TCR_Public/000327.MBX   T R O U B L E D   C O M P A N Y   R E P O R T E R

     Monday, March 27, 2000, Vol. 4, No. 60  

CANADIAN AIRLINES: Commences CCAA Proceeding in Alberta
CANADIAN AIRLINES: Noteholders Seek Protective Court Orders
CWMBS (INDYMAC): Fitch IBCA Rating Alerts & Downgrades
CWT SPECIALTY: Bankruptcy Sale of Leases
DECISIONONE: Reorganization Plan Is Confirmed by Court

DEVLIEG-BULLARD: Third Motion For Exclusivity Extension
FIRST ALLIANCE: Files For Bankruptcy Protection
FRUIT OF THE LOOM: Law Firm Announces Filing Class Action
GENESIS HEALTH: Considers Bankruptcy After Missing Payment
GULF STATES STEEL: Contract Awaits Court Approval

GUY'S FOODS: Court Approves Asset Sale
HARNISCHFEGER: Announces First Quarter Results
HARNISCHFEGER: Seeks Approval of Settlement With Norscan
HUMPTY DUMPTY: Bar Date Set For May 8, 2000

JUDGE GROUP: Benson Assoc Holds 5.76% of Stock
KEY PLASTICS: Key Plastics Seeks Financial Reorganization
LIBERTY GROUP: Moody's Lowers Ratings
MERIT ENERGY: Seeks Termination of Order Under CCAA
NEUROMEDICAL SYSTEMS: Effective Date of Plan of Liquidation

NORTON MOTORCYCLES: Reports No Revenues For 9 Month Period
PARAGON TRADE: Kimberly Clark Sues Again
PAXSON COMMUNICATIONS: Stock Holders List Shares Held
RECYCLING INDUSTRIES: Court Approves DHR International

SCAFFOLD CONSTRUCTION: Files Formal Plan of Arrangement
SHACK EVENTS: Millenium Event Organizer Considers Bankruptcy
SOUTH FULTON: Bonds Downgraded To `B' By Fitch IBCA
SOUTHERN MINERAL: Hearing on Disclosure Statement
STARMET: Net Sales Decrease 24%

STYLESITE: Fingerhut Acquires Brownstone Studio, Lew Magram
VENCOR: Plan Negotiations Moving Too Slowly For Creditors
WSR CORP: Court Extends Exclusivity
XCL LTD: Putnam Investments Owns 12.1% of Common Stock


CANADIAN AIRLINES: Commences CCAA Proceeding in Alberta
Canadian Airlines Corporation's Board of Directors said that it took
"the next step in the airline's financial restructuring today with a
decision to file for court protection."  Canadian Airlines' and Canadian
Regionals' operations, employees and customers, the Company stressed, are
not affected by the filing and the airline will continue business as usual.
Suppliers who are providing goods and services necessary for the operation
of the airline such as travel agencies, fuel, catering, and materials
will continue to be paid in the normal course, the airline assured.

At the Company's behest, the Court of Queen's Bench of Alberta today
granted an order under the Companies' Creditors Arrangement Act ("CCAA")
in respect of the Corporation and Canadian Airlines International
Ltd. ("Canadian Airlines").

"This is the next logical step, with no impact on our day-to-day operations,
as we build on successful discussions with creditors to date," said Paul
Brotto, President and Chief Executive Officer, Canadian Airlines. "With
many creditors having come to terms, the filing provides a formal structure
through which creditor approval of the debt restructuring can be quickly
obtained.  We have made tremendous progress, entering the filing with
the support of a substantial number of secured creditors and aircraft
lessors with interests in approximately 80% of our fleet."  He concluded,
"We are nearing the end of the process to put Canadian Airlines on a
sound financial footing."

Under the terms of the order, the Corporation will present a Plan of
Arrangement, setting out the terms of the restructuring of its debt
and other obligations, to creditors and the Courts within 30 days.
Creditor meetings to approve the Plan of Arrangement are expected to
be held in early May. The order stays any proceedings against the
Corporation or Canadian Airlines, and ensures that no pre-emptive
action can be taken by creditors to disrupt the significant progress
to date in negotiations with creditors.

The Plan contemplates that Canadian will become a wholly owned
subsidiary of Air Canada upon completion. It is likely that
shareholder interests will also be compromised.  As such, there can be
no assurances as to what level of consideration, if any, will be offered
to shareholders of Canadian Airlines Corporation as part of the process.

CANADIAN AIRLINES: Noteholders Seek Protective Court Orders
The holders of (US) $175 million in Senior Secured Notes issued
by Canadian Airlines are today seeking an Order of the Alberta
Court of Queen's Bench enabling them to take steps to protect and
preserve the assets of Canadian Airlines charged in their favour
to secure the monies owed to them by the company. The holders of
the Senior Secured Notes are seeking payment in full of all
obligations owed them by Canadian Airlines, approximately (US)
$184 million. Failing payment of that amount, the holders
are seeking to enforce their rights against the key operational
assets charged in their favour.

The Bank of Nova Scotia Trust Company of New York, the Trustee
for the holders of the Notes, and Montreal Trust Company of
Canada, as Collateral Agent, will assert in Court that the Air
Canada group of companies, which now includes Canadian Airlines,
is in default under the terms of the Trust Indenture under which
the Notes were issued. They will also assert that Canadian
Airlines is required to repay in full all of the amounts due to
the holders of the Senior Secured Notes.

The Notes are secured by a package of key operational assets of
Canadian Airlines. These assets include Canadian Airlines' spare
engines and parts; its ground equipment; its communications
equipment which links ramp, maintenance and other personnel;
fuel; inventory; food and beverages; catering supplies and
galley equipment. The Notes are also secured by Canadian
Airlines' key operational centres in Vancouver and Calgary and by
its three aircraft hangers at Lester B. Pearson International
Airport. The holders of the Senior Secured Notes also hold the
shares of Canadian Regional Airlines, a wholly owned subsidiary
of Canadian Airlines which has annual revenues of approximately
(CDN) $600 million.

Mr. Geoffrey Morawetz of the law firm of Goodman Phillips &
Vineberg, representing the Trustee and the Collateral Agent,
said, "The issue here is one of preserving and protecting the
value of the key operational assets until such time as the Air
Canada group makes a commitment to pay in full the obligations
owed to the Senior Secured noteholders."

In 1998, the independently appraised value of the collateral
totaled approximately (US) $380 million, some (US) $200 million
more than the principal amount outstanding to the holders of
Senior Secured Notes. The holders of these notes have been
advised that the fair market value of the collateral today is
substantially the same or better than the value in 1998. A senior
officer of Canadian Airlines has certified the fair market value
of the collateral was in excess of (US) $300 million as recently
as December 1999.

The Notes in the amount of (US) $175 million were issued under a
Trust Indenture between Canadian Airlines and the Bank of Nova
Scotia Trust Company of New York as Trustee in April 1998. The
Notes are repayable in full on maturity on May 1, 2005 or are
payable prior to maturity where certain events occur regarding
the operational or financial status of Canadian Airlines. One
such event is a change in control of the company. The current
amount outstanding, including interest and costs, is
approximately (US) $184 million.

The Senior Secured Notes are held by a group of financial
institutions based primarily in the United States. These
investors, a number of which have held the Notes since they were
issued in 1998, include such established financial institutions
as Mass Mutual Life Insurance Co. and Lazard Freres & Co.

Mr. Morawetz noted, "The Senior Secured Noteholders have acted in
a fair and reasonable manner throughout this process and will
continue to do so. They are as committed as anyone to the
successful restructuring of Canadian Airlines within the Air
Canada group. They are willing and have offered to work with the
company toward the resolution of these matters. They have
indicated the company can continue to use the property and assets
in question once it confirms it will honour the terms of the
Trust Indenture. In the continued absence of such assurances, and
in order to obtain a degree of certainty, the creditors have no
choice but to ensure that legal remedies are in place to protect
their interests should those measures be required."

The Order being sought would, if granted, appoint Ernst & Young
to protect the security position of the creditors regarding
property and assets pledged to secure the Notes. At the same
time, the Trustee has indicated a willingness to work with the
Air Canada group towards a solution once the latter confirms it
will honour the terms of the Trust Indenture. The Trustee has
also indicted it is prepared to discuss the company's continued
use of the charged property and assets on acceptable terms during
this process.

CWMBS (INDYMAC): Fitch IBCA Rating Alerts & Downgrades
Fitch IBCA is taking rating actions on the following CWMBS
(IndyMac) Inc.'s mortgage pass-through certificates:

--  CWMBS 1994-O, class B5 ($459,942 outstanding) rated `B' and
currently on RatingAlert Negative, is downgraded to `CCC'.

--  CWMBS 1994-V, class B5 ($834,997 outstanding), rated `B' and
currently on RatingAlert Negative, is downgraded to `CCC'.

--  CWMBS 1995-B, class B5 ($342,041 outstanding), rated `B' is
placed on RatingAlert Negative.

--  CWMBS 1995-Q, class B5 ($615,739 outstanding), rated `B' is
placed on RatingAlert Negative.

--  CWMBS 1995-N, class B5 ($115,283 outstanding), rated `CCC' is
downgraded to a `D', class B4 ($1,484,501 outstanding), rated `B'
and currently on RatingAlert Negative is downgraded to a `CCC',
class B3 ($2,319,532 outstanding), rated `BBB' is placed on
RatingAlert Negative.

--  CWMBS 1996-K, class B5 ($433,462 outstanding), rated `B' is
placed on RatingAlert Negative.

The action is due to the level of losses incurred to date and the
high delinquencies in relation to the applicable credit support

CWT SPECIALTY: Bankruptcy Sale of Leases
The Honorable Jeffry H. Gallet, United States Bankruptcy Judge

PURSUANT to ORDER of the Bankruptcy Court dated March 22, 2000,
PLEASE TAKE NOTICE that the Debtor, a ladies apparel retail chain
d/b/a CHERRY & WEBB is conducting an auction/sale of its
unexpired leases for the following:

-- 31 stores ranging from 7,500 to 33,600 SF, located in CT, MA,
NH, RI & VT.  The locations are enclosed malls, strip centers &
downtown areas

-- A 152,700 SF Distribution Center/Office in Massachusetts

-- A 5400 SF Office in Manhattan

The following is a brief outline of some of the pertinent

-- Bids and deposits are due by April 6, 2000 at 5:00 PM.

-- The Auction will be on April 11, 2000 at 11:00 AM for
"qualified bidders" at the offices of Weil Gotshal & Manges, the
Debtor's counsel.

-- A hearing will be held to confirm the results of the auction
on April 18, 2000 at 9:30 AM before the Honorable Jeffry H.
Gallet at the US Bankruptcy Court, SDNY, One Bowling Green, NY,

The Debtors have retained DJM Asset Management, LLC to conduct
the lease sales.  For information regarding the leases, bid
procedures and becoming a "qualified bidder" please contact DJM
Asset Management at 631-752-1100. (Thomas Laczay - ext 225; James
Avallone - ext 224; Emilio Amendola - ext 223; Andrew Graiser -
ext 229)

Attorneys for Debtor:
Weil Gotshal & Manges LLP      
767 Fifth Avenue               
New York, New York             
Attn: Judy Liu, Esq.

Attorneys for Unsecured Creditors Committee:
Kronish, Lieb, Weiner & Hellman, LLP
1114 Avenue of the Americas
New York, New York 10036
Attn: Lawrence Gottlieb

DJM Asset Management, LLC
445 Broad Hollow Road
Melville, NY 11747
Attn: Andrew Graiser

DECISIONONE: Reorganization Plan Is Confirmed by Court
DecisionOne Corporation today announced that on March 21, 2000
the U.S. Bankruptcy Court in Delaware had confirmed the company's
prepackaged plan of reorganization, completing its restructuring
process begun January, 1999.

As previously announced, on February 14, 2000, DecisionOne
submitted the plan for court confirmation with the unanimous
support of its relevant creditor groups.

Under the terms of the restructuring plan, DecisionOne's bank
lending group will exchange approximately $523 million in
existing indebtedness for approximately 94.5% of the reorganized
company's equity and $250 million in new senior secured bank

The holders of the company's 9-3/4% Senior Subordinated Notes due
2007 will exchange their Notes for approximately 5% of the
reorganized company's equity and warrants to purchase up to an
additional 10.8% of the reorganized company's equity at various
exercise prices.  The holders of the 11-1/2% Senior Discount
Debentures due 2008 issued by DecisionOne Holdings Corp., and
DecisionOne Holdings' other unsecured creditors, will receive a
total of approximately 0.5% of the reorganized company's equity.  
The holders of the common stock of DecisionOne Holdings Corp.
(OTC Bulletin Board: DOCIQ) will not receive any distribution
under the terms of the agreement, and such stock will be

The agreement further provides that the holders of the company's
14% Senior Notes due 2006 would exchange their Notes for warrants
to purchase up to 6.2% of the reorganized company's equity at
various exercise prices.

As previously announced, the plan also provides that general and
trade creditors will be paid in full.

Employing more than 5,000 people, DecisionOne is the largest
independent provider of multivendor computer maintenance and
technology support services in North America.  Headquartered near
Philadelphia, PA, the company provides services for a broad range
of computing environments, from the data center to the desktop,
through one of the industry's largest service infrastructures.
DecisionOne has an impressive roster of customers, representing
more than 50 percent of Fortune 1000 companies.  For more
information regarding DecisionOne, refer to the DecisionOne web
site at

DEVLIEG-BULLARD: Third Motion For Exclusivity Extension
The debtor, DeVlieg-Bullard, Inc., seeks a court order extending
the periods during which it has the exclusive right to file its
plan of reorganization through and including June 30, 2000 and
and the period to obtain acceptance thereof through and including
August 31, 2000.

Debtor's Chapter 11 case is one of the largest cases pending in
its district.  The debtor has over 5,000 creditors and is a party
to a $18.5 million DIP facility, and has two levels of
subordinated debtor,  Plan negotiations with the Committee have
not begun in earnest because the debtor is investigating the
possibility of selling substantially all of its assets, either as
a whole to one buyer or by division to more than one buyer.    
The debtor needs the time to continue working on the turnaround
of financial and operational matters.  These include an effort to
work with CFITBC to put in place the medium-term or long-term
financing.  The extended time period is also necessary to explore
various asset sale options that could form the basis of a
workable plan.  The debtor will use this period to work closely
with its creditor constituencies to develop a plan that will
maximize value to the debtor and its estate and creditors.

FIRST ALLIANCE: Files For Bankruptcy Protection
First Alliance Corp., which lends money to home buyers with poor
credit, has filed for bankruptcy protection, saying it will lay
off 85 percent of its staff and stop making loans.

Earlier this month, the company was the subject of an
investigative article in The New York Times and a segment of the
ABC News program "20/20."

Company Chairman Brian Chisick on Thursday blamed the recent
"unwarranted negative publicity" for the decision to seek Chapter
11 bankruptcy protection.

"These unfair and inaccurate stories have devastated the
company's 30-year reputation and acutely hindered the company's
relationships with businesses, consumers and regulators," Chisick
said in a news release.

The Irvine-based company said it would close all its branches,
located in 10 states, and will lay off approximately 300 people.

First Alliance is being investigated by the U.S. Department of
Justice and seven state attorneys general because of complaints
about its lending practices. The company also faces lawsuits
filed by stockholders and customers, including the American
Association of Retired Persons.

The company's annual earnings have been dropping steadily since
1995. In 1999, it reported net income of $3.8 million, down from
$14.2 million in 1998 and $32.7 million in 1997, according to its
annual report, filed March 13 with the Securities and Exchange

First Alliance has branches in California, New York, New Jersey,
Illinois, Arizona, Colorado, Maryland, Oregon, Utah and

FRUIT OF THE LOOM: Law Firm Announces Filing Class Action
Wechsler Harwood Halebian & Feffer LLP announced that it has been
retained to file a class action in the United States District
Court for the Western District of Kentucky on behalf of
purchasers of Fruit of the Loom, Inc. Class A common stock during
the period commencing September 28, 1998 and ending November 4,

The action will charge the debtor's two top officers with
violations of the Securities Exchange Act of 1934. The complaint
alleges that during the third and fourth quarters of 1998, Fruit
of the Loom told investors it was materially reducing its levels
of finished goods and raw materials inventory by curtailing
production at certain of its facilities for several days in each
of those quarters, but that Fruit of the Loom expected strong
sales growth in 1999-2000. On April 21, 1999, Fruit of the Loom
reported its first quarter 1999 results, including sales of $408
million and a loss of $.13 per share, compared to year earlier
earnings per share of $.43. Fruit of the Loom said these
disappointing results were due to an inability to manufacture
sufficient product to meet strong demand. As a result, Fruit of
the Loom forecast that its 1999 sales would be about $2.0-$2.1
billion, generating earnings per share of over $1.35, followed by
2000 earnings per share of over $2.00. From June 1999 to August
1999, Fruit of the Loom projected a third quarter 1999 profit,
better second half 1999 results, and represented that the
production problems were now largely resolved and its plants were
running at capacity.

But then, on November 4 1999, the debtor revealed it had suffered
a loss of $166.4 million on third quarter 1999 sales of only $548
million, a loss of $2.49 per share. This huge loss was not only
due to Fruit of the Loom's poor and out-of-control operations,
but also a massive $60 million write-off of over-valued and
non-existent inventory, a $20 million loss on cotton futures
contracts and a $10 million charge for a loss on a supply
contract from a previously sold facility. In December 1999, Fruit
of the Loom filed for bankruptcy. On March 17, 2000, Fruit
announced its fourth quarter and year end 1999 results, including
a loss of $398.5 million in the fourth quarter of 1999. Instead
of achieving success with its operational reorganization,
recovering from its production problems, achieving expense
reductions and growing revenues, net income and earnings per
share, as well as the strong cash flow as defendants had forecast
for Fruit of the Loom during most of the Class Period, Fruit of
the Loom, in fact, suffered declining revenues, huge losses and
massive cash flow deficits because its MIS and inventory and
production control systems were defective, its reorganization had
failed and it could not overcome its production problems, leading
to massively escalating expenses, all of which resulted in the
debtor's bankruptcy. Fruit of the Loom 's stock became virtually
worthless, inflicting millions of dollars of damage on class

Plaintiff seeks to recover damages on behalf of all purchasers of
Fruit of the Loom Class A common stock during the Class Period.
The plaintiff is represented by the law firm of Wechsler Harwood
Halebian & Feffer LLP

GENESIS HEALTH: Considers Bankruptcy After Missing Payment
Pennsylvania-based Genesis Health Ventures Inc., a nursing home
operator, failed to make a $3.8 million interest payment to
lenders this week and has been granted a 60-day grace period to
make payments on $1.5 billion in outstanding debt, The Washington
Post reported. Genesis is considering bankruptcy among its
options, and is the latest in a long line of nursing home
companies to have serious financial problems. Along with its
colleagues in the industry, Genesis cites the decrease in
Medicare reimbursements. Prior to changes in Medicare payments,
Genesis received an average Medicare payment of $370 a day for
each patient in its nursing homes, whereas today it receives $86
per day per patient. Genesis operates 50 nursing homes and two
assisted-living facilities that serve 8,000 people in Maryland,
as well as eight nursing homes and two assisted-living facilities
serving 1,600 people in Virginia. (ABI 24-Mar-00)

GULF STATES STEEL: Contract Awaits Court Approval
A new five-year labor contract between Gulf States Steel and the
United Steel workers of America awaits a bankruptcy judge's
approval and an April 8 vote of the union's members.

The tentative contract was approved Wednesday by the company and
union leadership.  It provides pay raises and improved benefits,
but specific details were not disclosed.

Union spokesman Earl Guyton said a new long-term contract is
crucial to the company's efforts to get bank loans that will
improve the plant.

Although the current contract doesn't expire until Oct. 1, the
new accord could help the company emerge from bankruptcy. The
company declared Chapter 11 bankruptcy July 1.

U.S. Bankruptcy Judge James Sledge will consider the labor pact
only after other parties in the bankruptcy and the company's bond
holders review it. A bankruptcy hearing is planned Friday morning
in Gadsden.

CEO Bob Schaal said if Sledge requests information about the
tentative agreement, he will briefed about it at the hearing.

GUY'S FOODS: Court Approves Asset Sale
A bankruptcy judge has approved sale of the assets of Guy's Foods
to General Products and Services of Fort Wayne, Ind.

Family Snacks Inc., which operates Guy's Foods, filed for Chapter
11 bankruptcy reorganization on Feb. 11. Under the plan approved
Wednesday by Judge Frank W. Koger, General Products will assume
most of Guy's Foods' debt, including some $14 million owed to
LaSalle National Bank of Chicago.

The sale is expected to close Monday.

Ron Hirasawa, chairman and chief executive officer of General
Products, said he hoped to retain at least 60 percent of Guy's
Foods' work force and most of its senior managers. The work
force, once as high as 1,000, is down to about 700.

General Products also plans to continue operating the 325,000-
square-foot Guy's warehouse, distribution and office complex in
suburban Liberty, Hirasawa said.

The sale does not include a warehouse in Tulsa, Okla.; $300,000
in cash for unsecured creditors; and stock in Guy's Foods' North
Carolina subsidiary, which filed for Chapter 11 in the fall.

Guy's Foods was founded in 1937 by Guy Caldwell and his wife,
Frances Caldwell, who began by roasting and selling peanuts in a
makeshift cooker in a small storeroom in Kansas City. Borden Inc.
acquired Guy's in 1979 and sold it to Victor R. Sabatino, a
veteran of the snack food industry, and several other executives
in 1994.

The privately owned General Products, which does business under
the Seyfert's and Ultima Foods brand names, has fewer than 300
employees and its revenues last year were estimated at about $40
million, compared to Guy's estimated $125 million.

General Products was formed last year through the merger of
Seyfert's Foods of Fort Wayne and Ultima Foods of Chicago. Like
Guy's, it makes a variety of salty snack foods, including potato
chips, tortilla chips, corn chips, pretzels, cheese twists and

General Products' snacks are distributed by its own truck fleet
to stores in Indiana, Kentucky, Ohio, Michigan and Illinois, and
the company also ships to specialty stores and private labels
throughout the country.

Guy's has an eight-state distribution area in the Midwest and
also makes snacks for nationwide warehouse distributors and
international customers.

HARNISCHFEGER: Announces First Quarter Results
For the three-month period ending January 31, 2000, the Debtors
report a $16.4 million loss on $264.4 million in total sales.  A
full-text copy of the Company's form 10-Q for First Quarter is
available at no charge at:

HARNISCHFEGER: Seeks Approval of Settlement With Norscan
The Debtors tell the Court that, upon the repudiation of contract
by Asia Pacific Resources International Holdings, Inc. and
Norscan-Tech Limited, they have obtained preliminary injunction
of the payment of approximately $4,700,000 by First Bank, NA on a
stand-by letter of credit for the benefit of Norscan and Asia
Pacific. The letter of credit, the Debtors say, is in relation to
the manufacture of a paper machine to be situated in China.

Subsequent to the injunction, Norscan filed a demand for
arbitration with the ICC's International Court of Arbitration
against Beloit and its two subsidiaries in Asia, alleging breach
of contract and seeking the return of down payment in the amount
of $4,711,000. Beloit then filed a counterclaim alleging breach
of contract and seeking retention of the down payment plus costs
and damages.

The Debtors ask the Court to approve a Settlement Agreement which
they say represent a favorable resolution of the dispute because
the Agreement:

-- will provide HII with $4,200,000 of the approximately
   $5,262,000 currently held at the Circuit Court as a result
   of the injunction;

-- eliminates the risks and costs associated with litigation and

-- avoids the substantial costs of further discovery, trial and
   possible appeal;

-- avoids the risks of not getting anything in the Arbitration;

-- reduces the prepetition claims outstanding against the Debtors
   because Norscan and Asia Pacific Resources will withdraw any
   proofs of claim filed against the Debtors.

HUMPTY DUMPTY: Bar Date Set For May 8, 2000
By order of the US Bankruptcy Court, District of Maine, a Bar
Date of May 8, 2000 is established in the case of Humpty Dumpty
Potato Chip Company.  Any holder of a claim against the debtor
must file proof of claim with the Bankruptcy Court no later than
the Bar Date.

UBS AG, of Zurich,(successor to Union Bank of Switzerland)
beneficially owns 1,995,500 shares with shared voting power, and
117,400 shares with sole dispositive power, of the common stock
of International Heritage Inc.  The holding represents 5.9% of
the outstanding common stock of the company.

JUDGE GROUP: Benson Assoc Holds 5.76% of Stock
Benson Associates, LLC, of Portland, Oregon beneficially owns
802,500 shares of the common stock of Judge Group Inc.  The
Associates hold sole voting and dispositive rights.  The holding
represents 5.76% of the outstanding common stock of the company.

KEY PLASTICS: Key Plastics Seeks Financial Reorganization
Key Plastics, L.L.C., one of the world's leaders in the
automotive plastics industry, and certain of its domestics
affiliates, today filed for voluntary petitions for
reorganization under Chapter 11 of the United States Bankruptcy
Code in the United States Bankruptcy Court for the Eastern
District of Michigan, Southern Division.

The Company also announced that it has received a proposed
commitment from its lending group for up to $125 million in
debtor-in-possession (DIP) financing.  The DIP financing, which
is subject to court approval, is expected to provide adequate
funding for all post-petition trade and employee obligations, as
well as the costs associated with the restructuring process.
Most importantly, it will provide sufficient working capital
during restructuring to allow Key Plastics to maintain full

"This decision will enable our company to maintain engineering
and manufacturing of our products without significant
interruption, while addressing the burden of our interest charges
and debt amortization," said David C. Benoit, Chief Executive
Officer of Key Plastics, L.L.C.

In just five years, Key Plastics has grown from nine facilities
in the United States and Mexico to 34 facilities in nine
countries.  The company has enjoyed strong growth, tripling
employment since 1995 while increasing sales 200 percent over
that period.

Key Plastics designs and manufactures highly engineered precision
plastic components and subsystems, including Interior Trim such
as driver information, audio and HVAC components; Under Hood
components including pressurized bottles and mass air flow
housings, and Exterior Ornamentation including door handles
and fuel filler doors.

The Company's World Headquarters and Technical Center is located
in Novi, Michigan.  Key's Novi Headquarters and Plymouth,
Michigan Test and Validation Laboratory are ISO 9001 certified.  
All of its manufacturing facilities are QS-9000 certified.

LIBERTY GROUP: Moody's Lowers Ratings
Moody's Investors Service downgraded the debt ratings of Liberty
Group Publishing, Inc. (Publishing) and its Liberty Group
Operating, Inc. (Operating) subsidiary (taken together, Liberty).
Affected debt instruments include $89 million (face value) of
0%/11-5/8% senior discount notes due 2009 of Publishing, the
rating for which was lowered to Caa2 from Caa1; $180 million of
9-3/8% senior subordinated notes due 2008 of Operating, the
rating for which was lowered to Caa1 from B3; and the $175
million existing senior secured bank revolving credit facility
due 2005 (as amended) of Operating, the rating for which was
lowered to B1 from Ba3. Moody's also assigned a B1 rating to
Operating's proposed $100 million senior secured bank term loan
due 2007, and confirmed the existing "caa" ratings for
approximately $85 million (as currently being increased by $26
million) of junior and $59 million of senior pay-in-kind
preferred stock of Publishing. The senior implied rating for
Publishing has also been revised downward, to B2 from B1, as has
the senior unsecured issuer rating, to Caa2 from Caa1. The
outlook for all ratings is stable.

The downgrades principally reflect the general lack of
improvement in the company's credit profile over the last two
years, upon which the original rating assignments were partially
predicated. Specifically, Moody's notes that Liberty's
consolidated leverage continues to remain at very high levels,
and that the absence of cash flow growth at levels consistent
with management's initial projections has resulted in lower debt
service coverage levels than originally expected. Moreover, the
lower ratings and stable outlook further incorporate Moody's
belief that the company will continue to make opportunistic
acquisitions of comparatively underperforming newspaper assets
over the future forecast period, thereby rendering its current
financial condition to be relatively stagnant and deeming the
revised ratings to be more appropriate for both the current and
expected future credit risk of the consolidated entity going

The ratings themselves continue to reflect Liberty's highly
leveraged balance sheet, particularly in consideration of the
mandatorily redeemable preferred stock obligations which cannot
be treated entirely as equity given their many debt-like
characteristics; a still thin layer of common equity investment,
notwithstanding the PIK feature attached to the preferred capital
contributed to date and which is being increased at present;
uncertainty with respect to future acquisition multiples, and
related integration risks that compound lingering issues for
recently acquired properties; and ongoing (albeit comparatively
limited relative to industry peers) vulnerability to both
economic recessions and historically cyclical newsprint costs.

Positive considerations which continue to support the company's
ratings, however, include the fairly stable and predictable
revenue and cash flow generating ability, and dominant market
positions, of its community newspapers and circulars;
management's recent track record of successfully identifying,
acquiring, integrating, and effecting operating improvements at
acquired properties, notwithstanding some mixed results over the
last year; an improved liquidity position following the
anticipated successful closing of the bank debt add-on facility;
and limited capital investment requirements, which should enable
more meaningful free cash flow growth and the ability to reduce
debt as further cost-cutting initiatives and operating
improvements result from enhanced clustering and core cash flow
growth is ultimately realized.

The ratings also continue to broadly reflect the relative rank,
structure and capital mix of the consolidated entity in the
context of its individual debt and preferred stock instruments.
The Caa1 rating for the senior subordinated notes of Operating
continues to reflect their effective and contractual
subordination to the growing amount of senior secured and
guaranteed bank debt. The Caa2 rating for the senior discount
notes of Publishing further incorporates the structural
subordination of this holding company debt class to a material
amount Operating debt and other subsidiary obligations. Finally,
Moody's notes that the continued upward notch to B1 (from the B2
senior implied rating) that the bank debt maintains reflects its
still strong asset coverage, even in a distress scenario, and a
reasonable amount of multi-layered junior capital behind it,
notwithstanding the increased top-heaviness of the consolidated
entity by virtue of the upsizing of this debt class to its
maximum permitted level at present.

Northbrook, Illinois-based, Liberty Group Publishing, Inc.,
through its wholly-owned subsidiary Liberty Group Operating,
Inc., is a leading publisher of 308 local newspapers and free
circulars to rural communities located in 16 states.

MERIT ENERGY: Seeks Termination of Order Under CCAA
Merit Energy Ltd. ("Merit") announces that the National Bank of
Canada and Bank One have made an application to the Court
of Queen's Bench of Alberta to terminate the previously granted
order under the Companies' Creditors Arrangement Act (Canada) and
to appoint Arthur Andersen Inc. as Receiver/Manager of Merit.  
This application is scheduled to be heard at 9:00 a.m. (Calgary
time) on March 24, 2000.

Merit also announces that the following persons have resigned
from their positions with Merit:

Barry Stobo - Interim President and Chief Executive Officer and

Paul Macdonell - Vice President, Engineering and Business

Neil Thiessen - Vice President, Exploration

Helmut Eckert - Land Manager

Stephen Cochrane   - Controller

The Board of Directors has appointed Duncan Chisholm as Interim
Chief Executive Officer of Merit.

NEUROMEDICAL SYSTEMS: Effective Date of Plan of Liquidation
By order dated January 31, 2000, the US Bankruptcy Court,
District of Delaware entered an order confirming the debtor's
first amended plan of liquidation.  The Effective Date of the
plan is March 15, 2000.

NORTON MOTORCYCLES: Reports No Revenues For 9 Month Period
Norton Motorcycles Inc., a development stage company, had no
revenues in the nine months ended December 31,1999 or December
31, 1998.  The accumulated deficit for the nine month period of
1999 was $2,326 and the accumulated deficit in the nine month
1998 period was $296.

The company was organized in 1986 for the purpose of evaluating
and seeking merger candidates. Through March 1999, the company
had no operations other than management had been seeking merger
or other business opportunities. In April 1999 the company
acquired the trade name Norton and certain assets
that were being used to develop a line of high performance
motorcycles. Also in April 1999 the company's name was changed to
Norton Motorcycles, Inc. from Hallmark Properties, Inc.

On October 1, 1999 the company commenced proceedings in the
English High Court against its former engineering consultants,
MCD, for relief including delivery up of prototype motorcycles
and design drawings. MCD is defending that claim and has
indicated that it intends to pursue a claim to ownership
of the designs and/or prototypes and a claim for substantial
damages that it has estimated to be in excess of $1.7 million.
Although the outcome of this dispute is uncertain, the company's
English solicitors have advised the company that they believe
that it is unlikely that MCD's claims to the designs and
prototypes and to damages sought will be sustained.

Since the commencement of these proceedings the company has
received advice that places in question previous assessments as
to the development and viability of the designs previously
provided to the company. Based on such advice the company now
believes that it is unlikely that it will complete the
development of its previously announced motorcycle product line.
The company is seeking an independent third party evaluation of
the designs and prototypes and it will be in a position to
provide further details upon receipt of that evaluation. The
company may have to make further application to the English Court
in order to secure such an inspection.

Given Norton's insufficient cash resources, the substantial
doubts about viability of the motorcycle product line which was
being developed by MCD, the significant amounts owed to suppliers
and debt holders and the substantial on-going litigation faced by
the company, the company may be unable to continue as a going
concern and may have to file for bankruptcy or other court
protection from suppliers and debt holders. Additionally, the
company may seek to sell all or a portion of its assets,
including the trade name Norton.

PARAGON TRADE: Kimberly Clark Sues Again
The Dallas Morning News reports on March 23, 2000 that Kimberly-
Clark Corp., which collected more than $ 115 million from Paragon
Trade Brands Inc. to settle diaper patent infringement claims,
has sued Paragon again, alleging infringement of a patent on
disposable training pants.

Irving-based Kimberly-Clark, the world's top maker of tissue
products, says in a lawsuit filed Monday in federal court in
Wilmington that it is the owner of a patent awarded in 1994 for a
method of cutting and placing components of its Huggies Pull-Ups.

The company says Norcross, Ga.-based Paragon - the No. 1 U.S. and
Canadian generic diaper maker, which filed for Chapter 11
Bankruptcy Court protection in 1998 - is using Kimberly-Clark's
invention to sell its own training pants.

Paragon was sold to Wellspring Capital Management LLC in January.
Paragon spokesmen were not immediately available for comment.

Shares of Kimberly-Clark, which reported $ 13 billion in sales
for 1999, fell $ 1.19 to $ 51.81. Paragon last traded at 50 cents
on Feb. 10.

PAXSON COMMUNICATIONS: Stock Holders List Shares Held
The following firms hold the common stock of Paxson
Communications Corporation in the amounts and capacities shown:

The Gabelli Funds, LLC, 897,000 shares with sole voting and
dispositive powers, 1.67% of the outstanding common stock of the

GAMCO Investors, Inc., 1,854,050 shares with sole voting, and
1,902,050 shares with sole dispositive powers, 3.54%;

Gabelli & Company, Inc., 3,200 shares with sole voting and
dispositive powers, 0.01%;

Gabelli International Limited, 18,900 shares with sole voting and       
dispositive powers, 0.04%;

Gabelli International II Limited, 15,000 shares with sole voting
and dispositive powers, 0.03%;

Gabelli Performance Partnership L.P., 22,000 shares with sole
voting and dispositive powers, 0.04%;

Gabelli Securities, Inc., 3,000 shares with sole voting and
dispositive powers, 0.01%;

Gemini Capital Management Ltd., 89,500 shares with sole voting
and dispositive powers, 0.17%; and

MJG Associates, Inc., 3,000 shares with sole voting and
dispositive powers, 0.01%.

RECYCLING INDUSTRIES: Court Approves DHR International
By order of the US Bankruptcy Court, District of Colorado,
entered on March 13, 2000, the debtors, Recycling Industries,
Inc. and affiliated debtors were granted the authority to retain
DHR International as the debtors' executive search consultant.

Debtor: Saddle Up Ranch, Inc.
        7725 N. Rainbow Boulevard
        Las Vegas, NV 89131

Type of Business: Equestrian Facility and Quest Ranch

Petition Date: March 20, 2000   Chapter 11

Court: District of Nevada

Bankruptcy Case No.: 00-11974

Judge: Linda B. Riegle

Debtor's Counsel: PRO SE

Total Assets: $ 1,591,969
Total Debts:  $ 1,089,940

SCAFFOLD CONSTRUCTION: Files Formal Plan of Arrangement
Scaffold Connection Corporation (SFD:TSE) reports that it
will file its formal plan of arrangement and compromise with the
Court of Queen's Bench of Alberta today.  The Plan is subject to
obtaining the formal approval of creditors, the necessary
regulatory approvals in respect of the issuance of shares and
approval of the Court.

The Company has not yet scheduled meetings with each class of
creditors, but will in the near future, subject to the directions
of the Court.  The Company will also be applying today to extend
the stay granted under the Companies' Creditors Arrangement Act,
which presently expires on March 31, 2000.

Highlights of the Plan are as follows:

* Secured creditors, as identified and defined in the Plan, will
  retain their respective security positions.

* The Company, as required by its principle lenders, will dispose
  of surplus assets to reduce its operating and term lines of
  credit.  The Company believes the disposal of surplus assets is
  reasonable and achievable and will not significantly impact
  future operations.

* 9.75% convertible, secured, debenture holders have the option
  of extending their repayment date two years or converting their
  debenture to common shares at $0.60 per share.  The aggregate
  principle amount of the debentures is $2.25 million.

* To facilitate the administration of the Plan, each unsecured
  creditor with a claim of less than $1,000 will receive cash for
  their claim.

* Unsecured creditors with a claim of $1,000 or more will have
  the option of either accepting a total of $1,000 cash or
  converting their claim to common shares at a rate of $0.60 per
  share for the first $2 million of indebtedness, $0.50 per share
  for the next $1 million, $0.40 per share for the next $1
  million and $0.30 per share thereafter.

The Company estimates that this Plan will result in $17 million
of unsecured indebtedness being converted into approximately 29
million common shares.

The Company has worked closely with its major creditors in
developing this Plan.

To assist with the feasibility and implementation of this Plan
the Company has arranged subordinated secured loans of $1.5
million from two of the Company's shareholders.  The loans are
repayable over 3 years and bear interest at 9.5%.  These lenders
will also be granted a total of 1.5 million warrants to acquire
common shares of the Company at $0.50 per share expiring in 3

The Company has also implemented a number of changes to its
operations that make this Plan feasible, including a major
restructuring of management and a significant reduction in fixed

SHACK EVENTS: Millenium Event Organizer Considers Bankruptcy
Shack Events Inc., Falls Church, Va., is considering filing for
bankruptcy protection after scrapping a much-hyped New Year's Eve
gala at the MCI Center in Washington, The Washington Post
reported. Shack, which repeatedly claimed that tickets were
moving at a rapid pace for a sell-out gala, cancelled the event
on Dec. 29, and many people who bought $249 and $399 tickets may
not get their money back. Promoter Mike Harrigan had planned
bands on every level of the MCI center, 150 open bars and indoor
fireworks, but only 3,500 of the 11,000 plus tickets were sold.
Most of those who purchased tickets through Ticketmaster have
received refunds, but those who bought directly from Shack Events
have not been as fortunate. Harrigan said he did not know if he
could provide a number for how many refunds Shack Events has
issued, but said, "There has been very little money to do that."
His company, which has previously staged eight successful New
Year's Eve events, is considering filing for bankruptcy. (ABI 24-

SOUTH FULTON: Bonds Downgraded To `B' By Fitch IBCA
Fitch IBCA has downgraded to `B' from `BB' its rating on Tri-City
Hospital Authority's approximately $35 million outstanding
revenue anticipation certificates, (South Fulton Medical Center),
series 1993.

Bonds with a rating of `B' are highly speculative. `B' ratings
indicate that significant credit risk is present, but a limited
margin of safety remains. Financial commitments are currently
being met; however, capacity for continued payment is contingent
upon a sustained, favorable business and economic environment.
Fitch IBCA has not received feedback from management and has
analyzed this credit based on unaudited financial statements for
the year ended June 30, 1999 and unaudited financial statements
for the six months ended Dec. 31, 1999. Additional rating action
may occur in the future.

The primary reasons for the downgrade include the consolidated
entity's dangerously low level of unrestricted liquidity and its
poor performance in fiscal 1999. As of Dec. 31, 1999, Georgia
International Health Alliance, Inc. (GIHA), the parent of South
Fulton Medical Center (SFMC) had only $1.9 million of
unrestricted liquidity, translating to only 7.7 days cash on
hand, a cushion ratio of 0.5 times (x), and cash to debt of 5.7%.
All of these liquidity measures are dangerously low and provide
the organization with essentially no flexibility. Furthermore,
the organization had a poor fiscal 1999 as it recorded an excess
loss of negative $3.8 million, equating to a negative excess
margin of 3.2% and coverage of maximum annual debt service of
0.7x, on an unaudited basis. This could result in a rate covenant
violation. Fiscal 1999's performance followed a much improved
fiscal 1998. For the first six months of fiscal 2000, GIHA had an
excess loss of $1.1 million, translating to an excess margin of
negative 2.0% and coverage of MADS of 1.1x.

Absent any immediate changes, Fitch IBCA believes that GIHA will
have difficulty making its debt service payments in the future.
Fitch IBCA also believes that SFMC has not had to use its debt
service reserve fund yet.

Located in East Point, Georgia (a southern suburb of Atlanta),
GIHA is a health care provider with a 405-bed acute care hospital
and other related entities.

SOUTHERN MINERAL: Hearing on Disclosure Statement
The hearing to consider the approval of the disclosure statement
of Southern Mineral Corporation and its affiliated debtors shall
be held at 3:00 PM on April 17, 2000 before the Honorable Wesley
w. Steen, US Bankruptcy Judge, Southern District of Texas,
Victoria Division.

STARMET: Net Sales Decrease 24%
Net sales of Starmet Corporation decreased by $1,784,000, or 24%,
to $5,635,000 in the first quarter of fiscal 2000, as compared to
the first quarter of fiscal 1999 when net sales were $7,419,000.  
The company did realize a slight net gain in the first quarter of
fiscal 2000 of $223,000, whereas in the same quarter of fiscal
1999 the company's net loss was $87,000.

Starmet continues to have a significant working capital
deficiency and has restructured or amended its debt agreements
with its principal lender a number of times.  The company has
been served a complaint for breach of contract by one of its
principal vendors.   In addition, the company has significant
potential liabilities associated with discontinued or
suspended  aspects of its business which it believes are the
responsibility of the U.S. Government.  If these liabilities were
to become the responsibility of the company, Starmet has
indicated it would be required to consider insolvency or similar
reorganization proceedings to preserve its business operations.  
In response to this situation, the company is pursuing
alternative financing, arranging vendor payment plans, and
continuing to restructure internally.

STYLESITE: Fingerhut Acquires Brownstone Studio, Lew Magram
Fingerhut Companies, Inc., a wholly owned subsidiary of Federated
Department Stores, Inc. (NYSE:FD), announced it acquired the
Brownstone Studio and Lew Magram catalogs. Both catalogs sell
women's apparel and accessories.

Fingerhut expects to run the new business under the direction of
its subsidiary, Tucson-based Arizona Mail Order Co., Inc., which
was purchased by Fingerhut in Aug. 1998. In Dec. 1998, Fingerhut
also purchased Bedford Fair Industries for an undisclosed amount,
giving the company women's apparel catalogs Bedford Fair and
Willow Ridge.

Brownstone and Lew Magram were owned by StyleSite Marketing,
Inc., which filed for Chapter 11 bankruptcy court protection in
January. Fingerhut purchased assets in a bankruptcy court sale
that included inventory, trademarks and customer lists. The
merchandising and creative staffs of the two catalogs will
remain largely intact. Fingerhut did not acquire warehouses and
telemarketing as part of the purchase.

Fingerhut Companies Inc. is a leading database marketing company
selling a broad range of products and services through catalogs,
direct marketing and the Internet.

VENCOR: Plan Negotiations Moving Too Slowly For Creditors
The Courier-Journal (Louisville, KY.) reports on                       
March 23, 2000, that Vencor Inc. continues to negotiate a plan to
restructure its finances so it can emerge from Chapter 11

Attorney Joel Zweibel, representing a group of secured lenders
who are owed $565 million by Vencor, complained in court here on
March 22, 2000 that "the negotiations are not progressing
anywhere near as well" as anybody expected when the nursing-home
and hospital operator filed for bankruptcy protection last

Vencor had already worked out a tentative framework with its
creditors at the time of that filing and said it expected to
present a formal plan within a couple of months, well within the
120-day period during which a company filing Chapter 11 has the
exclusive right to propose a plan of reorganization.

But the hearing before bankruptcy judge Mary Walrath dealt with
Vencor's request for a second two-month extension of that period.
A temporary extension had been in place since the initial
extension expired March 13.

Walrath agreed yesterday to give Vencor until May 16 to file a
plan, and until July 17 to win approval of the proposal from

According to the report, Vencor attorney Lindsey Granfield said
that the company is "still optimistic that negotiations can be
concluded in the near future."  The company says unspecified
events since the bankruptcy filings have slowed the negotiations.

The U.S. Department of Justice put in a formal claim against
Vencor this month, saying the company owes the government more
than $1.3 billion - mostly due to what it says was fraud
committed to win extra payments from Medicare.  Any repayments to
Medicare, the federal health insurance plan for the elderly, will
have to be part of Vencor's reorganization plan.

Neither Vencor nor Ventas - Vencor's sister real-estate company,
which shares liability for the government claim - could pay what
the Justice Department has sought. The agency has been
negotiating a settlement that would likely amount to far less
than the full claim.

WSR CORP: Court Extends Exclusivity
The US Bankruptcy Court, District of Delaware entered an order on
March 1, 2000 in the case of WSR Corporation, R&S Strauss, Inc.,
National Automotive Stores, Inc. and National Auto Stores Corp.,
debtors, extending the debtors' plan exclusivity period to and
including May 11, 2000.  The solicitation exclusivity period is
extended to and including July 10, 2000.

XCL LTD: Putnam Investments Owns 12.1% of Common Stock
Putnam Investments, Inc., which is a wholly-owned subsidiary of
Marsh & McLennan Companies, Inc., wholly owns two registered
investment advisers:  Putnam Investment Management, Inc., which
is the investment adviser to the Putnam family of mutual funds
and The Putnam Advisory Company, Inc., which is the investment
adviser to Putnam's institutional clients.

Of the common stock of XCL Ltd., Putnam Investments, Inc. owns
143,192 shares with shared voting powers, and 2,767,881 shares
with shared dispositive powers, representing 12.1% of the
outstanding common stock of the company.  Putnam Investment
Management, Inc. shares dispositive power over 2,582,791 shares,
representing 11.3% of the outstanding common stock of the company
and The Putnam Advisory Company, Inc. shares voting power over
143,192 shares and shared dispositive power over 185,091 shares.  
This amount represents only 0.8% of the outstanding common stock
of XCL.

Both subsidiaries have dispository power over the shares as
investment managers, but each of the mutual fund's trustees have
voting power over the shares held by each fund, and The Putnam
Advisory Company, Inc. has shared voting power over the shares
held by the institutional clients.


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., Trenton, NJ, and Beard
Group, Inc., Washington, DC. Debra Brennan, Yvonne L. Metzler,
Edem Alfeche and Ronald Ladia, Editors.

Copyright 2000.  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
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contained herein is obtained from sources believed to be
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