg BB+ 4.66% M-6 BB/Watch Neg BB 3.51% CBA Commercial Assets LLC Commercial mortgage pass-through certificates series 2006-1 Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ A AAA/Watch Neg AAA 20.35% M-1 AA+/Watch Neg AA+ 16.57% M-2 AA-/Watch Neg AA- 12.78% M-3 BBB+/Watch Neg BBB+ 8.65% M-4 BBB-/Watch Neg BBB- 6.24% M-5 BB/Watch Neg BB 4.69% M-6 CCC/Watch Neg CCC 1.60% CBA Commercial Assets LLC Commercial mortgage pass-through certificates series 2006-2 Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ A AAA/Watch Neg AAA 17.57% M-1 AAA/Watch Neg AAA 14.17% M-2 A+/Watch Neg A+ 9.74% M-3 BBB+/Watch Neg BBB+ 7.22% M-4 BB+/Watch Neg BB+ 5.15% M-5 BB/Watch Neg BB 4.12% M-6 CCC/Watch Neg CCC 1.75% CBA Commercial Assets LLC Commercial mortgage pass-through certificates series 2007-1 Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ A AAA/Watch Neg AAA 15.86% M-1 AA+/Watch Neg AA+ 12.96% M-2 A-/Watch Neg A- 9.92% M-3 BBB/Watch Neg BBB 8.06% M-4 BBB-/Watch Neg BBB- 6.87% M-5 BB+/Watch Neg BB+ 5.42% M-6 BB-/Watch Neg BB- 4.36% M-7 B/Watch Neg B 3.17% CHRYSLER LLC: Auto Parts Suppliers Ask Co. for Advance Payments --------------------------------------------------------------- Some auto parts suppliers have asked Chrysler LLC for advanced payment on fears that the company might file for bankruptcy, Alex Ortolani and Mike Ramsey at Bloomberg News report, citing people familiar with the matter. According to Bloomberg, the sources said that Chrysler rejected one request and is negotiating with other suppliers. Bloomberg says that Chrysler said it needs $4 billion in U.S. loans immediately to avoid running out of cash in the first quarter of 2009. Tom Krisher at The Associated Press relates that top Chrysler executives have warned that the company is nearing the minimum level of cash needed to operate the firm and will have trouble paying bills after the first of the year. Citing Chrysler's Chief Financial Officer Ron Kolka, The AP says that most suppliers are getting payments in the normal 45-day cycle. Chrysler's Vice Chairman Tom LaSorda said that an oil company that makes billions has demanded cash before shipments, The AP relates. Bloomberg states that sources said the talks include proposals to Chrysler for prompter payments. Mike Ramsey at Bloomberg says that President Tom LaSorda said in an interview the company won't consider "winding down" and will return to profitability with U.S. aid. Sharon Terlep at Dow Jones Newswires reports that Chrysler CEO Bob Nardelli said on Thursday that the Senate may not pass the $14 billion bailout and asked for workers' support in convincing the lawmakers to help the company. 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 Dec. 3, 2008, Dominion Bond Rating Service downgraded the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. 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. As reported in the TCR on Dec. 3, 2008, Dominion Bond Rating Service downgraded on Nov. 20, 2008, the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. CHRYSLER LLC: Credit Unions to Extend $10 Billion in Loans ---------------------------------------------------------- Sharon Terlep at The Wall Street Journal reports that a group of 1,300 credit unions have pledged to extend about $10 billion in auto loans. According to WSJ, the credit unions are aiming to win new borrowers while providing General Motors Corp., Ford Motor Co., and Chrysler LLC financial assistance. Tom Henderson at Crain's Detroit Business relates that GM and the Michigan Credit Union League said on Dec. 10 that a consortium of credit unions in Michigan, Ohio, Indiana, and Illinois have agreed to provide up to $10 billion to finance the sale of new GM vehicles through June 2009, in exchange for supplier discounts from GM to more than 12 million credit union members in the Midwest. According to a statement posted at Lovemycreditunion.org, credit union members will be able to get an additional $250 bonus cash between Dec. 10, 2008 and Jan. 5, 2009, on their eligible new GM vehicle purchase. The GM price discount program includes these brands: Buick, Cadillac, Hummer, Saab, Chevrolet, GMC, Saturn, and Pontiac. The program runs from Dec. 8, 2008, through June 30, 2009. WSJ relates that the credit union group said that it's working with Ford Motor Co. and Chrysler LLC on a similar arrangement. 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 Dec. 3, 2008, Dominion Bond Rating Service downgraded the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. 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. As reported in the TCR on Dec. 3, 2008, Dominion Bond Rating Service downgraded on Nov. 20, 2008, the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. CIRCUIT CITY: Keeps Insurance Policies, Pays $410,000 ----------------------------------------------------- Circuit City Stores, Inc., and its affiliates seek permission from the U.S. Bankruptcy Court for the Eastern District of Virginia to maintain their various insurance policies and to pay all premiums, brokers' fees, administrations fees, and consulting fees, arising under or in connection with the insurance policies. The Debtors' Insurance Policies include coverage for, among others, workers' compensation claims, automobile claims, business aircraft claims, fiduciary liability claims, claims for losses due to crime, business travel and accident claims, stock throughput claims, boiler and machinery claims, certain general and excess liability claims, directors' and officers' liability, employers' liability, and various property-related liabilities. The third-party claims that are covered by the Insurance Policies are neither unusual in amount nor in number in relation to the extent of the business operations conducted by the Debtors. To the extent that any Insurance Policy premiums may be attributed to prepetition insurance coverage, the Debtors believe that payment of those Insurance Policy premiums is necessary to ensure continued coverage under such Insurance Policies and to maintain good relationships with the Debtors' insurers. Similarly, the Debtors' believe that continued payment of Insurance Policy premiums as those premiums come due in the ordinary course of the Debtors' business is necessary. The Debtors have been represented in their negotiations with their various insurance underwriters by Beecher Carlson Insurance Services, Inc., Aon, Marsh USA, Inc., Mercer Insurance Group, and Jardine Lloyd Thompson Canada. The employment of the Insurance Brokers has allowed the Debtors to obtain the insurance coverage necessary to operate their businesses in a reasonable and prudent manner, and to realize considerable savings in the procurement of those policies. The Debtors have engaged Specialty Risk Services to administer their general liability, auto liability, and workers' compensation policies. The Debtors believe that the employment of SRS is the most cost-effective way to handle the high volume of claims that must be administered under these policies. The Debtors also employ The Travelers Company and Sedgwick Claims Management Services to administer various insurance policies. The Debtors are assisted by Navigant Consulting Inc. in managing difficult claims with high liability exposure and the potential to interrupt the Debtors' ongoing business operations. The Debtors engaged Navigant to handle specific losses and enter into a new contract for each of these engagements. The Insurance Policies maintained by the Debtors will all eventually expire under their annual terms, beginning with policies due to expire in December 2008. Many of the Debtors' Insurance Policies cover both the Debtors and certain of the Debtors' affiliates that are not Debtors. In any case, the parent company, Circuit City Stores, Inc., pays all of the Insurance Obligations and charges its subsidiaries, including the Non-Filing Affiliates, through journal entries to intercompany loan accounts, allocating the premiums to the subsidiaries depending on the particular type of insurance coverage. These Intercompany Transactions reduce the Debtors' administrative costs, ensure that all affiliates of the Debtors' maintain appropriate insurance coverage, and, in certain cases, result in tax benefits to the Debtors. The Debtors also engage in a series of Intercompany Transactions with Northern National Insurance, Ltd., a wholly owned subsidiary of CCS. The Debtors' pay premiums to NNIL to insure a portion of their deductible under their workers' compensation policies. The Debtors' believe that this arrangement provides certain risk- pooling advantages. * * * The Court has granted the Debtors' request on an interim basis. Judge Huennekens permits the Debtors to pay all fees arising under or in connection with the Insurance Policies as they become due, including, without limitation, these amounts that include fees relating to the prepetition period: Amount ------ Insurance Brokers $230,000 SRS $160,000 The Travelers Company and Sedgwick Claims Management Services $15,000 Navigant $5,000 About Circuit City Stores, Inc. Headquartered in Richmond, Virginia, Circuit City Stores Inc. (NYSE: CC) -- http://www.circuitcity.com/-- is a specialty retailer of consumer electronics, home office products, entertainment software and related services. The company has two segments: domestic and international. Circuit City Stores, Inc. (NYSE: CC) together with 17 affiliates filed a voluntary petition for reorganization relief under Chapter 11 of the Bankruptcy Code on November 10 (E.D. Virg. Lead Case No.: 08-35653). InterTAN Canada, Ltd., which runs Circuit City's Canadian operations, also sought protection under the Companies' Creditors Arrangement Act in Canada. Gregg M. Galardi, Esq., and Ian S. Fredericks, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, are the Debtors' general restructuring counsel. Dion W. Hayes, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, are the Debtors' local counsel. The Debtors also tapped Kirkland & Ellis LLP as special financing counsel; Wilmer, Cutler, Pickering, Hale and Dorr, LLP, as special securities counsel; and FTI Consulting, Inc. and Rotschild Inc. as financial advisors. The Debtors' Canadian general restructuring counsel is Osler, Hoskin & Harcourt LLP. Kurtzman Carson Consultants LLC is the Debtors' claims and voting agent. The Debtors disclosed total assets of $3,400,080,000 and debts of $2,323,328,000 as of Aug. 31, 2008. (Circuit City Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). COW CREEK: Fitch Junks Rating; Concurrently Withdraws Ratings ------------------------------------------------------------- Fitch Ratings has downgraded the ratings assigned to the Cow Creek Band of Umpqua Indians. -- Issuer rating to 'CCC' from 'B+'; -- Tax revenue bonds, series 2006A, 2006B and 2006C to 'CCC+' from 'BB-'. Fitch is concurrently withdrawing the ratings. Fitch has concerns regarding management's accounting treatment of certain related-party asset sale transactions between the Seven Feathers Casino and the tribal government, raising significant governance and internal control issues. Due to a trend of weak operating results at Seven Feathers, based on latest twelve month Sept. 30, 2008 results, Cow Creek would be in breach of the leverage covenant in its debt agreements absent the booking of gains on two related-party asset sales. Backing out these gains, the leverage ratio was 4.1 times, in excess of the 4.0x covenant level. The definition of pledged revenues under the debt agreements (including the bond indenture, bank loan agreement and collateral trust and security agreement) does allow Cow Creek to include non-operating income for the purposes of demonstrating compliance with financial covenants. However, an independent certified public accountant has not yet reviewed the terms of the sales to determine if they meet the GAAP criteria for recognition. In the event that an independent CPA determines that the asset sale gains do not meet the criteria for recognition and thus cannot be included in the calculation, Fitch believes it is likely Cow Creek will be in breach of the leverage covenant in the next several quarters, requiring it to seek a waiver or amendment from investors. Compliance with financial covenants is tested on a rolling quarterly basis, and violation of a financial covenant is considered an event of default under the debt agreements. The debt agreements require that Cow Creek produce annual financial statements for Seven Feathers which are audited by an independent CPA. The bank loan and bonds rank pari passu with respect to their right of payment from the pledged revenues. Recourse for investors in an event of default is acceleration of outstanding principal. In the event that principal acceleration occurs, recourse of the bank lender and the bondholders is limited to the pledged cash flows after the operating expenses of Seven Feathers have been paid. The 'CCC+' transaction rating on the bonds is one-notch higher than the 'CCC' issuer rating due to credit enhancement provided by security covenants included in the legal documents associated with the bonds. The most important of these is a cash fund debt service reserve fund in an amount equal to one year of principal and interest, which is available to bond holders but not the lender. The 2006A, 2006B and 2006C bonds are outstanding in the amount of $97.4 million with term maturities in 2011, 2016, 2022 and 2026. The bonds are subject to mandatory monthly sinking fund payments of principal in an amount sufficient to fully amortize by maturity. The bank loan has a total capacity of $25 million, $5.9 million of which is currently drawn. CULLIGAN INTERNATIONAL: Moody's Holds 'B3' CFR; Outlook Negative ---------------------------------------------------------------- Moody's Investors Service affirmed Culligan International Company's debt ratings but changed the outlook to negative from stable. The change in outlook reflects lack of improvement in what were already very weak credit metrics, ongoing weakness in household spending on water-filtration equipment in the US and parts of Europe, and intensifying pressures on the outlook for consumer credit and employment. Moreover, the negative outlook reflects the potential that continuing economic weakness is also likely to put pressure on commercial and industrial spending on water treatment solutions and these constitute a significant portion of the company's revenue stream. Culligan's ratings reflect very high financial leverage, with adjusted debt to EBITDA for the twelve months ended September 30, 2008 in excess of 8 times calculated using Moody's standard analytic adjustments. The high leverage stems from the combination of continued-weak organic revenue growth on a currency-adjusted basis and the company's $900 million recapitalization in May 2007, which included a $375 million dividend payment to equity holders, which include a private equity fund managed by Clayton, Dubilier & Rice, Inc. The affirmation of the ratings reflects broad geographic diversity, the strength of its brand and diverse distribution channels. The ratings are also supported by low dealer churn rates through several cycles, a large installed equipment base and the recurring nature of about 50% of Culligan's revenue, which help provide a relatively predictable cash flow stream. When coupled with expected cost reductions, the company should continue to generate sufficient cash flow to cover capital expenditure needs, albeit with constrained ability to repay significant debt levels. Weak credit metrics are offset in part by good near-term liquidity which, aided by the absence of maintenance financial covenants, will provide Culligan with flexibility over the next several quarters. Moody's took these rating actions: -- Affirmed the B3 Corporate Family Rating; -- Affirmed the B3 Probability of Default Rating; -- Affirmed the B2 (LGD 3, 33%) on the First Lien Senior Secured Credit Facilities due 2012; -- Affirmed the Caa2 (LGD 5, 84%) Second Lien Senior Secured Term Loan due 2013; -- Changed the rating outlook to negative from stable. The previous rating action was on December 12, 2007 when Culligan's Corporate Family Rating was downgraded to B3, with a stable outlook. Culligan is a global provider of water treatment products and services for household and commercial applications. Products are sold under the Culligan brand. Revenue was approximately $800 million over the twelve month period ended September 30, 2008. CUSTOMER ASSET: S&P Cuts Counterparty Credit Rating to 'BB' ----------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its counterparty credit and financial strength ratings on Customer Asset Protection Insurance Co. to 'BB' from 'A+'. The ratings remain on CreditWatch with negative implications, where they were placed on Sept. 16, 2008. "The downgrade reflects our reassessment of the probability of CAPCO incurring a significant claim due to the liquidation of Lehman Brothers International (Europe), said S&P's credit analyst James Brender. "We placed CAPCO on CreditWatch after the bankruptcy of Lehman Brothers Holdings Inc., the parent of three broker dealers that are members of CAPCO including Lehman Brothers International (Europe). Initially, S&P did not expect CAPCO to incur a material claim from Lehman's bankruptcy because there is no evidence that any clients' assets were misappropriated." Although there is still tremendous uncertainty surrounding the administration of Lehman Brothers International (Europe), S&P now believes the decision by some clients to permit the rehypothecation of some of their assets increases the risk of a claim on CAPCO. The clients' claims on rehypothecated assets are expected to have the same status as general creditors of LBIE, which exposes CAPCO to heightened risk of claims. Based on the limited availability of information from the liquidator, it is not possible to calculate the magnitude of CAPCO's ultimate losses, but the ultimate insolvency of the company is possible. S&P's primary concern regarding CAPCO is clearly the potential for a claim related to those clients of LBIE that opted to rehypothecate their assets to LBIE. S&P believes the administrator of the liquidation has segregated those clients who did not rehypothecate their assets. These clients may still endure long delays in obtaining access to their assets, but Standard & Poor's does not expect CAPCO will incur a significant liability from insuring these accounts. CAPCO's insurance does not reimburse clients for a decline in the market value of their securities or adverse circumstances that may arise from being unable to access or trade their securities. Standard & Poor's believes there is only a remote chance that clients of CAPCO's other members will need coverage from CAPCO. S&P's opinion reflects the members' financial strength and the short time remaining on CAPCO's policies, which provide coverage on an occurrence basis. Many of CAPCO's members are still rated in the 'A' category or higher despite the very challenging environment for financial institutions. S&P believes CAPCO's members will decide to obtain excess SIPC coverage from another carrier when all of the members' policies expire in mid February. Therefore, a claim would not be eligible for coverage from CAPCO unless the liquidation of one of its members began in the next three months. Some of CAPCO's members have encountered financial stress, but there has been no indication that clients' assets were misappropriated, meaning that claims on CAPCO's insurance policies under the U.S. contracts are expected to be minimal. In the U.S., CAPCO provides excess SIPC coverage for its members, which are broker/dealers. Broker/dealers are regulated entities where customer assets are required to be segregated from the firm's assets and may not be used in the ongoing business of the firm or affected by a broker/dealer's own trading losses. For an excess SIPC claim to occur, all of the following must happen: a broker/dealer must be deemed insolvent; client assets must be found to be missing, lost or stolen; and customer property, SIPC advances, fidelity bond proceeds, if any, and distributions from the general estate of the member, if any, to customers are insufficient to satisfy customer account obligations. Neither SIPC nor excess SIPC cover a decline in the market value of a client's investments. Because of these conditions, any losses to CAPCO relating to U.S.-based Lehman units are not expected to be material. DALTON CORP: Files for Chapter 11 Protection in Indiana ------------------------------------------------------- Indianapolis Business Journal reports that Dalton Corp. has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Indiana. According to Indianapolis Business, Dalton has 1,500 employees at gray iron foundries in Warsaw and Kendallville. Inside Indiana Business relates that Dalton will close the Kendallville facility in March 2009. More than 200 employees will be laid off, Inside Indiana says. Dalton said that the closure was due to recession and a weak market for its products, according to Inside Indiana. Dalton also has a machining facility in Stryker, Ohio, Indianapolis Business states. Dalton Corp. -- http://www.daltonfoundries.com/-- manufactures gray iron castings and machined components for the air conditioning/refrigeration, automotive, heavy truck, and other industrial markets. DAW LOS ANGELES: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Daw Los Angeles Land Acquisition, LLC 3559 Greenwood Avenue Commerce, CA 90040 Case No.: 08-31424 Chapter 11 Petition Date: December 10, 2008 Court: U.S. Bankruptcy Court Central District Of California (Los Angeles) Judge: Barry Russell Debtor's Counsel: Richard T Baum, Esq. 2215 Colby Ave Los Angeles, CA 90064 310-277-2040 Email: rickbaum@hotmail.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $500,001 to $1,000,000 The Debtor did not file a list of its largest unsecured creditors when it filed its petition. DBSI INC: Wachovia Plaza Owners Want to Terminate Master Lease -------------------------------------------------------------- Brian Bandell at South Florida Business Journal reports that the owners of Wachovia Plaza want to terminate DBSI Inc.'s master lease on the property. Michael Linton, the attorney for Wachovia Plaza's owners, said that DBSI holds the master lease on the property and subleases it to the tenants, South Florida Business relates. The report says that about 35 individual investors have stakes in the building. Citing Mr. Linton, South Florida Business says that DBSI secured court approval to continue collecting and paying rent in the building. "The plan is to get the master lease terminated and have the subleases go directly to the owners. The idea is to remove DBSI from ownership and control of the property," South Florida Business quoted Mr. Linton as saying. Meridian Idaho-based DBSI Inc. -- http://www.dbsi.com-- operates a real estate company. The company and its affiliates filed for Chapter 11 protection on Nov. 10, 2008 (Bankr. D. Delaware Case No. 08-12687). James L. Patton, Esq., Joseph M. Barry, Esq., and Michael R. Nestor, Esq., at Young, Conaway, Stargatt & Taylor LLP represent the Debtors in their restructuring efforts. Kurztman Carson Consultants LLC is the Debtors' claims agent. The Debtors listed assets of $100 million to $500 million and debts of $100 million to $500 million. DELTA AIR LINES: Expands Marketing Alliance With Alaska Air ----------------------------------------------------------- Delta Air Lines (NYSE: DAL) CEO Richard Anderson and Alaska Air Group (NYSE: ALK) Chairman and CEO Bill Ayer announced an agreement in principle to amend their marketing agreement to make the airlines preferred alliance partners on the West Coast. The amended agreement will offer important benefits to customers including supporting the launch of new Delta long-haul trans-Pacific and Latin American routes from the West Coast; expanded connecting opportunities to and from Alaska Airlines and Horizon Air hubs and focus cities; and enhanced worldwide frequent flier and lounge reciprocity agreements between Delta and Alaska. "Alaska Air Group is a perfect alliance partner for Delta as we pair our expansive international network with Alaska's leading presence across the West Coast to build a platform for international growth from the West," said Delta CEO Richard Anderson. "Building on our existing agreement, Delta, Alaska and Horizon will now be able to offer customers more departures and capacity along the West Coast than any U.S. airline with the enhanced ability to feed Delta's growing global route system." Alaska Chairman and CEO Bill Ayer added: "Continuing to work with Delta -- the world's largest airline with the broadest global route system of any U.S. carrier -- is a natural fit for Alaska and Horizon. Our customers will benefit from expanded access to Delta's unmatched domestic and international network and from improved frequent flier and lounge agreements that make it easier to fly with Alaska around the world. All three airlines enjoy similar reputations for excellent service and a quality product, making our alliance even more complementary." Customers Benefit By the end of 2009, Delta and Alaska/Horizon plan to launch a series of customer benefits resulting from the enhanced agreement, including: * Access for Delta Crown Room Club and Northwest WorldClub members to Alaska Board Rooms in Anchorage, Seattle, Los Angeles, Portland, San Francisco and Vancouver, and for Alaska Board Room members to Crown Room Clubs and WorldClubs worldwide; and * Elite reciprocity privileges for Delta SkyMiles members and Alaska Airlines Mileage Plan members including priority boarding, priority check-in and seat assignments, and reciprocal upgrades for customers who have reached Platinum or Gold status in either airline's frequent flier program. Northwest WorldPerks members and Alaska Mileage Plan members who have reached Platinum or Gold status already enjoy reciprocal upgrades when flying on Alaska and Northwest operated flights. Delta's expanded marketing alliance with Alaska builds on the airlines' existing alliance, launched in 2004, as well as a more than 20-year relationship between Alaska, Horizon and Northwest Airlines. Currently, codesharing by Delta, including Northwest, extends to more than 100 markets served by Alaska, including Horizon, and codesharing by Alaska extends to more than 30 markets served by Delta. The carriers have a long history of cooperation and will work to ensure that new customer benefits are introduced quickly. The majority of new customer benefits resulting from the expanded agreement will be implemented in 2009. To celebrate Delta and Alaska's expanded partnership, Delta SkyMiles, Alaska Airlines Mileage Plan and Northwest WorldPerks members will be offered a bonus miles promotion beginning in December 2008. Additional details and terms and conditions will be announced shortly. New Delta International Service Delta and Alaska will offer customers connecting opportunities to more than 50 destinations beyond Los Angeles, more than 70 destinations beyond Seattle, more than 30 destinations beyond Portland and nearly 20 destinations beyond San Francisco. This extensive connecting route network will provide new customer feed to support two new and proposed long- haul international routes from the West Coast in 2009: * Seattle to Beijing, China. As previously announced, Delta subsidiary Northwest Airlines will introduce nonstop service between Seattle and Beijing, China, effective March 1, 2009. Flights and schedules are currently available for sale to customers for travel on this route via http://www.delta.comand http://www.nwa.com. Flights will be operated with the Airbus A330-200 aircraft. * Los Angeles to Sao Paulo, Brazil. Delta has requested authority from the U.S. Department of Transportation to operate its first nonstop flight between Los Angeles and South America, currently in the final stages of decision. If Delta's application is approved by DOT, service is expected to begin in spring 2009 and would be operated with Boeing 767-300ER aircraft. These new routes will complement existing long-haul international service from the West Coast offered by Delta, including Northwest-operated flights between Los Angeles, Portland, San Francisco and Seattle and Tokyo; Northwest-operated flights between Seattle and Portland and Amsterdam; KLM-operated fights between Los Angeles and San Francisco and Amsterdam; and Air France-operated flights between Los Angeles, San Francisco and Seattle and Paris-Charles deGaulle. About Alaska Air Group Alaska Airlines and sister carrier Horizon Air together serve more than 90 cities through an expansive network in Alaska, the Lower 48, Hawaii, Canada and Mexico. Alaska Airlines ranked "Highest in Customer Satisfaction among Traditional Network Carriers (tie)" in the J.D. Power and Associates 2008 North America Airline Satisfaction SurveySM. For reservations, visit http://www.alaskaair.com. For more news and information, visit the Alaska Airlines/Horizon Air Newsroom at http://www.alaskaair.com/newsroom. About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE: DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. (Delta Air Lines Bankruptcy News, Issue No. 112; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on July 29, 2008, Standard & Poor's Ratings Services lowered its ratings on Northwest Airlines Corp. and subsidiary Northwest Airlines Inc. (both rated B/Negative/--), including lowering the long-term corporate credit ratings on both entities to 'B' from 'B+', and removed the ratings from CreditWatch, where they had been placed with negative implications April 15, 2008. The outlook is negative. The downgrade reflects expected losses and reduced or negative operating cash flow caused by high fuel prices. S&P also lowered our ratings on enhanced equipment trust certificates, in some cases by more than one notch. DELTA AIR LINES: Issues Investor Update for December 2008 --------------------------------------------------------- Delta Air Lines, Inc., issued an Investor Update, to provide guidance for the December 2008 quarter. As a result of the merger with Northwest Airlines Corporation on October 29, 2008, Delta's consolidated Generally Accepted Accounting Principles results will include Northwest's from October 30, 2008 to December 31, 2008, in addition to Delta's standalone results for the entire quarter. In a Form 8K filed with the Securities and Exchange Commission dated November 21, 2008, Hank Halter, Delta's senior vice president and chief financial officer, noted an operating margin of 0% to (2)% and a $2.91 fuel price per gallon for the December 2008 quarter, which figures include Northwest's results. Mr. Hank also provided guidance in terms of Delta's consolidated RASM and system capacity, which also covers Northwest's: December 2008 quarter vs. December 2007 quarter ------------------------- Consolidated RASM Up 2 - 4% System Capacity Down 4% Domestic Down 12% International Up 4% Mr. Hank pointed to the demand that has slowed over the course of the quarter. Domestic advance bookings are running two points higher year over year, reflecting capacity reductions in the domestic system, he said. "As a result, we are evaluating our capacity plans for 2009 on both the domestic and international system and expect to reduce future capacity to better align supply with current levels of demand," Mr. Hank disclosed. In this regard, Delta's plans to add new international flights, as earlier announced, remain, but the Company will continue to monitor performance, Delta spokeswoman Betsy Talton told The Associated Press. For the fourth quarter and full year 2008, Delta estimates diluted shares to be 681 million and 468 million, Mr. Hank told the SEC. About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington, represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Scott L. Hazan, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C. as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed $14.4 billion in total assets and $17.9 billion in total debts. On Jan. 12, 2007, the Debtors filed with the Court their chapter 11 plan. On Feb. 15, 2007, the Debtors filed an amended plan and disclosure statement. The Court approved the adequacy of the Debtors' amended disclosure statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' amended plan. That amended plan took effect May 31, 2007. (Northwest Airlines Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE: DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. (Delta Air Lines Bankruptcy News, Issue No. 112; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on July 29, 2008, Standard & Poor's Ratings Services lowered its ratings on Northwest Airlines Corp. and subsidiary Northwest Airlines Inc. (both rated B/Negative/--), including lowering the long-term corporate credit ratings on both entities to 'B' from 'B+', and removed the ratings from CreditWatch, where they had been placed with negative implications April 15, 2008. The outlook is negative. The downgrade reflects expected losses and reduced or negative operating cash flow caused by high fuel prices. S&P also lowered our ratings on enhanced equipment trust certificates, in some cases by more than one notch. DT EQUIPMENT: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: DT EQUIPMENT SERVICES, LLC 1635 N GREENFIELD RD #112 MESA, AZ 85205 Case No.: 08-17585 Chapter 11 Petition Date: December 5, 2008 Court: U.S. Bankruptcy Court District of Arizona (Phoenix) Judge: Redfield T. Baum Sr. Debtor's Counsel: KIRK A. GUINN, Esq. GUKEISEN LAW GROUP, P.C. 430 W. 1st Street, Suite 102 Tempe, AZ 85281 602-265-3822 Fax: 480-699-1070 Email: arizonabankruptcyhelpers@yahoo.com Estimated Assets: $100,001 to $500,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Debtor's 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/azb08-17585.pdf DT EQUIPMENT: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: DT EQUIPMENT SERVICES, LLC 1635 N GREENFIELD RD #112 MESA, AZ 85205 Case No.: 08-17585 Chapter 11 Petition Date: December 5, 2008 Court: U.S. Bankruptcy Court District of Arizona (Phoenix) Judge: Redfield T. Baum Sr. Debtor's Counsel: KIRK A. GUINN, Esq. GUKEISEN LAW GROUP, P.C. 430 W. 1st Street, Suite 102 Tempe, AZ 85281 602-265-3822 Fax: 480-699-1070 Email: arizonabankruptcyhelpers@yahoo.com Estimated Assets: $100,001 to $500,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Debtor's 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/azb08-17585.pdf EDUCATION LOAN: Moody's Cuts Rating on 2004B Loan Notes to 'B3' --------------------------------------------------------------- Moody's Investors Service has downgraded one tranche of subordinate auction rate notes from U.S. Education Loan Trust III, LLC (2004 Indenture). The rating on the subordinate auction rate notes was placed on review for possible downgrade on August 27, 2008 and the rating action concluded the review. The affected note balance was $20 million out of a total outstanding note balance of $263,400,000, as of September 30, 2008, for this transaction. The ratings on the subordinate auction rate notes were assigned by evaluating factors determined to be applicable to the credit profile of the notes, such as i) the nature, sufficiency, and quality of historical performance information regarding the asset class, ii) an analysis of the collateral being securitized, iii) an analysis of the transaction's allocation of collateral cashflow and capital structure, and (iv) a comparison of these attributes against those of other similar transactions. The action was prompted by the increase in funding cost due to the prolonged and continuing dislocations in the Student Loan Auction Rate Securities market. As the FFELP student loan collateral is indexed to Financial Commercial Paper, trusts that have issued SLARS have suffered excess spread compression as the yield on the assets has not increased in tandem with the cost of the liabilities. In most structures, excess spread is a primary source of credit enhancement. As the auction rate market remains under stress and auctions continue to fail, the ability of the trusts that have issued SLARS to accumulate credit enhancement has been negatively impacted. As of September 30, 2008, approximately 43% of the trust's liabilities were funded by auction rate notes and the trust was undercollateralized by 0.9% at the subordinate notes level (i.e. total parity, or the ratio of total assets to total liabilities was 99.1%). Undercollateralization represented 12% of the outstanding balance of the subordinate notes in the trust. In addition, the Class 2004A-3 reset rate note is going to be remarketed in June 2009. Under the provision of the indenture, upon the occurrence of the failed remarketing, the reset rate notes will become auction rate notes. At the failed auction, the trust is expected to generate minimally positive excess spread. The complete rating actions are: Issuer: U.S. Education Loan Trust III, LLC (2004 Indenture) -- Series 2004B Subordinate Auction Rate Student Loan Backed Notes, Downgraded to B3 from A2; previously on 8/27/2008 Placed under Review for Possible Downgrade. EMPIRE LAND: Court Converts Case to Chapter 7 Liquidation --------------------------------------------------------- The United States Bankruptcy Court for the Central District of California converted the Chapter 11 case of Empire Land LLC to Chapter 7 liquidation proceeding, according to Bloomberg News. The Troubled Company Reporter said on Nov. 12, 2008, the Official Committee of Unsecured Creditors of the Debtor filed the conversion motion before the Court. The Committee wants the cases converted to Chapter 7 instead of having a Chapter 11 trustee take over the Debtor's estates on grounds that: -- a trustee likely will need to consider substantive consolidation of the other 92 non-debtor entities, which cannot effectively addressed in a liquidating Chapter 11 plan; -- Chapter 11 plan process would increase expenses; -- value of the Debtor's estate could not be adequately disclosed in a disclosure statement; and -- trustee expenses are superior in priority. The Committee told the Court administrative fees and operating losses are mounting, and exclusive periods have expired and no plan as been filed to date. Although there is a draft of the plan, the Debtor has not negotiated any of the terms with the Committee. The plan provides, among other things, the Debtor's unit, Empire Partners Inc., will receive a full release of all claims in turn for $25,000 and any liquidating trustee be forbidden from using any of the Debtor's assets to pursue claims against the Debtor's principals. About Empire Land Headquartered in Ontario, California, Empire Land, LLC, dba Empire Land Development, LLC -- http://www.epinc.com/-- develops communities and other land construction projects located in California and Arizona. As of March 31, 2008, the company owned at least 11,800 lost in 14 separate land projects. The company and seven of its affiliates filed for Chapter 11 protection on April 25, 2008 (Bankr. C.D. Calif. Lead Case No.08-14592). James Stang, Esq., at Pachulski Stang Ziehl & Jones, LLP, represents the Debtors in their restructuring efforts. The U.S. Trustee for Region 16 has appointed three creditors to serve on an Official Committee of Unsecured Creditors in these cases. The Committee selected Landau & Berger LLP as its general bankruptcy counsel. When the Debtors filed for protection against their creditors, they listed assets and debts between $100 million to $500 million. EQUITY MEDIA: Silver Point Asks Court for Co.'s Liquidation ----------------------------------------------------------- Court documents say that Silver Point Finance LLC has asked the U.S. Bankruptcy Court for the Eastern District of Arkansas to convert Equity Media Holdings Corp.'s Chapter 11 reorganization case to Chapter 7 liquidation. Silver Point, a lender on one of Equity Media's senior credit facilities, said in court documents that Equity Media filed for Chapter 11 protection without any planning nor exit strategy. According to the documents, Silver Point also claimed that Equity Media had been a victim of "gross mismanagement." Reuters relates that Silver Point sought a judicial foreclosure and receivership proceeding on Equity Media in the Circuit Court of Pulaski County, Arkansas, last week to try to get regain the money from the debtor. Silver Point said in court documents, "The sole purpose of (Equity Media's) bankruptcy filing was to stay the foreclosure proceeding and thwart the secured lenders' attempt to protect the rapidly deteriorating value of their collateral." According to Reuters, Silver Point claimed that Equity Media had rejected "repeated offers" to provide debtor-in-possession financing so that the debtor could hire experienced bankruptcy lawyers for the case and fund an orderly sale of its assets. Court documents say that an emergency hearing will be held on Dec. 16. About Equity Media Little Rock, Arizona-based Equity Media Holdings Corp. -- http://www.emdaholdings.com/-- fka Equity Broadcasting Corporation, dba Coconut Palm Acquisition Corp. and Equity Broadcasting Corp., operates 121 television stations including 23 full power, 38 Class A and 60 low power stations. The company was founded in 1998. The company filed for Chapter 11 protection on Dec. 8, 2008 (Bankr. E. D. Ariz. Case No. 08-17646). James F. Dowden, Esq., who has an office at Little Rock, Arizona, represents the company in its restructuring effort. The company listed assets of $100,000,000 to $500,000,000 and debts of $50,000,000 to $100,000,000. EXIDE TECH: Wants Claims Objection Deadline Moved to Jan. 30 ------------------------------------------------------------ Exide Technologies, Inc., and its affiliates ask the U.S. Bankruptcy Court for the District of Delaware to further extend through January 30, 2009, the time within which it may object to certain claims. Laura Davis Jones, Esq., at Pachulski Stang Zeihl & Jones LLP in Wilmington, Delaware, tells the Court that the Debtors have more than 6,100 proofs of claim that were asserted against them. To date, Ms. Jones adds, the Reorganized Debtors have filed more than 50 claims and consensually resolved numerous other claims. Through the efforts of the Reorganized Debtors', the Post- confirmation Committee of Unsecured Creditors and each of their professionals, approximately 6,037 Claims have been reviewed, reconciled and resolved, reducing the total amount of outstanding Claims by over $3,400,000,000. Furthermore, the Reorganized Debtor has completed 17 quarterly distributions to creditors under the Joint Plan, consisting of distributions on approximately 2,590 claims for approximately $1,660,000,000, Ms. Jones says. Since August 2008, the Reorganized Debtor has made considerable advancements with respect to the remaining, more complex claims. Despite this substantial progress, the Reorganized Debtor requires additional time to review and resolve the approximately 85 remaining claims, Ms. Jones explains. The extension will provide the Reorganized Debtor and the Committee with necessary time to continue to evaluate the claims filed against the estate, prepare and file additional objections to Claims and, where possible, consensually resolve claims, she says. The Reorganized Debtor asks the Court that the requested extension be without prejudice to its right to seek further extensions of the time within which to object claims. About Exide Technologies Headquartered in Princeton, New Jersey, Exide Technologies (NASDAQ: XIDE) -- http://www.exide.com/-- manufactures and distributes lead acid batteries and other related electrical energy storage products. The company filed for chapter 11 protection on Apr. 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, and James E. O'Neill, Esq., at Pachulski Stang Ziehl & Jones LLP represented the Debtors in their successful restructuring. The Court confirmed Exide's Amended Joint Chapter 11 Plan on April 20, 2004. The plan took effect on May 5, 2004. At Dec. 31, 2007, the company's consolidated balance sheet showed $2.426 billion in total assets, $1.989 billion in total liabilities, $17.2 million in minority interest, and $420.1 million in total stockholders' equity. (Exide Bankruptcy News, Issue No. 111; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported by the Troubled Company Reporter on July 9, 2008, Moody's Investors Service upgraded the Corporate Family and Probability of Default Ratings of Exide Technologies, Inc. to B3 from Caa1. Moody's raised the ratings on the company's asset based revolving credit facility to Ba2 from Ba3, the senior secured term loans to Ba3 from B1, and the senior secured junior- lien notes to B3 from Caa1. The outlook is stable. According to Moody's, the upgrade reflects Exide Technologies' improved credit metrics that have been achieved as a result of cost reduction initiatives and successful pricing actions which have offset the impact of increasing lead costs on the company's operations. Moody's explained the actions have reduced financial risk and positioned the company to generate credit metrics consistent with the B3 rating over the intermediate term. While Exide benefits from its geographic and customer diversification, it remains exposed to cyclical industry conditions, and commodity pricing pressures. FEDERAL-MOGUL: Carl Icahn Increases Stake to 75.69% --------------------------------------------------- Billionaire investor Carl C. Icahn disclosed with the Securities and Exchange Commission on December 3, 2008, that he indirectly beneficially owns 75,241,924 shares of Federal Mogul Corporation's common stock. Mr. Icahn's stocks represent 75.69% of the 99,404,500 FMC stocks outstanding as of October 20, 2008. Mr. Icahn bought the stocks through Icahn Enterprises Holdings L.P., which he 100% owns. Mr. Icahn also disclosed that his wife, Gail Golden, owns 34,798 shares of FMC stock. Thornwood Associates Limited Partnership, Icahn Enterprises and Barberry Corp. previously entered into a Contribution and Exchange Agreement, pursuant to which Thornwood transferred 24,491,924 shares of FMC stock to Icahn Enterprises, which shares were subsequently contributed to Icahn Enterprises Holdings, and then from Icahn Enterprises Holdings to FM Holdings in exchange for aggregate consideration consisting of 4,286,087 units representing limited partnership interests in Icahn Enterprises. As a result of the transactions consummated pursuant to the Agreement, the 24,491,924 shares formerly held by Thornwood are now held by FM Holdings, Dominick Ragone, chief financial officer of several Icahn entities, said. Mr. Icahn's owned companies, in other news, disposed 6,096,175 shares of WCI Communities, Inc.'s common stock for $0.02 to an undisclosed buyer who said that it was acquiring the shares for investment purposes. About Federal-Mogul Corporation Federal-Mogul Corporation -- http://www.federal-mogul.com/-- (OTCBB: FDMLQ) is a global supplier, serving the world's foremost original equipment manufacturers of automotive, light commercial, heavy-duty, agricultural, marine, rail, off-road and industrial vehicles, as well as the worldwide aftermarket. Founded in Detroit in 1899, the company is headquartered in Southfield, Michigan, and employs 45,000 people in 35 countries. Aside from the U.S., Federal-Mogul also has operations in other locations which includes, among others, Mexico, Malaysia, Australia, China, India, Japan, Korea, and Thailand. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl & Jones, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. On March 7, 2003, the Debtors filed their Joint Chapter 11 Plan. They submitted a Disclosure Statement explaining that plan on April 21, 2003. They submitted several amendments and on June 6, 2004, the Bankruptcy Court approved the Third Amended Disclosure Statement for their Third Amended Plan. On July 28, 2004, the District Court approved the Disclosure Statement. The estimation hearing began on June 14, 2005. The Debtors submitted a Fourth Amended Plan and Disclosure Statement on Nov. 21, 2006, and the Bankruptcy Court approved that Disclosure Statement on Feb. 6, 2007. The Fourth Amended Plan was confirmed by the Bankruptcy Court on Nov. 8, 2007, and affirmed by the District Court on November 14. Federal-Mogul emerged from chapter 11 on Dec. 27, 2007. (Federal-Mogul Bankruptcy News, Issue No. 176; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the Troubled Company Reporter on Nov. 4, 2008, Standard & Poor's Ratings Services said it has revised its outlook on Federal-Mogul Corp. to negative from stable and affirmed its 'BB-' corporate credit rating on the company. Southfield, Mich.- based Federal-Mogul had total balance sheet debt of $3 billion as of Sept. 30, 2008. FEDERAL-MOGUL: Claims Objection Deadline Moved to June 27 --------------------------------------------------------- Federal-Mogul Corp. and its debtor-affiliates obtained approval from the U.S. Bankruptcy Court for the District of Delaware of their request to extend the period within which they may object to proofs of claim or interest and any administrative claims until June 27, 2009. The current objection deadline expires on December 27, 2008. Extending the Claims Objection Deadline and the Administrative Claims Objection Deadline is essential and in the best interests of the Debtors and their bankruptcy estates, James F. Conlan, Esq., at Sidley Austin LLP, in Chicago, Illinois, tells the Court. Mr. Conlan notes that of the 11,000 proofs of claim received, the Debtors have successfully objected to, consensually resolved, or agreed to virtually all of the general unsecured claims. However, the Debtors believe that 130 proofs of claim remain to be resolved, which are less than 1.2% of all claims asserted against them. Since the last extension of the Claims Objection Deadline and the Administrative Claims Objection Deadline, the Debtors have resolved 23 claims, including several of the largest outstanding unsecured claims like the claim of their former chief executive officer, which had a face value of more than $7,700,000. Several other unsecured claims have been withdrawn by holders following consultation with the Debtors. The Debtors have also made similarly strong progress in reviewing and addressing Administrative Claims, Mr. Conlan relates. He points out that the overwhelming majority of claims received postpetition are claims that have been or will be satisfied in the ordinary course of the Debtors' business, like taxes and vendor claims, which are not subject to the Claims Bar Date. Mr. Conlan assures the Court that the requested extension does not prejudice claim holders, and is clearly contemplated by the Debtors' confirmed Fourth Amended Joint Plan of Reorganization. He adds that the Plan provides for distributions to be made to creditors on account of allowed claims through 2010. Thus, he says, extending the Claims Objection Deadline and the Administrative Claims Objection Deadline through June 27, 2009, will not result in the delay of any payments to claimants, nor will it prolong the administration of the bankruptcy estates. About Federal-Mogul Corporation Federal-Mogul Corporation -- http://www.federal-mogul.com/-- (OTCBB: FDMLQ) is a global supplier, serving the world's foremost original equipment manufacturers of automotive, light commercial, heavy-duty, agricultural, marine, rail, off-road and industrial vehicles, as well as the worldwide aftermarket. Founded in Detroit in 1899, the company is headquartered in Southfield, Michigan, and employs 45,000 people in 35 countries. Aside from the U.S., Federal-Mogul also has operations in other locations which includes, among others, Mexico, Malaysia, Australia, China, India, Japan, Korea, and Thailand. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl & Jones, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. On March 7, 2003, the Debtors filed their Joint Chapter 11 Plan. They submitted a Disclosure Statement explaining that plan on April 21, 2003. They submitted several amendments and on June 6, 2004, the Bankruptcy Court approved the Third Amended Disclosure Statement for their Third Amended Plan. On July 28, 2004, the District Court approved the Disclosure Statement. The estimation hearing began on June 14, 2005. The Debtors submitted a Fourth Amended Plan and Disclosure Statement on Nov. 21, 2006, and the Bankruptcy Court approved that Disclosure Statement on Feb. 6, 2007. The Fourth Amended Plan was confirmed by the Bankruptcy Court on Nov. 8, 2007, and affirmed by the District Court on November 14. Federal-Mogul emerged from chapter 11 on Dec. 27, 2007. (Federal-Mogul Bankruptcy News, Issue No. 176; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the Troubled Company Reporter on Nov. 4, 2008, Standard & Poor's Ratings Services said it has revised its outlook on Federal-Mogul Corp. to negative from stable and affirmed its 'BB-' corporate credit rating on the company. Southfield, Mich.- based Federal-Mogul had total balance sheet debt of $3 billion as of Sept. 30, 2008. FEDERAL-MOGUL: Inks Deal with Tersigni Consulting on Overbilling ---------------------------------------------------------------- Federal-Mogul Corp. and its debtor-affiliates obtained approval from the U.S. Bankruptcy Court for the District of Delaware of a compromise and settlement agreement with L. Tersigni Consulting, P.C., Nancy Tersigni as executrix of the Tersigni Probate Estate, and Elizabeth Tersigni, resolving Federal Mogul's assertion that LTC overbilled it for professional services it has performed in the past. To recall, Federal Mogul and several other bankrupt asbestos companies hired LTC in their bankruptcy cases. The Asbestos Debtors engaged in extensive negotiations with Tersigni regarding the amount that should be reimbursed to Federal-Mogul on account of LTC's overbilling issues. The key terms of the Settlement Agreement are: (a) the Tersigni Probate Estate will pay Federal Mogul $598,740, which represents 11.1% of the fees that the Debtors paid to LTC minus 88.9% of LTC's $227,886 claim against the Debtors' bankruptcy estates for unpaid fees; (b) the Tersigni Parties' timely payment of the full Settlement Amount will settle in full any and all claims of Federal Mogul against them; (c) the LTC Bankruptcy Estate waives payment on the LTC Claim; (d) the Settlement Agreement includes broad, mutual three-way releases among the Tersigni Parties, Federal Mogul, and the LTC Bankruptcy Estate; (e) if in the LTC Bankruptcy Case the Tersigni Parties and the LTC Bankruptcy Estate enter into a settlement with any other entity holding claims similar to that of Federal Mogul on terms that are more favorable than the terms provided to Federal Mogul in the Settlement Agreement, the Tersigni Parties will notify the Debtors, and Federal Mogul, in its sole discretion, may opt to dissolve the Settlement Agreement; and (f) in the event the Settlement Agreement is dissolved, the Parties agree to take whatever steps necessary to return the Parties to the position that they would be in had no settlement been effected, and Federal Mogul will be free to take whatever actions are necessary and appropriate to recover on the full amount of the Debtors' claims. The bankruptcy court overseeing Tersigni's Chapter 11 case approved the Settlement Agreement at a hearing held on November 6, 2008. The Debtors believe that they are authorized under their Plan of Reorganization to liquidate their claim against the Tersigni Parties as an asset of their bankruptcy estates without need for the Court's order. However, because (i) the Settlement Agreement finally resolves all fees paid to a Court-approved professional, (ii) the Court expressed deep concern as to the fees paid to LTC after the allegations of overbillings came to light, and (iii) the Court's order appointing an examiner in the cases is stayed, but not yet vacated, the Debtors believe the request is appropriate. A full-text copy of the Settlement Agreement is available for free at http://bankrupt.com/misc/FMC_Tersigni_Settlement.pdf About Federal-Mogul Corporation Federal-Mogul Corporation -- http://www.federal-mogul.com/-- (OTCBB: FDMLQ) is a global supplier, serving the world's foremost original equipment manufacturers of automotive, light commercial, heavy-duty, agricultural, marine, rail, off-road and industrial vehicles, as well as the worldwide aftermarket. Founded in Detroit in 1899, the company is headquartered in Southfield, Michigan, and employs 45,000 people in 35 countries. Aside from the U.S., Federal-Mogul also has operations in other locations which includes, among others, Mexico, Malaysia, Australia, China, India, Japan, Korea, and Thailand. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl & Jones, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. On March 7, 2003, the Debtors filed their Joint Chapter 11 Plan. They submitted a Disclosure Statement explaining that plan on April 21, 2003. They submitted several amendments and on June 6, 2004, the Bankruptcy Court approved the Third Amended Disclosure Statement for their Third Amended Plan. On July 28, 2004, the District Court approved the Disclosure Statement. The estimation hearing began on June 14, 2005. The Debtors submitted a Fourth Amended Plan and Disclosure Statement on Nov. 21, 2006, and the Bankruptcy Court approved that Disclosure Statement on Feb. 6, 2007. The Fourth Amended Plan was confirmed by the Bankruptcy Court on Nov. 8, 2007, and affirmed by the District Court on November 14. Federal-Mogul emerged from chapter 11 on Dec. 27, 2007. (Federal-Mogul Bankruptcy News, Issue No. 176; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the Troubled Company Reporter on Nov. 4, 2008, Standard & Poor's Ratings Services said it has revised its outlook on Federal-Mogul Corp. to negative from stable and affirmed its 'BB-' corporate credit rating on the company. Southfield, Mich.- based Federal-Mogul had total balance sheet debt of $3 billion as of Sept. 30, 2008. FEDERAL-MOGUL: Asks for Court Approval for Carfel Deal ------------------------------------------------------ Federal-Mogul Corp. and its debtor-affiliates ask approval from the U.S. Bankruptcy Court for the District of Delaware of a settlement with Carfel, Inc. On January 2, 2001, Carfel, Inc., now known as GFX Corp., filed a complaint in the Circuit Court for Dade County, Florida, against Felt Products Incorporated and Federal Mogul Corporation. The case was removed to the U.S. District Court for the Southern District of Florida on January 31, 2001. In the Florida District Court Action, Carfel alleged that Debtors Felt Products Manufacturing Co. and Federal-Mogul breached a supplier agreement by failing to use their best efforts to promote product sales during the terms of the agreement. The Florida District Court Action was closed by an administrative order dated October 5, 2001, pending conclusion of the Debtors' bankruptcy proceedings. In January 2003, Carfel filed Claim No. 4370 against Fel-Pro asserting an unsecured, non-priority claim for $1,217,943, and with the same basis as in the Florida District Court Action. The Debtors disputed Carfel's allegations. Pursuant to the orders of the U.S. Bankruptcy Court for the District of Delaware, the period in which the Debtors might object to the Claim has been extended on numerous occasions, most recently through and including December 27, 2008. Carfel recently filed a request in the Florida District Court to reopen the Action. The Debtors believe that that action was in violation of the discharge injunction contained in their confirmed Plan of Reorganization and the order confirming the Plan. The Debtors tell the Court that they addressed the issues with Carfel, in addition to seeking a consensual resolution of the Claim, following Carfel's request to reopen the case. The negotiations resulted in a stipulation. By this motion, the Debtors ask the Court to approve the stipulation, pursuant to which the Debtors agree to entitle Carfel an allowed unsecured claim against Fel-Pro for $400,000. The allowed claim will be paid in three installments, on a discounted basis, in accordance with the terms of the Plan. The first installment payment will be paid to Carfel by December 31, 2008. The second and third installment payments will be made in accordance with the timetable specified in the Plan. Upon receipt of the first payment, Carfel will donate $40,000 of the payment as a charitable contribution to the Miami Children's Hospital Foundation. Within 30 days after the first payment, Carfel will dismiss with prejudice the Florida District Court Action, which will be stayed, and Carfel will take all necessary action to implement and maintain that stay, until the action is dismissed. The Debtors assert that the terms of the Stipulation are fair and reasonable, and in the best interests of the bankruptcy estates. They assert that the Stipulation is the product of the Parties' arms-length negotiations resulting to the reduction of the Claim amount by more than $800,000. In addition, the Debtors will secure the dismissal of a long-outstanding piece of litigation against Fel-Pro, and resolve one of the largest of the relative handful of claims that remain against their estates. Absent the Court's approval of the Stipulation, Fel-Pro would be required to litigate Carfel's claim either in the Bankruptcy Court or in the Florida District Court, incurring significant expense while facing an uncertain outcome, the Debtors point out. To secure the benefits of the proposed settlement while avoiding the costs and uncertainty of litigation, the Debtors ask the Court to approve the Stipulation. About Federal-Mogul Corporation Federal-Mogul Corporation -- http://www.federal-mogul.com/-- (OTCBB: FDMLQ) is a global supplier, serving the world's foremost original equipment manufacturers of automotive, light commercial, heavy-duty, agricultural, marine, rail, off-road and industrial vehicles, as well as the worldwide aftermarket. Founded in Detroit in 1899, the company is headquartered in Southfield, Michigan, and employs 45,000 people in 35 countries. Aside from the U.S., Federal-Mogul also has operations in other locations which includes, among others, Mexico, Malaysia, Australia, China, India, Japan, Korea, and Thailand. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl & Jones, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. On March 7, 2003, the Debtors filed their Joint Chapter 11 Plan. They submitted a Disclosure Statement explaining that plan on April 21, 2003. They submitted several amendments and on June 6, 2004, the Bankruptcy Court approved the Third Amended Disclosure Statement for their Third Amended Plan. On July 28, 2004, the District Court approved the Disclosure Statement. The estimation hearing began on June 14, 2005. The Debtors submitted a Fourth Amended Plan and Disclosure Statement on Nov. 21, 2006, and the Bankruptcy Court approved that Disclosure Statement on Feb. 6, 2007. The Fourth Amended Plan was confirmed by the Bankruptcy Court on Nov. 8, 2007, and affirmed by the District Court on November 14. Federal-Mogul emerged from chapter 11 on Dec. 27, 2007. (Federal-Mogul Bankruptcy News, Issue No. 176; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the Troubled Company Reporter on Nov. 4, 2008, Standard & Poor's Ratings Services said it has revised its outlook on Federal-Mogul Corp. to negative from stable and affirmed its 'BB-' corporate credit rating on the company. Southfield, Mich.- based Federal-Mogul had total balance sheet debt of $3 billion as of Sept. 30, 2008. FORD MOTOR: Credit Unions to Extend $10 Billion in Loans -------------------------------------------------------- Sharon Terlep at The Wall Street Journal reports that a group of 1,300 credit unions have pledged to extend about $10 billion in auto loans. According to WSJ, the credit unions are aiming to win new borrowers while providing General Motors Corp., Ford Motor Co., and Chrysler LLC financial assistance. Tom Henderson at Crain's Detroit Business relates that GM and the Michigan Credit Union League said on Dec. 10 that a consortium of credit unions in Michigan, Ohio, Indiana, and Illinois have agreed to provide up to $10 billion to finance the sale of new GM vehicles through June 2009, in exchange for supplier discounts from GM to more than 12 million credit union members in the Midwest. According to a statement posted at Lovemycreditunion.org, credit union members will be able to get an additional $250 bonus cash between Dec. 10, 2008 and Jan. 5, 2009, on their eligible new GM vehicle purchase. The GM price discount program includes these brands: Buick, Cadillac, Hummer, Saab, Chevrolet, GMC, Saturn, and Pontiac. The program runs from Dec. 8, 2008, through June 30, 2009. WSJ relates that the credit union group said that it's working with Ford Motor Co. and Chrysler LLC on a similar arrangement. 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 Nov. 11, 2008, Moody's Investors Service lowered the debt ratings of Ford Motor Company, Corporate Family and Probability of Default Ratings to Caa1 from B3. The company's Speculative Grade Liquidity rating remains at SGL-3 and the rating outlook is negative. In a related action Moody's also lowered the long-term rating of Ford Motor Credit Company to B3 from B2. The outlook for Ford Credit is negative. 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-'. FPL ENERGY: S&P Downgrades Ratings on $125 Mil. Bonds to 'BB-' -------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its rating to 'BBB-' from 'BBB' on FPL Energy American Wind LLC's $380 million bonds due 2023. At the same time, S&P lowered its rating to 'BB-' from 'BB' on FPL Energy Wind Funding LLC's $125 million bonds due 2017. The outlook is stable. "The lowered rating on American Wind is a result of increased offtaker risk, given the non-investment grade rating and negative outlook of Public Service Co. of New Mexico," said S&P's credit analyst Grace Drinker. "American Wind is the sole source of cash flow to Wind Funding, thus, the lowered rating on Wind Funding reflects that of American Wind." "The rating could be lowered further if Public Service Co. of New Mexico's senior secured ratings drop materially from their current level, or if the weighted average offtaker credit profile declines from its current level. A rating upgrade would likely require a significant improvement in Public Service Co. of New Mexico's rating." Public Service Co. of New Mexico is the offtaker to the New Mexico wind project and provided 23% of cash flow in 2007. S&P estimate it will provide about 27% of cash flow to American Wind through the debt tenor. The increased PSNM offtaker risk is somewhat mitigated by three factors: That it pays New Mexico a fixed rate of only 2.73 cents per kilowatt hour until June 2028, a low price that should represent a good economic incentive for the utility; given a stringent Renewable Portfolio Standard in New Mexico that requires 20% of retail sales by investor-owned utilities to come from renewable sources by 2020, American Wind could be able enter into a comparable agreement if it is unable to sell to PSNM; and that American Wind has substantial liquidity that could support debt service obligations for more than one year if New Mexico needs to find a replacement offtaker. GARRETT INVESTMENT: Case Summary & Largest Unsecured Creditor ------------------------------------------------------------- Debtor: Garrett Investment Properties, Inc. 1348 Holly Glen Run Apopka, FL 32703 Case No.: 08-11697 Chapter 11 Petition Date: December 9, 2008 Court: U.S. Bankruptcy Court Middle District of Florida (Orlando) Debtor's Counsel: Robert B Branson, Esq. 1524 East Livingston Street Orlando, FL 32803 Tel: 407-894-6834 Fax: 407-896-7370 lawbankruptcy1@aol.com Total Assets: $1,625,000 Total Debts: $663,492 The Debtor identified its largest unsecured creditor as Karlin Daniels & Associates at 4285 SW Martin Hwy in Palm City, Florida, with a disputed claim for $64,021. The Debtor's shareholders, Lawrence and Nancy Garrett, filed a separate Chapter 11 case on December 3, 2008, case number 08-11516. Judge Karen S. Jennemann oversees the proceedings. GARRETT INVESTMENT: Case Summary & Largest Unsecured Creditor ------------------------------------------------------------- Debtor: Garrett Investment Properties, Inc. 1348 Holly Glen Run Apopka, FL 32703 Case No.: 08-11697 Chapter 11 Petition Date: December 9, 2008 Court: U.S. Bankruptcy Court Middle District of Florida (Orlando) Debtor's Counsel: Robert B Branson, Esq. 1524 East Livingston Street Orlando, FL 32803 Tel: 407-894-6834 Fax: 407-896-7370 lawbankruptcy1@aol.com Total Assets: $1,625,000 Total Debts: $663,492 The Debtor identified its largest unsecured creditor as Karlin Daniels & Associates at 4285 SW Martin Hwy in Palm City, Florida, with a disputed claim for $64,021. The Debtor's shareholders, Lawrence and Nancy Garrett, filed a separate Chapter 11 case on December 3, 2008, case number 08-11516. Judge Karen S. Jennemann oversees the proceedings. GATEWAY ETHANOL: May Employ ICM Inc. to Evaluate Ethanol Plant -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Kansas granted Gateway Ethanol LLC permission to employ ICM, Inc., to evaluate the current condition of its ethanol plant in Pratt, Kansas, and to determine what modifications would be required to put the plant into an operating condition that would allow it to meet its nameplate 55 million gallons per year capacity. The Debtor told the Court that an evaluation of the plant by ICM will facilitate bidding on the plant in connection with the sale of its assets. On Oct. 23, 2008, the Debtor signed an Asset Purchase Agreement with Dougherty Funding LLC, its principal secured lender, as the stalking horse. Pursuant to the Purchase Agreement, Dougherty agreed to credit bid substantially all of the Debtor's assets. ICM will render the following services: a) visit the site and determine what modifications would be required and file its report within one week following the site visit. The cost of the site visit and intial report will be between $10,000 and $15,000 on a time and material (T&M) basis at ICM's current standard rate schedule. b) within 30 days of the plant visit, prepare a report containing a detailed cost estimate for the engineering and construction of the proposed plant modifications, including an estimate of the cost for commissioning the facility, start-up, training of the new operators and assisting with operations through performance testing of the plant. The cost of the cost extimate report will be between $25,000 and $30,000, also on a T&M type basis. The Debtor told the Court that ICM has extensive experience in the designing, specifying instrumentation and automated systems, programming, startup, and long-term support of ethanol plants. Dave Vander Griend, the chief executive officer of ICM Inc., assured the Court that ICM does not represent any interest adverse to the Debtor's estate, and that ICM is a "distinterested person" as that term is defined pursuant to Sec. 101(14) of the Bankruptcy Code. About Gateway Ethanol Pratt, Kansas-based Gateway Ethanol, LLC, operates an ethanol plant that has a capacity of 55 million gallons a year, according to Orion Ethanol's Web site. The company filed for bankruptcy protection on October 5, 2008 (Bankr. D. Ks. Case No. 08-22579). Laurence M. Frazen, Esq., Megan J. Redmond, Esq., and Tammee E. McVey, Esq., at Bryan Cave, LLP, represent the Debtor in its restructuring efforts. In its schedules, the Debtor listed total assets of $94,545,022, and total debts of $93,353,654. GATEWAY ETHANOL: Gets Go-Ahead to Sell Corn, Milo and Mill Dust --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Kansas approved the sale of the corn and milo, and in addition, the mill dust, which motion was made orally during the sale hearing, owned by Gateway Ethanol, L.L.C. The net proceeds shall be segregated in Debtor's miscellaneous receipts bank account pending a determination of the proper party entitled to the proceeds of the sale. As reported in the Troubled Company Reporter on Nov. 19, 2008, Gateway Ethanol LLC asked the Court to sell approximately 7,500 bushels of corn and approximately 10,000 bushels of milo located in its grain bins at its facility in Pratt, Kansas. The Debtor told the Court that its ethanol plant is currently not operating, and that the sale of the grain before it deteriorates further in quality and value would be in the best interests of its estate, creditors, and all parties in interest. About Gateway Ethanol Pratt, Kansas-based Gateway Ethanol, LLC, operates an ethanol plant that has a capacity of 55 million gallons a year, according to Orion Ethanol's Web site. The company filed for bankruptcy protection on October 5, 2008 (Bankr. D. Ks. Case No. 08-22579). Laurence M. Frazen, Esq., Megan J. Redmond, Esq., and Tammee E. McVey, Esq., at Bryan Cave, LLP, represent the Debtor in its restructuring efforts. In its schedules, the Debtor listed total assets of $94,545,022, and total debts of $93,353,654. GENERAL MOTORS: Hires Lawyers & Bankers to Mull Chapter 11 Filing ----------------------------------------------------------------- Jeffrey McCracken, John D. Stoll, and Greg Hitt at The Wall Street Journal report that people familiar with the matter said General Motors Corp. has hired lawyers and bankers to mull over a possible Chapter 11 filing by the company. According to WSJ, GM has retained Harvey Miller of Weil Gotshal & Manges LP as bankruptcy counsel. GM, says the report, has also hired: -- restructuring veteran Jay Alix, -- Evercore Partners' William Repko, and -- Blackstone Group's Arthur Newman. WSJ relates that the hiring of bankruptcy experts indicates GM's increasing desperation as it waits for government financial assistance, which is being considered in the Congress. WSJ states that while Senate Majority Leader Harry Reid hopes to push a bill through this week, Sen. John Thune says that there is a lot of resistance on the bailout. Citing a source, WSJ reports that GM CEO Rick Wagoner has been hesitant to consider the company's possible bankruptcy on fears that it would discourage potential car buyers. A bankruptcy filing, according to the report, would also be very expensive and difficult due to tight credit markets. Mr. Wagoner is still against filing for Chapter 11, the report states. The board is keeping all options open, says WSJ, citing GM director Kent Kresa. GM's board is putting Mr. Wagoner to deepening scrutiny, meeting three times a week and receiving constant updates on the financial situation, the report states. Mr. Kresa, according to the report, said that the GM management was constantly caught off guard by auto sale drops. Executives kept changing sales projections, but the managers never fully understood how bad the situation could get, the report syas, citing Mr. Kresa. WSJ states that GM now operates near its minimum-required funding options, and GM executives are worried that suppliers could tighten credit terms and the government could swiftly take back its loans. "This is an urgent situation and we need to deal with it," the report quoted Mr. Kresa as saying. GM will be meeting with its dealers this week to discuss a new advertising campaign to increase sales, WSJ report. According to WSJ, GM will also discuss the possible closure of its Saturn division or put it into bankruptcy protection, as it is a separate entity. Peter A. McKay at WSJ relates that GM led in stock declines on Thursday, sliding 10.4%. Ellen Kullman Leaves Board for DuPont CEO Post DuPont President Ellen J. Kullman has resigned from GM's Board of Directors, effective Dec. 11, 2008, to focus on her new responsibilities at DuPont. Ms. Kullman will become chief executive officer of DuPont on Jan. 1, 2009. "I have been proud to serve on GM's Board for four years," Ms. Kullman said. "GM has made important advancements across a number of fronts and I wish the GM team continued success as they work to overcome the current challenges." "I understand and respect Ellen's need to focus on DuPont right now," noted George M.C. Fisher, presiding director of GM's Board. "She's been a great Board member for GM, and we'll miss her." Ms. Kullman served on GM's Audit Committee and Investment Funds Committee. There are no immediate plans to replace her on those committees. 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. General Motors Latin America, Africa and Middle East, with headquarters in Miramar, Florida, is one of GM's four regional business units. GM LAAM employs approximately 37,000 people in 18 countries and has manufacturing facilities in Argentina, Brazil, Colombia, Ecuador, Egypt, Kenya, South Africa and Venezuela. GM LAAM markets vehicles under the Buick, Cadillac, Chevrolet, GMC, Hummer, Isuzu, Opel, Saab and Suzuki brands. As reported in the Troubled Company Reporter on Nov. 10, 2008, General Motors Corporation's balance sheet at Sept. 30, 2008, showed total assets of $110.425 billion, total liabilities of $170.3 billion, resulting in a stockholders' deficit of $59.9 billion. * * * As reported in the Troubled Company Reporter on Nov. 11, 2008, Standard & Poor's Ratings Services lowered its ratings, including the corporate credit rating, on General Motors Corp. to 'CCC+' from 'B-' and removed them from CreditWatch, where they had been placed with negative implications on Oct. 9, 2008. S&P said that the outlook is negative. Fitch Ratings, as reported in the Troubled Company Reporter on Nov. 11, 2008, placed the Issuer Default Rating of General Motors on Rating Watch Negative as a result of the company's rapidly diminishing liquidity position. Given the current liquidity level of $16.2 billion and the pace of negative cash flows, Fitch expects that GM will require direct federal assistance over the next quarter and the forbearance of trade creditors in order to avoid default. With virtually no further access to external capital and little potential for material asset sales, cash holdings are expected to shortly reach minimum required operating levels. Fitch placed these on Rating Watch Negative: -- Senior secured at 'B/RR1'; -- Senior unsecured at 'CCC-/RR5'. As reported in the Troubled Company Reporter on June 24, 2008, DBRS has placed the ratings of General Motors Corp. and General Motors of Canada Limited Under Review with Negative Implications. The rating action reflects the structural deterioration of the company's operations in North America brought on by high oil prices and a slowing U.S. Economy. GENERAL MOTORS: Ind. Fiduciary Extends Share Trading Blackout ------------------------------------------------------------- General Motors Corp. disclosed in a regulatory filing with the Securities and Exchange Commission that State Street Bank and Trust Company, which serves as the independent fiduciary of the GM Common Stock Fund in the Plans, has extended until further notice the temporary suspension on purchases of the GM Common Stock Fund that began on September 30. General Motors disclosed on Sept. 30, 2008, that it had suspended purchases of its common stock, par value $1-2/3 per share, by employees in GM's Savings-Stock Purchase Plan and the Personal Savings Plan. All purchases of Common Stock under the Plans were suspended because the Plans had issued all of their registered shares of Common Stock. This suspension was the result of recent unexpectedly high demand among the Plans' participants due to increased employee interest and a lower market price for the Common Stock. The demand significantly exceeded the usual volume and exhausted the supply of registered stock more quickly than the administrators of the Plans foresaw. This trading blackout began on Sept. 30, 2008, and was expected to end the week of Nov. 9, 2008, when GM planned to file a registration statement with the SEC registering additional shares for the Plans. State Street determined that, due to GM's earnings announcement and related information about GM's business, it was not ppropriate to allow additional investments by participants into the GM Common Stock Fund. As independent fiduciary, State Street is specifically authorized pursuant to its agreements with GM and the Plan documents to impose restrictions on purchases or exchanges into and out of the GM Common Stock Fund at any time. GM has not registered additional shares of GM Common Stock for the Plans with the SEC. Plan participants, other than directors and officers, are not prevented from selling Common Stock through the Plans, or buying or selling Common Stock outside the Plans, during the blackout period. Based on the provisions of the Plans, these participants may also at any time exchange shares in the Common Stock Fund for other investment options or change their contribution election. The contributions of participants directed to the GM Common Stock Fund, will be invested in the default fund for the Plan in which they participate, unless they provide new instructions. This means that, until the temporary suspension for Common Stock purchases is removed, that contributions to the S-SPP will be invested in the Pyramis Strategic Balanced Commingled Pool investment option and that contributions to the PSP will be invested in the Pyramis Active Lifecycle Commingled Pool Investment option closest to the year that the participant will attain the age of 65. On Nov. 21, 2008, GM sent a notice to its directors and executive officers informing them of the trading restrictions in the Common Stock Fund imposed by State Street and that the blackout period instituted on Sept. 30, 2008, would continue. During the blackout period, GM's directors and executive officers will be prohibited from directly acquiring, disposing of or transferring any equity securities of GM acquired by them in connection with their service and employment with GM in such capacities. The notice was sent to ensure compliance with Section 306(a) of the Sarbanes-Oxley Act of 2002. In accordance with the unforeseeable circumstance exemption under Section 306(a) GM determined that it was unable to give advance notice of the blackout period to the directors and executive officers. A full-text copy of the notice is available for free at http://ResearchArchives.com/t/s?360e 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. General Motors Latin America, Africa and Middle East, with headquarters in Miramar, Florida, is one of GM's four regional business units. GM LAAM employs approximately 37,000 people in 18 countries and has manufacturing facilities in Argentina, Brazil, Colombia, Ecuador, Egypt, Kenya, South Africa and Venezuela. GM LAAM markets vehicles under the Buick, Cadillac, Chevrolet, GMC, Hummer, Isuzu, Opel, Saab and Suzuki brands. As reported in the Troubled Company Reporter on Nov. 10, 2008, General Motors Corporation's balance sheet at Sept. 30, 2008, showed total assets of $110.425 billion, total liabilities of $170.3 billion, resulting in a stockholders' deficit of $59.9 billion. * * * As reported in the Troubled Company Reporter on Nov. 11, 2008, Standard & Poor's Ratings Services lowered its ratings, including the corporate credit rating, on General Motors Corp. to 'CCC+' from 'B-' and removed them from CreditWatch, where they had been placed with negative implications on Oct. 9, 2008. S&P said that the outlook is negative. Fitch Ratings, as reported in the Troubled Company Reporter on Nov. 11, 2008, placed the Issuer Default Rating of General Motors on Rating Watch Negative as a result of the company's rapidly diminishing liquidity position. Given the current liquidity level of $16.2 billion and the pace of negative cash flows, Fitch expects that GM will require direct federal assistance over the next quarter and the forbearance of trade creditors in order to avoid default. With virtually no further access to external capital and little potential for material asset sales, cash holdings are expected to shortly reach minimum required operating levels. Fitch placed these on Rating Watch Negative: -- Senior secured at 'B/RR1'; -- Senior unsecured at 'CCC-/RR5'. As reported in the Troubled Company Reporter on June 24, 2008, DBRS has placed the ratings of General Motors Corp. and General Motors of Canada Limited Under Review with Negative Implications. The rating action reflects the structural deterioration of the company's operations in North America brought on by high oil prices and a slowing U.S. economy. GLOBAL GENERAL: Files for Chapter 15 Bankruptcy in New York ----------------------------------------------------------- Foreign representative Thomas Klaus Freudenstein filed voluntary petitions for GLOBAL General and Reinsurance Company Limited, and its wholly owned subsidiary GLOBALE Ruckversicherrungs-AG under Chapter 15 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. Mr. Freudenstein said the company went into run-off since October 2002, in which it ceased underwriting non-life insurances business. The company seeks to determine, settle and pay all liquidated claim of its insureds, related Mr. Freudenstein. A run-off of an insurance company will take more than 20 years to complete, he added. The company has proposed a "cut-off scheme of arrangement under English law to shorten the time period for the run-off and reduce administrative costs, Mr. Freudenstein noted. The company listed assets and debts of more than $100 million in its petition. Mr. Freudenstein is asking the Court to set a hearing on the petitions after Jan. 12, 2009. Juliette Stevens is the company's English legal counsel. According to BLoomberg News, Chapter 15 assists foreign companies organize and protect U.S. assets during their reorganizations in other countries. About GLOBAL General Headquartered in London, GLOBAL General and Reinsurance Company Limited is an insurance and reinsurance company formed in April 16, 1940. Between 1940 and 2002, GLOBAL General wrote a wide array of reinsurance business in England. The reinsurance portfolio was underwritten in London, predominantly from the early 1950's to the early 1980's. The portfolio was mostly accepted through placements made by London market brokers. The portfolio consists of facultative and treaty reinsurance, both proportional and non-proportional, covering various classes including, but not limited to, marine, non-marine and aviation. GLOBAL GENERAL: Voluntary Chapter 15 Case Summary ------------------------------------------------- Chapter 15 Petitioner: Thomas Klaus Freudenstein Chapter 15 Debtor: Global General and Reinsurance Company Limited Chapter 15 Case No.: 08-14939 Debtor-affiliates filing separate Chapter 15 petitions: Entity Case No. ------ -------- Globale Ruckversicherungs-AG 08-14940 Type of Business: The Debtors are insurance and reinsurance company. Chapter 15 Petition Date: December 10, 2008 Court: Southern District of New York (Manhattan) Judge: Robert D. Drain Chapter 15 Petitioner's Counsel: Howard Seife, Esq. hseife@chadbourne.com Chadbourne & Parke LLP 30 Rockefeller Plaza New York, NY 10112 Tel: (212)408-5361 Fax : (212) 541-5369 Estimated Assets: More than $100 million Estimated Debts: More than $100 million GENERAL MOTORS: Suppliers Seek Advance Payments ----------------------------------------------- Some auto-parts suppliers have asked General Motors Corp. for advance payments, after the company warned that it would run out if it fails to secure loans from the government, Jeff Green at Bloomberg News reports, citing people familiar with the matter. According to Bloomberg, the sources said that GM has rejected the requests. The report says that GM pays its 3,600 suppliers about 45 days after getting an invoice. Advance payment requests started in the last several weeks but have not disrupted vehicle production, the report states, citing a person familiar with the matter. GM Purchasing Vice President Bo Andersson denied to the trade publication Automotive News on Nov. 25 that suppliers were seeking payment in advance or shorter turnarounds on invoices. GM spokesperson Dan Flores, Bloomberg relates, said, "Despite the current economic challenges, GM remains committed to maintaining a strong, open relationship with our suppliers. GM remains focused on maintaining payment terms and being a prompt payer." Car Czar Appointment May Spur Holders' Demand for Payouts Banc of America Securities analyst Glen Taksler said that the appointment of a "car czar" to supervise the government bailout program has raised the possibility of a bankruptcy event for credit-default swaps. A car czar might trigger "what's known as an event in the vast market for credit-default swaps," which would cause holders of GM and Ford Motor Co. credit protection to demand payouts, WSJ says, citing Banc of America. Mr. Taksler said that The International Swaps and Derivatives Association, a standard-setter for credit-derivatives trading, identified the appointment of an administrator, trustee, or similar official to oversee all or most of an entity's assets as a trigger event for a bankruptcy filing, WSJ relates. WSJ quoted Mr. Taksler as saying, "The result may depend on the exact wording of a potential bailout package. We find arguments both for and against an autos czar triggering CDS. ... The actual process is likely to be determined through ISDA." According to WSJ, the Depository Trust & Clearing Corp. said that institutions like banks and insurance firms hold $43.15 billion in credit protection on GM debt. WSJ relates that excluding contracts sold by the same institutions holding GM DCS, there is about $3.3 billion in GM CDS outstanding, while the DTCC said that for Ford Motor debt, there is about $34 billion in gross CDS and about $2.8 billion in net swaps outstanding. Chrysler LLC, according to the report, is a private company and doesn't trade in the CDS market. Corey Boles, Patrick Yoest, and Josh Mitchell posted on The Wall Street Journal blog that the government financial bailout bill being considered in the House of Representatives would require Chrysler's parent, Cerberus Capital Management, to put up equity warrants for Chrysler to get an emergency loan, because Chrysler is a private company. 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. General Motors Latin America, Africa and Middle East, with headquarters in Miramar, Florida, is one of GM's four regional business units. GM LAAM employs approximately 37,000 people in 18 countries and has manufacturing facilities in Argentina, Brazil, Colombia, Ecuador, Egypt, Kenya, South Africa and Venezuela. GM LAAM markets vehicles under the Buick, Cadillac, Chevrolet, GMC, Hummer, Isuzu, Opel, Saab and Suzuki brands. As reported in the Troubled Company Reporter on Nov. 10, 2008, General Motors Corporation's balance sheet at Sept. 30, 2008, showed total assets of $110.425 billion, total liabilities of $170.3 billion, resulting in a stockholders' deficit of $59.9 billion. * * * As reported in the Troubled Company Reporter on Nov. 11, 2008, Standard & Poor's Ratings Services lowered its ratings, including the corporate credit rating, on General Motors Corp. to 'CCC+' from 'B-' and removed them from CreditWatch, where they had been placed with negative implications on Oct. 9, 2008. S&P said that the outlook is negative. Fitch Ratings, as reported in the Troubled Company Reporter on Nov. 11, 2008, placed the Issuer Default Rating of General Motors on Rating Watch Negative as a result of the company's rapidly diminishing liquidity position. Given the current liquidity level of $16.2 billion and the pace of negative cash flows, Fitch expects that GM will require direct federal assistance over the next quarter and the forbearance of trade creditors in order to avoid default. With virtually no further access to external capital and little potential for material asset sales, cash holdings are expected to shortly reach minimum required operating levels. Fitch placed these on Rating Watch Negative: -- Senior secured at 'B/RR1'; -- Senior unsecured at 'CCC-/RR5'. As reported in the Troubled Company Reporter on June 24, 2008, DBRS has placed the ratings of General Motors Corp. and General Motors of Canada Limited Under Review with Negative Implications. The rating action reflects the structural deterioration of the company's operations in North America brought on by high oil prices and a slowing U.S. Economy. GENERAL MOTORS: Credit Unions to Extend $10 Billion in Loans ------------------------------------------------------------ Sharon Terlep at The Wall Street Journal reports that a group of 1,300 credit unions have pledged to extend about $10 billion in auto loans. According to WSJ, the credit unions are aiming to win new borrowers while providing General Motors Corp., Ford Motor Co., and Chrysler LLC financial assistance. Tom Henderson at Crain's Detroit Business relates that GM and the Michigan Credit Union League said on Dec. 10 that a consortium of credit unions in Michigan, Ohio, Indiana, and Illinois have agreed to provide up to $10 billion to finance the sale of new GM vehicles through June 2009, in exchange for supplier discounts from GM to more than 12 million credit union members in the Midwest. According to a statement posted at Lovemycreditunion.org, credit union members will be able to get an additional $250 bonus cash between Dec. 10, 2008 and Jan. 5, 2009, on their eligible new GM vehicle purchase. The GM price discount program includes these brands: Buick, Cadillac, Hummer, Saab, Chevrolet, GMC, Saturn, and Pontiac. The program runs from Dec. 8, 2008, through June 30, 2009. WSJ relates that the credit union group said that it's working with Ford Motor Co. and Chrysler LLC on a similar arrangement. 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. General Motors Latin America, Africa and Middle East, with headquarters in Miramar, Florida, is one of GM's four regional business units. GM LAAM employs approximately 37,000 people in 18 countries and has manufacturing facilities in Argentina, Brazil, Colombia, Ecuador, Egypt, Kenya, South Africa and Venezuela. GM LAAM markets vehicles under the Buick, Cadillac, Chevrolet, GMC, Hummer, Isuzu, Opel, Saab and Suzuki brands. As reported in the Troubled Company Reporter on Nov. 10, 2008, General Motors Corporation's balance sheet at Sept. 30, 2008, showed total assets of $110.425 billion, total liabilities of $170.3 billion, resulting in a stockholders' deficit of $59.9 billion. * * * As reported in the Troubled Company Reporter on Nov. 11, 2008, Standard & Poor's Ratings Services lowered its ratings, including the corporate credit rating, on General Motors Corp. to 'CCC+' from 'B-' and removed them from CreditWatch, where they had been placed with negative implications on Oct. 9, 2008. S&P said that the outlook is negative. Fitch Ratings, as reported in the Troubled Company Reporter on Nov. 11, 2008, placed the Issuer Default Rating of General Motors on Rating Watch Negative as a result of the company's rapidly diminishing liquidity position. Given the current liquidity level of $16.2 billion and the pace of negative cash flows, Fitch expects that GM will require direct federal assistance over the next quarter and the forbearance of trade creditors in order to avoid default. With virtually no further access to external capital and little potential for material asset sales, cash holdings are expected to shortly reach minimum required operating levels. Fitch placed these on Rating Watch Negative: -- Senior secured at 'B/RR1'; -- Senior unsecured at 'CCC-/RR5'. As reported in the Troubled Company Reporter on June 24, 2008, DBRS has placed the ratings of General Motors Corp. and General Motors of Canada Limited Under Review with Negative Implications. The rating action reflects the structural deterioration of the company's operations in North America brought on by high oil prices and a slowing U.S. economy. GMACM MORTGAGE: Moody's Downgrades Ratings on Five Cert. Classes ---------------------------------------------------------------- Moody's Investors Service has downgraded 8 tranches from GMACM Mortgage Loan Trust 2006-AR1. The collateral backing this transaction consists primarily of first-lien, adjustable-rate, prime Jumbo mortgage loans. The actions are triggered by higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to currently available credit enhancement levels. The actions listed below reflect Moody's revised expected losses on the Jumbo sector announced in a press release on September 18th, and are part of Moody's on-going review process. Moody's final rating actions are based on current ratings, level of credit enhancement, collateral performance and updated pool- level loss expectations. Moody's also took into account credit enhancement provided by seniority, cross-collateralization, time tranching, and other structural features within the Aaa waterfalls. Complete rating actions are: Issuer: GMACM Mortgage Loan Trust 2006-AR1 -- Cl. 1-A-1 Certificate, Downgraded to A1; previously on 10/6/2008 Aaa Placed Under Review for Possible Downgrade -- Cl. 2-A-1 Certificate, Downgraded to A1; previously on 10/6/2008 Aaa Placed Under Review for Possible Downgrade -- Cl. 2-A-2 Certificate, Downgraded to Ba1; previously on 10/6/2008 Aa1 Placed Under Review for Possible Downgrade -- Cl. 3-A-1 Certificate, Downgraded to Aa3; previously on 10/6/2008 Aaa Placed Under Review for Possible Downgrade -- Cl. 3-A-2 Certificate, Downgraded to Ba2 previously on 10/6/2008 Aa1 Placed Under Review for Possible Downgrade -- Cl. M-1 Certificate, Downgraded to Caa3; previously on 10/6/2008 Aa2 Placed Under Review for Possible Downgrade -- Cl. M-2 Certificate, Downgraded to Ca; previously on 10/6/2008 A2 Placed Under Review for Possible Downgrade -- Cl. M-3 Certificate, Downgraded to Ca; previously on 4/4/2008 Baa2 Placed Under Review for Possible Downgrade Moody's calculates estimated losses for Jumbo RMBS in a two-stage process. First, serious delinquencies are projected through late 2009, primarily based upon recent historical performance. These projected delinquencies are converted into projected losses using lifetime roll rates (the probability of transition to default) averaging 40% for 60-day delinquencies, 75% for delinquencies greater than 90 days, and 90-100% for foreclosure or REO, and severity assumptions averaging 35%. The second step is to determine losses for the remaining life of the deal, following the projection period. Depending on a deal's performance, including delinquency, default, and prepayment rates, as well as collateral characteristics, such as loan type (fixed or adjustable), or loan-to-value ratios and geographic concentrations of remaining current loans, Moody's assumes varying degrees of slowing in the loss rate (which is measured by loss-to- liquidation) for the remaining life of the deal. Typical degrees of slowing in loss rate after late 2009 range from no slowing at all to 40% slowing. To take an example, a deal with very poor early performance due to relatively high loan-to-value ratios and dropping regional home values would be expected to see markedly high delinquency and loss rates for the next year. But the high rate of losses may be expected to slow afterwards, as economic factors and real estate values begin to stabilize, and a slowing of 20-40% may be used in the projection. On the other hand, a deal with stronger early performance that is demonstrating relative resiliency in the current market environment may not be expected to have high losses in the near-term, but may be expected to sustain a similar level of losses for the life of the deal, as the pool continues to be subject to factors that have more historically driven prime performance such as borrower life events, unemployment, and so on. Loss estimates are subject to variability and, as a result, realized losses could ultimately turn out higher or lower than Moody's current expectations. Moody's will continue to evaluate performance data as it becomes available and will assess the pattern of potential future defaults and adjust loss expectations accordingly if necessary. GRF MEDSPA: Case Summary & Four Largest Unsecured Creditors ----------------------------------------------------------- Debtor: GRF Medspa Broadway Plaza, LLC dba Pure Med Spa 3440 Preston Ridge Road, Suite 450 Alpharetta, GA 30005 Bankruptcy Case No.: 08-85038 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- GRF Medspa Redmond Town Center Mall, LLC 08-85039 GRF Medspa Santa Ana, LLC 08-85040 GRF Medspa Santa Clara, LLC 08-85041 GRF Medspa Southcenter, LLC 08-85042 GRF Medspa Washington Square Mall, LLC 08-85043 GRF Medspa Village at Corte Madera, LLC 08-85044 Chapter 11 Petition Date: December 4, 2008 Court: Northern District of Georgia (Atlanta) Debtor's Counsel: J. Robert Williamson, Esq. rwilliamson@swlawfirm.com Scroggins and Williamson 1500 Candler Building 127 Peachtree Street, N.E. Atlanta, GA 30303 Tel: (404) 893-3880 Estimated Assets: Less than $50,000 Estimated Debts: $100,000 to $500,000 A list of the Debtor's largest unsecured creditors is available for free at: http://bankrupt.com/misc/ganb08-85038.pdf GROWERS DIRECT: CFO K. Muhuri Owns 570,000 Shares ------------------------------------------------- Nepal Kanti Muhuri, Growers Direct Coffee Company, Inc.'s chief financial officer and director, disclosed in a Form 4 filing with the Securities and Exchange Commission that he may be deemed to beneficially own 570,000 shares of the company's common stock after the Oct. 16, 2008, purchase of 500,000 shares of common stock at $0.05 per share. There were 37,413,992 shares outstanding of common stock of the company at Sept. 30, 2008. Headquartered in Berkeley, California, Growers Direct Coffee Company Inc. (OTC BB: GWDC) -- http://www.growersdirectcoffee.com/ -- is a world-wide distributor and a marketer of the green bean coffee grown in Papua New Guinea, "Penlyne Castle" brand "Jamaican Blue Mountain" coffee grown by Blue Mountain Coffee Co-Operative Society Ltd of Jamaica. Coffee in Papua New Guinea are grown by the company's shareholder-farmers in the Highland region's rich volcanic soils between the altitudes of 4,000 and 6,000 feet above sea level. Going Concern Doubt PMB Helin Donovan, LLP, in San Francisco, expressed substantial doubt about Growers Direct Coffee Company Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's significant operating losses. GROWERS DIRECT: Board Appoints Sean Tan as CEO and President ------------------------------------------------------------ The board of directors of Growers Direct Coffee Company, Inc. appointed Sean Tan as a director, president and chief executive officer. Mr. Tan holds a Bachelor's degree in Economics and Political Science from Northern Illinois University and a Master's degree in Public Administration from Pennsylvania State University in December. Mr. Tan has banking and international consulting experience. He has been involved in consulting business since 2001. The company has entered into a definitive management agreement dated Nov. 20, 2008, with Mr. Tan. Mr. Tan will perform the duties customarily performed by the president and chief executive officer and the other duties as reasonably requested by the chairman or the board of directors of the company. These duties will include, but not be limited to signing SEC filings and certifications required by the Sarbanes-Oxley Act and other responsibilities assigned by the board. The term of Tan's agreement engagement is for 12 months unless terminated sooner in accordance with the provisions of the agreement. The company will make monthly management fee payment of $6,000 to Mr. Tan, in arrears, on the 25th day of each month. After 12 months, Mr. Tan's monthly management fee payment will increase to $10,000 per month. Under this agreement, Mr. Tan will be issued 1,500,000 restricted common shares of the company. The company has also entered into a definitive management agreement dated Nov. 20, 2008, with Nepal Muhuri. Mr. Muhuri will the duties customarily performed by the chief financial officer and secretary and such other duties as reasonably requested by the chairman or the board of directors of the company. These duties will include, but not be limited to signing SEC filings and certifications required by the Sarbanes-Oxley Act and other responsibilities assigned by the board. The term of Mr. Muhuri's agreement engagement is for 12 months unless terminated sooner in accordance with the provisions of the agreement. The company disclosed in the filing that it will make monthly management fee payment of $5,000 to Mr. Muhuri, in arrears, on the 25th day of each month. After 12 months, Mr. Muhuri's monthly management fee payment will increase to $10,000 per month. Under this agreement, Mr. Muhuri will be issued 1,500,000 restricted common shares of the company. A full-text copy of the agreement with Mr. tan is available for free at http://ResearchArchives.com/t/s?3601 A full-text copy of the agreement with Mr. Muhuri is available for free at http://ResearchArchives.com/t/s?3602 In a separate filing, the company disclosed that Michael Rynning has resigned as a director effective Oct. 31, 2008. Growers Direct and Mr. Rynning have terminated the management agreement dated Aug. 15, 2008. About Growers Direct Headquartered in Berkeley, California, Growers Direct Coffee Company Inc. (OTC BB: GWDC) -- http://www.growersdirectcoffee.com/ -- is a world-wide distributor and a marketer of the green bean coffee grown in Papua New Guinea, "Penlyne Castle" brand "Jamaican Blue Mountain" coffee grown by Blue Mountain Coffee Co-Operative Society Ltd of Jamaica. Coffee in Papua New Guinea are grown by the company's shareholder-farmers in the Highland region's rich volcanic soils between the altitudes of 4,000 and 6,000 feet above sea level. Going Concern Doubt PMB Helin Donovan, LLP, in San Francisco, expressed substantial doubt about Growers Direct Coffee Company Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's significant operating losses. GROWERS DIRECT: September 30 Balance Sheet Upside-Down by $2.9MM ---------------------------------------------------------------- Growers Direct Coffee Company Inc.'s balance sheet at Sept. 30, 2008, showed total assets $919,101 and total liabilities of $3,866,929, resulting in a stockholders' deficit of $2,947,828. For the three months ended Sept. 30, 2008, the company reported net loss of $789,713 compared to net loss of $2,464,180 for the same period in the previous year. For the nine months ended Sept. 30, 2008, the company incurred net loss of $3,782,483 compared with net loss of $8,125,820 for the same period in the previous year. Cash equivalents comprise certain highly liquid instruments with a maturity of three months or less when purchased. As at Sept. 30, 2008 and Dec. 31, 2007, cash and cash equivalents consist of cash only. A full-text copy of the 10-Q filing is available for free at http://ResearchArchives.com/t/s?3605 In a separate filing, the company disclosed that it has received a notice of late filing from the Securities and Exchange Commission on Nov. 7, 2008. The company stated that the required financial statements for the period ended Sept. 30, 2008, was delayed due to lack of funds to pay for unreasonable expenses. About Growers Direct Coffee Company Inc. Headquartered in Berkeley, California, Growers Direct Coffee Company Inc. (OTC BB: GWDC) -- http://www.growersdirectcoffee.com/ -- is a world-wide distributor and a marketer of the green bean coffee grown in Papua New Guinea, "Penlyne Castle" brand "Jamaican Blue Mountain" coffee grown by Blue Mountain Coffee Co-Operative Society Ltd of Jamaica. Coffee in Papua New Guinea are grown by the company's shareholder-farmers in the Highland region's rich volcanic soils between the altitudes of 4,000 and 6,000 feet above sea level. Going Concern Doubt PMB Helin Donovan, LLP, in San Francisco, expressed substantial doubt about Growers Direct Coffee Company Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's significant operating losses. GUIDED THERAPEUTICS: To Issue $2.3 Million 15% Sub. Secured Notes ----------------------------------------------------------------- On December 1, 2008, Guided Therapeutics, Inc., entered into a Note Purchase Agreement with 28 existing and new lenders, pursuant to which the company will issue approximately $2.3 million in aggregate principal amount of 15% subordinated secured convertible notes due December 1, 2011, and warrants exercisable for 1,558,878 shares of the company's common stock. The Convertible Notes will be subordinated to the existing senior secured obligations of the company, which are secured by (a) a first priority lien on all of the company's assets; (b) a guaranty by the company's wholly owned subsidiary, InterScan, Inc.; (c) a lien on all of InterScan's assets; and (d) a pledge on all issued and outstanding stock of the company and InterScan. No payments will be due under the Convertible Notes until they mature on December 1, 2011. The Convertible Notes will bear interest at 15% per year, payable on the Maturity Date, absent an event of default (in which case the interest rate increases to 20%). The Convertible Notes will be convertible into approximately 3,556,580 shares of the company's common stock, at a conversion rate of $0.65 per share, subject to certain adjustments. The Warrants will be immediately exercisable for 11,558,878 shares at an exercise price of $0.65 per share, subject to certain adjustments. The Loan Agreement also provides certain registration rights to the Lenders with respect to the shares of the company's common stock underlying the Convertible Notes and Warrants. Approximately $1.1 million of the proceeds from the Loan Agreement will be used to convert existing debt into Convertible Notes, and approximately $0.2 million will be used to retire debt from previous loans. The remaining funds, less fees and expenses, are intended for use in product development, working capital and other corporate purposes. The unsecured notes issued to Dolores Maloof on April 10, 2008, in the aggregate principal amount of $400,000, plus interest, will be converted into Convertible Notes, as will be notes issued under the note purchase agreement, dated July 7, 2008, in aggregate principal amount of $625,000, plus interest, held by Ressler & Tesh, PLLC, Richard Blumberg and designated Investors, Dr. George Goll, Jill T. Gentile, Gregory S. Petrie, Mark E. Brennan & Maureen C. Brennan, Jt. Tenants WROS, Michael Moore, Benny H. Screws, The Sternfeld Family Trust, Peter L. Reininger, John C. Imhoff and J.E. Funderburke. Of the $2.3 million in aggregate principal value of the Convertible Notes, approximately $1.1 million will be issued in exchange for existing securities of the company and the remaining approximately $1.2 million will be issued for cash. The Lenders include John E. Imhoff, William Zachary, Jr. Michael C. James, Dr. Ronald W. Hart and Ronald W. Allen, all directors of the company, who collectively own an aggregate of approximately 28% of the company's outstanding common stock. Going Concern Doubt In the company's Quarterly Report for the period ended June 30, 2008, Mark L. Faupel, president, chief executive officer and acting chief financial officer, related that at June 30, 2008, the company's current liabilities exceeded current assets by approximately $5.0 million and it had a capital deficit due principally to its recurring losses from operations. "As of June 30, 2008, the company was past due on payments due under its Convertible Notes payable in the amount of $531,000 and under a 90-day 13% convertible, unsecured note payable in the amount of $250,000, as well as an unsecured, non-interest bearing note payable in the amount of $10,000. In March 2007, the company borrowed $2.8 million and repaid existing noteholders $1.2 million, including related interest. In addition, $1.9 million of existing loans were converted into secured convertible notes payable in March 2010." "The company was successful in raising approximately $831,000 additional capital during the second quarter of 2008. The funds were used as general working capital. If additional capital cannot be raised at some point in the fourth quarter of 2008, the company might be required to enter into unfavorable agreements or, if that is not possible, be unable to continue operations, and to the extent practicable, liquidate or file for bankruptcy protection. As of [November 25, 2008], the effort is on-going, and has resulted in additional capital of $460,000 through the issuance of short-term (30 to 90 days) promissory notes. Subsequent to the end of the quarter ended June 30, 2008 we also issued series of short-term promissory notes totaling $234,000, bearing interest at 16% per year to complete the closing of our Note Purchase Agreement. These factors raise substantial doubts about the company's ability to continue as a going concern. Additional debt or equity financing will be required for the company to continue its business activities. If additional funds do not become available, the company has plans to curtail operations by reducing discretionary spending and staffing levels. If funds are not obtained, the company will have to curtail its operations and attempt to operate by only pursuing activities for which it has external financial support, such as the National Institute on Alcohol Abuse and Alcoholism contract and the National Cancer Institute funding. However, there can be no assurance that external financial support will be sufficient to maintain even limited operations, or that the company will be able to raise additional funds on acceptable terms, or at all." "Management intends to obtain additional funds through sales of intangibles assets, debt or equity financings and collaborative partnerships. Management believes that debt or equity financing expected to be obtained in the fourth quarter of 2008, along with funds from government contracts and grants, and other strategic partnerships, will be sufficient to support planned operations through December 31, 2008, during which production of the company's cervical cancer detection device could be launched." About Guided Therapeutics Guided Therapeutics, Inc. (Other OTC: GTHP.PK) -- http://www.spectrx.com-- Guided Therapeutics, Inc., a medical technology company, together with its subsidiaries, develops products for the non-invasive cervical cancer detection and diabetes markets. The company is developing a non-invasive cervical cancer detection product using its biophotonic technologies, which is used to identify cervical cancers and precancers painlessly, non-invasively, and at the point-of-care by scanning the cervix with light, then analyzing the light reflected or emanating from the cervix to produce a map or image of diseased tissue. Guided Therapeutics has license agreements with Georgia Tech Research Corporation and Altea Technologies, Inc. The company, formerly known as SpectRx, Inc., was founded in 1992 and is based in Norcross, Ga. HARTFORD/NORTHWEST: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Hartford/Northwest, LLC 1150 Suncast Ln #2 El Dorado Hills, CA 95762 Case No.: 08-38100 Chapter 11 Petition Date: December 8, 2008 Court: U.S. Bankruptcy Court Eastern District of California (Sacramento) Judge: Robert S. Bardwil Debtor's Counsel: Howard S. Nevins, Esq. 2150 River Plaza Dr #450 Sacramento, CA 95833-3883 (916) 925-6620 Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor does not have creditors who are not insiders. HERFF JONES: Terminated Deal Cues Moody's to Withdraws Ratings -------------------------------------------------------------- Moody's Investors Service withdrew the ratings and outlook of Herff Jones, Inc. following the termination of its agreement with American Achievement Group Holding Corp. since, as a consequence, the company will not raise any debt financing. These ratings are withdrawn: -- Ba3 Corporate Family Rating -- B1 Probability of Default Rating -- Ba3 $100 million revolving credit facility, 5 years (LGD3, 35.72%) -- Ba3 $335 million term loan A, 5 years (LGD3, 35.72%) -- Ba3 $300 million term loan B, 7 years (LGD3, 35.72%) -- Stable Outlook Moody's latest rating action was the first-time assignment of ratings to Herff Jones, including the Ba3 corporate family and B1 probability of default ratings, on September 10, 2008. Herff Jones, Inc .is a leading manufacturer and publisher of graduation related items sold throughout North America. The principal methodology used in rating Herff Jones was the Global Packaged Goods Industry which can be found at www.moodys.com in the Credit Policy & Methodologies directory, in the Ratings Methodologies subdirectory. HINES HORTICULTURE: Court Approves Sale Bidding Procedures ---------------------------------------------------------- Hines Horticulture Inc. and its debtor-affiliates won approval from the United States Bankruptcy Court for the District of Delaware to hold an auction for its business on Dec. 15. Bids are due Dec. 14, and the Debtors will conduct an auction the next day if multiple bids are received. The Debtors will present the results of the auction to the Court at a Dec. 16 sale hearing. According to Bloomberg's Bill Rochelle, the auction was hurriedly arranged after Black Diamond Capital Management LLC, the intended buyer, was finally able to line up financing 10 weeks after the original deadline. Black Diamond, according to Mr. Rochelle, has offered $70 million, including as much as $58 million cash to pay off the pre- bankruptcy secured loans and financing for the Chapter 11 case. Black Diamond would also pay as much as $12 million toward debt owing to suppliers. Bids for the Debtors' assets with a $2,750,000 deposit must delivered no later than 5:00 p.m., on Dec. 14, 2008. An auction will take place the next day at 1:00 p.m., at the offices of Young Conaway Stargatt & Taylor LLP at The Brandywine Building, 1000 West Street, 17 floor in Wilmington, Delaware. Overbid will be made in increments of at least $500,000 at the auction. The Debtors' investment banker Miller Buckfire & Co. LLC said it has a list of interested parties to purchase the Debtors' assets but it did not name any of them. In addition, the Debtors and their investment banker will provide Bank of America N.A., agent for the Debtors' postpetition secured lenders, reports of all sale efforts, expressions of interest and offers received. The Court will also consider at the Dec. 16 hearing Hines' request to extend its exclusive right to file a Chapter 11 plan until March 18, Bloomberg says. The Plan is built upon the sale of the business to Black Diamond. Bank of America, Hines Horticulture's indenture trustee for 10-1/4% callable bonds with a principle amount of $175 million due in 2011, is expected to receive full repayment under the plan, Bloomberg relates. Hines' request to implement an asset sale incentive program for 17 of its key employees in connection with the sale of the Debtors' assets will also be heard Dec. 16. As reported by the Dec. 5 edition of the Troubled Company reporter, a maximum pool of $1.6 million available for award under the incentive program, and employees will be eligible to receive up to 135% of their base salary. Hines has talked to Black Diamond about funding of the incentive plan. About Hines Horticulture Headquartered in Irvine, California, Hines Horticulture, Inc. -- http://www.hineshorticulture.com/-- operates nursery facilities located in Arizona, California, Oregon and Texas. Through its affiliate, the company produces and distributes horticultural products. The company and its affiliate, Hines Nurseries, Inc., filed for Chapter 11 protection on Aug. 20, 2008 (Bankr. D. Del. Case No.08-11922). Anup Sathy, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructure efforts. Robert S. Brady, Esq., and Edmon L. Morton, Esq., at Young, Conaway, Stargatt & Taylor, serve as the Debtors' co-counsel. The Debtors selected Epiq Bankruptcy Solutions LLC as their voting and claims agent, and Financial Balloting Group LLC as their securities voting agent. The U.S. Trustee for Region 3 appointed creditors to serve on an Official Committee of Unsecured Creditors for the Debtors' case. When the Debtors filed for protection from their creditors, they listed assets and debts of between $100 million and $500 million each. HORIZON LINES: S&P Cuts Rating on Senior Unsecured Notes to 'B-' ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on shipping company Horizon Lines Inc., including lowering the long-term corporate credit rating to 'B+' from 'BB-'. At the same time, S&P lowered the rating on the senior secured debt to 'BB', two notches above the new corporate credit rating, from 'BB+', while leaving the recovery rating on this debt unchanged at '1' indicating expectations of very high (90%-100%) recovery in the event of a payment default. In addition, S&P lowered the rating on the senior unsecured notes to 'B-' from 'B', two notches below the new corporate credit rating, while leaving the recovery rating on this debt unchanged at '6', indicating expectations of a negligible (0%-10%) recovery in the event of a payment default. The outlook is negative. "The downgrade reflects our expectation that earnings will remain under pressure due to weak macroeconomic conditions in the markets served, with Puerto Rico being the hardest hit. This weakness has deepened through the year, causing the company to make multiple downward revisions to its earnings estimates," said S&P's credit analyst Funmi Afonja. For example, the company gave an EBITDA guidance of $175 million-$185 million in February 2008 and lowered it several times to $120 million-$130 million by October 2008. Given current uncertainty over the depth and duration of the U.S. recession, S&P is maintaining a negative outlook on the company. Ratings on Charlotte, N.C.-based Horizon Lines reflect the company's highly leveraged financial profile, shareholder-friendly financial policies, and participation in the capital-intensive and competitive shipping industry. Positive credit factors include barriers to entry afforded by the Jones Act (which applies to intra-U.S. shipping) and relatively stable demand from the company's diverse customer base. Horizon Lines primarily transports goods between the continental U.S. and Alaska, Hawaii, Guam, Micronesia, Asia, and Puerto Rico. The company also operates a fully integrated logistics services business. As of Sept. 30, 2008, debt to EBITDA (adjusted for operating leases) was 6.6x, compared with 4.9x in the prior period. Over the past year, credit measures have weakened due largely to margin pressure from elevated fuel prices and weaker volumes and due to debt-financed share buybacks. S&P expects that credit measures will remain vulnerable to weakening macroeconomic conditions and be less affected by fuel prices that have moderated in recent months. The negative outlook reflects the potential for a further material weakening in the company's financial profile, due to the effects of a potential severe U.S. recession. If that were to occur, causing debt to EBITDA to rise above 7x on a sustained basis, S&P would likely lower ratings. S&P could revise the outlook to stable if earnings and credit metrics strengthen as a result of improved market conditions, although S&P does not anticipate such an improvement over the near term. IFLOOR INC: Gets Initial Approval to Use Square 1 Cash Collateral ----------------------------------------------------------------- The Deal's Mike Schoeck reports that the Hon. Philip H. Brandt of the United States Bankruptcy Court for the Western District of Washington authorized iFloor Inc. to use, on the interim basis, cash collateral from Square 1 Bank of Seattle owed $4.5 million in prepetition debt. Mr. Schoeck says the debtor must begin making adequate protection payments to the bank. In addition, the Court has entered two orders to ensure that the Debtor would begin making monthly payments to its utilities companies, Mr. Schoeck relates. Another court order guaranteed the Debtor to begin making payment to temporary personnel on Dec. 12, 2008, for its next $56,000 monthly payroll, he adds. A hearing is set for Dec. 31, 2008, to consider final approval of the motion, Mr. Schoeck notes. Headquartered in Tukwila, Washington, iFLOOR, Inc. sells floor- related products. The company filed for Chapter 11 protection on December 4, 2008 (Bankr. W.D. Wash. Case No. 08-18376). Mark D. Northrup, Esq., at Graham & Dunn PC, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed assets between $1 million and $10 million, and debts between $10 million and $50 million. IFLOOR INC: Blames Bankruptcy on Weakening Economy -------------------------------------------------- Internetretailer.com reports that that iFloor, Inc., has filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Western District of Washington. iFloor said in a statement that it has been hurt by the economy, particularly the decline in the housing and remodeling industries. iFloor, according to Internetretailer.com, said that it has attempted in recent months to cut operating expenses and find new funding sources. iFloor posted on its Web site that it will be clearing out inventory over the next several days and that more than $2 million in inventory will be sold. Tukwila, Washington-based iFLOOR, Inc. -- http://www.ifloor.com/- - filed for Chapter 11 protection on Dec. 4, 2008 (Bankr. W. D. Wash. Case No. 08-18376). Mark D. Northrup, Esq., at Graham & Dunn PC represents the company in its restructuring effort. The company listed assets of $1,000,000 to $10,000,000 and debts of $10,000,000 to $50,000,000. INVESTMENT EQUITY: Files First Plan of Reorganization ----------------------------------------------------- Investment Equity Holdings, LLC submitted to the U.S. Bankruptcy Court for the District of Arizona on Dec. 8, 2008, its First Plan of Reorganization and First Disclosure Statement explaining its First Plan of Reorganization. Plan Funding The Debtor's original plan when it purchased an undeveloped 30 acre property fronting the 101 freeway in Glendale, Arizona, between 83rd and Bell Road across from the Arrowhead Town Center, was to develop a 100,000 square foot office condominium development project, featuring three two-story buildings and had named this project Palm Canyon Business Park. With the decline of the real estate market coupled with the failure of banks to make loans to buyers, the Debtors recognized that the highest and best use of the property was to develop it into an entertainment center entitled Palm Canyon as described in the Plan of Reorganization. A "Family Fun Center Park" would utilize a portion of the subject property. Wave House Development, who utilizes proprietary technology to create waves for surfing and other water sports and activities in theme parks and other commercial areas, is currently in discussions with the Debtor to lease approximately half of the Debtor's property for them to construct their facilities. Debtor has retained Technical Solutions to complete the re-zoning of the property from PAD to C-2 which is estimated to take 4 to 6 months. The Debtor also has had discussions with the City of Glendale who it says has shown great interest in the project. Debtors believes this re-zoning will increase the value of the property. Pursuant to the Plan, Home National Bank, the first lien holder on the property, will be paid in cash within 30 days of re-zoning of the property. Potential investors have been invited to acquire a percentage of interest or a percentage thereof, in the reorganized debtor. These proceeds, in conjunction with the Property's revenues will provide the necessary funds to Debtor to pay creditors under the Plan. Classification and Treatment of Claims Class 1, which consist of all claims for the cost of administration of the Debtor's bankruptcy estate, will be paid 100%, in cash. Class 2, which consist of allowed claims arising under Sec. 507(a)(3) and (4) including claims for wages and vacation pay earned by employees of the Debtor within 90 days before the filing of the bankruptcy petition, will be paid 100%, in cash. Class 3, which consist of all allowed claims of the United States Internal Reveue Service, the State of Arizona, Department of Revenue and the Department of Economic Security, City of Tucson or other government agency which are entitled to priority pursuant to 507(a)(7) of the Bankruptcy Code except ad valorem taxes, shall retain its lien or claim, in accordance with Sec. 1129 of the Bankruptcy Code. The claim shall bear simple interest at a fixed rate. Any Class 3 Claims shall be paid within 30 days of the completion of the re-zoning of the property. Class 4, which consist of prepetition allowed Secured Ad Valorem Real Property Tax Claims of Maricopa County will be paid within 60 days of completion of the re-zoning of the property. Class 6, which consists of the allowed secured claim of Home National Bank, will be paid within 30 days of completion of the re-zoning of the property. Class 7, which consists of the allowed secured claim of Investment Equity Development of Arizona to the extent of the value of the secured creditor's interest in the Debtor's interest in real property, shall be paid the full amount of its allowed claim within 60 days of the completion of the re-zoning of the property. Class 8, which consist of all unsecured claims against the Debtor, shall be paid in an amount equal to 100% of their allowed claims within 180 days of the completion of the re-zoning of the property. Class 9, which consists of the Debtor's equity holders, will retain their current percentage of interest or a portion thereof by becoming participating investors. They shall be allowed to contribute to the substantial capital required to fund the Plan or make capital improvements for the Debtor as allowed by the Debtor's Board of Directors. Class 10, which consist of claims of all contingent, unliquidated and disputed claims, shall receive no distribution under the Plan. Class 11, which consists of the claims of participating investors, may be required to contribute substantial capital to fund the Plan or make capital improvement to the subject property. Classes 1 and 2, which are unimpared under the Plan, are authomatically deemed to have accepted the Plan. Class 3 through 11 are impaired. The Debtor has not included a Cash Flow projection or Sources and Uses of Cash as the Debtor proposed to pay all secured claims within 60 days of the re-zoning of the property. Post-Confirmation Management The reorganized Debtor will continue to be managed by Dale Dowers and David Inman. A full-text copy of the First Plan of Reorganization is available for free at: http://researcharchives.com/t/s?360b A full-text copy of the First Disclosure Statement explaining the First Plan of Reorganization available for free at: http://researcharchives.com/t/s?360c About Investment Equity Headquartered in Las Vegas, Nevada, Investment Equity Holdings, LLC operates a real estate business. The company filed for Chapter 11 protection on Sept. 9, 2008 (Bankr. D. Ariz. Case No. 08-11956). Eric Slocum Sparks, Esq., at Eric Slocum Sparks PC, reresents the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed total assets of $13,000,000, and total debts of $9,561,514. ISATIS INTERNATIONAL: Case Summary & 4 Largest Creditors -------------------------------------------------------- Debtor: Isatis International, Inc dba Pacific Coast Inn P.O. Box 1620 La Jolla, CA 92038 Case No.: 08-12545 Chapter 11 Petition Date: December 8, 2008 Court: U.S. Bankruptcy Court Southern District of California (San Diego) Judge: Louise DeCarl Adler Debtor's Counsel: Thomas C Nelson, Esq. 550 West C Street, Suite 1850 San Diego, CA 92101 Tel: (619) 236-1245 Email: Tom@tcnlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Debtor's 4 largest unsecured creditors is available for free at: http://bankrupt.com/misc/casb08-12545.pdf KB TOYS: Case Summary & 40 Largest Unsecured Creditors ------------------------------------------------------ Debtor: KB Toys, Inc. aka See Annex A 100 West Street Pittsfield, MA 01201 Bankruptcy Case No.: 08-13269 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- KB Toys of Massachusetts, Inc. 08-13270 KB Toys Retail, Inc. 08-13271 KB Toys Gift Cards, Inc. 08-13272 KB Toys Puerto Rico, Inc. 08-13273 KB Toys Merchandising, Inc. 08-13274 Creative Innovations & Sourcing HK, Inc. 08-13275 Creative Innovations & Sourcing, LLC 08-13276 KB Holdings, LLC 08-13277 Related Information: The Debtors operates a chain of retail toy stores. On Jan. 14, 2008, the Debtor and 69 of its affiliates filed for protection under Chapter 11 of the Bankruptcy Code, which were administratively consolidated under Case No. 04-10120. Two of the 200 bankruptcy cases remain open, KB Toys Inc. and KB Toy of Massachusetts Inc. In connection with the emergence of KB Toys from bankruptcy in August 2005, and the subsequent organizational restructuring, the assets and operations of may of these prior debtors were transferred among then existing debtor entities and consolidated with KB Toys Group. Furthermore, most of the entities involved were either dissolved or were merged into surviving entities, and several of them changed their names. As a result, nine Debtors and four inactive special purpose units which are not debtors. See: http://www.kbtoys.com/ Chapter 11 Petition Date: December 11, 2008 Court: District of Delaware (Delaware) Judge: Kevin J. Carey Debtor's Counsel: Joel A. Waite, Esq. Matthew Barry Lunn, Esq. bankfilings@ycst.com Young, Conaway, Stargatt & Taylor LLP The Brandywine Bldg. 1000 West Street, 17th Floor P.O. Box 391 Wilmington, DE 19899-0391 Tel: (302) 571-6600 Fax: (302) 571-0453 Debtors' Co-Counsel: Wilmer Cutler Pickering Hale and Dorr LLP Financial and Restructuring Advisor: FTI Consulting Inc. Claims and Noticing Agent: Epiq Bankruptcy Solutions, LLC Estimated Assets: $100 million to $500 million Estimated Debts: $100 million to $500 million The petition was signed by president and chief executive officer Andrew Bailen. The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Li & Fung Toy Island trade-foreign $27,204,977 Manufacturing consolidation Attn: Eddie Chan 1/F Hong Kong Spinners Inc. 800 Cheung Sha Wan Road Kowloon, Hong Kong China Tel: 011-852-2300-5555 Fax: 011-852-2300-5786 Mattel Toys trade $1,292,351 Attn: Kathleen Simpson Taylor MI-1204 333 Continental Boulevard El Segundo, CA 90245 Tel: (310) 252-4223 Fax: (310) 252-2860 Energizer Battery trade $728,127 Attn: Jody McMackin 533 Maryville University Dr. St. Louis, MO 63141 Fax: (856) 772-0884 WorkflowOne non trade $672,060 Attn: Theresa PO Box 644108 Pittsburg, PA 15264 Fax: (920) 661-4010 Legends LP trade $435,521 Hasbro Inc. (Milton Bradley) trade $424,625 HBG New Jersey LLC rent warehouse $414,311 Lego Systems Inc. trade $374,702 JA-RU Inc. trade $336,414 TMP International trade $334,508 SVG Distribution Inc. trade $333,499 Publications International trade $313,355 Ltd. JJ Bean Inc. trade $226,456 Mattel Brands trade $200,769 Hasbro Inc. (Kenner) trade $186,550 Gamers Factory Inc. trade $177,625 Goffa International trade $153,347 Corporation Cokem International trade $146,964 Windsor Marketing Corp. non trade $126,262 advertising United States Playing Cards trade $123,839 Croy & Associates trade $123,270 Crayola LLC trade $122,193 Mega Brands America trade $115,472 Skullduggery Inc. trade $111,381 C&F Worldwide Agency Corp. non-trade $109,021 Mattel Sales (Radica) trade $108,118 Kids Only Inc. trade $100,927 Lisa Frank Inc. trade $99,548 Metro Tech non trade $98,670 Sakar International trade $93,535 Toy Invest/Toy Smith trade $91,877 Imperial Toy Corporation trade $89,811 Finn Dixon & Herling LP legal $89,419 Moore Wallace non trade $88,726 Spin Masters Inc. trade $87,970 Mattel Sales Corp. (Arco) trade $87,177 Trends International Inc. trade $83,589 K'Nex Limited Partnership trade $83,121 Group Tru Company Inc. trade $80,058 Bang Zoom non trade $75,000 KB TOYS: Files for 2nd Chapter 11 Protection; To Start GOB Sales ---------------------------------------------------------------- Peg Brickley at The Wall Street Journal reports that KB Toys, Inc., has filed for bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware, after exiting from a prior Chapter 11 case three years ago. WSJ relates that KB Toys was hurt by declining sales. WSJ relates that KB Toys first filed for Chapter 11 protection in 2004 under that ownership of Boston private equity investor Bain Capital, whom unsecured creditors accused of improperly draining cash from the company in a dividend recapitalization deal. According to the report, two lawsuits involving the recapitalization arrangement were settled. Court documents show that more than $27 million in litigation settlements went into the coffers of the first KB Toys Chapter 11 case in the fourth quarter of 2006, when creditors who had dropped a lawsuit against Bain Capital in Massachusetts canceled a bankruptcy court motion involving the lawsuit. WSJ states that about half of the original KB Toys outlets were closed during its first bankruptcy case, which started in 2004. Prentice Capital Management Inc., according to WSJ, acquired the remaining stores for $20 million, and said that it would try to revive the operation. Court documents say that Prentice Capital owns almost 90% of KB Toys. WSJ states that the rest of KB Toys is property of a trust set up to find money for creditors who weren't paid in the first bankruptcy proceeding. A part of the new KB Toys was set aside in a trust for creditors to give them a chance at improving their recovery if the company did well, the report says. WSJ reports that under the first Chapter 11 reorganization plan, toy makers and other unsecured creditors would get less than 10 cents on the dollar of what they were owed, but KB Toys' new bankruptcy filing brings doubt on the value of the portion of the creditor recovery that depends on the success of the new KB Toys. KB Toys said in court documents that it wants to start with going- out-of-business sales at hundreds of its stores right away "to take advantage of the last two weeks of the holiday selling season." KB Toys, according to WSJ, has 277 stores located primarily in shopping malls, along with 40 KB Toy Works stores in strip malls. Court documents say that the company runs 114 outlet stores and 30 temporary "holiday stores." WSJ states that KB Toys operates wholesale distribution business, Creative Innovations and Sourcing LLC, and which court documents say would also go up for sale. WSJ relates that KB Toys owes: -- $65 million on loans to first-lien lenders, -- $30 million on letters of credit to the first-lien group, and -- $95 million to second-lien lenders. KB Toys hired Wilmer Cutler Pickering Hale & Dorr and Young Conaway Stargatt & Taylor as its bankruptcy counsel, the same law firms that represented the company in its first restructuring effort, WSJ states. About KB Toys Headquartered in Pittsfield, Massachusetts, KB Toys Inc. -- http://www.kbtoys.com/-- is a combined mall-based and online specialty toy retailer. The company and its affiliates operate a chain of retail toy stores. KEANE INTERNATIONAL: Moody's Cuts Corporate Family Rating to 'B2' ----------------------------------------------------------------- Moody's Investors Service lowered Keane International Inc.'s corporate family rating to B2 from B1. Simultaneously, Moody's also lowered the ratings on the company's senior secured credit facilities to B2 from B1. The ratings downgrade reflects the company's weaker than expected financial performance resulting in weaker credit metrics and expectations of continued pressure on revenues and profitability in a weak macro economic environment. The company has experienced decline in revenues and EBITDA over the last twelve months and has significantly underperformed its budget. The integration of legacy Keane with Caritor has been challenging and the expected revenues and profitability improvement has not materialized. Keane's B2 CFR reflects the company's modest size and low profitability, as measured by its pretax income and asset returns, its financial strength, as measured by its high financial leverage and moderate interest coverage, and its business profile, as measured by its client concentration. The rating is constrained by Moody's expectation that Keane will continue to experience pressure in its revenues and profitability due to continued weakness and uncertainty in the overall macro environment, which could curb end-market demand for the company's services offerings among financial institution customers and prospects. The rating is supported by Keane's good market position with comprehensive service offerings and a balanced near-shore / off-shore strategy in a large IT services market and its good liquidity profile. The stable rating outlook reflects Moody's expectation that the company will be able to continue to generate positive free cash flow and maintain good liquidity. These ratings are lowered: -- Corporate Family Rating to B2 from B1 -- Probability of Default Rating to B2 from B1 -- $50 million revolving credit facility (due 2013) to B2, LGD 3, 46% from B1, LGD 3, 48% -- $45 million synthetic letter of credit facility (due 2013) to B2, LGD 3, 46% from B1, LGD 3, 48% -- $600 million first lien term loan (due 2013) to B2, LGD 3, 46% from B1, LGD 3, 48% The previous rating action occurred on April 20, 2007 when Moody's assigned Keane B1 CFR and assigned a B1 rating to the company's first lien credit facilities ($600 million term loan, $50 million revolving credit facility, and $45 million synthetic letter of credit facility). Headquartered in San Ramon, California, Keane International, Inc., is an IT services firm specializing in application management / maintenance, application development / integration and business process outsourcing services for enterprise customers in various industry verticals. The company reported revenues of $974 million for the twelve months ended September 2008. LA REINA: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------- Debtor: La Reina, Inc., 316 North Ford Blvd Los Angeles, CA 90022 Case No.: 08-31458 Chapter 11 Petition Date: December 10, 2008 Court: U.S. Bankruptcy Court Central District Of California (Los Angeles) Judge: Ernest M. Robles Debtor's Counsel: Marc J Winthrop, Esq. 660 Newport Center Dr Ste 400 Newport Beach, CA 92660 949-720-4100 Email: pj@winthropcouchot.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Debtor's 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/cacb08-31458.pdf LEHMAN BROTHERS: Neuberger Sale Valued at $1.2 Billion ------------------------------------------------------ Lehman Brothers Holdings Inc.'s sale of its investment-management division is valued at about $1.2 billion in stock, Bloomberg News said, citing two people familiar with the transaction. As reported by yesterday's Troubled Company Reporter, LBHI will seek approval of the sale of its investment management unit, including Neuberger Berman, at a hearing before the U.S. Bankruptcy Court for the Southern District of New York on Dec. 22, 2008, at 10:00 a.m. LBHI and NBSH Acquisition, LLC, an entity formed by executives at Neuberger Berman, won the bidding for LBHI's investment management unit, beating other competing bids including the joint bid by stalking-horse bidder Bain Capital Partners and Hellman & Friedman, who were paid $52 million as a result of the termination of their deal. A copy of the NBSH Asset Purchase Agreement is available for free at http://bankrupt.com/misc/Lehman_NB_APA.pdf Martin Bienenstock, Esq., at Dewey & LeBoeuf, which represents certain creditors of Lehman, said LBHI was forced to give up Neuberger Berman in a cash-less transaction because the unit was eroding value. "Neuberger management received the deal of a lifetime by obtaining 51 percent of the common stock for no cash, because that will take control of Neuberger away from the Lehman bankruptcy," Mr. Bienenstock said, in a telephone interview with Bloomberg. The NBSH APA provides that LBHI will receive $813.8 million in new dividend-paying preferred shares, plus common stock representing a 49% stake in the business. Executives of Neuberger, will own the remaining 51% stake. At the closing, NBSH will issue: -- to LBHI 93% of the preferred shares and all of the class A shares, representing 49% of the total common shares. -- to the executives 7% of the referred shares and all Class B shares, representing 51% of the total common shares. "Our team has stayed together, with turnover of about 2 percent, during an extraordinary time," George Walker, chief executive officer of Neuberger Investment management, said in an e-mailed statement, according to Bloomberg. "Our people are enthusiastic about the future of this firm." 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 Sept. 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. 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. On Sept. 19, 2008, the Honorable Gerard E. Lynch, Judge of the United States District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act in the case captioned Securities Investor Protection Corporation v. Lehman Brothers Inc., Case No. 08-CIV- 8119 (GEL). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI 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. Nomura Holdings Inc., the largest brokerage house in Japan, on Sept. 22 reached an agreement to purchased Lehman Brothers Holdings, Inc.'s operations in Europe and the Middle East less than 24 hours after it reached a deal to buy Lehman's operations in the Asia Pacific for US$225 million. Nomura paid only $2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. 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 Sept. 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 Sept. 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 Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., <http://bankrupt.com/newsstand/>or 215/945-7000). LENDINGCLUB CORP: Sept. 30 Balance Sheet Upside Down by $11.5 Mil. ------------------------------------------------------------------ As of September 30, 2008, LendingClub Corporation's balance sheet showed total assets of $15,116,781, total liabilities of $11,444,154, total preferred stock of $15,204,287, and total stockholders' deficit of $11,531,660. In a regulatory filing with the Securities and Exchange Commission, Renaud Laplanche, chief executive officer, and Richard G. Castro, vice president for finance and administration, relate certain conditions that raise substantial doubt about the company's ability to continue as a going concern. "To strengthen our financial position, on September 29, 2008, we completed a $4.1 million equity financing round, and $1.0 million of our convertible notes were converted into equity," Messrs. Laplanche and Castro said. "The company has incurred operating losses since its inception. For the three and six months ended September 30, 2008 and 2007, the company incurred a net loss of $3.3 million, $7.1 million, $1.6 million and $2.7 million, respectively. For the six months ended September 30, 2008 and 2007, the company had negative cash flow from operations of $4.4 million and $2.6 million, respectively. Additionally, as of September 30, 2008, the company had an accumulated deficit of $14.9 million since inception." "Since its inception, the company has financed its operations through debt and equity financing from various sources. The company is dependent upon raising additional capital or seeking additional debt financing to fund its current operating plans for the foreseeable future. Failure to obtain sufficient debt and equity financing and, ultimately, to achieve profitable operations and positive cash flows from operations could adversely affect the company's ability to achieve its business objectives and continue as a going concern. Further, there can be no assurance as to the availability or terms upon which the required financing and capital might be available." A full-text copy of the company's Quarterly Report is available for free at: http://www.sec.gov/Archives/edgar/data/1409970/000136231008007657/c77698e10vq.htm About LendingClub Lending Club is an Internet-based social lending platform that enables its borrower members to borrow money and its lender members to purchase Member Payment Dependent Notes, the proceeds of which fund loans made to individual borrower members. LIBERTY MEDIA: S&P Keeps 'BB+' Corp. Credit Rating; Outlook Neg. ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on Englewood, Colorado-based Liberty Media Corp., including the 'BB+' corporate credit rating and removed them from CreditWatch, where they were placed with negative implications, on Sept. 4, 2008. The rating outlook is negative. The previous CreditWatch listing was prompted by Liberty Media's plan to distribute businesses and assets attributed to Liberty Entertainment to existing tracking stock holders. Liberty Entertainment is the tracking stock issued by Liberty Media to mirror the performance of its interest in DIRECTV Group Inc. and Starz Entertainment LLC. Subsequently, Liberty Media announced that the split-off of Liberty Entertainment is being postponed due to adverse conditions in the stock and credit markets. S&P believes that the split-off is likely to be postponed beyond the first quarter of 2009, or possibly indefinitely. "The 'BB+' rating is based on management's aggressive and shareholder-favoring financial strategy," said S&P's credit analyst Andy Liu. "This is somewhat mitigated by the company's large equity portfolio and the long-term solid business prospects of its majority owned and wholly owned operations." Liberty Media consists of wholly owned subsidiaries QVC Inc. and Starz Entertainment LLC, important stakes in DIRECTV Group Inc., HSN Inc., IAC/InterActiveCorp, and Expedia Inc., and a portfolio of less strategic, minority equity investments and developing businesses. The holding company assets include investments in Time Warner Inc., Sprint Nextel Corp., Motorola Inc., Viacom Inc., Ticketmaster, and Tree.com Inc. QVC and Starz represent the core of Liberty Media's wholly owned businesses amid several start-up entertainment holdings. This relatively narrow base of operations is augmented by the company's portfolio of high quality investments, concentrated in shares of Time Warner Inc. (BBB+/Watch Neg/A-2), IAC/InterActiveCorp (BB/Stable/--), Expedia Inc. (BB/Stable/--), and Viacom Inc. (BBB/Negative/A-2). For the 12 months ended Sept. 30, 2008, total debt to EBITDA was high, at 10.2x. Liberty was very active in repurchasing its own shares, often using debt as the funding source, which has been the key reason for escalating leverage. Based on the state of the credit markets, Liberty Media is beginning to shift its attention toward reducing debt leverage and maturities over the next two to three years. S&P believes that a meaningful portion of Liberty Media's discretionary cash flow will be directed toward debt repayment over the next two to three years and that it could de- lever somewhat as a result. Most recently in mid November, Liberty Media completed a cash tender for a portion of its 8.5% senior debentures due 2029 and 8.25% senior debentures due 2030. LOANCARE'S RESI: Fitch Downgrades Residential Servicer Ratings -------------------------------------------------------------- Fitch Ratings has downgraded LoanCare Servicing Center, Inc.'s U.S. residential primary servicer ratings: -- Residential primary specialty subservicer rating to 'RPS4' from 'RPS2-'; -- Residential primary prime servicer rating to 'RPS4' from 'RPS3'. The ratings are also placed on Rating Watch Evolving. The servicer rating actions reflect the change in financial condition of LoanCare's parent, LandAmerica Financial Group. On Nov. 26, 2008, Fitch downgraded the long-term Issuer Default Rating of LFG to 'D' from 'B' following LFG's announcement that it would be seeking Chapter 11 bankruptcy protection. The rating actions also reflect Fitch's concern regarding the potential impact on servicing operations of continued pressure on LoanCare's financial flexibility in the increasingly challenging residential mortgage market. A company's financial condition is an important component of Fitch's servicer rating analysis. However, this is somewhat mitigated by the fact that LoanCare, as a subservicer, does not have the advancing responsibilities of a typical primary servicer. The Rating Watch Evolving indicates that further rating actions are possible depending upon the stability of LoanCare's financial condition, servicing portfolio and operational capabilities, as well as the outcome of any potential acquisition. Fitch will continue to monitor LoanCare's financial condition and servicing operations. In addition, Fitch plans to perform its annual operational review of LoanCare's servicing platform in the first quarter of 2009 and will provide further commentary, as appropriate. LOUISIANA PACIFIC: Moody's Cuts Corporate Family Rating to 'Ba3' ---------------------------------------------------------------- Moody's Investors Service has downgraded Louisiana Pacific Corporation's corporate family rating to Ba3 from Ba2 concluding a review for possible downgrade initiated on November 4, 2008. At the same time, Moody's lowered the ratings on the senior unsecured notes to Ba3 from Ba2. LP's speculative grade liquidity rating was affirmed at SGL-3 and the rating outlook is negative. The downgrade reflects the company's weakened financial position and the expectation that the company will continue to face challenging industry conditions over the next 12 to 18 months. The company's weakened credit protection metrics are in part due to the severity of the slump in demand and prices for the company's principal product -- oriented strand board. OSB prices have remained around industry average cash cost since mid 2006 owing to the severe downturn in new residential construction at a time when additional OSB production capacity was coming on-line. Moody's do not anticipate any significant improvement in the near term and believe OSB pricing will remain depressed until the industry capacity utilization rate increases significantly. The company's credit protection metrics continue to lag the company's rating and the company remains challenged with its volatile cash flow stream, its relatively modest size, and lack of product and geographic diversification. A material portion of LP's previously sizeable cash and short-term investments have been applied towards funding negative cash flows and the company has some near term debt maturities. LP's credit profile is supported by its market-leading OSB franchise and the positive long term industry fundamentals as OSB continues to take market share from plywood due to its relative production cost advantage. LP has good geographic coverage to support national and regional builders and the company generates substantial free cash flow in strong OSB pricing environments. With approximately 40% of its assets located in Canada, LP's financial performance is also influenced by the volatile Canadian dollar. Downgrades: Issuer: Louisiana-Pacific Corporation -- Probability of Default Rating, Downgraded to Ba3 from Ba2 -- Corporate Family Rating, Downgraded to Ba3 from Ba2 -- Senior Unsecured Regular Bond/Debenture, Downgraded to Ba3 from Ba2 -- Senior Unsecured Shelf, Downgraded to (P)Ba3 from (P)Ba2 Outlook Actions: Issuer: Louisiana-Pacific Corporation -- Outlook, Changed To Negative From Rating Under Review Confirmations: Issuer: Louisiana-Pacific Corporation -- Senior Unsecured Regular Bond/Debenture, Confirmed at LGD4, 58% The company's speculative grade liquidity rating was affirmed at SGL-3 reflecting anticipated adequate liquidity over the next 12 months. The liquidity rating reflects the company's reduced cash position, projected continuing cash burn over the next several quarters and limited committed external liquidity sources. The company's primary source of liquidity is its cash balance that stood at approximately $300 million on September 30, 2008. LP's liquidity profile also reflects the potential for alternate liquidity through the sale of assets. In addition, the company is expecting a tax refund of approximately $80 million in 2009. Although LP is taking measures to preserve cash, the ongoing cash needs to fund its operations continue to deplete the company's liquidity. The negative outlook reflects continued pressure on LP's debt protection measurements given the prospects for a protracted weak OSB pricing environment. Should financial results deteriorate from expected levels, or should the company's liquidity arrangements become impaired, LP's ratings may be lowered. The outlook is likely to remain negative until OSB pricing and the company's credit protection metrics improve. Moody's last rating action was on November 4, 2008, when LP's ratings were put on review for possible downgrade. Headquartered in Nashville, Tennessee, Louisiana-Pacific Corporation is a leading manufacturer and distributor of wood based building materials, and is North America's largest producer of OSB. The company has approximately 24% and 15% market share for OSB and structural panels, respectively. MDWERKS INC: Stockholders OK Amendment to COI, Elect Directors -------------------------------------------------------------- MDwerks, Inc., disclosed in a regulatory filing with the Securities and Exchange Commission the stockholders approved an amendment to Article 4 of the Certificate of Incorporation of the company to increase the authorized number of shares of common stock, par value $0.001 per share, of the company from 100 million shares to 200 million shares. At the Oct. 29, 2008, Special Meeting, the stockholders also approved an amendment to Section 1 of Article I of the company's Bylaws to appropriately reflect the name of the company as MDwerks, Inc. and an amendment to Section 2 of Article II of the company's Bylaws to change the date of the annual meeting of the company to May 31 of each year or the other date as the board of directors determines. The stockholders also elected these people to serve on the board of directors and on these committees: -- Howard B. Katz, chairman of the board of directors -- David M. Barnes, director, audit committee chairman and compensation committee chairman -- Peter Dunne, director and compensation committee member -- Paul Kushner, director and audit committee member -- Shad Stastney, director -- Chris Phillips, director -- Sheldon Steiner, director The stockholders also ratified the appointment of Sherb & Co., LLP, as the independent registered public accounting firm for the company for the fiscal year ended Dec. 31, 2008 and for the 2009 quarterly SEC reports. About Mdwerks Inc. Based in Deerfield Beach, Florida, MDwerks Inc. (OTC BB: MDWK) -- http://www.mdwerks.com/-- provides healthcare professionals with automated electronic insurance claims management solutions and advance funding of medical claims. Going Concern Doubt As reported in the Troubled Company Reporter on Oct. 23, 2008, Sherb & Co., LLP, in Boca Raton, Florida, expressed substantial doubt about MDwerks Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's recurring losses from operations. Revenues have not been significant enough to support the company's daily operations. Management may need to raise additional funds by way of a public or private offering and make strategic acquisitions. MDWERKS INC: Inks Loan and Securities Purchase Deal with Lender --------------------------------------------------------------- Mdwerks Inc. and its subsidiary Xeni Financial Services, Corp., entered into a Loan and Securities Purchase Agreement with Debt Opportunity Fund LLLP, pursuant to which DOF will lend the company up to $10,300,000, subject to a deduction for an original issue discount of 2%. The proceeds from the loan from DOF will be used to purchase medicinal preparations prescription workers' compensation claims from a prospective new client, pursuant to a claims assignment agreement. The claims assignment agreement is being negotiated and the prospective new client and there can be no assurance that the negotiations will result in a definitive agreement. Until the time as the claims assignment agreement and documents related to the claims assignment agreement are executed, and certain other conditions set forth in the Loan Agreement are satisfied, other than $300,000 disbursed to MDwerks for working capital purposes, the proceeds of the loan from DOF will be held in an escrow account. In the event the conditions to the disbursement of the funds in the escrow account are not satisfied on or before Dec. 8, 2008, all proceeds in the escrow account will be returned to DOF. Pursuant to the Loan Agreement, the company issued a Senior Secured Promissory Note, dated Nov. 14, 2008, to DOF in the original principal amount of $10,300,000. The DOF Note bears interest at the rate of 13% per annum and is payable monthly, in arrears on the first day of each month, commencing on Dec. 1, 2008. Interest will not begin to accrue on amounts held in the escrow account, until the time as those amounts are disbursed to the company. Principal payments in the monthly amount of $150,000 commence on June 1, 2009, and, subject to events of default specified in the Loan Agreement, the entire amount of principal and accrued but unpaid interest due under the note becomes due and payable on Nov. 14, 2010. To the extent the balance of the loan is not disbursed to the company on or before Dec. 8, 2008, DOF will surrender the DOF Note for cancellation and the company and XFS will reissue a new note in the principal amount actually received. In connection with the Loan Agreement and the financing provided under the Loan Agreement, the company, and each of its subsidiaries and DOF entered into security agreements, dated Nov. 14, 2008, pursuant to which the company and its subsidiaries granted a security interest to DOF in substantially all of its assets. Each of its subsidiaries also entered into a guaranty agreement to guaranty all obligations under the Loan Agreement and documents entered into in connection with the Loan Agreement. As partial consideration for the loan provided by DOF the company issued to DOF a ten-year Series J Warrant to purchase 9,339,816 shares of its common stock at a price of $1.00 per share. In the event the balance of the loan is not disbursed to the company on or before Dec. 8, 2008, DOF will surrender the Series J Warrant for cancellation. To date, no update on the matter was provided by the company. In connection with the issuance of the Series J Warrant, the company and DOF entered into a registration rights agreement, dated Nov. 14, 2008, pursuant to which, among other things, the company granted piggyback registration rights to DOF for the Series J Warrant. A full-text copy of agreements and instruments entered into in connection with the transaction is available for free at http://ResearchArchives.com/t/s?3608 About Mdwerks Inc. Based in Deerfield Beach, Florida, MDwerks Inc. (OTC BB: MDWK) -- http://www.mdwerks.com/-- provides healthcare professionals with automated electronic insurance claims management solutions and advance funding of medical claims. Going Concern Doubt As reported in the Troubled Company Reporter on Oct. 23, 2008, Sherb & Co., LLP, in Boca Raton, Florida, expressed substantial doubt about MDwerks Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's recurring losses from operations. Revenues have not been significant enough to support the company's daily operations. Management may need to raise additional funds by way of a public or private offering and make strategic acquisitions. MDWERKS INC: Posts $9MM Net Loss Nine Month ended September 30 -------------------------------------------------------------- MDwerks Inc. reported financial results for three and nine months ended Sept. 30, 2008. For three months ended Sept. 30, 2008, the company reported net loss of $2,605,510 compared to net loss of 2,184,840 for the same period in the previous year. For the nine months ended Sept. 30, 2008, the company incurred net loss of $9,374,052 compared to net loss of $7,259,932 for the same period in the previous year. Liquidity and Capital Resources The company used the proceeds from the sales of preferred stock through Sept. 30, 2008, and proceeds from notes and loans payable for working capital purposes and to fund its notes receivable of $1,466,977 and accounts receivable of $841,887 owed to the company at Sept. 30, 2008. The company will continue to advance funds under note agreements to providers that subscribe to its financial services lending solutions. The company believes it has sufficient funds and prospective business activity to conduct its business and operations as they are currently undertaken for the next 12 months. While the company is attempting to attain revenue growth and profitability, the growth has not been significant enough to support the company's daily operations. Management may need to raise additional funds by way of a public or private offering and make strategic acquisitions. While the company believes in the viability of its strategy to improve sales volume and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the company to continue as a going concern is dependent on the company's ability to further implement its business plan and generate revenue. The company also disclosed that it currently have no material commitments for capital expenditures. At Sept. 30, 2008, the company has cash of $664,605. MDwerks Inc.'s balance sheet at Sept. 30, 2008, showed total assets of $5,950,271, total liabilities of $5,600,729 and stockholders' equity of $349,542. A full-text copy of the 10-Q filing is available for free at http://ResearchArchives.com/t/s?3609 About Mdwerks Inc. Based in Deerfield Beach, Florida, MDwerks Inc. (OTC BB: MDWK) -- http://www.mdwerks.com/-- provides healthcare professionals with automated electronic insurance claims management solutions and advance funding of medical claims. Going Concern Doubt As reported in the Troubled Company Reporter on Oct. 23, 2008, Sherb & Co., LLP, in Boca Raton, Florida, expressed substantial doubt about MDwerks Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's recurring losses from operations. Revenues have not been significant enough to support the company's daily operations. Management may need to raise additional funds by way of a public or private offering and make strategic acquisitions. MERRILL LYNCH: Fitch Junks Ratings on $39.8 Mil. Class G Notes -------------------------------------------------------------- Fitch Ratings downgrades one class of Merrill Lynch Mortgage Investors, Inc.'s commercial mortgage pass-through certificates, series 1996-C2: -- $39.8 million class G to 'CC' from 'B-'; Distressed Recovery rating of 'DR3' assigned. Fitch upgrades and assigns a Rating Outlook to this class: -- $34 million class F to 'AAA' from 'AA'; Outlook Stable. In addition, Fitch affirms this class: -- Interest only class IO at 'AAA'; Outlook Stable. Fitch does not rate the $1.9 million class H. Classes A-1 through E have paid in full. The rating downgrade is the result of two loans in special servicing, including the largest remaining loan which transferred to special servicing in November 2008, and the high level of Fitch Loans of Concern (39.9%). The upgrade of class F is due to the transaction paying down 12.5% since Fitch's last rating action and the resulting increase in credit enhancement levels. Rating Outlooks reflect the likely direction of any rating changes over the next one to two years. As of the November 2008 distribution date, the pool's aggregate certificate balance has decreased 93.3% to $75.8 million from $1.1 billion at issuance. Realized losses to date to the non-rated class total $32.2 million. The largest loan (19.6%) transferred to special servicing in November 2008 for imminent default. The loan is collateralized by a 672-unit limited service hotel property in Orlando, Florida. The property lost the Best Western flag in February 2008 and is now an Econo Lodge. The reported year-end 2007 debt service coverage ratio was 0.78 times. The second specially serviced asset (4.8%) is a 367-unit hotel property located in Kissimmee, Florida. The hotel has been experiencing cash flow declines since 2001 due to the over- saturation of the Orlando hotel market. Reported YE 2007 occupancy was occupancy was 60%. In addition to the two specially serviced loans, Fitch has identified seven other loans (15.5%) as Fitch Loans of Concern, which includes the specially serviced loans and those loans with low debt service coverage ratio and declining occupancies. The largest Loan of Concern (4.9%) not specially serviced is secured by a 138-unit multifamily property located in Grand Rapids, Michigan. The property has suffered a severe decline in occupancy, with YE 2007 reported occupancy of 68.8% from 87.7% in 2006. Fitch is also concerned about the increasingly concentrated nature of this pool, with 27 loans currently remaining. The pool also has high exposure to Florida, which represents 37.8% of the pool. Of the remaining loans, 45.8% are fully amortizing. MERRILL LYNCH: Moody's Cuts Ratings on 14 Certificate Classes ------------------------------------------------------------- Moody's Investors Service has downgraded 15 tranches from 3 Jumbo transactions issued by Merrill Lynch in 2006 and 2007. The collateral backing these transactions consists primarily of first-lien, fixed and adjustable-rate, prime Jumbo mortgage loans. The actions are triggered by higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to currently available credit enhancement levels. The actions listed below reflect Moody's revised expected losses on the Jumbo sector announced in a press release on September 18, and are part of Moody's on-going review process. Moody's final rating actions are based on current ratings, level of credit enhancement, collateral performance and updated pool- level loss expectations relative to current level of credit enhanacement. Moody's took into account credit enhancement provided by seniority, cross-collateralization, time tranching, and other structural features within the Aaa waterfalls. General loss estimation methodology is outlined below. Complete rating actions are: Issuer: Merrill Lynch Mortgage Backed Securities Trust 2007-2 -- Cl. I-A1 Certificate, Downgraded to Aa3; previously on 10/6/2008 Aaa Placed Under Review for Possible Downgrade -- Cl. I-A2 Certificate, Downgraded to Ba3; previously on 10/6/2008 Aaa Placed Under Review for Possible Downgrade -- Cl. X-A Certificate, Downgraded to Aa3; previously on 10/6/2008 Aaa Placed Under Review for Possible Downgrade Issuer: Merrill Lynch Mortgage Investors Trust 2006-F1 -- Cl. I-A1 Certificate, Downgraded to Ba3; previously on 10/6/2008 Aaa Placed Under Review for Possible Downgrade -- Cl. I-A2 Certificate, Downgraded to Ba3; previously on 10/6/2008 Aaa Placed Under Review for Possible Downgrade -- Cl. I-A3 Certificate, Downgraded to Ba1; previously on 10/6/2008 Aaa Placed Under Review for Possible Downgrade -- Cl. I-A4 Certificate, Downgraded to Ba3; previously on 10/6/2008 Aaa Placed Under Review for Possible Downgrade -- Cl. I-A6 Certificate, Downgraded to Ba3; previously on 10/6/2008 Aaa Placed Under Review for Possible Downgrade -- Cl. I-A7 Certificate, Downgraded to Ba3; previously on 10/6/2008 Aaa Placed Under Review for Possible Downgrade -- Cl. I-A8 Certificate, Downgraded to Ba3; previously on 10/6/2008 Aaa Placed Under Review for Possible Downgrade -- Cl. IO Certificate, Downgraded to Ba3; previously on 10/6/2008 Aaa Placed Under Review for Possible Downgrade -- Cl. PO Certificate, Downgraded to Ba3; previously on 10/6/2008 Aaa Placed Under Review for Possible Downgrade Issuer: Merrill Lynch Mortgage Investors Trust MLCC 2006-1 -- Cl. I-A Certificate, Downgraded to Aa2; previously on 3/13/2006 Assigned to Aaa -- Cl. II-A-1 Certificate, Downgraded to Aa2; previously on 3/13/2006 Assigned to Aaa -- Cl. II-A-2 Certificate, Downgraded to Aa2; previously on 3/13/2006 Assigned to Aaa Moody's calculates estimated losses for Jumbo RMBS in a two-stage process. First, serious delinquencies are projected through late 2009, primarily based upon recent historical performance. These projected delinquencies are converted into projected losses using lifetime roll rates (the probability of transition to default) averaging 40% for 60-day delinquencies, 75% for delinquencies greater than 90 days, and 90-100% for foreclosure or REO, and severity assumptions averaging 35%. The second step is to determine losses for the remaining life of the deal, following the projection period. Depending on a deal's performance, including delinquency, default, and prepayment rates, as well as collateral characteristics, such as loan type (fixed or adjustable), or loan-to-value ratios and geographic concentrations of remaining current loans, Moody's assumes varying degrees of slowing in the loss rate (which is measured by loss-to- liquidation) for the remaining life of the deal. Typical degrees of slowing in loss rate after late 2009 range from no slowing at all to 40% slowing. To take an example, a deal with very poor early performance due to relatively high loan-to-value ratios and dropping regional home values would be expected to see markedly high delinquency and loss rates for the next year. But the high rate of losses may be expected to slow afterwards, as economic factors and real estate values begin to stabilize, and a slowing of 20-40% may be used in the projection. On the other hand, a deal with stronger early performance that is demonstrating relative resiliency in the current market environment may not be expected to have high losses in the near-term, but may be expected to sustain a similar level of losses for the life of the deal, as the pool continues to be subject to factors that have more historically driven prime performance such as borrower life events, unemployment, and so on. Loss estimates are subject to variability and, as a result, realized losses could ultimately turn out higher or lower than Moody's current expectations. Moody's will continue to evaluate performance data as it becomes available and will assess the pattern of potential future defaults and adjust loss expectations accordingly if necessary. MHP SA: Moody's Assigns Corporate Family Rating of 'B3' ------------------------------------------------------- Moody's Investors Service has assigned a B3 corporate family rating to MHP S.A., the ultimate holding company for the MHP group, and withdrew the B2 CFR of OJSC Myronivsky Hliboproduct, the key Ukrainian operating company of the group. At the same time, Moody's downgraded the rating of MHP's senior unsecured notes, totaling USD250 million and due 2011, to B3 from B2. Moody's assigned a Baa2.ua national scale rating to MHP S.A. and withdrew the A2.ua national scale rating of Myronivsky Hliboproduct. The outlook on the ratings is stable. Moody's rating action reflected that MHP S.A. had taken the role of the ultimate holding company for the MHP group from Myronivsky Hliboproduct and was in fact a reassignment of the global scale CFR and NSR ratings from the latter to the former, with the ratings of Myronivsky Hliboproduct withdrawn. The actual downgrade of the ratings and that of MHP S.A.'s notes, which actually accompanied the reassignment, was prompted by the depreciation of the Ukrainian local currency, which has been significant so far, and worsening economic environment in Ukraine. In this environment, given its foreign currency denominated debt, MHP's ability to manage its leveraged position and covenant compliance could be challenged going forward. However, despite the challenging conditions of which the company has no control, the rating also recognizes a certain level of cushion built to up as a result of the company's successful April- May 2008 IPO, strong operating performance in 2008 and completion of a large part of the planned investment programme. Moody's notes that MHP's liquidity is currently adequate when factoring anticipated cash-flow generation. At the end of Q3 2008, the company's dollar-denominated current accounts and short- term bank deposits of USD84.3 million and additionally available USD- and EUR-denominated unused credit facilities of USD30.3 million exceeded its short-term debt of USD88.7 million. Moody's also positively notes the company's flexibility regarding its capex programme, which can be significantly reduced and/or delayed. Reasonably required capex associated with the completion of the Myronivka project is estimated at approximately USD80 million, which accounts for about 50% of the company's 2009 capex plan. Moody's acknowledges MHP's strong operational performance and improvements in the financial metrics since the beginning of the year. The company's EBITA margins increased to approximately 30%. According to Moody's estimates based on the company's preliminary 9M 2008 results (but taking into account the depreciation of the currency), the adjusted leverage is likely to be below 3x on an LTM basis, with EBIT/Interest expected to be at least 2.5x, even if calculated based on the current exchange rate of the local currency. But for currency risk, these ratios would be more in line with a higher rating. MHP benefits from its leading position in the Ukrainian market, low costs supported by the vertical integration of its business, and the government's subsidies. However, in the medium term, the company's cash flow generation ability could be affected by a potentially weakening demand for its products due to worsening economic conditions, though this risk has not yet materialized. A continued material depreciation of the local currency, undermining the company's financial flexibility, could result in a downgrade of the outlook and the ratings. More broadly, a material deterioration in the company's operating and financial performance in the challenging economic environment could also result in a negative pressure on the ratings. More broadly Moody's would expect the company to continue managing its liquidity position; cap its leverage around debt to EBITDA at 2.5x in 2009 on an on-going basis and adjust its capex programme to the changing market environment. MHP is also expected to develop in line with its business strategy and have an EBITA margin of around 20%. The last rating action was implemented on 4 April 2007, when Moody's assigned Loss Given Default Assessments in EMEA for speculative-grade corporate families, including MHP. MHP's debt ratings remained unchanged with the implementation of Moody's Loss Given Default and Probability of Default rating methodology. The principal methodology used in rating MHP was Moody's Global Natural Product Processors - Protein and Agriculture Rating Methodology. MHP S.A. is domiciled in Luxemburg. It is the ultimate holding company for the MHP group of companies, which largely consist of OJSC Myronivsky Hliboproduct, headquartered in Kyiv, Ukraine, and its subsidiaries. MHP is one of the leading agro-industrial integrated businesses in Ukraine, focusing on branded poultry production. MHP's 2007 revenues from continuous operations were UAH2,412.1 million (approximately USD477.6 million), with the poultry and related operations segment contributing around 80.5%, including 59.4% from sales of chicken meat. MICHAEL VICK: Creditors Balk at Disclosure Statement ---------------------------------------------------- Larry O'Dell at The Associated Press reports that Michael Vick's major creditors have filed an objection on his disclosure statement, claiming that it lacks sufficient detail about the debtor's finances and prospects of returning to the National Football League. As reported by the Nov. 19 issue of the Troubled Company Reporter, Mr. Vick submitted to the U.S. Bankruptcy Court for the Eastern District of Virginia a Chapter 11 plan and a disclosure statement explaining the plan. Under the plan, Mr. Vick will pay creditors from his assets and earnings if he is reinstated by the NFL. The AP relates that Mr. Vick is earning 12 cents an hour at the federal penitentiary in Leavenworth, where he is serving a 23- month term for bankrolling a dogfighting ring. Mr. Vick, according to The AP, was once the highest-paid NFL player. The AP relates that Mr. Vick is scheduled to be released from federal custody around July 20, 2009. Mr. Vick, The AP states, submitted a disclosure statement that listed real estate holdings, luxury cars and boats, business interests, bank accounts, and expenses to support a large extended family. The statement, according to the report, also showed millions in unexplained cash withdrawals and transfers over the last two years. According to the AP, the creditors said that Mr. Vick's papers list: -- $1.1 million in transfers authorized by a former associate, -- $1 million marked as "cash out miscellaneous," and -- almost $2.3 million in transfers between his accounts. The AP quoted the creditors as saying, "With such large sums of the Debtor's money unaccounted for, it would be impossible for the Debtor's disclosure statement to contain 'adequate information' regarding his finances." The creditors, The AP states, said that without better information, it is impossible to determine if they should vote for or against Mr. Vick's reorganization plan. Mr. Vick, according to The AP, assured in his disclosure statement that upon his release, he will be reinstated into the NFL, resume his career and be able to earn a substantial living. The report states that Mr. Vick's plan for paying his debts depends on his return to pro football. According to the report, the creditors wanted more assurance. According to The AP, a hearing for the confirmation of the reorganization plan will be held on Jan. 15, 2009. The AP states that the creditors committee consists of: -- Atlanta Falcons, -- Royal Bank of Canada, -- Wachovia Bank, -- 1st Source Bank, and -- Radtke Sports. Joel Enterprises Inc., another major creditor, filed its own objection to Mr. Vick's disclosure statement, The AP reports. Michael Vick filed for Chapter 11 protection on July 7, 2008 (Bankr. E.D. Va. Case No. 08-50775). Dennis T. Lewandowski, Esq., and Paul K. Campsen, Esq., at Kaufman & Canoles, P.C., represent Mr. Vick in his bankruptcy case. Mr. Vick listed assets of $16.1 million and debts of $20.4 million in his bankruptcy filing. MICHAELANGELO GONZALEZ: Case Summary & 20 Largest Creditors ----------------------------------------------------------- Debtor: Michaelangelo Gonzalez aka Mike Gonzalez aka Michael Gonzalez aka Michaelangelo Dalusung Gonzalez aka Michael D Gonzalez 1915 Myra Ave Los Angeles, CA 90027 Case No.: 08-31481 Chapter 11 Petition Date: December 10, 2008 Court: U.S. Bankruptcy Court Central District Of California (Los Angeles) Judge: Alan M. Ahart Debtor's Counsel: James S. Yan, Esq. 980 S Arroyo Pkwy Ste 250 Pasadena, CA 91105 626-405-0872 Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Debtor's 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/cacb08-31481.pdf NETVERSANT SOLUTIONS: Section 341(a) Meeting Set for December 29 ---------------------------------------------------------------- The U.S. Trustee for Region 3 will convene a meeting of creditors of NetVersant Solutions Inc. and its debtor-affiliates on Dec. 29, 2008, at 2:00 p.m., at Caleb Boggs Federal Building, 844 King Street, 5th floor, Room 5209 in Wilmington, Delaware. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. About NetVersant Solutions Headquartered in Houston, Texas, NetVersant Solutions, Inc. -- http://www.netversant.com/-- provides wireless network infrastructure services. The company also provides an array of voice, video and data communication services. The company and 20 of its affiliates filed for Chapter 11 protection on Nov. 19, 2008, (Bankr. D. Del. Lead Case No. 08-12973). Daniel B. Butz, Esq., and Gregory W. Werkheiser, Esq., at Morris, Nichols, Arsht & Tunnell, represents the Debtors in their restructuring efforts. The Debtor selected Porter & Hedges LLP as local counsel. When they filed for protection from their creditors, they listed assets and debts between $100 million and $500 million each. NETVERSANT SOLUTIONS: U.S. Trustee Forms 3-Member Creditor Panel ---------------------------------------------------------------- Roberta A. DeAngelis, the United States Trustee for Region 3, appointed three creditors to serve on an Official Committee of Unsecured Creditors for NetVersant Solutions Inc. and its debtor- affiliates. The creditors committee members are: 1) Anixter, Inc. Attn: Thomas L. Wuich Director of Credit and Risk Management 2301 Patriot Blvd. Glenview, IL 60026 Tel: (224) 521-8412 Fax: (224) 521-8542. 2) Westcon Group North America, Inc. Attn: Susan Joseph Assistant General Counsel, 520 White Plains Rd. Tarrytown, NY 10591 Tel: (914) 924-1994 Fax: (914) 829-7161. 3) Sprint Solutions, Inc. Attn: Juliette Morrow Campbell Bankruptcy Specialist 10002 Park Meadows Dr. Lone Tree, CO 80124 Tel: (720) 206-3689 Fax: (877) 816-1663 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtor is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. About NetVersant Solutions Headquartered in Houston, Texas, NetVersant Solutions, Inc. -- http://www.netversant.com/-- provides wireless network infrastructure services. The company also provides an array of voice, video and data communication services. The company and 20 of its affiliates filed for Chapter 11 protection on Nov. 19, 2008, (Bankr. D. Del. Lead Case No. 08-12973). Daniel B. Butz, Esq., and Gregory W. Werkheiser, Esq., at Morris, Nichols, Arsht & Tunnell, represents the Debtors in their restructuring efforts. The Debtor selected Porter & Hedges LLP as local counsel. When they filed for protection from their creditors, they listed assets and debts between $100 million and $500 million each. NETVERSANT SOLUTIONS: Court Approves Sale Bidding Procedures ------------------------------------------------------------ The Hon. Peter J. Walsh of the United States Bankruptcy for the District of Delaware approved bidding procedures for the sale of substantially all assets of NetVersant Solutions Inc. and its debtor-affiliates. All bids for the Debtors' assets must be submitted by Dec. 15,2008, at 4:00 p.m. An auction will take place at the offices of Morris, Nichols, Arsht & Tunnel LLP at N. Market St., 18th floor in Wilmington, Delaware, on Dec. 17, 2008, at 10:00 a.m., followed by a sale hearing on Dec. 19, 2008, at 9:30 a.m. The Debtors told the Court that the sale of their assets would relieve their business of their current substantial debt and other liabilities. The implementation of these operational changes enable their business to be profitable, the Debtor said. The sale is expected to close by Jan. 16, 2009. About NetVersant Solutions Headquartered in Houston, Texas, NetVersant Solutions, Inc. -- http://www.netversant.com/-- provides wireless network infrastructure services. The company also provides an array of voice, video and data communication services. The company and 20 of its affiliates filed for Chapter 11 protection on Nov. 19, 2008, (Bankr. D. Del. Lead Case No. 08-12973). Daniel B. Butz, Esq., and Gregory W. Werkheiser, Esq., at Morris, Nichols, Arsht & Tunnell, represents the Debtors in their restructuring efforts. The Debtor selected Porter & Hedges LLP as local counsel. When they filed for protection from their creditors, they listed assets and debts between $100 million and $500 million each. NEUMANN HOMES: Antioch Village Wants FDCM to Comply With Deal ------------------------------------------------------------- The village of Antioch asks the U.S. Bankruptcy Court for the Northern District of Illinois to compel Fidelity and Deposit Company of Maryland to comply with their prior stipulation. The court-approved stipulation, which was signed together with Neumann Homes, Inc., requires FDCM to construct public infrastructure for the benefit of Antioch residents. The stipulation is part of the Debtors' agreement with Antioch for implementing a housing project known as NeuHaven. Attorney for Antioch, Lawrence Moelmann, Esq., at Hinshaw & Culbertson, in Chicago, Illinois, says FDCM violated the terms of their stipulation when it failed to respond to the demand of the Village to perform its duties under the bonds, including Bond No. 08779406 dated March 3, 2005 in the amount of $1,692,722. Under the stipulation, FDCM was required to respond in writing without delay when the Village issued the demand by: (1) agreeing to pay the penal limit of the bonds, which would constitute a complete discharge of FDCM's obligations under the bond for which the penal sum is paid; (2) denying all or part of its obligations under the bonds and stating the reason for the denial; or (3) agreeing to make arrangements to complete the construction of the public infrastructure. Mr. Moelmann informs the Court that FDCM's attorneys, after several calls and emails, advised the Village that it would pay the full amount of Bond No. 08779406, but would deny the claim on Bond No. 08661009 dated January 27, 2003, on grounds that it had been placed by the other bond. FDCM also stated that it would provide a release to Antioch that would be exchanged for the payment of $1,692,722 on Bond No. 08779406. FDCM subsequently sent a letter dated Sept. 25, 2008, to the Village in response to the demand, imposing a condition that the Village must first exhaust the proceeds from the special service area bonds allocated to NeuHaven before FDCM pay the sum of Bond No. 08779406 for the cost of building the public infrastructure. The letter also stated that the cost is $3,125,000, which exceeds the penalty for Bond No. 08779406. Mr. Moelmann points out that FDCM's response acknowledged that it has liability under Bond No. 08779406 and that the losses would likely exceed the penalty for the bond. He notes that FDCM's response is contrary to its prior statement that it would pay the Village the full penal sum of the bond. FDCM's response is also contrary to the stipulation and agreed order, which does not give the option to FDCM of acknowledging liability under the bond while withholding any payment under the bond until the SSA funds are exhausted, Mr. Moelmann adds. "In the event of a valid claim under Bond No. 08779406, [FDCM] only had the option of making arrangements for completion of all or part of the public improvements up to the limits of the bond or by paying the penal limit of Bond No. 08779406," he maintains. The Village thus urges the Court to direct FDCM to immediately comply with the stipulation and pay the remaining limit of Bond No. 08779406, which is $1,092,722, in exchange for a release from the Village. "Because of current economic conditions, including the decreased tax base . . . Antioch does not have funds to complete the public improvements in NeuHaven, some of which are necessary for the safety and welfare of the residents of NeuHaven," Mr. Moelmann says. FDCM Responds FDCM contends that the Village's obligation to exhaust the SSA funds first is not a newly imposed condition. The Village agreed in 2003 that upon default by Neumann Homes, it would exhaust the SSA funds first, Cornelius Riordan, Esq., at Riordan McKee & Piper, in Chicago, Illinois, tells the Court on behalf of FDCM. Mr. Riordan notes that the stipulation also provides that in case the Village completed the construction, it would be paid from the SSA proceeds and funds from the surety. The use of SSA funds is not a condition imposed by FDCM, but an obligation freely assumed by the Village, Mr. Riordan elaborated, adding that FDCM fully expected the Village to honor its commitment to use the SSA funds to build the infrastructure in NeuHaven when it signed the stipulation. The Village only has the right, but not the obligation, to complete the construction under the Agreement. Neumann Homes and FDCM have the obligation to construct the public improvements. If FDCM chose the option of constructing the public improvements, then it could submit request to draw upon the SSA funds in accordance with the rights held by Neumann Homes, Mr. Moelmann says. He adds that neither Neumann Homes nor FDCM has the right to the SSA funds unless it completes the construction. About Neumann Homes Headquartered in Warrenville, Illinois, Neumann Homes Inc. -- http://www.neumannhomes.com/-- develops and builds residential real estate throughout the Midwest and West US. The company is active in the Chicago area, southeastern Wisconsin, Colorado, and Michigan. The company has built more than 11,000 homes in some 150 residential communities. The company offers formal business training to employees through classes, seminars, and computer- based training. The company filed for Chapter 11 protection on Nov. 1, 2007 (Bankr. N.D. Ill. Case No. 07-20412). George Panagakis, Esq., at Skadded, Arps, Slate, Meagher & Flom L.L.P., was selected by the Debtors to represent them in these cases. The Official Committee of Unsecured Creditors has selected Paul, Hastings, Janofsky & Walker LLP, as its counsel in these bankruptcy proceeding. When the Debtors filed for protection from its creditors, they listed assets and debts of more than $100 million. (Neumann Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000) NEUMANN HOMES: Court Lets BofA Foreclose on Sky Ranch Property -------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois authorized Bank of America, as successor-in-interest to LaSalle Bank National Association, to foreclose on a deed of trust on a real property owned by Debtor Sky Ranch, LLC. The Property, a 932-acre vacant land in Denver, Colorado, serves as collateral for the $17,400,000 loan Sky Ranch obtained from LaSalle Bank in 2005. Bank of America agree to take the responsibility of preserving and maintaining the Property or appointing a receiver to do the task. BofA will reimburse the Debtors $16,672 for the costs they incurred in maintaining and disposing the Property. BofA also disclaim any interests in refunds of cash bonds and prepaid permit fees previously furnished by the Debtors to certain municipalities in connection with their housing projects. John Robert Weiss, Esq., at Duane Morris LLP, in Chicago, Illinois, had argued that the proposed foreclosure is warranted since LaSalle Bank's interest in the property is not protected. "[Sky Ranch] owns no other assets or collateral against which it could provide additional or replacement liens. It cannot otherwise provide LaSalle with the indubitable equivalent of the impairment of the bank's interest in the collateral," Mr. Weiss pointed out. About Neumann Homes Headquartered in Warrenville, Illinois, Neumann Homes Inc. -- http://www.neumannhomes.com/-- develops and builds residential real estate throughout the Midwest and West US. The company is active in the Chicago area, southeastern Wisconsin, Colorado, and Michigan. The company has built more than 11,000 homes in some 150 residential communities. The company offers formal business training to employees through classes, seminars, and computer- based training. The company filed for Chapter 11 protection on Nov. 1, 2007 (Bankr. N.D. Ill. Case No. 07-20412). George Panagakis, Esq., at Skadded, Arps, Slate, Meagher & Flom L.L.P., was selected by the Debtors to represent them in these cases. The Official Committee of Unsecured Creditors has selected Paul, Hastings, Janofsky & Walker LLP, as its counsel in these bankruptcy proceeding. When the Debtors filed for protection from its creditors, they listed assets and debts of more than $100 million. (Neumann Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000) NEW YORK TIMES: In Talks With Lenders Over Coming Debt Payments --------------------------------------------------------------- Russell Adams and Shira Ovide at The Wall Street Journal relate that The New York Times Co. said that it is negotiating with lenders about debts maturing in 2009 and 2010. WSJ relates that The NY Times has a $400 million credit facility that expires in May 2009, and another of the same amount expiring in 2011. According to WSJ, The NY Times executives said that they expect to secure the financing to meet those obligations. The NY Times' chief financial officer James Follo said that the company won't replace the full debt that expires in May because it won't need all of it, WSJ states. The NY Times plans to borrow less in 2009, which The NY Times described as "among the most challenging years we have faced," WSJ says. The Guardian relates that The NY Times will sell or mortgage its headquarters to raise about $225 million. According to The Guardian, The NY Times wants to take out a mortgage on its Manhattan headquarters, in which it owns a 58% stake, or sell and lease it back. The NY Times, says The Guardian, is also considering other financing, as well as the sale of assets, a share issue, or bringing in new private investors. The Guardian relates that The NY Times could sell About.com, which could be worth about $500 million. According to the report, The NY Times said that it would cut capital expenditure to $80 million in 2009 from $140 million this year. About New York Times The New York Times Co. operates as a diversified media company in the United States. It operates in two segments, News Media and About Group. The company was founded in 1896. As reported in the Troubled Company Reporter on Dec. 4, 2008, The NY Times cut its quarterly dividend by 74%, as part of an effort to conserve cash. The NY Times said that it took steps to lower debt and increase liquidity, including reevaluating its assets. The NY Times has laid off employees, merged sections of the NY Times and Globe to reduce printing costs, and consolidated New York area printing plants this year. NY Times has $46 million in cash and about $1.1 billion of debt. EDGE METAL: Ch. 7 Trustee Has $16,500 Bid for Personal Property --------------------------------------------------------------- The Chapter 7 Trustee overseeing the liquidation of The Edge Metal Systems Inc. wants to sell all of the Debtor's right, title and interest in (1) all tangible personal property housed at the site of the Debtor's former business located at 101 Brick Kiln Road in Chelmsford, Mass. and (2) all intellectual property belonging to the Debtor. The sale is subject to approval by the Bankruptcy Court. A hearing in Worcester is scheduled on December 30, 2008, at 10:30 a.m. Counteroffers of at least $16,500 must be filed with the Bankruptcy Court and served on the Chapter 7 Trustee (together with a $5,000 deposit) so as to be received no later than December 29, 2008 at 12:00 noon. The Debtor's assets available for inspection upon request by contacting Gina M. Barbieri at (508)791-8500. The Edge Metal Systems Inc. sought chapter 11 protection (Bankr. D. Mass. Case No. 06-42098) on October 6, 2006, and converted to a chapter 7 proceeding sometime thereafter. A copy of the Debtor's chapter 11 petition is available at no charge at <http://bankrupt.com/misc/mab06- 42098.pdf>http://bankrupt.com/misc/mab06-42098.pdf OEM/ERIE: Plan Administrator Settles Jamestown Container's Claim ---------------------------------------------------------------- UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA In re: ) ) Bankruptcy No. 07-11344 JAD O.E.M./ERIE, INC., ) ) Chapter 11 Debtor. ) _______________________________) Related to Document ) Nos. 344 & 345 James A. Schaffner, Plan ) Administrator, Movant, ) Date & Time of Hearing: v. ) December 2, 2008 at 1:30 p.m. Jamestown Container Corp., ) Respondent. ) CERTIFICATE OF NO OBJECTION REGARDING MOTION FOR ORDER APPROVING SETTLEMENT AND COMPROMISE WITH JAMESTOWN CONTAINER CORP. The Quinn Law Firm hereby certifies that: 1. On November 4, 2008, O.E.M./Erie, Inc. by James A. Schaffner as Plan Administrator filed a Motion for Order Approving Settlement and Compromise with Jamestown Container Corp. (the "Motion") with the Bankruptcy Court. 2. Pursuant to the Order dated November 6, 2008, and responsive pleading to the Motion were to be filed with the Court on or before November 25, 2008. 3. The deadline for filing a responsive pleading to the Motion has passed, and no responsive pleading to the Motion has been filed or served upon the undersigned counsel. Respectfully submitted, Michael P. Kruszewski, Esq. QUINN, BUSECK, LEEMHUIS, TOOHEY & KROTO, INC. 2222 West Grandview Boulevard Erie, Pennsylvania 16506-4508 Telephone: 814-833-2222 Facsimile: 814-833-6753 OFFICE DEPOT: Will Close 112 Underperforming Stores --------------------------------------------------- Office Depot, Inc., disclosed in a filing with the Securities and Exchange Commission on Dec. 9, 2008, that it will close 112 underperforming retail stores in North America over the next three months, reducing the North American store base to 1,163. The store closures are part of the strategic review Office Depot disclosed on Oct. 29, 2008. The stores to be closed are located in various geographic regions, including 45 in the Central U.S., 40 in the Northeast and Canada, 19 in the West and eight in the South. Additionally, 14 stores will be closed through 2009 as their leases expire or other lease arrangements are finalized. New store openings for 2009 now have been reduced to approximately 20, down from the previous estimate of 40 stores. This will facilitate a reduction in total company capital spending in 2009 to less than $200 million, significantly lower than projected depreciation and amortization of $275 million. Office Depot also plans to close six of its 33 distribution facilities in North America. This is consistent with the Company's long term plan to reduce the total number of facilities and combine its separate supply chain systems. Office Depot anticipates taking charges in the fourth quarter 2008 and in 2009 for these actions totaling in a range from $270 million to $300 million. The cash component of these charges is projected to be approximately $40 million over the next 12 months and is comprised of continuing lease payments on closed stores; and severance for store, headquarters and field sales staffing; partially offset by cash received for liquidated inventory and assets. The remaining non-cash and future cash charges of approximately $230 million to $260 million are comprised principally of fixed asset write-offs and lease reserves on closed stores. These actions should benefit 2009 EBIT and cash flow by approximately $90 million and $70 million respectively. The benefit to cash flow is primarily a result of lower 2009 capital spending, payroll savings, and operational improvements from store closures. Further actions are being considered and are expected to result in additional charges to be recognized in the fourth quarter of 2008 and into 2009. These actions include the assessment of tangible and intangible assets, including the annual goodwill evaluation, and potentially restructuring businesses. Will Sell Stores in to Gordon Brothers On Dec. 9, 2008, Office Depot entered into an Agency Agreement with Gordon Brothers Retail Partners, LLC, for the sale of inventory from 112 Office Depot stores in the United States and Canada which the company plans to close. The Agreement provides that the sale will commence on Dec. 10, 2008, and be completed on or before March 28, 2009, although the completion date may be extended by mutual agreement of the parties. Pursuant to the Agreement, Office Depot will receive guaranteed minimum proceeds of approximately $50 million from Gordon Brothers, representing 77% of the aggregate cost value of the inventory. Gordon Brothers will sell the inventory through 106 Office Depot locations. As its agency fee Gordon Brothers will receive 5% of the cost value of the inventory. Office Depot will receive 80% of any additional net proceeds. Office Depot will receive the guaranteed minimum payment as the inventory is sold throughout the liquidation period. The company has the option to accelerate this payment upon the consent of the company's lenders to the granting of a first priority security interest in the inventory to Gordon Brothers. Until the guaranteed minimum is paid in full, Gordon Brothers will furnish to Office Depot an irrevocable letter of credit equal to the estimated guaranteed minimum plus a certain amount for expenses. About Office Depot Office Depot, Inc., based in Delray Beach Florida, is the second largest retailer of office supplies, with LTM September 2008 revenues of $15.1 billion and 1,275 retail locations in North America. As reported by the Troubled Company Reporter on Nov. 3, 2008, Moody's Investors Service placed Office Depot, Inc.'s Ba1 corporate family rating, Ba1 probability of default rating, and Ba2 senior note rating, on review for possible downgrade. The review is in response to continued softness in the company's operating performance through the third quarter of 2008. Office Depot's SGL-3 speculative grade liquidity rating was affirmed. ONE COMMUNICATIONS: S&P Keeps 'B-' Corporate Credit Rating ---------------------------------------------------------- Standard & Poor's Ratings Services said it revised the outlook on Burlington, Massachussetts-based competitive local exchange carrier One Communications Corp. to positive from developing. S&P has also affirmed all ratings, including the 'B-' corporate credit rating. Total debt outstanding as of Sept. 30, 2008, was approximately $554 million. "The outlook revision is based on our assessment that the company will maintain adequate cushion under its bank credit facility total leverage and interest coverage covenants," said Standard & Poor's credit analyst Allyn Arden. The former developing outlook incorporated our concern that the company might violate tightening debt covenants, but S&P now believe One's financial performance has been sufficient to obviate that near-term covenant concern. "However," added Mr. Arden, "operating performance has not improved sufficiently to warrant an upgrade at this time." PJC SANITATION: Case Summary & 12 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: PJC Sanitation Service, Inc. dba Ace Service 590 Atkins Avenue Brooklyn, NY 11208 Case No.: 08-48402 Chapter 11 Petition Date: December 10, 2008 Court: U.S. Bankruptcy Court Eastern District of New York (Brooklyn) Judge: Elizabeth S. Stong Debtor's Counsel: Chad B Friedman, Esq. Ravin Greenberg LLC 101 Eisenhower Parkway Roseland, NJ 07068 Tel: (973) 226-1500 Fax: (973) 226-6888 Email: cfriedman@ravingreenberg.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Debtor's 12 largest unsecured creditors is available for free at: http://bankrupt.com/misc/nyeb08-48402.pdf PLATINUM STUDIOS: Sept. 30 Balance Sheet Upside Down by $6.1 Mil. ----------------------------------------------------------------- Platinum Studios, Inc.'s balance sheet as of September 30, 2008, showed total assets of $3,085,515 and total liabilities of $9,281,428, resulting in total shareholders' deficit of $6,195,913. For the quarter ended September 30, 2008, the company posted a net loss of $1,248,042, on net revenues of $167,983. Scott Mitchell Rosenberg, chief executive officer and chairman of the board, and Brian Altounian, president, chief operating officer and principal financial and accounting officer, relate that the company has incurred significant losses, which have resulted in an accumulated deficit of $16,724,338 as of September 30, 2008. "The company plans to seek additional financing in order to execute its business plan, but there is no assurance the company will be able to obtain such financing on terms favorable to the company or at all. These items raise substantial doubt about the company's ability to continue as a going concern." The company has entered into operating leases having expiration dates through 2011 for real estate and various equipment needs, including office facilities, computers, office equipment and a vehicle. On July 10, 2006, the Company entered into an operating agreement for the lease of real property located in Los Angeles, California. The agreement has a five-year term, commencing September 1, 2006, and ending August 31, 2011. The Company has various non-cancelable leases for computers, software, and furniture, at a cost of $273,150 at September 30, 2008 and December 31, 2007. The capital leases are secured by the assets, which cannot be freely sold until the maturity date of the lease. Accumulated amortization for equipment under capital lease totaled $125,790 and $81,454 at September 30, 2008 and December 31, 2007. On September 9, 2008, Wells Fargo Equipment Finance, Inc. filed suit against the company in the California Superior Court, County of Los Angeles (Case No. SC099681). The lawsuit alleges that the company has failed to repay certain debts owed to Wells in a total amount of $61,286. On September 16, 2008, Wells filed an application for a Writ of Attachment in which Wells requested the attachment of the corporate assets of the Company. "If Wells prevails in its lawsuit, there is a possibility that it may take possession of some of the assets of the company and sell them. Such a sale may be at a discount to its current value and would diminish the assets of the Company. The company intends to vigorously defend itself against these allegations," Messrs. Rosenberg and Altounian relate. A full-text copy of the company's Quarterly Report is available for free at: http://www.sec.gov/Archives/edgar/data/1410132/000114090508000201/pdos_10-q9302008v3.htm About Platinum Studios Platinum Studios, Inc., controls a library consisting of more than 5,600 characters and is engaged principally as a comics-based entertainment company adapting characters and storylines for production in film, television, publishing and all other media. Platinum Studios, LLC, was formed and operated as a California limited liability company from its inception on November 20, 1996, through September 14, 2006. On September 15, 2006, Platinum Studios, LLC, filed with the State of California to convert Platinum Studios, LLC into Platinum Studios, Inc., a California corporation. This change to the Company structure was made in preparation of a private placement memorandum and common stock offering in October 2006. PRIME MORTGAGE: Moody's Downgrades Ratings on Two Cert. Classes --------------------------------------------------------------- Moody's Investors Service has downgraded 15 tranches from 2 Jumbo transactions issued by Prime Mortgage in 2006 and 2007. The collateral backing these transactions consists primarily of first-lien, fixed-rate, prime Jumbo mortgage loans. The actions are triggered by higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to currently available credit enhancement levels. The actions listed below reflect Moody's revised expected losses on the Jumbo sector announced in a press release on September 18th, and are part of Moody's on-going review process. Moody's final rating actions are based on current ratings, level of credit enhancement, collateral performance and updated pool- level loss expectations relative to current level of credit enhanacement. Moody's took into account credit enhancement provided by seniority, cross-collateralization, time tranching, and other structural features within the Aaa waterfalls. Issuer: Prime Mortgage Trust 2006-2 -- Cl. I-A1-1 Certificate, Downgraded to A1, previously on 10/6/08 Aaa Placed Under Review for Possible Downgrade -- Cl. I-A1-2 Certificate, Downgraded to A1, previously on 10/6/08 Aaa Placed Under Review for Possible Downgrade -- Cl. I-A1-3 Certificate, Downgraded to A1, previously on 10/6/08 Aaa Placed Under Review for Possible Downgrade -- Cl. I-A1-4 Certificate, Downgraded to A1, previously on 10/6/08 Aaa Placed Under Review for Possible Downgrade -- Cl. I-A1-5 Certificate, Downgraded to A1, previously on 10/6/08 Aaa Placed Under Review for Possible Downgrade -- Cl. I-A2-1 Certificate, Downgraded to A1, previously on 10/6/08 Aaa Placed Under Review for Possible Downgrade -- Cl. I-A2-2 Certificate, Downgraded to A1, previously on 10/6/08 Aaa Placed Under Review for Possible Downgrade -- Cl. II-A1-1 Certificate, Downgraded to A1, previously on 10/6/08 Aaa Placed Under Review for Possible Downgrade -- Cl. II-A2-1 Certificate, Downgraded to A1, previously on 10/6/08 Aaa Placed Under Review for Possible Downgrade -- Cl. X Certificate, Downgraded to A1, previously on 10/6/08 Aaa Placed Under Review for Possible Downgrade -- Cl. B-X Certificate, Downgraded to Baa2, previously on 10/6/08 Aa2 Placed Under Review for Possible Downgrade -- Cl. B-1 Certificate, Downgraded to Baa2, previously on 10/6/08 Aa2 Placed Under Review for Possible Downgrade -- Cl. B-2 Certificate, Downgraded to Ba3, previously on 4/4/08 A2 Placed Under Review for Possible Downgrade -- Cl. B-3 Certificate, Downgraded to B2, previously on 4/4/08 Baa2 Placed Under Review for Possible Downgrade Issuer: Prime Mortgage Trust 2007-1 -- Cl. A-3 Certificate, Downgraded to Aa2, previously on 10/6/08 Aaa Placed Under Review for Possible Downgrade Moody's calculates estimated losses for Jumbo RMBS in a two-stage process. First, serious delinquencies are projected through late 2009, primarily based upon recent historical performance. These projected delinquencies are converted into projected losses using lifetime roll rates (the probability of transition to default) averaging 40% for 60-day delinquencies, 75% for delinquencies greater than 90 days, and 90-100% for foreclosure or REO, and severity assumptions averaging 35%. The second step is to determine losses for the remaining life of the deal, following the projection period. Depending on a deal's performance, including delinquency, default, and prepayment rates, as well as collateral characteristics, such as loan type (fixed or adjustable), or loan-to-value ratios and geographic concentrations of remaining current loans, Moody's assumes varying degrees of slowing in the loss rate (which is measured by loss-to- liquidation) for the remaining life of the deal. Typical degrees of slowing in loss rate after late 2009 range from no slowing at all to 40% slowing. To take an example, a deal with very poor early performance due to relatively high loan-to-value ratios and dropping regional home values would be expected to see markedly high delinquency and loss rates for the next year. But the high rate of losses may be expected to slow afterwards, as economic factors and real estate values begin to stabilize, and a slowing of 20-40% may be used in the projection. On the other hand, a deal with stronger early performance that is demonstrating relative resiliency in the current market environment may not be expected to have high losses in the near-term, but may be expected to sustain a similar level of losses for the life of the deal, as the pool continues to be subject to factors that have more historically driven prime performance such as borrower life events, unemployment, and so on. Loss estimates are subject to variability and, as a result, realized losses could ultimately turn out higher or lower than Moody's current expectations. Moody's will continue to evaluate performance data as it becomes available and will assess the pattern of potential future defaults and adjust loss expectations accordingly if necessary. PROVIDENCE SERVICE: S&P Cuts Corporate Credit Rating to 'B-' ------------------------------------------------------------ Standard & Poor's Rating Services said that it removed its ratings on Tucson, Arizona-based Providence Service Corp. from CreditWatch, where they were placed with negative implications on Oct. 27, 2008. At the same time, S&P lowered its corporate credit rating on Providence to 'B-' from 'B+'. The outlook is negative. "The rating action is the result of materially weaker-than- expected performance since the initial rating about one year ago, and concerns with the company's liquidity position, including its ability to comply with debt covenants," said S&P's credit analyst Alain Pelanne. The low speculative-grade ratings on Providence continue to reflect its reliance on contracts with state and local agencies (some of which are capitated), its aggressive leverage, and the challenge of managing a recent and significant expansion into the niche industry of coordinating non-emergency transportation for Medicaid recipients. Since the acquisition of the company's NET segment, LogistiCare, use of its services under its capitated contracts has been much higher than initially expected, largely the result of high unemployment and fuel costs, leading to underperformance relative to expectations. Also, in the third quarter of 2008, the company recorded a $141 million asset impairment charge, mainly related to the goodwill recorded at the time of the LogistiCare acquisition. REDBEND PARTNERS: Case Summary & 40 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: RedBend Partners, L.P. 10 Faraday Irvine, CA 92618 Case No.: 08-18147 Debtor-affiliates filing separate Chapter 11 petitions: Affiliate Case Number --------- ----------- AH Foods Corporation 08-18155 Benton King, LLC 08-18154 LN Foods Corporation 08-18153 OrBreck, LLC 08-18151 Kingland, LLC 08-18150 MillBreck, LP 08-18148 DP Foods Corporation 08-18141 Chapter 11 Petition Date: December 9, 2008 Eight debtor-affiliates filed separate Chapter 11 cases on November 6, 2008: Affiliate Case Number --------- ----------- StarRibs North LP 08-17182 StarRibs South LP 08-17183 WhitTown Partners LP 08-17186 Imperial Smokehouse Partners 08-17187 DesertBreck LP 08-17188 OceanCountry Partners LP 08-17189 BlueOcean Partners LP 08-17190 Dogwood Partners LP 08-17192 HillBreck LP 08-17193 GilBreck LP 08-17194 PalmBreck LP 08-17195 Two debtor-affiliates filed separate Chapter 11 cases on November 7, 2008: Affiliate Case Number --------- ----------- Metro Border LP 08-17276 Metro Border LLC 08-17277 Four debtor-affiliates filed separate Chapter 11 cases on November 25, 2008: Affiliate Case Number --------- ----------- Breckenridge Foods Systems, I08-17777 River King LLC 08-17773 River King LP 08-17774 RSM-BFS Partners LP 08-17771 Court: U.S. Bankruptcy Court Central District Of California (Santa Ana) Judge: Theodor Albert Debtor's Counsel: Evan D. Smiley, Esq. Email: esmiley@wgllp.com Kyra E. Andrassy, Esq. Email: kandrassy@wgllp.com Weiland Golden Smiley Wang Ekvall & Strok LLP 650 Town Center Dr Ste 950 Costa Mesa, CA 92626 Tel: 714-966-1000 Fax: 714-966-1002 RedBend's Estimated Assets: $1,000,001 to $10,000,000 RedBend's Estimated Debts: $1,000,001 to $10,000,000 DP Food's Estimated Assets: $1,000,001 to $10,000,000 DP Food's Estimated Debts: $1,000,001 to $10,000,000 A list of RedBend's 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/cacb08-18147.pdf A list of DP Food's 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/cacb08-18141.pdf REFCO INC: Court Expunges $600 Mil. Claim by Former President ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York disallowed and expunged Claim Nos. 10479 and 10491 filed by former Refco Group Ltd. President Tone N. Grant, at the behest of Marc S. Kirschner, plan administrator for Refco Capital Markets, Ltd. As previously reported, Mr. Grant filed Claim No. 10479 and 10491, for $300,000,000 each, alleging fraud, misrepresentations or omissions to disclose material facts, indemnification and contribution for acts Mr. Grant had allegedly taken as an officer of the Debtors. Judge Robert Drain found that Mr. Grant's claims are inconsistent with the Debtors' books and records. Judge Drain also noted that Mr. Grant has not contested Mr. Kirschner's objection to the Claims. About Refco Inc. Headquartered in New York, Refco Inc. -- http://www.refco.com/ -- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The company has operations in Bermuda. The company and 23 of its affiliates filed for Chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported US$16.5 billion in assets and US$16.8 billion in debts to the Bankruptcy Court on the first day of its Chapter 11 cases. The Court confirmed the Modified Joint Chapter 11 Plan of Refco Inc. and certain of its Direct and Indirect Subsidiaries, including Refco Capital Markets, Ltd., and Refco F/X Associates, LLC, on Dec. 15, 2006. That Plan became effective on Dec. 26, 2006. Pursuant to the plan, RJM, LLC, was named plan administrator to reorganized Refco, Inc. and its affiliates, and Marc S. Kirschner as plan administrator to Refco Capital Markets, Ltd. (Refco Bankruptcy News, Issue No. 89; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) REFCO INC: Pacific Inks Preliminary Settlement w/ Sandler --------------------------------------------------------- Pacific Investment Management Company LLC and RH Capital Associates LLC, lead plaintiffs in the federal securities law class action styled In re: Refco Securities Litigation (S.D.N.Y) (Lynch, J.), sought the U.S. District Court for the Southern District of New York's preliminary approval of a settlement of the action, as against Sandler O'Neill & Partners, L.P. The Lead Plaintiffs also asked the District Court to certify the proposed class for the purpose of the Sandler Settlement. According to James Sabella, Esq., at Grant and Eisenhofer, P.A., in New York, Sandler and the Lead Plaintiffs have engaged in extensive arm's-length negotiations and agreed to a $3,500,000 settlement payment, subject to the District Court's approval. Mr. Sabella tells the District Court that the Settlement provides meaningful monetary benefits to the Settlement Class. The Lead Plaintiffs believe that Sandler bears responsibility for damages suffered by the Settlement Class, but it was not the most culpable among the defendants in the action, especially that Sandler's share of the Initial Public Offering underwriting was a mere 2.78%. Additionally, Mr. Sabella asserted that preliminary certification of a settlement is appropriate under Rule 23 of the Federal Rules of Civil Procedure. He maintains that the Settlement Class satisfies the prerequisites of Civil Rule 23(a) for these reasons: (1) The Settlement Class is sufficiently numerous; (2) There are common questions of law and effect; (3) The class representative's claims are typical of the claims asserted by the Settlement Class; and (4) The class representatives will fairly and adequately protect the interest of the class. He adds that the Settlement Class also satisfies the prerequisites of Civil Rule 23(b)(3) as: (1) Common legal and factual questions predominate; and (2) A class action is superior to other methods of adjudication. District Court Judge Gerard Lynch found that the Settlement provides a beneficial result for the Settlement Class, and accordingly approved the Sandler Settlement. Moreover, Judge Lynch granted preliminary certification to the Settlement Class for settlement purposes. He deferred the final consideration and approval of the Settlement, and scheduled a final hearing at a later date. About Refco Inc. Headquartered in New York, Refco Inc. -- http://www.refco.com/ -- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The company has operations in Bermuda. The company and 23 of its affiliates filed for Chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported US$16.5 billion in assets and US$16.8 billion in debts to the Bankruptcy Court on the first day of its Chapter 11 cases. The Court confirmed the Modified Joint Chapter 11 Plan of Refco Inc. and certain of its Direct and Indirect Subsidiaries, including Refco Capital Markets, Ltd., and Refco F/X Associates, LLC, on Dec. 15, 2006. That Plan became effective on Dec. 26, 2006. Pursuant to the plan, RJM, LLC, was named plan administrator to reorganized Refco, Inc. and its affiliates, and Marc S. Kirschner as plan administrator to Refco Capital Markets, Ltd. (Refco Bankruptcy News, Issue No. 89; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) REFCO INC: RCM Administrator Proposes to Pay Stilton Claims ----------------------------------------------------------- Marc S. Kirschner, the Plan Administrator for Refco Capital Markets, Ltd., and Stilton International Holdings Limited ask the U.S. Bankruptcy Court for the Southern District of New York to approve a stipulation resolving Stilton's Claim No. 9124 and the preference action bearing Case No. 1642, commenced by the RCM Plan Administrator against Stilton. The RCM Plan Administrator tells the Court that the parties have agreed to settle their dispute by entering a Settlement Agreement. The material terms of the Agreement are: (a) The Preference Action will settled for $12,900,000, to be paid by Stilton to the RCM estate; (b) Claim No. 9124 will be allowed as an RCM FX/Unsecured Claim for $54,000,000; (c) Stilton will have an allowed RCM FX/Unsecured Claim for $12,900,000; (d) Stilton will receive distributions with respect to the Allowed Stilton Claims, in the same level as the other allowed as an RCM FX/Unsecured Claimholders or 44.57%; (e) In view of a $14,212,800 reserved amount, in lieu of Stilton delivering new funds and the RCM Plan Administrator delivering a full Catch-Up Distribution, Stilton and the RCM Plan Administrator agree that: -- the Catch-Up Distribution due to Stilton will be $5,749,530; -- the Catch-Up will be offset against the Settlement Amount, leaving a net Settlement Amount of $7,150,470; -- the Net Settlement Amount will be offset against the Reserved Amount of $14,212,800, leaving a $7,062,330 net Reserved Amount due Stilton, and upon payment the balance of the Reserved Amount will be removed from the RCM Disputed Claims Reserve and become available for distribution under the RCM Settlement Agreement; (f) The parties exchange mutual releases from all claims and causes of action relating to Claim No. 9124; and (g) The Preference Action will be dismissed with prejudice and without costs assessed against any party, and the Second Distribution Order will also be dismissed or amended as no longer effective as to Stilton. Jared R. Clark, Esq., at Bingham McCutchen LLP, in New York, represents that the Stipulation is in the best interests of RCM, RCM's estate, and RCM's creditors, and should accordingly be approved. About Refco Inc. Headquartered in New York, Refco Inc. -- http://www.refco.com/ -- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The company has operations in Bermuda. The company and 23 of its affiliates filed for Chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported US$16.5 billion in assets and US$16.8 billion in debts to the Bankruptcy Court on the first day of its Chapter 11 cases. The Court confirmed the Modified Joint Chapter 11 Plan of Refco Inc. and certain of its Direct and Indirect Subsidiaries, including Refco Capital Markets, Ltd., and Refco F/X Associates, LLC, on Dec. 15, 2006. That Plan became effective on Dec. 26, 2006. Pursuant to the plan, RJM, LLC, was named plan administrator to reorganized Refco, Inc. and its affiliates, and Marc S. Kirschner as plan administrator to Refco Capital Markets, Ltd. (Refco Bankruptcy News, Issue No. 89; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) REFCO INC: Tone Grant Serves Sentence In Minnesota Prison --------------------------------------------------------- Tone Grant, former president of Refco Group Ltd., has began serving his 10-year sentence in late October 2008 at a United States federal prison camp in Duluth, Minnesota, for defrauding Refco investors of $2,400,000,000, David Glovin of Bloomberg News reported. Mr. Grant was convicted for conspiracy, securities fraud, wire fraud, bank fraud, and money laundering last April 2008, in a jury decision at the U.S. District Court for the Southern District of New York in Manhattan. At the jury trial, Mr. Grant's lawyers had argued that he was chiefly a salesman who did not focus on Refco's accounting details, and was duped by Phillip Bennett, Refco's former chief executive officer, chairman and controlling shareholder. The jurors rejected Mr. Grant's claim that he was not aware that Mr. Bennett was hiding $1,100,000,000 in debt and expenses through a phony accounting scheme. However, the key evidence -- a hand-written note stating "1.111 real debt" that Mr. Grant passed to Mr. Bennett in a meeting -- convinced the jurors of Mr. Grant's guilt. According to Mr. Glovin, Mr. Grant filed an appeal from the life sentence. A federal appeals court denied Mr. Grant's request to remain free while the appeal is pending. About Refco Inc. Headquartered in New York, Refco Inc. -- http://www.refco.com/ -- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The company has operations in Bermuda. The company and 23 of its affiliates filed for Chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported US$16.5 billion in assets and US$16.8 billion in debts to the Bankruptcy Court on the first day of its Chapter 11 cases. The Court confirmed the Modified Joint Chapter 11 Plan of Refco Inc. and certain of its Direct and Indirect Subsidiaries, including Refco Capital Markets, Ltd., and Refco F/X Associates, LLC, on Dec. 15, 2006. That Plan became effective on Dec. 26, 2006. Pursuant to the plan, RJM, LLC, was named plan administrator to reorganized Refco, Inc. and its affiliates, and Marc S. Kirschner as plan administrator to Refco Capital Markets, Ltd. (Refco Bankruptcy News, Issue No. 89; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) REICHHOLD INDUSTRIES: Moody's Reviews B1 CFR for Likely Downgrade ----------------------------------------------------------------- Moody's Investors Service put Reichhold Industries, Inc's ratings under review for a possible downgrade (B1 corporate family rating and B2 rating on its $195 million senior unsecured notes due 2014). The rating action follows a period of declining quarterly operating results for the first nine months of 2008, severe declines in volume being faced by many commodities chemical companies in the fourth quarter and concerns over the outlook for the business. Moody's review will consider the ability of Reichhold to scale back operations during periods of lower demand to minimize margin declines, the impact the global economic slowdown and associated reductions in demand will have on Reichhold's volumes and profitability, the company's ability to improve cash flows through management of capital expenditures and working capital, and its liquidity. Additionally, any significant increase in environmental remediation liabilities or litigation costs, or a change in the company's liability profile will be considered during the review. Lower volumes and selling prices will likely pressure margins and could strain the company's liquidity position despite the positive impact lower raw material and energy commodity prices will have on the cost of goods sold and working capital requirements. The ability of the company to produce positive free cash flow over the next twelve months is uncertain. Moody's last rating action for Reichhold was on August 2, 2006 when Moody's assigned a B1 corporate family rating and a B2 rating on its $195 million senior unsecured notes due 2014. The proceeds of the notes were used to refinance $170 million of existing debt due September 15, 2008, and pay a dividend to the private owners and transaction fees. A stable outlook was also assigned in 2006. Reichhold is a leading supplier of unsaturated polyester resins for composites applications and of resins and other polymers for coatings applications. It manufactures over one billion pounds of thermoset resins and gelcoats annually. Reichhold has more than 3,000 products used in thousands of applications, but products generally fall within two categories: Composites, which account for almost three-quarters of sales, and Coatings. Products are typically sold to a broad base of customers primarily for industrial purposes. Reichhold's sales for the LTM period ending September 30, 2008 were $1.35 billion. REHRIG INTERNATIONAL: Auction Sale of Battle Creek Facility Okayed ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware authorized Rehrig International Inc. and its affiliated Debtors to hold the unreserved public auction sale of substantially all of Woodside- United Acquisition LLC (United)'s remaining assets (the Auction Assets), on an "as is, where is" basis, provided that the Debtors shall not sell any accounting or business records of the Debtors, including information contained in electronic form. The sale of the Auction Assets is not subject to avoidance pursuant to Sec. 363(n) of the Bankruptcy Code. United was founded in 2007 for the purpose of acquiring substantially all of the assets and substantially all of the liabilities of United Steel & Wire Company, a Michigan corporation originally founded in 1906 as the Battle Creek Rack Company. The Auction Assets, which consist of shop equipment, excess or aged inventory, spare parts, maintenance equipment, miscellaneous hand tools, miscellaneous tooling, scrap metal, pallets, shelving, racks, lawn maintenance items, furniture, and computer equiment, shall be sold free and clear of all encumbrances with such encumbrances to attach to the proceeds to be received by the Debtors in the same priority and subject to the same defenses and avoidability, if any, as before the sale. The Debtors are authorized and directed to remit the proceeds of the sale to the Senior Lender as required under the terms of the Final DIP Order. As reported in the Troubled Company Reporter on Nov. 13, 2008, Rehrig International Inc. said it would sell its 80,000-sq. ft. facility called United Steel & Wire Co. in Battle Creek, Michigan. About Rehrig International Headquartered in Richmond, Virginia, Rehrig International Incorporated -- http://www.rehrig.org-- manufactures wire products, plastic processed plastics, industrial trucks & tractors, conveyors & conveying equipment, laminated plastics and sheet metal fabricator. The company and its two affiliates filed for Chapter 11 protection on Sept. 5, 2008 (Bankr. D. Del. Case No. 08-12064). Kurtzman Carson Consulting, LLC, serves as the Debtors' Claims, Noticing and Balloting Agent. Richard W. Riley, Esq., at Duane Morris LLP, and Stephen Edward Garcia, Esq., at Stephen E. Garcia PC, represent the Debtors as counsel. Bradford J. Sandler, Esq., at Benesch Friedlander Coplan & Aronoff, and Wojciech F. Jung, Esq., at Lowenstein Sandler PC, represent the Official Committee of Unsecured Creditors as counsel. When the Debtors filed for protection from their creditors they listed assets of between $10 million and $50 million and estimated debts of between $10 million and $50 million. REHRIG INTERNATIONAL: Wants Plan Filing Period Extended to May 1 ---------------------------------------------------------------- Rehrig International Incorporated and its affiliated debtors ask the U.S. Bankruptcy Court for the District of Delaware to extend their exclusive periods to: a) file a plan through and including May 1, 2009; and b) solicit acceptances of said plan through and including July 1, 2009. The Debtors tell the Court that they are seeking the extension to provide them with the necessary time and resources to discuss with all constituencies the best manner in which to conclude these cases. About Rehrig International Headquartered in Richmond, Virginia, Rehrig International Incorporated -- http://www.rehrig.org-- manufactures wire products, plastic processed plastics, industrial trucks & tractors, conveyors & conveying equipment, laminated plastics and sheet metal fabricator. The company and its two affiliates filed for Chapter 11 protection on Sept. 5, 2008 (Bankr. D. Del. Case No. 08-12064). Kurtzman Carson Consulting, LLC, serves as the Debtors' Claims, Noticing and Balloting Agent. Richard W. Riley, Esq., at Duane Morris LLP, and Stephen Edward Garcia, Esq., at Stephen E. Garcia PC, represent the Debtors as counsel. Bradford J. Sandler, Esq., at Benesch Friedlander Coplan & Aronoff, and Wojciech F. Jung, Esq., at Lowenstein Sandler PC, represent the Official Committee of Unsecured Creditors as counsel. When the Debtors filed for protection from their creditors they listed assets of between $10 million and $50 million and estimated debts of between $10 million and $50 million. ROCKETINFO INC: Sept. 30 Balance Sheet Upside Down by $310,060 -------------------------------------------------------------- In a regulatory filing, Philip Graves, CEO and director of Rocketinfo Inc., relates that the company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. "The ability of Rocketinfo Inc. to continue as a going concern is dependent on Rocketinfo Inc. obtaining adequate capital to fund operating losses until it becomes profitable." As of September 30, 2008, the company's balance sheet showed: Total assets $1,105,697 Total liabilities $1,415,757 Total stockholders' equity ($310,060) The company posted a net loss of $94,239 on revenues of $38,800 for the three-month period ended September 30, 2008. "If Rocketinfo Inc. is unable to obtain adequate capital, it could be forced to cease operations. In order to continue as a going concern, Rocketinfo Inc. will need, among other things, additional capital resources. Management's plans to obtain such resources for Rocketinfo Inc. include (1) obtaining capital from management and significant existing shareholders or prospective shareholders sufficient to meet its minimal operating expenses, and (2) seeking out and completing a merger with an existing operating company. However, management cannot provide any assurances that Rocketinfo Inc. will be successful in accomplishing any of its plans," Mr. Graves relates. Early this year, Moore & Associates Chartered in Las Vegas, Nevada, completed its audit of the consolidated financial statements of company and its wholly owned subsidiary, Rocket Technologies Inc., for the year ended December 31, 2007. "The company has not yet established an ongoing source of revenues sufficient to cover its operating costs, which raises substantial doubt about its ability to continue as a going concern." A full-text copy of the company's latest Quarterly Report is available for free at: http://www.sec.gov/Archives/edgar/data/1085203/000101489708000148/rocketinfo10q3q08.txt About Rocketinfo Rocketinfo Inc., was formed on October 2, 1998, to focus on the development of digital microwave products, including an ultra-high bandwidth digital microwave radio. On October 9, 2002, a change in control of Rocketinfo Inc. occurred as the selling shareholders sold 8,000,000 previously held shares of Rocketinfo Inc.'s outstanding common stock for cash of $8,000, which constituted a majority ownership of Rocketinfo Inc. The new shareholders became involved because of their expertise in the oil and gas business and ability to seek funding to acquire oil and gas properties. The sale of shares by the selling shareholders was initiated as a result of an exhaustive review by Rocketinfo Inc.'s Board of Directors and subsequent decision to focus its resources and management efforts on pursuing opportunities in the oil and gas industry. Rocketinfo Inc.'s attempt to finance oil and gas operations through a combination of privately placed debt or equity proved to be unsuccessful so on October 1, 2004, Rocketinfo Inc. moved into another field of enterprise through the acquisition of Rocket Technologies Inc., a Canadian corporation, that developed data mining and search engine software and applications. ROL-LAND FARMS: Ontario Court Grants Protection Under CCAA ---------------------------------------------------------- Rol-land Farms Limited, Esses Kent Mushrooms, Ltd., Hebb-Lin Incorporated, 1537621 Ontario Limited and 1063141 Ontario Inc. have received protection from their creditors under the Companies' Creditors Arrangement Act pursuant to an order of the Ontario Superior Court of Justice issued Dec. 10, 2008, which allows them time to restructure their businesses and affairs. As a result of current economic circumstances, Rol-land Farms has determined that it is in the best interests of its shareholders, employees and creditors to seek protection pursuant to the CCAA and to restructure so that it can emerge as a stronger and more viable operation. The company said it has the full support of its bank, which is providing DIP financing, and its senior management. The company further said it is its intent to emerge from CCAA protection as a stronger, more efficient producer. The Court appointed PricewaterhouseCoopers Inc. as Monitor. Scarfone Hawkins LLP is representing Rol-land Farms, et al., in their restructuring efforts. About Rol-land Farms Headquartered in Blenheim and Kingsville, Ontario, Rol-land Farms carries on its farming operations in Ontario, Alberta and Prince Edward Island. The company is the largest mushroom producer in Canada and is the third largest mushroom producer in North America, supplying approximately one million pounds of mushrooms a week to retailers across Canada and the United States. The company also produces and sells cash crops. ROYAL CARIBBEAN: S&P Downgrades Rating on $45 Mil. Certs. to 'BB' ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the $45 million corporate-backed trust certificates from Corporate Backed Trust Certificates Series 2001-27 Trust to 'BB' from 'BB+' and removed it from CreditWatch, where it was placed with negative implications on Nov. 10, 2008. The downgrade and CreditWatch removal reflect the Dec. 5, 2008, lowering of the corporate credit and the senior unsecured ratings on Royal Caribbean Cruises Ltd. and their removal from CreditWatch with negative implications. Corporate Backed Trust Certificates Series 2001-27 Trust is a pass-through transaction, and the rating on the certificates is based solely on the 'BB' rating assigned to the underlying securities, the 7.50% senior debentures due Oct. 15, 2027, issued by Royal Caribbean Cruises Ltd. SCIENS CFO: Moody's Downgrades Ratings on Four Security Classes --------------------------------------------------------------- Moody's Investors Service has downgraded these debt securities of Sciens CFO I Limited: EUR 121,200,000 Class A Floating Rate Notes due 2014 -- Current Rating: Aa3, on review for downgrade -- Prior Rating: Aa1, on review for downgrade EUR 21,000,000 Class B Floating Rate Notes due 2014 -- Current Rating: Ba1, on review for downgrade -- Prior Rating: A3, on review for downgrade EUR 13,900,000 Class C Floating Rate Notes due 2014 -- Current Rating: B2, on review for downgrade -- Prior Rating: Ba1, on review for downgrade EUR 18,600,000 Class D Floating Rate Notes due 2014 -- Current Rating: Ca, on review for downgrade -- Prior Rating: Caa1, on review for downgrade EUR 7,800,000 Class E Floating Rate Notes due 2014 -- Current Rating: Ca, on review for downgrade -- Prior Rating: Caa3, on review for downgrade Originally rated on 14 December 2006, Sciens CFO I Limited is a collateralized fund obligation backed by equity interests in a diversified fund of hedge funds. The fund is managed by SF Management Ltd. The last rating action on the affected securities was on Oct. 28, 2008 when several debt tranches were downgraded and all debt tranches were maintained on review for further possible downgrade. The rating action reflects continued deterioration of the net asset values of the underlying hedge funds within the structure. The ratings also reflect concern over the vehicle's ability to liquidate portfolio assets within the covenanted timeframe. SHAFFER & SON: Taking Bids for Seven Homes in Various Stages ------------------------------------------------------------ IN THE UNITED STATES BANKRUPTCY COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA In re: ) ) Case No. 1-07-bk-03724 SHAFFER & SON, INC., ) ) Chapter 11 Debtor in Possession. ) NOTICE OF SALE PROCEDURES, AUCTION DATE, AND SALE HEARING PLEASE BE ADVISED that pursuant to a motion, dated November 19, 2008 (the "Sale Procedures Motion"), filed by Shaffer & Son, Inc. (the "Debtor"), the United States Bankruptcy Court for the Middle District of Pennsylvania (the "Court") entered an Order (the "Procedures Order") approving certain Sale Procedures (the "Sale Procedures") in connection with the proposed sale by the Debtor to one or more bidders, at an auction (the "Auction") to be conducted at the offices of the Debtor of certain real property and improvements (the "Homes") identified as follows: (a) Deer Run Lot 111 - 2054 Deer Run Drive, Hummelstown, PA (completed home) (b) Deer Run Lot 133 - 694 Stoverdale Road, Hummelstown, PA (c) Deer Run Lot 134 - 692 Stoverdale Road, Hummelstown, PA (incomplete shell) (d) Deer Run Lot 135 - 690 Stoverdale Road, Hummelstown, PA (incomplete shell) (e) Deer Run Lot 136 - 688 Stoverdale Road, Hummelstown, PA (incomplete shell) (f) Stone Hill Lot 52 - 805 Meadow Court, York, PA (completed home) (g) Stone Hill Lot 54 - 1721 Stone Hill Drive, York, PA (incomplete shell) PLEASE BE FURTHER ADVISED that, December, 12, 2008 at 10:00 a.m. (the "Inspection Day") has been schedule as the date for interested bidders to inspect the Homes. PLEASE BE FURTHER ADVISED that, on December 22, 2008 at 10:00 a.m. (the "Auction Date") the Auction will be conducted at the offices of the Debtor's counsel set forth below. A copy of the Sale Procedures and Sale Motion can be obtained by requesting same from Debtor's counsel. PLEASE BE FURTHER ADVISED that all Bids for the Homes shall be submitted in accordance with the Sale Procedures and shall be submitted in writing to Debtor's counsel such that the Bid is actually received not later than December 19, 2008 at 12:00 noon. Copies of the Motion are on file at: Clerk of the Bankruptcy Court United States Bankruptcy Court for the Middle District P O Box 908 Harrisburg, PA 17108 and may be examined by all interested parties during regular business hours. Copies may be obtained from the Debtor's Attorney: Leslie D. Jacobson, Esq. Chad J. Julius, Esq. 8150 Derry Street Harrisburg, PA 17111.5260 Telephone (717) 909.5858 Fax (717) 909.7788 Date: December 5, 2008 CLERK OF THE U.S. BANKRUPTCY * * * Shaffer & Son, Inc. -- http://www.shafferandson.com/-- sought protection from its creditors under chapter 11 (Bankr. M.D. Pa. Case No. 07-03724) on November 21, 2007. At that time, Shaffer estimated its assets and liabilities were between $1 million and $100 million. SINOFRESH HEALTHCARE: Sept. 30 Balance Sheet Upside Down by $2.8MM ------------------------------------------------------------------ Charles A. Fust, chairman of the board, chief executive officer, and acting chief financial officer of SinoFresh Healthcare, Inc., disclosed in a regulatory filing that as of September 30, 2008, his company had total assets of approximately $1.8 million, liabilities of approximately $4.6 million and stockholders' deficit of approximately $2.8 million. "Our working capital deficit was approximately $4.5 million as of September 30, 2008." "During the first nine months of 2008, the Company's cash and cash equivalents decreased approximately $500 to $427 at September 30, 2008. The Company's current liquidity is extremely limited and the Company will require a significant amount of additional funding in order to meet its current working capital requirements, including repayment of its debentures. To address these issues, the Company is attempting to obtain additional funding through the issuance of debt and equity securities, joint ventures or other arrangements. Although the Company believes that it will be able to obtain additional funding, there can be no assurance that the Company's efforts will be successful," Mr. Fust relates. "On June 9, 2006, the Company entered into an unsecured loan agreement with a non-affiliated third party in the amount of $100,000. According to the loan provisions, the principal and interest totaling $120,000 was due on July 31, 2006. The Company is currently in default on the repayment of this loan." "During 2007, the Company obtained financing in the total amount of $220,000 through the sale of 18-month Unsecured 10% convertible debentures." "Pursuant to a Memorandum of Understanding that was terminated in February 2008, the Company received an initial investment of $200,500 during the year ended December 31, 2007 in exchange for 1,002,500 common shares. During the nine months ended September 30, 2008, the Company received additional investments of $411,565, in exchange for 2,057,823 common shares." "In August 2007, a group of new investors acquired certain outstanding convertible debentures issued by the Company having a face value of $1,255,000 plus accrued interest approximating $528,000, directly from third party debenture holders through a private sale. Such debentures matured on December 6, 2007 and are currently in default. As part of the MOU, the Company and the Investors agreed to convert $855,000 of the debentures, plus accrued penalties and interest into 3,333,750 shares of common stock." "At September 30, 2008, 1,836,680 of these common shares have been issued and 5,297,393 are pending conversion, which will occur upon direction from the investors. During October, 2008, the Company issued 1,500,000 shares of common stock to Investors." "As of December 31, 2007, the Investors held remaining convertible debentures with a face value of $400,000, plus previously accrued interest and penalties that, will entitle them to convert the debentures at $0.20 per share. In March 2008, the Investors purchased from a third party, additional convertible debentures having a face value of $305,000. At September 30, 2008, the Investors now own 100% of the Company's outstanding secured convertible debentures. Such debentures matured on December 6, 2006 and are currently in default. As a result of such transaction, the Investors are the sole senior secured debt holders of the Company with a lien on all assets of the Company." Going Concern Doubt According to Mr. Fust, the Company's ability to continue as a going concern is subject to substantial doubt due to the Company's history of losses, current default status on the repayment of debentures, limited financial resources and need for additional working capital to implement the Company's business plan. The Company requires additional funding in order to repay its debentures and to market and distribute its products, exploit the technology underlying its patents, further develop existing and new products, and pay its other existing current liabilities. "On September 30, 2008, the Company had current assets of approximately $120,000 (including cash and cash equivalents of $427) and current liabilities of approximately $4,618,000. As a result, the Company's current liquidity is extremely limited and the Company will require a significant amount of additional funding in order to meet its current working capital requirements, including repayment of its debentures. To address these issues, the Company is attempting to acquire additional funding through the issuance of debt and equity securities, joint ventures or other arrangements. Although the Company believes that it will be able to obtain additional funding, there can be no assurance that the Company's efforts will be successful." For the three months ended September 30, 2008, the company posted a net loss of $274,237 on revenues of $37,974. A full-text copy of the company's Quarterly Report is available for free at: http://www.sec.gov/Archives/edgar/data/1171596/000110801708000637/sinofresh10q.htm SOLUTIA INC: Challenges Morgan County, Alabama Tax Law ------------------------------------------------------ The Decatur Daily reported that Solutia Inc. challenged the "constitutionality" of a law passed in April 2008 in Morgan County, Alabama, which was intended to define the intent of a local tax law that took effect in 1978. The new law, sponsored by State Senator Arthur Orr, R-Decatur, is meant to protect money for Morgan County Schools and volunteer fire departments. According to the report, attorneys for Solutia and the Morgan County Commission and school system argued before a circuit court in Morgan County on (i) the legality of the new state law; and (ii) Morgan County's request for a partial summary judgment in its favor with respect to Solutia's contention that it paid $340,000 in taxes in error. The report said that Solutia attorneys are seeking a tax refund to reduce the financial obligations of the company. Solutia's lawyers contend that the new law is illegal because: (a) revenue-raising statutes must originate in the state House of Representatives; (b) the statute violates Solutia's constitutional right to due process; and (c) the statute violates the 1998 Tax Simplification Act. Solutia also asserts that some of its vendors are not located in, nor do they have an agent in, Morgan County, which violates U.S. commerce laws, the report related. The Morgan County school system argues that because Solutia uses the direct pay permit, which allows the company to pay sales or use taxes directly to the state and takes the burden off the vendor, the court and defendants have no way of knowing the vendors' locations or to show nexus. A trial on the matter is scheduled for January 26, 2009, the report related. About Solutia Inc. Based in St. Louis, Missouri, Solutia Inc. (OTCBB: SOLUQ) (NYSE: SOA-WI) -- http://www.solutia.com/-- and its subsidiaries, manufactures and sells chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03- 17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP, in New York, as lead bankruptcy counsel, and David A. Warfield, Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St. Louis Missouri, as special counsel. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. The Official Committee of Retirees of Solutia, Inc., et al., is represented by Daniel D. Doyle, Esq., Nicholas A. Franke, Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne, LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E. Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, in Birmingham, Alabama. On Feb. 14, 2006, the Debtors filed their Reorganization Plan & Disclosure Statement. On May 15, 2007, they filed an Amended Reorganization Plan and on July 9, 2007, filed a 2nd Amended Reorganization Plan. The Bankruptcy Court approved the Debtors' amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007, the Debtor re-filed a Consensual Plan & Disclosure Statement and on Nov. 29, 2007, the Court confirmed the Debtors' Consensual Plan. Solutia emerged from chapter 11 protection Feb. 28, 2008. Solutia's $2.05 billion exit financing facility was funded by Citigroup Global Markets Inc., Goldman Sachs Credit Partners L.P., and Deutsche Bank Securities Inc. The exit financing is being used to pay certain creditors, and for ongoing operations. (Solutia Bankruptcy News, Issue No. 135; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * Standard & Poor's Ratings Services said its ratings on Solutia Inc. (B+/Stable/--) will not change as a result of the company's recent announcement of a public offering of common shares. SOLUTIA INC: Seeks Court OK for $600,000 Settlement With DuPont --------------------------------------------------------------- Solutia Inc., asks the U.S. Bankruptcy Court for the Southern District of New York to approve a settlement with E.I. DuPont de Nemours and Company DuPont previously filed a motion seeking the allowance of an administrative claim for $1,394,718 against Solutia Inc., et al. Solutia objected to the Administrative Motion. Thereafter, Solutia and DuPont engaged in an informal discovery process during which the parties also engaged in settlement negotiations. As a result of the informal discovery and negotiations, and the desire of Solutia and DuPont to avoid the time, cost, and uncertainty of litigation, the parties seek to settle the Administrative Motion pursuant to the terms of a stipulation. Solutia and DuPont ask the Court to approve the compromise and settlement of all claims, disputes and liabilities between them relating to the January 2002 Contract and all its amendments. The salient terms of the Stipulation include: (a) DuPont is granted an allowed administrative claim of $600,000, which will be paid by Solutia in good funds by December 15, 2008. (b) DuPont and Solutia exchange mutual releases for all claims, liabilities and disputes relating to the Contract. (c) In the event the Stipulation is not approved by the Court, it will be deemed null and void without prejudice to the parties. In that case, the parties' agreement will not be allowed or permitted to be used against Solutia or DuPont in any litigation regarding those claims or disputes. About Solutia Inc. Based in St. Louis, Missouri, Solutia Inc. (OTCBB: SOLUQ) (NYSE: SOA-WI) -- http://www.solutia.com/-- and its subsidiaries, manufactures and sells chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03- 17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP, in New York, as lead bankruptcy counsel, and David A. Warfield, Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St. Louis Missouri, as special counsel. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. The Official Committee of Retirees of Solutia, Inc., et al., is represented by Daniel D. Doyle, Esq., Nicholas A. Franke, Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne, LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E. Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, in Birmingham, Alabama. On Feb. 14, 2006, the Debtors filed their Reorganization Plan & Disclosure Statement. On May 15, 2007, they filed an Amended Reorganization Plan and on July 9, 2007, filed a 2nd Amended Reorganization Plan. The Bankruptcy Court approved the Debtors' amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007, the Debtor re-filed a Consensual Plan & Disclosure Statement and on Nov. 29, 2007, the Court confirmed the Debtors' Consensual Plan. Solutia emerged from chapter 11 protection Feb. 28, 2008. Solutia's $2.05 billion exit financing facility was funded by Citigroup Global Markets Inc., Goldman Sachs Credit Partners L.P., and Deutsche Bank Securities Inc. The exit financing is being used to pay certain creditors, and for ongoing operations. (Solutia Bankruptcy News, Issue No. 135; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * Standard & Poor's Ratings Services said its ratings on Solutia Inc. (B+/Stable/--) will not change as a result of the company's recent announcement of a public offering of common shares. SPRINT NEXTEL: Moody's Downgrades Senior Debt Rating to 'Ba2' ------------------------------------------------------------- Moody's Investors Service has downgraded Sprint Nextel Corporation's senior unsecured debt rating to Ba2 from Baa3 and assigned a Corporate Family Rating of Ba1. As part of the rating action, Moody's has downgraded the short-term rating of Sprint Nextel to Not Prime from Prime-3 and assigned a speculative grade liquidity rating of SGL-1. In addition, Moody's upgraded Sprint Nextel's senior unsecured revolving credit facility to Baa2 to reflect the recent addition of guarantees. The outlook for Sprint Nextel's ratings is negative. The rating action concludes the review of Sprint Nextel's ratings that was initiated on May 16, 2008. The summary of rating actions is: Issuer: Sprint Nextel Corporation Assignments: -- Corporate Family Rating, Assigned Ba1 -- Probability of Default Rating, Assigned Ba1 -- Speculative Grade Liquidity Rating, Assigned SGL-1 Upgrades: -- Senior Unsecured Bank Credit Facility, Upgraded to Baa2, LGD2 - 14%, from Baa3 Downgrades: -- Commercial Paper, Downgraded to NP from P-3 -- Senior Unsecured Regular Bond/Debenture, Downgraded to Ba2, LGD5 - 78%, from Baa3 -- Senior Unsecured Bank Credit Facility, Assigned LGD2, 14% -- Senior Unsecured Regular Bond/Debenture, Assigned LGD5, 78% Issuer: NEXTEL Communications, Inc. Downgrades: -- Senior Unsecured Conv./Exch. Bond/Debenture, Downgraded to Ba2, LGD4 - 64%, from Baa3 -- Senior Unsecured Regular Bond/Debenture, Downgraded to Ba2, LGD4 - 64%, from Baa3 Issuer: Sprint Capital Corporation Downgrades: -- Senior Unsecured Medium-Term Note Program, Downgraded to Ba2, LGD5 - 78%, from Baa3 -- Senior Unsecured Regular Bond/Debenture, Downgraded to Ba2, LGD5 - 78%, from Baa3 Outlook Actions: -- Outlook, Changed To Negative From Rating Under Review The downgrade of Sprint Nextel's rating reflects the company's significantly weakened market position among the national wireless carriers and its continuing challenges in turning around its wireless operations amid intense competition and weak economic conditions. While subscriber churn has improved from year-ago levels, Moody's believes the company's efforts to turn subscriber growth positive will take longer than previously anticipated as the company faces strong competition from AT&T and Verizon in the post pay subscriber segment and from flat rate service providers in the prepaid segment. As a result, Moody's expects Sprint Nextel's operating cash flows and subscriber counts to deteriorate until the second half of 2009, when Moody's expect the company's market share and wireless operating cash flows to stabilize. The Ba1 rating reflects Sprint Nextel's position as the third largest national wireless provider with a strong spectrum position in its major markets, offset by its deteriorating financial profile, including high leverage of 3.4x and weak free cash flow of 6.4% (both LTM 3Q 2008), due to large subscriber losses over the past five quarters. In addition, the rating is supported by management's vigorous efforts to reduce costs and improve service quality and its commitment to continue reducing debt through 2010. The rating incorporates the significant operating risks confronting Sprint Nextel in an intensely competitive environment as the national wireless penetration rate approaches 90% and rising subscriber acquisition costs continue to pressure EBITDA margins. The negative outlook considers significant execution risks faced by the company to stabilize its operating performance amid these competitive challenges, further exacerbated by the economic recession. Moody's believes that downward rating pressure will persist until the company is able to stem the erosion of its competitive position and maintain market share. Moody's has assigned a speculative grade liquidity rating of SGL-1 to Sprint Nextel, reflecting the company's very good liquidity over the next twelve months. The SGL-1 rating considers Sprint Nextel's large cash balances of approximately $3.3 billion at 9/30/2008 (pro forma for the $1 billion repayment of its revolving credit facility in November 2008 and approximately $200 million of cash received from Clearwire Corporation), the company's free cash flow from operations, manageable debt repayments, and increased flexibility under the recently amended credit facility. As part of the rating action and in accordance with its LGD methodology, Moody's upgraded the ratings of the company's amended revolving credit facility to Baa2 from Baa3, reflecting the structural seniority provided by the recent addition of operating subsidiary guarantees. In addition, the company's other debt ratings, as well as the ratings at Sprint Capital and Nextel Communications, were downgraded to Ba2 from Baa3. Moody's last rating action was on September 16, 2008, when Moody's announced it would continue to review the ratings of Sprint Nextel for downgrade. Sprint Nextel Corporation, with headquarters in Overland Park, Kansas, is one of the largest telecommunications companies in the United States. It offers digital wireless services under the Sprint master brand name in addition to a broad suite of wireline communications services. The company operates two wireless networks, one based on CDMA technology and the other over the former Nextel Communication's iDEN network. As of 9/30/2008, Sprint Nextel had 50.5 million wireless customers, including wholesale and affiliate subscribers. SPROTT MOLYBDENUM: Exploring Possible Liquidation; Shares Up ------------------------------------------------------------ Sprott Molybdenum Participation Corporation said it's exploring strategic alternatives, including a possible liquidation. Sprott Moly's board of directors, and together manager Sprott Asset Management Inc., is exploring alternatives for the company in light of recent market developments, and the continued trading of its shares below net asset value. The Dec. 10 announcement said that the focus of the review is to investigate strategic alternatives that would make best use of the Corporation's current cash position, including a possible liquidation. As at December 5, 2008, the Corporation's net asset value was $1.74 per common share, of which $1.31 per common share was in cash and near cash securities, net of short term liabilities. "There can be no assurance that the process will result in any specific strategic or financial transactions, and no timetable has been set for its completion," the company said. According to The Canadian Press, Sprott Molybdenum shares were up 30 cents or 36 per cent to $1.13 in Wednesday morning trading. The company's shares have traded as high as $5.20 and as low as 67 cents in the past year. About Sprott Molybdenum Sprott Molybdenum Participation Corporation (TSX: MLY, MLY.WT) is an investment holding company created with the goal of achieving capital appreciation by investing in securities of private and public companies that explore for, mine or process molybdenum and by investing in, holding, selling and otherwise transacting in all commercial forms of molybdenum. SYNTAX-BRILLIAN: Court Suspends Chapter 11 Examiner Services ------------------------------------------------------------ The Hon. Brendan L. Shannon of the United States Bankruptcy Court for the District of Delaware suspended the services of James S. Feltman, the Chapter 11 examiner of Syntax-Brillian and its debtor-affiliates' cases, and the Debtors' special counsel effective as of Oct. 22, 2008. Judge Shannon directed, at the behest of the Debtors' and the Official Committee of Unsecured Creditor, the examiner to provide copies of any documents related to its investigation to the Debtors. He founded that the examiner and the Committee are in common interest with respect to the matters investigated by the examiner, any information provided by it to the Committee. The Troubled Company Reporter said on Aug. 28, 2008, the Debtors argued to have an examiner is unnecessary because they -- together with the Securities and Exchange Commission -- are presently conducting an investigation what caused the unexpected decline in the value of their assets and would only duplicate their efforts. However, the U.S. Trustee argued that the appointment is appropriate on grounds that the Debtors' fixed, liquidated, unsecured debts, services, and taxes have exceeded $5 million. The appointment of a Chapter 11 examiner is in the best interest of creditors, equity holders and other interest of the Debtors' estates, the U.S. trustee contended. The Chapter 11 examiner had investigated, among other things (i) the facts and circumstances surrounding the sudden decline in the Debtors' assets; (ii) the bona fides and necessity of the proposed sale of the substantially all of the Debtors' assets to TCV; and (iii) the ability and inclination of the Debtor's current management to probe and pursue potential claims and causes of action against the Debtors' former officers including directors who selected the Debtor's current chief executive officer and chief financial officer. About Syntax-Brillian Based in Tempe, Arizona, Syntax-Brillian Corporation (Nasdaq: BRLC) -- http://www.syntaxbrillian.com/-- and its affiliated debtors, Syntax-Brillian SPE, Inc. and Syntax Groups Corp. design, develop, and distribute high-definition televisions (HDTVs) utilizing liquid crystal display (LCD) and, formerly, liquid crystal (LCoS) technologies. The Debtors sell their HDTVs under the Olevia brand name. SBC is also the sole shareholder of Vivitar Corp., a suplier of film cameras and a line of digital imaging products, including digital camerasl. The Debtors filed separate petitions for Chapter 11 relief on July 8, 2008 (Bankr. D. Del. Lead Case No. 08-11407). Nancy A. Mitchell, Esq., Allen G. Kadish, Esq., and John W. Weiss, Esq., at Greenberg Traurig LLP in New York, represent the Debtors as counsel. Victoria Counihan, Esq., at Greenburg Traurig LLP in Wilmington, Delaware, represents the Debtors as Delaware counsel. Five members compose the Official Committee of Unsecured Creditors. Epiq Bankruptcy Solutions, LLC is the Debtors' balloting, notice, and claims agent. Syntax-Brillian cut a deal to sell its business assets to Olevia International Group LLC. On Sept. 10, 2008, OIG told the Bankruptcy Court that it won't pursue the deal, contending that the Debtors irreparably breached various covenants and representations contained in the Purchase Agreement, causing various Closing Conditions to fail, and rendering it unable to comply with its obligations under the Purchase Agreement. OIG also accused the Debtors of violating their sale contract by losing business from Target Corp., the Debtors' main customer. The following day, the Debtors filed a lawsuit asking the Court to compel Olevia International to complete the purchase. On Oct. 10. the Bankruptcy Court denied OIG's emergency request to excuse it from its obligations. OIG has taken an appeal of that order. When the Debtors filed for protection from their creditors, they listed total assets of $175,714,000 and total debts of $259,389,000. TELETOUCH COMMUNICATIONS: Auditor Raises Going Concern Doubt ------------------------------------------------------------ Teletouch Communications, Inc., delivered its Annual Report for the year ended May 31, 2007, to the Securities and Exchange Commission on November 24, 2008. BDO Seidman, LLP, in Houston, Texas, on November 17, 2008, noted that the company has suffered recurring losses from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Chief Executive Officer Robert M. McMurrey relates that the company has suffered recurring losses from operations, and it had a working capital deficit of approximately $24,029,000 and $29,583,000 at May 31, 2007 and 2006, respectively, and a shareholders' deficit of approximately $17,387,000 and $19,093,000 at May 31, 2007 and 2006, respectively. "The company's senior and subordinated debt totaled approximately $9,878,000 and $27,890,000 at May 31, 2007 and 2006, respectively. The senior and subordinated debt was due and payable in full on April 14, 2006 and May 1, 2006, respectively. In September 2005, the company executed amendments with its senior and subordinated debt holders under, which they agreed to waive the existing events of default and defer interest payments on the subordinated debt until after the maturity of the senior debt on April 14, 2006." According to Mr. McMurrey, in August 2006, prior to the acquisition by Teletouch, Progressive Concepts, Inc. was successful in negotiating a restructuring of its debt obligations with both its senior and subordinated lenders under which it was fully released from the balance of $9,782,000 in subordinated debt which was converted to redeemable equity at Teletouch's parent company, TLL Partners, LLC. "TLLP also assumed the full balance remaining on PCI's senior debt obligations (after a $10,000,000 cash payment to the lender by the PCI) and PCI was conditionally released from having any future payment obligations under the senior debt and all liens on the assets of PCI were conditionally released as long as certain terms of a Transaction Party Agreement by and among PCI, Teletouch, TLLP and the senior lender, Fortress Credit Corp. were not violated. The TPA provided Fortress with certain control over the ongoing operations of Teletouch and PCI as well as provided for the contingent re-instatement of the liens on PCI assets if certain conditions were not maintained by either Teletouch or PCI. A TPA was required by Fortress in order to assure that PCI or Teletouch would not take actions which in Fortress' view could reduce the value of Fortress' security. Under the terms of the TPA both PCI and Teletouch were bound to comply with certain negative covenants. If either PCI or Teletouch had breached the TPA or violated any of the negative covenants then Fortress could have reinstated the Senior Debt at PCI to the fullest extent available under the law as if the debt restructuring had never occurred. PCI was conditionally released from having any future payment obligations under the Senior Debt as long as the terms of the TPA were not violated. However, in accordance with Statement of Financial Accounting Standard No. 140, PCI must be legally released from being the primary obligor under the Senior Debt in order to de-recognize this liability. Because of the existence of the TPA which allows Fortress limited control of PCI and Teletouch and a contingent ability to reinstate the debt at PCI, we believe that PCI has not been fully released from being the primary obligor under the Senior Debt as contemplated by SFAS 140 as of May 31, 2007. In addition, TLLP is a holding company with no operations with a minimal amount of cash on hand and may be dependent upon selling a sufficient number of shares it owns in Teletouch common stock or upon the cash flows of Teletouch through the receipt of future cash dividends to service its outstanding debt obligations. The company has no current agreements with TLLP to fund cash nor does it have any current plans to declare dividends in order to allow TLLP to meet the debt obligations. Therefore, PCI and Teletouch will continue to report the Senior Debt as a liability on its balance sheet until such time as the debt is fully satisfied by TLLP or when PCI and Teletouch are released from the TPA." "In May 2008, the company was able to secure an additional $5,000,000 revolving credit facility with another senior lender. The proceeds were used primarily to pay $2,000,000 to PCI's former senior lender to have the liens on the assets of the company fully and permanently released, and $1,500,000 was used to make an initial payment to the holders of certain redeemable common stock warrants that became due in December 2007. Even upon the company's completion of the restructuring of its debt obligations in August 2006 and the subsequent restructuring in May 2008, the company has only been able to partially improve its working capital deficit and shareholders' deficit. During fiscal 2008 and continuing into fiscal 2009, the company has been focusing on evaluating the operations of its PCI subsidiary." Teletouch's total assets of May 31, 2007, was $32,302,000 while its total liabilities was $49,689,000. Net loss of the year ended May 31, 2007, was $8,079,000. A full-text copy of the company's Annual Report is available for free at: http://www.sec.gov/Archives/edgar/data/928659/000119312508243397/d10k.htm About Teletouch During the fiscal year ended May 31, 2007, Teletouch Communications, Inc., a Delaware corporation, finalized two significant transactions -- it acquired Progressive Concepts, Inc., on August 11, 2006, and it finalized the sale of its paging business on August 14, 2006. Teletouch Communications, Inc. was incorporated under the laws of the State of Delaware in July 1994 and in 2006 relocated its corporate headquarters from Tyler, Texas to Fort Worth, Texas in conjunction with the acquisition of PCI. Teletouch has been a provider of telecommunications services for over 40 years, providing two-way radio services in Texas, GPS- telemetry and public safety and emergency response vehicle products and services throughout the U.S. Following the sale of the paging business and the acquisition of PCI in August 2006, Teletouch's core-business has been acquiring, billing and supporting cellular subscribers under a recurring revenue relationship with AT&T Wireless, formerly Cingular Wireless. TEREX CORPORATION: Moody's Affirms Corp. Family Rating at 'Ba2' --------------------------------------------------------------- Moody's Investors Service affirmed Terex Corporation's corporate family and probability of default ratings at Ba2. In related rating actions Moody's upgraded the rating for the company's senior secured bank credit facility to Baa2 from Baa3 and the rating for the senior subordinated notes due 2014 to Ba1 from Ba2. The senior subordinated notes due 2017 are affirmed at Ba3. Terex's speculative grade liquidity remains at SGL-1. The outlook is stable. Terex's Ba2 corporate family rating reflects the company's strength in its cranes and mining businesses and global footprint. For several of the financial metrics within Moody's Heavy Manufacturing Rating Methodology Terex's performance could be seen as to be consistent with a rating higher than the Ba2 assigned. Through LTM September 2008 Terex's key credit metrics were: EBITA margin -- 10.9%; EBIT/interest expense -- 7.7x; debt/EBITDA -- 2.1x ;and, free cash flow/debt -- 9.0% (all ratios adjusted per Moody's methodology). Yet, these strengths are balanced against the expectation for a downturn in the company's Aerial Work Platform, Construction, and Materials Processing businesses. Terex must contend with a number of operating issues during 2009 including the slowing of the U.S. and Western European economies which is negatively impacting the construction sectors, the main driver for the AWP and Construction businesses. Constraining the ratings further is the potential that Terex could pursue debt-financed share repurchases and acquisitions once the credit markets have stabilized. Key non-operating risks include potential costs associated with any resolution of the Securities and Exchange Commission investigation relating to prior accounting issues and the U.S. Department of Justice investigation related to pricing practices in the rock crushing and screening industry. Nevertheless, Moody's expects that Terex should be able to weather these challenges within the Ba2 rating level due to the company's geographic and product diversity, operating efficiencies, moderate financial leverage and commitment to maintaining ample liquidity. The ratings for the senior secured bank credit facility and senior subordinated notes reflect the probability of default of the company, to which Moody's assigns a PDR of Ba2. The upgrades to the senior secured credit facility and senior subordinated notes due 2014 result from revised expectations regarding the loss given default assessments for these debt instruments. With a significant portion of its operations located outside of the U.S., a larger portion of Terex's foreign trade payables are viewed to be excluded from the 20 day administrative priority claim assumption in the LGD waterfall. The greater amount of more junior claims in the waterfall acts to reduce the loss given default assessment of the bank credit facility and senior subordinated notes due 2014, providing uplift to the ratings. Because the subordinated notes due 2017 do not benefit from subsidiary guarantees, they are ranked below the 2014 notes in the waterfall and do not benefit from the same rating uplift. These ratings/assessments were affected by this action: -- Corporate family rating affirmed at Ba2; -- Probability of default affirmed at Ba2; -- $896 million senior secured bank credit facility (benefiting from subsidiary guarantees) upgraded to Baa2 (LGD1, 9%) from Baa3 (LGD2, 16%); -- $300 million senior subordinated notes due 2014 (benefiting from upstream guarantees) upgraded to Ba1 (LGD3, 35%) from Ba2 (LGD3, 42%); and, -- $800 million senior subordinated notes due 2017 (unguaranteed) affirmed at Ba3, but its loss given default assessment is changed to (LGD5, 76%) from Ba3 (LGD5, 79%). The company's speculative grade liquidity rating of SGL-1 is unchanged. The last rating action was on November 8, 2007 at which time Moody's affirmed Terex's Ba2 corporate family rating. Terex Corporation is a diversified global manufacturer with five business segments supporting construction, mining, utility and other end markets. Last twelve months revenues through September 30, 2008 were approximately $10.4 billion. TEXAS NATIONAL BANK: Weiss Ratings Assigns "Very Weak" E- Rating ---------------------------------------------------------------- Weiss Ratings has assigned its E- rating to Mercedes, Tex.-based Texas National Bank. Weiss says that the institution currently demonstrates what it considers to be significant weaknesses and has also failed some of the basic tests Weiss uses to identify fiscal stability. "Even in a favorable economic environment," Weiss says, "it is our opinion that depositors or creditors could incur significant risks." Texas National Bank -- http://www.texasnational.net/-- is chartered as a national bank primarily regulated by the Office of the Comptroller of the Currency. Deposits have been insured by the Federal Deposit Insurance Corporation since Jan. 1, 1934. Texas National was established on Nov. 26, 1920. Texas National disclosed $55.7 million in assets and $62.8 million in liabilities at Sept. 30, 2008, in regulatory filings available from the Federal Financial Institutions Examination Council. Average assets during the quarter ending Sept. 30, 2008, were $77.4 million. TRIBUNE CO: Chapter 11 Filing Exposes Risks of ESOPs ---------------------------------------------------- The Wall Street Journal reports that Tribune's Chapter 11 filing highlights the risks of plans that invest employee savings into common stock. One big potential exposure, according to Ellen E. Schultz of The WASJ, came via the employee stock ownership plan, or ESOP, which the company set up in 2007. On April 1, 2007, Tribune's board of directors approved a series of transactions with a newly formed Tribune Employee Stock Ownership Plan, EGI-TRB, L.L.C., a Delaware limited liability company majority-owned by Sam Investment Trust (a trust established for the benefit of Samuel Zell and his family), and Samuel Zell. On Dec. 20, 2007, the company completed the Leveraged ESOP Transactions which culminated in the cancellation of all issued and outstanding shares of the company's common stock as of that date, other than shares held by the Company or the ESOP, and the company becoming wholly-owned by the ESOP. Under the ESOP, Tribune was planning to contribute shares -- worth about 5% of each employee's pay -- into employee accounts each year. According to WSJ, the first contribution was expected to be made in the first quarter, and it isn't clear whether this will happen or whether the shares will have any value after Tribune's bankruptcy filing. "At this point, the employees technically haven't lost anything in the ESOP because their balances are still zero," WSJ notes. WSJ, however, points out that under the ESOP, employees' accounts are 100% invested in the employer's stock, which can leave employees dangerously exposed to the fate of their company and industry. When it filed for chapter 11, Tribune Co., and its units disclosed $7,605,195,000 in assets and $12,972,541,148 in debts. Tribune owes under $10 billion from facilities arranged by JPMorgan and Merrill Lynch, and $1.26 billion in bonds issued in 1992 to 1997. Under the absolute priority rule of the Bankruptcy Code, creditors have priority over a company's equity holders. Unsecured creditors stand ahead of investors in the receiving line and their claims must be satisfied before any investment loss is compensated. About Tribune Company Headquartered in Chicago, Illinois, Tribune Company -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The company and 110 of its affiliates filed for Chapter 11 protection on December 8, 2008 (Bankr. D. Del. Lead Case No. 08-13141). The Debtors proposed Sidley Austion LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North Americal LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of Dec. 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. TRIBUNE CO: S&P's Ratings on Class A & B Certs. Tumble to 'D' ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class A and B units from the $79.795 million Structured Asset Trust Unit Repackaging Tribune Co. Debenture Backed Series 2006-1 to 'D' from 'CC'. The downgrades reflect the Dec. 9, 2008, lowering of the rating on the underlying securities, the $79.795 million 7.25% debentures due Nov. 15, 2096, issued by Tribune Co., to 'D' following Tribune's bankruptcy filing. Structured Asset Trust Unit Repackaging Tribune Co. Debenture Backed Series 2006-1 is a pass-through transaction, and the ratings on the certificates issued by the trust are based solely on the rating assigned to the underlying securities, the $79.795 million 7.25% debentures due Nov. 15, 2096, issued by Tribune Co. TRIBUNE CO: SATURNS to Wind-down Bonds on Chapter 11 Bankruptcy --------------------------------------------------------------- Structured Asset Trust Unit Repackagings, Tribune Company Debenture Backed 2006-1 Trust, a "Trust Wind Up Event" has occurred under the terms of the Trust Agreement governing the Trust due to the Chapter 11 Voluntary Petition filed by the Tribune Company on Dec. 8, 2008. The Class A Units were delisted from the New York Stock Exchange on Dec. 9, 2008. Morgan Stanley & Co. Incorporated, as selling agent, will undertake to sell all underlying securities owned by the Trust. The timing, price and other terms of any sale conducted by the Morgan Stanley will be determined by itself, but all sales will be completed within 30 days or such longer period of time as may be reasonable with respect to the underlying securities. Morgan Stanley will solicit at least three bids for the underlying securities. The firm will, on behalf of the Trust, sell the underlying securities at the highest bid price received. Upon the sale of the underlying securities, the trustee will distribute the cash proceeds of the liquidation to the payment of claims of the Class A Units and the Class B Units pro rata in proportion to the relative claim amounts of each. The claim amount with respect to the Class A Units will equal their outstanding principal balance plus accrued and unpaid interest, if any. The claim amount with respect to the Class B Units will equal their "Present Value Amount" as such term is defined in the Trust Agreement. Additional proceeds, if any, will be applied in satisfaction of certain administrative fees. The trust will terminate following the distribution of all such funds. Chicago, Illinois-based Tribune Co. -- http://www.tribune.com/-- fka Times Mirror Corporation, is America's largest employee-owned media company, operating businesses in publishing, interactive and broadcasting. In publishing, Tribune's leading daily newspapers include the Los Angeles Times, Chicago Tribune, The Baltimore Sun, Sun-Sentinel (South Florida), Orlando Sentinel, Hartford Courant, Morning Call and Daily Press. The company's broadcasting group operates 23 television stations, WGN America on national cable, Chicago's WGN-AM and the Chicago Cubs baseball team. The company filed for Chapter 11 protection on Dec. 8, 2008 (Bankr. D. Delaware Case No. 08-13141). Norman L. Pernick, Esq., at Cole, Schotz, Meisel, Forman & Leonard, PA, and Sidley Austion LLP represent the company in its restructuring effort. The company's financial advisors are Lazard Ltd. and Alvarez & Marsal North Americal LLC. Its claims agent is Epiq Bankruptcy Solutions LLC. As of Dec. 8, 2008, the company listed assets of $7,604,195,000 and debts of $12,972,541,148. TRIBUNE CO: Scripps Cuts Offer for 31% Stake in Food Network ------------------------------------------------------------ Bloomberg News reports that Scripps Networks Interactive Inc. has cut its offer for Tribune Co.'s minority stake in the Food Network because of its own tumbling stock price. The latest bid for Tribune's stake in the network is "considerably less" and reflects the drop in Scripps's stock price, Joe NeCastro, the company's finance chief, said Dec. 10 in an interview, according to Bloomberg. The shares have declined 40% since July 1, when the company split from E.W. Scripps Co. According to Bloomberg, Scripps made its most recent offer several days before Tribune filed for Chapter 11 bankruptcy protection on Dec. 8, Mr. NeCastro said. Scripps Chief Executive Officer Kenneth Lowe called the latest bid a "fair offer," but did not identify the amount of the bid. Tribune has a 31% stake in Food network while Scripps owns the remaining 69%. According to Scripps, Food Network's operating revenue increased 8.8% to $113 million in the third quarter of 2008. Food Network reaches more than 97 million domestic subscribers, up from about 96 million at the end of the third quarter 2007. "Prime-time viewership at Food Network was the highest in the network's history during the quarter, with solid gains among younger viewers," Mr. Lowe said, in late October, when the company released its third quarter results. Tribune made a $58,130,000 net income on equity investments in its first three fiscal quarters ended Sept. 28, 2008, down from $67,953,000 in the same period in 2007. "Net income on equity investments for the first three quarters of 2008 included a $16 million write-down at one of the Company's interactive investments, partially offset by an improvement at TV Food Network," Tribune said. Tribune may only get about $400 million for the network, CreditSights Inc. debt analyst Jake Newman said in an interview, according to Bloomberg. That's down from his estimate of as much as $1.05 billion in April, the report notes. About Food Network With headquarters in New York, FOOD NETWORK -- http://www.foodnetwork.com-- is a lifestyle network and Web site that features programs about food and cooking. Food Network can be seen internationally in Canada, Australia, Korea, Thailand, Singapore, the Philippines, Monaco, Andorra, Africa, France, and the French-speaking territories in the Caribbean and Polynesia. About Scripps Networks Scripps Networks Interactive Inc. is the leading developer of lifestyle-oriented content for television and the Internet, where on-air programming is complemented with online video, social media areas and e-commerce components on companion Web sites and broadband vertical channels. The company's media portfolio includes: Lifestyle Media, with popular lifestyle television and Internet brands HGTV, Food Network, DIY Network, Fine Living Network (FLN) and country music network Great American Country (GAC) ; and Interactive Services, with leading online search and comparison shopping services, Shopzilla and uSwitch. About Tribune Company Chicago, Illinois-based Tribune Co. -- http://www.tribune.com/-- fka Times Mirror Corporation, is America's largest employee-owned media company, operating businesses in publishing, interactive and broadcasting. In publishing, Tribune's leading daily newspapers include the Los Angeles Times, Chicago Tribune, The Baltimore Sun, Sun-Sentinel (South Florida), Orlando Sentinel, Hartford Courant, Morning Call and Daily Press. The company's broadcasting group operates 23 television stations, WGN America on national cable, Chicago's WGN-AM and the Chicago Cubs baseball team. The company filed for Chapter 11 protection on Dec. 8, 2008 (Bankr. D. Delaware Case No. 08-13141). Norman L. Pernick, Esq., at Cole, Schotz, Meisel, Forman & Leonard, PA, and Sidley Austion LLP represent the company in its restructuring effort. The company's financial advisors are Lazard Ltd. and Alvarez & Marsal North Americal LLC. Its claims agent is Epiq Bankruptcy Solutions LLC. As of Dec. 8, 2008, the company listed assets of $7,604,195,000 and debts of $12,972,541,148. (Tribune Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., <http://bankrupt.com/newsstand/>or 215/945-7000). UMPQUA INDIANS: Fitch Withdraws Junk Issuer Rating & Tax Bonds -------------------------------------------------------------- Fitch Ratings has downgraded the ratings assigned to the Cow Creek Band of Umpqua Indians (Cow Creek) as follows. --Issuer rating to 'CCC' from 'B+'; --Tax revenue bonds, series 2006A, 2006B and 2006C to 'CCC+' from 'BB-'. Fitch is concurrently withdrawing the ratings. Fitch has concerns regarding management's accounting treatment of certain related-party asset sale transactions between the Seven Feathers Casino and the tribal government, raising significant governance and internal control issues (see Fitch research 'Evaluating Governance Practices: The Native American Tribal Perspective' dated Aug. 14, 2008). Due to a trend of weak operating results at Seven Feathers, based on latest twelve month (LTM) Sept. 30, 2008, results, Cow Creek would be in breach of the leverage covenant in its debt agreements absent the booking of gains on two related-party asset sales. Backing out these gains, the leverage ratio was 4.1 times (x), in excess of the 4.0x covenant level. The definition of pledged revenues under the debt agreements (including the bond indenture, bank loan agreement and collateral trust and security agreement) does allow Cow Creek to include non-operating income for the purposes of demonstrating compliance with financial covenants. However, an independent certified public accountant (CPA) has not yet reviewed the terms of the sales to determine if they meet the GAAP criteria for recognition. In the event that an independent CPA determines that the asset sale gains do not meet the criteria for recognition and thus cannot be included in the calculation, Fitch believes it is likely Cow Creek will be in breach of the leverage covenant in the next several quarters, requiring it to seek a waiver or amendment from investors. Compliance with financial covenants is tested on a rolling quarterly basis, and violation of a financial covenant is considered an event of default under the debt agreements. The debt agreements require that Cow Creek produce annual financial statements for Seven Feathers which are audited by an independent CPA. The bank loan and bonds rank pari passu with respect to their right of payment from the pledged revenues. Recourse for investors in an event of default is acceleration of outstanding principal. In the event that principal acceleration occurs, recourse of the bank lender and the bondholders is limited to the pledged cash flows after the operating expenses of Seven Feathers have been paid. The 'CCC+' transaction rating on the bonds is one-notch higher than the 'CCC' issuer rating due to credit enhancement provided by security covenants included in the legal documents associated with the bonds. The most important of these is a cash fund debt service reserve fund in an amount equal to one year of principal and interest, which is available to bond holders but not the lender. The 2006A, 2006B and 2006C bonds are outstanding in the amount of $97.4 million with term maturities in 2011, 2016, 2022 and 2026. The bonds are subject to mandatory monthly sinking fund payments of principal in an amount sufficient to fully amortize by maturity. The bank loan has a total capacity of $25 million, $5.9 million of which is currently drawn. Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site. UNITED SITE: Weak Market Cues S&P to Junk Corp. Credit Rating ------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its corporate credit rating on United Site Services Inc. to 'CCC+' from 'B-'. At the same time, S&P lowered the rating on the company's senior secured first-lien revolving credit facility to 'B' from 'B+' and lowered the rating on the company's senior secured second-lien term loan to 'CCC+' from 'B'. The recovery rating for the first-lien facility remains '1', indicating the likelihood of very high (90% to 100%) recovery in the event of a payment default. S&P revised the recovery rating on the second- lien facility to '4' from '2'. The '4' indicates the likelihood of average (30% to 50%) recovery in the event of a payment default. The outlook is negative. "The downgrade and negative outlook reflect our concern that the backdrop of a very weak construction market could further weaken the company's already depressed earnings and cash flow generation from its base business," said S&P's credit analyst James T. Siahaan. When combined with USS' high debt leverage, anemic coverage ratios, and higher interest expense in 2009, such economic uncertainty portends increased risk of default. The company benefits from the fact that its debt does not need to be refinanced until 2012 and that it currently possesses adequate levels of headroom under its lone financial covenant. Westborough, Massachussetts-based USS rents and services portable restrooms and is highly vulnerable to the cyclicality of residential and commercial construction. The current conditions could result in limited or negative free cash flow during the next several quarters and could further pressure USS' already weak liquidity. Should credit quality deteriorate further because of prolonged weakness in the housing and construction markets, S&P could lower the ratings. S&P could revise the outlook to stable if the company steadily improves cash flow generation and credit-protection measures by successfully weathering the slowdown in the construction market and diversifying its cash flow base to increase revenues from non- construction-based activities, such as special events and -- to the extent possible -- emergency services. UNIVISION COMMS: Moody's Lowers Corporate Family Rating to 'B3' --------------------------------------------------------------- Moody's Investors Service downgraded Univision Communications Inc.'s Corporate Family rating and Probability of Default rating to B3 from B2, while also lowering associated debt ratings, concluding the review for downgrade that was initiated on August 11, 2008. The downgrades reflect Moody's expectation that weak advertising spending in 2009 will create increased pressure on Univision's revenue and cash flow despite likely upside from additional retransmission compensation. Moody's expects these pressures combined with meaningful step-downs in Univision's maximum secured debt-to-EBITDA covenant will diminish covenant cushion considerably through the end of 2009. In addition, Univision's high debt-to-EBITDA leverage will likely increase further and asset sales are unlikely to improve credit metrics significantly. The rating outlook is negative. Downgrades: Issuer: Univision Communications, Inc. -- Corporate Family Rating, Downgraded to B3 from B2 -- Probability of Default Rating, Downgraded to B3 from B2 -- Senior Secured Credit Facility and Senior Secured Bonds, Downgraded to B2, LGD3 - 40% from B1, LGD3 - 40% -- Senior Secured Credit Facility (Second Lien) Downgraded to Caa2, LGD5 - 87% from Caa1, LGD5 - 86% -- Senior Unsecured Regular Bond/Debenture, Downgraded to Caa2, LGD6 - 93% from Caa1, LGD6 - 93% -- Multiple Seniority Shelf, Downgraded to (P)Caa2 from (P)Caa1 Outlook Actions: Issuer: Univision Communications, Inc. -- Outlook, Changed To Negative From Rating Under Review The SGL-3 indicates Moody's belief that Univision has only adequate liquidity through the end of 2009. Liquidity will remain a significant rating consideration until pressure from the cyclical advertising downturn eases and is critical to surviving through the advertising downturn within the existing capital structure. This would allow Univision to realize the benefits of its good intermediate-term growth prospects underpinned by its strong and leading market position in Spanish-language media in the U.S. and favorable demographic trends. Moody's believes Univision will maintain a modest cushion under the covenant based on an assumed 10-15% advertising revenue decline in 2009 and Moody's estimates for retransmission consent fees and cost savings, but the margin of compliance will likely be small. Weaker than anticipated operating performance or lower than anticipated retransmission consent fees or cost savings could erode this cushion and pressure the rating. Successful attainment of a waiver or amendment under the credit facility may require an increase in pricing that could be uneconomic for Univision to bear given the large component of bank debt in the capital structure. The negative rating outlook reflects concern that a deeper or more extended downturn in advertising revenue than expected could further weaken Univision's ability to maintain compliance with its financial covenants. The last rating action was on August 11, 2008 when Moody's downgraded Univision's CFR and PDR to B2 from B1 and placed the ratings on review for downgrade. Univision, headquartered in New York, is the leading Spanish- language media company in the United States with television network operations in Miami and television and radio stations in major cities throughout the U.S. and Puerto Rico. Annual revenue approximates $2 billion. VIEW SYSTEMS: Directors Acquire 10 Million Shares of Stock ---------------------------------------------------------- Martin J. Maassen, View Systems Inc.'s director and 10% owner, disclosed in a Form 4 filing with the Securities and Exchange Commission that he may be deemed to beneficially own 5,030,624 shares of the company's common stock after the Oct. 15, 2008, puchase of 5,000,000 shares of common stock at $0.04 per share. In a separate form 4 filing, Michael L. Bagnoli, secretary, director and a 10% owner of the company, also disclosed that he may be deemed to directly own 5,009,000 shares of the company's common stock after acquiring 5,000,000 shares at $0.04 per share. At Nov. 5, 2008, the company has 13,747,163 shares of common Stock, $.001 par value per share outstanding. Based in Baltimore, Maryland, View Systems Inc. (OTC BB: VYST) -- http://www.viewsystems.com/-- manufactures and installs unique security products to government agencies, schools, courthouses, event and sports venues, the Military and commercial businesses. Going Concern Doubt As reported in the Troubled Company Reporter on April 30, 2008, Davis, Sita & Company, P.A, in Greenbelt, Maryland, expressed substantial doubt about View Systems Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm said, "The company has incurred ongoing operating losses and does not currently have financing commitments in place to meet expected cash requirements through 2008. In addition, certain notes payable have come due and the note holders have demanded payment." VIEW SYSTEMS: Discloses 16,247,163 Shares Issued and Outstanding ---------------------------------------------------------------- View Systems Inc. disclosed in a regulatory filing with the Securities and Exchange Commission that it has 16,247,163 shares of common stock issued and outstanding. On Oct. 15, 2008, the company issued 2,500,000 common shares to Starr Consulting, Inc. and its assigns in exchange for forgiveness of a promissory note made in favor of Starr Consulting, Inc. on Aug. 7, 2006, and having a face amount of $50,000 plus interest accrued of $50,000. The estimated price per share of the transaction was $0.04. The company also reported that it had agreed that it would issue additional shares to Starr Consulting, Inc. and its assigns if they failed to realize $100,000 in proceeds from their 2,500,000 shares within 90 days of issuance. Starr Consulting, Inc. retained 500,000 shares and assigned 500,000 shares to each of these entities: Power Network, Inc., BAF Consulting, Inc., New Age Sports, Inc., and Seville Consulting, Inc. Star Consulting and its assigns failed to realize their $100,000 proceeds and on Dec. 1, 2008, the company issued the additional 2,500,000 shares to Star Consulting, Inc. Again, Star Consulting retained 500,000 shares and assigned 500,000 shares each to Power Network, Inc., BAF Consulting, Inc., New Age Sports, Inc., and Seville Consulting, Inc. About View Systems Based in Baltimore, Maryland, View Systems Inc. (OTC BB: VYST) -- http://www.viewsystems.com/-- manufactures and installs unique security products to government agencies, schools, courthouses, event and sports venues, the Military and commercial businesses. Going Concern Doubt As reported in the Troubled Company Reporter on April 30, 2008, Davis, Sita & Company, P.A, in Greenbelt, Maryland, expressed substantial doubt about View Systems Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm said, "The company has incurred ongoing operating losses and does not currently have financing commitments in place to meet expected cash requirements through 2008. In addition, certain notes payable have come due and the note holders have demanded payment." VIEW SYSTEMS: Issues 10MM Shares, Discloses New Majority Ownership ------------------------------------------------------------------ View Systems Inc. disclosed in a regulatory filing with the Securities and Exchange Commission of the new majority ownership of the company. On Oct. 15, 2008, the company's board of directors approved the issuance of 5 million restricted shares of company common stock each to directors Dr. Martin Maassen and Dr. Michael Bagnoli in exchange for their forgiveness of loans made to the company, for a total of 10 million shares issued to them. The dollar value of the debts paid off to Drs. Bagnoli and Maassen is $200,000 each, for a per share issuance price of $0.04 per share. In connection with the issuance of ten million shares of common stock on Oct. 15, 2008, to its directors Drs. Maassen and Bagnoli, a change of control passed from director and majority shareholder Gunther Than. After the issuance of the shares, the majority ownership of the company is: Name and Address of Beneficial Owner: Michael L. Bagnoli Director, Secretary Title of Class: Common Number of Shares Beneficially Owned: 5,009,000* Percent of Shares Beneficially Owned: 36.4% * Represents 5,007,625 common shares held by Mr. Bagnoli, 500 common shares held by his spouse and 875 common shares held by a trust. Name and Address of Beneficial Owner: Martin Maassen Director Title of Class: Common Number of Shares Beneficially Owned: 5,030,624** Percent of Shares Beneficially Owned: 36.6% ** Represents 5,021,249 common shares held by Mr. Maassen and his spouse and 9,375 common shares held by his spouse. Name and Address of Beneficial Owner: Gunther Than Director, CEO Title of Class: Common and Preferred Number of Shares Beneficially Owned: Common - 32,302 Preferred - 89,647 Percent of Shares Beneficially Owned: Common - Less than 1% Preferred - 100% Name and Address of Beneficial Owner: All Directors and Officers as a Group Title of Class: Common and Preferred Number of Shares Beneficially Owned: Common - 10,071,926 Preferred - 89,647 Percent of Shares Beneficially Owned: Common - 73.3% Preferred - 100% There are 13,747,163 shares of common stock outstanding after the transactions. Mr. Than's ownership of Series A preferred stock allows him to control 1,344,705 votes on all shareholder matters, or the equivalent of the right to vote 8.91% of all common shares. About View Systems Based in Baltimore, Maryland, View Systems Inc. (OTC BB: VYST) -- http://www.viewsystems.com/-- manufactures and installs unique security products to government agencies, schools, courthouses, event and sports venues, the Military and commercial businesses. Going Concern Doubt As reported in the Troubled Company Reporter on April 30, 2008, Davis, Sita & Company, P.A, in Greenbelt, Maryland, expressed substantial doubt about View Systems Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm said, "The company has incurred ongoing operating losses and does not currently have financing commitments in place to meet expected cash requirements through 2008. In addition, certain notes payable have come due and the note holders have demanded payment." On June 10, 2008, the TCR reported that View Systems' consolidated balance sheet at March 31, 2008, showed $1,455,882 in total assets and $2,180,188 in total liabilities, resulting in a $724,306 total stockholders' deficit. At March 31, 2008, the company's consolidated balance sheet also showed strained liquidity with $202,848 in total current assets available to pay $2,180,188 in total current liabilities. The company reported a net loss of $65,942, on net revenues of $290,431, for the first quarter ended March 31, 2008, compared with a net loss of $323,506, on net revenues of $250,706, for the same period ended March 31, 2007. VIEW SYSTEMS: September 30 Balance Sheet Upside-Down by $743,077 ---------------------------------------------------------------- View Systems, Inc.'s balance sheet at Sept. 30, 2008, showed total assets of $1,350,877 and total liabilities of $2,093,954, resulting in a stockholders' deficit of $743,077. The company reported net loss of $134,913 for three months ended Sept. 30, 2008, compared with net loss of $315,806 for the same period in the previous year. For nine months ended Sept. 30, 2008, the company incurred net loss of $92,719 compared with net loss of $602,038 for the same period in the previous year. Liquidity and Capital Resources In spite of a decrease in net revenue from product sales, the company's net profits have been increasing and have been enough to pay ongoing costs as rent, telephone, payroll and materials but are not sufficient to cover the company's old accounts payable. The company's auditors have expressed substantial doubt that it can continue as a going concern. The company is continuing to push sales and control costs. Historically, the company has relied on revenues, debt financing, and sales of its common stock to satisfy its cash requirements. For the quarter ended Sept. 30, 2008, the company received cash from revenues of $199,204, $0 from issuance of equity, and $0 from stockholder advances. The company intends to rely on the issuance of its common stock to convert debt into equity and to raise cash. Management anticipates that it will continue to issue some shares for services in the short term. Management intends to finance its 2008 operations primarily with the revenue from product sales and any cash short falls will be addressed through equity or debt financing, if available. The company has insufficient financing commitments in place to meet its expected cash requirements for 2008, and it cannot assure that it will be able to obtain financing on favorable terms. If it cannot obtain financing to fund its operations in 2008, then it may be required to reduce its expenses and scale back its operations even further. The company's total current liabilities decreased to $2,173,354 at Sept. 30, 2008, compared to $2,165,418 at Dec. 31, 2007. Its total current liabilities at Sept. 30, 2008, included accounts payable of $455,103 accrued expenses of $92,538 accrued interest of $203,118 accrued royalties of $150,000, loans from shareholder of $313,599 and notes payable of $958,996. A full-text copy of the 10-Q filing is available for free at http://ResearchArchives.com/t/s?360d About View Systems Inc. Based in Baltimore, Maryland, View Systems Inc. (OTC BB: VYST) -- http://www.viewsystems.com/-- manufactures and installs unique security products to government agencies, schools, courthouses, event and sports venues, the Military and commercial businesses. Going Concern Doubt As reported in the Troubled Company Reporter on April 30, 2008, Davis, Sita & Company, P.A, in Greenbelt, Maryland, expressed substantial doubt about View Systems Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm said, "The company has incurred ongoing operating losses and does not currently have financing commitments in place to meet expected cash requirements through 2008. In addition, certain notes payable have come due and the note holders have demanded payment." W.R. Grace: Confirmation Hearings Set for April & June 2009 ----------------------------------------------------------- Judge Judith Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware signed a case management order scheduling a two-phase hearing to consider confirmation of W.R. Grace & Co.'s First Amended Joint Plan of Reorganization on: * April 6-8, 2009 -- Phase I of Confirmation Hearing will address confirmation issues raised by the Debtors' insurers, lenders under the Prepetition Credit Facilities and holder of Indirect personal injury or property damage Trust Claims. * June 22-25, 2008 -- Phase II of Confirmation Hearing will address the objections of the Libby Claimants and other confirmation objections not addressed in Phase I. Closing statements, if necessary, are scheduled July 20-21, 2009. W.R. Grace & Co., its subsidiaries, the Official Committee of Asbestos Personal Injury Claimants, the Asbestos PI Future Claimants' Representative, and the Official Committee of Equity Security Holders, delivered to the U.S. Bankruptcy Court for the District of Delaware on November 10, 2008, a first amended Joint Plan of Reorganization and a Disclosure Statement explaining the amended Plan. The Court notes that the CMO will not apply to issues with respect to Asbestos PD matters. The parties-in-interest will enter into a separate CMO with respect to Asbestos PD matters once the Asbestos PD documents called for in the First Amended Plan have been filed. James E. O'Neill, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, relates that on November 24, 2008, Judge Fitzgerald heard arguments and objections with respect to the Debtors' proposed CMO regarding the First Amended Plan and made rulings with respect to those arguments and objections. At the Court's directive, on December 1, 2008, the Debtors circulated a revised CMO, which they believe accurately reflected Judge Fitzgerald's rulings to all interested parties and asked those parties to provide the Debtors with comments no later than December 2. To address comments received, the Debtors further revised the CMO. Mr. O'Neill relates that the only significant comments that the Debtors did not incorporate in the revised CMO were two comments from insurers, which requested insertion of: (i) a clause indicating that the insurers objected to the CMO; and (ii) a paragraph ordering the Debtors to produce overly broad and voluminous discovery to the insurers by a date certain and tying certain Case Management deadlines to this production. The Insurers are Federal Insurance Company, Arrowood Indemnity Company, formerly known as Royal Indemnity Company; Continental Casualty Company; Transportation Insurance Company and their American insurance affiliates; counsel to OneBeacon America Insurance Company; Seaton Insurance Company, Government Employees Insurance Co.; Columbia Insurance Company, formerly known as Republic Insurance Company; Zurich Insurance Company; Zurich International (Bermuda) Ltd.; Maryland Casualty Company; and Fireman's Fund Insurance Company and Allianz S.p.A, formerly known as Riunione. Mr. O'Neill asserts that the Insurers' comments were unnecessary and inappropriate. Moreover, the insurers have asked for access to the Debtors' historical claims database. Mr. O'Neill says that the Debtors have no objection to this request but is concerned about privacy and confidentiality interests of the claimants. The Debtors will report to the Court on those matters at the December 15, 2008 omnibus hearing. The Insurers have asked the Court to deny the Debtors' proposed Case Management form on grounds, among others, that it did not include all of the Insurers' proposed changes. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. The Debtors' filed their Chapter 11 Plan and Disclosure Statement on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan and Disclosure Statement. The hearing to consider the adequacy of the Debtors' Disclosure Statement began on Jan. 21, 2005. The Debtors' exclusive period to file a chapter 11 plan expired on July 23, 2007. Estimation of W.R. Grace's asbestos personal injury liabilities commenced on Jan. 14, 2008. (W.R. Grace Bankruptcy News, Issue No. 174; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) W.R. GRACE: Insurers Want Documents Declared Confidential --------------------------------------------------------- Arrowood Indemnity Company, formerly known as Royal Indemnity Company; Federal Insurance Company; Continental Casualty Company; Maryland Casualty Company; Zurich Insurance Company; Zurich International Ltd.; Government Employees Insurance Co.; and Columbia Insurance, formerly known as Republic Insurance Company, seek for entry by the U.S. Bankruptcy Court for the District of Delaware of a confidentiality order with respect to insurance- related documents. Continental Casualty Company; Fireman's Fund Insurance Company; Allianz S.p.A., formerly known as Riunione Adriatica Di Sicurta; and Allstate Insurance Company, as successor-in-interest to Northbrook Excess and Surplus Insurance Company, join in the Insurers' motion. W.R. Grace & Co., its subsidiaries, the Official Committee of Asbestos Personal Injury Claimants, the Asbestos PI Future Claimants' Representative, and the Official Committee of Equity Security Holders, delivered to the U.S. Bankruptcy Court for the District of Delaware on November 10, 2008, a first amended Joint Plan of Reorganization and a Disclosure Statement explaining the amended Plan. The insurers maintain that they will be prejudiced and their rights to due process impaired if the Court will commence contested Plan confirmation proceedings with some parties having access to full pleading records while others having no such access. Moreover, the insurers complain that their proposed order is intended to clear the Debtors' confidentiality concerns that were raised at the November 24, 2008, case conference, and to put all parties-in-interest on an equal footing before the start of discovery. At the Insurers' behest, the Court will convene an expedited hearing on the request on December 15, 2008. Objections were due December 10, 2008. Objections Various law firms representing asbestos personal injury claimants in the Debtors' cases, contend that while it is certainly the Debtors' prerogative to address their confidentiality interests by way of a protective order, the information covered by the Insurers may include information that the law firms consider highly confidential and have only been provided to the Debtor under the stringent confidentiality orders proposed. The Law Firms tell the Court that they do not and will not accede to discovery request. Moreover, the Law Firms challenge the Insurers to bear the burden of proving standing to object to the Debtors' insurance neutral plan of reorganization before Insurers may obtain the confidential information from the Law Firms. The Law Firms are: * Baron & Budd, P.C; * Foster & Sear, L.L.P.; * Hissey, Kientz & Herron, P.L.L.C.; * The Law Offices of Peter G. Angelos, APC; * David Lipman, P.A.; * Provost & Umphrey, L.L.P.; * Weitz & Luxenberg P.C.; * Wilentz, Goldman & Spitzer, P.A.; and * Williams Kherkher Law Firm L.L.P. Kazan, McClain, Abrams, Fernandez, Lyons, Farrise & Greenwood, A Professional Law Corporation; Waters & Krauss, LLP; Paul and Hanley; Early Ludwick & Sweeney; Harowitz & Tigerman; the Wartnick Law Firm; and Early & Strauss, join in the objections raised by the Law Firms. Debtors Propose Revised Stipulation The Debtors said that although they support the Insurers' request, they do not agree on the form of the stipulation and order proposed by the Insurers, pointing out, among others, that the Insurers have made very broad document requests. Through meet-and-confer process, the Insurers have somewhat narrowed their document request, the Debtors told the Court. Copies of the Revised Confidentiality Stipulation and proposed protective order, and their black-lined versions are available for free at: http://bankrupt.com/misc/Grace_RvsdConfidentialitySTIP.pdf http://bankrupt.com/misc/Grace_BlacklinedConfidentialitySTIP.pdf The Debtors noted that they have not had a chance to discuss the most recent version of the stipulation with the Insurers and anticipate that many of the issues outline therein may be resolved before the December 15 hearing. They informed the Court that they have also served copies of their response and the revised stipulation on the Insurers and parties-in-interest to previous protective orders. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. The Debtors' filed their Chapter 11 Plan and Disclosure Statement on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan and Disclosure Statement. The hearing to consider the adequacy of the Debtors' Disclosure Statement began on Jan. 21, 2005. The Debtors' exclusive period to file a chapter 11 plan expired on July 23, 2007. Estimation of W.R. Grace's asbestos personal injury liabilities commenced on Jan. 14, 2008. (W.R. Grace Bankruptcy News, Issue No. 174; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) W.R. GRACE: FMR Entities Disclose 10.55% Equity Stake in Grace -------------------------------------------------------------- FMR LLC discloses with the Securities and Exchange Commission that it is deemed to beneficially own 7,613,367 shares of W.R. Grace & Co. common stock, which represents 10.551% of the 72,157,518 shares of Grace common stock outstanding as of October 31, 2008. Other FMC affiliates and Edward C. Johnson, chairman of FMR LLC, disclose that they are deemed to beneficially own: Shares Equity Reporting Entity Owned Stake ---------------- ------ ------ Edward C. Johnson 7,613,367 10.551% Fidelity Management & Research Company 6,784,630 9.403% Pyramis Global Advisors Trust Company 661,637 0.917% FIL Limited 167,100 0.232% Mr. Johnson and FMR LLC, through their control of Fidelity and the funds, each has sole power to dispose of the 6,784,630 shares owned by the Funds. Members of the family of Mr. Johnson are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. Neither FMR LLC nor Mr. Johnson 3d, has the sole power to vote or direct the voting of the shares owned directly by the Fidelity Funds, which power resides with the Funds' Boards of Trustees. Fidelity carries out the voting of the shares under written guidelines established by the Funds' Boards of Trustees. Mr. Johnson and FMR LLC, through its control of Pyramis, each has sole dispositive power over 661,637 shares and sole power to vote or to direct the voting of 576,737 shares of Common Stock owned by the institutional accounts managed by PGATC. Partnerships controlled predominantly by members of the family of Mr. Johnson or trusts for their benefit, own shares of FIL voting stock with the right to cast approximately 47% of the total votes which may be cast by all holders of FIL voting stock. FMR LLC and FIL are separate and independent corporate entities, and their Boards of Directors are generally composed of different individuals. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. The Debtors' filed their Chapter 11 Plan and Disclosure Statement on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan and Disclosure Statement. The hearing to consider the adequacy of the Debtors' Disclosure Statement began on Jan. 21, 2005. The Debtors' exclusive period to file a chapter 11 plan expired on July 23, 2007. Estimation of W.R. Grace's asbestos personal injury liabilities commenced on Jan. 14, 2008. (W.R. Grace Bankruptcy News, Issue No. 174; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) W.R. GRACE: Settlement With Tersigni Consulting Approved -------------------------------------------------------- W.R. Grace Co., obtained approval of a settlement with the bankruptcy estates of L. Tersigni Consulting CPA, P.C. The U.S. Bankruptcy Court for the District of Connecticut overseeing LTC's Chapter 11 case, entered an order approving the stipulation on November 24, 2008. The U.S. Bankruptcy Court for the District of Delaware was also deemed to approve the stipulation after no parties objected to the deal. W.R. Grace filed a $4,855,994 claim against the bankruptcy estates of L. Tersigni Consulting CPA, P.C., for alleged overcharges during LTC's retention as financial advisor to the Official Committee of Asbestos Personal Injury Claimants. The Debtors also asserted a $4,855,994 claim against the Tersigni Probate Estate for the Alleged Overcharges. LTC, on the other hand, has asserted a $195,144 claim for unpaid professional services rendered in the Debtors' Chapter 11 cases. To resolve their claims, the Debtors entered into a stipulation with Nancy Tersigni, as executrix of the estate of Loreto T. Tersigni, to resolve the Claims. The Tersigni Probate Estate agrees to pay the Debtors $365,531 or 11% of the total fees paid to LTC, covering all Claims asserted by the Debtors against LTC and the Tersigni Entities. All deadlines with respect to the Debtors' action against the Tersigni Probate Estate will be tolled from October 16, 2008 until the $365,531 is paid to the Debtors. The LTC's estates agree to waive payment on the LTC Claim for $195,144 asserted against the Debtors. The parties also agree to mutual releases. In June 2007, the U.S. Trustee for Region 3 asked Judge Fitzgerald to appoint an examiner to investigate the alleged overbilling practices of Mr. Tersigni, principal and owner of LTC. In November that year, the firm sought bankruptcy protection and an examiner was appointed. The Examiner, upon review of documents, estimated that overbillings could be between $5,500,000, to $10,300,000. The overbillings, according to the Examiner, started in as early as 2002 and ended around March 2007. Mr. Tersigni died in May 2007. LTC was hired by Caplin & Drysdale, Chartered, and Stutzman, Bromberg, Esserman & Plifka, P.A., two law firms representing asbestos creditors committee in high-profile asbestos bankruptcy cases, including W.R. Grace, Federal-Mogul, Owens Corning, and USG Corp. Examiner Order Dropped James E. O'Neill, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, relates that since the Debtors have settled matters with Tersigni, and certain other related parties, the Debtors filed with the Court a draft order vacating the Order Granting Motion of U.S. Trustee for the Appointment of an Examiner related to the conduct of L. Tersigni Consulting, P.C. He attests that the U.S. Trustee has reviewed and approved the proposed Order. Accordingly, at the Debtors' behest, the Deleware Court vacated its order on the appointment of an examiner related to the conduct of LTC. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. The Debtors' filed their Chapter 11 Plan and Disclosure Statement on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan and Disclosure Statement. The hearing to consider the adequacy of the Debtors' Disclosure Statement began on Jan. 21, 2005. The Debtors' exclusive period to file a chapter 11 plan expired on July 23, 2007. Estimation of W.R. Grace's asbestos personal injury liabilities commenced on Jan. 14, 2008. (W.R. Grace Bankruptcy News, Issue No. 173; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) WASTEQUIP INC: High Leverage Cue Moody's to Downgrade Ratings ------------------------------------------------------------- Moody's Investors Service has lowered the corporate family and probability of default ratings of Wastequip Inc. to Caa1 from B3. In addition, the ratings on the senior secured revolving credit facility and term loan were lowered to B2 from B1. The rating outlook is negative. The downgrade reflects the deterioration of Wastequip's earnings and cash flow over the past year, the company's high leverage and the expectation that the conditions driving Wastequip's operational challenges will continue to limit the company's financial flexibility in the near term. Specifically, the action highlights Moody's concerns that challenging end market conditions, reduced demand for Wastequip's products and a difficult pricing environment, coupled with the company's substantial debt burden, high interest costs and weakened liquidity profile, could prevent the company from reducing its financial leverage through earnings growth or debt repayment in 2009. The negative outlook reflects Moody's view that reduced waste volumes, driven by falling residential and non-residential construction activity in the U.S., and the resulting decline in product demand will continue to weigh on Wastequip's margins and earnings, limiting the benefits from recent restructuring activities. Moody's does not view the reduced earnings capacity as an immediate threat to Wastequip's adequate liquidity profile given the expectation of cash generation from working capital reductions, existing cash balances and revolver availability. However, the company's credit facility includes a fixed charge coverage covenant that will step up twice over the next two quarters making compliance increasingly challenging if earnings deterioration continues. These ratings were downgraded: -- Corporate Family Rating to Caa1 from B3; -- Probability of Default Rating to Caa1 from B3; -- Senior secured revolving credit facility to B2 (LGD2/11%) from B1 (LGD2/29%); and -- Senior secured term loan to B2 (LGD2/11%) from B1 (LGD2/29%). The last rating action was on December 13, 2007 when the corporate family rating of Wastequip was downgraded to B3. Wastequip is the largest manufacturer of waste handling and recycling equipment used to collect, process, and transport solid and liquid waste in North America. Revenues for the twelve months ending September 30, 2008 were slightly below $500 million. WCI COMMUNITIES: Appoints Russell Devendorf as CFO -------------------------------------------------- WCI Communities, Inc., has appointed Russell Devendorf as Senior Vice President and Chief Financial Officer of WCI, effective December 1, 2008. Mr. Devendorf joins WCI from homebuilding company Meritage Homes Corporation where he served as Vice President-Finance since May 2008. Previously, he served with homebuilder TOUSA, Inc., in financial and accounting management positions over a six year period, where he most recently served from July 2006 to May 2008 as Vice President, Treasurer, and Corporate Secretary. Before joining TOUSA, Inc., from April 2000 to March 2002, Mr. Devendorf co-founded Resource International, a sales, marketing and distribution company concentrating in consumer electronic products and served as its Vice President and Chief Financial Officer. Prior to joining Resource International, Mr. Devendorf was employed by Ernst & Young, LLP from April 1996 to March 2000 as a senior Auditor in its real estate group. Mr. Devendorf is a Certified Public Accountant and Certified Treasury Professional. In connection with his service as Chief Financial Officer, Mr. Devendorf will receive: (i) an annual salary of $275,000; (ii) a 12 month temporary living stipend of $3,000 per month; (iii) a one time cash relocation expense payment of $5,000; (iv) payment of certain expenses related to his relocation from Arizona to Florida; and (v) standard and customary closing costs related to the sale of Mr. Devendorf's current Florida home and purchase of a new home closer to the Company's headquarters in Bonita Springs. Mr. Devendorf will also enter into a Severance and Non- solicitation Agreement with WCI, which provides that if Mr. Devendorf's employment with WCI is terminated for reasons other than for "cause" or is voluntarily terminated by Mr. Devendorf for "good reason," then Mr. Devendorf will be entitled to severance compensation equal to six months of base salary, payable in a lump sum. Pursuant to the Severance Agreement, Mr. Devendorf is also subject to a 12 month non-solicitation covenant commencing on the date of Termination and a covenant not to disclose confidential information. If Mr. Devendorf's employment with WCI is terminated for "cause" or by reason of death or disability, he is not entitled to any Severance. Mr. Devendorf will be eligible to participate in a proposed 2009 Management Incentive Compensation Plan and Emergence Incentive Award, the terms of which have not yet been approved by the Official Committee of Unsecured Creditors nor the United States Bankruptcy Court for the District of Delaware. If the Plans are approved by the Committee and the Court, an amended Form 8-K will be filed by WCI describing Mr. Devendorf's participation in the Plans. Senior VP Steps Down On November 6, 2008, Albert F. Moscato, Jr., senior vice president of business development for WCI Communities, Inc., resigned effective November 20, 2008, to pursue new opportunities, the company disclosed in a filing with the U.S. Securities and Exchange Commission. 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; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). WCI COMMUNITIES: Delays Filing Of 2008 3rd Quarter Results ---------------------------------------------------------- WCI Communities, Inc., has notified the U.S. Securities & Exchange Commission that it could not file its quarterly report for the quarter ended September 30, 2008, within the prescribed time period. According to Scott Perry, WCI's chief accounting officer, the closing of the Company's books and the process of preparing WCI's financial statements for the quarter is taking longer than expected due to: -- "manpower constraints" following the resignation of Ernest Scheidemann, WCI's chief financial officer, on August 31, 2008; -- the focus of WCI's resources on the preparation of documents and schedules for submission; and -- the length of time needed to complete detailed, updated impairment analyses for WCI's real estate inventories. Mr. Perry, however, assures the SEC that WCI intends to file its Form 10-Q as soon as practicable after completion of its reporting process no later than January 28, 2009, in accordance with the Company's $150 million DIP Credit Agreement. Mr. Perry reveals that WCI anticipates reporting total revenues between $90 million and $100 million for the three months ended September 30, 2008, as compared to total revenues of $166 million and net loss of $69 million for the three months ended September 30, 2007. At this time, WCI says it is unable to provide an estimate of its net loss for the three months ended September 30, 2008, but it anticipates that it will exceed the net loss of $69 million reported for the three months ended September 30, 2007. "The decrease in revenues is a result of the continuing decrease in demand for homes, which has resulted in a decline in home closings, lower sales prices achieved on home closings, a decline in new home orders and the Company completing all towers under construction during the three month period," Mr. Perry explains. WCI's anticipated increase in net loss is due to be between $8 million to $11 million of bankruptcy-related legal, consultant and other restructuring related expenses and the recognition of real estate impairment losses, Mr. Perry adds. "The Company has not completed its updated analyses related to real estate impairments; therefore, it is unable to provide an estimate of its full results of operations," Mr. Perry says. 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; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). WCI COMMUNITIES: Kraft Wants to Serve Subpoenas on Gateway ---------------------------------------------------------- Kraft Contruction Company, Inc., seeks permission from the U.S. Bankruptcy Court for the District of Delaware to serve subpoenas on debtor Bay Colony - Gateway, Inc., as a third party, requesting the production of certain documents and for the disposition of Gateway. In June 2007, Belize Condominium Association, Inc., filed an action in the Circuit Court of the 20th Judicial Circuit in Collier County, Florida against Gateway, and Kraft. The Belize Association asserted claims against Gateway as developer and Kraft as general contractor for alleged construction defects. The Association subsequently filed an amended complaint which added claims against Kraft. In October 2007 and May 2008, Gateway and Kraft filed answers. However, no cross claims were asserted. Discovery proceeded but the Florida Action was eventually stayed after the Debtors filed for Chapter 11 protection. Kathleen M. Miller, Esq., at Smith Katzenstein & Furlow LLP, in Wilmington, Delaware, contends that the duties of Kraft and Gateway are intertwined because by law, Kraft and Gateway have warranted to provide a condominium that is fit and constructed in accordance with applicable codes. Ms. Miller tells the Court that Kraft cannot defend itself against the claims of the Association without obtaining discovery from Gateway. Specifically, she notes, Kraft need discovery with respect to: -- what actions, if any, were taken between the time when Kraft completed its work and the date the condominium units were turned over to the Association; -- documents and communications relating to the design of the high rise; and -- any notice of warranty claims or construction defects received by Gateway and any action taken in response. Ms. Miller argues that since Kraft is seeking discovery to enable it to defend itself in the Florida Action and it is not seeking to pursue a claim against Gateway, as none was asserted, the automatic stay provisions of Section 362 of the Bankruptcy Code does not apply. 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. 15; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). WCI COMMUNITIES: Gateway, et al., File Schedules & Statements ------------------------------------------------------------- Three debtor-affiliates of WCI Communities, Inc., reported assets ranging between $100,000,000 to $130,000,000: Debtors Assets Liabilities ------- ------ ----------- Bay Colony-Gateway, Inc. $129,910,548 $1,464,337,193 Communities Finance Company LLC 170,850,191 1,456,610,193 WCI Towers Northeast USA, Inc. 110,131,059 784,802,493 Jonathan Pertchik, the Debtors' chief restructuring officer, disclosed that these Debtors earned income from employment or operation of their businesses within two years immediately prior to the Petition Date: YTD 2008 FY 2007 FY 2006 -------- ------- ------- Bay Colony Gateway $15,105,990 $71,411,679 $103,423,474 Communities Finance $9,294,192 $42,707,905 $169,952,298 WCI Towers NE USA ($30,991,879) $57,625,867 $58,090,583 The disbursements of Bay Colony, Communities Finance, and WCI Towers with respect to consultations on debt consolidation, relief under the bankruptcy law, or preparation of a petition in bankruptcy within one year immediately preceding the Petition Date are consolidated in the Statement of Financial Affairs for WCI Communities, Inc. 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; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). WEST VALLEY FINANCIAL: Voluntary Chapter 11 Case Summary -------------------------------------------------------- Debtor: West Valley Financial Group, Inc. 20115 Orchard Meadow Dr. Saratoga, CA 95070 Case No.: 08-57124 Chapter 11 Petition Date: December 9, 2008 Court: U.S. Bankruptcy Court Northern District of California (San Jose) Debtor's Counsel: Charles B. Greene, Esq. 84 W Santa Clara St. #770 San Jose, CA 95113 (408) 279-3518 Email: cbgattyecf@aol.com Total Assets: $3,400,000 Total Debts: $1,489,159 The Debtor does not have creditors who are not insiders. WINSTAR COMMUNICATIONS: Blackstone to Receive Payment for Claims ---------------------------------------------------------------- Christine C. Shubert, as Chapter 7 Trustee for the estate of Winstar Communications, Inc., obtained the U.S. Bankruptcy Court for the District of Delaware's approval of a stipulation with The Blackstone Group, LP, in connection with their dispute on Blackstone's administrative expense claims. Blackstone sought the allowance and payment of its administrative expense claims against the Debtors, including $257,064 in legal fees, incurred by its counsel, Kirkland & Ellis LLP, as well as an unliquidated component for future legal fees, in connection with an action filed by Winstar Holdings, LLC, and IDT Corporation against Blackstone, Impala Partners, LLC, and Citicorp, alleging fraudulent misrepresentations relating to the sale of Winstar assets. The Chapter 7 Trustee asked the Court to deny Blackstone's request on the grounds that the request was premature and cannot be considered until the conclusion of the Action. She asserted that if Blackstone is convicted, the Debtors will not be liable for any expenses the firm incurred pursuant to an indemnity agreement between the parties. Ms. Shubert added that at the present time, the Debtors' assets are encumbered and there are no funds available to pay Chapter 11 administrative claims. Blackstone and the Chapter 7 Trustee have consequently reached an agreement with respect to the claim allowance dispute. The salient terms of the Stipulation are: (a) Blackstone will have a Chapter 11 administrative claim against the Debtors in an amount to be determined at a later date; (b) In the event the Action is concluded through a settlement or final judgment, the parties will negotiate a mutually agreeable figure as to all indemnified expenses as well as all losses incurred to date, which sum will constitute the Administrative Claim; (c) In the event that the Action is not concluded through a settlement or final judgment, the parties will negotiate a figure as to all indemnified expenses and losses incurred to date, which sum will constitute the Administrative Claim; (d) If the parties agree as to the amount of the Administrative Claim, Blackstone will be paid its Claim along with other allowed administrative claims in accordance with a Court order; (e) If the parties do not reach an agreement as to the amount of the Administrative Claim, each party reserves its rights under the Bankruptcy Code and existing law; (f) Blackstone will withdraw the Claim Motion and the Chapter 7 Trustee will withdraw its objection upon approval of the Stipulation; and (g) If there is a final judicial determination of the losses, claims, damages, or liabilities in the Action resulting from Blackstone's bad faith, gross negligence or willful misconduct, the Administrative Claim will be equal to $0, and Blackstone will reimburse the Chapter 7 Trustee for all amounts paid to Blackstone under the Stipulation. Pursuant to the Court's order, Blackstone notified the Court of the withdrawal of its Motion and the Chapter 7 Trustee has also withdrawn its Objection. About Winstar Communications Based in New York, Winstar Communications, Inc., provides broadband services to business customers. The company and its debtor-affiliates filed for chapter 11 protection on April 18, 2001 (Bankr. D. Del. Case Nos. 01-01430 through 01-01462). As part of their chapter 11 restructuring strategy, the Debtors sold their domestic telecom assets to IDT Winstar Acquisition, Inc. IDT later sold the Winstar Assets to GVC Networks, LLC, resulting in the creation of GVCwinstar, a wholly owned subsidiary of GVC Networks. On Jan. 24, 2002, the Bankruptcy Court converted the Debtors' cases to a chapter 7 liquidation proceeding . Christine C. Shubert serves as the Debtors' chapter 7 trustee. The chapter 7 trustee is represented by Fox Rothschild LLP and Kaye Scholer LLP. When the Debtors filed for bankruptcy, they listed $4,975,437,068 in total assets and $4,994,467,530 in total debts. The Debtors are currently embroiled in a legal battle before the U.S. Court of Appeals for the Third Circuit to recover about $200 million in payments made to Lucent Technologies. The parties also allege breach of contract claims. (Winstar Bankruptcy News, Issue No. 86; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) WINSTAR COMMUNICATIONS: Lucent Appeals $188MM Preference Order -------------------------------------------------------------- At a hearing before the Honorable Dolores K. Sloviter, Honorable Morton I. Greenberg, Honorable Joseph E. Irenas of the U.S. Court of Appeals for the Third Circuit, Craig Goldblatt, Esq., at Wilmer Cutler Pickering Hale and Dorr, LLP, in Washington D.C., on behalf of Lucent Technologies, Inc., contended that the facts as found by the U.S. Bankruptcy Court for the District of Delaware are insufficient to give rise to Lucent's liability to Winstar Communications Inc. The Bankruptcy Court had found that Christine C. Shubert, the Chapter 7 Trustee for Winstar Communications, Inc., was entitled to recover a $188,000,000 repayment of Winstar's debt to Lucent, which constitutes a preference transfer. The Bankruptcy Court also awarded $62,000,000 after finding that Lucent had breached a contract with a Winstar subsidiary. The Bankruptcy Court held that Lucent was an insider because Lucent used its influence over Winstar, which was "derived from the parties' strategic relationship, to pressure Winstar to engage in improper transactions." Mr. Goldblatt argued that the $188,000,000 Repayment is not a preference transfer, since Lucent received the payment more than 90 days before Winstar's bankruptcy filing. Moreover, it could only be a preference if the Winstar Chapter 7 Trustee proved that Lucent was an insider of Winstar. To be a person in control, a creditor must have the power to direct the operations of the debtor and to exercise managerial control over the debtor's affairs, Mr. Goldblatt asserted. Lucent, Trustee Argue Insubordination Issue Mr. Goldblatt, on behalf of Lucent, addressed the equitable subordination issue in the action In re Winstar Communications, Inc., No. 07-2569. Mr. Goldblatt brought to the attention of the Third Circuit that the Fifth Circuit reversed the Bankruptcy Court's decision to subordinate the claims of two corporate insiders, who acted as officers and directors and were the company's largest shareholders, in In re SI Restructuring, Inc., Case No. 07-50872 (5th Cir. June 20, 2008). Mr. Goldblatt pointed out that the Bankruptcy Court had not only subordinated Lucent's entire unsecured claim, providing that it would recover nothing on that claim, but also transferred the value of Lucent's lien to the estate, depriving Lucent of the $21,000,000 in collateral. Mr. Goldblatt reiterated that Lucent was not an insider, pointing out that it did not exercise actual managerial control of Winstar. He argued that equitable subordination is remedial, not penal, and should be applied only to offset specific harm suffered by creditors, on account of the inequitable conduct. Representing Chapter 7 Trustee, David R. King, Esq., at Herrick Feinstein, LLP, advised the Third Circuit of the Tenth Circuit Court of Appeals' decision in In re Anstine v. Carl Zeiss Meditec, Inc., Case No. 07-1259 (10th Cir., July 15, 2008). According to Mr. King, the Anstine case is directly on point on the issue of whether or not Lucent was an insider. For statutory insiders, the Tenth Circuit held that the "person in control" test under Section 101(31) of the Bankruptcy Code is met by a finding that a corporate creditor can "unqualifiably dictate corporate policy and the disposition of corporate assets" for the debtor. The Tenth Circuit do not require day-to-day or "managerial control" for non-statutory insiders. It also held that control is not required for a corporation to be an insider of another corporation and instead, as the Chapter 7 Trustee argued, the test for non-statutory insiders is the existence of non arm's-length dealings between the parties. Thus, Mr. King argued, based on the Tenth Circuit's ruling, Lucent's claims that (i) statutory insiders under the "person in control" test must exercise day-to-day or actual managerial control; and (ii) corporate non-statutory insiders must also exercise "actual managerial control" should be rejected. Mr. King added that in the Anstine case, the corporation was not an insider because the Bankruptcy Court found that the corporate creditor was not a "person in control" of the corporate debtor, and dealt at arm's-length with the debtor at all times. In Lucent's case, the Bankruptcy Court made multiple findings of fact, concerning both Lucent's control and ability to "dictate corporate policy and the disposition of corporate assets, and the non arm's-length dealings between the parties, Mr. King stated. Mr. Goldblatt, in Lucent's defense, elaborated that in In re Anstine, the case held that a commercial creditor was not an insider although the creditor owned more than 10% of the debtor's stock and the creditor's CEO served on the debtor's board. Contrary to the Chapter 7 Trustee's contentions, the Anstine case supports the conclusion that Lucent was not an insider of Winstar, Mr. Goldblatt maintained. However, Mr. Goldblatt argued, the Tenth Circuit had held that the creditor was not a non-statutory insider and rejected the notion that a close strategic relationship suffices to make a commercial creditor a non-statutory insider. The Tenth Circuit had explained that the advantage gained by the creditor through the course of dealings between the parties -- rather than through simple affinity -- indicates that the creditor is not an insider. "That is precisely the case here," Mr. Goldblatt said. Parties Dispute Subcontract Claim and Preferential Transfer Mr. King, on the Chapter 7 Trustee's behalf, asserts that the Chapter 7 Trustee's claim is a core claim, and Lucent is not entitled to a jury trial with respect to that claim. He argues that the decision in In re CBI Holding Co. Inc., 529 F.3d 432 (2d Cir. 2008), supports the Chapter 7 Trustee's claims. In CBI's case, Ernst & Young filed a claim for prepetition accounting services, and CBI filed an adversary proceeding against E&Y for fraud, breach of contract, and negligence in connection with those services. The CBI Court ruled against E&Y, and on appeal E&Y argued that CBI's claims were not core and that it was entitled to a jury trial. The Second Circuit rejected E&Y's argument and held that CBI's claims were core since they were integrally related to E&Y's claims against the estate. The CBI Court further held that CBI's claims were core, regardless of whether they were direct defenses to E&Y's claims. The CBI Court also denied E&Y's request for a jury trial, and distinguished its holding in In re Germain v. National Bank, 988 F.2d 1323 (2d Cir. 1993). The CBI Court noted that in Germain, the claim was based on prepetition dealings, but the debtor's claim was related to postpetition conduct; hence it was not integral to the claim. In addition, Mr. King said that in In re Entringer Bakeries, Inc., IVo. 07-30499 (5th Cir., Nov. 6, 2008), the Fifth Circuit supported the Chapter 7 Trustee's argument that the preferential transfer was not "earmarked." The Fifth Circuit applied its "control" standard for earmarking, and rejected earmarking with respect to a $180,000 preferential payment because the debtor controlled the funds when they were deposited into its general account, commingled with other funds, and held for one day before being paid to the old creditor. Similarly, Mr. King explained, Winstar received a deposit of funds into its general account, commingled the funds with other funds, and controlled those funds before paying them out to Lucent. In Lucent's defense, Mr. Goldblatt asserted that the Chapter 7 Trustee's state-law breach-of-contract claim is a non-core dispute, for which Lucent is entitled to a tribunal and jury trial. He maintained that the Third Circuit has not adopted the Second Circuit's test for determining matters that constitute "core." Under Third Circuit, a matter is "core" only if it invokes a substantive right provided by the Bankruptcy Code, or arises in the context of a bankruptcy case. Mr. Goldblatt maintained that neither is true of the Chapter 7 Trustee's claim. Mr. Goldblatt argued that even under CBI's reasoning, the subcontract claim is not core. CBI found the lawsuit at issue core, he elaborated, because (i) the claims raised were defenses to the creditor's proof of claim, thus implicating the claims- allowance process; and (ii) the claims were counterclaims to the creditor's claim. According to Mr. Goldblatt, the Chapter 7 Trustee's claim that Lucent breached its subcontract is not a defense to Lucent's claim for repayment of its loan to Winstar. Furthermore, he stated, the subcontract claim is a counterclaim since it was filed before Lucent filed its proof of claim. Therefore, CBI's case is irrelevant to the core/non-core analysis, he asserted. With respect to the jury-trial analysis, CBI's case is also irrelevant, Mr. Goldblatt added. In CBI, the Second Circuit found that the creditor was not entitled to a jury trial because the contract suit affected the allowance of claim, but this does not apply in Lucent's case, Mr. Goldblatt countered. The resolution of the subcontract claim will not affect the allowance of Lucent's claim, he said. Moreover, Mr. Goldblatt pointed out that in Entringer's case, the Fifth Circuit's decision is consistent with the settled law on earmarking, on which Lucent relies. Where there is an agreement between the debtor and the new lender requiring that the funds be used to pay an old creditor, the debtor's physical control over the funds is irrelevant, he maintained. He averred that the rule is the same whether the new lender pays the old creditor directly, or pays the debtor with the understanding that the funds will be paid to the creditor. Thus, in Entringer, there was no earmarking because there was no agreement that the funds were to be used to pay the old creditor, he pointed out. About Winstar Communications Based in New York, Winstar Communications, Inc., provides broadband services to business customers. The company and its debtor-affiliates filed for chapter 11 protection on April 18, 2001 (Bankr. D. Del. Case Nos. 01-01430 through 01-01462). As part of their chapter 11 restructuring strategy, the Debtors sold their domestic telecom assets to IDT Winstar Acquisition, Inc. IDT later sold the Winstar Assets to GVC Networks, LLC, resulting in the creation of GVCwinstar, a wholly owned subsidiary of GVC Networks. On Jan. 24, 2002, the Bankruptcy Court converted the Debtors' cases to a chapter 7 liquidation proceeding . Christine C. Shubert serves as the Debtors' chapter 7 trustee. The chapter 7 trustee is represented by Fox Rothschild LLP and Kaye Scholer LLP. When the Debtors filed for bankruptcy, they listed $4,975,437,068 in total assets and $4,994,467,530 in total debts. The Debtors are currently embroiled in a legal battle before the U.S. Court of Appeals for the Third Circuit to recover about $200 million in payments made to Lucent Technologies. The parties also allege breach of contract claims. (Winstar Bankruptcy News, Issue No. 86; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) WINSTAR COMMUNICATIONS: Trustee Taps C&W as Consultants ------------------------------------------------------- Christine C. Shubert, as Chapter 7 Trustee for the estate of Winstar Communications, Inc., sought and obtained the U.S. Bankruptcy Court for the District of Delaware's authority to retain C&W Consultants, Inc., as her special consultant. The Chapter 7 Trustee selected C&W to be her special consultant for the limited purpose of pursuing and recovering certain remnant, residual, unknown and difficult-to-monetize assets of the Winstar estates. According to the Chapter 7 Trustee, the Residual Assets include, escheated funds being held in each state's unclaimed property program, collection of unpaid settlements and judgments held in the Estate's favor, and class action matters with claims available for the Estate's benefit. Residual Assets, the Chapter 7 Trustee continues, exclude: (1) any recoveries or proceeds resulting from the adversary proceeding captioned Shubert v. Lucent Technologies Inc., United States Bankruptcy Court, Adversary Proceeding No. 01-011063, or any potential claims or causes of action relating to or arising out of the Lucent Adversary Proceeding; (2) any funds presently held by the Winstar estate; (3) any funds, assets or claims received by the Winstar estate for which C&W did not have any involvement; (4) all international assets or claims presently held by the Winstar Estate or arising in the future, except for assets or claims discovered in Canada; and (5) a certain claim for unclaimed funds on behalf of WCI Capital Corp. against the State of New York. Pursuant to an engagement letter between the parties, C&W's services will be provided on a contingent fee basis. The firm will also be reimbursed by the Chapter 7 Trustee from recoveries related to the Residual Assets. Specifically, C&W will receive one-third of gross recoveries related to the Residual Assets as compensation, to be taken directly from the monies collected by C&W in connection with the Residual Assets, without further Court order. The Chapter 7 Trustee pointed out that the funds from the Residual Assets will be C&W's sole source of compensation. The Chapter 7 Trustee attested that C&W has not entered into any agreement to share its compensation as may be awarded, except as permitted under the Bankruptcy Code. Eric Linn, president of C&W, assured the Court that his firm does not represent any interest adverse to the Debtors' estates, and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Winstar Communications Based in New York, Winstar Communications, Inc., provides broadband services to business customers. The company and its debtor-affiliates filed for chapter 11 protection on April 18, 2001 (Bankr. D. Del. Case Nos. 01-01430 through 01-01462). As part of their chapter 11 restructuring strategy, the Debtors sold their domestic telecom assets to IDT Winstar Acquisition, Inc. IDT later sold the Winstar Assets to GVC Networks, LLC, resulting in the creation of GVCwinstar, a wholly owned subsidiary of GVC Networks. On Jan. 24, 2002, the Bankruptcy Court converted the Debtors' cases to a chapter 7 liquidation proceeding . Christine C. Shubert serves as the Debtors' chapter 7 trustee. The chapter 7 trustee is represented by Fox Rothschild LLP and Kaye Scholer LLP. When the Debtors filed for bankruptcy, they listed $4,975,437,068 in total assets and $4,994,467,530 in total debts. The Debtors are currently embroiled in a legal battle before the U.S. Court of Appeals for the Third Circuit to recover about $200 million in payments made to Lucent Technologies. The parties also allege breach of contract claims. (Winstar Bankruptcy News, Issue No. 86; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) WINSTAR COMMUNICATIONS: Trustee Taps Walker Nell as Accountants --------------------------------------------------------------- Christine C. Shubert, the Chapter 7 Trustee for the estate of Winstar Communications, Inc., sought and obtained approval from the U.S. Bankruptcy Court for the District of Delaware to retain Walker Nell Consultants, Inc., as accountants to the Debtors' estate, nunc pro tunc to September 8, 2008. Representing the Chapter 7 Trustee, Sheldon K. Rennie, Esq., at Fox Rothschild LLP, in Wilmington Delaware, told the Court that the Chapter 7 Trustee wants to hire WNC to avail the services of Stephen J. Scherf. Mr. Scherf provided services relating to tax services, preference analysis and the insolvency analysis in the multi-million dollar lawsuit against Lucent Technologies Inc., Mr. Rennie related. With the services of Mr. Scherf, the Chapter 7 Trustee was able to obtain a $300,000,000 judgment against Lucent. The case against Lucent is currently on appeal. According to Mr. Rennie, Mr. Scherf resigned from Executive Sounding Board Associates, Inc., the Chapter 7 Trustee's accountant, on September 5, 2008. He joined WNC on September 8. Subsequently, the Chapter 7 Trustee terminated the services of ESB with the Court's consent, effective as of September 5. WNC will render services in line with the services Mr. Scherf performed for Winstar's benefit while he was at ESB. As accountant, WNC will provide: (a) General accounting and tax advisory services to the Chapter 7 Trustee regarding the administration of the Debtors' estate; (b) Review of and assistance in the preparation and filing of any tax returns, assistance regarding existing and future IRS examinations, as well as other tax assistance as may be requested; (c) Analysis and advice regarding additional accounting, financial, valuation and related issues that may arise in the course of these proceedings; (d) Assistance to the Chapter 7 Trustee's counsel in the preparation and evaluation of any potential litigation; (e) Providing testimony on various matters; and (f) Other services for the Chapter 7 Trustee in the Debtors' Chapter 7 cases, as requested. WNC will be paid on an hourly basis at the firm's normal and customary hourly rates as well as reimbursement of actual and necessary expenses incurred: Professional Hourly Rate ------------ ----------- Stephen J. Scherf $425 Staff through Managing Directors $100 - $450 WNC will also be reimbursed for actual and necessary expenses it incurred or incurs in connection with the contemplated services. Mr. Scherf assured the Court that WNC does not represent any interest adverse to the Debtors' estates, and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Winstar Communications Based in New York, Winstar Communications, Inc., provides broadband services to business customers. The company and its debtor-affiliates filed for chapter 11 protection on April 18, 2001 (Bankr. D. Del. Case Nos. 01-01430 through 01-01462). As part of their chapter 11 restructuring strategy, the Debtors sold their domestic telecom assets to IDT Winstar Acquisition, Inc. IDT later sold the Winstar Assets to GVC Networks, LLC, resulting in the creation of GVCwinstar, a wholly owned subsidiary of GVC Networks. On Jan. 24, 2002, the Bankruptcy Court converted the Debtors' cases to a chapter 7 liquidation proceeding . Christine C. Shubert serves as the Debtors' chapter 7 trustee. The chapter 7 trustee is represented by Fox Rothschild LLP and Kaye Scholer LLP. When the Debtors filed for bankruptcy, they listed $4,975,437,068 in total assets and $4,994,467,530 in total debts. The Debtors are currently embroiled in a legal battle before the U.S. Court of Appeals for the Third Circuit to recover about $200 million in payments made to Lucent Technologies. The parties also allege breach of contract claims. (Winstar Bankruptcy News, Issue No. 86; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) WHITE MARLIN: Moody's Downgrades US$24 Mil. Original Swap to 'B1' ----------------------------------------------------------------- Moody's Investors Service has downgraded these credit default swap: Transaction: White Marlin CDO 2007-1, Ltd. Class E CDS Class Description: US$24,000,000 Original Swap Notional Amount Credit Derivative Transaction due September 22, 2014 -- Prior Rating: Baa2, on review for possible downgrade -- Prior Rating Date: March 27, /2008 -- Current Rating: B1, on review for possible downgrade This Transaction has exposure to Lehman Brothers Special Financing Inc. Moody's explained that LBSFI acts as a credit default swap counterparty in the Transaction and that its obligations as such are guaranteed by Lehman Brothers Holdings Inc. The filing of a petition of bankruptcy of LBHI under Chapter 11 of the U.S. Bankruptcy Code on September 15, 2008 is expected to result in an Event of Default under the CDS. The rating action reflects the increased expected loss attributable to the loss of premium as the result of LBSFI Event of Default under the CDS. This transaction is a single name CDS referencing the US$24,000,000 Class E Contingent Funding Deferrable Notes Due 2014 issued by White Marlin CDO 2007-1, Ltd. Moody's initially analyzed and continues to monitor this transaction using primarily the methodology and its supplements for corporate synthetic CDOs as described in Moody's Special Reports below: -- Moody's Approach To Rating Synthetic CDOs (July 2003) -- Moody's Approach to Rating Digital Credit Default Swaps (July 2004) -- Moody's Revisits Its Assumptions Regarding Corporate Default (and Asset) Correlations for CDOs (November 2004) -- Understanding Collateral Risks of Funded Synthetics in CDOs (June 2006) * Fitch Puts Ratings Seven U.S. Auto Suppliers on Negative Watch ---------------------------------------------------------------- Fitch Ratings has placed the Issuer Default Ratings of the U.S. auto suppliers on Rating Watch Negative, based on the impact of a potential bankruptcy filing by General Motors. Given its smaller profile, it is unlikely that a bankruptcy filing by Chrysler would have the same impact. Industry bankruptcies could result from either the failure of the auto legislation currently under consideration in the U.S. Congress, or the failure of the Detroit Three to develop viable restructuring plans in the several months prior to the expiration of the bridge loans included in the current legislation. In 2009, auto suppliers are already facing a steep global downturn in auto production, including a deeply depressed production forecast in the U.S. and Europe. In the event of a General Motors bankruptcy, Fitch believes that the resulting contraction in auto production, the supply chain, trade credit and capital-access would cause widespread shutdowns and bankruptcies throughout the supply chain. Given the cliff- risk nature of the risks involved, Fitch has tried to detail below the extent of the potential rating actions that would be taken in the event of a GM bankruptcy. In any event, Fitch will continue to take individual rating actions in the sector as events unfold over the next several weeks and months. Fitch notes that even if the OEMs avoid bankruptcy, major restructurings of their operations will occur, causing material changes in the operations of their Tier I suppliers. These restructurings could also lead to ratings actions, providing further rationale for placing these suppliers on Rating Watch Negative. The following table shows the auto suppliers placed or remain on Rating Watch Negative and the ratings most likely to result in the event of a GM bankruptcy: Companies Current IDR/Prospective IDR American Axle 'B'/'CC'; ArvinMeritor 'B'/CCC'; Hayes-Lemmerz 'B'/CCC'; Johnson Controls 'A-'/'BBB+'; Tenneco 'BB-/B-'; TRW 'BB'/'B-'; Visteon 'CCC'/'CC' Companies not included in the rating actions: Cummins 'BBB+'; Goodyear 'BB-'; Navistar 'BB-'. Despite improved diversification by most Tier 1 suppliers -- across manufacturers, geographies and product lines -- the decline in supplier revenues and operating cash flow through 2009 resulting from a GM bankruptcy would likely produce covenant violations across the vast majority of suppliers. Of equal concern, Tier 2 and three suppliers are likely to experience widespread bankruptcies through loss of volume, lack of receivables financing, and restricted financial and trade credit. Fitch expects that a collapse of trade credit throughout the supply chain would put at risk the domestic operations of these suppliers, as well as their financial viability. TRW and Tenneco remain better positioned given their global operations, but Fitch expects that these two companies, at a minimum, would require renegotiations with their bank group. Ratings on Rating Watch Negative are as follows: American Axle & Manufacturing Holdings, Inc. --IDR 'B'; American Axle & Manufacturing, Inc --IDR 'B'; ArvinMeritor --IDR 'B'; --Secured 'BB'; --Senior unsecured 'B/RR4'. Hayes-Lemmerz International, Inc --IDR 'B'. Hayes-Lemmerz Finance Luxembourg S.A --IDR 'B'; --Senior unsecured 'B-/RR5'; --Senior secured 'BB/RR1'. HLI Operating Company Inc. Fitch Places Seven U.S. Auto Suppliers on Rating Watch Negative --IDR 'B'; --Senior secured 'BB/RR1'. Johnson Controls --IDR 'A-'. York International --IDR 'A-'. Tenneco --IDR 'BB-'; --Senior unsecured 'BB-'; --Subordinated 'B'; --Senior secured notes 'BB'; --Senior secured credit facilities 'BB+'. TRW Automotive Holdings Corp --IDR 'BB'. TRW Automotive, Inc --IDR 'BB'; --Secured 'BB+'; --Senior unsecured 'BB-'. Visteon Corp --IDR 'CCC'; --Senior secured 'B/RR1'; --senior unsecured 'CC/RR6'. Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site. * Fitch Rates Stock under Treasury's Capital Purchase Program ------------------------------------------------------------- Fitch Ratings has assigned ratings to the preferred stock issued under the Treasury's Capital Purchase Program. The CPP is one of the U.S. Government programs established to help stabilize and restore confidence in the U.S. banking system. The rated entities listed below reflect the companies that have already issued preferred stock under the CPP. The amount of preferred stock issued by each company individually ranges between 1% and 3% of risk-weighted assets. Ratings Assigned: Associated Banc-Corp -- Preferred stock 'BBB'. Bank of America Corporation -- Preferred stock 'A'. The Bank of New York Mellon Corporation -- Preferred stock 'A+'. BB&T Corporation -- Preferred stock 'A+'. Capital One Financial Corporation+ -- Preferred stock 'BBB+'. Cathay General Bancorp -- Preferred stock 'BB+'. Citigroup Inc. -- Preferred stock 'BBB'; Rating Watch Negative. City National Corporation -- Preferred stock 'BBB+'. Comerica Incorporated -- Preferred stock 'A'. CVB Financial Corp. -- Preferred stock 'BBB'. First Horizon National Corporation+ -- Preferred stock 'BBB-'. First Midwest Bancorp, Inc. -- Preferred stock 'BBB'. First Niagara Financial Group, Inc. -- Preferred stock 'BBB-'. Goldman Sachs Group, Inc. -- Preferred stock 'A+'. Huntington Bancshares Incorporated -- Preferred stock 'BBB+'. JP Morgan Chase & Co. -- Preferred stock 'A+'. KeyCorp -- Preferred stock 'A-'. Marshall & Ilsley Corporation -- Preferred stock 'A'; Ratings Watch Negative. Merrill Lynch & Co., Inc.* -- Preferred Stock 'A'; Rating Watch Evolving. Morgan Stanley -- Preferred stock 'BBB+'. Northern Trust Corporation -- Preferred stock 'A+'; Rating Watch Negative. Popular, Inc. -- Preferred stock 'BBB+'. Provident Bankshares Corporation -- Preferred stock 'BBB-'. Regions Financial Corporation -- Preferred stock 'A'. The South Financial Group, Inc. -- Preferred stock 'BB'. State Street Corporation -- Preferred stock 'A+'. Sterling Financial Corporation -- Preferred stock 'BB+'. SunTrust Banks, Inc. -- Preferred stock 'A'; Rating Watch Negative. Taylor Capital Group, Inc. -- Preferred stock 'B'; Rating Watch Negative. TCF Financial Corporation -- Preferred stock 'BBB+'. Trustmark Corporation -- Preferred stock 'BBB+'. UCBH Holdings Inc. -- Preferred stock 'BBB-'. U.S. Bancorp -- Preferred stock 'A+'. Washington Federal Inc. -- Preferred stock 'BBB+'. Webster Financial Corporation -- Preferred stock 'BBB-'. Wells Fargo & Company, Inc. -- Preferred stock 'AA-'. Zions Bancorporation -- Preferred stock 'BBB+'. * Settlement deferred pending merger with Bank of America Corporation. + The ratings for Capital One Financial Corporation and First Horizon National Corporation were previously assigned. * Fitch Revises Outlook for U.S. Equity REITs to Negative for 2009 ------------------------------------------------------------------ U.S. equity REITs are up against a recessionary economy, which coupled with softening property fundamentals and weakening liquidity profiles, will make these companies more susceptible to rating downgrades in 2009, according to Fitch Ratings, which has revised the Rating Outlook for the U.S. equity REIT sector to Negative from Stable. With the capital markets still mired in a deep freeze, negative rating implications are pervasive for REITs, according to Managing Director and U.S. REIT group head Steven Marks. 'REITs are in a difficult debt refinancing environment that will lead to worsening fixed charge coverage ratios, more challenged liquidity profiles and softening unencumbered asset coverage metrics,' said Marks. 'In addition, a slowing asset sales market will hamper REITs' ability to reduce leverage and sell weaker-performing assets to recycle capital to improve overall portfolio quality.' With Fitch projecting a slightly more than 1% decline in GDP for next year (the steepest GDP decline since World War II) and unemployment to eclipse 8% by late 2009, these projections are of particular concern for office REITs (Rating Outlook Negative) since space absorption is driven by both growth in GDP and employment. The broader economic slowdown also has adverse credit implications for industrial REITs (Rating Outlook Negative), namely weakened industrial tenant demand and declining national occupancy rates (now at a 16-year low) that will challenge the rental pricing and earnings power of these companies. The economy's woes are also cutting into consumer discretionary spending, which coupled with a deteriorating labor outlook will increasingly weigh on retail REITs (Rating Outlook Negative), although necessity-based properties such as grocery-anchored shopping centers should perform well. The two subsectors with more benign credit pictures in 2008 are multifamily and health care REITs, both of which carry a Stable Outlook by Fitch. Helping the Outlook for Multifamily REITs is their continued access to financing from Fannie Mae and Freddie Mac, while health care REITs will continue to benefit from long- term demographic trends that are driving demand for services amid relatively muted new supply. * Fitch Says Healthcare Outlook Negative Due to Economic Pressure ----------------------------------------------------------------- Fitch's 2009 Outlook for the U.S. Healthcare sector is Negative. Fitch believes that, in general, the Healthcare sector will face a very difficult operating environment in 2009 resulting from weaker demand associated with the global economic recession and a U.S. governmental focus on reducing the consumer burden of health care spending. Even though U.S. healthcare demand remains strong due to an aging demographic, Fitch expects that growing economic weakness will cause some consumers to delay or forego spending on prescriptions and procedures due to rising unemployment levels and declining wealth. As a result, volume weakness will likely increase, in part putting pressure on top line growth. It is also likely that a growing uninsured or underinsured population will result in an increase in bad debt and uncompensated care for the industry. In the U.S., regulatory and legislative pressure on the healthcare industry will grow as the government increases its focus on controlling healthcare costs. Fitch expects that the government will encourage policy that has it take a more active roll in negotiating pricing and making low cost generic alternatives available to consumers. Key legislative and regulatory policy issues that can impact consumer healthcare costs include: universal coverage, patent reform, generic biologic pathway, revisions to Medicare Part-D and comparative effectiveness. While it is not likely that legislation creating universal healthcare would have a meaningful effect on 2009 results, the other issues such as revisions to Medicare Part-D could be enacted. The likely result of some of these reforms would be pricing pressure on healthcare industry participants. Therefore, weakening volume along with expected pricing weakness will result in downward top line revenue pressure for the industry, in general. Fitch expects that industry participants will be able to, in part, limit the negative impact from revenue weakness on EBITDA by on- going cost containment and operational restructuring. Nevertheless, flexibility in capital spending should allow operators to produce generally stable levels of free cash flow. However, in spite of economic and operational challenges, Fitch expects companies to continue to aggressively return capital to shareholders through share repurchases and dividends. Merger and acquisition activity is expected to remain high for the industry as operators look to improve their product and service position in this challenging 2009 operating environment. As a result, Fitch expects this acquisition activity could lead to higher leverage resulting from increased debt levels. Liquidity for the industry as a whole remains stable. U.S. healthcare companies with Fitch credit ratings generated last 12 months free cash flow as of 3Q'08 of approximately $42 billion and maintained a balance sheet cash level of approximately $65 billion. This internal liquidity compares to a remaining 2008 and 2009 maturity schedule of approximately $21 billion. Revolving credit capacity for the industry remains strong with an average availability of approximately 79% or $42 billion. Nevertheless, there are companies within the sector that have weaker liquidity and financial flexibility, such as HCA, Inc. with higher near-term maturities and Tenet Healthcare Corp with significant negative free cash flow. Pharmaceutical Manufacturers Fitch has a Negative Outlook for U.S. pharmaceutical manufacturers in 2009 as the industry confronts a changing political and regulatory environment, a lingering recession, as well as maturing product portfolios. A key uncertainty on the growth prospects of the industry relates to the direction of the new U.S. administration and key decisions expected to be finalized during 2009. At the forefront is the much discussed potential elimination of the non-interference clause of the Medicare Prescription Drug, Improvement and Modernization Act of 2003. Clearly, allowing direct price negotiations with manufacturers would pressure pricing dynamics given the purchasing leverage of the government through the Medicare Part-D program. Additionally, the new president will need to appoint a new commissioner of the Food and Drug Administration, an agency under increased political and consumer scrutiny of its drug approval recommendations. Fitch expects the conservative stance at the FDA will still hinder the approval process for new medicines in 2009 as the agency adjusts to new leadership and continues to wrestle with potential safety concerns found upon examining clinical data. Nevertheless, Fitch anticipates FDA marketing clearances for 2009 to be at a level consistent with 2008 including novel new drugs such as Eli Lilly's Effient, Wyeth's 13-valent pneumococcal disease vaccine, and Bristol-Myers Squibb's Onglyza. The industry will benefit from a moderation of patent expiry in 2009, with J&J's Topamax being the only notable loss for U.S. drug developers. However, as the next wave of major pharmaceutical patent expirations quickly approaches, Fitch believes another period of significant industry consolidation is near, especially for those manufacturers facing the largest patent cliffs. Industry participants are anticipated to fill R&D and product portfolio voids through an acceleration of business development activities in 2009. Overall, Fitch expects sales growth to further moderate in 2009, modestly pressuring margins for brand name pharmaceutical manufacturers. Cost rationalization throughout the industry over the past few years will serve to support margins next year in addition to the coming period of patent expirations after the end of the decade. Generally, cash flows for drug manufacturers are expected to cover capital commitments in 2009. The shareholder- friendly pharmaceutical industry will use significant operating cash flow to sustain or increase dividends and satisfy share repurchase programs. Medical Devices Fitch has a Stable Outlook for the medical device sector in 2009. The relatively non-discretional nature of medical devices should support demand growth for this part of the healthcare industry in 2009 in spite of rising unemployment and economic challenges. The most important issues for the medical device industry in 2009 relate to the drug eluting stent and implantable cardioverter defibrillator markets. After resolving concerns related to safety, efficacy and manufacturing, both of these device platforms have experienced stabilization and a subsequent return to growth in their respective global markets. The improvement of these markets are important to device makers since DES and ICD products are high margin and have a material impact on profitability. New product introductions are expected to shift the competitive advantages between individual device makers, but the overall industry should generate sufficient cash to fund their operations and strategic initiatives while preserving their credit profiles. For-Profit Hospital Operators Fitch has a Negative Outlook for the for-profit hospital operator segment in 2009. Fitch expects the uninsured rate to increase materially in 2009, which along with potential Medicaid cuts due to state budget shortfalls, will pressure bad debt expense and uncompensated care. Increases in other operating expenses such as professional fees may also lead to profitability declines. In addition, volumes will likely suffer as patients delay elective or non-urgent procedures. Lower profitability and weak volume growth are expected to result in declining free cash flow throughout the sector with some providers reducing capital spending in order to conserve cash. Fitch notes that some offsetting trends do exist to limit the decline in sector performance during 2009. First, providers have adopted new methods to address the uninsured, including increased point-of-service collections, patient screening, and efforts to qualify patients for Medicaid or other assistance programs that have eased some of the pressure on bad debt expense. Second, operators are experiencing stability in managed care pricing, which should allow some revenue growth in spite of weak volumes. While longer-term pressure on reimbursement is possible, most managed care contracts for 2009 have already been set and Fitch expects rate increases to remain in the mid-to-high single digits. Third, for-profit hospital operators will face an improving political climate. It is likely that the newly elected executive and legislative representation will address state Medicaid shortages and enhance healthcare coverage. Finally, with the exception of HCA, Inc., Fitch notes that the sector does not face any significant debt maturities in the next two years that would necessitate refinancing in the current credit environment. Fitch currently rates the healthcare sector: -- Abbott Laboratories ('A+', Stable Outlook); -- Allergan, Inc. ('A-', Positive Outlook); -- AmerisourceBergen Corp. ('BBB', Stable Outlook); -- Amgen, Inc. ('A', Stable Outlook); -- Baxter International, Inc. ('A', Stable Outlook); -- Beckman Coulter, Inc. ('BBB', Stable Outlook); -- Boston Scientific Corp. ('BB+', Stable Outlook); -- Bristol-Myers Squibb Co. ('A+', Stable Outlook) -- Cardinal Health, Inc. ('BBB+', Stable Outlook); -- Community Health Systems, Inc. ('B', Stable Outlook); -- Covidien Ltd. ('A', Stable Outlook); -- DaVita Inc. ('BB-', Stable Outlook); -- Eli Lilly & Co. ('A+', Stable Outlook); -- Express Scripts Inc. ('BBB', Stable Outlook); -- HCA, Inc. ('B', Stable Outlook); -- Health Management Associates ('B+', Stable Outlook); -- Johnson & Johnson ('AAA', Stable Outlook); -- Life Technologies Corp. ('BBB-', Stable Outlook); -- LifePoint Hospitals, Inc. ('BB-', Stable Outlook); -- McKesson Corp. ('BBB+', Stable Outlook); -- Medco Health Solutions Inc. ('BBB', Stable Outlook); -- Merck & Co. ('AA-', Negative Outlook); -- Owens & Minor Inc. ('BBB-', Stable Outlook); -- Pfizer, Inc. ('AA+', Negative Outlook); -- Royalty Pharma Finance Trust ('BBB-', Stable Outlook); -- Schering-Plough Corp. ('BBB+', Stable Outlook); -- Tenet Healthcare Corp. ('B-', Stable Outlook); -- Thermo Fisher Scientific, Inc. ('BBB+', Stable Outlook); -- Universal Health Services ('BBB', Stable Outlook); -- Watson Pharmaceuticals Inc. ('BBB-', Stable Outlook); -- Wyeth ('A-', Stable Outlook). * Moody's Reports Modeled Weighted Average Rating for TRUP CDOs --------------------------------------------------------------- Moody's is providing additional information from the November 12, 2008 press release on TRUP CDOs. The additional information, shown in the table below, includes the modeled weighted average rating factor (including the 1.25 stress) and the assumed defaulted par for each of the 44 TRUP CDOs using the approach described in the Rating Action. Moody's methodology for bank TRUP CDOs is summarized below. This methodology is the same approach used in the Rating Action. Moody's approach to calculating the default probability used two financial ratios for every bank in the collateral portfolio. The first ratio is calculated: (non-current loans plus other real estate owned) divided by (tangible common equity plus allowance for loan losses). The second ratio is calculated: (non-current loans plus other real estate owned plus 20% of current construction and development loans) divided by (tangible common equity plus allowance for loan losses). If the First Ratio is above 150% or the Second Ratio is above 175%, for purposes of these rating actions, Moody's assumed these banks to be defaulted with a zero recovery. If the First Ratio is above 100% or the Second Ratio is above 130%, Moody's assumed these banks had an implied default probability Rating Factor of 6500 (implied default probability rating of Caa2). Moody's used the second quarter 2008 financials when calculating the First Ratio and Second Ratio. Generally, the First Ratio and Second Ratio were used to identify banks more likely to defer payments on their trust preferred securities or default. For all other banks in TRUP CDOs without a public rating from Moody's, when calculating the default probability, Moody's used the quantitative V3.1 Risk Calc Model for private banks with the credit cycle adjustment. To account for potential model error and adverse selection, the most favorable implied default probability Rating Factor assumed from the Model was 360, which translates into an implied default probability rating of Baa2. Finally, to account for the increased likelihood of deferral on the bank TRUPs in the current environment, the pool-wide default probability was multiplied by 1.25. Moody's used the second quarter 2008 financials in the Model. For correlation purposes, Moody's continued to assume five regions for U.S. banks, but no longer making a distinction between banks and thrifts. Also, Moody's increased the assumed inter-asset correlation, which is correlation between bank regions, to 10%. The assumed intra-asset correlation, which is correlation within bank regions, remained at 45%. The update to the default probability assumptions was a much larger driver to these rating actions than the correlation update. Moody's continued to assume a 10% recovery for bank trust preferred securities in its cash flow analysis which represents the likelihood that some banks that defer interest payments may ultimately pay cumulative interest without defaulting. For any bank TRUP issuer currently deferring interest, Moody's assumed that issuer was defaulted with a zero recovery. Moody's also continued to use the correlated binomial to analyze TRUP CDOs. Other than the assumptions noted above, these actions used the approach outlined in Moody's Approach to Rating U.S. Bank Trust Preferred Security CDOs, April 14, 2004. -- TRUP CDO: ALESCO Preferred Funding I, Ltd. -- WARF*: 1194 -- Assumed Defaulted Par Amount: $37,500,000 -- TRUP CDO: ALESCO Preferred Funding II, Ltd. -- WARF*: 889 -- Assumed Defaulted Par Amount: $40,000,000 -- TRUP CDO: ALESCO Preferred Funding III, LTD. -- WARF*: 1333 -- Assumed Defaulted Par Amount: $25,000,000 -- TRUP CDO: ALESCO Preferred Funding IV, Ltd. -- WARF*: 1740 -- Assumed Defaulted Par Amount: $28,000,000 -- TRUP CDO: MM Community Funding Ltd. -- WARF*: 1520 -- Assumed Defaulted Par Amount: $21,000,000 -- TRUP CDO: MM Community Funding II, Ltd. -- WARF*: 392 -- Assumed Defaulted Par Amount: $28,000,000 -- TRUP CDO: MM COMMUNITY FUNDING III, LTD. -- WARF*: 711 -- Assumed Defaulted Par Amount: $10,000,000 -- TRUP CDO: MM Community Funding IX, Ltd. -- WARF*: 1608 -- Assumed Defaulted Par Amount: $9,250,000 -- TRUP CDO: MMCAPS Funding I, Ltd. -- WARF*: 761 -- Assumed Defaulted Par Amount: $25,000,000 -- TRUP CDO: MMCAPS Funding XIX, Ltd. -- WARF*: 1549 -- Assumed Defaulted Par Amount: $13,500,000 -- TRUP CDO: MMCAPS Funding XVIII, Ltd. -- WARF*: 1590 -- Assumed Defaulted Par Amount: $17,500,000 -- TRUP CDO: Preferred Term Securities I, Ltd. -- WARF*: 1070 -- Assumed Defaulted Par Amount: $36,000,000 -- TRUP CDO: Preferred Term Securities II, Ltd -- WARF*: 1141 -- Assumed Defaulted Par Amount: $41,000,000 -- TRUP CDO: Preferred Term Securities IV, Ltd. -- WARF*: 1969 -- Assumed Defaulted Par Amount: $12,000,000 -- TRUP CDO: Preferred Term Securities V, Ltd. -- WARF*: 999 -- Assumed Defaulted Par Amount: $0 -- TRUP CDO: Preferred Term Securities VI, Ltd. -- WARF*: 3002 -- Assumed Defaulted Par Amount: $0 -- TRUP CDO: Preferred Term Securities VII -- WARF*: 2373 -- Assumed Defaulted Par Amount: $49,000,000 -- TRUP CDO: Preferred Term Securites VIII, Ltd -- WARF*: 1967 -- Assumed Defaulted Par Amount: $30,000,000 -- TRUP CDO: Preferred Term Securities IX, Ltd. -- WARF*: 1428 -- Assumed Defaulted Par Amount: $10,000,000 -- TRUP CDO: Preferred Term Securities X, Ltd. -- WARF*: 1696 -- Assumed Defaulted Par Amount: $24,500,000 -- TRUP CDO: Preferred Term Securities XI, Ltd. -- WARF*: 1615 -- Assumed Defaulted Par Amount: $8,000,000 -- TRUP CDO: Preferred Term Securities XII, Ltd. -- WARF*: 1632 -- Assumed Defaulted Par Amount: $16,000,000 -- TRUP CDO: Preferred Term Securities XIII, LTD. -- WARF*: 1483 -- Assumed Defaulted Par Amount: $14,000,000 -- TRUP CDO: Preferred Term Securities XIV, Ltd. -- WARF*: 974 -- Assumed Defaulted Par Amount: $5,000,000 -- TRUP CDO: Regional Diversified Funding 2004-1LTD. -- WARF*: 1761 -- Assumed Defaulted Par Amount: $35,000,000 -- TRUP CDO: Regional Diversified Funding Ltd. -- WARF*: 1373 -- Assumed Defaulted Par Amount: $10,000,000 -- TRUP CDO: Soloso CDO 2005-1 Ltd. -- WARF*: 1732 -- Assumed Defaulted Par Amount: $39,000,000 -- TRUP CDO: TPREF FUNDING I LTD. -- WARF*: 1429 -- Assumed Defaulted Par Amount: $30,000,000 -- TRUP CDO: TPREF FUNDING II Ltd. -- WARF*: 1624 -- Assumed Defaulted Par Amount: $19,000,000 -- TRUP CDO: TPREF Funding III, Ltd. -- WARF*: 1245 -- Assumed Defaulted Par Amount: $26,000,000 -- TRUP CDO: Trapeza CDO I, LLC -- WARF*: 1668 -- Assumed Defaulted Par Amount: $26,000,000 -- TRUP CDO: Trapeza CDO II, LLC -- WARF*: 1591 -- Assumed Defaulted Par Amount: $22,330,000 -- TRUP CDO: Trapeza CDO III, LLC -- WARF*: 1814 -- Assumed Defaulted Par Amount: $30,670,000 -- TRUP CDO: Trapeza CDO IV, LLC -- WARF*: 1667 -- Assumed Defaulted Par Amount: $36,000,000 -- TRUP CDO: Trapeza CDO V, Ltd. -- WARF*: 1345 -- Assumed Defaulted Par Amount: $36,000,000 -- TRUP CDO: Trapeza CDO VI, Ltd. -- WARF*: 1113 -- Assumed Defaulted Par Amount: $33,000,000 -- TRUP CDO: Trapeza CDO VII, Ltd. -- WARF*: 1730 -- Assumed Defaulted Par Amount: $0 -- TRUP CDO: Tropic CDO II, LTD -- WARF*: 1742 -- Assumed Defaulted Par Amount: $36,000,000 -- TRUP CDO: Tropic CDO III LTD -- WARF*: 1908 -- Assumed Defaulted Par Amount: $20,500,000 -- TRUP CDO: Tropic CDO IV LTD. -- WARF*: 1635 -- Assumed Defaulted Par Amount: $16,500,000 -- TRUP CDO: US Capital Funding I LTD -- WARF*: 1014 -- Assumed Defaulted Par Amount: $9,000,000 -- TRUP CDO: US Capital Funding II LTD -- WARF*: 1083 -- Assumed Defaulted Par Amount: $9,500,000 -- TRUP CDO: US Capital Funding III, Ltd. -- WARF*: 833 -- Assumed Defaulted Par Amount: $22,000,000 -- TRUP CDO: US CAPITAL FUNDING IV, LTD. -- WARF*: 1294 -- Assumed Defaulted Par Amount: $57,400,991 * (Including the 1.25 Stress) * Moody's Says Outlook for Infrastructure Issuers is Stable ----------------------------------------------------------- Despite credit and economic conditions that have remained highly challenging for many U.S. public infrastructure enterprises, the outlook for most issuers is stable, says Moody's Investors Service in a new report. The current environment is especially challenging for infrastructure issuers that rely on the tax-exempt municipal market for capital, including airports, mass transit systems, port, toll roads and public power utilities. "While some larger and higher-rated issuers have used their diversified credit strengths to successfully issue new debt in recent weeks, many other issuers face widened credit spreads, higher borrowing costs, and reduced market access," said Moody's Senior Vice President Maria Matesanz, author of the report, which examines the short- and long-term credit and economic risks facing U.S. public infrastructure enterprises. "However, the stable outlook holds for most infrastructure issuers due to fundamental strengths reflected in the provision of essential public services, adequate balance sheets, and generally sound governance and fiscal management practices," said Matesanz. Moody's previously noted a weakening trend in some fundamental credit factors affecting U.S. infrastructure sectors, including airports, ports, public power utilities, toll roads and mass transit systems. A negative outlook was assigned to the airport sector in mid 2008 due to significant airline capacity reductions, and Moody's most recent outlook report for the toll road sector noted diminished growth in traffic and revenue for toll road issuers. The report concludes that sound debt and treasury management practices, preservation of adequate liquidity, and strong governance oversight will be significant determinants of credit quality for issuers during the coming period of financial adjustment. "We also expect that many of these issuers will be sustained by their critical role as providers of essential transportation and power services, enabling them to generate adequate revenues during a recession, as well as maintain bipartisan political support and possibly obtain new sources of public funding," said Matesanz. * S&P Cuts Rating on Class B-4 From Alt. Loan Trust 2005-85CB to D ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on 51 classes from seven residential mortgage-backed securities transactions backed by U.S. Alternative-A mortgage loan collateral issued from 2005 to 2007. In addition, S&P affirmed its ratings on 72 classes from six of the seven downgraded deals. The downgrades reflect S&P's opinion that projected credit support for the affected classes is insufficient to maintain the previous ratings, given its current projected losses. In addition, S&P is revising its loss expectations for Alternative Loan Trust 2005-J13 and Alternative Loan Trust 2005-85CB due to current negative performance. The projected lifetime losses for each transaction are: Transaction Orig. bal. (million) Projected losses ----------- -------------------- ---------------- CWALT 2005-J13 $250.8 2.85% CWALT 2005-85CB $1,270.7 3.29% S&P arrived at its estimated projected losses for the Alt-A RMBS deals. The revised loss assumptions used in this review also include the new loss severity assumptions. As part of its analysis, S&P considered the characteristics of the underlying mortgage collateral as well as macroeconomic influences. For example, the risk profile of the underlying mortgage pools influences S&P's default projections, while its outlook for housing price declines and the health of the housing market influence its loss severity assumptions. To assess the creditworthiness of each class, S&P reviewed the individual delinquency and loss trends of each transaction for changes, if any, in risk characteristics, servicing, and the expected ability to withstand additional credit deterioration. In order to maintain a rating higher than 'B', a class had to absorb losses in excess of the base-case loss assumptions S&P assumed in its analysis. For example, a class may have to withstand approximately 115% of S&P's base-case loss assumptions in order to maintain a 'BB' rating, while a different class may have to withstand approximately 125% of S&P's base-case loss assumptions to maintain a 'BBB' rating. A class that has an affirmed 'AAA' rating can likely withstand approximately 150% of S&P's base-case loss assumptions under its analysis, subject to individual caps and qualitative factors assumed on specific transactions. S&P also took into account the pay structure of each transaction and only stressed each class with losses that would occur while it remained outstanding. Additionally, S&P only gave excess interest credit for the amount of time the class would be outstanding. For example, if S&P projected a class to pay down in 15 months, then S&P only applied 15 months of losses to that class. Additionally, in such a case S&P assumed 15 months of excess spread if the class was structured with excess spread as credit enhancement. In the coming weeks, S&P will continue to analyze the remaining transactions affected by its revised loss expectations. S&P will analyze deals in order of performance, looking at worse-performing deals first. Rating Actions Alternative Loan Trust 2004-29CB Series 2004-29CB Rating ------ Class CUSIP To From ----- ----- -- ---- B-2 12667FZW8 B BBB B-3 12667FZX6 CCC BB B-4 12667FZY4 CC B Alternative Loan Trust 2005-26CB Series 2005-26CB Rating ------ Class CUSIP To From ----- ----- -- ---- B-2 12667GUC5 CCC BBB B-3 12667GTJ2 CCC BB B-4 12667GTK9 CC B Alternative Loan Trust 2005-30CB Series 2005-30CB Rating ------ Class CUSIP To From ----- ----- -- ---- B-1 12667GYA5 BBB A B-2 12667GYB3 CCC BBB B-3 12667GYC1 CCC BB B-4 12667GYD9 CC B Alternative Loan Trust 2005-80CB Series 2005-80CB Rating ------ Class CUSIP To From ----- ----- -- ---- 1-A-1 12668BGC1 A AAA 2-A-1 12668BGD9 A AAA 3-A-1 12668BGE7 A AAA 4-A-1 12668BGF4 A AAA 5-A-1 12668BGG2 A AAA 1-X 12668BGH0 A AAA 2-X 12668BGJ6 A AAA 3-X 12668BGK3 A AAA 4-X 12668BGL1 A AAA 5-X 12668BGM9 A AAA PO 12668BGN7 A AAA M 12668BGQ0 CCC AA B-1 12668BGR8 CCC A B-2 12668BGS6 CC BBB B-3 12668BGT4 CC B Alternative Loan Trust 2005-85CB Series 2005-85CB Rating ------ Class CUSIP To From ----- ----- -- ---- 1-A-1 12668BEE9 BBB AAA 2-A-2 12668BEG4 BBB AAA 2-A-5 12668BEK5 BBB AAA 2-A-6 12668BEL3 BBB AAA 2-A-7 12668BEM1 BBB AAA 2-A-8 12668BEN9 BBB AAA 2-A-9 12668BFY4 BBB AAA 3-A-1 12668BEP4 BBB AAA 3-A-2 12668BEZ2 BBB AAA 1-X 12668BEQ2 BBB AAA 3-X 12668BES8 BBB AAA PO 12668BET6 BBB AAA M 12668BEV1 CCC AA B-1 12668BEW9 CC A B-2 12668BEX7 CC BBB B-3 12668BFZ1 CC BB B-4 12668BGA5 D B Alternative Loan Trust 2005-J13 Series 2005-J13 Rating ------ Class CUSIP To From ----- ----- -- ---- M 12668AE27 B AA B-1 12668AE35 CCC A B-2 12668AE43 CCC BBB B-3 12668AE50 CC BB B-4 12668AE68 CC B IndyMac INDX Mortgage Loan Trust 2005-AR11 Series 2005-AR11 Rating ------ Class CUSIP To From ----- ----- -- ---- B-1 45660LQP7 BB AA+ B-2 45660LQQ5 CCC AA- B-3 45660LQR3 CCC BBB+ B-4 45660LQT9 CC B Ratings Affirmed Alternative Loan Trust 2004-29CB Series 2004-29CB Class CUSIP Rating ----- ----- ------ A-1 12667FZF5 AAA A-2 12667FZG3 AAA A-3 12667FZH1 AAA A-4 12667FZJ7 AAA A-5 12667FZK4 AAA A-6 12667FZL2 AAA A-7 12667FZM0 AAA A-8 12667FZN8 AAA A-9 12667FZP3 AAA A-10 12667FZQ1 AAA A-11 12667FZR9 AAA PO 12667FZS7 AAA M 12667FZU2 AA B-1 12667FZV0 A Alternative Loan Trust 2005-26CB Series 2005-26CB Class CUSIP Rating ----- ----- ------ A-1 12667GTM5 AAA A-2 12667GTN3 AAA A-3 12667GTP8 AAA A-4 12667GTQ6 AAA A-5 12667GTR4 AAA A-6 12667GTS2 AAA A-7 12667GTT0 AAA A-8 12667GTU7 AAA A-9 12667GTV5 AAA A-10 12667GTW3 AAA A-11 12667GTX1 AAA PO 12667GTY9 AAA M 12667GUA9 AA B-1 12667GUB7 A Alternative Loan Trust 2005-30CB Series 2005-30CB Class CUSIP Rating ----- ----- ------ 1-A-1 12667GXK4 AAA 1-A-2 12667GXL2 AAA 1-A-3 12667GXM0 AAA 1-A-4 12667GXN8 AAA 1-A-5 12667GXP3 AAA 1-A-6 12667GXQ1 AAA 1-A-7 12667GXR9 AAA 1-A-8 12667GXS7 AAA 1-A-9 12667GXT5 AAA 1-A-10 12667GXU2 AAA 1-A-11 12667GXV0 AAA 1-A-12 12667GL27 AAA 2-A-1 12667GXW8 AAA PO 12667GXX6 AAA M 12667GXZ1 AA Alternative Loan Trust 2005-85CB Series 2005-85CB Class CUSIP Rating ----- ----- ------ 2-A-1 12668BEF6 AAA 2-A-3 12668BEH2 AAA 2-A-4 12668BEJ8 AAA 2-X 12668BER0 AAA Alternative Loan Trust 2005-J13 Series 2005-J13 Class CUSIP Rating ----- ----- ------ 1-A-1 12668AB79 AAA 1-A-2 12668AB87 AAA 1-A-3 12668AB95 AAA 1-A-4 12668AC29 AAA 1-X 12668AC37 AAA 2-A-1 12668AC45 AAA 2-A-2 12668AC52 AAA 2-A-3 12668AC60 AAA 2-A-4 12668AC78 AAA 2-A-5 12668AC86 AAA 2-A-6 12668AC94 AAA 2-A-7 12668AD28 AAA 2-A-8 12668AD36 AAA 2-A-9 12668AD44 AAA 2-A-10 12668AD51 AAA 2-A-11 12668AD69 AAA 2-X 12668AD77 AAA PO 12668AD85 AAA IndyMac INDX Mortgage Loan Trust 2005-AR11 Series 2005-AR11 Class CUSIP Rating ----- ----- ------ A-1 45660LQF9 AAA A-2 45660LQG7 AAA A-3 45660LQH5 AAA A-4 45660LQJ1 AAA A-5 45660LQK8 AAA A-6 45660LQL6 AAA A-7 45660LQM4 AAA * S&P Junks Ratings on Four Classes From Four RMBS Deals -------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on nine classes from four U.S. prime jumbo residential mortgage-backed securities transactions issued between 2002 and 2004. S&P also affirmed its ratings on 123 classes from these and nine other deals issued in 1998, 1999, and 2002 to 2004. The downgrades reflect S&P's belief that these classes may no longer have sufficient credit enhancement to support the ratings at the previous levels. S&P's belief is based on its projected lifetime losses, which S&P derived from a loss curve that utilizes the dollar amount of loans currently in the delinquency pipelines of the affected transactions. The affirmations reflect current credit enhancement levels that S&P believes are sufficient to support the ratings at their current levels. S&P will continue to monitor these transactions and adjust the ratings on the remaining classes if the available credit support is no longer sufficient to support the current ratings. Ratings Lowered Bank of America Mortgage 2002-E Trust Series 2002-E Rating ------ Class CUSIP To From ----- ----- -- ---- B-1 06050HJK5 AA AAA B-2 06050HJL3 BB AAA B-3 06050HJM1 CCC A First Horizon Mortgage Pass-Through Trust 2002-AR2 Series 2002-AR2 Rating ------ Class CUSIP To From ----- ----- -- ---- B-2 32051DRE4 BBB AA+ B-3 32051DRF1 B A First Horizon Mortgage Pass-Through Trust 2003-AR1 Series 2003-AR1 Rating ------ Class CUSIP To From ----- ----- -- ---- B-5 32051DTU6 CCC B Structured Asset Mortgage Investments II Trust 2004-AR5 Series 2004-AR5 Rating ------ Class CUSIP To From ----- ----- -- ---- II-B-3 86359LEN5 BB BBB II-B-4 86359LES4 CCC BB II-B-5 86359LET2 CCC B Ratings Affirmed Bank of America Mortgage 2002-E Trust Series 2002-E Class CUSIP Rating ----- ----- ------ A-1 06050HJH2 AAA Bank of America Mortgage Securities Inc. Series 2004-A Class CUSIP Rating ----- ----- ------ 1-A-1 05948XS69 AAA 2-A-1 05948XS93 AAA 2-A-2 05948XT27 AAA 2-A-3 05948XT35 AAA 2-A-4 05948XT43 AAA 3-A-1 05948XT50 AAA B-1 05948XT68 AA B-2 05948XT76 A B-3 05948XT84 BBB B-4 05948XU58 BB B-5 05948XU66 B Bank of America Mortgage Securities Inc. Series 2004-3 Class CUSIP Rating ----- ----- ------ 1-A-1 05949AAA8 AAA 1-A-2 05949AAB6 AAA 1-A-3 05949AAC4 AAA 1-A-4 05949AAD2 AAA 1-A-5 05949AAE0 AAA 1-A-6 05949AAF7 AAA 1-A-7 05949AAG5 AAA 1-A-8 05949AAH3 AAA 1-A-9 05949AAJ9 AAA 1-A-10 05949AAK6 AAA 1-A-11 05949AAL4 AAA 1-A-12 05949AAM2 AAA 1-A-13 05949AAN0 AAA 1-A-14 05949AAP5 AAA 1-A-15 05949AAQ3 AAA 1-A-16 05949AAR1 AAA 1-A-17 05949AAS9 AAA 1-A-18 05949AAT7 AAA 1-A-20 05949AAV2 AAA 1-A-21 05949AAW0 AAA 1-A-22 05949AAX8 AAA 1-A-23 05949AAY6 AAA 1-A-24 05949AAZ3 AAA 1-A-25 05949ABA7 AAA 1-A-26 05949ABB5 AAA 1-A-27 05949ABC3 AAA 2-A-1 05949ABG4 AAA 2-A-2 05949ABH2 AAA 2-A-3 05949ABJ8 AAA 2-A-4 05949ABK5 AAA 2-A-5 05949ABL3 AAA 2-A-6 05949ABM1 AAA 2-A-8 05949ABP4 AAA 2-A-9 05949ABQ2 AAA 2-A-10 05949ABR0 AAA 2-A-11 05949ABS8 AAA 2-A-12 05949ABT6 AAA 2-A-14 05949ABV1 AAA 2-A-15 05949ABW9 AAA 2-A-16 05949ABX7 AAA 3-A-1 05949ABY5 AAA 3-A-2 05949ABZ2 AAA 3-A-3 05949ACA6 AAA 4-A-1 05949ACB4 AAA A-PO 05949ACC2 AAA 15-IO 05949ACD0 AAA 30-IO 05949ACE8 AAA 1-B-1 05949ACF5 AA 1-B-2 05949ACG3 A 1-B-3 05949ACH1 BBB 1-B-4 05949ACQ1 BB 1-B-5 05949ACR9 B X-B-1 05949ACJ7 AA X-B-2 05949ACK4 A X-B-3 05949ACL2 BBB X-B-4 05949ACT5 BB X-B-5 05949ACU2 B 3-B-2 05949ACN8 A 3-B-3 05949ACP3 BBB 3-B-4 05949ACW8 BB 3-B-5 05949ACX6 B Bank of America Mortgage Securities Inc. Series 2004-C Class CUSIP Rating ----- ----- ------ 1-A-1 05948X5P2 AAA 2-A-1 05948X5S6 AAA 2-A-2 05948X5T4 AAA 3-A-1 05948X5U1 AAA B-1 05948X5V9 AA B-2 05948X5W7 A B-3 05948X5X5 BBB B-4 05948X6B2 BB B-5 05948X6C0 B First Horizon Mortgage Pass-Through Trust 2002-8 Series 2002-8 Class CUSIP Rating ----- ----- ------ I-A-8 32051DRS3 AAA I-A-PO 32051DRT1 AAA II-A-1 32051DRU8 AAA B-1 32051DRW4 AAA B-2 32051DRX2 AA+ B-3 32051DRY0 AA First Horizon Mortgage Pass-Through Trust 2002-AR2 Series 2002-AR2 Class CUSIP Rating ----- ----- ------ II-A-1 32051DRA2 AAA III-A-1 32051DRC8 AAA B-1 32051DRD6 AAA First Horizon Mortgage Pass-Through Trust 2003-AR1 Series 2003-AR1 Class CUSIP Rating ----- ----- ------ I-A-1 32051DTL6 AAA II-A-1 32051DTM4 AAA III-A-1 32051DTP7 AAA B-1 32051DTQ5 AAA B-2 32051DTR3 AA B-3 32051DTS1 A- B-4 32051DTT9 BB Structured Asset Mortgage Investment, Inc. Series 1998-6 Class CUSIP Rating ----- ----- ------ A-I 86358HAF6 AAA A-II 86358HAG4 AAA A-III 86358HAH2 AAA A-IV 86358HAJ8 AAA B-1 86358HAL3 AAA B-2 86358HAM1 AAA B-3 86358HAN9 AAA B-4 86358HAR0 A+ B-5 86358HAS8 BB A-V 86358HAK5 AAA Structured Asset Mortgage Investments II Trust 2004-AR5 Series 2004-AR5 Class CUSIP Rating ----- ----- ------ I-A-1 86359LDX4 AAA I-A-2 86359LDY2 AAA I-X 86359LEC9 AAA II-A-1 86359LDZ9 AAA II-A-2 86359LEA3 AAA II-A-3 86359LEB1 AAA II-B-1 86359LEL9 AA II-B-2 86359LEM7 A Structured Asset Mortgage Investments Trust 1999-1 Series 1999-1 Class CUSIP Rating ----- ----- ------ II-A 86358HGW3 AAA Structured Asset Mortgage Investments Trust 1999-2 Series 1999-2 Class CUSIP Rating ----- ----- ------ 3-A 86358HHV4 AAA 3-X 86358HHW2 AAA Structured Asset Mortgage Investments Trust 2002-AR4 Series 2002-AR4 Class CUSIP Rating ----- ----- ------ A-1 86358HQR3 AAA X 86358HQS1 AAA Structured Asset Mortgage Investments Trust 2002-AR5 Series 2002-AR5 Class CUSIP Rating ----- ----- ------ A-1 86358HRF8 AAA X 86358HRG6 AAA * S&P's Investment-Grade & Spec.-Grade Composite Spreads Widen -------------------------------------------------------------- Both Standard & Poor's investment-grade and speculative-grade composite spreads widened marginally to 559 basis points and 1,687 bps, respectively, but are still tighter than last Thursday's five-year highs. Spreads widened marginally across the ratings spectrum as well, leaving 'AA' at 427 bps, 'A' at 501 bps, 'BBB' at 673 bps, 'BB' at 1,202 bps, 'B' at 1,810 bps (a new five-year high), and 'CCC' at 3,097 bps. Industry spreads also widened across the board yesterday by an average margin of 5 bps, leaving financial institutions at 764 bps, banks at 623 bps, industrials at 957 bps, utilities at 554 bps, and telecommunications at 845 bps. 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. * BOOK REVIEW: Voluntary Assignments for the Benefit of Creditors ----------------------------------------------------------------- Publisher: Beard Books Softcover: 788 pages for both volumes Price: $34.95 each volume; $49.95 set Review by Henry Berry http://www.amazon.com/exec/obidos/ASIN/189312228X/internetbankrupt http://www.amazon.com/exec/obidos/ASIN/1893122298/internetbankrupt Voluntary Assignments for the Benefit of Creditors is a 1999 update of the classic nineteenth-century work on the important financial and business instrument known as "voluntary assignments." The author of the original edition was Alexander M. Burrill, a noted legal scholar who also wrote a law dictionary and several other texts. Voluntary Assignments for the Benefit of Creditors is now in its sixth edition, with Avery-Webb authoring the update. As defined by the authors, voluntary assignments for the benefit of creditors are "transfers, without compulsion of law, by debtors, of some or all of their property to an assignee or assignees, in trust to apply the same, or the proceeds thereof, to the payment of some or all of their debts, and to return the surplus, if any, to the owner." Voluntary assignments offer businesspersons from small business owners to corporate executives great flexibility in raising capital. Considering the many ways that businesses can enter into voluntary assignments, the different ways of valuing properties "assigned," and the changing value of these properties over time, the law governing voluntary assignment is complex. The authors tackle the subject of voluntary assignments in all its breadth and depth. During the 1800s, when Burrill's work first came out, there were innumerable cases dealing with voluntary assignments. The case law of the 1800s remains authoritative, informative, and instructive today. To render it comprehensible, the authors break down the subject matter into its many facets, thereby allowing lawyers and others to quickly reference areas of interest. These cases are listed alphabetically, and comprise more than fifty pages in a front section titled "Table of Cases." Cases are also referred to in the text proper and in copious footnotes. The format of the text, including the footnotes, is the standard followed by many legal texts and handbooks, notably the multi-volume American Jurisprudence. The sections are numbered consecutively in forty- five chapters. There are 458 sections in all. The sections are relatively short, even though the subject of voluntary assignments is complex and there is bountiful case law. Readers can peruse general topics such as execution of the assignment, construction of assignments, sale of the assigned property, and the rights, duties, and powers of the assignee. More specific, detailed topics can be accessed using the index. There are two appendices. The first contains synopses of the statutes of every state and territory on voluntary assignments. The second appendix contains nearly thirty standard forms that can be used for various aspects of assignments. Although voluminous and rigorous in its commentary and legal citations, the two-volume Voluntary Assignments for the Benefit of Creditors is neither dense nor ungainly. Like a good lawyer breaking down a case so it can be comprehended by a jury of average persons, so does Burrill and Avery-Webb deal with the topic of voluntary assignments. Born in 1868 in Tennessee, James Avery-Webb (d. 1953) had a career as a prominent attorney in New York City. ********* 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. Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Luke Caballos, Sheryl Joy P. Olano, 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 ***