TCR_Public/010125.MBX         T R O U B L E D   C O M P A N Y   R E P O R T E R

            Thursday, January 25, 2001, Vol. 5, No. 18

                           Headlines

APCOA/STANDARD: Moody's Downgrades All Ratings & Outlook Negative
ARMSTRONG HOLDINGS: Paying Sales, Property, & Franchise Taxes
BEPAID.COM: Can't Pay, So Files Chapter 7 Bankruptcy Petition
COMPLETE MANAGEMENT: Disclosure Statement Hearing Set for Feb. 16
eTOYS: Misses Payments to Creditors

FLIPSIDE.COM: Closes Office & Cuts 30% of Staff
FRUIT OF THE LOOM: Creditors Oppose Claims Objection Protocol
GENESIS HEALTH: Settles Medicare Overpayment Claims With HHS
GLOBAL AVIATION: Files for Chapter 11 Protection in New York
ICG COMMUNICATIONS: To Prioritize Reclamation Claims

iCOPYRIGHT: Board Votes To Shut Digital Content Venture Down
KRIGEL'S JEWELERS: Files for CHapter 11 Protection in Kansas City
LEGEND AIRLINES: Looks For New Funding After Lender Defaults
LERNOUT & HAUSPIE: Proposes Key Employee Severance Program
LERNOUT & HAUSPIE: Inks $60MM DIP Facility with Cerberus/Gabriel

LETSBUYIT.COM: Raises $2.32 Million of $3.73 Needed
LIDS CORP.: Wells Fargo Extends $25 Million DIP Loan
LOEWEN GROUP: Settles Claims with Bayview Shareholders
LONDON FOG: Seeks Fifth Exclusivity Extension to April 19
LTV CORPORATION: Continues Workers Compensation Programs

NETROM INC: Hires James Toreson as New CEO
OWENS CORNING: Enters Settlement Pact re GBF/Pittsburgh Landfill
RG RECEIVABLES: S&P Raises VARIG Securitization Rating to B
SERVICE MERCHANDISE: Gets $35MM Committed Vendor Credit Line
SERVICE MERCHANDISE: Hires Michael E. Hogrefe as New SVP & CFO

US AUTOMOTIVE: Selling All Assets to FDP Virginia

                           *********

APCOA/STANDARD: Moody's Downgrades All Ratings & Outlook Negative
-----------------------------------------------------------------
Moody's Investors Service lowered all ratings of APCOA/Standard
Parking Inc. Said ratings include:

     (a) $40 million bank facility downgraded to B2 from B1

     (b) $140 million 9.25% senior subordinated notes due 2008
         downgraded to Caa2 from Caa1,

     (c) $70 million 11.25% senior discount notes (issued by the
         parent company AP Holdings Inc) lowered to Ca from Caa2.

     (d) The senior implied rating was lowered to Caa1 from B2

     (e) Issuer rating lowered to Caa1 from B3.

Rating outlook is negative.

Moody's said the rating change and negative outlook were prompted
by the company's continued high leverage relative to expectations
at the time of the original offering in 1998 and the tight
liquidity position with $7 million in cash and $5 million
available on the revolver. Wit the negative outlook, ratings
could fall again over the intermediate term if leverage cannot be
reduced or the holding company does not successfully resolve its
issues related to the AmeriServe bankruptcy.

The ratings reflect the company's leveraged financial condition,
the constrained liquidity position, and the intensely competitive
parking services industry, according to Moody's. The risk that
Holberg's exposure to the AmeriServe bankruptcy is not
successfully resolved and slowness in achieving administrative
synergies from the 1998 APCOA and Standard Parking merger also
restrain the rating. Moody's also relates that the increased
outsourcing of parking management by building owners, the
company's significant market position within the parking
industry, and the increasing proportion of higher-margin managed
parking facilities relative to leased facilities are strengths
for the credit.

Moody's further states that:

     (a) The B2 rating on the bank facility (issued by
         APCOA/Standard Parking Inc) considers that the company's
         real and personal property secure this loan and that the
         company's domestic operating subsidiaries provide
         guarantees. In a default scenario, Moody's believes that       
         the bank lenders could achieve full recovery.

     (b) The Caa2 rating on the senior subordinated notes (issued
         by APCOA/Standard Parking Inc) reflects their
         contractual subordination to a substantial amount of
         debt including the bank facility and trade accounts
         payable. The company's twelve most significant operating
         subsidiaries do provide subordinated guarantees. Moody's
         expects that the company's likely recovery value in a
         default scenario would not suffice to prevent a material
         loss on these notes.

     (c) The Caa3 rating on the senior discount notes (issued by
         AP Holdings Inc) recognizes that the notes are
         structurally subordinate to all debt obligations at
         APCOA/Standard Parking Inc and the operating
         subsidiaries. AP Holdings Inc contributed the proceeds
         of $40.3 million from this discount note issue to
         APCOA/Standard Parking Inc in the form of redeemable
         preferred stock. Interest payments (at AP Holdings Inc)
         and preferred dividend payments (at APCOA/Standard
         Parking Inc) will pay in kind until the note balance
         accrues to $70.0 million in March 2003 when payments in
         cash begins. Moody's anticipates that holders of these
         discount notes could experience a complete loss in a
         distressed scenario.

APCOA/Standard and AmeriServe were the two principal businesses
under the common ownership of Holberg Industries Inc., Moody's
said. AmeriServe filed for bankruptcy in January 2000 and,
following liquidation of most assets, its creditors have
recovered only about one-third of the $1.1 billion of pre-
bankruptcy debt. While Holberg's creditors have the right to
regard the AmeriServe bankruptcy as an event of default, Moody's
believes however that this is an unlikely scenario given that
such action would trigger change of control provisions that
compel APCOA to repurchase all rated debt. The APCOA/Standard
Parking and AP Holdings debt is senior to any debt at Holberg and
Moody's expects settlement of the rated debt would exhaust all
enterprise value.

According to Moody's, the company has not achieved administrative
synergies from the 1998 APCOA and Standard Parking merger as
quickly as anticipated. Delays in finding administrative
synergies have led to operating profitability substantially less
than 1998 expectations. However, the company has managed cost
control of individual contracts reasonably well in meeting our
gross profitability expectations of around 22%. Moody's believes
that the 4th Quarter 2000 special charge of $1.4 million to
reduce annual administrative expense by $2 million is prudent,
but administrative costs will still remain higher than originally
projected in 1998.

If the company is able to become cash-flow neutral over the short
term, the current liquidity position allows for working capital
variation in daily operations, according to Moodys. Increased
liquidity would allow the company to seek new contracts that
require permanent working capital investment as well as buffer
against external shocks.

APCOA/Standard Parking Inc, headquartered in Chicago, Illinois,
manages about 1900 parking facilities with 1.0 million parking
spaces across the United States and Canada.


ARMSTRONG HOLDINGS: Paying Sales, Property, & Franchise Taxes
-------------------------------------------------------------
Stephen Karotkin, Esq., and Debra A. Dandeneau, Esq., of Weil,
Gotshal & Manges LLP, asked Chief Judge Joseph Farnan to grant
Armstrong Holdings, Inc., authority to pay prepetition sales,
use, property, franchise, and other "trust fund" taxes to the
respective taxing authorities in the ordinary course of the
Debtors' businesses, without prejudice to the Debtors' rights to
contest the amounts of any taxes on any grounds which arise.

In the ordinary course of its businesses, the Debtors bill sales
tax on non-exempt sales of products. Sales tax is billed to the
customer on its invoice, collected, and subsequently remitted by
the Debtors to the applicable taxing authorities. Sales taxes
accrue on a periodic basis and are calculated based upon a
statutory percentage of the sale price. For the most part, sales
taxes are paid in arrears. Some jurisdictions, however, require
the Debtors to remit estimated sales taxes on a monthly or
quarterly basis. The applicable Taxing Authority requires a
subsequent "true up" to determine any payment deficiency or
surplusage for the period, after which the applicable refund or
payment is then made.

The Debtors also are obligated to remit use taxes on a periodic
basis to the applicable taxing authorities. AWI incurs these
taxes with its purchase of taxable equipment and supplies for its
own use, in circumstances where the vendor failed to collect a
sales tax from AWI. Use taxes accrue on a monthly basis and are
remitted to the relevant taxing authorities on the same basis as
sales taxes.

As of the Petition Date, AWI had collected and accrued
approximately $496,363.00 in sales and use taxes on behalf of the
taxing authorities. As of the Petition Date, AWI had not remitted
any of this amount to the taxing authorities.

Property taxes are payable on certain real and personal property
owned by AWI within the United States. Such taxes normally accrue
on an annualized basis and are paid in installments throughout
the calendar year. The combined estimated real and personal
property taxes due through the fourth quarter of the 2000
calendar year are approximately $865,502.00.

Franchise taxes are payable on certain franchises owned by AWI
within the United States. Such taxes accrue and are paid on an
annualized basis when a request for an extension of time to file
the tax return is made with the various states. The estimated
franchise taxes for the 2000 calendar year are $458,350.00.

The Debtors request authority to pay these taxes in the ordinary
course of their business operations on an unaccelerated basis, as
the payments become due. To the extent that any checks issued by
AWI prepetition on account of the taxes were not cleared as of
the Petition Date, AWI seeks authorization from the Court for the
banks to resubmit and honor the checks and any wire transfer
requests. To the extent that the taxing authorities have not
otherwise received payment, the Debtors seek authority to pay
such obligations through replacement checks, or provide for other
means of payment to the taxing authorities, to the extent
necessary to pay all outstanding taxes due as of the Petition
Date, inclusive of the Debtors' obligations for taxes on real and
personal property, throughout the remainder of the 2000 calendar
year.

After consideration of the Debtors' motion and argument, Judge
Farnan granted the motion and directed payment of the taxes on
the terms and conditions stated in the motion, without prejudice
to the rights of the Debtors to contest amounts due on any
appropriate basis. (Armstrong Bankruptcy News, Issue No. 3;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


BEPAID.COM: Can't Pay, So Files Chapter 7 Bankruptcy Petition
-------------------------------------------------------------
Bepaid.com voluntarily filed for chapter 7 bankruptcy protection
with the U.S. Bankruptcy Court, Southern District of New York,
according to LocalBusiness.com. Founded in Iceland and then
relocated to New York in March, the company sought to create a
business around paying consumers to view advertisements on the
Internet using its proprietary software.

The 25-employee company was launched on a $4 million investment
from Icelandic investors. According to court records, Bepaid.com
had assets of $236,000, including $99,000 in Beenz, the Internet
currency floated by New York's Beenz.com, and another $72,000 in
receivables from Phonefree.com. The company listed liabilities of
$638,000, including $300,000 owed to parties in Iceland and
another $20,000 owed to Hill Knowlton, a public relations firm in
New York. The company's U.K. based subsidiary, BePaid UK Limited,
entered liquidation proceedings in November, according to court
documents. (ABI World, January 23, 2001)


COMPLETE MANAGEMENT: Disclosure Statement Hearing Set for Feb. 16
-----------------------------------------------------------------
On January 17, 2001, Complete Management, Inc. filed a Chapter 11
Amended Plan of Reorganization and related Disclosure Statement
with the U.S. Bankruptcy Court, which subsequently scheduled a
February 16th hearing to consider approving the Disclosure
Statement's adequacy. The Company has been operating under
Chapter 11 protection since October 12, 1999.  (New Generation
Research January 23, 2001)


eTOYS: Misses Payments to Creditors
-----------------------------------
Perhaps signaling eToys' place on the endangered dot-com list, a
creditor has gone public complaining that the online retailer has
not paid its bills, according to the Daily News. RemedyTemp,
which does business as Remedy Intelligent Staffing, said it
provided temporary staffing for eToys' customer service center
and its distribution centers during the Christmas rush last
month. Now, in a move it says reflects eToys' failure to pay
invoices, RemedyTemp expects to post a charge of about $2
million, or 14 cents a share, the first fiscal quarter ended Dec.
31. A RemedyTemp executive accused eToys of failing to live up to
its commitments.

"We are extremely disappointed that eToys suddenly stopped making
its payments under an explicit plan, particularly following their
history of consistent, prompt payments," said Alan M. Purdy,
RemedyTemps' senior vice president and chief financial officer.
He said the charge his company plans to take represents the
entire balance due from eToys.

Several calls to eToys were not returned for comment. However,
the CNET news service quoted eToys spokesman Gary Gerdemann as
confirming that some creditors have not been paid. (ABI World,
January 23, 2001)


FLIPSIDE.COM: Closes Office & Cuts 30% of Staff
-----------------------------------------------
Flipside.com, a subsidiary of Vivendi Universal, said that it has
closed its Seattle office and laid off 39 employees to focus on
its core business, according to CNET News.com. Vernon Thompson, a
spokesman for the unit, said the online game site last week
transferred 30 percent of its 37 staffers in Seattle to Vivendi
Universal Sierra Online's Bellevue, Wash., offices. The remainder
was laid off.

Flipside was formed in March 2000 following the merger of online
game sites Won.net and PrizeCentral.com. It makes money through
advertising and draws viewers by offering cash and prizes.
Although analysts say web surfers are signing up to play online
games, web companies that rely on advertising revenues have hit
hard times. Thompson called the move strategic and not primarily
aimed at cutting costs. He declined to say whether the privately
held company is profitable. (ABI World, January 23, 2001)


FRUIT OF THE LOOM: Creditors Oppose Claims Objection Protocol
-------------------------------------------------------------
South Florida Stadium Corp., Miami Dolphins Ltd., Huizenga
Holdings Inc., and Florida Panthers Hockey Club Ltd., object to
Fruit of the Loom's proposed procedures for claims objection and
settlement.

On August 23, 1996, Union Underwear entered agreements with the
above parties concerning stadium naming rights and sponsorship
for entertainment and promotions. On April 7, 2000, the Court
approved a stipulation between the parties and permitted the
creditors to file a proof of claim. Proofs of claim were filed on
August 14, 2000.

Todd C. Schiltz Esq., from the law firm Wolf, Block, Schorr &
Solis- Cohen, counsel for the creditors, recites Fruit of the
Loom's proposed procedures for claims objection:

     (A) Debtor is permitted to object to claims on enumerated
         grounds including:

        (1) the description in the claim is insufficient

        (2) the claim is overstated

        (3) Debtors books/records show no basis for allowance of
            the claim

     (B) Separate hearings may be held on each of the enumerated
         grounds raised

Mr. Schiltz argues that this procedure authorizes separate and
multiple hearings on any objection raised by Fruit of the Loom.
Admittedly, separate hearings may be appropriate in other
contexts, but in the above case would lead to multiple hearings
on the same issues. This would be wasteful for the Court, the
creditors and Fruit of the Loom's estate. If the procedures are
not changed, creditors may have to bring witnesses and evidence
to Delaware from Florida. This would cause considerable hardship
and expense if forced to do so more than once. A consolidation
would serve judicial economy.

Allied Signal Inc., American Cyanamid Company, Rutgers, The State
University of New Jersey, Columbia University, Mount Union
College, The BOC Group Inc., University of Illinois, Ciba
Specialty Chemicals Corporation, University of Minnesota, Pure-
Lab Company of America and Western Michigan University object to
Fruit of the Loom's motion authorizing rejection of executory
contracts.

The objectors make two claims to support their position. First,
many of the objectors have already settled their matters with
Fruit of the Loom through cash payments and otherwise.
Essentially, they have already met their obligations. Second,
many of the parties subject to the motion have not been contacted
or served with a copy of the motion.

Jeffrey D. Prol Esq., from Lowenstein Sandler of Roseland, New
Jersey states that the term "executory contract" is not defined
in the Bankruptcy Code. However, under Section 365, numerous
courts have offered similar definitions. See In re Columbia Gas
System Imc., 50 F. 3d 233 (3rd Cir. 1995), citing Sharon Steel
Corp. v. National Fuel Gas Distribution Corp., 872 F. 2d 36, 39
(3rd Cir. 1989). Unless both parties to a contract have
unperformed obligations that would constitute a material breach
if not performed, the contract is not an executory contract under
Section 365. Therefore, the objectors have rendered full
performance of their obligations making their agreements with
Fruit of the Loom something other than executory contracts and
cannot be rejected by Debtor. (Fruit of the Loom Bankruptcy News,
Issue No. 20; Bankruptcy Creditors' Service, Inc., 609/392-0900)


GENESIS HEALTH: Settles Medicare Overpayment Claims With HHS
------------------------------------------------------------
As previously reported, HHS determined that it had made
Prepetition Overpayments to the Genesis Health Ventures, Inc. in
the amount of $2,332,950 and Prepetition Overpayments to The
Multicare Companies, Inc. in the amount of $544,015 for services
provided by the Debtors to Medicare beneficiaries pursuant to
provider agreements. HHS asserted that it had the right to setoff
or recoup such amounts from payments owed to the Debtors. In
order to have regular payments from HHS, and to provide adequate
protection to HHS for its alleged setoff or recoupment rights,
the GHV Debtors and Multicare Debtors entered into respective
stipulations with HHS.

With regard to the GHV Debtors, the HHS Stipulation provides that
the Debtors will repay the Prepetition Overpayments in six
monthly installments of $388,825. The Debtors have made four of
the six required Monthly Payments. The Multicare Stipulation with
HHS provides that the Debtors will repay the Prepetition
Overpayments in three monthly installments of $181,338. The
Multicare Debtors have made all of the required Monthly Payments.

The HHS Stipulation also provides that if HHS subsequently
determines that it has underpaid the Debtors, HHS would credit
such underpayment against the Monthly Payments.

The Amendments

Subsequent to the Court's approval of the HHS Stipulation, HHS
revised its calculation of the amount of Prepetition Overpayments
to GHV to $2,003,556.

HHS advised both the GHV Debtors and the Multicare Debtors that
due to subsequent audits and other matters, future calculations
could result in an increase in the amount of the Prepetition
Overpayments.

To provide adequate protection to HHS in the event the
Prepetition Overpayments are larger than anticipated, and with
respect to the GHV cases, also to reduce the remaining Monthly
Payments, the parties entered into an Amended Stipulation which
provides that:

     (1) GHV's last Monthly Payments will be reduced to $59,431    
         instead of $388,825;

     (2) In the event HHS determines it owes any underpayments to
         any of the GHV Debtors or Multicare Debtors and setoff
         the underpayments against the Prepetition Overpayments,
         in accordance with the HHS Stipulation, HHS shall  
         provide written notice to the Debtors within ten
         business days of such action;

     (3) In order to provide adequate protection to HHS in the
         event the prepetition overpayments actually exceed the
         amounts specified in the Amended Stipulation, the
         Debtors agree that HHS may withhold or "freeze" certain
         amounts that may in the future be determined to be owed
         to the Debtors. Such amounts relate, in large part, to
         claims made by the Debtors for service periods prior to
         the implementation of the prospective payment system for
         amounts that have been disallowed by the fiscal
         intermediary or HHS and are subject to review or appeal.
         HHS's administrative freeze will continue until the
         earlier of
         
        (i) the determination by HHS that it has a liquidated
            claim against the Debtors which would give HHS a
            right of setoff against the frozen funds, or

       (ii) the confirmation of a plan of reorganization, at
            which time either party may file a motion with the
            Bankruptcy Court seeking an adjudication with respect
            to the disposition of such frozen funds.

Judge Walsh has given his stamp of approval to the Stipulations.
(Genesis/Multicare Bankruptcy News, Issue No. 7; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


GLOBAL AVIATION: Files for Chapter 11 Protection in New York
------------------------------------------------------------
Twenty months after it began operations at the Griffiss Business
and Technology Park in upstate New York, Global Aviation
Services, an aircraft maintenance and repair company, has filed
for chapter 11 bankruptcy, according to the Central New York
Business Journal. Global and its parent company, Quebec-based
Aviation Resources Limited Liability Corp., are more than $6.7
million in debt and have more than 100 creditors. One of the
creditors is Griffiss Local Development Corp. (GLDC), the
economic-development organization responsible for managing and
attracting new businesses to the former military base. GLDC is
owed more than $774,000.

Robert Duchow, communications and marketing specialist for the
Mohawk Valley EDGE, an economic development agency, said it is
too early to tell what will happen, but that there is still hope
that Global will survive and eventually thrive in Rome, N.Y.
"There have been several companies that have already expressed an
interest in taking a look at Global Aviation Services," he said.
Expectations were high when Global began operations in Rome in
1999. The state of New York along with GLDC, offered
approximately $5.5 million in incentives for Aviation Resources
LLC to establish its aircraft industry at Griffiss in hopes that
the company - and the industry -would thrive at the former base.
It was extolled as a major step in the redevelopment of the
former military base, which closed in 1995, and company officials
projected that the workforce might reach close to 500 by the time
its lease expired in 2006. But those hopes have not materialized.
(ABI World, January 23, 2001)


ICG COMMUNICATIONS: To Prioritize Reclamation Claims
-------------------------------------------------------
ICG Communications, Inc. filed a Motion seeking an Order which:

   (a) Confirms a grant of administrative status to obligations
       arising from the postpetition delivery of goods;

   (b) Establishing authority for the Debtors to pay certain   
       expenses in the ordinary course of their business;

   (c) Confirming administrative expense treatment, at a minimum,  
       for certain holders of valid reclamation claims; and

   (d) Prohibiting third parties from reclaiming goods or
       interfering with the delivery of goods to the Debtors.

In granting this Motion, the Bankruptcy Court ordered that
vendors will have the status of administrative claimants for
undisputed obligations arising from outstanding orders relating
to shipments of goods received and accepted by the Debtors after
the Petition Date.

The Court further authorized the Debtors to pay their undisputed
obligations arising from postpetition shipment or delivery of
goods by vendors and accept delivery under the Debtors' customary
practice in the ordinary course prior to the commencement of
these Chapter 11 cases, and to pay for goods in transit on and
after the Petition Date.

Vendors were granted administrative status, at a minimum, for the
value of goods received and accepted by the Debtors, if and to
the extent that the vendor has made a valid reclamation demand,
but only to the extent that the vendor proves the validity of its
demand and the amount of its claim. Nothing in this Order
prejudices the vendors' rights to seek a lien to secure their
claim by Order of the Court.

If the vendor asserts a timely and proper reclamation demand with
respect to goods received and accepted by the Debtors, the Court
then ordered that the Debtors were deemed to have waived the
following defenses:

     (a) The Debtors' use, sale or commingling of goods after the
         date and time that the Debtors receive a reclamation   
         demand with respect to the goods;

     (b) A reclamation claimant's failure to take any and all
         possible "self-help" measures with respect to the goods;

     (c) The failure of a reclamation claimant to institute an
         adversary proceeding against the Debtors seeking to
         enjoin them from using or selling such goods or any
         other similar relief.

Judge Robinson further enjoined all vendors from reclaiming or
interfering in any way with the postpetition shipment or delivery
of goods to the Debtors without first making application to and
obtaining an Order of the Court. (ICG Communications Bankruptcy
News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-
0900)


iCOPYRIGHT: Board Votes To Shut Digital Content Venture Down
------------------------------------------------------------
The board of directors for iCopyright on voted to shut the
company down after it failed to improve its financial health
following layoffs in December, according to LocalBusiness.com.
Based in Renton, Wash., the company automated the licensing and
delivery of digital content, giving online publishers new ways to
sell their products.

An employee with the company said that the company held a meeting
Friday afternoon to determine whether or not to continue as a
business. Later, the employee said that a general announcement
would be made for employees on Saturday. "It's pretty much
guaranteed that they're going to be closing up shop," said the
employee. Company officials could not immediately reached for
comment.

According to the employee, after the company trimmed its staff by
14 percent in December, the Board said that they (iCopyright) had
"two to three months" to prove the concept. To help matters, the
Board granted the company a "$2 million to $3 million" bridge
loan. But when revenues continued to decline, they decided to
liquidate the business and give the staff some kind of severance,
said the employee. (ABI World, January 23, 2001)


KRIGEL'S JEWELERS: Files for CHapter 11 Protection in Kansas City
-----------------------------------------------------------------
The 90-year-old Kansas City area chain Krigel's Jewelers filed
for Chapter 11 bankruptcy court protection, The Kansas City Star
relates.  Company owner and president Scott Krigel disclosed that
ARY Jewellers, bullion dealers and retail jewelers from Dubai in
the United Arab Emirates, intends buy the 21-store chain and turn
it into a national operation. Based in Overland Park, Krigel's
has stores in Kansas, Missouri, Ohio and Illinois

Krigel's attorney, James Bird, Esq., said that before filing the
bankruptcy petition, the company consulted and got majority of
its 63 creditors, to whom the company owes approximately $10
million dollars, to agree to the bankruptcy plan. As part of the
deal, ARY will pay 60 cents on the dollar, or about $6 million to
partly cover the company's debts. ARY's attorneys have confirmed
that ARY has already deposited the amount in a U.S. bank to pay
the creditors. Moreover, Krigel's was paid up with all its other
creditors, Bird said.

Aside from $6 million, ARY will also pay $50,000 for the company
stock and pay Scott Krigel $500,000 a year for three years as
part of a noncompete and consulting agreement.

Bankruptcy records show that Krigel's has $16.5 million in assets
and $18.5 million in debts. Those debts comprise $8.5 million in
secured debt, $9.7 million in unsecured debt and $328,601.44 in
tax claims.

Krigel's had sales of $29,445,009 in the year that ended in
February 1999, $28,814,011 in the year that ended in February
2000 and $23,223,693 from March through December 2000, The Kansas
City Star reports.

The company hopes to complete the bankruptcy proceedings within
45 days. The Kansas City Star reports that ARY can cancel the
deal if it is not completed by April 30.

According to Krigel, ARY intends to keep all of Krigel's stores
open and keep all 250 employees, including the executive team.

The chain was founded by Krigel's grandfather in 1910, was taken
over by his father and had three stores when Krigel himself
joined the business in 1976, The Kansas City Star reports. It
gradually grew to its current 21 stores. Krigel said the chain
lost substantial money in the past two years, would lose money in
January, perhaps break even in February and lose money in March.
"Our volume dwindled and our costs escalated as the malls let
more jewelers in," Krigel said. "There are not only more
(competitors), but they are better run" than in the past.
Krigel said he started shopping the company and contacted every
national chain, but got no firm offers.

"They would have cut our staff and stores, and the 30 people in
our corporate offices in Overland Park would have been let go
completely," Krigel said. "When ARY came and said they would keep
everything intact, we decided to sell to them."

Krigel said ARY has seven retail stores in Dubai but wants a
presence in the United States and Europe. Buying Krigel's would
give ARY a base from which to create a national chain.
"They chose us because we have the computer systems and the
executives and already have stores," Krigel said. "They can go
national by expanding our organization."

The court approved all the motions made on behalf of Krigel's,
but questioned compensation to be paid during the bankruptcy to
Krigel and his mother, Peggy Krigel, who also works for the
company, according to The Kansas City Star. Scott Krigel is paid
nearly $200,000 a year, and his mother makes about $150,000 a
year.

The court has approved the plan for two months but will review
the matter if the bankruptcy took longer.


LEGEND AIRLINES: Looks For New Funding After Lender Defaults
------------------------------------------------------------
Legend Airlines Inc. announced that it may start looking for new
financing after a group of private investors led by former
airline securities analyst John Pincavage failed to deliver the
money needed to restart the bankrupt airline, according to a
newswire report. "Legend Airlines is extremely disappointed by
this additional failure of the lender to honor its commitment,"
said President T. Allan McArtor. "We believe the lender is in
default of the court-approved financing arrangement."

So far, Legend has received only $250,000 of $20 million in
financing approved last week by the U.S. Bankruptcy Court for the
Northern District of Texas. By this point, the investors should
have delivered an additional $2.75 million to $3 million, a
company spokesman said. Pincavage could not be reached for
comment Jan. 22 but said last week that the delay will not derail
efforts to fund the airline.

Dennis Olson, a Dallas attorney who represents the creditors
committee, said he would file a motion Jan. 26 to dismiss the
financing plan. It is increasingly unlikely that Pincavage's
group will deliver on its promises, he said. "I don't believe
Legend has gotten a straight [answer] " for why the investors
group has reneged on its commitment, he said. "The excuses are
getting more and more difficult to believe." (ABI World, January
23, 2001)


LERNOUT & HAUSPIE: Proposes Key Employee Severance Program
----------------------------------------------------------
Lernout & Hauspie Speech Products N.V. and Dictaphone Corp.
sought Court authority to make severance payments to employees
who have been or will be terminated after the Petition Date. As
part of its reorganization efforts, the Debtors seek to
streamline costs through a labor force reduction designed to
lower payroll and employee-related expenses. This undertaking is
part of an overall work force reduction plan being implemented
globally by the Debtors and their non-debtor affiliates, under
which approximately 800 employees (including 289 in Korea) will
be terminated worldwide during January 2001, and an additional
400 during the first fiscal quarter of 2001.

In connection with this downsizing effort, the Debtors have
requested authority to make severance payments under a new plan
developed after the Petition Date, with the amount of the
payments calculated as a function of the length of the employees'
service with the Debtors. The Debtors propose to pay
approximately 264 employees a total of approximately $2.8
million. If the employment of these persons were continued, their
eligible payroll will be approximately $12.3 million annually.
Their departure will therefore result in a cost savings to the
Debtors of approximately $9.5 million (netting out the severance
payments).

A breakdown of the severance payments relating to each member of
the Debtors is:

     L&H: Will terminate 70 employees, for a total severance
          payment of $1,619,000, including taxes and early paid  
          vacation.

     Dictaphone: Will terminate 154 employees for a total
                 severance payment of $1,003,726.

     L&H Holdings: Will terminate 40 employees, for a total
                   severance payment of $136,560.

(L&H/Dictaphone Bankruptcy News, Issue No. 3; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


LERNOUT & HAUSPIE: Inks $60MM DIP Facility with Cerberus/Gabriel
----------------------------------------------------------------
Cerberus Capital Management LP and Gabriel Capital Group have
agreed to provide troubled speech technology company Lernout &
Hauspie with $60 million of debtor-in-possession (DIP) financing,
Reuters relates.  The agreement, which was coursed through
Cerberus/Gabriel affiliate Ableco Finance LLC, gives a $20
million term and $40 million revolving credit to provide working
capital for ordinary business operations.  It will also be
used to pay off a $20 million "bridge" financing agreement with
General Electric Capital Corp., the finance unit of General
Electric Corp.

L&H filed an emergency motion Tuesday saying it would seek
approval of the DIP financing agreement, which will expire unless
approved, at a Thursday hearing in Camden, N.J.  Reuters obtained
a copy of the emergency motion, and says the credit agreement
requires the following terms of L&H:

     a) a $232,000 commitment fee plus a $200,000 term closing  
        fee

     b) $200,000 in expenses

     c) an $800,000 revolver fee;

     d) $25,000 monthly monitoring fee

     e) $10,000 monthly administration fee.

The base interest rate will be at least 9.5%.  The Ableco lenders
will have a perfected first priority lien over other creditors on
the L&H assets in bankruptcy.

Noteholders of Dictaphone Corp. and former controlling
shareholders of both Dictaphone and Dragon Systems, Inc. are
among those who have objected against securing DIP financing with
these companies' assets.  L&H will also try to seek approval of a
$175 million insurance agreement with AON Corp. unit Cananwill,
Inc.


LETSBUYIT.COM: Raises $2.32 Million of $3.73 Needed
----------------------------------------------------
Struggling Internet retailer LetsBuyIt.com announced that it has
raised $2.32 million of the $3.73 million it needs to avoid
bankruptcy, an industry source said. But even if it does raise
the outstanding $1.4 million it needs to convince judges at a
Friday court hearing in Amsterdam that it can stay afloat, it
still needs to find a further $28 million by March 14 to satisfy
its short-term liquidity needs, according to Reuters. A court
ruling on Friday gave the debt-laden e-tailer until 12:00 EST on
Jan. 24 to come up with $1.4 million in funding or bank
guarantees, following a petition for bankruptcy by LetsBuyIt's
own debt moratorium administrators. (ABI World, January 23, 2001)


LIDS CORP.: Wells Fargo Extends $25 Million DIP Loan
----------------------------------------------------
Lids Corp., a Westport, Ma. retailer of headwear, has received a
$25 million credit line from Wells Fargo Retail Finance in order
to help fund its reorganization efforts. The privately-held
company operates 388 stores in forty-seven states nationwide.
Lids recently filed Chapter 11 in the U.S. Bankruptcy Court in
Wilmington, De. (New Generation Research January 23, 2001)


LOEWEN GROUP: Settles Claims with Bayview Shareholders
------------------------------------------------------
Pursuant to the More Formal Share Purchase Agreement between The
Loewen Group, Inc. and the Shareholders of Bayview Services, Inc.
dated December 2, 1992, LGII delivered 13 Promissory Notes dated
January 1, 1993 and bearing interest at a rate of 8% per annum,
each obligating LGII to make 10 annual payments beginning on
January 1, 1994 and continuing through and including January 1,
2003. From January 1994 through January 1999, LGII made timely
annual payments pursuant to the terms of the Promissory Notes but
ceased making payments after the petition date.

On or about July 27, 2000, the parties to whom the Promissory
Notes are payable were movants for relief from the automatic
stay, or alternatively, request for adequate protection.

In connection with the Purchase Agreement and Promissory Notes,
the Debtors had also executed mortgages on certain real property
in favor of the Movants, in order to secure the payment
obligations under the Promissory Notes, and had entered into a
Non Competition Agreement dated January 1, 1993 with the movants.

The movants also filed their motion on or about July 27, 2000 for
an order compelling LGII to assume or reject the Non-Compete
Agreement, and to the extent necessary, for relief from the
automatic stay to terminate the non-compete agreement.

The Debtors and Movant wish to resolve the Stay Relief Motion,
the Non-Compete Motion and certain related matters upon certain
terms and conditions and have sought and obtained the Court's
approval of their stipulation.

                    Stipulation and Agreed Order

The parties agree that:

(1) Within 10 days of the Agreement Effective Date, that is, the  
    date the Stipulation and Order becomes a final, nonappealable
    order of the Court, the Debtors shall make Catch-Up Payments
    in the respective agreed amounts, each of which is equal to
    the amount of interest that accrued under the terms of the
    applicable Promissory Note as calculated at the applicable
    rate, for the period from August 1, 2000 through and
    including November 30, 2000.

(2) Beginning on January 1, 2001, provided that the Agreement
    Effective Date has occurred, until the entry of an order of
    the Court confirming a plan of reorganization in the Debtors'
    chapter 11 cases or any other further order of the Court
    addressing the obligations arising under the Promissory
    Notes, the Debtors shall make monthly Future Payments to each
    of the Movants in the respective amounts, each  representing
    the amount of interest that would have accrued during the
    month prior to payment on the outstanding principal balance
    under the applicable Promissory Note, calculated at the
    applicable rate.

(3) The Debtors shall make the monthly Future Payments on the
    first business day of each month without notice or demand
    from the Movants. Future Payments shall be considered timely
    so long as they are made on or before the 10th calendar day
    of the applicable month.

(4) The Catch-Up Payment and the Future Payments shall be
    credited to LGII's obligations to the Movants under the
    Promissory Notes.

(5) The Movants waive any rights that they may have under the
    Loan Documents to calculate, accrue, collect or assert a
    claim for, on account of the late payment of any installment
    under the Loan Documents:

    (a) interest at any "default" or "penalty" rate exceeding the
        applicable nondefault rate; or

    (b) any late fees or charges, prepayment premiums,
        acceleration fees, premiums or penalties or `interest on
        interest."

(6) The January 1999-May 1999 Interest and the June 1999- July
    2000 Interest shall be payable pursuant to the terms of the
    Confirmation Order or such other further order of the Court
    addressing these amounts and the obligations under the Loan
    Documents.

(7) Through the date of entry of the Confirmation Order or such
    other order, neither the January 1999- May 1999 Interest nor
    the June 1999- July 2000 Interest shall accrue any interest,
    fees or other charges.

(8) The Movants agree to continue to be bound by the terms and
    conditions of the Non-Compete Agreement, notwithstanding the
    Debtors' failure to make timely payments under the terms of
    the Promissory Note.

(9) The Movants further agree that so long as LGII complies with
    the terms of this Stipulation and Order (a) they will not
    assert that LGII has breached the Non-Compete Agreement and
    (b) their covenants under the Non-Compete Agreement remain in
    full force and effect.

(10) The Movants and the Dcbtors reserve their rights concerning,
     and this Stipulation is made without prejudice to:

      (a) a determination of the value of the Movants'
          collateral; and

      (b) any contractual or statutory rights that the Movants
          may have under section 506(b) of the Bankruptcy Code or
          other applicable law to assert and be paid a claim for
          reasonable fees, costs or charges under the Loan
          Documents.

(11) So long as the Debtors are in reasonable compliance with the
     terms of the Stipulation and Agreed Order, the Movants shall  
     not seek any other or further relief under section 362 of
     the Bankruptcy Code.

(12) The parties agree on the amounts of outstanding principal
     balance under each of the Promissory Notes, the interest
     that accrued under each of the Promissory Notes for the
     period from January 1, 1999 through and including May 31,
     1999 and the interest that has accrued under each of the
     Promissory Notes for the period from June 1, 1999 through
     and including July 31, 2000 as set forth in the Stipulation
     and Order. (Loewen Bankruptcy News, Issue No. 32; Bankruptcy
     Creditors' Service, Inc., 609/392-0900)


LONDON FOG: Seeks Fifth Exclusivity Extension to April 19
---------------------------------------------------------
London Fog Industries Inc. is seeking bankruptcy court
authorization to extend the exclusive periods under which it can
file its reorganization plan and solicit acceptances. A hearing
on the matter is slated for Friday before the U.S. Bankruptcy
Court in Wilmington, Del. The court has granted four previous
exclusivity extensions to the company. Under the proposed 90-day
extensions, the company's exclusive time to file a reorganization
would be extended through April 19. During this period, other
parties wouldn't be allowed to file competing plans. Currently,
London Fog's exclusive plan-filing period expires Friday and its
solicitation period to gather plan acceptances would expire March
20. (ABI World, January 23, 2001)


LTV CORPORATION: Continues Workers Compensation Programs
--------------------------------------------------------
The LTV Corporation maintain workers' compensation insurance
coverage for current or former employees in numerous states,
including Alabama, Arkansas, Connecticut, California, Georgia,
Indiana, Illinois, Kentucky, Michigan, Minnesota, Missouri, New
Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania,
Rhode Island, Tennessee, Texas, West Virginia and Wisconsin. By
this Motion, the Debtors sought and obtained authorization to
continue their workers' compensation programs in all of these
jurisdictions and to pay certain related prepetition claims,
premiums and expenses.

In several states, including Ohio, Indiana, and Illinois, certain
of the Debtors operate as self-insured employers. In addition,
certain of the Debtors operate as self-insured employers for
certain categories of employees under the federal Longshore and
Harbor Workers' Compensation Act. As a result, these Debtors
maintain a variety of self-insured workers' compensation programs
under which they directly pay applicable workers' compensation
claims as they arise.

Certain of the self-insured states have required the Debtors to
post various forms of collateral as security for the Debtors'
obligations to pay the self-insured claims in these
jurisdictions. For example, in Indiana the Debtors have
contributed approximately $1 million to a trust fund maintained
by the state, and in Illinois and Ohio the Debtors have provided
the states with irrevocable letters of credit in the
approximately amounts of $1,200,000 and $1,500,000, respectively.

Based on historical experience, the Debtors estimate that the
aggregate amount of self-insured claims accrued but not yet paid
as of the Petition Date is approximately $41,800,000.

In the State of Ohio, certain of the Debtors participate in a
"monopolistic" workers' compensation insurance program funded
through, and administered by, the Ohio Bureau of Workers'
Compensation. Under this funded program, the Debtors pay certain
premiums to the Bureau. The funded premiums generally are based
on the participating Debtors' payroll for their employees in Ohio
during the coverage period and are adjusted retroactively based
on a final audit of the Debtors' payroll.

The Debtors estimate that the aggregate amount of funded premiums
accrued but not yet paid as of the Petition Date is approximately
$50,000.

In several states, including Alabama, Connecticut, Georgia, and
others, the Debtors maintain certain high-deductible and no-
deductible workers' compensation and employers' liability
insurance programs with the American International Group and
certain of its affiliates. Under the insured program, insurance
coverage is provide for losses up to $2 million per claim, and
the Debtors are obligated to pay an annual premium that is
adjustable retroactively based on the Debtors' final audited
payroll for the coverage period, and in addition, to reimburse
AIG for the loss payments that AIG makes in respect of coverage
deductibles and claims asserted against the debtors, all in
accordance with the terms of the insured programs. The Debtors
pay the insured premium in monthly installments of approximately
$195,833 each. To secure the Debtors' obligations under their
current workers' compensation and employers' liability insurance
policies, as well as various other liability insurance policies
issued to the Debtors by AIG, AIG has required the Debtors to
post collateral in the form of irrevocable letters of credit for
such liabilities. The aggregate amount of outstanding letters of
credit posted by the Debtors in support of the insurance policies
is approximately $42,300,000. (LTV Bankruptcy News, Issue No. 2;
Bankruptcy Creditors' Service, Inc., 609/392-00900)


NETROM INC: Hires James Toreson as New CEO
------------------------------------------
Netrom Inc., (Pink Sheets:NRRM) announced the appointment of
James S.Toreson as the Company's new Chairman and Chief Executive
Officer.

A seasoned senior executive, Toreson brings extensive experience
in restructuring and rebuilding small and medium size companies.
He has a distinguished track record of accomplishment working in
turnaround situations. As Chairman and CEO, Toreson will lead
Netrom through the final phase of its turnaround. He will play a
key role in the development and expansion of its recent
acquisition, Networth Inc., d.b.a. BigRebate.

"I am extremely excited to be joining Netrom at this particular
time. The Company has made tremendous progress over the past nine
months and is poised to complete its reorganization/turnaround,"
said Toreson. "We are now in a position to start moving forward,
building a profitable, high growth company and delivering
significant value to Netrom's shareholders. The Company's
management will need the continued support and cooperation of its
creditors and shareholders as it executes its plan to build a new
Netrom."

"Jim brings a lot of credibility to the executive management team
of Netrom and he will have a major impact on executing and
achieving our short and long term goals," said Ron Clark,
president of Netrom. "His professional credentials, track record,
leadership ability and business acumen will greatly strengthen
investor confidence in Netrom and help put us on a fast track to
making 2001 a successful year for the Company and its
shareholders."

Toreson has been CEO and president of Onshore Inc., a management
consulting business he founded in 1990. Toreson recently served
as President of Forte Systems Inc., Troy, Mich., a software
consulting services and systems integration provider. Prior to
Onshore Inc. he founded Xebec Inc., a designer and manufacturer
of hard disk controllers. He served as its chairman, CEO and
president over a 13-year period. Beginning with $5,000 in
capital, he built the company to $150 million in revenue.

About Netrom Inc.

Netrom Inc. (Pink Sheets:NRRM), founded in 1996, is a development
stage company, headquartered in Orange County, Calif. Since its
inception, Netrom has been involved with the development of
technologies related to the Internet, as well as developing new
eBusiness models. In the first quarter of 2000, Netrom became
insolvent and was forced into a major reorganization. The
Company's short-term mission has been to complete a turnaround of
its business, restore trading of its stock to the OTC BB market
and fuel the growth of the Company through strategic
acquisitions.


OWENS CORNING: Enters Settlement Pact re GBF/Pittsburgh Landfill
----------------------------------------------------------------
Owens Corning sought Judge Walrath's approval of a proposed
settlement of litigation pending in the United States District
Court for the Northern District of California, styled "Members of
the GBF/Pittsburg Landfill Respondents Group v. Contra Costa
Waste Service". Fibreboard is one of the plaintiffs in this
action.

From the early 1960s through the end of 1974, the GBF site in
Contra Costa County, California, included both solid and liquid
waste storage and disposal areas. Various corporations or
individuals, including Contra Costa Waste Service, Inc. and other
Garaventa entities owned or operated the site during all times
relevant to the GBF action. In October 1974 the site's liquid
waste disposal ponds were closed in accordance with a closure
plan approved by the California Regional Water Quality Control
Board for the Central Valley Region. As part of this closure
plan, Fibreboard waste products, including sawdust, wood pulp and
other products, were diverted to the liquid waste ponds at the
site for use as absorbent materials.

In 1987, the State of California issued a Remedial Action Order,
subsequently amended several times, in which it identified a
number of entities alleged to be responsible for cleaning up the
site. These entities included Fibreboard and other generators of
waste products that were deposited at the site, as well as the
operator of the liquid waste ponds, and the City of Pittsburg,
California, and the Garaventa entities. Since 1987 the
Respondents Group, including Fibreboard, has engaged in the
investigation of the site in accordance with the State's
directions. The Garaventa entities have refused to contribute to
the site's investigation or clean-up.

In the litigation, the Respondents' Group sought damages and
restitution and alleged that the Garaventa entities were liable
for all clean-up costs related to the site. The defendants in
turn filed counterclaims against the Respondents' Group.

The parties have reached a comprehensive settlement of the
federal action. The significant terms of the settlement are:

     (a) TRC Companies, Inc., a company specializing in
environmental management and infra-structure improvement, will
take title to the site and undertake its remediation. TRC will
assume all environmental liability that any of the parties may
have with respect to the site and indemnify the parties against
any further liability with respect to the site.

     (b) TRC will purchase an insurance policy that will
guarantee financing for the site's clean-up.

     (c) TRC will receive a confidential amount, not disclosed in
the Motion or attachments, from the Respondents' Group for taking
title to the site and assuming its remediation. The Garaventa
entities will pay a portion of the settlement amount to the
Respondents' Group, which will forward it, together with the
remaining portion of the settlement amount, directly to TRC.

     (d) The parties will exchange mutual releases.

While at this time Fibreboard's share of the settlement amount
remains approximate, pending finalization of the terms of the
insurance policy to be obtained by TRC and resolution of the
State of California's outstanding claim for oversight costs, but
Fibreboard believes its share of the settlement amount will not
exceed $1.2 million, and may be less. Fibreboard will not be
obligated immediately to fund its share of the settlement amount.
Certain members of the Respondents' Group have agreed to advance
Fibreboard's share of the settlement amount to facilitate and
permit consummation of the proposed settlement agreement, and
will file a claim in Fibreboard's Chapter 11 case for
reimbursement of such amount. That reimbursement claim will be an
allowed general unsecured claim and will be paid under the
Debtors' reorganization plan in the same manner as other claims
in that class. (Owens Corning Bankruptcy News, Issue No. 8;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


RG RECEIVABLES: S&P Raises VARIG Securitization Rating to B
-----------------------------------------------------------
Standard & Poor's raised its rating on RG Receivables Co. Ltd.'s
$100 million 9.6% notes to single-'B'-plus from triple-'C'-plus
and removed the transaction from CreditWatch.

The transaction, which was originally rated double-'B'-minus, was
placed on CreditWatch with negative implications on Jan. 14,
1999, and later lowered to triple-'C'-plus on March 4, 1999,
while remaining on CreditWatch. Subsequently, the CreditWatch
designation was revised to developing in July 1999, where it
remained until today's rating action.

The RG Receivables notes are secured by the proceeds of credit
and charge card receivables generated by the sale of airline
tickets in the U.S. to Viacao Aerea Rio-Grandense S.A. (Varig)
customers flying between Brazil and the U.S. The transaction is
structured to capture offshore dollar-denominated payments
generated from the sale of tickets on Varig flights between
Brazil and the U.S. and between the U.S. and Tokyo, Japan.
As is the case with all future flow transactions, the RG
Receivables rating is closely linked to the underlying
performance risk of the generator of the securitized assets,
Varig. Thus, a major component of the transaction rating is
Standard & Poor's assessment of Varig's creditworthiness, its
ability to continue operating, and its willingness and ability to
maintain sufficient service to designated U.S. destinations until
the notes are fully paid.

The rating upgrade reflects several developments. Varig has
successfully completed a debt and operations restructuring plan
over the past 24 months since Brazil underwent a significant
devaluation of its currency. The company remains heavily indebted
-- total debt amounts to about $2.4 billion against EBITDAR of
about $550 million -- but has taken active measures to reduce
this burden through renegotiation of selected debt and aircraft
lease obligations and ongoing asset sales. In addition, capacity
reductions by financially pressured competitors in the Brazilian
airline industry has eased pricing pressures on domestic routes
and allowed Varig to assume some of the international flights
previously flown by Viacao Aerea Sao Paulo S.A., a competing
Brazilian airline. Varig's international flight operations have
also become more efficient through the use of smaller planes,
producing higher load factors and increased scheduling
flexibility. These efforts have been particularly important in
light of cost pressures generated since 2000 by higher fuel
prices. Overall, Varig controls about 43% of the domestic airline
market and, among Brazilian carriers, 84% of the international
market based on revenue passenger kilometers. International
flights account for more than one-half of the company's passenger
service revenue.

Beyond the improved operating performance by the generator of the
transaction assets, Varig, the transaction rating upgrade is
supported by solid cash flow coverage, which remains in excess of
3 times quarterly debt service. The legal strength of the
transaction was also demonstrated during the recent crisis in
Brazil, as the transaction continued to perform as expected
despite Varig's need to renegotiate much of its debt and several
aircraft lease contracts.

Although the transaction performed well through the worst of the
most recent economic turbulence in Brazil, future performance
remains highly dependent upon both the efforts of Varig to reduce
its high debt level and the continued health of the Brazil-U.S.
travel market. In addition, the future health and financial
stability of the Brazilian economy will be key. Because much of
Varig's debt is short term and there exists a corporate interest
coverage performance covenant in the transaction -- violation of
which triggers an event of default -- the transaction rating
remains particularly sensitive to the interest rate environment
in Brazil and the ability of Varig to manage its finances
astutely until the transaction pays down fully in February 2005.
Although an early amortization or redemption event triggered by a
covenant violation would not, by itself, necessarily lead to a
downgrade of the transaction rating, the liquidity impact on
Varig's financial position of such an event could be significant
and might, thereby, impact the transaction rating indirectly
through the transaction's link to Varig's own corporate
operational risk rating, Standard & Poor's said.
    

SERVICE MERCHANDISE: Gets $35MM Committed Vendor Credit Line
------------------------------------------------------------
Service Merchandise Company, Inc. (OTCBB:SVCDQ) announced that in
support of the Company's reorganization initiatives, CIT
Commercial Services, a division of CIT (NYSE: CIT; TSE: CIT.U),
has provided the Company with a committed $35 million three-year
unsecured vendor line of credit, enhancing Service Merchandise's
strong liquidity position and vendor relationships.

The Company said that cash availability under its committed bank
lines, exclusive of the new CIT vendor line, is expected to
exceed $140 million at January 28, 2001 and should continue to be
in the range of $90 to $230 million throughout 2001 which
supports the Company's more targeted merchandise assortment
following its planned exit last year from toys, electronics and
sporting goods.

"CIT, together with our other factors, lenders, vendors and other
creditors, have been a great source of strength and support for
our company as we continue to implement our strategic
restructuring initiatives and prepare our business for emergence
from chapter 11 reorganization in a timely fashion," said
Chairman and Chief Executive Officer Sam Cusano. "CIT's
commitment, together with our already strong availability under
our bank agreement, should only enhance our relationships with
our key vendors."

Lawrence A. Marsiello, Group Chief Executive Officer of CIT
Commercial Finance, stated, "We are pleased to provide this new
level of committed credit support to Service Merchandise and its
vendors. This credit line validates the substantial progress made
by Service Merchandise in a difficult retail environment, and
represents our vote of confidence in the Company." CIT Commercial
Services, the nation's largest provider of factoring services, is
a unit of Commercial Finance, an operating group of CIT. The
commitment letter will be filed on Form 8-K with the Securities
and Exchange Commission.


SERVICE MERCHANDISE: Hires Michael E. Hogrefe as New SVP & CFO
--------------------------------------------------------------
Service Merchandise Company, Inc. (OTCBB:SVCDQ) appointed Michael
E. Hogrefe as Senior Vice President and Chief Financial Officer,
effective February 4. Mr. Hogrefe, 40, joins Service Merchandise
from Frontline Group, Inc. of Nashville, where he served as
Executive Vice President, Chief Financial Officer and Secretary
since 1999. Before that, he was Chief Financial Officer for
Bright Horizons Family Solutions, Inc. (NASDAQ:BFAM) from 1996.
Mr. Hogrefe is a former financial executive of Service
Merchandise, serving in various positions of increasing
responsibility from 1990 to 1996,
including Treasurer.

"Mike Hogrefe brings to Service Merchandise a proven track record
in financial leadership and improved profitability through a wide
range of industries," Mr. Cusano said. "We look forward to the
benefits that his expertise will provide our company as we
continue to implement our business plan and prepare the Company
for negotiation of what we expect will be a consensual
reorganization plan with our creditors."

The Company said that Mr. Hogrefe's two-year employment agreement
was approved earlier today without objection by the Bankruptcy
Court at the monthly omnibus hearing held in the United States
Bankruptcy Court for the Middle District of Tennessee. The
Company also told the Court that it revised its earlier financial
guidance upward regarding fiscal year 2000 preliminary financial
performance previously announced on January 10. The Company said
that its representatives reported to the Bankruptcy Court that
the Company's final 2000 financial results, which are expected to
be released early next month, will likely exceed the range of
continuing EBITDAR (earnings before interest, taxes,
depreciation, amortization and restructuring expenses) previously
reported as $30 to $33 million for the 12 months ended December
31, 2000. The Company's continuing EBITDAR for 1999 was $25.9
million. The Company earlier said that its preliminary financial
results were subject to physical inventory results, normal year-
end adjustments and other matters.


US AUTOMOTIVE: Selling All Assets to FDP Virginia
-------------------------------------------------
US Automotive Manufacturing, Inc. and its wholly-owned
subsidiaries, US Automotive Friction, Inc., and Quality
Automotive Company, entered into an Asset Purchase Agreement for
the sale of all of their assets to FDP Virginia, Inc. In order to
effectuate the proposed sale, the Company filed a voluntary
petition Monday under Chapter 11 of the United States Bankruptcy
Code in the United States Bankruptcy Court for the District of
Delaware. The proposed sale of such assets, if approved, would be
free and clear of all liens, claims and encumbrances. The
proceeds of sale are not expected to be sufficient to repay the
Company's senior secured lender in full. FDP Virginia, Inc. is a
subsidiary of Friction Division Products, Inc. and W&W
Electronics, Limited. The Company has filed a motion for approval
of the sale under Section 363 of the Bankruptcy Code and
anticipates a hearing to be conducted thereon within
approximately thirty (30) days. It is expected that closing of
the sale will take place within fifty-five (55) days of the
filing of the bankruptcy petition. The closing is subject to
normal and customary conditions, and requires Bankruptcy Court
approval.

The Company has also announced that it has reached an agreement
with its lenders to provide additional borrowing ability under a
debtor-in-possession loan facility which will again allow the
Company to purchase new inventory and operate the business in the
ordinary course in order to satisfy the Company's customers' and
employees' needs through the anticipated date of closing of the
proposed sale.

                          *********

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 are
available at your local bookstore or through Amazon.com.  Go to
http://www.amazon.com/exec/obidos/ASIN/189312214X/internetbankrup
t to order any title today.  

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


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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, 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-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.  Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.

The TCR subscription rate is $575 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each.  For subscription information, contact Christopher
Beard at 301/951-6400.

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