TCR_Public/010226.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, February 26, 2001, Vol. 5, No. 39

                            Headlines

AARO BROADBAND: Looks For New Funding To Sustain Operations
ARMSTRONG: Committee Balks at Debtor Hiring Church & Houff
ASI ENTERTAINMENT: May Shut Down If Unable To Raise Capital
BORDEN CHEMICALS: Moody's Cuts Senior Notes Rating to Ca from B2
CALENDARCENTRAL: Looks for Buyer or Licensee as it Closes Doors

CROWN BOOKS: Gets Interim Approval of $5 Million DIP Financing
CROWN CORK: Asbestos-Related Charges May Drive Chapter 11 Filing
DESTINATION FILMS: Cuts Jobs & Considers Filing for Bankruptcy
DOSKOCIL: Hires Chanin Capital For Debt Restructuring Assistance
DT INDUSTRIES: Selling Vanguard Technical Solutions To EXFO

eUNIVERSE INC.: Selling Certain Assets To Raise Money
FINE AIR: Completed Arrow Air Merger Paves Way for Emergence
FLASHCOM: Court Okays Covad's Bid To Purchase DSL Customer Base
FRANK'S NURSERY: Wells Fargo Extends $100MM DIP Loan
FRANK'S NURSERY: Moody's Rates Bank Debt at B3 & Sub. Notes at Ca

FRUIT OF THE LOOM: City of Memphis Objects to CEC Retention
HARNISCHFEGER INDUSTRIES: Austrian Receiver Presses Admin. Claim
HOMCOM COMMUNICATIONS: Employs Feldman Sherb as New Accountants
HUDSONS GRILL: Hires King Griffin As New Certifying Accountant
HYMEDIX INC.: Taps O'Connor Davies as New Public Accountants

ICG COMM.: Seeks To Assume Gap Int'l Consulting Agreement
IMPERIAL SUGAR: Asks To Assume Executory Employment Agreements
INNOVACOM: Video Concern Files for Chapter 7 Bankruptcy
INTEGRATED HEALTH: Seeks Approval Of Respiratory Business Leases
ITEQ INC.: Waives Revolving Credit Agreement

LASON INC.: In Default of Credit Agreement
LASON INC.: Names William C. Brooks as Chairman of the Board
LERNOUT & HAUSPIE: Visteon Wants License Obligations Honored
LOEWEN GROUP: Selling 2 Rhode Island Funeral Homes for $850,000
MERRILL CORP.: Moody's Reviews Ratings For Possible Downgrade

OWENS CORNING: Strikes Adequate Assurance Deals with Utilities
PAUL HARRIS: Retains Keen Realty in Chapter 11 Restructuring
PILLOWTEX CORP.: Paying Dallas Transitional Employee Benefits
PLANETRX.COM: Reports Q4 and Year-End 2000 Losses
PLATINUM ENTERTAINMENT: Files Reorganization Plan in Chicago

PRIMESTREET: Pulls The Plug & Seeks Buyer For Technology
QUINTUS CORPORATION: Files Chapter 11 Petition in Wilmington
QUINTUS CORP.: Case Summary & 25 Largest Unsecured Creditors
QUINTUS CORPORATION: Agrees to Sell All Assets to Avaya, Inc.
QUINTUS: Publishes Q3 2000 Results & Financial Restatement

RNETHEALTH INC.: Formulates Plan To Meet Cash Needs
STUART ENTERTAINMENT: Files "Chapter 22" Petition in Minnesota
TRANS WORLD: Continental Withdraws Auction Process Objections
WEBLINK WIRELESS: Moody's Junks Senior Note Ratings
WHEELING-PITTSBURGH: Assumes UAI Contract to Complete Tower

WORLDWIDE WIRELESS: Esyon Extends $1 Million Funding for 6 Months

BOND PRICING: For the week of February 26 - March 2, 2001

                            *********

AARO BROADBAND: Looks For New Funding To Sustain Operations
-----------------------------------------------------------
The management of Aaro Broadband Wireless Communications, Inc.,
through the merger with Global Wireless Technologies, Inc., has
begun a plan to recapitalize the company and to change its
business emphasis.

The company incurred a net loss of $375,000 during the year ended
December 31, 1999, and, as of that date, the company's current
liabilities exceeded its current assets by $859,000 and its total
liabilities exceeded its total assets by $488,000. Additionally,
based on unaudited interim financial information, at September
30, 2000 the company's current liabilities exceeded its current
assets by $3,018,000 and its total liabilities exceeded its total
assets by $505,000.

These factors, among others, according to the company's
accounting firm, raise substantial doubt about the company's
ability to continue as a going concern.


ARMSTRONG: Committee Balks at Debtor Hiring Church & Houff
----------------------------------------------------------
Elihu Inselbuch, Esq., and Peter Van N. Lockwood, Esq., at Caplin
& Drysdale, Chartered, tell the Court that the Official Committee
of Asbestos Claimants objects to Armstrong Holdings, Inc.'s
proposed employment of the law firm of Church & Houff P.A. as
special asbestos litigation counsel.

The Asbestos Committee called the engagement "unnecessary in
light of the protections provided to the Debtors through these
Chapter 11 proceedings." Further, the Committee disagrees with
Church's claim that the firm would not perform any work relating
to the administration of the Chapter 11 cases. The Committee said
that, to the extent that Church & Houff might be asked to
participate in the estimation or liquidation of asbestos-related
claims, its representation would be outside of the scope of
authorized employment and therefore contrary to the Bankruptcy
Code. For these two reasons, the Committee asked that Debtors'
Application to employ said law firm be denied. (Armstrong
Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service,
Inc., 609/392-0900)


ASI ENTERTAINMENT: May Shut Down If Unable To Raise Capital
-----------------------------------------------------------
ASI Entertainment Inc. had accumulated losses of approximately
$1,564,000 at December 31, 2000 and will be required to make
significant expenditure in connection with continuing engineering
and marketing efforts along with general and administrative
expenses. The company's ability to continue its operations is
dependant upon its raising of capital through debt or equity
financing in order to meet its working needs.

These conditions raise substantial doubt about the company's
ability to continue as a going concern subsequent to the
acquisition, and if substantial additional funding is not
acquired or alternative sources developed, management will be
required to curtail its operations.

No sales were made in the three month period ended December 31,
2000. Similarly no sales were made in the three month period
ending December 31, 1999.

The company had a net loss of $183,776 in the three month period
ended December 31, 2000 compared to a net loss of $87,652 in the
three month period ended December 31, 1999. Expenses increased
from $87,652 in the three months ended December 31, 1999 to
$183,776 in the three months ended December 31, 2000.

Additionally, no sales were made in the six month period ended
December 31, 2000. Similarly no sales were made in the six month
period ending December 31, 1999. In the six month period ended
December 31, 2000, the company had a loss of $269,743 compared to
a loss of $158,526 in the six month period ended December 31,
1999.


BORDEN CHEMICALS: Moody's Cuts Senior Notes Rating to Ca from B2
----------------------------------------------------------------
Moody's Investors Service downgraded Borden Chemicals and
Plastics Operating L.P.'s (BCP) $200 million senior notes, due
2005, to Ca from B2, while the senior implied rating is placed at
Caa1 and the senior unsecured rating at Ca. The rating outlook is
negative.

Moody's states that the downgrade is due to BCP's significantly
reduced liquidity, its high risk of default, the severe impact of
higher natural gas prices, and materially lower anticipated 2001
financial results than were previously expected.

As reported, the company stopped its acetylene and acetylene-
based VCM production unit in Geismar, Louisiana in January due to
high natural gas costs, and took a related $58 million impairment
charge in the fourth quarter of 2000. The company had
approximately $28 million available as of December 31, 2000 under
its $100 million secured asset based credit facility, and the
company's peak borrowing period is expected to be at about the
time that the May 2001 bond interest payment is due, which raises
concerns about possible default, according to Moody's.

Moody's rating action is also said to reflect the anticipated
pressure on PVC margins that will be caused by slowing
construction, which is the key PVC end market use, the cyclical
nature of its current principal raw materials (ethylene, chlorine
and VCM), and lack of integration to chlorine and only partial
integration to ethylene resulting in less stable margins than
integrated producers have.

Moreover, the downgrade also reflects lack of diversification of
products, past large distributions to limited partners following
the last cyclical upturn, and losses incurred in 1998 and 1999
resulting from the downcycle that began in 1997 in the
partnership's three key products (PVC, nitrogen fertilizers, and
methanol), Moody's says.

Louisiana-based Borden Chemicals and Plastics Operating L.P., is
a company that produces PVC resins and feedstocks (VCM and
acetylene).


CALENDARCENTRAL: Looks for Buyer or Licensee as it Closes Doors
---------------------------------------------------------------
CalendarCentral will close its doors at the end of February and
seeks merger and acquisition or a licensing opportunity for its
intellectual property, according to LocalBusiness.com. "We had a
very favorable response from customers and prospects for our new
CalendarCentral 4.0," said CalendarCentral CEO and President
Dennis Phillips. "However, given market conditions... we do not
believe CalendarCentral can remain viable as a stand-alone
business."

Phillips said the dot-com fallout is making it difficult to find
partners or obtain additional financing. The company obtained a
bridge loan to continue pursuing its merger and acquisition or
licensing opportunities. Phillips said he and the company's
founder, Flint O'Brien, would continue to pursue those
opportunities for at least another month. (ABI World, February
22, 2001)


CROWN BOOKS: Gets Interim Approval of $5 Million DIP Financing
--------------------------------------------------------------
U.S. Bankruptcy Court in Wilmington, Del., granted interim
approval for discount bookseller Crown Books Corp. to use up to
$5 million of debtor-in-possession (DIP) financing from Wells
Fargo and Foothill Capital Corp. U.S. Bankruptcy Judge Mary F.
Walrath entered the interim order on Feb. 13. A final hearing on
the matter is scheduled for March 2. (ABI World, February 22,
2001)


CROWN CORK: Asbestos-Related Charges May Drive Chapter 11 Filing
----------------------------------------------------------------
Crown Cork & Seal Co. Inc., already reeling from a weak business
environment and the stigma of a junk debt rating, is now being
dogged by market fears that asbestos-related liabilities could
ultimately lead to a chapter 11 bankruptcy filing, according to
Reuters. Since reporting that its fourth-quarter deficit widened
in 2000, mainly because of an asbestos-related charge, the $7.3
billion maker of metal and plastic packaging has seen 31 percent
of its market value erased on the New York Stock Exchange.

While most analysts do not expect a bankruptcy filing, some say
investors fear Crown Cork & Seal could sink beneath the same tide
of asbestos injury claims that has swept a half-dozen other
manufacturers, including Owens Corning and Armstrong World
Industries, into chapter 11 over the past year. Those fears
recently got a shot in the arm from the brokerage firm Bear
Stearns, which advised clients that the asbestos danger to Crown
Cork & Seal's future was real.

"From our perspective Crown Cork, through little fault of its
own, is beginning to move down the slippery road toward court
protection," said Bear Stearns analyst Gary Schneider. He said
that he does not believe chapter 11 is imminent, however. Many
Wall Street analysts see no reason to fear a bankruptcy filing,
saying weakness in the company's stock cannot be attributed
entirely to asbestos concerns. "Crown Cork clearly has had
several challenges to combat these last two or three years, and
asbestos claims has been one. But I don't see them going chapter
11," said George Staphos of Salomon Smith Barney. (ABI World,
February 22, 2001)


DESTINATION FILMS: Cuts Jobs & Considers Filing for Bankruptcy
--------------------------------------------------------------
Destination Films, a two-year-old production company that had a
string of flops including "Bats" and "Drowning Mona," has laid
off all of its employees and may file for bankruptcy, according
to the Associated Press. About 50 workers in New York and Los
Angeles received a final paycheck on Friday, said Chief Executive
Officer Barry London. The company has not yet filed for
bankruptcy but "it's one of the options," he said. London added
that he sincerely doubts the company will find the capital it
needs to keep operating.

It's unclear what will happen to the company's three finished
features, which were scheduled for release late last year but
were delayed because the company had no money to finance
distribution. The company failed to produce a single hit during
its 28-month existence, claiming total box office earnings of
about $65 million from only a handful of films. Destination also
had nearly a dozen films in development, but none had begun
shooting. Most of Destination's unreleased projects likely would
be sold along with its other assets if the company files for
bankruptcy. (ABI World, February 22, 2001)


DOSKOCIL: Hires Chanin Capital For Debt Restructuring Assistance
----------------------------------------------------------------
Plastic pet products maker Doskocil Manufacturing Co. Inc. said
it's in default of certain financial covenants under its credit
lines, and signed a limited forbearance agreement with its
lenders that became effective on Feb. 14, according to Dow Jones.

According to the company's quarterly report for the period that
ended on Dec. 30, another default could occur if the company
doesn't secure a capital infusion of $8 million by Feb. 28. Its
controlling investor, Westar Funds, is obliged to provide that
infusion under a support agreement.

Doskocil also said it hired investment banking firm Chanin
Capital Partners to assist in restructuring its debt and equity
capitalization, which may include a restructuring through
bankruptcy proceedings. Westar Funds told the Arlington, Texas-
based company that it intends to pursue discussions with the
lenders under the credit lines, indicating a willingness to make
the financial contribution. The company's lenders have agreed not
to exercise rights and remedies available to them before July 1,
other than their right to block the company's payments of its
subordinated notes, unless there are further defaults.

Doskocil's debt includes bank credit lines of $93.1 million,
subordinated notes of $85 million and capital leases of $1.1
million. The company has a $4.3 million interest payment on the
subordinated notes, which are due March 15. (ABI World, February
22, 2001)


DT INDUSTRIES: Selling Vanguard Technical Solutions To EXFO
-----------------------------------------------------------
DT Industries, Inc. (Nasdaq: DTII) executed an agreement with
EXFO Electro-Optical Engineering Inc. (Nasdaq: EXFO, Toronto:
EXF) pursuant to which EXFO's affiliate, Burleigh Automation,
Inc., will purchase substantially all of the assets of Vanguard
Technical Solutions, Inc., a wholly-owned subsidiary of DT
Industries. Terms of the transaction were not disclosed. The
parties expect the transaction to close in the next 30 days.

Vanguard, an automation equipment manufacturer in Tucson,
Arizona, with approximately 20 employees, has been in operation
since June 1999. It will be integrated into Burleigh Automation,
Inc., a subsidiary of Burleigh Instruments, Inc., which was
acquired by EXFO in December 2000.

Vanguard specializes in the design and manufacturing of ultra-
precision assembly equipment for sensitive process and critical
assembly challenges on the manufacturing floor. Vanguard's
VectorPlace(TM) workstation is a fully automated assembly
solution with micrometer placement precision. It uses as many as
four manipulator robots to seamlessly assemble optical sub-
components up to sub-micron accuracy in order to provide a
scalable throughput solution and cycle-time improvement.

DT Industries is a leading designer, manufacturer and integrator
of automated production systems used to assemble, test or package
industrial and consumer products. The Company also produces
precision metal components, tools and dies for a broad range of
industrial applications.

DT Industries, beset by certain disruptions in the past few
months, is currently working a number of strategic initiatives to
achieve a successful turnaround by 2002. Accordingly, the
company, with Stephen J. Perkins at the helm, is taking steps to
improve margins and balance sheet performance in its core
businesses and is actively divesting business units identified as
non-core in order to reduce debt. Perkins had said in an earlier
press release: "Jack Casper, our new chief financial officer, and
I are in the process of setting goals for improvements on several
financial benchmarks -- such as free cash flow, working capital
efficiency and return on operating assets -- that we believe will
help DT Industries return to acceptable levels of profitability."


eUNIVERSE INC.: Selling Certain Assets To Raise Money
-----------------------------------------------------
eUniverse, Inc. is a Nevada Corporation engaged in developing and
operating a network of web sites providing entertainment-oriented
services. The company is engaged in providing online diversionary
entertainment content and advertising on its network of web
sites. It conducts operations from facilities located in
Wallingford, Connecticut, San Francisco and Los Angeles,
California, New York, New York, and Mount Vernon, Washington.

The company has sustained losses and negative cash flows from
operations since its inception. It currently does not have
sufficient cash reserves and working capital surplus to fund its
operations, and its ability to meet its obligations in the
ordinary course of business is dependent upon its ability to
raise additional financing through public or private equity
financings, establish profitable operations, enter into
collaborative or other arrangements with corporate sources, or
secure other sources of financing to fund operations. Management
believes that divesting its eCommerce operations will enable the
company to become cash flow positive in the near future.

Management also will attempt to raise additional working capital
through equity and/or debt financings in the upcoming months.

These matters raise substantial doubt about the company's ability
to continue as a going concern. It has a limited operating
history, and its prospects are subject to the risks, expenses and
uncertainties frequently encountered by companies in the new and
rapidly evolving markets for Internet products and services.

These risks include the rejection of the company's services by
Internet consumers or advertisers and the inability of the
company to maintain and increase the levels of traffic on its web
sites, as well as other risks and uncertainties. In the event
that the company does not successfully implement its business
plan and obtain additional equity and/or debt financing, certain
assets may not be recoverable.


FINE AIR: Completed Arrow Air Merger Paves Way for Emergence
------------------------------------------------------------
Fine Air Services Corp. completed a planned merger of Arrow Air
and Fine Air, its two air cargo carriers. The Miami-based air
cargo carrier will now be officially known as Fine Air Services
Corp. with a trade name of "Fine Air." This merger is the
culmination of a strategic business plan set into motion by J.
Frank Fine, Fine Air's Chairman and CEO, and Barry H. Fine, Fine
Air's President, which dates back to the March 1999 purchase of
Arrow Air.

"We are now concentrating on our scheduled air cargo service with
dramatic improvements to our on-time departures to 28
destinations in Central America, South America and the
Caribbean," said Barry Fine. "Our customers have noted these
positive changes and praised Fine Air for these improvements."

Mr. Luis Benitez, Gateway Manager for BAXGLOBAL, a major
worldwide freight forwarder and significant Fine Air customer,
noted in a recent email that the air carrier's on-time service
level is 92 percent, adding, "This is very good -- you should be
proud of the work you're doing. I like this new Fine Air."

The merger is part of the company's reorganization process as it
continues to operate under the protection of U.S. Bankruptcy
Court Judge A.J. Cristol.  "Our goal is to have a plan of
reorganization filed within 45 days, and we expect court
confirmation of the plan by Memorial Day to successfully emerge
from Chapter 11," said Fine.

Since 1994, Fine Air has been the largest scheduled air cargo
carrier serving Miami International Airport, based on tons of
international freight.

The company's scheduled cargo services provide seamless
transportation through its Miami International Airport hub,
linking North America, Europe, Asia and the Pacific Rim with 28
South and Central American and Caribbean cities. The company's
1,200 customers worldwide include international and domestic
freight forwarders, integrated carriers, passenger and cargo
airlines, major shippers and the United States Postal Service.


FLASHCOM: Court Okays Covad's Bid To Purchase DSL Customer Base
---------------------------------------------------------------
Covad Communications (Nasdaq:COVD), the leading national
broadband services provider utilizing DSL (Digital Subscriber
Line) technology, said that the United States Bankruptcy Court in
Santa Ana, Calif., approved its offer to purchase all of the
Covad supplied Flashcom DSL customers for a combination of cash
and debt forgiveness.  Covad will provide up to $750,000 in both
cash and debt forgiveness up front, and could pay up to an
additional $2.75 million more depending on how many Flashcom
lines are successfully migrated through the Covad Safety Net
program.

The transaction allows Covad to seek migration requests from
approximately 24,500 Flashcom DSL customers who may have faced
losing their broadband connections.

Flashcom, one of Covad's distressed Internet Service Providers
(ISPs), filed for bankruptcy protection on Dec. 8, 2000, and has
the largest number of DSL lines among the distressed ISPs.

Beginning this week, Covad will start to seek migration requests
from Flashcom's customers through Covad Safety Net, the program
that migrates end users of distressed ISPs to an ISP
participating in the program or to Covad.net.

"This is great news for Flashcom's customers who want a simple
way to transfer their Covad DSL to another Internet service
provider," said Chuck McMinn, Covad chairman. "Our negotiations
were successful with Flashcom because we share a common goal of
reaching a mutually acceptable business resolution that also
allows end users to keep their broadband connections up and
running."

Introduced on Dec. 11, 2000, Covad's Safety Net program was
established to help customers of financially distressed ISPs
maintain their DSL connections.

"We remain fully committed to working with distressed ISP
partners to get payment and find solutions for their customers,"
continued McMinn. "Unfortunately, after lengthy negotiations with
some of our distressed ISPs, we were forced to turn-off their
connection to Covad's network. Because we could not reach an
agreement with these ISPs and they did not pay their bills to
Covad, the end users of these ISPs have unfortunately experienced
a disruption or termination of their DSL connections. Flashcom is
a great example of how an ISP and Covad can negotiate an
agreement to minimize the impact on innocent end users."

By clicking on the "Safety Net" button on Covad's website
(www.covad.com), end users, including those who have already
experienced service disruption, can quickly learn if they qualify
for the program. If end users qualify and elect to participate in
the Covad Safety Net program, they will be guided through the
migration process with minimal disruption to their broadband
connection. Starting today, Flashcom end users will receive
emails and letters directing them to the Covad Safety Net program
for a plan to transition their broadband connections with little
to no loss of service.

                   About Covad Communications

Covad is the leading national broadband services 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 109 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 US homes and businesses.
Corporate headquarters is located at 4250 Burton Drive, Santa
Clara, Calif. 95054. Telephone: 888-GO-COVAD. Web Site:
http://www.covad.com.


FRANK'S NURSERY: Wells Fargo Extends $100MM DIP Loan
----------------------------------------------------
Retail asset-based lender Wells Fargo Retail Finance, of Boston,
will provide a $100 million debtor-in-possession (DIP) line of
credit to Frank's Nursery and Crafts, of Troy, Mich., the
country's leading specialty retailer of lawn and garden products.
The company filed for Chapter 11 bankruptcy on Monday, February
19, in a Baltimore Federal Bankruptcy Court.

"Wells Fargo Retail Finance was a logical choice for us, given
their commitment to the retail industry, and consistent approach
in lending to retailers," said Frank's Nursery and Crafts
Chairman and CEO Joe Baczko. "Without their focus and
flexibility, this facility would not have come together in such
short order."

Frank's began as a family-owned produce market in Detroit. It
expanded into a nursery in 1949 when owners Frank Sherr and Max
Weinberg noticed that a customer complaining about the high price
of coffee was willing to pay 79 cents for a potted geranium.
Weinberg quickly added a new dimension to his business by
offering live plants and supplies for outdoor gardening. As his
nursery business bloomed, Weinberg abandoned the produce
business.

In the 1970's, Frank's opened stores in Ohio, Indiana, Illinois,
and Minnesota. In 1980, to better reflect its burgeoning image,
the company changed its name to Frank's Nursery and Crafts. Three
years later, the company was acquired by the General Host
Corporation of Stamford, Connecticut. General Host eventually
acquired several successful local garden and craft chains in
Pennsylvania and New York and converted them to Frank's stores.
In 1997, Frank's was acquired by The Cypress Group LLC, a private
equity investment group. This made the garden supply chain a
privately held company with public debt. In December 2000,
Frank's announced it was closing 44 of its stores, including all
seven of its stores in Massachusetts. Today the company operates
218 stores in 15 states, primarily in the East and Midwest
regions.

"As a recognized leader in the lawn and garden segment, Frank's
is well-positioned in the bankruptcy to have every opportunity to
reorganize," said Wells Fargo Retail Finance Senior Managing
Director and Co-COO Andrew H. Moser. "While having experienced
difficulty in recent years, management is clearly focused on what
needs to be accomplished in achieving a successful
reorganization, and we stand behind them in this effort."

Wells Fargo Retail Finance:

Based in Boston with additional offices located in Philadelphia
and Los Angeles, Wells Fargo Retail Finance brings more than 25
years of experience in providing working capital to retailers,
and has nearly $1.8 billion in loan commitments to retailers
throughout North America.
Wells Fargo & Company is a diversified financial services company
with $272 billion in assets, providing banking, insurance,
investments, mortgage and consumer finance from more than 5,700
stores and the Internet (www.wellsfargo.com) across North America
and elsewhere internationally.


FRANK'S NURSERY: Moody's Rates Bank Debt at B3 & Sub. Notes at Ca
-----------------------------------------------------------------
Following Frank's Nursery & Crafts' Chapter 11 filing on February
20, Moody's Investors Service lowered the company's debt ratings
as follows:

      * Senior implied rating to Caa2 from B3;

      * Secured bank debt to B3 from B2;

      * Senior subordinated notes to Ca from Caa3;

      * Senior unsecured issuer rating to Caa3 from Caa1.

According to Moody's, the debt rating reflects the expectation
that the secured lenders at the time of the bankruptcy filing are
adequately covered by the value of inventory and real estate
collateral. Reportedly, Frank's has arranged a DIP of $100
million which will be used for working capital financing, and
which has repaid borrowings under the existing revolving credit
facility.

The Ca rating of the subordinated notes assumes that Frank's
remains a going concern, but incorporates uncertainty about
recovery of principal based on questions about Frank's near term
performance and its ability to maintain the value of its
franchise for the medium to long term, Moody's states.

Accordingly, Frank's values from closed stores and property sales
have fallen short of the company's expectations. Moody's relates
that closing less productive stores could conserve cash, but a
diminished presence could hurt Frank's potential for recovery by
damaging its market image and reducing operating leverage.
Unknown weather factors and continued competition from big-box
retailers are also said to add to uncertainty about Frank's
operating results and franchise potential.


FRUIT OF THE LOOM: City of Memphis Objects to CEC Retention
-----------------------------------------------------------
Gwenthian Hewitt Esq., is the assistant city attorney for
Memphis, Tennessee. She stated that The City of Memphis has
several issues with Fruit of the Loom, Ltd.'s retention of CEC as
environmental consultants.

First, Fruit of the Loom failed to provide sufficient information
on the scope of work CEC will perform and what sites it will
manage. Due to this paucity of information, it is impossible to
tell whether the proposed agreement is in the best interests of
creditors. Second, she worries that NWI's obligations may go
unfulfilled to the detriment of the City of Memphis. Third, Ms.
Hewitt took issue with the fact that it appears CEC will
employ NWI personnel who were providing similar services at NWI.

Also, NWI assumed maintenance and responsibility costs for
Velsicol and now appears to be transferring its obligation to an
entity that might be inadequately insured. She objects because
the insurance protection should at least cover the range of
potential response costs that could arise under the assumed
obligations. Last, Ms. Hewitt wants NWI to return the files on a
dumpsite located in Memphis, named Hollywood. In July 1999, after
the Memphis Environmental Center transferred the files to NWI, a
project file index was prepared. The files cover the entire
history of the site from the 1930s to the present. The files were
shipped in approximately 59 file storage boxes. (Fruit of the
Loom Bankruptcy News, Issue No. 22; Bankruptcy Creditors'
Service, Inc., 609/392-0900)


HARNISCHFEGER INDUSTRIES: Austrian Receiver Presses Admin. Claim
----------------------------------------------------------------
Dr. Hackl, who was appointed official receiver of Beloit Austria
as the company entered into liquidation proceedings under
Austrian law, filed a Request for Allowance of Administrative
Claims in the amount of $2,765,495.27 plus interest.

                The Debtors' Objection

Harnischfeger Industries, Inc. contended that Dr. Hackl's motion
for the administrative claim should be denied because Dr. Hackl
has failed to carry his burden of proving that the requested
amount should be allowed as an administrative expense. Dr. Hackl,
the Debtors noted, cannot establish that the Invoices attached to
his motion directly and substantially benefitted the Debtors in
the operation of their businesses.

Specifically, the Debtors noted that Dr. Hackl's invoices, e.g.
nos. 9107 and 91157, relate to services provided prior to the
petition date and some invoices reflect services that benefited
non-debtor entities.

In particular, the Debtors noted that the Invoices with the
largest dollar amounts (Invoices nos. 910179 and 910181, which
total $1,476,620.58) relate to the Fleissner Dryer, which was
related to the Robin Hood project, a turnkey project entered into
between non-Debtor Beloit Walmsley, Ltd. and Proctor & Gamble.
The Debtors believe that Walmsley entered insolvency proceedings
in the United Kingdom in late 1999.

The Debtors also noted that portions of the Invoices relating to
the Fleissner Dryer are for backcharges and include entries for
administration fees. Other invoices recite "storage charges" and
"finance charges." The Debtors contended that Dr. Hackl has not
demonstrated the actual benefit such charges provided to the
Debrors' estates.

Several other Invoices, the Debtors noted, related to the Asia
Pulp and Paper project, and involved services rendered to Swedish
locations. The APP project was entered into by Beloit Asia
Pacific, Pte., Ltd. a non- Debtor. Here, Dr. Hackl does not
explain how any Debtor derived actual benefit from any of the
work reflected on the Invoices, the Debtors told Judge Walsh.

                The Robin Hood Invoices

The Debtors observed that approximately one-third of the dollar
value of the Invoices relates to the Robin Hood project.

The Debtors explained that they extended to Beloit Austria
$17,753,265.46 in post-petition credit support, which was
extended pursuant to the DIP Facility. The Debtors counted the
sum against the credit ceiling of $90 million in the relevant
provision of the DIP Facility. With regard to this credit
support, Beloit lent money to Walmsley, whereupon Walmsley would
use the funds to pay trade payables to Beloit Austria. A
substantial amount of this credit support went toward completion
of the Robin Hood project. Thus, the Debtors noted that all the
benefit of the credit support given went primarily to Walmsley
and secondarily to Beloit Austria.

Therefore, the Debtors conclude that Walmsley, not Beloit, is the
obligor on the Invoices related to the Robin Hood project. If
Walmsley failed to pay Beloit Austria, then Beloit Austria may
have a claim against Walmsley. If Walmsley paid Beloit Austria
for items reflected in the Invoices, then Beloit Austria is not
damaged, the Debtors argued. In any event, the Debtors asserted,
the Bankruptcy Court is not the appropriate forum to decide a
dispute between non-debtors Beloit Austria and Walmsley.
(Harnischfeger Bankruptcy News, Issue No. 37; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


HOMCOM COMMUNICATIONS: Employs Feldman Sherb as New Accountants
---------------------------------------------------------------
On February 8, 2001, HomCom Communications, Inc. dismissed
PricewaterhouseCoopers LLP, as its independent accountants
effective immediately. The company's Board of Directors
participated in and approved the decision to change independent
accountants.

In its report on the company's financial statements for the
fiscal years ended December 31, 1999 and 1998,
PricewaterhouseCoopers stated that HomCom had experienced
recurring losses and negative cash flows since its
inception and has an accumulated deficit. They further stated
that HomCom is dependent on continued financing from investors to
sustain its activities and there is no assurance that such
financing will be available. These factors raise substantial
doubt about the company's ability to continue as a going concern.
On February 8, 2001, HomCom engaged the firm of Feldman Sherb &
Co., as independent accountants for the fiscal year ending
December 31, 2000. The company's Board of Directors approved the
selection of Feldman Sherb & Co. as independent accountants.


HUDSONS GRILL: Hires King Griffin As New Certifying Accountant
--------------------------------------------------------------
Hudson's Grill International, Inc., a Texas corporation based in
Dallas, Texas, announced that it had changed its certifying
accountant. King Griffin & Adamson P.C. will become the company's
new certifying accountant, replacing Hein + Associates LLP. Hein
+ Associates LLP was dismissed on February 1, 2001, and King
Griffin & Adamson agreed to become the company's new certifying
accountant.

In its opinion rendered in its 1999 audit of the company, Hein +
Associates stated the following:

"The accompanying financial statements have been prepared
assuming that the company will continue as a going concern...the
company has suffered recurring losses from operations and
currently has a shareholders' deficit, which raise substantial
doubt about its ability to continue as a going concern."

The company issued the following press release: "Hudson's Grill
International, Inc., based in Dallas, Texas, announced today that
it had changed its certifying accountants. Beginning February 6,
2001, Hudson's new certifying accountants will be King Griffin &
Adamson P.C., who are based in Dallas, Texas. They will be taking
over the company's auditing responsibilities from Hein Associates
LLP. The change was approved by the company's board of directors
and was not the result of any disagreements with Hein. Likewise,
it was not the result of any negative advice or information
provided by Hein."

Hudson's Grill International is a public company, but it is not
currently being actively traded because it does not yet have a
market maker. The company plans on soliciting market makers, and
if such can be established, the company's class A common shares
will be traded over the counter on the bulletin board under the
NASD symbol HGII.


HYMEDIX INC.: Taps O'Connor Davies as New Public Accountants
------------------------------------------------------------
On January 31, 2001, the Board of Directors of Hymedix Inc.
authorized the company to engage O'Connor Davies Munns & Dobbins,
LLP rather than Arthur Andersen LLP as its independent public
accountants for the fiscal year ending December 31, 2000, subject
to the company confirming acceptance by O'Connor Davies Munns &
Dobbins of such appointment and notifying Arthur Andersen.

On that same date the company advised each accounting firm of its
decision, and O'Connor Davies Munns & Dobbins accepted the
appointment and was officially engaged as independent public
accountants for the fiscal year ending December 31, 2000.

Arthur Andersen LLP served as Hymedix's independent public
accountants and auditors since 1996 but was dismissed by the
Board of Directors as of January 31, 2001. The decision to employ
O'Connor Davies Munns & Dobbins was the result of the comany's
decision to lower its expenses in connection with its quarterly
reporting and year end audit requirements.

Additionally, in each of the past three fiscal years, Arthur
Andersen LLP, in its report, noted that although the financial
statements had been prepared assuming that Hymedix will continue
as a going concern, the company had incurred a loss from
operations in each of the last three years, has a working capital
deficit, has a net capital deficiency and is not in compliance
with certain loan provisions and these factors raise a
substantial doubt about its ability to continue as a going
concern.


ICG COMM.: Seeks To Assume Gap Int'l Consulting Agreement
---------------------------------------------------------
ICG Communications, Inc. sought to assume an agreement with Gap
International, Inc., which was executed shortly before the
Petition Date. The Debtors believe that a significant
restructuring of their operations is necessary to restore the
Debtors to profitability and to enable them to emerge from
Chapter 11 as healthy, viable businesses. To effectuate that
restructuring, the Debtors' management has identified several
projects and tasks designed to make the Debtors' operations more
efficient, to increase productivity, and to reduce costs. To
complete their projects as quickly and successfully as possible,
the Debtors have determined in the exercise of their business
judgment to utilize the assistance of independent consultants
that specialize in working with companies to identify areas where
operational improvements can be made and in implementing those
improvements. Toward this end, the Debtors interviewed a number
of different firms that provide such services. As a result of
these efforts, the Debtors decided to retain, subject to this
Court's approval, two different consulting firms to provide
assistance in specific areas. Accordingly, on November 10, 2000,
the Debtors executed an agreement with GAP for "breakthrough
enterprise" consulting.

GAP is a management consulting and leadership training firm that
specializes in assisting companies and management teams create
and implement strategies designed to improve operating results.
GAP provides extensive leadership coaching and training to senior
executives and other selected employees. GAP's programs are
designed to assist in:

      (a) development of a successful business plan;

      (b) creating executive alignment on strategic alternatives;
          and

      (c) implementing a successful business plan.

GAP assists corporations in accomplishing these objectives by,
among other things, conducting a series of intensive seminars,
programs and training sessions for executives and other select
employees. These sessions are conducted over a year-long period
and include multiple hour-long, single day and week-long programs
with both groups and individuals. Under the GAP agreement, GAP
will assist the Debtors with regard to the specific tasks of
developing and facilitating programs that foster management
alignment on strategic alternatives and provide a foundation for
the creation and implementation of a business plan.

These programs build management alignment, leadership skills and
accountability. Critically, these intense programs focus on
specific projects, such as locating and dispensing excess lease
circuits, that are critical to the Debtors' ability to stabilize
business operations and develop a long-term business plan that is
viable.

The term of the GAP agreement is one year, with payments provided
in four sequential installments. The one-year period is divided
into four discrete components, each cancelable upon 90 days'
notice. Total fees to be paid to GAP under this agreement are
estimated by the Debtors to be $2.7 million, of which $528,000
was paid in the ordinary course of business prior to the Petition
Date, leaving a maximum of $2.1 million to be paid after the
Petition Date. The second installment of $528,000 is due to be
paid in February 2001, with the remaining two payments to be made
quarterly in June, 2001, and September, 2001. (ICG Communications
Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service,
Inc., 609/392-0900)


IMPERIAL SUGAR: Asks To Assume Executory Employment Agreements
--------------------------------------------------------------
Imperial Sugar Company asked Judge Sue L. Robinson for
authorization to assume certain executory employment agreements
and allow indemnification obligations as administrative expenses.

The Debtors and their senior executives are parties to a one-year
employment and severance agreements that are automatically
extended on a year-to-year basis. These agreements cover
compensation and entitles executives to severance benefits in the
event that certain conditions occur.

The Employment and Severance Pay Agreements provides the
following:

      Individual                 Compensation      Severance
      ----------                 ------------      ---------
      (a) Peter C. Carrothers    $280,000           Yes-1
      (b) Douglas W. Ehrenkanz   $315,000           Yes-1
      (c) Mark S. Flegenheimer   $205,000           No
      (d) Roger W. Hill          $150,000           Yes-2
      (e) Mark Q. Huggins        $275,000           Yes-1
      (f) James C. Kempner       $630,000           Yes-1
      (g) Walter C. Lehneis      $225,000           No
      (h) Karen L. Mercer        $158,000           No
      (i) Benjamin A. Oxnard     $280,000           Yes-1
      (j) John A. Richmond       $206,000           No
      (k) David H. Roche         $245,000           No
      (l) William F. Schwer      $305,000           Yes-1
      (m) W. J. "Duffy" Smith    $300,000           Yes-1

Employees with severance payments 1, described as "yes-1" above,
shall receive severance payments equal to two times their annual
salary for termination without cause or non-renewal of their
employment contract, and equal to three times their annual salary
for termination as a consequence of a change in control.

Employees with severance payments 2, described as "yes-2" above,
shall receive severance payment for involuntary termination equal
to the greater of:

      (i) the product of one-fourth of the employee's average
monthly salary over the last preceding twelve months, multiplied
by the number of full years of service completed by the employee
with the Company and its Affiliates, or

     (ii) the total of the annual bonuses received by the employee
during the 36 months preceding the employee's death or
involuntary employment termination.

The Change Control Agreements contains the following:

      Individual                 Salary            Severance
      ----------                 ------            ---------
      (a) Robert D. Braem        $98,500           Yes-1
      (b) Barry L. Brown         $129,388          Yes-1
      (c) Francis M. Durkin      $180,000          Yes-1
      (d) B. T. Harrison         $150,000          Yes-1
      (e) Frank J. Jacobs        $170,000          Yes-1
      (f) C. K. Jones            $120,000          Yes-1
      (g) Karl Kaiser            $180,000          Yes-1
      (h) A. K. Lebsock          $125,000          Yes-1
      (i) H. P. Mechler          $159,000          Yes-1
      (j) David W. Montgomery    $126,000          Yes-2
      (k) R. W. Strickland       $131,950          Yes-1
      (l) R. M. Thompson         $120,000          Yes-1

Employees falling under severance 1, described as "yes-1" above,
shall receive severance payments equal to three times their
annual salary for termination as a consequence of a change in
control.

Employees falling under severance 2, describes as "yes-2" above,
shall receive severance payments equal to their annual base
salary for termination as a consequence of change in control.

The Debtors maintain Directors and Officers Liability Insurance
in the aggregate amount of $25 million under a policy that
provides for a $500,000 per occurrence deductible. This insurance
is to indemnify directors and officers for reasonable expenses
incurred by them in connection with suits in which they are named
as defendants.

James L. Patton, Jr., Esq., at Young Conaway Stargatt & Taylor,
LLP, in Delaware pleaded that in the Debtors' business judgment
the retention of the senior executives' invaluable knowledge and
experience is vital to the Debtors' business interests, these
estates, and the creditors.

Mr. Patton explained that the assumption of these employment
agreements is essential to the continuation of the Debtors'
businesses and to a successful reorganization. He advanced the
following arguments:

      (1) The continued employment of the senior executives will
create the continuity and stability that are necessary for a
reorganization of the Debtors' operations;

      (2) The employment agreements are signs that the executives'
are valued and their assumption will prevent uncertainty as to
these individuals' employment prospects, and create a sense of
security;

      (3) Finding qualified replacements in the event that the
senior executives resign would be difficult since a pending
bankruptcy proceeding may make it difficult for the Debtors to
attract qualified managers;

      (4) New executives, no matter how qualified, would lack the
in-depth knowledge and experience possessed by current ones; and

      (5) Assumption of the employment agreements will create no
additional burdens or liabilities for the estate. They are the
Debtors' valid and subsisting contract. The Debtors are not in
default and will not incur expenses in connection with the
requisite of curing defaults prior to assumption.

Mr. Patton told Judge Robinson that the Debtors should be allowed
to charge their indemnification obligations as administrative
expenses because corporate officers and directors must be given
adequate assurance of protection from personal liability charged
against them in the performance of their corporate functions.
(Imperial Sugar Bankruptcy News, Issue No. 3; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


INNOVACOM: Video Concern Files for Chapter 7 Bankruptcy
-------------------------------------------------------
InnovaCom Inc., a provider of video-transmission systems, filed
for chapter 7 bankruptcy protection last week in the U.S.
Bankruptcy Court in San Jose, Calif., according to Dow Jones.
InnovaCom is based in Santa Clara, Calif. The filing raises the
possibility that the bankruptcy court could erase all of
InnovaCom's debts as the company liquidates remaining assets.
(ABI World, February 22, 2001)


INTEGRATED HEALTH: Seeks Approval Of Respiratory Business Leases
----------------------------------------------------------------
In connection with the respiratory equipment and services
business operated by Debtor Centennial Medical Equipment, Inc.
d/b/a Quest Health Care, Integrated Health Services, Inc. asked
the Court for approval of (i) a lease by and between Quest
(Tenant) and The Northwestern Mutual Life Insurance Company d/b/a
Commerce Park Foster City (Landlord), for the premises currently
occupied by Quest, upon the expiry of the current lease on March
31, 2001 and (ii) an additional lease related to additional
property at the same address to cater for Quest's need for
additional space due to business expansion.

The Respiratory Business is profitable. Quest expects EBITDA of
the business to increase, over the next two years, from its
current level of approximately 39% to approximately 50%. The
Debtors told Judge Walrath that the Respiratory Business' solid
earnings and projected earnings growth correlate to the
significant increase in the number of patients serviced by Quest.
With respect to this, Quest was recently awarded a Veterans
Administration contract pursuant to which it is servicing
approximately 1200 patients, and will service an additional 700
patients during the coming months.

The current lease covers 3,200 square foot of warehouse and
office space. In connection with its business operation, Quest
stores, delivers and services in-home respiratory equipment,
including gaseous oxygen tanks and oxygen concentrators, utilized
by patients receiving in-home respiratory therapy. In addition,
Quest utilizes the Premises as its bill processing center where
it processes and submits bills to Medicaid and private insurance
companies for reimbursement.

Quest has increased its inventory and staff commensurate with the
Respiratory Business' expansion and needs additional premises for
that. The Additional Lease covers an additional 1,600 square feet
of warehouse and office space at the address to cater for this
need.

The term of the lease is for three years commencing on April 1,
2001 at monthly rent of $7,040 for the first year, $7,456 for the
second year and $7,904 for the third year. The term of the
Additional Lease is three years and one month, commencing March
1, 2001 and expiring on March 31, 2001, at monthly rent of $3,360
for the first year, $3,568 for the second year and $3,782 for the
third year. (Integrated Health Bankruptcy News, Issue No. 14;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


ITEQ INC.: Waives Revolving Credit Agreement
--------------------------------------------
Last week, ITEQ Inc. (OTC Bulletin Board: ITEQ) entered into
another limited waiver to its revolving credit agreement dated
October 1997, to allow additional time to pursue an overall
restructuring plan to reduce the company's overall level of debt
and improve its balance sheet.  The Company says that it
anticipates any such restructuring will be highly dilutive to the
value of ITEQ's presently outstanding common stock.

As of April 3, 2000 and subsequently on July 7, 2000, the Company
and its lenders entered into Limited Waivers and amended the
credit facility various lending institutions including Fleet
National Bank (f/k/a/ BankBoston, N.A.), as Agent, and
DeustcheBank AG, as Documentation Agent, whereby compliance with
certain financial covenants was waived through December 29, 2000.
In connection with these waivers and amendments, the Company
retained an investment banking firm to assist it in reviewing and
implementing restructuring alternatives.

ITEQ manufactures engineered equipment and provides after-market
and technical services to industrial customers worldwide. The
Company's products include heat exchangers, storage tanks and
tank products, filtration equipment and related services.


LASON INC.: In Default of Credit Agreement
------------------------------------------
Lason, Inc. (OTCBB:LSON) announced last week that it is in
default of its credit agreement based on the Company's failure to
meet required payments and violations of certain other financial
covenants under the terms of the agreement that expires in
September 2001.  Lason is currently involved in negotiating with
its lenders for a modification of its credit agreement to reflect
current operating conditions, the Company's current business plan
and an extension of its term.

"Our negotiations with our bank group are being conducted in a
positive and constructive manner and we continue to work toward a
mutually acceptable agreement," stated John R. Messinger,
President and Chief Executive Officer of Lason.

Lason had previously received waivers from its lenders for the
Company's failure to meet the requisite payments due on December
31, 2000, and January 31, 2001, and for violations of certain
other financial covenants included in the credit agreement. The
waivers expired on February 13, 2001, and the Company and the
lenders are continuing to discuss a modification of the credit
agreement. The lenders have the right under the credit agreement
to declare all amounts outstanding immediately due and payable,
but have not done so. The failure to amend the credit agreement
could have a material adverse effect on the Company.

Effective August 2, 2000, the Company engaged Conway, MacKenzie &
Dunleavy to provide turnaround consulting services and on August
23, 2000 appointed Donald S. MacKenzie to serve as Chief
Restructuring Officer of the Company according to the terms of a
letter dated August 2, 2000.

As of September 11, 2000, the Borrowers -- LASON, INC., a
Delaware corporation, LASON CANADA COMPANY, a Nova Scotia
unlimited liability company, and LASON U.K., LTD., a corporation
organized under the laws of the United Kingdom owed the
Lenders -- COMERICA BANK, CREDIT LYONNAIS-CHICAGO BRANCH,
NATIONAL CITY BANK, ABN AMRO BANK N.V., MICHIGAN NATIONAL BANK,
UNION BANK OF CALIFORNIA, N.A., THE FUJI BANK LIMITED, THE CHASE
MANHATTAN BANK, MELLON BANK, N.A., FLEET NATIONAL BANK, and
BARCLAYS BANK PLC, NEW YORK BRANCH, with BANK ONE, MICHIGAN,
serving as administrative agent -- $170,550,000 plus accrued
interest.

Lason is a leading provider of integrated information management
services for image and data capture, data management and output
processing. Since its founding in 1985, Lason has grown to employ
over 8,900 people with operations in 29 U.S. states, United
Kingdom, Canada, Mexico, India, Mauritius and the Caribbean. The
Company currently has over 85 multi-functional imaging centers
and operates over 70 facility management sites located on
customers' premises.


LASON INC.: Names William C. Brooks as Chairman of the Board
------------------------------------------------------------
Lason, Inc. (OTCBB:LSON) announced that William C. Brooks was
named Chairman of the Board. Robert A. Yanover resigned from the
Board as both Chairman and as a Director of the company for
health reasons.

Mr. Brooks joined Lason's Board of Directors in May 2000. He has
extensive experience with a public company which has recently
completed a restructuring in his capacity as Chairman of United
American Healthcare Corporation (OTCBB:UAHC), a provider of
management and consulting services to managed care operations.

Mr. Brooks is founder and Chairman of The Brooks Group
International, Ltd., a private holding company. He serves as a
board member of Louisiana-Pacific Corporation (NYSE:LPX), DTE
Energy Company and Detroit Edison (NYSE:DTE) and Covansys
(Nasdaq:CVNS). He also serves in leadership positions for a
number of non-profit and community organizations. Mr. Brooks
served as a member of the Social Security Advisory Board, having
been appointed by President Bill Clinton as one of three
presidential appointees to the Board. In addition, he served as
Assistant Secretary of Labor for the Employment Standards
Administration, the largest agency in the Department of Labor.
President George Bush appointed Mr. Brooks to the position.

Mr. Brooks is a retired U.S. Air Force officer and a retired Vice
President of General Motors Corporation. He is a graduate of Long
Island University and holds an MBA from the University of
Oklahoma. He also has completed the Harvard Business School's
Advanced Management Program.


LERNOUT & HAUSPIE: Visteon Wants License Obligations Honored
------------------------------------------------------------
Dragon System, Inc. entered into a license agreement with Ford
Motors Company in 1997 for the development and licensing of
speech recognition software programs. This agreement was amended
in 1999 so that Visteon Corporation, through its affiliate
Visteon Automotive Systems, could be substituted as licensee in
place of Ford.

One of the debtors, Lernout & Hauspie Speech Products, N.V.,
acquired Dragon in 2000 and changed Dragon's name to L&H
Holdings, USA, Inc. Holdings is a wholly-owned subsidiary, so
that L&H became the licensor under the license agreement by
virtue of the acquisition of Dragon.

The license agreement includes covenants that:

      (1) L&H will develop and license to Visteon certain portions
of its computer programs that will operate in substantial
conformance with material specifications of Visteon;

      (2) L&H will use reasonable efforts to make the computer
programs comply with the specifications should they fail to do
so;

      (3) Services rendered by L&H will be performed in a
professional manner by qualified personnel;

      (4) Both parties understand that speech recognition is a
statistical process and that speech recognition errors are
inherent in it;

      (5) Visteon acknowledges that L&H has no responsibility for
designing the applications in which the computer programs are to
be used, and that L&H has no liability for recognition errors
that occur so long as the computer programs meet the standards
established by the parties in the specifications;

      (6) Visteon pays the following fees to L&H, which are non-
refundable except in case of L&H's breach of the agreement:

          Date/Payment Trigger                          Payment
          --------------------                          -------
          Payment upon execution of this agreement
               and Completion of Milestone 1  ......... $475,800

          Milestone 2 ..................................$317,200

          Milestone 3 ..................................$317,200

          Milestone 4 and acceptance of completed
               computer programs .......................$475,800

      (7) Vision shall pay L&H the following royalties for copies
of the computer programs:

          Accumulated Units                  Royalties
          -----------------                  ---------
          (a) 0 - 50,000                     $15.50
          (b) 50,001 - 100,000               $13.00
          (c) 100,001 - 200,000              $11.00
          (d) 200,001 - 350,000              $ 9.00
          (e) 351,001 - 500,000              $ 7.50
          (f) 500,001 - 1,000,000            $ 6.00
          (g) 1,000,001 - 3,000,000          $ 3.00
          (h) 3,000,001 - 10,000,000         $ 2.00
          (i) > 10,000,000                   $ 1.00

An amendment of the agreement provides for the payment by Visteon
of additional fees, which are non-refundable except in case of
breach of the agreement by L&H:

          DATE/PAYMENT TRIGGER                          PAYMENT
          --------------------                          -------

          (a) upon execution of this amendment to the
              agreement and completion of
              Milestone 2-1                             $87,600

          (b) upon completion of Milestone 2-2          $58,400

          (c) upon completion of Milestone 2-3          $58,400

          (d) upon completion of Milestone 2-4          $87,600

Visteon wrote L&H prior to the petition date enumerating what
Visteon regarded as the many material failures L&H had committed
in violation of the agreement. Visteon asserted that software
delivered by L&H did not meet production quality standards or
contract standards, some software contained bugs and did not meet
the agreement's recognition accuracy requirement, and L&H failed
to provide Visteon with certain deliverables as required under
the agreement, or when products were delivered they failed to
perform as required. These defects have not been cured by L&H.

Visteon sent a letter to Mr. Luc A. Despins, Esq., at Milbank,
Tweed, Hadley & McCloy, LLP, in New York, counsel for Debtors,
after the filing of the petition, demanding (a)satisfactory and
timely performance of all their obligations under the Agreement
or (b) turn over to Visteon of the intellectual property that is
subject of the Agreement; and requesting that Debtors not
interfere with Visteon's rights under the agreement.

Mr. Mark Minuti, Esq., at Saul Ewing LLP, in Delaware asked Judge
Wizmur, on Visteon's behalf, to compel L&H to perform its
obligation under the license agreement or to turn over the
subject intellectual property to Visteon Corporation. He argued
that Visteon has made its demand in writing, as required by the
agreement, and despite this demand L&H has not performed its
obligation. He added that L&H's remissness has had an adverse
impact on Visteon's ability to meet its commitment to provide
voice products to its customers, including its ability to provide
mobile multimedia and telematics products. Mr. Minuti explained
to Judge Wizmur that without her order Visteon will experience
delays of at least one year in rolling out new speed technology
products in the automotive market, which is its core market
and as such it will continue to suffer. (L&H/Dictaphone
Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service,
Inc., 609/392-0900)


LOEWEN GROUP: Selling 2 Rhode Island Funeral Homes for $850,000
---------------------------------------------------------------
As part of The Loewen Group, Inc.'s Disposition Program and
Global Bid Procedures Program, Debtors Frank R. Gorton & Sons,
Inc. and Rushlow-Iacoi Funeral Home, Inc. have identified an
initial bidder (the ALA Holdings, LLC) for the purchase of
funeral home businesses and related assets at the Sale Locations,
free of all liens, claims and encumberances, at a purchase price
of $850,000 pursuant to the Asset Purchase Agreement dated
December 28, 2000.

Accordingly, the Debtors sought and obtained the Court's
authority: (i) to sell the funeral home and cemetery businesses
and related assets at the Sale Locations to the Purchaser that
the Debtors determine has submitted the highest and best offer,
free of all liens, claims and encumberances; and (ii) to assume
and assign to the Purchaser the executory contracts and unexpired
leases, pursuant to section 363 of the Bankruptcy Code.

The Sale Locations are:

      (1) Gorton Funeral Home (Loc. No. 3604)
          721 Washington Street
          Coventry, Rhode Island 02816

      (2) Rushlow-Iacoi & Associates (Loc. No. 3605)
          64 Friendship Street
          Westerly, Rhode Island 02891

Pursuant to section 365 of the Bankruptcy Code, the Selling
Debtors will assume 13 executory contracts and unexpired leases -
4 Management Agreements, 3 Non Competition Agreements, 2
Consulting Agreements, 3 Oral Leases and 1 contract regarding
waste. The Selling Debtors will subsequently assign its rights
and obligations under the Assignment Agreements to the Initial
Bidder. The Debtors do not believe that there are any monetary
defaults or cure costs associated with the assumption and
assignment of the Assignment Agreements. The Debtors told the
Court that they are continuing to review each of the Assignment
Agreements and will notify the nondebtor party to an Assignment
Agreement immediately if they identify any cure obligation
associated with that agreement.

Qualified competing bid must exceed $875,000 i.e. 3% above the
Purchase Price. Any entity that desires to submit a competing bid
for the Sale Locations may do so in accordance with the Bidding
Procedures approved by the Disposition Order.

In accordance with the Net Asset Sale Proceeds Procedures, the
Debtors will use the proceeds generated to repay any outstanding
balances under the Replacement DIP Facility and deposit the net
proceeds into an account maintained by LGII at First Union
National Bank for investment, pending ultimate distribution on
court order.

Neweol would sell and the Initial Bidder would purchase certain
accounts receivable related to the Sale Locations, pursuant to a
purchase agreement between Neweol and the Initial Bidder. The
amount of the Neweol Allocation will be determined immediately
prior to closing. The Neweol Allocation will not be utilized or
deposited in the manner contemplated by the New Asset Sale
Proceeds Procedures. (Loewen Bankruptcy News, Issue No. 33;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


MERRILL CORP.: Moody's Reviews Ratings For Possible Downgrade
-------------------------------------------------------------
Moody's Investors Service put all ratings for Minnesota-based
Merrill Corporation and Merrill Company LLC under review for
possible downgrade. These ratings are:

      * the B3 rating assigned to Merrill's $140 million 12.00%
senior subordinated notes, due 2009;

      * the B1 rating assigned to Merrill Company LLC's $270
million senior secured credit facilities;

      * the B1 senior implied rating and

      * the B2 senior unsecured issuer rating.

Accordingly, the review is prompted by the company's recent
announcement that the amended covenants under its credit
facilities will not likely be met as of January 31, 2001, and as
a consequence they may not be able to borrow under their
revolving credit facility.
Moody's relates that the review will include the analysis of
Merrill's FYE January 31, 2001 performance and review of
additional amendments, waivers or potential restructuring under
the credit facilities. The rating agency will also review the
effect of any restructuring on the senior subordinated debt.

The expected covenant violations for January 31, 2001 and
possibly March 31, 2001 and April 30, 2001 are the result of
continued weakness in the domestic financial transaction market
and its impact on Merrill's Financial Document Services business
unit, according to Moody's.

Merrill Corporation is a diversified business communications and
document services company applying advanced information systems
and internet/intranet technology to provide a broad range of
services to its financial, legal and corporate clientele. Founded
in 1968, the company currently operates in the US and various
locations throughout Western Europe.


OWENS CORNING: Strikes Adequate Assurance Deals with Utilities
--------------------------------------------------------------
Owens Corning previously filed and obtained an Order granting a
Motion seeking interim and final orders (i) prohibiting utilities
from altering, refusing or discontinuing services on account of
prepetition invoices, and (ii) establishing procedures for
determining requests for additional adequate assurance of
payment. Under the procedure embodied in Judge Walrath's order,
several utilities have requested that the Debtors provide
additional adequate assurance of payment which differ from the
assurances described in Judge Walrath's prior order. To that
end, the Debtors have entered into a series of substantially
similar stipulations and agreed orders with these utilities for
the security deposits indicated:

      Utility                            Security Deposit
      -------                            ----------------

      Amerenue                                  $212
      Arkansas Western Gas Company               125
      Cincinnati Gas & Electric Company      100,000 LC
      Columbia Gas of Ohio                    35,396
      Corn Belt Energy Corporation               160
      Entergy Arkansas, Inc.                     630
      Entergy Gulf States, Inc.                1,085
      Entergy Louisiana, Inc.                  1,230
      Entergy Mississippi, Inc.                  425
      Florida Gas Transmission Co.            15,000
      Florida Power Corporation                  500
      Florida Power & Light Company           15,000
      Georgia Power & Savannah Electric Co.  500,000
      Johnson City Power Board                 3,000
      Lakeland Electric & Water                2,000
      Metropolitan Water Reclamation             350
      Morehead City Water Department             400
      Niagara Mohawk Power Corporation       350,000
      Northern Indiana Public Service Co.     36,320
      Pacific Gas & Electric                 117,000
      Piedmont Natural Gas Co.                75,000
      Shelby Energy Cooperative, Inc.          2,000
      Southern California Edison              60,000
      Southwest Gas Corporation               25,000
      TXU Electric & Gas                     500,000
      Utah Power & Light & Pacific Power      35,000
      Verizon Communications, Inc.            40,000
      XCEL Energy                              4,000

Under these stipulations, the utility will continue to provide
services to the Debtors and to invoice the Debtors for these
services in the same manner that was customary prior to the
Petition Date. The Debtors shall pay the full, undisputed amounts
of the utility's postpetition invoices on or before the due dates
set forth in the invoices, and if the Debtors fail to do so, the
utility may avail itself of its remedies provided by applicable
regulations.

The Debtors will pay to the utility postpetition security
deposits in cash or by letter of credit or bond, which will bear
interest, if paid in cash, as provided for under the utility's
regulations, and will be returned to the Debtors, less any
amounts due for unpaid utility invoices for postpetition
services, as provided under the utility's regulations.

If there is a default by the Debtors with respect to (i) payment
of the security deposit, or (ii) payment of charges for
postpetition utility services, as to which there is not a good
faith dispute, and the default is not cured within the greater of
ten days or the period provided for in the regulations after
written notice from the utility to the Debtors, then the utility
may terminate postpetition utility services to the Debtors in
accordance with the regulations and without further Order of the
Court.  Any undisputed charges for postpetition utility services
is an administrative expense. (Owens Corning Bankruptcy News,
Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900)


PAUL HARRIS: Retains Keen Realty in Chapter 11 Restructuring
------------------------------------------------------------
Paul Harris Stores Inc., the Indianapolis-based women's apparel
retail chain, has retained Keen Realty LLC to organize a
bankruptcy auction of the leaseholds on about 100 of its retail
sites. Paul Harris filed for chapter 11 protection on Oct. 16,
2000. "We encourage prospective purchasers to put in their bids
immediately so that credible offers can be considered," said Mike
Matlat, Keen Realty's Vice President. "We're moving quickly and
would not want anyone to miss out." The March auction date and
time have not been set. (ABI World, February 22, 2001)


PILLOWTEX CORP.: Paying Dallas Transitional Employee Benefits
-------------------------------------------------------------
As part of a cost-saving restructuring, Pillowtex Corporation
is in the process of transitioning most of their financial and
accounting operations from Dallas, Texas, to Kannapolis, North
Carolina. In August 2000 the Debtors approached certain of their
employees whose positions were either scheduled to be eliminated,
or moved to North Carolina as part of the transition and offered
them a severance payment if they would agree to stay at their
positions and assist in the transition of the financial and
accounting operations until the earlier of the date on which
their position was eliminated, or December 31, 2000, the
estimated completion date for the transition. To further assist
in a successful transition, certain of the transitional employees
subsequently agreed to stay at their positions beyond the end of
the year.

The Prepetition Retention Program includes: (a) stay bonus plan
which is designed to encourage transitional employees to (i)
maintain their employment with the Debtors, (ii) maximize revenue
as much a possible through the collection of accounts receivable
prior to the completion of the transition, and (iii) perform
their assigned duties at the highest possible level; and (b)
certain severance arrangements which also encourage transitional
employees to maintain their employment with the Debtors through
the transitional period and provide financial benefits intended
to assist the transitional employees while they secure new
employment.

The stay bonus plan was designed for the purpose of retaining and
encouraging the maximum effectiveness of the transitional
employees and is calculated in part based on the performance of
the transitional employees and, in some circumstances, their
department. Under the stay bonus plan, transitional employees are
eligible to earn (a) a specified bonus payment based upon the
transitional employee's performance review, and in some
instances, also upon a calculation of days sales outstanding, and
(b) a retention payment, each payable upon the earlier of
December 31, 2000, or the date their assignment ends.

For certain transitional employees that work in the accounts
receivable and collection departments, the amount of their
performance bonus is determined by (a) whether their department
achieves certain targets of revenue collection and (b) the
results of a review of their performance during the transition
period. These transitional employees may earn a performance bonus
of up to a maximum of five to six times their monthly wages.
Certain other transitional employees will have their performance
bonus determined solely by the results of a review of their
performance during the transition period and may earn up to a
maximum of five tines their monthly wages. Based on performance
to date, the Debtors do not believe that, on average, any of the
transitional employees will earn a performance bonus of more than
four times their monthly wages.

The second part of the stay bonus plan is the retention payment.
A retention payment equal to one or two month's wages, depending
upon job classification, will be paid to transitional employees
who remain employed by the Debtors until their terminate date and
have been employed by the Debtors for at least one year as of
December 31, 2000. Transitional employees who remain employed by
the Debtors until their termination date, but have been employed
by the Debtors for less than one year as of December 31, 2000,
will receive a pro rata retention payment based on their length
of service.

As a complement to the stay bonus plan, the severance plan
further ensures (a) the retention of the transitional employees
through the transition period, and (b) basic financial security
for the transitional employees, notwithstanding possible job
loss, by providing one week of severance pay for each completed
year of service.

The Debtors estimate that approximately 65 transitional employees
will be eligible for the performance bonuses, retention payments,
and severance benefits, and that the maximum aggregate of those
payments will not exceed $904,482, $176,644, and $230,020,
respectively. In general, an eligible transitional employee must
be employed by the Debtors as of the termination date to earn and
receive any retention program benefits. If, however, an eligible
employee is terminated by the Debtors without cause, the employee
will receive his or her entire retention program benefits, which
will be paid on the same schedule as if the employee had not been
terminated.

No retention program benefits are currently due and payable, and
the transitional employees will not earn their respective
retention program benefits until their termination date.
Nonetheless, out of an abundance of caution, the Debtors
requested authority to pay all amounts owed under the prepetition
retention program, whether those payments constitute prepetition
obligations or postpetition obligations. (Pillowtex Bankruptcy
News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-
0900)


PLANETRX.COM: Reports Q4 and Year-End 2000 Losses
-------------------------------------------------
PlanetRx.com, Inc. (OTC Bulletin Board: PLRX) (www.PlanetRx.com),
today announced fourth quarter and fiscal year-end financial
results for the period ended December 31, 2000.

Net revenues for the fourth quarter of 2000 were $8.0 million.
The pro forma net loss for the fiscal fourth quarter of 2000 was
$10.3 million, or $(1.69) per share, excluding certain non-cash
and non-recurring items. Including these non-cash and non-
recurring charges, the Company reported a fourth quarter net loss
of $176.0 million, or $(28.85) per share.

Net revenues for the fiscal year ended December 31, 2000 were
$36.2 million. The pro forma net loss for year was $92.3 million,
or $(15.35) per share, excluding certain non-cash and non-
recurring items. Including these non-cash and one-time charges,
the Company reported a net loss for the fiscal year end of $303.6
million, or $(50.50) per share.

Management expects that operating losses and negative cash flows
from operations may continue for the fiscal year 2001. As a
result of these factors, it is expected that the audit report of
the Company's independent accountants on the December 31, 2000
financial statements will include a paragraph regarding the
Company's ability to continue as a going concern.

As previously announced, PlanetRx.com will discontinue the sale
of retail health and beauty products as of March 12, 2001 and has
already begun implementing steps to monetize its distribution
center and other assets. PlanetRx.com is providing customers the
option to transfer their prescription needs to drugstore.com.
PlanetRx.com will hold a conference call to discuss fourth
quarter results and future outlook for 2001. Details of the call
will be announced at a later date.

                          About PlanetRx.com

PlanetRx.com, Inc., a leading Internet healthcare destination for
commerce, content and community, delivers a convenient,
personalized and informed health and beauty shopping experience.
With products ranging from prescriptions to personal-care items
to the latest medical information, PlanetRx.com gives consumers
the ability to manage their own healthcare in a convenient and
secure environment. PlanetRx.com is one of five online pharmacies
to have received the Verified Internet Pharmacy Practice Sites
(VIPPS) seal of approval from The National Association of Boards
of Pharmacy (NABP). The company is headquartered in Memphis, TN
and operates its own pharmacy and distribution center in order to
ensure the highest quality customer care.


PLATINUM ENTERTAINMENT: Files Reorganization Plan in Chicago
------------------------------------------------------------
Platinum Entertainment, Inc., one of America's largest
independent record companies, has filed a Plan of Reorganization
with the United States Bankruptcy Court for the District of
Chicago.

The Plan outlines the company's goals to become a successful
entertainment company through various strategic reorganization
initiatives. As part of these initiatives, new operating
management will be appointed. Content Partners LLC, a bankruptcy
court-approved corporate advisory, reorganization and sales
company, is leading the reorganization efforts.

"We are hoping to receive an effective, rapid confirmation by the
Court," said Martin Tudor, CEO of Content Partners LLC. "We
believe that Platinum is well-positioned to grow into a viable
entertainment company."

About Platinum Entertainment

Platinum Entertainment, Inc. produces, licenses, acquires,
markets and distributes high quality recorded music in the pop,
adult contemporary, country, blues, gospel, urban and classical
formats primarily under its Platinum, Platinum Nashville, CGI,
and Intersound Classical labels. Platinum's products include new
releases, as well as compilations that enable Platinum to exploit
its catalog of master recordings.


PRIMESTREET: Pulls The Plug & Seeks Buyer For Technology
--------------------------------------------------------
PrimeStreet, a two-year-old Boston company, yesterday laid off
more than 60 of its 70 employees and is seeking a buyer for its
technology, according to Boston.Internet.com. PrimeStreet had a
proven technology - a transaction engine designed to help banks
and other lenders check credit and speed the loan application
process for small business owners. It also had good partners,
more than 93 on- and offline customers and $41 million in venture
backing. What it didn't have was revenue coming in the door fast
enough. The company's prime customers-banks-didn't move quickly
when replacing their small business lending processes, so the
sales cycle was slow. Investors had promised that they would back
PrimeStreet in six months, once it had delivered its product to
more customers and proven its ability to scale. But PrimeStreet
needed the money yesterday.

Eleni Varitimos, a PrimeStreet business analyst who's helping the
company wind down and complete its asset sale, said the company
was doomed by the combination of a cautious investment market and
a slow revenue cycle. "Small business lending is a core part of
their [financial institutions] business, so they moved very
slowly," she said. "From the investors' perspective, it was smart
to wait to see if we could deliver what we promised. But the
longer they made us wait, the worse it got." (ABI World, February
22, 2001)


QUINTUS CORPORATION: Files Chapter 11 Petition in Wilmington
------------------------------------------------------------
Quintus Corporation voluntarily filed petitions in the U.S.
District Court in Wilmington, Delaware for relief under Chapter
11 of the U.S. Bankruptcy Code.

Quintus intends to continue business as usual through this
process and does not anticipate any interruption in continuing to
service its customers and partners or relationships with existing
vendors and suppliers.

In connection with the filing, the company has engaged the
services of Pachulski, Stang, Ziehl, Young and Jones as legal
advisors and PricewaterhouseCoopers as financial advisors. James
Coriston has concluded his contract as interim Chief Financial
Officer having completed his work on the financial review and
preparation of accounting statements and restatements. The
PricewaterhouseCoopers financial restructuring team is lead by
Paul Weber, a partner in PricewaterhouseCoopers for 9 years with
extensive experience in Chapter 11 proceedings.

                  About Quintus Corporation

Quintus Corporation (OTCBB:QNTS) provides a comprehensive
electronic customer relationship management (eCRM) solution that
enables companies to increase revenue potential by improving
customer satisfaction and loyalty. A technology innovator,
Quintus offers products that manage all customer interactions,
such as customer orders, inquiries and service requests, and
allow delivery of consistent customer service across multiple
communications channels, including the Internet, e-mail and
telephone. Quintus is based in Dublin, California with additional
offices throughout North America, Europe and Asia. For more
information, call 800/337-8941, email sales@quintus.com or access
us on the Internet at www.quintus.com.


QUINTUS CORP.: Case Summary & 25 Largest Unsecured Creditors
------------------------------------------------------------
Lead Debtor: Quintus Corporation
              4120 Dublin Blvd.
              Dublin, CA 94568

Debtor affiliates filing separate Chapter 11 petition:

      Mustang.com, Inc.
      Acuity Corporation

Type of Business: Developer and provider of comprehensive
                   electronic customer relationship management
                   (eCRM) software, applications and services

Chapter 11 Petition Date: February 22, 2001

Bankruptcy Case Nos.: 01-00501 through 01-00503

Debtors' Counsel: Laura Davis Jones, Esq.
                   Pachulski, Stang, Ziehl, Young & Jones P.C.
                   919 Market Street
                   Wilmington, DE 19801
                   (302) 652-4100
                   (302) 652-4400 (F)

Total Assets (Consolidated): $72,809,000

Total Liabilities (Consolidated): $31,090,000

Consolidated List Of Debtors' 25 Largest Unsecured Creditors:

Entity                        Nature of Claim     Claim Amount
------                        ---------------     ------------
One Workplace L. Ferrari      Trade Debt          $1,154,301
P.O. Box 49138
San Jose, CA 95161-9138
Phone: (408)263-1001
Fax: (408)263-3322

Williams Communications       Trade Debt            $220,376

Siebel Systems                Trade Debt            $160,000

IVC Inc.                      Trade Debt            $132,764

Cognos Corp.                  Trade Debt            $105,773

Siemens                       Trade Debt            $105,773

MCSi Technical Industries     Trade Debt            $101,122

Beehive Software              Unsecured Note        $100,000

Extraprise Group, Inc.        Trade Debt             $86,423

Ensemble Consulting           Trade Debt             $73,100

Hall Kinion                   Trade Debt             $59,693

Technology Marketing Corp.    Trade Debt             $54,768

SDL Plc                       Trade Debt             $49,310

Citation Press                Trade Debt             $45,867

Penton Media, Inc.            Trade Debt             $44,955

Miller Freeman Inc.           Trade Debt             $44,700

Corporate Motivators          Trade Debt             $41,007

Rex Electric, Inc.            Trade Debt             $33,389

Network Design & Integration  Trade Debt             $33,100

PSW Technologies, Inc.        Trade Debt             $31,955

Catalyst Systems &
Peripherals                   Trade Debt             $30,564

Freedom Technology            Trade Debt             $29,114

AT&T/AZ-0505814486001         Trade Debt             $28,465

Sun Microsystems              Trade Debt             $26,467

Huntington Group              Trade Debt             $24,750


QUINTUS CORPORATION: Agrees to Sell All Assets to Avaya, Inc.
-------------------------------------------------------------
Quintus Corporation entered into an agreement with Avaya Inc.
(NYSE:AV), a global leader in business communications solutions
and services, in which Avaya will acquire substantially all of
Quintus' assets for $30 million in cash and assume certain of
Quintus' liabilities up to an additional $30 million.

Upon completion of the proposed purchase, Avaya will incorporate
Quintus' eCRM business as a key component of its customer
relationship management (CRM) solutions portfolio, which
currently includes advanced customer care technologies such as
interactive voice response (IVR), workflow management,
intelligent routing and predictive dialing, while also providing
product continuity for Quintus eContact customers worldwide.

In order for the agreement with Avaya to go forward, Quintus has
filed a motion seeking the Court's approval of the asset purchase
agreement with Avaya pursuant to section 363 of the Bankruptcy
Code. The agreement is subject to approval of the bankruptcy
court and under the Hart-Scott-Rodino Antitrust Improvements Act
and other customary conditions for a transaction of this nature.

The companies hope to complete the asset purchase agreement
within the next 45 days.

In making its Chapter 11 filing, Quintus has also noted its need
for near-term funding to continue operations and its current
inability to gain funding in the normal course of business,
primarily due to outstanding lawsuits filed against the company.
Quintus believes that the Avaya agreement will bring value to
shareholders, provide continuity to Quintus customers, partners
and employees, and continue the evolution of Quintus' technology
heritage.

The company also stated that the current Quintus management team
is committed to leading the company through this transition,
working together with the management of Avaya. All Quintus
employees will be offered employment within Avaya upon the
closing of the transaction.

Keith Larson, vice president of the Communications Applications
Group at Avaya, stated, "We are impressed with Quintus'
substantial customer base, strong partnerships and award-winning
eCRM technology. When the agreement is final, we plan to leverage
Quintus eContact with Avaya's broad CRM portfolio to establish a
new standard in the market for integrated multi-channel customer
relationship management, while continuing to provide reliable,
high-quality service and support to Quintus' existing customer
base."

                          About Avaya

Avaya, headquartered in Basking Ridge, N.J., USA, is a leading
provider of communications systems for enterprises, including
businesses, government agencies and other organizations. Avaya
offers voice, converged voice and data, customer relationship
management, messaging, multi-service networking and structured
cabling products and services. Avaya is a worldwide leader in
sales of messaging and structured cabling systems and a U.S.
leader in sales of enterprise voice communications and call
center systems. Avaya intends to use its leadership positions in
enterprise communications systems and software, its broad
portfolio of products and services, and strategic alliances with
other technology and consulting services leaders to offer its
customers comprehensive eBusiness solutions. For more information
about Avaya, visit its Web site at http://www.avaya.com.


QUINTUS: Publishes Q3 2000 Results & Financial Restatement
----------------------------------------------------------
Quintus Corporation (OTCBB:QNTS) disclosed its unaudited
preliminary results for the fiscal third quarter ended December
31, 2000, provided further information on the status of its
financial restatement process, and is publishing a summary of its
restatement for all outstanding periods.

Quintus' revenue for the fiscal 2001 third quarter ended December
31, 2000 was $9.5 million and net loss excluding, where
applicable, impairment of goodwill, amortization of intangibles,
charges for in-process research and development, charges for
restructuring and stock based compensation (Pro-forma net loss)
was $24.0 million, or $(0.60) per share. Net loss for the quarter
was $295.5 million, or $(7.42) per share. The results for the
third quarter include an impairment charge of $251.6 million
related to goodwill associated with the acquisitions of Acuity
Corp. and Mustang.com, Inc., and the recognition of a one-time
expense of $4 million for restructuring costs in the third
quarter.

The company's results for the quarter were significantly impacted
by uncertainty following the announcement on November 22, 2000
that previous financial results would need to be restated.
Consequently, the company saw prospective customers delaying or
not concluding orders, which was further exacerbated by the
general economic slowdown in the market.

During the quarter, Quintus closed one order in excess of $1
million, initiated new business relationships with 12 companies
and expanded business with over 40 of its existing customers.
Deployments of full multi-channel contact centers, including
implementations with Siebel eBusiness applications, were
completed at multiple customer sites.

Quintus achieved revenues in excess of $50 million for calendar
2000 and its products continue to receive recognition from
customers and analysts alike, including notable commendations in
recently published Forrester and Cahners In-Stat research
reports.

As of December 31, 2000, Quintus had $23.1 million in cash and
cash equivalents. Quintus notes its need for near-term funding to
continue operations and stated that the company is therefore
actively considering a range of funding options, including
potential sale of the company.

                   Status of Restatement Process

The company previously announced on February 16 that it has yet
to complete the filing of its financial statements as required by
the SEC, pending resolution of the appropriate accounting
treatment for one transaction. The revenue from this transaction
was part of a total receivable of approximately $6 million due
from one customer, $4.5 million of which was based on falsified
documentation, as reported by the company on November 22, 2000.
This transaction is currently included in the unaudited restated
numbers published in this release as a $1.5 million transaction
in the March 2000 quarter. Quintus has had difficulty receiving
sufficient information to ensure that revenue is recorded in the
appropriate quarter. Quintus is working with the customer and its
outside auditors to confirm the appropriate revenue recognition
for this transaction.

With the exception of this one transaction the company has
completed its accounting relating to the consolidated financial
statements to be included in an amended form 10-K for the fiscal
year ended March 31, 2000, amended form 10-Qs for the quarters
ended December 31, 1999 and June 30, 2000, and form 10-Qs for the
quarters ended September 30, 2000 and December 31, 2000. The
company intends to file these forms promptly upon resolution of
the transaction in question.

                     Background to Restatements

On November 22, 2000, Quintus announced that, following a review
by Davis Polk & Wardwell, assisted by PricewaterhouseCoopers LLP,
the audit committee of its board of directors had identified
three transactions in the company's previously announced
financial results that were based upon falsified documentation,
requiring the company to restate previous SEC financial filings.

On January 23, 2001, Quintus announced that, after an extensive
review, falsified documentation was limited to the three cases
announced on November 22, but that the restatements would also
include one additional transaction that would be accounted for as
a non-monetary "barter" transaction, and one additional smaller
transaction where the timing of revenue recognition would need to
be changed.

The financial restatements prepared, and summarized in unaudited
form below, show the effects of changing these five transactions
on the company's income statement and balance sheet for each
period.


RNETHEALTH INC.: Formulates Plan To Meet Cash Needs
---------------------------------------------------
RnetHealth Inc. has negative working capital, reduced cash
levels, recurring losses from operations and has limited
operating revenues, that raise substantial doubt about the
company's ability to continue as a going concern. The ability of
the company to operate as a going concern is dependent upon its
ability (1) to obtain sufficient additional debt and equity
capital from public and private sources, (2) to attract
appropriate strategic partners to increase revenues, (3) to
distribute its programming and services through multimedia
channels, (4) to achieve a critical mass of viewers to attract
advertisers and healthcare providers and (5) to acquire and
develop appropriate content for internet and cable broadcasters.

The company plans to raise additional working capital through
private and public offerings. To achieve this, the company has
embarked on a definitive plan to (1) enter into new strategic
relationships, (2) obtain equity infusions from option holders,
existing shareholders and other third parties, (3) increase
awareness of the company in the investing community, and (4)
increase revenues from non-traditional areas. The successful
outcome of future activities cannot be determined at this time
and there are no assurances that if achieved, the company will
have sufficient funds to execute its intended business plan or
generate positive operating results.

Net sales of $893,613 for the six-month period ended December 31,
2000 were 24% higher than the net sales of $721,671 for the six-
month period ended December 31, 1999, due to normal sales growth.
The net loss for the six-month period ended December 31, 2000 was
$3,971,550 as compared to a net loss of $5,280,185 for the six-
month period ended December 31, 1999.

Net sales of $390,847 for the three-month period ended December
31, 2000 were 32% higher than the net sales of $295,002 for the
three-month period ended December 31, 1999, due to normal sales
growth.

The net loss for the three-month period ended December 31, 2000
was $1,909,922 as compared to a net loss
of $2,654,448 for the three-month period ended December 31, 1999.


STUART ENTERTAINMENT: Files "Chapter 22" Petition in Minnesota
--------------------------------------------------------------
Craig D. Hansen, Esq., at Squire, Sanders & Dempsey L.L.P., tells
Judge Fitzgerald in Wilmington, Delaware, that Reorganized Stuart
Entertainment, Inc., now known as B.K. Entertainment, Inc., filed
for bankruptcy in the U.S. Bankruptcy Court for the District of
Minnesota on February 16, 2001. Squire Sanders, Mr. Hansen notes,
is one of the Debtors' largest unsecured creditors. Additionally,
Mr. Hansen suggests that all unsecured creditors whose claims
remain unresolved in Stuart's first chapter 11 case should not be
considered to have claims against the Debtor in the second
chapter 11 case. Mr. Hansen made this suggestion in a post-
confirmation status report filed "without consultation with the
Debtor" in the Delaware bankruptcy court. Mr. Hansen told Judge
Fitzgerald that his firm has "not been in contact with the Debtor
for some time and the Debtor has long since stopped honoring its
fee obligations."  As a result, Squire Sanders is one of the
Company's largest unsecured creditors.


TRANS WORLD: Continental Withdraws Auction Process Objections
-------------------------------------------------------------
Continental Airlines (NYSE: CAL) said it is immediately
withdrawing its appeal of the preferential treatment that
American Airlines has sought in the TWA bankruptcy.

"We have stated repeatedly that we would step aside if American
unconditionally guaranteed that it would fulfill its promises to
hire substantially all of the TWA employees and protect retiree
benefits," said a Continental spokesperson.

Yesterday at a hearing before the bankruptcy court, in response
to Continental's concerns, TWA and American gave assurances that
(1) they were proceeding in good faith to complete the
transaction they had publicly described, (2) they were amending
the legal documents to conform to the public description, and (3)
the American transaction would in fact save the jobs of TWA's
employees and protect the benefits of TWA's existing retirees, as
described in the Senate testimony of American's CEO Donald Carty.

In addition, TWA told the Court that it was necessary to obtain
approval of the American transaction by March 9, in order to meet
certain financial obligations to aircraft lessors that are coming
due on March 12, and that if TWA fails to meet such obligations,
it may be unable to continue to fly.

"While we are still concerned about American's true intentions,
we have concluded, based on American's assurances and
commitments, that it is appropriate to withdraw our objections at
this time," concluded the spokesperson.


WEBLINK WIRELESS: Moody's Junks Senior Note Ratings
---------------------------------------------------
Moody's Investors Service today downgraded the ratings on the two
unsecured debt issues of WebLink Wireless (fka PageMart
Wireless). These are:

      * the company's 15% Senior Notes due 2005 downgraded to Caa2
        from B3, and

      * the 11.25% Senior Subordinated Notes due 2008 lowered to
        Ca from Caa2.

The outlook for these ratings is negative.

According to Moody's, the downgrades reflect the company's poor
financial results and its requirement for additional capital in
order to continue as a going concern. The company is reportedly
hoping to issue a new convertible debt security that will rank
senior to both of the rated issues. Moody's states that the
successful placement of this issue will address the company's
liquidity issues, but further subordinate the two public bonds
which already rank behind outstandings under a $80 million
secured credit facility and a $10 million secured vendor
financing arrangement.

The rapid deterioration of the company's traditional numeric
paging base has negatively affected the company's liquidity
position. Accordingly, this base was being used as a funding
source for the company's wireless data operations. The company
has said that it requires $70 million to fully fund the company
for the year 2001. Should the company not be able to secure the
required new capital, the ratings may fall further, Moody's says.

WebLink Wireless is located in Dallas, Texas and serves 2.2
million paging customers, including over 350,000 wireless data
subscribers.


WHEELING-PITTSBURGH: Assumes UAI Contract to Complete Tower
-----------------------------------------------------------
Wheeling-Pittsburgh Steel Corporation asked that Judge Bodoh
authorize it to assume a contract with UAI Environmental Inc. and
to use certain environmental escrow account funds to complete the
installation of a meteorological tower under that contract. The
Debtor told Judge Bodoh that it and United States are parties to
a stipulation approved by Judge Bodoh which resolves claims made
by the Environmental Protection Agency involving the civil
penalties provisions of a consent decree.

Under the terms of this Stipulation, an escrow fund was
established and was funded by an initial deposit by WPSC in 1991.
The agreement permits WPSC to request approval from the EPA to
withdraw funds from this account for projects that are beneficial
to the environmental but that are not required by law. Any funds
remaining in the account after 19 years must be turned over to
the United States. The account has a current balance of $4
million.

In furtherance of the installation of a SODAR meteorological
station, UAI sent WPSC a proposal to install and operate a
meteorological monitoring program at WPSC's Follansbee, West
Virginia, site. WPSC entered into an agreement with UAI for the
installation, erection, construction, and completion of a 60-
meter meteorological tower necessary to begin a monitoring
program required by the EPA. The monitoring program is intended
to collect EPA Prevention of Significant Deterioration quality
meteorological data.

UAI has commenced work under this contract and is currently owed
$17,500 from WPSC for goods and services performed under the
agreement, which is to be paid out of the escrow account. These
benefits are provided at virtually no cost to the WPSC estate
since the costs of the UAI contract will be drawn from the escrow
account. WPSC therefore asked Judge Bodoh for authority to assume
the UAI contract, and pay the monies owed, but only after WPSC
has first received payment in an identical sum from the escrow
account.

In the absence of any charges against the estate, Judge Bodoh
granted this Motion, but expressly conditioned his Order upon the
prior receipt from the escrow account by WPSC of identical sums
to those paid to UAI. (Wheeling-Pittsburgh Bankruptcy News, Issue
No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900)


WORLDWIDE WIRELESS: Esyon Extends $1 Million Funding for 6 Months
------------------------------------------------------------
Worldwide Wireless Networks Inc. (OTC BB:WWWN), signed a binding
agreement with Esyon (a privately held strategic partner,
formerly Global Bridge E-net) that provides funding to support
Worldwide's operations for a minimum of six months.

In addition, they announced details of restructuring aspects of
their business model in their efforts to achieve profitability.
Worldwide Wireless Networks' President and acting CEO, Jerry
Collazo, announced a binding agreement with Esyon. The
involvement from Esyon is anticipated to provide Worldwide the
operational capital required to continue current operations as
the company refocuses direction to achieve profitability. Esyon
has committed to provide up to $1,000,000 in funding over a six-
month period.

The funding will allow Worldwide to cover it's cash burn rate for
this period of time in order to restructure it's operations to
become cash flow positive. This restructure includes outsourcing
some logistical functions and refocusing the sales and marketing
model to be able to scale the business more efficiently and with
greater speed.

Additional details will be provided when a definitive agreement
is signed.

"We are very enthused about the changes taking place at Worldwide
Wireless," stated Mr. Collazo. "The financial support from Esyon
and our cost cutting measures are providing the opportunity for
us to continue to gain market share and allow us the time to
achieve our goal of profitability without being dependent on our
equity line of credit. This first quarter we are focusing on
increasing revenues with our core wireless Internet services.
There is a tremendous value proposition to the end user of our
wireless Internet service. By eliminating the local loop fees
that all wired providers must contend with, we can save our
customers an immediate 33% over wired T-1 service. In addition to
the cost savings, we can install our carrier class service in a
few days, as opposed to four to six weeks for wired services, and
we eliminate the downtimes and bottlenecks of the local loops.
Given the continuing growth of bandwidth usage and our ability to
deliver a very competitive service, I am confident we have a
winning offering."

About Worldwide Wireless Networks

Worldwide Wireless Networks is a data-centric wireless
communications company headquartered in Orange, California. The
Company specializes in high-speed Internet access using an owned
wireless network. Other products and services include frame
relay, collocation services and network consulting. The Company
serves all sizes of commercial business accounts.


BOND PRICING: For the week of February 26 - March 2, 2001
---------------------------------------------------------
Following are indicated issues for selected issues:

AMC Ent 9 1/2 '05                 74 - 76
Amresco 9 7/8 '04                 52 - 54
Asia Pulp & Paper 11 3/4 '05      28 - 30(f)
Chiquita 9 5/8 '04                48 - 50(f)
Conseco 9 '06                     84 - 85
Federal Mogul 7 1/2 '04           23 - 25
Globalstar 11 3/8 '04             11 - 12(f)
Oakwood 7 7/8 '04                 42 - 44
Owens Corning 7 1/2 '05           25 - 26(f)
PSI Net 11 '09                    25 - 26
Revlon 8 5/8 '08                  48 - 49
Saks 7 '04                        84 - 86
Sterling 11 3/4 '06               57 - 58
Teligent 11 1/2 '07                8 - 9
TWA 11 3/8 '06                    12 - 16(f)

                           *********

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.bankrupt.com/books/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.


                           *********


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
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                      *** End of Transmission ***