/raid1/www/Hosts/bankrupt/TCRLA_Public/010720.mbx        T R O U B L E D   C O M P A N Y   R E P O R T E R

                   L A T I N   A M E R I C A

            Friday, July 20, 2001, Vol. 2, Issue 141

                           Headlines


A R G E N T I N A

AEROLINEAS ARGENTINAS: Sets July 23 As Deadline For Bids
AEROLINEAS ARGENTINAS: SEPI Chairman Resigns; Replacement Sought
YMAD: Government Rep Refutes Rumors On Payment Conflicts


B R A Z I L

AVENTIS PHARMA: Brazilian Subsidiary In Financial Trouble
CVRD: Posts 2Q01 Performance Results; Earnings, Divestments Up
DAIMLERCHRYSLER: Chairman Reveals Investment Plans For Brazil
STARMEDIA: Expects To Get Back In The Black By Year-End


C H I L E

MORGAN IMPRESORES: Arcadia Impresores Buys 100% Of Assets
PSINET: Cisco Objects To The Sell-Off Of Chilean Subsidiaries


E C U A D O R

FILANBANCO: Ecuador Postpones Auction


M E X I C O

CINTRA: Transport Ministry To Release Airline Policy This Week
DESC: Draws One Buyer For Shopping Center
GRUPO SIDEK: To Put Hotels Back On The Market
HYLSA: S&P Reduces Debt Rating By Two Notches to "B-"
SERFIN: Posts First Half-Year Results


P A N A M A

PSINET: Cisco Files Response Regarding Panamanian Sale


P A R A G U A Y

BANCOPLUS: Intervened And Heading For Liquidation


      - - - - - - - - -


=================
A R G E N T I N A
=================

AEROLINEAS ARGENTINAS: Sets July 23 As Deadline For Bids
--------------------------------------------------------
Spanish state holding company SEPI announced that if it doesn't
receive sufficient offers by July 23 to rescue the struggling
airline Aerolineas Argentinas, it would begin to liquidating the
carrier, Reuters reported Wednesday.

"There are five offers, although I don't know whether we should
class them as offers or not very concrete expressions of
interest," said SEPI Chairman Pedro Ferreras. "Our schedule is to
study the offers until the 23rd and, if none of them convinces
us, we will start bankruptcy proceedings at the shareholders
meeting that day," he added.

Possible buyers who have expressed interest in Aerolineas include
Peru's Aero Continente, Spanish travel group Viajes Marsans, and
a Spanish-Argentinean consortium, formed by the Argentinean
magnate Eduardo Eurnekian, Spanish airline Air Europa and Spanish
construction entrepreneur Jacinto Rey. Alitalia of Italy could
also join the bid. The chairman of Air Europa, Juan Jose Hidalgo,
has confirmed that his company is prepared to participate in the
consortium as industrial partner, though he emphasized that talks
were at a preliminary stage.


AEROLINEAS ARGENTINAS: SEPI Chairman Resigns; Replacement Sought
---------------------------------------------------------------
An unnamed source from the Spanish state holding company SEPI
revealed that its chairman, Pedro Ferreras, has handed in his
resignation to Finance Minister Cristobal Montoro, El Pais
reported Wednesday. Ferreras is reportedly resigning for personal
reasons, although he will not leave the company immediately.

According to Economy Minister Rodrigo Rato, SEPI's new chairman
will be chosen from a selection of candidates over the coming
weeks, and Finance Minister Cristobal Montoro will be responsible
for presenting one or more candidates to the government.


YMAD: Government Rep Refutes Rumors On Payment Conflicts
--------------------------------------------------------
Moises Yadon, the provincial government's representative on
Argentine state-owned mining company Yacimientos Mineros Aguas
del Dionisio's (YMAD) board, denied rumors that YMAD and
Alumbrera operator MIM Holdings of Australia have disagreed over
payments, Business News Americas reported Wednesday. On the
contrary, Yadon confirmed that payments of Alumbrera copper-gold
mine in Catamarca province to YMAD are keeping the company
afloat.

"Alumbrera has been very punctual with payments and has made them
in accordance with the established agreement. There's no problem
with them," said Yadon.

YMAD does not hold a share in Alumbrera but, as it held the
original title to the property, has the right to 20 percent of
pre-tax earnings after capital recovery, an MIM spokesperson
said.

"An advance of US$2 million per year is paid for the first five
years and these advances shall be deducted from later payments,"
the official added.

According to an Alumbrera spokesperson, Julian Rooney, "We
distribute profits to YMAD according to the agreement we have,
and we have made all corresponding payments."

The problem for the financially-troubled YMAD is that the mine
has still not recovered its capital investment of some US$1.2
billion, and the last of the advanced payments is due early next
year.

"That is why we have to find a balance within our company for
when these payments stop," said Yadon.


===========
B R A Z I L
===========

AVENTIS PHARMA: Brazilian Subsidiary In Financial Trouble
---------------------------------------------------------
Gerard Libercier, the chief executive of Aventis Pharma's
Brazilian subsidiary Aventis Pharma do Brasil, affirmed that the
company is experiencing difficulties in the country, South
American Business Information reported Tuesday. The company's
troubles reportedly stem from a current price freeze in the
country and the valuation of the US dollar. The company is a
result of the association between Hoechst and Rhodia Pharma. The
parent company, Aventis Pharma, is headquartered in France and
the owns pharmaceutical products Novalgina, Dorflex, Alegra and
Clexane.


CVRD: Posts 2Q01 Performance Results; Earnings, Divestments Up
--------------------------------------------------------------
Companhia Vale do Rio Doce (NYSE: RIOpr)(CVRD), the largest
diversified mining company in the Americas, posted Wednesday a
solid R$ 546 million net earnings in 2Q01, equal to earnings per
share of R$ 1.418.

Earnings accumulated in 1H01 amounted to R$ 1.206 billion, 9.5%
higher than the R$ 1.101 billion achieved in 1H00. This result
was adversely affected by the depreciation of the Brazilian Real
(BRL) against the US dollar (USD). It is not a Company policy to
hedge against exchange rate volatility, as the structure of its
cash flow provides a natural protection against devaluation in
Brazil's currency, over time. On the other hand, the divestments
of CSN and Bahia Sul in 1Q01 generated capital gains that boosted
1H01 earnings.

2Q01 EBITDA, which is directly boosted by a weakening of the BRL,
reached an all-time high of R$ 775 million in 2Q01. 1H01 EBITDA
was R$1.464 billion, 24.6% higher than in 1H00.


DAIMLERCHRYSLER: Chairman Reveals Investment Plans For Brazil
-------------------------------------------------------------
DaimlerChrysler chairman in Latin America, Ben van Schaik,
announced that the company will invest R$500 million in Brazil
this year and in 2002 to transform the country into a leading
center for the development and manufacture of commercial
vehicles, Gazeta Mercantil related Wednesday. Schaik's
announcement comes in the midst of a debate about the company's
strategy to offset a possible slow-down in the second half.
According to the chairman, "surprises such as power cuts and a
collapse in Argentina" could alter the company's earnings
estimates for 2001. "But I trust in the well-known Brazilian
flexibility during times of crisis," he said.


STARMEDIA: Expects To Get Back In The Black By Year-End
-------------------------------------------------------
StarMedia should be able to get out of the red by the end of the
year after getting a cash boost of US$36 million. The funds are
the result of an agreement with Bell South in Latin America,
Valor Economico reported Monday. StarMedia is developing content
such as segmented portals and services for cell phones and hand
held computers. News of the agreement boosted StarMedia's share
price from US$2.00 to US$2.55. StarMedia's income grew 59 percent
in the first three months of the year, but net losses also grew
to US$31.2 million.



=========
C H I L E
=========

MORGAN IMPRESORES: Arcadia Impresores Buys 100% Of Assets
---------------------------------------------------------
Arcadia Impresores, which is associated with publishing company
El Mercurio, acquired Morgan Impresores, a company reportedly
teetering on the edge of Bankruptcy, for the equivalent of US$11
million, South American Business Information reported Wednesday.
Following the transaction, which included the purchase of all of
Morgan's assets, El Mercurio is now one of the leaders in the
domestic publishing sector.

Morgan, before it was buffeted with financial troubles, had about
40 percent of the market and was one of the biggest exporters of
printed material. According to estimates, Morgan generated annual
sales of nearly US$24 million, of which 20 percent corresponded
to foreign markets, especially Brazil and Argentina.

In August of last year, Morgan had over US$25 million in debts.
Its sales to Brazil dropped from US$14 million to between US$2 -
$3 million per year. Contributing to the company's pressure is
the entry of foreign companies like Donnely and Quebecor, whose
strong partnerships with Cochrane and Antartica (respectively),
have significantly impacted the industry.

Before it was sold, Morgan Impresores was controlled by Banta
Corporation (30 percent), Juan Pablo Morgan (25 percent), Darby
Investment (35 percent) and Estrella Americana (10 percent).


PSINET: Cisco Objects To The Sell-Off Of Chilean Subsidiaries
-------------------------------------------------------------
In their response to PSINet's motion to sell its Chilean
subsidiaries, Cisco Systems Capital Corporation and their
affiliates make it clear that Cisco does not seek to derail the
sale but objects to the motion with respect to equipment leased
to the Debtors under a Master Agreement to Lease Equipment.

Cisco tells the Court that the Debtors have failed to make
regularly scheduled payments of rent under the Master Lease.
Cisco is in the process of calculating the obligations owed by
the Debtors. Currently, Cisco projects such obligations to exceed
$100 million. Cisco tells Judge Gerber that upon information, it
believes that items of the Cisco Equipment may have been
transferred among Debtors and their affiliates, including non-
debtor subsidiaries, without notification to or consent by Cisco.
As a result, some of the Cisco Equipment may be currently in the
possession, custody or control of the Direct Subsidiaries and
Chilean Operating Companies.

To the extent that the sale purports to transfer any interests in
Cisco Equipment, Cisco objects to the sale on the following
grounds:

     (1) Cisco has not been provided with adequate notice of the
sale.

     (2) The motion only seeks to transfer the ownership
interests free and   clear of liens but does not seek authority
to transfer any personal property free and clear. Therefore, any
liens, claims, rights and interests of Cisco will continue to
attach to the Cisco Equipment following the closing of the sale.

     (3) The motion does not seek authority to assume or assign
executory contracts under 11 U.S.C. section 365. The Cisco
Equipment is operable only when used in conjunction with software
licensed by Cisco to Debtors. Cisco does not consent to the use
of the Cisco Equipment by any purchaser inasmuch as such use
would require the unlicensed use of Cisco's software.

Therefore, Cisco suggests that in authorizing the sale, the Court
direct:

     (a) that the underlying asset purchase agreements be amended
to provide a mechanism for the adjustment of the purchase price
to reflect any recovery by the Debtors or Cisco of the Cisco
Equipment;

     (b) that the Debtors and Cisco will have a sufficient period
of time to investigate whether any of the Cisco Equipment has
been unlawfully transferred to any of the Direct Subsidiaries or
Chilean Operating Companies and to retake such equipment.

Cisco requests that the Court condition any order approving the
motion upon findings that:

     (1) any items of Cisco Equipment that have not been
identified with particularity are excluded from the sale, and
Cisco's liens, claims, rights and interests will continue in the
Cisco Equipment,

     (2) no Cisco-owned software or interest therein is
transferred to the purchasers,

     (3) Cisco reserves all of its rights and claims with respect
to its software, including the right to require any purchaser to
execute and pay any fees associated with a new software licensing
agreement, and

     (4) the underlying asset purchase agreements are amended as
described above.

Debtors Clarify They Are Not Selling Lessors' Equipment

The Debtors clarify that the Sale Agreement does not purport to
convey equipment that is leased. Since the filing the Sale
Motion, the Debtors discovered various items of equipment that
were acquired from third parties under agreements that purport to
be leases. The Debtors intend to seek declarations that the
equipment in question is held under financing agreements, rather
than true leases by filing adversary proceedings with the Court,
and have informed the proposed buyers of the Chilean subsidiaries
accordingly.

The Court's Order

Judge Gerber granted the Sale Motion. Among other things, the
Court's order provides that:

     (A) No transfer of any license or right to use any software
of Cisco Systems, Inc., or its affiliates presently in existence
between Cisco and the Debtors or their non-debtor affiliates is
accomplished by the authority granted. The Debtors must comply
with the provisions of section 363 and 365 of the Bankruptcy Code
in the event the Debtors seek to assign to any third party any
rights in software licensing agreements among the Debtors and
Cisco. These provisions do not prejudice the rights of Cisco, the
Debtors or the Chilean Subsidiaries under any license agreements
in existence between such parties; and

     (B) The purchasers and Debtors acknowledge that although
equipment is leased by Cisco or to the extent it is subject to an
unavoidable security interest in favor of Cisco and may be in the
possession of  the Chilean Subsidiaries,

         (1) the Cisco Equipment has not been determined to
constitute an asset of such Subsidiaries, and Cisco and the
Debtors reserve their rights as to that issue,

         (2) Cisco's liens, claims, and interests in that Cisco
Equipment, as the case may be, will not be altered in any manner
by the Court's order, and

         (3) Cisco may, subject to applicable provisions of the
Bankruptcy Code, seek to repossess the Cisco Equipment without
compensation to the purchaser and such Subsidiaries.

For More Information See: PSINet Bankruptcy News, Issue No. 5;
Bankruptcy Creditors' Service, Inc., 609/392-0900.



=============
E C U A D O R
=============

FILANBANCO: Ecuador Postpones Auction
-------------------------------------
The Ecuadorian government decided to postpone the auction of
parts of state-owned Filanbanco SA, the country's largest-bank,
after no bidders showed up to take part in Wednesday's scheduled
sale, Bloomberg said in a report. Government officials didn't
release information regarding the future auction date but the
transaction is widely expected to take place before Friday.

"No one has arrived, neither the Finance Minister, nor any
private bank representatives," said Lorena Bravo, an official at
the Central Bank of Guayaquil where the auction was due to take
place.

Finance Minister Jorge Gallardo announced late Tuesday the
closure of Filanbanco and the auction of packages of deposits and
loans. Earlier, analysts had warned that more time was needed to
hold the sale. Filanbanco has $1.2 billion in assets. Filanbanco
clients with less than $300 in their account will receive their
deposits in cash as of Monday, while deposits over $300 will be
transferred to the winning bidder(s).



===========
M E X I C O
===========

CINTRA: Transport Ministry To Release Airline Policy This Week
--------------------------------------------------------------
Transport and Communications Ministry, under Minister Pedro
Cerisola, is expected to release officially this week the Mexican
Aeronautical Policy, Mexico City daily Reforma reported
Wednesday. This was one of the conditions set in order for
government-owned holding company Cintra to proceed with the
auction. The holding company's auction awaits the establishment
of clear parameters for this federal airline industry policy.
Cintra's strategy to sell Aeromexico and Mexicana airlines
separately will continue, with a union tussle almost certain to
ensue.

The policy document will be presented to unions, businesses,
investors and the general public, and among other points will
include topics such as operational security, efficiency, prices
and tariffs, regional commercial aviation and freight services.


DESC: Draws One Buyer For Shopping Center
-----------------------------------------
At least one serious buyer has emerged for Desc Group's Santa Fe
shopping center in Mexico City's southwest. The DESC group
continues to offload non-strategic assets and businesses,
especially in the real estate sector, Mexico City daily Reforma
reported Wednesday. According to the report, the interested party
is CAABSA, managed by the Amodio brothers. The sale would include
34,400 square meters of exhibition space and 7,000 square meters
for conventions, excluding those parts of the mall in the hands
of Liverpool, Palacio de Hierro and Sears.


GRUPO SIDEK: To Put Hotels Back On The Market
---------------------------------------------
Grupo Sidek, S.A. de C.V. will again put a package of eight
hotels up for sale, the same hotels that Steadfast Properties and
Developments Inc. tried to purchase through its subsidiary AMX
Resort Holdings at the beginning of this year, El Financiero
daily said in a report Wednesday. The move comes after a Federal
District court threw out a demand by AMX Resorts against Sidek-
Situr. Sidek-Situr said that the U.S. Company AMX had not
complied with the payment obligations stipulated in the contract,
having failed to obtain the necessary credit from GMAC, the
General Motors financial wing. The transaction reportedly
involved a sum of $160 million. With the court's decision, Sidek
can put the hotels back on the market again, although the agent
responsible for the sale has not yet been announced.


HYLSA: S&P Reduces Debt Rating By Two Notches to "B-"
----------------------------------------------------
New York-based ratings company Standard & Poor's (S&P) downgraded
the debt rating of Mexico's Hylsa SA, the main steel unit of
Hylsamex SA, Bloomberg reported Wednesday. Steel and
petrochemical company Alfa owns Hylsamex.

S&P reduced Hylsa's rating to `B-,' which is six levels from
investment-grade, from `B+.' The outlook for the company is
negative, S&P said in a statement. The move comes amidst the
backdrop of declining profits brought about by a weak steel
demand and higher energy costs

"The ratings on Hylsa reflect the company's high debt leverage,
limited financial flexibility and low interest coverage," S&P
said.

Hylsa may find it difficult to raise money in order to pay or
refinance $80 million in debt coming due this year and $286
million next year because of its sagging steel sales and profits.
Steel sales by volume have dropped 27 percent in the first five
months of this year compared with the same period last year.
Margins on operating cash flow fell to 11 percent in the first
quarter compared with 20 percent for the same period last year.

"If conditions in the domestic and international steel markets
continue to be weak for a prolonged period, Hylsa's financial
profile could deteriorate even more," S&P related.


SERFIN: Posts First Half-Year Results
-------------------------------------
Grupo Financiero Serfin, which Grupo Financiero Santander
Mexicano acquired last May for $1.4 billion from bank bailout
agency IPAB, presented their first half-year results, the best in
the bank's history, Mexico City daily Reforma reported Wednesday.
It saw a 1.314 percent increase in net profitability compared to
the first six months of 2000. The bank will end this year with
over 215 million dollars savings in operating costs. So far this
year, cuts in staffing and a general austerity program have saved
1.92 billion pesos. Serfin's goal is to capture an additional 1.5
percent of market share, increasing from 8.7 percent in June to
9.5 by the end of the year.



===========
P A N A M A
===========

PSINET: Cisco Files Response Regarding Panamanian Sale
------------------------------------------------------
Cisco filed a response similar to that filed in its objection to
PSINet's motion for the sale of Chilean subsidiaries. The
response draws the Court's attention to issues over Cisco
Equipment under the Master Lease and making requests to resolve
those issues.

PSINet clarifies that the Panamanian Sale Agreement does not
purport to convey equipment that is leased and, to the extent
equipment was acquired under an agreement that purport to be
leases but is a financing agreement, the Debtors will file
adversary proceedings with the Court seeking to recharacterize
those agreements.

A dispute between Global Crossing and the Debtors arose over this
motion.

Global Crossing's Allegations

Global Crossing USA, Inc. objects to the transfer of the right to
use Global's network under the Capacity Purchase Agreement (CPA),
which is an executory contract between Global and PSINetworks,
Inc.

Global tells the Court that the Debtors' proposed stock transfer
is "nothing more than a disguised re-transfer of the same rights
in violation of Section 365 of the Bankruptcy Code and the
express terms of the agreement creating and controlling such
rights."The Debtors transferred Ft. Amador-L.A. IRU to a non-
debtor affiliate PSINet Panama, Inc. on the petition date, prior
to filing their petition for bankruptcy. In seeking to sell the
stock of their Panamanian Subsidiaries, the Debtors seek approval
of the Stock Purchase Agreement and the IRU Transfer.

Global accuses that, in doing so, the Debtors are seeking the
Court's approval for their secret assignment on the filing date
of one MCU of capacity from PSINetworks to its affiliate, and the
subsequent transfer of that same MCU from the non-debtor
affiliate to the propopsed purchaser. The value of the right to
use the one MCU of capacity is at least $3MM, Global tells the
Court.

Pursuant to the CPA, Global relates, PSINetworks initially
acquired the right to use four Minimum Capacity Units, or "MCUs"
of capacity on certain portions of Global's network. Thereafter,
PSINetworks was permitted the right to use additional capacity
under the terms and conditions of the CPA. Initially, PSINetworks
purchased the right to use 1 MCU of capacity on the traffic
connection from Los Angeles, California to Fort Amador, Panama
(the "LA-Ft. Amador IRU") for $4,800,000 and an Annual
Maintenance Cost of $325,000. Thereafter, PSINetworks acquired
the right to use additional capacity in the form of traffic
connections from Miami to Buenos Aries, and from Buenos Aries to
Sao Paulo and Rio deJaneiro (the Latin America Capacity). Global
accuses that PSINetworks defaulted under the CPA because it
failed to make the first payment due.

Global is unhappy about the transfer. Such transfer to non-
affiliates without the whole CPA will detrimentally impact
Global's ability to control the IRUs through the CPA, Global
complains. From a practical perspective, the CPA is unenforceable
if the various IRUs under it were to be transferred to non-
PSINetworks entities, Global tells the Court.

Global accuses that:

     (1) The transfer to the purchaser of the Panamanian
Subsidiaries is in violation of the terms of the CPA. The Debtors
are attempting to cherry-pick those rights under the CPA they
would like to assign. To the extent that PSINetworks has the
ability to transfer any right to use capacity in the amount of
one MCU or greater, it is limited to affiliates. Subsequent
transfers are prohibited.The exception is if substantially all of
the assets or business of PSINetworks ar sold, and in such event,
the entirety of the CPA would be transferred. All the IRUs are
part of and governed by the CPA. Thus, in order for the Debtors
to assign any of their rights under the CPA, they have to assume
and assign the entire CPA, not just certain rights under it.

     (2) The transfer to PSINet Panama, Inc. on the petition date
prior to the Debtors' filing for bankruptcy is voidable under
Sections 547 and 548 of the Bankruptcy Code. This eleventh-hour
transfer on the filing date to a non-debtor affiliate is an
obvious attempt to avoid their assumption obligations under
Section 365(a) and (f), Global accuses. Global tells the Court
that PSINetworks is in default of its prepetition and
postpetition payment obligations to Global under the CPA. Global
also draws the Court's attention to the Debtors' failure to
identify any consideration for the IRU Transfer from the debtor
PSINetworks to the non-debtor affiliate PSINet Panama. In the
absence of the Debtors' receipt of reasonable value for the
interest transferred, the filing date transfer of the Debtors'
right to use the LA-Ft. Amador lines is voidable as a fraudulent
transfer under 11 U.S.C. section 548(a)(1)(B), Global argues. To
the extent the transfer is a prepetition transfer, it must honor
the anti-assignment provisions of the CPA. The CPA prohibits the
transfer of one MCU of capacity to any non-affialiate of
PSINetworks. The CPA permits the transfer of any rights of
PSINetworks to an affialite and prohibits any further transfer of
capacity. The rationale is to have the network stay within the
PSINetworks corporate family unless PSINetworks was sold. The
Debtor is seeking approval of an elaborate scheme to transfer one
MCU but the CPA expressly prohibits any transfers of one MCU or
more, and the transfer is therefore void.

     (3) There was something nefarious about the assignment of
the Panama IRU because Networks accomplised this in a covert
manner. To induce Global to restore service on the Latin American
Capacity,

         (a) PSINetworks wired a $2,033,577 payment prepetition,

         (b) the Debtors represented that they would take action
to shield the pre-petition payment from a preference attack by
having Global deemed a critical vendor and that they would take
action to obtain an order authorizing the payment of all pre-
petition sums due accordingly. Throughout the course of their
negotiation with Global regarding the Latin American Capacity,
the Debtors were at all times silent on the other capacity that
they were apparently secretly ttansferring at the same time. The
Debtors later filed a motion for authorization to pay prepetition
claim of Global Crossing as a Critical Vendor, but then refused
to prosecute it. After obtaining the benefit of its bargain with
Global, the Debtor demanded that Global return the prepetition
payment of $2,033,577 wired to Global. Global refused, On July 2,
2001, Global filed its motion to compel the Debtor to assume              
or reject the Capacity Purchase Agreement.

     (4) The Debtors are merely attempting to end-run their
obligation to assume the CPA in order to assign rights under the
Agreement pursuant to 11 U.S.C. section 365(f).

PSINet's Response

The Debtors contend that:

     (a) There has been nothing covert about the transfer of the
Panama IRU. Although neither advance notice nor Global Crossing's
consent was required under the CPA for the Debtors to transfer
the Panama IRU to PSINet Panama, Inc., the Debtors, as a courtesy
to Global Crossing and as an accommodation to the buyer, gave
Global Crossing both advance notice and sought its consent to the
transfer. Global Crossing declined to give its consent but this
does not make the transfer improper.

     (b) The transfer of the IRU was not an impermissible end run
around section 365 of the Bankruptcy Code. Global Crossing cites
no authority to support its argument that section 365 applies to
a Debtor's prepetition assignment of its contract rights. The
transaction to which Global Crossing objects is the sale of stock
of an entity - not a debtor in this proceeding - one of whose
assets is the Panama IRU. The prepetittion transfer of the Panama
IRU is irrelevant under section 365.

     (c) The transfer of the Panama IRU to PSINet Panama, Inc.
and the sale of PSINet Panama, Inc. are permitted by the CPA. The
CPA provides for the transfer of the IRU from Networks to PSINet
Panama, Inc. because PSINet Panama, Inc. and Networks are
affiliates. The prohibition cited by Global Crossing addresses,
among other things, subleasing capacity but it does not apply to
transfers under section 23(c). Specifically, the CPA provides
that "[a]ny such lease, license or transfer agreement shall
prohibit further assignment, transfer or other disposition of
Purchased Capacity, except in accordance with the terms of this
section 23." - the antecedent of "such lease, license or transfer
agreement" is a transfer in accordance with section 23(d) (which
addresse,s among other things, subleasing capacity). Moreover,
under the transaction structure employed by Networks,there is no
further transfer of capacity, after the sale of the stock of
PSINet Panama, Inc., the Panama IRU remains under the same
corporate ownership as it did prior to such sale.

     (d) There has been no fraudulent transfer or preferential
transfer.

The Debtors do not believe that the transfer of the Panama IRU
from Networks to PSINet Panama Inc. is avoidable either as a
preference or as a fraudulent conveyance. PSINet caused Networks
to transfer the Panama IRU to PSINet Panama, Inc. in the belief
that the non-debtor Panamanian subsidiaries and the Panama IRU
would be worth substantially more if they could be conveyed to a
buyer together, than if they could not. Indeed, because Global
Crossing's consent would be required to transfer the Panama IRU
to any entity other than a PSINet affiliate, it is difficult to
see how any substantial value could be realized other than by a
transaction such as the one contemplated by the Debtors.

Moreover, it would be pointless to seek avoidance, because there
is no benefit to the estates from avoidance. The Debtors are
ceasing their operations in Panama and have no use for the Panama
IRU once they have divested their Panamanian operations.
Avoidance would only saddle the Debtors with an unwanted asset
that they can only dispose of among their affiliates or by
abandonment. Moreover, avoidance would prevent the Debtors from
selling their Panamanian business to the proposed buyer, because
the IRU is integral to that business and to the buyer's
obligations to close. In sum avoidance would destroy the value of
the IRU, dramatically reduce the amount any buyer would pay for
the Panamanian business, and eliminate all of the other many
benefits the Debtors are receiving under the sale agreement,
including release of the Sinfonet holdback guarantee liability.

Global Crossing's argument that the transfer of the IRU from
Networks to PSINet Panama, Inc. is voidable as a preference
because it is on account of antecedent debt owed to Ree Panama
also fails because any antecedent debt due by a debtor to Ree
Panama was owed by PSINet, Inc., not by Networks, and therefore
is not on account of "antecedent debt owed by the debtor" within
the meaning of 11 U.S.C. section 547(b)(2).

For the reasons cited in the Response to Global Crossing's
Objection and in the original motion, the Debtors believe that
the transaction is in the best interests of their estates and
would represent a contemporaneous exchange for value under 11
U.S.C. section 547(c)(1).

The Court's Order

The Court granted the Debtors' motion, authorizing the stock sale
and the IRU transfer, among other things.

The Court rules that the IRU Transfer was permissible and proper
and not a transfer avoidable under Chapter 5 of Title 11, United
States Code.

However, the Court's order does not provide for a waive of the 10
day stay pursuant to Bankruptcy Rule 6004(g).

With respect to the Cisco Equipment, Judger Gerber makes it clear
that the Court Order does not provide for any transfer of the
Debtors' or their affiliates' existing license or right to use
Cisco software.

The Court's order states that the purchasers and Debtors
acknowledge that although equipment is leased by Cisco or to the
extent it is subject to an unavoidable security interest in favor
of Cisco and may be in the possession of the Panamanian
Subsidiaries,

     (1) the Cisco Equipment has not been determined to
constitute an asset of such Subsidiaries, and Cisco and the
Debtors reserve their respective rights as to that issue,

     (2) the Court's order will not alter Cisco's liens, claims
and interests in the Cisco Equipment;

     (3) Cisco may, subject to applicable provisions of the
Bankruptcy Code, seek to repossess the Cisco Equipment without
compensation to the purchaser and such Subsidiaries.

For More Information See:  PSINet Bankruptcy News, Issue No. 5;
Bankruptcy Creditors' Service, Inc., 609/392-0900.



===============
P A R A G U A Y
===============

BANCOPLUS: Intervened And Heading For Liquidation
-------------------------------------------------
Intervened Paraguayan bank Bancoplus is doomed to liquidation as
its owners have decided this week not to inject any more capital
to save the bank, a spokesperson from Paraguay's banking
regulator said in a report Wednesday in Business News Americas.

The bank's owners, who requested its intervention as it struggled
to face past-due and non-performing loans at 28 percent of total
loans, decided not to take advantage of the second chance given
to them to put up the required 11 billion Guaranies (US$2.5
million) to shore up the bank and avoid liquidation.

The regulator has already assigned an intervention team to report
back on Bancoplus' financial situation. The team's report will be
used to present a final report to the Central Bank board, which
in turn will decide how the liquidation process will be
adjudicated.

A judicial liquidation is much faster than an out-of court
process, the spokesperson said, adding that the latter could take
more than two years in Bancoplus' case.

Bancoplus accounted for just 1.2 percent of total loans in the
financial system and its 6,000 clients will have to wait for
their money until the Central Bank board has made its decision on
the nature of the liquidation process, he said.

Depositors could be reimbursed through the government's deposit
guarantee, from the proceeds of an asset sale, or both, he added.




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 Latin American is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ,
and Beard Group, Inc., Washington, DC. John D. Resnick, Edem
Psamathe P. Alfeche and Janice Mendoza, Editors.

Copyright 2001.  All rights reserved.  ISSN 1529-2746.

This material is copyrighted and any commercial use, resale or
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