TCR_Public/010108.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, January 8, 2001, Vol. 5, No. 5

                                 Headlines

AMERICAN FILM: Says it Filed a Chapter 11 Petition; Don't Get Excited
ANNA NICOLE SMITH: E. Pierce Marshall Blasts Judge Bufford
APPLE ORTHODONTIX: Requests 365(d)(4) Extension to Feb. 23
ARMSTRONG WORLD: Cuts 56 Jobs as it Streamlines Operations
BRADLEES INC.: Seeks $2.3 Million Severance Benefits for Executives

CINEMASTAR LUXURY: Cinemastar to Restructure Under Chapter 11
CORAM HEALTHCARE: There's Far More to This Failed Confirmation Story
COVAD BUSINESS: Lays Off 400 Workers in BlueStar.Net Restructuring
EDISON MISSION: Standard & Poor's Lowers Rating to BBB-
ENGAGE, INC.: Lays-Out Restructuring Plan to Break-Even This Year

eTOYS: Will Lay Off Workers as Hopes for Profits Slims
FRUIT OF THE LOOM: Selling Jet Sew Technologies Assets to Mohawk
GEORGE MAGAZINE: Will Cease Operations, Final Issue to Appear in March
HARNISCHFEGER: Total Enterprise Value Hinges on Coal Production
ICG COMMUNICATIONS: Hires Zolfo Cooper as Consultant & Advisor

INTEGRATED HEALTH: Rejecting Ten Rotech Leases
JCC HOLDING: Files Chapter 11 Petition in New Orleans
LERNOUT & HAUSPIE: Court Approves Milbank Tweed as Lead Counsel
LAIDLAW, INC.: CIBC Arranges Bridge Financing Through March 31
LOEWEN GROUP: Rock of Ages Completes Acquisition of 16 KY Cemeteries

MERCATA: Plans to Shutter Operations on January 31, 2001
OPTEL, INC.: Hires Anchor Pacific as Financial Advisor
OWENS-CORNING: Hires Nathan Roberts as Ohio Bankruptcy Co-Counsel
PILLOWTEX: Taps Arthur Andersen as Business Consultants
SAFETY-KLEEN: Committee Retains Nexsen Pruet as South Carolina Counsel

SALTON SEA: Standard & Poor's Cuts Senior-Secured Bonds to BBB-
SEARS, ROEBUCK: December Comparable Store Sales Decline by 1.1%
STROUDS, INC.: Proposes Key Employee Retention Program
SUN HELATHCARE: Selling Chicago Property for $1,650,000 in Cash
THERMATRIX INC.: Wins Approval of 2nd Amended Disclosure Statement

VLASIC FOODS: Misses Interest Payment; Lazard Working Overtime

* Bond pricing for the week of January 8, 2001

                                 *********

AMERICAN FILM: Says it Filed a Chapter 11 Petition; Don't Get Excited
---------------------------------------------------------------------
American Film Technologies, Inc. (OTCBBS:AFTC) said Friday that its
"secured creditor sought to exercise his rights to the collateral
resulting from default by the Company under a settlement agreement."  
The Company said it is seeking court protection under Chapter 11 of the
U.S. Bankruptcy Code, in order to allow it to prepare a plan of
reorganization and recapitalization which could satisfy its obligations
and allow business operations to resume.  

The Company says in reports filed with the SEC that it filed for
bankruptcy in 1993.  Conflicting statements thereafter suggest that the
company may have emerged or may still be in bankruptcy.  The company's
latest balance sheet shows $267,000 in assets and more than $3.5 million
in debts.  The company's latest income statement shows no revenue.

Based in New York City, American Film Technologies, Inc. -- see
http://www.aftmedia.com-- describes itself as being "principally  
engaged in the acquisition and joint venture aggregation of evergreen
classic black and white feature films and TV series that are modernized
through the company's proprietary restoration and colorization process.
Colorized versions of films and TV series become eligible for new 95-
year copyrights, thus creating major assets with significant, proven
market value. This new, digital content provides a platform for AFT to
generate ongoing licensing fees, advertising, and e-commerce revenue
from multiple sources, including broadcast, cable, DVD, VHS, satellite,
the Internet, and emerging broadband distribution channels."

The Company did not disclose the venue it chose for filing its chapter
11 petition.  The Bankruptcy Court in Manhattan had no record of the
filing at press time.  


ANNA NICOLE SMITH: E. Pierce Marshall Blasts Judge Bufford
----------------------------------------------------------
The following statement was issued on January 3, 2001 by E. Pierce
Marshall:

     Terming the judgment an "illegal sham" and a "disgrace to
legitimate legal process," E. Pierce Marshall vowed to appeal to the
highest level the judgment by California bankruptcy magistrate, Samuel
L. Bufford, that he owes over half a billion dollars to ex-Playboy
centerfold Anna Nicole Smith and her platoon of contingency-fee lawyers.
"My father, J. Howard Marshall, II, provided Smith with millions of
dollars in gifts and set up a company for her so that she could support
herself. Dad clearly believed that he had provided for Smith before his
death. No court that listened to the evidence would have concluded that
my father ever intended for Smith to receive anything further from his
separate property, including stock in Marshall Petroleum and Koch
Industries. Judge Bufford is attempting to give Smith what her deceased
husband did not intend for her to receive," Marshall said.

     "Bufford's unprecedented judgment is highly offensive to the public
sense of justice and propriety. As well, it directly violates a
citizen's rights under the U.S. Constitution," said Marshall. "First,
the Bankruptcy Court specifically lacks jurisdiction to decide state
probate issues. Then, in rendering his opinion, Bufford maliciously
excluded relevant evidence and repeatedly invented facts and laws in an
emotional effort to reach a predetermined conclusion," said Marshall.
"Blatantly casting aside all pretense of objectivity and due process of
law. Bufford arbitrarily struck the testimony of individuals and
documentary evidence presented at a 'mock trial' creating a 'Star
Chamber Proceeding.' Following that, Bufford made up law directly
contrary to actual law, which did not fit his predetermined objective,"
he added. "Bufford's unstable behavior in this case is a classic example
of, 'My mind is already made up. Don't confuse me with the facts.'"


APPLE ORTHODONTIX: Requests 365(d)(4) Extension to Feb. 23
----------------------------------------------------------
"[T]he Debtor has made substantial progress in assessing the value or
marketability of [its] Unexpired Leases and making a determination with
respect to which Unexpired Leases should be assumes and which, if any,
should be rejected," Apple Orthodontix, Inc., tells the U.S. Bankruptcy
Court in Houston. Apple indicates that nine leases are up in their air,
including the company's corporate headquarters lease. Against that
backdrop, John P. Melko, Esq., at Verner Lipfert Bernhard McPherson &
Hand, Chartered, and Jeff J. Marwel, Esq., of Katten Muchin Zavis, ask
the Court to grant a sixth extension of their time, pursuant to 11
U.S.C. Sec. 265(d)(4) within which to decide whether to assume, assume
and assign, or reject the nine remaining leases. Specifically, Apple
asks for an extension through February 23, 2001. By that date, a plan of
reorganization should be on the table and the path to confirmation
should be clear.


ARMSTRONG WORLD: Cuts 56 Jobs as it Streamlines Operations
----------------------------------------------------
Armstrong Holdings, Inc. (NYSE: ACK) said its chief operating
subsidiary, Armstrong World Industries, had eliminated 56 corporate and
line-of-business staff positions as a result of streamlining the
organization to more accurately reflect staffing needs for current
business conditions. Most of the positions being eliminated are in
Lancaster and come from the corporate, flooring and building products
organizations.

"At the end of the third quarter of last year we began to see a slowdown
in several of our key markets, a trend that we believe will continue for
some time. At that time we began to reassess our corporate and line-of-
business staffing to streamline and restructure functions in order to
respond to these business conditions," said Chairman and CEO Michael D.
Lockhart.

Affected employees will be offered severance packages and career
counseling based on their length of service with the company.

Armstrong Holdings, Inc. is a global leader in the design, innovation
and manufacture of floors and ceilings. Based in Lancaster, PA,
Armstrong has approximately 3,200 employees in the county and 18,000
employees worldwide. In 1999, Armstrong's net sales totaled more than
$3.4 billion.


BRADLEES INC.: Seeks $2.3 Million Severance Benefits for Executives
-------------------------------------------------------------------
Bradlees Inc. filed documents with the U.S. Bankruptcy Court in
Manhattan in support of a request to pay $2.3 million of severance
benefits to 11 top executives, according to a report obtained by the
Boston Globe.  

The Globe notes that the request does not include chief executive Peter
Thorner, who could receive as much as $6 million, as company documents
suggest. The court hearing was for Thursday, January 4, 2001.  Bradlees
has an irrevocable unconditional standby letter of credit of $3 million
to guarantee financial obligation to Thorner but this was rewritten and
the amount was increased to $6 million, the Boston Globe reports.

Troubled companies usually offer rich compensation packages to hire and
retain talented executives such as Thorner who has a reputation for
restoring ailing retailers to health. The amounts mentioned contrasts
with the $13.1 million in severance pay for the company's 9,800
employees, the same article from the Boston Globe said.


CINEMASTAR LUXURY: Cinemastar to Restructure Under Chapter 11
--------------------------------------------------------------
CinemaStar Luxury Theaters Inc. (Nasdaq:LUXY) filed a voluntary petition
to reorganize its business under chapter 11 of the U.S. Bankruptcy Code.
The filings were made Thursday, Jan. 4, 2001 in the United States
Bankruptcy Court for the Southern District of California.

The company says it has been negatively impacted by the recent
overbuilding in the industry and the resulting intense competition for
movie patrons.  The company has determined that reorganization
under chapter 11 of the U.S. Bankruptcy code is the most efficient
means for the company to restructure or terminate uneconomic
theater leases, and to position the company for success in the highly
competitive movie exhibition industry. The company plans to
continue operations at a majority of its theaters as it completes the
reorganization process.

CinemaStar -- http://www.cinemastar.com-- owns and/or operates seven  
first-run motion picture theaters in Southern California (83 screens)
and one theater in Tijuana, Mexico (10 screens), for a total of eight
theaters (93 screens).


CORAM HEALTHCARE: There's Far More to This Failed Confirmation Story
--------------------------------------------------------------------
After Judge Walrath declined to approve a plan of reorganization for
which Coram Healthcare Corporation (OTCBB:CRHEQ) and Coram, Inc., sought
confirmation, an unnamed attorney representing told a business reporter
for the Denver Rocky Mountain News that "the judge did not conclude
there was a conflict of interest but said she could not determine
whether the potential for a conflict of interest influenced the
reorganization plan."  

Unadulterated fiction, Richard Levy, Esq., would assert, pointing to the
printed transcript from December 21, 2000, confirmation hearing.  Mr.
Levy and his colleagues at Altheimer & Gray in Chicago, representing the
Official Committee of Equity Security Holders appointed in Coram's
chapter 11 cases, pressed their confirmation objection that the Plan was
not proposed in good faith and -- in the District of Delaware of all
places -- won!

"Well, I'm in a difficult situation," Judge Walrath said from the bench
at the confirmation hearing.  "I would like to sidestep my duties, but I
think I have to determine in deciding whether to confirm this plan under
1129(a)(3), I must conclude that it is proposed in good faith and that
the plan proponents have acted in good faith.  I just do not want to be
in a position to conclude on this record that that is so.  I cannot
conclude on this record that that is so.  

"I think that the contractual relationship between Cerberus and the CEO,
Mr. Crowley, did taint the process, and I think that, if anything, the
ultimate fairness of the process in bankruptcy is a paramount principle
to be protected by the Bankruptcy Court."  

What taint?  What contractual relationship?  This is where the story
gets juicy and gives rise to Judge Walrath finding that Coram CEO Daniel
Crowley suffered from an actual and undisclosed conflict of interest
sufficient to warrant denial of confirmation.  

In a massive document production, Mr. Levy and the Equity Committee
stumbled onto a draft November 1999 letter authored by Mr. Crowely and
addressed to Stephen Feinberg at Cerberus Partners L.P.  That letter,
when presented to Judge Walrath at the confirmation hearing as Exhibit
EC-20, made her eyes pop!  The letter relates that Cerberus has asked
Mr. Crowley to lead the Coram restructuring and suggests that his
compensation in another turnaround involving California-based T-shirt
maker Winterland -- in which Cerberus is also a major creditor -- be
tied to Coram's EBITDA performance.  No public record disclosed this
relationship prior to the Equity Committee's discovery.  

"I think that the actions of Mr. Crowley to hide the relationship, and I
think that EC-20 did show an intent to hide the relationship and to hide
his request for additional compensation in Winterland in exchange for
his efforts here [in Coram's case] did at least evidence that he,
himself, believed that this relationship should not be disclosed and,
therefore, did, in fact, taint his ability to serve as CEO of the
debtor," Judge Walrath opined.  

Coram filed voluntary petitions with the U.S. Bankruptcy Court for
the District of Delaware under Chapter 11 of the U.S. Bankruptcy
Code on August 8, 2000 with the support of the lenders holding the
Company's principal debt.  David M. Friedman, Esq., at Kasowitz, Benson,
Torres & Friedman, LLP, serves as lead counsel to Coram; Chanin Capital
Partners provides financial advisory services to the Debtors.  Cerberus
Partners, L.P., Foothill Capital Corporation and Goldman Sachs Credit
Partners, L.P., represented by Alan B. Miller, Esq., at Weil, Gotshal &
Manges in New York.  An Official Committee of Unsecured Creditors is
represented by Chaim J. Fortgang, Esq., at Wachtell, Lipton, Rosen &
Katz.  

Denver-based Coram Healthcare, through its subsidiaries, including
all branch offices, is a national leader in providing quality home
infusion therapies and support for clinical trials, medical
product development and medical informatics.

One footnote.  Who is the driving force on the Equity Committee?  How
could some fragmented group of out-of-the-money mom-and-pop shareholders
wind-up working together in less than a year's time to blow-up
confirmation of a multi-hundred-million-dollar company's plan?  Messrs.
Crowley, Feinberg, Friedman, Miller and Fortgang have the pleasure of
being across the negotiating table from hedge-fund manager Richard
Haydon, real estate maven Sam Zell and money manager William Weinstein.


COVAD BUSINESS: Lays Off 400 Workers in BlueStar.Net Restructuring
------------------------------------------------------------------
Covad Communications (Nasdaq:COVD), the leading national broadband
services provider utilizing DSL (Digital Subscriber Line) technology, is
restructuring its Covad Business Solutions division, formerly
BlueStar.net, as part of its previously announced initiative to reduce
operating costs in 2001 by 20-30 percent.  The restructuring will result
in streamlining Covad's direct sales and marketing channel while cutting
operating costs by further reducing the company's workforce,
consolidating office space and eliminating underutilized central
offices.

The costs of this additional restructuring of the business are included
in the estimated $20 million fourth quarter restructuring charge that
Covad announced on December 12, 2000, covering the costs of severance
and cost reductions. This restructuring results in a 400-position
reduction or approximately 14 percent of the employee base. Coupled with
the staff reduction announced on November 27, 2000, the total headcount
for Covad has been reduced by approximately 800 people.

"The direct channel, which incorporates direct field sales, web sales
and telesales, continues to be an important channel for Covad, but we
needed to consolidate and streamline operations to meet our drive to
profitability goals," said Chuck McMinn, chairman of Covad. "We expect
Covad Business Solutions to be a major contributor to our line count for
2001, helping to ensure that we add business customers in a cost-
effective way."

The workforce reductions are taking place in various Covad facilities
throughout the East and Central regions. The positions impacted are at
all levels of the organization and include sales, operations, marketing
and support functions, affecting approximately 400 full-time employees.
Employees affected by the reduction will be informed within 30 days.
Covad is providing career services and counseling through its Employee
Assistance Program, along with severance arrangements and benefits
continuation.

The cost reductions also include consolidation of office space and
closure of various central offices that are currently under-performing
and/or not fully built-out. Covad plans to close approximately 200
central offices affecting less than one-and-one-half percent of the
company's subscriber base. This brings Covad's total in-service central
office count to approximately 1800, which continues to provide service
coverage for approximately 40 to 45 percent of homes and businesses in
the U.S.

"In order to satisfy market priorities and achieve profitability sooner,
we will continue to look at every aspect of our business and take the
necessary steps to control costs," said McMinn. "By controlling costs,
we expect the expense levels of the company to be significantly reduced
for 2001. Today's cost cutting efforts are concentrated in our direct
channel. We will continue to evaluate other ways to maximize efficiency
and productivity to reach our profitability goals.

"Although some of these actions are difficult, we're confident that
we're making prudent decisions and taking immediate actions that will
make our business even stronger," said McMinn. "Given the fact that the
demand for our broadband services continues to thrive, we're excited
about the opportunities we have to fill our nationwide network, continue
to expand distribution channels and deliver value-added services that
will increase revenue and margins. Our goal is to continue to improve
the company's financial performance for 2001, and execute on the plan
that was communicated on December 12."

Covad is the leading national broadband service provider of high-speed
Internet and network access utilizing Digital Subscriber Line (DSL)
technology. It offers DSL, IP and dial-up services through Internet
Service Providers, telecommunications carriers, enterprises, affinity
groups, PC OEMs and ASPs to small and medium-sized businesses and home
users. Covad services are currently available across the United States
in 112 of the top Metropolitan Statistical Areas (MSAs). Covad's network
currently covers more than 40 million homes and business and reaches
approximately 40 to 45 percent of all U.S. homes and businesses.

Legg Mason Analyst Daniel Ernst is following Covad closely. For a
streaming audio presentation by Mr. Ernst, access
http://www.on24.com/index.html?id=47713&type=av&ref=bizwire


EDISON MISSION: Standard & Poor's Lowers Rating to BBB-
-------------------------------------------------------
Standard & Poor's lowered its rating on Edison Mission Energy Funding
Corp (Big 4) to triple-'B'-minus from triple-'B' on January 4, 2001. The
rating remains on CreditWatch with negative implications where it was
placed Dec. 13, 2000.

This rating action reflects today's rating downgrade of the project's
primary contractual offtaker, Southern California Edison Co. (SoCalEd:
triple-'B'-minus/Watch Neg/'A-3'), to triple-'B'-minus as a result of
the extraordinary events in California's power markets, which have
brought the state's two largest investor owned utilities to the brink of
bankruptcy. SoCalEd is the primary counterparty to the Big 4.

The Big 4 is wholly owned subsidiary of Edison Mission Energy
(single-'A'-minus/Watch Neg/A-2). The notes are being repaid from
partnership distributions paid to affiliates of Edison Mission Energy
Funding from four cogeneration projects in California. The aggregate
generating capacity of these four gas-fired, combined cycle, gas
turbine projects is 1,210 MW, of which Edison Mission Energy Co.
affiliates have a 601 MW net ownership interest.

SoCalEd is facing imminent default unless California regulators and
politicians can immediately craft a viable financial solution that
restores liquidity to the utility. Because SoCalEd is counterparty to
long-term contracts associated with the Big 4, a bankruptcy filing
by the utility could trigger a default under the offtake contracts or a
stay of payments, which in turn would trigger a default under the
lending documents. Should SoCalEd file for bankruptcy, the Big 4
would be at serious risk of falling into the lowest speculative grades
or even to 'D'.

Standard & Poor's notes that the Big 4 does not face immediate
liquidity problems as it has a six-month debt service reserve in place,
which may be sufficient to weather the current crisis in California. In
addition, the Big 4 is current in its principal and interest payments,
and SoCalEd is current in its payments to the underlying projects.

Over the next few weeks, Standard & Poor's will be assessing each
of underlying project contracts and long-term equilibrium economic
positions of the plants, as well as the potential for selling into
alternative offtake arrangements that may potentially protect the
projects' credit positions.

The four projects that support the repayment of the $450 million in
notes and bonds are the 385 MW Watson facility in Carson, Calif.;
the 225 MW Midway-Sunset plant located near Taft, Calif.; the
300 MW Sycamore facility located near Bakersfield, Calif.; and the
300 MW Kern River plant, also located near Bakersfield, Calif. All
four plants sell electricity or steam, or both, to SoCalEd; Pacific Gas
& Electric Co. (corporate credit rating triple-'B'-minus/WatchNeg/'A-
3'); AERA (a joint venture of Exxon Mobil Corp., triple-'A'/stable/'A-
1'-plus and Shell Oil Co., triple-'A'/Stable/'A-1'-plus); Arco Products
Co. (a subsidiary of BP Amoco Corp., double-'A'-plus/Stable/'A-1+'); and
Texaco Exploration and Production Inc. (a subsidiary of Texaco
Inc., single-'A'-plus/WatchPos/'A-1'), Standard & Poor's said.


ENGAGE, INC.: Lays-Out Restructuring Plan to Break-Even This Year
-----------------------------------------------------------------
Engage, Inc. (Nasdaq: ENGA), a leading enterprise marketing software and
interactive media company, announced its new operational strategy
designed to strengthen the company and accelerate its path to
profitability.  Engage has simplified its organizational structure in an
effort to increase operational efficiencies, improve margins and further
reduce expenses. As a result, over the next several months employee
headcount will be reduced by 550 or approximately 50%, through a
combination of layoffs, job eliminations and attrition.

The new, streamlined Engage is built to leverage the company's unique
combination of enterprise marketing software and interactive media for
synchronized, multi-channel marketing.

"Engage is delivering solutions that address the need of companies to
make interactive marketing an integrated part of their overall sales and
marketing efforts," said Tony Nuzzo, president and CEO, Engage. "As
interactive marketing continues to evolve and mature, Engage's software,
combined with its media network, enables marketers to synchronize
programs delivered over interactive and emerging media with those
delivered over more traditional channels."

Engage will become a more simplified organization with integrated sales,
client service, marketing and engineering functions, and is implementing
operational efficiencies, enabling it to eliminate numerous duplicate
positions. Once fully implemented, the workforce reduction and other
operational changes are expected to generate annualized improvements in
operating margins and cost reductions of approximately $120 - $150
million. The company expects to incur restructuring charges as part of
this action. The cash impact of these charges is expected to be
approximately $17 - $20 million. The non-cash components of the
restructuring charges are expected to be $23 - $25 million.

"We believe this major restructuring is necessary to enable the company
to position itself for future growth and to significantly reduce costs.
We are creating a fully integrated company with internal dynamics that
facilitate more effective communication and decision making," Nuzzo
said.

Through these actions, Engage is integrating its multiple businesses,
management teams and operating units into a single, cohesive
organization which will include two worldwide sales and service
operations groups - software and media. The company expects to benefit
from consolidated operations for software and media sales, marketing and
engineering. Furthermore, Engage is implementing a number of changes
that are expected to improve operational efficiency and margin growth
within each operating group.

These include:

     * Increasing focus on software, which is designed to increase the
proportion of the company's revenues generated by software solutions,
which have higher gross margins than Engage's other businesses. This in
turn is expected to have a positive impact on Engage's overall margins;

     * Consolidating offices, including moving the principal operations
of the media business group from San Francisco to Engage headquarters in
Andover;

     * In its media business, renegotiating agreements with some of its
network Web sites to increase the percentage of revenue retained by
Engage;

     * An ongoing emphasis on improving operational efficiencies; and

     * Combining ad serving for its media network and AdKnowledge
services onto the media network platform, while continuing to support
its AdManager software.

The two worldwide sales and service operations groups have direct
responsibility for customer sales and service, combined with revenue
forecasts and attainment. The worldwide software sales and service
group, led by Dean Wiltse, is focused on delivering enterprise marketing
software solutions to both traditional marketers and e-marketers to
enable them to manage and deliver targeted, synchronized marketing
programs across multiple channels. Tom Rothfels will head the worldwide
media sales and service group which is focused on delivering precisely
targeted and optimized online marketing programs that can be measured
against response, sales or branding objectives.

The worldwide engineering group, led by co-founder Daniel Jaye, is
responsible for end-to-end product delivery and network operations.
Betsy Zikakis will lead the worldwide marketing group which will
consolidate all product and corporate marketing under one organization
and will be responsible for lead generation, sales support and product
management. Each group is responsible for making a positive contribution
to gross margin improvements.

The company's goal is to achieve break even on a cash earnings basis by
the exit of the fourth fiscal quarter 2001. Cash earnings excludes
amortization of goodwill and other intangible assets, stock
compensation, in-process R&D, restructuring and acquisition costs. As of
the end of November, 2000, the company held $100 million in cash, cash
equivalents and short-term securities as previously reported. The
company believes that its cash and cash equivalents will be sufficient
to fund Engage's operations through profitability.

Engage, Inc. (Nasdaq: ENGA) is a leading enterprise marketing software
and interactive media company. A majority-owned operating company of
CMGI, Engage enables companies to harness the power of interactive
marketing to create more loyal customers, maximize revenue, and increase
their brand's visibility and recognition. Based in Andover,
Massachusetts, Engage has European headquarters in London and offices
worldwide. For more information on Engage please call 877-U-ENGAGE or
visit www.engage.com.

In the three months ending October 31, 2000, Engage posted a $173
million loss from operations on $41 million in total revenue; $115
million of that loss was attributable to amortization of goodwill and
other intangibles.  

Mr. Nuzzo told a reporter for the Los Angeles times that, since Nov. 20,
when he arrived as Engage's CEO, there were five presidents reporting to
him from five divisions.  He said paring that back to one president, and
eliminating duplication between divisions, would result in "clearer,
faster communication and greater value for shareholders."  

Engage will host a conference call on January 17, 2001 at 4:30 p.m. EST
to provide further guidance. A live Web cast will be accessible at
http://www.engage.com/investor


eTOYS: Will Lay Off Workers as Hopes for Profits Slims
------------------------------------------------------  
Following a doleful Christmas season, the languishing Internet toy
store, eToys announced Thursday that it would lay off 700 of its 1,000
employees in the United States, Reuters reports.  On Wednesday,
according to the same article, eToys declared that it would shut down
its operations in Europe and lay off 74 employees there.

The Los Angeles company, one of the pioneers in e-tailing, is "studying
strategic alternatives since it does not expect to achieve profitability
by 2003."  Industry analysts tell Reuters that eToys needs to find a
partner or buyer since it cannot survive as an independent enterprise.

As early as November 2000, eToys poured money into their warehouses to
make sure that it could accommodate all orders and deliver it on time
during the holiday season  which was a make or break period. Although,
eToys had a lot more holiday traffic than most e-tailers, as a survey
from Nielson/Net Ratings suggests, earnings for the last three months of
the year would only be about half of what was expected, Reuters said.

eToys case, Reuters opines, serves as an example of the challenges and
high costs of running a pure-play Internet.


FRUIT OF THE LOOM: Selling Jet Sew Technologies Assets to Mohawk
----------------------------------------------------------------
Jet Sew Technologies Inc., a subsidiary of Fruit of the Loom, is a non-
core business and has been operating at a deficit. It lost $971,694 from
January 1, 2000 through April 29, 2000. Jet Sew designs, markets, and
builds automatic modular sewing systems that are used to manufacture
textile and apparel machinery.

On April 5, 2000, the Court entered an order authorizing Jet Sew to
design and sell two experimental sewing machines to Springs Industries
Inc., for $909,000. This account receivable remains outstanding.

Fruit of the Loom, in consultation with its financial advisors, Lazard
Freres & Co., has determined that a sale of Jet Sew's assets would
provide the maximum value to its estate. Debtor considered both
liquidation and a wind-down, but believes a going-concern sale has the
greatest potential for value maximization. Judge Walsh agrees and has
approved an order that allows the sale to proceed.

In May 2000, Jet Sew and Lazard began discussions with Mohawk Partners,
of New Hardford, New York. The assets for sale include telephone
numbers, real estate, parking, improvements, furniture, fixtures,
inventory, vehicles, equipment, records, intellectual property and all
other assets owned by Jet Sew and located at its offices in Barneveld,
New York. Not included is Jet Sew's claims under Sections 544 through
553. Also excluded is cash of $130,382, accounts receivable of $30,085
and prepaid assets aggregating $57,591.

The sale price is $3,500,000. Mohawk Partners will pay Fruit of the Loom
10% or $350,000 upon execution of the agreement. At the closing of the
sale, Mohawk Partners will pay $2,241,000 and deliver in escrow $909,000
in an interest-bearing account pending collection of the receivable to
Springs Industries. Within five business days after any payment from
Springs Industries, in full or otherwise, Mohawk Partners will direct
the escrow agent to release equal funds to Jet Sew. Any accrued interest
will be paid to Mohawk Partners. Under this scheme, Jet Sew assumes the
collection risk from Springs Industries.

At closing, Mohawk Partners will assume all Jet Sew's current
liabilities except prepaid contracts, services to be rendered, total
accrued taxes and accounts labeled "Total Serv. To Be Pend. Helmy."
Mohawk Partners will also assume executory contracts and unexpired
leases. Jet Sew will retain all pre-closing off-balance sheet employee
obligations including its pension and profit-sharing obligations.

Ernst Schramayr, Jet Sew vice president of research and development, is
a key employee. Mohawk Partners expects to enter into an employment
agreement with Mr. Schramayr to ensure his continued service after the
sale.

Ms. Stickles tells Judge Walsh that the asset sale is in accordance with
Section 363(b)(1) and 105(a). It represents sound business judgment. She
requests that the sale be exempt from any tax.  (Fruit of the Loom
Bankruptcy News, Issue No. 19, Bankruptcy Creditors' Service, Inc.,
609/392-0900)


GEORGE MAGAZINE: Will Cease Operations, Final Issue to Appear in March
----------------------------------------------------------------------
A special commemorative issue of George in March will be the final
publication for the magazine launched by John F. Kennedy Jr. in 1995.
Jack Kliger, President and CEO of Hachette Filipacchi Magazines (a
division of the French conglomerate Lagardere SCA), made the
announcement to the staff last week.  The George Web site --
http://www.georgemag.com-- which gained a strong following during the  
presidential campaign, will continue to operate.

Kliger made this statement today about the closing:

     "I have advised the staff of George today that, after a
comprehensive review of all options, we will cease publication, in March
with a special tribute, including interviews conducted by John F.
Kennedy Jr., as editor.

     "Despite a superb editorial product, under the leadership of
Editor-in-Chief Frank Lalli, advertiser support has not been
forthcoming. The recent softening of the advertising market has only
compounded George's situation. The likelihood that George's prospects
will improve in this environment has become remote.

     "We have explored every possible scenario, including different
publishing models and alternative media projects. None has proven
realistic.

     "While I have been enthusiastic about George and remain so, the
reality of today's magazine business is that we cannot make George work
economically, despite its stellar editorial product.

     "I deeply regret this decision but it is unavoidable. The closing
of a magazine is always an enormously sad event for those of us that
love this business and cherish the craftsmanship that produces great
magazines.

     "George was given enormous vitality and creativity by its founder
John F. Kennedy, Jr., who developed an exciting editorial concept.

     "Frank Lalli has proven a worthy successor as editor-in-chief,
assembling a great team, bringing great focus, energy and leadership to
the magazine. The editorial product has gotten stronger, with superb
investigative reporting and newsbreaking articles. Frank has done
everything we have asked him to do and has enhanced George's distinctive
identity as a political magazine with no equal. Readers have responded,
and circulation has grown by 25 percent over the past year.

     "Our publishing efforts led by Dan Lagani have been tireless and
skillful. HFM is grateful for the extraordinary work of both the
editorial and publishing teams who have dedicated themselves to
producing such an outstanding product.

     "I am indebted to Frank and Dan and the entire staff of George for
their extraordinary work in producing such a superb product."

The Associated Press reports that the magazine's 39 employees will
receive severance packages.


HARNISCHFEGER: Total Enterprise Value Hinges on Coal Production
---------------------------------------------------------------
Judge Walsh is going to learn more about the future of coal production
than he ever suspected.  As Harnischfeger Industries, Inc., presses
toward confirmation of its chapter 11 plan, total enterprise value is
the issue of the day.  The Equity Committee is on one end of the
spectrum and the Debtors and their creditors are on the other.  The
parties see a $627 million difference in the value of Reorganized HII
attributable to assumptions about coal production.  

The Debtors filed their Third Amended Plan of Reorganization and a Third
Amended Disclosure Statement in support of that plan on December 26,
2000.  As previously reported in the Troubled Company Reporter and
detailed in Harnischfeger Bankruptcy News, that Third Amended Plan is
premised on a valuation report prepared by The Blackstone Group.  
Blackstone estimates that the enterprise value of the New Company falls
between $925 million and $1.115 billion, with a pinpoint value of $1.02
billion.  Blackstone further estimates that the aggregate value
attributable to the New HII Common Stock to be issued under the plan
falls between $598 and $783 million, with a pinpoint value of $688
million.  

The Debtors' best estimate of unsecured claims against its estates is
$1.162 billion.  Because the absolute priority rule buried in Section
1129(b)(2)(B) of the U.S. Bankruptcy Code requires full payment of all
creditors' claims plus post-petition interest before any shareholder
could collect a dime, the plan must deliver $1.315 billion (assuming a
7.5% interest rate applied over a 21 month period) to the Debtors'
unsecured creditors or shareholders, plainly and simply, are out of the
money.  Blackstone's valuation leaves a $627 million shortfall.  Black
letter bankruptcy law based on Blackstone's valuation says shareholders
take nothing when Harnischfeger emerges from chapter 11.  

Houlihan Lokey Howard & Zulkin, representing the Official Committee of
Unsecured Creditors appointed in HII's chapter 11 cases, undertook its
own independent valuation and reviewed Blackstone's valuation.  Houlihan
reached the same material concusions as did Blackstone.

The Equity Committee, however, says that the Debtors, Blackstone and
Houlihan are wrong because their assumptions are flawed.  Goldin
Associates, L.L.C., representing the Equity Committee, points to two
things that boost the value of Reorganized HII by at least $627 million:

     (1) the outlook for coal production has materially
         improved during the past year; and

     (2) President-elect Bush has pledged to reverse the
         policies of the Clinton Administration that
         discouraged domestic coal production and use of coal.  

James H.M. Sprayregan, Esq., at Kirkland & Ellis in Chicago, says
that the Debtors have asked the Equity Committee to quantify how
the outlook for coal production changes the Blackstone's analysis and to
explain their speculative assertion that the new President will be able
to change policies that affect the coal industry, but they've not
received a complete answer.  Seymour Preston, Jr., the Managing Director
at Goldin who leads the Harnischfeger Engagement at a cost of $54,000
per month did share a copy of a four-page article entitled, "A Comeback
for Coal; With Oil Prices High, It's Looking Cheap -- And It's Abundant"
appearing in the December 11, 2000, edition of Business Week, with the
Debtors, the Committees, and their professionals.  

The Official Committee of Equity Security Holders tells Harnischfeger
that it will show all of its cards at the hearing before Judge Walsh to
consider confirmation of the Third Amended Plan.   Erica M. Ryland,
Esq., at Berlack, Israels & Liberman LLP, says her team of lawyers
representing the Equity Committee will put Goldin professionals and a
parade of other experts on the witness stand to testify that the
projections and macroeconomic assumptions contained in the Debtors'
business plan are flawed and to prove that the demand for coal has
changed dramatically due to rapidly rising prices (and threats of
shortages) of alternative energy sources such as natural gas and oil.  
Blackstone's valuation "is premised on a business plan developed by the
Debtors nearly a year ago," Ms. Ryland explains.  "The business plan and
the derivative valuation fail to reflect that the outlook for coal
production (a key driver of the Debtors' business plan has changed
dramatically over the past year because of a growing energy crisis in
this country and around the world," Ms. Ryland continues.  Additionally,
the Equity Committee will argue at the confirmation hearing that HII has
understated projected sales to growth markets such as China, Russia,
India and Poland will be materially higher than what management told
Blackstone.  

The Equity Committee will get its day in court.  At the confirmation
hearing, the parties expect to have long, drawn-out conversations about
coal production.  Judge Walsh will get to listen to the Equity
Committee's professionals argue that increased coal demand and higher
projected sales in China, Russia, India and Poland translate into $627
million of additional value to Harnischfeger's Estates.  The Bankruptcy
Court will then get to listen to the Debtors' professionals say that
Goldin is promoting voodoo valuation methodologies, the Equity Committee
is making arguments based on nothing more than speculation and fantasy,
and that it is impossible to quantify the coal production-related
assumptions in any rational or reasoned way that will deliver $627
million of value to Harnischfeger's Estates.  

The HII Creditors' Committee, represented by Lindsee P. Granfield,
Esq., at Cleary, Gottlieb, Steen & Hamilton, will likely lend its
support to the argument that, while the value of Reorganized HII might
be higher than what Blackstone concludes, the suggestion that the value
is 60% higher is ludicrous.  The Beloit Creditors' Committee,
represented by Wendell H. Adair, Esq., at Stroock & Stroock & Lavan LLP,
would be expected to provide a measure of harmony to that refrain.  

Procedurally, Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young
& Jones P.C., serving as local counsel to the Debtors, relates,
Harnischfeger obtained Judge Walsh's approval of their Third Amended
Disclosure Statement on December 20, 2000.  The Court found that the
Disclosure Statement provides creditors with information of kind, and in
sufficient detail, to enable a hypothetical reasonable investor to make
an informed judgment about the plan and to decide whether they should
vote to accept or reject the plan.  Copies of the Plan and Disclosure
Statement are in the mail to all of the Debtors' creditors together with
customized ballots and solicitation letters from the various
constituencies.  Creditors' ballots must be received by the Debtors'
voting agent by 5:00 p.m. on January 30, 2001 to be counted.  The
Debtors and the Creditors' Committee anticipate an overwhelming
acceptance rate.  All objections to confirmation of the Plan must be
filed with the Court by January 30, 2001.  The Plan will then be
presented to Judge Walsh for final approval at a Confirmation Hearing
scheduled for March 5, 2001, in Wilmington, Delaware.  

The Harnischfeger Debtors and their lawyers direct any party-in-interest
wishing to obtain information about the solicitation procedures,
balloting, voting, or needing copies of the Plan, the Disclosure
Statement, or the Exhibit Book to contact Bankruptcy Management
Corporation located in El Segundo, California at (888) 909-0100.  


ICG COMMUNICATIONS: Hires Zolfo Cooper as Consultant & Advisor
--------------------------------------------------------------
On or about September 27, 2000, ICG Communications hired Zolfo Cooper
LLC to serve as its bankruptcy consultant and special financial advisor.
Because the Debtors are very large complex enterprises, they require the
services of an experienced bankruptcy consultant and special financial
advisor to assist them in restructuring the business and developing,
negotiating, and confirming a plan of reorganization.

Specifically, the Debtors will look to Zolfo to:

(a) Assist management in developing a rolling 13-week cash-flow
    forecast and related processes;

(b) Advise and assist management in developing a long-term
    business plan, including identifying strategies and tactics to
    improve the Debtors' economic model and which will be utilized in
    the development of a capital restructuring plan;

(c) Advise and assist management who will be negotiating and
    implementing a capital restructuring with creditors and potential
    stakeholders, as necessary;

(d) Advise and assist management who will be seeking alternative
    sources of financing; and

(e) Provide such other services as the Debtors requested.

Subsequent to the Petition, the services to be rendered to the Debtors
by ZC are:

(a) Advise and assist management in organizing the Debtors'
    resources and activities so as to effectively and efficiently plan,
    coordinate, and manage the Chapter 11 process and communicate with
    customers, lenders, suppliers, employees, shareholders, and other
    parties in interest;

(b) Assist management in designing and implementing programs to
    manage or divest assets, improve operations, reduce costs, and
    restructure as necessary with the objective of rehabilitating the
    business;

(c) Advise the Debtors concerning interfacing with official
    committees, other constituencies and their professionals, including
    the preparation of financial and operating information required by
    such parties and/or the Court;

(d) Advise and assist management in the development and
    implementation of a reorganization plan and underlying business
    plan, including the related assumptions and rationale, along with
    other information to be included in a disclosure statement;

(e) Advise and assist the Debtors in forecasting, planning,
    controlling, and other aspects of managing cash and, if necessary,
    obtaining debtor-in-possession financing and/or exit financing;

(f) Advise the Debtors with respect to resolving disputes and
    otherwise managing the claims process;

(g) Advise and assist the Debtors in negotiating a reorganization
    plan with the various creditor and other constituencies;

(h) As requested, render expert testimony concerning the feasibility of
    a reorganization plan and other matters that may arise in the case;
    and

(i) Provide such other services as may be required by the Debtors.

The hourly billing rates of professionals who may be assigned to these
Chapter 11 cases are:

          Principals/members                  $410-525
          Professional staff                  $125-400
          Paraprofessional and support staff  $ 75-200

In addition to these hourly fees, the Debtors have agreed to pay ZC a
contingency fee as follows:

(a) Consummation Fee. If the Debtors succeed in obtaining a
    consensual restructuring and/or extinguishment of a substantial
    amount of its existing indebtedness, or a final judicial order
    approving a plan of reorganization under Chapter 11 or a sale of
    substantially all of the Debtors' assets, then upon consummation of
    such a restructuring or sale the Debtors will pay ZC a consummation
    fee of $1.5 million;

(b) Reasonable out-of-pocket expenses, including costs of ZC's
    legal counsel and any applicable state sales or excise taxes.

Steven G. Panagos, a principal of ZC, has discloses that ZC has received
a retainer of $500,000, less application of prepetition fees and
expenses, and has averred that ZC holds no interests adverse to the
Debtors or these estates on the matters upon which it is engaged, but
discloses that ZC has connections with The Chase Manhattan Bank through
various business investments and companies in which ZC has an interest.

Mr. Panagos further disclosed that ZC currently represents a counsel to
a trustee in litigation in which each of Ernst & Young and KMPG LLP has
been identified as a potential defendant; currently represents the
Debtors in the Loewen Group Chapter 11 cases in which KMPG are
professionals employed by the Debtors; and currently represents
unsecured creditors in a case in which KMPG is an unsecured creditor.
Further, Wasserstein Perella, a proposed professional in these cases, is
also representing the Debtors in the Loewen cases. ZC represents
debtors in other cases in which Wasserstein Perella is involved as
professionals or a shareholder. Through Chapter 11 cases, ZC has other
relationships with Hicks, Muse, Tate & Furst, Lucent Technologies, Royal
Bank of Canada, Barclays Bank PLC, First Union National Bank and other
creditors of these estates have interests.  (ICG Communications
Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc.,
609/392-0900)


INTEGRATED HEALTH: Rejecting Ten Rotech Leases
----------------------------------------------
Integrated Health Services, Inc., seeks the Court's authority to reject
10 Rotech nonresidential real property leases, pursuant to Section 365
of the Bankruptcy Code.  Two of these relate to currently vacant parcels
of Leased Property for which the Debtors would like to reject the
appurtenant lease. The other eight relate to parcels of Leased Property
which are anticipated to be vacated shortly and as to which the Debtors
would also like to reject the appurtenant leases.

Rotech, which operates the Debtors' home respiratory services, is the
lessee of approximately 700 nonresidential real property leases located
throughout the United States. Most of the Leased Property is used as
retail outlets, office space or storage space.

The Debtors have determined that these leases should be rejected because
they:

      (a) are of no value to the Debtors or constitute a burden upon
          the Debtors' estates: and

      (b) are unnecessary for the Debtors' continued operations.

These ten leases are:

(1) Name:                 Rotech Oxygen & Medical Equipment, Inc.
    Location:             Tampa, FL.
    Lease Expires:        3.14.01
    Rent:                 $ 8,745.66
    Reason for rejection: Location is no longer needed and will be
                          vacated shortly.

(2) Name:                 Hamilton Medical Equipment Service, Inc.
                          d/b/a Home Care Helping Hand
    Location:             Decorah, IA
    Lease Expires:        1.31.03
    Rent:                 $1,040.00
    Reason for rejection: Location is vacant and not needed

(3) Name:                 Value Care, Inc. d/b/a
                          Home Care Medical Equipment
    Location:             New Hampton, IA
    Lease Expires:        4.30.02
    Rent:                 $650.00
    Reason for rejection: Location is vacant and not needed

(4) Name:                 Care Medical Supplies, Inc. d/b/a Medsource
    Location:             Northbrook, IL
    Lease Expires:        9.28.04
    Rent:                 $7,179.27
    Reason for rejection: Location is no longer needed and will be
                          vacated shortly.

(5) Name:                 Responsive Home Health Care, Inc. d/b/a
                          Hook's Home Health Care
    Location:             Kokomo, IN
    Lease Expires:        3.31.04
    Rent:                 $2,770.83
    Reason for rejection: Location is no longer needed and will be
                          vacated shortly.

(6) Name:                 Professional Breathing Associates, Inc.
                          d/b/a Great Lakes Home Medical
Location:                 Escanaba, MI
Lease Expires:            6.30.01
Rent:                     $1,820.00
Reason for rejection:     Location is no longer needed and will be
                          vacated shortly.

(7) Name:                 Centennial Medical Equipment, Inc. d/b/a
                          Quest Health Care
Location:                 Minnetonka, MN
Lease Expires:            12.31.02
Rent:                     $2,458.58
Reason for rejection:     Location is no longer needed and will be
                          vacated shortly.

(8) Name:                 Responsive Home Health Care, Inc. d/b/a
                          Hook's Home Health Care
Location:                 Springfield, OH
Lease Expires:            12.31.01
Rent:                     $3,250.00
Reason for rejection:     Location is no longer needed and will be
                          vacated shortly.

(9) Name:                 Medical Rental Supply, Inc. d/b/a
                          InHome Medical
Location:                 Huntington, WV
Lease Expires:            6.30.01
Reason for rejection:     Location is no longer needed and will be
                          vacated shortly.

(10) Name:                Medical Rental Supply, Inc. d/b/a
                          InHome Medical
Location:                 Ona, WV
Lease Expires:            6.1.03
Rent:                     $1,000.00
Reason for rejection:     Location is no longer needed and will be
                          vacated shortly.

Mr. James A. McNabb, Jr., Corporate Counsel of Rotech, represent that
the Debtors have thoroughly reviewed each of the 10 unwanted leases and
have determined that the leases do not provide a benefit but in many
cases impose an economic hardship upon IHS. Mr. McNaBB also believe that
there is no reasonable likelihood that the Debtors could sublet or
assign any of the leaseholds on advantageous terms.  (Integrated Health
Bankruptcy News, Issue No. 12; Bankruptcy Creditor's Service Inc.,
609/392-0900)


JCC HOLDING: Files Chapter 11 Petition in New Orleans
-----------------------------------------------------
JCC Holding Company announced on January 4, 2000 that it filed a
petition for Chapter 11 reorganization in New Orleans in the Bankruptcy
Court for the Eastern District of Louisiana.  This filing has been
expected as a part of JCC's attempts to reorganize the company's debt
and capital structure in conjunction with JCC's request for a reduction
in the$100 million minimum annual payment to the State of Louisiana and
relief from certain operating restrictions. The timing of this filing
was the result of the need to conclude this reorganization process prior
to March 31, 2001 to meet certain obligations imposed by JCC's casino
operating contract with the State of Louisiana.

JCC's Harrah's New Orleans Casino remains open and will continue
operations during the bankruptcy proceedings. No disruptions in
employment or operations are expected during these proceedings unless
the relief sought by JCC is not obtained and a bankruptcy plan cannot be
timely approved and consummated by March 31, 2001.

Jazz Casino Company, LLC, a subsidiary of JCC Holding Company, has the
exclusive license to own and operate the only land-based casino in
Orleans Parish. Harrah's New Orleans Management Company, a subsidiary of
Harrah's Entertainment, has the contract with Jazz Casino Company to
manage the casino. The casino directly employs approximately 3,000
people earning wages, benefits and tips of over $100 million annually.
The 100,000 square foot casino is located at Canal Street at the
Mississippi River in downtown New Orleans and is adjacent to the French
Quarter, the Aquarium of the Americas and the Ernest N. Morial
Convention Center.

JCC HOLDING: Judge Brahney Allows Continued Casino Operations
-------------------------------------------------------------
On January 4, 2000, JCC Holding Company obtained authority to continue
operations at its land-based casino, Harrah's New Orleans, while
bankruptcy proceedings continue.

In orders signed today by Judge Thomas Brahney, U.S. Bankruptcy Court,
Eastern District of Louisiana, JCC was authorized to pay all employee
wages and benefits in the ordinary course of business as if no
bankruptcy filing had occurred. In addition, JCC was authorized to honor
all obligations of its customers and to pay all expenses of persons
providing goods and services relating to the operation of the casino,
including food, beverage, hotels, restaurants and general trade
creditors.

JCC's Harrah's New Orleans Casino remains open and will continue
operations during the bankruptcy proceedings. No disruptions in
employment or operations are expected during these proceedings unless
the relief sought by JCC is not obtained and a bankruptcy plan cannot be
timely approved and consummated by March 31, 2001.

JCC filed a petition for Chapter 11 reorganization in New Orleans
earlier today. This filing has been expected as a part of JCC's attempts
to reorganize the company's debt and capital structure in
conjunction with JCC's request for a reduction in the $100 million
minimum annual payment to the State of Louisiana and relief from
certain operating restrictions. The timing of this filing was the result
of the need to conclude this reorganization process prior to the
March 31, 2001 deadline imposed by certain obligations in JCC's casino
operating contract with the State of Louisiana.

Jazz Casino Company, LLC, a subsidiary of JCC Holding Company, has the
exclusive license to own and operate the only land-based casino in
Orleans Parish. Harrah's New Orleans Management Company, a subsidiary of
Harrah's Entertainment has the contract with Jazz Casino Company to
manage the casino. The casino directly employs approximately 3,000
people earning wages, benefits and tips of over $100 million annually.
The 100,000 square foot casino is located at Canal Street at the
Mississippi River in downtown New Orleans and is adjacent to the French
Quarter, the Aquarium of the Americas and the Ernest N. Morial
Convention Center.


LERNOUT & HAUSPIE: Court Approves Milbank Tweed as Lead Counsel
---------------------------------------------------------------
Lernout & Hauspie Speech Products and Dictaphone Corporation sought and
obtained authority from Judge Wizmur to employ Milbank, Tweed, Hadley &
McCloy LLP, as their lead counsel in these Chapter 11 proceedings.

Prior to its chapter 11 filing, L&H retained Milbank to represent L&H
and certain members of its Board of Directors in connection with two
class-action lawsuits pending in courts in the United States. From and
after the Petition Date, Milbank will cease representation of the
members of L&H's Board of Directors individually, and will represent
only L&H or the Debtors in connection with the class action suits and
any other matters in connection with these Chapter 11 cases.

On November 11, 2000, the Debtors retained Milbank to advise on matters
relating to a restructuring of the financial obligations of the Debtors,
as well as issues relating to a potential chapter 11 filing.

Luc A. Despins, Esq., leads the engagement from Milbank's New York
office.  Milbank will be compensated at its standard hourly rates. At
present, those rates range from $410 to $625 for partners, $350 to $505
for of counsel, $155 to $395 for associates, and $105 to $220 for legal
assistants. These hourly rates are subject to periodic firm-wide
adjustments in the ordinary course of Milbank's business.

According to Milbank's books, Milbank was paid approximately $148,000
from the Debtors for legal services performed and expenses incurred in
connection with a potential restructuring, and in contemplation of or in
connection with the Debtors' Chapter 11 cases. Milbank has received a
retainer in the amount of approximately $55,000 from the Debtors. To
the extent amounts currently owed to Milbank are not satisfied by the
retainer, any outstanding pre-petition fees and expenses will be waived
by Milbank.

The services which Milbank will render to the Debtor are:

(a) Advise the L&H Group of its rights, powers and duties as debtor
    and debtor-in- possession;

(b) Advise the L&H Group concerning actions that it might take to
    collect and recover property for the benefit of its estate;

(c) Prepare all necessary and appropriate applications, motions,
    draft orders, other pleadings, notices, schedules, and other
    documents, and review all financial and other reports to be filed
    in the Debtors' Chapter 11 cases;

(d) Advise the Debtors concerning, and prepare responses to,
    applications, motions, other pleadings, notices and other papers
    that may be filed and served in the Debtors' Chapter 11 cases;

(e) Review the nature and validity of any liens asserted against
    the Debtors' property and advise the Debtors concerning the
    enforceability of such liens;

(f) Advise and assist the Debtors in connection with the formulation,
    negotiation and promulgation of a plan of reorganization
    and related documents;

(g) Advise and assist the Debtors in connection with any potential
    property dispositions;

(h) Advise the Debtors concerning executory contract and unexpired
    lease assumptions, assignments and rejections and lease
    restructurings;

(i) Assist the Debtors in reviewing, estimating and resolving
    claims asserted against these estates;

(j) Commence and conduct any and all litigation necessary or
    appropriate to assert rights held by the L&H Group, protect assets
    of its estate or otherwise further the goal of completing a
    successful reorganization; and

(k) Perform all other necessary legal services in connection with
    the Debtors' Chapter 11 cases.

In the interests of full disclosure, Mr. Despins advises the Court and
the Companies' creditors that Milbank presently represents Intel
Corporation and Deutsche Bank A.G., a pre-petition unsecured lender to
the Debtors, and Milbank formerly represented various creditors of the
Debtors' estates, including Fortis Bank N.V., Morris Nichols Arsht &
Tunnell (proposed co-counsel), and affiliates of KBC Bank N.V., a pre-
petition unsecured lender. None of these representations involved any
matter material to these estates or the Debtors, Mr. Despins assures
Judge Wizmur.  (L&H/Dictaphone Bankruptcy News, Issue No. 2; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


LAIDLAW, INC.: CIBC Arranges Bridge Financing Through March 31
--------------------------------------------------------------
Laidlaw Inc. (TSE:LDM) says it closed a secured financing arrangement
with a group of banks, with the Canadian Imperial Bank of Commerce as
agent, to establish a $100 million revolving credit facility, including
a letter of credit sub-facility in an amount up to $50 million. The
facility matures on March 31, 2001. This arrangement will provide
working capital availability for the Laidlaw operating companies, other
than Greyhound Lines, Inc., which established a separate secured,
revolving credit facility in October 2000.

"As a result of somewhat higher cash balances than originally
anticipated we believe a $100 million facility is adequate for the
company's near-term needs. As we previously announced, on October 25,
2000, Greyhound entered into a separate $125 million revolving credit
facility, against which it borrowed to fund a partial repayment of
intercompany amounts due to Laidlaw," said John R. Grainger, Laidlaw
Inc.'s president and CEO.

"Coupled with borrowing availability under these secured credit
facilities and cash flow expected to be generated from operations, we
believe our working capital needs will be adequately funded," concluded
Mr. Grainger.

Laidlaw Inc. is a holding company for North America's largest providers
of school and intercity bus transportation, municipal transit, patient
transportation and emergency department management services.


LIDS CORPORATION: Files for Chapter 11 Protection in Wilmington
---------------------------------------------------------------
Westwood, Mass.-based, Lids Corp., filed for chapter 11 protection last
week in the U.S. Bankruptcy Court for the District of Delaware.  
protection from creditors under federal bankruptcy laws.   

"This filing will provide Lids with the opportunity to streamline its
operations and cost structure so that we may return to profitability,"
Nancy Babine Kucinski told the Associated Press after she took over as
the company's chief executive officer following the resignation of Jack
B. Chadsey.

Lids says it is the world's largest hat retailer, selling more than 10
million hats annually in over 400 in 46 states and at
http://www.lidscorp.comon-line.  Competing in a $3 billion headgear  
industry, Lids says it offers "the newest and broadest assortment of
lids in the world, everything from professional sports and college team
caps to brand-name hats such as Adidas, Nike, Puma, and Kangol. Of the
5,000 hats in each of our stores, 50% are exclusive to Lids."  

Two college friends started Lids in 1992 with a single kiosk and a
dream.  So they set up shop at a mall in Boston, Massachusetts, started
selling authentic sports hats to everyone in sight, and Lids was
created.  Soon they were expanding their collection and growing like
mad. Now Lids is in over 400 locations across the U.S.--in malls and
airports, at festival centers and on downtown streets.  In 2001, a
chapter 11 bankruptcy filing adds drama to their corporate history.  

The Los Angeles times notes that the Company was "silent on whether the
move would result in store closures."  What do you think?  


LOEWEN GROUP: Rock of Ages Completes Acquisition of 16 KY Cemeteries
--------------------------------------------------------------------
Rock of Ages Corp. (NASDAQ/NMS:ROAC) completed its previously announced
acquisition of 16 cemeteries and one granite memorial retailer in
Kentucky formerly owned by the Loewen Group Inc.  The purchase price was
$6.8 million, representing approximately 90% of the 1999 revenue of the
acquired entities.

Taken together, the 16 cemeteries have approximately 50,000 cemetery
lots available for sale and 170 acres of undeveloped land available for
future cemetery use. In accordance with an agreement between Rock of
Ages and Keith & Keith Enterprises LLC made prior to the latter's
successful bankruptcy auction bid for 20 cemeteries, a memorial
retailer, and 31 funeral homes owned by the Loewen Group, Rock of Ages
took title to the 16 cemeteries and one memorial retailer directly from
Loewen as the designee of Keith & Keith, a real estate investment
partnership owned by John Keith and Roy Keith Jr. Simultaneously with
the Rock of Ages transaction, Keith & Keith sold all of the funeral
homes and remaining cemeteries to third parties with the exception of
certain undeveloped acreage at a cemetery not purchased by Rock of Ages.

John Keith and Roy Keith Jr., the principals of Keith & Keith, have
agreed to extensions of their existing employment contracts with Rock of
Ages through Dec. 31, 2004. They will assume responsibility for all of
the company's operations in Kentucky and Southern Illinois.

"This acquisition is an exceptional opportunity for Rock of Ages to
dramatically expand our granite memorial market in Kentucky. The
acquired businesses currently generate revenue of approximately $7.5
million annually, primarily from the sale of cemetery lots and flush
markers. We believe that we can increase this contribution in two ways.
First, we will open new retail memorial sales locations at the
cemeteries that are not close to any of the retail outlets we already
own in this state. Second, 14 of the 16 cemeteries involved in the
transaction currently allow only flush bronze markers. We plan to
establish upright granite monument sections in all but one of the 16
cemeteries, which will give our customers freedom of choice in memorials
and provide us with the opportunity to expand sales of Rock of Ages-
branded memorials," said Kurt Swenson, chairman and chief executive
officer of Rock of Ages.


MERCATA: Plans to Shutter Operations on January 31, 2001
--------------------------------------------------------
Mercata, the leading provider of Internet-based group buying services,
announced last week that it will cease operations as of January 31,
2001.  The company is taking this step despite outstanding performance
throughout 2000, due to the lack of funding sources for e-commerce
companies.  Mercata had filed for an IPO in early 2000 before the market
correction. The company has since been unable to attract further private
investment.

"Mercata has performed extremely well as a company despite the difficult
economic environment," said Tom Van Horn, founder, president and CEO of
Mercata, Inc. "We have consistently met or exceeded the goals that we
have set for ourselves and against which investors measure our
performance."

In August of 2000, Mercata was granted the first patent covering group
buying business methods and technology. Mercata has 16 additional
patents pending on its proprietary business methods and related
technology. Its patented business methods and systems delivered powerful
yield management and dynamic pricing capabilities to Mercata.com, the
We-Commerce Network and Mercata Marketplace partners.
Following its launch in May of 1999, Mercata built a leading online
consumer shopping destination and introduced the PowerBuy to the World
Wide Web. The company also built a thriving platform business that
allowed sellers to leverage its proprietary group buying technology
through the We-Commerce Network, with partners including Sun
Microsystems and General Motors. In November 2000, Mercata launched the
Mercata Marketplace, a platform for small and medium-sized sellers to
offer their products and services for sale using self-service PowerBuys.
Since its launch, the Mercata Marketplace has signed hundreds of online
sellers and sponsored and hosted thousands of PowerBuy offers.

Mercata.com will be accepting orders until January 31, 2001 and
accepting returns if they are postmarked by January 20, 2001. The We-
Commerce Network and Mercata Marketplace will continue operations until
January 31.  Mercata is providing detailed information for customers and
partners on its site as well as through customer service, which can be
reached via e-mail at CustomerService@mercata.com or phone at 1-877-637-
2282.


OPTEL, INC.: Hires Anchor Pacific as Financial Advisor
------------------------------------------------------
OpTel, Inc., its debtor-affiliates and its debtor-subsidiaries ask the
U.S. Bankruptcy Court for the District of Delaware for permission to
employ Anchor Pacific Corp. as their financial advisor and consultant,
nunc pro tunc to December 1, 2000. OpTel explains that while it hired
Daniels & Associates, L.P., earlier in its chapter 11 cases as
investment bankers to market and sell the Estates' California Assets,
the Debtors have (without further explanation) "recently terminated
their retention of Daniels."

Specifically, OpTel wants Anchor to:

(A) identify, contact and elicit interest from prospective third-party
    purchasers for certain of the Debtors' assets;

(B) assist management in the preparation of any informal materials to
    be distributed to prospective third-party purchasers which may
    describe such things as the Debtors' assets, operations,
    management, financial condition and other information;

(C) assist the Debtors in negotiations with any prospective third-party
    purchasers; and

(D) assist the Debtors with management and/or advisory services, as my
    be requested including without limitation, assistance in developing
    and implementing the Debtors' short and long-term business plans
    and a plan of reorganization.

The Debtors propose to pay Anchor:

(1) a $100,000 monthly advisory fee for the period from December 1,2000
    through May 31,2001 and $50,000 per month thereafter. In the event
    that the engagement is terminated prior to May 31, 2001, OpTel will
    pay an Additional Fee equal to the lesser or (x) the difference
    between $600,000 and the amounts actually paid and (y) $300,000;

(2) an additional $10,000 per month for the period from December
    20,2000 through April 20, 2001 for services provided by William
    Chain; and

(3) upon consummation of any so-called Covered Transaction (which
    excludes transactions arranged by Daniels & Assoc.), a cash fee
    equal to 1.25% of the Gross Proceeds of such Covered Transaction.

C. Ronald Dorchester, Anchor's President, will lead the engagement from
Anchor's offices in Austin, Texas. Mr. Dorchester brings 27 years of
television industry experience to the Debtors.


OWENS-CORNING: Hires Nathan Roberts as Ohio Bankruptcy Co-Counsel
-----------------------------------------------------------------
Owens Corning asks for authority from Judge Walrath to employ the law
firm of Nathan Roberts & Arnold, Ltd., retroactive to the Petition Date,
as their Ohio bankruptcy co-counsel. The Debtors acknowledged that they
have previously filed an application to employ the firm of Skadden,
Arps, Slate, Meagher & Flom LLP as their principal bankruptcy counsel,
and the firm of Bingham Dana LLP as additional local counsel in
Wilmington, Delaware. The Debtors contemplate that the Nathan, Roberts &
Arnold firm will provide bankruptcy counsel to the Debtors in Toledo,
Ohio, in close proximity to Owens Corning's World Headquarters in Ohio.

Prior to the commencement of these Chapter 11 cases, Nathan Roberts &
Arnold represented Owens Corning in a variety of commercial and business
matters, including bankruptcy advice in connection with insolvencies of
the Debtors' vendors and customers. Postpetition, the firm's services
are to include:

(a) On site support regarding commercial matters, day-to-day
    contractual matters, and routine claim collection and recovery
    matters;

(b) Attend local meetings and negotiate with representatives of
    creditors and other parties in interest;

(c) Take all necessary action to protect and preserve the Debtors'
    estates, including negotiations concerning commercial and
    contractual litigation in which the Debtors may be involved;

(d) Advise the Debtors locally in connection with ongoing business
    and commercial matters, many of which occur in the ordinary course
    of the Debtors' business, including without limitation advising
    Debtors on, and bringing legal actions in connection with,  
    collection of the Debtors' accounts receivable, and prosecution of
    other legal and business claims by the Debtors.

The Debtors explain that the duties and activities of Nathan, Roberts &
Arnold will be different from the duties of Skadden Arps and Bingham
Dana, and assure Judge Walrath that the Debtors and their counsel will
avoid duplication of legal services to the Debtors, and will ensure that
the legal services undertaken by the Nathan, Roberts & Arnold firm on
behalf of the Debtors do not overlap with or duplicate the legal
services provided by the Debtors' other reorganization counsel.

With regard to retroactive appointment of this firm, the Debtors stated
that they and Nathan, Roberts & Arnold were under substantial time
pressure to begin service before judicial approval could be obtained.
The Debtors were also burdened with the retention of at least seven
other professionals in these cases, as well as the myriad of issues that
arise at the beginning of any large and complex bankruptcy case.
Furthermore, the determination of disinterestedness could not be made
prior to a review of the Debtors' list of creditors. That list was not
available until later in the proceedings. The Debtors claimed no third
party would be prejudiced by retroactive appointment of Nathan, Roberts
& Arnold, and the delay in making this application was described as
"minimal" in light of the nature and complexity of the cases. Finally,
the Debtors argued that the timing of this application was affected by
the necessity of establishing procedures designed to avoid duplication
of efforts and coordination of services with those of other
reorganization counsel.

On October 4, 2000, Owens Corning paid the Nathan, Roberts & Arnold firm
a $25,000 retainer for services to be rendered on and after that date,
and the firm placed the retainer in its trust account. Any portion of
prepetition amounts paid by the Debtors to Nathan, Roberts & Arnold that
has not yet been applied to prepetition fees and expenses or filing fees
will be applied when such amounts are identified, and should any balance
remain after such identification, added to or reserved in the Nathan,
Roberts & Arnold trust account for postpetition fees and expenses that
are allowed by the Court.

The fees charged by Nathan, Roberts & Arnold were described as hourly
rates from $175 to $195 for partners, $145 to $175 for counsel and
associates, and $80 for legal assistants. These hourly rates are subject
to periodic increases in the normal course of the firm's business, often
due to the increased experience of a particular professional.

H. Buswell Roberts, Jr., a member of the Nathan, Roberts & Arnold firm,
averred that the firm was disinterested within the meaning of the
Bankruptcy Code, and had no conflicts of interest with the Debtors or
these estates on the matters for which retention is sought. Mr. Roberts
stated that he would be the principal attorney with the firm on this
engagement, but that W. David Arnold, another member of the firm, would
also be responsible for representation of the Debtors.

Mr. Roberts further disclosed that the firm also represents, or has
represented, the following creditors or parties in interest in these
estates: Bank One, Industrial Bank of Japan Ltd., Communica, Automatic
Handling, Inc., and Mitchell & Co.

The firm believes that its representation of these entities in matters
unrelated to these Chapter 11 cases has not and will not in any way
affect the firm's representation of the Debtors in their Chapter 11
cases and in other legal matters as Debtors and Debtors-in-Possession.
(Owens-Corning Bankruptcy News, Issue No. 7; Bankruptcy Creditors'
Service, Inc., 609/392-0900)


PILLOWTEX: Taps Arthur Andersen as Business Consultants
-------------------------------------------------------
Pillowtex Corporation ask Judge Robinson for an Order authorizing them
to employ the firm of Arthur Andersen LLP as business consultants in
these Chapter 11 cases. The terms of Andersen's employment are
described in two engagement letters dated as of September 8, 2000, and
November 3, 2000. Under these engagement letters, Andersen is to
perform the following services for the Debtors:

(a) Advise and asset the Debtors with developing and implementing
    a "Cash Acceleration and Backlog Reduction Program," which will be
    designed to accomplish, among other things, immediate, mid-term and
    long-term improvements in the Debtors' accounts receivables
    processes, including reduced backlogs, enhanced collection times
    and amounts, more thorough record keeping and accounting and more
    focused monitoring;

(b) Advise and assist the Debtors with developing and implementing
    an "Accounts Receivable Performance Improvement Program," which
    will be designed to transition the Debtors' accounts receivables
    operations from Dallas, Texas, to Kannapolis, North Carolina, and
    to develop a new receivables department structure in Kannapolis
    that will maximize the efficiency and effectiveness of these f
    functions;

(c) Advise and assist the Debtors with developing and implementing
    a "Finance Process Improvement and Transition Program," which will
    be designed to analyze, improve, integrate and redesign the
    Debtors' data tracking, record keeping and reporting of financial
    operations;

(d) Advise and assist the Debtors with analyzing current production
    capacity at the four U.S. pillow and pad facilities and
    recommend capacity optimization improvements to help align the
    projected sales plan with the production level required to support
    the plan; and

(e) Advise and assist the Debtors with developing a standard
    operating model to serve as a blueprint for all plant level
    activities within the pillows an pad facilities, including a
    simplified approach to implement systems required to support plant
    level activities and "best practice" processes for running the
    pillow and pad facilities.

As part of the compensation, the engagement letters provide that the
Debtors will indemnify Andersen for all costs, fees, expenses, damages
and liabilities (including defense costs) associated with any third
party claim relating to or arising as a result of (a) Andersen's
services for the Debtors, (b) the Debtors' use of materials Andersen
delivers to the Debtors in connection with its services for the Debtors,
or (c) the Engagement Letters. Conversely, Andersen will indemnify the
Debtors for negligent or willful acts or omissions by Andersen's
personnel in performing services under the engagement letters.

The engagement letters contain provisions intended to limit Andersen's
liability to the fees it receives and to exclude special damages. In
addition, the engagement letters require that any cause of action must
be brought against Andersen within 18 months after it arises.

The engagement letters also provide that the Debtors or Andersen may
terminate either engagement letter at any time upon 15 days' written
notice to the other party. Upon termination of either engagement
letter, however, the Debtors will remain obligated to pay Andersen for
all services rendered and expenses incurred as of the date of
termination, and any reasonable costs associated with the termination.
Termination of either engagement letter by either party does not affect
the Debtors' indemnification obligations under the engagement letters
with respect to activities occurring prior to the termination date.

Prior to the Petition Date, on or about October 5, 2000, the Debtors
paid $350,000 to Andersen as a retainer for services rendered or to be
rendered by Andersen and for reimbursement of Andersen's expenses. As
of the Petition Date all of the retainer had been applied.

In addition to providing Andersen with the retainer, the Debtors made
the following payments to Andersen during the year immediately preceding
the Petition Date:

           Payment Date                      Payment Amount
           ------------                      --------------
           Aug 12, 2000                          $ 62,500
           Sep 27, 2000                          $ 73,976
           Oct 12, 2000                          $321,200
           Oct 23, 2000                          $ 35,000
            Nov 5, 2000                          $284,700
            Nov 7, 2000                          $540,600

Including the applied portion of the retain, the Debtors made payments
to Andersen aggregating $1,667,976 during the year immediately preceding
the Petition Date on account of fees and expenses incurred by Andersen
on matters relating to the Debtors.

By Affidavit, James A. Schuchard, a partner in Andersen, stated on
behalf of Andersen that the firm was a disinterested party within the
meaning of the Bankruptcy Code and had no connection with the Debtors,
their creditors, the U. S. Trustee, or any other party with an actual or
potential interest in these Chapter 11 cases or their respective
attorneys or accountants, except that Jones, Day, Reavis & Pogue,
counsel for the Debtors, has provided services to Andersen in the past
and continues to provide these services, and Andersen in turn has
provided, and continued to provide, services to Jones Day. In addition,
Andersen has provided, or continues to provide, services to various
parties in interest in these cases, such as E. W. Blanch Holdings, Inc.,
Guildford Mills, Inc., the Bank of New York, Chase Manhattan Trust
Company, N.A., State Street Bank & Trust Company, U. S. Bank & Trust
Company, E. I. DuPont de Nemours & Co., Martha Stewart Everyday by
Kmart, The Bank of Nova Scotia, The Bank of Tokyo-Mitsubishi, Ltd., Bank
One, Texas, N.A., Chase Manhattan Bank, Comerica Bank, Credit Lyonnais
SA, and other creditors and equity holders of these estates, but only in
matters unrelated to these estates and the matters upon which Andersen
is to be employed.

The following individuals from Andersen will be members of the Steering
Committee assigned to this project:

                   Tony Williams
                   Alan Oakley
                   Debra Poole
                   Scott Shimizu
                   Jim Schuchard

The Project Sponsor will be Tony Williams, and the Quality Partner will
be Ed Root. Project Management will be headed by Bryan Dunlap, John
Dillon, Troy Lutes, and Eric Wohl, with other members of the firm
participating as the Core Technology Team, the Core Operations Team, and
the Education Team.

The fees and expenses for this work is estimated to be in the range of
$1,100,000 to $1,300,000 plus expenses.  (Pillowtex Bankruptcy News,
Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900)


SAFETY-KLEEN: Committee Retains Nexsen Pruet as South Carolina Counsel
----------------------------------------------------------------------
The Official Committee of Unsecured Creditors has presented an
Application to Judge Walsh, which has been granted, to employ the law
firm of Nexsen Pruet Jacobs & Pollard LLP, of Columbia, South Carolina,
as local counsel for the Committee in certain litigation and related
matters in South Carolina, retroactive to the commencement of Safety-
Kleen Corp.'s chapter 11 cases.  

The Court has already authorized the retention by the Committee
of the firms of Milbank, Tweed, Hadley & McCloy as lead counsel, and
Morris, Nichols, Arsht & Tunnell as local counsel to represent the
Committee in these Chapter 11 cases. However, the Committee advised
Judge Walsh that it also needs local counsel in South Carolina to
protect its rights in interest in litigation. Heretofore, Safety-Kleen
(Pinewood) filed an adversary proceeding against the State of South
Carolina, Department of Health and Environmental Control, which is
pending in the District Court. See prior entry at [00133]. The Local
Rules of that Court require that the Committee retain local counsel.

The Committee intends to employ Nexsen Pruet to provide the following
services:

(a) Advise the Committee with respect to its rights, powers and duties  
    in the South Carolina matter;

(b) Assist and advise the Committee in its consultations with
    Safety-Kleen relative to the South Carolina matter;

(c) Assist the Committee in its analysis of, and negotiations
    with, Safety-Kleen or any third party concerning the South Carolina
    matter;

(d) Represent the Committee at all hearings and other proceedings in
    the South Carolina matter;

(e) Assist the Committee in preparing pleadings and applications
    as may be necessary in furtherance of the Committee's interests and
    objectives in the South Carolina matters; and

(f) Perform such other legal services as may be required and are
    deemed to be in the interests of the Committee in accordance with
    the Committee's powers and duties as set forth in the Bankruptcy  
    Code in the South Carolina matter.

Julio E. Mendoza, Jr., on behalf of the law firm, has averred that the
firm has no interests adverse to the estate, the Committee or the
Debtors on the matters for which employment was sought and granted, and
that the firm will be seeking compensation at its standard hourly rate
of $150 to $250 for attorneys who are likely to provide services to the
Committee, and $90 for legal assistants. These rates are subject to
periodic hourly rate adjustments in the ordinary course of the firm's
business.

In the interests of full disclosure, Mr. Mendoza stated that the firm
has represented Safety-Kleen as special counsel in matters concerning
Safety-Kleen's benefits programs, but this representation is unrelated
to the South Carolina matter for which the Committee seeks to employ the
firm. The Debtors have consented to the firm's representation of the
Committee, and the firm has established procedures to be sure the two
areas of representation are kept separate. Further, in September 2000
the firm filed documents on behalf of Safety-Kleen to contest an
application by an out-of-state company for a certificate of convenience
and necessity to operate as a transporter of hazardous waste in South
Carolina. The deadline for such filing was imminent and the firm acted
to preserve the Debtors' right to contest the application. The firm can
withdraw without prejudice to the Debtors, who will obtain other
counsel.

The firm currently represents and has represented Bank of America, NA,
Bank One NA, Citibank NA, Comerica, and other pre-petition lenders to
the Debtors on matters unrelated to these Chapter 11 proceedings.
(Safety-Kleen Bankruptcy News, Issue No. 12; Bankruptcy Creditors'
Service, Inc., 6609/392-0900)


SALTON SEA: Standard & Poor's Cuts Senior-Secured Bonds to BBB-
---------------------------------------------------------------
Standard & Poor's lowered its rating on Salton Sea Funding Corp.'s $592
million senior-secured bonds, series B, C, E, and F, to triple-'B'-
minus from triple-'B'. The rating remains on CreditWatch with negative
implications where it was placed Dec. 21, 2000.

This rating action reflects today's rating downgrade of the project's
primary contractual offtaker, Southern California Edison Co. (SoCalEd:
triple-'B'-minus/Watch Neg/'A-3'), to triple-'B'-minus as a result of
the extraordinary events in California's power markets, which have
brought the state's two largest investor-owned utilities to the brink of
bankruptcy.

Salton Sea Funding Corp. is an indirect wholly owned subsidiary of
CE Generation LLC (triple-'B'-minus/stable), which is owned 50%
by MidAmerican Energy Holdings Co. (MEC,triple-'B'-minus/Watch Pos/--)
and 50% by El Paso Energy Corp. (triple-'B'-plus/stable/'A-2'). Salton
Sea Funding is the financing vehicle for MEC's Southern California-based
geothermal power projects, which total about 304 gross MW.

SoCalEd is facing imminent default unless California regulators and
politicians can immediately craft a viable financial solution that
restores liquidity to the utility. Because SoCalEd is counterparty to
long-term contracts with Salton Sea, a bankruptcy filing by the utility
would likely trigger a default under the offtake contracts or a stay
of payments, which in turn would trigger a default under the project
debt indenture. Should SoCalEd file for bankruptcy, Salton Sea would be
at serious risk of falling into the lowest speculative grades or even to
'D'.

Standard & Poor's notes that Salton Sea does not face immediate
liquidity problems as it has a six-month debt service reserve in place,
which may be sufficient to weather the current crisis in California. In
addition, the projects are current in their principal and interest
payments, and SoCalEd is current in its payments to the projects.

Over the next few weeks, Standard & Poor's will be assessing each
of Salton Sea's project contracts and long-term equilibrium economic
positions, as well as the potential for selling into alternative
offtake arrangements that may potentially protect the projects' credit
positions.

Salton Sea Funding is a wholly owned subsidiary of Magma Power Co.,
which in turn is wholly owned by CE Generation LLC. Three groups of
wholly owned CE Generation (the guarantors) with assets in geothermal
production guarantee Salton Sea Funding's obligations: Salton Sea
Guarantors, Royalty Guarantor, and the Partnership Guarantors. Through
the guarantors, CE Generation owns and operates the Salton Sea Units 1,
2, 3, and 4; the Imperial Valley projects (including the Vulcan, Del
Ranch, Elmore, and Leathers projects); and the Royalty projects. The
total capacity of these geothermal projects is about 304 MW gross and
267 MW net, Standard & Poor's said.


SEARS, ROEBUCK: December Comparable Store Sales Decline by 1.1%
---------------------------------------------------------------
Sears, Roebuck and Co. (NYSE: S) reports that total domestic store
revenues for the five weeks ending December 30, 2000 were $4.42 billion.
Comparable domestic store revenues decreased 1.1 percent. Total domestic
store revenues decreased 0.1 percent compared to $4.43 billion for the
five weeks ending January 1, 2000.

"Like other retailers, general industry softness and difficult weather
conditions dampened our holiday season sales," said Chairman and Chief
Executive Officer Alan J. Lacy. "Despite the challenging environment, we
posted solid sales in a number of leadership categories. In hardlines,
appliances posted solid gains, while sporting goods and lawn and garden
generated strong increases. Footwear and home fashions also performed
well. Off the mall, we were very pleased with the results posted by
Sears Tire Group and The Great Indoors, which both showed double-digit
increases."
                                            Sears, Roebuck and Co.
                                           5 Weeks         48 Weeks

    2000 Domestic Store Revenues*      $4,422,300,000   28,190,400,000
    1999 Domestic Store Revenues*       4,426,100,000   27,196,800,000
    Percent Change                          (0.1)%             3.7%
    Comparable Domestic Stores % Change     (1.1)%             2.4%

    2000 Total Revenues*               $5,612,100,000    8,134,100,000
    1999 Total Revenues*               $5,587,600,000    6,807,700,000
    Percent Change                          0.4%               3.6%

     * Revenue amounts for both 1999 and 2000 reflect the implementation
       of the SEC staff accounting bulletin (SAB No. 101) for licensed
       business revenue.


                  Company Records Fourth Quarter Charges
                 for Store Closures and Asset Impairment

The company also announced that it had initiated the closing of 89
under-performing stores, including 53 NTB stores, 30 hardware stores and
4 full-line stores (2 include Sears Auto Centers). The store closings
were announced to affected associates on December 29, 2000. The company
plans to complete the closings in the first quarter of 2001. Fourth
quarter 2000 results will include a non-recurring pre-tax charge of
approximately $150 million ($100 million after tax) related to asset
write-downs, severance and other exit costs.

Fourth quarter results will also include a one-time pre-tax charge of
approximately $115 million ($100 million after tax) related to Sears
Termite and Pest Control. Due to ongoing and anticipated future losses,
a long-term asset impairment expense is being recognized in fiscal 2000.
The impairment expense primarily represents a non-cash charge for
goodwill.

"Our actions reflect our heightened focus on productivity and returns.
We will continue to identify opportunities to more effectively deploy
resources and enhance overall company profitability," said Lacy. "By
closing under-performing NTB and hardware stores we will enhance the
profitability of Sears off-the mall businesses. Sears Termite and Pest
control is a non-core business for Sears, and we are evaluating
strategic options for this business."

Sears, Roebuck and Co. is a leading U.S. retailer of apparel, home and
automotive products and services, with annual revenue of nearly $40
billion. The company serves families across the country through
approximately 860 full-line department stores, approximately 2,100
specialized retail locations, and a variety of online offerings
accessible through the company's Web site at http://www.sears.com

The company makes available by phone a recorded message on sales
performance of its domestic stores.  The message is updated weekly and
can be heard by calling 847-286-6111.


STROUDS, INC.: Proposes Key Employee Retention Program
------------------------------------------------------
Home decor retailer Strouds, Inc., says that, as in any large chapter 11
case, its key employees and executives are aware that the Company
examining many reorganization scenarios and that many middle and upper
management positions may be at risk. With 16 store closings to date and
the prospects of further closings and asset sales, the harsh realities
of the restructuring process have already caused significant turnover in
the Debtor's workforce. Strouds counts 445 departures since the Petition
Date, of which 56 were key employees.

"The Debtor believes," Bennett J. Murphy, Esq., and Kelly K. Frazier,
Esq., of Hennigan, Bennett & Dorman tell Judge Walrath, "that the most
cost-effective was to bring this attrition under control, to create
positive morale, and to preserve the assets of the bankruptcy estate is
to offer a financial incentive that will (with certain exceptions) be
paid only if the covered employee remains working for the Debtors
through a confirmed plan or plans of reorganization."

The Debtors propose an $847,000 Retention Plan that classifies 41
employees in three Groups and is premised on a reorganization of the
Debtor's Estate:

                                               Reorganization
   Class          Description                         Bonus
   -----          -----------                     --------------
   Level I        Senior Executives who           35% of Gross
                  report to the CEO               Annual Salary
   
   Level II       Employees with critical         20% of Gross
                  management responsibility       Annual Salary

   Level III      Employees with critical         15% of Gross
                  administrative responsibility   Annual Salary

In the event that the chapter 11 case results in a sale of substantially
all of the Debtor's assets, these Critical Employees would be entitled
to a cash bonus equal to: (i) the amount of the Reorganization Bonus for
Critical Employees that are not given an offer of continued employment
on equal or better terms by the purchaser in connection with the Asset
Sale; or (ii) 50% of the Reorganization Bonus for Critical Employees
that receive and accept an Equivalent Offer.


SUN HELATHCARE: Selling Chicago Property for $1,650,000 in Cash
---------------------------------------------------------------
Sun Healthcare Group, Inc., and its debtor-affiliates seek the Court's
authority (i) to sell, free and clear of liens, claims and encumbrances
approximately 1.03 acres of vacant land located in Chicago, Illinois to
ViCor Development, Inc. for $1,650,000, pursuant to sections 363(b) and
363(f) of the Bankruptcy Code, and (ii) for exemption, pursuant to
section 1146(c) of the Bankruptcy Code, from the payment of stamp or
similar tax in connection with the sale.

The Debtors submit that the the Property, located near the intersection
of North Sheridan Road and Lawrence Avenue, is not necessary for their
reorganization, the terms for the deal are favorable and the proposed
sale will bring substantial value to Sun's estates.

The Debtors obtained ownership of the Property from Assisted Living
Investments, LLC, of which SunBridge was a member. ALI acquired the
Property, at the request of SunBridge and its corporate parent Sun
Healthcare Group, Inc., with the original intent of developing and
operating an assisted living facility until such time as SunBridge was
to "net lease" such facility from ALl. Subsequently, the Debtors decided
that, as an integral part of their business and reorganization plan,
they would no longer develop and operate assisted living facilities.
Accordingly, they identified the Property along with other properties
for sale to raise cash necessary to fund their reorganization efforts.

To market the Property, the Debtors engaged the services of their
Broker, RE\Source Commercial Real Estate Services, whom they have
obtained the Court's authority to employ. As a result, seven parties
expressed an interest in purchasing the Property. Out of these, three
submitted written offers, including ViCor. In its initial proposal,
ViCor offered to purchase the Property for $1,550,000, with
contingencies relating to zoning and regulatory approvals included in
its offer.

In the face of competing offers, ViCor raised its purchase price to
$1,650,000 and to remove the contigencies. After negotiations, the
parties signed a contract of sale. $25,000 of the purchase price is
payable as earnest money deposit and the balance to be paid at closing
which is anticipated to be December 29, 2000. If the Contract is
terminated without Purchaser's fault, the Earnest Money shall be
returned to Purchaser, but if the termination is due to the Purchaser's
fault, it will be retained by the Seller as liquidated damages. Upon
closing, the Seller SunBridge shall pay the Broker its commission in the
amount of 5% of the Purchase Price.

The Debtors represent that the Contract is a result of the Broker's
extensive marketing efforts and represents the highest and best offer
that the Debtors received to date. The Debtors also submit that the
Contract is the product of good faith and arms-length negotiations
between the parties. Upon information and belief, the Purchaser is
creditworthy and possesses the financial resources to close the
transactions contemplated by the Contract. Mr. Thomas Witt (Director of
Mergers and Acquisitions of Sun Healthcare Group, Inc.) and Mr. Richard
Reedy (owner of RE\Source Commercial Real Estate Services) have each
executed an affidavit in support of this Motion.

The Debtors anticipate the Contract to be closed promptly following
approval by this Court and propose that the Property be sold to the
Purchaser pursuant to the terms of the Contract, but subject to higher
and better offers (Competing Offers) without further marketing efforts.

The Debtors propose that any Competing Offer must equal at least 110% of
the Purchase Price and be upon the same or better terms and conditions
as the Contract.  (Sun Healthcare Bankruptcy News, Issue No. 16;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


THERMATRIX INC.: Wins Approval of 2nd Amended Disclosure Statement
------------------------------------------------------------------
The United States Bankruptcy Court for the Central District of
California ruled that the Second Amended Disclosure Statement that
accompanies the Second Amended Plan of Reorganization, originally filed
November 21, 2000, by Thermatrix Inc. (OTC:TMXIQ) contains adequate
information and that the Company is now authorized to disseminate the
Second Amended Reorganization Plan and Disclosure Statement to creditors
and interest holders and to solicit consents.

Theramatrix anticipates mailing copies of the Plan, Disclosure Statement
and ballots to creditors today.  Copies of the Plan and Disclosure
Statement should be available on the Company web site at
http://www.thermatrix.comtomorrow.   

The Plan is a reorganizing plan by Thermatrix and a liquidating plan by
Wahlco, Inc. ("Wahlco") and Wahlco Engineered Products, Inc. ("WEP")
and was proposed jointly by the Debtors-in-Possession and the Official
Committee of Creditors Holding Unsecured Claims.  The confirmation
hearing on the Plan is scheduled for February 13, 2001 and the Effective
Date of the Plan is expected to be on or about February 28, 2001.

As previously announced, the proponents seek to accomplish payments
under the Plan from (1) revenues generated from the business operations
of Thermatrix; (2) an advance payment from The Dow Chemical Company on a
contract utilizing the Thermatrix FTO technology; (3) the issuance of
new subordinated debt; (4) a new revolving line of credit; and (5) the
sale of the assets of Wahlco and WEP.

The closing of $3.25 million of new subordinated debt and a $3.0 million
line of credit will be completed on or about the Effective
Date. As previously announced, the bankruptcy court has approved the
sale of the assets of Wahlco and WEP. The Company expects that both
sales will be completed by January 15, 2001.

Under the provisions of the Plan, unsecured creditors will receive $0.40
in full settlement of each dollar of allowed claim. The
existing Preferred and Common Stock of Thermatrix, as well as all stock
options, warrants and other such instruments, will be cancelled. As
such, the Company does not believe these shares will have any value. A
total of 20,000,000 shares of New Common Stock will be issued to the
providers of the new subordinated debt and the existing Preferred
shareholders. "We believe the proposed Plan, which was developed in
concert with the Creditors' Committee, is the most appropriate way of
settling the bankruptcy estates," said Daniel S. Tedone, President
and Chief Executive Officer. "When the Plan is confirmed, a highly-
focused, revitalized Thermatrix will emerge from Chapter 11 protection
and be better able to supply and service its customers on a global basis
in its core business -- the application of its flameless thermal
oxidation technology."

Thermatrix is an industrial company providing air pollution control
solutions, based on its unique and patented thermal oxidation
technology, to the global market of continuously operating facilities.
The technology may be employed in a highly effective manner across a
broad range of industries that include refining, chemical,
pharmaceutical, pulp and paper, and industrial manufacturing.


VLASIC FOODS: Misses Interest Payment; Lazard Working Overtime
--------------------------------------------------------------
Credit ratings for Cherry Hill, N.J-based Vlasic Foods International
Inc., producer of pickles and Swanson and Hungry-Man frozen foods, were
downgraded by rating agency Standard & Poor's last week after the
company failed to make a $10.25 million interest payment.  

Standard & Poor's cut Vlasic's:

     * corporate credit rating to SD (selective default) from CC;
     * subordinated debt rating to D from C; and
     * senior secured bank loan rating to CC from CCC-minus.

Vlasic has already suggested it may seek bankruptcy protection.  A
report circulated by Reuters says that Vlasic has hired investment firm
Lazard Freres & Co. to help Vlasic explore its strategic alternatives.  


* Bond pricing for the week of January 8, 2001
----------------------------------------------
Data is supplied by DLS Capital Partners, Inc. Following are
indicated prices for selected issues:

Amazon 4.75 '09                            35 - 37
Armstrong 9.75 '08                         44 - 46
Bayou Steel 9.5 '08                        49 - 51
Chiquita Brands 9.625 '04                  35 - 43
CKE Restaurants 4.25 '04                   43 - 45
CMI Industries 9.5 '03                     40 - 46
Conseco 8.796 '27                          50 - 52
Federal Mogul 7.5 '04                      30 - 32
Federal Mogul 7.5 '09                      26 - 29
Golden Books 10.75 '04                     19 - 21
J.C. Penney 8.125 '27                      55 - 57
Oakwood Homes 7.875 '04                    49 - 41
OpTel 11.5 '08                             56 - 58
Pathnet 12.25 '08                          17 - 19
Rite Aid 5.25 '02                          30 - 34
TWA 11.5 '04                               56 - 58
TWA 12 '02                                 53 - 55
Xerox 5.5 '03                              57 - 59
Xerox 5.25 '03                             57 - 59
Xerox Capital 5.875 '04                    57 - 59
Xerox Capital 8.0 '27                      26 - 28


                           *********

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

A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.

Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles available
from Amazon.com -- go to
http://www.amazon.com/exec/obidos/ASIN/189312214X/internetbankrupt
-- or through your local bookstore.

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.


                           *********


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 USA, and Beard Group,
Inc., Washington, DC USA.  Debra Brennan, Yvonne L. Metzler, May
Guangko, Aileen Quijano and Peter A. Chapman, Editors.

Copyright 2001.  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-
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For subscription information, contact Christopher Beard at 301/951-6400.

                     *** End of Transmission ***