X0303 4 2009-06-02 0 0001373641 Highland Distressed Opportunities, Inc. HCD 0001167365 HIGHLAND CAPITAL MANAGEMENT LP 13455 NOEL ROAD SUITE 800 DALLAS TX 75240 0 0 0 1 Investment Adviser 0001228922 DONDERO JAMES D 13455 NOEL ROAD SUITE 800 DALLAS TX 75240 0 1 0 0 President Common Shares par value $0.001 per share 2009-06-02 4 S 0 131501 2.33 D 864988.17 I See Footnotes Highland Capital Management, L.P. ("Highland Capital") transferred the shares of the issuer (the "Shares") to a participant in Highland Capital's Amended and Restated 2005 HCMLP Option Plan in connection with the exercise by such participant of an option to acquire the Shares which was granted under the Plan This statement is filed by and on behalf of each of the following persons (collectively, the "Reporting Persons"): Highland Capital and James D. Dondero ("Dondero"). Mr. Dondero is the President and a director of Strand Advisors, Inc. ("Strand"), the general partner of Highland Capital; he may be deemed to beneficially own shares owned and/or held by and/or for the account of and/or for the benefit of Strand and/or Highland Capital. Each of the Reporting Persons declares that neither the filing of this statement nor anything herein shall be construed as an admission that such person is, for the purposes of Section 13(d) or 13(g) of the Act or any other purpose, the beneficial owner of any securities covered by this statement. Each of the Reporting Persons may be deemed to be a member of a group with respect to the issuer or securities of the issuer for the purposes of Section 13(d) or 13(g) of the Act. Each of the Reporting Persons declares that neither the filing of this statement nor anything herein shall be construed as an admission that such person is, for the purposes of Section 13(d) or 13(g) of the Act or any other purpose, (i) acting (or has agreed or is agreeing to act together with any other person) as a partnership, limited partnership, syndicate, or other group for the purpose of acquiring, holding, or disposing of securities of the issuer or otherwise with respect to the issuer or any securities of the issuer or (ii) a member of any group with respect to the issuer or any securities of the issuer. See Exhibit 99.1 Joint Filer Agreement Highland Capital Management, L.P. By: Strand Advisors, Inc., its general partner /s/ James D. Dondero 2009-06-04 James D. Dondero 2009-06-04