/raid1/www/Hosts/bankrupt/TCREUR_Public/011228.MBX          T R O U B L E D   C O M P A N Y   R E P O R T E R

                            E U R O P E

            Friday, December 28, 2001, Vol. 2, No. 54


                             Headlines

* B E L G I U M *

LERNOUT & HAUSPIE: Debtors' Motion to Extend Solicitation Periods
SABENA SA: Court Ruling Puts Survival of DAT in Doubt

* F R A N C E *

AIR LIB: Works Council Set to Hear About Airline's Future

* G E R M A N Y *

DAIMLERCHRYSLER: Subsidiary to Sell $15BB Asset-Backed Securities
KONEMANN VERLAGS: Files for Bankruptcy

* I R E L A N D *

AER LINGUS: Offers Cheaper Fare for Online Bookings

* I T A L Y *

ALITALIA SPA: Air France Mum on Alitalia Board Swap

* S P A I N *

IBERIA SA: Government Clears Job Cuts at Airline

* S W I T Z E R L A N D *

SULZER MEDICA: Will Post First-Quarter Results in May
ZURICH FINANCIAL: Sees $400MM Full-Year Net Loss

* U N I T E D   K I N G D O M *

BIOGLAN PHARMA: Further Drops to 18%
COOKSON GROUP: Suspends Dividend Despite Fresh Cash
EQUITABLE LIFE: Halifax Closures Put Equitable Payment at Risk
HUNTINGDON LIFE: Set to Begin Trading in the U.S.
INDEPENDENT INSURANCE: FSA Faces First Lawsuit
NTL INCORPORATED: Fails to Secure New Vendor Financing
RAILTRACK GROUP: New Railtrack Board May See Pay Double
SAVE GROUP: Rescue Deal Saves 2,000 Jobs


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B E L G I U M
=============


LERNOUT & HAUSPIE: Debtors' Motion to Extend Solicitation Periods
-----------------------------------------------------------------

Lernout & Hauspie Speech Products N.V. and Dictaphone Corporation
will return to Court on January 4, 2002, asking Judge Wizmur for
additional time to solicit acceptances of their chapter 11 plans
and to get their chapter 11 cases back on track.

The L&H Plan is Still on the Table

As previously reported, L&H Holdings, L&H N.V., and Dictaphone
filed a joint plan of reorganization and joint disclosure
statement with the Bankruptcy Court on August 28, 2001.  That
Plan contemplated that (a) Dictaphone would reorganize and emerge
from chapter 11 as a stand-alone entity and (b) the estates of
L&H NV and L&H Holdings would dispose of their assets, by
entering into a joint venture or similar arrangement involving
the contribution of their assets into that joint venture.

When the Ieper Commercial Court declined to approve a parallel
plan proposed in the Belgian Concordat proceeding and imposed
unworkable restrictions on the L&H Debtors, the Debtors abandoned
the August 28 Plan as it relates to Dictaphone.

That August 28 Plan, as it relates to L&H N.V. and L&H Holdings,
is still a valid plan and the L&H Debtors intend to prosecute
that plan to confirmation. To keep the plan process alive, the
L&H Debtors ask Judge Wizmur for an extension of their exclusive
solicitation period.

The Dictaphone Plan is Moving Forward

The Debtors remind Judge Wizmur that she approved Dictaphone's
Second Amended Disclosure Statement on October 18, 2001.
Dictaphone had hoped that the plan would be circulated to
creditors shortly thereafter for voting and that confirmation
would follow in short order.

Unfortunately, on October 18, 2001, the Concordat Proceeding fell
apart at the hands of the Belgian appellate court. In light of
that event in Belgium, Dictaphone determined that it was best to
temporarily delay soliciting votes to accept or reject the Second
Amended Dictaphone Plan until a new Concordat Proceeding could be
filed. It was and, after some procedural hiccups and wrangling,
the Five Belgian judge-commissaires (known as Curators) appointed
in the L&H NV Belgian Bankruptcy Case gave their consent to allow
the Debtors to (i) continue Dictaphone's chapter 11 case
(including the plan confirmation process) subject to certain
conditions and (ii) continue with the L&H Group's efforts to sell
or otherwise dispose of the assets of L&H NV and L&H Holdings,
pursuant to a plan or otherwise.

Negotiations with respect to the distribution of the Dictaphone
New Common Stock have continued since Oct. 18 among the core
parties-in-interest in these chapter 11 cases.  Those talks have
resulted in the parties agreeing to distribute 10% of the
Dictaphone New Common Stock to L&H NV while reducing the
distribution to L&H NV's pre-petition Belgian lenders from 65% to
63%.  That change will be reflected in a Third Amended Plan Of
Reorganization for Dictaphone.


The Debtors remind Judge Wizmur that the Bankruptcy Code gives a
debtor the exclusive right to file a plan of reorganization for
an initial period of 120 days from the petition date. If the
debtor files a plan within this exclusive period, then the debtor
has the exclusive right for 180 days from the petition date to
solicit acceptances to its plan.

During these exclusive periods, no other party-in-interest may
file a competing plan of reorganization. The Court may extend the
exclusive periods "for cause" upon request of a party-in-interest
and after notice and hearing.

Congress did not intend that the 120- and 180-day periods be
inflexible deadlines; rather, Congress intended that the
exclusive periods be of adequate length, given the circumstances,
for the debtor to formulate, negotiate and draft a consensual
plan without the dislocation and disruption to the business that
would occur with the filing of competing plans of reorganization.

Ample Cause Exists For Extension Of Solicitation Periods

Since the Petition Date, the L&H Group, in addition to handling
administrative matters and business complications that accompany
any chapter 11 filing, has been working diligently and resolutely
to:

(a) develop a plan to maximize value for creditors;
(b) develop a proposal for the actual plan of reorganization; and
(c) file the L&H Joint Plan and Joint Disclosure Statement and
the Third Amended Dictaphone Plan and Third Amended Dictaphone
Disclosure Statement agreeable to various parties-in-interest.

The Debtors say they anticipate that Judge Wizmur will approve
the Third Amended Dictaphone Disclosure Statement and establish
December 7, 2001 as the voting deadline in connection with
soliciting acceptances or rejections of such Third Amended
Dictaphone Plan. They remind Judge Wizmur that she has
established December 19, 2001 as the hearing date in connection
with confirmation of the Third Amended Dictaphone Plan.

The requested extension of the Dictaphone Solicitation Period
will allow Dictaphone to continue with its proposed
reorganization while temporarily suspending the reorganization of
L&H NV and L&H Holdings.

The Debtors believe that the additional time requested hereunder
will allow for an appropriate amount of time for L&H NV and L&H
Holdings to finalize the distribution scheme to its respective
creditors, to amend the L&H Joint Plan and L&H Joint Disclosure
Statement accordingly, to seek approval of the L&H Joint
Disclosure Statement, and, following approval, solicit votes
accepting or rejecting the L&H Joint Plan.

Debtors Not Using Exclusivity To Pressure Creditors

The L&H Debtors' request for an extension of the Solicitation
Periods is not a negotiation tactic, but instead merely a
reflection of the fact that an extension is required to provide
sufficient time to complete the solicitation process in this
complex chapter 11 case. The Debtors say they recognize the need
to deal with all parties-in-interest in these cases. The Debtors
and their professionals have consistently conferred with these
constituencies throughout the plan development process. The
Debtors have no intention to discontinue this exchange if this
Motion is granted.

For these reasons, the Debtors submit that the requested
extensions are justified, appropriate and realistic under the
circumstances and, therefore, the Court should extend the
Dictaphone Solicitation Period through and including December 31,
2001, and the L&H Solicitation Period through and including
January 31, 2002, without prejudice to the right of the L&H Group
to seek further extensions.

AllVoice Objects

AllVoice Computing plc, a creditor and party-in-interest, objects
to the Motion for a further extension of the solicitation
periods, saying that the record provides no basis for an
extension where cause exists to convert the cases of Lernout &
Hauspie Speech Products N.V. and L&H Holdings USA, Inc., to cases
under Chapter 7 of the Bankruptcy Code.

Confirmation Less Likely

On or about November 9, 2001, the Debtors filed the Extension
Motion, in which they seek to extend the exclusive solicitation
period (but not the exclusive filing period) under Code 1121.
Notwithstanding any statement or implication to the contrary
contained in the Extension Motion, the Liquidating Debtors were
forced to withdraw the Joint Disclosure Statement and Proposed
Joint Plan from consideration, and the record is devoid of
evidence to suggest that they have made any progress whatsoever
towards the goal of proposing a confirmable plan.

To the contrary, the Liquidating Debtors are less likely to have
the ability to propose a confirmable plan today than they were in
August of this year. AllVoice requests that the Court deny the
Extension Motion for reasons substantially set forth in the
Motion to Convert, but adds one additional ground of objection.

Plan Not Feasible

AllVoice tells Judge Wizmur she should not extend time to solicit
acceptances of a plan where there is no evidence to suggest that
the Liquidating Debtors can or will propose a confirmable plan.
In its Objection to their Joint Disclosure Statement, for
example, AllVoice identified numerous deficiencies stemming, not
merely from a failure to present adequate information as required
by Code 1125, but from an inability to present a confirmable
plan. Feasibility - to take but one example - was even then an
insurmountable obstacle: the Debtors admitted that N.V. and
Holdings liquidations could be avoided only if the Debtors
secured a $30,000,000 credit facility or formed a joint venture,
but provided no evidence to suggest that these contingencies were
a likely outcome. Having withdrawn the Joint Disclosure Statement
shortly after the filing of AllVoice's Objection, they have not
filed another; nor has either of the Liquidating Debtors ever
supplied the Court with any estimate of valuation for either
entity.

The Liquidating Debtors' feasibility problems have only increased
with time. The value of each of the Liquidating Debtors' estates
has fallen substantially. The Debtors have essentially conceded
as much in their "Motion of L&H Group for Order Pursuant to
Section 363(b) of Bankruptcy Code and Bankruptcy Rule 9019(a)
Denying Approval of Baker Settlement Agreement" at 15, in which
they admit that "it [appears] virtually certain that the claims
of all Holdings' creditors would not be paid in full". It is now
apparent that the Liquidating Debtors' principal source of funds
is the proceeds of asset sales that may be diverted either to the
Belgian curators or to satisfy rapidly mounting administrative
costs and fees. Furthermore, insofar as they have continued to
market infringing products, the size of AllVoice's administrative
claim can only increase.

Finally, it is disingenuous for the Debtors to imply that a
disclosure statement and proposed plan are presently on file with
the Court, awaiting amendment, when the Joint Disclosure
Statement was withdrawn for good and sufficient reasons after the
filing of AllVoice's objection and the appointment of the
Curators in N.V.'s Belgian proceedings, and no other plan and
disclosure statement have ever been filed. As the record makes
abundantly clear, the Liquidating Debtors are presently engaged
in a flurry of activity, seeking to liquidate the last vestiges
of their estates. There is no basis whatever for a belief that
they are working to prepare a plan to rehabilitate their
businesses, and that additional time will permit them to
"finalize [a] distribution scheme", "amend" their moribund
disclosure statement and seek votes for a plan of reorganization
that can never be confirmed.

To the contrary, as AllVoice shows in the Motion to Convert, it
is likely that, within a matter of weeks, the Liquidating Debtors
will have rid themselves of the last of their tangible assets in
the last of a succession of "fire sales". At the same time, other
assets of the Liquidating Debtors - i.e., potential preference
claims against affiliates and others - have not been exploited.
In short, by the end of January, 2002 - the date requested in the
Extension Motion - it is unlikely that any tangible assets will
remain to be reorganized. (L&H/Dictaphone Bankruptcy News,
Issue No. 16; Bankruptcy Creditors' Service, Inc., 609-392-0900)


SABENA SA: Court Ruling Puts Survival of DAT in Doubt
-----------------------------------------------------

Plans to develop a successor to Sabena airlines were thrown into
doubt Wednesday when a Belgian commercial court refused to grant
bankruptcy protection to Sabena's former in-house bank, the
Associated Press reported.

Investors had hoped the court would extend protection for Sabena
Interservice Center (SIC), a subsidiary of the failed Belgian
national airline, under a plan to erase the 109 million euros
owed to it by Delta Air Transport (DAT).

DAT is a former Sabena subsidiary that the government and a group
of private investors want to develop as a Sabena successor.

Without protection from creditors, SIC will be unable to
participate in the rescue, casting grave doubt over the future of
DAT.

If DAT were forced to collapse, it would likely entail the loss
of another 6,000 jobs.


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F R A N C E
===========


AIR LIB: Works Council Set to Hear About Airline's Future
---------------------------------------------------------

The works committee of troubled French airline Air Lib, formerly
Swissair Group AG units AOM-Air Liberte, will meet today to hear
about the future of the company, reports the AFX News.

According to Paul Fourier from the CGT Air Lib union, the works
council will be told whether the airline will file for bankruptcy
or a financing solution.

The management of Air Lib earlier assured its employees that it
would not file for bankruptcy.


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G E R M A N Y
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DAIMLERCHRYSLER: Subsidiary to Sell $15BB Asset-Backed Securities
-----------------------------------------------------------------

DaimlerChrysler AG subsidiary DaimlerChrysler Services North
America LLC filed with the Securities and Exchange Commission to
sell up to $15 billion of asset-backed securities, the Dow Jones
Newswires reported.

Details of the securities will be provided in a prospectus.

DaimlerChrysler Services intends to use the net proceeds for
general corporate purposes.

No underwriter was listed in the filing.

DaimlerChrysler Services North America LLC, a merged entity of
Chrysler Financial and Mercedes-Benz Credit, provides services
for its entire line of passenger car and commercial vehicle
products.


KONEMANN VERLAGS: Files for Bankruptcy
--------------------------------------

Konemann Verlags GmbH, one of the largest book publishing
companies in Germany, has sought insolvency protection pending
restructuring, AFX News reported.

Quarto Group Inc, a publisher of illustrated non-fiction books
based in the U.K., said its customer Konemann Verlags owes them
approximately 1.2 million sterling.


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I R E L A N D
=============


AER LINGUS: Offers Cheaper Fare for Online Bookings
---------------------------------------------------

Cash-strapped Irish airline Aer Lingus is offering big reductions
in fares on most of its routes to passengers who book directly
through its revamped Internet site.

According to a report from the Irish Times newspaper, Aer Lingus
will offer some 2.5 million seats at lower prices between January
and March 2002.

Customers who book by telephone or through travel agents will
still get lower fares, but not as low as those available to
Internet customers.

The latest moves by Aer Lingus follow negotiations with staff
aimed at cutting costs and increasing flexibility.

Aer Lingus is facing losses of around 70 million Irish pounds for
the year. It was already suffering from the global downturn and
also the foot-and-mouth livestock disease outbreak in spring.


=========
I T A L Y
=========


ALITALIA SPA: Air France Mum on Alitalia Board Swap
---------------------------------------------------

Air France declined to comment on whether the company and
struggling carrier Alitalia planned to name top executives to
each other's boards as part of their commercial alliance.

Earlier, a source told Reuters that an agreement was looming that
would see Alitalia Chief Executive Francesco Mengozzi join the
French airline's board with Air France Chairman Jean-Cyril
Spinetta joining Alitalia's.

Alitalia in July joined Air France and Delta Air Lines' code
sharing and marketing alliance to help steer itself out of
financial crisis.


=========
S P A I N
=========


IBERIA SA: Government Clears Job Cuts at Airline
------------------------------------------------

The Spanish government has approved Iberia, Lineas Aereas de
Espana SA's plan to cut 2,515 jobs out of a total workforce of
29,000, AFX News reported.

The job cuts is part of the airline's restructuring process
following the crisis triggered by the September 11 attacks on the
U.S.

The move only concerns voluntary redundancies and will affect 207
pilots, 520 flight attendants, 13 cabin technicians and 1,775
ground staff, AFX added.

Iberia has unveiled a cost saving measures, dubbed as "anti-
crisis" plan, which would save the company up to 799 million
euros. The plan involved savings of 625 million euros through a
15% cut in capacity, 120 million euros through redundancies and a
cut of 54 million euros in general costs.


=====================
S W I T Z E R L A N D
=====================


SULZER MEDICA: Will Post First-Quarter Results in May
-----------------------------------------------------

Sulzer Medica, Europe's biggest orthopedics device maker, said it
would publish its first quarter results for 2002 on May 8, 2002.

It further announced that it would hold its Annual General
Meeting of Shareholders at the Messe Zurich on May 17, 2002.

Sulzer Medica AG is facing arbitration proceedings from former
parent, Swiss techonology group Sulzer AG.

The proceedings shall confirm the legal validity of Sulzer
Medica's obligation to indemnify Sulzer against all expenses and
damage claims arising in relation with Sulzer Medica's medical
devices sector.

Sulzer Medica's U.S. unit, Sulzer Orthopaedics Inc., faces more
than a thousand lawsuits in the U.S. in connection with faulty
hip and knee joints. It is likely to pay around $800 million in
damages.


ZURICH FINANCIAL: Sees $400MM Full-Year Net Loss
------------------------------------------------

Zurich Financial Services expects a full-year net loss of $200
million to $400 million under the International Accounting
Standards, reports Reuters.

The embattled Swiss insurance group said the September 11 attacks
in the U.S., asset impairment charges and lower investment income
impacted the results.

ZFS early this month sold its 80% stake in investment management
operation Zurich Scudder Investments to Deutsche Bank to address
the problems of its high cost base, leveraged balance sheet and
its poorly performing businesses.


===========================
U N I T E D   K I N G D O M
===========================


BIOGLAN PHARMA: Further Drops to 18%
------------------------------------

Shares of Bioglan Pharma Plc, which have slumped 98 this year,
further fell 18% to 7.75p on Monday's trading, extending last
week's 17% drop, Bloomberg reported.

Bioglan Pharma is still in discussions over funding with its
banks.

The debt-laden biotech firm currently has enough working capital
to trade until January 31.

As of July, Bioglan's net debt stood at 105 million pounds, while
operating loss was at 34 million pounds.

The company further revealed current assets of 42.9 million
pounds and current liabilities of 57.4 million pounds.


COOKSON GROUP: Suspends Dividend Despite Fresh Cash
---------------------------------------------------

London-based Cookson Group plc, which makes components for mobile
phones and personal computers, will suspend its interim dividend
next year despite securing a renewed credit line of 450 million
pounds.

A new syndicated loan from Barclays, Lloyds TSB and Citigroup
will replace existing facilities of 500 million pounds, almost
half of which was due during next year.

The troubled engineering group company, according to the
Independent News, will pass the half-year payment because its
markets were likely to remain difficult throughout the first half
of 2002.

No cash dividend will be paid until certain financial targets
have been achieved, the paper further reports.


EQUITABLE LIFE: Halifax Closures Put Equitable Payment at Risk
--------------------------------------------------------------

Last month's closure of 30 branches of Halifax Equitable, which
was demerged from Equitable Life early this year, has raised
questions about the ability of the company to repay Equitable
Life 250 million pounds in 2004, the Daily Telegraph reported.

Clive Scott-Hopkins, a director of the independent financial
adviser Towry Law, said that with the closure of Halifax
branches, sales targets would not be met.

Equitable's individual policyholders and 6,000 pension group
trustees will decide by January 11 on the compromise scheme that
will allow the assurer to cap its liabilities to holders of
valuable guaranteed annuity rate policies (GARs), estimated at
about 1.6 billion pounds.

If the deal is approved, Halifax will have to pay 250 million
pounds. The final tranche of 250 million pounds will only be paid
if Halifax Equitable meets certain sales targets that will be
measured over 2002 and 2003.


HUNTINGDON LIFE: Set to Begin Trading in the U.S.
-------------------------------------------------

Drug-testing company Huntingdon Life Sciences has received US
regulatory approval for its transformation into a US-listed
company.

The Financial Times reported that Huntingdon would be delisted
from the London Stock Exchange. The company's shares in Life
Sciences Research, a shell company created in October to
facilitate the transformation, will begin trading on New York's
NASD over-the-counter bulletin board market on January 24.

The company would retain the Huntingdon name for operational
purposes, the paper added.

HLS's move to the U.S. was prompted by the poor liquidity in the
U.K. shares, following the withdrawal of support from
stockbrokers and marketmakers, who were targeted by animal rights
activists.


INDEPENDENT INSURANCE: FSA Faces First Lawsuit
----------------------------------------------

The Financial Services Authority will face its first lawsuit if
creditors of collapsed Independent Insurance Group plc pushes
through with its plan to file a lawsuit for negligence against
the City regulator, reports the Electronic Telegraph.

The Independent Insurance Action Group, formed after Independent
crashed into liquidation in June, has spent months building a
case that the FSA's failure to respond to warnings about
Independent constitutes negligence.

The action group, led by Stephen Alexander of legal firm Class
Law, believes it has found a way of bringing its case and expects
to file a suit in the High Court in January.

Independent called in liquidators PricewaterhouseCoopers after
actuaries Watson Wyatt said they could not quantify the company's
liabilities because hundreds of claims had not been entered into
its systems.

The FSA declined to comment on the pending legal action.


NTL INCORPORATED: Fails to Secure New Vendor Financing
------------------------------------------------------

Debt-laden cable operator NTL failed to secure new vendor
financing from its suppliers of set-top boxes and other services,
the Financial Times reported.

Set-top box manufacturer Pace said it has never offered vendor
financing to NTL and has no plans to change this.

IBM declined to comment on any negotiations, but confirmed it has
no vendor financing with NTL.

The vendor financing measures, combined with job cuts and
reductions in overheads such as telecoms fees, are needed to
lower the cash-burn rate.

NTL already has a total $250 million of vendor financing from
telecommunications equipment suppliers Cisco Systems and Nortel.


RAILTRACK GROUP: New Railtrack Board May See Pay Double
-------------------------------------------------------

The new executive board of Railtrack will be paid more than
double the salaries and bonuses received by their predecessors.

According to a report from The Times newspaper, the new chief
executive of Railtrack could be paid 875,000 pounds a year under
the proposal drawn up by recruitment consultant Heidrick &
Struggles and WestLB, the German bank aiming to work with the
government on its plans for a replacement for the crippled rail
infrastructure group.

The job also commands pension and bonuses worth up to 375,000
pounds, bringing the final pay to more than 1 million pounds a
year. The bonus will depend if Railtrack hit financial targets
and strict safety and performance criteria.

Former chief executive Steve Marshall earned 341,000 pounds last
year, including pension entitlements.

Railtrack's finance director will be paid a total of 481,025
pounds under the proposals while the operations, commercial and
capital projects directors will be paid 300,000 pounds. They are
entitled to the same 75% bonus as the chief executive.


SAVE GROUP: Rescue Deal Saves 2,000 Jobs
----------------------------------------

The rescue deal for Save Group, U.K.'s largest independent petrol
retailer that fell into administration in March, has saved 2,000
jobs, the Scotsman newspaper reported.

Property entrepreneur Jack Petchey, who allied with independent
petrol distribution operator Bayfords, bought Save Group for 47
million pounds (US$66.5 million) from administrators Ernst &
Young.

The failed group blamed fierce competition between the major oil
suppliers and the supermarket chains for its slump in fortunes.

                                      ************

          S U B S C R I P T I O N   I N F O R M A T I O N

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USA, and Beard Group, Inc., Washington, DC USA. Kimberly MacAdam,
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Copyright 2001.  All rights reserved.  ISSN 1529-2754.

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