TCR_Public/000824.MBX             T R O U B L E D   C O M P A N Y   R E P O R T E R

                 Thursday, August 24, 2000, Vol. 4, No. 166


AMES DEPARTMENT: Moody's Confirms Debt Ratings & Negative Outlook
ANACOMP, INC.: Projecting October Bond Default, Retains DLJ for Advice
APB ONLINE: To Purchase Media Company's Assets
APPONLINE.COM: Holzer & Holzer Files Shareholder Class Action Suit
ARM FINANCIAL: Bankruptcy Court Confirms Amended Plan Of Liquidation

BENNETT FUNDING: WOW Entertainment Shareholders Acquire American Gaming
CINCINNATI CORDAGE: Ohio Paper Distributor Files For Bankruptcy Protection
COLLEGECLUB.COM: Assets To Be Purchased by Student Advantage, Inc.
COLORADO PRIME: Moody's Junks All Ratings And Says Outlook Remains Negative
COLUMBUS COMMUNITY: Columbus, Ohio, Hospital Files for Chapter 11 Relief

DRKOOP.COM: Obtains $20 Million in Equity Financing, Easing Financial Pain
ELDER BEERMAN: Retains Renaissance Partners To Aid in Strategic Planning
GENESIS/MULTICARE: Vehicle Lessor Wants Decision About Lease Agreement
GULF STATES: Files Notice of Structured Closure Of Facilities
HARNISCHFEGER INDUSTRIES: Resolves Rockwell's $1.8 Billion in Filed Claims

HARRISBURG EAST: EQK Files Modified Amended Plan of Reorganization
KITTY HAWK: Creditors' Committee Wants to Attend Board Meetings
LOEWEN GROUP: Says "Substantial Progress" in Reorganization Plan Talks
MARINER POST-ACUTE: Obtains Extension of Exclusive Period to November 20
MERISEL, INC.: Moody's Ratchets Sr. Note & Bank Debt Ratings Down a Notch

NATIONAL BOSTON: Blames Infotopia Misrepresentations for Chapter 11 Filing
NMT MEDICAL: Still Exploring Strategic Alternatives for Neurosurgical Unit
PARACELSUS: Houston-based Hospital To File For Bankruptcy Due To Defaults
POTLATCH CORP.: Moodys Gives Negative Outlook to Senior Unsecured Debt
SAFETY-KLEEN: Motion To Sell Nashville Property To PRTP For $300,000

SIERRA HEALTH: A.M. Best Places Ratings Under Review With Neg. Implications
SPECIALIZED SOFTWARE: Firms Files Chapter 11 To Get Rid Of Excess Baggage
SUN HEALTHCARE: Motion To Sell Accelerated Care Plus & Compromise Claims
THOMAS & BETTS: Moody's Puts Senior Debt & Short Term Ratings Under Review
UNITED MEDICORP: Medical Insurance Provider Reports 2Q Loss

VENCOR: Debtors' Motion To Transfer Highland Nursing And Rehab. Facility
VOLUNTEER DRUG: $40 Million Drug Distributor to Call it Quits
WARNACO GROUP: Moody's Lowers Debt Ratings To Ba2 With Negative Outlook


AMES DEPARTMENT: Moody's Confirms Debt Ratings & Negative Outlook
Moody's Investors Service confirmed the debt ratings of Ames Department
Stores and of its subsidiary, Hills Stores.  The rating outlook was changed
to negative from stable, however, due to higher debt levels and decreased
financial flexibility to handle potential adverse conditions in the near

The following ratings were affected by this action:

    i)   Senior implied rating of Ba3;

    ii)  $200 million senior unsecured guaranteed notes due 2006 at B1;

    iii) Senior unsecured issuer rating of B2;

    iv)  $650 million senior secured guaranteed bank facilities maturing           
           2002 at Ba2;

    v)   Senior unsecured notes of Hills Stores Co., which are not formally
           supported by Ames, at B2.

Ames operating results and cash flow generation have been impacted by
unseasonally cool and rainy weather throughout its business area during
Spring and Summer of 2000. Weather patterns have continued cool through
late August, which Moody's believes will result in seasonal merchandise
being liquidated at unsatisfactory margins. Moody's does not believe that
apparel has been significantly affected because of the company's practice
of buying apparel throughout the season rather than committing upfront.
Maturation of the acquired Hills locations is somewhat behind the company's
plan, but still performing within Moody's expectations.

Debt was at a relatively high level at the close of the second quarter, and
Moody's has revised its expected debt levels throughout the remainder of
the year. Ames does not expect to add significantly to debt during the
remainder of the year, as it expects to use receipts from summer clearances
to holiday merchandise. Ames did announce a temporary increase to its
revolving credit facility which Moody's believes will provide an adequate
level of available liquidity for this year.

The ratings confirmation reflects the expectation that Ames will maintain
its financial profile in the near to medium term, and that the store will
remain relevant to its target market. Ames is conserving cash by reducing
the level of growth and capital expenditures planned for the near term, and
by delaying previously approved stock buybacks. Moody's anticipates that
the company will maintain lease-adjusted debt to EBITDAR of about 5 times,
and EBIT to interest coverage of about two times. Moody's expectations are
based on assumptions of more seasonable weather patterns in the coming
months, and on the belief that management will maintain its consistent and
conservative operating strategies.

The negative outlook recognizes Ames' reduced financial flexibility as a
result of higher debt levels. A ratings downgrade could result if the
company continues to face adverse operating conditions.

The ratings continue to reflect Ames' high leverage; the expectation that
debt will not be substantially reduced in the near term; and the potential
for short term fluctuations in debt and inventory levels as Ames adjusts to
new markets.

Ames Department Stores, Inc., headquartered in Rocky Hill, Connecticut,
operates 467 discount department stores throughout the Northeast and upper

ANACOMP, INC.: Projecting October Bond Default, Retains DLJ for Advice
Poway, California-based Anacomp, Inc., The San Diego Union-Tribune reports,
failed in its efforts to improve the company business, posting a $43
million net loss for its third quarter ended June 30.  Anacomp's microfiche
business together with costs for docHarbor division caused the huge losses.
Anacomp confirmed that it won't make the October interest payment $310
million of bond debt.  Anacomp has hired Donaldson, Lufkin & Jenrette,
hoping that it can seek other partners to help restructure the company's

Anacomp emerged from chapter 11 in December after a contentious 3 1/2-year
restructuring.  But it still carried a heavy debt.  Allen & Co. was brought
in to explore a possible sale or merger.  Allen & Co.'s efforts failed.
Anacomp's chief executive Ralph Koehrer resigned and was replaced earlier
this month by Phil Smoot.

APB ONLINE: To Purchase Media Company's Assets
APB Online Inc., operator of ( the  
only media company exclusively covering crime, justice and safety, said it
has filed for court permission to sell its assets.

The proposed purchaser is (,the  
authoritative, one-stop information and training resource for companies and
their employees, as well as a comprehensive safety resource and community
for consumers on the Internet.  Among's many investors are
Apollo Advisors, L.P. and Rare Medium Group, Inc. (NASDAQ: RRRR).

APB has agreed to sell its assets, including its programming archive, to, which plans to continue the news service with
many of its current and former reporters and editors. The agreement, which
includes debtor-in-possession financing, is subject to approval by the U.S.
Bankruptcy Court. Proceeds from the sale will be used to satisfy the claims
of creditors.

APB has operated under Chapter 11 bankruptcy protection since July 5, 2000., which is based in Waltham, Mass., said it was pleased with
the proposed transaction. "This relationship is a natural marriage of two
cutting-edge businesses dedicated to providing high-quality news and safety
information over the Internet. We are committed to maintaining the award-
winning journalistic integrity of the site. This relationship gives and the opportunity to accelerate their growth
and become a greater service to the public. sees an
excellent source of both investment and content from APB Online."
Details of the pending acquisition are on file with the Bankruptcy Court
and may be accessed at the Court's Internet site.

"'s investment confirms the broad appeal of APB's content,"
said Marshall V. Davidson, APB Online's chairman and chief executive
officer. "Exciting, informative and propriety content is a key to long-term
success on the Internet. and share the belief
that great content will drive the opportunities for great business."

                               About APB

Founded in 1998, is the principal operating division of APB
Online Inc., a privately held communications company based in New York. is the first media outlet exclusively covering crime, justice
and safety issues --together the most intensively followed subjects in
media. gets revenues from program sponsorships and e-commerce
partners, and from syndication and licensing of its branded content to
major Web sites, television, radio, newspapers, magazines, book publishers
and wireless devices. is produced in a New York City newsroom
staffed by veteran newspaper and television journalists, as well as
freelancers nationwide.

Among its professional awards are the first Scripps Howard Foundation
National Journalism Award for Web Reporting, the first Society of
Professional Journalists' Sigma Delta Chi Award for Excellence in Online
Journalism Deadline Reporting, and a special citation for body of work in
the first online award by Investigative Reporters and Editors Inc.

Brill's Content recently named one of the best news sites on
the Internet. is dedicated to the public's right to know,
providing accurate, expert, contextual, fair and responsible coverage of
crime, justice and safety.

APB Online raised capital through a private placement to institutional
investors in August 1999. A financing that began in March failed when the
market valuation of virtually all Internet content companies, public and
private, declined substantially in April. On June 5, the company announced
that it had exhausted its funding and terminated employees, but would
continue to publish.

Since that announcement, the site has continued daily posting of its award-
winning content and has received more journalism awards. On June 19, the
company said it had rehired some employees after two weeks of volunteer

                            About is the authoritative, one-stop information and training
resource for companies and their employees, as well as a comprehensive
safety resource and community for consumers on the Internet.
offers rich content incorporating "best practices" advice from government
agencies, safety experts and commercial and community groups.

It provides cost-effective, customized safety solutions for businesses,
governments and their employees. is building the world's
most advanced safety information delivery system that connects to your
desktop, laptop, dashboard, palmtop, kiosk, or cell phone.

A team of technology investors, headed by Apollo Management, L.P. and Rare
Medium Group, Inc., provided the funding to launch Rare
Medium, a prestigious Web solutions developer, has provided its services to
design and launch the new site.

APPONLINE.COM: Holzer & Holzer Files Shareholder Class Action Suit
Holzer & Holzer filed a class action lawsuit in the United States District
Court for the Eastern District of New York on behalf of all persons who
purchased or otherwise acquired the common stock of, Inc.
(AMEX: AOP; OTCBB: AOPL) between June 1, 1999 and June 30, 2000, inclusive.

The complaint alleges that defendants violated the federal securities laws
by disseminating false and misleading information about the Company's
business, operations and financial condition, which caused the price of the
Company's common stock to be artificially inflated throughout the Class
Period. The complaint alleges that on August 14, 2000 AppOnline common
stock closed at $.08 per share, down roughly 98.5% from its Class Period
high of $5.50 per share.

The complaint alleges that defendants, among other things, violated various
banking rules and regulations. The complaint alleges that on May 24, 2000
Newsday reported that the Fair Housing Administration (the "FHA") had fined
Island Mortgage Network, Inc. ("Island"), a subsidiary of AppOnline, for
making loans that did not comply with FHA standards and had been based on
allegedly false documentation and incomplete or incorrect information.
Then, on June 30, 2000, New York State Banking Regulators suspended
Island's mortgage banking license for allegedly making loans it could not
fund and for failing to provide regulators with access to its files, the
complaint alleges.

Contact Corey D. Holzer, Esq., at (888) 508-6832 or

ARM FINANCIAL: Bankruptcy Court Confirms Amended Plan Of Liquidation
The U.S. Bankruptcy Court confirmed ARM Financial Group, Inc.'s Amended
Plan of Liquidation, dated July 5, 2000.  The Court approved the adequacy
of the related Disclosure Statement on the same date it was filed.  The
Company has been operating under Chapter 11 protection since December 20,
1999.  (New Generation Research, Inc. 22-Aug-00)

BENNETT FUNDING: WOW Entertainment Shareholders Acquire American Gaming
The shareholders of WOW Entertainment, Inc. announced that the Bankruptcy
Court for the Northern District of New York approved their purchase of all
the shares of American Gaming & Entertainment, Inc., owned by Shamrock
Holdings Group, Inc. and Richard C. Breeden, as Trustee of the Bennett
Funding Group, Inc. at a hearing held on August 17, 2000. The Bankruptcy
Court also approved the conversion of all of the preferred stock of AGEL
owned by Shamrock and Breeden into 360,588,361 shares of common stock of

The purchase of all the shares of AGEL was also approved by the Indiana
Gaming Commission at a hearing held on August 21, 2000, subject to
Commission staff review and approval of the final documents between AGEL
and RSR, LLC on or before August 31, 2000. The Company anticipates the
remaining contingencies will be fulfilled within the next seven days and
the sale of the shares will close on or about August 31, 2000.

Shares of AGEL are traded on the OTC Bulletin Board under the symbol
"AGEL". Promptly upon a closing of the stock sale, the Company anticipates
engaging in a transaction whereby it will become a wholly-owned subsidiary
of AGEL. Based in Indianapolis, Indiana, the Company develops and produces
sports entertainment programming. The Company's first run syndicated
television series WOW-Women of Wrestling will premiere this Fall and is
being distributed by M/G Perin, Inc.

CINCINNATI CORDAGE: Ohio Paper Distributor Files For Bankruptcy Protection
Cincinnati Cordage & Paper Co., The Cincinnati Post reports, filed for
bankruptcy protection under Chapter 11 after incurring high debts due to
competition and shrinking profits.  Attorney Edmund Adams, Esq., of Frost &
Jacobs, Cincinnati Cordage's bankruptcy counsel says that his client's
financial woes are "compounded by the industry trend of consolidation which
has accelerated.  We're hoping to either have a sale in place or a
reorganization in the next 60 to 90 days.  We want to move through this

Cincinnati Cordage & Paper Co. distributes printing paper and listed assets
of $32.8 million and debts of $34 million in its bankruptcy papers.  The
company has 200 employees in 10 cities, including Columbus, Cleveland,
Indianapolis and Louisville.

COLLEGECLUB.COM: Assets To Be Purchased by Student Advantage, Inc.
Student Advantage, Inc. (Nasdaq: STAD), calling itself the leading off-line
and online portal to the higher education community, and,
Inc., an online integrated communications and media Internet company for
college students, have signed a definitive agreement through which Student
Advantage will acquire substantially all of the assets of
and certain of its subsidiaries, including its Web site,

In deciding to acquire, Student Advantage Chairman and
Chief Executive Officer Raymond V. Sozzi, Jr. said, "We expect to bolster
considerably the business potential of by utilizing Student
Advantage's proprietary content and commerce offerings to generate
significant additional revenue from CollegeClub's extensive user and member

San Diego-based provides its members with an integrated
communications solution, including an interactive online community, and has
approximately 2.9 million registered online members at 3,600 college and
university campuses. In May, the last full month of the college spring
semester, had 1.9 million unique visitors and more than 262
million page views, ranking it among the top 50 sites overall and the
leading college-oriented Web site, according to PC Data Online, an
independent service that tracks Internet usage.

Boston-based Student Advantage reaches the higher education community with
a mission of helping students save money, work smarter and make more
informed life decisions through integrated content and commerce
relationships with both university and corporate partners.

Student Advantage has proprietary commerce relationships with nearly 50
national retailers -- including AT&T, Amtrak, Staples, Greyhound, Barnes &
Noble and Tower Records -- and 15,000 local participating locations in
approximately 125 cities throughout the country. The online Student
Advantage Network includes a strong channel-based Web site, a cutting edge
academic research engine, a comprehensive online scholarship database and
information site, and a news service syndicating stories from more than 500
of the nation's top college newspapers. The company also maintains the most
popular college sports destination on the Internet, and counts more than
2.1 million active members enrolled in the fee-based Student Advantage
Membership Program.

" has created an online suite of community services that
resonates with the college student marketplace," Sozzi said. "When combined
with our proprietary student-focused content and commerce offerings, and
our ability to realize significant revenue from those services,'s assets will give Student Advantage's commerce and
advertising partners truly integrated sales and marketing opportunities
that are unmatched."

"By becoming part of Student Advantage,'s student members
will have access to a wider array of commerce products, while maintaining
the spirit of community that has made and its members such
a force on the Internet," he added.

"Our success has been driven by our ability to meld the community and
content aspects of our programs with solid revenue generation, something
many traditional community-focused sites have been unable to do."

"There are enormous opportunities to be gained by joining the strengths and
reach of these two college sector community and commerce leaders," said
Monte Brem, Senior Vice President of Corporate Development of " stands out as an online leader for
reaching college students and Student Advantage is the leader among
diversified student commerce platforms to the higher education community."
Under the terms of the definitive agreement, Student Advantage will acquire
substantially all of the assets, such as the Web site and
other intellectual properties, and assume certain of the company's revenue
contracts, which include a strategic alliance with General Motors. Other
assets of, Inc., such as and Izio, are not
being acquired by Student Advantage. The purchase price consists of $7
million in cash, subject to adjustment, and 1.5 million shares of Student
Advantage common stock, representing less than 4.5 percent of Student
Advantage's outstanding common stock. The agreement also provides for an
additional cash payment of up to $5 million to if certain
Web site revenue performance goals are met during 2001.

Completion of the purchase is subject to, among other things, approval by
the U.S. Bankruptcy Court in San Diego where, Inc., the Web
site's owner, and certain of its subsidiaries each filed a voluntary
petition for reorganization under Chapter 11 of the federal Bankruptcy Code
on Monday, August 21.

In addition, Student Advantage purchased the assets of another, Inc. subsidiary, eStudentLoan LLC, for approximately $1
million of cash on July 28. The assets of eStudentLoan purchased by Student
Advantage are currently subject to a repurchase option by
In a related development, Student Advantage announced it had secured a $10
million financing commitment from FleetBoston Bank, NA, which the company
said it would use to help finance the deal.

COLORADO PRIME: Moody's Junks All Ratings And Says Outlook Remains Negative
Moody's Investors Service downgraded all ratings of Colorado Prime
Corporation.  Ratings lowered include the $50.0 million bank revolver due
2002 to Caa1 from B3 and the $84.3 million 12.5% senior unsecured notes due
2004 to Ca from Caa2.  The senior implied rating also fell to Caa3 from
Caa1 and the issuer rating dropped to C from Caa3. The rating outlook
remains negative.

The rating action was prompted by liquidity concerns as to the ability of
the company to make upcoming interest payments, even if the company
succeeds in selling unutilized assets over the short term. Availability
under the bank facility is minimal and continued weak operating results
have inhibited the company's cash generation ability. Revenue fell to $68
million in the first six months of 2000 versus $74 million in the same
period of 1999 while cash flow (as represented by EBITDA) proved
insufficient to cover interest. For the twelve months ending June 2000,
leverage remained high as debt equaled more than 9 times EBITDA. With a low
cash balance and the revolver largely drawn, Moody's believes that, without
a balance sheet restructuring, meeting bond interest obligations going
forward will prove challenging.

The negative rating outlook reflects our view that near term liquidity is
uncertain until the company significantly reduces leverage. The negative
outlook also considers that there is little capacity to absorb unexpected
events and that ratings could be lowered further if the company's
enterprise value were to substantially decrease.

The Caa1 rating on the senior secured bank facility (maturity April 2002)
reflects that the facility is secured by substantially all of the company's
tangible and intangible assets with availability tied to a percentage of
eligible accounts receivable. While the borrowing base mechanism should
ensure that receivables remain in excess of bank borrowing, we believe that
collection of accounts receivable in a distressed scenario could prove
highly uncertain. As a result we believe the collateral provides moderate
protection. The Ca rating on the senior unsecured notes considers the
possible substantial impairment caused by their effective subordination to
the sizable (in relation to estimated enterprise value) bank facility.

Revenue and cost of sales have both been adversely affected by recent
events. At the end of the 1st Quarter 2000, adverse publicity about the
company's selling practices caused potential customers to lessen the volume
of items purchased and salesmen to scale back sales efforts. Cost of sales
have risen since the end of 1999 due to unexpected increases in beef
prices. The company is taking steps to operate at a lower revenue level and
to control beef prices going forward, but we believe that the company will
still be negatively impacted at least through the 4th Quarter 2000.
However, the company has taken steps to reduce inventory and improve
efficiency through outsourcing all food preparation and order assembly.

Colorado Prime Corporation, headquartered in Farmingdale, New York,
directly markets food programs and in-home dining and entertainment
products in 32 states with 1,025 telemarketers and 500 sales

COLUMBUS COMMUNITY: Columbus, Ohio, Hospital Files for Chapter 11 Relief
Columbus Community Hospital undertook a Chapter 11 reorganization this
week.  With court protection from creditors, CCH obtains time to
restructure its debts and develop a plan to strengthen the hospital's
finances.  Columbus Community is working closely with its lenders during
the process.

Patients, employees and south side residents will see no changes in
Columbus Community Hospital's services as the hospital begins a financial
reorganization designed to restore its financial stability.

The hospital's staff size and service offerings remain unchanged. Columbus
Community has nearly 500 employees and 278 physicians providing such
services as acute inpatient care, emergency services, rehabilitation,
surgery and outpatient care.

"The South Side community has relied on CCH for almost 100 years, and we
are working to develop a plan that will allow us to continue providing
hospital care for many years to come," said Bill Melvin, CFO.

"This hospital has weathered many challenges over the years," he said.
"With the support of our medical staff, patients, employees and the
community, we are optimistic that we will again prevail."

Columbus Community Hospital, located in Columbus, Ohio, is owned by a group
of local physicians who bought the hospital in 1991.  As part of that
reorganization, an outside investment firm, CHM, Inc., sold its interest in
the hospital to the physician group.  Terms of the sale were never
disclosed publicly.

"We understand that recent uncertainty about the hospital's future has
caused concern for many in the community and for our employees," Melvin
said.  "[The Chapter 11 filing] is a positive step forward, and we want to
reassure the community that we are committed to providing ongoing care,
both during the reorganization and into the future."

Hospital officials said they could not predict how long the reorganization
will take. Information will be provided to the community as the process
develops, with updates available at the hospital's Web site at

DRKOOP.COM: Obtains $20 Million in Equity Financing, Easing Financial Pain
Late last week,, Inc., the Austin, Texas, Web-based health-
services venture, told the Securities and Exchange Commission that it will
be forced to end operations unless it quickly raise some $27 million. The
company still has access to $2.6 million in bridge financing, but that
amount would fund operations for only about two weeks.  

Tuesday,, Inc. (Nasdaq: KOOP) announced financial results for
the second quarter ended June 30, 2000, and reported:

      * $20 million received in an equity financing
      * A new management team led by Richard Rosenblatt
      * The pending reconfiguration of the of the Board of Directors

The $20 million financing is from a group of investors including Prime
Ventures, JF Shea Ventures, Cramer-Rosenthal-McGlynn, Inc., and RMC
Capital. The new management team and its investor group have invested $3.5
million as part of this financing. The financing was offered solely to
accredited investors in a private placement of convertible preferred stock,
which is convertible into shares of common stock at $0.35 per share. The
newly issued shares will be restricted securities and, therefore, not
freely tradable. The Company is not obligated to register such securities
until May 2001.  The terms of the financing and related transactions were
described generally in the Form 10-Q filed on August 21, 2000.  The
financing could be increased to as much as $27.5 million if outstanding
overallotment options with identified investors are exercised.

In conjunction with the financing, the Company has appointed three new
executives: Richard M. Rosenblatt as Chief Executive Officer, Edward A.
Cespedes as President, and Stephen Plutsky as Chief Financial Officer. The
incoming management team currently leads Prime Ventures, LLC, a venture
capital fund investing primarily in technology and Internet companies. Mr.
Rosenblatt co-founded and was the Chairman and Chief Executive Officer of
iMALL, Inc, which was acquired in October, 1999 by Excite@Home in a
transaction valuing iMALL at $565 million. Until March 2000, Mr. Rosenblatt
served as Excite@Home's Senior Vice President of E-Business Services.
The Placement Agent and investors have the right to designate up to four
new directors. Of the current members of the Board of Directors, Dr. C.
Everett Koop will continue to serve as Chairman and Donald Hackett will
remain a director. In connection with his appointment as CEO, Mr.
Rosenblatt has been appointed to the Board of Directors. Designees of the
Placement Agent will be elected to the board once a mandatory notice to
stockholders is prepared and mailed.

The securities issued in the private placement were issued in a transaction
exempt from registration under the federal securities laws and may not be
offered or sold absent registration or an applicable exemption from
registration. This press release is not intended and shall not be construed
as an offer to sell or a solicitation of an offer to buy any securities of
the Company.

Total revenue for the quarter increased to $2.5 million as compared to $1.0
million for the comparable period of 1999. Loss attributable to common
stockholders for the quarter was $40.6 million, or $1.18 per share,
compared to $17.6 million, or $1.28 per share, for the second quarter of
1999. For the second quarter, non-cash expenses accounted for approximately
$30.0 million of this loss, due primarily to the amortization of expenses
associated with renegotiated portal agreements and a one-time settlement.
As previously disclosed, has been implementing aggressive cost-
cutting measures, which include the renegotiation of portal agreements, a
substantial reduction in the company's workforce, and a reduction in its
advertising expenses. Cash expenses from operations were approximately
$12.8 million in the second quarter compared to $18.6 million in the prior
quarter. The Company estimates that cash expenses from operations will be
further significantly reduced to approximately $6.5 million for the quarter
ending September 30, 2000. The foregoing forecast is subject to material
uncertainties as discussed below and also may be impacted by business
decisions to be made by new management.

ELDER BEERMAN: Retains Renaissance Partners To Aid in Strategic Planning
Elder Beerman and Renaissance Partners, L.L.C., jointly announced that
Renaissance has been retained by The Elder Beerman Stores Corp., the
operator of 60 department stores and 2 furniture stores in the Midwest.
Renaissance Partners has been retained to assist the company's Chairman and
CEO Frederick J. Mershad, key officers and retail-experienced members of
the Board of Directors, in a strategic evaluation and planning process
aimed at increasing revenues, profitability, and market capitalization.

These initiatives are expected to result in expense reductions, a more
focused merchandising strategy and new prototype store expansion in
selected Midwest markets. The strategic planning process also includes in-
depth consumer research conducted by ROI Retail Strategies. Renaissance is
providing services focused on merchandising, merchandise planning,
distribution and allocation, financial planning and expense management.

Thomas H. Hicks, John S. Lupo and Dena P. McKinley have been assigned to
this engagement.  Mr. Hicks previously served as CEO, COO, CFO or as a
consultant in many retail turnarounds including Cato Corporation, Higbee's,
D. H. Holmes, PCI Holdings, Best Products, and Welcome Home.  John Lupo is
a veteran apparel merchant, having served as President -- Chief
Merchandising Officer at Higbee's, Chief Merchandising Officer at Dillard's
-- Ohio, Chief Apparel Merchant at Wal-Mart and as COO of Wal-Mart
International. Lupo serves as a Director of Rayovac and as an Advisory
Board member of Kent State University Rodgers and Silverman School of
Fashion Design and Merchandising.  Ms. McKinley previously served in senior
merchandise planning, controllership and consulting positions for clients
and employers including Elder Beerman, Lane Bryant, Sportmart, May
Department Stores, Federated Department Stores and Macy's, and is a leading
authority on retail industry inventory systems and management.

Renaissance Partners is a member of the Turnaround Management Association,
National Retail Federation, International Council of Shopping Centers, the
Association for Corporate Growth and venture capital organizations
throughout the Southeastern and Midwestern United States.

GENESIS/MULTICARE: Vehicle Lessor Wants Decision About Lease Agreement
Lease Plan U.S.A. complains that Genesis Health Ventures, Inc., has not
made payments under the Vehicle Lease Agreement for the months of May, 2000
and July, 2000. According to Lease Plan, the Debtors' past due pre-petition
rent arrearage owed under the Lease is $261,870 and post-petition arrearage
is $321,192.

Lease Plan accuses the Debtors of failing and refusing to make post-
petition payments of rents while utilizing the vehicles leased. Besides,
the Debtors have not provided adequate assurance that it will cure the
defaults, nor has it provided adequate assurance of its future performance
under the Lease, Lease Plan accuses.

Lease Plan asserts that pursuant to 11 U.S.C. section 365(d)(2), the Court
should order the Debtor to determine promptly and within a specified time
whether to assume or reject the Lease. (Genesis/Multicare Bankruptcy News,
Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900)

GULF STATES: Files Notice of Structured Closure Of Facilities
Gulf States Steel, Inc. of Alabama filed a Notice of Structured Closure of
Facilities with the United States Bankruptcy Court for the Northern
District of Alabama, Eastern Division.  Gulf States says it has determined
that its business is no longer economically viable and has determined to
engage in the structured closure of its facilities.  On August 4, 2000 and
August 8, 2000, respectively, the Company's DIP Lenders gave notice of an
event of default under the post-petition credit agreements.

HARNISCHFEGER INDUSTRIES: Resolves Rockwell's $1.8 Billion in Filed Claims
Rockwell International filed 59 proofs of claim with the U.S. Bankruptcy
Court for the District of Delaware:

      * one $29,631,333.39 claim against Beloit Corporation;
      * one $29,631,333.39 claim against Joy Technologies, Inc.;
      * one $32,131,333.39 claim against Harnischfeger Industries, Inc.; and
      * fifty-six $32,131,333.39 claim against each of the other Debtors.  

Beloit believes that it owes Rockwell some amount, but nowhere near $1.8
billion.  Rockwell's proofs of claim, the Debtors say, fail to provide
sufficient detail to explain the basis for the claims.  Beloit has asked
Rockwell for additional information.  Rockwell has not responded.  

By this Objection, the Debtors ask Judge Walsh to disallow Rockwell's
proofs of claim on five bases:

  (A) Rockwell has failed to comply with Bankruptcy Rule 3001(c),
      which requires that a creditor supply documentation sufficient to
      support its claim to meet its burden of proof.

  (B) The $2.5 million difference between the Beloit and HII claims relates
      to a purported guarantee by HII for debts incurred by Joy.  Assuming
      that the guarantee is enforceable, the Debtors say, Rockwell does not
      specify which Joy affiliate benefits from the guarantee.  

  (C) The Rockwell Claims, the Debtors assert, are based on a flawed premise
      concerning substantive consolidation.  It appears to the Debtors that
      Beloit is the only party liable to Rockwell.  There, of course, has
      been no substantive consolidation of the Debtors, and "[i]t is highly
      unlikely that the Debtors' cases will be substantively consolidated,"
      the Debtors say, explaining that, "[t]he Debtors have unique product
      lines, maintain corporate formalities and have separate relationships
      with their creditors."

  (D) The Rockwell Claims inappropriately include claims for certain
      administrative expenses.

  (E) The Rockwell Claims must be disallowed under 11 U.S.C. Sec. 502(d)
      until Rockwell disgorges $1,091,386.73 on account of preferential
      payments by Beloit to Reliance Electric prior  to the Petition Date.  

The Debtors report to Judge Walsh that they have entered into a stipulation
with Rockwell International whereby 57 of Rockwell's 59 proofs of claim, in
the aggregate of $1,688,986,003, are deemed to be in the amount of $0.00
for purposes of voting and distribution unless and until otherwise ordered
by the Court.  (Harnischfeger Bankruptcy News, Issue Nos. 24 & 26;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

HARRISBURG EAST: EQK Files Modified Amended Plan of Reorganization
EQK Realty Investors I announced that it filed a Modified Amended Plan of
Reorganization with the U.S. Bankruptcy Court for the Middle District of
Pennsylvania, where EQK's bankruptcy case is pending.  The Modified Plan is
to be submitted to a vote of shareholders and will be subject to
confirmation by the Bankruptcy Court.  A disclosure statement describing
the Modified Plan will be mailed to shareholders shortly.

The Modified Plan contemplates that the Harrisburg East Mall, the sole
remaining real estate asset of EQK, will be sold at an outcry auction to be
held in the courtroom of the Bankruptcy Court, currently scheduled for 2:00
p.m. on September 21, 2000.

The Modified Plan also reflects terms of an agreement dated as of August
18, 2000, among EQK, American Realty Trust ("ART") and American Realty
Investors, Inc. ("ARI"), the new parent company of ART (the "Agreement").
Pursuant to the Agreement and the Modified Plan, claims asserted by ART
against EQK arising out of the previous, now terminated merger agreement
between EQK and ART would be settled in exchange for the issuance to ART of
six million shares of beneficial interest in EQK (the "EQK Shares"). An
additional 1.5 million EQK Shares would be issued to ART in exchange for
$1,125,000 in cash and 125,000 shares of ARI Series A Preferred Stock with
a liquidation value of $10 per share. The Series A Preferred Stock has
substantially similar terms to the former Series F Preferred Stock of ART
that was to be issued pursuant to the prior merger agreement. All existing
EQK shares are to be cancelled pursuant to the Modified Plan resulting in
EQK being wholly owned by ARI and ART upon closing under the Agreement,
which is scheduled to take place eleven days after confirmation of the
Modified Plan by the Bankruptcy Court, provided that no stay is then in

Under the Modified Plan, if confirmed by the Bankruptcy Court, the net
assets of EQK (including proceeds from the anticipated auction sale of the
Mall and the consideration to be paid pursuant to the Agreement) remaining
after payments of secured creditors' claims will be paid first to EQK's
unsecured creditors until they are paid in full, and then any remaining
assets would be distributed to EQK's shareholders.

Lloyd T. Whitaker, president of EQK, emphasized that there can be no
assurance that the Modified Plan will be confirmed or that any assets
ultimately will be available for distribution to EQK's shareholders.

The name EQK Realty Investors I is the designation of the Trustees under a
Declaration of Trust dated October 8, 1984, as amended.  Neither the
Trustees, Shareholders, Officers or Agents of the Trust shall be liable for
the obligations of the Trust, and all persons shall look solely to the
trust estate of EQK Realty Investors I for the payment, performance and
obligations of the Trust.

KITTY HAWK: Creditors' Committee Wants to Attend Board Meetings
Kitty Hawk, Inc., its Official Unsecured Creditors' Committee asserts, is
insolvent. All of Kitty Hawk's subsidiaries are also insolvent unless the
guarantees given by Kitty Hawk, Inc., are avoided. Shareholders are
hopelessly out of the money. Accordingly, the Debtors' Directors have
fiduciary duties to the creditors. Because the Committee also has a
fiduciary duty to the Debtors' creditors -- not to mention the statutory
duty to monitor the Debtors' activities -- "it is vitally important that
the Committee monitor the meetings of the board of directors to ensure that
the Debtors fulfill their fiduciary obligations to creditors," Jeff P.
Prostok, Esq., of Forshey & Prostok, LLP, in Fort Worth tells Bankruptcy
Judge Barbara J. Houser.

The ability to attend Board meetings, the Committee says, "will enable the
Committee to remain fully informed of the Debtors' activities. With this
information, the Committee can better protect the interests of unsecured
creditors." The Committee understands that the Debtors are intent on filing
a plan that "fails to take into account the potential avoidable obligations
incurred by various Debtors in guaranteeing the obligations of the [holders
of the 9.95% Senior Secured Notes issued by Kitty Hawk, Inc.]" The
Committee feels a strong obligation to its constituency to closely monitor
the Debtors' "waste of the limited resources of the estate" in proposing a
non-consensual plan incapable of obtaining confirmation.

Mr. Prostok stresses that a Committee representative simply wants to attend
and monitor Board meetings, not vote, not participate in discussions or do
anything to alter the Board's membership.

Mr. Prostok hints that, if this Motion is denied, Judge Houser and the
Debtors can expect this Motion to be followed by motions for appointment of
a Trustee, an Examiner or another responsible person in Kitty Hawk's
chapter 11 cases.

LOEWEN GROUP: Says "Substantial Progress" in Reorganization Plan Talks
According to published reports, Loewen Group, Inc. has begun discussions
related to the Company's plan of reorganization.  The Company, which has
been operating under Chapter 11 protection since June 1, 1999, announced
that it is seeking information from holders of the Company's Series 1,
Series 2, and Series 5 senior notes.  As previously announced, the Company
stated that it is making "substantial progress" in the development of a
reorganization plan and processing claims. (New Generation Research, Inc.

MARINER POST-ACUTE: Obtains Extension of Exclusive Period to November 20
At the Debtors' behest, Judge Walrath granted Mariner Post-Acute Network,
Inc., and its debtor-affiliates a further extension of their exclusive
period for filing a plan to November 20, 2000, and for soliciting
acceptance of that plan to January 19, 2001.

The Debtors tell the Judge that they have made good progress towards
rehabilitation but still have an enormous amount of work to do before a
plan can be proposed. They are continuing to analyze their assets and
business operations, which require substantial time and energy, given the
size and scope of their cases. At the present stage, neither the Debtors
nor their principal creditor constituencies are ready for substantive plan
discussions which need to be held before a consensual plan can be reached.
The Debtors also need to conclude their negotiations with federal
regulators regarding, among other things, the amount of any reimbursement-
related claims that may be owing to or by the Debtors. Moreover, the
Debtors say they require additional time in which to receive, review, and
analyze the claims filed in the cases before they can formulate and
finalize the terms of a feasible plan of reorganization. The Bar Date for
substantially all claims has been set for September 29, 2000.

The Debtors emphasize that the challenges facing the healthcare industry
are real, reminding the Court that Vencor, Inc., Sun Healthcare Group,
Inc., Integrated Health Services, Inc., Genesis Health Ventures, and other
large nursing home businesses have commenced their own chapter 11 cases,
and other similar companies are expected to follow. The Debtors draw upon
the examples of other Debtors in the healthcare industry with respect to
exclusivity periods. Vencor, for example, has requested a fourth extension
of exclusivity which, if granted, would provide the debtor with up to
thirteen months of exclusivity, and Sun Healthcare obtained on June 6, 2000
another extension of up to nearly twelve months of exclusivity.

The Debtors assure the Court that MPAN Debtors are not seeking to use
exclusivity to pressure creditors into accepting a plan of reorganization.
Rather, they need to evaluate the financial, operating, and industry
information that has been developed over the past several months in order
to effectively complete their business plan and assess the continued
performance and prospects of their business operations. Only after that
process is complete will it be appropriate to negotiate and file a plan of
reorganization, the Debtors contend. (Mariner Bankruptcy News, Issue No. 8;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

MERISEL, INC.: Moody's Ratchets Sr. Note & Bank Debt Ratings Down a Notch
Moody's Investors Service lowered to Ca from Caa2 the rating on Merisel,
Inc.'s remaining $67.4 million 12-1/2% senior notes, due 2004, outstanding.
At the same time, Moody's lowered to B3 from B2 the rating on the $35
million senior secured bank revolving credit facility, due 2003, with its
Merisel Americas, Inc. operating subsidiary, of which no amounts are
outstanding. The commitment under the credit facility was decreased from
$100 million in May, 2000, although under the revised covenants which
require minimum levels of gross profits there is minimal borrowing
availability and it is unlikely that any borrowing will take place. The
senior implied rating for the company's debt has been lowered Caa2 from B3,
and the senior unsecured issuer rating has been lowered to Caa3 from Caa2.
The outlook is negative.

The ratings downgrade is based on the constriction of vendor credit support
in the wake of Merisel's continued operating losses and the Chapter 11
filings earlier this year by three major information technology
distributors. Since the beginning of the year, the company's inventory
level has been reduced dramatically from $446 million to $194 million, or
by nearly 57%, as payments terms were tightened and accounts payable
reduced by a commensurate 56%. The company exhibited some increase in
average selling prices in FY2000Q2, contributing to a slight improvement in
gross margin to 4.77%. Nevertheless, the increase in front end selling
margins was not sufficient to offset the continued reduction in vendor
rebates and price protection losses that have beset the industry. Moreover,
the overall lower sales levels contributed further to the decline in vendor

Merisel has stated that it will not have sufficient liquidity for the
continued operation of its United States distribution business unless it
receives improved vendor credit support. It is critical for a distribution
company to maintain minimum inventory levels to support timely fulfillment
of customer orders. As the company seeks to restructure its U.S.
distribution business, its problems are likely to mount with potential
defections of its sales force and a loss of reseller activity to its two
principal domestic rivals, Ingram Micro and TechData, which remain more
formidably capitalized and, despite challenges in the current business
environment, remain profitable. Additionally, to the extent that Merisel's
U.S. based sales suffer further declines, its importance as a strategic
channel partner to the major systems vendors, with the exception of Sun
Microsystems, will diminish. Merisel has maintained a solid position within
the Canadian market, where it continues to effectively represent the
leading vendors, and the company has attained notable success with its
Merisel Open Computing Alliance (MOCA) set up on behalf of Sun Microsystems
to provide enterprise-class solutions for Sun servers and the Sun Solaris
operating system to Sun-authorized resellers and consultants. Earlier this
year the company declared that it was evaluating its strategic options with
regard to the MOCA operations. It is possible that a sale of the MOCA
business would generate a significant premium to Merisel above the
valuation of the underlying MOCA assets, as carried on the balance sheet.
However, a prospective MOCA sale would almost certainly presage a
substantial reduction of the remaining business, rendering Merisel a niche
player in a limited segment of information technology product sales.

While Merisel ended FY2000Q2 on June 30, 2000 with cash and cash
equivalents of $36 million and a book equity of $79 million, the company's
balance sheet does not reflect $214 million outstanding under its
receivables securitization purchase and servicing agreement. As a result of
an impairment charge recorded in FY2000Q2 and ensuing amendments and
waivers under the securitization agreement, the company must either
restructure its U.S. distribution business, sell the U.S. distribution
business, or submit a plan to wind down the U.S. business by October 30,
2000. Off-balance sheet receivables are more than sufficient to cover the
amount extended under the securitization facility. However, the liquidity
afforded by this instrument is crucial to sustaining even the reduced scale
of operation that the company currently manages. The company's recent
appointment of a turnaround specialist from outside the organization in the
dual role of chief executive and chief operating officer may be a harbinger
of the difficult times ahead.

The senior notes are structurally subordinated to the obligations of the
operating company. During FY2000Q2 and FY2000Q3, Merisel opportunistically
purchased notes in the open market, engendering some optimism that the
notes may maintain a modicum of liquidity or, through the survival of the
Canadian operation and MOCA, offer a reasonable prospect for fractional
recovery of principal after the costs of restructuring or unwinding the
U.S. operations are taken into account. In June, 2000, $37.5 million of
notes were acquired at an average dollar price of 40, while an additional
$20.1 million of notes were purchased in July at a cost to the company
which has not been specified publicly. The company's present cash position
is uncertain, and its reported purchase of notes may unsettle certain of
the company's remaining creditors.

Merisel, Inc., headquartered in El Segundo, California, is a distributor of
technology products to value-added resellers, corporate resellers,
retailers, and direct marketers throughout North America.

NATIONAL BOSTON: Blames Infotopia Misrepresentations for Chapter 11 Filing
National Boston Medical, Inc. (OTC Pink Sheets: NBMX) announced that it has
filed a petition under the United States Bankruptcy Code to re-organize its
financial affairs.  The reason for the filing was the inability of NBM to
continue operating its business due to the sale exchange agreement entered
into between Infotopia, Dr. Abravenals Formulas, Inc. and NBM, in April
2000. Although it was represented to the Board of NBM that Infotopia would
honor and otherwise assume certain obligations of NBM as partial
consideration for the transfer, management of Infotopia (some of whom were
former Board members of NBM) has refused to honor its representations. In
addition, certain other matters were misrepresented to the Board of NBM,
and NBM had failed to receive certain other consideration as part of the
transfer. Due to these misrepresentations and failure to receive the
requisite consideration, NBM and certain related entities had no other
option but to file a Chapter 11 petition. As part of the Bankruptcy
proceedings, NBM will investigate and pursue all claims against Infotopia
and related third parties.

In addition NBM is currently seeking investors to fund its proposed re-
organization plan.

NMT MEDICAL: Still Exploring Strategic Alternatives for Neurosurgical Unit
NMT Medical (Nasdaq: NMTI) announced financial results for the second
quarter and six months ended June 30, 2000.

Total revenues for the second quarter of 2000 were $9.19 million compared
with $9.21 million in the same quarter of 1999 while revenues for the first
six months of the year increased to $19.20 million from $16.98 million in
comparable period of 1999.

Revenues for the second quarter of 2000 remained relatively constant from
the second quarter of 1999 due to increased sales of NMT's cardiovascular
product lines offset by decreased sales of neurosurgical products.  The
Company had a 57% and 108% increase in unit sales and dollar sales,
respectively, of CardioSEAL(R) Septal Occluders from the second quarter of
1999 to 2000, offset by a 20% decrease in dollar sales of the Company's
neurosurgical products.

The Company continues to explore alternative strategic approaches for its
Neurosurgical business unit and, as an indirect result, the Company
recorded a non-cash charge of $7.1 million in the second quarter of 2000 to
write down long-lived assets of its Neurosciences division to their
estimated fair value.

Although this charge is a non-cash accounting adjustment, it nonetheless
significantly reduced reported net income for the second quarter and six
months ended June 30, 2000.

Net income for the second quarter of 2000 was reported at a loss of
$8.70 million, or $0.80 per share, compared to a loss of $317,478, or
$0.03 per share, in the second quarter of 1999.  Net loss from continued
operations for the second quarter of 2000, before the $7.1 million non-cash
charge, was $715,000, or $0.07 per share, compared to a loss of $383,000,
or $0.04 per share, in the second quarter of 1999.  Similarly, reported net
income for the first six months of 2000 amounted to a loss of $8.63
million, or $0.79 per share, compared to a loss of $852,347, or $0.08 per
share, in the first half of 1999.  Net loss from continued operations for
the six months ended June 30, 2000, before the $7.1 million non-cash
charge, was $646,000, or $0.06 per share, compared to a loss of $1 million,
or $0.10 per share, in the first half of 1999.

Commenting on today's reported financial results, Rudy Davis, Acting
President and Vice President of Sales and Marketing said, "We are very
pleased with the steady growth of our cardiovascular product lines and
continue to refocus our energies in this area."  He further noted that "The
performance of the Neurosciences division has clearly been disappointing.  
Therefore, the company is continuing to explore strategic alternatives for
the Neurosciences division."

The Company reported that the CardioSEAL(R) business continues to show
steady quarter-to-quarter growth, primarily resulting from the ongoing
commercial roll out of sales in the US.  Second-quarter unit sales of US-
based PFO Occluders were up over 270% from first quarter and represented
approximately 31% of all unit sales in the second quarter.  In addition,
second-quarter Vena Cava filter sales increased approximately 10% year-

With regard to this strength in cardiovascular product sales, Mr. Davis
noted, "In addition to progress being demonstrated on the top line, we
continue to add new cardiology centers to our list of approved sites, and
are seeing increased interest in the PFO indication.  We have surpassed our
goal of having 60 centers through the Internal Review Broad (IRB) process
by the end of the second quarter and have shifted our focus to getting
these centers through the training program and into routine use."  Several
major centers received IRB approval during the second quarter of the year,
including Lenox Hill Hospital in New York City, Miami Heart Institute,
Arizona Heart Institute, Barnes Hospital in St. Louis and William Beaumont
Hospital in Michigan.

The Company also recently received approval of CardioSEAL(R) from the
Health Protection Bureau of the government in Canada.  "This Canadian
approval reflects the talents and dedication of our Regulatory Affairs
group and the impact of this approval represents an exciting new
opportunity to further build global sales during the remainder of the
year," said Mr. Davis.

NMT Medical designs, develops and markets innovative medical devices that
utilize advanced technologies and are delivered by minimally invasive
procedures.  The Company's products are designed to offer alternative
approaches to existing complex treatments, thereby reducing patient trauma,
shortening procedure, hospitalization and recovery times, and lowering
overall treatment costs.  The Company's medical devices include self-
expanding stents, vena cava filters and septal repair devices.  The NMT
Neurosciences division serves the needs of neurosurgeons with a range of
implantable and disposable products, including cerebral spinal fluid
shunts, external drainage products, and the Spetzler(TM) Titanium Aneurysm

PARACELSUS: Houston-based Hospital To File For Bankruptcy Due To Defaults
Troubled Houston-based Paracelsus Healthcare Corp., Modern Healthcare
reports, may file for bankruptcy petition in the next couple of months.  
Paracelsus Healthcare Corp. defaulted on interest payments on $325 million
of senior subordinate notes.  Paracelsus first missed a $16.3 million
interest payment last February.  According to a written statement from
Paracelsus, "Based upon the most recent discussions with the noteholders,
the company believes it is likely that a restructuring plan will be
implemented in the near future through a voluntary filing of bankruptcy
under Chapter 11 of the Bankruptcy Code."

Paracelsus would likely exclude the subsidiaries that operate the company's
10 hospitals from a chapter 11 filing, according to Deborah Frankovich
Senior VP and treasurer of the healthcare provider.  Modern Healthcare
recalls that Paracelsus sold five of its strongest hospitals, all in the
Salt Lake City market, to Iasis Healthcare, based in Franklin, Tennessee,
last year.

POTLATCH CORP.: Moodys Gives Negative Outlook to Senior Unsecured Debt
Moody's Investors Service changed the outlook on Potlatch Corporation's
Baa1 senior unsecured and Prime-1 short term debt ratings to negative from
stable. The change in outlook reflects the company's declining performance
over the past several years, weaker than anticipated performance during the
current industry upturn, and our expectation that the company will be
slower in paying down debt and restoring debt protection measurements than
previously projected. Moody's will assess management's plans for improving
performance and restoring debt protection measurements. Failure of
management to take decisive action to improve performance in the near term
could result in a rating downgrade.

Potlatch's debt has risen over the past several years, with the completion
of several capital projects occurring during a period of relatively weak
pricing. The company had projected that free cash flow would increase
significantly in 2000 and 2001 as capital spending declined and prices for
its pulp and paper based products improved. Although cash generation has
increased, it is still below levels previously anticipated levels, and free
cash flow will be likely be insufficient to prevent a further increase in
debt for the current year. Further, we project that Potlatch, whose
dividend pay-out is relatively high for the industry, will fail to earn its
dividend for the fourth straight year.

Potlatch has operations in lumber, oriented strand board (OSB),
particleboard, plywood, tissue, coated paper, bleached paperboard and
market pulp, making it quite diversified for a company of its size. Its
diversification among wood products and paper, two often counter-cyclical
businesses, provides a level of stability to Potlatch's earnings over the
long term. In addition, the company's large private label tissue business
provides some stability to margins, and we believe that Potlatch's earnings
are less volatile than most of its major competitors.

However, Potlatch's market position in all of its businesses is relatively
small, and it competes against much larger diversified competitors who have
access to significantly greater financial resources. In our view, there is
a high likelihood that ongoing industry consolidation, which is raising the
market share and strength of others, will increase the competitive pressure
on Potlatch, making it more difficult for the company to remain a small
niche player in such a wide array of products.

Potlatch, headquartered in Spokane, Washington, is a diversified forest
products company with timberlands in Arkansas, Idaho and Minnesota.

SAFETY-KLEEN: Motion To Sell Nashville Property To PRTP For $300,000
The Debtors own 5.54 acres of real property located at 7230 Centennial
Place in Nashville, Tennessee. A thermal oxidizer, a 3,000 square foot
modular office building, a 5,200 square foot drum storage facility, and a
1,000 square foot maintenance shop, sit on the Property. Safety-Kleen has
identified the Nashville Property as a Non-Core Asset that is unnecessary
to their reorganization.

The Debtors advise the Court that Eakin & Smith Real Estate, Inc.,
marketed the Nashville Property for approximately 7-8 months through the
use of brochures, cold calls to surrounding neighbors, and a sign on the
Nashville Property. In addition, target users were identified and
contacted, the property was shown several times to potential prospects,
and state and local agencies were made aware of the site.

Those marketing efforts culminated in the Debtors' execution of a Sale
Agreement dated May 15, 2000, agreeing to sell the Nashville Property to
P.R. Trading Partnership for $300,000 in cash. Safety-Kleen thought it
was a good deal in May and the Debtors believe it is still a good deal.

Accordingly, the Debtors ask Judge Walsh for authority to sell the
Nashville Property pursuant to the terms of the Sale Agreement.
Additionally, the Debtors ask Judge Walsh for authority to pay Eakin a 6%
Brokerage Fee. (Safety-Kleen Bankruptcy News, Issue No. 6; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

SIERRA HEALTH: A.M. Best Places Ratings Under Review With Neg. Implications
A.M. Best Co. has placed the financial strength ratings of Health Plan of
Nevada, Inc. (B++) and its operating affiliates-Texas Health Choice, L.C.
(B+) and Sierra Health and Life Insurance Co. (B++)-under review with
negative implications.

The actions reflect A.M. Best's continued concern over the degree of
financial leverage at Sierra Health Services, Inc., Health Plan of Nevada's
parent, and the ongoing weakness in the operating results within the Texas
operations, Texas Health Choice.

The action follows Sierra Health Services' recent announcement that it
reported $209 million in charges, net of taxes, during the second quarter
of 2000. The charges included the write-off of $98 million in goodwill
related to the Kaiser-Texas acquisition in October 1998, the recording of
additional premium deficiency reserves for the Texas operation, IBNR
reserve adjustments and write-downs for buildings, furniture and equipment
at various discontinued operations in Arizona and Texas.

The charges have affected Sierra's compliance with certain bank covenants.
The company has received a waiver from the banks concerning issues of non-
compliance and is currently working with its lenders to amend these

Largely as a result of these charges, Sierra's consolidated debt to total
capital ratio rose from 49% at year-end 1999, to in excess of 75% at June
30, 2000-which is significantly higher than the range expected for
companies in the Very Good rating category. Best notes that the company did
also announce the sale of the Houston operations, as well as other
initiatives intended to raise cash to help pay down the outstanding debt.
In addition, Sierra reported core revenue growth, and improved medical cost
and administrative cost ratios during the second quarter.

A.M. Best is concerned that this level of financial leverage could restrict
the company's ability to support continued growth while servicing the debt.
The organization is in the process of implementing various initiatives to
reduce its debt load and improve its earnings capacity. A.M. Best believes
the success of these initiatives are critical to the maintenance of a
Secure rating.

The ratings will remain under review pending further discussions with
management and the execution of plans to reduce the holding company's
financial leverage and improve the operating fundamentals of its core

SPECIALIZED SOFTWARE: Firms Files Chapter 11 To Get Rid Of Excess Baggage
The Telegram & Gazette reports that Specialized Software International,
Inc., filed for bankruptcy protection under Chapter 11 in the bankruptcy
court in Worcester, Massachusetts.  The software company (known for Y2K
remediation), listed assets of $2.06 million and $3.35 million of debts.

The reason for the filing is to get rid of 16,000 square feet of extra
space and 15 to 20 equipment leases related to Y2K conversions.  Matthew F.
Crowshaw, chief executive officer of the company, issued a statement saying
the company filed for the bankruptcy to protect it from "residual debt
associated with its Y2K business."  

According to John J. Monaghan, Esq., of Holland & Knight LLP in Boston,
"This is one of the few classic reorganizations you'll see.  They want to
get rid of some excess baggage, and then get back on their feet healthy

Specialized Software started in 1982 with only six employees and grew as it
started developing for the Y2K bug.

SUN HEALTHCARE: Motion To Sell Accelerated Care Plus & Compromise Claims
Sun Healthcare Group, Inc., and its debtor-affiliates seek the Court's
authority, pursuant to Bankruptcy Rules 6004 and 9019, for the sale of
assets of Debtor Accelerated Care Plus, LLC to Debtor SunDance, the sale by
SunDance to the Castels and the Beaches, who are Claimants and previous
owners of companies which hold 100% of ACP, and for entry of a Settlement
with Castels and Beaches.

ACP manufactured and sold equipment for use in connection with
rehabilitation therapy in the long-term care industry, and also provided
services and training programs for the use of the equipment.

Prior to April 1997, the Castels and the Beaches owned respectively all of
the outstanding shares of HC, Inc. and Cal-Med, Inc. which together hold
100% of the limited liability company membership interests of ACP.

In April 1997 SunDance acquired ACP as an indirect subsidiary by purchasing
the outstanding shares of HC and Cal-Med, each for $250,000 in cash, plus
promissory notes for $517,500, plus future payments for earn-outs related
to ACP's performance in an amount not to exceed $4,275,000 in the case of
HC and not to exceed $4,230,000 in the case of Cal-Med. Sun Healthcare
Group, Inc. guaranteed certain of SunDance's obligations to the Claimants
relating to the purchase of shares in an amount not to exceed $5 million
per purchase agreement.

In connection with the transaction, John C. Castel and John Beach entered
into employment agreements with SunDance and became senior officers of
SunDance. They also received a right of first refusal with respect to the
sale or transfer of substantially all of ACP's assets.

The Debtors tell the Court that prior to the federal government's
implementation of the Prospective Payment System, companies providing
rehabilitation services were profitable and received cost basis
reimbursement not only for the delivery of rehabilition but also for the
purchase of equipment. Following the implementation of PPS, ACP's revenues
from SunDance and other non-affiliated customers and dealers dropped. As a
result, Sun initiated a shutdown process for ACP in October 1999, laying
off approximately 75% of its employees.

Attempts to sell ACP or its assets have been unsuccessful because of the
markt situation, employee layoffs and attrition during the shut down
period, and the existence of the Claimants' right of first refusal, the
Debtors say.

The Claimants have asserted claims in the amount of approximately $4.7
million against each of Sun and SunDance arising from the promissory notes
and the earn-out provisions relating to SunDance's April 1997 purchase of
HC and Cal-Med. The Debtors dispute these claims. SunDance believes that
the Claimants are insiders and that certain payments made to them under the
earn-out provisions as preferences pursuant to 11 U.S.C. sections 547 and
550 may be recovered. The Claimants dispute these claims.

                            The Settlement

In light of the difficulty in liquidating ACP and the existence of the
Claimants' right of first refusal, the Debtors have determined to settle
the claims in part through a transfer of certain of ACP's inventory and
other assets to the Claimants. ACP will sell substantially all of its
assets, except certain assets, to SunDance, including its non-affiliated
accounts receivables, in exchange for an intercompany claim from SunDance
in the amount of $1,053,504, which reflects the value of assets of ACP
being transferred to SunDance. SunDance will then sell the assets acquired
from ACP to the Claimants in partial satisfaction of the Claimants' claims
against SunDance.

The proposed Settlement Agreement provides that:

    (1) The Debtors and the Claimants will exchange mutual general releases,
         except that the Claimants will retain, in the aggregate, a $500,000
         claim against either Sun or SunDance. Between Sun and SunDance, the
         claim will be against the one whose chapter 11 estate provides
         general unsecured creditors with a greater distribution.

    (2) ACP will sell, free and clear of liens and claims, substantially all
         of its assets as set forth in the Settlement Agreement to SunDance.
         SunDance will sell certain assets acquired from ACP as set forth in
         the Settlement Agreement to the Claimants, also free and clear of
         liens and claims, provided that ACP will retain (i) 10% of the
         collections relating to the accounts receivable outstanding on July
         7, 2000 and collected prior to closing, and (ii) 20% of the
         accounts receivable generated after July 7, 2000.

    (3) SunDance will pay the Claimants $100,000 in cash, subject to
         reduction for any royalty payments triggered by the transfer of
         ACP's assets to the Claimants.

    (4) The Claimants will vote in favor of, not object to, and accept the
         treatment for general unsecured, non-priority claims of Sun and
         SunDance as specified in the agreement in principle dated October
         26, 1999 or, if different, the treatment of such claims in any plan
         of reorganization.

    (5) Exclusive of the assets purchased for $ 100,000, the assets that ACP
         is selling to SunDance and that SunDance will be selling to the
         Claimants are:

        (i)   inventory with a book value of $687,677;

        (ii)  equipment with a book value of $290,827;

        (iii) non-affiliated accounts receivable in the gross amount of
               approximately $130,000, of which ACP estimates that
               approximately $75,000 are collectible; and

        (iv) certain intellectual property.

    (6) ACP will sell substantially all of its assets to SunDance, in
         exchange for an intercompany administrative claim from SunDance in
         the amount of the book value of such assets.

    (7) ACP will publish notice of the sale in the Wall Street Journal at
         least 15 days prior to the hearing.

    (8) If any competing offers are received, the Debtors will, in their
         business judgment and after consultation with the Committee,
         determine which is the highest and best offer and whether
         proceeding with the settlement is appropriate. In the event that
         another offer is preferred, the Debtors will advise the Court
         accordingly at the hearing on this Motion

(Sun Healthcare Bankruptcy News, Issue No. 13; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

THOMAS & BETTS: Moody's Puts Senior Debt & Short Term Ratings Under Review
Moody's placed the senior unsecured and short-term ratings of the Thomas &
Betts Corporation under review for possible downgrade following its second
quarter earnings announcement, which included special charges of $224
million to address a variety of balance sheet and income statement items.

Moody's said that the company's operating performance over the past few
quarters has been less stable and weaker than historic levels, and that
this may continue over the near to intermediate term. The review will focus
on the company's plans to address the issues that are negatively affecting
its operational performance and financial controls. These issues include
the ongoing challenges the company faces in implementing a reliable
enterprise software system to better address its product pricing, accounts
receivable, and inventory management in addition to the company's plans to
reduce operating costs in its price competitive, electrical connector and
component businesses. While Moody's believes the company has sufficient
liquidity, with approximately $140 million of cash, following the post
second quarter sale of its electronics OEM business, Moody's will also
review the sources of operational and financial liquidity going forward,
including currently unused, $300 million bank facility.

Ratings under review for possible downgrade include the following:

    i)   Senior unsecured at Baa2 and shelf registration at (P)Baa2

    ii)  Senior unsecured $300 million revolving credit facility due June
           2003 at Baa2

    iii) Preferred stock shelf registration at (P)"baa3"

    iv)  Short term rating for commercial paper at Prime-2

Thomas & Betts Corporation, headquartered in Memphis, Tennessee,
manufactures and markets components and connectors for the worldwide
electrical markets.

UNITED MEDICORP: Medical Insurance Provider Reports 2Q Loss
Negatively impacted by revenue reductions from previously announced
contract terminations, United Medicorp, Inc. (OTC Bulletin Board: UMCI)
announced its second quarter loss.

Revenue for the second quarter ended June 30, 2000 was $625,938, down 21
percent compared with $797,338 in the prior year quarter. Net loss for the
second quarter was $24,395 compared to net loss of $1,796,429 in the prior
year quarter. The prior year's second quarter net loss included a loss of
$1,748,738 from discontinued operations. Loss per share for the second
quarter was $0.0008, compared to a per share loss of $0.0621 in the prior
year quarter, of which the per share loss of $0.0605 related to
discontinued operations.

Revenue for the six months ended June 30, 2000 was $1,142,935, down 32
percent compared with $1,679,088 for the corresponding six-month period a
year ago. Net loss for the current six-month period was $161,012 compared
to net loss of $1,829,927 for the corresponding six-month period a year
ago. The prior year's corresponding six-month period included a loss of
$1,882,363 from discontinued operations. Loss per share for the current
six-month period was $0.0056, compared to a per share loss of $0.0640 in
the prior year six-month period, of which the per share loss of $0.0658
related to discontinued operations.

Based in Dallas, Texas, United Medicorp, Inc., provides medical insurance
claims processing, accounts receivable management and collection agency
services to healthcare providers nationwide.

VENCOR: Debtors' Motion To Transfer Highland Nursing And Rehab. Facility
Further to the Debtors' motion to transfer Highland Nursing and
Rehabilitation Facility to Cedar, the parties Vencor, Inc., the United
States Department of Health and Human Services, the Department of Justice
and Cedar Holdings, LLC agree to further terms as set forth in a
Stipulation and sought and obtained the Court's approval to effectuate the
transfer in accordance with the motion and the Stipulation whereby:

    (1)  The Debtors assume and assign the Medicare Provider Agreement to
          Cedar, effective on the date that the Facility is transferred to

    (2)  Cedar will pay Cure Amount of $82,500 on the Effective Date to the
          United States;

    (3)  Such payment will fully release Cedar of successor liability

         (a) to HHS under the Medicare Provider Agreement,
         (b) to DOJ under:

            (i)   False Claims Act, 31 U.S.C. sections 3729-3733,

            (ii)  Civil Monetary Penalties Law, 42 U.S.C. sections l320a-7a,

            (iii) Program Fraud Civil Remedies Act, 31 U.S.C. sections 3801-
                   3812; or

            (iv) common law theories in connection with the failure of
                  Debtors' Medisave Western Region pharmacies to properly
                  issue credit for drugs returned during calendar years
                  1994-1996, and/or in connection with over-billing the
                  United States for and maintaining false or fraudulent
                  documentation of respiratory care services and associated
                  supplies provided by Debtors' subsidiary, Vencare, to
                  Medicare patients at the Facility during the cost report
                  years 1997-1998;

    (4)  Cedar will have to comply with requirements under the Medicare
          program, including

         (a) applying for and obtaining HHS approval of a change of

         (b) being subject to HHS review of future payments under the
              Medicare Provider Agreement; and

         (c) HHS's right to alter or amend the method of reimbursement to

    (5)  Any claim against the Debtors by HHS or the applicable fiscal
          intermediary under the Medicare Provider Agreement is cured and
          released, and the Debtors and HHS release each other of claims
          arising from related underpayments or overpayments;

    (6)  Debtors, Cedar and HHS each will consider all cost reporting
          periods under the Medicare Provider Agreement prior to the
          Effective Date to be fully and finally closed;

    (7)  Debtors and Cedar will withdraw any appeals pending and will not
          bring further appeals with respect to the Medicare Provider
          Agreement before the Provider Reimbursement Review Board or any
          federal district court;

    (8)  Debtors will file a terminating cost report for the Facility
          through the Effective Date, and Cedar will file a partial cost
          report to cover the period from the Effective Date through the end
          of the fiscal period in which the Effective Date falls;

    (9)  Debtors shall not alter, modify or amend in any way any of the
          terms of the Stipulation through a plan of reorganization or

    (10) The rule of law which provides that ambiguities will be construed
          against the drafting party in interpreting written instruments
          will not be applicable to or used in resolving any dispute over
          the meaning or intent of this Agreement or any of its provisions.

(Vencor Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc.,

VOLUNTEER DRUG: $40 Million Drug Distributor to Call it Quits
Volunteer Drug Distributors, a licensee of Drug Emporium, informed its
creditors last week that it will voluntarily liquidate its assets in an
"orderly" fashion and then terminate operations, according to a report
appearing in F&D Reports' Scrambled Eggs publication. A spokesperson for
Drug Emporium tells F&D that the loss of Volunteer, which has gross sales
of approximately $40 million annually, will not have a significant impact
on Drug Emporium's operations.

WARNACO GROUP: Moody's Lowers Debt Ratings To Ba2 With Negative Outlook
Moody's Investors Service lowered the senior implied ratings of The Warnaco
Group, Inc. to Ba2 from Ba1. The rating outlook is negative. The rating
action concludes the review process originally initiated on June 1, 2000.

The rating conclusion reflects Warnaco's very thin debt protection measures
as a result of higher acquisition-related debt and soft operating
performance. The negative outlook reflects Moody's view that significant
improvements in debt protection measures are unlikely in the short run,
leaving the company vulnerable to increasingly difficult retail conditions,
especially in the departments stores. The outlook also reflects the
uncertainties regarding the timing and final resolution of the legal suit
with Calvin Klein, (scheduled to come to trial in January of 2001), and the
possible impact that the suit may have on the Calvin Klein brands, which
represent a significant portion of Warnaco's sales. Notwithstanding these
uncertainties, the new rating level anticipates that the steps that Warnaco
has taken this year to reduce costs and clear excess inventory will begin
to show results, through stronger margins, in the second half of the year.
Management has also indicated that it will make debt repayment a priority.
Failure to achieve these objectives would negatively affect the ratings.

Ratings Lowered:
    *    Warnaco Group Inc. -- Senior Implied rating to Ba2 from Ba1;
                            -- Issuer Rating to Ba3 from Ba2.

    **   Warnaco Inc. -- Guaranteed Revolving Credit Facility due 2002 to               
                           Ba2 from Ba1.

    ***  Designer Holdings, Ltd. -- 6% Convertible Subordinated Debentures
                                      due 2016 to B2 from B1

    **** Designer Finance Trust -- 6% Convertible Trust Preferred Securities
                                     at to "b2" from "b1"

Moody's noted that Warnaco benefits from a diverse array of brands with
significant market shares, historically good cash flow and a strong
management team, which is taking necessary steps to cut costs and reduce
inventories. However, the downgrade is predicated on our view that high
leverage and sharply reduced coverage ratios have limited Warnaco's
financial flexibility. This situation is the result of acquisitions and
share buybacks, and it leaves the company more vulnerable at a time of
greater challenges in the retail market. These challenges include the
industry's consolidation, heavily promotional pricing, declining same store
sales and Warnaco's difficult relationship with a key designer.

To demonstrate its commitment to reducing debt levels, Warnaco has
indicated that it will suspend share buybacks. Moody's nevertheless views
the current low level of the stock price and diminished return on assets as
creating a higher degree of risk for the company. Moody's will continue to
assess Warnaco's business with Calvin Klein Inc., given the importance of
this brand for its business.

The issuer rating of Ba3 is one notch below the senior implied or
enterprise rating, because it reflects the risk at the holding company
only, Warnaco Group Inc., without the benefit of the guarantees of the
operating companies.

Headquartered in New York, Warnaco Group is a major designer, manufacturer,
and marketer of women's intimate apparel, menswear and accessories and
designer jeans and jeans related sportswear for men, women, juniors and
children under a variety of brand names.


Bond pricing, appearing in each Monday's edition of the TCR, is provided by
DLS Capital Partners in Dallas, Texas.

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For copies of court documents filed in the District of Delaware, please
contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents
filed in cases pending outside the District of Delaware, contact Ken Troubh
at Nationwide Research & Consulting at 207/791-2852.


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Copyright 2000. All rights reserved. ISSN 1520-9474.

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